EXHIBIT 10.32



 





Exhibit 10.32




 




 




 




LEASE




CABOT INDUSTRIAL PROPERTIES, L.P.,

Landlord,




and

PORTOLA PACKAGING, INC.,

Tenant




 









 







Table of Contents




	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	1.
	 	USE AND RESTRICTIONS ON USE	 	1
	 
	 	 	 	 
	2.
	 	TERM	 	1
	 
	 	 	 	 
	3.
	 	RENT	 	2
	 
	 	 	 	 
	4.
	 	RENT ADJUSTMENTS	 	2
	 
	 	 	 	 
	5.
	 	SECURITY DEPOSIT	 	4
	 
	 	 	 	 
	6.
	 	ALTERATIONS	 	4
	 
	 	 	 	 
	7.
	 	REPAIR	 	5
	 
	 	 	 	 
	8.
	 	LIENS	 	6
	 
	 	 	 	 
	9.
	 	ASSIGNMENT AND SUBLETTING	 	6
	 
	 	 	 	 
	10.
	 	INDEMNIFICATION	 	7
	 
	 	 	 	 
	11.
	 	INSURANCE	 	7
	 
	 	 	 	 
	12.
	 	WAIVER OF SUBROGATION	 	8
	 
	 	 	 	 
	13.
	 	SERVICES AND UTILITIES	 	8
	 
	 	 	 	 
	14.
	 	HOLDING OVER	 	8
	 
	 	 	 	 
	15.
	 	SUBORDINATION	 	8
	 
	 	 	 	 
	16.
	 	RULES AND REGULATIONS	 	9
	 
	 	 	 	 
	17.
	 	REENTRY BY LANDLORD	 	9
	 
	 	 	 	 
	18.
	 	DEFAULT	 	9
	 
	 	 	 	 
	19.
	 	REMEDIES	 	10
	 
	 	 	 	 
	20.
	 	TENANT'S BANKRUPTCY OR INSOLVENCY.	 	12
	 
	 	 	 	 
	21.
	 	QUIET ENJOYMENT	 	13
	 
	 	 	 	 
	22.
	 	CASUALTY	 	13
	 
	 	 	 	 
	23.
	 	EMINENT DOMAIN	 	14
	 
	 	 	 	 
	24.
	 	SALE BY LANDLORD	 	14
	 
	 	 	 	 
	25.
	 	ESTOPPEL CERTIFICATES	 	14
	 
	 	 	 	 
	26.
	 	SURRENDER OF PREMISES	 	14
	 
	 	 	 	 
	27.
	 	NOTICES	 	15
	 
	 	 	 	 
	28.
	 	TAXES PAYABLE BY TENANT	 	15
	 
	 	 	 	 
	29.
	 	RELOCATION OF TENANT	 	15
	 
	 	 	 	 
	30.
	 	DEFINED TERMS AND HEADINGS	 	16
	 
	 	 	 	 
	31.
	 	TENANT'S AUTHORITY	 	16
	 
	 	 	 	 
	32.
	 	FINANCIAL STATEMENTS AND CREDIT REPORTS	 	16
	 
	 	 	 	 
	33.
	 	COMMISSIONS	 	16
	 
	 	 	 	 
	34.
	 	TIME AND APPLICABLE LAW	 	16
	 
	 	 	 	 
	35.
	 	SUCCESSORS AND ASSIGNS	 	16
	 
	 	 	 	 
	36.
	 	ENTIRE AGREEMENT	 	16
	 
	 	 	 	 
	37.
	 	EXAMINATION NOT OPTION	 	16







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Table of Contents

(continued)




	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	38.
	 	RECORDATION	 	16
	 
	 	 	 	 
	39.
	 	OPTION TO EXTEND	 	17
	 
	 	 	 	 
	40.
	 	RIGHT OF FIRST OFFER	 	17
	 
	 	 	 	 
	41.
	 	FORCE MAJEURE	 	18
	 
	 	 	 	 
	42.
	 	LIMITATION OF LANDLORD'S LIABILITY	 	18






EXHIBIT A — FLOOR PLAN DEPICTING THE PREMISES


EXHIBIT A-1 — SITE PLAN DEPICTING THE PREMISES


EXHIBIT B — INITIAL ALTERATIONS


EXHIBIT C — COMMENCEMENT DATE MEMORANDUM


EXHIBIT D — RULES AND REGULATIONS


EXHIBIT E — HAZARDOUS MATERIALS


EXHIBIT F — LIST OF HAZARDOUS MATERIALS




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MULTI-TENANT INDUSTRIAL NET LEASE




REFERENCE PAGES




	 	 	 
	BUILDING:

	 	4 South 84th Avenue, Tolleson, Arizona
	 
	 	 
	LANDLORD:

	 	Cabot Industrial Properties, L.P., a Delaware limited
partnership
	 
	 	 
	LANDLORD’S ADDRESS:

	 	c/o RREEF Management Company
	

	 	2201 East Camelback Road, Suite 230B
	

	 	Phoenix, Arizona 85016
	 
	 	 
	WIRE INSTRUCTIONS AND/OR ADDRESS FOR RENT PAYMENT:

	 	Cabot Industrial Properties, L.P. (Lock Box #6)
	

	 	75 Remittance Dr., Suite 1431
	

	 	Chicago, IL. 60675-1431
	 
	 	 
	LEASE REFERENCE DATE:

	 	June 5, 2003
	 
	 	 
	TENANT:

	 	Portola Packaging, Inc., a Delaware corporation
	 
	 	 
	TENANT’S NOTICE ADDRESS:
	 	 
	     (a) As of beginning of Term:

	 	4 South 84th Avenue, Suite 200
	

	 	Tolleson, Arizona
	

	 	Attn: Plant Manager
	 
	 	 
	     (b) Prior to beginning of Term (if different):

	 	890 Faulstich Court
	

	 	San Jose, CA 95112
	

	 	Attn: Dennis Berg
	 
	 	 
	PREMISES ADDRESS:

	 	4 South 84th Avenue, Suite 200
	

	 	Tolleson, Arizona 85353
	 
	 	 
	PREMISES RENTABLE AREA:

	 	Approximately 115,000 sq. ft. (for outline of
Premises see Exhibit A)
	 
	 	 
	USE:

	 	Operation of a plastics manufacturing business, and
the office uses related thereto
	 
	 	 
	SCHEDULED COMMENCEMENT DATE:

	 	November 1, 2003
	 
	 	 
	TERM OF LEASE:

	 	Fifteen (15) years plus the Commencement Month (as
defined below), beginning on the Commencement Date
and ending on the Termination Date. The period from
the Commencement Date to the last day of the same
month is the “Commencement Month.”
	 
	 	 
	TERMINATION DATE:

	 	The last day of the one hundred and eightieth
(180th) full calendar month after (if the
Commencement Month is not a full calendar month), or
from and including (if the Commencement Month is a
full calendar month), the







iii









 





	 	 	 
	

	 	Commencement Month







	 	 	 	 	 	 	 	 	 	 	 
	ANNUAL RENT and MONTHLY INSTALLMENT OF RENT(Article 3):

	 	Months
	 	Annual Rent*
	 	Monthly Rent*

	 	 	
 
	

	 	1-6
	 	$	266,928.00	 	 	$	22,244.00	 
	

	 	7-30
	 	$	611,928.00	 	 	$	50,994.00	 
	

	 	31-60
	 	$	639,528.00	 	 	$	53,294.00	 
	

	 	61-90
	 	$	680,928.00	 	 	$	56,744.00	 
	

	 	91-120
	 	$	722,328.00	 	 	$	60,194.00	 
	

	 	121-150
	 	$	763,728.00	 	 	$	63,644.00	 
	

	 	151-180
	 	$	818,928.00	 	 	$	68,244.00	 









      	 	 	 
	 
	 	If the Commencement Date is
            other than the first(1st ) day of a calendar month, the
            Monthly Installment of Rent due for the Commencement Month shall be
            owed by Tenant on the Commencement Date (and, assuming funds are available,
            taken fromthe Security Deposit on or about that date, per Article
            3.1), prorated based upon a monthly rent amount of $50,994.00.
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	  
	 	*plus applicable sale and transaction
            privilege taxes
	 
	 	 
	 
	 	Note: The foregoing figures are subject
            to adjustment, per Article 3.1 of the Lease
	 
	 	 
	 
	 	 
	 INITIAL
              ESTIMATED MONTHLY INSTALLMENT
	 	$10,120.00
	 OF RENT ADJUSTMENTS
              (Article 4)
	 	 
	 	 	 
	 	 	Notwithstanding any contrary
            language in the Lease, Tenant shall not be obligated to pay its Proportionate
            Share of Expenses and Taxes for the first six (6) full calendar months
            of the Term of the Lease (but Tenant shall owe its Proportionate Share
            of Expenses and Taxes for the Commencement Month,which charge [assuming
            funds are available] shall be taken from the Security Deposit,
            per Article 3.1, on or about the Commencement Date)
	 	 
	  
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 	 
	 TENANT’S
              PROPORTIONATE SHARE:
	 	48.73%, based on the Premises square footage
            of 115,000 divided by the Project square footage of 236,007
	 
	 	 
	 
	 	 
	 
	 	 
	 SECURITY
              DEPOSIT:
	 	$900,000.00, which figure is subject to
            reduction to $100,000.00 in accordance with Article 3.1 of the Lease
	 
	 	 
	 
	 	 
	 
	 	 
	ASSIGNMENT/SUBLETTING
              FEE
	 	$500.00
	 
	 	 
	REAL ESTATE BROKER
              DUE COMMISSION:
	 	CB Richard Ellis, Inc. and Trammell Crow
	 
	 	 
	TENANT’S SIC
              CODE:
	 	3089
	 
	 	 
















 









 





    	 	 	 	 	 
	AMORTIZATION RATE:

	10	%
	 	 






The Reference Pages information is incorporated into and made a part of the Lease. In the event of
any conflict between any Reference Pages information and the Lease, the Lease shall control. This
Lease includes Exhibits A through D, all of which are made a part of this Lease.



    	 	 	 	 	 	 
	LANDLORD:	 	TENANT:
	 
	 	 	 	 	 
	CABOT INDUSTRIAL PROPERTIES,
          L.P.,	 	PORTOLA PACKAGING, INC.,
          a
	 	 	Delaware corporation
	a Delaware limited partnership	 	 
	 
	 	 	 	 	 
	By: 
	 	RREEF Management Company, a Delaware

        	 	By:	 
	corporation, its Authorized Agent 	 	 	

	 	 	 	 	Name:
	Name:
	 	 	 	 	 
	 
	 	
  	 	 	 
	 	 	Bret C. Borg, CPM	 	 
	 	 	 
	Title: District Manager	 	Title:
	 	 	 
	Dated: May ____, 2003	 	Dated: May ____, 2003







 









 





LEASE




     By this Lease Landlord leases to Tenant and Tenant leases from Landlord the Premises in the
Building as set forth and described on the Reference Pages. The Premises are depicted on the floor
plan attached hereto as Exhibit A, and the Building is depicted on the site plan attached
hereto as Exhibit A-1. Landlord and Tenant agree that said Exhibit A and Exhibit A-1 is
an estimate only and that the parties shall amend this Lease to attach the final Exhibit A and
Exhibit A-1 once same has been finalized, which shall occur prior to the commencement of
construction pursuant to Exhibit B. The Reference Pages, including all terms defined thereon, are
incorporated as part of this Lease.


1. USE AND RESTRICTIONS ON USE.



     1.1 The Premises are to be used solely for the purposes set forth on the Reference Pages.
Landlord represents, to the best of its knowledge without any duty of inquiry or investigation,
that as of the Lease Reference Date the Building and Premises comply with all governmental laws,
ordinances, and regulations applicable to the Building and its occupancy. Landlord shall promptly
comply with all governmental orders and directions for the correction, prevention and abatement of
any violation in the Building or appurtenant land, caused or permitted by, or resulting from the
obligations of Landlord, all at Landlord’s sole expense. Tenant shall not do or permit anything to
be done in or about the Premises which will in any way materially obstruct or interfere with the
rights of other tenants or occupants of the Building or materially injure, annoy, or disturb them,
or allow the Premises to be used for any, unlawful or objectionable purpose, or commit any waste.
Tenant shall not do, permit or suffer in, on, or about the Premises the sale of any alcoholic
liquor without the written consent of Landlord first obtained. Tenant shall comply with all
governmental laws, ordinances and regulations applicable to the use of the Premises and its
occupancy and shall promptly comply with all governmental orders and directions for the correction,
prevention and abatement of any violations in the Premises, the Building or appurtenant land,
caused or permitted by, or resulting from the specific use by, Tenant of the Premises, all at
Tenant’s sole expense. Tenant shall not do or permit anything to be done on or about the Premises
or bring or keep anything into the Premises which will in any way materially increase the rate of,
invalidate or prevent the procuring of any insurance protecting against loss or damage to the
Building or any of its contents by fire or other casualty or against liability for damage to
property or injury to persons in or about the Building or any part thereof. Tenant’s obligations,
liabilities and responsibilities in regard to the handling, use, manufacture, storage or disposal
of Hazardous Materials (as defined in Exhibit E) are set forth in Exhibit E.



     1.2 Tenant and its agents, contractors, employees, licensees or invitees (collectively, the
“Tenant Entities”) will be entitled to the non-exclusive use of the common areas of the Building as
they exist from time to time during the Term, including the parking facilities, subject to
Landlord’s rules and regulations (which rules and regulations shall apply uniformly to all tenants
at the Building) regarding such use. However, in no event will Tenant or the Tenant Entities park
more vehicles in the parking facilities than Tenant’s Proportionate Share of the total parking
spaces available for common use (provided that the number of total parking spaces allocable to
Tenant shall at no time be less than the number of total parking spaces allocable to Tenant on the
Lease Reference Date). The foregoing shall not be deemed to provide Tenant with an exclusive right
to any parking spaces or any guaranty of the availability of any particular parking spaces or any
specific number of parking spaces (provided that the number of total parking spaces allocable to
Tenant shall at no time be less than the number of total parking spaces allocable to Tenant on the
Lease Reference Date).


2. TERM.



     2.1 The Term of this Lease shall begin on the date (“Commencement Date”) that Landlord shall
tender possession of the Premises to Tenant (as defined in Section 7 of Exhibit B), and shall
terminate on the date as shown on the Reference Pages (“Termination Date”), unless sooner
terminated by the provisions of this Lease. Landlord shall tender possession of the Premises with
all the work, if any, to be performed by Landlord pursuant to Exhibit B to this Lease
substantially completed. Tenant shall deliver a punch list of items not completed or which need
repair within thirty (30) days after Landlord tenders possession of the Premises and Landlord
agrees to proceed with due diligence to complete or repair, as applicable, such items. Tenant
shall, at Landlord’s request, execute and deliver a memorandum agreement provided by Landlord in
the form of Exhibit C attached hereto, setting forth the actual Commencement Date,
Termination Date and, if necessary, a revised rent schedule. Should Tenant fail to do so within
thirty (30) days after Landlord’s request, the information set forth in such memorandum provided by
Landlord shall be conclusively presumed to be agreed and correct.



     2.2 The general contractor being retained to construct the Initial Improvements (as defined in
Exhibit B) shall provide the parties with a time line indicating, among other things, the date by
which it intends to complete the Initial Improvements. Promptly after receipt of the time line,
Landlord and Tenant shall meet to mutually agree upon the date by



1









 






which they expect the Initial Improvements to be completed (which date is, for the purposes of
this Section 2.2, referred to as the “New Scheduled Commencement Date”). In the event of the
inability of Landlord to deliver possession of the Premises by the New Scheduled Commencement Date
for any reason, Landlord shall not be liable for any damages resulting from such inability, but
Tenant shall not be liable for any rent until the time when Landlord can, after notice to Tenant,
deliver possession of the Premises to Tenant. No such failure to give possession by the New
Scheduled Commencement Date shall affect the other obligations of Tenant under this Lease, except
that if Landlord is unable to deliver possession of the Premises within one hundred twenty (120)
days after the New Scheduled Commencement Date (other than as a result of strikes, shortages of
materials, holdover tenancies or similar matters beyond the reasonable control of Landlord such as
a Tenant Delay (as defined below and in Paragraph 4 of Exhibit B and Tenant is notified by Landlord
in writing as to such delay), Tenant shall have the option to terminate this Lease unless said
delay is a result of: (a) Tenant’s failure to agree to plans and specifications and/or
construction cost estimates or bids; (b) Tenant’s request for materials, finishes or installations
other than Landlord’s standard except those, if any, that Landlord shall have expressly agreed to
furnish without extension of time agreed by Landlord; (c) Tenant’s material change in any plans or
specifications; or, (d) performance or completion by a party employed by Tenant (each of the
foregoing, a “Tenant Delay”). To be effective, Tenant must exercise said right of termination
within ten (10) business days after the end of said one hundred twenty (120) day period, as said
period may be extended as otherwise provided herein. If any delay in the Commencement Date is the
result of a Tenant Delay, the Commencement Date shall be the date that Landlord would have
tendered possession of the Premises to Tenant but for such Tenant Delay.



     2.3 In the event Landlord permits Tenant, or any agent, employee or contractor of Tenant, to
enter, use or occupy the Premises prior to the Commencement Date, such entry, use or occupancy
shall be subject to all the provisions of this Lease other than the payment of Rent and Tenant’s
Proportionate Share of Expenses and Taxes, including, without limitation, Tenant’s compliance with
the insurance requirements of Article 11. Said early possession shall not advance the Termination
Date.



     2.4 Landlord shall be responsible for ensuring that a railroad service to and from the
Premises is available within six (6) months of the Commencement Date. In the event that railroad
service is not available to the Premises on or before the Commencement Date, Landlord shall pay to
Tenant as negotiated and agreed upon liquidated damages for such failure an amount equal to Eight
Hundred Dollars ($800) per day for each day after the Commencement Date until railroad service to
and from the Premises is available. Any sums paid to Tenant under the foregoing sentence shall be
deemed to be negotiated and agreed upon liquidated damages paid to Tenant by reason of Landlord’s
failure to ensure the availability of railroad service to and from the Premises, the parties hereby
agreeing that said amount is a reasonable forecast of just compensation for the harm that may be
caused to Tenant as a result of Landlord’s failure to ensure the availability of railroad service
to and from the Premises and that Tenant’s harm in the event of such failure would be incapable of
accurate estimation or very difficult to accurately estimate. If railroad service is not available
to and from the Premises within six (6) months of the Commencement Date, then Tenant shall a
one-time right to cancel and terminate the Lease, which right of cancellation must be exercised by
Tenant giving written notice thereof to Landlord within ten (10) business days of the end of said
six (6) month period. The six (6) month period referenced herein shall be extended as the result
of strikes, shortages of materials, or similar matters beyond the reasonable control of Landlord
such as a Tenant Delay (as defined in Section 2.2 above and in Paragraph 4 of Exhibit B).


3. RENT.



     3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from time to time by paying the
Monthly Installment of Rent then in effect on or before the first day of each full calendar month
during the Term, except that the first full month’s rent shall be paid upon the execution of this
Lease. The Monthly Installment of Rent in effect at any time shall be one-twelfth (1/12) of the
Annual Rent in effect at such time. Rent for any period during the Term which is less than a full
month shall be a prorated portion of the Monthly Installment of Rent based upon the number of days
in such month. Said rent shall be paid to Landlord, without deduction or offset and without notice
or demand, at the Rent Payment Address, as set forth on the Reference Pages, or to such other
person or at such other place as Landlord may from time to time designate in writing. If an Event
of Default occurs, Landlord may require by notice to Tenant that all subsequent rent payments be
made by an automatic payment from Tenant’s bank account to Landlord’s account, without cost to
Landlord. Tenant must implement such automatic payment system prior to the next scheduled rent
payment or within ten (10) business days after Landlord’s notice, whichever is later. Unless
specified in this Lease to the contrary, all amounts and sums payable by Tenant to Landlord
pursuant to this Lease shall be deemed additional rent. Notwithstanding anything to the contrary
set forth herein,



2









 






Landlord acknowledges that the first Eight Hundred Thousand Dollars ($800,000.00) due from
Tenant under the Lease (whether defined or referenced as a Monthly Installment of Rent, Tenant’s
Proportionate Share of Expenses and/or Taxes, additional rent, or otherwise) shall be taken by
Landlord from Tenant’s Security Deposit of Nine Hundred Thousand Dollars ($900,000.00), such that,
over time and absent any Event of Default by Tenant under the Lease, the Security Deposit will be
reduced to One Hundred Thousand Dollars ($100,000.00)



     }3.2 Tenant recognizes that late payment of any rent or other sum due under this Lease will
result in administrative expense to Landlord, the extent of which additional expense is extremely
difficult and economically impractical to ascertain. Tenant therefore agrees that if rent or any
other sum is not paid within five (5) days after Landlord gives Tenant written notice of Tenant’s
alleged failure to pay same when due and payable pursuant to this Lease, a late charge shall be
imposed in an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) four percent (4%)
of the unpaid rent or other payment. The amount of the late charge to be paid by Tenant shall be
reassessed and added to Tenant’s obligation for each successive month until paid. The provisions
of this Section 3.2 in no way relieve Tenant of the obligation to pay rent or other payments on or
before the date on which they are due, nor do the terms of this Section 3.2 in any way affect
Landlord’s remedies pursuant to Article 19 of this Lease in the event said rent or other payment is
unpaid after date due.


4. RENT ADJUSTMENTS.



     4.1 For the purpose of this Article 4, the following terms are defined as follows:



            4.1.1 Lease Year: Each calendar year falling partly or wholly within the Term.



            4.1.2 Expenses: All costs of operation, maintenance, repair, replacement and management of
the Building, as determined in accordance with generally accepted accounting principles,
consistently applied, including the following costs by way of illustration, but not limitation:
water and sewer charges; insurance charges of or relating to all insurance policies and
endorsements deemed by Landlord to be reasonably necessary or desirable and relating in any manner
to the protection, preservation, or operation of the Building or any part thereof; utility costs,
including, but not limited to, the cost of heat, light, power, steam, gas; waste disposal; the cost
of janitorial services; the cost of security and alarm services (including any central station
signaling system); costs of cleaning, repairing, replacing and maintaining the common areas,
including parking and landscaping, window cleaning costs; labor costs; costs and expenses of
managing the Building including management and/or administrative fees; air conditioning maintenance
costs; elevator maintenance fees and supplies; material costs; equipment costs including the cost
of maintenance, repair and service agreements and rental and leasing costs; purchase costs of
equipment; current rental and leasing costs of items which would be capital items if purchased;
tool costs; licenses, permits and inspection fees; wages and salaries of employees employed solely
at the Building; employee benefits and payroll taxes; any sales, use or service taxes incurred in
connection therewith. In addition, Landlord shall be entitled to recover, as additional rent
(which, along with any other capital expenditures constituting Expenses, Landlord may either
include in Expenses or cause to be billed to Tenant along with Expenses and Taxes but as a separate
item), Tenant’s Proportionate Share of: (i) an allocable portion of the cost of capital improvement
items which are reasonably calculated to reduce operating expenses; (ii) the cost of fire
sprinklers and suppression systems and other life safety systems; and (iii) other capital expenses
which are required under any governmental laws, regulations or ordinances which were not applicable
to the Building at the time it was constructed; but the costs described in this sentence shall be
amortized over the reasonable life of such expenditures in accordance with such reasonable life and
amortization schedules as shall be determined by Landlord in accordance with generally accepted
accounting principles, with interest on the unamortized amount at one percent (1%) in excess of the
Wall Street Journal prime lending rate announced from time to time. Expenses shall not include any
of the following: (i) depreciation or amortization of the Building or equipment in the Building
except as provided herein; (ii) loan principal or interest payments or other financing costs; (iii)
costs of alterations of other tenants’ premises; (iv) leasing commissions; (v) interest expenses on
borrowings; .(vi) advertising costs; (vii) general overhead and administrative expenses of
Landlord, including, without limitation, accounting and legal expenses; (viii) costs of negotiating
or enforcing other leases; (ix) costs of correcting structural defects in or inadequacy of the
structural design and/or construction of the Building; (x) expenses directly resulting from the
gross negligence or willful misconduct of Landlord, its agents, employees or contractors; (xi)
direct expenses for which Landlord is reimbursed by other sources (such as warranties, insurance or
other tenants); (xii) any bad debt loss, rent loss or reserves for bad debt or rent loss; (xiii)
the expense of extraordinary services provided to other tenants in the Building; (xiv) costs
incurred by Landlord due to the violation by Landlord of the terms and conditions of any lease of
space in the Building; or (xv) insurance costs specified by Landlord’s insurance carrier as being
caused by the use, acts or omissions of any other tenant of the Building or by the nature of such
other tenant’s occupancy which create an extraordinary or unusual risk.



3









 





            4.1.3 Taxes: Real estate taxes and any other taxes, charges and assessments which are levied
with respect to the Building or the land appurtenant to the Building, or with respect to any
improvements, fixtures and equipment or other property of Landlord, real or personal, located in
the Building and used in connection with the operation of the Building and said land, any payments
to any ground lessor in reimbursement of tax payments made by such lessor; and all fees, expenses
and costs incurred by Landlord in investigating, protesting, contesting or in any way seeking to
reduce or avoid increase in any assessments, levies or the tax rate pertaining to any Taxes to be
paid by Landlord in any Lease Year but only to the extent of actual tax savings. Taxes shall not
include any corporate franchise, or estate, inheritance or net income tax, or tax imposed upon any
transfer by Landlord of its interest in this Lease or the Building or any taxes to be paid by
Tenant pursuant to Article 28.



     4.2 Tenant shall pay as additional rent for each Lease Year Tenant’s Proportionate Share of
Expenses and Taxes incurred for such Lease Year. As long as Tenant is not in default under any of
the terms, covenants, conditions, provisions and agreements to be kept and performed by Tenant
under this Lease beyond any applicable cure period, in no event shall Tenant’s Proportionate Share
of Controllable Expenses increase by more than five percent (5%) from the previous Lease Year,
calculated cumulatively over the Term of the Lease (applied on a pro-rata basis based upon the
number of months of the Term which fall within the Lease Year, if applicable). “Controllable
Expenses” shall be defined as all Expenses exclusive of utility charges, union negotiated labor
wages, and insurance premiums. (Although separately defined herein, for purposes of clarification,
it is understood that Taxes are not a part of “Controllable Expenses” and are therefore excluded
from the 5% limitation on increases due from Tenant.) There shall be no cap on non-Controllable
Expenses. By way of example, assume Controllable Expenses for the first Lease Year of $100.00. In
the second Lease Year, Controllable Expenses would be the lesser of (i) Tenant’s Proportionate
Share of Controllable Expenses for the second Lease Year, or (ii) $105.00 ($100.00 plus 5%, which
would be the Cap Amount). In the third Lease Year, Controllable Expenses would be the lesser of
(i) Tenant’s Proportionate Share of Controllable Expenses for the third Lease Year, or (ii) $110.25
($105.00 plus 5%). In the fourth Lease Year, Controllable Expenses would be the lesser of (i)
Tenant’s Proportionate Share of Controllable Expenses for the fourth Lease Year, or (ii) $115.76
($110.25 plus 5%).



     4.3 The annual determination of Expenses shall be made by Landlord and shall be binding upon
Landlord and Tenant, subject to the provisions of this Section 4.23. During the Term, Tenant or
Tenant’s accountants may review, at Tenant’s sole cost and expense, the books and records
supporting such determination in an office of Landlord, or Landlord’s agent, such office to be
located in the greater Phoenix metropolitan area, during normal business hours, upon giving
Landlord five (5) days advance written notice within sixty (60) days after receipt of such
determination, but in no event more often than once in any one (1) year period, subject to
execution of a confidentiality agreement acceptable to Landlord and Tenant or Tenant’s accountants.
If Tenant fails to object to Landlord’s determination of Expenses within ninety (90) days after
receipt, or if any such objection fails to state the reason for the objection, Tenant shall be
deemed to have approved such determination and shall have no further right to object to or contest
such determination. In the event that during all or any portion of any Lease Year or Base Year, the
Building is not fully rented and occupied Landlord shall make an appropriate adjustment in
occupancy-related Expenses for such year for the purpose of avoiding distortion of the amount of
such Expenses to be attributed to Tenant by reason of variation in total occupancy of the Building,
by employing consistent and sound accounting and management principles to determine Expenses that
would have been paid or incurred by Landlord had the Building been at least ninety-five percent
(95%) rented and occupied, and the amount so determined shall be deemed to have been Expenses for
such Lease Year.



     4.4 Prior to the actual determination thereof for a Lease Year, Landlord may from time to time
estimate Tenant’s liability for Expenses and/or Taxes due under this Lease for the Lease Year or
portion thereof. Landlord will give Tenant written notification of the amount of such estimate and
Tenant agrees that it will pay, by increase of its Monthly Installments of Rent due in such Lease
Year, additional rent in the amount of such estimate. Any such increased rate of Monthly
Installments of Rent pursuant to this Section 4.3 shall remain in effect until further written
notification to Tenant pursuant hereto.



     4.5 When the above mentioned actual determination of Tenant’s liability for Expenses and/or
Taxes is made for any Lease Year and when Tenant is so notified in writing, then:



            4.5.1 If the total additional rent Tenant actually paid pursuant to Section 4.2 on account of
Expenses and/or Taxes for the Lease Year is less than Tenant’s liability for Expenses and/or Taxes,
then Tenant shall pay such deficiency to Landlord as additional rent in one lump sum within thirty
(30) days of receipt of Landlord’s bill therefor; and



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            4.5.2 If the total additional rent Tenant actually paid pursuant to Section 4.2 on account of
Expenses and/or Taxes for the Lease Year is more than Tenant’s liability for Expenses and/or Taxes,
then Landlord shall credit the difference against the then next due payments to be made by Tenant
under this Article 4, or, if the Lease has terminated, refund the difference in cash.



     4.6 If the Commencement Date is other than January 1 or if the Termination Date is other than
December 31, Tenant’s liability for Expenses and Taxes for the Lease Year in which said Date occurs
shall be prorated based upon a three hundred sixty-five (365) day year.


5. SECURITY DEPOSIT. Tenant shall deposit the Security Deposit with Landlord upon the execution of
this Lease. Subject to the terms and conditions set forth in Section 3.1 above, said sum shall be
held by Landlord as security for the faithful performance by Tenant of all the terms, covenants and
conditions of this Lease to be kept and performed by Tenant and not as an advance rental deposit or
as a measure of Landlord’s damage in case of Tenant’s default. Notwithstanding Section 3.1
above,if Tenant defaults with respect to any provision of this Lease beyond any applicable cure
period, Landlord may use any part of the Security Deposit for the payment of any rent or any other
sum in default beyond any applicable cure period, or for the payment of any amount which Landlord
may spend or become obligated to spend by reason of Tenant’s default, or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of Tenant’s default. If any portion
is so used, Tenant shall within five (5) business days after written demand therefor, deposit with
Landlord an amount sufficient to restore the Security Deposit to its original amount (as adjusted
pursuant to Section 3.1 above) and Tenant’s failure to do so shall be a material breach of this
Lease. Except to such extent, if any, as shall be required by law, Landlord shall not be required
to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to
interest on such deposit. If Tenant shall fully and faithfully perform every provision of this
Lease to be performed by it, the Security Deposit or any balance thereof shall be returned to
Tenant at such time after termination of this Lease when Landlord shall have determined that all of
Tenant’s obligations under this Lease have been fulfilled.


Notwithstanding anything to the contrary set forth herein, at any time during the term of the Lease
Tenant shall have the right to convert One Hundred Thousand Dollars ($100,000.00) of the Security
Deposit to an unconditional and irrevocable letter of credit (the “Letter of Credit”),
which Letter of Credit shall: (i) be in form and substance reasonably satisfactory to Landlord,
(ii) name Landlord as beneficiary, (iii) expressly allow Landlord to draw upon it at any time from
time to time by delivering to the issuer notice that Landlord is entitled to draw thereunder, (iv)
be drawable on an FDIC-insured financial institution reasonably satisfactory to Landlord, and (v)
be redeemable in the state of Arizona. If Tenant does not provide Landlord with a substitute
Letter of Credit complying with all of the requirements hereof at least ten (10) days before the
stated expiration date of the then current Letter of Credit, then Landlord shall have the right to
draw upon the current Letter of Credit and hold the funds drawn as all or part of the Security
Deposit (as the case may be). If Tenant defaults under this Lease beyond any applicable cure
period, Landlord may use any part of the Letter of Credit or Security Deposit (at Landlord’s
option) to pay or perform any obligation of Tenant under this Lease, or to compensate Landlord for
any loss or damage resulting from any default. Within fifteen (15) business days of Tenant’s
tender of a Letter of Credit which complies with all of the foregoing terms and conditions,
Landlord shall return up to One Hundred Thousand Dollars ($100,000.00) of the security deposit to
Tenant. The exact amount to be returned to Tenant shall be equal to the amount set forth in the
Letter of Credit (up to $100,000.00) less any portion thereof which Landlord has applied, or has
the right to apply, in accordance with this Article 5.


6. ALTERATIONS.



     6.1 Except for those, if any, specifically provided for in Exhibit B to this Lease,
and any minor alterations, additions or improvements which do not, in the aggregate, exceed
$20,000.00 in any calendar year and which do not affect the structural integrity of the Building or
the Premises, or which do not require modification to the systems servicing the Building, Tenant
shall not make or suffer to be made any alterations, additions, or improvements, including, but not
limited to, the attachment of any fixtures or equipment in, on, or to the Premises or any part
thereof or the making of any improvements as required by Article 7, without the prior written
consent of Landlord. If Tenant is authorized by the foregoing sentence to make an alteration,
addition or improvement without the prior written consent of Landlord, Tenant must still provide
Landlord with prior written notice of the work which is to be performed and the anticipated cost
thereof. When applying for such consent, Tenant shall, if requested by Landlord, furnish complete
plans and specifications for such alterations, additions and improvements. Landlord’s consent shall
not be unreasonably withheld with respect to alterations which (i) are not structural in nature,
(ii) are not visible from the exterior of the Building, (iii) do not affect or require modification
of the Building’s electrical, mechanical, plumbing, HVAC or other systems, and (iv) in aggregate do
not cost more than $5.00 per rentable square foot of that portion of the Premises affected by the
alterations in question. Nothing



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contained herein shall allow Tenant to make any alterations, additions or improvements to the
exterior of the Building or the common areas without Landlord’s prior written consent.



     6.2 In the event Landlord consents to the making of any such alteration, addition or
improvement by Tenant, the same shall be made by using a contractor reasonably approved by
Landlord, at Tenant’s sole cost and expense.



     6.3 All alterations, additions or improvements proposed by Tenant shall be constructed in
accordance with all government laws, ordinances, rules and regulations, using Building standard
materials where applicable, and Tenant shall, prior to construction, provide the additional
insurance required under Article 11 in such case, and also all such assurances to Landlord as
Landlord shall reasonably require to assure payment of the costs thereof, including but not limited
to, notices of non-responsibility, waivers of lien, surety company performance bonds and funded
construction escrows and to protect Landlord and the Building and appurtenant land against any loss
from any mechanic’s, materialmen’s or other liens. Tenant shall pay in addition to any sums due
pursuant to Article 4, any increase in real estate taxes attributable to any such alteration,
addition or improvement for so long, during the Term, as such increase is ascertainable; at
Landlord’s election said sums shall be paid in the same way as sums due under Article 4. Landlord
may, as a condition to its consent to any particular alterations or improvements, require Tenant to
deposit with Landlord the amount reasonably estimated by Landlord as sufficient to cover the cost
of removing such alterations or improvements and restoring the Premises, to the extent required
under Section 26.2


7. REPAIR.



     7.1 Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint
the Premises, except as specified in Exhibit B if attached to this Lease and except that
Landlord shall repair and maintain the structural portions of the roof, foundation and walls of the
Building. By taking possession of the Premises, Tenant accepts them as being in good order,
condition and repair and in the condition in which Landlord is obligated to deliver them, except as
set forth in the punch list to be delivered pursuant to Section 2.1. It is hereby understood and
agreed that no representations respecting the condition of the Premises or the Building have been
made by Landlord to Tenant, except as specifically set forth in this Lease. Landlord shall not be
liable for any failure to make any repairs or to perform any maintenance unless such failure shall
persist for an unreasonable time after written notice of the need of such repairs or maintenance is
given to Landlord by Tenant.



     7.2 Tenant shall at its own cost and expense keep and maintain all parts of the Premises and
such portion of the Building and improvements as are within the exclusive control of Tenant in good
condition, promptly making all necessary repairs and replacements, whether ordinary or
extraordinary, with materials and workmanship of the same character, kind and quality as the
original (including, but not limited to, repair and replacement of all fixtures installed by
Tenant, water heaters serving the Premises, windows, glass and plate glass, doors, exterior stairs,
skylights, any special office entries, interior walls and finish work, floors and floor coverings,
heating and air conditioning systems serving the Premises, electrical systems and fixtures,
sprinkler systems, dock boards, truck doors, dock bumpers, plumbing fixtures, and performance of
regular removal of trash and debris). Tenant as part of its obligations hereunder shall keep the
Premises in a clean and sanitary condition. Tenant will, as far as possible keep all such parts of
the Premises from deterioration (other than due to ordinary wear and tear) and from falling
temporarily out of repair, and upon termination of this Lease in any way Tenant will yield up the
Premises to Landlord in good condition and repair, normal wear and tear, loss by fire or other
casualty excepted (but not excepting any damage to glass). Tenant shall, at its own cost and
expense, repair any damage to the Premises or the Building resulting from and/or caused in whole or
in part by the negligence or misconduct of Tenant, its agents, employees, contractors, invitees, or
any other person entering upon the Premises as a result of Tenant’s business activities or caused
by Tenant’s default hereunder.



     7.3 Except as provided in Article 22, there shall be no abatement of rent and no liability of
Landlord by reason of any injury to or interference with Tenant’s business arising from the making
of any repairs, alterations or improvements in or to any portion of the Building or the Premises or
to fixtures, appurtenances and equipment in the Building. Except to the extent, if any, prohibited
by law, Tenant waives the right to make repairs at Landlord’s expense under any law, statute or
ordinance now or hereafter in effect unless Landlord fails to make said repair within a reasonable
time after written notice of such failure to Landlord provided, however, that such failure shall
not be an event of default if such failure could not reasonably be cured within thirty (30) days
after Landlord’s receipt of said notice but Landlord has commenced the repair within such thirty
(30) day period and thereafter is diligently pursuing such repair to completion.



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     7.4 Tenant shall, at its own cost and expense, enter into a regularly scheduled preventive
maintenance/service contract with a maintenance contractor approved by Landlord for servicing all
heating and air conditioning systems and equipment serving the Premises (and a copy thereof shall
be furnished to Landlord). The service contract must include all services suggested by the
equipment manufacturer in the operation/maintenance manual and must become effective within thirty
(30) days of the date Tenant takes possession of the Premises. Should Tenant fail to do so,
Landlord may, upon notice to Tenant, enter into such a maintenance/ service contract on behalf of
Tenant or perform the work and in either case, charge Tenant the cost thereof along with a
reasonable amount for Landlord’s overhead.



     7.5 Landlord shall coordinate any repairs and other maintenance of any railroad tracks serving
the Building and, if Tenant uses such rail tracks, Tenant shall reimburse Landlord or the railroad
company from time to time upon demand, as additional rent, for its share of the costs of such
repair and maintenance and for any other sums specified in any agreement to which Landlord or
Tenant is a party respecting such tracks, such costs to be borne proportionately by all tenants in
the Building using such rail tracks, based upon the actual number of rail cars shipped and received
by such tenant during each calendar year during the Term.


8. LIENS. Tenant shall keep the Premises, the Building and appurtenant land and Tenant’s leasehold
interest in the Premises free from any liens arising out of any services, work or materials
performed, furnished, or contracted for by Tenant, or obligations incurred by Tenant. In the event
that Tenant fails, within ten (10) business days following Tenant receipt of written notice of the
imposition of any such lien, to either cause the same to be released of record or provide Landlord
with insurance against the same issued by a major title insurance company or such other protection
against the same as Landlord shall reasonably accept (such failure to constitute an Event of
Default), Landlord shall have the right to cause the same to be released by such means as it shall
deem proper, including payment of the claim giving rise to such lien. All such sums paid by
Landlord and all expenses incurred by it in connection therewith shall be payable to it by Tenant
within five (5) business days of Landlord’s demand .


9. ASSIGNMENT AND SUBLETTING.



     9.1 Tenant shall not have the right to assign or pledge this Lease or to sublet the whole or
any part of the Premises whether voluntarily or by operation of law, or permit the use or occupancy
of the Premises by anyone other than Tenant, and shall not make, suffer or permit such assignment,
subleasing or occupancy without the prior written consent of Landlord, such consent not to be
unreasonably withheld, and said restrictions shall be binding upon any and all assignees of the
Lease and subtenants of the Premises. In the event Tenant desires to sublet, or permit such
occupancy of, the Premises, or any portion thereof, or assign this Lease, Tenant shall give written
notice thereof to Landlord at least thirty (30) days but no more than sixty (60) days prior to the
proposed commencement date of such subletting or assignment, which notice shall set forth the name
of the proposed subtenant or assignee, the relevant terms of any sublease or assignment and copies
of financial reports and other relevant financial information of the proposed subtenant or
assignee. Notwithstanding anything to the contrary set forth herein, Tenant shall have the right
to assign the Lease or sublet all or a portion of the Premises to an affiliate of Tenant or to a
successor to all or substantially all of Tenant’s assets, in any of which events Tenant shall
remain liable to Landlord for performance of its obligations hereunder (with the understanding that
in the event of a sale of all of Tenant’s assets, Tenant shall only remain liable to Landlord if
the underlying transaction is proven to be a sham, fraudulent or otherwise not entered into in good
faith by Tenant).



     9.2 Notwithstanding any assignment or subletting, permitted or otherwise, Tenant shall at all
times remain directly, primarily and fully responsible and liable for the payment of the rent
specified in this Lease and for compliance with all of its other obligations under the terms,
provisions and covenants of this Lease. Upon the occurrence of an Event of Default, if the
Premises or any part of them are then assigned or sublet, Landlord, in addition to any other
remedies provided in this Lease or provided by law, may, at its option, collect directly from such
assignee or subtenant all rents due and becoming due to Tenant under such assignment or sublease
and apply such rent against any sums due to Landlord from Tenant under this Lease, and no such
collection shall be construed to constitute a novation or release of Tenant from the further
performance of Tenant’s obligations under this Lease.



     9.4 In the event that Tenant sells, sublets, assigns or transfers this Lease, Tenant shall pay
to Landlord as additional rent an amount equal to fifty percent (50%) of any Increased Rent (as
defined below), less the Costs Component (as defined below), when and as such Increased Rent is
received by Tenant. As used in this Section, “Increased Rent” shall mean the excess of (i) all
rent and other consideration which Tenant is entitled to receive solely by reason of any sale,
sublease, assignment or other transfer of this Lease, over (ii) the rent otherwise payable by
Tenant under this Lease at such time. For purposes of the foregoing, any consideration received by
Tenant in form other than cash shall be valued at its fair



7









 






market value as determined by Landlord in good faith. The “Costs Component” is that amount
which, if paid monthly, would fully amortize on a straight-line basis, over the entire period for
which Tenant is to receive Increased Rent, the reasonable costs incurred by Tenant for leasing
commissions and tenant improvements in connection with such sublease, assignment or other transfer.



     9.5 Notwithstanding any other provision hereof, it shall be considered reasonable for Landlord
to withhold its consent to any assignment of this Lease or sublease of any portion of the Premises
if at the time of either Tenant’s notice of the proposed assignment or sublease or the proposed
commencement date thereof, there shall exist any uncured default of Tenant or matter which will
become a default of Tenant with passage of time unless cured, or if the proposed assignee or
sublessee is an entity: (a) with which Landlord is already in negotiation; (b) is already an
occupant of the Building unless Landlord is unable to provide the amount of space required by such
occupant; (c) is a governmental agency; (d) is incompatible with the character of occupancy of the
Building; (e) with which the payment for the sublease or assignment is determined in whole or in
part based upon its net income or profits; or (f) would subject the Premises to a use which would:
(i) involve increased personnel or wear upon the Building; or (ii) violate any exclusive right
granted to another tenant of the Building; or (iii) require any addition to or modification of the
Premises or the Building in order to comply with building code or other governmental requirements;
or, (iv) be highly likely to involve a violation of the Tenant’s obligations under Exhibit E.
Tenant expressly agrees that for the purposes of any statutory or other requirement of
reasonableness on the part of Landlord, Landlord’s refusal to consent to any assignment or sublease
for any of the reasons described in this Section 9.4, shall be conclusively deemed to be
reasonable.



     9.6 Upon any request to assign or sublet, Tenant will pay to Landlord the
Assignment/Subletting Fee plus, on demand, a sum equal to all of Landlord’s reasonable costs
actually incurred, including reasonable attorney’s fees, incurred in investigating and considering
any proposed or purported assignment or pledge of this Lease or sublease of any of the Premises but
in no event more than $1,000.00, regardless of whether Landlord shall consent to, refuse consent,
or determine that Landlord’s consent is not required for, such assignment, pledge or sublease. Any
purported sale, assignment, mortgage, transfer of this Lease or subletting which does not comply
with the provisions of this Article 9 shall be void.



     9.7 If Tenant is a corporation, limited liability company, partnership or trust, any transfer
or transfers of or change or changes within any twelve (12) month period in the number of the
outstanding voting shares of the corporation or limited liability company, the general partnership
interests in the partnership or the identity of the persons or entities controlling the activities
of such partnership or trust resulting in the persons or entities owning or controlling a majority
of such shares, partnership interests or activities of such partnership or trust at the beginning
of such period no longer having such ownership or control shall be regarded as equivalent to an
assignment of this Lease to the persons or entities acquiring such ownership or control and shall
be subject to all the provisions of this Article 9 to the same extent and for all intents and
purposes as though such an assignment.


10. INDEMNIFICATION. None of the Landlord Entities shall be liable and Tenant hereby waives all
claims against them for any damage to any property or any injury to any person in or about the
Premises or the Building by or from any cause whatsoever (including without limiting the foregoing,
rain or water leakage of any character from the roof, windows, walls, basement, pipes, plumbing
works or appliances, the Building not being in good condition or repair, gas, fire, oil,
electricity or theft), except to the extent caused by or arising from the gross negligence or
willful misconduct of Landlord or its agents, employees or contractors. Tenant shall protect,
indemnify and hold the Landlord Entities harmless from and against any and all loss, claims,
liability or costs (including court costs and attorney’s fees) incurred by reason of (a) any damage
to any property (including but not limited to property of any Landlord Entity) or any injury
(including but not limited to death) to any person occurring in, on or about the Premises or the
Building to the extent that such injury or damage shall be caused by or arise from any actual or
alleged act, neglect, fault, or omission by or of Tenant or any Tenant Entity to meet any standards
imposed by any duty with respect to the injury or damage; (b) the conduct or management of any work
or thing whatsoever done by the Tenant in or about the Premises or from transactions of the Tenant
concerning the Premises; (c) Tenant’s failure to comply with any and all governmental laws,
ordinances and regulations applicable to the condition or use of the Premises or its occupancy; or
(d) any breach or default on the part of Tenant in the performance of any covenant or agreement on
the part of the Tenant to be performed pursuant to this Lease. The indemnity provisions set forth
in the preceding sentence shall not apply to any loss, claim, liability or cost in the event of the
gross negligence or willful misconduct of Landlord, its agents, employees or contractors. The
provisions of this Article shall survive the termination of this Lease with respect to any claims
or liability accruing prior to such termination.



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11. INSURANCE.



     11.1 Tenant shall keep in force throughout the Term: (a) a Commercial General Liability
insurance policy or policies to protect the Landlord Entities against any liability to the public
or to any invitee of Tenant or a Landlord Entity incidental to the use of or resulting from any
accident occurring in or upon the Premises with a limit of not less than $1,000,000 per occurrence
and not less than $2,000,000 in the annual aggregate, or such larger amount as Landlord may
prudently require from time to time, covering bodily injury and property damage liability and
$1,000,000 products/completed operations aggregate; (b) Business Auto Liability covering owned,
non-owned and hired vehicles with a limit of not less than $1,000,000 per accident; (c) insurance
protecting against liability under Worker’s Compensation Laws with limits at least as required by
statute; (d) Employers Liability with limits of $1,000,000 each accident, $1,000,000 disease policy
limit, $1,000,000 disease—each employee; (e) All Risk or Special Form coverage protecting Tenant
against loss of or damage to Tenant’s alterations, additions, improvements, carpeting, floor
coverings, panelings, decorations, fixtures, inventory and other business personal property
situated in or about the Premises to the full replacement value of the property so insured, (f)
Business Interruption Insurance for 100% of the 12 months actual loss sustained, and (g) Excess
Liability in the amount of $5,000,000.



     11.2 The aforesaid policies shall (a) be provided at Tenant’s expense; (b) name the Landlord
Entities as additional insureds (General Liability) and loss payee (Property¬Special Form); (c) be
issued by an insurance company with a minimum Best’s rating of “A:VII” during the Term; and (d)
provide that said insurance shall not be canceled unless thirty (30) days prior written notice (ten
days for non-payment of premium) shall have been given to Landlord; a certificate of Liability
insurance on ACORD Form 25 and a certificate of Property insurance on ACORD Form 27 shall be
delivered to Landlord by Tenant upon the Commencement Date and at least thirty (30) days prior to
each renewal of said insurance.



     Whenever Tenant shall undertake any alterations, additions or improvements in, to or about the
Premises (“Work”) the aforesaid insurance protection must extend to and include injuries to persons
and damage to property arising in connection with such Work, without limitation including liability
under any applicable structural work act, and such other insurance as Landlord shall require; and
the policies of or certificates evidencing such insurance must be delivered to Landlord prior to
the commencement of any such Work.11.4 Landlord shall maintain such insurance on the Building as is
customary of owners of similarly situated buildings in the greater Phoenix metropolitan area, in an
amount no less than the full replacement value of the Building with such policies to be issued by
an insurance company with a minimum Best’s rating of “A:VII” during the Term.


12. WAIVER OF SUBROGATION. So long as their respective insurers so permit, Tenant and Landlord
hereby mutually waive their respective rights of recovery against each other for any loss insured
by fire, extended coverage, All Risks or other insurance now or hereafter existing for the benefit
of the respective party but only to the extent of the net insurance proceeds payable under such
policies. Each party shall obtain any special endorsements required by their insurer to evidence
compliance with the aforementioned waiver.


13. SERVICES AND UTILITIES. Tenant shall pay for all water, gas, heat, light, power, telephone,
sewer, sprinkler system charges and other utilities and services used on or from the Premises,
together with any taxes, penalties, and surcharges or the like pertaining thereto and any
maintenance charges for utilities. Tenant shall furnish all electric light bulbs, tubes and
ballasts, battery packs for emergency lighting and fire extinguishers. If any such services are
not separately metered to Tenant, Tenant shall pay such proportion of all charges jointly metered
with other premises as determined by Landlord, in its sole discretion, to be reasonable. Any such
charges paid by Landlord and assessed against Tenant shall be immediately payable to Landlord
within five (5) business days following demand therefor and shall be additional rent hereunder.
Tenant will not, without the written consent of Landlord, which consent not to be unreasonably
conditioned, withheld or delayed, contract with a utility provider to service the Premises with any
utility, including, but not limited to, telecommunications, electricity, water, sewer or gas, which
is not previously providing such service to other tenants in the Building. Landlord shall in no
event be liable for any interruption or failure of utility services on or to the Premises unless
caused by the gross negligence or willful misconduct of Landlord, its agents, employees or
contractors.


14. HOLDING OVER. Tenant shall pay Landlord for each day Tenant retains possession of the Premises
or part of them after termination of this Lease by lapse of time or otherwise at the rate
(“Holdover Rate”) which shall be One Hundred Fifty Percent (150%) of the amount of the Annual Rent
for the last period prior to the date of such termination plus all Rent Adjustments under Article
4, prorated on a daily basis, and also pay all damages sustained by Landlord by reason of such
retention. If Landlord gives notice to Tenant of Landlord’s election to such effect, such holding
over shall constitute renewal

9









 





of this Lease for a period from month to month or one (1) year, whichever shall be specified in
such notice, in either case at the Holdover Rate, but if the Landlord does not so elect, no such
renewal shall result notwithstanding acceptance by Landlord of any sums due hereunder after such
termination; and instead, a tenancy at sufferance at the Holdover Rate shall be deemed to have been
created. In any event, no provision of this Article 14 shall be deemed to waive Landlord’s right
of reentry or any other right under this Lease or at law.


15. SUBORDINATION; NON-DISTURBANCE. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, subject to the terms hereof, this
Lease shall be subject and subordinate at all times to ground or underlying leases and to the lien
of any mortgages or deeds of trust now or hereafter placed on, against or affecting the Building,
Landlord’s interest or estate in the Building, or any ground or underlying lease; provided,
however, that if the lessor, mortgagee, trustee, or holder of any such mortgage or deed of trust
elects to have Tenant’s interest in this Lease be superior to any such instrument, then, by notice
to Tenant, this Lease shall be deemed superior, whether this Lease was executed before or after
said instrument. Notwithstanding the foregoing, Tenant covenants and agrees to execute and deliver
within ten (10) days of Landlord’s request such further instruments evidencing such subordination
or superiority of this Lease as may be required by Landlord. The foregoing subordination is
contingent upon the lender or ground lessor agreeing that, so long as Tenant is not in default
hereunder beyond any applicable cure period, such lender or ground lessor shall not disturb
Tenant’s use and possession of the Premises.


16. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with all the rules and
regulations as set forth in Exhibit D to this Lease and all reasonable and
non-discriminatory modifications of and additions to them from time to time put into effect by
Landlord. Landlord shall not be responsible to Tenant for the non-performance by any other tenant
or occupant of the Building of any such rules and regulations, provided that Landlord shall
uniformly enforce same against all tenants or occupants of the Building.


17. REENTRY BY LANDLORD.



     17.1 Landlord reserves and shall at all times have the right, upon reasonable advance written
notice to Tenant (but in no event greater than forty-eight (48) hours in advance, with no notice
being required in the event of an emergency) to re-enter the Premises to inspect the same, to show
said Premises to prospective purchasers, mortgagees or tenants (but, as to prospective tenants,
only during the last six (6) months of the Term), and to alter, improve or repair the Premises and
any portion of the Building, without abatement of rent, and may for that purpose erect, use and
maintain scaffolding, pipes, conduits and other necessary structures and open any wall, ceiling or
floor in and through the Building and Premises where reasonably required by the character of the
work to be performed, provided entrance to the Premises shall not be blocked thereby, and further
provided that the business of Tenant shall not be interfered with unreasonably.. In the event that
Landlord damages any portion of any wall or wall covering, ceiling, or floor or floor covering
within the Premises, Landlord shall repair or replace the damaged portion to match the original as
nearly as commercially reasonable but shall not be required to repair or replace more than the
portion actually damaged. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment
of the Premises, and any other loss occasioned by any action of Landlord authorized by this Article
17 except to the extent caused by the gross negligence or willful misconduct of Landlord, its
agents or employees.



     17.2 For each of the aforesaid purposes, Landlord shall at all times have and retain a key
with which to unlock all of the doors in the Premises, excluding Tenant’s vaults and safes or
special security areas (designated in advance), and Landlord shall have the right to use any and
all means which Landlord may deem proper to open said doors in an emergency to obtain entry to any
portion of the Premises. As to any portion (other than designated special security areas) to which
access cannot be had by means of a key or keys in Landlord’s possession, Landlord is authorized to
gain access by such means as Landlord shall elect and the reasonable cost of repairing any damage
occurring in doing so shall be borne by Tenant and paid to Landlord within five (5) business days
of Landlord’s demand.


18. DEFAULT.



     18.1 Except as otherwise provided in Article 20, the following events shall be deemed to be
Events of Default under this Lease:



            18.1.1 Tenant shall fail to pay when due any sum of money becoming due to be paid to Landlord
under this Lease, whether such sum be any installment of the rent reserved by this Lease, any other
amount treated as additional rent under this Lease, or any other payment or reimbursement to
Landlord required by this Lease, whether or not treated as



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additional rent under this Lease, and such failure shall continue for a period of five (5)
business days after written notice that such payment was not made when due, but if any such notice
shall be given, for the twelve (12) month period commencing with the date of such notice, the
failure to pay within five (5) business days after due any additional sum of money becoming due to
be paid to Landlord under this Lease during such period shall be an Event of Default, without
notice.



            18.1.2 Tenant shall fail to comply with any term, provision or covenant of this Lease which is
not provided for in another Section of this Article and shall not cure such failure within twenty
(20) days (forthwith, if the failure involves a hazardous condition) after written notice of such
failure to Tenant provided, however, that such failure shall not be an event of default if such
failure could not reasonably be cured during such twenty (20) day period, Tenant has commenced the
cure within such twenty (20) day period and thereafter is diligently pursuing such cure to
completion, but the total aggregate cure period shall not exceed ninety (90) days.



            18.1.3 Tenant shall fail to vacate the Premises immediately upon termination of this Lease, by
lapse of time or otherwise, or upon termination of Tenant’s right to possession only.



            18.1.4 Tenant shall become insolvent, admit in writing its inability to pay its debts
generally as they become due, file a petition in bankruptcy or a petition to take advantage of any
insolvency statute, make an assignment for the benefit of creditors, make a transfer in fraud of
creditors, apply for or consent to the appointment of a receiver of itself or of the whole or any
substantial part of its property, or file a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws, as now in effect or hereafter amended, or any other
applicable law or statute of the United States or any state thereof.



            18.1.5 A court of competent jurisdiction shall enter an order, judgment or decree adjudicating
Tenant bankrupt, or appointing a receiver of Tenant, or of the whole or any substantial part of its
property, without the consent of Tenant, or approving a petition filed against Tenant seeking
reorganization or arrangement of Tenant under the bankruptcy laws of the United States, as now in
effect or hereafter amended, or any state thereof, and such order, judgment or decree shall not be
vacated or set aside or stayed within sixty (60) days from the date of entry thereof.


19. REMEDIES.



     19.1 Except as otherwise provided in Article 20, upon the occurrence of any of the Events of
Default described or referred to in Article 18, Landlord shall have the option to pursue any one or
more of the following remedies without any notice or demand whatsoever, concurrently or
consecutively and not alternatively:



            19.1.1 Landlord may, at its election, terminate this Lease or terminate Tenant’s right to
possession only, without terminating the Lease.



            19.1.2 Upon any termination of this Lease, whether by lapse of time or otherwise, or upon any
termination of Tenant’s right to possession without termination of the Lease, Tenant shall
surrender possession and vacate the Premises immediately, and deliver possession thereof to
Landlord, and Tenant hereby grants to Landlord full and free license to enter into and upon the
Premises in such event and to repossess Landlord of the Premises as of Landlord’s former estate and
to expel or remove Tenant and any others who may be occupying or be within the Premises and to
remove Tenant’s signs and other evidence of tenancy and all other property of Tenant therefrom
without being deemed in any manner guilty of trespass, eviction or forcible entry or detainer, and
without incurring any liability for any damage resulting therefrom, Tenant waiving any right to
claim damages for such re-entry and expulsion, and without relinquishing Landlord’s right to rent
or any other right given to Landlord under this Lease or by operation of law.



            19.1.3 Upon any termination of this Lease, whether by lapse of time or otherwise, Landlord
shall be entitled to recover as damages, all rent, including any amounts treated as additional rent
under this Lease, and other sums due and payable by Tenant on the date of termination, plus as
liquidated damages and not as a penalty, an amount equal to the sum of: (a) an amount equal to the
then present value of the rent reserved in this Lease for the residue of the stated Term of this
Lease including any amounts treated as additional rent under this Lease and all other sums provided
in this Lease to be paid by Tenant, minus the fair rental value of the Premises for such residue;
(b) the value of the time and expense necessary to obtain a replacement tenant or tenants, and the
estimated expenses described in Section 19.1.4 relating to recovery of the Premises, preparation
for reletting and for reletting itself; and (c) the cost of performing any other covenants which
would have otherwise been performed by Tenant.



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            19.1.4 Upon any termination of Tenant’s right to possession only without termination of the
Lease:



                        19.1.4.1 Neither such termination of Tenant’s right to possession nor Landlord’s taking and
holding possession thereof as provided in Section 19.1.2 shall terminate the Lease or release
Tenant, in whole or in part, from any obligation, including Tenant’s obligation to pay the rent,
including any amounts treated as additional rent, under this Lease for the full Term, and if
Landlord so elects Tenant shall continue to pay to Landlord the entire amount of the rent as and
when it becomes due, including any amounts treated as additional rent under this Lease, for the
remainder of the Term plus any other sums provided in this Lease to be paid by Tenant for the
remainder of the Term.



                        19.1.4.2 Landlord shall use commercially reasonable efforts to relet the Premises or portions
thereof to the extent required by applicable law. Landlord and Tenant agree that nevertheless
Landlord shall at most be required to use only the same efforts Landlord then uses to lease
premises in the Building generally and that in any case that Landlord shall not be required to give
any preference or priority to the showing or leasing of the Premises or portions thereof over any
other space that Landlord may be leasing or have available and may place a suitable prospective
tenant in any such other space regardless of when such other space becomes available and that
Landlord shall have the right to relet the Premises for a greater or lesser term than that
remaining under this Lease, the right to relet only a portion of the Premises, or a portion of the
Premises or the entire Premises as a part of a larger area, and the right to change the character
or use of the Premises. In connection with or in preparation for any reletting, Landlord may, but
shall not be required to, make repairs, alterations and additions in or to the Premises and
redecorate the same to the extent Landlord deems necessary or desirable, and Tenant shall pay the
cost thereof, together with Landlord’s expenses of reletting, including, without limitation, any
commission incurred by Landlord, within five (5) days of Landlord’s demand. Landlord shall not be
required to observe any instruction given by Tenant about any reletting or accept any tenant
offered by Tenant unless such offered tenant has a credit-worthiness acceptable to Landlord and
leases the entire Premises upon terms and conditions including a rate of rent (after giving effect
to all expenditures by Landlord for tenant improvements, broker’s commissions and other leasing
costs) all no less favorable to Landlord than as called for in this Lease, nor shall Landlord be
required to make or permit any assignment or sublease for more than the current term or which
Landlord would not be required to permit under the provisions of Article 9.



                        19.1.4.3 Until such time as Landlord shall elect to terminate the Lease and shall thereupon be
entitled to recover the amounts specified in such case in Section 19.1.3, Tenant shall pay to
Landlord upon demand the full amount of all rent, including any amounts treated as additional rent
under this Lease and other sums reserved in this Lease for the remaining Term, together with the
costs of repairs, alterations, additions, redecorating and Landlord’s expenses of reletting and the
collection of the rent accruing therefrom (including reasonable attorney’s fees and broker’s
commissions), as the same shall then be due or become due from time to time, less only such
consideration as Landlord may have received from any reletting of the Premises; and Tenant agrees
that Landlord may file suits from time to time to recover any sums falling due under this Article
19 as they become due. Any proceeds of reletting by Landlord in excess of the amount then owed by
Tenant to Landlord from time to time shall be credited against Tenant’s future obligations under
this Lease but shall not otherwise be refunded to Tenant or inure to Tenant’s benefit.



     19.2 Upon the occurrence of an Event of Default, Landlord may (but shall not be obligated to)
cure such default at Tenant’s sole expense. Without limiting the generality of the foregoing,
Landlord may, at Landlord’s option, enter into and upon the Premises if Landlord determines in its
sole discretion that Tenant is not acting within a commercially reasonable time to maintain, repair
or replace anything for which Tenant is responsible under this Lease or to otherwise effect
compliance with its obligations under this Lease and correct the same, without being deemed in any
manner guilty of trespass, eviction or forcible entry and detainer and without incurring any
liability for any damage or interruption of Tenant’s business resulting therefrom and Tenant agrees
to reimburse Landlord within five (5) days of Landlord’s demand as additional rent, for any
expenses which Landlord may incur in thus effecting compliance with Tenant’s obligations under this
Lease, plus interest from the date of expenditure by Landlord at the Wall Street Journal prime
rate.



     19.3 Tenant understands and agrees that in entering into this Lease, Landlord is relying upon
receipt of all the Annual and Monthly Installments of Rent to become due with respect to all the
Premises originally leased hereunder over the full Initial Term of this Lease for amortization,
including interest at the Amortization Rate. For purposes hereof, the “Concession Amount” shall be
defined as the aggregate of all amounts forgone or expended by Landlord as free rent under the
lease, under Exhibit B hereof for construction allowances (excluding therefrom any amounts
expended by Landlord for Landlord’s Work, as defined in Exhibit B), and for brokers’
commissions payable by reason of this Lease. Accordingly, Tenant agrees that if this Lease or
Tenant’s right to possession of the Premises leased hereunder shall be terminated as of any date
(“Default Termination Date”) prior to the expiration of the full Initial Term hereof by reason of a
default of Tenant, there



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shall be due and owing to Landlord as of the day prior to the Default Termination Date, as
rent in addition to all other amounts owed by Tenant as of such Date, the amount (“Unamortized
Amount”) of the Concession Amount determined as set forth below; provided, however, that in the
event that such amounts are recovered by Landlord pursuant to any other provision of this Article
19, Landlord agrees that it shall not attempt to recover such amounts pursuant to this Paragraph
19.3. For the purposes hereof, the Unamortized Amount shall be determined in the same manner as
the remaining principal balance of a mortgage with interest at the Amortization Rate payable in
level payments over the same length of time as from the effectuation of the Concession concerned to
the end of the full Initial Term of this Lease would be determined.



     19.4 If, on account of any breach or default by Tenant in Tenant’s obligations under the terms
and conditions of this Lease, it shall become necessary or appropriate for Landlord to employ or
consult with an attorney or collection agency concerning or to enforce or defend any of Landlord’s
rights or remedies arising under this Lease or to collect any sums due from Tenant, Tenant agrees
to pay all costs and fees so incurred by Landlord, including, without limitation, reasonable
attorneys’ fees and costs. TENANT EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY.



     19.5 Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other
remedies provided in this Lease or any other remedies provided by law (all such remedies being
cumulative), nor shall pursuit of any remedy provided in this Lease constitute a forfeiture or
waiver of any rent due to Landlord under this Lease or of any damages accruing to Landlord by
reason of the violation of any of the terms, provisions and covenants contained in this Lease.



     19.6 No act or thing done by Landlord or its agents during the Term shall be deemed a
termination of this Lease or an acceptance of the surrender of the Premises, and no agreement to
terminate this Lease or accept a surrender of said Premises shall be valid, unless in writing
signed by Landlord. No waiver by Landlord of any violation or breach of any of the terms,
provisions and covenants contained in this Lease shall be deemed or construed to constitute a
waiver of any other violation or breach of any of the terms, provisions and covenants contained in
this Lease. Landlord’s acceptance of the payment of rental or other payments after the occurrence
of an Event of Default shall not be construed as a waiver of such Default, unless Landlord so
notifies Tenant in writing or if the Default were a failure of payment and such payment cures such
Default even if made after the applicable cure period. Forbearance by Landlord in enforcing one or
more of the remedies provided in this Lease upon an Event of Default shall not be deemed or
construed to constitute a waiver of such Default or of Landlord’s right to enforce any such
remedies with respect to such Default or any subsequent Default.



     19.7 Landlord shall have any statutory landlord’s lien rights granted by the laws of the State
of Arizona.



     19.8 Any and all property which may be removed from the Premises by Landlord pursuant to the
authority of this Lease or of law upon an Event of Default by Tenant, to which Tenant is or may be
entitled, may be handled, removed and/or stored, as the case may be, by or at the direction of
Landlord but at the risk, cost and expense of Tenant, and Landlord shall in no event be responsible
for the value, preservation or safekeeping thereof. Tenant shall pay to Landlord, upon demand, any
and all expenses incurred in such removal and all storage charges against such property so long as
the same shall be in Landlord’s possession or under Landlord’s control. Any such property of
Tenant not retaken by Tenant from storage within thirty (30) days after removal from the Premises
shall, at Landlord’s option, be deemed conveyed by Tenant to Landlord under this Lease as by a bill
of sale without further payment or credit by Landlord to Tenant.



     19.9 If more than three (3) Events of Default occur during the Term or any renewal thereof,
Tenant’s renewal options, expansion options, purchase options and rights of first offer and/or
refusal, if any are provided for in this Lease, shall be null and void.



     20. TENANT’S BANKRUPTCY OR INSOLVENCY.



     20.1 If at any time and for so long as Tenant shall be subjected to the provisions of the
United States Bankruptcy Code or other law of the United States or any state thereof for the
protection of debtors as in effect at such time (each a “Debtor’s Law”):



     20.1.1 Tenant, Tenant as debtor-in-possession, and any trustee or receiver of Tenant’s assets
(each a “Tenant’s Representative”) shall have no greater right to assume or assign this Lease or
any interest in this Lease, or to sublease any of the Premises than accorded to Tenant in Article
9, except to the extent Landlord shall be required to permit such assumption, assignment or
sublease by the provisions of such Debtor’s Law. Without limitation of the generality of the
foregoing, any right of any Tenant’s Representative to assume or assign this Lease or to sublease
any of the Premises shall be subject to the conditions that:



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                        20.1.1.1 Such Debtor’s Law shall provide to Tenant’s Representative a right of assumption of
this Lease which Tenant’s Representative shall have timely exercised and Tenant’s Representative
shall have fully cured any default of Tenant under this Lease.



                        20.1.1.2 Tenant’s Representative or the proposed assignee, as the case shall be, shall have
deposited with Landlord as security for the timely payment of rent an amount equal to the larger
of: (a) three (3) months’ rent and other monetary charges accruing under this Lease; and (b) any
sum specified in Article 5; and shall have provided Landlord with adequate other assurance of the
future performance of the obligations of the Tenant under this Lease. Without limitation, such
assurances shall include, at least, in the case of assumption of this Lease, demonstration to the
satisfaction of the Landlord that Tenant’s Representative has and will continue to have sufficient
unencumbered assets after the payment of all secured obligations and administrative expenses to
assure Landlord that Tenant’s Representative will have sufficient funds to fulfill the obligations
of Tenant under this Lease; and, in the case of assignment, submission of current financial
statements of the proposed assignee, audited by an independent certified public accountant
reasonably acceptable to Landlord and showing a net worth and working capital in amounts determined
by Landlord to be sufficient to assure the future performance by such assignee of all of the
Tenant’s obligations under this Lease.



                        20.1.1.3 The assumption or any contemplated assignment of this Lease or subleasing any part of
the Premises, as shall be the case, will not breach any provision in any other lease, mortgage,
financing agreement or other agreement by which Landlord is bound.



                        20.1.1.4 Landlord shall have, or would have had absent the Debtor’s Law, no right under
Article 9 to refuse consent to the proposed assignment or sublease by reason of the identity or
nature of the proposed assignee or sublessee or the proposed use of the Premises concerned.



     21. QUIET ENJOYMENT. Landlord represents and warrants that it has full right and authority to
enter into this Lease and that Tenant, while paying the rental and performing its other covenants
and agreements contained in this Lease, shall peaceably and quietly have, hold and enjoy the
Premises for the Term without hindrance or molestation from Landlord subject to the terms and
provisions of this Lease. Landlord shall not be liable for any interference or disturbance by
other tenants or third persons (other than Landlord’s agents, employees or contractors), nor shall
Tenant be released from any of the obligations of this Lease because of such interference or
disturbance.



22. CASUALTY




     22.1 In the event the Premises or the Building are damaged by fire or other cause and in
Landlord’s reasonable estimation such damage can be materially restored within one hundred eighty
(180) days, Landlord shall forthwith repair the same and this Lease shall remain in full force and
effect, except that Tenant shall be entitled to a proportionate abatement in rent from the date of
such damage. Such abatement of rent shall be made pro rata in accordance with the extent to which
the damage and the making of such repairs shall interfere with the use and occupancy by Tenant of
the Premises from time to time as mutually determined, in good faith, by Landlord and Tenant.
Within forty-five (45) days from the date of such damage, Landlord shall notify Tenant, in writing,
of Landlord’s reasonable estimation of the length of time within which material restoration can be
made, and Landlord’s determination shall be binding on Tenant. For purposes of this Lease, the
Building or Premises shall be deemed “materially restored” if they are in substantially the same
condition as immediately before such damage.



     22.2 If such repairs cannot, in Landlord’s reasonable estimation, be made within one hundred
eighty (180) days, Landlord and Tenant shall each have the option of giving the other, at any time
within ninety (90) days after such damage, notice terminating this Lease as of the date of such
damage. In the event of the giving of such notice, this Lease shall expire and all interest of the
Tenant in the Premises shall terminate as of the date of such damage as if such date had been
originally fixed in this Lease for the expiration of the Term. In the event that neither Landlord
nor Tenant exercises its option to terminate this Lease, then Landlord shall repair or restore such
damage, this Lease continuing in full force and effect, and the rent hereunder shall be
proportionately abated as provided in Section 22.1.



     22.3 Landlord shall not be required to repair or replace any damage or loss by or from fire or
other cause to any panelings, decorations, partitions, additions, railings, ceilings, floor
coverings, office fixtures or any other property or improvements installed on the Premises by, or
belonging to, Tenant. Any insurance which may be carried by Landlord or Tenant against loss or
damage to the Building or Premises shall be for the sole benefit of the party carrying such
insurance and under its sole control.



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     22.4     In the event that Landlord should fail to complete such repairs and
material restoration within sixty (60) days after the date estimated by
Landlord therefor as extended by this Section 22.4, Tenant may at its option
and as its sole remedy terminate this Lease by delivering written notice to
Landlord, within fifteen (15) days after the expiration of said period of time,
whereupon the Lease shall end on the date of such notice or such later date
fixed in such notice as if the date of such notice was the date originally
fixed in this Lease for the expiration of the Term; provided, however, that if
construction is delayed because of changes, deletions or additions in
construction requested by Tenant, strikes, lockouts, casualties, Acts of God,
war, material or labor shortages, government regulation or control or other
causes beyond the reasonable control of Landlord, the period for restoration,
repair or rebuilding shall be extended for the amount of time Landlord is so
delayed, but in no event more than an additional ninety (90) days.



     22.5     Notwithstanding anything to the contrary contained in this Article:
(a) Landlord shall not have any obligation whatsoever to repair, reconstruct,
or restore the Premises when the damages resulting from any casualty covered by
the provisions of this Article 22 occur during the last twelve (12) months of
the Term or any extension thereof or if the holder of any indebtedness secured
by a mortgage or deed of trust covering the Premises or Building requires that
any insurance proceeds be applied to such indebtedness, but if Landlord
determines not to repair such damages in either such case, Landlord shall
notify Tenant and if such damages shall render any material portion of the
Premises untenantable Tenant shall have the right to terminate this Lease by
notice to Landlord within fifteen (15) days after receipt of Landlord’s notice;
and (b) in the event the holder of any indebtedness secured by a mortgage or
deed of trust covering the Premises or Building requires that any insurance
proceeds be applied to such indebtedness, then Landlord shall have the right to
terminate this Lease by delivering written notice of termination to Tenant
within fifteen (15) days after such requirement is made by any such holder,
whereupon this Lease shall end on the date of such damage as if the date of
such damage were the date originally fixed in this Lease for the expiration of
the Term.



     22.6     In the event of any damage or destruction to the Building or Premises
by any peril covered by the provisions of this Article 22, it shall be Tenant’s
responsibility to properly secure the Premises and upon notice from Landlord to
remove forthwith, at its sole cost and expense, such portion of all of the
property belonging to Tenant or its licensees from such portion or all of the
Building or Premises as Landlord shall request.


23.     EMINENT DOMAIN. If all or any substantial part of the Premises shall be
taken or appropriated by any public or quasi-public authority under the power
of eminent domain, or conveyance in lieu of such appropriation, either party to
this Lease shall have the right, at its option, of giving the other, at any
time within thirty (30) days after such taking, notice terminating this Lease,
except that Tenant may only terminate this Lease by reason of taking or
appropriation, if such taking or appropriation shall be so substantial as to
materially interfere with Tenant’s use and occupancy of the Premises. If
neither party to this Lease shall so elect to terminate this Lease, the rental
thereafter to be paid shall be adjusted on a fair and equitable basis under the
circumstances. In addition to the rights of Landlord above, if any substantial
part of the Building shall be taken or appropriated by any public or
quasi-public authority under the power of eminent domain or conveyance in lieu
thereof, and regardless of whether the Premises or any part thereof are so
taken or appropriated, Landlord shall have the right, at its sole option, to
terminate this Lease. Landlord shall be entitled to any and all income, rent,
award, or any interest whatsoever in or upon any such sum, which may be paid or
made in connection with any such public or quasi-public use or purpose, and
Tenant hereby assigns to Landlord any interest it may have in or claim to all
or any part of such sums, other than any separate award which may be made with
respect to Tenant’s trade fixtures and moving expenses; Tenant shall make no
claim for the value of any unexpired Term.



24.     SALE BY LANDLORD. In event of a sale or conveyance by Landlord of the
Building, the same shall operate to release Landlord from any future liability
upon any of the covenants or conditions, expressed or implied, contained in
this Lease in favor of Tenant, provided that such successor expressly assumes
Landlord’s obligations hereunder in writing, and in such event Tenant agrees to
look solely to the responsibility of the successor in interest of Landlord in
and to this Lease. Except as set forth in this Article 24, this Lease shall
not be affected by any such sale and Tenant agrees to attorn to the purchaser
or assignee. If any security has been given by Tenant to secure the faithful
performance of any of the covenants of this Lease, Landlord may transfer or
deliver said security, as such, to Landlord’s successor in interest and
thereupon Landlord shall be discharged from any further liability with regard
to said security provided that such successor expressly assumes Landlord’s
obligations hereunder in writing.



25.     ESTOPPEL CERTIFICATES. Within ten (10) business days following any written
request which Landlord may make from time to time, Tenant shall execute and
deliver to Landlord or mortgagee or prospective mortgagee a sworn statement
certifying: (a) the date of commencement of this Lease; (b) the fact that this
Lease is unmodified and in full force and effect (or, if there have been
modifications to this Lease, that this lease is in full force and effect, as
modified, and stating




15









 







the date and nature of such modifications); (c) the date
to which the rent and other sums payable under this Lease have been paid; (d)
the fact that there are no current defaults under this Lease by either Landlord
or Tenant except as specified in Tenant’s statement; and (e) such other matters
as may be reasonably requested by Landlord. Landlord and Tenant intend that
any statement delivered pursuant to this Article 25 may be relied upon by any
mortgagee, beneficiary or purchaser, and Tenant shall be liable for all loss,
cost or expense resulting from the failure of any sale or funding of any loan
caused by any material misstatement contained in such estoppel certificate
which material misstatement is made by Tenant in bad faith and which is not
corrected within ten (10) business days of receipt of written request that such
correction be made. Tenant irrevocably agrees that if Tenant fails to execute
and deliver such certificate within such ten (10) business day period Landlord
or Landlord’s beneficiary or agent may execute and deliver such certificate on
Tenant’s behalf, and that such certificate shall be fully binding on Tenant.



26.     SURRENDER OF PREMISES.




     26.1     Tenant shall arrange to meet Landlord for two (2) joint inspections
of the Premises, the first to occur at least thirty (30) days (but no more than
sixty (60) days) before the last day of the Term, and the second to occur not
later than forty-eight (48) hours after Tenant has vacated the Premises. In
the event of Tenant’s failure to arrange such joint inspections and/or
participate in either such inspection, Landlord’s inspection at or after
Tenant’s vacating the Premises shall be conclusively deemed correct for
purposes of determining Tenant’s responsibility for repairs and restoration.



     26.2     All alterations, additions, and improvements in, on, or to the
Premises made or installed by or for Tenant, including carpeting (collectively,
“Alterations”), shall be and remain the property of Tenant during the Term.
Upon the expiration or sooner termination of the Term, all Alterations shall
become a part of the realty and shall belong to Landlord without compensation,
and title shall pass to Landlord under this Lease as by a bill of sale. At the
end of the Term or any renewal of the Term or other sooner termination of this
Lease, Tenant will peaceably deliver up to Landlord possession of the Premises,
together with all Alterations by whomsoever made, in the same conditions
received or first installed, broom clean and free of all debris, excepting only
ordinary wear and tear and damage by fire or other casualty. Notwithstanding
the foregoing, if Landlord elects by notice given to Tenant at least ten (10)
days prior to expiration of the Term, Tenant shall, at Tenant’s sole cost,
remove any Alterations, including carpeting, so designated by Landlord’s
notice, and repair any damage caused by such removal. Tenant must, at Tenant’s
sole cost, remove upon termination of this Lease, any and all of Tenant’s
furniture, furnishings, movable partitions of less than full height from floor
to ceiling and other trade fixtures and personal property (collectively,
“Personalty”). Personalty not so removed shall be deemed abandoned by the
Tenant and title to the same shall thereupon pass to Landlord under this Lease
as by a bill of sale, but Tenant shall remain responsible for the cost of
removal and disposal of such Personalty, as well as any damage caused by such
removal.



     26.3     All obligations of Tenant under this Lease not fully performed as of
the expiration or earlier termination of the Term shall survive the expiration
or earlier termination of the Term Upon the expiration or earlier termination
of the Term, Tenant shall pay to Landlord the amount, as reasonably estimated
by Landlord, necessary to repair and restore the Premises as provided in this
Lease and/or to discharge Tenant’s obligation for unpaid amounts due or to
become due to Landlord. All such amounts shall be used and held by Landlord
for payment of such obligations of Tenant, with Tenant being liable for any
additional costs upon demand by Landlord, or with any excess to be returned to
Tenant after all such obligations have been determined and satisfied. Any
otherwise unused Security Deposit shall be credited against the amount payable
by Tenant under this Lease.


27.     NOTICES. Any notice or document required or permitted to be delivered
under this Lease shall be addressed to the intended recipient, by fully prepaid
registered or certified United States Mail return receipt requested, or by
reputable independent contract delivery service furnishing a written record of
attempted or actual delivery, and shall be deemed to be delivered when tendered
for delivery to the addressee at its address set forth on the Reference Pages,
or at such other address as it has then last specified by written notice
delivered in accordance with this Article 27. Any such notice or document may
also be personally delivered if a receipt is signed by and received from, the
individual, if any, named in Tenant’s Notice Address.



28.     TAXES PAYABLE BY TENANT. In addition to rent and other charges to be paid
by Tenant under this Lease, Tenant shall reimburse to Landlord, upon demand,
any and all taxes payable by Landlord (other than income taxes) whether or not
now customary or within the contemplation of the parties to this Lease: (a)
upon, allocable to, or measured by or on the gross or net rent payable under
this Lease, including without limitation any excise tax levied by the State,
any political subdivision thereof, or the Federal Government with respect to
the receipt of such rent; (b) upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy of the
Premises or any portion




16









 







thereof, including any sales, use or service tax
imposed as a result thereof; (c) upon or measured by the Tenant’s gross
receipts or payroll or the value of Tenant’s equipment, furniture, fixtures and
other personal property of Tenant or leasehold improvements, alterations or
additions located in the Premises; or (d) upon this transaction or any document
to which Tenant is a party creating or transferring any interest of Tenant in
this Lease or the Premises. In addition to the foregoing, Tenant agrees to
pay, before delinquency, any and all taxes levied or assessed against Tenant
and which become payable during the term hereof upon Tenant’s equipment,
furniture, fixtures and other personal property of Tenant located in the
Premises.



29.     INTENTIONALLY DELETED.



30.     DEFINED TERMS AND HEADINGS. The Article headings shown in this Lease are
for convenience of reference and shall in no way define, increase, limit or
describe the scope or intent of any provision of this Lease. Any
indemnification or insurance of Landlord shall apply to and inure to the
benefit of all the following “Landlord Entities”, being Landlord, Landlord’s
investment manager, and the trustees, boards of directors, officers, general
partners, beneficiaries, stockholders, employees and agents of each of them.
Any option granted to Landlord shall also include or be exercisable by
Landlord’s trustee, beneficiary, agents and employees, as the case may be. In
any case where this Lease is signed by more than one person, the obligations
under this Lease shall be joint and several. The terms “Tenant” and “Landlord”
or any pronoun used in place thereof shall indicate and include the masculine
or feminine, the singular or plural number, individuals, firms or corporations,
and their and each of their respective successors, executors, administrators
and permitted assigns, according to the context hereof. The term “rentable
area” shall mean the rentable area of the Premises or the Building as
reasonably calculated by the Landlord on the basis of the plans and
specifications of the Building including a proportionate share of any common
areas. Landlord hereby represents and warrants to Tenant that, to its actual
knowledge, the figures for the rentable square footage of the Premises and
Tenant’s Proportionate Share shown on the Reference Pages are correct and
Tenant hereby accepts and agrees to be bound by same; however, Landlord may
adjust either or both figures if there is manifest error, addition or
subtraction to the Building or any business park or complex of which the
Building is a part, remeasurement or other circumstance reasonably justifying
adjustment. The term “Building” refers to the structure in which the Premises
are located and the common areas (parking lots, sidewalks, landscaping, etc.)
appurtenant thereto. If the Building is part of a larger complex of
structures, the term “Building” may include the entire complex, where
appropriate (such as shared Expenses or Taxes) and subject to Landlord’s
reasonable discretion.



31.     TENANT’S AUTHORITY. If Tenant signs as a corporation, partnership, trust
or other legal entity each of the persons executing this Lease on behalf of
Tenant represents and warrants that Tenant has been and is qualified to do
business in the state in which the Building is located, that the entity has
full right and authority to enter into this Lease, and that all persons signing
on behalf of the entity were authorized to do so by appropriate actions.
Tenant agrees to deliver to Landlord, simultaneously with the delivery of this
Lease, a corporate resolution or other appropriate documentation reasonably
acceptable to Landlord evidencing the due authorization of Tenant to enter into
this Lease.



32.     FINANCIAL STATEMENTS AND CREDIT REPORTS. At Landlord’s request, Tenant
shall deliver to Landlord a copy, certified by an officer of Tenant as being a
true and correct copy, of Tenant’s most recent audited financial statement, or,
if unaudited, certified by Tenant’s chief financial officer as being true,
complete and correct in all material respects. Tenant hereby authorizes
Landlord to obtain one or more credit reports on Tenant at any time, and shall
execute such further authorizations as Landlord may reasonably require in order
to obtain a credit report. Landlord agrees to hold all information obtained
pursuant to this Article 32 strictly confidential.



33.     COMMISSIONS. Each of the parties represents and warrants to the other that
it has not dealt with any broker or finder in connection with this Lease,
except as described on the Reference Pages.



34.     TIME AND APPLICABLE LAW. Time is of the essence of this Lease and all of
its provisions. This Lease shall in all respects be governed by the laws of
the state in which the Building is located.



35.     SUCCESSORS AND ASSIGNS. Subject to the provisions of Article 9, the terms,
covenants and conditions contained in this Lease shall be binding upon and
inure to the benefit of the heirs, successors, executors, administrators and
assigns of the parties to this Lease.



36.     ENTIRE AGREEMENT. This Lease, together with its exhibits, contains all
agreements of the parties to this Lease and supersedes any previous
negotiations. There have been no representations made by the Landlord or any
of its representatives or understandings made between the parties other than
those set forth in this Lease and its exhibits. This Lease may not be modified
except by a written instrument duly executed by the parties to this Lease.




17









 







37.     EXAMINATION NOT OPTION. Submission of this Lease shall not be deemed to be
a reservation of the Premises. Landlord shall not be bound by this Lease until
it has received a copy of this Lease duly executed by Tenant and has delivered
to Tenant a copy of this Lease duly executed by Landlord, and until such
delivery Landlord reserves the right to exhibit and lease the Premises to other
prospective tenants. Notwithstanding anything contained in this Lease to the
contrary, Landlord may withhold delivery of possession of the Premises from
Tenant until such time as Tenant has paid to Landlord any security deposit
required by Article 5, the first month’s rent as set forth in Article 3 and any
sum owed pursuant to this Lease.



38.     RECORDATION. Tenant shall not record or register this Lease or a short
form memorandum hereof without the prior written consent of Landlord, and then
shall pay all charges and taxes incident such recording or registration.



39.     OPTION TO EXTEND. Tenant shall, provided the Lease is in full force
and effect and Tenant is not in default beyond any applicable cure period under
any of the other terms and conditions of the Lease at the time of notification
or commencement, have two (2) options to extend the term of this Lease for a
period of five (5) years each, on the same terms and conditions as set forth in
the Lease, except as modified by the terms, covenants and conditions as set
forth below:





a.     If Tenant elects to exercise said option, then Tenant shall provide
Landlord with written notice no earlier than the date which is two hundred
ten (210) days prior to the expiration of the Term of this Lease, but no
later than the date which is one hundred eighty (180) days prior to the
expiration of theTerm of this Lease. If Tenant fails to provide such
notice, Tenant shall have no right to extend or renew the term of the
Lease.




b.     The Annual Rent and Monthly Installment of Rent in effect at the
expiration of the then current Term of the Lease shall be increased to
reflect one hundred percent (100%) of the current fair market rental for
comparable space in the Building and in other similar buildings in the
same rental market as of the date the extended term is to commence, taking
into account the specific provisions of the Lease which will remain
constant. Landlord shall advise Tenant of the new Annual Rent and Monthly
Installment of Rent for the Premises no later than thirty (30) days after
receipt of Tenant’s written request therefor. Said request shall be made
no earlier than sixty (60) days prior to the first date on which Tenant
may exercise its option under this Paragraph. Said notification of the
new Annual Rent and Minimum Monthly Installment of Rent may include a
provision for its escalation to provide for a change in fair market rental
between the time of notification and the commencement of the extended
term. In no event shall the Annual Rent and Monthly Installment of Rent
for either extended period be less than the Annual Rent and Monthly
Installment of Rent in effect at the end of the preceding period.




c.     This option is not transferable. The parties hereto acknowledge and
agree that they intend that the aforesaid option to extend this Lease
shall be “personal” to Tenant as set forth above and that in no other
event will any assignee or sublessee have any rights to exercise the
aforesaid option to extend without Landlord’s prior written consent.




d.     Should the extension options provided for above be exercised, Tenant
shall have no further right to extend the term of the Lease. Should
Tenant not exercise the first extension option, then Tenant shall have no
further extension option.



40.      RIGHT OF FIRST OFFER. Subject to Subsection 40b below, and subject to any
expansion or renewal options of any current tenant in the Building or the right
of Landlord to extend the Lease of any current tenant in the Building (a “Prior
Tenant”), Landlord hereby grants to Tenant for the initial term of the Lease a
right of first offer for any space that is adjacent to the Premises
(collectively, the “ROFO Space”), to be exercised in accordance with Subsection
a below




a.     If any ROFO Space becomes available for lease to anyone other than a
Prior Tenant, Landlord shall so notify Tenant (“Landlord’s ROFO Notice”)
identifying the available ROFO Space (the “Subject ROFO Space”).
Landlord’s ROFO Notice may be given up to twelve (12) months in advance of
such availability and shall contain the terms upon which Landlord intends
to offer the Subject ROFO Space for lease to the market. Tenant shall
notify Landlord within ten (10) business days of receipt of Landlord’s
ROFO Notice whether it desires to lease the Subject ROFO Space on the
terms set forth in Landlord’s ROFO Notice. If Tenant does not notify
Landlord within said 10-business day period that it will lease the Subject
ROFO Space, Tenant shall be deemed to have refused the Subject ROFO Space.
After any refusal, Tenant shall have no further right of first offer for
such Subject ROFO Space and Landlord shall be free to lease such space to
any party for any term and upon any terms it desires, provided same are
not materially more favorable to the new tenant than those offered to
Tenant. If Tenant exercises its right of first



18









 






offer with respect to the
Subject ROFO Space, such space shall be added to the Premises for all
purposes of this Lease for the remaining Term of the Lease (but in no
event less than three (3) years) on (a) the terms specified in Landlord’s
ROFO Notice, and (b) the terms of this Lease to the extent that they do
not conflict with the terms specified in Landlord’s ROFO Notice, except
that the terms of Landlord’s ROFO Notice shall not apply during any
extended Term of the Lease but, instead, the terms of the Lease applying
to the remainder of the Premises during the extended Term shall also apply
to the Subject ROFO Space.




b. Tenant’s right of first offer is subject to the conditions that: (i)
on the date that Tenant delivers its notice exercising its right of first
offer, Tenant is not in default under this Lease after the expiration of
any applicable notice and cure periods, and (ii) Tenant shall not have
assigned the Lease, or sublet all of the Premises under a sublease which
is in effect at any time during the period commencing with Tenant’s
delivery of its notice and ending on the date the ROFO Space is added to
the Premises.




c. Promptly after Tenant’s exercise of its right of first offer, Landlord
shall prepare and deliver to Tenant an amendment to the Lease to reflect
changes in the Premises, Base Rent, Tenant’s Proportionate Share and any
other appropriate terms changed by the addition of the ROFO Space. Within
fifteen (15) business days thereafter, Tenant shall execute and return the
amendment for Landlord’s execution.


41.     FORCE MAJEURE. If any performance by Landlord hereunder is delayed due
to any conditions, acts or circumstances beyond the control of Landlord
including, without limitation, war, terrorism, strike, fire, labor disturbance,
riot or civil commotion, act of government or any governmental agency, flood,
earthquake, landslide, act of God, act of third parties or any other reason of
force majeure, the time within which Landlord is required to complete such
performance shall be extended for a period equal to the period of such delay.



42.     LIMITATION OF LANDLORD’S LIABILITY. Redress for any claim against Landlord
under this Lease shall be limited to and enforceable only against and to the
extent of Landlord’s interest in the Building. The obligations of Landlord
under this Lease are not intended to be and shall not be personally binding on,
nor shall any resort be had to the private properties of, any of its or its
investment manager’s trustees, directors, officers, partners, beneficiaries,
members, stockholders, employees, or agents, and in no case shall Landlord be
liable to Tenant hereunder for any lost profits, damage to business, or any
form of special, indirect or consequential damages.



	 	 	 
	LANDLORD:

	 	TENANT:
	 
	 	 
	CABOT
INDUSTRIAL PROPERTIES, L.P.,


a Delaware limited partnership

	 	PORTOLA PACKAGING, INC.,


a Delaware corporation
	 
	By: RREEF Management Company, a
Delaware corporation, 

its Authorized Agent


Name: ________________________


          Bret C. Borg, CPM

	 	By: ________________________


Name:
	
Title: District Manager

	 	
Title:
	Dated: May ___, 2003

	 	Dated: May ___, 2003







19









 






EXHIBIT A – FLOOR PLAN DEPICTING THE PREMISES




attached to and made a part of Lease bearing the

Lease Reference Date of June 5, 2003, between

Cabot Industrial Properties, L.P., as Landlord and

Portola Packaging, Inc., as Tenant




     Exhibit A is intended only to show the general layout of the Premises as of
the beginning of the Term of this Lease. It does not in any way supersede any
of Landlord’s rights set forth in Article 17 with respect to arrangements
and/or locations of public parts of the Building and changes in such
arrangements and/or locations. It is not to be scaled; any measurements or
distances shown should be taken as approximate.



A-1









 





EXHIBIT A-1 – SITE PLAN




attached to and made a part of Lease bearing the

Lease Reference Date of June 5, 2003, between

Cabot Industrial Properties, L.P., as Landlord and

Portola Packaging, Inc., as Tenant



Exhibit A-1 is intended only to show the general layout of the Premises as of
the beginning of the Term of this Lease. It does not in any way supersede any
of Landlord’s rights set forth in Article 17 with respect to arrangements
and/or locations of public parts of the Building and changes in such
arrangements and/or locations. It is not to be scaled; any measurements or
distances shown should be taken as approximate.




A-2









 








EXHIBIT B – INITIAL ALTERATIONS




attached to and made a part of Lease bearing the

Lease Reference Date of June 5, 2003, between

Cabot Industrial Properties, L.P., as Landlord and

Portola Packaging, Inc., as Tenant




     1.      INITIAL IMPROVEMENTS. Landlord shall cause plans and specifications
(the “Plans”) of the improvements (the “Initial Improvements”, which shall be
defined to exclude Tenant’s personal property, trade fixtures [such as, but not
limited to, silos, molds, and processing equipment], equipment, furniture and
inventory) to be prepared in sufficient detail to define the construction work
necessary to implement the Initial Improvements pursuant to that certain floor
plan dated April 14, 2003 (attached hereto as Exhibit “I”). Tenant shall have
five (5) business days after receipt thereof to either provide comments to such
Plans or to approve the same. Tenant shall be deemed to have approved such
Plans if it does not timely provide comments on such Plans. If Tenant provides
Landlord with comments to the Plans, Landlord shall provide revised Plans to
Tenant incorporating Tenant’s comments within one (1) week after receipt of
Tenant’s comments. Tenant shall within five (5) business days after receipt
either provide comments to such revised Plans or approve the same. Tenant
shall be deemed to have approved such revised Plans if it does not timely
provide comments on such Plans. The process described above shall be repeated,
if necessary, until the Plans have been finally approved by the parties.
Landlord shall thereafter cause to be performed the Initial Improvements in the
Premises in accordance with the final Plans. The parties shall cooperate to
agree upon the final Plans as promptly as possible.



     The Plans for the Initial Improvements shall comply with all applicable
governmental requirements. Landlord’s approval of any of the Plans (or any
modifications or changes thereto) shall not impose upon Landlord or its agents
or representatives any obligation with respect to the design of the Initial
Improvements or the compliance of such Initial Improvements or the Plans with
applicable governmental requirements.



     Landlord shall select a contractor to perform the construction of the
Initial Improvements. Such contractor shall be selected by a competitive bid
process contractors selected by Landlord, with consultation of Tenant.
Landlord shall use commercially reasonable efforts to cause the Initial
Improvements to be substantially completed, except for minor “Punch List”
items, on or before the Scheduled Commencement Date specified in the Reference
Pages, subject to Tenant Delay (as defined in Section 4 hereof) and force
majeure (as defined in Article 41 of the Lease).



     Landlord, or an agent of Landlord, shall provide project management
services in connection with the construction of the Initial Improvements and
the Change Orders (hereinafter defined). Such project management services
shall be performed for a fee of three percent (3%) of all costs related to the
preparation of the Plans and the construction of the Initial Improvements and
the Change Orders, and shall be paid (at Landlord’s discretion) from the
Landlord’s Contribution and/or Financed Amount (as said terms are defined
below).



     2.      CHANGE ORDERS. If, prior to the Commencement Date, Tenant shall
require improvements or changes (individually or collectively, “Change Orders”)
to the Premises in addition to, revision of or substitution for the Initial
Improvements, Tenant shall deliver to Landlord for its approval plans and
specifications for such Change Orders. If Landlord does not approve of the
plans for Change Orders, Landlord shall advise Tenant of the revisions
required. Tenant shall revise and redeliver the plans and specifications to
Landlord within five (5) business days of Landlord’s advice or Tenant shall be
deemed to have abandoned its request for such Change Orders. Tenant shall pay
for all revisions of the Plans, and the construction of all Change Orders.



     3.      COST OF INITIAL IMPROVEMENTS AND CHANGE ORDERS. The parties anticipate
that the Initial Improvements will cost approximately Four Million Dollars
($4,000,000.00). Landlord shall contribute up to Two Million Three Hundred
Thousand Dollars ($2,300,000.00) (the “Landlord’s Contribution”) towards
construction of the Initial Improvements. The costs and expenses in excess of
Landlord’s Contribution, including those associated with any change(s) to the
Plans and any construction resulting from such change(s), shall be the sole
responsibility of Tenant. Landlord has no obligation to pay for the costs and
expenses associated with construction of the Initial Improvements and any
Change Orders to the extent said costs and expenses exceed the Landlord’s
Contribution. If the cost of construction of the Initial



B-1









 





     Improvements
(including any Change Orders) will result in a contract price which exceeds the
Landlord’s Contribution, Landlord shall take the first One Hundred Fifty
Thousand Dollars ($150,000.00) of such overage, plus ten percent (10%) thereof
(to be held by Landlord to offset any unforeseen additional charges and
refunded to Tenant in the event there are no unforeseen additional charges or
if the cost thereof is less than the amount paid by Tenant), from the Security
Deposit, in which event Tenant shall have the obligation (without any notice
being required from Landlord) to restore by September 15, 2003 the amount of
the Security Deposit so applied by Landlord. If the cost of construction of
the Initial Improvements, including any Change Orders (together with the ten
percent contingency amount thereon) result in an overage in excess of
$150,000.00 above the amount of the Landlord’s Contribution, and said amount
has been determined by Landlord and provided to Tenant in writing prior to
September 1, 2003, then Tenant shall deposit such overage, plus ten percent
(10%) thereof (to be held by Landlord to offset any unforeseen additional
charges and refunded to Tenant in the event there are no unforeseen additional
charges or the cost thereof is less than the amount paid by Tenant) (“the
Overage Deposit”, which the parties initially estimate to be $1,688,500.00 [the
$1,700,00.00 difference between the estimated cost of construction and the
Landlord’s Contribution, less the $165,000.00 to be taken by Landlord from the
Security Deposit {including the ten percent contingency}, plus ten percent {the
contingency amount}of the $1,535,000.00 estimated balance remaining due]), to
Landlord no later than September 5, 2003. If the amount of such overage is
determined on or after September 1, 2003, then Tenant shall tender the Overage
Deposit within ten (10) business days of its receipt of written notice from
Landlord of the amount thereof. Landlord and Tenant hereby acknowledge and
agree that the Overage Deposit may arise and be paid in one (1) or more
installments as the cost of construction of the Initial Improvements are
incurred (but in no event shall Tenant be required to pay any installment
before September 1, 2003), and if paid in installments the Overage Deposit
shall be the total of any and all such installments. Notwithstanding anything
in the Lease to the contrary, Landlord and Tenant hereby acknowledge and agree
that Landlord shall be responsible for paying the first $2,300,000.00 in
construction costs with respect to the Initial Improvements and any Change
Orders, that the first $150,000.00 in excess thereof shall be taken from
Tenant’s Security Deposit (to be restored by Tenant by September 15, 2003), and
that the balance of any cost in excess thereof shall then be taken from the
Overage Deposit. Landlord and Tenant hereby each agree to use reasonable
efforts to ensure that the foregoing sentence is included in any and all
construction contracts entered into with respect to the Initial Improvements
and any Change Orders. If Landlord expends less that the amount of Landlord’s
Contribution, the difference between the amount of Landlord’s Contribution and
the amount spent by Landlord shall be paid to Tenant within thirty (30) days
after the Commencement Date.



     4.      COMMENCEMENT DATE DELAY. The Commencement Date shall be delayed until
the Initial Improvements have been substantially completed (the “Completion
Date”), except to the extent that the delay shall be caused by any one or more
of the following (a “Tenant Delay”):



          (a)     Tenant’s request for Change Orders whether or not any such Change
Orders are actually performed; or



          (b)     Contractor’s performance of any Change Orders; or



          (c)     Tenant’s request for materials, finishes or installations requiring
unusually long lead times; or



          (d)     Tenant’s delay in reviewing, revising or approving plans and
specifications beyond the periods set forth herein; or



          (e)     Tenant’s delay in providing information critical to the normal
progression of the project. Tenant shall provide such information as soon as
reasonably possible, but in no event longer than one week after receipt of such
request for information from the Landlord; or



          (f)     Tenant’s delay in making payments to Landlord for the costs of any
Change Orders; or



          (g)     Any other act or omission by Tenant, its agents, contractors or
persons employed by any of such persons; or



B-2









 





          (h)     Any delay caused by any contractor(s) that Tenant has required that
Landlord hire to perform certain portions of the construction of the Initial
Improvements including, but not limited to, the following contractors: (i)
Corbins Electric, (ii) Liqui-Chill, and (iii) the overhead crane contractor,
which is to be determined by Tenant.


If the Commencement Date is delayed for any reason, then Landlord shall cause
Landlord’s architect to certify the date on which the Initial Improvements
would have been completed but for such Tenant Delay, or were in fact completed
without any Tenant Delay.




     5.      ACCESS BY TENANT PRIOR TO COMMENCEMENT OF TERM. As long as, in the
opinion of Landlord and the general contractor, such access will not interfere
with completion of the Initial Improvements or delay the Commencement Date,
Landlord shall permit Tenant and its agents to enter the Premises prior to the
Commencement Date to install furniture and fixtures and to otherwise prepare
the Premises for Tenant’s use and occupancy. This permission constitutes a
license only, conditioned upon Tenant’s:



          (a)     working in harmony with Landlord and Landlord’s agents, contractors,
workmen, mechanics and suppliers and with other tenants and occupants of the
Building;



          (b)     obtaining in advance Landlord’s reasonable approval of the contractors
proposed to be used by Tenant; and



          (c)     furnishing Landlord with such insurance as Landlord may reasonably
require against liabilities which may arise out of such entry.



     Landlord shall not be liable in any way for any injury, loss or damage
which may occur to any of Tenant’s property or installations in the Premises
prior to the Commencement Date other than as a result of the gross negligence
or willful misconduct of Landlord, its agents or employees. Tenant shall
protect, defend, indemnify and save harmless Landlord from all liabilities,
costs, damages, fees and expenses arising out of the activities of Tenant or
its agents, contractors, suppliers or workmen in the Premises or the Building.
The entry and occupation permitted under this Section shall be governed by all
other terms of the Lease.



     6. MISCELLANEOUS. Terms used in this Exhibit B shall have the meanings
assigned to them in the Lease. The terms of this Exhibit B are subject to the
terms of the Lease.



     7. TENDER OF THE PREMISES. The Commencement Date shall be deemed
to have occurred on the date that Landlord shall tender possession of
the Premises to Tenant with the Initial Improvements having been
substantially completed (which Commencement Date may be before the
Scheduled Commencement Date set forth on the Reference Pages of the
Lease or before the New Scheduled Commencement Date, as said term is
defined in Section 2.2 of the Lease).



(Remainder of Page Left Blank Intentionally)




B-3









 








EXHIBIT C – COMMENCEMENT DATE MEMORANDUM




attached to and made a part of Lease bearing the

Lease Reference Date of June 5, 2003, between

Cabot Industrial Properties, L.P., as Landlord and

Portola Packaging, Inc., as Tenant




COMMENCEMENT DATE MEMORANDUM




     THIS MEMORANDUM, made as of ___, 20___, by and between ___
(“Landlord”) and ___(“Tenant”).


     Recitals


	 	 	
	 
	A.	 	Landlord and Tenant are parties to that certain Lease, dated
for reference ___, 20___(the “Lease”) for certain premises (the
“Premises”) consisting of approximately ___square feet at the
building commonly known as ___.
	 
	B.	 	Tenant is in possession of the Premises and the Term of the
Lease has commenced.
	 
	C.	 	Landlord and Tenant desire to enter into this Memorandum
confirming the Commencement Date, the Termination Date and other
matters under the Lease.
	 





     NOW, THEREFORE, Landlord and Tenant agree as follows:



	1.	 	     The actual Commencement Date is ___.
	 
	2.	 	     The actual Termination Date is ___.
	 
	3.	 	The schedule of the Annual Rent and the Monthly Installment of Rent set
forth on the Reference Pages is deleted in its entirety, and the following is
substituted therefor:






[insert rent
schedule] __________________________________________________




	4.	 	     Capitalized terms not defined herein shall have the same meaning as set
forth in the Lease.
	 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first above written.


	 	 	 
	LANDLORD:

	 	TENANT:
	 
	By:
	 	 
	 
	By:
__________ DO_NOT_SIGN
__________ 

Name: _______________________________


Title: ________________________________


Dated: _______________________________


	 	By: __________ DO_NOT_SIGN__________

Name: _______________________________


Title: ________________________________


Dated: _______________________________










C-1









 






EXHIBIT D – RULES AND REGULATIONS




attached to and made a part of Lease bearing the

Lease Reference Date of June 5, 2003, between

Cabot Industrial Properties, L.P., as Landlord and

Portola Packaging, Inc., as Tenant



1.     No sign, placard, picture, advertisement, name or notice (collectively
referred to as “Signs”) shall be installed or displayed on any part of the
outside of the Building without the prior written consent of the Landlord which
consent shall be in Landlord’s sole discretion. All approved Signs shall be
printed, painted, affixed or inscribed at Tenant’s expense by a person or
vendor approved by Landlord and shall be removed by Tenant at Tenant’s expense
upon vacating the Premises. Landlord shall have the right to remove any Sign
installed or displayed in violation of this rule at Tenant’s expense and
without notice.



2.     If Landlord objects in writing to any curtains, blinds, shades or screens
attached to or hung in or used in connection with any window or door of the
Premises or Building, Tenant shall immediately discontinue such use. No awning
shall be permitted on any part of the Premises. Tenant shall not place
anything or allow anything to be placed against or near any glass partitions or
doors or windows which may appear unsightly, in the opinion of Landlord, from
outside the Premises.



3.     Tenant shall not alter any lock or other access device or install a new or
additional lock or access device or bolt on any door of its Premises without
the prior written consent of Landlord. Tenant, upon the termination of its
tenancy, shall deliver to Landlord the keys or other means of access to all
doors.



4.     If Tenant requires telephone, data, burglar alarm or similar service, the
cost of purchasing, installing and maintaining such service shall be borne
solely by Tenant. No boring or cutting for wires will be allowed without the
prior written consent of Landlord. Landlord shall direct electricians as to
where and how telephone, data, and electrical wires are to be introduced or
installed. The location of burglar alarms, telephones, call boxes or other
office equipment affixed to the Premises shall be subject to the prior written
approval of Landlord.



5.     Tenant shall not place a load upon any floor of its Premises, including
mezzanine area, if any, which exceeds the load per square foot that such floor
was designed to carry and that is allowed by law, which load limit shall be
provided by Landlord to Tenant in writing. Heavy objects shall stand on such
platforms as reasonably determined by Landlord to be necessary to properly
distribute the weight. Landlord will not be responsible for loss of or damage
to any such equipment or other property from any cause other than the gross
negligence or willful misconduct of Landlord, its agents, employees or
contractors, and all damage done to the Building by maintaining or moving such
equipment or other property shall be repaired at the expense of Tenant.



6.     Tenant shall not install any radio or television antenna, satellite dish,
loudspeaker or other device on the roof or exterior walls of the Building
without Landlord’s prior written consent which consent shall be in Landlord’s
sole discretion.



7.     Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork, plaster or drywall (except for pictures and general office uses) or
in any way deface the Premises or any part thereof. Tenant shall not affix
any floor covering to the floor of the Premises or paint or seal any floors in
any manner except as approved by Landlord. Tenant shall repair any damage
resulting from noncompliance with this rule.



8.     No cooking shall be done or permitted on the Premises, except that
Underwriters’ Laboratory approved microwave ovens or equipment for brewing
coffee, tea, hot chocolate and similar beverages shall be permitted, provided
that such equipment and use is in accordance with all applicable federal, state
and city laws, codes, ordinances, rules and regulations.



9.     Tenant shall not use any hand trucks except those equipped with the rubber
tires and side guards, and may use such other material-handling equipment as
Landlord may reasonably approve. Tenant shall not bring any other vehicles of
any kind into the Building. Forklifts which operate on asphalt areas shall only
use tires that do not damage the asphalt.



10.     Tenant shall not use the name of the Building or any photograph or other
likeness of the Building in connection with or in promoting or advertising
Tenant’s business except that Tenant may include the Building name in Tenant’s
address.




D-1









 







11.     All trash and refuse shall be contained in suitable receptacles at
locations approved by Landlord. Tenant shall not place in the trash receptacles
any personal trash or material that cannot be disposed of in the ordinary and
customary manner of removing such trash without violation of any law or
ordinance governing such disposal.



12.     Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governing authority.



13.     Tenant assumes all responsibility for securing and protecting its Premises
and its contents including keeping doors locked and other means of entry to the
Premises closed.



14.     Tenant shall not use any method of heating or air conditioning other than
that supplied by Landlord without Landlord’s prior written consent.



15.     No person shall go on the roof without Landlord’s permission.



16.     Tenant shall not permit any animals, other than seeing-eye dogs, to be
brought or kept in or about the Premises or any common area of the property.



17.     Tenant shall not permit any motor vehicles to be washed or mechanical work
or maintenance of motor vehicles to be performed on any portion of the Premises
or parking lot.



18.     These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of any premises in the Building.



19.     Landlord reserves the right to make such other and reasonable rules and
regulations as in its judgment may from time to time be needed for safety and
security, for care and cleanliness of the Building and for the preservation of
good order in and about the Building, provided same shall apply uniformly to
all tenants. Tenant agrees to abide by all such rules and regulations herein
stated and any additional rules and regulations which are adopted. Tenant
shall be responsible for the observance of all of the foregoing rules by
Tenant’s employees, agents, clients, customers, invitees and guests.



20.     Any toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown into them. The
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the Tenant who, or whose employees or invitees,
shall have caused it.



21.     Tenant shall not permit smoking or carrying of lighted cigarettes or cigars
in areas reasonably designated by Landlord or any applicable governmental
agencies as non-smoking areas.



22.     Any directory of the Building or project of which the Building is a part
(“Project Area”), if provided, will be exclusively for the display of the name
and location of tenants only and Landlord reserves the right to charge for the
use thereof and to exclude any other names.



23.     Canvassing, soliciting, distribution of handbills or any other written
material in the Building or Project Area is prohibited and each tenant shall
cooperate to prevent the same. No tenant shall solicit business from other
tenants or permit the sale of any goods or merchandise in the Building or
Project Area without the written consent of Landlord.



24.     Any equipment belonging to Tenant which causes noise or vibration that may
be transmitted to the structure of the Building or to any space therein to such
a degree as to be objectionable to Landlord or to any tenants in the Building
shall be placed and maintained by Tenant, at Tenant’s expense, on vibration
eliminators or other devices sufficient to eliminate the noise or vibration.



25.     Driveways, sidewalks, halls, passages, exits, entrances and stairways
(“Access Areas”) shall not be obstructed by tenants or used by tenants for any
purpose other than for ingress to and egress from their respective premises.
Access areas are not for the use of the general public and Landlord shall in
all cases retain the right to control and prevent access thereto by all persons
whose presence, in the judgement of Landlord, shall be prejudicial to the
safety, character, reputation and interests of the Building or its tenants.





D-2









 







26.     Landlord reserves the right to designate the use of parking areas and
spaces. Tenant shall not park in visitor, reserved, or unauthorized parking
areas. Tenant and Tenant’s guests shall park between designated parking lines
only and shall not park motor vehicles in those areas designated by Landlord
for loading and unloading. Vehicles in violation of the above shall be subject
to being towed at the vehicle owner’s expense. Vehicles parked overnight
without prior written consent of the Landlord shall be deemed abandoned and
shall be subject to being towed at vehicle owner’s expense. Tenant will from
time to time, upon the request of Landlord, supply Landlord with a list of
license plate numbers of vehicles owned or operated by its employees or agents.



27.     No trucks, tractors or similar vehicles can be parked anywhere other than
in Tenant’s own truck dock area. Tractor-trailers which must be unhooked or
parked with dolly wheels beyond the concrete loading areas must use steel
plates or wood blocks under the dolly wheels to prevent damage to the asphalt
paving surfaces. No parking or storing of such trailers will be permitted in
the parking areas or on streets adjacent thereto.



28. During periods of loading and unloading, Tenant shall not unreasonably
interfere with traffic flow and loading and unloading areas of other tenants.
All products, materials or goods must be stored within the Tenant’s Premises
and not in any exterior areas, including, but not limited to, exterior dock
platforms, against the exterior of the Building, parking areas and driveway
areas. Tenant agrees to keep the exterior of the Premises clean and free of
nails, wood, pallets, packing materials, barrels and any other debris produced
from their operation.




[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]





D-3










 





EXHIBIT E – HAZARDOUS MATERIALS




attached to and made a part of Lease bearing the

Lease Reference Date of June 5, 2003, between

Cabot Industrial Properties, L.P., as Landlord and

Portola Packaging, Inc., as Tenant





	1.	 	Tenant agrees that Tenant, its agents, contractors, licensees, or
invitees shall not handle, use, manufacture, store or dispose of any
flammables, explosives, radioactive materials, hazardous wastes or
materials, toxic wastes or materials, or other similar substances,
petroleum products or derivatives (collectively “Hazardous Materials”) on,
under, or about the Premises, without Landlord’s prior written consent
(which consent shall not be unreasonably withheld as long as Tenant
demonstrates and documents to Landlord’s reasonable satisfaction (i) that
such Hazardous Materials (A) are necessary or useful to Tenant’s business;
and (B) will be used, kept, and stored in compliance with all laws
relating to any Hazardous Materials so brought or used or kept in or about
the Premises; and (ii) that Tenant will give all required notices
concerning the presence in or on the Premises or the release of such
Hazardous Materials from the Premises) provided that Tenant may handle,
store, use or dispose of products containing small quantities of Hazardous
Materials, which products are of a type customarily found in offices and
households (such as aerosol cans containing insecticides, toner for
copies, paints, paint remover, and the like), provided further that Tenant
shall handle, store, use and dispose of any such Hazardous Materials in a
safe and lawful manner and shall not allow such Hazardous Materials to
contaminate the Premises or the environment.
	 
	2.	 	Tenant further agrees that Tenant will not permit any substance suspected
of causing cancer or reproductive toxicity to come into contact with
groundwater under the Premises. Any such substance coming into contact
with groundwater shall be considered a Hazardous Material for purposes of
this Rider.
	 
	3.	 	(i) Notwithstanding the provisions of Paragraph (1), Tenant may handle,
store, and use Hazardous Materials, limited to the types, amounts, and use
identified in the Hazardous Materials Exhibit attached hereto. If no
Hazardous Materials Exhibit is attached to this Lease, then this Paragraph
(3) shall be of no force and effect. Tenant hereby certifies to Landlord
that the information provided by Tenant pursuant to this Paragraph is
true, correct, and complete. Tenant covenants to comply with the use
restrictions shown on the attached Hazardous Materials Exhibit. Tenant’s
business and operations, and more especially its handling, storage, use
and disposal of Hazardous Materials shall at all times comply with all
applicable laws pertaining to Hazardous Materials. Tenant shall secure
and abide by all permits necessary for Tenant’s operations on the
Premises. Tenant shall give or post all notices required by all
applicable laws pertaining to Hazardous Materials. If Tenant shall at any
time fail to comply with this Paragraph, Tenant shall immediately notify
Landlord in writing of such noncompliance.
	 
	 	 	(ii) Tenant shall provide Landlord with copies of any Material Safety
Data Sheets (as required by the Occupational Safety and Health Act)
relating to any Hazardous Materials to be used, kept, or stored at or on
the Premises, at least 30 days prior to the first use, placement, or
storage of such Hazardous Material on the Premises. Landlord shall have
10 days following delivery of such Material Safety Data Sheets to approve
or forbid, in its sole discretion subject to the limitation contained in
Paragraph (a) above, such use, placement, or storage of a Hazardous
Material on the Premises.
	 
	 	 	(iii) Tenant shall not store hazardous wastes on the premises for more
than 90 days; “hazardous waste” has the meaning given it by the Resource
Conservation and Recovery Act of 1976, as amended. Tenant shall not
install any underground or above ground storage tanks on the Premises.
Tenant shall not dispose of any Hazardous Material or solid waste on the
Premises. In performing any alterations of the Premises permitted by the
Lease, Tenant shall not install any Hazardous Material in the Premises
without the specific consent of Landlord attached as an exhibit to this
Rider.
	 
	 	 	(iv) Any increase in the premiums for necessary insurance on the Property
which arises from Tenant’s use and/or storage of Hazardous Materials shall
be solely at Tenant’s expense. Tenant shall procure and maintain at its sole




E-1









 






	 	 	expense such additional insurance as may be necessary to comply with
any requirement of any Federal, State or local governmental agency with
jurisdiction.
	 
	4.	 	If Landlord, in its sole discretion, believes that the Premises or the
environment have become contaminated with Hazardous Materials that must be
removed under the laws of the state where the Premises are located, in
breach of the provisions of this Lease, Landlord, in addition to its other
rights under this Lease, may enter upon the Premises and obtain samples
from the Premises, including without limitation the soil and groundwater
under the Premises, for the purposes of analyzing the same to determine
whether and to what extent the Premises or the environment have become so
contaminated. Tenant shall reimburse Landlord for the costs of any
inspection, sampling and analysis that discloses contamination for which
Tenant is liable under the terms of this Rider. Tenant may not perform
any sampling, testing, or drilling to locate any Hazardous Materials on
the Premises without Landlord’s prior written consent.
	 
	5.	 	Without limiting the above, Tenant shall reimburse, defend, indemnify and
hold Landlord harmless from and against any and all claims, losses,
liabilities, damages, costs and expenses, including without limitation,
loss of rental income, loss due to business interruption, and attorneys
fees and costs, arising out of or in any way connected with the use,
manufacture, storage, or disposal of Hazardous Materials by Tenant, its
agents or contractors on, under or about the Premises including, without
limitation, the costs of any required or necessary investigation, repair,
cleanup or detoxification and the preparation of any closure or other
required plans in connection herewith, whether voluntary or compelled by
governmental authority. The indemnity obligations of Tenant under this
clause shall survive any termination of the Lease. At Landlord’s option,
Tenant shall perform any required or necessary investigation, repair,
cleanup, or detoxification of the Premises. In such case, Landlord shall
have the right, in its sole discretion, to approve all plans, consultants,
and cleanup standards. Tenant shall provide Landlord on a timely basis
with (i) copies of all documents, reports, and communications with
governmental authorities; and (ii) notice and an opportunity to attend all
meetings with regulatory authorities. Tenant shall comply with all notice
requirements and Landlord and Tenant agree to cooperate with governmental
authorities seeking access to the Premises for purposes of sampling or
inspection. No disturbance of Tenant’s use of the Premises resulting from
activities conducted pursuant to this Paragraph shall constitute an actual
or constructive eviction of Tenant from the Premises. In the event that
such cleanup extends beyond the termination of the Lease, Tenant’s
obligation to pay rent (including additional rent and percentage rent, if
any) shall continue until such cleanup is completed and any certificate of
clearance or similar document has been delivered to Landlord. Rent during
such holdover period shall be at market rent; if the parties are unable to
agree upon the amount of such market rent, then Landlord shall have the
option of (a) increasing the rent for the period of such holdover based
upon the increase in the cost-of-living from the third month preceding the
commencement date to the third month preceding the start of the holdover
period, using such indices and assumptions and calculations as Landlord in
its sole reasonable judgment shall determine are necessary; or (b) having
Landlord and Tenant each appoint a qualified MAI appraiser doing business
in the area; in turn, these two independent MAI appraisers shall appoint a
third MAI appraiser and the majority shall decide upon the fair market
rental for Premises as of the expiration of the then current term.
Landlord and Tenant shall equally share in the expense of this appraisal
except that in the event the rent is found to be within fifteen percent of
the original rate quoted by Landlord, then Tenant shall bear the full cost
of all the appraisal process. In no event shall the rent be subject to
determination or modification by any person, entity, court, or authority
other than as set forth expressly herein, and in no event shall the rent
for any holdover period be less than the rent due in the preceding period.
	 
	6.	 	Notwithstanding anything set forth in this Lease, Tenant shall only be
responsible for contamination of Hazardous Materials or any cleanup
resulting directly therefrom, resulting directly from matters occurring or
Hazardous Materials deposited (other than by contractors, agents or
representatives controlled by Landlord) during the Lease term, and any
other period of time during which Tenant is in actual or constructive
occupancy of the Premises. Tenant shall take reasonable precautions to
prevent the contamination of the Premise with Hazardous Materials by third
parties.
	 
	7.	 	It shall not be unreasonable for Landlord to withhold its consent to any
proposed Assignment or Sublease if (i) the proposed Assignee’s or
Sublessee’s anticipated use of the premises involves the generation,
storage, use, treatment or disposal of Hazardous Materials; (ii) the
proposed Assignee or Sublessee has been required by any prior landlord,
lender, or governmental authority to take remedial action in connection
with Hazardous Materials contaminating a property if the contamination
resulted from such Assignee’s or Sublessee’s actions or use of the
property in question;




E-2









 






	 	 	or (iii) the proposed Assignee or Sublessee is
subject to an enforcement order issued by any governmental authority in
connection with the use, disposal, or storage of a hazardous material.
	 
	8.	 	Any of Tenant’s insurance insuring against claims of the type dealt with
in this Rider shall be considered primary coverage for claims against the
Property arising out of or under this Paragraph.
	 
	9.	 	In the event of (i) any transfer of Tenant’s interest under this Lease;
or (ii) the termination of this Lease, by lapse of time or otherwise,
Tenant shall be solely responsible for compliance with any and all then
effective federal, state or local laws concerning (i) the physical
condition of the Premises, Building, or Property caused by Tenant’s
occupancy of the Premises; or (ii) the presence of hazardous or toxic
materials in or on the Premises, Building, or Property relating to
Tenant’s occupancy of the Premises (for example, the New Jersey
Environmental Cleanup Responsibility Act, the Illinois Responsible
Property Transfer Act, or similar applicable state laws), including but
not limited to any reporting or filing requirements imposed by such laws.
Tenant’s duty to pay rent, additional rent, and percentage rent shall
continue until the obligations imposed by such laws are satisfied in full
and any certificate of clearance or similar document has been delivered to
Landlord.
	 
	10.	 	All consents given by Landlord pursuant to this Rider shall be in writing
and shall be attached as amendments to this Rider. If such consents are
not attached to this Rider, then such consents will be deemed withheld.





E-3









 










EXHIBIT F — LIST OF HAZARDOUS MATERIALS




attached to and made a part of Lease bearing the

Lease Reference Date of June 5, 2003, between

Cabot Industrial Properties, L.P., as Landlord and

Portola Packaging, Inc., as Tenant




Permitted Chemicals



Landlord hereby permits Tenant to use, handle, and store the chemicals listed
below, in the quantities indicated, per the Hazardous Materials language
contained in the Lease and Exhibit E.




	 	 	 	 	 
	Chemical
	 	Quantity
	 	Classification

	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 
	 
	
 

	 	
 
	 	
 








F-1










 





SECOND AMENDMENT TO LEASE




     THIS AMENDMENT, made as of December 12, 2003, by and between CABOT
INDUSTRIAL PROPERTIES, L.P., a Delaware limited partnership (“Landlord”), and
PORTOLA PACKAGING, INC., a Delaware corporation (“Tenant”),



     W I T N E S S E T H:



     Recital of Facts:



     A.   Landlord and Tenant entered into the Lease dated June 5, 2003, which
was amended by the First Amendment to Lease dated October 1, 2003, between
Landlord and Tenant (such Lease, as amended by such First Amendment to Lease,
is the “Lease”). Words defined in the Lease have the same meanings in this
Amendment.



     B.   Exhibit B to the Lease requires Landlord to construct the Initial
Improvements in the Premises in accordance with the final Plans. Exhibit B to
the Lease requires Landlord to pay Landlord’s Contribution to defray the cost
of the Initial Improvements. Exhibit B to the Lease requires Tenant to pay the
cost of the Initial Improvements in excess of Landlord’s Contribution. The
budget for the Initial Improvements is $4,886,499. Landlord’s Contribution is
$2,533,220. Tenant deposited the amount of $2,353,279 (“Tenant’s Cost
Deposit”) with Landlord to pay Tenant’s share of the cost of the Initial
Improvements.



     C.   Landlord entered into the Standard Form of Agreement between Owner and
Contractor (the “Construction Contract”) dated July 28, 2003, with Willmeng
Construction, Inc. (the “General Contractor”) and the RREEF Agreement for
Professional Services (the “Management Agreement”) dated August 1, 2003, with
Don Hoon (the “Construction Manager”) for the construction of the Initial
Improvements.



     D.   Landlord has substantially completed the Initial Improvements. Tenant
has accepted possession of the Premises. The Commencement Date is December 1,
2003, and the Termination Date is November 30, 2018. Landlord and Tenant
executed a Commencement Date Memorandum dated December 1, 2003, which confirmed
the Commencement Date and the Termination Date. Landlord made railroad service
available to the Premises on or before the Commencement Date as required by
Section 2.4 of the Lease.



     E.   In this Amendment, Landlord and Tenant will provide for the final
completion of the Initial Improvements.



     NOW, THEREFORE, in consideration of the covenants in this Amendment,
Landlord and Tenant agree as follows:



     1.   Confirmation of Facts. As of the date of this Amendment, the foregoing
Recital of Facts is true and correct and is incorporated in and made a part of
this Amendment.



     2.   Completion of Initial Improvements. As of the date of this Amendment,
Landlord has substantially completed the Initial Improvements as required by
the Lease, Landlord has fully expended Landlord’s Contribution for the Initial
Improvements, and Landlord has



1









 





disbursed Tenant’s Cost Deposit for the Initial
Improvements except for the amount of $705,233.71 (the “Remaining Tenant’s Cost
Deposit”). An accounting of the expenditures made by Landlord for the Initial
Improvements from Landlord’s Contribution and Tenant’s Cost Deposit is set
forth in Exhibit A attached hereto and made a part hereof. As of the date of
this Amendment, Landlord shall pay the Remaining Tenant’s Cost Deposit to
Tenant, Landlord shall assign the Construction Contract and the Management
Agreement to Tenant, and Tenant shall assume the obligations of Landlord under
the Construction Contract and the Management Agreement. Upon such payment of
the Remaining Tenant’s Cost Deposit and assignment of the Construction Contract
and the Management Agreement to Tenant, Landlord shall have no further
liability or obligation with respect to the Initial Improvements and Tenant
shall have the right to enforce the obligations of the General Contractor and
the Construction Manager under the Construction Contract and the Management
Agreement. Tenant hereby releases and discharges Landlord from all liabilities
and obligations with respect to the Initial Improvements. Tenant shall
complete the Initial Improvements reasonably promptly after the date of this
Amendment. Tenant shall indemnify and defend Landlord against and hold
Landlord harmless from all claims, demands, liabilities, losses, damages, costs
and expenses, including reasonable attorneys’ fees and disbursements, with
respect to the Initial Improvements. Tenant shall not assert any demand or
defense against Landlord, or deduct and withhold from or set off against any
rent or other sums payable by Tenant under the Lease, on account of any claim
of Tenant against the General Contractor or the Construction Manager with
respect to the construction of the Initial Improvements. Tenant shall look
solely to the General Contractor and the Construction Manager for performance
of construction of the Initial Improvements under the Construction Contract and
the Management Agreement and any failure by either of them to perform the
Initial Improvements shall not constitute a default by Landlord under the
Lease.



     3.   Legal Effect. If there is any conflict between this Amendment and the
Lease, this Amendment shall control. Except as amended by this Amendment, the
Lease is unmodified and, as so amended, the Lease shall remain in full force
and effect.



     4.   Counterparts. This Amendment may be executed in counterparts by
separately executed signature pages attached to this Amendment. Each such
executed counterpart shall be an original and all such executed counterparts
shall constitute one and the same Amendment.



     5.   Successors and Assigns. This Amendment shall benefit and bind Landlord
and Tenant and their respective successors and assigns.



2









 





     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of
the date first hereinabove written.



	 	 	 
	 	 	
CABOT INDUSTRIAL PROPERTIES, L.P., a

Delaware limited partnership
	 	 	
By    RREEF MANAGEMENT COMPANY, a

        
Delaware corporation, its Authorized Agent
	 	 	
        By  



          
          
          
        
      Bret C. Borg

        
        
        
          
      District Manager
	 	 	
PORTOLA PACKAGING, INC., a Delaware corporation
	 	 	
 By



          
          
          
     
     Dennis L. Berg

      
       
     Vice President and Chief Financial Officer







3









 






EXHIBIT A




Accounting of Expenditures for Initial Improvements




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date	 	Vendor - Contractor	 	Cost / Amount	 	Remarks
	 
	05/15/03
	 	Don Hoon	 	 	1,088.00	 	 	Construction Manger Fee, May
	05/15/03
	 	Evolution Design	 	 	3,679.72	 	 	April charges
	06/03/03
	 	Evolution Design	 	 	5,761.01	 	 	Design fees
	06/15/03
	 	Don Hoon	 	 	10,500.00	 	 	Construction Manger Fee, June
	07/02/03
	 	Liqui-Chill Inc	 	 	91,000.00	 	 	Installment amount $101,128.35
	07/02/03
	 	Liqui-Chill Inc	 	 	10,128.35	 	 	Final amount of $101,128.35
	07/08/03
	 	Mountain States	 	 	99,622.00	 	 	Addnl Spur tracks
	07/09/03
	 	Evolution Design	 	 	75,055.00	 	 	Project Architech Fee
	07/11/03
	 	Willmeng Construction	 	 	11,995.50	 	 	Pre-construction Fees
	07/11/03
	 	Willmeng Construction	 	 	303,584.30	 	 	Progress Payment #1
	07/14/03
	 	Evolution Design	 	 	13,417.91	 	 	Demo Permit
	07/14/03
	 	Willmeng Construction	 	 	6,454.50	 	 	Final - pre-construction billing
	07/15/03
	 	Liqui-Chill Inc	 	 	101,128.35	 	 	2nd half deposit
	07/18/03
	 	Evolution Design	 	 	71,142.33	 	 	Eng. Services - July '03
	07/31/03
	 	Don Hoon	 	 	6,563.00	 	 	July Const. Mgmt. Fees
	08/01/02
	 	Liqui-Chill Inc	 	 	202,256.75	 	 	1st Progress Payment
	08/14/03
	 	Ace Crane	 	 	142,425.00	 	 	50% of P.O.
	08/31/03
	 	Don Hoon	 	 	6,713.00	 	 	August Const. Mgmt. Fees
	09/05/03
	 	Mountain States	 	 	5,374.61	 	 	Willmeng completed - chk to be returned
	09/12/03
	 	Evolution Design	 	 	6,605.94	 	 	August charges
	09/12/03
	 	Ace Crane	 	 	72,232.00	 	 	Progress Payment #3
	09/16/03
	 	Landa Associates	 	 	9,378.00	 	 	Structural design - chiller platform
	09/19/03
	 	Salt River Project	 	 	6,000.00	 	 	Design Pad fees
	09/23/03
	 	Evolution Design	 	 	3,990.25	 	 	8/1 to 9/10 charges
	09/30/03
	 	Willmeng Construction	 	 	550,221.00	 	 	2nd Draw
	09/30/03
	 	Don Hoon	 	 	6,225.00	 	 	Sept Const. Mgmt. Fees
	09/30/03
	 	Corbins	 	 	24,287.16	 	 	Progress Payment #1
	10/01/03
	 	Liqui-Chill Inc	 	 	202,256.75	 	 	2nd Progress Payment
	10/10/03
	 	Evolution Design	 	 	8,033.44	 	 	Sept. charges
	10/20/03
	 	Liqui-Chill Inc	 	 	161,805.50	 	 	3rd Progress Payment
	10/31/03
	 	Don Hoon	 	 	4,388.00	 	 	Oct Const Mgmt Fees
	10/31/03
	 	Willmeng Construction	 	 	453,384.00	 	 	Draw #3
	10/31/03
	 	Corbins Electric	 	 	221,309.75	 	 	2nd Progress Payment
	11/04/03
	 	Ace Crane	 	 	70,970.00	 	 	Progress payment #4
	11/11/03
	 	Evolution Design	 	 	5,354.06	 	 	10/03 charges
	12/10/03
	 	Evolution Design	 	 	2,625.68	 	 	Nov. Billing
	12/10/03
	 	Evolution Design	 	 	1,350.00	 	 	Final (Dec.) Billing
	12/10/03
	 	Sunstate Landscaping	 	 	3,600.00	 	 	Landscaping & irrigation adj.
	12/10/03
	 	Willmeng Construction	 	 	1,061,575.00	 	 	Draw #4
	12/10/03
	 	Corbins Electric	 	 	16,000.00	 	 	3rd Progress Payment
	12/10/03
	 	RREEF Construction Mgmt.	 	 	121,784.43	 	 	3% management services
	 
	 	Total Payments Thru. 12-10	 	 	4,181,265.29	 	 	 	 	 
	 
	 
	 	Tenant Contribution	 	 	2,353,279.00	 	 	 	 	 
	 
	 	Landlord Contribution	 	 	2,533,220.00	 	 	 	 	 
	 
	 	Total Budget	 	 	4,886,499.00	 	 	 	 	 
	 
	 
	 	Balance Remaining	 	 	705,233.71