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Exhibit 10.42    
  

 
 

ASSET PURCHASE AGREEMENT    
  

        This ASSET PURCHASE AGREEMENT (this "Agreement") is made as of August 23, 2002, by and among (1) Emerald Valley Kitchen, Inc., an Oregon
corporation whose principal office is located at 90472 Woodruff, Eugene, Oregon 97402 ("Emerald Valley"), and Mel Bankoff, an individual and president and majority owner of Emerald Valley ("Bankoff")
(Emerald Valley and Bankoff together, the "Sellers"), and (2) Monterey Pasta Company ("Buyer"), a Delaware corporation, whose principal office is located at 1528 Moffett Street, Salinas,
California 93905. 

        This
Agreement is made in conjunction with a Royalty Agreement and Employment Agreement of even date also made by and among the parties. 

        This
Agreement is made under the following circumstances: 

RECITALS:  

        A.    Sellers
are the owners of certain assets more particularly described below. 

        B.    Sellers
and Buyer desire that Buyer purchase and acquire from Sellers all of Sellers' respective rights, title and interest in such assets on the terms and conditions set
forth in this Agreement. 

        C.    Sellers
and Buyer agree that Buyer has the capital and resources to promote and expand Seller's business of creating, manufacturing and distributing organic food
products, and that the promotion and
expansion of organic food product sales is the primary reason for Seller's agreement to sell its business to Buyer. 

        D.    Sellers
and Buyer acknowledge that the improper disclosure or misuse of trade secrets and confidential information related to such assets would materially adversely
affect the assets, their transfer to Buyer, and Buyer's business subsequent to such transfer. 

        E.    In
order therefore to protect the value of such transfer for the benefit of Buyer, Sellers are willing to enter into certain covenants and agreements respecting the
confidentiality of such information. 

        THEREFORE,
in consideration of the mutual covenants, agreements, representations and warranties contained in this Agreement, the parties agree as follows: 

AGREEMENT:  

1.    PURCHASE AND SALE OF ASSETS 

        (a)    The Assets and Excluded Assets; Purchase Price.    Subject to all of the terms and conditions set forth in this
Agreement, at the Closing of the Agreement as defined below Buyer agrees to purchase from Sellers, and Sellers agree to sell, convey, assign and deliver to Buyer, all of Sellers' right, title and
interest in and to certain tangible and intangible property owned or used by Sellers (collectively the "Assets"). The total price to be paid for the Assets shall be $5,500,000 plus the cost of
accepted inventory as specified below, to be paid in cash at the Closing, provided that the total calculated purchase price to Sellers, including the cash consideration paid at Closing and the net
value of the Excluded Assets (as defined below) less liabilities of Emerald Valley at Closing other than the Lease described in subsection 1(c) below (the "Purchase price") shall not be less than
$6,000,000. The Assets and the estimated portion of the Purchase Price to be paid to Emerald Valley for each of them at the Closing are set forth below; all assets of Emerald Valley not listed below
are excluded from the sale to Buyer (the "Excluded Assets"). The Assets include: 

	(i)
	All
inventory of Emerald Valley acceptable to Buyer at book cost equal to $243,991 on the date of closing.

	(ii)
	All
equipment used in the business of Emerald Valley: $75,000.00. 

 

	(iii)
	All
trademark and trade name rights to incorporating the name "Emerald Valley Kitchen": $25,000.00.

	(iv)
	Recipes,
formulas and processing technology for Emerald Valley products: $25,000.00.

	(v)
	All
customer lists of Emerald Valley: $10,000.00.

	(vi)
	Non-competition
and confidentiality agreements set forth in section 6 below: $25,000.00.

	(vii)
	Goodwill:
$5,340,000.00. 

        (b)    Conditions to Payment.    Payment by Buyer of the purchase price of the Assets is conditioned upon the
satisfaction of the following conditions (the "Conditions to Payment") at the time of the Closing: 

	(i)
	All
representations and warranties of Sellers made herein shall be true and correct as if made at the closing.

	(ii)
	Sellers
shall have provided all necessary technology and know-how pertaining to the Assets. All recipes shall be provided to Buyer at the time of closing.

	(iii)
	There
shall have been no breach by Sellers of Sellers' covenants hereunder.

	(iv)
	Emerald
Valley shall have taken all steps required by applicable law to approve the Agreement. The Board of Directors of Buyer and shareholders of Emerald Valley shall have approved
the Agreement.

	(v)
	Sellers
shall have obtained all required approvals, consents and authorizations of third parties to the transaction.

	(vi)
	Buyer
and Sellers shall have entered into the Royalty Agreement and Employment Agreement referred to in the second paragraph hereof.

	(vii)
	Buyer
shall have completed a due diligence review of the Assets and business of Sellers satisfactory to Buyer in its sole discretion. 

        (c)    No Assumption of Liabilities; Lease.    Buyer does not assume
any liabilities and/or contracts associated with Sellers or any of the Assets, other than the existing building and land lease at 90472 Woodruff, Eugene, Oregon at its current terms (the "Lease"); any
future modifications of the Lease shall be mutually agreed to by Buyer and Bankoff. Any and all other liabilities and obligations of Sellers, or related to the Assets, shall remain the liabilities and
obligations of Sellers, and Sellers shall pay, perform or discharge such liabilities and obligations, and remain solely responsible for their payment and performance when due. 

        The
foregoing notwithstanding, Buyer agrees to honor Sellers' purchase orders for ingredients and supplies entered into in the ordinary course of Sellers' business for delivery after
Closing and which have not been included in inventory. Buyer also agrees to honor Sellers' sale orders for deliveries to Sellers' customers entered into in the ordinary course of Sellers' business in
accordance with the agreed upon terms. Buyer shall have the right to inspect Sellers' books and records prior to Closing relating to unfilled sales and purchase orders. 

        (d)    Taxes.    

	(i)
	Sellers
shall pay any and all of Sellers' federal, state and local taxes which result from the transactions contemplated by this Agreement, including all items of depreciation
recapture and investment tax credit recapture, all state or local sales or use taxes which may be due, and Sellers' share, prorated as of date of Closing, of state and local personal property taxes
pertaining to the Assets. 

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	(ii)
	Buyer
shall not be responsible for any business, occupation, withholding or similar tax, or any taxes of any kind with respect to the Assets or Sellers' business relating to the
period before the date of closing. 

        (e)    Additional Consideration.    Buyer agrees to pay additional consideration to the Sellers for the Assets as
follows: 

	(i)
	Pursuant
to the terms of the Royalty Agreement.

	(ii)
	For
the five years following Closing at the rate of 50% of excess actual Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") from the Organic Business Segment, that is, all organic product produced at the Emerald Valley facility in Eugene, Oregon, or its co-packer(s) ("Segment") above
each annual estimate provided in Exhibit "A" attached hereto. Sales of organic products produced at another packing plant pursuant to a production
contract using the Emerald Valley Kitchen's label shall be included in the Segment. For purposes of calculation, each of the first through fifth years after Closing will be examined as a discrete
period, with no accumulation of results from prior years. Each calculation will take place within 30 days after the end of each such 12 month period and any payment due will be payable
within ten days after the calculation date. For purposes of measurement, the first 12 month period will begin August 26, 2002, the first day of Buyer's ninth accounting period and will
end with the last day of the Buyer's accounting period 52 weeks afterward. Future measurement periods beyond the first year calculation will be based on the Buyer's 52 or 53 week accounting cycle as
it varies from time to time. 

2.    CLOSING 

        (a)    Time and Place.    The closing of the sale of the Assets shall take place August 23, 2002 at 90472
Woodruff, Eugene, Oregon 97402, upon the satisfaction of the Conditions to Payment (the "Closing"). Upon satisfaction of the Conditions to Payment, the Buyer shall pay to Sellers the Purchase Price
specified in subsection 1(a). 

        (b)    Brokers' Fees.    Buyer shall be responsible for payment of the fees of Monterey Bay Corporate Development.
Sellers shall be responsible for payment of the fees of MergeWest Capital, LLC. Except for such fees, Sellers and Buyer, and each of them, hereby represent that they have not dealt with any broker or
salesperson in connection with this transaction and no commission is payable or shall be paid as a result of this Agreement. Sellers shall indemnify, defend, and hold Buyer, and Buyer shall indemnify,
defend and hold Sellers, free and harmless from any liability for any claims for commissions, referral fees, or finder's fees asserted by any third party with respect to the Agreement. 

3.    TERMINATION OF AGREEMENT 

        (a)    This
Agreement shall terminate automatically, unless otherwise agreed to in writing by the parties, in the event the Conditions to Payment are not satisfied and the
Closing has not occurred, on or before August 23, 2002. 

        (b)    In
the event of a termination of this Agreement as provided above, neither Buyer nor Sellers thereafter shall have any responsibility under this Agreement to the other
except the duty to maintain confidentiality of information exchanged by the parties, and any documents or other things delivered by any party that are in the possession of another party shall be
immediately returned. 

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4.    REPRESENTATIONS AND WARRANTIES OF SELLERS 

        Sellers
represent and warrant to Buyer as follows: 

        (a)    Ownership of Assets.    Sellers have good and marketable title to the Assets, including any contract rights
included therein, subject to no lien, third party right or claim, charge, security interest, liability, obligation, restriction, encumbrance or title defect of any kind, and all right, claim, title
and interest in and to the Assets is being sold, assigned, transferred and conveyed to Buyer effective as of the Closing, free of any and all such interests. Except as provided in this Agreement,
Sellers have full power and authority to sell and transfer the Assets without the consent or approval of any other person or authority, and, subject to the provisions of this Agreement, will transfer
the Assets to Buyer at the Closing free of liens, encumbrances, restrictions or adverse claims or interests. 

        (b)    Organization and Authority.    Emerald Valley is a corporation duly organized, validly existing and in good
standing under the laws of Oregon. Sellers have all necessary power and authority to own, use and convey the Assets. 

        (c)    Enforceability.    This Agreement and any documents referenced in it to be delivered by Sellers shall be duly
executed and, when delivered as provided in this Agreement: (i) will constitute the legal, valid and binding obligations of Sellers, enforceable in accordance with their respective terms;
(ii) do not and will not violate or conflict with, result in a breach or default under, or give any person or entity any right to terminate or modify any contract, agreement or commitment of
any kind applicable to Sellers or to any of the Assets; (iii) do not and will not violate, conflict with, result in a breach or default under, or give any person or entity any right to
terminate or modify any order, writ, judgment, decree, license, permit, approval, or authorization of any kind applicable to Sellers, or to any of the Assets; (iv) do not and will
not violate or conflict with any law, statute, rule, or regulation of any kind applicable to Sellers or to any of the Assets; and (v) do not and will not result in the creation or imposition of
any lien, third party right or claim, charge, security interest, liability, restriction, encumbrance or title defect of any kind against or with respect to any of the rights, properties, and assets of
Sellers, including the Assets. 

        (d)    No Undisclosed Liabilities.    Sellers (i) did not have, as of the date of this Agreement, any debts,
liabilities or obligations, whether accrued, absolute, contingent or otherwise, which are material to the condition, title or operation of the Assets purchase orders for ingredients and supplies
incurred in the ordinary course of Sellers' business; (ii) shall not incur following the date of this Agreement, any such debts, liabilities or obligations; and (iii) were not, as of
the date of this Agreement, or since such date have not become, a party to any contract or agreement that may materially adversely affect the condition, title or operation of the Assets. 

        (e)    Transactions Not Prohibited.    The consummation of the transactions contemplated by this Agreement will not
result in the breach of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) or allow the acceleration of the obligations of Sellers under,
any lease, license, promissory note, indenture, mortgage, deed of trust, insurance policy or other instrument, arrangement, or agreement to which Sellers are parties or to which Sellers or any of the
Assets is subject, nor will such consummation conflict with any license, certificate, permit or franchise held by Sellers. The use of the Assets by Buyer will not violate, conflict with or infringe
any intellectual property or other rights of any third party. 

        (f)    Compliance with Laws.    Sellers have all licenses, permits and authorizations necessary for the lawful
operation or use of the Assets pursuant to all applicable statutes, laws, ordinances, rules and regulations of all governmental bodies, agencies and divisions having, asserting or claiming
jurisdiction over the Assets. Sellers are not in violation of any laws or regulations, the violation of which would have a material adverse effect on the Assets. 

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        (g)    Legal Proceedings.    There is no pending or threatened action, suit, proceeding, claim or arbitration, nor any
pending or threatened investigation by any governmental agency, affecting the Assets, or relating to the transactions contemplated by this Agreement. There is no outstanding order, writ, injunction or
decree of any court, government or governmental agency affecting the Assets. 

        (h)    Employment Matters.    Sellers shall pay all payroll obligations owing or accruing to Emerald Valley's
employees through Closing, including employment taxes, retirement contributions, accrued sick leave and/or vacation pay, or other benefits owing to Emerald Valley's employees. Emerald Valley's
employees shall be notified of this sale as of the date of Closing and that the employees may apply for employment with Buyer upon the terms described in section 7(c). 

        (i)    Truth at Closing.    All representations and warranties contained in this Section 4 will be true at the
Closing, as if made as of the date of Closing, except to the extent of any changes or events specifically authorized by this Agreement. There is no fact, event or circumstance known to Sellers and not
fully, accurately and completely disclosed to Buyer which may reasonably be anticipated to have a material adverse effect on the Assets. 

5.    REPRESENTATIONS AND WARRANTIES OF BUYER 

        Buyer
represents and warrants to Sellers as follows: 

        (a)    Organization.    Buyer is a corporation duly organized, validly existing and in good standing under the laws of
Delaware and qualified to do business in the State of California. 

        (b)    Authority.    Buyer has the power and authority to enter into and perform its obligations under this Agreement
and to own, use and operate its rights, properties and assets and to conduct its business. 

        (c)    Transactions Not Prohibited.    The consummation of the transactions contemplated by this Agreement will not
result in the breach of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) or allow the acceleration of the obligations of Buyer under any
lease, license, promissory note, indenture, mortgage, deed of trust, insurance policy or other instrument, arrangement, or agreement to which Buyer is a party or to which Buyer or any of its assets is
subject, nor will such consummation conflict with any license, certificate, permit or franchise of any public authority held by Buyer. 

        (d)    Enforceability.    This Agreement and any documents described herein to be delivered by Buyer at the Closing
shall be duly executed and, when delivered as provided in this Agreement: (i) will constitute the legal, valid and binding obligations of Buyer, enforceable in accordance with their respective
terms; (ii) do not and will not violate or conflict with, or result in a breach or default under any contract, agreement, writ, judgment, decree, license, permit, approval or authorization of
any kind applicable to Buyer. 

        (e)    Truth at Closing.    All representations and warranties contained in this Section 5 will be true the
Closing, as if made on the date of Closing, except to the extent of any changes or events specifically authorized by this Agreement. 

6.    COVENANTS OF SELLERS 

        Sellers
make the following covenants to and for the benefit of Buyer: 

        (a)    Covenant Not to Compete.    Sellers jointly and severally covenant and agree that they will not, for a
five-year period commencing on the date of this Agreement, directly or indirectly, engage in, own, manage, operate, finance, participate in, provide services for, have an interest in, or
otherwise be involved in any business arrangement with any person, firm, partnership, corporation, or business, whether as an employee, officer, director, agent, security holder, creditor, consultant,
shareholder, 

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partner, trustee, joint venturer, broker, distributor, sales representative or in any other capacity, that engages in the production, sale, or distribution of product lines now produced by the Buyer
or the Sellers. The foregoing notwithstanding, Sellers shall not be prohibited from owning debt or equity instruments issued by a publicly traded company so long as Sellers' total interests in such
entity do not exceed 5-percent of any class of stock (including conversion rights) of such publicly traded company. 

        (b)    Confidential Information.    Sellers acknowledge and agree that they possess confidential information related
to the Buyer and the Assets, the improper disclosure or misuse of which would materially adversely affect the ability of Buyer to make use of the Assets, and that Sellers' covenants and agreements
contained in this section are in furtherance of and ancillary to the purchase and sale transactions contemplated by this Agreement and are reasonable and necessary to preserve and protect the Assets.
The confidentiality provisions of this section shall survive the Closing of this Agreement. 

        Sellers,
and any agent or representative of them, shall not, without prior permission of the Buyer, disclose any proprietary information relating to the Buyer, the Assets or any product
line now produced by the Buyer or Sellers ("Confidential Information"), such as, but not limited to, formulas, specifications, manufacturing methods, documentation produced, business affairs, future
plans, process information, customer lists, and any other information which is a valuable, special and unique asset of the Buyer or the Assets, and which shall include any other information
represented by the Buyer, its officers or agents to Sellers as confidential. Confidential Information shall not include information that becomes publicly available through no act of the disclosing
party, is received rightfully from a third party without duty of confidentiality, is disclosed under operation of law, or is disclosed with the prior written permission of the Buyer. 

        Sellers
agree that they will not at any time or in any manner, either directly or indirectly, use any Confidential Information for their own benefit, and that they will protect such
information and treat it as strictly confidential. A violation of this paragraph shall be a material violation of this Agreement. If it appears that Emerald Valley or Bankoff has disclosed (or has
threatened to disclose) Confidential Information in violation of this Agreement, the Buyer shall be entitled to an injunction to restrain any of them from disclosing, in whole or in part, such
information, or from providing any services to any party to whom such information has been disclosed or may be disclosed. The Buyer shall not be prohibited by this provision from pursuing other
remedies, including claims for losses and damages. 

        In
the event Buyer does not purchase the Assets, the provisions of this Paragraph 6(b) shall apply only to Confidential Information provided directly or indirectly by Buyer to
Sellers. 

        (c)    No Further Negotiations by Sellers.    During the pendency of the Closing, so long as this Agreement has not
been terminated as provided in section 3, Sellers agree that they will not, directly or indirectly, offer the stock of Emerald Valley or any of the Assets to, solicit or entertain offers for
them from, negotiate for their sale, or make information concerning them available to, any third party, other than sales of completed products in the ordinary course of business. 

        (d)    Emerald Valley Kitchen.    Sellers acknowledge and agree that, from and after the closing of the Agreement,
Buyer will own and retain all trademark and trade name rights in the name "Emerald Valley Kitchen." Sellers covenant and agree that Sellers (i) will not use or attempt to use the name "Emerald
Valley Kitchen" in advertising or marketing, as a trademark or trade name, or in any other manner or for any other purpose not consistent with the rights to such name transferred to the Buyer by this
Agreement, and (ii) within 120 days after Closing, will amend the articles of incorporation of Emerald Valley to change its name to a name other than Emerald Valley Kitchen, Inc.
and provide proof of such amendment to Buyer. 

        (e)    Access.    To permit Buyer to conduct its due diligence investigation, Sellers will permit Buyer and its
representatives to have reasonable access to the Assets, the premises in which Sellers conducts the business of Emerald Valley and all of Emerald Valley's books, records and personnel files, and will 

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furnish to Buyer financial data, operating data, and other information concerning Emerald Valley or its business, as Buyer shall reasonably request. 

        (f)    Conduct of Business; Interim Operations.    Until the Closing or termination of this Agreement, Sellers will
conduct the business of Emerald Valley in a reasonable and prudent manner in accordance with past practices, preserve its existing business organization and relationships with its employees,
customers, suppliers and others with whom it has a business relationship, preserve and protect the Assets, and conduct the business in compliance with all applicable laws and regulations. 

        (g)    Covenants Reasonable; Remedies for Breach.    The covenants of Sellers contained in this section 6 are
reasonable in duration and scope. In the event of a breach of these covenants by Sellers, or any of them, Buyer shall be entitled to injunctive relief, as well as to damages sustained and the recovery
of actual attorneys' fees and all costs incurred to enforce these covenants. 

7.    COVENANTS OF BUYER 

        Buyer
makes the following covenants for the benefit of Sellers each of which shall survive Closing of this Agreement: 

        (a)    Confidential Information.    Until the Closing has occurred or this Agreement has been terminated, Buyer will
hold in confidence, and will not use to the detriment of Sellers, any data and information obtained from Sellers in connection with this Agreement. Upon termination of this Agreement for any reason,
Buyer shall return promptly to Sellers all printed information received by Buyer from Sellers in connection with the proposed transaction and deliver to Seller or destroy all copies of such printed
material which may have been made by Buyer or its representatives. 

        In
the event Buyer does not purchase the Assets, Buyer shall not, without prior permission of Sellers, disclose any proprietary information relating to Sellers, the Assets or any product
line now produced by Sellers including but not limited to formulas, methods, specifications, manufacturing methods, recipes, documentation produced, business affairs, future plans, process
information, customer lists or any other information which is a valuable, special and unique asset of Sellers or the Assets including any information represented by Sellers, its officers or agents to
Buyer as confidential (collectively, "Sellers' Confidential Information"). Sellers' Confidential Information shall not include any other information that becomes publicly available through no act of
the disclosing party, is received rightfully from a third party without duty of confidentiality, is disclosed under operation of law, or is disclosed with the prior written permission of the Sellers. 

        Buyer
agrees that it will not at any time or in any manner, either directly or indirectly, use any of Sellers' Confidential Information for its own benefit, and that it will protect such
information and treat it as strictly confidential. A violation of this paragraph shall be a material violation of this Agreement. If it appears that buyer has disclosed (or has threatened to disclose)
Sellers' Confidential Information in violation of this Agreement, Sellers shall be entitled to an injunction to restrain Buyer from disclosing, in whole or in part, such information, or from providing
any services to any party to whom such information has been disclosed or may be disclosed. Sellers shall not be prohibited by this provision from pursuing other remedies, including claims for losses
or damages. 

        (b)    Promotion and Development.    Buyer agrees that it will promote and develop the sales and distribution of
organic food products including those included in the Segment and shall provide sufficient resources to promote and develop the sales of organic food products. 

        (c)    Continued Employment.    Buyer agrees to offer employment to Emerald Valley's current employees in a good faith
attempt to maintain continued employment for as many of Emerald Valley's employees as possible. It is acknowledged that all such employees hired by Buyer shall be hired "at will" and no Emerald Valley
employee shall have any rights to continued employment with Buyer. Subject to this section, Buyer agrees to provide compensation and fringe benefits to Emerald Valley 

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employees retained by Buyer at levels at least as beneficial to such employees as was previously provided by Sellers. 

        Sellers
have maintained a Self-Directed Employee Plan (SEP) for the benefit of Emerald Valley employees to which Sellers have contributed annually up to 15% of the gross
salaries of Emerald Valley employees entitled to participate in the SEP. Buyer and Sellers mutually covenant and agree that they will in good faith, consistently with the principle expressed in the
preceding paragraph, on or before September 30, 2002, negotiate, agree upon and implement a cash bonus program for Emerald Valley employees retained by Buyer which, taken together with the
benefit provided by Buyer's 401k Plan, will replace the dollars associated with the previous SEP benefit provided by Emerald Valley. 

        (d)    Donation for Charitable Causes.    Buyer agrees to continue Emerald Valley's commitment to donate
1-percent of gross sales from the conduct of the Emerald Valley business (Segment) to humanitarian and environmental charities. A committee of four Emerald Valley Segment employees will be
established by October 30, 2002 to select the charitable recipients to be reviewed by the Chairman of the Board of Directors of Buyer. 

8.    INDEMNIFICATION 

        (a)    Sellers.    Sellers covenant and agree to indemnify, hold harmless and defend Buyer, its successors in interest
and assigns and their respective shareholders, partners, members, directors, officers, managers, employees, agents and representatives from and against (i) all liabilities, losses, claims,
demands, suits, judgments, damages and expenses (including reasonable legal expenses) resulting from a breach or nonfulfillment of any of the representations, warranties, covenants and agreements of
Sellers set forth in this Agreement; (ii) all losses, damages, costs and expenses relating to, arising out of or attributable to any lien, third party right, third party claim, charge, security
interest, liability, obligation, restriction, encumbrance or title defect of any kind with respect to any of the Assets; (iii) all liabilities of Sellers; and (iv) attorneys' fees and
other costs and expenses, judgments and amounts paid in settlement or compromise of any third party action, lawsuit, proceeding, citation or investigation relating to, arising out of or attributable
to any matter referred to in clauses (i)-(iii) of this subsection 8(a). In the event that Buyer sustains any liability, loss, damage or expense which is covered by Sellers' indemnification
under this paragraph, Buyer may elect to offset the same against any amount then payable to Sellers under this Agreement or the Royalty Agreement. 

        (b)    Buyer.    Except as otherwise provided in this Agreement, Buyer agrees to defend, indemnify and hold harmless
the Sellers against all liabilities, losses, claims, demands, suits, judgments, damages and expenses (including reasonable legal expenses) resulting from a breach or nonfulfillment of any of the
representations, warranties, agreements and covenants of Buyer set forth in this Agreement. Buyer agrees, in addition to any other rights or remedies of Sellers, to defend, indemnify and hold Sellers
harmless from any and all losses, damages, liabilities or expenses (including reasonable attorneys' fees and court costs) arising out of or resulting from, or in connection with any complaint, claim
or legal action whatsoever, whether foreseen or unforeseen, alleging damages, death, illness, injury or damage to property, resulting from any use of the Assets by Buyer after the date of Closing of
this Agreement. 

        (c)    Notice of Claims.    If any third party claim is asserted relating to any liability specified in Sections 8(a)
or 8(b), the party against which such claim is made shall promptly give notice of such claim to the indemnifying party and the indemnifying party shall have the sole right, at its, his or her own
expense, to contest or to compromise and settle such claim. 

9.    MISCELLANEOUS 

        (a)    Professional Expenses.    Buyer and Sellers shall be responsible to pay the fees of their respective attorneys,
accountants and consultants incurred in connection with the Agreement. 

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        (b)    Further Execution and Delivery.    Sellers shall execute and/or deliver all such items, articles, bills of
sale, assignments, releases and other documents and instruments as Buyer or any of its successors in interest or assigns may at any time request to further and more completely evidence and confirm the
sale, assignment, transfer and conveyance to Buyer pursuant to this Agreement of all of Sellers' right, claim, title and interest in and to the Assets and the Lease, subject to no liens, third party
rights, third party claims, liabilities, encumbrances or title defects of any kind. 

        (c)    Notification.    All notices required or permitted under this Agreement shall be in writing and shall be deemed
delivered when delivered in person or deposited in the United States mail, postage prepaid, addressed as follows, or when received by confirmed fax as follows: 

	 	To the Buyer:	 	Monterey Pasta Company

1528 Moffett Street

Salinas, CA 93905

Attention: R. Lance Hewitt

Chief Executive Officer

Phone: (408) 753-6262

Fax: (408) 753-6257	 	 
	

 	

To Sellers:	
 	

Mel Bankoff

President

Emerald Valley Kitchen

90472 Woodruff

P.O. Box 23236

Eugene, Oregon 97402

Phone: (541) 688-3297

Fax: (541) 485-2016	
 	

 

        (d)    Survival of Terms.    All representations, warranties and covenants (including but not limited to covenants
relating to competition and confidentiality) contained in this Agreement or in any certificate or other instrument delivered by or on behalf of the parties hereto shall be continuous and shall survive
the execution of the Agreement, the Closing and the delivery of any documents transferring title to the Assets and the Lease to Buyer pursuant to the Agreement. 

        (e)    Counterparts.    This Agreement may be executed in counterparts, each of which shall be deemed an original, and
all of which when taken together shall constitute one and the same instrument. 

        (f)    Captions and Terms.    The captions used in the Agreement are for convenience of reference only and shall not
be considered part of it nor limit or otherwise affect the meaning of any of its provisions. Usage of the singular or plural number or the masculine, feminine or neuter gender shall include the
others, as the context may require. 

        (g)    Waivers.    No waiver or failure of enforcement by Sellers or Buyer of any term or condition of this Agreement
shall be effective unless in writing, nor shall it operate as a waiver of any other breach of such term or condition or of any other term or condition. 

        (h)    Binding Effect.    The terms and conditions of the Agreement shall inure to the benefit of, and be binding
upon, the respective successors and assigns of the parties, but are not intended, nor shall the Agreement be construed, to confer any enforceable rights on any person not a party to the Agreement or
such person's successors or assigns. 

        (i)    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of
California. 

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        (j)    Entire Agreement.    Except for the Royalty and Employment Agreements referred to in the second paragraph
hereof, this Agreement contains the entire agreement of the parties and there are no other promises or conditions in any other agreement whether oral or written. This Agreement supersedes any prior
written or oral agreements between the parties concerning its subject matter, including but not limited to the Letter of Intent dated August 1, 2002. 

        (k)    Mediation of Disputes.    Any controversy arising out of the performance of this Agreement or regarding its
interpretation is subject to a good faith effort at resolution through non-binding mediation before any complaint (whether a civil complaint in court or a complaint in arbitration) may be
filed. Mediation is a process in which parties attempt to resolve a dispute by submitting it to an impartial, neutral mediator who is authorized to facilitate the resolution of the dispute but who is
not empowered to impose a settlement on the parties. The mediation fee, if any, shall be paid one-half by Sellers and one-half by Buyer. The parties agree to limit the
admissibility in any subsequent litigation or proceeding of anything said, any admissions made, and any documents prepared, in the course of mediation, consistent with California Evidence Code
section 1152.5. 

        IF
ANY PARTY COMMENCES A COURT ACTION OR AN ARBITRATION PROCEEDING BASED ON A DISPUTE OR CLAIM TO WHICH THIS SECTION APPLIES WITHOUT FIRST ATTEMPTING TO RESOLVE THE MATTER IN GOOD FAITH
THROUGH MEDIATION, THEN THAT PARTY SHALL NOT BE ENTITLED TO RECOVER ATTORNEY'S FEES EVEN IF THEY WOULD OTHERWISE BE AVAILABLE TO THAT PARTY IN A SUBSEQUENT COURT ACTION OR ARBITRATION PROCEEDING. 

        (l)    Arbitration of Disputes Following Mediation.    Any controversy or claim arising out of, or relating to this
Agreement, or its making, performance, or interpretation, which is not resolved through the mediation process required by the preceding section, shall be resolved by arbitration conducted in Monterey
County in accordance with the rules of the American Arbitration Association then existing, and judgment on the arbitration award may be entered in any court having jurisdiction over the subject matter
of the controversy. Such award may be appealed to any appellate court having jurisdiction over the matter to the same extent that an appeal would be permissible from a civil judgment. The arbitrators
selected shall be persons experienced in general corporate matters and business agreements,
and shall make their awards based upon the principles of California law. The parties shall have the right to discovery and the arbitration proceeding shall be reported by a certified court reporter. 

        BY
THEIR EXECUTION OF THIS AGREEMENT, THE PARTIES ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THIS ARBITRATION OF DISPUTES PROVISION DECIDED BY NEUTRAL
ARBITRATION. ADDITIONALLY, THE PARTIES ARE GIVING UP ANY RIGHTS THEY OTHERWISE POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR BY JURY TRIAL; PROVIDED, HOWEVER, THE PARTIES ARE NOT GIVING UP THEIR
RIGHT TO APPEAL THE DECISION OF THE ARBITRATOR(S). IF ANY PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, SUCH PARTY MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE. THE PARTIES' AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. THE PARTIES HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF
THE MATTERS INCLUDED IN THIS ARBITRATION OF DISPUTES PROVISION TO NEUTRAL ARBITRATION. 

        (m)    Assignment.    This Agreement will bind and inure to the benefit of each party's permitted successors and
assigns. No party may assign this Agreement, in whole or in part, without the written consent of all other parties, provided,  however, that the Buyer may
assign this Agreement without such consent to a successor in interest of the Buyer or in connection with any merger,
consolidation, sale of all or substantially all of the Buyer's assets or any other transaction in which more than fifty percent 

10

 

(50%) of the Buyer's voting securities are transferred. Any attempt to assign this Agreement other than in accordance with this provision shall be null and void. 

        (n)    Interpretation.    Sellers have been given the opportunity to retain counsel of their own choosing for purposes
of this Agreement, and either have done so or have elected not to do so, as they see fit. This Agreement shall be construed according to the fair meaning of its language. The rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement. 

        (o)    Disclosure.    The parties mutually agree not to disclose the terms of this Agreement except by news release in
a form mutually agreed to by the parties, by Form 8K as required by NASDAQ or Securities and Exchange Commission reporting requirements to which Buyer is subject, or except as required by court
order. If disclosure is required, the disclosing party agrees to notify the other party in advance of the content of the information being disclosed and to whom the disclosure is being made. 

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

	Date: August 23, 2002	 	MONTEREY PASTA COMPANY
	

 	
 	

By:	
 	

/s/  R. LANCE HEWITT      
 R. Lance Hewitt
 Chief Executive Officer
	

Date: August 23, 2002	
 	

EMERALD VALLEY KITCHEN, INC.
	

 	
 	

By:	
 	

/s/  MEL BANKOFF      
 Mel Bankoff
 President
	

Date: August 23, 2002	
 	

By:	
 	

/s/  MEL BANKOFF      
 Mel Bankoff

11

  

 
 

SPOUSAL CONSENT    
  

        I, /s/ MARTHA BLANCHET, do hereby acknowledge that I have read the foregoing Asset Purchase Agreement and know of
its contents. I am aware by its provisions that my spouse has agreed to sell to Monterey Pasta Company all right and interest in and to certain assets which may be assets of the marital community and
as to which I therefore may have a community interest. I hereby approve of the terms of the Agreement. 

Date:
August 23, 2002 

12

  

 
 

EXHIBIT A    
  

 
 

ESTIMATES OF EARNINGS BEFORE TAXES, DEPRECIATION AND AMORTIZATION
  (Subsection 1(e) of the Agreement)    
  

	 
	 	2002–03
	 	2003–04
	 	2004–05
	 	2005–06
	 	2006–07

	EBITDA (dollars in 000s)	 	979	 	1,178	 	1,404	 	1,675	 	2,001

13

QuickLinks

Exhibit 10.42

ASSET PURCHASE AGREEMENT

SPOUSAL CONSENT

EXHIBIT A

ESTIMATES OF EARNINGS BEFORE TAXES, DEPRECIATION AND AMORTIZATION (Subsection 1(e) of the Agreement)QuickLinks
 -- Click here to rapidly navigate through this document

 
 

EXHIBIT 10.43    
  

        COMMERCIAL LEASE AGREEMENT
  Between  

 MEL BANKOFF
  (Landlord)  

 – and –  

 MONTEREY PASTA COMPANY,
  a Delaware corporation  

 (Tenant)  

 Property: 90472 Woodruff Street, Eugene, Oregon
  (Leased Premises)  

Prepared
by: 

 RICHARD L. LARSON

JOHNSON, CLIFTON, LARSON & CORSON, P.C.  

1050 Citizens Building

975 Oak Street

Eugene, Oregon 97401-3176

Telephone No. (541) 484-2434 

 
 

TABLE OF CONTENTS    
  

	ARTICLE I	 	 
	LANDLORD'S COVENANTS	 	1
	

1.1	
 	

Agreement to Lease	
 	

1
	1.2	 	Possession and Quiet Enjoyment	 	1
	1.3	 	Term	 	1
	 	 	1.3.1 Option to Renew Lease	 	1
	

ARTICLE II	
 	

 
	PAYMENTS BY TENANT	 	1
	

2.1	
 	

Payment of Rent	
 	

1
	 	 	2.1.1 CPI Adjustment	 	2
	2.2	 	Property Taxes	 	2
	 	 	2.2.1 Real Property Taxes	 	2
	 	 	2.2.2 Personal Property Taxes	 	2
	 	 	2.2.3 Tenant's Right to Contest Taxes	 	2
	 	 	2.2.4 Substitute Taxes	 	2
	2.3	 	Utilities	 	3
	2.4	 	Repairs and Maintenance	 	3
	2.5	 	Insurance	 	3
	

ARTICLE III	
 	

 
	ADDITIONAL COVENANTS	 	4
	

3.1	
 	

Use of Premises	
 	

4
	3.2	 	Alterations and Improvements	 	5
	3.3	 	Assignment and Sublease	 	5
	3.4	 	Liens	 	5
	3.5	 	Liability for Accident or Injury	 	6
	 	 	3.5.1 Landlord's Liability	 	6
	 	 	3.5.2 Indemnity	 	6
	 	 	3.5.3 Liability Insurance	 	6
	3.6	 	Fixtures	 	6
	 	 	3.6.1 Property Rights	 	6
	 	 	3.6.2 Removal	 	6
	 	 	3.6.3 Time For Removal	 	7
	3.7	 	Surrender at Expiration	 	7
	

ARTICLE IV	
 	

 
	DAMAGE, DESTRUCTION OR EMINENT DOMAIN	 	7
	

4.1	
 	

Damage	
 	

7
	 	 	4.1.1 Insured Loss	 	7
	 	 	4.1.2 Damage; Uninsured Loss	 	7
	 	 	4.1.3 Abatement of Rent	 	7
	 	 	4.1.4 Waiver	 	8
	4.2	 	Tenant's Termination Rights	 	8
	4.3	 	Damage Near End of Term	 	8
	4.4	 	Tenant's Damage Claim for Eminent Domain	 	9

	

ARTICLE V	
 	

 
	DEFAULT	 	9
	

5.1	
 	

Default	
 	

9
	 	 	5.1.1 Failure To Pay Rent	 	9
	 	 	5.1.2 Failure of Obligation Other Than Rent	 	9
	 	 	5.1.3 Insolvency of Tenant	 	9
	5.2	 	Remedies on Default	 	10
	 	 	5.2.1 Landlord's Right To Terminate	 	10
	 	 	5.2.2 Damages Without Termination	 	10
	 	 	5.2.3 Liability Following Termination	 	10
	 	 	5.2.4 Rights On Reentry	 	10
	 	 	5.2.5 Damages On Termination	 	10
	 	 	5.2.6 Other Remedies	 	10
	5.3	 	Liquidated Damages	 	10
	

ARTICLE VI	
 	

 
	MISCELLANEOUS	 	11
	6.1	 	Accord and Satisfaction	 	11
	6.2	 	Notices	 	11
	6.3	 	Joint and Several Liability	 	11
	6.4	 	Entire Agreement	 	11
	6.5	 	Use of Pronoun	 	11
	6.6	 	Paragraph Headings	 	11
	6.7	 	Waiver	 	11
	6.8	 	Heirs and Assigns	 	12
	6.9	 	Signs	 	12
	6.10	 	Attorney Fees	 	12

  

 
 

COMMERCIAL LEASE AGREEMENT    
  

        THIS LEASE AGREEMENT, made and entered into as of the            day of August, 2002 between MEL BANKOFF, hereinafter referred
to as Landlord and MONTEREY
PASTA COMPANY, a Delaware corporation, hereinafter referred to as Tenant. 

W I T N E S S E T H

ARTICLE I

LANDLORD'S COVENANTS  

        1.1    Agreement to Lease.    In consideration of the rents to be paid by Tenant, and of the
covenants and agreements hereinafter stipulated to be kept by the parties, Landlord does hereby lease to Tenant the real property commonly known as 90472 Woodruff Street in Eugene, Oregon, consisting
of approximately 19,000 square feet of office, warehouse and production area, and adjacent parking, vehicular access ways and grounds, hereinafter referred to as the "Leased Premises." 

        1.2    Possession and Quiet Enjoyment.    Landlord is the owner of the Leased Premises and has authority to enter into
this Lease. Landlord covenants that so long as Tenant complies with Tenant's obligations under the terms of this Lease, that Tenant shall be entitled to the peaceable and quiet possession of the
Leased Premises. 

        The
taking of possession of the Leased Premises shall be conclusive evidence that the Tenant accepts the same "as is" and that the same are in a satisfactory condition at the time
possession is taken. 

        1.3    Term.    This Lease shall commence as of the 26th day of August, 2002, and shall terminate on
December 31, 2007, unless sooner terminated pursuant to the terms of this Lease regarding termination, or unless extended by Tenant pursuant to Tenant's option to renew. Such renewal shall be
on the same terms and conditions as set forth herein. 

                1.3.1    Option to Renew Lease.    So long as Tenant is not in default pursuant to the terms of this
Lease, which default is continuing after notice from Landlord and the expiration of any applicable grace period provided for in this Lease, Tenant shall have the option to renew this Lease for three
additional terms of five years each. 

                Such
renewal by Tenant shall be binding upon Landlord only if Tenant gives notice of such renewal, in writing, to Landlord at least 180-days prior to the
expiration of the then current term. The rental payable during such renewal term shall be as specified in Paragraph 1.3 above, adjusted as provided in Paragraph 2.1.1 below. All other
terms and conditions shall remain in full force and effect during such renewal term. 

ARTICLE II

PAYMENTS BY TENANT  

        In consideration of the covenants of the Landlord provided by this Agreement, Tenant agrees to make the following payments, with the express understanding that
timely payments are the essence of this Agreement: 

        2.1    Payment of Rent.    The monthly rental shall be $6,000.00 per month, payable on the 1st day of each month
through December 31, 2003, in advance, with the first monthly payment due on execution of this Lease. Monthly rental due during calendar year 2004 shall be in the sum of $6,500.00. After
December 31, 2004 monthly rental shall be determined pursuant to Paragraph 2.1.1 below. Rent and all other charges or sums for any period during the term of this Lease which is
for less than one (1) full calendar month shall be prorated based upon the actual number of days of the partial calendar month. 

1

 

                2.1.1    CPI Adjustment.    For the 12-month period commencing January 1, 2005, and
for each succeeding year of the lease term as well as during any renewal term, the monthly rental shall be increased to reflect the percentage increase in the Consumer Price Index West B/C published
by the Department of Labor, or such other Index which is most consistent therewith if the Consumers Price Index is no longer published, ("CPI"), over the prior 12-month period, utilizing
the most currently available CPI figure, in comparison with the CPI figure for the same calendar month 12-months previously. 

        For
example, if as of January 1, 2005 the most currently available CPI figure is for the month of October, 2004, then the October 2004 CPI figure would be compared with the
October 2003 CPI figure. If the October 2004 figure were 206, and the October 2003 figure were 200, then the monthly rental commencing January 1, 2005 through
December 31, 2005 would be $6,695.00. 

                206

                      
x 6500 = $6,695 

                200

        Notwithstanding
the foregoing, in no event shall the monthly rent be reduced below the initial monthly rental, nor shall any adjustment be more than 5-percent greater than
the monthly rental in effect immediately prior to such adjustment. 

        2.2    Property Taxes.  

                2.2.1    Real Property Taxes.    Tenant shall be
responsible for the payment of
the real property taxes levied on the Leased Premises, except as otherwise provided herein. 

                The
taxes during the first year and the last year of the lease term shall be prorated between the parties. As soon as practicable following receipt of the property tax
assessment, during the lease term or any renewal, Landlord shall provide Tenant with a copy of the real property tax assessment statement and Tenant shall pay such amount as additional rent in a lump
sum within 15-days of receipt of the statement from Landlord. If Landlord does not provide the statement to Tenant described in the preceding sentence in a timely manner, Tenant shall
still be liable for payment of the taxes but Landlord will be responsible for all interest or foregone discounts resulting from the delayed delivery of the statement. 

                2.2.2    Personal Property Taxes.    Tenant shall pay all personal property taxes on Tenant's property
located on the Premises during the term of this Lease, when due. 

                2.2.3    Tenant's Right to Contest Taxes.    Tenant, at its cost, shall have the right at any time to
seek a reduction in or otherwise contest any real property taxes for which it is obligated to reimburse Landlord pursuant to this Article, by action or proceeding against the entity with authority to
assess or impose the same. 

                Landlord
shall not be required to join in any proceeding or action brought by Tenant unless the provisions of applicable laws or regulations require that such proceeding or
action be brought by or in the name of Landlord, in which event Landlord shall join in such proceeding or action or permit it to be brought in Landlord's name, provided that Tenant protect, indemnify,
and hold Landlord free and harmless from and against any liability, cost or expense in connection with such proceeding or contest. 

                Tenant
shall continue, during the pendency of such proceeding or action, to pay the real property taxes due as determined by Landlord pursuant to this Article 2. If
Tenant is successful in such action or proceeding, Landlord shall reimburse to Tenant the amount of Tenant's share of any reduction in real property taxes realized by Tenant in such contest or
proceeding within 10-days after the amount of such reduction has been determined. 

                2.2.4    Substitute Taxes.    If at any time during the term of this Lease, under the laws of the state
of Oregon, or of any political subdivision thereof in which the Premises are situated, a tax or 

2

 

excise on rent, or other tax however described, is levied or assessed by the state of Oregon, or by any such political subdivision, against Landlord on account of the guaranteed rental, or any other
rentals accruing under this Lease, as a substitute in whole or in part for any real property taxes on the Premises or any part thereof, such tax or excise on rent shall, to the extent of the amount
thereof which is lawfully assessed or imposed as a direct result of Landlord's ownership of the Premises or of this Lease or of the rentals accruing under this Lease, be deemed to be a real property
tax or assessment levied or assessed against the Premises for the purpose of this Article II. However, nothing contained in this Lease shall require Tenant to pay any income, excess profits,
franchise or similar tax payable by Landlord on account of the rentals accruing under this Lease. 

        2.3    Utilities.    Tenant shall pay, before delinquent, at Tenant's sole cost and expense, all charges for water,
gas, heat, electricity, power, telephone service, sewer service charges and sewer rental charged or attributable to the Leased Premises, and all other services or utilities used in, upon or about the
Leased Premises by Tenant during the term thereof. 

        2.4    Repairs and Maintenance.    Tenant covenants that Tenant shall, at Tenant's own expense, keep and maintain the
interior and exterior of the Leased Premises, including all walls, plumbing, electrical, heating, ventilation, air conditioning, doors, ceilings, floors, glass and fixtures located on said Leased
Premises during the term of this Lease, as well as the parking areas, vehicular access ways and landscaping substantially in the condition received, and in a clean and sanitary condition and will
always keep and maintain the Leased Premises and all the appurtenances thereto belonging or appertaining thereto, in conformity to and in compliance with all orders, ordinances, rules and regulations,
and statutes of all governmental authorities having jurisdiction over the Leased Premises, or the use thereof. The parties expressly agree that Landlord shall not be required, during the term of this
Lease, or any extension thereof, to make any alterations, repairs, or maintenance to any part of said property, except that Landlord shall be responsible for the maintenance and/or replacement of the
roof, structural members and foundation. 

        Notwithstanding
anything herein to the contrary, if Landlord fails to timely perform its maintenance and repair obligations hereunder, and, as a consequence, Tenant's use of the Leased
Premises is substantially impaired, Tenant shall have the right after notice to Landlord to cause such repair or maintenance to be performed at Landlord's expense and to deduct the costs thereof from
the Rent payable to Landlord. Except in the event of an emergency, Landlord shall not enter the Leased
Premises for the purpose of inspecting the Leased Premises or effecting any repairs except upon not less than 24-hours' advance notice to Tenant. Landlord shall make every effort feasible
to avoid having any of Landlord's maintenance or repair activities interfere with Tenant's business activities and occupancy of the Leased Premises. 

        2.5    Insurance.    Landlord will maintain during the term of this Lease a policy of extended coverage
("all-risk") property insurance on the Leased Premises (excluding Tenant's trade fixtures and equipment) in the amount of the full replacement value thereof as determined from time to time
by Landlord's insurance agent, but in any event not less than every three years, together with rent loss coverage. Landlord shall obtain such insurance at competitive rates, and Tenant shall have the
right to cause such insurance to be placed with an insurance carrier designated by Tenant, if Tenant's insurance carrier is able to provide the required insurance at less expense than Landlord's
proposed insurance carrier; provided, however, that Tenant's insurance carrier and the insurance policy to be issued by it otherwise meet the requirements of this paragraph. Not more frequently than
once every six months, Tenant will reimburse Landlord for the premium cost of the insurance to be maintained by Landlord pursuant to this paragraph within 30-days after Landlord delivers
an invoice and reasonable supporting documentation showing the amount owed by Tenant. In no event shall Tenant be required to pay the cost of any earthquake coverage that Landlord may elect to
maintain. All insurance required to be carried by Landlord or Tenant hereunder shall be primary and non-contributory and shall be placed with insurers authorized to do business in the
state of Oregon and holding a Policyholders Rating of 

3

 

"A" or better in the most current edition of Best's Insurance Guide. The policies may be carried under blanket policies maintained by Tenant or Landlord if they otherwise comply with the provisions
of this paragraph and provide substantially equivalent coverage. 

ARTICLE III

ADDITIONAL COVENANTS  

        3.1    Use of Premises.    The Leased Premises shall be used by Tenant for commercial and/or industrial purposes
consistent with applicable building codes and zoning laws, and for no other activity without the written consent of Landlord which shall not be unreasonably withheld, conditioned, or delayed. Tenant
shall not permit or suffer any waste or destruction of the Leased Premises, reasonable wear and tear excepted. All use shall be in accordance with applicable zoning laws. 

        Tenant
shall cause the Leased Premises and all operations on the Leased Premises to comply with all Environmental Laws and orders of any governmental authorities having jurisdiction
under any Environmental Laws. Tenant shall have no obligation or responsibility in regard to any contamination which may have occurred prior to Tenant's taking of possession of the Leased Premises or
which was not caused by Tenant or Tenant's agents or invitees. Landlord affirms, that it has no knowledge of any such contamination. Tenant shall exercise extreme care in handling Hazardous Substances
and shall undertake any and all preventive, investigatory or remedial action (including, without limitation,
emergency response, removal, containment and other remedial action) (a) required by any applicable Environmental Laws or orders by any governmental authority having jurisdiction under
Environmental Laws, or (b) necessary to prevent or minimize property damage, personal injury or damage to the environment, or the threat of any such damage or injury, by releases of or exposure
to Hazardous Substances in connection with the Leased Premises or operations on the Leased Premises provided such action(s) are necessitated by Tenant or Tenant's agents or invitees use or handling of
Hazardous Substances at the Leased Premises or Tenant's business at the Leased Premises. In the event Tenant fails to perform any of its obligations under this section, Landlord may perform (but shall
not be required to perform) such obligations at Tenant's expense. In performing any such obligations of Tenant, Landlord shall at all times be deemed to be the agent of Tenant and shall not by reason
of such performance be deemed to be assuming any responsibility of Tenant under any Environmental Laws or to any third party. Landlord represents and warrants to Tenant that on the commencement of the
term hereof, the Leased Premises shall (a) comply with all applicable covenants and restrictions of record, statutes, ordinances, codes, rules, regulations, orders, and requirements, including
but not limited to Environmental Laws and the ADA, as in effect at the time of initial construction, and (b) are free from contamination by any Hazardous Substances (and for purposes of this
subclause (b), the Leased Premises shall be deemed to include the underlying soil and ground water). In the event of a breach of the foregoing warranties, Landlord shall promptly rectify such breach
at its sole cost and expense to the extent required by applicable governmental regulations. Landlord also shall protect, indemnify, defend, and hold Tenant harmless from and against any and all
liability, loss, suits, claims, actions, costs, and expense (including, without limitation, attorneys' fees) arising from (a) any breach of the foregoing warranties and (b) any
contamination of the Leased Premises (including the underlying land and ground water) by any Hazardous Materials, where such contamination was not caused by Tenant. The provisions of this paragraph
shall survive the termination of this Lease. 

        As
used in this Section 3.1, "Environmental Laws" means any and all state, federal and local statutes, regulations, and ordinances relating to the protection of human health or
the environment. "Hazardous Substances" is used in its very broadest sense and refers to materials that, because of their quantity, concentration or physical, chemical or infectious characteristics,
may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled.
"Hazardous Substances" shall include, without limitation, petroleum products or crude oil or any fraction thereof and any and all 

4

 

hazardous or toxic substances, materials or waste as defined by or listed under the Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Comprehensive Environmental Response,
Compensation and Liability Act, or any other of the Environmental Laws. 

        3.2    Alterations and Improvements.    It is contemplated that Tenant may make minor alterations or improvements on
the Leased Premises, but all such alterations or improvements shall be made only after receiving written approval from Landlord or Landlord's authorized agent. All such alterations or improvements
shall be at the sole cost and expense of Tenant. 

        All
improvements and alterations performed on the Leased Premises by the Tenant shall be the property of the Landlord when installed, unless otherwise agreed in writing. 

        Notwithstanding
anything herein to the contrary, 

        (a)  With
respect to any alterations, additions or improvements requiring Landlord's consent, Landlord shall not unreasonably withhold its consent thereto. 

        (b)  Tenant
shall not be required to remove any alterations, additions or improvements for which Tenant has obtained Landlord's consent, unless Landlord has indicated, at the
time of granting such consent, that such removal will be required. 

        (c)  Tenant
shall have the right to make alterations, additions and improvements which in each instance (i) do not cost more than $5,000.00, (ii) are not
visible from the exterior of the Leased Premises, and (iii) do not affect the structural integrity of the Building or Building mechanical or electrical systems, without the consent of Landlord,
but with notice to Landlord. 

        (d)  Tenant
shall be entitled to remove its furniture, trade fixtures, and other personal property purchased or placed upon the Leased Premises by Tenant. 

        3.3    Assignment and Sublease.    No part of the Leased Premises or this Lease may be assigned, mortgaged or
subleased by Tenant, nor may a right of use of any portion of the property be conferred on a third person by any other means, without the prior written consent of Landlord which consent shall not be
unreasonably withheld. This provision shall apply to all transfers by operation of law and transfers to and by trustees in bankruptcy, receivers, administrators, executors and legatees. No consent in
one instance shall prevent this provision from applying to a subsequent instance. Landlord shall consent to a transaction covered by this provision when withholding such consent would be unreasonable
in the circumstances. 

        Notwithstanding
anything to the contrary contained in this Lease, Landlord and Tenant agree as follows: Tenant may assign this Lease or sublet the Leased Premises or any portion thereof,
without Landlord's consent, to any entity which controls, is controlled by, or is under common control with Tenant; to any entity which results from a merger of, reorganization of, or consolidation
with Tenant; to any entity engaged in a joint venture with Tenant; or to any entity engaged in a joint venture with Tenant; or to any entity which acquires substantially all of the stock or assets of
Tenant, as a going concern, with respect to the business that is being conducted in the Leased Premises (hereinafter each a "Permitted Transfer"). In addition, an assignment by Tenant which results
from or occurs in connection with a sale or transfer of the capital stock of Tenant shall be deemed a Permitted Transfer if (1) such sale or transfer of capital stock occurs in connection with
any bona fide financing or capitalization for the benefit of Tenant, or (2) such sale or transfer of capital stock is under the auspices of the NASDAQ or other regional or national stock
exchange. Landlord shall have no right to terminate the Lease in connection with, and shall have no right to any sums or other economic consideration resulting from, any Permitted Transfer. 

        3.4    Liens.    Tenant covenants that Tenant will not permit any lien to be placed upon the Leased Premises, during
the term of this Lease. 

5

 

        3.5    Liability for Accident or Injury.

                3.5.1    Landlord's Liability.    Landlord shall not be liable to Tenant for any injuries to persons or
damage to property, including any disruption of Tenant's business activities on the Premises, resulting from the negligence of any person other than Landlord, or from the condition of any part of the
building, including but not limited to, damage from water, gas or steam. The foregoing limitation on Landlord's liability shall not apply to the extent such injury or damage is due to the negligence
or willful misconduct of Landlord, its agents, contractors or employees or a breach by Landlord of its obligations under the Lease. 

                3.5.2    Indemnity.    Tenant shall indemnify and hold Landlord harmless against any and all claims
arising from the negligence of Tenant, its officers, agents, invitees or employees, or arising from the failure of Tenant to comply with any covenant or agreement required to be performed herein by
Tenant, and shall, at Tenant's own expense, defend Landlord against any suits or actions arising from such injury or damage and all appeals therefrom, and shall satisfy and discharge any judgment or
decree that may be awarded against Landlord in any such proceeding. Tenant shall not be required to indemnify, defend, or hold Landlord harmless from or against claims, liability, loss, cost or
expense arising out of (i) the breach by Landlord, or Landlord's agents, employees, licensees, invitees, or independent contractors (collectively "Landlord's Agents"), of any covenant,
representation or warranty under this Lease, or (ii) any negligence or willful misconduct of Landlord of Landlord's Agents. Landlord shall indemnify and hold Tenant harmless against any and all
claims arising from the negligence of Landlord or Landlord's agents or arising from Landlord's failure to comply with any covenant or agreement required to be performed by Landlord herein and Landlord
shall at Landlord's expense, defend Tenant against any actions arising from such injury or damage and all appeals therefrom, and shall satisfy and discharge any judgment or decree that may be awarded
against Tenant in any such proceeding. 

                3.5.3    Liability Insurance.    In order to comply with the foregoing provision, Tenant shall procure
and thereafter, during the term of this Lease, continue to carry public liability and property damage insurance including fire/legal liability coverage with a responsible company, with limits of not
less than $500,000.00, single limit. Such insurance shall cover all risks arising directly or indirectly out of Tenant's activities or any condition of the Leased Premises, whether or not related to
an occurrence caused or contributed to by Tenant but may exclude coverage for contamination by Hazardous Substances. Certificates evidencing such insurance and bearing endorsements requiring
30-days' written notice to Landlord prior to any change or cancellation shall be furnished to Landlord by Tenant. 

        3.6    Fixtures.

                3.6.1    Property Rights.    All fixtures placed upon the Leased Premises during the term by Tenant,
other than Tenant's trade fixtures, shall, at Landlord's option, become the property of Landlord. Movable furniture, decorations, curtains, blinds, furnishings, signs and trade fixtures shall remain
the property of Tenant, if placed upon the Leased Premises by Tenant. 

                3.6.2    Removal.    If Landlord so elects, Tenant shall remove any or all fixtures including
underground storage tanks placed upon the Leased Premises by Tenant which would otherwise remain the property of Landlord, and shall repair any physical damage resulting from the removal. If Tenant
fails to remove such fixtures within twenty (20) days after Landlord's request for removal, Landlord may do so and charge the cost to Tenant. Tenant shall remove all furnishings, furniture and
trade fixtures which remain the property of Tenant. If Tenant fails to do so, this shall be an abandonment of the property, and Landlord may retain the property and all rights of Tenant with respect
to it shall cease, or, by notice in writing given to Tenant within 10-days after removal was required, Landlord may elect to hold Tenant to the obligation of removal. If Landlord elects to
require Tenant to remove, Landlord may effect a removal and place the property in public storage for Tenant's account. Tenant 

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shall be liable to Landlord for the cost of removal, transportation to storage and storage, with interest at 12-percent per annum on all such expenses from the date of expenditure by
Landlord. 

                3.6.3    Time For Removal.    The time for removal of any property or fixtures which Tenant is required
to remove from the Leased Premises upon termination shall be as follows: 

                (1)    On
or before the date the Lease terminates because of expiration of the original or a renewal term or because of default under Article V. 

                (2)    Within
10-days after notice from Landlord requiring such removal where the property to be removed is a fixture which Tenant is not required to
remove except after such notice by Landlord. 

        3.7    Surrender at Expiration.    Upon expiration of the lease term or earlier termination on account of default,
Tenant shall deliver all keys to Landlord and surrender the Leased Premises in good condition, reasonable wear and tear excepted, and broom clean. Alterations constructed by Tenant with permission
from Landlord shall not be removed or restored to the original condition unless the terms of permission for the alteration so require. Depreciation and wear from ordinary use for the purpose for which
the Premises were let need not be restored, but all repair for which Tenant is responsible shall be completed to the latest practical date prior to such surrender. Tenant's obligations under this
paragraph shall be subordinate to the provisions of Article IV related to destruction. 

ARTICLE IV

DAMAGE, DESTRUCTION OR EMINENT DOMAIN  

        4.1    Damage.

                4.1.1    Insured Loss.    If there is damage to the Leased Premises which was caused by any peril
required to be covered or actually covered by insurance pursuant to Paragraph 2.6 above ("Insured Loss"), or if there is damage which is not an Insured Loss, but the estimated restoration cost
is no more than 33-percent of the then actual replacement cost of the Leased Premises, as the case may be, then, in either event, Landlord shall, at Landlord's expense, repair such damage,
but not damage to Tenant's trade fixtures or equipment, as promptly as possible; and this Lease shall continue in full force and effect, except as otherwise provided below. 

                4.1.2    Damage; Uninsured Loss.    If there is damage which is not an Insured Loss and the estimated
restoration costs exceeds 33-percent of the actual replacement cost of the Leased Premises, as the case may be, then Landlord may at Landlord's option either (i) repair such damage
as promptly as possible at Landlord's expense, in which event the Lease shall continue in full force and effect, or (ii) give notice to Tenant within 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. If Landlord elects to terminate this Lease, Tenant shall have the right
within 10-days after the receipt of such notice to give notice to Landlord of Tenant's intention to repair such damage at Tenant's expense, without reimbursement from Landlord, in which
event this Lease shall continue in full force and effect, and Tenant shall proceed to make such repairs as soon as reasonably possible, except that Landlord shall be obligated to reimburse Tenant for
100-percent of the insurance proceeds received attributable to the replacement of the damaged improvements. If Tenant does not give such notice within such 10-day period, this
Lease shall be terminated as of the date of the occurrence of such damage. 

                4.1.3    Abatement of Rent.    If Landlord or Tenant restores the Leased Premises pursuant to the
provisions of this Article, the monthly Rent and real property taxes payable hereunder by Tenant for the period during which such restoration continues shall be abated in proportion to the degree to
which Tenant's use of the Leased Premises or access thereto is impaired. Except for the foregoing abatements, Tenant shall have no claim against Landlord for any damage suffered by reason of any such
damage, destruction, repair or restoration, except as otherwise provided in Paragraph 3.5.2. 

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                4.1.4    Waiver.    Landlord and Tenant waive the provisions of any statutes which relate to termination
of leases when leased property is destroyed, and agree that such event shall be governed by the terms of this Lease. 

        4.2    Tenant's Termination Rights.

                (i)    Notwithstanding
anything to the contrary herein, if there is damage, whether or not an Insured Loss (including destruction required by any authorized
public authority) which cannot be repaired within 180-days after the date of the casualty (the "Estimated Rebuilding Period") as reasonably determined by an architect or engineer jointly
selected by Landlord and Tenant, this Lease shall terminate at the option of Tenant as of the date of such damage. Landlord and Tenant shall use reasonable efforts to obtain a written estimate of the
repair period within 30-days after the date of damage. If Tenant desires to exercise its termination option, it shall give Landlord written notice of such exercise within
30-days after Tenant obtains written notice of the estimated repair period. 

                (ii)    If
Landlord has not completed the restoration within an additional 60-days after the Estimated Rebuilding Period, Tenant shall have the right
to terminate this Lease upon notice to Landlord given at any time prior to the date that Landlord's restoration is completed. 

                (iii)    If
Landlord is required or elects to restore the Leased Premises under the provisions of this section and does not commence such restoration within
120-days of the date the damage occurs, Tenant may, at Tenant's option, terminate this Lease by giving Landlord notice thereof at any time prior to the commencement of such restoration. In
such event, this Lease shall terminate as of the date of such notice. 

                (iv)    Upon
termination of this Lease by either party pursuant to this Article 4, an equitable adjustment shall be made concerning advance rent and any
advance payments made by Tenant to Landlord. Landlord shall, in addition, return to Tenant so much of Tenant's security deposit as has not theretofore been applied by Landlord. 

        4.3    Damage Near End of Term.    If at any time during the last year of the term of this Lease, there is a casualty
to the Leased Premises (whether or not an Insured Loss) such that Tenant's use or occupancy of the Leased Premises is materially impaired, Landlord or Tenant may terminate this Lease as of the date of
the casualty by giving the other party notice within 45-days after the date of such casualty. Notwithstanding anything to the contrary in this Lease, if at the time of such casualty,
Tenant has an option to extend the term of the Lease and the time for the exercise of such option has not then expired, Tenant shall have a period of 45-days from the date of casualty in
which to elect to exercise the extension option. If Tenant exercises such option during said 45-day period, and provided Landlord is otherwise obligated to, or elects to, repair such
damage under the provisions of this section, Landlord shall, at Landlord's expense, repair such damage as soon as reasonably possible, and this Lease shall continue in full force and effect. If Tenant
fails to exercise such option during said 45-day period, then Landlord may, at Landlord's option, terminate this Lease effective as of the date of the casualty, giving notice to Tenant of
Landlord's election to do so within 10-days after the expiration of said 45-day period. 

        Notwithstanding
anything herein to the contrary, if all the Leased Premises or all access thereto is taken for public or quasi-public use in condemnation proceedings, by right of eminent
domain, or deed in lieu thereof, this Lease shall terminate as of the date of taking and charges including rent due under this Lease shall be prorated as of the date of this Lease, and any prepaid
rent and other charges shall be refunded to Tenant. However, if less than the entire Leased Premises is taken and, in Tenant's opinion the remaining portion is adequate and suitable for use for its
purposes as herein stated, then at Tenant's option to be exercised by notice to Landlord within 20-days following said taking, this Lease shall continue in full force and effect as to that
portion of the Leased Premises remaining, and the monthly rental payable hereunder after the date of said taking for the remainder of the term hereof shall be reduced in the same proportion as the
floor area of the Leased Premises is reduced by said taking. In such event (i.e. the continuance of the Lease as to the portion remaining), Landlord shall, at 

8

 

its sole cost and expense, proceed diligently to restore said Leased Premises as closely as possible to their condition immediately prior to the taking. Landlord shall, at all times, keep Tenant
promptly and fully advised of any condemnation proceedings or threat thereof. Any award or compensation arising out of such appropriation or taking shall be apportioned between Landlord and Tenant
with respect to the property of the Landlord and the relocation expenses, improvements, fixtures and leasehold of the Tenant so taken without regard to any termination of this Lease. Nothing herein
shall prohibit Tenant from taking independent action against the condemning authority to recover any other damage or costs to which it may be entitled. 

        Landlord
represents and warrants that, as of the commencement of the Lease, it has no actual or constructive knowledge of any proposed condemnation or road or access changes or
impairment to the visibility of the Leased Premises including, but not limited to, turn restrictions, barriers or medians, overpasses, underpasses or bypasses, that would adversely affect the Leased
Premises or the conduct of Tenant's business at the Leased Premises. In the event that, prior to the commencement date, any of the foregoing actions is proposed by any governmental or private
authority, Tenant shall be under no obligation to commence or continue construction of its work on the Leased Premises, and Tenant shall have the option to (i) recover all rights, damages and
awards pursuant to which it is entitled hereunder, or (ii) terminate this Lease with a reservation of its rights and remedies hereunder. 

        4.4    Tenant's Damage Claim for Eminent Domain.    Nothing contained herein shall be construed to preclude Tenant
from prosecuting any claim directly against the condemning authority in such condemnation proceedings for loss of business, or depreciation of, damage to, or cost of removal of or for the value of
stock, trade fixtures, furniture and other personal property belonging to Tenant; provided, however that no such claims shall diminish or otherwise adversely affect Landlord's award for the taking of
the land, buildings and improvements thereon. 

ARTICLE V

DEFAULT  

        5.1    Default by Tenant.    The following shall be events of default: 

                5.1.1    Failure To Pay Rent.    Failure of Tenant to pay any rent or other charge within
10-days after notice from Landlord that the same is delinquent and Tenant receives written notice from Landlord that the rental is due; provided, however, Landlord shall not be required to
give Tenant written notice of nonpayment more than two (2) times during any calendar year. 

                5.1.2    Failure of Obligation Other Than Rent.    Failure of Tenant to comply with any term or
condition or fulfill any obligation of the Lease (other than the payment of rent or other charges) within 30-days after written notice by Landlord specifying the nature of the default with
reasonable particularity. If the default is of such a nature that it cannot be completely remedied within the 30-day period, this provision shall be complied with if Tenant begins
correction of the default within the 30-day period and thereafter proceeds with reasonable diligence and in good faith to effect the remedy as soon as practicable. 

                5.1.3    Insolvency of Tenant.    An assignment by Tenant for the benefit of creditors; the filing by
Tenant of a voluntary petition in bankruptcy; an adjudication that Tenant is bankrupt or the appointment of a receiver of the properties of Tenant; the filing of an involuntary petition of bankruptcy
and failure by Tenant to secure a dismissal of the petition within 60-days after filing; attachment of or the levying of execution on the leasehold interest and failure of Tenant to secure
discharge of the attachment or release of the levy of execution within 60-days. If Tenant consists of two or more individuals or business entities, the events of default specified in this
subparagraph shall apply to each individual unless within 30-days after an event of default occurs, the remaining individual(s) produce evidence satisfactory to Landlord that they have
unconditionally acquired the interest of the one causing the default. If the Lease has been assigned, the events of default so specified shall apply 

9

 

only with respect to the one then exercising the rights of Tenant under the Lease. This paragraph shall apply only to the extent that it is not in conflict with the United States Bankruptcy Laws. 

        5.2    Remedies on Default by Tenant.

                5.2.1    Landlord's Right To Terminate.    In the event of a default, the Lease may be terminated at the
option of Landlord by notice in writing to Tenant. The notice may be given before or after the running of the grace period for default and may be included in a notice of failure of compliance given
under Paragraph 5.1.2. 

                5.2.2    Damages Without Termination.    If the Lease is not terminated by election of Landlord or
otherwise, Landlord shall be entitled to recover damages from Tenant for the default. 

                5.2.3    Liability Following Termination.    If the Lease is terminated for any reason, Tenant's
liability to Landlord for damages shall survive such termination, and the rights and obligations of the parties shall be as follows: 

                (1)    Tenant
shall vacate the property immediately, remove any property of Tenant, including any fixtures which Tenant is required to remove at the end of the
lease term, perform any cleanup, alterations or other work required to leave the property in the condition required at the end of the term, and deliver all keys to Landlord. 

                (2)    Landlord
may reenter, take possession of the Premises and remove any persons or property by legal action. 

                5.2.4    Rights On Reentry.    Following reentry or abandonment, Landlord may relet the Premises and in
that connection may: 

                (1)    Make
any suitable alterations or refurbish the Premises, or both, or change the character or use of the Premises, but Landlord shall not be required to
relet for any use or purpose (other than that specified in the Lease) which Landlord may reasonably consider injurious to the Premises, or to any tenant which Landlord may reasonably consider
uncreditworthy. 

                (2)    Relet
all or part of the Premises, alone or in conjunction with other properties, for a term longer or shorter than the term of this Lease, upon any
reasonable terms and conditions, including the granting of some rent-free occupancy or other rent concession. 

                5.2.5    Damages On Termination.    In the event of termination on default, Landlord shall be entitled
to recover immediately, without waiting until the due date of any future rent or until the date fixed for expiration of the lease term, the following amounts as damages: 

                (1)    Any
excess of (a) the value of all of Tenant's obligations under this Lease, including the obligation to pay rent, from the date of default until
the end of the term, over (b) the reasonable rental value of the property for the same period figured as of the date of default, the net result to be discounted to the date of default at a
reasonable rate, not exceeding 8-percent per annum. 

                (2)    The
reasonable costs of reentry and reletting, including without limitation the cost of any cleanup, refurbishing, removal of Tenant's property and
fixtures, or any other expense occasioned by Tenant's failure to quit the Premises upon termination and to leave them in the required condition, any remodeling costs required to make the Leased
Premises conform to the condition that Tenant was
otherwise required to surrender them in at the expiration of the Lease, together with attorney fees, court costs, broker commissions and advertising costs. 

                5.2.6    Other Remedies.    The foregoing remedies shall be in addition to and shall not exclude any
other remedy available to Landlord under applicable law. 

        5.3    Liquidated Damages.    In the event that Tenant fails to pay rent when due pursuant to this Agreement and
Landlord does not elect to terminate the Lease for such default, in addition to any 

10

 

remedy not inconsistent herewith, Tenant agrees to pay to Landlord as liquidated damages for such late payment, 3-percent of the rental otherwise due. 

        5.4    Default by Landlord. In the event of failure by Landlord to comply with any term of this Lease or discharge any
obligation of this Lease, and such failure is not cured by Landlord within thirty (30) days of written notice from Tenant, then Tenant may pay or discharge Landlord's obligation and offset the
cost so incurred from rent thereafter owing until Tenant has been reimbursed from the cost so incurred. If the amount expended by Tenant exceeds the rent thereafter owing, Landlord shall reimburse the
excess upon demand. 

ARTICLE VI

MISCELLANEOUS  

        6.1    Accord and Satisfaction.    No payment by Tenant or receipt by Landlord of a lesser amount than the rent herein
stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be
deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy provided in this
Lease. 

        6.2    Notices.    Any notice required or permitted under this Lease shall be given when actually delivered or when
deposited in the United States mail, as certified mail, addressed as follows: 

	 
	 	 

	To Landlord:	 	MEL BANKOFF

2905 Adams Street

Eugene, Oregon 97405
	

To Tenant:	
 	

MONTEREY PASTA COMPANY, INC.

1528 Moffett Street

Salinas, California 93905

or
to such other address as may be specified from time to time by either of the parties in writing. 

        6.3    Joint and Several Liability.    In the event Tenant now or hereafter shall consist of more than one person,
firm or corporation, all such persons, firms or corporations shall be jointly and severally liable as Tenant hereunder. 

        6.4    Entire Agreement.    This document contains the entire agreement between the parties and shall not be altered
or modified except by written agreement, signed by all the parties hereto. 

        6.5    Use of Pronoun.    The use of the neuter, singular pronoun to refer to Tenant shall be deemed a proper
reference even though Tenant may be an individual, a partnership, a corporation, or a group of two or more individuals or corporations. The necessary grammatical changes required to make the
provisions of this Lease apply in the plural sense where there is more than one Tenant and to either corporations, associations, partnerships, or individuals, males or females shall in all instances
be assumed as though in each case fully expressed. 

        6.6    Paragraph Headings.    Paragraph headings are used for the convenience of the reader and are not intended to
effect the legal rights otherwise determined under this Lease Agreement. 

        6.7    Waiver.    It is understood and agreed by the parties that no waiver by the Landlord of any breach of any
provision hereof by Tenant, or any forbearance by the Landlord hereunder, shall constitute or be deemed to be a waiver of any remedy provided by law or by this Agreement upon any subsequent breach by
Tenant of the same or any other provision of this Agreement. 

11

 

        6.8    Heirs and Assigns.    Subject to the restrictions upon assignment described above, this Agreement shall be
binding upon and inure to the benefit of the heirs and assigns of the parties. 

        6.9    Signs.    Landlord hereby consents to Tenant's installation of signage, at Tenant's sole cost and expense, to
be constructed in accordance with applicable provisions of the City of Eugene Municipal Code. Tenant shall remove all such signage at the expiration of the term and repair any damage caused by such
removal. 

        6.10    Attorney Fees.    In the event that suit or action is instituted by any party to this Agreement to enforce the
terms of this agreement, it is understood that the prevailing party in such suit or action shall be entitled to recover, in addition to the relief provided by the court, such further sums as the trial
or appellate court may award as reasonable attorney fees, including any fees assessed as the reasonable estimated costs to enforce collection of any judgment entered. 

        6.11    Waiver of Landlord's Lien. Landlord waives any and all rights, title and interest Landlord now has, or hereafter may
have, whether statutory or otherwise, to Tenant's inventory, equipment, furnishings, trade fixtures, books and records, personal property, and tenant improvements paid for by Tenant located at the
Leased Premises (singly and/or collectively, the "Collateral"). Landlord acknowledges that Landlord has no lien, right, claim, interest or title in or to the Collateral. Landlord further agrees that
Tenant shall have the right, at its discretion, to mortgage, pledge, hypothecate or grant a security interest in the Collateral as security for its obligations under any equipment lease or other
financing arrangement related to the conduct of Tenant's business at the Leased Premises. 

        IN
WITNESS WHEREOF, the parties have executed this Lease Agreement, in duplicate, as of the day and year above stated. 

	Landlord:	 	Tenant:
	
 	
 	

 	
 	
MONTEREY PASTA COMPANY
	

By:	
 	

/s/  MEL BANKOFF      
 Mel Bankoff	
 	

By:	
 	

/s/  R. LANCE HEWITT      
 R. Lance Hewitt
	 	 	 	 	Its:	 	President/CEO

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QuickLinks

EXHIBIT 10.43

TABLE OF CONTENTS

COMMERCIAL LEASE AGREEMENT

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