Exhibit 10.3

DATE: 4/04/03

LANDLORD: GEOMAX

TENANT: Sierra Monitor Corporation

PREMISES: 1991 Tarob Court Milpitas, CA

LEASE AGREEMENT

TABLE OF CONTENTS
 
Paragraph
 
Page
     
 1.
Fundamental Lease Provisions
1
 2.
Premises
2
 3.
Use
2
 4.
Rent
3
 5.
Term
5
 6.
Possession
5
 7.
Rules and Regulations and Common Area
5
 8.
Parking
5
 9.
Expenses of Operation and Maintenance of the Complex
6
10.
Acceptance and Surrender of Premises
7
11.
Alterations and Additions
7
12.
Tenant Maintenance
7
13.
Utilities
8
14.
Taxes
8
15.
Liability Insurance
9
16.
Tenant's Property Insurance and Worker's Compensation
9
17.
Landlord's Insurance; Waiver of Subrogation
9
18.
Indemnification; Exemption of Landlord from Liability
10
19.
Compliance
10
20.
Liens
10
21.
Assignment and Subletting
10
22.
Subordination and Mortgages
11
23.
Entry by Landlord
11
24.
Bankruptcy; Tenant's Default
12
25.
Abandonment
12
26.
Destruction
13
27.
Eminent Domain
13
28.
Sale or Conveyance by Landlord
14
29.
Attornment to Lender or Third Party
14
30.
Holding Over
14
31.
Certificate of Estoppel
14
32.
Construction Changes
14
33.
Right of Landlord to Perform
14
34.
Attorney's Fees
15
35.
Waiver
15
36.
Notices
15
37.
Examination of Lease
15
38.
Default by Landlord
15
39.
Corporate Authority
15
40.
Limitation of Liability
15

Exhibit 10.3
 
 

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41.
Brokers
16
42.
Signs
16
43.
Hazardous Materials
16
44.
Interest
17
45.
Miscellaneous and General Provisions
17

Exhibits

A  Legal Description
B  Site Plan of Complex and Building
C  Tenant Improvements Work Letter
D  Acknowledgment of Commencement
E  Hazardous Materials

Riders
1 – Option

Exhibit 10.3
 
 

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This Lease supersedes the old Lease Dated 7/31/00 which is Terminated as of
5/1/03.

LEASE AGREEMENT
 
 
DATED:
April 4, 2003
LANDLORD:
GEOMAX, a California general partnership
TENANT:
Sierra Monitor Corporation, a California Corporation

 
 
1.
FUNDAMENTAL LEASE PROVISIONS.

A.
PREMISES:  Approximately 15,788 square feet of leasable area in the building
containing approximately      leasable square feet located on a parcel of land
in the County of Santa Clara State of California, as more particularly described
in the legal description attached as Exhibit A hereto, with a common address of
1991 Tarob Court Milpitas, CA    The location of Premises is indicated on the
site plan attached as Exhibit B hereto. (Paragraph 2)

B.
LEASE TERM:   72 full calendar months, plus any partial month at the beginning
of the Lease Term. (Paragraph 5)

C.
COMMENCEMENT DATE:  May 1, 2003, or twenty-four (24) hours after substantial
completion of the Tenant Improvements, whichever is later. (Paragraph 5)

D.
INITIAL BASIC RENT: (Paragraph 4.A)

Lease Months (inclusive)
 
Basic Rent (per leasable sq. ft.)
 
Basic Rent (total)
         
01 – 72
 
1.656 NNN
 
$ 26,149.00

E.
ADDITIONAL RENT:  Real Property Taxes, insurance premiums, tenant association
dues (if any), maintenance and other costs and expenses under this
Lease.  (Paragraph 4.E)

F.
TENANT'S SHARE:   Forty-two 4/10 percent (42.4%) (Paragraph 4.E)

G.
PREPAID RENT:  $ None for the ____________ month(s) of the Lease Term.
(Paragraph 4.H)

H.
BASIC RENT ADJUSTMENT:  The Basic Rent shall be subject to a CPI adjustment on
the first day of each of the following full calendar months of the Lease
Term:  None (Paragraph 4.B)

 
I.
SECURITY DEPOSIT:  $ 40,000.00 (Paragraph 4.G)

 
J.
PERMITTED USE:   Research & Development, light manufacturing and related
activities including admin., Manufacturing & design of instruments to monitor
hazardous gases. (Paragraph 3)

K.
NUMBER OF PARKING SPACES:   Sixty (60) (Paragraph 8)

L.
ADDRESSES FOR NOTICES AND PAYMENT OF RENT (Paragraphs 4.F and 36):

To Landlord:
GEOMAX
To Tenant:
Sierra Monitor Corporation
         
2025 Gateway Place, #124
 
1991 Tarob Court
 
San Jose, CA 95111
 
Milpitas, CA 95035
Facsimile No.: 
408-452-0268
Facsimile No.:
408-262-9042

Exhibit 10.3
 
1

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M.
TENANT'S BROKER:
None  (Paragraph 41)

N.
GUARANTORS:
None

O.
OTHER PROVISIONS:  The following Riders are added hereto and included as part of
this Lease:

Rider No.
 
Paragraph No.
 
Title
         
1
  
  
  
Option

Each reference in this Lease to  any of the provisions in this Paragraph 1 shall
be construed to incorporate all of the terms of each such provision.  In the
event of any conflict between this Paragraph 1 and the balance of the Lease, the
balance of the Lease shall control.

 
2.
PREMISES.

 
A.
Premises.  Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord for the Lease Term, at the Rent and upon the terms and conditions
hereinafter set forth, that certain space ("Premises") within that certain
building ("Building") described in Paragraph 1.A.  As used herein, the "Complex"
shall mean and include all of the land described in Exhibit A and shown on
Exhibit B attached hereto, and all of the buildings, improvements, fixtures and
equipment now or hereafter situated on said land.

 
Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth, and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions.  This Lease is made upon the condition of such
performance and observance.

 
Landlord agrees to construct any improvements to the Premises ("Tenant
Improvements") as may be described in Exhibit C attached hereto and incorporated
herein by reference, upon such terms and conditions as are set forth in such
Exhibit C.  The Tenant Improvements shall be deemed substantially complete when
Landlord notifies Tenant in writing that the Tenant Improvements (if any) are
substantially completed in accordance with Exhibit C, subject only to "punch
list" items that do not materially diminish the usefulness of the Premises.

 
B.
Square Footage.  Landlord and Tenant conclusively agree that the statements of
rentable square footage contained herein shall be deemed to be correct and
binding upon the parties for all purposes under this Lease, even if subsequent
measurements determine that one or more of such figures is incorrect; provided,
however, that if the square footage of the Premises, the Building or the Complex
is increased or decreased as a result of remodeling, reconstruction, or
renovation, whether due to damage, condemnation or otherwise as permitted or
contemplated by this Lease, then upon written notice from Landlord to Tenant,
such square footage statements (and all other amounts calculated based on such
square footage statements) shall be equitable revised in accordance therewith).

 
3.
USE.      Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances, including without
limitation the Americans With Disabilities Act of 1990 (the "ADA"), and solely
for the purpose specified in Paragraph 1.J and for no other purpose.  Tenant
shall not do or permit to be done in or about the Premises or the Complex nor
bring or keep or permit to be brought or kept in or about the Premises or the
Complex anything which is prohibited by or will in any way increase the existing
rate of (or otherwise affect) fire or any insurance covering the Premises or the
Complex or any part thereof, or any of its contents, or will cause a
cancellation of any insurance covering the Premises or the Complex or any part
thereof, or any of its contents.  Tenant shall not do or permit to be done
anything in, on or about the Premises or the Complex which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Complex or injure or annoy them, or use or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises or the Complex.  No
sale by auction shall be permitted on the Premises.  Tenant shall not place any
loads upon the floors, walls, or ceiling, which endanger the structure, or place
any harmful fluids or other materials in the drainage system of the Building
therein, or overload existing electrical or other mechanical systems.  No waste
materials or refuse shall be dumped upon or permitted to remain upon any part of
the Premises or outside of the Premises, except in trash containers placed
inside exterior enclosures designated by Landlord for that purpose or inside of
the Building proper where designated by Landlord.  No materials, supplies,
equipment, finished products or semi-finished products, raw materials or
articles of any nature shall be stored upon or permitted to remain outside the
Premises.  No loudspeaker or other device, system or apparatus which can be
heard outside the Premises shall be used in or at the Premises without the prior
written consent of Landlord.  Tenant shall not commit or suffer to be committed
any waste in or upon the Premises.  Tenant shall comply with any covenants,
conditions, or restrictions ("CC&R's") affecting the Premises, as the same may
hereafter be amended from time to time, as well as any reasonable rules and
regulations promulgated by Landlord from time to time (the "Rules and
Regulations").  Landlord reserves the right to reasonably amend such Rules and
Regulations from time to time as Landlord may deem appropriate, which amendment
shall be binding upon Tenant upon delivery of a copy thereof to Tenant.  Tenant
shall use its best efforts to cause its agents, employees, contractors and
invitees to cooperate in observance of such Rules and Regulations, as the same
may be amended from time to time.  The provisions of this Paragraph are for the
benefit of Landlord only and shall not be construed to be for the benefit of any
tenant or occupant of the Complex.  Landlord shall not be responsible to Tenant
for the breach of the Rules and Regulations by any other tenant or occupant of
the Complex.

Exhibit 10.3
 
2

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4.
RENT

 
A.
Basic Rent.  Tenant agrees to pay to Landlord the sum set forth in Paragraph 1.D
hereof as monthly basic rent ("Basic Rent"), in lawful money of the United
States of America, without deduction, offset, prior notice, or demand, on the
first day of every calendar month of the Lease Term, and Landlord agrees to
accept such sum as Basic Rent for the Premises.

 
B.
Partial Months.  In the event that the Lease Term commences on a date other than
the first day of a calendar month, on the Commencement Date Tenant shall pay to
Landlord as Basic Rent for the period from such Commencement Date to the first
day of the first full calendar month that proportion of the monthly Basic Rent
hereunder which the number of days between such Commencement Date and the first
day of the next succeeding calendar month bears to thirty (30), and such partial
first month shall not be counted when computing the number of months in the term
of this Lease.  In the event that the Lease Term is terminated for any reason on
a date other than the last day of a calendar month, on the first day of the last
calendar month of the Lease Term Tenant shall pay to Landlord as Basic Rent for
the period from said first day of said last calendar month to and including the
last day of the Lease Term that proportion of the monthly Basic Rent hereunder
which the number of days between said first day of said last calendar month and
the last day of the term hereof bears to thirty (30).

 
C.
Late Charge.  Notwithstanding any other provision of this Lease, if Tenant is
delinquent in the payment of Rent as set forth in this Paragraph 4, or any part
thereof, Tenant agrees to pay Landlord, in addition to the delinquent Rent due,
a late charge for each Rent payment which is not actually received by Landlord
within ten (10) days after due date for such payment.  Said late charge shall
equal ten (10%) percent of each Rent payment so in default.  In the event that a
late charge is payable hereunder and not paid by Tenant for three (3)
consecutive months, then Rent shall automatically become due and payable three
(3) months in advance, rather than monthly notwithstanding Paragraph 4 or any
other provision of this Lease to the contrary.

 
D.
Additional Rent.  Beginning with the Commencement Date, Tenant shall pay to
Landlord in addition to the Basic Rent  the following additional amounts
(“Additional Rent”):

 
(1)
Tenant's proportionate share ("Tenant's Share") as specified in Paragraph 1.F,
of all Real Property Taxes relating to the Complex, as set forth in Paragraph
14, and

 
(2)
Tenant's Share of all property insurance premiums relating to the Complex, as
set forth in Paragraph 15, and

 
(3)
Tenant's Share of expenses for the operation, management, maintenance and repair
of the Building (including Common Areas of the Building) and Common Areas of the
Complex in which the Premises are located, as set forth in Paragraph 9, and

 
(4)
The sums required to reimburse Landlord for the cost of repairs and maintenance
to the Premises, as set forth in Paragraph 12; and

 
(5)
All charges, costs and expenses, which Tenant is required to pay hereunder,
together with all interest and penalties, costs and expenses including without
limitation attorneys' fees and legal expenses, that may accrue thereto in the
event of Tenant's failure to pay such amounts, and all damages, reasonable costs
and expenses which Landlord may incur by reason of default of Tenant or failure
on Tenant's part to comply with the terms of this Lease.  In the event of
nonpayment by Tenant of Additional Rent, Landlord shall have all the rights and
remedies with respect thereto as Landlord has for nonpayment of Basic Rent.

Exhibit 10.3
 
3

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The Additional Rent due hereunder shall be paid to Landlord or Landlord's agent
(i) within ten (10) days for taxes and insurance and within ten (10) days for
all other Additional Rent items after presentation of an invoice from Landlord
or Landlord's agent setting forth such Additional Rent, and/or (ii) at the
option of Landlord, directly to the designated recipient thereof, as and when
such amounts are due, in accordance with statements or invoices presented to
Tenant; and/or (iii) at the option of Landlord, to Landlord monthly, in advance,
in an amount estimated by Landlord to be Landlord's approximate average monthly
expenditure for such Additional Rent items, which estimated amount shall be
reconciled at the end of each calendar year as compared to Landlord's actual
expenditure for said Additional Rent items, with Tenant paying to Landlord, upon
demand, any amount of actual expenses expended by Landlord in excess of said
estimated amount, or Landlord applying any amount of estimated payments made by
Tenant in excess of Landlord's actual expenditures for said Additional Rent
items to Basic Rent and/or Additional Rent next becoming due.

The respective obligations of Landlord and Tenant under this Paragraph shall
survive the expiration or other termination of this Lease, and if the Lease Term
shall expire or shall otherwise terminate on a day other than the last day of a
calendar year, the actual Additional Rent incurred for the calendar year in
which the Lease Term expires or otherwise terminates shall be determined and
settled on the basis of the statement of actual Additional Rent for such
calendar year and shall be prorated in the proportion which the number of days
in such calendar year preceding such expiration or termination bears to 365.

 
E.
Place and Time of Payment of Rent and Additional Rent.  All Basic Rent hereunder
and all payments hereunder for Additional Rent shall be paid to Landlord at the
address of Landlord as specified in Paragraph 1.L or such other place as
Landlord may from time to time designate in writing.  It shall  be Tenant’s
responsibility to ensure that all Rent payments are mailed or sent in time for
Landlord to receive them by the specified deadline, and Landlord shall not be
responsible for any delays in delivery of payments by mail or otherwise.

 
F.
Security Deposit.  Concurrently with Tenant's execution of this Lease, Tenant
shall deposit with Landlord the sum specified in Paragraph 1.I hereof as a
security deposit (the "Security Deposit"), which shall be held by Landlord
as  security for the faithful performance by Tenant of all of the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant, and
shall not in any event be used or applied by Tenant as "last month's rent."  If
Tenant defaults with respect to any provision 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 amount which Landlord may 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,  including without limitation
owing to Landlord under Paragraph 25, and in this regard Tenant hereby waives
any restrictions on the uses to which the Security Deposit may be put as
contained in Section 1950.7 of the California Civil Code.  If any portion of
said Security Deposit is so used or applied, Tenant shall, within ten (10) days
after written demand therefor, deposit cash with Landlord in the amount
sufficient to restore the Security Deposit to its original amount.  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 Security Deposit.  If Tenant
fully and faithfully performs 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) at
the expiration of the Lease Term and after Tenant has vacated the Premises.  In
the event of termination of Landlord's interest in this Lease, Landlord shall
transfer said Security Deposit to Landlord's successor in interest whereupon
Landlord shall be released from liability for the return of such Security
Deposit or any accounting therefor.

 
G.
Prepaid Rent.  Concurrently with Tenant's execution of this Lease, Tenant shall
pay to Landlord the sum specified in Paragraph 1.G as prepaid Rent for the
months designated therein.

 
H.
Definition of Rent.  The term "Rent" as used in this Lease shall mean Basic
Rent, Additional Rent, and any and all other sums, however designated, required
to be paid by Tenant under this Lease, whether payable to Landlord or third
parties.

 
I.
Additional Rights of Landlord.  In addition to any late payment or interest
charges payable to Landlord hereunder and any other rights or remedies that
Landlord may have under this Lease or applicable law, all of which rights and
remedies shall be cumulative, Tenant, as a material part of the consideration
for this Lease, hereby agrees as follows:

 
(1)
If Tenant makes any payment under this Lease by check and such check is
dishonored or otherwise returned unpaid to Landlord due to insufficient funds,
then Landlord, at its option, may require Tenant to make all future payments
under this Lease by cashier's check or wire transfer in accordance with wiring
instructions given to Tenant by Landlord.

 
(2)
If Landlord fails to receive any payment that Tenant is required to make under
this Lease when due and Landlord thereafter, and prior to receiving such
payment, proceeds to serve a "3-Day Notice" or similar notice to Tenant as
permitted under Section 1162 of the California Code of Civil Procedure, then in
each such instance, and regardless of whether Tenant thereafter makes such
payment, Tenant shall pay to Landlord, upon demand, as Additional Rent, an
administrative charge in the amount of $200.  Tenant acknowledges that such
charge constitutes liquidated damages and not a penalty and represents a
reasonable estimate of the additional administrative costs that Landlord will
incur in serving such notice.

Exhibit 10.3
 
4

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(3)
If Landlord fails to receive any payment that Tenant is required to make under
this Lease within ten (10) days after the due date for such payment, and such
delinquency occurs on two (2) separate occasions, then, at Landlord's election,
exercisable by written notice to Tenant at any time after the second such
delinquency, any and all rights of first offer with respect to any premises in
the Building or Complex, rights of first refusal with respect to any such
premises, and options to renew or extend the term of this Lease, which in any
case may be granted to Tenant under this Lease or any exhibit, rider or
amendment hereto (each referred to in this Lease as an "Option") shall
terminate.  In such event, Tenant shall execute a quitclaim deed or other
similar document as may be requested by Landlord to evidence the termination of
such Option.

 
(4)
If Landlord fails to receive any payment that Tenant is required to make under
this Lease within ten (10) days after the due date for such payment, and such
delinquency occurs on three (3) separate occasions, then Landlord, at its
election, exercisable by one or more written notices to Tenant at any time after
the third such delinquency, may require any or all of the following:  (i) that
all future payments of Basic Rent be paid three (3) months in advance;   (ii)
that, subject to annual reconciliation as provided in Paragraph 4.E above, all
future payments of Additional Rent shall be payable three (3) months in advance
based upon an amount estimated by Landlord to be Landlord's average quarterly
expenditure for such items of Additional Rent; and (iii) that the Security
Deposit specified in Paragraph 1.H be immediately increased by one hundred
percent (100%), in which event Tenant shall, within ten (10) days after written
demand therefor, deposit such additional amount in cash with Landlord.

 
5.
TERM. The term of this Lease (the “Lease Term”)  shall be for the period of time
specified in Paragraph 1.B (unless sooner terminated as hereinafter provided)
and, subject to Paragraph 6, shall commence on the commencement date
("Commencement Date") specified in Paragraph 1.C.  Within 10 days following the
Commencement Date of the Lease Term, Tenant will execute and deliver to Landlord
a certificate substantially in the form of Exhibit D indicating any exceptions
thereto which may exist at that time.  Tenant's failure to execute and deliver
such certificate within such time limit shall constitute an unqualified
acceptance of the Premises and acknowledgement that the statements contained in
Exhibit D are true and correct without exception.

 
6.
POSSESSION.   If Landlord, for any reason whatsoever, cannot deliver possession
of said Premises to Tenant on the date set forth in Paragraph 1.C or any other
date, this Lease shall not be void or voidable; no obligation of Tenant shall be
affected thereby; nor shall Landlord or Landlord's agents be liable to Tenant
for any loss or damage resulting therefrom; but in that event the commencement
and termination dates of the Lease, and all other dates affected thereby shall
be revised to conform to the date of Landlord's delivery to Tenant of possession
of the Premises, and the Lease Term shall be extended for a period equal to the
delay in delivery of possession, plus the number of days necessary to end the
Lease Term on the last day of a month.  The above is, however, subject to the
provision that the period of delay of delivery of the Premises shall not exceed
180 days from the date specified in Paragraph 1.C (except those delays caused by
Acts of God, strikes, war, utilities, governmental bodies, weather, unavailable
materials, and delays beyond Landlord's control shall be excluded in calculating
such period) in which instance Tenant, at its option, may, by written notice to
Landlord within ten (10) days after the end of the 180-day period, terminate
this Lease and the parties shall have no further liability thereafter accruing
under this Lease.

 
7.
COMMON AREAS.  Subject to the terms and conditions of this Lease and any Rules
and Regulations, Tenant shall have the non-exclusive right in common with other
occupants of the Complex, to use the access roads, parking areas, and facilities
provided and designated by Landlord for the general use and convenience of the
occupants of the Complex, which areas and facilities are referred to herein as
"Common Areas".  This right shall terminate upon the termination of this
Lease.  Landlord reserves the right from time to time to make changes in the
shape, size, location, amount and extent of Common Areas.

 
8.
PARKING.  Subject to the terms and conditions of this Lease and subject to the
Rules and Regulations, during the Lease Term, Tenant shall have the
non-exclusive right, in common with other tenants or occupants of the Complex,
to use the number of parking spaces in the common parking areas of the Complex
as is specified in Paragraph 1.K.  Neither Tenant nor Tenant's employees,
agents, representatives and/or invitees shall use parking spaces in excess of
said number of spaces allocated to Tenant hereunder.  Tenant acknowledges that
certain other tenants of the Complex may have exclusive parking rights to
certain parking spaces in the parking areas of the Complex, and that Tenant
shall have no right to use such exclusive spaces upon receiving notice of the
location of such exclusive spaces from Landlord.  Landlord shall have the right
(but not the obligation), at Landlord's sole discretion,  to designate the
specific location of Tenant's parking spaces within the common parking areas of
the Complex.  Landlord shall also have the right to implement a system of
parking charges, vouchers, fines or other parking control fees to be paid by
Tenant and/or the users of the Complex, if so required by any governmental
agency having jurisdiction over the Complex or if required to meet parking
programs mandated by government.

Exhibit 10.3
 
5

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Tenant shall not, at any time, park, or permit to be parked, any trucks or
vehicles adjacent to the loading areas so as to interfere in any way with the
use of such areas, nor shall Tenant at any time park, or permit the parking of
Tenant's trucks or other vehicles or the trucks and vehicles of Tenant's
suppliers or others, in any portion of the common area not designated by
Landlord for such use by Tenant.  Tenant shall not park nor permit to be parked,
any inoperative vehicles or equipment on any portion of the parking area or
outside areas of the Complex, or use the same for storage.  Tenant agrees to
assume responsibility for compliance by its employees with the parking
provisions contained herein.

If Tenant or its employees park in other than such designated parking areas,
then Landlord may charge Tenant, as Additional Rent, and Tenant agrees to pay,
ten ($10.00) dollars per day for each day or partial day each such vehicle is
parked in any area other than that designated.  Tenant hereby authorizes
Landlord at Tenant's sole expense to tow away from the Complex any vehicle
belonging to Tenant or Tenant's employees parked in violation of these
provisions, or to attach violation stickers or notices to such vehicles and levy
fines for such violations.  Landlord shall have no obligation to Tenant to
police the parking areas or enforce any private or public parking restrictions,
which enforcement shall be at Landlord's sole and absolute discretion.

 
9.
EXPENSES OF OPERATION AND MAINTENANCE OF THE COMPLEX.  As Additional Rent and in
accordance with Paragraph 4.E of this Lease, and except for those expenses
required to be paid exclusively by Tenant as set forth in Paragraphs 12 and 13
or elsewhere in this Lease, Tenant shall pay to Landlord Tenant's Share of all
expenses of operation, management, maintenance and repair of the Building,
Complex and Common Areas including, but not limited to, all sums expended in
connection with the Common Areas and Building exteriors for all general
maintenance and repairs; license, permit, and inspection fees; security; utility
charges associated with exterior landscaping and lighting (including water and
sewer charges); janitorial services; trash removal; fire protection systems;
general liability insurance protecting against claims related to the condition,
use or occupancy of the Common Areas (in such amounts and providing such
coverage as determined in Landlord's sole discretion); exterior window cleaning;
maintenance of landscaped areas, irrigation systems, parking lots, sidewalks,
driveways, and stairways, including without limitation resurfacing, restriping,
cleaning and sweeping; maintenance, repair and replacement of all Building
systems and fixtures, including without limitation electrical, mechanical,
lighting, plumbing, and telecommunication systems including without limitation
intra-Building telephone, telecommunication and network cabling which
telecommunication systems are located outside of the Premises, except as
otherwise provided in Paragraph 12 below; repair and replacement of roofs and
structural elements of the buildings (excluding new capital improvements);
salaries and employee benefits of personnel (and payroll taxes applicable
thereto) to the extent they are engaged in the operation, supervision, and/or
maintenance of the Complex; reasonable attorneys' fees with respect to matters
of common interest to occupants of the Complex or relating to the Complex; fees
for accounting, bookkeeping, expense collection, and other management services
rendered by Landlord and/or by a third party manager engaged by Landlord (which
may be a party affiliated with Landlord), except that the total amount charged
for such management services and included in Tenant's share of expenses shall be
three percent (3%) of the then current Basic Rent payable by Tenant for each
respective month; taxes on personal property, equipment and machinery utilized
in the operation of the Complex; supplies, materials, equipment and tools;
maintenance and/or insurance contracts covering all or any of the repairs or
maintenance described in this Paragraph 9;  and the cost of complying with
rules, regulations and orders of governmental authorities, including without
limitation maintenance, alterations and repairs required in connection
therewith.  At Landlord’s election, Landlord may determine that with respect to
certain recurring items of major repair and maintenance (“Major Repairs”),
Landlord will not charge the costs thereof as current expenses when such costs
are incurred, but instead will charge Tenant a reasonable monthly fee to be used
by Landlord for performing such Major Repairs as and when the need therefor
shall arise.  Such Major Repairs shall include, at Landlord’s election, any or
all of the following: (i) replacing (but not repairing) the roof (ii)
repaving  (but not resealing) the parking lot; (iii) replacing (but not
repairing) the HVAC compressors or other major system components; (iv) painting
the exterior of the Building; and (v) other similar items as may be determined
by Landlord from time to time.

Also at Landlord’s election, Landlord may in its reasonable discretion allocate
between the Building and the other buildings, if any, within the Complex (i)
certain CAM Expenses that affect the Complex as a whole, but are not
specifically attributable to any particular building(s) within the Complex;
and/or (ii) certain CAM Expenses that are specifically attributable to a
particular building or buildings.

"Additional Rent" as used herein shall not include Landlord's debt repayments;
interest on charges; expenses directly or indirectly incurred by Landlord for
the benefit of any other tenant; cost for the installation of partitioning or
any other tenant improvements; cost of attracting tenants; depreciation;
interest; or executive salaries.

Exhibit 10.3
 
6

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10.
ACCEPTANCE AND SURRENDER OF PREMISES.  By taking possession hereunder, Tenant
accepts the Premises as being in good and sanitary order, condition and repair
and accepts the Building, the Premises and the Common Areas in their then
existing condition and without representation or warranty by Landlord as to its
condition, the use or occupancy which may be made thereof, or the precise square
footage of the Building or the Premises.  Any exceptions to the foregoing must
be by written agreement executed by Landlord and Tenant.  Subject to Paragraphs
26 and 27, Tenant agrees on the last day of the Lease Term, or on the sooner
termination of this Lease, to surrender the Premises promptly and peaceably to
Landlord in good condition and repair (normal wear and tear excepted), with all
interior walls painted, or cleaned so that they appear freshly painted, and
repaired and replaced, if damaged; all floors cleaned and waxed; all carpets
cleaned and shampooed; the air conditioning and heating equipment serviced by a
reputable and licensed service firm and in good operating condition (provided
the maintenance of such equipment has been Tenant's responsibility during the
term of this Lease) together with all alterations, additions, and improvements
which may have been made in, to, or on the Premises (except movable trade
fixtures installed at the expense of Tenant); provided, however, that Tenant
shall ascertain from Landlord within thirty (30) days before the end of the
Lease Term whether Landlord desires to have the Premises or any part or parts
thereof restored to their condition and configuration as when the Premises were
delivered to Tenant and if Landlord shall so desire, then Tenant shall restore
said Premises or such part or parts thereof before the end of this Lease at
Tenant's sole cost and expense.  Tenant, on or before the end of the Lease Term
or sooner termination of this Lease, shall remove all of Tenant's personal
property and trade fixtures from the Premises, and all property not so removed
on or before the end of the Lease Term or sooner termination of this Lease shall
be deemed abandoned by Tenant and title to same shall thereupon pass to Landlord
without compensation to Tenant.  Landlord may, upon termination of this Lease,
remove all moveable furniture and equipment so abandoned by Tenant, at Tenant's
sole cost, and repair any damage caused by such removal at Tenant's sole
cost.  If the Premises are not surrendered at the end of the term or sooner
termination of this Lease, Tenant shall indemnify Landlord against loss or
liability resulting from the delay by Tenant in so surrendering the Premises
including, without limitation, consequential damages to Landlord caused, in
whole or in part, by such delay.  Nothing contained herein shall be construed as
an extension of the term hereof or as a consent of Landlord to any holding over
by Tenant.  The voluntary or other surrender of this Lease or the Premises by
Tenant or a mutual cancellation of this Lease shall not work as a merger and, at
the option of Landlord, shall either terminate all or any existing subleases or
operate as an assignment to Landlord of all or any such subleases.

 
11.
ALTERATIONS AND ADDITIONS.  Tenant shall not make, or suffer to be made, any
alteration or addition to the Premises, or any part thereof, without the prior
written consent of Landlord.  All work with respect to any alteration or
addition shall be done in a good and workmanlike manner, shall be under the
supervision of a competent architect or competent licensed structural engineer
approved by Landlord, and shall be made in accordance with all applicable laws,
ordinances, codes and regulations related thereto and the plans and
specifications with respect thereto shall be approved in writing by Landlord
before commencement of work.  Landlord's approval of Tenant's plans and
specification shall create no responsibility or liability on the part of
Landlord for their completeness, design sufficiency or compliance with
governmental laws, rules or regulations.

Tenant agrees that it will not proceed to make such alteration or additions
without having obtained consent from Landlord to do so, and until ten (10) days
after the receipt of such consent, in order that Landlord may post appropriate
notices to avoid any liability to contractors or material suppliers for payment
for Tenant's improvements.  Tenant will at all times permit such notices to be
posted and to remain posted until the completion of work.  Tenant shall, if
required by Landlord, secure at Tenant's own cost and expense, a completion and
lien indemnity bond, satisfactory to Landlord, for such work.  Tenant further
covenants and agrees that any mechanic's lien filed against the Premises or
against the Complex for work claimed to have been done for, or materials claimed
to have been furnished to, Tenant will be discharged by Tenant, by bond or
otherwise, within ten (10) days after the imposition thereof, at the cost and
expense of Tenant.  Any exceptions to the foregoing must be made in writing and
executed by both Landlord and Tenant.  Upon completion of the work, Tenant shall
file a Notice of Completion as permitted by law in the Office of the County
Recorder where the Premises is located.

Any addition to, or alteration of, the Premises, except moveable furniture and
trade fixtures, shall at once become a part of the Premises and belong to
Landlord.  Tenant shall retain title to all moveable furniture and trade
fixtures placed in the Premises.  All heating, lighting, electrical, air
conditioning, floor to ceiling partitioning, drapery, carpeting, and floor
installations made by Tenant, together with all property that has become an
integral part of the Premises, shall not be deemed trade fixtures.

 
12.
REPAIR AND MAINTENANCE OF THE PREMISES.

 
A.
Landlord's Obligations.  So long as no Event of Default (as defined in Paragraph
24) has occurred, which remains uncured beyond the applicable cure period (if
any) set forth in this Lease, Landlord shall, at its sole cost and expense,
maintain and repair the building foundations, structural elements of the
exterior walls and structural elements of the roof, except to the extent of any
non-insured damage (or deductible portion of any insured damage) that is the
result of the negligence or willful act of Tenant or Tenant’s employees, agents
or contractors, in which case Tenant shall be liable for the repair at Tenant's
sole cost and expense.  Landlord shall also maintain and repair (i) the roof
membrane, (ii) the exterior surface of the building (including, maintenance of
equipment located on the roof top, exterior window washing and exterior
painting), and (iii) at Landlord's election, the HVAC equipment (through a
contract with a service company of Landlord's choice); provided, however, that
Tenant shall reimburse Landlord for the cost thereof as Additional Rent in
accordance with Paragraph 4.E.  Landlord shall have no obligation to make
repairs under this Paragraph until a reasonable time after receipt of written
notice from Tenant of the need for such repairs.  In no event shall any payments
owed by Tenant under this Lease be abated on account of Landlord's failure to
make repairs under this Paragraph.  Tenant hereby waives all statutory rights to
make repairs for or at the expense of Landlord.

 
B.
Tenant's Obligations.  Except to the extent of Landlord's express obligations
under Paragraph 12.A, Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and every part thereof in a high
standard of maintenance and repair, and in good and sanitary
condition.  Tenant’s maintenance and repair responsibilities herein referred to
include, but are not limited to, all windows, window frames, plate glass,
glazing, truck doors, plumbing systems (such as water and drain lines, sinks,
toilets, faucets, drains, showers and water fountains), electrical systems (such
as panels, conduits, outlets, lighting fixtures, lamps, bulbs, tubes, ballasts),
heating and air conditioning distribution and temperature control systems (such
as fans, air handlers, ducts, mixing boxes, thermostats, time clocks, supply and
return grills), telecommunication systems within the Premises (including without
limitation all distribution throughout the Premises from Tenant's computer
closets), and telecommunication systems located outside of the Premises
(including without limitation intra Building telephone, telecommunication and
network cabling) installed to exclusively serve all or any portion of the
Premises, all interior improvements within the Premises including but not
limited to wall coverings, window coverings, carpet, floor coverings,
partitioning, ceilings, doors (both interior and exterior, including closing
mechanisms, latches, and locks), skylights (if any), automatic fire
extinguishing systems, and all other interior improvements of any nature
whatsoever.  Tenant also agrees to provide janitorial services for the Premises
as well as carpet shields under all rolling chairs or to otherwise be
responsible for wear and tear of the carpet caused by such rolling chairs if
such wear and tear exceeds that caused by normal foot traffic in surrounding
areas.  Areas of excessive wear in the Premises shall be replaced at Tenant’s
sole expense upon Lease termination.  If Landlord elects to require Tenant to
maintain the HVAC equipment, Tenant shall contract with a service company for
the quarterly maintenance of the heating and air conditioning equipment, with a
copy of the service contract to be furnished to Landlord within ten (10) days
after opening for business, and a copy of any subsequent contracts to be
furnished from time to time.  If Tenant needs to access Building system,
including without limitation the Building telecommunication system, Tenant shall
have the right to do so only upon the prior written consent of Landlord and by
utilization of a contractor consented to by Landlord, provided that despite any
such consent by Landlord, Tenant shall remain fully responsible for the acts,
omissions and negligence of any such contractor.

Exhibit 10.3
 
7

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13.
UTILITIES.  Tenant shall pay, directly to the provider of such services, as the
same shall become due, all charges for water, gas, electricity, telephone, telex
and other electronic communications service, sewer service, waste pick-up and
any other utilities, materials or services furnished directly to or used by
Tenant on or about the Premises during the Lease Term, including, without
limitation, any temporary or permanent utility surcharge or other exactions
whether or not hereinafter imposed.  If any such services and utilities are
jointly metered and not directly billed to Tenant, Tenant shall pay an equitable
portion of all charges as Additional Rent, with the determination of Tenant's
equitable portion to be made by Landlord.  At Landlord's request, Tenant shall
pay Landlord for the cost of installing separate meters.  Tenant shall pay for
any and all telecommunication or other utility system modifications or additions
which it may require and which Landlord expressly agrees to provide pursuant to
the terms of this Lease or any subsequent written agreement; provided, however,
that nothing in this Lease shall require Landlord to provide, modify or install
any utility system or utility system component for Tenant's use except to the
extent that the same is required by law or by an express written agreement
between Landlord and Tenant.  Landlord shall not be liable for, and Tenant shall
not be entitled to, any abatement or reduction of Rent or other compensation by
reason of any interruption or failure of utility services to the Premises.

 
14.
TAXES.

 
A.
Real Property Taxes. As Additional Rent and in accordance with Paragraph 4.E of
this Lease, Tenant shall pay to Landlord Tenant's Share of all Real Property
Taxes that accrue during the Lease Term and which constitute Real Property Taxes
pertaining to the Complex.  This obligation shall survive the expiration or
earlier termination of this Lease, and if any Real Property Taxes are imposed by
the County Assessor or other governmental authority for the period of time
constituting the Lease Term, whether or not Landlord is billed for the same
during the Lease Term, Tenant shall pay such Real Property Taxes when they are
ultimately billed, in accordance with Paragraph 4.E.  The term "Real Property
Taxes," as used herein, shall mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all installments of principal and interest required to pay
any general or special assessments for public improvements and any increases
resulting from reassessments caused by any new improvements or any change in
ownership of the Complex) now or hereafter imposed by any governmental or
quasi-governmental authority or special district having the direct or indirect
power to tax or levy assessments, which are levied or assessed against, or with
respect to the value, occupancy or use of, all or any portion of the Complex (as
now constructed or as may at any time hereafter be constructed, altered, or
otherwise changed) or Landlord's interest therein; any improvements located
within the Complex (regardless of ownership); the fixtures, equipment and other
property of Landlord, real or personal, that are an integral part of and located
in the Complex; or parking areas, public utilities, or energy within the
Complex; (ii) all charges, levies or fees imposed by reason of environmental
regulation or other governmental control of the Complex; and (iii) all costs and
fees (including attorneys' fees) incurred by Landlord in contesting any Real
Property Tax and in negotiating with public authorities as to any Real Property
Tax.  If at any time during the term of this Lease the taxation or assessment of
the Complex prevailing as of the commencement date of this Lease shall be
altered so that in lieu of or in addition to any Real Property Tax described
above there shall be levied, assessed or imposed (whether by reason of a change
in the method of taxation or assessment, creation of a new tax or charge, or any
other cause) an alternate or additional tax or charge (i) on the value, use or
occupancy of the Complex or Landlord's interest therein or (ii) on or measured
by the gross receipts, income or rentals from the Complex, on Landlord's
business of leasing the Complex, or computed in any manner with respect to the
operation of the Complex, then any such tax or charge, however designated, shall
be included within the meaning of the term "Real Property Taxes" for purposes of
this Lease.  If any Real Property Tax is based upon property or rents unrelated
to the Complex, then only that part of such Real Property Tax that is fairly
allocable to the Complex shall be included within the meaning of the term "Real
Property Taxes."  Notwithstanding the foregoing, the term "Real Property Taxes"
shall not include estate, inheritance, gift or franchise taxes of Landlord or
the federal or state net income tax imposed on Landlord's income from all
sources.

 
B.
Taxes on Tenant's Property.

 
(1)
Tenant shall be liable for and shall pay ten (10) days before delinquency, taxes
levied against any personal property or trade fixtures placed by Tenant in or
about the Premises.  If any such taxes on Tenant's personal property or trade
fixtures are levied against Landlord or Landlord's property or if the assessed
value of the Premises is increased by the inclusion therein of a value placed
upon such personal property or trade fixtures of Tenant and if Landlord, after
written notice to Tenant, pays the taxes based on such increased assessment,
which Landlord shall have the right to do regardless of the validity thereof
(but only under proper protest if requested by Tenant), Tenant shall upon
demand, as the case may be, repay to Landlord the taxes so levied against
Landlord, or the proportion of such taxes resulting from such increase in the
assessment; provided that in any such event Tenant shall have the right, in the
name of Landlord and with Landlord's full cooperation (but without cost to
Landlord), to bring suit in any court of competent jurisdiction to recover the
amount of any such taxes so paid under protest, and any amount so recovered
shall belong to Tenant.

Exhibit 10.3
 
8

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(2)
If the Tenant improvements in the Premises, whether installed, and/or paid for
by Landlord or Tenant and whether or not affixed to the real property so as to
become a part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which standard office improvements in
other space in the Complex are assessed, then the real property taxes and
assessments levied against Landlord or the Complex by reason of such excess
assessed valuation shall be deemed to be taxes levied against personal property
of Tenant and shall be governed by the provisions of Paragraph 14.B (1)
above.  If the records of the County Assessor are available and sufficiently
detailed to serve as a basis for determining whether said Tenant improvements
are assessed at a higher valuation than standard office improvements in other
space in the Complex, such records shall be binding on both the Landlord and the
Tenant.  If the records of the County Assessor are not available or sufficiently
detailed to serve as a basis for making said determination, the actual cost of
construction shall be used.

 
15.
LIABILITY INSURANCE.  Tenant, at Tenant's expense, agrees to obtain and  keep in
force during the term of this Lease a policy of comprehensive public liability
insurance against any and all claims for personal injury, death, property
damage, or other liabilities related to the condition, use or occupancy of the
Premises or to Tenant's operations on the Premises, including an extended
liability endorsement providing contractual liability and broad form property
damage coverage.  Such insurance shall also contain a cross-liability clause and
shall insure Tenant's performance of the indemnity agreement set forth in
Paragraph 18, although Tenant's obligations pursuant to such indemnity shall not
be limited to the amount of any insurance required of, or otherwise carried by,
Tenant.  Such liability insurance shall have a combined single limit of not less
than Two Million Dollars ($2,000,000) and certificates evidencing such insurance
shall be furnished to Landlord prior to Tenant's occupancy of the Premises.  The
policy or policies affecting such insurance shall name Landlord and the
beneficiary or mortgagee of any deed of trust or mortgage affecting the Premises
as additional insureds, and shall insure any liability of Landlord, contingent
or otherwise, with respect to any act or omission of Tenant, its agents,
employees or invitees or otherwise by any conduct or transactions of any of said
persons in or about or concerning the Premises, including any failure of Tenant
to observe or perform any of its obligations hereunder; shall be issued by an
insurance company admitted to transact business in the State of California
having a rating of A or better in "Best's Insurance Guide"; and shall provide
that the insurance effected thereby shall not be canceled, except upon thirty
(30) days' prior written notice to Landlord.  Said liability insurance shall be
primary and not contributing to any insurance available to Landlord, and
Landlord's insurance shall be in excess thereto.  If, during the Lease Term, in
the considered opinion of Landlord's lender, insurance advisor, or counsel, the
amount of insurance described in this Paragraph 15 is not adequate, Tenant
agrees to increase said coverage to such reasonable amount as Landlord's lender,
insurance advisor, or counsel shall deem adequate.

 
16.
TENANT'S PROPERTY INSURANCE AND WORKER'S COMPENSATION.  Tenant shall maintain a
policy or policies of fire and property damage insurance in "all risk" form with
a sprinkler leakage endorsement insuring the personal property, inventory, trade
fixtures, and leasehold improvements within the Premises for the full
replacement value thereof.  The proceeds from any of such policies shall be used
for the repair or replacement of such items so insured.  Tenant shall also
maintain a policy or policies of worker's compensation insurance and any other
employee benefit insurance sufficient to comply with all laws.

 
17.
LANDLORD'S INSURANCE; WAIVER OF SUBROGATION.

 
A.
Landlord's Property Insurance.  Landlord shall purchase and keep in force, a
policy or policies of casualty insurance covering loss or damage to the
Premises, Building and related Common Area improvements in the amount of the
full replacement value thereof, providing protection against those perils
covered by "all risk" insurance, and including such other casualty endorsements
as Landlord may elect.  Landlord shall also maintain at Landlord's election, or
if required by Landlord's lender from time to time, earthquake and/or flood
damage insurance, worker's compensation insurance, sprinkler leakage insurance
and rental income insurance in the amount of one hundred (100%) percent of
twelve (12) months Basic Rent, plus sums paid as Additional Rent.  Tenant shall
pay to Landlord Tenant's Share of the cost of Landlord's insurance, as described
herein, as Additional Rent in accordance with Paragraph 4.E hereof.  If such
insurance cost is increased due to Tenant's use of the Premises or the Complex,
Tenant agrees to pay to Landlord the full cost of such increase.  Tenant shall
have no interest in nor any right to the proceeds of any insurance procured by
Landlord as described in this Paragraph 17.

 
B.
Waiver of Subrogation.  Each party hereby releases the other party, and its
partners, officers, agents, employees, and servants, from any and all claims,
demands, loss, expense, or injury to the Premises or to the furnishings,
fixtures, equipment, inventory, or other property in, about, or upon the
Premises, which is caused by or results from perils, events, or happenings which
are the subject of fire or other casualty insurance in force at the time of such
loss irrespective of any negligence on the part of the released party which may
have contributed to or caused such loss; subject to the following limitations:
(i) the party being released shall not be released from any liability to the
extent that such damages are not covered by the insurance recovery obtained by
the releasing party, and (ii) the party being released shall be responsible for
reimbursing the releasing party for any deductible owed as a result of such
damages.  Each party shall use commercially reasonable efforts to obtain, if
needed, appropriate endorsements to its policies of insurance with respect to
the foregoing releases; provided, however, that failure to obtain such
endorsements shall not affect the releases hereinabove given.

Exhibit 10.3
 
9

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18.
INDEMNIFICATION; EXEMPTION OF LANDLORD FROM LIABILITY.

 
A.
Indemnification.  Subject to Section 2782 of the California Civil Code, Tenant
shall defend, protect, indemnify, and hold Landlord and its agents, contractors
and employees harmless (except for gross negligence or willful misconduct of
Landlord and then only to the extent that such loss is not waived under
Paragraph 17.B) from and against any and all obligations, losses, costs,
expenses, liabilities, claims, damages, demands, fines, penalties, attorneys'
fees, investigation costs, court costs or expert witness fees incurred in
connection with or on account of, or arising from any injury or death or
property damage resulting from (i) the use, condition or occupancy of the
Premises or (ii) any act or omission or negligence of Tenant or Tenant's agents,
contractors, employees, or invitees or (iii) any occurrence in, upon or at the
Premises from any cause whatsoever or (iv) any breach, violation or
non-performance by Tenant of any of its obligations hereunder.

 
B.
Exemption of Landlord from Liability.  Neither Landlord nor its agents or
contractors or employees shall be liable to Tenant, and Tenant waives all claims
against Landlord, and its agents, contractors and employees for injury or death
to any person (including without limitation Tenant and Tenant's employees) or
for damage or loss to Tenant's business (including consequential damages) or for
damage or loss to any property (including without limitation Tenant's personal
property) by and from all causes, including without limitation (i) any latent or
patent defect in the Premises, Building or Complex, or (ii) fire, steam,
electricity, gas, dampness, water or rain which may leak or flow from or into
any part of the Premises or the Complex, or (iii) interruption, breakage,
leakage, obstruction or defects of pipes, sprinklers, wires, appliances, or
Building Systems, including without limitation plumbing, heating, air
conditioning, telecommunications or lighting systems or fixtures, whether the
damage or injury results from conditions arising in, upon, or about the
Premises, Building or Complex or from other sources or (iv) any act or omission
or neglect of any other tenant of the Building or Complex.  Tenant shall
immediately notify Landlord in writing of any known defect in the Premises.  The
provisions of this Paragraph 18.B shall not apply to any damage or injury caused
by Landlord's willful misconduct or gross negligence, except to the extent the
same is waived under Paragraph 17.B.

 
19.
COMPLIANCE.  Tenant, at its sole cost and expense, shall promptly comply with
all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter in effect; with the requirements of any board of
fire underwriters or other similar body now or hereafter constituted; and with
any direction or occupancy certificate issued pursuant to law by any public
officer; provided, however, that no such failure shall be deemed a breach of
these provisions if Tenant, immediately upon notification, commences to remedy
or rectify said failure.  The judgment of any court of competent jurisdiction or
the admission by Tenant in any action against Tenant, whether Landlord be a
party thereto or not, that Tenant has violated any such law, statute, ordinance
or governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant.  This Paragraph shall
not be interpreted as requiring Tenant to make structural changes or structural
improvements, except to the extent such changes or improvements are required as
a result of Tenant's use or alteration of the Premises.  Tenant shall, at its
sole cost and expense, comply with any and all requirements pertaining to said
Premises, of any insurance organization or company, necessary for the
maintenance of reasonable fire and public liability insurance covering the
Premises.

 
20.
LIENS.  Tenant shall keep the Premises and the Complex free from any liens
arising out of any work performed, materials furnished or obligation incurred by
Tenant.  In the event that Tenant shall not, within ten (10) days following the
imposition of such lien, cause the same to be released of record, by bond or
otherwise, Landlord shall have, in addition to all other remedies provided
herein and by law, the right, but not the obligation, to cause the same to be
released by such means as it shall deem proper, including payment of the claim
giving rise to such lien.  All sums paid by Landlord for such purpose, and all
expenses incurred by it in connection therewith, shall be payable to Landlord by
Tenant on demand with interest thereon as specified in Paragraph 44 below.

 
21.
ASSIGNMENT AND SUBLETTING.

 
A.
Landlord's Consent Required.  Tenant shall not assign, transfer, or hypothecate
the leasehold estate under this Lease, or any interest herein, and shall not
sublet the Premises, or any part thereof, or any right or privilege appurtenant
thereto (including, but not limited to, the parking spaces to be used in
connection with Tenant's occupancy), or suffer any other person or entity to
occupy or use the Premises, or any portion thereof, without, in each case, the
prior written consent of Landlord, which consent will not be unreasonably
withheld.  Any attempt to do so without such prior consent shall be wholly void
and shall constitute a default by Tenant under this Lease.  In the event
Landlord consents to any assignment or subletting, such consent shall not
constitute a waiver of any of the restrictions of this Paragraph 21 and the same
shall apply to each successive assignment or subletting hereunder, if any.  In
no event shall Landlord's consent to an assignment or subletting affect the
continuing primary liability of Tenant (which, following assignment, shall be
joint and several with the assignee), or relieve Tenant of any of its
obligations hereunder without an express written release being given by
Landlord.  In the event that Landlord shall consent to an assignment or
subletting under this Paragraph 21, such assignment or subletting shall not be
effective until the assignee or sublessee shall assume all of the obligations of
this Lease on the part of Tenant to be performed or observed and whereby the
assignee or sublessee shall agree that the provisions contained in this Lease
shall, notwithstanding such assignment or subletting, continue to be binding
upon it with respect to all future assignments and sublettings.  Such assignment
or sublease agreement shall be duly executed and a fully executed copy thereof
shall be delivered to Landlord, and Landlord may collect Rent due hereunder
directly from the assignee or sublessee.  Collection of Rent directly from an
assignee or sublessee shall not constitute a consent or a waiver of the
necessity of consent to such assignment or subletting, nor shall such collection
constitute a recognition of such assignee or sublessee as the Tenant hereunder
or a release of Tenant from the performance of all of its obligations hereunder.

Exhibit 10.3
 
10

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B.
Reasonable Consent.  If Tenant complies with the following conditions, Landlord
shall not unreasonably withhold its consent to the assignment of the Lease or
the subletting of the Premises or any portion thereof:  Tenant shall submit in
writing to Landlord (a) the name and legal composition of the proposed assignee
or subtenant; (b) the nature of the proposed assignee's or subtenant's business
to be carried on in the Premises; (c) the terms and provisions of the proposed
assignment or sublease; (d) such reasonable financial information as Landlord
may request concerning the proposed assignee or subtenant including, without
limitation, financial history, credit rating and business experience.  Tenant
acknowledges that Landlord has entered into this Lease in reliance on the
particular skills, knowledge and experience of Tenant and/or the principal
officer of Tenant with respect to the conduct of business in the
Premises.  Without limiting Landlord's right to refuse to give such consent on
any other reasonable grounds, Landlord reserves the right to refuse to give such
consent if in Landlord's reasonable business judgment (i) the quality of
operation of the Complex may be in any way adversely affected during the Lease
Term; (ii) the proposed assignee or quasi-governmental department or agency
(iii) the financial worth of the proposed new tenant is less than that of Tenant
executing this Lease: (iv) the proposed assignee’s or subtenant’s use of the
Premises involves the storage, use or disposal of any Hazardous Materials; (v)
the proposed assignee or subtenant has been required by any governmental
authority to clean up Hazardous Materials; (vi) the proposed assignee or
subtenant is subject to investigation or enforcement by any governmental
authority in connection with the use, disposal or storage of a Hazardous
Material; (vii) investigation discloses other information reasonably
unsatisfactory to Landlord.

 
C.
Bonus Rent.  Tenant agrees that fifty percent (50%) of any amounts paid by the
assignee or sublessee as Basic Rent or its equivalent, however described, in
excess of the Basic Rent payable by Tenant hereunder (or, in the case of
sublease of a portion of the Premises, in excess of the Basic Rent reasonably
allocable to such portion), shall be the property of Landlord and such amounts
shall be payable directly to Landlord by the assignee or sublessee.  At
Landlord's request, a written agreement shall be entered into by and among
Tenant, Landlord and the proposed assignee or sublessee confirming the
requirements of this paragraph.

 
D.
Recapture.  If the proposed assignment or subletting shall affect 80% or more of
the Premises, Landlord shall have the options to (i) terminate this Lease as of
the proposed effective date for the assignment or for the commencement of the
term of the proposed sublease, and this Lease shall then be terminated
accordingly, or (ii) take assignment of or sublet from Tenant the affected
portion of the Premises pursuant to the same terms and conditions as set forth
in the executed assignment of sublease submitted by Tenant.

 
E.
Certain Transactions.  The sale of all or substantially all of Tenant's assets
(other than bulk sales in the ordinary course of business), or, if Tenant is a
corporation, limited liability company, an unincorporated association, or a
partnership, the transfer, assignment or hypothecation of any stock or interest
in such corporation, company, association or partnership in the aggregate in
excess of twenty-five percent (25%) (except for publicly traded shares of stock
constituting a transfer of twenty-five percent (25%) or more in the aggregate,
so long as no change in the controlling interests of Tenant occurs as a result
thereof) shall be deemed an assignment within the meaning and provisions of this
Paragraph 21.

 
F.
Costs; Acknowledgment of Reasonableness.  Tenant agrees to reimburse Landlord
for Landlord's expenses (including attorneys' fees and costs) incurred in
connection with processing and documentation associated with any consents
requested by Tenant under this Paragraph 21.  Tenant agrees that the provisions
of this Paragraph 21 are not unreasonable standards or conditions for any
purpose, including for purposes of the California Civil Code Section 1951.4(b).

 
22.
SUBORDINATION AND MORTGAGES.  In the event Landlord's title or leasehold
interest in the Premises or the Complex is now or hereafter encumbered by the
lien of any mortgage or deed of trust to secure a loan from a lender
(hereinafter referred to as a "Lender") to Landlord, Tenant shall, at the
request of Landlord or Lender, execute in writing an agreement subordinating its
rights under this Lease to the lien of such mortgage or deed of trust, or, if so
requested, agreeing that the lien of Lender's mortgage or deed of trust shall be
or remain subject and subordinate to the rights of Tenant under this
Lease.  Notwithstanding any such subordination, Tenant's possession under this
Lease shall not be disturbed if Tenant is not in default and so long as Tenant
shall pay all Rent and fully and faithfully observe and perform all of the
provisions set forth in this Lease.  Tenant acknowledges that upon receipt from
a lender of a "Demand to Pay Rent to Party other than Landlord" under Section
2938 of the California Civil Code, Tenant shall be required to pay all Rents to
the Lender as they become due.

 
23.
ENTRY BY LANDLORD.  At all reasonable times after 24 hours prior notice (except
in emergencies, in which case no notice is required) Landlord shall have, the
right to enter the Premises to inspect them; to perform any services to be
provided by Landlord hereunder; to submit the Premises to prospective
purchasers, lenders, or tenants and to post "For Rent" or "For Sale" or other
signs relative to the same; to post notices of nonresponsibility; and to alter,
improve or repair the Premises, all without abatement of Rent; and may erect
scaffolding and other necessary structures in or through the Premises where
reasonably required by the character of the work to be performed; provided,
however that Landlord shall endeavor not to unreasonably interfere with Tenant's
use of the Premises.  For each of the foregoing purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in an
emergency.  Any entry to the Premises obtained by Landlord by any of said means,
or otherwise, shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into or a detainer of the Premises or an eviction,
actual or constructive, of Tenant from the Premises or any portion
thereof.  Landlord shall also have the right at any time to change the
arrangement or location of entrances or passageways, doors and doorways,
corridors, elevators, stairs, toilets or other public parts of the Complex and
to change the name, number or designation by which the Complex is commonly
known, and none of the foregoing shall be deemed an actual or constructive
eviction of Tenant, or shall entitle Tenant to any damages or reduction of Rent
hereunder.

Exhibit 10.3
 
11

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24.
TENANT'S DEFAULT.  The occurrence of any of the following shall be an "Event of
Default" (sometimes referred to herein as a "default") by Tenant and a material
breach of this Lease:

 
(1)
Tenant shall fail to make any payment owed by Tenant under this Lease, as and
when due, and such failure is not cured within three (3) days after Tenant
receives written notice from Landlord specifying such failure.  At Landlord's
election, any such notice shall be concurrent with, and not in addition to, any
notice required under Section 1161 of the California Code of Civil Procedure;

 
(2)
Tenant shall fail to observe, keep or perform any of the terms, covenants,
agreements or conditions under this Lease that Tenant is obligated to observe or
perform, other than that described in subsection (1) above, for a period of
thirty (30) days after Tenant receives written notice from Landlord of said
failure; provided, however, that if the nature of Tenant's default is such that
more than thirty (30) days are reasonably required for its cure, then Tenant
shall not be deemed to be in default under this Lease if Tenant shall commence
the cure of such default within said thirty (30) day period and diligently
prosecute the same to completion within such time period as is reasonably needed
but not to exceed ninety (90) days from the date of Landlord's notice.  At
Landlord's election, any such notice from Landlord shall be concurrent with, and
not in addition to, any notice required under Section 1161 of the California
Code of Civil Procedure;

 
(3)
Tenant shall (i) make any general arrangement or assignment for the benefit of
creditors; (ii) become a "debtor" as defined in 11 U.S.C. Section 101 or any
successor statute thereto (unless, in case of a petition filed against Tenant,
the same is dismissed within 60 days); (iii) suffer the appointment of a trustee
or receiver to take possession of substantially all of Tenant's assets located
at the Premises or of Tenant's interest in this Lease, where possession is not
restored to Tenant within 30 days; or (iv) suffer the attachment, execution or
other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where such seizure is not
discharged within 30 days.  The provisions of this subparagraph 24(3) shall also
apply to any Guarantor of this Lease.  However, in the event that any provision
of this subparagraph is contrary to any applicable law, such provision shall be
of no force or effect; or

 
(4)
Tenant shall vacate or abandon the Premises at any time during the Lease Term
(except that Tenant may vacate so long as it pays Rent, provides an on site
security guard during normal business hours from Monday through Friday, and
otherwise performs its obligations hereunder).

 
25.
LANDLORD'S REMEDIES AND RIGHTS

 
A.
Termination of Lease.  In case of an Event of Default by Tenant, Landlord shall
have the right, in addition to all other rights available to Landlord under this
Lease or now or hereafter permitted by law or in equity, to terminate this Lease
by providing Tenant with a notice of termination.  Upon termination, Landlord
may recover any damages proximately caused by Tenant's failure to perform under
this Lease, or which are likely in the ordinary course of business to be
incurred, including any amount expended or to be expended by Landlord in an
effort to mitigate damages, as well as any other damages which Landlord is
entitled to recover under any statute now or hereafter in effect.  Landlord's
damages include, without limitation, the following:

 
(1)
the worth at the time of the award of any unpaid Rent which had been earned at
the time of termination;

 
(2)
the worth at the time of the award of the amount by which the unpaid Rent which
would have been earned after termination until the time of the award exceeds the
amount of the loss of such Rent that Tenant proves could have been reasonably
avoided; and

 
(3)
the worth at the time of the award of the amount by which the unpaid Rent for
the balance of the term after the time of the award exceeds the amount of the
loss of such Rent that Tenant proves could have been reasonably avoided.

As used in subparagraphs (1) and (2) above, the "worth at the time of award"
shall be determined by allowing interest at the maximum rate of interest
permitted by applicable law.  As used in subparagraph (3), the "worth at the
time of award" shall be determined by discounting to present value such amount
at one percent (1%) more than the discount rate of the Federal Reserve Bank in
San Francisco in effect at the time of the award.

 
B.
Continuation of Lease.  In accordance with California Civil Code Section 1951.4
(or any successor statute), Tenant acknowledges that in the event Tenant has
breached this Lease and abandoned the Premises, this Lease shall continue in
effect for so long as Landlord does not terminate Tenant's right to possession,
and Landlord may enforce all its rights and remedies under this Lease, including
the right to recover the Rent as it becomes due under this Lease.  Acts of
maintenance or preservation or efforts to relet the Premises or the appointment
of a receiver upon initiative of Landlord to protect Landlord's interest under
this Lease shall not constitute a termination of Tenant's right to possession.

 
C.
Right of Entry.  In case of an Event of Default by Tenant, Landlord shall also
have the right, with or without terminating this Lease, to enter the Premises
and remove all persons and personal property from the Premises, such property
being removed and stored in a public warehouse or elsewhere at Tenant's sole
cost and expense for at least thirty (30) days, and after such thirty (30) day
period, Landlord shall have the right to discard or otherwise dispose of such
property in accordance with California law.  No removal by Landlord of any
persons or property in the Premises shall constitute an election to terminate
this Lease.  Such an election to terminate may only be made by Landlord in
writing, or decreed by an arbitrator or a court of competent
jurisdiction.  Landlord's right of entry shall include the right to remodel the
Premises and relet the Premises.  All costs incurred in such entry and reletting
shall be paid by Tenant.  Rents collected by Landlord from any other tenant
which occupies the Premises shall be offset against the amounts owed to Landlord
by Tenant.  Tenant shall be responsible for any amounts not recovered by
Landlord from any other tenant which occupies the Premises.  Any payments made
by Tenant shall be credited to the amounts owed by Tenant in the sole order and
discretion of Landlord, irrespective of any designation or request by
Tenant.  No entry by Landlord shall prevent Landlord from later terminating this
Lease by written notice.

Exhibit 10.3
 
12

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D.
Remedies.  Tenant hereby waives, for itself and all persons claiming by, through
or under Tenant, all rights and privileges which it might have under any present
or future law to redeem the Premises or to continue this Lease after being
legally dispossessed or ejected from the Premises.  The rights and remedies of
Landlord set forth in this Lease are not exclusive, and Landlord may exercise
any other right or remedy available to it under this Lease, at law or in equity.

 
26.
DESTRUCTION.  In the event the Premises are destroyed in whole or in part from
any cause, except damage and destruction caused from vandalism or accident for
which Tenant is responsible for under Paragraph 12, Landlord may, at its option:

 
(a)
Rebuild or restore the Premises to their condition prior to the damage or
destruction, or

 
(b)
Terminate this Lease, provided that the Premises is damaged to the extent of
thirty-three (33%) of the replacement cost thereof or to any extent if (i) the
damage is not covered by insurance, and/or (ii) the damage occurs during the
last twelve (12) months of the Lease Term.

Landlord shall give Tenant notice in writing within thirty (30) days from the
destruction of the Premises of its election to either rebuild and restore them,
or to terminate this Lease.  In the event Landlord agrees to rebuild or restore
the Premises, Landlord shall do so promptly at its expense.  Unless such damage
is caused by Tenant or Tenant's agents, employees or contractors, Tenant shall
be entitled to a reduction in Rent while such repair is being made in the
proportion that the area of the Premises rendered untenantable by such damage
bears to the total area of the Premises.  If Landlord initially estimates that
the rebuilding or restoration will exceed 180 days or if Landlord does not
complete the rebuilding or restoration within one hundred eighty (180) days
following the date of destruction (such period of time to be extended for delays
caused by the fault or neglect of Tenant or because of Acts of God, acts of
public agencies, labor disputes, strikes, fires, freight embargoes, rainy or
stormy weather, inability to obtain materials, supplies or fuels, acts of
contractors or subcontractors, or delay of the contractors or subcontractors due
to such causes or other contingencies beyond the control of Landlord), then
Tenant shall have the right to terminate this Lease by giving thirty (30) days
prior written notice to Landlord.  Notwithstanding anything herein to the
contrary, Landlord's obligation to rebuild or restore shall not include
restoration of Tenant's trade fixtures, equipment, (including telecommunication
equipment, whether or not located within the Premises), merchandise, or any
improvements, alterations, or additions made by Tenant to the Premises, which
Tenant shall forthwith replace or fully repair at Tenant's sole cost and expense
provided this Lease is not cancelled according to the provisions above.

Unless this Lease is terminated pursuant to the foregoing provisions, this Lease
shall remain in full force and effect.  Tenant hereby expressly waives any
statutory rights of termination which may arise by reason of any partial or
total destruction of the Premises.

In the event the damage or destruction of the Premises is caused by Tenant or
Tenant's employees, agents or independent contractors, Tenant shall pay the
deductible portion of Landlord’s insurance proceeds.

 
27.
EMINENT DOMAIN.  If all or any part of the Premises shall be taken by any public
or quasi-public authority under the power of eminent domain or conveyance in
lieu thereof, this Lease shall terminate as to any portion of the Premises so
taken or conveyed on the date when title vests in the condemnor, and Landlord
shall be entitled to any and all payment, income, rent, award, or any interest
therein whatsoever which may be paid or made in connection with such taking or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the
value or any unexpired term of this Lease.  Notwithstanding the foregoing
Paragraph, any compensation specifically awarded to Tenant for loss of business,
Tenant's personal property, moving cost or loss of goodwill, shall be and remain
the property of Tenant.

 
 
If (i) any action or proceeding is commenced for such taking of the Premises or
any part thereof, or if Landlord is advised in writing by any entity or body
having the right or power of condemnation of its intention to condemn the
Premises or any portion thereof, or (ii) any of the foregoing events occur with
respect to the taking of any other space in the Complex, or (iii) any such
spaces are taken or conveyed in lieu of such taking, Landlord shall have the
right to terminate this Lease by giving Tenant written notice thereof within
sixty (60) days of the date of receipt of said written advice, or commencement
of said action or proceeding, taking or conveyance, which termination shall take
place as of the first to occur of the last day of the calendar month next
following the month in which such notice is given or the date on which title to
the Premises shall vest in the condemnor.

 
 
In the event of a partial taking or conveyance of the Premises, if the portion
of the Premises taken or conveyed is so substantial that the Tenant can no
longer reasonably conduct its business, Tenant shall have the privilege of
terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention to do so, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next following the month in which such notice is given, upon payment by
Tenant of the Rent from the date of such taking or conveyance to the date of
termination.

Exhibit 10.3
 
13

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If a portion of the Premises shall be taken by condemnation or conveyance in
lieu thereof and neither Landlord nor Tenant terminate this Lease as provided
herein, this Lease shall continue in full force and effect as to the part of the
Premises not so taken or conveyed, and the Rent herein shall be apportioned as
of the date of such taking or conveyance so that thereafter the Rent to be paid
by Tenant shall be in the ratio that the area of the portion of the Premises not
so taken or conveyed bears to the total area of the Premises prior to such
taking.

 
28.
SALE OR CONVEYANCE BY LANDLORD.  In the event of a sale or conveyance of the
Complex or any interest therein, by any owner of the reversion then constituting
Landlord, the transferor shall thereby be released from any further liability
upon any of the terms, covenants or conditions (express or implied) herein
contained in favor of Tenant, and in such event, insofar as such transfer is
concerned, Tenant agrees to look solely to the responsibility of the successor
in interest of such transferor in and to the Complex and this Lease.  This Lease
shall not be affected by any such sale or conveyance, and Tenant agrees to
attorn to the successor in interest of such transferor.

 
29.
ATTORNMENT TO LENDER OR THIRD PARTY.  In the event the interest of Landlord in
the Complex is encumbered by mortgage or deed of trust, and such interest is
acquired by the lender or any third party through judicial foreclosure,
non-judicial foreclosure, or conveyance in lieu thereof, Tenant hereby agrees to
attorn to such purchaser or transferee and to recognize such purchaser or
transferee as the landlord under this Lease.  In the event the lien of the deed
of trust securing the loan from a lender to Landlord is prior and paramount to
the Lease, this Lease shall nonetheless continue in full force and effect for
the remainder of the unexpired term hereof, at the same rental herein reserved
and upon all the other terms, conditions and covenants herein contained.

 
30.
HOLDING OVER.  Any holding over by Tenant after expiration or other termination
of the Lease Term shall not constitute a renewal of the Lease or give Tenant any
rights to the Premises except as expressly provided in this Lease.  Any holding
over after the expiration or other termination of the Lease Term, with the prior
written consent of Landlord, shall be construed to be a tenancy from month to
month, on the same terms and conditions herein specified insofar as applicable
except that the monthly Basic Rent shall be increased to an amount equal to one
hundred fifty (150%) percent of the monthly Basic Rent required during the last
month of the Lease Term.

 
31.
CERTIFICATE OF ESTOPPEL.  Tenant shall, within ten (10) days after written
notice from Landlord, at any time, execute, acknowledge and deliver to Landlord
a statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any; (ii)
acknowledging that there are not, to Tenant’s knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults, if any are claimed;
and (iii) certifying to such other matters concerning the Premises, the Lease or
Tenant's tenancy as Landlord may request.  Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises.  Tenant’s failure to deliver such statement within such time shall be
conclusive upon Tenant that this Lease is in full force and effect, without
modification except as may be represented by Landlord, that there are no uncured
defaults in Landlord’s performance, and that not more than one month’s Rent has
been paid in advance.

 
32.
CONSTRUCTION CHANGES.  It is understood that the description of the Premises and
the location of ductwork, plumbing and other facilities therein are subject to
such minor changes as Landlord or Landlord's architect determines to be
desirable in the course of construction of the Premises, and no such changes, or
any changes in plans for any other portions of the Premises or the Complex shall
affect this Lease or entitle Tenant to any reduction of Rent hereunder or result
in any liability of Landlord to Tenant.  Landlord does not guarantee the
accuracy of any drawings supplied to Tenant and verification of the accuracy of
such drawings rests with Tenant.

 
33.
RIGHT OF LANDLORD TO   PERFORM.  All terms, covenants and conditions of this
Lease to be performed or observed by Tenant shall be performed or observed by
Tenant at Tenant's sole cost and expense and without any reduction of Rent.  If
Tenant shall fail to pay Rent, required to be paid by it hereunder, or shall
fail to perform any other term or covenant required to be performed by it
hereunder, and such failure shall continue for five (5) days after written
notice thereof from Landlord, Landlord, without waiving or releasing Tenant from
any obligation of Tenant hereunder, may, but shall not be obligated to, make any
such payment or perform any such other term or covenant on Tenant's part to be
performed.  All sums so paid by Landlord and all necessary costs of such
performance by Landlord together with interest thereon at the rate of interest
specified in Paragraph 44 below, shall be paid to Landlord on demand as
Additional Rent, and Landlord shall have (in addition to any other right or
remedy of Landlord) the same rights and remedies in the event of nonpayment by
Tenant of Rent hereunder.

Exhibit 10.3
 
14

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34.
ATTORNEY'S FEES.  In the event that either Landlord or Tenant should bring suit
or become involved in any proceeding for the possession of the Premises, for the
recovery of any sum due under this Lease, or because of the breach of any
provision of this Lease, or for any other relief against the other party
hereunder, then all costs and expenses, including reasonable attorneys' fees,
incurred by the prevailing party therein shall be paid by the other party, which
obligation on the part of the other party shall be deemed to have accrued on the
date of the commencement of such action or proceeding and shall be enforceable
whether or not the action or proceeding is prosecuted to judgment.  Should
Landlord be named as a defendant in any suit brought against Tenant in
connection with or arising out of Tenant's occupancy hereunder, Tenant shall pay
to Landlord its costs and expenses incurred in such suit, including a reasonable
attorneys' fees.

 
35.
WAIVER.  No covenant, term or condition or the breach thereof shall be deemed
waived, except by written consent of the party against whom the waiver is
claimed, and any waiver of the breach of any covenant, term or condition shall
not be deemed to be a waiver of any other covenant, term or condition or any
subsequent failure of the party failing to perform or observe the same or any
other such term, covenant or condition.  Acceptance by Landlord of any
performance by Tenant after the time the same shall have become due shall not
constitute a waiver by Landlord of the breach or default of any covenant, term
or condition unless otherwise expressly agreed to by Landlord in writing.

 
36.
NOTICES.  All notices, demands, requests, advises or designations (collectively
"Notices") which may be or are required to be given by either party to the other
party hereunder shall be in writing.  All Notices shall be sufficiently given,
made or delivered if (i) to Tenant, personally served on Tenant by leaving the
same at the Premises, or (ii) to Landlord, if personally served on a Landlord
Owner (defined below) executing this Lease.  Notice shall also be sufficiently
given, made or delivered if sent by (a) postage prepaid United States mail or
overnight courier, addressed as specified in Paragraph 1.L, or (b) facsimile
transmission to the numbers specified in Paragraph 1.L, with confirming copy
sent by United States mail.  Each Notice referred to in this Paragraph shall be
deemed received on the date of the personal service, the next business day after
sending via overnight courier or facsimile transmission, or on the third (3rd)
day after mailing thereof by United States mail, postage prepaid, as the case
may be.

 
37.
EXAMINATION OF LEASE.  Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant.

 
38.
DEFAULT BY LANDLORD.  Landlord shall not be in default unless Landlord fails to
perform obligations required of Landlord within a reasonable time, but in no
event earlier than thirty (30) days after written notice by Tenant to Landlord
and to the holder of any mortgage or deed of trust covering the Premises whose
name and address shall have previously been furnished to Tenant in writing,
specifying wherein Landlord has failed to perform such obligations; provided,
however, that if the nature of Landlord's obligations is such that more than
thirty (30) days are required for performance, then Landlord shall not be in
default if Landlord commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion.

 
39.
AUTHORITY.  If Tenant is a corporation (or other entity) each individual
executing this Lease on behalf of said corporation (or other entity) represents
and warrants that he or she is duly authorized to execute and deliver this Lease
on behalf of said corporation (or other entity) in accordance with the by-laws
of said corporation (or in accordance with the agreement of such other entity)
and that this Lease is binding upon said corporation (or other entity) in
accordance with its terms.  Tenant shall, within sixty (60) days after execution
of this Lease, deliver to Landlord a certified copy of the resolution of the
Board of Directors or other governing members of said corporation (or other
entity) authorizing or ratifying the execution of this Lease.

 
40.
LIMITATION OF LIABILITY.  In consideration of the benefits accruing hereunder,
Tenant and all successors and assigns covenant and agree that, in the event of
any actual or alleged failure, breach or default hereunder by Landlord:

 
(i)
the sole and exclusive remedy and source of recovery for any judgment or award
shall be against Landlord's interest in the Premises;

 
(ii)
no partner, member, shareholder or other owner of Landlord (collectively,
“Landlord Owner”) shall be sued or named as a party in any suit or action
(except as may be necessary to secure jurisdiction of the partnership);

 
(iii)
no service of process shall be made against  Landlord Owner (except as may be
necessary to secure jurisdiction of Landlord);

 
(iv)
no  Landlord Owner shall be required to answer or otherwise plead to any service
of process;

 
(v)
no judgment will be taken against  Landlord Owner;

 
(vi)
any judgment taken against any  Landlord Owner may be vacated and set aside at
any time without hearing;

 
(vii)
no writ of execution will ever be levied against the assets of any  Landlord
Owner;

 
(viii)
these covenants and agreements are enforceable both by Landlord and also by any
Landlord Owner.

Exhibit 10.3
 
15

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Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.

 
41.
BROKERS.  Tenant warrants that it has had dealings with only the real estate
broker(s) or agent(s) specified in Paragraph 1.M in connection with the
negotiation of this Lease and that it knows of no other real estate broker or
agent who is entitled to a commission in connection with this Lease.  Tenant
shall indemnify, defend, protect and hold harmless Landlord and Landlord's
agents, employees and independent contractors from and against any and all
liabilities, losses, costs, expenses and damages (including attorneys' fees and
costs) arising out of any allegations or claim by any third party, other than
the broker(s) specified above, for a commission or fee in connection with the
negotiation of this Lease.

 
42.
SIGNS.  No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside of
the Premises or any exterior windows of the Premises without the prior written
consent of Landlord.  If Tenant does not obtain Landlord's prior written consent
pursuant to the preceding sentence, Landlord shall have the right to remove any
such sign, placard, picture, advertisement, name or notice without notice to and
at the expense of Tenant.  If Tenant is allowed to print or affix or in any way
place a sign in, on, or about the Premises, upon expiration or other sooner
termination of this Lease, Tenant at Tenant's sole cost and expense shall both
remove such sign and repair all damage in such a manner as to restore all
aspects of the appearance of the Premises to the condition prior to the
placement of said sign.

All approved signs or lettering on outside doors shall be printed, painted,
affixed or inscribed at the expense of Tenant or by a person approved of by
Landlord.

Tenant shall not place anything or allow anything to be placed near the glass of
any window, door partition or wall which may, in Landlord's judgment, appear
unsightly from outside the Premises.

 
43.
HAZARDOUS MATERIALS.

 
A.
Definitions.  As used herein, the term “Hazardous Material” shall mean any
substance or material which has been determined by any state, federal, or local
government authority to be capable of posing a risk of injury to health, safety
or property including all of those materials and substances designated as
hazardous or toxic by the Environmental Protection Agency, the California Water
Quality Control Board, the Department of Labor, the California Department of
Industrial Relations, the Department of Transportation, the Department of
Agriculture, the Department of Human Services, the Food and Drug Agency or any
other governmental agency which regulates hazardous or toxic substances in the
environment.  Without limiting the generality of the foregoing, the term
“Hazardous Material” shall include (i) all of those materials and substances
listed as hazardous or toxic in Sections 66261.1 through 66261.126 of Title 22
of the California Code of Regulations, Article  4, Chapter 11, as the same shall
be amended from time to time, or any other federal, state or local statute, law,
ordinance, resolution, code, rule, regulation, order or decree regulating,
relating to, or imposing liability or standards of conduct concerning, any
hazardous, toxic or dangerous waste, substance or material as now or at any time
hereafter in effect, (ii) any substance, product, waste or other material of any
nature whatsoever which may give rise to liability under any statutory or common
law theory based on negligence, trespass, intentional tort, nuisance or strict
liability or under any reported decisions of a state or federal court, or (iii)
petroleum or crude oil other than petroleum and petroleum products which are
contained within regularly operated motor vehicles.

 
B.
Restriction on Use.  Tenant shall not cause or permit any Hazardous Material to
be used, generated, released, discharged, transported to or from, stored, or
disposed of in or about the Premises, the Complex, or any other land or
improvements in the vicinity of the Premises or the Complex, without the prior
written consent of Landlord, which consent may be withheld in Landlord's sole
and absolute discretion.  However, subject to the terms and conditions set forth
herein, Landlord agrees that so long as the original party named herein as
Tenant remains the Tenant under this Lease, and so long as no uncured Event of
Default exists under this Lease, Tenant shall be permitted to use and store in
the Premises only the substances listed on Exhibit E attached hereto (however,
the inclusion of Exhibit E shall in no way be deemed to create any obligation on
Landlord's part to review the list of Hazardous Materials for conformity to
laws).  Without limiting the generality of the foregoing, Tenant, at its sole
cost and expense, shall comply with all laws relating to the storage, use,
generation, release, transportation and disposal of Hazardous Materials.  If the
presence of any Hazardous Material on the Premises caused or permitted by Tenant
results in contamination of the Premises, the Complex, or any nearby premises,
Tenant, at its sole cost and expense, shall promptly take all actions necessary
to return the same to the condition existing prior to such contamination.

Tenant shall indemnify, defend, protect and hold harmless Landlord and
Landlord's agents, employees and independent contractors from and against any
and all claims, judgments, damages (including, without limitation, punitive
damages), losses, penalties, fines, demands, liabilities (including strict
liability), encumbrances, liens, costs and expenses of investigation and defense
of any claim, including, without limitation, reasonable attorneys' fees and
disbursements and consultants' fees, arising out of, relating to or resulting
from any storage, use, generation, discharge, treatment, transportation, release
or disposal by Tenant, or Tenant's agents, employees or independent contractors,
of any Hazardous Material upon, about, above or beneath the Premises, the
Complex or any nearby premises.  This indemnity shall survive the expiration or
earlier termination of this Lease.  Tenant shall not suffer any lien to be
recorded against the Premises or the Complex as a consequence of a Hazardous
Material, including any so-called state, federal or local “super fund” lien
related to the “clean up” of a Hazardous Material in or about the Premises, the
Complex or any other premises.

Exhibit 10.3
 
16

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C.
Compliance.  Tenant shall immediately notify Landlord of any inquiry, test,
investigation, or enforcement proceeding by or against Tenant or the Premises
concerning a Hazardous Material.  Tenant acknowledges that Landlord, as the
owner of the Premises, at its election, shall have the sole right, at Tenant’s
expense, to negotiate, defend, approve and appeal any action taken or order
issued with regard to a Hazardous Material by an applicable governmental
authority.  Landlord shall have the right to appoint a consultant, at Tenant’s
expense, to conduct an investigation to determine whether any Hazardous Material
is being used, stored and disposed of in an appropriate manner.  Tenant, at its
expense, shall comply with all recommendations of the consultant.

 
D.
Certification Upon Termination of Lease.  Upon the expiration or earlier
termination of the Lease, Tenant, at its sole cost, shall remove all Hazardous
Materials from the Premises and shall provide a certificate to Landlord at
Landlord’s request certifying that there is no contamination of soil in or about
the Premises and that there is no other contamination of Hazardous Materials in
the Premises.  If Tenant fails to so surrender the Premises, Tenant shall, in
addition to its obligations under Paragraph 43.B above, indemnify, defend,
protect and hold harmless Landlord and Landlord's agents, employees and
independent contractors from and against any and all damages arising out of,
related to or resulting from Tenant’s failure to surrender the Premises as
required by this Paragraph, including without limitation any claims or damages
in connection with the condition of the Premises such as damages occasioned by
the inability to relet the Premises or a reduction in the fair market and/or
rental value of the Premises by reason of the existence of any Hazardous
Material upon, about, above or beneath the Premises, the Complex or any nearby
premises.

 
E.
Clean-up Activities.  If any action is required to be taken by a governmental
authority to clean-up Hazardous Materials from the Premises and such action is
not completed prior to the expiration or earlier termination of the Lease,
Tenant shall be deemed to have impermissibly held over until such time as such
required action is completed, and in addition to the requirements of Paragraph
30, Landlord shall be entitled to all damages directly or indirectly incurred in
connection with such holding over, including without limitation, damages
occasioned by the inability to relet the Premises or a reduction of the fair
market and/or rental value of the Premises.

 
44.
INTEREST.   Any sum accruing to Landlord under the provisions of this Lease
which shall not be paid by Tenant within thirty (30) days after such sum becomes
due, shall bear interest from the expiration of such 30 day period, until paid,
at the rate of twelve percent (12%) per annum, or the maximum rate then
permitted under applicable law, whichever is less.

 
45.
MISCELLANEOUS AND GENERAL PROVISIONS.

 
A.
Use of Building Name.  Tenant shall not, without the written consent of
Landlord, use the name of the Building for any purpose other than as the address
of the business conducted by Tenant in the Premises.

 
B.
Governing Law; Partial Invalidity.  This Lease shall in all respects be governed
by and construed in accordance with the laws of the State of California.   If
any provision of this Lease shall be invalid, unenforceable or ineffective for
any reason whatsoever, all other provisions hereof shall be and remain in full
force and effect.

 
C.
Definitions; Binding Effect.  The term "Premises" includes the space leased
hereby and any improvements now or hereafter installed therein or attached
thereto.  The term "Landlord" or any pronoun used in place thereof includes the
plural as well as the singular and the successors and assigns of Landlord.  The
term "Tenant" or any pronoun used in place thereof includes the plural as well
as the singular and individuals, firms, associations, partnerships and
corporations, and their and each of their respective heirs, executors,
administrators, successors and permitted assigns, according to the context
hereof, and the provisions of this Lease shall inure to the benefit of and bind
such heirs, executors, administrators, successors and permitted assigns.

 
 
The term "person" includes the plural as well as the singular and individuals,
firms, associations, partnerships and corporations.  Words used in any gender
include other genders.  If there be more than one Tenant, the obligations of
Tenant hereunder are joint and several.  The paragraph headings of this Lease
are for convenience of reference only and shall have no effect upon the
construction or interpretation of any provision hereof.

 
D.
Time of the Essence.  Time is of the essence of this Lease and of each and all
of its provisions.

 
E.
Quitclaim of Leasehold Interest.  At the expiration or earlier termination of
this Lease, Tenant shall execute, acknowledge and deliver to Landlord, within
ten (10) days after written demand from Landlord to Tenant, any quitclaim deed
or other document required by any reputable title company licensed to operate in
the State of California, to remove the cloud or encumbrance created by this
Lease from the real property of which Tenant's Premises are a part.

 
F.
Entire Agreement.  All exhibits, riders and attachments referenced in this Lease
are hereby incorporated into this Lease.  This instrument along with any
exhibits, riders and attachments hereto constitutes the entire agreement between
Landlord and Tenant relative to the Premises and this agreement and the exhibits
and attachments may be altered, amended or revoked only by an instrument in
writing signed by both Landlord and Tenant.  Landlord and Tenant hereby
acknowledge that neither party has relied upon any representation concerning the
Premises that is not set forth in this Lease and agree that all prior or
contemporaneous oral agreements between and among themselves and their agents or
representatives relative to the leasing of the Premises are merged in or revoked
by this agreement.

 
G.
Recording of Lease.  Neither Landlord nor Tenant shall record this Lease or a
short form memorandum hereof without the consent of the other.

Exhibit 10.3
 
17

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H.
Amendments Required by Lender.  Tenant further agrees to execute any amendments
required by a lender to enable Landlord to obtain financing, so long as Tenant's
rights hereunder are not substantially affected.

 
I.
Air Rights Retained by Landlord.  Tenant covenants and agrees that no diminution
or shutting off of light, air or view by any structure which may be hereafter
erected (whether or not by Landlord) shall in any way affect this Lease, entitle
Tenant to any reduction of Rent hereunder or result in any liability of Landlord
to Tenant.

 
J.
Early Occupancy.  If Tenant occupies the Premises prior to the Commencement
Date, such occupancy shall be subject to all of the provisions of this Lease,
and Tenant shall pay Basic Rent, Additional Rent and all other charges specified
in this Lease for the early occupancy period.  Early occupancy of the Premises
by Tenant shall not advance the termination date of this Lease.

 
K.
Options Personal to Tenant.  Any Options  shall (i) be personal to the original
Tenant executing this Lease, (ii) not be assignable and (iii) not be separated
from this Lease in any manner, whether by reservation or otherwise.  Any such
Option may be exercised only by the original Tenant executing this Lease while
occupying the Premises and provided that such Option shall be exercised in good
faith without the intent of thereafter assigning this Lease or subletting the
Premises, or any portion thereof, and may not be exercised or assigned,
voluntarily or involuntarily, by or to any other person or entity.

IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this Lease
as of the day and year first above written.
 
LANDLORD:  
GEOMAX
 
TENANT:  
SIERRA MONITOR CORPORATION
 
a California General  Partnership
   
a California Corporation

 
By:
Max Gahrahmat
 
By:
Gordon R. Arnold
           
/s/ Max Gahrahmat
   
/s/ Gordon R. Arnold
 
Signature
   
Signature
           
Partner
   
President
 
Title of Signatory
   
Title of Signatory

 
LANDLORD:
  
 
TENANT:
 

 
By:
George L. Quinn Jr.
 
By:
Gordon R. Arnold
           
/s/ George L. Quinn Jr.
   
/s/ Gordon R. Arnold
 
Signature
   
Signature
           
Partner
   
President
 
Title of Signatory
   
Title of Signatory

Exhibit 10.3
 
18

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EXHIBIT A

LEGAL DESCRIPTION OF COMPLEX

The real property referred to in this Lease as the "Complex" shall mean and
include all that certain real property situated in the County of Santa Clara
State of California, more particularly described as follows:

Parcel 3, as shown on that certain map entitled “Parcel Map”, which map was
filed for record in the Office of the Reorder of the County of Santa Clara State
of California on November 28,1978 in Book 431 of Maps, at page(s) 2 and 3.

Exhibit 10.3
 
19

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EXHIBIT B

SITE PLAN OF COMPLEX AND BUILDING

[Graphic Omitted ]

Exhibit 10.3
 
20

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EXHIBIT D

ACKNOWLEDGMENT OF COMMENCEMENT

Landlord: GEOMAX
Tenant: SIERRA MONITOR CORPORATION
Complex: Tarob Court Business Park
Premises: 1991 Tarob Court Milpitas, CA

For the Lease dated April 4th, 2003, the undersigned hereby certifies:

 
I.
That the undersigned Tenant occupies the
above-described  Premises  consisting  of  approximately 15,788 square feet.

 
II.
That the initial Lease term commenced on 5/01, 2003 and  will terminate on 4/30,
2009

 
III.
That Tenant's obligation to pay monthly Basic Rent in the amount of $ 26,149
commenced or will commence on  5/01, 2003.

 
IV.
That a security deposit of $40,000.00 has been paid by Tenant to Landlord.

 
V.
That all construction to be performed by Landlord is complete and has been
accepted by Tenant.

Dated as of this 14 day of April, 2003.
 
LANDLORD:  
GEOMAX
 
TENANT:  
SIERRA MONITOR CORPORATION
 
a California General  Partnership
   
a California Corporation

 
By:
Max Gahrahmat
 
By:
Gordon R. Arnold
           
/s/ Max Gahrahmat
   
/s/ Gordon R. Arnold
 
Signature
   
Signature
           
Partner
   
President
 
Title of Signatory
   
Title of Signatory

 
LANDLORD:
   
TENANT:
 

 
By:
George L. Quinn Jr.
 
By:
Gordon R. Arnold
           
/s/ George L. Quinn Jr.
   
/s/ Gordon R. Arnold
 
Signature
   
Signature
           
Partner
   
President
 
Title of Signatory
   
Title of Signatory

Exhibit 10.3
 
21

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EXHIBIT E

HAZARDOUS MATERIALS

Subject to the terms and conditions set forth in Paragraph 43 of the Lease, so
long as the original party named therein as Tenant remains the Tenant under the
Lease, and so long as no uncured Event of Default exists under the Lease, Tenant
shall be permitted to use and store in the Premises only the substances listed
below.  If no items are listed, then Tenant shall not be entitled to use or
store any Hazardous Material on or about the Premises.

Chemical Inventory Listing

Hazard Class
 
Physical State
 
*Manner of Storage
 
** Note
             
Non Flammable Gas
 
Gas
 
E
   
Flammable Gas
 
Gas
 
E
   
Oxidizer
 
Gas
 
E
   
Poison
 
Liquid
 
A
   
N/A
 
Liquid
 
A
 
1
N/A
 
Liquid
 
A
 
2
N/A
 
Liquid
 
A
 
3
N/A
 
Liquid
 
A
 
4
Flammable
  
Liquid
  
A
  
5

*Indicates as:     E: Pressurized Vessels
A: Container on Shelf

** Note

1 – Various aerosol canisters (quart) of urethane, acrylic
2 – Cleaning fluids (quart and smaller) i.e. Household ammonia, soaps
3 – Adhesives and gules in tubes and pint containers
4- Blue line activator
5 – Laboratory chemicals including alcohols, acids, bases (pint containers)

Exhibit 10.3
 
22

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[ex10-3pg01.jpg]

Exhibit 10.3
 
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Exhibit 10.3
 
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[ex10-3pg03.jpg]

Exhibit 10.3
 
25

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Exhibit 10.3
 
26

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Exhibit 10.3
 
27

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