EXHIBIT 10.11

 

INDUSTRIAL REAL ESTATE SUBLEASE

 

(MULTI-TENANT FACILITY)

 

This Agreement constitutes a sublease of a portion of the premises at 211 West
Cutting Boulevard, Richmond, California (the “Property”) between National
Distribution Agency (“Landlord or Subleasor”) and WinCup Holdings, Inc.
(“Tenant” or “Sublessee”) which Sublease is herein referred to as the “Lease” or
the “Sublease”. This Lease is subject to that certain lease between Landlord as
Tenant and Sacramento Sproule Lane Corporation as Landlord, dated November 27,
1985 (the “Master Lease”).

 

Landlord warrants and represents to Tenant that the Master Lease has not been
amended or modified except as expressly set forth herein, that Landlord is not
now and as of the commencement of the Term hereof will not be, in default or
breach of any of the provisions of the Master Lease, and the Landlord has no
knowledge of any claim by the Master Lessor that Landlord is in default or
breach of any of the provisions of the Master Lease.

 

All applicable terms and conditions of the Master Lease are incorporated into
and made a part of this Sublease as if Landlord were the Lessor thereunder,
Tenant the Lessee thereunder, and the Property, a portion of the Premises,
except to the extent modified herein and not inconsistent with the Master Lease;
provided, however, that Tenant acknowledges that its rights under this Sublease
are subject to Landlord’s rights under the Master Lease during the Term to the
extent that such obligations are applicable to the Property, except that the
obligation to pay rent to the Master Lessor under the Master Lease shall be
considered performed by Tenant to the extent and in the amount rent is paid to
Landlord in accordance with Section 1.12 of this Sublease. Tenant shall not
commit or suffer any act or omission that will violate any of the provisions of
the Master Lease. Landlord shall exercise due diligence in attempting to cause
the Master Lessor to perform its obligations under the Master Lease for the
benefit of Tenant. If the Master Lease terminates this Sublease shall terminate
and the parties shall be relieved of any further liability or obligation under
this Sublease provided however, that if the Master Lease terminates as a result
of a default or breach by Landlord or Tenant under this Sublease and/or the
Master Lease, then the defaulting party shall be liable to the non-defaulting
party for the damage attributable to such default or breach and suffered as a
result of such termination. Notwithstanding the foregoing, if the Master, Lease
gives Landlord any right to terminate the Master Lease in the event of the
partial or total damage, destruction, or condemnation of the Master Premises or
the building or project of which the Master Premises are a part, the exercise of
such right by Landlord shall not constitute a default or breach hereunder
provided that Tenant receives a pro rata portion of any proceeds, or other
remuneration, if any, which Landlord receives as a result of such termination.

 

ARTICLE ONE: BASIC TERMS

 

This Article One contains the Basic Terms of this Lease between the Landlord and
Tenant named below. Other Articles, Sections and paragraphs of the Lease
referred to in this Article One explain and define the Basic Terms and are to be
read in conjunction with the Basic Terms.

 

Section 1.01. Date of Lease: February 1, 1998.

 

Section 1.02. Landlord (include legal entity): National Distribution Agency,
Inc., a Delaware corporation, herein also known and sometimes described as
Sublessor, Successor by assignment under the Master Lease.

 

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Address of Landlord: c/o 528 Arizona Avenue, Suite 206, Santa Monica, CA
90401-1437.

 

Section 1.03. Tenant (include legal entity): WinCup Holdings, Inc., a Delaware
corporation, herein also known and sometimes described as Sublessee herein.

 

Address of Tenant: 7980 West Buckeye Road, Phoenix, AZ 85043

 

Section 1.04. Property: The Property leased hereunder is part of a multi-tenant
real property leased to Landlord under the Master Lease, and described or
depicted in Exhibit “A”. The premises comprises the total property and includes
the land, the buildings and all other improvements located on the land, and the
common areas described in Paragraph 4.05(a), (the “Project”). The leased
Property is located at 211 West Cutting Blvd., Richmond, California, and
includes 103,600 square feet of warehouse space, including 2,400 square feet of
offices, in the Western portion of the Project, as more fully reflected in
Exhibit “A”, and outlined in red.

 

Section 1.05. Lease Term: Seven (7) years and zero (0) months beginning on
February 1, 1998, or such other date as specified in this Lease, and ending on
January 31, 2005. In addition, Tenant shall have the Option(s) to Renew as more
fully provided in Rider No. 3, attached and incorporated herein by reference.

 

Section 1.06. Permitted Uses: (See Article Five)

 

Warehousing and storage of WinCup Holdings, Inc., or its affiliates, products,
and for no other purpose, without the prior or concurrent written consent of
Landlord.

 

Section 1.07. Tenant’s Guarantor: Not applicable.

 

Section 1.08. Brokers: (See Article Fourteen)

 

Landlord’s Broker: C. B. Commercial.

Tenant’s Broker: Grubb & Ellis.

 

Section 1.09. Commission Payable to Landlord’s Broker: (See Article Fourteen)
Per separate agreement with Landlord.

 

Section 1.10. Initial Security Deposit: (See Section 3.03) Thirty Thousand
Forty-four Dollars and no/100 ($30,044).

 

Section 1.11. Vehicle Parking Spaces Allocated to Tenant: (See Section 4.05) 35
unassigned parking spaces.

 

Section 1.12. Rent and Other Charges Payable by Tenant:

 

(a) BASE RENT:

 

Months

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Rate per sq. ft. per mo.

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   Amount per mo.

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Abated

mo. rent
months 1-4

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01-04

  ½ months rent @ $.29 psf/mth/nnn    $ 15,022.00    $ 15,022.00

05-12

  $.29 psf/mth/nnn    $ 30,044.00       

13-24

  $.30 psf/mth/nnn    $ 31,080.00       

25-36

  $.32 psf/mth/nnn    $ 33,152.00       

37-84

  Shall be adjusted annually with a minimum increase of 4% per annum and a
maximum increase according to the CPI Index for the San Francisco Bay Area.

 

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The rates payable hereunder are more fully set forth in Lease Rider No. 1
attached and incorporated herein by reference, and as referred to in Lease Rider
No. 2, also attached and incorporated herein by reference.

 

In the event that Landlord is in default under the Master Lease and either
Landlord or Tenant receive notice of such default from the Master Lessor under
the Master Lease, Tenant shall have the right (without any obligation to do so),
to pay rent provided in this section, and all other sums due Landlord hereunder,
which Landlord is obligated to pay directly to the Master Lessor.

 

(b) OTHER PERIODIC PAYMENTS INCLUDED AS RENT: (i) Real Property Taxes (See
Section 4.02); (ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See
Section 4.04); (iv) Tenant’s Initial Pro Rata Share of Common Area Expenses
(44%) (See Section 4.05); (v) Impounds for Insurance Premiums and Property Taxes
(See Section 4.08); (vi) Maintenance, Repairs and Alterations (See Article Six).

 

Section 1.13. Landlord’s Share of Profit on Assignment or Sublease: (See Section
9.05) eighty percent (80%) of the Profit (the “Landlord’s Share”).

 

Section 1.14. Riders: The following Riders are attached to and made a part of
this Lease:

 

Rider No. 1 - Base Rent Schedule

 

Rider No. 2 - Tenant Improvement Allowance

 

Rider No. 3 - Options to Renew

 

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ARTICLE TWO: LEASE TERM

 

Section 2.01. Lease of Property For Lease Term. Landlord leases the Property to
Tenant and Tenant leases the Property from Landlord for the Lease Term. The
Lease Term is for the period stated in Section 1.05 above and shall begin and
end on the dates specified in Section 1.05 above, unless the beginning or end of
the Lease Term is changed under any provision of this Lease. The “Commencement
Date” shall be the date specified in Section 1.05 above for the beginning of the
Lease Term, unless advanced or delayed under any provision of this Lease.

 

Section 2.02. Delay in Commencement. Landlord shall not be liable to Tenant if
Landlord does not deliver possession of the Property to Tenant on the
Commencement Date. Landlord’s non-delivery of the Property to Tenant on that
date shall not affect this Lease or the obligations of Tenant under this Lease
except that the Commencement Date shall be delayed until Landlord delivers
possession of the Property to Tenant and the Lease Term shall be extended for a
period equal to the delay in delivery of possession of the Property to Tenant,
plus the number of days necessary to end the Lease Term on the last day of a
month. If Landlord does not deliver possession of the Property to Tenant within
thirty (30) days after the Commencement Date, Tenant may elect to cancel this
Lease by giving written notice to Landlord within ten (10) days after the thirty
(30) -day period ends. If Tenant gives such notice, the Lease shall be cancelled
and neither Landlord nor Tenant shall have any further obligations to the other.
If Tenant does not give such notice, Tenant’s right to cancel the Lease shall
expire and the Lease Term shall commence upon the delivery of possession of the
Property to Tenant. If delivery of possession of the Property to Tenant is
delayed, Landlord and Tenant shall, upon such delivery, execute an amendment to
this Lease setting forth the actual Commencement Date and expiration date of the
Lease. Failure to execute such amendment shall not affect the actual
Commencement Date and expiration date of the Lease.

 

Section 2.03. Early Occupancy. If Tenant occupies the Property prior to the
Commencement Date, Tenant’s occupancy of the Property shall be subject to all of
the provisions of this Lease. Early occupancy of the Property shall not advance
the expiration date of this Lease. Tenant shall pay Base Rent and all other
charges specified in this Lease for the early occupancy period.

 

Section 2.04. Holding Over. Tenant shall vacate the Property upon the expiration
or earlier termination of this Lease. Tenant shall reimburse Landlord for and
indemnify Landlord against all damages which Landlord incurs from Tenant’s delay
in vacating the Property. If Tenant does not vacate the Property upon the
expiration or earlier termination of the Lease and Landlord thereafter accepts
rent from Tenant, Tenant’s occupancy of the Property shall be a “month-to-month”
tenancy, subject to all of the terms of this Lease applicable to a
month-to-month tenancy, except that the Base Rent then in effect shall be
increased by ten percent (10%).

 

ARTICLE THREE: BASE RENT

 

Section 3.01. Time and Manner of Payment. Upon execution of this Lease, Tenant
shall pay Landlord the Base Rent in the amount stated in Paragraph 1.12(a) above
for the first month of the Lease Term. On the first day of the second month of
the Lease Term and each month thereafter, Tenant shall pay Landlord the Base
Rent, in advance, within five (5) business days after the commencement of each
month, without offset, deduction or prior demand. The Base Rent shall be payable
at Landlord’s address or at such other place as Landlord may designate in
writing.

 

Section 3.02. [Intentionally omitted].

 

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Section 3.03. Security Deposit Increases.

 

(a) Upon the execution of this Lease, Tenant shall deposit with Landlord a cash
Security Deposit in the amount set forth in Section 1.10 above. Landlord may
apply all or part of the Security Deposit to any unpaid rent or other charges
due from Tenant or to cure any other defaults of Tenant. If Landlord uses any
part of the Security Deposit, Tenant shall restore the Security Deposit to its
full amount within ten (10) days after Landlord’s written request. Tenant’s
failure to do so shall be a material default under this Lease. No interest shall
be paid on the Security Deposit. Landlord shall not be required to keep the
Security Deposit separate from its other accounts and no trust relationship is
created with respect to the Security Deposit.

 

(b) Each time the Base Rent is increased, Tenant shall deposit additional funds
with Landlord sufficient to increase the Security Deposit to an amount which
bears the same relationship to the adjusted Base Rent as the initial Security
Deposit bore to the initial Base Rent. for month five (5).

 

Section 3.04. Termination; Advance Payments. Upon termination of this Lease
under Article Seven (Damage or Destruction), Article Eight (Condemnation) or any
other termination not resulting from Tenant’s default, and after Tenant has
vacated the Property in the manner required by this Lease, Landlord shall refund
or credit to Tenant (or Tenant’s successor) the unused portion of the Security
Deposit, any advance rent or other advance payments made by Tenant to Landlord,
and any amounts paid for real property taxes and other reserves which apply to
any time periods after termination of the Lease.

 

ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT

 

Section 4.01. Additional Rent. All charges payable by Tenant other than Base
Rent are called “Additional Rent.” Unless this Lease provides otherwise, Tenant
shall pay all Additional Rent then due with the next monthly installment of Base
Rent. The term “rent” shall mean Base Rent and Additional Rent.

 

Section 4.02. Property Taxes.

 

(a) Real Property Taxes. Tenant shall pay all real property taxes on the
Property (including any fees, taxes or assessments against, or as a result of,
any tenant improvements installed on the Property by or for the benefit of
Tenant) during the Lease Term. Subject to Paragraph 4.02(c) and Section 4.08
below, such payment shall be made at least ten (10) days prior to the
delinquency date of the taxes. Within such ten (10) -day period, Tenant shall
furnish Landlord with satisfactory evidence that the real property taxes have
been paid. Landlord shall reimburse Tenant for any real property taxes paid by
Tenant covering any period of time prior to or after the Lease Term. If Tenant
fails to pay the real property taxes when due, Landlord may pay the taxes and
Tenant shall reimburse Landlord for the amount of such tax payment as Additional
Rent.

 

(b) Definition of “Real Property Tax.” “Real property tax” means: (i) any fee,
license fee, license tax, business license fee, commercial rental tax, levy,
charge, assessment, penalty or tax imposed by any taxing authority against the
Property; (ii) any tax on the Landlord’s right to receive, or the receipt of,
rent or income from the Property or against Landlord’s business of leasing the
Property; (iii) any tax or charge for fire protection, streets, sidewalks, road
maintenance, refuse or other services provided to the Property by any
governmental agency; (iv) any tax imposed upon this transaction or based upon a
re-assessment of the Property due to a change of ownership, as defined by
applicable law, or other transfer of all or part of Landlord’s interest in the
Property; and (v) any charge or fee replacing any tax previously included within
the definition of real property tax. “Real property tax” does not, however,
include Landlord’s federal or state income, franchise, inheritance or estate
taxes.

 

(c) Joint Assessment. If the Property is not separately assessed, Landlord shall
reasonably determine Tenant’s share of the real property tax payable by Tenant
under Paragraph 4.02(a) from the assessor’s worksheets or other reasonably
available information. Tenant shall pay its share to Landlord within fifteen
(15) days after receipt of Landlord’s written statement. Tenant’s share of such
real property tax shall be 44% of the total amount assessed on the Project.

 

(d) Personal Property Taxes.

 

(i) Tenant shall pay all taxes charged against trade fixtures, furnishings,
equipment or any other personal property belonging to Tenant. Tenant shall try
to have personal property taxed separately from the Property.

 

(ii) If any of Tenant’s personal property is taxed with the Property, Tenant
shall pay Landlord the taxes for the personal property within fifteen (15) days
after Tenant receives a written statement from Landlord for such personal
property taxes.

 

Section 4.03. Utilities. Tenant shall pay, directly to the appropriate supplier,
the cost of all natural gas, heat, light, power, sewer service, telephone,
water, refuse disposal and other utilities and services supplied to the
Property. However, if any services or utilities are jointly metered with other
property, Landlord shall make a reasonable determination of Tenant’s
proportionate share of the cost of such utilities and services and Tenant shall
pay its share to Landlord within fifteen (15) days after receipt of Landlord’s
written statement. Tenant’s share of such utility shall be 44% of the total
charged to the Project.

 

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Section 4.04. Insurance Policies.

 

(a) Liability Insurance. During the Lease Term, Tenant shall maintain a policy
of commercial general liability insurance (sometimes known as broad form
comprehensive general liability insurance) insuring Tenant against liability for
bodily injury, property damage (including loss of use of property) and personal
injury arising out of the operation, use or occupancy of the Property. Tenant
shall name Landlord as an additional insured under such policy. The initial
amount of such insurance shall be One Million Dollars ($1,000,000) per
occurrence and shall be subject to periodic increase based upon inflation,
increased liability awards, recommendation of Landlord’s professional insurance
advisers and other relevant factors. The liability insurance obtained by Tenant
under this Paragraph 4.04(a) shall (i) be primary and non-contributing; (ii)
contain cross-liability endorsements; and (iii) insure Landlord against Tenant’s
performance under Section 5.05, if the matters giving rise to the indemnity
under Section 5.05 result from the negligence of Tenant. The amount and coverage
of such insurance shall not limit Tenant’s liability nor relieve Tenant of any
other obligation under this Lease. Landlord may also obtain comprehensive public
liability insurance in an amount and with coverage determined by Landlord
insuring Landlord against liability arising out of ownership, operation, use or
occupancy of the Property. The policy obtained by Landlord shall not be
contributory and shall not provide primary insurance.

 

(b) Property and Rental Income Insurance. During the Lease Term, Landlord shall
maintain policies of insurance covering loss of or damage to the Property in the
full amount of its replacement value. Such policy shall contain an Inflation
Guard Endorsement and shall provide protection against all perils included
within the classification of fire, extended coverage, vandalism, malicious
mischief, special extended perils (all risk), sprinkler leakage and any other
perils which Landlord deems reasonably necessary. Landlord shall have the right
to obtain flood and earthquake insurance if required by any lender holding a
security interest in the Property. Landlord shall not obtain insurance for
Tenant’s fixtures or equipment or building improvements installed by Tenant on
the Property. During the Lease Term, Landlord shall also maintain a rental
income insurance policy, with loss payable to Landlord, in an amount equal to
one year’s Base Rent, plus estimated real property taxes and insurance premiums.
Tenant shall be liable for the payment of any deductible amount under Tenant’s
insurance policies maintained pursuant to this Section 4.04, in an amount not to
exceed Ten Thousand Dollars ($10,000). Tenant shall not do or permit anything to
be done which invalidates any such insurance policies.

 

(c) Payment of Premiums. Subject to Section 4.08, Tenant shall pay all premiums
for the insurance policies described in Paragraph 4.04(a) and (b) (whether
obtained by Landlord or Tenant) within fifteen (15) days after Tenant’s receipt
of a copy of the premium statement or other evidence of the amount due, except
Landlord shall pay all premiums for non-primary comprehensive public liability
insurance which Landlord elects to obtain as provided in Paragraph 4.04(a). For
insurance policies maintained by Landlord which cover improvements on the entire
Project, Tenant shall pay Tenant’s prorated share of the premiums, in accordance
with the formula in Paragraph 4.05(e) for determining Tenant’s share of Common
Area costs. If insurance policies maintained by Landlord cover improvements on
real property other than the Project, Landlord shall deliver to Tenant a
statement of the premium applicable to the Property showing in reasonable detail
how Tenant’s share of the premium was computed. If the Lease Term expires before
the expiration of an insurance policy maintained by Landlord, Tenant shall be
liable for Tenant’s prorated share of the insurance premiums. Before the
Commencement Date, Tenant shall deliver to Landlord a copy of any policy of
insurance which Tenant is required to maintain under this Section 4.04. At least
thirty (30) days prior to the expiration of any such policy, Tenant shall
deliver to Landlord a renewal of such policy. As an alternative to providing a
policy of insurance, Tenant shall have the right to provide Landlord a
certificate of insurance, executed by an authorized officer of the insurance
company, showing that the insurance which Tenant is required to maintain under
this Section 4.04 is in full force and effect and containing such other
information which Landlord reasonably requires.

 

(d) General Insurance Provisions.

 

(i) Any insurance which Tenant is required to maintain under this Lease shall
include a provision which requires the insurance carrier to give Landlord not
less than thirty (30) days’ written notice prior to any cancellation or
modification of such coverage.

 

(ii) If Tenant fails to deliver any policy, certificate or renewal to Landlord
required under this Lease within the prescribed time period or if any such
policy is cancelled or modified during the Lease Term without Landlord’s
consent, Landlord may obtain such insurance, in which case Tenant shall
reimburse Landlord for the cost of such insurance within fifteen (15) days after
receipt of a statement that indicates the cost of such insurance.

 

(iii) Tenant shall maintain all insurance required under this Lease with
companies holding a “General Policy Rating” of A-12 or better, as set forth in
the most current issue of “Best Key Rating Guide”. Landlord and Tenant
acknowledge the insurance markets are rapidly changing and that insurance in the
form and amounts described in this Section 4.04 may not be available in the
future. Tenant acknowledges that the insurance described in this Section 4.04 is
for the primary benefit of Landlord. If at any time during the Lease Term,
Tenant is unable to maintain the insurance required under the Lease, Tenant
shall nevertheless maintain insurance coverage which is customary and
commercially reasonable in the insurance industry for Tenant’s type of business,
as that coverage may change from time to time. Landlord makes no representation
as to the adequacy of such insurance to protect Landlord’s or Tenant’s
interests. Therefore, Tenant shall obtain any such additional property or
liability insurance which Tenant deems necessary to protect Landlord and Tenant.

 

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(iv) Unless prohibited under any applicable insurance policies maintained,
Landlord and Tenant each hereby waive any and all rights of recovery against the
other, or against the officers, employees, agents or representatives of the
other, for loss of or damage to its property or the property of others under its
control, if such loss or damage is covered by any insurance policy in force
(whether or not described in this Lease) at the time of such loss or damage.
Upon obtaining the required policies of insurance, Landlord and Tenant shall
give notice to the insurance carriers of this mutual waiver of subrogation.

 

Section 4.05. Common Areas; Use, Maintenance and Costs.

 

(a) Common Areas. As used in this Lease, “Common Areas” shall mean all areas
within the Project which are available for the common use of tenants of the
Project and which are not leased or held for the exclusive use of Tenant or
other tenants, including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping and planted
areas. Landlord, from time to time, may change the size, location, nature and
use of any of the Common Areas, convert Common Areas into leaseable areas,
construct additional parking facilities (including parking structures) in the
Common Areas, and increase or decrease Common Area land and/or facilities.
Tenant acknowledges that such activities may result in inconvenience to Tenant.
Such activities and changes are permitted if they do not materially affect
Tenant’s use of the Property.

 

(b) Use of Common Areas. Tenant shall have the nonexclusive right (in common
with other tenants and all others to whom Landlord has granted or may grant such
rights) to use the Common Areas for the purposes intended, subject to such
reasonable rules and regulations as Landlord may establish from time to time.
Tenant shall abide by such rules and regulations and shall use its best effort
to cause others who use the Common Areas with Tenant’s express or implied
permission to abide by Landlord’s rules and regulations. At any time, Landlord
may close any Common Areas to perform any acts in the Common Areas as, in
Landlord’s judgment, are desirable to improve the Project. Tenant shall not
interfere with the rights of Landlord, other tenants or any other person
entitled to use the Common Areas.

 

(c) Specific Provision re: Vehicle Parking. Tenant shall be entitled to use the
number of vehicle parking spaces in the Project allocated to Tenant in Section
1.11 of the Lease without paying any additional rent. Tenant’s parking shall not
be reserved and shall be limited to vehicles no larger than standard size
automobiles or pickup utility vehicles. Tenant shall not cause large trucks or
other large vehicles to be parked within the Project or on the adjacent public
streets. Temporary parking of large delivery vehicles in the Project may be
permitted by the rules and regulations established by Landlord. Vehicles shall
be parked only in striped parking spaces and not in driveways, loading areas or
other locations not specifically designated for parking. Handicapped spaces
shall only be used by those legally permitted to use them. If Tenant parks more
vehicles in the parking area than the number set forth in Section 1.11 of this
Lease, such conduct shall be a material breach of this Lease. In addition to
Landlord’s other remedies under the Lease, Tenant shall pay a daily charge
determined by Landlord for each such additional vehicle.

 

(d) Maintenance of Common Areas. Landlord shall maintain the Common Areas in
good order, condition and repair and shall operate the Project, in Landlord’s
sole discretion, as a first-class industrial/commercial real property
development. Tenant shall pay Tenant’s pro rata share (as determined below) of
all costs incurred by Landlord for the operation and maintenance of the Common
Areas. Common Area costs include, but are not limited to, costs and expenses for
the following: gardening and landscaping; utilities, water and sewage charges;
maintenance of signs (other than tenants’ signs); premiums for liability,
property damage, fire and other types of casualty insurance on the Common Areas
and worker’s compensation insurance; all property taxes and assessments levied
on or attributable to the Common Areas and all Common Area Improvements; all
personal property taxes levied on or attributable to personal property used in
connection with the Common Areas; straight-line depreciation on personal
property owned by Landlord which is consumed in the operation or maintenance of
the Common Areas; rental or lease payments paid by Landlord for rented or leased
personal property used in the operation or maintenance of the Common Areas; fees
for required licenses and permits; repairing, resurfacing, repaving,
maintaining, painting, lighting, cleaning, refuse removal, security and similar
items; reserves for roof replacement and exterior painting and other appropriate
reserves; and a reasonable allowance to Landlord for Landlord’s supervision of
the Common Areas (not to exceed five percent (5%) of the gross rents of the
Project for the calendar year). Landlord may cause any or all of such services
to be provided by third parties and the cost of such services shall be included
in Common Area costs. Common Area costs shall not include depreciation of real
property which forms part of the Common Areas.

 

© 1988  

California Chapters of the

Society of Industrial and

Office Realtors,® Inc.

   5   Initials      

/s/ DR

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(e) Tenant’s Share and Payment. Tenant shall pay Tenant’s annual pro rata share
of all Common Area costs (prorated for any fractional month) upon written notice
from Landlord that such costs are due and payable, and in any event prior to
delinquency. Tenant’s pro rata share shall be calculated by dividing the square
foot area of the Property, as set forth in Section 1.04 of the Lease, by the
aggregate square foot area of the Project which is leased or held for lease by
tenants, as of the date on which the computation is made. Tenant’s initial pro
rata share is set out in Paragraph 1.12(b). Any changes in the Common Area costs
and/or the aggregate area of the Project leased or held for lease during the
Lease Term shall be effective on the first day of the month after such change
occurs. Landlord may, at Landlord’s election, estimate in advance and charge to
Tenant as Common Area costs, all real property taxes for which Tenant is liable
under Section 4.02 of the Lease, all insurance premiums for which Tenant is
liable under Section 4.04 of the Lease, all maintenance and repair costs for
which Tenant is liable under Section 6.04 of the Lease, and all other Common
Area costs payable by Tenant hereunder. At Landlord’s election, such statements
of estimated Common Area costs shall be delivered monthly, quarterly or at any
other periodic intervals to be designated by Landlord. Landlord may adjust such
estimates at any time based upon Landlord’s experience and reasonable
anticipation of costs. Such adjustments shall be effective as of the next rent
payment date after notice to Tenant. Within sixty (60) days after the end of
each calendar year of the Lease Term, Landlord shall deliver to Tenant a
statement prepared in accordance with generally accepted accounting principles
setting forth, in reasonable detail, the Common Area costs paid or incurred by
Landlord during the preceding calendar year and Tenant’s pro rata share. Upon
receipt of such statement, there shall be an adjustment between Landlord and
Tenant, with payment to or credit given by Landlord (as the case may be) so that
Landlord shall receive the entire amount of Tenant’s share of such costs and
expenses for such period.

 

Section 4.06. Late Charges. Tenant’s failure to pay rent promptly may cause
Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but are
not limited to, processing and accounting charges and late charges which may be
imposed on Landlord by any ground lease, mortgage or trust deed encumbering the
Property. Therefore, if Landlord does not receive any rent payment within ten
(10) days after it becomes due, Tenant shall pay Landlord a late charge equal to
ten percent (10%) of the overdue amount. The parties agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of such late payment.

 

Section 4.07. Interest on Past Due Obligations. Any amount owed by Tenant to
Landlord which is not paid when due shall bear interest at the rate of fifteen
percent (15%) per annum from the due date of such amount. However, interest
shall not be payable on late charges to be paid by Tenant under this Lease. The
payment of interest on such amounts shall not excuse or cure any default by
tenant under this Lease. If the interest rate specified in this Lease is higher
than the rate permitted by law, the interest rate is hereby decreased to the
maximum legal interest rate permitted by law.

 

Section 4.08. Impounds for Insurance Premiums and Real Property Taxes. If
requested by any ground lessor or lender to whom Landlord has granted, or may
hereafter grant, a security interest in the Property, or if Tenant is more than
ten (10) days late in the payment of rent more than once in any consecutive
twelve (12) -month period, Tenant shall pay Landlord a sum equal to one-twelfth
(1/12) of the annual real property taxes and insurance premiums payable by
Tenant under this Lease, together with each payment of Base Rent. Landlord shall
hold such payments in a non-interest bearing impound account. If unknown,
Landlord shall reasonably estimate the amount of real property taxes and
insurance premiums when due. Tenant shall pay any deficiency of funds in the
impound account to Landlord upon written request. If Tenant defaults under this
Lease, Landlord may apply any funds in the impound account to any obligation
then due under this Lease.

 

ARTICLE FIVE: USE OF PROPERTY

 

Section 5.01. Permitted Uses. Tenant may use the Property only for the Permitted
Uses set forth in Section 1.06 above.

 

Section 5.02. Manner of Use. Tenant shall not cause or permit the Property to be
used in any way which constitutes a violation of any law, ordinance, or
governmental regulation or order, which annoys or interferes with the rights of
tenants of the Project, or which constitutes a nuisance or waste. Tenant shall
obtain and pay for all permits, including a Certificate of Occupancy, required
for tenant’s occupancy of the Property and shall promptly take all actions
necessary to comply with all applicable statutes, ordinances, rules,
regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act.

 

Section 5.03. Hazardous Materials. As used in this Lease, the term “Hazardous
Material” means any flammable items, explosives, radioactive materials,
hazardous or toxic substances, material or waste or related materials, including
any substances defined as or included in the definition of “hazardous
substances”, “hazardous wastes”, “hazardous materials” or “toxic substances” now
or subsequently regulated under any applicable federal, state or local laws or
regulations, including without limitation petroleum-based products, paints,
solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonia
compounds and other chemical products, asbestos, PCBs and similar compounds, and
including any different products and materials which are subsequently found to
have adverse effects on the environment or the health and safety of persons.
Tenant shall not cause or permit any Hazardous Material to be generated,
produced, brought upon, used, stored, treated or disposed of in or about the
Property by Tenant, its agents, employees, contractors, sublessees or invitees
without the prior written consent of Landlord. Landlord shall be entitled to
take into account such other factors or facts as Landlord may reasonably
determine to be relevant in determining whether to grant or withhold consent to
Tenant’s proposed activity with respect to Hazardous Material. In no event,
however, shall Landlord be required to consent to the installation or use of any
storage tanks on the Property.

 

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Section 5.04. Signs and Auctions. Tenant shall not place any signs on the
Property without Landlord’s prior written consent. Tenant shall not conduct or
permit any auctions or sheriff’s sales at the Property.

 

Section 5.05. Indemnity. Tenant shall indemnify Landlord against and hold
Landlord harmless from any and all costs, claims or liability arising from: (a)
Tenant’s use of the Property; (b) the conduct of tenant’s business or anything
else done or permitted by Tenant to be done in or about the Property, including
any contamination of the Property or any other property resulting from the
presence or use of Hazardous Material caused or permitted by Tenant; (c) any
breach or default in the performance of Tenant’s obligations under this Lease
except to the extent such cost, claim or liability arose out of Landlord’s gross
negligence or willful misconduct; (d) any misrepresentation or breach of
warranty by Tenant under this Lease; or (e) other acts or omissions of Tenant.
Tenant shall defend Landlord against any such cost, claim or liability at
Tenant’s expense with counsel reasonably acceptable to Landlord or, at
Landlord’s election, Tenant shall reimburse Landlord for any legal fees or costs
incurred by Landlord in connection with any such claim. As a material part of
the consideration to Landlord, Tenant assumes all risk of damage to property or
injury to persons in or about the Property arising from any cause, and Tenant
hereby waives all claims in respect thereof against Landlord, except for any
claim arising out of Landlord’s gross negligence or willful misconduct. As used
in this Section, the term “Tenant” shall include Tenant’s employees, agents,
contractors and invitees, if applicable.

 

Section 5.06. Landlord’s Access. Landlord or its agents may enter the Property
at all reasonable times to show the Property to potential buyers, investors or
tenants or other parties; to do any other act or to inspect and conduct tests in
order to monitor Tenant’s compliance with all applicable environmental laws and
all laws governing the presence and use of Hazardous Material; or for any other
purpose Landlord deems necessary. Landlord shall give Tenant reasonable prior
notice of such entry, except in the case of an emergency. Landlord may place
customary “For Sale” or “For Lease” signs on the Property.

 

Section 5.07. Quiet Possession. If Tenant pays the rent and complies with all
other terms of this Lease, Tenant may occupy and enjoy the Property for the full
Lease Term, subject to the provisions of this Lease.

 

ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS

 

Section 6.01. Existing Conditions. Tenant accepts the Property in its condition
as of the execution of the Lease, subject to all recorded matters, laws,
ordinances, and governmental regulations and orders. Except as provided herein,
Tenant acknowledges that neither Landlord nor any agent of Landlord has made any
representation as to the condition of the Property or the suitability of the
Property for Tenant’s intended use. Tenant represents and warrants that Tenant
has made its own inspection of and inquiry regarding the condition of the
Property and is not relying on any representations of Landlord or any Broker
with respect thereto. If Landlord or Landlord’s Broker has provided a Property
Information Sheet or other Disclosure Statement regarding the Property, a copy
is attached as an exhibit to the Lease.

 

Section 6.02. Exemption of Landlord from Liability. Landlord shall not be liable
for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant’s
employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures or any other cause; (c) conditions arising in or about the
Properly or upon other portions of the Project, or from other sources or places;
or (d) any act or omission of any other tenant of the Project. Landlord shall
not be liable for any such damage or injury even though the cause of or the
means of repairing such damage or injury are not accessible to Tenant. The
provisions of this Section 6.02 shall not, however, exempt Landlord from
liability for Landlord’s gross negligence, willful misconduct, or breach of its
obligation under this Lease.

 

Section 6.03. Landlord’s Obligations.

 

(a) Except as provided in Article Seven (Damage or Destruction) and Article
Eight (Condemnation), Landlord shall keep the following in good order, condition
and repair: the foundations, exterior walls, structure, and roof of the Property
(including painting the exterior surface of the exterior walls of the Property
not more often than once every five (5) years, if necessary) and all components
of electrical, mechanical, plumbing, heating and air conditioning systems and
facilities located in the Property which are concealed or used in common by
tenants of the Project. However, Landlord shall not be obligated to maintain or
repair windows, doors, plate glass or the interior surfaces of exterior walls.
Landlord shall make repairs under this Section 6.03 within a reasonable time
after receipt of written notice from tenant of the need for such repairs.

 

(b) Tenant shall pay or reimburse Landlord for all costs Landlord incurs under
Paragraph 6.03(a) above as Common Area costs as provided for in Section 4.05 of
the Lease. Tenant waives the benefit of any statute in effect now or in the
future which might give Tenant the right to make repairs at Landlord’s expense
or to terminate this Lease due to Landlord’s failure to keep the Property in
good order, condition and repair.

 

© 1988  

California Chapters of the

Society of Industrial and

Office Realtors,® Inc.

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/s/ DR

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Section 6.04. Tenant’s Obligations.

 

(a) Except as provided in Section 6.03, Article Seven (Damage or Destruction)
and Article Eight (Condemnation), Tenant shall keep all portions of the Property
(including structural, nonstructural, interior, systems and equipment) in good
order, condition and repair (including interior repainting and refinishing, as
needed). If any portion of the Property or any system or equipment in the
Property which Tenant is obligated to repair cannot be fully repaired or
restored, Tenant shall promptly replace such portion of the Property or system
or equipment in the Property, regardless of whether the benefit of such
replacement extends beyond the Lease Term; but if the benefit or useful life of
such replacement extends beyond the Lease Term (as such term may be extended by
exercise of any options), the useful life of such replacement shall be prorated
over the remaining portion of the Lease Term (as extended), and Tenant shall be
liable only for that portion of the cost which is applicable to the Lease Term
(as extended). Tenant shall maintain a preventive maintenance contract providing
for the regular inspection and maintenance of the heating and air conditioning
system by a licensed heating and air conditioning contractor, unless Landlord
maintains such equipment under Section 6.03 above. If any part of the Property
or the Project is damaged by any act or omission of Tenant, Tenant shall pay
Landlord the cost of repairing or replacing such damaged property, whether or
not Landlord would otherwise be obligated to pay the cost of maintaining or
repairing such property. It is the intention of Landlord and Tenant that at all
times Tenant shall maintain the portions of the Property which Tenant is
obligated to maintain in an attractive, first-class and fully operative
condition.

 

(b) Tenant shall fulfill all of Tenant’s obligations under this Section 6.04 at
Tenant’s sole expense. If Tenant fails to maintain, repair or replace the
Property as required by this Section 6.04, Landlord may, upon ten (10) days’
prior notice to Tenant (except that no notice shall be required in the case of
an emergency), enter the Property and perform such maintenance or repair
(including replacement, as needed) on behalf of Tenant. In such case, Tenant
shall reimburse Landlord for all costs incurred in performing such maintenance
or repair immediately upon demand.

 

Section 6.05. Alterations, Additions, and Improvements.

 

(a) Tenant shall not make any alterations, additions, or improvements to the
Property without Landlord’s prior written consent, except for non-structural
alterations which do not exceed Ten Thousand Dollars ($10,000) in cost
cumulatively over the Lease Term and which are not visible from the outside of
any building of which the Property is part. Landlord may require Tenant to
provide demolition and/or lien and completion bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord’s written request. All alterations, additions, and improvements
shall be done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with “as built”
plans, copies of all construction contracts, and proof of payment for all labor
and materials.

 

(b) Tenant shall pay when due all claims for labor and material furnished to the
Property. Tenant shall give Landlord at least twenty (20) days’ prior written
notice of the commencement of any work on the Property, regardless of whether
Landlord’s consent to such work is required. Landlord may elect to record and
post notices of non-responsibility on the Property.

 

Section 6.06. Condition upon Termination. Upon the termination of the Lease,
Tenant shall surrender the Property to Landlord, broom clean and in the same
condition as received except for ordinary wear and tear which Tenant was not
otherwise obligated to remedy under any provision of this Lease. However, Tenant
shall not be obligated to repair any damage which Landlord is required to repair
under Article Seven (Damage or Destruction). In addition, Landlord may require
Tenant to remove any alterations, additions or improvements made by Tenant
(whether or not made with Landlord’s consent) prior to the expiration of the
Lease and to restore the Property to its prior condition, all at Tenant’s
expense. All alterations, additions and improvements which Landlord has not
required Tenant to remove shall become Landlord’s property and shall be
surrendered to Landlord upon the expiration or earlier termination of the Lease,
except that Tenant may remove any of Tenant’s machinery or equipment which can
be removed without material damage to the Property. Tenant shall repair, at
Tenant’s expense, any damage to the Property caused by the removal of any such
machinery or equipment. In no event, however, shall Tenant remove any of the
following materials or equipment (which shall be deemed Landlord’s property)
without Landlord’s prior written consent: any power wiring or power panels;
lighting or lighting fixtures; wall coverings; drapes, blinds or other window
coverings; carpets or other floor coverings; heaters, air conditioners or any
other heating or air conditioning equipment; fencing or security gates; or other
similar building operating equipment and decorations.

 

ARTICLE SEVEN: DAMAGE OR DESTRUCTION

 

Section 7.01. Partial Damage to Property.

 

(a) Tenant shall notify Landlord in writing immediately upon the occurrence of
any damage to the Property. If the Property is only partially damaged (i.e.,
less than fifty percent (50%) of the Property is untenantable as a result of
such damage or less than fifty percent (50%) of Tenant’s operations are
materially impaired) and if the proceeds received by Landlord from the insurance
policies described in Paragraph 4.04(b) are sufficient to pay for the necessary
repairs, this Lease shall remain in effect and Landlord shall repair the damage
as soon as reasonably possible, provided Tenant shall be entitled to terminate
this Lease if such damage is not substantially repaired within one hundred and
eighty (180) days from the date on which Tenant’s written notice to Landlord
hereunder is delivered to Landlord pursuant to the provisions of Subsection
13.06 of this Lease. Landlord may elect (but is not required) to repair any
damage to Tenant’s fixtures, equipment, or improvements.

 

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Society of Industrial and

Office Realtors,® Inc.

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(b) If the insurance proceeds received by Landlord are not sufficient to pay the
entire cost of repair, or if the cause of the damage is not covered by the
insurance policies which Landlord maintains under Paragraph 4.04(b), Landlord
may elect either to (i) repair the damage as soon as reasonably possible, in
which case this Lease shall remain in full force and effect, or (ii) terminate
this Lease as of the date the damage occurred. Landlord shall notify Tenant
within thirty (30) days after receipt of notice of the occurrence of the damage
whether Landlord elects to repair the damage or terminate the Lease. If Landlord
elects to repair the damage, Tenant shall pay Landlord the “deductible amount”
(if any) under Landlord’s insurance policies and, if the damage was due to an
act or omission of Tenant, or Tenant’s employees, agents, contractors or
invitees, the difference between the actual cost of repair and any insurance
proceeds received by Landlord. If Landlord elects to terminate this Lease,
Tenant may elect to continue this Lease in full force and effect, in which case
Tenant shall repair any damage to the Property and any building in which the
Property is located. Tenant shall pay the cost of such repairs, except that upon
satisfactory completion of such repairs, Landlord shall deliver to Tenant any
insurance proceeds received by Landlord for the damage repaired by Tenant.
Tenant shall give Landlord written notice of such election within ten (10) days
after receiving Landlord’s termination notice.

 

(c) If the damage to the Property occurs during the last six (6) months of the
Lease Term and such damage will require more than thirty (30) days to repair,
either Landlord or Tenant may elect to terminate this Lease as of the date the
damage occurred, regardless of the sufficiency of any insurance proceeds. The
party electing to terminate this Lease shall give written notification to the
other party of such election within thirty (30) days after Tenant’s notice to
Landlord of the occurrence of the damage.

 

Section 7.02. Substantial or Total Destruction. If the Property is substantially
or totally destroyed by any cause whatsoever (i.e., the damage to the Property
is greater than partial damage as described in Section 7.01), and regardless of
whether Landlord receives any insurance proceeds, this Lease shall terminate as
of the date the destruction occurred. Notwithstanding the preceding sentence, if
the Property can be rebuilt within six (6) months after the date of destruction,
Landlord may elect to rebuild the Property at Landlord’s own expense, in which
case this Lease shall remain in full force and effect. Landlord shall notify
Tenant of such election within thirty (30) days after Tenant’s notice of the
occurrence of total or substantial destruction. If Landlord so elects, Landlord
shall rebuild the Property at Landlord’s sole expense, except that if the
destruction was caused by an act or omission of Tenant, Tenant shall pay
Landlord the difference between the actual cost of rebuilding and any insurance
proceeds received by Landlord.

 

Section 7.03. Temporary Reduction of Rent. If the Property is destroyed or
damaged and Landlord or Tenant repairs or restores the Property pursuant to the
provisions of this Article Seven, any rent payable during the period of such
damage, repair and/or restoration shall be reduced according to the degree, if
any, to which Tenant’s use of the Property is impaired. However, the reduction
shall not exceed the sum of one year’s payment of Base Rent, insurance premiums
and real property taxes. Except for such possible reduction in Base Rent,
insurance premiums and real property taxes, Tenant shall not be entitled to any
compensation, reduction, or reimbursement from Landlord as a result of any
damage, destruction, repair, or restoration of or to the Property.

 

Section 7.04. Waiver. Tenant waives the protection of any statute, code or
judicial decision which grants a tenant the right to terminate a lease in the
event of the substantial or total destruction of the leased property. Tenant
agrees that the provisions of Section 7.02 above shall govern the rights and
obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.

 

ARTICLE EIGHT: CONDEMNATION

 

If all or any portion of the Property is taken under the power of eminent domain
or sold under the threat of that power (all of which are called “Condemnation”),
this Lease shall terminate as to the part taken or sold on the date the
condemning authority takes title or possession, whichever occurs first. If more
than twenty percent (20%) of the floor area of the building in which the
Property is located, or which is located on the Property, is taken, either
Landlord or Tenant may terminate this Lease as of the date the condemning
authority takes title or possession, by delivering written notice to the other
within ten (10) days after receipt of written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
takes title or possession). If neither Landlord nor Tenant terminates this
Lease, this Lease shall remain in effect as to the portion of the Property not
taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property. Any Condemnation
award or payment shall be distributed in the following order: (a) first, to any
ground lessor, mortgagee or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant’s trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease
is not terminated, Landlord shall repair any damage to the Property caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Lease or make
such repair at Landlord’s expense.

 

© 1988  

California Chapters of the

Society of Industrial and

Office Realtors,® Inc.

   9   Initials      

/s/ DR

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ARTICLE Nine: ASSIGNMENT AND SUBLETTING

 

Section 9.01. Landlord’s Consent Required. No portion of the Property or of
Tenant’s interest in this Lease may be acquired by any other person or entity,
whether by sale, assignment, mortgage, sublease, transfer, operation of law, or
act of Tenant, without Landlord’s prior written consent, except as provided in
Section 9.02 below. Landlord has the right to grant or withhold its consent as
provided in Section 9.05 below. Any attempted transfer without consent shall be
void and shall constitute a non-curable breach of this Lease. If Tenant is a
partnership, any cumulative transfer of more than twenty percent (20%) of the
partnership interests shall require Landlord’s consent. If Tenant is a
corporation, any change in the ownership of a controlling interest of the voting
stock of the corporation shall require Landlord’s consent.

 

Section 9.02. Tenant Affiliate. Tenant may assign this Lease or sublease the
Property, without Landlord’s consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with Tenant (“Tenant’s
Affiliate”). In such case, any Tenant’s Affiliate shall assume in writing all of
Tenant’s obligations under this Lease.

 

Section 9.03. No Release of Tenant. No transfer permitted by this Article Nine,
whether with or without Landlord’s consent, shall release Tenant or change
Tenant’s primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease. Landlord’s acceptance of rent from any other person
is not a waiver of any provision of this Article Nine. Consent to one transfer
is not a consent to any subsequent transfer. If Tenant’s transferee defaults
under this Lease, Landlord may proceed directly against Tenant without pursuing
remedies against the transferee. Landlord may consent to subsequent assignments
or modifications of this Lease by Tenant’s transferee, without notifying Tenant
or obtaining its consent. Such action shall not relieve Tenant’s liability under
this Lease.

 

Section 9.04. Offer to Terminate. If Tenant desires to assign the Lease or
sublease the Property, Tenant shall have the right to offer, in writing, to
terminate the Lease as of a date specified in the offer. If Landlord elects in
writing to accept the offer to terminate within twenty (20) days after notice of
the offer, the Lease shall terminate as of the date specified and all the terms
and provisions of the Lease governing termination shall apply. If Landlord does
not so elect, the Lease shall continue in effect until otherwise terminated and
the provisions of Section 9.05 with respect to any proposed transfer shall
continue to apply.

 

Section 9.05. Landlord’s Consent.

 

(a) Tenant’s request for consent to any transfer described in Section 9.01 shall
set forth in writing the details of the proposed transfer, including the name,
business and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and the rent and security
deposit payable under any proposed assignment or sublease), and any other
information Landlord deems relevant. Landlord shall have the right to withhold
consent, if reasonable, or to grant consent, based on the following factors: (i)
the business of the proposed assignee or subtenant and the proposed use of the
Property; (ii) the net worth and financial reputation of the proposed assignee
or subtenant; (iii) Tenant’s compliance with all of its obligations under the
Lease; and (iv) such other factors as Landlord may reasonably deem relevant. If
Landlord objects to a proposed assignment solely because of the net worth and/or
financial reputation of the proposed assignee, tenant may nonetheless sublease
(but not assign), all or a portion of the Property to the proposed transferee,
but only on the other terms of the proposed transfer.

 

(b) If Tenant assigns or subleases, the following shall apply:

 

(i) Tenant shall pay to Landlord as Additional Rent under the Lease the
Landlord’s Share (stated in Section 1.13) of the Profit (defined below) on such
transaction as and when received by Tenant, unless Landlord gives written notice
to Tenant and the assignee or subtenant that Landlord’s Share shall be paid by
the assignee or subtenant to Landlord directly. The “Profit” means (A) all
amounts paid to Tenant for such assignment or sublease, including “key” money,
monthly rent in excess of the monthly rent payable under the Lease, and all fees
and other consideration paid for the assignment or sublease, including fees
under any collateral agreements, less (B) costs and expenses directly incurred
by Tenant in connection with the execution and performance of such assignment or
sublease for real estate broker’s commissions and costs of renovation or
construction of tenant improvements required under such assignment or sublease.
Tenant is entitled to recover such costs and expenses before Tenant is obligated
to pay the Landlord’s Share to Landlord. The Profit in the case of a sublease of
less than all the Property is the rent allocable to the subleased space as a
percentage on a square footage basis.

 

(ii) Tenant shall provide Landlord a written statement certifying all amounts to
be paid from any assignment or sublease of the Property within thirty (30) days
after the transaction documentation is signed, and Landlord may inspect Tenant’s
books and records to verify the accuracy of such statement. On written request,
Tenant shall promptly furnish to Landlord copies of all the transaction
documentation, all of which shall be certified by Tenant to be complete, true
and correct. Landlord’s receipt of Landlord’s Share shall not be a consent to
any further assignment or subletting. The breach of Tenant’s obligation under
this Paragraph 9.05(b) shall be a material default of the Lease.

 

Section 9.06. No Merger. No merger shall result from Tenant’s sublease of the
Property under this Article Nine, Tenant’s surrender of this Lease or the
termination of this Lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.

 

© 1988  

California Chapters of the

Society of Industrial and

Office Realtors,® Inc.

   10   Initials      

/s/ DR

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       (Multi-Tenant Net Form)      

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ARTICLE TEN: DEFAULTS; REMEDIES

 

Section 10.01. Covenants and Conditions. Tenant’s performance of each of
Tenant’s obligations under this Lease is a condition as well as a covenant.
Tenant’s right to continue in possession of the Property is conditioned upon
such performance. Time is of the essence in the performance of all covenants and
conditions.

 

Section 10.02. Defaults. Tenant shall be in material default under this Lease:

 

(a) If Tenant abandons the Property or if Tenant’s vacation of the Property
results in the cancellation of any insurance described in Section 4.04;

 

(b) If Tenant fails to pay rent or any other charge within ten (10) business
days from the date when due after one (1) business day’s written notice from
Landlord;

 

(c) If Tenant fails to perform any of Tenant’s non-monetary obligations under
this Lease for a period of thirty (30) days after written notice from Landlord;
provided that if more than thirty (30) days are required to complete such
performance, Tenant shall not be in default if Tenant commences such performance
within the thirty (30) -day period and thereafter diligently pursues its
completion. However, Landlord shall not be required to give such notice if
Tenant’s failure to perform constitutes a non-curable breach of this Lease. The
notice required by this Paragraph is intended to satisfy any and all notice
requirements imposed by law on Landlord and is not in addition to any such
requirement.

 

(d) (i) If Tenant makes a general assignment or general arrangement for the
benefit of creditors; (ii) if a petition for adjudication of bankruptcy or for
reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant’s assets located at the
Property or of Tenant’s interest in this Lease and possession is not restored to
Tenant within thirty (30) days; or (iv) if substantially all of Tenant’s assets
located at the Property or of Tenant’s interest in this Lease is subjected to
attachment, execution or other judicial seizure which is not discharged within
thirty (30) days. If a court of competent jurisdiction determines that any of
the acts described in this subparagraph (d) is not a default under this Lease,
and a trustee is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant’s interest hereunder,
then Landlord shall receive, as Additional Rent, the excess, if any, of the rent
(or any other consideration) paid in connection with such assignment or sublease
over the rent payable by Tenant under this Lease.

 

(e) If any guarantor of the Lease revokes or otherwise terminates, or purports
to revoke or otherwise terminate, any guaranty of all or any portion of Tenant’s
obligations under the Lease. Unless otherwise expressly provided, no guaranty of
the Lease is revocable.

 

Section 10.03. Remedies. On the occurrence of any material default by Tenant,
Landlord may, at any time thereafter, with or without notice or demand and
without limiting Landlord in the exercise of any right or remedy which Landlord
may have:

 

(a) Terminate Tenant’s right to possession of the Property by any lawful means,
in which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Property to Landlord. In such event, Landlord shall be
entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant’s default, including (i) the worth at the time of the award of the unpaid
Base Rent, Additional Rent and other charges which Landlord had earned at the
time of the termination; (ii) the worth at the time of the award of the amount
by which the unpaid Base Rent, Additional Rent and other charges which Landlord
would have earned after termination until the time of the award exceeds the
amount of such rental loss that Tenant proves Landlord could have reasonably
avoided; (iii) the worth at the time of the award of the amount by which the
unpaid Base Rent, Additional Rent and other charges which Tenant would have paid
for the balance of the Lease term after the time of award exceeds the amount of
such rental loss that Tenant proves Landlord could have reasonably avoided; and
(iv) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under the
Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, any costs or expenses Landlord incurs
in maintaining or preserving the Property after such default, the cost of
recovering possession of the Property, expenses of reletting, including
necessary renovation or alteration of the Property, Landlord’s reasonable
attorneys’ fees incurred in connection therewith, and any real estate commission
paid or payable. As used in subparts (i) and (ii) above, the “worth at the time
of the award” is computed by allowing interest on unpaid amounts at the rate of
fifteen percent (15%) per annum, or such lesser amount as may then be the
maximum lawful rate. As used in subpart (iii) above, the “worth at the time of
the award” is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award, plus one percent
(1%). If Tenant has abandoned the Property, Landlord shall have the option of
(i) retaking possession of the Property and recovering from Tenant the amount
specified in this Paragraph 10.03(a), or (ii) proceeding under Paragraph
10.03(b);

 

(b) Maintain Tenant’s right to possession, in which case this Lease shall
continue in effect whether or not Tenant has abandoned the Property. In such
event, Landlord shall be entitled to enforce all of Landlord’s rights and
remedies under this Lease, including the right to recover the rent as it becomes
due;

 

(c) Pursue any other remedy now or hereafter available to Landlord under the
laws or judicial decisions of the state in which the Property is located.

 

© 1988  

California Chapters of the

Society of Industrial and

Office Realtors,® Inc.

   11   Initials      

/s/ DR

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       (Multi-Tenant Net Form)      

/s/ JNA /s/ TBW

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Section 10.04. Repayment of “Free” Rent. If this Lease provides for a
postponement of any monthly rental payments, a period of “free” rent or other
rent concession, such postponed rent or “free” rent is called the “Abated Rent”.
Tenant shall be credited with having paid all of the Abated Rent on the
expiration of the of the Lease Term only if Tenant has fully, faithfully, and
punctually performed all of Tenant’s obligations hereunder, including the
payment of all rent (other than the Abated Rent) and all other monetary
obligations and the surrender of the Property in the physical condition required
by this Lease. Tenant acknowledges that its right to receive credit for the
Abated Rent is absolutely conditioned upon Tenant’s full, faithful and punctual
performance of its obligations under this Lease. If Tenant defaults and does not
cure within any applicable grace period, the Abated Rent shall immediately
become due and payable in full and this Lease shall be enforced as if there were
no such rent abatement or other rent concession. In such case Abated Rent shall
be calculated based on the full initial rent payable under this Lease.

 

Section 10.05. Automatic Termination. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence of
any act which affirms the Landlord’s intention to terminate the Lease as
provided in Section 10.03 hereof, including the filing of an unlawful detainer
action against Tenant. On such termination, Landlord’s damages for default shall
include all costs and fees, including reasonable attorneys’ fees that Landlord
incurs in connection with the filing, commencement, pursuing and/or defending of
any action in any bankruptcy court or other court with respect to the Lease; the
obtaining of relief from any stay in bankruptcy restraining any action to evict
Tenant; or the pursuing of any action with respect to Landlord’s right to
possession of the Property. All such damages suffered (apart from Base Rent and
other rent payable hereunder) shall constitute pecuniary damages which must be
reimbursed to Landlord prior to assumption of the Lease by Tenant or any
successor to Tenant in any bankruptcy or other proceeding.

 

Section 10.06. Cumulative Remedies. Landlord’s exercise of any right or remedy
shall not prevent it from exercising any other right or remedy.

 

ARTICLE ELEVEN: PROTECTION OF LENDERS

 

Section 11.01. Subordination. Landlord shall have the right to subordinate this
Lease to any ground lease, deed of trust or mortgage encumbering the Property,
any advances made on the security thereof and any renewals, modifications,
consolidations, replacements or extensions thereof, whenever made or recorded.
Tenant shall cooperate with Landlord and any lender which is acquiring a
security interest in the Property or the Lease. Tenant shall execute such
further documents and assurances as such lender may require, provided that
Tenant’s obligations under this Lease shall not be increased in any material way
(the performance of ministerial acts shall not be deemed material), and Tenant
shall not be deprived of its rights under this Lease. Tenant’s right to quiet
possession of the Property during the Lease Term shall not be disturbed if
Tenant pays the rent and performs all of Tenant’s obligations under this Lease
and is not otherwise in default. If any ground lessor, beneficiary or mortgagee
elects to have this Lease prior to the lien of its ground lease, deed of trust
or mortgage and gives written notice thereof to Tenant, this Lease shall be
deemed prior to such ground lease, deed of trust or mortgage whether this Lease
is dated prior or subsequent to the date of said ground lease, deed of trust or
mortgage or the date of recording thereof.

 

Section 11.02. Attornment. If Landlord’s interest in the Property is acquired by
any ground lessor, beneficiary under a deed of trust, mortgagee, or purchaser at
a foreclosure sale, Tenant shall attorn to the transferee of or successor to
Landlord’s interest in the Property and recognize such transferee or successor
as Landlord under this Lease. Tenant waives the protection of any statute or
rule of law which gives or purports to give Tenant any right to terminate this
Lease or surrender possession of the Property upon the transfer of Landlord’s
interest.

 

Section 11.03. Signing of Documents. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such attornment
or subordination or agreement to do so. If Tenant fails to do so within ten (10)
days after written request, Tenant hereby makes, constitutes and irrevocably
appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.

 

Section 11.04. Estoppel Certificates.

 

(a) Upon either party’s written request, the other party shall execute,
acknowledge and deliver to the requesting party a written statement certifying:
(i) that none of the terms or provisions of this Lease have been changed (or if
they have been changed, stating how they have been changed); (ii) that this
Lease has not been cancelled or terminated; (iii) the last date of payment of
the Base Rent and other charges and the time period covered by such payment;
(iv) that the responding party is not in default under this Lease (or, if
responding party is claimed to be in default, stating why); and (v) such other
representations or information with respect to responding party or the Lease as
the requesting party may reasonably request or in the case of Landlord, which
any prospective purchaser or encumbrancer of the Property may require. The
responding party shall deliver such statement to the other party within ten (10)
days after the request thereof. Landlord may give any such statement by Tenant
to any prospective purchaser or encumbrancer of the Property. Such purchaser or
encumbrancer may rely conclusively upon such statement as true and correct.
Landlord shall be entitled to receive information concerning the terms and
conditions of any sublease or assignment, whether Landlord has consented thereto
or not.

 

        (b) If the responding party does not deliver such statement to the other
party within such ten (10)-day period, requesting party, and any prospective
purchaser or encumbrancer, may conclusively presume and rely upon the following
facts: (i) that the terms and provisions of this Lease have not been changed
except as otherwise represented by the requesting party; (ii) that this Lease
has not been cancelled or terminated except as otherwise represented by the
requesting party; (iii) that not more than one month’s Base Rent or other
charges have been paid in advance; and (iv) that Landlord is not in default
under the Lease. In such event, the party charged with responding shall be
estopped from denying the truth of such facts.

 

© 1988  

California Chapters of the

Society of Industrial and

Office Realtors,® Inc.

   12   Initials      

/s/ DR

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       (Multi-Tenant Net Form)      

/s/ JNA /s/ TBW

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                 FORM SMN                 

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Section 11.05. Tenant’s Financial Condition. Within ten (10) days after written
request from Landlord, Tenant shall deliver to Landlord such financial
statements as Landlord reasonably requires to verify the net worth of Tenant or
any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall
deliver to any lender designated by Landlord any financial statements required
by such lender to facilitate the financing or refinancing of the Property.
Tenant represents and warrants to Landlord that each such financial statement is
a true and accurate statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the purposes set
forth in this Lease.

 

ARTICLE TWELVE: LEGAL COSTS

 

Section 12.01. Legal Proceedings. If Tenant or Landlord shall be in breach or
default under this Lease, such party (the “Defaulting Party”) shall reimburse
the other party (the “Nondefaulting Party”) upon demand for any reasonable costs
or expenses that the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the provisions
of this Lease is commenced, the court in such action shall award to the party in
whose favor a judgment is entered, a reasonable sum as attorneys’ fees and
costs. The losing party in such action shall pay such attorneys’ fees and costs.
Tenant shall also indemnify Landlord against and hold Landlord harmless from all
costs, expenses, demands and liability Landlord may incur if Landlord becomes or
is made a party to any claim or action (a) instituted by Tenant against any
third party, or by any third party against Tenant, or by or against any person
holding any interest under or using the Property by license of or agreement with
Tenant; (b) for foreclosure of any lien for labor or material furnished to or
for Tenant or such other person; (c) otherwise arising out of or resulting from
any act or transaction of Tenant or such other person; or (d) necessary to
protect Landlord’s interest under this Lease in a bankruptcy proceeding of
Tenant, or other proceeding of Tenant under Title 11 of the United States Code,
as amended. Tenant shall defend Landlord against any such claim or action at
Tenant’s expense with counsel reasonably acceptable to Landlord or, at
Landlord’s election, Tenant shall reimburse Landlord for any legal fees or costs
Landlord incurs in any such claim or action.

 

Section 12.02. Landlord’s Consent. Tenant shall pay Landlord’s reasonable
attorneys’ fees incurred in connection with Tenant’s request for Landlord’s
consent under Article Nine (Assignment and Subletting), or in connection with
any other act which Tenant proposes to do and which requires Landlord’s consent.

 

ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS

 

Section 13.01. Non-Discrimination. Tenant promises, and it is a condition to the
continuance of this Lease, that there will be no discrimination against, or
segregation of, any person or group of persons on the basis of race, color, sex,
creed, national origin or ancestry in the leasing, subleasing, transferring,
occupancy, tenure or use of the Property or any portion thereof.

 

Section 13.02. Landlord’s Liability; Certain Duties.

 

(a) As used in this Lease, the term “Landlord” means only the current owner or
owners of the fee title to the Property or Project or the leasehold estate under
a ground lease of the Property or Project at the time in question. Each Landlord
is obligated to perform the obligations of Landlord under this Lease only during
the time such Landlord owns such interest or title. Any Landlord who transfers
its title or interest is relieved of all liability with respect to the
obligations of Landlord under this Lease to be performed on or after the date of
transfer provided the successor Landlord expressly assumes Landlord’s
obligations for the remainder of the Lease. However, each Landlord shall deliver
to its transferee all funds that Tenant previously paid if such funds have not
yet been applied under the terms of this Lease.

 

(b) Tenant shall give written notice of any failure by Landlord to perform any
of its obligations under this Lease to Landlord and to any ground lessor,
mortgagee or beneficiary under any deed of trust encumbering the Property whose
name and address have been furnished to Tenant in writing. Landlord shall not be
in default under this Lease unless Landlord (or such ground lessor, mortgagee or
beneficiary) fails to cure such non-performance within thirty (30) days after
receipt of Tenant’s notice. However, if such non-performance reasonably requires
more than thirty (30) days to cure, Landlord shall not be in default if such
cure is commenced within such thirty (30) -day period and thereafter diligently
pursued to completion; provided that, in the event such default is not
substantially cured within one hundred eighty (180) days from delivery of Notice
from Tenant hereunder, Tenant may terminate this Lease.

 

(c) Notwithstanding any term or provision herein to the contrary, the liability
of Landlord for the performance of its duties and obligations under this Lease
is limited to Landlord’s interest in the Property and the Project, and neither
the Landlord nor its partners, shareholders, officers or other principals shall
have any personal liability under this Lease.

 

Section 13.03. Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.

 

        Section 13.04. Interpretation. The captions of the Articles or Sections
of this Lease are to assist the parties in reading this Lease and are not part
of the terms or provisions of this Lease. Whenever required by the context of
this Lease, the singular shall include the plural and the plural shall include
the singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term “Tenant” shall include Tenant’s agents, employees, contractors,
invitees, successors or others using the Property with Tenant’s expressed or
implied permission.

 

© 1988  

California Chapters of the

Society of Industrial and

Office Realtors,® Inc.

   13   Initials      

/s/ DR

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       (Multi-Tenant Net Form)      

/s/ JNA /s/ TBW

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                 FORM SMN                 

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Section 13.05. Incorporation of Prior Agreements; Modifications. This Lease is
the only agreement between the parties pertaining to the lease of the Property
and no other agreements are effective. All amendments to this Lease shall be in
writing and signed by all parties. Any other attempted amendment shall be void.

 

Section 13.06. Notices. All notices required or permitted under this Lease shall
be in writing and shall be personally delivered or sent by certified mail,
return receipt requested, postage prepaid. Notices to Tenant shall be delivered
to the address specified in Section 1.03 above, except that upon Tenant’s taking
possession of the Property, the Property shall be Tenant’s address for notice
purposes. Notices to Landlord shall be delivered to the address specified in
Section 1.02 above. All notices shall be effective upon delivery. Either party
may change its notice address upon written notice to the other party.

 

Section 13.07. Waivers. All waivers must be in writing and signed by the waiving
party. Landlord’s failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.

 

Section 13.08. No Recordation. Tenant shall not record this Lease without prior
written consent from Landlord. However, either Landlord or Tenant may require
that a “Short Form” memorandum of this Lease executed by both parties be
recorded. The party requiring such recording shall pay all transfer taxes and
recording fees.

 

Section 13.09. Binding Effect; Choice of Law. This Lease binds any party who
legally acquires any rights or interest in this Lease from Landlord or Tenant.
However, Landlord shall have no obligation to Tenant’s successor unless the
rights or interests of Tenant’s successor are acquired in accordance with the
terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.

 

Section 13.10. Corporate Authority; Partnership Authority. If any party hereto
is a corporation, each person signing this Lease on behalf of such party
represents and warrants that he has full authority to do so and that this Lease
binds the corporation. Within thirty (30) days after this Lease is signed, each
corporate party shall deliver to the other party a certified copy of a
resolution of its Board of Directors authorizing the execution of this Lease or
other evidence of such authority reasonably acceptable to the party entitled
thereto. If Tenant is a partnership, each person or entity signing this Lease
for Tenant represents and warrants that he or it is a general partner of the
partnership, that he or it has full authority to sign for the partnership and
that this Lease binds the partnership and all general partners of the
partnership. Tenant shall give written notice to Landlord of any general
partner’s withdrawal or addition. Within thirty (30) days after this Lease is
signed, Tenant shall deliver to Landlord a copy of Tenant’s recorded statement
of partnership or certificate of limited partnership.

 

Section 13.11. Joint and Several Liability. All parties signing this Lease as
Tenant shall be jointly and severally liable for all obligations of Tenant.

 

Section 13.12. Force Majeure. If Landlord or Tenant cannot perform any of its
obligations due to events beyond Landlord’s or Tenant’s control, the time
provided for performing such obligations shall be extended by a period of time
equal to the duration of such events. Events beyond Landlord’s or Tenant’s
control include, but are not limited to, acts of God, war, civil commotion,
labor disputes, strikes, fire, flood or other casualty, shortages of labor or
material, government regulation or restriction and weather conditions.

 

Section 13.13. Execution of Lease. This Lease may be executed in counterparts
and, when all counterpart documents are executed, the counterparts shall
constitute a single binding instrument. Landlord’s delivery of this Lease to
Tenant shall not be deemed to be an offer to lease and shall not be binding upon
either party until executed and delivered by both parties.

 

Section 13.14. Survival. All representations and warranties of Landlord and
Tenant shall survive the termination of this Lease.

 

ARTICLE FOURTEEN: BROKERS

 

Section 14.01. Broker’s Fee. When this Lease is signed by and delivered to both
Landlord and Tenant, Landlord shall pay a real estate commission to Landlord’s
Broker named in Section 1.08 above, if any, as provided in the written agreement
between Landlord and Landlord’s Broker. Landlord shall pay Landlord’s Broker a
commission if Tenant exercises any option to extend the Lease Term or to buy the
Property, or any similar option or right which Landlord may grant to Tenant, or
if Landlord’s Broker is the procuring cause of any other lease or sale entered
into between Landlord and Tenant covering the Property. Such commission shall be
the amount set forth in Landlord’s Broker’s commission schedule in effect as of
the execution of this Lease. If a Tenant’s Broker is named in Section 1.08
above, Landlord’s Broker shall pay an appropriate portion of its commission to
Tenant’s Broker if so provided in any agreement between Landlord’s Broker and
Tenant’s Broker. Nothing contained in this Lease shall impose any obligation on
Landlord to pay a commission or fee to any party other than Landlord’s Broker.

 

        Section 14.02. Protection of Brokers. If Landlord sells the Property, or
assigns Landlord’s interest in this Lease, the buyer or assignee shall, by
accepting such conveyance of the Property or assignment of the Lease, be
conclusively deemed to have agreed to make all payments to Landlord’s Broker
thereafter required of Landlord under this Article Fourteen. Landlord’s Broker
shall have the right to bring a legal action to enforce or declare rights under
this provision. The prevailing party in such action shall be entitled to
reasonable attorneys’ fees to be paid by the losing party. Such attorneys’ fees
shall be fixed by the court in such action. This Paragraph is included in this
Lease for the benefit of Landlord’s Broker.

 

© 1988  

California Chapters of the

Society of Industrial and

Office Realtors,® Inc.

   14   Initials      

/s/ DR

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       (Multi-Tenant Net Form)      

/s/ JNA /s/ TBW

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                 FORM SMN                 

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Section 14.03. Broker’s Disclosure of Agency. Landlord’s Broker hereby discloses
to Landlord and Tenant and Landlord and Tenant hereby consent to Landlord’s
Broker acting in this transaction as the agent of (check one):

 

¨ Landlord exclusively; or

 

¨ both Landlord and Tenant.

 

Section 14.04. No Other Brokers. Tenant represents and warrants to Landlord that
the brokers named in Section 1.08 above are the only agents, brokers, finders or
other parties with whom Tenant has dealt who are or may be entitled to any
commission or fee with respect to this Lease or the Property.

 

ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED HERETO OR
IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED, PLEASE DRAW
A LINE THROUGH THE SPACE BELOW.

 

[Line through space in the original.]

 

Landlord and Tenant have signed this Lease at the place and on the dates
specified adjacent to their signatures below and have initialed all Riders which
are attached to or incorporated by reference in this Lease.

 

       

“LANDLORD”

Signed on                     , 19    

 

NATIONAL DISTRIBUTION AGENCY, INC.

at                                                          .

 

_______________________________________________

   

By:

 

/s/ John N. Alphson

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

       

John N. Alphson

   

Its:

 

Corporate Secretary

   

By:

 

/s/ Thomas White

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

   

Its:

 

President

       

      “TENANT”

Signed on                     , 19    

 

WINCUP HOLDINGS, INC.

at                                                          .

 

_______________________________________________

   

By:

 

/s/ Donald Rogalski

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

       

Donald Rogalski

   

Its:

 

Senior Vice President – Administration

   

By:

 

/s/ Michael V. Valenza

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

       

Michael V. Valenza

   

Its:

 

Senior Vice President – Finance & CFO

 

IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A
PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.

 

THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION OF
THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE
REALTORS,® INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE SOUTHERN
CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS,® INC., ITS
LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR
AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS
LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO
ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL
COUNSEL.

 

© 1988  

California Chapters of the

Society of Industrial and

Office Realtors,® Inc.

   15   Initials      

/s/ DR

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       (Multi-Tenant Net Form)      

/s/ JNA /s/ TBW

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                 FORM SMN                 

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Exhibit “A” to Industrial Real Estate Sublease National Distribution Agency,
Inc., Landlord WinCup Holdings, Inc., Tenant            /s/ JNA /s/ TBW

 

[Graphic Omitted]

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BASE RENT SCHEDULE

 

LEASE RIDER

 

RIDER NO. 1

 

This Rider is attached to and made a part of that certain Lease (the “Lease”)
dated February 1, 1998, between National Distribution Agency, Inc., a Delaware
corporation, as Landlord, and WinCup Holdings, Inc., as Tenant; covering the
premises constituting a portion of Project located at 211 West Cutting Blvd.,
Richmond, California (the “Property”). The terms used herein shall have the same
definitions as set forth in the Lease. The provisions of this Rider shall
supersede any inconsistent or conflicting provisions of the Lease.

 

Section 1.12 Rent and Other Charges Payable by Tenant

 

This Rider sets forth the Base Rental payable under the Lease for the first and
subsequent years.

 

   

Rental Period

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   Monthly
Base Rent

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Year 1 -  

February 1, 1998 through May 30, 1998

   $ 15,022.00    

June 1, 1998 through January 31, 1999

   $ 30,044.00 Year 2 -  

February 1, 1999 through January 31, 2000

   $ 31,080.00 Year 3 -  

February 1, 2000 through January 31, 2001

   $ 33,152.00

 

Minimum rental which would be due based on assumed CPI increase of four percent
(4%) per annum:

 

Year 4 -  

February 1, 2001 through January 31, 2002

   $ 34,478.00 Year 5 -  

February 1, 2002 through January 31, 2003

   $ 35,857.00 Year 6 -  

February 1, 2003 through January 31, 2004

   $ 37,291.00 Year 7 -  

February 1, 2004 through January 31, 2005

   $ 38,783.00

 

Notwithstanding the foregoing, the increased rental for the periods indicated
are subject to the effective CPI increase for such periods as set forth in
Section 1.12(a) of the Sublease.

 

1/12/98    Initial          

/s/ DR

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/s/ JNA /s/ TBW

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TENANT IMPROVEMENT ALLOWANCE

 

LEASE RIDER

 

RIDER NO. 2

 

This Rider is attached to and made a part of that certain Lease (the “Lease”)
dated February 1, 1998, between National Distribution Agency, Inc., a Delaware
corporation, as Landlord, and WinCup Holdings. Inc., as Tenant, covering the
premises constituting a portion of Project located at 211 West Cutting Blvd.,
Richmond, California (the “Property”). The terms used herein shall have the same
definitions as set forth in the Lease. The provisions of this Rider shall
supersede any inconsistent or conflicting provisions of the Lease.

 

The Tenant Improvement Allowance paid for by Landlord shall be amortized by
equal monthly payments over the first four (4) years of the Lease, as additional
Rent. It is estimated by WinCup Holdings, Inc., that the Tenant Improvements
shall not exceed Fifty Thousand Dollars and no/100 ($50,000). Any excess cost
over the amount of $50,000, shall be paid by, and at the sole cost, of Tenant.
It is anticipated by Landlord, that the financing charge will be ten percent
(10%) per annum for the Tenant Improvements provided by Landlord. The type and
character of Tenant Improvements, whether paid by Landlord or those at Tenant’s
option, shall be subject to approval of plans and specifications, by the
Building Department of the City of Richmond, as accepted by Sublessor and
submitted to said Building Department.

 

12/12/97    -1-   Initial      

/s/ DR

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/s/ JNA /s/ TBW

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OPTION(S) TO RENEW

 

LEASE RIDER

 

RIDER NO. 3

 

This Rider is attached to and made a part of that certain Lease (the “Lease”)
dated February 1, 1998, between National Distribution Agency, Inc., a Delaware
corporation, as landlord or Sublessor, and WinCup Holdings, Inc., a Delaware
corporation, as Tenant or Sublessee, covering the premises constituting a
portion of Project located at 211 West Cutting Blvd., Richmond, California (the
“Property”). The terms used herein shall have the same definitions as set forth
in the Lease. The provisions of this Rider shall supersede any inconsistent or
conflicting provisions of the Lease.

 

1. Option to Renew Terms.

 

Provided Sublessee shall not be in material default of any terms or conditions
of this Sublease at the time of exercise of the particular Option to Extend
provided herein, Sublessee shall have the right and option to extend the Initial
Term for two (2) five-year periods, such five year periods are herein referred
to as the “Extended Term”; provided that, the Second Extended Term shall be for
a shorter period ending concurrently with the termination of the Master Lease on
January 24, 2015, unless prior, thereto, Sublessor shall have become the owner
of the fee title of the Leased Premises. Each Extended Term shall commence on
the day next following the Term Expiration Date for the preceding Initial Term
or Extended Term unless sooner terminated as herein provided and shall terminate
on the fifth anniversary of such Extended Term Commencement Date. Sublessee may
exercise its right and option to extend the Initial Term or any applicable
Extended Term only by giving Sublessor written notice of its intention to do so
at least one hundred and twenty (120) days prior to the end of the Initial Term
or applicable Extended Term. The Sublease as extended shall be upon and subject
to the terms and conditions set forth herein for the Initial Term except for
exclusion of any free rent and, further, that the Rent (defined below) shall be
as specified in Section 2 hereof. Sublessor agrees and covenants that:

 

(a) Except for defaults committed by Sublessee, it will not commit or allow to
be committed (and if committed, it will timely cure within the periods set forth
in the Master Lease), any event which would constitute an event of default under
the Master Lease, including complying with an order or judgment of any court
having jurisdiction, pursuant to a declaratory relief, or similar action whereby
the obligation of a matter of performance under the Master Lease, involving, but
not limited to, compliance with any subsequently enacted ordinances or laws
concerning seismic retrofitting and or repair to the Leased Premises, or any
portion thereof, is disputed between Master Lessor and Sublessor, and such a
court order or judgment determines that the performance in dispute is the
obligation of Sublessor under the Master Lease.

 

(b) That it will timely exercise its rights to extend the term of the Master
Lease so that at all times the remaining term of the Master Lease is at least as
long as the remaining term of this Sublease, as the same may be extended by
Sublessee from time to time, with the exception of the Third Extension Term, as
limited above.

 

2. Personal Options.

 

The Option(s) are personal to the Tenant named in Section 1.03 of the Lease or
any Tenant’s Affiliate described in Section 9.02 of the Lease. If Tenant
subleases any portion of the Property or assigns or otherwise transfers any
interest under the Lease to an entity other than a Tenant’s Affiliate prior to
the exercise of an Option (whether with or without Landlord’s consent), such
Option and any succeeding Options shall lapse. If Tenant

 

1/12/98    1   Initial      

/s/ DR

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/s/ JNA /s/ TBW

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subleases any portion of the Property or assigns or otherwise transfers any
interest of Tenant under the Lease to an entity other than a Tenant Affiliate
after the exercise of an Option but prior to the commencement of the respective
Extension (whether with or without Landlord’s consent), such Option and any
succeeding Options shall lapse and the Lease Term shall expire as if such Option
was not exercised. If Tenant subleases any portion of the Property or assigns or
otherwise transfers any interest of Tenant under the Lease in accordance with
Article 9 of the Lease, after the exercise of an Option, and after the
commencement of the Extension related to such Option, then the term of the Lease
shall expire upon the expiration of the Extension during which such sublease or
transfer occurred and only the succeeding Options shall lapse.

 

A. Calculation of Rent.

 

The Base Rent during the Extension(s) shall be determined by the following
method:

 

  1.   Cost of Living Adjustment.

 

Rental Adjustment Date(s): The first day of the first month(s) of the 1st, and
2nd Extension(s) of the Lease Term.

 

The Base Rent shall be increased on the date(s) specified in Section A.1 above
(the “Rental Adjustment Date(s)”), (i.e., February 1, 2005, and February 1,
2010), by reference to the index described in Paragraph 1.12(a) of the Sublease,
as follows:

 

The Base Rent in effect immediately prior to the applicable Rental Adjustment
Date (the “Comparison Base Rent”), shall be increased by the percentage that the
index has increased from the month in which the payment of the comparison base
rent commenced through the month in which the applicable Rental Adjustment Date
occurs. In no event shall the base rent be reduced by reason of such
computation.

 

1/12/98    2   Initial      

/s/ DR

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/s/ JNA /s/ TBW

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