exv10w2



 




Exhibit 10.2



SINGLE-TENANT INDUSTRIAL TRIPLE NET LEASE




Effective Date: October 1, 2005



(the date set forth below Landlord’s signature)




BASIC LEASE INFORMATION




	 	 	 
	Landlord:

	 	ProLogis, a Maryland Real Estate Investment Trust
	 
	 	 
	Landlord’s Address For Notice:

	 	ProLogis

26277 SW
95th
Avenue, Suite 405

Wilsonville, OR 97070

Attn: Property Management

Telephone: (503) 685-9292

Fax: (503) 685-6363
	 
	 	 
	With a copy to:

	 	c/o ProLogis

14100 E.
35th
Place

Aurora, CO 80011

Attn: Legal Department

Telephone: (303) 375-9292

Fax: (303) 576-2761
	 
	 	 
	Landlord’s Address
For Payment of Rent:

	 	ProLogis

c/o Bank of America, California

File #73103

Account #14200 - 04598

P.O. Box 6000

San Francisco, CA 94160-3103
	 
	 	 
	Tenant:

	 	LACROSSE FOOTWEAR, INC., a Wisconsin corporation
	 
	 	 
	Tenant’s Address
For Notice:

	 	18550 NE Riverside Parkway

Gresham, Oregon 97230

Attn: David Carlson

Telephone: (503) 766-1010

Fax: (503) 382-2531
	 
	 	 
	Project:

	 	Southshore Corporate Park. “Southshore Corporate Park
” means that certain project, portions of which are
under development by Landlord, located in the City of
Portland (“City”), County of Multnomah
(“County”),
State of Oregon. A conceptual plot plan of Southshore
Corporate Park (the “Site Plan”) is attached hereto as
Exhibit A-1 (which indicates thereon the approximate
location of the Premises and other parcels of land
within Southshore Corporate Park as presently
contemplated by Landlord). Tenant acknowledges that
Exhibit A-1 is intended to be used only for
illustrative purposes and nothing contained therein
shall constitute a representation or warranty by
Landlord.
	 
	 	 





(i)









 






	 	 	 
	Land:

	 	Approximately 7.98 acre parcel of land shown on the
Site Plan attached hereto as Exhibit A-1.
	 
	 	 
	Building:

	 	An office/warehouse building to be located upon the
Land and containing approximately 144,690 rentable
square feet.
	 
	 	 
	Premises:

	 	The Building and the Land shall constitute the
Premises. The Premises is more particularly depicted
on Exhibit A-2.
	 
	 	 
	Premises Address:

	 	[To be provided prior to Commencement]
	     Street:

	 	————————————
	     City and State:

	 	Portland, Oregon 97230
	 
	 	 
	Term:

	 	One Hundred Twenty (120) months
	 
	 	 
	Estimated Commencement Date:

	 	June 1, 2006






Base Rent:




	 	 	 	 	 
	Months	 	Monthly Base
Rent*  
	1-24

	 	$	77,372.09	 
	25-48

	 	$	80,759.78	 
	49-72

	 	$	84,316.86	 
	73-96

	 	$	88,051.79	 
	96-120

	 	$	91,973.47	 








 




			
	*	 	Subject to adjustment in accordance with Section 1.4
of the Lease and Section 9(c) of the Work Letter
attached to the Lease as Exhibit B.





	 	 	 
	Tenant’s Share of Building
Operating Expenses:

	 	100%	 






	 	 	 
	Tenant’s Share of Project
Operating Expenses:

	 	8.78%*	 





 




			
	*	 	Subject to adjustment if more buildings are
constructed in Southshore Corporate Park that are not
currently taken into consideration in determining
Tenants Share of Project Operating Expenses.





	 	 	 
	Security Deposit:

	 	$77,372.00
	 
	 	 





	 	 	 
	Broker:

	 	Landlord’s Broker: GVA Kidder Matthews
Tenant’s Broker: GVA Kidder Matthews
	 
	 	 
	Lease Year:

	 	Shall refer to each twelve (12) month period during the
Term commencing on the Commencement Date.






(ii)









 






	 	 	 
	Permitted Uses:

	 	The warehousing, distribution and sale of footwear,
apparel and related products, together with collateral
office uses and potentially a retail outlet open to the
general public, which uses are permitted under current
zoning for the Project. No other uses shall be
permitted without the prior written consent of Landlord
which consent shall not be unreasonably withheld.
	 
	 	 
	Options:

	 	One (1) five (5) year Option to Extend as more
particularly set forth in the Addendum to Lease.
	 
	 	 
	Parking Spaces:

	 	One Hundred Seventy-Five (175) unreserved parking
spaces upon the Premises. In addition, Tenant may, at
Tenant’s sole cost and expense, provide for the
striping of additional parking spaces in the paved
areas adjacent to Tenant’s loading dock, provided that
(i) the addition of such spaces in the loading dock is
in compliance with all Applicable Laws and (ii) any and
all costs associated with providing such parking spaces
in the loading dock areas shall be at Tenant’s sole
cost and expense, including, without limitation, any
landscaping requirements imposed by the City.






ADDENDUM




EXHIBITS




	 	 	 
	A-1

	 	Project Site Plan
	A-2

	 	Premises
	B

	 	Work Letter
	C

	 	Commencement Date Memorandum
	D

	 	Insurance Certificate
	E

	 	Prohibited Uses
	F

	 	Rules and Regulations
	G

	 	Requirements for Improvements or Alterations by Tenant
	H

	 	Estoppel Certificate
	I

	 	Form of Subordination, Non-Disturbance and Attornment Agreement






     The Basic Lease Information set forth above and the Addendum and Exhibits attached hereto are
incorporated into and made a part of the following Lease. Each reference in this Lease to any of
the Basic Lease Information shall mean the respective information above and shall be construed to
incorporate all of the terms provided under the particular Lease paragraph pertaining to such
information. In the event of any conflict between the Basic Lease Information and the provisions
of the Lease, the latter shall control.



	 	 	 	 	 	 	 	 	 
	LANDLORD

	 	(___)
	 	AND TENANT
	 	(___)
	 	AGREE.
	 

	 	initial
	 	 	 	initial	 	 











(iii)









 





TABLE OF CONTENTS







	 	 	 	 	 
	
	 	 	Page	 
	1. PREMISES
	 	 	1	 
	1.1 Premises
	 	 	1	 
	1.2 Common Area
	 	 	1	 
	1.3 Reserved Rights
	 	 	1	 
	1.4 Re-measurement of Premises
	 	 	1	 
	 
	 	 	 	 
	2. TERM
	 	 	1	 
	2.1 Commencement Date
	 	 	1	 
	2.2 Possession
	 	 	3	 
	2.3 Early Entry
	 	 	3	 
	 
	 	 	 	 
	3. RENT
	 	 	3	 
	3.1 Rent
	 	 	3	 
	3.2 Late Charge and Interest
	 	 	4	 
	3.3 Security Deposit
	 	 	4	 
	 
	 	 	 	 
	4. UTILITIES
	 	 	4	 
	 
	 	 	 	 
	5. TAXES
	 	 	4	 
	5.1 Real Property Taxes
	 	 	4	 
	5.2 Definition of Real Property Taxes
	 	 	4	 
	5.3 Personal Property Taxes
	 	 	5	 
	 
	 	 	 	 
	6. OPERATING EXPENSES
	 	 	5	 
	6.1 Operating Expenses.
	 	 	5	 
	6.2 Definition of Operating Expenses
	 	 	5	 
	 
	 	 	 	 
	7. ESTIMATED EXPENSES
	 	 	6	 
	7.1 Payment
	 	 	6	 
	7.2 Adjustment
	 	 	7	 
	 
	 	 	 	 
	8. INSURANCE
	 	 	7	 
	8.1 Landlord
	 	 	7	 
	8.2 Tenant
	 	 	7	 
	8.3 General
	 	 	8	 
	8.4 Indemnity
	 	 	8	 
	8.5 Exemption of Landlord from Liability
	 	 	9	 
	 
	 	 	 	 
	9. REPAIRS AND MAINTENANCE
	 	 	9	 
	9.1 Tenant
	 	 	9	 
	9.2 Landlord
	 	 	10	 
	 
	 	 	 	 
	10. ALTERATIONS
	 	 	10	 
	10.1 Trade Fixtures; Alterations
	 	 	10	 
	10.2 Damage; Removal
	 	 	11	 
	10.3 Liens
	 	 	11	 
	10.4 Standard of Work
	 	 	11	 






(i)









 






	 	 	 	 	 
	
	 	 	Page	 
	11. USE
	 	 	11	 
	 
	 	 	 	 
	12. ENVIRONMENTAL MATTERS
	 	 	12	 
	12.1 Hazardous Materials
	 	 	12	 
	12.2 Indemnification
	 	 	13	 
	12.3 Pre-Existing Conditions
	 	 	13	 
	 
	 	 	 	 
	13. DAMAGE AND DESTRUCTION
	 	 	13	 
	13.1 Casualty
	 	 	13	 
	13.2 Tenant’s Fault
	 	 	14	 
	13.3 Uninsured Casualty
	 	 	14	 
	13.4 Waiver
	 	 	14	 
	 
	 	 	 	 
	14. EMINENT DOMAIN
	 	 	15	 
	14.1 Total Condemnation
	 	 	15	 
	14.2 Partial Condemnation
	 	 	15	 
	14.3 Award
	 	 	15	 
	14.4 Temporary Condemnation
	 	 	15	 
	 
	 	 	 	 
	15. DEFAULT
	 	 	15	 
	15.1 Events of Defaults
	 	 	15	 
	15.2 Remedies
	 	 	16	 
	15.3 Cumulative
	 	 	17	 
	 
	 	 	 	 
	16. ASSIGNMENT AND SUBLETTING
	 	 	17	 
	 
	 	 	 	 
	17. ESTOPPEL, ATTORNMENT AND SUBORDINATION
	 	 	18	 
	17.1 Estoppel
	 	 	18	 
	17.2 Subordination
	 	 	18	 
	17.3 Attornment
	 	 	18	 
	 
	 	 	 	 
	18. INTENTIONALLY OMITTED
	 	 	19	 
	 
	 	 	 	 
	19. MISCELLANEOUS
	 	 	19	 
	19.1 General
	 	 	19	 
	19.2 Signs
	 	 	20	 
	19.3 Waiver
	 	 	20	 
	19.4 Financial Statements
	 	 	20	 
	19.5 Limitation of Liability
	 	 	20	 
	19.6 Notices
	 	 	20	 
	19.7 Brokerage Commission
	 	 	20	 
	19.8 Authorization
	 	 	21	 
	19.9 Holding Over; Surrender
	 	 	21	 
	19.10 Joint and Several
	 	 	21	 
	19.11 Covenants and Conditions
	 	 	21	 
	19.12 Auctions
	 	 	21	 
	19.13 Consents
	 	 	21	 
	19.14 Force Majeure
	 	 	22	 
	19.15 Mortgagee Protection
	 	 	22	 
	19.16 Intentionally Omitted
	 	 	22	 
	19.17 Hazardous Substance Disclosure
	 	 	22	 
	19.18 Addenda
	 	 	22	 






(ii)








 











1. PREMISES




     1.1 Premises. Landlord hereby leases to Tenant the Land and the Building (hereinafter
collectively referred to as the “Premises”) as depicted on Exhibit A-2 attached hereto.
Tenant acknowledges that, except as set forth in this Lease or in the Work Letter, if any, neither
Landlord nor any broker or agent has made any representations or warranties in connection with the
physical condition of the Premises or their fitness for Tenant’s use upon which Tenant has relied
directly or indirectly for any purpose. By taking possession of the Premises, Tenant accepts the
Premises “AS-IS” and waives all claims of defect in the Premises, except as set forth in the Work
Letter.



     1.2 Common Area. Tenant may, subject to reasonable rules made by Landlord, use common
facilities in the Project (“Common Area”) designated by Landlord from time to time for the common
use of all tenants of the Project.



     1.3 Reserved Rights. Landlord reserves the right to enter the Premises at reasonable
times upon reasonable notice to Tenant (or without notice in case of an emergency) and/or to
undertake the following all without abatement of rent or liability to Tenant: inspect the Premises
and/or the performance by Tenant of the terms and conditions hereof; make such alterations,
repairs, improvements or additions to the Premises as required or permitted hereunder; change
boundary lines of the Common Area; install, use, maintain, repair, alter, relocate or replace any
pipes, ducts, conduits, wires, equipment and other facilities (including, without limitation,
cabling and conduit for telecommunications facilities of any kind) in the Common Area or the
Premises; grant easements on the Project, dedicate for public use portions thereof and record
covenants, conditions and restrictions (including those certain “CC&Rs” defined in Section 11
below) affecting the Project and/or amendments to existing CC&Rs which do not unreasonably
interfere with Tenant’s use of the Premises or impose additional material monetary obligations on
Tenant; change the name of the Project; affix reasonable signs and displays; and, during the last
nine (9) months of the Term, place signs for the rental of, and show the Premises to prospective
tenants.



     1.4 Re-measurement of Premises. At Landlord’s option, prior to the delivery of
possession of the Premises to Tenant, Landlord shall cause Landlord’s architect to measure and
certify in writing to Landlord the rentable square footage of the office portion of the Building
and the Building in its entirety (as measured from the exterior drip line of the Building), and if
such measurement differs from the rentable square footage of the Building and the office portion of
the Building specified below, then all amounts under this Lease calculated on the basis of such
rentable square footage (including, without limitation, the Base Rent) shall be adjusted
accordingly within thirty (30) days thereafter, retroactive to the Commencement Date. In
accordance with the foregoing, Landlord and Tenant acknowledge and agree that the Monthly Base Rent
amounts due Landlord hereunder are based upon the Building containing 144,690 rentable square feet
of space (36,026 square feet of such area being office space including mezzanine). Therefore, if
following the Substantial Completion of the Improvements Landlord determines that the Building’s
total square footage and/or the office space located within the Building differs from the square
footage stated above, the Monthly Base Rent payable by Tenant to Landlord hereunder shall be
adjusted hereunder.


2. TERM




     2.1 Commencement Date. Except as otherwise specifically provided below in this
Section 2.1, the Term of the Lease shall commence (“Commencement Date”) on the first day of
the first full month following the date on which Landlord delivers to Tenant the Premises
Substantially Complete (as hereinafter defined) in accordance with the Work Letter attached hereto
as Exhibit B except that if Landlord delivers the Premises to Tenant on the first day of a
month, that date shall be the Commencement Date, and the Lease shall continue in full force and
effect for the period of time specified as the Term or until this Lease is terminated as otherwise
provided herein. The Premises shall be deemed to be “Substantially Complete” on the
earliest of the date on which: (1) Landlord files or causes to be filed with the City in which the
Premises are located (if required) and delivers to Tenant an architect’s notice of substantial
completion, or similar written notice that the Premises are substantially complete, and Landlord
has completed all work under the Lease necessary so that the Premises may be lawfully occupied with
respect to Landlord’s work under the Lease for the Permitted Uses, (2) Tenant commences business
operations in the Premises, or (3) a certificate of occupancy (or a reasonably substantial
equivalent such as a signoff



 









 




from a building inspector or a temporary certificate of occupancy) is issued for the Premises
(or is ready to be issued other than for items installed or to be installed by Tenant under the
Lease) and the Premises may be lawfully occupied with respect to Landlord’s work under the Lease
for the Permitted Uses. Landlord shall arrange for the construction of the Improvements (as
defined in the Work Letter) in accordance with and subject to the terms of the Work Letter. Tenant
shall, upon demand after delivery of the Premises to Tenant, execute and deliver to Landlord a
Commencement Date Memorandum in the form attached hereto as Exhibit C acknowledging (i) the
Possession Date, (ii) the Commencement Date, (iii) the Monthly Base Rent Schedule for the initial
term, (iv) the final square footage of the Premises and (v) Tenant’s acceptance of the Premises.
If the Premises are not Substantially Complete on the Estimated Commencement Date as extended by
Force Majeure events and Tenant Delays (as defined in the Lease or Work Letter, if any), this Lease
shall remain in effect, Landlord shall not be subject to any liability except as specifically set
forth elsewhere in this Lease, and the Commencement Date shall be delayed, as hereinafter provided
in this Section 2.1, until the date the Premises are Substantially Complete.




     Notwithstanding the foregoing, if the Premises have not been delivered to Tenant Substantially
Complete on or before the Estimated Commencement Date for reasons other than Tenant Delays and/or
Force Majeure Delays (which delays shall extend the Estimated Commencement Date), then Landlord
will use best efforts to assist Tenant in locating temporary space of 50,000 square feet of
contiguous, high-cube warehouse distribution space in the Portland Airport Way Submarket [Tenant
shall be responsible for payment for such temporary space] for a period from June 1, 2006 to
October 1, 2006 and if Landlord , or an affiliate has such warehouse space available in the
Portland Airport Way Submarket, Landlord shall make such space available to Tenant at a base rental
rate equal to the “Special Base Rate”. The “Special Base Rate” will be the average base rental
rate of the five leases with the lowest effective rental rate in such Submarket for similar space
executed in the prior twelve (12) month period.



     If Landlord achieves Substantial Completion of the Premises following the Estimated
Commencement Date (as extended to the extent of Tenant Delays and/or Force Majeure Delays) and
prior to October 1, 2006, then:




     (A) if Tenant elects to take possession of the entire Premises during this period, the
Commencement Date shall be deemed to have occurred as of such date; or




     (B) if Tenant does not elect to take possession of the entire Premises during this
period then:




     (i) Tenant shall nevertheless be obligated to take possession of the Office
Portion of the Premises (as defined in the Work Letter attached hereto as
Exhibit B) (not the warehouse portion of the Building) and commence paying
Base Rent with respect to the Office Portion of the Premises only (at the rate of
$1.00 per square foot of office space [$36,026] per month) for the period of time
prior to the Commencement Date, and commence paying that portion of the Additional
Rent that relates to the Office Portion of the Building only (which portion shall be
calculated by dividing the square footage of the Office Portion of the Building by
the total square footage of the Building and multiplying the resulting percentage by
the items of Additional Rent payable to Landlord for the entire Premises, provided,
however, any item that pertains just to the Office Portion of the Building, such as
utilities metered just to the Office Portion, would not be pro-rated).




     (ii) Tenant shall not be required to take possession of the warehouse portion
of the Building and, although the Lease will be effective, the Rent and other
expenses attributable to the warehouse portion of the Building shall not commence
and Tenant shall have no obligation to pay Base Rent, Additional Rent or other
expenses attributable to the warehouse portion of the Building until the
Commencement Date.




     (iii) The Commencement Date hereunder shall not occur until the earlier of (x)
Tenant’s occupancy of the entire Premises, or (y) the later of (a) October 1, 2006,
or (b) the date the Premises is delivered to Tenant Substantially Complete in
accordance with the terms of this Lease.




     (iv) Landlord acknowledges and agrees that if Tenant occupies the Office
Portion of the Premises (and not the warehouse portion of the Building) pursuant to
the terms of clause (B)



-2-









 






above prior to October 1, 2006, Tenant shall receive a credit of $13,000 per
month (“Rent Credit”) against the Base Rent payable to Landlord hereunder
until the Commencement Date with respect to such Office Portion of the Premises,
PLUS a further credit (“Additional Rent Credit”) against the Additional Rent payable
to Landlord hereunder with respect to such Office Portion of the Premises until the
Commencement Date, which Additional Rent Credit shall be calculated by dividing the
square footage of the office space that Tenant is presently leasing from Landlord at
18550 N.E. Riverside Parkway-Building A, Portland, Oregon (pursuant to that certain
Multi-Tenant Industrial Triple Net Lease, dated August 24, 2000) by the total square
footage that Tenant is leasing from Landlord in such existing leased premises and
multiplying the resulting percentage by the additional rent and other expenses being
paid by Tenant under such existing lease. The Rent Credit and the Additional Rent
Credit shall be available as long as base rent and additional rent are being paid by
Tenant to Landlord pursuant to Tenant’s lease of space located at 18550 NE Riverside
Parkway-Building A.



     2.2 Possession. Tenant’s possession of the Premises, or a portion thereof, during the
period of time, if any, from the date on which Landlord delivers possession of the Premises to
Tenant Substantially Complete (the “Possession Date”) to the Commencement Date, shall be
subject to all the provisions of this Lease and shall not advance the expiration date. Rent shall
be paid for such period (at the rate stated in the Basic Lease Information as adjusted by the terms
of the Work Letter and/or Section 2.1 above), prorated on the basis of a thirty (30) day month, and
shall be due and payable to Landlord on or before the Commencement Date. Tenant shall upon demand
acknowledge in writing the Possession Date in the form attached hereto as Exhibit C.



     2.3 Early Entry. Subject to the following provisions of this Section 2.3, Tenant
shall have the right to enter the Premises (but in no event earlier than sixty (60) days prior to
the Possession Date) for the purpose of installing trade fixtures and equipment within the
Premises, and such early entry for such purposes shall not constitute occupancy for operation of
Tenant’s business and shall not trigger the Commencement Date. Landlord will sequence construction
of the Building to permit Tenant the right of entry forty-five (45) days prior to the Possession
Date although Landlord will use its good faith efforts to grant such entry sixty (60) days prior to
the Possession Date. Tenant agrees (i) any such early entry by Tenant shall be at Tenant’s sole
risk, (ii) Tenant shall not interfere with Landlord or Landlord’s contractors completing work
within the Premises or cause any labor difficulties; Tenant, together with its employees, agents
and independent contractors will be subject to and will work under the direction of Landlord’s
contractor, (iii) Tenant shall comply with and be bound by all provisions of this Lease during the
period of any such early entry except for the payment of Rent, (iv) prior to entry upon the
Premises by Tenant, Tenant agrees to pay for and provide to Landlord certificates evidencing the
existence and amounts of liability insurance carried by Tenant, which coverage must comply with the
provisions of this Lease relating to insurance, (v) Tenant and its agents and contractors agree to
comply with all applicable laws, regulations, permits and other approvals required to perform its
work during the early entry on the Premises, and (vi) Tenant agrees to indemnify, protect, defend
and save Landlord and the Premises harmless from and against any and all liens, liabilities,
losses, damages, costs, expenses, demands, actions, causes of action and claims (including, without
limitation, attorneys’ fees and legal costs) arising out of the early entry, use, construction, or
occupancy of the Premises by Tenant or its agents, employees or contractors.


3. RENT




     3.1 Rent. Tenant shall pay to Landlord, at Landlord’s Address for Payment of Rent
designated in the Basic Lease Information, or at such other address as Landlord may from time to
time designate in writing to Tenant for the payment of Rent, the Base Rent, without notice, demand,
offset or deduction (except as otherwise expressly provided in this Lease), in advance, on the
first day of each calendar month commencing on the Commencement Date. Landlord shall have no
obligation to notify Tenant of any increase in Rent and Tenant’s obligation to pay all Rent (and
any increases) when due shall not be modified or altered by such lack of notice from Landlord. It
is intended that the Rent to be paid hereunder by Tenant will be received by Landlord without any
deduction or offset whatsoever by Tenant, foreseeable or unforeseeable. Except as expressly
provided to the contrary in this Lease, Landlord shall not be required to make any expenditure,
incur any obligation, or incur any liability of any kind whatsoever in connection with this Lease
or the ownership, construction, maintenance, operation or repair of the Premises or the Project.
Upon the execution of this Lease, Tenant shall pay to Landlord the first month’s Base Rent. If the
Term commences (or ends) on a date other than the first (or last) day of a month, Base Rent shall
be prorated



-3-









 




on the basis of a thirty (30) day month. All sums other than Base Rent which Tenant is
obligated to pay under this Lease shall be deemed to be additional rent due hereunder
(“Additional Rent”), whether or not such sums are designated Additional Rent and, together
with the Base Rent, shall be due and payable, except as otherwise specifically provided herein, to
Landlord commencing on the Possession Date. The term “Rent” means the Base Rent and all
Additional Rent payable hereunder.




     3.2 Late Charge and Interest. The late payment of any Rent will cause Landlord to
incur additional costs, including administration and collection costs and processing and accounting
expenses and increased debt service (“Delinquency Costs”). If Landlord has not received
any installment of Rent within five (5) days after such amount is due, (i) Tenant shall pay a late
charge of five percent (5%) of the delinquent amount, which is agreed to represent a reasonable
estimate of the Delinquency Costs incurred by Landlord, and (ii) all such delinquent amounts shall
bear interest from the date such amount was due until paid in full at a rate per annum
(“Applicable Interest Rate”) equal to the lesser of (a) the maximum interest rate permitted
by law or (b) three percent (3%) above the rate publicly announced by Bank of America, N.A. (or if
Bank of America, N.A. ceases to exist, the largest bank then headquartered in the State of Oregon)
(“Bank”) as its “Reference Rate”; provided, however, that, if Tenant has not been
delinquent in paying Rent beyond such five (5) day period during the twelve (12) month period
immediately preceding the late payment in question, then a late charge shall not be assessed and
the Applicable Interest Rate (accruing from the date the payment was due) shall not apply unless
Tenant fails to make the applicable payment of Rent within five (5) days after Landlord delivers
notice of such delinquency to Tenant, and provided further that such additional notice and cure
period shall apply no more than three (3) times during the Term. If the use of the announced
Reference Rate is discontinued by the Bank, then the term Reference Rate shall mean the announced
rate charged by the Bank which is, from time to time, substituted for the Reference Rate. Landlord
and Tenant recognize that the damage which Landlord shall suffer as a result of Tenant’s failure to
pay such amounts is difficult to ascertain and said late charge and interest are the best estimate
of the damage which Landlord shall suffer in the event of late payment. If a late charge becomes
payable for any three (3) installments of Rent within any twelve (12) month period, then the Rent
shall automatically become due and payable quarterly in advance.



     3.3 Security Deposit. One (1) business day after the Possession Date, Tenant shall
pay to Landlord the Security Deposit (less any security deposit retained by Landlord, if any, in
connection with the Premises located at 18550 NE Riverside Parkway, Gresham, Oregon). The Security
Deposit shall secure the full and faithful performance of each provision of this Lease to be
performed by Tenant. Landlord shall not be required to pay interest on the Security Deposit or to
keep the Security Deposit separate from Landlord’s own funds. If Tenant fails to perform fully and
timely all or any of Tenant’s covenants and obligations hereunder, Landlord may, but without
obligation, apply all or any portion of the Security Deposit toward fulfillment of Tenant’s
unperformed covenants and/or obligations. If Landlord does so apply any portion of the Security
Deposit, Tenant shall immediately pay Landlord sufficient cash to restore the Security Deposit to
the amount of the then current Base Rent per month. Upon any increase or decrease in Base Rent,
Landlord may require the Security Deposit to be increased or decreased by the amount of the
adjustment in the per month Base Rent. After Tenant vacates the Premises, upon the expiration or
sooner termination of this Lease, if Tenant is not then in default, Landlord shall return to Tenant
any unapplied balance of the Security Deposit.


4. UTILITIES. Tenant shall pay all charges for heat, water, gas, electricity, telephone
and any other utilities used on the Premises by Tenant directly to the applicable utility provider.
Landlord shall not be liable to Tenant for interruption in or curtailment of any utility service,
nor shall any such interruption or curtailment constitute constructive eviction or grounds for
rental abatement. Landlord hereby agrees to use commercially reasonable efforts to restore any
interrupted or curtailed services to the extent such interruption or curtailment is caused by
Landlord.



5. TAXES




     5.1 Real Property Taxes. Tenant shall pay to Landlord Tenant’s Share of Real Property
Taxes (as defined in Section 5.2) as a part of Operating Expenses for each full or partial calendar
year during the Lease Term in accordance with the terms and provisions of Section 7.1 below.



     5.2 Definition of Real Property Taxes. “Real Property Taxes” shall be the sum
of the following: all real property taxes, assessments, supplementary taxes, escape taxes,
possessory-interest taxes, business or license



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taxes or fees, service payments in lieu of such taxes or fees, annual or periodic license or
use fees, excises, transit and traffic charges, housing fund assessments, open space charges,
childcare fees, school, sewer and parking fees or any other assessments, levies, fees, exactions or
charges, general and special, ordinary and extraordinary, unforeseen as well as foreseen (including
fees “in-lieu” of any such tax or assessment) which are assessed, levied, charged, conferred or
imposed by any public authority upon the Premises or any other improvements located upon the
Premises (or any real property comprising any portion thereof) or its operations, together with all
taxes, assessments or other fees imposed by any public authority upon or measured by any Rent or
other charges payable hereunder, including any gross receipts tax or excise tax levied by any
governmental authority with respect to receipt of rental income, or upon, with respect to or by
reason of the possession, leasing, operation, management, maintenance, alteration, repair, use or
occupancy by Tenant of the Premises or any portion thereof, or documentary transfer taxes upon this
transaction or any document to which Tenant is a party creating or transferring an interest in the
Premises, together with any tax imposed in substitution, partially or totally, of any tax
previously included within the aforesaid definition or any additional tax the nature of which was
previously included within the aforesaid definition, together with any and all reasonable costs and
expenses (including, without limitation, reasonable attorneys’, administrative and expert witness
fees and costs) incurred by Landlord in challenging any of the foregoing or seeking the reduction
in or abatement, redemption or return of any of the foregoing, but only to the extent of any such
reduction, abatement, redemption or return. Notwithstanding the foregoing, any assessments that
may be paid over more than a one (1) year period shall be included in “Real Property Taxes” as if
such payments were made in the maximum number of installments permitted by Applicable Laws and only
the portion thereof attributable to a given year shall be included in “Real Property Taxes” for
that year. All references to Real Property Taxes during a particular year shall be deemed to refer
to taxes accrued during such year, including supplemental tax bills regardless of when they are
actually assessed and without regard to when such taxes are payable. Real Property Taxes shall
expressly include One Hundred Percent (100%) of any increase or supplemental assessments accruing
as a result of the construction of the Building, or any other improvements located upon the
Premises. In addition to Tenant’s Share of Real Property Taxes (paid as a part of Operating
Expenses), Tenant shall pay to Landlord One Hundred Percent (100%) of any increase in taxes due to
the increased assessed value of the Premises directly attributable to the value of any Tenant
Improvements (as defined in the Work Letter, if any). The obligation of Tenant to pay Real
Property Taxes (including any supplemental taxes) for the last full and/or partial year(s) of the
Term shall survive the expiration or early termination of this Lease. In no event shall Tenant or
any Tenant Party (as defined in Section 12.1) be entitled to file any property tax assessment
appeal. Nothing contained in this Lease shall require Tenant to pay any franchise, corporate,
estate or inheritance tax of Landlord, or any income, profits or revenue tax or charge upon the net
income of Landlord to the extent attributable to Landlord’s general or net income (as opposed to
rents or receipts attributable to operations at the Project). Subject to the terms of this Section
5.2, Real Property Taxes for partial years, if any, falling within the Term shall be prorated.




     5.3 Personal Property Taxes. Prior to delinquency, Tenant shall pay all taxes and
assessments levied upon trade fixtures, alterations, additions, improvements, inventories and other
personal property located and/or installed on the Premises by Tenant; and Tenant shall provide
Landlord copies of receipts for payment of all such taxes and assessments. To the extent any such
taxes are not separately assessed or billed to Tenant, Tenant shall pay the amount thereof as
invoiced by Landlord.


6. OPERATING EXPENSES




     6.1 Operating Expenses. Tenant shall pay to Landlord Tenant’s Share of the Building
Operating Expenses, if any, and Tenant’s Share of Project Operating Expenses for each full or
partial calendar year during the Lease Term, as provided in Section 7.1 below. Tenant’s Share of
Building Operating Expenses and Tenant’s Share of Project Operating Expenses may be referred to
herein collectively as “Tenant’s Share”.



     6.2 Definition of Operating Expenses. “Operating Expenses” shall mean
collectively the “Building Operating Expenses” and the “Project Operating Expenses” as defined in
this Section 6.2. The Lease is a single tenant “triple-net” Lease and Tenant shall be responsible
to perform and shall have the first opportunity/obligation to perform all repairs and maintenance
of the Premises in accordance with Section 9.1 below, subject to Landlord’s responsibility for the
maintenance and repair of specific areas of the Premises as specifically set forth in Section 9.2
below. However, in the event Landlord does perform any repair or maintenance items which are
Tenant’s responsibility or expends funds for taxes or insurance (or items described in 6.2.1
below), Tenant shall reimburse Landlord as set forth below.



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          6.2.1. “Building Operating Expenses” means the total costs and expenses incurred by
Landlord in the ownership, operation, maintenance, repair and management of the Premises,
including, but not limited to: (a) repair, replacement, maintenance, utility costs and landscaping
of the Premises, including, but not limited to, any and all costs of maintenance, repair and
replacement of all parking areas (including bumpers, sweeping, striping and slurry coating), common
driveways, loading and unloading areas, trash areas, outdoor lighting, sidewalks, walkways,
landscaping, irrigation systems, fences and gates and other costs which are allocable to the
Premises including any costs under the terms of any CC&Rs affecting the real property, (b)
non-structural maintenance, repair and replacement of the roof (and roof membrane), skylights and
exterior walls of the Premises (including painting); (c) commercially reasonable (based upon the
standard set forth in Section 8.1 below) insurance deductibles and the costs relating to the
insurance maintained by Landlord as described in Section 8.1 below, including, without limitation,
Landlord’s cost of any deductible or self insurance retention; (d) maintenance contracts for, and
the repair and replacement of, the heating, ventilation and air-conditioning (HVAC) systems and
elevators, if any; (e) maintenance, repair, replacement, monitoring and operation of the fire/life
safety and sprinkler system (to the extent Landlord is obligated to do so pursuant to Section 9.2);
(f) trash collection; (g) capital improvements or capital replacements (excluding the roof
structure) made to or capital assets acquired for the Premises after the Commencement Date that are
intended to reduce Building Operating Expenses or are reasonably necessary for the health and
safety of the occupants of the Building or are required under any governmental law or regulation,
which capital costs, or an allocable portion thereof, shall be amortized over the period reasonably
determined by Landlord, together with interest on the unamortized balance at the Applicable
Interest Rate; (h) intentionally omitted; (i) Real Property Taxes attributable to the Premises; and
(j) any other reasonable costs incurred by Landlord related to the Premises and not related to the
Project as a whole. Notwithstanding any provision to the contrary contained in this Section 6.2.1,
Tenant shall pay to Landlord an amount equal to two percent (2%) of Rent for the costs and fees
incurred by Landlord in connection with the management of this Lease and/or the Premises including
the cost of those services which are customarily performed by a property management services
company, whether performed internally or through an outside management company. Building Operating
Expenses shall not include (i) replacement of or structural repairs to the roof or the exterior
walls; (ii) repairs to the extent covered by insurance proceeds, or paid by Tenant or other third
parties; (iii) alterations and tenant improvements solely attributable to tenants of the Project
other than Tenant; (iv) marketing expenses; (v) any cost or expense associated with compliance with
any laws, ordinances, rules or regulations regarding any condition existing upon the Premises if
such condition existed prior to the Commencement Date, including, but not limited to removal of any
and all asbestos and other toxic and hazardous substances located in the Premises; (vi) items for
which Landlord is actually reimbursed from other sources (other than the payment by other tenants
of Building Operating Expenses and Project Operating Expenses); (vii) the cost of services sold to
other tenants; (viii) legal fees and expenses (except for legal fees and expenses incurred by
Landlord in enforcing the Common Area use provisions of other tenants’ leases); (ix) brokers’ fees
and other marketing costs with respect to other tenants and/or leases; (x) interest, fees and costs
related to financings; (xi) costs incurred in connection with the investigation, reporting,
remediation or abatement of any Hazardous Material located (or alleged to be located) in, on, under
or about the Project (other than de minimus costs to clean up and/or remove minor oil spills or
minor amounts of other Hazardous Materials thereon); (xii) general overhead; (xiii) salaries and
expenses for employees at the management level and above except as otherwise provided herein; and
(xiv) depreciation.




          6.2.2. Project Operating Expenses. “Project Operating Expenses” shall include
all reasonable and necessary expenses incurred by Landlord in the ownership, operation,
maintenance, repair and management of the Project Common Areas, including, without limitation, Real
Property Taxes attributable to the Project Common Areas, except as expressly excluded in Section
6.2.1 above. Tenant has previously received an estimate of the anticipated Project Operating
Expenses.



7. ESTIMATED EXPENSES




     7.1 Payment. “Estimated Expenses” for any particular year shall mean
Landlord’s estimate of Operating Expenses for a calendar year. Tenant shall pay Tenant’s Share of
the Estimated Expenses with installments of Base Rent in monthly installments of one-twelfth
(1/12th) thereof on the first day of each calendar month during such year. If at any time Landlord
determines that Operating Expenses are projected to vary from the then Estimated Expenses, Landlord
may, by notice to Tenant, revise such Estimated Expenses, and Tenant’s monthly installments for the
remainder of such year shall be adjusted so that by the end of such calendar year Tenant has paid
to Landlord Tenant’s Share of the revised Estimated Expenses for such year.



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     7.2 Adjustment. “Operating Expenses Adjustment” (or “Adjustment”)
shall mean the difference between Tenant’s Share of Estimated Expenses and Tenant’s Share of
Operating Expenses for any calendar year. After the end of each calendar year, Landlord shall
deliver to Tenant a statement of Tenant’s Share of Operating Expenses for such calendar year,
accompanied by a computation of the Adjustment. If Tenant’s payments are less than Tenant’s Share,
then Tenant shall pay the difference within twenty (20) days after receipt of such statement.
Tenant’s obligation to pay such amount shall survive the expiration or termination of this Lease.
If Tenant’s payments exceed Tenant’s Share, then (provided that Tenant is not in default) Landlord
shall credit such excess amount to future installments of Tenant’s Share for the next calendar
year. If Tenant is in default, Landlord may, but shall not be required to, credit such amount to
Rent arrearages.


8. INSURANCE




     8.1 Landlord. Landlord shall maintain insurance through individual or blanket
policies insuring the Building against fire and extended coverage (including, if Landlord elects,
“all risk” coverage, earthquake/volcanic action, flood and/or surface water insurance) for the full
replacement cost of the Building, with commercially reasonable deductibles and the form and
endorsements of such coverage as selected by Landlord, together with rental abatement insurance
against loss of Rent in an amount equal to the amount of Rent for a period of at least twelve (12)
months commencing on the date of loss. Landlord may also carry such other insurance as Landlord
may deem prudent or advisable, including, without limitation, liability insurance in such amounts
and on such commercially reasonable terms as Landlord shall determine. For purposes of this
Section 8.1, the “commercially reasonable” standard shall be based upon insurance and deductibles
customarily carried or selected by sophisticated, institutional landlords for the protection of
such landlords and the protection of properties similar to the Building. Tenant shall pay to
Landlord, as a portion of the Operating Expenses, the costs of the insurance coverages described
herein, including, without limitation, Landlord’s cost of any self-insurance deductible or
retention.



     8.2 Tenant. Tenant shall, at Tenant’s expense, obtain and keep in force at all times
the following insurance:



          8.2.1. Commercial General Liability Insurance (Occurrence Form). A policy of
commercial general liability insurance (occurrence form) having a combined single limit of not less
than Two Million Dollars ($2,000,000) per occurrence and Two Million Dollars ($2,000,000) aggregate
per location if Tenant has multiple locations, providing coverage for, among other things, blanket
contractual liability, premises, products/completed operations with an “Additional Insured-Managers
or Lessors of Premises Endorsement” and containing the “Amendment of the Pollution Exclusion
Endorsement” for damage caused by heat, smoke or fumes from a hostile fire, and personal and
advertising injury coverage, and, if necessary, Tenant shall provide for restoration of the
aggregate limit by increasing the aggregate limits of existing policies, obtaining new policies or
through umbrella coverage, and provided that the policy shall not contain any intra-insured
exclusions as between insured persons or organizations, but shall include coverage for liability
assumed under this Lease as an “insured contract” for the performance of Tenant’s indemnity
obligations under this Lease;




          8.2.2. Automobile Liability Insurance. Business automobile liability insurance having
a combined single limit of not less than Two Million Dollars ($2,000,000) per occurrence and
insuring Tenant against liability for claims arising out of ownership, maintenance, or use of any
owned, hired or non-owned automobiles;




          8.2.3. Workers’ Compensation and Employer’s Liability Insurance. Workers’
compensation insurance having limits not less than those required by state statute and federal
statute, if applicable, and covering all persons employed by Tenant in the conduct of its
operations on the Premises (including the all states endorsement and, if applicable, the volunteers
endorsement), together with employer’s liability insurance coverage in the amount of at least Five
Hundred Thousand Dollars ($500,000); and




          8.2.4. Property Insurance. “All risk” property insurance including boiler and
machinery comprehensive form, if applicable, covering damage to or loss of any of Tenant’s personal
property, fixtures, equipment and alterations, including electronic data processing equipment
(collectively “Tenant’s Property”) (and coverage for the full replacement cost thereof
including business interruption of Tenant), together with, if the property of Tenant’s invitees is
to be kept in the Premises, warehouser’s legal liability or bailee customers insurance for the full
replacement cost of the property belonging to invitees and located in the Premises; and




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          8.2.5. Business Interruption. Loss of income and extra expense insurance in amounts
as will reimburse Tenant for direct or indirect loss of earnings attributable to all peril commonly
insured against by prudent lessees in the business of Tenant or attributable to prevention of
access to the Premises as a result of such perils.




     8.3 General



          8.3.1. Insurance Companies. Insurance required to be maintained by Tenant shall be
written by companies licensed to do business in the state in which the Premises are located and
having a “General Policyholders Rating” of at least “A — VIII” (or such higher
rating as may be required by a lender having a lien on the Premises) as set forth in the most
current issue of “Best’s Insurance Guide.”




          8.3.2. Certificates of Insurance. Tenant shall deliver to Landlord certificates of
insurance for all insurance required to be maintained by Tenant in the form of Exhibit D,
attached hereto (or in a form acceptable to Landlord in its sole discretion), no later than seven
(7) days prior to the date of possession of the Premises. Tenant shall, at least ten (10) days
prior to expiration of the policy, furnish Landlord with certificates of renewal or “binders”
thereof. Each certificate shall expressly provide that such policies shall not be cancelable or
otherwise subject to modification except after thirty (30) days prior written notice to the parties
named as additional insureds in this Lease (except in the case of cancellation for nonpayment of
premium in which case cancellation shall not take effect until at least ten (10) days’ notice has
been given to Landlord). If Tenant fails to maintain any insurance required in this Lease, Tenant
shall be liable for all losses and costs suffered or incurred by Landlord (including litigation
costs and attorneys’ fees and expenses) resulting from said failure.




          8.3.3. Additional Insureds. Landlord, Landlord’s lender, if any, and any property
management company of Landlord for the Premises shall be named as additional insureds on a form
approved by Landlord under all of the policies required by Section 8.2.1. The policies required
under Section 8.2.1 shall provide for severability of interest.




          8.3.4. Primary Coverage. All insurance to be maintained by Tenant shall, except for
workers’ compensation and employer’s liability insurance, be primary, without right of contribution
from insurance of Landlord. Any umbrella liability policy or excess liability policy (which shall
be in “following form”) shall provide that if the underlying aggregate is exhausted, the excess
coverage will drop down as primary insurance. The limits of insurance maintained by Tenant shall
not limit Tenant’s liability under this Lease.




          8.3.5. Waiver of Subrogation. Whenever (a) any loss, cost, damage or expense
resulting from fire, explosion or any other casualty is incurred by either Landlord or Tenant or by
anyone claiming by, through or under Landlord or Tenant in connection with the Premises, and (b)
such party is covered in whole or in part by property insurance (or would have been covered but for
such party’s failure to maintain the coverage required in this Section 8) with respect to such
loss, cost, damage or expense or as required under this Lease to be self-insured, then the party so
insured (or so required) hereby waives (on its own behalf and on behalf of its insured) any claims
against and releases the party from any liability said other party may have on account of such
loss, cost, damage or expense. All property insurance which is carried by either party to insure
against damage or loss to property shall include provisions denying to each respective insurer
rights of subrogation and recovery against the other party. The waiver of subrogation contained in
this Section 8.3.5 shall not apply to any casualty which is not covered or required to be covered
by the insurance required to be maintained pursuant to this Lease.




          8.3.6. Notification of Incidents. Tenant shall notify Landlord within forty-eight
(48) hours after the occurrence of any accidents or incidents in the Premises or the Project which
could give rise to a claim under any of the insurance policies required under this Section 8.




     8.4 Indemnity.



          8.4.1. Indemnity by Tenant. Tenant shall indemnify, protect, defend (by counsel
reasonably acceptable to Landlord) and hold harmless Landlord and Landlord’s affiliated entities,
and each of their respective members, managers, partners, directors, officers, employees,
shareholders, lenders, agents, contractors, successors and assigns (collectively, “Landlord
Parties”) from and against any and all claims, judgments, causes of action,






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damages, penalties, costs, liabilities, and expenses, including all costs, reasonable
attorneys’ fees, expenses and liabilities incurred in the defense of any such claim or any action
or proceeding brought thereon (collectively, “Claims” or “Liabilities”), arising at
any time during or after the Term as a result (directly or indirectly) of or in connection with (i)
any default in the performance of any obligation on Tenant’s part to be performed under the terms
of this Lease, or (ii) Tenant’s use of the Premises, the conduct of Tenant’s business or any
activity, work or things done, permitted or suffered by Tenant or any Tenant Party (as defined in
Section 12.1) in or about the Premises or other portions of the Project, except to the extent
caused by (a) Landlord’s gross negligence or willful misconduct with respect to Claims or
Liabilities which are covered under any insurance policy required to be maintained by Tenant under
this Lease (or would be covered under such insurance policy if Tenant had maintained the required
insurance policy or policies) (collectively, the “Insurable Risks”), even though caused or
alleged to be caused by the negligence or fault (as opposed to gross negligence or willful
misconduct) of Landlord or Landlord Parties (this indemnity is intended to indemnify Landlord and
Landlord Parties against the consequences of their own negligence with respect to the Insurable
Risks when Landlord or Landlord Parties are jointly, comparatively, contributively, or concurrently
negligent with Tenant), or (b) Landlord’s negligence or breach of this Lease with respect to Claims
or Liabilities that are not part of the Insurable Risks. The obligations of Tenant under this
Section 8.4 shall survive the termination of this Lease with respect to any claims or liability
arising prior to such termination.




          8.4.2. Indemnity by Landlord. Landlord shall indemnify, protect, defend (by counsel
reasonably acceptable to Tenant) and hold Tenant and Tenant’s affiliated entities, and each of
their respective members, managers, partners, directors, officers, employees, shareholders,
lenders, agents, contractors, successors and assigns harmless from and against any and all Claims
or Liabilities arising out of or in connection with, but only to the extent of (a) Landlord’s gross
negligence or willful misconduct with respect to Claims or Liabilities that are part of Insurable
Risks and (b) Landlord’s negligence or breach of this Lease with respect to Claims or Liabilities
that are not a part of the Insurable Risks; provided, however, the foregoing indemnity of Landlord
shall in no way limit the provisions of Section 19.5 hereof. Landlord’s agreement to indemnify,
defend and hold Tenant harmless as provided above is not intended to and shall not relieve any
insurance carrier of its obligations under policies required to be carried by Tenant pursuant to
the provisions of this Lease to the extent that such policies cover (or, if such policies would
have been carried as required, would have covered) Claims or Liabilities incurred as a result of
negligent acts or omissions or the willful misconduct of Landlord or those of other Landlord
Parties.




     8.5 Exemption of Landlord from Liability. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property including, but not limited
to, Tenant’s fixtures, equipment, furniture and alterations or illness or injury to persons in,
upon or about the Premises or other portions of the Project arising from any cause, and Tenant
hereby waives all claims in respect thereof against Landlord, except to the extent caused by (a)
Landlord’s gross negligence or willful misconduct with respect to Claims or Liabilities that are
part of the Insurable Risks of (b) Landlord’s negligence or breach of this Lease with respect to
the Claims or Liabilities that are not part of the Insurable Risks. Tenant hereby agrees that
Landlord shall not be liable for injury to Tenant’s business or any loss of income therefrom.
Tenant further agrees that Landlord shall not be liable for damage to the property of Tenant, or
injury to or illness or death of Tenant or any Tenant Party, or any other person in or about the
Premises or the Project, whether such damage, illness or injury is caused by fire, steam,
electricity, gas, water or rain, or from the breakage, leakage or other defects of sprinklers,
wires, appliances, ventilation, plumbing, air conditioning or lighting fixtures, or from any other
cause, and whether said damage, illness or injury results from conditions arising upon the
Premises, upon other portions of the Building or from other sources or places, and regardless of
whether the cause of such damage, illness or injury or the means of repairing the same is
inaccessible to Tenant, except to the extent such damage, illness or injury is caused by (a)
Landlord’s gross negligence or willful misconduct with respect to Claims or Liabilities that are
part of the Insurable Risks or (b) Landlord’s negligence or breach of this Lease with respect to
Claims or Liabilities that are not part of the Insurable Risks. Landlord shall not be liable for
any damages arising from any act or neglect of any contractor or other tenant, if any, of the
Building or the Project or Landlord’s failure to enforce the terms of any agreements with parties
other than Tenant.


9. REPAIRS AND MAINTENANCE




     9.1 Tenant. Tenant, at Tenant’s sole cost and expense, shall keep and maintain the
Premises interior and exterior (excluding only replacement of or structural repairs to the roof and
other matters that are Landlord’s responsibility pursuant to Section 9.2 below), including, without
limitation, exterior painting, parking lot repairs and maintenance, loading docks, roll up doors
and ramps, floors, subfloors and floor coverings, walls and wall



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coverings, doors, windows, glass, plate glass, locks, ceilings, skylights, lighting systems,
interior plumbing, electrical and mechanical systems and wiring, appliances and devices using or
containing refrigerants, fixtures and equipment in good repair and in a clean and safe condition,
and repair and/or replace any and all of the foregoing in a clean and safe condition, in good
order, condition and repair. Without limiting the foregoing, Tenant shall, at Tenant’s sole
expense, immediately replace all broken glass in the Premises with glass equal to or in excess of
the specification and quality of the original glass; and repair any area damaged by Tenant,
Tenant’s agents, employees, invitees and visitors, including any damage caused by any roof
penetration, whether or not such roof penetration was approved by Landlord. All repairs and
replacements by Tenant shall be made and performed: (a) at Tenant’s cost and expense and at such
time and in such manner as Landlord may designate, (b) by contractors or mechanics approved by
Landlord, (c) so that same shall be at least equal in quality, value and utility to the original
work or installation, (d) in a manner and using equipment and materials that will not interfere
with or impair the operations, use or occupation of the Building or any of the mechanical,
electrical, plumbing or other systems in the Building or the Project, and (e) in accordance with
the Rules and Regulations and all Applicable Laws. In the event Tenant fails, in the reasonable
judgment of Landlord, to maintain the Premises in accordance with the obligations under the Lease,
which failure continues at the end of ten (10) days following Tenant’s receipt of written notice
from Landlord stating the nature of the failure, Landlord shall have the right to enter the
Premises and perform such maintenance, repairs or refurbishing at Tenant’s sole cost and expense
(including a sum for overhead to Landlord equal to ten percent (10%) of the costs of maintenance,
repairs or refurbishing). Tenant shall maintain written records of maintenance and repairs, as
required by any Applicable Law, and shall use certified technicians to perform such maintenance and
repairs, as so required. Tenant shall deliver full and complete copies of all service or
maintenance contracts entered into by Tenant for the Premises to Landlord within one hundred twenty
(120) days after the Commencement Date. Landlord agrees to assign to Tenant on a non-exclusive
basis the benefit of any equipment warranties for systems installed in the Premises to the extent
Tenant is required to maintain and repair such systems pursuant to the terms of this Lease.




     9.2 Landlord. Landlord shall, subject to the following limitations, repair damage to
structural portions of the roof, foundation and load-bearing portions of walls (excluding wall
coverings, painting, glass and doors) of the Building; provided, if such damage is caused by an act
or omission of Tenant, or any Tenant Party, then the cost thereof shall be at Tenant’s sole expense
except to the extent such damage is covered or required to be covered by the insurance required
under this Lease to be maintained by Landlord (and specifically excluding any amounts payable from
the deductible thereunder, which shall be payable by Tenant). Landlord shall not be required to
make any repair resulting from (i) any alteration or modification to the Building or to mechanical
equipment within the Building performed by, for or because of Tenant or to special equipment or
systems installed by, for or because of Tenant, except as provided in Section 13 of this Lease,
(ii) the installation, use or operation of Tenant’s property, fixtures and equipment, (iii) the
moving of Tenant’s property in or out of the Building or in and about the Premises, (iv) Tenant’s
use or occupancy of the Premises in violation of Section 11 of this Lease or in the manner not
contemplated by the parties at the time of the execution of this Lease, (v) the acts or omissions
of Tenant or any Tenant Party unless such damage is not covered by the insurance required under
this Lease to be maintained by Tenant and is fully covered by the insurance required under this
Lease to be maintained by Landlord, (vi) fire and other casualty, except as provided by Section 13
of this Lease or (vii) condemnation, except as provided in Section 14 of this Lease. Landlord
shall make repairs under this Section 9.2 within a reasonable time after receipt of written notice
from Tenant of the need for such repairs. There shall be no abatement of Rent during the
performance of such work. Landlord shall not be liable to Tenant for injury or damage that may
result from any defect in the construction or condition of the Premises, nor for any damage that
may result from interruption of Tenant’s use of the Premises during any repairs by Landlord.
Tenant waives any right to repair the Premises and/or the Project at the expense of Landlord under
any Applicable Laws.


10. ALTERATIONS




     10.1 Trade Fixtures; Alterations. Tenant may install necessary trade fixtures,
equipment and furniture in the Premises, provided that such items are installed and are removable
without structural or material damage to the Premises or the Project. Tenant shall not construct,
nor allow to be constructed, any alterations or physical additions in, about or to the Premises
(except as provided in the Work Letter) without obtaining the prior written consent of Landlord,
which consent shall be conditioned upon Tenant’s compliance with the provisions of Exhibit
G and any other applicable reasonable requirements of Landlord regarding construction of
improvements and alterations. Tenant shall submit plans and specifications to Landlord with
Tenant’s request for approval and shall



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reimburse Landlord for all costs which Landlord may incur in connection with granting approval
to Tenant for any such alterations and additions, including any costs or expenses which Landlord
may incur in electing to have outside architects and engineers review said matters. If Landlord
does not respond to a written request from Tenant within ten (10) business days, then Landlord
shall be deemed to disapprove such request. Notwithstanding the foregoing, Tenant may make
alterations to the Premises without Landlord’s consent, provided that the cost of any such
alteration does not exceed Twenty-Five Thousand Dollars ($25,000.00) per alteration or Fifty
Thousand Dollars ($50,000.00) in the aggregate in any twelve (12) month period, and further
provided that such alterations do not (i) require any structural or other substantial modifications
to the Premises or the Building, (ii) require any changes to nor adversely affect the systems and
equipment of the Building, and (iii) affect the exterior appearance of the Building, and further
provided that Tenant shall give Landlord at least fifteen (15) days prior written notice of any
such alteration, which notice shall be accompanied by reasonably adequate evidence that such
alterations meet the criteria contained in this sentence. In the event Tenant makes any
alterations to the Premises that trigger or give rise to a requirement that the Building or the
Premises come into compliance with any governmental laws, ordinances, statutes, orders and/or
regulations (such as ADA requirements), Tenant shall be fully responsible for complying, at its
sole cost and expense, with same. Tenant shall post, record and file a notice of completion after
completion of such work and provide Landlord with a copy thereof. Tenant shall provide Landlord
with a set of “as-built” drawings for any such work. Notwithstanding anything to the contrary
contained herein, Landlord shall cause the Premises to comply as of Substantial Completion (as
defined in the Work Letter) of the Premises with the ADA as it exists as of such date.




     10.2 Damage; Removal. Tenant shall repair all damage to the Premises or the Project
caused by the installation or removal of Tenant’s fixtures, equipment, furniture or alterations.
Upon the termination of this Lease, Tenant shall (if required in writing at the time Landlord
consents thereto or, if Landlord’s consent thereto is not required, at the time such items are
installed provided that in each such case Tenant requests in writing at the time of Tenant’s
request for consent or at the time of installation thereof, as applicable, that Landlord make such
a determination) remove any or all trade fixtures, alterations, additions, improvements and
partitions made or installed by Tenant, and restore the Premises to its condition existing prior to
the construction of any such items; provided, however, Landlord has the absolute right to require
Tenant to have all or any portion of such items designated by Landlord other than Tenant’s trade
fixtures or other personal property to remain on the Premises, in which event they shall be and
become the property of Landlord upon the termination of this Lease. All such removals and
restoration shall be accomplished in a good and workmanlike manner and so as not to cause any
damage to the Premises or the Project whatsoever.



     10.3 Liens. Tenant shall promptly pay and discharge all claims for labor performed,
supplies furnished and services rendered at the request of Tenant and shall keep the Premises free
of all mechanics’ and materialmen’s liens in connection therewith. Tenant shall provide at least
ten (10) days prior written notice to Landlord before any labor is performed, supplies furnished or
services rendered on or at the Premises and Landlord shall have the right to post on the Premises
notices of non-responsibility. If any lien is filed, Tenant shall cause such lien to be released
and removed (or provide security therefor acceptable to Landlord in Landlord’s sole discretion)
within ten (10) days after the date of filing, and if Tenant fails to do so, Landlord may take such
action as may be necessary to remove such lien and Tenant shall pay Landlord such amounts expended
by Landlord together with interest thereon at the Applicable Interest Rate from the date of
expenditure.



     10.4 Standard of Work. All work to be performed by or for Tenant pursuant hereto
shall be performed diligently and in a good, workmanlike manner, and in compliance with all
Applicable Laws, and/or Tenant and Landlord’s insurance carriers. Landlord shall have the right,
but not the obligation, to inspect periodically the work on the Premises and Landlord may require
changes in the method or quality of the work.


11. USE. The Premises shall be used only for the Permitted Uses set forth in the Basic
Lease Information and for no other uses without Landlord’s prior written consent, not to be
unreasonably withheld. Tenant’s use of the Premises shall be in compliance with and subject to all
applicable laws, statutes, codes, ordinances, orders, rules, regulations, conditions of approval
and requirements of all federal, state, county, municipal and governmental authorities and all
administrative or judicial orders or decrees and all permits, licenses, approvals and other
entitlements issued by governmental entities, and rules of common law, relating to or affecting the
Project, the Premises or the Building or the use or operation thereof, whether now existing or
hereafter enacted, including, without limitation, the Americans with Disabilities Act of 1990, 42
USC 12111 et seq. (the “ADA”) as the same





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may be amended from time to time, all Environmental Laws (as defined in Section 12.1), and any
CC&Rs or any supplement thereto recorded in any official or public records with respect to the
Project or any portion thereof (“Applicable Laws”). From and after the date hereof Tenant
shall use the Premises and permit the Premises to be used solely for uses permitted by that certain
Declaration of Covenants, Conditions and Restrictions for Southshore Corporate Park executed by
Catellus Development Corporation and recorded in the Official Records of Multnomah County, State of
Oregon on June 7, 1999 as Instrument No. 99113258 (the “CC&Rs”). In addition, Tenant
acknowledges that the Premises are subject to that certain Administrative Order on Consent made and
entered into by and among the United States Environmental Protection Agency, the State of Oregon
Department of Environmental Quality and Winmar Pacific, Inc. dated effective as of April 16, 1991
(the “Administrative Order”), which imposes certain covenants, conditions and restrictions
on Southshore Corporate Park. Except as otherwise expressly provided in this Lease, Tenant shall
be responsible for obtaining any permit, business license, or other permits or licenses required by
any governmental agency permitting Tenant’s use or occupancy of the Premises. In no event shall
the Premises be used for any of the Prohibited Uses set forth on Exhibit E attached hereto.
Tenant shall comply with the rules and regulations attached hereto as Exhibit F, together
with such additional reasonable, non-discriminatory rules and regulations as Landlord may from time
to time prescribe. Tenant shall not commit waste, overload the floors or structure of the
Building, subject the Premises or the Project to any use which would damage the same or increase
the risk of loss or violate any insurance coverage, permit any unreasonable odors, smoke, dust,
gas, substances, noise or vibrations to emanate from the Premises, take any action which would
constitute a nuisance or would disturb, obstruct or endanger any other tenants, take any action
which would abrogate any warranties, or use or allow the Premises to be used for any unlawful
purpose. Tenant shall have the right to use for its employees and invitees the parking areas
located upon the Premises. Landlord hereby agrees to use commercially reasonable efforts to cause
other tenants of the Project to comply with the terms and provisions of their leases, but
notwithstanding the foregoing, in no event shall Landlord be responsible for non-compliance by any
other tenant or occupant of the Project with, or Landlord’s failure to enforce, any of the rules or
regulations or CC&Rs or any other terms or provisions of such tenant’s or occupant’s lease, and
neither such noncompliance by any such parties nor Landlord’s failure to enforce the same shall
constitute a default by Landlord under this Lease or entitle Tenant to any remedies whatsoever
against Landlord. Tenant shall promptly comply with the reasonable requirements of any board of
fire insurance underwriters or other similar body now or hereafter constituted. Tenant shall not
do any act which shall in any way encumber the title of Landlord in and to the Premises, the
Building or the Project.



12. ENVIRONMENTAL MATTERS




     12.1 Hazardous Materials. Tenant shall not cause nor permit, nor allow any of
Tenant’s employees, agents, customers, visitors, invitees, licensees, contractors, assignees or
subtenants (individually, a “Tenant Party” and collectively, “Tenant’s Parties”) to
cause or permit, any Hazardous Materials to be brought upon, stored, manufactured, generated,
blended, handled, recycled, treated, disposed or used on, under or about the Premises or the
Project, except for routine office and janitorial supplies and fuels and materials to operate
forklifts in usual and customary quantities stored, used and disposed of in accordance with all
applicable Environmental Laws. As used herein, “Hazardous Materials” means any chemical,
substance, material, controlled substance, object, condition, waste, living organism or combination
thereof, whether solid, semi-solid, liquid or gaseous, which is or may be hazardous to human
health or safety or to the environment due to its radioactivity, ignitability, corrosivity,
reactivity, explosivity, toxicity, carcinogenicity, mutagenicity, phytotoxicity, infectiousness or
other harmful or potentially harmful properties or effects, including, without limitation, tobacco
smoke, petroleum and petroleum products, asbestos, radon, polychlorinated biphenyls (PCBs),
refrigerants (including those substances defined in the Environmental Protection Agency’s
“Refrigerant Recycling Rule,” as amended from time to time) and all of those chemicals,
substances, materials, controlled substances, objects, conditions, wastes, living organisms or
combinations thereof which are now or become in the future listed, defined or regulated in any
manner by any Environmental Law based upon, directly or indirectly, such properties or effects. As
used herein, “Environmental Laws” means any and all federal, state or local environmental,
health and/or safety-related laws, regulations, standards, decisions of courts, ordinances, rules,
codes, orders, decrees, directives, guidelines, permits or permit conditions, currently existing
and as amended, enacted, issued or adopted in the future which are or become applicable to Tenant,
the Premises or the Project. Tenant and Tenant’s Parties shall comply with all Environmental Laws
in connection with Tenant’s occupancy of the Premises and promptly notify Landlord in writing of
the violation of any Environmental Law or presence of any Hazardous Materials, other than office
and janitorial supplies as permitted above, in, on, under or about the Premises or the improvements
or the soil or groundwater



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thereunder. Landlord shall have the right to enter upon and inspect the Premises and to
conduct tests, monitoring and investigations. If such tests indicate the presence of any
environmental condition caused or negligently or willfully exacerbated by Tenant or any Tenant
Party, Tenant shall reimburse Landlord for the cost of conducting such tests. The phrase
“environmental condition” shall mean any adverse condition relating to any Hazardous
Materials or the environment, including surface water, groundwater, drinking water supply, land,
surface or subsurface strata or the ambient air and includes air, land and water pollutants, noise,
vibration, light and odors. In the event of any such environmental condition caused by Tenant or
negligently or willfully exacerbated by Tenant or any Tenant Party, Tenant shall promptly take any
and all steps necessary to rectify the same to the satisfaction of the applicable agencies and
Landlord, or shall, at Landlord’s election, reimburse Landlord, upon demand, for the actual cost to
Landlord of performing rectifying work. The reimbursement shall be paid to Landlord in accordance
with the progress of the work, based upon Landlord’s actual cost thereof and within ten (10) days
of receipt of each periodic invoice from Landlord therefor; and upon completion of such work by
Landlord, Tenant shall pay to Landlord any shortfall promptly after receipt of Landlord’s bills
therefor or Landlord shall promptly refund to Tenant any excess deposit, as the case may be.




     12.2 Indemnification. Tenant shall indemnify, protect, defend (by counsel acceptable
to Landlord) and hold harmless Landlord and Landlord’s affiliated entities, and each of their
respective members, managers, partners, directors, officers, employees, shareholders, lenders,
agents, contractors, successors and assigns (individually and collectively, “Indemnitees”)
from and against any and all claims, judgments, causes of action, damages, penalties, fines, taxes,
costs, liabilities, losses and expenses arising at any time during or after the Term as a result
(directly or indirectly) of or in connection with (a) Tenant and/or any Tenant Party’s breach of
this Section 12, or (b) the release of Hazardous Materials on, under or about the Premises or other
property as a result (directly or indirectly) of Tenant’s and/or any Tenant Party’s activities, or
negligent failure to act, in connection with the Premises. This indemnity shall include, without
limitation, the cost of any required or necessary repair, cleanup or detoxification, and the
preparation and implementation of any closure, monitoring or other required plans, whether such
action is required or necessary prior to or following the termination of this Lease. Neither the
written consent by Landlord to the presence of Hazardous Materials on, under or about the Premises,
nor the strict compliance by Tenant with all Environmental Laws, shall excuse Tenant from Tenant’s
obligation of indemnification pursuant hereto. Tenant’s obligations pursuant to the foregoing
indemnity shall survive the expiration or termination of this Lease.



     12.3 Pre-Existing Conditions. Landlord hereby represents to Tenant that, to its
actual knowledge, no environmental condition (as defined in Section 12.1) in violation of law
presently exists as of the Effective Date on, under, or within the Premises. For purposes of this
Lease, current “actual knowledge” shall mean the actual, present knowledge of Dan Marcus as
of the date of this Lease, without investigation or inquiry of any kind.


13. DAMAGE AND DESTRUCTION




     13.1 Casualty. If the Premises or Building should be damaged or destroyed by fire or
other casualty, Tenant shall give immediate written notice to Landlord. Within thirty (30) days
after receipt from Tenant of such written notice, Landlord shall notify Tenant whether, in
Landlord’s reasonable determination, the necessary repairs can reasonably be made: (a) within one
hundred eighty (180) days; or (b) in more than one hundred eighty (180) days, in each case after
the date Landlord receives notice of such casualty from Tenant.



          13.1.1. Less Than 180 Days. If the Premises or Building should be damaged only to
such extent that rebuilding or repairs can reasonably be completed within one hundred eighty (180)
days after the date Landlord receives notice of such casualty from Tenant, this Lease shall not
terminate and, provided that insurance proceeds are available to fully repair the damage, Landlord
shall repair the Premises and the initial Tenant Improvements installed or constructed in the
Premises by Landlord pursuant to the Work Letter, except that Landlord shall not be required to
rebuild, repair or replace Tenant’s Property which may have been placed in, on or about the
Premises by or for the exclusive benefit of Tenant (other than the initial Tenant Improvements
installed or constructed in the Premises by Landlord pursuant to the Work Letter). If Tenant is
required to vacate all or a portion of the Premises during Landlord’s repair thereof, the Base Rent
payable hereunder shall be abated proportionately on the basis of the size of the area of the
Premises that is damaged (i.e., the number of square feet of floor area of the Premises that is
damaged compared to the total square footage of the floor area of the Premises) from the date
Tenant vacates all or a portion of the Premises that was damaged only to the extent rental
abatement insurance proceeds are received by Landlord and only during the period the Premises are
unfit for occupancy.




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          13.1.2. Greater Than 180 Days. If the Premises or Building should be so damaged that
rebuilding or repairs cannot be completed within one hundred eighty (180) days after the date
Landlord receives notice of such casualty from Tenant, either Landlord or Tenant may terminate this
Lease by giving written notice within ten (10) days after notice from Landlord specifying such time
period of repair; and this Lease shall terminate and the Rent shall be abated from the date Tenant
vacates the Premises. In the event that neither party elects to terminate this Lease, Landlord
shall promptly commence and diligently prosecute to completion the repairs to the Building or
Premises, provided insurance proceeds are available to repair the damage (except that Landlord
shall not be required to rebuild, repair or replace Tenant’s Property which may have been placed
in, on or about the Premises by or for the benefit of Tenant other than the initial Tenant
Improvements installed or constructed in the Premises by Landlord pursuant to the Work Letter). If
Tenant is required to vacate all or a portion of the Premises during Landlord’s repair thereof, the
Base Rent payable hereunder shall be abated proportionately on the basis of the size of the area of
the Premises that is damaged (i.e., the number of square feet of floor area of the Premises that is
damaged compared to the total square footage of the floor area of the Premises), from the date
Tenant vacates all or a portion of the Premises that was damaged only to the extent rental
abatement insurance proceeds are received by Landlord and only during the period that the Premises
are unfit for occupancy.




          13.1.3. Casualty During the Last Year of the Lease Term. Notwithstanding any other
provisions hereof, if the Premises or the Building shall be damaged within the last year of the
Lease Term, and if the cost to repair or reconstruct the portion of the Building or the Premises
which was damaged or destroyed shall exceed $10,000, then, irrespective of the time necessary to
complete such repair or reconstruction, Landlord and Tenant shall each have the right, in its sole
discretion, to terminate the Lease effective upon the occurrence of such damage, in which event the
Rent shall be abated from the date Tenant vacates the Premises. The foregoing right shall be in
addition to any other right and option of Landlord and Tenant under this Section 13.




     13.2 Tenant’s Fault. If the Premises or any portion of the Premises is damaged
resulting from the negligence or breach of this Lease by Tenant or any of Tenant’s Parties, Rent
shall not be reduced during the repair of such damage except to the extent such lost Rent payments
are covered by or required to be covered by the insurance required to be maintained by Landlord
pursuant to this Lease and Tenant shall be liable to Landlord for the cost of the repair caused
thereby to the extent such cost is not covered by insurance proceeds received by Landlord.



     13.3 Uninsured Casualty. Tenant shall be responsible for and shall pay to Landlord
Tenant’s Share of any deductible or retention amount payable under the property insurance for the
Premises. In the event that the Premises or any portion of the Premises is damaged to the extent
Tenant is unable to use the Premises and such damage is not covered by insurance proceeds received
by Landlord (or which would have been received by Landlord had Landlord maintained the insurance
required by this Lease to be maintained by Landlord) or in the event that the holder of any
indebtedness secured by the Premises requires that the insurance proceeds be applied to such
indebtedness, then Landlord shall have the right at Landlord’s option either (i) to repair such
damage as soon as reasonably possible at Landlord’s expense, or (ii) to give written notice to
Tenant within thirty (30) days after the date of the occurrence of such damage of Landlord’s
intention to terminate this Lease as of the date of the occurrence of such damage. In the event
Landlord elects to terminate this Lease, Tenant shall have the right within ten (10) days after
receipt of such notice to give written notice to Landlord of Tenant’s commitment to pay the cost of
repair of such damage, in which event this Lease shall continue in full force and effect, and
Landlord shall make such repairs as soon as reasonably possible subject to the following
conditions: Tenant shall deposit with Landlord Landlord’s estimated cost of such repairs not later
than ten (10) days prior to Landlord’s commencement of the repair work. If the cost of such
repairs exceeds the amount deposited, Tenant shall reimburse Landlord for such excess cost within
fifteen (15) days after receipt of an invoice from Landlord. Any amount deposited by Tenant in
excess of the cost of such repairs shall be refunded within thirty (30) days of Landlord’s final
payment to Landlord’s contractor. If Tenant does not give such notice within the ten (10) day
period, or fails to make such deposit as required, this Lease shall terminate automatically as of
the date of the occurrence of the damage.



     13.4 Waiver. With respect to any damage or destruction which Landlord is obligated to
repair or may elect to repair, Tenant waives all rights to terminate this Lease pursuant to rights
otherwise presently or hereafter accorded by law.



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14. EMINENT DOMAIN




     14.1 Total Condemnation. If all of the Premises is condemned by eminent domain,
inversely condemned or sold under threat of condemnation for any public or quasi-public use or
purpose (“Condemned”), this Lease shall terminate as of the earlier of the date the
condemning authority takes title to or possession of the Premises, and Rent shall be adjusted to
the date of termination.



     14.2 Partial Condemnation. If any portion of the Premises or the Building is
Condemned and Landlord and Tenant determine in their reasonable discretion that such partial
condemnation materially impairs Tenant’s ability to use the Premises for Tenant’s business as
reasonably determined by Landlord and Tenant, Tenant and Landlord shall each have the option of
terminating this Lease as of the earlier of the date title vests in the condemning authority or as
of the date an order of immediate possession is issued and Rent shall be adjusted to the date of
termination. If Landlord and Tenant determine that such partial condemnation does not materially
impair Tenant’s ability to use the Premises for the business of Tenant, Landlord shall promptly
restore the Premises to the extent of any condemnation proceeds recovered by Landlord, excluding
the portion thereof lost in such condemnation, and this Lease shall continue in full force and
effect except that after the date of such title vesting or order of immediate possession Rent shall
be adjusted as reasonably determined by Landlord.



     14.3 Award. If the Premises are wholly or partially Condemned, Landlord shall be
entitled to the entire award paid for such condemnation, and Tenant waives any claim to any part of
the award from Landlord or the condemning authority; provided, however, Tenant shall have the right
to recover from the condemning authority such compensation as may be separately awarded to Tenant
in connection with costs in removing Tenant’s merchandise, furniture, fixtures, leasehold
improvements and equipment to a new location, loss of business and the taking of Tenant’s personal
property provided that such award to Tenant does not reduce the amount of the award payable to
Landlord. No condemnation of any kind shall be construed to constitute an actual or constructive
eviction of Tenant or a breach of any express or implied covenant of quiet enjoyment.



     14.4 Temporary Condemnation. In the event of a temporary condemnation not extending
beyond the Term, this Lease shall remain in effect, Tenant shall continue to pay Rent and Tenant
shall receive any award made for such condemnation except damages to any of Landlord’s property.
If a temporary condemnation is for a period which extends beyond the Term, this Lease shall
terminate as of the date of initial occupancy by the condemning authority and any such award shall
be distributed in accordance with the preceding section. If a temporary condemnation remains in
effect at the expiration or earlier termination of this Lease, Tenant shall pay Landlord the
reasonable cost of performing any obligations required of Tenant with respect to the surrender of
the Premises.


15. DEFAULT




     15.1 Events of Defaults. The occurrence of any of the following events shall, at
Landlord’s option, constitute an “Event of Default”:



          15.1.1. Vacation or abandonment of the Premises for a period of sixty (60) consecutive days
and failure to secure the Premises;




          15.1.2. Failure to pay Rent on the date when due and the failure continuing for a period of
seven (7) days after such payment is due and notice of such default is given to Tenant, provided
such notice shall be in lieu of any notice required by O.R.S. Section 105.120 or any other
Applicable Laws;




          15.1.3. Failure to perform Tenant’s covenants and obligations hereunder (except default in the
payment of Rent) where such failure continues for a period of thirty (30) days after written notice
from Landlord; provided, however, if the nature of the default is such that more than thirty (30)
days are reasonably required for its cure, Tenant shall not be deemed to be in default if Tenant
commences the cure within such thirty (30) day period and diligently and continuously prosecutes
such cure to completion;




          15.1.4. The making of a general assignment by Tenant for the benefit of creditors; the filing
of a voluntary petition by Tenant or the filing of an involuntary petition by any of Tenant’s
creditors seeking the





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rehabilitation, liquidation or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action, the failure to
remove or discharge the same within sixty (60) days of such filing; the appointment of a receiver
or other custodian to take possession of substantially all of Tenant’s assets or this leasehold;
Tenant’s insolvency or inability to pay Tenant’s debts or failure generally to pay Tenant’s debts
when due; any court entering a decree or order directing the winding up or liquidation of Tenant or
of substantially all of Tenant’s assets; Tenant taking any action toward the dissolution or winding
up of Tenant’s affairs; the cessation or suspension of Tenant’s use of the Premises; or the
attachment, execution or other judicial seizure of substantially all of Tenant’s assets or this
leasehold; or




          15.1.5. The making of any material misrepresentation or omission by Tenant or any successor in
interest of Tenant in any materials delivered by or on behalf of Tenant to Landlord or Landlord’s
lender pursuant to this Lease.




     15.2 Remedies



          15.2.1. Termination. In the event of the occurrence of any Event of Default, Landlord
shall have the right to give a written termination notice to Tenant (which notice may be the notice
given under Section 15.1 above, if applicable, and which notice shall be in lieu of any notice
required by O.R.S. Section 105.120 or any other Oregon law and, on the date specified in such
notice, this Lease shall terminate unless on or before such date all arrears of Rent and all other
sums payable by Tenant under this Lease and all costs and expenses incurred by or on behalf of
Landlord hereunder shall have been paid by Tenant and all other Events of Default at the time
existing shall have been fully remedied to the satisfaction of Landlord.




               15.2.1.1 Repossession. Following termination, without prejudice to other remedies
Landlord may have, Landlord may (i) peaceably re-enter the Premises upon voluntary surrender by
Tenant or remove Tenant therefrom and any other persons occupying the Premises, using such legal
proceedings as may be available; (ii) repossess the Premises or relet the Premises or any part
thereof for such term (which may be for a term extending beyond the Term), at such rental and upon
such other terms and conditions as Landlord in Landlord’s sole discretion shall determine, with the
right to make reasonable alterations and repairs to the Premises; and (iii) remove all personal
property therefrom.



               15.2.1.2 Unpaid Rent. Landlord shall have all the rights and remedies of a landlord
provided by Applicable Law, including the right to recover from Tenant but subject to Landlord’s
duty to mitigate damages if required by Applicable Laws: (a) the worth, at the time of award, of
the unpaid Rent that had been earned at the time of termination, (b) the worth, at the time of
award, of the amount by which the unpaid Rent that would have been earned after the date of
termination until the time of award exceeds the amount of loss of rent that Tenant proves could
have been reasonably avoided, (c) the worth, at the time of award, of the amount by which the
unpaid Rent for the balance of the Term after the time of award exceeds the amount of the loss of
rent that Tenant proves could have been reasonably avoided, and (d) any other amount, and court
costs, necessary to compensate Landlord for all detriment proximately caused by Tenant’s default.
The phrase “worth, at the time of award,” as used in (a) and (b) above, shall be computed at the
Applicable Interest Rate, and as used in (c) above, shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).



          15.2.2. Continuation. Even though an Event of Default may have occurred, this Lease
shall continue in effect for so long as Landlord does not terminate Tenant’s right to possession;
and Landlord may enforce all of Landlord’s rights and remedies under this Lease allowed by law
(“lessor” may continue the Lease in effect after “lessee’s” breach and abandonment and recover Rent
as it becomes due, if “lessee” has the right to sublet or assign, subject only to reasonable
limitations) to recover Rent as it becomes due. Landlord, without terminating this Lease, may,
during the period Tenant is in default, enter the Premises and relet the same, or any portion
thereof, to third parties for Tenant’s account and Tenant shall be liable to Landlord for all
reasonable costs Landlord incurs in reletting the Premises, including, without limitation, brokers’
commissions, expenses of remodeling the Premises and like costs. Reletting may be for a period
shorter or longer than the remaining Term. Tenant shall continue to pay the Rent on the date the
same is due. No act by Landlord hereunder, including acts of maintenance, preservation or efforts
to lease the Premises or the appointment of a receiver upon application of Landlord to protect
Landlord’s interest under this Lease, shall terminate this Lease unless Landlord notifies Tenant
that Landlord elects to terminate





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this Lease. In the event that Landlord elects to relet the Premises, the rent that Landlord
receives from reletting shall be applied to the payment of, first, any indebtedness from Tenant to
Landlord other than Base Rent and Tenant’s Share of Operating Expenses and Real Property Taxes;
second, all costs, including maintenance, incurred by Landlord in reletting; and, third, Base Rent
and Tenant’s Share of Operating Expenses and Real Property Taxes under this Lease. After deducting
the payments referred to above, any sum remaining from the rental Landlord receives from reletting
shall be held by Landlord and applied in payment of future Rent as Rent becomes due under this
Lease. In no event, and notwithstanding anything in Section 16 to the contrary, shall Tenant be
entitled to any excess rent received by Landlord. If, on the date Rent is due under this Lease,
the rent received from the reletting is less than the Rent due on that date, Tenant shall pay to
Landlord, in addition to the remaining Rent due, all costs, including maintenance, which Landlord
incurred in reletting the Premises that remain after applying the rent received from reletting as
provided hereinabove. So long as this Lease is not terminated, Landlord shall have the right to
remedy any default of Tenant, to maintain or improve the Premises, to cause a receiver to be
appointed to administer the Premises and new or existing subleases and to add to the Rent payable
hereunder all of Landlord’s reasonable costs in so doing, with interest at the Applicable Interest
Rate from the date of such expenditure. Landlord shall have no duty to relet the Premises so long
as it has other unleased space available in the Project.




     15.3 Cumulative. Each right and remedy of Landlord provided for herein or now or
hereafter existing at law, in equity, by statute or otherwise shall be cumulative and shall not
preclude Landlord from exercising any other rights or remedies provided for in this Lease or now or
hereafter existing at law or in equity, by statute or otherwise. No payment by Tenant of a lesser
amount than the Rent nor any endorsement on any check or letter accompanying any check or payment
as Rent shall be deemed an accord and satisfaction of full payment of Rent; and Landlord may accept
such payment without prejudice to Landlord’s right to recover the balance of such Rent or to pursue
other remedies.


16. ASSIGNMENT AND SUBLETTING. Tenant shall not assign, sublet or otherwise transfer,
whether voluntarily or involuntarily or by operation of law, the Premises or any part thereof
without Landlord’s prior written approval, which shall not be unreasonably withheld; provided,
however, Tenant agrees it shall be reasonable for Landlord to disapprove of a requested assignment,
if the proposed assignee does not have a tangible net worth (as determined in accordance with
generally accepted accounting principles consistently applied) equal to or greater than that of
Tenant as of the date of the Lease as shown in the financial information provided to Landlord. The
merger of Tenant with any other entity or the transfer of any controlling or managing ownership or
beneficial interest in Tenant, or the assignment of a substantial portion of the assets of Tenant,
whether or not located at the Premises, shall constitute an assignment hereunder. If Tenant
desires to assign this Lease or sublet any or all of the Premises, Tenant shall give Landlord
written notice thereof with copies of all related documents and agreements associated with the
assignment or sublease, including without limitation, the financial statements of any proposed
assignee, twenty (20) days prior to the anticipated effective date of the assignment or sublease.
Tenant shall pay Landlord’s reasonable attorneys’ fees incurred in the review of such documentation
plus an administrative fee of Five Hundred Dollars ($500.00) for each proposed transfer. Landlord
shall have a period of fifteen (15) days following receipt of such notice and all related documents
and agreements to notify Tenant in writing of Landlord’s approval or disapproval of the proposed
assignment or sublease. If Landlord fails to notify Tenant in writing of such election, Landlord
shall be deemed to have disapproved such assignment or subletting. This Lease may not be assigned
by operation of law. Any purported assignment or subletting contrary to the provisions hereof
shall be void and shall constitute an Event of Default hereunder. Except in the case of an
assignment or sublease to an Affiliate, if Tenant receives rent or other consideration for any such
transfer in excess of the Rent, or in case of the sublease of a portion of the Premises, in excess
of such Rent that is fairly allocable to such portion, after appropriate adjustments to assure that
all other payments required hereunder are appropriately taken into account, Tenant shall pay
Landlord fifty percent (50%) of the difference between each such payment of rent or other
consideration and the Rent required hereunder. Landlord may, without waiving any rights or
remedies, collect rent from the assignee, subtenant or occupant and apply the net amount collected
to the Rent herein reserved and apportion any excess rent so collected in accordance with the terms
of the preceding sentence. Such acceptance of Rent shall in no event be deemed to imply that
Landlord is approving a subtenant or assignee which Landlord has not approved in writing pursuant
to the requirements of this Section 16. Notwithstanding any assignment or subleasing of the
Premises, Tenant shall continue to be liable as a principal and not as a guarantor or surety to the
same extent as though no assignment or subletting had been made. Landlord may consent to
subsequent assignments or subletting of this Lease or amendments or modifications to the Lease by
assignees of Tenant without notifying Tenant or any successor of Tenant and without obtaining their
consent. No permitted transfer shall be effective until there has been delivered to





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Landlord a counterpart of the transfer instrument in which the transferee agrees to be and remain
jointly and severally liable with Tenant for the payment of Rent pertaining to the Premises and for
the performance of all the terms and provisions of this Lease relating thereto arising on or after
the date of the transfer. Notwithstanding the provisions set forth above requiring Landlord’s
consent to any assignment or subletting, Tenant may assign this Lease or sublet the Premises or any
portion thereof, without Landlord’s consent, to any partnership, corporation, limited liability
company or other entity which controls, is controlled by, or is under common control with Tenant
(control being defined for such purposes as the power to direct the management of the relevant
entity), or to any partnership, corporation or other entity resulting from a merger or
consolidation with Tenant or to any person or entity which acquires at least a majority of all the
assets of Tenant as a going concern (collectively, an “Affiliate”); provided, that (i)
Landlord receives twenty (20) days prior written notice of such assignment or subletting together
with reasonable financial information concerning the creditworthiness of the Affiliate, (ii) the
Affiliate assumes (in the event of an assignment) in writing all of Tenant’s obligations under this
Lease, (iii) Landlord receives a fully executed copy of such assignment or sublease agreement
between Tenant and the Affiliate, and (iv) the original Tenant hereunder, i.e., LaCrosse Footwear,
Inc., remains liable for all of Tenant’s obligations under this Lease. In no event shall the
transfer or sale of public stock sold on an exchange regulated by the SEC in any Affiliate
constitute a transfer under this Lease. Landlord may assign its interest in the Lease in its sole
discretion without Tenant’s consent.



17. ESTOPPEL, ATTORNMENT AND SUBORDINATION




     17.1 Estoppel. Within ten (10) days after written request by Landlord, Tenant shall
deliver an estoppel certificate duly executed (and acknowledged if required by any lender), in the
form attached hereto as Exhibit H, or in such other form as may be acceptable to the
lender, which form may include some or all of the provisions contained in Exhibit H, to any
proposed mortgagee, purchaser or Landlord. Tenant’s failure to deliver said statement in such time
period shall be an Event of Default hereunder and shall be conclusive upon Tenant that (a) this
Lease is in full force and effect, without modification except as may be represented by Landlord;
(b) there are no uncured defaults in Landlord’s performance and Tenant has no right of offset,
counterclaim or deduction against Rent hereunder; and (c) no more than one month’s Base Rent has
been paid in advance. If any financier should require that this Lease be amended (other than in
the description of the Premises, the Term, the Permitted Use, the Rent or as will substantially,
materially or adversely affect the rights of Tenant), Landlord shall give written notice thereof to
Tenant, which notice shall be accompanied by a Lease supplement embodying such amendments. Tenant
shall, within ten (10) days after the receipt of Landlord’s notice, execute and deliver to Landlord
the tendered Lease supplement. If Tenant fails to deliver to Landlord the tendered Lease
supplement within ten (10) days after receipt of Landlord’s notice, Tenant shall be deemed to have
given Landlord a power of attorney to execute such supplement on behalf of Tenant.



     17.2 Subordination. This Lease shall be subject and subordinate to all ground leases,
master leases and the lien of all mortgages and deeds of trust which now or hereafter affect the
Premises or the Project or Landlord’s interest therein, and all amendments thereto, provided that
Tenant receives an executed Subordination, Nondisturbance and Attornment Agreement in the form
attached hereto as Exhibit I (or such other form as may be commercially reasonable, which form may
include some or all of the provisions contained in Exhibit I, so long as such form includes a
non-disturbance agreement in favor of Tenant) or as otherwise may be required by the applicable
lender, ground lessee and/or master lessor (so long as such documentation includes a
non-disturbance agreement in favor of Tenant) (a “SNDA”). If requested, Tenant shall
execute and deliver to Landlord within ten (10) days after Landlord’s request whatever
documentation that may reasonably be required to further effect the provisions of this paragraph
including a SNDA, or as otherwise may be required by the applicable lender, ground lessee and/or
master lessor (so long as such documentation includes a SNDA).



     17.3 Attornment. Tenant hereby agrees that Tenant will recognize as its landlord
under this Lease and shall attorn to any person succeeding to the interest of Landlord in respect
of the land and the buildings governed by this Lease upon any foreclosure of any mortgage upon such
land or buildings or upon the execution of any deed in lieu of foreclosure in respect to such deed
of trust. If requested, Tenant shall execute and deliver an instrument or instruments confirming
its attornment as provided for herein; provided, however, that no such beneficiary or successor-
in-interest shall be bound by any payment of Base Rent for more than one (1) month in advance, or
any amendment or modification of this Lease made without the express written consent of such
beneficiary where such consent is required under applicable loan documents.



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18. INTENTIONALLY OMITTED.



19. MISCELLANEOUS




     19.1 General



          19.1.1. Entire Agreement. This Lease sets forth all the agreements between Landlord
and Tenant concerning the Premises; and there are no agreements either oral or written other than
as set forth herein.




          19.1.2. Time of Essence. Time is of the essence of this Lease.




          19.1.3. Attorneys’ Fees. In any action or proceeding which either party brings
against the other to enforce its rights hereunder, the nonprevailing party shall pay all costs
incurred by the prevailing party, including reasonable attorneys’ fees, which amounts shall be a
part of the judgment in said action or proceeding.




          19.1.4. Severability. If any provision of this Lease or the application of any such
provision shall be held by a court of competent jurisdiction to be invalid, void or unenforceable
to any extent, the remaining provisions of this Lease and the application thereof shall remain in
full force and effect and shall not be affected, impaired or invalidated.




          19.1.5. Law. This Lease shall be construed and enforced in accordance with the laws
of the State of Oregon. No conflicts of law rules of any state or country (including, without
limitation, Oregon conflicts of law rules) shall be applied to result in the application of any
substantive or procedural laws of any state or country other than Oregon. All controversies,
claims, actions or causes of action arising between the parties hereto and/or their respective
successors and assigns (including any Affiliates thereof), shall be brought, heard and adjudicated
by the courts of the State of Oregon, with venue in the County of Multnomah. Each of the parties
hereto and their respective successors and assigns (including any Affiliates thereof) hereby
consents to personal jurisdiction by the courts of the State of Oregon in connection with any such
controversy, claim, action or cause of action, and each of the parties hereto and their respective
successors and assigns (including any Affiliates thereof) consents to service of process by any
means authorized by Oregon law and consent to the enforcement of any judgment so obtained in the
courts of the State of Oregon on the same terms and conditions as if such controversy, claim,
action or cause of action had been originally heard and adjudicated to a final judgment in such
courts. Each of the parties hereto and their respective successors and assigns (including any
Affiliates thereof) further acknowledges that the laws and courts of Oregon were freely and
voluntarily chosen to govern this Lease and to adjudicate any claims or disputes hereunder.




          19.1.6. No Option. Submission of this Lease to Tenant for examination or negotiation
does not constitute an option to lease, offer to lease or a reservation of, or option for, the
Premises; and this document shall become effective and binding only upon the execution and delivery
hereof by Landlord and Tenant.




          19.1.7. Successors and Assigns. This Lease shall be binding upon and inure to the
benefit of the successors and assigns of Landlord and, subject to compliance with the terms of
Section 16, Tenant.




          19.1.8. Third Party Beneficiaries. Nothing herein is intended to create any third
party benefit.




          19.1.9. Memorandum of Lease. Tenant shall not record this Lease or a short form
memorandum hereof without Landlord’s prior written consent which Landlord may withhold in its sole
discretion.




          19.1.10. Agency, Partnership or Joint Venture. Nothing contained herein nor any acts
of the parties hereto shall be deemed or construed by the parties hereto, nor by any third party,
as creating the relationship of principal and agent or of partnership or of joint venture by the
parties hereto or any relationship other than the relationship of landlord and tenant.




          19.1.11. Merger. The voluntary or other surrender of this Lease by Tenant or a mutual
cancellation thereof or a termination by Landlord shall not work a merger and shall, at the option
of Landlord,





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terminate all or any existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all of such subtenancies.




          19.1.12. Headings. Section headings have been inserted solely as a matter of
convenience and are not intended to define or limit the scope of any of the provisions contained
therein.




          19.1.13. Security Measures. Tenant hereby acknowledges that Landlord shall have no
obligation to provide a guard service or other security measures whatsoever. Tenant assumes all
responsibility for the protection of the Premises, Tenant, its agents and invitees and their
property from the acts of third parties.




     19.2 Signs. All signs and graphics of every kind visible in or from public view or
corridors or the exterior of the Premises (whether located inside or outside of the Premises) shall
be subject to Landlord’s prior written approval and shall be subject to any applicable governmental
laws, ordinances, and regulations and in compliance with Landlord’s signage program. Tenant shall
remove all such signs and graphics prior to the termination of this Lease. Such installations and
removals shall be made in such manner as to avoid injury or defacement of the Premises; and Tenant
shall repair any injury or defacement, including without limitation, discoloration caused by such
installation or removal.



     19.3 Waiver. No waiver of any default or breach hereunder shall be implied from any
omission to take action on account thereof, notwithstanding any custom and practice or course of
dealing. No waiver by either party of any provision under this Lease shall be effective unless in
writing and signed by such party. No waiver shall affect any default other than the default
specified in the waiver and then such waiver shall be operative only for the time and to the extent
therein stated. Waivers of any covenant shall not be construed as a waiver of any subsequent
breach of the same.



     19.4 Financial Statements. Tenant shall provide to any lender, purchaser or Landlord,
within ten (10) days after request (provided such request may not be made more often than once in
any consecutive twelve (12) month period unless an uncured Event of Default exists or except in
connection with any financing or sale of all or any portion of the Project), a current, accurate
financial statement for Tenant and Tenant’s business and financial statements for Tenant and
Tenant’s business for each of the three (3) years prior to the current financial statement year
prepared under generally accepted accounting principles consistently applied and certified as true
and correct by an appropriate officer of Tenant. Tenant shall also provide within said 10-day
period such other financial information or tax returns as may be reasonably required by Landlord,
purchaser or any lender of either.



     19.5 Limitation of Liability. The obligations of Landlord under this Lease are not
personal obligations of the individual partners, members, managers, directors, officers,
shareholders, agents or employees of Landlord; and Tenant shall look solely to the Building for
satisfaction of any liability of Landlord and shall not look to other assets of Landlord nor seek
recourse against the assets of the individual partners, directors, officers, shareholders, agents
or employees of Landlord. Whenever Landlord transfers its interest, Landlord shall be
automatically released from further performance under this Lease and from all further liabilities
and expenses hereunder and the transferee of Landlord’s interest shall assume all liabilities and
obligations of Landlord hereunder after the date of such transfer.



     19.6 Notices. All notices to be given hereunder shall be in writing and mailed
postage prepaid by certified or registered mail, return receipt requested, or delivered by personal
or courier delivery or recognized overnight delivery service, or sent by facsimile, electronically
confirmed, (immediately followed by one of the preceding methods), to Landlord’s Address and
Tenant’s Address, or to such other place as Landlord or Tenant may designate in a written notice
given to the other party. Notices shall be deemed served upon the first attempted delivery by the
U.S. Postal Service, the courier or a recognized overnight delivery service, or upon receipt of the
facsimile prior to 5 p.m. on any business day, or, if after 5 p.m., on the next business day.



     19.7 Brokerage Commission. Landlord shall pay a brokerage commission to Landlord’s
Broker specified in the Basic Lease Information in accordance with a separate agreement between
Landlord and Landlord’s Broker and Tenant’s Broker. Landlord shall have no further or separate
obligation for payment of any commissions or fees to any other broker or finder. Tenant warrants
to Landlord that Tenant’s sole contact with Landlord or with the Premises in connection with this
transaction has been directly with Landlord, Landlord’s Broker and Tenant’s



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Broker specified in the Basic Lease Information, and that no other broker or finder can
properly claim a right to a commission or a finder’s fee based upon contacts between the claimant
and Tenant. Any commissions or fees payable to Tenant’s Broker with respect to this Transaction
shall be paid by Landlord’s Broker or Landlord. Subject to the foregoing, Tenant agrees to
indemnify and hold Landlord harmless from any claims or liability, including reasonable attorneys’
fees, in connection with a claim by any person for a real estate broker’s commission, finder’s fee
or other compensation based upon any statement, representation or agreement of Tenant, and Landlord
agrees to indemnify and hold Tenant harmless from any such claims or liability, including
reasonable attorneys’ fees, based upon any statement, representation or agreement of Landlord.




     19.8 Authorization. Each individual executing this Lease on behalf of Tenant
represents and warrants that he or she is duly authorized to execute and deliver this Lease on
behalf of Tenant and that such execution is binding upon Tenant.



     19.9 Holding Over; Surrender



          19.9.1. Holding Over. If Tenant holds over the Premises or any part thereof after
expiration of the Term, such holding over shall, at Landlord’s option, constitute a month-to-month
tenancy, at a rent equal to one hundred fifty percent (150%) of the Base Rent in effect immediately
prior to such holding over and shall otherwise be on all the other terms and conditions of this
Lease. This paragraph shall not be construed as Landlord’s permission for Tenant to hold over.
Acceptance of Rent by Landlord following expiration or termination shall not constitute a renewal
of this Lease or extension of the Term except as specifically set forth above. If Tenant fails to
surrender the Premises upon expiration or earlier termination of this Lease, Tenant shall indemnify
and hold Landlord harmless from and against all loss or liability resulting from or arising out of
Tenant’s failure to surrender the Premises, including, but not limited to, any amounts required to
be paid to any tenant or prospective tenant who was to have occupied the Premises after the
expiration or earlier termination of this Lease and any related attorneys’ fees and brokerage
commissions.




          19.9.2. Surrender. Upon the termination of this Lease or Tenant’s right to possession
of the Premises, Tenant will surrender the Premises in a condition with the Tenant Improvements (as
defined in the Work Letter) intact, broom clean, together with all keys, in good condition and
repair, reasonable wear and tear excepted. Tenant shall patch and fill all holes within the
Premises and all penetrations of the roof shall be resealed to a watertight condition. In no event
may Tenant remove from the Premises any mechanical or electrical systems or any wiring or any other
aspect of any systems within the Premises. Conditions existing because of Tenant’s failure to
perform maintenance, repairs or replacements shall not be deemed “reasonable wear and tear.”




     19.10 Joint and Several. If Tenant consists of more than one person, the obligation
of all such persons shall be joint and several.



     19.11 Covenants and Conditions. Each provision to be performed by Tenant hereunder
shall be deemed to be both a covenant and a condition.



     19.12 Auctions. Tenant shall not conduct, nor permit to be conducted, any auction
upon the Premises without Landlord’s prior written consent. Landlord shall not be obligated to
exercise any standard of reasonableness in determining whether to permit an auction.



     19.13 Consents. Except as otherwise provided elsewhere in this Lease, Landlord’s
actual reasonable costs and expenses (including, but not limited to, architects’, attorneys’,
engineers’ and other consultants’ fees) incurred in the consideration of, or response to, a request
by Tenant for any Landlord consent, including but not limited to, consents to an assignment, a
subletting or the presence or use of a Hazardous Material, shall be paid by Tenant upon receipt of
an invoice and supporting documentation therefor. Except as otherwise expressly provided in this
Lease, whenever Landlord’s consent to or approval of any matter is required hereunder, such
approval or consent shall not be unreasonably withheld. Landlord’s consent to any act, assignment
or subletting shall not constitute an acknowledgment that no Event of Default or breach by Tenant
of this Lease exists, nor shall such consent be deemed a waiver of any then existing Event of
Default or breach, except as may be otherwise specifically stated in writing by Landlord at the
time of such consent. Except as otherwise set forth herein, the failure to specify herein any
particular condition to Landlord’s consent shall not preclude the imposition by Landlord at the
time of



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consent of such further or other conditions as are then reasonable with reference to the
particular matter for which consent is being given.




     19.14 Force Majeure. “Force Majeure” as used herein means delays resulting
from causes beyond the reasonable control of the other party, including, without limitation, any
delay caused by any action, inaction, order, ruling, moratorium, regulation, statute, condition or
other decision of any private party or governmental agency having jurisdiction over any portion of
the Project, over the construction anticipated to occur thereon or over any uses thereof, or by
delays in inspections or in issuing approvals by private parties or permits by governmental
agencies, or by fire, flood, inclement weather, strikes, lockouts or other labor or industrial
disturbance (whether or not on the part of agents or employees of either party hereto engaged in
the construction of the Premises), civil disturbance, order of any government, court or regulatory
body claiming jurisdiction or otherwise, act of public enemy, war, riot, sabotage, blockage,
embargo, failure or inability to secure materials, supplies or labor through ordinary sources by
reason of shortages or priority, discovery of hazardous or toxic materials, earthquake, or other
natural disaster, delays caused by any dispute resolution process, or any cause whatsoever beyond
the reasonable control (excluding financial inability) of the party whose performance is required,
or any of its contractors or other representatives, whether or not similar to any of the causes
hereinabove stated. In no event shall an event of Force Majeure delay payment of Rent hereunder



     19.15 Mortgagee Protection. Tenant agrees to give any holder of any mortgage or deed
of trust secured by the Real Property, by registered or certified mail or nationally recognized
overnight delivery service, a copy of any notice of default served upon the Landlord by Tenant,
provided that, prior to such notice, Tenant has been notified in writing (by way of service on
Tenant of a copy of assignment of rents and leases or otherwise) of the address of such holder of a
mortgage or deed of trust. Tenant further agrees that if Landlord shall have failed to cure such
default within thirty (30) days after such notice to Landlord (or if such default cannot be cured
or corrected within that time, then such additional time as may be necessary if Landlord has
commenced within such thirty (30) day period and is diligently pursuing the remedies or steps
necessary to cure or correct such default), then the holder of any mortgage or deed of trust shall
have an additional forty-five (45) days within which to cure or correct such default (or if such
default cannot be cured or corrected within that time, then such additional time as may be
necessary if such holder of any mortgage or deed of trust has commenced within such forty-five (45)
day period and is diligently pursuing the remedies or steps necessary to cure or correct such
default). Notwithstanding the foregoing, in no event shall any holder of any mortgage or deed of
trust have any obligation to cure any default of the Landlord.



     19.16 Intentionally Omitted.



     19.17 Hazardous Substance Disclosure. Gasoline and other automotive fluids, asbestos
containing materials, maintenance fluids, copying fluids and other office supplies and equipment,
certain construction and finish materials, tobacco smoke, cosmetics and other personal items may be
present on the Project. Gasoline and other automotive fluids are found in the garage and parking
areas of the Project. Cleaning, lubricating and hydraulic fluids used in the operation and
maintenance of the Building are found in the utility areas of the Building not generally accessible
to Building occupants or the public. Many Building occupants use copy machines and printers with
associated fluids and toners, and pens, markers, inks, and office equipment that may contain
Hazardous Materials. Certain adhesives, paints and other construction materials and finishes used
in portions of the Building may contain Hazardous Materials. The Building may from time to time be
exposed to tobacco smoke. Building occupants and other persons entering the Building from time to
time may use or carry prescription and non-prescription drugs, perfumes, cosmetics and other
toiletries, and foods and beverages, some of which may contain Hazardous Materials. By its
execution of this Lease, Tenant acknowledges the notice set forth hereinabove.



     19.18 Addenda. The Addenda attached hereto, if any, and identified with this Lease
are incorporated herein by this reference as if fully set forth herein.



[No Further Text On This Page]




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     IN WITNESS WHEREOF, the parties have executed this Lease as of the date set forth above.



	 	 	 	 	 	 	 	 	 
	“Landlord”	 	 	 	“Tenant”
	 
	 	 	 	 	 	 	 	 
	PROLOGIS,	 	 	 	LACROSSE FOOTWEAR, INC.,
	a Maryland Real Estate Investment Trust	 	 	a Wisconsin corporation
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 
	 	 	Name:	 	 	 	Name: Joseph P. Schneider
	 	 	Title:	 	 	 	Title: President and Chief Executive Officer







-23-










 





ADDENDUM TO LEASE




     THIS ADDENDUM TO LEASE (“Addendum”) is attached to and constitutes an integral part of
the Lease between PROLOGIS, a Maryland Real Estate Investment Trust, as Landlord, and
LACROSSE FOOTWEAR, INC., as Tenant. The terms of this Addendum shall be incorporated in the Lease
for all purposes. All words and phrases not specifically defined in this Addendum are as defined
in the Lease. In the event of a conflict between the provisions of the Lease and the provisions of
this Addendum, this Addendum shall control.



     The following new Sections are hereby added to the Lease which state in their entirety as
follows:



     20. Option to Extend




     Provided (i) Tenant is not in default under the terms of this Lease past any applicable
grace period at the time this renewal option is exercised or at the commencement of the
Extension Term (as hereinafter defined), (ii) Tenant is in possession of at least eighty
percent (80%) of the Premises (i.e., Tenant has not subleased or assigned twenty percent
(20%) or more of the Premises at such time), including any expansion space, and (iii)
Landlord has not given more than two (2) notices of default in any twelve (12) month period
for nonpayment of monetary obligations during the prior two (2) Lease Years, Tenant shall
have the option to renew this Lease for an additional period of sixty (60) months
(“Extension Term”). The Extension Term shall be on all the terms and conditions of
this Lease, except that Landlord shall have no additional obligation for free rent,
leasehold improvements or for any other tenant inducements for the Extension Term. Base
Rent shall be increased as follows:



	 	 	 	 	 
	Extension	 	Base Rent during	 
	     Term	 	Extension Term*	 
	1-24
	 	$	86,472.99	 
	 
	 	 	 	 
	25-48
	 	$	90,796.64	 
	 
	 	 	 	 
	49-60
	 	$	95,336.47	 




 


*      Subject to adjustment in accordance with Section 1.4 of the Lease and Section 9(c) of the
Work Letter attached to the Lease as Exhibit B.



There shall be no additional extension terms beyond the Extension Term set forth herein.
Tenant must exercise its option to extend this Lease by giving Landlord written notice of
its election to do so no later than one hundred eighty (180) nor earlier than two hundred
ten (210) days prior to the end of the initial Term. Any notice not given in a timely
manner shall be void, and Tenant shall be deemed to have waived its extension rights. The
extension option set forth herein is personal to Tenant and shall not be included in any
assignment of this Lease.



21. Option to Terminate. Provided Tenant is not then in default under this Lease
past any applicable grace period at the time Tenant delivers the Termination Notice (as
defined below) or on the Termination Date (as defined below), Tenant shall have a one-time
option to terminate and cancel the Lease (“Termination Option”), effective as of the
last day of the eighty-fourth (84th) full calendar month of the Term
(“Termination Date”), by delivering to Landlord, on or before the date which
precedes the Termination Date by no more than three hundred sixty-five (365) days nor less
than two hundred seventy (270) days, written notice (“Termination Notice”) of
Tenant’s exercise of its Termination Option, together with the Termination Consideration (as
defined below).




     21.1 Termination Consideration. As a condition to the effectiveness of
Tenant’s exercise of its Termination Option and in addition to Tenant’s obligation to
satisfy all other monetary and non-monetary obligations arising under the Lease through to
the Termination Date, Tenant must pay to Landlord (in



ADDENDUM TO

LEASE




-1-









 








immediately available funds), as provided below, the following (collectively, the
“Termination Consideration”):




     (i) the amount equal to three (3) months Base Rent for the three (3) months
immediately following the Termination Date; plus




     (ii) the unamortized balance, as of the Termination Date, of Seven Hundred
Sixty Thousand Dollars ($760,000) adjusted first by a dollar-for-dollar reduction
for every dollar of the unused portion of the Allowance as determined under Section
9(c) of the Work Letter with the remaining balance, if any, amortized at nine
percent (9%) per annum over a ten (10) year period coterminous with the initial term
of this Lease; plus




     (iii) the unamortized balance of the Amortized Commissions and Other TI Costs
(as defined below), which would have been due and payable for the remainder of the
initial Lease Term had this Lease not been terminated. For purposes of this Section
21, “Amortized Commissions and Other TI Costs” means the sum of (a) the
amount of dollars (up to $1,513,092) actually expended by Landlord from the
Allowance (as defined in Section 9 of the Work Letter), plus (b) all leasing
commissions paid by Landlord to Landlord’s Broker and Tenant’s Broker (as identified
in the Basic Lease Information) in connection with this Lease.




     One-half (1/2) of the Termination Consideration shall be paid by Tenant to Landlord on
the date Tenant delivers the Termination Notice to Landlord, and the balance of the
Termination Consideration shall be paid by Tenant to Landlord on the Termination Date.




     21.2 Continued Performance. After Tenant properly and timely exercises its
Termination Option and properly and timely delivers the Termination Consideration to
Landlord, and as a condition to the effectiveness of the Termination Option, Tenant shall
continue to perform its obligation under the Lease through the Termination Date (including
the payment of any and all Rent due during such period) and shall surrender the Premises to
Landlord on such date in accordance with Section 19.9.2 of the Lease. Furthermore, Tenant
shall remain liable for all matters under the Lease that accrue prior to the Termination
Date and shall remain liable for those matters specified in the Lease to survive the
termination of the Lease. Tenant acknowledges and agrees that Tenant’s Termination Option
is a one-time option only and shall not create or confer upon Tenant any other right to
terminate or cancel the Lease at any other time or for any other reason. If Tenant fails to
deliver the Termination Notice , together with the Termination Consideration, to Landlord
within the time frames described above, the Termination Option shall be null and void and
Tenant shall be deemed to have waived such termination option.



22. Lease Termination. Concurrently with the execution of this Lease, Landlord and
Tenant shall execute a Lease Termination Agreement for space located at 18550 NE Riverside
Parkway-Building A.




     Each of the parties acknowledges the incorporation of this Addendum to the Lease.



	 	 	 
	 

	 	 
	Tenant’s Initials
	 	Landlord’s Initials






ADDENDUM TO

LEASE





-2-









 








EXHIBIT A-1




PROJECT SITE PLAN









EXHIBIT A-1






-1-









 








EXHIBIT A-2




PREMISES









EXHIBIT A-2





-1-









 








EXHIBIT B




WORK LETTER




     THIS WORK LETTER (“Work Letter”) is entered into by and between PROLOGIS, a
Maryland Real Estate Investment Trust (“Landlord”), and LACROSSE FOOTWEAR, INC., a
Wisconsin corporation (“Tenant”).



R E C I T A L S :




     A. Landlord and Tenant have entered into that certain Single-Tenant Industrial Triple Net
Lease (the “Lease”) dated as of the date hereof, covering certain premises (the
“Premises”) more particularly described in the Lease. This Work Letter is attached to the
Lease as Exhibit B. The Lease is hereby incorporated into this Work Letter by this
reference. Capitalized terms not defined in this Work Letter shall have the meanings given to such
terms in the Lease.



     B. In consideration of the mutual covenants contained in the Lease and this Work Letter,
Landlord and Tenant hereby agree as follows:



A G R E E M E N T :




     1. Definitions. As used in this Work Letter and in the Lease, the term
“Shell” shall mean those improvements set forth on the “Final Shell Plans” (defined in
Section 5(b) of this Work Letter); which shall include a concrete, tilt up industrial building to
contain approximately 126,677 square feet of floor area (the “Building”). As used in this
Work Letter and in the Lease, the term “Tenant Improvements” shall mean all the
improvements (other than the Shell improvements) set forth on the “Final Tenant Improvement Plans”
(defined in Section 5(b) of this Work Letter) to be constructed within the Premises, including,
without limitation, the construction of an office area of approximately thirty-six thousand
twenty-six (36,026) square feet as generally depicted on Schedule 3 attached hereto (the “Office
Portion of the Premises”). As used in this Work Letter only, “Improvements” shall mean the Shell,
mezzanine and the Tenant Improvements. The construction and installation of the Improvements is
sometimes referred to herein as the “Work”.



     2. Completion of Improvements. Subject to the terms of the Lease and this Work Letter
and any “Tenant Delay” or “Force Majeure Delay” as provided herein, Landlord shall use its
commercially reasonable and diligent efforts to cause the “Contractor” (defined in Section 7 of
this Work Letter) to complete the construction and installation of the Improvements substantially
in accordance with the terms of this Work Letter by the Estimated Commencement Date.



     3. Designation of Representatives. With respect to the planning, design and
construction of the Tenant Improvements, Landlord hereby designates Dan Marcus, Kurt Fuller and Ben
Peterson as “Landlord’s Representatives” and Tenant hereby designates Dave Carlson and Gary
Carlson as “Tenant’s Representatives.” Tenant hereby confirms that Tenant’s
Representatives have full authority to act on behalf of and to bind Tenant with respect to all
matters pertaining to the planning, design and construction of the Improvements. Landlord hereby
confirms that Landlord’s Representatives have full authority to act on behalf of Landlord with
respect to matters pertaining to the planning, design and construction of the Improvements. Either
party may change its designated representative upon five (5) days prior written notice to the other
party.



     4. Architect. Group Mackenzie (“Architect”) shall act as the architect with
respect to the design of the Shell and the Tenant Improvements. Landlord shall enter into a
contract with the Architect for such services (the “Architect Contract”). The parties
acknowledge and agree that the Architect Contract entered into with the Architect will obligate the
Architect to issue to both Landlord and Tenant an architect’s certificate (“Architect’s
Certificate”) upon Substantial Completion (as hereinafter defined) of the Improvements
certifying the Substantial Completion of



EXHIBIT B




-1-









 




the Improvements in accordance with the Final Plans. Landlord reserves the right to retain a
development consultant to assist Landlord in performing its obligations under this Work Letter and
under the Lease. All costs associated with any such developer shall be included within the cost of
the Work.




     5. Improvement Plans



          (a) Preliminary Plans. Attached hereto are the following preliminary plans and base
building specifications for the Shell and the Tenant Improvements (collectively, the
“Preliminary Plans”), which have been reviewed and approved by Landlord and Tenant: (i)
Schedule 1 is a site plan; (ii) Schedule 2 is the “Base Building Specifications” for the Shell; and
(iii) Schedule 3 is a floor plan for the Office Portion of the Premises, if available.




          (b) Final Plans. No later than November 15, 2005, the parties shall agree upon final
plans and specifications for the Tenant Improvements (“Final Tenant Improvement Plans”)
which shall be consistent with the Preliminary Plans, except for the changes, if any, mutually
agreed to be made thereto by the parties. Included in the Final Tenant Improvement Plans will be
the civil, architectural and structural plans for the Tenant Improvements. No later than November
1, 2005, the parties shall agree upon final plans and specifications for the Shell which will be
based on Schedule 2 (“Final Shell Plans”) which shall be consistent with the Preliminary
Plans, except for the changes, if any, mutually agreed to be made thereto by the parties. Included
in the Final Shell Plans shall be the civil, architectural and structural plans for the Shell and
the landscape plan for the exterior of the Building. The Final Tenant Improvement Plans and the
Final Shell Plans are hereinafter referred to collectively as the “Final Plans”. When the
Final Plans have been approved by Tenant and Landlord, Architect shall submit the Final Plans to
the appropriate governmental agency for plan checking and the issuance of a building permit for the
Tenant Improvements. Architect shall make any and all changes to the Final Plans required by any
applicable governmental entity to obtain a building permit for the Tenant Improvements.




          (c) Work Cost Estimate. Prior to the commencement of construction of any of the
Tenant Improvements and on a monthly basis during the design stage of the Tenant Improvements,
Landlord shall submit to Tenant a written estimate of the cost to complete the Tenant Improvements,
which written estimate will be based upon the Final Plans taking into account any modifications
which may be required to reflect changes in the Final Plans required by the appropriate
governmental authorities in connection with the issuance of a building permit (the “Work Cost
Estimate”). Tenant will either approve the Work Cost Estimate, or disapprove specific items,
and submit to Landlord revisions to the Final Plans in the form of a Change Order. Submission and
approval of the Work Cost Estimate will proceed in accordance with the work schedule provided by
Landlord. Upon Tenant’s approval of the Work Cost Estimate (the “Work Cost Statement”),
Landlord will have the right to purchase materials and to commence the construction of the items
included in the Work Cost Statement. If the total costs reflected in the Work Cost Statement
exceed the Allowance and the Tenant Contribution (as such terms are defined in Section 9 below),
Tenant shall pay such excess to Landlord in cash or by wire transfer of funds, within ten (10) days
after Tenant’s approval of the Work Cost Statement. During Landlord’s construction of the Tenant
Improvements, Landlord shall endeavor to keep Tenant reasonably informed of the status of
construction costs with respect to the Tenant Improvements.




          (d) No Representations. Notwithstanding anything to the contrary contained in the
Lease or herein, Landlord’s participation in the preparation of the Preliminary Plans, the Final
Plans, the cost estimates for the Tenant Improvements and the construction thereof shall not
constitute any representation or warranty, express or implied, that the Improvements and/or the
Premises, if built in accordance with the Final Plans, will be suitable for Tenant’s intended
purpose. Tenant acknowledges and agrees that the Improvements and the Premises are intended for
use by Tenant and the specifications and design requirements for the Improvements and the Premises
are not within the special knowledge or experience of Landlord. Landlord’s sole obligation shall
be to arrange the construction of the Improvements in a good and workmanlike manner substantially
in accordance with the requirements of the Final Plans and in compliance with all applicable laws
and building codes; and any additional costs or expense required for the modification thereof to
more adequately meet Tenant’s use, whether during or after Landlord’s construction thereof, shall
be borne entirely by Tenant except as otherwise provided in this Work Letter. Notwithstanding the
foregoing, Landlord agrees to assign to Tenant on a non-exclusive basis the benefit of all
construction and architectural warranties pertaining to the Tenant Improvements to the extent that
they do not relate to structural or other portions of the Building that Landlord is required to
maintain and repair under the Lease.




EXHIBIT B





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     6. Change Orders. After the parties approve the Final Plans and a building permit for
the Shell and/or the Tenant Improvements is issued, any further changes to the Final Plans and/or
the base Building Specifications shall require the prior written approval of Tenant and Landlord
(not to be unreasonably withheld or delayed), provided that Landlord shall not need the consent or
approval of Tenant for changes to the Final Plans that do not change the Building square footage by
more than one percent (1%) and that do not affect the Tenant Improvements and/or the Premises or
materially alter the quality or character of the Building. If Tenant desires any change in the
Final Plans relative to the Shell or Tenant Improvements which is reasonable and practical (which
shall be conclusively determined by the Architect), such changes may only be requested by the
delivery to Landlord by Tenant of a proposed written “Change Order” specifically setting
forth the requested change. Landlord shall have five (5) business days from the receipt of the
proposed Change Order to provide Tenant with the Architect’s disapproval of the proposed change
stating the reason(s) for such disapproval, or if the Architect approves the proposed change, the
following items: (i) a summary of any increase in the cost caused by such change (the “Change
Order Cost”), (ii) a statement of the number of days of any delay caused by such proposed
change (the “Change Order Delay”), and (iii) a statement of the cost of the Change Order
Delay (the “Change Order Delay Expense”), which Change Order Delay Expense shall be the
product of the number of days of delay multiplied by the estimated daily Base Rent rate. Tenant
shall then have three (3) business days to approve the Change Order Cost, the Change Order Delay
and the Change Order Delay Expense. If Tenant approves these items, Tenant shall pay to Landlord
the Change Order Cost and Change Order Delay Expense within two (2) business days after Tenant’s
approval thereof (except that the portion of the Change Order Cost which reflects the hard
construction costs associated with such Change Order may be paid by Tenant in accordance with the
progress of the work, within ten (10) days of receipt of each periodic invoice from Landlord
therefor), and Landlord shall promptly following receipt of such payment execute the Change Order
and cause the appropriate changes to the Final Plans to be made. If Tenant fails to respond to
Landlord within said three (3) business day period, the Change Order Cost, the Change Order Delay
and the Change Order Delay Expense shall be deemed disapproved by Tenant and Landlord shall have no
further obligation to perform any Work set forth in the proposed Change Order. The Change Order
Cost shall include all costs associated with the Change Order, including, without limitation,
architectural fees, engineering fees and construction costs, as conclusively determined by the
Architect and the Contractor (defined in Section 7), respectively, together with a five percent
(5%) fee of these costs as reimbursement for the expense of administration and coordination of such
Change Order by Landlord’s Representative. The Change Order Delay shall include all delays caused
by the Change Order, including, without limitation, all design and construction delays, as
conclusively determined by the Architect and the Contractor (defined in Section 7), respectively.



     7. Contractor. Perlo McCormack Pacific or Sierra Pacific Construction, a contractor
selected by Landlord and approved by Tenant (“Contractor”), shall be used to construct the
Improvements.



     8. Construction of the Tenant Improvements. Landlord shall enter into a construction
contract with the Contractor on a form reasonably acceptable to Landlord (“Construction
Contract”) for the construction and installation of the Improvements substantially in
accordance with the Final Plans. Such construction contract shall provide for the Improvements to
be constructed in a good and workmanlike manner and in compliance with all applicable laws and
building codes.



     9. Payment for Cost of the Tenant Improvements.



          (a) Allowance. Landlord hereby grants to Tenant a tenant improvement allowance for
the work related to the Tenant Improvements described on the Final Plans in the amount of Two
Million Two Hundred Seventy-Three Thousand Ninety-Two Dollars ($2,273,092.00) (the
“Allowance”). The Allowance is to be used only for the following costs approved by
Landlord:




               (i) Payment of the cost of preparing the Preliminary Plans relative to the Tenant Improvements
(including, without limitation, Architect’s costs under the Architect Contract) and the Final
Tenant Improvement Plans, including mechanical, electrical, plumbing and structural drawings and of
all other aspects necessary to complete the Final Tenant Improvement Plans.



               (ii) The payment of plan check, permit and license fees relating to construction of the Tenant
Improvements.



EXHIBIT B




-3-









 





               (iii) Construction of the Tenant Improvements as provided in the Final Tenant Improvement
Plans, including without limitation, the following:



                    (aa) Installation within the Premises of all partitioning, doors, floor coverings, ceilings,
wall coverings and painting and similar items, skylights or additional windows, if any;



                    (bb) All electrical wiring, lighting fixtures, outlets and switches, and other electrical work
necessary for the Premises;



                    (cc) The furnishing, installation and screening of all HVAC units, duct work, terminal boxes,
diffusers and accessories necessary for the heating, ventilation and air conditioning systems
within the Premises;



                    (dd) Any additional improvements to the Premises required for Tenant’s use of the Premises
including, but not limited to, odor control, special heating, ventilation and air conditioning,
noise or vibration control or other special systems or improvements;



                    (ee) All fire and life safety control systems such as fire walls, sprinklers, halon, fire
alarms, including piping, wiring and accessories, necessary for the Premises, sprinkler upgrades,
if any;



                    (ff) All plumbing, fixtures, pipes and accessories necessary for the Premises;



                    (gg) Testing and inspection costs;



                    (hh) Fees for the Contractor and tenant improvement coordinator including, but not limited to,
fees and costs attributable to general conditions associated with the construction of the Tenant
Improvements; and



                    (ii) items listed on Schedule 4 attached hereto.



               (iv) The payment of interest and reasonable loan fees incurred in connection with the Project
Loan (defined in Section 11).



               (v) An administrative and coordination fee charged by Landlord against the Allowance equal to
two and one-half percent (2.5%) of the total cost to complete the design, permit process and
construction of the Tenant Improvements.



          In no event will the Allowance be used to pay for Tenant’s moving expenses or for furniture,
artifacts, equipment, telephone systems or any other item of personal property which is not affixed
to the Premises.




          (b) Costs in Excess of Allowance. The cost of each item referenced in Section 9(a)
above shall be charged against the Allowance. If the costs of the Tenant Improvements exceed the
Allowance and Tenant has approved the same, then all costs of the Tenant Improvements which exceed
the Allowance shall be funded by Tenant in cash in advance pursuant to invoices submitted by
Landlord.




          (c) Unused Allowance. Provided Tenant is not in default under the Lease beyond any
applicable cure period, any unused portion of the Allowance upon completion of the Improvements
will be refunded to Tenant in the form of an abatement of Base Rent pursuant to the following
formula: for every $1,000 of unused Allowance up to a maximum of $760,000, Tenant shall receive a
rent abatement to Base Rent of $12.70 per month and for every $1,000 of unused Allowance over
$760,000, Tenant shall receive a rent abatement to Base Rent of $8.70 per month. The final
adjusted Monthly Base Rent for the initial term of the Lease will be set forth in the Commencement
Date Memorandum.




EXHIBIT B






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          (d) Cooperation. Landlord shall provide to Tenant, or provide directly to any
third-party governmental, or quasi-governmental, agency that provides, or is solicited to provide,
economic or financial assistance to Tenant (including but not limited to the Portland Development
Commission), all reasonable information and documentation reasonably requested by Tenant or such
governmental agency with respect to evaluating, reviewing or determining the existence and terms of
the Lease, and the scope and nature of the Tenant Improvements constructed, or to be constructed,
within the Premises, including but not limited to plans and budgets for such Tenant Improvements,
and receipts and invoices for all materials and labor provided, or to be provided, in the
construction of such Tenant Improvements.




     10. Payment for Cost of the Shell. Landlord shall pay the cost of designing and
constructing the Shell as provided in the Final Shell Plans.



     11. Financing of Construction of Tenant Improvements. Landlord may elect to finance
the construction of the Improvements and/or other portions of the Project with the proceeds of a
loan (“Project Loan”) from a third party lender (“Lender”) at the then prevailing
market rate and market terms for similar projects. The documents securing or given in connection
with the Project Loan, if any, are herein collectively called “Loan Documents.” Any
Project Loan may be secured by the lien of a deed of trust encumbering the Premises and the Tenant
Improvements. Tenant agrees to execute and/or provide all documents reasonably required by any
Lender in connection with any Project Loan, including, without limitation, estoppel certificates,
subordination agreements (subject to a commercially reasonable non-disturbance agreement), consents
to the assignment of this Agreement, written confirmation of the satisfaction of closing
conditions, and evidence of the due execution, validity and enforceability of this Agreement. The
costs of any Project Loan shall be included within the cost of the Allowance for purposes of the
provisions of this Work Letter.



     12. Substantial Completion; Estimated Commencement Date. [SEE SECTION 2.1 OF THE
LEASE].



     13. Tenant Delays; Force Majeure Delays. As used herein, “Tenant Delays”
means any delay in the completion of the Improvements resulting from any or all of the following:
(1) Tenant’s failure to timely perform any of its obligations pursuant to this Work Letter
(including Tenants failure to respond to Landlord’s written request for information or approval
within two (2) business days), on or before the due date therefor, any action item which is
Tenant’s responsibility pursuant to this Work Letter, including Tenant’s failure to grant approvals
and/or make payments within the time frames described herein; (2) Tenant’s requested material
modifications to the Final Plans or any Tenant-initiated Change Orders; (3) Tenant’s request for
materials, finishes, or installations which are not readily available in the marketplace after
reasonable efforts by Contractor to locate and obtain the same, (4) any delay in any way whatsoever
arising from Tenant’s right to conduct “Inspections” under Section 14 below, (5) Change Order
Delays, or (6) any other act or failure to act by Tenant, which actually causes the completion of
the Improvements to be delayed, Tenant’s Representative, Tenant’s Architect, Tenant’s employees,
agents, independent contractors, consultants and/or any other person performing or required to
perform services on behalf of Tenant, including interference with Landlord, or its contractors,
during Tenant’s entry under Section 2.3 of the Lease. “Force Majeure Delays” as used
herein means delays resulting from causes beyond the reasonable control of Landlord or the
Contractor, including, without limitation, any delay caused by any action, inaction, order, ruling,
moratorium, regulation, statute, condition or other decision of any private party or governmental
agency having jurisdiction over any portion of the project, over the construction of the
Improvements or over any uses thereof, or by delays in inspections or in issuing approvals by
private parties or permits by governmental agencies, or by fire, flood, inclement weather, strikes,
lockouts or other labor or industrial disturbance (whether or not on the part of agents or
employees of either party hereto engaged in the construction of the Tenant Improvements), civil
disturbance, order of any government, court or regulatory body claiming jurisdiction or otherwise,
act of public enemy, war, riot, sabotage, blockage, embargo, failure or inability to secure
materials, supplies or labor through ordinary sources by reason of shortages or priority, discovery
of hazardous or toxic materials, earthquake, or other natural disaster, delays caused by any
dispute resolution process, or any cause whatsoever beyond the reasonable control (excluding
financial inability) of the party whose performance is required, or any of its contractors or other
representatives, whether or not similar to any of the causes hereinabove stated. If requested by
Tenant in writing at the time that Tenant requests any modification to the Preliminary Plans or any
Tenant-initiated Change Orders, Landlord shall provide Tenant with written notice if, in Landlord’s
reasonable determination, Landlord expects that such matters will result in a Tenant Delay;
provided, however, such notice or failure to deliver the same shall not be binding upon Landlord if
Landlord’s determination is incorrect.



EXHIBIT B




-5-









 





     14. Tenant’s Inspection Rights. Landlord shall schedule and attend monthly progress
meetings, walk-throughs and any other meetings with the Architect, the Contractor and Tenant to
discuss the progress of the construction of the Improvements (“Meetings”). Landlord shall
give Tenant at least forty-eight (48) hours prior notice (written or telephonic) of all such
Meetings. Tenant shall designate in writing the person or persons appointed by Tenant to attend
the Meetings and such designated party shall be entitled to be present at and to participate in the
discussions during all Meetings; but Landlord may conduct the Meetings even if Tenant’s appointees
are not present provided the above-referenced notice was given. In addition to the foregoing and
to Tenant’s early entry rights as provided in Section 2.3 of the Lease, Tenant or its agents shall
have the right at any and all reasonable times to conduct inspections, tests, surveys and reports
of work in progress (“Inspections”) for the purpose of reviewing whether the Improvements
are being constructed in accordance with the Final Plans, as amended by any approved Change Orders
or other agreed upon changes. Tenant agrees to protect, hold harmless and indemnify Landlord from
all claims, demands, costs and liabilities (including reasonable attorneys’ fees) arising from
Tenant’s or Tenant’s agents entry onto the Premises for the purpose of conducting Inspections.



     15. Walk-Through and Punch List. Upon Substantial Completion of the Improvements,
Tenant, Landlord, and the Architect shall jointly conduct a walk-through of the Improvements and
shall jointly prepare a punch list (“Punch List”) of items needing additional work
(“Punch List Items”); provided, however, the Punch List shall be limited to items which are
required by the Construction Contract, the Final Plans, Change Orders and any other changes agreed
to by the parties. Landlord shall repair or correct such punch-list items no later than thirty
(30) days after the date of such walk-through (unless the nature of such repair or correction is
such that more than thirty (30) days are required for completion, in which case, Landlord shall
commence such repair or correction within such thirty-day period and diligently prosecute the same
to completion).



     16. Miscellaneous Construction Covenants.



          (a) Coordination with Lease. Nothing herein contained shall be construed as (i)
constituting Tenant as Landlord’s agent for any purpose whatsoever, or (ii) a waiver by Landlord or
Tenant of any of the terms or provisions of the Lease. Any default by either party with respect to
any portion of this Work Letter, shall be deemed a breach of the Lease for which Landlord and
Tenant shall have all the rights and remedies as in the case of a breach of the Lease by the other
party.




          (b) Cooperation. Landlord and Tenant agree to cooperate with one another and to cause
their respective employees, agents and contractors to cooperate with one another to coordinate any
work being performed by Landlord and/or Tenant under this Work Letter, and their respective
employees, agents and contractors so as to avoid unnecessary interference and delays with the
completion of the Work.




     17. No Representations. Landlord does not warrant that the Building or any component
thereof will be free of latent defects or that it will not require maintenance and/or repair within
any particular period of time, except as expressly provided herein. Tenant acknowledges and agrees
that it shall rely solely on the warranty or guaranty, if any, from Contractor, Architect or other
material and/or service providers relative to the proper design and construction of the
Improvements or any component thereof.



EXHIBIT B





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     IN WITNESS WHEREOF, this Work Letter is executed as of the date of the Lease.



	 	 	 	 	 	 	 	 	 
	“Landlord”	 	 	 	“Tenant”
	 
	 	 	 	 	 	 	 	 
	PROLOGIS,	 	 	 	LACROSSE FOOTWEAR, INC.,
	a Maryland Real Estate Investment Trust	 	 	 	a Wisconsin corporation
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 	 	Name:	 	 	 	Name: Joseph P. Schneider
	 	 	Title:	 	 	 	Title: President and Chief Executive Officer





EXHIBIT B


-7-









 








SCHEDULE 1









SCHEDULE 1 to

EXHIBIT B






-1-









 








SCHEDULE 2




PRELIMINARY OUTLINE SPECIFICATIONS

The LaCrosse Footwear Company

Build-to-Suit




Southshore Corporate Park — Lot 8

Portland, Oregon




September 20, 2005





			
	 ̈	 	 OVERVIEW








	 	 	 
	Description:

	 	32’ clear freestanding concrete tilt-up building past first column lines.
	 
	 	 
	Building Dimensions:

	 	220’ wide X 570’ long
	 
	 	 
	Total Square Footage:

	 	Approximately 126,677 square feet on grade
	 

	 	Approximately 18,013 square feet on office mezzanine
	 

	 	Approximately 144,690 total square feet total
	 
	 	 
	Site Area:

	 	Approximately 347,786 square feet (7.98 Acres)







			
	 ̈	 	GENERAL REQUIREMENTS









	 	 	Includes design/engineering services, material, labor, insurance, and supervision for the
construction of the LaCrosse Footwear Company facility.
	 
	 	 	Includes the cost of the building permits, required licenses, and sales tax.
	 
	 	 	Includes parking for a minimum of 175 cars.
	 
	 	 	Construction will be under the direction of a Project Manager and a full time on-site
Superintendent.
	 
	 	 	Temporary water, sewer, and electrical service will be the responsibility of the General
Contractor until the Temporary Certificate of Occupancy (less punch list items) is received.
	 
	 	 	At the conclusion of the project, one (1) set of “as-built” drawings shall be provided to the
LaCrosse.
	 
	 	 	Compliance with applicable ADA and OSHA construction codes is included.






			
	 ̈	 	SITE WORK









	 	 	A final, site-specific soils report will be obtained from a qualified local geotechnical engineer. The report will
comprise a complete site analysis, including recommendations for structural foundation systems, building pad
preparation, sub-grade and paving designs.





SCHEDULE 2 to

EXHIBT B





-1-









 









	 	 	All existing vegetation will be removed from the construction
area.


Existing unsuitable and/or organic soils, if any, will be removed from the building and paving areas. Any excess
soils shall be removed from the site.


Soil erosion and sediment control will be provided to the
satisfaction of local government authorities.


Parking areas and roadway entrances and exits will be drained as required.
	 
	 	 	The storm drainage system will be sized to accommodate internal roof drains.
	 
	 	 	Storm water drain design will meet all local codes and ordinances.
	 
	 	 	There will be cast in place concrete curbs at high traffic areas and extruded concrete curbs
at all other paved areas.
	 
	 	 	An allowance of $5,000 has been included for a monument sign.





Paving





	 	 	The main drive and truck access shall be 3” thick asphalt with a 6” gravel base over 16” of 6%
cement-treated soil unless otherwise recommended by the geotechnical engineer.
	 
	 	 	Truck parking and roads shall be 3” thick asphalt with a 6” gravel base over 16” of 6%
cement-treated soil unless otherwise recommended by the geotechnical engineer.
	 
	 	 	All auto parking areas shall be 2.5” thick asphalt with a 4” gravel base over 12” of 5%
cement-treated soil unless otherwise recommended by the geotechnical engineer.
	 
	 	 	Striping shall be provided for the car parking areas.
	 
	 	 	All sidewalks shall be 5’ wide (or wider if required by code), 4” thick, 3000 psi and broom
finished.





Landscaping





	 	 	Seeding, landscaping, and irrigation to meet City standards and Southshore CC&R’s is included.





Site Utilities





	 	 	An 8” underground water service will be provided for building fire protection and a 2”
underground water service with a 2” meter base will be provided for domestic use in compliance
with local codes and building requirements. Meter shall be sized to meet domestic water
demand.
	 
	 	 	A 6” ABS sanitary sewer system shall be provided in compliance with local codes and building
requirements.
	 
	 	 	Electric and natural gas service shall be provided and sized to meet building requirements
(see Electric).
	 
	 	 	Conduit shall be provided for telephone service for the tenant’s system. The phone service and
system will be provided by LaCrosse.





SCHEDULE 2 to

EXHIBT B




-2-









 





Concrete Truckwells





	 	 	Natural Color, 60’-0” deep concrete slab; 6” nominal thickness
with 6” gravel base over 12” of 5% cement treated soil. Heavy
broom finish. Reinforcing will be #4 bars, 24 inches on center
each way.






			
	 ̈	 	BUILDING








Excavation, Backfilling, and Grading





	 	 	All cut, fill, and fine grading shall be included.
	 
	 	 	Fill under the building shall be as specified by a geotechnical engineer and tested as
directed by a geotechnical engineer. The building subgrade shall be a 4” gravel base over 12”
of 5% cement-treated soil.
	 
	 	 	Any area not covered by the building or site work shall be stabilized and graded for proper
drainage and maintenance.





Foundations





	 	 	Reinforced concrete foundation shall be used. The foundations shall be properly engineered
with suitable steel reinforcing for the loads imposed by the structure and its attendant live,
wind, dead, and other loads.
	 
	 	 	Concrete used in foundations shall attain 3,000 psi compressive strength in 28 days.
	 
	 	 	Interior building columns shall be supported by steel reinforced concrete pad footings.
	 
	 	 	Concrete pads and/or stairs shall be provided for all egress doors, unless they open directly
onto a paved surface.





Floor Slab





	 	 	The warehouse floor slab shall be constructed in accordance with geotechnical and structural
engineers’ recommendations. The floor slab shall be 6” thick, 4000-psi reinforced concrete.
Reinforcing shall be #4 reinforcing bars, 24” on center each way. Floor flatness will not be
less than FF-50. Floor levelness will not be less than FL-35.
	 
	 	 	Floor slabs shall be cured with a membrane curing compound, and shall be scrubbed and cleaned
prior to tenant occupancy. Seal concrete floor with one coat of spray-on sealer.
“Lapidolith”, Ashford or equal.
	 
	 	 	Placement of concrete shall be done by utilizing a hydraulic power driven laser screed or a
roller screed in accordance with the structural engineer’s recommendation.
	 
	 	 	Slab control joints shall be saw cut at the optimum time to reduce cracking. The maximum
distance between saw cut control joints shall be 15’ or as recommended by the structural
engineer. Joints in areas exposed to fork truck traffic shall be filled with MM80 epoxy joint
filler or equal.
	 
	 	 	Slab cold construction joints shall be doweled with 1/2” X 1’-0” smooth bars at 24” on center.
	 
	 	 	All columns shall have a formed diamond block out that will be poured and saw cut separately.
	 
	 	 	No keyways of any type shall be allowed in the floor slab.





SCHEDULE 2 to

EXHIBIT B




-3-









 






	 	 	All concrete mix designs shall be provided by a structural engineer and shall be reviewed and
approved by an independent concrete testing agency prior to concrete placement.





Exterior Walls





	 	 	The exterior walls of the warehouse shall be of concrete tilt wall construction in accordance
with local codes.
	 
	 	 	The tilt-panels and footings are 4’ deeper in the ground at the proposed future dock areas on
the South and West elevations.
	 
	 	 	Overhead door openings shall have cast-in steel channel frames up 4’ each side.





Structure





	 	 	The roof structure shall consist of structural steel joist girders and bar joists with 2x6
subpurlins and OSB decking supported by steel on the interior bay and load bearing steel
columns.
	 
	 	 	Column spacing shall be approximately 50’ in the east / west direction except the end bays.
Columns shall be designed to accommodate a 32’ interior clear height at the first column line
in from the perimeter wall to the bottom of the lowest structural joist member.
	 
	 	 	All structural steel will have one coat of shop applied “gray” primer paint.





Metals





	 	 	Lintels, sill angels, roof frames and other miscellaneous metals shall be provided and painted
to match the structural steel.
	 
	 	 	Exterior pipe handrails conforming to ADA specifications shall be provided at exterior stairs.
	 
	 	 	One (1) roof access ladder will be located in the electrical room.





Roofing





	 	 	The roof shall be a built-up roof consisting of a base sheet, 2 plies and cap sheet (4-ply
built up roof).
	 
	 	 	The roof’s insulation value shall be R-19 (white vinyl faced batt insulation attached to the
underside of the subpurlins below the roof deck).
	 
	 	 	The roofing systems shall consist of components manufactured by the same manufacturer and
shall be designed to be free of leaks and installed to prohibit standing water at any
location.
	 
	 	 	The roof shall be drained by rain drains and internal PVC downspouts. Overflow protection
shall be by through wall scuppers.
	 
	 	 	Any roof curbings and penetrations shall be coordinated with the roof system and installed per
the manufacturer’s recommendations.
	 
	 	 	Skylights at a ratio of 1:100 for warehouse area are included. The skylights shall also act
as roof vents as required by code.
	 
	 	 	No draft curtains are included.





SCHEDULE 2 to

EXHIBIT B




-4-









 





Glass and Glazing





	 	 	Catellus has included 2,040 square feet of storefront at the
entries.



There will be 540 square feet of 6 ft. high window bands at the first floor offices. There
will be 1,260 square feet of Second floor windows.
	 
	 	 	Fixed glass at the office areas shall be U.S. Aluminum Products or equal. All mullions shall
be mill finished to match the entrance work.
	 
	 	 	Two 10’ high storefront entrances will be provided. The aluminum entrances shall be 1”
insulated glass, tempered where required and meeting local codes. The aluminum doors will be
narrow stile, with closer, tempered glass, aluminum threshold, pile weather stripping and
finished to match frame members. Vestibules are not included.





Doors, Frames and Hardware





	 	 	Hollow metal frame doors shall be used. The frames and doors shall be consistent in
manufacture and design to provide a continuous appearance.
	 
	 	 	Four 12’ X 14’, 24 gauge, vertical, sectional panel insulated overhead doors, manually
operated with chain hoist.
	 
	 	 	Sixteen 9’x10’ 24 gauge, vertical sectional panel insulated overhead doors, manually operated
with chain hoist.
	 
	 	 	Knockouts future dock doors are included.





Dock Equipment





	 	 	Included are 16 Kelly dock seals, 32 dock bumpers, and two-30,000 lb mechanical or pneumatic
dock pit levelers.





Painting





	 	 	Metal structural members shall receive one coat of prime paint only and shall be touched up
after erection to remove abrasions and to present a generally finished appearance.
	 
	 	 	The building exterior shall receive elastomeric paint to cover and provide attractive exterior
appearance with minimal maintenance. Color to be determined in conjunction with LaCrosse and
Catellus.





Fire Protection





	 	 	A design-build wet sprinkler system shall be installed in the warehouse, office and retail
areas. The entire building will have an ESFR system. A fire pump will be installed at the
southeast corner of the building.
	 
	 	 	Twenty-five fire extinguishers for the warehouse have been included.
	 
	 	 	Five fire hydrants will be installed to City requirements similar to the rest of the park.





Electrical





	 	 	The electrical service shall meet all applicable codes and regulations.





SCHEDULE 2 to

EXHIBIT B









-5-









 












	 	 	A 2,000 amp, 277/480 volt, three phase, four-wire service shall be provided. Power shall be
metered through a transformer located outside of the building adjacent to the electrical room.
A 100-amp house panel will be provided at the electrical room for exterior lights.
	 
	 	 	The main electrical control panels shall be located inside the electrical room.
	 
	 	 	A basic fire alarm system that monitors fire water flow will be furnished.
	 
	 	 	This building will have a duplex plug at every other loading dock door. No other
warehouse power distribution.





Lighting





	 	 	Exterior lighting shall be 1 foot-candle average at all outside areas by use of wall-mounted
400 watt, metal halide fixtures and pole lights installed in the parking lot to provide
adequate lighting.
	 
	 	 	All site lighting shall be activated by light sensitive photocells and deactivated by a timer.
	 
	 	 	Warehouse lighting using 400-watt metal halide high bay fixtures to provide an average of 30
foot-candles of lighting at a height of 36 inches off the floor before racking and/or
equipment is in place. The lighting is based on an open warehouse and does not account for
narrow aisles/high stacking or a specific layout.
	 
	 	 	Offices will have 70 foot-candles of lighting. The hallways and restrooms will have 30-foot
candles of lighting.





Plumbing





	 	 	All plumbing systems and their component parts shall be installed in accordance with
applicable local codes. Plumbing fixtures to be American Standard or equal.
	 
	 	 	One 6” underslab sanitary sewer line and 2” overhead waterline shall be provided the length of
the building.
	 
	 	 	Provide one hose bib at each bank of dock doors.





Heating, Ventilation and Air Conditioning





	 	 	The warehouse will have gas fired space heaters to provide freeze protection. We have
included ten roof top ventilators.





Tenant Improvement Allowances





	 	 	The Tenant Improvement allowances shall be per the Catellus August 18, 2005 “Proposal for
Build-to-Suite” lease. The allowances include architectural and engineering fees, permit
costs, and construction material testing costs.





Exclusions





	 	•	 	Work that is not specifically included in the Final Tenant Improvement Plans.
	 
	 	•	 	Finish painting the roof structure and warehouse columns.
	 
	 	•	 	Exterior canopies
	 
	 	•	 	Phone, data, or computer cabling
	 
	 	•	 	Appliances
	 
	 	•	 	Compressed air systems
	 
	 	•	 	Signage except for monument sign allowance





SCHEDULE 2 to

EXHIBIT B




-6-









 





SCHEDULE 3




FLOOR PLAN FOR THE OFFICE PORTION OF THE PREMISES




(To Be Provided)




SCHEDULE 3 to

EXHIBIT B





-1-









 








SCHEDULE 4




ALTERNATES REQUESTED BY LACROSSE




Item




Construct Mezzanine (~18,000 sf)




Elevator to Mezzanine Space




Paint Interior Warehouse Walls




Battery Charging Stations (10) + Ventilation




Emergency Generator for W’house Lighting




Additional Warehouse Ventilation




SCHEDULE 4 to

EXHIBIT B





-1-









 








EXHIBIT C




COMMENCEMENT DATE MEMORANDUM




     With respect to that certain Single-Tenant Industrial Triple Net Lease (“Lease”) dated
                    , 20___, between                                                             , a                                                              (“Tenant”), and
                                                            ,
a                                                             (“Landlord”), whereby Landlord leased to
Tenant and Tenant leased from Landlord approximately                      rentable square feet of the building
located at                                                                                  (“Premises”), Tenant hereby acknowledges and
certifies to Landlord as follows:



     (1) Landlord delivered possession of the Premises to Tenant Substantially Complete on
                                                             (“Possession Date”);



     (2) The Lease commenced on                     
                                         (“Commencement Date”);




     (3) The Monthly Base Rent schedule for the initial term shall be                                         .



     (4) The Premises contain                      square feet of space; and




     (5) Tenant has accepted and is currently in possession of the Premises and the Premises are
acceptable for Tenant’s use.



     IN WITNESS WHEREOF, this Commencement Date Memorandum is executed this ___day of
                                                            .



	 	 	 	 	 	 	 	 	 	 	 
	 	 	“Tenant”	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	,	 
	 	 	 	 	 	 	 
	 

	 	a	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 	 	 





EXHIBIT C


-1-









 







EXHIBIT D




INSURANCE CERTIFICATE









EXHIBIT D





-1-









 






EXHIBIT E




PROHIBITED USES




     The following types of operations and activities are expressly prohibited on the Premises:




	 	1.	 	automobile/truck/forklift maintenance, repair or fueling;
	 
	 	2.	 	battery manufacturing or reclamation;
	 
	 	3.	 	ceramics and jewelry manufacturing or finishing;
	 
	 	4.	 	chemical (organic or inorganic) storage, use or manufacturing;
	 
	 	5.	 	drum recycling;
	 
	 	6.	 	dry cleaning;
	 
	 	7.	 	electronic components manufacturing;
	 
	 	8.	 	electroplating and metal finishing;
	 
	 	9.	 	explosives manufacturing, use or storage;
	 
	 	10.	 	hazardous waste treatment, storage, or disposal;
	 
	 	11.	 	leather production, tanning or finishing;
	 
	 	12.	 	machinery and tool manufacturing;
	 
	 	13.	 	medical equipment manufacturing and hospitals;
	 
	 	14.	 	metal shredding, recycling or reclamation;
	 
	 	15.	 	metal smelting and refining;
	 
	 	16.	 	mining;
	 
	 	17.	 	paint, pigment and coating operations;
	 
	 	18.	 	petroleum refining;
	 
	 	19.	 	plastic and synthetic materials manufacturing;
	 
	 	20.	 	solvent reclamation;
	 
	 	21.	 	tire and rubber manufacturing;
	 
	 	22.	 	above- and/or underground storage tanks; and
	 
	 	23.	 	residential use or occupancy.




EXHIBIT E
-1-










 











EXHIBIT F




RULES AND REGULATIONS





	1.	 	No automobile, recreational vehicle or any other type of vehicle or equipment shall remain
upon the Premises or the Project longer than 72 hours and no vehicle or equipment of any kind
shall be dismantled or repaired or serviced on the Premises or the Project. All vehicle
parking shall be restricted to areas designated and marked for vehicle parking; provided,
however, that the foregoing restrictions shall not be deemed to prevent Tenant from utilizing
the truck dock wells exclusively serving the Premises for additional parking or to prevent
temporary parking for loading or unloading of vehicles in designated areas, including the
parking of incoming or outgoing delivery trucks and trailers. Temporary parking of operating
vehicles for longer time periods will be permitted for employees which are traveling for
Tenant’s business.
	 
	2.	 	Signs will conform to sign standards and criteria established from time to time by Landlord.
No other signs, placards, pictures, advertisements, names or notices shall be inscribed,
displayed or printed or affixed on or to any part of the outside or inside of the building
without the written consent of Landlord and Landlord shall have the right to remove any such
non-conforming signs, placards, pictures, advertisements, names or notices without notice to
and at the expense of Tenant.
	 
	3.	 	No antenna, aerial, discs, dishes or other such device shall be erected on the roof or
exterior walls of the Premises, or on the grounds, without the written consent of the Landlord
in each instance. Any device so installed without such written consent shall be subject to
removal without notice at any time. Provided, however, that Tenant may install surveillance
cameras with Landlord’s consent (which will not be unreasonably withheld) as to any location
which requires mounting of equipment on the exterior walls or roof.
	 
	4.	 	No loud speakers, televisions, phonographs, radios or other devices shall be used in a manner
so as to be heard or seen outside of the Premises without the prior written consent of the
Landlord.
	 
	5.	 	The outside areas immediately adjoining the Premises shall be kept clean and free from dirt
and rubbish by the Tenant to the satisfaction of Landlord and Tenant shall not place or permit
any obstruction or materials in such areas or permit any work to be performed outside the
Premises.
	 
	6.	 	No open storage shall be permitted in the Project.
	 
	7.	 	All garbage and refuse shall be placed in containers placed at the location designated for
refuse collection, in the manner specified by Landlord.
	 
	8.	 	No vending machine or machines of any description shall be installed, maintained or operated
within the Project outside of the Building.
	 
	9.	 	Tenant shall not disturb, solicit, or canvass any occupant of the building and shall
cooperate to prevent same.
	 
	10.	 	No noxious or offensive trade or activity shall be carried on upon any units or any part of
the Project nor shall anything be done thereon which would in any way interfere with the quiet
enjoyment of each of the other tenants of the Project or which would increase the rate of
insurance or overburden utility facilities from time to time existing in the Project.
	 
	11.	 	Landlord reserves the right to make such amendments to these rules and regulations from time
to time as are nondiscriminatory and not inconsistent with the Lease.




EXHIBIT F
-1-










 











EXHIBIT G




REQUIREMENTS FOR IMPROVEMENTS OR ALTERATIONS BY TENANT




     If Landlord shall permit Tenant to construct any initial tenant improvements in the Premises
or to have any work performed in the Premises at any time prior to or during the Lease term by a
contractor retained by Tenant (“Tenant’s Work”), then Tenant shall comply with the
requirements set forth herein. If Tenant’s Work has been properly authorized, Tenant will receive
written approval and consent for alterations to the Premises. All alterations to the Premises,
excepting movable furniture and trade fixtures, shall, at Landlord’s option, become a part of the
realty and belong to Landlord.



     1. SUBMITTAL OF PLANS. Prior to commencing any work in the Premises, Tenant shall
submit to Landlord for approval its proposed plans for the work. Without limiting the foregoing,
Tenant shall provide:



          (a) A separate scale drawing denoting all proposed construction and/or demolition, if
necessary.




          (b) A separate drawing for each trade proposing structural, electrical, mechanical, civil or
landscaping modifications.




          (c) Specify all dimensions and complete references to all work to be performed in the affected
areas.




          (d) If adding extra electrical or mechanical equipment, provide complete operating and
maintenance specifications for each item.




     2. CHECKLIST. With respect to each project, Landlord will provide Tenant with a
checklist listing the items required to be furnished to Landlord in connection with the proposed
work. Tenant shall furnish to Landlord prior to, during, or upon completion of Tenant’s Work, as
applicable, each of the items specified in the checklist attached hereto as Attachment 1.



     3. CONTRACTORS PROVIDING TENANT IMPROVEMENT SERVICES.



          (a) The contractor employed by Tenant and any subcontractors shall be (i) duly licensed in the
state in which the Premises are located, and (ii) subject to Landlord’s prior written approval,
which approval shall not be unreasonably withheld. If more than one trade is employed on a single
job, state law requires the services of a general contractor in addition to contractors for
specialty work being performed.




          (b) Each contractor shall provide proof of licensing as a general or specialty contractor in
accordance with state law. Additionally, each contractor shall furnish proof of licensing in the
city or municipality in which the construction related activity is to take place.




          (c) Tenant shall use Landlord’s subcontractor for mechanical, electrical, plumbing, roofing
and roofing consultant.




          (d) Tenant and Tenant’s contractors shall comply with all Applicable Laws pertaining to the
performance of Tenant’s Work and the completed improvements and all applicable safety regulations
established by Landlord or the general contractor.




          (e) Prior to commencement of any work in the Premises, Tenant and Tenant’s contractors (and
any subcontractors) shall obtain and provide Landlord with certificates evidencing Workers’
Compensation, public liability and property damage insurance in amounts and forms and with
companies satisfactory to Landlord. Each general contractor (and any subcontractor) employed on
the Premises shall provide Landlord with a current certificate of insurance in effect for that
contractor with a thirty day notice of cancellation or revocation clause. Insurance requirements
are as follows:




EXHIBIT G
-1-










 








               (i) Comprehensive General Liability with a $2,000,000 Combined Single Limit covering the
liability of Landlord and contractor for bodily injury and property damage arising as a result of
the construction of the improvements and the services performed thereunder. Landlord shall be
named as an additional insured.



               (ii) Comprehensive Automobile Liability with a $2,000,000 Combined Single Limit covering
Landlord and vehicles used by contractor (and any subcontractor) in connection with the
construction of the improvements.



               (iii) Workers’ Compensation and Employer’s Liability as required by law, for employees of the
contractor (and any subcontractors) performing work on the Premises.



          (f) The following requirements shall be incorporated as “Special Conditions” into the contract
between Tenant and its contractors and a copy of the contract shall be furnished to Landlord prior
to the commencement of Tenant’s Work:




               (i) Prior to start of Tenant’s Work, Tenant’s contractor shall provide Landlord with a
construction schedule in “bar graph” form indicating the completion dates of all phases of Tenant’s
Work.



               (ii) Tenant’s contractor shall be responsible for the repair, replacement or clean-up of any
damage done by it to other contractors’ work which specifically includes accessways to the Premises
which may be concurrently used by others.



               (iii) Tenant’s contractor shall accept the Premises prior to starting any trenching
operations. Any rework of sub-base or compaction required after the contractor’s initial
acceptance of the Premises shall be done by Tenant’s contractor, which shall include the removal
from the Project of any excess dirt or debris.



               (iv) Tenant’s contractor shall contain its storage of materials and its operations within the
Premises and such other space as it may be assigned by Landlord or Landlord’s contractor. Should
Tenant’s contractor be assigned space outside the Premises, it shall move to such other space as
Landlord or Landlord’s contractor shall direct from time to time to avoid interference or delays
with other work.



               (v) Tenant’s contractor shall clean up the construction area and surrounding exterior areas
daily. All trash, demolition materials and surplus construction materials shall be stored within
the Premises and promptly removed from the Premises and the Project and disposed of in an approved
sanitation site.



               (vi) Tenant’s contractor shall provide temporary utilities, portable toilet facilities, and
potable drinking water as required for its work within the Premises and shall pay to Landlord’s
contractor the cost of any temporary utilities and facilities provided by Landlord’s contractor at
Tenant’s contractor’s request.



               (vii) Tenant’s contractor shall notify Landlord or Landlord’s project manager of any planned
work to be done on weekends or other than normal job hours.



               (viii) Tenant’s contractor or subcontractors shall not post signs on any part of the Project
or on the Premises.



     4. COSTS.



          (a) Tenant shall promptly pay any and all costs and expenses in connection with or arising out
of the performance of Tenant’s Work (including the costs of permits therefor) and shall furnish to
Landlord evidence of such payment upon request.




          (b) Tenant shall pay Landlord an amount equal to two and one-half percent (2.5%) of the total
hard costs of construction and installation of Tenant’s Work as compensation to Landlord for review
of plans, use of facilities and other miscellaneous costs of Landlord incurred as a result of such
work.




EXHIBIT G
-2-










 








     5. CONTRACTOR’S BONDS. Prior to the commencement of construction, Tenant shall obtain
or cause its contractor to obtain and deliver evidence thereof to Landlord payment and performance
bonds covering the faithful performance of the contract for the construction of the Tenant’s Work
and the payment of all obligations arising thereunder. In the alternative, and at Landlord’s
option, Tenant may appoint Landlord as its contractor, and in so doing, Tenant shall deposit with
the Landlord a sum of money equal to the entire amount of the estimated construction cost, as is
required for the installation of the Tenant improvements on the Premises. If Tenant deposits with
Landlord monies for construction costs, it is agreed that Landlord will not be placed in a
fiduciary capacity as a trustee, or any other fiduciary title, for the sums of monies in Landlord’s
possession. Tenant agrees to hold Landlord harmless from any and all claims, for workmanship and
installation of improvements, and for merchantability and quality of goods used for the
installation of Tenant’s improvements, as are requested by Tenant. Any bonds obtained pursuant
hereto shall be for the mutual benefit of both Landlord and Tenant as obligees and beneficiaries.



     6. MECHANIC’S LIENS.



          (a) Tenant shall not suffer or permit to be enforced against the Premises or any part of the
Project any mechanic’s, materialman’s, contractor’s or subcontractor’s lien arising out of any work
of improvement, however it may arise.




          (b) Tenant shall notify Landlord at least thirty (30) days prior to the commencement of
construction of any Tenant’s Work and Landlord shall have the right to post and record a notice of
nonresponsibility in conformity with applicable law. Within ten (10) days following completion of
Tenant’s Work, Tenant shall file a Notice of Completion and deliver to Landlord an unconditional
release and waiver of lien executed by each contractor, subcontractor and materialman involved in
Tenant’s Work.




          (c) In the event any lien is filed against the Project or any portion thereof or against
Tenant’s leasehold interest therein, Tenant shall obtain the release and/or discharge of said lien,
within twenty (20) days after the filing thereof. In the event Tenant fails to do so, Landlord may
obtain the release and/or discharge of said lien and Tenant shall indemnify Landlord for the costs
thereof, including reasonable attorney’s fees, together with interest at the Applicable Interest
Rate from the date of demand. Nothing herein shall prohibit Tenant from contesting the validity of
any such asserted claim, provided Tenant has furnished to Landlord a lien release bond freeing the
Premises from the effect of the lien claim.




     7. INDEMNITY. Tenant shall indemnify, defend (with counsel satisfactory to Landlord)
and hold Landlord harmless from and against any and all suits, claims, actions, loss, cost or
expense (including claims for workers’ compensation, attorney’s fees and costs) based on personal
injury or property damage, or otherwise (including, without limitation, contract and breach of
warranty claims) arising from the performance of Tenant’s Work. Tenant shall repair or replace
(or, at Landlord’s election, reimburse Landlord for the cost of repairing or replacing) any portion
of the Building or item of Landlord’s equipment or any of Landlord’s real or personal property
damaged, lost or destroyed in the performance of Tenant’s Work.



     8. BUILDING STANDARDS. All work shall conform to Landlord’s established building
standards and specifications. Tenant is required to make these standards part of the construction
documents.



     9. ROOF PENETRATIONS. If improvements penetrate the roof membrane, the penetrations
will be sealed per Landlord/IRC roofing specifications and inspected by IRC to maintain roof
warranty. The cost of inspection and all corrective work shall be borne by Tenant. Tenant shall
use Landlord’s original roofing contractor.



     10. BUILDING MODIFICATIONS. Work will only be approved within the confines of a given
space. Tenant will not be allowed to modify building exterior or mechanical and electrical service
as provided to the building in common with other tenants.



     11. ELECTRICAL WORK. All electrical work shall be approved from the unit space
electrical panel only. Additional service requirements shall be secured only by direction of
Landlord. Tenant shall use Landlord’s original electrical contractor.



EXHIBIT G
-3-










 





     12. SCHEDULE OF WORK. Tenant may be required to provide a schedule of all work to be
performed, subject to Landlord approval. All costs to produce such schedule shall be borne solely
by Tenant.



     13. CLEAN UP AND DISPOSAL OF CONSTRUCTION DEBRIS. Building trash containers are
provided for office generated trash only and are not to be used for disposal of
construction-related materials and debris. Unapproved usage will result in a penalty assessment to
the Tenant equal to the cost of an extra pick-up service as provided under the current rate
schedule of regular trash removal service.



     14. INSPECTION BY LANDLORD. Landlord reserves the following rights: (i) the right
of inspection prior to, during and at completion of all construction and/or demolition, (ii) the
right to post and record a notice of nonresponsibility in conformity with California law, and (iii)
the right to order a total stop to all improvements underway for non-compliance with any of the
requirements hereof.



     15. GENERAL PROVISIONS.



          (a) If Landlord has agreed to provide an allowance toward the cost of tenant improvements,
Landlord shall retain from such funds an amount determined by Landlord until Tenant has fully
complied with the requirements hereof.




          (b) All materials, work, installations and decorations of any nature whatsoever brought on or
installed in the Premises before the commencement of the Term or throughout the Term shall be at
Tenant’s risk, and neither Landlord nor any party acting on Landlord’s behalf shall be responsible
for any damage thereto or loss or destruction thereof due to any reason or cause whatsoever.




          (c) Nothing contained herein shall make or constitute Tenant as the agent of Landlord.




EXHIBIT G
-4-










 








EXHIBIT H




TENANT ESTOPPEL CERTIFICATE




To: [Insert name of party to rely on document] (“Relying Party”)




	 	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	Attn:
	 	 	 	 
	 	 	 	 	 





	 	 	 	 	 	 	 	 	 
	Re:

	 	Lease Dated:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Current Landlord:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Current Tenant:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Square Feet:
	 	Approximately	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Floor(s):	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Located at:	 	 	 	 	 	 
	 	 	 	 	 	 	 





     (“Tenant”) hereby certifies that as of ___, 20___:



     1. Tenant is the present owner and holder of the tenant’s interest under the lease described
above, as it may be amended to date (the “Lease”)
with ___ as Landlord (who is
called “Landlord” for the purposes of this Certificate). (USE THE NEXT SENTENCE IF THE
LANDLORD OR TENANT NAMED IN THE LEASE IS A PREDECESSOR TO THE CURRENT LANDLORD OR TENANT.) [The
original landlord under the Lease was ___, and the original tenant under the Lease was
___.] The Lease covers the premises commonly
known as ___ (the
“Premises”) in the building (the “Building”) at the address set forth above.



(CHOOSE ONE OF THE FOLLOWING SECTION 2(a)s BELOW)




     [2. (a) A true, correct and complete copy of the Lease (including all modifications,
amendments, supplements, side letters, addenda and riders of and to it) is attached to this
Certificate as Exhibit A.]



     [2 (a) The attached Exhibit A accurately identifies the Lease and all modifications,
amendments, supplements, side letters, addenda and riders of and to it.]



          (b) (IF APPLICABLE) [The Lease provides that in addition to the Premises, Tenant has the right
to use or rent ___[assigned/unassigned] parking spaces near the Building or in the garage
portion of the building during the term of the Lease.]




          (c) The
term of the Lease commenced on ___, 20___ and will expire on ___,
___, including any presently exercised option or renewal term. (CHOOSE ONE OF THE FOLLOWING TWO
SENTENCES.) [Tenant has no option or right to renew, extend or cancel the Lease, or to lease
additional space in the Premises or Building, or to use any parking (IF APPLICABLE) [other than
that specified in Section 2(b) above].] [Except as
specified in Paragraph(s) ___ of the
Lease (copy attached), Tenant has no option or right to renew, extend or cancel the Lease, or to
lease additional space in the Premises or Building, or to use any parking (IF APPLICABLE) [other
than that specified in Section 2(b) above].]




(CHOOSE ONE OF THE FOLLOWING SECTION 2(d)s)




          [(d) Tenant has no option or preferential right to purchase all or any part of the Premises
(or the land of which the Premises are a part). Tenant has no right or interest with respect to
the Premises or the Building other than as Tenant under the Lease.]




EXHIBIT H
-1-










 






          [(d)
Except as specified in Paragraph(s) ___ of the Lease (copy attached), Tenant has
no option or preferential right to purchase all or any part of the Premises (or the land of which
the Premises are a part). Except for the foregoing, Tenant has no right or interest with respect
to the Premises or the Building other than as Tenant under the Lease.]




          (e) The
annual minimum rent currently payable under the Lease is $___ and such rent has
been paid through ___, 20___.




          (f) (IF APPLICABLE) [Additional rent is payable under the Lease for (i) operating,
maintenance or repair expenses, (ii) property taxes, (iii) consumer price index cost of living
adjustments, or (iv) percentage of gross sales adjustments (i.e., adjustments made based on
underpayments of percentage rent). Such additional rent has been paid in accordance with
Landlord’s rendered bills through ___, 20___. The base year amounts for additional rental
items are as follows: (1) operating, maintenance or repair expenses $___, (2) property
taxes $___, and (3) consumer price index
___ (please indicate base year CPI level).]




          (g) Tenant has made no agreement with Landlord or any agent, representative or employee of
Landlord concerning free rent, partial rent, rebate of rental payments or any other similar rent
concession (IF APPLICABLE) [except as expressly set forth in
Paragraph(s) ___ of the Lease (copy
attached)].




          (h) Landlord
currently holds a security deposit in the amount of $___ which is to be
applied by Landlord or returned to Tenant in accordance with Paragraph(s) ___of the Lease.
Tenant acknowledges and agrees that Relying Party shall have no responsibility or liability for any
security deposit, except to the extent that any security deposit shall have been actually received
by Relying Party.




     3. (a) The Lease constitutes the entire agreement between Tenant and Landlord with respect to
the Premises, has not been modified changed, altered or amended and is in full force and effect in
the form (CHOOSE ONE) [attached as/described in] Exhibit A. There are no other agreements,
written or oral, which affect Tenant’s occupancy of the Premises.



          (b) All insurance required of Tenant under the Lease has been provided by Tenant and all
premiums have been paid.




          (c) To the actual knowledge of Tenant, no party is in default under the Lease. To the actual
knowledge of Tenant, no event has occurred which, with the giving of notice or passage of time, or
both, would constitute such a default.




          (d) The interest of Tenant in the Lease has not been assigned or encumbered. Tenant is not
entitled to any credit against any rent or other charge or rent concession under the Lease except
as set forth in the Lease. No rental payments have been made more than one month in advance.




     4. All contributions required to be paid by Landlord to date for improvements to the Premises
have been paid in full and all of Landlord’s obligations with respect to tenant improvements have
been fully performed. Tenant has accepted the Premises, subject to no conditions other than those
set forth in the Lease.



     5. Neither Tenant nor any guarantor of Tenant’s obligations under the Lease is the subject of
any bankruptcy or other voluntary or involuntary proceeding, in or out of court, for the adjustment
of debtor-creditor relationships.



     6. Tenant is in compliance with the terms and provisions of Section 12 of the Lease.



     7. Tenant hereby acknowledges that Landlord intends to [discuss action to be taken vis-a-vis
Relying Party]. Tenant acknowledges the right of Landlord, Relying Party and any and all of
Landlord’s present and future lenders and their successors and assigns to rely upon the statements
and representations of Tenant



EXHIBIT H
-2-









 




contained in this Certificate and further acknowledges that any
action taken by such parties will be made and entered into in material reliance on this
Certificate.




     8. Tenant hereby agrees to furnish Relying Party with such other and further estoppel as
Relying Party may reasonably request.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	     ,	 
	 	 	 	 	 	 
	 

	 	a  	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 






EXHIBIT H
-3-









 






EXHIBIT “I”




FORM OF SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT




	 	 	 
	RECORDING REQUESTED BY
	 	)
	AND WHEN RECORDED MAIL TO:
	 	)
	 
	 	)
	 
	 	)
	 
	 	)
	 
	 	)
	 
	 	)
	 
	 	)
	 
	 	)






 





Space above for Recorder’s Use




SUBORDINATION, NONDISTURBANCE

AND ATTORNMENT AGREEMENT





NOTICE: THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT RESULTS IN YOUR
LEASEHOLD ESTATE BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR
LATER SECURITY INSTRUMENT.



     This Subordination, Nondisturbance and Attornment Agreement (“Agreement”) is entered
into as of the ___ day of ___,
200___ by and among LACROSSE FOOTWEAR, INC., a
___ corporation (“Tenant”), ___, a ___
(“Borrower”) and ___(“Bank”).



Factual Background




     A. Borrower owns certain real property in the County of Mutnomah, State of Oregon, more
particularly described in the attached Schedule 1 term “Property” herein means that real property
together with all improvements (the “Improvements”) located on it.



     B. Bank has made or agreed to make a loan to Borrower in the principal amount of
___ and ___/100 Dollars ($___) (the “Loan”) as provided in
a loan agreement (the “Loan Agreement”). The Loan is or will be evidenced by a promissory
note (the “Note”) which is or will be secured by a deed of trust encumbering the Property
(the “Deed of Trust”) with an assignment of rents. The Loan Agreement, the Note, the Deed
of Trust, this Agreement and all other documents and instruments identified in the Loan Agreement
as “Loan Documents” shall be collectively referred to herein as the “Loan
Documents”.



     C. Tenant and Borrower (as landlord) entered into a lease dated ___, 200___(the
“Lease”) under which Borrower leased to Tenant a portion of the Improvements located within
the Property and more particularly described in the Lease (the “Premises”).



     D. It is a requirement of the Loan to Borrower that Tenant agree, among other things, to
subordinate Tenant’s rights under the Lease to the lien of the Loan Documents and to attorn to Bank
on the terms and conditions of this Agreement. Tenant is willing to agree to such subordination
and attornment and other conditions, provided that Bank agrees to a nondisturbance provision, all
as set forth more fully below.



EXHIBIT “I”




-1-









 








A G R E E M E N T :




     Therefore, the parties agree as follows:



     1. Subordination. The Loan Documents and all supplements, amendments, modifications,
renewals, replacements and extensions of and to them shall unconditionally be and remain at all
times a lien on the Property prior and superior to the Lease, to the leasehold estate created by
it, and to all rights and privileges of Tenant under it. The Lease and leasehold estate, together
with all rights and privileges of Tenant under that Lease, are hereby made subordinate to the lien
of the Loan Documents in favor of Bank. Tenant consents to Borrower and Bank entering into the
Deed of Trust and the other Loan Documents. Tenant further declares, agrees and acknowledges that
in making disbursements under the Loan Documents Bank has no obligation or duty to, nor has Bank
represented that it will, see to the application of such proceeds by the person or persons to whom
they are disbursed by Bank, and any application or use of such proceeds for purposes other than
those provided for in the Loan Documents shall not defeat the subordination made in this Agreement,
in whole or in part.



     2. Definitions of “Transfer of the Property” and “Purchaser”. As used herein, the
term “Transfer of the Property” means any transfer of Borrower’s interest in the Property by
foreclosure, trustee’s sale or other action or proceeding for the enforcement of the Deed of Trust
or by deed in lieu thereof. The term “Purchaser”, as used herein, means any transferee, including
Bank, of the interest of Borrower as a result of any such Transfer of the Property and also
includes any and all successors and assigns, including Bank, of such transferee.



     3. Nondisturbance. Bank agrees that the enforcement of the Deed of Trust shall not
terminate the Lease or disturb Tenant in the possession and use of the Premises unless at the time
of foreclosure Tenant is in default under the Lease or this Agreement past applicable grace
periods, and Bank so notifies Tenant in writing at or prior to the time of the foreclosure sale
that the Lease will be terminated by foreclosure because of such default. The nondisturbance
herein granted is subject to Section 5 below. This nondisturbance applies to any option to extend
or renew the Lease term which is set forth in the Lease as of the date of this Agreement.



     4. Attornment. Subject to Section 3 above, if any Transfer of the Property should
occur, Tenant shall and hereby does attorn to Purchaser, including Bank if it should be the
Purchaser, as the landlord under the Lease, and Tenant shall be bound to Purchaser under all of the
terms, covenants and conditions of the Lease for the balance of the Lease term and any extensions
or renewals of it which may then or later be in effect under any validly exercised extension or
renewal option contained in the Lease, all with the same force and effect as if Purchaser had been
the original landlord under the Lease. This attornment shall be effective and self-operative
without the execution of any further instruments upon Purchaser’s succeeding to the interest of the
landlord under the Lease.



     5. Subordination of Options and Rights of First Refusal. The Loan Documents and all
supplements, amendments, modifications, renewals, replacements and extensions of and to them shall
unconditionally be and remain at all times a lien on the Property prior and superior to any
existing or future right of Tenant, whether arising out of the Lease or otherwise, to exercise any
option or right of first offer to:




     (a) purchase the Premises or the Property or any interest or portion in or of either of
them; or




     (b) expand into other space in the Improvements except pursuant to Sections 21 and 22
of the Lease.



     Tenant specifically agrees and acknowledges that upon any Transfer of the Property, any such
purchase option, whether now existing or in the future arising, shall terminate and be inapplicable
to the Property notwithstanding the nondisturbance granted to Tenant in Section 3 above. If any
option or right of first offer to purchase is exercised prior to a Transfer of the Property, any
title so acquired to all or any part of the Property shall be subject to the lien of the Loan
Documents, which lien shall in no way be impaired by the exercise of such option or right of first
offer. Bank specifically reserves all of its rights to enforce any accelerating transfer, due on
sale, due on encumbrance or similar provision in the Deed of Trust or any other Loan Document.



EXHIBIT “I”




-2-









 








     6. Notices of Default; Material Notices; Bank’s Rights to Cure Default. Tenant shall
send a copy of any notice of default or similar statement with respect to the Lease to Bank at the
same time such notice or statement is sent to Borrower. In the event of any act or omission by
Borrower which would give Tenant the right to terminate the Lease or to claim a partial or total
eviction, Tenant shall not exercise any such right or make any such claim until it has given Bank
written notice of such act or omission and has given Bank either thirty (30) days to cure the
default. Nothing in this Agreement, however, shall be construed as a promise or undertaking by
Bank to cure any default of Borrower.



     7. Limitation on Bank’s Performance. Nothing in this Agreement shall be deemed or
construed to be an agreement by Bank to perform any covenant of Borrower as landlord under the
Lease. Tenant agrees that if Bank becomes Purchaser then, upon subsequent transfer of the Property
by Bank to a new owner, Bank shall have no further liability under the Lease after said transfer.



     8. Limitation on Liability. No Purchaser who acquires title to the Property shall
have any obligation or liability beyond its interest in the Property.



     9. Tenant’s Covenants. Tenant agrees that during the term of the Lease, without
Bank’s prior written consent, Tenant shall not:




     (a) pay any rent or additional rent more than one month in advance to any landlord
including Borrower; or




     (b) cancel, terminate or surrender the Lease, except at the normal expiration of the
Lease term or as provided in Section 6 above.



     10. Bank Not Obligated. Bank, if it becomes the Purchaser or if it takes possession
under the Deed of Trust, and any other Purchaser shall not (a) be liable for any damages or other
relief attributable to any act or omission of any prior Landlord under the Lease including
Borrower; or (b) be subject to any offset or defense not specifically provided for in the Lease
which Tenant may have against any prior landlord under the Lease; or (c) be bound by any prepayment
by Tenant of more than one month’s installment of rent; or (d) be obligated for any security
deposit not actually delivered to Purchaser; or (e) be bound by any modification or amendment of or
to the Lease unless the amendment or modification shall have been approved in writing by Bank.



     11. Tenant’s Estoppel Certificate.




     (a) True and Complete Lease. Tenant represents and warrants to Bank that
Schedule 2 accurately identifies the Lease and all amendments, supplements, side letters and
other agreements and memoranda pertaining to the Lease, the leasehold and/or the Premises.




     (b) Tenant’s Option Rights. Tenant has no right or option of any nature
whatsoever, whether arising out of the Lease or otherwise, to purchase the Premises or the
Property, or any interest or portion in or of either of them, to expand into other space in
the Improvements or to extend or renew the term of the Lease, except as described in the
attached Schedule 3.




     (c) No Default. As of the date of this Agreement, Tenant represents and
warrants that to the best of Tenant’s knowledge there exist no events of default or events
that with notice or the passage of time or both would be events of default under the Lease
on either the Tenant’s part or the Borrower’s, nor is there any right of offset against any
of Tenant’s obligations under the Lease, except as described in the attached Schedule 4.
Tenant represents and warrants that the Lease is in full force and effect as of the date of
this Agreement.




     (d) Hazardous Substances. Tenant represents and warrants that it is in
compliance with Section 12 of the Lease.



EXHIBIT “I”




-3-









 








     12. Integration; Etc. This Agreement integrates all of the terms and conditions of
the parties’ agreement regarding the subordination of the Lease to the Loan Documents, attornment,
nondisturbance and the other matters contained herein. This Agreement supersedes and cancels all
oral negotiations and prior and other writings with respect to (a) such subordination (only to such
extent, however, as would affect the priority between the Lease and the Loan Documents), including
any provisions of the Lease which provide for the subordination of the Lease to a deed of trust or
to a mortgage and (b) such attornment, non-disturbance and other matters contained herein. If
there is any conflict between the terms, conditions and provisions of this Agreement and those of
any other agreement or instrument, including the Lease, the terms, conditions and provisions of
this Agreement shall prevail. This Agreement may not be modified or amended except by a written
agreement signed by the parties or their respective successors in interest. This Agreement may be
executed in counterparts, each of which is an original but all of which shall constitute one and
the same instrument.



     13. Notices. All notices given under this Agreement shall be in writing and shall be
given by personal delivery, overnight receipted courier or by registered or certified United States
mail, postage prepaid, sent to the party at its address appearing below. Notices shall be
effective upon receipt (or on the date when proper delivery is refused). Addresses for notices may
be changed by any party by notice to all other parties in accordance with this Section. Service of
any notice on any one Borrower shall be effective service on Borrower for all purposes.





	 	 	 	 	 	 	 	 	 	 	 
	To Bank:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Attn.:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	To Borrower:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Attn:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	To Tenant:	 	LaCrosse Footwear, Inc.	 	 	 	 	 	 
	 	 	18550 NE Riverside Parkway	 	 	 	 	 	 
	 	 	Portland, Oregon 97230	 	 	 	 	 	 
	 

	 	Attn:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	With a Copy to:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Attn:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 





     14. Attorneys’ Fees. If any lawsuit, judicial reference or arbitration is commenced
which arises out of or relates to this Agreement, the prevailing party shall be entitled to recover
from each other party such sums as the court, referee or arbitrator may adjudge to be reasonable
attorneys’ fees, including the costs for any legal services by in-house counsel, in addition to
costs and expenses otherwise allowed by law.



     15. Miscellaneous Provisions. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective successors and assigns. This Agreement is governed by
the laws of the State of California without regard to the choice of law rules of that State. This
Agreement satisfies any condition or requirement in the Lease relating to the granting of a
nondisturbance agreement by Bank. As used herein, the word “include(s)” means “include(s) without
limitation,” and the word “including” means “including but not limited to.” Bank, at its sole
discretion, may but shall not be obligated to record this Agreement.



     16. Arbitration; Judicial Reference. Bank and Borrower have agreed in the Loan
Agreement that any dispute shall be resolved by arbitration or judicial reference. Therefore any
controversy or claim between or among the parties hereto (including Tenant) which arises out of or
relates to this Agreement, including any claim based on or arising from an alleged tort, shall also
be determined by arbitration or judicial reference as set forth below.



EXHIBIT “I”




-4-









 









     (a) Judicial Reference. In any judicial action between or among the parties,
including any action or cause of action arising out of or relating to this Agreement or
based on or arising from an alleged tort, all decisions of fact and law shall at the request
of any party be referred to a referee in accordance with California Code of Civil Procedure
Sections 638 et seq. The parties shall designate to the court a referee or referees
selected under the auspices of the American Arbitration Association (“AAA”) in the
same manner as arbitrators are selected in AAA-sponsored proceedings. The presiding referee
of the panel, or the referee if there is a single referee, shall be an active attorney or
retired judge. Judgment upon the award rendered by such referee or referees shall be
entered in the court in which such proceeding was commenced in accordance with California
Code of Civil Procedure Sections 644 and 645.




     (b) Mandatory Arbitration. After the Bank’s Deed of Trust has been released,
fully reconveyed or extinguished, any controversy or claim between or among the parties,
including those arising out of or relating to this Agreement or any claim based on or
arising from an alleged tort, shall at the request of any party be determined by
arbitration. The arbitration shall be conducted in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement, and under the Commercial Rules of the AAA. The arbitrator(s) shall give effect
to statutes of limitation in determining any claim. Any controversy concerning whether an
issue is arbitrable shall be determined by the arbitrator(s). Judgment upon the arbitration
award may be entered in any court having jurisdiction. The institution and maintenance of
an action for judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests such action for judicial
relief.




     (c) Real Property Collateral. Notwithstanding the provisions of Subsection
(b), no controversy or claim shall be submitted to arbitration without the consent of all
parties if, at the time of the proposed submission, any obligation of Borrower to Bank is
secured by real property collateral. If all parties do not consent to submission of such a
controversy or claim to arbitration, the controversy or claim shall be determined by
judicial reference as provided in Subsection (a).




     (d) Provisional Remedies, Self-Help and Foreclosure. No provision of this
Section shall limit the right of any party to this Agreement to exercise self-help remedies
such as setoff, foreclosure against or sale of any real or personal property collateral or
security, or to obtain provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other proceeding.
The exercise of a remedy does not waive the right of a party to resort to arbitration or
reference. At Bank’s option, foreclosure under a deed of trust or mortgage may be
accomplished either by exercise of power of sale under the deed of trust or mortgage or by
judicial foreclosure.




     (e) The parties agree that this arbitration and judicial reference provision shall not
prohibit or limit summary proceedings to obtain possession of real property pursuant to
Chapter 4 of the California Code of Civil Procedure (Section 1159 et seq.)
as amended from time to time, or any similar law, statute or ordinance now or hereafter in
effect.



     NOTICE: THIS AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR LEASE TO
OBTAIN A LOAN, A PORTION OF WHICH MAY BE EXPENDED FOR PURPOSES OTHER THAN IMPROVEMENT OF THE
PROPERTY.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	“TENANT”	 	LACROSSE FOOTWEAR, INC.,	 	 
	 	 	a Wisconsin corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	Name:	 	Dave Carlson	 	 
	 	 	 	 	 	 	Title:	 	Executive Vice President	 	 





EXHIBIT "I"

-5-









 






	 	 	 	 	 	 	 	 	 	 	 
	“BORROWER”
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	a	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Title:	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Name:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Title:	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	“BANK”
	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 

	 	a	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 	 	 
	 	 	 	 	 	 	 





EXHIBIT “I”




-6-









 








SCHEDULE 1

PROPERTY DESCRIPTION




EXHIBIT “I”




-7-









 








SCHEDULE 2




IDENTIFY LEASE AND LIST ALL AMENDMENTS,

SUPPLEMENTS, SIDE LETTERS AND OTHER AGREEMENTS

AND MEMORANDA PERTAINING TO LEASE, PREMISES OR PROPERTY





	 	1.	Single-Tenant Industrial Triple Net Lease dated ___, 2005 between
Borrower and Tenant.





EXHIBIT “I”




-8-









 








SCHEDULE 3




LIST OF PURCHASE, EXPANSION, FIRST REFUSAL

EXTENSION AND RENEWAL OPTIONS





	 	1.	Option to Extend pursuant to Section 20 of the Lease.





EXHIBIT “I”




-9-









 








SCHEDULE 4




LIST ANY EXISTING DEFAULTS OR OFFSETS UNDER LEASE



          None.




EXHIBIT “I”





-10-









 








	 	 	 	 	 	 	 
	STATE OF ___

	 	 	 	)	 	 
	 

	 	 	 	) ss.

	COUNTY OF

	 	 	 	)	 	 
	 
	 	 	 	 	 	 
	 	 	On before me, a notary public, personally appeared personally
known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
	 
	 	 	 	 	 	 
	 	 	WITNESS my hand and official seal.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 
 

	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	STATE OF ___

	 	 	 	)	 	 
	 

	 	 	 	) ss.

	COUNTY OF

	 	 	 	)	 	 
	 
	 	 	 	 	 	 
	 	 	On before me, a notary public, personally appeared personally
known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
	 
	 	 	WITNESS my hand and official seal.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 
 

	 
	EXHIBIT
“I”






-11-