Document:

Exhibit
10.6

 

REGISTRATION
RIGHTS AGREEMENT

 

This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into May 16, 2003
(the “Effective Date”)  by
and between QUIXOTE CORPORATION, a Delaware corporation (“Quixote”), and U.S. TRAFFIC CORPORATION, a
Delaware corporation and MYERS/NUART ELECTRICAL PRODUCTS, INC. (together, the “Stockholder”).

 

R E C I T A L S

 

A.                                   The
Stockholder and Green Light Acquisition Corporation, a Delaware corporation
that is a wholly-owned subsidiary of Quixote (“Buyer”), have entered into a
Asset Purchase Agreement of even date herewith (the “Asset Purchase Agreement”),  pursuant
to which Buyer is to acquire certain assets of the Stockholder.

 

B.                                     As
a condition precedent to the consummation of the transactions contemplated by
the Asset Purchase Agreement, Quixote has agreed to grant the Stockholder
certain registration rights with respect to the shares of Quixote Common Stock
that are issued to it in accordance with the Asset Purchase Agreement, subject
to the terms and conditions of this Agreement.

 

NOW,
THEREFORE, in consideration of the facts stated in the foregoing recitals and
the mutual promises hereinafter set forth, the parties hereto agree as follows:

 

1.                                      REGISTRATION
RIGHTS

 

1.1                                 Certain
Definitions.  For purposes of this
Agreement:

 

(a)                                  1933
Act.  The term “1933 Act” means the U.S. Securities Act of
1933, as amended, or any successor law.

 

(b)                                 1934
Act.  The term “1934 Act”  means the U.S. Securities Exchange Act of
1934, as amended, or any successor law.

 

(c)                                  Business
Day.  The term “Business Day” shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in The City of Chicago, Illinois are authorized or
obligated by law or executive order to close

 

(d)                                 Form
S-3.  The term “Form S-3”  means a registration statement filed
under Form S-3 under the 1933 Act, as such is in effect on the Effective Date,
or any successor form of registration statement under the 1933 Act subsequently
adopted by the SEC which permits inclusion or incorporation of a substantial
amount of information by reference to other documents filed by Quixote with the
SEC.

 

 

(e)                                  Holder.  The term “Holder”  means each holder of Registrable
Securities.

 

(f)                                    Prospectus.  The term “Prospectus” means any prospectus contained
in a registration statement covering the sale of any Registrable Securities.

 

(g)                                 Quixote
Common Stock.  The term “Quixote Common Stock”
means the common stock of Quixote Corporation, par value $0.01 – 2/3 per share.

 

(h)                                 Registrable
Securities.  The term “Registrable Securities”  means:  (i) the 558,534 shares of Quixote Common
Stock that are delivered to the Stockholder as the Consideration Shares
pursuant to Section 2.6(a) of the Asset Purchase Agreement; and (ii) any
Quixote securities (and shares of Quixote Common Stock issued on conversion of
such securities, if applicable) that may be issued as a dividend or other
distribution, recapitalization or reclassification (including without
limitation shares of Quixote Common Stock issued in a subdivision or split of
Quixote’s outstanding Common Stock) with respect to, or in exchange for, or in
replacement of, shares of Quixote Common Stock described in clause (i) of this
Section 1.1(h) or in this clause (ii); excluding in all cases, however, from
the definition of “Registrable
Securities” any such shares that: (w) are registered under the
1933 Act and sold in accordance with the effective registration statement
covering them (including the Shelf Registration Statement or Subsequent
Registration Statement); (x) are sold by a person in a transaction in which
rights under this Agreement with respect to such shares are not transferred in
accordance with the terms of this Agreement; (y) can be sold under Rule 144(k);
or (z) are sold pursuant to Rule 144 promulgated under the 1933 Act or
otherwise sold to the public.  Except as
provided in clause (ii) of the first sentence of this Section 1.1(h), without
limitation, the term “Registrable Securities”  does  not  include
any shares of Quixote Common Stock that were not issued to the Stockholder in
accordance with the Asset Purchase Agreement.

 

(i)                                     Registration.  The terms “register,” “registered,” and  “registration”
refer to a registration effected by preparing and filing a
registration statement in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement.

 

(j)                                     Rule
415.  The term “Rule 415”  means Rule 415 promulgated under the 1933
Act, as such Rule may be amended from time to time, or any similar or successor
rule or regulation hereafter adopted by the SEC.

 

(k)                                  SEC.  The term “SEC “ or the term “Commission”  means the U.S. Securities
and Exchange Commission.

 

(l)                                     Shelf
Registration. The term “Shelf Registration” shall mean a
registration effected pursuant to Section 1.2 hereof.

 

(m)                               Shelf
Registration Statement.  The term “Shelf
Registration Statement” shall mean a “shelf” registration statement
of Quixote pursuant to the provisions of

 

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Section 1.2 of this
Agreement providing for the registration of, and the sale on a continuous or
delayed basis by the holders of, all of the Registrable Securities pursuant to
Rule 415 under the 1933 Act, or any similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.  As the context
may require, “Shelf Registration Statement” shall include any Subsequent
Shelf Registration Statement.

 

Capitalized
terms used in this Agreement but not defined in this Section 1 or elsewhere in
this Agreement shall have the same meanings given to such terms in the Asset Purchase
Agreement.

 

1.2                                 Shelf
Registration.

 

(a)                                  Filing
and Registration Period.  Subject to
the terms and conditions of this Agreement, within ten (10) Business Days
following the the date of the Closing under the Asset Purchase Agreement,
Quixote shall prepare and file with the SEC a Shelf Registration Statement on
Form S-3 providing for the registration of, and the sale on a continuous or
delayed basis by the holders of, all of the then outstanding Registrable
Securities pursuant to Rule 415. 
Quixote shall use its reasonable best efforts to have such Shelf
Registration Statement declared effective as soon as practicable after the
filing of Quixote’s Form 8-K for the acquisition of the Business contemplated
in the Asset Purchase Agreement and to keep the Shelf Registration Statement
continuously effective during the period of time commencing on the date the
Shelf Registration Statement is declared effective under the 1933 Act by the
SEC (the “Effectiveness Date”)  and
ending on the date that is three years after the Effectiveness Date, or such
earlier date when there are no more Registrable Securities (such period of time
being hereinafter called the “Registration Period”).  Quixote shall have no duty
or obligation to keep the Shelf Registration Statement (or any Subsequent
Registration Statement, as defined below) effective after the expiration of the
Registration Period.  At the time the
Shelf Registration Statement is initially declared effective, each Holder that
was a Holder as of ten (10) Business Days prior to the time of effectiveness
shall be named as a selling securityholder in the Shelf Registration Statement
and the related Prospectus in such a manner as to comply with Item 507 of
Regulation S-K and any other disclosure laws or regulations applicable to
selling securityholders under the 1933 Act. 
Neither Quixote nor any other person shall include any securities other
than Registrable Securities in any Shelf Registration Statement or Subsequent
Registration, except with the written consent of the Holders of the majority of
the Registrable Securities sought to be registered pursuant to such Shelf
Registration Statement or Subsequent Registration, as applicable.

 

(b)                                 Subsequent
Registration.  If the Shelf
Registration Statement is filed with the SEC and becomes effective under the
1933 Act, and the Shelf Registration Statement or a Subsequent Registration
Statement (as defined below) thereafter ceases to be effective for any reason
at any time during the Registration Period, then Quixote shall use its best
efforts to obtain the prompt withdrawal of any order

 

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suspending the
effectiveness thereof, and in any event shall, within twenty (20) days of such
cessation of effectiveness, file  an
amendment to the Shelf Registration Statement seeking to obtain the withdrawal
of the order suspending the effectiveness thereof, or file an additional
“shelf” registration statement pursuant to Rule 415 covering all of the then
outstanding Registrable Securities (a “Subsequent Registration Statement”). If a Subsequent
Registration Statement is filed, Quixote shall use its best efforts to cause
the Subsequent Registration Statement to be declared effective as soon as
practicable after such filing and to keep such registration statement
continuously effective until the end of the Registration Period.

 

(c)                                  Supplements
and Amendments. Subject to Section 1.2(d), Quixote further agrees to, after
the Effectiveness Date, supplement or amend the Shelf Registration Statement if
required by the rules, regulations or instructions applicable to the
registration form used by Quixote for such Shelf Registration Statement or by
the 1933 Act or by any other rules and regulations thereunder for shelf
registration or if reasonably requested by any Holder with respect to
information relating to such Holder, including without limitation any action
necessary to identify such Holder as a selling securityholder in the Shelf
Registration Statement and/or to describe such Holder’s intended methods of
distribution of Registrable Securities, and to use its reasonable best efforts
to cause any such supplement to be filed or amendment to become effective and
such Shelf Registration Statement to become usable as soon as thereafter
practicable.

 

 (d)                              Deferral Period.
If (A) the SEC has issued a stop order suspending the effectiveness of a Shelf
Registration or has initiated proceedings with respect to a Shelf Registration
under Section 8(d) or 8(e) of the 1933 Act, (B) any event has occurred or any
fact exists  (a “Material Event”)
as a result of which any Registration Statement shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or any
Prospectus shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (C) any pending corporate development has occurred or
exists, the disclosure of which would, in good faith judgment of the Board of
Directors of Quixote, be premature or otherwise inadvisable at such time or
would have a material adverse affect upon Quixote and its stockholders, Quixote
will (i) in the case of clause (B) above, subject to the next sentence, as
promptly as practicable, prepare and file, if necessary pursuant to applicable
law, a post-effective amendment to such Registration Statement or a supplement
to the related Prospectus or any document incorporated therein by reference or
file any other required document that would be incorporated by reference into
such Registration Statement and Prospectus so that such Registration Statement
does not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and such Prospectus does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to  make the
statements therein, in the light of the circumstances under which they were
made, not misleading, as thereafter delivered to the purchasers of the
Registrable

 

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Securities being sold
thereunder, and, in the case of a post-effective amendment to a Registration
Statement, subject to the next sentence, use its best efforts to cause it to be
declared effective as promptly as is practicable, and (ii) give notice to the
Holders that the availability of such Registration Statement is suspended (a “Deferral
Notice”) and, upon receipt of any Deferral Notice, each Holder agrees not
to sell any Registrable Securities pursuant to such Registration Statement
until such Holder’s receipt of copies of the supplemented or amended Prospectus
provided for in clause (i) above, or until it is advised in writing by Quixote
that the Prospectus may be used, and has received copies of any additional
or supplemental filings that are incorporated or deemed incorporated by
reference in such Prospectus.  Quixote
will use its reasonable best efforts to ensure that the use of the Prospectus
may be resumed (x) in the case of clause (A) above, as promptly as is
practicable, and (y) in the case of clause (B) above, as soon as, in the sole
judgment of the Company, public disclosure of such Material Event would not be
prejudicial to or contrary to the interests of the Company or, if necessary to
avoid unreasonable burden or expense, as soon as practicable thereafter, and
(z) in the case of clause (C) above, Quixote shall use its best efforts to
minimize the duration of any Deferral Period (as hereinafter defined) at all
times and make appropriate public disclosures as soon as practicable consistent
with the reasons for such deferral. 
Quixote shall be entitled to exercise its right under this Section
1.2(d) to suspend the availability of the Shelf Registration Statement or any
Prospectus no more than two (2) times in any twelve-month period, and any such
period during which the availability of the Registration Statement and any
Prospectus is suspended (the “Deferral Period”) shall not exceed thirty (30)
days; provided, however, in the event Quixote exercises its right to
suspend the availability of the Shelf Registration Statement two (2) times
prior to October 1, 2003, then Quixote shall be entitled to exercise its
right to suspend the availability of the Shelf Registration Statement one (1)
more time between October 1, 2003 and May 16, 2004.  The period of any such Deferral Period shall
be added to the period of time the Company has agreed to keep the Registration
Statement effective.  The Company shall
use all commercially reasonable efforts to limit the duration and number of any
Deferral Periods.  The Holders hereby
agree that upon receipt of any Deferral Notice from the Company, each Holder
shall, and shall cause each of its officers, directors, employees, affiliates,
advisors, agents and representatives to, keep confidential all nonpublic
information set forth in such notice including the existence or terms of such
Deferral Notice.

 

1.3                                 Limitations.  Notwithstanding the provisions of Section
1.2 above, Quixote shall not be obligated to effect any registration, qualification
or compliance of Registrable Securities pursuant to Section 1.2 of this
Agreement, and the Holders shall not be entitled to sell Registrable Securities
pursuant to any registration statement filed under Section 1.2 of this
Agreement, as applicable:

 

(a)                                  in
any particular jurisdiction in which Quixote would be required to qualify to do
business or to execute a general consent to service of process in effecting
such registration, qualification or compliance, unless Quixote is already so
qualified or otherwise subject to service of process in such jurisdiction; or

 

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(b)                                 if
the SEC refuses to declare such registration effective due to the participation
of any particular Holder in such registration (unless such Holder withdraws all
such Holder’s Registrable Securities from such registration statement).

 

1.4                                 Shares
Otherwise Eligible for Resale.  Notwithstanding
anything herein to the contrary, Quixote shall not be obligated to effect or
continue to keep effective any such registration, registration statement,
qualification or compliance with respect to the Registrable Securities held by
any particular Holder:

 

(a)                                  if
Quixote or its legal counsel shall have received a “no-action” letter or
similar written confirmation from the SEC that all the Registrable Securities
then held by such Holder may be resold by such Holder without restriction
as to volume or manner of sale without registration under the 1933 Act pursuant
to the provisions of Rule 144(k) promulgated under the 1933 Act (or successor
provisions), or otherwise and have confirmed such ability to sell to the
applicable Holder so long as such ability remains effective;

 

(b)                                 if
legal counsel to Quixote shall deliver a written opinion to Quixote, its transfer
agent and the Holders, in form and substance reasonably acceptable to Quixote,
to the effect that all the Registrable Securities then held by such Holder
may be resold by such Holder without restriction as to volume or manner of
sale without registration under the 1933 Act pursuant to the provisions of Rule
144(k) promulgated under the 1933 Act, or otherwise and have confirmed such
ability to sell to the applicable Holder so long as such ability to sell
remains effective; or

 

(c)                                  after
expiration or termination of the Registration Period.

 

1.6                                 Eligibility
for Form S-3.  Quixote represents
and warrants that it is currently eligible to register the resale of all the
Registrable Securities by the Holders on a registration statement on Form S-3
under the 1933 Act for the account of the Holders.  Quixote shall file all reports required to be filed by Quixote
with the SEC in a timely manner and take all other actions which may be
required so as to maintain such eligibility for the use of Form S-3.

 

1.7                                 Expenses.  Quixote shall pay all fees and expenses
incurred in connection with the performance of its obligations under this
Agreement, including without limitation all filing, registration and
qualification, printers’, legal and accounting fees, but specifically excluding
the fees and expenses of counsel or other advisors to the Holders of
Registrable Securities (except as provided in Section 1.8(i)) and any
underwriting discounts, brokerage fees and commissions incurred by Holders of
Registrable Securities.

 

1.8                                 Obligations
of Quixote.  Subject to Sections
1.2, 1.3 and 1.4 above, when required to effect the registration of any
Registrable Securities under the terms of this Agreement:

 

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(a)                                  Quixote
shall, as expeditiously as reasonably possible, prepare and file with the SEC a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become and remain
effective for the period of the distribution contemplated.

 

(b)                                 Quixote
shall promptly prepare and file with the SEC such amendments and supplements to
such registration statement and Prospectus and in connection therewith as
may be necessary to comply with the provisions of the 1933 Act with
respect to the distribution of all Registrable Securities covered by such
registration statement.

 

(c)                                  Quixote
shall furnish to each Holder such number of copies of the registration
statement and Prospectus contained therein including each preliminary prospectus
(and any amendments or supplements thereto), in conformity with the
requirements of the 1933 Act, and such other documents and information as such
Holder may reasonably request.

 

(d)                                 Quixote
shall promptly notify each Holder and if requested by any such Holder or
counsel, confirm such advice in writing (i) when each registration statement
has become effective and when any post-effective amendment thereto has been
filed and becomes effective, (ii) of any communication or request by the SEC or
any state securities authority related to amendments and supplements to any
registration statement or Prospectus or related to additional information
before or after the registration statement has become effective, or (iii) of
the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of any registration statement or the initiation of
any proceedings for that purpose; and

 

(e)                                  Quixote
shall use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of
such jurisdictions as will be reasonably requested by the Holders; provided
that Quixote will not be required in connection therewith or as a condition
thereto to qualify to do business in or to file a general consent to service of
process in any such state or jurisdiction wherein it would not but for the
requirements of this paragraph (e) be required to do so.

 

(f)                                    If
Holders who hold a majority of the Registrable Securities included in the Shelf
Registration Statement (or Subsequent Registration Statement) determine to use
underwriters as part of their plan of distribution for the Registrable
Securities, Quixote shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary representations, warranties, covenants, indemnification
and contribution obligations, and legal opinion and accounting letter delivery
requirements, with the underwriters identified by such Holders.

 

(g)                                 As
promptly as practicable after becoming aware of a Material Event, Quixote shall
notify each Holder of the happening of such event and subject to Section
1.2(d), use its best efforts promptly to prepare a supplement or amendment to

 

7

 

the
registration statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to each Holder as
such Holder may reasonably request.

 

(h)                                 Quixote will
advise the Holders, promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of such registration statement under the Act or the initiation or
threatening of any proceeding for such purpose, and promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal
if such stop order should be issued.

 

 (i)                                  Quixote shall permit
a single firm of counsel, designated as selling shareholders’ counsel by the
Holders who hold a majority of the Registrable Securities being sold, which
shall initially be Altheimer & Gray (“Designated Counsel”), to review and
comment upon the registration statement(s) and all amendments and supplements
thereto a reasonable period of time prior to their filing with the SEC, and not
file any document in a form to which such counsel reasonably objects.  Quixote shall reimburse the Holders for the
reasonable fees and disbursements of the Designated Counsel for legal services
provided Holders after the Effectiveness Date in connection with registrations
of Registrable Securities under this Agreement.

 

 (j)                              Quixote shall use its
best efforts to comply with all applicable laws related to such registration
statement and offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith (including,
without limitation, the 1933 Act and the 1934 Act and the rules and regulations
promulgated by the Commission) and make generally available to its security
holders as soon as practicable (but in any event not later than fifteen (15)
months after the effectiveness of such registration statement) an earnings
statement of Quixote and its subsidiaries complying with Section 11(a) of the
1933 Act.

 

(k)                                  Quixote
shall hold in confidence and not make any disclosure of information concerning
an Holder provided to Quixote unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) the disclosure
of such information is necessary to avoid or correct a misstatement or omission
in any registration statement, (iii) the release of such information is ordered
pursuant to a subpoena or other final, non-appealable order from a court or
governmental body of competent jurisdiction, or (iv) such information has been
made generally available to the public other than by disclosure in violation of
this or any other agreement. Quixote agrees that it shall, upon learning that
disclosure of such information concerning an Holder is sought in or by a court
or governmental body of  competent
jurisdiction or through other means, give prompt notice to such Holder and
allow such Holder, at the Holder’s expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such information.

 

(l)                                     Quixote
shall use its best efforts to secure designation and quotation of all the
Registrable Securities covered by the registration statement on the Nasdaq
National Market System or, if, Quixote’s Common Stock is not so authorized for

 

8

 

quotation
on such system, such automated quotation system or securities exchange on which
Quixote Common Stock is then quoted or listed.

 

(m)                               Quixote
shall cooperate with the Holders who hold Registrable Securities being offered
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legend) representing the Registrable Securities to be offered
pursuant to any registration statement and enable such certificates to be in
such denominations or amounts, as the Holders may reasonably request and
registered in such names as the Holders may request. Not later than the
date on which any registration statement registering the resale of Registrable
Securities is declared effective, Quixote shall deliver to its transfer agent
instructions, accompanied by any reasonably required opinion of counsel, that
permit sales of unlegended securities in a timely fashion that complies with
then mandated securities settlement procedures for regular way market
transactions.

 

(n)                                 Quixote
shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Holders of Registrable Securities pursuant to any
registration statement.

 

1.11                           Furnish
Information.  Each Holder shall
furnish to Quixote such information regarding itself or himself, the
Registrable Securities held by it or him, and the intended method of
disposition and plan of distribution of such Registrable Securities as shall be
required to timely effect the registration of its or his Registrable
Securities.  Quixote promptly will
include such Holder information and such intended method of disposition and
plan of distribution of such Registrable Securities in a Prospectus, supplement
or post-effective amendment to a registration statement, as applicable, subject
to review and approval by counsel to Quixote.

 

1.12                           Indemnification.

 

(a)                                  By
Quixote.  To the extent permitted by
law, Quixote will and it hereby agrees to indemnify, defend and hold harmless
each Holder, its officers and directors, and each Person, if any, who controls
such Holder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act (the “Holder indemnified parties”), against any
losses, claims, damages, or liabilities (joint or several)  (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or
investigating any such action or claim (“Losses”) or identified that arise out
of or are based upon or are caused by any of the following statements,
omissions or violations (collectively, a “Violation”):

 

(i)                                     any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement filed by Quixote pursuant to this Agreement pursuant to
which Registrable Securities are sold, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto;

 

9

 

(ii)                                  the
omission or alleged omission to state in any such registration statement,
preliminary prospectus or final prospectus or any amendments or supplements
thereto, of a material fact required to be stated therein, or necessary to make
the statements therein not misleading; or

 

(iii)                               any
violation or alleged violation by Quixote of the 1933 Act, the 1934 Act, any
U.S. federal or state securities law or any rule or regulation promulgated
under the 1933 Act, the 1934 Act or any U.S. federal or state securities law in
connection with the offering of Registrable Securities covered by such
registration statement and Quixote will indemnify and reimburse each such
Holder indemnified party  for any
reasonable attorneys’ fees and other expenses reasonably incurred by any such
indemnified party in connection with investigating or defending any such Loss,
as incurred; provided  however, that the indemnity agreement
contained in this subsection 1.12(a) shall not apply to amounts paid in
settlement of any such Losses if such settlement is effected without the
written consent of Quixote (which consent shall not be unreasonably withheld or
delayed), nor shall Quixote be liable in any such case for any such Losses to
the extent (and only to the extent), that they arise out of or are based upon
or are caused by a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by such Holder, to the extent it is established that any such
Losses result from the fact that such Holder, sold Registrable Securities to a
person to whom there was not sent or given, by or on behalf of such Holder a
copy of the Prospectus (as then amended or supplemented, if Quixote shall have
furnished any amendments or supplements thereto) at or prior to the written
confirmation of the sale of the Registrable Securities to such person, nor if
such Losses result from an untrue statement or alleged untrue statement or an
omission or alleged omission contained in such preliminary Prospectus that was
corrected in the Prospectus (as so amended or supplemented), unless such
failure is the result of noncompliance by Quixote with its obligations to
deliver copies of the Prospectus to such Holder; nor shall this indemnity inure
to the benefit of any Holder, from whom the person asserting any such Losses
purchased the Registrable Securities concerned to the extent it is established
that, at the time of such purchase, such Holder had received written notice
from Quixote that the use of such Prospectus was suspended as provided in this
Agreement.

 

(b)                                 By
Selling Holders.  To the extent
permitted by law, each selling Holder will indemnify and hold harmless Quixote,
each of its directors, each of its officers who have signed the registration
statement, each person, if any, who controls Quixote within the meaning of the
1933 Act, any underwriter against any Losses to which Quixote or any such
director, officer, controlling person, underwriter or other such Holder
may become subject insofar as such Losses arise out of or are based upon
or are caused by any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will indemnify and reimburse
Quixote or any such director, officer, controlling person, underwriter for any
reasonable attorneys’ fees and other expenses reasonably incurred by Quixote or
any such director, officer, controlling person,

 

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underwriter
in connection with investigating or defending any such Losses, as incurred; provided
however, that the indemnity agreement contained in this subsection
1.9(b) shall not apply to amounts paid in settlement of any such Losses if such
settlement is effected without the consent of the indemnifying Holder, which
consent shall not be unreasonably withheld or delayed; and provided  further
that the total amounts payable in indemnity by any Holder under this subsection
1.12(b) in respect of any offering shall not exceed the net proceeds received
by such Holder in the offering out of which the applicable Violation arises.

 

(c)                                  Notice.  Promptly after receipt by an indemnified
party under this Section 1.12 of notice of the commencement of any action
(including any governmental action) against such indemnified party, such
indemnified party will, if a claim for indemnification or contribution in
respect thereof is to be made against any indemnifying party under this Section
1.12, deliver to the indemnifying party a written notice of the commencement
thereof and, the indemnifying party shall be entitled to participate therein,
and to the extent that it shall determine, jointly and with any other
indemnifying party similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of the indemnifying
party’s election to assume the defense thereof, such indemnifying party shall
not be liable to such indemnified party for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation up to the date of such
election notice and if the party assuming the defense of such action fails to
defend such action it shall indemnify and reimburse the indemnified parties for
any reasonable attorneys’ fees and other expenses reasonably incurred by them
in connection with investigating or defending such action; provided  however,
that: an indemnified party shall have the right to retain its own counsel, with
the fees and expenses of such counsel to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to an actual or potential
conflict of interests between such indemnified party and any other party
represented by such counsel in such proceeding.  The failure to notify the indemnifying party in writing of the
commencement of an action or proceeding shall not release the indemnifying
party from any liability which it may have to an indemnified party in
respect of such action or proceeding on account of the indemnification
provisions of or contemplated by this Section 1.12 unless the indemnifying
party was materially prejudiced by such failure of the indemnified party to
give such notice, and in no event shall such omission relieve the indemnifying
party of any other liability it may have to such indemnified party.

 

(d)                                 Contribution.  If the indemnification provided for in this
Section 1.12 is unavailable to the indemnified parties in respect of any Losses
referred to herein, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses as between Quixote, on the one
hand, and the Holders, on the other hand, in such proportion as is appropriate to
reflect the relative fault of Quixote and of the Holders in connection with
such statements or omissions, as well as any other relevant

 

11

 

equitable considerations.
The relative fault of Quixote, on the one hand, and of the Holders, on the
other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
such party, and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

 

Quixote and the Holders
agree that it would not be just and equitable if contribution pursuant to this
Section 1.12 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. 
The amount paid or payable by an Indemnified party as a result of the
Losses referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 1.12, an
indemnifying party that is a selling Holder of Registrable Securities shall in
no event be required to contribute any amount in excess of the net proceeds received
by such Holder in the offering out of which the contribution obligation arises.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.

 

(e)                                  Survival.  The obligations of Quixote and Holders under
this Section 1.12 shall survive the completion of any offering of Registrable
Securities in a registration statement pursuant to this Agreement, and otherwise.

 

1.13                           Duration
and Termination of Quixote’s Obligations. 
Quixote will have no obligations pursuant to Section 1.2 of this
Agreement with respect to any request or requests for registration (or
inclusion in a registration) made by any Holder or to maintain or continue to
keep effective any registration or registration statement pursuant hereto:  (a) after the expiration or termination of
the Registration Period; (b) with respect to a particular Holder if, in the
opinion of counsel to Quixote, all such Registrable Securities proposed to be
sold by such Holder may be sold without restriction as to volume or manner
of sale  without registration under the
1933 Act pursuant to Rule 144(k) promulgated under the 1933 Act or otherwise
and such Holder has been advised of such opinion and is permitted to freely
sell his Registrable Securities; or (c) if all Registrable Securities have been
registered and sold pursuant to a registration effected pursuant to this
Agreement and/or have been transferred in transactions in which registration
rights hereunder have not been assigned in accordance with this Agreement.

 

1.14                           Rule
144 Requirements.  Quixote agrees to:

 

(a)                                  file
with the SEC in a timely manner all reports and other documents required of the
Quixote under the 1933 Act and the 1934 Act; and

 

12

 

(b)                                 furnish
to any Holder of Registrable Securities upon request (i) a written statement by
the Quixote as to its compliance with the requirements of Rule 144(c) and the
reporting requirements of the 1933 Act and the 1934 Act, (ii) a copy of the
most recent annual or quarterly report of Quixote, and (iii) such other reports
and documents of Quixote as such Holder may reasonably request to avail
itself of any similar rule or regulation of the SEC allowing himself, herself
or itself to sell any such securities without registration.

 

2.                                      TRANSFER
OF REGISTRATION RIGHTS

 

This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns; provided,
however, that the benefits and right contemplated hereunder to be provided to
any holder of the Registrable Securities shall be limited to the registered
holder thereof.  This Agreement and the
rights, duties and obligations hereunder may not be assigned or delegated
by Quixote or any Holder without the prior written consent of the other parties
hereto, which shall not be unreasonably withheld.  Notwithstanding the foregoing, no consent shall be required for a
Holder to assign its interest to any of its Affiliates.  A Holder who transfer his interest under
this Agreement as to all or part of his Registrable Securities shall, within
ten (10) days after such transfer, furnish to Quixote written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned and (ii) such transferee
shall agree in writing to be subject to all restrictions and obligations set
forth in this Agreement and in the Standstill Agreement dated as of the date of
this Agreement between Quixote and the original Holders.  The rights of a Holder hereunder with respect
to any Registrable Securities not transferred shall not be assigned by virtue
of the transfer of the Registrable Securities as to which such rights are
assigned.

 

3.                                      GENERAL
PROVISIONS

 

3.1                                 Notices.  All notices, requests, payments,
instructions, or other documents to be given hereunder shall be in writing or
by written telecommunication, and shall be deemed to have been duly given if
(i) delivered personally (effective upon delivery), (ii) sent by a reputable,
established courier service that guarantees next business day delivery
(effective the next business day), or (iii) sent by facsimile followed within
24 hours by confirmation by one of the foregoing methods (effective upon the
first business day after receipt of the facsimile in complete, readable
form).  Notices to each party shall be
addressed as set forth below (or to such other address as the recipient party
may have furnished to the sending party for the purpose pursuant to this
Paragraph 3.1).

 

13

 

	
  If to Quixote:

  
	
   

  
	
  Quixote Corporation

  One East Wacker Drive

  Chicago, Illinois  60601

  Facsimile No.: (312) 467-0197

  Attention:  Leslie J. Jezuit

  
	
   

  
	
  With a copy to:

  
	
   

  
	
  Holland & Knight LLC

  131 S. Dearborn Street, 30th Floor

  Chicago, Illinois 60603

  Facsimile No.: (312) 578-6666

  Attention:  Anne Hamblin Schiave

  
	
   

  
	
  If to Stockholder:

  
	
   

  
	
  U. S. Traffic Corporation and Myers Power Products,
  Inc.

  2000 Highland Avenue

  Bethlehem, Pennsylvania  18020

  Facsimile No.: (610) 868-8686

  Attention:  Walter Rogers

  
	
   

  
	
  With a copy to:

  
	
   

  
	
  Altheimer & Gray

  Suite 4000

  10 S. Wacker Dr.

  Chicago, Illinois 600606

  Facsimile No.: (312) 715-4987

  Attention: David W. Schoenberg

  

 

or at such other address
as the party to be served with notice may have furnished in writing to the
party seeking or desiring to serve notice as a place for the service of notice.

 

3.2                                 Entire
Agreement.  This Agreement
constitutes and contains the entire agreement and understanding of the parties
with respect to the subject matter hereof and supersede any and all prior
negotiations, correspondence, agreements, understandings, duties or obligations
between the parties with respect to the subject matter hereof.

 

3.3                                 Existing
Registration Rights; No Inconsistent Agreements.  Quixote represents and warrants that there are not existing
agreements with respect to its securities which are inconsistent with or limit
or impair the rights granted to the Holders

 

14

 

of
Registrable Securities in this Agreement or otherwise conflict with the
provisions hereof and agrees that it will not enter into any such agreements
after the date of this Agreement.

 

3.4                                 Amendment
of Rights.  Any provision of this
Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of Quixote and Holders who own a
majority of all the Registrable Securities then outstanding.  Any amendment or waiver effected in
accordance with this Section 3.3 shall be binding upon each Holder, each
permitted successor or assignee of each Holder and Quixote, but no such
Amendment shall reduce the rights of any indemnified party under Section 1.12
with respect to any Violation arising before the date of such amendment.

 

3.5                                 Governing
Law.  This Agreement will be
governed by and construed exclusively in accordance with the internal laws of
the State of Illinois, United States of America, as applied to agreements among
Illinois residents entered into and to be performed entirely within Illinois,
excluding that body of law relating to conflict of laws and choice of law.

 

3.6                                 Severability.  If one or more provisions of this Agreement
are held to be unenforceable under applicable law, then such provision(s) will
be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and will be enforceable in
accordance with its terms.

 

3.7                                 No
Third Party Beneficiaries.  Nothing
in this Agreement, express or implied, is intended to confer upon any person,
other than the parties hereto and their permitted successors and assigns, any
rights or remedies under or by reason of this Agreement.

 

3.8                                 Captions.  The headings and captions to sections of
this Agreement have been inserted for identification and reference purposes
only and will not be used to construe or interpret this Agreement.

 

3.9                                 Counterparts.  This Agreement may be executed in
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

 

3.10                           Effectiveness
of Agreement.  Regardless of when
signed, this Agreement will not become effective or binding unless and until
the Closing.

 

[Signature
Page Follows]

 

15

 

[Signature
Page to Registration Rights Agreement}

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement effective as of the Effective Date.

 

	
  QUIXOTE CORPORATION

  	
  U. S. TRAFFIC CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Leslie J. Jezuit

  	
   

  	
  By:

  	
  /s/ Gary J. Coury

  
	
  Title:

  	
  President

  	
   

  	
  Its:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MYERS/NUART ELECTRICAL

  PRODUCTS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Diana Grootonk

  
	
   

  	
   

  	
  Its:

  	
  President

  
										

 

16

 

Exhibit
A

 

to

 

Registration
Rights Agreement

 

	
  Name and
  Address

  of Stockholder

  	
   

  	
  Number of Registrable Securities

  Owned By the Stockholder

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U. S. Traffic
  Corporation

  2000 Highland Avenue

  Bethlehem, Pennsylvania  18020

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Myers/Nuart
  Electrical Products, Inc.

  2000 Highland Avenue

  Bethlehem, Pennsylvania  18020

  	
   

  	
   

  	
   

  

 

17Exhibit
10.7

 

LEASE

 

CAMBRIDGE
LEASING CORPORATION

 

LANDLORD

 

GREEN
LIGHT ACQUISITION COMPANY

 

TENANT

 

9601
and 9603 JOHN STREET

SANTA FE SPRINGS, CALIFORNIA

 

PREMISES

 

May
16, 2003

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
  Premises

  
	
   

  	
   

  
	
  ARTICLE 2

  	
  Rent

  
	
   

  	
   

  
	
  ARTICLE 3

  	
  Use of Premises

  
	
   

  	
   

  
	
  ARTICLE 4

  	
  Repairs and Maintenance

  
	
   

  	
   

  
	
  ARTICLE 5

  	
  Taxes and Assessments

  
	
   

  	
   

  
	
  ARTICLE 6

  	
  Compliance With Laws

  
	
   

  	
   

  
	
  ARTICLE 7

  	
  Assignment and Subletting

  
	
   

  	
   

  
	
  ARTICLE 8

  	
  Waiver of Jury Trial

  
	
   

  	
   

  
	
  ARTICLE 9

  	
  Insurance

  
	
   

  	
   

  
	
  ARTICLE 10

  	
  Damage and Destruction

  
	
   

  	
   

  
	
  ARTICLE 11

  	
  Changes and Alterations

  
	
   

  	
   

  
	
  ARTICLE 12

  	
  Surrender of Premises; Ownership of
  Improvement

  
	
   

  	
   

  
	
  ARTICLE 13

  	
  Arbitration

  
	
   

  	
   

  
	
  ARTICLE 14

  	
  Notices and Certificates

  
	
   

  	
   

  
	
  ARTICLE 15

  	
  No Waivers, Cumulative Remedies, etc.

  
	
   

  	
   

  
	
  ARTICLE 16

  	
  Quiet Enjoyment

  
	
   

  	
   

  
	
  ARTICLE 17

  	
  Landlord May Cure Defaults

  
	
   

  	
   

  
	
  ARTICLE 18

  	
  Indemnity

  
	
   

  	
   

  
	
  ARTICLE 19

  	
  Default

  
	
   

  	
   

  
	
  ARTICLE 20

  	
  Inspection of Premises by Landlord

  
	
   

  	
   

  
	
  ARTICLE 21

  	
  Limitation of Landlord’s Liability

  
	
   

  	
   

  
	
  ARTICLE 22

  	
  Mortgage Subordination

  
	
   

  	
   

  
	
  ARTICLE 23

  	
  Mechanics, Liens

  

 

i

 

	
  ARTICLE 24

  	
  Invalidity of Particular Provisions

  
	
   

  	
   

  
	
  ARTICLE 25

  	
  Representations by Landlord

  
	
   

  	
   

  
	
  ARTICLE 26

  	
  Condemnation

  
	
   

  	
   

  
	
  ARTICLE 27

  	
  Renewal Option

  
	
   

  	
   

  
	
  ARTICLE 28

  	
  Right of First Refusal

  
	
   

  	
   

  
	
  ARTICLE 29

  	
  Definitions and Miscellaneous

  
	
   

  	
   

  
	
  ARTICLE 30

  	
  Security Deposit

  
	
   

  	
   

  
	
  ARTICLE 31

  	
  Successors Bound

  
	
   

  	
   

  
	
  ARTICLE 32

  	
  Broker

  
	
   

  	
   

  
	
  ARTICLE 33

  	
  Late Charges; Interest

  
	
   

  	
   

  
	
  ARTICLE 34

  	
  No Money Damages

  
	
   

  	
   

  
	
  ARTICLE 35

  	
  Intentionally Omitted

  
	
   

  	
   

  
	
  ARTICLE 36

  	
  Net Lease

  
	
   

  	
   

  
	
  ARTICLE 37

  	
  Guarantor

  
	
   

  
	
  Exhibit A – Legal Description

  
	
   

  
	
  Exhibit B - Title Exceptions

  

 

ii

 

LEASE
AGREEMENT

 

LEASE made the 16th
day of May between Cambridge Leasing Corporation, a Delaware
corporation, having an office at Nine Washington Terrace, St. Louis, MO 63112 (“Landlord”),
and Green
Light Acquisition Company, a Delaware corporation, having an office
at c/o Quixote Transportation Safety, Inc., One East Wacker Drive, Suite 3000,
Chicago, IL  60601 (“Tenant”).

 

IT IS MUTUALLY COVENANTED
AND AGREED between Landlord and Tenant as follows:

 

ARTICLE 1

 

Premises

 

Section 1.1. 
Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
the land and buildings described in Exhibit A hereto annexed consisting of
one building containing a total of 182,566 square feet (“Leased Premises”), subject
to the title exceptions set forth in Exhibit B hereto annexed.

 

Section 1.2. 
The term shall commence on the date hereof (“Commencement Date”) and end
at midnight on the date that is 5 years after the last day of the month in
which the Commencement Date falls, unless sooner terminated or further extended
as hereinafter provided.

 

ARTICLE 2

 

Rent

 

Section 2.1. 
Tenant shall pay the following as rent for the Leased Premises:

 

(a)           a
Fixed Net Rent (“Fixed Net Rent”) at the rate of $1,161,120.00  per annum.

 

(b)           all
other sums and charges required to be paid by Tenant under the terms of this
Lease which are sometimes referred to as “Additional Rent.”

 

Section 2.2. 
The Fixed Net Rent shall be payable in equal monthly installments of $98,691.30
in advance on the first day of each month during the term of this Lease, except
that upon the execution of this Lease Tenant shall pay the first month’s Fixed
Net Rent, or if the date of this Lease is not the first day of a month, Tenant,
upon the execution of this Lease, shall pay the prorated rent from such date
through the end of such month.

 

Section 2.3. 
Tenant shall pay the Fixed Net Rent and Additional Rent in lawful money
of the United States which shall be legal tender for the payment of all debts,
public and private, at the time of payment, and shall be paid at the principal
office of Landlord or at such other place as Landlord may designate by notice.

 

 

ARTICLE 3

 

Use
of Premises

 

Section 3.1. 
Tenant shall use and occupy the Leased Premises solely for manufacturing,
sales and related office use subject to, and in accordance with all applicable
laws, regulations, orders, codes and zoning regulations (including the
applicable certificate of occupancy) and the terms of this Lease.

 

Section 3.2. 
Tenant will not use or allow the Leased Premises or any part thereof to
be used or occupied for any unlawful or hazardous purpose or in violation of
any certificate of occupancy covering the use thereof; and will not permit or
cause any act to be done or any condition to exist at the Leased Premises which
would constitute a nuisance, public or private, or which may make void or
voidable any insurance then in force, or which may constitute a default under
any Mortgage (as defined in Article 22) to which the Leased Premises is
subject, or which may pollute or cause the pollution of the air or of any
waters in or around the area of the Leased Premises.

 

Section 3.3. 
Tenant shall not permit the Leased Premises, or any portion thereof, to
be used by the public, as such, without restriction or in such manner as might
reasonably tend to impair Landlord’s title thereto, or in such manner as might
reasonably make possible a claim or claims of adverse usage or adverse
possession by the public, as such, or of implied dedication thereof.

 

ARTICLE 4

 

Repairs
and Maintenance

 

Section 4.1. 
Tenant at its expense, shall take good care of the Leased Premises, keep
them in good order and condition, ordinary wear and tear excepted, and make all
necessary repairs thereto, interior and exterior, structural and
non-structural, ordinary and extraordinary, foreseen and unforeseen.  Tenant shall not suffer or commit waste or
injury to the Leased Premises.

 

When used in this Article, the term “repairs”
shall include replacements, renewals or substitutions when necessary for any
reason.  Each replacement, renewal or
substitution shall be new and of such class and character, a least equal to the
existing facility, as is appropriate at the time.  No article of personal property (other than Tenant Trade Fixtures
as defined in Section 29.9) or building equipment or any replacement,
renewal or substitution thereof shall be removed from the Leased Premises
except for repair unless replaced, renewed or substituted as aforesaid.

 

Section 4.2. 
Landlord shall not be obligated to furnish any services or perform any
work of any kind at the Leased Premises. 
Without limiting the foregoing, Tenant waives the right to make repairs
at Landlord’s expense under any law, statute or ordinance now or hereinafter in
effect (including without limitation the provisions of California Civil Code
Section 1942 and any successive sections or statutes of a similar nature).  Further, Tenant waives the

 

2

 

provisions of
California Civil Code Section 1932(1) or any other applicable existing or
future law, ordinance or governmental regulation permitting the termination of
this Lease due to any interruption, failure or inability to provide any
service.

 

Section 4.3. 
Tenant shall not deposit, dump, store, pour on any part of the soil of
the Leased Premises, or permit the accumulation on the Leased Premises of dry
or liquid waste, chemicals, solvents or other material, garbage, property no
longer used by Tenant, or any other substance or material which, if left on the
Leased Premises, could cause injury to the health of or discomfort to persons
in the neighborhood or on the Leased Premises, adversely affect the environment
of the Leased Premises, including the air above and the ground below and
surrounding such premises, or create an unsightly appearance thereon.  Tenant, at its expense, shall promptly
remove or cause the removal of all such material from the Leased Premises.

 

Section 4.4. 
(a) The term “Hazardous Substances,” as used in this
Lease shall include, without limitation, flammables, explosives, radioactive
materials, asbestos, biohazard materials, mold, mildew, chlorofluorocarbons
(CFCs), polychlorinated biphenyls (PCBs), chemicals known to cause cancer or
reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic
substances or related materials, petroleum and petroleum products, and
substances declared to be dangerous, hazardous or toxic under any law or
regulation now or hereafter enacted or promulgated by any governmental
authority, but specifically excluding naturally occurring methane gas.

 

(b)           Without
limiting the generality of any other provision of this Lease, Tenant shall not
cause or permit to occur:

 

(i)            Any violation of any federal, state,
or local law, ordinance, or regulation now or hereafter enacted, related to
environmental conditions on, over, under, or about the Leased Premises, or
arising from Tenant’s use or occupancy of the Leased Premises, including, but
not limited to, ozone, soil and ground water conditions, or

 

(ii)           The use, generation, release,
manufacture, refining, production, processing, storage, or disposal of any
Hazardous Substance on, over, under, or about the Leased Premises, or the
transportation to or from the Leased Premises of any Hazardous Substance,
except to the extent and in the amount any Hazardous Substances are currently
used in the manufacturing processes currently operating at the Leased Premises.

 

(c)           (i) Tenant
shall, at Tenant’s own expense, comply with all present and future laws
regulating the use, generation, storage, transportation, or disposal of
Hazardous Substances, as same may be amended time to time, and all rules,
regulations, ordinances, orders and directives issued or promulgated pursuant
to or in connection therewith (“Laws”).

 

(ii)           Tenant shall, at Tenant’s own
expense, make all submissions to, provide all information required by, and
comply with all requirements of all governmental authorities (the “Authorities”)
under the Laws.

 

(iii)          Should any Authority or any third
party demand that a cleanup plan be prepared and that a cleanup be undertaken
because of any deposit, spill, discharge, or other release or presence of
Hazardous Substances that occurs during the

 

3

 

term of this Lease, at or from the Leased Premises, or
which arises at any time from Tenant’s use or occupancy of the Leased Premises,
then Tenant shall, at Tenant’s own expense, prepare and submit the required
plans and all related bonds and other financial assurances; and Tenant shall
carry out all such cleanup plans. 
Tenant shall obtain Landlord’s prior written approval of all such
cleanup plans, which approval shall not be unreasonably withheld.  Landlord agrees to provide reasonable
assistance to Tenant in its cleanup provided Landlord is not subjected to any
liability or costs (including internal costs) for such assistance.

 

(iv)          Tenant shall promptly provide all
information regarding the use, generation, storage, transportation, or disposal
of Hazardous Substances that is reasonably requested by Landlord.  If Tenant fails to fulfill any duty imposed
under this Section 4.4(c) within a reasonable time, Landlord may do so,
and in such case, Tenant shall cooperate with Landlord in order to prepare all
documents Landlord reasonably deems necessary or appropriate to determine the
applicability of the Laws to the Leased Premises and Tenant’s use thereof and
for compliance therewith, and Tenant shall execute such documents promptly upon
Landlord’s request.  No such action by
Landlord and no attempt made by Landlord to mitigate damages under any Law
shall constitute a waiver of any of Tenant’s obligations under this
Section 4.4.

 

(v)           Tenant covenants, at its own cost and
expense, to take any and all steps necessary to remain in compliance with all
requirements of the methane gas ordinance zone established by the City of Santa
Fe Springs, including the City’s requirement to sample the five (5) methane gas
monitoring wells on the Leased Premises each quarter, and to annually provide
summary reports of such sampling to the City of Santa Fe Springs Fire
Department.  Tenant shall deliver a copy
of the quarterly sampling results to Landlord within 30 days of receiving such
sample results, and a copy of the annual report to Landlord within 30 days of
submitting such report to the City of Santa Fe Springs Fire Department.  Tenant agrees to promptly provide Landlord
with a copy of any notice it receives from any party, including any
Authorities, regarding the Santa Fe Springs methane gas ordinance or the 5
methane gas monitoring wells on the Leased Premises.

 

(vi)          Tenant’s obligations and liabilities
under this Section 4.4(c) shall survive the expiration or earlier termination
of this Lease.

 

(d)           (i) Tenant
shall indemnify, defend, and hold harmless Landlord, and its officers,
directors, beneficiaries, shareholders, partners, agents, and employees from
all fines, suits, procedures, claims, and actions of every kind, and all costs
associated therewith (including attorneys, and consultants’ fees) arising out
of or in any way connected with any deposit, spill, discharge, or other release
of Hazardous Substances that occurs during the term of this Lease, at or from
the Leased Premises, or which arises at any time from Tenant’s use or occupancy
of the Leased Premises, or from Tenant’s failure to provide all information,
make all submissions, and take all steps required by all Authorities under the
Laws and all other environmental laws, except to the extent caused by Landlord
or its agents.

 

4

 

(ii)           Tenant’s obligations and liabilities
under this Section 4.4(d) shall survive the expiration or earlier termination
of this Lease.

 

(e)           Landlord
agrees to promptly provide Tenant with a copy of any notice it receives from
any party, including any Authorities, regarding the Santa Fe Springs methane
gas ordinance or the 5 methane gas monitoring wells on the Leased Premises.

 

ARTICLE 5

 

Taxes
and Assessments

 

Section 5.1. 
Tenant shall pay all real estate and personal property taxes,
assessments, special assessments, water and sewer charges, transit taxes or
charges, transfer taxes, license and permit fees, vault fees and charges,
public utility charges, conduit franchise charges, and all other taxes and
charges of every kind and nature whatsoever, whether of the same kind or
character as the foregoing or otherwise and howsoever designated, including,
without limitation, sales and use and occupancy taxes, together with all
interest and penalties thereon, ordinary and extraordinary, foreseen and
unforeseen, general and special, heretofore, now or hereafter levied or imposed
upon the Leased Premises or the rents and income thereof, or arising from the
use, occupancy, operation and possession of the Leased Premises or from the
execution of, or exercise of, any right under or with respect to this Lease,
and whether levied or assessed by any federal, state county, town, village,
school district, municipality, special taxing district or otherwise (all of
which are sometimes herein referred to collectively as “Impositions” and
individually as “Imposition”). 
Landlord and Tenant acknowledge that Proposition 13 was adopted by the
voters of the State of California in 1978 to limit increases in real estate taxes
by limiting reassessments to events such as changes in ownership.  The parties hereby confirm and agree that
“Impositions” for purposes of this Lease shall also include, without
limitation, increases in real estate taxes resulting from reassessments based
on changes in ownership of the Leased Premises (as “change in ownership” is
defined in California Revenue and Taxation Code Sections 60 through 62), as
well as taxes, assessments, fees, levies and charges that may be imposed by
governmental bodies for services, including, but not limited to, fire
protection, street, sidewalk and road maintenance, refuse removal and other
governmental services because of the limitation on increases in real estate
taxes under Proposition 13. 
Notwithstanding the above, the amount of any increases in real estate
taxes resulting from reassessments based on changes in ownership of the Leased
Premises that are to be included in the Impositions shall be limited to 1 time
during the initial term of this Lease, and shall be equal to 50% of the
increase over the last yearly real estate taxes for the Leased Premises.

 

Except as provided in Section 5.2, Tenant shall
pay such Impositions not later than the day before the last day on which they
may be paid without penalty or interest (or on such earlier date as may be
required under the provisions of any Mortgage (as defined in Article 22)
provided adequate notice of such earlier payment date in the Mortgage is timely
provided to Tenant).

 

Section 5.2. 
Landlord, if Landlord is required to fund a tax escrow under its
Mortgage, may require Tenant to pay to Landlord, on the 1st day of each and
every calendar month during the term of this Lease, a sum equal to 1/12th of
the annual real estate taxes and

 

5

 

assessments levied
and assessed against the Leased Premises for each then current or ensuing
fiscal or calendar year, as the case my be, so that at least 30 days prior to
the date each installment of real estate taxes or assessments shall become due
or payable Tenant shall have deposited with Landlord a sum sufficient to pay
the same.  Landlord shall deposit such
sums with the holder of the Mortgage if and as required by said Mortgage and
provide Tenant with notice of such deposits. 
In the event that the amount of the real estate taxes or assessments
shall not have been fixed at the time when any such monthly deposit is required
to be made, Tenant shall make such deposit based upon the amount of the real
estate taxes and assessments levied or assessed for the immediately preceding
fiscal or calendar year, as the case may be, subject to adjustment as and when
the amount of such real estate taxes or assessments are ascertained.  Landlord agrees to apply to the payment of
real estate taxes and assessments, in the months during which such taxes and
assessments become due and payable in each year.  If the total deposits made by Tenant for the prior year is in
excess of the actual real estate taxes or assessments paid by Landlord, then
Landlord shall apply such overpayment against any rent due or to become due
hereunder, provided that if the term expires prior to the determination of such
overpayment, Landlord shall refund such overpayment to Tenant after fist
deducting the amount of any rent due hereunder.  Likewise, Tenant shall pay to Landlord within 10 days after
demand, any underpayment of real estate taxes or assessments with respect to
the prior year, whether or not the Lease has terminated prior to receipt by
Tenant of such demand, it being understood that this clause shall survive the
expiration of this Lease.

 

Section 5.3. 
The certificate, advice or bill of the appropriate official designated
by law to make or issue the same or to receive payment of any Imposition, of
nonpayment of such Imposition shall be prima facie evidence that such
Imposition is due and unpaid at the time of the making or issuance of such
certificate, advice or bill, except to the extent that Tenant has receipted
bills evidencing the payment of such Impositions.

 

Section 5.4. 
If any assessment is payable, at the option of the taxpayer, in
installments, Tenant may pay it in installments as they respectively become
due.  However, if the holder of any
Mortgage shall request that the assessment be paid in its entirety, without
installments, or if prior to such request, installment payments had been
arranged and the holder of such Mortgage shall request that all of the unpaid
installments be paid at once, Tenant shall pay the entire assessment or all of
the unpaid installments thereof, as the case may be, promptly after such
request.

 

Section 5.5. 
Impositions, whether or not a lien upon the Leased Premises, shall be
apportioned between Landlord and Tenant upon any termination of this Lease as
of the date of termination.

 

Section 5.6. 
(a) Tenant, at Tenant’s expense, may in good faith contest any
Impositions in any manner permitted by law.

 

(b)           Landlord
reserves the right (at its expense) to contest any and all Impositions which
apply to any period following the term of this Lease.

 

(c)           Landlord
and Tenant agree to reasonably cooperate with the other party at the requesting
party’s expense with respect to rights of the respective parties to contest

 

6

 

Impositions as set forth in this Section, provided that the
nonrequesting party shall not be required to execute any documents unless the
nonrequesting party is reasonably satisfied that the facts set forth in such
documents or pleadings is accurate.

 

(d)           Tenant
and Landlord shall indemnify, defend and hold harmless the other party from and
against any liability, damage or expense (including, without limitation,
attorneys, fees) arising from or relating to their respective exercise of any
right under this Section 5.6. 
However, the foregoing shall in no way be deemed to limit or reduce the
obligations of Tenant otherwise provided in this Lease (including, without
limitation, the payment of any and all Impositions in accordance with the
provisions of this Lease).

 

Section 5.7. 
Tenant shall not be obligated to pay any franchise, corporate, estate,
inheritance, succession tax or capital levy of Landlord or any income, profits
or revenue tax upon the income of Landlord. 
However, if (a) a tax or excise is levied upon the rent reserved hereunder
in lieu of or as a substitute in whole or in part for Impositions, or (b) a tax
or excise is levied upon the rent reserved hereunder other than of the nature
specified in the first sentence of this Section 5.7, which results in a
reduction of the Fixed Net Rent retained by Landlord after payment of such tax
to an amount less than the Fixed Net Rent which otherwise would have been
retained by Landlord, Tenant, on demand, shall pay such tax or excise or
reimburse Landlord therefor.

 

Section 5.8. 
In respect of any payments of Impositions made by Tenant directly to the
taxing authority, Tenant, not later than the last day on which each Imposition
may be paid without penalty or interest, shall furnish to Landlord reasonably
satisfactory evidence of payment thereof and, if required under any Mortgage,
to the holder of such Mortgage.

 

ARTICLE 6

 

Compliance
With Laws

 

Section 6.1. 
Tenant, at Tenant’s expense, shall duly comply in all material respects
with all laws and ordinances and the orders, rules, regulations and
requirements of federal, state and municipal governments and departments
thereof, and the orders, rules, regulations and requirements of the applicable
Board of Fire Underwriters, if any, or of any other Board now or hereafter
constituted exercising similar functions, as the case may be, and the
requirements of the insurance carriers issuing any policy required to be
carried by Tenant under this Lease, now or hereafter applicable to the Leased
Premises including without limitation, any matter pertaining to the
environmental condition of the Leased Premises and other property which may be
affected thereby, and to any change, alteration and improvement thereat, and
whether or not such compliance shall require structural repairs, additions,
changes or alterations.  However, Tenant
shall indemnify and hold Landlord harmless from and against any loss, cost,
expense, liability or obligation by reason of any failure by Tenant to so
comply whether or not material.

 

7

 

ARTICLE 7

 

Assignment
and Subletting

 

Section 7.1. 
Tenant, by operation of law or otherwise, (whether voluntarily or
involuntarily) shall not assign, mortgage or encumber this Lease or sublet the
Leased Premises or any part thereof without Landlord’s prior written consent.

 

Section 7.2. 
(a) In the event Tenant desires Landlord’s consent to an assignment
or subletting of all or any part of the Leased Premises, Tenant by notice in
writing shall (i) notify Landlord of the name of the proposed assignee or
subtenant and furnish to the Landlord such information as to the proposed
assignee’s or subtenant’s financial responsibility and standing as Landlord may
require, (ii) deliver to Landlord an executed copy of the proposed
assignment or sublease, as Landlord may require, and (iii) offer to vacate
the Leased Premises and to surrender the same to Landlord as of the date (the “Surrender
Date”) specified in said offer which shall be the last day of any
calendar month during the term hereof, provided, however, that the Surrender
Date shall not be earlier than the date occurring 120 days after the receipt of
such notice from Tenant.  If Landlord
accepts such offer, then Tenant shall surrender to Landlord, effective as of
the Surrender Date (but not earlier than 120 days from the date Landlord
accepts such offer), all Tenant’s right, title and interest in and to the
entire Leased Premises.  If the entire
Leased Premises be so surrendered by Tenant, then (x) if the offer which gave
rise to such surrender was given prior to the second anniversary of the
Commencement Date the unapplied portion of the Security Deposit set forth in
Article 30 shall be returned to Tenant, and (y) this Lease shall be
canceled and terminated as of the Surrender Date with the same force and effect
as if the Surrender Date were the date hereinabove specified for the expiration
of the final term of this Lease.

 

(b)           In
the event Landlord does not accept such offer of Tenant referred to in
Section 7.2(a), Landlord shall not unreasonably withhold or delay its
consent to any such proposed assignment or subletting, provided that the
proposed assignee or subtenant is: 
(i) of a financial standing reasonably satisfactory to Landlord or
reasonably similar to that of Tenant (taking into account Tenant’s Security
Deposit and Guarantor) and in this regard, Tenant shall furnish Landlord with
such information as Landlord shall require as to the proposed assignee’s or
subtenant’s financial responsibility and standing, (ii) is engaged in a
business reasonably satisfactory to Landlord or reasonably similar to that of
Tenant, and (iii) will use the Leased Premises in a manner reasonably
satisfactory to Landlord or reasonably similar to that of Tenant.  Tenant shall reimburse Landlord for any
reasonable expenses that may be incurred by Landlord in connection with the
proposed assignment or sublease, including without limitation the reasonable
costs of making investigations as to the acceptability of a proposed assignee
or subtenant and reasonable legal expenses incurred in connection with the
granting of any requested consent to the assignment or sublease, and if
Landlord withholds consent based upon any restriction by the Mortgage (if any)
or any failure to consent by the holder thereof, if required, such withholding
shall be deemed reasonable.

 

(c)           Notwithstanding
the above, Tenant shall not be required to vacate the Leased Premises and to
surrender the same to Landlord (as provided in Section 7.2(a)(iii) above), if
Tenant is proposing to sublet or assign the Leased Premises, or any portion
thereof, to a wholly

 

 

8

 

owned corporation, partnership or other legal entity or affiliate,
subsidiary or parent of Tenant provided that: 
(i) Tenant is not in default under this Lease; and (ii) Tenant fulfills
all the other requirements of this Section 7 regarding a proposed assignment or
sublet of the Leased Premises, including obtaining Landlord’s consent.  As used herein:  (a) “parent” shall mean a company which owns a majority of
Tenant’s voting equity; (b) “subsidiary” shall mean an entity wholly owned by
Tenant or at least fifty-one percent (51%) of whose voting equity is owned by
Tenant; and (c) “affiliate” shall mean an entity controlled, controlling or
under common control with Tenant. 
Notwithstanding the foregoing, sale of the shares of equity of any
affiliate or subsidiary to which this Lease has been assigned or transferred
other than to another parent, subsidiary or affiliate of the original Tenant
named hereunder shall be deemed to be an assignment requiring Tenant to offer
to vacate the Leased Premises and to surrender the same to Landlord (as
provided in Section 7.2(a)(iii) above).

 

Section 7.3. 
An assignment, transfer or issuance of a controlling interest in the
shares of stock of any corporate Tenant, or of any interest (beneficial or
otherwise), in any other entity (non-corporate) Tenant shall be deemed an
assignment subject to and prohibited by the provisions of this Article, except
that a transfer by devolution upon death shall not be deemed to be a prohibited
assignment unless its effect is to transfer control of such corporation or
other entity to a person or persons who did not have control at the time such
Tenant acquired Tenant’s leasehold estate under this Lease.  In the event any corporation or other entity
shall become the Tenant, such Tenant shall, within ten (10) days after
Landlord’s demand from time to time during the term of this Lease, furnish
Landlord with a sworn statement or other proof satisfactory to Landlord setting
forth the identity of each of its stockholders or other beneficial owners and
the respective ownership interests of each of them.  For purposes hereof, “control” or “controlling interest” shall
mean ownership of fifty percent (50%) or more of (a) the voting stock of
any corporate Tenant, and (b) the partnership or other ownership interest
of any other entity tenant.

 

Section 7.4. 
In any event, and notwithstanding Landlord’s consent thereto, no
assignment of this Lease or subletting of the Leased Premises shall be valid or
binding upon Landlord:

 

(a)           until
the following instruments, duly executed and acknowledged, in form for
recording, and otherwise satisfactory to Landlord, shall have been delivered to
Landlord:

 

(i)            a counterpart of the proposed
assignment or sublease; and

 

(ii)           in the case of an assignment, an
agreement under which the assignee assumes and agrees to perform all of the
terms, covenants and conditions of this Lease on Tenant’s part to be performed;
or

 

(b)           if
at the time of the assignment or sublease Tenant is in Default (as defined in
Article 19).

 

Section 7.5. 
Notwithstanding any assignment of this Lease, Tenant shall continue to
be liable as principal and not as guarantor under this Lease and shall be
obligated to perform all of the terms, covenants and conditions thereof.

 

9

 

Section 7.6. 
The consent of Landlord, when and if given, shall be for that instance
alone and the consent of Landlord shall be required for, and the provisions of
this Article shall apply, to each subsequent assignment or sublease.

 

ARTICLE 8

 

Waiver
of Jury Trial

 

Section 8.1. 
To the extent permitted by law, Landlord and Tenant hereby waive trial
by jury in any action or proceeding or counterclaim brought by either of them
against the other on matters which are connected with this Lease or any of its
provisions, or Tenant’s use and occupancy of the Leased Premises.

 

ARTICLE 9

 

Insurance

 

Section 9.1. 
(a)  Tenant, at Tenant’s expense, shall maintain in force and
effect:

 

(i)            All risk insurance covering any
buildings and improvements and building equipment now or hereafter on the land
which is included as part of the Leased Premises and all personal property
appertaining thereto and Tenant Trade Fixtures, as defined in Section 29.9
(including articles removed from the Leased Premises for repair) against loss
or damage by fire and such risks as are customarily included in all risk
coverage policies covering property in the community in which the Leased
Premises are situated (including earthquake coverage) in an amount equal to
100% of the full replacement value of said buildings, improvements, building
equipment and personal property (but in no event less than (1) $2,000,000
for buildings and improvements, and (2) $2,000,000 for equipment and
personal property) with an inflation guard endorsement, or the amount required
under any Mortgage to which this Lease is subject, whichever is greater.  Notwithstanding the above, Tenant may
self-insure for earthquake insurance coverage specified above.  If Tenant self insures as described herein,
then, for purposes of Article 10 below, any loss of damage to any buildings and
improvements and building equipment and all personal property appertaining
thereto and Tenant Trade Fixtures, or any additions or improvements thereto or
the contents thereof that would have been covered by the earthquake insurance
required to be carried hereunder shall be deemed covered by and recoverable by
Tenant under valid and collective policies of insurance;

 

(ii)           Rent insurance in a face amount not
less than the amount of the Fixed Net Rent, Impositions and Additional Rent
under this Lease against loss resulting from any of the risks and hazards
required to be covered by insurance under all of the other provisions of this
Section;

 

(iii)          Intentionally Omitted;

 

(iv)          Insurance against loss or damage by
explosion of steam boiler, pressure vessels or similar apparatus with such
limits as from time to time may be

 

10

 

reasonably required by Landlord but not less than
$1,000,000 per occurrence and; boiler, machinery, rental income coverage equal
to Fixed Net Rent, Impositions, and Additional Rent for one year;

 

(v)           Such other and additional insurance
and in such amounts as at the time customarily is carried with respect to
buildings, improvements and building equipment and personal property similar in
character, general location, use and occupancy to the buildings, improvements
and building equipment and personal property then on the land of and included
in the Leased Premises; and

 

(vi)          Such other or additional insurance and
in such amounts as may be required under any Mortgage to which this Lease is
subject.

 

(b)           The
words “full
replacement value,” as used in Sections 9.1(a)(i) and
9.1(a)(iii), shall mean the cost of actual replacement without depreciation
(excluding foundations, footings and excavation costs below the lowest basement
floor, and cost of underground flues, pipes or drains) and the full replacement
value shall be determined from time to time, at Landlord’s request, not more
frequently than once every three years, by one of the insurers or by an
architect, engineer, contractor or appraiser selected by Tenant, at Tenant’s
expense, and approved by Landlord.  No
omission by Landlord to request such determination shall relieve Tenant of any
of Tenant’s obligations under this Section.

 

(c)           Tenant
shall not carry any separate insurance of the same character required under
this Section unless Landlord and the holder of any Mortgage shall be named as
an insured with loss payable as herein provided.  Tenant shall promptly notify Landlord of the issuance of any such
separate insurance and shall deliver the policies and certificates as provided
in Section 9.5.

 

Section 9.2. 
Tenant, at Tenant’s expense, shall maintain for the mutual benefit of
Landlord and Tenant, comprehensive general public liability insurance
(including an endorsement for (a) personal injury coverage; (b) broad form hold
harmless clause; (c) notice and knowledge of occurrence clause; (d)
unintentional errors and omissions clause; and also including, without
limitation, coverage for explosion and, (if the Leased Premises include any
elevator, elevator liability and elevator collision) against claims for
personal injury, death or property damage occurring in, on or about the Leased
Premises (including, without limitation, personal injury, death or property
damage resulting directly or indirectly from any change, alteration, improvement
or repair) with such limits as Landlord, from time to time, reasonably may
require but not less than $1,000,000 in the event of death or personal injury
to any one person and not less than $2,000,000 in the event of death or
personal injury to any number of persons in one accident and of not less than
$1,000,000 for property damage.  Such
coverage may be effected by an umbrella policy above the basic coverage
provided by comprehensive general public liability insurance coverage.

 

Section 9.3. 
Subject to the requirements of any Mortgage, any dispute between
Landlord and Tenant as to the amount or kind of insurance to be carried under
Section 9.1, or the limits of insurance under Section 9.2, shall be
determined by arbitration under the provisions of Article 13.

 

11

 

Section 9.4. 
The insurance required under this Article shall be effected by valid and
enforceable policies issued by insurance companies of recognized responsibility
authorized and licensed to do business in the State in which the Leased
Premises are situated and which have received at least an A rating from A.M.
Best & Co. at the time such policies are issued.

 

Section 9.5. 
Upon the commencement date of this Lease and thereafter, not less than
30 days prior to the expiration date of the expiring policies theretofore
furnished pursuant to this Article, originals of such policies and renewal
policies, as the case may be, shall be delivered by Tenant to Landlord, with
proof of payment reasonably satisfactory to Landlord of the respective premiums
thereunder.  If the Leased Premises are
covered by a Mortgage, originals of the policies for the insurance required
under Sections 9.1(a)(i), (iii), (iv), (v) and (vi), shall be delivered to
Landlord for transmittal to the holder of such Mortgage, and, if obtainable,
duplicate originals thereof, and if not obtainable, certificates thereof shall
be delivered to Landlord.

 

Section 9.6. 
All policies of insurance required under Sections 9.1 and 9.2 shall
name Tenant as the insured and Landlord and a holder of any Mortgage as a loss
payee or an additional insured, as their interests may appear.  Each policy of insurance required under this
Article, to the extent obtainable, shall (a) contain an agreement by the
insurer that it will not be canceled or modified without at least 30 days’
prior written notice sent by registered or certified mail, return receipt
requested, to Landlord and (except for rent insurance) to the holder of any
Mortgage; and (b) provide that no act or omission of Tenant or any subtenant
shall result in a forfeiture of such insurance.

 

Section 9.7. 
The loss, if any, under policies of insurance required under
Section 9.1 shall be adjusted by and paid to Landlord (subject to the
provisions of Section 10.3 and 10.4) if not required to be paid to the
holder of any Mortgage.

 

Section 9.8. 
Upon termination of this Lease, the premiums on all transferable
insurance policies provided for in this Article, then in force, shall be
apportioned between Landlord and Tenant as of the date of termination, but only
to the extent such insurance policies are actually transferred to Landlord and
provided that Landlord shall not be required to make any apportionment payment
to Tenant if Tenant is then in default under this Lease.

 

Section 9.9. 
If any liability claim shall be asserted against Tenant or the Leased
Premises, Tenant, promptly after having knowledge thereof, will notify Landlord
of such claim.

 

ARTICLE 10

 

Damage
and Destruction

 

Section 10.1. 
In case of damage to or total or partial destruction, other than by
reason of condemnation proceedings (collectively a “Casualty”) of any building,
improvements or building equipment now or hereafter on the land of and included
in the Leased Premises, and such Casualty renders all or a substantial portion
of the Leased Premises untenantable, and in Landlord’s reasonable opinion it
would not be economically feasible to repair or restore the Leased Premises,
then Landlord may terminate this Lease upon written notice to the Tenant within
90 days after the Casualty.  In
addition, Landlord, by notice to Tenant within 90 days after

 

12

 

the date of the Casualty,
shall have the right to terminate this Lease if:  (1)  the Leased Premises have been materially damaged and
there is less than 2 years of the Term remaining on the date of the Casualty;
(2) any Mortgage requires that the insurance proceeds be applied to the
payment of the mortgage debt.

 

Section 10.2. 
If this Lease is not terminated, Landlord shall proceed with reasonable
promptness to repair and restore the Leased Premises, subject to reasonable
delays for insurance adjustments and delays caused by matters beyond Landlord’s
reasonable control, and also subject to zoning laws and building codes then in
effect. Landlord shall have no liability to Tenant, and Tenant shall not be
entitled to terminate this Lease (except as hereinafter provided) if such
repairs and restoration are not in fact completed within the time period
estimated by Landlord.  However, if the
Leased Premises are not repaired or restored within eighteen (18) months after
the date of the Casualty (“Outside Completion Date”), then either
party may terminate this Lease by written notice to the other party not later
than thirty (30) days after the expiration of the Outside Completion Date, but
prior to substantial completion of repair or restoration.  Land lord and Tenant agree that the Outside
Completion Date shall be postponed by the number of days the repair or
restructuring work is delayed due to force majeur and shall take into effect
any Tenant Delays.  As used herein “Tenant
Delay” shall mean any delays resulting from the acts or omissions of
Tenant, its employees, agents and contractors or their respective contractors
or vendors, including, without limitation, and Tenant’s failure to comply with
any of its obligations under this Lease.

 

Section 10.3. 
Whether or not this Lease is terminated as provided herein, upon notice
from Landlord, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Tenant’s insurance
required under Section 9.1(a); provided if the estimated cost to repair the
Leased Premises exceeds the amount of insurance proceeds received by Landlord
from Tenant’s insurance carrier, the excess cost of such repairs shall be paid
by Tenant to Landlord prior to Landlord’s commencement of repairs.  Within 15 days of demand, Tenant shall also
pay Landlord for any additional excess costs that are determined during the
performance of the repairs.  No repair
or restoration work shall be undertaken by Landlord until such deficiency shall
have been paid to Landlord or until Tenant shall have delivered to Landlord a
surety bond in form and amount issued by a surety company of recognized
responsibility or such other security, as may be satisfactory to Landlord (for
the amount of the deficiency only) conditioned upon and securing the completion
of and full payment for the restoration and repair work.  Upon the expiration or sooner termination of
this Lease pursuant to this Article, all insurance proceeds then held by
Landlord and all insurance proceeds payable by insurance carriers but still in
the hands of such carriers shall become the property of Landlord.  However, the foregoing shall in no way limit
or reduce Tenant’s obligations on account of any deficiency with respect the
amount of such proceeds required to so restore, replace, repair or alter the
same.

 

Section 10.4. 
Any net proceeds of insurance under the policy required under
Section 9.1(a)(ii) shall be held by Landlord and applied by Landlord
against payment of the Fixed Net Rent and Additional Rent as they become due
(any deficiency to be paid by Tenant) until the repair and restoration work is
completed and fully paid for, at which time the balance of such proceeds, if
any, remaining after such application shall be paid to Tenant, provided
Landlord has not given notice of default under this Lease and the applicable
grace period, if any,

 

13

 

expired and provided
further that such excess shall be paid to Tenant if and when such default has
been cured within such applicable grace period.

 

Section 10.5. 
Notwithstanding anything to the contrary herein set forth, (a) Landlord
shall have no duty pursuant to this Article 10 to expend for any repair or
restoration amounts in excess of insurance proceeds paid to Landlord and
available for repair or restoration; (b) Tenant shall not have the right to
terminate this Lease pursuant to this Article 10 if the Casualty was caused by
the act or neglect of Tenant or its agents, employees or invitees; and (c)  Landlord shall not be liable for any
inconvenience to Tenant, or injury to Tenant’s business resulting in any way
from the Casualty or the repair thereof.

 

Section 10.6. 
There shall be no abatement or reduction of Fixed Net Rent or Additional
Rent payable by Tenant under this Lease nor any diminution of any of Tenant’s
obligations under this Lease by reason of any such damage or destruction, nor
shall Tenant be entitled to surrender possession of the Leased Premises by
reason thereof unless this Lease is terminated pursuant to Section 10.1;
and Tenant hereby waives all rights to such relief now or hereafter conferred
upon it by any law now in existence or hereafter enacted.  Further, the parties hereby waive the
provision of California Civil Code Section 1932, Subsection 2, and Section
1933, Subsection 4 (and any successor statutes thereof permitting the parties
to terminate this Lease as a result of any damage or destruction).

 

ARTICLE 11

 

Changes
and Alterations

 

Section 11.1. 
Tenant shall not make any single change, alteration or improvement on
the Leased Premises (a) involving an aggregate cost of more than $25,000 (as
estimated by a reputable architect selected by Tenant at its expense) or (b)
if, regardless of the cost, such change, alteration or improvement will
materially lessen the value of the Leased Premises or will overtax or affect the
structural strength of any building or improvement on the land of and included
in the Leased Premises, without first obtaining the consent of Landlord (which
will not be unreasonably withheld in the case of such alteration or improvement
to which clause (b) does not apply) thereto in each case, and the consent of
the holder of any Mortgage, if such consent is required under the particular
Mortgage; and Tenant shall not demolish any building or improvement on the land
of and included in the Leased Premises without such consents.  The consent of Landlord and such holder of
the Mortgage, if given, shall be for that instance alone, and such consent
shall be required for each and every further change, alteration, improvement or
demolition.  Notwithstanding the above,
Landlord’s consent shall not be required for any reconfiguration of Tenant’s
Trade Fixtures by Tenant that has no effect on the structure of any building or
improvement or any building system, wall or ceiling.

 

Section 11.2. 
Where Landlord’s consent has been obtained, no change, alteration or
improvement shall be made until:

 

(a)           detailed
plans and specifications and the cost estimate therefor (prepared by the
reputable architect selected by Tenant) shall have been delivered to and
reasonably approved by Landlord;

 

14

 

(b)           Tenant
shall have delivered to Landlord security, reasonably satisfactory to Landlord,
or a surety bond issued by a surety company of recognized responsibility,
satisfactory to Landlord in an amount at least equal to 110% of the estimated
cost of such work (but less the net amount for which a casualty insurance award
has been made and actually paid to Landlord) conditioned upon and securing the
completion of and payment for such work, and

 

(c)           Tenant
shall have procured and paid for all permits and authorizations from all
governmental authorities having jurisdiction thereover, and shall have
delivered copies thereof to Landlord.

 

If Landlord shall dispute
the estimated cost of the work or the form and content of the surety bond or
the responsibility of the surety company or the value of the security referred
to in this Section, such dispute shall be determined by arbitration in
accordance with the provisions of Article 13.

 

At all times when the
work is in progress, Tenant shall, at Tenant’s sole cost and expense, maintain,
or cause to be maintained, workmen’s compensation insurance covering all
persons employed in connection with the work and with respect to whom death or
personal injury claims could be asserted against Landlord, Tenant or the Leased
Premises; and shall deliver to Landlord with proof of payment of the premium
therefor comprehensive general liability insurance for the mutual benefit of
Tenant and Landlord expressly covering the additional hazards due to the work,
with limits of not less than $1,000,000 in the event of death or personal
injury to any one person and not less than $2,000,000 in the event of death or
personal injury to any number of persons in one accident and of not less than
$1,000,000 for property damage.  The
policy of comprehensive general liability insurance, insofar as it relates to
property damage, shall not contain any restrictive clauses relating to
excavating, sheet piling, moving, shoring, underpinning, removal and rebuilding
of structural supports or subsurface work or any similar restrictive
clauses.  The comprehensive general
liability insurance provided for in this Section 11.2 may be effected by
an appropriate endorsement, if obtainable, upon the insurance required to be
maintained by Tenant pursuant to Section 9.2.  All insurance of the character in this subdivision described
shall be issued by companies of the same character as described in Section 9.4.

 

Section 11.3. 
All permitted changes, alterations and improvements shall be prosecuted
diligently and performed in a good and workmanlike manner in accordance with
all applicable laws, ordinances and regulations, and the plans and
specifications approved by Landlord. 
All of the materials used shall be new and free of all liens,
encumbrances, financing statements, chattel mortgages, conditional bills of
sale and title retention or security agreements.  Tenant shall obtain, keep in effect, and furnish to Landlord
copies of all permits, licenses, consents and approvals required by any
governmental or municipal body having jurisdiction over the Leased Premises in
connection with any work undertaken by or on behalf of Tenant.

 

Section 11.4. 
This Lease shall not be affected or suspended, nor shall the purposes of
this Lease be deemed frustrated, nor shall the Fixed Net Rent or Additional
Rent or other charges payable by Tenant be abated, suspended, reduced or
diminished by reason of Tenant being prevented from or delayed in building by
any present or future laws, rules, requirements, orders, directions, ordinances
or regulations of the United States of America or of

 

15

 

the City, County or State
governmental or lawful authority whatsoever, or by priorities, rationing or
curtailment of labor or materials, or strikes or by war or by any matter or
thing resulting therefrom, or by any other cause or causes whether or not
beyond the control of Tenant.

 

Section 11.5. 
In addition to complying with all other provisions hereof in connection
with any work undertaken by or on behalf of Tenant, Tenant shall (i) furnish
Landlord a contract made with a contractor satisfactory to Landlord providing
for the completion of all work, labor and materials necessary to complete the
permitted changes, alterations and improvements in accordance with the plans
approved by Landlord, (ii) use its best efforts to have such contract be for a
fixed sum and in assignable form, and (iii) provide Landlord with an assignment
of such contract in form satisfactory to Landlord, which shall be duly executed
and acknowledged by Tenant and by its terms shall be effective upon any
termination of this Lease or upon Landlord’s reentry upon the Leased Premises
pursuant to this Lease prior to the complete performance of such contract.  Such assignment shall also provide, that
Landlord shall be entitled to the benefit of all payments made on account of
said contract including payments made prior to the effective date of such
assignment.

 

Section 11.6. 
Landlord may, upon reasonable notice to Tenant, at any time and from
time to time during usual business hours and without unreasonably interfering
with Tenant’s business or any construction in progress (except without notice
and at anytime in case of emergency), in addition to any other right of access
given to Landlord pursuant to the terms of this Lease, at Landlord’s expense,
enter upon the Leased Premises with one or more engineers and/or architects of
Landlord’s selection (“Landlord’s Architect”) to determine the
course and degree of completion of the permitted changes, alterations and
improvements and its compliance with the plans approved by Landlord and the
terms and conditions of this Lease.

 

Section 11.7. 
Anything hereinabove contained to the contrary notwithstanding, nothing
contained herein shall be construed to be a consent by Landlord to the placing
of any lien against the fee interest in the Leased Premises or land and/or
building.

 

Section 11.8. 
Upon completion of the permitted changes, alterations and improvements,
the Tenant shall deliver to Landlord professional as built plans of same,
sealed by a licensed architect.

 

Section 11.9. 
Tenant shall pay to Landlord, within ten (10) days after demand, all
reasonable out of pocket charges or expenses Landlord may incur in reviewing
plans, permits, contracts or similar items or inspecting the work in progress
and as completed, including reasonable fees of architects, engineers and
attorneys, regardless of whether Landlord’s consent to any proposed work is
obtained.

 

ARTICLE 12

 

Surrender
of Premises; Ownership of Improvement

 

Section 12.1. 
Any building and improvement hereafter erected on the land which is
included as part of the Leased Premises including building equipment and
personal property installed thereon by Tenant, and any replacements or
additions to and changes and alterations of

 

16

 

any of the foregoing made or installed by Tenant, but excluding
Tenant’s Trade Fixtures, shall become the property of Landlord upon completion
or installation, without payment or offset and shall be deemed included in the
Leased Premises subject to the terms, covenants and conditions of this Lease
and shall be surrendered in accordance with the provisions of Section 12.2.

 

Section 12.2. 
Upon the expiration or sooner termination of this Lease, Tenant shall
peaceably and quietly surrender the Leased Premises in good order, repair and
condition, reasonable wear and tear excepted.

 

Section 12.3. 
Tenant Trade Fixtures, as defined in Section 29.9, shall remain the
property of Tenant and may be removed by Tenant upon any termination of this
Lease or at any time or times prior thereto provided that Tenant repairs any
damage caused by such removal.  If upon
any termination of this Lease, Tenant Trade Fixtures are not removed, Landlord
may store them at Tenant’s expense or Landlord, at its election, may treat them
as abandoned, in which event they shall become the property of Landlord without
payment or offset.

 

Section 12.4. 
Tenant acknowledges that possession of the Leased Premises must be
surrendered to Landlord at the expiration or sooner termination of the term of
this Lease.  Tenant agrees to indemnify
and save Landlord harmless against all costs, claims, loss or liability
resulting from delay by Tenant in so surrendering the Leased Premises,
including, without limitation, any claims made by any succeeding tenant founded
on such delay.  Tenant agrees that if
possession of the Leased Premises is not surrendered to Landlord upon the date
of the expiration or sooner termination of the term of this Lease, then Tenant
shall pay to Landlord as liquidated damages for each month and for each portion
of any month during which Tenant holds over in the Leased Premises after the expiration
or sooner termination of the term of this Lease, a sum equal to one and
one-half (1-1/2) times the aggregate Fixed Net Rent and Additional Rent
which was payable under this Lease during the last month of the term
hereof.  Nothing herein contained shall
be deemed to permit Tenant to retain possession of the Leased Premises after
the expiration or sooner termination of the term of this Lease.  The aforesaid provisions of this Article
shall survive the expiration or sooner termination of the term of this Lease.

 

ARTICLE 13

 

Arbitration

 

Section 13.1. 
Wherever in this Lease it is provided that any question shall be
determined by arbitration as provided in this Article, such question shall be
settled and finally determined by arbitration in the city in which the Leased
Premises is located, as follows:

 

(a)           Landlord
and Tenant each shall appoint an arbitrator within ten days after either of
them shall have requested arbitration. 
If either Landlord or Tenant shall have failed to appoint an arbitrator
within such period of time and thereafter shall have failed to do so within a
period of five days after notice by the other party (who shall have appointed
an arbitrator) requesting the appointment of such arbitrator, then such
arbitrator which was selected shall appoint a second arbitrator.

 

17

 

(b)           The
two arbitrators appointed as above provided shall select a third arbitrator.

 

(c)           Each
arbitrator so selected shall have at least ten years experience in the subject
matter of the dispute, and no arbitrator shall be a person who is or has been
an employee of Landlord or Tenant during the five-year period immediately
preceding his appointment.

 

(d)           The
three arbitrators, selected as aforesaid, shall convene and commence hearings
within ten days after the appointment of the third arbitrator and shall proceed
to conclude such hearings within a reasonable time thereafter.  The decision of such arbitrators shall be in
writing and made within ten days after the final hearing unless such time is
extended by agreement of the parties to the arbitration; and the vote of the
majority of them shall be the decision of all and binding upon Landlord and
Tenant.  Duplicate original counterparts
of such decision shall be sent by the arbitrators to both Landlord and Tenant.

 

Section 13.2. 
The Arbitrators, in arriving at their decision, shall consider all
testimony and documentary evidence which may be presented at any hearing as
well as relevant facts and data which the arbitrators may discover by
investigation and inquiry outside of such hearings.  The parties to the arbitration shall have the right to be
represented by counsel and to cross-examine witnesses.  Landlord and Tenant shall each pay the fee
of the arbitrator appointed by it or on its behalf and the fee of its
attorney.  All other expenses of the
arbitration (including without limitation the fee of the third arbitrator)
shall be borne equally by Landlord and Tenant unless the arbitrators shall
decide upon a different allocation.

 

ARTICLE 14

 

Notices
and Certificates

 

Section 14.1. 
Any notice, statement, certificate, consent, approval, disapproval,
request or demand required or permitted to be given in this Lease shall be in
writing sent by registered or certified mail, return receipt requested by hand
or reputable overnight delivery service, addressed as the case may be, to
Landlord, and to Tenant at their respective addresses set forth above, or to
such other addresses as Landlord and Tenant shall designate in the manner herein
provided; and shall be deemed to have been given on the date, which is three
business days after it shall have been mailed as aforesaid.

 

At the same time, a copy
thereof, if sent to Landlord, shall be mailed to Altheimer & Gray, 10 S.
Wacker Drive, Chicago, IL 60606, Attention: 
David W. Schoenberg, Esq., and a copy thereof, if sent to Tenant,
shall be mailed to Holland & Knight, 131 South Dearborn Street, 30th
Floor, Chicago, IL  60603,
Attention:  Anne Schiave.  Either party may designate a different
attorney or different address, or both by notice mailed as aforesaid.

 

Section 14.2. 
Within fifteen days after request by Landlord, Tenant, from time to
time, and without charge, shall deliver to Landlord or to a person, firm,
corporation or entity, specified by Landlord, a duly executed and acknowledged
instrument certifying:

 

18

 

(a)           that
this Lease is unmodified and in full force and effect, or if there has been any
modification, that the same is in full force and effect, as modified, and
stating any such modification;

 

(b)           whether
Tenant knows of any then existing defenses by Tenant to the enforcement by
Landlord of the terms, covenants and conditions of this Lease and any
modification thereof, and, if so, specifying them;

 

(c)           the
dates to which Fixed Net Rent and Additional Rent have been paid;

 

(d)           statement
of any claims Tenant may have against Landlord; and

 

(e)           In
addition to all of the foregoing, and not in limitation thereof, Tenant shall
deliver to Landlord statements or the required information therefor which the
Landlord, as mortgagor, is required to furnish under any Mortgage to which this
Lease is subject, to the extent reasonably available to Tenant.

 

Section 14.3. 
Within fifteen days after request by Tenant, Landlord, from time to
time, and without charge, shall deliver to Tenant or to a person, firm,
corporation or entity, specified by Tenant, a duly executed and acknowledged
instrument certifying:

 

(a)           that
this Lease is unmodified and in full force and effect, or if there has been any
modification, that the same is in full force and effect, as modified, and
stating any such modification;

 

(b)           to
the best of Landlord’s knowledge, the dates to which Fixed Net Rent and
Additional Rent have been paid; and

 

(c)           statement
of any claims Landlord may have against Tenant.

 

ARTICLE 15

 

No
Waivers, Cumulative Remedies, etc.

 

Section 15.1. 
The specific remedies to which Landlord may resort under the provisions
of this Lease are cumulative and are not intended to be exclusive of any other
remedies or means of redress to which Landlord may be lawfully entitled in case
of any breach or threatened breach by Tenant of any of the terms, covenants and
conditions of this Lease.  The failure
of Landlord to insist upon the strict performance of any of the terms,
covenants and conditions of this Lease, or to exercise any right or remedy
herein contained, shall not be construed as a waiver or relinquishment for the
future of such term, covenant, condition, right or remedy.  A receipt by Landlord of Fixed Net Rent with
knowledge of the breach of any term, covenant or condition of this Lease shall
not be deemed a waiver of such breach. 
This Lease may not be changed or terminated orally.  In addition to the other remedies in this
Lease provided, Landlord shall be entitled to the restraint by injunction of
the violation or attempted or threatened violation of any of the terms,
covenants and conditions of this Lease or to a decree, in any court having
jurisdiction in the matter, compelling performance of any such terms, covenants
and conditions.

 

19

 

Section 15.2. 
No receipt of monies by Landlord from Tenant, after any re-entry or
after the cancellation or termination of this Lease in any lawful manner, shall
reinstate, continue or extend the term thereof, or affect any notice
theretofore given to Tenant, or operate as a waiver of the right of Landlord to
enforce the payment of any sums required to be paid by Tenant hereunder, or
operate as a waiver of the right of Landlord to recover possession of the
Leased Premises by proper action, proceeding or other remedy; and after the
service of notice to terminate this Lease, or after the commencement of any
action, proceeding or other remedy, Landlord may demand, receive and collect
any monies due, and apply them on account of Tenant’s obligations under this
Lease but without in any respect affecting such notice, action, proceeding or
remedy, except that if a money judgment is being sought in any such action or
proceeding, the amount of such judgment shall be reduced by such payment.

 

Section 15.3. 
If Tenant is in arrears in the payment of Fixed Net Rent or Additional
Rent, Tenant waives its right, if any, to designate the items in arrears
against which any payments made by Tenant are to be credited and Landlord may
apply any of such payments to any such items in arrears as Landlord, in its
sole discretion, shall determine, irrespective of any designation or request by
Tenant as to the items against which any such payments shall be credited.

 

Section 15.4. 
No payment by Tenant nor receipt by Landlord of a lesser amount than may
be required to be paid hereunder shall be deemed to be other than on account of
any such payment, nor shall any endorsement or statement on any check or any
letter accompanying any check tendered as payment be deemed an accord and
satisfaction and Landlord may accept such check or payment without prejudice to
Landlord’s right to recover the balance of such payment due or pursue any other
remedy in this Lease provided.

 

ARTICLE 16

 

Quiet
Enjoyment

 

Section 16.1. 
Tenant, subject to the terms of this Lease and to any Mortgage and other
matters to which this Lease may be subject, upon paying the Fixed Net Rent and
Additional Rent and performing the other terms, covenants and conditions of
this Lease, shall and may peaceably and quietly have, hold, occupy, possess and
enjoy the Leased Premises during the term of this Lease free of claims of
persons holding or claiming under or through Landlord.

 

ARTICLE 17

 

Landlord
May Cure Defaults

 

Section 17.1. 
If Tenant shall be in Default (as defined in Article 19), with
reasonable notice (except if an emergency exists), Landlord may do whatever is
necessary to cure such Default for the account and at the expense of Tenant
(including without limitation, Landlord’s attorneys’ fees) and the amount of
any out-of-pocket payment made or expense, reasonably incurred by Landlord for
such purpose shall be deemed Additional Rent and shall be

 

20

 

paid by Tenant to Landlord on demand or, at Landlord’s election, may be
added to any subsequent installment or installments of Fixed Net Rent.

 

ARTICLE 18

 

Indemnity

 

Section 18.1. 
Except to the extent caused by the negligence or willful misconduct of
Landlord, Tenant shall indemnify and save Landlord, its agents, employees,
directors and officers (collectively “Landlord’s Agents”) harmless against any
liability to and all claims by or on behalf of any person, firm, governmental
authority, corporation or entity for personal injury or property damage,
arising:

 

(a)           from
the use or management by Tenant of the Leased Premises, or from any work or
thing whatsoever done or omitted to be done thereat by Tenant, Tenant’s Agents
(as defined below), contractors, invitees, or patrons, or from any accident
thereat, and

 

(b)           from
any breach or default by Tenant of and under any of the terms, covenants and
conditions of this Lease; and shall indemnify and save Landlord and Landlord’s
Agents harmless against any liability to and all claims by and on behalf of any
person, firm, governmental authority, corporation or entity by reason of any
contest by Tenant authorized under Article 5 or Article 6.

 

Section 18.2. 
Tenant also shall indemnify and save Landlord and Landlord’s Agents
harmless against all out of pocket costs, reasonable counsel fees, expenses and
penalties incurred by Landlord and Landlord’s Agents in connection with any
such liability or claim described in Section 18.1 above.  If any action or proceeding shall be brought
against Landlord and/or Landlord’s Agents in connection with any such liability
or claim, Landlord shall notify Tenant thereof and Tenant shall defend such
action or proceeding, at Tenant’s expense, by counsel reasonably satisfactory
to Landlord or, at Landlord’s option, Landlord may retain its own counsel for
such defense and Tenant shall reimburse Landlord and Landlord’s Agents for the
reasonable expense incurred by Landlord and Landlord’s Agents in such regard.

 

Section 18.3. 
Except to the extent caused by the negligence or willful misconduct of
Tenant, its agents, employees, directors and officers (collectively “Tenant’s
Agents”), Landlord shall indemnify and save Tenant and Tenant’s
Agents harmless against any liability to and all claims by or on behalf of any
person, firm, governmental authority, corporation or entity for personal injury
or property damage, arising from any breach or default by Landlord of and under
any of the terms, covenants and conditions of this Lease.

 

Section 18.4. 
Landlord also shall indemnify and save Tenant and Tenant’s Agents
harmless against all out of pocket costs, reasonable counsel fees, expenses and
penalties incurred by Tenant or Tenant’s Agents in connection with any
liability or claim described in Section 18.3 above.  If any action or proceeding shall be brought against Tenant
and/or Tenant’s Agents in connection with any such liability or claim, Tenant
shall notify Landlord thereof and Landlord shall defend such action or
proceeding, at Landlord’s expense, by counsel reasonably satisfactory to Tenant
or, at Tenant’s option, Tenant may retain its own counsel for such defense and

 

21

 

Landlord shall reimburse Tenant and Tenant’s Agents for the reasonable
expense incurred by Tenant and Tenant’s Agents in such regard.

 

ARTICLE 19

 

Default

 

Section 19.1. 
Tenant shall be in default (“Default”) of this Lease if:

 

(a)           Tenant
fails to make payment of any Fixed Net Rent or Additional Rent or other sum due
Landlord on or before the date due and such failure continues for a period of
5 days after notice by Landlord to Tenant (or without notice if such
failure comes within the provisions of Section 19.2), or

 

(b)           Tenant
or any Guarantor files a petition in bankruptcy or insolvency or for
reorganization or arrangement or for the appointment of a receiver of all or a
portion of Tenant’s property, or

 

(c)           any
involuntary petition of the kind referred to in Section 19.1(b) shall be filed
against Tenant or any Guarantor and such petition shall not be vacated or
withdrawn within 90 days after the date of filing thereof, or

 

(d)           Tenant
or any Guarantor shall be adjudicated a bankrupt by any court, or

 

(e)           Tenant
or any Guarantor shall make an assignment for the benefit of creditors, or

 

(f)            a
receiver shall be appointed for the property of Tenant or any Guarantor by
order of a court of competent jurisdiction thereover or the conduct and
operation of Tenant’s or any Guarantor’s business shall be taken over by (i) a
receiver appointed by order of a court of competent jurisdiction or (ii) an
agency or governmental authority having jurisdiction thereover, or

 

(g)           Tenant
fails to perform any of the other terms, covenants and conditions of this Lease
and such failure shall not have been remedied within 30 days after notice by
Landlord to Tenant specifying such failure (or without notice if such failure
comes within the provisions of Section 19.2); provided however that any such notice
shall be in lieu of, and not in addition to any notice required under
California Code of Civil Procedure, Section 1161, or where such failure
reasonably cannot be remedied within such period of 30 days, Tenant has not
commenced to cure the failure within such 30-day period and is not proceeding
with due diligence to cure it.

 

Section 19.2. 
If Tenant fails to pay Fixed Net Rent, Additional Rent or other sum when
due, or fails in the performance of any other term of this Lease three times in
any period of twelve consecutive calendar months (whether or not such failure
is cured within the applicable cure periods), then any subsequent violation
may, at Landlord’s option, be a Default by Tenant with no cure period for
Tenant.

 

22

 

Section 19.3. 
Upon a Default by Tenant, Landlord, at its election, may terminate this
Lease, and upon such termination Tenant shall quit and surrender the Leased
Premises to Landlord whereupon the term of this Lease shall expire on the date
so fixed in such notice as fully and completely as if it were the date herein
definitely fixed for the expiration of the term, and all right, title and
interest of Tenant shall thereupon wholly cease and expire and the Tenant shall
thereupon quit and surrender the Leased Premises but Tenant shall remain liable
as provided under this Lease, it being the intention of the parties hereby to
create a conditional limitation.  If
this Lease shall terminate as provided in this Section, or if not so terminated
and Tenant shall be in Default:

 

(a)           Landlord
may re-enter and resume possession of the Leased Premises and remove all
persons and property therefrom either by summary dispossess proceedings or by a
suitable action or proceeding, at law or in equity, or otherwise, without being
liable for any damages therefor; and

 

(b)           Landlord
may relet the whole or any part of the Leased Premises for a period equal to,
greater or less than the remainder of the then term of this Lease, at such
rental and upon such terms and conditions as Landlord shall deem reasonable, to
any tenant it may deem suitable and for any use and purpose it may deem
appropriate.  Landlord shall not be
liable in any respect for failure to relet the Leased Premises, and, in the
event of such reletting, for failure to collect the rent thereunder; any sums
received by Landlord on a reletting in excess of the rent reserved in this
Lease, shall belong to Landlord. 
Notwithstanding the above, Landlord will use reasonable efforts to
mitigate damages, provided that these efforts shall not require Landlord to
relet the Leased Premises to any party that Landlord could reasonably reject as
a transferee pursuant to Article 7.

 

Section 19.4. 
If this Lease shall terminate as provided in this Article or by summary
dispossess proceedings, Landlord shall be entitled to recover from Tenant as
damages, in addition to arrears in Fixed Net Rent, and Additional Rent:

 

(a)           amounts
equal to all expenses incurred by Landlord in recovering possession of the
Leased Premises and in connection with the reletting of the Leased Premises,
including, without limitation, the cost of repairing the Leased Premises,
broker’s commissions and legal fees, which amounts shall be due and payable by
Tenant to Landlord at such time or times as they shall have been incurred, and

 

(b)           amounts
equal to the deficiency between the Fixed Net Rent and Additional Rent which
would have become due and payable had this Lease not terminated and the net
amount, if any, of rent and Additional Rent collected by Landlord on reletting
the Leased Premises (after deducting the cost of renovating or remodeling the
Leased Premises, for a particular tenant, not included within
Section 19.4(a) above).  The
amounts specified in this subdivision shall be due and payable by Tenant on the
several days on which such Fixed Net Rent and Additional Rent would have become
due and payable had this Lease not terminated. 
Tenant consents that Landlord shall be entitled to institute separate
suits or actions or proceedings for the recovery of such amount or amounts, and
Tenant hereby waives the right to enforce or assert the rule against splitting
a cause of action as a defense thereto. 
Landlord, at its election, which shall be exercised by giving notice to
Tenant, may recover from Tenant and

 

23

 

Tenant shall pay, in lieu of the sums becoming due under the foregoing
provisions of this Section 19.4(b), an amount equal to the excess of
(i) Fixed Net Rent and Additional Rent which would have become due and
payable had this Lease not terminated (from the date of the giving of such
notice to the end of the then term of this Lease) over (ii) the fair and
reasonable rental value (at the date of the giving of the notice) of the Leased
Premises for the same period, both discounted to the date of the giving of such
notice, at the rate of six percent (6%) per annum.

 

Section 19.5. 
Tenant, for itself and for all persons claiming through or under it,
hereby waives any and all rights which are or may be conferred upon Tenant by
any present or future law to redeem the Leased Premises after any termination
of this Lease.

 

Section 19.6. 
The words “re-enter” and “re-entry” as used in this Article, are not
restricted to their technical legal meaning.

 

Section 19.7. 
Tenant hereby waives the service of any notice in writing by Landlord of
its intention to re-enter, except as otherwise provided in this Lease.

 

Section 19.8. 
The foregoing remedies of Landlord shall also be available to Landlord
pursuant to California Civil Code Section 1951.4 and any successor statute
thereof in the event Tenant has abandoned the Leased Premises.

 

ARTICLE 20

 

Inspection
of Premises by Landlord

 

Section 20.1. 
Landlord and the holder of any Mortgage shall have the right to enter
the Leased Premises at all times but, except in the case of emergency, only at
reasonable times during usual business hours and without unreasonably
interfering with Tenant’s operation of its business, for the purpose of:

 

(a)           inspecting
them; and

 

(b)           making
any repairs to the Leased Premises and performing any work therein that may be
necessary by reason of Tenant’s Default; and

 

(c)           exhibiting
the Leased Premises for the purposes of sale, mortgage or renting during
reasonable business hours on at least two days’ notice.

 

Section 20.2. 
Nothing in this Lease shall (a) limit the right of a holder of a
Mortgage to inspect the Leased Premises, or (b) imply any duty upon
Landlord to do any work which, under any of the provisions of this Lease,
Tenant may be required to perform and the performance thereof by Landlord shall
not constitute a waiver of Tenant’s default or any of Landlord’s rights and
remedies under this Lease by reason thereof.

 

24

 

ARTICLE 21

 

Limitation
of Landlord’s Liability

 

Section 21.1. 
The term “Landlord,” as used in this Lease, so far as Landlord’s
covenants and agreements under this Lease are concerned, shall be limited to
mean and include only the owner or owners at the time in question of the fee
title to the Leased Premises.  In the
event of any conveyance of such fee title to the Leased Premises, and
regardless of whether the grantee is financially responsible or solvent and
notwithstanding that the grantor may be a stockholder, officer or director of a
corporate grantee, Landlord herein named and each subsequent grantor shall be
automatically relieved, from and after the date of such conveyance, of all
personal liability as respects the performance of any of Landlord’s covenants and
agreements thereafter to be performed, and such grantee shall be bound by all
such covenants and agreements; it being intended that Landlord’s covenants and
agreements shall be binding on Landlord and Landlord’s distributees, personal
representatives, successors and assigns only during and in respect of their
successive periods of ownership. 
However, Landlord or the grantor shall turn over to the grantee all
monies, if any, then held by Landlord or such grantor on behalf of Tenant.

 

ARTICLE 22

 

Mortgage
Subordination

 

Section 22.1. 
This lease shall be subject and subordinate to any mortgage granted by
Landlord, all instruments in connection therewith (including Assignment of
Lessor’s Interest in Lease), and to any other mortgage hereafter placed and becoming
a lien upon the fee title of the Leased Premises and to any renewals,
extensions, modifications, consolidations, replacements and correlations
thereof (collectively referred to herein as “Mortgage”).

 

Section 22.2. 
This lease is and shall be subject and subordinate to any security
agreement executed as additional or supplemental security to any Mortgage
referred to in Section 22.1, and to any financing statements under the
Uniform Commercial Code.

 

Section 22.3. 
The provisions of this Article shall be self-operative, without the
necessity of any other written consent, approval or subordination by
Tenant.  However, upon request of
Landlord, Tenant, at any time or times, shall execute, acknowledge and deliver
to Landlord, without expense to Landlord, any instruments required by Landlord
or the mortgagee to confirm such subordination.  Tenant, in confirmation of the foregoing, hereby irrevocably
nominates, constitutes and appoints Landlord, Tenant’s proper and legal
attorney-in-fact for any purpose required to effectuate and carry out the
intent of this Article, with a power coupled with an interest, hereby ratifying
all that Landlord may do as such attorney-in-fact of Tenant.

 

Section 22.4. 
Tenant shall not perform or permit the performance of any act which is
prohibited by the provisions of any Mortgage to which this Lease is subject and
shall not do anything or suffer or permit any act, condition or thing to occur
at the Leased Premises, which constitutes a default under such Mortgage except
that Tenant shall not be obligated to pay the principal indebtedness thereof or
interest thereon.

 

25

 

Section 22.5. 
Tenant shall consent to such reasonable amendments of this Lease as the
holder of any Mortgage to which this Lease is subject shall request provided
that such amendments do not increase the Fixed Net Rent or Additional Rent or
increase Tenant’s other obligations or decreases Tenant’s rights hereunder, and
do not shorten the term of this Lease.

 

ARTICLE 23

 

Mechanics,
Liens

 

Section 23.1. 
If, because of any act or omission (or alleged act or omission) of
Tenant, any mechanic’s or other lien, charge or order for the payment of money
shall be filed against the Leased Premises (whether or not such lien, charge or
order is valid or enforceable as such), Tenant, at Tenant’s expense, shall
cause it to be canceled or discharged of record by bonding or otherwise within
thirty days after notice, and Tenant shall indemnify and save Landlord harmless
against and shall pay all costs, expenses, losses, fines and penalties,
including, without limitation, attorneys’ fees resulting therefrom.

 

ARTICLE 24

 

Invalidity
of Particular Provisions

 

Section 24.1. 
If any term, covenant or condition of this Lease or the application
thereof to any person or circumstances shall be held invalid or unenforceable
to any extent, the remainder of this Lease, or the application of such term,
covenant or condition to persons or circumstances other than those as to which
it is held invalid and unenforceable shall not be affected thereby and each
term, covenant and condition of this Lease shall be otherwise valid and
enforceable to the fullest extent permitted by law.

 

ARTICLE 25

 

Representations
by Landlord

 

Section 25.1. 
Except as specified in this Article 25.2 below, Landlord has made no
representations whatsoever with respect to the Leased Premises, or land and
buildings and other improvements included in the Leased Premises, and said
land, building, improvements and premises are hereby leased to Tenant “as is”
in their condition as of the date hereof. 
Tenant represents and warrants that it has investigated and is familiar
with the land, building, improvements and Leased Premises and accepts same in
their present “as is” condition.  This lease
contains the entire agreement between Landlord and Tenant and all prior
negotiations and agreements are merged herein.

 

Section 25.2. 
Landlord represents that it is the owner of the Leased Premises and that
to Landlord’s knowledge, as of the date hereof, the Leased Premises complies
with all applicable zoning laws and ordinances.

 

26

 

ARTICLE 26

 

Condemnation

 

Section 26.1. 
Whenever used in this Article, the following words shall have the
following respective definitions and meanings:

 

(a)           “condemnation”
or “condemnation
proceedings”:  any action or
proceedings brought by competent authority for the purpose of taking the fee of
the Leased Premises or any interest therein or any part thereof as a result of
the exercise of the power of eminent domain, including a voluntary sale to such
authority either under threat of or in lieu of condemnation or while such
action or proceeding is pending.

 

(b)           “Taking”
or “Taken”:  the event of vesting of title to the fee of
the Leased Premises or any part thereof in the competent authority pursuant to
condemnation.

 

(c)           “Vesting
Date”:  the date of the
Taking.

 

Section 26.2. 
In case of a Taking of all of the Leased Premises, this Lease shall
terminate as of the Vesting Date and the Fixed Net Rent and Additional Rent
shall be apportioned to the date of termination.

 

Section 26.3. 
In case of a Taking of less than all of the Leased Premises, Landlord
and Tenant mutually shall determine, within sixty days after the Vesting Date,
whether the remaining premises (after Restoration referred to in
Section 26.5) can economically and feasibly be used by Tenant.  If Landlord and Tenant cannot agree upon
such matter, it shall be determined by arbitration under the provisions of
Article 13.  If it is determined either
by mutual consent or by arbitration that the remaining Leased Premises cannot
be economically and feasibly used by Tenant, Tenant, at its election, may
terminate this Lease on at least twenty days’ but not more than sixty days,
notice to Landlord to such effect provided that such election to terminate is
executed within 60 days after such determination.  Upon any such termination, the Fixed Net Rent and Additional Rent
shall be apportioned to the date of termination.

 

If Tenant does not elect
to terminate this Lease within the period aforementioned, it shall continue in
full force and effect as to the remaining portion of the Leased Premises
subject to a reduction in the Fixed Net Rent as provided in Section 26.6.

 

Section 26.4. 
In the event of any condemnation and regardless of whether or not this
Lease is terminated, Tenant shall have no claim against Landlord or the
condemning authorities for the value of any unexpired term of this Lease or for
any portion of the condemnation award or payment made in lieu thereof and
Landlord shall be entitled to the entire award that may be made in any such
condemnation proceedings or any payment that may be made for the premises
taken.  Tenant hereby waives all right
to recover the value of any estate hereby vested in or owned by Tenant and
Tenant hereby assigns such rights to Landlord. 
Tenant, if requested by Landlord, shall execute all further instruments
that may be required in order to effectuate collection by Landlord of such
awards or payments.

 

27

 

Nothing contained herein,
however shall be deemed to preclude Tenant from obtaining, or to give Landlord
any interest in, any award to Tenant for loss of or damage to Tenant Trade
Fixtures or removable personal property or for damages for cessation of
Tenant’s business or relocation.  In
connection therewith, Tenant, at its expense, may appear in the condemnation
proceedings and participate in the hearings, trials and appeals, if any, solely
with respect to such claims.

 

Section 26.5. 
If, in case of a partial Taking, Tenant does not elect to terminate this
Lease, as provided in Section 26.3 above, Landlord shall proceed with
reasonable promptness to repair and restore the remaining improvements (all of
such repair or reconstruction being referred to in this Article as “Restoration”).

 

Section 26.6. 
If, in case of a partial Taking of the building on the Leased Premises,
and this Lease does not terminate under the provisions of Section 26.3, the
annual Fixed Net Rent payable by Tenant from and after the date Tenant vacates
the portion of the building taken shall be that part of the annual Fixed Net
Rent payable by Tenant immediately prior to the Taking which (i) the
rental value of the part of the building not Taken (after completion of the
restoration required under Section 26.5) bears to (ii) the rental
value of the entire building immediately prior to the Taking.  If Landlord and Tenant cannot agree upon
such respective rental values, they shall be determined by arbitration in
accordance with the provisions of Article 13.

 

Any Fixed Net Rent
becoming due and payable hereunder between the date Tenant vacates the portion
of the building Taken and the date of determination of the amount of the rent
reduction, if any, to be made in respect thereof, shall be paid at the rate
theretofore payable hereunder; provided, however, that within thirty days after
such determination Landlord shall pay to Tenant an amount equal to the amount
by which any Fixed Net Rent theretofore paid by Tenant for such period shall
exceed the amount of the Fixed Net Rent for such period as so reduced, and if
not so paid Tenant, at its election, may deduct such amount from any subsequent
installment or installments of Fixed Net Rent payable hereunder.

 

Section 26.7. 
In the event of a Taking of all or any portion of the Leased Premises
for temporary use, the foregoing provisions of this Article shall be
inapplicable thereto, this Lease shall continue in full force and effect without
reduction or abatement of Fixed Net Rent or Additional Rent and Tenant alone
shall be entitled to make claim for, recover and retain any award recoverable
in respect of such temporary use whether in the form of rental or otherwise.  If the award is made in a lump-sum covering
a period beyond the expiration of the term of this Lease, Landlord also shall
be entitled to make claim for and recover the portion of the award allocable to
such period.  If the award is made in a
lump-sum covering the entire period or substantially the entire period of such
temporary use, or shall be payable in periodic installments other than
quarterly or more frequent installments, such award shall be paid to Landlord
and shall be held and applied by Landlord for the payment of Fixed Net Rent and
Additional Rent as they become due.  Any
balance remaining after the temporary use has terminated, and after payment of
the Fixed Net Rent and Additional Rent to the date of such termination, shall
belong to and be paid to Tenant provided that it does not relate to any period
beyond the expiration of the term of this Lease.

 

28

 

If any portion of the
award for such temporary use is intended to cover the cost of restoring the
Leased Premises to the condition they were in prior to such temporary use, or
making repairs occasioned by or resulting from such temporary use, such portion
shall be paid to Landlord and held until the termination of the temporary use
and then disbursed by Landlord (in the same manner and subject to the same
conditions as provided in Section 10.2 for the disbursement of insurance
proceeds) to cover the cost of such restoration and repair; and any balance
remaining shall belong to and be paid to Tenant.  However, if such temporary use shall terminate after the
expiration of this Lease, Landlord shall be entitled to retain the entire
portion of the award intended to cover the cost of restoration and Tenant shall
not be entitled to any part thereof.

 

Section 26.8. 
The parties hereby waive the provisions of the California Code of Civil
Procedure Section 1265.130 and any successor or similar statutes permitting the
parties to terminate this Lease in the event of a Taking.

 

ARTICLE 27

 

Renewal
Option

 

Section 27.1. 
Tenant shall have one (1) renewal option of five (5) years (“Option”),
under the same terms as are stipulated in the present document, starting with a
Fixed Net Rent which will be negotiated at the time of renewal, but which shall
not be less than the Fixed Net Rent of the final year of the contract in force,
with an increase of the rate as stated below. 
In order to exercise the Option, Tenant must give written notice of such
election to Landlord and Landlord must receive the same at least 6 months, but
not more than 12 months prior to the date the option period would commence,
time being of the essence.  If proper
notification of the exercise of the Option is not given and received, such
Option shall automatically expire.  This Option cannot be exercised:  (i) during the period commencing with the
giving of any notice of default and continuing until said default is cured,
(ii) during the period of time any Fixed Net Rent or Additional Rent is
unpaid (without regard to whether notice thereof is given Tenant), (iii) during
the time Tenant is in Default of this Lease, or (iv) in the event that Tenant
has been given 3 or more notices of default, whether or not the defaults are
cured, during the 12 month period immediately preceding the exercise of the
Option.  The monthly rent for
each month of the 5 year option period shall be calculated as described in
Section 27.2 below.

 

Section 27.2. 
On the last day of the initial term (the “Market Rental Value Adjustment Date”),
the rent shall be adjusted to the Market Rental Value (MRV) of the Leased Premises
as follows:  Four months prior to the
Market Rental Value Adjustment Date, the parties shall attempt to agree upon
what the new MRV with be on the Market Rental Value Adjustment Date.  If agreement cannot be reach within 30 days,
then both Landlord and Tenant shall each immediately make a reasonable
determination of the MRV and submit such determination, in writing to
arbitration in accordance with the following (and not in accordance with
Article 13):

 

(a)           within
15 days thereafter, Landlord and Tenant shall each select an appraiser of their
choice to act as an arbitrator.  Each
appraiser so selected shall be certified as a MAI appraiser or as an ASA
appraiser and shall have had at least 5 years experience within the

 

29

 

previous 10 years as a
real estate appraiser working in the Santa Fe Springs area.  The two arbitrators so appointed shall
immediately select a third mutually acceptable appraiser to act as a third
arbitrator (with the qualifications specified above).

 

(b)           the
3 arbitrators shall within 30 days of the appointment of the third arbitrator
reach a decision as to what the actual MRV for the Leased Premises is, and
whether Landlord’s or Tenant’s submitted MRV is the closest thereto.  The decision of a majority of the
arbitrators shall be binding on the parties.

 

(c)           If
either of the parties fails to appoint an arbitrator within the specified 15
days, the arbitrator timely appointed by one of them shall reach a decision of
his or her own, and such decision shall be binding on the parties.

 

(d)           the
entire cost of such arbitration shall be paid equally by both parties, or by
the party whose submitted MRV is not selected (i.e. the one that is NOT the
closest to the actual MRV) if such party’s MRV is more than 50% further from
the actual MRV than the other party’s originally submitted MRV.

 

(e)           notwithstanding
the above, the new MRV shall not be less than the rent payable for the month
immediately preceding the rent adjustment.

 

ARTICLE 28

 

Right
of First Refusal

 

Section 28.1. 
Landlord shall not, at any time
prior to the expiration of the term of this Lease, or any extension thereof,
sell the Leased Premises, or any interest therein, without first giving written
notice thereof to Tenant, which notice is hereinafter referred to as “Notice of
Sale.”  The Notice of Sale shall include the exact and
complete terms of the proposed sale and shall have attached thereto a copy of
the bona fide offer and counteroffer, if any, duly executed by both Landlord
and the prospective purchaser.

 

Section 28.2.  For a period of  15 calendar days after receipt by Tenant of the Notice of Sale,
Tenant shall have the right to give written notice to Landlord of Tenant’s
exercise of Tenant’s right to purchase the Leased Premises, the interest
therein proposed to be sold, or the property of which the Leased Premises is a
part, on the same terms, price and conditions as set forth in the Notice of
Sale.  In the event that Landlord does
not receive written notice of Tenant’s exercise of the right herein granted
within said 15 day period, there shall be a conclusive presumption that Tenant
has elected not to exercise Tenant’s right hereunder, and Landlord may complete
the sale to the prospective purchaser, on the same terms set forth in the
Notice of Sale.

 

Section 28.3.  In the event that Tenant declines to
exercise its right of first refusal after receipt of the Notice of Sale, and,
thereafter, Landlord and the prospective purchaser modify by more than 5%, (i)
the sales price, or (ii) the amount of down payment, or if there is a material
change in any seller financing offered, or in the event that the sale is not
consummated within 180 days of the date of the Notice of Sale, then Tenant’s
right of first refusal shall reapply to said transaction.

 

30

 

Section 28.4.  In the event that Tenant declines to
exercise its right of first refusal after receipt of the Notice of Sale, and,
thereafter, the proposed transfer or sale is not consummated, the Tenant’s
right of first refusal shall apply to any subsequent transaction.  If, however, said transfer or sale is, in
fact, completed, then said right shall be extinguished and shall not apply to
any subsequent transactions.

 

Section 28.5.  Notwithstanding the above, this right of
first refusal is intended to apply only to voluntary transfers involving third
party transferees.  This right of first
refusal shall not, therefore, apply: 
where the Leased Premises is taken by or sold to a governmental agency,
to inter-family or inter-ownership transfers, to transfers by Landlord to a
trust created by Landlord, or, if Landlord is a trust, to transfers to a trust
beneficiary.

 

Section 28.6.  This right of first refusal cannot be exercised:  (i) during the period commencing with the
giving of any notice of default and continuing until said default is cured,
(ii) during the period of time any rent is unpaid (without regard to
whether notice thereof is given Tenant), (iii) during the time Tenant is in
default of this Lease, or (iv) in the event that Tenant has been given 3 or
more notices of Default, whether or not the defaults are cured, during the 12
month period immediately preceding the exercise of the right of first refusal.

 

ARTICLE 29

 

Definitions
and Miscellaneous

 

Section 29.1. 
The captions of this Lease and index preceding it are for convenience
and reference only and in no way define, limit or describe the scope and intent
of this Lease nor in any way affect this Lease.

 

Section 29.2. 
Wherever in this Lease it is provided that Landlord may terminate this
Lease upon a specified number of days’ notice to Tenant, it is intended that
this Lease shall come to an end upon the expiration of the specified number of
days as though said date were the originally specified expiration date of the
term of this Lease.

 

Section 29.3. 
The words “building equipment” shall mean all fixtures of every nature
and description, now or hereafter on the Leased Premises, used in the operation
and maintenance thereof whether or not affixed to the realty, including,
without limitation, fixtures, machinery, apparatus, equipment, fittings,
elevators, heating, plumbing, air conditioning equipment and tools.

 

Section 29.4. 
The word “Mortgage” as used in this Lease shall include a deed of
trust.

 

Section 29.5. 
All pronouns or any variation thereof shall be deemed to refer to
masculine, feminine or neuter, singular or plural as the identity of the person
or persons may require.

 

Section 29.6. 
This lease may be executed in any number of counterparts, each of which
shall be an original but all of which shall constitute one instrument.

 

31

 

Section 29.7. 
Wherever reference is made in this Lease to a fee mortgage to which this
Lease is “subject”
the word “subject” is intended to and shall mean “subject and subordinate.”

 

Section 29.8. 
Wherever in this Lease the words “termination of this Lease” or words of
similar import are used, they are intended to include the expiration of the
term of this Lease and concomitantly whenever the words “expiration of the term of this Lease”
or words of similar import are used, they are intended to include any
termination of this Lease.

 

Section 29.9. 
The words “Tenant Trade Fixtures” as used in this Lease shall mean
personal property, furniture, machinery and equipment installed by Tenant, at
Tenant’s expense, which are not used or procured for use in connection with the
operation and maintenance of the Leased Premises as such, but which are used or
procured for use solely and directly in connection with Tenant’s business
conducted on the Leased Premises.  The
foregoing definition shall in no way limit or reduce Tenant’s obligations to
make any repairs, replacements and restorations as required under this Lease.

 

ARTICLE 30

 

Security
Deposit

 

Section 30.1. 
To secure the full and faithful performance by Tenant of all of the
terms, covenants and conditions of this Lease on Tenant’s part to be performed,
Tenant, upon the execution of this Lease, shall deposit with Landlord the sum
of $98,691.30 (“Security Deposit”). 
Any and all interest accrued on the Security Deposit shall be held as
additional Security Deposit under the terms of this Article and shall belong,
and be paid to such party entitled to the Security Deposit in accordance with
the terms of this Lease.

 

Section 30.2. 
If Tenant shall be in default under any of the terms, covenants and
conditions of this Lease, Landlord, in its sole discretion, shall have the
right but not the obligation to use or apply all or any part of the Security
Deposit to reimburse Landlord for any loss, damage or expense suffered or
incurred by Landlord and to pay any sums which Landlord shall be entitled to
recover from Tenant under this Lease by reason of such default or any previous
default.  If Landlord shall use or apply
all or any part of the Security Deposit as hereinabove provided, Tenant, on
demand, shall deposit with Landlord additional funds as security hereunder to
replenish the Security Deposit to the amount stated in Section 30.1.  If Tenant shall fail or refuse to make such
additional deposit, Landlord shall have the same rights in law and in equity
and under this Lease as it has with respect to a default by Tenant in the
payment of Fixed Net Rent or Additional Rent.

 

Section 30.3. 
The use of the Security Deposit, as provided in this Article, shall not
be deemed or construed as a waiver of Tenant’s default or as a waiver of any
other rights and remedies to which Landlord may be entitled under the
provisions of this Lease by reason of such default, it being intended that
Landlord’s right to use the whole or any part of the Security Deposit shall be
in addition to but not in limitation of any such other rights and remedies; and
Landlord may exercise any of such other rights and remedies independently of or
in conjunction with its rights under this Article.

 

32

 

Section 30.4. 
In the event of a sale of the fee title of the Leased Premises, Landlord
(or in the event of a subsequent sale, the then grantor) may assign or pay over
the unused Security Deposit to the grantee. 
In such event, Landlord or the then grantor, as the case may be, shall
be released from any further obligation with respect thereto and Tenant shall
be entitled to look only to the grantee for the return of the Security Deposit
in accordance with the provisions of this Article.

 

Section 30.5. 
Upon any termination of this Lease, if Tenant is not in default under
any of the terms, covenants and conditions thereof, and after payment of all
sums due Landlord (including but not limited to Impositions) but not limited to
Landlord shall return to Tenant the unused Security Deposit then held by
Landlord.

 

ARTICLE 31

 

Successors
Bound

 

Section 31.1. 
This lease shall be binding upon and inure to the benefit of Landlord
and Tenant and their respective distributees, personal representatives,
successors, and, except as otherwise provided in this Lease, their assigns.

 

ARTICLE 32

 

Broker

 

Section 32.1. 
Tenant represents and warrants that Tenant has had no dealings or
communications with any broker or agent in connection with the Leased Premises
and the consummation of this Lease. 
Tenant covenants and agrees to pay and to indemnify and hold Landlord
harmless from and against any and all costs, expenses (including, without
limitation, reasonable counsel fees) or liability for any compensation,
commission or charges claimed by any broker or agent claiming to have
introduced Tenant to the Leased Premises or to have been consulted by or to
have represented Tenant with respect to this Lease or the negotiation thereof.

 

ARTICLE 33

 

Late
Charges; Interest

 

Section 33.1. 
In the event any payment of Fixed Net Rent or Additional Rent (other
than interest payable pursuant to the next sentence) is not received by
Landlord within five days after the day it is due, Tenant shall pay to
Landlord, as Additional Rent, a late charge equal to three (3%) percent of the
amount of any such late payment (but not less than any late charge imposed upon
Landlord under the Mortgage by reason of Landlord’s failure to receive a
payment of Fixed Net Rent).  If any
amount of fixed rent or Additional Rent is not received by Landlord on the day it
is due and notice of such failure has been given, interest on such amount shall
accrue from the expiration of the applicable grace period, if any, at the rate
of 18% per annum compounded monthly on the first day of each calendar month, or
at the maximum rate permitted by law, whichever is less, until such amount with
such interest is paid, whether or not a judgment

 

33

 

is obtained therefore,
and such interest shall constitute Additional Rent and shall be payable by
Tenant to Landlord as and when it accrues.

 

ARTICLE 34

 

No
Money Damages

 

Section 34.1. 
With respect to any provision of this Lease which provides that Landlord
shall not unreasonably withhold or unreasonably delay any consent or any
approval, Tenant in no event shall be entitled to make, nor shall Tenant make,
any claim, and Tenant hereby waives any claim, for money damages, nor shall
Tenant claim any money damages by way of setoff, counterclaim or defense based
upon any claim or assertion by Tenant that Landlord has unreasonably withheld
or unreasonably delayed any consent or approval.  Tenant’s sole remedy shall be an action or proceeding to enforce
any such provision or for performance, injunction or declaratory judgment.

 

ARTICLE 35

 

Intentionally
Omitted

 

ARTICLE 36

 

Net
Lease

 

Section 36.1. 
This lease shall be deemed and construed to be a net lease, and the
Fixed Net Rent and Additional Rent payable by Tenant shall be absolutely net to
Landlord without deduction, abatement, setoff, counterclaim or defense of any
kind.

 

ARTICLE 37

 

Guarantor

 

Section 37.1. 
The obligations of the Tenant under this Lease are to be guaranteed by
Quixote Corporation, a Delaware corporation (“Guarantor”).  The Guarantor shall execute a guaranty in
the form acceptable to Landlord, and shall have the same obligations as Tenant
under this Lease.

 

[EXECUTION COMMENCES ON THE NEXT
PAGE]

 

34

 

IN WITNESS WHEREOF, Landlord and Tenant
have duly executed this Lease as of the date first specified above.

 

	
  WITNESS:

  	
   

  
	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
   

  	
  CAMBRIDGE
  LEASING CORPORATION

  
	
  /s/ Leslie W. Rogers

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Louise Welch

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Walter J. Rogers

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Walter J. Rogers

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
  /s/ Christopher J.
  Rosette

  	
   

  	
  GREEN
  LIGHT ACQUISITION

  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Leslie J. Jezuit

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Leslie J. Jezuit

  
	
   

  	
   

  	
  Title:

  	
  President

  
							

 

35

 

EXHIBIT A

 

(Legal
Description)

 

SAID
LAND IS SITUATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS
DESCRIBED AS FOLLOWS:

 

PARCEL
1:

 

LOT
1 AND THE SOUTHWESTERLY 161.22 FEET OF LOT 2, MEASURED AT RIGHT ANGLES FROM THE
SOUTHWESTERLY LINE OF SAID LOT 2 OF TRACT NO. 27623, IN THE CITY OF SANTA FE
SPRINGS, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED
IN BOOK 706 PAGE(S) 55 TO 57 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.

 

EXCEPT
FROM SAID LOT 1, THAT PORTION THEREOF DESCRIBED AS FOLLOWS:

 

BEGINNING
AT A POINT IN THE NORTHWESTERLY LINE OF SAID LOT 1, THAT IS DISTANT THEREON
NORTH 39° 01’ 35” EAST 267.04 FEET FROM THE MOST WESTERLY CORNER OF SAID LOT 1;
THENCE ALONG SAID NORTHWESTERLY LINE, SOUTH 39° 01’ 35” WEST 267.04 FEET TO
SAID MOST WESTERLY CORNER; THENCE ALONG THE SOUTHWESTERLY AND SOUTHERLY LINES
OF SAID LOT 1 AS FOLLOWS:

 

SOUTH
50° 04’ 20” EAST 378.84 FEET AND NORTH 84° 28’ 38” EAST 23.85 FEET; THENCE
ALONG THE SOUTHEASTERLY LINE OF SAID LOT 1, NORTH 39° 01’ 35” EAST 250.04 FEET;
THENCE NORTH 50° 04’ 20” WEST 395.84 FEET TO SAID POINT OF BEGINNING.

 

ALSO
EXCEPT AN UNDIVIDED ONE-HALF OF ALL OIL, GAS AND MINERALS AND OF ALL OIL, GAS,
AND MINERAL RIGHTS UPON AND UNDER SAID LAND WITH NO RIGHT OF ENTRY ON THE
SURFACE OF SAID LAND FOR THE PURPOSE OF EXTRACTING OIL, GAS AND MINERALS
THEREON AND THEREUNDER, AS RESERVED BY SECURITY-FIRST NATIONAL BANK OF LOS
ANGELES, IN DEED RECORDED IN BOOK 18259, PAGE 99, OFFICIAL RECORDS.

 

ALSO
EXCEPT AN UNDIVIDED 1/4TH INTEREST IN AND TO ALL OIL, GAS OR OTHER HYDROCARBON
SUBSTANCES AND ALL MINERALS OF EVERY KIND AND NATURE IN OR UNDER OR PRODUCED
FROM BELOW 500 FEET FROM THE SURFACE OF SAID LAND, AS RESERVED BY JUSTIN J.
ACCARIAS, ET AL., IN THE DEED RECORDED JANUARY 5, 1956 IN BOOK 49964, PAGE 184,
OFFICIAL RECORDS.

 

ALL
INTEREST TO ENTER IN AND UPON THE SURFACE OR WITHIN 500 FEET OF THE SURFACE OF
SAID LAND WERE QUITCLAIMED TO THE RECORD OWNERS OF THE SURFACE OF SAID LAND BY
A DEED RECORDED FEBRUARY 16, 1961 AS INSTRUMENT NO. 1595, IN BOOK D1125, PAGE
870, OFFICIAL RECORDS.

 

 

A-1

 

ALSO
EXCEPT AN UNDIVIDED ONE-FOURTH INTEREST IN ALL OIL, GAS, OR OTHER HYDROCARBON
SUBSTANCES AND ALL MINERALS OF EVERY KIND AND NATURE, IN OR UNDER OR PRODUCED
FROM BELOW 500 FEET FROM THE SURFACE OF SAID LAND WITHOUT THE RIGHT OF SURFACE
ENTRY, AS RESERVED IN THE DEED FROM BEN WEINGART, AS TRUSTEE FOR TRUST 2 UNDER
THE WILL OF STELLA WEINGART, DECEASED, ET AL., RECORDED FEBRUARY 16, 1961 AS
INSTRUMENT NO. 1597, IN BOOK D1125, PAGE 874, OFFICIAL RECORDS.

 

PARCEL
2:

 

ALL
THAT PORTION OF LOT 2 OF TRACT NO. 27623, IN THE CITY OF SANTA FE SPRINGS,
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 706
PAGE(S) 55 TO 57 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY, LYING SOUTHWESTERLY OF A LINE WHICH IS PARALLEL WITH AND DISTANT
NORTHEASTERLY 412.57 FEET MEASURED AT RIGHT ANGLES FROM THE SOUTHWESTERLY LINE
OF SAID LOT 2.

 

EXCEPT
THE SOUTHWESTERLY 161.22 FEET, MEASURED AT RIGHT ANGLES OF SAID LOT 2.

 

ALSO
EXCEPT AN UNDIVIDED ONE-HALF OF ALL OIL, GAS AND MINERALS AND OF ALL OIL, GAS
AND MINERAL RIGHTS UPON AND UNDER SAID LAND, WITH NO RIGHT OF ENTRY ON THE
SURFACE OF SAID LAND FOR THE PURPOSE OF EXTRACTING OIL, GAS AND MINERALS
THEREON AND THEREUNDER, AS RESERVED BY SECURITY FIRST NATIONAL BANK OF LOS
ANGELES, IN DEED RECORDED IN BOOK 18259, PAGE 99, OFFICIAL RECORDS.

 

ALSO
EXCEPT AN UNDIVIDED 1/4TH INTEREST IN AND TO ALL OIL, GAS, OR OTHER HYDROCARBON
SUBSTANCES AND ALL MINERALS OF EVERY KIND AND NATURE IN OR UNDER OR PRODUCED
FROM BELOW 500 FEET FROM THE SURFACE OF SAID LAND, AS RESERVED BY JUSTIN J.
ACCARIAS, ET AL., IN THE DEED RECORDED JANUARY 5, 1956 IN BOOK 49964, PAGE 184,
OFFICIAL RECORDS.

 

ALSO
EXCEPT AN UNDIVIDED ONE-FOURTH INTEREST IN ALL OIL, GAS OR OTHER HYDROCARBON
SUBSTANCES AND ALL MINERALS OF EVERY KIND AND NATURE, IN OR UNDER OR PRODUCED
FROM BELOW 500 FEET FROM THE SURFACE OF SAID LAND WITHOUT THE RIGHT OF SURFACE
ENTRY, AS RESERVED IN THE DEED FROM BEN WEINGART, AS TRUSTEE FOR TRUST NO. 2
UNDER THE WILL OF STELLA WEINGART, DECEASED, ET AL., RECORDED FEBRUARY 16, 1961
AS INSTRUMENT NO. 1597, IN BOOK D1125, PAGE 874, OFFICIAL RECORDS.

 

APN:  8168-9-36

 

A-2

 

EXHIBIT B

 

(Title
Exceptions)

 

1.                                       Any
state of facts an inspection and an accurate survey may show provided that such
facts do not render title unmarketable.

 

2.                                       Covenants,
restrictions, easements, agreements and reservations of record, if any.

 

3.                                       Present
and future building restrictions and regulations and present and future zoning
laws, ordinances, resolutions and regulations of the city, village or town in
which the Facility lie and all present and future ordinances, laws, regulations
and orders of all boards, bureaus, commissions and bodies of any municipal,
county, state or federal sovereign, now or thereafter having acquired
jurisdiction of the Leased Premises and the use and improvement thereof, which
are not violated by the existing structures.

 

4.                                       Revocable
nature of the right, if any, to maintain vaults, vault spaces, basement and
subbasement spaces, areas, marquees or signs, beyond the building lines.

 

5.                                       Violations
of law, ordinances, orders or requirement that might or might not be disclosed
by an examination and inspection or search of the Leased Premises by any
federal, state, or municipal departments or authority having jurisdiction, as
the same may exist on the date.

 

6.                                       Impositions
accrued or unaccrued, fixed or not fixed.

 

7.                                       Any
grants or record, licenses or consents with respect to public utility lines,
pipes, conduits and equipment, provided same do not materially interfere with
the current use of the Leased Premises as of this date.

 

B-1

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