30 EXHIBIT 10(1) CONFIDENTIAL PORTIONS OMITTED

 

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                                                                  EXHIBIT 10(1)

 

                          CONFIDENTIAL PORTIONS OMITTED

 

  LEGEND: [**] REPRESENTS CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY

          WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO

          A REQUEST FOR CONFIDENTIAL TREATMENT

 

 

 

 

                                                            LEASE AGREEMENT

 

         The parties to this Lease Agreement ("Lease"), entered into on January

28, 2005, between MFB Financial ("Landlord") and May Oberfell Lorber ("Tenant"),

hereby agree as follows:

         1. PREMISES AND PREPARATION.

         The Landlord hereby leases to the Tenant and the Tenant leases from the

Landlord, subject to all of the terms and conditions hereinafter set forth,

office space as shown on the space plan attached hereto as "Exhibit B"

containing 17,613 square feet of rentable space (the "Premises") in the office

building which is commonly known as MFB Plaza, located at 4100 Edison Lakes

Parkway, Mishawaka, Indiana in St. Joseph County (the "Building").

         2. TERM. The term of the Lease of the Premises shall be 180 months

         commencing at the time the Premises have been completely built out and

         the space has been turned over to Tenant, which the parties anticipate

         will be late spring/early summer. If the commencement date of this

         Lease is other than the 1st day of the month, then the term of this

         Lease shall be extended through the last day of the final month.

         3. USE. The Premises shall be occupied and used by the Tenant for

         office space and for no other purposes. 4. BASIC RENT. [Confidential

         material omitted from this section and filed separately with the

         Securities and Exchange

Commission pursuant to a request for confidential treatment is represented by

the symbol [**]. ] The Tenant shall pay to the Landlord as basic minimum rent

during the initial five year term of the Lease $[**], per month for 60 months,

which is $[**] per rentable square foot or annual basic rent of $[**], in

advance, on the first day of each calendar month during the term of this Lease.

During the second five year term of the Lease the basic rent shall be increased

to $[**] per square foot or annual basic rent of $[**]. Wherever the term

rentable square feet is used, this term shall refer to the square feet being

occupied by Tenant (17,018) plus a load factor of three and one-half percent (3

1/2%) for a total of 17,613. During the final 5 years of the Lease the basic

rent shall be increased to $[**] per square foot of rentable space. The basic

rent together with the additional rent as defined in paragraph 5 hereof are

referred to hereinafter as "Rental". Tenant hereby agrees to pay the Rental

monthly to Landlord at Landlord's building management office or at such other

location as Landlord may designate from time to time, without demand. In the

event of a partial month at the beginning of the term of this Lease, the Rental

shall be prorated on the basis of a thirty (30) day month. Any portion of the

Rental or other charges not paid when due shall bear a delinquency service

charge equal to five (5%) percent of such delinquency. In addition, the Tenant

shall be charged a Fifty ($50.00) Dollar processing penalty for any Rental check

that is returned to the Landlord as uncollectible or insufficient funds. All

Rental and other charges payable by Tenant pursuant to the terms of this Lease

shall be payable without relief from valuation or appraisement laws.

         5. ADDITIONAL RENT. [Confidential material omitted from this section

and filed separately with the Securities and Exchange Commission pursuant to a

request for confidential treatment is represented by the symbol [**]. ] A.

Subject to the limitations set forth in paragraph C hereunder, in addition to

the Basic Rent, Tenant shall pay, as Additional Rent, Tenant's Percentage of the

Operating Cost for the Building in any calendar year. For purposes of this

Agreement, "Tenant Percentage" shall mean Fifteen and forty one hundredths

Percent (15.41%). In the event Tenant expands into additional space under the

Lease, Tenant's Percentage shall be recalculated to account for such additional

space. B. "Operating Cost," as that term is used herein, shall consist of all

operating costs of the Building, which shall be computed on the accrual basis in

accordance with generally accepted accounting principles consistently applied

and shall consist of all costs and expenses incurred by Landlord to maintain all

facilities used in the operation of the Building and its environs of every kind

and nature which Landlord shall pay or become obligated to pay because of or in

connection with the ownership and operation of the Building, (but not specific

costs which are separately billed to and paid or reimbursed by specific tenants)

including, but not limited to, the following:

i)                       Wages, salaries, fringe benefits, costs, payroll taxes,

                         unemployment compensation payments, workmen's

                         compensation insurance premiums and other related

                         expenses of all employees directly engaged in the

                         operation, maintenance and security of the Building;

                         costs of building employee uniforms and cleaning

                         thereof; the costs of fair rental value of a Building

                         management office; management fees payable by Landlord

                         (excluding brokerage commissions for leasing) if

                         management of the Building is contracted to a third

                         party;

 

ii)                      All supplies and materials used in the operation,

                         cleaning and maintenance of the Building and all of its

                         machinery and equipment;

 

iii)                     Costs of utilities, including water and power for

                         heating, lighting, air conditioning and ventilating the

                         entire Building (including all common and service

                         areas), fuel adjustment charges, sewer use charges and

                         any utility taxes;

 

iv)                      Costs of all management, maintenance and service

                         agreements for the Building and the equipment therein,

                         including, without limitation, alarm service, trash

                         removal, window cleaning and elevator maintenance;

 

v)                       Accounting costs, including the costs of audits by

                         certified public accountants, pertaining solely to the

                         management and operation of the Building;

 

vi)                      Costs of all insurance, including, without limitation,

                         fire, casualty, liability and rental value insurance

                         applicable to the Building and Landlord's personal

                         property used in connection with the operation and

                         maintenance of the Building;

 

vii)                     Costs of repairs, replacements and general maintenance

                         of the Building and each part thereof excluding

                         repairs, replacements and general maintenance paid by

                         proceeds of insurance or by Tenant or by other third

                         parties, and alterations attributable solely to other

                         Tenants of the Building;

 

viii)                    Snow removal, landscaping and any and all other common

                         area maintenance costs related to public areas,

                         including sidewalks and landscaping on the Building's

                         site;

 

ix)                      Amortization of capital improvements made to the

                         Building subsequent to the commencement date of this

                         Lease which may be required by governmental authorities

                         or which will improve the operating efficiency of the

                         Building resulting in a reduction of Operating

                         Expenses;

 

x)                       Personal property taxes, real property taxes, water and

                         sewer rents, fees or charges paid to any not for profit

                         organization or other association for the maintaining

                         Edison Parkway and/or the common areas in the Edison

                         Lakes Corporate Park.

 

C.                       It is understood and agreed that the Operating Cost

                         Tenant shall be required to pay shall be limited in

                         accordance with the following:

                  (i)      From the commencement of the Lease through December

                           31, 2008, Tenant's share of the Operating Cost shall

                           be the lesser of:

 

                           (a) the actual Operating Cost for the Building

                               multiplied by Tenant's Percentage or

 

                           (b)$[**] multiplied by 17,613 (being the number of

                              rentable square feet included in the Premises).

 

                           (Hereafter, that portion of the Operating Cost that

                           does not include taxes and insurance shall be

                           referred to as "Non-T & I Operating Cost" and that

                           portion of the Operating Cost of the Building which

                           consists of Tax and Insurance shall be called "T &

                           I.")

 

                  (ii)     Non-T & I Cost for all calendar years beginning with

                           2009 through the end of the original fifteen (15)

                           year lease term will be limited to the amount

                           specified as the "Non-T & I Operating Cost Cap" for

                           the year in question as set forth on the "May

                           Oberfell Non-T & I Operating Cap Table" attached

                           hereto as Exhibit "C" multiplied by 17,613 (being the

                           number of rentable square feet in the Premises). The

                           parties have agreed that the schedule of "Caps"

                           specified on Exhibit C shall not apply to increases

                           in the Operating Cost resulting from increases in T &

                           I.

 

                  (iii)    In Summary, for the years beginning January 1, 2009

                           through the original fifteen (15) year term of the

                           Lease, Tenant shall pay as follows:

 

                           (a)      the basic rent as set forth in Paragraph

                                    Four and any additional amounts Tenant shall

                                    be required to pay hereunder other than the

                                    Operating Cost; plus

 

                           (b) Tenant's share of the Operating Cost, which shall

                               be the lesser of:

 

                                            the actual Non-T & I Operating Cost

                                            multiplied by the Tenant's

                                            Percentage of 15.41%, or

 

                                            the amount of the Non-T & I

                                            Operating Cost Cap specified for the

                                            year in question on Exhibit C hereto

                                            multiplied by 17,613 (being the

                                            number of rentable square feet in

                                            the Premises); plus

 

                           (c) the actual T & I multiplied by Tenant's

Percentage of 15.41%.

 

D. Subject to the limitations set forth in paragraph C hereunder, Landlord may

estimate the Operating Cost for the Building for any calendar year. Tenant's

Percentage of the Operating Costs, as defined above at 15.41% of said Operating

Costs, shall be payable in monthly installments with each Rental payment date

for such calendar year. Within a reasonable period of time after the end of such

calendar year, Landlord shall render to Tenant a statement of the actual

Operating Cost for such calendar year and a computation of Tenant's share of

Excess Operating Cost, if any. Within fifteen (15) days thereafter, Tenant shall

pay to Landlord Tenant's share of the Excess Operating Cost, provided, however,

such Excess Operating Cost shall not be paid by Tenant if the effect of such

payment would cause the Tenant's Operating Cost to exceed the limitations set

forth in paragraph C hereunder. If the computation shows that a refund is due

Tenant, such amount shall be credited by Landlord against the next Rental

payment due.

         6. SECURITY DEPOSIT. There shall be no Security Deposit required.

         7. SERVICES TO BE PROVIDED BY THE LANDLORD. The Landlord shall provide

         the following services to the Premises during reasonable business

         hours:

         A. Janitorial services for customary cleaning in and about the

         Premises. The Tenant may not provide any janitorial service of its own

         without the Landlord's prior written consent, and then only subject to

         such additional conditions as the Landlord may reasonably impose.

         B. Landlord shall provide heating and air conditioning so as to

         maintain, subject to government regulations, in all rooms, on a

         reasonably consistent basis, a temperature 72(degree)F at all times

         (i.e. year round) under normal business operations daily from 7:00 a.m.

         to 6:00 p.m., Monday through Friday, holidays excepted. In addition,

         Landlord shall provide an HVAC system such that Tenant shall be able to

         maintain heat and cooling through "zones" or other mechanism which

         Tenant can control on its Premises such that the temperature may be

         maintained in accordance with the above standard during non-business

         hours. Wherever heat-generating machines or equipment are used or

         business operations are conducted in the Premises which, in the

         judgment of the Landlord, affect the temperature otherwise maintained

         by the air conditioning system, the Landlord reserves the right to

         modify said system, including the installation of supplementary air

         conditioning units in the Premises, and the cost and expense of

         operation and maintenance thereof shall be paid by the Tenant to the

         Landlord.

         C. Water from city mains, drawn through fixtures installed by the

         Landlord for drinking, lavatory, and toilet purposes, including a

         reasonable amount of hot water.

         D. Automatic passenger elevator services in common with other Tenants

         at all times.

         E. Electrical wiring system in the Premises for standard electrical

         receptacles and lighting fixtures with a dedicated line for file

         servers and copiers. Such electricity will be used only for normal

         equipment and accessories. Replacement lighting tubes, lamps, bulbs,

         and ballasts required for the overhead lighting fixtures in the

         Premises will be installed at the Tenant's expense. Tenant shall be

         responsible for bulbs and maintenance of all chandelier and ornamental

         lighting. The Landlord reserves the right to provide a separate meter

         for the Premises and to require the Tenant to pay for its use of

         electricity billed to such meter in lieu of including the cost of

         electricity in the operating expenses.

         F. Snow-removal services for the outside parking facilities, related

         driveways, and sidewalks at all reasonable times. G. Lavatories for the

         use of Tenant's employees and invitees in common with other Tenants in

         the Building. H. All windows and glass will be washed and cleaned

         inside and outside a minimum of two (2) times per year and Landlord

         shall clean Tenant's carpets a minimum of once per year.  This is in

         addition to the normal cleaning services provided by Landlord.

         I. Landlord shall provide and maintain all emergency lighting and

            fire extinguishers as required by state and local

            codes and regulations.

         J. It is understood and agreed that the cost of Landlord providing any

            of the above services shall be included in the "Operating Cost"

            hereunder of which Tenant shall pay its "Tenant's Percentage" as

            Additional Rent pursuant to Paragraph 5, above.

         The Landlord does not warrant that any of the services above mentioned

will be free from interruptions caused by repairs, renewals, improvements,

alterations, strikes, lockouts, accidents, inability of the Landlord to obtain

fuel or supplies, or any other cause beyond the reasonable control of the

Landlord. Any such interruption of service will not constitute an eviction or

disturbance of the Tenant's use and possession of the Premises, or any part

thereof, or render the Landlord liable to the Tenant for damages, or relieve the

Tenant from performance of the Tenant's obligations under this Lease. Landlord

shall furnish Tenant with reasonable notice (24 hour minimum) of any known or

anticipated interruption of electrical services. The Landlord will use

reasonable efforts to promptly remedy any situation which has interrupted such

services.

         8. LANDLORD'S TITLE. The Landlord's title is and always shall be

paramount to the title of the Tenant, and nothing contained herein authorizes

the Tenant to do any act which may encumber the title of the Landlord. This

Lease is subject and subordinate to all ground and underlying leases, and to all

mortgages which may now or hereafter affect such ground and underlying leases,

or the real property or Building, of which the Premises form a part, and to all

renewals, modifications, consolidations, replacements, and extensions thereof,

and to all advances made or hereafter to be made on the security of any such

mortgages. Provided, however, that notwithstanding the foregoing, the mortgagee

shall recognize this Lease and provide a non-disturbance and attornment

agreement which, will in substance, allow Tenant to remain in possession of the

Premises in accordance with the terms and conditions of this Lease as long as

Tenant is not in default. The non-disturbance and attornment agreement shall be

forwarded to Tenant only in the event Tenant is not in default under the terms

and conditions of this Lease. The Tenant covenants and agrees that it will, upon

the written request of such mortgagee or such purchaser, attorn thereto and

execute, acknowledge, and deliver any instrument that has for its purposes and

effect subordination of this Lease to said mortgage subject to the

non-disturbance set forth herein above.

         9.       ASSIGNMENT AND SUBLETTING.

                  A. The Tenant may not assign or transfer all or any part of

its rights and interests under this Lease, and may not sublet or permit the use

and occupancy of all or any part of the Premises, to or by a third party without

the prior written consent of the Landlord. The Landlord's consent under this

sub-paragraph shall be in its absolute discretion and subject to such conditions

as the Landlord may impose. If the Landlord grants its consent, then all

consideration paid or to be paid by such third party, including any amounts in

excess of the rent due under this Lease, shall be paid directly to the Landlord.

In the event of assignment by Tenant, the Tenant shall continue to remain

responsible to Landlord for all payments due hereunder in the event Tenant's

assignee shall fail to make prompt payments to Landlord.

                  B. The Landlord may transfer and assign, in whole or in part,

all of its rights and obligations under this Lease and in the Building and

related real estate. After such transfer or assignment, the Landlord named in

this Lease will have no further liability to the Tenant under this Lease for the

obligations assumed by the assignee or transferee.

         10. UNTENANTABILITY. If the Premises or the Building is made

untenantable by fire or other cause, the Landlord may elect (a) to terminate

this Lease as of the date of such casualty by notice to the Tenant within thirty

(30) days after that date, or (b) to repair all damages to the Premises or the

Building so that the same shall be restored to such condition as existed

immediately prior to such damage. If the Landlord elects to terminate this

Lease, the rent shall be abated on a per diem basis and be paid to the date of

the fire or casualty. If the Landlord elects to restore the Premises and

Building, such restoration shall be completed with reasonable promptness. If the

Premises are unusable during such restoration, or if the Tenant is reasonably

required to close its operation while such repairs are made, the rent shall

abate during such period of repair while such operations have ceased and the

Premises are completely closed. If the Tenant continues to operate on the

Premises during such repairs, but is unable to use a substantial portion

thereof, then the rent shall be prorated in the proportion which the area of

unusable leased space bears to the total Premises for the period that said space

is unusable. The Landlord will not be liable for business losses to the Tenant

by reason of damage to the Premises. If such untenantability is caused by the

fault of the Tenant, there will be no apportionment or abatement of rent.

Notwithstanding anything contained in this paragraph to the contrary, if the

Premises is not or cannot be made tenantable within one hundred and eighty (180)

days after said damage for any reason whatsoever, the Tenant may terminate this

Lease.

         11. SIGNS. Except as modified by Exhibit A, Tenant shall pay for all

signs related to the Tenant's use of the Premises. No sign, advertisement, or

notice may be inscribed, painted, or affixed on any part of the outside or

inside of the Premises or Building by the Tenant except on the doors of the

Premises leased by the Tenant and on the directory board, and then at the

Tenant's expense and only of such color, size, style, and material as is

specified by the Landlord in writing. The Landlord reserves the right to remove

all other signs at the expense of the Tenant. At the expiration of the lease

term, the Tenant shall remove its signs from such doors.

         12. ALTERATIONS. No alterations or additions may be made and no

fixtures may be affixed to the Premises or the Building without prior written

consent of Landlord, which consent shall not be unreasonably withheld. Provided,

however, no consent by Landlord shall be required for Tenant to make alterations

to the interior of the Premises which do not involve moving or removing walls,

floors, ceilings, plumbing or lavatory equipment or fixtures, or electrical

systems, or air, heating or cooling vents, systems, equipment or duct work. All

such alterations, additions and fixtures, except the Tenant's trade fixtures and

business machines, shall be and remain the property of Landlord unless otherwise

agreed in writing by the Landlord. If at any time, including at the termination

of the Lease Term, Tenant removes any satellite dish, antennae or other

equipment from the Building or the Premises, Tenant shall, at its sole cost and

expense, immediately repair all damage caused either by the installation or

removal of such equipment and restore the Building and the Premises to the

condition which existed prior to the installation thereof. All such removal and

repair shall be subject to the prior approval of the Landlord.

         13. USE OF THE PREMISES. The Tenant (a) shall occupy and use the

Premises during the term for the purposes specified in Paragraph 3, above, and

none other; (b) may not make or permit any use of the Premises which, directly

or indirectly, is forbidden by public law, ordinance, or government regulations

or which may be dangerous to life, limb, or property, or which may invalidate or

increase the premium cost of any policy of insurance carried on the Building or

covering its operations; (c) may not obstruct or use for storage or for any

purpose other than ingress and egress the sidewalks, entrances, courts,

corridors, vestibules, halls, elevators, and stairways of the Building; (d) may

not make or permit any noise or odor that is objectionable to other occupants of

the Building to emanate from the Premises, may not create or maintain a nuisance

thereon, may not disturb, solicit, or canvass any occupant of the Building, and

may not do any act tending to interfere with the quiet enjoyment of their leased

space in the Building by other Tenants, or to injure the reputation of the

Building; (e) may install an antennae or satellite dish on the roof at the

Tenant's sole expense, provided that such antennae or satellite dish is for the

use of Tenant and/or Tenant's Guests only (unless Landlord gives its prior

written consent for use by others), it being understood that Landlord shall have

the right to approve, in advance of installation by the Tenant, the size,

weight, location and method of installation of Tenant's antennae or satellite

dish, which approval shall not be unreasonably withheld, and that the Tenant

shall not be required to pay rent for the antennae or satellite dish location;

(f) may not place, or permit to be placed, any article of any kind on the window

ledges or on the exterior walls and may not throw, or permit to be thrown or

dropped, any article from any window of the Building; (g) may not attach

additional locks or similar devices to any door or window and, upon the

termination of this Lease or of the Tenant's possession, shall surrender all

keys to the Premises and shall explain to the Landlord all combination locks on

safes, cabinets, and vaults; (h) shall be responsible for locking the doors and

closing the transoms and windows in and to the Premises; (i) may not install any

awnings, or other form of inside or outside window covering or window

ventilators or similar devices without the prior written consent of the

Landlord; (j) may not overload any floor, shall route and locate safes and other

heavy articles as the Landlord may direct, shall bring safes, furniture, and all

large articles through the Building and onto the Premises at such times and in

such manner as the Landlord directs and at the Tenant's sole risk and

responsibility, and shall list all furniture, equipment, and similar articles to

be removed from the Building for approval at the office of the Management before

the removal of such articles; (k) may not install in the Premises any equipment

which uses a substantial amount of electricity without the advance written

consent of the Landlord, shall ascertain from the Landlord the maximum amount of

electrical current which can safely be used in the premises, taking into account

the capacity of the electrical wiring in the Building and the Premises and the

needs of other Tenants in the Building and, notwithstanding the Landlord's

consent to such installation, may not use more electricity than such safe

capacity; (l) shall be responsible for the cost of modification, installation,

maintenance, repair, and additional operating and utility expenses related to

any supplementary air conditioning required by heat-generating machines or

extraordinary equipment used by the Tenant; (m) may locate antennas and other

sending and/or receiving equipment within the Premises for the purpose of

wireless networking solely within the Premises, provided that no such antennas

and/or equipment causes or results in signals, sounds, electrical impulses

and/or data to be received outside the Premises or interferes with equipment

being used outside the Premises. It is understood and agreed that the rights

granted in subparagraphs (e) and (m) hereof to install an antennae or satellite

dish take precedence over and supersede any contradictory provisions of the

Building Rules and Regulations now or hereafter adopted.

         All persons entering or leaving the Building between the hours of 6:00

p.m. and 8:00 a.m. Monday through Friday or any time Saturdays, Sundays, or

holidays, may be required to identify themselves to a watchman, by registration

or otherwise, and to establish their right to enter or leave the Building.

Provided further that nothing contained herein shall be construed to require the

Landlord to provide watchmen or other security agents on or about the Building.

The Landlord may exclude or repel any peddler, solicitor, or beggar. In addition

to all other liabilities for breach of any covenant of this Paragraph, the

Tenant shall pay to the Landlord, as additional rent hereunder, an amount equal

to any increase in insurance premiums caused by such breach. The violation of

any covenant of this Paragraph may be restrained by injunction without the

requirement of any bond.

         14. REPAIRS. The Tenant shall take good care of the Premises and the

fixtures therein and shall keep the Premises in good order, condition, and

repair at the Tenant's expense during the term of this Lease, including the

replacement of all interior broken glass. Exterior glass broken by the Tenant

will be replaced by Landlord, at Tenant's sole cost and expense and the Tenant

shall promptly pay the Landlord for the costs thereof as additional rent for

glass of the same size and quality. If the Tenant does not make necessary

repairs within a reasonable time and adequately, the Landlord may, but need not,

make such repairs and the Tenant shall promptly pay the Landlord for the costs

thereof as additional rent. On the expiration or early termination or

cancellation of this Lease, the Tenant shall surrender the Premises and the

Landlord's fixtures in as good condition as of the time of delivery to the

Tenant, subject to reasonable wear and tear. All injury to the Building or

fixtures caused by moving of the Tenant in and out of the Building and any and

all breakage or any other injury whatsoever to the Building, fixtures or to the

property of any Tenants of the Building caused by the Tenant and any damage done

by water, steam, electricity, fire, or other substance to the Building or

fixtures, or to the property of other Tenants in the Building caused by the

Tenant may be repaired by the Landlord at the expense of the Tenant, and the

cost thereof shall become due and payable by the Tenant as additional rent upon

the delivery of a statement of such costs by the Landlord to the Tenant, or

mailing the same, postage prepaid, to the Tenant at its last known address.

         15.      EMINENT DOMAIN.

                  (a) Partial or Total Condemnation. If any portion of the

Premises is taken for any public or quasi-public use under any governmental law,

ordinance or regulation, or by right of eminent domain, or by private purchase

under threat or intimidation thereof, this Lease shall terminate on the election

of either party, effective on the date of possession of the Premises or any

portion thereof is taken by the condemning authority or private purchaser. In

the case of a partial condemnation where neither party elects to terminate this