Document:

exv10w13

 

Exhibit 10.13

LEASE AGREEMENT

By and Between

Chambersburg Business Park, LP,

a Delaware limited partnership,

as Landlord

and

TST/Impreso, Inc.,

a Delaware corporation,

as Tenant

 

 

TABLE OF CONTENTS

FOR

LEASE

	 	 	 	 	 	 	 
	Title	 	 	 	Page No.	 
	LEASE AGREEMENT	 	 	1	 
	1.	 	PROPERTY
	 	 	1	 
	2.	 	TERM
	 	 	1	 
	3.	 	RENT
	 	 	2	 
	4.	 	OPERATING LEASE
	 	 	3	 
	5.	 	PROJECT MAINTENANCE AND EXPENSES
	 	 	3	 
	6.	 	PERMITTED USE
	 	 	5	 
	7.	 	ENVIRONMENTAL COMPLIANCE\HAZARDOUS MATERIALS
	 	 	5	 
	8.	 	UTILITIES
	 	 	10	 
	9.	 	AS-IS CONDITION
	 	 	10	 
	10.	 	TENANT’S TAXES AND ASSESSMENTS
	 	 	10	 
	11.	 	ALTERNATION OF PREMISES
	 	 	10	 
	12.	 	INSURANCE
	 	 	11	 
	13.	 	WAIVER, EXCULPATION AND INDEMNITY
	 	 	13	 
	14.	 	CONSTRUCTION LIENS
	 	 	14	 
	15.	 	QUIET ENJOYMENT
	 	 	14	 
	16.	 	LANDLORD’S RIGHT OF ENTRY
	 	 	14	 
	17.	 	DESTRUCTION OF BUILDING
	 	 	15	 
	18.	 	EMINENT DOMAIN
	 	 	15	 
	19.	 	BANKRUPTCY
	 	 	16	 
	20.	 	DEFAULT
	 	 	17	 
	21.	 	SURRENDER OF PROPERTY
	 	 	17	 
	22.	 	HOLDING OVER
	 	 	18	 
	23.	 	SURRENDER OF LEASE
	 	 	18	 
	24.	 	NOTICE
	 	 	18	 
	25.	 	ASSIGNMENT AND SUBLETTING
	 	 	19	 
	26.	 	ATTORNEY’S FEES
	 	 	20	 
	27.	 	JUDGMENT COSTS
	 	 	20	 
	28.	 	BROKERS
	 	 	20	 
	29.	 	SUBORDINATION OF LEASE
	 	 	20	 
	30.	 	ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
	 	 	21	 
	31.	 	SHORT FORM OF LEASE
	 	 	21	 
	32.	 	SIGNS
	 	 	22	 
	33.	 	GENERAL PROVISIONS
	 	 	22	 
	34.	 	OPTION TO PURCHASE PROPERTY
	 	 	23	 

	 	 	 
	Exhibit A

	 	Site Plan
	Exhibit B

	 	Work Letter for Initial Improvements of the Premises
	Exhibit B-1

	 	Contract for Roof Repairs
	Exhibit B-2

	 	Contract for Air Systems
	Exhibit B-3

	 	Contract for Asbetos Abatement

 

 

LEASE AGREEMENT

     THIS
LEASE AGREEMENT (“Lease”), dated as of August 15, 2003 (“Effective Date”), is made by and
between Chambersburg Business Park, LP, a Delaware limited partnership (“Landlord”), and
TST/Impreso Inc., a Delaware corporation (“Tenant”).

WITNESSETH

1. PROPERTY.

    1.1 Property. Landlord owns that certain real property improved with one or more
buildings (the “Building”) located at 1002 Wayne Avenue, Borough of Chambersburg, Franklin County,
Pennsylvania (collectively, the “Property”). Landlord, for and in consideration of the rents,
covenants, agreements, and stipulations contained herein, to be paid, kept and performed by Tenant,
leases and rents the Property to Tenant, and Tenant hereby leases and takes from Landlord the
Property upon the terms and conditions contained herein.

    1.2 Premises means 414,000 rentable square feet of the Building, as verified by Landlord and
Tenant’s respective agents, and as outlined on the site plan attached as Exhibit “A”, to
which Landlord and Tenant conclusively agree for all purposes of this Lease.

2. TERM.

    2.1 Term. The term of the Lease shall be for thirteen (13) years beginning on the
Commencement Date (the “Term”), unless extended or sooner terminated pursuant to the terms of this
Lease. The term “Lease Year” as used herein shall mean any 365-consecutive-day period beginning on
the Commencement Date or any anniversary thereafter.

    2.2 Commencement Date. The term “Commencement Date” as used herein shall mean the date
Landlord completes the Asbestos Abatement of the Property, as defined and described in Exhibit
“B”. Tenant shall be entitled to occupy the Premises after full execution of this Lease but
before the Commencement Date, in which event all obligations of this Lease, other than the
obligation to pay Base Rent, shall apply. Landlord shall give Tenant written notice when Landlord
completes the Asbestos Abatement to confirm the Commencement Date. Tenant shall be entitled to
obtain a certificate from an asbestos remediation company reasonably acceptable to Landlord
(“Asbestos Certificate”) confirming that all asbestos has been removed from the Premises in
accordance with Exhibit “B”. If Tenant elects to obtain an Asbestos Certificate, Landlord
shall give Tenant notice of the anticipated completion date of the Asbestos Abatement to allow
Tenant to promptly schedule its remediation contractor to inspect the Premises. Although the
Commencement Date shall occur when the Asbestos Abatement is completed by Landlord, Base Rent shall
be suspended until Tenant obtains the Asbestos Certificate but shall be due and payable
retroactively to the date the Asbestos Abatement was actually completed by Landlord.

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3. RENT

    3.1 Payment of Rent. Rent shall be due and payable in lawful money of the United States in
advance on the twenty-fifth (25th) day of each month preceding the month that Rent is
due and payable, commencing on the twenty-fifth (25th) day of the month immediately
following the Commencement Date, and continuing each month thereafter of the Term, and any
extension term. Tenant shall pay to Landlord as base rent (“Base Rent”) for the Property, without
notice or demand and without abatement, deduction, offset or set off, the amounts set forth below.
Upon the Effective Date, Tenant shall pay the first month’s Base Rent and any other charges. Rent
shall be pro rated daily for periods less than one month.

	 	 	 	 	 	 	 	 	 
	LEASE YEAR	 	MONTHLY BASE RENT	 	 	ANNUAL BASE RENT	 
	1—5
	 	$	60,292.50	 	 	$	723,510.00	 
	6—10    
	 	$	65,167.50	 	 	$	782,010.00	 
	  11—13
	 	$	70,530.00	 	 	$	846,360.00	 
	*14—15
	 	$	78,366.67	 	 	$	940,400.00	 
	*16—20
	 	$	84,920.83	 	 	$	1,019,050.00	 

 

			
	* if Tenant properly exercises the Option to Extend the Lease Term as set forth in Paragraph
35 below.

    3.2 Place of Payment. All payments under this Lease to be made by Tenant to
Landlord shall be made payable to, and mailed or personally delivered to Landlord at the following
address or such other address(es) which Landlord may notify Tenant from time to time: One West
Avenue, Larchmont, New York 10538.

    3.3 Late Payment. Tenant hereby acknowledges that late payment by Tenant to
Landlord of Rent (defined below) pursuant to this Lease will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain.
Accordingly, if any installment of Rent or other payment under this Lease is not received by
Landlord, on or before the fifth (5th) day of the month in which such Rent or other payment is due,
Tenant shall pay a late charge equal to the amount Landlord is charged for late payments under its
mortgage documents pertaining to this Property (currently, five percent (5%) of such overdue
amounts). Tenant shall also be responsible for a service fee equal to Fifty Dollars ($50.00) for
any check returned for insufficient funds together with such other costs and expenses as may be
imposed by Landlord’s bank. The payment to and acceptance by Landlord of such late charge shall in
no event constitute a waiver by Landlord of Tenant’s default with respect to such overdue amounts,
nor prevent Landlord from exercising any of the other rights and remedies granted at law or in
equity or pursuant to this Lease.

    3.4 Rent. The term “Rent” or “rent” shall mean the total of all sums due to
Landlord from Tenant hereunder, including, but not limited to, Base Rent, Project Expenses and all
other fees and charges owed to Landlord as well as all damages, costs, expenses, and sums that
Landlord may suffer or incur, or that may become due, by reason of any default of Tenant or failure
by Tenant to comply with the terms and conditions of this Lease, and, in the event of

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nonpayment, Landlord shall have all the rights and remedies as herein provided for failure to pay
Rent.

4. OPERATING LEASE.

     In addition to the payment of Base Rent, Tenant shall be directly responsible for the payment
of any and all Project Expenses (defined in Paragraph 5.1) and all Utilities (defined in
Paragraph 8) with respect to the Property, and Landlord shall have no obligations of any
nature with respect to the Property, except as otherwise specifically provided in this Lease.
Notwithstanding any other provision of this Lease to the contrary, Tenant shall be responsible for
all repair, maintenance, replacement and construction with respect to the Property and, upon
expiration of the Term, Tenant shall surrender the Property to Landlord in substantially the same
condition as it exists as of the date hereof, reasonable wear and tear excepted, and in accordance
with Paragraph 21.

5. PROJECT MAINTENANCE AND EXPENSES.

    5.1 Definitions. Tenant shall be responsible for both the performance of and payment of costs
associated with all of the following:

         5.1.1 For purposes of this Lease, the term “Property Expenses” shall include the aggregate
amount of the total costs and expenses connected with or related to (i) the operation, repair and
maintenance of the Property, including, without limitation, electricity, gas, water, sewer and
other utilities, trash removal, security, snow plowing, landscaping, mowing and weed removal,
sweeping and janitorial services, electrical, plumbing, sprinkler and HVAC repair and maintenance,
alarm and sprinkler system testing, maintenance and repair, (ii) the maintenance repair,
resurfacing and restriping of all parking areas, loading and unloading areas, trash areas,
roadways, driveways, walkways, (iii) maintaining the signage, (iv) painting of the Building and
Property, (v) fence and gate repair and maintenance, (vi) the repair and replacement of all
lighting facilities, (vii) the repair, replacement and maintenance of all roofs, foundations and
the structural soundness of the foundation and walls of the Building, except as specifically set
forth herein, and (viii) the repair and maintenance of all equipment, facilities and components
related to the Property, including but not limited to fixtures, walls (interior), finish work,
ceilings, floors, utility connections and facilities, windows, glass, doors, and plate glass,
downspouts, gutters, truck doors, dock levelers, bumpers, seals and enclosures, and termite and
pest extermination. Tenant shall, in keeping the Property in good working order, condition and
repair, exercise and perform good maintenance practices. Except for the Initial Improvements as
set forth on Exhibit “B”, Tenant’s obligations shall include restorations, replacements or
renewals when necessary to keep the Property and all improvements thereon or a part thereof in good
order, condition and state of repair. Tenant agrees to return the Property to Landlord at the
expiration, or prior to termination of this Lease, in as good condition and repair as when first
received, normal wear and tear excepted, in accordance with Paragraph 21.

          5.1.2 For purposes of this Lease, the term “Insurance Expenses”
shall include
the aggregate amount of the cost of fire, extended coverage, sprinkler, comprehensive public
liability, property damage, earthquake and other insurance obtained by Landlord in connection

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with the Property, including insurance required pursuant to Paragraph 12 hereof, and the
deductible portion of any insured loss otherwise covered by such insurance.

          5.1.3 For purposes of this Lease, the term “Taxes” shall include all
taxes,
assessments and charges levied upon or with respect to the Property or any personal property of
Landlord used in the operation thereof, or Landlord’s interest in the Property or such personal
property. Additionally, Taxes shall include, without limitation, all general real property taxes
and general and special assessments, occupancy taxes, commercial rental taxes, charges, fees or
assessments for transit, housing, police, fire or other governmental services or purported benefits
to the Property, service payments in lieu of taxes, and any tax, fee or excise on the act of
entering into any lease for space in the Property, or on the use or occupancy of the Property or
any part thereof, or on the rent payable under any lease or in connection with the business of
renting space in the Property that are now or hereafter levied or assessed against Landlord by the
United States of America, the state in which the Property is located, or any political subdivision,
public corporation, district or other political or public entity, whether due to increased rate
and/or valuation, additional improvements, change of ownership, or any other events or
circumstances, and shall also include any other tax, fee or other excise, however described, that
may be levied or assessed as a substitute for or as an addition to, as a whole or in part, any
other Taxes whether or not now customary or in the contemplation of the parties on the date of this
Lease. Taxes shall not include franchise, transfer, inheritance or capital stock taxes or income
taxes measured by the net income of Landlord from all sources unless, due to a change in the method
of taxation, any of such taxes is levied or assessed against Landlord as a substitute for or as an
addition to, as a whole or in part, any other tax that would otherwise constitute a Tax. Taxes
shall also include reasonable legal fees, costs and disbursements incurred in connection with
proceedings to contest, determine or reduce Taxes. If any Taxes are specially assessed by reason
of the occupancy or activities of one or more tenants and not the occupancy or activities of the
Tenants as a whole, such Taxes shall be allocated by Landlord to the tenant or tenants whose
occupancy or activities brought about such assessment. All payments with respect to Taxes shall be
made by Tenant to the appropriate taxing authority at least ten (10) days prior to any delinquency
date. Tenant shall promptly furnish Landlord with satisfactory evidence that all Taxes have been
paid in a complete and timely manner. Tenant shall have the right to contest any Taxes at Tenant’s
expense. Landlord will cooperate with Tenant in disputing such Taxes which will include, without
limitation, allowing Tenant to appear on behalf of Landlord to contest the Taxes.

     5.2 Project Expenses. The Property Expenses, Insurance Expenses and Taxes shall collectively
be referred to herein as the “Project Expenses,” all of which shall be paid directly by Tenant. If
required by Landlord’s lender, Tenant shall pay Taxes directly to Landlord or Landlord’s lender as
part of Rent. Tenant shall be entitled to pay Insurance Expenses directly and change insurance
carriers as set forth in Paragraph 12.1. Notwithstanding the foregoing, Tenant’s obligation to pay
the premium for Landlord’s commercial liability insurance policy as set forth in Paragraph 12.1
shall be limited for the first five (5) years of the Lease Term to $3,200.00 per year, with annual
increases allowed in an amount not to exceed the cost of living increases determined for the area
in which the Property is located. There shall be no such limit for the balance of the Lease Term.

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6. PERMITTED USE.

Tenant shall use and occupy the Premises throughout the Term of the Lease for warehousing, storage,
light manufacturing, distribution and any other lawful uses associated with their business. In
particular, no use shall be made or permitted to be made of the Property, nor acts done that could
cause a cancellation of any insurance policy covering the Property, or any part thereof. In the
operation of its permitted use of the Building, Tenant shall comply with all laws, ordinances,
rules, regulations and codes of all municipal, county, state and federal authorities pertaining to
the Property. Tenant shall not commit, or suffer to be committed, any waste upon the Property or
any public or private nuisance.

7. ENVIRONMENTAL COMPLIANCE\HAZARDOUS MATERIALS.

     7.1 Definitions. “Hazardous Materials” shall mean any (i) material, substance or waste that
is or has the characteristic of being hazardous, toxic, ignitable, reactive, flammable, explosive,
radioactive, mutagenic or corrosive, including, without limitation, petroleum, or any petroleum
derivative, solvents, heavy metals, acids, pesticides, paints, printing ink, PCBs, asbestos,
materials commonly known to cause cancer or reproductive problems and those materials, substances
and/or wastes, including wastes which are or later become regulated by any local governmental
authority, the state in which the Premises are located or the United States Government, including,
but not limited to, substances defined as “hazardous substances,” “hazardous materials,” “toxic
substances” or “hazardous wastes” in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. ‘9601, et seq.; the Hazardous Materials Transportation
Act, 49 U.S.C. ‘1801, et seq.; the Resource Conservation and Recovery Act; all environmental laws
of the state where the Property is located, and any other environmental law, regulation or
ordinance now existing or hereinafter enacted, (ii) any other substance or matter which results in
liability to any person or entity from exposure to such substance or matter under any statutory or
common law theory, and (iii) any substance or matter which is in excess of relevant and appropriate
levels set forth in any applicable federal, state or local law or regulation pertaining to any
hazardous or toxic substance, material or waste, or for which any applicable federal, state or
local agency orders or otherwise requires removal, remediation or treatment. “Hazardous Materials
Laws” shall mean all present and future federal, state and local laws, ordinances and regulations,
prudent industry practices, requirements of governmental entities and manufacturer’s instructions
relating to industrial hygiene, environmental protection or the use, analysis, generation,
manufacture, storage, presence, disposal or transportation of any Hazardous Materials, including
without limitation the laws, regulations and ordinances referred to in the preceding sentence.

     7.2. Use of Premises by Tenant. Except for common cleaning solutions, lubricants and fuels
used by Tenant in its ordinary operations, so long as the same are stored in appropriate containers
in compliance with all Hazardous Materials Laws, Tenant hereby agrees that Tenant and Tenant’s
officers, employees, representatives, agents, consultants, contractors, subcontractors, successors,
assigns, subtenants, concessionaires, invitees and any other occupants of the Premises (for
purposes of this Paragraph 8, referred to collectively herein as “Tenant Representatives”)
shall not cause or permit any Hazardous Materials to be used, generated, manufactured, refined,
produced, processed, stored or disposed of, on, under or about the

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Premises or the Property or transport to or from the Premises or the Property without the
express prior written consent of Landlord. Landlord may, in its sole discretion, place such
conditions as Landlord deems appropriate with respect to such Hazardous Materials, including
without limitation, rules, regulations and safeguards as may be required by any insurance carrier,
environmental consultant or lender of Landlord, or environmental consultant retained by any lender
of Landlord, and may further require that Tenant demonstrates to Landlord that such Hazardous
Materials are necessary or useful to Tenant’s business and will be generated, stored, used and
disposed of in a manner that complies with all Hazardous Materials Laws regulating such Hazardous
Materials and with good business practices. Tenant understands that Landlord may utilize an
environmental consultant to assist in determining conditions of approval and monitoring in
connection with the presence, storage, generation or use of Hazardous Materials on or about the
Premises by Tenant, and Tenant agrees that any costs reasonably incurred by Landlord in connection
with any such environmental consultant’s services shall be reimbursed by Tenant to Landlord as
additional rent upon demand. Unless approved in writing by Landlord, Tenant shall not be entitled
to utilize any Hazardous Materials in the Premises. In connection therewith, Tenant shall at its
own expense procure, maintain in effect and comply with all conditions of any and all permits,
licenses and other governmental and regulatory approvals required for the storage or use by Tenant
or any of Tenant’s Representatives of Hazardous Materials on the Premises or the Property,
including without limitation, discharge of (appropriately treated) materials or wastes into or
through any sanitary sewer serving the Premises or the Property with all required permits.

     7.3. Remediation. If at any time during the Lease Term any contamination of the Premises or
the Property by Hazardous Materials shall occur where such contamination is caused by the act or
omission of Tenant or Tenant’s Representatives (“Tenant’s Contamination”), then Tenant, at Tenant’s
sole cost and expense, shall promptly and diligently remove such Hazardous Materials from the
Premises, the Property or the groundwater underlying the Premises or the Property to the extent
required to comply with applicable Hazardous Materials Laws to restore the Premises or the Property
to the same or better condition which existed before the Tenant’s Contamination. Tenant shall not
take any required remedial action in response to any Tenant’s Contamination in or about the
Premises or the Property, or enter into any settlement agreement, consent, decree or other
compromise in respect to any claims relating to any Tenant’s Contamination without first obtaining
the prior written consent of Landlord, which may be subject to conditions imposed by Landlord as
determined in Landlord’s sole discretion, provided, however, Landlord’s prior written consent shall
not be necessary in the event that the presence of Hazardous Materials on, under or about the
Premises or the Property (i) poses an immediate threat to the health, safety or welfare of any
individual or (ii) is of such a nature that an immediate remedial response is necessary and it is
not possible to obtain Landlord’s consent before taking such action. Tenant and Landlord shall
jointly prepare a remediation plan in compliance with all Hazardous Materials Laws and the
provisions of this Lease. In addition to all other rights and remedies of the Landlord hereunder,
if Tenant does not promptly and diligently take all steps to prepare and obtain all necessary
approvals of a remediation plan for any Tenant’s Contamination, and thereafter commence the
required remediation of any Hazardous Materials released or discharged in connection with Tenant’s
Contamination within thirty (30) days after all necessary approvals and consents have been obtained
and thereafter continue to prosecute such remediation to completion in accordance with an approved

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remediation plan, then Landlord, at its sole discretion, shall have the right, but not the
obligation, to cause such remediation to be accomplished, and Tenant shall reimburse Landlord
within fifteen (15) business days of Landlord’s demand for reimbursement of all amounts reasonably
paid by Landlord (together with interest on such amounts at the highest lawful rate until paid),
when such demand is accompanied by reasonable proof of payment by Landlord of the amounts demanded.
Tenant shall promptly deliver to Landlord, legible copies of hazardous waste manifests reflecting
the legal and proper disposal of all Hazardous Materials removed from the Premises or the Property
as part of Tenant’s remediation of any Tenant’s Contamination.

     7.4. Disposition of Hazardous Materials. Except as discharged into the sanitary sewer in
strict accordance and conformity with Paragraph 8.2 herein and all applicable Hazardous
Materials Laws, if Tenant causes any and all Hazardous Materials to be removed from the Premises
and the Property (including without limitation all Hazardous Materials removed from the Premises as
part of the required remediation of Tenant’s Contamination), such removal shall be transported
solely by duly licensed haulers to duly licensed facilities for recycling or final disposal of such
materials and wastes. Tenant is and shall be deemed to be the “operator” “in charge” of Tenant’s
“facility” and the “owner,” as such terms are used in the Hazardous Materials Laws, of all
Hazardous Materials and any wastes generated or resulting therefrom. Tenant shall be designated as
the “generator,” as such terms are used in the Hazardous Materials Laws, on all manifests relating
to such Hazardous Materials or wastes.

     7.5. Notice of Hazardous Materials Matters. Tenant shall immediately notify Landlord in
writing of: (i) any enforcement, clean up, removal or other governmental or regulatory action
instituted, contemplated or threatened concerning the Premises pursuant to any Hazardous Materials
Laws; (ii) any claim made or threatened by any person against the Tenant or the Premises relating
to damage contribution, cost recovery, compensation, loss or injury resulting from or claimed to
result from any Hazardous Materials on or about the Premises; (iii) any reports made to any
environmental agency arising out of or in connection with any Hazardous Materials in or removed
from the Premises including any complaints, notices, warnings or asserted violations in connection
therewith, all upon receipt by Tenant of actual knowledge of any of the foregoing matters; and (iv)
any spill, release, discharge or disposal of any Hazardous Materials in, on or under the Premises,
the Property, or any portion thereof. Tenant shall also supply to Landlord as promptly as
possible, and in any event within five (5) business days after Tenant first receives or sends the
same, with copies of all claims, reports, complaints, notices, warnings or asserted violations
relating in any way to the Premises or Tenant’s use thereof.

     7.6. Indemnification by Tenant. Tenant shall indemnify, defend (by counsel reasonably
acceptable to Landlord), protect, and hold Landlord, and each of Landlord’s employees,
representatives, agents, attorneys, successors and assigns, and its directors, officers, partners,
representatives, any lender having a lien on or covering the Premises or any part thereof, and any
entity or person named or required to be named as an additional insured in Paragraph 14.2
of this Lease free and harmless from and against any and all claims, actions (including, without
limitation, the cost of investigation and testing, consultant’s and attorneys’ fees, remedial and
enforcement actions of any kind, administrative (informal or otherwise) or judicial proceedings and
orders or judgments arising therefrom), causes of action, liabilities,

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penalties, forfeitures, damages (including, but not limited to, damages for the loss or
restriction or use of rentable space or any amenity of the Premises or the Property, or damages
arising from any adverse impact on marketing of space in the Premises or the Property), diminution
in the value of the Premises or the Property, fines, injunctive relief, losses or expenses
(including, without limitation, reasonable attorneys’ fees and costs) or death of or injury to any
person or damage to any property whatsoever, arising from or caused in whole or in part, directly
or indirectly by (i) any Tenant’s Contamination, (ii) Tenant’s or Tenant’s Representatives’ failure
to comply with any Hazardous Materials Laws with respect to the Premises, or (iii) offsite disposal
or transportation of Hazardous Materials on, from, under or about the Premises or the Property by
Tenant or Tenant’s Representatives. Tenant’s obligations hereunder shall include without
limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary
repair, clean up or detoxification or decontamination of the Premises, and the preparation and
implementation of any closure, remedial action or other required plans in connection therewith.
For purposes of the indemnity provisions hereof, any acts or omissions of Tenant, or by employees,
agents, assignees, contractors or subcontractors of Tenant or others acting for or on behalf of
Tenant (whether or not they are negligent, intentional, willful or unlawful), shall be strictly
attributable to Tenant.

     7.7. Indemnification by Landlord for Pre-Existing Asbestos. Landlord shall indemnify, defend
(by counsel reasonably acceptable to Tenant), protect, and hold Tenant, and each of Tenant’s
employees, representatives, agents, attorneys, successors and assigns, free and harmless from and
against any and all claims, actions, causes of action (including, without limitation, remedial and
enforcement actions of any kind, administrative or judicial proceedings, and orders or judgments
arising therefrom), liabilities, penalties, forfeitures, losses or expenses (including, without
limitation, reasonable attorneys’ fees and costs) or death of or injury to any person or damage to
any property whatsoever, to the extent arising from or caused in whole or in part, directly or
indirectly by (i) the presence of any pre-existing friable and non-friable asbestos in the
Premises, and (ii) any contamination caused by Landlord in violation of a Hazardous Material Law.
Landlord’s obligations hereunder shall include without limitation, and whether foreseeable or
unforeseeable, all costs of any required or necessary repair, clean up or detoxification or
decontamination of the Premises, and the preparation and implementation of any closure, remedial
action or other required plans in connection therewith. This indemnity shall be specifically
limited to affirmative acts of Landlord, and shall not include the acts or omissions of any other
tenants of the Property or other persons.

     7.8. Tenant Certifications. Within ninety (90) days prior to the expiration of the Lease
Term, Tenant shall certify to Landlord in writing that, to the best of its knowledge, (i) the
Premises is free from all Hazardous Materials caused by Tenant or Tenant’s Representatives, and
(ii) no such Hazardous Materials exist on, under or about the Premises other than as specifically
identified to Landlord by Tenant in writing. If Landlord reasonably believes that such
certification is inaccurate, or if an environmental report is required by law, Landlord shall give
notice to Tenant within thirty (30) days after receipt of Tenant’s certification that Tenant shall
have the Premises thoroughly inspected by an environmental consultant acceptable to Landlord for
purposes of determining whether the Premises is free from all Hazardous Materials. If Landlord
fails to timely give such notice, the requirement for an environmental inspection report is not
required of Tenant unless such report is otherwise required by Tenant under this Paragraph 

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8. Landlord’s failure to request an environmental inspection report shall in no way
alter, abridge or limit Tenant’s indemnity obligation hereunder. Tenant shall deliver to Landlord
a copy of the environmental consultant’s report forty-five (45) days prior to the expiration of the
Lease. In the event the report discloses the existence of any Hazardous Materials, requires any
clean up or any other form of response (collectively “Clean up”), Tenant shall perform such
immediately and deliver the Premises with the conditions specified in the report “cleaned up”, to
the full satisfaction of Landlord. In the event the conditions specified in the report require
Clean up which cannot be completed prior to the expiration of the Lease Term, Tenant shall be
obligated to pay Landlord a per diem amount of the hold-over rent in Paragraph 22 below,
until Tenant completes Clean up.

     7.9. Exclusivity. The allocations of responsibility between, obligations and liabilities
undertaken by, and indemnifications given by Landlord and Tenant under this Paragraph 7,
shall be the exclusive provisions under this Lease, applicable to the subject matter treated in
this Paragraph 7, and any other conflicting or inconsistent provisions contained in this
Lease shall not apply with respect to the subject matter.

     7.10. Compliance with Environmental Laws. Tenant shall at all times and in all respects
comply with all Hazardous Materials Laws. All reporting obligations imposed by Hazardous Materials
Laws are strictly the responsibility of Tenant to the extent Tenant’s actions or inactions prompt
such reporting. Tenant and Landlord have been informed that certain judicial decisions have held
that, notwithstanding the specific language of a lease, courts may impose the responsibility for
complying with legal requirements and for performing improvements, maintenance and repairs on a
landlord or tenant based on the court’s assessment of the parties’ intent in light of certain
equitable factors. Tenant and Landlord have each been advised by their respective legal counsel
about the provisions of this Lease allocating responsibility for compliance with laws and for
performing improvements, maintenance and repairs between Tenant and Landlord. Tenant and Landlord
expressly agree that the allocation of responsibility for compliance with laws and for performing
improvements, maintenance and repairs set forth in this Lease represents Tenant’s and Landlord’s
intent with respect to this issue.

     7.11. Limitation of Liability. Landlord confirms that as of the Effective Date, and to the
best of Landlord’s current, actual knowledge, except as disclosed in any report delivered to Tenant
prior to the Effective Date, there are no Hazardous Materials located on, in, about or under the
Property or the Building in material violation of any applicable Hazardous Materials Laws. In
connection with the preceding sentence, Landlord shall have no liability for any claim, cause of
action or other liability arising out of or relating to the presence of Hazardous Materials on the
Property that exceeds Fifty Thousand Dollars ($50,000.00) in the aggregate, inclusive of, without
limitation, reasonable attorneys’ fees, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal, or restoration work required by any federal, state,
or local governmental agency or political subdivision because of Hazardous Materials present in the
soil, the Building and the ground water on or under the Building, but excluding the cost of removal
or abatement of any asbestos in the Building which is Landlord’s responsibility.

     7.12. Survival and Duration of Obligations. All covenants, representations, warranties,
obligations and indemnities made or given under this Paragraph 7 shall survive the

9

 

expiration or earlier termination of this Lease.

8. UTILITIES.

    Tenant shall pay all service charges, and all initial utility deposits and all fees, for
water, electricity, sewage, janitorial, trash removal, gas, telephone, pest control and any other
utility services furnished to the Property during the Term of this Lease (“Utilities”). Tenant
shall pay for all Utilities in addition to Rent and Project Expenses. Tenant shall cause each of
the Utilities to be separately metered or billed and shall be responsible for any fees or deposits
required in connection therewith.

9. AS-IS CONDITION.

    Except for the Asbestos Abatement and the Landlord Improvements to be performed by Landlord as
set forth in Exhibit “B” attached hereto, Tenant accepts the Property in its present
“As-Is”, “Where-Is” and “With-All-Faults” condition and specifically acknowledges that the Premises
and the Property are suited for the uses intended by Tenant. Landlord represents and warrants that
the Premises contain a sprinkler system that satisfies code requirements for the Premises as of the
Commencement Date; receipt of a certificate of occupancy on or about the Commencement Date shall
conclusively satisfy this representation and warranty.

10. TENANT’S TAXES AND ASSESSMENTS.

      Tenant covenants and agrees to pay promptly, when due, all personal property taxes or other
taxes and assessments levied and assessed by any governmental authority upon the removable property
of Tenant in, upon or about the Property.

11. ALTERATION OF PREMISES.

      Tenant shall not alter, repair or change the Property at a cost in excess of $25,000.00
(“Material Alterations”) without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. All alterations, improvements or changes shall remain a part of and be
surrendered with the Property, unless Landlord directs its removal under Paragraph 21 of
this Lease.

     11.1 Construction Plans. If Tenant elects to make Material Alterations or improvements as
provided in this Paragraph 11, Tenant shall retain an architect, space planner and
contractor, all reasonably approved by Landlord to prepare the construction drawings, and
engineering consultants to prepare all plans and working drawings and other Tenant work in the
Premises (collectively, “Construction Plans”). Tenant shall obtain, at its sole cost and expense,
all necessary building permits and certificates of occupancy for the Premises; provided, however,
Landlord shall cooperate with Tenant in executing permit applications and performing ministerial
acts reasonably necessary to enable Tenant to obtain any such permits or certificates, so long as
Landlord shall have no obligation to expend costs associated therewith. All Construction Plans
shall comply with Landlord’s reasonable requirements and shall be approved by Landlord prior to the
commencement of construction of any tenant improvements or

10

 

alterations. No changes or alterations to the approved Construction Plans shall be made without the
prior written consent of Landlord, which consent shall not be unreasonably withheld.

     11.1 Requirements. All alterations shall be constructed in strict compliance with applicable
state law provisions, and if applicable, with approved Construction Plans and with all additional
requirements propounded by Landlord at the time Landlord approves the Construction Plans. Tenant’s
indemnity of Landlord as set forth in the Lease shall also apply with respect to any and all costs,
losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or
Tenant’s agents or anyone employed by any of them (including the Contractors, as defined in
Exhibit “B”) arising out of the construction of any alterations. Such indemnity by Tenant,
as set forth in the Lease, shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to Landlord’s performance of any ministerial acts
reasonably necessary to permit Tenant to complete any tenant improvements, and to enable Tenant to
obtain any building permit or certificates for the Premises. All of Tenant’s agents, contractors,
subcontractors, engineers and the like shall carry worker’s compensation insurance covering all of
their respective employees, and shall also carry commercial general liability coverage and property
damage insurance, all with limits, in form and with companies as are required to be carried by
Tenant as set forth in the Lease, and the policies therefor shall insure Landlord and Tenant, as
their interests may appear. Tenant shall carry “Builder’s All Risk” insurance in an amount
approved by Landlord covering the construction of any Material Alterations, and such other
insurance as Landlord may reasonably require at the time Landlord approves the Construction Plans.
Tenant shall be responsible for assuring that all alterations are completed in a lien-free manner.
Tenant agrees to give Landlord written notice not less than ten (10) days in advance of the
commencement of any construction, alteration, addition, improvement, installation or repair costing
in excess of Twenty-five Thousand Dollars ($25,000.00) in order that Landlord may post appropriate
notices of Landlord’s non-responsibility. Promptly after the tenant improvements are completed,
Tenant shall file an appropriate Notice of Completion.

12. INSURANCE.

     12.1. Landlord’s Insurance. Landlord shall maintain in full force and effect throughout the
entire term of this Lease commercial general liability insurance for the Building and common areas
and general fire and extended coverage insurance, including vandalism and special form or such
other broader coverage as may from time to time be customary on the Building and the common areas
and other areas of land within which the Building are located in such amounts determined by
Landlord. Copies of all such insurance policies or certificates thereof endorsed to show payment
of the premium shall be available for inspection by Tenant and such policies and certificates shall
show Landlord and the beneficiary of any mortgage or deed of trust on the Premises to be additional
insureds as their interests may exist (or a mortgagee loss payable endorsement). Such insurance
may be provided by a blanket insurance policy covering the Premises, so long as the coverage on the
Premises is at all times at least as great as required by this Paragraph. The insurance obtained
by Landlord under this Paragraph shall constitute an item of “Insurance Expenses” under
Paragraph 5.1.2. Landlord shall submit the invoice for insurance to Tenant who shall pay
directly and confirm payment to Landlord. If Tenant fails to timely pay any invoice, Landlord may
pay the invoice to avoid lapse of coverage and obtain reimbursement from Tenant. Tenant shall be
entitled to use an alternate insurance

11

 

carrier to provide the insurance for Landlord contemplated under this Lease, provided,
however, (i) the carrier and the terms and conditions of such coverage are reasonably acceptable to
Landlord and Landlord’s lender, and (ii) there is no lapse in coverage.

     12.2. Tenant’s Insurance. Tenant agrees to take out and keep in force during the term hereof,
without expense to Landlord, with an insurance company with general policy holder’s rating of not
less than B+V, as rated in the most current Best’s Insurance Reports, or other company acceptable
to Landlord, the policies of insurance as set forth below. Tenant shall be permitted to obtain the
insurance required under this Paragraph 12 by providing a blanket policy of insurance
reasonably acceptable to Landlord, so long as the coverage required hereunder is not reduced or
diminished and the requirements set forth in this Lease shall otherwise be satisfied by such
blanket policy or policies. All such insurance policies shall name Landlord and any property
manager of Landlord as additional named insureds.

              12.2.1. Commercial general liability insurance, in the name of Tenant, insuring against any
liability for injury to or death of persons resulting from any occurrence in or about the Building
and for damage to property in such amounts as may from time to time be customary with respect to
similar properties in the same area, but in any event not less than $3,000,000.00 per occurrence.
The amounts of such insurance required hereunder shall be adjusted from time to time as requested
by Landlord based upon Landlord’s determination as to the amounts of such insurance generally
required at such time for comparable premises and buildings in the general geographical area of the
Premises. In addition, such policy of insurance shall include the ordinary and usual coverage for
any additional liability as coverage for any potential liability arising out of or because of any
construction, work of repair or alterations done on or about the Premises by or under the control
or direction of Tenant.

             12.2.2 Personal property insurance covering the personal property and trade fixtures of Tenant
in an amount equal to the replacement value of the personal property and trade fixtures, as such
replacement value may vary from time to time.

             12.2.3 Workers compensation insurance as required by law and employer liability insurance with
limits of not less than $1,000,000.00.

     12.3. Certificates of Insurance. All policies of insurance set forth in Paragraph
12.2 above, shall provide that copies of the policies or certificates thereof showing the
premium thereon to have been paid, shall be delivered to Landlord prior to the Commencement Date
and thereafter fifteen (15) days prior to each renewal date. All such policies shall provide that
they shall not be canceled nor coverage reduced by the insurer without first giving at least thirty
(30) days prior written notice to Landlord. If Tenant fails to procure and keep in force such
insurance, Landlord may procure it, and the cost thereof with interest at the maximum lawful rate
shall be payable immediately by Tenant to Landlord as additional rent. Such insurance may be
provided by a blanket insurance policy covering the Premises, so long as the coverage on the
Premises is at all times at least as great as required by this Paragraph 12.

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13. WAIVER, EXCULPATION AND INDEMNITY.

     13.1 Definitions. For purposes of this Paragraph 13, (i) “Tenant Parties”
shall mean,
singularly and collectively, Tenant and Tenant’s officers, directors, shareholders, partners,
members, managers, trustees, agents, employees, and independent contractors as well as to all
persons and entities claiming through any of the foregoing persons or entities, and (ii) “Landlord Parties” shall mean singularly and collectively, Landlord and Landlord’s officers,
directors, shareholders, partners, members, managers, trustees, agents, employees, and independent
contractors as well as to all persons and entities claiming through any of the foregoing persons or
entities.

    13.2 Exculpation. Except for Landlord’s obligations with respect to asbestos removal provided
in Exhibit “B”, Tenant, on behalf of itself and of all Tenant Parties, and as a material
part of the consideration to be rendered to Landlord under this Lease, hereby waives, to the
fullest extent permitted by law, all claims against Landlord for loss, theft or damages to goods,
wares, merchandise or other property (whether tangible or intangible) in and about the Property,
for loss or damage to Tenant’s business or other economic loss (whether direct or consequential),
and for the injury or death to any persons in, on or about the Property.

    13.3 Tenant’s Indemnity. Tenant shall to the fullest extent permitted by law,
at Tenant’s sole cost and expense, indemnify, defend (by an attorney of Landlord’s choice,
reasonably acceptable to Tenant), reimburse, protect and hold harmless Landlord and all Landlord
Parties from and against all Claims (as defined below in this Paragraph 13.3) from any
cause, arising from or related (directly or indirectly) to this Lease, the tenancy created under
this Lease, or the Premises, Tenant’s conducting of its business, any alterations, activities, work
or things done, omitted, permitted, allowed or suffered by Tenant or Tenant Parties in, at or about
the Premises or Building, including the violation of or failure to comply with any applicable laws,
statutes, ordinances, standards, rules, regulations, orders, decrees or judgments in existence on
the Commencement Date hereof or enacted, promulgated, or issued after the date of this Lease, any
breach of default in performance of any obligation on Tenant’s part to be performed under this
Lease, including obligations which survive expiration or earlier termination of this Lease under
the terms of this Lease, the acts or omissions or negligence of Tenant or any Tenant Parties or of
any invitee, guest or licensee of Tenant in, on or about the Property, relating to their use,
possession, or occupancy of the Property or, Tenant’s obligations under this Lease, or to any work
done, permitted or contracted for by any of them on or about the Premises. If Landlord shall,
without fault on its part, be made a party to any litigation commenced by or against Tenant or any
Tenant Parties, Tenant shall pay all costs and reasonable attorney’s fees incurred by such
litigation, unless such costs and fees are covered by Landlord’s insurance. For purposes of this
Lease, the term “Claims” means any and all claims, losses, costs, damage, expenses, liabilities,
liens, actions, causes of action (whether in tort or contract, law or equity, or otherwise),
charges, assessments, fines and penalties of any kind (including consultant and expert expenses,
court costs and attorney fees actually incurred).

     13.4 Waiver of Subrogation. No party shall have any right or claim against
the Landlord by way of subrogation or assignment and Tenant hereby waives and relinquishes any such
right. Tenant shall request its insurance carriers to endorse all applicable policies

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waiving the carrier’s right of recovery under subrogation or otherwise against Landlord and provide
a certificate of insurance verifying this waiver.

     13.5 Survival and Duration of Obligations. All representations, warranties,
obligations and indemnities made or given under this Paragraph 13 shall survive the
expiration or earlier termination of this Lease.

14. CONSTRUCTION LIENS.

      Tenant shall not suffer or permit any construction liens, mechanic’s liens or materialman’s
liens to be filed against the Property. Landlord shall have the right at all reasonable times to
post and keep posted at the Property, any notices which it deems necessary for protection from such
liens. Tenant shall have the right to contest by proper proceedings any such construction liens,
mechanic’s liens or materialman’s liens, provided that Tenant shall prosecute such contest
diligently and in good faith and such contest shall not expose Landlord to any civil or criminal
penalty or liability. Upon Landlord’s demand, Tenant shall furnish Landlord a surety bond or other
adequate security satisfactory to Landlord sufficient both to indemnify Landlord against liability
and hold the Property free from adverse effect in the event the contest is not successful. If such
liens are so filed and Tenant does not properly contest such liens, Landlord, at its election, and
upon not less than ten (10) days prior written notice to Tenant, may pay and satisfy same and, in
such event the sums so paid by Landlord, with interest thereon at the rate of twelve percent (12%)
per annum from the date of payment, and all actual and other expenses, including reasonable
attorney’s fees, so paid by Landlord, shall be deemed to be a Property Expense, payable as
additional rent, due and payable by the Tenant at once without notice or demand.

15. QUIET ENJOYMENT.

      Landlord covenants and agrees that Tenant, upon making all of Tenant’s payments of Rent as and
when due under the Lease, and upon performing, observing and keeping the covenants, agreements and
conditions of this Lease on its part to be kept, shall peaceably and quietly hold, occupy and enjoy
the Property during the Term of this Lease, subject to the terms and provisions of this Lease.

16. LANDLORD’S RIGHT OF ENTRY.

      Landlord and his agents shall have no right to enter the Premises, except in the following
circumstances: (i) any emergencies at the Building, (ii) any requests by Landlord’s lender or in
order for Landlord to respond to any lender requests, and (iii) in the last six (6) months of the
then-current Term upon reasonable notice in order to examine or to show the Building and Premises
to prospective tenants or buyers and to place “For Rent” or “For Sale” signs on or about the
Property. Upon receipt of reasonable advance notice from Landlord, Tenant may arrange to have a
designated representative accompany Landlord in entering the Property. Landlord’s right of reentry
shall not be deemed to impose upon Landlord any obligation, responsibility, or liability for the
care, supervision or repair of the Property other than as herein provided; provided, however, that
Landlord shall use reasonable care to prevent loss or damage to Tenant’s property resulting from
Landlord’s entry. Notwithstanding the foregoing, Landlord shall have

14

 

the right to enter the Property without first giving notice to the Tenant in the event of an
emergency where the nature of the emergency will not reasonably permit the giving of notice.

17. DESTRUCTION OF BUILDINGS

      17.1 Partial Destruction. In the event of a partial destruction of the building containing
the Premises during the term of this Lease from any cause, Landlord shall forthwith repair the
same, provided such repair can reasonably be made within ninety (90) days from the happening of
such destruction under applicable laws and regulations. During such period, Tenant shall be
entitled to a proportionate reduction of rent to the extent such repairs unreasonably interfere
with the business carried on by Tenant in the Premises. If Tenant fails to remove its goods, wares
or equipment within a reasonable time and as a result the repair or restoration is delayed, or if
such damage or destruction is caused primarily by the negligence or willful act of Tenant, or its
employees, invitees or agents, there shall be no reduction in rent during such delay. In the event
that such repair cannot reasonably be made within ninety (90) days from the happening of such
destruction under applicable laws and regulations, Landlord shall have the right to terminate this
Lease by notifying Tenant in writing within sixty (60) days from the happening of such destruction
of Landlord’s decision not to repair such building in which event this Lease shall be deemed
terminated. If Landlord fails to give such written notice of Landlord’s decision not to repair
such building within such sixty (60) days, then Landlord shall be required to commence the repair
of the building promptly and thereafter diligently complete the repairs. In addition to the above,
in the event that such building is partially destroyed and (i) the cost of repairing such building
exceeds thirty-three and one-third percent (33-1/3%) of the replacement cost thereof, or (ii) the
damage caused by the partial destruction of such building cannot reasonably be repaired within a
period of ninety (90) days from the happening of such damage, Landlord may elect to terminate this
Lease, whether or not such building is insured, by written notice to Tenant given within sixty (60)
days from the happening of such destruction. If Landlord fails to give such written notice of
Landlord’s decision not to repair such building within such sixty (60) days, then Landlord shall be
required to repair such building within ninety (90) days from the happening of such destruction, if
it can be reasonably repaired in such time, or as soon thereafter as reasonably practical if it
cannot reasonably be repaired in such earlier period of time.

      17.2 Total Destruction. A total destruction of the building containing the Premises shall
terminate this Lease. A total destruction of such building means the cost of repairing such
building exceeds seventy-five percent (75%) of the replacement cost of such building.

18. EMINENT DOMAIN.

      18.1 Definitions. For purposes of this Lease, the word “condemned” is co-extensive
with the phrase “right of eminent domain”, that is, the right of the government to take property
for public use, and shall include the intention to condemn expressed in writing as well as the
filing of any action or proceeding for condemnation.

      18.2 Exercise of Condemnation. If any action or proceeding is commenced for the
condemnation of the Property or any portion thereof, or if Landlord is advised in writing by any

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government (federal, state or local) agency or department or bureau thereof, or any entity or body
having the right or power of condemnation, of its intention to condemn all or any portion of the
Property at the time thereof, or if the Property or any part or portion thereof be condemned
through such action, then and in any of such events Landlord shall promptly notify Tenant and may,
without any obligation or liability to Tenant, and without affecting the validity and existence of
this Lease other than as hereafter expressly provided, agree to sell and/or convey to the
condemnor, without first requiring that any action or proceeding be instituted, or if such action
or proceeding shall have been instituted, without requiring any trial or hearing thereof, and
Landlord is expressly empowered to stipulate to judgment therein, the part and portion of the
Property sought by the condemnor, free from this Lease and the rights of Tenant hereunder;
provided, however, Tenant shall have the right to institute proceedings, at its sole cost and
expense, to halt any such action and Landlord agrees to reasonably cooperate with Tenant at no cost
or expense to Landlord. Tenant shall have no claim against Landlord nor be entitled to any part or
portion of the amount that may be paid or awarded as a result of the sale, for the reasons as
aforesaid, or condemnation of the Premises or any part or portion thereof, except that Tenant shall
be entitled to pursue an action to recover from the condemnor and Landlord shall have no claim
thereto for Tenant’s relocation costs, loss of goodwill, for Tenant’s trade fixtures, any removable
structures and improvements erected and made by Tenant to or upon the Property or the Building
which Tenant is or may be entitled to remove at the expiration of this Lease and Tenant’s leasehold
estate hereunder.

     18.3 Effect on Lease. If the entire Property is condemned, this Lease shall terminate
as of the earlier of such taking or loss of possession. If only a part of the Property is
condemned and taken, then Landlord and Tenant shall cooperate to determine whether the remaining
portion thereof significantly interferes with Tenant’s business and use of the Premises, and if so,
Tenant shall have the option to terminate this Lease effective as of the earlier of such taking or
loss of possession. If by such condemnation and taking only a part of the Property is taken, and
the remaining part thereof is in Tenant’s reasonable discretion suitable for the purposes for which
Tenant has leased the Property, this Lease shall continue, but the Base Rent shall be reduced in an
amount proportionate to the percentage that the floor area of that portion of the Property
physically taken by eminent domain bears to the floor area of all the Building located on the
Property.

19. BANKRUPTCY.

      If a general assignment is made by Tenant for the benefit of creditors, or any action is taken
by or against Tenant under any insolvency or bankruptcy statute or law, or if a receiver is
appointed to take possession of all or substantially all of the assets of Tenant (and Tenant fails
to terminate such receivership within sixty (60) days after such appointment), or if any action is
taken by a creditor of Tenant under any insolvency or bankruptcy statute or law, and such action is
not dismissed or vacated within thirty (30) days after the date of such filing, then this Lease
shall terminate at the option of Landlord upon the occurrence of any such contingency and shall
expire as fully and completely as if the day of the occurrence of such contingency was the date
specified in this Lease for the expiration thereof. In such event, Tenant shall then quit and
surrender the Property to Landlord.

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20. DEFAULT.

     If Tenant fails to pay any Rent or other sum due hereunder at the time set forth in this
Lease, or in the event Tenant fails to perform any other covenant to be performed by Tenant under
this Lease and continues to fail to perform the same for a period of thirty (30) days after receipt
of written notice from Landlord pertaining thereto (or a reasonable period of time, using due
diligence, if any non-monetary default cannot be cured within such thirty (30)-day period, but not
to exceed sixty (60) days), then Tenant shall be deemed to have breached this Lease and Landlord,
in addition to other rights or remedies it may have, may:

     20.1 Continue this Lease in effect by not terminating Tenant’s right to possession of the
Property, and thereby be entitled to enforce all Landlord’s rights and remedies under this Lease,
including the right to recover the Rent specified in this Lease as it becomes due under this Lease;
or

     20.2 Terminate Tenant’s right to possession of the Property, thereby terminating this
Lease, and recover from Tenant:

          20.2.1 The worth at the time of award of the unpaid Rent which had been earned
at the time of termination of the Lease;

          20.2.2 The worth at the time of award of the amount by which the unpaid rent
which would have been earned after termination of the Lease until the time of award exceeds the
amount of rental loss that Tenant proves could have been reasonably avoided;

          20.2.3 The worth at the time of award of the amount by which the unpaid rent for
the balance of the term after the time of award exceeds the amount of rental loss that Tenant
proves could be reasonably avoided; and

          20.2.4 Any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant’s failure to perform its obligations under this Lease; or

     20.3 In lieu of, or in addition to, bringing an action for any or all of the
recoveries
described in Paragraph 20.2 above, bring an action to recover and regain possession of the
Property in the manner provided by the laws of unlawful detainer then in effect in the state where
the Property is located. If Landlord makes any expenditure required of Tenant hereunder, or if
Tenant fails to make any payment or expenditure required of Tenant hereunder, such amount shall be
payable by Tenant to Landlord as Rent together with interest from the date due at the rate of
eighteen percent (18%) per annum, but not to exceed the maximum amount allowed by law, and Landlord
shall have the same remedies as on the default in payment of Rent. The payment of interest
required hereunder shall be in addition to the late charge set forth in Paragraph 3.3.

21. SURRENDER OF PROPERTY.

     On or before the expiration of the Lease Term, Tenant shall vacate the Property and the

17

 

Building located thereon in broom clean condition and otherwise in the same condition as existed on
the Commencement Date, ordinary wear and tear excepted, except that any improvements made within
the Building by Tenant shall remain, in the same condition and repair as when constructed or
installed, reasonable wear and tear excepted, unless Landlord gives Tenant at least thirty (30)
days prior written notice, which, if any, of such improvements in the Building are to be removed.
Landlord’s failure to timely give notice to Tenant to remove any such improvements shall not
relieve Tenant of its obligation to remove any such improvements requested to be removed by
Landlord. In addition, Tenant shall remove from the Property all Tenant’s personal property and
trade fixtures in order that Landlord can repossess the Property and all the Building and
improvements located thereon on the day this Lease expires or is sooner terminated. Any removal of
the Tenant’s improvements, Tenant’s property and/or trade fixtures by Tenant shall be accomplished
in a manner which will minimize any damage or injury to the Property, and any such damage or injury
shall be repaired by Tenant at its sole cost and expense with thirty (30) days after Tenant
vacates.

22. HOLDING OVER.

     Should Tenant hold over and remain in possession of the Property after the expiration of this
Lease, without the written consent of Landlord, such possession shall be as a month-to-month
tenant. Unless Landlord agrees otherwise in writing, Base Rent during the hold-over period shall
be payable in an amount equal to one hundred thirty-five percent (135%) of the Base Rent paid for
the last month of the Term hereof until Tenant vacates the Property. All other terms and
conditions of this Lease shall continue in full force and effect during such hold-over tenancy,
which hold-over tenancy shall be terminable by either party delivering at least one (1) month’s
written notice, before the end of any monthly period. Such hold-over tenancy shall terminate
effective as of the last day of the month following the month in which the termination notice is
given.

23. SURRENDER OF LEASE.

     The voluntary or other surrender of this Lease by Tenant, or mutual cancellation thereof,
shall not work a merger and may, at the option of Landlord, operate to terminate this Lease and/or
all or any existing subleases or subtenancies or may operate as an assignment of any or all such
subleases or subtenancies to Landlord.

24. NOTICE.

     All notices, demands or requests required or permitted under this Lease shall be in writing
and delivered personally, or mailed postage prepaid by registered or certified mail, return receipt
requested, or sent by Federal Express, addressed as set forth below. Any party may designate a
different address by notice similarly given. Any notice, demand or request so given, delivered or
made by United States mail shall be deemed to have been given or delivered or made on the third
business day following the day on which the same is deposited in the United States mail as
registered or certified mail, return receipt requested, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given, delivered or made by
registered or certified mail as aforesaid, shall be deemed to be given, delivered or

18

 

made on receipt of the same by the party to whom the same is to be given, delivered or made,
addressed as follows:

	 	 	 
	TO LANDLORD:

	 	One West Avenue
	 

	 	Larchmont, New York 10538
	 

	 	Attn: Stuart Lichter
	 

	 	Telephone (914) 834-2600
	 

	 	FAX (914) 834-2002
	 
	with a required copy to:

	 	Fainsbert, Mase & Snyder, LLP
	 

	 	11835 West Olympic Blvd., Suite 1100
	 

	 	Los Angeles, California 90064
	 

	 	Attn: John A. Mase, Esq.
	 

	 	Telephone (310) 473-6400
	 

	 	FAX (310) 473-8702
	 
	 	 
	TO TENANT:

	 	TST/Impreso
	 

	 	652 Southwestern Blvd.
	 

	 	Coppell, Texas 75019
	 

	 	Attn: Marshall Sorokwasz, Esq.
	 

	 	Telephone (972) 462-0100, ext.1103
	 

	 	FAX (972) 462-7764
	 
	 	 
	with a required copy to:

	 	TST/Impreso
	 

	 	652 Southwestern Blvd.
	 

	 	Coppell, Texas 75019
	 

	 	Attn: Tammy Yahiel, Esq.
	 

	 	Telephone (972) 462-0100, ext.1117
	 

	 	FAX (972) 393-5692

25. ASSIGNMENT AND SUBLETTING.

     25.1 No Assignment. Tenant shall not directly or indirectly, voluntarily or by operation of
law, sell, assign, encumber, pledge or otherwise transfer or hypothecate all or any part of the
Property or Tenant’s leasehold estate hereunder (collectively, “Assignment) without Landlord’s
prior written consent in each instance, which consent may not be unreasonably withheld by Landlord.
Tenant shall be entitled to sublease less than the entire Property (“Sublease”) without requiring
the consent of Landlord. Landlord’s consent to an Assignment shall not be deemed to have been
unreasonably withheld if the proposed assignee intends to use the Property in a manner that would
violate current zoning regulations or applicable laws or in a manner that would increase the use
of, or the possibility of disturbance of, Hazardous Materials on the Property.

     25.2 No Relief of Obligations. Consent by Landlord to any Assignment or
Sublease by Tenant shall not relieve Tenant of any obligation to be performed by Tenant under this
Lease, whether arising before or after the Assignment or Sublease. The consent by Landlord

19

 

to any Assignment or Sublease shall not relieve Tenant of the obligation to obtain Landlord’s
express written consent to any other Assignment or Sublease. Any Assignment or Sublease that is
not in compliance with this Paragraph 25 shall be void and, at the option of Landlord,
shall constitute a material default by Tenant under this Lease. The acceptance of Rent by Landlord
from a proposed assignee or subtenant shall not constitute the consent by Landlord to such
Assignment or Sublease. Each Transferee under an Assignment shall assume all obligations of Tenant
under this Lease and shall be and remain liable jointly and severally with Tenant for the payment
of Base Rent, additional rent and other charges, and for the performance of all other provisions of
this Lease. Each Transferee under a Sublease, other than Landlord, shall be subject to this Lease.

26. ATTORNEY’S FEES.

      In the event of any legal or equitable action arising out of this Lease, the prevailing party
shall be entitled to recover all reasonable fees, costs and expenses, together with reasonable
attorney’s fees incurred in connection with such action. The fees, costs and expenses so recovered
shall include those incurred in prosecuting or defending any appeal. The prevailing party shall
also be entitled to reasonable attorney’s fees incurred to collect or enforce the judgment.

27. JUDGMENT COSTS.

      Should Landlord, without fault on Landlord’s part, be made a party to any litigation
instituted by or against Tenant, or by or against any person holding the Property by license of
Tenant, or for foreclosure of any lien for labor or material furnished to or for Tenant, or any
such person, or otherwise arising out of or resulting from any act or transaction of Tenant, or of
any such person, Tenant covenants to pay to Landlord, the amount of any judgment rendered against
Landlord or the Property or any part thereof, and all costs and expenses, including reasonable
attorney’s fees incurred by Landlord in connection with such litigation.

28. BROKERS.

      Tenant warrants that it has had no dealings with any real estate broker or agent in connection
with the Property and this Lease, and that it knows of no real estate broker or agent who is or
might be entitled to a commission in connection with this Lease other than John Van Buskirk, SIOR,
NAI/CIR. Landlord shall only pay the real estate brokerage commission due to any real estate
broker or agent entitled to a commission in connection with this Lease if claimed through the
actions of Landlord and pursuant to a separate agreement. Tenant shall pay any other commission or
finder’s fee due if claimed through the actions of Tenant.

29. SUBORDINATION OF LEASE.

      This Lease is subject and subordinate to any mortgages which may now or hereafter be placed
upon or affect the property or Building of which the Premises are a part, and to all renewals,
modifications, consolidations, replacements and extensions hereof, provided that the holder(s) of
such mortgage(s) shall agree in writing not to disturb the possession of the Premises

20

 

by Tenant or the rights of Tenant under this Lease so long as Tenant is not in material
default (subject to applicable notice and cure rights in favor of Tenant as contained in this
Lease) in the performance of its obligations thereunder and, in the event of foreclosure, Tenant
agrees to look solely to the mortgagee’s interest in the Property for the payment and discharge of
any obligations imposed upon the mortgagee or Landlord under this Lease. In the event that a
Successor Landlord, as hereinafter defined, takes title to the Property, (i) Successor Landlord
shall be bound to Tenant under all of the terms and conditions of this Lease, (ii) Tenant shall
recognize and attorn to Successor Landlord as Tenant’s direct landlord under this Lease, and (iii)
this Lease shall continue in full force and effect, in accordance with its terms, as a direct lease
between Successor Landlord and Tenant. This clause shall be self-operative, and no further
instrument or subordination shall be necessary unless requested by a mortgagee or the insuring
title company, in which event Tenant shall sign, within five (5) business days after requested,
such instruments and/or documents as the mortgagee and/or insuring title company reasonably request
be signed (“SNDA”). In the event Tenant fails to execute an SNDA or an estoppel certificate as
provided herein, Tenant hereby constitutes and appoints Landlord as its attorney-in-fact, with full
power of substitution, to sign, execute, certify, acknowledge, deliver or record, where required or
appropriate, in the name, place and stead of Tenant, all such SNDAs and estoppel certificates for
and on behalf of Tenant as may be required.

30. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.

     30.1 Estoppel Certificate. Tenant shall, at any time and from time to time, upon not
less than ten (10) days’ prior request by Landlord, execute, acknowledge and deliver to Landlord,
or to such other persons who may be designated in such request, a statement in writing certifying
that this Lease is unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and stating the modifications) and, if so,
the dates to which the rent and any other charges have been paid in advance, and such other items
requested by Landlord, including without limitation, the lease commencement date and expiration
date, rent amounts, and that no offsets or counterclaims are present. It is intended that any such
statement delivered pursuant to this Paragraph may be relied upon by any prospective purchaser or
encumbrancer (including assignee) of the Property.

     30.2 Financial Statements. If Landlord desires to finance, refinance, or sell the
Property, or any part thereof, Tenant shall deliver to Landlord, or to such potential lender or
purchaser designated by Landlord, such financial information regarding Tenant, as may reasonably be
required to establish Tenants’ creditworthiness. All financial information provided by Tenant to
Landlord or any lender or potential purchaser shall be held by the recipient in strict confidence
and may not be used or disclosed by the recipient except for the purpose of determining Tenants’
creditworthiness in connection with Tenants’ obligations under this Lease.

31. SHORT FORM OF LEASE.

      Tenant agrees to execute, deliver and acknowledge, at the request of Landlord, a short form of
this Lease satisfactory to counsel for Landlord, and Landlord may in its sole discretion record
this Lease or such short form in the County where the Property is located. Tenant shall not record
this Lease, or a short form of this Lease, without Landlord’s prior written consent,

21

 

which shall not be unreasonably withheld. In the event of any conflict between the terms of this
Lease and any short form of this Lease, the terms of this Lease shall prevail.

32. SIGNS.

      Tenant may install signs on the exterior of the Property and at the entrance to the Property,
provided, however, that Tenant’s signs shall comply with any applicable laws and regulations
affecting the Property. Tenant shall maintain any such signs installed on the Property.

33. GENERAL PROVISIONS.

      33.1 Governing Law. This Lease shall be governed by the laws of the Commonwealth of
Pennsylvania and the parties hereto agree that venue shall be proper in any state or federal court
located within the state.

      33.2 Waiver. The waiver by Landlord of any breach of any term, covenant, or
condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same
or any other term, covenant or condition contained herein. The acceptance of rent hereunder shall
not be construed to be a waiver of any breach by Tenant of any term, condition or covenant of this
Lease.

      33.3 Remedies Cumulative. It is understood and agreed that the remedies herein give
to Landlord shall be cumulative, and the exercise of any one remedy of Landlord shall not be to the
exclusion of any other remedy.

      33.4 Successors and Assigns. The covenants and conditions herein contained
shall, subject to the provisions as to assignment, apply to and bind the heirs, successors,
executors, administrators and assigns of all of the parties hereto; if Landlord or Tenant is
comprised of multiple parties, each of such parties hereto shall be jointly and severally liable
hereunder.

      33.5 Entire Agreement. This Lease, the exhibits herein referred to, and any
addendum executed concurrently herewith, are the final, complete and exclusive agreement between
the parties and cover in full each and every agreement of every kind or nature, whatsoever,
concerning the Property and all preliminary negotiations and agreements of whatsoever kind or
nature, are merged herein. Landlord has made no representations or promises whatsoever with
respect to the Property, except those contained herein, and no other person, firm, partnership or
corporation has at any time had any authority from Landlord to make any representations or promises
on behalf of Landlord, and Tenant expressly agrees that if any such representations or promises
have been made by others, Tenant hereby waives all right to rely thereon. No verbal agreement or
implied covenant shall be held to vary the provisions hereof, any statute, law or custom to the
contrary notwithstanding. Unless otherwise provided herein, no supplement, modification, or
amendment of this Lease shall be binding unless executed in writing by the parties.

22

 

      33.6 Captions. The captions of paragraphs of this Lease are for convenience only,
and
do not in any way limit or amplify the terms and provisions of this Lease.

      33.7 Partial Invalidity. If any term, covenant, condition or provision of this
Lease is
held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the provisions shall remain in full force and effect and shall in no way be affected, impaired or
invalidated.

      33.8 Authority. The person(s) executing this Lease warrants that he or she has the
authority to execute this Lease and has obtained or has the requisite corporate or other authority
to do the same.

      33.9 Approvals. Any consent or approval required hereunder shall not be
unreasonably withheld, conditioned or delayed by the party from whom such consent or approval is
requested unless this Lease expressly provides otherwise.

      33.10 Counterparts. This Lease may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

      33.11 Joint and Several Obligations. The obligations of the persons signing as Tenant under
this Lease shall be joint and several in all respects.

34. OPTION TO PURCHASE PROPERTY.

      34.1 Exercise. At any time during either the fifty-fifth (55th) month through the
sixtieth (60th) month (“First Exercise Period”), or during the one hundred fifteenth
(115th) month through the one hundred twentieth (120th) month (“Second
Exercise Period”) (either, an “Exercise Period”) of the Lease Term, Tenant shall have the right to
exercise an option to purchase the Property and any related personal property located on the
Property (“Purchase Option”), for an amount equal to $8,039,000.00. Tenant’s purchase of the
Property shall be upon and subject to the terms as set forth in this Paragraph 34 and
subject to such other reasonable terms agreed to between Landlord and Tenant. The Purchase Option
shall be exercised by Tenant, if at all, in the following manner: (i) Tenant shall not be in
default under the Lease on the delivery date of the Purchase Option Notice (as defined below), and
(ii) Tenant shall deliver to Landlord: (a) written notice (“Purchase Option Notice“) to Landlord no
later than the last day of the Exercise Period stating that Tenant desires to exercise the Purchase
Option, and (b) the deposit in the amount of Twenty Five Thousand and no/100 Dollars ($25,000)
(“Deposit”), which Landlord shall place into escrow with an Escrow Holder (defined in Paragraph
34.2.1 below). Thereafter, Tenant, as Buyer, and Landlord, as Seller, shall enter into a
purchase and sale agreement on a standard form, which shall be reasonably based on the terms of
purchase and sale set forth in this Paragraph 34. Buyer shall provide Seller with no less
than thirty (30) days’ notice of the contemplated close of escrow (the “Closing”), and with respect
to the first Purchase Option, such Closing shall occur during the sixty-first (61st)
through sixty-sixth (66th) months of the Lease Term; with respect to the second Purchase
Option, the Closing shall occur no later than during the one hundred twenty-first
(121st) through the one

23

 

hundred twenty-sixth (126th) months of the Lease Term. Until the sale of the
Property closes, this Lease shall remain in full force and effect according to the terms hereof.
Tenant’s failure to deliver the Purchase Option Notice on or before the last day of the First
Exercise Period or Second Exercise Period, as applicable, shall be deemed to constitute Tenant’s
election not to exercise the Purchase Option.

     34.2 Purchase of the Property.

             34.2.1 The purchase price shall be $8,039,000. If Tenant exercises the Purchase Option in the
First Exercise Period, Tenant shall have elected to purchase the entire Property and Tenant shall
be entitled to a purchase price reduction of $200,000 if such Closing occurs before expiration of
the sixty-sixth (66th) month of the Lease Term. If Tenant exercises the Purchase Option
in the Second Exercise Period, the Seller shall sell and the Buyer shall purchase the Property
excluding approximately one and one-half acres of land with frontage on Wayne Avenue as mutually
agreed upon by Landlord and Tenant which shall be retained by Landlord (the “Retained Land”),
provided, however, Landlord shall not be entitled to select any portion of the land where the
existing parking lot is currently located as the Retained Land unless Landlord reasonably agrees to
construct a replacement parking lot for Tenant reasonably acceptable to Tenant and the replacement
parking lot is completed before the construction on the Retained Land. Seller shall not be allowed
primary access for ingress and egress over the balance of the Property purchased by Buyer for the
benefit of the Retained Land. Buyer and Seller shall, however, be allowed to create any easements
required by city regulations or requirements in subdividing the Property to allow the other party
secondary access over such other party’s land for fire trucks or other purposes. Upon the mutual
execution of a purchase and sale agreement, which Landlord shall deliver to Buyer promptly upon
receipt of Tenant’s Purchase Option Notice, escrow shall be opened upon the mutual execution and
delivery to escrow of the purchase and sale agreement. Escrow will be opened and title shall be
ordered with First American Title Company, Los Angeles, as title company and escrow holder (“Escrow
Holder”). The Deposit shall be held by Escrow Holder in an interest-bearing account insured by the
federal government in an institution as directed by Landlord. If the purchase and sale of the
Property is consummated as contemplated hereunder, the Deposit plus all interest accrued thereon
shall be paid to Seller and credited against the Purchase Price. If the purchase and sale of the
Property is not consummated because of any reason except for a default under this Agreement on the
part of Seller, then the Deposit plus all interest accrued thereon shall be immediately refunded to
Seller. If the purchase and sale of the Property is not consummated because of a default by Seller
under the purchase and sale agreement, then the Deposit plus all interest accrued thereon shall be
paid to and retained by Buyer. Buyer shall deposit the balance of the Purchase Price in cash with
Escrow Holder before Close of Escrow in accordance with the requirements of the Escrow Holder.
Seller and Buyer shall negotiate in good faith to execute a purchase and sale agreement within a
timely manner, as time is of the essence, on the terms and conditions set forth herein.

             34.2.2 Title to the Property will be conveyed to Buyer by special warranty deed on close of
escrow subject to matters of title approved by Buyer. Title shall be conveyed subject to no
monetary liens except for the payment of non-delinquent real property taxes. Title insurance shall
be provided by First American Title Company, Los Angeles. Seller shall pay the

24

 

premium for the title policy of a standard coverage owner’s policy, and Buyer shall pay any
additional title insurance costs associated with Buyer obtaining an ALTA or other extended coverage
owner’s policy (including an updated ALTA survey of the Property, any lender’s policy of title
insurance, and the cost of any title endorsements that Seller elects to obtain).

             34.2.3 All other closing costs, transfer taxes, title insurance policy costs, recording fees
and the like shall be shared equally by Buyer and Seller.

             34.2.4 Buyer shall have twenty-one (21) days following receipt of a preliminary title report
and underlying documents (including, to the extent easily obtainable, any easement plot plans)
(“Contingency Date”) to approve the condition of title for the Property. If Buyer notifies Seller
in writing by the Contingency Date that one or more items are disapproved, Seller will have the
right to (i) cure any unacceptable item prior to the Closing, or (ii) elect to immediately
terminate the escrow and the purchase and sale agreement. If Seller is unable or unwilling to cure
any disapproved exception to title or if escrow is terminated as provided in this paragraph, then
Buyer shall have the right to terminate the purchase and sale agreement and any Deposit made by
Buyer as of that date, less Buyer’s escrow costs, will be returned to Buyer, provided Buyer is not
in default under the Lease Agreement. Alternatively, Buyer may elect to waive the objection to
title and proceed to closing. Buyer shall have up to thirty days (30) days following the
Contingency Date (the “Financing Contingency Date”) to obtain financing for the Property in an
amount not to exceed 85% of the purchase price (“Financing Contingency”). Buyer shall give written
notice to Seller before expiration of the Financing Contingency Date if Buyer has failed to satisfy
the Financing Contingency. Buyer’s failure to timely give notice to Seller of Buyer’s failure to
satisfy the Financing Contingency shall be deemed Buyer’s satisfaction or waiver the Financing
Contingency and the purchase and sale transaction shall proceed towards Closing.

             34.2.5 Buyer is purchasing property “AS IS” and will have until the Contingency Date to
investigate and approve or disapprove the Property for Buyer’s intended use, which investigation
will include, but not be limited to economic feasibility, zoning, building condition, availability
of utilities, permits, soils, geology and environmental conditions, certificate of occupancy or
final inspection card, a copy of Seller’s current title insurance policy, and other governmental
approvals and reports (“Contingent Items”). The investigation of the Property will be conducted at
Buyer’s sole expense. Buyer may request prior to Buyer’s exercise of the Purchase Option but Seller
shall not be obligated to provide to Buyer until after Seller’s receipt of Buyer’s Purchase Option
Notice, and to the extent in Seller’s possession, the following: one (1) set of copies of documents
relating to the Property, including any maintenance records, prior soils and engineering reports,
Certificate of Occupancy, final inspection card, and property improvement plans to the extent any
such documents are in Seller’s possession. If Seller delivers any such reports or Property
information, it shall be without any representation or warranty by Seller as to accuracy or
completeness. Buyer shall indemnify Seller and its contractors agents from and against all claims,
actions, losses, liabilities, damages, costs and expenses (including, but not limited to,
attorneys’ fees and costs) incurred, suffered by, or claimed against the Seller, etc. or any of
them, by reason of any reliance on any information contained in the reports delivered to Buyer
prior to the Effective Date, damage to the Property or injury to persons caused by Buyer and/or its
agents, representatives or consultants in investigating the Property.

25

 

The foregoing provisions shall survive the Closing or any termination of the purchase and sale
agreement.

          34.2.6 The parties shall represent and warrant that neither party has incurred any obligations
for each real estate broker’s commissions, finder’s fees or any similar fees in connection with the
transaction contemplated by the sale of the Property except for a commission, if any, due pursuant
to a separate commission agreement. If any person asserts a claim for commission or finder’s fee
based upon any contact or dealings with Buyer or Seller, the party through whom that person makes
his claim will indemnify, hold harmless and defend that other party from such claim and all
expenses, including reasonable attorneys’ fees, incurred by the other party in defending the claim.

35. Option to Extend. Landlord hereby grants to Tenant one option to extend the Lease Term for the
Premises for an additional seven (7) years, upon each and all of the terms and conditions of this
Lease as amended below; provided, however, that Tenant shall not be in default of this Lease on the
date of exercise of the option, as extended. Tenant shall provide Landlord with written notice on
or prior to nine (9) months before expiration of the then-current Lease Term of the exercise of the
option to extend this Lease for such additional term, time being of the essence. If notice of
exercise of the option is not timely given, this option shall automatically expire. The rent for
the extended Lease Term shall consist of Base Rent for the Premises for the extended Lease Term in
the amount of $78,366.67 per month for the 157th through 180th months, inclusive, of the extended
Lease Term, inclusive, and $84,920.83 for the 181st through 240th months,
inclusive, of the extended Lease Term, the Tenant’s Share of Project Expenses under Paragraph
5, and any other charges under this Lease.

[Signatures on following page]

26

 

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

LANDLORD:

CHAMBERSBURG BUSINESS PARK, LP,

a Delaware limited partnership

	 	 	 	 	 	 	 
	By:	 	S. L. Chambersburg, Inc.	 	 
	 	 	a Delaware corporation, its general partner
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Stuart Lichter, President	 	 

TENANT:

TST/IMPRESO INC.,

a Delaware corporation

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Its:
	 	 	 	 
	 

	 	 	 	 

27

 

EXHIBIT “A”

SITE PLAN

28

 

EXHIBIT “B”

WORK LETTER

for

INITIAL IMPROVEMENTS OF THE PREMISES

     This Work Letter sets forth the terms and conditions agreed to by Landlord and Tenant relating
to improvement work consisting of the Asbestos Abatement and the Landlord Improvements
(collectively, “Initial Improvements”) at the Property, as described below and in the Lease, to
which this Work Letter is attached. This Work Letter is hereby incorporated into the Lease by
reference and all obligations of the parties hereunder shall be obligations of the parties under
the Lease. It is intended that the work will be constructed to meet the specifications and criteria
developed and approved by Landlord, and performed by Tenant’s designated contractors, as described
below.

     1. Defined Terms. Capitalized terms used in this work letter and not defined shall have the
meanings given to such terms in the Lease.

     2. Contract Approval. Tenant shall be entitled to approve all contracts on all repairs in
this work letter, including, without limitation, the Contract for Roof Repairs attached to the
Lease as Exhibit B-1 and the Air Systems Contract attached to the Lease as Exhibit B-2, whose
approval shall not be unreasonably withheld or delayed. All contracts shall conform to the most
recent specifications submitted to Tenant. Tenant’s failure to approve such contracts within five
days after the date of this Lease shall be deemed approval thereof.

	 	3.	 	Asbestos Abatement. Landlord shall retain contractors to perform certain
asbestos remediation or abatement work to the Property described below (“Asbestos
Abatement”), at Landlord’s sole cost and expense, which shall be performed in
accordance with all applicable Hazardous Materials Laws. Landlord shall remove all
asbestos material from the Premises, including, but not limited to, the following:

	 	A.	 	Remove any asbestos-containing materials located in the roof
that will be repaired/replaced in accordance with Paragraph 3 of this
Exhibit “B”.
	 
	 	B.	 	Remove any asbestos floor tiles in the offices.
	 
	 	C.	 	Remove asbestos from the boiler room.

     3. Landlord Improvements. Landlord shall construct certain improvements to the Premises, at
Landlord’s sole cost and expense, as more fully described below (the “Landlord Improvements”). The
Landlord Improvements shall consist of the following work:

29

 

	 	1.	 	Replace the roof membrane over the Premises (the actual roofing
materials exclusive of the roofing structure and plywood), excluding
approximately 30,000 square feet which was recently re-roofed.
	 
	 	2.	 	Replace the current heating system and install air-rotation
units. The cost of this work shall not exceed $230,000.00.

     4.    As-Is. Except as specifically set forth herein, Tenant accepts the Property in its present
“As-Is”, “Where-Is” and “With-All-Faults” condition.

     5.    Initial Improvements to be Performed by Landlord. With respect to the Initial Improvements
to be performed by Landlord, Landlord will make reasonable efforts to minimize the inconvenience
and disturbance caused thereby, but shall not be liable or responsible for business interruption or
damage to the Property that results from Landlord’s work to the Building.

     5.    Additional Allowance. Landlord shall provide Tenant with an additional allowance of
$25,000 to refurbish the office portion of the Premises. If the total cost of the Landlord
Improvements is less than $1,539,000, Landlord shall provide Tenant with a further allowance to be
used for office refurbishment to the extent the total cost of the Landlord Improvements is less
than $1,539,000, but no more than an additional $25,000, for a total additional allowance of
$50,000 under this Paragraph 5.

30exv10w9

 

Exhibit 10.9

Change in Control Agreement

This agreement is entered into as of this 14th day of December 2005 by and between
Photon Dynamics, Inc., a California Corporation (the “Company”), and Jeffrey A. Hawthorne
(“Executive”).

Recitals

Executive is employed by the Company and is a valued officer of the Company. As an inducement
to Executive to remain in the employ of the Company, the Company wishes to provide for certain
rights in favor of Executive to severance payments and other benefits in the event of a Change of
Control (as defined below) of the Company upon the terms herein provided.

     NOW THEREFORE, in consideration of the foregoing and the mutual promises herein contained, the
parties agree as follows:

     1.1 Definition. For purposes of this Agreement, “Change in Control” means occurrence in a
single transaction or in a series of related transactions of any one or more of following events:

   (a) any person (within the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended) becomes the owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power of the
Company’s then outstanding securities other than by virtue of a merger, consolidation or
similar transaction;

   (b) there is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) the Company and, immediately after the consummation of such merger,
consolidation or similar transaction, the stockholders of the Company immediately prior
thereto do not own, directly or indirectly, outstanding voting securities representing more
than fifty percent (50%) of the combined outstanding voting power of the surviving entity in
such merger, consolidation or similar transaction or more than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving entity in such merger,
consolidation or similar transaction; or

   (c) there is consummated a sale, Iease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its subsidiaries, other than
a sale, lease, license or other disposition of all or substantially all of the consolidated
assets of the Company and its subsidiaries to an entity, more than fifty percent (50%) of
the combined voting power of the voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their ownership of the Company immediately
prior to such sale, lease, license or other disposition.

     1.2 Termination After a Change in Control. In the event that within twelve (12) months
following a Change in Control, the Company terminates your employment without Cause (as defined
below) or you resign for Good Reason (as defined below) (a Change in Control Termination), (a) the
Company will provide you with severance in the amount of one (1) year of your then-existing base
salary and on target bonus, less payroll deductions and all required withholdings, paid either (at
the Company’s discretion) in a lump sum or in regular payments at equal intervals over a period of
time not longer than one (1) year, and (b) all stock options held by you shall have their vesting
accelerated such that all

 

 

options are fully vested and exercisable as of the date of the Change in Control Termination
(the “Acceleration”). As a precondition of receiving the Acceleration, you must first sign and
allow to become effective a general release of claims in favor of the Company in a form acceptable
to the Company.

     1.3 Definition of “Cause.” For purposes of this Agreement, “Cause” shall mean the occurrence
of one 0r more of the following: (a) your indictment or conviction of any felony or crime involving
moral turpitude or dishonesty; (b) your participation in any fraud against the Company or its
successor; (c) breach of your duties to the Company or its successor, including, without
limitation, persistent unsatisfactory performance of job duties; (d) intentional damage to any
property of the Company or its successor; (e) willful conduct that is demonstrably injurious to the
Company or its successor, monetarily or otherwise; (f) breach of any agreement with the Company or
its successor, including your Proprietary Information and Inventions Agreement; or (g) conduct by
you that in the good faith and reasonable determination of the Company demonstrates gross unfitness
to serve. Physical or mental disability or death shall not constitute Cause hereunder.

     1.4 Definition of “Good Reason.” For purposes of this Agreement, your voluntary termination of
employment with the Company will be considered a termination for “Good Reason” if you resign your
employment because one of the following events occurs without your consent: (a) a reduction of your
then-existing annual base salary by more than ten percent (‘10%), unless the then-existing base
salaries of other executive officers of the Company are accordingly reduced; (b) a material
reduction in the package of benefits and incentives, taken as a whole, provided to you (not
including raising of employee contributions to the extent of any cost increases imposed by third
parties), except to the extent that such benefits and incentives of other executive officers of the
Company are similarly reduced; (c) assignment to you of any duties 0r any limitation of your
responsibilities substantially inconsistent with your position, duties, responsibilities and status
with the Company immediately prior to the date of the Change in Control; or (d) relocation of the
principal place of your employment to a location that is more than fifty (50) miles from your
principal place of employment immediately prior to the date of the Change in Control.

     1.5 Limitation on Payments. lf any payment or benefit you would receive pursuant to a Change
in Control from the Company or otherwise (“Payment”) would (i) constitute a “parachute payment”
within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the
excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal
to the Reduced Amount, The “Reduced Amount” shall be either (x) the largest portion of the Payment
that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest
portion, up to and including the total, of the Payment, whichever amount, after taking into account
all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all
computed at the highest applicable marginal rate), results in your receipt, on an after-tax basis,
of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax. lf a reduction in payments or benefits constituting “parachute payments”
is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following
order unless you elect in writing a different order (provided, however, that such election shall be
subject to Board approval if made on or after the effective date of the event that triggers the
Payment): reduction of cash payments; cancellation of Acceleration; reduction of employee benefits.
In the event that Acceleration is to be reduced, it shall be cancelled in the reverse order of the
date of grant of your Options (i.e., earliest granted Option cancelled last) unless you elect in
writing a different order for cancellation.

The accounting firm engaged by the Company for general audit purposes as of the day prior to the
effective date of the Change in Control shall perform the foregoing calculations, lf the accounting
firm so engaged by the Company is serving as accountant or auditor for the individual, entity or
group effecting the Change in Control, the Company shall appoint a nationally recognized accounting
firm to make the determinations required hereunder. The Company shall bear all expenses with
respect to the determinations by such accounting firm required to be made hereunder.

The accounting firm engaged to make the determinations hereunder shall provide its calculations,
together with detailed supporting documentation, to you and the Company within fifteen (15)
calendar days after the date on which your right to a Payment is triggered (if requested at that
time by you or the

 

 

Company) or such other time as requested by you or the Company. lf the accounting firm determines
that no Excise Tax is payable with respect to a Payment, either before or after the application of
the
Reduced Amount, it shall furnish you and the Company with an opinion reasonably acceptable to you
that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of
the accounting firm made hereunder shall be final, binding and conclusive upon you and the Company.

2. General Provisions.

     2.1 Severability. Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any
other provision or any other jurisdiction, but such invalid, illegal or unenforceable provision
will be reformed, construed and enforced in such jurisdiction so as to render it valid, legal, and
enforceable consistent with the intent of the parties insofar as Possible.

     2.2 Entire Agreement. This Agreement, constitutes the entire and exclusive agreement between
you and the Company, and it supersedes any prior agreement, promise, representation, 0r statement,
written or otherwise, between you and the Company with regard to this subject matter. lt is entered
into without reliance 0n any promise, representation, statement or agreement other than those
expressly contained or incorporated herein, and it cannot be modified or amended except in a
writing signed by you and a duly authorized officer of the Company.

     2.3 Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and
be enforceable by you, the company and your and its respective successors, assigns, heirs,
executors and administrators, except that you may not assign any of your duties hereunder and you
may not assign any of your rights hereunder without the written consent of the Company, which shall
not be withheld unreasonably.

     2.4 Governing Law. All questions concerning the construction, validity and interpretation of
this Agreement will be governed by the law of the State of California as applied to contracts made
and to be performed entirely within California.

IN WITNESS WHEREOF, the parties hereto have duly executed this agreement as of the date first above
written.

Photon Dynamics, Inc.

	 	 	 
	By:

	 	/s/ MAUREEN L. LAMB
	 

	 	 

Accepted and agreed:

	 	 	 
	/s/ JEFFREY A. HAWTHORNE

	 	12/13/2005
	 

	 	 
	 

	 	Date

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