Document:

Exhibit 10.8

 

 

STANDARD
INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - NET

AIR COMMERCIAL REAL ESTATE ASSOCIATION

 

1.                                      Basic
Provisions (“Basic Provisions”).

 

1.1                               Parties: This Lease (“Lease”), dated for reference purposes only July 23,
2010, is made by and between 96–OP Prop, L.L.C., a Kansas limited
liability company (“Lessor”) and Torotel, Inc.,
a Missouri corporation (“Lessee”),
(collectively the “Parties”, or
individually a “Party”).

 

1.2(a)                Premises: That certain portion of the
Project (as defined below), including all improvements therein or to be
provided by Lessor under the terms of this Lease, commonly known by the street
address of 550 N. Rogers Road, located in the City of Olathe, County
of Johnson, State of Kansas, with zip code 66062, as
outlined and highlighted as Area A on Exhibit “A-1”
and in the site plan area  depicted on Exhibit “A-2” attached
hereto (the “Premises”) and generally  described  as (describe
briefly the nature of the Premises): Suite 550 Area A, including
office, production and warehouse floor areas totaling +/-18,212 rentable square
feet (see plan attached as  Exhibit “A-1”.  In addition to Lessee’s rights to use and
occupy the Premises as hereinafter specified, Lessee shall have non-exclusive
rights to use the - utility raceways of the building containing the Premises (“Building”) and to the common Areas (as defined in Paragraph
2.7 below), and to the use of existing water, gas, sewer, power, telephone,
conduit, electrical and other utility lines (collectively “MEP/utility lines”)
presently located in and designed to serve the Premises. Lessee will not have
any rights to the roof or exterior walls of the Building or to any other
buildings in the Project, but may be granted a license for limited case-by-case
access to the roof and exterior walls of the Building for installation of
pre-approved security cameras, satellite dish(s), antennae, vents, etc.,
as provided in the Addendum. The Premises, the Building, the Common Areas, the
land upon which they are located, along with all other buildings and
improvements thereon in the Lindenwood
Business & Technical Center (“LBTC”), are herein
collectively referred to as the “Project.”  (See also Paragraph 2)

 

1.2(b)                Parking:  thirty (30) - vehicle parking spaces.
(See also Paragraph 2.6 and Exhibit “A-2” and
Exhibit “D”)

 

1.3                               Term: three (3) years and six
(6) months (“Original Term”) commencing September 1,
2010  (“Commencement Date”) and ending February 28,
2014  (“Expiration Date”). (See also
Paragraph 3)

 

1.4                               Early Possession:  August 16,
2010 (“Early Possession Date”).

(See also Paragraphs 3.2 and 3.3 )

 

1.5                               Base Rent: Nine Thousand
Four Hundred Eight Five and 42/100 Dollars ($9,485.42) per month (“Base Rent”), with each such installment payable on the first
(1st) day of each month commencing September 1, 2010 (See also
Paragraph 4).

 

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

 

1.6                               Lessee’s Share of Common Area
Operating Expenses: Eight and 77/100 percent (  8.77  %) (“Lessee’s Share”).
Lessee’s Share has been calculated by dividing the approximate square footage
of the Premises by the approximate square footage of the tenatable areas of the
Building (i.e., a deemed +/-18,212 sf divided by a deemed
+/-207,710 sf). In the event that the size of the Premises and/or
the tenatable areas of the Building are modified during the term of this Lease,
Lessor shall recalculate Lessee’s Share to reflect such modification consistent
with this definition.

 

1.7                               Base Rent and Other Monies Paid
Upon Execution: 

 

(a)                                 Base
Rent: $ 9,485.42 for the period 9/1/10 - 9/30/10.

(b)                                 Common
Area Operating Expense estimate: $ 2,580.03 for the
period 9/1/10 - 9/30/10.

(c)                                  Security
Deposit: $ 12,750.00  (“Security
Deposit”). (See also Paragraph 5)

(d)                                 Other: $ 685.00
for monthly Central Plant cost estimate for 9/1/10 - 9/30/10.

(e)                                  Total Due Upon Execution of this
Lease: $ 25,500.45.

 

1.8                               Agreed Use: office, light
manufacturing and warehouse.

(See also Paragraph 6)

 

1.9                               Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph 8)

 

1.10                        Real Estate Brokers: (See also
Paragraph 15)

 

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

 

x
     Tom Haverty w/ Grubb & Ellis              
represents Lessor exclusively (“Lessor’s Broker”);

x      Lou Serrone w/
Serrone & Co.               
represents Lessee exclusively (“Lessee’s Broker”);
or

 

(b)                                 Payment to Brokers: Lessor shall
pay to the Brokers the brokerage fee agreed to in a separate written agreement.

 

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

 

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

 

x an Addendum consisting
of Paragraphs 50  through 71
and Exhibits “A”-“E” ;

x a site plan
depicting the Premises (attached as Exhibits
“A-1” and “A-2”);

x a site plan
depicting the Project (attached as
Exhibit “A-2”);

o a current set
of the Rules and Regulations for the Project;

 

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o a current set
of the Rules and Regulations adopted by the owners’ association;

o a Work Letter
;

x other
(specify); Parking Rules and Privileges, attached as Lease
Exhibit “D”, Furniture and Equipment Schedule, attached as
Exhibit “E”.

 

2.                                      Premises.

 

2.1                              Letting. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease.
Unless otherwise provided herein, any statement of size set forth in this
Lease, or that may have been used in calculating Rent, is an approximation
which the Parties agree is reasonable and any payments based thereon are not
subject to revision whether or not the actual size is more or less. (see floor plan with architect’s measurement notes
attached as Exhibit “A-1”).

 

2.2                               Condition. Lessor shall
deliver that portion of the Premises contained within the Building (‘Unit”) to Lessee broom clean and free of
debris on the Commencement Date or the Early Possession Date, whichever first
occurs (“Start Date”), and -                               
- warrants that the existing electrical, plumbing, fire sprinkler, lighting,
heating, ventilating and air conditioning systems (“HVAC”), loading doors, sump pumps, if any, and all other
such elements in the Unit, other than those elements
which are planned to be removed, reconfigured, remodeled or replaced in
connection with Lessee’s planned remodeling of the Premises, and other than any
elements to be constructed by Lessee, shall be in good operating
condition on said date, that the structural elements of the roof, bearing walls
and foundation of the Unit shall be free of material defects, and that the Unit
does not contain hazardous levels of any mold or fungi defined as toxic under
applicable state or federal law. If a non-compliance with such warranty exists
as of the Start Date, or if one of such systems or elements should malfunction
or fail within the appropriate warranty period, Lessor shall, as Lessor’s sole
obligation with respect to such matter, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, malfunction or
failure, rectify same at Lessor’s expense. The warranty periods shall be as
follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to
the remaining systems and other elements of the Unit. If Lessee does not give
Lessor the required notice within the appropriate warranty period, correction
of any such non-compliance, malfunction or failure shall be the obligation of
Lessee at Lessee’s sole cost and expense (except for the repairs to the fire
sprinkler systems, roof, foundations, and/or bearing walls - see Paragraph 7).

 

2.3                               Compliance.
Lessor warrants that to the best of its knowledge the improvements on
the Premises and the Common Areas (excepting therefrom all aspects and elements
of the existing Premises improvements and finishes which are planned to be
demolished and/or removed, reconfigured, remodeled or replaced in connection
with Lessee’s planned remodeling of the Premises) comply with the building
codes that were in effect at the time that each such improvement, or portion
thereof, was constructed, and also, subject
to applicable grandfathering interpretations, with all applicable
laws, covenants or restrictions of record, regulations, and ordinances in
effect on the Start Date (“Applicable
Requirements”). Said warranty does not apply to any special use to
which Lessee will put the Premises, modifications which may be required by the
Americans with Disabilities Act or any similar laws as a result of Lessee’s use
(see Paragraph 49), or to any Alterations or Utility Installations (as defined
in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible
for determining whether or not the Applicable Requirements and especially the
zoning are appropriate for Lessee’s intended use, and acknowledges that past
uses of the Premises may no longer be allowed. If the Premises do not comply
with said warranty, Lessor shall, except as otherwise provided, promptly after
receipt of written notice from Lessee setting forth with specificity the nature
and extent of such non-compliance, rectify the same at Lessor’s expense. If
Lessee does not give Lessor written notice of a non-compliance with this
warranty within 6 months following the Start Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee’s sole cost and
expense. If the Applicable Requirements are - changed subsequent to the Start Date so as to
require during the term of this Lease the construction of an addition to or an
alteration of the Unit, Premises and/or Building, the remediation of any
Hazardous Substance, or the reinforcement or other physical modification of the
Unit, Premises and/or Building (“Capital
Expenditure”), Lessor and Lessee shall allocate the cost of such
work as follows:

 

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

 

(b)                       If such Capital
Expenditure is not the result of the specific and unique use of the Premises by
Lessee (such as, governmentally mandated seismic modifications), then Lessor
shall pay for such Capital Expenditure and Lessee shall only be obligated to
pay, each month during the remainder of the term of this Lease, on the date
that on which the Base Rent is due, an amount equal to 144th of the portion of
such costs reasonably attributable to the Premises. Lessee shall pay Interest
(see Section 13.5) on the balance but may prepay its obligation at any
time. If, however, such Capital Expenditure is required during the last 2 years
of this Lease or if Lessor reasonably determines that it is not economically
feasible to pay its share thereof, Lessor shall have the option to terminate
this Lease upon 90 days prior written notice to Lessee unless Lessee notifies
Lessor, in writing, within 10 days after receipt of Lessor’s termination notice
that Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure,
Lessee may advance such funds and deduct same, with Interest, from Rent until
Lessor’s share of such costs have been fully paid. If Lessee is unable to
finance Lessor’s share, or if the balance of the Rent due and payable for the
remainder of this Lease is not sufficient to fully reimburse Lessee on an
offset basis, Lessee shall have the right to terminate this Lease upon 30 days
written notice to Lessor.

 

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

 

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

 

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2.5                               

 

2.6                               Vehicle
Parking. Lessee shall be entitled to use the number of
parking spaces specified in Paragraph 1.2(b) on those portions of the
Common Areas designated from time to time by Lessor for parking. Lessee shall
not use more parking spaces than said number. Said parking spaces shall be used
for parking by vehicles no larger than full-size passenger automobiles or
pick-up trucks*, herein called “Permitted
Size Vehicles.” (*but also see subsection (e) below re: dock area parking)
Lessor may regulate the loading and unloading of vehicles by
adopting Rules and Regulations as provided in Paragraph 2.9. No vehicles
other than Permitted Size Vehicles may be parked in the Common Area without the
prior written permission of Lessor. In addition:

 

(a)                            Lessee shall not permit or
allow any vehicles that belong to or are controlled by Lessee or Lessee’s
employees, suppliers, shippers, customers, contractors or invitees to be loaded,
unloaded, or parked in areas other than those designated by Lessor for such
activities.

 

(b)                            Lessee shall not service or
store any vehicles in the Common Areas.

 

(c)                             If Lessee permits or allows
any of the prohibited activities described in this Paragraph 2.6, then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved and
charge the cost to Lessee, which cost shall be immediately payable upon demand
by Lessor.

 

(d)                            If the ratio of vehicular parking spaces for the Building (or the Project
as it may affect the Building) is reduced for any reason during the Lease Term,
including but not limited to reasons such as future construction, or casualty,
Lessee shall nevertheless be entitled to an ongoing parking allocation equal
to 1.5 parking space for each 1,000 rsf then being leased by Lessee, and
Lessor shall immediately provide Lessee with substitute parking in order to
maintain that ratio. Lessor may from time to time make changes in the
designated areas for Lessee’s parking (e.g., in concert with the rental of
other spaces on the Property), provided that any such changes shall not reduce
the number or ratio of spaces allocated to Lessee and any alternately designated
parking area shall be substantially comparable in terms of accessibility,
convenience and quality to the original parking spaces.

 

(e)                             Notwithstanding anything to the contrary in this Paragraph 2.6 (but
subject to any Applicable Regulations), Lessee shall have the 24/7 and 365 day
per year right to control management of its loading docks and to park and store
trucks and/or trailers of any size at its loading dock doors and/or on the
concrete approach areas that comprise the loading dock drive aprons for the
dock doors that serve the Premises.

 

2.7                               Common Areas - Definition. The term “Common Areas” is defined as all areas and
facilities outside the Premises and within the exterior boundary line of the
Project and interior utility raceways and installations within the Unit that
are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other tenants of the Project and their
respective employees, suppliers, shippers, customers, contractors and invitees,
including parking areas, loading and unloading areas, trash areas, roadways,
walkways, driveways and landscaped areas.

 

2.8                               Common
Areas - Lessee’s Rights. Lessor grants to Lessee, for the benefit of
Lessee and its employees, suppliers, shippers, contractors, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or
restrictions governing the use of the Project. Under no circumstances shall the
right herein granted to use the Common Areas be deemed to include the right to
store any property, temporarily or permanently, in the Common Areas. Any such
storage shall be permitted only by the prior written consent of Lessor or
Lessor’s designated agent, which consent may be revoked at any time. In the
event that any unauthorized storage shall occur then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it
may have, to remove the property and charge the cost to Lessee, which cost
shall be immediately payable upon demand by Lessor.

 

2.9                               Common
Areas - Rules and Regulations. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
establish, modify, amend and enforce reasonable rules and regulations (“Rules and Regulations”) for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and
their invitees. Lessee agrees to abide by and conform to all such Rules and
Regulations, and shall use its best efforts to cause its employees, suppliers,
shippers, customers, contractors and invitees to so abide and conform. Lessor
shall not be responsible to Lessee for the non-compliance with said Rules and
Regulations by other tenants of the Project. Notwithstanding
anything to the contrary herein, under no circumstances shall the Rules and
Regulations: (a) conflict in any material way with the terms of this
Lease, (b) impose a material monetary cost upon Lessee, or (c) materially
and adversly impact Lessee’s Agreed Use. The Rules and
Regulations applicable to the Common Areas and any modification or amendment
thereto shall be delivered to Lessee in writing and shall generally be
applied in a nondiscriminatory manner, subject to negotiated differences in
contract terms for various tenants of the Project (e.g., some tenants, like
Lessee herein, may be allocated special signage rights and/or others may be assigned
reserved parking). Further, the Rules and Regulations shall not cause
material interference with Lessee’s business or its rights under the Lease - in
the event of any conflict between the Rules and Regulations, and the
Lease, the terms and conditions of the Lease shall control.

 

2.10                        Common
Areas - Changes. Lessor shall have the right, in Lessor’s sole
discretion, from time to time:

 

(a)                                 To make changes to the
Common Areas, including, without limitation, changes in the location, size,
shape and number of driveways, entrances, parking spaces, parking areas,
loading and unloading areas, ingress, egress, direction of traffic, landscaped
areas, walkways and utility raceways;

 

(b)                                 To close temporarily any of
the Common Areas for maintenance purposes so long as reasonable access to the
Premises remains available;

 

(c)                                  

 

(d)                                 To add additional buildings
and improvements to the Common Areas;

 

(e)                                  To use the Common Areas
while engaged in making additional improvements, repairs or alterations to the
Project, or any portion thereof; and

 

(f)                                   To do and
perform such other acts and make such other changes in, to or with respect to
the Common Areas and Project as Lessor may, in the exercise of sound business
judgment, deem to be appropriate; provided
that such other acts or changes will not impose or cause a material monetary
cost to be imposed upon Lessee or materially and adversely impact Lessee’s
Agreed Use.

 

3.                                      Term.

 

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

 

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

 

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during such period. Any such early possession shall not affect the
Expiration Date.

 

3.3                               Delay In Possession. Lessor agrees
to use its best commercially reasonable efforts to deliver access to and
possession of the Premises to Lessee, WITH LESSOR’S WORK COMPLETED, by the Commencement
Date. If, despite said efforts, Lessor is unable to deliver possession as
agreed, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or change the Expiration Date. Lessee
shall not, however, be obligated to pay Rent or perform its other obligations
until Lessor delivers possession of the Premises and any period of rent
abatement that Lessee would otherwise have enjoyed shall run from the date of
the delivery of possession and continue for a period equal to what Lessee would
otherwise have enjoyed, but minus any days of delay caused by the acts or
omissions of Lessee. If possession is not delivered within 60 days after the
Commencement Date, Lessee may, at its option, by notice in writing within 10
days after the end of such 60 day period: (i) elect
to receive an additional abatement of Rent equal to one day for each day of
delay beyond said 60-day period, or (ii) cancel this Lease, in
which event the Parties shall be discharged from all obligations hereunder. If
such written notice is not received by Lessor within said 10 day period,
Lessee’s right to cancel shall terminate. Except as otherwise provided, if
possession is not tendered to Lessee by the Start Date
and Lessee does not terminate this Lease, as aforesaid, any period of rent
abatement that Lessee would otherwise have enjoyed shall run from the date of
delivery of possession and continue for a period equal to what Lessee would
otherwise have enjoyed under the terms hereof, but minus any days of delay
caused by the acts or omissions of Lessee. If access to and initial possession
of the Premises is not delivered within 4 months after the Commencement Date,
this Lease shall terminate unless other agreements are reached between Lessor and
Lessee, in writing (and upon such
termination, all advance Rent and Security Deposit funds deposited by Lessee
shall be refunded to Lessee).

 

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

 

4.                                      Rent.

 

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

 

4.2                               Common Area Operating (“CAM”)
Expenses. Lessee shall pay to Lessor during the term hereof,
in addition to the Base Rent, Lessee’s Share (as specified in Paragraph 1.6) of
all Common Area Operating Expenses, as hereinafter defined, during each
calendar year of the term of this Lease, in accordance with the following
provisions:

 

(a)                                 “Common Area Operating Expenses” are defined,
for purposes of this Lease, as all reasonable and actual costs incurred by
Lessor relating to the ownership and operation of the Building and such portion
of the Project directly supporting the Building, including, but not limited to,
the following:

 

(i)                                     The operation, repair and
maintenance, in neat, clean, good order and condition , and if necessary the
replacement, of the following:

(aa)                          The Common Areas and Common
Area improvements, including parking areas, loading and unloading areas, trash
areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers,
irrigation systems, Common Area lighting facilities, fences and gates,
elevators, roofs, and roof drainage systems.

 

(bb)                          Exterior signs for the
Project and any tenant directories.

 

(cc)                            Any fire sprinkler systems.

 

(ii)                                  The cost of water, gas,
electricity and telephone to service the Common Areas and any utilities not
separately metered.

(iii)                               The cost of trash disposal,
pest control services, property management (based on reasonable fees not
exceeding 3% of Rents), security services, owners’ association dues and fees,
the cost to repaint the exterior of any structures and the cost of any
environmental inspections.

 

(iv)                              Actual costs of maintenance,
repair and/or replacement of Common Area improvements and equipment.

 

(v)                                 Real Property Taxes (as
defined in Paragraph 10).

 

(vi)                              The cost of the premiums for
the insurance maintained by Lessor pursuant to Paragraph 8.

 

(vii)                           Any deductible portion of an
insured loss concerning the Building or the Common Areas (provided that, as
required by the provisions of Paragraph 8.3, the maximum deductible on
Lessor’s insurance policy for the Building will not exceed $10,000 per
occurrence).

 

(viii)                        Auditors’, accountants’ and
attorneys’ fees and costs related to the operation, maintenance, repair and
replacement of the Project.

 

(ix)                              The cost of any
capital improvement to the Building or the Project not covered under the
provisions of Paragraph 2.3 provided; however, that Lessor shall allocate the
cost of any such capital improvement over a 10 year period and Lessee shall not
be required to pay more than Lessee’s Share of 1/10th of the cost of such capital improvement in any
given year.

 

                                                                                                                                                (x)                                 The cost of any
other services to be provided by Lessor that are stated elsewhere in this Lease
to be a Common Area Operating Expense. Notwithstanding the above,
Operating Expenses shall not include the following: (a) the cost of any
work performed (such as preparing a tenant’s space for occupancy, including
painting and decorating) or services provided (such as separately metered
electricity) for any tenant (including Lessee) at such tenant’s cost, or
provided by Lessor without charge as an inducement to lease (such as free rent
or improvement allowances); (b) salaries of Lessor’s officers and partners
and its headquarters staff; (c) the cost of any work performed or service
provided for any tenant of the Building (other than Lessee) to a materially
greater extent or in a materially more favorable manner than that furnished
generally to the other tenants and occupants (such as electricity and cleaning
services); (d) the cost of any items to the extent Lessor is reimbursed by
insurance proceeds, condemnation awards, a tenant of the Building, or
otherwise; (e) the cost of any material expansions of or structural
improvements to the Building or the Property, or Operating Expenses generated
by such expansions constructed after the Commencement Date (except to the
extent that the specific expansion or improvement was made by Lessor in
response to Lessee’s direction or request or was required in order to
modify Building or its systems to meet Lessee’s specific operating
requirements); (f) the cost of any additions, changes, or replacements
which under generally accepted accounting principles are properly classified as
capital expenditures, except to the extent provided clause “ix” in Paragraph
4.2 above; (g) the cost of any repair made in response to any insured fire
or casualty damage (except for the amount of the “deductible” under Lessor’s
property insurance) or any condemnation; (h) insurance premiums to the
extent any tenant causes an increase in the Lessor’s existing

 

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insurance premiums and/or requires Lessor to purchase additional
insurance not typically carried by comparable building owners to the Lessor;
(i) interest and principal payments on any debt, depreciation, and rental
under any ground lease or other underlying lease; (j) any real estate
brokerage commissions or other cost incurred in procuring tenants, or any fee
in lieu of commission; (k) any architectural fees for tenant space;
(I) any costs representing an amount paid to an entity related to or
affiliated with Lessor to the extent in excess of the amount which would have
been paid in the absence of such a relationship; (m) any expenses for
repairs or maintenance to the extent they are reimbursed under warranties,
guaranties or service contracts (excluding any mandatory deductibles);
(n) legal and related expenses arising out of the construction, sale or
financing of the Building, or the enforcement of the provisions of any tenant’s
lease; (o) insurance premiums to the extent of any refunds thereof;
(p) home office accounting fee allocations; (q) costs with respect to
a sale, financing or refinancing; (r) bad debt loss, rent loss or reserves
for bad debt loss or rent loss (but this exclusion does not apply to the
portion of the Lessor’s Building insurance premiums which may be attributable
to the rent loss coverage included in such policy); (s) costs associated
with the operation of the business entity of Lessor, including partnership
audit, business entity accounting, and business entity legal matters;
(t) fines and penalties associated with Lessor making late payments or
violating Governmental Requirements; (u) depreciation of the building or
equipment; (v) any local, state or federal income or profits tax,
franchise tax, estate, gift or inheritance tax, transfer tax, excise tax or
capital stock tax; (x) promotional, marketing or entertainment expenses,
including charitable or political contributions; (y) the cost of procuring
or relocating tenants, including attorney’s fees; (z) reserves of any
kind; or (aa) advertising and promotional expenses.

 

(b)                                 Any Common Area Operating
Expenses and Real Property Taxes that are specifically attributable to the
Unit, the Building or to any other building in the Project or to the operation,
repair and maintenance thereof, shall be allocated entirely to such Unit,
Building, or other building. However, any Common Area Operating Expenses and
Real Property Taxes that are not specifically attributable to the Building or
to any other building or to the operation, repair and maintenance thereof,
shall be equitably allocated by Lessor to all buildings in the Project.

 

(c)                                  The inclusion of the
improvements, facilities and services set forth in Subparagraph 4.2(a) shall
not be deemed to impose an obligation upon Lessor to either have said
improvements or facilities or to provide those services unless the Project
already has the same, Lessor already provides the services, or Lessor has
agreed elsewhere in this Lease to provide the same or some of them.

 

(d)                                 Lessee’s Share of Common
Area Operating Expenses is payable monthly on the same day as the Base Rent is
due hereunder . The amount of such payments shall be based on Lessor’s estimate
of the annual Common Area Operating Expenses. Within 120 days after the end of
each calendar year, Lessor shall deliver to Lessee a reasonably detailed statement
showing Lessee’s Share of the actual Common Area Operating Expenses incurred
during the preceding year. If Lessee’s payments during such year exceed
Lessee’s Share, Lessor shall credit the amount of such over-payment against
Lessee’s future payments. If Lessee’s payments during such year were less than
Lessee’s Share, Lessee shall pay to Lessor the amount of the deficiency within
30 days after delivery by Lessor to Lessee of the statement (also see Addendum).

 

(e)                                  Common Area Operating
Expenses shall not include any expenses paid by any tenant directly to third
parties, or as to which Lessor is otherwise reimbursed by any third party,
other tenant, or insurance proceeds.

 

4.3                                 Payment. Lessee shall cause
payment of Rent to be received by Lessor in lawful money of the United States,
without offset or deduction (except as specifically permitted in this Lease),
on or before the day on which it is due (with a 10-day grace
period before such payment will incur late charges - also see
Section 13.4) ..... In the event that any invoice prepared by
Lessor is inaccurate such inaccuracy shall not constitute a waiver and Lessee
shall be obligated to pay the amount set forth in this Lease. Rent for any
period during the term hereof which is for less than one full calendar month
shall be prorated based upon the actual number of days of said month. Payment
of Rent shall be made to Lessor at its address stated herein or to such other
persons or place as Lessor may from time to time designate in writing.
Acceptance of a payment which is less than the amount then due shall not be a
waiver of Lessor’s rights to the balance of such Rent, regardless of Lessor’s
endorsement of any check so stating. In the event that any check, draft, or
other instrument of payment given by Lessee to Lessor is dishonored for any
reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any Late
Charge and Lessor, at its option, may require all future Rent be paid by
cashier’s check. Payments will be applied first to accrued late charges and
attorney’s fees, second to accrued interest, then to Base Rent and Common Area
Operating Expenses, and any remaining amount to any other outstanding charges
or costs (See Addendum regarding Lessee’s rights to review
Lessor’s books and records).

 

5.                                       Security
Deposit. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit as security for Lessee’s faithful performance of
its obligations under this Lease. If Lessee fails to pay Rent, or otherwise
Defaults under this Lease, Lessor may use, apply or retain all or any portion
of said Security Deposit for the payment of any amount due already due Lessor,
for Rents which will be due in the future, and/ or to reimburse or compensate
Lessor for any liability, expense, loss or damage which Lessor may suffer or
incur by reason thereof. If Lessor uses or applies all or any portion of the
Security Deposit, Lessee shall within 10 days after written request therefor
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Lessor shall not be required to keep the
Security Deposit separate from its general accounts. Within 60 days after the
expiration or termination of this Lease, Lessor shall return that portion of
the Security Deposit not used or applied by Lessor. No part of the Security
Deposit shall be considered to be held in trust, to bear interest or to be
prepayment for any monies to be paid by Lessee under this Lease. Lessor shall transfer the Security Deposit to any successor to Lessor’s
interest in the Unit, the Building, or the Project.

 

6.                                       Use.

 

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

 

6.2                                 Hazardous Substances.

 

                              (a)                                       Reportable
Uses Require Consent. The term “Hazardous
Substance” as used in this Lease shall mean any product, substance,
or waste whose presence, use, manufacture, disposal, transportation, or
release, either by itself or in combination with other materials

 

5

 

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

 

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

 

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

 

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

 

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

 

(f)                                    Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Lessee taking possession, or otherwise not caused by Lessee, unless
such remediation measure is required as a result of Lessee’s use (including
“Alterations”, as defined in paragraph 7.3(a) below) of the Premises, in
which event Lessee shall be responsible for such payment. Lessee shall
cooperate fully in any such activities at the request of Lessor, including
allowing Lessor and Lessor’s agents to have reasonable access to the Premises
at reasonable times in order to carry out Lessor’s investigative and remedial
responsibilities.

 

(g)                                 

 

                                                6.3                                 Lessee’s Compliance with Applicable Requirements. Except as
otherwise provided in this Lease, Lessee shall, at Lessee’s sole expense,
fully, diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor’s engineers and/or consultants
which relate in any manner to such Requirements, without regard to whether said
Requirements are now in effect or become effective after the Start Date. Lessee
shall, within 10 days after receipt of Lessor’s written request, provide Lessor
with copies of all permits and other documents, and other information
evidencing Lessee’s compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure
of Lessee or the Premises to comply with any Applicable Requirements. Likewise,
Lessee shall immediately give written notice to Lessor of: (i) any water
damage to the Premises and any suspected seepage, pooling, dampness or other
condition conducive to the production of mold; or (ii) any mustiness or
other odors that might indicate the presence of mold in the Premises. Notwithstanding anything in the Lease to the contrary,
Lessor shall provide Lessee with written notice regarding any alleged violation
under this section and a reasonable opportunity to cure the same.

 

6.4                                 Inspection;
Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and consultants shall
have the right to enter into Premises at any time, in the case of an emergency,
and otherwise at reasonable times after reasonable notice, for the purpose of
inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease. The cost of any such inspections shall be paid by Lessor,
unless a violation of Applicable Requirements, or a Hazardous Substance
Condition (see Paragraph 9.1) is found to exist or be imminent, or the
inspection is

 

6

 

requested or ordered by a governmental authority. In such case, Lessee
shall upon request reimburse Lessor for the cost of such inspection, so long as
such inspection is reasonably related to the violation or contamination. In
addition, Lessee shall provide copies of all relevant material safety data
sheets (MSDS) to Lessor within 10
days of the receipt of written request therefor. Also see Addendum for notice and access provisions.

 

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

 

7.1                                 Lessee’s
Obligations.

 

(a)                                  In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliance with Applicable
Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations (intended for Lessee’s exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee’s use, any prior use, the
elements or the age of such portion of the Premises), including, but not
limited to, all equipment or facilities, such as plumbing, HVAC equipment, UPS
systems, compressors, electrical systems and components, access control
systems, lighting facilities, boilers, pressure vessels, fixtures, interior
walls, interior surfaces of exterior walls, ceilings, floors, windows, doors,
plate glass, and skylights but excluding any items which are the responsibility
of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good
order, condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the
service contracts required by Paragraph 7.1(b) below. Lessee’s obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order,
condition and state of repair.

 

(b)                       Service Contracts. Lessee shall, at Lessee’s sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) UPS system,
compressors and pressure vessels, and (iii)      .
 However, Lessor reserves the right, upon
notice to Lessee, to procure and maintain any or all of such service contracts on commercially reasonable terms, and
Lessee shall reimburse Lessor, upon demand, for the cost thereof.

 

NOTWITHSTANDING THE ABOVE,
LESSOR WILL PLACE AND MANAGE CONTRACTS FOR THE AIR HANDLER, ENERGY MANAGEMENT,
UPS, ACCESS CONTROL AND COMPRESSOR EQUIPMENT AND LESSEE WILL PAY ITS SHARE OF
SUCH COSTS AS A PREMISES EXPENSE BASED ON THE SHARE OF SUCH EQUIPMENT ALLOCATED
TO SERVE THE PREMISES (also see applicable provisions in Sections 55-62 of the
Addendum).

 

(c)                                  Failure to Perform. If Lessee fails to perform
Lessee’s obligations under this Paragraph 7.1, Lessor may enter upon the Premises
after 10 days’ prior written notice to Lessee (except in the case of an
emergency, in which case no notice shall be required), perform such obligations
on Lessee’s behalf, and put the Premises in good order, condition and repair,
and Lessee shall promptly pay to Lessor a sum equal to 100% of the cost
thereof.

 

(d)                                 Replacement. Subject to Lessee’s indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee’s failure to exercise and perform good maintenance
practices, if an item described in Paragraph 7.1(b) cannot be repaired
other than at a cost which is in excess of 50% of the cost of replacing such
item, then such item shall be replaced by Lessor, and the cost thereof shall be
prorated between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on which Base
Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator
of which is 144 (ie. 1/144th of the cost per month). Lessee shall pay Interest
(at the rate specified in Section 13.5) on the unamortized balance but may
prepay its obligation at any time.

 

7.2                                 Lessor’s
Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use),
7.1 (Lessee’s Obligations), 9 (Damage or Destruction) and 14 (Condemnation),
Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke detection systems, fire hydrants, parking
lots, walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas and all parts thereof, as well as providing
the services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. As an element of Common Area
Operating Expenses, Lessor shall _ be obligated to periodicaly paint the exterior surfaces of exterior walls in order to maintain the
Project in a commercially acceptable condition. Lessor shall not be obligated
to paint _ interior surfaces of exterior walls nor shall Lessor be
obligated to maintain, repair or replace windows, doors or plate glass of the
Premises. Lessee expressly waives the benefit of any statute now or hereafter
in effect to the extent it is inconsistent with the terms of this Lease. Notwithstanding anything in the Lease to the contrary,
Lessee shall provide Lessor with written notice regarding any alleged violation
under this section and a reasonable opportunity to cure the same. Following the
expiration of all applicable cure periods provided to Lessor, Lessee may contract
directly for Building repairs that are reasonably required to cure a Lessor
breach or failure to maintain the Building as required herein (provided that
Lessee shall give concurrent notice to Lessor of its arrangements and shall
reasonably coordinate the same with any Lessor initiated repairs), and any
reasonable out-of-pocket amounts paid or incurred by Lessee in so doing shall
be deemed paid or incurred for the account of the Building (as Common Area
Operating Expenses) and Lessor agrees to pay and/or reimburse Lessee therefore
(net of amounts that would otherwise be assessable to and chargeable to Lessee
and/or the Premises); provided however, Lessee may arrange for repairs to cure
any such breach or failure as aforesaid prior to the expiration of said waiting
period if an emergency situation exists and the immediate curing of such breach
of failure is necessary to protect the Premises, or persons or property located
therein from imminent injury or damage. Within thirty (30) days from the date
Lessor receives copies of invoices from Lessee detailing such expenditures,
Lessor agrees to pay and/or reimburse Lessee for its reasonable out-of-pocket
expenditures paid (net of such sums as would otherwise be allocable to and/or
chargeable back to Lessee and/or the Premises).

 

7.3                                 Utility
Installations; Trade Fixtures; Alterations.

 

                                                                                                (a)                                  Definitions. The term “Utility
Installations” refers to all floor and window coverings, air and/or
vacuum lines, power panels, electrical distribution, security and fire protection
systems, communication cabling, lighting fixtures, HVAC equipment, plumbing,
and fencing in or on the Premises. The term “Trade
Fixtures” shall mean Lessee’s machinery and equipment that can be
removed without doing material damage to the Premises. The term “Alterations” shall mean any modification
of the improvements, other than Utility Installations or Trade Fixtures,
whether by addition or deletion. “Lessee
Owned Alterations and/or Utility Installations” are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). “Lessee
Personal Property” shall mean Lessee’s telecommunications equipment, signs,
inventory and Trade Fixtures. Lessor waives any lien rights it may have
concerning the Lessee Personal Property and confirms that Lessee shall have the
right to remove the same from the Premises at any time during the Term of this
Lease, without Lessor’s consent, but subject to Lessee’s obligations to repair
any damages caused thereby.

 

(b)                                 Consent. Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor’s prior written

 

7

 

consent. Lessee may, however, make non-structural Utility Installations
and Alterations to the interior of the Premises (excluding the roof) without
such consent but upon written notice to Lessor, as long as they are not visible
from the outside, do not involve puncturing, relocating or removing the roof or
any existing walls, will not affect the electrical, plumbing, HVAC, and/or life
safety systems, and the cumulative cost thereof during this Lease as extended
does not exceed a sum equal to 3 month’s Base Rent in the aggregate, or a sum
equal to one month’s Base Rent in any one year. Notwithstanding the foregoing,
Lessee shall not make or permit any roof penetrations and/or install anything
on the roof without the prior written approval of Lessor. Lessor may, as a
precondition to granting such approval, require Lessee to utilize a contractor
chosen and/or approved by Lessor. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall
be presented to Lessor in written form with detailed plans. Consent shall be
deemed conditioned upon Lessee’s: (i) acquiring all applicable
governmental permits, (ii) furnishing Lessor with copies of both the
permits and the plans and specifications prior to commencement of the work, and
(iii) compliance with all conditions of said permits and other Applicable
Requirements in a prompt and expeditious manner. Any Alterations or Utility
Installations shall be performed in a workmanlike manner with good and
sufficient materials. Lessee shall promptly upon completion furnish Lessor with
as-built plans and specifications. For work which costs an amount in excess of
one month’s Base Rent, Lessor may condition its consent upon Lessee providing a
lien and completion bond in an amount equal to 100% of the estimated cost of
such Alteration or Utility Installation and/or upon Lessee’s posting an
additional Security Deposit with Lessor.

 

(c)                                  Liens; Bonds. Lessee shall
pay, when due, all claims for labor or materials furnished or alleged to have
been furnished to or for Lessee at or for use on the Premises, which claims are
or may be secured by any mechanic’s or materialman’s lien against the Premises
or any interest therein. Lessee shall give Lessor not less than 10 days notice
prior to the commencement of any work in, on or about the Premises, and Lessor
shall have the right to post notices of non-responsibility. If Lessee shall
contest the validity of any such lien, claim or demand, then Lessee shall, at
its sole expense defend and protect itself, Lessor and the Premises against the
same and shall pay and satisfy any such adverse judgment that may be rendered
thereon before the enforcement thereof. If Lessor shall require, Lessee shall
furnish a surety bond in an amount equal to 125% of the amount of such
contested lien, claim or demand, indemnifying Lessor against liability for the
same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor’s attorneys’ fees and costs.

 

7.4                                 Ownership; Removal; Surrender;
and Restoration.

 

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

 

(b)                                 Removal/Restoration.  Upon Lessee’s request during the final year of the Lease Term, Lessor
will meet with Lessee and the parties will coordinate to tour the Premises to
discuss and identify items which Lessor will require Lessee to remove and/or
elements of the Building that Lessor will require Lessee to restore at the
termination of the Lease. By delivery to Lessee of written notice
from Lessor not later than 15 days prior to the end of the term of this Lease (or, if sooner, not later than 45 days after the parties have jointly
toured the Premises for the purpose of identifying such items),
Lessor may require that any or all Lessee Owned Alterations or Utility
Installations be removed by the expiration or termination of this Lease and/or that original conditions of the Premises be restored;
provided that all Alterations and Utility Installations that existed in the
Premises on the Commencement Date shall remain and be surrendered as part of
the Premises on the Expiration Date. Lessor may require the removal
at any time of all or any part of any Lessee Owned Alterations or Utility
Installations made without the required consent.

 

(c)                                  Surrender; Restoration. Lessee shall
surrender the Premises by the Expiration Date or any earlier termination date,
with all of the improvements, parts and surfaces thereof broom clean and free
of debris, and in good operating order, condition and state of repair, ordinary
wear and tear excepted. “Ordinary wear and tear” shall not include any damage
or deterioration that would have been prevented by good maintenance practice.  Lessee shall repair any damage occasioned by
the installation, maintenance or removal of Trade Fixtures, Lessee owned
Alterations and/or Utility Installations, furnishings, and equipment as well as
the removal of any storage tank installed by or for Lessee. Lessee shall also
completely remove from the Premises any and all Hazardous Substances brought
onto the Premises by or for Lessee, or any third party (except Hazardous
Substances which were deposited via underground migration from areas outside of
the Project) even if such removal would require Lessee to perform or pay for
work that exceeds statutory requirements. Trade Fixtures shall remain the
property of Lessee and shall be removed by Lessee. Any personal property of
Lessee not removed on or before the Expiration Date or any earlier termination
date shall be deemed to have been abandoned by Lessee and may be disposed of or
retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate
the Premises pursuant to this Paragraph 7.4(c) without the express written
consent of Lessor shall constitute a holdover under the provisions of Paragraph
26 below.

 

8.                                       Insurance;
Indemnity.

 

8.1                                 Payment of Premiums. The cost of
the premiums for the insurance policies required to be carried by Lessor,
pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common Area
Operating Expense. Premiums for policy periods commencing prior to, or
extending beyond, the term of this Lease shall be prorated to coincide with the
corresponding Start Date or Expiration Date.

 

8.2                                 Liability Insurance.

 

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

 

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

 

8.3                                 Property Insurance - Building, Improvements
and Rental Value.

 

(a)                                  Building and Improvements. As an
element of Common Area Expenses, Lessor shall obtain and
keep in force a policy or policies of insurance in the name of Lessor, with
loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or
damage to the Building.  The amount of
such insurance shall be equal to the full insurable replacement cost of the
Building, including the Premises, as the

 

8

 

same shall exist from time to time, or the amount required by any
Lender, but in no event more than the commercially reasonable and available
insurable value thereof. Lessee Owned Alterations and Utility Installations,
Trade Fixtures, and Lessee’s personal property shall be insured by Lessee under
Paragraph 8.4. If the coverage is available and commercially appropriate, such
policy or policies shall insure against all risks of direct physical loss or
damage (except the perils of flood and/or earthquake unless reasonably
available and prudently determined to be appropriate by Lessor and/or required
by a Lender), including coverage for debris removal and the enforcement of any
Applicable Requirements requiring the upgrading, demolition, reconstruction or
replacement of any portion of the Building as the result of a covered loss.
Said policy or policies shall also contain an agreed valuation provision in
lieu of any coinsurance clause, waiver of subrogation, and inflation guard
protection.  If such Building insurance
coverage has a deductible clause, the deductible amount shall not exceed
$10,000 per occurrence.

 

(b)                                 Rental Value.  Lessor shall
also obtain and keep in force a policy or policies in the name of Lessor with
loss payable to Lessor and any Lender, insuring the loss of the full Rent for
one year (“Rental Value insurance”). Said insurance shall contain an
agreed valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by Lessee, for the next 12 month period.

 

(c)                                  Adjacent Premises.  Lessee shall
pay for any increase in the premiums for the property insurance of the Building
and for the Common Areas or other buildings in the Project if said increase is
caused by Lessee’s acts, omissions, use or occupancy of the Premises;  provided that Lessor
shall provide Lessee with written notice and a reasonable opportunity to modify
or cure such acts, use or occupancy prior to charging Lessee for such
increases.

 

(d)                                 Lessee’s Improvements.  Lessor shall
not be required to insure Lessee Owned Alterations and Utility Installations unless
the item in question has become the property of Lessor under the terms of this
Lease.

 

8.4                                 Lessee’s
Property; Business Interruption Insurance.

 

(a)                                  Property Damage.  Lessee shall
obtain and maintain insurance coverage on all of Lessee’s personal property,
Lessee Personal Property, Trade Fixtures, and Lessee Owned Alterations and
Utility Installations. Such insurance shall be full replacement cost coverage.
with a deductible of not to exceed $10,000 per occurrence. The proceeds from
any such insurance shall be used by Lessee for the replacement of Lessee
Personal Property, personal property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations. Lessee shall provide Lessor with written
evidence that such insurance is in force.

 

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

 

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

 

8.5                                 Insurance
Policies.  Insurance required herein
shall be by companies duly licensed or admitted to transact business in the
state where the Premises are located, and maintaining during the policy term a
“General Policyholders Rating” of at least A-, VI, as set forth in the most
current issue of “Best’s Insurance Guide”, or such other rating (not to exceed
A-, VII) as may be required by a Lender. Lessee shall not do or permit to be
done anything which invalidates the required insurance policies. Lessee shall,
prior to the Start Date, deliver to Lessor certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable except after 30 days prior written notice to Lessor. Lessee shall,
at least 10 days prior to the expiration of such policies, furnish Lessor with
evidence of renewals or “insurance binders” evidencing renewal thereof, or
Lessor may order such insurance and charge Lessee for the costs thereof that
Lessor actually incurs to secure replacement insurance to cover the period of
Lessee’s non-compliance, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year, or the length
of the remaining term of this Lease, whichever is less. If either Party shall fail
to procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.

 

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

 

8.7                                 Indemnity. Subject to the Waiver of Subrogation provisions of paragraph
8.6 and the Assumption/Allocation of Risk provisions of paragraph 8.8, and
except for Lessor’s gross negligence or willful misconduct, Lessee shall
indemnify, protect, defend and hold harmless the Premises, Lessor and its
agents, Lessor’s master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys’ and consultants’ fees, expenses and/or liabilities
arising out of, involving, or in connection with, the use and/or occupancy of
the Premises and the Building and the Project
by Lessee. If any action or proceeding is brought against Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the
same at Lessee’s expense by counsel reasonably satisfactory to Lessor and
Lessor shall cooperate with Lessee in such defense. Lessor need not have first
paid any such claim in order to be defended or indemnified. Subject to the Waiver of Subrogation provisions of
paragraph 8.6 and the Assumption/Allocation of Risks provisions of paragraph
8.8, Lessor shall indemnify, protect, defend and hold Lessee harmless from and
against any and all claims, losses and/or damages, liens, judgements,
penalties, attorneys’ and consultants’ fees, expenses and/or liabilities
directly caused by the Lessor’s gross negligence or willful misconduct in the
Premises, the Building or on the Project. If any action or proceeding is
brought against Lessee by reason of the foregoing, Lessor shall upon notice
defend the same at Lessor’s expense and Lessee shall cooperate with Lessor in
such defense. Lessee need not have first paid any such claim in order to be
defended or indemnified.

 

                                                8.8                                 Assumption/Allocation of Risks Lessee hereby assumes all risk of damage
to Lessee Personal Property, Trade Fixtures and Lessee Owned Alterations and
Utility Installations, from any cause whatsoever, and all risk of injury to
persons in, upon or about the Project, from any cause whatsoever (EXCEPT TO THE
EXTENT THAT SUCH DAMAGE AND/OR INJURY IS DIRECTLY CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF LESSOR) and Lessee hereby waives all such
claims against Lessor (EXCEPT TO THE EXTENT THAT SUCH DAMAGE AND/OR INJURY IS
DIRECTLY CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LESSOR).
Lessee shall give prompt notice to Lessor in case of damage or accidents in the
Premises, the Building or elsewhere on the Project. WITH THE EXCEPTION OF
LESSOR’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, Lessor shall have no liability
for any damage, loss, cost or expense incurred or suffered for: (i) injury
or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee’s employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, indoor air quality,
the presence of mold or from the breakage, leakage, obstruction or other
defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or
lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises or upon other portions of the
Building, or from other sources or places, (ii) any damages arising from

 

9

 

any act or neglect of any other tenant of Lessor or from the failure of
Lessor or its agents to enforce the provisions of any other lease in the
Project, or (iii) injury to Lessee’s business or for any loss of income or
profit therefrom. Instead, it is intended that Lessee’s sole recourse in the
event of such damages or injury be to file a claim on the insurance policy(ies)
that Lessee is required to maintain pursuant to the provisions of paragraph 8. For the specific purposes hereof, any insurance deductible and/or level
of self insurance shall be deemed to be full insurance and neither Lessor nor
Lessee shall be liable to the other for any damage caused by fire or any of the
other types of risks commonly insured against under any insurance policy
required by this Lease and Lessor and Lessee release each other from any claims
and demands of whatever nature for damage, loss or injury to the Premises
and/or the Building, or to the other’s property in, on or about the Premises
and the Building, that are caused by or result from risks or perils insured
against under any insurance policies carried by or required to be carried by
Lessor and/or Lessee under this Lease.

 

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

 

8.10                        Blanket
Insurance. Notwithstanding anything to the contrary contained herein, any
insurance policies required to be carried under this Lease may be effected by a
blanket policy or policies of insurance, provided, however, that the total
amount of insurance available with respect to the insurance obligations under
this Lease shall be at least the equivalent of separate policies in the amounts
required under this Lease during the Term of the Lease, and provided further,
that in all respects, any such blanket policy or policies shall comply with the
remaining provisions of this Section, as applicable.

 

9.                                       Damage
or Destruction.

 

9.1                                 Definitions.

 

(a)                                  “Premises Partial Damage” shall mean
damage or destruction to the improvements on the Premises, other than Lessee
Owned Alterations and Utility Installations, which can reasonably be repaired
in 4 months or less from the date of the damage or destruction. Lessor shall
notify Lessee in writing within 30 days from the date of the damage or
destruction as to whether or not the damage is Partial or Total.
Notwithstanding the foregoing, Premises Partial Damage shall not include damage
to windows, doors, and/or other similar items which Lessee has the
responsibility to repair or replace pursuant to the provisions of Paragraph
7.1.

 

(b)                                 “Premises Total Destruction” shall mean
damage or destruction to the improvements on the Premises, other than Lessee
Owned Alterations and Utility Installations and Trade Fixtures, which cannot
reasonably be repaired in 4 months or less from the date of the damage or
destruction and/or the cost thereof exceeds a sum equal to 12 month’s Base
Rent. Lessor shall notify Lessee in writing within 30 days from the date of the
damage or destruction as to whether or not the damage is Partial or Total.

 

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

 

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

 

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

 

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

 

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

 

9.4                                 Total Destruction.
Notwithstanding any other provision hereof, if a Premises Total Destruction
occurs, this Lease shall terminate

 

10

 

15 days following such Destruction. If the damage or destruction was
caused by the gross negligence or willful misconduct of Lessee, Lessor shall
have the right to recover Lessor’s damages from Lessee, except as provided in
Paragraph 8.6.

 

9.5                                 Damage Near
End of Term. If at any time during the last 6 months of this
Lease there is damage for which the cost to repair exceeds one month’s Base
Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective
60 days following the date of occurrence of such damage by giving a written
termination notice to Lessee within 30 days after the date of occurrence of
such damage. Notwithstanding the foregoing, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then
Lessee may preserve this Lease by, (a) exercising such option and (b) providing
Lessor with any shortage in insurance proceeds (or adequate assurance thereof)
needed to make the repairs on or before the earlier of (i) the date which
is 10 days after Lessee’s receipt of Lessor’s written notice purporting to
terminate this Lease, or (ii) the day prior to the date upon which such
option expires. If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any
shortage in insurance proceeds, Lessor shall, at Lessor’s commercially
reasonable expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee fails to exercise such
option and provide such funds or assurance during such period, then this Lease
shall terminate on the date specified in the termination notice and Lessee’s
option shall be extinguished.

 

9.6                                 Abatement
of Rent; Lessee’s Remedies.

 

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

 

(b)                                 Remedies. If Lessor is obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such
repair or restoration within 90 days after such obligation shall accrue, Lessee
may, at any time prior to the commencement of such repair or restoration, give
written notice to Lessor and to any Lenders of which Lessee has actual notice,
of Lessee’s election to terminate this Lease on a date not less than 60 days
following the giving of such notice. If Lessee gives such notice and such
repair or restoration is not commenced within 30 days thereafter or if Lessor does not proceed with due diligence to
thereafter repair or restore the Premises within 180 days, this
Lease shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within such 30 days and
substantially completed within 180 days therafter, this Lease shall
continue in full force and effect. “Commence” shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs. If Lessor commences such repair or restoration prior
to Lessee giving a notice of election to terminate as provided above, but
nevertheless does not substantially complete the same within nine (9) months
after the date of Damage or Destruction (subject to tolling of time for any
force majeure delay), Lessee shall thereafter have an additional right to
terminate this Lease, with such termination to be effective upon Lessee’s
written notice to Lessor.

 

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

 

10.                               Real Property Taxes.

 

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

 

10.2                           Payment of
Taxes. Except as otherwise provided in Paragraph 10.3, Lessor shall pay the
Real Property Taxes applicable to the Project, and said payments shall be
included in the calculation of Common Area Operating Expenses in accordance
with the provisions of Paragraph 4.2.

 

10.3                           Additional
Improvements. Common Area Operating Expenses shall not include Real
Property Taxes specified in the tax assessor’s records and work sheets as being
caused by additional improvements placed upon the Project by other lessees or
by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding
Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the time Common
Area Operating Expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes if assessed solely by reason of Alterations,
Trade Fixtures or Utility Installations placed upon the Premises by Lessee or
at Lessee’s request or by reason of any alterations or improvements to the
Premises made by Lessor subsequent to the execution of this Lease by the
Parties.

 

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

 

10.5                      Personal
Property Taxes. Lessee shall pay prior to delinquency all taxes
assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises. When possible, Lessee shall cause its
Lessee Owned Alterations and Utility Installations, Trade Fixtures,
furnishings, equipment and all other personal property to be assessed and
billed separately from the real property of Lessor. If any of Lessee’s said
property shall be assessed with Lessor’s real property, Lessee shall pay Lessor
the taxes attributable to Lessee’s property within 10 days after receipt of a
written statement setting forth the taxes applicable to Lessee’s property.

 

11.                                 Utilities and Services. Lessee shall pay for all
water, gas, heat, light, power, telephone, trash disposal and other utilities
and services supplied to the Premises, together with any taxes thereon.
Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessor’s
reasonable judgment, Lessor determines that Lessee is using a disproportionate
amount of water, electricity or other commonly metered utilities, or that
Lessee is generating such a large volume of trash as to require an increase in
the size of the trash receptacle and/or an increase in the number of times per
month that it is emptied, then Lessor may increase Lessee’s Base Rent by an
amount equal to such increased costs.  There shall be no abatement of Rent and Lessor
shall not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due

 

11

 

to riot, strike, labor dispute, breakdown, accident, repair or other
cause beyond Lessor’s reasonable control or in cooperation with governmental
request or directions.

 

12.                                 Assignment and Subletting.

 

12.1                           Lessor’s
Consent Required.

 

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

 

(b)                                 Unless Lessee is a
corporation and its stock is publicly traded on a national stock exchange, a
change in the control of Lessee shall constitute an assignment requiring
consent. The transfer, on a cumulative basis, of 50% or more of the voting
control of Lessee shall constitute a change in control for this purpose.

 

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

 

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

 

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

 

(f)                                    Lessor may reasonably
withhold consent to a proposed assignment or subletting if Lessee is in Default
at the time consent is requested.

 

(g)                                 Notwithstanding the
foregoing, allowing a de minimis portion of the Premises, ie. 20 square feet or
less, to be used by a third party vendor in connection with the installation of
a vending machine or payphone shall not constitute a subletting.

 

Lessor consents to the
common use and shared occupancy of the Premises by Lessee’s affiliated entities.

 

12.2                           Terms and
Conditions Applicable to Assignment and Subletting.

 

(a)                                  Lessee may assign the Lease or sublease the Premises only after first
obtaining Lessor’s prior written consent, which consent will not be
unreasonably withheld, conditioned or delayed by Lessor. Regardless of
Lessor’s consent, no assignment or subletting shall: (i) be effective
without the express written assumption by such assignee or sublessee of the
obligations of Lessee under this Lease, (ii) release Lessee of any
obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

 

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

 

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

 

(d)                                 In the event of any Default
or Breach by Lessee (which is not cured within any applicable notice and cure
period), Lessor may proceed directly against Lessee, any Guarantors or anyone
else responsible for the performance of Lessee’s obligations under this Lease,
including any assignee or sublessee, without first exhausting Lessor’s remedies
against any other person or entity responsible therefore to Lessor, or any
security held by Lessor.

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

13.                                 Default;
Breach; Remedies.

 

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

 

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

 

(b)                                 The failure of Lessee to
make any payment of Rent or any Security Deposit required to be made by Lessee
hereunder, whether to Lessor or to a third party, when due, to provide
reasonable evidence of insurance or surety bond, or to fulfill any obligation
under this Lease which endangers or threatens life or property, where such
failure continues for a period of five (5) business
days following written notice to Lessee.

 

(c)                                  The commission of waste, act
or acts constituting public or private nuisance, and/or an illegal activity on
the Premises by Lessee, where such actions continue for a period of ten (10) business days following written notice to
Lessee.

 

(d)                                 The failure by Lessee to
provide (i) reasonable written evidence of compliance with Applicable
Requirements, (ii) the service contracts, (iii) the rescission of an
unauthorized assignment or subletting, (iv) an Estoppel Certificate, (v) a
requested subordination, (vi) evidence concerning any guaranty and/or
Guarantor, (vii) any document requested under Paragraph 41, (viii) material
data safety sheets (MSDS), or (ix) any other documentation or information
which Lessor may reasonably require of Lessee under the terms of this Lease,
where any such failure continues for a period of thirty (30)
days following written notice to Lessee.

 

(e)                                  A Default by Lessee as to
the terms, covenants, conditions or provisions of this Lease, or of the rules adopted
under Paragraph 2.9 hereof, other than those described in subparagraphs
13.1(a), (b), (c) or (d), above, where such Default continues for a period
of 30 days after written notice; provided, however, that if the nature of
Lessee’s Default is such that more than 30 days are reasonably required for its
cure, then it shall not be deemed to be a Breach if Lessee commences such cure
within said 30 day period and thereafter diligently prosecutes such cure to
completion.

 

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

 

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

 

13.2                           Remedies. If Lessee
fails to perform any of its affirmative duties or obligations, within 10 days
after written notice (or in case of an emergency, without notice) (and subject to any of the applicable cure periods provided in
Section 13.1 above), Lessor may, at its option, perform such
duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental
licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to
115% of the costs and expenses incurred by Lessor in such performance upon
receipt of an invoice therefor. In the event of a Breach, Lessor may, with or
without further notice or demand, and without limiting Lessor in the exercise
of any right or remedy which Lessor may have by reason of such Breach:

 

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

 

(b)                                 Continue the Lease and
Lessee’s right to possession and recover the Rent as it becomes due, in which
event Lessee

 

13

 

may sublet or assign, subject only to reasonable limitations. Acts of
maintenance, efforts to relet, and/or the appointment of a receiver to protect
the Lessor’s interests, shall not constitute a termination of the Lessee’s
right to possession.

 

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

 

NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THE FOREGOING, LESSOR SHALL INITIATE REASONABLE STEPS TO MITIGATE
ITS DAMAGES

 

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

 

13.4                           Late Charges. Lessee
hereby acknowledges that late payment by Lessee of Rent will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor
within 10-days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall immediately
pay to Lessor a one-time late charge equal to 3% of each such overdue amount or
$100, whichever is greater. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in
no event constitute a waiver of Lessee’s Default or Breach with respect to such
overdue amount, nor prevent the exercise of any of the other rights and
remedies granted hereunder. In the event that a late charge is payable
hereunder, whether or not collected, for 3 consecutive installments of Base
Rent, then notwithstanding any provision of this Lease to the contrary, Base
Rent shall, at Lessor’s option, become due and payable quarterly in advance.

 

NOTWITHSTANDING THE ABOVE, UPON
LESSEE’S PROMPT CURE OF ITS FIRST LATE PAYMENT, LESSOR WILL WAIVE THE LATE
CHARGE ASSESSED FOR SUCH FIRST LATE PAYMENT.

 

13.5                      Interest. Any monetary
payment due Lessor hereunder, other than late charges, not received by Lessor
within ten (10) days of the due date, when due as to scheduled payments
(such as Base Rent) or within 30 days following the date on which it was due
for non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the 31st day after it was due as to non-scheduled
payments. The interest (“Interest”)
charged shall be computed at the rate of 10% per annum but shall not exceed the
maximum rate allowed by law. Interest is payable in addition to the potential
late charge provided for in Paragraph 13.4.

 

13.6                      Breach by Lessor.

 

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

 

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

 

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

 

15.                                 Brokerage
Fees - (per separate listing agreement).

 

                                                15.1                           

 

15.2                           

 

14

 

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

 

16.                                 Estoppel Certificates.

 

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

 

(b)                                 If the Responding Party
shall fail to execute or deliver the Estoppel Certificate within such 10 day
period, the Requesting Party may execute an Estoppel Certificate stating that:
(i) the Lease is in full force and effect without modification except as
may be represented by the Requesting Party, (ii) there are no uncured
defaults in the Requesting Party’s performance, and (iii) if Lessor is the
Requesting Party, not more than one month’s rent has been paid in advance.
Prospective purchasers and encumbrancers may rely upon the Requesting Party’s
Estoppel Certificate, and the Responding Party shall be estopped from denying
the truth of the facts contained in said Certificate.

 

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

 

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

 

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

 

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

 

20.                                 Limitation on Liability. The obligations of Lessor
under this Lease shall not constitute personal obligations of Lessor, or its
partners, members, directors, officers or shareholders, or their individual
partners, members, directors, officers or shareholders, and Lessee shall look
to the Premises and the Building and Lessor’s interest in the entire LBTC
Project, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against Lessor’s partners, members, directors, officers or shareholders, or any
of their personal assets for such satisfaction.

 

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

 

22.                                 No Prior or Other Agreements; Broker Disclaimer. This Lease
contains all agreements between the Parties with respect to any matter mentioned
herein, and no other prior or contemporaneous agreement or understanding shall
be effective. Lessor and Lessee each represents and warrants to the Brokers
that it has made, and is relying solely upon, its own investigation as to the
nature, quality, character and financial responsibility of the other Party to
this Lease and as to the use, nature, quality and character of the Premises.
Brokers have no responsibility with respect thereto or with respect to any
default or breach hereof by either Party.

 

23.                                 Notices.

 

23.1                           Notice
Requirements. All notices required or permitted by this Lease or
applicable law shall be in writing and may be delivered in person (by hand or
by courier) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, or by other
express courier or express mail service, with postage prepaid, and
shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The following addresses shall be that Party’s address for
delivery or mailing of notices:

 

	
  if to Lessee, to:

  	
   

  	
  Torotel, Inc.

  620 N. Lindenwood

  Olathe, Kansas 66062

  attn: Real Estate Department

  H James Serrone

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  if to Lessor, to:

  	
   

  	
  96-OP Prop, L.L.C.

  c/o The Denzer Group

  13110 Beverly Street

  Overland Park, KS 66209

  attn: Paul P. Denzer

  	
   

  	
  with a mandatory copy to:

  96-OP Prop, L.L.C.

  c/o Cassidy Turley

  2600 Grand Ave., Suite 1000

  Kansas City, MO 64108

  
	
   

  	
   

  	
  attn: Property Manager -
  Lindenwood Business & Technical Center

  

 

15

 

Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee’s taking possession of the
Premises, the Premises shall constitute Lessee’s address for notice. A copy of
all notices to Lessor shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter designate
in writing.

 

23.2                           Date of
Notice. Any notice sent by registered or certified mail, return receipt
requested, or by express courier or express mail
service, shall be deemed given on the date of actual
delivery and receipt, or first affirmative refusal thereof.  If notice is received on a Saturday,
Sunday or legal holiday, it shall be deemed received on the next business day.

 

24.                                 Waivers.

 

(a)                                  No waiver by either party of the Default or Breach of any term, covenant
or condition hereof by the other party,
shall be deemed a waiver of any other term, covenant or condition hereof, or of
any subsequent Default or Breach by such party of
the same or of any other term, covenant or condition hereof. Lessee’s and/or Lessor’s consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of any future
consent to, or approval of, any subsequent or similar act by the other party, or be construed as the basis of an estoppel
to enforce the provision or provisions of this Lease requiring such consent.

 

(b)                                 The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of moneys or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor
at or before the time of deposit of such payment.

 

(c)                                  THE PARTIES AGREE THAT THE
TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND
HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT
SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.

 

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

 

(a)                                  When entering into a
discussion with a real estate agent regarding a real estate transaction, a Lessor
or Lessee should from the outset understand what type of agency relationship or
representation it has with the agent or agents in the transaction. Lessor and
Lessee acknowledge being advised by the Brokers in this transaction, as
follows:

 

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

 

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

 

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

 

(b)                                 Brokers have no
responsibility with respect to any Default or Breach hereof by either Party.
The Parties agree that no lawsuit or other legal proceeding involving any
breach of duty, error or omission relating to this Lease may be brought against
Broker more than one year after the Start Date and that the liability
(including court costs and attorneys’ fees), of any Broker with respect to any
such lawsuit and/or legal proceeding shall not exceed the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker’s liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

 

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

 

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

 

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

 

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

 

29.                                 Binding
Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and

 

16

 

be governed by the laws of the State in which the
Premises are located. Any litigation between the Parties hereto concerning this
Lease shall be initiated in the county in which the Premises are located.

 

30.           Subordination;
Attornment; Non-Disturbance.

 

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

 

30.2         Attornment. In the event that Lessor transfers
title to the Premises, or the Premises are acquired by another upon the
foreclosure or termination of a Security Devise to which this Lease is
subordinated (i) Lessee shall, subject to the non-disturbance provisions
of Paragraph 30.3, attorn to such new owner, and upon request, enter into a new
lease, containing all of the terms and provisions of this Lease, with such new
owner for the remainder of the term hereof, or, at the election of the new
owner, this Lease will automatically become a new lease between Lessee and such
new owner, and (ii) Lessor shall thereafter be relieved of any further
obligations hereunder and such new owner shall assume all of Lessor’s
obligations, except that such new owner shall not: (a) be liable for any
act or omission of any prior lessor or with respect to events occurring prior
to acquisition of ownership; (b) be subject to any offsets or defenses
which Lessee might have against any prior lessor, (c) be bound by
prepayment of more than one month’s rent, or (d) be liable for the return
of any security deposit paid to any prior lessor which was not paid or credited
to such new owner.

 

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

 

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

 

31.           Attorneys’
Fees. If any Party or Broker brings an action or
proceeding involving the Premises whether founded in tort, contract or equity,
or to declare rights hereunder, the Prevailing Party (as hereafter defined) in
any such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate
suit, whether or not such action or proceeding is pursued to decision or
judgment. The term, “Prevailing Party” shall
include, without limitation, a Party or Broker who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorneys’ fees award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to
attorneys’ fees, costs and expenses incurred in the preparation and service of
notices of Default and consultations in connection therewith, whether or not a
legal action is subsequently commenced in connection with such Default or
resulting Breach ($200 is a reasonable minimum per occurrence for such services
and consultation).

 

32.           Lessor’s
Access; Showing Premises; Repairs. Lessor and Lessor’s agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times after reasonable prior notice for
the purpose of showing the same to prospective purchasers, lenders, or tenants,
and making such alterations, repairs, improvements or additions to the Premises
as Lessor may deem necessary or desirable and the erecting, using and
maintaining of utilities, services, pipes and conduits through the Premises
and/or other premises as long as there is no material adverse effect on
Lessee’s use of the Premises. All such activities shall be without abatement of
rent or liability to Lessee. Lessor will only show the Premises as available
for release in the last nine (9) months of the Term. Also see Addendum regarding Lessor’s access and notice requirements.

 

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

 

34.           Signs.
Lessor may place on the Premises ordinary “For Sale” signs at any time
and ordinary “For Lease” signs during the last 6 9 months of the term hereof;
though Lessor may place signs on the Building to market other vacant spaces.
Except for ordinary “For Sublease” signs which may be placed only on the
Premises, Lessee shall not place any sign upon the Project without Lessor’s
prior written consent. All signs must comply with all Applicable Requirements. (see Addendum for expanded signage rights)

 

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

 

36.           Consents.
Except as otherwise provided herein, wherever in this Lease the consent
of a Party is required to an act by or for the other Party, such consent shall
not be unreasonably withheld, conditioned or delayed. Lessor’s actual
reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ fees) (but not to exceed
$1,000.00 for any single occurance) incurred in the consideration of, or
response to, a request by Lessee for any Lessor consent (not applicable to
Lessor’s initial costs incurred to review and approve Lessee’s plans and
specifications developed for work to occur in 2010 for the initial remodeling
improvements for the Premises, it being understood that Lessor will incur those
expenses as an element of the initial lease transaction), including but not
limited to consents to an assignment, a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and
supporting documentation therefor. Lessor’s consent to any act, assignment or
subletting shall not constitute an acknowledgment that no Default or Breach by
Lessee of this Lease exists, nor shall such consent be

 

17

 

deemed a waiver of any then existing Default or
Breach, except as may be otherwise specifically stated in writing by Lessor at
the time of such consent. The failure to specify herein any particular
condition to Lessor’s consent shall not preclude the imposition by Lessor at
the time of consent of such further or other conditions as are then reasonable
with reference to the particular matter for which consent is being given. In
the event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within 10 business days following such request.

 

37.           N/A

 

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

 

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

 

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

 

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

 

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

 

39.4         Effect of Default on
Options.

 

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

 

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

 

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

 

40.           Security Measures. Lessee hereby acknowledges that the Rent
payable to Lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties. Lessee shall have the right to install
its own access control and/or security systems; provided that such installation
shall be coordinated with Lessor to ensure proper tie in to building life
safety systems and Lessor shall be provided with appropriate keys/codes for
access by Lessor and its property manager and maintenance engineer.

 

41.           Reservations. Lessor reserves the right: (i) to grant,
without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, (ii) to cause the recordation of
parcel maps and restrictions, and (iii) to create and/or install new
utility raceways, so long as such easements, rights, dedications, maps,
restrictions, and utility raceways do not unreasonably interfere with the use
of the Premises by Lessee. Lessee agrees to sign any documents reasonably
requested by Lessor to effectuate such rights. Notwithstanding
the foregoing, unless consented to by Lessee, Lessor shall not initiate or
allow any changes that would materially interfere with the operation of
Lessee’s business, the ingress or egress to the Premises or the parking
allocated to the Premises for use by the Lessee.

 

42.           Performance Under Protest. If at any time a dispute shall
arise as to any amount or sum of money to be paid by one Party to the other
under the provisions hereof, the Party against whom the obligation to pay the
money is asserted shall have the right to make payment “under protest” and such
payment shall not be regarded as a voluntary payment and there shall survive
the right on the part of said Party to institute suit for recovery of such sum.
If it shall be adjudged that there was no legal obligation on the part of said
Party to pay such sum or any part thereof, said Party shall be entitled to
recover such sum or so much thereof as it was not legally required to pay. A
Party who does not initiate suit for the recovery of sums paid “under protest”
within 6 months shall be deemed to have waived its right to protest such
payment.

 

43.           Authority; Multiple Parties; Execution.

 

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

 

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

 

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

 

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

 

45.           Offer. Preparation of this Lease by either party or their
agent and submission of same to the other Party shall not be deemed an offer to

 

18

 

lease to the other Party. This Lease is not intended
to be binding until executed and delivered by all Parties hereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Executed at:

  	
  Johnson County, KS

  	
   

  	
  Executed at:

  	
  Johnson County, Kansas

  
	
  On:

  	
  July 30, 2010

  	
   

  	
  On:

  	
  July 30, 2010

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By LESSOR:

  	
   

  	
  By LESSEE:

  
	
  96-OP Prop, L.L.C.,

  	
   

  	
  Torotel, Inc.,

  
	
  a Kansas limited liability
  company

  	
   

  	
  a Missouri corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Paul P. Denzer

  	
   

  	
  By:

  	
  /s/ Herb Sizemore

  
	
  Name Printed:

  	
  Paul P. Denzer

  	
   

  	
  Name Printed:

  	
  Herb Sizemore

  
	
  Title:

  	
  Manager

  	
   

  	
  Title :

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Address:

  	
  c/o The Denzer Group

  	
   

  	
  Address:

  	
   

  
	
  13110 Beverly St.,
  Overland Park, KS 66209

  	
   

  	
   

  
	
  Telephone:

  	
  (913) 681-5770

  	
   

  	
  Telephone: (     )

  	
   

  
	
  Facsimile:

  	
  (913) 681-5707

  	
   

  	
  Facsimile: (     )

  	
   

  
	
  Federal ID No.

  	
  48-1176095

  	
   

  	
  Federal ID No.

  	
   

  
																					

 

19Exhibit 10.1

 

EXECUTION

 

JOINDER AGREEMENT

 

This JOINDER AGREEMENT (the “Joinder
Agreement”) is made as of the 29th day of July, 2010 by and
among  MARKWEST ENERGY PARTNERS, L.P., a Delaware limited partnership (“Borrower”), WELLS FARGO BANK,
NATIONAL ASSOCIATION, individually and as Administrative Agent (in such
capacity, “Administrative Agent”), Issuing
Bank and Swingline Lender and GOLDMAN SACHS BANK USA (“New
Lender”).

 

RECITALS

 

Borrower, Administrative Agent, Issuing Bank,
Swingline Lender and the Lenders named therein are parties to that certain
Amended and Restated Credit Agreement dated as of July 1, 2010 (as
amended, supplemented, restated, increased, extended or otherwise modified from
time to time, the “Credit Agreement”).  All terms used herein and not otherwise
defined shall have the same meaning given to them in the Credit Agreement.

 

Pursuant to Section 2.09 of the Credit
Agreement, Borrower has the right to cause from time to time
a Commitment Increase by adding to the Credit Agreement an additional Lender
which is reasonably acceptable to the Administrative Agent; provided however (i) no Default or Event of Default has
occurred and is continuing or would exist after giving effect to the Commitment
Increase, (ii) a Notice of Commitment Increase has been given by the
Borrower to the Administrative Agent no later than three Business Days prior to
the Revolving Commitment Termination Date, (iii) the effective date of the
Commitment Increase shall be no earlier than five Business days after Administrative
Agent’s receipt of the Notice of Commitment Increase; (iv) no such
increase shall result in the aggregate amount of the Commitments exceeding
$900,000,000, and (v) no such increase shall be in an amount less than
$5,000,000.

 

AGREEMENT

 

1.             Borrower and New
Lender hereby agree that, from and after the date hereof, New Lender shall have
the Commitment as set forth on the attached Supplement to Schedule 1.  By its execution and delivery of this Joinder
Agreement, New Lender hereby assumes all of the rights and obligations of a
Lender under the Credit Agreement to the extent of such Commitment.  Such Commitment of New Lender shall represent
an increase in the Commitments pursuant to Section 2.09
of the Credit Agreement.

 

2.             Administrative
Agent acknowledges that the New Lender is reasonably acceptable to the
Administrative Agent.

 

3.             New Lender hereby (a) represents
and warrants as follows: (i) it has full power and authority, and has
taken all action necessary to execute and deliver this Joinder Agreement, to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) from and after the Commitment Increase
Effective Date (hereinafter defined), it shall, to the extent of its
Commitment, be bound by the provisions of the Credit Agreement as a Lender
thereunder, and, to the extent of its Commitment, shall have the obligations of
a Lender thereunder, (iii) it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements delivered pursuant
to Sections 6.01 (a) and (b) thereof,
as applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Joinder Agreement on 

 

1

 

the
basis of which it has made such analysis and decision independently and without
reliance on Administrative Agent or any other Lender, and (iv) if it is a
Foreign Lender, attached to this Joinder Agreement is any documentation required
to be delivered by it pursuant to the terms of the Credit Agreement, duly
completed and executed by New Lender; and (b) agrees that (1) it
will, independently and without reliance on Administrative Agent, or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (2) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

 

4.             This Joinder
Agreement shall be effective on the date (the “Commitment
Increase Effective Date”) that (i) Borrower and New Lender
each execute a counterpart hereof and deliver the same to Administrative Agent,
(ii) Administrative Agent, Issuing Bank and Swingline Lender execute
and deliver a counterpart hereof to Borrower and New Lender and (iii) each
of the conditions to the increase in the aggregate Commitment in Section 2.09 of the Credit
Agreement shall have occurred.  From and
after the Commitment Increase Effective Date, New Lender shall be a “Lender”
under the Loan Documents.

 

5.             Upon any increase
in the aggregate Commitment pursuant to Section 2.09,
Lenders have authorized Administrative Agent and Borrower to make non-ratable
borrowings and prepayments of the Loans, and if any such prepayment would
result in payments being due under Section 3.05,
Borrower shall pay any such required amounts in order to keep the outstanding
Loans ratable with any revised Applicable Percentage arising from the
Commitment under this Joinder Agreement. 
On the Commitment Increase Effective Date, New Lender shall make a Loan
for the account of Borrower to the extent necessary to implement such provisions
of Section 2.09 of the Credit
Agreement.

 

6.             Borrower (a) represents
and warrants that, on and as of the Commitment Increase Effective Date, before
and after giving effect to the increase in the aggregate Commitment resulting
hereunder, (i) no Default or Event of Default exists or would exist
immediately after giving effect to the Commitment Increase, (ii) the
representations and warranties contained in Article V
and the other Loan Documents are true and correct in all material respects on
and as of the Commitment Increase Effective Date, except
to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct in all material respects
as of such earlier date and except that for
purposes of this Joinder Agreement the representation and warranty contained in
subsection  (b) of
Section 5.06 shall be deemed to
refer to the most recent financial statements furnished pursuant to clause (a) of Section 6.01, and (iii) all
financial covenants in Section 7.15
would be satisfied on a pro forma basis as of the most recent testing date and
on the Commitment Increase Effective Date after giving effect to the actual
Credit Exposure on the Commitment Increase Effective Date.  Borrower hereby certifies that attached
hereto is a true and correct copy of resolutions of the Board of Directors of
MarkWest Energy GP, L.L.C. acting in its capacity as general partner of the
Borrower authorizing the increase in the aggregate Commitment to $705,000,000
as set forth in this Joinder Agreement.

 

7.             Borrower hereby (i) consents
to the provisions of this Joinder Agreement and the transactions contemplated
herein and (ii) agrees that all of its respective obligations and
covenants thereunder shall remain unimpaired by the execution and delivery of
this Joinder Agreement and the other documents and instruments executed in
connection herewith.

 

8.             This Joinder
Agreement may not be amended, changed, waived or modified, except by a writing
executed by the parties hereto.

 

2

 

9.             This Joinder
Agreement embodies the entire agreement among New Lender, Borrower, Issuing
Bank, Swingline Lender and Administrative Agent with respect to the subject
matter hereof and supersedes all other prior arrangements and understandings
relating to the subject matter hereof.

 

10.          This Joinder
Agreement may be executed in any number of counterparts each of which shall be
deemed to be an original.  Each such
counterpart shall become effective when counterparts have been executed by all
parties hereto.  Delivery of an executed
counterpart of this Joinder Agreement by telecopier or other electronic means
shall be effective as delivery of a manually executed counterpart of this
Joinder Agreement.

 

11.          This Joinder
Agreement shall be binding upon and inure to the benefit of New Lender and
Borrower and their respective successors and permitted assigns, except that
neither party may assign or transfer any of its rights or obligations hereunder
except in compliance with the requirements of Section 10.07
of the Credit Agreement.

 

12.          This Joinder
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York.

 

If requested by New Lender, Borrower shall execute and
deliver to New Lender, as of the Commitment Increase Effective Date, a Note in
the form attached to the Credit Agreement to evidence the Commitment of New
Lender.

 

[REMAINDER
OF PAGE IS INTENTIONALLY LEFT BLANK.]

 

3

 

IN WITNESS WHEREOF,
Administrative Agent, Issuing Bank, Swingline Lender,  Borrower and New Lender have executed this Joinder Agreement as of the date
shown above.

 

 

	
   

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION, as
  Administrative Agent, Issuing Bank and Swingline Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Suzanne F. Ridenhour

  
	
   

  	
   

  	
  Suzanne F. Ridenhour

  
	
   

  	
   

  	
  Vice President

  

 

Signature Page

 

1

 

	
   

  	
  GOLDMAN SACHS BANK USA,

  
	
   

  	
  as New Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Walton

  
	
   

  	
   

  	
  Name: Mark Walton

  
	
   

  	
   

  	
  Title: Authorized Signatory

  

 

Signature Page

 

2

 

	
   

  	
  MARKWEST ENERGY PARTNERS, L.P.,

  
	
   

  	
  as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nancy K. Buese

  
	
   

  	
   

  	
  Nancy K. Buese

  
	
   

  	
   

  	
  Senior
  Vice President

  
	
   

  	
   

  	
  Chief Financial Officer

  

 

Signature Page

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]