Build-to-suit Facility

BUILD-TO-SUIT FACILITY


ABSOLUTE NET LEASE


ARTICLE ONE: BASIC TERMS


This Article One contains the Basic Terms of this Lease between the Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the Lease referred to in this Article One explain and define the Basic Terms and are to be read in conjunction with the Basic Terms.


Section 1.01. DATE OF LEASE: October 3, 1989.


Section 1.02. LANDLORD: CARL D. PANATTONI


Address of Landlord:


7728 Wilbur Way, Suite A
Sacramento, California 95828


Section 1.03. TENANT: PACIFIC RICE PRODUCTS, INC., A CALIFORNIA
CORPORATION


Address of Tenant:


1250 Harter Avenue
Woodland, California, 95695


Section 1.04. PROPERTY: An approximately but not greater than 60,000 square foot building located on the northernmost 5.65 PLUS OR MINUS acre portion of Assessor's Parcel Number 27-045-55 located on Santa Anita Court together with easements for ingress and egress to and from the building to the nearest public highway(s), and easement for parking purposes in accordance with Section 1.12, in Yolo County, California further described in Exhibit "A".


Section 1.05. LEASE TERM: Ten (10) years, COMMENCING UPON SUBSTANTIAL COMPLETION, or such other date as is specified in this Lease, and ENDING ON MAY 31, 2000.


Section 1.06. PERMITTED USES: (See Section 5.01). Any reasonable and legal use consistent with current zoning, Tenant's current business and which is permitted by reason of any laws, rules and regulations of local, state and Federal governments, districts, agencies, commissions and boards, and other standard and rule-making bodies.
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Section 1.07. LANDLORD'S BROKER: (See Article Fourteen) Landlord has not entered into an agreement for payment of commissions currently or in arrears to any broker.


Section 1.08. TENANT'S BROKER: (See Article Fourteen) Tenant has not entered into an agreement for payment of commissions currently or in arrears to any broker.


Section 1.09. COMMISSION PAYABLE TO BROKERS: (See Article Fourteen) In conjunction with the above Sections 1.08 and 1.09, no agreements exist for commissions payable to brokers.


Section 1.10. INITIAL SECURITY DEPOSIT: [See Paragraphs 3.03 and 13.03 (c)] Thirteen Thousand Five Hundred Thirty Dollars Even ($13,530.00).


Section 1.11. VEHICLE PARKING SPACES ALLOCATED TO TENANT: at lease fifty-two (52) spaces, including visitor parking, or per applicable Code.


Section 1.12. RENT AND OTHER CHARGES PAYABLE BY TENANT: (a) BASE RENT: Thirteen Thousand Five Hundred Thirty Dollars Even ($13,530.00) per month for the first sixty (60) months, as provided in Section 3.01, and shall be increased to Fifteen Thousand Nine Hundred Thirty Dollars Even ($15,930.00) for months 61 through 120 after the Commencement Date; (b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes (See Section 4.02) ; (ii) Utilities (See Section 4.03) ; (iii) Insurance Premiums. (See Section 4.04) ; Multiple Tenant Buildings (See Section 4.05) and other such payment that are required of a triple net tenant.


Section 1.13. DESCRIPTION AND CONSTRUCTION OF IMPROVEMENTS BY LANDLORD:


(a) DESCRIPTION OF IMPROVEMENTS. Landlord shall at Landlord's expense construct certain improvements on or about the property (the "Work") in accordance with certain plans and specifications to be prepared by Landlord for approval by Tenant, a summary of which is attached hereto as Exhibit "B" ("Plans a Specifications").


(b) COMPLETION OF THE WORK. Landlord shall use all reasonable efforts to complete as promptly as possible the work described in Exhibit "B" prior to the scheduled commencement date set forth in Section 1.05 of the Lease. Notwithstanding the date set forth in Section 1.05, the commencement date shall be the date upon which the work is substantially completed and the Property and completed improvements are delivered to Tenant. For the purposes of this


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Lease, the work shall be conclusively deemed to be substantially completed when all work described in the final plans is completed except for minor items of work, e.g. pickup work which can be completed with only minor interference with Tenant's conduct of business on the property. If Landlord fails to deliver possession of the Property with the improvements completed within ninety (90) days of the date set forth in Section 1.05 hereof, Landlord shall be in default hereunder unless such delay is directly caused by the acts of Tenant or Force Majeure.


(c) CHANGES. Except as otherwise provided in Section 15.16, Landlord's obligation to prepare the property for Tenant's occupancy is limited to completion of the work set forth in Exhibit "B". If Tenant requests any change, addition, or alternation ("Changes") in such plans and specifications or in the construction of the work, Landlord shall promptly give Tenant an estimate of the cost of such changes and the resulting delay in the delivery of the property to Tenant. Within three (3) days after receipt of such estimates, Tenant shall give Landlord written notice of whether or not Tenant elects to proceed with such changes. If Tenant fails to notify Landlord in writing, Landlord at its election may either:
1. Make such changes at Tenant's expense; or
2. Complete the work without making such changes. Tenant shall pay or reimburse Landlord for the cost of such changes within thirty (30) days after billing. Any delay caused by Tenant's request for any changes or from the construction of any changes shall not in any event delay the Commencement Date which shall occur on the date it would have occurred but for such changes. The work shall be the property of Landlord and shall remain upon and be surrendered with the property upon the expiration of the Lease term.


(d) OPTION TO CANCEL. Both Tenant and Landlord recognize that this Lease has been executed prior to Tenant's approval of plans and specifications. Tenant also recognizes that Landlord will be incurring substantial costs to expedite the construction of the building. Tenant shall have the right to cancel this contract anytime prior to approving plans and specifications. If Tenant does cancel this contract, Tenant shall reimburse Landlord for all documented reasonable expenses.


ARTICLE TWO: LEASE TERM


Section 2.01. LEASE OF PROPERTY FOR LEASE TERM. Landlord leases the Property to Tenant and Tenant leases the Property from Landlord for the Lease Term. The Lease Term is for the period stated in Section 1.05 above and shall begin and end on the dates specified in Section 1.05 above, unless the beginning or end of
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the Lease Term is changed under any provision of this Lease, in which case the expiration of the Lease Term shall be adjusted accordingly. The "Commencement Date" shall be the date specified in Section 1.05 above for the beginning of the Lease Term, unless advanced or delayed under any provision of this Lease, in which case the expiration of the Lease Term shall be adjusted accordingly, however payment of the first (1st) month's Base Rent under Paragraph 1.12 and the Initial Security Deposit under Paragraph 1.10 shall occur upon execution of the Lease.


Section 2.02. DELAY IN COMMENCEMENT. Landlord shall not be liable to Tenant if Landlord does not deliver possession of the Property to Tenant on the first date specified in Section 1.05 above. Landlord's non-delivery of the Property to Tenant on that date shall not affect this Lease or the obligations of Tenant under this Lease. However, the Commencement Date shall be delayed until possession of the Property is delivered to Tenant. The Lease Term shall be extended for a period equal to the delay in delivery of possession of the Property to Tenant, plus the number of days necessary to end the Lease Term on the last day of a month. If Landlord does not deliver possession of the Property to Tenant within ninety (90) days after the date first specified in Section 1.05 above, Tenant may elect to cancel this Lease by giving written notice within thirty (30) days after the 90-day period ends. If Tenant give such notice, the Lease shall be canceled and neither Landlord nor Tenant shall have any further obligations to the other. If Tenant does not give such notice, Tenants' right to cancel the Lease shall expire and the Lease Term shall commence upon the delivery of possession of the Property to Tenant. If delivery of possession of the Property to Tenant is delayed, Landlord and Tenant shall, upon such delivery, execute an amendment to this Lease setting forth the Commencement Date and expiration date of the Lease. Tenant's aforementioned right to cancel and the effect of any other delays in commencement shall be subject to Section 15.05(a) regarding "Force Majeure."


Section 2.03. EARLY OCCUPANCY. If Tenant occupies the Property prior to the Commencement Date except if such occupancy is reasonably necessary in connection with any preparation of the Property by Tenant for Tenant's occupancy, and provided Tenant does not interfere with Landlord's work in progress or construction, and further provided that Tenant use the utmost care for the safety of its employees and agents and others on the Property in allowing then early occupancy of the Property (failure to adhere to the above provisions shall terminate any right Tenant has to early occupancy), Tenant's occupancy of the Property shall be subject to all of the provisions of this Lease. Early occupancy Of the Property shall not advance the expiration date of this Lease.
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Section 2.04. HOLDING OVER. Tenant shall vacate the Property upon the expiration or earlier termination of the Lease. Tenant shall reimburse Landlord for and indemnify Landlord against all damages incurred by Landlord resulting from any delay by Tenant in vacating the Property. If Tenant does not vacate the Property upon the expiration or earlier termination of the Lease and Landlord thereafter accepts rent from Tenant, Tenant's occupancy of the Property shall be a "month-to-month" tenancy, subject to all of the terms of this Lease applicable to a month-to-month tenancy, except that the Base Rent then in effect shall be increased by twenty-five percent (25%).


Section 2.05. OPTION TO RENEW. Lessee shall have the option to renew this Lease for two (2) additional five (5) year periods provided Lessee has complied with each of the following conditions: (1) At the time of exercise of the option in accordance with the notification provisions set forth hereinbelow, Lessee is not in default of any of the terms and conditions of this Lease; and (2) Lessee has not been in default of any term or condition of this Lease within the four (4) month period immediately preceding the required notification of exercise. Lessee must exercise its option to renew by giving written notice ninety (90) days prior to expiration of this Lease of its intention to extend for each of the additional five (5) year periods. All the terms and conditions shall remain the same with the exception of rent, which shall be ninety-five percent (95%) of the Fair Market Rent. For purposes hereof, "Fair Market Rent" shall mean the first year's effective rental rates then being received for like premises in like buildings in the area for leases of approximately five years and on otherwise substantially similar terms of this Lease. For purposes hereof, adjustments to such effective rental rates applicable after the first year of the term shall not be taken into account in determining Fair Market Rent. Landlord and Tenant shall have thirty (30) days after Tenant notifies Landlord of the exercise of its Option to Extend in which to agree to the Fair Market Rent.


If the parties cannot agree to the Fair Market Rent within such thirty (30) day period, each party shall appoint an Appraiser (hereinafter defined) and shall give notice to the other party of the identity of the Appraiser within ten (10) days after the expiration of said thirty (30) day period. For purposes hereof, "Appraiser" means a real estate broker or MAI designated appraiser, in either case with not less than five (5) years of full time commercial appraisal or brokerage experience in the area in which
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the Premises are located and with no prior business dealings with the party appointing such Appraiser.


If either party fails to appoint an Appraiser, the sole Appraiser appointed shall make the determination of Fair Market Rent. If two Appraisers are appointed, they shall immediately meet and attempt to agree upon the Fair Market Rent. If they are unable to do so within fifteen (15) days after their first meeting, they shall jointly appoint a third Appraiser to make such determination, and the third Appraiser shall make such determination within ten (10) days of his/her appointment. If the two Appraisers are unable to agree upon such third Appraiser, either party may petition the Presiding Judge of the Superior Court of Yolo County to appoint such third Appraiser.


The determination of Fair Market Rent as provided herein shall be binding upon the parties hereto. Promptly upon such determination, the parties shall execute an amendment specifying ninety-five percent (95%) of the Fair Market Rent.


ARTICLE THREE: BASE RENT


Section 3.01. TIME AND MANNER OF PAYMENT. Upon execution of this Lease, Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph 1.13(a) above for the first month of the Lease Term, and the Security Deposit in the amount stated in Paragraph 1.11. On the first (1st) day of the second month of the Lease Term and each month thereafter, Tenant shall pay Landlord the Base Rent, in advance, without offset, deduction or prior demand. The Base Rent shall be payable at Landlord's address or at such other place as Landlord may designate in writing.


Section 3.02. BASE RENT INCREASES. The Base Rent shall be increased at the times specified in Paragraph 1.12 (a) above. Landlord shall notify Tenant of each increase in writing. Tenant shall pay the new Base Rent from its effective date until the next periodic increase. Landlord's notice may be given after the effective date of the increase. In such event, Tenant shall pay Landlord the necessary rental adjustment for the months elapsed between the effective date of the increase and Landlord's notice of such increase within ten (10) days After Landlord's notice.


Section 3.03. SECURITY DEPOSIT INCREASES. Each time the Base Rent is increased, Tenant shall deposit additional funds with Landlord sufficient to increase the Security Deposit to an amount which bears the same relationship to the adjusted Base Rent as the initial Security Deposit bore to the initial Base Rent. The initial Security Deposit shall be paid by Tenant to Landlord upon


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execution of the Lease.


Section 3.04. TERMINATION; ADVANCE PAYMENTS. Upon termination of this Lease under Article Seven (Damage or Destruction), Article Eight (Condemnation) or any other termination not resulting from Tenant's default, and after Tenant has vacated the Property in the manner required by this Lease, a pro rata adjustment shall be made concerning advance rent, any other advance payments made by Tenant to Landlord, and accrued real property taxes.


ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT


Section 4.01. ADDITIONAL RENT. All charges payable by Tenant other than Base Rent are called "Additional Rent." Unless this Lease provides otherwise, all Additional Rent shall be paid with the next monthly installment of Base Rent. The term "Rent" shall mean Base Rent and Additional Rent.


Section 4.02. REAL PROPERTY TAXES.


(a) PAYMENT OF TAXES. Tenant shall pay all real property taxes on the Property during the Lease Term. Subject to Paragraph 4.02(c) and Section 4.08 below, such payment shall be made at least ten (10) days prior to the delinquency date of the taxes. Tenant shall promptly furnish Landlord with satisfactory evidence that the real property taxes have been paid. Landlord shall reimburse Tenant for any real property taxes paid by Tenant covering any period of time prior to or after the Lease Term. If Tenant fails to pay the real property taxes when due, Landlord may pay the taxes and Tenant shall reimburse Landlord for the amount of such tax payment as Additional Rent within fifteen (15) days after Tenant receives written notice of same from Landlord.


(b) DEFINITION OF "REAL PROPERTY TAX". "Real Property Tax" means: (i) any fee, license fee, license tax, business license fee, commercial rental tax, levy, charge, assessment, penalty or tax imposed by any taxing authority against the Property or land upon which the Property is located; (ii) any Real Property tax on the Landlord's right to receive, or the receipt of, rent or income from the Property or against Landlord's business of leasing the Property; (iii) any tax or charge for fire protection, streets, sidewalks, road maintenance, refuse or other services provided to the Property by any governmental agency; (iv) any Real Property tax imposed upon this transaction, or based upon a reassessment of the property due to a change of ownership or transfer of all or part of Landlord's interest in the Property; and (v) any charge or fee replacing any tax previously included within the definition of real
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property tax. "Real property tax" does not, however, include Landlord's federal or state income, franchise, inheritance or estate taxes.


(c) JOINT ASSESSMENT. If the Property is not separately assessed, Tenant's share of the real property tax payable by Tenant under Paragraph 4.02(a) shall be determined from the assessor's worksheets or other reasonable available information. Landlord shall make a reasonable determination of Tenant's proportionate share of such real property tax and Tenant shall pay such share to Landlord within fifteen (15) days after receipt of Landlord's written statement.


(d) PERSONAL PROPERTY TAXES.


(i) Tenant shall pay all taxes charged against trade fixtures, equipment or any other personal property belonging to Tenant. Tenant shall try to have personal property taxed separated from the Property..


(ii) In the event Landlord pays taxes on the Property, if any of Tenant's personal property is taxed with the Property, Tenant shall pay Landlord the taxes for the personal property within fifteen (15) days after Tenant receives a written statement from Landlord for such personal property taxes.


(e) TENANT'S RIGHT TO CONTEST TAXES. Tenant may attempt to have the assessed valuation of the Property reduced or may initiate proceedings to contest the real property taxes. If required by law, Landlord shall join in the proceedings brought by Tenant. However, Tenant shall pay all costs of the proceedings, including any costs incurred by Landlord. Upon the final determination of any proceeding or contest, Tenant shall immediately pay the real property taxes due, together with all costs, charges, interest and penalties incidental to the proceedings. If Tenant does not pay the real property taxes when due and contests such taxes, Tenant shall not be in default under this Lease for nonpayment of such taxes if Tenant deposits funds with Landlord or opens an interest-bearing account reasonably acceptable to Landlord in the joint names of Landlord and Tenant. The amount of such deposit shall be sufficient to pay the real property taxes plus a reasonable estimate of the interest, costs, charges and penalties which may accrue if Tenant's action is unsuccessful, less any applicable tax impounds previously paid by Tenant to Landlord. The deposit shall be applied to the real property taxes due, as determined at such proceedings. The real property taxes shall be paid under protest from each deposit if such payment under protest is necessary to prevent to Property from being sold under a "tax sale" or similar
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enforcement proceeding.


Section 4.03. UTILITIES. Tenant shall pay, directly to the appropriate supplier, the cost of all natural gas, heat, light, power, sewer service, telephone, water, refuse disposal, fire monitoring (if applicable), and other utilities and services supplied to the Property. However, if any services or utilities are jointly metered with other property, Landlord will, upon request by Tenant, separately meter the Property. In the absence of Tenant's request, Landlord shall make a reasonable determination of Tenant's proportionate share of the cost of such utilities and services and Tenant shall pay such share to Landlord within fifteen (15) days after receipt of Landlord's written statement.


Section 4.04. INSURANCE PREMIUMS.


(a) LIABILITY INSURANCE. During the Lease Term, Tenant shall maintain a policy of comprehensive public liability insurance, at Tenant's expense, insuring Landlord against liability arising out of the ownership, use, occupancy or maintenance of Tenant's proportionate share of the Property. The initial amount of such insurance shall be at least $3,000,000, and shall be subject to periodic increase based upon inflation, increased liability awards, recommendation of professional insurance advisers, and other relevant factors. However, the amount of such insurance shall not limit Tenant's liability nor relieve Tenant of any obligation hereunder. The policy shall contain cross-liability endorsements, if applicable, and shall insure Tenant's performance of the indemnity provisions of Paragraphs 5.05(a), (b) and (e). Tenant shall, at Tenant's expense, maintain such other liability insurance as Tenant deems necessary to protect Tenant.


(b) HAZARD AND RENTAL INCOME INSURANCE. During the Lease Term, Landlord shall maintain policies of insurance at Tenant's expense, covering loss of or damage to the Property in the full amount of its replacement value. Such policies shall provide protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended perils (all risk), sprinkler leakage, earthquake sprinkler leakage, and Inflation Guard endorsement, and any other perils (except flood unless required by a lender holding a security interest in the Property) which Landlord reasonably deems necessary. Landlord may obtain insurance coverage for Tenant at Tenant's expense, maintain such primary or additional insurance on its fixtures, equipment and building improvements as Tenant deems necessary to protect its interest. During the Lease Term, Landlord shall also maintain a rental income insurance policy at Tenant's expense, with loss payable to Landlord in an amount equal to one
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(1) year's Base Rent, estimated real property taxes and insurance premiums. Tenant shall not do or permit to be done anything which invalidates any such insurance policies.


(c) PAYMENT OF PREMIUMS; INSURANCE POLICIES. Subject to Section 4.05 Tenant shall pay all premiums for the insurance policies described in Paragraph 4.04(a) and (b) within fifteen (15) days after receipt by Tenant of a copy of the premium statement or other evidence of the amount due. If the insurance policies maintained by landlord cover improvements or real property other than the Property, Landlord shall also deliver to Tenant a statement of the amount of the premiums applicable to the Property showing, in reasonable detail, how such amount was computed. If the Lease Term expires before the expiration of the insurance policy period, Tenant's Liability for insurance premiums shall be prorated on an annual basis. All insurance shall be maintained with companies holding a "General Policyholder's Rating" of B+ or better, as set forth in the most current issue of "Best's Insurance Guide." Tenant shall be liable for the payment of any deductible amount under Landlord's insurance policies; said deductible shall in no event be greater than $1,000. All policies required to be maintained hereunder may be maintained under Tenant's existing umbrella policies.


Section 4.05. MULTIPLE TENANT BUILDINGS; RULES AND REGULATIONS. If the Property is part of a larger building or group of buildings, Tenant shall pay monthly, in advance, its pro rata share of common area maintenance and repair costs as reasonably determined by Landlord. Tenant shall also comply with Landlord's rules and regulations respecting the management, care and safety of the common areas of such buildings and grounds, including parking areas, landscaped areas, walkways, hallways and other facilities provided for the common use and convenience of other occupants. Notice of such rules and regulations will be posted or given to Tenant. Tenant shall pay for any increase in the property insurance premiums for such buildings caused by Tenant's acts, omissions, use or occupancy of the Property.


Section 4.06. LATE CHARGES. Tenant's failure to pay rent promptly may cause Landlord to incur unanticipated costs. The exact amount of such costs are impractical or extremely difficult to ascertain. Such costs may include, but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord by any ground lease, mortgage or trust deed encumbering the Property. Therefore, if Landlord does not receive any rent payment on or before the day it becomes due, Landlord shall have the option to notify Tenant verbally or in writing of Landlord's failure to receive the rent payment, and Tenant shall
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