Document:

Exhibit 4.1

 

FIRST SUPPLEMENTAL INDENTURE

 

Dated
as of November 16, 2005

 

Supplement
to Indenture dated as of November 21, 2002

 

____________________________________________

 

between

3M
COMPANY

 

and

 

CITIBANK,
N.A.

____________________________________________

 

Liquid Yield Option(TM) Notes due 2032 (Zero Coupon
- Senior)

 

 

 

 

TABLE OF CONTENTS

 

 

	
   

  	
   

  	
  Page

  
	
  RECITALS

  	
   

  	
  1

  
	
  ARTICLE
  1

  	
   

  
	
   

  	
   

  	
   

  
	
  RATIFICATION;
  DEFINITIONS

  	
   

  
	
  SECTION 1.01.

  	
  First Supplemental
  Indenture

  	
  1

  
	
  SECTION 1.02.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2

  	
   

  
	
   

  	
   

  	
   

  
	
  AMENDMENTS
  TO CERTAIN PROVISIONS OF THE ORIGINAL INDENTURE

  	
   

  
	
  SECTION 2.01.

  	
  Amendment to Section
  1.01 of the Original Indenture

  	
  2

  
	
  SECTION 2.02.

  	
  Amendments to
  Sections 2.08(c) and (d), 2.11, 3.01, 3.03, 3.04, 3.05, 3.07, 3.08, 3.09,
  3.10, 3.11, 3.14, 4.01, 5.01, 6.02, 6.03, 6.07, 6.09, 6.10, 6.12, 9.02,
  10.02, 11.02 and 11.03 of the Original Indenture

  	
  2

  
	
  SECTION 2.03.

  	
  Amendment to Section
  6.01(a) of the Original Indenture

  	
  2

  
	
  SECTION 2.04.

  	
  Amendment to Section
  7.07 of the Original Indenture

  	
  2

  
	
  SECTION 2.05.

  	
  Amendment to Section
  10.08(a)(i) of the Original Indenture

  	
  2

  
	
  SECTION 2.06.

  	
  Amendment to
  Section 11.01 of the Original Indenture

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3

  	
   

  
	
   

  	
   

  	
   

  
	
  AMENDMENTS
  TO CERTAIN PROVISIONS OF THE SECURITIES; NOTATION ON THE SECURITIES

  	
   

  
	
  SECTION 3.01.

  	
  Amendments to Form of
  Securities

  	
  3

  
	
  SECTION 3.02.

  	
  Notation on Securities

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4

  	
   

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
  SECTION 4.01.

  	
  Trust Indenture Act
  Controls

  	
  8

  
	
  SECTION 4.02.

  	
  Incorporation into
  Indenture

  	
  8

  
	
  SECTION 4.03.

  	
  Successors and
  Assigns

  	
  8

  
	
  SECTION 4.04.

  	
  Governing Law

  	
  8

  
	
  SECTION 4.05.

  	
  Multiple Originals

  	
  8

  
	
  SECTION 4.06.

  	
  Separability Clause

  	
  9

  
	
  SECTION 4.07.

  	
  The Trustee

  	
  9

  
	
   

  	
   

  	
   

  

 

 

i

 

FIRST SUPPLEMENTAL INDENTURE, dated as of the November 16, 2005 (the “First
Supplemental Indenture”), between 3M COMPANY, a Delaware corporation (the “Company”),
and Citibank, N.A., a national banking association (the “Trustee”).

 

RECITALS

 

WHEREAS, the Company and the Trustee executed and delivered an
Indenture, dated as of November 21, 2002 (the “Original Indenture”, and, as
amended by this First Supplemental Indenture, the “Indenture”), to provide for
the issuance by the Company of its Liquid Yield Option(TM) Notes due 2032 (Zero
Coupon - Senior) (the “Securities”);

 

WHEREAS, the Company desires to amend the Original Indenture and the
Securities to add to the Company’s covenants for the benefit of the
Securityholders;

 

WHEREAS, Section 9.01 of the Original Indenture provides that, without
the consent of any Securityholder, the Company and the Trustee may amend the
Original Indenture or the Securities to, among other things, add to the Company’s
covenants for the benefit of the Securityholders and to make any change that
does not adversely affect the rights of any Holder; and

 

WHEREAS, all things necessary for the execution of this First
Supplemental Indenture, and to make this First Supplemental Indenture a valid
supplement to the Original Indenture according to its terms and a valid and
binding agreement of the Company, have been done.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree, for
the benefit of the other party and for the equal and ratable benefit of the
Holders, as follows:

 

ARTICLE 1

 

RATIFICATION;
DEFINITIONS

 

SECTION
1.01.               First Supplemental
Indenture.  This First Supplemental
Indenture is supplemental to, and is entered into in accordance with
Section 9.01, of the Original Indenture and, except as modified, amended
and supplemented by this First Supplemental Indenture, the provisions of the
Original Indenture are ratified and confirmed in all respects and shall remain
in full force and effect.

 

SECTION
1.02.               Definitions.  Capitalized terms used but not defined herein
shall have the meanings assigned to them in the Original Indenture.

 

 

1

 

ARTICLE 2

 

AMENDMENTS
TO CERTAIN PROVISIONS OF THE ORIGINAL INDENTURE

 

SECTION
2.01.               Amendment to
Section 1.01 of the Original Indenture. 
The definition of “Stated Maturity” in Section 1.01 of the Original
Indenture is hereby amended by replacing it in its entirety with the following:

 

“Stated Maturity,” when used with respect to any Security or any
installment of contingent or semiannual cash interest thereon, means the date
specified in such Security as the fixed date on which an amount equal to the
Principal Amount at Maturity of such Security or such installment of contingent
or semiannual cash interest is due and payable.”

 

SECTION
2.02.               Amendments to
Sections 2.08(c) and (d), 2.11, 3.01, 3.03, 3.04, 3.05, 3.07, 3.08, 3.09, 3.10,
3.11, 3.14, 4.01, 5.01, 6.02, 6.03, 6.07, 6.09, 6.10, 6.12, 9.02, 10.02, 11.02
and 11.03 of the Original Indenture. 
Sections 2.08(c) and (d), 2.11, 3.01, 3.03, 3.04, 3.05, 3.07, 3.08,
3.09, 3.10, 3.11, 3.14, 4.01, 5.01, 6.02, 6.03, 6.07, 6.09, 6.10, 6.12, 9.02,
10.02, 11.02 and 11.03 of the Original Indenture are hereby amended by
replacing the words “contingent interest” in each of the sections therein with “contingent
or semiannual cash interest”.

 

SECTION
2.03.               Amendment to
Section 6.01(a) of the Original Indenture. 
Section 6.01(a) of the Original Indenture is hereby amended by replacing
it in its entirety with the following:

 

“(1) the Company defaults in payment when due of any contingent
interest on any of the Securities, or any semiannual cash interest that is
payable pursuant to the terms of the Securities, which default, in either case,
continues for 30 days;”

 

SECTION
2.04.               Amendment to
Section 7.07 of the Original Indenture. 
The second paragraph of Section 7.07 of the Original Indenture is hereby
amended by replacing it in its entirety with the following:

 

“To secure the Company’s payment obligations in this Section 7.07,
Holders shall have been deemed to have granted to the Trustee a lien prior to
the Securities on all money or property held or collected by the Trustee,
except that held in trust to pay the Principal Amount at Maturity, Issue Price
plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change
in Control Purchase Price, contingent interest, interest or semiannual cash
interest, if any, as the case may be, on particular Securities.”

 

SECTION
2.05.               Amendment to
Section 10.08(a)(i) of the Original Indenture.  The first paragraph of Section 10.08(a)(i) of
the Original Indenture is hereby amended by replacing it in its entirety with
the following:

 

“(i)          If, upon the date
prior to the Ex-Dividend Time with respect to a cash dividend on the Common
Stock, the aggregate amount of such cash dividend together with the amounts of
all Relevant Cash Dividends equals or exceeds on a 

 

 

2

 

per share basis the sum of (a) 5% of the Sale Price of the Common
Stock on the last Trading Day preceding the date of declaration by the Board of
Directors of the cash dividend or distribution with respect to which this provision
is being applied, and (b) the quotient of the amount of any contingent and
semiannual cash interest paid on a Security during the Ex-Dividend Measurement
Period and divided by the conversion rate in effect on the payment date of such
relevant contingent interest or semiannual cash interest payment date, as the
case may be, then such cash dividend together with all Relevant Cash Dividends,
shall be deemed to be an Extraordinary Cash Dividend and for purposes of
applying the formula set forth above in this Section 10.08(a), the value
of “F” shall be equal to (y) the aggregate amount of such cash dividend
together with the amount of all Relevant Cash Dividends, minus (z) the
aggregate amount of all Relevant Cash Dividends for which a prior adjustment in
the Conversion Rate was previously made under this Section 10.08(a).”

 

SECTION
2.06.               Amendment to
Section 11.01 of the Original Indenture.  Section 11.01 of the Original Indenture
is hereby amended by adding the following sentence:

 

“Semiannual cash interest shall be payable pursuant to paragraph 1
of the Securities.”

 

ARTICLE 3

 

AMENDMENTS
TO CERTAIN PROVISIONS OF THE SECURITIES; 

NOTATION ON THE SECURITIES

 

SECTION
3.01.               Amendments to Form
of Securities.  The following
amendments are hereby made to the forms of the Securities attached to the
Original Indenture as Exhibits A and B:

 

(a)           The first paragraph of the face of the form of the
Securities is hereby deleted in its entirety and replaced with the following
paragraph:

 

“FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE
DISCOUNT AND THE ISSUE DATE OF THIS SECURITY IS NOVEMBER 21, 2002. IN ADDITION,
THIS SECURITY IS SUBJECT TO UNITED STATES FEDERAL INCOME TAX REGULATIONS
GOVERNING CONTINGENT PAYMENT DEBT INSTRUMENTS. 
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE, THE ISSUE PRICE OF EACH SECURITY IS $860.87 PER $1,000 OF PRINCIPAL
AMOUNT AND THE COMPARABLE YIELD IS 4.55%, COMPOUNDED SEMIANNUALLY (WHICH WILL
BE TREATED AS THE YIELD FOR UNITED STATES FEDERAL INCOME TAX PURPOSES).  THE YIELD FOR ACCRUING ORIGINAL ISSUE
DISCOUNT FOR NON-TAX PURPOSES IS 0.5% PER YEAR (COMPUTED ON A SEMIANNUAL BOND
EQUIVALENT BASIS) 

 

 

3

 

CALCULATED FROM NOVEMBER 21, 2002, EXCLUDING ANY CONTINGENT AND
SEMIANNUAL CASH INTEREST.”

 

(b)           Paragraph 1 of the Securities is hereby deleted in its
entirety and replaced with the following paragraphs:

 

“Cash payment of interest will accrue on the Principal Amount at
Maturity of this Security at the rate per annum equal to 2.40% from and
including November 22, 2005 to but excluding November 22, 2007. The Company
will pay this cash interest semiannually in arrears on May 22, 2006,
November 22, 2006, May 22, 2007 and November 22, 2007 (each, an “Interest
Payment Date”) to the holders of record on the fifteenth calendar day next
preceding the applicable Interest Payment Date (whether or not a Business Day)
(each such date a “Regular Record Date”). Such interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months and will accrue from
the most recent date to which interest has been paid or, if no interest has
been paid, from (but not including) November 22, 2005.  Interest on any Security that is payable, and
is punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the person in whose name that Security is registered at the close of
business on the Regular Record Date for such interest at the office or agency
of the Company maintained for such purpose.

 

This Security shall not bear interest, except as specified in this
paragraph 1 or in paragraph 5 hereof. If the Principal Amount at
Maturity hereof or any portion of such Principal Amount at Maturity is not paid
when due (whether upon acceleration pursuant to Section 6.02 of the
Indenture, upon the date set for payment of the Redemption Price pursuant to
paragraph 6 hereof, upon the date set for payment of the Purchase Price or
Change in Control Purchase Price pursuant to paragraph 7 hereof or upon
the Stated Maturity of this Security) or if any contingent or semiannual cash
interest due hereon is not paid when due in accordance with this
paragraph 1 and paragraph 5 hereof, then in each such case the
overdue amount shall, to the extent permitted by law, bear interest at the rate
of 0.5% per annum, compounded semiannually, which interest shall accrue from
the date such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accrual of
Original Issue Discount.

 

Original Issue Discount (the difference between the Issue Price and the
Principal Amount at Maturity of the Security), in the period during which a
Security remains outstanding, shall accrue at 0.5% per annum, on a semiannual
bond equivalent basis using a 360-day year composed of twelve 30-day months,
from the Issue Date of this Security.”

 

(c)           Paragraph 4 of the Securities is hereby deleted in its
entirety and replace with the following:

 

 

4

 

“Indenture and First Supplemental Indenture.

 

The Company issued the Securities under an Indenture dated as of
November 21, 2002 (the “Indenture”), between the Company and the
Trustee.  Pursuant to Section 9.01 of the
Indenture, the Company and the Trustee entered into a First Supplemental
Indenture, dated as of November 21, 2005 (the “First Supplemental Indenture”),
to add to the Company’s covenants for the benefit of the Securityholders.  The terms of the Securities include those
stated in the Indenture, as supplemented by the First Supplemental Indenture,
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as in effect from time to time (the “TIA”). Capitalized terms used herein
and not defined herein have the meanings ascribed thereto in the Indenture, as
supplemented by the First Supplemental Indenture. The Securities are subject to
all such terms, and Securityholders are referred to the Indenture and the First
Supplemental Indenture for a statement of those terms.

 

The Securities are general unsecured and unsubordinated obligations of
the Company limited to $639,000,000 aggregate Principal Amount at Maturity
(subject to Section 2.07 of the Indenture). The Indenture does not limit
other indebtedness of the Company, secured or unsecured.”

 

(d)           The third paragraph of paragraph 6 of the Securities is
hereby deleted in its entirety and replaced with the following paragraph:

 

“In addition to the Redemption Price payable with respect to all
Securities or portions thereof to be redeemed as of a Redemption Date, the
Holders of such Securities (or portions thereof) shall be entitled to receive
accrued and unpaid contingent or semiannual cash interest, if any, with respect
thereto, which interest shall be paid in cash on the Redemption Date.”

 

(e)           The sixth paragraph of paragraph 7 of the Securities is
hereby deleted in its entirety and replaced with the following paragraph:

 

“In addition to the Purchase Price or Change in Control Purchase Price,
as the case may be, payable with respect to all Securities or portions thereof
to be purchased as of the Purchase Date or the Change in Control Purchase Date,
as the case may be, the Holders of such Securities (or portions thereof) shall
be entitled to receive any accrued and unpaid contingent or semiannual cash
interest with respect thereto, which shall be paid in cash promptly following
the later of the Purchase Date or the Change in Control Purchase Date, as the
case may be and the time of delivery of such Securities to the Paying Agent
pursuant to the Indenture.”

 

(f)            The eighth paragraph of paragraph 7 of the Securities is
hereby deleted in its entirety and replaced with the following paragraph:

 

“If cash (and/or securities if permitted under the Indenture)
sufficient to pay the Purchase Price or Change in Control Purchase Price, as
the case may be, of, 

 

 

5

 

together with any accrued and unpaid contingent or semiannual cash
interest with respect to, all Securities or portions thereof to be purchased as
of the Purchase Date or the Change in Control Purchase Date, as the case may
be, is deposited with the Paying Agent on the Business Day following the
Purchase Date or the Change in Control Purchase Date, as the case may be,
Original Issue Discount and any contingent or semiannual cash interest shall
cease to accrue on such Securities (or portions thereof) immediately after such
Purchase Date or Change in Control Purchase Date, as the case may be, and the
Holder thereof shall have no other rights as such (other than the right to
receive the Purchase Price or Change in Control Purchase Price, as the case may
be, and any accrued and unpaid contingent or semiannual cash interest upon
surrender of such Security).”

 

(g)           Paragraph 8 of the Securities is hereby deleted in its
entirety and replaced with the following paragraph:

 

“Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at the Holder’s registered address. If money sufficient to pay the Redemption
Price of, and accrued and unpaid contingent or semiannual cash interest, if
any, with respect to, all Securities (or portions thereof) to be redeemed on
the Redemption Date is deposited with the Paying Agent prior to or on the
Redemption Date, on such Redemption Date, Original Issue Discount and
contingent or semiannual cash interest, if any, shall cease to accrue on such
Securities or portions thereof. Securities in denominations larger than $1,000
of Principal Amount at Maturity may be redeemed in part but only in integral
multiples of $1,000 of Principal Amount at Maturity.”

 

(h)           The tenth and eleventh paragraphs of paragraph 9 of the
Securities are hereby deleted and replaced in their entirety with the following
paragraphs:

 

“Accrued and unpaid contingent or semiannual cash interest will not be
paid in cash on Securities that are converted; provided, however that
Securities surrendered for conversion during the period, in the case of
semiannual cash interest payable under paragraph 1, from the close of
business on any Regular Record Date immediately preceding any Interest Payment
Date to the opening of business on such Interest Payment Date or, in the case
of contingent interest, from the close of business on any date on which
contingent interest accrues to the opening of business on the date on which
such contingent interest is payable, shall be entitled to receive such interest
in lieu of contingent or semiannual cash interest, as the case may be, payable
on such Securities on the corresponding Interest Payment Date or the date on
which such contingent interest is payable and (except Securities with respect
to which the Company has mailed a notice of redemption) Securities surrendered
for conversion during such periods must be accompanied by payment of an amount
equal to the interest in lieu of contingent or semiannual cash interest with
respect thereto that the registered Holder is to receive.

 

 

6

 

A Holder may convert a portion of a Security if the Principal Amount at
Maturity of such portion is $1,000 or an integral multiple of $1,000. No
payment or adjustment will be made for dividends on the Common Stock except as
provided in the Indenture. On conversion of a Security, accrued Original Issue
Discount attributable to the period from the Issue Date through the Conversion
Date, accrued Tax OID and (except as provided above) accrued contingent or
semiannual cash interest with respect to the converted Security shall not be cancelled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
Holder thereof through the delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares), or cash or a combination of
cash and Common Stock in lieu thereof, in exchange for the Security being
converted pursuant to the terms hereof; and the fair market value of such
shares of Common Stock (together with any such cash payment in lieu of
fractional shares), or cash or a combination of cash and Common Stock in lieu
thereof, shall be treated as delivered, to the extent thereof, first in
exchange for Original Issue Discount and Tax OID accrued through the Conversion
Date and accrued contingent or semiannual cash interest, if any, and the balance,
if any, of such cash and/or the fair market value of such Common Stock (and any
such cash payment in lieu of fractional shares), or cash in lieu thereof, shall
be treated as delivered in exchange for the Issue Price of the Security being
converted pursuant to the provisions hereof.”

 

(i)            The first paragraph of paragraph 16 of the Securities is
hereby deleted and replaced in its entirety with the following paragraph:

 

“Under the Indenture, Events of Default include (i) default in the
payment of contingent interest or semiannual cash interest when the same
becomes due and payable, which default, in either case, continues for 30 days;
(ii) default in payment of the Principal Amount at Maturity, Issue Price
plus accrued Original Issue Discount, Redemption Price, Purchase Price or
Change in Control Purchase Price, as the case may be, in respect of the
Securities when the same becomes due and payable; (iii) failure by the
Company to comply with other agreements in the Indenture or the Securities,
subject to notice and lapse of time; (iv) the acceleration of Debt in an
amount in excess of $20,000,000 because of a default with respect to such Debt
without such Debt having been discharged or such acceleration having been
cured, waived, rescinded or annulled, subject to notice and lapse of time;
provided, however, that if any such failure or acceleration referred to above
shall cease or be cured, waived, rescinded or annulled, then the Event of
Default by reason thereof shall be deemed not to have occurred; and (v) certain
events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee, or the Holders of at least 25% in aggregate Principal
Amount at Maturity of the Securities at the time outstanding, may declare the
Issue Price plus the Original Issue Discount through the date of such
declaration, and any accrued and unpaid interest (including contingent or
semiannual cash interest) if any, through the date of such declaration, on all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Issue Price plus
the Original Issue 

 

 

7

 

Discount on the Securities, and any accrued and unpaid interest
(including contingent or semiannual cash interest) if any, through the
occurrence of such event, becoming due and payable immediately upon the
occurrence of such Events of Default.”

 

SECTION
3.02.               Notation on
Securities.  (a)  The Securities, as amended by the provisions
of this First Supplemental Indenture, shall bear a notation substantially to
the following effect:

 

“THE TERMS OF THIS SECURITY HAVE BEEN AMENDED TO THE EXTENT PROVIDED IN
THE FIRST SUPPLEMENTAL INDENTURE, DATED AS OF NOVEMBER 21, 2005, BETWEEN THE COMPANY
AND THE TRUSTEE. THE FIRST SUPPLEMENTAL INDENTURE WAS ENTERED INTO BETWEEN THE
COMPANY AND THE TRUSTEE PURSUANT TO SECTION 9.01 OF THE INDENTURE TO ADD TO THE
COMPANY’S COVENANTS FOR THE BENEFIT OF THE SECURITYHOLDERS. THE TERMS OF THIS
SECURITY INCLUDE THOSE STATED IN THE INDENTURE, AS SUPPLEMENTED BY THE FIRST
SUPPLEMENTAL INDENTURE, AND HOLDERS ARE REFERRED TO THE INDENTURE AND THE FIRST
SUPPLEMENTAL INDENTURE FOR A STATEMENT OF THOSE TERMS.”

 

(b)           The Trustee hereby acknowledges that the Securities shall
bear the above notation pursuant to, and upon satisfaction of, the conditions
set forth in Sections 9.05, 9.06, 12.04 and 12.05 of the Indenture.

 

ARTICLE 4

 

MISCELLANEOUS

 

SECTION
4.01.               Trust Indenture Act
Controls.  If any provision of this
First Supplemental Indenture limits, qualifies, or conflicts with another
provision which is required to be included in this Indenture by the TIA, the
required provision shall control.

 

SECTION
4.02.               Incorporation into
Indenture.  This First Supplemental
Indenture and all its provisions shall be deemed a part of the Original
Indenture in the manner and to the extent herein and therein provided.

 

SECTION
4.03.               Successors and
Assigns.  All covenants and
agreements of the Company and the Trustee in this First Supplemental Indenture
shall bind their respective successors.

 

SECTION
4.04.               Governing Law.  THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THIS FIRST SUPPLEMENTAL INDENTURE.

 

SECTION
4.05.               Multiple Originals.  The parties may sign any number of copies of
this First Supplemental Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this First Supplemental Indenture.

 

 

8

 

SECTION
4.06.               Separability Clause.  In case any provision in this First
Supplemental Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

SECTION
4.07.               The Trustee.  The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
First Supplemental Indenture. The recitals herein contained are made by the
Company and not by the Trustee, and the Trustee assumes no responsibility for
the correctness thereof.

 

*
* * * * * * * *

 

 

9

 

IN WITNESS WHEREOF, the undersigned, being duly authorized, have
executed this First Supplemental Indenture on behalf of the respective parties
hereto as of the date first above written.

 

 

	
   

  	
  3M
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William J. Schmoll

  
	
   

  	
   

  	
  Name: William J. Schmoll

  
	
   

  	
   

  	
  Title: Vice President and
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CITIBANK,
  N.A.

  
	
   

  	
  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wafaa Orfy

  
	
   

  	
   

  	
  Name: Wafaa Orfy

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

10EXHIBIT 10.1

 

SUBLEASE AGREEMENT

 

Between

 

VENTURE LIGHTING INTERNATIONAL, INC.

An Ohio Corporation

As Sublandlord

 

And

 

FIBERSTARS, INC.

A California Corporation

As Subtenant

 

Dated as of November 11, 2005

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1 SUBLEASE OF
  SUBLEASED PREMISES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1
  Subleased Premises

  	
   

  	
   

  
	
  Section 1.2 Option
  to Expand

  	
   

  	
   

  
	
  Section 1.3
  Exceptions to Master Lease

  	
   

  	
   

  
	
  Section 1.4 Term

  	
   

  	
   

  
	
  Section 1.4 Option
  to Terminate

  	
   

  	
   

  
	
  Section 1.6
  Renewal

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 USE OF SUBLEASED
  PREMISES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.1
  Compliance

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 RENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1
  Monthly Rent Payments

  	
   

  	
   

  
	
  Section 3.2 Other
  Amounts as Additional Rental

  	
   

  	
   

  
	
  Section 3.3
  Capital Expenditures

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 TAXES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1
  Obligation of Pay

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 INSURANCE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1
  Maintenance of Insurance

  	
   

  	
   

  
	
  Section 5.2
  Liability Insurance

  	
   

  	
   

  
	
  Section 5.3 Other
  Insurance

  	
   

  	
   

  
	
  Section 5.4 Mutual
  Waiver of Subrogation

  	
   

  	
   

  
	
  Section 5.5
  Failure to Maintain Insurance

  	
   

  	
   

  
	
  Section 5.6
  Insurance Prohibition

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 REPAIRS AND
  MAINTENANCE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.1
  Subtenant’s Obligations

  	
   

  	
   

  
	
  Section 6.2
  Sublandlord’s Obligations

  	
   

  	
   

  
	
  Section 6.3
  Failure to Repair – Indemnification

  	
   

  	
   

  
	
  Section 6.4
  Inspections

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 PUBLIC
  UTILITIES AND SERVICES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.1 Public
  Utilities and Services

  	
   

  	
   

  
	
  Section 7.2
  Discontinuation of Services

  	
   

  	
   

  

 

i

 

	
  ARTICLE 8 ALTERATIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.1
  Prohibitions

  	
   

  	
   

  
	
  Section 8.2
  Permitted Alterations

  	
   

  	
   

  
	
  Section 8.3
  Bathroom Improvements

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 LIENS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.1
  Prohibition on Liens

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 INDEMNITY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.1
  Subtenant’s Indemnification

  	
   

  	
   

  
	
  Section 10.2 Sublandlord’s
  Indemnification

  	
   

  	
   

  
	
  Section 10.3
  Notice to Sublandlord

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 ACCESS FOR
  INSPECTION AND SHORING

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.1
  Access by Sublandlord

  	
   

  	
   

  
	
  Section 11.2
  Access by Others

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 DAMAGE AND
  DESTRUCTION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.1
  Sublandlord Repair

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 ENVIRONMENTAL
  MATTERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.1
  Hazardous Substances

  	
   

  	
   

  
	
  Section 13.2
  Notice

  	
   

  	
   

  
	
  Section 13.3
  Right to Participate

  	
   

  	
   

  
	
  Section 13.4
  Migration

  	
   

  	
   

  
	
  Section 13.5
  Remedial Action

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14 DEFAULTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.1
  Defaults

  	
   

  	
   

  
	
  Section 14.2
  Remedies

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15 NOTICES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 15.1
  Method of Notice

  	
   

  	
   

  
	
  Section 15.2 Time
  of Notice

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16 HOLDING OVER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 16.1
  Holdover Rent

  	
   

  	
   

  

 

ii

 

	
  ARTICLE 17 SUBLANDLORD’S
  REPRESENTATION/WARRANTIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 17.1
  Representations and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 18 ASSIGNMENT
  AND SUBLETTING

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 18.1
  Assignment and Subletting

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19 MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 19.1
  HVAC/Ceiling Repairs

  	
   

  	
   

  
	
  Section 19.2
  Dedicated Computer/Phone Lines

  	
   

  	
   

  
	
  Section 19.3
  Signage

  	
   

  	
   

  
	
  Section 19.4
  Parking.

  	
   

  	
   

  
	
  Section 19.5
  Master Landlord’s Consent

  	
   

  	
   

  
	
  Section 19.6 Master
  Landlord’s Consent

  	
   

  	
   

  
	
  Section 19.7
  Defined Terms

  	
   

  	
   

  
	
   

  	
   

  
	
  EXHIBIT “A”

  	
  Master Lease

  	
   

  
	
  EXHIBIT “B”

  	
  Description of Leased Premises

  	
   

  
	
  EXHIBIT “C”

  	
  Description of Initial Fiberstars Premises

  	
   

  
	
  EXHIBIT “D”

  	
  Description of Phase I Premises, the Phase II
  Premises, the Phase III Premises, the Phase IV Premises, and the Phase V
  Premises

  	
   

  
	
  EXHIBIT “E”

  	
  Rent

  	
   

  
	
  EXHIBIT “F”

  	
  Description of “Quadrants”

  	
   

  
	
  EXHIBIT “G”

  	
  Master Landlord’s Consent

  	
   

  
				

 

iii

 

SUBLEASE AGREEMENT

 

THIS
SUBLEASE AGREEMENT (“Sublease”) executed and delivered as of
the November 11, 2005 at Solon, Ohio by and between Venture
Lighting International, Inc., an Ohio corporation, with offices
at 32000 Aurora Road, Solon, Ohio 44139 (hereinafter called “Sublandlord”) and Fiberstars, Inc., a California corporation, having a
place of business at 32000 Aurora Road, Solon, Ohio 44139 (hereinafter called “Subtenant”).

 

WITNESSETH:

 

WHEREAS,
Sublandlord and ADLT Realty Corp. I, Inc., an Ohio corporation (“Master
Landlord”) have entered into that certain Lease Agreement dated March 11,
1998, a copy of which is attached hereto as Exhibit
“A”, and is incorporated into this
Sublease as if set forth in full (the “Master Lease”), whereby Sublandlord leases
from Master Landlord certain Premises described in Exhibit “B”,
attached hereto, which property is located in Solon, Ohio (the “Leased Premises”);
and

 

WHEREAS,
Subtenant has been leasing and occupying, on a month-to-month basis, a portion
of the Leased Premises, which portion of the Leased Premises is described on Exhibit “C” hereto (the “Initial Fiberstars Premises”); and

 

WHEREAS,
effective as of the Commencement Date (as defined below), subject to and in
accordance with the terms and provisions hereinafter set forth, Sublandlord
desires to continue to sublease to Subtenant the Initial Fiberstars Premises;
as of the Subsequent Commencement Date (as defined below), subject to and in
accordance with the terms and provisions hereinafter set forth, Sublandlord
desires to sublease to Subtenant such additional portions of the Leased
Premises, which additional portions of the Leased Premises are described in Exhibit “D” hereto (as therein described, the “Phase I
Premises”, the “Phase II Premises”, the “Phase III Premises”, the “Phase IV
Premises”, and the “Phase V Premises”). 
The term “Subleased Premises”, as used herein, shall mean the Initial
Fiberstars Premises until September 26, 2005 (the “Subsequent Commencement
Date”), and thereafter shall mean the Phase I Premises, or such portions
thereof as they become available.  From
and after November 1, 2005, the term “Subleased Premises”, as used herein,
shall mean the Phase II Premises, or such portions thereof as they become
available.  From and after April 1,
2006, the term “Subleased Premises”, as used herein, shall mean the Phase III
Premises, or such portions thereof as they become available.  From and after July 1, 2006, the term “Subleased
Premises”, as used herein, shall mean the Phase IV Premises, or such portions
thereof as they become available.  From
and after January 1, 2007, the term “Subleased Premises”, as used herein,
shall mean the Phase V Premises, or such portions thereof as they become
available.  Subtenant, subject to and in
accordance with the terms and provisions hereinafter set forth, desires to
sublease from Sublandlord the Subleased Premises, all of which is subject to
and upon the terms, provisions and conditions hereinafter set forth.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby mutually acknowledged, and in and for the
covenants, agreements, representations and warranties hereinafter set forth,
Sublandlord and Subtenant hereby covenant, agree, represent and warrant as
follows:

 

1

 

ARTICLE 1

SUBLEASE OF SUBLEASED PREMISES

 

Section 1.1                                   Subleased
Premises.  Sublandlord, for and
in consideration of the rent hereinafter specified and for the covenants and
agreements hereinafter set forth to be kept, observed and performed by
Subtenant, has subleased and by these presents does hereby sublease unto
Subtenant the Subleased Premises, together with all buildings, appurtenances,
rights, privileges and easements in any way now or hereafter appertaining
hereto.

 

Section 1.2                                   Option to Expand.

 

(a)                                  Subtenant shall have the option to expand the
Subleased Premises to include an additional 15,000 square feet to the
operations space portion of the Subleased Premises (the “Option Space”) on the
same terms as provided for in this Sublease (provided that the Rent payable for
the Option Space shall be as set forth on Exhibit “E” attached hereto).  The Option Space shall be selected by
Sublandlord and shall be reasonably acceptable to Subtenant, and shall be
located within the Northeast or Southwest quadrants (as more particularly
described on Exhibit “F”
attached hereto) of the
Leased Premises.  Sublandlord shall,
prior to March 1, 2006, provide written notice to Subtenant describing the
exact location of the Option Space. 
Subtenant shall exercise such option upon written notice to Sublandlord
given no later than April 1, 2006. 
The Option Space shall be made available to Subtenant as soon as is
practicable after Subtenant has exercised its option by delivery of such
written notice.  To the extent that
Subtenant exercises its option to include the Option Space in the Subleased
Premises, such Option Space shall thereafter be included in the definition of
the term “Subleased Premises”.

 

(b)                                 Subtenant shall have the option to expand the
Subleased Premises to include an additional 2,000 square feet to the office
space portion of the Subleased Premises (the “Office Option Space”) on the same
terms as provided for in this Sublease (provided that the Rent payable for the
Office Option Space shall be as set forth on Exhibit “E” attached hereto).  The Office Option Space shall be located in
the library or other equivalent space adjacent to the office space portion of
the Phase IV Premises designated by Sublandlord and shall be reasonably
acceptable to Subtenant.  Subtenant shall
exercise such option upon written notice to Sublandlord given no later than May 1,
2006.  If Subtenant exercises its option
with respect to the Office Option Space, then such space shall be made
available to Subtenant on July 1, 2005. 
To the extent that Subtenant exercises its option to include the Office
Option Space in the Subleased Premises, such Office Option Space shall
thereafter be included in the definition of the term “Subleased Premises”.

 

Section 1.3                                   Exceptions
to Master Lease. 
Subtenant acknowledges that all of the terms and conditions of the
Master Lease will be applicable to this Sublease, with the effect that
Subtenant shall be entitled to the rights, and subject to the obligations of
Tenant pursuant to the Master Lease, and Sublandlord shall be entitled to the
rights, and subject to the obligations, of Landlord pursuant to the Master
Lease.  Notwithstanding the foregoing
incorporation of the Master Lease, the following provisions thereof are hereby
excluded: Article One (Demised Premises and Term); Article Three
(Annual Rent); Article Four (Additional Rent); Article Five (Taxes); Article Six
(Insurance); Article Eight (Repairs and Maintenance); Article Nine
(Public Utilities and Services); Article Ten (Alterations); Section 11.02
(Prohibitions); Article Twelve (Indemnity); Article Thirteen (Access
for Inspection, Showing and Shoring); Article Fourteen

 

2

 

(Damage
and Destruction); Article Seventeen (Defaults); Article Eighteen
(Additional Remedies of Lessor). 
However, nothing herein contained shall be construed as to require
Subtenant to perform any work, repairs or maintenance (including any
replacements), in, to or upon the Subleased Premises or with respect to any
equipment, system or fixture therein.

 

Section 1.4                                   Term.  Subtenant shall have and hold the Subleased
Premises for a Term (the “Term”) of three (3) years and six (6) months,
effective as of July 1, 2005 (the “Commencement Date”), and expiring on December 31,
2008 (the “Expiration Date”).  Subtenant
may terminate this Sublease at any time following a Building Sale, provided
Subtenant provides notice to Sublandlord of such termination within 30 days
following receipt of written notice that Master Landlord intends to effect a
Building Sale, which notice shall set forth the termination date determined by
Subtenant.  For the purposes of this
Section, the term “Building Sale” shall mean the sale or other transfer of the
Leased Premises, the result of which is that the Leased Premises are not owned
in fee (subject to any mortgage), or leased, by Advanced Lighting Technologies, Inc.,
or one of its subsidiaries.  Furthermore,
Subtenant may terminate this Sublease at any time following either a cessation
of Sublandlord’s operations at the Leased Premises, or the relocation of Master
Landlord’s senior management personnel away from the Leased Premises, provided
Subtenant provides notice to Sublandlord of such termination within 30 days
following receipt of written notice that Sublandlord intends to cease
operations at the Leased Premises or that Master Landlord intends to relocate
its senior management personnel, which notice shall set forth the termination
date determined by Subtenant.

 

Section 1.5                                   Option
to Terminate.  Subtenant is in
the process of applying for a Job Creation Tax Credit (the “Tax Credit”) from
the city of Solon, Ohio.  Subtenant
covenants that it shall use commercially reasonable efforts and shall act
diligently to obtain the Tax Credit.  In
the event that Subtenant does not receive a Tax Credit, acceptable to Subtenant
in its reasonable discretion, on or before November 30, 2005, Tenant shall
have the right upon notice to Sublandlord on or prior to December 15,
2005, to terminate this Sublease.  In the
event that Subtenant so elects to terminate this Sublease, Subtenant shall pay
a termination fee to Sublandlord in the amount of One /hundred Fifty Thousand
Dollars ($150,000.00) (the “Termination Fee”). 
Sublandlord and Subtenant agree that the payment of the Termination Fee
is not intended as a forfeiture or penalty.

 

Section 1.6                                   Renewal.  Provided that Subtenant is not in Default
beyond any applicable cure periods, this Sublease shall automatically renew for
three (3) additional years thereafter, unless either of the parties hereto
provides written notification to the other least ninety (90), but no more than
one hundred eighty (180) days prior to the Expiration Date that the party
sending the notice is terminating this Sublease (“Termination Notification”).  The terms and conditions of each such
extended period shall be the same as set forth in this Sublease.

 

ARTICLE 2

USE OF SUBLEASED PREMISES

 

Section 2.1                                   Compliance.  Except as otherwise provided herein,
Subtenant shall observe and comply with all conditions and requirements imposed
by all governmental authorities having jurisdiction over the Subleased Premises
throughout the Term of this Sublease which are caused by Subtenant’s use
thereof; provided, however, that Subtenant shall not be

 

3

 

obligated to make any
capital improvements to the Subleased Premises required by such governmental
authorities, except for those improvements or modifications required by
Subtenant’s use of the Subleased Premises. 
Until such time as the Subleased Premises shall be separated from the
Leased Premises by demising walls, Subtenant shall use the Subleased Premises
in accordance with the written safety and security rules and regulations
observed by Sublandlord’s personnel at the Leased Premises.

 

ARTICLE 3

RENT

 

Section 3.1            Monthly Rent Payments.  Subtenant shall pay Sublandlord “Rent” for
the Term, in addition to all other amounts hereunder, as listed in Exhibit “E.”  If, on any date set forth
on Exhibit “E” for commencement of any Phase, all or a portion of the
Subleased Premises, which was to first become Subleased Premises on such date,
is not available for occupancy by the Subtenant, Subtenant’s obligation to pay
Rent as set forth thereunder shall be reduced by the Rent attributable to that
portion which is unavailable, until such portion is actually made available. If
Subtenant does not exercise its option to lease the Option Space and/or the
Office Option Space, Subtenant shall have no obligation to pay the Rent
attributable to such Option Space and/or the Office Option Space.  Subject to the provisions of Section 7.1
below, it is agreed between Sublandlord and Subtenant that this lease shall be
“gross”, that the Rent includes, without limitation, all costs of repairs and
maintenance to the Subleased Premises, including capital expenditures (except
as set forth in Section 3.3 below), property tax, property insurance,
landscaping, snow removal, gas, water, electricity, light, heat, power, steam,
and air-conditioning or other utility or service used (except for telephone and
other communication services), building supplies, janitorial supplies, alarm
systems, pest control service, and the costs of certain personnel of
Sublandlord (which personnel agreements are more specifically set forth in the
Ancillary Services Agreement between Sublandlord and Subtenant dated of even
date herewith), and that Subtenant shall have no further obligation for payment
for any utilities or services to be provided by Sublandlord hereunder.  Rent for each calendar month, being
calculated as one-twelfth of the applicable annual rental, is payable in
advance on the first day of the month without demand or offset.  Notwithstanding the foregoing, Lessee shall
commence paying rent upon the execution of this Sublease Agreement with such
payment including arrearages, if any, for prior periods.

 

Section 3.2                                   Other
Amounts as Additional Rental. 
Subtenant shall pay without notice or demand and without abatement,
reduction or setoff, as and toward “Additional Rental” hereunder, all costs,
expenses and all other sums of money required to be paid by Subtenant under the
terms of this Sublease and, unless otherwise specified herein with respect to
time of payment, within thirty (30) days after receipt of an invoice from
Sublandlord therefor, whether or not the same be designated as Additional
Rental.  In the event of any non-payment
by Subtenant of all or any part thereof, when due, Sublandlord shall have all
of the rights and remedies provided for in this Sublease, or in law or in
equity for the non-payment of rent or for the breach of a condition.

 

Section 3.3                                   Capital
Expenditures.  Subtenant may
undertake, at Subtenant’s sole cost and expense, certain capital expenditures
to be conducted at the Subleased Premises in connection with the division of
the Subleased Premises from the Leased Premises or in connection with Subtenant’s
demonstration area or applications area, including the installation of

 

4

 

hallway doors, curtaining
off the production area and soundproofing the production area to minimize the
sound audible from the Subleased Premises. 
Such capital expenditures are subject to Sublandlord’s approval, which
shall not be unreasonably withheld.  With
the exception of the foregoing and the provisions of Section 8.3 below,
any capital expenditures to be made at the Leased Premises shall be conducted
by Sublandlord, at Sublandlord’s sole cost and expense, and the costs thereof
shall not be passed on to Subtenant.

 

ARTICLE 4

TAXES

 

Section 4.1                                   Obligation
to Pay.  Sublandlord shall pay
all real estate taxes, assessments and charges which shall be assessed and
levied upon the Subleased Premises or any part thereof during the Term as they
become due.  Subtenant shall be
responsible for and pay all other taxes imposed upon Subtenant including, but
not limited to, sales and use taxes, personal property taxes and income and
franchise taxes.

 

ARTICLE 5

INSURANCE

 

Section 5.1                                   Maintenance
Insurance.  At all times during
the Term of this Sublease, Subtenant agrees to carry standard form “All Risk”
property insurance on its property located at the Subleased Premises for full
replacement thereof and shall provide Sublandlord and Master Landlord with a
certificate of insurance reflecting such coverage.  Such insurance shall include a provision
whereby the insurer agrees not to cancel the insurance policy without thirty
(30) days prior notice to the Sublandlord.

 

Section 5.2                                   Liability
Insurance.  At all times during
the Term of this Sublease, at its own cost and expense, Subtenant shall provide
and keep in force comprehensive general liability insurance policies, in broad
form, protecting Sublandlord and Master Landlord as additional insureds, against
any and all liability in the amount of not less than a combined single limit of
One Million Dollars ($1,000,000.00), each occurrence, and at least Two Million
Dollars ($2,000,000.00) in the aggregate. 
All such policies shall cover the entire Subleased Premises and all
corresponding common areas of the Leased Premises, which are leased to
Subtenant.

 

Section 5.3                                   Other
Insurance.  At all times during
the Term of this Sublease, at its own cost and expense, Subtenant shall provide
and keep in force personal property insurance covering damage and loss to
Subtenant’s inventory, trade fixtures, furnishings, equipment and personal
property, business interruption insurance, including insurance covering loss of
profit.  All proceeds payable under all
such policies shall be payable to Subtenant.

 

Section 5.4                                   Mutual
Waiver of Subrogation. 
Notwithstanding anything set forth in this Sublease to the contrary,
Master Landlord, Sublandlord and Subtenant do hereby waive any and all right of
recovery, claim action or cause of action against the other, their respective
agents, officers and employees for any loss or damage that may occur to the
Subleased Premises or the Leased Premises or any addition or improvements
thereto, by reason of fire, the elements or any other cause which would be
insured against under the terms of the insurance policy or policies required
hereunder, or for which Master Landlord, Sublandlord or Subtenant may actually
be reimbursed as a result of insurance coverage affecting any loss suffered by
either party hereto,

 

5

 

regardless of cause or
origin, including the negligence of Master Landlord, Sublandlord or Subtenant
or their respective agents, officers and employees.  In addition, all insurance policies carried
by either party covering the Subleased Premises including, but not limited to,
contents, fire and casualty insurance, shall expressly waive any right on the
part of the insurer against the other party for damage to or destruction of the
Subleased Premises resulting from the acts, omissions or negligence of the
other party.

 

Section 5.5                                   Failure
to Maintain Insurance.  In the
event that Subtenant fails to obtain, or having obtained, thereafter fails to
maintain insurance as is required in this Sublease and such failure shall
continue for a period of ten (10) days after notice by Sublandlord with
respect to such failure, Sublandlord may, but shall not be obligated to, effect
and maintain any such insurance coverage and pay the premiums therefor and all
premiums so paid by Sublandlord shall be deemed Additional Rental hereunder,
and payable by Subtenant on demand by Sublandlord.

 

Section 5.6                                   Insurance
Prohibition.  Subtenant or
Sublandlord shall not carry separate insurance concurrent in form or contributing
in the event of loss with any insurance required or which may reasonably be
required to be furnished by Subtenant or Sublandlord under the provision of
this Article Five, unless, in conformity with the requirements of this Article Five,
Sublandlord or Subtenant, as the case may be, is included therein as one of the
insureds, with loss payable as provided in this Sublease.  Subtenant or Sublandlord shall notify the
other of the issuance of such separate insurance and shall cause any such
policies to be delivered as provided in this Article Five.

 

ARTICLE 6

REPAIRS AND MAINTENANCE

 

Section 6.1                                   Subtenant’s
Obligations.  Throughout the Term
of this Sublease, Subtenant covenants and agrees to keep and maintain as
required by good engineering practice, at its cost, all interior nonstructural
portions of the Subleased Premises, to make all repairs becoming necessary
including, but without limitation, repairs to interior walls, windows, doors,
glass, floor coverings, plumbing and other mechanical appurtenances and
equipment located in the Subleased Premises, provided, however, that Subtenant
shall not be required to make any capital improvements to the Subleased
Premises.  Subtenant shall give
Sublandlord prompt notice of any fire or other casualty that may occur at the
Subleased Premises.  At or prior to the
termination of this Sublease all injury caused directly or indirectly by the
installation or removal of furniture, trade fixtures and property of Subtenant
shall be repaired by Subtenant at Subtenant’s sole cost and expense.  For purposes of this Sublease the term “trade
fixtures” shall be deemed to include storage racks and overhead cranes.

 

Section 6.2                                   Sublandlord’s
Obligations.  Sublandlord shall,
at all times and at its expense maintain as required by good engineering
practice and repair and replace the exterior portions of the Subleased
Premises, all structural portions of the interior and exterior portions of the
Subleased Premises, including but not limited to the roof, gutters and
downspouts, walls, sidewalks, curbs, driveways, parking areas and all
underground utilities servicing the Subleased Premises and the heating, air
conditioning and ventilating systems currently serving the Subleased Premises.

 

6

 

Section 6.3                                   Failure
to Repair – Indemnification. 
Subtenant and Sublandlord shall indemnify and save harmless each other
against and from all costs, expenses, liabilities, losses, damages, suits,
fines, penalties, claims and demands resulting from indemnifying party’s
failure to comply with the foregoing obligations pursuant to Sections 6.1 and
6.2.  In the event that Subtenant or
Sublandlord fail to perform any of their obligations pursuant to Sections 6.1
or 6.2, the other party may, but shall not be required to, at the sole cost and
expense of the other, make such repairs or replacements or perform such acts
required to be performed, and the cost and expense thereof shall be deemed to
be Additional Rent or a set off against rent, as the case may be provided,
however, that neither Subtenant nor Sublandlord shall commence to effect any
such repairs or replacement or perform or cause to be performed any of the
obligations required of the other unless they shall first have given the other
not less than fifteen (15) days prior written notice specifying the work
required to be performed and, provided further, that Subtenant or Sublandlord,
as the case may be, shall be presumed to have complied with such notice if they
commence such repairs or replacements or perform such specified obligations
within said fifteen (15) days period and proceeds thereafter to complete same
with due diligence.

 

Section 6.4                                   Inspection.  Subtenant shall permit Sublandlord, any
mortgagee and/or the authorized representatives of each, upon 24 hour prior
notice, to enter the Subleased Premises at all reasonable times, upon
reasonable written notice, for the purpose of (a) inspecting the same and
of determining the necessity of Subtenant making any repairs, replacements or
restorations to the Subleased Premises and of performing any work therein that
may be necessary to comply with Subtenant’s obligations under this Sublease or
with any laws, ordinances, rules, regulations or requirements of any public
authority, or that may be necessary to prevent waste or deterioration in
connection with the Subleased Premises, and (b) permitting Sublandlord, at
Subtenant’s cost and expense, pursuant to Section 6.3 to make those
repairs, replacements and restorations required to be made by Subtenant
pursuant to Section 6.1, but which Subtenant has failed to do after due
notice from Sublandlord.

 

ARTICLE 7

PUBLIC UTILITIES AND SERVICES

 

Section 7.1                                   Public
Utilities and Services. 
Sublandlord agrees to pay or cause to be paid all charges for gas,
water, electricity, light, heat, power, steam, and air-conditioning or other
utility or service used (except for telephone and other communication
services), rendered or supplied to, upon or in connection with the Subleased
Premises and Subtenant’s occupation and use thereof throughout the Term of this
Sublease; provided, however, that, Subtenant shall pay or cause to be paid all
charges for electricity used by production machinery used by Subtenant on the
Subleased Premises to the extent that such charges are in excess of Seven
Thousand Five Hundred Dollars ($7,500.00) per month.  If necessary, Sublandlord may decide to
separately meter such utilities provided for production machinery, at
Sublandlord’s sole cost and expense. 
Subtenant shall, at its sole cost and expense, procure or cause to be
procured any and all necessary permits, licenses or other authorizations
required for the lawful and proper use, occupation, operation and management of
the Subleased Premises.

 

Section 7.2                                   Discontinuation
of Services.  Any discontinuation
of utilities or service beyond the control of the Sublandlord shall not
constitute a constructive eviction of Subtenant by Sublandlord.

 

7

 

ARTICLE 8

ALTERATIONS

 

Section 8.1                                   Prohibitions.  Subtenant agrees that it will not (a) demolish
or undertake any structural alterations of any of the buildings or other
improvements erected upon or otherwise comprising the Subleased Premises
without the prior written consent of Sublandlord, which consent may be withheld
in Sublandlord’s sole discretion, and if required under the Master Lease,
without Master Landlord’s prior written consent, or (b) make any other
improvements comprising the Subleased Premises which would weaken, impair or
the otherwise in any way affect the structural aspects or integrity of or
lessen the value of the Subleased Premises and/or the buildings and other
improvements comprising the Subleased Premises, without the prior written
consent of Sublandlord, which consent may be withheld in Sublandlord’s sole
discretion, and if required under the Master Lease, without Master Landlord’s
prior written consent.

 

Section 8.2                                   Permitted
Alterations.

 

(a)                                              With
respect to any alterations permitted to be made by Subtenant pursuant to this Article Eight,
Subtenant and Sublandlord shall agree on who shall pay all costs, expenses and
charges thereof, (i) either Subtenant or Sublandlord, as appropriate,
shall make the same in accordance with all applicable laws and building codes
in a good and workmanlike manner, (ii) cause the same to be performed by
qualified contractors, (iii) fully and completely indemnify and hold
harmless Sublandlord from and against any mechanic’s liens or other liens or
claims in connection with the making thereof, and (iv) by reason of such
alterations, not thereby reduce the economic value of the Subleased Premises.

 

(b)                                             All
alterations, improvements and additions to the Subleased Premises permitted to
be made by Subtenant hereunder, shall be made in accordance with all applicable
laws and plans and specifications previously submitted to Sublandlord for
Sublandlord’s approval, which approval shall not be unreasonably withheld or
delayed, and, except for removable trade fixtures, shall at once when made or
installed be deemed to have attached to the freehold and to have become the
property of Sublandlord and shall, unless otherwise agreed, remain for the
benefit of Sublandlord at the end of the Term or other expiration of this
Sublease in as good order and condition as they were when installed, reasonable
wear and tear excepted.

 

Section 8.3                                   Bathroom
Improvements.  Sublandlord shall
undertake to perform certain bathroom renovations (the “Bathroom Improvements”)
to the Subleased Premises.  Subtenant
shall be responsible for fifty percent (50%) of the cost of such Bathroom
Improvements, up to a maximum of Fifteen Thousand Dollars ($15,000).  Sublandlord shall be responsible for fifty
percent (50%) of the cost of such Bathroom Improvements, up to a maximum of
Fifteen Thousand Dollars ($15,000), and shall be responsible for one hundred
percent (100%) of any cost of such Bathroom Improvements in excess of Thirty
Thousand Dollars ($30,000).  Sublandlord
shall engage a general contractor, subcontractors, a construction manager and
such other professionals, as Sublandlord may deem appropriate to implement the
Bathroom Improvements.

 

8

 

ARTICLE 9

LIENS

 

Section 9.1                                   Prohibition
on Liens.  Subtenant shall not
suffer or permit any liens to be filed against the Subleased Premises or any
part thereof by reason of any work, labor, services or materials done for or
supplied to, or claimed to have been done for or supplied to, Subtenant or
anyone holding the Subleased Premises or any part thereof through or under Subtenant.  If any such lien shall at any time be filed
against the Subleased Premises, Subtenant shall immediately cause the same to
be discharged of record by payment, deposit or bond.  If Subtenant shall fail to discharge any such
lien within sixty (60) days after notice by Sublandlord, then, in addition to
any other right or remedy of Sublandlord, Sublandlord may, but shall not be
obligated to, procure the discharge of the same either (i) by paying the
amount claimed to be due, (ii) by deposit in court or (iii) by
bonding.  Any amount paid or deposited by
Sublandlord for any of the aforesaid purposes and all legal and other expenses
of Sublandlord, including counsel fees and all necessary disbursements in
connection therewith, in defending any such action or in procuring the
discharge of such lien, together with interest thereon, at the “prime rate” as
published in The Wall Street Journal, plus 3%
from the date of payment or deposit, shall be deemed to be Additional Rent
hereunder, and shall be due and payable by Subtenant on demand by Sublandlord,
or at the election of Sublandlord, shall become due and payable in full with
the next due installment of Rent hereunder.

 

ARTICLE 10

INDEMNITY

 

Section 10.1                            Subtenant’s
Indemnification.  Subtenant shall
indemnify, defend and save harmless Sublandlord from and against all liability,
judgments, claims, demands, suits, actions, losses, penalties, fines, damages,
costs and expenses, including attorneys’ fees, of any kind or nature
whatsoever, due to or arising out of or from any breach, violation or
non-performance of any covenant, condition, provision or agreement in this
Sublease set forth and contained on the part of Subtenant to be fulfilled,
kept, observed and performed, and claims of every kind or nature, arising out
of the use and occupation of the Subleased Premises by Subtenant, including,
without limitation, any damage to property occasioned by or arising from the
use and occupation thereof by Subtenant or by any sublessee, sub-subtenant or
assignee of Subtenant, or any injury to any person or persons, including death
resulting at anytime therefrom, occurring in or about the Subleased Premises.

 

Section 10.2                            Sublandlord’s
Indemnification.  Sublandlord
shall indemnify, defend and save harmless Subtenant from and against all
liability, judgments, claims, demands, suits, actions, losses penalties, fines,
damages, costs and expenses, including attorneys’ fees, of any kind or nature
whatsoever, due to or arising out of or from any breach, violation or
non-performance of any covenant, condition, provision or agreement in (i) the
Master Lease set forth and contained on the part of Sublandlord, as tenant
thereunder, to be fulfilled, kept, observed and performed, or (ii) this
Sublease set forth and contained on the part of Sublandlord to be fulfilled,
kept, observed and performed; and claims of every kind or nature, arising out
of the use and occupation of the Subleased Premises by Sublandlord, including,
without limitation, any damage to property occasioned by or arising from the
use and occupation thereof by Sublandlord prior to the Commencement Date or by
any sublessee, sub-subtenant or assignee of Sublandlord, or any

 

9

 

injury to any person or
persons, including death resulting at anytime therefrom, occurring in or about
the Subleased Premises.

 

Section 10.3                            Notice
to Sublandlord.  Sublandlord
shall in no event be charged with Default in the performance of any of its
obligations hereunder unless and until Sublandlord shall have failed to perform
such obligations within thirty (30) days (or such additional time as is
reasonably required to correct any such Default) after notice to Sublandlord by
Subtenant properly specifying wherein Sublandlord has failed to perform any such
obligations.

 

ARTICLE 11

ACCESS FOR INSPECTION AND SHORING

 

Section 11.1                            Access
by Sublandlord.  Sublandlord and
its agent upon prior notice to Subtenant shall have the right to enter the
Subleased Premises at all reasonable hours for the purpose of inspection
thereof, or of making repairs, replacements and restorations that Subtenant has
neglected or refused to make in accordance with the agreements, terms,
covenants and conditions of this Sublease. 
In an emergency situation, such notice shall not be required.  Sublandlord hereby covenants that it shall
use commercially reasonable efforts to avoid any interference with Subtenant’s
use or occupancy of the Subleased Premises in conducting such repairs,
replacements and restorations.

 

Section 11.2                            Access
by Others.  If any excavation or
other building operation shall be about to be made or shall be made upon any
adjoining land or streets, Subtenant shall permit any third persons obligated
or authorized by law to protect the Subleased Premises and their respective
representatives, to enter upon the Subleased Premises to shore the foundations
and walls thereof and to do any other act or thing necessary for the safety and
preservation of the Subleased Premises, provided, however, that in the event no
third person is so obligated by law, or in the event any such person shall
neglect or refuse to do any such work, Sublandlord agrees that it will do or
cause the same to be done at its sole cost and expense.  Sublandlord hereby covenants that it shall
use commercially reasonable efforts to avoid any interference with Subtenant’s
use or occupancy of the Subleased Premises in conducting work.

 

ARTICLE 12

DAMAGE AND DESTRUCTION

 

Section 12.1                            Sublandlord
Repair.  Any damage to or
destruction of all or any part of the buildings and other improvements
comprising the Subleased Premises from any cause whatsoever, shall not render
this Sublease void or voidable nor terminate it in whole or in part by either
party hereto, except as hereinafter provided. 
Sublandlord shall within ten (10) days of the occurrence of any
damage or destruction, provide Subtenant with notice as to whether Sublandlord
reasonably believes it will be able to repair such damage or destruction within
ninety (90) days of said notice.

 

(a)                                              If
Sublandlord states in Sublandlord’s notice that it will not be able to repair
said damage or destruction within said ninety (90) day period, then Subtenant
shall have the right to terminate this Sublease by notifying Sublandlord of
such termination in Subtenant’s notice to Sublandlord delivered to Sublandlord
within ten (10) days from receipt of Sublandlord’s notice

 

10

 

to Subtenant, in which
event this Sublease shall be null and void as of the date of such damage or
destruction.

 

(b)                                             If
Subtenant does not terminate this Sublease or if Sublandlord can repair damages
within 90 days then Sublandlord, at Sublandlord’s sole cost and expense, shall
immediately proceed with the reconstruction, repair or restoration of the
damaged portion of the Subleased Premises and shall complete the repair,
restoration or reconstruction thereof so that the Subleased Premises is an
architecturally whole unit, the same as nearly as possible to its condition
immediately prior to such damage and destruction.  Such repair, restoration or reconstruction
shall be made in accordance with the terms hereof within a reasonable time
thereafter.  Subtenant’s Rent shall be
equitably and proportionately adjusted until such time as Sublandlord has
completed the repairs or restoration.

 

ARTICLE 13

ENVIRONMENTAL MATTERS

 

Section 13.1                            Hazardous
Substances.  At no time shall any
explosives, petroleum (including crude oil), radioactive materials, hazardous
wastes, toxic substances or related materials, including, without limitation,
any asbestos, asbestos containing materials, PCB’s or any substances defined as
or included in the definition of “hazardous substances,” “hazardous waste,” “hazardous
materials,” or “toxic substances” (collectively, “Hazardous Substances”), under
Federal, state or local law, ordinance or regulation dealing with or otherwise
pertaining to toxic or hazardous substances, wastes or materials (collectively,
the “Hazardous Substances Laws”) be used, generated, manufactured, stored,
released by Subtenant (or within Subtenants reasonable control), or disposed of
in, on, under or about the Subleased Premises by Subtenant or be transported to
or from the Subleased Premises by Subtenant or be transported to or from the
Subleased Premises by Subtenant, except as such Hazardous Substances may be
required to be used, stored or transported in connection with the permitted
uses of Subleased Premises and then only to the extent and in the manner
permitted by law after obtaining all necessary permits and licenses therefor.  Notwithstanding the foregoing, Subtenant
shall have the right, without prior consent of Sublandlord or Master Landlord,
to utilize within the Subleased Premises reasonable quantities of ordinary and
general office supplies such as copier toner, liquid paper, glue, ink and
common household cleaning materials (some or all of which may constitute “Hazardous
Substances” under this Sublease). Subtenant shall provide to Sublandlord a list
of all Hazardous Substances introduced by Subtenant to the Subleased Premises
prior to the introduction of such Hazardous Substances to the Subleased
Premises and, upon Sublandlord’s request, shall provide Sublandlord with a
Material Safety Data Sheet for each such substance.  For purposes of this Section, Subtenant shall
be deemed to include its agents, invitees and trespassers.

 

Section 13.2                            Notice.          Subtenant shall
immediately advise Sublandlord in writing of the occurrence or: (i) any
discharge, release or disposal of any Hazardous Substances in, on, under or
about the Subleased Premises known to Subtenant; (ii) any enforcement,
clean up or other governmental or regulatory actions being instituted or
threatened against the Subleased Premises known to Subtenant or against
Subtenant with respect to any Hazardous Substances Law; (iii) any
violation or non-compliance with Hazardous Substances laws with respect to the
Subleased Premises known to the Subtenant, or (iv) any claim made or
threatened by any third party against the Subleased Premises, relating to
damage, contribution, cost recovery, compensation, loss or

 

11

 

injury resulting from
hazardous Substances known to Subtenant (collectively, “Hazardous Substances
Claims”).

 

Section 13.3                            Right
to Participate.  Sublandlord shall
have the right to participate in, as a party if it so elects, any legal
proceedings initiated in connection with any Hazardous Substance Claims.  In the event the Sublandlord shall elect to
participate in, and/or be or joined as a party in any legal proceeding
initiated in connection with any Hazardous Substances Claims, Sublandlord shall
be responsible or and pay its own attorneys fees and costs incurred in
connection therewith without seeking contribution or indemnification by
Subtenant; provided if Subtenant is found to be responsible for any Hazardous
Substance Claim, Sublandlord shall be paid, on demand, for their attorneys fees
and costs in connection therewith. 
Subtenant shall be solely responsible for, and shall indemnify, defend
and hold harmless Sublandlord, Sublandlord’s mortgagees and their directors,
officers, employees, agents, successors and assigns from and against any
damage, expense or liability directly or indirectly arising out of or
attributable to the use, generation, storage, release, threatened release,
discharge or disposal of Hazardous Substances, on, under or about the Subleased
Premises by Subtenant (or within the reasonable control of Subtenant),
including, without limitation: (i) the cost of any required or necessary
repair, cleanup or detoxification of the Subleased Premises, and the
preparation and implementation of any closure, remedial or other required
plans; and (ii) all costs and expenses incurred by Sublandlord in
connection with clause (i) including, but not limited to, attorney
fees.  In no event will the Subtenant be
responsible for any damage, expense, costs or liability for any act solely
attributable to events that occurred prior to the Commencement Date of this
Sublease or otherwise not caused by Subtenant (or within the reasonable control
of Subtenant).  Any loss, damage, cost,
expense or liability incurred by Sublandlord for which Subtenant is responsible
for shall be payable to Sublandlord as Additional Rent on the first day of the
month immediately following the month when the Subtenant receives notice
thereof.  This obligation shall survive
the termination of the Lease.

 

Section 13.4                            Migration.  Any other term of this Sublease
notwithstanding, the obligations of this Article 13 shall not be
applicable to any Hazardous Substance that migrates to the Subleased Premises
form any other property.

 

Section 13.5                            Remedial
Action.  Without Sublandlord’s
written consent, and if required under the Master Lease, without Master
Landlord’s prior written consent, Subtenant shall not take any remedial action
in response to the presence of any Hazardous Substances in, on, under or about
the Subleased Premises, nor enter into any settlement agreement, consent decree
or other compromise in respect to any Hazardous Substances Claims, which
remedial action, settlement, consent or compromise might, in Sublandlord’s
judgment, impair the value of Sublandlord’s interest in the Subleased Premises; provided, however, that Sublandlord’s prior consent shall
not be necessary in the event that the presence of Hazardous Substances in, on,
under or about the Subleased Premises either poses an immediate threat to the
health, safety or welfare of any individual or is of such nature that an
immediate remedial response is necessary and it is not possible to obtain
Sublandlord’s consent before taking such action, provided Subtenant shall
notify Sublandlord as soon as practicable of any action so taken.

 

12

 

ARTICLE 14

DEFAULTS

 

Section 14.1                            Defaults.  In the event any one or more of the following
events shall occur (each, a “Default”):

 

(a)                                              Subtenant
shall fail to make payment to Sublandlord of any Rent and, such non-payment
shall continue for a period of three (3) business days after written
notice given to Subtenant by Sublandlord or Sublandlord’s agent; or

 

(b)                                             Subtenant
shall fail to make payment to Sublandlord of any other monetary obligations
hereunder, and such non-payment shall continue for a period of thirty (30) days
after written notice given to Subtenant by Sublandlord or Sublandlord’s agent;
or

 

(c)                                              Subtenant
shall fail, neglect or refuse to keep and perform any of the other covenants,
conditions, stipulations or agreements herein contained, covenanted and agreed
to be kept and performed by Subtenant, and in the event any such failure shall
continue for a period of thirty (30) days after notice thereof given in writing
to Subtenant by Sublandlord or Sublandlord’s agents; provided, however, that if
Subtenant cannot reasonably cure such failure within such thirty (30) day
period, Subtenant shall have such additional period of time as Subtenant
reasonably requires so long as Subtenant continues to cure its failure within
such thirty (30) day period and proceeds with due diligence to cure such failure;
or

 

(d)                                             Any
voluntary or involuntary petition or similar pleading under any section or
sections of any bankruptcy act shall be filed by or against Subtenant, or any
voluntary or involuntary proceeding in any court or tribunal shall be
instituted to declare Subtenant insolvent or unable to pay Subtenants debts,
and the same shall not be dismissed or discharged within ninety (90) days after
receipt by Subtenant of notice of such proceeding; or

 

(e)                                              Subtenant
makes any assignment of its property for the benefit of creditors or should the
Subleased Premises be taken under a levy of execution or attachment in any
action against Subtenant and such levy, attachment or assignment is not
dismissed or discharged within ninety (90) days after such assignment or, in the
case of a levy or attachment, within ninety (90) days after receipt by
Subtenant of notice thereof.

 

Section 14.2                            Remedies.   In the event of a Default with respect
to any obligation by the Subtenant then, in any one of such events, in addition
to and not in lieu of any other rights or remedies available to Sublandlord
pursuant to this Sublease, or at law or in equity, Sublandlord may serve upon
Subtenant a written five (5) day notice of cancellation and termination of
this Sublease and this Sublease shall end and expire as fully and completely as
if the date of expiration of such five (5) day period were the day herein
definitely fixed for the end and expiration of this Sublease and the Term of
this Sublease, and Subtenant shall then quit and surrender to Sublandlord the
Subleased Premises, and Sublandlord may enter into or repossess the Subleased
Premises, either by summary proceedings or otherwise in accordance with
law.  In the event this Sublease is
terminated pursuant to the foregoing, all of the right, title and estate and
interest of Subtenant in and to the Subleased Premises, all rents, issues and
profits derived from the Subleased Premises whether then accrued or to accrue,
all insurance policies and all insurance proceeds paid or payable to Subtenant
or to Sublandlord pursuant to this Sublease, and

 

13

 

the entire undisbursed
balance of any Use Award described in this Sublease, shall automatically pass
to, vest in and belong to Sublandlord, without further action on the part of
either party and without cost or charge to Sublandlord, free of any claim
thereto by Subtenant.

 

ARTICLE 15

NOTICES

 

Section 15.1                            Method
of Notice.  All notices require
herein shall be given in writing and delivered personally, or sent by facsimile
transmission, certified mail (return receipt requested) of the United States
Postal Service, or nationally recognized overnight courier service addressed as
follows:

 

	
  SUBLANDLORD:

  	
   

  	
  Venture Lighting
  International, Inc.

  
	
   

  	
   

  	
  32000 Aurora
  Road

  
	
   

  	
   

  	
  Solon, OH 44139

  
	
   

  	
   

  	
  Attention:
  President

  
	
   

  	
   

  	
   

  
	
  SUBTENANT:

  	
   

  	
  Fiberstars, Inc.

  
	
   

  	
   

  	
  32000 Aurora
  Road

  
	
   

  	
   

  	
  Solon, OH 44139

  
	
   

  	
   

  	
  Attention: Vice
  President, Engineering

  

 

Section 15.2                            Time
of Notice.  Any notice shall be
deemed received if delivered personally or sent by facsimile machine when
actually received; upon the date of receipt shown on the receipt card if sent
by certified mail of the United States Postal Services; or two (2) business
days after deposit with a nationally recognized overnight mail courier
service.  Any general correspondence, not
intended to have a binding legal effect on the other party, may be sent by
first class mail of the United States Postal Service.  Either party may change its address for the
giving of notice, by giving to the other party a written notice of such change
at least (10) days prior to the effective date of such change.

 

ARTICLE 16

HOLDING OVER

 

Section 16.1                            Holdover
Rent.  If Subtenant shall fail to
surrender and deliver up the Subleased Premises on the Expiration Date or
earlier termination of this Sublease, from the last day of the Term to the date
on which Sublandlord received full use of the Subleased Premises, Subtenant
shall be obligated to pay Rent at one and one half times the rate in effect on
the last day of the Term.  Nothing in
this Article 16 shall limit the Sublandlord’s right to possession of the
Subleased Premises on termination of this Sublease.

 

ARTICLE 17

SUBLANDLORD’S REPRESENTATIONS/WARRANTIES

 

Section 17.1                            Representations
and Warranties.  Sublandlord
represents and warrants the following to Subtenant as of the date hereof, each
of which shall continue to be true in all material respects throughout the Term
of this Sublease.

 

14

 

(a)                                              Sublandlord
has full power, authority and legal right to enter into this Sublease.

 

(b)                                             Sublandlord
is the lessee of the Leased Premises, holds its leasehold interest in the
Leased Premises free and clear of all liens and encumbrances except for zoning
ordinances or requirements; coal, oil, gas and all other minerals, and all
rights pertaining thereto, as may have been heretofore sold, reserved, or
leased; and all rights-of-way and building and use restrictions or record as
may affect the Leased Premises, as well as all easements and rights-of-way
discerned on the Leased Premises.

 

(c)                                              No
other party other than ADLT Realty I, Inc., as fee owner of the Leased
Premises, and Mortgage holder has any claim to the Subleased Premises by reason
of any purchase and sale agreement, option to purchase, right of first refusal,
lease, adverse possession or other prescriptive right.

 

(d)                                             The
execution of this Sublease, compliance with the terms hereof and occupation of
the Subleased Premises by Subtenant will not conflict with, constitute or cause
a breach or default under the terms of any agreement or instrument to which
Sublandlord is a party.

 

ARTICLE 18

ASSIGNMENT AND SUBLETTING

 

Section 18.1                            Assignment
and Subletting.  Subtenant shall
not assign this Sublease or further sublet all or any part of the Subleased
Premises except with the prior written consent of Sublandlord, which consent
shall not be unreasonably withheld or delayed. 
Notwithstanding the foregoing, Subtenant may sublet or assign its interest
to any Affiliate of Subtenant (i.e., an entity controlled by, under common
control with, or controlling, Subtenant), without the requirement of obtaining
Sublandlord’s consent.  Sublandlord shall
approve or disapprove the proposed sublease or assignment by written notice to
Tenant given within twenty (20) days after Subtenant’s request for approval of
an assignment or sublease.  The parties
acknowledge that Subtenant is a publicly traded corporation, and that therefore
transfers of share in Subtenant shall not be considered an assignment for
purposes hereof.

 

ARTICLE 19

MISCELLANEOUS

 

Section 19.1                            HVAC/Ceiling Repairs.  Sublandlord agrees that it shall, prior to November 1,
2005, at its sole cost and expense, repair the HVAC and ceiling in the “Tree
House” production offices.  In the event
that Sublandlord is unable to complete such repairs on or before November 1,
2005, Sublandlord shall provide Subtenant with alternate, reasonably comparable
space satisfactory to Subtenant, in its reasonable discretion.  Sublandlord shall pay all Subtenant’s costs
of relocation in connection with Subtenant’s move to such alternate space.

 

Section 19.2                            Dedicated Computer/Phone Lines.  As soon as practicable, but in any event prior to
October 31, Sublandlord shall, at Subtenant’s sole cost and expense, install
dedicated computer and telephone lines to Subtenant’s operations areas, subject
to Subtenant’s reasonable approval. 
Subtenant shall have the right, at Subtenant’s sole cost and expense, to
install new or additional dedicated computer and telephone lines to such other
portions of the

 

15

 

Subleased
Premises as Subtenant deemed necessary or desirable, subject to Sublandlord’s
reasonable approval.

 

Section 19.3                            Signage.  Subtenant shall have the right, at Subtenant’s
sole cost and expense, subject to Sublandlord’s reasonable approval, to install
signage (i) on the Building, reflecting Subtenant’s company name and logo,
in size and quality comparable to Sublandlord’s existing signage, (ii) on
the Building’s monument signage, reflecting Subtenant’s company name and logo,
in size and quality comparable to Sublandlord’s existing signage, and (iii) in
the interior lobby and the shipping/receiving area of the Leased Premises,
providing the name and such directional information as Subtenant may
require.  Subtenant shall cooperate with
Sublandlord to coordinate its signage with Sublandlord’s signage.

 

Section 19.4                            Parking.  Subtenant shall have the exclusive right to use
five (5) reserved parking spaces, and shall have the non-exclusive right
to use the designated visitor parking spaces for Subtenant’s invitees, and the
non-exclusive right to use such unreserved parking spaces as shall be required
for Subtenant’s employees.

 

Section 19.5                            Cubicles.  Subtenant and Sublandlord each own certain
cubicles located in the Leased Premises and the Subleased Premises.  Subtenant and Sublandlord hereby agree that
the cubicles owned by Subtenant shall remain in the office area of the
Northwest quadrant, and that the cubicles owned by Sublandlord shall remain in
the office area of the Northeast quadrant; provided, however, that Sublandlord
and Subtenant may agree to exchange certain of their cubicles for one another
in the event that it proves more expedient to do so.

 

Section 19.6                            Master Landlord’s Consent.  Master Landlord’s consent is required for
this Sublease.  Therefore, the
effectiveness of this Sublease is contingent upon obtaining the consent of
Landlord.  Attached, as Exhibit “G”, is Master Landlord’s consent hereto.

 

Section 19.7                            Defined
Terms.  Unless the context of
this Sublease otherwise provides, the terms defined in this Article shall
have, for all purposes of this Sublease, the following respective meanings:

 

(a)                                              The
term “Subtenant” shall mean Fiberstars, Inc., a California company, its
successors and assigns.

 

(b)                                             The
term “Sublandlord” shall mean Venture Lighting International, Inc. its
agents and assigns.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

16

 

IN
WITNESS WHEREOF, the parties hereto have caused this Sublease
to be executed as of the day and year first above written, but effective as of
the Commencement Date.

 

 

	
  WITNESSES:

  	
  SUBLANDLORD:

  
	
   

  	
   

  
	
   

  	
  VENTURE
  LIGHTING

  
	
  Name:

  	
  /s/ David F.
  Bedell

  	
   

  	
  INTERNATIONAL,
  INC.

  
	
   

  	
  an Ohio
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sabu
  Krishnan

  	
   

  
	
  Name:

  	
  /s/ Jacqueline
  K. Massaro

  	
   

  	
  Name:

  	
  Sabu Krishnan

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUBTENANT:

  
	
   

  	
   

  
	
  Name:

  	
  /s/ Donna Prunetti

  	
   

  	
  FIBERSTARS,
  INC.

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert A.
  Connors

  	
   

  
	
  Name:

  	
  /s/ Linda
  Sawatzky

  	
   

  	
  Name:

  	
  Robert A.
  Connors

  	
   

  
	
   

  	
  Its:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

17

 

	
  Name:

  	
   

  	
   

  	
  By:

  
	
   

  	
  Name:

  
	
  Name:

  	
   

  	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE OF

  	
  Ohio

  	
   

  	
  )

  
	
   

  	
  ) SS:

  
	
  COUNTY OF

  	
  Cuyahoga

  	
   

  	
  )

  
						

 

BEFORE
ME, a Notary Public in and for said county and state personally appeared the
above-named Venture Lighting International, Inc., an Ohio corporation,
(hereinafter referred to as “Sublandlord”) by 
, its  , and  , its 
, respectively, who acknowledged that they did execute the foregoing
Lease for an on behalf of Sublandlord and that the execution thereof was their
free and voluntary act individually and as the duly authorized officers of
Sublandlord.

 

IN
TESTIMONY WHEREOF, I have hereunto set my hand and seal at Solon, OH, 7, day
of October, 2005.

 

 

	
   

  	
  Notary Public

  	
  /s/ Jennifer E.
  Kurowski

  
	
   

  	
  My commission
  expires:

  	
  Jennifer E.
  Kurowski

  
	
   

  	
   

  	
  Notary Public,
  State of Ohio

  
	
   

  	
   

  	
  My Commission
  Expires 12/20/07

  
	
   

  	
   

  
	
  STATE OF

  	
  California

  	
   

  	
  )

  
	
   

  	
  ) SS:

  
	
  COUNTY OF

  	
  Alameda

  	
   

  	
  )

  
							

 

BEFORE
ME, a Notary Public in and for said county and state personally appeared the
above-named Fiberstars, Inc., a California corporation, (hereinafter
referred to as “Subtenant”) by  ,
its  , and  , its 
, respectively, who acknowledged that they did execute the foregoing
Lease for an on behalf of Subtenant and that the execution thereof was their
free and voluntary act individually and as the duly authorized of Subtenant.

 

IN
TESTIMONY WHEREOF, I have hereunto set my hand and seal at Nov. 11 day of 2005.

 

	
   

  	
  Notary Public

  	
  /s/ Ila Rajneesh

  
	
   

  	
  My commission
  expires:

  	
  Ila Rajneesh

  
	
   

  	
   

  	
  Commission # 1410882

  
	
   

  	
   

  	
  Notary Public -
  California

  
	
   

  	
   

  	
  Alameda County

  
	
   

  	
   

  	
  My Comm. Expires
  Apr. 13, 2007

  
				

 

18

 

EXHIBIT “A”

 

MASTER LEASE

 

19

 

EXHIBIT “B”

 

	
  Description

  	
   

  	
  Square Footage

  	
   

  
	
  First Floor High
  Bay area, including covered Dock Space

  	
   

  	
  184,375 sq. ft.

  	
   

  
	
  First Floor Low
  Bay manufacturing area

  	
   

  	
  47,500 sq. ft

  	
   

  
	
  First Floor
  Office Area

  	
   

  	
  26,875 sq. ft

  	
   

  
	
  Second Floor
  Finished Office Space

  	
   

  	
  32,300 sq. ft

  	
   

  
	
  Second Floor
  Unfinished Office Space

  	
   

  	
  32,300 sq. ft

  	
   

  
	
  Second Floor
  Mechanical Space

  	
   

  	
  10,000 sq. ft

  	
   

  

 

Legal
Description

 

Situated
in the Village of Solon, County of Cuyahoga and State of Ohio, and being Part of
Original Solon Township Lots 4 and 7 in Tract
2, and bounded and described as follows:

 

Beginning
at an iron pin in the Southwesterly line at the Westerly end of the relocation
of Aurora Road, 86 feet wide, as dedicated and recorded in Volume 105, Page 26
of Cuyahoga County Records; thence Southeasterly along said Southwesterly line
of relocated Aurora Road, along a curved line deflecting to the right, an arc
distance of 415.73 feet, said arc having a radius of 799.22 feet, and a chord
which bears south 52 degrees 37’ 24’ * East, a distance of 411.06 feet to the
principal place of beginning of the parcel of land described herein;

 

Thence
continuing along said Southwesterly line of relocated Aurora Road, along a
curved line deflecting toward the right, an arc distance of 129.43 feet, said
arc having a radius of 799.22 feet and a chord which bears South 33 degrees 04’
56’ * East a distance of 129.29 feet to a point of tangency;

 

Thence
continuing along said Southwesterly line of the relocation of Aurora Road,
South 28 degrees 26’ 34’ * East, a distance of 737.50 feet to a point;

 

Thence
Southwesterly along a curved line deflecting to the left, an arc distance of
698.80, said arc having a radius of 603.63 feet, and a chord which bears South
54 degrees 27’ 56’ * West, a distance of 660.42 feet to a point;

 

Thence
North 90 degrees 00’ 00’ * West, a distance of 675.56 feet to a point;

 

Thence
North 0 degrees 00’ 00’ * East, a distance of 708.86 feet to a point;

 

Thence
North 61 degrees 22’ 00’ * East, a distance of 901.40 feet to the principal
place of beginning, be the same more or less, but subject to all legal
highways.

 

Permanent
Parcel No. 953-37-001

 

20

 

EXHIBIT “C”

 

Description of Initial Fiberstars Premises

 

	
  Description

  	
   

  	
  Square Footage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (A)

  	
  Manufacturing
  Area

  	
   

  	
  13,125 sq. ft.

  	
   

  
	
   

  	
  Upstairs Offices

  	
   

  	
  1,250 sq. ft

  	
   

  
	
   

  	
  1st
  Floor, S.E. High Bay area

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (C)

  	
  Covered Dock
  Space

  	
   

  	
  1,250 sq. ft.

  	
   

  
	
   

  	
  1st
  Floor, S.W. High Bay area

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (D)

  	
  Engineering Area

  	
   

  	
  9,375 sq. ft.

  	
   

  
	
   

  	
  1st
  Floor, N.W. High Bay area

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (E)

  	
  Office Space

  	
   

  	
  7,500 sq. ft.

  	
   

  
	
   

  	
  1st
  Floor, N.W. Corner

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Total:

  	
   

  	
  32,500 sq. ft.

  	
   

  

 

21

 

EXHIBIT “D”

Description of the Phase I Premises, the Phase II Premises, the Phase III
Premises, the

Phase IV Premises, and the Phase V Premises

 

Phase I.  Between
9/26/05 and 10/31/05

 

	
   

  	
   

  	
  Building

  Quadrant

  	
   

  	
  Ft
  Sq.

  	
   

  
	
  Operations

  	
   

  	
  SE High Bay

  	
   

  	
  26,875

  	
   

  
	
  Engineering

  	
   

  	
  NW High Bay

  	
   

  	
  9,375

  	
   

  
	
  Office

  	
   

  	
  NW Low Office

  	
   

  	
  7,500

  	
   

  
	
  Committed

  	
   

  	
   

  	
   

  	
  43,750

  	
   

  
	
  Fiberstars Option Space

  	
   

  	
   

  	
   

  	
  —

  	
   

  
	
  Fiberstars Office Option Space

  	
   

  	
   

  	
   

  	
  —

  	
   

  
	
  Committed + Optional Space

  	
   

  	
   

  	
   

  	
  43,750

  	
   

  

 

Phase II.  Between
11/01/05 and 03/31/06

 

	
   

  	
   

  	
  Building

  Quadrant

  	
   

  	
  Ft
  Sq.

  	
   

  
	
  Operations*

  	
   

  	
  SE High Bay

  	
   

  	
  40,625

  	
   

  
	
  Engineering

  	
   

  	
  NW High Bay

  	
   

  	
  9,375

  	
   

  
	
  Office**

  	
   

  	
  NW Low Office

  	
   

  	
  9,000

  	
   

  
	
  Committed

  	
   

  	
   

  	
   

  	
  59,000

  	
   

  
	
  Fiberstars Option Space

  	
   

  	
   

  	
   

  	
  —

  	
   

  
	
  Fiberstars Office Option Space

  	
   

  	
   

  	
   

  	
  —

  	
   

  
	
  Committed + Optional Space

  	
   

  	
   

  	
   

  	
  59,000

  	
   

  

 

*Note:  Operations area is the contiguous “walled in”
area of the SE High Bay Quadrant, excluding the Sublandlord’s “cage”.

**1500 sq. ft.
of additional office space will include open space adjacent to subtenant
existing office space plus enclosed office space currently used by Sublandlord’s
human resources department.

 

Phase
III.  Between 04/01/06 and 06/30/06

 

	
   

  	
   

  	
  Building

  Quadrant

  	
   

  	
  Ft
  Sq.

  	
   

  
	
  Operations

  	
   

  	
  SE High Bay

  	
   

  	
  40,625

  	
   

  
	
  Engineering

  	
   

  	
  NW High Bay

  	
   

  	
  9,375

  	
   

  
	
  Office

  	
   

  	
  NW Low Office

  	
   

  	
  9,000

  	
   

  
	
  Committed

  	
   

  	
   

  	
   

  	
  61,000

  	
   

  
	
  Fiberstars Option Space ***

  	
   

  	
   

  	
   

  	
  15,000

  	
   

  
	
  Fiberstars Office Option Space

  	
   

  	
   

  	
   

  	
  —

  	
   

  
	
  Committed + Optional Space

  	
   

  	
   

  	
   

  	
  76,000

  	
   

  

 

Phase IV.  Between 07/01/06 and 12/31/06

 

	
   

  	
   

  	
  Building

  Quadrant

  	
   

  	
  Ft
  Sq.

  	
   

  
	
  Operations

  	
   

  	
  SE High Bay

  	
   

  	
  40,625

  	
   

  
	
  Engineering*

  	
   

  	
  NE Low Bay

  	
   

  	
  9,000

  	
   

  
	
  Office**

  	
   

  	
  NE Low Office

  	
   

  	
  13,000

  	
   

  
	
  Committed

  	
   

  	
   

  	
   

  	
  64,625

  	
   

  
	
  Fiberstars Option Space***

  	
   

  	
   

  	
   

  	
  15,000

  	
   

  
	
  Fiberstars Office Option Space****

  	
   

  	
  2,000

  	
   

  
	
  Committed + Optional Space

  	
   

  	
   

  	
   

  	
  79,625

  	
   

  

 

*Note:  Subtenant to move into approximately 9,000 ft
sq in Sublandlord’s lab and engineering space in NE quadrant.

**Note:  Subtenant to move into approximately 13,000
sq. ft. of Sublandlord’s office space in NE quadrant, including the two
conference rooms between engineering and Sarver, with existing cubicles.  Mutual conference room access to be agreed
upon by Subtenant and Sublandlord.

***Subtenant
may exercise its option to lease the Option Space pursuant to the provisions of
Section 1.2 above.

****Note:  Subtenant may exercise its option to lease
the Office Option Space pursuant to the provisions of Section 1.2 above,
which shall be 2000 sq. ft. of additional office space, reasonably satisfactory
to Subtenant and Sublandlord, suitable for a customer demonstration area, and
adjacent to or within the Phase IV Premises office space.

 

Phase V.  Between 01/01/07 and 12/31/08

 

	
   

  	
   

  	
  Building

  Quadrant

  	
   

  	
  Ft
  Sq.

  	
   

  
	
  Operations

  	
   

  	
  SE High Bay

  	
   

  	
  40,625

  	
   

  
	
  Engineering

  	
   

  	
  NE Low Bay

  	
   

  	
  9,000

  	
   

  
	
  Office

  	
   

  	
  NE Low Office

  	
   

  	
  13,000

  	
   

  
	
  Committed

  	
   

  	
   

  	
   

  	
  64,625

  	
   

  
	
  Fiberstars Option Space

  	
   

  	
   

  	
   

  	
  15,000

  	
   

  
	
  Fiberstars Office Option Space

  	
   

  	
   

  	
   

  	
  2,000

  	
   

  
	
  Committed + Optional Space

  	
   

  	
   

  	
   

  	
  79,625

  	
   

  

 

22

 

EXHIBIT “E”

Rent

 

	
  Total Annual Rent Before Subsequent Commencement
  Date

  	
   

  	
   

  	
   

  	
   

  
	
   (Between 8/1/05 and 9/25/05 (“Initial
  Fiberstars Premises”))

  	
   

  	
  $

  	
  225,600

  	
   

  

 

Total Annual Rent
After Subsequent Commencement Date:

 

Between
9/26/05 and 10/31/05 (the “Phase I Premises”)

 

	
  09/26/2005
  — 10/31/2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Annual
  Rent

  	
   

  	
  Monthly
  Rent

  	
   

  
	
   

  	
   

  	
  Building
  Quadrant

  	
   

  	
  Ft
  Sq.

  	
   

  	
  Per
  Ft Sq.

  	
   

  	
  Total

  	
   

  	
  Per
  Ft Sq.

  	
   

  	
  Total

  	
   

  
	
  Operations

  	
   

  	
  SE High Bay

  	
   

  	
  26,875

  	
   

  	
  $

  	
  6.45

  	
   

  	
  $

  	
  173,344

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  14,445

  	
   

  
	
  Engineering

  	
   

  	
  NW High Bay

  	
   

  	
  9,375

  	
   

  	
  $

  	
  6.45

  	
   

  	
  $

  	
  60,469

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  5,039

  	
   

  
	
  Office

  	
   

  	
  NW Low Office

  	
   

  	
  7,500

  	
   

  	
  $

  	
  9.65

  	
   

  	
  $

  	
  72,375

  	
   

  	
  $

  	
  0.80

  	
   

  	
  $

  	
  6,031

  	
   

  
	
  Committed

  	
   

  	
   

  	
   

  	
  43,750

  	
   

  	
  $

  	
  7.00

  	
   

  	
  $

  	
  306,188

  	
   

  	
  $

  	
  0.58

  	
   

  	
  $

  	
  25,516

  	
   

  
	
  Fiberstars Option Space

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
  Fiberstars Office Option Space

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
  Committed + Optional Space

  	
   

  	
   

  	
   

  	
  43,750

  	
   

  	
  $

  	
  7.00

  	
   

  	
  $

  	
  306,188

  	
   

  	
  $

  	
  0.58

  	
   

  	
  $

  	
  25,516

  	
   

  

 

Between
11/01/05 and 03/31/06 (the “Phase II Premises”)

 

	
  11/01/2005
  - 03/31/2006

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Annual
  Rent

  	
   

  	
  Monthly
  Rent

  	
   

  
	
   

  	
   

  	
  Building
  Quadrant

  	
   

  	
  Ft
  Sq.

  	
   

  	
  Per
  Ft Sq.

  	
   

  	
  Total

  	
   

  	
  Per
  Ft Sq.

  	
   

  	
  Total

  	
   

  
	
  Operations

  	
   

  	
  SE High Bay

  	
   

  	
  40,625

  	
   

  	
  $

  	
  6.45

  	
   

  	
  $

  	
  262,031

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  21,836

  	
   

  
	
  Engineering

  	
   

  	
  NW High Bay

  	
   

  	
  9,375

  	
   

  	
  $

  	
  6.45

  	
   

  	
  $

  	
  60,469

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  5,039

  	
   

  
	
  Office

  	
   

  	
  NW Low Office

  	
   

  	
  9,000

  	
   

  	
  $

  	
  9.65

  	
   

  	
  $

  	
  86,850

  	
   

  	
  $

  	
  0.80

  	
   

  	
  $

  	
  7,238

  	
   

  
	
  Committed

  	
   

  	
   

  	
   

  	
  59,000

  	
   

  	
  $

  	
  6.94

  	
   

  	
  $

  	
  409,350

  	
   

  	
  $

  	
  0.58

  	
   

  	
  $

  	
  34,113

  	
   

  
	
  Fiberstars Option Space

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
  Fiberstars Office Option Space

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
  Committed + Optional Space

  	
   

  	
   

  	
   

  	
  59,000

  	
   

  	
  $

  	
  6.94

  	
   

  	
  $

  	
  409,350

  	
   

  	
  $

  	
  0.58

  	
   

  	
  $

  	
  34,113

  	
   

  

 

Between
04/01/06 and 06/30/06 (the “Phase III Premises”)

 

	
  04/01/2006
  - 06/30/2006

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Annual
  Rent

  	
   

  	
  Monthly
  Rent

  	
   

  
	
   

  	
   

  	
  Building
  Quadrant

  	
   

  	
  Ft
  Sq.

  	
   

  	
  Per
  Ft Sq.

  	
   

  	
  Total

  	
   

  	
  Per
  Ft Sq.

  	
   

  	
  Total

  	
   

  
	
  Operations

  	
   

  	
  SE High Bay

  	
   

  	
  40,625

  	
   

  	
  $

  	
  6.45

  	
   

  	
  $

  	
  262,031

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  21,836

  	
   

  
	
  Engineering

  	
   

  	
  NW High Bay

  	
   

  	
  9,375

  	
   

  	
  $

  	
  6.45

  	
   

  	
  $

  	
  60,469

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  5,039

  	
   

  
	
  Office

  	
   

  	
  NW Low Office

  	
   

  	
  9,000

  	
   

  	
  $

  	
  9.65

  	
   

  	
  $

  	
  86,850

  	
   

  	
  $

  	
  0.80

  	
   

  	
  $

  	
  7,238

  	
   

  
	
  Committed

  	
   

  	
   

  	
   

  	
  59,000

  	
   

  	
  $

  	
  6.94

  	
   

  	
  $

  	
  409,350

  	
   

  	
  $

  	
  0.58

  	
   

  	
  $

  	
  34,113

  	
   

  
	
  Fiberstars Option Space*

  	
   

  	
   

  	
   

  	
  15,000

  	
   

  	
  $

  	
  6.45

  	
   

  	
  $

  	
  96,750

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  8,063

  	
   

  
	
  Fiberstars Office Option Space

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
  Committed + Optional Space

  	
   

  	
   

  	
   

  	
  74,000

  	
   

  	
  $

  	
  6.84

  	
   

  	
  $

  	
  506,100

  	
   

  	
  $

  	
  0.57

  	
   

  	
  $

  	
  42,175

  	
   

  

 

*This
portion of Rent due only of option has been exercised.

 

2

 

Between
07/01/06 and 12/31/06 (the “Phase IV Premises”)

 

	
  07/01/2006
  - 12/31/2006

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Annual
  Rent

  	
   

  	
  Monthly
  Rent

  	
   

  
	
   

  	
   

  	
  Building
  Quadrant

  	
   

  	
  Ft
  Sq.

  	
   

  	
  Per
  Ft Sq.

  	
   

  	
  Total

  	
   

  	
  Per
  Ft Sq.

  	
   

  	
  Total

  	
   

  
	
  Operations

  	
   

  	
  SE High Bay

  	
   

  	
  40,625

  	
   

  	
  $

  	
  6.45

  	
   

  	
  $

  	
  262,031

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  21,836

  	
   

  
	
  Engineering

  	
   

  	
  NE Low Bay

  	
   

  	
  9,000

  	
   

  	
  $

  	
  6.45

  	
   

  	
  $

  	
  58,050

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  4,838

  	
   

  
	
  Office

  	
   

  	
  NE Low Office

  	
   

  	
  13,000

  	
   

  	
  $

  	
  9.65

  	
   

  	
  $

  	
  125,450

  	
   

  	
  $

  	
  0.80

  	
   

  	
  $

  	
  10,454

  	
   

  
	
  Committed

  	
   

  	
   

  	
   

  	
  62,625

  	
   

  	
  $

  	
  7.11

  	
   

  	
  $

  	
  445,531

  	
   

  	
  $

  	
  0.59

  	
   

  	
  $

  	
  37,128

  	
   

  
	
  Fiberstars Option Space*

  	
   

  	
   

  	
   

  	
  15,000

  	
   

  	
  $

  	
  6.45

  	
   

  	
  $

  	
  96,750

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  8,063

  	
   

  
	
  Fiberstars Office Option Space*

  	
   

  	
   

  	
   

  	
  2,000

  	
   

  	
  $

  	
  9.65

  	
   

  	
  $

  	
  19,300

  	
   

  	
  $

  	
  0.80

  	
   

  	
  $

  	
  1,608

  	
   

  
	
  Committed + Optional Space

  	
   

  	
   

  	
   

  	
  79,625

  	
   

  	
  $

  	
  7.05

  	
   

  	
  $

  	
  561,581

  	
   

  	
  $

  	
  0.59

  	
   

  	
  $

  	
  46,798

  	
   

  

 

*This
portion of Rent due only of option has been exercised.

 

Between
01/01/07 and 12/31/08 (the “Phase V Premises”)

 

	
  01/01/2007
  - 12/31/2008

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Annual
  Rent

  	
   

  	
  Monthly
  Rent

  	
   

  
	
   

  	
   

  	
  Building
  Quadrant

  	
   

  	
  Ft
  Sq.

  	
   

  	
  Per
  Ft Sq.

  	
   

  	
  Total

  	
   

  	
  Per
  Ft Sq.

  	
   

  	
  Total

  	
   

  
	
  Operations

  	
   

  	
  SE High Bay

  	
   

  	
  40,625

  	
   

  	
  $

  	
  6.95

  	
   

  	
  $

  	
  282,344

  	
   

  	
  $

  	
  0.58

  	
   

  	
  $

  	
  23,529

  	
   

  
	
  Engineering

  	
   

  	
  NE Low Bay

  	
   

  	
  9,000

  	
   

  	
  $

  	
  6.95

  	
   

  	
  $

  	
  62,550

  	
   

  	
  $

  	
  0.58

  	
   

  	
  $

  	
  5,213

  	
   

  
	
  Office

  	
   

  	
  NE Low Office

  	
   

  	
  13,000

  	
   

  	
  $

  	
  10.15

  	
   

  	
  $

  	
  131,950

  	
   

  	
  $

  	
  0.85

  	
   

  	
  $

  	
  10,996

  	
   

  
	
  Committed

  	
   

  	
   

  	
   

  	
  62,625

  	
   

  	
  $

  	
  7.61

  	
   

  	
  $

  	
  476,844

  	
   

  	
  $

  	
  0.63

  	
   

  	
  $

  	
  39,737

  	
   

  
	
  Fiberstars Option Space*

  	
   

  	
   

  	
   

  	
  15,000

  	
   

  	
  $

  	
  6.95

  	
   

  	
  $

  	
  104,250

  	
   

  	
  $

  	
  0.58

  	
   

  	
  $

  	
  8,688

  	
   

  
	
  Fiberstars Office Option Space*

  	
   

  	
   

  	
   

  	
  2,000

  	
   

  	
  $

  	
  10.15

  	
   

  	
  $

  	
  20,300

  	
   

  	
  $

  	
  0.80

  	
   

  	
  $

  	
  1,692

  	
   

  
	
  Committed + Optional Space

  	
   

  	
   

  	
   

  	
  79,625

  	
   

  	
  $

  	
  7.55

  	
   

  	
  $

  	
  601,394

  	
   

  	
  $

  	
  0.63

  	
   

  	
  $

  	
  50,116

  	
   

  

 

*This
portion of Rent due only of option has been exercised.

 

3

 

EXHIBIT “F”

 

DESCRIPTION
OF “QUADRANTS”

 

4

 

EXHIBIT “G”

 

MASTER LANDLORD’S CONSENT

 

1.                                      PARTIES:

 

	
  LANDLORD:

  	
   

  	
  ADLT Realty
  Corp. I, Inc.

  
	
  TENANT/SUBLANDLORD:

  	
   

  	
  Venture Lighting
  International, Inc.

  

 

2.                                      PREMISES:  Landlord and Tenant have entered into a Lease
(“Master Lease”) for the Premises located at 32000 Aurora Road, Solon, Ohio.

 

3.                                      SUBLEASE:  Tenant, as Sublandlord, desires to Sublease a
portion of the Premises to Fiberstars, Inc., as Subtenant, pursuant a
Sublease dated the         of                   ,
2005.

 

4.                                      LANDLORD’S
CONSENT:  Landlord’s consent to the
Sublease is required under the Master Lease. 
Landlord hereby approves and consents to the Sublease between
Tenant/Sublandlord and Subtenant, and all of the provisions set forth therein.

 

5.                                      NO
DEFAULTS: As of the date of this Consent: (A) Landlord represents that
Tenant is not in default of the Master Lease; and (B) Tenant represents
that Landlord is not in default of the Master Lease.

 

6.                                      COUNTERPARTS:
This Consent may be executed in counterparts and shall constitute an agreement
binding upon the other party notwithstanding that either party is not a
signatory to the original or the same counterpart provided that the other party
is furnished with a copy thereof containing the signature of the other party.

 

IN
WITNESS WHEREOF, Landlord and Tenant have executed this
Landlord’s Consent on the        day of                  ,
2005.

 

 

	
  LANDLORD:

  
	
  ADLT Realty
  Corp. I, Inc.

  
	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
  TENANT:

  
	
  Venture Lighting
  International, Inc.

  
	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

5

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