LEASE AGREEMENT

LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is made and entered into by and between Met 94, Ltd, hereinafter referred to as “Landlord,” and Encore Orthopedics, Inc., hereinafter referred to as “Tenant”

1.             PREMISES AND TERM. In consideration of the mutual obligations of Landlord and Tenant set forth herein, Landlord leases to Tenant, and Tenant hereby takes from Landlord, certain leased premises situated within the County of Travis, State of Texas, as more particularly described on EXHIBIT “A” attached hereto and incorporated herein by reference (the “Premises”), to have and to hold, subject to the terms, covenants and conditions in this Lease. The term of this Lease shall commence on the Lease Commencement Date hereinafter set forth and shall end on the last day of the month that is one hundred twenty (120) months after the Lease Commencement Date.

A             [Intentionally Omitted]

B             Building or Improvements to be Constructed   Landlord shall commit to a “substantially complete” shell building on the date which is one hundred eighty (180) days subsequent to the execution of this Lease Agreement This period will be subject to extension for force majeure delays The Lease Commencement Date will be thirty (30) days after the date of Substantial Completion of (i) the shell building and (ii) the tenant interior finish-out (the “Tenant Improvements”) Landlord shall use its best efforts and take all appropriate steps to complete the cul-de-sac described on Exhibit C-9 by no later than February 1, 1997 Rent shall commence on the Lease Commencement Date (the “Rent Commencement Date”) The term “Substantial Completion” shall mean the date (1) the selected contractor has completed the Tenant Improvements that it is obligated to perform pursuant to the contract it has with Tenant, notwithstanding “punch list” items which do not interfere with use of the Premises, (2) Landlord obtains a Certificate of Occupancy for the Premises, (3) all building fire alarms, fire sprinklers, smoke detectors, exit lights, life safety equipment and other building code requirements are installed and operational on the Premises, and (4) HVAC, utilities, plumbing service and doors and hardware for the Premises are sufficiently completed so as to enable Tenant to fully move in and install its furniture, fixtures, machinery and equipment in the Premises and conduct normal business operations in the Premises Tenant shall have the right to occupy that portion of the Premises that comprise its cleaning and packaging area of the Tenant Improvements at any time prior to Substantial Completion of the Tenant Improvements, provided that such occupancy shall not interfere with Landlord’s efforts to obtain Substantial Completion of the Tenant Improvements. Furthermore, Tenant shall have the right to occupy the entire Premises at any time after the date of Substantial Completion. The Landlord agrees to the above completion date subject to no delays of more than one (1) day caused solely by Tenant In the event that Tenant does cause one or more delays of more than one (1) day, then the time for the Landlord to achieve Substantial Completion shall be extended by such number of days.  Tenant shall not be deemed to have caused a delay unless it has been given no later than thirty (30) days prior to any deadline, a schedule and timetable of when Tenant is responsible for making decisions that impact on Landlord’s ability to achieve Substantial Completion In the event that Landlord does not substantially complete the shell building within two hundred ten (210) days (or such other extended date pursuant to this paragraph) from execution of this Lease Agreement, Landlord shall give Tenant a credit against rent due and payable under this Lease at the rate of Three Hundred Fifty Dollars ($350) per day for each day after the two hundred tenth (210 th ) day (or such other later extended date pursuant to this paragraph) that it takes to reach substantial completion of the shell building. As soon as the shell building and the Tenant Improvements have been substantially completed, Landlord shall notify Tenant in writing that Substantial Completion has occurred

2.             BASE RENT, SECURITY DEPOSIT AND ESCROW DEPOSITS.

A             Base Rent Tenant agrees to pay Landlord rent for the Premises, in advance, without demand, deduction or set off, at the rate of Six hundred thirteen one thousandths cents ($0.613) per square foot of rentable area per month during months 1 through 60 of the term hereof and Seven hundred thirteen one thousandths cents ($0.713) per square foot of rentable area per month during months 61 through 120 of the term hereof.  One such monthly installment, plus the other monthly charges set forth in Paragraph 2C below, shall be due and payable on the date hereof, and a like monthly installment shall be due and payable on or before the first day of each calendar month succeeding the Rent Commencement Date, except that all payments due hereunder for any fractional calendar month shall be prorated.

B             Security Deposit Pursuant to the provisions of Exhibit C-6, Tenant shall provide a Letter of Credit or Certificate of Deposit (the “Credit Enhancement”) At such point as the Credit Enhancement is amortized down to Twenty-Five

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Thousand Dollars ($25,000), this amount, which at the option of Tenant may be converted into a cash deposit or a certificate of deposit which is pledged to Landlord, shall be held by Landlord, without obligation for interest, as security for the performance of Tenant’s obligations under this Lease (the “Security Deposit”), it being expressly understood and agreed that the Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Upon occurrence of an Event of Default, subject to the provisions of Exhibit C-6, Landlord may convert the Security Deposit to cash and use all or part of the Security Deposit to pay past due rent or other payments due Landlord under this Lease or the cost of any other damage, injury, expense or liability caused by such Event of Default, without prejudice to any other remedy provided herein or provided by law.  On demand, Tenant shall pay Landlord the amount that will restore the Security Deposit to its original amount.  The Security Deposit shall be deemed the property of Landlord, but any remaining balance of the Security Deposit shall be returned by Landlord to Tenant when all of Tenant’s present and future obligations under this Lease have been fulfilled

C             Escrow Deposits . Without limiting in any way Tenant’s other obligations under this Lease, subject to the provisions of Section 4-B hereof, Tenant agrees to pay to Landlord its Proportionate Share (a; defined in this Paragraph 2C below) of (i) Taxes (hereinafter defined) payable by Landlord pursuant to Paragraph 3A below, (ii) the cost of utilities payable by Landlord pursuant to Paragraph 8 below, (iii) Landlord’s cost of maintaining any insurance or insurance related expense applicable to the Building and Landlord’s personal property used in connection therewith including, but not limited to, insurance pursuant to Paragraph 9A below (the “Common Insurance”), and (iv) Landlord’s cost of maintaining the Premises pursuant to paragraph 5E below and any common area charges payable by Tenant in accordance with Paragraph 4B below (the “Common Maintenance”) (all of (i), (ii), (iii) and (iv) are collectively, the “Tenant Costs”) During each month of the term of this Lease, on the same day that rent is due hereunder, Tenant shall deposit in escrow with Landlord an amount equal to one-twelfth (1/12) of the estimated amount of Tenant’s Proportionate Share of the Tenant Costs Tenant authorizes Landlord to use the funds deposited with Landlord under this Paragraph 2C to pay such Tenant Costs The initial monthly escrow payments are based upon the estimated amounts for the year in question and shall be increased or decreased annually to reflect the projected actual amount of all Tenant Costs.  If the Tenant’s total escrow deposits for any calendar year are less than Tenant’s actual Proportionate Share of the Tenant Costs for such calendar year, Tenant shall pay the difference to Landlord within thirty (30) days after demand. If the total escrow deposits of Tenant for any calendar year are more than Tenant’s actual Proportionate Share of the Tenant Costs for such calendar year, Landlord shall retain such excess and credit it against Tenant’s escrow deposits next maturing after such determination.  Landlord agrees to make such determination as early in each calendar year as is practicable and shall provide Tenant, within fifteen (15) days of written request by Tenant, with a statement showing (a) actual Tenant Costs for the preceding calendar year, (b) any amount paid by Tenant toward said Tenant Costs during such calendar year on an estimated basis, and (c) any revised estimate of Tenant’s obligation for Tenant Costs for the current calendar year In the event the Premises constitute a portion of a multiple occupancy building (the “Building”), Tenant’s “Proportionate Share” with respect to the Building, as used in this Lease, shall mean a fraction, the numerator of which is the gross rentable area on the ground floor contained in the Premises and the denominator of which is the gross rentable area on the ground floor contained in the entire Building. In the event the Premises or the Building is part of a project or business park owned, managed or leased by Landlord or an affiliate of Landlord (the “Project”), Tenant’s “Proportionate Share” of the Project, as used in this Lease, shall mean a fraction, the numerator of which is the gross rentable area on the ground floor contained in the Premises and the denominator of which is the gross rentable area on the ground floor contained in all of the buildings currently constructed or planned to be constructed (including the Building) within the Project

3.             TAXES

A             Real Property Taxes . Subject to reimbursement under Paragraph 2C herein, Landlord agrees to pay all taxes, assessments and governmental charges of any kind and nature (collectively referred to herein as “Taxes”) that accrue against the Premises, the Building and/or the land of which the Premises or the Building are a part If at any time during the term of this Lease there shall be levied, assessed or imposed on Landlord a capital levy or other tax directly on the rents received therefrom and/or a franchise tax, assessment, levy or charge measured by or based, in whole or in part, upon such rents from the Premises and/or the land and improvements of which the Premises are a part, then all such taxes, assessments, levies or charges, or the part thereof so measured or based shall be deemed to be included within the term “Taxes” for the purposes hereof.  The Landlord shall have the right to employ a tax consulting firm to attempt to assure a fair tax burden on the real property within the applicable taxing jurisdiction Tenant agrees to pay its Proportionate Share of the cost of such consultant

If at any time during the term of this Lease there shall be levied, assessed or imposed on the Landlord a franchise tax, business tax, income tax, or other levy relating to this Lease or the Premises, such levy being in lieu of all or a portion of the local property tax for schools, a reasonable allocation of such amount shall be deemed to be included within the term “Taxes” for purposes of determining Tenant’s share of Taxes to be reimbursed to Landlord

B             Personal Property Taxes . Tenant shall be liable for all taxes levied or assessed against any personal property or fixtures placed in or on the Premises. If any such taxes are levied or assessed against Landlord or Landlord’s property and (i) Landlord pays the same or (ii) the assessed value of Landlord’s property is increased by inclusion of such personal property and fixtures and Landlord pays the increased taxes, then Tenant shall pay to Landlord, upon demand, the amount of such taxes

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4.             LANDLORD’S REPAIRS AND MAINTENANCE.

A             Structural Repairs Landlord, at its own cost and expense (without any pass through to Tenant), shall maintain in a condition consistent with similar buildings in similar locations in Austin, Texas, the roof, foundation and the structural soundness of the exterior walls of the Building in good repair, reasonable wear and tear excluded. The term “walls” as used herein shall not include windows, glass or plate glass, any doors, special store fronts or office entries, and the term “foundation” as used herein shall not include loading docks. Tenant shall immediately give Landlord written notice (“Tenant Repair Notice”) of defect or need for repairs, after which Landlord shall have reasonable opportunity to effect such repairs or cure such defect Landlord agrees to commence the repairs not later than five (5) days after receipt of a Tenant Repair Notice.  In the event of an emergency, Tenant shall have the right to immediately undertake repairs which are Landlord’s responsibility and to notify Landlord after the repairs have been undertaken If Landlord fails to immediately and diligently undertake to repair or maintain the Premises within five (5) days after receipt of a Tenant Repair Notice, or if Tenant undertakes emergency repairs as provided herein, Tenant may perform the repairs or maintenance and, in addition to any other remedies Tenant may have at law or in equity, Tenant may bill Landlord for the costs of the repairs and maintenance. In the event that Landlord has not paid such bill within thirty (30) days of the receipt of the invoice or is not in good faith negotiating with Tenant with respect to whose responsibility the repairs were, then Tenant may deduct such costs from the rent next coming due.

B.            Tenant’s Share of Common Area Charges Tenant agrees to pay its Proportionate Share of the cost of (i) maintenance and/or landscaping (including both maintenance and replacement of landscaping, but not the initial cost of landscaping the Building) of any property that is a part of the Building and/or the Project; (ii) operating, maintaining and repairing any property, facilities or services (including without limitation utilities and insurance therefore) provided for the use or benefit of Tenant or the common use or benefit of Tenant and other lessees of the Building; and (iii) an administrative fee of seven and one-half percent (7 1 / 2 %) of all common area maintenance charges. Notwithstanding the foregoing, there will be no property management fees passed through to Tenant during the term and the renewal Common Maintenance will be capped to increase on a cumulative basis to no more than six percent (6%) per year.

C.            Right to Audit Tenant Costs Tenant shall have the right, at Tenant’s sole cost, to audit the Landlord’s records of Tenants Costs.  Tenant may review only those records of Landlord that are specifically related to Tenant Costs Tenant will keep confidential all agreements involving the rights provided in this section and the results of any audits conducted hereunder Notwithstanding the foregoing, Tenant shall be permitted to furnish the foregoing information to its attorneys, accountants, and auditors to the extent necessary to perform their respective services for Tenant Tenant may not conduct an audit more often than once each calendar year Tenant may audit records with respect to each lease year only one time. No audit shall cover a period of time in excess of the one calendar year immediately preceding the audit. Notwithstanding the first sentence of this provision, in the event that the total amount of annual Tenant’s Costs are misstated by more than ten percent (10%), the cost of such audit to Tenant will be reimbursed to Tenant by Landlord within thirty (30) days of the date that Tenant invoices Landlord for such costs

5.             TENANT’S REPAIRS.

A.            Maintenance  of Premises and Appurtenances Tenant, at its own cost and expense, shall (i) maintain all parts of the Premises and promptly make all necessary repairs and replacements to the Premises (except those for which Landlord is expressly responsible hereunder), and (ii) keep the parking areas, driveways and alleys surrounding the Premises in a clean and sanitary condition.  Tenant’s obligation to maintain, repair and make replacements to the Premises shall cover, but not be limited to, pest control (including termites), trash removal and the maintenance, repair and replacement of all HVAC, electrical, plumbing (but not including common lines), sprinkler and other mechanical systems.  Landlord shall assign to Tenant all rights under every manufacturer’s warranty for equipment and mechanical systems that Landlord obtains during the construction of the Building that relate to the Premises

B             [Intentionally Omitted]

C             Parking . Tenant and its employees, customers and licensees shall have the right to use the one hundred ninety-two (192) parking spaces for the initial term adjacent to the Premises as shown on Exhibit A-1.  In addition, if Tenant leases up to additional 28,800 square feet in the Building, it will have the right to use up to eighty (80) more spaces (on a pro rata basis) as shown on Exhibit B Such parking shall be subject to (i) all rules and regulations promulgated by Landlord, and (ii) rights of ingress and egress of other lessees. Landlord shall not be responsible for enforcing Tenant’s parking rights against any third parties, and Tenant expressly does not have the right to tow or obstruct improperly parked vehicles Tenant agrees not to park on any public streets or private roadways adjacent to or in the vicinity of the Premises except where legal parking is allowed

D.            System Maintenance . Tenant, at its own cost and expense, shall enter into a regularly scheduled preventive maintenance/service contract with a maintenance contractor approved by Landlord for servicing all heating and air conditioning systems and equipment within the Premises The service contract must include all services suggested by he equipment

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manufacturer in its operations/maintenance manual and must become effective within thirty (30) days of the date Tenant takes possession of the Premises.

E              Option to Maintain Premises Landlord reserves the right to perform, in whole or in part, maintenance, repairs and replacements to the exterior of the Premises, paving, common area, landscape, exterior painting, common sewage line plumbing and any other items that are otherwise Tenant’s obligations under this Paragraph 5, in which event, Tenant shall be liable for its Proportionate Share of the cost and expense of such repair, replacement, maintenance and other such items

6.             ALTERATIONS. Except as set forth herein, Tenant shall not make any alterations, additions or improvements to the Premises without the prior written consent of Landlord Tenant, at its own cost and expense, may erect such shelves, bins, machinery and trade fixtures as it desires, provided that (i) such items do not alter the basic character of the Premises or the Building, (ii) such items do not overload or damage same, (iii) such items may be removed without injury to the Premises, and (iv) the construction, erection or installation thereof complies with all applicable governmental laws, ordinances, regulations and with Landlord’s specifications and requirements. With respect to tenant improvements constructed after Substantial Completion, Tenant shall be responsible for compliance with The Americans With Disabilities Act of 1990 Landlord shall be responsible for having the shell building and Tenant Improvements upon Substantial Completion comply with The Americans With Disabilities Act of 1990 Without implying any consent of Landlord thereto, all alterations, additions, improvements and partitions erected by Tenant shall be and remain the property of Tenant during the term of this Lease. Tenant may remove, either during or at the termination of the Lease, all bus duct, all elements relating to the cleaning and packaging room, the exhaust system for the grinding and polishing room, the air compressors to run the internal compressed air lines and the outside signage All shelves, bins, machinery and trade fixtures installed by Tenant shall be removed on or before the earlier to occur of the day of termination or expiration of this Lease or vacating the Premises, at which time Tenant shall restore the Premises to their original condition, wear and tear excepted. All alterations, installations, removals and restorations shall be performed in a good and workmanlike manner so as not to damage or alter the primary structure or structural qualities of the Building or other improvements situated on the Premises or of which the Premises are a part. Tenant is allowed to make changes to the space upon the Landlord’s consent Tenant is allowed to make, without consent, up to $50,000 per year of improvements to the Premises subsequent to the construction of the initial Tenant Improvements, if such improvements do not affect the structure of the Building Except for improvements made by the Tenant to the mezzanine level of the Premises, any such improvements are subject to demolition upon the termination or expiration of this Lease if Landlord notifies Tenant prior to the time that the improvements are constructed that demolition will be required at the termination or expiration of this Lease Improvements to the mezzanine level of the Premises may be required to be demolished at the termination of the Lease If required, Landlord must notify Tenant of such requirement at least three (3) months prior to the termination of the Lease Any demolition required under this provision is to be performed by Tenant, at Tenant’s costs.

7.             SIGNS.  Any signage Tenant desires for the Premises shall be subject to Landlord’s written approval and shall be submitted to Landlord prior to the Lease Commencement Date of this Lease Tenant, at Tenant’s expense, will be allowed to have signage (including company logo) on the outside of the building. The design shall be in keeping with the architectural and environmental integrity of the Property and shall be as shown on Exhibit E attached hereto Tenant shall repair, paint and/or. replace the Building fascia surface to which its signs are attached upon Tenant’s vacating the Premises or the removal or alteration of its signage. Tenant shall not, without Landlord’s prior written consent, (i) make any changes to the exterior of the Premises, such as painting; (ii) install any exterior lights, decorations, balloons, flags, pennants or banners; or (iii) erect or install any signs, windows or door lettering, placards, decorations or advertising media of any type which can be viewed from the exterior of the Premises All signs, decorations, advertising media, blinds, draperies and other window treatment or bars or other security installations visible from outside the Premises shall conform in all respects to the criteria established by Landlord or shall be otherwise subject to Landlord’s prior written consent

8.             UTILITIES.  Landlord agrees to provide normal water, electricity, gas and sewer service to the Premises. Tenant shall pay for all water, gas, heat, light, power, telephone, sewer, sprinkler charges and other utilities and services used on or at the Premises, together with any taxes, penalties, surcharges or the like pertaining to the Tenant’s use of the Premises and any maintenance charges for utilities Such services are to be separately metered to Tenant and Landlord shall install, at its expense, such water and natural gas submeters as are necessary for this purpose Tenant shall pay its pro rata share, as reasonably determined by Landlord, of all charges for jointly metered utilities. Except when caused by the gross negligence or willful misconduct of Landlord, its employees, agents or representatives, Landlord shall not be liable for any interruption or failure of utility service on the Premises, and Tenant shall have no rights or claims as a result of any such failure

9.             INSURANCE.

A.            Landlord’s Insurance . Subject to reimbursement under Paragraph 2C herein, Landlord shall maintain comprehensive general liability insurance with limits of net less that S1,000,000 combined single limit and insurance covering the Building in an amount not less than ninety percent (90%) of the “replacement cost”, excluding site and foundation costs thereof, insuring against the perils of fire, lightning, extended coverage, vandalism and malicious mischief.

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B             Tenant’s Insurance . Tenant, at its own expense, shall maintain during the term of this Lease a policy or policies of workers’ compensation and comprehensive general liability insurance, including personal injury and property damage, with contractual liability endorsement, in the amount of Five Hundred Thousand Dollars ($500,000 00) for property damage and One Million Dollars ($1,000,000 00) per occurrence and One Million Dollars ($1,000,000 00) in the aggregate for personal injuries or deaths of persons occurring in or about the Premises. Tenant, at its own expense, shall also maintain during the term of this Lease fire and extended coverage insurance covering the replacement cost of (i) all alterations, additions, partitions and improvements installed or placed on the Premises by Tenant or by Landlord on behalf of Tenant (the “Tenant Alterations”); and (ii) all of Tenant’s personal property contained within the Premises. Said policies shall (i) name the Landlord as additional insured; (ii) be issued by an insurance company which is reasonably acceptable to Landlord; and (iii) provide that said insurance shall not be canceled unless thirty (30) days prior written notice has been given to Landlord Said policy or policies or certificates thereof shall be delivered to Landlord by Tenant on or before the Lease Commencement Date and upon each renewal of said insurance. Any insurance proceeds awarded or paid to Tenant for Tenant’s signs, trade fixtures, equipment, the Tenant Alterations or any property owned by Tenant shall be paid and belong to Tenant

C             Prohibited Uses . Tenant will not permit the Premises to be used for any purpose or in any manner that would (i) void the insurance thereon, (ii) increase the insurance risk or cost thereof, or (iii) cause the disallowance of any sprinkler credits; including without limitation, use of the Premises for the receipt, storage or handling of any product, material or merchandise that is explosive or highly inflammable It is understood that Tenant in its normal operations uses titanium and there shall be no additional charge to Tenant for insurance due to such usage.  If any increase in the cost of any insurance on the Premises or the Building is caused by Tenant’s use of the Premises or because Tenant vacates the Premises, then Tenant shall pay the amount of such increase to Landlord upon demand therefor.

10.          FIRE AND CASUALTY DAMAGE.

A.            Total or Substantial Damage and Destruction If the Premises or the Building should be damaged or destroyed by fire or other peril, Tenant shall immediately give written notice to Landlord of such damage or destruction. If the Premises or the Building should be totally destroyed by any peril covered by the insurance to be provided by Landlord under Paragraph 9A above, or if they should be so damaged thereby that, in Landlord’s reasonable estimation, rebuilding or repairs cannot be completed within one hundred eighty (180) days after the date of such damage (“Total Damage”), then this Lease shall terminate, the rent shall be abated during the unexpired portion of this Lease, effective upon the date of the occurrence of such damage, and Tenant shall not be required to pay for any unamortized finish-out allowance or commissions remaining under the Lease. Landlord shall notify Tenant within four (4) weeks of the damage or destruction of its intentions to rebuild. Failure to notify Tenant within such time period shall obligate Landlord to undertake the repairs necessary to restore the Premises to their original conditions. If Landlord chooses to rebuild or restore the Premises, Landlord shall promptly and diligently undertake such efforts

B.            Partial Damage or Destruction . If the Premises or the Building should be damaged by any peril covered by the insurance to be provided by Landlord under Paragraph 9A above and, in Landlord’s estimation, rebuilding or repairs can be substantially completed within one hundred eighty (180) days after the date of such damage, then this Lease shall not terminate and Landlord shall promptly and diligently substantially restore the Premises to its previous condition, except that Landlord shall not be required to rebuild, repair or replace any part of the partitions, fixtures, additions and other improvements that may have been constructed, erected or installed in or about the Premises which were paid for directly by Tenant (not including any amounts paid for by Tenant as part of the Tenant Improvement Allowance)

C.            Lienholders’ Rights in Proceeds . Notwithstanding anything herein to the contrary, in the event the holder of any indebtedness secured by a mortgage or deed of trust covering the Premises requires that in the event of Total Damage to the Premises that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice of termination to Tenant within fifteen (15) days after such requirement is made known to Landlord by any such holder, whereupon all rights and obligations hereunder shall cease and terminate; provided however, such determination must have been made within four (4) weeks of the damage or destruction. In such event, Tenant shall not be required to pay for any unamortized finish-out allowance or commissions remaining under the Lease

D.            Waiver of Subrogation . Notwithstanding anything in this Lease to the contrary, Landlord and Tenant hereby waive and release each other of and from any and all rights of recovery, claims, actions or causes of action against each other, or their respective agents, officers and employees, for any loss or damage that may occur to the Premises, improvements to the Building or personal property (Building contents) within the Building and/or Premises, for any reason regardless of cause or origin.  Each party to this Lease agrees immediately after execution of this Lease to give written notice of the terms of the mutual waivers contained in this subparagraph to each insurance company that has issued to such party policies of fire and extended coverage insurance and to have the insurance policies properly endorsed to provide that the carriers of such policies waive all rights of recovery under subrogation or otherwise against the other party

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11.          LIABILITY AND INDEMNIFICATION. Except for any claims, rights of recovery and causes of action that Landlord has released, Tenant shall hold Landlord harmless from and defend Landlord against any and all claims or liability for any injury or damage (i) to any person or property whatsoever occurring in, on or about the Premises or any part thereof, the Building and/or other common areas, the use of which Tenant may have in accordance with this Lease, if (and only if) such injury or damage shall be caused in whole or in part by the negligence or willful misconduct of Tenant, its agents, servants, employees or invitees; (ii) arising from the conduct or management of any work done by the Tenant in or about the Premises; (iii) arising from transactions of the Tenant; and (iv) all costs, counsel fees, expenses and liabilities incurred in connection with any such claim or action or proceeding brought thereon Except for any claims, rights of recovery and causes of action that Tenant has released, Landlord shall hold Tenant harmless from and defend Tenant against any and all claims or liability for any injury or damage (i) to any person or property whatsoever occurring in, on or about the Premises or any part thereof, the Building and/or other common areas, the use of which Tenant may have in accordance with this Lease, if (and only if) such injury or damage shall be caused in whole or in part by the gross negligence or willful misconduct of Landlord, its agents, servants, employees of invitees; and (ii) all costs, counsel fees, expenses and liabilities incurred in connection with any such claim or action or proceeding brought thereon. The provisions of this Paragraph 11 shall survive the expiration or termination of this Lease Landlord shall not be liable in any event for personal injury or loss of Tenant’s property caused by fire, flood, water leaks, rain, hail, ice, snow, smoke, lightning, wind, explosion, interruption of utilities or other occurrences, unless such event was caused by the gross negligence or willful misconduct of Landlord, its agents, servants, employees or invitees Landlord strongly recommends that Tenant secure Tenant’s own insurance in excess of the amounts required elsewhere in this Lease to protect against the above occurrences if Tenant desires additional coverage for such risks. Tenant shall give prompt notice to Landlord of any significant accidents involving injury to persons or property.  Furthermore, Landlord shall not be responsible for lost or stolen personal property, equipment, money or jewelry from the unless such event was caused by the gross negligence or willful misconduct of Landlord, its agents, servants, employees or invitees.  Landlord shall not be liable to Tenant or Tenant’s employees, customers or invitees for any damages or losses to persons or property caused by any lossees in the Building or the Project, or for any damages or losses caused by theft, burglary, assault, vandalism or other crimes unless such event was caused by the gross negligence or willful misconduct of Landlord, its agents, servants, employees or invitees.  Landlord strongly recommends that Tenant provide its own security systems and services and secure Tenant’s own insurance in excess of the amounts required elsewhere in this Lease to protect against the above occurrences if Tenant desires additional protection or coverage for such risks.  Tenant shall give Landlord prompt notice of any criminal or suspicious conduct it observes within or about the Premises, the Building or the Project and/or any personal injury or property damage caused thereby Landlord may, but is not obligated to, enter into agreements with third parties for the provision, monitoring, maintenance and repair of any courtesy patrols or similar services or fire protective systems and equipment and, to the extent same is provided at Landlord’s sole discretion, Landlord shall not be liable to Tenant for any damages, costs or expenses which occur for any reason in the event any such system or equipment is not properly installed, monitored or maintained or any such services are not properly provided. Landlord shall use reasonable diligence in the maintenance of lighting in the parking areas servicing the Premises, which shall be at a level to provide a safe environment for Tenant and its employees, visitors and guests, it being understood that such level to be determined solely by the Landlord.

12.          USE.   The Premises shall be used only for the purpose of manufacturing, receiving, storing, shipping and selling (other than retail) products, materials and merchandise made and/or distributed by Tenant, general office use and for such other legally permitted uses compatible with the Building’s current zoning Except for the outside storage of waste cutting fluid and other materials in the area outside of the Premises designated for such purposes, outside storage, including without limitation storage of trucks and other vehicles, is prohibited without Landlord’s prior written consent  Tenant shall comply with all governmental laws, ordinances and regulations applicable to the use of the Premises and shall promptly comply with all governmental orders and directives for the correction, prevention and abatement of nuisances in, upon or connected with the Premises, all at Tenant’s sole expense.  Other than in the ordinary course of business, Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the Premises, nor take any other action that would constitute a nuisance or would disturb, unreasonably interfere with or endanger Landlord or any other lessees of the Building or the Project, it being understood and permitted that Tenant’s normal business operations create dust and other fumes relating to polishing and grinding of metals, and that metal machining will be occurring on an ongoing basis within the Premises.

13 .          HAZARDOUS WASTE. The term “Hazardous Substances,” as used in this Lease, shall mean pollutants, contaminants, toxic or hazardous wastes, radioactive materials or any other substances, the use and/or the removal of which is required or the use of which is restricted, prohibited or penalized by any “Environmental Law,” which term shall mean any federal, state or local statute, ordinance, regulation or other law of a governmental or quasi-governmental authority relating to pollution or protection of the environment or the regulation of the storage or handling of Hazardous Substances. Tenant hereby agrees that: (i) no activity will be conducted on the Premises that will produce any Hazardous Substances, except for such activities that are part of the ordinary course of Tenant’s business activities (the “Permitted Activities”), provided said Permitted Activities are conducted in accordance with all Environmental Laws and Tenant shall have notified Landlord of such activities and, in connection therewith, Tenant shall be responsible for obtaining any required permits or authorizations and paying any fees and providing any testing required by any governmental agency; (ii) the Premises will not be used in any manner for the storage of any Hazardous Substances, except for the temporary storage of such materials that are used in the ordinary course of Tenant’s business (the “Permitted Materials”), provided such Permitted Materials are properly stored in a manner and location

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meeting all Environmental Laws, and, in connection therewith, Tenant shall be responsible for obtaining any required permits or authorizations and paying any fees and providing any testing required by any governmental agency; (i