Document:

Exhibit

10.8

 

LEASE CONTRACT (“LEASE”) DATED

                                    ,

2003, IS ENTERED INTO BY AND BETWEEN INTERSECTION DEVELOPMENT CORPORATION, S. A. DE C. V., REPRESENTED

HEREIN BY GREGORY ODION  (HEREINAFTER REFERRED TO AS “LESSOR”),

AND QUIXOTE

TRANSPORTATION SAFETY MEXICO, S. DE R. L. DE C. V., REPRESENTED

HEREIN BYMARIA EUGENIA RIOS ESPINOSA (HEREINAFTER REFERRED TO AS “LESSEE”),

IN ACCORDANCE WITH THE FOLLOWING RECITALS AND CLAUSES.

 

R E C I T A L S

 

I.                                         LESSOR

hereby states:

 

a)              That through Public

Instrument No. 36552 Volume 940 of Notary Public No. 8, of Tijuana, Mexico,

which was duly recorded with the Public Registry of Property and Commerce for

the city of Tecate, Mexico, under Record No. 36552 of Volume 940, Civil

Section, that on May 26, 1999, LESSOR acquired a plot of land (“LAND”)

known as lot numbers 4-7, block 8, of Parque Industrial Tecate, with an

approximate area of 14,419 square meters (155,202 square feet), that is located

in the city of Tecate, Baja California, Mexico.

 

b)             That upon a portion of lots 4-7 of block

8, LESSOR has built and owns an industrial building with an approximate area of

6,313 square meters (67,927 square feet) (“BUILDING”), which together with the

LAND will be referred to from herein as the “LEASED PROPERTY”.

 

c)              That it is duly

represented in this act by Mr. Gregory Odion, who possesses adequate and

sufficient authority to enter into this LEASE.

 

d)             That it is LESSOR’S intent to lease the

building above mentioned to LESSEE.

 

II.                                     LESSEE,

hereby states:

 

a)              That it is a company

duly authorized and existing under the laws of the Mexican Republic, as

evidenced by Public Instrument No. 26747 granted before Mr. Miquel Soberon

Mainero, Notary Public No. 181 of the Federal District, under the name QUIXOTE

TRANSPORTATION SAFETY MEXICO, S. DE R. L. DE C. V. operating as a warehousing

and distribution plant in the City of Tecate, Baja California, as shown on

Exhibit A.

 

b)             That it is duly

represented in this act by Ms. Maria Eugenia Rios Espinosa, who possesses adequate

and sufficient authority to enter into this LEASE as evidenced by Public

Instrument No.

                      

granted before Mr.                       ,

Notary Public No.

                      

for the State of

                      ,

as shown on Exhibit A.

 

c)              That it wishes to

lease from LESSOR the LEASED PROPERTY described in subparagraph b) of Recital I

herein.

 

Based on the foregoing, the parties hereto agree to

the following:

 

C L A U S E S

 

FIRST.- SCOPE OF THE AGREEMENT.

 

Under the terms of this LEASE, LESSOR hereby leases to

LESSEE the temporary use and enjoyment of LEASED PROPERTY.

 

SECOND.- OWNERSHIP OF THE LEASED PROPERTY.

 

LESSOR has ownership of the LEASED PROPERTY and of

other common areas, and LESSEE may peacefully enjoy and use same.  Likewise, LESSOR agrees that any encumbrance

or mortgage shall, in no way, prejudice

 

1

 

the terms and conditions of this LEASE or the

extension thereof that may occur, and that any modification of said encumbrances

or mortgages, or any new encumbrance or mortgage on the LEASED PROPERTY must

contain a clause acknowledging and accepting the existence and duration of this

LEASE, as well as the right of extension herein contained, if said right of

extension is agreed to by the parties at the time of execution of said mortgage

by LESSOR.

 

The parties acknowledge the fact that a series of

protective covenants have been stipulated as binding on LESSOR and the tenants

of Parque Industrial Tecate, which are incorporated into this LEASE and made a

part hereof by reference. . LESSOR and LESSEE declare that they are familiar

with them and accept them as binding for both. LESSOR guarantees that the

LEASED PROPERTY does not violate said covenants and that it complies with all

regulations applicable to land use, as is evident from the subdivision permit

for industrial purposes with respect to Parque Industrial Tecate.

 

THIRD.- IMPROVEMENTS.

 

3.1                                 LESSEE

accepts the LEASED PROPERTY in “as is” condition and configuration. LESSEE

agrees the that the LEASED PROPERTY is in good order and satisfactory condition

and that there are no representations or warranties by LESSOR regarding the

condition of the LEASED PROPERTY.

 

3.2                                 LESSEE

must indemnify and leave LESSOR free from all liability or claim on account of

any personal claims or indemnification for damages arising out of the actions

of LESSEE in fulfillment of its obligations related to any construction of the

structures, improvements, installation of machinery and equipment or repair of

the LEASED PROPERTY, stipulated herein.

 

FOURTH.- USE OF THE LEASED PROPERTY.

 

4.1                                 The

uses that LESSEE may make of the LEASED PROPERTY shall be light and clean

industry, general office, warehouse, manufacturing, and similar items,

storehouse, services, repairs engineering, sales, product demonstration

employee and customer training, auxiliary storehouse, vehicle parking, and any

other incidental use related to the manufacture, storage and office service,

and for no other use without written authorization from LESSOR.  LESSEE shall not perform, nor allow any

person to perform, any act in the LEASED PROPERTY that is contrary to the laws,

statutes, ordinances, restrictions or regulations of the government with respect

to the LEASED PROPERTY.

 

4.2                                 LESSEE

shall no cause or permit any Hazardous Substance (as defined below) to be

spilled or released in, on, under, or about the LEASED PROPERTY, except to the

extent and in the amount any Hazardous Substance is currently used in the

manufacturing processes currently operating at the LEASED PROPERTY, provided

that the same shall at all times be brought upon, kept or used in accordance

with all applicable Mexican laws and requirements.  LESSEE shall also promptly, at LESSEE’S expense, comply will all

applicable requirements whether or not formally ordered or required, for the

cleanup of any contamination of, and for the maintenance, security and/or

monitoring of the LEASED PROPERTY and neighboring properties, that was caused

or materially contributed to by LESSEE, or pertaining to or involving any

Hazardous Substance brought on the LEASED PROPERTY during the LEASE TERM (as

defined below) by or for LESSEE or any third party.  Hazardous Substance shall mean any product, substance or waste

whose presence, use, manufacture, disposal, transportation, or release, either

by itself or in combination with any other materials expected to be on the

LEASED PROPERTY, is either: (i) potentially injurious to the public health,

safety or welfare, the environment or the LEASED PROPERTY, (ii) regulated or

monitored by any governmental authority, or (iii) a basis of potential

liability of LESSOR to any governmental agency or third party.  LESSEE indemnifies LESSOR harmless from and

against any and all loss of rents and/or damages, liabilities, judgments,

claims, expenses, penalties and attorneys’ and consultants’ fees arising our of

or involving any Hazardous Substance brought onto the LEASED PROPERTY by or for

LESSEE or any third party.

 

2

 

FIFTH.- TERM OF THE LEASE , PERMITS, AUTHORIZATIONS

AND LICENSES.

 

5.1                                 The

term of this LEASE (“LEASE TERM”) shall commence on the date (hereinafter

“Lease Starting Date”) this LEASE is signed and entered into and shall end at

midnight on the date that is 5 years after the last day of the month in which

the Lease Starting Date falls, unless sooner terminated or further extended as

hereinafter provided.  After the initial

LEASE TERM, LESSEE has the option to lease for one (1) period of five (5)

years, as described in Section 6 herein. 

If LESSEE properly exercises this option, it will be mandatory for

LESSOR.

 

5.2                                 LESSEE,

at its exclusive expense and risk, shall obtain all permits, licenses, and

authorizations from the Federal, State and Municipal authorities, and for that

purpose, LESSEE declares that it will use the industrial premises for a light

and clean industry, general office, warehouse and distribution, under the

program approved by the Ministry of the Economy, with the specific use

stipulated by Section 4.1 herein.

 

SIXTH.- RENT, TERMS AND CONDITIONS OF PAYMENT

 

6.1                                 During

the LEASE TERM, LESSEE agrees to pay as the total price of the rent for the

LEASED PROPERTY in the amount of $317,898.36 per annum, currency of the United

States of America.  The rent shall be

payable in equal monthly installments of $26,491.53 U.S. Dollars in advance on

the first day of each month during the LEASE TERM , except that upon the

execution of this LEASE LESSEE shall pay the first monthly rent, or if the

Lease Starting Date is not the first day of a month, LESSEE, upon the execution

of this LEASE, shall pay the prorated rent from such date through the end of

such month and the amount corresponding to the last monthly payment shall be

the prorated proportion of the monthly rent payment equivalent to the time that

the LEASED PROPERTY was occupied by LESSEE, until such time as this LEASE

terminates.

 

6.2                                 The

above mentioned rent payments must be effected by LESSEE in dollars, currency

of the United States of America, at the LESSOR’S address.  Payment may be made in pesos, Mexican

currency, at an exchange rate determined by the Banco de México and published

in the Official Gazette of the Federation (Diario Oficial de la Federación) on

the day of payment.  All payments must

be received in advance during the first five calendar days of each month.

 

6.3                                 Intentionally

omitted.

 

6.4                                 Intentionally

omitted.

 

6.5                                 During

the LEASE TERM, LESSEE reserves the right to effect payments in advance of the

monthly amount referred to in above paragraph 6.1, and LESSOR agrees to accept

said payments as rents paid in advance, notifying his financial agent of the

reception of said payments.

 

6.6                                 LESSEE

shall pay the Value Added Tax to LESSOR pertaining to the monthly rental

payment, in Mexican legal tender and LESSOR must issue the fiscally required

receipt provided for by applicable law.

 

6.7                                 In

the event that LESSEE fails to make payment of the rent within the period of 5

(five) business days indicated in above paragraph 6.1, same must pay LESSOR for

such delay a late charge equal to five percent (5%) of the amount due.

 

6.8                                 LESSEE

shall have one (1) renewal option of five (5) years (“Option”), under the same

terms as are stipulated in this LEASE, starting with a rent which will be

negotiated at the time of renewal, but which shall not be less than the rent of

the final year of this LEASE, with an increase of the rate as stated

below.  In order to exercise the Option,

LESSEE must give written notice of such election to LESSOR and LESSOR must

receive the same at least 6 months, but not more than 12 months prior to the

date the option period would commence, time being of the essence.  If proper notification of the exercise of

the Option is not given and/or received, such Option shall automatically expire.  This

Option cannot be exercised:  (i) during

the period commencing with the giving of any notice of default and continuing

until

 

3

 

said default is cured, (ii) during the period of time any rent is

due and unpaid (without regard to whether notice thereof is given LESSEE), or

(iii) during the time LESSEE is in default of this LEASE, or (iv) in the event

that LESSEE has been given 3 or more notices of default, whether or not the

defaults are cured, during the 12 month period immediately preceding the

exercise of the Option.  The

monthly rent for each month of the 5 year option period shall be calculated as

described in Section 6.9 below.

 

6.9                                 On

the last day of the initial LEASE TERM (the “Market Rental Value Adjustment

Date”), the rent shall be adjusted to the Market Rental Value (MRV) of the

LEASED PROPERTY as follows:  Four months

prior to the Market Rental Value Adjustment Date, the parties shall attempt to

agree upon what the new MRV with be on the Market Rental Value Adjustment

Date.  If agreement cannot be reach

within 30 days, then both LESSEE AND LESSOR shall each immediately make a

reasonable determination of the MRV and submit such determination, in writing

to arbitration in accordance with the following:

 

(a)                                  within

15 days thereafter, LESSOR and LESSEE shall each select an appraiser of their

choice to act as an arbitrator.  Each

appraiser so selected shall be certified as a MAI appraiser or as an ASA

appraiser and shall have had at least 5 years experience within the previous 10

years as a real estate appraiser working in the Tecate, Baja California

area.  The two arbitrators so appointed

shall immediately select a third mutually acceptable appraiser to act as a

third arbitrator (with the qualifications specified above).

 

(b)                                 the

3 arbitrators shall within 30 days of the appointment of the third arbitrator

reach a decision as to what the actual MRV for the LEASED PROPERTY is, and

whether LESSOR’S or LESSEE’S submitted MRV is the closest thereto.  The decision of a majority of the

arbitrators shall be binding on the parties.

 

(c)                                  If

either of the parties fails to appoint an arbitrator within the specified 15

days, the arbitrator timely appointed by one of them shall reach a decision of

his or her own, and such decision shall be binding o the parties.

 

(d)                                 the

entire cost of such arbitration shall be paid equally by both parties, or by

the party whose submitted MRV is not selected (i.e. the one that is NOT the

closest to the actual MRV) if such party’s MRV is more than 50% further from

the actual MRV than the other party’s originally submitted MRV..

 

(e)                                  notwithstanding

the above, the new MRV shall not be less than the rent payable for the month

immediately preceding the rent adjustment.

 

6.10                           LESSEE

agrees that under no circumstance will it retain rents payable to LESSOR and

only under LESSOR’S express written consent will LESSEE be able to do so.

 

SEVENTH.- TAXES AND PUBLIC UTILITIES.

 

7.1                                 As

of the Lease Starting Date, LESSEE shall pay bills for the services related to

water, telephone lines, drainage, and electric power.

 

7.2                                 LESSOR

commits to carry out the necessary arrangements and works in order that the

LEASED PROPERTY shall be furnished with water, drainage, electric power and to

guarantee that same shall be furnished without any difficulty by the public or

private companies that supply them as of the Lease Starting Date.

 

7.3                                 Intentionally

Omitted.

 

7.4                                 In

as much as the capacity for telephone, electricity and water and sewage belong

to LESSOR, LESSEE must respect the ownership of such capacity upon termination

of this LEASE.  If LESSEE does not

transfer said services to LESSOR, the latter shall discount from the deposit

provided for in clause 16.1 of this LEASE the sum of $3.00 (three 00/100) dollars,

currency of the United States of America, per square meter of land for the

water and sewer rights,  $1,500.00 (One

thousand five

 

4

 

hundred 00/100)

dollars, currency of the United States of America for each unreturned telephone

line, and $80.00 (Eighty 00/100) dollars, currency of the United States of

America per every unreturned kva.

 

7.5                                 LESSEE

shall be responsible for the payment of the corresponding property tax of the

LEASED PROPERTY, which is paid every six months.

 

EIGHTH.- CESSION OF RIGHTS AND SUBLEASING.

 

LESSEE shall have the right to sublease all or part of

the LEASED PROPERTY, or to assign and cede the rights of the LEASED PROPERTY,

or to assign and cede the rights of this LEASE with LESSOR’S prior written

consent, which consent shall not be unreasonably withheld, but should it occur,

said subleasing or cession shall not relieve LESSEE from any of its obligations

contained in this LEASE, especially those having to do with payment of the rent

and those guaranteed by the under the Guaranty given pursuant to Section

16.2.  In compliance with the foregoing,

LESSEE may sublease all or part of the LEASED PROPERTY, or to cede its

rights under this LEASE to any third party.

 

NINTH.- MAINTENANCE AND REPAIRS.

 

9.1                                 Intentionally

omitted.

 

9.2                                 LESSEE

shall be responsible for the construction work effected in the occupancy of the

LEASED PROPERTY, as may be required. LESSOR shall have no responsibility

for any repairs or maintenance that may be required on account of normal

wear and tear and/or incorrect use of the LEASED PROPERTY and its components by

LESSEE or negligence on the part of LESSEE, its employees, agents or visitors.

LESSEE will be responsible for building maintenance in all of its components, for

the LEASE TERM, including the structural integrity of the roof, columns,

exterior walls, and foundations.  The

parties agreeing that the LESSOR has no obligation, in any manner whatsoever,

to repair and maintain the LEASED PROPERTY, or the equipment therein.

 

9.3                                 LESSEE

shall not make any single change, alteration or improvement on the LEASED

PROPERTY (a) involving an aggregate cost of more than $25,000 U.S. Dollars (as

estimated by a reputable architect selected by LESSEE at its expense) or (b)

if, regardless of the cost, such change, alteration or improvement will

materially lessen the value of the LEASED PROPERTY or will overtax or affect

the structural strength of any building or improvement on the LAND, without

first obtaining the consent of LESSOR (which will not be unreasonably withheld

in the case of such alteration or improvement to which clause (b) does not

apply) thereto in each case, and the consent of the holder of any mortgage

covering the LAND, if such consent is required under the particular mortgage

covering the LAND; and LESSEE shall not demolish any building or improvement on

the LAND without such consents.  The

consent of LESSOR and such holder of the mortgage covering the LAND, if given,

shall be for that instance alone, and such consent shall be required for each

and every further change, alteration, improvement or demolition.  Notwithstanding the above, LESSOR’S consent

shall not be required for any reconfiguration of LESSEE’S equipment or personal

property by LESSEE that has no effect on the structure of any building or

improvement or any building system, wall or ceiling.

 

9.4                                 Where

LESSOR’S consent has been obtained, no change, alteration or improvement shall

be made until:

 

(a)                                  detailed

plans and specifications and the cost estimate therefor (prepared by the

reputable architect selected by LESSEE) shall have been delivered to and

reasonably approved by LESSOR;

 

(b)                                 LESSEE

shall have delivered to LESSOR security, reasonably satisfactory to LESSOR, or

a surety bond issued by a surety company of recognized responsibility,

satisfactory to LESSOR in an amount at least equal to 110% of the estimated

cost of such work (but less the net amount for which a casualty insurance award

has been made and actually paid to LESSOR) conditioned upon and securing the

completion of and payment for such work, and

 

5

 

(c)                                  LESSEE

shall have procured and paid for all permits and authorizations from all

governmental authorities having jurisdiction thereover, and shall have

delivered copies thereof to LESSOR.

 

9.5                                 At

all times when the work is in progress, LESSEE shall, at LESSEE’S sole cost and

expense, maintain, or cause to be maintained, workmen’s compensation insurance

covering all persons employed in connection with the work and with respect to

whom death or personal injury claims could be asserted against LESSOR, LESSEE

or the LEASED PROPERTY; and shall deliver to LESSOR with proof of payment of

the premium therefor comprehensive general liability insurance for the mutual

benefit of LESSEE and LESSOR expressly covering the additional hazards due to

the work, with limits of not less than $1,000,000 U.S. Dollars in the event of

death or personal injury to any one person and not less than $2,000,000 U.S.

Dollars in the event of death or personal injury to any number of persons in

one accident and of not less than $1,000,000 U.S. Dollars for property

damage.  The policy of comprehensive

general liability insurance, insofar as it relates to property damage, shall

not contain any restrictive clauses relating to excavating, sheet piling,

moving, shoring, underpinning, removal and rebuilding of structural supports or

subsurface work or any similar restrictive clauses.  The comprehensive general liability insurance provided for in

this Section 9.5 may be effected by an appropriate endorsement, if

obtainable, upon the insurance required to be maintained by LESSEE pursuant to

Section 11.1.  All insurance of the

character in this subdivision described shall be issued by companies of the

same character as described in Section 11.5.

 

9.6                                 All

permitted changes, alterations and improvements shall be prosecuted diligently

and performed in a good and workmanlike manner in accordance with all

applicable laws, ordinances and regulations, and the plans and specifications

approved by LESSOR.  All of the

materials used shall be new and free of all liens, encumbrances, financing

statements, chattel mortgages, conditional bills of sale and title retention or

security agreements.  LESSEE shall

obtain, keep in effect, and furnish to LESSOR copies of all permits, licenses,

consents and approvals required by any governmental or municipal body having

jurisdiction over the LEASED PROPERTY in connection with any work undertaken by

or on behalf of LESSEE.

 

9.7                                 This

LEASE shall not be affected or suspended, nor shall the purposes of this LEASE

be deemed frustrated, nor shall the rent or other charges payable by LESSEE be

abated, suspended, reduced or diminished by reason of LESSEE being prevented

from or delayed in building by any present or future laws, rules, requirements,

orders, directions, ordinances or regulations of Mexico or any other lawful

authority whatsoever, or by priorities, rationing or curtailment of labor or

materials, or strikes or by war or by any matter or thing resulting therefrom,

or by any other cause or causes whether or not beyond the control of LESSEE.

 

9.8                                 In

addition to complying with all other provisions hereof in connection with any

work undertaken by or on behalf of LESSEE, LESSEE shall (i) furnish LESSOR a

contract made with a contractor satisfactory to LESSOR providing for the

completion of all work, labor and materials necessary to complete the permitted

changes, alterations and improvements in accordance with the plans approved by

LESSOR, (ii) use its best efforts to have such contract be for a fixed sum and

in assignable form, and (iii) provide LESSOR with an assignment of such

contract in form satisfactory to LESSOR, which shall be duly executed and

acknowledged by LESSEE and by its terms shall be effective upon any termination

of this LEASE or upon LESSOR’S reentry upon the LEASED PROPERTY pursuant to

this LEASE prior to the complete performance of such contract.  Such assignment shall also provide, that

LESSOR shall be entitled to the benefit of all payments made on account of said

contract including payments made prior to the effective date of such

assignment.

 

9.9                                 LESSOR

may, upon reasonable notice to LESSEE, at any time and from time to time during

usual business hours and without unreasonably interfering with LESSEE’S

business or any construction in progress (except without notice and at anytime

in case of emergency), in addition to any other right of access given to LESSOR

pursuant to the terms of this LEASE, at LESSOR’S expense, enter upon the LEASED

PROPERTY with one or more engineers and/or architects of LESSOR’S selection to

determine the course and degree of completion of the permitted changes,

alterations and

 

6

 

improvements and

its compliance with the plans approved by LESSOR and the terms and conditions

of this LEASE.

 

9.10                           Anything

hereinabove contained to the contrary notwithstanding, nothing contained herein

shall be construed to be a consent by LESSOR to the placing of any lien against

the fee interest in the LEASED PROPERTY or LAND and/or BUILDING.

 

9.11                           Upon

completion of the permitted changes, alterations and improvements, the LESSEE

shall deliver to LESSOR professional as built plans of same, sealed by a

licensed architect.

 

9.12                           LESSEE

shall pay to LESSOR, within ten (10) days after demand, all reasonable out of

pocket charges or expenses LESSOR may incur in reviewing plans, permits,

contracts or similar items or inspecting the work in progress and as completed,

including reasonable fees of architects, engineers and attorneys, regardless of

whether LESSOR’S consent to any proposed work is obtained.

 

TENTH.- PARK TENANT ASSOCIATION.

 

LESSEE understands that it must be a member of the

Property’s Tenant Association and that he must pay a fee which currently is

equivalent to One Thousand Dollars ($1,000.00) currency of the United States of

America, per year, in quarterly payments, payable directly to Parque Industrial

Tecate.

 

ELEVENTH.- INSURANCE.

 

11.1                           LESSEE,

at LESSEE’S expense, shall maintain in force and effect:

 

(a)                                  All

risk insurance covering the Building and any other buildings, improvements and

building equipment now or hereafter on the Land and all personal property

appertaining thereto and LESSEE equipment and personal property (including

articles removed from the LEASED PROPERTY for repair) against loss or damage by

fire and such risks as are customarily included in all risk coverage policies

covering property in the community in which the LEASED PROPERTY are situated

(including earthquake coverage) in an amount equal to 100% of the full

replacement value of said buildings, improvements, building equipment and

personal property (but in no event less than (1)$2,000,000 U.S. Dollars for

buildings and improvements, and (2) $2,000,000 U.S. Dollars for equipment

and personal property) with an inflation guard endorsement, or the amount

required under any mortgage covering the LAND to which this LEASE is subject,

whichever is greater.  Notwithstanding

the above, LESSEE may self-insure for earthquake insurance coverage

specified above.  If LESSEE self insures

as described herein, then, for purposes of Article 12 below, any loss of damage

to any buildings and improvements and building equipment and all personal

property appertaining thereto and LESSEE’S equipment and personal property, or

any additions or improvements thereto or the contents thereof that would have

been covered by the earthquake insurance required to be carried hereunder shall

be deemed covered by and recoverable by LESSEE under valid and collective

policies of insurance;

 

(b)                                 Rent

insurance in a face amount not less than the amount of the rent under this

LEASE against loss resulting from any of the risks and hazards required to be

covered by insurance under all of the other provisions of this Section;

 

(c)                                  Intentionally

Omitted;

 

(d)                                 Insurance

against loss or damage by explosion of steam boiler, pressure vessels or

similar apparatus with such limits as from time to time may be reasonably

required by LESSOR but not less than $1,000,000 U.S. Dollars per occurrence

and; boiler, machinery, rental income coverage equal to rent for one year;

 

(e)                                  Such

other and additional insurance and in such amounts as at the time customarily

is carried with respect to buildings, improvements and building equipment and

personal property

 

7

 

similar in character,

general location, use and occupancy to the buildings, improvements and building

equipment and personal property then on the LAND; and

 

(f)                                    Such

other or additional insurance and in such amounts as may be required under

any mortgage to which this LEASE is subject.

 

11.2                           The

words “full replacement value,” as used in Sections 11.1(a), shall mean

the cost of actual replacement without depreciation (excluding foundations,

footings and excavation costs below the lowest basement floor, and cost of

underground flues, pipes or drains) and the full replacement value shall be

determined from time to time, at LESSOR’S request, not more frequently than

once every three years, by one of the insurers or by an architect, engineer,

contractor or appraiser selected by LESSEE, at LESSEE’S expense, and approved

by LESSOR.  No omission by LESSOR to

request such determination shall relieve LESSEE of any of LESSEE’S obligations

under this Section.

 

11.3                           LESSEE

shall not carry any separate insurance of the same character required under

this Section unless LESSOR and the holder of any mortgage to which this LEASE

is subject shall be named as an insured with loss payable as herein

provided.  LESSEE shall promptly notify

LESSOR of the issuance of any such separate insurance and shall deliver the

policies and certificates as provided in Section 11.5.

 

11.4                           LESSEE,

at LESSEE’S expense, shall maintain for the mutual benefit of LESSOR and

LESSEE, comprehensive general public liability insurance (including an

endorsement for (a) personal injury coverage; (b) broad form hold harmless

clause; (c) notice and knowledge of occurrence clause; (d) unintentional errors

and omissions clause; and also including, without limitation, coverage for

explosion and, (if the LEASED PROPERTY include any elevator, elevator liability

and elevator collision) against claims for personal injury, death or property

damage occurring in, on or about the LEASED PROPERTY (including, without

limitation, personal injury, death or property damage resulting directly or

indirectly from any change, alteration, improvement or repair) with such limits

as LESSOR, from time to time, reasonably may require but not less than

$1,000,000 U.S. Dollars in the event of death or personal injury to any one

person and not less than $2,000,000 U.S. Dollars in the event of death or

personal injury to any number of persons in one accident and of not less than

$1,000,000 U.S. Dollars for property damage. 

Such coverage may be effected by an umbrella policy above the basic

coverage provided by comprehensive general public liability insurance coverage.

 

11.5                           The

insurance required under this Article shall be effected by valid and

enforceable policies issued by insurance companies of recognized responsibility

authorized and licensed to do business in the country of Mexico and which have

received at least an A rating from A.M. Best & Co. at the time such policies

are issued.

 

11.6                           Upon

the Lease Starting Date and thereafter, not less than 30 days prior to the

expiration date of the expiring policies theretofore furnished pursuant to this

Article, originals of such policies and renewal policies, as the case

may be, shall be delivered by LESSEE to LESSOR, with proof of payment

reasonably satisfactory to LESSOR of the respective premiums thereunder.

 

11.7                           All

policies of insurance required under Sections 11.1 and 11.4 shall name

LESSEE as the insured and LESSOR and a holder of any mortgage covering the LAND

as a loss payee or an additional insured, as their interests

may appear.  Each policy of

insurance required under this Article, to the extent obtainable, shall (a) contain

an agreement by the insurer that it will not be canceled or modified without at

least 30 days’ prior written notice sent by registered or certified mail,

return receipt requested, to LESSOR and (except for rent insurance) to the

holder of any mortgage covering the LAND; and (b) provide that no act or

omission of LESSEE or any sublessee shall result in a forfeiture of such

insurance.

 

11.8                           The

loss, if any, under policies of insurance required under Section 11.1

shall be adjusted by and paid to LESSOR (subject to the provisions of

Sections 12.3 and 12.4) if not required to be paid to the holder of any

mortgage covering the LAND.  All

deductibles payable under the insurance listed herein shall be paid by LESSEE.

 

8

 

11.9                           Upon

termination of this LEASE, the premiums on all transferable insurance policies

provided for in this Article, then in force, shall be apportioned between

LESSOR and LESSEE as of the date of termination, but only to the extent such

insurance policies are actually transferred to LESSOR and provided that LESSOR

shall not be required to make any apportionment payment to LESSEE if LESSEE is

then in default under this LEASE.

 

11.10                     If any

liability claim shall be asserted against LESSEE or the LEASED PROPERTY,

LESSEE, promptly after having knowledge thereof, will notify LESSOR of such

claim.

 

TWELFTH.- LOSS AND DESTRUCTION.

 

12.1                           In case

of damage to or total or partial destruction (collectively a “Casualty”) of the

Building or any other  building,

improvements or building equipment now or hereafter on the LAND, and such

Casualty renders all or a substantial portion of the LEASED PROPERTY

untenantable, and in LESSOR’S reasonable opinion it would not be economically

feasible to repair or restore the LEASED PROPERTY, then LESSOR may terminate

this LEASE upon written notice to the LESSEE within 90 days after the

Casualty.  In addition, LESSOR, by

notice to LESSEE within 90 days after the date of the Casualty, shall have the

right to terminate this LEASE if: 

(1)  the LEASED PROPERTY have been materially damaged and there is

less than 2 years of the Term remaining on the date of the Casualty;

(2) any mortgage to which this LEASE is subject  requires that the insurance proceeds be applied to the payment of

the mortgage debt.

 

12.2                           If this

LESSEE is not terminated, LESSOR shall proceed with reasonable promptness to

repair and restore the LEASED PROPERTY, subject to reasonable delays for

insurance adjustments and delays caused by matters beyond LESSOR’S reasonable

control, and also subject to zoning laws and building codes then in effect.

LESSOR shall have no liability to LESSEE, and LESSEE shall not be entitled to

terminate this LEASE (except as hereinafter provided) if such repairs and

restoration are not in fact completed within the time period estimated by

LESSOR.  However, if the LEASED PROPERTY

are not repaired or restored within eighteen (18) months after the date of the

Casualty (“Outside Completion Date”), then either party may terminate this

LEASE by written notice to the other party not later than thirty (30) days

after the expiration of the Outside Completion Date, but prior to substantial

completion of repair or restoration. 

LESSOR and LESSEE agree that the Outside Completion Date shall be

postponed by the number of days the repair or restructuring work is delayed due

to force

majeur and shall take into effect any LESSEE Delays.  As used herein “Lessee Delay” shall mean any

delays resulting from the acts or omissions of LESSEE, its employees, agents

and contractors or their respective contractors or vendors, including, without

limitation, and LESSEE’S failure to comply with any of its obligations under

this LEASE.

 

12.3                           Whether

or not this LEASE is terminated as provided herein or pursuant to applicable

Mexican law, upon notice from LESSOR, LESSEE shall assign to LESSOR (or to any

party designated by LESSOR) all insurance proceeds payable to LESSEE under

LESSEE’S insurance required under Section 11.1(a); provided if the estimated

cost to repair the LEASED PROPERTY exceeds the amount of insurance proceeds

received by LESSOR from LESSEE’S insurance carrier, the excess cost of such

repairs shall be paid by LESSEE to LESSOR prior to LESSOR’S commencement of

repairs.  Within 15 days of demand,

LESSEE shall also pay LESSOR for any additional excess costs that are

determined during the performance of the repairs.  No repair or restoration work shall be undertaken by LESSOR until

such deficiency shall have been paid to LESSOR or until LESSEE shall have

delivered to LESSOR a surety bond in form and amount issued by a surety company

of recognized responsibility or such other security, as may be

satisfactory to LESSOR (for the amount of the deficiency only) conditioned upon

and securing the completion of and full payment for the restoration and repair

work.  Upon the expiration or sooner

termination of this LEASE pursuant to this Article, all insurance proceeds then

held by LESSOR and all insurance proceeds payable by insurance carriers but

still in the hands of such carriers shall become the property of LESSOR.  However, the foregoing shall in no way limit

or reduce LESSEE’S obligations on account of any deficiency with respect the

amount of such proceeds required to so restore, replace, repair or alter the

same.

 

9

 

12.4                           Any net

proceeds of insurance under the policy required under Section 11.1(b)

shall be held by LESSOR and applied by LESSOR against payment of the rent as

they become due (any deficiency to be paid by LESSEE) until the repair and

restoration work is completed and fully paid for, at which time the balance of

such proceeds, if any, remaining after such application shall be paid to

LESSEE, provided LESSOR has not given notice of default under this LEASE and

the applicable grace period, if any, expired and provided further that such

excess shall be paid to LESSEE if and when such default has been cured within

such applicable grace period. 

Notwithstanding the above, if this LEASE is terminated as provided herein

or pursuant to applicable Mexican law, all net proceeds of insurance under the

policy required under Section 11.1(b) shall be paid to LESSOR, provided that if

such proceeds do not equal one year’s rent payments, LESSEE shall pay LESSOR

any deficiency.

 

12.5                           Notwithstanding

anything to the contrary herein set forth, (a) LESSOR shall have no duty

pursuant to this Article 12 to expend for any repair or restoration amounts in

excess of insurance proceeds paid to LESSOR and available for repair or

restoration; (b) LESSEE shall not have the right to terminate this LEASE

pursuant to this Article 12 if the Casualty was caused by the act or neglect of

LESSEE or its agents, employees or invitees; and (c)  LESSOR shall not be liable for any inconvenience to LESSEE, or

injury to LESSEE’S business resulting in any way from the Casualty or the

repair thereof.

 

12.6                           There

shall be no abatement or reduction of rent payable by LESSEE under this LEASE

nor any diminution of any of LESSEE’S obligations under this LEASE by reason of

any such damage or destruction, nor shall LESSEE be entitled to surrender

possession of the LEASED PROPERTY by reason thereof unless this LEASE is

terminated pursuant to Section 12.1; and LESSEE hereby waives all rights

to such relief now or hereafter conferred upon it by any law now in existence

or hereafter enacted.

 

THIRTEENTH.- VACATING THE PROPERTY.

 

13.1                           On the

last day of the LEASE TERM or on the last day of any extension, or in case of

advance termination, LESSEE must surrender the possession of the LEASED

PROPERTY to LESSOR without delay leaving such property in adequate conditions

to be used in the same condition as delivered at the Commencement Date, normal

wear and tear excepted.  For such

purposes, 120 days prior to the termination of the LEASE TERM, the parties will

jointly inspect the LEASED PROPERTY in order to determine the conditions and

state of the LEASED PROPERTY.

 

13.2                           All

signs, inscriptions, canopies and analogous objects set up by LESSEE, must be

removed by LESSEE at the expiration of this LEASE.

 

13.3                           The

furniture and equipment installed by LESSEE shall continue being owned by

LESSEE and must be removed by LESSEE before the expiration of this LEASE and

LESSEE shall, for its own account, repair any damage resulting from the above

mentioned installation or removal.

 

FOURTEENTH.- SURRENDER OF THE LEASED PROPERTY.

 

LESSEE acknowledges that

possession of the LEASED PROPERTY must be surrendered to LESSOR at the

expiration or sooner termination of the LEASE TERM.  LESSEE agrees to indemnify and save LESSOR harmless against all

costs, claims, loss or liability resulting from delay by LESSEE in so

surrendering the LEASED PROPERTY, including, without limitation, any claims

made by any succeeding tenant founded on such delay.  LESSEE agrees that if possession of the LEASED PROPERTY is not

surrendered to LESSOR upon the date of the expiration or sooner termination of

the LEASE TERM, then LESSEE shall pay to LESSOR as liquidated damages for each

month and for each portion of any month during which LESSEE holds over in the

LEASED PROPERTY after the expiration or sooner termination of the LEASE TERM, a

sum equal to one and one-half (1-1/2) times the aggregate rent which was

payable under this LEASE during the last month of the LEASE TERM hereof.  Nothing herein contained shall be deemed to

permit LESSEE to retain possession of the LEASED PROPERTY after the expiration

or sooner termination of the LEASE TERM. 

The aforesaid provisions of this Article shall survive the expiration or

sooner termination of the LEASE TERM.

 

10

 

FIFTEENTH.- ACCESS TO THE LEASED PROPERTY BY LESSOR.

 

15.1                           LESSEE

shall allow LESSOR and its authorized representatives to enter the LEASED

PROPERTY at any reasonable time in order to inspect and perform any necessary

LESSOR repairs or LESSEE repairs, if LESSEE has not performed such repair

within 10 days after it has received written notice of the need therefor from

LESSOR.  Notwithstanding the above,

LESSOR may not perform a repair if a repair is of a nature that it will

require more than 10 days to complete and if LESSEE begins and is diligently

pursuing such a repair within the 10 day period after LESSEE has received

written notice.

 

15.2                           Nothing

in this Clause shall be construed as an obligation of LESSOR to make such works

and therefore, it does not constitute a waiver of the rights contained in this

LEASE in case of non-compliance by LESSEE in regard to conducting such works.

 

15.3                           In the

event LESSEE decides not to renew this LEASE, LESSOR shall be entitled to enter

the LEASED PROPERTY during working hours and days in order to show the LEASED

PROPERTY to potential lessees, notifying LESSEE thereof 24 hours in advance and

without it causing any inconveniences to the LESSEE.

 

SIXTEENTH.- GUARANTEES.

 

16.1                           Simultaneously

with the execution of this LEASE, LESSEE shall deliver to LESSOR the amount of

$26,491.53 dollars, currency of the United States of America as deposit, in

order to guarantee the fulfillment of the obligations acquired under this

LEASE.  Such deposit shall be reimbursed

at the expiration of this LEASE, subject to the deductions resulting from

accounts payable, non-transferred public utility services or necessary expenses

for repairs made in the LEASED PROPERTY.

 

16.2                           Simultaneously

with the execution of this LEASE, LESSEE shall obtain and deliver to the

satisfaction of LESSOR, a satisfactory guarantee granted by Quixote

Corporation, a Delaware corporation, in regard to the rent payments and all

other obligations of LESSEE under this LEASE.

 

SEVENTEENTH.- SUBORDINATION AND SALE.

 

LESSEE agrees to subordinate this LEASE (including any

extension thereof) to any mortgage or lien encumbering the LEASED PROPERTY now

or in the future, with the understanding that the holder of any such mortgage

or lien (“Mortgagee) agrees in not to interfere with the possession and other

rights of LESSEE under this LEASE during the time in which LESSEE continues

fulfilling its obligations under this LEASE. 

In the case the Mortgagee acquires the title of ownership of the LEASED

PROPERTY by auction or any other means, or should the LEASED PROPERTY be sold

to a third party, the new owner should accept that LESSEE is a party to this

LEASE and to execute the obligations of LESSOR under the terms of this LEASE

and LESSEE shall acknowledge such creditor or person acquiring the ownership of

the LEASED PROPERTY.  LESSEE and LESSOR

agree to hold all necessary acts to execute the agreements contained in this

clause.

 

EIGHTEENTH.- NON-COMPLIANCE.

 

Incurring into any of the following shall constitute

non-compliance and default by LESSEE:

 

18.1                           LESSEE

fails to pay rent when due and such failure continues for 5 days after written

notice from LESSOR.

 

18.2                           LESSEE

fails to fulfill any covenant, condition or provision of this LEASE, when such

failure continues for a 30 day period after LESSEE receives the corresponding

written notice from LESSOR; or if the nature of the non-compliance were such it

were impossible to compensate it by means of just paying moneys, and more than

a 30 day period were required for its repair, LESSEE shall not be in

non-compliance of such obligations if LESSEE fails to commence the cure of such

failure within the 30 day period and diligently continuing therewith.

 

11

 

18.3                           (a)                                A

complaint filed by or against LESSEE demanding to be declared insolvent for

effects of bankruptcy, provided such claim is superseded within a period of 30

(thirty) days after it has been filed.

 

(b)                                 The

designation of an auditor or controller to take possession of all the

properties of LESSEE or a substantial part thereof.

 

(c)                                  The

attachment, execution or any other judicial act against all of the properties

of LESSEE or a substantial part thereof.

 

(d)                                 In

the event LESSEE violates the contamination regulations as well as the

environmental norms applicable in Tecate, Baja California, Mexico.

 

18.4                           In case

of any violation by LESSEE of what has been stipulated herein, such as it is

defined under the foregoing paragraph 18.1, besides having other rights contemplated

by applicable law, LESSOR may terminate this LEASE 10 days after LESSEE

has received written notice of the termination by LESSOR.  If LESSOR takes possession of the LEASED

PROPERTY by legal means of through any lawfully established notification, this

LEASE shall be deemed terminated and LESSOR shall conduct its best effort to

lease the LEASED PROPERTY or any part thereof, under the terms and conditions

and for the rent it may deem reasonable, having the right to make minor

changes and repairs in the LEASED PROPERTY.

 

18.5                           Rent

payments excluded, in no case whatsoever shall it be considered that LESSOR or

LESSEE have not complied with any of their obligations, if they have fulfilled

them within a 30 day period as of the date on which the corresponding notice in

writing of LESSEE or LESSOR, as the case may be, demanding such

fulfillment, has been received.

 

NINETEENTH.- INDEMNITY.

 

Except to the extent

caused by the negligence or willful misconduct of LESSOR, LESSEE shall

indemnify and save LESSOR, its agents, employees, directors and officers

(collectively “agents”) harmless against any liability to and all claims by or

on behalf of any person, firm, governmental authority, corporation or entity

for personal injury or property damage ), arising:

from the use or

management by LESSEE of the LEASED PROPERTY, or from any work or thing

whatsoever done or omitted to be done thereat by LESSEE, its agents,

contractors, employees, invitees, or patrons, or from any accident thereat, and

from any breach or default by LESSEE of and under any of the terms, covenants

and conditions of this LEASE.

 

LESSEE also shall

indemnify and save LESSOR and its agents harmless against all out of pocket

costs, reasonable counsel fees, expenses and penalties incurred by LESSOR and

its agents in connection with any such liability or claim.  If any action or proceeding shall be brought

against LESSOR and/or its agents in connection with any such liability or

claim, LESSOR shall notify LESSEE thereof and LESSEE shall defend such action

or proceeding, at LESSEE’S expense, by counsel reasonably satisfactory to

LESSOR or, at LESSOR’S option, LESSOR may retain its own counsel for such

defense and LESSEE shall reimburse LESSOR and its agents for the reasonable

expense incurred by LESSOR and its agents in such regard.

 

TWENTIETH.- RIGHT OF FIRST REFUSAL.

 

20.1                           LESSOR shall not, at any time prior to the expiration

of the LEASE TERM, or any extension thereof, sell the LEASED PROPERTY, or any

interest therein, without first giving written notice thereof to LESSEE, which

notice is hereinafter referred to as “Notice of Sale”.

 

20.2                           The Notice of Sale shall include the exact and complete terms of the

proposed sale and shall have attached thereto a copy of the bona fide offer and

counteroffer, if any, duly executed by both LESSOR and the prospective

purchaser.

 

20.3                           For a period of 15 calendar days after receipt by LESSEE of the Notice of

Sale, LESSEE shall have the right to give written notice to LESSOR of LESSEE’S

exercise of LESSEE’S right to purchase the

 

12

 

LEASED PROPERTY, the interest therein proposed to be sold, or the

property of which the LEASED PROPERTY is a part, on the same terms, price and

conditions as set forth in the Notice of Sale. 

In the event that LESSOR does not receive written notice of LESSEE’S

exercise of the right herein granted within said 15 day period, there shall be

a conclusive presumption that LESSEE has elected NOT to exercise LESSEE’S right

hereunder, and LESSOR may complete the sale to the prospective purchaser,

on the same terms set forth in the Notice of Sale.

 

20.4                           In the event that LESSEE declines to exercise its right of first refusal

after receipt of the Notice of Sale, and, thereafter, LESSOR and the

prospective purchaser modify by more than 5%, (i) the sales price, or (ii) the

amount of down payment, or if there is a material change in any seller

financing offered, or in the event that the sale is not consummated within 180

days of the date of the Notice of Sale, then LESSEE’S right of first refusal

shall reapply to said transaction.

 

20.5                           In the event that LESSEE declines to exercise its right of first refusal

after receipt of the Notice of Sale, and, thereafter, the proposed transfer or

sale is not consummated, the LESSEE’S right of first refusal shall apply to any

subsequent transaction.  If, however,

said transfer or sale is, in fact, completed, then said right shall be

extinguished and shall not apply to any subsequent transactions.

 

20.6                           Notwithstanding the above, this right of first refusal is

intended to apply only to voluntary transfers involving third party

transferees.  This right of first

refusal shall not, therefore, apply: 

where the LEASED PROPERTY is taken by or sold to a governmental agency,

to inter-family or inter-ownership transfers, to transfers by LESSOR to a trust

created by LESSOR, or, if LESSOR is a trust, to transfers to a trust

beneficiary.

 

20.7                           This right of first refusal cannot be exercised:  (i) during the period commencing with the

giving of any notice of default and continuing until said default is cured,

(ii) during the period of time any rent is unpaid (without regard to

whether notice thereof is given LESSEE), (iii) during the time LESSEE is in

default of this LEASE, or (iv) in the event that LESSEE has been given 3 or

more notices of default, whether or not the defaults are cured, during the 12

month period immediately preceding the exercise of the right of first refusal.

 

TWENTY-FIRST.- PEACEABLE USE.

 

LESSOR agrees that LESSEE shall be entitled to enjoy

the peaceable use of the LEASED PROPERTY during the LEASE TERM without any

interference, intermission or without being bothered by LESSOR, any other

tenant of the industrial park or any other third party, provided LESSEE pays

the rent and fulfills what has been set forth herein.

 

TWENTY-SECOND.- NOTICES.

 

In case it were necessary or desirable for any of the

parties to notify or to demand something of the other party in accordance with

the provisions of this LEASE, such notification or demand shall be made

personally or by certified or registered mail, with acknowledgment or receipt,

addressed to the domicile appearing below, until such address is modified and

notified by the corresponding party.

 

 

	

  LESSOR

  	

   

  	

  LESSEE

  
	

  INTERSECTION DEVELOPMENT

  CORPORATION,

  S. A. DE C. V

  	

   

  	

  QUIXOTE TRANSPORTATION SAFETY

  MEXICO, S. DE R. L. DE C. V.

  
	

  3 Rim Ridge

  NewPort, California 92657

  Tel: (249) 219-0101

  Fax: (249) 219-0109

  Attention:  Walter Rogers

  	

   

  	

  c/o Quixote

  Transportation Safety, Inc.

  One East Wacker Drive, Suite 3000, Chicago IL  60601

  Tel: (312) 467-6755

  Fax: (312) 467-0562

  

 

13

 

TWENTY-THIRD.- ENTIRE AGREEMENT.

 

This LEASE and its attachments contain all the

covenants and conditions established between the parties with respect to the

LEASED PROPERTY.  Consequently, the

parties acknowledge that after undersigning this LEASE, all other previous

agreements shall be duly recorded and fulfilled, with the exception of those contemplated

herein.

 

If any term, agreement, condition or clause hereof or

its application in regard to any individual or circumstance were to be declared

null, void or undemandable by a competent court, the remaining clauses,

agreements and conditions or their application in regard to any individual or

circumstance shall remain in force.

 

TWENTY-FOURTH.- AMENDMENTS.

 

This LEASE may not be orally modified, nor

modified in any way other than by a written agreement duly undersigned by the

legal representatives of the parties hereto.

 

TWENTY-FIFTH.- INTENTIONALLY OMITTED.

 

TWENTY-SIXTH.- LANGUAGE.

 

This LEASE is entered into in English and Spanish

versions. The parties agree that for purposes of interpretation or in the event

of any conflict, the English version shall prevail.

 

TWENTY-SEVENTH.- APPLICABLE LAW AND

JURISDICTION.

 

In case of controversies arising from this LEASE, the

parties expressly agree to subject to the applicable laws of the State of Baja

California, Mexico, and the courts of the city of Tecate, Baja California,

Mexico, expressly waiving any other venue which could correspond to them due to

their present or future domiciles, or due to any other reason.

 

[Signature page to

follow]

 

14

 

Consequently, due to the foregoing, the parties execute

and undersign this LEASE on the date and places provided below.

 

 

	

   

  	

   

  
	

  LESSOR

  INTERSECTION DEVELOPMENT CORPORATION,

  S. A. DE C. V. .

  	

  LESSEE

  QUIXOTE TRANSPORTATION SAFETY MEXICO, S.

  DE R. L. DE C. V.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  /s/

  Greg Odion

  	

   

  	

   

  	

  /s/

  Leslie J. Jezuit

  	

   

  
	

  By:

  	

  Greg Odion

  	

   

  	

  By:

  	

  Leslie J. Jezuit

  	

   

  
	

  Date:

  	

   

  	

   

  	

  Date:

  	

   

  	

   

  
	

  Place:

  	

  Santa Fe

  Springs, CA, USA

  	

   

  	

  Place

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WITNESSED BY:

  	

   

  	

   

  	

  WITNESSED BY:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  /s/

  Diana Grootonk

  	

   

  	

   

  	

  /s/

  Christopher J. Rosette

  	

   

  
	

  Name:

  	

  Diana Grootonk

  	

   

  	

  Name:

  	

  Christopher J.

  Rosette

  	

   

  
	

  Date:

  	

  05/20/03

  	

   

  	

  Date:

  	

   

  	

   

  
	

  Place:

  	

  Los Angeles

  	

   

  	

  Place:

  	

   

  	

   

  

 

15

 

EXHIBIT A

 

[to be provided by

LESSEE]

 

LAX1 #249712 v1

 

16Exhibit
10.9

 

MYERS
PEDESTAL SUPPLY

AND
TRANSITION AGREEMENT

 

This
MYERS PEDESTAL SUPPLY AND TRANSITION AGREEMENT (this “Agreement”) is made May 16, 2003
between GREEN LIGHT ACQUISITION COMPANY (“Buyer”), and U.S. TRAFFIC CORPORATION and MYERS/NUART
ELECTRICAL PRODUCTS, INC. (collectively, “Seller”).

 

R E C I T A L S

 

A.                                   Seller
and Buyer have entered into an Asset Purchase Agreement bearing the date hereof
(the “Asset Purchase Agreement”);

 

B.                                     Pursuant
to the Asset Purchase Agreement, Buyer has purchased substantially all of the
assets of the Business (as defined in the Asset Purchase Agreement) and Seller
has retained its Myers power pedestal products segment (the “Pedestal Business”);

 

C.                                     The
products of the Pedestal Business are currently being manufactured by employees
at the Santa Fe Springs, California facility that is part of the Business;

 

D.                                    The
Parties have agreed that the Buyer will continue to manufacture Myers Pedestal
products for Seller until Seller can relocate the Pedestal Business on the terms
and conditions set forth herein;

 

NOW,
THEREFORE, in consideration of the premises and mutual promises made herein,
the Parties agree as follows:

 

1.                                          Definitions.  For purposes of this Agreement, the
following terms have the specified meaning:

 

a.                                   “Confidential Information” means
any information either party possesses or learns about the Pedestal Business
which is not known to the public.

 

b.                                  “Facility” means the
real property located in Santa Fe Springs, California which is used in the
conduct of the Business.

 

c.                                   “Pedestal Business Machinery and
Equipment” means the assets listed on Schedule 1(c).

 

d.                                  “Pedestal Business Inventory”
means inventory of raw materials purchased specifically for the manufacture of
products of the Pedestal Business.

 

e.                                   “Term” means the time
period commencing on the date hereof and expiring on the later of
December 31, 2003 or the date the Pedestal Business vacates Buyer’s
facilities, but in no event later than April 1, 2004.

 

 

2.                                          Facilities.  Buyer agrees that Seller may conduct
the Pedestal Business in Buyer’s facilities at Santa Fe Springs rent-free until
January 31, 2004.  In the event
Seller is unable to vacate the facilities by January 31, 2004, Seller
may holdover in the facility on a month-to-month basis until March 31,
2004 by paying Buyer a sum of $150,000 on the first day of each month Seller
holds over.

 

3.                                          Employees.  Seller has retained certain salaried
employees who will handle sales, engineering, and maintaining documentation
necessary to satisfy Buyer and Seller during the Term.  During the Term, such employees
may occupy such offices at the Facility as determined by Buyer.  Buyer shall provide such employees with
customary office services, including telephone, fax, photocopy, computer and
cleaning services, all at no charge to Seller, in a manner comparable to that
which was provided by Seller during its conduct of the Business at the
Facility.  It is understood, however,
that the tangible assets used by such employees at the Facility are the
property of Buyer.

 

4.                                          Operation
of the Pedestal Business. 
During the Term, Buyer will operate the Pedestal Business for Seller by
manufacturing product and purchasing necessary inventory, all in consultation
with Seller.  To operate the Pedestal
Business during the Term, Buyer will use its hourly employees, the Pedestal
Business Inventory, and Pedestal Business Machinery and Equipment, as well as
Buyer’s own inventory.  Buyer will sell
and invoice Pedestal Business product to Seller on a fully costed bill of
materials basis, without inclusion of any corporate allocation or burden for
labor or  material or other overhead
charges.

 

During the Term, Buyer
will maintain all Pedestal Business Machinery and Equipment, and
Seller-salaried employees will conduct all Pedestal Business customer contacts,
collect Pedestal Business receivables, and cause payment of Pedestal Business
payables in the ordinary course on behalf of Seller.

 

5.                                          Termination
of Arrangement.

 

a.                                   The
Parties will agree which Buyer hourly employees Seller will seek to employ when
the Pedestal Business relocates.

 

b.                                  Upon
expiration of the Term, Buyer will transfer to Seller, without charge, good and
usable raw materials inventory having an aggregate value which is equal to the
Pedestal Business Inventory which was transferred to Buyer pursuant to the
Asset Purchase Agreement.

 

c.                                   The
Parties will cooperate in the transition of the Pedestal Business accounting
and records transfer to Seller’s new facility.

 

d.                                  When
Seller vacates the facilities, Seller will pay all costs incurred in connection
with the removal of the Pedestal Business Machinery and Equipment and the
Pedestal Business inventory from the facilities.  Buyer employees will make all simple electrical disconnections from
Pedestal Business Machinery and Equipment.

 

2

 

6.                                          Assignment
of Rights.  This Agreement shall
not confer any rights or remedies upon any Person other than the Parties, their
respective successors and permitted assigns. 
This Agreement shall be binding upon and inure to the benefit of the
Parties named herein and their respective successors and permitted
assigns.  No Party may assign
either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party; provided, however, that
(x) Buyer may (i) assign any or all of its rights and interests hereunder
to one or more of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of which cases
Buyer nonetheless shall remain responsible for the performance of all of its
obligations hereunder).

 

7.                                          Confidentiality.  Seller and Buyer will treat and hold as such
all of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the other Party or destroy, at the request and option of the other Party, all
tangible embodiments (and all copies) of the Confidential Information which is
in its possession.  In the event that
either Party is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any Confidential
Information, such Party will notify the other Party promptly of the request or
requirement so that the other Party may seek an appropriate protective
order or waive compliance with the provisions of this Section 7.  If, in the absence of a protective order or
the receipt of a waiver hereunder, either Party  is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt,
that such Party may disclose the Confidential Information to the tribunal;
provided, however, that such Party shall use its best efforts to obtain, at the
request of the other Party, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as the other Party shall designate.  The foregoing provisions shall not apply to
any Confidential Information which is generally available to the public
immediately prior to the time of disclosure.

 

8.                                          Headings.  The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.

 

9.                                          Notices.  All notices, requests demands, claims, and
other communications hereunder will be in writing.  Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given if sent by telecopier (with written
confirmation of receipt) (and a copy is mailed, by registered or certified
mail, return receipt requested, postage prepaid), or if sent by a nationally recognized
overnight delivery service (with written confirmation of receipt in each case)
addressed to the intended recipient, as set forth below:

 

3

 

	
  If to Seller:

  	
   

  	
  U.S. Traffic
  Corporation/Myers Power Products, Inc.

  
	
   

  	
   

  	
  2000 Highland Avenue

  
	
   

  	
   

  	
  Bethlehem, Pennsylvania
  18020

  
	
   

  	
   

  	
  Attention:  Walter Rogers

  
	
   

  	
   

  	
  Facsimile: (610)
  868-8686

  
	
   

  	
   

  	
   

  
	
  Copy to:

  	
   

  	
  Altheimer & Gray

  
	
   

  	
   

  	
  Suite 4000

  
	
   

  	
   

  	
  10 S. Wacker Drive

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
   

  	
  Attention:  David W. Schoenberg

  
	
   

  	
   

  	
  Facsimile:  (312) 715-4987

  
	
   

  	
   

  	
   

  
	
  If to Buyer:

  	
   

  	
  Green Light Acquisition
  Company

  
	
   

  	
   

  	
  One East Wacker Drive

  
	
   

  	
   

  	
  Chicago, Illinois  60601

  
	
   

  	
   

  	
  Attention:  Leslie J. Jezuit

  
	
   

  	
   

  	
  Facsimile:  (312) 467-0197

  
	
   

  	
   

  	
   

  
	
  Copy to:

  	
   

  	
  Holland & Knight
  LLC

  
	
   

  	
   

  	
  30th Floor

  
	
   

  	
   

  	
  131 S. Dearborn Street

  
	
   

  	
   

  	
  Chicago, IL  60603

  
	
   

  	
   

  	
  Attention:  Anne Hamblin Schiave

  
	
   

  	
   

  	
  Facsimile:  (312) 578-6666

  

 

Any Party may send
any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless
and until it actually is received by the intended recipient.  Any Party may change the address to
which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Parties notice in the manner herein set
forth.

 

10.                                   Choice
of Law.  This Agreement shall be
governed by and construed in accordance with the substantive laws of the State
of Illinois without giving effect to any choice or conflict of law provision or
rule (whether of the State of Illinois or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Illinois.

 

11.                                   Amendment.  No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Buyer and Seller.  No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or

 

4

 

affect in any way any
rights arising by virtue of any prior or subsequent such occurrence.

 

12.                                   Severability.  Any term or provision of this Agreement that
is invalid or unenforceable in any circumstance in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other circumstance or in any other jurisdiction.

 

13.                                   Venue.  This Agreement has been executed and
delivered in and shall be deemed to have been made in Chicago, Illinois.  Seller and Buyer each agrees to the
exclusive jurisdiction of any state or Federal court within the City of
Chicago, with respect to any claim or cause of action arising under or relating
to this Agreement, and waives personal service of any and all process upon it,
and consents that all services of process be made by registered or certified
mail, return receipt requested, directed to it at its address as set forth in Section
9, and service so made shall be deemed to be completed when received.  Seller and Buyer each waives any objection
based on forum  non  conveniens and waives any objection to
venue of any action instituted hereunder. 
Nothing in this paragraph shall affect the right of Seller or Buyer to
serve legal process in any other manner permitted by law.

 

[Signature page to follow]

 

5

 

IN WITNESS WHEREOF, this Agreement has been
executed as of the date above written.

 

 

	
  GREEN LIGHT ACQUISITION COMPANY

  	
  U. S. TRAFFIC CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Leslie J. Jezuit

  	
   

  	
  By:

  	
  /s/ Gary J. Coury

  	
   

  
	
  Its:

  	
  President

  	
   

  	
  Its:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MYERS/NUART ELECTRICAL PRODUCTS,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Diana Grootonk

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  President

  	
   

  

 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]