Document:

Exhibit 10.13

 

 

STANDARD FORM

INDUSTRIAL BUILDING LEASE

(MULTI-TENANT)

 

1.                                      BASIC TERMS.  This
Section 1 contains the Basic
Terms of this Lease between Landlord and Tenant, named below.  Other Sections of the Lease referred to in
this Section 1 explain and define
the Basic Terms and are to be read in conjunction with the Basic Terms.

 

1.1.                            Date of Lease:  March 21, 2003

 

1.2.                            Landlord: 
First Industrial LP

 

1.3.                            Tenant: 
The Wornick Company

 

1.4.                            Premises: 
“Phase I Premises”
consisting of approximately 25,336 square feet designated as the “Tenant 8”
space on Exhibit A-2 attached hereto, together with approximately 3,240 square
feet designated as the “Tenant 2” space on Exhibit A-2 to be used by Tenant for
office and employee welfare, containing a total of approximately 28,576 square
feet; the “Phase II Premises”
containing approximately 31,740 square feet as shown on Exhibit A-2 attached
hereto; and the “Phase III Premises”
containing approximately 100,621 square feet as shown on Exhibit A-2 attached
hereto, totaling 160,937 square feet, in the building commonly known as the
Creek Road Business Park, 4700-4750 Creek Road, Cincinnati, OH 45242 (the “Building”).  As used in this Lease, the term “Premises,” when the context so
requires, means whatever portion of the Phase I Premises, Phase II Premises,
and Phase III Premises is being leased by Tenant hereunder from time to time.

 

Landlord
shall complete the Phase I Improvements, Phase II Improvements, and Phase III
Improvements (as described on Exhibit B attached hereto) prior to the Phase I
Premises Commencement Date, Phase II Premises Commencement Date and, Phase III
Premises Commencement Date, respectively. 
Landlord shall also complete the Additional Improvements (as described
on Exhibit B) to the Phase I Premises, Phase II Premises, and Phase III
Premises prior to the Phase I Premises Commencement Date, Phase II Premises
Commencement Date, Phase III Premises Commencement Date, respectively.

 

Nitrogen
Tanks:  Beginning on the Phase III
Premises Commencement Date and continuing thereafter during the Term of this
Lease, Tenant shall be permitted to install, store and use for its business
purposes two nitrogen tanks on the west end or in the rear of the Building in a
location mutually agreed upon by Landlord and Tenant but in any event
sufficiently close to the Premises that the same are practically and
economically useable in the business of Tenant being conducted on the Premises.

 

Parking
Spaces:  During all periods in which
Tenant is leasing the Phase I Premises, Landlord shall provide Tenant with 60
allocated parking spaces at the Building. 
During all periods in which Tenant is leasing the Phase I Premises and
Phase II Premises, Landlord shall provide Tenant with 90 allocated parking
spaces at the Building.  During all
periods in which Tenant is leasing the Phase I Premises, Phase II Premises and
Phase III Premises, Landlord shall provide Tenant with 275 allocated parking
spaces at the Building.  During all
periods in which Tenant is leasing only the Phase I Premises and Phase III
Premises, Landlord shall provide Tenant with 225 allocated parking spaces at
the Building.  If Tenant leases Adjacent
Space pursuant to Rider No. 3 attached hereto, Landlord shall provide Tenant with
the allocated parking spaces associated with each of the Adjacent Spaces
leased, as outlined on the attached Exhibit A-2.

 

 

Sears
Termination Fee:  Landlord and Tenant
acknowledge that the Phase II Premises and Phase III Premises are presently
leased to Sears and that Landlord is in the process of negotiating an early
termination of Sears’ lease of such space, including a fee to be paid by Sears
in consideration for such early termination (the “Termination Fee”).  At
such time as Landlord has received payment from Sears of the full amount of the
Termination Fee and Sears has vacated such premises, net of any gross rents
that Landlord was scheduled to receive in 2003 from Sears for the Phase III
Premises prior to the Commencement Date for the lease of the Phase III Premises
to Tenant as outlined in Section 1.6, Landlord shall pay Tenant 100% of
the amount of the Termination Fee in excess of $100,000.00 and up to
$200,000.00, for a total of $100,000.00. 
Landlord and Tenant shall each receive 50% of any Termination Fee amount
in excess of $200,000.00.

 

1.5.                            Property: 
See Exhibit A-1, A-2.

 

1.6.                            Lease Term: 
Approximately five (5) years four (4)
months (“Term”),
commencing, with respect to the Phase I Premises, on
March      , 2003 (the “Phase I Premises Commencement Date”), and
commencing, with respect to the Phase II Premises, on the later of
March 1, 2004 or completion of the Phase II Improvements (the “Phase II Premises Commencement Date”), and
commencing, with respect to the Phase III Premises, on the later of
March 1, 2004 or completion of the Phase III Improvements (the “Phase III Premises Commencement Date”) and
ending on July 31, 2008 (“Expiration
Date”).  As used in this
Lease, the “Term” means the initial Term, as the same may be extended pursuant
to Tenant’s exercise of the renewal option set forth on Rider No. 4 attached
hereto.

 

1.7.                            Permitted Uses:  (See Section 4.1)
Food storage, processing, assembly, packaging, warehousing, distribution,
office and employee facilities (including dining areas and break rooms), and
related purposes.

 

1.8.                            Tenant’s Guarantor:  None

 

1.9.                            Brokers: 
(See Section 23)

 

(A)                          Tenant’s Broker:  Colliers Turley Martin Tucker

 

(B)                            Landlord’s Broker:  None

 

1.10.                     Security/Damage Deposit:  Waived.

 

1.11.                     Initial Estimated Additional Rent Payable by
Tenant:  $0.70 psf/year

 

1.12.                     Tenant’s Proportionate Share:  Subject to adjustment as hereafter set
forth, the parties hereto anticipate that the Tenant’s Proportionate Share
shall be 10.78% from and after the Phase I Premises Commencement Date, 22.76%
from and after the Phase II Premises Commencement Date, and 60.73% from and
after the Phase III Premises Commencement Date; provided that Tenant’s
Proportionate Share shall be calculated by taking the rentable area of the
Premises and dividing it by the total rentable area of the Building (the total
rentable area of the Building being 265,000 sq. ft.).

 

1.13.                     Riders to Lease:  The following riders are attached to and made a part of this
Lease.  (If none, so state): Rider No. 1
(Cancellation Option); Rider No. 2 (Termination Option); Rider No. 3 (Expansion
Rights); Rider No. 4 (Renewal Options).

 

2.                                      LEASE OF PREMISES; RENT.

 

2.1.                            Lease of Premises for Lease
Term.  Landlord hereby leases the Premises to
Tenant, and Tenant hereby rents the Premises from Landlord, for the Term and
subject to the conditions of this Lease.

 

2

 

2.2.                            Types of Rental Payments. 
Tenant shall pay net base rent to Landlord in monthly installments, in
advance, on the first day of each and every calendar month during the Term of
this Lease (the “Base Rent”) in
the amounts and for the periods set forth below for each of the Premises
described herein:

 

PHASE 1 PREMISES 

 

(28,576 sq. ft.)

 

	
  Lease Period

  	
   

  	
  Annual
  Base Rent

  	
   

  	
  Monthly
  Base Rent

  	
   

  	
  Annual
  Amt. PSF

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3/16/03-3/31/04

  	
   

  	
  $

  	
  65,724.80

  	
   

  	
  $

  	
  5,477.07

  	
   

  	
  $

  	
  2.30

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4/1/04-3/31/05

  	
   

  	
  $

  	
  71,440.00

  	
   

  	
  $

  	
  5,953.33

  	
   

  	
  $

  	
  2.50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4/1/05-3/31/06

  	
   

  	
  $

  	
  77,155.20

  	
   

  	
  $

  	
  6,429.60

  	
   

  	
  $

  	
  2.70

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4/1/06-3/31/07

  	
   

  	
  $

  	
  82,870.40

  	
   

  	
  $

  	
  6,905.87

  	
   

  	
  $

  	
  2.90

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4/1/07-7/31/08

  	
   

  	
  $

  	
  88,585.60

  	
   

  	
  $

  	
  7,382.13

  	
   

  	
  $

  	
  3.10

  	
   

  

 

 

PHASE II PREMISES

 

(31,740 sq. ft.)

 

	
  Lease Period

  	
   

  	
  Annual
  Base Rent

  	
   

  	
  Monthly
  Base Rent

  	
   

  	
  Annual
  Amt. PSF

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phase II Premises Commencement Date –
  4/30/06

  	
   

  	
  $

  	
  88,872.00

  	
   

  	
  $

  	
  7,406.00

  	
   

  	
  $

  	
  2.80

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5/1/06 – 7/31/08

  	
   

  	
  $

  	
  95,220.00

  	
   

  	
  $

  	
  7,935.00

  	
   

  	
  $

  	
  3.00

  	
   

  

 

 

PHASE III PREMISES

 

(100,621 sq. ft.)

 

	
  Lease Period

  	
   

  	
  Annual
  Base Rent

  	
   

  	
  Monthly
  Base Rent

  	
   

  	
  Annual
  Amt. PSF

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phase III Premises Commencement Date –
  7/31/04

  	
   

  	
  $

  	
  276,707.76

  	
   

  	
  $

  	
  23,058.98

  	
   

  	
  $

  	
  2.75

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8/1/04-7/31/05

  	
   

  	
  $

  	
  281,738.76

  	
   

  	
  $

  	
  23,478.23

  	
   

  	
  $

  	
  2.80

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8/1/05-7/31/06

  	
   

  	
  $

  	
  286,769.88

  	
   

  	
  $

  	
  23,897.49

  	
   

  	
  $

  	
  2.85

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8/1/06-7/31/07

  	
   

  	
  $

  	
  291,800.88

  	
   

  	
  $

  	
  24,316.74

  	
   

  	
  $

  	
  2.90

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8/1/07-7/31/08

  	
   

  	
  $

  	
  296,832.00

  	
   

  	
  $

  	
  24,735.00

  	
   

  	
  $

  	
  2.95

  	
   

  

 

 

Tenant
shall also pay Tenant’s Proportionate Share (as set forth in Section 1.12) of Operating Expenses
(as hereinafter defined) and any other amounts owed by Tenant hereunder
[collectively, “Additional Rent”].  In the

 

3

 

event
any monthly installment of Base Rent or Additional Rent, or both, is not paid
within five (5) business days after Tenant’s receipt of notice from Landlord
that such payment is past due, Landlord may charge Tenant a late charge equal
to 4% of the then delinquent installment of Base Rent and/or Additional Rent
[the “Late Charge”; the Late
Charge, Default Interest (as defined in Section 22.3
below), Base Rent and Additional Rent shall collectively be referred to as “Rent”) shall be paid by Tenant to Landlord
as Additional Rent.  Tenant shall pay
Rent to Landlord at the following address: c/o First Industrial, L.P., 75
Remittance Drive, Suite 1444, Chicago, IL 60675-1444, or if sent by overnight
courier, Northern Trust Receipt & Dispatch, 350 N. Orleans Street, 8th
Floor, Suite 1444, Chicago, IL 60654, Attention:  First Industrial L.P., Lockbox #1444, (or such other entity
designated as Landlord’s management agent, if any, and if Landlord so appoints
such a management agent, the “Agent”),
or pursuant to such other directions as Landlord shall designate in this Lease
or otherwise in writing.  The foregoing
notwithstanding, Tenant shall be entitled to receive notices from Landlord
under this paragraph on only the first occasion of nonpayment of Rent in each
calendar year and, on the second and each succeeding occasion of nonpayment of
Rent in such calendar year, Tenant shall not be entitled to the above-described
5-business day written notice and cure period and, thereafter during such
calendar year, the Late Charge shall be due in the event any monthly
installment of Base Rent or Additional Rent, or both, is not paid within 10
days of the date when due.

 

2.3.                            Covenants Concerning Rental
Payments.  Tenant shall pay the Rent promptly when due,
without notice or demand, and without any abatement, deduction or setoff,
except as may otherwise be expressly and specifically provided in this
Lease.  No payment by Tenant, or receipt
or acceptance by Agent or Landlord, of a lesser amount than the correct Rent
shall be deemed to be other than a payment on account, nor shall any
endorsement or statement on any check or letter accompanying any payment be
deemed an accord or satisfaction, and Agent or Landlord may accept such payment
without prejudice to its right to recover the balance due or to pursue any
other remedy available to Landlord.  If
the Commencement Date occurs on a day other than the first day of a calendar
month, the Rent due for the first calendar month of the Term shall be prorated
on a per diem basis and paid to Landlord on the Commencement Date.

 

3.                                      OPERATING EXPENSES.

 

3.1.                            Definitional Terms Relating
to Additional Rent.  For purposes of this Section and other
relevant provisions of the Lease:

 

3.1.1.                  Operating Expenses.  The
term “Operating Expenses” shall
mean all costs and expenses paid or incurred with respect to the ownership,
repair, replacement, restoration, maintenance and operation of the Property,
including, without limitation, the following: (i) services provided directly by
employees of Landlord or Agent in connection with the operation, maintenance or
rendition of other services to or for the Property; (ii) to the extent not
separately metered, billed, or furnished, all charges for utilities and
services furnished to either or both of the Property and the Premises
(including, without limitation, the Common Areas [as hereinafter defined]),
together with any taxes on such utilities; (iii) all premiums for casualty,
workers’ compensation, liability, boiler, flood and all other types of
insurance provided by Landlord and relating to the Property, all third party
administrative costs incurred in connection with the procurement and
implementation of such insurance policies, and all deductibles paid by Landlord
pursuant to insurance policies required to be maintained by Landlord under this
Lease; (iv) the cost of all supplies, tools, materials and equipment utilized
in the ownership and operation of the Property, and sales and other taxes
thereon; (v) amounts charged (including, without limitation, those costs and
expenses set forth in Section 13.2(i)
below) by any or all of contractors, materialmen and suppliers for services,
materials and supplies furnished to Landlord in connection with any or all of
the operation, repair and maintenance of any part of the Property, including,
without limitation, the structural elements of the Property and the Common
Areas; (vi) an annual management fee equal to four percent (4%) of the annual
Rent payable hereunder to Landlord or Agent or other persons or management
entities actually involved in the management and operation of the Property;
(vii) any capital improvements made by, or on behalf of, Landlord to the
Property that are either or both (a) designed to reduce Operating Expenses and
(b) required to keep the Property in compliance with all governmental laws,
rules and regulations applicable thereto, from time to time, the cost of which
capital improvements shall be reasonably amortized by Landlord over the useful
life of the improvement, in accordance with generally accepted accounting
principles; (viii) all professional fees incurred in connection with the
operation, management and maintenance of the Property; and (ix) Taxes, as
hereinafter defined in Section 3.1.2.  Notwithstanding the definitions set forth in
section 3.1.1 and section 3.1.2, the definitions of Operating
Expenses and Taxes shall exclude the following: costs of services provided
exclusively to other tenants and not to Tenant; late

 

4

 

fees incurred by Landlord
for late payments of bills not due to the acts or omissions of Tenant, its
employees, agents or representatives; any cost or expense which Landlord incurs
which is charged directly to the tenant on whose behalf it is incurred (whether
or not the same shall finally be paid) or for which Landlord is otherwise
reimbursed by insurance proceeds or condemnation awards; income, profit,
franchise, corporate, capital stock, estate, inheritance and any other taxes
imposed on, or measured by, the income of Landlord from the operation of the
Property; payments to subsidiaries or affiliates of Landlord for services or
materials to the extent such payments would not have been made had the services
or materials been provided by an unaffiliated party on a competitive basis;
legal fees, arbitration and mediation expenses and other expenses incurred in
connection with the resolution of disputes between Landlord and tenants at the
Property; costs arising from the negligence or willful misconduct of Landlord
or its agents, employees, contractors or other tenants or occupants at the
Property; costs arising from a breach by any other tenant of its obligations
under its lease; costs incurred in Landlord’s leasing activities, including
leasing fees, commissions and other compensation paid to brokers or to
Landlord’s employees and agents, advertising costs, costs of renovations,
tenant improvements, or alterations made at the initiation or in connection
with the renewal of tenant leases, and legal fees incurred in negotiating and
preparing lease documents; salaries or other compensation paid to employees of
Landlord above the grade of building manager; costs of capital improvements
(except to the extent expressly permitted under this Section 3.1.1); cost of correcting defects in the
original construction of the improvements at the Property or related
improvements; costs of remediating or otherwise addressing environmental
contamination at the property; interest and principal payments on any mortgage,
deed of trust or indebtedness of Landlord; depreciation; payments made under
any ground lease; and construction and other costs related to any addition to
or expansion of improvements at the Property.

 

3.1.2.                  Taxes.  The
term “Taxes,” as referred to in Section 3.1.l(ix) above shall mean (i)
all governmental taxes, assessments, fees and charges of every kind or nature
(other than Landlord’s income taxes), whether general, special, ordinary or
extraordinary, due at any time or from time to time, during the Term and any
extensions thereof, in connection with the ownership, leasing, or operation of
the Property, or of the personal property and equipment located therein or used
in connection therewith; and (ii) any reasonable expenses incurred by Landlord
in contesting such taxes or assessments and/or the assessed value of the
Property.  For purposes hereof, Taxes
for any year shall be Taxes that are due for payment or paid in that year
rather than Taxes that are assessed, become a lien, or accrue during such year.

 

3.1.3.                  Operating Year.  The
term “Operating Year” shall mean the calendar year commencing January 1st
of each year (including the calendar year within which the Commencement Date
occurs) during the Term.

 

3.2.                            Payment of Operating
Expenses.  Tenant shall pay, as Additional Rent and in
accordance with the requirements of Section 3.3,
Tenant’s Proportionate Share of the Operating Expenses as set forth in Section 3.3.  Additional Rent for the Phase I Premises, Phase II Premises, and
Phase III Premises shall commence to accrue upon the Phase I Premises
Commencement Date, Phase II Premises Commencement Date, and Phase III Premises
Commencement Date, respectively.  The
Tenant’s Proportionate Share of Operating Expenses payable hereunder for the
Operating Years in which the Term begins and ends shall be prorated to
correspond to that portion of said Operating Years occurring within the
Term.  Tenant’s Proportionate Share of
Operating Expenses and any other sums due and payable under this Lease shall be
adjusted upon receipt of the actual bills therefor, and the obligations of this
Section 3 shall survive the
termination or expiration of the Lease.

 

3.3.                            Payment of Additional
Rent.  Landlord shall have the right to reasonably
estimate the Operating Expenses for each Operating Year.  Upon Landlord’s or Agent’s notice to Tenant
of such estimated amount, Tenant shall pay, on the first day of each month
during that Operating Year, an amount (the “Estimated
Additional Rent”) equal
to the estimate of the Tenant’s Proportionate Share of Operating Expenses
divided by 12 (or the fractional portion of the Operating Year remaining at the
time Landlord delivers its notice of the estimated amounts due from Tenant for
that Operating Year).  If the aggregate
amount of Estimated Additional Rent actually paid by Tenant during any
Operating Year is less than Tenant’s actual ultimate liability for Operating
Expenses for that particular Operating Year, Tenant shall pay the deficiency
within 30 days of Landlord’s written demand therefor.  If the aggregate amount of Estimated
Additional Rent actually paid by Tenant during a given Operating Year exceeds
Tenant’s actual liability for such Operating Year, the excess shall be credited
against the Estimated Additional Rent next due from Tenant during the
immediately subsequent Operating Year, except that in the event that such
excess is paid by Tenant during the final Lease Year, then upon the expiration
of the Term, Landlord or

 

5

 

Agent shall pay Tenant the
then-applicable excess promptly after determination thereof.  No interest shall be payable to Tenant on
account of payments of Estimated Additional Rent and such payments may be
commingled.

 

Within
one hundred twenty (120) days after the end of each calendar year during the
Lease Term, Landlord shall furnish to Tenant (i) annual statements itemizing
the Operating Expenses for the year just ended, which statements shall be
reasonably detailed, prepared in the ordinary course of Landlord’s business and
certified by Landlord as being true and complete, and (ii) Landlord’s
calculations showing Tenant’s Proportionate Share of the Operating Expenses for
such year.  Upon thirty (30) days prior
notice and not more than once per year during the Lease Term, Tenant shall have
the right to inspect Landlord’s books and records for the sole purpose of
verifying the Operating Expenses and the calculation of the Tenant’s
Proportionate Share thereof.  If any
such inspection reveals that Tenant was overcharged and not otherwise properly
reconciled pursuant to this Section 3.3,
Landlord shall credit any such amounts to the next payment(s) of Additional
Rent becoming due or, in the final year, refund any such excess amount charged
to Tenant.  Tenant agrees to maintain in
strict confidence any information Tenant obtains or reviews pursuant to its
inspections rights granted under this Section 3.3
except that Tenant shall be permitted to disclose such information to its
attorneys and advisors, provided Tenant informs such parties of the
confidential nature of such information and uses good faith and diligent
efforts to cause such parties to maintain such information as confidential.

 

4.                                      USE OF PREMISES AND COMMON
AREAS; SECURITY DEPOSIT.

 

4.1.                            Use of Premises and
Property.  The Premises shall be used by the Tenant for
the purpose(s) set forth in Section 1.7
above and for no other purpose whatsoever. 
Tenant shall not, at any time, use or occupy, or suffer or permit anyone
to use or occupy, the Premises, or do or permit anything to be done in the
Premises or the Property, in any manner that may (a) violate any Certificate of
Occupancy for the Premises or the Property; (b) cause, or be liable to cause,
injury to, or in any way impair the value or proper utilization of, all or any
portion of the Property (including, but not limited to, the structural elements
of the Property) or any equipment, facilities or systems therein; (c)
constitute a violation of the laws and requirements of any public authority or
the requirements of insurance bodies or the rules and regulations of the
Property, including any covenant, condition or restriction affecting the
Property, (d) exceed the load bearing capacity of the floor of the Premises;
(e) impair or tend to impair the character, reputation or appearance of the
Property; or (e) unreasonably annoy, inconvenience or disrupt the operations or
tenancies of other tenants or users of the Property.  On or prior to the date hereof, Tenant has completed and delivered
for the benefit of Landlord a “Tenant Operations Inquiry Form” in the form
attached hereto as Exhibit D
describing the nature of Tenant’s proposed business operations at the Premises,
which form is intended to, and shall be, relied upon by Landlord.

 

4.2.                            Use of Common Areas.  As used herein, “Common Areas”
shall mean all areas within the Property that are available for the common use
of tenants of the Property and that are not leased or held for the exclusive
use of Tenant or other tenants or licensees, including, but not limited to,
parking areas, driveways, sidewalks, loading areas, access roads, corridors,
landscaping and planted areas.  Tenant
shall have the nonexclusive right to use the Common Areas for the purposes
intended, subject to such reasonable rules and regulations as Landlord may
uniformly establish from time to time. 
Tenant shall not interfere with the rights of any or all of Landlord,
other tenants or licensees, or any other person entitled to use the Common
Areas.  Without limitation of the
foregoing, Tenant shall not park or store any vehicles or trailers on, or
conduct truck loading and unloading activities in, the Common Areas in a manner
that unreasonably disturbs, disrupts or prevents the use of the Common Areas by
Landlord, other tenants or licensees or other persons entitled to use the
Common Areas.  Landlord, from time to
time, may change any or all of the size, location, nature and use of any of the
Common Areas although such changes may result in inconvenience to Tenant, so long
as such changes do not materially and adversely affect Tenant’s use of the
Premises.  In addition to the foregoing,
Landlord may, at any time, close or suspend access to any Common Areas to
perform any acts in the Common Areas as, in Landlord’s reasonable judgment, are
desirable to improve or maintain either or both of the Premises and the
Property, or are required in order to satisfy Landlord’s obligations under
either or both of Sections 13.2
and 18; provided, however, that
Landlord shall use reasonable efforts to limit any disruption of Tenant’s use
and operation of the Premises in connection therewith.

 

4.3.                            Signage.  Tenant shall not affix any sign of any size or character to any portion
of the Property, without prior written approval of Landlord, which approval
shall not be unreasonably withheld or delayed.

 

6

 

Tenant shall remove all
signs of Tenant upon the expiration or earlier termination of this Lease and
immediately repair any damage to either or both of the Property and the
Premises caused by, or resulting from, such removal.

 

4.4.                            Intentionally Omitted.

 

5.                                      CONDITION AND DELIVERY OF
PREMISES.

 

5.1.                            Conditions of Premises.  Landlord presents and warrants to Tenant that, on the Phase I
Premises Commencement Date, Phase II Premises Commencement Date, and Phase III
Premises Commencement Date, respectively, and as applicable, all plumbing,
electrical, heating, ventilating, air-conditioning, ventilating and mechanical
systems, including the dock doors permitted to be used by Tenant hereunder,
located within the Premises, or located outside the Premises but which service
the Premises, shall be in good condition and repair and in proper working
order.  Tenant acknowledges that, except
as set forth in this Lease, neither Landlord or Agent, nor any representative
of Landlord, has made any representation as to the condition of the Premises or
the suitability of the Premises for Tenant’s intended use.  Neither Landlord nor Agent shall be
obligated to make any repairs, replacements or improvements (whether structural
or otherwise) of any kind or nature to the Premises in connection with, or in
consideration of, this Lease, except (a) as set forth in Sections 13.2 and 18 and (b) with respect to all (if any)
repairs and improvements expressly and specifically described in Exhibit B attached hereto (“Landlord Work Items”) and (c) as may be
required in order to deliver the Premises to Tenant in the condition required
under this paragraph.  Landlord shall
enforce, or cause Agent to enforce, upon Tenant’s request, all manufacturer’s
or contractor’s warranties, if any, issued in connection with any of the
Landlord Work Items.  Landlord shall
perform, or caused to be performed, the Landlord Work Items in a good and workmanlike
manner.

 

5.2.                            Delay in Commencement.  Landlord shall not be liable to Tenant if Landlord does not deliver
possession of the Phase I Premises, Phase II Premises, or Phase III Premises to
Tenant on the Phase I Premises Commencement Date, Phase II Premises
Commencement Date, or Phase III Premises Commencement Date, respectively.  The obligations of Tenant under the Lease
shall not be affected thereby, except that the applicable Commencement Date
shall be delayed until Landlord delivers possession of the Phase I Premises,
Phase II Premises, or Phase III Premises (as the case may be) to Tenant.  A delay in the Commencement Date shall not
change the Expiration Date. 
Notwithstanding the foregoing provisions, in the event any such premises
are not delivered by Landlord as required herein by September 1, 2003,
Tenant may elect to terminate this Lease.

 

6.                                      SUBORDINATION; NOTICES TO
SUPERIOR LESSORS AND MORTGAGEES; ATTORNMENT.

 

6.1.                            Subordination.  Provided that Tenant is provided with a reasonable and customary
subordination, nondisturbance and attornment agreement duly executed by the
holder of any mortgage or deed of trust or the landlord pursuant to any ground
lease, this Lease shall be subject and subordinate at all times to (a) all
ground leases or underlying leases that may now exist or hereafter be executed
affecting either or both of the Premises and the Property and (b) any mortgage
or deed of trust that may now exist or hereafter be placed upon, and encumber,
any or all of (x) the Property; (y) any ground leases or underlying leases for
the benefit of the Property; and (z) all or any portion of Landlord’s interest
or estate in any of said items. 
Notwithstanding the foregoing, Landlord shall have the right to
subordinate or cause to be subordinated any such ground leases or underlying
leases that benefit the Property or any such mortgage or deed of trust liens to
this Lease.  Tenant shall execute and
deliver, upon demand by Landlord any additional documents evidencing the
priority of subordination of this Lease with respect to any such ground leases
or underlying leases for the benefit of the Property or any such mortgage or
deed of trust provided such documents are in a commercially reasonable form.

 

6.2.                            Estoppel Certificates.  Tenant agrees, from time to time and within 10 days after request by
Landlord, to deliver to Landlord, or Landlord’s designee, an estoppel
certificate stating such matters pertaining to this Lease as may be reasonably
requested by Landlord provided such certificate is in a commercially reasonable
form.  Failure by Tenant to timely
execute and deliver such certificate shall constitute an acceptance of the
Premises and acknowledgment by Tenant that the statements included therein are
true and correct without exception. 
Landlord and Tenant intend that any statement delivered pursuant to this
section may be relied upon by any prospective purchaser or mortgagee of
the Property or of any interest therein or any other Landlord designee.

 

7

 

6.3.                            Transfer for Landlord.  In the event of a sale or conveyance by Landlord of the Property, the
same shall operate to release Landlord from any future liability for any of the
covenants or conditions, express or implied, herein contained in favor of
Tenant to the extent such covenants and conditions are assumed by Landlord’s
successor-in-interest, and in such event Tenant agrees to look solely to
Landlord’s successor in interest with respect thereto and agrees to attorn to
such successor.

 

7.                                      QUIET ENJOYMENT.  Subject to the provisions of this Lease, so long as Tenant pays all of
the Rent and performs all of its other obligations hereunder, Tenant shall not
be disturbed in its possession of the Premises by Landlord, Agent or any other
person lawfully claiming through or under Landlord; provided, however, in
addition to Landlord’s rights under Section 16
and elsewhere in this Lease, Landlord and Landlord’s agents, employees,
contractors and representatives shall be provided reasonable access to the
Premises such that Landlord and Landlord’s agents, employees, contractors and
representatives may perform the General Maintenance Services (as hereinafter
defined) without undue interruption, delay or hindrance.  This covenant shall be construed as a
covenant running with the Property and is not a personal covenant of
Landlord.  Tenant shall not unreasonably
interrupt, delay, prevent or hinder the performance of the General Maintenance
Services by or on behalf of Landlord. 
Notwithstanding the foregoing, however, Tenant acknowledges and agrees
that Landlord shall have the unfettered and unilateral right to use portions of
the Common Areas (inclusive of the roof of the Building) for such purposes and
uses as Landlord may desire; provided, however, that in all events and under
all circumstances, Landlord’s use of any portion of the Common Areas shall not
interfere, in any material respect, with any or all of (a) Tenant’s rights to
occupy and use the Common Areas (in the manner and for the purposes
contemplated hereunder); (b) Tenant’s right to utilize the vehicular parking
areas located on the Common Areas; and (c) Tenant’s right of access, ingress
and egress to and from the Common Areas.

 

8.                                      ASSIGNMENT, SUBLETTING AND
MORTGAGING.

 

8.1.                            Prohibition.  Tenant acknowledges that this Lease and the Rent due under this Lease
have been agreed to by Landlord in reliance upon Tenant’s reputation and
creditworthiness and upon the continued operation of the Premises by Tenant for
the particular use described in Section 4.1
above; therefore, Tenant shall not, whether voluntarily, or by operation of
law, or otherwise: (a) assign or otherwise transfer this Lease; (b) sublet the
Premises or any part thereof, or allow the same to be used or occupied by
anyone other than Tenant; or (c) mortgage, pledge, encumber, or otherwise hypothecate
this Lease or the Premises, or any part thereof, in any manner whatsoever,
without in each instance obtaining the prior written consent of Landlord, which
consent may be given or withheld in Landlord’s sole, but reasonable,
discretion.  Except as otherwise
specified herein, any purported assignment, mortgage, transfer, pledge or
sublease made without the prior written consent of Landlord shall be absolutely
null and void.  No assignment of this
Lease shall be effective and valid unless and until the assignee executes and
delivers to Landlord any and all documentation reasonably required by Landlord
in order to evidence assignee’s assumption of all obligations of Tenant
hereunder.  Any consent by Landlord to a
particular assignment, sublease or mortgage shall not constitute consent or
approval of any subsequent assignment, sublease or mortgage, and Landlord’s
written approval shall be required in all such instances.  No consent by Landlord to any assignment or
sublease shall be deemed to release Tenant from its obligations hereunder and
Tenant shall remain fully liable for performance of all obligations under this
Lease.

 

8.2.                            Rights of Landlord.  If this Lease is assigned, or if the Premises (or any part thereof) are
sublet or used or occupied by anyone other than Tenant, whether or not in
violation of this Lease, Landlord or Agent may (without prejudice to, or waiver
of its rights), collect Rent from the assignee, subtenant or occupant.  Landlord or Agent may apply the net amount
collected to the Rent herein reserved, but no such assignment, subletting,
occupancy or collection shall be deemed a waiver of any of the provisions of
this Section 8.  With respect to the allocable portion of the
Premises sublet by Tenant to any person or entity not affiliated with Tenant,
in the event that the total rent and any other considerations received under
any sublease by Tenant is greater than the total Rent required to be paid, from
time to time, under this Lease, Tenant shall pay to Landlord fifty percent
(50%) of such excess as received from any such subtenant (after deducting any
brokerage commissions, tenant improvement costs and other costs incurred by
Tenant in connection with such subletting), and such amount shall be deemed a
component of the Additional Rent.

 

8.3.                            Permitted Transfers.  The provisions of Section 8.1(a)
shall not apply to a transfer of a majority (i.e. greater than 50% interest) of
the voting stock of Tenant or to any other change in voting control of

 

8

 

Tenant (if Tenant is a
corporation), or to a transfer of a majority of the general partnership or
membership interests in Tenant (if Tenant is a partnership or a limited
liability company) or to a change in the managerial control of Tenant, or to
transfer in connection with a merger, reorganization, or sale of all or
substantially all the assets of Tenant, and Tenant shall be permitted to assign
this Lease without Landlord’s consent in connection with any such transfer,
provided, in any of such events, the successor to Tenant (or any party
remaining liable for the obligations of Tenant hereunder) has a net worth equal
to or greater than $10,000,000.00.  Any
such permitted transferee shall execute and deliver to Landlord any and all
documentation reasonably required by Landlord in order to evidence assignee’s
assumption of all obligations of Tenant hereunder.

 

9.                                      COMPLIANCE WITH LAWS.

 

9.1.                            Compliance with Laws.  Tenant shall, at its sole expense (regardless of the cost thereof),
comply with all local, state and federal laws, rules, regulations and
requirements now or hereafter in force and all judicial and administrative
decisions in connection with the enforcement thereof (collectively, “Laws”), pertaining to either or both of the
Premises and Tenant’s use and occupancy thereof.  If any license or permit is required for the conduct of Tenant’s
business in the Premises, Tenant, at its expense, shall procure such license
prior to the Commencement Date, and shall maintain such license or permit in
good standing throughout the Term. 
Tenant shall give prompt notice to Landlord of any written notice it
receives of the alleged violation of any Law or requirement of any governmental
or administrative authority with respect to either or both of the Premises and
the use or occupation thereof.  The
judgment of any court of competent jurisdiction, or the admission of Tenant in
any action or proceeding against Tenant, whether Landlord is a party thereto or
not, that any such Law pertaining to the Premises has been violated, shall be
conclusive of that fact as between Landlord and Tenant.  Landlord represents and warrants to Tenant
that, on the Phase I Premises Commencement Date, Phase II Premises Commencement
Date, and Phase III Premises Commencement Date, the Phase I Premises, Phase II
Premises, and Phase III Premises, respectively, shall, to Landlord’s actual
knowledge, be in compliance with all applicable Laws in all material
respects.  Landlord shall indemnify
Tenant against all Tenant Losses (as defined in Section 17.2.2 hereof) actually suffered by Tenant
as the direct result of the applicable portion of the Premises not being in
material compliance with Laws on the applicable Commencement Date.

 

9.2.                            Hazardous Materials.  If, at any time or from time to time during the Term (or any extension
thereof), any Hazardous Material (defined below) is generated, transported,
stored, used, treated or disposed of at, to, from, on or in either or both of
the Premises and the Property by, or as a result of any act or omission of, any
or all of Tenant and any or all of Tenant’s Parties (defined below): (i) Tenant
shall, at its own cost, at all times comply (and cause all others to comply)
with all laws (federal, state or local) relating to Hazardous Materials,
including, but not limited to, all Environmental Laws (defined below), and
Tenant shall further, at its own cost, obtain and maintain in full force and
effect at all times all permits and other approvals required in connection
therewith; (ii) Tenant shall promptly provide Landlord or Agent with complete
copies of all communications, permits or agreements with, from or issued by any
governmental authority or agency (federal, state or local) or any private
entity relating in any way to the presence, release, threat of release, or
placement of Hazardous Materials on or in the Premises or any portion of the
Property, or the generation, transportation, storage, use, treatment, or
disposal at, on, in or from the Premises, of any Hazardous Materials; (iii)
Landlord, Agent and their respective agents and employees shall have the right
to either or both (x) enter the Premises and (y) conduct appropriate tests for
the purposes of ascertaining Tenant’s compliance with all applicable laws
(including Environmental Laws), rules or permits relating in any way to the
generation, transport, storage, use, treatment, disposal or presence of
Hazardous Materials on, at, in or from all or any portion of either or both of
the Premises and the Property; and (iv) upon written request by Landlord or
Agent and only if Landlord has a reasonable basis for believing that Tenant’s
activities at the Premises are not in compliance with applicable Environmental
Laws, Tenant shall provide Landlord with the results of reasonably appropriate
tests of air, water or soil to demonstrate that Tenant complies with all
applicable laws, rules or permits relating in any way to the generation,
transport, storage, use, treatment, disposal or presence of Hazardous Materials
on, at, in or from all or any portion of either or both of the Premises and the
Property.  This Section 9.2 does not authorize the
generation, transportation, storage, use, treatment or disposal of any
Hazardous Materials at, to, from, on or in the Premises in contravention of
this Section 9.  Tenant covenants to investigate, clean up
and otherwise remediate, at Tenant’s sole expense, any release of Hazardous
Materials caused, contributed to, or created by any or all of (A) Tenant and
(B) any or all of Tenant’s officers, directors, members, managers, partners,
invitees, agents, employees, contractors or representatives (“Tenant Parties”) during the Term.  Such investigation and remediation shall be
performed only after Tenant has obtained Landlord’s prior written

 

9

 

consent; provided, however,
that Tenant shall be entitled to respond immediately to an emergency without
first obtaining such consent.  All
remediation shall be performed in strict compliance with Environmental Laws and
to the reasonable satisfaction of Landlord. 
Tenant shall be liable for any and all conditions covered hereby, and
for all costs relating thereto, that are caused or created by any or all of
Tenant and any or all of Tenant’s Parties. 
Tenant shall not enter into any settlement agreement, consent decree or
other compromise with respect to any claims relating to any Hazardous Materials
in any way connected to the Premises without first obtaining Landlord’s written
consent (which consent may be given or withheld in Landlord’s sole, but
reasonable, discretion) and affording Landlord the reasonable opportunity to
participate in any such proceedings.  As
used herein, the term (x) “Environmental Laws”
shall mean any and all laws pertaining to Hazardous Materials or that otherwise
deal with, or relate to, air or water quality, air emissions, soil or ground
conditions or other environmental matters of any kind; and (y) “Hazardous Materials” shall mean any waste,
material or substance (whether in the form of liquids, solids or gases, and
whether or not airborne) that is or may be deemed to be or include a pesticide,
petroleum, asbestos, polychlorinated biphenyl, radioactive material, urea
formaldehyde or any other pollutant or contaminant that is or may be deemed to
be hazardous, toxic, ignitable, reactive, corrosive, dangerous, harmful or
injurious, or that presents a risk to public health or to the environment, and
that is or becomes regulated by any Environmental Law.  The undertakings, covenants and obligations
imposed on Tenant under this Section 9.2
shall survive the termination or expiration of this Lease.  Notwithstanding anything in this Lease to
the contrary, Landlord hereby indemnifies, defends, and holds Tenant
Indemnified Parties (defined In Section 17.2.2
below) harmless from and against any and all Tenant Losses (defined below)
actually suffered or incurred by Tenant or any Tenant Indemnified Parties as
the direct result of the presence of Hazardous Materials in existence as of, or
prior to, the applicable Commencement Date, or shown to have arisen subsequent
to the applicable Commencement Date as a result of the use of the Building by
Landlord.

 

10.                               INSURANCE.

 

10.1.                     Insurance to be Maintained
by Landlord.  Landlord shall maintain (a) “all-risk”
property insurance policy covering the Property (at its full replacement cost),
but excluding Tenant’s Property (AS defined in Section 12.2 below), and (b) commercial general
public liability insurance covering Landlord for claims arising out of
liability for bodily injury, death, personal injury, advertising injury and
property damage occurring in and about the Property and otherwise resulting
from any acts and operations of Landlord, its agents and employees, and (c)
rent loss insurance, all of the above with limits that are required by any lender(s)
of Landlord, or as are otherwise reasonably determined by Landlord.

 

10.2.                     Insurance to be Maintained
by Tenant.  Tenant shall purchase, at its own expense,
and keep in force at all times during this Lease the policies of insurance set
forth below in Sections 10.2.1 and
10.2.2 (collectively, “Tenant’s Policies”).  All Tenant’s Policies shall (a) be issued by
an insurance company with a Best rating of A-X or better and otherwise
reasonably acceptable to Landlord and shall be licensed to do business in the
state in which the Property is located; (b) provide that said insurance shall
not be canceled or materially modified unless 30 days’ prior written notice
shall have been given to Landlord; and (c) otherwise be in such form, and
include such coverages, as Landlord may reasonably require.  All Tenant’s Policies (or, at Landlord’s
option, Certificates of Insurance, in a form reasonably acceptable to Landlord,
evidencing said Tenant’s Policies), shall be delivered to Landlord by Tenant
upon commencement of the Lease and renewals thereof shall be delivered at least
30 days prior to the expiration of each Tenant’s Policy.  Tenant shall give prompt notice to Landlord
and Agent of any bodily injury, death, personal injury, advertising injury or
property damage occurring in and about the Property.

 

10.2.1.           General Liability and Auto
Insurance.  Tenant shall purchase and maintain,
throughout the Term, a Tenant’s Policy(ies) of (i) commercial general or excess
liability insurance, including personal injury and property damage, in the
amount of not less than $2,000,000.00 per occurrence, and $5,000,000.00 annual
general aggregate, per location; (ii) comprehensive automobile liability
insurance covering Tenant against any losses arising out of liability for
personal injuries or deaths of persons and property damage occurring in or
about the Premises in the amount of not less than $1,000,000, combined single
limit.  The Tenant’s Policies required
by this Section 10.2.1 shall
(a) name Landlord, Agent, and any party holding an interest to which this Lease
may be subordinated whose name shall have been furnished in writing to Tenant,
as additional insureds; (b) provide coverage on an occurrence basis; (c)
provide coverage for the indemnity obligations of Tenant under this Lease; (d)
contain a severability of insured parties provision and/or a cross liability
endorsement; (e) be primary, not

 

10

 

contributing with, and not
in excess of, coverage that Landlord may carry; and (f) provide coverage with
no exclusion for a pollution incident arising from a hostile fire.

 

10.2.2.           Property and Workers’
Compensation Insurance.  Tenant shall purchase and maintain,
throughout the Term, a Tenant’s Policy or Policies of (i) “all-risk” property
insurance covering Tenant’s Property and damage to other property resulting
from any acts or operations of Tenant, and (ii) workers’ compensation insurance
per the applicable state statutes covering all employees of Tenant.

 

10.3.                     Waiver of Subrogation.  Notwithstanding anything in this Lease to the contrary, and to the
extent permitted by law and without affecting the coverage provided by
insurance required to be maintained hereunder, Landlord and Tenant each waive
any right to recover against the other for (a) damages to property, (b) damages
to all or any portion of either or both of the Premises and the Property, (c)
claims arising by reason of the foregoing, to the extent such damages and
claims are insured against, or required to be insured against, by Landlord or
Tenant under this Lease, or (d) claims paid by Tenant’s workers’ compensation
carrier.  This provision is intended to
waive, fully and for the benefit of each party, any rights and/or claims which
might give rise to a right of subrogation by any insurance carrier.  The coverage obtained by each party pursuant
to this Lease shall include, without limitation, a waiver of subrogation by the
carrier which conforms to the provisions of this section.

 

11.                               ALTERATIONS.

 

11.1.                     Procedural Requirements.  Tenant may, from time to time, at its expense, make alterations or
improvements in and to the Premises (hereinafter collectively referred to as “Alterations”), provided that Tenant first
obtains the written consent of Landlord in each instance.  Landlord’s consent to Alterations shall not
be unreasonably withheld, provided that: (a) the Alterations are non-structural
and the structural integrity of the Property shall not be affected; (b) the
Alterations are to the interior of the Premises; (c) the proper functioning of
the mechanical, electrical, heating, ventilating, air-conditioning (“HVAC”), sanitary and other service systems
of the Property shall not be affected and the usage of such systems by Tenant
shall not be increased; (d) the Alterations have no adverse effect on other
leased premises in the Property; (e) Tenant shall have appropriate insurance
coverage, reasonably satisfactory to Landlord, regarding the performance and
installation of the Alterations; (f) the Alterations shall conform with all
other requirements of this Lease; and (g) Tenant shall have provided Landlord
with reasonably detailed plans for such Alterations in advance of requesting
Landlord’s consent.  Additionally,
before proceeding with any Alterations, Tenant shall (i) at Tenant’s expense,
obtain all necessary governmental permits and certificates for the commencement
and prosecution of Alterations; (ii) submit to Agent, for Landlord’s written
approval, working drawings, plans and specifications and all permits for the
work to be done and Tenant shall not proceed with such Alterations until it has
received said approval; and (iii) cause those contractors, materialmen and
suppliers engaged to perform the Alterations to deliver to Landlord
certificates of insurance (in a form reasonably acceptable to Landlord)
evidencing policies of commercial general liability insurance (providing the
same coverages as required in Section 10.2.1
above) and workers’ compensation insurance. 
Such insurance policies shall satisfy the obligations imposed under Section 10.2.1(a) through (d) and (f).  After obtaining Landlord’s approval to the
Alterations, Tenant shall give Landlord at least five days’ prior written
notice of the commencement of any Alterations at the Premises, and Landlord may
elect to record and post notices of non-responsibility at the Premises.  Notwithstanding anything to the contrary
contained in this Section 11.1,
Landlord’s consent shall not be required for Alterations satisfying clauses (a)
through (f) above and costing $25,000.00 or less in any one instance (up to an
maximum aggregate or $100,000 over the Term) provided that Tenant notifies
Landlord of such Alterations prior to commencing thereon and obtains all
approvals and permits from third parties necessary for the commencement and
prosecution of such Alterations. 
Notwithstanding anything to the contrary contained in this Section 11.1, the dollar amounts set
forth above shall apply only to the cost of the alterations to or improvements
of the Premises and shall not apply to the value or cost of the equipment
Tenant elects to use or install at that Premises.

 

11.2.                     Performance of
Alterations.  Tenant shall cause the Alterations to be
performed in compliance with all applicable permits, laws and requirements of
public authorities, and with Landlord’s reasonable rules and regulations or any
other restrictions that Landlord or Agent may impose on the Alterations.  Tenant shall cause the Alterations to be
diligently performed in a good and workmanlike manner, using new materials and
equipment at least equal in quality and class to the standards for the Property
established by Landlord or Agent. 
Tenant shall obtain all necessary permits and certificates for final
governmental approval of the Alterations and shall

 

11

 

provide Landlord with “as
built” plans, copies of all construction contracts, governmental permits and
certificates and proof of payment for all labor and materials, including,
without limitation, copies of paid invoices and final lien waivers.  Notwithstanding anything in this Lease to
the contrary, with Landlord’s prior consent, which consent shall not be
unreasonably withheld, conditioned or delayed, Tenant shall be permitted to
install telecommunications and other lines and wires at the Property as may be
reasonably necessary in order to facilitate communications between Tenant’s
property to the north (or any other property used or occupied by Tenant) and
the Premises leased by Tenant hereunder.

 

11.3.                     Lien Prohibition.  Tenant shall pay when due all claims for labor and material furnished
to the Premises in connection with the Alterations.  Tenant shall not permit any mechanics’ or materialmen’s liens to
attach to the Premises or the Property. 
Tenant, at its expense, shall procure the satisfaction or discharge of
record of all such liens and encumbrances within 30 days after the filing
thereof; or, within such thirty (30) day period, Tenant shall provide Landlord,
at Tenant’s sole expense, with endorsements (satisfactory, both in form and
substance, to Landlord and the holder of any mortgage or deed of trust) to the
existing title insurance policies of Landlord and the holder of any mortgage or
deed of trust, insuring against the existence of, and any attempted enforcement
of, such lien or encumbrance.  In the
event Tenant has not so performed, Landlord may, at its option, pay and
discharge such liens and Tenant shall be responsible to reimburse Landlord, on
demand and as Additional Rent under this Lease, for all costs and expenses
incurred in connection therewith, together with interest thereon at the rate
set forth in Section 22.3, which expenses shall include reasonable fees of
attorneys of Landlord’s choosing, and any costs in posting bond to effect
discharge or release of the lien as an encumbrance against the Premises or the
Property.

 

12.                               LANDLORD’S AND TENANT’S
PROPERTY.

 

12.1.                     Landlord’s Property.  All fixtures, machinery, equipment, improvements and appurtenances
attached to, or built into, the Premises at the commencement of, or during the
Term, excluding Tenant’s Property (as defined below), shall become and remain a
part of the Premises; shall be deemed the property of Landlord (the “Landlord’s Property”), without compensation
or credit to Tenant; and shall not be removed by Tenant at the Expiration
Date.  Further, any personal property in
the Premises on the Commencement Date, movable or otherwise, unless installed
and paid for by Tenant, shall be and shall remain the property of Landlord and
shall not be removed by Tenant.  In no
event shall Tenant remove any of the following materials or equipment without
Landlord’s prior written consent (which consent may be given or withheld in
Landlord’s sole discretion): any power wiring or power panels, lighting or
lighting fixtures, wall or window coverings, carpets or other floor coverings,
heaters, air conditioners or any other HVAC equipment, fencing or security
gates, or other similar building operating equipment and decorations.

 

12.2.                     Tenant’s Property.  All partitions, business and trade fixtures, machinery and equipment,
communications equipment, motor control centers, refrigeration equipment and
office equipment, any HVAC equipment installed by Tenant and specific to
Tenant’s use and occupancy of the Premises (excluding the HVAC equipment
presently installed at the Premises and any repairs or replacements respecting
such equipment) and other non-structural items that are installed in the
Premises by, or for the account of, Tenant and without expense to Landlord and
that can be removed without structural damage to the Property, and all
furniture, furnishings and other personal property owned by Tenant and located
in the Premises (collectively, the “Tenant’s
Property”) shall be and shall remain the property of Tenant and may
be removed by Tenant at any time during the Term and at the Expiration Date,
provided Tenant repairs or pays the cost of repairing any damage to the
Premises or to the Property resulting from the installation and/or removal
thereof.  At or before the Expiration
Date, or the date of any earlier termination, Tenant, at its expense, shall
remove from the Premises all of Tenant’s Property and any Alterations (except
such items thereof as constitute Landlord’s Property; or as Landlord shall have
expressly permitted, in writing, to remain, which property shall become the
property of Landlord), and Tenant shall repair (to Landlord’s reasonable
satisfaction) any damage to the Premises or the Property resulting from any
installation and/or removal of Tenant’s Property.  Any other items of Tenant’s Property that shall remain in the
Premises after the Expiration Date, or following an earlier termination date,
may, at the option of Landlord, be deemed to have been abandoned by Tenant, and
in such case, such items may be retained by Landlord as its property or be
disposed of by Landlord, in Landlord’s sole and absolute discretion and without
accountability, at Tenant’s expense.

 

12

 

13.                               REPAIRS AND MAINTENANCE.

 

13.1.                     Tenant Repairs and
Maintenance.  Tenant shall, at its expense, throughout the
Term, (i) maintain and preserve, in good condition and repair and in proper
working order (subject to normal and customary wear and tear), the Premises and
the fixtures and appurtenances therein which exclusively serve the Premises
(including, but not limited to, the Premises’ plumbing and HVAC systems, all
doors, overhead or otherwise, glass and levelers located in the Premises or
otherwise available in the Property for Tenant’s sole use; and excluding,
however, those components of the Premises for which Landlord is expressly
responsible under Section 13.2);
and (ii) except to the extent Landlord elects to repair and maintain the HVAC
systems as part of General Maintenance Services (as hereinafter defined),
maintain, in full force and effect, a preventative maintenance and service
contract with a reputable service provider for maintenance of the HVAC systems
of the Premises (a copy of which service agreement shall be provided to
Landlord within fifteen (15) days after the Commencement Date).  Tenant shall also be responsible for all
costs and expenses incurred to perform any and all repairs and replacements
(whether structural or non-structural; interior or exterior; and ordinary or
extraordinary), in and to the Premises and the Property and the facilities and
systems thereof; if and to the extent that the need for such repairs or
replacements arises directly or indirectly from any or all of: (a) the
performance or existence of any Alterations, (b) the installation, use or
operation of Tenant’s Property in the Premises, (c) the moving of Tenant’s
Property in or out of the Property, and (d) any act, omission, misuse, or
neglect of Tenant, any of its subtenants, or others entering into the Premises
by act or omission of Tenant or any subtenant (except to the extent Landlord
has waived claims against Tenant therefor under Section 10.3 hereof).  Any repairs or replacements required to be
made by Tenant to any or all of the structural components of the Property and
the mechanical, electrical, sanitary, HVAC, or other systems of the Property or
Premises shall be performed by appropriately licensed contractors approved by
Landlord, which approval shall not be unreasonably withheld.  All such repairs or replacements shall be
subject to the supervision and control of Landlord, and all repairs and
replacements shall be made with materials of equal or better quality than the
items being repaired or replaced. 
Notwithstanding any of the foregoing, however, from time to time during
the Term, Landlord may elect, in its sole discretion and by delivery of written
notice to Tenant and with Tenant’s prior written consent, which shall not be
unreasonably withheld, to perform on behalf of Tenant, all or some portion of
the repairs, maintenance, restoration and replacement in and to the Premises
required to be performed by Tenant under this Lease (any such repairs,
maintenance, restoration and/or replacement activities that Landlord elects to
perform on behalf of Tenant are herein collectively referred to as “General Maintenance Services”).  Tenant shall reimburse Landlord for the cost
of all General Maintenance Services provided by Landlord as Additional Rent
simultaneously with the payment of Operating Expenses as part of Estimated
Additional Rent (on a monthly estimated basis subject to annual reconciliation
as described in Section 3.3
above).  Unless and until Landlord
affirmatively elects to provide General Maintenance Services, nothing contained
herein shall be construed to obligate Landlord to perform any General
Maintenance Services or, except as otherwise expressly provided in Section 13.2, to repair, maintain,
restore or replace any portion of the Premises.  Landlord may from time to time, in its sole discretion, (x)
reduce or expand the scope of the General Maintenance Services that Landlord
has elected to provide (provided Landlord may not expand the scope thereof
without Tenant’s prior written consent), or (y) revoke its election to provide
any or all of the General Maintenance Services, in either event, upon delivery
of not less than thirty (30) days’ prior written notice to Tenant.  If Landlord does not elect to repair,
maintain and/or replace the HVAC systems as part of General Maintenance Services,
or revokes such election at any time after having made such election, Tenant
shall enter into a preventative maintenance and service contract with a
reputable service provider for maintenance of the HVAC systems of the Premises,
a copy of which agreement shall be provided to Landlord.  Notwithstanding the foregoing, Landlord
shall be responsible for any cost or expense incurred as a result of the
Premises not being in the condition, repair and order specified in Section 5 hereof as of the Phase I
Premises Commencement Date, Phase II Premises Commencement Date, and Phase III
Premises Commencement Date, respectively, as applicable.

 

13.2.                     Landlord Repairs.  Notwithstanding anything contrary herein, Landlord shall maintain in
good condition and repair and in working order, and shall repair, replace and
restore the foundation, exterior and interior load-bearing walls, roof
structure and roof covering and tuckpointing of the Property, the Common Areas,
and all base building fixtures, equipment, systems and facilities that serve
the Building and Property generally (as distinguished from those that serve
individual tenant spaces); provided, however, that (i) all costs and expenses
so incurred by Landlord to repair, replace and restore the above items shall
constitute Operating Expenses; provided, however, that with respect to any
costs incurred in the replacement context, those costs shall not constitute an
Operating Expense except to the extent that such costs so qualify under Section 3.1.1(vii); and (ii) notwithstanding

 

13

 

(i) above, in the event that
any such repair, replacement or restoration is necessitated by any or all of
the matters set forth in Sections 13.1(a)
through (d) above (collectively, “Tenant Necessitated Repairs”), then Tenant
shall be required to reimburse Landlord for all costs and expenses that
Landlord incurs in order to perform such Tenant Necessitated Repairs (except to
the extent Landlord has waived claims against Tenant therefor under Section 10.3
hereof), and such reimbursement shall be paid, in full, within 10 days after
Landlord’s delivery of demand therefor. 
Landlord agrees to commence the repairs, replacements or restoration
described in this Section 13.2
within a reasonable period of time after receiving from Tenant written notice
of the need for such repairs.

 

14.                               UTILITIES.  Tenant shall purchase all utility services and shall provide for
scavenger, cleaning and extermination services.  As provided in Section 3.1.1
above, utility charges that are not separately metered to the Premises shall be
included within Operating Expenses; therefore, when and as Tenant pays
estimated Operating Expenses, those estimated monthly payments shall include
monthly estimated installments of non-separately metered utility charges.  With regard to utility services that are
separately metered to the Premises, Tenant may pay such utility charges
directly to the utility or municipality providing such service, and in that
event: (a) all charges shall be paid by Tenant before they become delinquent;
and (b) utility charges for the Premises shall not be included in estimated
Operating Expenses.  Tenant shall be
solely responsible for the repair and maintenance of any meters necessary in
connection with such services.  Tenant’s
use of electrical energy in the Premises shall not, at any time, exceed the
capacity of either or both of (i) any of the electrical conductors and
equipment in or otherwise servicing the Premises; and (ii) the HVAC systems of
either or both of the Premises and the Property.

 

15.                               INVOLUNTARY CESSATION OF
SERVICES.  Landlord reserves the right, without any
liability to Tenant and without affecting Tenant’s covenants and obligations
hereunder, to stop service of any or all of the HVAC, electric, sanitary,
elevator (if any), and other systems serving the Premises, or to stop any other
services required by Landlord under this Lease, whenever and for so long as may
be necessary by reason of (i) accidents, emergencies, strikes, or the making of
repairs or changes which Landlord or Agent, in good faith, deems necessary or
(ii) any other cause beyond Landlord’s reasonable control.  Further, it is also understood and agreed
that Landlord or Agent shall have no liability or responsibility for a
cessation of services to the Premises or to the Property that occurs as a
result of causes beyond Landlord’s or Agent’s reasonable control.  No such interruption of service shall be
deemed an eviction or disturbance of Tenant’s use and possession of the
Premises or any part thereof, or render Landlord or Agent liable to Tenant for
damages, or relieve Tenant from performance of Tenant’s obligations under this
Lease, including, but not limited to, the obligation to pay Rent; provided,
however, that if any interruption of services persists for a period in excess
of two (2) consecutive business days Tenant shall, as Tenant’s sole remedy, be
entitled to a proportionate abatement of Rent to the extent, if any, of any
actual loss of use of the Premises by Tenant.

 

16.                               LANDLORD’S RIGHTS.  Landlord, Agent and their respective agents, employees and
representatives shall have the right to enter and/or pass through the Premises
at any time or times upon reasonable prior notice (except in the event of
emergency): (a) to examine and inspect the Premises and to show them to actual
and prospective lenders, prospective purchasers or mortgagees of the Property
or providers of capital to Landlord and its affiliates; and (b) to make such
repairs, alterations, additions and improvements in or to all or any portion of
either or both of the Premises and the Property, or the Property’s facilities
and equipment as Landlord is required or desires to make.  Landlord and Agent shall be allowed to take
all materials into and upon the Premises that may be required in connection
with any repairs, alterations, additions or improvements, without any liability
to Tenant and without any reduction or modification of Tenant’s covenants and
obligations hereunder; provided, however, that Landlord shall use reasonable
efforts to limit interference with Tenant’s business operations and Tenant’s
occupancy and use of the Premises. 
During the period of six months prior to the Expiration Date (or at any
time, if Tenant has vacated or abandoned the Premises or is otherwise in
default under this Lease), Landlord and its agents may exhibit the Premises to
prospective tenants.  Additionally,
Landlord and Agent shall have the following rights with respect to the
Premises, exercisable without notice to Tenant, without liability to Tenant,
and without being deemed an eviction or disturbance of Tenant’s use or
possession of the Premises or giving rise to any claim for setoff or abatement
of Rent: (i) to designate and approve, prior to installation, all types of
signs; (ii) to have pass keys, access cards, or both, to the Premises; and
(iii) to decorate, remodel, repair, alter or otherwise prepare the Premises for
reoccupancy at any time after Tenant vacates or abandons the Premises for more
than 30 consecutive days or without notice to Landlord of Tenant’s intention to
reoccupy the Premises.

 

14

 

17.                               NON-LIABILITY AND
INDEMNIFICATION.

 

17.1.                     Non-Liability.  Except as provided in Section 17.2.2,
none of Landlord, Agent, any other managing agent, or their respective
affiliates, owners, partners, directors, officers, agents and employees shall
be liable to Tenant for any loss, injury, or damage, to Tenant or to any other
person, or to its or their property, irrespective of the cause of such injury,
damage or loss.  Further, except as
provided in Section 17.2.2,
none of Landlord, Agent, any other managing agent, or their respective
affiliates, owners, partners, directors, officers, agents and employees shall
be liable to Tenant (a) for any damage caused by other tenants or persons in,
upon or about the Property, or caused by operations in construction of any
public or quasi-public work; (b) with respect to matters for which Landlord is
liable, for consequential or indirect damages purportedly arising out of any
loss of use of the Premises or any equipment or facilities therein by Tenant or
any person claiming through or under Tenant; (c) any defect in the Premises or
the Property (unless such defect arises from a breach by Landlord of its
obligations under this Lease); (d) injury or damage to person or property
caused by fire, or theft, or resulting from the operation of heating or air
conditioning or lighting apparatus, or from falling plaster, or from steam,
gas, electricity, water, rain, snow, ice, or dampness, that may leak or flow
from any part of the Property, or from the pipes, appliances or plumbing work
of the same (unless such injury or damage arises from a breach by Landlord of
its obligations under this Lease).

 

Except
as provided in Section 17.2.1,
neither Tenant nor its affiliates, owners, partners, directors, officers,
agents or employees shall be liable to Landlord for any loss, injury, or
damage, to Landlord or to any other person, or to its or their property,
irrespective of the cause of such injury, damage or loss.  Further, except as provided in Section 17.2.1, neither Tenant nor its
affiliates, owners, partners, directors, officers, agents or employees shall be
liable to Landlord (a) for any damage caused by other tenants or persons in,
upon or about the Property, or caused by operations in construction of any
public or quasi-public work; (b) with respect to matters for which Tenant is
liable, for consequential or indirect damages suffered by Landlord; (c) any
defect in the Premises or the Property (unless such defect arises from a breach
by Tenant under this Lease); (d) injury or damage to person or property caused
by fire, or theft, or resulting from the operation of heating or air
conditioning or lighting apparatus, or from falling plaster, or from steam,
gas, electricity, water, rain, snow, ice, or dampness, that may leak or flow
from any part of the Property, or from the pipes, appliances or plumbing work
of the same (unless such injury or damage arises from a breach by Tenant under
this Lease).

 

17.2.                     Indemnification.

 

17.2.1.           Tenant Indemnification.  Tenant hereby indemnifies, defends, and holds Landlord, Agent and their
respective affiliates, owners, partners, directors, officers, agents and
employees (collectively, “Landlord
Indemnified Parties”) harmless from and against any and all Losses
(defined below) actually suffered or incurred by Landlord or any Landlord
Indemnified Parties arising from or in connection with any or all of: (a) any
act, omission or negligence of any or all of Tenant and Tenant Parties (as
defined in Section 9.2); (b) any accident, injury or damage whatsoever
(unless caused by Landlord’s negligence) occurring on the Property or within
the Premises or Common Areas and caused by any or all of Tenant and Tenant
Parties; (c) any breach by Tenant of any of its warranties and representations
under this Lease; (d) any violation or alleged violation by any or all of
Tenant and Tenant Parties of any Law including, without limitation, any
Environmental Law; (e) any breach of the provisions of Section 9 by any or all of Tenant and
Tenant’s Parties; (f) claims for work or labor performed or materials supplies
furnished to or at the request of any or all of Tenant and Tenant Parties; (g)
any Hazardous Materials used, exposed, emitted, released, discharged,
generated, manufactured, sold, transported, handled, stored, treated, reused,
presented, disposed of or recycled in, at, near or under all or any portion of
the Premises as a result of the acts or omissions of any or all of Tenant and
Tenant Parties; and (h) the violation of any Environmental Law or any permit,
application or consent required in connection with any Environmental Law by any
or all of Tenant and Tenant Parties with respect to the Premises during the
Term, excluding, however, any violation of any Environmental Law resulting
directly from the acts or omissions of Landlord and Landlord Indemnified
Parties (collectively, “Tenant Indemnified
Matters”).  In case any
action or proceeding is brought against any or all of Landlord and the Landlord
Indemnified Parties by reason of any of Tenant Indemnified Matters, Tenant,
upon notice from any or all of Landlord, Agent or any Superior Party (defined
below), shall resist and defend such action or proceeding by counsel reasonably
satisfactory to Landlord.  The term “Losses” shall mean all claims, demands,
expenses, actions, judgments, damages (actual, but not consequential),
penalties, fines, liabilities, losses of every kind and nature (including,
without limitation, property damage, diminution in value of Landlord’s

 

15

 

interest in the Premises or
the Property, damages for the loss or restriction on use of any space or
amenity within the Premises or the Property, damages arising from any adverse
impact on marketing space in the Property, sums paid in settlement of claims
and any costs and expenses associated with injury, illness or death to or of
any person), suits, administrative proceedings, costs and fees, including,
without limitation, attorneys’ and consultants’ reasonable fees and expenses,
and the costs of cleanup, remediation, removal and restoration, that are in any
way related to any matter covered by the foregoing indemnity.  The provision of this Section 17.2.1 shall survive the expiration or
termination of this Lease.

 

17.2.2.           Landlord
Indemnification.  Landlord hereby indemnifies, defends, and
holds Tenant and Tenant Parties (herein collectively, “Tenant Indemnified Parties”) harmless from
and against any and all Tenant Losses (defined below) actually suffered or
incurred by Tenant or any Tenant Indemnified Parties arising from or in
connection with any or all of: (a) any act, omission or negligence of any or
all of Landlord and Landlord’s Indemnified Parties; (b) any accident, injury or
damage whatsoever (unless caused by Tenant negligence) occurring within the
Building or Common Areas and caused by any or all of Landlord and Landlord
Indemnified Parties; (c) any breach by Landlord of any of its warranties and
representations under this Lease; (d) any violation or alleged violation by any
or all of Landlord and Landlord Indemnified Parties of any Law including,
without limitation, any Environmental Law; (e) claims for work or labor
performed or materials supplies furnished to or at the request of any or all of
Landlord and Landlord Indemnified Parties; (f) any Hazardous Materials used,
exposed, emitted, released, discharged, generated, manufactured, sold,
transported, handled, stored, treated, reused, presented, disposed of or
recycled in, at, near or under all or any portion of the Property by any or all
of Landlord and Landlord Indemnified Parties; and (g) the violation of any
Environmental Law or any permit, application or consent required in connection
with any Environmental Law by any or all of Landlord and Landlord Indemnified
Parties with respect to the Property during the Term, excluding, however, any
violation of any Environmental Law resulting directly from the acts or
omissions of Tenant and Tenant Parties (collectively, “Landlord’s Indemnified Matters”).  In case any action or proceeding is brought
against any or all of Tenant and Tenant Parties by reason of any of Landlord’s
Indemnified Matters, Landlord, upon notice from any or all of Tenant and Tenant
Parties, shall resist and defend such action or proceeding by counsel
reasonably satisfactory to Tenant.  The
term “Tenant Losses” shall mean
all claims, demands, expenses, actions, judgments, damages (actual, but not
consequential), penalties, fines, liabilities, losses of every kind and nature
(including, without limitation, property damage, diminution in value of Tenant
interest in the Premises, damages for the loss or restriction on use of any
space or amenity within the Premises or the Property, sums paid in settlement
of claims and any costs and expenses associated with injury, illness or death
to or of any person), suits, administrative proceedings, costs and fees,
including, without limitation, attorneys’ and consultants’ reasonable fees and
expenses, and the costs of cleanup, remediation, removal and restoration, that
are in any way related to any matter covered by the foregoing indemnity or
Landlord’s indemnity as outlined in Section 9.1
and 9.2, Notwithstanding anything
to the contrary set forth in this Lease, however, in all events and under all
circumstances, the liability of Landlord to Tenant shall be limited to the
interest of Landlord in the Property, and Tenant agrees to look solely to
Landlord’s interest in the Property for the recovery of any judgment or award
against Landlord, it being intended that Landlord shall not be personally
liable for any judgment or deficiency. 
The provisions of this Section 17.2.2
shall survive the expiration or termination of this Lease.

 

17.3.                     Force Majeure.  The
obligations of Landlord and Tenant hereunder shall not be affected, impaired or
excused, and the non-performing party shall have no liability whatsoever to the
other party, with respect to any act, event or circumstance arising out of (a) Landlord’s
or Tenant’s failure (as the case may be) to fulfill, or delay in fulfilling any
of its respective obligations under this Lease by reason of labor dispute,
governmental preemption of property in connection with a public emergency or
shortages of fuel, supplies, or labor, or any other cause, whether similar or
dissimilar, beyond such party’s reasonable control; or (b) any failure or
defect in the supply, quantity or character of utilities furnished to the
Premises, or by reason of any requirement, act or omission of any public
utility or others serving the Property, beyond such party’s reasonable control.

 

18.                               DAMAGE OR DESTRUCTION.

 

18.1.                     Notification and
Repair.  Tenant shall give prompt notice to Landlord
and Agent of (a) any fire or other casualty to the Premises or the Property,
and (b) any damage to, or defect in, any part or appurtenance of the Property’s
sanitary, electrical, HVAC, elevator or other systems located in or passing
through the Premises or any part thereof of which Tenant becomes aware.  Subject to the provisions of Section 18.3 below, if either or both
of the Property and the Premises is damaged by fire or other insured casualty,
Landlord shall repair

 

16

 

(or cause Agent to repair)
the damage and restore and rebuild the Property and/or the Premises (except for
Tenant’s Property) with reasonable dispatch after (x) notice to it of the
damage or destruction and (y) the adjustment of the insurance proceeds
attributable to such damage.  Subject to
the provisions of Section 18.3
below, Tenant shall not be entitled to terminate this Lease and no damages,
compensation or claim shall be payable by Landlord for purported inconvenience,
loss of business or annoyance arising from any repair or restoration of any
portion of the Premises or of the Property pursuant to this Section.  Landlord (or Agent, as the case may be)
shall use its diligent, good faith efforts to make such repair or restoration
promptly and in such manner as not to unreasonably interfere with Tenant’s use
and occupancy of the Premises, but Landlord or Agent shall not be required to
do such repair or restoration work except during normal business hours of
business days.

 

18.2.                     Rental Abatement. 
Provided that any damage to either or both of the Property and the
Premises is not caused by, or is not the result of acts or omissions by, any or
all of Tenant and Tenant’s Parties, if (a) the Property is damaged by fire or
other casualty thereby causing the Premises to be inaccessible or (b) the
Premises are partially damaged by fire or other casualty, the Rent shall be
proportionally abated to the extent of any actual loss of use of the Premises
by Tenant.

 

18.3.                     Total Destruction.  If the Property or the Premises shall be totally destroyed by fire or
other casualty, or if the Property shall be so damaged by fire or other
casualty that (in the reasonable opinion of a reputable contractor or architect
designated by Landlord): (i) its repair or restoration requires more than 180
days or (ii) such repair or restoration requires the expenditure of more than
50% of the full insurable value of the Property immediately prior to the
casualty or (iii) the damage [x] is less than the amount stated in (ii) above,
but more than 25% of the full insurable value of the Property; and [y] occurs
during the last two years of Lease Term, then in any such event, Landlord and
Tenant shall each have the option to terminate this Lease (by so advising the
other, in writing) within 10 days after said contractor or architect delivers
written notice of its opinion to Landlord and Tenant, but in all events prior
to the commencement of any restoration of the Premises or the Property by
Landlord.  In such event, the
termination shall be effective as of the date upon which either Landlord or
Tenant, as the case may be, receives timely written notice from the other
terminating this Lease pursuant to the preceding sentence.  If neither Landlord nor Tenant timely
delivers a termination notice, this Lease shall remain in full force and
effect.  Notwithstanding the foregoing,
if (A) any holder of a mortgage or deed of trust encumbering the Property or
landlord pursuant to a ground lease encumbering the Property (collectively, “Superior Parties”) or other party entitled
to the insurance proceeds fails to make such proceeds available to Landlord in
an amount sufficient for restoration of the Premises or the Property, or (B)
the issuer of any casualty insurance policies on the Property fails to make
available to Landlord sufficient proceeds for restoration of the Premises or
the Property, then Landlord may, at Landlord’s sole option, terminate this
Lease by giving Tenant written notice to such effect within 30 days after
Landlord receives notice from the Superior Party or insurance company, as the
case may be, that such proceeds shall not be made available, in which event the
termination of this Lease shall be effective as of the date Tenant receives
written notice from Landlord of Landlord’s election to terminate this Lease.  If Landlord does not exercise such right of
termination, Landlord shall, subject to Section 18.4, repair the Premises
and Property (excluding Tenant’s Property) to the condition existing
immediately prior to such casualty. 
Landlord shall have no liability to Tenant, and Tenant shall not be
entitled to terminate this Lease by virtue of any delays in completion of
repairs and restoration.  For purposes
of this Section 18.3 only, “full insurable value” shall mean
replacement cost, less the cost of footings, foundations and other structures
below grade.

 

18.4.                     Insurance Proceeds.  Landlord shall not be obligated to expend in repairs and restoration an
amount in excess of the proceeds of insurance recovered with respect to any
casualty.  In the event such insurance
proceeds are insufficient to fully restore the Property and Premises and as a
result Landlord elects not to so fully restore the Property and Premises,
Landlord shall notify Tenant thereof in writing, and Tenant have the right to
terminate this Lease by giving written notice thereof to Landlord within thirty
(30) days after receiving such notice from Landlord.  Tenant acknowledges that Landlord shall be entitled to the full
proceeds of any insurance coverage, whether carried by Landlord or Tenant, for
damage to either or both of the Premises and the Property (excluding any
proceeds for damage to Tenant’s Property). 
In the event that either or both of the Premises and the Property are
not repaired or reconstructed, all proceeds of insurance (excluding any proceeds
covering Tenant’s Property), whether carried by Landlord or Tenant, shall be
payable to Landlord.  Landlord’s duty to
repair the Premises and the Property (excluding Tenant’s Property) is limited
to repairing the Premises to the condition existing immediately prior to such
fire or other casualty.

 

17

 

19.                               EMINENT DOMAIN.  If the whole, or any substantial (as reasonably determined by Landlord)
portion, of the Property is taken or condemned for any public use under any Law
or by right of eminent domain, or by private purchase in lieu thereof, and such
taking would prevent or materially interfere with the Permitted Use of the
Premises, this Lease shall terminate effective when the physical taking of said
Premises occurs.  If less than a
substantial portion of the Property is so taken or condemned, or if the taking
or condemnation is temporary (regardless of the portion of the Property
affected), this Lease shall not terminate, but the Rent payable hereunder shall
be proportionally abated to the extent of any actual loss of use of the
Premises by Tenant.  Landlord shall be
entitled to any and all payment, income, rent or award, or any interest therein
whatsoever, which may be paid or made in connection with such a taking or
conveyance, and Tenant shall have no claim against Landlord for the value of
any unexpired portion of this Lease. 
Notwithstanding the foregoing, any compensation specifically and
independently awarded to Tenant for loss of business or goodwill, or for its
personal property, or moving expenses, shall be the property of Tenant.

 

20.                               SURRENDER AND HOLDOVER.  On the last day of the Term, or upon any earlier termination of this
Lease, or upon any re-entry by Landlord upon the Premises, (a) Tenant shall
quit and surrender the Premises to Landlord “broom-clean” and in good order,
condition and repair (as defined by Exhibit C,
attached hereto and incorporated herein by reference), except for ordinary wear
and tear and such damage or destruction as Landlord is required to repair or
restore under this Lease, (b) Tenant shall remove all of Tenant’s Property
therefrom, except as otherwise expressly provided in this Lease, and (c) Tenant
shall surrender to Landlord any and all keys, access cards, computer codes or
any other items used to access the Premises. 
Landlord shall be permitted to inspect the Premises in order to verify
compliance with this Section 20
at any time prior to (x) the Expiration Date, (y) the effective date of any
earlier termination of this Lease, or (z) the surrender date otherwise agreed
to in writing by Landlord and Tenant. 
The obligations imposed under the first sentence of this Section 20 shall survive the
termination or expiration of this Lease. 
If any repairs are required to be performed in, to or at the Premises
(pursuant to the first sentence of this Section 20
or any other applicable provision of this Lease) upon the expiration or
termination of the Term, Tenant shall cause such repairs to be performed, to
Landlord’s reasonable satisfaction, within 10 business days after the date on
which this Lease is terminated or expired. 
If Tenant fails to timely comply with the preceding sentence, then
Landlord shall have the right to cause the repairs to be performed, at Tenant’s
expense, and all such expenses so incurred by Landlord shall bear interest (at
the rate specified in the second sentence of Section 22.3)
from the date the expense is incurred until the date paid, in full, by Tenant
(inclusive of interest).  If Tenant
remains in possession after the Expiration Date hereof or after any earlier
termination date of this Lease or of Tenant’s right to possession: (i) Tenant
shall be deemed a tenant-at-will; (ii) Tenant shall pay 150% of the aggregate
of the Base Rent then in effect under this Lease and 100% of Additional Rent,
and also shall pay all actual damages sustained by Landlord, directly by reason
of Tenant’s remaining in possession after the expiration or termination of this
Lease; (iii) there shall be no renewal or extension of this Lease by operation
of law; and (iv) the tenancy-at-will may be terminated by either party hereto
upon 30 days’ prior written notice given by the terminating party to the
non-terminating party.  The provisions
of this Section 20 shall not
constitute a waiver by Landlord of any re-entry rights of Landlord provided
hereunder or by law.

 

21.                               EVENTS OF DEFAULT.

 

21.1.                     Bankruptcy of Tenant.  It shall be a default by Tenant under this Lease if Tenant makes an
assignment for the benefit of creditors, or files a voluntary petition under
any state or federal bankruptcy or insolvency law, or an involuntary petition
alleging an act of bankruptcy or insolvency is filed against Tenant under any
state or federal bankruptcy or insolvency law that is not dismissed within 90
days, or whenever a petition is filed by or against (to the extent not
dismissed within 90 days) Tenant under the reorganization provisions of the
United States Bankruptcy Code or under the provisions of any state or federal
law of like import, or whenever a petition shall be filed by Tenant under the
arrangement provisions of the United States Bankruptcy Code or similar state or
federal law, or whenever a receiver of Tenant, or of, or for, the property of
Tenant shall be appointed, or Tenant admits it is insolvent or is not able to
pay its debts as they mature.

 

21.2.                     Default
Provisions.  Each of the following
shall constitute a default by Tenant under this Lease: (a) if Tenant fails to
pay Rent or any other payment when due hereunder within five (5) business days
after written notice from Landlord of such failure to pay on the due date; or
(b) if Tenant fails, whether by action or inaction, to timely comply with, or
satisfy, any or all of the obligations imposed on Tenant under this Lease
(other than the obligation to pay Rent) for a period of 30 days after
Landlord’s delivery to Tenant of written notice of such

18

 

default under this Section 21.2(b); provided, however,
that if the default cannot, by its nature, be cured within such 30 day period,
but Tenant commences and diligently pursues a cure of such default promptly
within the initial 30 day cure period, then Landlord shall not exercise its
remedies under Section 22
unless such default remains uncured for more than 60 days after the initial
delivery of Landlord’s original default notice.

 

22.                               RIGHTS AND REMEDIES.

 

22.1.                     Landlord’s Cure Rights Upon
Default of Tenant.  If Tenant defaults in the performance of any
of its obligations under this Lease, and fails to cure such default on a timely
basis (pursuant to Section 21.2),
Landlord, without thereby waiving such default, may (but shall not be obligated
to) perform the same for the account, and at the expense of, Tenant.

 

22.2.                     Landlord’s Remedies.  In
the event of any default by Tenant under this Lease, Landlord, at its option,
and after any applicable notice and cure period (as required pursuant to Section 21.2), but without additional
notice or demand from Landlord, if any, as provided in Section 21.2 has expired, may, in
addition to all other rights and remedies provided in this Lease, or otherwise
at law or in equity: (a) terminate this Lease and Tenant’s right of possession
of the Premises; or (b) terminate Tenant’s right of possession of the Premises
without terminating this Lease; provided, however, that Landlord may, whether
Landlord elects to proceed under Subsections (a) or (b) above, relet the
Premises, or any part thereof for the account of Tenant, for such rent and term
and upon such terms and conditions as are acceptable to Landlord.  In addition, for purposes of any reletting,
Landlord is authorized to decorate, repair, alter and improve the Premises to
the extent deemed necessary by Landlord, in its sole discretion.  In the event of the termination of this
Lease by Landlord pursuant to (a) above, Landlord shall be entitled to recover
from Tenant (i) all damages and other sums that Landlord is entitled to recover
under any provision of this Lease or at law or in equity, including, but not limited
to, all fixed dollar amounts of Base Rent and Additional Rent accrued and
unpaid for the period up to and including such termination date; (ii) all other
additional sums payable by Tenant, or for which Tenant is liable, or in respect
of which Tenant has agreed to indemnify Landlord, under any of the provisions
of this Lease, that may be then owing and unpaid; (iii) all costs and expenses
(including, without limitation, court costs and attorneys’ reasonable fees)
incurred by Landlord in the enforcement of its rights and remedies under this
Lease; and (iv) any damages provable by Landlord as a matter of law including,
without limitation, an amount equal to the positive difference, if any, between
(x) the discounted present value (at 6% per annum) of the Base Rent provided to
be paid for the remainder of the Term (measured from the effective termination
date of this Lease) and (y) the fair market rental value of the Leased Premises
(determined at the date of termination of this Lease) after deduction (from
such fair market rental value) of the projected costs and expenses of reletting
the Premises (including the anticipated costs of repairs, alterations,
improvements, additions, legal fees and brokerage commissions) as reasonably
estimated by Landlord.  If Landlord
elects to pursue its rights and remedies under Subsection (b) above, and
the Premises are relet and a sufficient sum is not realized therefrom, then to
satisfy the payment, when due, of Base Rent and Additional Rent reserved under
the Lease for any monthly period (after payment of all Landlord’s reasonable
expenses of reletting), Tenant shall pay any such deficiency monthly.  If Landlord elects to pursue its rights and
remedies under Subsection (b) above, and Landlord fails to relet the
Premises, then Tenant shall pay to Landlord all costs of Landlord’s expenses of
reletting (including the anticipated costs of repairs, alterations,
improvements, additions, legal fees and brokerage commissions) as reasonably
estimated by Landlord.  Tenant agrees
that Landlord may file suit to recover any sums due to Landlord hereunder from
time to time and that such suit or recovery of any amount due Landlord
hereunder shall not be any defense to any subsequent action brought for any
amount not theretofore reduced to judgment in favor of Landlord.  If Landlord elects to pursue its rights and
remedies under Subsection (b), then Landlord shall at any time have the
further right and remedy to rescind such election and pursue its rights and
remedies under Subsection (a).  In
the event Landlord elects, pursuant to clause (b) of this Section 22.2, to terminate Tenant’s
right of possession only, without terminating this Lease, Landlord may, at
Landlord’s option, enter into the Premises, remove Tenant’s Property, Tenant’s
signs and other evidences of tenancy, and take and hold possession thereof, as
provided in Section 20
hereof; provided, however, that such entry and possession shall not terminate
this Lease or release Tenant, in whole or in part, from Tenant’s obligation to
pay the Base Rent and Additional Rent reserved hereunder for the full Term, or
from any other obligation of Tenant under this Lease.  Any and all property that may be removed from the Premises by
Landlord pursuant to the authority of the Lease or of law, to which Tenant is
or may be entitled, may be handled, removed or stored by Landlord at the sole
risk, cost and expense of Tenant, and in no event or circumstance shall
Landlord be responsible for the value, preservation or safekeeping thereof.  Tenant shall pay to Landlord, upon demand,
any and all expenses incurred in such removal and all storage charges against
such

 

19

 

property so long as the same
shall be in Landlord’s possession or under Landlord’s control.  Any such property of Tenant not retaken from
storage by Tenant within 30 days after the end of the Term, however terminated,
shall be conclusively presumed to have been conveyed by Tenant to Landlord
under this Lease as in a bill of sale, without further payment or credit by
Landlord to Tenant.

 

22.3.                     Additional Rights of
Landlord and Tenant.  Any and all costs, expenses and
disbursements, of any kind or nature, incurred by Landlord or Agent in
connection with the enforcement of any and all of the terms and provisions of
this Lease, including attorneys’ reasonable fees (through all appellate
proceedings), shall be due and payable (as Additional Rent) Landlord’s
submission of an invoice therefor.  All
sums advanced by Landlord or Agent on account of Tenant under this Section, or
pursuant to any other provision of this Lease, and all Base Rent and Additional
Rent, if delinquent or not paid by Tenant and received by Landlord on or prior
to the expiration of any applicable notice or cure period provided for hereunder,
shall bear interest at the rate of 4% per annum above the “prime” or
“reference” or “base” rate (on a per annum basis) of interest publicly
announced as such, from time to time, by the Bank One, or its successor (“Default Interest”), from the due date
thereof until paid, and such interest shall be and constitute Additional Rent
and be due and payable upon Landlord’s or Agent’s submission of an invoice
therefor.  The various rights, remedies
and elections of Landlord reserved, expressed or contained herein are
cumulative and no one of them shall be deemed to be exclusive of the others or
of such other rights, remedies, options or elections as are now or may
hereafter be conferred upon Landlord by law.

 

22.4.                     Event of Bankruptcy.  In
addition to, and in no way limiting the other remedies set forth herein,
Landlord and Tenant agree that if Tenant ever becomes the subject of a
voluntary or involuntary bankruptcy, reorganization, composition, or other
similar type proceeding under the federal bankruptcy laws, as now enacted or
hereinafter amended, then: (a) “adequate assurance of future performance” by
Tenant pursuant to Bankruptcy Code Section 365 will include (but not be
limited to) payment of an additional/new security deposit in the amount of three
times the then current Base Rent payable hereunder; (b) any person or entity to
which this Lease is assigned, pursuant to the provisions of the Bankruptcy
Code, shall be deemed, without further act or deed, to have assumed all of the
obligations of Tenant arising under this Lease on and after the effective date
of such assignment, and any such assignee shall, upon demand by Landlord,
execute and deliver to Landlord an instrument confirming such assumption of
liability; (c) notwithstanding anything in this Lease to the contrary, all
amounts payable by Tenant to or on behalf of Landlord under this Lease, whether
or not expressly denominated as “Rent”, shall constitute “rent” for the
purposes of Section 502(b)(6) of the Bankruptcy Code; and (d) if this Lease
is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, any and all monies or other considerations payable or
otherwise to be delivered to Landlord or Agent (including Base Rent, Additional
Rent and other amounts hereunder), shall be and remain the exclusive property
of Landlord and shall not constitute property of Tenant or of the bankruptcy
estate of Tenant.  Any and all monies or
other considerations constituting Landlord’s property under the preceding
sentence not paid or delivered to Landlord or Agent shall be held in trust by
Tenant or Tenant’s bankruptcy estate for the benefit of Landlord and shall be
promptly paid to or turned over to Landlord.

 

23.                               BROKER.  Tenant covenants, warrants and represents that the broker set forth in Section 1.9(A) was the only broker to
represent Tenant in the negotiation of this Lease (“Tenant’s Broker”).  Landlord covenants, warrants and
represents that the broker set forth in Section 1.9(B)
was the only broker to represent Landlord in the negotiation of this Lease (“Landlord’s Broker”).  Landlord
shall be solely responsible for paying the commission of Landlord’s Broker and
Tenant’s Broker.  Each party agrees to
and hereby does defend, indemnify and hold the other harmless against and from
any brokerage commissions or finder’s fees or claims therefor by a party
claiming to have dealt with the indemnifying party and all costs, expenses and
liabilities in connection therewith, including, without limitation, reasonable
attorneys’ fees and expenses, for any breach of the foregoing.  The foregoing indemnification shall survive
the termination or expiration of this Lease.

 

24.                               MISCELLANEOUS.

 

24.1.                     Merger.  All prior understandings and agreements between the parties are merged
in this Lease, which alone fully and completely expresses the agreement of the
parties.  No agreement shall be
effective to modify this Lease, in whole or in part, unless such agreement is
in writing, and is signed by the party against whom enforcement of said change
or modification is sought.

 

20

 

24.2.                     Notices.  Any notice required to be given by either party pursuant to this Lease,
shall be in writing and shall be deemed to have been properly given, rendered
or made only if personally delivered, or if sent by Federal Express or other
comparable commercial overnight delivery service, addressed to the other party
at the addresses set forth below (or to such other address as Landlord or
Tenant may designate to each other from time to time by written notice), and
shall be deemed to have been given, rendered or made on the day so delivered or
on the first business day after having been deposited with the courier service:

 

	
  If
  to Landlord: 

  	
  First
  Industrial LP

  
	
   

  	
  311
  South Wacker Drive, Suite 4000

  
	
   

  	
  Chicago,
  Illinois 60606

  
	
   

  	
  Attn:
  Vice President - Operations Management

  
	
   

  	
   

  
	
  With
  a copy to:

  	
  First
  Industrial Realty Trust, Inc.

  
	
   

  	
  4742
  Creek Road

  
	
   

  	
  Cincinnati,
  OH 45242

  
	
   

  	
  Attn:
  Senior Regional Director

  
	
   

  	
   

  
	
  With
  a copy to:

  	
  Barack
  Ferrazzano Kirschbaum Perlman & Nagelberg

  
	
   

  	
  333
  West Wacker Drive

  
	
   

  	
  Suite
  2700

  
	
   

  	
  Chicago,
  Illinois 60606

  
	
   

  	
  Attn:
  Jeremy T. Bunnow

  
	
   

  	
   

  
	
  If
  to Tenant:

  	
  The
  Wornick Company

  
	
   

  	
  10825
  Kenwood Road

  
	
   

  	
  Cincinnati,
  OH 45242

  
	
   

  	
  Attn:
  Ron Davis

  

 

24.3.                     Non-Waiver.  The failure of either party to insist, in any one or more instances,
upon the strict performance of any one or more of the obligations of this
Lease, or to exercise any election herein contained, shall not be construed as
a waiver or relinquishment for the future of the performance of such one or
more obligations of this Lease or of the right to exercise such election, but
the Lease shall continue and remain in full force and effect with respect to
any subsequent breach, act or omission. 
The receipt and acceptance by Landlord or Agent of Base Rent or
Additional Rent with knowledge of breach by Tenant of any obligation of this
Lease shall not be deemed a waiver of such breach.

 

24.4.                     Legal Costs.  Any
party in breach or default under this Lease (the “Defaulting Party”) shall reimburse the other party (the “Nondefaulting Party”) upon demand for any
legal fees and court (or other administrative proceeding) costs or expenses
that the Nondefaulting Party incurs in connection with the breach or default,
regardless whether suit is commenced or judgment entered.  Such costs shall include legal fees and
costs incurred for the negotiation of a settlement, enforcement of rights or
otherwise.  Furthermore, in the event of
litigation, the court in such action shall award to the party in whose favor a
judgment is entered a reasonable sum as attorneys’ fees and costs, which sum
shall be paid by the losing party.

 

24.5.                     Parties Bound.  Except as otherwise expressly provided for in this Lease, this Lease
shall be binding upon, and inure to the benefit of, the successors and
assignees of the parties hereto.  Tenant
hereby releases Landlord named herein from any obligations of Landlord for any
period subsequent to the conveyance and transfer of Landlord’s ownership
interest in the Property.  In the event
of such conveyance and transfer, Landlord’s obligations shall thereafter be
binding upon each transferee (whether Successor Landlord or otherwise).  No obligation of Landlord shall arise under
this Lease until the instrument is signed by, and delivered to, both Landlord
and Tenant.

 

24.6.                     Recordation of Lease.  Tenant shall not record or file this Lease (or any memorandum hereof)
in the public records of any county or state.

 

21

 

24.7.                     Survival of Obligations.  Upon the expiration or other termination of this Lease, neither party
shall have any further obligation nor liability to the other except as
otherwise expressly provided in this Lease and except for such obligations as,
by their nature or under the circumstances, can only be, or by the provisions
of this Lease, may be performed after such expiration or other termination.

 

24.8.                     Governing Law;
Construction.  This Lease shall be governed by and construed
in accordance with the laws of the state in which the Property is located.  If any provision of this Lease shall be
invalid or unenforceable, the remainder of this Lease shall not be affected but
shall be enforced to the extent permitted by law.  The captions, headings and titles in this Lease are solely for
convenience of reference and shall not affect its interpretation.  This Lease shall be construed without regard
to any presumption or other rule requiring construction against the party
causing this Lease to be drafted.  Each
covenant, agreement, obligation, or other provision of this Lease to be
performed by Tenant, shall be construed as a separate and independent covenant
of Tenant, not dependent on any other provision of this Lease.  All terms and words used in this Lease,
regardless of the number or gender in which they are used, shall be deemed to
include any other number and any other gender as the context may require.  This Lease may be executed in counterpart
and, when all counterpart documents are executed, the counterparts shall
constitute a single binding instrument.

 

24.9.                     Time.  Time is of the essence for this Lease. 
If the time for performance hereunder falls on a Saturday, Sunday or a
day that is recognized as a holiday in the state in which the Property is
located, then such time shall be deemed extended to the next day that is not a
Saturday, Sunday or holiday in said state.

 

24.10.              Authority of Tenant.  If Tenant is a corporation, partnership, limited liability company,
association or any other entity, it shall deliver to Landlord, concurrently
with the delivery to Landlord of an executed Lease, certified resolutions of
Tenant’s directors or other governing person or body (i) authorizing execution
and delivery of this Lease and the performance by Tenant of its obligations
hereunder and (ii) certifying the authority of the party executing the Lease as
having been duly authorized to do so.

 

24.11.              WAIVER OF TRIAL BY
JURY.  THE LANDLORD AND THE TENANT, TO THE FULLEST
EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BROUGHT BY ANY PARTY TO THIS LEASE WITH RESPECT TO THIS LEASE,
THE PREMISES, OR ANY OTHER MATTER RELATED TO THIS LEASE OR THE PREMISES.

 

24.12.              Relocation.  Intentionally omitted.

 

24.13.              Financial Information.  From time to time during the Term, Tenant shall deliver to Landlord
unaudited financial statements concerning Tenant’s financial condition within
ten (10) days following Landlord’s written request therefor and Landlord agrees
that the information contained in such statements shall be treated
confidentially.

 

24.14.              Confidential
Information.  Tenant agrees to maintain in strict
confidence the economic terms of this Lease and any or all other materials,
data and information delivered to or received by the parties either prior to or
during the Term in connection with the negotiation and execution hereof.  The provisions of this Section 24.14 shall survive the
termination of this Lease.

 

24.15.              Submission of Lease.  Submission of this Lease to Tenant for signature does not constitute a
reservation of space or an option to lease. 
This Lease is not effective until execution by and delivery to both
Landlord and Tenant.

 

24.16.              Joint and Several
Liability.  All parties signing this Lease as Tenant
shall be jointly and severally liable for all obligations of Tenant hereunder.

 

24.17.              Riders.  All Riders and Exhibits attached hereto and executed (or initialed)
both by Landlord and Tenant shall be deemed to be a part hereof and hereby
incorporated herein.

 

[Signature Page to Follow]

 

22

 

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of the day and
year first above written.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  First Industrial, L.P., a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By:  First Industrial Realty Trust, Inc.

  
	
   

  	
  Its:  Sole general partner

  
	
   

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  
	
  Witness:
  

  	
  /s/
  Sandra McIntosh

  	
   

  	
  Signed:
  

  	
  /s/
  Ross Kirk

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Printed
  Name: 

  	
  Sandra
  McIntosh

  	
  Printed
  Name:  Ross Kirk

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness:
  

  	
  /s/
  Vann S. McCollough

  	
   

  	
  Its:  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Printed
  Name: 

  	
  Vann
  S. McCollough

  	
   

  	
   

  
							

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  The Wornick Company, a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

	
  Witness:
  

  	
  /s/
  J.F. McQuay

  	
   

  	
  Signed:
  

  	
  /s/
  Larry Rose

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Printed
  Name:  

  	
  J.F.
  McQuay

  	
  Printed
  Name:  Larry Rose

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness:
  

  	
  /s/
  Teresa Williams

  	
   

  	
  Its:  President and CEO

  
	
   

  	
   

  	
   

  	
   

  
	
  Printed
  Name:

  	
  Teresa
  Williams

  	
   

  	
   

  

 

S-1

 

STATE
OF FLORIDA

 

COUNTY
OF HILLSBOROUGH

 

Before
me, the undersigned, a Notary Public for Hillsborough County, personally
appeared Ross Kirk, Managing Director, of First Industrial, LP, the Landlord in
the foregoing instrument who acknowledged the signing of the foregoing
instrument to be his free act and deed on behalf of the Landlord for the uses
and purpose set forth therein.

 

IN
WITNESS WHEREOF, I have hereunto signed my name and affixed my official seal on
the 21st day of March, 2003.

 

	
   

  	
  /s/
  Virginia Saclarides

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
   

  	
  Virginia
  Saclarides

  	
   

  
	
   

  	
  Type
  or Print Name

  

 

 

STATE
OF TEXAS

 

COUNTY
OF HIDALGO

 

Before
me, the undersigned, a Notary Public for Hidalgo County, personally appeared
Larry Rose, President and CEO of The Wornick Company, a Nevada corporation, the
Tenant in the foregoing instrument who acknowledged the signing of the
foregoing instrument to be his free act and deed on behalf of the Tenant for
the uses and purposes set forth therein.

 

IN
WITNESS WHEREOF, I have hereunto signed my name and affixed my official seal on
the 12th day of March, 2003.

 

	
   

  	
  /s/
  Virginia Rocha

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
   

  	
  Virginia
  Rocha

  	
   

  
	
   

  	
  Type
  or Print Name

  

 

S-2

 

RIDER NO. 1

CANCELLATION OPTION

 

(Phase II Premises and Tenant 2 Space)

 

RIDER No. 1 attached to and made a part of the Lease dated
March 21, 2003, between FIRST INDUSTRIAL, L.P., as Landlord, and THE
WORNICK COMPANY, as Tenant, for Premises located at 4732, 4744 and 4750 Creek
Road, Cincinnati, Ohio.

 

Provided
Tenant is not then in default under the Lease and no condition then exists
which with the passage of time or giving of notice, or both, would constitute a
default, Tenant shall have a one-time right to (i) cancel the portion of the
Lease for the Phase II Premises (31,740 sf) effective as of the 31st
day of December 2003, by giving written notice to Landlord of such
termination election no later than the 30th day of
November 2003 and/or (ii) cancel the portion of the Lease for the Tenant 2
space (3,240 sf) effective as of the Commencement Date of the Phase III
Premises.  Tenant shall also have right
to cancel the existing Lease between Landlord and Tenant pertaining to the
Tenant’s lease of the approximately 3,000 square feet of space on the second
floor on the south side of the building as of the Commencement Date of the
Phase III Premises, and Tenant shall vacate the approximate 3,000 square feet
within 30 days of the Phase III Commencement Date.  If an event has occurred that with the passage of time or the
giving of notice, or both, would constitute an uncured default under this Lease
and Tenant has exercised its cancellation right described in either or both of
clauses (i) and/or (ii) under the terms of this Rider No. 1, Landlord, in its
sole discretion, shall have the right to declare such exercise(s) voidable if
such event ripens into an uncured default. 
No such termination(s) by Tenant shall relieve Tenant from the
performance of any obligations that have accrued but have not been fully
performed as of the effective date of such termination(s).

 

1

 

RIDER NO. 2

TERMINATION OPTION

 

RIDER No. 2 attached to and made a part of the Lease dated
March 21, 2003, between FIRST INDUSTRIAL, L.P., as Landlord, and THE
WORNICK COMPANY, as Tenant, for Premises located at 4732, 4744 and 4750 Creek
Road, Cincinnati, Ohio.

 

Notwithstanding
anything to the contrary contained herein, Tenant shall have the option to
terminate this Lease (“Termination Option”)
in accordance with the following terms and conditions:

 

Tenant Gives Notice.  If Tenant desires to exercise
the Termination Option, Tenant shall give Landlord irrevocable written notice
(“Termination Notice”) of Tenant’s
exercise of this Termination Option, which shall be delivered by certified
mail, which Termination Notice must be received by Landlord no later than the
date that is six full calendar months prior to the Termination Date.  Time is of the essence with respect to
Landlord’s receipt of the Termination Notice and all other deadlines in this
Clause.

 

Termination Date.  If Tenant gives the Termination Notice and
complies with all the provisions in this Clause, the Lease shall terminate at
11:59 p.m. on the last day of the thirty
sixth (36th) full calendar month after the Phase III Premises
Commencement Date (the “Termination
Date”).

 

Termination Fee Must Accompany Notice.  In
order for such Termination Notice to be effective, it must be accompanied by
the termination fee in the amount equal to six (6) monthly installments of
Annual Base Rent plus an amount equal to the unamortized cost of the Phase I
Improvements, Phase II Improvements and Phase III Improvements (as defined on
Exhibit B to this Lease) and unearned brokerage commissions, which shall be
payable only in cash or certified funds. 
For purposes of calculating the unamortized portion of the cost of such
Improvements, the cost of such Improvements shall be deemed amortized in equal
monthly installments without interest over a period of time beginning on the
Phase I Premises Commencement Date, Phase II Premises Commencement Date, and
Phase III Premises Commencement Date (as applicable) and ending on the
scheduled Expiration Date.

 

Tenant’s Obligation Survives Termination.  Tenant’s obligations to pay Rent, Additional Rent, and any other costs
or charges under this Lease, and to perform all other Lease obligations for the
period up to and including the Termination Date, shall survive the termination
of this Lease.

 

Landlord May Cancel and Void Termination if Tenant in
Default.  Notwithstanding the foregoing, if at any time
during the period on or after the date on which Tenant shall exercise its
Termination Option (in accordance with this Rider No. 2) up to and including
the Termination Date Tenant shall be in default under this Lease beyond any
applicable notice or cure period, then Landlord may elect, but is not
obligated, to cancel and declare null and void Tenant’s exercise of the
Termination Option by giving Tenant written notice thereof prior to the
Termination Date, whereupon this Lease shall continue in full force and effect
for the full Lease Term hereof unaffected by Tenant’s exercise of the
Termination Option.  If Landlord does
not so cancel Tenant’s exercise of the Termination Option, Tenant’s obligation
to cure such default shall survive the Termination Date.

 

Tenant Shall Surrender Space by Termination Date.  In the event Tenant exercises the Termination Option, Tenant covenants
and agrees to surrender full and complete possession of the Premises to
Landlord on or before the Termination Date vacant, broom-clean, in good order
and condition, and, in accordance with the provisions of this Lease, and
thereafter the Premises shall be free and clear of all leases, tenancies, and
rights of occupancy of any entity claiming by or through Tenant.

 

Failure to Surrender Makes Tenant a Holdover.  If Tenant shall fail to deliver possession of the Premises on or before
the Termination Date in accordance with the terms hereof, Tenant shall be
deemed to be a holdover tenant from and after the Termination Date, and in such
event, Tenant shall be liable to Landlord for payments for the use and occupancy
of the Premises equal to the fair market value thereof, and shall also be
liable to Landlord for all costs and expenses incurred by Landlord in securing
possession of the Premises.  Landlord
may accept any such sums from Tenant without prejudice to Landlord’s right to
evict Tenant from the Premises by any lawful means.

 

Lease Ceases After Termination.  If
Tenant properly and timely exercises the Termination Option and properly and
timely satisfies all other monetary and non-monetary obligations under this
Lease, the Lease shall cease and expire on the Termination Date with the same
force and effect as if said Termination Date were the date originally provided
in this Lease as the expiration date of the Term hereof.

 

2

 

RIDER NO. 3

 

EXPANSION RIGHTS

 

RIDER No. 3 attached to and made a part of the Lease dated
March 21, 2003, between FIRST INDUSTRIAL, L.P., as Landlord, and THE
WORNICK COMPANY, as Tenant, for Premises located at 4732, 4744 and 4750 Creek
Road, Cincinnati, Ohio.

 

During
such time as this Lease is in effect and provided that Tenant is not in default
under this Lease (and no event has occurred with the passage of time or the
giving of notice, or both, would constitute a default under this Lease), Tenant
shall have the right to lease the immediately adjacent approximately
12,696-25,392 square feet of the Building, as labeled “Expansion Premises” on
attached Exhibit A-2 (referred to in this Rider as the “Adjacent Space”), on
the terms set forth in this Rider.  If
an event has occurred that with the passage of time or the giving of notice, or
both, would constitute an uncured default under this Lease and Tenant has
exercised its expansion option under the terms of this Rider No. 3, Landlord,
in its sole discretion, shall have the right to declare such exercise voidable
if such event ripens into an uncured default. 
Tenant’s rights under this Rider are subordinate to any leases of the
Adjacent Space (including any rights of first offer and other expansion rights)
and options to renew or extend the lease term or any purchase options or
agreements concerning the Building or Property that Landlord has entered into
as of the Date of Lease.  This limited
right to expand space shall operate as follows: (i) if and when Landlord
receives a bona fide third-party written offer to lease all or any part of the
Adjacent Space on terms and conditions that Landlord has determined it is
prepared to accept, Landlord shall, prior to accepting such offer, notify
Tenant in writing of such offer, together with a statement of the terms and
conditions of such offer; (ii) Tenant shall have five (5) days from receipt of
Landlord’s notice in which to deliver to Landlord Tenant’s written,
unconditional election and agreement to lease the entire Adjacent Space (x) at
a base rental rate equal to the base rental rate set forth in the third-party
offer; (y) for a term equal to the longer of the then remaining term under this
Lease or the term set forth in the third party offer, and (z) otherwise on all
the same terms and conditions of this Lease; (iii) if Tenant duly delivers its
written, unconditional election and agreement to lease the Adjacent Space, then
effective on the first day of the first calendar month immediately following
delivery by Tenant of its agreement to lease: (a) the Adjacent Space will be
deemed to be added to and become a part of the Premises for all purposes under
this Lease (and the term “Premises” shall be redefined to include the Adjacent
Space); (b) Tenant’s Proportionate Share shall increase to reflect the addition
of the entire Adjacent Space to the Premises; (c) Base Rent for the Adjacent
Space (which shall be in addition to the Base Rent due under this Lease for the
then existing Premises) shall be due from Tenant at the rate established by
clause (ii)(x) above; and (d) Tenant will not be entitled to any allowance or
other incentive or abatement with regard to the Adjacent Space and will accept
the Adjacent Space in its as-is condition, without representation or warranty,
and without any improvements, installations or other work items to be performed
by Landlord except those that would have been available to the third-party who
made the bona fide third-party written offer, which the Tenant is matching.  Tenant shall promptly upon request of
Landlord execute and deliver to Landlord an amendment to this Lease consistent
with the foregoing and otherwise containing such provisions as are, in
Landlord’s reasonable judgment, necessary to evidence this expansion of Tenant’s
occupancy of the Building, with the execution and delivery by Tenant of such
Lease amendment constituting a condition precedent to Tenant’s right to occupy
the Adjacent Space as contemplated by this Rider (but not as a condition
precedent to commencement of the lease term (and Tenant’s resulting Rent
payment and other obligations) for the Adjacent Space).

 

3

 

RIDER NO. 4

 

Renewal Option

 

RIDER No. 4 attached to and made a part of the Lease dated
March 21, 2003, between FIRST INDUSTRIAL, L.P., as Landlord, and THE
WORNICK COMPANY, as Tenant, for Premises located at 4732, 4744 and 4750 Creek
Road, Cincinnati, Ohio.

 

Provided
that this Lease is in full force and effect and Tenant is not in default of its
obligations hereunder (beyond any applicable notice or cure period) at the time
the Renewal Option (defined below) is exercised and at the commencement of the
Renewal Term (defined below), Landlord hereby grants to Tenant the option to
extend the initial Term of this Lease (“Renewal
Option”) for one (1) additional period of two (2) years (the “Renewal Term”), upon the same terms and
conditions as are contained in this Lease, except as provided below.  Landlord shall have no obligation to make
any improvements, decorations, repairs, alterations or additions to the
Premises as a condition to Tenant’s obligation to pay Rent for the Renewal
Term.  The Renewal Option granted herein
shall be exercised, if at all, by written notice (the “Renewal Notice”) to Landlord given not
later than 270 days prior to the Expiration Date.  In the event that Tenant fails to deliver the Renewal Notice on a
timely basis, Tenant shall have no further right to extend the Term.  Base Rent payable for the Premises during
the Renewal Term shall be in an amount equal to one hundred five percent (105%)
of the amount of the Base Rent payable for the Premises during the period
immediately prior to the commencement of the Renewal Term.

 

4

 

EXHIBIT A-1

 

CREEK ROAD BUSINESS CENTER

 

Situate
in Section 17, Town 4, Entire Range 1, Sycamore Township, City of Blue
Ash, Hamilton County,

 

Ohio
and being more particularly described as follows:

 

Beginning
at the intersection of the centerlines of Creek Road and Kenwood Road, the
centerline of Kenwood Road also being the east line of Section 17;

 

Thence
along said centerline of Creek Road, North 81°15’40” West, 1072.48 feet to a
point;

 

Thence
North 08°44’20” East, 30.00 feet to a point in the northerly right-of-way line
of Creek Road and the real point of beginning for this description;

 

Thence
from said REAL POINT OF BEGINNING, North 08°44’20” East, 667.28 feet to a
point;

 

Thence
South 81°15’40” East, 970.64 feet to a point in the westerly right-of-way line
of Kenwood Road;

 

Thence
along said westerly line of Kenwood Road, South 03°4l’00” West, 653.50 feet to
a point;

 

Thence
along an arc deflecting to the right, having a radius of 15.00 feet, a distance
of 24.89 feet, the chord of said arc bears South 51°12’40” West 22.13 feet to a
point in the aforesaid northerly right-of-way of Creek Road;

 

Thence
along said northerly line of Creek Road, North 81°15’40” West, 1013.28 feet to
the real point of beginning.

 

Containing
15.319 acres of land.

Subject
to all legal highways, easements, and restrictions of record.

 

A-1

 

ASSIGNMENT AND ASSUMPTION OF LEASE

 

ASSIGNMENT AND ASSUMPTION OF LEASE (this “Agreement”), entered into as
of June 30, 2004, by and among The Wornick Company, a Nevada corporation
(“Assignor”); and The Wornick Company, a Delaware corporation (“Assignee”).
Assignor and Assignee are referred to collectively herein as the “Parties.”

 

W  I  T  N
E  S  S  E  T  H:

 

WHEREAS, Assignor, as “Tenant,” and First Industrial LP, a Delaware
limited partnership, as “Landlord,” are parties to the Standard Form Industrial
Building Lease (Multi-Tenant) dated March 21, 2003 (the “Lease”),
presently covering certain premises (the “Premises”) located at 4700-4750 Creek
Road, Cincinnati, Ohio, a copy of which Lease is attached hereto as Exhibit A;
and

 

WHEREAS, Assignor, as “Seller,” and Assignee, as “Buyer,” are parties
to an Asset Purchase Agreement dated December 3, 2003 (the “Purchase
Agreement”), pursuant to which, subject to the terms and conditions set forth
therein, Assignee will purchase substantially all of the assets (and assume
certain of the liabilities) of Assignor, including all of Seller’s right, title
and interest in, under and to the Lease; and

 

WHEREAS, simultaneously with the closing of the transactions
contemplated by the Purchase Agreement, the Parties mutually desire (a) that
Assignor assign all of its right, title and interest in, under and to the Lease
to Assignee, (b) that Assignee accept such assignment from Assignor and assume
all of Assignor’s obligations as Tenant under the Lease, and (c) that Landlord
consent to the assignment contemplated hereby, all on the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the receipt and adequacy of which are
expressly acknowledged, the Parties agree as follows:

 

1.  Effective Date. For
all purposes under this Agreement, the term “Effective Date” shall mean that
date, if any, on which the closing of the transactions contemplated by the
Purchase Agreement is consummated.

 

2.  Assignment and Assumption.

 

(a)                                  Effective
as of the Effective Date, Assignor hereby assigns, transfers and sets over unto
Assignee all of Assignor’s right, title and interest in, under and to (i) the
Lease and (ii) the aggregate security deposit heretofore made by Assignor
pursuant to the Lease. Assignor will deliver possession of the Premises to
Assignee on the Effective Date.

 

(b)                                 Assignee
hereby accepts the foregoing assignment and hereby agrees to perform all of the
terms and conditions of the Lease to be performed on the part of Assignor and
assumes all of the liabilities and obligations of Assignor under the Lease, as

 

 

amended
hereby, arising or accruing on or after the Effective Date, including, without
limitation, liability for the payment of rent and for the due performance of
all the terms, covenants and conditions of the tenant pursuant to the Lease as
amended hereby.

 

3.  Consent to Assignment.
Effective as of the Effective Date, Landlord has consented to the assignment
effected hereby.

 

4.  Representation of
Assignor. The Assignor hereby represents to the Assignee and agrees as
follows:

 

(a)                                  The
Lease attached hereto as Exhibit A is a true, correct and complete copy of the
Lease, the Lease has not been amended or modified except as set forth above and
the same is the only agreement between the Landlord and the Assignor with
respect to the subject matter thereof.

 

(b)                                 The
Lease is in full force and effect with no defaults (or events which, with the
passage of time, would become defaults) thereunder on the part of either party
in the performance of its obligations under such Lease.

 

(c)                                  The
minimum or base rent and all other rentals and other payments due, owing and
accruing under the Lease have been paid through the due date thereof
immediately preceding the Effective Date.

 

(d)                                 The
current amount of tenant’s expense and tax contribution is $7,944.86 per month.

 

(e)                                  Landlord
is currently holding a security deposit with respect to the Lease in the amount
of $5,912.

 

5.  Miscellaneous.

 

(a)                                  Headings.
The section headings used herein are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.

 

(b)                                 Governing
law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.

 

(c)                                  Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together will constitute one and the
same instrument.

 

2

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the day and year first above written.

 

 

	
  ASSIGNOR

  	
  ASSIGNEE

  
	
   

  	
   

  
	
  The Wornick Company, a Nevada

  	
  The Wornick Company, a Delaware

  
	
  corporation

  	
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Larry L. Rose

  	
   

  	
  By: 

  	
  /s/ Robert B. McKeon

  	
   

  
	
  Larry L. Rose, President and

  	
  Robert B. McKeon, President

  
	
  Chief Executive Officer

  	
   

  
						

 

3Exhibit 10.14

 

 

LEASE AGREEMENT

BY AND BETWEEN RONALD C. WORNICK, AS
LANDLORD,

AND THE WORNICK COMPANY, AS TENANT

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Certain
  Definitions.

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Leased
  Premises.

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Term
  of Lease.

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Rental.

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Use
  of Premises.

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Operation
  of Business.

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Care
  of Leased Premises.

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Fixtures.

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Insurance.

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Indemnification.

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Mutual
  Waiver of Subrogation.

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Assignment,
  Mortgage and Subleasing.

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Net
  Lease.

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Casualty
  Damage.

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Risk
  of Loss.

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Default
  of Tenant.

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Condemnation.

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Taxes
  and Assessments.

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Tenant’s
  Compliance with Laws and Indemnifications.

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  CPI
  Rent Adjustments.

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 21.

  	
  Waiver.

  	
  17

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Construction
  of Lease.

  	
  17

  

 

 

	
  Section 23.

  	
  Prohibition
  Against Liens.

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 24.

  	
  Holding
  Over and Successors.

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 25.

  	
  Miscellaneous.

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 26.

  	
  Right
  of First Refusal.

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 27.

  	
  Purchase
  of the Property in the Event of Damage or Condemnation.

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 28.

  	
  Composite
  Lease.

  	
  23

  

 

ii

 

LEASE AGREEMENT

 

	
  THE STATE OF TEXAS

  	
  §

  	
   

  
	
   

  	
  §

  	
  KNOW ALL MEN BY THESE PRESENTS:

  
	
  COUNTY OF HIDALGO

  	
  §

  	
   

  

 

This Lease Agreement (this “Lease”) is made and entered into by and
between RONALD C. WORNICK, as “LANDLORD”, and THE WORNICK COMPANY, a Texas
corporation, as “TENANT”.

 

W I T N E S S E T H:

 

Section 1.  Certain Definitions.

 

Each of the terms set forth below shall have the meaning set forth
opposite such term:

 

a.                                       Property
One:  The real property located in
Hidalgo County, Texas, described on Exhibit A attached hereto and incorporated
herein, including any improvements located therein.

 

b.                                      Property
Two:  The real property located in
Hidalgo County, Texas, described on Exhibit B attached hereto and incorporated
herein, including any improvements located therein.

 

c.                                       “Property”
or “Properties”: Singularly, either Property One or Property Two, and in
the plural form, both Property One and Property Two.

 

d.                                      Improvements:  The improvements located on the Properties.

 

e.                                       Leased
Premises:  The Properties, including
the Improvements.

 

f.                                         CPI:  The Consumer Price Index for All Urban
Consumers, All Items (Base year 1982-1984 = 100) published by the United States Department of Labor, Bureau
of Labor Statistics.  If the Bureau of
Labor Statistics substantially revises the manner in which the CPI is
determined, an adjustment shall be made in the revised index which would
produce results equivalent, as nearly as possible, to those which would be
obtained hereunder if the CPI were not so revised.  If the 1982-1984 average shall no longer be used as an Index of
100, such change shall constitute substantial revision.  If the CPI becomes unavailable to the public
because publication is discontinued, or otherwise, LANDLORD shall substitute
therefor a comparable index based upon changes in the cost of living or
purchasing power of the consumer dollar published by a governmental agency,
major bank, other financial institution, university or recognized financial

 

1

 

publisher.  Under no circumstances shall a decrease in
the CPI ever reduce the monthly rent or give rise to a credit in favor of
TENANT.

 

g.                                      CPI
Rent Adjustment and CPI Rent Adjustment Dates:  The CPI Rent Adjustment shall take place on the following dates:

(1)                                  January 1,
1998—”First Rent Adjustment Date”

(2)                                  January 1,
200l —”Second Rent Adjustment Date”

(3)                                  January 1,
2004 —”Third Rent Adjustment Date”

(4)                                  January 1,
2007 —”Fourth Rent Adjustment Date”

 

h.                                      Fair
Market Value or Fair Market Value Purchase Price:  “Fair Market Value” and “Fair Market Purchase Price” shall be
determined by appraisal as set forth in this paragraph.  In the event that it becomes necessary to
determine the Fair Market Value or Fair Market Value Purchase Price of either
Property or both Properties for any purpose of this Lease, the party required
or permitted to give notice of such required determination shall include in the
notice the name of a person selected to act as an appraiser on its behalf.  Within ten (10) days after receipt of any
such notice, LANDLORD (or TENANT, as the case may be) shall by notice to TENANT
(or LANDLORD, as the case may be) appoint a second person as an appraiser on
its behalf.  The appraisers thus
appointed (each of whom must be a member of the American Institute of Real
Estate Appraisers or any successor organization thereto), within forty-five
(45) days after the date of the notice appointing the first appraiser, shall
proceed to appraise the Property or Properties, as the case may be, to
determine the Fair Market Value or Fair Market Value Purchase Price thereof as
of the relevant date (giving effect to the impact, if any, of inflation or
deflation from the date of their decision to the relevant date); provided,
however, that if only one appraiser shall have been so appointed, or if two
appraisers shall have been so appointed but only one such appraiser shall have
made such determination within fifty (50) days after the making of TENANT’s or
LANDLORD’s request, then the determination of such appraiser shall be final and
binding upon the parties.  If two
appraisers shall have been appointed and shall have made their determinations
within the respective requisite periods set forth above and if the difference
between the amounts so determined shall not exceed ten percent (10%) of the
lesser of such amounts, then the Fair Market Value or Fair Market Value
Purchase Price shall be an amount equal to fifty percent (50%) of the sum of
the amounts so determined.  If the
difference between the amounts so determined shall exceed ten percent (10%) of
the lesser of such amounts, then such two appraisers shall have twenty (20)
days to appoint a third appraiser, but if such appraisers fail to do so, then
either party may request the American Arbitration Association or any successor
organization thereto to appoint an appraiser within twenty (20) days of such
request, and

 

2

 

both parties
shall be bound by any appointment so made within such 20-day period.  If no such appraiser shall have been
appointed within such twenty (20) days or within ninety (90) days of the
original request for a determination of Fair Market Value or Fair Market Value
Purchase Price, whichever is earlier, either LANDLORD or TENANT may apply to
any court having jurisdiction to have appointment made by such court.  Any appraiser appointed by the American
Arbitration Association or by such court shall be instructed to determine the
Fair Market Value or Fair Market Value Purchase Price within thirty (30) days
after appointment of such appraiser. 
The determination of the appraiser which differs most in terms of dollar
amount from the determinations of the other two appraisers shall be excluded,
and fifty percent (50%) of the sum of the remaining two determinations shall be
final and binding upon LANDLORD and TENANT as the Fair Market Value or Fair
Market Value Purchase Price for such interest. 
This provision for determination by appraisal shall be specifically
enforceable to the extent such remedy is available under applicable law, and
any determination hereunder shall be final and binding upon the parties except
as otherwise provided by applicable law. 
LANDLORD and TENANT shall each pay the fees and expenses of the
appraiser appointed by it and each shall pay one-half of the fees and expenses of
the third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal. 
Notwithstanding any determination otherwise by such appraisal, the Fair
Market Value and Fair Market Value Purchase Price shall not be less than the
amount of the outstanding principal and accrued unpaid interest on all
indebtedness of LANDLORD for which the Leased Premises is pledged as collateral
to secure payment and performance.

 

Section 2.  Leased
Premises.

 

a.                                       In
consideration of the conditions, covenants and agreements hereinafter set forth
to be kept and performed by TENANT, LANDLORD does hereby lease the Leased
Premises to TENANT, and TENANT does hereby lease the Leased Premises from
LANDLORD.

 

b.                                      This
Lease and the Leased Premises are subject to all covenants, easements, restrictions,
encumbrances, outstanding mineral interests and governmental regulatory
ordinances to the extent they are valid and in force and effect.

 

Section 3.  Term of
Lease.

 

a.                                       This
Lease shall be for a term commencing on the effective date specified below and
terminating at midnight on December 31, 2010.

 

b.                                      TENANT
shall remain bound by this Lease in accordance with its terms and nothing shall
entitle TENANT to any abatement,

 

3

 

reduction,
suspension or deferment of the monthly rental or other sums payable by TENANT
hereunder, except as otherwise specifically provided in this Lease.

 

Section 4.  Rental.

 

TENANT agrees to pay LANDLORD a rental of Thirty Three Thousand One
Hundred Fifteen Dollars ($33,115.00) per calendar month subject to increase as
provided herein.  All rentals shall be
due and payable monthly in advance on the first day of each month without the
right of setoff or deduction except as expressly provided herein.  If this Lease commences on other than the
first day of a month, then the rental for such month shall be prorated based on
the number of days in such month that the Lease was in force.

 

Section 5.  Use of
Premises.

 

Subject to the terms and provisions of this, TENANT may use the Leased Premises
for any lawful purposes.

 

Section 6.  Operation of
Business.

 

TENANT covenants and agrees as follows:

 

a.                                       Not
to permit any illegal or immoral practice to be carried on or committed on the
Leased Premises; or use or allow the Leased Premises to be used for any purpose
that might invalidate or increase the rate of insurance on the Leased Premises.

 

b.                                      Not
perform any act or carry on any practice on the Leased Premises which may
damage the Leased Premises or which would constitute a nuisance.

 

Section 7.  Care of
Leased Premises.

 

a.                                       TENANT
shall not make any alterations or additions to the Leased Premises without the
prior written consent of LANDLORD, and any such additions and alterations made
by TENANT shall become and remain the property of LANDLORD at the termination
of this Lease, except to the extent that LANDLORD agrees otherwise in the above
required written consent.  All
authorized alterations, additions and improvements which are erected,
constructed or installed by TENANT shall comply with all applicable
governmental laws, ordinances, regulations and other requirements.

 

b.                                      TENANT
shall keep the Leased Premises in good working order, repair and condition
(which repairs shall include necessary replacements and all expenditures
required to comply

 

4

 

with all laws
now or hereafter enacted, whether the work is structural, involves a capital
expenditure or results in a benefit extending beyond the term of this
Lease).  TENANT is presently occupying
the Leased Premises, and agrees to accept the same “AS IS” without any
agreements, representations, understandings or obligations on the part of
LANDLORD to perform any alterations, repairs or replacement.

 

Section 8.  Fixtures.

 

a.                                       TENANT
shall be permitted to install and maintain its trade fixtures and equipment on
the Leased Premises, and all such trade fixtures and equipment may be removed
by TENANT, provided, however, that any damage to the Leased Premises caused by
such removal shall be promptly repaired by TENANT.

 

Section 9.  Insurance.

 

a.                                       At
all times during the term of this Lease, TENANT, as additional rent, shall
purchase and maintain a policy or policies of comprehensive general liability
insurance providing personal injury and property damage liability coverages
with respect to the Leased Premises and the business conducted thereon, with
limits approved by LANDLORD.  Such
insurance policy or policies shall name both TENANT, LANDLORD and LANDLORD’s
mortgagee of the Leased Premises as named insureds.

 

b.                                      TENANT,
as additional rent, shall purchase and maintain during the term of this Lease
“all risk” casualty insurance policies covering the Improvements, together with
such endorsements as may reasonably be required by LANDLORD from time to time
to fully insure the Improvements on a replacement cost basis.  Such insurance policy(s) shall name LANDLORD
as the insured, and shall provide a loss payable clause in favor of LANDLORD
and any mortgagee of the LANDLORD.

 

c.                                       If
LANDLORD so requests, TENANT, as additional rent, shall purchase and maintain a
rental value insurance policy covering risk of loss during the first twelve
(12) months of reconstruction necessitated by the occurrence of any of the
hazards described in Section 14, Casualty Damage, in an amount covering at
least twelve months rental.  Such
insurance policy shall name LANDLORD as the insured.  Any loss proceeds collected by LANDLORD pursuant to such policy
shall be used to defray TENANT’s rental obligation to the extent of such
amounts actually received by LANDLORD.

 

d.                                      Each
of the foregoing policies of insurance shall be in form and written by insurers
approved by LANDLORD, which approval shall not be unreasonably withheld, and
shall provide that the insurers will not cancel or change such insurance
without first

 

5

 

giving
LANDLORD, TENANT and LANDLORD’s mortgagee not less than ten (10) days prior
written notice.  LANDLORD and LANDLORD’s
mortgagee shall be furnished a duplicate original of all such insurance
policies.

 

e.                                       If
TENANT fails to timely provide the liability, casualty or the rental value
insurance specified in this Section 9, then LANDLORD may elect to provide
such insurance and, in such event, TENANT shall pay to LANDLORD, as additional
rent, the cost of such insurance within ten (10) days after receipt of a
statement of such costs from LANDLORD.

 

Section 10.  Indemnification.

 

TENANT covenants and agrees to protect, indemnify and save LANDLORD and
LANDLORD’s heirs, legal representatives and assigns harmless from all claims
for damages and/or injuries to persons or property arising from injury to
persons or property on or adjacent to the Leased Premises, including all costs,
attorney’s fees, expenses and liabilities incurred in connection with any such
claim or action, without limit and without regard to the cause or causes
thereof or the negligence of LANDLORD, its agents, employees or any other
person or entity, whether such negligence be sole, joint or concurrent, active
or passive, or because of any defect in, on or upon the Leased Premises.

 

Section 11.  Mutual
Waiver of Subrogation.

 

LANDLORD hereby waives any right of recovery that LANDLORD may have
against TENANT for the loss of or damage to any of LANDLORD’S property
resulting from any cause whatsoever to the extent that collection for such loss
or damage is made by LANDLORD under any insurance policy or policies in effect
at the time such loss or damage occurs; and TENANT hereby waives any right of
recovery that TENANT may have against LANDLORD for the loss of or damage to any
of TENANT’S property resulting from any cause whatsoever to the extent that
collection for such loss or damage is made by TENANT under any insurance policy
or policies in effect at the time of such loss or damage.  The mutual waivers set forth in this
paragraph apply only to the extent they are permitted by law, the loss or
damage is covered by insurance proceeds, and such waivers do not adversely
affect any insurance coverage.

 

Section 12.  Assignment,
Mortgage and Subleasing.

 

a.                                       Assignment
by Tenant.  TENANT shall not,
whether by operation of law or otherwise, assign this Lease, or any part
thereof, without the prior written approval of LANDLORD in each instance.

 

6

 

b.                                      Subleases.  TENANT shall not sublease all or any part of
the Leased Premises without prior written approval of LANDLORD.

 

c.                                       Mortgages.  TENANT shall not mortgage all or any part of
TENANT’S leasehold estate without prior written approval of LANDLORD.

 

d.                                      Approvals
by Landlord.  LANDLORD agrees not to
unreasonably withhold its consent to a proposed assignment, sublease or
mortgage of the Leased Premises.  The
approval by LANDLORD of any of the acts specified in this Section shall
not relieve TENANT, or TENANT’s authorized assignee, transferee or subtenant
from liability under this Lease.

 

Section 13.  Net Lease.

 

TENANT agrees that this Lease is to be a “net lease” and that LANDLORD
is to receive all rentals and other sums required to be paid by TENANT
absolutely free from any charges, assessments, taxes, expenses or deductions of
any kind.

 

Section 14.  Casualty
Damage.

 

a.                                       All
proceeds payable by reason of any loss or damage to the Leased Premises, or any
portion thereof, and insured under any policy of insurance required by this
Lease shall be paid to LANDLORD and held by LANDLORD in trust and shall be made
available for reconstruction or repair, as the case may be, of any damage to or
destruction of the Leased Premises, or any portion thereof, and shall be paid
out by LANDLORD from time to time for the reasonable cost of such
reconstruction or repair.  Any excess
proceeds of insurance remaining after the completion of the restoration or
reconstruction of the Leased Premises shall be retained by LANDLORD free and
clear upon completion of any such repair and restoration except as otherwise
specifically provided below in this Section. 
In the event neither LANDLORD nor TENANT is required or elects to repair
and restore, all such insurance proceeds shall be retained by LANDLORD.  All salvage resulting from any risk covered
by insurance shall belong to LANDLORD except that any salvage relating to
additions paid for by TENANT or to TENANT’s personal property shall belong to
TENANT.

 

b.

 

(1)                                  If
during the term of this Lease, Property One and/or Property Two is totally or
partially destroyed from a risk covered by the insurance described in
Section 9 and if such damaged Property is rendered unsuitable for TENANT’s
use, TENANT shall have the option, by giving notice to LANDLORD within sixty
(60) days following the date of such

 

7

 

destruction, to (i) restore such damaged Property to substantially the
same condition as existed immediately before the damage or destruction, or (ii)
offer to acquire such damaged Property from LANDLORD for a purchase price equal
to the Fair Market Value Purchase Price of such Property immediately prior to
such damage or destruction.  Such damage
or destruction shall not terminate this Lease.

 

(2)                                  If
during the term of this Lease, Property One and/or Property Two is partially
destroyed from a risk covered by the insurance described in Section 9, but
such damaged Property is not thereby rendered unsuitable for TENANT’s use,
TENANT shall restore such damaged Property to substantially the same condition
as existed immediately before the damage or destruction.  Such damage or destruction shall not
terminate this Lease; provided, however, if TENANT cannot within a reasonable
time obtain all necessary governmental approvals, including building permits,
licenses, conditional use permits and any certificates of need, after diligent
efforts to do so, in order to be able to perform all required repair and
restoration work and to operate such damaged Property for TENANT’s use in
substantially the same manner as immediately prior to such damage or
destruction, TENANT may offer to acquire such damaged Property for a purchase
price equal to the Fair Market Value Purchase Price of such damaged Property
immediately prior to such damage or destruction.

 

(3)                                  If
the cost of the repair or restoration to a damaged Property exceeds the amount
of insurance proceeds received by LANDLORD, TENANT shall be obligated to
contribute any excess amount needed to restore the such damaged Property.  Such amount shall be paid by TENANT to
LANDLORD to be held in trust together with any other insurance proceeds for
application to the cost of repair and restoration.

 

(4)                                  In
the event LANDLORD does not accept TENANT’s offer to so purchase such damaged
Property within thirty (30) days after the date of such offer, TENANT may
either (a) withdraw its offer to purchase such damaged Property and proceed to
restore such damaged Property to substantially the same condition as existed
immediately before the damage or destruction, or (b) terminate this Lease as to
such damaged Property and LANDLORD shall retain the insurance proceeds, and
TENANT shall pay to LANDLORD, on demand, the amount of any deductible or
uninsured loss arising in connection therewith.

 

(5)                                  In
the event LANDLORD accepts TENANT’s offer to purchase such damaged Property,
this Lease shall terminate

 

8

 

as to such damaged Property upon payment of the purchase price and LANDLORD
shall remit to TENANT all insurance proceeds for such damaged Property being
held in trust by LANDLORD or assign to TENANT all rights to receive the
insurance proceeds if not already paid to LANDLORD.

 

c.                                       If
during the term of this Lease, either Property One and/or Property Two is
totally or materially destroyed from a risk not covered by the insurance
described in Section 9, whether or not such damage or destruction renders
such damaged Property unsuitable for TENANT’S use, TENANT shall either (i) restore
such damaged Property to substantially the same condition it was in immediately
before such damage or destruction and such damage or destruction shall not
terminate this Lease or (ii) offer to acquire the damaged Property at its Fair
Market Value Purchase Price immediately prior to such damage or destruction.

 

d.                                      All
insurance proceeds payable by reason of any loss of or damage to TENANT’s
personal property shall be paid to TENANT and TENANT shall use such insurance
proceeds in trust to pay the cost of repairing or replacing TENANT’s personal
property.

 

e.                                       If
TENANT is required or elects to restore the Property or Properties as provided
in this section, TENANT shall also restore all alterations and improvements
made by TENANT, as well as TENANT’s personal property.

 

f.                                         This
Lease shall remain in full force and effect and TENANT’s obligation to make
rental payments and to pay all other charges required by this Lease shall
remain unabated during any period required for repair and restoration, except
that the proceeds of rental insurance, if any, paid to LANDLORD shall
constitute payment of such amounts by TENANT.

 

g.                                      Any
termination of this Lease to a damaged Property pursuant to this
Section shall cause any right of first refusal granted to LANDLORD under
this Lease to be terminated and to be without further force or effect as to the
damaged Property.

 

h.                                      LANDLORD
hereby waives any statutory or common law rights of termination which may arise
by reason of any damage or destruction of the Properties or any part thereof.

 

i.                                          If
LANDLORD’S mortgagees do not allow the insurance proceeds to be used for
restoration, then TENANT’s sole remedy shall be to terminate this Lease as to
such damaged Property.

 

Section 15.  Risk of Loss.

 

During the term of this Lease, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased

 

9

 

Premises in consequence of the damage or destruction thereof by fire,
the elements, casualties, thefts, riots, wars or otherwise, is assumed by
TENANT and, LANDLORD shall in no event be answerable or accountable therefor
nor shall any of the events mentioned in this Section entitle TENANT to
any abatement of monthly rental except as specified provided in this Lease.

 

Section 16.  Default of
Tenant.

 

1.                                       Events
of Default.  The following events
shall be deemed to be events of default by TENANT under this Lease:

 

a.                                       If
TENANT shall fail to pay any installment of rent, additional rent or other sum
of money payable hereunder when due and the continuance of such failure for ten
(10) days following written notice hereof from LANDLORD to TENANT.

 

b.                                      If
TENANT shall fail to comply with any term, provision, or covenant of this
Lease, other than the payment of rent, additional rent or other sum of money to
LANDLORD, and shall not cure or correct such failure within a reasonable time
but, in no event, more than thirty (30) days following notice; provided,
however, if the nature of the TENANT’s failure is such that more time is
reasonably required in order to cure, TENANT shall not be in default if TENANT
commences to cure within such time period and thereafter with reasonable
diligence seeks to cure such failure to completion.

 

c.                                       If
a petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of the property of
TENANT shall be filed against TENANT in any court, pursuant to any statute
either of the United States or of any state, and if, within thirty (30) days
thereafter, TENANT fails to secure a discharge thereof, or if TENANT shall
voluntarily file any such petition, or make an assignment for the benefit of
creditors.

 

d.                                      If
TENANT’s leasehold estate shall be taken under writ of execution or other
process of law in any action against TENANT.

 

e.                                       If
TENANT shall abandon or vacate the Leased Premises.

 

2.                                       Remedies.  If an event of default shall have occurred,
LANDLORD shall have the right, without further notice or demand of any kind to
TENANT or any other party, then or at any time thereafter, to the extent
permitted by law, to pursue any one or

 

10

 

more of the
following remedies in addition to all other rights or remedies provided herein
or at law or in equity.

 

a.                                       LANDLORD
may terminate this Lease and forthwith repossess the Leased Premises and be
entitled to recover forthwith as damages a sum of money equal to the total of
(i) the reasonable cost of recovering the Leased Premises, (ii) the unpaid rent
and additional rent earned at the time of termination, the cost of curing
TENANT’s other defaults plus interest thereon from the due date at the rate
herein provided, and (iii) an amount equal to the then present value of the
balance of the rent and additional rent for the remainder of the term, less the
then present value of the fair rental value of the Leased Premises for the
remainder of the term.  The amounts
computed in accordance with the foregoing subclause (iii) shall both be discounted
in accordance with accepted financial practice at the rate of four percent (4%)
per annum to determine present value.

 

b.                                      LANDLORD
may elect to terminate TENANT’s right of possession without terminating this
Lease, in which event TENANT agrees to surrender possession and vacate the
Leased Premises immediately and deliver possession to LANDLORD, and TENANT
hereby grants LANDLORD full and free license to enter in and upon the Leased
Premises or any part thereof and to expel or remove TENANT or any other person
or party who may be occupying or within the Leased Premises or any part thereof
and remove any and all property therefrom. 
Such property may be removed by LANDLORD and stored in a public
warehouse or elsewhere at the cost of and for the account of TENANT without
terminating this Lease or releasing TENANT in whole or in part from TENANT’s
obligations to pay rent, additional rent and other charges and perform any of
the covenants, conditions and agreements to be performed by TENANT as provided
in this Lease, and without LANDLORD being deemed in any manner guilty of
trespass, eviction, forcible entry or detainer, and without relinquishing
LANDLORD’S rights as herein provided.

 

c.                                       If
LANDLORD re-enters the Leased Premises without terminating this Lease, then
LANDLORD may relet the Leased Premises or any part or parts thereof, either in
the name of LANDLORD or otherwise, for a term which may at LANDLORD’S option be
less than or exceed the period which would otherwise have constituted the
balance of the term and upon such other terms and conditions as LANDLORD may
deem advisable.  TENANT shall pay
LANDLORD for each month of the period which would otherwise have constituted
the balance of the term, any deficiency between (i) the sum of one monthly
installment of rent and other costs that would have been payable for the month
in question but for such re-entry or

 

11

 

termination, and (ii) the net amount, if any, of the rents collected on
account of the lease or leases of the Leased Premises for each month of the
period which would otherwise have constituted the balance of the term.  The failure of LANDLORD to relet the Leased
Premises or any part or parts thereof shall not release or affect TENANT’s
liability for damages; provided, however, that LANDLORD shall use reasonable
efforts to relet the Leased Premises. 
There shall be added to the said deficiency such expenses as LANDLORD
may reasonably incur in connection with any reletting (such as court costs,
attorney’s fees, brokerage costs and expenses for putting and keeping the
Leased Premises in good order or for preparing the same for reletting).  Any deficiency shall be paid in monthly
installments by TENANT on the rent day specified in this Lease, and any suit
brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of LANDLORD to collect the deficiency for any
subsequent month by a similar proceeding. 
No such re-entry or taking possession of the Leased Premises by LANDLORD
shall be construed as an election on its part to terminate this Lease unless a
written notice of such termination is given to TENANT or unless the termination
thereof is decreed by a court of competent jurisdiction.

 

Any amount collected by LANDLORD from subsequent Tenants for any rental
period in excess of that provided for in this Lease for such period shall be
credited to TENANT in reduction of TENANT’s liability for any rental period in
which the amount collected by LANDLORD shall be less than that provided for by
this Lease; but TENANT shall only be entitled to receive any such excess
rentals at the end of the term and without interest.  An election to re-enter the Leased Premises (without terminating
this Lease) and the reletting or not reletting of the Leased Premises shall not
thereafter prevent LANDLORD from electing to terminate this Lease for such
previous breach.

 

In the event it is necessary for LANDLORD to bring suit for such rental
payments or other charges as they accrue or in order to collect any damages,
LANDLORD shall have the right to allow such rental or deficiencies to
accumulate and to bring an action on several or all of the deficiencies at one
time.  Any such suit shall not prejudice
in any way the right of LANDLORD to bring a similar action for subsequent
rental or damage deficiencies.

 

Section 17.  Condemnation.

 

a.

 

(1)                                  “Condemnation”
means (i) the exercise of any governmental power, whether by legal proceedings
or

 

12

 

(2)                                  otherwise,
by a Condemnor or (ii) a voluntary [  ]
transfer by LANDLORD to any Condemner, either [  ] of Condemnation or while legal proceedings for [  ] are pending.

 

(3)                                  “Date
of Taking” means the date the Condemnor has the right to possession of the
property being condemned.

 

(4)                                  “Award”
means all compensation, sums or anything of value awarded, paid or received on
a total or partial Condemnation.

 

(5)                                  “Condemnor”
means any public or quasi-public authority, or private corporation or
individual, having the power of Condemnation.

 

b.                                      If
during the term of this Lease there is any taking of all or any part of the
Leased Premises or any interest in this Lease by Condemnation, the rights and
obligations of the parties shall be determined by this Section.

 

c.                                       If
there is any taking of all of Property One and/or Property Two by Condemnation
or if a portion of such condemned Property is taken so that such condemned
Property is rendered unfit for TENANT’s use, then this Lease shall terminate as
to such condemned Property on the Date of Taking.

 

d.                                      If
there is a taking of a portion of Property One or Property Two by Condemnation,
this Lease shall remain in effect if such condemned Property is not thereby
rendered unsuitable for TENANT’s use. 
If, however, such condemned Property is thereby rendered unsuitable for
TENANT’s use, TENANT shall have the right (a) to restore such condemned
Property, to the extent possible, to substantially the same condition as
existed immediately before the partial taking and, subject to the rights of
LANDLORD’s mortgagee, LANDLORD shall make the condemnation award available to
TENANT for such restoration, or (b) to offer to acquire such condemned Property
from LANDLORD for a purchase price equal to the Fair Market Value Purchase
Price of such condemned Property immediately prior to such partial taking, in
which event this Lease shall terminate as to such condemned Property upon
payment of the purchase price.  TENANT
shall exercise its option by giving LANDLORD notice thereof within (60) days
after TENANT receives notice of the taking. 
In the event LANDLORD does not accept TENANT’s offer to so acquire such
condemned Property within thirty (30) days after receipt of the notice
described in the preceding sentence, TENANT may either (a) withdraw its offer
to acquire such condemned Property and proceed to restore such condemned
Property to the extent possible, to substantially the same condition as existed
immediately before the partial taking,

 

13

 

or (b)
terminate this Lease as to the condemned Property by written notice.

 

e.                                       If
there is a partial taking of Property One and/or Property Two and this Lease
remains in full force and effect as to such condemned Property or Properties,
TENANT shall accomplish all necessary restoration and, subject to the rights of
LANDLORD’s mortgagee, LANDLORD shall make the condemnation award for the
condemned Property available to TENANT for such restoration.

 

f.                                         In
the event LANDLORD accepts TENANT’S offer to purchase such condemned Property,
the entire Award shall belong to TENANT and LANDLORD agrees to assign to TENANT
all of its rights thereto at closing of the purchase.  In any other event, the entire Award shall belong to and be paid
to LANDLORD, except that, if this Lease is terminated as to such condemned
Property, and subject to the rights of the LANDLORD’s mortgagee and as
otherwise provided herein, TENANT shall be entitled to receive from the Award a
sum attributable to TENANT’s personal property and any reasonable removal and
relocation costs if specifically included in the Award.

 

If TENANT is required or elects to restore such condemned Property,
LANDLORD agrees that, subject to the rights of the LANDLORD’S mortgagees, its
portion of the Award shall be used for such restoration and it shall hold such
portion of the Award in trust, for application to the cost of the
restoration.  If the LANDLORD’S
mortgagees do not allow the Award to be used for restoration, then TENANT’s
sole remedy shall be to terminate this Lease as to such condemned Property.

 

Section 18.  Taxes and
Assessments.

 

a.                                       TENANT
shall pay to LANDLORD, as additional rent, within ten (10) days after receipt
of a statement, the amount of all taxes and assessments levied and assessed by
any lawful authority against the Leased Premises during the term of this Lease,
including, but not limited to, taxes and assessments levied and assessed for
1995.  The amount of additional rent to
be paid to LANDLORD by TENANT because of such taxes and assessment shall be
prorated between LANDLORD and TENANT for the last year of the term of this
Lease based upon the number of days in such year that this Lease was in force.

 

b.                                      TENANT
shall pay all taxes and assessments levied and assessed on the value of its
personal property prior to their becoming delinquent.

 

14

 

Section 19.  Tenant’s Compliance with Laws and Indemnifications.

 

a.                                       TENANT
shall, at its expense, comply with all laws, rules, orders, ordinances,
directions, regulations and requirements of federal, state, county and
municipal authorities pertaining to TENANT’s use of the Leased Premises
regardless of when they become effective, including, without limitation, the
Americans with Disabilities Act, all applicable federal, state and local laws,
regulations or ordinances pertaining to air and water quality, hazardous
materials (as hereinafter defined), waste, disposal, air emissions and other
environmental, zoning and land use matters, and with any directive or order of
any public officer or officers, pursuant to law, which shall impose any duty
upon TENANT with respect to the use or occupation of the Leased Premises.

 

b.                                      TENANT
shall not cause or knowingly permit any Hazardous Material to be brought upon,
kept or used in or about the Leased Premises by TENANT, its employees, invitees
or guests without the prior written consent of LANDLORD.

 

c.                                       In
addition to, and without limitation on any general indemnity obligations of
TENANT under this Lease, TENANT specifically agrees that it shall indemnify,
defend and hold LANDLORD harmless from any and all claims, judgements, damages,
penalties, fines, costs, liabilities or losses (including, without limitation,
diminution in value of the Leased Premises, damages for the loss or restriction
on use of rentable or usable space or of any amenity of the Leased Premises,
and sums paid in settlement of claims, attorney’s fees, consultant fees and
expert fees) which arise during or after the term as a result of any breach by
TENANT of its obligations under this Section or any contamination of the
Leased Premises resulting from the presence of Hazardous Materials on or about
the Leased Premises caused or permitted by TENANT.  This indemnification of LANDLORD by TENANT includes, without limitation,
costs incurred in connection with any investigation of site conditions, and any
cleanup, remedial, removal or restoration work required by any federal, state,
or local governmental agency or political subdivision.  Without limiting the foregoing, if the
presence of any Hazardous Material on the Leased Premises caused or permitted
by TENANT results in any contamination of the Leased Premises or surrounding
area, TENANT shall promptly take all actions at its sole expense as are
necessary to return such property to the condition existing prior to the
introduction of any such Hazardous Material; provided, however, that LANDLORD’s
approval of such actions shall first be obtained.  TENANT further agrees to defend LANDLORD, its agents, employees,
and assigns in any administrative or judicial proceeding brought by private
individuals or governmental entities seeking recovery of damages for personal
injury or property damage, or recovery of civil penalties or fines out of,

 

15

 

connected
with, or relating to any breach by TENANT of its obligations under this
Section or any contamination of the Leased Premises resulting from the
presence of Hazardous Materials on or about the Leased Premises caused or
permitted by TENANT.  The foregoing
indemnity shall survive the expiration or earlier termination of this Lease.

 

As used herein, the term “Hazardous Material” or “Hazardous Materials”
means any pollutant, toxic substance, hazardous waste, hazardous material,
hazardous substance, or oil as defined in or pursuant to the Resource
Conservation and Recovery Act, as amended, the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, or all other federal,
state or local environmental law, regulation, ordinance, rule, or bylaw, whether
existing as of the date hereof, previously enforced or subsequently enacted.

 

Section 20.  CPI Rent
Adjustments.

 

Commencing with the First Rent Adjustment Date, the monthly rent shall
be adjusted by the percentage increase, if any, in the CPI from January 1,
1996.  Each subsequent CPI rental
adjustment shall be by reference to the CPI in effect at the time of the prior
CPI Rent Adjustment Date.  Pending
determination of the actual adjustment, TENANT shall pay an estimated adjusted
rental, as reasonably determined by LANDLORD by reference to the then available
CPI information.  Upon notification of
the actual adjustment after the publication of the required information, any
overpayment shall be credited against the next installment of rent due, and any
underpayment shall be immediately due and payable by TENANT.  LANDLORD’s failure to request payment of an
estimated or actual rent adjustment shall not constitute a waiver of the right
to any adjustment provided for in this Lease or in this Section.  The CPI Rent Adjustments are:

 

a.                                       First
CPI Rent Adjustment.  The monthly
rental payable for January 1, 1998 to December 31, 2000 (the “First
Rent Adjustment Date”) shall be the greater of the following: (i) $33,115, or
(ii) the sum of $33,115 plus the amount of rent determined by the percentage
increase in the CPI for the period from January 1, 1996 to
December 31, 1997 multiplied by $33,115 (“First Adjusted Rental Period”).

 

b.                                      Second
CPI Rent Adjustment.  The monthly
rental payable for January 1, 2001 to December 31, 2003, shall be the
greater of the following: (1) the monthly rent payable during the First
Adjusted Rental Period or (ii) the amount of rent determined by the percentage
increase in the CPI from January 1, 1998 to December 30, 2000 multiplied
by the monthly rent paid during the First Adjusted Rental Period (“Second
Adjusted Rental Period”).

 

16

 

c.                                       The
monthly rental payable for January 1, 2004 to December 31, 2006,
shall be the greater of the following: (i) the monthly rent payable during the
Second Adjusted Rental Period, or (ii) the amount of rent determined by the
percentage increase in the CPI from January 1, 2001 to December 30,
2003 multiplied by the monthly rent paid during the Second Adjusted Rental
Period (“Third Adjusted Rental Period”).

 

d.                                      The
monthly rental payable for January 1, 2007 to December 31, 2010,
shall be the greater of the following: (i) the monthly rent payable during the
Third Adjusted Rental Period, or (ii) the amount of rent determined by the
percentage increase in the CPI from January 1, 2004 to January 1,
2006 multiplied by the monthly rent paid during the Third Adjusted Rental
Period (“Fourth Adjusted Rental Period”).

 

Section 21.  Waiver.

 

For the purposes of determining the rights of LANDLORD and TENANT
hereunder, it is agreed that no act or omission of LANDLORD shall be construed
or held to be a waiver of its rights hereunder, except insofar as LANDLORD may
specifically waive a particular right in writing.  Such a written waiver by LANDLORD shall apply only to the default
existing at the time of its execution and described therein and shall not be
deemed or held to be a waiver of a subsequent default of the same or any other
nature.  A written consent given by
LANDLORD pursuant to the terms and provisions of this Lease shall never be
deemed or held to be consent to a subsequent performance of the same or any
other act.  LANDLORD’s receipt of monies
from TENANT under the terms of this Lease shall never be deemed or held to be a
waiver of the rights of LANDLORD hereunder.

 

Section 22.  Construction
of Lease.

 

a.                                       In
the event any provision of this Lease shall be held to be invalid or
unenforceable, such holding shall not be deemed to affect the validity and
enforceability of the remainder of the Lease, nor of the same provision as
applied to other persons or circumstances. 
This Lease shall be construed with the express intention of the parties
to it that it shall be valid and enforceable in every respect to the extent
permitted by law.

 

b.                                      This
Lease sets forth all the covenants, promises, agreements, conditions and
understandings between LANDLORD and TENANT concerning the Leased Premises and
there are no covenants, promises, agreements, conditions or understandings,
either oral or written, between them other than are herein set forth.  Except as herein otherwise provided, no
subsequent alteration, amendment, change or addition to this Lease shall be
binding upon LANDLORD or TENANT unless reduced to writing and signed by them.

 

17

 

c.                                       Time
is of the essence.

 

Section 23.  Prohibition
Against Liens.

 

TENANT shall have no power or authority, expressed or implied, to do,
and TENANT is hereby prohibited from doing, any act or to make any contract
that may create a Lien upon, or in any manner to bind, the interest or estate
of LANDLORD in the Leased Premises.  Any
approval by LANDLORD to TENANT to do any work upon the Leased Premises, or any
part thereof, shall never be construed to constitute an express or implied
agency in TENANT to bind or encumber the interest or estate of LANDLORD in any
way whatsoever.  Any relationship
between the parties hereto other than that of landlord and tenant is hereby
expressly negated.  TENANT covenants and
agrees that TENANT will pay or cause to be paid all costs, charges, and
expenses that become due and payable on account of work on, at, to, from, or
about the Leased Premises authorized by TENANT, and will not permit any valid
and enforceable lien to be established against LANDLORD’s interest in the
Leased Premises on account of such work. 
TENANT shall protect, indemnify and hold LANDLORD harmless from any
costs, claims, causes of action or expenses including, without limitation,
attorney’s fees and court costs, arising from or in any manner pertaining to
the approved construction or installation of any alterations, additions or
improvements to the Leased Premises and/or any claim for unpaid bills, or any
claim of or creation of a Lien upon, or in any manner pertaining to the
interest or estate of LANDLORD in the Leased Premises.

 

Section 24.  Holding Over
and Successors.

 

a.                                       Holding
Over by Tenant.  TENANT shall pay
LANDLORD the monthly rental, additional rent and other charges prorated on a
per diem basis for each day TENANT shall retain possession of the Leased
Premises or any part thereof after expiration or earlier termination of this
Lease, together with all damages sustained by LANDLORD on account thereof.  This provision shall not serve as permission
for TENANT to hold over nor serve to extend the term (although tenant shall
remain a tenant at sufferance bound to comply with all provisions of the Lease
until TENANT vacates the Leased Premises.) LANDLORD shall have the right, at
any time after expiration or earlier termination of this Lease or TENANT’s
right to possession, to reenter and possess the Leased Premises and remove all
property and persons therefrom, and LANDLORD shall have such other remedies for
holdover as may be available to LANDLORD under other provisions of this Lease
or applicable laws.

 

b.                                      Successors.  All rights and liabilities herein given, or
imposed upon, the respective parties shall extend and bind the several
respective heirs, legal representatives, successors and

 

18

 

assigns of the
said parties subject to the limitations on assignment and subleasing contained
herein.

 

Section 25. 
Miscellaneous.

 

1.                                       Notices.  Any notice, request, demand, or other
communication which, under the terms of this Lease or under any statute or
other law, must or may be given or made by the parties hereto, shall be in
writing, shall be sent by and deemed received when deposited in the United
States mails, registered or certified mail, postage prepaid, return receipt
requested, or if otherwise delivered or sent, shall be deemed to have been
given or made when received at the following addresses or such other addresses
as may hereafter be designated in writing from time to time by the parties
hereto in the manner provided in this paragraph:

 

	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  The Wornick Company

  	
   

  	
  Ronald C. Wornick

  
	
  Attn: Corporate Secretary

  	
   

  	
  345 Lorton Avenue

  
	
  200 N. First Street

  	
   

  	
  Burlingame, California 94010

  
	
  McAllen, Texas 78501

  	
   

  	
   

  

 

2.                                       Amendments.  No subsequent alteration, amendment, change,
deletion, or addition to this Lease shall be binding upon LANDLORD or TENANT
unless in writing and signed by both LANDLORD and TENANT.

 

3.                                       Governing
Law.  This Lease and the rights and
obligations of the parties hereto shall be interpreted, construed, and enforced
in accordance with the laws of the State of Texas.

 

4.                                       Captions
and Section Numbers.  The
captions, paragraph numbers, and article numbers appearing anywhere in
this Lease are inserted only as a matter of convenience and in no way define,
limit, construe, or describe the scope or intent of any such Paragraphs or
Articles of this Lease nor in any way affect this Lease.  All references herein to “Articles,”
“Paragraphs,” or “Sub-Paragraphs” are references to articles, paragraphs, or
sub-paragraphs of this Lease.

 

5.                                       Attorney’s
Fees.  In the event of any
litigation between the parties relating to this Lease, the prevailing party
shall be entitled to recover its reasonable attorney’s fees and costs as part
of the judgment or settlement therein. 
In the event of a breach of this Lease by either party which does not
result in litigation but which causes the non-breaching party to incur
attorneys’ fees or costs, the breaching party shall reimburse such fees and
costs to the non-breaching party upon

 

19

 

demand.  If either party or any of its officers,
directors, shareholders, partners, agents, affiliates or employees shall be
made a party to any litigation commenced by or against the other party and is
not found to be at fault, the other party shall pay all costs, expenses and
reasonable attorneys’ fees incurred by any such party in connection with such
litigation.

 

6.                                       Quiet
Enjoyment.  LANDLORD shall defend
the TENANT in the quiet enjoyment and peaceful possession of the Leased
Premises during the term so long as TENANT is not in default under the terms of
this Lease.

 

7.                                       Recordation.  Both LANDLORD and TENANT agree not to record
this Lease, but each party hereto agrees, on request of the other, to execute a
short form memorandum of this Lease in recordable form specifying the names and
addresses of the parties, the date hereof, the term, and a description of the
Leased Premises.  In no event shall such
short form memorandum set forth the rental or other charges payable by TENANT
under this Lease; and any such memorandum shall expressly state that it is
executed pursuant to the provisions contained in this Lease and is not intended
to vary the terms and conditions of this Lease.

 

8.                                       Unavoidable
Default or Delay.  In the event
either party to this Lease shall be delayed, hindered, or prevented from the
performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor disputes, inability to produce materials, failure of power,
restrictive governmental laws or regulations, riot, insurrection, war,
relocation of electrical generating, distribution or service facilities or the
inability of any company providing utilities to the Building or other cause not
within the reasonable control of such party (expressly except the financial
inability of such party to perform its obligations hereunder), then the
performance of such acts shall be excused for the period of delay and the
period for performance of any such act shall be extended for a period
equivalent to the period of such delay.

 

9.                                       Landlord’s
Performance for the Account of Tenant. 
If, after reasonable notice TENANT fails to perform any one or more of
its obligations hereunder, in addition to the other rights of LANDLORD
hereunder, LANDLORD shall have the right but not the obligation to perform all
or any part of such obligations of TENANT. 
Upon receipt of a demand therefor from LANDLORD, TENANT shall reimburse
LANDLORD for (i) the cost to LANDLORD of performing such obligations plus (ii)
interest thereon as hereinafter provided.

 

10.                                 Landlord’s
Failure to Perform.  If LANDLORD
fails to perform any of its obligations under this Lease, LANDLORD shall

 

20

 

not be in
default hereunder and TENANT shall not have any rights or remedies growing out
of such failure unless TENANT gives LANDLORD written notice thereof setting
forth in reasonable detail the nature and extent of such failure and such
failure by LANDLORD is not cured within the thirty (30) day period following
delivery of such notice, or if the nature of LANDLORD’s default is such that
more time is reasonably required in order to cure, such period shall be
extended for the period reasonably required therefor if LANDLORD commences
curing such failure within such thirty (30) day period and continues the curing
thereof with reasonable diligence until completion.

 

11.                                 Interest.  All installments of rent, additional rent
and all other payments of any character required to be paid to LANDLORD by
TENANT under the terms of this Lease shall, following the due date thereof,
bear interest at either the rate of Ten percent (10%) per annum or the maximum
non-usurious rate allowed by law, whichever is the lesser rate.

 

12.                                 Estoppel
Certificate.  TENANT shall from time
to time, within ten (10) days after written request from LANDLORD, execute,
acknowledge and deliver a statement: (i) certifying that this Lease is
unmodified and in full force and effect (or if this Lease is claimed not to be
in force and effect, specifying the ground therefor) and the dates to which the
rent and other charges hereunder have been paid, (ii) acknowledging that there
are not, to TENANT’s knowledge, any uncured defaults on the part of LANDLORD
hereunder (or specifying such defaults if any are claimed), and (iii)
certifying such other matters as LANDLORD may reasonably request, or as may be
requested by LANDLORD’s current or prospective Lenders, insurance carriers,
auditors, and prospective purchasers. 
Any such statement may be relied upon by any such parties.  If TENANT shall fail to execute and return
such statement within the time required herein, TENANT shall be deemed to have
agreed with the matters set forth thereon.

 

Section 26.  Right of
First Refusal.

 

If at any time during the term of this Lease, LANDLORD shall desire to
sell Property One and/or Property Two, TENANT shall have the right of first
refusal to purchase such Property or Properties, as follows:

 

a.                                       LANDLORD
shall furnish to TENANT three (3) copies of a contract of sale (“Contract”)
between LANDLORD and TENANT signed by LANDLORD specifying the terms and
conditions upon which he will sell such Property or Properties to TENANT.  If TENANT shall fail to exercise this Right
of First Refusal by signing and returning two (2) copies of the Contract to
LANDLORD together with any down-payment or earnest money deposit therein
provided within ten (10) days after receipt of the Contract, then LANDLORD

 

21

 

shall have  the right to sell such Property or
Properties to any other party upon terms substantially equal to or better than
set forth in the Contract.  If LANDLORD
shall sell such Property or Properties upon terms equal to or better than those
offered to TENANT, this Right of First Refusal shall terminate; provided,
however, if such a sale is not consummated, then this Right of First Refusal
shall remain in force and effect.

 

b.                                      The
following transfers shall be excluded from TENANT’s Right of First Refusal:

 

1.                                       The
sale of LANDLORD’S estate in the Leased Premises, or any portion thereof, at a
foreclosure of any Deed of Trust or Mortgage covering the Leased Premises or by
a Deed in Lieu of Foreclosure;

 

2.                                       A
transfer of LANDLORD’s estate in the Leased Premises, or any portion thereof,
or any part thereof, to any corporation, partnership, trust or other entity
which is controlled wholly or in part by LANDLORD or members of LANDLORD’s
family;

 

3.                                       A
transfer by gift, devise or descent;

 

TENANT’s Right of First Refusal shall, however, remain in effect after
any such transfer specified in subparagraphs 2. and 3. of paragraph b of this
Section and be binding on the transferee in any such transaction.

 

Section 27.  Purchase of the Property in the Event of Damage or Condemnation.

 

In the event LANDLORD accepts an offer from TENANT to purchase Property
One and/or Property Two at the Fair Market Value or Fair Market Value Purchase
Price under the conditions and terms of sections 14 or 17 of this Lease, then
such sale shall be on the terms and conditions as set forth in this
paragraph.  Closing of such sale shall
be on or before thirty (30) days from the date that the Fair Market Value
Purchase Price is determined.  At
Closing, LANDLORD shall deliver to TENANT a Special Warranty Deed, subject to
all matters of record, but free and clear of any mortgage lien, and TENANT
shall deliver to LANDLORD the purchase price payable in cash.  Any real estate transfer taxes, if any, to
the extent permitted by law, shall be paid by TENANT.

 

22

 

Section 28.  Composite
Lease.

 

This Lease, although executed and delivered as a composite instrument
for convenience, constitutes a separate lease and agreement between LANDLORD
and TENANT with respect to Property One and Property Two, and all provision
hereof shall be applicable separately to each Property, with the same effect as
if a separate lease with respect thereto had been executed and delivered by
LANDLORD and TENANT.  If any such
separate lease shall be terminated or extended pursuant to any provision
hereof, such termination or extension shall have no effect upon the remaining
lease.  Upon request of LANDLORD or
TENANT, a separate lease of either Property, in the same form as this Lease
except for such mutually satisfactory modifications as shall be required by the
fact that such lease relates only to one Property, will be executed and
delivered by LANDLORD and TENANT.

 

IN WITNESS WHEREOF, LANDLORD and TENANT have executed this Lease
Agreement to be effective as of November 27, 1995.

 

	
  TENANT:

  	
  LANDLORD:

  
	
   

  	
   

  
	
  THE WORNICK COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Ronald C. Wornick

  	
   

  	
  /s/ Ronald C. Wornick

  	
   

  
	
   

  	
  Ronald C. Wornick,

  	
  Ronald C. Wornick

  
	
   

  	
  President

  	
   

  
					

 

23

 

EXHIBIT A

 

TO THE LEASE AGREEMENT

 

(Property One)

 

TRACT A OF PROPERTY ONE:

 

All of Lot “A”, RIGHT-AWAY FOODS INC., an addition to the City of
McAllen, Hidalgo County, Texas, according to the map or plat thereof recorded
in Volume 21, Page 81, Map Records of Hidalgo County, Texas.

 

TRACT B OF PROPERTY ONE:

 

A 5.0 acre tract of land, more or less, out of Lot 5, Block 12, STEELE
AND PERSHING SUBDIVISION, Hidalgo
County, Texas, according to the map or plat thereof recorded in Volume 8, Page
115, Deed Records of Hidalgo County, Texas and being more particularly
described by metes and bounds as follows:

 

BEGINNING at an iron rod set on the West line of Lot 5, South 8 degrees
46 minutes West, 160.0 feet from its Northwest corner for the Northwest corner
of the following described tract of land, said point being on the South line
McAllen Pharr Outfall Drain Ditch right of way;

 

THENCE, with the South line of said drain ditch right of way, parallel
to the North line of Lot 5, South 81 degrees 14 minutes East, 463.4 feet to an
iron rod set, for the Northeast corner hereof;

 

THENCE, parallel to the West line of Lot 5, South 8 degrees 46 minutes
West, 470.0 feet to an iron rod set on the North line of 60 foot Cedar Avenue,
for the Southeast corner hereof; said Cedar Avenue shown on map of Industrial
Distribution Center, recorded in Volume 21, Page 80, Map Records;

 

THENCE with the North line of Cedar Avenue, North 81 degrees 14 minutes
West, 463.4 feet to an iron rod set on the West line of Lot 5, for the
Southwest corner hereof; said point also being on the East line of Lot “A”,
Right Away Foods, Inc. Subdivision, recorded in Volume 21, Page 81, Map
Records;

 

THENCE, with the East line of Lot “A” Right Away Foods, Inc.
Subdivision and the West line of Lot 5, Block 12, Steele and Pershing
Subdivision, North 8 degrees 46 minutes East, 470.0 feet to the PLACE OF
BEGINNING, containing 5.0 acres of land, more or less.

 

 

TRACT C OF PROPERTY ONE:

 

TRACT IV:  A tract of land
containing 2.46 acres, more or less, out of the West 17.51 acres of Lot 4,
Block 12, STEELE AND PERSHING SUBDIVISION, Hidalgo County, Texas, according to
the map or plat thereof recorded in Volume 8, Page 115, Deed Records of Hidalgo
County, Texas and being more particularly described by metes and bounds as follows:

 

BEGINNING at an iron pipe on the South right of way line of the McAllen
Outfall Drain Ditch, in the City of McAllen, Texas, for the Northeast corner of
the following described tract of land; said point located North 81 deg.  14 min. 
West, 789.0 feet, and South 8 deg. 46 min. West, 160.0 feet from the
Northeast corner of said Lot 4;

 

THENCE, with the East line of the West 17.51 acres of Lot 4, South 8
deg. 46 min. West, 201.78 feet to a point for the most Northerly Southeast
corner hereof; said point being 5.0 feet Northerly from the North edge of
concrete curb;

 

THENCE, parallel to the North line of Lot 4, parallel to the North edge
of concrete curb, North 81 deg.  14
min.  West, 30.0 feet to the point of
beginning of a curve to the left, for a point in line hereof;

 

THENCE, continue parallel to and 5.0 feet Westerly from the edge of
concrete curb, with said curve to the left, on a radius of 55.0 feet through an
arc of 156 deg. 25 min. 19 sec., a distance of 150.15 feet to the point of
beginning of curve to right;

 

THENCE, continue parallel to and 5.0 feet Westerly from the edge of
concrete curb, with said curve to the right, on a radius of 45.0 feet, through
an arc of 32 deg.  20 min.  41 sec., a distance of 25.40 feet to end of
curve, for a point in the East line hereof; said point being 30.0 feet Westerly
from the centerline of North 1st Street;

 

THENCE, parallel to and 30 feet Westerly from the centerline of North
1st Street; South 8 deg.  46 min.  West 366.88 feet to an iron pipe for the
most Southerly Southeast corner hereof;

 

THENCE, North 81 deg.  23 min.
30 sec. West, 144.92 feet to an iron pipe on the approximate East toe of Drain
Ditch Spoil Bank, for the Southwest corner hereof;

 

THENCE, with a line along said Spoil Bank, North 7 deg. 40 min. East,
708.46 feet to an iron pipe on the South right of way line of McAllen Outfall
Drain Ditch, for the Northwest corner hereof;

 

THENCE, with said drain ditch right of way line as follows; South 73
deg. 30 min. 40 sec. East, 98.42 feet and South 81 deg. 14 min. East, 90.99
feet to the POINT OF BEGINNING. 
Containing 2.46 acres of land, more or less.

 

 

EXHIBIT B

 

TO THE LEASE AGREEMENT

 

(Property Two)

 

All of Lot “A”, WORNICK CO. 
BUSINESS DEVELOPMENT CENTER SUB’D, an addition to the City of Pharr,
Hidalgo County, Texas, according to the map or plat thereof recorded in Volume
26, Page 69B, Map Records of Hidalgo County, Texas.

 

SAVE AND EXCEPT the West 30 feet thereof conveyed to U.S.  Internex Transportation, Inc., in Warranty
Deed dated October 18, 1994, filed February 6, 1995 in the office of
the County Clerk of Hidalgo County, Texas, under Document No.  434330.

 

 

 

AMENDMENT TO LEASE AGREEMENTS

 

RONALD C. WORNICK, as “Landlord,” and The Wornick Company, a Texas
corporation, as “Tenant,” are parties to the following two lease agreements:

 

A.                                   Lease Agreement by
and between Landlord and Tenant, dated November 27, 1995, and pertaining
to certain real property located in Hidalgo County, Texas and more fully
described therein (the “Texas Lease”).

 

B.                                     Amended and
Restated Lease Agreement by and between Landlord and Tenant (Tenant’s interest
being acquired pursuant to the Assignment of Amended and Restated Lease
Agreement dated October 28, 1995), dated to be effective December 30,
1994, and pertaining to certain real property located in Hamilton County, Ohio
and more fully described therein (the “Ohio Lease”).

 

The parties agree that the Texas Lease and the Ohio Lease are amended as follows:

 

1.                                       The
discount rate set forth in the last sentence of Section 16.2.a shall be
“six percent (6%)”.

 

2.                                       Section 16.1.e.  is amended and restated in its entirety to
read as follows:

 

“If Tenant shall abandon or vacate the Leased Premises and cease to
care for the Lease Premises as provided for in Section 7 herein.”

 

3.                                       The
last sentence of Section 1.f. of the Ohio Lease and Section 1.h. of
the Texas Lease are deleted.

 

4.                                       Section 26
is amended to provide that Tenant shall have thirty (30) days within which to
exercise its right of first refusal, rather than ten (10) days.

 

5.                                       Section 14.i.
of the Texas Lease is amended and restated in its entirety to read as follows:

 

“If Landlord’s mortgagees do not allow the insurance proceeds to be
used for restoration, then Tenant’s exclusive remedies shall be (a) to
terminate this Lease, or (b) if (i) such proceeds are used to service
Landlord’s mortgage secured by the Leased Premises or otherwise made available
to or used for the benefit of Landlord, and (ii) Tenant is not in default under
this Lease to require Landlord to restore the Leased Premises, provided,
however, that Landlord’s obligation to restore the Leased Premises shall be
limited to the amount of

 

 

such proceeds and, provided further than Landlord shall not be
obligated to restore the Leased Premises pursuant to provisions of this
section if such proceeds are not available prior to the end of the 12th
year of term of the Lease.

 

6.                                       The
last sentence of the second paragraph of Section 17.f. is amended and
restated in its entirety to read as follows:

 

“If the Landlord’s mortgagees do not allow the Award to be used for
restoration, then Tenant’s exclusive remedies shall be (a) to terminate this
Lease, or (b) if such Award are used to service Landlord’s mortgage secured by
the Leased Premises or otherwise made available to or used for thee benefit of
Landlord, to require Landlord to restore the Leased Premises, provided,
however, that Landlord’s obligation to restore the Leased Premises shall be
limited to the amount of such Award and, provided further that Landlord shall
not be obligated to restore the Leased Premises pursuant to provisions of this
section if such Award is not available prior to the end of the twelfth
year of term of the Lease.

 

Except as specifically amended above, the Ohio Lease and the Texas
Lease are ratified and confirmed.

 

Effective as of November 29, 1995

 

 

	
  TENANT:

  	
  LANDLORD:

  
	
   

  	
   

  
	
  THE WORNICK COMPANY

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
  Larry L. Rose

  	
   

  	
  /s/ Ronald C. Wornick

  	
   

  
	
  Name:

  	
  Larry L. Rose

  	
   

  	
  Ronald C. Wornick

  
	
  Title:

  	
  Secretary

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed to by Landlord’s Mortgage:

  	
   

  
	
   

  	
   

  
	
  TEXAS STATE BANK

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
  G. E. Roney

  	
   

  	
   

  	
   

  
	
  Name:

  	
  G. E. Roney

  	
   

  	
   

  
	
  Title:

  	
  Chairman of the Board

  	
   

  	
   

  
								

 

ii

 

ASSIGNMENT AND ASSUMPTION OF LEASE

 

ASSIGNMENT AND ASSUMPTION OF LEASE (this “Agreement”), entered into as of
June 30, 2004, by and among The Wornick Company, a Nevada corporation
(“Assignor”); and The Wornick Company Right Away Division, L.P., a Delaware
limited partnership (“Assignee”). Assignor and Assignee are referred to
collectively herein as the “Parties.”

 

W  I  T  N
E  S  S  E  T  H:

 

WHEREAS, Assignor, as “Tenant,” and Ronald C. and Anita A. Wornick
Revocable Trust, successor-in-interest to Ronald C. Wornick, as “Landlord,” are
parties to the Lease Agreement dated November 27, 1995, as amended by
Amendment to Lease Agreements dated November 29, 1995, as assigned to
Landlord by Lease Assignment dated July 8, 1998 (collectively, the
“Lease”), presently covering certain premises (the “Premises”) located at 200
North First Street and the 400 Block of East Earling Road, McAllen, Texas, a
copy of which Lease is attached hereto as Exhibit A; and

 

WHEREAS, Assignor, as “Seller,” and Assignee, as “Buyer,” are parties
to an Assets Purchase and Sale Contract dated December 3, 2003 (the
“Purchase Agreement”), pursuant to which, subject to the terms and conditions
set forth therein, Assignee will purchase substantially all of the assets (and
assume certain of the liabilities) of Assignor, including all of Seller’s
right, title and interest in, under and to the Lease; and

 

WHEREAS, simultaneously with the closing of the transactions
contemplated by the Purchase Agreement, the Parties mutually desire (a) that
Assignor assign all of its right, title and interest in, under and to the Lease
to Assignee, (b) that Assignee accept such assignment from Assignor and assume
all of Assignor’s obligations as Tenant under the Lease, and (c) that Landlord
consent to the assignment contemplated hereby, all on the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the receipt and adequacy of which are
expressly acknowledged, the Parties agree as follows:

 

1.                                       Effective
Date. For all purposes under this Agreement, the term “Effective Date”
shall mean that date, if any, on which the closing of the transactions
contemplated by the Purchase Agreement is consummated.

 

2.                                       Assignment
and Assumption.

 

(a)                                  Effective
as of the Effective Date, Assignor hereby assigns, transfers and sets over unto
Assignee all of Assignor’s right, title and interest in, under and to (i) the
Lease and (ii) the aggregate security deposit heretofore made by Assignor
pursuant to the Lease. Assignor will deliver possession of the Premises to
Assignee on the Effective Date.

 

(b)                                 Assignee
hereby accepts the foregoing assignment and hereby agrees to perform all of the
terms and conditions of the Lease to be performed on the part of Assignor and

 

 

assumes all of the liabilities and obligations of Assignor under the
Lease, as amended hereby, arising or accruing on or after the Effective Date,
including, without limitation, liability for the payment of rent and for the
due performance of all the terms, covenants and conditions of the tenant
pursuant to the Lease as amended hereby.

 

3.                                       Consent
to Assignment. Effective as of the Effective Date, Landlord has consented
to the assignment effected hereby.

 

4.                                       Representation
of Assignor. The Assignor hereby represents to the Assignee and agrees as
follows:

 

(a)                                  The
Lease attached hereto as Exhibit A is a true, correct and complete copy of the
Lease, the Lease has not been amended or modified except as set forth above and
the same is the only agreement between the Landlord and the Assignor with
respect to the subject matter thereof.

 

(b)                                 The
Lease is in full force and effect with no defaults (or events which, with the
passage of time, would become defaults) thereunder on the part of either party
in the performance of its obligations under such Lease.

 

(c)                                  The
minimum or base rent and all other rentals and other payments due, owing and
accruing under the Lease have been paid through the date thereof immediately
preceding the Effective Date.

 

(d)                                 The
current amount of tenant’s expense and tax contribution is $39,759.75 per
month.

 

(e)                                  Landlord
is currently holding a security deposit with respect to the Lease in the amount
of $0.

 

5.                                       Miscellaneous.

 

(a)                                  Headings.
The section headings used herein are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.

 

(b)                                 Governing
law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas.

 

(c)                                  Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together will constitute one and the
same instrument.

 

2

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

 

 

	
  ASSIGNOR

  	
  ASSIGNEE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Wornick Company, a Nevada

  	
  The Wornick Company Right Away

  
	
  corporation

  	
  Division, L.P., a Delaware limited

  
	
   

  	
  partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By: Right Away Management Corporation,

  
	
   

  	
  a Delaware corporation,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
  Larry L. Rose

  	
   

  	
  By:

  	
  /s/

  	
  Robert B. McKeon

  	
   

  
	
   

  	
  Larry L. Rose, President and

  	
   

  	
   

  	
  Robert B. McKeon, President

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  	
   

  	
   

  	
   

  
												

 

3

 

	
  STATE OF NEW YORK

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF NEW YORK

  	
   

  	
  §

  

 

This instrument was acknowledged before me on June 30, 2004, by
Larry L. Rose, President and CEO of The Wornick Company, a Nevada corporation,
on behalf of said corporation.

 

 

	
     /s/ Janna Gabriel

  	
   

  
	
  Notary Public

  
	
  Printed Name:

  	
  Janna Gabriel

  	
   

  
	
  My Commission Expires:

  
	
  9/24/05

  	
   

  
				

 

 

	
  STATE OF NEW YORK

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF NEW YORK

  	
   

  	
  §

  

 

 

This instrument was acknowledged before me on June 30, 2004 by
Robert B. McKeon, President of Right Away Management Corporation, a Delaware
corporation, the general partner of The Wornick Company Right Away Division,
L.P., a Delaware limited partnership.

 

	
     /s/ Elaine Gerace

  	
   

  
	
  Notary Public

  
	
  Printed Name:

  	
  Elaine Gerace

  	
   

  
	
  My Commission Expires:

  
	
  5/18/06

  	
   

  
				

 

4

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