LEASE

6.3            Condition of Premises .   Lessee hereby accepts the Premises in its condition existing as of the date of the execution hereof, subject to the terms and conditions of ADDENDUM ONE , subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises , and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Lessee acknowledges that neither Lessor nor Lessor’s agent has made any representation or warranty as to the suitability of the Premises for the conduct of Lessee’s business.

7.              Maintenance, Repairs and Alterations .

7.1            Lessor’s Obligations .  Subject to the terms and conditions of this Lease , specifically without limitation the provisions of Section 7.2, Article 9 and except for damage caused by any negligent or intentional act, or omission of Lessee , Lessee’s agents, employees, or invitees, Lessor , at Lessor’s expense, shall keep in good order, condition and repair the Premises .  Lessor shall have no obligation to make repairs under this Paragraph 7.1 until a reasonable time after receipt of written notice of the need for such repairs.   Lessee expressly waives the benefits of any stature now or hereafter in effect which would otherwise afford Lessee the right to make repairs at Lessor’s expense or to terminate this Lease because of Lessor’s failure to keep the Premises in good order, condition and repair.

7.2            Lessee’s Obligations .

(a)            Subject to the provision of Paragraph 9 and Paragraph 7.1, Lessee , at Lessee’s expense, shall keep in clean and good order the Premises .   Lessee’s obligations hereunder shall include providing janitorial service.

(b)            If Lessee fails to perform Lessee’s obligations under this Paragraph 7.2, Lessor may at Lessor’s option enter upon the Premises after (a) five (5) days prior written notice to Lessee , which notice shall provide Lessee ten (10) days to cure the failure to perform, (b)  Lessee fails to cure the failure to perform within said ten (10) days, and put the same in good order and condition and the cost thereof together with interest thereon at the rate of 18% per annum shall be due and payable as additional rent to Lessor together with Lessee’s next rental installment.

(c)            On the last day of the term hereof, or on any sooner termination, Lessee shall surrender the Premises to Lessor in the same condition as received, broom clean, ordinary wear and tear excepted.   Lessee shall repair any damage to the Premises occasioned by the removal of its trade fixtures, furnishings and equipment pursuant to Paragraph 7.3(c), which repair shall include the patching and fitting of holes and repair of structural damage.

7.3            Alterations and Additions .

(a)            Lessee shall not, without Lessor’s prior written consent, make any alterations, improvements, additions, or utility installations in, on or about the Premises , except for non-structural alterations not exceeding $1,000.00 in cost.  As used in this Paragraph 7.3, the term “utility installations” shall include bus ducting, power panels, fluorescent fixtures, space heaters, conduits and wiring.  As a condition to giving such consent, Lessor may require Lessee to provide Lessor , at Lessee’s sole cost and expense, a lien and completion bond in an amount equal to one and one-half times the estimated cost of such improvements, to insure Lessor against any liability for mechanics’ and material men’s liens and to insure completion of the work.  As an additional condition to giving consent Lessor may require all such work be done by contractors hired by Lessor , for which Lessee shall be responsible for all costs.

(b)            Lessee shall pay, when due, all claims for labor or material furnished or alleged to have been furnished to or for Lessee at or for use in the Premises , which claims are or may be secured by mechanics’ or material men’s lien against the Premises or any interest therein.   Lessee shall give Lessor not less than ten (10) days’ notice prior to the commencement of any work in the Premises , and Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law.

(c)            All alterations, improvements, additions and utility installations (whether or not such utility installations constitute trade fixtures of Lessee ), which may be made on the Premises , shall become the property of Lessor and remain upon and be surrendered with the Premises at the expiration of the term.  Notwithstanding the provisions of this Paragraph 7.3(c), Lessee’s machinery and equipment, other than that which is affixed to the Premises so that it cannot be removed without material damage to the Premises , shall remain the property of Lessee and may be removed by Lessee subject to the provisions of Paragraph 7.2(c).

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8.              Insurance; Indemnity .

8.1            Liability Insurance .  Lessee shall, at Lessee’s sole expense, obtain and keep in force during the term of this Lease a policy of comprehensive public liability insurance insuring Lessor and Lessee against any liability arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto.  Such insurance shall be in an amount of not less than $1.0 million for injury to or death of one person in any one accident or occurrence and in an amount of not less than $1.0 million for injury to or death of more than one person in any one accident or occurrence.  Such insurance shall further insure Lessor and Lessee against liability for property damage of at least $1.0 million.  The limits of said insurance shall not, however, limit the liability of Lessee hereunder.  If Lessee shall fail to procure and maintain said insurance, Lessor may but shall not be required to procure and maintain the same, but if Lessor does so, the liability insurance costs shall be at the expense of Lessee .

8.2            Property Insurance .  Lessor shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to the Premises , in the amount of the full replacement value thereof, providing protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended perils (all risk).

8.3            Insurance Policies .  Insurance required hereunder shall be with companies rated AAA or better in “Best’s Insurance Guide.” Lessee shall deliver to Lessor copies of policies of liability insurance required under paragraph 8.1 or certificates evidencing the existence, coverages and amounts of such insurance with loss payable clauses satisfactory to Lessor .  No such policy shall be cancelable or subject to reduction of coverage or other modification except after fifteen (15) days advance written notice to Lessor .   Lessee shall, within fifteen (15) days prior to the expiration of such policies, furnish Lessor with renewals or “binders” thereof, or Lessor may order such insurance and charge the cost thereof to Lessee , which amount shall be payable by Lessee upon demand.   Lessee shall not do or permit to be done anything which shall invalidate the insurance policies referred to hereinabove.

8.4            Indemnity .   Lessee shall indemnify and hold harmless Lessor from and against any and all claims arising from Lessee’s possession and use of the Premises , or from the conduct of Lessee’s business or from any activity, work or things done, permitted or suffered by Lessee in or about the Premises or elsewhere and shall further indemnify and hold harmless Lessor from and against any and all claims arising from any breach or default in the performance of any contractors, or employees and from and against all costs, attorney’s fees, expenses and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon; and in case any action or proceeding be brought against Lessor by reason of any such claim, Lessee upon notice from Lessor shall defend the same at Lessee’s expense by counsel satisfactory to Lessor.  Lessee , as a material part of the consideration to Lessor , hereby assumes all risk of damage to property or injury to persons, in, upon or about the Premises arising from any cause and Lessee hereby waives all claims in respect thereof against Lessor .

8.5            Exemption of Lessor from Liability .   Lessee hereby agrees that Lessor shall not be liable for injury to Lessee’s business or any loss of income therefrom or for damage to the goods, wares, merchandise or other property of Lessee , Lessee’s employees, invitees, customers, or any other person in or about the Premises , nor shall Lessor be liable for injury to the person of Lessee , Lessee’s employees, agents or contractors, 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, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether the said damage or injury results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to Lessee .   Lessor shall not be liable for any damage arising from any act or neglect of any other tenant, if any, of the building in which the Premises are located.

9.              Damage or Destruction .

9.1            Partial Damage-Insured .  Subject to the provisions of Paragraph 9.4, if the Premises are damaged and such damage was caused by a casually covered under an insurance policy maintained pursuant to Paragraph 8.2 , Lessor shall at Lessor’s expense repair such damages as soon as reasonable possible and this Lease shall continue in full force and effect.

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9.2            Partial Damage-Uninsured .  Subject to the provisions of Paragraph 9.4, if at anytime during the term hereof the Premises are damaged, except by a negligent or willful act of Lessee , and such damage was caused by a casualty not covered under an insurance policy maintained by Lessor pursuant to Paragraph 8.2, Lessor may at Lessor’s option (i) repair such damage as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Lessee within thirty (30) days after the date of the occurrence of such damage of Lessor’s intention to cancel and terminate this Lease as of the date of the occurrence of such damage.  In the event Lessor elects to give such Notice of Lessor’s intention to cancel and terminate this Lease , Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee’s intention to repair such damage at Lessee’s expense, without reimbursement from Lessor , in which event this Lease shall continue in full force and effect, and Lessee shall proceed to make such repairs as soon as reasonable possible.  If Lessee does not give such notice within such 10-day period this Lease shall be canceled and terminated as of the date of the occurrence of such damage.

9.3            Total Destruction .  If at any time during the term hereof the Premises are totally destroyed from any cause whether or not covered by the insurance maintained by Lessor pursuant to Paragraph 8.2 (including any total destruction required by any authorized public authority) this Lease shall automatically terminate as of the date of such total destruction.

9.4            Damage Near End of Term .  If the Premises are partially destroyed or damaged during the last one month of the term of this Lease , Lessor may at Lessor’s option cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Lessee of Lessor’s election to do so within 10 days after the date of occurrence of such damage.

9.5            Abatement of Rent; Lessee’s Remedies .

(a)            If the Premises are partially destroyed or damaged and Lessor or Lessee repairs or restores them pursuant to the provisions of this Article, the rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired. Except for abatement of rent, if any, Lessee shall have no claim against Lessor  for any damage suffered by reason of any such damage, destruction, repair or restoration.

(b)            If Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not commence such repair or restoration within 90 days after such obligations shall accrue, Lessee may at Lessee’s option cancel and terminate this Lease by giving Lessor written notice of Lessee’s election to do so at any time prior to the commencement of such repair or restoration.  In such event this Lease shall terminate as of the date of such notice.  Any abatement in rent shall be computed as provided in Paragraph 9.5(a).

9.6            Termination-Advance Payments .  Upon termination of this Lease pursuant to this Paragraph 9, an equitable adjustment shall be made concerning advance rent and any advance payments made by Lessee to Lessor , and the Letter of Credit shall be released provided Lessee is not in default under any of the terms and conditions hereof.

10.            Personal Property Taxes .

10.l           Payment of Real Property Tax .  Lessor shall pay all real property taxes applicable to the Premises during the term of the Lease .

10.2          Personal Property Taxes .

(a)            Lessee shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Lessee , including without limitation the furniture being used by Lessee pursuant to Addendum One , contained in the Premises .  When possible, Lessee shall cause said trade fixtures, furnishings, equipme