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Michigan Commercial Lease Agreement

 

Source: http://www.sec.gov/

 

 

LEASE AGREEMENT MASS STREET

<TEXT>

<PAGE>

THIS LEASE made this 14 day of June, 1989 by and between D R GROUP, a

Michigan Co-Partnership, whose address is 27300 W. 11 Mile Road, Ste. 806,

Southfield, Michigan 48034, the Lessor, hereinafter designated as the Landlord,

and ROFIN-SINAR INCORPORATED, a Delaware corporation, whose address is 3333

North First Street, San Jose, CA 95134-1995, the Lessee, hereinafter designated

as the Tenant.

ARTICLE I

DESCRIPTION

-----------

WITNESSETH: The Landlord, in consideration of the rents to be paid and the

covenants and agreements to be performed by the Tenant, does hereby lease unto

the Tenant the following described premises situated in the City of Livonia,

County of Wayne, State of Michigan, to wit: a light industrial building

containing approximately 23,500 square feet, more commonly known as 45701 Mast

Street. See attached Plans and Specs.

ARTICLE II

COMPLETION OF BUILDING

----------------------

Section 1. The building and demised premises shall be constructed

---------

substantially in accordance with Plans and Specifications set forth in Exhibit

"B", attached hereto and made a part hereof. It is understood and agreed by

Tenant that any minor changes from any plans or specifications during

construction of the building or demised premises shall not relieve Tenant of its

obligations under this Lease Agreement. Improvements to the building and

demised premises shall be constructed in accordance with Exhibits "C" and "D"

attached hereto and made a part hereof by Landlord, at Tenant's expense, and

shall be constructed in a good and workmanlike manner using only new, quality

material. Landlord's construction work shall be pursuant to applicable

ordinances, statutes, regulations and laws.

Section 2. Landlord agrees to make every reasonable effort to ensure the

---------

building is completed, as hereinafter defined, on or before August 15, 1989 or

earlier if accepted by Tenant. If the building is not completed on or before

August 15, 1989, for reasons other than unforeseen labor and/or materials

shortages, general strike or act of God, Tenant may, at its option, and as its

sole remedy, by written notice to Landlord on or before August 1, 1990, cancel

this Lease Agreement in its entirety, provided that the building is not

completed prior to the giving of said notice. For purposes of this Agreement,

the building shall be deemed completed when the City of Livonia issues a final

Certificate of Occupancy, or a temporary permit authorizing occupancy if weather

prevents issuance of final Certificate of Occupancy, and all facilities

necessary to Tenant's occupancy and use of the demised premises have been

substantially completed, including access to and throughout the premises,

toilet, heating, ventilating, air-conditioning, water, plumbing, lighting and

electrical power

<PAGE>

2

and other utility facilities are installed in good operating order and the work

remaining to be done is of such a nature as to not materially interfere with the

Tenant's use of the premises and ten (10) days written notice of the completion

of the demised premises shall have been given by Landlord to Tenant. Occupancy

of said premises by Tenant shall be construed as acceptable and acknowledgment

that the demised premises has been completed and in the condition called for,

except for punch list items. Notwithstanding the terms of this paragraph to the

contrary, Tenant shall have the right to use the building to store its equipment

prior to August 1, 1989, provided, however, that said storage shall not

interfere with Landlord's construction of improvements as called for under

Exhibit "C" attached hereto and made a part hereof. Further, prior to storing

anything in the demised premises, Tenant shall provide Landlord with

certificates of insurance as required under Article V of this Lease Agreement.

Such storage shall not, however, be deemed taking occupancy for payment of rent

under Article III.

Section 3. During the course of construction, Tenant, its employees,

---------

agents and contractors may enter upon the premises at all reasonable times for

the purpose of inspection, and as soon possible after such construction has

advanced to the point where Tenant's contractors can conveniently and without

unreasonable interference with Landlord's contractor enter into the premises to

construct and install Tenant's improvements, fixtures and other equipment and

with Landlord's consent, which shall not be unreasonably withheld or delayed,

may enter upon the premises for the purpose of installing improvements,

fixtures, and other equipment upon condition that Tenant, its employees, agents

and contractors will not unreasonably interfere with Landlord's employees,

agents or contractors, in the pursuit of Landlord's construction. Landlord

shall have no responsibility or liability whatsoever for any loss of or damage

to any fixtures or other equipment installed or left upon the demised premises

by Tenant.

Section 4. Landlord shall remove all tools, scaffolding, unused or

---------

discarded building materials, waste and rubbish of any sort, in, on or about the

premises prior to the commencement date of this Lease.

ARTICLE III

RENT AND TERMS

--------------

Section 1. This Lease shall commence on the date the building shall be

---------

completed in accordance with Section 2 of Article II hereof, and notice of such

completion has been given in accordance with Section 2 of Article II, and shall

continue until the first day of the month following the date of completion of

the building, plus a period of four (4) years after the first day of such month.

<PAGE>

3

Section 2. Tenant shall pay to Landlord as rent for said leased premises

---------

the sum of THREE HUNDRED SEVENTY SIX THOUSAND THIRTY TWO AND 00/100

($376,032.00) Dollars, payable monthly as hereinafter provided. Should the term

of this Lease commence on a day other than the first day of a calendar month,

then the rental for such month shall be pro-rated on a daily basis based upon a

thirty (30) day calendar month. Should any lease year contain less than twelve

(12) calendar months, said annual rental shall be appropriately pro-rated. In

addition to the daily rental, the Tenant shall pay at the time of execution of

this Lease the first full months's rent of SEVEN THOUSAND EIGHT HUNDRED THIRTY

FOUR AND 00/100 ($7,834.00) Dollars, receipt of which is hereby acknowledged.

In the event that Tenant takes occupancy prior to August 1, 1989, rent shall

commence from the date of occupancy. The rent under this Article III shall

commence from the date of occupancy. In the event that Tenant does not pay,

when due and payable, or within seven (7) days thereafter, any rent or any

additional rent, not timely paid shall bear interest in accordance with Article

XXXVI until paid. Rent is payable at 27300 W. 11 Mile Road, Suite 806,

Southfield, Michigan 48034, or at such other place as Landlord may give written

notice to Tenant.

Section 3. The Tenant hereby hires the said premises for the said term as

---------

above mentioned and covenants well and truly to pay, or cause to be paid unto

the Landlord at the dates and times above mentioned, the rent above reserved.

Landlord waives any Landlord's liens now and hereafter provided by law.

ARTICLE IV

TAXES

-----

Section 1. Tenant shall pay, as additional rent, to Landlord during the

---------

term of this Lease all taxes and assessments which may be levied or assessed by

any lawful authority, for each calendar year during the term hereof, against the

land, building or improvements comprising the leased premises. (Such taxes and

assessments being hereinafter called "Taxes"). Should the State of Michigan or

any political subdivision thereof or any governmental authority having

jurisdiction thereover, now or hereafter impose a tax and/or assessment of any

kind or nature upon, against or with respect to the rentals payable by Tenant to

Landlord or any income of Landlord derived from the leased premises or with

respect to Landlord's or the individuals or entities which form the Landlord

herein, ownership of the land and building or buildings comprising the leased

premises, as a substitution for all or any part of the taxes and assessments

levied or assessed against such land and such building or buildings, or in

addition thereto, such tax and/or assessment shall be deemed to constitute a tax

and/or assessment against such land and such building or buildings for the

purpose of this paragraph and Tenant shall be obligated to pay it as provided

herein. In addition, should any governmental authority having jurisdiction

thereover impose a tax or surcharge of any kind or nature upon, against or with

respect to

<PAGE>

4

the parking areas or the number of parking spaces comprising the leased

premises, such tax or surcharge shall likewise be deemed a constituted tax

and/or assessment against such land and such building or buildings for the

purpose of this paragraph and Tenant shall be obligated to pay such tax provided

herein. Landlord represents that, to the best of its knowledge, no new tax of a

nature not presently in effect or new assessments will be imposed on the demised

premises. In the event an assessment is imposed as a lump sum, Tenant shall be

obligated to pay said assessment based on the number of years left of the lease

term or any option term. By way of illustration but not limitation: $1,000.00

assessment, five (5) years left on the lease term ($1,000.00 / 5 = $200.00 per

year - $1,000.00/5 = $200.00).

Section 2. At the option of Landlord, Tenant shall pay all taxes within

---------

ten (10) days of presenting the tax bill, or the taxes shall be paid in monthly

installments on or before the first day of each calendar month, in advance, in

an amount estimated by Landlord. Upon receipt of all tax bills and assessment

bills attributable to any calendar year during the term hereof, Landlord shall

furnish Tenant with a written statement of the actual amount of Tenant's share

of the premises taxes of such calendar year. In the event the total amount of

monthly installments paid by Tenant pursuant to this Article does not equal the

sum due from Tenant as shown on such statement, then Tenant shall pay to

Landlord the deficiency within ten (10) days after demand therefor by Landlord;

or Landlord shall credit such excess to the next installment of rent due from

Tenant, as the case may be. A copy of a tax bill or assessment bill submitted

by Landlord to Tenant shall at all times be sufficient evidence of the amount of

taxes against the property to which such bill relates. Prior to, or at the

commencement of the term of this Lease and from time to time thereafter

throughout the term hereof, Landlord shall notify Tenant in writing of

Landlord's estimate of Tenant's monthly installments due hereunder. Landlord's

and Tenant's obligation under this Lease shall survive the expiration of this

Lease.

Section 3. Notwithstanding anything in this Article to the contrary, all

---------

reasonable costs and expenses incurred by Landlord during negotiations for or

contests of the amount of taxes shall be included within the term "Taxes". In

the event a refund is obtained, Landlord shall credit a portion thereof to the

next installment of rent due from Tenant, such portion to be based upon the

percentage of the original taxes paid by Tenant from which the refund was

derived.

Section 4. Tenant, at all times shall be responsible for and shall pay,

---------

before delinquent, all taxes levied, assessed or unpaid on any leasehold

interest, any right of occupancy, any investment of Tenant in the premises, or

any personal property of any kind owned, installed or used by Tenant including

Tenant's leasehold improvements or on Tenant's right to occupy the premises.

<PAGE>

5

Section 5. Tenant shall, in addition to the foregoing, pay any new tax of

---------

a nature not presently in effect but which may hereafter be levied, assessed, or

imposed upon the Landlord or the demised premises, if such tax shall be based on

or arise out of the ownership, use or operation of the leased premises. For the

purpose of computing Tenant's liability for such new type of tax, the leased

premises shall be deemed the only property of Landlord.

Section 6. Tenant agrees to cooperate with Landlord to obtain a tax

---------

abatement for said demised premises.

Excluded under this Article IV shall be any income tax or inheritance tax

of Landlord.

ARTICLE V

INSURANCE AND INDEMNITY

-----------------------

Section 1. Tenant, at its own expense, shall maintain for the mutual

---------

benefit of Landlord and Tenant, insurance of the following character:

A. Comprehensive general liability insurance against claims for

bodily injury, personal injury, death or property damage occurring on, at

or about the demised premises, such insurance to afford protection for

Landlord and such other parties as Landlord shall then designate, of not

less than Two Million and no/100 ($2,000,000.00) Dollars, with respect to

bodily injury, personal injury or death to any one person, not less than

Two Million and no/100 ($2,000,000.00) Dollars, with respect to any one

accident or occurrence and not less than One Million and no/100

($1,000,000.00) Dollars, with respect to property damage. Policies for

such insurance shall be for the mutual benefit of Landlord, Tenant and such

other parties as Landlord may designate, all of whom shall be deemed as

insureds.

B. Workman's compensation covering all persons employed in connection

with any work done on or about the demised premises with respect to which

claims for death or bodily injury shall be asserted against Landlord,

Tenant or the demised premises.

C. Rent interruption insurance in amounts equal to Tenant's total

rental obligation for twelve (12) full months under this Lease, plus the

total of the estimated cost to Tenant of taxes, assessments, insurance

premiums and common ares charges.

D. Fire and extended coverage in the standard fire extended coverage

and the special extended coverage endorsements providing all risk insurance

in an amount

<PAGE>

6

equal to full replacement value of the building and all improvements, using

not less than ONE MILLION TWO HUNDRED SEVENTY FIVE THOUSAND ($1,275,000.00)

Dollars as the Landlord's current estimate of the replacement value. Said

estimate shall be revised at the expiration of the initial term of the

insurance policy and shall be revised by the Landlord at each renewal of

said policy.

E. The Tenant shall also be responsible for all glass damage on or

within the premises, but is not required to obtain plate glass insurance.

F. Landlord, along with any desired mortgagee if required, are to be

added as insureds, loss payees or additional insureds, as appropriate under

the policies.

Section 2. All insurance policies required under this Article V shall

---------

be issued by companies of recognized financial standing, rated at least A + AAA

by Best's Insurance Guide and duly licensed to do business under the laws of the

State of Michigan. Every policy which Tenant is obligated to carry under the

provisions of this Section shall contain an agreement by the insurer that it

will not cancel or materially modify such policy except after twenty (20) days

prior written notice to Landlord. Tenant shall deliver to Landlord, upon

delivery of its occupancy of the demised premises, certificates of the insurers,

evidencing all of the insurance which is required to be maintained by Tenant

hereunder, and Tenant shall, within thirty (30) days prior to the expiration of

any such insurance deliver other original or duplicate policies or other

certificates or binders of the insurers evidencing the renewal or issuance of

such insurance. If Tenant fails to effect, maintain or renew any insurance

provided for in this Section, or to pay the premium therefor, or to deliver to

Landlord any of such policies or certificates, then in any of said events,

Landlord, at its option, but without obligation so to do, may upon five (5) days

notice to Tenant, procure such insurance. Any sums expended by Landlord to

procure such insurance shall be additional rent hereunder and shall be repaid by

Tenant within five (5) days following the date on which expenditures shall be

made by Landlord.

Section 3. Such insurance may be by so-called "blanket" policy

---------

coverage, provided, however, that such "blanket" policy coverage allocates a

satisfactory amount of insurance to the demised premises, that this amount is

not subject to deduction because of co-insurance, and that adjustment in payment

of the insurance so allocated will be in the amounts specified in the Lease.

Further, said blanket coverage shall not be subject to invalidation as to the

demised premises because of any act or omission by the Tenant.

Section 4. Except for the negligence of Landlord Tenant covenants to

---------

indemnify Landlord, and save it harmless from and against any and all claims,

actions, damages, liability and expense, including attorney fees, in connection

with loss of life, personal injury and/or damage to property arising from or out

of any occurrence in, upon or

<PAGE>

7

at the leased premises or the occupancy or use by Tenant of the leased premises

or any part thereof, arising from or out of Tenant's failure to comply with any

provisions of this Lease or occasioned wholly or in part by any act or omission

of Tenant, its agents, contractors, employees, servants, customers or licensees.

For the purpose hereof, the leased premises shall include service areas

adjoining the same, including the parking areas, and the loading platform areas.

In case Landlord shall, without fault on its part, be made a party to any

litigation commenced by or against Tenant, then Tenant shall protect and hold it

harmless and shall pay all reasonable costs, expenses and reasonable attorney

fees incurred or paid by Landlord in connection with such litigation. Tenant

shall also pay all reasonable costs, expenses and reasonable attorney fees that

may be incurred in enforcing the Tenant's covenants and agreements in this

Lease.

ARTICLE VI

PAYMENT BY LANDLORD

-------------------

If the Tenant shall default in any payment or expenditure other than

rent required to be paid or expended by the Tenant under the terms hereof, the

Landlord may at its option make such payment or expenditure on behalf of Tenant,

in which event the amount thereof shall be payable as rental to the Landlord by

the Tenant on the next ensuing rent day, together with interest at thirteen

(13%) percent per annum from the date of such payment or expenditure by the

Landlord and on default in such payment the Landlord shall have the same

remedies as on default in payment of rent.

ARTICLE VII

ASSIGNMENT

----------

Section 1. Tenant agrees not to assign or in any manner transfer this

---------

Lease or any estate or interest therein, and not to lease or sublet the leased

premises or any part or parts thereof or any right or privilege appurtenant

thereto, and not to allow anyone to conduct business at, upon or from the leased

premises or to come in, by, through or under it, in all cases either by

voluntary or involuntary act of Tenant or by operation of law or otherwise, or a

merger with Tenant or to a purchaser of substantially all of the assets of

Tenant, without the written consent of Landlord which consent shall not

unreasonably be withheld. The sale, issuance or transfer of any voting stock of

Tenant or Tenant's Guarantor, if any, which results in a change in the voting

control of Tenant, or Tenant's Guarantor, if any, shall be deemed to be an

assignment of this Lease within the meaning of this Article. Any such

prohibited act by Tenant (or any attempt at same) either voluntarily or

involuntarily or by operation of law or otherwise, shall at Landlord's option,

terminate this Lease and any such purported act shall be null and void.

Notwithstanding the terms of this paragraph to the contrary, in the event of an

assignment or subletting by Tenant, Tenant

<PAGE>

8

shall not be relieved of any of its obligations under the terms of this Lease.

Further, any increase in the rent under Article III of this Lease, due to any

assignment under this Article VII, shall be divided fifty-fifty (50-50) between

Landlord and Tenant. Payment of Landlord's fifty (50%) percent shall be paid

monthly with the rent as called for under Article III.

Landlord agrees that in the event Tenant contracts with Landlord to

build a new building or to lease a new building to it, this Lease will be

terminated as of the date that Tenant takes occupancy and pays rent for the new

building.

ARTICLE VIII

ALTERATIONS

-----------

Section 1. Tenant shall not make or cause to be made any alterations,

---------

additions or improvements to the leased premises without the prior written

approval of Landlord which shall not be unreasonably withheld or delayed.

Tenant shall present to Landlord plans and specifications for such work at the

time approval is sought. Notwithstanding this paragraph to the contrary, Tenant

shall have the right to make alterations up to $3,000.00 per year without

approval of Landlord.

Section 2. All alterations, additions and improvements made by Tenant

---------

shall be deemed to have attached to the leasehold and to have become the

property of Landlord upon such attachment; upon expiration of this Lease or any

renewal term thereof, Tenant shall not remove any of such alterations, additions

and improvements, except that Tenant may remove control panels (but not standard

building control panels) manufacturing and testing equipment, material handling,

storage equipment and office furniture systems and components, whether installed

before or during occupancy by Tenant or by Landlord for Tenant and trade

fixtures. It is understood that Tenant shall not have this right of removal

unless all rents and other charges due hereunder are paid in full and Tenant is

not otherwise in default under the terms of this Lease.

Landlord may designate by written notice to Tenant that alterations,

improvements and additions, installed in accordance with this Article VIII,

shall be removed by Tenant at the expiration or termination of this Lease, shall

promptly remove the same and repair any damages to the leased premises caused by

such removal or shall reimburse Landlord for the costs of repairing such damage.

Further, Tenant agrees repair any damages to the leased premises caused by

removal of any other alterations, additions and improvements. Said

reimbursement to Landlord under this Section 2 shall be made by Tenant to

Landlord within ten (10) days after receipt of invoice from Landlord.

<PAGE>

9

ARTICLE IX

EMINENT DOMAIN

--------------

If the whole or more than fifty (50%) percent of the leased premises

shall be taken by any public authority under the power of eminent domain or sold

to public authority under threat or in lieu of such a taking, then the term of

this Lease shall cease on the part so taken, as of the day possession shall be

taken by such public authority, and the rent shall be paid up to that date.

Landlord or Tenant may, by written notice to the other, within thirty (30) days

from the date possession is taken by public authority, terminate this Lease. In

the event that neither Landlord or Tenant terminates this Lease, all of the

terms herein provided shall continue in effect, except that as of the date

possession is taken by public authority, the rent and other charges payable by

Tenant to Landlord shall be reduced in proportion to the floor areas of the

leased premises taken and Landlord shall, at its expense, make all necessary

repairs or alterations to the basic building, so as to constitute the remaining

leased premises a complete architectural unit, and Tenant, at Tenant's sole

cost, shall similarly act with respect to Tenant's improvements, trade fixtures,

furnishings and equipment. All damages awarded for such taking under the power

of eminent domain or sale under threat or in lieu of such taking, whether for

the whole or a part of the leased premises, shall belong to and be the property

of Landlord, irrespective of whether such damages shall be awarded as

compensation for diminution in value to the leasehold or to the fee of the

leased premises, and Tenant shall have no claim against either Landlord or the

condemning authority with respect thereto; provided, however, that Landlord

shall not be entitled to any award specifically designated as compensation for,

depreciation to, or cost of removal or location of Tenant's stock and fixtures.

Tenant shall be entitled to its unamortized costs for improvements.

ARTICLE X

MAINTENANCE AND REPAIRS

-----------------------

Section 1. Landlord shall, at its own expense, make all necessary

---------

repairs to the roof, outer walls, structural members or framing, footings and

foundation of the premises which repairs are occasioned by structural defects.

Tenant shall, at its expense, take care of the remainder of the demised premises

both inside and out and keep the same and all parts thereof, by way of

illustration, but not limitation, landscaping and parking areas, together with

any and all alterations, additions and improvements therein or thereto, in good

order and condition, suffering no waste or injury, and shall promptly make all

needed repairs and replacements, in and to any building or structure or

equipment now or hereafter erected upon the demised premises, including vaults,

sidewalks, water, sewer and gas connections, pipes and mains, and all other

fixtures, machinery and equipment now or hereafter belonging to or connected

with said premises or used in their operation. Landlord shall assign to Tenant

the benefit of all warranties on any said items purchased by Landlord as part of

the premise

<PAGE>

10

construction under Exhibit "C", including labor, workmanship and/or materials.

Landlord shall negotiate in good faith the most advantageous warranties and for

the right to assign them. Notwithstanding the foregoing, Landlord shall, at

Tenant's option, process such claims on Tenant's behalf. All such repairs and

replacements shall be of good workmanlike quality and new material sufficient

for the proper maintenance and operation of the demised premises. The Tenant

shall not allow the accumulation of waste or refuse matter, not permit anything

to be done upon the demised premises which would invalidate or prevent the

procurement of any insurance policies which may at any time be required pursuant

to the provisions of Article V hereof. The Tenant shall not obstruct or permit

the obstruction of the street or sidewalk and shall keep the sidewalk and curb

adjoining the demised premises clean and free of snow and ice.

Section 2. The Tenant shall at its own expense under penalty of

---------

forfeiture and damages promptly comply with all lawful laws, orders, regulations

or ordinances of all municipal, County and State authorities affecting the

premises hereby leased and the cleanliness, safety, occupation and use of same,

provided, however, that Landlord shall be solely responsible for rectifying

breaches or violations arising out of its construction of the premises including

the improvements constructed or to be constructed by Landlord prior to August 1,

1989.

Section 3. The Landlord shall have the right to enter upon the leased

---------

premises at all reasonably hours or at least one (1) days notice for the purpose

of inspecting the same. If the Landlord reasonably deems any repairs necessary,

he may demand that the Tenant make the same and if the Tenant refuses or

neglects forthwith to commence such repairs and complete the same with

reasonable dispatch, the Landlord may make or cause to be made such repairs and

shall not be responsible to the Tenant for any loss or damage that may accrue to

its stock or business by reason thereof, and if the Landlord makes or causes to

be made such repairs, the Tenant agrees that it will within twenty (20) days pay

to the Landlord the cost thereof within ten (10) days after receipt by Tenant of

invoice from Landlord, with interest at thirteen (13%) percent per annum, and if

it shall make default in such payment, the Landlord shall have the remedies

provided in Paragraph 6 hereof.

Section 4. The Landlord reserves the right of free access at all

---------

times to the roof of said leased premises. The Tenant shall not erect any

structures for storage or any aerial, or use the roof for any purpose without

the consent in writing of the Landlord, which consent shall not be unreasonably

withheld with respect to aerials, provided, however, that Tenant shall submit a

detailed plan to Landlord specifically identifying the type of aerial and nature

of work to be done by Tenant. Tenant shall be responsible for any damage,

repair or replacement caused by construction of any aerial under this Section.

In the event that Tenant does not repair or replace said damage in a timely

manner, Landlord shall have the right to do so and Tenant agrees to pay Tenant

the costs and expenses for same to Landlord within ten (10) days after receipt

of invoice from Landlord.

<PAGE>

11

Landlord agrees to be responsible for repairs and replacement to the

roof for the first four (4) years of this Lease. Tenant, beginning with the

fifth (5th) year, agrees to pay a pro-rata share of the roof repairs and

replacement based on a fifteen (15) year life of the roof.

ARTICLE XI

RIGHT TO ERECT SIGNS

--------------------

Tenant is hereby granted the right to erect signs on the exterior of

the building which shall be constructed in conformity with all requirements of

local law and shall be subject to the prior written approval of Landlord, which

approval will not be unreasonably withheld. Tenant agrees to hold Landlord

harmless form any liability arising out of or in connection with the erection or

maintenance of such signs.

Landlord covenants that it will not and will not allow any other

Tenant to erect signs on the face or sides of the building in which the demised

premises are located.

ARTICLE XII

LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT

-----------------------------------------

Landlord may, without notice, if in the opinion of Landlord an

emergency exists, perform any covenant or condition of this Lease for the

Tenant's account and at the Tenant's expense, in the event that the Tenant shall

default in the performance of any such covenant or condition. Tenant shall

reimburse Landlord for all reasonable costs and expenses of Landlord, including

reasonable attorney fees, thereby incurred within ten (10) days after receipt by

Tenant from Landlord of a statement setting forth the amount of such costs and

expenses. The failure by Tenant to so reimburse Landlord within such ten (10)

day period shall constitute a default by Tenant under this Lease and shall carry

with it the same consequences as failure to pay any installment of rental.

Landlord's rights and remedies pursuant to this Article shall be an addition to

any and all other rights and remedies provided under this Lease or at law and

shall survive the termination of this Lease.

ARTICLE XIII

DEFAULT

-------

Section 1. If any one or more of the following events (herein

---------

sometimes called "events of default") shall happen:

<PAGE>

12

A. If default shall be made in the due and punctual payment of any

rent, or in the payment of any other sums of money required to be paid by

Tenant under this Lease or any part thereof, when and as the same shall

become due and payable, and such default shall continue for a period of

seven (7) days after written notice from Landlord to Tenant specifying the

items in default; or

B. In the event Tenant shall be in default in the performance of any

other covenants, terms, conditions, provisions, rules and regulations of

this Lease excepting those items listed in the above Section (A) and if

such default is not cured within twenty (20) days after written notice

thereof given by the Landlord, excepting such defaults that cannot be cured

completely within such twenty (20) day period, provided that the Tenant

shall within such twenty (20) day period, promptly commence and proceed

with reasonable diligence and in good faith to remedy such default;

then and in any such event Landlord at any time thereafter may give written

notice to Tenant specifying such event of default or events of default and

stating that this Lease and the term hereby demised shall expire and terminate

on the date specified in such notice, unless remedied pursuant to A and B

hereinabove, which shall be at least seven (7) days after the giving of such

notice, and upon the date specified in such notice this Lease and the term

hereby demised and all rights of Tenant under this Lease, including any renewal

privileges, whether or not exercised, shall expire and terminate, unless said

event or events of default have been remedied pursuant to A and B hereinabove.

Section 2. Upon any such expiration or termination of this Lease,

---------

Tenant shall quit and peacefully surrender the demised premises to Landlord, and

Landlord, upon or at any such expiration or termination, may without further

notice, enter upon and re-enter the demised premises and possess and repossess

itself thereof, by summary proceedings, ejectment, and may dispossess Tenant and

remove Tenant and all other persons and property from the demised premises and

may have, hold and enjoy the demised premises and the right to receive all

rental of and from the same. In the event that the Landlord shall, during the

period covered by this Lease, obtain possession of said premises by re-entry,

summary proceedings, or otherwise, the Tenant hereby agrees to pay the Landlord

the reasonable expense incurred in obtaining possession of said premises and

also all reasonable expenses and commissions which may be paid in and about the

letting of the same.

Section 3. If this Lease shall terminate pursuant to this Article, or

---------

by summary proceedings or otherwise, or if the demised premises or any part

thereof shall be abandoned by Tenant, or shall become vacant during the term

hereof, Landlord may in its own name, but as agent for Tenant if this lease not

be terminated, or if this lease be terminated, in its own behalf, relet the

demised premises or any part thereof, or said premises, with additional premises

for such term or terms, (which may be greater or less than the period which

would otherwise have constituted the balance of the term of the Lease)

<PAGE>

13

and on such conditions (which may include concessions or free rent and

alterations of the demised premises) as Landlord, in its reasonable discretion

based on market condition and the advice of commercial experienced broker, may

determine and may collect and receive the rents therefor. Landlord shall in no

way be responsible or liable for any failure to relet the demised premises or

any part thereof, or of any failure to collect any rent due upon such reletting,

provided, however, that Tenant shall not be liable for the remaining rent under

this Lease or for any damages unless either (i) Landlord takes reasonable steps

to mitigate its damages or (ii) Landlord does not unreasonably withhold its

consent to any proposed assignment or sublease so as to enable Tenant mitigate

its damages.

Section 4. No such expiration or termination of this Lease, or

---------

summary proceedings, abandonment or vacancy shall relieve Tenant of its

liability and obligation under this Lease, whether or not the demised premises

shall be relet, provided, however, that Tenant shall not be liable for the

remaining rent under this Lease or for any damages unless either (i) Landlord

takes reasonable steps to mitigate its damages or (ii) Landlord does not

unreasonably withhold its consent to any proposed assignment or sublease so as

to enable Tenant mitigate its damages. In any such event Tenant shall pay

Landlord the rent and all other charges required to be paid by Tenant up to the

time of such event. Thereafter:

A. 1. Tenant, until the end of the term of this Lease, or what would

have been such term in the absence of any such event, shall be liable to

Landlord as damages for Tenant's default, the equivalent of the amount of

the rent and other charges which would be payable under this Lease by

Tenant if this Lease were still in effect, less the net proceeds of any

reletting effected pursuant to the provisions above, after deducting all

Landlord's expenses in connection with such reletting, including, without

limitation, all repossession costs, brokerage and management commissions,

operating expenses, legal expenses, reasonable attorneys' fees, alteration

costs, and expenses of preparation for such reletting.

2. Tenant shall pay such current damages (herein called "deficiency")

to Landlord monthly on the days on which the net rent would have been

payable under this Lease if this Lease were still in effect, and Landlord

shall be entitled to recover from Tenant each monthly deficiency as the

same shall arise.

3. At any time after the expiration or termination of this Lease

pursuant to this Article, in lieu of collecting any further monthly

deficiencies as aforesaid, Landlord shall be entitled to recover from

Tenant, and Tenant shall pay to Landlord, on demand, as damages, in

addition to the damages provided for in Section 8, damages computed in the

manner set forth in this Section B, minus any such monthly deficiencies

previously recovered from Tenant.

<PAGE>

14

B. 1. In the case of any breach of this Lease mentioned in Sections 6

and 7, Landlord shall immediately and ipso facto, without notice or other

action by Landlord, become entitled to recover from Tenant, as damages for

such breach, in addition to any damages becoming due under Sections 6 and

7, an amount equal to the difference between the rent and other charges

reserved in this Lease from the date of such breach to the date of the

expiration of the original term demised and the then fair and reasonable

rental value of the premises for the same period. Said damages shall

become due and payable to Landlord immediately upon such breach of this

Lease and without regard to whether this Lease be terminated or not, and if

this Lease be terminated without regard to the manner in which it is

terminated. In the computation of such damages, the difference between any

installment of rent thereafter becoming due and the fair and reasonable

rental value of the premises for the period for which such installment was

payable shall be discounted to the date of such breach at the rate of not

more than six (6%) percent per annum.

2. If and so long as the term of this Lease shall continue, the rent

reserved herein for the unexpired term of the Lease after a breach

mentioned in Sections 6 and 7, shall be reduced by the amount of such

liquidated damages together with interest thereon at an implied rate of six

(6%) percent per annum as may be paid to Landlord, such reduction being

applied proportionately to each installment of rent thereafter becoming

due. During the continuance of the Lease after such a breach and until

such damages are paid to Landlord, the whole amount of each installment of

rent herein reserved shall be due and payable at the time herein specified

and if, by reason of the subsequent payment of liquidated damages, and the

resulting reduction in rental, Landlord shall have received a sum in excess

of all installments, as so reduced, becoming due after the breach and

before the collection of such damages, such excess shall be refunded upon

the receipt of such liquidated damages.

Section 5. If the demised premises or any part thereof be relet by

---------

Landlord for the unexpired term of this Lease or any part thereof, before

presentation of proof of such liquidated damages to any court, commission or

tribunal, the amount of rent reserved upon such reletting shall be considered as

part of the evidence of the fair and reasonable rental value for the part or the

whole of the premises so relet during the term of the reletting. Nothing herein

contained shall limit or prejudice the right of Landlord to obtain as liquidated

damages by reason of such termination, an amount equal to the maximum allowed by

any statute or rule of law in effect at the time when and governing the

proceeding in which, such damages are to be proved, whether or not such amount

be greater, equal to, or less than the amount of the difference referred to

above.

Section 6. If this Lease be terminated by summary proceedings or

---------

otherwise, or if the premises are abandoned or become vacant, and whether or not

the premises be relet, Landlord shall be entitled to recover from Tenant, and

Tenant shall pay to Landlord, in

<PAGE>

15

addition to any damages becoming due under this Article, the following: an

amount equal to all reasonable expenses, if any, including reasonable counsel

fees, incurred by Landlord in recovering possession of the demised premises, and

all reasonable costs and charges for the care of said premises while vacant,

which damages shall be due and payable by Tenant to Landlord at such time as

such expenses are incurred by Landlord.

Section 7. If this Lease be terminated in any manner whatsoever, or

---------

if there be any breach of this Lease specified in Sections 6 and 7, then and in

either of such events, Tenant covenants and agrees, any other covenant in this

Lease notwithstanding:

A. That the premises shall be in the same condition as that in which

Tenant has agreed to surrender them to Landlord at the expiration of the

term hereof.

B. That Tenant, on or before the occurrence of any such event shall

perform any covenant contained in this Lease for the making of any

improvement, alteration or betterment to the premises, or for restoring or

rebuilding any part thereof; and

C. That, for the breach of any covenant above stated in this Section

7, Landlord shall be entitled to recover and Tenant shall pay, ipso facto,

without notice or other action by Landlord, the then cost of performing

such covenant, less interest thereon at the rate of six (6%) percent per

annum for the period between the occurrence of any such event and the time

when any such work or act, the cost of which is computed, should have been

performed under the other provisions of this Lease had such event not

occurred.

Section 8. No failure by Landlord to insist upon the strict

---------

performance of any agreement, term, covenant, or condition hereof or to exercise

any right or remedy consequent upon a breach thereof, and no acceptance of full

or partial rent during the continuance of any such breach, shall constitute a

waiver of any such breach or of such agreement, term, covenant or condition. No

agreement, term, covenant or condition hereof to be performed or complied with

by Tenant and no breach shall affect or alter this Lease, but each and every

agreement, term, covenant and condition hereof shall continue in full force and

effect with respect to any other then existing or subsequent breach thereof. No

covenant or term hereunder shall be deemed "uncurable" provided it is cured in

accordance with the terms of this Article XIII.

Section 9. In the event of any breach by Tenant of any of the

---------

agreements, terms, covenants or conditions contained in this Lease, Landlord

shall be entitled to enjoin such breach or threatened breach and shall have the

right to invoke any right and remedy allowed at law or in equity or by statute

or otherwise as though re-entry, summary proceedings and other remedies were not

provided for in this Lease.

<PAGE>

16

Section 10. Each right and remedy provided for in this Lease shall be

----------

cumulative and shall be in addition to every other right or remedy provided for

in this Lease or now or hereafter existing at law or in equity or by statute or

otherwise, and the exercise or beginning of the exercise by Landlord or Tenant

of any one or more of the rights or remedies provided for in this Lease or now

or hereafter existing at law or in equity or by statute or otherwise shall not

preclude the simultaneous or later exercise by the party in question of any or

all other rights or remedies provided for in this Lease or now or hereafter

existing at law or in equity or by statute or otherwise.

ARTICLE XIV

BANKRUPTCY OR INSOLVENCY

------------------------

Section 1. Tenant's interest not transferable. Neither Tenant's

---------

interest in this Lease, nor any estate hereby created in Tenant nor any interest

herein or therein, shall pass to any trustee or receiver or assignee for the

benefit of creditors or otherwise by operation of law except as may specifically

be provided pursuant to the Bankruptcy Code.

Section 2. Termination. In the event the interest or estate created

---------

in Tenant hereby shall be taken in execution or by other process of law, or if

Tenant's Guarantor, if any, or his executors, administrators, or assigns, if

any, shall be adjudicated insolvent or bankrupt pursuant to the provisions of

any State Act or the Bankruptcy Code or if Tenant is adjudicated insolvent by a

Court of competent jurisdiction other than the United States Bankruptcy Court,

or if a receiver or trustee of the property of Tenant or Tenant's Guarantor, if

any shall be appointed by reason of the insolvency or inability of Tenant or

Tenant's Guarantor, if any, to pay its debts, or if any assignment shall be made

of the property of Tenant or Tenant's Guarantor, if any, for the benefit of

creditors, then and in any such events, this Lease and all rights of Tenant

hereunder shall automatically cease and terminate with the same force and effect

as though the date of such event were the date originally set forth herein and

fixed for the expiration of the term, and Tenant shall vacate and surrender the

leased premises but shall remain liable as herein provided.

Section 3. Tenant's obligation to avoid Creditors' proceedings.

---------

Tenant or Tenant's Guarantor shall not cause or give cause for the appointment

of a trustee or receiver of the assets of Tenant or Tenant's Guarantor, if any,

and shall not make any assignment for the benefit of creditors or become or be

adjudicated insolvent. The allowance of any petition under any insolvency law

except under the Bankruptcy Code or the appointment of a trustee or receiver of

Tenant or Tenant's Guarantor, if any, or of the assets of either of them, shall

be conclusive evidence that Tenant caused, or gave cause therefor, unless such

allowance of the petition or the appointment of a trustee or receiver, is

vacated within thirty (30) days after such allowance or appointment. Any act

described in this paragraph shall be deemed a material breach of Tenant's

obligations hereunder, and this Lease shall thereupon

<PAGE>

17

automatically terminate. Landlord does in addition, reserve any and all other

remedies provided in this Lease or in law.

Section 4. Rights and obligations under the Bankruptcy Code:

---------

A. Upon the filing of a petition by or against Tenant under the

Bankruptcy Code, Tenant, as debtor and as debtor in possession, and any

trustee who may be appointed agree as follows:

1. To perform each and every obligation of Tenant under this

Lease including, but not limited to, the manner of "operations" as

provided in this Lease until such time as this Lease is either

rejected or assumed by order of the United States Bankruptcy Court.

2. To pay monthly in advance on the first day of each month as

reasonable compensation for use and occupancy of the leased premises

an amount equal to all rent and other charges otherwise due pursuant

to this Lease.

3. To reject or assume this Lease within sixty (60) days of the

filing of such petition under Chapter 7 of the Bankruptcy Code or

within one hundred twenty (120) days of the filing of a petition under

any other Chapter.

4. To give Landlord the notice required by law of any proceeding

relating to any assumption of this Lease.

5. To give the notice required by law of any abandonment of the

leased premises; any such abandonment to be deemed a rejection of this

Lease.

6. To do all other things of benefit to Landlord otherwise

required under the Bankruptcy Code, unless such things are not

required except upon request of Landlord following such petition, in

which event Landlord must first request them.

B. No default of this Lease by Tenant, either prior to or subsequent

to the filing of such a petition, shall be deemed to have been waived

unless expressly done so in writing by Landlord.

C. Included within and in addition to any other conditions or

obligations imposed upon Tenant or its successor in the event of assumption

and/or assignment are the following:

<PAGE>

18

1. The cure of any monetary defaults and the reimbursement of

pecuniary loss within not more than thirty (30) days of assumption

and/or assignment;

2. The use of the leased premises as set forth in this Lease.

3. If required by the Bankruptcy Code, the prior written consent

of any mortgagee to which this Lease has been assigned as collateral

security.

ARTICLE XV

RIGHT TO MORTGAGE

-----------------

ARTICLE XVI

NON-LIABILITY

-------------

Section 1. As a consideration for making of this Lease, the Landlord

---------

shall not be liable for any failure of public or private utility services to the

premises, nor for injury or damage which may be sustained to person or property

by the Tenant or any other person caused by or resulting from steam,

electricity, gas, water, rain, ice, or snow which may leak or flow from or into

any part of said building or from the breakage, leakage, obstruction or other

defect of the pipes, wiring, appliances, plumbing or lighting fixtures of the

same, the condition of said premises or any part thereof, or through the

elevator, if any, or from the street or subsurface, or from any other source or

cause whatsoever, nor for interference with light or other incorporeal

hereditaments, provided such interference is caused by anybody other than the

Landlord, or caused by operations by or for the City in construction of any

public or quasi-public work, neither shall the Landlord be liable for any defect

in the building, latent or otherwise, except as otherwise provided herein.

Section 2. The Tenant further acknowledges that it has examined the

---------

said leased premises prior to the making of this lease, and knows the condition

thereof, and that no representations as to the condition or state of repairs

thereof have been made by the Landlord or its agent, which are not herein

expressed, and the Tenant hereby accepts the leased premises in their present

condition at the date of the execution of this Lease, subject to construction to

be done by Landlord under Article II, Exhibit "C", Work Letter Punch List.

Section 3. The Landlord shall not be responsible or liable to the

---------

Tenant for any loss or damage that may be occasioned by or through the acts or

omissions of persons occupying adjoining premises or any part of the premises

adjacent to or connected with the premises hereby leased or any part of the

building of which the leased premises are a part or

<PAGE>

19

for any loss or damage resulting to the Tenant or his property from bursting,

stoppage or leaking of water, gas, sewer or steam pipes.

ARTICLE XVII

USE AND OCCUPANCY

-----------------

It is understood and agreed between the parties hereto that said

premises during the continuance of this Lease shall be used and occupied for

office, warehouse, distribution, customer demonstration, product and process

development and assembly of electrical and/or mechanical equipment and for no

other purpose or purposes without the written consent of the Landlord, and that

the Tenant will not use the premises for any purpose in violation of any law,

municipal ordinance or regulation and that on any breach of this agreement, the

Landlord may at its option terminate this Lease forthwith and re-enter and

repossess the leased premises by any summary proceeding.

ARTICLE XVIII

DAMAGE AND DESTRUCTION

----------------------

Section 1. If the building is damaged by fire or any other cause, the

---------

following provisions of this Article shall apply:

A. If the damage is to such extent that the cost of restoration, as

reasonably estimated by Landlord, will equal or exceed thirty (30%) percent

of the replacement value of the building (exclusive of foundations) in its

condition just prior to the occurrence of the damage, Landlord may, not

later than the sixtieth (60th) day following the damage, give Tenant a

written notice stating that it elects to terminate this Lease. If such

notice shall be given:

1. This Lease shall terminate on the thirtieth (30th) day after

the giving of said notice.

2. Tenant shall surrender possession of the premises within a

reasonable time thereafter.

3. The rent and additional rent shall be apportioned as of the

date of such surrender and any rent paid for any period beyond said

date shall be repaid to Tenant.

B. If the cost of restoration, as reasonably estimated by Landlord,

shall amount to less than thirty (30%) percent of said replacement value of

the building, or

<PAGE>

20

if despite the cost Landlord does not elect to terminate this Lease,

Landlord shall restore the building and the premises with reasonable

promptness, subject to delays beyond Landlord's control and delays in the

making of insurance adjustments by Landlord, and Tenant shall not have the

right to terminate this Lease. Notwithstanding this paragraph B. to the

contrary, Tenant shall have the right to terminate this Lease if repairs

are not completed by Landlord within six (6) months after said damage or

destruction under this Article XVIII.

Landlord need not restore fixtures, improvements or other property of

Tenant.

Section 2. In any case in which the use of the premises is affected

---------

by any damage to the building, there shall be either an abatement or an

equitable reduction in rent depending on the period for which the extent to

which the premises are not reasonably usable for the purposes for which they are

leased hereunder, but this provision shall not relieve any insurance company of

the obligation to pay such rent. The words "restoration" and "restore" as used

in this Article shall include repairs. If the damage results from the fault of

Tenant, or Tenant's agents, servants, visitors or licensees, Tenant shall not be

entitled to any abatement or reduction of rent, except to the extent, if any,

that Landlord receives the proceeds of rent insurance in lieu of such rent.

Section 3. In the event of any loss or damage to the building, the

---------

premises and/or any contents, each party shall look first to any insurance in

its favor before making any claim against the other party; and to the extent

possible without additional cost, each party shall obtain, for each policy of

such insurance, provisions permitting waiver of any claim against the other

party for loss or damage within the scope of insurance, and each party, to such

extent permitted, for itself and its insurers waives all such insured claims

against the other party (its agents, employees and guests).

ARTICLE XIX

NOTICES

-------

All notices required herein shall be given in writing by certified or

registered mail, return receipt requested, if addressed to Landlord, at the

place where the rent reserved herein is payable and if addressed to Tenant as

follows:

Rofin Sinar Inc.

3333 North First Street

San Jose, CA 95134-1995

or mailed to such other addresses as the parties respectively may designate by

notice given in like manner.

<PAGE>

21

ARTICLE XX

HEADINGS AND SECTION NUMBERS

----------------------------

The headings, section numbers and article numbers appearing in this

Lease are inserted only as a matter of convenience and in no way define, limit,

or construe, or describe the scope of intent of such sections or articles of

this Lease nor in any way affect this Lease.

ARTICLE XXI

UTILITIES

---------

The Tenant shall pay, as and when the same shall become due and

payable, all water and sewer rents, rates, charges, assessments and other

utilities supplied the leased property.

ARTICLE XXII

ADDITIONAL RULES

----------------

The Landlord may, from time to time, make such reasonable rules and

regulations as in the Landlord's judgment may be necessary or advisable for the

safety, care and cleanliness of the premises, the cleanliness of the building in

which the same are located, the common areas and other tenants occupying said

adjoining buildings and for the preservation of good order in said building and

adjoining buildings and the use and occupancy of the demised premises shall be

conditioned upon observance of the compliance with such rules and regulations.

The violation of any such rules shall entitle Landlord to damages only and shall

not result in termination or forfeiture of this Lease, provided, however, said

violation of such rules does not result in material damage or reduction in the

valuation of the building and demised premises.

ARTICLE XXIII

ADDITIONAL DOCUMENTS

--------------------

The parties hereto, upon request, agree to execute any additional

documents reasonably required to carry out the intent and provisions of this

Lease.

<PAGE>

22

ARTICLE XXIV

LIGHT AND AIR

-------------

If at any time any windows of the demised premises are temporarily

closed, darkened or bricked-up for any reason whatsoever including, but not

limited to, Landlord's own acts, Landlord shall not be liable for any damage

Tenant may sustain thereby and Tenant shall not be entitled to any compensation

therefor nor abatement of rent, nor shall the same release Tenant from its

obligations hereunder nor constitute an eviction.

ARTICLE XXV

WAIVER OF RIGHTS AND REDEMPTION

-------------------------------

ARTICLE XXVI

WAIVER

------

The failure of the Landlord to insist, in any one or more instances

upon a strict performance of any of the covenants of this Lease, or to exercise

any option herein contained, shall not be construed as a waiver or a

relinquishment for the future of such covenant or option, but the same shall

continue and remain in full force and effect. The receipt by the Landlord of

rent, with knowledge of the breach of any covenant hereof, shall not be deemed a

waiver of such breach and no waiver by the Landlord of any provision hereof

shall be deemed to have been made unless expressed in writing and signed by the

Landlord.

ARTICLE XXVII

NO PARTNERSHIP

--------------

Nothing contained herein shall be deemed or construed by the parties

hereto, nor by any third party, as creating the relationship of principal and

agent or of partnership or of joint venture between the parties hereto, it being

understood and agreed that neither the method of computation of rent, nor any

other provision contained herein, nor any acts of the parties herein, shall be

deemed to create any relationship between the parties hereto other than the

relationship of Landlord and Tenant.

<PAGE>

23

ARTICLE XXVIII

PARTIAL INVALIDITY

------------------

If any term, covenant or condition of this Lease or the application

thereof to any person or circumstance shall, to any extent, be invalid or

unenforceable, the remainder of this Lease, or the application of such term,

covenant or condition to persons or circumstances other than those as to which

it is held invalid or unenforceable, shall not be affected thereby and each

term, covenant or condition of this Lease shall be valid and be enforced to the

fullest extent permitted by Law.

ARTICLE XXIX

LIENS

-----

The Tenant shall have no power to do any act or make any contract

which may create or be the foundation for any lien, mortgage or other

encumbrance upon the estate of the Landlord or of any interest of the Landlord

in the demised premises, or upon or in the building or buildings or improvements

thereon or hereafter erected or placed hereon, it being agreed that should the

Tenant cause any improvements, alterations or repairs to be made to the demised

premises, or material furnished or labor performed therein, or thereon, neither

the Landlord nor the demised premises nor any improvements shall under any

circumstances be liable for the payment of any expenses incurred or for the

value of any work done or material furnished to the demised premises or any part

thereof; but all such improvements, alterations, repairs, materials and labor

shall be done at the Tenant's expense and the Tenant shall be solely and wholly

responsible to contractors, laborers and materialmen, furnishing labor and

material to said premises and building or buildings and improvements or any part

thereof and all such laborers, materialmen and contractors are hereby charged

with notice that they must look solely and wholly to the Tenant and the Tenant's

interest in the premises, to secure the payment of any bills for work done and

materials furnished.

In the event a mechanic's lien shall be filed against the demised

premises or Tenant's interest therein as the result of the work undertaken by

Tenant to ready the demised premises for the opening of Tenant's business or as

a result of any repairs or alterations made by Tenant, Tenant shall, within ten

(10) days after receiving notice of such lien, discharge such lien either by

payment of the indebtedness due the mechanic's lien claimant or by filing a bond

(as provided by statute) as security therefor. In the event Tenant shall fail

to discharge such lien, Landlord shall, among its remedies, have the right to

procure such discharge by filing such bond and Tenant shall pay the cost of such

bond to Landlord as additional rent upon the first day that rent shall be due

thereafter.

<PAGE>

24

ARTICLE XXX

ENTIRE AGREEMENT

----------------

This Lease and the Exhibits, Riders and/or Addenda, if any, attached

and signed by the parties, set forth the entire agreement between the parties.

Any prior conversations or writings are merged herein and extinguished. No

subsequent amendment to this Lease shall be binding upon Landlord or Tenant

unless reduced to writing and signed. If any provisions contained in a Rider or

addenda is inconsistent with a provision of this Lease, the provisions contained

in said rider or addenda shall supersede the Lease provision.

ARTICLE XXXI

INTERPRETATION AND USE OF PRONOUNS

----------------------------------

Nothing contained herein shall be deemed or construed by the parties

hereto, nor by any third party, as creating the relationship of principal and

agent or of partnership or of joint venture between the parties hereto, it being

understood and agreed that neither the method of computation of rent, nor any

other provision contained herein, nor any acts of the parties herein, shall be

deemed to create any relationship between the parties hereto other than the

relationship of Landlord and Tenant. Wherever herein the singular number is

used, the same shall include the plural, the masculine gender shall include the

feminine and neuter genders and the neuter gender shall include the feminine and

masculine genders.

ARTICLE XXXII

COMPLIANCE WITH LAWS

--------------------

Tenant covenants and warrants that during the term of this Lease or

any extension thereof, Tenant, at its expense and under penalty of forfeiture

and damages, has complied and will continue to comply with all statutes,

ordinances, rules, order, regulations and/or requirements of all county,

municipal, state, federal and other applicable governmental authorities now in

force or which may hereinafter be in force as pertains to the conduct of

Tenant's business. Tenant agrees to indemnify, save and hold Landlord harmless

from any fines or penalties assessed against the demised premises for a

violation of any statutes, ordinances, rules, orders, regulations and/or

requirements of all county, municipal, state, federal and other governmental

authorities as a result of Tenant's improper, unusual or unlawful manner of

using the demised premises for the conduct of Tenant's business.

<PAGE>

25

ARTICLE XXXIII

CONSTRUCTION AND INTERPRETATION

-------------------------------

This Lease shall be construed and interpreted in accordance with the

laws of the State of Michigan.

ARTICLE XXXIV

RENT TO BE NET TO LANDLORD

--------------------------

It is the intention of the parties that the rent payable hereunder

shall be net to Landlord, so that this Lease shall yield to Landlord the net

annual rent specified herein during the term of this Lease, and that all costs,

expenses and obligations of every kind or nature whatsoever relating to the

demised premises including, but not limited to all charges made against the

leased premises for gas, water, heat and electricity during the continuance of

this lease shall be paid as the same shall become due by Tenant except for those

costs, expenses and obligations specifically designated as those of Landlord.

Notwithstanding the terms of this Article XXXIV to the contrary, any additional

costs or expenses which Tenant is not obligated to pay as normal costs and

expenses under the terms of this Lease, shall be prorated over the balance of

the Lease term or any option term. By way of illustration but not limitation:

$1,000.00 assessment, five (5) years left on the Lease term ($1,000.00 / 5 =

$200.00 per year - $1,000.00/5 = $200.00).

ARTICLE XXXV

DELAYS

------

Section 1. In the event that either party hereto shall be delayed or

---------

hindered in or prevented from the performance of any act required hereunder by

reason of strikes, lockouts, labor troubles, inability to procure materials,

failure of power, restrictive governmental laws or regulations, riots,

insurrection, war or other reason of a like nature not the fault of the party

delayed in performing work or doing acts required under the terms of this Lease,

then performance of such act shall be excused for the period of the delay and

the period for the performance of any such act shall be extended for a period

equivalent to the period of such delay. The party entitled to such extension

hereunder shall give written notice as soon as possible to the other party

hereto of its claim of right to such extension and the reason(s) therefor. The

provisions of this Paragraph shall not operate to excuse Tenant from prompt

payment of rent, or any other payments required by the terms of this Lease.

Section 2. It is understood that if the Tenant shall be unable to

---------

enter into and occupy the premises hereby leased at the time above provided, by

reason of the said premises not being ready for occupancy, or by reason of the

holding over of any previous occupant of

<PAGE>

26

said premises, or as a result of any cause or reason beyond the direct control

of the Landlord, the Landlord shall not be liable in damages to the Tenant

therefor, but during the period the Tenant shall be unable to occupy said

premises as hereinbefore provided, the rental therefor shall be abated and the

Landlord is to be the sole judge as to when the premises are ready for

occupancy.

ARTICLE XXXVI

INTEREST ON PAST DUE OBLIGATIONS

--------------------------------

Any amount due from Tenant to Landlord hereunder which is not paid

when due shall bear interest at thirteen (13%) percent per annum from the date

due until paid, unless otherwise specifically provided herein, but the payment

of such interest shall not excuse or cure any default by Tenant under this

Lease.

ARTICLE XXXVII

LIABILITY OF LANDLORD

---------------------

If Landlord shall fail to perform any covenant, term or condition of

this Lease upon Landlord's part to be performed, and if as a consequence of such

default Tenant shall recover a money judgment against Landlord, such judgment

shall be satisfied only out of the proceeds of sale received upon execution of

such judgment and levied thereon against the right, title and interest of

Landlord in the demised premises and out of rents or other income from such

property receivable by Landlord, or out of the consideration received by

Landlord from the sale or other disposition of all or any part of Landlord's

right, title and interest in the demised premises. Neither Landlord nor any of

the partners comprising the partnership which is the Landlord herein shall be

liable for any deficiency. Notwithstanding the terms of this Article XXXVII to

the contrary, Tenant may offset against rent and other charges hereunder, under

this Article for any deficiency not satisfied by the equity in the property

after final judgment is obtained by Tenant after all appeals have been exhausted

by either Landlord or Tenant.

ARTICLE XXXVIII

RE-RENTING

----------

The Tenant hereby agrees that for a period commencing ninety (90) days

prior to the termination of this Lease, the Landlord may show the premises to

prospective Tenants.

<PAGE>

27

ARTICLE XXXIX

QUIET ENJOYMENT

---------------

The Landlord covenants that the said Tenant, on payment of all the

aforesaid installments and performing all the covenants aforesaid, shall and may

peacefully and quietly have, hold and enjoy the said demised premises for the

term aforesaid.

ARTICLE XL

HOLDING OVER

------------

Any holding over after the expiration of the term hereof with the

consent of Landlord, shall be construed to be a tenancy from month-to-month at

one hundred twenty five (125%) percent of the last month's rental together with

an amount estimated by Landlord for the monthly additional charges payable

pursuant to this Lease, and shall otherwise be on the same terms and conditions

as herein specified so far as applicable. Any holding over without Landlord's

consent shall entitle Landlord to re-enter the leased premises pursuant to

Article XIII, Section 2 of this Lease.

ARTICLE XLI

SUCCESSORS

----------

All rights and liabilities herein given to, or imposed upon, the

respective parties hereto shall extend to and bind the several respective heirs,

executors, administrators, successors and assigns of the said parties; and if

there shall be more than one Tenant, they shall all be bound jointly and

severally by the terms, covenants and agreements herein. No rights, however,

shall inure to the benefit of any assignee of Tenant unless the assignment to

such assignee is permitted by or has been approved by the Landlord in writing as

provided in Article VII.

ARTICLE XLII

FURNISHING OF FINANCIAL STATEMENTS

----------------------------------

Upon Landlord's written request, Tenant shall promptly furnish

Landlord, from time to time, with financial statements reflecting Tenant's

current financial condition, and written evidence of ownership of controlling

stock interest if Tenant is a corporation. Notwithstanding the terms of this

Article XLII to the contrary, Tenant shall not be required to provide financial

statements more than annually.

<PAGE>

28

ARTICLE XLIII

ACCORD AND SATISFACTION

-----------------------

Payment by Tenant or receipt by Landlord of a lesser amount than the

rent or other charges herein stipulated shall be deemed to be on account of the

earliest due stipulated rent or other charges, and no endorsement or statement

on any check or any letter accompanying any check payment as rent or other

charges shall be deemed an accord and satisfaction and Landlord shall accept

such check or payment without prejudice to Landlord's right to recover the

balance of such rent or other charges or pursue any other remedy in this Lease

to the Tenant.

ARTICLE XLIV

EXECUTION OF LEASE; NO OPTION

-----------------------------

The submission of this Lease to Tenant shall be for examination

purposes only, and does not and shall not constitute a reservation of or option

for Tenant to lease, or otherwise create any interest by Tenant in, the leased

premises. Execution of this Lease by Tenant and returned to Landlord shall not

be binding upon Landlord, notwithstanding any time interval, until Landlord has

in fact executed and delivered this Lease to the Tenant.

ARTICLE XLV

RECORDING

---------

Landlord agrees to prepare a Memorandum of Lease, submit for approval

to Tenant and upon Tenant's approval, record same on Tenant's behalf.

ARTICLE XLVI

WAIVER OF COUNTERCLAIMS

-----------------------

In the event Landlord commences any proceedings for nonpayment of rent

or as a result of the holding over of Tenant after the expiration of the term of

this Lease, Tenant will not interpose any counter-claim of whatsoever nature or

description in any such proceedings, which shall not be construed as a waiver of

Tenant's right to assert such claims in any separate action or actions brought

by Tenant.

<PAGE>

29

ARTICLE XLVII

ESTOPPEL STATEMENT

------------------

Tenant agrees within ten (10) days after request therefor by Landlord,

to execute in recordable form and deliver to Landlord a statement, in writing,

certifying (a) that this Lease is in full force and effect; (b) date of

commencement of the term of this Lease; (c) that rent is paid currently without

any off-set or defense thereto; (d) the amount of rent, if any, paid in advance;

(e) whether this Lease has been modified and, if so, identifying the

modifications; and (f) that there are no uncured defaults by Landlord or stating

those claimed by Tenant, provided that, in fact, such facts are accurate and

ascertainable.

ARTICLE XLVIII

ATTORNMENT

----------

In the event any proceedings are brought for the foreclosure of, or in

the event of a conveyance by deed in lieu of foreclosure of, or in the event of

exercise of the power of sale under any mortgage and/or deed of trust made by

Landlord covering the leased premises, or in the event Landlord sells, conveys

or otherwise transfers its interest in the demised premises or any portion

thereof containing the demised premises, this Lease shall remain in full force

and effect and Tenant hereby attorns to and covenants and agrees to execute an

instrument in writing reasonably satisfactory to the new owner whereby Tenant

attorns to, such successor in interest and recognizes such successor as the

Landlord under this Lease, provided, however, that Tenant is not in default

under the terms of this Lease, and any mortgagee or financial institution agrees

to recognize Tenant's Lease. Payment by or performance of this Lease by any

person, firm or corporation claiming an interest in this Lease or the leased

premises by, through or under the Tenant without Landlord's consent in writing

shall not constitute an attornment or create any interest in this Lease or the

leased premises.

ARTICLE XLIX

SUBORDINATION

-------------

Tenant agrees that this Lease shall, at the request of the Landlord,

be subordinate to any first mortgage on deeds of trust that may hereafter be

placed upon said premises and to any and all advances to be made thereunder, and

to the interest thereon, and all renewals, replacements and extensions thereof,

provided the mortgagee or trustee named in said mortgages or trust deeds shall

agree to recognize the Lease of said Tenant in the event of foreclosure if

Tenant is not in default. Tenant also agrees that any mortgagee or trustee may

elect to have this Lease a prior lien to its mortgage or deed of trust, and in

the event of such election and upon notification by such mortgagee or trustee to

Tenant to that

<PAGE>

30

effect, this Lease shall be deemed prior in lien to the said mortgage or deed of

trust, whether this Lease is dated prior to or subsequent to the date of said

mortgage or deed of trust. Tenant agrees upon request of Landlord, any

mortgagee or any trustee, it shall execute whatever instruments may be required

to carry out the intent of this Article.

ARTICLE L

REMEDIES

--------

Failure of the Tenant to execute any of the above instruments within

forty five (45) days upon written request so to do by Landlord shall constitute

a breach of this Lease and the Landlord may, at its option, cancel this Lease

and terminate the Tenant's interest therein. Further, Tenant hereby irrevocably

appoints Landlord as attorney-in-fact for the Tenant with full power and

authority to execute and deliver in the name of the Tenant any such instruments,

provided, however, that Landlord may only exercise its appointment as attorney-

in-fact under this Article in the event of sale or financing of the above

building and demised premises and only for an estoppel and/or subordination

document. Further, provided that the terms of this Lease are not materially

changed.

Notwithstanding the terms of this Article to the contrary, Landlord

will not exercise its power of attorney under this Article until the forty-five

(45) days has elapsed.

ARTICLE LI

EXECUTION OF LEASE

------------------

If either party hereto is a partnership, limited partnership,

corporation or other joint venture or association, the individual(s) executing

this Lease on behalf of such entity warrant and represent that such entity is

validly organized and existing and authorized to do business under the laws of

the State of Michigan, that the form of entity is as set forth in the

introductory paragraph of this Lease and the acknowledgments at the end of this

Lease, that the entity has full power and lawful authority to enter into this

Lease in the manner and form herein set forth, and that the execution of this

Lease by such individual(s) is proper and sufficient to legally bind such entity

in accordance with the terms and conditions hereof. If Tenant consists of more

than one person or entity, then the obligations imposed on Tenant shall be joint

and several. Tenant agrees that at the time of execution of this Lease that it

will provide Landlord with a Certificate of Good Standing and a resolution of

its Board of Directors authorizing execution of this Lease and the party who is

executing on behalf of the Tenant.

<PAGE>

31

ARTICLE LII

LANDLORD'S LIEN

---------------

ARTICLE LIII

PLANS AND SPECIFICATIONS

------------------------

The completion of the facility shall be done in accordance with the

attached specification sheet marked as Exhibit "B" and building plans marked as

Exhibit "A" attached hereto and made a part hereof.

ARTICLE LIV

WARRANTIES

----------

Landlord hereby extends to Tenant on the entire facility from date of

occupancy by Tenant a one (1) year building warranty on the entire facility and

furthermore, Landlord shall extend any and all warranties given to Landlord by

the manufacturers.

ARTICLE LV

LARGER FACILITY REQUIREMENTS

----------------------------

It is understood and agreed that if Tenant requires a larger facility

during the term of this Lease and Landlord has an existing building on the

market or coming available that meets Tenant's requirements, or if Landlord can

obtain a parcel of land and construct a facility pursuant to Tenant's

specifications, Landlord agrees to first negotiate a new lease covering the

larger facility under terms and conditions acceptable to both parties, and after

the terms have been agreed upon and the facility is ready for occupancy, then

Landlord will immediately cancel this existing Lease and the new Lease shall be

in full force and effect.

ARTICLE LVI

TAX ABATEMENT

-------------

Tenant agrees to fully cooperate with Landlord in the event that

Landlord shall seek a tax abatement for the property leased hereunder.

<PAGE>

32

ARTICLE LVII

------------

Facility shall be completed in accordance with the attached Plans

marked Exhibit "A" and attached Specifications Sheet marked Exhibit "B".

ARTICLE LVIII

ENVIRONMENTAL

-------------

Section 1. Prior to occupancy by Tenant, Landlord, at Landlord's

---------

expense, shall obtain a report from a reputable environmental consultant of

Landlord's choice and reasonably acceptable to Tenant, to determine if the

leased property has been or presently is contaminated by hazardous materials or

has been used for the handling, storage, transportation or disposal of hazardous

or toxic materials. Copy of said report shall be attached hereto and made a

part of this Lease Agreement as Exhibit "D".

Section 2. On termination of the Lease or any option period, Tenant

---------

shall obtain, at Tenant's expense, a report from a reputable environmental

consultant of Tenant's choice and reasonably acceptable to Landlord, to

determine if the leased property has been or presently is contaminated by

hazardous materials or has been used for the handling, storage, transportation

or disposal of hazardous or toxic materials.

Section 3. The results of the reports under Sections 1 and 2

---------

hereinabove, shall be in writing and shall be promptly submitted either by

Landlord or Tenant to the other, as the case may be.

Section 4. Prior to Tenant's occupancy, Landlord agrees, at its

---------

expense, to undertake to clean up and remove any hazardous or toxic materials

indicated in the environmental report under Section 1 hereinabove, which may be

required by any governmental authority.

Section 5. Tenant agrees that any change in the hazardous or toxic

---------

materials contaminating the property between the reports of Landlord and Tenant

shall be the sole obligation and liability of Tenant to clean up and remove at

its expense; unless Tenant proves that Landlord or adjacent property is

responsible for contamination. The obligation under this Section shall be

absolute. The burden of proving a third party defense to Tenant's obligations

and liabilities under this Article shall be borne by Tenant.

Section 6. For purposes of this Lease Agreement, a "Hazardous

---------

Material" and "Hazardous Materials" shall mean and include urea formaldehyde,

petroleum, asbestos, polychlorinated biphenyls and any material, substance or

waste which is now defined or listed as a "hazardous substance", "hazardous

material", "hazardous waste", "extremely

<PAGE>

33

hazardous waste", "restricted hazardous waste", "toxic waste", "toxic material",

"toxic substance" or "economic poison" in any federal, state or local law,

ordinance, regulation, publication or order or is now listed or defined as

"hazardous" or "extremely hazardous" in the Comprehensive Environmental

Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et

--

seq., or in any successor statutes or provisions, in the Hazardous Materials

- ---

Transportation Act, 49 U.S.C. Section 1801, et seq., or in any successor

-- ---

statutes or provisions, in the Resource Conservation and Recovery Act, 42 U.S.C.

Section 6901, et seq., or in any successor statutes or provisions, in the Clean

-- ---

Water Act, 33 U.S.C. Section 1251 et seq., or in any successor statutes or

-- ---

provisions.

Section 7. Landlord and Tenant's obligations under this Article shall

---------

arise upon the discovery of the presence of any hazardous substance, whether or

not the Environmental Protection Agency or any other federal agency or any state

or local environmental agency has taken or threatened any action in connection

with the presence of any hazardous substances.

Section 8. Landlord agrees to indemnify, defend, and hold Tenant

---------

harmless from and against any and all claims, loss, damages, costs and expenses

arising out of or in any way relating to the existence, at any time, prior to

occupancy of Tenant of any hazardous or toxic materials in, on, under, at or

used on the property leased hereunder.

Section 9. Tenant covenants that it shall indemnify, defend and hold

---------

Landlord harmless from and against any and all claims, loss, damages, costs and

expenses arising out of or in any way relating to the existence, at any time,

after its occupancy of the leased premises of any hazardous or toxic materials;

provided, however, that if the environmental report listed in Section 2 shows no

contamination, the burden of proof shall be on Landlord to show that Tenant,

nevertheless, caused such contamination.

Section 10. Notwithstanding anything in this Lease to the contrary,

----------

the undertakings of both Landlord and Tenant under this Article shall survive

the expiration or termination of the Lease Agreement or any option regardless of

the means of such expiration or termination.

ARTICLE LIX

OPTION

------

Provided Tenant is not in default of any of the terms of this Lease,

Landlord grants to Tenant three (3) one (1) year options to extend the Lease on

the following rental terms:

<PAGE>

34

<TABLE>

<CAPTION>

Option Year Monthly Rental

------------- --------------

<S> <C>

1 $8,700.00

2 8,900.00

3 9,300.00

</TABLE>

Said option shall be exercised by Tenant in writing, of Tenant's

intention to do so, given to Landlord at least six (6) months prior to the

expiration of the term of this Lease or any option period.

IN WITNESS WHEREOF, the parties have hereunto set their hands and

seals the day and year first above written.

LANDLORD:

D R GROUP, a Michigan Co-Partnership

BY:

- ----------------------------- ----------------------------------

BY:

- ----------------------------- ----------------------------------

TENANT:

ROFIN-SINAR INCORPORATED, a Delaware

corporation

BY:

- ----------------------------- ----------------------------------

BY:

- ----------------------------- ----------------------------------