Sample Business Contracts


California-Norwalk-14910 Carmenita Road Lease - Donald M. Hypes and Burke Industries Inc.

Lease Forms

  • Start a state-specific lease for the rental of commercial property. Specify the term and rent due, as well as whether the landlord or tenant is responsible for property taxes, insurance, and maintenance and repairs.
  • When a tenant vacates commercial property before the lease term has expired, it may be able to rent the premises to a third party. The tenant would be the sublessor and the third party would be the sublessee. Besides preparing a sublease, both parties will want to review the provisions for assignment or subletting in the original lease agreement between the landlord and the sublessor.
  • Tenants of residential property should prepare a sublease agreement if they are seeking to sublease a room or the entire apartment or house to a third party. All parties should review the original lease agreement to see if there are any restrictions on subletting or assigning the premises.
  • Triple net leases are a type of commercial leases where the tenant has to pay for property taxes, insurance, utilities, and maintenance, in addition to the monthly rent.
  • When renting an office space, tenants should understand the amount of the rent and duration of the lease. Other important terms include whether the space can be subleased, which parties are responsible for maintenance, and whether any furniture and furnishings will be provided.


                  INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE

                                    for
                            14910 Carmenita Road
                            Norwalk, California
     
      1.   PARTIES.
     
      THIS INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE ("Lease") is entered 
into this 17th day of November, 1995 (the "Execution Date") by and between 
DONALD M. HYPES, Trustee under that certain Declaration of Trust dated 
April 25, 1983, as amended ("Landlord") and BURKE INDUSTRIES, INC., a 
California corporation ("Tenant").
     
      2.   LEASED PREMISES.
     
           2.1.   DESCRIPTION OF PREMISES.  Landlord is the owner of certain 
real property commonly known by the street address of 14910 Carmenita Road, 
Norwalk, California, which real property contains a building (the "Building") 
and certain exterior real property improved with parking and other 
improvements associated with the operation of the Building. As used herein, 
"Premises" means and includes, without limitation, the Building and any and 
all interior and exterior improvements to the Building, paving, driveways, 
entryways and exits and other physical structures and improvements located 
in, on or about the real property, all landscaping, excavations, planting on 
the Property, and all interior and exterior fixtures and also includes all 
trade fixtures of Tenant, and assignees and sublessees that cannot be 
removed from the Premises without causing structural damage. The 
Premises are more particularly described on Exhibit "A" attached hereto and 
incorporated herein by this reference.
     
           2.2.   LEASE OF PREMISES.  Landlord hereby leases to Tenant and 
Tenant hereby hires from Landlord, for the term, at the rental and upon the 
conditions in this Lease, the Premises.  Tenant accepts the Premises subject 
to those existing liens, encumbrances, charges, conditions, covenants, 
easements, restrictions and rights-of-way.
     
           2.3.   CONDITION OF PREMISES/WARRANTY.  Tenant acknowledges that 
the Premises need certain repair work (the "Repair Work") described on 
Exhibit "B" attached hereto and incorporated herein by this reference and 
Tenant agrees to perform at its sole cost and expense the Repair Work on or 
prior to June 30, 1996. Tenant acknowledges that it has been in possession 
of the Premises prior to the commencement of this Lease, and accepts the 
Premises and the improvements that are currently located in, on and about the 
Premises in a strictly "AS IS" condition, despite the need to complete the 
Repair Work, provided that, Landlord shall repair and maintain the Building's 
roof and skylights located thereon (hereinafter "Landlord's Work"). 
Landlord's contractors shall commence Landlord's Work within thirty (30) 
days of the Execution Date and such work shall be performed in a good 
workmanlike manner and Tenant shall permit Landlord's contractors with 
reasonable access to the Premises to conduct Landlord's Work. Landlord shall 
use reasonable efforts to minimize inconvenience to Tenant and shall 
reasonably schedule Landlord's Work with Tenant. Exclusive of the Repair 
Work and Landlord's Work, Tenant hereby acknowledges that it has conducted an 
inspection of the Premises and has found the Premises and all systems on the 
Premises to be in good operating condition, including without limitation the 
heating, air-conditioning, plumbing and electrical systems. In no event 
shall Landlord be obligated to make any repairs to the Premises or 
improvements, including the air-conditioning system, and any and all repairs 
or replacements shall be at the sole cost and expense of Tenant, provided 
that, Landlord shall be responsible for the maintenance and repair of 
Landlord's Work. Except for Landlord's Work, Tenant's taking possession of 
the Premises constitutes an acceptance of the Premises and constitutes a 
waiver of any warranty of any defect 

<PAGE>


in regard to workmanship or material of the Premises and other improvements 
that are a part of the Premises. Landlord shall have no obligation to 
maintain or repair the Premises nor any of the leasehold improvements 
currently and/or subsequently located in and about the Premises, provided 
that, Landlord shall be responsible for the maintenance and repair of 
Landlord's Work.

      3.   TERM OF LEASE.

           3.1.   ORIGINAL TERM.  The original term of the Lease shall be for 
a period of five (5) years.
           
           3.2.   OPTION TO EXTEND TERM.  Tenant is given the option to extend
the term on all the provisions contained in this Lease for a five (5) year
period ("extended term-1") following expiration of the original term by giving
written notice of exercise of the option ("option notice-1") to Landlord not
less than sixty (60) days prior to the expiration of the original term; provided
that, if Tenant is in default on the date of giving any option notice provided
herein above beyond all applicable notice and cure periods, then such option
notice shall be totally ineffective, or if Tenant is in default beyond all
applicable notice and cure periods on the date any extended term provided herein
above is to commence, then such extended term shall not commence and this Lease
shall expire at the end of such current term; and provided further that, upon
giving any effective option notice provided herein above, Tenant shall be 
bound by all the provisions contained in this Lease through the expiration
of such extended term except that monthly rental for the extended term shall be
calculated as provided in Section 4.3 below subject to adjustment as provided in
Section 4.2 below. For purposes of this Lease, "Term" shall be defined 
as the original term plus any appropriately exercised extended term
provided under this Lease.
           
           3.3.   COMMENCEMENT OF TERM.  The term "Commencement Date", as 
used in this Lease, shall be July 26, 1995.
           
           3.4.   HOLDING OVER.  This Lease shall terminate without further 
notice at expiration of the original term or at the end of the particular 
extended term to the extent the Tenant properly exercised its option to 
extend the term of this Lease. Any holding over by Tenant after expiration 
shall not constitute a renewal or extension or give Tenant any rights 
in or to the Premises. If, after expiration of the Term, Tenant remains in 
possession of the Premises with Landlord's permission (express or implied), 
Tenant shall become a tenant from month to month only, upon all the 
provisions of this Lease (except as to term and rent), but the monthly rent 
payable by Tenant shall be increased to one hundred fifty percent (150%) 
of the monthly rent payable by Tenant immediately preceding the expiration 
of the Term then in effect. Such held over monthly rate shall be payable in 
advance on or before the first day of each month. If either party desires to 
terminate such month-to-month tenancy, it shall give the other party not less 
than thirty (30) days advance written notice of the date of termination.
           
      4.   RENT.
     
           4.1.   RENT.  During the Term of this Lease, Tenant shall pay to
Landlord as monthly rent (sometimes hereinafter referred to as "monthly rent" or
"monthly rental"), without deduction, set off, prior notice, or demand, the sum
of Eight Thousand Dollars ($8,000.00) per month, which sum is subject 
to adjustment as provided in Section 4.2 herein. Rent for any period during the
Term of this Lease which is for less than one month shall be a prorated portion
of the monthly rent, based upon a thirty (30) day month. Monthly rent shall be
paid in advance on the first day of each month, during the Term of this Lease,
except that monthly rent for the last six days of July and for the entire month
of August and September, 1995, shall be paid to Landlord on the Execution Date.
           
           4.2.   ADJUSTMENT OF MONTHLY RENT.  The monthly rent provided for in
Section 4.1 shall be increased two and one-half (2 1/2) years after the
Commencement Date and two and one-half (2 1/2) years after the commencement of
any extension or renewal hereof (the "Increase Date"). The monthly rent shall
increase on each

                                      -2-
<PAGE>

Increase Date by the same percentage as the Consumer Price Index (hereafter,
"CPI") for all Urban Consumers in the Los Angeles-Anaheim-Riverside 
Areas (1982-1984 = 100) published by the United States Bureau of Labor
Statistics and determined two (2) months prior to the Effective Date or two (2)
months prior to the commencement of the Extended Term as the case may be, has
increased during the thirty (30) month period prior to the date that is two (2)
months before the applicable Increase Date; provided, however, that in no event
shall the amount of the monthly rent as adjusted be less than the monthly rent
immediately preceding the Increase Date plus seven and one-half percent (7 1/2%)
thereof, nor more than the monthly rent immediately preceding the Increase Date
plus fifteen percent (15%) thereof. If the CPI specified herein is discontinued
or revised during the term of this Lease such other government index or
computation with which it is replaced shall be used in order to obtain
substantially the same result as would have been obtained if the CPI had not
been discontinued. Increases to the monthly rent shall be due upon written
notice or demand from Landlord setting forth the new monthly rental
calculation, provided that, any failure on the part of Landlord to demand such
increases shall not result in any waiver of Landlord's right to collect such
increases for the year.
 
           4.3.   EXTENDED TERM MONTHLY RENT.  The parties shall have ten (10)
days after Landlord receives the option notice in which to agree on monthly rent
at the commencement of the extended term. If the parties agree on the monthly
rent for the extended term then during said ten (10) day period they shall
immediately execute an amendment to this Lease, stating the monthly rent.
   
           If the parties are unable to agree on the monthly rent for the 
extended term within that period, then within ten (10) days after expiration 
of that period each party, at its cost and by giving notice to the other 
party, shall appoint a real estate appraiser with at least five years' 
full-time commercial appraisal experience in the area in which the Premises 
are located to appraise and set the monthly rent for the extended term. The 
appraisers shall base their appraisals on the assumptions that the rental 
shall be that amount at which tenants are leasing space comparable in size, 
location and quality to the Premises which comparable space is located in 
commercial/industrial buildings in the Norwalk area and which are comparable 
to the Premises in age and location and shall take into account the following 
factors: length of lease term, and all monetary and non-monetary concessions 
being quoted such tenants except rental abatement and leasehold improvement 
allowance concessions shall only apply if such concessions are being granted 
to tenants that are in the position of renewing an existing lease. If a party 
does not appoint an appraiser within ten (10) days after the other party has 
given notice of the name of its appraiser, the single appraiser appointed 
shall be the sole appraiser and shall set the monthly rent for the extended 
term. If the two (2) appraisers are appointed by the parties as stated in 
this paragraph, they shall meet promptly and attempt to set the monthly rent 
for the extended term. If they are unable to agree within twenty (20) days 
after the second appraiser has been appointed they shall attempt to select a 
third appraiser meeting the qualifications stated in this paragraph within 
ten (10) days after the last day the two appraisers are given to set the 
monthly rent. If they are unable to agree on the third appraiser, either of 
the parties to this lease by giving ten (10) days' prior written notice to 
the other party can file a petition with the American Arbitration Association 
solely for the purpose of selecting a third appraiser who meets the 
qualifications stated in this paragraph. Each party shall bear half the cost 
of the American Arbitration Association's appointing the third appraiser and 
of paying the third appraiser's fee. The third appraiser, however selected, 
shall be a person who has not previously acted in any capacity for either 
party.
           
           Within twenty (20) days after the selection of this third appraiser,
a majority of the appraisers shall set the monthly rent for the extended term.
If a majority of the appraisers are unable to set the monthly rent within the
stipulated period of time, the three appraisals shall be added together and
their total divided by three; the resulting quotient shall be the monthly rent
for the Premises during the extended term.


                                      -3-
<PAGE>


           If, however, the low appraisal and/or the high appraisal are/is more
than ten percent (10%) lower and/or higher than the middle appraisal, the low
appraisal and/or the high appraisal shall be disregarded. If only one appraisal
is disregarded, the remaining two appraisals shall be added together and their
total divided by two; the resulting quotient shall be the monthly rent for the
Premises during the extended term. If both the low appraisal and the high
appraisal are disregarded as stated in this paragraph, the middle appraisal
shall be the monthly rent for the Premises during the extended term. 
Notwithstanding anything contained herein to the contrary, in no event shall the
monthly rent for the extended term be less than the monthly rent payable during
the last month of the original term of the Lease. If the monthly rent for the
extended term is not set prior to commencement of the extended term, then Tenant
shall pay monthly rent at the monthly rent rate payable during the last month of
the original term of the Lease with any shortfall to be paid within ten (10)
days of receipt of notice from the appraisers setting forth the determination of
the monthly rent for the extended term. After the monthly rent for the extended
term has been set, the appraisers shall immediately notify the parties in
writing.
           
           4.4.   ABATEMENT OF MONTHLY RENT.  Notwithstanding anything 
contained in this Lease to the contrary, the monthly rent during the original 
term shall be abated for a total period of three (3) calendar months 
commencing on the first full calendar month (the "Abatement Commencement 
Month") after Tenant or its contractor(s) in a good workmanlike manner 
completes all of the Repair Work set forth on Exhibit "B" attached hereto, 
but in no event shall the Abatement Commencement Month be prior to January 
1996. Tenant shall notify Landlord in writing immediately upon completion of 
all Repair Work and shall concurrently provide Landlord copies of all 
invoices for such repair work and copies of canceled checks for such invoices 
except to the extent the repair work is conducted by Tenant in which case 
Tenant shall certify to Landlord in writing that such work was completed by 
Tenant. The monthly rent shall be abated for a total abatement of three (3) 
consecutive calendar months including the Abatement Commencement Month. In 
the event Tenant or its contractor(s) fail to complete in a good workmanlike 
manner, all of the Repair Work on or before June 30, 1996, then Tenant shall 
not be entitled to any abatement of monthly rent under this Section 4.4 and 
such event shall be deemed a default by Tenant under this Lease.
           
           4.5.   LATE CHARGE.  Tenant acknowledges that the late payment of any
monthly rent will cause Landlord to lose the use of that money and incur costs
and expenses not contemplated under this Lease, including, without limitation,
administration and collection costs and processing and accounting expenses, the
exact amount of which is extremely difficult to ascertain. Therefore, if any
such installment is not received by Landlord within ten (10) days from the date
it is due, Tenant shall pay Landlord a late charge equal to six percent (6%) of
the delinquent portion of such installment. Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and is
fair compensation to Landlord for the loss suffered from such nonpayment by
Tenant. Acceptance of any late charge shall neither constitute a waiver of
Tenant's default with respect to such nonpayment by Tenant nor prevent Landlord
from exercising any other rights or remedies available to Landlord under this
Lease.
           
           4.6.   NET LEASE/WAIVER.  This Lease shall be deemed and construed 
to be an absolute net lease. The obligation of Tenant to pay the monthly rent 
and all other amounts payable by Tenant to Landlord hereunder when due shall 
be without abatement, deduction or set-off except as otherwise provided 
herein, and, except as otherwise provided herein, Tenant hereby waives all 
rights now and hereafter conferred by law to quit, terminate or surrender 
this Lease or the Premises, or any part thereof, and to receive any 
abatement, suspension, deferment or reduction of, or relief from, the rent 
under section 1932 and subsection 1933(4) of the California Civil Code, and 
any amendment thereof or any law of similar import that may hereafter be 
enacted.

           4.7.   WHERE TO PAY RENT.  All rent shall be paid to Landlord at 363
Bouquet Canyon Drive, Palm Desert, California 92211, or at such other address as
Landlord may direct in writing from time to time.

                                      -4-

<PAGE>


           4.8.   SECURITY DEPOSIT.  Tenant shall, upon execution of this 
Lease, deposit with Landlord the sum of Eight Thousand Dollars ($8,000.00) as 
a security deposit. This security deposit shall be held by Landlord as 
security for the faithful performance by Tenant of all the terms, covenants, 
and conditions of this Lease to be kept and performed by Tenant. If Tenant 
defaults with respect to any provisions of this Lease, including but not 
limited to, the provisions relating to the payment of rent, Landlord may (but 
shall not be required to) use, apply or retain all or any part of the 
security deposit for the payment of any rent or any other sum in default, or 
for the payment of any amount which Landlord may spend or become obligated to 
spend by reason of Tenant's default, or to compensate Landlord for any other 
loss or damage which Landlord may suffer by reason of Tenant's default. If 
any portion of said deposit is so used or applied, Tenant shall, within ten 
(10) days after written demand therefor, deposit cash with Landlord in an 
amount sufficient to restore the security deposit to its original amount and 
Tenant's failure to do so shall be a material breach of this Lease. Landlord 
shall not be required to keep this security deposit separate from its general 
funds, and Tenant shall not be entitled to interest on such deposit. If 
Tenant shall fully and faithfully perform every provision of this Lease to be 
performed by it, the security deposit or any balance thereof shall be 
returned to Tenant (or, at Landlord's option, to the last assignee of 
Tenant's interest hereunder) within ten (10) days after the expiration of the 
Lease term. In the event of termination of Landlord's interest in this Lease, 
Landlord shall transfer said deposit to Landlord's successor in interest.
           
           4.9.   TAXES AND OTHER GOVERNMENTAL CHARGES.  Landlord shall furnish
Tenant with all tax bills immediately upon receipt thereof. Tenant shall pay in
addition to monthly rent Impositions, as hereinafter defined, accruing during
the Term of this Lease. Impositions shall be defined as all personal and real
property taxes, assessments, levies and other governmental charges of every
description, whether general, special, ordinary, extraordinary or otherwise
(individually "Imposition" and collectively "Impositions") levied on or assessed
against the Premises, improvements and personal property located on or in, on
and about the Premises or any improvements, the leasehold estate, or any
subleasehold estate, whether belonging to or chargeable against Landlord or
Tenant.
           
           Tenant shall pay the Impositions shown on the real property tax 
bill and unsecured property tax and all other Impositions directly to the 
taxing or levying authority at least three (3) days before the date upon 
which such Impositions become delinquent. Any penalties assessed for failure 
to timely pay Impositions that Tenant is required to pay directly to the 
taxing or levying authority shall be at Tenant's sole cost and expense. 
Tenant shall forward to Landlord a copy of the canceled checks and/or 
receipts from the taxing or levying authorities promptly upon written request 
of Landlord. In the event Tenant fails to pay any Impositions required to be 
paid by Tenant directly to the taxing or levying authority, Landlord shall 
have the right to pay such Impositions on behalf of Tenant with the right of 
reimbursement as provided hereinafter.
           
           If during the Term of this Lease any governmental subdivision or 
agency shall undertake to create an improvement or special assessment 
district, the proposed boundaries of which include the Premises, Landlord 
shall be entitled to support or oppose the creation of such district or 
inclusion of the Premises therein or both, and to appear in any proceeding 
relating thereto. There shall be included in the definition of "Impositions" 
with respect to any calendar year only the accrued amount currently payable 
on any bonds and special assessments, including interest accrued for such tax 
calendar year or the accrued portion of the current annual installment for 
such calendar year. Tax refunds shall be credited against Impositions and 
refunded to Tenant, regardless of when received, based on the year to which 
the refund is applicable.
           
           Tenant's obligation to pay Impositions levied or assessed against 
the Premises or improvements thereon or personal property on or in the 
Premises or such improvements shall not include the following: business, 
income or profits taxes levied or assessed against Landlord by federal, 
state, county, municipal or other governmental agencies; transfer taxes of 
Landlord; franchise or other profits taxes imposed on the corporate owner of 
the fee to the Premises; gift

                                      -5-

<PAGE>


taxes, capital stock taxes, inheritance and succession taxes, estate taxes, and
other taxes to the extent applicable to Landlord's general or net income (as
opposed to rents or receipts. If, however, Impositions are levied or assessed
on the rents derived from the Premises in lieu of all or any part of real
property taxes, personal property taxes or real and personal property taxes that
Tenant would have been obligated to pay under the provisions hereof, and the
purpose of the new taxes is more closely akin to that of an ad valorem or use
tax than to an income or franchise tax on Landlord's income, Tenant shall pay
such Impositions as provided herein for property taxes and assessments.
          
           After written request (the "Tax Notice") by Tenant, at Landlord's
option, either (i) Landlord shall diligently pursue claims for reduction in the
Impositions of the Premises or any part thereof, in which event Landlord shall
provide Tenant with detailed information as to how Landlord will pursue such
claims, (ii) Tenant may pursue such claims with Landlord's concurrence, in the
name of Landlord, or (iii) Tenant may pursue such claims in the name of Landlord
without Landlord's concurrence. In the event that Landlord does not elect either
item (i) or (ii) above, within thirty (30) days of receipt of the Tax Notice,
Tenant shall thereafter have the right to pursue such claims under item (iii)
above. The cost of any such proceedings shall be at the sole cost and expense
of Tenant. Tenant may give a Tax Notice prior to the issuance of the actual tax
bill by the taxing authority or receipt by Tenant of a billing from Landlord for
Tenant's share thereof, however, in no event shall Tenant be permitted to delay
payment of a contested tax bill if failure to pay would either cause interest
and/or penalties to accrue if Tenant's claims are rejected.
          
           If Tenant fails or refuses to pay the amount of any Impositions when
due, and/or fails to reimburse Landlord for Impositions paid directly by
Landlord within ten (10) days after Landlord provides notice to Tenant of the
amount payable by Tenant, then the Impositions shall be treated as added rent
due from Tenant, with interest at the "Interest Rate" (as defined herein) to be
paid on demand by Landlord.
          
      5.   UTILITIES, MAINTENANCE AND REPAIR.
          
           5.1.   UTILITIES.  Throughout the Term of this Lease Tenant shall 
pay the appropriate suppliers for all water, gas, electricity, light, heat, 
telephone, power, and other utilities and communications services used by 
Tenant on the Premises during the Term, whether or not such services are 
billed directly to Tenant. Tenant will also procure, or cause to be procured, 
without cost to Landlord, any and all necessary permits, licenses, or other 
authorizations required for the lawful and proper installation and 
maintenance upon the Premises of wires, pipes, conduits, tubes, and other 
equipment and appliances for use in supplying any such service to and upon 
the Premises. Landlord, upon request of Tenant, and at the sole expense and 
liability of Tenant, will join with Tenant in any application required for 
obtaining or continuing any such services.
          
           5.2    MAINTENANCE AND REPAIR.  Throughout the Term of this Lease,
Tenant shall provide all interior and exterior maintenance and repair of the
Premises and grounds in the same condition and repair as when received and as
improved by the Repair work, ordinary wear and tear excepted. Tenant shall
further maintain the Premises so that the Premises remain in compliance with all
applicable laws, rules, ordinances, orders and regulations of any federal,
state, county, municipal or other governmental agency or body having or
claiming jurisdiction over the Premises except as otherwise required by Section
13.1.C. of this Lease. Tenant's obligations shall include, without 
limitation, maintenance and repair of the parking lot, sidewalks, driveways, 
interior and exterior walls, windows and glazing, temperature controlled water
and return, the Utility Systems including heating, air-conditioning, plumbing,
electrical, and other utility systems and all other items on the Premises it
being the intention of the parties that all obligations of repair and
maintenance be made by Tenant which are related to the Premises and/or necessary
for the continued operation of the Premises. Notwithstanding the foregoing,
except as provided hereinbelow, Landlord shall be responsible for the
maintenance and repair of the Building's roof and skylights, provided that, 
Tenant shall not allow its
           
                                      -6-
           
<PAGE>


employees, agents or contractors to walk over, on or across the Building's roof
except to the extent reasonable access thereto is necessary for the repair of
utility or other systems located thereon and Tenant shall not attempt to remove
or adjust the skylights. Tenant shall provide Landlord's contractor's with
reasonable access to the Premises during the Term to conduct any repairs
required by Landlord under this Lease. Furthermore, Tenant shall be responsible
for the repair of the Building's roof and/or skylights to the extent any damage
thereto is caused by Tenant or its agents willful misconduct or negligence, and 
any damage resulting from Tenant's being on the roof and/or any damage resulting
from Tenant's attempt to remove or adjust the skylights shall be deemed caused
by Tenant's negligence. Tenant shall also provide gardening service, 
trash collection and other services necessary to keep the Premises and grounds
in the same condition and repair as when received and as improved by the Repair
work, ordinary wear and tear excepted, all at the sole cost and expense of
Tenant. All maintenance and repairs shall be made in accordance with all
applicable laws, rules, ordinances, orders and regulations of any 
federal, state, county, municipal or other governmental agency or body having
or claiming jurisdiction over the Premises. Tenant shall promptly and
diligently repair, restore, and replace as required to maintain or comply as
above, including the repair, restoration and replacement necessary to maintain
all or any part of the Premises and improvements ordinary wear and tear 
excepted. Should Tenant fail to maintain the Premises and improvements or make
any repairs or replacements as required within thirty (30) days following
written request therefor, Landlord shall have the right to enter the Premises
and perform such maintenance or make such repairs or replacements for the
account of Tenant using third party contractors selected by Landlord,
provided that, in no event shall this right be deemed to be an obligation of
Landlord to conduct such maintenance and repairs. The cost of any maintenance,
repairs or replacements paid for by Landlord shall be treated as added rent due
from Tenant, with interest at the Interest Rate (as defined herein), to be paid
on demand by Landlord. Landlord shall give Tenant prompt notice of the
maintenance, repairs and replacements conducted, stating the amounts paid and
the names of the parties paid.
     
           If Tenant provides written notice to Landlord of an event or 
circumstance which requires the action of Landlord with respect to the 
repairs and/or maintenance as set forth in this Section 5.2, and Landlord 
fails to provide such action as required by the terms of this Lease, then 
Tenant may proceed to take the required action upon delivery of an additional 
ten (10) business days notice to Landlord specifying that Tenant is taking 
such required action, and if such action was required under the terms of this 
Lease to be taken by Landlord, then Tenant shall be entitled to prompt 
reimbursement by Landlord of Tenant's reasonable costs and expenses in taking 
such action plus interest at the Interest Rate. If Landlord does not deliver 
a detailed written objection to Tenant, within thirty (30) days after receipt 
of an invoice by Tenant of its costs of taking action which Tenant claims 
should have been taken by Landlord, and if such invoice from Tenant sets 
forth a reasonably particularized breakdown of its costs and expenses in 
connection with taking such action on behalf of Landlord, then Tenant shall 
be entitled to deduct from Rent payable by Tenant under this Lease, the 
amount set forth in such invoice together with interest at the Interest Rate. 
If, however, Landlord delivers to Tenant within thirty (30) days after 
receipt of Tenant's invoice, a written objection to the payment of such 
invoice, setting forth with reasonable particularity Landlord's reasons for 
its claim that such action did not have to be taken by Landlord pursuant to 
the terms of this Lease or that the charges are excessive (in which case 
Landlord shall pay the amount it contends would not have been excessive), 
then Tenant shall not be entitled to such deduction from Rent, but as 
Tenant's sole remedy, Tenant may proceed to institute legal proceedings 
against Landlord to collect the amount set forth in the subject invoice.
     
      6.   USE OF PREMISES.
     
      Tenant shall use the Premises for the manufacture,  warehouse, sales, 
administration and distribution of rubber elastomeric products and compounds, 
and for purposes reasonably incidental thereto, and shall not use or permit 
the Premises to be used for any other purpose without the prior written 
consent of

                                      -7-
                                                    
<PAGE>


Landlord. Tenant shall not do or permit anything to be done in or about the 
Premises nor bring or keep anything therein which will cause cancellation of 
any insurance policy covering said Building or any part thereof or any of its 
contents. Tenant shall use the Premises in accordance with applicable zoning 
ordinances and regulations, and shall not use or allow the Premises to be 
used for any unlawful purpose. Tenant shall not cause, maintain or permit any 
nuisance in, on or about the Premises, and shall not commit or suffer to be 
committed any waste in or upon the Premises.
 
      7.   ASSIGNMENT, SUBLETTING AND ENCUMBRANCE.
     
           7.1.   NO TRANSFER.  Tenant shall not, without the prior written 
consent of Landlord, which consent shall not be unreasonably withheld, assign 
or hypothecate this Lease or any interest in it, sublet the Premises or any 
part of them, or permit the use of the Premises by anyone other than Tenant 
(collectively, referred to herein as "transfer"). Landlord shall consent or 
deny consent to a transfer within twenty (20) days from receipt of a (i) 
written request therefor, and (ii) copies of audited financial statements, if 
available. and if not, copies of financial statements certified by an officer 
of the proposed assignee or sublessee for the last fiscal year of the 
proposed assignee or sublessee and un-audited quarterly financial statements 
for the three (3) immediately preceding calendar quarters (collectively, the 
"Transferee Statements"); and the failure of Landlord to consent or deny 
consent to any proposed transfer within such twenty (20) day period shall be 
deemed to be Landlord's approval thereof. Tenant's interest in this Lease 
shall not, nor shall any interest in it, be assignable by operation of law 
without the consent of Landlord, which consent shall not be unreasonably 
withheld. The change in ownership of fifty percent (50%) or more of the 
equity ownership or voting stock of Tenant shall constitute an assignment 
requiring the consent of Landlord. Any of the foregoing acts, without the 
consent of Landlord, shall be void and shall, at the option of Landlord, 
terminate this Lease. Notwithstanding anything to the contrary set forth in 
this Lease, upon ten (10) days prior written notice from Tenant to Landlord, 
Tenant may assign the Lease at any time, or sublease all or part of the 
Premises, without the receipt of Landlord's consent to (i) an entity which is 
controlled by, controls, or is under common control with Tenant (an 
"Affiliate"), or which owns or is owned by an Affiliate, (ii) an entity with 
which Tenant merges or consolidates, provided that, the surviving entity 
holds substantially all of Tenants assets prior to the merger or 
consolidation, or (ii) a purchaser of all or substantially all of Tenants 
stock or assets, so long as such transaction was not entered into as a 
subterfuge to avoid the obligations and restrictions of this Lease. The term 
"control", as used in this Section 7.1 shall mean the ownership, direct or 
indirect, of at least fifty percent (50%) of the voting securities. Tenant 
shall immediately notify Landlord in writing of the name of the Affiliate to 
which a sublease or assignment is made and provide Landlord with copies of 
all agreements reflecting such sublease or assignment.
           
           7.2.   WITHHOLDING CONSENT.  Without limiting the other instances in
which it may be reasonable for Landlord to withhold its consent to an assignment
or subletting, Landlord and Tenant acknowledge that it will be reasonable for
Landlord to withhold its consent in any of the following instances:
           
                  A.   if at any time consent is requested or at any time prior
to the granting of consent, Tenant is in default under this Lease or would be in
default under this Lease beyond all applicable grace or cure periods; or
                
                  B.   if, the financial condition of the proposed assignee or
subtenant as presented by the Transferee Statements does not meet commercially
reasonable credit standards within the reasonable judgment of Landlord.
                
           7.3.   SUBLETTING.  If at any time, or from time to time during the
Term, Tenant desires to sublet all or any part of the Premises, Tenant shall
give notice to Landlord setting forth the terms of the proposed subletting and
the space so proposed to be sublet. Tenant shall be free to sublet the space to
any third party subject to obtaining Landlord's prior written consent which
consent shall not be unreasonably withheld. In connection with each consent
requested

                                      -8-  

<PAGE>


by Tenant, Tenant shall submit to Landlord the terms of the proposed
transaction, the identity of the parties to the transaction, the proposed
documentation for the transaction, the proposed assignee's or sublessee's
Transferee Statements and all other information reasonably requested by Landlord
concerning the proposed transaction and the parties involved in it. Landlord's
right to withhold consent shall be permitted under the same criteria set forth
in Section 7.2 of this Lease.

           7.4.   NO FURTHER SUBLETTING.  Further subletting shall be 
permitted in accordance with Section 7.3 above if the sublease is for the 
entire Premises. No subtenant shall have a right further to sublet less than 
the entire Premises without Landlord's prior written consent, which Tenant 
acknowledges may be withheld in Landlord's absolute discretion, and any 
assignment by a subtenant of its Sublease will be subject to Landlord's prior 
written consent in the same manner as if Tenant were entering into a new 
sublease. No sublease, once consented to by Landlord, will be modified or 
terminated by Tenant without Landlord's prior written consent, which consent 
shall not be unreasonably withheld.
          
           7.5.   NO RELEASE.  Regardless of Landlord's consent, no 
subletting or assignment will release Tenant from Tenant's obligation or 
alter the primary liability of Tenant to pay the rental and to perform all 
other obligations to be performed by Tenant under this Lease. The acceptance 
of rental by Landlord from any other person will not be deemed to be a wavier 
by Landlord of any provision of this Lease. Consent to one assignment or 
subletting will not be deemed consent to any subsequent assignment or 
subletting in the event of default by any assignee of Tenant or any successor 
of Tenant in the performance of any of the terms of this Lease, Landlord may 
proceed directly against Tenant without the necessity of exhausting remedies 
against such assignee or successor.

           7.6.   COSTS.  If Tenant assigns this Lease or sublets the 
Premises or requests the consent of Landlord to any assignment, subletting, 
hypothecation, or other action requiring Landlord's consent, then Tenant will 
pay Landlord's reasonable out-of-pocket attorneys' fees incurred in 
connection with it not to exceed $2,500.00.

      8.   INDEMNITY, CASUALTY AND INSURANCE.

           8.1.   TENANT'S INDEMNIFICATION.  Except to the extent caused by 
Landlord's gross negligence or willful misconduct, Tenant shall indemnify and 
hold Landlord and its "Related Parties" (defined below) harmless against and 
from liability and claims of any kind for loss or damage to property of 
Tenant and/or its Related Parties, or for any injury to or death of any 
person, arising out of (i) use and occupancy of the Premises or any work, 
activity or other things allowed or suffered by Tenant and/or its Related 
Parties to be done in, on or about the Premises; (ii) any breach or default 
by Tenant and/or its Related Parties of any of Tenant's obligations under 
this Lease; or (iii) any negligent or otherwise tortious act or omission of 
Tenant and/or its Related Parties. Tenant shall, at Tenant's expense and by 
counsel reasonably satisfactory to Landlord, defend Landlord in any action or 
proceeding arising from any such claim and shall indemnify Landlord against 
all costs, attorneys' fees, expert-witness fees and any other expenses 
incurred in such action or proceeding. Except to the extent caused by 
Landlord's gross negligence or willful misconduct, as a material part of the 
consideration for Landlord's execution of this Lease, Tenant hereby assumes 
all risk of damage or injury to any person, property in, or about the 
Premises from any cause, and Tenant hereby waives all claims in respect 
thereof against Landlord. Landlord shall indemnify and hold Tenant and its 
Related parties harmless against and from liability and claims of any kind 
for loss or damage to property of Tenant and/or its Related parties, or for 
any injury to or death of any person, arising out of (i) any breach or 
default of Landlord and/or its Related parties of any of Landlord's 
obligation under this lease; or (ii) any grossly negligent act of Landlord 
and/or its Related Parties. Landlord shall, at Landlord's expense and by 
counsel reasonably satisfactory to Tenant, defend Tenant in any action or 
proceeding arising from any such claim and shall
     
                                      -9-
 
<PAGE>


indemnify Tenant against all costs, attorney's fees, expert witness fees and
any other expenses incurred in such action or proceeding.
          
           8.2.   LANDLORD'S LIABILITY LIMITATIONS.  Except in cases of 
Landlord's gross negligence or breach or default by Landlord and/or its 
Related Parties, of any of Landlord's obligations under this Lease, Landlord 
shall not be liable for injury or damage which may be sustained by the person 
or property of Tenant, its Related Parties or any other person in or about 
the Premises caused by or resulting from fire, steam, electricity, gas, water 
or rain which may leak or flow from or into any part of the Premises or from 
the breakage, leakage, obstruction or other defects of pipes, sprinklers, 
roof, wires, appliances, plumbing, air conditioning or lighting fixtures, 
whether such damage or injury results from conditions arising upon the 
Premises or from other sources.
          
           8.3.   RELATED PARTIES.  The "Related Parties" of an entity or 
individual (where appropriate) include, but are not limited to, all past, 
present and future employees, officers, directors, shareholders, contractors, 
subcontractors, invitees, customers, trust beneficiaries, partners, joint 
venturers, agents, successors, assigns, heirs, personal representatives, 
administrators, parent entities, subsidiaries and affiliates of that entity 
or individual (where appropriate).
          
           8.4.   DAMAGE OR DESTRUCTION.
          
                  A.   DEFINITIONS.
          
                       (1)   "PREMISES PARTIAL DAMAGE" shall mean damage or
destruction to the improvements on the Premises, the repair cost of which
damage or destruction is less than 50% of the then Replacement Cost of the
Premises immediately prior to such damage or destruction, excluding from such
calculation the value of the land.
          
                       (2)   "PREMISES TOTAL DESTRUCTION" shall mean damage 
or  destruction to Premises, the repair cost of which damage or destruction 
is 50% or more of the then Replacement Cost of the Premises immediately prior 
to such damage or destruction, excluding from such calculation the value of 
the land.
          
                       (3)   "INSURED LOSS" shall mean damage or destruction 
to  improvements on the Premises which was caused by an event required to be 
covered by the insurance described in Section 8.5, irrespective of any 
deductible amounts or coverage limits involved.
          
                       (4)   "REPLACEMENT COST" shall mean the cost to repair  
or rebuild the improvements owned by Landlord 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.
          
                  B.   PARTIAL DAMAGE - INSURED LOSS.  If a Premises Partial
Damage that is an Insured Loss occurs, then Landlord shall, at Landlord's
expense, repair such damage (but not Tenant's trade fixtures or tenant owned
alterations and utility installations) as soon as reasonably possible and this
Lease shall continue in full force and effect; provided, however, that Tenant
shall, at Landlord's election, make the repair of any damage or destruction the
total cost to repair of which is $10,000 or less, and, in such event, Landlord
shall make the insurance proceeds available, to Tenant on a reasonable basis for
that purpose, provided that, Tenant shall only be obligated to repair to the
extent of the insurance proceeds plus any insurance deductible. Notwithstanding
the foregoing, if the required insurance was not in force or the insurance
proceeds are not sufficient to effect such repair, the Tenant shall promptly
contribute the shortage in proceeds as and when required to complete said
repairs.
     
                                      -10-

<PAGE>


                  C.   PARTIAL DAMAGE - UNINSURED LOSS.  If a Premises Partial 
Damage that is not an Insured Loss occurs, Landlord may at Landlord's option, 
either: (i) repair such damage as soon as reasonably possible at Landlord's 
expense in which event this Lease shall continue in full force and effect, or 
(ii) if the uninsured damage exceeds Twenty Five Thousand Dollars 
($25,000.00), give notice to Tenant within thirty (30) days after receipt by 
Landlord of knowledge of the occurrence of such damage of Landlord's 
intention to terminate this Lease as of the date sixty (60) days following 
the giving of such notice. In the event Landlord elects to give such notice 
of Landlord's intention to terminate this Lease, Tenant shall have the right 
within ten (10) days after the receipt of such notice to give written notice 
to Landlord of Tenant's commitment to pay for the repair of such uninsured 
damage totally at Tenant's expense and without reimbursement from Landlord. 
Tenant shall provide Landlord with the required funds or satisfactory 
assurance thereof within thirty (30) days following Tenant's said commitment. 
In such event this Lease shall continue in full force and effect, and 
Landlord shall proceed to make such repairs as soon as reasonably possible 
and the required funds are available. If Tenant 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 Landlord's notice of 
termination.

                  D.   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.
          
                  E.   DAMAGE NEAR END OF TERM.  If at any time during the last 
twelve (12) months of the term of this Lease there is damage for which the 
cost to repair exceeds two (2) month's rent, whether or not an Insured Loss, 
Landlord and Tenant may, at their option, terminate this Lease effective 
sixty (60) days following the date of occurrence of such damage by giving 
written notice to the other party of their election to do so within thirty 
(30) days after the date of occurrence of such damage. Provided, however, if 
Tenant at that time has an exercisable option to extend this Lease then 
Tenant may preserve this Lease by, within twenty (20) days following the 
receipt of the termination election by Landlord ("Exercise Period"), 
(i) exercising such option and (ii) provide Landlord with any shortage in 
insurance proceeds (or adequate assurance thereof) needed to make the 
repairs. If Tenant duly exercises such option during said Exercise Period and 
provides Landlord with funds (or adequate assurance thereof) to cover any 
shortage in insurance proceeds, Landlord shall, at Landlord's expense repair 
such damage as soon as reasonably possible and this Lease shall continue in 
full force and effect. If Tenant fails to exercise such option and provide 
such funds or assurance during said Exercise Period, then if Landlord has 
exercised its option to terminate this Lease, the Lease shall terminate as of 
the expiration of said sixty (60) day period , notwithstanding any term or 
provision in the grant of option to the contrary.
          
                  F.   ABATEMENT OF RENT; TENANT'S REMEDIES.
          
                       (1)   In the event of damage, whether or not Landlord 
or Tenant  repairs or restores the Premises, the monthly rent, real property 
taxes, insurance premiums, and other charges, if any, payable by Tenant 
hereunder for the period during which such damage, its repair or the 
restoration continues shall be abated in proportion to the degree to which 
Tenant's use of the Premises is impaired. Except for abatement of monthly 
rent, real property taxes, insurance premiums, and other charges, if any, as 
aforesaid, all other obligations of Tenant hereunder shall be performed by 
Tenant, and Tenant shall have no claim against Landlord for any damage 
suffered by reason of any such repair or restoration except negligence or 
willful misconduct of Landlord or its agents.
          
                       (2)   If Landlord shall be obligated to repair or 
restore the Premises under the provisions of this Section 8.4 and shall not 
commence, in a substantial and meaningful way, the repair or restoration of 
the Premises within

                                      -11-

<PAGE>


ninety (90) days after such obligation shall accrue, Tenant may, at any time 
prior to the commencement of such repair or restoration, give written notice 
to Landlord and to any lenders of which Tenant has actual notice of Tenant's 
election and if 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 Landlord or a lender commences the repair 
or restoration of the Premises within thirty (30) days after receipt of such 
notice, this Lease shall continue in full force and effect. "Commence" as 
used in this Paragraph shall mean the beginning of the actual work on the 
Premises, whichever first occurs. Notwithstanding the terms of Section 8.4 of 
this Lease, in the event the Premises are damaged and Landlord is obligated 
or has elected to repair the damage under Section 8.4, Landlord shall 
reasonably and in good faith cause a mutually acceptable contractor to 
estimate the amount of time required to rebuild and/or restore the Premises 
within ninety (90) days of the date of such damage. In the event the repairs 
cannot be completed within one hundred eighty (180) days after the date of 
such damage, Landlord or Tenant may elect to terminate this Lease by written 
notice to the other, such notice to include the termination date giving 
Tenant thirty (30) days to vacate the Premises. Notwithstanding anything to 
the contrary contained in this Lease, in the event that, for any reason, all 
of the damage required or elected to be repaired or restored by Landlord is 
not repaired or restored on or before the date occurring one hundred eighty 
(180) days from the date of the damage, Tenant shall have the right to 
terminate this Lease by irrevocable notice to Landlord at any time thereafter 
until the repairs or restoration are completed, with thirty (30) days from 
the giving of such notice to vacate the Premises.
 
                  G.   TERMINATION - ADVANCE PAYMENTS.  Upon termination of 
this Lease pursuant to this Section 8.4, an equitable adjustment shall be 
made concerning advance monthly rent and any other advance payments made by 
Tenant to Landlord. Landlord shall, in addition, return to Tenant so much of 
Tenant's Security Deposit as has not been, or is not then required to be used 
by Landlord under the terms of this Lease.
                
                  H.   WAIVE STATUTES.  Landlord and Tenant agree that the 
terms of this Lease shall govern the effect of any damage to or destruction 
of the Premises with respect to the termination of this Lease and hereby 
waive the provisions of any present or future statute to the extent 
inconsistent herewith.
                
           8.5.   INSURANCE.
          
                  A.   FIRE AND EXTENDED COVERAGE INSURANCE. Tenant shall at 
its sole cost and expense keep or cause to be kept insured during the Term of 
this Lease, the Premises and all improvements located on or appurtenant to 
the Premises against loss or damage by fire and such other risks as are now 
or hereafter included in an extended coverage endorsement in common use for 
commercial structures, including vandalism, malicious mischief and special 
extended perils (all risk). The amount of the insurance shall be sufficient 
to prevent either Landlord or Tenant from becoming a co-insurer under the 
provisions of the policies, but in no event shall the amount be less than one 
hundred per cent (100%) of the then actual replacement cost, excluding costs 
of replacing excavations and foundations, but without deduction for 
depreciation (herein called "full insurable value") and in no event shall the 
deductible exceed Ten Thousand Dollars ($10,000) per occurrence. If any 
dispute whether the amount of insurance complies with the above cannot be 
resolved by agreement, Landlord may, not more frequently than every two and 
one-half (2 1/2) years during the Term, request the carrier of the insurance 
then in force to determine the full insurable value as defined in this 
provision and the resulting determination shall be conclusive between the 
parties for the purpose of this Section.
                
                  B.   PUBLIC LIABILITY INSURANCE.  Tenant shall at its sole
cost and expense keep or cause to be kept in force during the Term of this
Lease, for the mutual benefit of Landlord and Tenant, comprehensive broad form
general public liability insurance against claims and liability for personal
injury, death or property damage arising from the use, occupancy, disuse or
condition of the Premises and adjoining areas or ways, providing protection of
at least One


                                      -12-


<PAGE>


Million Dollars ($1,000,000) for bodily injury or death to any one person, at 
least One Million Dollars ($1,000,000) for any one accident or occurrence and 
at least Five Hundred Thousand Dollars ($500,000) for property damage. Not 
more frequently than every two and one-half (2 1/2) years during the Term, 
Landlord shall have the right to notify Tenant that Landlord elects to adjust 
the amount of public liability, property damage and products liability 
insurance required under this Section, based on the increase in the Consumer 
Price Index all items for Urban Consumers in the Los Angeles - Anaheim - 
Riverside Areas (1982 - 1984 = 100), published in the United States Bureau of 
Labor Statistics. If such an election is made, the amount of insurance 
required under this Section shall be increased by multiplying the insurance 
amounts under this Section by a fraction, the numerator of which shall be the 
Index most recently published preceding the date of notification of the 
requested adjustment, and the denominator of which shall be the Index most 
recently published preceding the Commencement Date of this Lease, provided 
that, in no event shall the amount of insurance required herein be decreased.

                  C.   INSURANCE POLICY FORM, CONTENT AND INSURER.

                       1.    All insurance required by express provisions 
hereof shall only be carried with responsible insurance companies licensed to 
do business in California, and rated in Best's Insurance Guide, or any 
successor thereto (or if there be none, an organization having a national 
reputation) as having a "Best's Rating" of "A" and a "Financial Size 
Category" of at least "IX" or if such rating or not then in effect the 
equivalent thereof, shall name Landlord as insured, and shall be in a policy 
reasonably acceptable to Landlord. All such policies shall be nonassessable 
and shall contain language, to the extent obtainable, to the effect that (i) 
any loss shall be payable notwithstanding any act or negligence of Landlord 
that might otherwise result in the forfeiture of the insurance, (ii) the 
insurer waives the right of subrogation against Landlord and against 
Landlord's agents and representatives, (iii) policies are primary and 
noncontributing with any insurance that may be carried by Landlord; and (iv) 
they cannot be canceled or materially changed except after fifteen (15) days' 
notice by the insurer to Landlord or Landlord's designated representative and 
any trust deed holder on the Premises designated by Landlord from time to 
time.
 
                       2.    Tenant shall furnish Landlord with copies of all 
such policies promptly on receipt of them, or with certificates evidencing 
the insurance. Tenant shall furnish Landlord with binders representing all 
insurance required by this Lease prior to the Commencement Date. Tenant may 
effect for its own account any insurance not required under this Lease.

                       3.    Landlord shall be named as an additional insured 
on such policy. Unless otherwise waived by Landlord, any insurance proceeds 
payable by an insurer with respect to Premises shall be payable solely to 
Landlord. Any insurance proceeds remaining after compliance with the 
provisions of this Lease relating to the maintenance, repair, and 
reconstruction of the Premises shall be the Tenant's sole property.
 
                       4.    Tenant may carry insurance under a so-called 
"blanket" policy, provided that such policy otherwise complies with the terms 
of this Section 8.5 and the amount of insurance required herein is not 
prejudiced by any losses covered by such blanket policy.
 
                  D.   FAILURE TO MAINTAIN INSURANCE AND PROOF OF COMPLIANCE. 
Tenant shall deliver to Landlord, in the manner required for notices, copies 
of certificates of all insurance policies required hereunder together with 
evidence satisfactory to Landlord of payment required for procurement and 
maintenance of the policy. If Tenant fails or refuses to procure or maintain 
insurance as required hereby or fails or refuses to furnish Landlord with 
required proof that the insurance has been procured and is in force and paid 
for, Landlord shall have the right, at Landlord's election and on five (5) 
days' prior written notice to Tenant, to procure and maintain such insurance. 
The premiums paid by Landlord shall be treated as added rent due from Tenant, 
with interest 

                                      -13-

<PAGE>


at the Interest Rate (defined herein), to be paid on demand by Landlord. 
Landlord shall give Tenant prompt notice of the payment of premiums, stating 
the amounts paid and the names of the insurer or insurers.
 
      9.   CONDEMNATION.
     
           9.1.   DEFINITIONS.
          
                  A.   "Condemnation" means (a) the exercise of any 
governmental power, whether by legal proceedings or otherwise, by a condemnor 
and (b) a voluntary sale or transfer by Landlord to any condemnor, either 
under threat of condemnation or while legal proceedings for condemnation are 
pending.
                
                  B.   "Date of taking" means the date the condemnor has the 
right to possession of the property being condemned.
                
                  C.   "Award" means all compensation, sums, or anything of 
value awarded, paid, or received on a total or partial condemnation.
                
                  D.   "Condemnor" means any public or quasi-public authority, 
or private corporation, or individual, having the power of condemnation.
                
                  E.   "Total taking" means the taking of the entire Premises 
under the power of condemnation.
                
                  F.   "Partial taking" means the taking of only a portion of 
the Premises under the power of condemnation which does not constitute a 
"total taking" as defined above.
                
           9.2.   TOTAL TAKING.  If, during the Term hereof, there shall be a 
"total taking" under the power of condemnation, then the leasehold estate of 
Tenant in the Premises shall cease and terminate as of the date of taking.
           
           9.3.   PARTIAL TAKING.  If, during the Term hereof, there shall be a 
partial taking of the Premises under the power of condemnation, this Lease 
shall terminate as to the portion of the Premises taken upon the date of 
taking, but this Lease shall continue in force and effect as to the remainder 
of the Premises. The rent payable by Tenant for the balance of the Term, 
shall be abated in the same ratio as the net leasable space of the Building 
taken bears to the total net leasable space of the Building. Tenant may elect 
to terminate this Lease if more than ten percent (10%) of the net leasable 
space of the Building is taken by condemnation or if there is a partial 
taking of a material portion of the Premises and the remaining portion of the 
Premises is rendered unsuitable for Tenant's continued use of the Premises as 
reasonably determined by Tenant. Tenant may also elect to terminate this 
Lease if twenty five percent (25%) or more of the Premises are taken by 
condemnation. Any election to terminate this Lease by Tenant under this 
Section must be made by written notice to Landlord within thirty (30) days 
before or thirty (30) days after the date of the condemnation. 
Notwithstanding anything contained herein to the contrary, in the event 
twenty five percent (25%) of the Premises are taken by condemnation, then 
Landlord in its sole discretion may terminate this Lease by giving notice to 
Tenant within thirty (30) days after the extent of the taking is determined. 
If Tenant does not elect to terminate this Lease within the time limits 
provided herein, then to the extent this Lease is not otherwise terminated by 
Landlord, this Lease shall continue in full force and effect except to the 
extent of any abatement of rent as provided hereinabove.
           
           9.4.   ALLOCATION OF AWARD.  The award for the taking of the 
Premises or any portion or portions thereof, shall, except as otherwise 
herein provided, belong to and be the sole property of Landlord, and Tenant 
shall not have any claim or be entitled to any award for diminution in value 
of its leasehold hereunder or for the value of any unexpired Term of this 
Lease; provided, however, Tenant shall be entitled to any award specifically 
allocated by the taking authority that is made for the taking of or injury 
to, or on account of

                                      -14-


<PAGE>


any cost or loss Tenant may sustain in the removal and moving of Tenant's 
merchandise, fixtures, equipment and furnishings.
     
           9.5.   EFFECT OF TERMINATION.  If this Lease is terminated, in whole 
or in part, pursuant to any of the provisions of this Section 9, all rentals 
and other charges payable by Tenant to Landlord hereunder and attributable to 
the Premises taken, shall be paid up to the date of taking and the parties 
shall thereupon be released from all further liability in relation thereto.
     
      10.  DEFAULT AND REMEDIES.
     
           10.1.  TENANT'S DEFAULT.  Each of the following events, subject to 
notice and cure periods provided in Section 10.2 below, shall constitute an 
event of default by Tenant and a breach of this Lease:
     
                  A.   Tenant's failure or omission to pay any rent or other 
sum payable hereunder on or before the same is due.
     
                  B.   Tenant's failure or omission to observe, keep or perform 
any of the other terms, agreements or conditions contained in this Lease to 
be performed by Tenant.

                  C.   Tenant's assignment or subletting contrary to the 
provisions hereof.                 

                  D.   The appointment of a receiver to take possession of the 
Premises or of Tenant's operations on the Premises for any reason, including 
but not limited to assignment for the benefit of creditors or voluntary or 
involuntary bankruptcy proceedings, but not including receivership 
(i) pursuant to the administration of the estate of any deceased or incompetent
Tenant or of any deceased or incompetent individual member of any Tenant, or 
(ii) instituted by Landlord, the event of default being not the appointment 
of a receiver at Landlord's instance but the event justifying the 
receivership, if any.

                  E.   An assignment by Tenant for the benefit of creditors or 
the filing of a voluntary or involuntary petition by or against Tenant under 
any law for the purpose of adjudicating Tenant a bankrupt; or for extending 
time for payment, adjustment or satisfaction of Tenant's liabilities; or for 
reorganization, dissolution or arrangement on account of or to prevent 
bankruptcy or insolvency; unless the assignment or proceeding, and all 
consequent orders, adjudications, custodies and supervisions are dismissed, 
vacated or otherwise permanently stayed or terminated within 60 days after 
the assignment, filing or other initial event.
                
           10.2.  NOTICE AND RIGHT TO CURE.
          
                  A.   If the alleged default is nonpayment of rent, taxes or 
other sums to be paid by Tenant to Landlord, Tenant shall have five (5) days 
after written notice is given to cure the default. For the cure of any other 
default, Tenant shall promptly and diligently after notice commence curing 
the default and shall have twenty (20) days after written notice is given to 
complete the cure or in the case of a failure or omission that cannot be 
cured by the payment of money and cannot be cured within twenty (20) days, 
such additional time as is reasonably required for the curing of the default.
               
                  B.   If Tenant shall have failed to cure after expiration of 
the applicable time for curing a particular default or before the expiration 
of that time in the event of emergency, Landlord may, at Landlord's election, 
but is not obligated to, make any payment required of Tenant under this 
Lease, or perform or comply with any term, agreement or condition imposed on 
Tenant hereunder or any such note or document, and the amount so paid plus 
the reasonable cost of any such performance or compliance, plus interest on 
such sum at the Interest Rate (defined below) from the date of payment, 
performance or compliance shall be deemed to be additional rent payable by 
Tenant on Landlord's demand. No such payment, performance or compliance shall 
constitute a waiver of

                                      -15- 

<PAGE>


default or of any remedy for default or render Landlord liable for any loss 
or damage resulting from the same.
 
           10.3.  LANDLORD'S REMEDIES.  If any default by Tenant continues 
uncured following notice of default for the period applicable to the default 
under the provisions of this Lease, Landlord shall have the following 
remedies in addition to all rights and remedies provided by law or equity to 
which Landlord may resort cumulatively or in the alternative:
           
                  A.   Terminate Tenant's right to possession of the Premises 
by any lawful means, in which case this Lease and the term hereof shall 
terminate and Tenant shall immediately surrender possession of the Premises 
to Landlord. In such event Landlord shall be entitled to recover from Tenant: 
(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 Tenant 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 awards exceeds the amount of such rental loss that 
the Tenant proves could be reasonably avoided; and (iv) any other amount 
necessary to compensate Landlord for all the detriment proximately caused by 
the Tenant'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 the leasing 
commission paid by Landlord 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 prior sentence shall be computed by discounting such amount at 
the discount rate of the Federal Reserve Bank of San Francisco at the time of 
award plus one percent (1%). Efforts by Landlord to mitigate damages is 
obtained through the provisional remedy of unlawful detainer, Landlord shall 
have the right to recover in such proceeding the unpaid rent and damages as 
are recoverable therein, or Landlord may reserve therein 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 are required under Section 10.2.A. or B. was not 
previously given, a notice to pay rent or quit, or to perform or quit, as the 
case may be, given to Tenant under any statute authorizing the forfeiture of 
leases for unlawful detainer shall also constitute the applicable notice for 
grace period purposes required by Section 10.2.A. or B. in such case, the 
applicable grace period under Section 10.2.A. or B. and under the unlawful 
detainer statute shall run concurrently after the one such statutory notice, 
and the failure of Tenant to cure the Default within the greater of the two 
such grace periods shall constitute both an unlawful detainer and a Breach of 
this Lease entitling Landlord to the remedies provided for in this Lease 
and/or by said statute.

                  B.   Continue the Lease and Tenant's right to possession in 
effect (in California under California Civil Code Section 1951.4) after 
Tenant's Breach and abandonment and recover the rent as it becomes due, 
provided Tenant has the right to sublet or assign, subject only to reasonable 
limitations. See Section 7 for the limitations on assignment and subletting 
which limitations Tenant and Landlord agree are reasonable. Acts of 
maintenance or preservation, efforts to relet the Premises, or the 
appointment of a receiver to protect the Landlord's interest under the Lease, 
shall not constitute a termination of the Tenant's right to possession.
                
                  C.   Pursue any other remedy now or hereafter available to 
Landlord 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 Tenant's right to possession shall not relieve Tenant from 
liability under any indemnity provisions of this Lease as to matters 
occurring or accruing during the term hereof or by reason of Tenant's 
occupancy of the Premises.

                                      -16- 

<PAGE>


           10.4.  SUBRENTS.  The following terms and conditions shall apply to 
any subletting by Tenant 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.   Tenant hereby assigns and transfers to Landlord all of 
Tenant's interest in all rentals and income arising from any sublease of all 
or a portion of the Premises heretofore or hereafter made by Tenant, and 
Landlord may collect such rent and income and apply same toward Tenant's 
obligations under this Lease; provided, however, that until a default shall 
occur in the performance of Tenant's obligations under this Lease beyond all 
notice and cure periods, Tenant may, except as otherwise provided in this 
Lease, receive, collect and enjoy the rents accruing under such sublease. 
Landlord shall not, by reason of this or any other assignment of such 
sublease to Landlord, nor by reason of the collection of the rents from a 
sublessee, be deemed liable to the sublessee for any failure of the Tenant to 
perform and comply with any of Tenant's obligations to the sublessee under 
such sublease. Lessee hereby irrevocably authorizes and directs any such 
sublessee, upon receipt of a written notice from Landlord stating that a 
default exists in the performance of Tenant's obligations under this Lease, 
to pay to Landlord the rents and other charges due and to become due under 
the sublease. Sublessee shall rely upon any such statement and request from 
Landlord and shall pay such rents and other charges to Landlord without any 
obligation or right to inquire as to whether such default exists and 
notwithstanding any notice from or claim from Tenant to the contrary, Tenant 
shall have no right or claim against said sublessee, or, until the default 
has been cured, against Landlord, for any such rents and other charges so 
paid by said sublessee to Landlord.
          
                  B.   In the event of a default by Tenant in the performance 
of its obligations under this Lease, Landlord, at its option and without 
obligation to do so, may require any sublessee to attorn to Landlord, in 
which event Landlord shall undertake the obligation of the sublessor under 
such sublease from the time of exercise of said option to the expiration of 
such sublease; provided, however, Landlord shall not be liable for any 
prepaid rents or security deposit paid by such sublessee to such sublessor or 
for any other prior defaults 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 Landlord herein.
          
                  D.   Landlord shall deliver a copy of any notice of default 
by Tenant to the sublessee, who shall have the right to cure the default of 
Tenant within the grace period, if any, specified in such notice. The 
sublessee shall have a right of reimbursement and offset from and against 
Tenant for any such breach cured by sublessee.
          
           10.5.  LANDLORD'S DEFAULT.  Landlord will be in default under this 
Lease if it fails for thirty (30) days following receipt of written notice 
from Tenant specifying a default to cure such default, if it is curable, or 
to institute and diligently pursue reasonable corrective or ameliorative acts 
for incurable defaults. Tenant's remedies shall be limited to an action for 
damages, injunction or specific performance and Tenant shall not have the 
right to withhold rent or terminate this Lease.
          
           10.6.  WAIVER AND VOLUNTARY ACTS.  No waiver of any breach or 
default shall constitute a waiver of any other breach or default, whether of 
the same or any other term, agreement or condition. No waiver, benefit, 
privilege or service voluntarily given or performed by either party shall 
give the other any contractual right by custom, estoppel or otherwise. The 
subsequent acceptance of rent pursuant to this Lease shall not constitute a 
waiver of any preceding breach or default by Tenant other than default in the 
payment of the particular rental payment so accepted regardless of Landlord's 
knowledge of the preceding breach at the time of accepting the rent, nor 
shall acceptance of rent or any other payment after termination constitute a 
reinstatement, extension or renewal of the Lease or revocation of any notice 
or other act by Landlord. The

                                      -17-
     
<PAGE>


payment of rent or any other payment by Tenant shall not constitute a waiver 
of Tenant's right to protest the payment of such amount.
 
      11.  EXPIRATION AND TERMINATION.
     
           11.1.  SURRENDER OF PREMISES AND OWNERSHIP OF IMPROVEMENTS.  At the 
expiration or earlier termination of the Lease, Tenant shall surrender 
possession of the Premises to Landlord. Tenant shall leave the surrendered 
Premises in the same condition and repair as when received and as improved by 
the Repair work, ordinary wear and tear and casualty excepted. Ordinary wear 
and tear shall not include any damage or deterioration that would have been 
prevented by good maintenance practice or by Tenant performing all of its 
obligations under this Lease. All of Tenant's trade fixtures, furnishings, 
furniture, signs and other personal property ("Tenant's Property") not 
permanently affixed to the Premises shall remain the property of Tenant. 
Tenant's Property shall mean Tenant's machinery and equipment that can be 
removed without doing material damage to the Premises, provided that, the 
Rotocure shall be Tenant's Property and Tenant shall be obligated to remove 
the Rotocure and repair any damage to the Premises caused by its removal. 
Tenant's Property shall not include carpeting, window coverings, air lines, 
power panels, electrical distribution, security, fire protection systems, 
lighting fixtures, heating, ventilating, air conditioning equipment, 
plumbing, and fencing (collectively, "Utility Property") on the Premises. All 
improvements to the Premises made by Tenant, excluding Tenant's Property, but 
including all Utility Property and partitions shall become the property of 
Landlord upon expiration or earlier termination of this Lease. Not later than 
the expiration of the time within which under any provision of this Lease, 
Tenant is required to surrender possession of the Premises to Landlord, 
Tenant shall remove all of Tenant's Property located in or about the 
Premises. All of Tenant's Property not removed within such time shall become 
and remain the property of Landlord. The removal of Tenant's Property whether 
by Landlord or Tenant shall be effected solely at the expense of Tenant and 
in a manner reasonably satisfactory to Landlord and without injury or damage 
to the Premises and Tenant covenants to repair immediately, at Tenant's 
expense, any injury or damage caused by such removal and leave the Premises 
in a neat and clean condition, free of debris.
           
           If Tenant fails to surrender the Premises at the expiration or 
sooner termination of this Lease, Tenant indemnifies and shall defend and 
hold Landlord harmless from all liability and expense resulting from the 
delay or failure to surrender, including, without limitation, claims made by 
any succeeding lessee founded on or resulting from Tenant's failure to 
surrender.
           
      12.  COMPLIANCE WITH ENVIRONMENTAL LAWS.
     
           12.1.  TERMINATION, CANCELLATION, SURRENDER.  At the end of this 
Lease, Tenant will surrender the Premises to Landlord free of any and all 
hazardous materials placed on or under the Premises by Tenant and/or Tenant's 
agents, assigns, sublessees, contractors, invitees and guests.
           
           12.2.  HAZARDOUS MATERIALS.  For the purpose of this Section 12, 
the term "hazardous materials" includes, without limitation, any flammable 
explosives, radioactive materials, hazardous materials, hazardous wastes, 
hazardous or toxic substances, oil, gasoline, diesel fuel and other 
hydrocarbon products, and related materials defined in the Comprehensive 
Environmental Response, Compensation and Liability Act of 1980, as amended 
(42 U.S.C. Section 9601 ET SEQ.), the Hazardous Materials Transportation Act, 
as amended (49 U.S.C. Section 1801 ET SEQ.), the Resource Conservation and 
Recovery Act of 1976, as amended (42 U.S.C. Section 6901 ET SEQ.), and in the 
regulations adopted and publications promulgated pursuant to them, or any 
other federal, state, or local environmental laws, ordinances, rules, or 
regulations now enacted or enacted after this date (collectively, the 
"environmental laws").
           
           12.3.  REMEDIES CUMULATIVE; SURVIVAL.  The provisions of this 
Section 12 shall be in addition to any and all obligations and liabilities 
Tenant may have to Landlord at common law, and will survive this Lease.
     
                                      -18- 

<PAGE>
         

           12.4.  LANDLORD RESPONSIBILITIES.  Landlord hereby agrees to 
indemnify, hold harmless and defend (by counsel reasonably satisfactory to 
Tenant), Tenant and its Related Parties from and against any and all claims, 
lawsuits, damages, liabilities, fines, penalties, charges, administrative and 
judicial proceedings and orders, judgments, remedial action requirements and 
enforcement actions of any kind, and all costs and expenses in connection 
therewith, arising out of (i) the presence on or under the Premises of any 
hazardous materials or any releases or discharges of any hazardous materials 
on, under or from the Premises and (ii) any activity carried on or undertaken 
on or off the Premises in connection with the handling, treatment, removal, 
storage, decontamination, clean-up, transport or disposal of any hazardous 
materials located on or under the Premises and any such cost shall be at 
Landlord's sole cost and expense; provided, however, the foregoing indemnity 
shall not, however, apply to any costs and expenses associated with hazardous 
materials placed on or under the Premises by Tenant and/or Tenant's agents, 
assigns, sublessees, contractors, invitees and guests. Notwithstanding 
anything to the contrary set forth in this Lease, the provisions of this 
Section 12.4 shall survive the expiration or earlier termination of this 
Lease.
           
           12.5.  TENANT RESPONSIBILITIES.  Tenant hereby agrees to indemnify, 
hold harmless and defend (by counsel reasonably satisfactory to Landlord), 
Landlord and its Related Parties from and against any and all claims, 
lawsuits, damages, liabilities, fines, penalties, charges, administrative and 
judicial proceedings and orders, judgments, remedial action requirements and 
enforcement actions of any kind, and all costs and expenses in connection 
therewith, arising out of (i) the presence on or under the Premises of any 
hazardous materials or any releases or discharges of any hazardous materials 
on, under or from the Premises and (ii) any activity carried on or undertaken 
on or off the Premises in connection with the handling, treatment, removal, 
storage, decontamination, clean-up, transport or disposal of any hazardous 
materials located on or under the Premises and any such cost shall be at 
Tenant's sole cost and expense; provided, however, the foregoing indemnity 
shall not, however, apply to any costs and expenses associated with hazardous 
materials placed on or under the Premises by a party other than Tenant and/or 
Tenant's agents, assigns, sublessees, contractors, invitees and guests. 
Notwithstanding anything to the contrary set forth in this Lease, the 
provisions of this Section 12.5 shall survive the expiration or earlier 
termination of this Lease.
           
      13.  ALTERATIONS.
     
           13.1.  ALTERATIONS.
          
                  A.   CONSENT OF LANDLORD TO ALTERATIONS. Tenant may make any 
improvements, alterations, additions or changes to the Premises 
(collectively, the "Alterations") which do not affect the Utility Property 
(other than the carpeting, window coverings, power panels and lighting 
fixtures), exterior appearance of the Building, or structural aspects of the 
Building, by providing Landlord with notice ("Nonstructural Notice") not less 
than twenty (20) days prior to the commencement thereof. Tenant may not make 
any Alterations which may affect the Utility Property, exterior appearance of 
the Building, or structural aspects of the Building without first procuring 
the prior written consent of Landlord to such Alterations, which consent 
shall be requested by Tenant's written notice ("Request for Approval") 
delivered to Landlord not less than twenty (20) days prior to commencement 
thereof, and which consent may be withheld by Landlord in its reasonable 
discretion. Any time Tenant proposes to make Alterations whether or not the 
consent of Landlord is required pursuant to this Section, Tenant's 
Nonstructural Notice and/or Request for Approval regarding proposed 
Alterations shall be delivered together with reasonable detailed final plans 
and specifications and working drawings (the "Plans") for the Alterations, 
and Landlord shall approve or disapprove the Request for Approval and 
applicable Plans within twenty (20) days after its receipt of the same. 
Tenant shall notify Landlord at least ten (10) business days before the date 
it intends to commence the Alterations and the Alterations shall not be 
commenced until ten (10) business days after Landlord has received notice 
from Tenant stating the date the installation of the Alterations is to 
commence so that Landlord can post and

                                      -19- 

<PAGE>


record an appropriate notice of non-responsibility. The Alterations shall be 
approved by all appropriate government agencies, and all applicable permits 
and authorizations shall be obtained before commencement of the Alterations. 
All Alterations shall be completed with due diligence in substantial 
compliance with the Plans.

                  B.   TENANT TO PAY ALTERATION COST.  All installations, 
additions or improvements, and alterations and changes made, with the consent 
of Landlord, after Tenant occupies the Premises, shall be made at the sole 
cost and expense of Tenant.
                
                  C.   ALTERATIONS REQUIRED BY LAW.  If, during the Term of this
Lease, any additions, alterations or improvements in or to the Premises, as
distinguished from repairs, are required by governmental regulations because of
the use to which the Premises are put by Tenant and not by reason of the
character or structure of the Premises, they shall be made and paid for by
Tenant, pursuant to the procedure set forth at Section 13.1.A above. Any other
additions, alterations or improvements in or to the Premises required by any
governmental laws, rules or regulations shall be at Landlord's sole cost and
expense, provided that, Tenant shall be obligated at Tenant's sole cost and
expense to make any additions, alterations or improvements required at any time
under the American Disabilities Act.
                
                  D.   SURRENDER OR REMOVAL OF IMPROVEMENTS.  All alterations, 
additions or improvements which are made in or to the Premises shall be the 
property of Landlord upon the termination of this Lease, unless within twenty 
(20) days following Landlord's receipt of the Nonstructural Notice and/or the 
Request for Approval and the Plans, Landlord gives Tenant written notice that 
the alterations, additions or improvements must be removed upon termination 
of the Lease, in which case Tenant shall cause the items so designated to be 
removed and the Premises to be restored to their condition at the 
commencement of Tenant's business, normal wear and tear excepted, all at the 
expense of Tenant.
                
                  E.   MECHANIC'S LIENS.  Tenant agrees to pay promptly for all 
labor done or materials furnished for any work of repair, maintenance, 
improvements, alterations, or additions done by Tenant, in connection with 
the Premises, and to keep and to hold the Premises free, clear, and harmless 
of and from all liens that could arise by reason of any such work. If any 
such lien shall at any time be filed against the Premises, Tenant shall 
either cause the same to be discharged of record within twenty (20) days 
after the date of filing the same, or if Tenant in its discretion and in good 
faith, determines that such lien should be contested, Tenant shall furnish 
such security as may be necessary or required to prevent any foreclosure 
proceedings against the Premises during the pendency of such contest. If 
Tenant shall fail to discharge such lien within such period or fail to 
furnish such security, then, in addition to any other right or remedy, 
Landlord may, but shall not be obligated to, discharge the same, either by 
paying the amount claimed to be due or by procuring the discharge of such 
lien by deposit in court or by giving security or in such other manner as is 
or may be prescribed by law. Tenant shall repay to Landlord on demand all 
sums disbursed or deposited by Landlord pursuant to the foregoing provisions 
hereof, including Landlord's costs, expenses, and reasonable attorney's fees 
incurred by Landlord in connection therewith. Nothing contained herein shall 
imply any consent or agreement on the part of the Landlord to subject 
Landlord's interest in the property of which the Premises are a part to 
liability under any mechanic's lien law.

                  F.   NOTICE OF NON-RESPONSIBILITY.  Landlord shall at all 
times have the right to post and to keep posted on the Premises such notices 
provided for under the laws of the State of California for the protection of 
the Premises from mechanic's liens or liens of a similar nature.
     
      14.  SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE.
     
           14.1.  SUBORDINATION.  This Lease granted hereby shall be subject 
and subordinate to any ground lease, mortgage, deed of trust, or other

                                      -20- 

<PAGE>

     
hypothecation or security device (collectively, "Security Device"), now or 
hereafter placed by Landlord 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. 
Tenant agrees that the Lenders holding any such Security Device shall have no 
duty, liability or obligation to perform any of the obligations of Landlord 
under this Lease, but that in the event of Landlord's default with respect to 
any such obligation, Tenant will give any Lender whose name and address have 
been furnished Tenant in writing for such purpose notice of Landlord's 
default and allow such Lender thirty (30) days following receipt of such 
notice for the cure of said default before invoking any remedies Tenant may 
have by reason thereof. 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 Tenant, this Lease and such Options 
shall be deemed prior to such Security Device, notwithstanding the relative 
dates of the documentation or recordation thereof.
 
           14.2.  ATTORNMENT.  Subject to the non-disturbance provisions of
Paragraph 14.3, Tenant 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 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 Tenant might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.
           
           14.3.  NON-DISTURBANCE.  With respect to Security Devices entered 
into by Landlord after the execution of this Lease, Tenant's subordination of 
this Lease shall be subject to receiving assurance (a "non-disturbance 
agreement") from the Lender that Tenant's possession and this Lease, 
including any options to extend the term hereof, will not be disturbed so 
long as Tenant is not in default of the Lease and attorns to the record owner 
of the Premises.
           
           14.4   SELF-EXECUTING.  The agreements contained in this Paragraph 
14 shall be effective without the execution of any further documents; 
provided, however, that, upon written request from Landlord, Tenant or a 
Lender in connection with a sale, financing or refinancing of the Premises, 
Tenant and Landlord 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.
           
      15.  GENERAL CONDITIONS AND MISCELLANEOUS PROVISIONS.
     
           15.1.  NOTICES.
          
                  A.   As used in this Lease "notice" includes but is not 
limited to the communication of notice, request, demand, approval, statement, 
report, acceptance, consent, waiver, appointment and other communication 
required or permitted hereunder. No notice of the exercise of any option or 
election is required unless the provision giving the election or option 
expressly requires notice. Unless the provisions of this Lease regarding rent 
direct otherwise, rent shall be sent in the manner provided for giving notice.
                
                  B.   All notices shall be in writing and shall be considered 
given either (i) when delivered in person to the recipient named as below, or 
(ii) on the date of delivery shown on the return receipt, after deposit in 
the United States mail in a sealed envelope or other container, either 
registered or certified mail, return receipt requested, postage and postal 
charges prepaid, addressed to the party intended as below, or (iii) on the 
date of delivery shown in the records of the telegraph company after 
transmission by telegraph to the party intended as follows or (iv) on the 
date of delivery by reputable overnight courier, or (v) by facsimile 
transmission upon telephone confirmation of receipt of the transmission 
thereof, provided a copy is also delivered via delivery or first class United 
States mail. If notice is received on a Saturday, Sunday or legal holiday, it 
shall be deemed received on the next business day.

                                      -21- 

<PAGE>


                        Notice to Landlord:
     
                        Donald M. Hypes
                        363 Bouquet Canyon Drive
                        Palm Desert, CA  92211
     
                        With a copy to:
     
                        Best, Best & Krieger
                        39700 Bob Hope Drive, Suite 312
                        Rancho Mirage, CA  92270
                        Attn:  Brian M. Lewis, Esq.
     
                        Notice to Tenant:
     
                        Burke Industries, Inc.
                        2250 South Tenth Street
                        San Jose, California 95112
                        Attn:  Mr. Reed C. Wolthausen
     
                        With copy to:
     
                        Richard L. Miller, Esq.
                        Stern, Neubauer, Greenwald & Pauly 
                        1299 Ocean Avenue, Tenth Floor 
                        Santa Monica, CA  90401-1007
     
                  C.   Either party may, by notice given at any time or from 
time to time, require subsequent notices to be given to another individual 
person, whether a party or an officer or representative, or to a different 
address, or both. Notices given before actual receipt of notice of change 
shall not be invalidated by the change.
     
           15.2.  INTERPRETATION AND CONSTRUCTION OF LEASE.
     
                  A.   The captions of the various articles and sections of 
this Lease are for convenience and ease of reference only and do not define, 
limit, augment or describe the scope, content or intent of this Lease or any 
part or parts of this Lease.
     
                  B.   All sections, paragraphs and articles referred to herein 
are sections, paragraphs and articles of this Lease unless otherwise 
specified and all exhibits referred to herein are exhibits attached to this 
Lease unless otherwise specified.
     
                  C.   Exhibits attached hereto and to which references are 
made in this Lease, are incorporated herein by the respective references to 
them. References to "this Lease" or "the Lease" include matters incorporated 
herein by reference.
     
                  D.   The neuter gender includes the feminine and masculine, 
the masculine includes the feminine and the neuter, and the feminine includes 
the neuter, and each includes corporation, partnership or other legal entity 
when the context so requires.
     
                 E.   The singular number includes the plural whenever the 
context so requires.
     
                  F.   Each party has relied on its own examination of this 
Lease, the counsel of his own advisors and warranties, representations and 
agreements in the Lease itself. The failure or refusal of Tenant to inspect 
the Premises or improvements, or the failure of either party to read the 
Lease or other documents or to obtain legal or other advice relevant to the 
transaction constitutes a waiver of any objection, contention, or claim that 
might have been based on such reading, inspection or advice.

                                      -22- 


<PAGE>


                  G.   The invalidity or illegality of any provision of this 
Lease shall not affect the remainder of the Lease.

                  H.   Time is of the essence of each provision of this Lease.
          
                  I.   All the undertakings of Tenant hereunder shall be deemed 
and construed to be "conditions" as well as undertakings as though the words 
specifically expressing or imparting conditions and undertakings were used in 
each separate instance.
          
                  J.   This Lease may only be modified in writing, signed by 
the parties in interest at the time of the modification.
          
                  K.   This Lease shall be interpreted, construed and enforced 
in accordance with laws of the State of California.

           15.3.  SUCCESSORS.  Subject to the provisions of this Lease on 
transfers, each and all the terms, agreements and conditions to this Lease 
shall be binding on and shall inure to the benefit of the heirs, successors, 
executors, administrators, assigns and personal representatives of the 
respective parties.
          
           15.4.  LANDLORD'S RIGHT OF INSPECTION AND LANDLORD'S AGENTS. 
Landlord and Landlord's agents may, at any reasonable time during business 
hours, upon twenty-four (24) hours prior written notice and from time to time 
during the Term, enter upon the Premises for the purpose of inspecting any 
improvements which may be constructed or placed thereon by Tenant, and making 
such alterations, repairs, improvements or additions to the Premises or to 
the Building, and otherwise for the purpose of showing the same to 
prospective purchasers, lenders, or lessees, and for such other purposes as 
may be necessary or proper for the reasonable protection of Landlord's 
interest. Landlord may at any time place on or about the Premises and/or to 
the Building any ordinary "For Sale" signs and Landlord may at any time 
during the last one hundred twenty (120) days of the then applicable Term 
place on the or about the Premises and/or to the Building any ordinary "For 
Lease" signs. All such activities of Landlord shall be without abatement of 
rent or liability to Landlord.
          
           15.5.  ESTOPPEL CERTIFICATES.
          
                  A.   Tenant shall, at any time and from time to time during 
the Term and upon not less than ten (10) days' prior written request by 
Landlord, execute, acknowledge and deliver to Landlord and any trust deed 
holder on the Premises designated by Landlord from time to time, a statement 
in writing certifying that this Lease is unmodified and in full force and 
effect (or if there have been any modifications that the same is in full 
force and effect as modified and stating the modifications). The statement 
shall also state the dates to which the rent and any other charges have been 
paid in advance, that, to Tenant's actual knowledge, there are no defaults 
existing or that defaults exist and the nature of such defaults. It is 
intended that such statement as provided in this Section 15.5.A may be relied 
upon by any prospective purchaser, encumbrancer or assignee of the Premises 
or all or any part of Landlord's interest under this Lease.
          
                  B.   Tenant's failure to execute, acknowledge and deliver on 
request the certified statement described above within the specified time 
shall constitute acknowledgment by Tenant to all persons entitled to rely on 
the statement that this Lease is unmodified and in full force and effect and 
that the rent and other charges have been duly and fully paid to and 
including the respective due dates immediately preceding the date of the 
notice of request and shall constitute a waiver, with respect to all persons 
entitled to rely on the statement, of any defaults that may exist before the 
date of the notice.
          
                  C.   Landlord hereby agrees to provide to Tenant an estoppel 
certificate signed by Landlord, containing the same types of information, and 
within the same period of time, as set forth above, with such changes as are 
reasonably necessary to reflect that the estoppel certificate is being granted

                                      -23- 


<PAGE>


and signed by Landlord to Tenant, rather than from Tenant to Landlord or a 
lender.
          
           15.6.  COVENANTS RUN WITH LAND.  The provisions hereof are and shall 
be deemed to be covenants running with the land and shall be binding upon and 
inure to the benefit of the successors and assigns of the parties hereto and 
also the successors and assigns of all subsequent landlords and tenants, 
respectively, hereunder.

          
           15.7.  COVENANTS AND CONDITIONS.  All provisions of this Lease, 
whether covenants or conditions, on the part of Tenant shall be deemed to be 
both covenants and conditions.
          
           15.8.  ATTORNEYS' FEES AND COSTS.  If either party brings an action 
or proceeding to enforce, protect or establish any right or remedy, the 
prevailing party shall be entitled to recover from the other party its costs 
of suit and reasonable attorneys' fees which shall be fixed by the court. 
Arbitration is not an action or proceeding for the purpose of this provision 
unless this Lease otherwise provides for the payment of attorneys' fees in 
connection with an arbitration.
          
           15.9.  EXECUTION IN COUNTERPARTS.  This Lease may be executed in two 
or more counterparts, each of which shall be an original, but all of which 
shall constitute one and the same instrument.
          
           15.10. ENTIRE AGREEMENT.  This Lease contains the entire agreement 
of the parties with respect to the matters covered by this Lease, and no 
other agreements, statements, or promise made by any party, or to any 
employees, officer, or agent of any party, which is not contained in this 
Lease shall be binding or valid.
          
           15.11. INTEREST RATE.  "Interest Rate" shall mean the rate equal to 
the floating commercial loan rate announced from time to time by Bank of 
America, a national banking association, or its successor, as its prime rate, 
plus two percent (2%) per annum.
          
           15.12. BROKERS.  Landlord and Tenant hereby warrant to each other 
that they have had no dealings with any real estate broker or agent in 
connection with the negotiation of this Lease and that they know of no real 
estate broker or agent who is entitled to a commission in connection with 
this Lease. Each party agrees to indemnify and defend the other party against 
and hold the other party harmless from any and all claims, demands, losses, 
liabilities, lawsuits, judgements, and costs and expenses (including, without 
limitations, reasonable attorneys' fees) with respect to any leasing 
commission or equivalent compensation alleged to be owing on account of the 
indemnifying party's dealings with any real estate broker or agent. The terms 
of this Section 15.12 shall survive the expiration and termination of the 
Lease.
          
           15.13. SIGNAGE.  Tenant shall have the right to install, affix and 
maintain any signs that are reasonably required to advertise Tenant's 
business on the exterior of the Building (but not on the roof) so long as the 
same comply with all applicable laws. Except as provided by Section 15.4, no 
other signs shall be permitted.
          
           15.14. TERMINATION; MERGER.  Unless specifically stated otherwise 
in writing by Landlord, the voluntary or other surrender of this Lease by 
Tenant, the mutual termination or cancellation hereof, or a termination 
hereof by Landlord for default by Tenant, shall automatically terminate any 
sublease or lesser estate in the Premises; provided, however, Landlord shall, 
in the event of any such surrender, termination or cancellation, have the 
option to continue any one or all of any existing subtenancies. Landlord's 
failure within ten (10) business days following any such event to make a 
written election to the contrary by written notice to the holder of any such 
lesser interest, shall constitute Landlord's election to have such event 
constitute the termination of such interest.
     
                                      -24-

 
<PAGE>


           15.15. 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 Tenant is a 
corporation, trust or partnership, Tenant shall, within thirty (30) days 
after request by Landlord, deliver to Landlord evidence satisfactory to 
Landlord of such authority.      
     
           15.16. WAIVERS.  No waiver by Landlord of the default or breach 
of any term, covenant or condition hereof by Tenant, shall be deemed a waiver 
of any other term, covenant or condition hereof, or of any subsequent default 
or breach by Tenant of the same or of any other term, covenant or condition 
hereof, Landlord's consent to, or approval of, any act shall not be deemed to 
render unnecessary the obtaining of Landlord's consent to, or approval of, 
any subsequent or similar act by Tenant, or be construed as the basis of an 
estoppel to enforce the provision or provisions of this Lease requiring such 
consent. Regardless of Landlord's knowledge of a default or breach at the 
time of accepting monthly rent, the acceptance of monthly rent by Landlord 
shall not be a waiver of any preceding default or breach by Tenant of any 
provisions hereof, other than the failure of Tenant to pay the particular 
rent so accepted. Any payment given Landlord by Tenant may be accepted by 
Landlord on account of moneys or damages due Landlord, notwithstanding any 
qualifying statements or conditions made by Tenant in connection therewith, 
which such statements and/or conditions shall be of no force or effect 
whatsoever unless specifically agreed to in writing by Landlord at or before 
the time of deposit of such payment.  
    
           15.17. 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.            
     
           15.18. RIGHT OF FIRST REFUSAL.  If during the term of this Lease, 
Landlord elects to sell the Premises to an unrelated third party, then 
Landlord shall provide Tenant with written notice (the "Sale Notice") which 
shall include the exact and complete terms of the proposed sale duly executed 
by Landlord and the prospective purchaser. For a period of fifteen (15) days 
(the "Notice Period") after receipt by Tenant of the Sale Notice, Tenant 
shall have the right (the "right of first refusal") to enter into an 
agreement with Landlord on the same terms, price and conditions set forth in 
the Sale Notice. To exercise Tenant's right of first refusal, Tenant shall 
deliver written notice (the "Exercise Notice") to Landlord of Tenant's 
exercise within the Notice Period and shall concurrently deliver to Landlord 
funds payable by cashier's check in the same amount of the initial deposit 
(the "Deposit") required in the Sales Notice made payable to the escrow 
holder provided therein. Tenant's timely delivery to Landlord of the Exercise 
Notice and the Deposit shall be deemed to be a binding contract for the 
purchase of the Premises in accordance with the terms of the Sale Notice, 
provided that, the sales price shall not be reduced whether or not Landlord 
is obligated to pay a sales commission upon a sale to Tenant. In the event 
Tenant fails to exercise its right of first refusal within the Notice Period 
it shall be conclusively presumed that Tenant has elected not to exercise its 
right of first refusal and Landlord may enter into the agreement with the 
prospective purchase or its nominee on the same terms and conditions set 
forth in the Sale Notice. In the event Tenant declines to exercise its right 
of first refusal after receipt of the Sale Notice, and, thereafter, Landlord 
and the prospective purchaser or its nominee do not enter into the agreement 
in strict accordance with the terms set forth in the Sale Notice within 
thirty (30) days following the expiration of the Notice Period, or otherwise 
fail to close the purchase and sale transaction contemplated thereunder in 
strict accordance with the terms and escrow closing period set forth in the 
Sale Notice, then Tenant's right of first refusal shall reapply in accordance 
with the provisions hereinabove to any sale transaction of the Premises to an 
unrelated third party that is entered into by Landlord. Notwithstanding 
anything contained herein to the contrary, upon the occurrence of any default 
under this Lease by Tenant beyond all applicable grace or cure periods 
provided that Landlord in its default notice to Tenant states that a failure 
to cure such default will result in a termination of this right of first 
refusal, or in the event of termination of this Lease by either party due to 
damage or condemnation as provided in Sections
     
                                      -25-
                                                       
<PAGE>


8.4 and 9, then the right of first refusal provided in this Section 15.18 
shall automatically be deemed deleted from this Lease and of no further force 
or effect. Furthermore, this right of first refusal shall automatically and 
irrevocably terminate without notice immediately upon expiration of the Term 
or at any time the Premises are sold by Landlord to an unrelated third party 
in accordance with the right of first refusal provisions herein.
   
       This right of first refusal is personal to the original Tenant named 
in Section 1 of this Lease and any Affiliate of Tenant and/or TIM HOWARD 
and/or DAN FLAMEN, and cannot be voluntarily or involuntarily assigned or 
exercised by any person or entity other than said original Tenant and any 
Affiliate of Tenant and/or TIM HOWARD and/or DAN FLAMEN. The right of first 
refusal is not assignable either as part of an assignment of this Lease or 
separately or apart therefrom, and it may not be separated from this Lease in 
any manner, by reservation or otherwise.
   
       IN WITNESS WHEREOF, this Lease has been executed as of the day and 
year first above written.
   
                              
                                             LANDLORD:
   
                                             /s/ Donald M. Hypes
                                             ---------------------------------
                                             Donald M. Hypes, Trustee of the 
                                             Declaration of Trust dated
                                             April 25, 1983, as amended.
   
   
                                             TENANT:
                                             
                                             ---------------------------------
                                             BURKE INDUSTRIES, INC., a 
                                             California Corporation
   
   
                                             By:  /s/ Reed  Wolthausen
                                                  ----------------------------
                                                  Reed C. Wolthausen,
                                                  Senior Vice President


                                      -26-
 

<PAGE>

     
                                  EXHIBIT "A"

                           DESCRIPTION OF THE PREMISES




                                      -27- 

    

<PAGE>


                                  EXHIBIT "B"
            
                                  REPAIR WORK
                    TO BE COMPLETED BY TENANT BY JUNE 30, 1996


1.  Asphalt: remove and replace approximately seven hundred fifty (750)     
    square feet of asphalt.  Patch all other damaged areas.  Apply slurry coat
    to all asphalt repaired areas and to driveway and existing parking lot.
    Paint and mark parking spaces in front, side and back of Building.

2.  Painting:  Repaint exterior of front of building.  Repaint inside of front
    offices.  Spot paint inside of Building as required.  Paint lunch room 
    interior.

3.  Flooring:  Remove existing flooring in entry, secretary work area, lab,
    bathrooms, lunch room and main office area and install new flooring. Install
    wall to wall carpeting in one existing private office.

4.  Plumbing:  Repair plumbing in men's bathroom.  Replace broken faucets.
    Replace or repair inoperative water heater.

5.  Doors: Repair front folding door and side roll up door as needed, and paint
    same.  Replace door on small men's bathroom and paint same.

6.  Air conditioning: Replace air conditioner in lab.

7.  Landscaping:  Remove and cap off sprinkler heads and install decorative pea
    gravel in front of Building, and install minimum landscaping on side of
    building.

                                      -28-



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