Document:

Exhibit 10.25

 

INDUSTRIAL
LEASE

 

This Industrial Lease (“Lease”) dated as of this 4th day of December, 2009, by and
between WELSH ROMULUS, LLC, a Delaware limited
liability company, BPE EXCHANGE, LLC,
a Delaware limited liability company and BPW EXCHANGE, LLC,
a Delaware limited liability company (collectively, “Landlord”)
and A123 SYSTEMS INC., a Delaware
corporation (“Tenant”).

 

WHEREAS, in consideration of the Rent
hereinafter defined, and the covenants contained herein, Landlord and Tenant
hereby agree as follows:

 

1.             Basic Lease Information/Definitions.

 

	
  1.1

  	
   

  	
  Premises

  	
   

  	
  Approximately 287,300
  square feet of office and warehouse space consisting of the entirety of the
  Building (defined below), as depicted on Exhibit A
  attached hereto and incorporated herein by reference. See Article 2.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  Building

  	
   

  	
  The building located at
  38100 Ecorse Road, Romulus, Michigan 48074, situated on that certain real
  property legally described on Exhibit B attached
  hereto and incorporated herein by reference (“Property”),
  initially consisting of approximately 287,300 square feet.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.3

  	
   

  	
  Commencement Date

  	
   

  	
  January 1, 2010

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.4

  	
   

  	
  Term

  	
   

  	
  Ten (10) years
  (120 months) unless sooner terminated or extended pursuant to the terms and
  conditions of this Lease; provided, however, that if the Commencement Date is
  not the first day of a calendar month, the Term shall be extended to the last
  day of the one hundred twentieth (120th) full calendar month.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.5

  	
   

  	
  Base Rent

  	
   

  	
  Base Rent shall be
  fixed for the entire Term at the annual rate of $1,364,675.00 (i.e. $4.75 pre
  rentable square foot of the Premises per annum), payable in equal monthly
  installments of $113,722.92, subject to the abatement provided in
  Article 21 below. See Article 4 and Article 21.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.6

  	
   

  	
  Tenant’s Pro Rata
  Share

  	
   

  	
  100% (which
  percentage is the quotient obtained by dividing the rentable area of the
  Premises by the rentable area of the Building and Property). The estimated
  Additional Rent (as hereinafter defined) for 2010 is $1.94 per square foot.
  See Section 4.2.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.7

  	
   

  	
  Security Deposit

  	
   

  	
  $750,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.8

  	
   

  	
  Tenant’s Notice Address

  	
   

  	
  38100 Ecorse Road

  Romulus, Michigan 48074

  Attention: John Pinho

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  With copies to:

  A123 Systems, Inc.

  Arsenal on the Charles

  321 Arsenal Street

  Watertown, Massachusetts 02472

  Attention: General Counsel

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  and to:

  Wilmer Cutler Pickering Hale and Dorr LLP

  60 State Street

  Boston, Massachusetts 02109

  Attention: Paul Jakubowski, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  See Section 27.5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.9

  	
   

  	
  Landlord’s Notice
  Address

  	
   

  	
  c/o Welsh Companies,
  LLC

  4350 Baker Road

  Minnetonka, MN 55343

  Attention: Asset Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  See Section 27.5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.10

  	
   

  	
  Insurance Requirement

  	
   

  	
  See Article 11.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.11

  	
   

  	
  Guarantor

  	
   

  	
  None

  

 

2.             Lease Grant; Conditions Precedent; Landlord
Cooperation.

 

2.1          Lease Grant.  Subject to
the terms of this Lease, Landlord leases to Tenant, and Tenant leases from
Landlord, the Premises (as defined in Section 1.1 hereof).

 

2.2          Conditions Precedent.  Intentionally
deleted.

 

2.3          Landlord Cooperation.  Landlord is
aware that Tenant intends to apply for federal, state and local grants, loans,
tax abatements and reductions and other incentives with respect to its business
to be conducted at the Premises. Landlord agrees to reasonably cooperate (at no
out-of-pocket expense to Landlord and without incurring any liability to
Landlord on account of such cooperation) with such activities and in no way
object to or impede such activities (provided such activities will not
adversely impact Landlord or the Property) to facilitate such activities.  In connection with the foregoing, Landlord
agrees, at the request of Tenant, to execute any commercially reasonable
documentation (subject to the foregoing limitations) related to the foregoing
and to appear at hearings and/or meetings as reasonably requested by
Tenant.  Further, and notwithstanding
anything to the contrary set forth in this Lease, Tenant shall have the right
to pledge or otherwise grant a first priority security lien or other interest
in its leasehold interest hereunder as well as its interest in any of Tenant’s
furniture, fixtures, equipment or other personal property (“Tenant’s Property”) to the United States Department of
Energy or any other party providing financing to Tenant in connection with the
conduct of Tenant’s business in the Premises, and upon written request by
Tenant, Landlord will execute and deliver Commercially Reasonable Instrument(s) (defined
below) consenting to such financing and/or waiving any statutory or contractual
Landlord’s lien in Tenant’s Property, provided Landlord shall not incur any
cost, expense or liability in connection with such instrument, it being agreed
that Tenant shall be responsible for any fee or review costs charged by its
lender and for Landlord’s out-of-pocket costs, including attorneys fees and
costs, incurred with respect to the same. Landlord’s failure to execute such
instrument shall have no effect on the rights, obligations and liabilities of
Landlord and Tenant or be considered to be a default by Landlord
hereunder.  As used in this Lease, “Commercially Reasonable Instrument(s)” shall be instruments
containing terms and provisions that other prudent institutional owners of
similar first class single tenant industrial buildings in the Romulus,
Michigan, area (“Similar Owners”) would agree to,
provided, for purposes of this Section 2.3, only, such Similar Owners
would be likewise entering into an agreement with a governmental bureau or
agency.

 

3.             Common Areas.

 

“Common Areas”
shall mean all areas within the Property that are not leased or held for the
exclusive use of Tenant or other tenants or licensees, including, but not
limited to, parking areas, driveways, sidewalks, loading areas, access 

 

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roads, corridors,
landscaping and planted areas. Tenant shall have the right to use the Common
Areas for the purposes intended.

 

4.             Rent.

 

4.1          Base Rent.  Subject to
the provisions of Article 21 of this Lease, Tenant shall pay to Landlord
the Base Rent identified in Section 1.5 of this Lease in advance on first
day of each calendar month during the Term, without notice, demand, deduction
or set-off, mailed to Welsh Romulus, LLC, care of Welsh Companies, LLC, 135 S.
LaSalle Street, Suite 1625, Attn: 
Trust Dept/CCM 724727.1, Chicago, Illinois 60603, or such other location
as Landlord shall advise Tenant of from time to time, and Base Rent checks
shall be made payable to Landlord. 
Should the Term commence on a day other than the first day of a calendar
month, Landlord and Tenant agree that Base Rent for the first month of the Term
shall be prorated and Base Rent for the remaining months shall be due and
payable on the first of the month as provided above.  Base Rent plus all other sums due and owing
pursuant to this Lease shall be collectively called “Rent.”

 

4.2          Common Area Expenses, Taxes and Insurance.

 

(i)    “Additional Rent”
shall mean that amount which is equal to Tenant’s Pro Rata Share, as identified
in Section 1.6 of this Lease, of the Expenses and Taxes for the
Building.  Subject to the limitations and
exclusions set forth below, “Expenses” shall
mean all actual costs and expenses paid or incurred by Landlord or its agents
and employees in connection with the performance of its obligations under this
Lease with respect to the ownership, repair, replacement, restoration,
maintenance and operation of the Property, including, but not limited to, the
following: (a) services provided directly by employees of Landlord or its
agents in connection with the operation, maintenance, repair or rendition of
other services to or for the Property; (b) to the extent not separately
metered, billed, or furnished, all charges for utilities and services furnished
to either or both of the Property and the Premises, together with any taxes on
such utilities; (c)  the insurance coverages maintained by Landlord
pursuant to Article 11 below except to the extent the same is to be
maintained by Landlord at its sole cost and expense in accordance with the
terms hereof; (d) the cost of all supplies, tools, materials and equipment
utilized in the ownership and operation of the Property, and sales and other
taxes thereon; (e) amounts charged by any or all of architects,
contractors, engineers or other professionals, materialmen and suppliers for
services, materials and supplies furnished to Landlord in connection with any
or all of the operation, repair and maintenance of any part of the Property
including, without limitation, the Building’s roof, the Building’s associated
surface parking areas, and the Common Area (except as expressly set forth
herein); (f) management fees to Landlord or its agents or other persons or
management entities actually involved in the management and operation of the
Property (which will equal three percent [3%] of annual gross receipts for the
Premises), subject to the provisions of Section 4.4 below; and (g) any
capital improvements made by, or on behalf of, Landlord to the Property which
Landlord makes or directs pursuant to the terms of this Lease that are any of
the following: (1) actually designed to reduce expenses (and in such
event, only to the extent such costs actually reduce Expenses), (2) required
to bring the Property in compliance with any and all laws, statutes,
ordinances, rules, orders, regulations, guidelines and other requirements of
federal, state or local governmental authorities or of any private association
or contained in any restrictive covenants or other declarations or agreements
(hereinafter “Law(s)”) applicable thereto, which
were first enacted (or first enforced based upon a new interpretation thereof)
on or after the Commencement Date, (3) relating to the Building’s roof or
Building’s associated surface parking area, or (4) any Tenant Capital
Improvement Items (defined in Section 8.1(ii) below), in all cases
the cost of which capital improvements, together with seven percent (7%)
interest, shall be amortized by Landlord over the useful life of the
improvement in accordance with generally accepted accounting principles (“GAAP”). Notwithstanding the foregoing or anything to the
contrary set forth in this Lease, “Expenses” shall not include any of the
following:

 

(1)           Costs incurred by Landlord in connection with its
maintenance, repair and replacement of the structure of the Building unless the
need for such maintenance, repair or replacement arises from Tenant’s
negligence, misuse of the Premises, willful misconduct or failure to abide by
the terms and provisions of this Lease;

 

(2)           Any rental payments and related costs pursuant to any
ground lease of land underlying all or any portion of the Property;

 

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(3)           All bad debt loss, rent loss, or reserves for bad debt
or rent loss;

 

(4)           Principal payments of mortgage and other non operating
debts of Landlord;

 

(5)           Expenses which may be considered capital improvements,
capital repairs, capital charges or any other capital costs as determined under
GAAP, except to the extent expressly provided in the definition of Expenses
above;

 

(6)           Payments for rented equipment, the cost of which would
constitute a capital expenditure if the equipment were purchased, in which
event, the above provision regarding the definition of Expenses would govern
the determination of whether such costs are included in Expenses;

 

(7)           Costs incurred by Landlord for the repair of damage to
the Building, to the extent that Landlord is reimbursed for such costs by
insurance proceeds, contractor warranties (in which event Landlord, at its
option, may pursue such claims directly or assign any such warranties to Tenant
for enforcement), guarantees, judgments or other third party sources.  Landlord will use commercially reasonable
efforts to collect on any warranty, guarantee, judgment or other third party
source;

 

(8)           Any expenses for which Landlord has received actual
reimbursement (other than as additional rent from Tenant or through payment by
Tenant of Expenses);

 

(9)           Advertising and promotional expenditures, and costs of
acquisition and maintenance of signs in or on the Building identifying the
owner of the Building;

 

(10)         Leasing commissions, brochures, marketing supplies,
attorney’s fees, costs, and disbursements and other expenses incurred in
connection with negotiation of leases with prospective tenants;

 

(11)         Rental concessions granted to specific tenants and expenses
incurred in renovating or otherwise improving or decorating, painting, or
redecorating space for specific tenants, other than ordinary repairs and
maintenance provided to all tenants;

 

(12)         All items (including repairs) and services for which
Tenant or other tenants pay directly to third parties or for which Tenant or
other tenants reimburse (or are required to reimburse) Landlord (other than
Expenses payable hereunder);

 

(13)         Salaries or fringe benefits of (i) employees
above the grade of building manager or general manager, and (ii) employees
whose time are not spent directly and solely in the operation of the Property,
provided that if any employee performs services in connection with the Building
and other buildings, costs associated with such employee may be proportionately
included in Expenses based on the percentage of time such employee spends in
connection with the operation, maintenance and management of the Building;

 

(14)         Overhead and profit increment paid to subsidiaries or
other affiliates of Landlord for services on or to the Property, Building
and\or Premises to the extent only that the costs of such services exceed the
competitive cost for such services rendered by persons or entities of similar
skill, competence and experience;

 

(15)         All costs associated with the operation of the
business of the ownership or entity which constitutes “Landlord” (as
distinguished from the costs of operating, maintaining, repairing and managing
the Building) including, but not limited to, (i) Landlord’s or Landlord’s
managing agent’s general corporate overhead and general corporate
administrative expenses, (ii) accounting costs, (iii) legal costs,
costs to defend lawsuits with any Landlord’s Mortgagee (defined in Article 12
below) (except as the actions of Tenant may be in issue), (iv) costs of
selling, syndicating, financing, mortgaging or hypothecating Landlord’s
interest in the Building, and (v) costs of disputes between Landlord and
its employees or Building manager;

 

(16)         Any costs, fines or penalties incurred due to
violations of any Laws which were first enacted (or first enforced based upon a
new interpretation thereof) prior to the Commencement Date;

 

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(17)         All assessments and premiums which do not arise from
the acts of Tenant, including the conduct of Tenant’s business in the Premises
or Tenant’s improvements in the Premises, which can be paid in installments,
shall be paid by Landlord in the maximum number of installments permitted by
law, unless the terms of any Mortgage (defined in Article 12 below)
require sooner payment, and in any event shall not be included as Expenses
except in the year in which the assessment or premium installment is actually
paid.

 

(18)         Any fines, costs, penalties or interest resulting from
the negligence or willful misconduct of the Landlord or its agents,
contractors, or employees;

 

(19)         Landlord’s charitable and political contributions;

 

(20)         Costs incurred by Landlord in connection with the
correction of defects in design and original construction of the Building;

 

(21)         All costs of purchasing or leasing major sculptures,
paintings or other major works or objects of art (as opposed to decorations
purchased or leased by Landlord for display in the Common Areas of the Building);

 

(22)         Depreciation; and

 

(23)         Costs incurred in connection with the sale, financing
or refinancing of the Building

 

“Taxes”
shall mean (x) all governmental taxes, assessments, fees and charges of
every kind or nature (other than Landlord’s income taxes), whether general,
special, ordinary or extraordinary, paid due at any time or from time to time,
during the Term and any extensions thereof, in connection with the ownership,
leasing, or operation of the Property, or of the personal property and equipment
located therein or used in connection therewith; and (y) any reasonable
expenses incurred by Landlord in contesting such taxes or assessments and/or
the assessed value of the Property.  For
purposes hereof, Taxes for any year shall be Taxes that are due for payment or
paid in that year rather than Taxes that are assessed, become a lien, or accrue
during such year which obligation shall survive the termination or expiration
of this Lease.  Notwithstanding the foregoing or anything
to the contrary set forth in this Lease, “Taxes” shall not include any income,
capital levy, capital stock, succession, franchise, gift, estate, inheritance,
transfer or deed tax.  If Tenant in the
exercise of its reasonable judgment believes that Taxes are excessive because
of improper valuations, tax rates or special assessments and should be
contested, and Landlord is not contesting Taxes for such year, then Tenant
shall have the right to contest with reasonable diligence the Taxes and to
deduct all reasonable third party out of pocket costs relating to the contest
from any refund obtained from such contest. 
Tenant shall be entitled to collect the entire refund, except to the
extent that the refund applies to taxes attributable to a period that precedes
or follows, in whole or in part, the Term, or in the event Tenant was not
obligated to pay the entirety of the taxes for which the contest was made, in
which case the refund shall be prorated accordingly.  Tenant shall use reasonable diligence in
pursuing any such tax contest, including any settlement thereof; provided,
however, Tenant (a) agrees to consult with Landlord prior to commencing
any such tax contest; and (b) shall not settle any such tax contest
without the approval of Landlord, which may be given or withheld in Landlord’s
reasonable discretion. Landlord agrees to reasonably cooperate (without
incurring any liability to Landlord on account of such cooperation) with any
tax contest and in no way object to or impede such tax contest (provided such
tax contest will not adversely impact Landlord or the Property) to facilitate
such tax contest.  Any fees and costs
assessed with respect to such contest shall be deemed Taxes as provided in the
definition of Taxes above.

 

(ii)           For each year during the Term, Tenant shall pay Tenant’s
Pro Rata Share of Expenses and Taxes as Additional Rent.  Prior to each calendar year, or as soon as
reasonably possible thereafter, Landlord shall estimate and notify Tenant of
the estimated amount of Additional Rent due for such year, and Tenant shall pay
Landlord one-twelfth (1/12) of such estimate on the first day of each month
during such year.  Landlord shall deliver
to Tenant a report setting forth the actual Expenses and Taxes for such
calendar year and a statement of the amount of Additional Rent that Tenant has
paid and is payable for such year. 
Landlord shall use commercially reasonable efforts to deliver such
report within one hundred twenty (120) days after the end of each calendar
year, but in no 

 

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event shall Landlord
deliver such report later than one hundred fifty (150) days after the end of
each calendar year.  Within thirty (30)
days after receipt of such report, Tenant shall pay to Landlord the amount of the
actual Additional Rent due for such calendar year minus any payments of
Additional Rent made by Tenant for such year. 
If Tenant’s estimated payments of Additional Rent exceed the amount due
Landlord for such calendar year, Landlord shall apply such excess as a credit
against Tenant’s other obligations under this Lease or, at Tenant’s written
election, within thirty (30) days after such election refund such excess to
Tenant.  If Landlord’s estimate of Tenant’s
Pro Rata Share of Expenses and Taxes for any calendar year exceeds by more than
five percent (5%) the actual Tenant’s Pro Rata Share of Expenses and Taxes for
that calendar year, Landlord shall include eight percent (8%) interest per
annum on any such excess; provided, however, that if the actual Tenant’s Pro
Rata Share of Expenses and Taxes is lower than Landlord’s estimate of
Additional Rent due to Landlord’s successful appeal regarding the cost of any
items included therein, including any Taxes, or Landlord’s receipt of any sums
from any warranty, guarantee, judgment or other third party source, then for
purposes of this sentence only, Landlord’s estimate of Additional Rent shall be
deemed to have been reduced by like reduction so that the reduction is not
reflected in the difference between Landlord’s estimate and the actual Expenses
and Taxes for such calendar year. Tenant’s obligation to pay (and Landlord’s
obligation to refund) any component of Additional Rent shall survive the
expiration or sooner termination of the Term.

 

(iii)          Tenant may, within one hundred fifty (150) days after
receiving Landlord’s statement of Expenses and Taxes, give Landlord written
notice (“Review Notice”) that Tenant intends to
review Landlord’s records of the Expenses and Taxes for the calendar year to
which such Landlord’s statement relates. 
Within a reasonable time after receipt of the Review Notice, Landlord
shall make all pertinent records available for inspection that are reasonably
necessary for Tenant to conduct its review. 
Tenant may either inspect the records at their location or pay for the
reasonable cost of copying and shipping the records.  If Tenant retains an agent to review Landlord’s
records, the agent must be with a licensed CPA firm.  Tenant shall be solely responsible for all
costs, expenses and fees incurred for the audit; provided, however, if Landlord
and Tenant determine that Expenses and Taxes for the Building for the year in
question were less than stated by more than five percent (5%), Landlord, within
sixty (60) days after its receipt of paid invoices therefor from Tenant, shall
reimburse Tenant for the reasonable amounts paid by Tenant to third parties in
connection with such review by Tenant. 
Within ninety (90) days after the records are made available to Tenant,
Tenant shall have the right to give Landlord written notice (an “Objection Notice”) stating in reasonable detail any
objection to Landlord’s statement of Expenses and Taxes for that year.  If Tenant fails to give Landlord an Objection
Notice within the ninety (90) day period or fails to provide Landlord with a
Review Notice within the one hundred fifty (150) day period described above,
Tenant shall be deemed to have approved Landlord’s statement of Expenses and
Taxes and shall be barred from raising any claims regarding the Expenses and
Taxes for the year to which such Landlord’s statement relates.  If Tenant provides Landlord with a timely
Objection Notice, Landlord and Tenant shall work together in good faith to
resolve any issues raised in Tenant’s Objection Notice.  If Landlord and Tenant determine that Expenses
and Taxes for the calendar year are less than reported, Landlord shall provide
Tenant with a credit against the next installment of Rent in the amount of the
overpayment by Tenant, or, at Tenant’s election, refund any excess amount to
Tenant within thirty (30) days following Tenant’s request therefor.  Likewise, if Landlord and Tenant determine
that Expenses and Taxes for the calendar year are greater than reported, Tenant
shall pay Landlord the amount of any underpayment within thirty (30) days.  The records obtained by Tenant shall be
treated as confidential.  In no event
shall Tenant be permitted to examine Landlord’s records or to dispute any
statement of Expenses and Taxes unless Tenant has paid and continues to pay all
Rent when due.

 

4.3          Late Payment.  If any
installment of Rent or any other sums due from Tenant is not received by
Landlord within ten (10) days following the due date, Tenant will pay to
Landlord a late charge equal to three percent (3%) (provided, however, that if
any installment of Rent is late more than one [1] time in any twelve [12] month
period, the late charge shall equal five percent [5%] on any late payment in
excess of such initial one [1] late payment) (in either case, unless a lesser
rate shall then be the maximum rate permissible by law with respect thereto, in
which event such lesser rate shall be charged) of such overdue amount;
provided, however, that for the first of any delinquency in payment in any
twelve (12) month period the late charge shall not accrue unless Tenant
continues to fail to pay ten (10) days following notice by Landlord of
such failure. Landlord and Tenant hereby agree that such late charge represents
a fair and reasonable estimate of the costs Landlord would incur as a result of
such late payment.

 

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4.4          Triple Net Conversion. 
Notwithstanding anything to the contrary set forth in this Lease, in the
event that Tenant collectively leases from Landlord and/or entities which
control, are controlled by, or are under common control with, Landlord (such
entities, “Landlord Affiliates”) space in the
State of Michigan exceeding, in the aggregate, 1,000,000 rentable square feet
(the “Triple Net Premises”), Tenant shall
have the right, upon the giving of not less than ninety (90) days written
notice to Landlord, and so long as Tenant assumes any service contracts that
Landlord entered into with third parties with respect to the given Triple Net
Premises (provided Tenant will not be obligated to assume any service contracts
with a remaining term in excess of twenty-four (24) months), to take over and
assume the repair, replacement, maintenance and operation of any Triple Net
Premises for which Tenant leases the entire rentable square footage, except
with respect to any repair, replacement, maintenance or operation obligations
of Landlord for which Landlord is not reimbursed through Expenses
(collectively, “Non-Reimbursed Landlord Related Items”);
it being agreed that Landlord will remain liable for the performance of such
Non-Reimbursed Landlord Related Items. 
In such event, except with respect to Non-Reimbursed Landlord Related
Items, Tenant shall be responsible, if and to the extent Landlord was otherwise
responsible for the same, for all impositions, insurance premiums, utility
charges, maintenance, repair and replacement expenses, payments or charges
under covenants, conditions and restrictions now of record or hereafter of
record, all expenses relating to compliance with all Laws in effect on or after
the effective date of Tenant’s assumption and applicable to the Premises or the
use or occupancy of the Premises, and all other costs, fees, charges, expenses,
reimbursements and obligations of every kind and nature whatsoever relating to
the Premises which may arise or become due during the term or by reason of
events occurring during the Term shall be paid or discharged by Tenant, at
Tenant’s sole cost and expense.  Tenant
will promptly notify Landlord if and when it becomes aware of the need for any
Non-Reimbursed Landlord Related Items. 
Following the effective date of such take over and assumption, Tenant
shall be obligated, at its sole cost and expense, to perform all repair,
replacement, maintenance and operation of the Triple Net Premises (subject to
the foregoing caveat regarding the Non-Reimbursed Landlord Related Items) in a
manner consistent with Similar Owners and perform the obligations of Landlord
contemplated by this Lease other than with respect to the performance of any
Non-Reimbursed Landlord Related Items, in which event Tenant shall not be
obligated to reimburse Landlord for its Pro Rata Share of Expenses (such as the
actual costs and expenses paid or incurred with respect to the ownership,
repair, replacement, maintenance and operation of the Property), except for the
insurance coverages maintained by Landlord pursuant to Article 11 below,
and the terms and provisions of subparagraph (ii) of Section 4.2
above shall be inapplicable except with respect to any partial year preceding
Tenant’s assumption of the repair, replacement, maintenance and operation of
any Triple Net Premises; it being the intent of the parties that with respect
to any Triple Net Premises Landlord be entitled to a reimbursement from Tenant
of 100%, but in no event in excess of 100%, of the costs actually paid or
incurred by Landlord (other than for Non-Reimbursed Landlord Related
Items).  Nothing herein contained,
however, shall relieve Tenant from its obligation to pay Taxes for the Building
in accordance with the provisions of Section 4.2 hereof.

 

5.             Security Deposit; Guaranty.

 

5.1          Security Deposit.

 

5.1.1       On or before five (5) days following full
execution and delivery of this Lease, Tenant shall pay to Landlord the Security
Deposit as security for Tenant’s performance of all of Tenant’s covenants and
obligations under this Lease; provided, however, that the Security Deposit is
not an advance rent deposit or an advance payment of any other kind, nor a
measure of Landlord’s damages upon Tenant’s Default.  Landlord shall not be required to segregate
the Security Deposit from its other funds and no interest shall accrue to be
payable to Tenant with respect thereto. 
Landlord may (but shall not be required to) use the Security Deposit or
any portion thereof to cure any Default or to compensate Landlord for any
damage Landlord incurs as a result of Tenant’s failure to perform any of its
covenants or obligations hereunder, it being understood that any use of the
Security Deposit shall not constitute a bar or defense to any of Landlord’s remedies
under this Lease or at law.  In such
event and upon written notice from Landlord to Tenant specifying the amount of
the Security Deposit so utilized by Landlord and the particular purpose for
which such amount was applied, Tenant shall immediately deposit with Landlord
an amount sufficient to return the Security Deposit to the full amount required
under this Lease.  Tenant’s failure to
make such payment to Landlord within ten (10) days of Landlord’s notice
shall constitute a Default.  If Tenant is
not in Default at the expiration or termination of this Lease, Landlord shall
return to Tenant the Security Deposit or the balance thereof then held by
Landlord; provided, however, that in no event shall any such return be
construed as an admission by Landlord that Tenant has performed all of its
covenants and obligations hereunder.

 

7

 

5.1.2       The Security Deposit may be in the form of an
irrevocable  letter of credit (the “Letter of Credit”), which Letter of Credit shall:  (a) be in the amount of $750,000.00; (b) be
in form and substance reasonably satisfactory to Landlord; (c) name
Landlord as its beneficiary; (d) be drawn on an FDIC insured financial
institution satisfactory to the Landlord (Landlord acknowledging and agreeing
that as of the date of its execution of this Lease Landlord approves Silicon
Valley Bank, J.P. Morgan and Bank of America, National Association as potential
issuers of the Letter of Credit); (e) expressly allow Landlord to draw
upon it:  (i) in the event that the
Tenant is in Default under the Lease by delivering to the issuer of the Letter
of Credit written notice that Landlord is entitled to draw thereunder pursuant
to the terms of this Lease; or (ii) if Tenant, within sixty (60) days prior
to expiration of the Letter of Credit then held by Landlord, fails to provide
Landlord with a replacement Letter of Credit meeting the requirements herein; (f) if
generally required by prudent institutional owners and customarily issued by
issuing banks, expressly state that it will be honored by the issuer without
inquiry into the accuracy of any such notice or statement made by Landlord; (g) expressly
permit multiple or partial draws up to the stated amount of the Letter of
Credit; (h) expressly provide that it is transferable to any successor of
Landlord; and (i)  expire no earlier than sixty (60) days after the
expiration of the Term of this Lease or provide for automatic annual renewals
such that the Letter of Credit, as renewed each year, will expire no earlier
than sixty (60) days after the expiration of the Term of this Lease.  In the event the issuer of the Letter of
Credit elects not to renew the Letter of Credit for any period required
hereunder, then if Tenant fails to provide Landlord with a replacement Letter
of Credit that complies with the requirements of this Section 5.1.2 at
least thirty (30) days prior to the stated expiration date of the Letter of
Credit then held by Landlord, Landlord may draw upon such Letter of Credit and
hold the proceeds thereof (and such proceeds need not be segregated) as a
Security Deposit pursuant to the terms of this Section 5.1.  Any renewal or replacement of the original or
any subsequent Letter of Credit shall meet the requirements for the original
Letter of Credit as set forth above, except that such replacement or renewal
shall be issued by an FDIC insured financial institution reasonably
satisfactory to the Landlord at the time of the issuance thereof.

 

5.1.3       If Landlord draws on the Letter of Credit as permitted
in this Lease or the Letter of Credit, then, upon demand of Landlord, Tenant
shall restore the amount available under the Letter of Credit to its original
amount by providing Landlord with an amendment to the Letter of Credit
evidencing that the amount available under the Letter of Credit has been
restored to its original amount.  In the
alternative, Tenant may provide Landlord with cash, to be held by Landlord in
accordance with this Article, equal to the restoration amount required under
the Letter of Credit.

 

5.1.4       The initial Letter of Credit shall be issued by a
commercial bank acceptable to Landlord (a) that is chartered under the
laws of the United States, any State thereof or the District of Columbia, (b) which
is insured by the Federal Deposit Insurance Corporation; (c) whose
long-term, unsecured and unsubordinated debt obligations are rated by at least
two of the following: (i) Fitch Ratings Ltd. (“Fitch”),
(ii) Moody’s Investors Service, Inc. (“Moody’s”)
and (iii) Standard & Poor’s Ratings Services (“S&P”), or their respective successors (collectively, the
“Rating Agencies”) with ratings of not
less than A from Fitch, A2 from Moody’s and A from S&P; and (d) which
has a short term deposit rating from at least two Rating Agencies with ratings
of not less than A1 from Fitch, P-1 from Moody’s and A-1 from S&P
(collectively, the “LC Issuer Requirements”).  If at any time the LC Issuer Requirements are
not met, Landlord shall notify Tenant as such, in which event Tenant shall have
five (5) business days to provide a letter of credit from an issuer
meeting the LC Issuer Requirements, or otherwise reasonably acceptable to
Landlord based on the then-existing status of financial firms.  Tenant’s failure to provide a replacement
letter of credit as aforesaid shall entitle Landlord to draw upon the Letter of
Credit and hold the proceeds thereof as the Security Deposit hereunder in
accordance with the terms of this Article 5.

 

5.1.5       Subject to the remaining terms of this Section 5.1,
and provided no more than one (1) monetary Default has occurred under this
Lease during the twelve (12) month period immediately preceding the effective
date of any reduction of the Security Deposit and that such monetary Default
was cured within any applicable notice and cure period set forth in this Lease,
Tenant shall have the right to reduce the amount of the Security Deposit (i.e.,
the Letter of Credit) so that the reduced Letter of Credit amounts will be as
follows:  (i) $500,000.00 effective
as of the first anniversary of the Commencement Date; (ii) $250,000.00
effective as of second anniversary of the Commencement Date; and (iii) $0.00
effective as of the third anniversary of the Commencement Date.  If Tenant is not entitled to reduce the
Security Deposit (i.e., the Letter of Credit) as of a particular reduction
effective date due to Tenant being in monetary Default under this Lease more
than one (1) time in any twelve (12) month period preceding such
reduction, then any subsequent reduction(s) Tenant is entitled to hereunder
shall be reduced by the amount of the reduction Tenant would have been entitled
to had Tenant timely paid all Rent during 

 

8

 

the twelve (12) months
prior to that particular earlier reduction effective date.  Any reduction in the Letter of Credit shall
be accomplished by Tenant providing Landlord with a substitute letter of credit
in the reduced amount, or by an amendment to the existing Letter of Credit
pursuant to which the amount thereof is reduced, provided such amendment is in
form and substance reasonably acceptable to Landlord.

 

5.2          Guaranty. 
Intentionally Deleted.

 

6.             Delivery of Premises.

 

6.1          Condition of Premises. Tenant agrees that Tenant is familiar with the
condition of both the Premises and the Property, and Tenant hereby accepts the
foregoing on an “AS-IS,” “WHERE-IS” basis, subject to Landlord’s obligation to
deliver the Premises to Tenant on the Commencement Date broom clean, and free
and clear of all occupants, debris and personal property except the personal
property described on Exhibit C (the
“Transferred Personal Property”), and
further subject to Landlord’s obligation to perform the work described on Exhibit D attached hereto and incorporated herein by
reference (“Landlord’s Work”).  In consideration of Tenant’s entry into this
Lease and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Landlord does hereby sell, assign, transfer, quit
claim and set over unto Tenant the Transferred Personal Property.  Landlord covenants to and with Tenant, to the
best of its knowledge, that (i) Landlord is the lawful owner of the
Transferred Personal Property and (ii) the Transferred Personal Property
is free from liens, security interests and encumbrances except with respect to
any of the foregoing held by the current Landlord’s Mortgagee.  For purposes of the foregoing covenant, “to
the best of its knowledge” means the knowledge of Thomas Schoenberger, the
regional real estate director for Welsh Companies, an affiliate of Landlord,
without duty of inquiry.  Landlord makes
no warranty of merchantability or fitness for purpose with respect to the
Transferred Personal Property, and the same is transferred in an “as is, where
is” condition, with all faults.  By
acceptance of delivery of the Transferred Personal Property, Tenant affirms
that Landlord makes no warranty that the Transferred Personal Property is fit
for any particular purpose and that there are no representations or warranties,
expressed, implied, or statutory. 
Landlord’s Work shall be, except as expressly set forth on said Exhibit D:
(i) diligently prosecuted as soon as commercially reasonable subsequent to
the Commencement Date, (ii) performed using Building standard materials
and methods, and (iii) at the sole cost and expense of Landlord. Tenant
acknowledges that the Landlord’s Work may be performed by Landlord in the
Premises during normal business hours subsequent to the Commencement Date.  Landlord and Tenant agree to cooperate with
each other in order to enable the Landlord’s Work to be performed in a timely
manner and with as little inconvenience to the operation of Tenant’s business
as is reasonably possible. 
Notwithstanding anything herein to the contrary, any delay in the
completion of the Landlord’s Work or inconvenience suffered by Tenant during
the performance of the Landlord’s Work in accordance with the terms set forth
above shall not subject Landlord to any liability for any loss or damage
resulting therefrom or entitle Tenant to any credit, abatement or adjustment of
Rent or other sums payable under the Lease; provided, however, that Tenant
shall be provided a so-called self help right in accordance with the provisions
of Section 8.1(i) below. 
Tenant acknowledges that except as expressly set forth in this Lease
neither Landlord nor Landlord’s agent, nor any representative of Landlord, has
made any representation as to the condition of the foregoing or the suitability
of the foregoing for Tenant’s intended use. 
Landlord represents that it has not received any notices (that have not
been corrected) from governmental authorities that any of the Premises,
Building or Property is in violation of any Laws, including, without
limitation, Title III of the Americans With Disabilities Act (the “ADA”).  Further,
Landlord represents that the base Building core, Building shell and surrounding
site work comply with applicable zoning and municipal building codes.  Said warranties do not apply to the use to
which Tenant will put the Premises, modifications which may be required by the
ADA, Environmental Laws or any similar Laws as a result of Tenant’s use, or to
any Alterations (as defined in Paragraph 8.2 below) made or to be made by
Tenant.  Tenant is responsible for
determining whether or not the zoning, ADA, Environmental Laws (collectively,
the “Applicable Requirements”) are
appropriate for Tenant’s intended use, and acknowledges that past uses of the
Premises may no longer be allowed. If the Premises do not comply with said
warranties, Landlord shall, except as otherwise provided, promptly after
receipt of written notice from Tenant setting forth with specificity the nature
and extent of such non-compliance, rectify the same and Landlord shall
indemnify Tenant for any costs, claims, damage or expense incurred by Tenant as
a result of the inaccuracy of such warranties. 
Landlord will sign Commercially Reasonable Instrument(s) (including
without limitation a so-called owner’s affidavit) requested by Tenant’s title
company with respect to the issuance of a leasehold title insurance policy to
Tenant insuring this Lease.

 

9

 

6.2          Delay in Commencement.  Unless due to
Landlord’s gross negligence or willful misconduct, Landlord shall not be liable
to Tenant if Landlord does not deliver possession of the Premises to Tenant on
the Commencement Date.  For purposes of
this Lease, Landlord shall be deemed to have delivered the Premises to Tenant
when the Premises are made available for Tenant’s occupancy, the parties hereto
acknowledging and agreeing that Tenant shall be liable for obtaining all
permits, licenses, and other authorizations necessary to permit Tenant to
construct any Alterations in connection with its initial fit out of the
Premises and to use and occupy the Premises for the use specified in this Lease
in accordance with all applicable Laws. 
The obligations of Tenant under this Lease shall not be affected
thereby, except that the Commencement Date shall be delayed until Landlord
delivers possession of the Premises to Tenant, and the Term of this Lease shall
be extended by a period equal to the number of days of delay in delivery of
possession of the Premises to Tenant, plus the number of days necessary to end
the Term of this Lease on the last day of a month.  Notwithstanding the foregoing, if the
Commencement Date has not occurred on or before the thirty-first (31st) day following full execution and delivery of this
Lease (the “Required Delivery Date”), Tenant,
as its sole remedy, may terminate this Lease by giving Landlord written notice
of termination at any time thereafter until the Commencement Date.  In such event, this Lease shall be deemed
null and void and of no further force and effect and Landlord shall promptly
refund any prepaid rent and Security Deposit previously advanced by Tenant
under this Lease and the parties hereto shall have no further responsibilities
or obligations to each other with respect to this Lease.

 

7.             Utilities.

 

Tenant shall
obtain all electricity, natural gas, telephone and other utilities that are
separately metered to the Premises directly from the company furnishing
same.  Tenant shall pay all utility
deposits and fees, and all monthly service charges for such utility services
furnished to the Premises during the Term of this Lease.  Tenant’s failure to obtain, Landlord’s
failure to furnish, or any interruption or termination of, services due to the
application of Laws, the failure of any equipment, the performance of repairs,
improvements or alterations, or the occurrence of any event or cause (a “Service Failure”) shall not render Landlord liable to
Tenant, constitute a constructive eviction of Tenant, give rise to an abatement
of Rent, nor relieve Tenant from the obligation to fulfill any covenant or
agreement.  However, if the Premises, or
a material portion of the Premises, is made untenantable for a period in excess
of three (3) consecutive business days as a result of a Service Failure,
then Tenant, as its sole remedy, shall be entitled to receive an abatement of
Rent payable hereunder during the period beginning on the fourth (4th) consecutive business day of the Service Failure and
ending on the day the service has been restored.  If the entire Premises has not been rendered
untenantable by the Service Failure, the amount of abatement that Tenant is
entitled to receive shall be prorated based upon the percentage of the Premises
rendered untenantable and not used by Tenant. 
Notwithstanding the foregoing, if a Service Failure (a) continues
for two hundred seventy (270) consecutive days after the Service Failure and (b) is
not being diligently remedied by Landlord, then Tenant, as its sole remedy,
shall have the right to elect to terminate this Lease at any time thereafter
until such Service Failure is restored without penalty, by delivering written
notice to Landlord of its election thereof. 
The foregoing termination right shall not apply if the Service Failure
is due to fire or other casualty. 
Instead, in such an event, the terms and provisions of Article 15
shall apply.

 

8.             Alterations; Repairs; Maintenance; Signs.

 

8.1          Repairs; Maintenance.

 

(i)            Landlord shall, at its sole cost and expense, keep the
Building’s exterior walls, footings, structural portions of load-bearing walls,
and structural columns and beams (collectively, the “Building
Structure”) in good repair and shall make all needed repairs and
replacements.  Landlord shall also keep (a) the
Building’s roof, (b) the Building’s associated surface parking areas, (c) the
Common Area, and (d) Tenant Capital Improvement Items in good repair and
shall make all needed repairs and replacements, the cost of which can be passed
through to Tenant to the extent permitted by Section 4.2 above.  Landlord, however, shall not be required to
make any repairs occasioned by the wrongful act or negligence of Tenant, its
agents, contractors, employees, subtenants, invitees, customers, licensees and
concessionaires (collectively, the “Tenant Related Parties”).  In the event the Premises should become in
need of repairs or replacements required to be made by Landlord hereunder,
Tenant shall give prompt written notice thereof to Landlord and Landlord shall
have a reasonable time after receipt by Landlord of such written notice in
which to make such repairs.  Landlord
shall not be liable to Tenant for any interruption of Tenant’s business or
inconvenience caused due to any work performed in the Premises pursuant to
Landlord’s rights

 

10

 

and obligations
under this Lease; provided that Landlord shall use diligent efforts to complete
such repairs as expeditiously as possible and in performing such work Landlord
shall use commercially reasonable efforts consistent with Similar Owners to minimize
any interference with Tenant’s use or occupancy of the Premises.  Landlord shall use efforts consistent with
Similar Owners to keep the parking areas and sidewalks of the Property free and
clear of dirt, rubbish, ice and snow.  To
the extent allowed by law, Tenant waives the right to make repairs at Landlord’s
expense under any Laws now or hereafter in effect.  Notwithstanding the foregoing, if the
Premises, or any portion of the Premises, is made untenantable for a period in
excess of three (3) consecutive business days as a result of Landlord’s
failure to comply with the terms of this paragraph, then Tenant, as its sole
remedy, shall be entitled to receive an abatement of Rent payable hereunder
during the period beginning on the fourth (4th)
consecutive business day of such failure and ending on the day Landlord
performs as required under this paragraph. 
If the entire Premises has not been rendered untenantable by Landlord’s
failure to perform, the amount of abatement that Tenant is entitled to receive
shall be prorated based upon the percentage of the Premises rendered
untenantable and not used by Tenant.  If
Landlord fails to take any action which Landlord is obligated to take under Section 6.1
with respect to Landlord’s Work or under this Section 8.1, Tenant may
deliver written notice thereof to Landlord (“Initial
Notice”).  The Initial Notice
must specifically describe the action that is required of Landlord to satisfy
the requirements of said Section 6.1 or this Section 8.1.  If within three (3) business days of
receiving Tenant’s Initial Notice, Landlord fails to cure or commence to cure
the items specified in the Initial Notice, Tenant may deliver to Landlord a
second notice (“Reminder Notice”).  The Reminder Notice must include a copy of
the Initial Notice and specify that Tenant will have the rights granted under
said Section 6.1 or this Section 8.1 if Landlord fails to cure or
commence to cure the specified items within three (3) business days of
receipt of the Reminder Notice.  If
Landlord fails to take or commence to take (and diligently pursue to
completion) the required action within three (3) business days of
receiving the Reminder Notice or, in the event of any emergency condition which
will likely render all or any portion of the Premises unusable, such as
flooding, without sending any Initial Notice or Reminder Notice, then Tenant
may, subject to the terms of this Section 8.1, proceed to take the
required action with respect to the Premises (but solely on its own behalf, and
not as the agent of Landlord).  Unless
Landlord delivers a written objection to Tenant as set forth below, Landlord
will reimburse Tenant for Tenant’s reasonable out-of-pocket costs and expenses
in taking such action within thirty (30) days after receiving an invoice from
Tenant setting forth a reasonably particularized breakdown of such costs and
expenses.  If Landlord does not so object
and does not pay such invoice within sixty (60) days after Landlord receives
the invoice, then Tenant may thereafter deduct from Base Rent the amount set
forth in such invoice; provided that in no event may Tenant deduct more than
fifty percent (50%) of the Base Rent due during any single month as a result of
the rights granted under this Section 8.1. 
If, however, Landlord delivers to Tenant, within thirty (30) days after
receiving Tenant’s invoice, a written objection to the payment of such invoice
setting forth with reasonable particularity any defenses to payment Landlord
believes it has (such as, for example, any claim that all or any portion of
such action did not have to be taken by Landlord pursuant to the terms of this
Lease, or that the charges are excessive (in which case Landlord will pay the
amount it contends would not have been excessive, or other justifiable
reasons), then Tenant will not be entitled to make any deduction from Base
Rent, and if the parties are unable to resolve Landlord’s objections then
Tenant, as Tenant’s sole remedy, may institute an action at law to collect the
unpaid amount.  The provisions of this Section 8.1
will not operate to exclude from Expenses any item properly includable therein.

 

(ii)           Tenant shall keep the Premises in good, clean and
habitable condition and shall at its sole cost and expense keep the same free
of dirt, rubbish, insects, rodents, vermin and other pests and make all needed
repairs and replacements, including replacement of cracked or broken glass,
except for repairs and replacements required to be made by Landlord.  Without limiting the coverage of the previous
sentence, it is understood that Tenant’s responsibilities include the repair
and replacement of the Premises’ and Building’s HVAC, life-safety, plumbing,
electrical, and mechanical systems; all doors, overhead or otherwise, glass and
levelers located in the Premises or otherwise available at the Premises for
Tenant’s use, the roof and the parking lot (collectively, the “Building Systems”) in accordance with all applicable
Laws.  Notwithstanding the foregoing, if
any of the foregoing repairs or replacements are Tenant Capital Improvement
Items (defined below), they will be performed by Landlord pursuant to 8.1(i) above
and chargeable to Tenant as Expenses pursuant to Section 4.2 above.  For purposes of this Lease, “Tenant Capital Improvement Items” are items which would be
deemed a capital improvement under GAAP, so long as the same are not required
to be made to, or as a result of, any Alteration (including without limitation
to or as a result of any Separately Insurable Alteration [defined in Section 8.2
below]), it being the understanding of the parties hereto that all repairs and
replacements to or on account of Alterations shall be performed by, and at the
sole cost and expense of, Tenant pursuant to this paragraph (ii).  Notwithstanding the foregoing, Landlord shall
be responsible for the costs of maintenance and repair with respect to the
Building’s 

 

11

 

HVAC that currently serve
the Building (specifically excluding the five [5] rooftop units that were
abandoned or relinquished by former occupants of the Building and do not
currently provide HVAC to the Building [the “Abandoned
Units”], which neither Landlord nor Tenant are obligated to maintain
or repair except as expressly provided below) during the first twelve (12) months
of the Term and such costs shall not be included in Expenses hereunder.  Furthermore, in the event, at any time and
from time to time during the Lease, Tenant elects to utilize one or more of the
Abandoned Units to serve the Premises, Landlord will reimburse Tenant for the
out-of-pocket cost incurred by Tenant for any repair or maintenance thereto
during the first twelve (12) months of such use (or such lesser period of time
in the event of the earlier expiration or termination of the Term), up to a maximum
sum of $2,000.00 per each of the Abandoned Units so utilized (the “Abandoned Units Allowance”). 
The Abandoned Units Allowance or appropriate portion thereof will be
paid to Tenant within thirty (30) days of Landlord’s receipt of paid invoices
for maintenance and/or repair costs.  The
Abandoned Units Allowance is not chargeable to Tenant as Expenses.  Tenant covenants and agrees that all water
and wash closets, drinking fountains and other plumbing fixtures will not be
used for any purpose other than those for which they were constructed, and no
sweepings, rubbish, rags, coffee grounds or other substances may be thrown
therein. Tenant shall store all trash and garbage in proper receptacles or
other facilities for such purpose within the Premises or in a trash dumpster or
similar container; and Tenant shall arrange for the regular pick-up of such
trash and garbage at Tenant’s expense. 
If any repairs required to be made by Tenant hereunder are not made
within thirty (30) days after written notice delivered to Tenant by Landlord,
then unless Tenant is diligently pursuing the completion of such repairs,
Landlord may at its option make such repairs without liability to Tenant for
any loss or damage which may result to its stock or business by reason of such
repairs (provided that Landlord shall use efforts consistent with other Similar
Owners to complete such repairs in a timely manner without unreasonable
interference to Tenant’s conduct of business) and Tenant shall pay to Landlord
upon demand, as Rent hereunder, the cost of such repairs plus interest at the
rate of eight percent (8%) per annum, such interest to accrue continuously from
the date of payment by Landlord until repayment by Tenant.  Notwithstanding the foregoing, Landlord shall
have the right to make such repairs without notice to Tenant in the event of an
emergency if Tenant is not diligently performing the same.  If, during repair, Landlord elects to store
any personal property of Tenant, including goods, wares, merchandise,
inventory, trade fixtures and other personal property of Tenant, same shall be
stored at the sole risk of Tenant. 
Except to the extent the same results from the negligence or willful
misconduct of Landlord or its agents, Landlord or its agents shall not be
liable for any loss or damage to persons or property resulting from fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak from any part of the Premises or from the pipes, appliances or plumbing
works therein or from the roof, street or subsurface or from any other places,
or from the act or negligence of any other tenant or any officer, agent,
employee, contractor or guest of any such tenant.

 

8.2           Alterations.  Tenant shall
not make any alterations, additions or improvements to the Premises including,
without limitation, the installation of satellite dishes, antennae or similar
equipment (each, an “Alteration” and
collectively, the “Alterations”)
without the prior written consent of Landlord, which Landlord’s consent shall
not be unreasonably withheld or conditioned, and in compliance with Landlord’s
reasonable requests regarding any installation required, except for the
installation of unattached, movable trade fixtures which may be installed
without drilling, cutting or otherwise defacing the Premises. Landlord shall
respond to Tenant within thirty (30) days following receipt of Tenant’s request
for approval of a proposed Alteration; it being further agreed that, solely
with respect to any Separately Insurable Alteration (defined below), if Landlord
does not so respond within such 30 day period and continues to fail to respond
within fifteen (15) days following Landlord’s receipt of Tenant’s written
notice of such failure, Landlord shall be deemed to have approved the
Separately Insurable Alteration in question. Any Alteration (other than a
Cosmetic Alteration [defined below]) that is (i) solely an improvement or
betterment to the Property (as opposed to a replacement or repair of any
existing portion of the Property), (ii) capable of being insured
separately from the balance of the Building and (iii) not integral to the
Building or Property such that the Building or Property could operate as a full
architectural unit and in substantially similar condition as it exists as of
the Commencement Date without the same, shall hereinafter be a “Separately Insurable Alteration”.  For purposes of clarification, to the extent
they comply with the provisions set forth above and may be covered by the
improvements and betterments insurance coverage maintained by Tenant, fixtures
and other items or Alterations which may attach to the Property shall be
considered Separately Insurable Alterations. 
In no event will Tenant be permitted to attach to the outside walls of
the Premises or Building any awnings or other projections, except any signage
expressly approved under this Lease. 
However, consent shall not be required for any Alterations that satisfy
all of the following criteria (a “Cosmetic Alteration”):  (1) is of a cosmetic nature such as
painting, wallpapering, hanging pictures and installing carpeting; (2) is
not visible from the exterior of the Premises or Building; (3) will not
materially adversely affect the systems or structure of the Building; and (4) does
not require work to be performed 

 

12

 

inside the walls or above
the ceiling of the Premises.  However,
even though consent is not required, the performance of Cosmetic Alterations
shall be subject to all the other provisions of this Article 8.  Tenant shall furnish complete plans and
specifications to Landlord for its approval at the time it requests Landlord’s
consent to any Alterations if the desired Alterations: (i) will affect the
Building Systems or Building Structure; or (ii) will require the filing of
plans and specifications with any governmental or quasi-governmental agency or
authority; or (iii) will cost in excess of Fifty Thousand Dollars
($50,000.00).  Prior to commencement of
any Alterations Tenant shall deliver to Landlord any building permit required
by applicable Laws and a copy of the executed construction contract(s).  Except with respect to the Alterations Tenant
intends to perform in connection with its initial occupancy of the Premises
(for which no fees shall be payable), Tenant shall reimburse Landlord within
thirty (30) days after the rendition of a bill for all of Landlord’s actual
out-of-pocket costs incurred in connection with any Alterations, including all
engineering, outside consulting, and construction fees incurred by or on behalf
of Landlord for the review and approval of Tenant’s plans and specifications
and for the monitoring of construction of the Alterations.  If Landlord consents to the making of any
Alteration, such Alteration shall be made by Tenant at Tenant’s sole cost and
expense by a contractor approved in writing by Landlord.  Tenant shall require its contractor to
maintain insurance in such amounts and in such form as detailed in paragraphs (b) and
(e) on Exhibit H attached
hereto.  If the Alterations which Tenant
causes to be constructed result in Landlord being required to make any
alterations and/or improvements to other portions of the Premises, as
applicable, in order to comply with any applicable Laws, which alterations
would not otherwise not need to be made but for such Alterations by Tenant,
then Tenant shall reimburse Landlord upon demand for all costs and expenses
incurred by Landlord in making such alterations and/or improvements.  Subject to the provisions of Article 18
of this Lease, any Alterations made by Tenant shall become the property of
Landlord upon installation and shall remain on and be surrendered with the
Premises upon the expiration or sooner termination of this Lease, except Tenant
shall upon demand by Landlord, at Tenant’s sole cost and expense, remove all or
any portion of any Alterations made by Tenant which are designated by Landlord
to be removed and repair and restore the Premises in a good and workmanlike
manner to their original condition, reasonable wear and tear excepted.  Notwithstanding the foregoing, Tenant, at the
time it requests approval for any Alterations or at any time thereafter, may
request in writing that Landlord advise Tenant whether the Alterations or any
portion of the Alterations must be removed upon the expiration or sooner
termination of this Lease.  Within
fifteen (15) days after receipt of Tenant’s request, Landlord shall advise
Tenant in writing as to which portions of the Alterations, if any, will be
required to be removed.  If Tenant sends
such request to both Landlord and Landlord’s Mortgagee and if Landlord
thereafter fails to so advise Tenant and continues to fail to advise Tenant
within five (5) days after receipt by Landlord and Landlord’s Mortgagee of
Tenant’s notice of such failure, Landlord will be deemed to have determined
that the Alterations need not be removed upon the expiration or sooner
termination of this Lease.

 

8.3           Performance of Work.  All work
described in this Article 8 shall be performed only by contractors and
subcontractors approved in writing by Landlord, such approval not to be
unreasonably withheld, conditioned or delayed. 
In the event that Tenant sends notice of a request for approval of a
contractor and/or subcontractor to Landlord, Landlord shall respond to Tenant
within thirty (30) days following receipt of Tenant’s request.  The parties agree that Landlord’s approval of
the general contractor to perform the Alterations shall not be considered to be
unreasonably withheld if any such general contractor (i) does not have
trade references reasonably acceptable to Landlord, (ii) does not maintain
insurance as required pursuant to the terms of this Lease, (iii) does not
have the ability to be bonded for the work in an amount of no less than
$2,000,000.00, or (iv) is not licensed as a contractor in the
state/municipality in which the Premises is located.  Tenant acknowledges the foregoing is not
intended to be an exclusive list of the reasons why Landlord may reasonably
withhold its consent to a general contractor. 
Tenant shall provide Landlord with the identities, mailing addresses and
telephone numbers of all persons performing work or supplying materials prior
to beginning such construction and Landlord may post on and about the Premises
notices of non-responsibility pursuant to applicable Laws.  All construction work done by Tenant within
the Premises shall be performed in a good and workmanlike manner with materials
consistent with the quality and age of materials used in similar tenant
improvement project in buildings owned by Similar Owners, lien-free and in
compliance with all Laws. Landlord’s consent to or approval of any alterations,
additions or improvements shall not constitute a representation or warranty by
Landlord, nor Landlord’s acceptance, that the same comply with sound architectural
and/or engineering practices or with all applicable Laws, and Tenant shall be
solely responsible for ensuring all such compliance.  All work affecting the roof of the Building
must be performed by Landlord’s roofing contractor or a contractor approved by
Landlord (such approval not to be unreasonably withheld, conditioned or
delayed) and no such work will be permitted if it would void or reduce any
warranty on the roof.  Tenant agrees to
indemnify, defend and hold Landlord harmless against any loss, liability or
damage resulting from such work.  The
foregoing indemnity shall survive the expiration or earlier termination of this
Lease.

 

13

 

8.4           Mechanics Liens.  All work
performed, materials furnished, or obligations incurred by or at the request of
Tenant shall be deemed authorized and ordered by Tenant only, and Tenant shall
not permit any mechanic’s liens to be filed against the Premises in connection
therewith.  Upon completion of any such
work, Tenant shall deliver to Landlord final lien waivers from all contractors,
subcontractors and materialmen who performed such work.  If such a lien is filed, then Tenant shall,
within thirty (30) days after Landlord has delivered notice of the filing
thereof to Tenant (or such earlier time period as may be necessary to prevent
the forfeiture of the Premises, or any interest of Landlord therein or the
imposition of a civil or criminal fine with respect thereto), either: (1) pay
the amount of the lien and cause the lien to be released of record; or (2) diligently
contest such lien and deliver to Landlord a bond or other security reasonably
satisfactory to Landlord.  If Tenant
fails to timely take either such action, then Landlord may pay the lien claim,
and any amounts so paid, including expenses and interest, shall be paid by
Tenant to Landlord within ten (10) days after Landlord has invoiced Tenant
therefore.  Nothing herein shall be
deemed a consent by Landlord to any liens being placed upon the Premises, or Landlord’s
interest therein due to any work performed by or for Tenant or deemed to give
any contractor or subcontractor or materialman any right or interest in any
funds held by Landlord to reimburse Tenant for any portion of the cost of such
work.  Tenant shall indemnify, defend and
hold harmless Landlord, its property manager, if any, and their respective
officers, directors, shareholders, partners, employees, managers, contractors,
attorneys and agents (collectively, the “Indemnitees”)
from and against all claims, demands, causes of action, suits, judgments,
damages and expenses, including attorneys’ fees in any way arising from or
relating to the failure by Tenant to pay for any work performed, materials
furnished, or obligations incurred by or at the request of Tenant.  The foregoing indemnity shall survive
termination or expiration of this Lease.

 

8.5           Signs.  Tenant shall
not place or permit to be placed any signs upon the roof of the Building, upon
any exterior area of the Building or upon the Property unless (i) the same
are professionally prepared and consistent in quality and nature with signs
located upon or appurtenant to buildings owned by Similar Owners, (ii) Tenant
complies with all applicable Laws, and (iii) such signage is installed,
maintained and removed at Tenant’s sole cost and expense.  Except with respect to the existing monument
signage at the Property which currently advertises the name of the owner of the
Property, Tenant shall have the exclusive right to place signage on the
Building and the Property, subject to compliance with all applicable Laws.  Landlord shall have the right, without Tenant’s
prior written consent, to change the name or names on the existing monument
signage to reflect a change in ownership and/or management of the Building or
Property and for no other reasons; provided, if pursuant to an amendment to
this Lease executed and delivered by Landlord and by Tenant the Building is
converted to a multi-tenant building, Landlord shall have (a) the right to
modify the monument signage to reflect the various tenants of the Building, and
(b) make such other changes to the monument signage with respect to such
conversion of the Building that Landlord deems prudent or desirable; it being
agreed, however, that any change pursuant to clause (b) shall be subject
to Tenant’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. 
Tenant, at its sole cost and expense, upon the expiration or earlier
termination of the Term of this Lease, or the removal or alteration of its sign
for any reason, shall be responsible for the repair, painting or replacement of
the Building fascia surface or other portion of the Building or Property where
signs are attached. If Tenant fails to do so, Landlord may have the sign
removed and the cost of removal shall be payable by Tenant within ten (10) days
of invoice, and such obligation shall survive termination or expiration of this
Lease.

 

9.             Use.

 

Tenant shall have the
right to use the Premises only for office, warehouse, manufacturing and
distribution purposes including, without limitation, the manufacture of
batteries for use in hybrid vehicles and as emergency power sources for
municipalities, as well as any other use approved by Landlord, which approval
shall not be unreasonably withheld so long as such use (i) is in keeping
with uses of buildings owned by Similar Owners, (ii) will not negatively
impact the value of the Property, and (iii) will not create materially
more hazardous materials at or on the Property, and shall comply with all Laws
relating to the use, condition, access to, and occupancy of the Premises and
will not commit waste, overload the Building Structure or the Building Systems
or subject the Premises to any use that would damage the Premises.  Tenant, at its sole cost and expense, shall
obtain and keep in effect during the Term, all permits, licenses, and other
authorizations necessary to permit Tenant to use and occupy the Premises for
the use specified above in accordance with all applicable Laws.  Tenant will not create or allow obnoxious or
harmful fumes, odors, smoke or other discharges which may create a nuisance,
nor will it or any of its agents, contractors or employees fuel or refuel any
vehicles, including trucks, on the Property. 
Further, Tenant shall not 

 

14

 

knowingly conduct or
permit to be conducted in the Premises any activity, or place any equipment in
or about the Premises or the Building, which will invalidate the insurance
coverage in effect or increase the rate of fire insurance or other insurance on
the Premises or the Building (Landlord hereby agreeing that Tenant’s use of the
Premises for the manufacture of batteries for use in hybrid vehicles and as
emergency power sources for municipalities or uses similar or related thereto
shall not so invalidate any insurance coverage or increase the rate of
insurance).  If any invalidation of
coverage or increase in the rate of fire insurance or other insurance occurs or
is threatened by any insurance company due to activity conducted from the
Premises, or any act or omission by Tenant or any Tenant Related Parties,
Tenant shall be liable for such increase. 
Notwithstanding the foregoing or any other provision of this Lease,
however, Tenant shall not be responsible for compliance with Laws requiring (i) structural
repairs or modifications to the Building, or (ii) installation of new
building service equipment such as fire detection or suppression equipment,
unless such repairs, modifications or installations are (a) due to the
negligence or willful misconduct of Tenant or any Tenant Related Parties, or (b) arise
from the conduct of Tenant’s particular business in the Premises or from Tenant’s
improvements in the Premises.

 

10.           Assignment and Subletting.

 

10.1         Tenant may not assign this Lease or any interest
herein or sublet the whole or any part of the Premises, or permit the same to
be occupied by anyone other than Tenant, without the prior written consent of
Landlord, which consent will not be unreasonably withheld, conditioned or
delayed and which will be deemed granted to the extent Landlord fails to
respond to any request for consent within thirty (30) days following delivery
of the request and all of the applicable information relating to the assignment
or subletting, including any financial documentation regarding the proposed
assignee or subtenant reasonably requested by Landlord.

 

10.2         Notwithstanding any assignment or subletting,
permitted or otherwise, Tenant shall at all times remain directly, primarily
and fully responsible and liable for the payment of the Rent specified in this
Lease and for compliance with all of its other obligations under the terms,
provisions and covenants of this Lease. 
Upon the occurrence of any Default, if the Premises or any part of them
are then assigned or sublet, Landlord, in addition to any other remedies
provided in this Lease or provided by law, may, at its option, collect directly
from such assignee or subtenant all rents due and becoming due to Tenant under
such assignment or sublease and apply such rent against any sums due to
Landlord from Tenant under this Lease, and no such collection shall be
construed to constitute a novation or release of Tenant from the further
performance of Tenant’s obligations under this Lease.

 

10.3         Intentionally deleted.

 

10.4         In the event that Tenant sells, sublets, assigns or
transfers this Lease other than pursuant to Section 10.8 below, Tenant
shall pay to Landlord as additional rent an amount equal to fifty percent (50%)
of any Increased Rent (as defined below), less the Costs Component (as defined
below), when and as such Increased Rent is received by Tenant.  As used in this Section, “Increased Rent” shall mean the excess of (i) all rent
and other consideration which Tenant actually receives by reason of any sale,
sublease, assignment or other transfer of this Lease, over (ii) the rent
otherwise payable by Tenant under this Lease at such time.  For purposes of the foregoing, any
consideration received by Tenant in form other than cash shall be valued at its
fair market value as determined by Tenant in good faith.  The “Costs Component”
is that amount which, if paid monthly, would fully amortize on a straight-line
basis, over the entire period for which Tenant is to receive Increased Rent,
the reasonable costs incurred by Tenant for leasing commissions and tenant
improvements in connection with such sublease, assignment or other
transfer.  In addition, Tenant shall
first be entitled to deduct from any Increased Rent the following: (a) the
gross revenue paid to Landlord by Tenant with respect to the subject portion of
the Premises during the period commencing on the date Tenant vacates the
subject portion of the Premises until the date the assignee or sublessee is
obligated to pay rent pursuant to its assignment or sublease; (b) improvement
allowances or other economic concessions granted by Tenant to the assignee or
sublessee; (c) the unamortized costs of initial and subsequent
improvements to the subject portion of the Premises paid for by Tenant; (d) costs
incurred by Tenant to buy out or take over the previous lease of the assignee
or sublessee; (e) all costs incurred by Tenant to advertise the subject
portion of the Premises for assignment or sublease; and (f) brokerage
commissions and/or legal fees paid by Tenant in connection with the assignment
or sublease.

 

10.5         Notwithstanding any other provision hereof, Tenant
shall have no right to make (and Landlord shall have the absolute right to
refuse consent to) any assignment of this Lease or sublease of any portion of
the 

 

15

 

Premises if at the time
of either Tenant’s notice of the proposed assignment or sublease or the
proposed commencement date thereof, there shall exist any uncured Default of
Tenant, or if the proposed assignee or sublessee is an entity:  (a) with which Landlord is already in
negotiation as evidenced by the issuance of a written proposal; (b) intentionally
deleted; (c) is a governmental agency; (d) intentionally deleted; (e) with
which the payment for the sublease or assignment is determined in whole or in
part based upon its net income or profits; or (f) would subject the
Premises to a use which would:  (i) require
any addition to or modification of the Premises or the Building in order to
comply with building code or other governmental requirements (unless the same
are paid for by Tenant or such assignee or sublessee; or, (ii) involve a
violation of Article 9 of this Lease. 
Tenant expressly agrees that Landlord shall have the absolute right to
refuse consent to any assignment or sublease such as is described in this Section 10.5,
and that for the purposes of any statutory or other requirement of
reasonableness on the part of Landlord such refusal shall be reasonable.

 

10.6         Upon any request to assign or sublet, Tenant will pay
to Landlord, on demand, a sum equal to all of Landlord’s reasonable
out-of-pocket costs, including reasonable attorney’s fees, incurred in
investigating and considering any proposed or purported assignment or pledge of
this Lease or sublease of any of the Premises, regardless of whether Landlord
shall consent to, refuse consent, or determine that Landlord’s consent is not
required for, such assignment, pledge or sublease.  Any purported sale, assignment, mortgage,
transfer of this Lease or subletting which does not comply with the provisions
of this Article 10 shall be void.

 

10.7         Except as permitted under Section 10.8 below, if
Tenant is a corporation, limited liability company, partnership or trust, any
transfer or transfers of or change or changes within any twelve (12) month
period in the number of the outstanding voting shares of the corporation or
limited liability company, the general partnership interests in the partnership
or the identity of the persons or entities controlling the activities of such
partnership or trust resulting in the persons or entities owning or controlling
a majority of such shares, partnership interests or activities of such
partnership or trust at the beginning of such period no longer having such
ownership or control shall be regarded as equivalent to an assignment of this
Lease to the persons or entities acquiring such ownership or control and shall
be subject to all the provisions of this Article 10 to the same extent and
for all intents and purposes as though such an assignment.

 

10.8         Notwithstanding the foregoing, Landlord’s consent
shall not be required, and only the provisions of Section 10.2 of this Article 10
will apply (and the remainder of Article 10 will not apply), in the event
of any (i) transfers of shares in Tenant or its Affiliates in the public
markets, (ii) assignment or subletting to an Affiliate (defined below), (iii) collateral
assignment as security in connection with a financing transaction, (iv) assignment
or subletting to a joint venture party or other party with whom Tenant or any
Affiliate has a contractual or other business relationship, or (v) change
in control of Tenant (provided, however, that in the case of an assignment
under (ii) or (iv) above, that either (a) the proposed
transferee has financial strength equal to or greater than Tenant’s as of the
date of such transfer, or (b) Tenant agrees to remain primarily liable on
the Lease).  For purposes of this Section 10.8,
“Affiliate” means: (x) any entity
which controls, is controlled by or is under common control with Tenant, (y) any
successor to Tenant by merger, consolidation or reorganization, or (z) any
purchaser of all or substantially all of the assets or stock of Tenant as a
going concern.  Promptly following any
transfer pursuant to this Section 10.8 Landlord shall be notified of such
transfer and be given a duplicate of any assignment or sublease documentation
relating to the same.

 

11.           Insurance.

 

11.1         Required Insurance; Insurance for Separately Insurable
Alterations.

 

11.1.1      Except as expressly set forth in Section 11.1.2
below, Tenant shall maintain during the Term the insurance detailed on Exhibit H attached hereto.  Wheresoever and howsoever set forth in said Exhibit H, the parties agree that (i) “Mortgagor”
shall be deemed to mean Tenant (except [x] with respect to the second time such
term is used in the sixth sentence of paragraph (a) thereof, at which time
“Mortgagor” shall be deemed to mean Tenant or Landlord, and [y] inasmuch as
Landlord is responsible for the maintenance of the same pursuant to Section 11.1.2
below, in paragraphs (g) [relating to business income] and (h) [relating
to terrorism] “Mortgagor” shall be deemed to mean Landlord), (ii) “Mortgage”
shall be deemed to mean this Lease; (iii) “Improvements” shall be deemed
to mean the Building and all associated improvements located upon the Property;
(iv) “Mortgagee” shall be deemed to mean Landlord’s Mortgagee; (v) each
of “Debt,” “Note,” “Rents,” “Profits,” and “Loan” shall be as 

 

16

 

defined in the Mortgage; (vi) “Real
Estate” shall be deemed to mean the Property; (vii) Tenant will meet the
requirements of paragraph (e) if the required coverages are covered by
Tenant’s Property Insurance (defined below), and (viii) the insurers of
Tenant shall provide at least thirty (30) days’ prior  written notice to Landlord’s Mortgagee prior
to (A) any policy reduction, cancellation or termination for any reason
and (B) any modification thereof which affects the interest of Landlord’s
Mortgagee.  Further, the parties agree
that the current MAI appraisal value of the Building is $17,000,000.00.  To the extent that the same is available,
Tenant shall separately maintain alterations and betterments insurance with
respect to any Separately Insurable Alteration for each such Separately
Insurable Alteration’s full replacement cost (insurable value) (any such
insurance the “Alterations Insurance”), and shall
further maintain insurance (full replacement cost [insurable value]) with
respect to all of the items included in Tenant’s Property (“Tenant’s Property Insurance”), in both cases providing
protection against perils included within the standard form of “all-risks” fire
and casualty insurance policy. 
Notwithstanding anything to the contrary set forth in this Lease, Tenant
shall be designated as the sole insured and/or loss payee with regard to the
Alterations Insurance and the Tenant’s Property Insurance.  The address for the mortgagee set forth in
paragraph (j) on Exhibit H
is amended to read as follows:

 

“Bank of America,
National Association, as successor by merger to LaSalle Bank National
Association, as Trustee for the registered holders of Bear Sterns Commercial
mortgage Securities Inc., Commercial mortgage Pass-Through Certificates,
2007-PWR16

c/o Prudential Asset
Resources, Inc.

2100 Ross Avenue, Suite 2500

Dallas, Texas 75201.”

 

Except as expressly
provided above, Landlord shall also be named as additional insured under all
liability policies, and Landlord or its designee shall be the loss payee on all
property insurance and rent loss insurance (it being understood that as of the
Commencement Date the foregoing Bank of America, National Association, shall be
Landlord’s designee as the loss payee for rent loss insurance).

 

11.1.2      Landlord shall maintain during the Term the insurance
detailed in paragraphs (g) [relating to business income] and (h) [relating
to terrorism] on Exhibit H attached hereto;
provided, however, with respect to such business income insurance, and
notwithstanding anything to the contrary set forth in said paragraph (g), to
the extent reasonably available Landlord shall obtain coverage to reflect
income during a twenty-four month period in lieu of an eighteen month
period.  The premium for compliance with
said paragraph (g) shall be included in Expenses; the premium for
compliance with said paragraph (h) shall not be included in Expenses or
otherwise reimbursed to Landlord by Tenant. 
Such other insurance on the Property or on any replacements or
substitutions thereof or additions thereto as may from time to time be required
by Mortgagee against other insurable hazards or casualties which are not
expressly set forth on Exhibit H attached hereto and which at the time are
commonly insured against in the case of property similarly situated, including,
without limitation, sinkhole, mine subsidence, earthquake and environmental and
law and ordinance insurance, due regard being given to the height and type of buildings,
their construction, location, use and occupancy, shall, if not directly carried
by Tenant, be carried by Landlord and the premiums therefore will be included
in Expenses.

 

11.2         Certificates, Subrogation and Other Matters. 
Tenant shall provide Landlord with certificates evidencing the insurance
coverage required hereunder prior to the Commencement Date.  Each party hereto hereby releases the other
party (and their respective agents, officers and employees) from any liability,
right of recovery, claim, action or cause of action the other party may have on
account of such loss, cost, damage or expense which arises from any peril that
would be covered by a Special Form replacement cost policy of insurance
regardless of the insurance actually carried by such party, the extent of any
recovery thereunder or the negligence of the party being released or its
agents, contractors, officers or employees and waives any right of subrogation
that might otherwise exist in or accrue to any person on account thereof, including
that of the insurance carriers of the other party.  All insurance policies carried by either
party with respect to its property located within or constituting a part of the
Property or the Premises or with respect to Landlord’s or Tenant’s respective
businesses (which shall include, without limitation, loss of earnings and loss
or damage with respect to Tenant’s leasehold interest in the case of Tenant and
loss of rents in the case of Landlord), whether or not required to be carried
by this Lease, shall permit the waiving of any right of recovery on the part of
the insured against the other party for any loss or damage to the extent such
rights have been waived by the insured prior to the occurrence of such loss or
damage.  For the purpose 

 

17

 

of the foregoing waiver,
the amount of any deductible applicable to any loss or damage shall be deemed
covered by the insured under the insurance policy to which such deductible
relates.

 

11.3         Waiver of Claims.  Except for
claims arising from the negligent acts of Landlord or Landlord’s agents,
employees or contractors and for the abatement rights expressly contained in
this Lease, Tenant waives all claims against Landlord for injury or death to
persons, damage to property or to any other interest of Tenant sustained by
Tenant or any party claiming through or under Tenant resulting from (i) any
occurrence in or upon the Premises; (ii) leaking of roofs, bursting, stoppage or
leaking of water, gas, sewer or steam pipes or equipment, including sprinklers;
(iii) wind, rain, snow, ice, flooding, freezing, fire, explosion,
earthquake, excessive heat or cold, fire or other casualty; (iv) the
Property, Premises, systems or equipment being defective, out of repair, or
failing, and (v) vandalism, malicious mischief, theft or other acts or
omissions of any other parties, including, without limitation, other tenants,
contractors and invitees at the Property. 
To the extent that Tenant is required to or does carry insurance hereunder,
Tenant agrees that Tenant’s property loss risks shall be borne by such
insurance, and Tenant agrees to look solely to and seek recovery only from its
insurance carriers in the event of such losses. 
For purposes of this Article, any deductible amount shall be treated as
though it were recoverable under such policies.

 

12.           Subordination; Attornment; Notice to Landlord’s
Mortgagee.

 

12.1         Subordination.  This Lease
shall be subordinate to any deed of trust, mortgage or other security
instrument or any ground lease (each, a “Mortgage”),
that now or hereafter covers all or any part of the Premises (the mortgagee
under any such Mortgage, beneficiary under any such deed of trust, holder or
secured party under any such security instrument, or the lessor under any such
ground lease is referred to herein as a “Landlord’s Mortgagee”).  The provisions of this Section shall be
self-operative and no further instrument of subordination shall be required;
provided that Landlord provides Tenant with a non-disturbance, subordination,
and attornment agreement (an “SNDA”) in favor
of Tenant from Landlord’s Mortgagee. 
Such SNDA in favor of Tenant shall (a) as it relates to any current
Landlord’s Mortgagee, be in form attached hereto as Exhibit I
(the “Current Landlord’s Mortgagee SNDA  Form”), and (b) as it relates to any future Landlord’s
Mortgagee, be in form reasonably satisfactory to Tenant, Landlord and such
future Landlord’s Mortgagee and provide that, so long as Tenant is paying the
Rent due under the Lease and is not otherwise in default under the Lease beyond
any applicable cure period, its right to possession and the other terms of the
Lease shall remain in full force and effect. 
Such future Landlord’s Mortgagee SNDA may include other commercially
reasonable provisions in favor of Landlord’s Mortgagee, including, without
limitation, additional time on behalf of Landlord’s Mortgagee to cure defaults
of the Landlord and provide that (a) neither Landlord’s Mortgagee nor any
successor-in-interest shall be bound by (i) any payment of the Base Rent,
Additional Rent, or other sum due under this Lease for more than one (1) month
in advance or (ii) any amendment or modification of the Lease made
following the date of such agreement without the express written consent of
Landlord’s Mortgagee or any successor-in-interest, except to the extent already
contemplated by the terms of this Lease; and (b) neither Landlord’s
Mortgagee nor any successor-in-interest will be liable for (i) any act or
omission or warranties of any prior landlord (including Landlord) except to the
extent such act or omission is continuing, (ii) the breach of any
warranties or obligations relating to construction of improvements on the
Property or any tenant finish work performed or to have been performed by any
prior landlord (including Landlord) except to the extent such breach continues,
or (iii) the return of any security deposit, except to the extent such
deposits have been received by Landlord’s Mortgagee, Landlord hereby agreeing
to deliver such deposits to Landlord’s Mortgagee.  Any such SNDA shall, in any event (a) recognize
and acknowledge the continuing effectiveness of the rights of Tenant contained
in Article 25 of this Lease, (b) recognize and acknowledge the rights
of Tenant to offset against rent as expressly set forth in this Lease, and (c) confirm
that the insurance proceeds following any casualty or condemnation will be
applied in accordance with the terms of this Lease and the provisions of the
Current Landlord’s Mortgagee SNDA Form relating to the same, without
regard to the language in any Mortgage or other related document or instrument;
provided, however, that if (b) and (c) above are not in keeping with
an SNDA then being entered into by institutional lenders making non-recourse
mortgage loans to Similar Owners (including Landlord) of buildings with tenants
of a similar credit quality to Tenant, such SNDA shall only be required to be
in keeping with the SNDAs that are then being offered by such institutional
lenders.  Notwithstanding anything
appearing herein to the contrary, so long as Tenant is not in Default of its
obligations under this Lease, Tenant’s possession of the Premises shall not be
disturbed by Landlord or by Landlord’s Mortgagee in the event of a foreclosure
or other enforcement of any Mortgage. 
Notwithstanding the foregoing, with regard to Landlord’s current
Landlord’s Mortgagee, Landlord agrees to provide to Tenant an SNDA in form of
the Current Landlord’s Mortgagee SNDA Form.

 

18

 

12.2         Attornment.  Subject to
the provisions of Section 12.1 above, Tenant shall attorn to any party
succeeding to Landlord’s interest in the Premises, whether by purchase,
foreclosure, deed in lieu of foreclosure, power of sale, termination of lease,
or otherwise, upon such party’s request, and shall execute such agreements
confirming such attornment as such party may reasonably request.

 

12.3         Notice to Landlord’s Mortgagee. 
Tenant shall not seek to enforce any remedy it may have for any default
on the part of Landlord without first giving written notice by certified mail,
return receipt requested, specifying the default in reasonable detail, to any
Landlord’s Mortgagee whose address has been given to Tenant.

 

12.4         Landlord’s Mortgagee’s Protection Provisions. 
Landlord’s Mortgagee shall have no liability or responsibility under or
pursuant to the terms of this Lease or otherwise after it ceases to own an
interest in the Building.  Nothing in
this Lease shall be construed to require Landlord’s Mortgagee to see to the
application of the proceeds of any loan, and Tenant’s agreements set forth
herein shall not be impaired on account of any modification of the documents
evidencing and securing any loan.

 

13.           Rules and Regulations; Intentionally Deleted.

 

14.           Eminent Domain.

 

If the whole of
the Property, or such portion of the Property as to render the conduct of
Tenant’s business at the Property unfeasible, in Tenant’s and Landlord’s
reasonable discretion, is taken or condemned for any public use under any Laws
or by right of eminent domain, or by private purchase in lieu thereof, this
Lease shall terminate effective when the physical taking of said Property
occurs.  If less than a substantial
portion of the Property is so taken or condemned and Tenant, in its reasonable
discretion, can continue to conduct business at the Property on the remaining
portion thereof, or if the taking or condemnation is temporary (regardless of
the portion of the Property affected), this Lease shall not terminate, but the
Rent payable hereunder shall be proportionally abated to the extent of any
actual loss of use of the Premises by Tenant. Landlord, with reasonable
diligence and at its expense (to the extent [i] covered by any condemnation
award made available to Landlord by Landlord’s Mortgagee or [ii] funded or
financed by Landlord, in Landlord’s sole discretion, following Landlord’s
Mortgagee’s determination that it will not make any condemnation award [or, for
purposes of Section 15.3 below, insurance proceeds] available to Landlord
but will instead apply the same against the sums due under the Mortgage [such
application of any condemnation award {or, for purposes of Section 15.3
below, the application of insurance proceeds} to the Mortgage, a “Payment Application Determination”, such funding by Landlord
in the event of a Payment Application Determination, {whether pursuant to
condemnation or casualty}, “Landlord’s Restoration
Funding”]) will restore the remaining portion of the Property as
nearly as practicable to its condition immediately prior to such taking or
condemnation (the “Condemnation Restoration”),
and Tenant shall have no claim against Landlord for the value of any unexpired
portion of this Lease.  Notwithstanding
the foregoing, (i) any compensation specifically and independently awarded
to Tenant for loss of business or goodwill shall be the property of Tenant, and
(ii) any compensation awarded for Separately Insurable Alterations and
Tenant’s Property shall be the property of Tenant.  In the event Landlord’s Mortgagee does not
commit to make any condemnation award available to Landlord (including, without
limitation, because of a Payment Application Determination) within ninety (90)
days following the date the physical taking or condemnation of the Property
occurs, then Landlord, in its sole discretion, within thirty (30) days
following the expiration of such ninety (90) day period, may terminate this
Lease by giving Tenant written notice, such termination to be effective upon
Tenant’s receipt of such notice of election to terminate, and absent such
notice of termination, subject to the remaining provisions of this Article 14,
Landlord shall proceed with the Condemnation Restoration without regard to the
cost thereof or the availability of any award or proceeds relating thereto as
part of Landlord’s Restoration Funding. 
Within sixty (60) days following the given taking or condemnation,
Landlord will engage a reputable contractor or architect designated by Landlord
and reasonably approved by Tenant in order to provide Tenant with notice of
Landlord’s estimated completion date for the Condemnation Restoration (“Landlord’s Condemnation Restoration Completion Estimation Date”).  For purposes of determining the Required
Condemnation Restoration Completion Date (defined below), the Condemnation
Restoration shall be deemed to commence on the earlier of (a) the date
Landlord actually commences the Condemnation Restoration, and (b) the date
falling one hundred twenty (120) days after the given taking or
condemnation.  In the event that the
Condemnation Restoration is not substantially completed within a period that is
one hundred fifty percent (150%) of Landlord’s Condemnation Restoration
Completion Estimation Date (such one 

 

19

 

hundred fifty
percent [150%] period, the “Required Condemnation
Restoration Completion Date”; provided, however, that in no event
will the Required Condemnation Restoration Completion Date be less than one
hundred eighty [180] days from the date Landlord commences the Condemnation
Restoration, and further provided that in the event that the Required
Condemnation Restoration Completion Date is less than seven hundred thirty
[730] days from the date of the physical taking or condemnation, the same shall
be subject to force majeure for a period not to exceed a Required Condemnation
Completion Date of seven hundred thirty [730] days from the date of the
physical taking or condemnation), then Tenant shall have the right, upon
written notice to Landlord given within thirty (30) days after the Required
Condemnation Restoration Completion Date, to terminate this Lease effective as
of the date Landlord receives such notice of termination (“Tenant’s
Outside Condemnation Completion Termination Right”).  For instance, if the Condemnation Restoration
is not substantially completed within six hundred (600) days from the date
Landlord commences the Condemnation Restoration and Landlord’s Condemnation
Restoration Completion Estimation Date was four hundred (400) days, Tenant shall
have Tenant’s Outside Condemnation Completion Termination Right unless such six
hundred (600) day period ends less than seven hundred thirty (730) days from
the date of the physical taking or condemnation, in which case the Required
Condemnation Restoration Completion Date is extended day for day, up to the
seven hundred thirtieth (730th) day from
the date of the physical taking or condemnation, for any delays due to force
majeure.  However, if Landlord determines
in good faith that it will be unable to substantially complete the Condemnation
Restoration by the Required Condemnation Restoration Completion Date, Landlord
shall have the right to immediately cease its performance of the Condemnation
Restoration and provide Tenant with written notice (the “Condemnation
Restoration Completion Extension Notice”) of such inability, which
Condemnation Restoration Completion Extension Notice shall set forth the date
on which Landlord reasonably believes that the Condemnation Restoration will be
substantially complete.  Tenant shall
have the right to terminate this Lease by providing written notice of
termination to Landlord within twenty (20) days after receipt of the
Condemnation Restoration Completion Extension Notice.  If Tenant does not terminate this Lease within
such twenty (20) day period, the Required Condemnation Restoration Completion
Date automatically shall be amended to be one hundred fifty percent (150%) of
the date set forth in Landlord’s Condemnation Restoration Completion Extension
Notice (subject to force majeure, if applicable pursuant to the foregoing seven
hundred thirty [730] day limitation).  In
the event that either or both of the Premises and the Property are not
restored, all condemnation proceeds and awards shall be payable to Landlord,
except that Tenant shall have the right to pursue an independent claim for
compensation with respect to any Separately Insurable Alteration and Tenant’s
Property.

 

15.           Fire or Other Casualty.

 

15.1         Notification and Repair. Tenant shall give prompt notice to Landlord of (a) any
fire or other casualty to the Premises or the Property, and (b) any damage
to, or defect in, any part or appurtenance of the Property’s sanitary,
electrical, HVAC, elevator or other systems located in or passing through the
Premises or any part thereof.  Subject to
the provisions of Section 15.3 below, if either or both of the Property
and the Premises is damaged by fire or other casualty, Landlord shall repair
(or cause its agents to repair) the damage and restore and rebuild the Property
(except for Tenant’s Property and any Separately Insurable Alteration) and/or
the Premises (such repair, the “Casualty Restoration”)
with reasonable dispatch after (x) notice to Landlord of the damage or
destruction and (y) the adjustment of the insurance proceeds attributable
to such damage (or, in the event of Landlord’s Restoration Funding, then
without regard to such adjustment), Landlord hereby agreeing to independently
fund the amount of any policy deductibles (unless there is a triple net
conversion under Section 4.4 of the Lease, in which case Tenant shall be
responsible for the same) as well as other administrative fees and expenses
required by Landlord’s Mortgagee, and further agreeing to apply any rental or
business interruption proceeds in the same manner that Rent is applied.  In the event of any Landlord’s Restoration
Funding, subject to the remaining provisions of this Article 15, Landlord
shall proceed with the Casualty Restoration without regard to the cost thereof
or the availability of any proceeds relating thereto as part of Landlord’s
Restoration Funding.  Within sixty (60)
days following the given fire or other casualty, Landlord shall engage a
reputable contractor or architect designated by Landlord and reasonably
approved by Tenant in order to provide Tenant with notice of Landlord’s
estimated completion date for the Casualty Restoration (“Landlord’s
Casualty Restoration Completion Estimation Date”).  For purposes of determining the Required
Casualty Restoration Completion Date (defined in Section 15.3 below), the
Casualty Restoration shall be deemed to commence on the earlier of (A) the
date Landlord actually commences the Casualty Restoration, and (B) the
later of (X) the date falling one hundred twenty (120) days after the
given fire or other casualty, and (Y) the date falling thirty (30) days
after Tenant and Landlord select a contractor pursuant to the method described
below in this Section 15.1.  Subject
to the provisions of Section 15.3 below, Tenant shall not 

 

20

 

be entitled to
terminate this Lease and no damages, compensation or claim shall be payable by
Landlord for purported inconvenience, loss of business or annoyance arising
from any Casualty Restoration of any portion of the Premises or of the Property
pursuant to this Section.  Landlord (or
its agents, as the case may be) shall use its diligent, good faith efforts to
make such Casualty Restoration promptly and in such manner as not to
unreasonably interfere with Tenant’s use and occupancy of the Premises, but
Landlord or its agents shall not be required to do such Casualty Restoration
except during normal business hours of business days.  Prior to commencing such Casualty
Restoration, Tenant shall propose at least three (3) contractors to
Landlord, and Landlord shall have the right to choose from such proposals the
contractor to perform the Casualty Restoration. 
The parties agree that Landlord’s approval of the contractor to perform
the Casualty Restoration shall not be considered to be unreasonably withheld if
any such contractor (i) does not have trade references reasonably
acceptable to Landlord, (ii) does not maintain insurance as required
pursuant to the terms of this Lease, (iii) does not have the ability to be
bonded for the work in an amount of no less than 150% of the total estimated
cost of the Casualty Restoration, (iv) does not provide current financial
statements reasonably acceptable to Landlord, or (v) is not licensed as a
contractor in the state/municipality in which the Premises is located.  Tenant acknowledges the foregoing is not
intended to be an exclusive list of the reasons why Landlord may reasonably
withhold its consent to the contractor to perform the Casualty
Restoration.  Landlord shall timely invite
Tenant to all progress meetings and generally keep Tenant apprised of the
progress of the Casualty Restoration, including the sums expended therefore and
shall promptly respond to any reasonable requests for information.  In the event that Tenant, in its reasonable
opinion, believes that Landlord and/or the chosen contractor are not timely
performing the Casualty Restoration or are failing to perform certain material
aspects of the Casualty Restoration, Tenant may provide Landlord written notice
with specificity of such failure and Landlord, within ten (10) days
following receipt of such notice, shall either endeavor to correct such failure
or provide written notice of its dispute of such failure.  In the event that Landlord fails or refuses
to endeavor to correct the specified failure(s) within such ten (10) day
period, Landlord and Tenant shall cooperate with each other in an effort to
resolve such dispute.

 

15.2         Rental Abatement. Provided that any damage to either or both of the
Property and the Premises is not caused by, or is not the result of acts or
omissions (where there was a duty to act) by, any or all of Tenant and the
Tenant Related Parties, if (a) the Property is damaged by fire or other
casualty thereby causing the Premises to be inaccessible or (b) the
Premises are partially damaged by fire or other casualty, the Rent shall be
proportionally abated to the extent of any actual loss of use of the Premises
by Tenant, but in either event the period of Tenant’s right to rent abatement
shall not exceed the greater of twenty four (24) months and the period of
coverage under Landlord’s rent loss insurance policy maintained pursuant to Article 11
above, after which time Tenant shall again be responsible for the payment of
Rent hereunder irrespective of whether the Casualty Restoration has been
completed.

 

15.3         Destruction and Tenant’s Rights. If the Property or the Premises shall
be totally destroyed by fire or other casualty, or if the Property shall be so
damaged by fire or other casualty that (pursuant to Landlord’s Casualty
Restoration Completion Estimation Date): (i) the Casualty Restoration
requires more than three hundred sixty five (365) days (subject to the caveat
set forth in the last sentence of this Section 15.3) or (ii) such
Casualty Restoration requires the expenditure of more than seventy five percent
(75%) of the full insurable value of the Property immediately prior to the
casualty or (iii) the damage (x) is less than the amount stated in (ii) above,
but more than thirty percent (30%) of the full insurable value of the Property;
and (y) occurs during the last two years of Term of this Lease, Tenant
shall have the option to terminate this Lease (by so advising Landlord, in
writing) within thirty (30) days after receipt of Landlord’s Casualty
Restoration Completion Estimation Date. 
In such event, the termination shall be effective as of the date upon
which Landlord receives timely written notice from Tenant terminating this
Lease pursuant to the preceding sentence. Subject to Landlord’s termination
right set forth below, if Tenant fails or refuses to timely deliver a
termination notice, this Lease shall remain in full force and effect.
Notwithstanding the foregoing, if either the issuer of any casualty insurance
policies on the Property or if Landlord’s Mortgagee does not commit to make
sufficient proceeds for the Casualty Restoration available to Landlord
(including, without limitation, because of a Payment Application Determination)
within ninety (90) days of the Casualty and Landlord, at its sole discretion,
elects not to provide Landlord’s Restoration Funding, then Landlord may, within
thirty (30) days following the expiration of such ninety (90) day period, at
its sole discretion, terminate this Lease by giving written notice to Tenant to
such effect, in which event the termination of this Lease shall be effective as
of the date Tenant receives such written notice.    Landlord shall have no liability to Tenant,
and Tenant shall not be entitled to terminate this Lease by virtue of any delays
in completion of the Casualty Restoration, except that if the Casualty
Restoration is not substantially completed within a period that is one hundred
fifty percent 

 

21

 

(150%) of Landlord’s
Casualty Restoration Completion Estimation Date (such one hundred fifty percent
[150%] period, the “Required Casualty
Restoration Completion Date”; provided however, that in no event
will the Required Casualty Restoration Completion Date be less than one hundred
eighty [180] days from the date Landlord commences the Casualty Restoration,
and further provided that in the event that the Required Casualty Restoration
Completion Date is less than seven hundred thirty [730] days from the date of
the fire or other casualty, the same shall be subject to force majeure for a
period not to exceed a Required Casualty Completion Date of seven hundred
thirty [730] days from the date of the fire or other casualty), then Tenant
shall have the right, upon written notice to Landlord given within thirty (30)
days after the Required Casualty Restoration Completion Date, to terminate this
Lease effective as of the date Landlord receives such notice of termination (“Tenant’s Outside Casualty Completion Termination Right”).  For instance, if the Casualty Restoration is
not substantially completed within six hundred (600) days from the date
Landlord commences the Casualty Restoration and Landlord’s Casualty Restoration
Completion Estimation Date was four hundred (400) days, Tenant shall have
Tenant’s Outside Casualty Completion Termination Right unless such six hundred
(600) day period ends less than seven hundred thirty (730) days from the date
of the fire or other casualty, in which case the Required Casualty Restoration
Completion Date is extended day for day, up to the seven hundred thirtieth (730th) day from the date of the fire or other casualty, for
any delays due to force majeure. 
However, if Landlord determines in good faith that it will be unable to
substantially complete the Casualty Restoration by the Required Casualty Restoration
Completion Date, Landlord shall have the right to immediately cease its
performance of the Casualty Restoration and provide Tenant with written notice
(the “Casualty Restoration Completion Extension Notice”)
of such inability, which Casualty Restoration Completion Extension Notice shall
set forth the date on which Landlord reasonably believes that the Casualty
Restoration will be substantially complete. 
Tenant shall have the right to terminate this Lease by providing written
notice of termination to Landlord within twenty (20) days after receipt of the
Casualty Restoration Completion Extension Notice.  If Tenant does not terminate this Lease
within such twenty (20) day period, the Required Casualty Restoration
Completion Date automatically shall be amended to be one hundred fifty percent
(150%) of the date set forth in Landlord’s Casualty Restoration Completion
Extension Notice (subject to force majeure, if applicable pursuant to the
foregoing seven hundred thirty [730] day limitation).  For purposes of the termination rights set
forth in this Section 15.3 only (and specifically without limiting any of
Tenant’s required insurance coverages hereunder), “full insurable value” shall
mean replacement cost, but shall not include the cost of (x) footings,
foundations and other structures below grade, (y) Separately Insurable
Alterations, and (z) Tenant’s Property. 
Further, if within the last two (2) years of the Term of this Lease
the Property or the Premises shall be totally destroyed by fire or other casualty,
or if the Property shall be so damaged by fire or other casualty such that in
any such event (in the reasonable opinion of a reputable contractor or
architect designated by Landlord and reasonably approved by Tenant) such
Casualty Restoration requires the expenditure of more than thirty percent (30%)
of the full insurable value of the Property, Landlord shall have the option to
terminate this Lease (by so advising Tenant, in writing) within thirty (30)
days after said contractor or architect delivers written notice of its opinion
to Landlord.  In such event, the
termination shall be effective as of the date which is thirty (30) days
following the date of such notice unless Tenant, within thirty (30) days of such
notice, validly exercises any Renewal Option remaining to it pursuant to Article 23
below, in which case this Lease shall continue in full force and effect as if
Landlord had never provided Tenant with a notice of termination. Subject to
Tenant’s termination right set forth above, if Landlord fails or refuses to
timely deliver a termination notice, this Lease shall remain in full force and
effect.  Notwithstanding anything to the
contrary set forth in this Section 15.3, the three hundred sixty five
(365) day period set forth in this Section 15.3 shall be automatically
extended to the extent that the sole reason that repairs would take in excess
of such three hundred sixty five (365) day period is because of an
Environmental Claim (defined in Section 20.6 below) for which Tenant is
responsible.

 

15.4         Insurance Proceeds. Landlord shall not be obligated to expend in repairs
and restoration an amount in excess of the proceeds of insurance recovered with
respect to any casualty, provided that Landlord hereby agrees to independently
fund the amount of any policy deductibles (unless there is a triple net
conversion under Section 4.4 of the Lease, in which case Tenant shall be
responsible for the same) as well as other administrative fees and expenses
required by Landlord’s Mortgage, and further agrees to apply any rental or
business interruption proceeds in the same manner that Rent is applied.  Tenant acknowledges that Landlord shall be
entitled to the full proceeds of any insurance coverage whether carried by Landlord
or Tenant, for damage to either or both of the Premises and the Property.  Notwithstanding the foregoing, to the extent
that the same is separate and distinct from the proceeds received under any
property insurance required under this Lease with respect to the Premises and
Property (i.e., Tenant is the sole insured and/or sole loss payee), Tenant
shall be entitled to any insurance proceeds pursuant to Section 11.1.1
above relating to Alterations Insurance and/or with respect to damage to Tenant’s
Property.

 

22

 

Landlord’s duty to repair
the Premises and the Property under this Article 15 (i) is limited to
repairing the Property and Premises to the condition existing immediately prior
to such fire or other casualty, and (ii) specifically excludes any duty to
repair any of Tenant’s Property and each and every Separately Insurable
Alteration.

 

16.           Default.

 

16.1         Tenant Default.  Tenant hereby
agrees that if:

 

(i)            Tenant shall fail to pay when due any sum of money
becoming due to be paid to Landlord under this Lease, whether such sum be any
installment of the Rent reserved by this Lease, any other amount treated as
Additional Rent under this Lease, or any other payment or reimbursement to
Landlord required by this Lease, whether or not treated as Additional Rent
under this Lease, and if any such case such failure shall continue for a period
of five (5) days after written notice that such payment was not made when
due.  Notwithstanding the foregoing, in
lieu of the foregoing cure period, Tenant shall be entitled to a cure period of
ten (10) days with respect to the first four (4) monetary Defaults in
any twelve (12) month period; or

 

(ii)           Tenant shall fail in performing any of the other
agreements, terms and conditions of this Lease within thirty (30) days after
written notice from Landlord of such failure to perform, or within such longer
period of time as reasonably necessary to cure if cure has been commenced
within thirty (30) days after written notice and is being diligently
prosecuted; or

 

(iii)          Tenant shall fail to vacate the Premises immediately
upon termination of this Lease, by lapse of time or otherwise, or upon
termination of Tenant’s right to possession only; or

 

(iv)          Tenant shall become insolvent, admit in writing its
inability to pay its debts generally as they become due, file a petition in
bankruptcy or a petition to take advantage of any insolvency statute, make an
assignment for the benefit of creditors, make a transfer in fraud of creditors,
apply for or consent to the appointment of a receiver of itself or of the whole
or any substantial part of its property, or file a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws, as now in
effect or hereafter amended, or any other applicable law or statute of the
United States or any state thereof; or

 

(v)           a court of competent jurisdiction shall enter an
order, judgment or decree adjudicating Tenant bankrupt, or appointing a
receiver of Tenant, or of the whole or any substantial part of its property,
without the consent of Tenant, or approving a petition filed against Tenant
seeking reorganization or arrangement of Tenant under the bankruptcy laws of
the United States, as now in effect or hereafter amended, or any state thereof,
and such order, judgment or decree shall not be vacated or set aside or stayed
within ninety (90) days from the date of entry thereof; or

 

(vi)          Tenant abandons the Premises at any time during the
Term of this Lease with the intent not to be bound by the terms of this Lease.

 

Unless Tenant cures the
same prior to Landlord terminating this Lease or terminating Tenant’s right to
possession of the Premises, Tenant shall be in “Default”
under this Lease.

 

16.2         Landlord Remedies.  If Tenant is
in Default, then in any such event, Landlord shall have the following rights
and remedies:

 

(i)            to collect all Rent and interest thereon, due or
becoming due on or before the expiration date of the Term of this Lease, and,
if Landlord shall elect to terminate this Lease, Landlord shall be entitled to
a money judgment for the aggregate amount of all Rent which would have become
due hereunder but for such termination, reduced to present value using an
annual discount rate equal to the statutory interest rate specified in MCL
438.31 et seq., as amended.

 

(ii)           with or without terminating this Lease, to peaceably
repossess the Premises or to obtain and enforce a judgment for possession in
summary proceedings pursuant to Chapter 57 of the Revised Judicative Act, MCLA
600.5701 et seq., as amended.

 

23

 

(iii)          with or without terminating this Lease, to relet the
Premises in whole or in part, to such tenant or tenants, for such term or
terms, at such rent or rents and upon such other conditions and with such
concessions as Landlord shall determine to be reasonable in light of market
conditions, and to collect from Tenant the excess of Rent (or the excess of
Rent which would have become due hereunder but for termination) over the amount
realized from such reletting (net of expenses incurred in connection therewith)
during the remaining Term of this Lease.

 

(iv)          to terminate this Lease by written notice to Tenant.

 

Landlord and Tenant
hereby waive trial by jury in connection with any judicial proceedings
involving the enforcement of any of the foregoing remedies.  In addition to and without limitation of the
foregoing, Tenant will indemnify Landlord against all loss of rents and other
damages which Landlord may incur by reason of such termination, including, but
not limited to, costs or restoring and repairing the Premises and putting the
same in rentable condition, costs of renting the Premises to another tenant,
loss or diminution of rents and other damage which Landlord may incur by reason
of such termination, any commissions paid to re-lease the Premises, all
reasonable attorneys’ fees and expenses incurred in enforcing any of the terms
of this Lease, and any other damages identified in this Lease.

 

17.           Non-Waiver, Cumulative Remedies.

 

Either party’s
acceptance of monies under this Lease following a Default by the other shall
not waive such party’s rights regarding such Default.  No waiver by either party of any violation or
breach of any of the terms contained herein shall waive that party’s rights
regarding any future violation of such term. 
Landlord’s acceptance of any partial payment of Rent shall not waive
Landlord’s rights with regard to the remaining portion of the Rent that is due,
regardless of any endorsement or other statement on any instrument delivered in
payment of Rent or any writing delivered in connection therewith; accordingly,
Landlord’s acceptance of a partial payment of Rent shall not constitute an
accord and satisfaction of the full amount of the Rent that is due.  Any and all remedies set forth in this
Lease:  (1) shall be in addition to
any and all other remedies either party may have at law or in equity; (2) shall
be cumulative; and (3) may be pursued successively or concurrently as such
party may elect.  The exercise of any
remedy by either party shall not be deemed an election of remedies or preclude
that party from exercising any other remedies in the future, except as
expressly set forth herein.

 

18.           Surrender of Premises/Holding Over.

 

At the expiration or
termination of this Lease, Tenant shall deliver to Landlord the Premises with
all improvements located therein in the condition the same were in as of the
Commencement Date, reasonable wear and tear excepted, and shall deliver to
Landlord all keys to the Premises. 
Tenant may remove all equipment, attached or unattached trade fixtures,
furniture, and personal property, equipment, wiring, conduits and cabling
placed in the Premises or elsewhere in the Building by Tenant so long as Tenant
repairs all damage caused by such removal and, to the extent required under Section 8.2
of this Lease, shall remove such alterations, additions, improvements, trade
fixtures, personal property, equipment, wiring, conduits, cabling and furniture
as Landlord may request, and repair all damage caused by such removal.  All items not so removed shall, at Landlord’s
option, be deemed to have been abandoned by Tenant and may be appropriated,
sold, stored, destroyed, or otherwise disposed of by Landlord at Tenant’s cost
without notice to Tenant and without any obligation to account for such
items.  The provisions of this Article shall
survive the expiration or earlier termination of this Lease.  If Tenant fails to vacate the Premises at the
end of the Term, then Tenant shall be a tenant at sufferance and Tenant shall,
in addition to Additional Rent and other charges under this Lease, owe Base
Rent equal to one hundred fifty percent (150%) of the Base Rent payable during
the last month of the Term, and Tenant shall otherwise continue to be subject
to all of Tenant’s obligations under this Lease and in addition shall be liable
for any court costs, legal costs and reasonable attorneys fees that Landlord
incurs as a result of Tenant’s holding over. 
The provisions of this Article shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord provided herein
or at Law.  If Tenant fails to surrender
the Premises upon the termination or expiration of this Lease, in addition to
any other liabilities to Landlord accruing there from, Tenant shall protect, defend,
indemnify and hold Landlord harmless from all loss, costs, including reasonable
attorneys’ fees, and liability resulting from such failure, including any
claims made by any succeeding tenant founded upon such failure to surrender,
and any lost profits to Landlord resulting there from.

 

24

 

After the thirtieth (30th) day of any holdover of the Premises by Tenant, and
notwithstanding the above or any other provision of this Lease to the contrary,
Tenant shall be liable for consequential damages and any other damages
permitted under this Lease or at Law, direct or otherwise, to Landlord in the
event Tenant fails to vacate the Premises within sixty (60) days after Landlord
notifies Tenant that Landlord has entered into a lease for the Premises or has
received a bona fide offer to lease the Premises, and that Landlord will be
unable to deliver possession, or perform improvements, due to Tenant’s
holdover.  Such sixty (60) day notice
period may run concurrently with the initial thirty (30) days of any Tenant
holdover.

 

19.           Rights of Landlord.

 

19.1         Intentionally Deleted.

 

19.2         Security.  Landlord
shall have the right to take such reasonable security measures as Landlord
deems advisable (provided, however, that any such security measures are for
Landlord’s own protection, and Tenant acknowledges that Landlord is not a
guarantor of the security or safety of Tenant and that such security matters
are the responsibility of Tenant); including evacuating the Building for cause,
suspected cause, or for drill purposes, so long as the same do not materially
interfere with Tenant’s use of the Premises. 
Without limitation of the foregoing, Tenant assumes full responsibility
for protecting the Premises from theft, robbery and pilferage, which includes
keeping valuable items locked up and doors locked and other means of entry to
the Premises closed and secured after business hours and at other times the
Premises is not in use.  Tenant and its
employees shall have continuous access to the Building and the Property 24
hours per day/7 days per week, subject to the terms of this Lease.

 

19.3         Prospective Purchaser’s and Lenders. 
Landlord shall have the right, upon at least forty eight (48) hours
advance notice (which may be telephonic or electronic) to enter the Premises at
all reasonable hours to show the Premises to prospective purchasers or
lenders.  Tenant shall also, within
fifteen (15) days of Landlord’s request therefore (but not more than one [1]
time within any twelve [12] month period in connection with a sale or refinance
of the Building, but at any time and from time to time in the event Tenant is
in Default or Landlord’s Mortgagee requests the same), provide Landlord with
current audited financial statements and other information reasonably requested
by Landlord regarding the financial condition of Tenant.

 

19.4         Prospective Tenants.  Landlord
shall have the right, upon at least forty eight (48) hours advance notice
(which may be telephonic or electronic), at any time during the last twelve
(12) months of the Term or at any time during the existence of a Default, to
enter the Premises at all reasonable hours to show the Premises to prospective
tenants.

 

20.           Hazardous Materials.

 

20.1         During the term of this Lease, Tenant shall comply
with all Environmental Laws and Environmental Permits (defined herein)
applicable to the operation or use of the Premises, will cause all other
persons occupying or using the Premises to comply with all such Environmental
Laws and Environmental Permits, will immediately pay or cause to be paid all
costs and expenses incurred by reason of such compliance, and will obtain and
renew all Environmental Permits required for operation or use of the Premises.

 

20.2         Tenant shall not generate, use, treat, store, handle,
release or dispose of, or permit the generation, use, treatment, storage,
handling, release or disposal of Hazardous Materials (as defined herein) on the
Premises except in compliance with all applicable Environmental Laws and
Environmental Permits.

 

20.3         Tenant will promptly advise Landlord in writing of any
of the following: (1) any pending or threatened Environmental Claim
against Tenant relating to the Premises or the Property; (2) any condition
or occurrence on the Premises or the Property that (a) results in
noncompliance by Tenant with any applicable Environmental Law, or (b) could
reasonably be anticipated to form the basis of an Environmental Claim against
Tenant or Landlord or the Premises; (3) any condition or occurrence on the
Premises or any property adjoining the Premises that could reasonably be
anticipated to cause the Premises to be subject to any restrictions on the
ownership, occupancy, use or transferability of the Premises under any
Environmental Law; and (4) the actual or anticipated taking of any removal
or remedial action by Tenant in response to the actual or alleged presence of
any Hazardous Material on the Premises or the Property.  All such notices shall describe in reasonable
detail the nature 

 

25

 

of the claim,
investigation, condition, occurrence or removal or remedial action and Tenant’s
response thereto.  In addition, Tenant
will provide Landlord with copies of all communications regarding the Premises
with any governmental agency relating to Environmental Laws, all such
communications with any person relating to Environmental Claims, and such
detailed reports of any such Environmental Claim as may reasonably be requested
by Landlord.

 

20.4         Tenant agrees to indemnify, defend and hold harmless
the Indemnitees from and against all obligations, including but not limited to
removal and remedial actions, losses, claims, suits, judgments, liabilities,
penalties, damages, including consequential and punitive damages, costs and
expenses, including reasonable attorneys’ and consultants’ fees and expenses,
of any kind or nature whatsoever that may at any time be incurred by, imposed
on or asserted against such Indemnitees directly or indirectly based on, or
arising or resulting from (a) the actual or alleged presence of Hazardous
Materials on the Premises which is caused or permitted by Tenant or Tenant
Related Parties and (b) any Environmental Claim relating in any way to
Tenant’s operation or use of the Premises (the “Hazardous
Materials Indemnified Matters”); it being understood that Tenant
shall not be liable for any Environmental Claim to the extent the same arises
due to the actions of Landlord or from the representations of Landlord
contained in Section 6.1 above being false.  The provisions of this Section shall
survive the expiration or sooner termination of this Lease.  Landlord shall indemnify, defend, reimburse
and hold Tenant harmless from and against any and all environmental damages
arising as a result of the violation of Environmental Laws first occurring
following the Commencement Date, including the cost of remediation, which
result from Hazardous Materials which existed on the Premises prior to Tenant’s
occupancy or which are caused by the gross negligence or willful misconduct of
Landlord. Landlord’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. 
Landlord hereby agrees to indemnify Tenant from and against any and all
loss, cost, damage, claim or expense arising from the presence of Hazardous
Materials at the Premises as of the Commencement Date.

 

20.5         All sums paid and costs incurred by Landlord or Tenant
with respect to any indemnified matter provided for above shall bear interest
at the rate of seven percent (7%) per annum from the date so paid or incurred
until reimbursed by the other party hereto, and all such sums and costs shall
be immediately due and payable on demand.

 

20.6         “Hazardous Materials”
means (i) petroleum or petroleum products, natural or synthetic gas,
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation, and radon gas; (ii) any substances defined as or included in
the definition of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic
substances,” “toxic pollutants,” “contaminants” or “pollutants,” or words of
similar import, under any applicable Environmental Law; and (iii) any
other substance exposure which is regulated by any governmental authority; (b) “Environmental Law(s)” means any federal, state or local
statute, law, rule, regulation, ordinance, code, policy or rule of common
law now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§
9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801 et seq.;
the Clean Water Act, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control
Act, 15 U.S.C. §§ 2601 et seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.;
the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.; the Atomic Energy Act,
42 U.S.C. §§ 2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. §§ 136 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
§§ 651 et seq.; (c) “Environmental Claims”
means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of non-compliance or violation,
investigations, proceedings, consent orders or consent agreements relating in
any way to any Environmental Law or any Environmental Permit, including without
limitation (i) any and all Environmental Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law and (ii) any
and all Environmental Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting
from Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment; (d) “Environmental
Permits” means all permits, approvals, identification numbers,
licenses and other authorizations required under any applicable Environmental
Law.

 

26

 

20.7         Landlord represents that, to the best of its
knowledge, and except as set forth in the Phase I Environmental Site Assessment
Update of the Light Industrial Property Located at 38070-38100 Ecorse Road,
Romulus, Michigan, dated January 16, 2009, prepared by PM Environmental, Inc.,
Project No. 02-3656-0, as of the Commencement Date the Premises do not
contain any Hazardous Materials.

 

21.           Base Rent Abatement.

 

Notwithstanding
anything to the contrary in the schedule of Base Rent set forth in Section 1.5
above, so long as Tenant is not then in monetary Default under this Lease
pursuant to the provisions of Section 16.1(i) or 16.1(iv) above,
Tenant shall be entitled to an abatement of one-half of each monthly
installment of Base Rent during the initial twelve (12) months of the Term (the
“Abated Base Rent Period”).  The Base Rent abated pursuant to the
foregoing shall be in the amount of $56,861.46 per month, for a total of
$682,337.52 (collectively, the “Abated Base Rent”).   During the Abated Base Rent Period, only
Base Rent shall be abated, and Tenant’s Pro Rata Share of Expenses and Taxes
all other costs and charges specified in this Lease shall remain due and
payable pursuant to the provisions of this Lease.  In the event that Tenant becomes in monetary
Default under this Lease pursuant to the provisions of Sections 16.1(i) or
16.1(iv) above during the Abated Base Rent Period, the Abated Base Rent
Period shall toll, day for day, until Tenant cures such monetary Default, at
which time, so long as such cure is effected within thirty (30) days of the
Default, the Abated Base Rent Period shall be reinstituted for the full number
of days that remained in the Abated Base Rent Period at the time of such
monetary Default; it being understood and agreed that if Tenant does not cure
any such monetary Default within said thirty (30) day period, then Tenant’s
rights to any tolled or future Abated Base Rent shall be null and void and of
no further force or effect.

 

22.           Tenant Improvement Allowance.

 

Notwithstanding anything
to the contrary set forth in this Lease, upon full execution and delivery of
this Lease Landlord will pay to Tenant the amount of $25,000.00 to offset
Tenant’s costs of carpeting and painting of the office area of the Premises and
such other improvements to the Premises as Tenant conducts pursuant to the
provisions of Article 8 of this Lease. 
Tenant will provide Landlord with copies of all paid invoices relating
to such improvements.

 

23.           Options to Renew.

 

23.1         Tenant shall have two (2) consecutive options to
extend the Term for five (5) years each (each, a “Renewal
Option”; the term of each Renewal Option shall be referred to as a “Renewal Term”), upon the terms and conditions contained
herein, including without limitation the payment of Tenant’s Pro Rata Share of
Expenses and Taxes determined on the same basis as set forth in Section 4.2
of this Lease, except that the Base Rent for each such Renewal Option shall be
at ninety seven and five-tenths percent (97.5%) of the then-fair market rate
for the applicable period including fair market concessions (e.g., Base Rent
abatement, tenant improvements, etc.) (the “Fair Market
Rate”) as set forth below.

 

23.2         Tenant shall provide notice to Landlord (“Renewal Notice”) of Tenant’s exercise of the Renewal Option
no later than the twelfth (12th) month
prior to the expiration of the Term (as may have been extended).  The Fair Market Rate is the rental rate then
being charged Similar Owners (including Landlord) to tenants of a similar
credit quality to Tenant for space of similar quality and size as the Premises,
taking into account, all relevant factors, including without limitation, age,
extent and quality of tenant improvements (but without regard to any moveable
fixtures or equipment within the Premises or the Property or any other
improvements to the Property which were paid for by Tenant), length of term,
amenities of the Building and the Property, location and/or floor height and
definition of net rentable area, reasonable projections of Base Rent, annual
Expenses and Taxes and allowances or concessions that have been granted such as
abatements, lease assumptions and existing conditions of leasehold improvement
and moving allowances.

 

23.3         No later than the eighth (8th)
month prior to the expiration of the Term (as may have been extended), Landlord
shall advise Tenant of the applicable Base Rent rate for the Premises for the
applicable Renewal Term.  Tenant, within
fifteen (15) days after the date on which Landlord advises Tenant of the
applicable Base Rent rate for the applicable Renewal Term, shall either (i) give
Landlord final binding written notice (“Binding Notice”)
of Tenant’s exercise of its Renewal Option, or (ii) if Tenant disagrees
with Landlord’s determination,

 

27

 

provide Landlord with
written notice of rejection (the “Rejection Notice”).  If Tenant provides Landlord with a Binding
Notice, Landlord and Tenant shall enter into the renewal amendment described in
Section 23.6 below upon the terms and conditions set forth herein.  If Tenant provides Landlord with a Rejection
Notice, or if Tenant fails to provide Landlord with either a Binding Notice or
a Rejection Notice, Landlord and Tenant shall work together in good faith to
agree upon the Fair Market Rate for the Premises during the Renewal Term.  Upon agreement, Landlord and Tenant shall
enter into the renewal amendment in accordance with the terms and conditions
hereof.  Notwithstanding the foregoing,
if Landlord and Tenant fail to agree upon the Fair Market Rate within thirty
(30) days the Fair Market Rate shall be determined in accordance with the
arbitration procedures described in Section 23.4 below.

 

23.4         Arbitration Procedure.

 

23.4.1.     If Landlord and Tenant fail to agree upon the Fair
Market Rate as set forth above, then each simultaneously submit to the other,
in a sealed envelope, its good faith estimate of the Fair Market Rate for the
Premises during the Renewal Term (collectively referred to as the “Estimates”).  If the
higher of such Estimates is not more than one hundred five percent (105%) of
the lower of such Estimates, then Fair Market Rate shall be the average of the
two Estimates.  If the Fair Market Rate
is not resolved by the exchange of Estimates, then, within seven (7) days
after the exchange of Estimates, Landlord and Tenant shall each select an
appraiser to determine which of the two Estimates most closely reflects the
Fair Market Rate for the Premises during the Renewal Term.  Each appraiser so selected shall be certified
as an MAI appraiser or as an ASA appraiser and shall have had at least five (5) years
experience within the previous ten (10) years as a real estate appraiser
working in Romulus, Michigan, with working knowledge of current rental rates
and practices.  For purposes hereof, an “MAI” appraiser means an individual who holds an MAI
designation conferred by, and is an independent member of, the American
Institute of Real Estate Appraisers (or its successor organization, or in the
event there is no successor organization, the organization and designation most
similar), and an “ASA” appraiser
means an individual who holds the Senior Member designation conferred by, and
is an independent member of, the American Society of Appraisers (or its
successor organization, or, in the event there is no successor organization,
the organization and designation most similar).

 

23.4.2.     Upon selection, Landlord’s and Tenant’s appraisers
shall work together in good faith to agree upon which of the two Estimates most
closely reflects the Fair Market Rate for the Premises.  The Estimate chosen by such appraisers shall
be binding on both Landlord and Tenant as the Base Rent rate for the Premises
during the Renewal Term.  If either
Landlord or Tenant fails to appoint an appraiser within the seven (7) day
period referred to above, the appraiser appointed by the other party shall be
the sole appraiser for the purposes hereof. 
If the two appraisers cannot agree upon which of the two Estimates most
closely reflects the Fair Market within twenty (20) days after their
appointment, then, within ten (10) days after the expiration of such
twenty (20) day period, the two appraisers shall select a third appraiser
meeting the aforementioned criteria. 
Once the third appraiser (i.e. arbitrator) has been selected as provided
for above, then, as soon thereafter as practicable but in any case within
fourteen (14) days, the arbitrator shall make his determination of which of the
two Estimates most closely reflects the Fair Market Rate and such Estimate
shall be binding on both Landlord and Tenant as the Base Rent rate for the
Premises.  If the arbitrator believes
that expert advice would materially assist him, he may retain one or more
qualified persons to provide such expert advice.  The parties shall share equally in the costs
of the arbitrator and of any experts retained by the arbitrator.  Any fees of any appraiser, counsel or experts
engaged directly by Landlord or Tenant, however, shall be borne by the party
retaining such appraiser, counsel or expert.

 

23.4.3      If the Fair Market Rate has not been determined by the
commencement date of the Renewal Term, Tenant shall pay Base Rent upon the
terms and conditions in effect during the last month of the initial Term for
the Premises until such time as the Fair Market Rate has been determined.  Upon such determination, the Base Rent for
the Premises shall be retroactively adjusted to the commencement of the Renewal
Term for the Premises.  If such
adjustment results in an underpayment of Base Rent by Tenant, Tenant shall pay
Landlord the amount of such underpayment within thirty (30) days after the
determination thereof.  If such
adjustment results in an overpayment of Base Rent by Tenant, Landlord shall
credit such overpayment against the next installment of Base Rent due under the
Lease and, to the extent necessary, any subsequent installments, until the
entire amount of such overpayment has been credited against Base Rent.

 

28

 

23.5         Tenant may not exercise the Renewal Option if on the
date Tenant attempts to exercise such Renewal Option or (a) Tenant is in
Default under this Lease, or (b) this Lease or Tenant’s right of
possession has been terminated, or (c) this Lease is not in full force and
effect on said date.

 

23.6         Following exercise by Tenant of the Renewal Option, at
the request of either party hereto and within thirty (30) days after such
request, Landlord and Tenant shall enter into an amendment to this Lease
confirming the terms, conditions and provisions applicable to the Renewal Term
as determined in accordance herewith.

 

24.           Parking.

 

During the Term, at no
additional rental and as an appurtenance to the Premises, Landlord shall
provide Tenant with the use of the entire surface parking area located on the
Property (the “Parking Area”) for the use of
Tenant and its employees.  Landlord shall
not be responsible for money, jewelry, automobiles or other personal property
lost in or stolen from the Parking Area regardless of whether such loss or theft
occurs when such area is locked or otherwise secured.  Except as caused by the negligence or willful
misconduct of Landlord and without limiting the terms of the preceding
sentence, Landlord shall not be liable for any loss, injury or damage to
persons using the Parking Area or automobiles or other property therein, it
being agreed that, to the fullest extent permitted by law, the use of the
Parking Area shall be at the sole risk of Tenant and its employees.  Except for emergency repairs, Tenant and its
employees shall not perform any work on any automobiles while located in the
Parking Area.  Landlord shall have the
right to temporarily close certain areas of the Parking Area to perform
necessary repairs, maintenance and improvements thereto.  Notwithstanding the foregoing, except in
emergency situations as determined by Landlord, Landlord shall provide Tenant
with thirty (30) days prior written notice of its intent to perform any
necessary repairs, maintenance or improvements to the Parking Area and shall
exercise reasonable efforts not to unreasonably interfere with the use of the
Parking Area by Tenant.  However, the
foregoing shall not require Landlord to perform work after normal business
hours unless Tenant agrees to reimburse Landlord for the extra cost incurred in
connection with such work which exceeds the cost for such work which would have
been incurred had it been performed during normal business hours.  Other than in connection with an assignment
or subletting of the Premises (i) approved by Landlord pursuant to Section 10.1
above, or (ii) pursuant to Section 10.8 above, Tenant shall not
assign or sublease any of the Parking Area without the consent of Landlord.

 

25.           Right of First Offer.

 

25.1         Subject to the rights in favor of other tenants as of
the date of this Lease as identified on Exhibit F
attached hereto (“Permitted Superior Rights”),
Tenant shall have and is hereby granted a right of first offer (the “Right of First Offer”) 
to add to the Premises demised hereunder each and every contiguous space
in excess of 100,000 rentable square feet in any of Landlord’s Michigan
Buildings (defined in Section 25.6 below) (“First Offer
Space”) that becomes Available for Lease (as hereinafter defined)
from time to time at any time during the period of time from the Commencement
Date through the [thirteenth (13th)] anniversary of the Commencement Date
(hereinafter, the “Offer Period”).  Subject to the following sentence, any First
Offer Space shall be deemed to be “Available for Lease”
upon expiration or other termination of any then-current lease of such space,
provided that no Permitted Superior Right exists (or, if any such Permitted
Superior Rights exist, if the parties with any such Permitted Superior Rights
waive or fail to timely exercise such rights). 
If any First Offer Space is Available for Lease during the Offer Period,
but is subject to a Permitted Superior Right which is exercisable in the
future, such First Offer Space shall be offered to Tenant for a term ending on
the required delivery date under any such Permitted Superior Right, if such
right is exercised.

 

25.2         Landlord shall notify Tenant in writing after Landlord
becomes aware that any First Offer Space is or will be Available for Lease (a “First Offer Notice”) during the Offer Period, which First
Offer Notice shall identify the given First Offer Space and shall include the
date that such First Offer Space will be available to Tenant; provided,
however, that, except with respect to Landlord’s Michigan Building located at
6505 Cogswell Boulevard, Romulus, Michigan (the “6505
Building”), Landlord will not provide a First Offer Notice more than
twelve (12) months in advance of the date of any such availability; further
provided, however, that Landlord will not provide any First Offer Notice prior
to the sixth-month anniversary of the Commencement Date, but as to the 6505
Building Landlord is deemed to have provided Tenant a First Offer Notice as of
the Commencement Date and, notwithstanding the provisions of the following
sentence, Tenant must provide its notice of irrevocable acceptance

 

29

 

of the offer to add the
6505 Building to the Premises on or before November 30, 2009.  Except as expressly provided in the foregoing
sentence with respect to the 6505 Building, Tenant shall have twenty (20)
business days from receipt of a First Offer Notice within which to notify
Landlord in writing of Tenant’s irrevocable acceptance of such offer to add all
of the First Offer Space to the Premises on the terms and conditions set forth
in this Lease, except with respect to any abatement, improvement allowance,
leasehold improvements, or other work to the Premises or any similar economic
incentives that may have been provided Tenant in connection with entering into
this Lease, and except that Base Rent for such First Offer Space shall, if the
term for the leasing of such First Offer Space commences during the initial
Term, initially be $4.75 per rentable square foot per annum during the initial
Term but will escalate annually at the rate of $.10 per rentable square foot of
the First Offer Space per annum for each twelve month period following the
expiration of the initial Term (by way of example, assuming the Term initially
expires on October 31, 2019, (i) if Tenant leases First Offer Space
commencing on November 1, 2015, Base Rent shall be $4.75 per annum from
First Offer Space commencement date through October 31, 2019 and shall
escalate annually by $.10 per rentable square foot each September 1st
thereafter until the end of the Term of the Lease as the same is extended as
provided herein, and (ii) if Tenant leases First Offer Space commencing December 1,
2021, Base Rent shall initially be $5.05 per rentable square foot  and shall escalate on November 1, 2022
to $5.15 per rentable square foot and shall continue escalating by $.10 per
rentable square foot each November 1st thereafter through the end of the term of the
Lease as the same is extended as provided herein).  Tenant shall take such First Offer Space on
an “as-is” basis; provided, however, that Tenant shall receive an allowance for
tenant improvements in the amount of $.07 per rentable square foot of such
First Offer Space multiplied by the number of years during the term of leasing
of such First Offer Space (e.g., if the First Offer Space consists of 100,000
rentable square feet and the Term of the lease with respect to such First Offer
Space is seven [7] years, then Tenant shall be entitled to an improvement
allowance of $49,000.00).  Except at
provided in Section 25.7 below, the rights of Tenant hereunder with regard
to any First Offer Space shall terminate with respect to that specific First
Offer Space if Tenant fails to exercise its right to lease such First Offer
Space within the twenty (20) business day period provided above.

 

25.3         If Tenant has validly exercised its rights pursuant to
this Article 25, then, such First Offer Space which is the subject of the
First Offer Notice shall be leased to Tenant pursuant to a lease (a “Modeled Lease”) that modeled substantially from the form of
this Lease, subject only to necessary changes to reflect the business terms
(such as the rentable square footage of such First Offer Space and Tenant’s Pro
Rata Share with respect to such First Offer Space and any other changes that
arise as a result of the First Offer Space being located within a multi-tenant
building) and factual differences between the given First Offer Space and the
Premises (such as parking capacity, building rules and regulations in the
case of a multi-tenant building and other conditions).  The term of the demise covering such First
Offer Space shall, except to the extent limited on account of subsequent
unexercised Permitted Superior Rights that will become effective after such
First Offer Space is leased to Tenant, be coterminous with the Term of this
Lease as it may be extended pursuant to Article 23 above hereof or
otherwise extended or renewed or as it may be earlier terminated as elsewhere
provided herein.  Notwithstanding the
foregoing, if the First Offer Space will be leased to Tenant as of a date at
which there remains less than seven (7) years in the Term of this Lease,
in order for Tenant’s exercise of the Right of First Offer to be valid, Tenant
must irrevocably exercise its initial and/or second Renewal Option, as
applicable, so that the term of this Lease (as so extended) has no less than
seven (7) years remaining on the date of Tenant’s exercise of the given
Right of First Offer.

 

25.4         Following exercise by Tenant of its right to lease any
First Offer Space, Landlord and Tenant shall enter into a Modeled Lease for the
First Offer Space.  Tenant shall enter
into such Modeled Lease for the given First Offer Space within twenty (20)
business days after Landlord forwards the same to Tenant for execution; provided
that the execution and delivery of such Modeled Lease shall not be a condition
precedent to the effectiveness of Tenant’s leasing of the First Offer Space
upon the terms set forth in the First Offer Notice.

 

25.5         It shall be a condition to Tenant’s right to exercise
a right to add First Offer Space under this Article 25 that, at the time
Tenant notifies Landlord of the exercise of such right to add such First Offer
Space to the Premises and at any time thereafter up to the date on which the
First Offer Space becomes part of the Premises, Tenant is not in Default under
this Lease.

 

25.6         For purposes of this Article 25, “Landlord’s Michigan Buildings” shall mean any of the
following buildings so long as the same are owned in their entirety in fee
simple by Landlord; provided, however, that at such time, if at all, that
Landlord sells, conveys or transfers its interest in any of the following
buildings to an

 

30

 

entity that is not
controlled by or under common control with Landlord, the same shall be excluded
from Landlord’s Michigan Buildings effective as of the date of such sale,
conveyance or transfer:

 

41133 Van Born Road,
Belleville, Michigan

41199 Van Born Road,
Belleville, Michigan

6505 Cogswell, Romulus,
Michigan

7525 Cogswell, Romulus,
Michigan.

 

25.7         Notwithstanding anything to the contrary in this Article 25,
if (i) Tenant was entitled to exercise its Right of First Offer, but
failed to provide Landlord with a First Offer Notice within the twenty (20)
business day period provided in Section 25.2 above (or by November 30,
2009, with respect to the 6505 Building), and (ii) Landlord does not enter
into a lease for the First Offer Space within a period of nine (9) months
following the date of the First Offer Notice, Tenant shall once again have a
Right of First Offer with respect to such First Offer Space.

 

26.           Intentionally Deleted.

 

27.           Miscellaneous.

 

27.1         Landlord Transfer.  Landlord may
transfer any portion of the Building and any of its rights under this
Lease.  If Landlord assigns its rights
under this Lease, then Landlord shall thereby be released from any further
obligations hereunder arising after the date of transfer, provided that the
assignee assumes Landlord’s obligations hereunder in writing.

 

27.2         Force Majeure.  Other than
for either party’s obligations under this Lease that can be performed by the
payment of money, whenever a period of time is herein prescribed for action to
be taken by either party hereto, such party shall not be liable or responsible
for, and there shall be excluded from the computation of any such period of
time, any delays due to strikes, riots, acts of God, shortages of labor or
materials, war, (declared or undeclared), acts of terrorism, Laws, or any other
causes of any kind whatsoever which are beyond the control of such party.

 

27.3         Brokerage.  Neither
Landlord nor Tenant has dealt with any broker or agent in connection with the
negotiation or execution of this Lease except for Grubb & Ellis and T3
Realty Advisors (together, “Broker”).  Landlord shall be responsible for any
commission owed to Broker in connection with this Lease pursuant to separate
agreement.  Each party shall indemnify,
defend and hold the other harmless from and against all costs, expenses,
attorneys’ fees, liens and other liability for commissions or other
compensation claimed by any broker or agent other than Broker claiming the same
by, through, or under the indemnifying party. 
The foregoing indemnity shall survive the expiration or earlier
termination of this Lease.

 

27.4         Estoppel Certificates.  From time to
time, either party shall furnish to the other or to any party designated by
such other, within twenty (20) days after such party has made a request
therefore, a certificate signed by the other party confirming and containing
such factual certifications and representations as to this Lease as such
requesting party may reasonably request.

 

27.5         Notices.  All notices
and other communications given pursuant to this Lease shall be in writing and
shall be: (1) mailed by first class, United States mail, postage prepaid,
certified, with return receipt requested, and addressed to the parties hereto
at the address specified in the Basic Lease Information; (2) hand
delivered to the intended addressee; (3) sent by a nationally recognized
overnight courier service; or (4) sent by facsimile transmission during
normal business hours followed by a copy of such notice sent in another manner
permitted hereunder.  All notices shall
be effective upon the earlier to occur of actual receipt, one (1) business
day following deposit with a nationally recognized overnight courier service,
or three (3) days following deposit in the United States mail.  Any notices shall be sent to the addresses of
the parties set forth in Article 1 of this Lease.  The parties hereto may change their addresses
by giving notice thereof to the other in conformity with this provision.

 

27.6         Separability.  If any clause
or provision of this Lease is illegal, invalid, or unenforceable under present
or future Laws, then the remainder of this Lease shall not be affected thereby.

 

31

 

27.7         Amendments; Binding Effect. 
This Lease may not be amended except by instrument in writing signed by
Landlord and Tenant.  Except as expressly
provided herein, no provision of this Lease shall be deemed to have been waived
by either party unless such waiver is in writing signed by such party, and no
custom or practice which may evolve between the parties in the administration
of the terms hereof shall waive or diminish the right of one party to insist
upon the performance by the other party in strict accordance with the terms
hereof.  The terms and conditions
contained in this Lease shall inure to the benefit of and be binding upon the
parties hereto, and upon their respective successors in interest and legal
representatives, except as otherwise herein expressly provided.  This Lease is for the sole benefit of
Landlord and Tenant, and, other than Landlord’s Mortgagee, no third party shall
be deemed a third party beneficiary hereof.

 

27.8         Quiet Enjoyment.  Provided
Tenant has performed all of its obligations hereunder, Tenant shall peaceably
and quietly hold and enjoy the Premises for the Term, without hindrance from
Landlord or any party claiming by, through, or under Landlord, subject to the
terms and conditions of this Lease.

 

27.9         No Merger.  There shall
be no merger of the leasehold estate hereby created with the fee estate in the
Premises or any part thereof if the same person acquires or holds, directly or
indirectly, this Lease or any interest in this Lease and the fee estate in the
leasehold Premises or any interest in such fee estate.

 

27.10       Entire Agreement.  This Lease
constitutes the entire agreement between Landlord and Tenant regarding the
subject matter hereof and supersedes all oral statements and prior writings
relating thereto.  Except for those set
forth in this Lease, no representations, warranties, or agreements have been
made by Landlord or Tenant to the other with respect to this Lease or the
obligations of Landlord or Tenant in connection therewith.  The normal rule of construction that any
ambiguities be resolved against the drafting party shall not apply to the
interpretation of this Lease or any exhibits or amendments hereto.

 

27.11       Governing Law.  This Lease
shall be governed by and construed in accordance with the laws of the state in
which the Premises are located.

 

27.12       Counterparts.  This Lease
may be executed in one or more counterparts each of which when so executed and
delivered shall be an original, but together shall constitute one and the same
instrument.

 

27.13       Authority.  Tenant (if a
corporation, partnership or other business entity) hereby represents and
warrants to Landlord that Tenant is a duly formed and existing entity qualified
to do business in the state in which the Premises are located, that Tenant has
full right and authority to execute and deliver this Lease, and that each person
signing on behalf of Tenant is authorized to do so.

 

27.14       Examination Not Option.  Submission of
this Lease shall not be deemed to be a reservation of the Premises.  Landlord shall not be bound by this Lease
until it has received a copy of this Lease duly executed by Tenant and has
delivered to Tenant a copy of this Lease duly executed by Landlord, and until
such delivery Landlord reserves the right to exhibit and lease the Premises to
other prospective tenants.

 

27.15       Recordation.  Tenant, at
its sole cost and expense, shall be entitled to record a memorandum or notice
of lease or other short form lease (each deemed a “notice of lease” hereunder),
subject to Landlord’s reasonable approval regarding the form and substance of
the notice of lease.  Tenant shall
provide Landlord with a copy of the recorded document, evidencing the recording
number and other recording information thereon. 
Tenant shall record all necessary documentation to release such notice
of lease of record within thirty (30) days following the expiration or earlier
termination of this Lease.  If Tenant
fails to have such notice of lease released within such thirty (30) day period,
Landlord shall be entitled to take all action as is reasonably necessary to
cause such notice of lease to be released. 
In such event, Tenant, within fifteen (15) days after demand, shall
reimburse Landlord for any reasonable costs and expenses, including reasonable
attorneys’ fees, incurred by Landlord in causing the notice of lease to be
released of record.

 

27.16       Limitation of Landlord’s Liability. 
Landlord’s obligations and liability with respect to this Lease shall be
limited solely to Landlord’s interest in the Building, as such interest is
constituted from time to time, and neither Landlord nor any partner or member
of Landlord, or any officer, director, shareholder, or partner or member of any
partner or member of Landlord, shall have any individual or personal liability
whatsoever with respect to this 

 

32

 

Lease.  Landlord’s interest in the Building shall be
deemed to include, without limitation, rent, insurance proceeds, mortgage
proceeds, sale proceeds and condemnation proceeds.

 

27.17       Executive Order 13224.  Tenant
represents and warrants to Landlord that neither Tenant, nor any of the
entities or individuals owning or controlling Tenant, have been designated as a
blocked person pursuant to Executive Order 13224.  Furthermore, if Tenant or any of the entities
or individuals owning or controlling Tenant either now or in the future is
designated as a blocked person pursuant to Executive Order 13224, such
circumstance shall constitute a Default by Tenant under this Lease and Landlord
may immediately (without delivering any prior notice to Tenant or affording
Tenant any opportunity to cure) exercise any and all rights and remedies
permitted in this Lease.  The foregoing
provisions shall not apply to any person or entity to the extent that such
person’s or entity’s interest in Tenant is through a U.S. Publicly Traded
Entity.

 

27.18       List of Exhibits.  All exhibits
and attachments attached hereto are incorporated herein by this reference.

 

	
  Exhibit A -

  	
  Premises

  
	
  Exhibit B -

  	
  Description of the
  Property

  
	
  Exhibit C -

  	
  Transferred Personal
  Property

  
	
  Exhibit D -

  	
  Landlord’s Work

  
	
  Exhibit E -

  	
  Intentionally Deleted

  
	
  Exhibit F -

  	
  Permitted Superior
  Rights

  
	
  Exhibit G -

  	
  Intentionally Deleted

  
	
  Exhibit H -

  	
  Required Insurance

  
	
  Exhibit I -

  	
  Current Landlord’s
  Mortgagee SNDA Form

  

 

[signatures
are set forth on the following page]

 

33

 

IN
WITNESS WHEREOF,
Landlord and Tenant have signed and sealed this Lease as of the day and year
first above written by their duly authorized member, partner or officer, as the
case may be.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
  WELSH
  ROMULUS, LLC, a
  Delaware limited

  liability company

  	
   

  	
  A123
  SYSTEMS INC., a
  Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Michael
  Rubino

  
	
  By:

  	
  /s/ Scott Frederiksen

  	
   

  	
  Name:

  	
  Michael Rubino

  
	
  Name:

  	
  Scott Frederiksen

  	
   

  	
  Title:

  	
  CFO

  
	
  Title:

  	
  Treasurer

  	
   

  	
  Execution Date:

  	
  November 30,
  2009

  
	
  Execution Date:

  	
  December 4, 2009

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BPE
  EXCHANGE, LLC,
  a Delaware limited

  liability company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Fred H. Chute Jr.

  	
   

  	
   

  
	
  Name:

  	
  Fred H. Chute Jr.

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  
	
  Execution Date:

  	
  November 25,
  2009

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BPW
  EXCHANGE, LLC,
  a Delaware limited

  liability company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Fred H. Chute Jr.

  	
   

  	
   

  
	
  Name:

  	
  Fred H. Chute Jr.

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  
	
  Execution Date:

  	
  November
  25, 2009

  	
   

  	
   

  
										

 

34

 

EXHIBIT A

 

PREMISES

 

(see attached
page)

 

 

 

 

EXHIBIT B

 

THE
PROPERTY

 

LAND IN THE COUNTY OF WAYNE, CITY OF ROMULUS, STATE OF
MICHIGAN, DESCRIBED AS:

 

THE SOUTHWEST 1/4  OF
THE SOUTHEAST 1/4 OF SECTION 6, TOWN 3 SOUTH, RANGE 9 EAST, EXCEPT SOUTH
60.00 FEET THEREOF, ALSO EXCEPTING THAT PART BEGINNING NORTH 00°06’10”
EAST 60.03 FEET AND NORTH 88°15’22” EAST 33.02 FEET FROM SOUTH 1/4  CORNER OF SECTION 6; THENCE NORTH 00°06’10”
EAST 803.00 FEET; THENCE SOUTH 89°53’50 EAST 300.00 FEET; THENCE SOUTH 00°06’10”
WEST 793.33 FEET; THENCE SOUTH 88°15’22” WEST 300.16 FEET TO THE POINT 07
BEGINNING.

 

ALSO BEING DESCRIBED AS:

 

PART OF THE SOUTHEAST 1/4  OF SECTION 6, TOWN 3 SOUTH, RANGE 9
EAST, CITY OF ROMULUS, WAYNE COUNTY, MICHIGAN, BEING DESCRIBED AS COMMENCING AT
THE SOUTH 1/4 CORNER OF SAID SECTION 6; THENCE DUE NORTH 60.03 FEET;
THENCE NORTH 88°08’53” EAST, 33.02 FEET; THENCE DUE NORTH ALONG THE EAST LINE
OF COGSWELL ROAD (66.00 FEET WIDE) 803.00 FEET TO THE POINT OF BEGINNING;
THENCE CONTINUING DUE NORTH ALONG SAID EAST LINE OF COGSWELL ROAD, 452.11 FEET;
THENCE NORTH 88°24’46”  EAST, 1283.18
FEET; THENCE SOUTH 00°06’59” WEST, 1249.26 FEET TO A POINT ON THE NORTH LINE OF
ECORSE ROAD (120.00 FEET WIDE); THENCE SOUTH 88°08’53” WEST ALONG SAID NORTH
LINE OF ECORSE ROAD 980.66 FEET; THENCE DUE NORTH 793.30 FEET; THENCE DUE WEST
300.00 FEET TO THE POINT OF BEGINNING.

 

LESS and EXCEPT the
portion of the foregoing shown in cross-hatch below:

 

 

 

EXHIBIT C

 

TRANSFERRED
PERSONAL PROPERTY

 

1.             Two spare overhead doors.

 

2.             Back flow preventer.

 

3.             Pallets of sodium halide light fixtures.

 

 

EXHIBIT D

 

LANDLORD’S
WORK

 

1.             Repair or replace, as necessary, soap dispensers in
the men’s restroom in the northwest warehouse.

 

2.             Repair or replace, as necessary, the dysfunctional
toilet in the women’s restroom in the northwest warehouse.

 

3.             Replace the water heater in the janitor closet in the
northwest warehouse.

 

4.             Replace as necessary light bulbs in the warehouse.

 

5.             Repair or replace, as necessary, dock levelers and DOK
LOK devises.

 

6.             Replace the exit door in the northeast warehouse.

 

7.             Replace side gaskets in the overhead door in the
southwest warehouse.

 

8.             Adjust office area closet doors so that the same do
not bind.

 

9.             HVAC improvements pursuant to the bids obtained by
Landlord from R&A Heating and Cooling, Inc., dated August 10,
2009 and September 29, 2009.

 

10.          Re-stripe ADA parking.

 

11.          Install panic bar hardware to the northeast warehouse
door system.

 

12.          Patch all penetrations in the east perimeter wall.

 

13.          Replace missing ceiling tile in the southwest
warehouse open area.

 

14.          Inspection and certification of the elevator.

 

15.          Paint the exterior of the Building.  Notwithstanding anything to the contrary set
forth in Section 6.1 of the Lease, the painting shall be done in a two
color scheme agreed to between Landlord and Tenant, shall be scheduled for the
optimal weather time for exterior painting in the environmental area of the
Building (which the parties anticipate will be Spring, 2010), and shall be
performed by Tenant’s contractor. 
Further, the actual cost of the materials and labor associated with such
painting shall be amortized over the portion of the initial Term of the Lease
remaining subsequent to completion of such painting, without interest, payable
in equal monthly installments included in Expenses.

 

 

EXHIBIT E

 

INTENTIONALLY
DELETED

 

 

EXHIBIT F

 

PERMITTED
SUPERIOR RIGHTS

 

1.             With respect to 6505 Cogswell Road:

 

A.            Mastronardi Produce-USA, Inc. lease of 199,680
square feet expires July 31, 2010. 
The lease does not contain an extension option.

 

B.            Medline Industries Inc. lease of 224,640 square feet
expires December 31, 2012.  The
lease does not contain an extension option.

 

2.             With respect to 41133 Van Born Road:

 

A.            Owens & Minor Distribution lease of 105,840
square feet expires January 31, 2011 (however, the same may be extended
until April 30, 2011 because Landlord and tenant are currently negotiating
a 3 month extension).  The lease contains
a five year extension option exercisable upon 180 days prior written notice.

 

3.             With respect to 41199 Van Born Road:

 

No
tenants of space exceeding 100,000 square feet.

 

4.             With respect to 7525 Cogswell Road:

 

A.            Argenbright, Inc. lease of 285,200 square feet
expires February 29, 2016.  The
lease contains two five year extension options, each exercisable upon 365 days
prior written notice.

 

 

EXHIBIT G

 

INTENTIONALLY
DELETED

 

 

EXHIBIT H

 

REQUIRED
INSURANCE

 

1.4          Insurance.  Tenant shall,
at Tenant’s expense, maintain in force and effect on the Property at all times
while the Lease to which this Exhibit H is attached continues in effect
the following insurance, except for the insurance required under paragraphs (g) [relating
to business income] and (h) [relating to terrorism] below, which business
income and terrorism insurance shall be maintained by Landlord pursuant to Section 11.1.2
of the Lease:

 

(a)         Insurance against loss or
damage to the Property by fire, windstorm, tornado and hail and against loss
and damage by such other, further and additional risks as may be now or
hereafter embraced by an “all-risk” or “special form” form of insurance policy.
The amount of such insurance shall be not less than one hundred percent (100%)
of the full replacement cost (insurable value) of the Improvements (as
established by an MAI appraisal), without reduction for depreciation. The determination
of the replacement cost amount shall be adjusted annually to comply with the
requirements of the insurer issuing such coverage or, at Mortgagee’s election,
by reference to such indices, appraisals or information as Mortgagee determines
in its reasonable discretion in order to reflect increased value due to
inflation. Absent such annual adjustment, each policy shall contain inflation
guard coverage insuring that the policy limit will be increased over time to
reflect the effect of inflation. Full replacement cost, as used herein, means,
with respect to the Improvements, the cost of replacing the Improvements without
regard to deduction for depreciation, exclusive of the cost of excavations,
foundations and footings below the lowest basement floor. Mortgagor shall also
maintain insurance against loss or damage to furniture, furnishings, fixtures,
equipment and other items (whether personalty or fixtures) included in the
Property and owned by Mortgagor from time to time, to the extent applicable, in
the amount of the cost of replacing the same, in each case, with inflation
guard coverage to reflect the effect of inflation, or annual valuation. Each
policy or policies shall contain a replacement cost endorsement and either an
agreed amount endorsement (to avoid the operation of any co-insurance
provisions) or a waiver of any co-insurance provisions, all subject to
Mortgagee’s approval. The maximum deductible shall be $10,000.00.

 

(b)         Commercial General Liability
Insurance against claims for personal injury, bodily injury, death and property
damage occurring on, in or about the Property in amounts not less than
$1,000,000.00 per occurrence and $2,000,000.00 in the aggregate plus umbrella
coverage in an amount not less than $2,000,000.00. During any construction on
the Property, Mortgagor’s general contractor for such construction shall also
provide the insurance required in this Subsection (b). Mortgagee hereby retains
the right to periodically review the amount of said liability insurance being
maintained by Mortgagor and to require an increase in the amount of said
liability insurance should Mortgagee deem an increase to be reasonably prudent
under then existing circumstances.

 

(c)          Boiler and machinery
insurance is required if steam boilers or other pressure-fired vessels are in
operation at the Property. Minimum liability coverage per accident must equal
the greater of the replacement cost (insurable value) of the Improvements
housing such boiler or pressure-fired machinery or $2,000,000.00. If one or more
large HVAC units is in operation at the Property, “Systems Breakdowns” coverage
shall be required, as determined by Mortgagee, Minimum liability coverage per
accident must equal the value of such unit(s).

 

1

 

(d)         If the Improvements or any
part thereof are situated in an area now or subsequently designated by the
Federal Emergency Management Agency (“FEMA”) as a
special flood hazard area (Zone A or Zone V), flood insurance in an amount
equal to the lesser of (i) the minimum amount required, under the terms of
coverage, to compensate for any damage or loss on a replacement basis (or the
unpaid balance of the Debt if replacement cost coverage is not available for
the type of building insured) or (ii) the maximum insurance available
under the appropriate National Flood Insurance Administration program. The
maximum deductible shall be $3,000.00 per building or a higher minimum amount
as required by FEMA or other applicable law.

 

(e)          During the period of any
construction, renovation or alteration of the Improvements which exceeds the
lesser of 10% of the principal amount of the Note or $500,000.00, at
Mortgagee’s request, a completed value, “All Risk” Builder’s Risk form, or
“Course of Construction” insurance policy in non-reporting form with
replacement cost and no co-insurance, in an amount approved by Mortgagee, may
be required. During the period of any construction of any addition to the
existing Improvements, a completed value, “All Risk” Builder’s Risk form or “Course
of Construction” insurance policy in non-reporting form, in an amount approved
by Mortgagee, shall be required.

 

(f)          When required by applicable
law, ordinance or other regulation, Worker’s Compensation and Employer’s
Liability Insurance covering all persons subject to the workers’ compensation laws
of the state in which the Property is located.

 

(g)          Business income (loss of rents)
insurance in amounts sufficient to compensate Mortgagor for all Rents and
Profits or income during a period of not less than eighteen (18) months. The
amount of coverage shall be adjusted annually to reflect the Rents and Profits
or income payable during the succeeding eighteen (18) month period.

 

(h)         Terrorism insurance in
compliance with the Terrorism Risk Insurance Act of 2002, Public Law 107-297,
as amended (“TRIA”). Mortgagor shall maintain
Terrorism Insurance throughout the Loan term whether or not TRIA remains in
effect; provided, however, if TRIA is no longer in effect, Mortgagor shall
purchase as much Terrorism Insurance as possible provided the total expense for
such insurance shall not be required to exceed two (2) times the aggregate
premium for such insurance at the time of the funding of the Loan (Mortgagor
shall satisfy the insurance requirements, other than with respect to terrorism
insurance regardless of price).

 

(i)     Intentionally Deleted.

 

2

 

(j)          All such insurance shall (i) be
with insurers fully licensed and authorised to do business in the state within which
the Property is located and which insurers, unless otherwise approved in
writing by Mortgagee, shall have and maintain a rating of at least “A-” or
higher from Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies (“Standard &  Poor’s”) or equivalent; (ii) contain
the complete address of the Real Estate (or a complete legal description); (iii) be
for terms of at least one (1) year with premium prepaid; (iv) be
subject to the approval of Mortgagee as to insurance companies, amounts,
content, forms of policies, method by which premiums are paid and expiration
dates; (v) contain deductibles which do not exceed $10,000.00 (except that
(x) there shall be no deductible with respect to the policies described in
(b), above, unless otherwise approved by Mortgagee and (y) the deductible
with respect to the policy described in clause (d), above, shall not exceed
$3,000.00); and (vi) include a standard, non-contributory, mortgagee
clause naming:

 

Prudential Mortgage Capital Company, LLC, its
successors and assigns as their interest may appear

c/o Prudential Asset Resources

Attn: Insurance Department

2200 Ross Avenue, Suite 4900E

Dallas, Texas 75201

 

(a) as an additional insured under all
liability insurance policies, (b) as the first mortgagee on all property
insurance policies and (c) as the loss payee on all loss of rents or loss
of business income insurance policies.

 

Mortgagor shall, as of the
date hereof, deliver to Mortgagee (a) evidence that said insurance
policies have been prepaid as required above and (b) certified copies of
such insurance policies and original certificates of insurance signed by an
authorized agent of the applicable insurance companies evidencing such
insurance satisfactory to Mortgagee. Mortgagor shall renew all such insurance
and deliver to Mortgagee certificates and policies evidencing such renewals at
least thirty (30) days before any such insurance shall expire. Mortgagor
further agrees that each such insurance policy: (i) shall provide for at
least thirty (30) days’ prior written notice to Mortgagee prior to (x) any
policy reduction, cancellation or termination for any reason and (y) any
modification thereof which affects the interest of Mortgagee; (ii) shall
contain an endorsement or agreement by the insurer that any loss shall be
payable to Mortgagee in accordance with the terms of such policy
notwithstanding any act or negligence of Mortgagor which might otherwise result
in forfeiture of such insurance; (iii) shall waive all rights of
Subrogation against Mortgagee; and (iv) in the event that the Real Estate
or the Improvements constitutes a legal non-conforming use under applicable
building, zoning or land use laws or ordinances, shall include an ordinance or
law coverage endorsement which will contain Coverage A: “Loss Due to Operation
of Law” (with a minimum liability limit equal to Replacement Cost With Agreed
Value Endorsement), Coverage B: “Demolition Cost” and Coverage C: “Increased
Cost of Construction” coverages.

 

3

 

EXHIBIT I

 

CURRENT
LANDLORD’S MORTGAGEE SNDA FORM

 

[to
be added once finalized]

 

1Exhibit 10.26

 

THIRD
AMENDMENT TO LEASE

 

Definitions:

 

	
  Effective Date:

  	
  December 28, 2009

  
	
   

  	
   

  
	
  Landlord:

  	
  Harvard University, founded in 1636, being an
  educational and charitable corporation established under the Harvard Charter
  of 1650 from the General Court of the Massachusetts Bay Colony, whose
  corporate name is “President and Fellows of Harvard College.”

  
	
   

  	
   

  
	
  Tenant:

  	
  A123 Systems, Inc., a Delaware corporation.

  
	
   

  	
   

  
	
  Lease:

  	
  Lease between Landlord, as landlord, and Tenant, as
  tenant, dated as of June 1, 2004, as amended by that certain First
  Amendment to Lease dated as of February 9, 2007, as further amended by
  that certain Second Amendment to Lease dated as of March 28, 2009 (the “Second
  Amendment”).

  
	
   

  	
   

  
	
  Existing Premises:

  	
  All of Building 60 (as defined in the First
  Amendment) containing approximately 10,993 rentable square feet of space, all
  as more particularly described in the Lease (the “Original Premises”);
  and a portion of the third floor of Building 312 containing approximately
  9,894 rentable square feet of space, as more particularly described in the
  Lease (the “First Amendment Expansion Premises”).

  
	
   

  	
   

  
	
  Third Amendment

  	
   

  
	
  Expansion Premises:

  	
  A portion of the second floor of Building 313
  containing approximately 3,506 rentable square feet of space, as more particularly
  described on Exhibit A attached hereto.

  
	
   

  	
   

  
	
  Third Amendment

  	
   

  
	
  Expansion Premises

  	
   

  
	
  Commencement Date:

  	
  December 28, 2009

  
	
   

  	
   

  
	
  Third Amendment

  	
   

  
	
  Expansion Premises

  	
   

  
	
  Rent Commencement Date:

  	
  February 1, 2010.

  

 

All capitalized terms not
otherwise defined herein shall have the meanings set forth in the Lease.

 

BACKGROUND:

 

Tenant desires to expand
the Premises and to extend the Lease Expiration Date, and Landlord has agreed
to such expansion and extension upon the terms and conditions set forth below,
and provided certain other revisions are made to the Lease, all as set forth
more particularly below.

 

Landlord and Tenant
hereby agree as follows:

 

1.             Expansion Premises:  Landlord will
deliver the Third Amendment Expansion Premises to Tenant as of the Third
Amendment Expansion Premises Commencement Date, and Tenant agrees to accept the
Third

 

 

Amendment
Expansion Premises broom clean and free of all occupants but otherwise in its
AS-IS condition, and Landlord shall have no obligation to do any work or make
any installation or alterations of any kind to the Third Amendment Expansion
Premises.  Each of the Third Amendment
Expansion Premises Commencement Date and the Third Amendment Expansion Premises
Rent Commencement Date shall be extended on a day-for-day basis for each day
after December 28, 2009 that Landlord’s failure to deliver the Third
Amendment Expansion Premises in the above-required condition persists.

 

2.             Amended Definitions:

 

(a)           As of the Third Amendment Expansion Premises
Commencement Date the following terms wherever they appear in the Lease shall
have the following meanings:

 

Lease
Expiration Date: April 30,
2011, or such earlier or later date upon which the Lease Term with respect to
the applicable premises may expire, be terminated or extended pursuant to any
of the conditions or other provisions of this Lease or pursuant to law.

 

Basic
Rent:           Original Premises Basic Rent, First
Amendment Expansion Premises Basic Rent and Third Amendment Expansion Premises
Rent.

 

Original Premises Basic Rent:

 

	
  Period

  	
   

  	
  Annual

  Basic Rent

  	
   

  	
  Monthly

  Basic Rent

  	
   

  
	
  Lease Year 1

  	
   

  	
  $

  	
  271,527.10

  	
   

  	
  $

  	
  22,627.26

  	
   

  
	
  Lease Year 2

  	
   

  	
  $

  	
  282,520.10

  	
   

  	
  $

  	
  23,543.34

  	
   

  
	
  Lease Year 3

  	
   

  	
  $

  	
  293,513.10

  	
   

  	
  $

  	
  24,459.43

  	
   

  
	
  Lease Year 4

  	
   

  	
  $

  	
  304,506.10

  	
   

  	
  $

  	
  25,375.51

  	
   

  
	
  Lease Year 5  and through April 30, 2011

  	
   

  	
  $

  	
  315,499.10

  	
   

  	
  $

  	
  26,291.59

  	
   

  

 

First Amendment Expansion
Premises Basic Rent:

 

	
  Period

  	
   

  	
  Annual

  Basic Rent

  	
   

  	
  Monthly

  Basic Rent

  	
   

  
	
  Lease Year 1
  (commencing on the Expansion Premises Rent Commencement Date)

  	
   

  	
  $

  	
  277,032.00

  	
   

  	
  $

  	
  23,086.00

  	
   

  
	
  Lease Year 2

  	
   

  	
  $

  	
  286,926.00

  	
   

  	
  $

  	
  23,910.50

  	
   

  
	
  Lease Year 3  and through April 30, 2011

  	
   

  	
  $

  	
  296,820.00

  	
   

  	
  $

  	
  24,735.00

  	
   

  

 

2

 

Third Amendment
Expansion Premises Basic Rent:

 

	
  Period

  	
   

  	
  Annual

  Basic Rent

  	
   

  	
  Monthly

  Basic Rent

  	
   

  
	
  Third Amendment
  Expansion Premises Rent Commencement Date - April 30, 2011

  	
   

  	
  $

  	
  105,180.00

  	
   

  	
  $

  	
  8,765.00

  	
   

  
								

 

Tenant’s
Share of Parking Spaces:  63 unreserved parking spaces
located in the Complex to be used in accordance with Section 2.7.

 

3.             Third Amendment Expansion Premises
Expense Allocation and Tax Reimbursement; Utilities. 
Tenant shall have no Expense Allocation or Tax Reimbursement obligations
with respect to the Third Amendment Expansion Premises.  Tenant shall pay all charges for its use of electricity
in the Third Amendment Expansion Premises. Electricity charges for the Third
Amendment Expansion Premises will be determined by Landlord based on check
meters installed in the Building, will be billed to Tenant in arrears on a
monthly basis and shall be due on the next Rent Payment Date after the date of
such invoice.

 

4.             Lease Term Extension Option.  Section 10
of the Lease and Section 5 of the Second Amendment are hereby deleted in
their entirety and Tenant shall have no further rights to extend the Lease
Term.

 

5.             Broker. 
Tenant warrants and represents to Landlord that it has not dealt with
any broker other than Beal and Company, Inc. (the “Broker”) and T3 Realty Advisors in
connection with this Amendment.  In the
event of any brokerage claims against Landlord (excluding claims made by the
Broker) predicated on prior dealings by the Tenant hereto with the maker of
such claims, Tenant shall defend, indemnify, and hold Landlord harmless against
all loss and expense incurred by Landlord (including reasonable attorneys’ fees).  Landlord shall be responsible for any
brokerage commission payable to the Broker pursuant to separate agreement.

 

6.             Ratification. 
Except as expressly modified by this Amendment, the Lease shall remain
in full force and effect, and as further modified by this Amendment, is
expressly ratified and confirmed by the parties hereto.

 

7.             Miscellaneous. 
This Amendment (i) contains the entire agreement with respect to
the subject matter hereof; (ii) may not be modified or terminated, nor may
any provision hereof be waived, orally or in any manner other than by an
agreement in writing signed by the parties hereto or their respective
successors, and assigns; (iii) shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts; (iv) may be
executed in multiple counterparts, each of which individually shall be deemed
an original and all of which together shall constitute a single original
agreement; and (v) shall inure to the benefit of, and be binding upon, the
parties hereto, and their successors, and assigns, subject to the provisions of
the Lease regarding assignment and subletting. Any termination of the Lease
shall also terminate and render void all rights of Tenant under this
Amendment.  Tenant’s rights under this
Amendment may not be severed from the Lease or separately sold, separately
assigned, or separately transferred.

 

[Remainder of Page Left Intentionally Blank]

 

3

 

IN WITNESS WHEREOF,
Landlord and Tenant have executed this Amendment under seal effective as of the
Effective Date.

 

 

	
   

  	
  PRESIDENT AND FELLOWS

  
	
   

  	
  OF HARVARD COLLEGE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert W. Iuliano

  
	
   

  	
   

  	
  Name:

  	
  Robert W. Iuliano

  
	
   

  	
   

  	
  Title:

  	
  Vice President and General
  Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James W. Gray

  
	
   

  	
   

  	
  Name:

  	
  James W. Gray

  
	
   

  	
   

  	
  Title:

  	
  Assoc. V.P. of Harvard
  Real Estate Services

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A123 SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Rubino

  
	
   

  	
   

  	
  Name:

  	
  Michael Rubino

  
	
   

  	
   

  	
  Title:

  	
  CFO

  

 

 

EXHIBIT A

 

THIRD AMENDMENT EXPANSION PREMISES

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