Document:

Exhibit 10.7

 

The parties making personal guarantees under
the Form of Guaranty of Credit, entered into in connection with the Norwich
Associates, LC $7.0 million line of credit established on September 17, 2001,
did so up to the amount set forth next to his/its name below:

 

John J. Byrne, Jr. - $924,000.00

 

John J. Byrne III - $952,000.00

 

Patrick M. Byrne - $924,000.00

 

J. Gregory Hale - $700,000.00

 

Cirque Property LC - $700,000.00

 

 

 

 

 

Final
9/12/01

 

GUARANTY
OF CREDIT

(_____)

 

                FOR VALUE RECEIVED, and for the
purpose of enabling NORWICH ASSOCIATES L.C. of Salt Lake City, Utah
(hereinafter called “Debtor”), to obtain credit from HAVERFORD UTAH, L.L.C,
(hereinafter called “Lender”), the undersigned (also referred to hereafter as
“Guarantor”) does hereby guarantee to the Lender, the prompt payment when due
or at any time thereafter, of thirteen and _______ percent (___%) of the then
unpaid balance of that certain Revolving Promissory Note in favor of Lender
executed by Debtor dated September 12, 2001, in the face amount of
$7,000,000.00 (the “Indebtedness”).  In
no event shall Guarantor’s obligation hereunder exceed the total amount of
_____________ Dollars ($_______).

                In the event that said Debtor
fails at any time or times to promptly pay any or all of the Indebtedness, the
undersigned promises to pay up to _________________ percent (___%) of the then
unpaid balance of the Indebtedness, but in no event to exceed the total amount
of $_________, as the same becomes due from said Debtor to said Lender, forthwith,
upon demand, including attorneys’ fees that may be incurred in enforcing the
provisions of this agreement including payment hereunder.

                The undersigned Guarantor hereby
waives presentment for payment, protest and notice of dishonor and of non-performance
of any note evidencing the Indebtedness.

                This is not a continuing
guaranty.  No other indebtedness of debt
of the Debtor is guaranteed by this Guaranty.

 

 

                Guarantor executes this Guaranty
for the purpose of inducing Lender to extend credit to Debtor, and Guarantor
hereby agrees that the Indebtedness was agreed to and extended by Lender to
Debtor or for its account in reliance upon this Guaranty.

                Guarantor agrees that upon any
default of Debtor, Lender may, at its option, proceed directly and at once, and
without notice to Guarantor of the occurrence of such default by Debtor,
against Guarantor to collect and recover the sum of Guarantor’s portion of the
Indebtedness, as guaranteed hereby.  The
obligations of Guarantor under this agreement are independent of the
obligations of Debtor, and separate action or actions may be brought and
prosecuted against Guarantor whether action is brought against Debtor or
whether Debtor be joined in any such action oar actions.  Guarantor agrees that the payment of any
indebtedness or other act which shall toll any applicable statute of
limitations shall similarly operate to toll such statute of limitations
applicable to Guarantor’s liability under this Guaranty.  Guarantor agrees to assume the
responsibility for being and keeping informed of the financial conditions of
Debtor and of all other circumstances bearing upon the risk of nonpayment of
the Indebtedness which diligent inquiry would reveal, and that Lender shall
have no obligation to advise Guarantor of any information relating to the
financial condition of Debtor, and absent a written request for information by
Guarantor, no obligation to inform Guarantor regarding the status of the
Indebtedness.

                Guarantor agrees that Lender
may, from time to time, at Lender’s election, without notice to Guarantor,
without Guarantor’s consent, and without affecting Guarantor’s liability under
this agreement, (a) renew, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Indebtedness or any

 

 

part
thereof of Debtor, including increasing or decreasing the rate of interest on
such indebtedness; (b) take and hold security for the payment of this Guaranty
or the indebtedness guaranteed, and exchange, surrender, compromise, release,
enforce, waive, release or deal with such security in any manner Lender deems
necessary, whether or not this security was provided by Debtor or Guarantor;
(c) apply such security and direct the order or manner of sale as Lender in its
discretion may determine, and (d) release or substitute any one or more of the
endorsers (if any) of Debtor.

                Guarantor waives any right: (a)
to require any notice of action or non action on the part of Debtor or lender
or of Guarantor; (b) to require any notice of the creation, renewal, extension
or accrual of any obligation or obligations of Debtor, present or future; (c)
to require notice of default or nonpayment and notice of dishonor to or upon
Guarantor, Debtor or any other party liable for any of the obligations of Debtor;
(d) to make any defense arising by reason of any disability of Debtor or by
reason of the cessation from any cause whatsoever of the liability of Debtor;
(e) for subrogation until all the Indebtedness is paid in full to Lender; (f)
to participate in any security now or hereafter held by Lender, and (g) to
claim any right to cause a marshalling of any or all Debtor’s assets or to
cause Lender to proceed against any of the security before proceeding against
Guarantor.

                Guarantor agrees to pay a
reasonable attorney’s fee and court costs of this Guaranty be placed with an
attorney for collection or enforcement or if suit be instituted thereon.  Guarantor further agrees that this Guaranty
shall be binding upon the undersigned, the legal representatives, successors
and assigns of the undersigned and shall be governed by and constructed in
accordance with the laws of the State of Utah.

 

 

                Guarantor agrees that all rights
and remedies of Lender are cumulative and distinct and may exercised
concurrently, independently or successively. 
The failure of Lender to promptly exercise any right hereunder shall not
operate as a waiver of such right and the waiver of any default shall not
constitute a waiver of any subsequent or other default.

                This contract shall inure to the
benefit of all transferees, assignees and/or endorsers of said Lender of any
part, parts or all of the Indebtedness partially herein guaranteed.

                IN WITNESS WHEREOF, the
Guarantor has hereto subscribed his/its name effective that 12th day
of September, 2001.

 

 

_______________________

_________, Guarantor

 

 

In the Presence Of:

 

_____________________

Witness

 

_____________________

WitnessEXHIBIT 10.12

STANDARD
INDUSTRIAL/COMMERCIAL MULTI–TENANT LEASE—NET

AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION

1.             Basic Provisions (“Basic
Provisions”).

1.1          Parties: 
This Lease (“Lease”), dated for reference purposes only,
March 15, 2000, is made by and between Marvin L. Oates
Trust dated March 7, 1995 (“Lessor”) and overstock.com, a Utah
Corporation (“Lessee”), (collectively the “Parties,”
or individually a “Party”).

1.2          (a) Premises: 
That certain portion of the Building, known as Suite 100
containing approximately 109,725 square feet of office and warehouse
space including all improvements therein or to be provided by Lessor under the
terms of this Lease, commonly known by the street address of 955 South 3800
West, located in the City of Salt Lake, County of Salt Lake,
State of Utah, with zip code 84104, as outlined on Exhibit A
attached hereto (“Premises”).  The
“Building” is that certain building containing the Premises and generally
described as:  a 354,255 square foot
concrete tilt up building.  In addition
to Lessee’s rights to use and occupy the Premises as hereinafter specified,
Lessee shall have non–exclusive rights to the Common Areas (as defined in
Paragraph 2.7 below) as hereinafter specified, but shall not have any
rights to the roof, exterior walls or utility raceways of the Building or to
any other buildings in the Industrial Center. 
The Premises, the Building, the Common Areas, the land upon which they
are located, along with all other buildings and improvements thereon, are
herein collectively referred to as the “Industrial Center.” (Also see
Paragraph 2.)

(b)           Parking: 
40 unreserved vehicle parking spaces (“Unreserved Parking Spaces”);
and n/a reserved vehicle parking spaces (“Reserved Parking Spaces”).  (Also see Paragraph 2.6.)

1.3          Term: 
5 years and 1 months (“Original Term”) commencing June 1,
2000 (“Commencement Date”) and ending June 30, 2005 (“Expiration
Date”).  (Also see
Paragraph 3.)

1.4          Early
Possession:  See Addendum Paragraph 3.3  (“Early Possession Date”).  (Also see Paragraphs 3.2 and 3.3.)

1.5          Base Rent: 
$30,723.00 per month (“Base Rent”), payable on the first
day of each month commencing June 1, 2000 (Also see
Paragraph 4.) [X] If this box is checked, this Lease provides for the Base
Rent to be adjusted per Addendum 1.5, attached hereto.

1.6          (a) Base Rent Paid Upon Execution: $30,723.00
as Base Rent for the period first month’s rent.

(b)           Lessee’s Share of Common Area Operating Expenses:
Thirty and 97/100 percent (30.97%) (“Lessee’s Share”) as
determined by [X] pro rata square footage of the Premises as compared to the
total square footage of the Building or [ ] other criteria as described in
Addendum ___.

 

 

1.7          Security
Deposit:  $200,000.00 (“Security Deposit”).  (Also see Paragraph 5 and Addendum
Paragraph 5.)

1.8          Permitted
Use:  Warehousing and distribution of consumer
merchandise (“Permitted Use”).  (Also see Paragraph 6.)

1.9          Insuring
Party.  Lessor is the “Insuring Party.” (Also see
Paragraph 8.)

1.10        (a) Real Estate Brokers.  The following real estate broker(s) (collectively,
the “Brokers”)
and brokerage relationships exist in this transaction and are consented to by
the Parties (check applicable boxes):

[   ]                               NAI Utah Commercial Real Estate represents Lessor exclusively (“Lessor’s
Broker”);

[   ]                               CB Commercial represents Lessee exclusively (“Lessee’s
Broker”); or

[   ]                               ____________________ represents both
Lessor and Lessee (“Dual Agency”).  (Also see Paragraph 15.)

(b)           Payment to Brokers.  Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s) (or in the event there is
no separate written agreement between Lessor and said Broker(s), the sum of $per
separate agreement) for brokerage services rendered by said Broker(s) in
connection with this transaction.

1.11        Guarantor. 
The obligations of the Lessee under this Lease are to be guaranteed by None
(“Guarantor”).  (Also see Paragraph 37.)

1.12        Addenda
and Exhibits.  Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 57, and Exhibits A — C,
all of which constitute a part of this Lease.

2.             Premises, Parking and Common Areas.

2.1          Letting. 
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
the Premises, for the term, at the rental, and upon all of the terms, covenants
and conditions set forth in this Lease. 
Unless otherwise provided herein, any statement of square footage set
forth in this Lease, or that may have been used in calculating rental and/or
Common Area Operating Expenses, is an approximation which Lessor and Lessee
agree is reasonable and the rental and Lessee’s Share (as defined in
Paragraph 1.6(b)) based thereon is not subject to revision whether or not
the actual square footage is more or less.

2.2          Condition. 
Lessor shall deliver the Premises to Lessee broom clean and free of
debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Premises, other than
those constructed by Lessee, shall be in good operating condition on the
Commencement Date.  If a non–compliance
with said warranty exists as of the Commencement 

 

 

2

 

Date, Lessor shall, except as otherwise provided in
this Lease, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non–compliance, rectify
same at Lessor’s expense.  If Lessee
does not give Lessor written notice of a non–compliance with this
warranty within thirty (30) days after the Commencement Date, correction of
that non–compliance shall be the obligation of Lessee at Lessee’s sole
cost and expense.

2.3          Compliance
with Covenants, Restrictions and Building Code.  Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee’s direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor’s consent or at Lessor’s direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.  Lessor further warrants to Lessee that
Lessor has no knowledge of any claim having been made by any governmental
agency that a violation or violations of applicable building codes,
regulations, or ordinances exist with regard to the Premises as of the
Commencement Date.  Said warranties
shall not apply to any Alterations or Utility Installations (defined in
Paragraph 7.3(a)) made or to be made by Lessee.  If the Premises do not comply with said warranties, Lessor shall,
except as otherwise provided in this Lease, promptly after receipt of written
notice from Lessee given within six (6) months following the Commencement Date
and setting forth with specificity the nature and extent of such non–compliance,
take such action, at Lessor’s expense, as may be reasonable or appropriate to
rectify the non–compliance. 
Lessor makes no warranty that the Permitted Use in Paragraph 1.8 is
permitted for the Premises under Applicable Laws (as defined in
Paragraph 2.4).

2.4          Acceptance
of Premises.  Lessee hereby acknowledges:  (a) that it has been advised by the
Broker(s) to satisfy itself with respect to the condition of the Premises
(including but not limited to the electrical and fire sprinkler systems,
security, environmental aspects, seismic and earthquake requirements, and
compliance with the Americans with Disabilities Act and applicable zoning,
municipal, county, state and federal laws, ordinances and regulations and any
covenants or restrictions of record (collectively, “Applicable Laws”) and the
present and future suitability of the Premises for Lessee’s intended use;
(b) that Lessee has made such investigation as it deems necessary with
reference to such matters, is satisfied with reference thereto, and assumes all
responsibility therefore as the same relate to Lessee’s occupancy of the
Premises and/or the terms of this Lease; and (c) that neither Lessor, nor
any of Lessor’s agents, has made any oral or written representations or
warranties with respect to said matters other than as set forth in this Lease.

2.5          Lessee as
Prior Owner/Occupant.  The warranties made by Lessor in this
Paragraph 2 shall be of no force or effect if immediately prior to the
date set forth in Paragraph 1.1 Lessee was the owner or occupant of the
Premises.  In such event, Lessee shall,
at Lessee’s sole cost and expense, correct any non–compliance of the
Premises with said warranties.

2.6          Vehicle
Parking.  Lessee shall be entitled to use the number
of Unreserved Parking Spaces and Reserved Parking Spaces specified in
Paragraph 1.2(b) on those portions of the Common Areas designated from
time to time by Lessor for parking. 
Lessee shall not use more parking spaces than said number.  Said parking spaces shall be used for
parking by vehicles no larger than full–size passenger automobiles or
pick–up trucks, herein called “Permitted Size Vehicles.” Vehicles other
than Permitted Size Vehicles shall be parked and loaded or unloaded as directed
by Lessor in the Rules and Regulations (as defined in Paragraph 40) issued
by Lessor.  (Also see Paragraph 2.9.)

 

3

 

(a)           Lessee shall not permit or allow any
vehicles that belong to or are controlled by Lessee or Lessee’s employees,
suppliers, shippers, customers, contractors or invitees to be loaded, unloaded,
or parked in areas other than those designated by Lessor for such activities.

(b)           If Lessee permits or allows any of
the prohibited activities described in this Paragraph 2.6, then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved and
charge the cost to Lessee, which cost shall be immediately payable upon demand
by Lessor.

(c)           Lessor shall at the Commencement Date
of this Lease, provide the parking facilities required by Applicable Law.

2.7          Common
Areas - Definition.  The term “Common Areas” is defined as
all areas and facilities outside the Premises and within the exterior boundary
line of the Industrial Center and interior utility raceways within the Premises
that are provided and designated by the Lessor from time to time for the
general non–exclusive use of Lessor, Lessee and other lessees of the
Industrial Center and their respective employees, suppliers, shippers,
customers, contractors and invitees, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways and landscaped areas.

2.8          Common
Areas - Lessee’s Rights.  Lessor hereby grants to
Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non–exclusive
right to use, in common with others entitled to such use, the Common Areas as
they exist from time to time, subject to any rights, powers, and privileges
reserved by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center.  Under no circumstances shall the right
herein granted to use the Common Areas be deemed to include the right to store
any property, temporarily or permanently, in the Common Areas.  Any such storage shall be permitted only by
the prior written consent of Lessor or Lessor’s designated agent, which consent
may be revoked at any time.  In the
event that any unauthorized storage shall occur then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it
may have, to remove the property and charge the cost to Lessee, which cost
shall be immediately payable upon demand by Lessor.

2.9          Common Areas. 
Rules
and Regulations.  Lessor or
such other person(s) as Lessor may appoint shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
establish, modify, amend and enforce reasonable Rules and Regulations with
respect thereto in accordance with Paragraph 40.  Lessee agrees to abide by and conform to all such Rules and
Regulations, and to cause its employees, suppliers, shippers, customers,
contractors and invitees to so abide and conform.  Lessor shall not be responsible to Lessee for the non–compliance
with said rules and regulations by other lessees of the Industrial Center.

 

4

 

2.10        Common
Areas.  Changes. 
Lessor shall have the right, in Lessor’s sole discretion, from time to
time:

(a)           To make changes to the Common Areas,
including, without limitation, changes in the location, size, shape and number
of driveways, entrances, parking spaces, parking areas, loading and unloading
areas, ingress, egress, direction of traffic, landscaped areas, walkways and
utility raceways;

(b)           To close temporarily any of the
Common Areas for maintenance purposes so long as reasonable access to the
Premises remains available;

(c)           To designate other land outside the
boundaries of the Industrial Center to be a part of the Common Areas;

(d)           To add additional buildings and
improvements to the Common Areas;

(e)           To use the Common Areas while engaged
in making additional improvements, repairs or alterations to the Industrial Center,
or any portion thereof; and

(f)            To do and perform such other acts
and make such other changes in, to or with respect to the Common Areas and
Industrial Center as Lessor may, in the exercise of sound business judgment,
deem to be appropriate.

3.             Term.

3.1          Term. 
The Commencement Date, Expiration Date and Original Term of this Lease
are as specified in Paragraph 1.3.

3.2          Early
Possession.  If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises
after the Early Possession Date but prior to the Commencement Date, the
obligation to pay Base Rent shall be abated for the period of such early
occupancy.  All other terms of this
Lease, however, (including but not limited to the obligations to pay Lessee’s
Share of Common Area Operating Expenses and to carry the insurance required by
Paragraph 8) shall be in effect including such period.  Any such early possession shall not affect
nor advance the Expiration Date of the Original Term.

3.3          Delay In
Possession.  If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified,
by the Commencement Date, Lessor shall not be subject to any liability
therefore, nor shall such failure affect the validity of this Lease, or the
obligations of Lessee hereunder, or extend the term hereof, but in such case,
Lessee shall not, except as otherwise provided herein, be obligated to pay rent
or perform any other obligation of Lessee under the terms of this Lease until
Lessor delivers possession of the Premises to Lessee.  If possession of the Premises is not delivered to Lessee within
sixty (60) days after the Commencement Date, Lessee may, at its option, by
notice in writing to Lessor within ten (10) days after the end of said sixty
(60) day period, cancel this Lease, in which event the parties shall be
discharged from all obligations hereunder, provided further, however, that if
such written notice of Lessee is not received by Lessor within said ten (10) 

 

5

 

day period, Lessee’s right to cancel this Lease
hereunder shall terminate and be of no further force or effect.  Except as may be otherwise provided, and
regardless of when the Original Term actually commences, if possession is not
tendered to Lessee when required by this Lease and Lessee does not terminate
this Lease, as aforesaid, the period free of the obligation to pay Base Rent,
if any, that Lessee would otherwise have enjoyed shall run from the date of
delivery of possession and continue for a period equal to the period during
which the Lessee would have otherwise enjoyed under the terms hereof, but minus
any days of delay caused by the acts, changes or omissions of Lessee.

4.             Rent.

4.1          Base Rent. 
Lessee shall pay Base Rent and other rent or charges, as the same may be
adjusted from time to time, to Lessor in lawful money of the United States,
without offset or deduction, on or before the day on which it is due under the
terms of this Lease.  Base Rent and all
other rent and charges for any period during the term hereof which is for less
than one full month shall be prorated based upon the actual number of days of
the month involved.  Payment of Base
Rent and other charges shall be made to Lessor at its address stated herein or
to such other persons or at such other addresses as Lessor may from time to
time designate in writing to Lessee.

4.2          Common Area
Operating Expenses.  Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent, Lessee’s Share (as specified in
Paragraph 1.6(b)) of all Common Area Operating Expenses, as hereinafter
defined, during each calendar year of the term of this Lease, in accordance
with the following provisions:

(a)           “Common Area Operating Expenses” are
defined, for purposes of this Lease, as all costs incurred by Lessor relating
to the ownership and operation of the Industrial Center, including, but not
limited to, the following:

(i)            The operation, repair and
maintenance, in neat, clean, good order and condition, of the following:

(aa)         The Common Areas, including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities, fences and gates, elevators, roof and exterior
building painting.

(bb)         Exterior signs and any tenant
directories.

(cc)         Fire detection and sprinkler systems.

(ii)           The cost of water, gas, electricity and
telephone to service the Common Areas.

(iii)          Trash disposal, property management
and security services and the costs of any environmental inspections.

(iv)          Reserves set aside for maintenance and
repair of Common Areas.

 

6

 

(v)           Real Property Taxes (as defined in
Paragraph 10.2) to be paid by Lessor for the Building and the Common Areas
under Para graph 10 hereof.

(vi)          The cost of the premiums for the
insurance policies maintained by Lessor under Paragraph 8 hereof.

(vii)         Any deductible portion of an insured
loss concerning the Building or the Common Areas.  Lessor’s deductible as referenced in this paragraph is currently
$5,000.  Lessor shall notify tenant
prior to increasing the deductible on the respective policy.

(viii)        Any other services to be provided by
Lessor that are stated elsewhere in this Lease to be a Common Area Operating
Expense.

(b)           Any Common Area Operating Expenses
and Real Property Taxes that are specifically attributable to the Building or to
any other building in the Industrial Center or to the operation, repair and
maintenance thereof, shall be allocated entirely to the Building or to such
other building.  However, any Common
Area Operating Expenses and Real Property Taxes that are not specifically
attributable to the Building or to any other building or to the operation,
repair and maintenance thereof, shall be equitably allocated by Lessor to all
buildings in the Industrial Center.

(c)           The inclusion of the improvements,
facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to
impose an obligation upon Lessor to either have said improvements or facilities
or to provide those services unless the Industrial Center already has the same,
Lessor already provides the services, or Lessor has agreed elsewhere in this
Lease to provide the same or some of them.

(d)           Lessee’s Share of Common Area
Operating Expenses shall be payable by Lessee within ten (10) days after a
reasonably detailed statement of actual expenses is presented to Lessee by
Lessor.  At Lessor’s option, however, an
amount may be estimated by Lessor from time to time of Lessee’s Share of annual
Common Area Operating Expenses and the same shall be payable monthly or
quarterly, as Lessor shall designate, during each 12–month period of the
Lease term, on the same day as the Base Rent is due hereunder.  Lessor shall deliver to Lessee within sixty
(60) days after the expiration of each calendar year a reasonably detailed
statement showing Lessee’s Share of the actual Common Area Operating Expenses
incurred during the preceding year.  If
Lessee’s payments under this Paragraph 4.2(d) during said preceding year
exceed Lessee’s Share as indicated on said statement, Lessor shall be credited
the amount of such overpayment against Lessee’s Share of Common Area Operating
Expenses next becoming due.  If Lessee’s
payments under this Paragraph 4.2(d) during said preceding year were less
than Lessee’s Share as indicated on said statement, Lessee shall pay to Lessor
the amount of the deficiency within ten (10) days after delivery by Lessor to
Lessee of said statement.  Notwithstanding
the foregoing, Lessor’s obligation to credit Lessee’s account pursuant to this
paragraph shall be conditional upon Lessee having first paid all of its monthly
installments toward Lessee’s share of the estimated common area operating
expenses.

5.             Security Deposit.  Lessee shall deposit with Lessor upon
execution hereof the security deposit set forth in paragraph 1.7 of the
Basic Lease Provisions as security for Lessee’s faithful 

 

7

 

performance of Lessee’s obligations
hereunder.  If Lessee fails to pay rent
or other charges due hereunder, or otherwise defaults with respect to any
provision of this Lease, Lessor may use, apply or retain all or any portion of
said deposit for the payment of any rent or other charge in default for the
payment of any other sum to which Lessor may become obligated by reason of
Lessee’s default, or to compensate Lessor for any loss or damage which Lessor
may suffer thereby if Lessor so uses or applies all or any portion of said
deposit, Lessee shall within ten (10) days after written demand therefor
deposit cash with Lessor in an amount sufficient to restore said deposit to the
full amount then required of Lessee.  If
the monthly Base Rent shall, from time to time, increase during the term of
this Lease, Lessee shall, at the time of such increase, deposit with Lessor
additional money as a security deposit so that the total amount of the security
deposit held by Lessor shall at all times be equal to the then current monthly
base rent.  Lessor shall not be required
to keep said security deposit separate from its general accounts.  If Lessee performs all of Lessee’s
obligations hereunder, said deposit, or so much thereof as has not heretofore
been applied by Lessor, shall be returned, without payment of interest or other
increment for its use, to Lessee (or, at Lessor’s option, to the last assignee,
if any, of Lessee’s interest hereunder) at the expiration of the term hereof,
and after Lessee has vacated the Premises. 
No trust relationship is created herein between Lessor and Lessee with
respect to said Security Deposit.  (See Addendum).

6.             Use.

6.1          Permitted
Use.

(a)           Lessee shall use and occupy the
Premises only for the Permitted Use set forth in Paragraph 1.8, or any
other legal use which is reasonably comparable thereto, and for no other
purpose.  Lessee shall not use or permit
the use of the Premises in a manner that is unlawful, creates waste or a
nuisance, or that disturbs owners and/or occupants of, or causes damage to the
Premises or neighboring premises or properties.

(b)           Lessor hereby agrees to not
unreasonably withhold or delay its consent to any written request by Lessee,
Lessee’s assignees or subtenants, and by prospective assignees and subtenants
of Lessee, its assignees and subtenants, for a modification of said Permitted
Use, so long as the same will not impair the structural integrity of the
improvements on the Premises or in the Building or the mechanical or electrical
systems therein, does not conflict with uses by other lessees, is not
significantly more burdensome to the Premises or the Building and the
improvements thereon, and is otherwise permissible pursuant to this Paragraph 6.  If Lessor elects to withhold such consent,
Lessor shall within five (5) business days after such request give a written
notification of same, which notice shall include an explanation of Lessor’s reasonable
objections to the change in use.

6.2          Hazardous
Substances.

(a)           Reportable Uses Require Consent.  The term “Hazardous Substance” as used
in this Lease shall mean any product, substance, chemical, material or waste
whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises,
is either:  (i) potentially
injurious to the public health, safety or welfare, the environment, or the
Premises; (ii) regulated or monitored by any governmental authority; or
(iii) a basis for potential 

 

8

 

liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory.  Hazardous Substance shall include, but not be
limited to, hydrocarbons, petroleum, gasoline, crude oil or any products or by–products
thereof.  Lessee shall not engage in any
activity, in or about the Premises which constitutes a Reportable Use (as
hereinafter defined) of Hazardous Substances without the express prior written
consent of Lessor and compliance in a timely manner (at Lessee’s sole cost and
expense) with all Applicable Requirements (as defined in Paragraph 6.3).  “Reportable Use” shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with, any
governmental authority, and (iii) the presence in, on or about the
Premises of a Hazardous Substance with respect to which any Applicable Laws
require that a notice be given to persons entering or occupying the Premises or
neighboring properties.  Notwithstanding
the foregoing, Lessee may, without Lessor’s prior consent, but upon notice to
Lessor and in compliance with all Applicable Requirements, use any ordinary and
customary materials reasonably required to be used by Lessee in the normal
course of the Permitted Use, so long as such use is not a Reportable Use and
does not expose the Premises or neighboring properties to any meaningful risk
of contamination or damage or expose Lessor to any liability therefor.  In addition, Lessor may (but without any
obligation to do so) condition its consent to any Reportable Use of any
Hazardous Substance by Lessee upon Lessee’s giving Lessor such additional
assurances as Lessor, in its reasonable discretion deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefor, including but not limited to
the installation (and, at Lessor’s option, removal on or before Lease
expiration or earlier termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasement) and/or the deposit
of an additional Security Deposit under Paragraph 5 hereof.

(b)           Duty to Inform Lessor.  If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises or the Building, other than as previously consented to by
Lessor, Lessee shall immediately give Lessor written notice thereof, together
with a copy of any statement, report, notice, registration, application,
permit, business plan, license, claim, action, or proceeding given to, or
received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance including but not limited to all such documents as may be involved in
any Reportable Use involving the Premises. 
Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under or about the Premises (including, without limitation,
through the plumbing or sanitary sewer system).

(c)           Indemnification.  Lessee shall indemnify, protect, defend and hold Lessor, its
agents, employees, lenders and ground lessor, if any, and the Premises,
harmless from and against any and all damages, liabilities, judgments, costs,
claims, liens, expenses, penalties, loss of permits and attorneys’ and
consultants’ fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee or by anyone under Lessee’s control.  Lessee’s obligations under this
Paragraph 6.2(c) shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation (including consultants’ and
attorneys’ fees and testing), removal, remediation, restoration and/or
abatement thereof, or of any contamination therein involved, and shall survive
the expiration or earlier termination of this Lease.  No termination, cancellation or release agreement entered into by

 

9

 

Lessor and Lessee shall release Lessee from its
obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.

6.3          Lessee’s
Compliance with Requirements.  Lessee
shall, at Lessee’s sole cost and expense, fully, diligently and in a timely
manner, comply with all “Applicable Requirements,” which term is
used in this Lease to mean all laws, rules, regulations, ordinances,
directives, covenants, easements and restrictions of record, permits, the
requirements of any applicable fire insurance underwriter or rating bureau, and
the recommendations of Lessor’s engineers and/or consultants, relating in any
manner to the Premises (including but not limited to matters pertaining to
(i) industrial hygiene, (ii) environmental conditions on, in, under
or about the Premises, including soil and groundwater conditions, and
(iii) the use, generation, manufacture, production, installation,
maintenance, removal, transportation, storage, spill, or release of any
Hazardous Substance), and (iv) the Americans With Disabilities Act of 1990
and all regulations issued thereunder now in effect or which may hereafter come
into effect.  Lessee shall, within five
(5) days after receipt of Lessor’s written request, provide Lessor with copies
of all documents and information, including but not limited to permits,
registrations, manifests, applications, reports and certificates, evidencing
Lessee’s compliance with any Applicable Requirements specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation, warning,
complaint or report pertaining to or involving failure by Lessee or the
Premises to comply with any Applicable Requirements.

6.4          Inspection;
Compliance with Law.  Lessor, Lessor’s agents, employees,
contractors and designated representatives, and the holders of any mortgages,
deeds of trust or ground leases on the Premises (“Lenders”) shall have the
right to enter the Premises at any time in the case of an emergency, and
otherwise at reasonable times, for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease and all
Applicable Requirements (as defined in Paragraph 6.3), and Lessor shall be
entitled to employ experts and/or consultants in connection therewith to advise
Lessor with respect to Lessee’s activities, including but not limited to
Lessee’s installation, operation, use, monitoring, maintenance, or removal of
any Hazardous Substance on or from the Premises.  The costs and expenses of any such inspections shall be paid by
the party requesting same, unless a Default or Breach of this Lease by Lessee
or a violation of Applicable Requirements or a contamination, caused or
materially contributed to by Lessee, is found to exist or to be imminent, or
unless the inspection is requested or ordered by a governmental authority as
the result of any such existing or imminent violation or contamination.  In such case, Lessee shall upon request
reimburse Lessor or Lessor’s Lender, as the case may be, for the costs and expenses
of such inspections.

7.             Maintenance, Repairs, Utility
Installations, Trade Fixtures end Alterations.

7.1          Lessee’s
Obligations.

(a)           Subject to the provisions of
Paragraphs 2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and
Building Code), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee’s sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair (whether or not such portion of 

 

10

 

the Premises requiring repair, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee’s use, any prior
use, the elements or the age of such portion of the Premises), including,
without limiting the generality of the foregoing, in full compliance with the
Americans with Disabilities Act of 1990 and all regulations issued hereunder,
all equipment or facilities specifically serving the Premises, such as
plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections
if within the Premises, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and skylights, but
excluding any items which are the responsibility of Lessor pursuant to
Paragraph 7.2 below.  Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices. 
Lessee’s obligations shall include restorations, replacements or
renewals when necessary to keep the Premises and all improvements thereon or a
part thereof in good order, condition and state of repair.

(b)           Lessee shall, at Lessee’s sole cost
and expense, procure and maintain a contract, with copies to Lessor, in
customary form and substance for and with a contractor specializing and
experienced in the inspection, maintenance and service of the heating, air
conditioning and ventilation system for the Premises.  However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain the contract for the heating, air conditioning and
ventilating systems, and if Lessor so elects, Lessee shall reimburse Lessor,
upon demand, for the cost thereof.

(c)           If Lessee fails to perform Lessee’s
obligations under this Paragraph 7.1, Lessor may enter upon the Premises
after ten (10) days’ prior written notice to Lessee (except in the case of an
emergency, in which case no notice shall be required), perform such obligations
on Lessee’s behalf, and put the Premises in good order, condition and repair,
in accordance with Paragraph 13.2 below.

7.2          Lessor’s
Obligations.  Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair
the foundations, exterior walls, structural condition of interior bearing
walls, exterior roof, fire sprinkler and/or standpipe and hose (if located in
the Common Areas) or other automatic fire extinguishing system including fire
alarm and/or smoke detection system and equipment, fire hydrants, parking lots,
walkways, parkways, driveways, landscaping, fences, signs and utility systems
serving the Common Areas and all parts thereof, as well as providing the
services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2.  Lessor shall not be
obligated to paint the exterior or interior surfaces of exterior walls nor
shall Lessor be obligated to maintain, repair or replace windows, doors or
plate glass of the Premises.  Lessee
expressly waives the benefit of any statute now or hereafter in effect which
would otherwise afford Lessee the right to make repairs at Lessor’s expense or
to terminate this Lease because of Lessor’s failure to keep the Building,
Industrial Center or Common Areas in good order, condition and repair.

 

11

 

7.3          Utility
Installations, Trade Fixtures, Alterations.

(a)           Definitions; Consent Required.  The term “Utility Installations” is
used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises.  The term “Trade Fixtures” shall mean Lessee’s
machinery and equipment which can be removed without doing material damage to
the Premises, The term “Alterations” shall mean any modification of
the improvements on the Premises which are provided by Lessor under the terms
of this Lease, other than Utility Installations or Trade Fixtures.  “Lessee–Owned Alterations and/or Utility
Installations” are defined as Alterations and/or Utility
Installations made by Lessee that are not yet owned by Lessor pursuant to
Paragraph 7.4(a).  Lessee shall not
make nor cause to be made any Alterations or Utility Installations in, on,
under or about the Premises without Lessor’s prior written consent.  Lessee may, however, make non–structural
Utility Installations to the interior of the Premises (excluding the roof)
without Lessor’s consent but upon notice to Lessor, so long as they are
in full compliance with the Americans with Disabilities Act of 1990 and all
regulations issued hereunder, are not visible from the outside of
the Premises, do not involve puncturing, relocating or removing the roof or any
existing walls, or changing or interfering with the fire sprinkler or fire
detection systems and the cumulative cost thereof during the term of this Lease
as extended does not exceed $2,500.00.

(b)           Consent. 
Any Alterations or Utility Installations that Lessee shall desire to
make and which require the consent of the Lessor shall be presented to Lessor
in written form with detailed plans. 
All consents given by Lessor, whether by virtue of Paragraph 7.3(a)
or by subsequent specific consent, shall be deemed conditioned upon:  (i) Lessee’s acquiring all applicable
permits required by governmental authorities; (ii) the furnishing of
copies of such permits together with a copy of the plans and specifications for
the Alteration or Utility Installation to Lessor prior to commencement of the
work thereon; and (iii) the compliance by Lessee with all conditions of
said permits in a prompt and expeditious manner.  Any Alterations or Utility Installations by Lessee during the
term of this Lease shall be done in a good and workmanlike manner, with good
and sufficient materials, and be in compliance with all Applicable
Requirements.  Lessee shall promptly
upon completion thereof furnish Lessor with as–built plans and
specifications therefore.  Lessor may,
(but without obligation to do so) condition its consent to any requested
Alteration or Utility Installation that costs $2,500.00 or more upon Lessee’s
providing Lessor with a lien and completion bond in an amount equal to one and
one–half times the estimated cost of such Alteration or Utility
Installation.

(c)           Lien Protection.  Lessee shall pay when due all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use on
the Premises, which claims are or may be secured by any mechanic’s or
materialmen’s lien against the Premises or any interest therein.  Lessee shall give Lessor not less than ten
(10) days’ notice prior to the commencement of any work in, on, or about the
Premises, and Lessor shall have the right to post notices of non–responsibility
in or on the Premises as provided by law. 
If Lessee shall, in good faith, contest the validity of any such lien,
claim or demand, then Lessee shall, at its sole expense, defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises. 
If Lessor shall require, Lessee shall furnish to Lessor a surety bond
satisfactory to 

 

12

 

Lessor in an amount equal to one and one–half
times the amount of such contested lien claim or demand, indemnifying Lessor
against liability for the same, as required by law for the holding of the
Premises free from the effect of such lien or claim.  In addition, Lessor may require Lessee to pay Lessor’s attorneys’
fees and costs in participating in such action if Lessor shall decide it is to
its best interest to do so.

7.4          Ownership,
Removal, Surrender, and Restoration.

(a)           Ownership. 
Subject to Lessor’s right to require their removal and to cause Lessee
to become the owner thereof as hereinafter provided in this Paragraph 7.4,
all Alterations and Utility Installations made to the Premises by Lessee shall
be the property of and owned by Lessee, but considered a part of the
Premises.  Lessor may, at any time and
at its option, elect in writing to Lessee to be the owner of all or any
specified part of the Lessee–Owned Alterations and Utility
Installations.  Unless otherwise
instructed per Subparagraph 7.4(b) hereof, all Lessee–Owned
Alterations and Utility Installations shall, at the expiration or earlier
termination of this Lease, become the property of Lessor and remain upon the
Premises and be surrendered with the Premises by Lessee.

(b)           Removal. 
Unless otherwise agreed in writing, Lessor may require that any or all
Lessee–owned Alterations or Utility Installations be removed by the
expiration or earlier termination of this Lease, notwithstanding that their
installation may have been consented to by Lessor.  Lessor may require the removal at any time of all or any part of
any Alterations or Utility Installations made without the required consent of
Lessor.

(c)           Surrender/Restoration.  Lessee shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, clean
and free of debris and in good operating order, condition and state of repair,
ordinary wear and tear excepted.  Ordinary wear and tear shall not include any damage or
deterioration that would have been prevented by good maintenance practice or by
Lessee performing all of its obligations under this Lease.  Except as otherwise agreed or specified
herein, the Premises, as surrendered, shall include the Alterations and Utility
Installations.  The obligation of Lessee
shall include the repair of any damage occasioned by the installation,
maintenance or removal of Lessee’s Trade Fixtures, furnishings, equipment, and
Lessee–Owned Alterations and Utility Installations, as well as the
removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or ground water contaminated
by Lessee, all as may then be required by Applicable Requirements and/or good
practice.  Lessee’s Trade Fixtures shall
remain the property of Lessee and shall be removed by Lessee subject to its
obligation to repair and restore the Premises per this Lease.

8.             Insurance; Indemnity.

8.1          Payment of
Premiums.  The cost of the premium for the insurance
policies maintained by Lessor under this Paragraph 8 shall be a Common
Area Operating Expanse pursuant to Paragraph 4.2 hereof.  Premiums for policy periods commencing prior
to, or extending beyond, the term of this Lease shall be pro–rated to
coincide with the corresponding Commencement Date or Expiration Date.

 

13

 

8.2          Liability
Insurance.

(a)           Carried by Lessee.  Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insured) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto.  Such insurance
shall be on an occurrence basis providing single limit coverage in an amount
not less than $2,000,000 per occurrence with an “Additional Insured–Managers
or Lessors of Premises” endorsement and contain the “Amendment of the Pollution
Exclusion” endorsement for damage caused by heat, smoke or fumes from a hostile
fire.  The policy shall not contain any
intra–insured exclusions as between insured persons or organizations, but
shall include coverage for liability assumed under this Lease as an “Insured
contract” for the performance of Lessee’s indemnity obligations
under this Lease.  The limits of said
insurance required by this Lease or as carried by Lessee shall not, however,
limit the liability of Lessee nor relieve Lessee of any obligation
hereunder.  All insurance to be carried
by Lessee shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance
only.  Lessee will name the following as
additional Insureds:  Marvin L. Oates Trust
dated March 7, 1995 (Lessor), A & A Properties, Inc., (Property
Manager) and Marvin L. Oates (Trustee).

(b)           Carried by Lessor.  Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in
lieu of, the insurance required to be maintained by Lessee.  Lessee shall not be named as an additional
insured herein.

8.3          Property
Insurance–Building, Improvements and Rental Value.

(a)           Building end Improvements.  Lessor shall obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and to any Lender(s), insuring against loss or damage to the
Premises.  Such insurance shall be for
full replacement cost, as the same shall exist from time to time, or the amount
required by any Lender(s), but in no event more than the commercially
reasonable and available insurable value thereof if, by reason of the unique
nature or age of the improvements involved, such latter amount is less than
full replacement cost.  Lessee–Owned
Alterations and Utility Installations, Trade Fixtures and Lessee’s personal
property shall be insured by Lessee pursuant to Paragraph 8.4.  If the coverage is available and
commercially appropriate, Lessor’s policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender), including coverage for any additional
costs resulting from debris removal and reasonable amounts of coverage for the
enforcement of any ordinance or law regulating the reconstruction or
replacement of any undamaged sections of the Building required to be demolished
or removed by reason of the enforcement of any building, zoning, safety or land
use laws as the result of a covered loss, but not including plate glass
insurance.  Said policy or policies
shall also contain an agreed valuation provision in lieu of any co–insurance
clause, waiver of subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage amount by a factor of not
less than the adjusted U.S. Department of Labor Consumer Price Index for All
Urban Consumers for the city nearest to where the Premises are located.

 

14

 

(b)           Rental Value.  Lessor shall also obtain and keep in force during the term of
this Lease a policy or policies in the name of Lessor, with loss payable to
Lessor and any Lender(s), insuring the loss of the full rental and other
charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). 
Said insurance may provide that in the event the Lease is terminated by
reason of an insured loss, the period of indemnity for such coverage shall be
extended beyond the date of the completion of repairs or replacement of the
Premises, to provide for one full year’s loss of rental revenues from the date
of any such loss.  Said insurance shall
contain an agreed valuation provision in lieu of any co–insurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
rental income, Real Property Taxes, insurance premium costs and other expenses,
if any, otherwise payable, for the next 12–month period.  Common Area Operating Expenses shall include
any deductible amount in the event of such loss.

(c)           Adjacent Premises.  Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Industrial Center if said increase is caused by Lessee’s
acts, omissions, use or occupancy of the Premises.

(d)           Lessee’s Improvements.  Since Lessor is the Insuring Party, Lessor
shall not be required to insure Lessee–Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.

8.4          Lessee’s
Property Insurance.  Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor’s option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee’s personal property, Trade Fixtures and Lessee–Owned
Alterations and Utility Installations in, on, or about the Premises similar in
coverage to that carried by Lessor as the Insuring Party under
Paragraph 8.3(a).  Such insurance
shall be full replacement cost coverage with a deductible not to exceed $1,000
per occurrence.  The proceeds from any
such insurance shall be used by Lessee for the replacement of personal property
and the restoration of Trade Fixtures and Lessee–Owned Alterations and
Utility Installations.  Upon request
from Lessor, Lessee shall provide Lessor with written evidence that such
insurance is in force.

8.5          Insurance
Policies.  Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises
are located, and maintaining during the policy term a “General Policyholders
Rating” of at least B+, V, or such other rating as may be required by a Lender,
as set forth in the most current issue of “Best’s Insurance Guide.” Lessee
shall not do or permit to be done anything which shall invalidate the insurance
policies referred to in this Paragraph 8. 
Lessee shall cause to be delivered to Lessor, within seven (7) days
after the earlier of the Early Possession Date or the Commencement Date,
certified copies of, or certificates evidencing the existence and amounts of,
the insurance required under Paragraph 8.2(a) and 8.4.  No such policy shall be cancelable or
subject to modification except after thirty (30) days’ prior written notice to
Lessor.  Lessee shall at least thirty
(30) days prior to the expiration of such policies and charge the cost thereof
to Lessee, which amount shall be payable by Lessee to Lessor upon demand.

8.6          Waiver of
Subrogation.  Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss or damage to their property arising out of or 

 

15

 

incident to the perils required to be insured against
under Paragraph 8.  The effect of
such releases and waivers of the right to recover damages shall not be limited
by the amount of insurance carried or required, or by any deductibles
applicable thereto.  Lessor and Lessee
agree to have their respective insurance companies issuing property damage
insurance waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

8.7          Indemnity. 
Except for Lessor’s negligence and/or breach of express warranties,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor’s master or ground lessor, partners and Lenders from and
against any and all claims, loss of rents and/or damages, costs, liens,
judgments, penalties, loss of permits, attorneys’ and consultants’ fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the occupancy of the Premises by Lessee, the conduct of Lessee’s business, any
act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee’s part to be performed under this
Lease.  The foregoing shall include, but
not be limited to, the defense or pursuit of any claim or any action or
proceeding involved therein, and whether or not (in the case of claims made
against Lessor) litigated and/or reduced to judgment.  In case any action or proceeding be brought against Lessor by
reason of any of the foregoing matters, Lessee upon notice from Lessor shall
defend the same at Lessee’s expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense.  Lessor need not have first paid any such
claim in order to be so indemnified.

8.8          Exemption
of Lessor from Liability.  Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee’s employees, contractors, invitees, customers, or
any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not.  Lessor shall not be liable for any damages
arising from any act or neglect of any other lessee of Lessor nor from the
failure by Lessor to enforce the provisions of any other lease in the
Industrial Center.  Notwithstanding
Lessor’s negligence or breach of this Lease, Lessor shall under no circumstances
be liable for injury to Lessee’s business or for any loss of income or profit
therefrom.

9.             Damage or Destruction.

9.1          Definitions.

(a)           “Premises Partial Damage” shall mean damage
or destruction to the Premises, other than Lessee–Owned Alterations and Utility
Installations, the repair cost of which damage or destruction is less than
fifty percent (50%) of the then Replacement Cost (as defined in
Paragraph 9.1(d)) of the Premises (excluding Lessee–Owned
Alterations and Utility Installations and Trade Fixtures) immediately prior to
such damage or destruction.

 

16

 

(b)           “Premises Total Destruction” shall mean
damage or destruction to the Premises, other than Lessee–Owned
Alterations and Utility Installations, the repair cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement Cost of the
Premises (excluding Lessee–Owned Alterations and Utility Installations
and Trade Fixtures) immediately prior to such damage or destruction.  In addition, damage or destruction to the
Building, other than Lessee–Owned Alterations and Utility Installations
and Trade Fixtures of any lessees of the Building, the cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement Cost
(excluding Lessee–Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building) of the Building shall, at the option
of Lessor, be deemed to be Premises Total Destruction.

(c)           “Insured Loss” shall mean damage or destruction
to the Premises, other than Lessee–Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a) irrespective of any
deductible amounts or coverage limits involved.

(d)           “Replacement Cost” shall mean the cost to
repair or rebuild the improvements owned by Lessor at the time of the
occurrence to their condition existing immediately prior thereto, including
demolition, debris removal and upgrading required by the operation of
applicable building codes, ordinances or laws, and without deduction for
depreciation.

(e)           “Hazardous Substance Condition” shall mean
the occurrence or discovery of a condition involving the presence of, or a
contamination by, a Hazardous Substance as defined in Paragraph 6.2(a),
in, on, or under the Premises.

9.2          Premises
Partial Damage - Insured Loss.  If Premises
Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor’s
expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee–Owned
Alterations and Utility Installations) as soon as reasonably possible and this
Lease shall continue in full force and effect. 
In the event, however, that there is a shortage of insurance proceeds
and such shortage is due to the fact that, by reason of the unique nature of
the improvements in the Premises, full replacement cost insurance coverage was
not commercially reasonable and available, Lessor shall have no obligation to
pay for the shortage in insurance proceeds or to fully restore the unique
aspects of the Premises unless Lessee provides Lessor with the funds to cover
same, or adequate assurance thereof, within ten (10) days following receipt of
written notice of such shortage and request therefor.  If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, Lessor shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect.  If Lessor does not receive such funds or
assurance within said period, Lessor may nevertheless elect by written notice
to Lessee within ten (10) days thereafter to make such restoration and repair
as is commercially reasonable with Lessor paying any shortage in proceeds, in
which case this Lease shall remain in full force and effect.  If Lessor does not receive such funds or
assurance within such ten (10) day period, and if Lessor does not so elect to
restore and repair, then this Lease shall terminate sixty (60) days following the
occurrence of the damage or destruction. 
Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any
such damage or destruction.  Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3

 

17

 

rather than Paragraph 9.2, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such
insurance shall be made available for the repairs it made by either Party.

9.3          Partial
Damage - Uninsured Loss.  If Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee’s expense and
this Lease shall continue in full force and effect), Lessor may at Lessor’s
option, either (i) repair such damage as soon as reasonably possible at
Lessor’s expense, in which event this Lease shall continue in full force and
effect, or (ii) give written notice to Lessee within thirty (30) days
after receipt by Lessor of knowledge of the occurrence of such damage of
Lessor’s desire to terminate this Lease as of the date sixty (60) days
following the date of such notice.  In
the event Lessor elects to give such notice of Lessor’s intention to terminate
this Lease, Lessee shall have the right within ten (10) days after the receipt
of such notice to give written notice to Lessor of Lessee’s commitment to pay
for the repair of such damage totally at Lessee’s expense and without
reimbursement from Lessor.  Lessee shall
provide Lessor with the required funds or satisfactory assurance thereof within
thirty (30) days following such commitment from Lessee.  In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such repairs as soon as
reasonably possible after the required funds are available.  If Lessee does not give such notice and
provide the funds or assurance thereof within the times specified above, this
Lease shall terminate as of the date specified in Lessor’s notice of
termination.

9.4          Total
Destruction.  Notwithstanding any other provision hereof,
if Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days following
the date of such Premises Total Destruction, whether or not the damage or
destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee.  In the event, however, that the
damage or destruction was caused by Lessee, Lessor shall have the right to
recover Lessor’s damages from Lessee except as released and waived in
Paragraph 9.7.

9.5          Damage Near
End of Term.  If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month’s Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor’s option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of
Lessor’s election to do so within thirty (30) days after the date of occurrence
of such damage.  Provided, however, if
Lessee at that time has an exercisable option to extend this Lease or to
purchase the Premises, then Lessee may preserve this Lease by
(a) exercising such option, and (b) providing Lessor with any
shortage in insurance proceeds (or adequate assurance thereof) needed to make
the repairs on or before the earlier of (i) the date which is ten (10)
days after Lessee’s receipt of Lessor’s written notice purporting to terminate
this Lease, or (ii) the day prior to the date upon which such option
expires.  If Lessee duly exercises such
option during such period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s
expense repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect.  If
Lessee fails to exercise such option and provide such funds or assurance during
such period, then this Lease shall terminate as of the date set forth in the
first sentence of this Paragraph 9.5.

 

18

 

9.6          Abatement
of Rent; Lessee’s Remedies.

(a)           In the event of (i) Premises
Partial Damage or (ii) Hazardous Substance Condition for Which Lessee is
not legally responsible, the Base Rent, Common Area Operating Expenses and
other charges, if any, payable by Lessee hereunder for the period during which
such damage or condition, its repair, remediation or restoration continues,
shall be abated in proportion to the degree to which Lessee’s use of the
Premises is impaired, but not in excess of proceeds from insurance required to
be carried under Paragraph 8.3(b). 
Except for abatement of Base Rent, Common Area Operating Expenses and
other charges, if any, as aforesaid, all other obligations of Lessee hereunder
shall be performed by Lessee, and Lessee shall have no claim against Lessor for
any damage suffered by reason of any such damage, destruction, repair,
remediation or restoration.

(b)           If Lessor shall be obligated to
repair or restore the Premises under the provisions of this Paragraph 9
and shall not commence, in a substantial and meaningful way, the repair or
restoration of the Premises within ninety (90) days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice of Lessee’s election to terminate this Lease on a date not
less than sixty (60) days following the giving of such notice.  If Lessee gives such notice to Lessor and
such Lenders and such repair or restoration is not commenced within thirty (30)
days after receipt of such notice, this Lease shall terminate as of the date
specified in said notice.  If Lessor or
a Lender commences the repair or restoration of the Premises within thirty (30)
days after the receipt of such notice, this Lease shall continue in full force
and effect.  “Commence” as used in this
Paragraph 9.6 shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever occurs first.

9.7          Hazardous
Substance Conditions.  If a Hazardous Substance Condition occurs,
unless Lessee is legally responsible therefor (in which case Lessee shall make
the investigation and remediation thereof required by Applicable Requirements
and this Lease shall continue in full force and effect, but subject to Lessor’s
rights under Paragraph 6.2(c) and Paragraph 13), Lessor may at
Lessor’s option either (i) investigate and remediate such Hazardous
Substance Condition, if required, as soon as reasonably possible at Lessor’s
expense, in which event this Lease shall continue in full force and effect, or
(ii) if the estimated cost to investigate and remediate such condition
exceeds twelve (12) times the then monthly Base Rent or $100,000 whichever is
greater, give written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance Condition of
Lessor’s desire to terminate this Lease as of the date sixty (60) days
following the date of such notice.  In
the event Lessor elects to give such notice of Lessor’s intention to terminate
this Lease, Lessee shall have the right within ten (10) days after the receipt
of such notice to give written notice to Lessor of Lessee’s commitment to pay
for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable
Requirements, over (b) an amount equal to twelve (12) times the then
monthly Base Rent or $100,000, whichever is greater.  Lessee shall provide Lessor with the funds required of Lessee or
satisfactory assurance thereof within thirty (30) days following said
commitment by Lessee.  In such event
this Lease shall continue in full force and effect, and Lessor shall proceed to
make such investigation and remediation as soon as reasonably possible after
the required funds are available.  If
Lessee does not give such notice and provide the required funds or assurance
thereof within the 

 

19

 

time period specified above, this Lease shall
terminate as of the date specified in Lessor’s notice of termination.

9.8          Termination. 
Advance
Payments.  Upon termination
of this Lease pursuant to this Paragraph 9, Lessor shall return to Lessee
any advance payment made by Lessee to Lessor and so much of Lessee’s Security
Deposit as has not been, or is not then required to be, used by Lessor under
the terms of this Lease.

9.9          Waiver of
Statutes.  Lessor and Lessee agree that the terms of
this Lease shall govern the effect of any damage to or destruction of the
Premises and the Building with respect to the termination of this Lease and
hereby waive the provisions of any present or future statute to the extent it
is inconsistent herewith.

10.          Real Property Taxes.

10.1        Payment of
Taxes.  Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Industrial Center, and except
as otherwise provided in Paragraph 10.3, any such amounts shall be
included in the calculation of Common Area Operating Expenses in accordance
with the provisions of Paragraph 4.2.

10.2        Real
Property Tax Definition.  As used herein, the term “Real
Property Taxes” shall include any form of real estate tax or
assessment, general, special, ordinary or extraordinary, and any license fee,
commercial rental tax, improvement bond or bonds, levy or tax (other than
inheritance, personal income or estate taxes) imposed upon the Industrial
Center by any authority having the direct or indirect power to tax, including
any city, state or federal government, or any school, agricultural, sanitary,
fire, street, drainage, or other improvement district thereof, levied against
any legal or equitable interest of Lessor in the Industrial Center or any
portion thereof, Lessor’s right to rent or other income therefrom, and/or
Lessor’s business of leasing the Premises. 
The term “Real Property Taxes” shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of events
occurring, or changes in Applicable Law taking effect, during the term of this
Lease, including but not limited to a change in the ownership of the Industrial
Center or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by
the Parties.  In calculating Real
Property Taxes for any calendar year, the Real Property Taxes for any real
estate tax year shall be included in the calculation of Real Property Taxes for
such calendar year based upon the number of days which such calendar year and
tax year have in common.

10.3        Additional
Improvements.  Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor’s records and work
sheets as being caused by additional improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees.  Notwithstanding
Paragraph 10.1 hereof, Lessee shall, however, pay to Lessor at the time
Common Area Operating Expenses are payable under Paragraph 4.2, the
entirety of any increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade Fixtures or Utility Installations placed upon the Premises
by Lessee or at Lessee’s request.

 

20

 

10.4        Joint
Assessment.  If the Building is not separately assessed,
Real Property Taxes allocated to the Building shall be an equitable proportion
of the Real Property Taxes for all of the land and improvements included within
the tax parcel assessed, such proportion to be determined by Lessor from the
respective valuations assigned in the assessor’s work sheets or such other
information as may be reasonably available. 
Lessor’s reasonable determination thereof, in good faith, shall be
conclusive.

10.5        Lessee’s
Property Taxes.  Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee–Owned Alterations and
Utility Installations.  Trade Fixtures,
furnishings, equipment and all personal property of Lessee contained in the
Premises or stored within the Industrial Center.  When possible, Lessee shall cause its Lessee–Owned
Alterations and Utility Installations, Trade Fixtures, furnishings, equipment
and all other personal property to be assessed and billed separately from the
real property of Lessor.  If any of
Lessee’s said property shall be assessed with Lessor’s real property, Lessee shall
pay Lessor the taxes attributable to Lessee’s property within ten (10) days
after receipt of a written statement setting forth the taxes applicable to
Lessee’s property.

11.          Utilities.  Lessee shall pay
directly for all utilities and services supplied to the Premises, including but
not limited to electricity, telephone, security, gas and cleaning of the
Premises, together with any taxes thereon. 
If any such utilities or services are not separately metered to the
Premises or separately billed to the Premises, Lessee shall pay to Lessor a
reasonable proportion to be determined by Lessor of all such charges jointly
metered or billed with other premises in the Building, in the manner and within
the time periods set forth in Paragraph 4.2(d).

12.          Assignment and Subletting.

12.1        Lessor’s
Consent Required.

(a)           Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage or otherwise transfer or encumber
(collectively, “assign”) or sublet all or any part of Lessee’s interest in this
Lease or in the Premises without Lessor’s prior written consent given under and
subject to the terms of Paragraph 36.

(b)           A change in the control of Lessee
shall constitute an assignment requiring Lessor’s consent.  The transfer, on a cumulative basis, of
twenty–five percent (25%) or more of the voting control of Lessee shall
constitute a change in control for this purpose.  A change in control for the purpose of the preceding sentence
shall be defined as a transaction or series of related transactions in which
securities possessing more than fifty percent (50%) of the total combined
voting power of Lessee’s outstanding securities are transferred to persons
different from the persons holding those securities immediately prior to such
transaction(s).

(c)           The involvement of Lessee or its
assets in any transaction, or series of transactions (by way of merger, sale,
acquisition, financing, refinancing, transfer, leveraged buy–out or
otherwise), whether or not a formal assignment or hypothecation of this Lease
or Lessee’s assets occurs, which results or will result in a reduction of the
Net Worth of Lessee, as hereinafter defined, by an amount equal to or greater
than twenty–five percent (25%) of such Net Worth of Lessee as it 

 

21

 

was represented to
Lessor at the time of full execution and delivery of this Lease or at the time
of the most recent assignment to which Lessor has consented, or as it exists
immediately prior to said transaction or transactions constituting such reduction,
at whichever time said Net Worth of Lessee was or is greater, shall be
considered an assignment of this Lease by Lessee to which Lessor may reasonably
withheld its consent.  “Net Worth of
Lessee” for purposes of this Lease shall be the net worth of Lessee (excluding
any Guarantors) established under generally accepted accounting principles
consistently applied.

(d)           An assignment or subletting of
Lessee’s interest in this Lease without Lessor’s specific prior written consent
shall, at Lessor’s option, be a Default curable after notice per
Paragraph 13.1, or a non–curable Breach without the necessity of any
notice and grace period.  If Lessor
elects to treat such unconsented to assignment or subletting as a non–curable
Breach, Lessor shall have the right to either: 
(i) terminate this Lease, or (ii) upon thirty (30) days’
written notice (“Lessor’s Notice”), increase the monthly Base Rent for the
Premises to the greater of the then fair market rental value of the Premises,
as reasonably determined by Lessor, or one hundred ten percent (110%) of
the Base Rent then in effect.  Pending
determination of the new fair market rental value, if disputed by Lessee,
Lessee shall pay the amount set forth in Lessor’s Notice, with any overpayment
credited against the next installment(s) of Base Rent coming due, and any
underpayment for the period retroactively to the effective date of the
adjustment being due and payable immediately upon the determination
thereof.  Further, in the event of such
Breach and rental adjustment, (i) the purchase price of any option to
purchase the Premises held by Lessee shall be subject to similar adjustment to
the then fair market value as reasonably determined by Lessor (without the
Lease being considered an encumbrance or any deduction for depreciation or
obsolescence, and considering the Premises at its highest and best use and in
good condition) or one hundred ten percent (110%) of the price previously in
effect, (ii) any index–oriented rental or price adjustment formulas
contained in this Lease shall be adjusted to require that the base index be
determined with reference to the index applicable to the time of such
adjustment, and (iii) any fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased in the same ratio as the new
rental hears to the Base Rent in effect immediately prior to the adjustment
specified in Lessor’s Notice.

(e)           Lessee’s remedy for any breach of
this Paragraph 12.1 by Lessor shall be limited to compensatory damages
and/or injunctive relief.

12.2        Terms
and Conditions Applicable to Assignment and Subletting.

(a)           Regardless of Lessor’s consent, any
assignment or subletting shall not (i) be effective without the express
written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, nor
(iii) alter the primary liability of Lessee for the payment of Base Rent
and other sums due Lessor hereunder or for the performance of any other
obligations to be performed by Lessee under this Lease.

(b)           Lessor may accept any rent or
performance of Lessee’s obligations from any person other than Lessee pending
approval or disapproval of an assignment. 
Neither a delay in the approval or disapproval of such assignment nor
the acceptance of any rent for performance shall 

 

22

 

constitute a waiver or estoppel of Lessor’s right to
exercise its remedies for the Default or Breach by Lessee of any of the terms,
covenants or conditions of this Lease.

(c)           The consent of Lessor to any
assignment or subletting shall not constitute a consent to any subsequent
assignment or subletting by Lessee or to any subsequent or successive
assignment or subletting by the assignee or sublessee.  However, Lessor may consent to subsequent
subletting and assignments of the sublease or any amendments or modifications
thereto without notifying Lessee or anyone else liable under this Lease or the
sublease and without obtaining their consent, and such action shall not relieve
such persons from liability under this Lease or the sublease.

(d)           In the event of any Default or Breach
of Lessee’s obligation under this Lease. 
Lessor may proceed directly against Lessee, any Guarantors or anyone
else responsible for the performance of the Lessee’s obligations under this
Lease, including any sublessee, without first exhausting Lessor’s remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.

(e)           Each request for consent to an
assignment or subletting shall be in writing, accompanied by information
relevant to Lessor’s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee,
including but not limited to the intended use and/or required modification of
the Premises, if any, together with a non–refundable deposit of $1,000 or
ten percent (10%) of the monthly Base Rent applicable to the portion of the
Premises which is the subject of the proposed assignment or sublease, whichever
is greater, as reasonable consideration for Lessor’s considering and processing
the request for consent.  Lessee agrees
to provide Lessor with such other or additional information and/or documentation
as may be reasonably requested by Lessor.

(f)            Any assignee of, or sublessee under,
this Lease shall, by reason of accepting such assignment or entering into such
sublease, be deemed, for the benefit of Lessor, to have assumed and agreed to
conform and comply with each and every term, covenant, condition and obligation
herein to be observed or performed by Lessee during the term of said assignment
or sublease, other than such obligations as are contrary to or inconsistent
with provisions of an assignment or sublease to which Lessor has specifically
consented in writing.

(g)           The occurrence of a transaction
described in Paragraph 12.2(c) shall give Lessor the right (but not the
obligation) to require that the Security Deposit be increased by an amount
equal to six (6) times the then monthly Base Rent, and Lessor may make the
actual receipt by Lessor of the Security Deposit increase a condition to
Lessor’s consent to such transaction.

(h)           Lessor, as a condition to giving its
consent to any assignment or subletting, may require that the amount and adjustment
schedule of the rent payable under this Lease be adjusted to what is then the
market value and/or adjustment schedule for property similar to the Premises as
then constituted, as determined by Lessor.

 

23

 

12.3        Additional
Terms and Conditions Applicable to Subletting.  The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

(a)           Lessee hereby assigns and transfers
to Lessor all of Lessee’s interest in all rentals and income arising from any
sublease of all or a portion of the Premises heretofore or hereafter made by
Lessee, and Lessor may collect such rent and income and apply same toward
Lessee’s obligations under this Lease; provided, however, that until a Breach
(as defined in Paragraph 13.1) shall occur in the performance of Lessee’s
obligations under this Lease, Lessee may, except as otherwise provided in this
Lease, receive, collect and enjoy the rents accruing under such sublease.  Lessor shall not, by reason of the foregoing
provision or any other assignment of such sublease to Lessor, nor by reason of
the collection of the rents from a sublessee, be deemed liable to the sublessee
for any failure of Lessee to perform and comply with any of Lessee’s
obligations to such sublessee under such Sublease.  Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach
exists in the performance of Lessee’s obligations under this Lease, to pay to
Lessor the rents and other charges due and to become due under the
sublease.  Sublessee shall rely upon any
such statement and request from Lessor and shall pay such rents and other
charges to Lessor without any obligation or right to inquire as to whether such
Breach exists and notwithstanding any notice from or claim from Lessee to the
contrary.  Lessee shall have no right or
claim against such sublessee, or, until the Breach has been cured, against
Lessor, for any such rents and other charges so paid by said sublessee to
Lessor.

(b)           In the event of a Breach by Lessee in
the performance of its obligations under this Lease, Lessor, at its option and
without any obligation to do so, may require any sublessee to attorn to Lessor,
in which event Lessor shall undertake the obligations of the sublessor under
such sublease from the time of the exercise of said option to the expiration of
such sublease; provided, however, Lessor shall not be liable for any prepaid
rents or security deposit paid by such sublessee to such sublessor or for any
other prior defaults or breaches of such sublessor under such sublease.

(c)           Any matter or thing requiring the
consent of the sublessor under a sublease shall also require the consent of
Lessor herein.

(d)           No sublessee under a sublease
approved by Lessor shall further assign or sublet all or any part of the
Premises without Lessor’s prior written consent.

(e)           Lessor shall deliver a copy of any
notice of Default or Breach by Lessee to the sublessee, who shall have the
right to cure the Default of Lessee within the grace period, if any, specified
in such notice.  The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.

13.          Default; Breach; Remedies.

13.1        Default;
Breach.  Lessor and Lessee agree that if an attorney
is consulted by Lessor in connection with a Lessee Default or Breach (as hereinafter
defined), $350.00 is a reasonable minimum sum per such occurrence for legal
services and costs in the preparation and service of a notice of Default, and
that Lessor may include the cost of such services and costs in said notice as 

 

24

 

rent due and payable to cure said default.  A “Default” by Lessee is defined as a failure
by Lessee to observe, comply with or perform any of the terms, covenants,
conditions or roles applicable to Lessee under this Lease.  A “Breach” by Lessee is defined as the
occurrence of any one or more of the following Defaults, and, where a grace
period for cure after notice is specified herein, the failure by Lessee to cure
such Default prior to the expiration of the applicable grace period, and shall
entitle Lessor to pursue the remedies set forth in Paragraphs 13.2 and/or 13.3:

(a)           The vacating of the Premises without
the intention to reoccupy same, or the abandonment of the Premises.

(b)           Except as expressly otherwise provided
in this Lease, the failure by Lessee to make any payment of Base Rent, Lessee’s
Share of Common Area Operating Expenses, or any other monetary payment required
to be made by Lessee hereunder as and when due, the failure by Lessee to
provide Lessor with reasonable evidence of insurance or surety bond required
under this Lease, or the failure of Lessee to fulfill any obligation under this
Lease which endangers or threatens life or property, where such failure
continues for a period of three (3) days following written notice thereof by or
on behalf of Lessor to Lessee.

(c)           Except as expressly otherwise
provided in this Lease, the failure by Lessee to provide Lessor with reasonable
written evidence (in duly executed original form, if applicable) of
(i) compliance with Applicable Requirements per Paragraph 6.3,
(ii) the inspection, maintenance and service contracts required under
Paragraph 7.1(b), (iii) the rescission of an unauthorized assignment
or subletting per Paragraph 12.1, (iv) a Tenancy Statement per Paragraphs
16 or 37, (v) the subordination or non–subordination of this Lease
per Paragraph 30, (vi) the guaranty of the performance of Lessee’s
obligations under this Lease if required under Paragraphs 1.11 and 37,
(vii) the execution of any document requested under Paragraph 42
(easements), or (viii) any other documentation or information which Lessor
may reasonably require of Lessee under the terms of this lease, where any such
failure continues for a period of ten (10) days following written notice by or on
behalf of Lessor to Lessee.

(d)           A Default by Lessee as to the terms,
covenants, conditions or provisions of this Lease, or of the rules adopted
under Paragraph 40 hereof that are to be observed, complied with or
performed by Lessee, other than those described in Subparagraphs 13.1(a),
(b) or (c), above, where such Default continues for a period of thirty (30)
days after written notice thereof by or on behalf of Lessor to Lessee;
provided, however, that if the nature of Lessee’s Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach of this Lease by Lessee if Lessee commences such cure
within said thirty (30) day period and thereafter diligently prosecutes such
cure to completion.

(e)           The occurrence of any of the
following events:  (i) the making
by Lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee’s becoming a “debtor” as defined in 11 U.S. Code Section 101
or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee’s assets located at the Premises or of Lessee’s interest in this Lease,
where possession is not restored to Lessee within thirty (30) days; or
(iv) the attachment, execution or other judicial seizure of substantially
all of Lessee’s assets 

25

 

located at the Premises or of Lessee’s interest in
this Lease, where such seizure is not discharged within thirty (30) days;
provided, however, in the event that any provision of this
Subparagraph 13.1(e) is contrary to any applicable law, such provision
shall be of no force or effect, and shall not affect the validity of the
remaining provisions.

(f)            The discovery by Lessor that any
financial statement of Lessee or of any Guarantor, given to Lessor by Lessee or
any Guarantor, was materially false.

(g)           If the performance of Lessee’s
obligations under this Lease is guaranteed: 
(i) the death of a Guarantor, (ii) the termination of a Guarantor’s
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor’s becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or
(v) a Guarantor’s breach of its guaranty obligation on an anticipatory
breach basis, and Lessee’s failure, within sixty (60) days following written
notice by or on behalf of Lessor to Lessee of any such event, to provide Lessor
with written alternative assurances of security, which, when coupled with the
then existing resources of Lessee, equals or exceeds the combined financial
resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.

13.2        Remedies. 
If Lessee fails to perform any affirmative duty or obligation of Lessee
under this Lease, within ten (10) days after written notice to Lessee (or in
case of an emergency, without notice), Lessor may at its option (but without
obligation to do so), perform such duty or obligation on Lessee’s behalf,
including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals.  The costs and expenses of any such
performance by Lessor shall be due and payable by Lessee to Lessor upon invoice
therefor.  If any check given to Lessor
by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at
its own option, may require all future payments to be made under this Lease by
Lessee to be made only by cashier’s check. 
In the event of a Breach of this Lease by Lessee (as defined in
Paragraph 13.1), with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach, Lessor may:

(a)           Terminate Lessee’s right to
possession of the Premises by any lawful means, in which case this Lease and
the term hereof shall terminate and Lessee shall immediately surrender
possession of the Premises to Lessor. 
In such event Lessor shall be entitled to recover from Lessee:  (i) the worth at the time of the award
of the unpaid rent which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the unpaid rent
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that the Lessee proves could have been
reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate
Lessor for all the detriment proximately caused by the Lessee’s failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including but not limited to the
cost of recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys’
fees, and that portion of any leasing commission paid by Lessor in connection
with this Lease applicable to the unexpired term of this Lease.  The worth at the time of award of the amount
referred to in provision (iii) of the immediately preceding sentence shall
be computed by 

 

26

 

discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco or the Federal Reserve Bank District in
which the Premises are located at the time of award plus one percent (1%).  Efforts by Lessor to mitigate damages caused
by Lessee’s Default or Breach of this Lease shall not waive Lessor’s right to
recover damages under this Paragraph 13.2.  If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for
such rent and/or damages.  If a notice
and grace period required under Subparagraph 13.1(b), (c) or (d) was not
previously given, a notice to pay rent or quit, or to perform or quit, as the
case may be, given to Lessee under any statute authorizing the forfeiture of
leases for unlawful detainer shall also constitute the applicable notice for
grace period purposes required by Subparagraph 13.1(b),(c) or (d).  In such case, the applicable grace period
under the unlawful detainer statute shall run concurrently after the one such
statutory notice, and the failure of Lessee to cure the Default within the
greater of the two (2) such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statute.

(b)           Continue the Lease and Lessee’s right
to possession in effect (in California under California Civil Code
Section 1951.4) after Lessee’s Breach and recover the rent as it becomes
due, provided Lessee has the right to sublet or sign, subject only to
reasonable limitations.  Lessor and
Lessee agree that the limitations on assignment and subletting in this Lease
are reasonable.  Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver
to protect the Lessor’s interest under this Lease, shall not constitute a
termination of the Lessee’s right to possession.

(c)           Pursue any other remedy now or
hereafter available to Lessor under the laws or judicial decisions of the state
wherein the Premises are located.

(d)           The expiration or termination of this
Lease and/or the termination of Lessee’s right to possession shall not relieve
Lessee from liability under any indemnity provisions of this Lease as to
matters occurring or accruing during the term hereof or by reason of Lessee’s
occupancy of the Premises.

13.3        Inducement
Recapture In Event of Breach.  Any
agreement by Lessor for free or abated rent or other charges applicable to the
Premises, or for the giving or paying by Lessor to or for Lessee of any cash or
other bonus, inducement or consideration for Lessee’s entering into this Lease,
all of which concessions are hereinafter referred to as “Inducement Provisions” shall
be deemed conditioned upon Lessee’s full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended.  Upon the occurrence of a Breach (as defined
in Paragraph 13.1) of this Lease by Lessee, any such Inducement Provision
shall automatically be deemed deleted from this Lease and of no further force
or effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an Inducement Provision
shall be immediately due and payable by Lessee to Lessor, and recoverable by
Lessor, as additional rent due under this Lease, notwithstanding any subsequent
cure of said Breach by Lessee.  The acceptance
by Lessor of rent or the sure of the Breach which initiated the operation of
this Paragraph 13.3 shall not 

 

27

 

be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in written by Lessor at the
time of such acceptance.

13.4        Late Charges. 
Lessee hereby acknowledges that late payment by Lessee to Lessor of rent
and other sums due hereunder will cause Lessor to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to
ascertain.  Such costs include, but are
not limited to, processing and accounting charges, and late charges which may
be imposed upon Lessor by the terms of any ground lease, mortgage or deed of
trust covering the Premises. 
Accordingly, if any installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor’s designee within ten (10) days after
such amount shall be due, then, without any requirement for notice to Lessee,
Lessee shall pay to Lessor a late charge equal to six percent (6%) of such
overdue amount.  The parties hereby
agree that such late charge represents a fair and reasonable estimate of the
costs Lessor will incur by reason of late payment by Lessee.  Acceptance of such late charge by Lessor
shall in no event constitute a waiver of Lessee’s Default or Breach with
respect to such overdue amount, nor prevent Lessor from exercising any of the
other rights and remedies granted hereunder. 
In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base  Rent shall, at Lessor’s
option, become due and payable quarterly in advance.

13.5        Breach by
Lessor.  Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor.  For
purposes of this Paragraph 13.5, a reasonable time shall in no event be
less than thirty (30) days after receipt by Lessor, and by any Lender(s) whose
name and address shall have been furnished to Lessee in writing for such
purpose, of written notice specifying wherein such obligation of Lessor has not
been performed; provided, however, that if the nature of Lessor’s obligation is
such that more then thirty (30) days after such notice are reasonably required
for its performance, then Lessor shall not be in breach of this Lease if
performance is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.  In the
event  of a default which has a material
adverse impact on Lessee’s ability to conduct its business, the default shall
be cured within a commercially reasonable time under the circumstances, but no
later than fifteen (15) days after Lessor receives notice from Lessee of the
default.

14.          Condemnation.  If the Premises or any
portion thereof are taken under the power of eminent domain or sold under the
threat of the exercise of said power (all of which are herein called
“condemnation”), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever first
occurs.  If more than ten percent (10%)
of the floor area of the Premises, or more than twenty–five percent (25%)
of the portion of the Common Areas designated for Lessee’s parking, is taken by
condemnation, Lessee may, at Lessee’s option, to be exercised in writing within
ten (10) days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, within ten (10) days after the
condemning authority shall have taken possession) terminate this Lease as of
the date the condemning authority takes such possession.  If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises.  No reduction of Base Rent shall occur if the

 

28

 

condemnation
does not apply to any portion of the Premises. 
Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of
such power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any compensation, separately awarded to Lessee for Lessee’s relocation
expenses and/or loss of Lessee’s Trade Fixtures.  In the event that this Lease is not terminated by reason of such
condemnation, Lessor shall to the extent of its net severance damages received,
over and above Lessee’s Share of the legal and other expenses incurred by
Lessor in the condemnation matter, repair any damage to the Premises caused by
such condemnation authority.  Lessee
shall be responsible for the payment of any amount in excess of such net
severance damages required to complete such repair.

15.          Brokers’ Fees.

15.1        Procuring
Cause.  The Broker(s) named in Paragraph 1.10
is/are the procuring cause of this Lease.

15.2        Representations
and Warranties.  Lessee and Lessor each represent and warrant
to the other that it has had no dealings with any person, firm, broker or
finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder’s fee in
connection with said transaction. 
Lessee and Lessor do each hereby agree to indemnify, protect, defend and
hold the other harmless from and against liability for compensation or charges
which may be claimed by any such unnamed broker, finder or other similar party
by reason of any dealings or actions of the indemnifying Party, including any
costs, expenses, and/or attorneys’ fees reasonably incurred with respect
thereto.

16.          Tenancy and Financial Statements.

16.1        Tenancy
Statement.  Each Party (as “Responding Party”) shall
within ten (10) days after written notice from the other Party (the “Requesting
Party”) execute, acknowledge and deliver to the Requesting Party a
statement in writing in a form similar to the then most current “Tenancy
Statement” form published by the American Industrial Real Estate
Association, plus such additional information, confirmation and/or statements
as may be reasonably requested by the Requesting Party.

16.2        Financial
Statement.  If Lessor desires to finance, refinance, or
sell the Premises or the Building, or any part thereof, Lessee and all
Guarantors shall deliver to any potential lender or purchaser designated by
Lessor such financial statements of Lessee and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee’s financial statements for the past three (3) years.  All such financial statements shall be
received by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.

17.          Lessor’s
Liability.  The term “Lessor” as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises.  In the event of a transfer of Lessor’s title
or interest in the Premises or in this Lease, Lessor shall deliver to the transferee
or assignee (in cash or by 

 

29

 

credit)
any unused Security Deposit held by Lessor at the time of such transfer or
assignment.  Except as provided in
Paragraph 15.3, upon such transfer or assignment and delivery of the
Security Deposit, as aforesaid, the prior Lessor shall be relieved of all
liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. 
Subject to the foregoing, the obligations and/or covenants in this Lease
to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.

18.          Severability.  The invalidity of any provision of this
Lease, as determined by a court of competent jurisdiction, shall in no way
affect the validity of any other provision hereof.

19.          Interest
on Past–Due Obligations. 
Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor within ten (10) days following the date on which it was due,
shall bear interest from the date due at the prime rate charged by the largest
state chartered bank in the state in which the Premises are located plus four
percent (4%) per annum, but not exceeding the maximum rate allowed by law, in
addition to the potential late charge provided for in Paragraph 13.4.

20.          Time
of Essence.  Time is of the
essence with respect to the performance of all obligations to be performed or
observed by the Parties under this Lease.

21.          Rent
Defined.  All monetary obligations of
Lessee to Lessor under the terms of this Lease are deemed to be rent.

22.          No
Prior or other Agreements; Broker Disclaimer. 
This Lease contains all agreements between the Parties with respect to
any matter mentioned herein, and no other prior or contemporaneous agreement or
understanding shall be effective. 
Lessor and Lessee each represents and warrants to the Brokers that it
has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this
Lease and as to the nature, quality and character of the Premises.  Brokers have no responsibility with respect
thereto or with respect to any default or breach hereof by either Party.  Each Broker shall be an intended third party
beneficiary of the provisions of this Paragraph 22.

23.          Notices.

23.1        Notice
Requirements.  All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by regular, certified or
registered mail or U.S. Postal Service Express Mail, with postage prepaid, or
by facsimile transmission during normal business hours, and shall be deemed
sufficiently given if served in a manner specified in this Paragraph 23.  The addresses noted adjacent to a Party’s
signature on this Lease shall be that Party’s address for delivery or mailing
of notice purposes.  Either Party may by
written notice to the other specify a different address for notice purposes,
except that upon Lessee’s taking possession of the Premises, the Premises shall
constitute Lessee’s address for the purpose of mailing or delivering notices to
Lessee.  A copy of all notices required
or permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by written notice to Lessee.

 

30

 

23.2        Date of
Notice.  Any notice sent by registered or certified
mail, return receipt requested, shall be deemed given on the date of delivery
shown on the receipt card, or if no delivery date is shown, the postmark
thereon.  If sent by regular mail, the
notice shall be deemed given forty–eight (48) hours after the same is
addressed as required herein and mailed with postage prepaid.  Notices delivered by United States Express
Mail or overnight courier that guarantees next day delivery shall be deemed
given twenty–four (24) hours after delivery of the same to the United
States Postal Service or courier.  Notice
given by facsimile in accordance with the terms of hereof will be deemed to be
received upon sender’s receipt of a transmission report, generated by sender’s
facsimile machine, which confirms the facsimile was successfully transmitted in
its entirety.  If notice is received on
a Saturday or a Sunday or a legal holiday, it shall be deemed received on the
next business day.

24.          Waivers.  No waiver by Lessor of the Default or Breach
of any term, covenant or condition hereof by Lessee, shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent Default
or Breach by Lessee of the same or any other term, covenant or condition
hereof.  Lessor’s consent to, or
approval of, any such act shall not be deemed to render unnecessary the
obtaining of Lessor’s consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent.  Regardless of Lessor’s knowledge of a Default or Breach at the
time of accepting rent, the acceptance of rent by Lessor shall not be a waiver
of any Default or Breach by Lessee of any provision hereof.  Any payment given Lessor by Lessee may be
accepted by Lessor on account of moneys or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.

25.          Recording.  Either Lessor or Lessee shall, upon request
of the other, execute, acknowledge and deliver to the other a short form
memorandum of this Lease for recording purposes.  The Party requesting recordation shall be responsible for payment
of any fees or taxes applicable thereto.

26.          No
Right to Holdover.  Lessee has no
right to retain possession of the Premises or any part thereof beyond the
expiration or earlier termination of this Lease.  In the event that Lessee holds over in violation of this
Paragraph 26 then the Base Rent payable from and after the time of the
expiration or earlier termination of this Lease shall be increased to one
hundred ten percent (110%) of the Base Rent applicable during the month immediately
preceding such expiration or earlier termination.  Nothing contained herein shall be construed as a consent by
Lessor to any holding over by Lessee.

27.          Cumulative
Remedies.  No remedy or
election hereunder shall be deemed exclusive but shall, wherever possible, be
cumulative with all other remedies at law or in equity.

28.          Covenants
and Conditions.  All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions.

29.          Binding
Effect; Choice of Law.  This Lease
shall be binding upon the Parties, their personal representatives, successors
and assigns and be governed by the laws of the State in which the 

 

31

 

Premises
are located.  Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.

30.          Subordination; Attornment; Non–Disturbance.

30.1        Subordination. 
This Lease and any Option granted hereby shall be subject and
subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, “Security Device”), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions
thereof.  Lessee agrees that the Lenders
holding any such Security Device shall have no duty, liability or obligation to
perform any of the obligations of Lessor under this Lease, but that in the
event of Lessor’s default with respect to any such obligation, Lessee will give
any Lender whose name and address have been furnished Lessee in writing for
such purpose notice of Lessor’s default pursuant to Paragraph 13.5.  If any Lender shall elect to have this Lease
and/or any Option granted hereby superior to the lien of its Security Device
and shall give written notice thereof to Lessee, this Lease and such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof.

30.2        Attornment. 
Subject to the non–disturbance provisions of Paragraph 30.3,
Lessee agrees to attorn to a Lender or any other party who acquires ownership
of the Premises by reason of a foreclosure of a Security Device, and that in
the event of such foreclosure, such new owner shall not:  (i) be liable for any act or omission
of any prior lessor or with respect to events occurring prior to acquisition of
ownership, (ii) be subject to any offsets or defenses which Lessee might
have against any prior lessor, or (iii) be bound by prepayment of more
than one month’s rent.

30.3        Non–Disturbance. 
With respect to Security Devices entered into by Lessor after the
execution of this lease, Lessee’s subordination of this Lease shall be subject
to receiving assurance (a “non–disturbance agreement”) from the Lender
that Lessee’s possession and this Lease, including any options to extend the
term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.

30.4        Self–Executing. 
The agreements contained in this Paragraph 30 shall be effective
without the execution of any further documents; provided, however, that upon
written request from Lessor or a Lender in connection with a sale, financing or
refinancing of Premises, Lessee and Lessor shall execute such further writings
as may be reasonably required to separately document any such subordination or
non–subordination, attornment and/or non-disturbance agreement as is
provided for herein.

31.          Attorneys’
Fee.  If any Party or Broker brings
an action or proceeding to enforce the terms hereof or declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys’
fees.  Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. 
The term “Prevailing
Party”
shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense.  The attorneys’ fee
award shall not be computed in accordance with any court fee schedule, 

 

32

 

but shall be such
as to fully reimburse all attorneys’ fees reasonably incurred.  Lessor shall be entitled to attorneys’ fees,
costs and expenses incurred in preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting
Breach.  Broker(s) shall be intended
third party beneficiaries of this Paragraph 31.

32.          Lessor’s
Access; Showing Premises; Repairs. 
Lessor and Lessor’s agents shall have the right to enter the Premises at
any time, in the case of an emergency, and otherwise at reasonable times for
the purpose of showing the same to prospective purchasers, lenders, or lessees,
and making such alterations, repairs, improvements or additions to the Premises
or to the Building, as Lessor may reasonably deem necessary.  Lessor may at any time place on or about the
Premises or Building any ordinary “For Sale” signs and Lessor may at any time
during the last one hundred eighty (180) days of the term hereof place on or
about the Premises any ordinary “For Lease” signs.  All such activities of Lessor shall be without abatement of rent
or liability to Lessee.

33.          Auctions.  Lessee shall not conduct, nor permit to be
conducted, either voluntarily or involuntarily, any auction upon the Premises
without first having obtained Lessor’s prior written consent.  Notwithstanding anything to the contrary in
this Lease, Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to grant such consent.

34.          Signs.  Lessee shall not place any sign upon the
exterior of the Premises or the Building, except that Lessee may, with Lessor’s
prior written consent, install (but not on the roof) such signs as are
reasonably required to advertise Lessee’s own business so long as such signs
are in a location designated by Lessor and comply with Applicable Requirements
and the signage criteria established for the Industrial Center by Lessor.  The installation of any sign on the Premises
by or for Lessee shall be subject to the provisions of Paragraph 7
(Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations).  Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof of the Building, and the
right to install advertising signs on the Building, including the roof, which
do not unreasonably interfere with the conduct of Lessee’s business; Lessor
shall be entitled to all revenues from such advertising signs.

35.          Termination;
Merger.  Unless specifically stated
otherwise in writing by Lessor, the voluntary or other surrender of this Lease
by Lessee, the mutual termination or cancellation hereof or a termination
hereof by Lessor for Breach by Lessee, shall automatically terminate any
sublease or lessor estate in the Premises; provided, however, Lessor shall, in
the event of any such surrender, termination or cancellation, have the option
to continue any one or all of any existing subtenancies.  Lessor’s failure within ten (10) days
following any such event to make a written election to the contrary by written
notice to the holder of any such lessor interest, shall constitute Lessor’s
election to have such event constitute the termination of such interest.

36.          Consents.

(a)           Except for Paragraph 33 hereof
(Auctions) or as otherwise provided herein, wherever in this Lease the consent
of a Party is required to an act by or for the other Party, such consent shall
not be unreasonably withheld or delayed. 
Lessor’s actual reasonable costs and expenses (including but not limited
to architects’, attorneys’, engineers’ and other consultants’ fees) 

 

33

 

incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent pertaining to this Lease or the
Premises, including but not limited to consents to an assignment a subletting
or the presence or use of a Hazardous Substance, shall be paid by Lessee to
Lessor upon receipt of an invoice and supporting documentation therefor, in
addition to the deposit described in Paragraph 12.2(e), Lessor may, as a
condition to considering any such request by Lessee, require that Lessee deposit
with Lessor an amount of money (in addition to the Security Deposit held under
Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor
will incur in considering and responding to Lessee’s request.  Any unused portion of said deposit shall be
refunded to Lessee without interest. 
Lessor’s consent to any act, assignment of this Lease or subletting of
the Premises by Lessee shall not constitute an acknowledgment that no Default
or Breach by Lessee of this Lease exists, nor shall such consent be deemed a
waiver of any then existing Default or Breach, except as may be otherwise
specifically stated in writing by Lessor at the time of such consent.

(b)           All conditions to Lessor’s consent
authorized by this Lease are acknowledged by Lessee as being reasonable.  The failure to specify herein any particular
condition to Lessor’s consent shall not preclude the impositions by Lessor at
the time of consent of such further or other conditions as are then reasonable
with reference to the particular matter for which consent is being given.

37.          Guarantor.

37.1        Form of
Guaranty.  If there are to be any Guarantors of this
Lease per Paragraph 1.11, the form of the guaranty to be executed by each
such Guarantor shall be in the form most recently published by the American
Industrial Real Estate Association, and each such Guarantor shall have the same
obligations as Lessee under this lease, including but not limited to the
obligation to provide the Tenancy Statement and information required in
Paragraph 16.

37.2        Additional
Obligations of Guarantor.  It shall constitute a Default
of the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: 
(a) evidence of the due execution of the guaranty called for by
this Lease, including the authority of the Guarantor (and of the party signing
on Guarantor’s behalf) to obligate such Guarantor on said guaranty, and
resolution of its board of directors authorizing the making of such guaranty,
together with a certificate of incumbency showing the signatures of the persons
authorized to sign on its behalf, (b) current financial statements of
Guarantor as may from time to time be requested by Lessor, (c) a Tenancy
Statement, or (d) written confirmation that the guaranty is still in
effect.

38.          Quiet
Possession.  Upon payment by
Lessee of the rent for the Premises and the performance of all of the
covenants, conditions and provisions on Lessee’s part to be observed and
performed under this Lease, Lessee shall have quiet possession of the Premises
for the entire term hereof subject to all of the provisions of this Lease.

39.          Options.

39.1        Definition. 
As used in this Lease, the word “Option” has the following meaning:  (a) the right to extend the term of
this Lease or to renew this Lease or to extend or renew any lease that Lessee
has on other property of Lessor; (b) the right of first refusal to lease
the Premises or the right of first offer to lease the Premises or the 

 

34

 

right of first refusal to lease other property of
Lessor or the right of first offer to lease other property of Lessor;
(c) the right to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises, or
the right to purchase other property of Lessor, or the right of first refusal
to purchase other property of Lessor, or the right of first offer to purchase
other property of Lessor.

39.2        Options
Personal to Original Lessee.  Each Option
granted to Lessee in this Lease is personal to the original Lessee named in
Paragraph 1.1 hereof, and cannot be voluntarily or involuntarily signed or
exercised by any person or entity other than said original Lessee while the
original Lessee is in full and actual possession of the Premises and without
the intention of thereafter assigning or subletting.  The Options, if any, herein granted to Lessee are not assignable,
either as a part of an assignment of this Lease or separately or apart
therefrom, and on Option may be separated from this Lease in any manner, by
reservation or otherwise.

39.3        Multiple
Options.  In the event that Lessee has any multiple
Options to extend or renew this Lease, a later option cannot be exercised
unless the prior options to extend or renew this Lease have been validly
exercised.

39.4        Effect of
Default on Options.

(a)           Lessee shall have no right to
exercise an Option, notwithstanding any provision in the grant of Option to the
contrary:  (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1
and continuing until the noticed Default is cured, or (ii) during the
period of time any monetary obligation due Lessor from Lessee is unpaid (but
regard to whether notice thereof is given Lessee), or (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessor
has given to Lessee three (3) or more notices of separate Defaults under
Paragraph 13.1 during the twelve (12) month period immediately preceding
the exercise of the Option, whether or not the Defaults are cured.

(b)           The period of time within which an
Option may be exercised shall not be extended or enlarged by reason of Lessee’s
inability to exercise an Option because of the provisions of
Paragraph 39.4(a).

(c)           All rights of Lessee under the
provisions of an option shall terminate and be of no further force or effect,
notwithstanding Lessee’s due and timely exercise of the Option, if, after such
exercise and during the term of this Lease, (i) Lessee fails to pay to
Lessor a monetary obligation of Lessee for a period of thirty (30) days after
such obligation becomes due (without any necessity of Lessor to give notice
thereof to Lessee), or (ii) Lessor gives to Lessee three (3) or more
notices of separate Defaults under Paragraph 13.1 during any twelve (12)
month period, whether or not the Defaults are cured, or (iii) if Lessee
commits a Breach of this Lease.

40.          Rules
and Regulations.  Lessee agrees
that it will abide by, and keep and observe all reasonable rules and
regulations (“Rules and Regulations”) which Lessor may make from time to time
for the management, safety, care, and cleanliness of the grounds, the parking
and unloading of vehicles and the preservation of good order, as well as for
the convenience of other occupants or tenants of the Building and the
Industrial Center and their invitees.

 

35

 

41.          Security
Measures.  Lessee hereby
acknowledges that the rental payable to Lessor hereunder does not include the
cost of guard service or other security measures, and that Lessor shall have no
obligation whatsoever to provide same. 
Lessee assumes all responsibility for the protection of the Premises,
Lessee, its agents and invitees and their property from the acts of third
parties.

42.          Reservations.  Lessor reserves the right, from time to
time, to grant, without the consent or joinder of Lessee, such easements,
rights of way, utility raceways, and dedications that Lessor deems necessary,
and to cause the recordation of parcel maps and restrictions, as long as such
easements, rights of way, utility raceways, dedications, maps and restrictions
do not reasonably interfere with the use of the Premises by Lessee.  Lessee agrees to sign any documents
reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.

43.          Performance
Under Protest.  If at any time a
dispute shall arise as to any amount or sum of money to be paid by one Party to
the other under the provisions hereof, the Party against whom the obligation to
pay the money is asserted shall have the right to make payment “under protest”
and such payment shall not be regarded as a voluntary payment and there shall
survive the right on the part of said Party to institute suit for recovery of
such sum.  If it shall be adjudged that
there was no legal obligation on the part of said Party to pay such sum or any
part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.

44.          Authority.  If either Party hereto is a corporation,
trust, or general or limited partnership, each individual executing this Lease
on behalf of such entity represents and warrants that he or she is duly
authorized to execute and deliver this Lease on its behalf.  If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.

45.          Conflict.  Any conflict between the printed provisions
of this Lease and the typewritten or handwritten provisions shall be controlled
by the typewritten or handwritten provisions.

46.          Offer.  Preparation of this Lease by either Lessor
or Lessee or Lessor’s agent or Lessee’s agent and submission of same to Lessee
or Lessor shall not be deemed an offer to lease.  This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

47.          Amendments.  This Lease may be modified only in writing,
signed by the parties in interest at the time of the modification.  The Parties shall amend this Lease from time
to time to reflect any adjustments that are made to the Base Rent or other rent
payable under this Lease.  As long as
they do not materially change Lessee’s obligations hereunder, Lessee agrees to
make such reasonable non–monetary modifications to this Lease as may be
reasonably required by an institutional insurance company or pension plan
Lender in connection with the obtaining of normal financing or refinancing of
the property of which the Premises are a part.

48.          Multiple
Parties.  Except as otherwise expressly
provided herein.  If more than one
person or entity is named herein as either Lessor or Lessee the obligations of
such multiple parties shall be the joint and several responsibility of all
persons or entities named herein as such Lessor or Lessee.

 

36

 

LESSOR AND LESSEE HAVE
CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED
HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY
CONSENT THERETO.  THE PARTIES HEREBY
AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND
LESSEE WITH RESPECT TO THE PREMISES.

IF THIS LEASE HAS BEEN
FILLED IN, IT HAS BEEN PREPARED FOR YOUR ATTORNEY’S REVIEW AND APPROVAL.  FURTHER, EXPERTS SHOULD BE CONSULTED TO
EVALUATE THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS, UNDERGROUND
STORAGE TANKS OR HAZARDOUS SUBSTANCES. 
NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL
REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKERS OR THEIR CONTRACTORS,
AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES
OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY
SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX
CONSEQUENCES OF THIS LEASE.  IF THE
SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE
STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

The parties hereto have
executed this Lease at the place and on the dates specified above their
respective signatures.

 

	
  Executed at:

  	
   

  	
   

  	
  Executed at:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  on:

  	
   

  	
   

  	
  on:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By LESSOR:

  	
   

  	
   

  	
  By LESSEE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marvin L. Oates Trust dated March 7, 1995

  	
   

  	
  overstocks.com

  
	
   

  	
   

  	
   

  	
  A Utah Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Marvin L. Oates

  	
   

  	
  By: 

  	
  /s/ Pat M. Byrne

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name Printed: 

  	
  Marvin L. Oates

  	
   

  	
  Name Printed: 

  	
  Karla Bourland - Pat Byrne

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title: 

  	
  Trustee of the Marvin L. Oates Trust

  	
   

  	
  Title: 

  	
  Chief Operating Officer - President

  
	
   

  	
  Dated March 7, 1995

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  

 

37

 

	
  Address:

  	
  8615
  Elder Creek Road

  	
   

  	
  Address:

  	
   

  	
  2855
  E. Cottonwood Parkway

  
	
   

  	
  Sacramento, California 95828

  	
   

  	
   

  	
   

  	
  Suite 500

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Salt Lake City, Utah 84121

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (916) 381–3600

  	
   

  	
  Telephone: 

  	
   

  	
  (801) 947–3118

  
	
  Facsimile:

  	
  (916) 381–8671

  	
   

  	
  Facsimile: 

  	
   

  	
  (801) 947–3218

  

NOTE:  These forms are often modified to meet
changing requirements of law and needs of the industry.  Always write or call to make sure you are
utilizing the most current form: 
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 345 So. Figueroa St., M–1,
Los Angeles, CA 90071. (213) 687–8777.

 

38

ADDENDUM
TO STANDARD INDUSTRIAL COMMERCIAL MULTI–TENANT LEASE–NET, DATED March 15,
2000 BY AND BETWEEN Marvin L. Oates Trust dated March 7, 1995
(LESSOR) and overstock.com, a Utah Corporation (LESSEE).  THIS ADDENDUM SHALL GOVERN IN THE EVENT OF A
CONFLICT BETWEEN THIS ADDENDUM AND THE LEASE FORM TO WHICH IT IS ATTACHED.

1.5          (continued)
Schedule for base rent is as follows:

	
  Month 1

  	
  Free

  
	
  Months 2-7

  	
  $30,723.00 per month

  
	
  Months 8-12

  	
  $30,723.00 per month

  
	
  Months 13-24

  	
  $31,820.25 per month

  
	
  Months 25-36

  	
  $32,917.50 per month

  
	
  Months 37-48

  	
  $34,014.75 per month

  
	
  Months 49-61

  	
  $35,112.00 per month

  

The rent figures
quoted herein are based on the improvements listed in Exhibit ”B” and
resulting plans submitted to the local Building Department.  If the Building Department requires changes
or additions to the plans for any reason, the rent shall be adjusted, subject
to Lessee’s approval, to reflect any additional cost for such changes or additions.

2.3          (continued)
Lessor warrants that any new construction by Lessor pursuant to this
Lease shall be in conformity with the building plans and permits, and shall
comply with current interpretations of the Americans With Disabilities Act of
1990 (“ADA”) regarding the type of building and/or tenant improvements
constructed by Lessor.  However, if any
governmental authority should require any additional improvements, permits or
approvals, under ADA or otherwise, due to Lessee’s particular use, or Lessee’s
employees, customers, or invitees, other than those which are stated in this
Lease, and other than requirements generally for buildings of this type,
including without limitation, additional fire protection equipment or flow
capacity, use permits, or zoning variances, such improvements or changes to the
permitted uses shall be made at Lessee’s sole expense.

3.1          (continued)
Lessor shall complete construction of the tenant improvements on Exhibit "B"
on or before the sixtieth [60th] day after issuance
of all building permits regarding the Premises.

Notwithstanding
any language herein to the contrary, the lease term shall commence on the date
(“Commencement Date”) that Lessor has delivered to Lessee:  (i) a fax or hard copy of final
governmental approval of all building permits for the Premises; or (ii) a
fax or hard copy of the Certificate of Occupancy (if needed for Lessee to
legally occupy the Premises).

3.3          (continued)
Lessor consents to the early entry of Lessee into the Premises for
the purpose of storing materials and installing equipment.  Lessee may enter the Premises, at no cost to
the Lessee, on the thirtieth [30th] day
after issuance of all building permits (the period from such early entry
through the commencement Date of the term shall be referred to as the 

39

 

“Early Entry
Period”).  Prior to such entry, Lessee shall
provide to Lessor evidence that all insurance coverage required under the Lease
is in full effect during the Early Entry Period.  The provisions of Paragraph 8 shall apply
during the Early Entry Period as if the Lease term had started on the first day
of the Early Entry Period.  During the
Early Entry Period, Lessee understands that Lessor shall be working to fulfill
its obligations under Exhibit "B" of this
Lease, and Lessor shall continue to have complete control over the jobsite and
Lessee’s access to the Premises.  Lessee
shall be permitted to use portions of the Premises as construction is completed
in order that Lessee may make a smooth transition from its prior facilities.

5.             SECURITY
DEPOSIT/LETTER OF CREDIT:  As
a condition precedent to Landlord’s obligations under this Lease, Lessee shall
deliver to Lessor not later than the fifth business day following the
Commencement Date, an irrevocable, unconditional and transferable Letter of
Credit issued by and drawn upon a commercial bank with which Lessee has a
business relationship, and if possible, having an office in California or which
would otherwise allow Lessor to draw upon the Letter of Credit without having
to travel outside of California (hereinafter referred to as the “Issuing Bank”)
and which Issuing Bank is reasonably acceptable to the Lessor and which Letter
of Credit shall have a term of not less than one year, be in form and content
reasonably satisfactory to Lessor, be for the account of Lessor and be in the
initial amount of $200,000 and shall reduce semi–annually as hereafter
provided.  The Letter of Credit shall
provide that:

a.                                       The Issuing Bank shall pay to Lessor or
its duly authorized representative an amount up to the face amount of the
Letter of Credit upon presentation of the Letter of Credit and a sight draft in
the amount to be drawn;

b.                                      The Letter of Credit shall be
automatically renewed, without amendment except for the reduction in the amount
thereof as hereafter expressly set forth, for consecutive periods of one year
each during the term of this Lease, unless Issuing Bank sends written notice
(hereinafter referred to as the “Non–Renewal Notice”) to Lessor by
certified mail, return receipt requested, not less than thirty (30) days next
preceding the then expiration date of the Letter of Credit, that it shall not
renew such Letter of Credit;

c.                                       Lessor, upon receipt of the Non–Renewal
Notice, shall have the right, exercisable by a sight draft, to receive the
monies represented by the Letter of Credit (which moneys shall be held by
Landlord as a cash deposit pursuant to the terms of this Article pending the
replacement of such Letter of Credit or Lessee’s default hereunder); and

d.                                      Upon Lessor’s sale of Lessor’s interest
in the Property, the Letter of Credit shall be transferable by Lessor as
provided herein.

In the event of a sale of
Lessor’s interest in the Property, Lessor shall have the right to transfer the Letter
of Credit deposited hereunder to the purchaser and Lessor shall thereupon be
released by Lessee from all liability for the return of such Letter of
Credit.  In such event, Lessee agrees to
look solely to the new Lessor for the return of said Letter of Credit.  It is agreed that the provisions hereof
shall apply to every transfer or assignment made of said Letter of Credit to a
new Lessor.

40

 

Lessee covenants that it
will not assign or encumber, or attempt to assign or encumber, the Letter of
Credit deposited hereunder as security, and that neither Lessor nor its
successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment, or attempted encumbrance.

Lessor agrees that it
will not draw down the proceeds of the Letter of Credit except in the event of
a default by Lessee hereunder which continues after any required notice and the
expiration of any applicable cure period or the receipt of notice of
non-renewable of such Letter of Credit by the Issuing Bank without the Lessee
having provided a substitute Letter of Credit at least seven (7) business days
prior to the expiation date of the Letter of Credit upon substantially the same
terms and conditions as the Letter of Credit.

The Lessee shall be
obligated to maintain a Letter of Credit meeting the requirements of this
Paragraph 5 during the term of this Lease, provided, however, the amount
available to be drawn under such Letter of Credit shall reduce as follows:

	
  Beginning of Month

  	
   

  	
  Amount of Reduction

  	
   

  	
  Balance of Letter of Credit

  
	
   

  	
   

  	
   

  	
   

  	
  $200,000.00

  
	
  7

  	
   

  	
  ($25,000.00)

  	
   

  	
  $175,000.00

  
	
  13

  	
   

  	
  ($25,000.00)

  	
   

  	
  $150,000.00

  
	
  19

  	
   

  	
  ($25,000.00)

  	
   

  	
  $125,000.00

  
	
  25

  	
   

  	
  ($25,000.00)

  	
   

  	
  $100,000.00

  
	
  31

  	
   

  	
  ($25,000.00)

  	
   

  	
  $  75,000.00

  
	
  37

  	
   

  	
  ($25,000.00)

  	
   

  	
  $  50,000.00

  

In the event of an
occurrence of an Event of Default under this Lease which is not cured or
waived, the Letter of Credit shall not be reduced further and the Lessor shall
have the right to draw upon the Letter of Credit as provided herein.

The Issuing Bank may be a
bank located outside of California in which event all costs and expenses of the
Lessor in realizing upon such Letter of Credit, including without limitation
travel outside of California, shall be a cost reimbursable to the Lessor under
this Lease.

Nothing in this
Paragraph 5 shall in any manner limit the liability of Lessee under this
Lease, and Lessor is reserving all rights and remedies against Lessee in the
event of an Event of Default by Tenant.

49.          BROKERS
DISCLOSURES.  The United States
Congress has recently enacted the Americans with Disabilities Act.  Among other things, this act is intended to
make many business establishments equally accessible to persons with a variety
of disabilities; modifications to real property may be required.  State and local laws also may mandate
changes.  The real estate brokers in
this transaction are not qualified to advise you as to what, if any, changes
may be required now, or in the future. 
Owners and Lessees should consult the attorneys and qualified design
professionals of their choice for information regarding these matters.  Real estate brokers cannot determine which
attorneys or design professionals have the appropriate expertise in this area.

41

 

Various construction
materials may contain items that have been or may be in the future be
determined to be hazardous (toxic) or undesirable and may need to be
specifically treated/handled or removed. 
For example, some transformers and other electrical components contain
PCB’s and asbestos has been used in components such as fireproofing, heating,
and cooling systems, air duct insulation, spray–on and tile acoustical
materials, linoleum, floor tiles, roofing dry wall and plaster.  Due to prior or current uses of the Property
or in the area, the Property may have hazardous or undesirable metals,
minerals, chemicals, hydrocarbons, or biological or radioactive items
(including electric and magnetic fields) in soils, water, building components,
above or below–ground containers or elsewhere in areas that may or may
not be accessible or noticeable.  Such
items may not leak or otherwise be released. 
Real estate agents have no expertise in the detection or correction of
hazardous or undesirable items.  Expert
inspections are necessary.  Current or
future laws may require clean up by past, present and/or future owners and/or
operators.  It is the responsibility of
the Seller/Lessor and Buyer/Lessee to retain qualified experts to detect and
correct such matters and to consult with legal counsel of their choice to
determine what provision, if any, they may wish to include in transaction
documents regarding the Property. 
Consult your attorney regarding this matter.

50.          OCCUPANCY:  If any governmental authority should require
any additional improvements due to Lessee’s occupancy other than those which
are stated in this addendum, such improvement shall be made at Lessee’s sole
expense.

51.          FIRE EXTINGUISHERS:  Lessee is responsible for supplying fire
extinguishers as required per code.

52.          FORKLIFT RESTRICTIONS:  Asphaltic cement can not withstand hard
rubber forklift tires.  In the event the
asphalt is damaged by Lessee’s use of a forklift with hard rubber tires, it
will be Lessee’s obligation to repair the damaged asphaltic cement at Lessee’s
sole expense.

53.          LESSEE’S PROPERTY:  Notwithstanding any language to the contrary
herein, in the event Lessor repaints the walls, replaces the floor covering, or
does any other repair, maintenance, remodeling, or refurbishing work for any
reason, Lessee shall remove Lessee’s personal property, including Lessee’s
furniture, cubicles, room dividers, modular office furniture, equipment,
computers and all computer–related equipment, and Lessee’s personnel, at
Lessee’s sole cost and expense, so that Lessor may complete Lessor’s work as
quickly and smoothly as possible during normal business hours.

54.          OUTSIDE STORAGE:  Outside storage is strictly prohibited.  Parking areas, loading zones, and vacant
property adjoining Lessee’s leased areas are to be left vacant and clean.  Lessor shall give Lessee forty–eight
(48) hours written notice of the need to clean up or remedy any condition which
may originate during the term of the lease. 
In the event Lessee fails to remedy the condition within forty–eight
(48) hours, Lessor may remediate the condition and charge Lessee the cost
thereof.

55.          FORCE MAJEURE:  If Lessor cannot perform any of its
obligations due to events beyond Lessor’s control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events.  Events beyond
Landlord’s control include, but are not limited to Acts of God, war, civil
commotion, labor disputes, strikes, fire, flood, excessive rain or other
casualty, shortages of labor or material, governments regulation or restriction
and weather conditions.

42

 

56.          FLOOR SEALER:  Lessor does not warrant the fitness of the
floor slab for applying floor sealer. 
For example, soil conditions may cause moisture to be present under the
concrete slab or migrate through the slab, which may affect the sealer’s
performance.  Lessee has been advised to
consult directly with the manufacturer’s representative, and Lessee shall look
directly to the manufacturer in the event of product failure.

57.          EXCLUSIVE RIGHT TO LEASE:  So long as Lessee is not in default of the
lease, Lessee shall have the exclusive right to lease the adjacent 65,835
square feet referenced on Exhibit ”A” for six (6) months from the lease
commencement date.  Should this right be
exercised, the rental rate per square foot and lease term shall be commensurate
with the terms established for the original premises.  Tenant shall pay Landlord $3,910.00 per month to keep this
exclusive right during the first six (6) months of the lease term.  Failure to make this payment shall not
constitute a default under the lease, but will void this right.

AGREED
AND ACCEPTED

 

	
  By
  LESSOR:

  	
   

  	
   

  	
   

  	
  By
  LESSEE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marvin L. Oates Trust dated March 7, 1995

  	
   

  	
  overstocks.com

  
	
   

  	
   

  	
   

  	
   

  	
  A Utah Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Marvin L. Oates

  	
   

  	
  By:

  	
   

  	
  /s/ Patrick M. Byrne

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name Printed: 

  	
   

  	
  Marvin L. Oates

  	
   

  	
  Name Printed:

  	
   

  	
  Karla Bourland - Patrick Byrne

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Trustee of the Marvin L. Oates Trust

  	
   

  	
  Title: 

  	
   

  	
  Chief Operating Officer - President

  
	
   

  	
   

  	
  Dated March 7, 1995

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

43

 

EXHIBIT A

[graphic display of
premises]

 

EXHIBIT B

TENANT IMPROVEMENTS

Lessor shall provide and
install the following items at Lessor’s sole cost.

1.                                       1,500 square feet of standard office
improvements including rest rooms per Exhibit C.

2.                                       600 Amps of 277/480 volts, 3–phase
electrical service with distribution to office and warehouse lights only.

3.                                       Landlord’s standard full height demising
wall along the east side of the premises. 
Landlord may demise the space with a chain link fence until the adjacent
space is leased to another tenant. 
Lessor shall demise the space with a full height wall no later than
December 1, 2000.

4.                                       One hundred nine (109) (1 per 1,000
square feet) 400 watt metal halide lights in the warehouse area.

5.                                       Ten (10) each 3 0,000 LB capacity edge of
dock levelers.

 

EXHIBIT C

WAREHOUSE LEASES

BUILDING STANDARD WORK

OFFICE AREA

1.             PARTITIONING:

Lessor shall
provide one hundred (100) lineal feet of 3’ to 9’ high partitioning per one
thousand (1,000) square feet of leased area.

2.             DOORS:

In addition to required exterior entry door(s), Lessor shall provide
three (3) doors per one thousand (1,000) square feet of leased area.  Walnut legacy hollow core, hung in Timely
brown tone metal jams with Schlage “F” series hardware.

3.             CEILING:

2’x4’ Donn grid (white) & Random fissured with acoustical tile
ceiling will be provided as building standard.

4.             FLOORING:

Office
area:  Shaw–Ambition II 26oz Level Loop
(carpet).

Break
room:  Vinylasa Vinyl 12” x 12” x 1/8 (VCT).

Storage
room:  Vinylasa Vinyl 12” x 12” x 1/8 (VCT).

Restrooms: 
Standard Lino- in house stock and 6” black or gray cove base with toe
(Mannington Vega II & Burke CB).

Cove base: 
4” Roppe with toe

5.             HEATING/AIR CONDITIONING:

Heating and air conditioning will be provided throughout the leased
office area in accordance with sound engineering practice and Title 24
requirements.

6.             ELECTRICAL OUTLETS:

Two (2) standard wall duplex outlet will be provided for every one
hundred (100) square feet of leased area.

7.             TELEPHONE OUTLETS:

One (1) standard wall outlet will be provided for every one hundred
(100) square feet of leased area.

8.             SWITCHES:

One (1) switch will be provided per two hundred (200) square feet of
leased area.

 

 

9.             LIGHT FIXTURES:

One (1) 2’x 4’ lay–in
fluorescent fixture with Prismatic lens will be provided for every seventy–five
(75) square feet of leased area.

10.          PAINTING:

All walls shall be
painted with one (1) finish coat Flat Latex ICI paint on textured walls and
Semi Gloss ICI paint in restrooms.

11.          INSULATION:

All perimeter
walls and ceilings next to unconditioned spaces and restroom walls will be
insulated.

12.          TOILET PARTITIONING:

Knickerbocker
baked enamel metal or equal will be provided where required.

13.          RESTROOMS:

Sink, toilet,
mirror, toilet paper dispensers, duplex outlet and handicapped fixtures will be
furnished.

14.          CABINETS:

Cabinetry,
appliance and or window coverings are not included in standard build–out.  These items can be provided for an extra
charge.

 

2

COMMENCEMENT OF LEASE AGREEMENT

Date:  July 20, 2000

This lease
commencement agreement pertains to that certain Lease dated March 15,
2000, by and between Marvin L. Oates Trust dated March 7, 1995
(Lessor) and Overstock.com, a Utah Corporation (Lessee) for
the premises located at 955 South 3800 West, Suite 100, Salt
Lake City, Utah, 84104 and consisting of approximately 109,725
square feet within a multi tenant/retail industrial
building of approximately 354,255 square feet.

Whereas, said Lessee’s 61
month lease term is to commence on the date indicated below, in which the
Lessor has substantially completed all work required, if any, to be performed
by it under the terms and conditions of the lease agreement.

In accordance with the
above, the parties hereto agree that the term of the lease shall commence on July 20,
2000, and expire on August 20, 2005.

All other terms and
conditions of said Lease are hereby reaffirmed as being in full force and
effect.

	
  LESSOR:

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marvin L. Oates on OK&B

  	
   

  	
   

  	
   

  
	
  A
  California General Partnership

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Marvin L. Oates

  	
   

  	
  By:

  	
   /s/ Karla Bourland

  
	
   

  	
  Marvin L. Oates, an individual

  	
   

  	
   

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Marvin L. Oates

  	
   

  	
   

  	
   

  
	
   

  	
  Marvin L. Oates

  	
   

  	
   

  	
   

  
	
   

  	
  Managing General Partner

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  August 02 2000

  	
   

  	
  Date:

  	
  25 Jul 00

  

 

 

LEASE AMENDMENT #1

This Amendment is dated
for referenced purposes only August 28, 2000, by and between, Marvin L. Oates as
Trustee of the Marvin L. Oates Trust dated March 7, 1995
as Lessor, and overstocks.com, a Utah corporation,
as Lessee.

RECITALS

1.                                       The Parties hereto have entered into a
certain Lease (“LEASE”) dated March 15, 2000, regarding premises
described therein as 955 South 3800 West, Suite 100, Salt Lake City, Utah
84104, consisting of approximately 109,725 square feet of warehouse
space, including approximately 1,500 square feet of office space.

2.                                       The parties desire to amend the lease by
providing for temporary space and exercising tenant’s option to lease the
adjacent space.

AGREEMENT

The parties agree as
follows:

1.                                       TEMPORARY SPACE:      Lessee
shall occupy two bays on a temporary basis and in accordance with the following
terms and conditions:

A.                                   Premises:  The two bays immediately to the west of and adjacent to the First
Right Space (see Exhibit A).

B.                                     Size: 
43,890 square feet.

C.                                     Commencement Date:  To be determined upon occupancy.

D.                                    Expiration Date:  Month–to–month occupancy
cancelable with fourteen (14) days notice by either party.  The term for the Temporary space shall be no
longer than six (6) months and the expiration date will in no event be later
than March 31, 2001.

E.                                      Rent: 
$13,167.00 per month ($0.30 p.s.f.) True Gross.  (Tenant shall not be responsible for payment
of the share of operating expenses attributable to the Temporary Space.)

2.                                       EXCLUSIVE RIGHT TO LEASE: 
Lessee
hereby exercises their Exclusive Right to Lease as contained in
Paragraph 57 of the original Lease.

A.                                   Premises:  The three bays immediately west of and adjacent to the initial
leased space containing 109,725 square feet (“First Right Space”) (see
Exhibit A).

 

 

B.                                     Size: 
65,835 square feet.  (This
expansion shall increase the total leased premises from 109,725 square feet to
175,560 square feet.)

C.                                     Commencement:  The day immediately following the termination date on the
Temporary Space discussed above.

D.                                    Expiration Date:  The expiration date for this space shall be
the same as the original space, August 20, 2005.

E.                                      Rent: 
Upon commencement of the term for the First Right Space, Lessee shall
pay additional rent in the amount of $18,433.80 per month ($0.28 p.s.f.)
NNN.  The rent schedule shall be
adjusted as follows:

	
  Commencement — 7/19/01

  	
  $49,156.80

  	
  $0.28 p.s.f. NNN

  
	
  8/20/01 — 8/19/02

  	
  $50,912.40

  	
  $0.29 p.s.f. NNN

  
	
  8/20/02 — 8/19/03

  	
  $52,668.00

  	
  $0.30 p.s.f. NNN

  
	
  8/20/03 — 8/19/04

  	
  $54,423.60

  	
  $0.31 p.s.f. NNN

  
	
  8/20/04 — 8/20/05

  	
  $56,179.20

  	
  $0.32 p.s.f. NNN

  

F.                                      Option Payment:  Upon commencement of the term on this space, the additional
option rents discussed in Section 57 of the base lease, which was paid to
keep the exclusive right shall be eliminated.

G.                                     Early Occupancy:  Tenant shall have access to the First Right
Space upon commencement of and during the term of the Temporary Space for the
purposes of installing racking and lighting.

3.                                       LETTER OF CREDIT:  Lessee shall
increase the letter of credit by $60,000, from $200,000 to $260,000.  The amount available to be drawn against the
letter of credit shall be reduced by $25,000 on the beginning of the 7th,
13th, 19th, 25th, 31st, and 37th
month, as depicted below.

	
  Beginning of Month

  	
   

  	
  Date of
  Reduction

  	
   

  	
  Amount of
  Reduction

  	
   

  	
  Balance of Letter of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $260,000.00

  	
   

  
	
  7

  	
   

  	
  1/20/01

  	
   

  	
  ($25,000.00

  	
  )

  	
  $235,000.00

  	
   

  
	
  13

  	
   

  	
  7/20/01

  	
   

  	
  ($25,000.00

  	
  )

  	
  $210,000.00

  	
   

  
	
  19

  	
   

  	
  1/20/02

  	
   

  	
  ($25,000.00

  	
  )

  	
  $185,000.00

  	
   

  
	
  25

  	
   

  	
  7/20/02

  	
   

  	
  ($25,000.00

  	
  )

  	
  $160,000.00

  	
   

  
	
  31

  	
   

  	
  1/20/03

  	
   

  	
  ($25,000.00

  	
  )

  	
  $135,000.00

  	
   

  
	
  37

  	
   

  	
  7/20/03

  	
   

  	
  ($25,000.00

  	
  )

  	
  $110,000.00

  	
   

  

4.                                       RIGHT OF FIRST REFUSAL TO LEASE: 
With the exception of lease renewals by existing tenants, the Lessee is
hereby granted, by the Lessor, a one–time right of first refusal
to lease the approximately 43,890 square feet of space immediately
adjacent to the west side 

2

 

                                                of Lessee’s First Right Space.  See Exhibit A.  This right of first refusal to lease is in
effect beginning upon mutual execution of this Amendment #1 and will
expire upon expiration of the term, provided:

A.                                   Lessee is not in default under any of the
conditions and provisions of this lease.

B.                                     The Lessee agrees to lease said adjacent
space in its entirety.  The Lessor shall
not be required to make any adjustments in the demising walls, or other tenant
improvements unless by separate agreement between the parties at such time.

C.                                     Lessor hereby agrees to provide written
notice defining the terms and conditions of the proposed lease.

D.                                    Lessee shall, within five (5)
days after receipt of the Lessor’s notice that a third party offer has been
received for the space, indicate, in writing, its agreement to lease said space
pursuant to the terms and conditions of the third party offer.  If Lessee does not give notice in writing to
Lessor within five (5) days of its intent to lease the adjacent
space, Lessor thereafter shall have the right to lease said space to a third
party.

5.                                       ADDITIONAL OPTIONS:  Tenant has
no additional or remaining options other than the right of first refusal
discussed in Paragraph 4 above.

All other terms and
conditions of the Lease shall remain the same in full force and effect.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be
executed as of the day and year written below.

 

	
  LESSOR:

  	
   

  	
  LESSEE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marvin L. Oates as Trustee of the

  	
   

  	
  overstock.com

  	
   

  
	
  Marvin L. Oates Trust dated March 7, 1995

  	
   

  	
  a Utah
  corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Marvin L. Oates

  	
   

  	
  By:

  	
   

  	
  /s/ Karla Bourland

  	
   

  
	
   

  	
  Marvin L. Oates

  	
   

  	
   

  	
   

  	
  K. Bourland

  	
   

  
	
   

  	
  Trustee of the Marvin L. Oates Trust

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  dated March 7, 1995

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  Sep 20 2000

  	
   

  	
  Date:

  	
   

  	
  19 Sept 00

  	
   

  

 

3

 

LEASE AMENDMENT #2

This Amendment is dated
for referenced purposes only November 12, 2001, by and between, Marvin L.
Oates as Trustee of the Marvin L. Oates Trust dated March 7, 1995
as Lessor, and overstock.com, a Utah Corporation, as Lessee.

RECITALS

1.                                       The Parties hereto have entered into a
certain Lease (“LEASE”) dated March 15, 2000, regarding the
premises described therein as 955 South 3800 West, Suite 100, Salt Lake
City, Utah 84104, consisting of approximately 109,725 square feet of
warehouse space, including approximately 1,500 square feet of office space.

2.                                       The Parties amended the Lease with Lease
Amendment #1 dated August 28, 2000 providing for temporary space and
exercising tenant’s option to lease the adjacent space.  Tenant’s space was increased by 109,725 square
feet, from 109,725 to 219,450 square feet, for a total of 176,560 square feet
of termed space and 43,890 of month–to–month space.

3.                                       The parties now desire to amend the lease
to add the month–to–month space to the term of the Lease.

AGREEMENT

The parties agree as
follows:

1.                                       TEAMED SPACE:               Effective
December 1, 2001, the 43,890 square feet currently leased on a month–to–month
basis shall be added to the term of the Lease, subject to all terms  and conditions of the Lease, including, but
not limited to payment of rent and operating expenses.  The total square feet leased shall remain as
219,450 square feet (See Exhibit A), but all shall now be on a termed
basis, expiring August 20, 2005. 
No space remains on a month–to–month basis.

2.                                       RENT:    Rent for the 219,450 square
feet shall be as follows:

	
  1/1/01 — 8/19/02

  	
  $63,640.50 per month

  	
  $0.29 p.s.f. NNN

  
	
  8/20/02 — 8/19/03

  	
  $65,835.00 per month

  	
  $0.30 p.s.f. NNN

  
	
  8/20/03 — 8/19/04

  	
  $68,029.50 per month

  	
  $0.31 p.s.f. NNN

  
	
  8/20/04 — 8/20/05

  	
  $70,244.00 per month

  	
  $0.32 p.s.f. NNN

  

3.                                       RIGHT OF FIRST REFUSAL:           This
Amendment #2 shall void Lessee’s Right of First Refusal discussed in Agreement
#1, dated August 23, 2000, as this Right of First Refusal was for this
43,890 square feet which is now added to the termed space.

4.                                       TENANT IMPROVEMENTS:            Lessor
shall connect the gas heaters in the 43,890 square feet of the Lessee’s gas
meter.

 

 

 

 

All other terms and
conditions of the Lease shall remain the same in full force and effect.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be
executed as of the day and year written below.

 

	
  LESSOR:

  	
   

  	
  LESSEE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marvin L. Oates as Trustee of the

  	
   

  	
  overstock.com

  	
   

  
	
  Marvin L. Oates Trust dated March 7, 1995

  	
   

  	
  a Utah
  corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Marvin L. Oates

  	
   

  	
  By:

  	
   

  	
  /s/ Jason Lindsey

  	
   

  
	
   

  	
  Marvin L. Oates

  	
   

  	
   

  	
   

  	
  Jason Lindsey, CFO

  	
   

  
	
   

  	
  Trustee of the Marvin L. Oates Trust

  	
   

  	
   

  	
   

  	
  overstock.com

  	
   

  
	
   

  	
  dated March 7, 1995

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  Jan 14 2002

  	
   

  	
  Date:

  	
   

  	
  Jan 3, 2002

  	
   

  

2

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