Document:

Exhibit
10.17

 

BASIC
LEASE INFORMATION

 

Lease dated as of
October 3, 2003

 

Landlord:                                                                                                             iStar
Garden City LLC, a Delaware limited liability company, together with any
successor or assign.

 

Tenant:                                                                                                                       AAR
Allen Services, Inc., an Illinois corporation, together with any successor or
assign permitted by the Lease.

 

Commencement Date:                                             October 3,
2003.

 

Lease Expiration Date:
October 31, 2023, which is the last day of the 240th full
calendar month following the Commencement Date, unless extended pursuant to
paragraph 4(b) of the Lease.

 

Primary Term and any Extension Term Fixed
Rent:  The
annual Fixed Rent during the Primary Term and any applicable Extension Term of
the Lease shall be payable monthly in advance (unless specifically set forth to
be paid at a different time below) as follows:

 

(a)                                                                                                                                                  From
the Commencement Date through the 12th full calendar month after the
Commencement Date:  at the annual rate
of $1,332,000.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing (i) if the Commencement Date does not occur on the first
day of a month, then on the first day of the month following the month in which
the Commencement Date occurs, and (ii) if the Commencement Date occurs on the
first day of a month, then on the Commencement Date.  Additionally, if the Commencement Date does not occur on the
first day of a month, then on the Commencement Date, a payment of an amount
equal to the product of $111,000.00 multiplied by a fraction, the numerator of
which is the number of days in the month from and including the Commencement
Date through the end of the month in which the Commencement Date occurs, and
the denominator of which is the total number of days in the month in which the
Commencement Date occurs.

 

(b)                                                                                                                                                 Beginning
with the 13th full calendar month after the Commencement Date
through the 24th full calendar month after the Commencement
Date:  at the annual rate of
$1,365,300.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 13th full calendar month after the
Commencement Date.

 

(c)                                                                                                                                                          Beginning
with the 25th full calendar month after the Commencement Date
through the 36th full calendar month after the Commencement
Date:  at the annual rate of
$1,399,433.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 25th full calendar month after the
Commencement Date.

 

(d)                                                                                                                                                         Beginning
with the 37th full calendar month after the Commencement Date
through the 48th full calendar month after the Commencement Date:  at the annual

 

 

rate of
$1,434,418.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 37th full calendar month after the
Commencement Date.

 

(e)                                                                                                                                                          Beginning
with the 49th full calendar month after the Commencement Date
through the 60th full calendar month after the Commencement
Date:  at the annual rate of
$1,470,279.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 49th full calendar month after the
Commencement Date.

 

(f)                                                                                                                                                            Beginning
with the 61st full calendar month after the Commencement Date
through the 72nd full calendar month after the Commencement
Date:  at the annual rate of
$1,507,036.00, 1/12 of which shall be payable in advance on the first day of each
month, commencing with the 61st full calendar month after the Commencement
Date.

 

(g)                                                                                                                                                         Beginning
with the 73rd full calendar month after the Commencement Date
through the 84th full calendar month after the Commencement
Date:  at the annual rate of $1,544,712.00,
1/12 of which shall be payable in advance on the first day of each month,
commencing with the 73rd full calendar month after the Commencement
Date.

 

(h)                                                                                                                                                         Beginning
with the 85th full calendar month after the Commencement Date
through the 96th full calendar month after the Commencement
Date:  at the annual rate of
$1,583,329.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 85th full calendar month after the
Commencement Date.

 

(i)                                                                                                                                                             Beginning
with the 97th full calendar month after the Commencement Date
through the 108th full calendar month after the Commencement
Date:  at the annual rate of
$1,622,913.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 97th full calendar month after the
Commencement Date.

 

(j)                                                                                                                                                             Beginning
with the 109th full calendar month after the Commencement Date
through the 120th full calendar month after the Commencement
Date:  at the annual rate of
$1,663,485.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 109th full calendar month after the
Commencement Date.

 

(k)                                                                                                                                                          Beginning
with the 121st full calendar month after the Commencement Date
through the 132nd full calendar month after the Commencement
Date:  at the annual rate of
$1,705,073.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 121st full calendar month after the
Commencement Date.

 

(l)                                                                                                                                                             Beginning
with the 133rd full calendar month after the Commencement Date
through the 144th full calendar month after the Commencement
Date:  at the annual rate of
$1,747,699.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 133rd full calendar month after the
Commencement Date.

 

(m)                                                                                                                                                       Beginning
with the 145th full calendar month after the Commencement Date
through the 156th full calendar month after the Commencement
Date:  at the annual rate of
$1,791,392.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 145th full calendar month after the
Commencement Date.

 

 

(n)                                                                                                                                                         Beginning
with the 157th full calendar month after the Commencement Date
through the 168th full calendar month after the Commencement
Date:  at the annual rate of
$1,836,177.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 157th full calendar month after the
Commencement Date.

 

(o)                                                                                                                                                         Beginning
with the 169th full calendar month after the Commencement Date
through the 180th full calendar month after the Commencement
Date:  at the annual rate of
$1,882,081.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 169th full calendar month after the
Commencement Date.

 

(p)                                                                                                                                                         Beginning
with the 181st full calendar month after the Commencement Date
through the 192nd full calendar month after the Commencement
Date:  at the annual rate of
$1,929,133.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 181st full calendar month after the
Commencement Date.

 

(q)                                                                                                                                                         Beginning
with the 193rd full calendar month after the Commencement Date
through the 204th full calendar month after the Commencement
Date:  at the annual rate of $1,977,361.00,
1/12 of which shall be payable in advance on the first day of each month,
commencing with the 193rd full calendar month after the Commencement
Date.

 

(r)                                                                                                                                                            Beginning
with the 205th full calendar month after the Commencement Date
through the 216th full calendar month after the Commencement
Date:  at the annual rate of
$2,026,797.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 205th full calendar month after the
Commencement Date.

 

(s)                                                                                                                                                          Beginning
with the 217th full calendar month after the Commencement Date
through the 228th full calendar month after the Commencement
Date:  at the annual rate of
$2,077,465.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 217th full calendar month after the
Commencement Date.

 

(t)                                                                                                                                                            Beginning
with the 229th full calendar month after the Commencement Date
through the 240th full calendar month after the Commencement
Date:  at the annual rate of
$2,129,402.00, 1/12 of which shall be payable in advance on the first day of
each month, commencing with the 229th full calendar month after the
Commencement Date.

 

(u)                                                                                                                                                         During
the first Extension Term, the annual Fixed Rent payable shall be as follows:

 

	
   

  	
  (i)

  	
  Beginning with the 241st
  full calendar month after the Commencement Date through the 252nd
  full calendar month after the Commencement Date:  at the annual rate of $2,182,637.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 241st
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Beginning with the 253rd
  full calendar month after the Commencement Date through the 264th
  full calendar month after the Commencement Date:  at the annual rate of $2,237,203.00, 1/12 of which shall be
  payable in advance on the

  

 

 

	
   

  	
   

  	
  first day of each
  month, commencing with the 253rd full calendar month after the
  Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Beginning with the 265th
  full calendar month after the Commencement Date through the 276th
  full calendar month after the Commencement Date:  at the annual rate of $2,293,133.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 265th
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  Beginning with the 277th
  full calendar month after the Commencement Date through the 288th
  full calendar month after the Commencement Date:  at the annual rate of $2,350,461.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 277th
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  Beginning with the 289th
  full calendar month after the Commencement Date through the 300th
  full calendar month after the Commencement Date:  at the annual rate of $2,409,223.00, 1/12 of which shall be payable
  in advance on the first day of each month, commencing with the 289th
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  During the
  second Extension Term, the annual Fixed Rent payable shall be as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Beginning with the 301st
  full calendar month after the Commencement Date through the 312th
  full calendar month after the Commencement Date:  at the annual rate of $2,469,454.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 301st
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Beginning with the 313th
  full calendar month after the Commencement Date through the 324th
  full calendar month after the Commencement Date:  at the annual rate of $2,531,190.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 313th
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Beginning with the 325th
  full calendar month after the Commencement Date through the 336th
  full calendar month after the Commencement Date:  at the annual rate of $2,594,470.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 325th
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  Beginning with the 337th
  full calendar month after the Commencement Date through the 348th
  full calendar month after the Commencement Date:  at the annual rate of $2,659,331.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 337th
  full calendar month after the Commencement Date.

  

 

 

	
   

  	
  (v)

  	
  Beginning with the 349th
  full calendar month after the Commencement Date through the 360th
  full calendar month after the Commencement Date:  at the annual rate of $2,725,815.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 349th
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
  (w)

  	
   

  	
  During the third
  Extension Term, the annual Fixed Rent payable shall be as follows:

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Beginning with the 361st
  full calendar month after the Commencement Date through the 372nd
  full calendar month after the Commencement Date:  at the annual rate of $2,793,960.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 361st
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Beginning with the 373rd
  full calendar month after the Commencement Date through the 384th
  full calendar month after the Commencement Date:  at the annual rate of $2,863,809.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 373rd
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Beginning with the 385th
  full calendar month after the Commencement Date through the 396th
  full calendar month after the Commencement Date:  at the annual rate of $2,935,404.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 385th
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  Beginning with the 397th
  full calendar month after the Commencement Date through the 408th
  full calendar month after the Commencement Date:  at the annual rate of $3,008,789.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 397th
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  Beginning with the 409th
  full calendar month after the Commencement Date through the 420th
  full calendar month after the Commencement Date:  at the annual rate of $3,084,009.00, 1/12 of which shall be
  payable in advance on the first day of each month, commencing with the 409th
  full calendar month after the Commencement Date.

  
	
   

  	
   

  	
   

  

Security Deposit Amount:  One
year’s Fixed Rent, subject to the provisions set forth in paragraphs 5 and 25.

 

Landlord Address for Payment by wire transfer
to:

 

	
   

  	
   

  	
  JPMorgan Chase Bank

  
	
   

  	
   

  	
  ABA # 021000021

  

 

 

	
   

  	
   

  	
  Account Name: iStar Garden City
  LLC/ iStar Finance Sub V LLC/

  
	
   

  	
   

  	
  Property Account

  
	
   

  	
   

  	
  Acct #
  230-329667

  
	
   

  	
   

  	
   

  
	
  Tenant
  Address:

  	
   

  	
  c/o AAR CORP.

  
	
   

  	
   

  	
  One AAR Place

  
	
   

  	
   

  	
  1100 North Wood Dale Road

  
	
   

  	
   

  	
  Wood Dale, Illinois 60191

  

 

 

LEASE
AGREEMENT

 

 

Between

 

 

iSTAR GARDEN CITY LLC,

 

as Landlord

 

 

and

 

 

AAR ALLEN SERVICES, INC.,

 

as Tenant

 

 

 

Dated as of
October 3, 2003

 

7

 

THIS LEASE AGREEMENT, is made and entered into as of the date set forth
in the Basic Lease Information (this lease agreement, together with all
amendments and supplements hereto, this “Lease”), by and between iSTAR GARDEN CITY
LLC, a Delaware limited liability company with offices c/o iStar Financial Inc., 1114
Avenue of the Americas, 27th Floor, New York, New York 10036 (together with any
successor or assigns, hereinafter called the “Landlord”) and AAR ALLEN
SERVICES, INC., an Illinois corporation, having an address at c/o AAR CORP.,
One AAR Place, 1100 North Wood Dale Road, Wood Dale, Illinois 60191 (together
with any successor or assign permitted by this Lease, hereinafter collectively
called the “Tenant”).

 

1.                                      DEFINITIONS

 

Capitalized terms used herein shall have the following meanings for all
purposes of this Lease and shall be equally applicable to both the singular and
plural forms of the terms herein defined.

 

“Additional Rent” means all amounts, liabilities and
obligations other than Fixed Rent which Tenant assumes or agrees to pay under
this Lease to Landlord or others.

 

“Affiliates” means Persons (other than individuals)
controlled by, controlling, or under common control with Tenant or Guarantor.

 

“Alternative Credit Rating Agency” means if either or both
of S & P and Moody’s no longer exist or no longer assign Credit Ratings,
such other nationally recognized statistical credit rating agency designated by
Landlord, acting in its sole discretion.

 

“Basic Lease Information” means the page(s) preceding this
Lease which are hereby incorporated by reference.

 

“Business Days” means any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the State of New York or
is a day on which banking institutions located in such state are closed.

 

“Casualty” shall mean any damage or destruction caused to
any Site by any reason, including fire.

 

“Casualty Repair” is defined in paragraph 10 of this Lease.

 

“Casualty Threshold” is defined in paragraph 10 of this
Lease.

 

“Claims” shall mean Liens (including lien removal and
bonding costs) liabilities, obligations, damages, losses, demands, penalties,
assessments, payments, fees of Mortgagee, fines, claims, actions, suits,
judgments, settlements, costs, expenses and disbursements (including legal fees
incurred and expenses and costs of investigation and environmental remedial
action) of any kind and nature whatsoever.

 

“Commencement Date” is defined and shall have the meaning
specified in the Basic Lease Information.

 

 

“Control” (including with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”) means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities, by contracts or otherwise.

 

“Corporate Control Event” means any of the following:  (i) a merger or consolidation of Tenant or
Guarantor with another entity, (ii) the sale of all or substantially all the
assets of Tenant or Guarantor to any party, (iii) any one Person acquiring 50%
or more of publicly traded common stock, voting securities or economic benefits
and burdens (including distributions) of Tenant or Guarantor within any twelve
month period, or (iv) a change in 50% or more of Tenant’s or Guarantor’s Board
of Directors in any 12 month period.

 

“Corporate Control Test Dates” means both (a) the date
which is ninety (90) days following the public announcement of a Corporate
Control Event and (b) the date which is sixty (60) days following the consummation
of a Corporate Control Event.

 

“Credit Rating” means the senior unsecured debt rating
issued by S&P and Moody’s or if either or both no longer exist or no longer
issue ratings then, for either or both as so applicable, an Alternative Credit
Rating Agency.  All references to
specific levels of a Credit Rating mean such rating with a “stable” or
“positive” outlook, but not a “negative” outlook or “on watch” associated with
such rating.

 

“Environmental Laws” is defined in paragraph 26(b) of this
Lease.

 

“Equipment” means the equipment listed on Exhibit B.

 

“Event of Default” is defined in paragraph 15 of this
Lease.

 

“Existing Credit Rating” means Guarantor’s Credit Rating as
of the date which is the earlier to occur of one week prior to the public
announcement of a Corporate Control Event or one week prior to the occurrence
of a Corporate Control Event.

 

“Extension Terms” is defined in paragraph 4(b) of this
Lease.

 

“Fixed Rent” is defined in paragraph 5(a) of this Lease.

 

“Guarantor” means AAR CORP., a Delaware corporation,
together with any successor or assign permitted by this Lease.

 

“Guaranty” means that certain Guaranty dated as of the date
of this Lease from Guarantor to Landlord, pursuant to which, among other
things, Guarantor unconditionally guarantees the payment and performance of
Tenant’s obligation under the Lease, all upon the terms and subject to the
conditions set forth therein, as such Guaranty is amended, modified or restated
from time to time.

 

 

“Imposition” means the various taxes and other charges
referred to in paragraph 6 of this Lease and the present and future
governmental laws and regulations more specifically described in
paragraph 6(b) of this Lease.

 

“Improvements” means all of the buildings, structures,
improvements, equipment, and all building fixtures therein (including parking
areas, and driveways) now or hereafter located on the Land and generally
described on Exhibit A-2 hereto, other than and specifically excluding
Tenant’s Trade Fixtures.

 

The words “include”, “includes”, “including”
and any other derivation of “include” means “including but not limited to”
unless specifically set forth to the contrary.

 

“Indemnified Partner” is defined in paragraph 26(c) of this
Lease.

 

“Initial Appraiser” is defined in Exhibit E of this
Lease.

 

“Initial Valuation” is defined in Exhibit E of this
Lease.

 

“Investment Grade Criteria” means Tenant or Guarantor has a
Credit Rating of either “BBB-” or higher from S&P or “Baa3” or higher from
Moody’s, (or an approximately equivalent Credit Rating from an Alternative
Credit Rating Agency, as applicable) in each case for the immediately preceding
six (6) consecutive calendar months.

 

“Issuer” is defined in paragraph 5(d)(iii) of this Lease.

 

“Land” means the title and interest of Landlord in and to
the two (2) parcels of real estate described on Exhibit A-1 hereto, and
any land lying in the bed of any existing dedicated street, road or alley
adjoining thereto, all strips and gores adjoining thereto, and all rights,
ways, easements, privileges and appurtenances thereunto belonging, including
all of Landlord’s right, title, and interest in and to all other property
rights, tangible or otherwise, arising out of or connected with Landlord’s
ownership thereof, but none of the Improvements thereon.

 

“Landlord” is defined in the first paragraph of this Lease.

 

“Lease” is defined in the first sentence of this Lease.

 

“Lease Expiration Date” is defined and shall have the
meaning specified in the Basic Lease Information.

 

“Legal Requirements” is defined in paragraph 12 of this
Lease.

 

“Letter of Credit” is defined in paragraph 5(d)(iii) of
this Lease

 

“Lien” shall mean any lien, mortgage, pledge, charge,
security interest or encumbrance of any kind, or any other type of preferential
arrangement that has the practical effect of creating

 

 

a security interest, including any arising
under any conditional sale agreement, capital lease or other title retention
agreement.

 

“Moody’s” means Moody’s Investors Services, Inc. and its
successors.

 

“Mortgage” shall mean a mortgage, deed to secure debt, deed
of trust or other security instrument of like nature or any ground or
underlying lease or other document of like nature on all or any portion of the
Premises given by Landlord to the Mortgagee.

 

“Mortgagee” shall mean any holder of a Mortgage with
respect to the Premises or any part thereof.

 

“Net Casualty Proceeds” shall mean the compensation and/or
insurance payments (whether received from a third party insurance company or
from Tenant because it has self-insured) net of the reasonable expenses of
collecting such amounts incurred by Landlord, any Mortgagee, Tenant, and
received by any Mortgagee, Landlord or Tenant in respect of any portion of the
Premises by reason of and on account of a fire or other casualty.

 

“Other Taxes” is defined in paragraph 6(b) of this Lease.

 

“Overdue Rate” means the greater of: (x) twelve percent
(12%) per annum or (y) the sum of five percent (5%) plus the prime interest
rate as reported from time to time in The Wall Street Journal, but in any
event, if lower, the maximum annual interest rate allowed by law for business
loans (not primarily for personal, family or household purposes); provided,
however, if The Wall Street Journal is no longer in existence or ceases
to publish such information, Landlord shall use the prime interest rate as
reported in a comparable publicly available publication selected by Landlord in
its sole discretion.

 

“Person” means any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, trustee(s) of a trust, unincorporated organization, or government or
governmental authority, agency or political subdivision thereof.

 

“Permitted Encumbrances” means:

 

(a)                                  Any
of the following, which are not yet due and payable at the time in
question:  (i) liens for water, sewer,
and other utility services; (ii) taxes, assessments and other governmental
charges (whether federal, state, local or foreign); and (iii) any liens of
mechanics, materialmen and laborers, including any construction liens, for work
or services performed or materials furnished in connection with the Premises;

 

(b)                                 The
easements, rights-of-way, encroachments, encumbrances, restrictive covenants
and other matters affecting the title to the Premises or any part thereof set
forth on Exhibit C attached hereto;

 

 

(c)                                  Any
Subordination, Non-Disturbance, and Attornment Agreement(s) recorded or
otherwise, which are provided to Tenant pursuant to paragraph 17 of this Lease
or as otherwise entered into by and among Landlord, Tenant, and any Mortgagee;

 

(d)                                 Liens
for taxes (whether federal, state, local or foreign) attributable to any
taxable period whether before, on or after the Commencement Date which are
being contested in good faith in accordance with the terms of this Lease by
Tenant and for which Tenant has established adequate reserves; and

 

(e)                                  This
Lease and the rights, privileges and entitlements of Tenant hereunder.

 

“Permitted Investments” shall mean any one or more of the
following obligations or securities having: (a) a predetermined fixed
dollar of principal due at maturity that cannot vary or change;
(b) bearing interest that may either be fixed or variable but which is
tied to a single interest rate index plus a single fixed rate spread (if any) and
move proportionately with that index; and (c) having the required ratings,
if any, provided for in this definition:

 

(i)                                     direct
obligations of, and obligations fully guaranteed as to timely payment of
principal and interest by, the United States of America or any agency or
instrumentality of the United States of America, the obligations of which are
backed by the full faith and credit of the United States of America that mature
in thirty (30) days or less after the date of issuance and that does not have a
“r” highlighter affixed to its rating;

 

(ii)                                  time
deposits, unsecured certificates of deposit, or bankers’ acceptances that
mature in thirty (30) days or less after the date of issuance and are issued or
held by any depository institution or trust company incorporated or organized
under the laws of the United States of America or any State thereof and subject
to supervision and examination by federal or state banking authorities, so long
as the commercial paper or other short-term debt obligations of such depository
institution or trust company are rated at least “A1” and “P1” by S&P and
Moody’s, respectively, or such other rating as would not result in the
downgrading, withdrawal or qualification of the then-current Credit Rating to
the pass-through certificates, as evidenced in writing and that does not have a
“r” highlighter affixed to its rating;

 

(iii)                               repurchase
agreements or obligations with respect to any security described in clause
(i) above where such security has a remaining maturity of thirty (30) days
or less and where such repurchase obligation has been entered into with a
depository institution or trust company (acting as principal) described in
clause (ii) above;

 

(iv)                              debt
obligations bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States of America or any state
thereof which mature in thirty (30) days or less from the date of issuance,
which debt obligations have ratings from Moody’s and S&P in the highest
category possible, or such other rating as would not result in the downgrading,
withdrawal or qualification of the then-current Credit Rating to any
pass-through certificate and that does not have a “r” highlighter affixed to
its rating; provided, however, that securities issued by any particular
corporation will not be Permitted Investments to the extent that investment
therein will cause the then-outstanding principal

 

 

amount of securities issued by such
corporation and held in the accounts established hereunder to exceed 10% of the
sum of the aggregate principal balance and the aggregate principal amount of
all Permitted Investments in such accounts; and

 

(v)                                 commercial
paper (including both non-interest-bearing discount obligations and
interest-bearing obligations) payable on demand or on a specified date maturing
in thirty (30) days or less after the date of issuance thereof and which is
rated in the highest category possible by Moody’s and S&P and that does not
have a “r” highlighter affixed to such rating.

 

“Premises” is defined in paragraph 2(a) of this Lease.

 

“Primary Term” is defined in paragraph 4(a) of this Lease.

 

“Proceeds Trustee” shall mean a federally insured bank or
trust company designated by Landlord, subject to the prior written approval of
Tenant, such approval not to be unreasonably withheld, delayed, or conditioned;
provided, however, if a Mortgage encumbers the Premises, the Mortgagee
thereunder may, at its option, be appointed Proceeds Trustee for so long as
such Mortgage remains outstanding and such Mortgagee does not control Landlord
or is not controlled by or under common control with Landlord.

 

“Property Taxes” is defined in paragraph 6(a) of this
Lease.

 

“Rent” means Fixed Rent and Additional Rent.

 

“Restoration Fund” is defined in paragraph 10 of this
Lease.

 

“S&P” means Standard & Poor’s Rating Service and
its successors or assigns.

 

“Security Deposit” is defined in paragraph 5(d) of
this Lease.

 

“Security Deposit Amount” is defined and shall have
the meaning specified in the Basic Lease Information.

 

“Site Assessments” is defined in paragraph 26 of this
Lease.

 

“Site Reviewers” is defined in paragraph 26 of this Lease.

 

“Subordination, Non-Disturbance and Attornment Agreement”
is defined in paragraph 17(a) of this Lease.

 

“Tenant” is defined in the first paragraph of this Lease.

 

“Tenant’s Trade Fixtures” means all personal property of
Tenant in or on the Premises, affixed or not, which is not necessary for the
operation of the Improvements, including tire racks and handling equipment,
pallets, fork lift trucks, lift racks, tools, office computers, and other

 

 

equipment or machines owned or leased from/by
the Tenant, and specifically excludes the Equipment.

 

“Term” means the Primary Term, together with each Extension
Term when Tenant has exercised or is deemed to have exercised its option
related to such Extension Term.

 

“Termination Date” is defined in paragraph 14 of this
Lease.

 

“Third Appraiser” is defined in Exhibit E of this
Lease.

 

“Third Valuation” is defined in Exhibit E of this
Lease.

 

“Transferee” is defined in paragraph 5(d)(vi) of this
Lease.

 

“Treasury Rate” means the yield to maturity of a debt
obligation of the United States Treasury having a maturity date closest to but
not earlier than the then-existing remaining Term of the Lease (excluding any
then-unexercised options for any Extension Terms) and, if more than one have
been issued with such maturity date, then using the debt obligation first
issued on or closest to the date of any termination by Landlord under this
Lease.

 

“Underground Tanks” is defined in paragraph 26(f) of this
Lease.

 

“Valuation Notice” is defined in Exhibit E of this
Lease.

 

“Valuation Period” is defined in Exhibit E of this
Lease.

 

2.                                      DEMISE OF PREMISES

 

(a)                                  Landlord
hereby demises and leases to Tenant and Tenant hereby leases and rents from
Landlord the Premises, IN ITS “AS IS” CONDITION, SUBJECT TO THE EXISTING STATE
OF TITLE (WITHOUT EXPRESS OR IMPLIED WARRANTY OF LANDLORD WITH RESPECT TO THE
CONDITION, QUALITY, REPAIR OR FITNESS OF THE PREMISES FOR A PARTICULAR USE OR
TITLE THERETO, ALL SUCH WARRANTIES BEING HEREBY DISCLAIMED BY LANDLORD AND
WAIVED AND RENOUNCED BY TENANT).  The
“Premises” consists of collectively, Landlord’s interest in the Land, the
Equipment, the Improvements, together with any easements, rights, and
appurtenances in connection therewith or belonging to said Land and
Improvements.  No easement for light,
air or view is included with or appurtenant to the Premises.  The foregoing disclaimer in this
paragraph 2(a) has been negotiated by Landlord and Tenant, each being
represented by independent counsel, and is intended as a complete negation of
any representation or warranty by Landlord, express or implied, with respect to
the condition, quality, repair, or fitness of the Premises for a particular
use, or title thereto.

 

(b)                                 The
Premises includes the Land and Improvements located at the address commonly
known as 747 Zeckendorf Boulevard, Garden City, New York, including
approximately 8.74 acres of land.

 

 

3.                                      USE

 

Tenant shall, subject to applicable zoning restrictions and any
recorded covenants or restrictions in the public records upon the Commencement
Date, use and occupy the Premises, only for warehousing, distribution,
fulfillment, light assembly, repair, overhaul, packaging, light manufacturing,
general offices, and any other lawful purposes which are both associated and
related thereto (including the following ancillary uses:  ATM machines, cafeteria/food service);
provided, however, except for the recordation of any Mortgage and any replacements,
renewals, amendments, consolidations, modifications, extensions or refinancing
thereof or as otherwise required by governmental order, from and after the
Commencement Date, without first having obtained Tenant’s prior written consent
which may be withheld or granted in Tenant’s sole and absolute discretion,
Landlord shall not record or otherwise take any voluntary action to subject the
Premises or Land to any additional covenants, restrictions, easements, or other
encumbrances of record or otherwise, or any rezoning of any Site from the
zoning classifications presently in existence as of the Commencement Date.  Tenant shall not use, suffer or permit the
Premises, or any portion thereof, to be used by Tenant, any third party or the
public, as such, without restriction or in such manner as might adversely
affect Landlord’s title to or interest in the Premises, or in such manner as
might make possible a claim or claims of adverse possession by the public, as
such, or third Persons, or of implied dedication of the Premises, or any
portion thereof.

 

4.                                      TERM

 

(a)                                  The
primary term of this Lease (the “Primary Term”) shall be for a period of
approximately twenty (20) years, beginning on the Commencement Date and ending
on the Lease Expiration Date.

 

(b)                                 Tenant
shall have the right, at its option, to extend the Primary Term of this Lease
for three (3) consecutive extension terms (the “Extension Terms”), each being
five (5) years in length.  Each
Extension Term shall commence on the day after the expiration of the preceding
term and shall expire on October 31, 2028 in the case of the first (1st)
Extension Term, and on October 31, 2033 and October 31, 2038 in the
case of the second (2nd) and third (3rd) Extension Terms,
respectively.  The options to extend the
Term of this Lease as described above shall not be deemed exercised by Tenant
unless at least eighteen (18) months prior to the Lease Expiration Date for the
Primary Term or at least eighteen (18) months prior to the expiration of the
Extension Term for the first (1st) and second (2nd)
Extension Terms, respectively, Tenant shall have delivered written notice to
Landlord of Tenant’s irrevocable decision to so extend this Lease at the end of
the Primary Term or any exercised Extension Term, as applicable.  Tenant’s failure to deliver one (1) such
timely notice to Landlord shall terminate the Extension Term to which such
notice specifically relates and all future Extension Terms, if any.  Subject to the provisions of paragraph 5,
the terms and conditions of this Lease shall apply to each Extension Term with
the same force and effect as if such Extension Term had originally been
included in the Primary Term of the Lease. 
The right of Tenant to the Extension Terms shall be conditioned upon
this Lease being in full force and effect and no Event of Default then existing
as of the Lease Expiration Date (for the first (1st) Extension Term)
or expiration of the first (1st) and

 

 

second (2nd) Extension Term, as
the case may be for the second (2nd) and third (3rd)
Extension Term, respectively.  The
Primary Term, together with any Extension Term which Tenant properly exercises
its option with respect to, and for which the conditions related thereto are
satisfied, shall constitute the “Term” of this Lease.

 

5.                                      RENTAL; SECURITY DEPOSIT; GUARANTY

 

(a)                                  Tenant
shall pay to Landlord the following amounts as Rent for the Premises:

 

(i)                                     During
the Term of this Lease, Tenant shall pay to Landlord, as fixed monthly rent,
the amount of monthly fixed rent specified in the Basic Lease Information (“Fixed Rent”).

 

(ii)                                  Throughout
the Term of this Lease, Tenant shall pay, as Additional Rent, all other amounts
of money and charges required to be paid by Tenant under this Lease, whether or
not such amounts of money or charges are designated Additional Rent.  As used in this Lease, “Rent” shall mean and include
all Fixed Rent and Additional Rent payable by Tenant in accordance with this
Lease.

 

(b)                                 It
is the intention of Landlord and Tenant that the Fixed Rent payable by Tenant
to Landlord during the entire Term of this Lease shall be absolutely net of all
costs and expenses incurred in connection with the management, operation,
maintenance and repair of the Premises in accordance with this Lease.  Landlord shall have no obligations or
liabilities whatsoever with respect to the management, operation, maintenance
or repair of the Premises during the Term of this Lease, and Tenant shall
manage, operate, maintain and repair the Premises in accordance with this Lease
and shall pay all costs and expenses incurred in connection therewith before
such costs or expenses become delinquent. 
Without limiting the generality of the foregoing, throughout the entire
term of this Lease, Tenant shall pay, as Additional Rent, all premiums for all
property and liability insurance covering the Premises required under this
Lease, all Property Taxes and all Other Taxes that accrue during or are
allocable to the Term of this Lease, and for Property Taxes and Other Taxes,
allocable for any period of time prior to the Term of this Lease.

 

(c)                                  Tenant
shall pay all Fixed Rent to Landlord, in advance, on or before the first
business day of each and every calendar month during the Term of this Lease
(other than the payment due on the Commencement Date which is due as set forth
in the Basic Lease Information) without notice, by wire transfer or other
electronic means (or otherwise so there are collected funds available to
Landlord on the due date).  Interest at
the Overdue Rate shall accrue on unpaid Fixed Rent from the due date thereof to
the date of actual payment.  If the
Fixed Rent is paid more than five (5) Business Days after its due date, a late
charge of 5% of the delinquent amount shall be due and payable.  Tenant shall pay all Additional Rent when
due.  Tenant shall pay all Fixed Rent to
Landlord without notice, demand, deduction or offset, in lawful money of the
United States of America, to the wire transfer address of Landlord specified in
the Basic Lease Information, or to such other accounts and/or Person or Persons
or at such other place or places as Landlord may from time to time designate in
writing.

 

(d)                                 Security
Deposit Requirements are set forth below.

 

 

(i)                                     Subject
to paragraph 5(d)(v) below, concurrently with the execution of this Lease,
Tenant shall deliver and maintain the Security Deposit Amount (in effect from
time to time) to Landlord as a security deposit (“Security Deposit”) in cash or
other immediately available funds or in the form of an irrevocable standby
letter of credit, in either case meeting the requirements of this
paragraph 5(d), to secure the full and faithful performance of Tenant’s
obligations under this Lease.  If there
is an Event of Default at any time during the Term or any holdover period,
Landlord shall have the right, but not the obligation, in accordance with the
terms of such letter of credit and this Lease, from time to time to draw upon
all or any part of the Security Deposit but only in such amounts as are
necessary to cure or partially cure the Event of Default which can be cured or
partially cured with the payment of money, or to pay itself any Rents then due,
damages or other amounts that Landlord would be entitled to recover and which
are currently due from Tenant on account of the Event of Default.  If Landlord draws upon such Security
Deposit, Landlord shall apply such proceeds to such amounts otherwise due from
Tenant as set forth above.  If Landlord
shall so draw on the Security Deposit and apply all of such proceeds so drawn
as set forth above, upon Landlord’s demand, Tenant shall, within five (5)
Business Days following notice, restore the Security Deposit to its previous
amount and any failure to do so shall be an Event of Default without further
notice.  Tenant may not use the Security
Deposit to pay Rent or otherwise cause Landlord to offset any amounts payable
by Tenant against the Security Deposit (except as provided herein).  The Security Deposit shall be returned to
Tenant within thirty (30) days after the first to occur of (1) the
Investment Grade Criteria being satisfied and the waiver set forth in paragraph
5(d)(v) being applicable, and (2) the expiration or earlier termination of
the Term and Tenant’s surrender of the Premises to Landlord as required by
paragraph 22 of this Lease, in each case less such amounts as may have
been used to cure or partially cure any Events of Default by Tenant.  Tenant’s failure to deposit, maintain and
replenish the Security Deposit as required by this Lease shall constitute an
immediate Event of Default under this Lease.

 

(ii)                                  If
Tenant desires to make the Security Deposit in cash or other immediately
available funds, the Security Deposit shall be held from time to time in an
account in Landlord’s or Mortgagee’s name (in either case with proper notation
by such account institution to indicate that the Security Deposit is Tenant’s
property subject to the lien arising under paragraph 5(d)(v) below), as
determined by Landlord, at a federally insured institution and not operating
under any regulatory or supervisory agreement, and in such state within the
continental United States as the holder thereof shall determine.  Such funds shall not be deemed to be trust
funds but shall not be commingled with the general funds of Landlord and shall
instead be held in a separate escrow account opened and maintained for this
Lease alone; provided, however, to the extent so received, any Mortgagee which
is an entity unaffiliated with Landlord or any affiliate of Landlord, may
commingle such Security Deposit funds. 
Landlord shall cause interest to be earned upon any cash or other
immediately available funds by depositing such cash or funds in a separate
interest-bearing federally insured account at an institution not operating
under any regulatory or supervisory agreement, or investing it in Permitted Investments
(as directed by, or on behalf of, Tenant). 
Any such interest earned on the Security Deposit shall be paid annually
to Tenant.  Tenant shall cooperate with
Landlord to ensure that any tax liability attributed to Landlord for such
interest shall be properly reallocated to Tenant and paid for by Tenant, and
Tenant agrees to indemnify, defend and hold Landlord

 

 

harmless from all such tax liability.  Such indemnity shall survive the expiration
or earlier termination of the Lease for six (6) years.

 

(iii)                               If
Tenant desires to make the Security Deposit by delivering an irrevocable
standby letter of credit to Landlord, such letter of credit shall meet all of
the following requirements:  (a) it is a
sight draft letter of credit from a financial institution (the “Issuer”)
acceptable to Landlord and Mortgagee, each in their respective sole and
absolute discretion; provided, however, Landlord hereby pre-approves any
financial institution having a Credit Rating of “A1” or higher from Moody’s and
“A+” or higher from S&P, or, as applicable, an approximately equivalent
rating from an Alternative Credit Rating Agency; (b) it has a face amount of
not less than the Security Deposit Amount; (c) it has an expiration date of not
less than one (1) year from the date such letter of credit is delivered to
Landlord or Mortgagee and thereafter renewed annually throughout the Term of
the Lease at least thirty (30) days prior to the expiration date (and may be
drawn on by the holder thereof if not so renewed with such funds then being
placed in an escrow as provided in (ii) above); (d) it is freely assignable by
Landlord and/or Mortgagee, provided that the transferor and transferee shall
have complied with the Issuer’s customary transfer requirements and pay when
due the reasonable costs charged by such Issuer in connection with such
assignment; (e) it may be drawn upon by Landlord or Mortgagee to cure Events of
Default by Tenant under this Lease, but only in accordance with its terms and
the terms of this Lease; (f) it shall provide Landlord and Mortgagee,
respectively, the rights that each would have hereunder and as set forth in the
escrow agreement referred to in (ii) above, and (g) it is otherwise reasonably
satisfactory to Landlord and is substantially similar to the letter of credit
form attached hereto as Exhibit F and incorporated herein by this
reference (a letter of credit satisfying the foregoing requirements is herein
called a “Letter
of Credit”).  If the Issuer
ceases to have a Credit Rating of both “A+” or higher by S&P and “A1” or
higher by Moody’s, Tenant shall, within ten (10) Business Days of the rating
downgrade, replace the Letter of Credit issued by a bank having such
rating.  Tenant shall pay all costs
associated with any change in the Issuer or Letter of Credit, including,
without limitation, in connection with any assignment of proceeds.  Notwithstanding the foregoing, Landlord
hereby approves the form of Letter of Credit attached hereto as Exhibit F-1
and the issuer referred to therein.

 

(iv)                              Tenant
shall execute such documents, instruments, financing statements, and
acknowledgments as Landlord may reasonably request from time to time to grant
and thereafter maintain a first-priority perfected security interest in the
Security Deposit.  Tenant hereby grants
Landlord a security interest in the Security Deposit as it exists from time to
time, and all proceeds and products thereof. 
Landlord and Tenant acknowledge that as of the date of this Lease,
Landlord’s possession of the Security Deposit would not require further
documents, instruments or financing statements to provide Landlord with a
first-priority perfected security interest in the Security Deposit.  Tenant acknowledges and agrees that the
Security Deposit may also be pledged as security to any Mortgagee and Tenant
shall cooperate with, permit, and execute such documents and instruments as may
be required to provide Mortgagee with such security.

 

(v)                                 So
long as no Event of Default then exists (it being agreed that it is a condition
precedent to any waiver in the requirement to maintain a Security Deposit with

 

 

Landlord as set forth in this paragraph 5(d)
that no Event of Default exists) when the Investment Grade Criteria is
satisfied, the requirements of maintaining the Security Deposit shall be waived
by Landlord upon Tenant’s written request accompanied by evidence satisfactory
to Landlord of such investment grade ratings. 
Such Landlord’s waiver shall cease if Tenant or Guarantor no longer or
at any time does not satisfy the Investment Grade Criteria.  If after being granted a waiver the
Investment Grade Criteria is subsequently no longer met, Tenant’s obligation to
deposit and replenish and thereafter maintain such Security Deposit under this
Lease shall be re-instated, without further act, deed or notice; provided,
however, Tenant shall be afforded ten (10) Business Days after such cessation
of such waiver within which to deposit the Security Deposit with Landlord;
provided, further, Landlord shall again be required to waive Tenant’s
obligation to maintain such Security Deposit when Tenant shall have satisfied
the conditions precedent required for such waiver as set forth in the first
sentence of this subsection (v).

 

(vi)                              If a
transferee of Landlord’s right, title, and interest in and to the Premises,
this Lease, and such Security Deposit (a “Transferee”), shall have assumed in writing
Landlord’s obligations hereunder and recognized Tenant in writing, as tenant
under this Lease; (ii) Landlord, or such Transferee, shall have delivered
written evidence of such Transferee’s assumption and recognition as
aforesaid;  (iii) Landlord shall deliver
the cash Security Deposit (including any accrued but unpaid interest thereon to
which Tenant is entitled under this Lease) and/or the Letter of Credit, as
applicable, to any such Transferee of Landlord’s right, title, and interest as
aforesaid, the then-current landlord delivering such Security Deposit to such
Transferee shall be discharged from further liability therefor; provided,
however, if the immediately preceding conditions (i), (ii), and (iii) are not
satisfied, Tenant shall have no obligations hereunder to such Transferee solely
with respect to the Security Deposit (including any replenishment, replacement,
or transfer obligations) unless and until such conditions shall have been
satisfied and the then-current landlord shall have delivered the Security
Deposit to such Transferee.

 

(e)                                  Tenant
acknowledges and agrees that it was a condition precedent to Landlord entering
into this Lease that Landlord receive a guaranty of Tenant’s payment and
performance of all of Tenant’s obligations under this Lease (in such form as
approved by Landlord, the “Guaranty”) from Guarantor, which Guaranty
is being entered into contemporaneously with the execution of this Lease.  Tenant hereby represents and warrants to
Landlord as of the date hereof and covenants to Landlord that throughout the
Term of this Lease Tenant shall cause Guarantor to be bound by the terms of the
Guaranty to Landlord.

 

6.                                      TAXES

 

(a)                                  Tenant
shall pay, as Additional Rent, all Property Taxes prior to the assessment of
any interest or penalty for late payment (subject to Tenant’s rights under this
paragraph (a) to make payment thereof in installments or under paragraph 6(e)
below to protest Property Taxes); provided, however, if Landlord or Mortgagee
is holding Tenant’s estimated payments thereof pursuant to paragraph 6(f)
below, Landlord or Mortgagee shall instead make such payments timely upon
Tenant’s behalf; provided, further, if any such Property Taxes may legally be
paid in installments, Tenant may, at its option, pay such Property Taxes in
such installments together

 

 

with any interest due thereon provided that
Tenant shall have paid all such installments, or provided to Landlord or
Mortgagee, such amounts as are necessary for the payment of, all such
installments prior to the expiration or earlier termination of this Lease.  “Property Taxes” shall mean all taxes,
assessments, excises, levies, fees and charges (and any tax, assessment,
excise, levy, municipal service fee, fee or charge levied wholly or partly in
lieu thereof or as a substitute therefor or as an addition thereto) of every
kind and description, general or special, ordinary or extraordinary, foreseen
or unforeseen, secured or unsecured, whether or not now customary or within the
contemplation of Landlord and Tenant, that are levied, assessed, charged,
confirmed or imposed by any public or government authority on or against, or
otherwise with respect to, the Premises or any part thereof or any personal
property used in connection with the Premises, including Landlord’s franchise
taxes based upon gross receipts (or derivatives therof, specifically excluding,
however, net income) but only to the extent that such taxes are in lieu of or a
substitute for any Property Taxes. 
Property Taxes shall not include net income or inheritance taxes,
franchise taxes (to the extent not included in the definition of Property
Taxes), estate taxes of Landlord or any succession or transfer taxes growing
out of or levied in connection with this Lease, in each case, of Landlord,
unless levied or assessed against Landlord as a substitute for any Property
Taxes.

 

(b)                                 Tenant
shall pay, as Additional Rent, all Other Taxes prior to the assessment of any
interest or penalty for late payment (subject to Tenant’s rights under
paragraph 6(e) below to payment in installments or to protest Other Taxes);
provided, however, if Landlord or Mortgagee is holding Tenant’s estimated
payments thereof pursuant to paragraph 6(f) below, Landlord or Mortgagee shall
instead make such payments timely upon Tenant’s behalf; provided, further, if
any such Other Taxes may legally be paid in installments, Tenant may, at its
option, pay such Other Taxes in such installments together with any interest
due thereon provided that Tenant shall have paid, or provided to Landlord or
Mortgagee, such amounts as are necessary for the payment of,  all such installments prior to the
expiration or earlier termination of this Lease.  “Other Taxes” shall mean all taxes, assessments, excises,
levies, fees and charges, including all payments related to the cost or
occupation of providing facilities or services, whether or not now customary or
within the contemplation of Landlord and Tenant, that are levied, assessed,
charged, confirmed or imposed by any public or government authority upon, or
measured by, or reasonably attributable to (i) the Premises, (ii) the cost or
value of Tenant’s equipment, furniture, fixtures and other personal property
located in the Premises or the cost or value of any leasehold improvements made
in or to the Premises by or for Tenant, regardless of whether title to such
improvements is vested in Tenant or Landlord, (iii) any Rent payable under this
Lease, including any gross income tax or excise tax levied by any public or
government authority with respect to the receipt of any such Rent but only to
the extent that such taxes are in lieu of or a substitute for any Property
Taxes, (iv) the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or (v) this
transaction or any document to which Tenant is a party creating or transferring
an interest or an estate in the Premises. 
“Other Taxes” shall not include net income, or inheritance taxes of
Landlord unless levied or assessed against Landlord in whole or in part in lieu
of, as a substitute for, or as an addition to any Other Taxes.

 

 

(c)                                  Except
for any tax on the net income derived from the Fixed Rent, if at any time
during the Term, any method of taxation shall be such that there shall be
levied, assessed or imposed on the Landlord, or on the Fixed Rent or Additional
Rent, or on the Premises, or any portion thereof, a capital levy, gross
receipts tax, occupational license tax or other tax on the Rents received
therefrom, or a franchise tax, or an assessment, gross receipts levy or charge
measured by or based in whole or in part upon such gross Rents, Tenant, to the
extent permitted by law, covenants to pay and discharge the same, it being the
intention of the parties hereto that the Fixed Rent to be paid hereunder shall
be paid to Landlord absolutely net without deduction or charge of any nature
whatsoever, foreseeable or unforeseeable, ordinary or extraordinary, or of any
nature, kind, or description, except as otherwise expressly provided in this
Lease.

 

(d)                                 Tenant
covenants to furnish Landlord, within fifteen (15) days after request by
Landlord official receipts of the appropriate taxing authority, if any, or
other appropriate proof reasonably satisfactory to Landlord, evidencing the
payment of all Impositions.  The
certificate, advice or bill of the appropriate official designated by law to
make or issue the same or to receive payment of any Imposition may be relied
upon by Landlord as sufficient evidence that such Imposition is due and unpaid
at the time of making or issuance of such certificate, advice or bill.

 

(e)                                  Tenant
shall have the right to contest the amount or validity, in whole or in part, of
any Property Tax or Other Tax or to seek a reduction in the valuation of the
Premises as assessed for real estate property tax purposes by appropriate
proceedings diligently conducted in good faith (but only after payment of such
Tax).  Landlord shall not be required to
join in any proceeding referred to in this subparagraph (e) unless required by
law, in which event Landlord shall, upon written request by Tenant, join in
such proceedings or permit the same to be brought in its name, all at Tenant’s
expense.  Landlord agrees to provide, at
Tenant’s expense, whatever assistance Tenant may reasonably require in
connection with any such contest. 
Tenant covenants that Landlord shall not suffer or sustain any costs or
expenses (including counsel fees) or any liability in connection with any such
proceeding.  No such consent shall
subject Landlord to any civil liability or the risk of any criminal liability
or forfeiture.

 

(f)                                    During
the continuance of any Event of Default or as required by a Mortgagee, Tenant
shall pay to Landlord on the first day of each calendar month an amount equal
to one twelfth (1/12) of the Property Taxes and Other Taxes thereafter due and
payable, as reasonably estimated by Landlord on the basis of assessments and
bills and estimates thereof.  Such
amounts shall be held by Landlord or Mortgagee, without interest, and shall not
be deemed to be trust funds but shall not be commingled with the general funds
of Landlord and shall instead be held in a separate escrow account of Landlord
or Mortgagee, as applicable, opened and maintained for this Lease alone;
provided, however, to the extent so received, any Mortgagee which is an entity
unaffiliated with Landlord or any affiliate of Landlord, may commingle such
funds.  Landlord shall apply such
amounts paid by Tenant under this paragraph 6(f) (including any amounts
tendered by Tenant which are intended for interest if Tenant shall have elected
to make such payments in installments) to the payment before delinquency of the
Property Taxes and Other Taxes, subject to any rights of the Mortgagee
thereto.  Landlord and Mortgagee shall
make no charge for holding and applying such amounts.  If at any time the amount on deposit pursuant to

 

 

this paragraph 6(f) shall be less than
the amount reasonably deemed necessary by Landlord to pay such Property Taxes
or Other Taxes as they become due, Tenant shall pay to Landlord the amount
necessary to make the deficiency within five (5) Business Days after notice
from Landlord requesting payment thereof.

 

(g)                                 Landlord
will, within thirty (30) days after receipt, reimburse Tenant for any refund of
Property Tax or Other Tax received by Landlord or Mortgagee as a result of any
tax contest relating to the Term.

 

7.                                      NET LEASE; NON-TERMINABILITY

 

(a)                                  This
is an absolutely net lease and the Fixed Rent, Additional Rent and all other
sums payable hereunder by Tenant shall be paid without notice (except as
expressly provided herein), demand, set-off, counterclaim, abatement,
suspension, deduction or defense.  It is
the intention of the parties hereto that the Fixed Rent shall be an absolutely
net return to Landlord throughout the Term of this Lease.  In order that such Rent shall be absolutely
net to Landlord, Tenant shall pay when due, and save Landlord harmless from and
against, any and all costs, charges and expenses attributable to the Premises,
including each fine, fee, penalty, charge (including governmental charges),
assessments, sewer rent, Impositions, insurance premiums as may be required
from time to time by Landlord or Mortgagee, utility expenses, carrying charges,
costs, expenses and obligations of every kind and nature whatsoever, general
and special, ordinary and extraordinary, foreseen and unforeseen, the payment
for which Landlord or Tenant is, or shall become liable by reason of any rights
or interest of Landlord or Tenant in, to or under the Premises or this Lease or
in any manner relating to the ownership, leasing, operation, management,
maintenance, repair, rebuilding use or occupation of the Premises, or of any
portion thereof; provided, however, that nothing herein contained shall be
construed as imposing upon Tenant any obligation to pay any estate,
inheritance, succession, franchise (to the extent excluded as set forth in
Paragraph 6) or transfer tax of Landlord growing out of, or levied in
connection with, this Lease or the Landlord’s right or interest in the
Premises.

 

(b)                                 This
Lease shall not terminate, nor shall Tenant have any right to terminate this
Lease, except as expressly provided in paragraph 14, nor shall Tenant be entitled
to any abatement or reduction of Rent hereunder except as required by
paragraph 14, nor shall the obligations of Tenant under this Lease be
affected, by reason of (i) any damage to or destruction of all or any part of
the Premises from whatever cause; (ii) subject to paragraph 14, the
taking of the Premises or any portion thereof by condemnation, requisition or
eminent domain proceedings; (iii) the prohibition, limitation or restriction of
Tenant’s use of all or any part of the Premises, or any interference with such
use, (iv) any eviction by paramount title or otherwise, (v) Tenant’s
acquisition or ownership of all or any part of the Premises otherwise than as
expressly provided herein; (vi) any default on the part of Landlord under this
Lease, or under any other agreement to which Landlord and Tenant may be
parties; or (vii) any other cause whether similar or dissimilar to the
foregoing, any present or future law to the contrary notwithstanding.  It is the intention of the parties hereto
that the obligations of Tenant hereunder shall be separate and independent
covenants and agreements, that the Fixed Rent, the Additional Rent and all
other sums payable by Tenant hereunder shall continue to be payable in all
events and that the

 

 

obligations of Tenant hereunder shall
continue unaffected unless the requirement to pay or perform the same shall
have been terminated pursuant to any express provision of this Lease.  Tenant agrees that Tenant will not be
relieved of the obligations to pay the Fixed Rent or any Additional Rent in
case of damage to or destruction or a condemnation (except as expressly
provided in paragraph 14) of the Premises.

 

(c)                                  Tenant
agrees that it will remain obligated under this Lease in accordance with its
terms, and that it will not take any action to terminate, rescind or void this
Lease, notwithstanding (i) the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution or winding-up or other
proceeding affecting Landlord or its successor in interest, or (ii) any action
with respect to this Lease which may be taken by any trustee or receiver of
Landlord or its successor in interest or by any court in any such proceeding.

 

(d)                                 Tenant
waives all rights which may now or hereafter be conferred by law (i) to quit,
terminate or surrender this Lease or the Premises or any part thereof, or (ii)
to any abatement, suspension, deferment or reduction of the Fixed Rent,
Additional Rent or any other sums payable under this Lease, except as otherwise
expressly provided herein.

 

8.                                      SERVICES

 

Tenant shall, at Tenant’s sole cost and expense, supply the Premises
with electricity, heating, ventilating and air conditioning, water, natural
gas, lighting, replacement for all lights, restroom supplies, telephone
service, window washing, security service, janitor, pest control and disposal
services (including hazardous and biological waste disposal), and such other
services as Tenant determines to furnish to the Premises.  Landlord shall not be in default hereunder
or be liable for any damage or loss directly or indirectly resulting from, nor
shall the Fixed Rent or Additional Rent be abated or a constructive or other
eviction be deemed to have occurred by reason of, the installation, use or
interruption of use of any equipment in connection with the furnishing of any
of the foregoing services, any failure to furnish or delay in furnishing any
such services, whether such failure or delay is caused by accident or any
condition beyond the control of Landlord or Tenant or by the making of repairs
or improvements to the Premises, or any limitation, curtailment, rationing or
restriction on use of water, electricity, gas or any form of energy serving the
Premises, whether such results from mandatory governmental restriction or
voluntary compliance with governmental guidelines.  Tenant shall pay the full cost of all of the foregoing services
and all other utilities and services supplied to the Premises as Additional
Rent.

 

9.                                      REPAIRS AND MAINTENANCE; REPLACEMENT

 

(a)                                  At
all times on and after the Commencement Date to and including the date of the
termination of the Term, by lapse of time or otherwise, Tenant shall, at its
own sole cost and expense, keep the Premises in good order and in a condition
equal to or better than the condition existing as of the date hereof, subject
to ordinary wear and tear, except as repaired, rebuilt or altered as required
or permitted by this Lease (or, in the case of termination pursuant to
paragraph 14, as condemned).  Tenant
shall timely and properly maintain, repair and replace all

 

 

of the Premises and all its component parts,
including parking lot surface and stripes, all landscaping, mechanical systems,
electrical and lighting systems, plumbing and sewage systems, fixtures and
appurtenances, interior and exterior walls, roof, foundations, floor slabs,
columns and structural steel so as to preserve and protect the useful life,
utility and value of such components, and in all events so as to preserve the
effectiveness of any warranty relating thereto, such repairs and replacements
to be at least equal in quality and class to the original work.  If any building system or component shall
become obsolete, non-functional, or uneconomic to repair, Tenant shall remove
such item from the Premises and, promptly replace it with an item of comparable
initial value and function.  Promptly
upon installation of any equipment which is not Tenant Trade Fixtures, Tenant
shall deliver to Landlord the original warranty relating to such equipment
(which shall specify Landlord as the owner of the equipment and upon Landlord’s
receipt of such original warranty, Landlord shall be deemed to have granted
Tenant a non-exclusive license and authority of Landlord solely to enforce such
warranty during the Term of the Lease). 
Tenant shall deliver to Landlord a written statement showing all
removals and replacements of such systems or components during the preceding
calendar year, including manufacturers, model numbers, and serial numbers.  Except for Site Assessments as provided in
paragraph 26(d), Landlord may, upon ten (10) Business Days’ prior notice cause
independent private inspectors to make inspections of any building and building
systems on the Premises or segments thereof to determine Tenant’s compliance
under this paragraph 9.  Tenant
shall pay the cost of one (1) such inspection on the Premises by or on behalf
of Landlord once every two (2) calendar years; provided, however, if such
inspection by Landlord reveals that the Premises, or any portion thereof,
including any equipment thereon, is not in the condition required by this
Lease, then Tenant shall pay for such additional inspections performed by
Landlord through the inspection approving the condition of such Premises as
being in conformity with the Lease. 
Notwithstanding the foregoing requirements of this paragraph 9, Tenant
shall have no obligation to deliver any warranties for any Trade Fixtures at
the Premises which may and which are subsequently removed by Tenant upon
expiration or earlier termination of this Lease.

 

Landlord may, but is not required to, after five (5) Business Days
notice to Tenant (except in the case of emergency, in which case Tenant shall
be given notice contemporaneously with entry), enter the Premises and make such
repairs, alterations, improvements, additions, replacements or maintenance as
Landlord deems necessary to cure any Event of Default of Tenant hereunder which
remains uncured after the expiration of any notice and cure period provided
under this Lease, as applicable, in a diligent fashion, and Tenant shall pay
Landlord as Additional Rent forthwith (and in any event within thirty (30)
days) after being billed for same by Landlord the cost thereof plus an
administrative fee of five percent (5%) of such cost, which bill shall be
accompanied by reasonably supporting documentation.  Such amounts shall bear interest at the Overdue Rate from the
date of expenditure by Landlord to the date of repayment by Tenant at the
Overdue Rate.

 

(b)                                 It
is intended by Tenant and Landlord that Landlord shall have no obligation, in
any manner whatsoever, to repair or maintain the Premises (or any equipment
therein), whether structural or nonstructural, all of which obligations are
intended, as between Landlord and Tenant, to be those of Tenant.  Tenant expressly waives the benefit of any
statute now or in the future in effect which would otherwise afford Tenant the
right to make repairs at Landlord’s

 

 

expense or to terminate this Lease because of
Landlord’s failure to keep the Premises in good order, condition and
repair.  Notwithstanding the foregoing,
Landlord shall repair or restore the Premises to the extent such repairs or
restoration is necessitated by any act or omission of Landlord, its agents,
contractors or employees.

 

(c)                                  Tenant
shall maintain on the Premises, and turn over to Landlord upon expiration or
termination of this Lease, then current operating manuals and original
warranties (to the extent applicable) for the equipment then located on the
Premises specifically excluding, in all cases, Tenant’s Trade Fixtures at the
Premises which may be and which are subsequently removed by Tenant upon
expiration or earlier termination of this Lease.

 

10.                               DESTRUCTION OF OR DAMAGE TO PREMISES

 

If the Premises is damaged by fire or other casualty during the Term of
this Lease, Tenant shall (a) repair such damage and restore the Premises to
substantially the same or better condition as existed before the occurrence of
such fire or other casualty using materials of the same or better grade than
that of the materials being replaced (herein, a “Casualty Repair”) and this
Lease shall remain in full force and effect. 
Such repair and replacement by Tenant shall be done in accordance with
paragraph 23 and the standards of paragraph 9 and Tenant shall, at its expense,
obtain all permits required for such work. An architect or engineer selected by
Landlord shall review, at Tenant’s expense, all plans and specifications and
all draw requests hereunder.  In no
event shall Fixed Rent or Additional Rent abate, nor shall this Lease terminate
by reason of such damage or destruction. 
Provided that no Event of Default by Tenant shall then exist under this
Lease (and no event has occurred which, with the passage of time, the giving of
notice, or both, would constitute an Event of Default), and provided Tenant
has:  (i) delivered to Landlord
plans and specifications and a budget for such Casualty Repair (all of which
Landlord shall have approved), and (ii) deposited with Landlord or the Proceeds
Trustee cash in the sum equal to the excess, if any, of the total cost set
forth in such approved budget over the amount of insurance proceeds received on
account of such casualty, then to the extent such proceeds are available to
Landlord from Mortgagee, Landlord shall make available to Tenant all insurance
proceeds actually received by Landlord on account of such casualty, for
application to the costs of such approved repair and restoration, as set forth
below.

 

For all Casualty Repairs, the following apply:

 

As used herein the “Casualty Threshold” means $250,000;
provided, however, that if Tenant or Guarantor, at the time of such fire or
casualty, has a Credit Rating of “BBB+” or higher from S&P and “Baa1” or
higher from Moody’s, then the “Casualty Threshold” shall be $1,000,000.  If the Net Casualty Proceeds are less than
the Credit Threshold at the time of the applicable fire or other casualty, such
Net Casualty Proceeds shall be paid to Tenant to apply to the cost of
restoration.  If the Net Casualty Proceeds
are equal to or greater than the Casualty Threshold at the time of the
applicable fire or other casualty, such Net Casualty Proceeds shall be paid to
the Proceeds Trustee (herein called the “Restoration Fund”) for release to Tenant as
restoration progresses, subject to and in accordance with paragraph 23(c).  If Landlord mortgages the Premises with a
Mortgage, the Mortgagee thereunder may, at its option be appointed

 

 

Proceeds Trustee for so long as such Mortgage
remains outstanding and such Mortgagee does not control Landlord or is not controlled
by or under common control with Landlord. 
Insurance proceeds shall be deposited in an interest bearing account and
interest shall be distributed to Tenant upon completion of said installation,
repair, replacement or rebuilding, provided no default has occurred and is
continuing hereunder.  All checks drawn
on said account shall be signed by the Proceeds Trustee.  Insurance proceeds shall be disbursed to
Tenant by the Proceeds Trustee under the following procedure:

 

(i)                                     No
more frequently than once per calendar month, Tenant may request that Landlord
reimburse Tenant out of such insurance proceeds for costs incurred by Tenant
for work in place to repair and restore the damaged Premises during the
immediately preceding calendar month. 
Tenant’s request shall certify that all work for which reimbursement is
requested was performed in compliance with the plans and specifications
approved by Landlord pursuant to paragraph 23 and all applicable laws, and
shall include reasonably satisfactory evidence of the costs incurred by Tenant
and unconditional partial (as to the amount received compared to percentage
completion) or final lien releases, as applicable, in form and substance
required by applicable law executed by all mechanic’s, materialmen, laborers,
suppliers and contractors who performed any portion of the repair work or
supplied materials; and

 

(ii)                                  Within
fifteen (15) days after receiving Tenant’s request, Landlord shall approve or
disapprove Tenant’s request, which approval shall not be unreasonably withheld,
delayed, or conditioned by written notice to Tenant.  If Landlord approves all or any portion of a request and Landlord
has received (and not previously disbursed) insurance proceeds for such costs,
then Landlord’s approval shall include a check in the amount approved by
Landlord.  If Landlord disapproves all
or any portion of a request, then Landlord’s notice shall state the reasons for
that disapproval.  Landlord’s failure to
deliver a notice approving or disapproving a request shall be conclusively
deemed Landlord’s disapproval of the request.

 

11.                               INSURANCE, HOLD HARMLESS AND INDEMNIFICATION

 

(a)                                  To
the fullest extent permitted by law, Landlord shall not be liable to Tenant for
any damage to or loss or theft of any property or for any bodily or personal
injury, illness or death of any person in, on or about the Premises arising at
any time and from any cause whatsoever, except to the extent such liability
arises out of any act or omission of Landlord, its agents, employees or
contractors.  Tenant waives all claims
against Landlord arising from any liability described in this
paragraph 11(a).

 

(b)                                 Except
to the extent such liability arises out of the acts or omissions of Landlord,
its agents, employees or contractors, Tenant hereby agrees to indemnify and
defend Landlord against and hold Landlord harmless from all claims, demands,
liabilities, damages, losses, costs and expenses, including attorneys’ fees and
disbursements, arising from or related to any use or occupancy of the Premises,
or any condition of the Premises, or any default in the performance of Tenant’s
obligations hereunder, or any damage to any property (including property of
employees and invitees of Tenant) or any bodily or personal injury, illness or
death of any person (including employees and invitees of Tenant) occurring in,
on or about the Premises or any part

 

 

thereof or any part of the building or the
land constituting a part of the Premises arising at any time and from any cause
whatsoever or occurring outside the Premises when such damage, bodily or
personal injury, illness or death is caused by any act or omission of Tenant or
its agents, officers, employees, contractors, invitees or licensees.  This paragraph 11(b) shall survive the
termination of this Lease with respect to any damage, bodily or personal
injury, illness or death occurring prior to such termination.

 

(c)                                  Tenant
shall, at all times and during the term of this Lease and at Tenant’s sole cost
and expense, obtain and keep in force comprehensive commercial general
liability insurance, including contractual liability (specifically covering
this Lease), cross liability, fire legal liability, and premises operations,
all on an “occurrence” policy form, with a minimum combined single limit in the
amount of Thirty Million Dollars ($30,000,000) per occurrence for bodily or
personal injury to, illness of, or death of persons and damage to property
occurring in, on or about the Premises, and such insurance shall name the
Landlord, any Mortgagee, and any other parties designated by Landlord as
additional insureds.  Tenant shall, at
Tenant’s sole cost and expense, be responsible for insuring Tenant’s furniture,
equipment, fixtures, computers, office machines and personal property.

 

(d)                                 Tenant
shall, at all times during the term of this Lease and at Tenant’s sole cost and
expense, obtain and keep in force worker’s compensation and employer’s
liability insurance in New York State.

 

(e)                                  Tenant
shall, at all times during the Term of this Lease, at Tenant’s sole cost and
expense, obtain and keep in force or reimburse Landlord for the cost of (a)
insurance against loss (including terrorism, earthquake and flood) or damage to
the Premises by fire and all other risks of physical loss (including earthquake
and flood) covered by insurance of the type now known as “all risk,” with
difference in conditions coverage, in an amount not less than the full
replacement cost of the Premises (without deduction for depreciation),
including the cost of debris removal and such endorsements as Landlord may
reasonably require, and containing “Replacement Cost” and “Agreed Amount”
endorsements; (b) boiler and machinery insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping, heating, ventilation and air
conditioning equipment, and elevator and escalator equipment, provided the
Premises contain equipment of such nature and insurance against loss of
occupancy or use arising from any breakdown of any such items, in such amounts
as Landlord may reasonably determine; (c) business interruption insurance
insuring that the Fixed Rent will be paid to Landlord for up to one year if the
Premises are destroyed or rendered untenantable by any cause insured against
(it being understood that the existence of such insurance does not reduce
Tenant’s obligation to pay Fixed Rent without diminution), and in the event of
termination of this Lease due to any such insured cause, pay to Landlord one
year’s Fixed Rent; and (d)  insurance in amounts and against such
other risks as Landlord or Mortgagee may reasonably require and against such
risks as are customarily insured against by operators of similar properties.

 

(f)                                    All
insurance required to be maintained by Tenant under this paragraph 11 and all
renewals thereof shall be issued by good and responsible companies qualified to
do and doing business in the state where the Premises are located and having an
S&P claims paying ability

 

 

rating of at least “A” and shall be
reasonably satisfactory to Landlord. 
All deductible amounts shall not exceed $100,000 under each such
insurance policy.  Each policy to be
maintained by Tenant shall expressly provide that the policy shall not be
canceled or altered without thirty (30) days’ prior written notice to Landlord
and Mortgagee and shall remain in effect notwithstanding any such cancellation
or alteration until such notice shall have been given to Landlord and such
period of thirty (30) days shall have expired. 
All insurance under this paragraph 11 to be maintained by Tenant shall
designate Landlord, Mortgagee, and any other parties designated by Landlord as
an additional insured and loss payee, shall be primary and noncontributing with
any insurance which may be carried by Landlord, shall afford coverage for all
claims based on any act, omission, event or condition that occurred or arose
(or the onset of which occurred or arose) during the policy period, and shall
expressly provide that Landlord, although named as an additional insured, shall
nevertheless be entitled to recover under the policy for any loss, injury or
damage to Landlord.  Tenant may carry
such insurance under “blanket” policies, provided such policies expressly
reserve an amount of coverage for the Premises equal to the amount required by
this Lease.  Upon the issuance of each
such policy to be maintained by Tenant, Tenant shall deliver a certificate
thereof (Acord 27 form) to Landlord for retention by Landlord.  Tenant shall pay to Landlord, immediately
upon demand all costs incurred by Landlord, as Additional Rent, to obtain and
maintain in effect the policies of insurance required under this paragraph 11
or otherwise required by Landlord.

 

(g)                                 Landlord
and Tenant, as applicable, either prior to or immediately after the
Commencement Date, procure from each of their respective insurers providing the
insurance required by this paragraph 11, a waiver of all rights of subrogation
which such insurer might otherwise, if at all, have to any claims against
Landlord or Tenant, as applicable.

 

(h)                                 During
the continuance of any Event of Default or as required by a Mortgagee, Tenant
shall pay to Landlord on the first day of each calendar month an amount equal
to one twelfth (1/12) of the premiums for the insurance required by this
paragraph 11, as reasonably estimated by Landlord on the basis of bills and
estimates thereof.  If such premium
payments shall have been made by Tenant, such amounts shall be held by Landlord
or Mortgagee, without interest, and shall not be deemed to be trust funds and
may be commingled with the general funds of Landlord or Mortgagee.  Landlord shall apply such amounts to the
payment of the insurance premiums with respect to which such amounts were paid,
subject to any rights of Mortgagee thereto. 
Landlord and Mortgagee shall make no charge for holding and applying
such amounts.  If at any time the amount
on deposit pursuant to this paragraph 11(h) shall be less than the amount
deemed necessary by Landlord to pay such premiums as they become due, Tenant
shall pay to Landlord the amount necessary to make the deficiency within five
(5) days after notice from Landlord requesting payment thereof.  Upon the expiration or termination of the
term of this Lease (other than as a result of an Event of Default), Landlord
shall promptly refund, and cause its Mortgagee to refund, to Tenant any amount
held by Landlord pursuant to this paragraph.

 

 

12.                               COMPLIANCE WITH LAWS, COVENANTS

 

Tenant shall throughout the Term promptly comply or cause compliance
with or remove or cure any violation of any and all present and future laws
including the Americans with Disabilities Act of 1990, as the same may be
amended from time to time, ordinances (zoning or otherwise), orders, rules,
regulations and requirements of all Federal, State, municipal and other
governmental bodies having jurisdiction over the Premises and the appropriate
departments, commissions, boards and officers thereof, and the orders, rules
and regulations of the Board of Fire Underwriters where the Premises are
situated, or any other body now or hereafter constituted exercising lawful or
valid authority over the Premises (collectively, “Legal Requirements”), or any
portion thereof, or the sidewalks, curbs, roadways, alleys or entrances
adjacent or appurtenant thereto, or exercising authority with respect to the
use or manner of use of the Premises, or such adjacent or appurtenant
facilities, and whether the compliance, curing or removal of any such violation
and the costs and expenses necessitated thereby shall have been foreseen or
unforeseen, ordinary or extraordinary, and whether or not the same shall be
presently within the contemplation of Landlord or Tenant or shall involve any
change in governmental policy, or require structural or extraordinary repairs,
alterations or additions by Tenant and irrespective of the amount of the costs
thereof.  Tenant, at its sole cost and
expense, shall comply with all agreements, contracts, easements, restrictions,
reservations or covenants, if any, running with the land or hereafter created
by Tenant or consented to, in writing, by Tenant or requested, in writing, by
Tenant.  Tenant shall also comply with,
observe and perform all provisions and requirements of all policies of
insurance at any time in force with respect to the Premises and required to be
obtained and maintained by Tenant under the terms of paragraph 11 hereof and
shall comply with all development permits issued by governmental authorities
issued in connection with development of the Premises; provided, however,
Landlord agrees, upon request of Tenant, to sign promptly and without a charge
therefor (except as provided in the final sentence of this subparagraph) any
applications or filings (1) for such licenses and permits as may be required by
Legal Requirements for the conduct, operation or restoration of the Premises
and the business to be conducted therein in accordance with the terms hereof,
and (2) the maintenance of the existing zoning for each Site to continue to
permit Tenant’s use thereof, in both cases where the signature of Landlord is
required by Legal Requirements in force at the time.  All costs incurred by Landlord in connection with obtaining any
such licenses and permits and zoning matters shall be borne by Tenant.

 

If Tenant shall at any time fail to pay any Imposition in accordance
with the provisions of paragraphs 6 or 26, or to take out, pay for, maintain
and deliver any of the insurance policies or certificates of insurance provided
for in paragraph 11, or shall fail to make any other payment or perform any
other act on its part to be made or performed hereunder, then Landlord, after
five business (5) days prior written notice to Tenant (or without notice in
situations where Landlord determines that delay is likely to cause harm to
Landlord’s interest in the Premises), and without waiving or releasing Tenant
from any obligation of Tenant contained in this Lease, may, but shall be under
no obligation to do so,

 

(i)                                     pay
any Imposition payable by Tenant pursuant to this Lease; or

 

(ii)                                  make
any other payment or perform any other act on Tenant’s part to be paid or
performed hereunder which Tenant shall not have performed within the time
required

 

 

therefor, except that any time permitted to
Tenant to perform any act required by this paragraph shall be extended for such
reasonable period not to exceed one hundred eighty (180) days as may be
necessary to effectuate such performance, provided throughout such time Tenant
is continuously, diligently and in good faith prosecuting such performance.

 

Landlord may enter upon the Premises for any such cure purpose set
forth in this paragraph 12 and take all such action in or on the Premises
as may be necessary therefor pursuant to this paragraph 12.  All sums, reasonable under the
circumstances, actually so paid by Landlord and all costs and expenses,
including attorney’s fees, incurred by Landlord in connection with the
performance of any such act, together with interest thereon at the Overdue Rate
and an administrative fee equal to five percent (5%) of all such costs and
expenses, shall be paid by Tenant to Landlord on demand and submission of
reasonable evidence of such expenditures. 
Landlord shall not be limited in the proof of any damages which Landlord
may claim against Tenant arising out of or by reason of Tenant’s failure to
provide and keep in force insurance as aforesaid, to the amount of the
insurance premium or premiums not paid or incurred by Tenant, and which would
have been payable upon such insurance, but Landlord shall also be entitled to
recover, as damages for such breach, the uninsured amount of any loss, damages,
costs and expenses of suit, including attorney’s fees, suffered or incurred by
reason of damage to or destruction of the Premises, or any portion thereof or
other damage or loss which Tenant is required to insure against hereunder,
occurring during any period when Tenant shall have failed or neglected to
provide insurance as aforesaid.

 

13.                               PARTIAL TAKING

 

If less than substantially all of the Premises shall be taken for
public or quasi-public purposes, Tenant will promptly, at its sole cost and
expense, restore, repair, replace or rebuild the improvements so taken in
conformity with the requirements of paragraph 9 as nearly as practicable to the
condition, size, quality of workmanship and market value thereof immediately
prior to such taking, without regard to the adequacy of any condemnation award
for such purpose.  There shall be no
abatement of Rent during such period of restoration.  In performing its obligations, Tenant shall be entitled to all
condemnation proceeds available to Landlord for restoration or repair of the
Premises under the same terms and conditions for disbursement set forth for
casualty proceeds in paragraph 10 hereof, including such proceeds being made
available by Mortgagee.  Tenant shall,
at its sole cost and expense, negotiate and, if necessary, litigate, the amount
of the award, and Landlord shall have the right to participate in such process,
and if Tenant fails to diligently prosecute such efforts, Landlord may take
control of the process.  Any condemnation
proceeds in excess of the amounts as are made available to Tenant for
restoration or repair of the Premises, shall be the sole and exclusive property
of Landlord.  Tenant shall have the
right to participate in condemnation proceedings with Landlord, and shall be
entitled to receive any award made by the condemning authority in respect of
business loss or, if available, business relocation and any other claim
permitted by law which does not, in any such case, diminish Landlord’s
recovery.

 

 

14.                               SUBSTANTIAL TAKING

 

If all or substantially all of the Premises shall be taken for public
or quasi-public purposes, and if Tenant determines that such event has rendered
the Premises unavailable for use or unsuitable for restoration for continued
use and occupancy in Tenant’s business, then Tenant, in lieu of rebuilding as
contemplated by paragraph 13, shall, not later than 90 days after such
occurrence (including a final determination of the condemnation award
associated therewith), deliver to Landlord (i) notice of its intention to
terminate this Lease on a date occurring not more than 180 days nor less than
90 days after such notice (the “Termination Date”), (ii) a certificate by
the president or a vice president of Tenant describing the event giving rise to
such termination, stating that such event has rendered the Premises unavailable
for use or unsuitable for restoration for continued use and occupancy in
Tenant’s business and that such termination will not violate any operating
agreement or covenant then in effect, and (iii) an irrevocable offer to
purchase any remaining portion of the Premises and the related condemnation
award at a price equal to the greater of (x) $14,800,000.00 plus any prepayment
premium or breakage fees charged by Mortgagee, or (y) the fair market value (as
determined in accordance with Exhibit E) of the Premises, considered as
encumbered by this Lease including assuming all Extension Terms have been
exercised by Tenant and considered as not having been the subject of a
condemnation.  Notwithstanding the foregoing,
in no event shall the final determination of the condemnation award exceed
$16,280,000.00.  Landlord shall accept
or reject such offer by notice given to Tenant not later than thirty (30) days
after receipt of Tenant’s notice, and if Landlord fails to act, it shall be
deemed to have accepted the offer.  If
Landlord shall have accepted such offer or is deemed to have accepted such
offer, (1) on the Termination Date, Landlord shall convey by special or limited
warranty deed to Tenant any remaining portion of the Premises in accordance
with paragraph 29, along with the right to receive any related
condemnation award to which Landlord is entitled, (2) this Lease shall no
longer apply to the Premises as of the Termination Date, except for liabilities
which accrued prior thereto related to the Premises, (3) Landlord and Tenant
shall execute a termination to this Lease confirming the foregoing, which
termination shall be prepared by or on behalf of Landlord, and (4) Tenant shall
pay all of Landlord’s costs and expenses (including attorney’s fees and
expenses) related to all of the foregoing. 
If Landlord rejects such offer, as of the Termination Date, (1) this
Lease shall no longer apply to the Premises, except for liabilities which
accrued prior thereto related to the Premises, (2) Landlord and Tenant shall
execute a termination of this Lease confirming the foregoing, which termination
shall be prepared by or on behalf of Landlord, and (3) Tenant shall pay all of
Landlord’s costs and expenses (including attorney’s fees and expenses) related
to all of the foregoing.

 

15.                               DEFAULT: 
EVENTS OF DEFAULT

 

The occurrence of any one or more of the following events (“Event of
Default”) shall constitute a breach of this Lease by Tenant:

 

(a)                                  Tenant
fails to pay any Fixed Rent as and when such Fixed Rent becomes due, and such
failure continues for five (5) days after written notice thereof, provided that
if Tenant is more than five (5) days late in the payment of Fixed Rent once in
any twelve (12) consecutive

 

8

 

month period, only one notice need be given
by Landlord during such 12 month period and any subsequent failure to pay Fixed
Rent on or before its due date within such twelve (12) consecutive months shall
constitute an Event of Default after five (5) days without notice; or

 

(b)                                 Tenant
fails to pay any Additional Rent as and when such Additional Rent becomes due
and payable and such failure continues for more than ten (10) days after
Landlord gives written notice thereof to Tenant; or

 

(c)                                  An
Event of Default occurs under paragraph 25, subletting/assignment; or

 

(d)                                 Tenant
fails to perform or breaches any agreement or covenant of this Lease not
separately covered in this paragraph 15 to be performed or observed by Tenant
as and when performance or observance is due and such failure or breach
continues for more than thirty (30) days after Landlord’s giving written notice
thereof to Tenant; provided, however, that if, by the nature of such agreement
or covenant, such failure or breach cannot reasonably be cured within such
period of thirty (30) days, an Event of Default shall not exist as long as
Tenant commences with due diligence and dispatch the curing of such failure or
breach within such period of thirty (30) days and, having so commenced,
thereafter prosecutes with diligence and dispatch and completes the curing of
such failure or breach within a reasonable time not to exceed one hundred
eighty (180) days; or

 

(e)                                  Tenant
(i) files, or consents by answer or otherwise to the filing against Tenant of,
a petition for relief or reorganization or arrangement or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy,
insolvency or other debtors’ relief law of any jurisdiction, (ii) makes an
assignment for the benefit of Tenant’s creditors, (iii) consents to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of Tenant or of any substantial part of Tenant’s property, or (iv) takes
action for the purpose of any of the foregoing; or

 

(f)                                    A
court or government authority enters an order, and such order is not vacated
within sixty (60) days, (i) appointing a custodian, receiver, trustee or other
officer with similar powers with respect to Tenant or with respect to any
substantial part of Tenant’s property, or (ii) constituting an order for relief
or approving a petition for relief or reorganization or arrangement or any
other petition in bankruptcy, insolvency or other debtors’ relief law of any
jurisdiction, or (iii) ordering the dissolution, winding-up or liquidation of
Tenant; or

 

(g)                                 Any
event occurs which is specifically stated to be an Event of Default under this
Lease; or

 

(h)                                 An
event of default shall occur under any loan agreement or indenture of Tenant or
Guarantor securing an amount in excess of $10,000,000 and which event of
default causes the lenders under such loan agreement or indenture to exercise
the right to accelerate the debt secured thereby.  Tenant shall promptly give notice of any such acceleration to
Landlord; or

 

(i)                                     Any
representation or warranty of Tenant contained in any writing delivered to
Landlord shall have been materially and adversely false as of the date it was
made; or

 

 

(j)                                     This
Lease or any estate of Tenant hereunder is levied upon under any attachment or
execution and such attachment or execution is not vacated within sixty (60)
days; or

 

(k)                                  Tenant
shall abandon the Premises for one hundred eighty (180) days.  Landlord and Tenant agree that no portion of
the Premises shall be deemed to be abandoned if during such period of
abandonment, Tenant shall continue to pay Rent and maintain the Premises in
accordance with this Lease and if such portion of the Premises (i) is included
in security procedures involving maintaining at least one (1) person at such
portion of the Premises at all times, (ii) daily inspections are made to such
portions of the Premises (which inspections may be made by the security
personnel), and (iii) one (1) such portion of the Premises is otherwise in
compliance with the terms of this Lease; or

 

(l)                                     Any
judgment or order for the payment of money in excess of $10,000,000 shall be
rendered against Tenant or Guarantor and not paid within thirty (30) days after
the rendering of a final non-appealable determination that Tenant or Guarantor
is liable for such payment; or

 

(m)                               Tenant
fails to pay any insurance premiums when due or otherwise fails to continuously
maintain all insurance required to be maintained by Tenant in accordance with
the terms and conditions of this Lease; or

 

(n)                                 Guarantor
defaults in its obligations under the Guaranty.

 

Landlord may treat the occurrence of any one or more of the foregoing
Events of Default as a breach of this Lease. 
For so long as such Event of Default continues, Landlord, at its option
and with or without notice or demand of any kind to Tenant or any other Person,
may have any one or more of the remedies provided in this Lease, in addition to
all other remedies and rights provided at law or in equity.

 

16.                               REMEDIES

 

Upon the occurrence of an Event of Default, Landlord shall, in addition
to, and not in derogation of any remedies for any preceding breach, with or
without notice of demand (except as otherwise expressly provided herein) and
without limiting Landlord in the exercise of any right or remedy which Landlord
may have by reason of such Event of Default have all of the following remedies
available:

 

(a)                                  Landlord
shall have the right to terminate Tenant’s right to possession of the Premises
and repossess the Premises by any lawful means without terminating this
Lease.  Landlord shall use good faith
and reasonably prompt efforts, to the extent required by applicable law of the
state where the Premises are located, to re-let the Premises for the account of
Tenant for such rent and upon such terms as may be satisfactory to
Landlord.  For the purposes of that
re-letting, Landlord may repair, and perform normal remodeling and alterations
to the Premises.  If Landlord fails to
re-let the Premises, Tenant shall pay to Landlord the Rent in this Lease for
the balance of the Term as those amounts become due in accordance with the
terms of this Lease.  If Landlord
re-lets the Premises, but fails to realize a sufficient sum from the re-letting
to pay the full amount of Rent in this Lease for the balance of the Term as
those amounts become due in

 

 

accordance with the terms of this Lease,
after paying all of the costs and expenses of all normal and customary
decoration, repairs, remodeling, alterations and additions and the expenses of
the re-letting and of the collection of the rent accruing from the re-letting,
Tenant shall pay to Landlord the amount of any deficiency upon Landlord’s
demand from time to time made.

 

(b)                                 Landlord
shall have the right at any time to give a written termination notice to Tenant
and, on the date specified in such notice, Tenant’s right to possession shall
terminate and this Lease shall terminate. 
Upon such termination, Landlord shall have the right to recover from
Tenant:

 

(i)                                     The
worth at the time of determination of all unpaid Rent which had been earned at
the time of termination;

 

(ii)                                  The
worth at the time of determination of the amount of all unpaid Rent for the
balance of the then-Term of this Lease after the time of termination excluding
the potential Lease term under any unexercised options for any Extension Terms
reduced only to the extent of net rental proceeds actually received from any
subsequent replacement tenant(s) for the Premises; provided, however, except to
the extent the Premises’ state statutes or common law requires Landlord to
mitigate its damages arising from an Event of Default by Tenant under this
Lease, from and after any such Event of Default, Landlord shall have no duty to
mitigate its damages by re-letting, or attempting to re-let, the Premises to
any replacement tenant(s); and

 

(iii)                               All
other amounts necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform all of Tenant’s obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom.  The “worth at the
time of determination” of the amounts referred to in clause (i) above shall be
computed by allowing interest at the Overdue Rate.  The “worth at the time of determination” of the amount referred
to in clause (ii) above shall be computed by discounting such amount to present
value by using the discount rate equal to the then Treasury Rate.  For the purpose of determining unpaid Rent
under clause (i) and (ii) above, the Rent reserved in this Lease shall be deemed
to be the total Rent payable by Tenant under paragraph 5 hereof.

 

(c)                                  Even
though Tenant has breached this Lease, this Lease shall continue in effect for
so long as Landlord does not terminate Tenant’s right to possession, and
Landlord shall have the right to enforce all its rights and remedies under this
Lease, including the right to recover all Rent as it becomes due under this
Lease.  Acts of maintenance or
preservation or efforts to relet the Premises or the appointment of a receiver
upon initiative of Landlord to protect Landlord’s interest under this Lease
shall not constitute a termination of Tenant’s right to possession unless
written notice of such termination is given by Landlord to Tenant.  Landlord shall have unrestricted rights of
entry for such purposes following an Event of Default.  Landlord shall be entitled to an
administrative fee of five percent (5%) of all amounts expended under this
paragraph 16.

 

(d)                                 All
agreements and covenants to be performed or observed by Tenant under this Lease
shall be at Tenant’s sole cost and expense and without any abatement of Fixed
Rent or

 

 

Additional Rent.  If Tenant fails to pay any sum of money to be paid by Tenant or
to perform any other act to be performed by Tenant under this Lease as and when
due or required to be performed, Landlord shall have the right, but shall not
be obligated, and without waiving or releasing Tenant from any obligations of
Tenant, to make any such payment or to perform any such other act on behalf of
Tenant in accordance with this Lease. 
All sums so paid by Landlord and all necessary incidental costs shall be
deemed Additional Rent hereunder and shall be payable by Tenant to Landlord on
demand, together with interest on all such sums from the date of expenditure by
Landlord to the date of repayment by Tenant at the Overdue Rate.  Landlord shall have, in addition to all
other rights and remedies of Landlord, the same rights and remedies in the
event of the nonpayment of such sums (plus interest at the Overdue Rate) by
Tenant as in the case of default by Tenant in the payment of Rent.

 

(e)                                  Intentionally
omitted.

 

(f)                                    If
Tenant abandons or surrenders the Premises, or any portion thereof, or an Event
of Default by Tenant pursuant to paragraph 15(k) above shall have occurred, or
Tenant is dispossessed by process of law or otherwise, any movable furniture,
equipment, trade fixtures or personal property belonging to Tenant and left in
the Premises, or any portion thereof, shall be deemed to be abandoned, at the
option of Landlord, and Landlord shall have the right to sell or otherwise
dispose of such personal property in any commercially reasonable manner.  If Tenant abandons the Premises, or any
portion thereof, Landlord shall have the right, but not the obligation, to
sublet the Premises, or any portion thereof, on reasonable terms for the
account of Tenant, and Tenant shall be liable for all costs of such subletting,
including the cost of preparing the Premises, or any portion thereof, for
subtenants and leasing commissions paid to brokers.

 

(g)                                 If
any Event of Default has occurred, then Landlord may serve upon Tenant a
written five-day notice of cancellation and termination of this Lease.  Upon the expiration of such five-day period,
this Lease and the Term shall automatically and without any action by anyone
terminate, expire and come to an end, by the mere lapse of time, as fully and
completely as if the expiration of such five-day period were the Expiration
Date and the last day of the Term as originally defined in this Lease.  The passage of such five-day period
constitutes the limit beyond which Tenant’s tenancy no longer exists.  Upon the mere occurrence of the passage of
five days following Landlord’s notice, this Lease shall automatically expire by
its express terms, and no re-entry or other act shall be necessary to terminate
this Lease.  Tenant shall then quit and
surrender the Premises to Landlord. 
Tenant shall, however, remain liable as this Lease provides.  The termination of this Lease shall in no
way limit Tenant’s liability under this Lease. 
It is a conditional limitation of this Lease that the Term shall
terminate and expire as set forth in this paragraph.  This paragraph is intended to establish a conditional limitation
and not a condition subsequent.  This
paragraph does not limit any other right or remedy of Landlord.

 

(h)                                 Tenant
hereby expressly waives the right of redemption provided for in New York Real
Property Actions and Proceedings Law section 761, and any similar or
successor statute.

 

 

17.                               SUBORDINATION

 

(a)                                  Subordination,
Non-Disturbance.  Tenant agrees at
any time hereafter, and from time to time within ten (10) days of written
request of Landlord, to execute and deliver to Landlord at Landlord’s election
either (1) an instrument in the form customarily used by any institutional
investor becoming a Mortgagee or (2) a subordination, non-disturbance and
attornment agreement substantially in the form attached hereto as Exhibit D
(in either such case, such instrument, release, document, or agreement is herein
called the “Subordination, Non-Disturbance and Attornment Agreement”), in
either case subjecting and subordinating this Lease to the lien of any
Mortgage, which at any time may be placed upon the Premises, or any portion
thereof, by Landlord, and to any replacements, renewals, amendments,
consolidations, modifications, extensions or refinancing thereof.  It is agreed, nevertheless, that so long as
there exists no Event of Default, such Subordination, Non-Disturbance and
Attornment Agreement shall not interfere with, hinder or reduce Tenant’s right
to quiet enjoyment under this Lease, nor the right of Tenant to continue to
occupy the Premises, and all portions thereof, and to conduct its business
thereon in accordance with the covenants, conditions, provisions, terms and
agreements of this Lease.  The costs of
preparing and recording such document shall be borne by Landlord, but Tenant
shall be responsible for its own counsel fees.

 

(b)                                 Mortgagee
Protection Clause.  In the event of
any act or omission of Landlord constituting a default by Landlord, Tenant
shall not exercise any remedy until Tenant has given Landlord and any Mortgagee
of the Premises written notice of such act or omission, and until a reasonable
period of time (not less than 10 Business Days) to allow Landlord or the
Mortgagee to remedy such act or omission shall have elapsed following receipt
of such notice.  However, if such act or
omission cannot, with due diligence and in good faith, be remedied within such
period or cannot be cured simply by the payment of money, the Landlord and the
Mortgagee shall be allowed such further period of time as may be reasonably
necessary provided that it commences remedying the same with due diligence and
in good faith and thereafter diligently prosecutes such cure, provided such
cure period shall not extend beyond 270 days after the notice of such
default.  Nothing herein contained shall
be construed or interpreted as requiring any Mortgagee receiving such notice to
remedy such act or omission.

 

(c)                                  Attornment.  If any Mortgagee shall succeed to the rights
of Landlord under this Lease or to ownership of the Premises, whether through
possession or foreclosure or the delivery of a deed to the Premises in lieu of
foreclosure, then such Mortgagee shall automatically be deemed to have
recognized this Lease and to assume the obligations of Landlord hereunder
accruing on and after the date such Mortgagee acquired title to the Premises
(including the obligation to cure any Landlord defaults then remaining uncured
under this Lease), and Tenant shall attorn to and recognize such Mortgagee as
Tenant’s landlord under this Lease and shall promptly execute and deliver any
instrument consistent with the Subordination, Non-Disturbance and Attornment
Agreement that such Mortgagee may reasonably request to evidence such
attornment (whether before or after the making of the Mortgage).  In the event of any other transfer of
Landlord’s interest hereunder, such transferee shall automatically be deemed to
have recognized this Lease and to assume the obligations of Landlord hereunder
accruing on and after the date of such transfer, Tenant shall attorn to and
recognize such transferee as Tenant’s landlord under this Lease and shall
promptly execute and deliver any instrument consistent with

 

 

the Subordination, Non-Disturbance and
Attornment Agreement that such transferee and Landlord may reasonably request
to evidence such attornment.

 

(d)                                 Acknowledgment.  Upon ten (10) days’ advance written notice,
Tenant agrees to execute, acknowledge and deliver a document acknowledging the
assignment by Landlord of this Lease to a Mortgagee, in a form then in use
among institutional lenders, with such changes therein as may be reasonably
requested by the Mortgagee.

 

18.                               LANDLORD’S RIGHT OF ENTRY

 

Landlord, Mortgagee, and their respective designees, shall have the
right to enter the Premises, and any part of the Premises, at any time during
normal business hours and any part of the Premises on five (5) Business Days’
advance notice and to inspect the same, post notices of non-responsibility,
monitor construction, perform appraisals, perform engineering studies, and
during the last twenty four (24) months of the Term or at any time after an
Event of Default, exhibit the Premises to prospective purchasers and
mortgagees, and examine Tenant’s books and records pertaining to the Premises,
insurance policies, certificates of occupancy and other documents, records and
permits in Tenant’s possession with respect to the Premises all of which shall
be customary and adequate and reasonably satisfactory to Landlord.

 

19.                               NOTICES

 

Notices, statements, demands, or other communications required or
permitted to be given, rendered or made by either party to the other pursuant
to this Lease or pursuant to any applicable law or requirement of public
authority, shall be in writing (whether or not so stated elsewhere in this
Lease) and shall be deemed to have been properly given, rendered or made, when
received by overnight delivery or overnight courier delivery (or, if such delivery
is refused, upon the date that delivery would have occurred but for such
refusal) or facsimile transmission (with electronic confirmation therefor) with
a confirmation copy of the entire original transmittal sent by overnight
delivery or by overnight courier delivery addressed to the other parties as
follows:

 

	
  To Landlord:

  	
   

  	
  iStar Garden
  City LLC

  
	
   

  	
   

  	
  1114 Avenue of
  the Americas

  
	
   

  	
   

  	
  27th
  Floor

  
	
   

  	
   

  	
  New York, New
  York  10036

  
	
   

  	
   

  	
  Attention: Chief
  Financial Officer

  
	
   

  	
   

  	
  Telephone: (212)
  930-9400

  
	
   

  	
   

  	
  Facsimile: (212)
  930-9494

  

 

 

	
  With a copy to:

  	
   

  	
  iStar Financial Inc.

  
	
   

  	
   

  	
  1114 Avenue of
  the Americas

  
	
   

  	
   

  	
  27th
  Floor

  
	
   

  	
   

  	
  New York, New
  York  10036

  
	
   

  	
   

  	
  Attention:
  General Counsel

  
	
   

  	
   

  	
  Telephone: (212)
  930-9400

  
	
   

  	
   

  	
  Facsimile: (212)
  930-9494

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
  Katten Muchin
  Zavis Rosenman

  
	
   

  	
   

  	
  525 West Monroe
  Street

  
	
   

  	
   

  	
  16th
  Floor

  
	
   

  	
   

  	
  Chicago,
  Illinois  60661-3693

  
	
   

  	
   

  	
  Attention:
  Gregory P. L. Pierce, Esq.

  
	
   

  	
   

  	
  Telephone: (312)
  902-5200

  
	
   

  	
   

  	
  Facsimile: (312)
  902-1061

  
	
   

  	
   

  	
   

  
	
  To Tenant:

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
  One AAR Place

  
	
   

  	
   

  	
  1100 North Wood
  Dale Road

  
	
   

  	
   

  	
  Wood Dale,
  Illinois 60191

  
	
   

  	
   

  	
  Attention: Tim
  Romenesko

  
	
   

  	
   

  	
  Telephone: (630)
  227-2090

  
	
   

  	
   

  	
  Facsimile: (630)
  227-2101

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
  One AAR Place

  
	
   

  	
   

  	
  1100 North Wood
  Dale Road

  
	
   

  	
   

  	
  Wood Dale,
  Illinois  60191

  
	
   

  	
   

  	
  Attention: Legal
  Department

  
	
   

  	
   

  	
  Telephone: (630)
  227-2040

  
	
   

  	
   

  	
  Facsimile: (630)
  227-2058

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Schiff Hardin
  & Waite

  
	
   

  	
   

  	
  623 Fifth Avenue

  
	
   

  	
   

  	
  New York, New
  York 10022

  
	
   

  	
   

  	
  Attention:  Christine A. McGuinness

  
	
   

  	
   

  	
  Telephone: (212)
  745-0831

  
	
   

  	
   

  	
  Facsimile: (212)
  753-5044

  

 

Any party listed in this paragraph 19 may, by notices as aforesaid,
designate a different address for addresses for notice, statements, demands or
other communications intended for it.

 

 

20.                               ESTOPPEL CERTIFICATE; FINANCIAL DATA

 

(a)                                  At
any time and from time to time, Tenant shall, within ten (10) Business Days
after written request by Landlord, execute, acknowledge and deliver to Landlord
a certificate certifying:  (a) that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect as modified, and
stating the date and nature of each modification); (b) the Commencement Date
and the Expiration Date determined in accordance with paragraph 4 and the Basic
Lease Information, and the date, if any, to which all Rent and other sums
payable hereunder have been paid; (c) the amount of Fixed Rent currently
payable monthly, (d) that no notice has been received by Tenant of any default
by Tenant hereunder which has not been cured, except as to defaults specified
in such certificate; (e) that Landlord is not in default under this Lease,
except as to defaults specified in such certificate; and (f) such other matters
as may be reasonably requested by Landlord or any actual or prospective
purchaser or mortgage lender.  Any such
certificate may be relied upon by Landlord and any actual or prospective
purchaser or mortgage lender of the Premises or any part thereof.

 

(b)                                 Tenant
shall and shall cause Guarantor to deliver to Landlord and to any Mortgagee,
Lender, or purchaser designated by Landlord the following information within
ninety (90) days after the end of each fiscal year of Guarantor or such longer
period as may be permitted by any nationally recognized stock exchange upon
which Guarantor’s capital stock is listed: 
an audited balance sheet of Guarantor and Guarantor’s consolidated
subsidiaries as at the end of such year, an audited statement of profits and
losses of Guarantor and Guarantor’s consolidated subsidiaries for such year,
and an audited statement of cash flows of Guarantor and Guarantor’s
consolidated subsidiaries for such year, setting forth in each case, in
comparative form, the corresponding figures for the preceding fiscal year in
reasonable detail and scope and certified by independent certified public
accountants of recognized national standing selected by Tenant and Guarantor;
and within forty-five (45) days or such longer period as may be permitted by
any nationally recognized stock exchange upon which Tenant’s or Guarantor’s
stock is listed after the end of each of the first three fiscal quarters of
Guarantor a balance sheet of Guarantor and Guarantor’s consolidated
subsidiaries as at the end of such quarter, statements of profits and losses of
Guarantor and Guarantor’s consolidated subsidiaries for such quarter and a
statement of cash flows of Guarantor and Guarantor’s consolidated subsidiaries
for such quarter, setting forth in each case, in comparative form, the corresponding
figures for the similar quarter of the preceding year (or in the case of an
interim balance sheet, to the end of the prior year), in reasonable detail and
scope, and certified to be complete and accurate by a financial officer of
Guarantor having knowledge thereof; the foregoing financial statements all
being prepared in accordance with generally accepted accounting principles,
consistently applied.  If and so long as
Tenant and Guarantor is a reporting company under the Securities and Exchange
Act of 1934, as amended, the foregoing requirements of this paragraph 20(b)
will be satisfied by the delivery of Tenant’s or Guarantor’s Forms 10-K, 10-Q
and annual reports promptly upon their filing with the Securities and Exchange
Commission.  Together with the annual
financial statements described above, Tenant shall deliver to Landlord an
annual Premises operating expense statements for the Premises in detail
reasonably satisfactory to Landlord and certified to be complete and accurate
by an officer of Tenant or Guarantor.

 

(c)                                  Upon
ten (10) days’ prior notice, Tenant and Guarantor will permit Landlord and its
professional representatives to visit Tenant’s and Guarantor’s offices, and
discuss Tenant’s

 

 

and Guarantor’s affairs and finances with
appropriate officers, and will make available such information as Landlord may
reasonably request bearing on the Tenant, Guarantor, the Premises or this Lease
as Tenant or Guarantor may maintain in the ordinary course of business.  Landlord shall agree to maintain the
confidentiality of any information designated by Tenant or Guarantor as
“nonpublic”.  Notwithstanding anything
herein to the contrary, and subject to compliance with applicable federal or
state securities laws, each party to this Lease, together with any employee,
representative or other agent of such party, is expressly authorized to
disclose to any and all persons, without limitation of any kind, any
information with respect to the “tax structure” and “tax treatment” (as such
terms are defined under Treasury Regulation § 1.6011-4(c)) of the
transaction contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to such tax
structure and tax treatment, provided that with respect to any document or
similar item that in either case contains nonpublic information, this sentence
shall only apply to such portions of such document or similar item that relate
to the tax treatment or tax structure of the transaction contemplated hereby.

 

21.                               MECHANICS’ LIENS

 

(a)                                  Except
for liens created through the act of Landlord, Tenant shall not suffer or
permit any mechanic’s lien or other lien to be filed or recorded against the
Premises, equipment or materials supplied or claimed to have been supplied to
the Premises at the request of Tenant, or anyone holding the Premises, or any
portion thereof, through or under Tenant. 
If any such mechanic’s lien or other lien shall at any time be filed or
recorded against the Premises, or any portion thereof, Tenant shall cause the
same to be discharged of record within thirty (30) days after the date of
filing or recording of the same. 
However, in the event Tenant desires to contest the validity of any lien
it shall (i) on or before thirty (30) days prior to the due date thereof (but
in no event later than 30 days after the filing or recording thereof), notify
Landlord, in writing, that Tenant intends to so contest same; (ii) on or before
the due date thereof, if such lien involves an amount in excess of $50,000 or
if any Mortgagee so requires, deposit with Landlord security (in form and
content reasonably satisfactory to Landlord or Mortgagee) for the payment of
the full amount of such lien, and from time to time deposit additional security
so that, at all times, adequate security will be available for the payment of
the full amount of the lien together with all interest, penalties, costs and
other charges in respect thereof.

 

If Tenant complies with the foregoing, and Tenant continues, in good
faith, to contest the validity of such lien by appropriate legal proceedings
which shall operate to prevent the collection thereof and the sale or
forfeiture of the Premises, or any part thereof, to satisfy the same, Tenant
shall be under no obligation to pay such lien until such time as the same has
been decreed, by court order, to be a valid lien on the Premises.  Any surplus deposit retained by Landlord,
after the payment of the lien shall be repaid to Tenant.  Provided that nonpayment of such lien does
not cause Landlord to be in violation of any of its contractual undertakings,
Landlord agrees not to pay such lien during the period of Tenant’s
contest.  However, if Landlord pays for
the discharge of a lien or any part thereof from funds of Landlord, any amount
paid by Landlord, together with all costs, fees and expenses in connection
therewith (including attorney’s fees of Landlord plus an administration fee
equal to 5% of such costs and expenses), shall be repaid by Tenant to Landlord
on demand by Landlord, together with interest thereon at

 

 

the Overdue Rate.  Tenant shall indemnify and defend Landlord against and save
Landlord and the Premises, and any portion thereof, harmless from and against
all losses, costs, damages, expenses, liabilities, suits, penalties, claims,
demands and obligations, including attorney’s fees, resulting from the
assertion, filing, foreclosure or other legal proceedings with respect to any
such mechanic’s lien or other lien or the attempt by Tenant to discharge same
as above provided.

 

(b)                                 All
materialmen, contractors, artisans, engineers, mechanics, laborers and any
other Person now or hereafter furnishing any labor, services, materials,
supplies or equipment to Tenant with respect to the Premises, or any portion
thereof, are hereby charged with notice that they must look exclusively to
Tenant to obtain payment for the same. 
Notice is hereby given that Landlord shall not be liable for any labor,
services, materials, supplies, skill, machinery, fixtures or equipment
furnished or to be furnished to Tenant upon credit, and that no mechanic’s lien
or other lien for any such labor, services, materials, supplies, machinery,
fixtures or equipment shall attach to or affect the estate or interest of
Landlord in and to the Premises, or any portion thereof.

 

(c)                                  Tenant
shall not create, permit or suffer, and, subject to the provisions of paragraph
21(a) hereof, shall promptly discharge and satisfy of record, any other lien,
encumbrance, charge, security interest, or other right or interest which, as a
result of Tenant’s action or inaction contrary to the provisions hereof, shall
be or become a lien, encumbrance, charge or security interest upon the
Premises, or any portion thereof, or the income therefrom, other than Permitted
Encumbrances.

 

22.                               END OF TERM

 

(a)                                  Upon
the expiration or earlier termination of the Term of this Lease, Tenant shall
surrender the Premises to Landlord in good repair and in a condition equal to
or better than the condition existing as of the date hereof, subject to
ordinary wear and tear, except as repaired, rebuilt or altered as required or
permitted by this Lease (or, in the case of termination pursuant to paragraph
14, as condemned), with the Equipment and Improvements, including all systems
and components thereof listed on Exhibit G attached hereto, in good
working order and condition  as reasonably determined by Landlord, and
Tenant shall surrender all keys to the Premises to Landlord at the place then
fixed for notices to Landlord and shall inform Landlord of all combinations on
locks, safes and vaults, if any.  Except
as otherwise provided herein, Tenant shall at such time remove all of its
property (including Tenant’s Trade Fixtures) therefrom and all alterations and
improvements placed thereon by Tenant and not consented to by Landlord.  Tenant shall repair any damage to the
Premises caused by such removal, and any and all such property not so removed
when required shall, at Landlord’s option, become the exclusive property of
Landlord or be disposed of by Landlord, at Tenant’s cost and expense, without
further notice to or demand upon Tenant.

 

(b)                                 If
the Premises are not surrendered as above set forth, Tenant shall indemnify,
defend and hold Landlord harmless from and against loss or liability resulting
from the delay by Tenant in so surrendering Premises, including any claim made
by any succeeding occupant founded on such delay.  Tenant’s obligation to observe or perform this covenant shall
survive the expiration or other termination of this Lease for three (3)
years.  In addition to the foregoing,
and

 

 

in addition to the Additional Rent, Tenant
shall pay to Landlord a sum equal to one hundred fifty percent (150%) of the
Fixed Rent payable during the preceding year during each month or portion
thereof for which Tenant shall remain in possession of the Premises or any part
thereof after the termination of the Term or of Tenant’s rights of possession,
whether by lapse of time or otherwise. 
The provisions of this paragraph 22(b) shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord provided
herein, at law or at equity.

 

(c)                                  All
property of Tenant not removed on or before the last day of the Term of this
Lease shall be deemed abandoned. Tenant hereby agrees that Landlord may remove
all property of Tenant, including Tenant’s Trade Fixtures, from the Premises
upon termination of this Lease and to cause its transportation and storage, all
at the sole cost and risk of Tenant and Landlord shall not be liable for
damage, theft, misappropriation or loss thereof and Landlord shall not be
liable in any manner in respect thereto and Landlord shall be entitled to
dispose of such property, as Landlord deems fit, without the requirement of an
accounting.  Tenant shall pay all costs
and expenses of such removal, transportation and storage.  Tenant shall reimburse Landlord upon demand
for any expenses reasonably and actually incurred by Landlord with respect to
removal or storage of abandoned property and with respect to restoring said
Premises to good order, condition and repair.

 

(d)                                 Except
for surrender upon the expiration or earlier termination of the Term hereof as
expressly provided herein, no surrender to Landlord of this Lease or of the
Premises shall be valid or effective unless agreed to and accepted in writing
by Landlord.

 

23.                               ALTERATIONS

 

(a)                                  Tenant
shall obtain Landlord’s prior written consent, which consent shall not be
unreasonably withheld, conditioned, or delayed so long as the value or utility
of the Premises in its current use is not diminished thereby, before making any
change in the structure of the Improvements or any building system costing at
least or more than $500,000.  Subject to
the terms of the preceding sentence, Tenant may make alterations, additions or
improvements to the Premises costing less than $500,000 without Landlord’s
consent only if (i) such alterations, additions or improvements will be in
compliance with all applicable laws, codes, rules, regulations and ordinances,
(ii) such alterations, additions or improvements will not reduce the fair
market value or utility of the Premises in its permitted use, considered as
unencumbered by this Lease, and (iii) such alterations, additions or
improvements will not affect in any way the structural, exterior or roof
elements of the Premises or mechanical, electrical, plumbing, utility or life
safety systems of the Premises, but Tenant shall give prior written notice of
any such alterations, additions or improvements to Landlord.  In all other cases, Landlord’s prior written
consent shall be required which consent shall not be unreasonably withheld,
conditioned, or delayed so long as the value or utility of the Premises in its
current use is not diminished thereby.  At
Landlord’s option, any improvement made without Landlord’s consent shall be removed
and the area repaired at Tenant’s expense at the termination of the Term.  Notwithstanding the foregoing, Landlord
hereby consents to the construction of certain office space in the southeast
corner of the Premises, which construction has commenced as of the date hereof
and will cost

 

 

approximately $52,000 to complete such office
space to match the existing office space in the Premises and an additional
$22,000 to install carpeting per Tenant’s specifications.

 

(b)                                 Except
as provided in paragraph 26(f), in no event shall Tenant be permitted to
install underground storage tanks or fuel systems on the Premises, or any
portion thereof.

 

(c)                                  All
alterations, additions or improvements requiring Landlord’s consent shall be
made at Tenant’s sole cost and expense as follows:

 

(i)                                     Tenant
shall submit to Landlord, for Landlord’s written approval, complete plans and
specifications for all work to be done by Tenant.  Such plans and specifications shall be prepared by the licensed
architect(s) and engineer(s) approved in writing by Landlord, shall comply with
all applicable codes, ordinances, rules and regulations, shall not adversely
affect the structural elements of the Premises, shall be in a form sufficient
to secure the approval of all government authorities with jurisdiction over the
Premises, and shall be otherwise satisfactory to Landlord in Landlord’s
reasonable discretion.

 

(ii)                                  Landlord
shall use reasonable efforts to notify Tenant in writing as promptly as
possible, but in no event later than thirty (30) days following Tenant’s
submission of complete plans and specifications for Landlord’s written
approval, whether Landlord approves, approves on condition that Tenant reverse
the alteration at Tenant’s expense at the termination or expiration of this Lease,
or disapproves such plans and specifications. 
Tenant may submit to Landlord revised plans and specifications for
Landlord’s prior written approval, which approval shall not be withheld or
delayed if (a) the work to be done would not, in Landlord’s reasonable
judgment, adversely affect the value, character, rentability or usefulness of
the Premises or any part thereof, or (b) the work to be done shall be required
by any Law (hereinafter defined). 
Tenant shall pay all costs, including the fees and expenses of the
licensed architect(s) and engineer(s), in preparing such plans and
specifications.

 

(iii)                               All
changes (other than field changes for which no change order is proposed and
which will be reflected in the final “as built” plans) in the plans and specifications
approved by Landlord shall be subject to Landlord’s prior written
approval.  If Tenant wishes to make such
change in approved plans and specifications, Tenant shall have such
architect(s) and engineer(s) prepare plans and specifications for such change
and submit them to Landlord for Landlord’s written approval.  Landlord shall notify Tenant in writing
promptly whether Landlord approves, approves on condition that Tenant reverse
the alteration at Tenant’s expense at the termination or expiration of this
Lease, or disapproves such change. 
Tenant may submit to Landlord revised plans and specifications for such
change for Landlord’s written approval. 
After Landlord’s written approval of such change, such change shall
become part of the plans and specifications approved by Landlord.

 

(iv)                              Tenant
shall obtain and comply with all building permits and other government permits
and approvals required in connection with the work.  Tenant shall, through Tenant’s licensed contractor, perform the
work substantially in accordance with the plans and specifications approved in
writing by Landlord.  Tenant shall pay,
as Additional Rent, the entire

 

 

cost of all work (including the cost of all
utilities, permits, fees, taxes, and property and liability insurance premiums
in connection therewith) required to make the alterations, additions or
improvements.  Under no circumstances
shall Landlord be liable to Tenant for any damage, loss, cost or expenses
incurred by Tenant on account of any plans and specifications, contractors or
subcontractors, design of any work, construction of any work, or delay in
completion of any work.

 

(v)                                 Tenant
shall give written notice to Landlord of the date on which construction of any
work to be done by outside contractors will be commenced at least ten (10) days
prior to such date.  Landlord shall have
the right to post and keep posted on the Premises any notices that may be
provided by law or which Landlord may deem to be proper for the protection of
Landlord and the Premises, or any portion thereof, from liens, and to take any
other action Landlord deems necessary to remove or discharge Liens at the
expense of Tenant.

 

(vi)                              All
alterations, additions, improvements, and fixtures, whether temporary or
permanent in character, made in or to the Premises by Tenant, shall become part
of the Premises and Landlord’s property, except those which are readily
removable with causing material damage to the Premises (which shall be and
remain the property of Tenant).  Upon
termination or expiration of this Lease, Tenant shall, at Tenant’s expense,
remove all movable furniture, equipment, trade fixtures, office machines and
other personal property (including Tenant’s Trade Fixtures) from the Premises
(but not the Improvements or Equipment) and repair all damage caused by such
removal.  Termination of this Lease
shall not affect the obligations of Tenant pursuant to this paragraph 23(c) to
be performed after such termination.

 

(d)                                 Promptly
following the completion of any alteration, addition, or improvement to the
Premises, Tenant shall furnish Landlord with a copy of the complete plans and
specifications for such work (including, if available, so-called “as-built”
plans and specifications).

 

(e)                                  Notwithstanding
anything to the contrary provided herein, Tenant shall cause the repair items
listed on Exhibit H attached hereto to be completed within twelve (12)
months of the Commencement Date.

 

24.                               MEMORANDUM OF LEASE

 

The parties agree to promptly execute a Memorandum of Lease in
recordable form and in a form mutually satisfactory to both parties.

 

25.                               SUBLETTING/ASSIGNMENT

 

(a)                                  Tenant
shall not, directly or indirectly, without the prior written consent of
Landlord and Mortgagee, assign this Lease or any interest herein, or any
interest in Tenant, or sublease the Premises or any part thereof, or permit the
use or occupancy of the Premises by any Person other than Tenant.  This Lease shall not, nor shall any interest
herein, be assignable as to the interest of Tenant involuntarily or by
operation of law without the prior written consent of Landlord and Mortgagee.

 

 

For purposes of this paragraph 25(a), the occurrence of a Corporate
Control Event, or the public announcement thereof, shall be deemed to be an
assignment of this Lease which is prohibited by the preceding paragraph unless
Tenant obtains Landlord’s and Mortgagee’s prior written consent as set forth
above.

 

Notwithstanding anything to the contrary provided herein, in the event
of an assignment or sublease to an entity with a Credit Rating of either “BBB”
or higher from S&P or “Baa2” or higher from Moody’s, in each case for six
(6) consecutive calendar months immediately preceding such assignment or
sublease, as the case may be, (i) Landlord’s and Mortgagee’s prior written
consent shall not be required for such assignment or sublease, as the case may
be, and (ii) Guarantor shall be released from its obligations under the
Guaranty.

 

Any of the foregoing prohibited acts without such prior written consent
of Landlord and Mortgagee, if required, shall be void and shall, at the option
of Landlord or Mortgagee, constitute an immediate Event of Default that
entitles Landlord to all remedies available at law and pursuant to this
Lease.  Tenant agrees that the instrument
by which any assignment or sublease to which Landlord and Mortgagee consent is
accomplished shall expressly provide that the assignee or subtenant will
perform all of the covenants to be performed by Tenant under this Lease (in the
case of a partial assignment or a sublease, only insofar as such covenants
relate to the portion of the Premises subject to such partial assignment or a
sublease) as and when performance is due after the effective date of the
assignment or sublease and that Landlord will have the right to enforce such
covenants directly against such assignee or subtenant.  Any purported assignment or sublease without
an instrument containing the foregoing provisions shall be void.  Unless and until expressly released by
Landlord and Mortgagee, Tenant shall in all cases remain primarily liable (and
not liable merely as a guarantor or surety) for the performance by any assignee
or subtenant of all such covenants, as if no assignment or sublease had been
made.

 

(b)                                 If
Landlord and Mortgagee consent in writing, Tenant may complete the intended
assignment or sublease subject to the following conditions: (i) no assignment
or sublease shall be valid and no assignee or subtenant shall take possession
of the Premises or any part thereof until an executed duplicate original of
such assignment or sublease, in compliance with paragraph 25(a), has been
delivered to Landlord and Mortgagee, and (ii) no assignee or subtenant
shall have a right further to assign or sublease without the prior written
consent of Landlord and Mortgagee which consents shall not be unreasonably
withheld, delayed, or conditioned.

 

(c)                                  Unless
and until expressly released by Landlord and Mortgagee, no assignment or
sublease whatsoever shall release Tenant from Tenant’s obligations and
liabilities under this Lease (which shall continue as the obligations of a
principal and not of a guarantor or surety) or alter the primary liability of
Tenant to pay all Rent and to perform all obligations to be paid and performed
by Tenant.  The acceptance of Rent by
Landlord from any other Person shall not be deemed to be a waiver by Landlord
of any provision of this Lease.  Consent
to one assignment or sublease shall not be deemed consent to any subsequent
assignment or sublease.  If any
assignee, subtenant or successor of Tenant defaults in the performance of any
obligation to be performed by Tenant under this Lease, Landlord may proceed
directly against Tenant without the necessity

 

 

of exhausting remedies against such assignee,
subtenant or successor.  Landlord may
consent to subsequent assignments or subleases or amendments or modifications
to this Lease with assignees, subtenants or successor of Tenant, without
notifying Tenant or any successor of Tenant and without obtaining any consent
thereto from Tenant or any successor of Tenant, and such action shall not
release Tenant from liability under this Lease.

 

(d)                                 Tenant
shall have no right to mortgage, grant a lien upon, encumber or otherwise
finance Tenant’s interest under this Lease or record a lien upon Tenant’s
interest in the Premises under this Lease, and Tenant shall not permit, cause
or suffer to be recorded in the real estate records of the county in which the
Premises are located any mortgage, deed to secure debt, deed of trust,
assignment, UCC financing statement or any other document granting, perfecting,
or recording a lien upon Tenant’s interest in this Lease or interest in the
Premises under this Lease.  Tenant shall
not give any notice, or permit or cause any other party to give any notice, to
Landlord of any existing lien on or security interest in Tenant’s interest in
this Lease or interest in the Premises under this Lease.  Tenant shall not request that Landlord
execute (nor shall Landlord have any obligation to execute) any non-disturbance,
attornment or any other agreement in favor of any party transacting any
business or transaction with or related to Tenant.

 

(e)                                  If
Tenant shall assign this Lease or sublet the Premises to any Person other than
Landlord, or request the consent of Landlord and Mortgagee to any assignment,
subletting, or other action which requires Landlord’s consent hereunder, Tenant
shall pay (i) Landlord’s reasonable standard processing fee which shall not
exceed Five Thousand Dollars ($5,000) in each instance and (ii) Landlord’s and
Mortgagee’s attorneys’ fees and costs incurred in connection therewith.

 

(f)                                    Tenant
agrees to give notice to Mortgagee of any request for consent to any assignment
or transfer of the Lease or subletting of all or any portion of the Premises
simultaneously with delivery of notice thereof to Landlord.

 

26.                               HAZARDOUS MATERIAL

 

(a)                                  Tenant
(i) shall comply, and cause the Premises to comply, with all Environmental Laws
(as hereinafter defined) applicable to the Premises (including the making of
all submissions to governmental authorities required by Environmental Laws and
the carrying out of any remediation program specified by such authority), (ii)
except as currently existing as of the Commencement Date, shall prohibit the
use of the Premises for the generation, manufacture, refinement, production, or
processing of any Hazardous Material (as hereinafter defined) or for the
storage, handling, transfer or transportation of any Hazardous Material (other
than in connection with the operation, business and maintenance of the Premises
and in commercially reasonable quantities as a consumer thereof and supplier of
consumer products and in compliance with Environmental Laws), (iii) shall not
permit to remain, install or permit the installation on the Premises of any
surface impoundments, underground storage tanks (other than the Underground
Tanks in accordance with the provisions of paragraph 26(f)), pcb-containing
transformers or asbestos-containing materials, and (iv) shall cause any
alterations of the Premises to be done in a way so as to not expose in an
unsafe manner the persons working on or visiting

 

 

the Premises to Hazardous Materials and in
connection with any such alterations shall remove any Hazardous Materials
present upon the Premises which are not in compliance with Environmental Laws
or which present a danger to persons working on or visiting the Premises.

 

(b)                                 “Environmental
Laws” means the Resource Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. §§6901, et  seq. (RCRA), as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. §§9601 et  seq. (CERCLA), as amended, the Toxic Substance
Control Act, as amended, 15 U.S.C. §§2601 et  seq., the Federal
Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C. §§136 et
seq., and all applicable federal, state and local environmental laws,
ordinances, rules and regulations, as any of the foregoing may have been or may
be from time to time amended, supplemented or supplanted, and any other
federal, state or local laws, ordinances, rules and regulations, now or
hereafter existing relating to regulations or control of Hazardous Material or
materials.  The term “Hazardous
Materials” as used in this Lease shall mean substances defined as “hazardous
substances”, “hazardous materials”, “hazardous wastes” or “toxic substances” in
any applicable federal, state or local statute, rule, regulation or
determination, including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. §§9601, et  seq.;
the Hazardous Materials Transportation Act, 49 U.S.C. §§1801, et  seq.;
the Resource, Conservation and Recovery Act of 1976, 42 U.S.C. §§6901, et
seq.; and, asbestos, pcb’s, radioactive substances, methane, volatile
hydrocarbons, petroleum or petroleum-derived substances or wastes, radon,
industrial solvents or any other material as may be specified in applicable law
or regulations.

 

(c)                                  Except
to the extent the following indemnity arises out of the acts or omissions of
Landlord, its agents, employees or contractors, Tenant agrees to protect,
defend, indemnify and hold harmless Landlord, its members, directors, officers,
employees and agents, and any successors to Landlord’s interest in the chain of
title to the Premises, their direct or indirect members, partners, directors,
officers, employees, and agents (collectively, the “Indemnified Partner”), from
and against any and all liability, including all foreseeable and all
unforeseeable damages including attorney’s and consultant’s fees, fines,
penalties and civil damages, directly or indirectly arising out of Tenant’s
use, generation, storage, treatment, release, threatened release, discharge,
spill, presence or disposal of Hazardous Materials from, on, at, to or under
the Premises prior to or during the Term of this Lease, and including for all
matters disclosed in the Environmental Reports, and the cost of any required or
necessary repair, response action, remediation, investigation, cleanup or
detoxification and the preparation of any closure or other required plans in
connection therewith, whether such action is required or necessary prior to or
following transfer of title to the Premises. 
This agreement to indemnify and hold harmless shall be in addition to
any other obligations or liabilities Tenant may have to Landlord at common law
under all statutes and ordinances or otherwise, and shall survive following the
date of expiration or earlier termination of this Lease for three (3) years,
except where the event giving rise to the liability for which indemnity is
sought arises out of Tenant’s acts, in which case the agreement to indemnify
shall survive the expiration or termination of this Lease without limit of
time.  Tenant expressly agrees that the
representations, warranties and covenants made and the indemnities stated in
this Lease are not personal to Landlord, and the benefits under this Lease may
be

 

 

assigned to subsequent parties in interest to
the chain of title to the Premises, which subsequent parties in interest may
proceed directly against Tenant to recover pursuant to this Lease.  Tenant, at its expense, may institute
appropriate legal proceedings with respect to environmental matters of the type
specified in this paragraph 26(c) or any lien for such environmental matters,
not involving Landlord or its Mortgagee as a defendant (unless Landlord or its
mortgagee is the alleged cause of the damage), conducted in good faith and with
due diligence, provided that such proceedings shall not in any way impair the
interests of Landlord or Mortgagee under this Lease or contravene the
provisions of any Mortgage.  Counsel to
Tenant in such proceedings shall be reasonably approved by Landlord if Landlord
is a defendant in the same proceeding. 
Landlord shall have the right to appoint co-counsel, which co-counsel
will cooperate with Tenant’s counsel in such proceedings.  The fees and expenses of such co-counsel
shall be paid by Landlord, unless such co-counsel are appointed because the interests
of Landlord and Tenant in such proceedings, in such counsel’s opinion, are or
have become adverse, or Tenant or Tenant’s counsel is not conducting such
proceedings in good faith or with due diligence.

 

(d)                                 Tenant,
upon five (5) days prior notice shall permit such Persons as Landlord or any
assignee of Landlord may designate and (unless an Event of Default has occurred
and is continuing) approved by Tenant, which approval shall not be unreasonably
withheld or delayed (“Site Reviewers”), to visit the Premises
from time to time and perform environmental site investigations and assessments
(“Site
Assessments”) on the Premises for the purpose of determining whether
there exists on the Premises any environmental condition which may result in
any liability, cost or expense to Landlord or any other owner or occupier of
the Premises.  Such Site Assessments may
include both above and below the ground testing for environmental damage or the
presence of Hazardous Material on the Premises and such other tests on the
Premises as may be necessary to conduct the Site Assessments in the reasonable
opinion of the Site Reviewers.  Tenant
shall supply to the Site Reviewers such historical and operational information
regarding the Premises as may be reasonably requested by the Site Reviewers to
facilitate the Site Assessments (other than information previously supplied in
writing to Landlord by Tenant) and shall make available for meetings with the
Site Reviewers appropriate personnel having knowledge of such matters.  The cost of performing and reporting all
Site Assessments shall be paid by Landlord unless an Event of Default has
occurred and is continuing or unless the Site Reviewers discover an
environmental condition causing the Premises not to be in compliance with applicable
Environmental Laws, in either of which events such cost will be paid by Tenant
within ten (10) days after demand by Landlord with interest to accrue at the
Overdue Rate.  Landlord, promptly after
written request by Tenant and payment by Tenant to the extent required as
aforesaid, shall deliver to Tenant copies of reports, summaries or other
compilations of the results of such Site Assessments.  Tenant’s sole remedy for Landlord’s breach of the preceding sentence
shall be a mandatory injunction, and not a termination of this Lease or a
withholding or reduction of Rent.

 

(e)                                  Tenant
shall notify Landlord in writing, promptly upon Tenant’s learning thereof, of
any:

 

 

(i)                                     notice
or claim to the effect that Tenant is or may be liable to any Person as a
result of the release or threatened release of any Hazardous Material into the
environment from the Premises;

 

(ii)                                  notice
that Tenant is subject to investigation by any governmental authority
evaluating whether any remedial action is needed to respond to the release or
threatened release of any Hazardous Material into the environment from the
Premises;

 

(iii)                               notice
that the Premises are subject to an environmental lien; and

 

(iv)                              notice
of violation to Tenant or awareness by Tenant of a condition which might
reasonably result in a notice of violation of any applicable Environmental Law
that could have a material adverse effect upon the Premises.

 

(f)                                    Tenant
acknowledges that, as of the date hereof, the following two (2) underground
storage tanks (the “Underground Tanks”) are located on the
Premises: (i) one (1) 550-gallon tank used to collect oil/material spills
inside the Premises and (ii) one (1) 10,000-gallon No.2 fuel oil tank.  In connection with the Underground Tanks,
the following provisions shall apply:

 

(i)                                     Tenant
shall at all times during the Term maintain, and shall have furnished Landlord
with evidence of, insurance meeting or exceeding the requirements set forth on Exhibit
I attached hereto, which evidence shall be in the form of certificates of
insurance.  If Landlord shall have not
received such evidence of insurance meeting or exceeding the requirements set
forth on Exhibit I attached hereto by October 20, 2003, Tenant
shall be deemed to have requested that Landlord provide such coverage for
Tenant by including the Premises under such insurance policies maintained by
Landlord or its affiliates and Tenant shall thereafter promptly pay, as
Additional Rent, one hundred and three percent (103%) of Landlord’s cost for
carrying such insurance.  Landlord will
maintain such insurance on Tenant’s behalf until (x) Tenant notifies Landlord
to cease causing such insurance to be so carried and (y) Tenant provides
Landlord with copies of the policies which Tenant obtains to replace such
Landlord’s policies, which Tenant furnished policies must be in conformance
with the requirements of this Lease.

 

(ii)                                  Tenant
shall cause, at Tenant’s sole cost and expense, the Underground Tanks to be
maintained and operated in accordance with all applicable laws, ordinances and
requirements of government authorities including, but not limited to, making
any changes therein as may be required from time to time by such laws,
ordinances or other requirements.

 

(iii)                               Tenant
shall maintain complete and accurate records of all maintenance and testing of
the Underground Tanks, and each portion thereof, and make such records
available upon five (5) days’ prior notice by Landlord.  Additionally, Tenant shall furnish Landlord
with copies of all certification and inspection reports obtained by Tenant for
any purpose, including but not limited to as required for insurance purposes,
within thirty (30) days of Tenant’s receipt of such certification and
inspection reports.

 

 

(iv)                              Tenant
shall cause the inspection and testing of the Underground Tanks for tightness
within one hundred twenty (120) days of the Commencement Date and thereafter no
less frequently than every five (5) years during the Term.  Tenant shall furnish Landlord with a written
report of the results of all such tightness inspections and testing within
thirty (30) days of Tenant’s receipt of such reports.

 

(v)                                 If
at least one (1) year prior to the Lease Expiration Date, Tenant shall have
received notice from Landlord of Landlord’s request that Tenant remove the
Underground Tanks prior to the Lease Expiration Date, Tenant shall be obligated
to remove the Underground Tanks prior to the Lease Expiration Date in
accordance with all then applicable laws, approvals, regulations and ordinances
applicable thereto.

 

(vi)                              Tenant
agrees that in no manner, expressed or implied, shall Landlord have any
responsibility for the Underground Tanks including the maintenance, operation,
and, as applicable, removal of the Underground Tanks.  Tenant hereby agrees to indemnify, defend and hold harmless
Landlord from any and all claims and damages in any way relating to the
maintenance, operation and, if applicable, removal, of the Underground Tanks,
including claims and damages from subsurface and groundwater conditions
relating to any of the maintenance, operation and, if applicable, removal, of
the Underground Tanks.  Such indemnity
shall survive the termination of this Lease.

 

(g)                                 Tenant
has furnished Landlord with that certain Asbestos Operations and Maintenance
Handbook, OSHA Class III and IV, prepared by PSI in 1995 and shall furnish
Landlord with updates of such plan from time to time throughout the Term to
accurately reflect conditions at the Premises.

 

27.                               FINANCING

 

(a)                                  Landlord
may assign this Lease to any Person, including any Mortgagee.  Tenant shall execute, acknowledge and
deliver any documents reasonably requested by Landlord, any such transferee, or
Mortgagee relating to such assignment of the Lease by Landlord or the Mortgage
financing.

 

(b)                                 If
Landlord proposes to refinance any Mortgage, Tenant shall cooperate in the
process, and shall negotiate in good faith any request made by a prospective
Mortgagee for changes or modifications to this Lease, and shall not
unreasonably withhold its consent to any such proposed change or modification
so long as the same does not adversely affect any significant right of Tenant
under this Lease, shorten any notice or cure period to which Tenant is
entitled, or increase Tenant’s obligations under this Lease and, during the
last twenty-four (24) months of the term of any Mortgage held by Mortgagee,
exhibit the Premises to prospective mortgagees, and permit such potential
mortgagee to examine all materials and records which shall be customary for a
mortgagee’s inspection, subject at all times to Landlord’s indemnity set forth
in Section 18 and the confidentiality requirements set forth in this
Lease.  Tenant agrees to execute,
acknowledge and deliver documents reasonably requested by the prospective
Mortgagee (such as a consent to the financing (without encumbering Tenant’s
assets), a consent to

 

 

assignment of lease, and a subordination,
non-disturbance and attornment agreement meeting the standards set forth in
paragraph 17) customary for tenants to sign in connection with mortgage
loans to their landlords, so long as such documents are in form then customary
among institutional lenders (provided the same do not adversely change Tenant’s
rights or obligations in a way not previously changed by loan documents
previously executed by Tenant in connection with an earlier Mortgage).

 

(c)                                  Tenant
shall permit Landlord and any Mortgagee or prospective Mortgagee, at their
expense,  to meet with management
personnel of Tenant or Guarantor at Tenant’s or Guarantor’s offices and to
discuss the Tenant’s or Guarantor’s business and finances.  On request of Landlord, Tenant agrees to
provide any Mortgagee or prospective Mortgagee the information to which
Landlord is entitled hereunder. If any such information is non-public each party
requesting such information shall sign a confidentiality agreement in form and
substance satisfactory to Tenant prior to such Mortgagee’s or prospective
Mortgagee’s receiving such information.

 

28.                               MISCELLANEOUS PROVISIONS

 

(a)                                  This
Lease and all of the covenants and provisions hereof shall inure to the benefit
of, and be binding upon, the parties hereto and the heirs, personal
representatives, successors and permitted assigns of the parties.

 

(b)                                 The
titles and headings appearing in this Lease are for reference only and shall
not be considered a part of this lease or in any way to modify, amend or affect
the provisions thereof.

 

(c)                                  This
Lease contains the complete agreement of the parties with reference to the
leasing of the Premises, and may not be amended except by an instrument in
writing signed by Landlord and Tenant and consented by Mortgagee (if any).

 

(d)                                 Any
provision or provisions of this Lease which shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provision
hereof, and the remaining provisions hereof shall nevertheless remain in full
force and effect.

 

(e)                                  This
Lease may be executed in one or more counterparts, and may be signed by each
party on a separate counterpart,  each
of which, taken together,  shall be an
original, and all of which shall constitute one and same instrument.

 

(f)                                    The
term “Landlord” as used in this Lease shall mean only the owner or owners at
the time in question of the Premises and in the event of any transfer of such
title or interest, Landlord named in this Lease (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 Landlord’s obligations thereafter to be
performed hereunder, provided that any funds in the hands of Landlord or the
then grantor at the time of such transfer, in which Tenant has an interest,
shall be delivered to the grantee. The obligations contained in this Lease to
be performed by Landlord shall, subject as aforesaid, be binding on Landlord’s
successors and assigns, only during their respective periods of ownership.

 

 

(g)                                 For
all issues which are Site-specific, this Lease shall be governed by and
construed and enforced in accordance with and subject to the laws of the state
where the Site is located, and for all issues which are not Site specific, the
internal laws, without regard to conflicts of laws, of the State of New York.

 

(h)                                 Any
claim based on or in respect of any liability of Landlord under this Lease
shall be enforced only against the Premises and not against any other assets,
properties or funds of (1) Landlord or any director, officer, member,
shareholder, general partner, limited partner, or direct or indirect member,
partner, employee or agent of Landlord or any of its members (or any legal representative,
heir, estate, successor or assign of any thereof), (2) any predecessor or
successor partnership, corporation or limited liability company (or other
entity) of Landlord or any of its members, either directly or through Landlord
or its predecessor or successor partnership, corporation of limited liability
company (or other Person) of Landlord or its general partners, and (3) any
other Person.

 

(i)                                     Without
the written approval of Landlord and Tenant, no Person other than Landlord
(including its direct and indirect partners), Mortgagee, Tenant and their
respective successors and assigns shall have any rights under this Lease.

 

(j)                                     There
shall be no merger of the leasehold estate created hereby by reason of the fact
that the same Person may own directly or indirectly, (1) the leasehold estate
created hereby or any interest in this Lease or such leasehold estate and (2)
the fee estate in the Premises. 
Notwithstanding any such combined ownership, this Lease shall continue
in full force and effect until terminated by an instrument executed by both
Landlord and Tenant.

 

(k)                                  Whenever
in this Lease either party is required to take an action within a particular
time period, delays caused by acts of God, war, major casualty, strike, labor
shortage or other cause beyond the reasonable control of such party shall not
be counted in determining the time in which such performance must be completed
(except in the case of the obligation to pay money) so long as such party
shall, promptly after becoming aware of the commencement of such delay, shall
give the other party notice thereof and estimating the duration thereof.

 

(l)                                     If
at any time a dispute shall arise as to any amount to be paid by one party to
the other hereunder, the obligor may make payment “under protest”, and such
payment shall not be deemed a voluntary payment, and the right of the obligor
to contest its liability for such payment shall survive such payment without
prejudice to the obligor’s position.

 

(m)                               Landlord
and Tenant each represent that they have dealt with no broker, finder or other
Person who could legally charge a commission in connection with Landlord’s
acquisition of the Land or with the Lease; provided, however, Landlord and
Tenant acknowledge and agree that Landlord was introduced to the transaction by
LaSalle Debt Capital Markets which will be compensated by Tenant out of the
sales proceeds funded by Landlord at closing.

 

(n)                                 The
parties hereto specifically acknowledge and agree that, notwithstanding any
other provision contained in this Lease, it is the intent of the parties that
their relationship

 

 

hereunder is and shall at all times be that
of landlord and tenant, and not that of partners, joint venturers, lender and
borrower, or any other relationship other than that of a landlord and tenant.

 

(o)                                 The
parties hereto specifically acknowledge and agree that time is of the essence
with regard to all obligations under this Lease.

 

(p)                                 Landlord
represents that as of the Commencement Date Landlord is a single purpose entity
wholly owned by iStar Financial Inc. and consolidated for accounting purposes
by iStar Financial Inc.

 

(q)                                 To
the extent permitted by applicable law, Landlord and Tenant hereby waive trial
by jury in any action or proceeding, and with respect to any claim asserted in
any such action or proceeding, brought by either of the parties against the
other on any matter whatsoever arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of
the Premises, any claim of injury or damage, or any emergency or other
statutory remedy with respect thereto.

 

29.                               PURCHASE PROCEDURE

 

(a)                                  In
the event of the purchase of the Premises or any Site by Tenant pursuant to
paragraphs 14 and 30 of this Lease, Landlord need not transfer and convey to
Tenant or its designee any better title thereto than that which was transferred
and conveyed to Landlord, and Tenant (or its designee) shall accept such title,
subject, however, to all liens, exceptions and restrictions on, against or relating
to the Premises or such Site and to all applicable laws, but free of the lien
of and security interest created by any and all Mortgages (unless expressly
assumed by Tenant) and liens, exceptions and restrictions on, against or
relating to any of the Premises or such Site which have been created by or
resulted from acts of Landlord, Landlord’s Mortgagee or any Person lawfully
acting by or through either of them, unless the same were created with the
consent of Tenant or as a result of a default by Tenant under this Lease or are
otherwise the responsibility of the Tenant hereunder.  Execution by Tenant of a consent to financing and a
nondisturbance agreement pursuant to paragraph 27 shall not constitute the
consent of Tenant to a mortgage or other lien securing such financing for
purposes of this paragraph 29.

 

(b)                                 Upon
the date fixed for any such purchase of the Premises or any Site pursuant to
paragraphs 14 and 30 of this Lease, Tenant shall pay to Landlord or to any
Person to whom Landlord directs payment, at Landlord’s address set forth above,
or at any other place designated by Landlord, the applicable purchase price
therefor specified herein, in federal or other immediately available funds
which at the time of such payment shall be legal tender for the payment of
public or private debts in the United States of America, less any credits of
the net awards or net proceeds allowed against the applicable purchase price
pursuant to the provisions of paragraph 14, and Landlord shall thereupon
deliver to Tenant (i) a special or limited warranty deed which describes any of
the Premises, or such Site, as applicable, then being sold to Tenant and
conveys and transfers the title thereto which is described in paragraph 29(a);
(ii) such other instruments as shall be necessary to transfer to Tenant or its
designee any other property (or rights to any net proceeds or net award not yet
received by Landlord, if applicable) then required

 

 

to be transferred or sold by Landlord pursuant to this Lease; and (iii)
any net award or net proceeds received by Landlord, if applicable, not credited
to Tenant against the applicable purchase price and required to be delivered by
Landlord to Tenant pursuant to this Lease. 
Additionally, Landlord and Tenant shall execute an amendment to this
Lease to reflect such change in the Premises and Rent.  Tenant shall pay all charges incident to
such conveyance and transfer, including Landlord’s counsel fees, escrow fees,
recording fees, title insurance premiums and all applicable federal, state and
local real estate transfer taxes or deed stamps which may be incurred or
imposed by reason of such conveyance and transfer and/or by reason of the
delivery of said deed and other instruments. 
Only upon the completion of Tenant’s purchase of all of the Premises,
including all Sites, but not prior thereto, this Lease and all obligations
hereunder shall terminate (including the obligations to pay Rent), except any
obligations and liabilities of Tenant, actual or contingent, under this Lease,
which (a) arose on or prior to such date or purchase or (b) survive termination
of this Lease.  In the event that the
completion of such purchase shall be delayed other than through the sole fault
of Landlord, then the applicable purchase price payable by Tenant upon the
purchase of the Premises or any Site pursuant to any provisions of this Lease
shall, at Landlord’s sole option, be determined as of the actual date of such
purchase by Tenant, provided that Tenant shall have paid to Landlord all Rent
due and payable hereunder to and including such date.  Any prepaid Fixed Rent or other prepaid sums paid to Landlord
shall be prorated as of the date the purchase is completed, and the prorated
unapplied balance shall be deducted from the applicable purchase price due to Landlord.

 

No apportionment of any Impositions shall be made upon such purchase,
Tenant being liable for payment thereof during the Term as Tenant and being
liable thereafter as owner.

 

(c)                                  In
the event of the purchase of the Premises or any Site by Tenant pursuant to any
provision of this Lease, Tenant shall, on the date of the closing of such
purchase, pay to Landlord (in addition to payment of the applicable purchase
price) all Rent and other sums then due and owing by Tenant to Landlord
hereunder relating to the property purchased through the date of the closing of
such purchase.

 

30.                               RIGHT OF FIRST REFUSAL

 

(a)                                  From
August 1, 2012 through October 31, 2012 (“ROFR Period”) and so long as
no Event of Default then exists (unless, solely for the purposes of this
paragraph 30, either (x) such Event of Default is waived in writing by
Landlord, Landlord having no obligation to do so or (y) Tenant remedies such
Event of Default as follows:  (1) with
respect to a monetary Event of Default, Tenant pays all sums then due and
payable to cure such Event of Default and (2) with respect to a non-monetary
Event of Default, Tenant indemnifies Landlord against any and all losses or
claims arising as a result of such non-monetary Event of Default), but subject
to termination as set forth below, Tenant shall have a right of first refusal
to purchase the Premises upon the terms and conditions set forth in this
paragraph 30.  During the ROFR Period
Landlord shall not sell or agree to sell the Premises without first complying
with this paragraph 30.

 

(b)                                 During
the ROFR Period, if Landlord receives an offer to sell the Premises to a Person
that is not a Landlord Affiliate or an Affiliate of Tenant or Guarantor which
Landlord

 

 

desires to accept, Landlord shall notify (“ROFR Notice”)
Tenant in writing of such event. 
Landlord agrees that if Landlord receives such an offer to sell the
Premises during the ROFR period for a purchase price of $16,280,000.00 or
greater on an all-cash basis, Landlord shall agree to accept such offer solely
for purposes of this paragraph 30 and complying with the provisions of this
paragraph 30.  The date such notice is
given is herein called the “ROFR Notice Date”.  The ROFR Notice shall state that Landlord
intends to sell the Premises to a Person that is not a Landlord Affiliate or an
Affiliate of Tenant or Guarantor, for the specified price in such offer (“ROFR Notice
Price”) on an all-cash basis. 
Tenant shall have the right, at its option, to make an offer (“Tenant’s
ROFR Offer”) to purchase the Premises in accordance with paragraph
29 on November 1, 2013 (notwithstanding any other proposed closing date in
any offer referenced in the ROFR Notice) for the ROFR Notice Price, which offer
shall be an all cash offer.

 

(c)                                  Tenant
shall exercise its right of first refusal to purchase the Premises, if at all,
by delivering in writing Tenant’s ROFR Offer to Landlord on or before the date
which is 30 days following the ROFR Notice Date.  If Tenant makes such Tenant’s ROFR Offer within such 30 day
period, Landlord shall then accept Tenant’s ROFR Offer within 10 Business Days,
and Tenant shall close a purchase of the Premises on an all-cash basis at the
ROFR Notice Price on November 1, 2013, in accordance with paragraph 29
above.

 

(d)                                 If
an Event of Default under this Lease has occurred or is continuing at the time
of the closing date for the sale to Tenant under this paragraph 30, Landlord
may, at Landlord’s option, terminate Tenant’s right and obligation to purchase
the Premises pursuant to this paragraph 30; provided, however, that Tenant may
remedy such Event of Default as follows: 
(1) with respect to a monetary Event of Default, Tenant pays all sums
then due and payable to cure said Event of Default and (2) with respect to a
non-monetary Event of Default, Tenant indemnifies Landlord against any and all
losses or claims arising as a result of such non-monetary Event of
Default.  Tenant’s failure to close the
purchase of the Premises on the closing date shall be an immediate Event of
Default under this Lease.

 

(e)                                  Landlord
shall not accept any unsolicited offers to sell the Premises during the ROFR
Period without first complying with the provisions of this paragraph 30.

 

(f)                                    Tenant’s
right of first refusal pursuant to this paragraph 30 shall not apply to
acquisition of the Premises, or any portion thereof, by a third party in a
condemnation proceeding or a conveyance in lieu of condemnation.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN
WITNESS WHEREOF, the parties have hereunto set their
hands under seal on the day and year first above written.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  iSTAR GARDEN CITY LLC,  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  iStar Financial Inc., a Maryland corporation

  
	
   

  	
  Its:

  	
  Sole Class A Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BARCLAY G. JONES, III

  	
   

  
	
   

  	
  Name:

  	
  Barclay G. Jones, III

  
	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  AAR ALLEN SERVICES, INC.,

  an Illinois corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TIMOTHY J. ROMENESKO

  	
   

  
	
   

  	
  Name:

  	
  Timothy J. Romenesko

  
	
   

  	
  Title:

  	
  Vice President

  
							

 

 

	
  STATE OF New York

  	
  )

  
	
   

  	
  )  SS

  
	
  COUNTY OF New York

  	
  )

  

 

On the 2nd day
of October in the year 2003 before me, the undersigned, personally
appeared Barclay G. Jones, personally known to me or proved to me on the basis
of satisfactory evidence to be the individuals whose names are subscribed to
the within instrument and acknowledged to me that they executed the same in
their capacity, and that by their signatures on the instrument, the
individuals, or the person or entity upon behalf of which the individual acted,
executed the instrument.

 

 

	
  /s/ SAMANTHA GARBUS

  	
   

  
	
  Notary Public

  

 

 

	
  STATE OF Illinois

  	
  )

  
	
   

  	
  )  SS

  
	
  COUNTY OF DuPage

  	
  )

  

 

On the 2nd day of October in the year
2003 before me, the undersigned, personally appeared Timothy J. Romenesko,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individuals whose names are subscribed to the within instrument and
acknowledged to me that they executed the same in their capacity, and that by
their signatures on the instrument, the individuals, or the person or entity
upon behalf of which the individual acted, executed the instrument.

 

	
  /s/ JO-ELLEN KIDDIE

  	
   

  
	
  Notary Public

  

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
   

  
	
  2.

  	
  DEMISE OF PREMISES

  	
   

  
	
  3.

  	
  USE

  	
   

  
	
  4.

  	
  TERM

  	
   

  
	
  5.

  	
  RENTAL; SECURITY DEPOSIT; GUARANTY

  	
   

  
	
  6.

  	
  TAXES

  	
   

  
	
  7.

  	
  NET LEASE; NON-TERMINABILITY

  	
   

  
	
  8.

  	
  SERVICES

  	
   

  
	
  9.

  	
  REPAIRS AND MAINTENANCE; REPLACEMENT

  	
   

  
	
  10.

  	
  DESTRUCTION OF OR DAMAGE TO PREMISES

  	
   

  
	
  11.

  	
  INSURANCE, HOLD HARMLESS AND
  INDEMNIFICATION

  	
   

  
	
  12.

  	
  COMPLIANCE
  WITH LAWS, COVENANTS

  	
   

  
	
  13.

  	
  PARTIAL
  TAKING

  	
   

  
	
  14.

  	
  SUBSTANTIAL TAKING

  	
   

  
	
  15.

  	
  DEFAULT:  EVENTS OF DEFAULT

  	
   

  
	
  16.

  	
  REMEDIES

  	
   

  
	
  17.

  	
  SUBORDINATION

  	
   

  
	
  18.

  	
  LANDLORD’S RIGHT OF ENTRY

  	
   

  
	
  19.

  	
  NOTICES

  	
   

  
	
  20.

  	
  ESTOPPEL CERTIFICATE; FINANCIAL DATA

  	
   

  
	
  21.

  	
  MECHANICS’
  LIENS

  	
   

  
	
  22.

  	
  END
  OF TERM

  	
   

  
	
  23.

  	
  ALTERATIONS

  	
   

  
	
  24.

  	
  MEMORANDUM OF LEASE

  	
   

  
	
  25.

  	
  SUBLETTING/ASSIGNMENT

  	
   

  
	
  26.

  	
  HAZARDOUS MATERIAL

  	
   

  
	
  27.

  	
  FINANCING

  	
   

  
	
  28.

  	
  MISCELLANEOUS PROVISIONS

  	
   

  
	
  29.

  	
  PURCHASE PROCEDURE

  	
   

  
	
  30.

  	
  RIGHT TO PURCHASE

  	
   

  

 

i

 

	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
  A-1

  	
  LEGAL DESCRIPTION FOR THE PREMISES - REAL
  ESTATE

  	
   

  
	
  A-2

  	
  IMPROVEMENTS

  	
   

  
	
  B

  	
  EQUIPMENT

  	
   

  
	
  C

  	
  PERMITTED ENCUMBRANCES

  	
   

  
	
  D

  	
  FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
  AGREEMENT

  	
   

  
	
  E

  	
  FAIR MARKET VALUE DETERMINATION FOR PREMISES

  	
   

  
	
  F

  	
  FORM OF LETTER CREDIT

  	
   

  
	
  F-1

  	
  APPROVED FORM OF LETTER OF CREDIT

  	
   

  
	
  G

  	
  GOOD WORKING ORDER ITEMS

  	
   

  
	
  H

  	
  REPAIR ITEMS

  	
   

  
	
  I

  	
  INSURANCE REQUIREMENTS FOR UNDERGROUND TANKS

  	
   

  

 

ii

 

EXHIBIT A-1

 

(Description Of
The Land)

 

 

EXHIBIT A-2

 

Improvements

 

One-story building built in 1952
and located on 8.74 acres of land with a total of approximately 145,000 square
feet, 30,000 of which is office space.

 

 

EXHIBIT B

 

Equipment

 

 

All of the fixtures, equipment, and apparatus of every nature and
description, if any, located in or on the Land, necessary for the operation of
the Improvements excluding Tenant’s Trade Fixtures.

 

 

EXHIBIT C

 

Permitted
Encumbrances

 

 

The items listed on Exhibit B of Chicago Title Insurance Company title
policy number 3503-00013 effective as of October 3, 2003.

 

 

EXHIBIT D

 

Form of
Subordination, Non-Disturbance and Attornment Agreement

 

 

THIS SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT (the “Agreement”) is made as of the         
day of
                              ,
2003 by and between
                                    ,
a Delaware limited liability company, having an address at c/o iStar Financial
Inc., 1114 Avenue of the Americas, 27th Floor, New York, New York
10036 (“Lender”) and AAR ALLEN SERVICES, INC., an Illinois corporation, having
an address at c/o AAR CORP., One AAR Place, 1100 North Wood Dale Road, Wood
Dale, Illinois 60191 (“Tenant”).

 

 

RECITALS:

 

A.                                                                                   Lender
is the present owner and holder of a certain mortgage and security agreement (
together with any and all extensions, renewals, substitutions, replacements,
amendments, modifications and/or restatements thereof, the “Security
Instrument”) dated                    ,
2003, given by Landlord (defined below) to Lender which encumbers the fee
estate of Landlord in certain premises described in Exhibit A attached hereto
(the “Property”) and which secures the payment of certain indebtedness owed by
Landlord to Lender evidenced by a certain promissory note dated                           ,
2003, given by Landlord to Lender (the note together with all extensions,
renewals, modifications, substitutions and amendments thereof shall
collectively be referred to as the “Note”);

 

B.                                                                                     Tenant
is the holder of a leasehold estate in a portion of the Property under and
pursuant to the provisions of a certain lease dated
                       ,
2003 between iStar Garden City LLC, as landlord (“Landlord”) and Tenant, as
tenant, (such lease, as modified and amended as set forth herein being
hereinafter referred to as the “Lease”); and

 

C.                                                                                     Tenant
has agreed to subordinate the Lease to the Security Instrument and to the lien
thereof and Lender has agreed to grant non-disturbance to Tenant under the
Lease on the terms and conditions hereinafter set forth.

 

 

AGREEMENT:

 

For good and valuable consideration, Tenant
and Lender agree as follows:

 

 

1.                                       SUBORDINATION.  The Lease and all of the terms, covenants
and provisions thereof and all rights, remedies and options of Tenant
thereunder are and shall at all times continue to be subject and subordinate in
all respects to the terms, covenants and provisions of the Security Instrument
and to the lien thereof, including without limitation, all renewals, increases,
modifications, spreaders, consolidations, replacements and extensions thereof
and to all sums secured thereby and advances made thereunder with the same
force and effect as if the Security Instrument had been executed, delivered and
recorded prior to the execution and delivery of the Lease.

 

2.                                       NON-DISTURBANCE.  If any action or proceeding is commenced by
Lender for the foreclosure of the Security Instrument or the sale of the
Property, Tenant shall not be named as a party therein unless such joinder
shall be required by law, provided, however, such joinder shall not result in
the termination of the Lease or disturb the Tenant’s possession or use of the
premises demised thereunder, and the sale of the Property in any such action or
proceeding and the exercise by Lender of any of its other rights under the Note
or the Security Instrument shall be made subject to all rights of Tenant under
the Lease, provided that at the time of the commencement of any such action or
proceeding or at the time of any such sale or exercise of any such other rights
(a) the Lease shall be in full force and effect and (b) Tenant shall not be in
default beyond any applicable notice and cure periods under any of the terms,
covenants or conditions of the Lease or of this Agreement on Tenant’s part to
be observed or performed.

 

3.                                       ATTORNMENT.  If Lender or any other subsequent purchaser
of the Property shall become the owner of the Property by reason of the
foreclosure of the Security Instrument or the acceptance of a deed or
assignment in lieu of foreclosure or by reason of any other enforcement of the
Security Instrument (Lender or such other purchaser being hereinafter referred
as “Purchaser”), and the conditions set forth in Section 2 above have been
met at the time Purchaser becomes owner of the Property, the Lease shall not be
terminated or affected thereby but shall continue in full force and effect as a
direct lease between Purchaser and Tenant upon all of the terms, covenants and
conditions set forth in the Lease and in that event, Tenant agrees to attorn to
Purchaser and Purchaser by virtue of such acquisition of the Property shall be
deemed to have agreed to accept such attornment, provided, however, that
Purchaser shall not be (i) liable for the failure of any prior landlord (any
such prior landlord, including Landlord, being hereinafter referred to as a
“Prior Landlord”) to perform any obligations of Prior Landlord under the Lease
which have accrued prior to the date on which Purchaser shall become the owner
of the Property provided such Purchaser cures any continuing default of Prior
Landlord under the Lease, (ii) subject to any offsets, defenses, abatements or
counterclaims which shall have accrued in favor of Tenant against any Prior
Landlord prior to the date upon which Purchaser shall become the owner of the
Property, (iii) liable for the return of rental security deposits, if any, paid
by Tenant to any Prior Landlord in accordance with the Lease unless such sums
are actually received by Purchaser, (iv) bound by any payment of rents,
additional rents or other sums which Tenant may have paid more than one (1)
month in advance to any Prior Landlord unless (i) such sums are actually
received by Purchaser or (ii) such prepayment shall have been expressly
approved of by Purchaser or (v) bound by any agreement terminating or amending
or modifying the rent, term, commencement date or other material term of the
Lease, or any voluntary surrender of the premises demised under the Lease, made
without Lender’s or Purchaser’s prior

 

 

written consent prior to the time Purchaser
succeeded to Landlord’s interest.  In
the event that any liability of Purchaser does arise pursuant to this Agreement
or the Lease, such liability shall be limited and restricted to Purchaser’s
interest in the Property and shall in no event exceed such interest.

 

4.                                       NOTICE
TO TENANT.  After notice is given to
Tenant by Lender that the Landlord is in default under the Note and the
Security Instrument and that the rentals under the Lease should be paid to
Lender pursuant to the terms of the assignment of leases and rents executed and
delivered by Landlord to Lender in connection therewith, Tenant shall
thereafter pay to Lender or as directed by the Lender, all rentals and all
other monies due or to become due to Landlord under the Lease and Landlord
hereby expressly authorizes Tenant to make such payments to Lender and hereby
releases and discharges Tenant from any liability to Landlord on account of any
such payments.

 

5.                                       NOTICE
TO LENDER AND RIGHT TO CURE.  Tenant
shall notify Lender of any default by Landlord under the Lease and agrees that,
notwithstanding any provisions of the Lease to the contrary, no notice of
cancellation thereof or of an abatement shall be effective unless Lender shall
have received notice of default giving rise to such cancellation or abatement
and shall have failed within sixty (60) days after receipt of such notice to
cure such default, or if such default cannot be cured within sixty (60) days,
shall have failed within sixty (60) days after receipt of such notice to commence
and thereafter diligently pursue any action necessary to cure such
default.  Notwithstanding the foregoing,
Lender shall have no obligation to cure any such default.

 

6.                                       NOTICES.  All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged by
the recipient thereof and confirmed by telephone by sender, (ii) one (1)
Business Day (hereinafter defined) after having been deposited for overnight
delivery with any reputable overnight courier service, or (iii) three (3)
Business Days after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:

 

	
  If to Tenant:

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
  One AAR Place

  
	
   

  	
   

  	
  1100 North Wood
  Dale Road

  
	
   

  	
   

  	
  Wood Dale,
  Illinois 60191

  
	
   

  	
   

  	
  Attention:  Tim Romenesko

  
	
   

  	
   

  	
  Telephone:  (630) 227-2090

  
	
   

  	
   

  	
  Facsimile:   (630) 227-2101

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to Lender:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

or addressed as such party may from time to time designate by written
notice to the other parties.  For
purposes of this Section 6, the term “Business Day” shall mean a day on
which commercial banks are not authorized or required by law to close in the
state where the Property is located. 
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.

 

7.                                       SUCCESSORS
AND ASSIGNS.  This Agreement shall
be binding upon and inure to the benefit of Lender, Tenant and Purchaser and
their respective successors and assigns.

 

8.                                       GOVERNING LAW.  This Agreement shall be deemed to be a
contract entered into pursuant to the laws of the State where the Property is
located and shall in all respects be governed, construed, applied and enforced
in accordance with the laws of the State where the Property is located.

 

9.                                       MISCELLANEOUS.  This Agreement may not be modified in any
manner or terminated except by an instrument in writing executed by the parties
hereto.  If any term, covenant or
condition of this Agreement is held to be invalid, illegal or unenforceable in
any respect, this Agreement shall be construed without such provision.  This Agreement may be executed in any number
of duplicate originals and each duplicate original shall be deemed to be an
original.  This Agreement may be
executed in several counterparts, each of which counterparts shall be deemed an
original instrument and all of which together shall constitute a single
Agreement.  The failure of any party
hereto to execute this Agreement, or any counterpart hereof, shall not relieve
the other signatories from their obligations hereunder.  Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.

 

 

[NO FURTHER TEXT ON
THIS PAGE]

 

 

IN WITNESS WHEREOF, Lender and Tenant have
duly executed this Agreement as of the date first above written.

 

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  AAR ALLEN SERVICES, INC., an Illinois
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  The undersigned accepts and agrees to the
  provisions of Section 4 hereof:

  	
   

  
	
   

  	
   

  
	
  LANDLORD:

  	
   

  
	
   

  	
   

  
	
  iSTAR GARDEN CITY LLC,

  a Delaware limited liability company

  	
   

  
	
   

  	
   

  
	
  By: iStar Financial Inc., a Maryland
  corporation

  	
   

  
	
  Its: Sole Class A Member

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
							

 

 

EXHIBIT E

 

Fair Market Value
Determination For Premises or any Site

 

Determination of fair market value of the Premises under paragraph 14
of this Lease shall be made in accordance with the following procedures:

 

(a)                                  Fair
market value of the Premises shall be determined by the agreement of two (2) MAI
appraisers (each, an “Initial Appraiser”), one of which shall be
selected by Landlord and the other of which shall be selected by Tenant as set
forth in this Exhibit E.  Tenant shall
identify in writing, as part of Tenant’s written notice exercising the purchase
option set forth in paragraph 14, the Initial Appraiser selected and retained
by Tenant and specifically identify such Initial Appraiser’s name, address,
phone number and qualifications as an appraiser.  Within thirty (30) days after receipt of notice of Tenant’s
Initial Appraiser, Landlord shall select its Initial Appraiser and notify
Tenant in writing of the name, address, phone number and qualifications of such
appraiser.  Within five (5) days after
Tenant receives from Landlord such notice of Landlord’s Initial Appraiser, each
of Landlord and Tenant shall direct, in writing with a copy to the other party,
its Initial Appraiser to work with the other party’s Initial Appraiser to
endeavor to determine and reach agreement upon the fair market value of the
Premises, considered as encumbered by this Lease, and thereafter to deliver in
writing to Landlord and Tenant within thirty (30) days (such 30-day period, the
“Valuation
Period”) the agreed-upon fair market value (the “Valuation
Notice”).  The costs and
expenses of each Initial Appraiser shall be paid by the party selecting such
Initial Appraiser.  If Tenant fails to
identify in writing an Initial Appraiser as required by this Exhibit E,
Landlord shall identify an Initial Appraiser on behalf of Tenant; provided,
however, Tenant shall be liable for the costs and expenses of such Initial
Appraiser identified on Tenant’s behalf by Landlord as if Tenant had selected
such Initial Appraiser.

 

(b)                                 If
the Initial Appraisers are not able to reach agreement upon the fair market
value within the Valuation Period, within ten (10) days after the end of the
Valuation Period each Initial Appraiser shall deliver a written notice to
Landlord, Tenant, and the other Initial Appraiser setting forth (i) such
Initial Appraiser’s valuation of the fair market value (each, an “Initial
Valuation”) and (ii) the name, address and qualifications of a third
MAI appraiser selected jointly by the Initial Appraisers (the “Third
Appraiser”).  The Initial
Appraisers shall, in writing with a copy to Landlord and Tenant, direct the
Third Appraiser (or substitute Third Appraiser) to determine a valuation of the
fair market value of the Premises, considered as encumbered by this Lease, and
to deliver in writing to Landlord, Tenant and the Initial Appraisers such
valuation (the “Third Valuation”) within twenty (20) days of the date of the
written direction retaining such Third Appraiser.  The fair market value shall be the arithmetic mean of (A) the
Third Valuation and (B) the Initial Valuation closer to the Third
Valuation.  If the Third Valuation is
exactly between the two Initial Valuations, then the fair market value shall be
the Third Valuation.  If the Initial
Appraisers are unable to agree upon the designation of a Third Appraiser within
the requisite time period or if the Third Appraiser selected does not make a
valuation of the fair market value within twenty (20) days after being directed
by the Initial Appraisers, then such Third Appraiser or a substitute Third
Appraiser, as

 

 

applicable,
shall, at the request of Landlord or Offeror, be appointed by the President or
Chairman of the American Arbitration Association in the area in which the
Premises are located which is the subject of the fair market valuation
determination determined hereunder.  The
costs and expenses of the Third Appraiser (and substitute Third Appraiser and
the American Arbitration Association, if applicable) shall be divided evenly
between, and paid for by, Landlord and Tenant.

 

(c)                                  All
appraisers selected or appointed pursuant to this Exhibit E shall
be independent qualified appraisers. 
Such appraisers shall have no right, power or authority to alter or
modify the provisions of this Lease, and such appraisers shall determine the
fair market value of the Premises, considered as encumbered by this Lease.

 

(d)                                 Notwithstanding
the foregoing, if Landlord and Tenant are able to agree upon a fair market
value of the Premises, prior to the date on which Tenant receives notice of
Landlord’s Initial Appraiser, Landlord and Tenant shall execute an agreement
setting forth such agreed-upon fair market value of the Premises, and waiving
each party’s right to have the fair market value of the Premises, determined in
accordance with the procedures set forth in paragraphs (a) and (b) of this Exhibit
E.

 

 

EXHIBIT F

 

Irrevocable
Standby Letter Of Credit Number
        

 

	
  LETTER OF CREDIT AMOUNT

  	
   

  	
  ISSUE DATE

  	
   

  	
  EXPIRATION
  DATE

  	
   

  
	
  USD
  $                

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  BENEFICIARY:

  	
  APPLICANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
  C/O ISTAR FINANCIAL INC.

  	
   

  
	
  1114 AVENUE OF THE AMERICAS, 27TH
  FLOOR

  	
   

  
	
  NEW YORK, NEW YORK 10036

  	
   

  
	
  ATTN: 
  CHIEF OPERATING OFFICER

  	
   

  
	
   

  	
   

  
	
  WITH A COPY TO:

  	
  WITH A FURTHER COPY TO:

  
	
   

  	
   

  
	
  ISTAR FINANCIAL INC.

  	
   

  
	
  1114 AVENUE OF THE AMERICAS, 27TH
  FLOOR

  	
  3480 PRESTON RIDGE ROAD, SUITE 575

  
	
  NEW YORK, NEW YORK 10036

  	
  ALPHARETTA, GEORGIA 30005

  
	
  ATTN: 
  GENERAL COUNSEL

  	
  ATTN: 
  DIRECTOR OF LEASE

  
	
   

  	
  ADMINISTRATION

  

 

GENTLEMEN:

 

WE HEREBY OPEN OUR
IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR FOR THE ACCOUNT OF THE ABOVE
REFERENCED APPLICANT IN THE TOTAL AGGREGATE AMOUNT OF USD
                   
WHICH IS AVAILABLE BY PAYMENT OF YOUR DRAFT(S) AT SIGHT DRAWN ON OURSELVES.

 

IT IS A CONDITION OF THIS
LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY EXTENDED WITHOUT WRITTEN
AMENDMENT FOR ONE YEAR FROM THE PRESENT OR ANY FUTURE EXPIRY DATE UNLESS AT
LEAST THIRTY (30) DAYS PRIOR TO SUCH EXPIRATION DATE, WE NOTIFY YOU IN WRITING
AT THE ABOVE ADDRESS THAT WE ELECT NOT TO RENEW THIS LETTER OF CREDIT FOR ANY
SUCH ADDITIONAL PERIOD(S).

 

THIS LETTER OF CREDIT IS
TRANSFERABLE IN ITS ENTIRETY.  WE SHALL
NOT RECOGNIZE ANY TRANSFER OF THE CREDIT UNTIL AN EXECUTED TRANSFER REQUEST IN
A FORM SUITABLE TO US, BEARING CERTIFICATION BY YOUR BANKERS THAT THE SIGNATURE
IS VALID, IS FILED WITH US, AND NOTICE OF THE TRANSFER ENDORSED ON THE REVERSE OF
THIS CREDIT BY US.

 

THIS LETTER OF CREDIT IS
SUCCESSIVELY TRANSFERABLE IN ITS ENTIRETY.

 

WE HEREBY AGREE WITH YOU
THAT DRAFT(S) DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF
THIS CREDIT SHALL BE DULY HONORED IF PRESENTED TOGETHER WITH DOCUMENT(S) AS
SPECIFIED ABOVE AND THE ORIGINAL OF THIS CREDIT, AT OUR OFFICE LOCATED AT
                                                                                                ,
ATTENTION:  STANDBY LETTER OF CREDIT
DEPARTMENT ON OR BEFORE THE ABOVE STATED EXPIRY DATE OR ANY AUTOMATICALLY
EXTENDED EXPIRY DATE AS PROVIDED FOR HEREIN.

 

DRAFT(S) DRAWN UNDER THIS
CREDIT MUST SPECIFICALLY REFERENCE OUR CREDIT NUMBER.

 

THIS LETTER OF CREDIT IS
SUBJECT TO THE 1998 INTERNATIONAL STANDBY PRACTICES, INTERNATIONAL CHAMBER OF
COMMERCE PUBLICATION NO. 590 (“ISP98”).

 

	
  SINCERELY,

  
	
   

  
	
   

  	
   

  
	
  AUTHORIZED SIGNATURE

  

 

 

EXHIBIT F-1

 

Approved Letter Of
Credit

 

 

EXHIBIT G

 

Good Working Order Items

 

Roof

 

•        Flashings

•        No
bubbles or holes on roof surface

•        Drains
free and clear

•        Skylights
and flashings

•        All
vents and stacks

•        Curbs

•        Expansion
joints

 

Asphalt paved area 

 

•        Sealed
and striped within last 12 months

•        No
dips or holes

 

Plumbing

 

•        Bathrooms
– toilets, sinks, urinals

 

Electrical

 

•        Master
switch boxes

•        Transformers

•        Receptacles
and switches

•        Lighting

 

Fire and Safety

 

•        Sprinkler
system will have been drained, flow tested and certified by a licensed
contractor within the last 6 months

•        Security
System

 

HVAC

 

•        Roof
top unit

•        Controls

•        Filters
replaced within last 6 months

•        All
drain lines to have been cleaned within last 3 months

 

 

EXHIBIT H

 

Repair Items

 

The following
items noted are those more specifically described as Immediate Needs in
Property Condition Assessment report prepared by Aaron & Wright Technical
Services Incorporated for iStar Financial Inc. and dated September 16,
2003:

 

•                  Repair
severely deteriorated asphalt-paved areas and parking lot throughout the
subject site. (Report Section 5.2 Paving and Curbing)

 

•                  Repair
deteriorated section of roofing membrane at the west side of the subject
building and replace ballasted roofing at northwest and west end
section of subject building. (Report Section 6.3 Roofing)

 

 

EXHIBIT I

 

Insurance Requirements for Underground Tanks

 

Tenant shall, at its own expense, maintain and keep in force during the
period of the Lease Agreement, the following additional coverage:

 

	
  •                                          Pollution
  Legal Liability (with specific coverage
  for legal liability involving the Underground Tanks)

  	
   

  	
  $1,000,000
  per incident; $2,000,000 aggregate

  

 

 

The liability policies should name Landlord and its affiliates as
certificate holders and additional insureds as follows:

 

iStar Garden City LLC

iStar Financial Inc., and its

Subsidiaries, successors and assigns

3480 Preston Ridge Rd., Suite 575

Alpharetta, GA 30005

 

 

GUARANTY

 

THIS GUARANTY (as amended, modified and restated from time to time is
herein called the “Guaranty”) is made as of October 3, 2003, by AAR CORP., a Delaware
corporation (“Guarantor”), to
and for the benefit of iSTAR GARDEN CITY LLC, a Delaware limited liability
company (such limited liability company, together with its successors,
transferees and assigns is herein called the “Landlord”).

 

RECITALS

 

A.                                    AAR
Allen Services, Inc., an Illinois corporation (“Tenant”), is entering into
that certain Lease Agreement with Landlord dated as of the date hereof (such
Lease Agreement as modified and restated from time to time is herein called the
“Lease”),
relating to the property having a common address of 747 Zeckendorf Boulevard,
Garden City, New York.  All terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the Lease.

 

B.                                    Guarantor
owns all of the issued and outstanding shares in Tenant, directly or
indirectly.  Guarantor shall receive
substantial benefits from Tenant’s entering into the Lease.  Guarantor has received and reviewed, and
hereby approves and acknowledges the terms and conditions of the Lease.

 

C.                                    The
execution and delivery of this Guaranty by Guarantor is a condition precedent
to Landlord’s entering into the Lease with Tenant, and without this Guaranty,
Landlord would be unwilling to enter into the Lease.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby conclusively acknowledged by Guarantor, and to
induce Landlord to enter into the Lease with Tenant, Guarantor hereby
absolutely, unconditionally and irrevocably agrees as follows:

 

1.                                      Guaranty.

 

(a)                                  Guarantor,
as a primary obligor and not merely as a surety, hereby absolutely,
unconditionally and irrevocably guarantees to Landlord the prompt and complete
payment and, in the case of non-pecuniary obligations, performance of all of
the Guaranteed Obligations (as defined below) in full, when and as the same
shall become due, whether on any due date or performance date, or upon demand
or otherwise.  This Guaranty constitutes
the agreement to pay money and to act in the first instance and is not to be
construed as a contract of indemnity or a guaranty of collectability.

 

(b)                                 As
used in this Guaranty, “Guaranteed Obligations” means,
collectively, all of the following:

 

 

(i)                                     all
of the indebtedness, liabilities and obligations of every kind and nature of
Tenant to Landlord relating to the payment of money arising under or in any way
relating to the Lease, howsoever created, incurred or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing, due or to
become due, and howsoever owned, held, or acquired by Landlord (collectively,
with the items set forth in (iii) and (iv) below, the “Monetary Obligations”),
including all of Tenant’s payment obligations owed to Landlord under the Lease,
including timely full payment of all Rent and all other amounts payable by
Tenant under the Lease, including, to the extent applicable, all payments
required under Sections 14 and 16 of the Lease;

 

(ii)                                  all
of the covenants, liabilities, and obligations of every kind and nature of
Tenant to Landlord which do not relate to the payment of money arising under or
in any way relating to the Lease, howsoever created, incurred or evidenced,
whether direct or indirect, absolute or contingent, new or hereafter existing,
due or to become due, and howsoever owned, held, or acquired by Landlord;

 

(iii)                               all
interest, fees, costs and expenses due Landlord after the filing of a
bankruptcy petition by or against Tenant regardless of whether such amounts can
be collected during the pendency of the bankruptcy proceedings; and

 

(iv)                              all
Enforcement Costs (as defined herein).

 

2.                                      Representations
and Warranties.  Guarantor
acknowledges and agrees that Landlord’s agreement to enter into the Lease with
Tenant is of substantial and material benefit to Guarantor and further agrees
that the following shall constitute representations and warranties of
Guarantor, and Guarantor acknowledges that Landlord intends to enter into the
Lease in reliance thereon:

 

(a)                                  There
is no existing event of default, and no event has occurred which with the
passage of time or the giving of notice or both will constitute an event of
default, under any agreement to which Guarantor is a party, the effect of which
event of default will impair performance by Guarantor of Guarantor’s
obligations pursuant to and as contemplated by the terms of this Guaranty, and
neither the execution and delivery of this Guaranty nor compliance with the
terms and provisions hereof will (i) violate any presently existing provision
of law or any presently existing regulation, order, writ, injunction or decree
of any court or governmental department, commission, board, bureau, agency or
instrumentality, or (ii) conflict or will be inconsistent with, or will result
in any breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, instrument,
document, agreement or contract of any kind that creates, represents, evidences
or provides for any lien, charge or encumbrance upon any of the property or
assets of Guarantor, or any other indenture, mortgage, deed of trust, instrument,
document, agreement or contract of any kind to which Guarantor is a party or by
which Guarantor or any of Guarantor’s property may be subject, or in the
event of any such conflict, the required consent or waiver of the other party
or parties thereto has been validly granted, is in full force and effect, is
valid and sufficient therefor and has been approved in writing by Landlord;

 

 

 

(b)                                 There
are no actions, suits or proceedings pending or, to Guarantor’s knowledge,
threatened against Guarantor before any court or any governmental,
administrative, regulatory, adjudicatory or arbitrational body or agency of any
kind that will adversely affect performance by Guarantor of Guarantor’s
obligations pursuant to and as contemplated by the terms and provisions of this
Guaranty;

 

(c)                                  Neither
this Guaranty nor any document, financial statement, credit information,
certificate or statement heretofore furnished or required herein to be
furnished to Landlord by Guarantor contains any untrue statement of fact or omits
to state a fact material to this Guaranty; and

 

(d)                                 Guarantor
is a corporation, duly incorporated and in good standing under the laws of the
State of Delaware and has as its principal place of business at One AAR Place,
1100 North Wood Dale Road, Wood Dale, Illinois 60191.

 

3.                                      Covenants.  Guarantor agrees and covenants that:

 

(a)                                  Any
indebtedness of Tenant now or hereafter existing or owing, together with any
interest thereon, to Guarantor, is hereby subordinated to the Rent payments and
any other payments due from Tenant to Landlord under the Lease, and such
indebtedness of Tenant to Guarantor shall be collected, enforced and received
by Guarantor in trust for the benefit of Landlord, and shall be paid over to
Landlord on account of the Rent payments and other payments due from Tenant to
Landlord to the extent Tenant fails to pay the same to Landlord and Guarantor
is obligated under this Guaranty for such Rent payments, but without impairing
or affecting in any manner the liability of Guarantor under the other
provisions of this Guaranty;

 

(b)                                 (1)
No payment by Guarantor under any provision of this Guaranty shall entitle
Guarantor, by subrogation to the rights of Landlord or otherwise, to (i) any
payment by Tenant or out of its property, or (ii) any payment from or rights in
any applicable bonds, title insurance certifications, commitments or
indemnities or other security held by or for the benefit of Landlord in
connection with the Premises; (2) until Tenant’s Guaranteed Obligations are
indefeasibly paid in full and all periods under applicable bankruptcy law for
the contest of any payment by any Guarantor or Tenant as a preferential or
fraudulent payment have expired, Guarantor knowingly, and with advice of
counsel, waives, relinquishes, releases and abandons all rights and claims to
indemnification, contribution, reimbursement, subrogation and payment which
such Guarantor may now or hereafter have by and from Tenant and the successors
and assigns of Tenant, for any payments made by Guarantor to Landlord,
including, without limitation, any rights which might allow Tenant, Tenant’s
successors, a creditor of Tenant, or a trustee in bankruptcy of Tenant to claim
in bankruptcy or any other similar proceedings that any payment made by Tenant
or Tenant’s successors and assigns to Landlord was on behalf of or for the
benefit of Guarantor and that such payment is recoverable by Tenant, a creditor
or trustee in bankruptcy of Tenant as a preferential payment, fraudulent
conveyance, payment of an insider or any other classification of payment which
may otherwise be recoverable from Landlord; and (3) unless and until Tenant’s
Guaranteed Obligations and Guarantor’s obligations under this 

 

 

Guaranty have been indefeasibly paid and
performed in full, Guarantor will not assign or otherwise transfer any such
claim to any other person or entity.

 

(c)                                  Landlord,
in its sole discretion, may at any time enter into agreements with Tenant to
amend and modify the Lease, and may waive or release any provision or
provisions thereof and, with reference thereto, may make and enter into any
such agreement or agreements as Landlord or Tenant may deem proper or
desirable, without any notice to or further assent from Guarantor and without
in any manner impairing or affecting this Guaranty or any of Landlord’s rights
hereunder;

 

(d)                                 Landlord
may enforce this Guaranty without the necessity at any time of resorting to or
exhausting any other remedy or any other security or collateral and without the
necessity of proceeding against Tenant;

 

(e)                                  Nothing
contained herein or otherwise shall prevent Landlord from pursuing concurrently
or successively all rights and remedies available to Landlord pursuant to any
document or agreement in law or in equity and against any persons, firms or
entities whatsoever (and particularly, but not by way of limitation, Landlord
may exercise any rights available to Landlord under the Lease), and the
exercise of any of Landlord’s rights or the completion of any of Landlord’s
remedies shall not constitute a discharge of any obligation of Guarantor
hereunder, it being the purpose and intent of Guarantor that Guarantor’s
obligations shall be absolute, independent and unconditional under any and all
circumstances whatsoever;

 

(f)                                    The
liability of Guarantor hereunder or any remedy for the enforcement thereof
shall in no way be affected by (i) the release or discharge of Tenant in any
creditors’ receivership, bankruptcy or other similar proceedings, (ii) the
impairment, limitation, modification or termination of the liabilities of
Tenant to Landlord or the estate of Tenant in bankruptcy, or of any lien or
security interest securing said liabilities, or any remedy for the enforcement
of Tenant’s said liability under the Lease, resulting from the operation of any
present or future provision of Title 11 of the United States Code or other
similar statute or from the decision in any court arising from, (iii) the
rejection or disaffirmance of the Lease in any such proceedings, (iv) any
disability or other defense of Tenant, (v) the cessation from any cause
whatsoever of the liability of the Tenant to Landlord, or (vi) any defense,
current or future, of Guarantor to any action, suit or proceeding at law or
otherwise, that may be instituted on this Guaranty;

 

(g)                                 This
Guaranty shall continue to be effective and be deemed to have continued in
existence or be reinstated (as the case may be) if at any time payment of all
or any part of any sum payable pursuant to the Lease is rescinded or otherwise
required to be returned by the payee upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the payor, all as though such
payment to Landlord had not been made, regardless of whether Landlord contested
the order requiring the return of such payment.  The obligations of Guarantor pursuant to the preceding sentence
shall survive any termination, cancellation, or release of this Guaranty;

 

 

(h)                                 Guarantor
hereby grants Landlord permission to deliver to any party holding a mortgage or
deed of trust on all or any portion of the Premises (each herein a “Mortgagee”)
copies of all financial statements and reports required to be delivered by
Tenant to Landlord under the Lease;

 

(i)                                     Upon
ten (10) days’ prior notice, Guarantor will permit Landlord and its
professional representatives to visit Guarantor’s offices, and discuss
Guarantor’s affairs and finances with appropriate officers, and will make
available such information as Landlord may reasonably request bearing on
Guarantor, the Premises or the Lease, and Landlord shall maintain the
confidentiality of any information designated by Guarantor as “nonpublic” and
Landlord will execute and use its reasonable efforts to cause Landlord’s
professional representatives to execute appropriate confidentiality agreements;
and

 

(j)                                     On
the date hereof after giving effect to this Guaranty, the Guarantor will be
Solvent.  As used in this paragraph, the
term “Solvent” means, with respect to a particular date, that on such date(A)
the present fair market value (or present fair saleable value) of the assets of
Guarantor is not less than the total amount required to pay the probable
liabilities of Guarantor on its total existing debts and liabilities (including
contingent liabilities) as they become absolute and matured, (B) Guarantor is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and commitments as they mature and become due in the
normal course of business, (C) Guarantor is not incurring debts or liabilities
beyond its ability to pay as such debts and liabilities mature and (D)
Guarantor is not engaged in any business or transaction, and is not about to
engage in any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which Guarantor is engaged.  In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.

 

4.                                      Continuing
Guaranty.  Guarantor agrees that the
obligations of Guarantor to Landlord hereunder constitute an absolute, present,
primary, continuing, irrevocable, unlimited, unconditional guaranty of payment
and performance and, without limitation, is not conditioned or contingent upon
any effort to attempt to seek payment or performance from any other person or
entity (whether or not pursuant to this Guaranty) or upon any other condition
or contingency.  In addition, the
obligations of Guarantor hereunder shall not be subject to any counterclaim,
set-off, abatement, suspension, deduction, deferment or defense, and shall
remain in full force and effect without regard to, and shall not be released,
discharged or affected in any way by any circumstances or condition (whether or
not Guarantor shall have any knowledge thereof), including:

 

(a)                                  any
lack of validity or enforceability of the Lease;

 

(b)                                 any
termination of the Lease in accordance with its terms or amendment,
modification or other change in the Lease;

 

 

(c)                                  any
failure, omission or delay on the part of Tenant, Guarantor or Landlord to
conform or comply with any term of any of the Lease;

 

(d)                                 any
waiver, compromise, release, settlement, forbearance or extension of time of
payment or performance or observance of any of the obligations or agreements
contained in the Lease;

 

(e)                                  any
action or inaction by Landlord under or in respect of the Lease, any failure,
lack of diligence, omission or delay on the part of Landlord to enforce, assert
or exercise any right, power or remedy conferred on Landlord in the Lease, or
any other action or inaction on the part of Landlord;

 

(f)                                    the
death or incapacity of Guarantor, as applicable, or any voluntary or
involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment,
assignment for the benefit of creditors, composition, receivership,
liquidation, marshalling of assets and liabilities or similar events or
proceedings with respect to Tenant or Guarantor, as applicable, or any of their
respective properties, or any action taken by any trustee or receiver or by any
court in any such proceeding;

 

(g)                                 any
merger or consolidation of Tenant into or with any other entity, or any sale,
lease or transfer of any of the assets of Tenant or Guarantor to any other
person or entity;

 

(h)                                 any
change in the ownership of the 100% of issued and outstanding stock owned in
Tenant by Guarantor or any other change in the relationship between Tenant and
Guarantor, or any termination of any such relationship;

 

(i)                                     to
the extent permitted by law, any release or discharge by operation of law of
Tenant from any obligation or agreement contained in the Lease;

 

(j)                                     any
conveyance, mortgage, or other transfer of all or any part of Tenant’s interest
in the Premises, or all or part of Guarantor’s interest therein;

 

(k)                                  any
assumption by any person of any or all of Tenant’s obligations under the Lease,
or Tenant’s assignment of any or all of its interest in the Lease (which
assignment is not permitted by the Lease without Landlord’s written consent);

 

(l)                                     the
power or authority or lack thereof of Tenant to execute, acknowledge or deliver
the Lease;

 

(m)                               any
defenses whatsoever that Tenant may or might have to the payment of the
Monetary Obligations, except for the payment thereof;

 

(n)                                 the
existence or non-existence of Tenant as a legal entity;

 

 

(o)                                 any
sale or assignment by Landlord of the Premises, this Guaranty, and/or the Lease
(including any assignment by Landlord to any Mortgagee consistent with the
provisions of Paragraph 10 of this Guaranty);

 

(p)                                 any
default by Tenant under the Lease or any right of setoff, counterclaim or
defense (other than payment in full of the Monetary Obligations in accordance
with the terms of the Lease) that Guarantor may or might have to its respective
undertaking, liabilities, and obligations hereunder, each and every such
defense being hereby waived by Guarantor; or

 

(q)                                 to
the extent permitted by law, any other occurrence, circumstance, happening or
event, whether similar or dissimilar to the foregoing and whether foreseen or
unforeseen, which otherwise might constitute a legal or equitable defense or
discharge of the liabilities of a guarantor or surety or which otherwise might
limit recourse against Tenant or Guarantor.

 

5.                                      Waivers.  Guarantor irrevocably waives (i) notice of
acceptance of this Guaranty by the Landlord and any and all notices and demands
of every kind that may be required to be given by any statute or rule or law,
(ii) any defense arising by reason of any disability or other defense of
Tenant, (iii) presentment, demand, notice of dishonor, protest and all other
notices whatsoever, (iv) any right to participate in any security now or
hereafter held by Landlord, (v) any right to enforce remedies Landlord now has,
or later may have, against Tenant, Guarantor, or any other party, (vi)
diligence in collection or protection of or realization upon any obligation
hereunder, or any security for or guaranty of any of the foregoing, and any and
all formalities that otherwise might be legally required to charge Tenant,
Guarantor, or any other party with liability, (vii) any right to require
Landlord to proceed against Tenant or any other person at any time or to
proceed against or exhaust any security held by Landlord at any time or to
pursue or exhaust any other remedy whatsoever at any time, (viii) the defense
of any statute of limitations affecting the liability of Guarantor hereunder or
the enforcement thereof, to the extent permitted by law, (ix) any defense
arising by reason of any invalidity or unenforceability of the Lease, or any
defense of Tenant, or any disability of Tenant, or by any cessation of the
liability of Tenant from any cause whatsoever, (x) any duty of
Landlord to advise Guarantor of any information known to Landlord regarding any
and all favorable or unfavorable information, financial or otherwise, about the
Premises learned or acquired by Landlord at any time (it is agreed that
Guarantor assumes the responsibility for being and keeping informed regarding
such information), (xi) all rights at law or in equity to seek subrogation,
contribution, indemnification or any other form of reimbursement or repayment
from Tenant or any other person or entity now or hereafter primarily or
secondarily liable for any of Tenant’s obligations for any disbursements made
by Guarantor under or in connection with this Guaranty and further agrees that
Guarantor shall have no claims of any kind or type against Tenant as a result
of any payment made by Guarantor to Landlord, all such claims being
specifically waived, (xii) any right to enforce any remedy which Landlord now
has or may hereafter have against Tenant and any benefit of, and the right to
participate in, any security now or hereafter held by Landlord, (xiii) any
defense arising by reason of any act or failure to act by Landlord, any
election of remedies made by Landlord or any other election afforded to
Landlord pursuant to applicable law, whether or not pursuant to a bankruptcy,
insolvency, liquidation, reorganization or similar proceeding filed by or
against 

 

 

Tenant, (xiv) notice of any of the
circumstances or conditions set forth in items (a) through (q), inclusive, of
Paragraph 4 above, and (xv) the requirement of Landlord to mitigate
damages.

 

6.                                      Effect
of Landlord’s Delay or Action.  No
delay on the part of Landlord in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by Landlord of
any right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy. 
No action of Landlord permitted hereunder shall in any way affect or
impair the rights of Landlord and the obligation of Guarantor under this
Guaranty.

 

7.                                      Enforcement.  All of the remedies set forth herein or
provided by the Lease or law or equity shall be equally available to Landlord,
and the choice by Landlord of one such alternative over another shall not be
subject to question or challenge by Guarantor, nor shall any such choice be
asserted as a defense, setoff, or failure to mitigate damages in any action,
proceeding, or counteraction by Landlord to recover or seek any other remedy
under this Guaranty, nor shall such choice preclude Landlord from subsequently
electing to exercise a different remedy. The obligations of Guarantor hereunder
are independent of the obligations of Tenant and, in the event of a default
hereunder, a separate action or actions may be brought and prosecuted against
Guarantor whether or not Guarantor is the alter ego of Tenant and whether or
not Tenant is joined therein or a separate action or actions are brought
against Tenant.  Guarantor agrees that
one or more successive actions may be brought against Guarantor, as often as
Landlord deem advisable, until all of the Guaranteed Obligations are paid and
performed in full.

 

8.                                      Enforcement
Costs.  If:  (i) this Guaranty is placed in the hands of
an attorney for collection or is collected through any legal proceeding; (ii)
an attorney is retained to represent Landlord in any bankruptcy,
reorganization, receivership, or other proceedings affecting creditors’ rights
and involving a claim under this Guaranty or the Lease; (iii) an attorney is
retained to protect or enforce the Lease or to provide advice or other
representation with respect to the Premises or the Lease in connection with an
enforcement action or potential enforcement action; or (iv) an attorney is
retained to represent Landlord in any other legal proceedings whatsoever in
connection with this Guaranty or the Lease, then Guarantor shall pay to
Landlord upon demand all actual out of pocket attorney’s fees, costs and
expenses, including, court costs, filing fees, recording costs, expenses of
foreclosure, title insurance premiums, survey costs, minutes of foreclosure,
and all other costs and expenses incurred in connection therewith (all of which
are referred to herein as “Enforcement Costs”),
in addition to all other amounts due hereunder.

 

9.                                      Notices.  Any notice, demand, request, or other
communication which any party hereto may be required or may desire to give
hereunder shall be in writing, addressed as follows, and shall be deemed to
have been properly given, rendered, made and delivered (i) when sent by
certified mail, postage prepaid, return receipt requested, on the fifth (4th)
day after deposit in such mail, or (ii) when received by overnight delivery or
overnight courier delivery (or if such delivery is refused, the date of such
refusal) or (iii) by facsimile transmission with a confirmation copy sent by
overnight delivery or by overnight courier delivery addressed to the other
party as follows:

 

 

	
  If to Guarantor:

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
  One AAR Place

  
	
   

  	
   

  	
  1100 North Wood Dale Road

  
	
   

  	
   

  	
  Wood Dale, Illinois 60191

  
	
   

  	
   

  	
  Attention:

  	
  Tim Romenesko

  
	
   

  	
   

  	
  Telephone:

  	
  630.227.2090

  
	
   

  	
   

  	
  Fax:

  	
  630.227.2101

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
  One AAR Place

  
	
   

  	
   

  	
  1100 North Wood Dale Road

  
	
   

  	
   

  	
  Wood Dale, Illinois 60191

  
	
   

  	
   

  	
  Attention:

  	
  Legal Department

  
	
   

  	
   

  	
  Telephone:

  	
  630.227.2040

  
	
   

  	
   

  	
  Fax:

  	
  630.227.2058

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Schiff Hardin & Waite

  
	
   

  	
   

  	
  623 Fifth Avenue

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Attention:

  	
  Christine A. McGuinness, Esq.

  
	
   

  	
   

  	
  Telephone:

  	
  212.745.0831

  
	
   

  	
   

  	
  Fax:

  	
  212.753.5044

  
	
   

  	
   

  	
   

  
	
  To Landlord:

  	
   

  	
  iStar Garden City LLC

  
	
   

  	
   

  	
  c/o iStar Financial Inc.

  
	
   

  	
   

  	
  1114 Avenue of the Americas

  
	
   

  	
   

  	
  27th Floor

  
	
   

  	
   

  	
  New York, New York  10036

  
	
   

  	
   

  	
  Attention:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
  Telephone:

  	
  212.930.9400

  
	
   

  	
   

  	
  Fax:

  	
  212.930.9494

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  iStar Garden City LLC

  
	
   

  	
   

  	
  c/o iStar Financial Inc.

  
	
   

  	
   

  	
  1114 Avenue of the Americas

  
	
   

  	
   

  	
  27th Floor

  
	
   

  	
   

  	
  New York, New York  10036

  
	
   

  	
   

  	
  Attention:

  	
  General Counsel

  
	
   

  	
   

  	
  Telephone:

  	
  212.930.9400

  
	
   

  	
   

  	
  Fax:

  	
  212.930.9494

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  

 

 

	
   

  	
   

  	
  Katten Muchin Zavis Rosenman

  
	
   

  	
   

  	
  525 West Monroe Street

  
	
   

  	
   

  	
  16th Floor

  
	
   

  	
   

  	
  Chicago, Illinois  60661-3693

  
	
   

  	
   

  	
  Attention:

  	
  Nina B. Matis, Esq.

  
	
   

  	
   

  	
   

  	
  Gregory P. L. Pierce, Esq.

  
	
   

  	
   

  	
  Telephone:

  	
  312.902.5541

  
	
   

  	
   

  	
  Fax:

  	
  312.902.1061

  

 

or at such other address as the party to be
served with notice may have furnished in writing to the party seeking or
desiring to serve notice as a place for the service of notice.  Notices given in any other fashion shall be
effective only upon receipt.

 

10.                               Assignment
and Modifications.  This Guaranty
shall be assignable by Landlord, its successors and assigns to any assignee of
all or a portion of Landlord’s rights under the Lease, including Mortgagee,
whether directly or by way of a grant of a security interest herein, without
the consent of Guarantor, and Guarantor shall execute, acknowledge and deliver
any documents reasonably requested by Landlord or such assignee in connection
therewith.  No modification, waiver,
amendment, discharge or change of this Guaranty shall be binding upon Landlord
except as expressly set forth in a writing duly signed and delivered on behalf
of Landlord.

 

11.                               Severability.  The parties hereto intend and believe that
each provision in this Guaranty comports with all applicable local, state and
federal laws and judicial decisions. 
However, if any provision or provisions, or if any portion of any
provision or provisions, in this Guaranty is found by a court of law to be in
violation of any applicable local, state, or federal law, statute, ordinance,
administrative or judicial decision, or public policy, and if such court
declares such portion, provision, or provisions of this Guaranty to be illegal,
invalid, unlawful, void or unenforceable as written, then it is the intent of
all parties hereto that such portion, provision, or provisions shall be given
force to the fullest possible extent that they are legal, valid and
enforceable, and that the remainder of this Guaranty shall be construed as if
such illegal, invalid, unlawful, void, or unenforceable portion, provision, or
provisions were not contained therein, and that the rights, obligations, and
interests of Guarantor and Landlord under the remainder of this Guaranty shall
continue in full force and effect.

 

12.                               Successors
and Assigns.  This Guaranty shall be
binding upon the heirs, executors, legal and personal representatives,
successors and assigns of Guarantor and shall inure to the benefit of
Landlord’s successors and assigns.

 

13.                               Jurisdiction.  With respect to any suit, action or
proceedings relating to this Guaranty, the Premises or the Lease (“Proceedings”) Guarantor (i) submits to the
non-exclusive jurisdiction of the state and federal courts located in the
County and State where any of the Premises are located or in the State of New
York and (ii) waives any objection which Guarantor may have at any time to the
laying of venue of any proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and further 

 

 

waives the right to object, with respect to
such Proceedings, that such court does not have jurisdiction over Guarantor.

 

14.                               Use
of Terms.  All personal pronouns
used in this Guaranty, whether used in the masculine, feminine or neuter
gender, shall include all other genders; the singular shall include the plural
and vice versa and shall refer solely to the parties signatory thereto except
where otherwise specifically provided. 
The words “include”, “includes”, “including” and any other derivation of “include” means
“including, but not limited to” unless specifically set forth to the contrary.

 

15.                               Material
Inducement.  Guarantor acknowledges
and agrees that Landlord is specifically relying upon the representations,
warranties, agreements and waivers contained herein and that such
representations, warranties, agreements and waivers constitute a material
inducement to Landlord to accept this Guaranty and to enter into the Lease and
the transaction contemplated therein.

 

16.                               Recitals
Incorporated.  The Recitals to this
Agreement are hereby incorporated into this Agreement together with all
exhibits, schedules and appendices hereto.

 

17.                               Governing
Law.  THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED UNDER THE INTERNAL LAWS (AS OPPOSED TO THE LAW OF
CONFLICTS) OF THE STATE OF NEW YORK.

 

18.                               WAIVER
OF JURY TRIAL.  GUARANTOR HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS GUARANTY OR ANY OTHER LOAN DOCUMENTS OR RELATING
THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS
GUARANTY AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.

 

19.                               Certificate.                                  Within
fifteen (15) days after request by Landlord, Guarantor shall deliver a
certificate confirming that this Guaranty is in full force and effect and
unamended (or, if amended, specifying such amendment), and whether, to the
knowledge of Guarantor, any default exists under the Lease or this Guaranty.

 

20.                               Refinance
Cooperation.                 If
Landlord proposes to finance or refinance the Premises, Guarantor shall
cooperate in the process, and shall negotiate in good faith any request made by
a prospective Mortgagee for changes or modifications to the Lease and this
Guaranty, and shall not unreasonably withhold its consent to any such proposed
change or modification so long as the same does not adversely affect any
significant right or obligation of Tenant under the Lease, shorten any notice
or cure period to which Tenant is entitled under the Lease or increase Tenant’s
obligations under the Lease or change Guarantor’s rights and obligations under
this Guaranty.  Guarantor agrees to
execute, acknowledge and deliver documents reasonably requested by the
prospective Mortgagee (such as a consent to the financing (without encumbering
Guarantor’s or Tenant’s assets), a consent to assignment of lease and of this 

 

 

Guaranty, estoppel certificate and a
subordination, non-disturbance and attornment agreement) customary for tenants
and their guarantors to sign in connection with mortgage loans to landlords, so
long as such documents are in form then customary among institutional lenders
(provided the same do not adversely change Tenant’s rights or obligations in a
way not previously changed by loan documents previously executed by Tenant in
connection with an earlier Mortgage or adversely change Guarantor’s rights and
obligations under this Guaranty). 
Guarantor shall permit Landlord and any Mortgagee or prospective
Mortgagee, at their expense, to meet with officers of Guarantor at Guarantor’s
offices and to discuss the Guarantor’s business and finances. On request of
Landlord, Guarantor agrees to provide any Mortgagee or prospective Mortgagee
the information to which Landlord is entitled hereunder, provided that if any
such information is non-public and designated as such by Guarantor, Landlord
will take reasonable steps to assure the confidentiality of such information.

 

[EXECUTION
PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, Guarantor has delivered
this Guaranty in as of the date first written above.

 

	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  AAR CORP., a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TIMOTHY
  J. ROMENESKO

  
	
   

  	
  Name:

  	
  Timothy J. Romenesko

  
	
   

  	
  Title:

  	
  Vice
  President & Chief Financial Officer

  
					

 

 

	
  STATE OF Illinois

  	
  )

  
	
   

  	
  )SS

  
	
  COUNTY
  OF DuPage

  	
  )

  

 

I, Jo-Ellen Kiddie, a Notary Public in and for said County, in the
State aforesaid, do hereby certify that Timothy J. Romenesko, personally known
to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that he
signed, sealed and delivered the same instrument as his free and voluntary act,
for the uses and purposes therein set forth.

 

GIVEN under my hand and notarial seal this 2nd day of October, 2003.

 

	
   

  	
  /s/ JO-ELLEN
  KIDDIE

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
   

  	
  My
  Commission expires:Exhibit 10.8

 

	
  

  	
  AMERICAN INDUSTRIAL REAL
  ESTATE ASSOCIATION

  

 

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — GROSS

(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, September 9,
2003, is made by and between  Bravante-Curci
Investors, L.P. (“Lessor”) and DPAC Technologies Corp., a
California corporation (“Lessee”),
(collectively the “Parties,” or
individually a “Party”).

1.2           Premises:  That certain real property, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
and commonly known as 3545 Howard Way, located in the County of Orange, State
of California, and generally described as (describe briefly the nature of the
property and, if applicable, the “Project”,
if the property is located within a Project) an approximate 24,026
rentable square foot, two-story, corporate headquarters building further
described as APN 415 112 20 (“Premises”).  (See also Paragraph 2)

1.3           Term:
5 years and -0- months (“Original Term”)
commencing June 1, 2004 (“Commencement Date”)
and ending May 31, 2009 (“Expiration Date”).  (See also Paragraph 3)

1.4           Early
Possession: upon lease execution through May 31, 2004 (“Early Possession Date”). (See also
Paragraphs 3.2 and 3.3)

1.5           Base
Rent:  $22,344.00 per month (“Base Rent”), payable on the 1st day of
each month commencing June 1, 2004. 
(See also Paragraph 4)

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

1.6           Base
Rent and Other Monies Paid Upon Execution:

(a)     Base Rent: $ 22,344.00 for the period June 2004.

(b)     Security Deposit: $ 25,227.00 (“Security Deposit”).  (See also Paragraph 5)

(c)     Association Fees: $                               for the period
                                                            

(d)     Other: $                  for
                                                                                                                                       .

(e)     Total Due Upon Execution of this Lease: $
47,571.

1.7           Agreed
Use: general office, warehouse, assembly, and manufacturing (See
also Paragraph 6)

1.8           Insuring
Party:  Lessor is the “Insuring Party”.  The annual “Base Premium”
is $                 (See also Paragraph 8)

1.9           Real
Estate Brokers: (See also Paragraph 15)

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

ý  Lee & Associates - Newport Beach, Inc. (Brian Garbutt and Mike
Meisenbach) represents Lessor exclusively (“Lessor’s Broker”); 

ý  Staubach (Ken
Ward and Ryan Hawkins) represents Lessee
exclusively (“Lessee’s Broker”);
or 

o                                                                     represents both Lessor and Lessee (“Dual Agency”).

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

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

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

ý   an
Addendum consisting of Paragraphs 51 through 56;

o   a
plot plan depicting the Premises;

o   a
current set of the Rules and Regulations;

ý   a
Work Letter; Appendix A

ý   other
(specify): Exhibit “B” - Signage.

 

2.             Premises.

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

2.2           Condition.  Lessor shall deliver the Premises to Lessee
broom clean and free of debris on the Commencement Date or the Early Possession
Date, whichever first occurs (“Start Date”),
and, so long as the required service contracts described in Paragraph 7.1(b)
below are obtained by Lessee and in effect within thirty days following the
Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, sump pumps, if any,
and all other such elements in the Premises, other than those constructed by
Lessee, shall be in good operating condition on said date and that the surface
and structural elements of the roof, bearing walls and foundation of any
buildings on the Premises (the “Building”)
shall be free of material defects.  If a
non-compliance with said warranty exists as of the Start Date, or if one of
such systems or

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

	
  ©1997 -
  American Industrial Real Estate Association

  	
  REVISED

  	
  FORM STG-8-7/01E

  

 

1

 

elements should malfunction or fail within
the appropriate warranty period, Lessor shall, as Lessor’s sole obligation with
respect to such matter, except as  otherwise
provided in this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense.  The warranty periods shall be as follows:
(i) 12 months as to the HVAC
systems, and elevator,  (ii) six
months to the remaining systems and other elements of the Building from occupancy.  If Lessee does not give Lessor the required notice within the
appropriate warranty period, correction of any such non-compliance, malfunction
or failure shall be the obligation of Lessee at Lessee’s sole cost and expense,
except for the roof, foundations, and bearing walls which are handled as
provided in paragraph 7.

2.3           Compliance.  Lessor warrants that the improvements on the
Premises comply with the building codes, applicable laws, covenants or
restrictions of record, regulations, and ordinances (“Applicable Requirements”) that were in effect at the time
that each improvement, or portion thereof, was constructed.  Said warranty does not apply to the use to
which Lessee will put the Premises, modifications which may be required by the
Americans with Disabilities Act or any similar laws as a result of Lessee’s use
(see Paragraph 50), or to any Alterations or Utility Installations (as defined
in Paragraph 7.3(a)) made or to be made by Lessee.  NOTE: Lessee is responsible for
determining whether or not the Applicable Requirements, and especially the
zoning, are appropriate for Lessee’s intended use, and acknowledges that past
uses of the Premises may no longer be allowed.  If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor’s expense.  If Lessee does not give Lessor written
notice of a non-compliance with this warranty within 6 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 so as to require during the
term of this Lease the construction of an addition to or an alteration of the
Premises and/or Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Unit, Premises and/or
Building (“Capital Expenditure”),
Lessor and Lessee shall allocate the cost of such work as follows:

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

(b)
If such Capital Expenditure is not the result of the specific and unique use of
the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph 7.1(d); provided, however,
that if such Capital Expenditure is required during the last 2 years of this
Lease or if Lessor reasonably determines that it is not economically feasible
to pay its share thereof, Lessor shall have the option to terminate this Lease
upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in
writing, within 10 days after receipt of Lessor’s termination notice that
Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure, Lessee
may advance such funds and deduct same, with Interest, from Rent until Lessor’s
share of such costs have been fully paid. 
If Lessee is unable to finance Lessor’s share, or if the balance of the
Rent due and payable for the remainder of this Lease is not sufficient to fully
reimburse Lessee on an offset basis, Lessee shall have the right to terminate
this Lease upon 30 days written notice to Lessor.

(c)
Notwithstanding the above, the provisions concerning Capital Expenditures are
intended to apply only to non-voluntary, unexpected, and new Applicable
Requirements.  If the Capital
Expenditures are instead triggered by Lessee as a result of an actual or
proposed change in use, change in intensity of use, or modification to the
Premises then, and in that event, Lessee shall either: (i) immediately cease
such changed use or intensity of use and/or take such other steps as may be
necessary to eliminate the requirement for such Capital Expenditure, or (ii)
complete such Capital Expenditure at its own expense. Lessee shall not,
however, have any right to terminate this Lease.

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

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

 

3.             Term.

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

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

3.3           Delay
In Possession.  Lessor agrees
to use its best commercially reasonable efforts to deliver possession of the
Premises to Lessee by the Early Possession Date.  If, despite said efforts, Lessor is unable to deliver possession
by such date, Lessor shall not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until Lessor delivers
possession of the Premises and any period of rent abatement that Lessee would
otherwise have enjoyed shall run from the date of delivery of possession and
continue for a period equal to what Lessee would otherwise have enjoyed under
the terms hereof, but minus any days of delay caused by the acts or omissions of
Lessee.  If possession is not delivered
within 60 days after the Early Possession Date, Lessee may, at its option, by
notice in writing within 10 days after the end of such 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 10 day period, Lessee’s right to cancel
shall terminate.  If possession of the
Premises is not delivered within 120 days after the Early Possession 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 deliver 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 on or before the day on
which it is due, without offset or deduction (except as specifically permitted
in this Lease).  Rent for any period
during the term hereof which is for less than one full calendar month shall be
prorated based upon the actual number of days of said month.  Payment of Rent shall be made to Lessor at
its address stated herein or to such other persons or place as Lessor may from
time to time designate in writing. 
Acceptance of a payment which is less than the amount then due shall not
be a waiver of Lessor’s rights to the balance of such Rent, regardless of
Lessor’s endorsement of any check so stating. 
In the event that any check, draft, or other instrument of payment given
by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to
Lessor the sum of $25 in addition to any Late Charge and Lessor, at its option,
may require all future payments to be made by Lessee to be by cashier’s
check.  Payments will be applied first
to accrued late charges and attorney’s fees, second to accrued interest, then
to Base Rent and Operating Expense Increase, and any remaining amount to any
other outstanding charges or costs.

 

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 the Security Deposit, Lessee shall within 10
days after written request therefor deposit monies with Lessor sufficient to
restore said Security Deposit to the full amount required by this Lease.  If the Base Rent increases during the 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

2

 

term of this Lease, Lessee shall, upon written
request from Lessor, deposit additional moneys 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
such change in financial condition. 
Lessor shall not be required to keep the Security Deposit separate from
its general accounts.  Within 14 days
after the expiration or termination of this Lease, if Lessor elects to apply
the Security Deposit only to unpaid Rent, and otherwise within 30 days after
the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall
return that portion of the Security Deposit not used or applied by Lessor.  No part of the Security Deposit shall be considered
to be held in trust, to bear interest or to be prepayment for any monies to be
paid by Lessee under this Lease.

 

6.             Use.

6.1           Use.  Lessee shall use and occupy the Premises
only for the Agreed Use, or any other legal use which is reasonably comparable
thereto, and for no other purpose.  Lessee shall not use or permit the use of the Premises in a manner
that is unlawful, creates damage, waste or a nuisance, or that disturbs
occupants of or causes damage to neighboring premises or properties.  Lessor shall not unreasonably withhold or
delay its consent to any written request for a modification of the Agreed Use,
so long as the same will not impair the structural integrity of the
improvements on the Premises or the mechanical or electrical systems therein,
and/or is not significantly more burdensome to the Premises.  If Lessor elects to withhold consent, Lessor
shall within 7 days after such request give written notification of same, which
notice shall include an explanation of Lessor’s objections to the change in the
Agreed Use.

6.2           Hazardous
Substances.

(a)
Reportable Uses Require Consent.  The term “Hazardous
Substance” as used in this Lease shall mean any product, substance,
or waste whose presence, use, manufacture, disposal, transportation, or
release, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public health,
safety or welfare, the environment or the Premises, (ii) regulated or monitored
by any governmental authority, or (iii) a basis for potential liability of
Lessor to any governmental agency or third party under any applicable statute
or common 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, ordinary office supplies
(copier toner, liquid paper, glue, etc.) and common household cleaning
materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. 
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, comply with all Applicable Requirements and 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 not caused or
contributed to by Lessee).  Lessee’s
obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination
of this Lease.  No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations under
this Lease with respect to Hazardous Substances, unless specifically so agreed
by Lessor in writing at the time of such agreement.

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

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

(g)
Lessor Termination Option.  If a Hazardous Substance Condition (see
Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is
legally responsible therefor (in which case Lessee shall make the investigation
and remediation thereof required by the Applicable Requirements and this Lease
shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i)
investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably possible at Lessor’s expense, in which event this Lease
shall continue in full force and effect, or (ii) if the estimated cost to
remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within 30 days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition, of Lessor’s desire to terminate this Lease as of the date
60 days following the date of such notice. 
In the event Lessor elects to give a termination notice, Lessee may,
within 10 days thereafter, give written notice to Lessor of Lessee’s commitment
to pay the amount by which the cost of the remediation of such Hazardous
Substance Condition exceeds an amount equal to 12 times the then monthly Base
Rent or $100,000, whichever is greater. 
Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within 30 days following such commitment.  In such event, this Lease shall continue in full force and
effect, and Lessor shall proceed to make such remediation as soon as reasonably
possible after the required funds are available.  If Lessee does not give such notice and provide the required
funds or assurance thereof within the time provided, this Lease shall terminate
as of the date specified in Lessor’s notice of termination.

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

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

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 (intended for Lessee’s exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, 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, HVAC equipment,
electrical, lighting facilities, boilers, pressure vessels, fire protection
system, fixtures, walls (interior and exterior), ceilings, 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 is also responsible for keeping the roof and roof drainage
clean and free of debris. Lessor shall keep the surface and structural elements
of the roof, foundations, and bearing walls in good repair (see paragraph 7.2).
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 (including,
e.g. graffiti removal) consistent with the exterior appearance of other similar
facilities of comparable age and size in the vicinity, including, when
necessary, the exterior repainting of the Building.

(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) clarifiers, (vi) basic utility feed to the perimeter of the
Building, and (viii) any other equipment, if reasonably required by
Lessor.  However, Lessor reserves the
right, upon notice to Lessee, to procure and maintain any or all of such
service contracts, and if Lessor so elects, Lessee shall reimburse Lessor, upon
demand, for the cost thereof.

(c)
Failure to Perform.  If Lessee fails to perform Lessee’s
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 days’ prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform such obligations on Lessee’s
behalf, and put the Premises in good order, condition and repair, and Lessee
shall promptly pay to Lessor a sum equal to 115% of the cost thereof.

(d)
Replacement.  Subject to Lessee’s indemnification of
Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of
liability resulting from Lessee’s failure to exercise and perform good
maintenance practices, if an item described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of
replacing such item, then such item shall be replaced by Lessor, and the cost
thereof shall be prorated between the Parties and Lessee shall only be
obligated to pay, each month during the remainder of the term of this Lease, on
the date on which Base Rent is due, an amount equal to the product of
multiplying the cost of such replacement by a fraction, the numerator of which
is one, and the denominator of which is 144 (ie. 1/144th of the cost per
month).  Lessee shall pay interest on
the unamortized balance at a rate that is commercially reasonable in the
judgment of Lessor’s accountants. 
Lessee may, however, prepay its obligation at any time.

7.2           Lessor’s
Obligations.  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, except for the surface and structural elements of the roof,
foundations and bearing walls, the repair of which shall be the responsibility
of Lessor upon receipt of written notice that such a repair is necessary.  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.  The term “Utility
Installations” refers to all floor and window coverings, air and/or
vacuum lines, power panels, electrical distribution, security and fire protection
systems, communication cabling, lighting fixtures, HVAC equipment, plumbing,
and fencing in or on the Premises.  The
term “Trade Fixtures” shall mean
Lessee’s machinery and equipment that can be removed without doing material
damage to the Premises. The term “Alterations”
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. “Lessee Owned Alterations and/or Utility
Installations” are defined as Alterations and/or Utility Installations
made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).

(b)
Consent.  Lessee shall not make any Alterations or Utility Installations to
the Premises without Lessor’s prior written consent.  Lessee may, however, make non-structural Utility Installations to
the interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof or any existing walls, will
not affect the electrical, plumbing, HVAC, and/or life safety systems, and the
cumulative cost thereof during this Lease as extended does not exceed a sum
equal to 3 month’s Base Rent in the aggregate or a sum equal to one month’s
Base Rent  in any one year.  Notwithstanding the foregoing, Lessee shall
not make or permit any roof penetrations and/or install anything on the roof
without the prior written approval of Lessor. 
Lessor may, as a precondition to granting such approval, require Lessee
to utilize a contractor chosen and/or approved by Lessor.  Any Alterations or Utility Installations
that Lessee shall desire to 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 in excess of one month’s Base Rent, Lessor may condition its consent
upon Lessee providing a lien and completion bond in an amount equal to 150% of
the estimated cost of such Alteration or Utility Installation and/or upon
Lessee’s posting an additional Security Deposit with Lessor.

(c)
Liens; Bonds.  Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic’s or materialmen’s lien against the Premises or any interest
therein.  Lessee shall give Lessor not
less than 10 days notice prior to the commencement of any work in, on or about
the Premises, and Lessor shall have the right to post notices of
non-responsibility.  If Lessee shall
contest the validity of any such lien, claim or demand, then Lessee shall, at
its sole expense defend and protect itself, Lessor and the Premises against the
same and shall pay and satisfy any such adverse judgment that may be rendered
thereon before the enforcement thereof. 
If Lessor shall require, Lessee shall furnish a surety bond in an amount
equal to 150% of the amount of such contested lien, claim or demand,
indemnifying Lessor against liability for the same.  If Lessor elects to participate in any such action, Lessee shall
pay Lessor’s attorneys’ fees and costs.

7.4           Ownership;
Removal; Surrender; and Restoration.

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

(b)
Removal.  By delivery to Lessee of written notice from Lessor not earlier
than 90 and not later than 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 of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good
operating order, condition and state of repair, ordinary wear and tear
excepted.  “Ordinary wear and tear”
shall not include any damage or deterioration that would have been prevented by
good maintenance practice. Notwithstanding the foregoing, if this Lease is for
12 months or less, then Lessee shall surrender the Premises in the same
condition as delivered to Lessee on the Start Date with NO allowance for
ordinary wear and tear.  Lessee shall
repair any damage occasioned by the installation, maintenance or removal of Trade
Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings,
and equipment as well as the removal of any storage tank installed by or for
Lessee.  Lessee shall completely remove
from the Premises any and all Hazardous Substances brought onto the Premises by
or for Lessee, or any third party (except Hazardous Substances which were
deposited via underground migration from areas outside of the Premises, or if
applicable, the Project) even if such removal would require Lessee to perform
or pay for work that exceeds statutory requirements.  Trade Fixtures shall remain the property of Lessee and shall be
removed by Lessee.  Any personal
property of Lessee not removed on or before the Expiration Date or any earlier
termination date shall be deemed to have been abandoned by Lessee and may be
disposed of or retained by Lessor as Lessor may desire.  The failure by Lessee to timely vacate the
Premises pursuant to this Paragraph 7.4(c) without the express written consent
of Lessor shall constitute a holdover under the provisions of Paragraph 26
below.

 

8.             Insurance; Indemnity.

8.1           Payment
of Premium Increases.

(a)
Lessee shall pay to Lessor any insurance cost increase (“Insurance Cost Increase”) occurring during
the term of this Lease. Insurance Cost Increase is defined as any increase in
the actual cost of the insurance required under Paragraph 8.2(b), 8.3(a) and
8.3(b) (“Required

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

4

 

Insurance”), over and above the Base Premium as hereinafter defined calculated on
an annual basis. Insurance Cost Increase shall include but not be  limited to increases resulting from the nature of Lessee’s occupancy,
any act or omission of Lessee, requirements of the holder of mortgage or deed
of trust covering the Premises, increased valuation of the Premises and/or a
premium rate increase. The parties are encouraged to fill in the Base Premium
in paragraph 1.9 with a reasonable premium for the Required Insurance based on
the Agreed Use of the Premises. If the parties fail to insert a dollar amount
in Paragraph 1.9, then the Base Premium shall be the lowest annual premium
reasonably obtainable for the Required Insurance as of the commencement of the
Original Term for the Agreed Use of the Premises. In no event, however, shall
Lessee be responsible for any portion of the increase in the premium cost
attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in
excess of $2,000,000 per occurrence.

(b)
Lessee shall pay any such Insurance Cost Increase to Lessor within 30 days
after receipt by Lessee of a copy of the premium statement or other reasonable
evidence of the amount due. If the insurance policies maintained hereunder
cover other property besides the Premises, Lessor shall also deliver to Lessee
a statement of the amount of such Insurance Cost Increase attributable only to
the Premises showing in reasonable detail the manner in which such amount was
computed. Premiums for policy periods commencing prior to, or extending beyond
the term of this Lease, shall be prorated to correspond to the term of this
Lease.

8.2
          Liability Insurance.

(a)
Carried by Lessee. Lessee shall
obtain and keep in force a Commercial General Liability policy of insurance
protecting Lessee and Lessor as an additional insured against claims for bodily
injury, personal injury and property damage based upon or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto.  Such insurance
shall be on an occurrence basis providing single limit coverage in an amount
not less than $1,000,000 per occurrence with an annual aggregate of not less
than $2,000,000, an “Additional Insured-Managers or Lessors of Premises
Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement”
for damage caused by heat, smoke or fumes from a hostile fire.  The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an “insured
contract” for the performance of Lessee’s indemnity obligations under this
Lease.  The limits of said insurance
shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder.  All insurance
carried by Lessee shall be primary to and not contributory with any similar
insurance carried by Lessor, whose insurance shall be considered excess
insurance only.

(b)
Carried by Lessor.  Lessor shall maintain liability insurance as
described 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 ground-lessor, and to any Lender insuring loss or damage to the
Premises.  The amount of such insurance
shall be equal to the full replacement cost of the Premises, as the same shall
exist from time to time, or the amount required by any Lender, but in no event
more than the commercially reasonable and available insurable value
thereof.  If Lessor is the Insuring
Party, however, Lessee Owned Alterations and Utility 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 or included in
the Base Premium), 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 year with an
extended period of indemnity for an additional 180 days (“Rental Value
insurance”). Said insurance shall contain an agreed valuation provision in
lieu of any coinsurance clause, and the amount of coverage shall be adjusted
annually to reflect the projected Rent otherwise payable by Lessee, for the
next 12 month period.  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 $5,000.00 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 30 days prior written notice to
Lessor.  Lessee shall, at least 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 nor
from the failure of Lessor to enforce the provisions of any other lease in the
Project. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee’s business or for
any loss of income or profit therefrom.

8.9           Failure
to Provide Insurance.  Lessee
acknowledges that any failure on its part to obtain or maintain the insurance
required herein will expose Lessor to risks and potentially cause Lessor to
incur costs not contemplated by this Lease, the extent of which will be
extremely difficult to ascertain. Accordingly, for any month or portion thereof
that Lessee does not maintain the required insurance and/or does not provide
Lessor with the required binders or certificates evidencing the existance of
the required insurance, the Base Rent shall be automatically increased, without
any requirement for notice to Lessee, by an amount equal to 10% of the then
existing Base Rent or $100, whichever is greater.  The parties agree that such increase in Base Rent represents fair
and reasonable compensation for the additional risk/ costs that Lessor will
incur by reason of Lessee’s failure to maintain the required insurance.  Such increase in Base Rent shall in no event
constitute a waiver of Lessee’s Default or Breach with respect to the failure
to maintain such insurance, prevent the exercise of any of the other rights and
remedies granted hereunder, nor relieve Lessee of its obligation to maintain
the insurance specified in this Lease.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

5

 

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

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

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

(d)
“Replacement Cost” shall mean the
cost to repair or rebuild the improvements owned by Lessor at the time of the
occurrence to 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 which requires repair, remediation, or
restoration.

9.2           Partial
Damage - Insured Loss.  If a
Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at
Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee
Owned Alterations and Utility Installations) as soon as reasonably possible and
this Lease shall continue in full force and effect; provided, however, that
Lessee shall, at Lessor’s election, make the repair of any damage or destruction
the total cost 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 10 days following receipt of written notice
of such shortage and request therefor. 
If Lessor receives said funds or adequate assurance thereof within said
10 day period, the party responsible for making the repairs shall complete them
as soon as reasonably possible and this Lease shall remain in full force and
effect.  If such funds or assurance are
not received, Lessor may nevertheless elect by written notice to Lessee within
10 days thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect, or (ii) have this Lease terminate 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 gross 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
30 days after receipt by Lessor of knowledge of the occurrence of such damage.  Such termination shall be effective 60 days
following the date of such notice.  In
the event Lessor elects to terminate this Lease, Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice
to Lessor of Lessee’s commitment to pay for the repair of such damage without
reimbursement from Lessor.  Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within 30 days
after making such commitment.  In such
event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available.  If Lessee does not
make the required commitment, 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 60 days following such Destruction.  If the damage or destruction was caused by the gross negligence
or willful misconduct of Lessee, Lessor shall have the right to recover
Lessor’s damages from Lessee, except as provided in Paragraph 8.6.

9.5           Damage
Near End of Term.  If at any
time during the last 6 months of this Lease there is damage for which the cost
to repair exceeds one month’s Base Rent, whether or not an Insured Loss, Lessor
may terminate this Lease effective 60 days following the date of occurrence of
such damage by giving a written termination notice to Lessee within 30 days
after the date of occurrence of such damage. 
Notwithstanding the foregoing, if Lessee at 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 10 days
after Lessee’s receipt of Lessor’s written notice purporting to terminate this
Lease, or (ii) the day prior to the date upon which such option expires.  If Lessee duly exercises such option during
such period and provides Lessor with funds (or adequate assurance thereof) to
cover any shortage 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 90 days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee’s election to terminate this Lease on a date not
less than 60 days following the giving of such notice.  If Lessee gives such notice and such repair
or restoration is not commenced within 30 days thereafter, this Lease shall
terminate as of the date specified in said notice.  If the repair or restoration is commenced within such 30 days,
this Lease shall continue in full force and effect.  “Commence” shall
mean either the unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.

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

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

 

10.           Real
Property Taxes.

10.1         Definition.  As used herein, the term “Real Property Taxes” shall include any
form of assessment; real estate, general, special, ordinary or extraordinary,
or rental levy or tax (other than inheritance, personal income or estate
taxes); improvement bond; and/or license fee imposed upon or levied against any
legal or equitable interest of Lessor in the Premises or the Project, Lessor’s
right to other income therefrom, and/or Lessor’s business of leasing, by any
authority having the direct or indirect power to tax and where the funds are
generated with reference to the Building address and where the proceeds so
generated are to be applied by the city, county or other local taxing authority
of a jurisdiction within which the Premises are located.  Real Property Taxes shall also include any
tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by
reason of events occurring during the term of this Lease, including but not
limited to, a change in the ownership of the Premises, and (ii) levied or
assessed on machinery or equipment provided by Lessor to Lessee pursuant to
this Lease.

10.2

(a)
Payment of Taxes.  Lessor shall pay the Real Property Taxes
applicable to the Premises provided, however, that Lessee shall pay to Lessor
the amount, if any, by which Real Property Taxes applicable to the Premises
increase over the fiscal tax year during which the Commencement Date Occurs
(“Tax Increase”).  Payment of any such
Tax Increase shall be made by Lessee to Lessor within 30 days after receipt of
Lessor’s written statement setting forth the amount due and computation
thereof.  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.  In the event lessee incurs a
late charge on any Rent payment, Lessor may estimate the current Real Property
Taxes, and require that the Tax Increase be paid in advance to Lessor by Lessee
monthly in advance with the payment of the Base Rent.  Such monthly payment shall be an amount equal to the amount of
the estimated installment of the Tax Increase divided by the number of months
remaining before the month in which said installment becomes delinquent.  When the actual amount of the applicable Tax
Increase is known, the amount of such equal monthly advance payments shall be
adjusted as required to provide the funds needed to pay the applicable Tax
Increase.  If the amount collected by
Lessor is insufficient to pay the Tax Increase when due, Lessee shall pay Lessor,
upon demand, such additional sums as are necessary to pay such
obligations.  Advance payments may be
intermingled with other moneys 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 such advance payments
may be treated by 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

6

 

Lessor as an additional Security Deposit.

(b)
Additional Improvements.  Notwithstanding anything to the contrary in
this Paragraph 10.2, Lessee shall pay to Lessor upon  demand
therefor the entirety of any increase in Real Property Taxes assessed by reason
of Alterations or Utility Installations placed upon the Premises by Lessee or
at Lessee’s request.

10.3         Joint
Assessment.  If the Premises
are not separately assessed, Lessee’s liability shall be an equitable
proportion of the Tax Increase 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 its Lessee Owned Alterations and
Utility Installations, Trade Fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property
of Lessor.  If any of Lessee’s said
property shall be assessed with Lessor’s real property, Lessee shall pay Lessor
the taxes attributable to Lessee’s property within 10 days after receipt of a
written statement setting forth the taxes applicable to Lessee’s property.

 

11.           Utilities
and Services.  Lessee shall
pay for all water, gas, heat, light, power, telephone, trash disposal and other
utilities and services supplied to the Premises, together with any taxes thereon.  If any such services are not separately
metered or billed to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered or billed.  There shall be no abatement of rent and
Lessor shall not be liable in any respect whatsoever for the inadequacy,
stoppage, interruption or discontinuance of any utility or service due to riot,
strike, labor dispute, breakdown, accident, repair or other cause beyond
Lessor’s reasonable control or in cooperation with governmental request or
directions.

 

12.           Assignment
and Subletting.

12.1         Lessor’s
Consent Required.

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

(b)
Unless Lessee is a corporation and its stock is publicly traded on a national
stock exchange, a change in the control of Lessee shall constitute an assignment
requiring consent. The transfer, on a cumulative basis, of 25% or more of the
voting control of Lessee shall constitute a change in control for this purpose.

(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 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 30 days written notice, increase the monthly Base Rent to 110% of
the Base Rent then in effect.  Further,
in the event of such Breach and rental adjustment, (i) the purchase price of
any option to purchase the Premises held by Lessee shall be subject to similar
adjustment to 110% of the price previously in effect, and (ii) all fixed and
non-fixed rental adjustments scheduled during the remainder of the Lease term
shall be increased to 110% of the scheduled adjusted rent.

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

12.2         Terms
and Conditions Applicable to Assignment and Subletting.

(a)
Regardless of Lessor’s consent, no assignment or subletting shall:  (i) be effective without the express written
assumption by such assignee or sublessee of the obligations of Lessee under
this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter
the primary liability of Lessee for the payment of Rent or for the performance
of any other obligations to be performed by Lessee.

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

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

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

(e)
Each request for consent to an assignment or subletting shall be in writing,
accompanied by information relevant to Lessor’s determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $500 as
consideration for Lessor’s considering and processing said request.  Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested. (See also Paragraph 36)

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

(g)
Lessor’s consent to any assignment or subletting shall not transfer to the
assignee or sublessee any Option granted to the original Lessee by this Lease
unless such transfer is specifically consented to by Lessor in writing. (See
Paragraph 39.2)

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

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

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

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

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

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

(f) Any profits shall be
split 50/50 between Lessor and Lessee.

 

13.
          Default; Breach; Remedies.

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

(a)
The abandonment of the Premises; or the vacating of the Premises without
providing a commercially reasonable level of security, or where the coverage of
the property insurance described in 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 5 days following written notice to Lessee.

(c)
The failure by Lessee to provide (i) reasonable written evidence of compliance
with Applicable Requirements, 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

7

 

(iii) the rescission of an unauthorized
assignment or subletting, (iv) an Estoppel Certificate, (v) a requested
subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii)
any document requested under Paragraph 42, (viii) material safety data sheets
(MSDS), or (ix) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of 10 days following written notice to Lessee.

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

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

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

(g)
If the performance of Lessee’s obligations under this Lease is guaranteed: (i)
the death of a Guarantor, (ii) the termination of 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 60 days following written notice of any such event, to provide written
alternative assurance or security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the Guarantors that existed at the time of execution of this Lease.

13.2            Remedies.  If Lessee fails to perform any of its
affirmative duties or obligations, within 10 days after written notice (or in
case of an emergency, without notice), Lessor may, at its option, perform such
duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental
licenses, permits or approvals.  Lessee
shall pay to Lessor an amount equal to 115% of the costs and expenses incurred
by Lessor in such performance upon receipt of an invoice therefor.  In the event of a Breach, Lessor may, with
or without further notice or demand, and without limiting Lessor in the
exercise of any right or remedy which Lessor may have by reason of such Breach:

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

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

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

13.3            Inducement
Recapture.  Any agreement for
free or abated rent or other charges, or for the giving or paying by Lessor to
or for Lessee of any cash or other bonus, inducement or consideration for
Lessee’s entering into this Lease, all of which concessions are hereinafter
referred to as “Inducement Provisions,”
shall be deemed conditioned upon Lessee’s full and faithful performance of all
of the terms, 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 10 days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to 5% of each such overdue amount or $100,
whichever is greater.  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 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 30 days following the date on which it
was due for non-scheduled payment, shall bear interest from the date when due,
as to scheduled payments, or the 31st day after it was due as to non-scheduled
payments.  The interest (“Interest”) charged shall be computed at
the rate of 10% per annum but shall not exceed the maximum rate allowed by
law.  Interest is payable in addition to
the potential late charge provided for in Paragraph 13.4.

13.6            Breach
by Lessor.

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

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

 

14.           Condemnation.  If the Premises or any portion thereof are taken under the power
of eminent domain or sold under the threat of the exercise of said power
(collectively “Condemnation”),
this Lease shall terminate as to the part taken as of the date the condemning
authority takes title or possession, whichever first occurs.  If more than 10% of the Building, or more
than 25% of that portion of the Premises not occupied by any building, is taken
by Condemnation, Lessee may, at Lessee’s option, to be exercised in writing
within 10 days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, within 10 days after the condemning
authority shall have taken possession) terminate this Lease as of the date the
condemning authority takes such possession. 
If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion
of the Premises remaining, except that the Base Rent shall be reduced in
proportion to the reduction in utility of the Premises caused by such

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

8

 

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.              Brokerage
Fees.

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.  Brokers shall be third party
beneficiaries of the provisions of Paragraphs 1.9, 15, 22 and 31.  If Lessor fails to pay to Brokers any
amounts due as and for brokerage fees pertaining to this Lease when due, then
such amounts shall accrue Interest.  In
addition, if Lessor fails to pay any amounts to Lessee’s Broker when due,
Lessee’s Broker may send written notice to Lessor and Lessee of such failure
and if Lessor fails to pay such amounts within 10 days after said notice, Lessee
shall pay said monies to its Broker and offset such amounts against Rent.  In addition, Lessee’s Broker shall be deemed
to be a third party beneficiary of any commission agreement entered into by
and/or between Lessor and Lessor’s Broker for the limited purpose of collecting
any brokerage fee owed.

15.3         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 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 10 day period, the Requesting Party may execute an
Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Party’s performance, and (iii)
if Lessor is the Requesting Party, not more than one month’s rent has been paid
in advance. Prospective purchasers and 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 3 years. 
All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes
herein set forth.

 

17.              Definition
of Lessor.  The term “Lessor” as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or,
if this is a sublease, of the Lessee’s interest in the prior lease.  In the event of a transfer of Lessor’s title
or interest in the Premises or this Lease, Lessor shall deliver to the
transferee or assignee (in cash or by credit) any unused Security Deposit held
by Lessor.  Except as provided in
Paragraph 15, upon such transfer or assignment and delivery of the Security
Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with
respect to the obligations and/or covenants under this Lease thereafter to be
performed by the Lessor.  Subject to the
foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.

 

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

 

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

 

20.              Limitation
on Liability.  The
obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor or its partners, members, directors, officers or
shareholders, and Lessee shall look to the Premises, and to no other assets of
Lessor, for the satisfaction of any liability of Lessor with respect to this
Lease, and shall not seek recourse against Lessor’s partners, members,
directors, officers or shareholders, or any of their personal assets 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 use, nature, quality and character
of the Premises.  Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.  The liability
(including court costs and attorneys’ fees), of any Broker with respect to
negotiation, execution, delivery or performance by either Lessor or Lessee
under this Lease or any amendment or modification hereto shall be limited to an
amount up to the fee received by such Broker pursuant to this Lease; provided,
however, that the foregoing limitation on each Broker’s liability shall not be
applicable to any gross negligence or willful misconduct of such Broker.

 

23.              Notices.

23.1         Notice Requirements.  All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by 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 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 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 (confirmation report from fax
machine is sufficient), 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 moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.

 

25.              Disclosures
Regarding The Nature of a Real Estate Agency Relationship.

(a)        When entering into a discussion with a
real estate agent regarding a real estate transaction, a Lessor or Lessee
should from the 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

9

 

outset
understand what type of agency relationship or representation it has with the
agent or agents in the transaction. 
Lessor and Lessee acknowledge being advised by the Brokers in this
transaction, as follows:

(i)                Lessor’s
Agent.  A Lessor’s agent under a
listing agreement with the Lessor acts as the agent for the Lessor only.  A Lessor’s agent or subagent has the
following affirmative obligations:  To
the Lessor:  A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings  with the Lessor.  To the
Lessee and the Lessor:  a. Diligent
exercise of reasonable skills and care in performance of the agent’s
duties.  b. A duty of honest and fair
dealing and good faith.  c. A duty to
disclose all facts known to the agent materially affecting the value or
desirability of the property that are not known to, or within the diligent
attention and observation of, the Parties. 
An agent is not obligated to reveal to either Party any confidential
information obtained from the other Party which does not involve the
affirmative duties set forth above.

(ii)               Lessee’s
Agent.  An agent can agree to act as
agent for the Lessee only.  In these
situations, the agent is not the Lessor’s agent, even if by agreement the agent
may receive compensation for services rendered, either in full or in part from
the Lessor.  An agent acting only for a
Lessee has the following affirmative obligations.  To the Lessee:  A
fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with
the Lessee.  To the Lessee and the
Lessor:  a. Diligent exercise of
reasonable skills and care in performance of the agent’s duties.  b. A duty of honest and fair dealing and
good faith.  c. A duty to disclose all
facts known to the agent materially affecting the value or desirability of the
property that are not known to, or within the diligent attention and
observation of, the Parties.  An agent
is not obligated to reveal to either Party any confidential information
obtained from the other Party which does not involve the affirmative duties set
forth above.

(iii)              Agent
Representing Both Lessor and Lessee. 
A real estate agent, either acting directly or through one or more
associate licenses, can legally be the agent of both the Lessor and the Lessee
in a transaction, but only with the knowledge and consent of both the Lessor
and the Lessee. In a dual agency situation, the agent has the following
affirmative obligations to both the Lessor and the Lessee: a. A fiduciary duty
of utmost care, integrity, honesty and loyalty in the dealings with either
Lessor or the Lessee.  b. Other duties
to the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In
representing both Lessor and Lessee, the agent may not without the express
permission of the respective Party, disclose to the other Party that the Lessor
will accept rent in an amount less than that indicated in the listing or that
the Lessee is willing to pay a higher rent than that offered. The above duties
of the agent in a real estate transaction do not relieve a Lessor or Lessee from
the responsibility to protect their own interests. Lessor and Lessee should
carefully read all agreements to assure that they adequately express their
understanding of the transaction.  A
real estate agent is a person qualified to advise about real estate.  If legal or tax advice is desired, consult a
competent professional.

(b)            Brokers have no responsibility with
respect to any default or breach hereof by either Party.  The liability (including court costs and
attorneys’ fees), of any Broker with respect to any breach of duty, error or
omission relating to this Lease shall not exceed the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker’s liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

(c)            Lessor and Lessee agree to identify
to Brokers as “Confidential” any communication or information given Brokers
that is considered by such Party to be confidential.

 

26.              No
Right To Holdover.  Lessee
has no right to retain possession of the Premises or any part thereof beyond
the expiration or termination of this Lease. 
In the event that Lessee holds over, then the Base Rent shall be
increased to 110% of the Base Rent applicable immediately preceding the expiration
or termination up to 3 months and then 125% of the base rent thereafter.  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 “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.  In the event that Lessor transfers title to
the Premises, or the Premises are acquired by another upon the foreclosure or
termination of a Security Device to which this Lease is subordinated (i) Lessee
shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to
such new owner, and upon request, enter into a new lease, containing all of the
terms and provisions of this Lease, with such new owner for the remainder of
the term hereof, or, at the election of such new owner, this Lease shall
automatically become a new Lease between Lessee and such new owner, upon all of
the terms and conditions hereof, for the remainder of the term hereof, and (ii)
Lessor shall thereafter be relieved of any further obligations hereunder and
such new owner shall assume all of Lessor’s obligations hereunder, except that
such new owner shall not:  (a) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (b) be subject to any offsets or defenses
which Lessee might have against any prior lessor,  (c) be bound by prepayment of more than one month’s rent, or (d)
be liable for the return of any security deposit paid to any prior lessor.

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

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 whether founded in tort,
contract or equity, or to declare rights hereunder, the Prevailing Party (as
hereafter defined) in any such proceeding, action, or appeal thereon, shall be
entitled to reasonable attorneys’ fees. 
Such fees may be awarded in the same suit or recovered in a separate
suit, whether or not such action or proceeding is pursued to decision or
judgment.  The term, “Prevailing Party” shall include, without
limitation, a Party or Broker who substantially obtains or defeats the relief
sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party or Broker of its claim or defense.  The attorneys’ 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 ($200 is a reasonable minimum per occurrence for such services
and consultation).

 

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

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

10

 

34.              Signs.  Lessor may place on the Premises ordinary
“For Sale” signs at any time and ordinary “For Lease” signs during the last 6
months of the term hereof.  Except for
ordinary “for sublease” signs, Lessee shall not place any sign upon the
Premises without Lessor’s prior written consent. All signs must comply with all
Applicable Requirements.

 

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
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 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) an Estoppel Certificate, or (d)
written confirmation that the guaranty is still in effect.

 

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

 

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

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

39.2         Options
Personal To Original Lessee. 
Any Option granted to Lessee in this Lease is personal to the original
Lessee, and cannot be assigned or exercised by anyone other than said original
Lessee and only 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
monetary breach and continuing
until said monetary breach is
cured, (ii) during the period of time any Rent is unpaid (without regard to
whether notice thereof is given Lessee), (iii) during the time Lessee is in
Breach of this Lease, or (iv) in the event that Lessee has been given 3 or more
notices of separate monetary breach,
whether or not the monetary breaches
are cured, during the 12 month period immediately preceding the exercise of the
Option.

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

(c)
An Option shall terminate and be of no further force or effect, notwithstanding
Lessee’s due and timely exercise of the Option, if, after such exercise and
prior to the commencement of the extended term or completion of the purchase,
(i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes
due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee
commits a Breach of this Lease.

 

40.              Multiple
Buildings.  If the Premises
are a part of a group of buildings controlled by Lessor, Lessee agrees that it
will abide by and conform to all reasonable rules and regulations which Lessor
may make from time to time for the management, safety, and care of said
properties, including the care and cleanliness of the grounds and including the
parking, loading and unloading of vehicles, and to cause its employees,
suppliers, shippers, customers, contractors and invitees to so abide and
conform.  Lessee also agrees to pay its
fair share of common expenses incurred in connection with such rules and
regulations.

 

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

 

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

 

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

 

44.              Authority;
Multiple Parties: Execution.

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

(b)  If this Lease is executed by more than one
person or entity as “Lessee”, each such person or entity shall be jointly and
severally liable hereunder.  It is
agreed that any one of the named Lessees shall be empowered to execute any
amendment to this Lease, or other document ancillary thereto and bind all of
the named Lessees, and Lessor may rely on the same as if all of the named
Lessees had executed such document.

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

 

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

 

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

 

47.              Amendments.
 This Lease may be modified
only in writing, signed by the Parties in interest at the time of the
modification.  As long as they do not

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

11

 

materially
change Lessee’s obligations hereunder, Lessee agrees to make such reasonable
non-monetary modifications to this Lease as may be reasonably required by a
Lender in connection with the obtaining of normal financing or refinancing of
the Premises.

 

48.              Waiver
of Jury Trial.   THE PARTIES HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.

 

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

 

50.              Americans
with Disabilities Act.  Since
compliance with the Americans with Disabilities Act (ADA) is dependent upon
Lessee’s specific use of the Premises, Lessor makes no warranty or
representation as to whether or not the Premises comply with ADA or any similar
legislation.  In the event that Lessee’s
use of the Premises requires modifications or additions to the Premises in
order to be in ADA compliance, Lessee agrees to make any such necessary
modifications and/or additions at Lessee’s expense.

 

 

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:

  
	
   

  	
   

  	
   

  
	
  Bravante-Curci Investors, L.P.

  	
   

  	
  DPAC Technologies Corp., a California

  
	
   

  	
   

  	
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
  Telephone/Facsimile:

  	
   

  	
   

  	
  Telephone/Facsimile:

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BROKER:

  	
   

  	
  BROKER:

  
	
  Lee & Associates - Newport Beach, Inc.

  	
   

  	
  Staubach

  
	
   

  	
   

  	
   

  
	
  Attn:

  	
  Brian Garbutt / Mike Meisenbach

  	
   

  	
  Attn:

  	
  Ken Ward / Ryan Hawkins

  
	
  Title: 

  	
  Senior Vice President

  	
   

  	
  Title:

  	
   

  
	
  Address: 

  	
  3991 MacArthur Blvd., Suite 100

  	
   

  	
  Address: 

  	
  610 Newport Center Drive

  
	
  Newport Beach, CA 92660

  	
   

  	
  Newport Beach, CA 92660

  
	
  Telephone/Facsimile:

  	
   (949) 724-1000

  	
   

  	
  Telephone/Facsimile: 

  	
  (949) 698-1100

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  
																				

 

NOTE: These forms are
often modified to meet the changing requirements of law and industry
needs.  Always write or call to make
sure you are utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION, 700 So. Flower Street, Suite 600, Los Angeles, California 90017.
(213) 687-8777. Fax No. (213) 687-8616

GARBUTT/GROSS LEASE-3545 HOWARD WAY

 

© Copyright 1997 - By American Industrial Real Estate
Association.  All rights reserved.

No part of these works may be reporduced in any form without
permission in writing.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

12

 

Addendum to that Standard Single-Tenant Commercial Lease
Gross

Dated September 8, 2003

By and Between

Bravante-Curci Investors, L.P. (“Lessor”)

and

DPAC Technologies Corp., a California Corporation (“Lessee”)

for that certain real property located at

3545 Howard Way, Costa Mesa, California

	
  52.

  	
   

  	
  Rental
  Rate Increases:

  	
   

  	
  Base monthly rental rate
  shall Increase per the following schedule:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2/1/05-1/31/06:

  	
  $23,064.96 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  2/1/06-1/31/07:

  	
  $23,785.74 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  2/1/07-1/31/08:

  	
  $24,506.52 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  2/1/08-5/31/09:

  	
  $25,227.30 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  53.

  	
   

  	
  Termination Option:

  	
   

  	
  Lesssee
  may at its option terminate this Lease in its entirety (the “Termination
  Option”) effective as of June 1, 2007 (the “Early Termination Date”) by
  delivering notice of its intent to terminate this Lease (the “Termination
  Notice”) to Lessor on or before the sixth (6th) month prior to the
  Early Termination Date, and paying a termination fee.  If Lesssee fails to deliver its
  termination Notice Timely, Lesssee will be deemed to have waived such
  Termination Option.  If there are any
  uncured defaults by Lesssee under this Lease as of the date Lesssee delivers
  the Termination Notice or as of the Early Termination Date.  The Termination Option shall be void, and
  the Lease shall remain in effect.  If
  Lesssee properly exercises its Termination Option, this shall terminate as of
  the Early Termination Date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  The
  termination fee for exercise of the Termination Option will be one hundred
  and forty thousand and seven hundred and ninety seven dollars ($140,797),
  which shall be payable upon delivery of the Termination Notice.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  54.

  	
   

  	
  Signage:

  	
   

  	
  Lessee
  shall have the right to top building and monument signage, in compliance with
  city of Costa Mesa as depicted on the signage exhibit attached hereto as
  exhibit B, which id hereby approved by Lessor.  All costs associated with installation and maintenance of Sign
  shall be the sole responsibility and expense of Lessee.  Such signage shall be removed upon the
  expiration of the Lease at Lessee’s sole cost and expense.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  55.

  	
   

  	
  Parking:

  	
   

  	
  Tenant
  shall have access to all the parking at 3545 Howard Way, free of charge.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  56.

  	
   

  	
  Option to Extend:

  	
   

  	
  Provided
  Tenant is not in default of any term and conditions of the lease, Landlord
  shall grant Tenant one (1) five (5) year option to extend the term by
  providing Landlord prior written notice no sooner than twelve (12) months and
  no later than nine (9) months at the following base rental rate:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Months 61-72:

  	
  $26,428 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  Months 73-84:

  	
  $27,149 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  Months 85-96:

  	
  $27,870 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  Months 97-108:

  	
  $28,591 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  Months
  109-120:

  	
  $29,312
  MG, per month

  
							

 

 

	
  AGREED AND ACCEPTED: Lessor

  	
  AGREED AND ACCEPTED: Lessee

  
	
  Bravante-Curci
  Investors, L.P.

  	
  DPAC
  Technologies Corp., a

  
	
   

  	
  California
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}]]