EX-10.12 11 ex1012q033104.txt STANDARD INDUSTRIALCOMMERCIAL MULTI-TENANT LEASE Exhibit 10.12 STANDARD INDUSTRIALCOMMERCIAL MULTI-TENANT LEASE - NET AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION 1. Basic Provisions ("Basic Provisions"). 1.1 Parties: This Lease ("Lease"), dated for reference purposes only March 14 2003, Is made by and between POMERADO LEASING NO. 3, a California Limited Partnership ("Lessor") -------------------------------------------------------------------------------- and MILSPERING CORPORATION, a California corporation, dba "American Medical Wholesale" -------------------------------------------------------------------------------- ("Lessee"), (collectively the "Parties", or individually a 'Party"). -------------------------------------------------------------------------------- 1.2(a) Premises: That certain portion of the Project (as defined below), including all improvements therein or to be provided by Lessor under the terms of this Lease, commonly known by the street address of 13250 , Gregg Street located in the City of Poway County of San Diego Slate of California with zip code 92064 , as outlined on attached hereto ("Premises") and Exhibit 2 generally described as (describe briefly the nature of Pomerado Corporate Center, an the Premises): Building A, approximately 42,191 square foot building of which Lessee shall lease approximately 20,904 square feet commonly known as Suite A In addition to Lessee's rights to use and occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as hereinafter specified, but shall not have any rights to the root, exterior walls or utility raceways of the building containing the Premises ("Building") or to any other buildings In the Project. The Premises, the Building, the Common Areas, the land upon which they are located,along with all other buildings and Improvements thereon, are herein collectively referred to as the "Project." (See also Paragraph 2) 1.2(b) Parking: thirty (30) unreserved vehicle parking spaces ("Unreserved Parking Spaces"); and reserved vehicle parking spaces ("Reserved Parking Spaces"). (See also Paragraph 2.e) 1.3 Term: Five (5) years and zero months ("Original Term") commencing April 11, 2003 ('Commencement Date") and ending April 30, 2008 ("Expiration Date"). (See also Paragraph 3) 1.4 . Early Possession: None ("Early Possession Date"). (See also Paragraphs 3.2 and 3 1.5 Base Rent per month ("Base Rent"), payable on the first day of each month commencing May 1, 2003 . (See also Paragraph 4) 0 If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted. 1.6 Lessee's Share of Common Area Operating Expenses: twenty and 73/100 percent (20 . 73%) ("Lessee's Share"). 1.7 Base Rent and Other Monies Paid Upon Execution: a) Base Rent: [INSERT MISSING TEXT] -for the period April 11 through April 30, 2003 , (b) Common Area Operating Expenses: (est.) for the period April 11. - 30, 2003 (c) Security Deposit: ("Security Deposit"). (See also Paragraph 5) (d) Other. [INSERT MISSING TEXT] for last month's estimated Common Area Operating Expenses (e) Total Due Upon Execution of this Lease: 1.8 Agreed Use: Off ice, warehouse and distribution of medical products . (See also Paragraph 6) 1.9 Insuring Party. Lessor Is the "Insuring Party". (See also Paragraph 8) 1.10 Real Estate Brokers: (See also Paragraph 15) (a) Representation: The following real estate brokers (the "Brokers") and brokerage relationships exist In this transaction (check applicable boxes): 0 CB Richard El l is , Inc. represents Lessor exclusively ("Lessor's Broker"); 0 Rancho Funding represents Lessee exclusively ("Lessee's Broker"):or represents both Lessor and Lessee ("Dual Agency"). (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the Brokers the brokerage fee agreed to In a separate written agreement (or If there is no such agreement, the -real" of or 6 % of the total Base Rent for the brokerage services rendered by the Brokers). 1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by N/A ("Guarantor"). (See also Paragraph 37) 1.12 Addenda and Exhibits. Attached hereto Is an Addendum or Addenda consisting of Paragraphs 1 through 15 and Exhibits 1 through 'I , all of which constitute a part of this Lease. 2. Premises. 2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein, any statement of size set forth In this Lease, or [hat may have been used in calculating Rent, is an approximation which the Parties agree is reasonable and any payments based thereon are not subject to revision whether or not the actual size is more or less. 2.2 Condition. Lessor shall deliver that portion of the Premises contained within the Building ('Unit") to Lessee broom clean and free of debris on the Commencement Date or the Early Possession Date, whichever first occurs ("Start Date"), and, so long as the required service contracts described In Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"), loading doors, if any, and all other such elements in the Unit, other then those constructed by Lessee, shall be in good operating condition on said date and that the structural elements of the roof, bearing walls and foundation of the Unit shall be free of materiel defects. If a non-compliance with such warranty exists as of the Start Dale, or If one of such systems or elements should malfunction or fall within the appropriate warranty period, Lessor shall, as Lessor's sole obligation with respect to soot, matter, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with sspecificity the nature and extent of such non-compliance, malfunction or failure, rectify same at Lessor's expense. The warranty periods shall be as follows: (I) 6 months as to the HVAC systems, and 60 days as to the remaining systems and other elements of the Unit. If Lessee does not give Lessor the required notice within the appropriate war tied, correction of any such non-compliance, malfunction or failure shall be the obligation of Lessee at Lessee's sole cost and expense (except for repairs to the tire sprinkler systems, root. foundations, and/or bearing walls - see Paragraph 7). 2.3 Compliance. Lessor warrants that the improvements on the Premises and the Common Areas comply with the building codes that were in effect at the time that each such Improvement, or portion thereof, was constructed, and also with alt applicable laws, covenants or restrictions of record, regulations, and ordinances in effect on the Stan Date ("Applicable Requirements"). Said warranty does not apply to the use to which Lessee will put the Premises or to any Alterations or Utility Installations (as defined in Paragraph 7.3(e)) made or to be made by Lessee. NOTE: Lessee Is responsible far determining whether or not the Applicable Requirements, and especially the zoning, are appropriate for Lessee's intended use, and acknowledges that past uses at the Premises may no longer be allowed. N the Premises do not comply with said warranty, Lessor shall, except as otherwise provided, promptly after receipt of written notice from Lessee selling forth with specificity the nature and extent of such non-compliance, rectify the same at Lessors expense. If Lessee does not give Lessor written notice of a non-compliance with this warranty within 6 months following the Start Date, correction of that non-compliance shall be the obligation of Lessee at Lessee's sole cost and expense. It the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Unit, Promises and/or Building, the remediation of any Hazardous Substance, or the reinforcement or other physical modification of the Unit, Premises and/or Building ("Capital Expenditure'), Lessor and Lessee shall allocate the cost of such work as follows: (a) Subject to Paragraph 2.3(c) below, If such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants to general, Lessee shall be fully responsible for the cost thereof, provided, however that if such Capital Expenditure Is required during the last 2 years of this Lease and the cost thereof exceeds 6 months' Base Rent, Lessee may Instead terminate this Lease unless Lessor notifies Lessee, In writing, within 10 days after receipt of Lessee's termination notice that Lessor has elected to pay the difference between the actual cost thereof and the amount equal to 6 months' Base Rent. It Lessee elects termination, Lessee shall Immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a termination date at least 90 days thereafter. Such termination date shall, however, in no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such Capital Expenditure. (b) If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor and Lessee shall allocate the obligation to pay for the portion of such costs reasonably attributable to the Premises pursuant to the formula set out in Paragraph 7.1(d); provided, however, that if such Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably determines that it is not economically feasible to pay Its share thereof. Lessor shall have The option to terminate this Lasso upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in writing, within 10 days after receipt of Lessor's termination notice that Lessee wilt pay for such Capital Expenditure. If Lessor does not elect to terminate, and falls to tender Its share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest, from Rent until Lessor's share of such costs have been fully paid. If Lessee Is unable to finance Lessor's share, or If the balance of the Rant due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Lease upon 30 days written notice to Lessor. (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises then, and in that event, Lessee shall be fully responsible for the cost thereof, and Lessee shall not have any right to terminate this Lease. 2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the condition of the Premises (Including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Lessee's intended use, (b) Losses has made such Investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the Premises, and (c) neither Lessor, Lessors agents, nor Brokers have made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (I) Brokers have made no representations, promises or warranties concerning Lessee's ability to honor the Lease or suitability to occupy the Premises, and (ii) it is Lessors sole responsibility to investigate the financial capability and/or suitability of as proposed tenants. 2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor In Paragraph 2 shall be of no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary corrective work. 2.6 Vehicle Parking. Lessee shall be entitled to use the number of Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas designated from time to time by Lessor for parking. Lessee shag not use more parking spaces than said number. Said parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein celled "Permitted Size Vehicles." Lessor may regulate the loading and unloading of vehicles by adopting Rules and Regulations as provided in Paragraph 2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common Area without the prior written permission of Lessor. 2 (a) Leases shaft not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee's employees, suppliers. shippers, customers, contractors or invitees to be loaded-unloaded, or parked In areas other than those designated by Lessor for such activities. (b) Lessee shall not service or store any vehicles in the Common Areas. (c) If Lessee permits or allows any of the prohibited activities described in this Paragraph 2.6, then Lessor shall have the right, without notice, In addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be Immediately payable upon demand by Lessor. 2.7 Common Areas - Definition. The term *Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Project and Interior utility raceways and Installations within trip Unit that are provided and designated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, Including parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas. 2.8 Common Areas - Lessee's Rights. Lessor grants to Lessee, for the benefit of Lessee and Its employees, suppliers, shippers, contractors, customers and Invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to Include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or Lessors designated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur then Lessor shall have the right, without notice, in addition to such other rights and remedies that It may have, to remove the properly and charge the cost to leases, which cost shall be Immediately payable upon demand by Lessor. 2.9 Common Areas - Rules and Regulations. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations ("Rules and Regulations") for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Building and the Project and their Invitees. Lessee agrees to abide by and conform to all such Rules and Regulations, and to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of the Project. 2.10 Common Areas - Changes. Lessor shall have the right, in Lessor's sole discretion, from time to time: (a) To make changes to the Common Areas, Including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, Ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways; (b) To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available; (c) To designate other land outside the boundaries of the Project to be a part of the Common Areas; (d) To add additional buildings and improvements to the Common Areas; (e) To use the Common Areas while engaged In making additional Improvements, repairs or alterations to the Project, or any portion thereof; and (f) To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Lessor may, In the exercise of sound business judgment, deem to be appropriate. 3. Term. 3.1 Term. The Commencement Date, Expiration Date end Original farm at this Lease are as specified In Paragraph 4.3. 3.2 Early Possession. It Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early possession. All other terms of this Lease (Including but not limited to The obligations to pay Lessee's Share of Common Area Operating Expenses, Real Property Taxes and Insurance premiums and to maintain the Premises) shall, however, be in effect during such period. Any such early possession shell not affect the Expiration Date, 3.3 Delay In Possession. Lessor agrees to use Its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession as agreed, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease. Lessee shall not, however, he obligated to pay Rent or perform its other obligations until It receives possession of the Premises. If possession Is not delivered within 60 days after the Commencement Date, Lessee may, at Its option, by notice In writing within to days after the end of such 60 day period, cancel this Lease, In which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said 10 day period, Lessee's right to cancel shall terminate. Except as otherwise provided, if pas Ion is not tendered to Lessee by the Start Date end Lessee does not terminate this Lease, as aforesaid, any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession of the Premises is not delivered within 4 months after the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor end Lessee, in writing. 3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies with Its obligation to provide evidence of insurance (Paragraph 8,6). Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, Including the payment of Rent, notwithstanding Lassoes election to withhold possession pending receipt of such evidence of Insurance. Further, it Lessee Is required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied. 3 4. Rent. 4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lasso (except for the Security Deposit) are deemed to be rent ("Rent"). 4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent, Lessee's Share (as specified In Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in accordance with the following provisions: (a) "Common Area Operating Expenses" are defined, for purposes of this Lease, as aft costs incurred by Lessor relating to the ownership and operation of the Project, including, but not limited to. the following: (i) The operation, repair and maintenance, in neat, clean, good order and condition of the following: (aa) The Common Areas and Common Area improvements, Including parking areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators, roofs, and roof drainage systems. (bb) Exterior signs and any tenant directories. (cc) Any lire detection and/or sprinkler systems. (ii) The cost of water, gas, electricity and telephone to service the Common Areas and any utilities not separately metered. (Iii) Trash disposal, pest control services, property management, security services, and the costs of any environmental inspections. (iv) Reserves set aside for maintenance and repair of Common Areas. (v) Real Property Taxes (as defined In Paragraph 10). (vi) The cost of the premiums for the insurance maintained by Lessor pursuant to Paragraph 8. (vii) Any deductible portion of an Insured loss concerning the Building or the Common Areas. (viii) The cost of any Capital Expenditure to the Building or the Project not covered under the provisions of Paragraph 2.3 provided; however, that Lessor shall allocate the cost of any such Capital Expenditure over a 12 year period andLessee shall not be required to pay more than Lessee's Share of 1/144th of the cost of such Capital Expenditure in any given month. (Ix) Any other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area Operating Expense: (b) Any Common Area Operating Expenses and Real Property Taxes that are specifically attributable to the Unit, the Building or to any other building In the Project or to the operation, repair and maintenance thereof, shall be allocated entirely to such Unit, Building, or other building. However, any Common Area Operating Expenses and Real Property Taxes that are not specifically attributable to the Building or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings In the Project. (c) The inclusion of the improvements, facilities and services set forth In Subparagraph 4,2(a) shall not be doomed to impose an obligation upon Lessor to either have said Improvements or facilities or to provide those services unless the Project already has the same, Lessor already provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of them. (d) Lessee's Share of Common Area Operating Expenses shall be payable by Lessee within 10 days after a reasonably detailed statement of actual expenses is presented to Lessee. At Lessor's option, however, an amount may be estimated by Lessor from time to time of Lessee's Share of annual Common Area Operating Expenses and the same shall be payable monthly or quarterly, as Lessor shag designate, during each 12 month period of the Lease term, on the same day as the Base Rent Is due hereunder, Lessor shall deliver to Lessee within 60 days after the expiration of each calendar year a reasonably detailed statement showing Lessee's Share of the actual Common Area Operating Expenses incurred during the preceding year. It Lessee's payments under this Paragraph 4.2(d) during the preceding year exceed Lessee's Share as Indicated on such statement, Lessor shall credit the amount of such over-payment against Lessee's Share of Common Area Operating Expenses next becoming due. If Lessee's payments under this Paragraph 4.2(d) during the preceding year were less than Lessee's Share as Indicated on such statement, Lessee shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee, of the statement. 4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address slated herein or to such other persons or place as Lessor may from time to lime designate in writing. Acceptance of a payment which is lees than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent, regardless of Lessor's endorsement of any check so slating. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 In addition to any late charges which may be due. 5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee's faithful performance of its obligations under this Lease. It Lessee falls to pay Rant, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or Incur by reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion to the Increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to Increase the Security Deposit to the extent necessary, in Lessor's reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. If a change In control of Losses occurs during this Lease and following such change the financial condition of Lessee is, in Lessor's reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a 4 commercially reasonable level based on such change in financial condition. Lessor shall not be required to keep the Security Deposit separate from Its general accounts. Within 14 days after the expiration or termination of this Lease, If Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within 30 days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No pall of the Security Deposit shall be considered to be held in trust, to hear interest or to be prepayment for any monies to be paid by Lessee under this Lease. 6. Use. 6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which Is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or properties. Lessor shall not unreasonably withhold or delay Its consent to any written request for a modification of the Agreed Use, so long as the same will not Impair the structural Integrity of the Improvements on the Premises or the mechanical or electrical systems therein, and/or Is not significantly more burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after such request give written notification of same, which notice shall include an explanation of Lessor's objections to the change in the Agreed Use. 6.2 Hazardous Substances. (a) Reportable Uses Require Consent. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by Itself or in combination with other materials expected to be on the Premises, Is either; (I) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (ill) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory, Hazardous Substances shall Include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessee's expense) with all Applicable Requirements. "Reportable Use" shall mean (I) the installation or use of any above or below ground storage tank, (II) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, so long as such use Is in compliance with all Applicable Requirements, is not a Reportable Use, and does not expose the Promises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition Its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or the environment against damage, contamination, Injury and/or liability, including, but not limited to, the installation (and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and/or increasing the Security Deposit. (b) Duty to Inform Lessor. It Lessee knows, or has reasonable cause to believe, that a Hazard... Substance has come to be located In, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which 11 has concerning the presence of such Hazardous Substance. (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released In, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee's expense, take all investigators and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, or any third party. (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, end attorneys' and consultants' fees arising out of or Involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from areas outside of the Project). Lessee's obligations shall Include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation, removal, remediatlon, restoration and/or abatement, and shall survive the aspiration or termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor In writing at the time of such agreement. (a) Lessor indemnlfcation. Lessor and its successors and assigns shall Indemnity, defend, reimburse and hold Lessee, Its employees and lenders, harmless from and against any and alt environmental damages, Including the cost of remediation, which existed as a result of Hazardous Substances on the Premises prior to the Start Date or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessor's obligations, as and when required by the Applicable Requirements, shall Include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. (I) Investigations and Remedlations. Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to the start Date, unless such remediation measure is required as a result of Lessee's use (including 'Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor, Including allowing Lessor end Lessors agents to have reasonable access to the Premises at reasonable times In order to carry out Lessor's Investigative and remedial responsibilities. (g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the lean of this Lease, unless Lessee Is legally responsible therefor (in which case Lessee shall make the Investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue In full force and effect, but subject to Lessor's rights under 5 Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and remediate such Hazardous Substance Condition, If inquired, as soon as reasonably possible at Lessor's expense, In which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Lessee, within 30 days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lassoes desire to terminate this Lease as of the date 60 days following the date of such notice. In the event Lessor elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of Lessee's commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000, whichever Is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days following such commitment. In such event, this Lease shall continue in full force and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time provided, this Lease shall terminate as of the date specified in Lessor's notice of termination. 6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise provided In this Lease, Lessee shall, at Lessee's sole expense, fully, diligently and In a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor's engineers and/or consultants which relate in any manner to the Premises, without regard to whether said requirements are now In affect or become effective after the Start Date. Lessee shall, within 10 days after receipt of Lessor's written request, provide Lessor with copies of all permits and other documents, and other Information evidencing Lessee's compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents Involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or Involving the failure of Lessee or the Premises to comply with any Applicable Requirements. 6.4 Inspection; Compliance. Lessor and Lessor's 'Lender" (as defined in Paragraph 30) and consultants shall have the fight to enter into Premises at any time, In the case of an emergency, and otherwise at reasonable times, for the purpose of Inspecting the condition of the Promises and for verifying compliance by Lessee with this Lease. The cost of any such Inspections shall be paid by Lessor, unless a violation of Applicable Requirements, Or a contamination is found to exist or be Imminent, or the inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such Inspection, so long as such inspection Is reasonably related to the violation or contamination. 7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations. 7.1 Lessee's Obligations. (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises, Utility Installations (intended for Lessee's exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee's use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights but excluding any Items which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below. Lessee's obligations shall include restorations, replacements or renewals when necessary to keep the Promises and all improvements thereon or a pad thereof in good order, condition and state of repair. (b) Service Contracts. Lessee shall, at Lessee's sole expense, procure and maintain contracts, with copies to Lessor, In customary form and substance for, and with contractors specializing and experienced In the maintenance of the following equipment and improvements, if any, it and when Installed on the Premises: (I) HVAC equipment, (ii) boiler and pressure vessels, (iii) clan tiers, and (Iv) any other equipment, if reasonably required by Lessor. However, Lessor reserves the right, upon notice to Lessee, to procure and maintain any or all of such service contracts, and If Lessor so elects, Lessee shall reimburse Lessor, upon demand, for the cost thereof. (c) Failure to Perform. If Lessee falls to perform Lessee's obligations under this Paragraph 7.1, Lessor may enter upon the Premises after 10 days' prior written notice to Lessee (except In the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee's behalf, and put the Premises in good order, condition and repair, and Lessee shall promptly reimburse Lessor for the cost thereof. (d) Replacement. Subject to Lessee's Indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulting from Lessee's failure to exercise and perform good maintenance practices, i1 an Item described in Paragraph 7.1(b) cannot be repaired other than at a coat which is in excess of 50"/" of the cost of replacing such item, than ouch item shall he replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease, on the date on which Base Rent Is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (Is. 11144th of the cost per month). Lessee shall pay Interest an the unamortlzed balance at a rate that Is commercially reasonable in the judgment of Lessor's accountants. Lessee may, however, prepay Its obligation at any time. 7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations, 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of Interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shah not be obligated to paint the exterior or Interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or 6 replace windows, doors or plate glass of the Premises. Lessee expressly waives the benefit of any statute now or hereafter in attack to the extent it is Inconsistent with the terms of this Lease. 7.3 Utility Installations; Trod. Fixtures; Alterations. (a) Definitions. The term "Utility Installations" refers to all floor and window coverings, air lines, power panels, electrical distribution, security and tire protection systems, communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. The to redo Fixtures' shall mean Lessee's machinery end equipment that can he removed without doing material damage to the Premise term "Alterations" shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned Alterations and/or Utility Installations' are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). (b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor's prior written consent. Lessee may, however, make non-structural Utility installations to the interior o1 the Premises (excluding the root) without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not Involve puncturing, relocating or removing the real or any existing walls, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal to 3 month's Base Rent In the aggregate ore sum equal to one month's Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (ill) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed In a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs an amount in excess of one month's Base Rent, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility Installation and/or upon Lessee's posting an additional Security Deposit with Lessor. (c) Indemnification. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been tarnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialman's lien against the Premises or any Interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the tight to post notices of non-responsibility. If Lessee shell contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessor's attorneys' fees end costs. 7.4 Ownership; Removal; Surrender; and Restoration. (a) Ownership. Subject to Lessor's right to require removal or elect ownership as hereinafter provided, all Alterations and Utility installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time, elect In writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, al the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises. (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not later than 30 days prior to the and of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent. (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the Improvements, parts and surfaces thereof broom clean and free of debris, and In good operating order, condition and state of repair, ordinary wear and tear excepted. "Ordinary wear and lest" shall not Include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing, It this Lease Is for 12 months or lass, then Lessee shall surrender the Premises In the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage lank installed by or for Lessee. Lessee shall also completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazardous Substances which were deposited via underground migration from areas outside of the Project) even d such removal would require Lessee to perform or pay for work that exceeds statutory requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below. 8. Insurance; Indemnity. 8.1 Payment of Premiums. The cost of the premiums for the Insurance policies required to be carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common Area Operating Expense. Premiums for policy periods commencing prior to, or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date. 8.2 Liability Insurance. (a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of Insurance protecting Lessee and Lessor as an additional Insured against claims for bodily Injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Promises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000, an "Additional Insured-Managers or Lessors of Premises Endorsement" and contain the 'Amendment of the Pollution Exclusion Endorsement' for damage caused by heal, smoke or fumes from a hostile fire. The policy shall not contain 7 any intra-Insured exclusions as between Insured persons or organizations, but shall Include coverage for liability assumed under Ibis Lease as an 'Insured contract" for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance shall riot, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. All Insurance carried by Lessee shall be primary to and not contributory with any similar insurance carried by Lessor, whose Insurance shall be considered excess Insurance only. (b) Carried by Lessor. Lessor shell maintain liability insurance as described In Paragraph 8.2(a), in addition to, and not in lieu of, the Insurance required to be maintained by Lessee. Lessee shall not be named as an additional Insured therein. 8.11 Property Insurance -Building, Improvements and Rental Value. (a) Building and Improvements. Lessor shall obtain and keep In force a policy or policies of Insurance In the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Premises. The amount of Such insurance shall be equal to the full replacement cost of the Premises, as the same shall exist from time to lime, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's personal property shell be insured by Lessee under Paragraph 8.4. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for debris removal end the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and Inflation guard protection causing an increase In the annual property Insurance coverage amount by a factor of not less man the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such Insurance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence. (b) Rental Value. Lessor shall also obtain and keep in force a policy or policies in the name of Lessor with loss payable to Lessor and any Lender. Insuring the loss of the frill Rent for one year with an extended period of Indemnity for en additional 180 days ('Rental Value insurance"). Said Insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shat) be adjusted annually to reflect the projected Rent otherwise payable by Lessee. for the next 12 month period. (c) Adjacent Premises. Lessee shall pay for any Increase In the premiums for the property Insurance of the Building and for the Common Areas or other buildings In the Project It said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises. (d) Lessee's Improvements. Since Lessor is the Insuring Party, Lessor shall not be required to insure Lessee Owned Alterations and Utility Installations unless the item in question has become the property of Lessor under the terms of this Lease. 8.4 Lessee's Property; Business Interruption Insurance. (a) Property Damage. Lessee shall obtain and maintain Insurance coverage an all of Lessee% personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor with written evidence that such Insurance is in force. (4) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly Insured against by prudent lessees In me business of Lessee or attributable to prevention of access to the Premises as a result of such perils. (c) No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee's property, business operations or obligations under this Lease. 8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or admitted to transact business in the state where the Premises are located, and maintaining during the policy term a "General Policyholders Elating" of at least e,, V, as sot forth in the most current issue of "Best's insurance Guide", or such other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which Invalidates the required Insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Lessee shall, at least 30 days prior to the expiration of such policies, furnish Lessor Milt evidence of renewals or "insurance binders" dancing renewal thereof, or Lessor may order such Insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. It either Party shall fail to procure and maintain the insurance required to be carded by it, the other Party may, but shall not be required to, procure and maintain the same. 8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, far loss of or damage to Its property arising out of or incident to the perils required to be Insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage Insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the Insurance Is not invalidated thereby. 8.7 Indemnity. Except for Lessors gross negligence or willful misconduct, Lessee shall Indemnity, protect, defend and hold harmless the Premises, Lessor and its agents, Lassoes master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, lions, judgments, penalties, attorneys' and consultants' fees, expenses and/or liabilities arising out of, Involving, or in connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding Is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified. 8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, 8 Lessee's employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or Injury Is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or tram any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building, or from other sources or places. Lessor shall not be liable for any damages arising from any actor neglect of any other tenant of Lessor nor from the failure of Lessor to enforce the provisions of any other lease In the Protect. Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under no circumstances be liable for Injury to Lessee's business or for any loss of income or profit therefrom. 9. Damage or Destruction. 9,1 Definitions. (a) 'Premises Partial Damage" shall mean damage or destruction to the improvements on the Premises, other then Lessee Owned Alterations and Utility Installations. which can reasonably be repaired In 3 months or less from the date of the damage or destruction, and the cost thereof does rat exceed a sum equal to 6 month's Base Rent. Lessor shall notify Lessee In writing within 30 days from the date of the damage or destruction as to whether or not the damage Is Partial or Total, (b) "Premises Total Destruction' shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired In 3 months or less from the date of the damage or destruction and/or the cost thereof exceeds a sum equal to 6 month's Base Rent. Lessor shall notify Lessee In writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total. (c) "Insured Loss" shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the Insurance described in Paragraph 8.3(a), Irrespective of any deductible amounts or coverage limits Involved. (d) 'Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, Including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation. \4 (e) 'Hazardous Substance Condition' shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), In, on, or under the Premises. 9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that Is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage (but not Lessee's Trade Fixtures or Lesson Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor's election, make the repair of any damage or destruction the total cost to repair of which is $5,000 or less, and, In such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required Insurance was not In force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the Improvements, full replacement cost Insurance coverage was not commercially reasonable and available. Lessor shall have no obligation to pay for the shortage In Insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written notice of such shortage and request Therefor. It Lessor receives said funds or adequate assurance thereof within said 10 day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to: (t) make such restoration and repair as is commercially reasonable with Lessor paying any shortage In proceeds, In which case this Lease shall remain in full force and effect, or (if) have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some Insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party. 9.3 Partial Damage - Uninsured Loss. It a Premises Partial Damage that Is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), Lessor may either: (I) repair such damage as soon as reasonably possible at Lessor's expense, In which event this Lease shell continue in full force and effect, or (It) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shall have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessee's commitment to pay for the repair of such damage without reimbursement from Lessor, Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice. 9.4 Total Destruction. Notwithstanding any other provision hereof, If a Premises Total Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lessors damages from Lessee, except as provided in Paragraph 8.6. 9.5 Damage Near End of Term. If at any lime during the last 6 months of this Lease there Is damage for which the cost to repair exceeds one month's Base Rent. whether or not en insured Loss, Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage by giving a written termination notice to Losses within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, If Lessee at that time has an execrable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage In Insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (1) the date which Is 10 days after 9 Lessee's receipt of Lessor's written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lassoes commercially reasonable expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee falls to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee's option shall be extinguished. 9.6 Abatement of Rent; Lessee's Remedies. (a) Abatement In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair, remediatlon or restoration of such damage shall be abated in proportion to the degree to which Lessee's use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value Insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability fur any such damage, destruction, remediation, repair or restoratlon except as provided herein. (b) Remedies. II Lessor shall be obligated to repair or restore the Premises and does not commence, In a substantial and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessee's election to terminate this Lease on e date not less than e0 days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date specified In said notice. If the repair or restoration is commenced within such 30 days, tills Lease shall continue in full force and effect. 'Commence" shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs. 9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lasses so much of Lessees Security Deposit as has not been, or is not then required to be, used by Lessor. Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent inconsistent herewith, 10. - Real Property Taxes. 10.1 Definition. As used herein, the term "Real Property Taxes" shall include any form of assessment; real estate, genera , ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license lee imposed upon or levied against any legal or equitable interest of Lessor in the Project, Lessor's right to other income therefrom, and/or Lessor's business of leasing, by any authority having the direct or Indirect power to tax and where the funds are generated with reference to the Project address and where the proceeds so generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Project is located. The term "Real Property Taxes" shall also Include any tax, fee, levy, assessment or charge, or any Increase therein, Imposed by reason of events occurring during the term of this Lease, including but not limited to, a change In the ownership of the Project or any portion thereof or a change in the Improvements thereon. In calculating Real Property Taxes for any calendar year, the Real Property Taxes for any real estate tax year shall be Included in the calculation of Real Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have In common. 10.2 Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Project, and except as otherwise provided in Paragraph 10.3, any such amounts shall be included in the calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2. 10.3 Additional Improvements. Common Area Operating Expenses shall not include Real Property Taxes specified in the tax assessor's records and work shoots as being caused by additional Improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes If assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Promises by Lessee or at Lessee's request, 10.4 Joint Assessment. If the Building Is not separately assessed, Real Property Taxes allocated to the Building shell be an equitable proportion of the Real Properly Taxes for all of the land and improvements Included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned In the assessor's work sheets or such other Information as may be reasonably available, Lessor's reasonable determination thereof, in good faith, shall be conclusive. 10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises. When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. II any of Lessee's said property shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee's property. it. 11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the 10 Premises, together with any taxes thereon. Notwithstanding the provisions of Paragraph 4.2, If at any time In Lessor's sole judgment, Lessor determines that Lessee is using a disproportionate amount of water, electricity or other commonly metered utilities, or that Lessee Is generating such a large volume of trash as to require an Increase in the size of the dumpster and/or an Increase In the number of times per month that the dumpster Is emptied, then Lessor may increase Lessee's Base Rent by an amount equal to such Increased costs. 12. Assignment and Subletting. 12.1 Lessor's Consent Required. (a) Lessee shall not voluntarily or by operation or law assign, transfer, mortgage or encumber (collectively, "assign or assignment") or sublet all or any part of Lessee's Interest in this Lease or In the Premises without Lassoes poor written consent. (b) A change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a change in control for this purpose. (c) The Involvement of Lessee or Its assets In any transaction, or series of transactions (by way at merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee's assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as It was represented at the time of the execution of this Lease or at the lime of the most recent assignment to which Lessor has consented, or as it exists immediately poor to said transaction or transactions constituting such reduction, whichever was or Is greater, shall he considered an assignment of this Lease to which Lessor may withhold its consent. 'Net Worth of Lessee" shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles. (d) An assignment or subletting without consent shall, at Lessor's option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach, Lessor may either: (f) terminate this Lease, or (II) upon 30 days written notice, increase the monthly Base Rent to 110% of the Base Rent then In affect. Further, In the event of such Breach and rental adjustment, (I) the purchase price of any option to purchase the Premises held by Lessee sham be subject to similar adjustment to 110% of the price previously in affect, and (it) all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent, (a) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief. 12.2 Terms and Conditions Applicable to Assignment and Subletting. (a) Regardless of Lassoes consent, no assignment or subletting shall: (I) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (II) release Lessee of any obligations hereunder, or (lit) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee. (b) Lessor may accept Rent or performance of Lessee's obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessor's right to exercise its remedies for Lessee's Default or Breach. (c) Lessor's consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting. (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee's obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor's remedies against any other person or entity responsible therefore to Lessor, or any security held by Lessor. (a) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessors determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the Intended use and/or required modification of the Premises, If any, together with a fee of $1,000 or 10% of the current monthly Base Rent applicable to the portion of the Premises which is the subject of the proposed assignment or sublease, whichever is greater, as consideration for Lessors considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (f) Any assignee of, or subleases under, this Lease shall, by reason of accepting such assignment or entering Into such sublease, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to In writing. (g) Lessors consent to any assignment or subletting shall not transfer to the assignee or subleases any Option granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing. (Sae Paragraph 39.2) 12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises end shall be deemed included In all subleases under this Lease whether or not expressly incorporated therein: (a) Lessee hereby assigns and transfers to Lessor all of Lessee's Interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee's obligations under this Lease; provided, however, that until a Breach shall occur In the performance of Lessee's Obligations, Lessee may collect said Rent. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such subleases, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Subleases shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary. (b) In the event of a Breath by Lessee. Lessor may, at its option, require subleases to attorn to Lessor, In which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or far any prior Defaults or Breaches of such sublessor. (c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor. (d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor's poor written consent. 11 (o) Lessor shelf deliver a copy of any notice of Default or Breach by Lessee to the Subleases, who shall have the right to cure the Default at Lessee within the grace period, If any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the subleases. 13. Default; Breach; Remedies. 13.1 Default; Breach. A "Default" Is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A "Breach" is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period: (a) The abandonment of the Promises; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described In Paragraph 8.3 Is jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism. (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due. to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days following written notice it) Lessee. (c) The failure by Lessee to provide (1) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41 (easements), or (viii) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days following written notice to Lessee. (d) A Default by Lessee as 10 the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs 13.1(a), (b) or (c), above, where such Default continues for a period of 30 days after written notice; provided, however, that if the nature of Lessees Default is such that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion. (e) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor" as defined in 11 U.S.C. ss. 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's Interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located al the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph (a) is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions. (f) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false. (g) If the performance of Lessee's obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a Guarantor's breach of its guaranty obligation on an anticipatory basis, and Lessee's failure, within 60 days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease. 13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within 10 days after written notice (or In case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee's behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee upon receipt of Invoice therefor. I f any check given to Lessor by Lessee shall not be honored by the bank upon which it Is drawn, Lessor, at its option, may require all future payments to be made by Lessee to be by cashiers check. In the event of a Breach. Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach: (a) Terminate Lessee's right to possession of the Promises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (I) the unpaid Rent which had been earned at the time of termination; (if) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the lime of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (III) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform Its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of Walking, Including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Lessor In connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (Iii) of the Immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent, Efforts by Lessor to mitigate damages caused by Lessee's Breach of this Lease shall not waive Lessors right to recover damages under Paragraph 12. If termination of this Lease Is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit, if a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1, In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall 12 constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for In this Lease and/or by said statute. (b) Continue the Lease and Lessee's right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessors interests, shall not constitute a termination of the Lessee's right to possession. (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provision of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee's occupancy of the Premises. 13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, Inducement or consideration for Lessee's entering into this Lease, all of which concessions are hereinafter referred to as 'Inducement Provisions", shall be deemed conditioned upon Lessee's full and faithful performance of ail of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shelf automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, Inducement or consideration theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so slated in writing by Lessor at the time of such acceptance. 13.4 Late Charges. Lessee hereby acknowledges that tare payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs Include, but are not limited to, processing arid accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within 5 days after such amount shall be due, then, without any requirement for notice to Lessee. Lessee shall pay to Lessor a one-time late charge equal to 10% of each such overdue amount or $100, whichever Is greater. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall In no event constitute a waiver of Lessee's Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights end remedies granted hereunder. In the event that a late charge Is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessors option, become due and payable quarterly In advance. 13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days following the date on which It was due for non-scheduled payment, shall bear Interest from the date when due, as to scheduled payments, or the 31st day after It was due as to non-scheduled payments. The interest ("Interest") charged shall be equal to the prime rate reported In the Wall Street Journal as published closest prior to the date when due plus 4%, but shall not exceed the maximum rate allowed by law. Interest is payable In addition to the potential fate charge provided for in Paragraph 13.4. 13.6 Breach by Lessor. (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that If the nature of Lassoes obligation Is such that more than 30 days are reasonably required for its performance, then Lessor shall not be In breach It performance Is commenced within such 30 day period said thereafter diligently pursued to completion. (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breech within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lassos may steel to cure said breach at Lessee's expense end offset from Rent an amount equal to the greater of one month's Base Rent or the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall document the cost of said cure and supply said documentation to Lessor. 14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively "Condemnation"), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the floor area of the Unit, or more than 25% of Lessee's Reserved Parking Spaces, is taken by Condemnation, Lessee may, at Lessee's option, to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning Authority takes much possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be Media as compensation for diminution In vale a leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be entitled to any compensation for lessee's relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, far purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled to any and all compensatlon which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation. 13 15. Brokerage Fees. 15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree In writing, Lessor agrees chat: (a) it Lessee exercises any Option, (b) If Lessee acquires from Lessor any rights to the Premises or other premises owned by Lessor and located within the Project, (c) It Lessee remains In possession of the Premises, with the consent of Lessor, after the expiration of this Lease, or (d) If Base Rent Is increased, whether by agreement or operation of an escalation clause herein, then, Lessor shall pay Brokers a fee in accordance with the schedule of the Brokers in effect at the lime of the execution of this Lease. 15.2 Assumption of Obligations. Any buyer or transferee of Lessor's interest in this Lease shall be deemed to have assumed Lessor's obligation hereunder: Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Lease when due, then such amounts shall accrue Interest. In addition, If Lessor fails to pay any amounts to Lessee's Broker when due, Lessee's Broker may send written notice to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within 10 days after said notice, Lessee shall pay said monies to Its Broker and offset such amounts against Rent. In addition, Lessee's Broker shall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Lessor and Lassoes Broker for the limited purpose of collecting any brokerage tee owed. 15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder (other than the Brokers, if any) in connection with this Lease, and that no one other then said named Brokers is entitled to any commission or finder's tee In connection herewith. Lessee and Lessor do each hereby agree to Indemnity, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, Including any costs, expenses, attorneys' fees reasonably Incurred with respect thereto. 16. Estoppel Certificates. (a) Each Party (as "Responding Party") shall within 10 days after written notice from the other Party (the "Requesting Party") execute; acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current "Estoppel Certificate' form published by the American Industrial Real Estate Association, plus such additional Information, confirmation and/or statements as may be reasonably requested by the Requesting Party. (b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (I) the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if Lessor is the Requesting Party, not more than one month's rent has been paid In advance. Prospective purchasers and encumbrances may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate. (0 ) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall deliver 1o any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser, Including but not limited to Lessee's financial statements for the past 3 years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. 17. Definition of Lessor. The term "Lessor" as used herein shall mean the owner of owners at the lime In question of the fee title to the Premises, or, If this Is a sublease, of the Lessee's Interest in the prior lease, In the event of a transfer of Lessor's title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Except as provided In Paragraph 15, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants In this Lease to he performed by the Lessor shall be binding only upon the Lessor as hereinabove defined. Notwithstanding the above, and subject to the provisions of Paragraph 20 below, the original Lessor under this Lease, and all subsequent holders of the Lessor's interest In this Lease shall remain liable and responsible with regard to the potential duties and liabilities of Lessor pertaining to Hazardous Substances as outlined In Paragraph 6.2 above. 18. Severability. The Invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof. 19. Days. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall moan and refer to calendar days. 20. Limitation on Liability. Subject to the provisions of Paragraph 17 above, the obligations of Lessor under this Lease shall not constitute personal obligations of Lessor, the Individual partners of Lessor or Its or their Individual partners, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against the Individual partners of Lessor, or Its or their individual partners, directors, officers or shareholders, or any of their personal assets for such satisfaction. 21. Time of Essence. Time Is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease. 14 22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and Is relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the use, nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party. The liability (including court costs and attorneys' fees), of any Broker with respect to negotiation, execution, delivery or performance by either Lessor or Lessee under this Lease or any amendment or modification hereto shall be limited to en amount up to the fee received by such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker's liability shall not be applicable to any gross negligence or willful misconduct of such Broker. 23. Notices. 23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered In person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given If served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate In writing. 23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the dale of delivery shown on the receipt card, or if no delivery date Is shown, the postmark thereon. If sent by regular mall the notice shall be damned given 46 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mall or overnight courier that guarantee next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered upon telephone confirmation of receipt (conflrmation report from fax machine is sufficient), provided a copy Is also delivered via delivery or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day. 24. Waivers No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or Breech by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment. 25. Disclosures Regarding The Nature of a Real Estate Agency Relationship. (a) When entering into a discussion with a real estate agent regarding a real estate transaction, a Lessor or Lessee should from the outset understand whet type of agency relationship or representation it has with the agent or agents in the transaction, Lessor and Lessee acknowledge being advised by the Brokers in this transaction, as follows: (I) Lessor's Agent. A Lessor's agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lessor's agent or subagent has the following affirmative obligations! To the Lessor A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills end care in performance of the agent's duties. (0) A (Jury or honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Patty any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (II) Lessee's Agent. An agent can agree to act as agent for the Lessee only. In these situations, the agent Is not the Lessor's agent, even it by agreement the agent may receive compensation for services rendered, either In full or In part from the Lessor. An agent acting only for a Lessee has the following affirmative obligations. To the Lessen: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the Lessor: (e) Diligent exercise of reasonable skills and care In performance of the agent's duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Patties, An agent Is not obligated to reveal to either Party any confidential information obtained from the other Party which does not Involve the affirmative duties set forth above. (iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Lessor and the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the Lessee. In a dual agency situation, the agent has the following affirmative obligations to both the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Lessor or the Lessee. (b) Other duties to the Lessor and the Lessee as stated above In subparagraphs Q) or (ii). In representing both Lessor and Lessee, the agent may not without the express permission of the respective Party, disclose to the other Party that the Lessor will accept rent in an amount less than that indicated in the listing or that the Lessee is willing to pay a higher rent than that offered. The above duties at the agent in a real estate transaction do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor and Lessee should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional. (b) Brokers have no responsibility with respect to any default or breach hereof by either Party. The liability (including court costs and attorneys' fees), of any Broker with respect to any breach of duty, error or 15 omission relating to this Lease shall not exceed the foe received by such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker's liability shall not be applicable to any gross negligence or willful misconduct of such Broker. (c) Buyer and Seller agree to identify to Brokers as "Confidential" any communication or information given Brokers that is considered by such Party to be confidential. 26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee. 27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 28. Covenants and Conditions; Construction of Agreement. AN provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as it both Parties had prepared it. 29. Binding Effect Choice of Low. This Lease shall be binding upon the parties, their personal representatives. successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall he Initiated in the county in which the Premises are located. 30. Subordination; Attornment; Non-Disturbance. 30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, 'Security Device'). now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as 'Lender") shall have no liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof. 30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are acquired by another upon the foreclosure or termination of a Security Device to which this Lease Is subordinated (I) Lessee shell, subject to the non-disturbance provisions of Paragraph 30.3, atton to such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of such new owner, this Lease shall automatically become a new Lease between Lessee and such new owner, upon all of the terms and conditions hereof. for the remainder of the term hereof, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessor's obligations hereunder, except that such new owner shall not: (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more than one month's rent, or (d) be liable for the return of any security deposit paid to any prior lessor. 30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee's subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance Agreement provides that Lessee's possession of the Premises, and this Lease, Including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. Further, within 80 days alter the execution of this Lease, Lessor shall use Its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which Is secured by the Premises. In the even) that Lessor is unable to provide the Non-Disturbance Agreement within said 80 days, then Lessee may, at Lessee's option, directly contact Lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement. 30.4 Self-Executing. The agreements contained In this Paragraph 30 shall be effective without the execution of any further documents: provided, however, that, upon written request from Lessor or a Lender In connection with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attainment and/or Non-Disturbance Agreement provided for herein. 31. Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded In tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) In any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, 'Prevailing Party' shall Include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of Its claim or defense. The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' tees reasonably incurred, in addition, Lessor shall be entitled to attorneys' fees, costs and expenses incurred in the 16 preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced In connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services and consultation). 32. Lessor's Access; Showing Promises; Repairs. Lessor and Lessor's agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable limes for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary. All such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time place on the Premises any ordinary "For Sale" signs and Lessor may during the last 8 months of the term hereof place on The Premises any ordinary 'For Lease' signs. Lasses may at any time place on the Premises any ordinary "For Sublease" sign. 33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises Without Lessor's prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction. 34. Signs. Except for ordinary 'For Sublease' signs which may be placed only on the Premises, Lessee shall not place any sign upon the Project without Lessor's prior written consent. All signs must comply with all Applicable Requirements. 35. Termination; Merger. Unless specifically stated Otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, ore termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Promises; provided, however, that Lessor may elect in continue any one or all existing subtenancies. Lessor's failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor's election to have such event constitute the termination of such Interest. 36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required in an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable coals and expenses (including but not limited to architects', attorneys', engineers' and other consultants' fees) Incurred In the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated In writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor's consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish Its reasons in writing and in reasonable detail within 10 business days following such request. 37. Guarantor. 37.1 Execution. The Guarantors, if any, shall each execute a guaranty In the form most recently published by the American Industrial Rest Estate Association, and each such Guarantor shall have the same obligations as Lessee under this Lease. 37.2 Default. II shall constitute a Default of the Lessee It any Guarantor falls or refuses, upon request to provide: (a) evidence of the execution of the guaranty, Including the authority of the party signing on Guarantors behalf to obligate Guarantor, and In the ;see of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written confirmation that the guaranty is still in effect. 38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee's part to b served and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof. 39 Options. If Lessee is granted an option, as defined below, then the following provisions shall apply. 39.1 Definition. 'Option" shall mean: (a) the right to extend the term of or renew this Lease or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to purchase or the right of first refusal to purchase the Premises or other property of Lessor. 39.2 Options Personal To Original Lasses. Any Option granted to Lessee in this Lease Is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee Is in full possession of The Premises and, if requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or subletting. 39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised. 39.4 Effect of Default on Options. (a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default Is cured, (ii) during the period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii) during the time Lessee is In Breach of this Lease, or (Iv) In the event that Lessee has boon given 3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Option. (b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the provisions of Paragraph 39.4(e). 17 (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee's due and timely exercise of the Option, it, after such exercise and prior to the commencement of the extended term, (i) Lessee fails to pay Rant for a period of 30 days offer such Rent becomes due (without any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee 3 or more notices of separate Default during any 12 month period, whether or not the Defaults are cured, or (Iii) it Lessee commits a Breech of this Lease. 40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, Its agents and invitees and their property from the acts of third parties. 41 . Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, (ii) to cause the recordation of parcel maps and restrictions, and (111) to create and/or install new utility raceways, so long as such easements, rights, dedications, maps, restrictions, and utility raceways do not unreasonably interfere with the use of the Promises by Lessee. Lessee agrees to sign any documents reasonably requested by Les sor to effectuate such rights. 42. Performance Under Protest. If at anytime a dispute shall arise as to any amount or sum of money lobe paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money Is asserted shall have the right to make payment 'under protest' and such payment shall not be regarded as a voluntary payment and there shall survive the right on the pan of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. 43. Authority. If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease an its behalf. Each party shall, within 30 days after request, deliver to the other party satisfactory evidence of such authority. 44. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions. 45. Offer. Preparation of this Lease by either party or their agent and submission of same to the other Party shall not be deemed an alter to tease to the other Party. This Lease is not Intended to be binding until executed and delivered by all Parties hereto. 46. Amendments. This Lease may be modified only in writing, signed by the Parties In Interest at the time of the modification. As long as they do not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises. 47. Multiple Parties. If more than one person or entity is named herein as either Lessor or Lessee, such multiple Parties shall have joint and several responsibility to comply with the terms of this Lease. 48. Waiver of Jury Trial. The Parties hereby waive their respective rights to trial by jury in any action or proceeding involving the Properly or arising out of this Agreement. 49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease 1 Is (R) Is not attached to this Lease. LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES. ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO: 1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. 2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE. WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED. 18 The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures. Executed at: Executed at: El Cajun, California Executed at: San Diego, California on: 4/4/03 on 3/31/03 By LESSOR: By LESSEE: POMERADO LEASING NO. 3 MILSPERING CORPORATION, a California ------------------------------- -------------------------------------------- corporation dba "American Medical Wholesale" By: /s/ Jeffrey C. Harmon By: /s/ Michael Jaspering Name Printed: Jeffrey C Hamann Name Printed: Michael Jaspering ------------------------------- -------------------------------------------- Title: President Title: President and CEO By: /s/ Daniel M. Whitaker By: /s/ Charles Greene ------------------------------- -------------------------------------------- Name Printed: Daniel M. Whitaker Name Printed: Charles Greene Title: Secretary Title: Vice President, Operations Address: 520 West Ash Street Suite 300 San Diego, CA 92101 Telephone: (619) 238-1832 Facsimile: (619) 531-1783 These forms are often modified to meat changing requirements of law and needs of the Industry. Always write or call to make sure you are utilizing the moat current form: American Industrial Real Estate Association, 700 South Flower Street, Suite 600, Los Angeles, CA 90017. (213) 687-877T . 19 ADDENDUM TO LEASE This Addendum to Lease ("Addendum") is made by and between POMERADO LEASING NO.3, A California Limited Partnership ("LESSOR") and MILSPERING CORPORATION, a California Corporation, dba "American Medical Wholesale" ("LESSEE") and is intended to supplement that certain Standard Industrial/Commercial Multi-Tenant Lease-Net between LESSOR and LESSEE dated March 14, 2003, ("Lease") to which this Addendum is annexed. If there is any inconsistency between this Addendum and the Lease, the terms of this Addendum shall supersede and control. LESSOR and LESSEE agree as follows: 1. Premises and Building Shell Description. "Building" means the freestanding building denoted on the site plan ("Site Plan"), which Is annexed to this Addendum as EXHIBIT "1 ", as "Building "A" and the "Premises" means and refers to the portion of the Building as depicted in EXHIBIT "2" which is being leased to LESSEE pursuant to this Lease. 1.1 Planned Size and Final Measurement Building "A" contains approximately 42,191 rentable square feet of which the Premises will consist of approximately 20,904 rentable square feet. The total project contains approximately 100.838 rentable square feet. All square footage measurements are from the root "drip line" and in accordance with the Building Owners and Managers Association International ("BOMA") standards. 2. Effective Date/Term/Commencement Date. Notwithstanding any other provision of the Lease, this Lease shall be effective upon execution by LESSOR and LESSEE ('Effective Date") and shall constitute a legally binding contract for LESSOR to deliver possession of the Premises in accordance with the requirements of this Lease and for LESSEE to accept possession and pay the rentals beginning upon the Commencement Date (as defined below). 2.1 Lease Term. The initial term ("Original Term") of the Lease shall be a period of time beginning on the Commencement Date and ending sixty (60) consecutive months later; provided, however, if the Commencement Date occurs other than on the first day of a calendar month, the Original Term shall be deemed extended for a period of time equal to the number of days between the Commencement Date and the beginning of the first full calendar month following the Commencement Date. 2.2 "Lease Year" Defined. The term "Lease Year" means consecutive twelve (12) month periods during the Lease Term; provided, however, in the case of the first Lease Year, such Lease Year shall be a period of time beginning on the Commencement Date and ending twelve (12) consecutive months thereafter, and each subsequent Lease Year shall be determined from the anniversary of the expiration of such first Lease Year; provided, further, however, if the Commencement Date occurs other than on the first day of a calendar month, the first Lease Year shall be deemed extended for a period of time equal to the number of days between the Commencement Date and the beginning of the first full calendar month following the Commencement Date. 3. Rent. "Rent" for the Premises shall be the sum of (a) the Base Rent described In subsection 3.1 of this Addendum, subject to adjustment as provided in subsection 3.2 of this Addendum, (b) LESSEE'S Share of Operating Expenses as defined in Section 4.2 of the Lease, (c) excess Tenant Improvement Amortization, if applicable, as provided In subsection 5.2 of this Addendum, and (d) any other amounts becoming payable by LESSEE under the Lease. The Rent shall be payable on the first day of each month. 3.1 Bass Rent. The monthly Base Rent set forth in Paragraph 1.5 of the Lease for the first Lease Year (as defined above) of the Original Term represents the full Base Rent payable upon the Commencement Date determined by multiplying the amount [INSERT] per rentable square foot by the total 20,904 rentable square feet of the Premises. If there is a variance in the rentable square footage of the Premises as actually constructed, the Base or the first Lease Year shall be adjusted based on the actual rentable square feet within the Premises multiplied times rentable square foot. 3-2 Increase In Base Rent. The Base Rent shall be increased at the beginning of the second Lease Year, and at the beginning of each Lease Year thereafter pursuant to the following rent schedule: First Lease Year Second Lease Year Third Lease Year Forth Lease Year Fifth Lease Year 4. LESSEE'S Payment of Operating Expenses. Beginning on the Commencement Date, in addition to payment of the Base Rent, LESSEE shall be responsible for payment of all "Operating Expenses" (as defined below). The term "Operating Expenses" means the following expenses and costs of the ownership and operation of the Premises: (a) amounts payable for maintenance contracts required to be procured pursuant to Paragraph 7.1(b) of the Lease (but not the cost of repairs or replacements payable by LESSEE). (b) insurance required to be maintained by LESSOR for LESSEE under the Lease (exclusive of the insurance maintained by LESSEE under Paragraph 8.4 of the Lease), (c) Real Property Taxes, (d) reasonable reserves for replacement of the roof, reasonable reserves for exterior building painting, and reasonable reserves for paving maintenance, (a) assessments and dues payable to any association or other governing body established pursuant to any covenants, conditions or restrictions affecting the Premises as of the date of the Lease, (f) payment of Mello Roos Bond installments, (g) afire sprinkler monitoring contract if payable separate from the fire sprinkler maintenance contract described in Paragraph 7.1(b) of the Lease, (h) the Administrative Fee described in subsection 4.3 of this Addendum, and (i) the reasonable amount of other ordinary and necessary expenses and costs of operation of the Premises, which are customarily incurred in the operation of similarly situated real estate projects; provided, however, the term "Operating Expenses" does not include (I) the costs of repairs or maintenance required to be performed by LESSEE to the extent such costs exceed the amount of any reserves accumulated from the Operating Expense collections for the particular repair or maintenance Item, or (II) any other items of expanse or cost which the terms of the Lease expressly require be paid or incurred by LESSEE, including all utility and trash charges payable by LESSEE under Paragraph 11 of the Lease. 4.1 LESSEE'S Share of Common Area Operating Expenses. The LESSEE'S Share of Common Area Operating Expenses stated in Paragraph 1.7(b) of the Lease is based on the rentable square feet to be included in the Industrial Center, the Building and the Premises. 4.2 Method of Payment. LESSEE shall pay to LESSOR monthly, as additional rent, an amount equal to 1/12 of the LESSEE'S share of the projected annual Operating Expenses. Such amount shall be due and payable concurrently with the payment of the applicable Base Rent. Prior to the beginning of each Lease Year, LESSOR will provide LESSEE an annual estimated Operating Budget ("Estimated Operating Budget") for each calendar year or partial year. Subject to LESSEE'S payment to LESSOR of the Operating Expenses as provided in this Addendum, LESSOR shall make prompt payment of the Operating Expenses. Any excess or deficit from the estimates shown in the Estimated Operating Budget will be credited or billed to LESSEE within ninety (90) days following the end of the applicable calendar year, and LESSOR shall concurrently furnish LESSEE with a detailed statement showing the actual Operating Expenses Incurred for such year. Any deficit will be payable as additional rent within ten (10) days of receipt of a final Operating Budget setting forth the actual expenditures for the applicable year and the deficit. Any excess shall be credited against the next payments of Operating Expenses due from LESSEE or refunded to LESSEE at the expiration or earlier termination of the Lease. LESSEE acknowledges that the amounts and/or categories of expense will likely vary in future years as the Premises ages. Promptly following LESSEE'S request, LESSOR shall furnish LESSEE with such additional information as LESSEE may reasonably request with respect to such Operating Expenses. 4.3 LESSOR'S Administrative Services. LESSOR agrees to provide certain administrative services to assist LESSEE in the performance of LESSEE'S obligations under Paragraphs 7, 8.2, 8.3 and 10 of the Lease in consideration for LESSEE'S monthly payment of an administrative fee to LESSOR of three percent (3%) of the Base Rent per month ("Administrative Fee"). Such Administrative Fee shall be payable as a part of the Operating Expenses payable by LESSEE. LESSOR'S administrative services shall consist of the following: LESSOR shall procure, on behalf of LESSEE, maintenance contracts required to be procured by LESSEE under Paragraph 7.1(b) of the Lease, and shall otherwise procure bids and contract proposals from contractors when necessary for LESSEE'S performance of its general maintenance and repair obligations under Paragraph 7.1 (a) of the Lease. 5. Tenant Improvements. The phrase 'Tenant Improvements' means all interior Improvements which are riot a part of the Building Shell Improvements, including (a) partitions, walls, doors, (b) all Interior surface finishes, including wall coverings, paint, floor coverings, suspended callings and other similar items, (c) duct work, heat pumps, vents, filters, diffusers, terminal boxes and accessories for completion of heating, ventilation and air conditioning systems within the Premises, (d) electrical distribution systems (including panels, sub-panels, wires and outlets), lighting fixtures, outlets, switches and other electrical work to be installed in the Premises, (e) plumbing lines, fixtures and accessories, (f) all fire and life safety control systems such as fire walls and lire alarms (including piping, wiring and accessories) to be located in the Premises, (g) improvements required for compliance with Title 24, provided, however, LESSEE'S trade fixtures, equipment and personal property (including telephone systems, chairs, tables, furniture, movable partitions and other equipment used In LESSEE'S business) shall not be considered part of the Tenant Improvements. The foregoing notwithstanding, the LESSOR at LESSOR'S cost and expense, per Exhibit "7", shall make the following building standard improvements to the Premises: 1, Demise the Premises (demising wall to be painted). 2. Separately meter electrical. 3. Clean carpets and paint two offices 4. Add door from reception area Into back office area. 5. Replace burned out light bulbs. 6. Remove all ONTO decals from conference room windows. 7. Demo all air and electrical drops in the warehouse area. 8. All electrical and HVAC systems to be in good working order. 9. If requested in writing by Lessee in the first six (6) months of the Lease Term, Lessor shall remove the interior partitioning wall in the warehouse area. Other than the foregoing, the LESSEE accepts the Leased Premises in an "as Is" condition. LESSEE agrees that he has determined the sufficiency of the zoning, electrical voltage, lighting, amperage, wiring, heating/air conditioning, fire sprinklers, water and waste systems available in and to the Premises for LESSEE'S use and occupancy. Additionally, San Diego Gas and Electric Company (SDG&E) does not always install transformers of sufficient size to power the electrical panels provided by the LESSOR in the Premises and Building. Before installing machinery at the inception of the Lease or making any significant increase In LESSEE'S power consumption in the future, It is LESSEE'S responsibility notify SDG&E of LESSEE'S usage so that San Diego Gas & Electric can make any necessary equipment changes. 5.1. Excess Costs Payable By LESSEE. Other than LESSOR'S improvements, as described in Subsection 5.1, LESSEE will be responsible for payment for all additional Tenant improvement Costs end any increased Tenant Improvement Costs attributable to any changes requested by LESSEE to the LESSOR'S Tenant Improvements as described In Section 5 above, whether such changes are requested during the design phase or during the course of construction of the Tenant Improvements. If LESSEE requests changes to LESSOR'S Improvements, LESSEE shall deposit funds with LESSOR (or make such other arrangements to guaranty payment of such excess costs as are acceptable to LESSOR) in an amount equal to such excess prior to the issuance of the building permit for construction of the Tenant Improvements, except in the case of excess costs resulting from changes during construction. Any construction changes shall be subject to LESSOR'S approval and LESSEE shall deposit funds with LESSOR to pay such costs within five (5) days following notice of the Contractor's cost for any change. 10. Hazardous Materials Questionnaire. Without limiting LESSEE'S obligations under Paragraph 6 of the Lease regarding compliance with Hazardous Substance Laws, LESSEE shall, within fifteen (15) days from the execution of the Lease, 2 complete and deliver to LESSOR for its filing with applicable government authorities a Hazardous Materials Questionnaire in the form as set forth in EXHIBIT "3" annexed to this Addendum. 11. Estimated Operating Expense Budget. A copy of the 2003 Estimated Common Area Operating Expenses Budget Is attached to this Addendum as EXHIBIT "4". LESSEE acknowledges that (a) this estimate is being provided only to Illustrate the projected amounts and categories of expense and that actual results may be different than the estimates; and (b) it is aware that amounts and categories of expense may vary in future years as the Promises ages. 12. Current Rules and Requisitions. Pursuant to Paragraph 2.9 of the Lease, LESSOR has adopted the Rules and Regulation annexed to this Addendum as EXHIBIT "5", and such Rules and Regulations shall remain in effect until changed by LESSOR in accordance with the Lease. 13. Parking. Pursuant to Section 1.2(b) of the Lease, LESSOR has granted LESSEE the right to use thirty (30) unreserved parking spaces In the Project. 14. LESSEE'S Use of Premises. Subject to Section 6 of the Lease, LESSEE, at LESSEE'S sole cost and expense, shall comply with all directions of any governmental authority having jurisdiction which shall, by reason of LESSEE'S particular use of the Premises, impose any duty or obligation upon LESSEE or LESSOR with respect to the Premises or Property. Prior to LESSEE's execution of the Lease and this Addendum, LESSEE and LESSEE's consultants shall have independently verified LESSEE's use of the Premises is in compliance with all and any zoning regulations as promulgated by the City of Poway. In no event shall LESSOR have any responsibility to LESSEE for LESSEE's compliance with any zoning regulations. 15. Nonbindinq Offer. LESSOR'S SUBMISSION OF THIS DOCUMENT FOR EXAMINATION, NEGOTIATION AND/OR SIGNATURE BY LESSEE DOES NOT CONSTITUTE AN OFFER TO LEASE, NOR A RESERVATION OF, NOR AN OPTION FOR THE LEASE OF THE PREMISES. THE DOCUMENT SHALL NOT BE BINDING AND IN EFFECT AGAINST EITHER PARTY UNTIL AT LEAST ONE COUNTERPART OF THIS LEASE IS FULLY EXECUTED AND DELIVERED BY LESSOR TO LESSEE. "LESSOR" POMERADO LEASING NO. 3, a California limited partnership By: Its General Partner, WHITMANN CORPORATION, a California corporation Dated: 4/3, 2003 By: /s/ Jeffrey C. Hamann, ------------------------------------- Jeffrey C. Hamann, President Dated: 4/1, 2003 By: /s/ Daniel M. Whitaker ------------------------------------- Daniel M. Whitaker, Secretary "LESSEE" MILSPERING CORPORATION A California Corporation dba "American Medical Wholesale" Dated 3/31, 2003 By: /s/ Michael Jaspering ------------------------------------- Michael Jaspering Its: President and CEO Dated 3.31, 2003 By: /s/ Charles Greene ------------------------------------- Charles Greene Its: Vice President, Operations 3 Site Plan [GRAPHIC OMITTED] Exhibit "1" Floor Plan 4 [GRAPHIC OMITTED] Exhibit "2" 5
LIST OF BUSINESSES WHICH REQUIRE REVIEW AND APPROVAL FROM COUNTY OF SAN DIEGO HEALTH DEPARTMENT THE HAZARDOUS MATERIALS MANAGEMENT DIVISION AUTOMOTIVE CHEMICAL HANDLING OTHERS AND MISCELLANEOUS ---------------------------------------------------------------------------------------------------- Battery Manufacturing/Recycling Agricultural Suppliers/Distributors Asphalt Plant Boat Yard Chemical Suppliers/Distributors Chiropractic Offices Car Wash Chemical Manufacturer Ca-Generation Plant Dealership Maintenance end Paint Coatings /Adhesives Dental Clinic/Offices Machine Shop Compressed Gas Suppliet/Dislributor Dialysis Centers Painting Dry Cleaning Frozen Food Processing Facilities Radiator Shop Fiberglass/Resin Applications Government Agencies Rental Yard Equipment Gas Station Hazardous Waste Haulers Repair, Preventive Maintenance Industrial Laundry Hospitals/Convalescent Homes Repair, Major Overhaul Laboratories Laboratories, Biological Laboratories Transportation Services Laboratory Suppliers/Distributors Medical Clinics/Offices Wrecking and Recycling Oil end Fuel Bulk Supply Public Utilities Pesticide Operator/Distributor Rock Quarry METAL WORKING Photographic Processing Veterinary Clinic/Hospitals --------------------------------- Pool Supplies/Maintenance Wood/Furniture Manufacturer/Refinishing Anodizing Printing/Blue Printing Ship Repair/Construction Chemical Milling/Etching Road Coatings Finish-Coating. Painting Swimming Pool (Gas Chlorination AEROSPACE ------------------------------ Flame Spraying Systems Only) Foundry Toxic Gas Handler Aerospace Industry Machine Shop-Drilling, Lathes, Toxic Gas Mfg. Aircraft Manufacturing Mills Metal Plating Aircraft Maintenance Metal Prepping/Chemical Coating ELECTRONICS --------------------------------------- Precious Metal Recovery Send Blasting, Grinding Electronics Components Mfg. Steel Fabricator Electronics Assembly end Sub Assembly Wrought Iron Manufacturing Printed Circuit Board Mfg. NOTE: THE ABOVE LIST INCLUDES BUSINESSES WHICH TYPICALLY USE, STORE, HANDLE AND DISPOSE OF HAZARDOUS SUBSTANCES. ANY BUSINESS NOT INCLUDED ON THIS LIST WHICH HANDLES, USES OR DISPOSES OF HAZARDOUS SUBSTANCES MAY STILL REQUIRE HAZARDOUS MATERIALS MANAGEMENT DIVISION (HMMD) REVIEW OF BUSINESS PLANS. FOR MORE INFORMATION CALL (619) 339-2222.
LISTING OF AIR POLLUTION CONTROL DISTRICT PERMIT CATEGORIES Businesses which include any of the following operations or equipment will require clearance from the Air Pollution Control District. Environmental Health Services County of Sae Diego DRSa4M-9171 (e/gz) Department of Health Services CHEMICAL COMBUSTION ROCK AND MINERAL 47-Organic Gas Starilizers 04-Piston Internal-Combustion Engines 04-Hot Asphalt Batch Plants OS-Rock Drills 13-Boilers & Heaters (1 MillionBlu/Hr. 05 - Rook Drills 32-Acid Chemical Milling or larger) 07 - Sand Rock & 33-Can & Coil Manufacturing Aggregate Plants 44-Evaporators, Dryers & Stills 13 Gas Turbines end Turbine Test 08-Concrete Batch, CTB, Concrete Processing Organic Materials Calls & Stands mixers mixers & Sillos 24-Dry Chemical Mixing & 14-Incinerators & Crematories 10 Brick Manufacturing Detergent Spray Towers 15-Burn Our Ovens 35-Bulk Dry Chemical Storage 16-Core Ovens COATINGS & SURFACE PREPARATION ELECTRONICS SOLVENT USE 01-Abrasive Blasting Equipment 29-Solder levelers 28-Vapor & Cold Depressing 27-Coating & Painting 29-Hydrosqueegees 30-Solvent & Extract Dryers 37-Plasma Arc & Ceramic 42-Electronic Component Manufacturing 31 - Dry Cleaning Deposition Spray Booths 38-Paint, Stain & Ink Mfg. OTHER 03-Asphalt Roofing Kettles end Tankers FOOD 46-Reverse Osmosis Membrane Mfg. METALS 12-Fish Canneries 51-Aqueous Waste Neutralization 18-Metal Melting Devices 12-Smoke Houses 11-Tire Buffers 19-Oil Quenching & Soft Baths 5O-Coffee Roasters 17-Brake Debonders 39 Precious Metals Relining 35-Bulk Flour & Powdered Sugar 23-Bulk Grain & Dry Chemical Transfer & Storage 45-Rubber Mixers 48-Landfill Gas Flare or Recovery Systems ORGANIC COMPOUND MARKETING (GASOLINE, ETC) 21-Waste Disposal & Reclamation Units 25 Gasoline & Alcohol Bulk Plans & Terminals 36-Grinding Booths & Rooms 25 Intermediate Refulers 40-Asphalt Pavement Heaters 26 Gasoline & Alcohol Fule Dispensing 43-Ceramic Slip Casting 41-Perlite Processing 40-Cooling Towers-Registration Only NOTE: OTHER EQUIPMENT NOT LISTED HERE THAT 15 CAPABLE OF EMITTING AIR CONTAMINANTS MAY REQUIRE AN AIR POLLUTION CONTROL DISTRICT PERMIT. IF THERE ARE ANY QUESTIONS, CONTACT THE AIR POLLUTION CONTROL DISTRICT AT (819) 6943307. EXHIBIT '3'
Exhibit "5" Pomerado Distribution Center II 13250 - 13350 Gregg Street, Poway, CA PROJECT RULES AND REGULATIONS These Rules and Regulations ("Rules") are adopted by the Lessor pursuant to the Lease to which the rules are annexed. The Rules supplement the Lease and in the event of any conflict or inconsistency between the Lease and the Rules, the Lease will control. The Rules may be changed from time to time by Lessor, subject to any restrictions set forth in the Lease, and any such changes shall be effective immediately upon delivery to Lessee. Accordingly, the Lessor adopts the following Rules: GENERAL RULES 1. No sign, placard, picture, advertisement, name or notice shall be installed or displayed on any part of the outside, or inside if visible from the exterior, of any building without the prior written consent of Lessor. Lessor Shall have the right to remove, at Lessee's expense and without notice, any item installed or displayed in violation of the Rule. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Lessee and in a configuration and style approved by Lessor, in its sole discretion. 2. If Lessor objects in writing to any curtains, blinds, shades, screens or hanging plants or other similar objects attached to or used in connection with any window or door of the Premises, or placed on any windowsill, which is visible from the exterior of the Premises, Lessee shall immediately discontinue such use. Lessee shall not place anything against or near glass partitions, doors or windows which is visible from outside the Premises without Lessor's consent. 3. Concurrently with Lessee's occupancy of the Premises, Lessee shall furnish Lessor, free of charge, three (3) sets of keys to each door lock on the Premises. Lessee shall be entitled to make or have made additional keys as Lessee desires. Lessee shall not alter any lock or install a new additional lock or bolt on any door of its Premises without furnishing Lessor, without charge, a new set of keys. Lessee, upon the termination of its Lease, shall deliver to Lessor the keys to all doors within the Premises. 4. Except for Lessee's Tenant Improvements, if Lessee requires telegraphic, telephonic, burglar alarm or similar services, it shall first obtain, and comply with, Lessor's installation instructions for any such equipment. 5. Deliveries of equipment, materials, furniture, packages, supplies, merchandise or other property will be received at the Project in a manner and method which does not impede or interfere with other tenants or the operation of any portion of the Project. Lessee shall be responsible for all repairs and replacements to the Project required on account of damage or injury caused by deliveries to Lessee's Premises. 6. Lessee shall not place a load upon any floor of the Premises which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. Business machines and mechanical equipment belonging to Lessee, which cause objectionable noise or vibration that may be transmitted to any structure of the Project or to any space therein to such a degree as to be placed and maintained by Lessee, at Lessee's expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration. Lessor will not be responsible for loss of, or damage to, any such equipment or other property from any cause, and all damage done to the Project by maintaining or moving such equipment or other property shall be repaired at the expense of Lessee. 7. Lessee shall not use or keep in the Premises or about the Project any kerosene, gasoline or inflammable or combustible fluid or materials other than those quantities necessary for the operation or maintenance of office equipment, delivery trucks and its permitted use of the Premises. Lessee shall not use or ,permit to be used in the Premises any foul or noxious gas or substance, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to, Landlord or other occupants of the Project by reason of noise, odor or vibrations. The foregoing notwithstanding, the Lessee shall store all hazardous and/or flammable materials in containers approved by the Poway Fire Department and other regulatory agencies. 8. Lessee shall not use any method of heating or airconditioning other than that approved by Lessor, in its reasonable discretion. 9. Lessee shall not waste electricity, water or airconditioning and agrees to cooperate fully with Lessor to assure the most effective operation of the Project's heating and airconditioning and to comply with any governmental energy-saving rules, laws or regulations of which Lessee has actual notice. 10. Lessee shall close and lock the doors of its Premises and entirely shut off all water faucets or other water apparatus, and electricity, gas or air outlets before Lessee and its employees leave the Premises. Lessee shall be responsible for any damage or injuries sustained by other tenants or occupants of the Project or by Lessor arising from Lessee's noncompliance with this Rule. 11. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the Lessee who, or whose employees or invitee's, shall have caused it. 12. Lessee shall not install any radio or television antenna, loudspeaker or other devices on the roof or exterior walls of any building, except with Lessor's consent. Lessee shall not interfere with radio or television broadcasting or reception from or in the Project or elsewhere. 13. All Lessee's installations, improvements and alt Lions shall be carried out in a manner and methodII designed to minimize any damage to the Premises on account of the installation or removal of such items. Lessee shall repair any damage resulting from Lessee's installations, improvements and alterations and the removal thereof upon termination of the Lease. 14. Canvassing, soliciting and distribution of handbills or any other written materials, and peddling upon the Project are prohibited and Lessee shall cooperate to prevent such activities. 15. Lessor reserves the right to exclude or expel from the Project any person who, in Lessor's judgement, is intoxicated or under the influence of liquor or drugs or who is in violations of any of the Rules, provided Lessor shall be under no obligation to do so nor have any liability to Lessee on account of Lessor's failure to exclude any person. 16. Lessee shall store all its trash and garbage within its Premises or in other facilities provided by Lessor. Lessee shall not place in any trash box or receptacle any material which cannot be disposed of in the ordinary and customary manner of trash and garbage disposal. All. garbage and refuse disposal shall be made in accordance with directions issued from time to time by Lessor. All trash placed in the trash box or receptacle shall be generated within the Pomerado Distribution Center II. Lessee shall not import any trash or waste generated in the conduct of the Lessee's business into the Pomerado Distribution Center II nor shall Lessee use the trash box or receptacles to dispose of this trash or waste. Lessee will instruct Lessee's employees, agents, clients or invitees to dispose all trash or' waste in a clean, orderly manner, to break down all cardboard containers and to place all trash IN the trash box or receptacle and not on or about the trash box or receptacle. 17. Equipment Storage - No material, equipment (with the exception of delivery trucks), supplies, or products shall be stored or permitted to remain on the property outside a permanent structure unless prior approval is obtained from the Lessor in the City of Poway. Approval of outside storage will be granted only where storage is visually screened from all approaches. 18. Pets or Animals - No pets or animals are allowed on the property or within Lessee's Premises. 19. Without the written consent of Lessor, Lessee shall not use the name of the Project in connection with or in promoting or advertising the business of Lessee except as Lessee's address. 20. Lessee shall comply with all safety, fire protection and evacuation procedures and regulations established by Lessor or any governmental agency. 21. Lessee assumes any and all responsibility for protecting its Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed. 22. Lessor may waive any one or more of these Rules for the benefit of Lessee or any other tenant, but no such waiver by Lessor shall be construed as a waiver of any other Rule in favor of Lessee or any other tenant, nor prevent Lessor from thereafter enforcing any such Rules against any or all of the tenants of the Project. 23. The Rules are in addition to, and shall not be . construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and conditions of Lessee's Lease of its Premises in the Project. 24. Lessee shall be responsible for the observance of all of, the Rules by Lessee's employees, agents, clients, customers, invitee's and guests. PARKING RULES 25. Lessor shall not be responsible for loss, injury or damage to any vehicle arising from the use of parking areas in the Project. In the event the general exclusion of liability set forth in the preceding sentence is determined not to apply to any particular claim, specific limitations on liability set forth below shall apply to any claim against Lessor arising in connection with the use. of parking areas in the Project. All claimed damage or loss must be reported and itemized in writing, delivered to the Lessor within thirty (30) days after any claimed damage or loss occurs. Any claim not so made is waived. Lessor has the option to make repairs, at its expense, of any claimed damage within two (2) business days after filing of any claim.' In all court actions the burden of proof to establish a claim remains with the Lessee. Court actions by Lessee for any claim must be filed within ninety (90) days from date of parking when a claimed loss occurred. Lessor is not responsible for damage by water, fire or defective brakes, or part, or for the act of omissions of others, or for articles left in the car. The total liability of Lessor is limited to $250.00 for all damages or loss to any vehicle. Lessor is not responsible for loss of use. 26. Lessee shall not park or permit the parking of any vehicle under Lessee's reasonable control in any parking areas designated by Lessor as areas for parking by visitors to the Project or for deliveries or assigned to other tenants or occupants of the Project. With the exception of delivery trucks, Lessee shall not leave vehicles in the parking area overnight (except that vehicles used in Lessee's business may be parked overnight in the loading area behind Lessee's Suite) nor park any vehicles in the parking areas other than automobiles, motorcycles, motor driven or non-motor driven bicycles. 27. In the event Lessor reasonably determines that a system of parking registration is required to provide for the orderly use of the parking areas within the Project, Lessor may institute a system of requiring decals or stickers. Parking stickers or any other device or form of identification supplied by Lessor as a condition of use of the parking areas shall remain the property of Lessor. Such parking identification device must be displayed as requested and may not be mutilated in any manner. The serial number of the parking identification device may not be obliterated. Devices are not transferable and any device in the possession of an unauthorized holder will be void. 28. Vehicles must be parked entirely with the painted stall lines of a single parking stall. All directional signs and arrows must be observed. The speed limit within all parking areas shall be five (5) miles per hour. 29. Parking is prohibited:. (a) in areas not striped for parking except for loading dock areas immediately behind the Premises; (b) in aisles; (c) where "no parking" signs are posted; (d) on ramps; (e) in cross hatched areas and in fire lanes; and (f) in such other areas as may be designated by Lessor. 30. Every vehicle owner is required to park and lock his own vehicle. All responsibility for damage to a vehicle or theft of property from a vehicle is assumed by the vehicle owner. 31. Parking areas are for the temporary parking of vehicles only. No storage of vehicles or other items will be permitted. Washing, waxing, cleaning or servicing of any vehicle is prohibited. 32. Lessee shall acquaint all employees, customers and guests of these rules. 33. Lessor reserves the right to modify and/or adopt such other reasonable and non-discriminatory rules and regulations for the parking facilities as it deems necessary for the operation of the parking facilities. Lessor may refuse to permit any person who violates these rules to park in the parking facilities, and any violation of the rules shall subject the vehicle to removal. EXHIBIT '6 SALE/LEASE AMERICANS WITH DISABILITIES ACT AND HAZARDOUS MATERIALS DISCLOSURE Pomerado Distribution Center 11 13250-13350 Gregg street Poway, CA 92064 State of California SALE/LEASE AMERICANS WITH DISABILITIES ACT AND HAZARDOUS MATERIALS DISCLOSURE The United States Congress has enacted the Americans With Disabilities Act. Among other things, this act is Intended to make many business establishments equally accessible to persons with a variety of disabilities; modifications to real property may be required. State and local laws also may mandate changes. The Owners of the Property and the real estate brokers, if any, In this transaction are not qualified to advise you as to what, if any, changes may be required now, or in the future. Lessees should consult the attorneys and qualified design professionals of their choice for information regarding these matters. The Owners of the Property and real estate brokers cannot determine which attorneys or design professionals have the appropriate expertise in this area. Various construction materials may contain items that have been or may In the future be determined to be hazardous (toxic) or undesirable and may need to be specifically treated/handled or removed. For example, some transformers and other electrical components contain PCBs, and asbestos has been used in components such as fire-proofing, heating and cooling systems, air duct insulation, spray-on and tile acoustical materials, linoleum, floor tiles, roofing, dry wall and plaster. Due to prior or current uses of the Property or in the area, the Property may have hazardous or undesirable metals, minerals, chemicals, hydrocarbons, or biological or radioactive items (including electric and magnetic fields) in soils, water, building components, above or below-ground containers or elsewhere in areas that may or may not be accessible or noticeable. Such items may leak or otherwise be released, Expert inspections are necessary. Current or future laws may require clean up by pest, present and/or future owners and/or operators. It Is the responsibility of the Lessee to retain qualified experts to detect and correct such matters and to consult with legal counsel of their choice to determine what provisions, if any, they may wish to include in transaction documents regarding the Property. To the best of Lessor's knowledge, Lessor has attached to this Disclosure copies of all existing surveys and reposts known to Lessor regarding asbestos and the hazardous materials and undesirable substances related to the Property. Lessor is required under California Health and Safety Code Section 25915 et. seq. to disclose reports and surveys regarding asbestos to certain persons, including their employees, contractors, co-owners, purchasers and tenants. Lessees have similar disclosure obligations. Lessors and Lessees have additional hazardous materials disclosure responsibilities to each other under California Health and Safety Code Section 25359.7 and other California laws. Consult your attorney regarding this matter. The Owners of the Property and real estate brokers, if any, are not qualified to assist you in this matter or provide you with other legal or tax advice. "LESSOR" POMERADO LEASING NO.3, a California limited partnership By: Its General Partner, WHITMANN CORPORATION, a California corporation By: /s/ Jeffrey C.H. --------------------------------- 4/2/03 By: /s/ Daniel M. Whitaker, Secretary "LESSEE" MILSPERING CORPORATION A California Corporation dba "American Medical Wholesale" By: ----------------------------------------- Michael Jaspring Its: President Date: 3/31/03 By: /s/ Charles Greene Its: Vice President, Operations Date: 3/31/03 -3