Exhibit 10.1

 

OFFICE LEASE

 

BY AND BETWEEN

 

SJ PLAZA, LLC,

A Delaware limited liability company,

As Landlord

 

And

 

HERITAGE BANK OF COMMERCE,

as Tenant

 

For Leased Premises at Suite 300, 150 Almaden Blvd., San Jose, CA

 

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TABLE OF CONTENTS

 

ARTICLE 1

SALIENT LEASE TERMS

1

ARTICLE 2

ADDITIONAL DEFINITIONS

3

ARTICLE 3

PREMISES AND COMMON AREAS

8

ARTICLE 4

TERM AND POSSESSION

9

ARTICLE 5

MINIMUM MONTHLY RENT

10

ARTICLE 6

ADDITIONAL RENT

10

ARTICLE 7

ACCORD AND SATISFACTION

12

ARTICLE 8

SECURITY DEPOSIT

12

ARTICLE 9

USE

13

ARTICLE 10

COMPLIANCE WITH LAWS AND REGULATIONS

13

ARTICLE 11

SERVICE AND EQUIPMENT

15

ARTICLE 12

ALTERATIONS

18

ARTICLE 13

PROPERTY INSURANCE

19

ARTICLE 14

INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION

20

ARTICLE 15

LIABILITY INSURANCE

21

ARTICLE 16

INSURANCE POLICY REOUIREMENTS & INSURANCE DEFAULTS

22

ARTICLE 17

FORFEITURE OF PROPERTY AND LESSOR’S LIEN

22

ARTICLE 18

MAINTENANCE AND REPAIRS

22

ARTICLE 19

DESTRUCTION

23

ARTICLE 20

CONDEMNATION

24

ARTICLE 21

ASSIGNMENT AND SUBLETTING

25

ARTICLE 22

ENTRY BY LESSOR

29

ARTICLE 23

SIGNS

29

ARTICLE 24

DEFAULT

29

ARTICLE 25

REMEDIES UPON DEFAULT

30

ARTICLE 26

BANKRUPTCY

32

ARTICLE 27

SURRENDER OF LEASE

33

ARTICLE 28

LANDLORD’S EXCULPATION

33

ARTICLE 29

ATTORNEYS’ FEES

33

ARTICLE 30

NOTICES

33

ARTICLE 31

SUBORDINATION AND FINANCING PROVISIONS

34

ARTICLE 32

ESTOPPEL CERTIFICATES

34

ARTICLE 33

MISCELLANEOUS PROVISIONS

35

 

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OFFICE LEASE

 

THIS OFFICE LEASE (“Lease”) is entered and dated for reference purposes only as
April 13, 2000, by and between “Landlord” and “Tenant” (as such terms are
defined below).

 

ARTICLE 1 SALIENT LEASE TERMS

 

In addition to the terms defined throughout this Lease, the following salient
terms shall have the following meanings when referred to in this Lease:

 

1.1

Rent Payment Address:

SJ PLAZA, LLC

 

100 Park Center Plaza, Suite 425

 

 

San Jose, CA 95113

 

 

 

1.2

“Landlord” and Notice Address:

SJ Plaza, LLC,

 

c/o Divco West Group, LLC

 

 

100 Park Center Plaza, Suite 425

 

 

San Jose, CA 95113

 

 

Attn.: Property Manager

 

 

 

 

 

With a copy to:

Divco West Group, LLC

 

 

 

150 Almaden Blvd., Suite 700

 

 

 

San Jose, CA 95113

 

 

 

Attention: Asset Manager

 

 

 

1.3

“Tenant” and Notice Address:

Heritage Bank of Commerce

 

150 Almaden Blvd.

 

 

San Jose, CA 95113

 

 

Attn: Kenneth Silveira, Executive Vice President

 

 

 

1.4

“Leased Premises:”

Suite 300, 150 Almaden Blvd., San Jose, CA 95113,

 

 

comprising approximately 12,824 square feet of Rentable Area.

 

 

 

1.5

“Building:”

That building located at 150 Almaden Blvd., San Jose, California, containing
approximately 201,748 square feet of Rentable Area, which shall be deemed the
actual square footage of Rentable Area in the Building.

 

 

 

1.6

“Complex:”

Park Center Plaza, consisting of the Building and those certain office buildings
located at Park Center Plaza, San Jose, California, and the Common Areas
(hereinafter defined) together with the parcel or parcels in common ownership
therewith and/or contiguous thereto, as outlined in Exhibit A attached hereto.

 

 

 

1.7

Estimated Commencement Date:

April 13, 2000 (“Estimated Commencement Date”)

 

 

 

1.8

“Term:”

From and after the Commencement Date (hereinafter defined) through February 28,
2010.

 

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1.9

“Minimum Monthly Rent:”

(A)

 

Time Period

 

Minimum Monthly Rent

 

 

 

 

 

 

 

 

 

 

 

 

Commencement Date though 2/28/01

 

$

42,319.20

 

 

 

 

 

3/1/01 through 2/28/02

 

$

43,588.78

 

 

 

 

 

3/1/02 through 2/28/03

 

$

44,896.44

 

 

 

 

 

3/1/03 through 2/29/04

 

$

46,243.33

 

 

 

 

 

3/1/04 through 2/28/05

 

$

47,630.63

 

 

 

 

 

3/1/05 through 2/28/06

 

$

49,059.55

 

 

 

 

 

3/1/06 through 2/28/07

 

$

50,531.34

 

 

 

 

 

3/1/07 through 2/29/08

 

$

52,047.28

 

 

 

 

 

3/1/08 through 2/28/09

 

$

53,608.70

 

 

 

 

 

3/1/09 through 2/28/10

 

$

55,216.96

 

 

 

 

 

 

Notwithstanding the foregoing, during the first six (6) months from and after
the Commencement Date, Tenant shall not be required to pay Minimum Monthly Rent
provided that Tenant complies with the terms of this Lease.

 

 

 

 

 

(B)

 

Advance Rent: -0-

 

 

 

 

 

 

1.10

“Base Year Costs:”

The greater of (i) actual costs in calendar year 2000 for Base Operating Costs,
Base Taxes and Base Insurance, or (ii) the amount of Base Operating Costs, Base
Taxes and Base Insurance as if the Building were one hundred percent (100%)
occupied and operational for the whole of calendar year 2000 in order to make an
adjustment for costs included within Common Area Costs that vary with occupancy
of the Building by tenants (which Base Year Costs shall be calculated separately
for each such category of Base Year Costs).

 

 

 

1.11

“Security Deposit:”

-0-

 

 

 

1.12

“Permitted Use:”

The Leased Premises shall be used solely for general office use, but for no
other use.

 

 

 

1.13

Proportionate Share:

Tenant’s initial Proportionate Share is 6.36% based on the ratio that the
Rentable Area of the Leased Premises (i.e., 12,824 square feet) bears to the
Rentable Area of the Building (i.e., 201,748 square feet).

 

 

 

1.14

Declaration of Restrictions:

As set forth on Exhibit F attached hereto and incorporated herein.

 

 

 

1.15

“Broker:”

None

 

 

 

1.16

“Reciprocal Easement Agreement:”

That certain Grant of Reciprocal Easements and Agreement for Maintenance dated
as of September 22, 1970 and recorded in Book 9072 at Page 22 of the Official
Records of Santa Clara County, California, as amended.

 

 

 

1.17

Contents:

Included as part of this Lease are the following Exhibits and addenda which are
attached hereto and incorporated herein by this reference:

 

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Exhibits:

A - Plan of the Complex

 

 

 

B - Floor Plan of the Leased Premises

 

 

 

C - Work Letter for Construction Obligations

 

 

 

D - Acknowledgment of Commencement Date

 

 

 

E - Rules & Regulations

 

 

 

F - Declaration of Restrictions

 

 

Addendum No. 1

 

ARTICLE 2 ADDITIONAL DEFINITIONS

 

The terms defined in this Article 2 shall, for all purposes of this Lease and
all agreements supplemental hereto, have the meanings herein specified, unless
expressly stated otherwise.

 

“Base Operating Costs” means the Operating Costs for the calendar year set forth
in Section 1.10 hereof.

 

“Base Insurance” means the Insurance Costs for the calendar year set forth in
Section 1.10 hereof.

 

“Base Taxes” means the Taxes for the calendar year set forth in Section 1.10
hereof.

 

“Building” shall mean the structure which contains the Leased Premises.

 

“Commencement Date” shall mean the date Landlord delivers possession of the
Leased Premises to Tenant regardless of the status of the construction of the
Leasehold Improvements and even if Tenant is unable to physically occupy the
Leased Premises at the time due to the construction of the Leasehold
Improvements.

 

“Common Areas” shall mean all areas and facilities outside the Leased Premises
within the exterior boundaries of the parcel of land containing the Building of
which the Leased Premises form a part, together with the exterior plaza and
access areas within the Complex, all as provided and designated by Landlord from
time to time for the general use and convenience of Tenant and of other tenants
of Landlord having the common use of such areas, and their respective authorized
representatives and invitees. Common Areas include, without limitation,
corridors, stairways, elevator shafts, janitor rooms in the Building, the Park
Center Plaza parking garage, the driveways and landscaped areas in the Complex
as generally outlined on Exhibit A attached hereto. Exhibit A is tentative and
Landlord reserves the right to make alterations thereto from time to time.

 

“Insurance Costs” shall mean all premiums and costs and expenses for all
policies of insurance which may be obtained by Landlord in its discretion for
(a) the Leased Premises, Building and the Common Areas of the Complex, or any
blanket policies which include the Building or Complex, covering damage thereto
and loss of rents caused by fire and other perils Landlord elects to cover,
including, without limitation, coverage for earthquakes and floods,
(b) commercial general liability insurance for the benefit of Landlord and its
designees and (c) such other coverage Landlord elects to obtain for the Leased
Premises, Building or Common Areas of the Complex, including, without
limitation, coverage for environmental liability and losses. Notwithstanding
anything to the contrary, Landlord reserves the right to adjust the Base
Insurance Costs if such Base Insurance costs include coverages for perils not
required or elected to be insured by Landlord in the future.

 

“Lease Year” means any calendar year, or portion thereof, following the
commencement hereof, the whole or any part of which period is included within
the Term.

 

“Leased Premises” shall mean the portion of space leased to Tenant hereunder.

 

“Leasehold Improvements” and “Tenant Improvements” shall mean the tenant
improvements, if any, to be constructed by Tenant pursuant to Exhibit C attached
hereto.

 

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“Operating Costs” means the total amounts paid or payable, whether by Landlord
or others on behalf of Landlord, in connection with the ownership, maintenance,
repair, and operations of the Building and the Common Areas of the Complex in
accordance with Landlord’s standard accounting procedures. Since the Complex
consists of multiple buildings, certain Operating Costs may pertain to a
particular building(s) and other Operating Costs to the Complex as a whole (such
as Operating Costs for the Common Areas of the Complex). Operating Costs
applicable to any particular building within the Complex shall be charged to the
building in question whose tenants shall be responsible for payment of their
respective proportionate shares in the pertinent building and other Operating
Costs applicable to the Complex (such as the Common Areas of the Complex) shall
be charged to each building in the Complex (including the Building) with the
tenants in each such building being responsible for paying their respective
proportionate shares in such building of such costs to the extent required under
the applicable leases. Landlord shall in good faith attempt to allocate such
Operating Costs to the buildings (including the Building) and such allocation
shall be binding on Tenant. Operating Costs shall include, but not be limited
to, the aggregate of the amount paid for:

 

(1)   all fuel used in heating and air conditioning of the Building and Common
Areas of the Complex;

 

(2)   the amount paid or payable for all electricity furnished by Landlord to
the Common Areas of the Complex (other than electricity furnished to and paid
for by other tenants by reason of their extraordinary consumption of electricity
and that furnished to the other building in the Complex for which the tenants of
such other building are responsible for such electrical costs);

 

(3)   the cost of periodic relamping and reballasting of lighting fixtures;

 

(4)   the amount paid or payable for all hot and cold water (other than that
chargeable to Tenants by reason of their extraordinary consumption of water and
that furnished to other buildings in the Complex for which the tenants of such
other building are responsible for such water costs);

 

(5)   the amount paid or payable for all labor and/or wages and other payments
including cost to Landlord of workers’ compensation and disability insurance,
payroll taxes, welfare and fringe benefits made to janitors, caretakers, and
other employees, contractors and subcontractors of Landlord (including wages of
the Building manager) involved in the management, operation, maintenance and
repair of the Complex;

 

(6)   painting for exterior walls of the Building and the Common Areas of the
Complex; managerial and administrative expenses; the total charges of any
independent contractors employed in the repair, care, operation, maintenance,
and cleaning of the Building and Common Areas of the Complex;

 

(7)   the amount paid or payable for all supplies occasioned by everyday wear
and tear;

 

(8)   the costs of climate control, window and exterior wall cleaning, telephone
and utility costs of the Building and Common Areas of the Complex;

 

(9)   the cost of accounting services necessary to compute the rents and charges
payable by Tenants and keep the books of the Building and Common Areas of the
Complex;

 

(10)    fees for management, including, without limitation, office rent,
supplies, equipment, salaries, wages, bonuses and other compensation (including
fringe benefits, vacation, holidays and other paid absence benefits) relating to
employees of Landlord or its agents engaged in the management, operation,
repair, or maintenance of the Building and/or Common Areas of the Complex;

 

(11)    fees for legal, accounting (including, without limitation, any outside
audit as Landlord may elect in its sole and absolute discretion), inspection and
consulting services;

 

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(12)    the cost of operating, repairing and maintaining the Building elevators;

 

(13)    the cost of porters, guards and other protection services;

 

(14)    the cost of establishing and maintaining the Building’s directory board;

 

(15)    payments for general maintenance and repairs to the plant and equipment
supplying climate control to the Building and Common Areas of the Complex;

 

(16)    the cost of supplying all services pursuant to Article 11 hereof to the
extent such services are not paid by individual tenants;

 

(17)    amortization of the costs, including repair and replacement, of all
maintenance and cleaning equipment and master utility meters and of the costs
incurred for repairing or replacing all other fixtures, equipment and facilities
serving or comprising the Building and Common Areas of the Complex which by
their nature require periodic or substantial repair or replacement, and which
are not charged fully in the year in which they are incurred, at rates on the
various items determined from time to time by Landlord in accordance with sound
accounting principles;

 

(18)     community association dues, assessments and charges and property
owners’ association dues, assessments and charges which may be imposed upon
Landlord by virtue of any recorded instrument affecting title to the Building;

 

(19)    all costs to upgrade, improve or change the utility, efficiency or
capacity of any utility or telecommunication system serving the Building and the
Common Areas of the Complex; however, to the extent such improvement constitutes
a capital improvement, the cost thereof shall be subject to amortization as
provided below for Capital Costs;

 

(20)    the repair and replacement, resurfacing and/or repaving of any paved
areas, curbs or gutters within the Building or Common Areas of the Complex;
however, to the extent such improvement constitutes a capital improvement, the
cost thereof shall be subject to amortization as provided below for Capital
Costs;;

 

(21)    the repair and replacement of any equipment serving or located within
the Complex; however, to the extent such improvement constitutes a capital
improvement, the cost thereof shall be subject to amortization as provided below
for Capital Costs; and

 

(22)    the cost of any capital improvements and replacements made by Landlord
to the Building or Common Areas of the Complex that constitute a capital
improvement as determined by Landlord in good faith based on property management
practices applied by Landlord in good faith for the following improvements and
replacements: (a) those made after the Commencement Date that are required under
any law, statute, ordinance, rule or regulation or any insurance requirement not
required at the time of the Commencement Date; (b) those made after the
Commencement Date that are undertaken for the protection of the health and
safety of occupants and invitees of the Building or Common Areas of the Complex
or made for the purpose of reducing other Operating Costs; and/or (c) those made
as replacements of improvements and building service equipment when required
because of normal wear and tear and made in the normal course of operating and
maintaining the Building and Common Areas of the Complex in first class
condition (“Capital Costs”).

 

Capital Costs shall be includable in Operating Costs each year only to the
extent of that fraction allocable to the year in question calculated by
amortizing such Capital Cost over the reasonably useful life of the improvement
resulting therefrom, as determined by Landlord in its good faith discretion,
with interest on the unamortized balance at the higher of (i) ten percent (10%)
per annum; or (ii) the interest rate as may have

 

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been paid by Landlord for the funds borrowed for the purpose of performing the
work for which the Capital Costs have been expended, but in no event to exceed
the highest rate permissible by law.

 

Operating Costs shall not include legal or accounting expenses incurred
expressly for negotiating a lease with a particular tenant, or as a result of a
default of a specific tenant, which negotiation or default does not affect the
operation of the Complex.

 

“Proportionate Share” or “Pro Rata Percent” shall be that fraction (converted to
a percentage) the numerator of which is the Rentable Area (hereinafter defined)
of the Leased Premises and the denominator of which is the Rentable Area of the
Building. Tenant’s Proportionate Share as of the commencement of the term hereof
is specified in Section 1.13. Said Proportionate Share shall be recalculated by
Landlord as may be required effective as at the commencement of any period to
which the calculation is applicable in this Lease. Notwithstanding the preceding
provisions of this Section, Tenant’s Proportionate Share as to certain expenses
may be calculated differently to yield a higher percentage share for Tenant as
to certain expenses in the event Landlord permits other tenants in the Building
to directly incur such expenses rather than have Landlord incur the expense in
common for the Building (such as, by way of illustration, wherein a tenant
performs its own janitorial services). In such case Tenant’s proportionate share
of the applicable expense shall be calculated as having as its denominator the
Rentable Area of all floors rentable to tenants in the Building less the
Rentable Area of tenants who have incurred such expense directly. In any case in
which Tenant, with Landlord’s consent, incurs such expenses directly, Tenant’s
proportionate share will be calculated specially so that expenses of the same
character which are incurred by Landlord for the benefit of other tenants in the
Building shall not be prorated to Tenant. Nothing herein shall imply that
Landlord will permit Tenant or any other tenant of the Building to incur any
Operating Costs. Any such permission shall be in the sole discretion of the
Landlord, which Landlord may grant or withhold in its arbitrary judgment.

 

“Real Estate Taxes” or “Taxes” shall mean and include all general and special
taxes, assessments, fees of every kind and nature, duties and levies, charged
and levied upon or assessed by any governmental authority against the parcel
containing the Building and all other improvements on such parcel, including the
various estates in such parcel and the Building and improvements thereon, any
leasehold improvements, fixtures, installations, additions and equipment,
whether owned by Landlord or Tenant or any other tenant; except that it shall
exclude any taxes of the kind covered by Section 6.1 hereof to the extent
Landlord is reimbursed therefor by any tenant in the Building. Real Estate Taxes
shall also include the reasonable cost to Landlord of contesting the amount,
validity, or the applicability of any Taxes mentioned in this Section but only
to the extent of the savings. Further included in the definition of Taxes herein
shall be general and special assessments, license fees, commercial rental tax,
levy, or tax (other than inheritance or estate taxes) imposed by any authority
having the direct or indirect power to tax, as against any legal or equitable
interest of Landlord in the Leased Premises, Building, parcel or in the Complex
or on the act of entering into this Lease or, as against Landlord’s right to
rent or other income therefrom, or as against Landlord’s business of leasing the
Leased Premises, Building, parcel or the Complex, any tax, fee, or charge with
respect to the possession, leasing, transfer of interest, operation, management,
maintenance, alteration, repair, use, or occupancy by Tenant, of the Leased
Premises, Building, parcel or any portion thereof or the Complex, or any tax
imposed in substitution, partially or totally, for any tax previously included
within the definition of Taxes herein, or any additional tax, the nature of
which may or may not have been previously included within the definition of
Taxes. Further, if at any time during the term of this Lease the method of
taxation or assessment of real estate or the income therefrom prevailing at the
time of execution hereof shall be, or has been altered so as to cause the whole
or any part of the Taxes now or hereafter levied, assessed or imposed on real
estate to be levied, assessed or imposed upon Landlord, wholly or partially, as
a capital levy, business tax, fee, permit or other charge, or on or measured by
the Rents received therefrom, then such new or altered taxes, regardless of
their nature, which are attributable to the land, the Building or to other
improvements on the land shall be deemed to be included within the term “Real
Estate Taxes” for purposes of this Section, whether in substitution for, or in
addition to any other Real Estate Taxes, save and except that such shall not be
deemed to include any enhancement of said tax attributable to other income of
Landlord. With respect to any general or special assessments which may be levied
upon or against

 

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the Leased Premises, Building, Complex, or the underlying realty, or which may
be evidenced by improvement or other bonds, and may be paid in annual or
semi-annual installments, only the amount of such installment, prorated for any
partial year, and statutory interest shall be included within the computation of
Taxes for which Tenant is responsible hereunder.

 

The parcel containing the Building is a separate tax parcel that may also
contain other buildings on such parcel. In such event and if the Building and
the buildings and improvements are currently included in the same tax bill and
contain different size and types of improvements, Landlord shall have the right
to allocate the Taxes to each such building in accordance with Landlord’s
reasonable accounting and management principles.

 

Notwithstanding anything to the contrary contained in the foregoing definition
of Real Estate Taxes, Tenant shall not be responsible or liable for the payment
of any state or federal income taxes assessed against Landlord, or any estate,
succession or inheritance taxes of Landlord, or corporation franchise taxes
imposed upon the corporate owner of the fee of the Building.

 

“Rent” “rent” or “rental” means Minimum Monthly Rent and all other sums required
to be paid by Tenant pursuant to the terms of this Lease.

 

“Rentable Area” “Rentable Area” as used in the Lease shall be determined as
follows:

 

(a)          Single Tenant Floor. As to each floor of the Building on which the
entire space rentable to tenants is or will be leased to one tenant, Rentable
Area shall be the entire area bounded by the inside surface of the exterior
glass walls on such floor, including all areas used for elevator lobbies,
corridors, special stairways, special elevators, restrooms, mechanical rooms,
electrical rooms and telephone closets, without deduction for columns and other
structural portions of the Building or vertical penetrations that are included
for the special use of Tenant, but excluding the area contained within the
interior walls of the Building stairs, fire towers, vertical ducts, elevator
shafts, flues, vents, stacks, pipe shafts, and the rentable square footage
described in Paragraph (c) below.

 

(b)          Multi-Tenant Floor. As to each floor of the Building on which space
is or will be leased to more than one tenant, Rentable Area attributable to each
such lease shall be the total of (i) the entire area included within the Leased
Premises covered by such lease, being the area bounded by the inside surface of
any exterior glass walls, the exterior of all walls separating such Leased
Premises from any public corridors or other public areas on such floor, and the
centerline of all walls separating such Leased Premises from other areas leased
or to be leased to other tenants on such floors, (ii) a pro rata portion of the
area within the elevator lobbies, corridors, restrooms, mechanical rooms,
electrical rooms, telephone closets and their enclosing walls situated on such
floor and (iii) the rentable square footage described in Paragraph (c) below.

 

(c)           Building Load. In any event, Rentable Area shall also include
Tenant’s Proportionate Share of the lobbies of the Building and Tenant’s
Proportionate Share of the area of the emergency equipment, fire pump equipment,
electrical switching gear, telephone equipment and mail delivery facilities
serving the Building.

 

(d)          Deemed Square Footage. From time to time at Landlord’s option,
Landlord may re-measure the Rentable Area of the Leased Premises and the
Building and the other buildings on the Land, which determination shall be
conclusive and thereon Tenant’s Proportionate Share shall be adjusted
accordingly.

 

“Structural” as herein used shall mean any portion of the Leased Premises,
Building or Common Areas of the Complex which provides bearing support to any
other integral member of the Leased Premises, Building or Common Areas of the
Complex such as, by limitation, the roof structure (trusses, joists, beams),
posts, load

 

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bearing walls, foundations, girders, floor joists, footings, and other load
bearing members constructed by Landlord.

 

ARTICLE 3 PREMISES AND COMMON AREAS

 

3.1                               Demising Clause. Landlord hereby leases to
Tenant, and Tenant hires from Landlord the Leased Premises, consisting of the
approximate square footage listed in the Salient Lease Terms, which the parties
agree shall be deemed the actual square footage, subject to change by Landlord
in connection with changes in the Rentable Area of the floor on which the Leased
Premises are located.

 

3.2                               Reservation. Landlord reserves the area
beneath and above the Building as well as the exterior thereof together with the
right to install, maintain, use, repair and replace pipes, ducts, conduits,
wires, and structural elements leading through the Leased Premises serving other
parts of the Building and Common Areas of the Complex, so long as such items are
concealed by walls, flooring or ceilings. Such reservation in no way affects the
maintenance obligations imposed herein. Landlord may change the shape, size,
location, number and extent of the improvements to any portion of the Building
or Common Areas of the Complex and/or the address or name of the Building
without the consent of Tenant, so long as such changes do not materially and
detrimentally impact Tenant’s use of the Premises.

 

3.3                               Covenants, Conditions and Restrictions. The
parties agree that this Lease is subject to the effect of (a) any covenants,
conditions, restrictions, easements, mortgages or deeds of trust, ground leases,
rights of way of record, and any other matters or documents of record,
including, without limitation, the Declaration of Restrictions referred to in
the Salient Lease Terms; (b) any zoning laws of the city, county and state where
the Complex is situated; and (c) general and special taxes not delinquent.
Tenant agrees that as to its leasehold estate, Tenant and all persons in
possession or holding under Tenant will conform to and will not violate the
terms of any covenants, conditions or restrictions of record which may now or
hereafter encumber the Building or the Complex, including, without limitation,
the Declaration of Restrictions referred to in the Salient Lease Terms
(hereinafter the “restrictions”). This Lease is subordinate to the restrictions
and any amendments or modifications thereto.

 

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

 

(a)                                 Common Areas-Changes. Landlord shall have
the right, in Landlord’s sole discretion, from time to time:

 

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

 

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

 

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(3)        To designate other land outside the boundaries of the Building to be
a part of the Common Areas;

 

(4)        To add additional improvements to the Common Areas;

 

(5)        To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Building or Complex, or any portion
thereof;

 

(6)        To do and perform such other acts and make such other changes in, to
or with respect to the Common Areas, Building and Complex as Landlord may, in
the exercise of sound business judgment, deem to be appropriate.

 

(b)                    Common Area Maintenance. Landlord shall, in Landlord’s
sole discretion, maintain the Common Areas (subject to reimbursement pursuant to
this Lease), establish and enforce reasonable rules and regulations concerning
such areas, close any of the Common Areas to whatever extent required in the
opinion of Landlord’s counsel to prevent a dedication of any of the Common Areas
or the accrual of any rights of any person or of the public to the Common Areas,
close temporarily any of the Common Areas for maintenance purposes, and make
changes to the Common Areas including, without limitation, changes in the
location of driveways, corridors, entrances, exits, the designation of areas for
the exclusive use of others, the direction of the flow of traffic or
construction of additional buildings thereupon. Landlord may provide security
for the Common Areas, but is not obligated to do so.

 

ARTICLE 4 TERM AND POSSESSION

 

4.1                               Commencement Date. The Term of this Lease
shall commence on the Commencement Date and shall be for the term specified in
Section 1.8 hereof (which includes as set forth in Section 1.8 any partial month
at the commencement of the Term if the Term commences other than on the first
day of the calendar month).

 

4.2                               Acknowledgment of Commencement. After delivery
of the Leased Premises to Tenant, Tenant shall execute a written acknowledgment
of the date of commencement in the form attached hereto as Exhibit D, and by
this reference it shall be incorporated herein. The failure of Tenant to execute
such an acknowledgement shall not delay the Commencement Date.

 

4.3                               Intentionally Deleted.

 

4.4                               Delay. If Landlord, for any reason whatsoever,
cannot deliver possession of the Leased Premises to Tenant at the Estimated
Commencement Date, this Lease shall not be void or voidable, nor shall Landlord
be liable for any loss or damage resulting therefrom; provided, however, that if
Landlord cannot deliver the Leased Premises to Tenant within six (6) months
beyond the Estimated Commencement Date, then either Landlord or Tenant may elect
to terminate this Lease upon written notice to the other within ten (10) days
after the end of said six month period.

 

4.5                               Acceptance of Work. Subject to Tenant’s
completion of the Tenant Improvements, Tenant agrees that by taking possession
of the Leased Premises it will conclusively be deemed to have inspected the
Leased Premises and found the Leased Premises in satisfactory condition. Tenant
acknowledges that neither Landlord, nor any agent, employee or servant of
Landlord, has made any representation or warranty, expressed or implied, with
respect to the Leased Premises, Building or Common Areas of the Complex, or with
respect to the suitability of them to the conduct of Tenant’s business, nor has
Landlord agreed to undertake any modifications, alterations, or improvements of
the Leased Premises, Building or Common Areas of the Complex, except as
specifically provided in this Lease.

 

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4.6                               Failure to Take Possession. Tenant’s inability
or failure to take possession of the Leased Premises when delivery is tendered
by Landlord shall not delay the Commencement Date of the Lease or Tenant’s
obligation to pay Rent. Tenant acknowledges that Landlord shall incur
significant expenses upon the execution of this Lease, even if Tenant never
takes possession of the Leased Premises, including, without limitation,
brokerage commissions and fees, legal or other professional fees, the costs of
space planning and the costs of construction of Tenant Improvements in the
Premises. Tenant acknowledges that all of said expenses, in addition to all
other expenses incurred and damages suffered by Landlord, shall be included in
measuring Landlord’s damages should Tenant breach the terms of this Lease.

 

ARTICLE 5 MINIMUM MONTHLY RENT

 

5.1                               Payment. Tenant shall pay to Landlord at the
address specified in Section 1.1, or at such other place as Landlord may
otherwise designate, as “Minimum Monthly Rent” for the Leased Premises the
amount specified in Section 1.9 hereof, payable in advance on the first day of
each month during the Term of the Lease. If the Term commences on other than the
first day of a calendar month, the rent for the first partial month shall be
prorated accordingly. All payments of Minimum Monthly Rent (including sums
defined as rent in Section 2 shall be in lawful money of the United States, and
payable without deduction, offset, counterclaim, prior notice or demand.

 

5.2                               Advance Rent. The amount specified in
Section 1.9(B) hereof is paid herewith to Landlord upon execution of this Lease
as advance rent, receipt of which is hereby acknowledged, provided, however,
that such amount shall be held by Landlord as an additional “Security Deposit”
pursuant to this Lease until it is applied by Landlord to the first Minimum
Monthly Rent due hereunder.

 

5.3                               Late Payment. If during any calendar year,
Tenant fails to pay Rent within five (5) days after receipt of notice that
payment is past due on more than three occasions, then Landlord may, by giving
written notice to Tenant, require that Tenant pay the Minimum Monthly Rent and
other Rent to Landlord quarterly in advance for the next two years, provided,
however, that if Tenant makes its quarterly payments as and when due each
quarter for the two year period, then Tenant may resort to making monthly
payments in advance.

 

ARTICLE 6 ADDITIONAL RENT

 

6.1                               Personal Property, Gross Receipts, Leasing
Taxes. This section is intended to deal with impositions or taxes directly
attributed to Tenant or this transaction, as distinct from taxes attributable to
the Building or Common Areas of the Complex which are to be allocated among
various tenants and others. Tenant shall pay before delinquency any and all
taxes, assessments, license fees and public charges levied, assessed or imposed
against Tenant or Tenant’s estate in this Lease or the property of Tenant
situated within the Premises which become due during the Term. On demand by
Landlord, Tenant shall furnish Landlord with satisfactory evidence of these
payments. If such taxes are included in the bill for the Real Estate Taxes for
the Building or Complex, then Tenant shall pay to Landlord as additional rent
the amount of such taxes within ten (10) days after demand from Landlord.

 

6.2                               Operating Costs, Taxes and Insurance.

 

(a)          Base Year Increases. If the Operating Costs, Taxes and/or Insurance
Costs for any Lease Year, calculated on the basis of the greater of (i) actual
Operating Costs, Taxes and Insurance Costs; or (ii) that amount of Operating
Costs, Taxes and Insurance Costs as if the Building were at least one hundred
percent (100%) occupied and operational for the whole of such Lease Year in
order to make an adjustment for costs that vary with occupancy of the Building
by tenants, are more than the applicable Base Year Costs for Base Operating
Costs, Base Taxes and Base Insurance as set forth in section 1.10 (which Base
Year Costs shall be calculated separately for each such category of Base Year
Costs), Tenant shall pay to Landlord its Proportionate

 

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Share of any such increase in Operating Costs, Taxes and/or Insurance Costs, as
the case may be, as additional Rent as hereinafter provided.

 

(b)          Partial Year. If any Lease Year of less than twelve (12) months is
included within the Term, the amount payable by Tenant for such period shall be
prorated on a per diem basis (utilizing a thirty (30) day month, three hundred
sixty (360) day year).

 

6.3                               Method of Payment. Any additional Rent payable
by Tenant under Sections 6.1 and 6.2 hereof shall be paid as follows, unless
otherwise provided:

 

(a)          Estimated Monthly. During the Term, Tenant shall pay to Landlord
monthly in advance with its payment of Minimum Monthly Rent, one-twelfth
(1/12th) of the amount of such additional Rent as estimated by Landlord in
advance, in good faith, to be due from Tenant. If at any time during the course
of the fiscal year, Landlord determines that Operating Costs, Insurance Costs
and/or Taxes are projected to vary from the then estimated costs for such items
by more than ten percent (10%), Landlord may, by written notice to Tenant,
revise the estimated Operating Costs, Insurance Costs and/or Taxes for the
balance of such fiscal year, and Tenant’s monthly installments for the remainder
of such year shall be adjusted so that by the end of such fiscal year Tenant
will have paid to Landlord Tenant’s Proportionate Share of the such revised
expenses for such year.

 

(b)          Annual Reconciliation. Annually, as soon as is reasonably possible
after the expiration of each Lease Year, Landlord shall prepare in good faith
and deliver to Tenant a comparative statement, which statement shall be
conclusive between the parties hereto, subject to Tenant’s inspection rights as
provided below, setting forth (1) the Operating Costs, Taxes and Insurance Costs
for such Lease Year, and (2) the amount of additional Rent as determined in
accordance with the provisions of this Article 6.

 

(c)           Adjustment. If the aggregate amount of such estimated additional
Rent payments made by Tenant in any Lease Year should be less than the
additional Rent due for such year, then Tenant shall pay to Landlord as
additional Rent upon demand the amount of such deficiency. If the aggregate
amount of such additional Rent payments made by Tenant in any Lease Year of the
Term should be greater than the additional Rent due for such year, then should
Tenant not be otherwise in default hereunder, the amount of such excess will be
applied by Landlord to the next succeeding installments of such additional Rent
due hereunder; and if there is any such excess for the last year of the Term,
the amount thereof will be refunded by Landlord to Tenant within sixty (60) days
of the last day of the Term, provided Tenant is not otherwise in default under
the terms of this Lease.

 

(d)          Inspection. Tenant shall have the right at its own expense to
inspect the books and records of Landlord pertaining to Operating
Costs, Insurance Costs and Taxes once in any calendar year by any employee of
Tenant or by a certified public accountant mutually acceptable to Landlord and
Tenant (provided such certified public accountant charges for its service on an
hourly basis and not based on a percentage of any recovery or similar incentive
method) at reasonable times, and upon reasonable written notice to Landlord.
Within one hundred twenty (120) days after receipt of Landlord’s annual
reconciliation, Tenant shall have the right, after at least ten (10) days prior
written notice to Landlord, to inspect at the offices of Landlord or its
property manager, the books and records of Landlord pertaining solely to the
Operating Costs, Insurance Costs and Taxes for the immediately preceding
calendar year covered in such annual reconciliation statement. All expenses of
the inspection shall be borne by Tenant and such inspection must be completed
within fifteen (15) days after commencement of such inspection. If Tenant’s
inspection reveals a discrepancy in the comparative annual reconciliation
statement, Tenant shall deliver a copy of the inspection report and supporting
calculations to Landlord within thirty (30) days after completion of the
inspection. If Tenant and Landlord are unable to resolve the discrepancy within
thirty (30) days after Landlord’s receipt of the inspection report, either party
may upon written notice to the other have the matter decided by an inspection by
an independent certified public accounting firm approved by Tenant and Landlord
(the “CPA Firm”), which approval shall not be

 

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unreasonably withheld or delayed. If the inspection by the CPA Firm shows that
the actual amount of Operating Costs, Insurance Costs or Taxes payable by Tenant
is greater than the amount previously paid by Tenant for such accounting period,
Tenant shall immediately pay Landlord the difference. If the inspection by the
CPA Firm shows that the actual applicable amount is less than the amount paid by
Tenant, then the difference shall be applied in payment of the next estimated
monthly installments of Operating Costs, Insurance Costs and/or Taxes owing by
Tenant, or in the event such accounting occurs following the expiration of the
Term hereof, such difference shall be refunded to Tenant. Tenant shall pay for
the cost of the inspection by the CPA Firm, unless such inspection shows that
Landlord overstated Operating Costs, Insurance Costs or Taxes by more than three
percent (3%), in which case Landlord shall pay for the cost of the inspection by
the CPA Firm.

 

ARTICLE 7 ACCORD AND SATISFACTION

 

7.1                               Acceptance of Payment. No payment by Tenant or
receipt by Landlord of a lesser amount of Minimum Monthly Rent or any other sum
due hereunder, shall be deemed to be other than on account of the earliest due
rent or payment, nor shall any endorsement or statement on any check or any
letter accompanying any such check or payment be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord’s right to recover the balance of such rent or payment or pursue any
other remedy available in this Lease, at law or in equity. Landlord may accept
any partial payment from Tenant without invalidation of any contractual notice
required to be given herein (to the extent such contractual notice is required)
and without invalidation of any notice required to be given pursuant to
California Code of Civil Procedure Section 1161, et seq., or of any successor
statute thereto.

 

ARTICLE 8 SECURITY DEPOSIT

 

8.1                               Payment on Lease Execution. Tenant shall pay
Landlord upon execution hereof the sum specified in the Salient Lease Terms as a
Security Deposit. This sum is designated as a Security Deposit and shall remain
the sole and separate property of Landlord until actually repaid to Tenant (or
at Landlord’s option the last assignee, if any, of Tenant’s interest hereunder),
said sum not being earned by Tenant until all conditions precedent for its
payment to Tenant have been fulfilled. As this sum both in equity and at law is
Landlord’s separate property, Landlord shall not be required to (1) keep said
deposit separate from his general accounts, or (2) pay interest, or other
increment for its use. If Tenant fails to pay rent or other charges when due
hereunder, or otherwise defaults with respect to any provision of this Lease,
including and not limited to Tenant’s obligation to restore or clean the Leased
Premises following vacation thereof, Tenant, at Landlord’s election, shall be
deemed not to have earned the right to repayment of the Security Deposit, or
those portions thereof used or applied by Landlord for the payment of any rent
or other charges in default, or for the payment of any other sum to which
Landlord may become obligated by reason of Tenant’s default, or to compensate
Landlord for any loss or damage which Landlord may suffer thereby. Landlord may
retain such portion of the Security Deposit as it reasonably deems necessary to
restore or clean the Leased Premises following vacation by Tenant. The Security
Deposit is not to be characterized as rent until and unless so applied in
respect of a default by Tenant.

 

8.2                               Restoration of Deposit. If Landlord elects to
use or apply all or any portion of the Security Deposit as provided in
Section 8.1, Tenant shall within ten (10) days after written demand therefor pay
to Landlord in cash, an amount equal to that portion of the Security Deposit
used or applied by Landlord, and Tenant’s failure to so do shall be a material
breach of this Lease. The ten (10) day notice specified in the preceding
sentence shall insofar as not prohibited by law, constitute full satisfaction of
notice of default provisions required by law or ordinance.

 

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ARTICLE 9 USE

 

9.1                               Permitted Use. The Leased Premises may be used
and occupied only for the purposes specified in Section 1.12 hereof, and for no
other purpose or purposes. Tenant shall not use, or permit to be used, the
Leased Premises in any manner that will disturb any other tenant in the Building
or Complex, or obstruct or interfere with the rights of other tenant or
occupants of the Building or Complex, or injure or annoy them or create any
unreasonable smells, noise or vibrations (taking into account the nature and
tenant-mix of the Building). Tenant shall not allow the Leased Premises to be
used for any improper, immoral, unlawful or objectionable purpose.

 

9.2                               Safes, Heavy Equipment. Tenant shall not place
a load upon any floor of the Leased Premises which exceeds the lesser of fifty
(50) pounds per square foot live load or such other amount specified in writing
by Landlord from time to time. Landlord reserves the right to prescribe the
weight and position of all safes and heavy installations which Tenant wishes to
place in the Leased Premises so as properly to distribute the weight thereof, or
to require plans prepared by a qualified structural engineer at Tenant’s sole
cost and expense for such heavy objects. Notwithstanding the foregoing, Landlord
shall have no liability for any damage caused by the installation of such heavy
equipment or safes.

 

9.3                               Machinery. Business machines and mechanical
equipment belonging to Tenant which cause noise and/or vibration that may be
transmitted to the structure of the Building or to any other leased space to
such a degree as to be objectionable to Landlord or to any tenants in the
Complex shall be placed and maintained by the party possessing the machines or
equipment, at such party’s expense, in settings of cork, rubber or spring type
noise and/or vibration eliminators, and Tenant shall take such other measures as
needed to eliminate vibration and/or noise. If the noise or vibrations cannot be
eliminated, Tenant must remove such equipment within ten (10) days following
written notice from Landlord.

 

9.4                               Waste or Nuisance. Tenant shall not commit, or
suffer to be committed, any waste upon the Leased Premises, or any nuisance, or
other act or thing which may disturb the quiet enjoyment of any other tenant or
occupant of the Complex in which the Leased Premises are located.

 

9.5                               Operation. If Tenant does not continuously
occupy the Leased Premises for a period of ninety (90) consecutive days at any
time after the Leasehold Improvements have been Substantially Completed as
provided in Exhibit C, other than due to any remodeling of the Leased Premises
or when such failure to occupy the Leased Premises for such period is during any
restoration of the Leased Premises as a result of a casualty, Tenant shall
notify Landlord within ten (10) days after receipt of written from Landlord
whether Tenant intends to re-occupy the Leased Premises. If Tenant informs
Landlord that Tenant does not intend to re-occupy the Leased Premises within the
following six months or Tenant does not re-occupy the Leased Premises within
said six month period, then Landlord shall have the right, but not the
obligation, to elect to recapture the Leased Premises upon thirty (30) days
prior written notice to Tenant, in which case this Lease shall terminate as of
the end of said 30 day period.

 

ARTICLE 10 COMPLIANCE WITH LAWS AND REGULATIONS

 

10.1                        Compliance Obligations. Tenant shall, at its sole
cost and expense, comply with all of the requirements of all municipal, state
and federal authorities now in force, or which may hereafter be in force,
pertaining to the Leased Premises, and shall faithfully observe in the use or
occupancy of the Leased Premises all municipal ordinances and state and federal
statutes, laws and regulations now or hereafter in force, including, without
limitation, the “Environmental Laws” (as hereinafter defined), and the Americans
with Disabilities Act, 42 U.S.C. §§ 12101-12213 (and any rules, regulations,
restrictions, guidelines, requirements or publications promulgated or published
pursuant thereto), whether or not any of the foregoing were foreseeable or
unforeseeable at the time of the execution of this Lease. Tenant’s obligation to
comply with and observe such requirements, ordinances, statutes and regulations
shall apply regardless of whether such requirements,

 

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ordinances, statutes and regulations regulate or relate to Tenant’s particular
use of the Leased Premises or regulate or relate to the use of premises in
general, and regardless of the cost thereof. The judgment of any court of
competent jurisdiction, or the admission of Tenant in any action or proceeding
against Tenant, whether Landlord be a party thereto or not, that any such
requirement, ordinance, statute or regulation pertaining to the Leased Premises
has been violated, shall be conclusive of that fact as between Landlord and
Tenant. Notwithstanding the foregoing, Tenant shall not be required to construct
capital improvements to the Leased Premises to comply with such requirements,
ordinances, statutes and regulations unless such work is required due to
Tenant’s particular use of the Leased Premises or any alterations constructed by
Tenant.

 

10.2                        Condition of Leased Premises. Subject to Landlord’s
work, if any, as referred to in Exhibit C to this Lease, Tenant hereby accepts
the Leased Premises in the condition existing as of the date of occupancy,
subject to all applicable zoning, municipal, county and state laws, ordinances,
rules, regulations, orders, restrictions of record, and requirements in effect
during the Term or any part of the Term hereof regulating the Leased Premises,
and without representation, warranty or covenant by Landlord, express or
implied, as to the condition, habitability or safety of the Leased Premises, the
suitability or fitness thereof for their intended purposes, or any other matter.

 

10.3                        Hazardous Materials.

 

(a)          Hazardous Materials. As used herein, the term “Hazardous Materials”
shall mean any wastes, materials or substances (whether in the form of liquids,
solids or gases, and whether or not air-borne), which are or are deemed to be
(i) pollutants or contaminants, or which are or are deemed to be hazardous,
toxic, ignitable, reactive, corrosive, dangerous, harmful or injurious, or which
present a risk to public health or to the environment, or which are or may
become regulated by or under the authority of any applicable local, state or
federal laws, judgments, ordinances, orders, rules, regulations, codes or other
governmental restrictions, guidelines or requirements, any amendments or
successor(s) thereto, replacements thereof or publications promulgated pursuant
thereto, including, without limitation, any such items or substances which are
or may become regulated by any of the Environmental Laws (as hereinafter
defined); (ii) listed as a chemical known to the State of California to cause
cancer or reproductive toxicity pursuant to Section 25249.8 of the California
Health and Safety Code, Division 20, Chapter 6.6 (Safe Drinking Water and Toxic
Enforcement Act of 1986); or (iii) a pesticide, petroleum, including crude oil
or any fraction thereof, asbestos or an asbestos-containing material, a
polychlorinated biphenyl, radioactive material, or urea formaldehyde.

 

(b)          Environmental Laws. In addition to the laws referred to in section
10.3(a) above, the term “Environmental Laws” shall be deemed to include, without
limitation, 33 U.S.C. Section 1251 et seq., 42 U.S.C. Section 6901 et seq., 42
U.S.C. Section 7401 et seq., 42 U.S.C. Section 9601 et seq., and California
Health and Safety Code Section 25100 et seq., and 25300 et seq., California
Water Code, Section 13020 et seq., or any successor(s) thereto, all local, state
and federal laws, judgments, ordinances, orders, rules, regulations, codes and
other governmental restrictions, guidelines and requirements, any amendments and
successors thereto, replacements thereof and publications promulgated pursuant
thereto, which deal with or otherwise in any manner relate to, air or water
quality, air emissions, soil or ground conditions or other environmental matters
of any kind.

 

(c)           Use of Hazardous Materials. Tenant agrees that during the Term of
this Lease, there shall be no use, presence, disposal, storage, generation,
leakage, treatment, manufacture, import, handling, processing, release, or
threatened release of Hazardous Materials on, from or under the Leased Premises
(individually and collectively, “Hazardous Use”) except to the extent that, and
in accordance with such conditions as, Landlord may have previously approved in
writing in its sole and absolute discretion. However, without the necessity of
obtaining such prior written consent, Tenant shall be entitled to use and store
only those Hazardous Materials which are (i) typically used in the ordinary
course of business in an office for use in the manner for which they were
designed and in such limited amounts as may be normal, customary and necessary
for Tenant’s business in the Premises, and (ii) in full compliance with
Environmental Laws, and all

 

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judicial and administrative decisions pertaining thereto. For the purposes of
this Section 10.3(c), the term Hazardous Use shall include Hazardous Use(s) on,
from or under the Leased Premises by Tenant or any of its directors, officers,
employees, shareholders, partners, invitees, agents, contractors or occupants
(collectively, “Tenant’s Parties”), whether known or unknown to Tenant, and
whether occurring and/or existing during or prior to the commencement of the
Term of this Lease.

 

(d)          Compliance. Tenant agrees that during the Term of this Lease Tenant
shall not be in violation of any federal, state or local law, ordinance or
regulation relating to industrial hygiene, soil, water, or environmental
conditions on, under or about the Leased Premises including, but not limited to,
the Environmental Laws.

 

(e)           Inspection and Testing by Landlord. Landlord shall have the right
at all times during the term of this Lease to (i) inspect the Leased Premises
and to (ii) conduct tests and investigations to determine whether Tenant is in
compliance with the provisions of this Section. Except in case of emergency,
Landlord shall give reasonable notice to Tenant before conducting any
inspections, tests, or investigations. The cost of all such inspections, tests
and investigations shall be borne by Tenant, if Tenant is in breach of
Section 10.3 of this Lease. Neither any action nor inaction on the part of
Landlord pursuant to this Section 10.3(e) shall be deemed in any way to release
Tenant from, or in any way modify or alter, Tenant’s responsibilities,
obligations, and/or liabilities incurred pursuant to Section 10.3 hereof.

 

10.4                        Indemnity. Tenant shall indemnify, hold harmless,
and, at Landlord’s option (with such attorneys as Landlord may approve in
advance and in writing), defend Landlord and Landlord’s officers, directors,
shareholders, partners, members, managers, employees, contractors, property
managers, agents and mortgagees and other lien holders, from and against any and
all “Losses” (hereinafter defined) arising from or related to: (a) any violation
by Tenant or any of Tenant’s Parties of any of the requirements, ordinances,
statutes, regulations or other laws referred to in this Article 10, including,
without limitation, the Environmental Laws; (b) any breach of the provisions of
this Article 10 by Tenant or any of Tenant’s Parties; or (c) any Hazardous Use
on, about or from the Leased Premises of any Hazardous Material approved by
Landlord under this Lease. The term “Losses” shall mean all claims, demands,
expenses, actions, judgments, damages (whether consequential, direct or
indirect, known or unknown, foreseen or unforeseen), penalties, fines,
liabilities, losses of every kind and nature (including, without limitation,
property damage, diminution in value of Landlord’s interest in the Leased
Premises or the Complex, damages for the loss or restriction on use of any space
or amenity within the Building or the Complex, damages arising from any adverse
impact on marketing space in the Complex, sums paid in settlement of claims and
any costs and expenses associated with injury, illness or death to or of any
person), suits, administrative proceedings, costs and fees, including, but not
limited to, attorneys’ and consultants’ fees and expenses, and the costs of
cleanup, remediation, removal and restoration, that are in any way related to
any matter covered by the foregoing indemnity.

 

ARTICLE 11 SERVICE AND EQUIPMENT

 

11.1                        Climate Control. So long as Tenant is not in default
under any of the covenants of this Lease, Landlord shall provide climate control
to the Leased Premises from 7:00 a.m. to 6:00 p.m. (the “Climate Control Hours”)
on weekdays and 9:00 a.m. to 1:00 p.m. Saturdays (Sundays and holidays excepted)
to maintain a temperature adequate for comfortable occupancy, provided that
Landlord shall have no responsibility or liability for failure to supply climate
control service when making repairs, alterations or improvements or when
prevented from so doing by strikes or any cause beyond Landlord’s reasonable
control. Any climate control furnished for periods not within the Climate
Control Hours pursuant to Tenant’s request shall be at Tenant’s sole cost and
expense in accordance with rate schedules promulgated by Landlord from time to
time. Upon request, Landlord shall advise Tenant of the then current rate
schedule and the basis for its calculation. Tenant acknowledges that Landlord
has installed in the Building a system for the purpose of climate control. Any
use of the Leased Premises not in accordance with the design standards or any
arrangement of partitioning which interferes with the normal operation of such
system may require changes or

 

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alterations in the system or ducts through which the climate control system
operates. Any changes or alterations so occasioned, if such changes can be
accommodated by Landlord’s equipment, shall be made by Tenant at its cost and
expense but only with the written consent of Landlord first had and obtained,
and in accordance with drawings and specifications and by a contractor first
approved in writing by Landlord. If installation of partitions, equipment or
fixtures by Tenant necessitates the re-balancing of the climate control
equipment in the Leased Premises, the same will be performed by Landlord at
Tenant’s expense. Tenant acknowledges that up to one (1) year may be required
after Tenant has fully occupied the Leased Premises in order to adjust and
balance the climate control systems. Any charges to be paid by Tenant hereunder
shall be due within ten (10) days of receipt of an invoice from Landlord, which
invoice may precede Landlord’s expenditure for the benefit of Tenant.

 

11.2                        Elevator Service. Landlord shall provide elevator
service (which may be with or without operator at Landlord’s option) provided
that Tenant, its employees, and all other persons using such services shall do
so at their own risk.

 

11.3                        Cleaning Public Areas. Landlord shall maintain and
keep clean the street level lobbies, sidewalks, truck dock, public corridors and
other public portions of the Building.

 

11.4                        Refuse Disposal. Tenant shall pay Landlord, within
ten (10) days of being billed therefor, for the removal from the Leased Premises
and the Building of such refuse and rubbish of Tenant as shall exceed that
ordinarily accumulated daily in the routine of a reasonable office.

 

11.5                        Janitorial Service. Landlord shall provide cleaning
and janitorial service in and about the Complex and Leased Premises each weekday
(Saturdays, Sundays and holidays excepted) in accordance with standards in
first-class office buildings in the city in which the Building is located.

 

11.6                        Special Cleaning Service. To the extent that Tenant
shall require special or more frequent cleaning and/or janitorial service
(hereinafter referred to as “Special Cleaning Service”) Landlord may, upon
reasonable advance notice from Tenant, elect to furnish such Special Cleaning
Service and Tenant agrees to pay Landlord, within ten (10) days of being billed
therefor, Landlord’s charge for providing such additional service. Special
Cleaning Service shall include but shall not be limited to the following to the
extent such services are beyond those typically provided pursuant to section 1.5
above:

 

(a)          The cleaning and maintenance of Tenant eating facilities other than
the normal and ordinary cleaning and removal of garbage, which special cleaning
service shall include, without limitation, the removal of dishes, utensils and
excess garbage; it being acknowledged that normal and ordinary cleaning service
does not involve placing dishes, glasses and utensils in the dishwasher,
cleaning any coffee pot or other cooking mechanism or cleaning the refrigerator
or any appliances;

 

(b)          The cleaning and maintenance of Tenant computer centers, including
peripheral areas other than the normal and ordinary cleaning and removal of
garbage if Tenant so desires;

 

(c)           The cleaning and maintenance of special equipment areas, locker
rooms, and medical centers;

 

(d)          The cleaning and maintenance in areas of special security; and

 

(e)           The provision of consumable supplies for private toilet rooms.

 

11.7                        Electrical. During the Term of this Lease, there
shall be available to the Leased Premises electrical facilities comparable to
those supplied in other comparable office buildings in the vicinity of the
Building to provide sufficient power for normal lighting and office machines of
similar low electrical consumption, and one personal computer for each desk
station, and such other additional computers or data

 

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processing equipment that is used in the ordinary and customary business of
Tenant for the use permitted under this Lease, but not for special lighting and
any other item of electrical equipment which requires a voltage other than one
hundred ten (110) volts single phase, as determined by Landlord in its
reasonable discretion; and provided, however, that if the installation of such
electrical equipment requires additional air conditioning capacity above that
normally provided to tenants of the Building or above standard usage of existing
capacity as determined by Landlord in its sole and absolute discretion, then the
additional air conditioning installation and/or operating costs attributable
thereto shall be paid by Tenant. Tenant agrees not to use any apparatus or
device in, upon or about the Leased Premises which may in any way increase the
amount of such electricity usually furnished or supplied to the Leased Premises,
and Tenant further agrees not to connect any apparatus or device to the wires,
conduits or pipes or other means by which such electricity is supplied, for the
purpose of using additional or unusual amounts of electricity, without the prior
written consent of Landlord. At all times, Tenant’s use of electric current
shall never exceed Tenant’s share of the capacity of the feeders to the Building
or the risers or wiring installation. Tenant shall not install or use or permit
the installation or use in the Leased Premises of any computer or electronic
data processing or ancillary equipment or any other electrical apparatus
designed to operate on electrical current in excess of 110 volts and 20 amps per
machine, without the prior written consent of Landlord, which may be exercised
in Landlord’s sole and absolute discretion. If Tenant shall require electrical
current in excess of that usually furnished or supplied for use of the Leased
Premises as general office space, Tenant shall first procure the written consent
of Landlord (which may be exercised in Landlord’s sole and absolute discretion)
to the use thereof and Landlord or Tenant may (i) cause a meter to be installed
in or for the Leased Premises, or (ii) if Tenant elects not to install said
meter, Landlord may reasonably estimate such excess electrical current. The cost
of any meters (including, without limitation, the cost of any installation) or
surveys to estimate such excess electrical current shall be paid by Tenant.
Landlord’s approval or any space plan, floor plan, construction plans,
specifications, or other drawings or materials regarding the construction of the
Tenant Improvements or any alterations shall not be deemed or construed as
consent by Landlord under this paragraph to Tenant’s use of such excess
electrical current as provided above. Tenant agrees to pay to Landlord, promptly
upon demand therefor, all costs of such electrical current consumed as well as
an additional use charge calculated by said meters (at the rates charged for
such services to the Building by the municipality or the local public utility)
or the amount specified in said estimate, as the case may be, plus any
additional expense incurred in keeping account of the electrical current so
consumed, which additional expense Landlord shall advise Tenant within a
reasonable time after request by Tenant.

 

11.8                        Water. During the Term of this Lease, if water is
made available to the Leased Premises, then water shall be used for drinking,
lavatory and office kitchen purposes only as applicable. If Tenant requires,
uses or consumes water for any purpose in addition to ordinary drinking,
lavatory, and office kitchen purposes (as determined by Landlord in its sole and
absolute discretion), as applicable, Landlord may reasonably estimate such
excess and Tenant shall pay for same. At Tenant’s sole cost and expense,
Landlord may also install a water meter and thereby measure Tenant’s water
consumption for all purposes, and Tenant shall keep said meter and installation
equipment in good working order and repair at Tenant’s own cost and expense.
Tenant agrees to pay for water consumed, as shown in said meter, as and when
bill are rendered.

 

11.9                        Interruptions. It is understood that Landlord does
not warrant that any of the services referred to above or any other services
which Landlord may supply will be free from interruption. Tenant acknowledges
that any one or more such services may be suspended or reduced by reason of
repairs, alterations or improvements necessary to be made, by strikes or
accidents, by any cause beyond the reasonable control of Landlord, or by orders
or regulations of any federal, state, county or municipal authority. Any such
interruption or suspension of services shall not be deemed an eviction or
disturbance of Tenant’s use and possession of the Leased Premises or any part
thereof, nor render Landlord liable to Tenant for damages by abatement of Rent
or otherwise, nor relieve Tenant of performance of Tenant’s obligations under
this Lease.

 

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ARTICLE 12 ALTERATIONS

 

12.1                        Consent of Landlord; Ownership. Except for the
Leasehold Improvements to be constructed by Tenant pursuant to Exhibit C, Tenant
shall not make, or suffer to be made, any alterations, additions or
improvements, including, without limitation, any alterations, additions or
improvements that result in increased telecommunication demands or require the
addition of new communication or computer wires, cables and related devises or
expand the number of telephone or communication lines dedicated to the Leased
Premises by the Building’s telecommunication design, (collectively,
“alterations”) to the Leased Premises, or any part thereof, without the written
consent of Landlord first had and obtained, which shall not be unreasonably
withheld. Any alterations, except trade fixtures, shall upon expiration or
termination of this Lease become a part of the realty and belong to Landlord.
Except as otherwise provided in this Lease, Tenant shall have the right to
remove its trade fixtures placed upon the Leased Premises provided that Tenant
restores the Leased Premises as indicated below.

 

12.2                        Requirements. Any alterations, additions or
installations performed by Tenant (hereinafter collectively “alterations”) shall
be subject to strict conformity with the following requirements:

 

(a)          All alterations shall be at the sole cost and expense of Tenant;

 

(b)          Prior to commencement of any work of alteration, Tenant shall
submit detailed plans and specifications, including working drawings
(hereinafter referred to as “Plans”), of the proposed alterations, which shall
be subject to the consent of Landlord in accordance with the terms of
Section 12.1 above;

 

(c)           Following approval of the Plans by Landlord, Tenant shall give
Landlord at least ten (10) days’ prior written notice of any commencement of
work in the Leased Premises so that Landlord may post notices of
non-responsibility in or upon the Leased Premises as provided by law;

 

(d)          No alterations shall be commenced without Tenant having previously
obtained all appropriate permits and approvals required by and of governmental
agencies;

 

(e)           All alterations shall be performed in a skillful and workmanlike
manner, consistent with the best practices and standards of the construction
industry, and pursued with diligence in accordance with said Plans previously
approved by Landlord and in full accord with all applicable laws and ordinances.
All material, equipment, and articles incorporated in the alterations are to be
new and of recent manufacture and of the most suitable grade for the purpose
intended;

 

(f)            Tenant must obtain the prior written approval from Landlord for
Tenant’s contractor before the commencement of the work. Tenant’s contractor for
any work shall maintain all of the insurance reasonably required by Landlord,
including, without limitation, commercial general liability and workers’
compensation.

 

(g)           As a condition of approval of alterations, Landlord may require
performance and labor and materialmen’s payment bonds issued by a surety
approved by Landlord, in a sum equal to the cost of the alterations guarantying
the completion of the alterations free and clear of all liens and other charges
in accordance with the Plans. Such bonds shall name Landlord as beneficiary. The
provisions of this paragraph shall not be applicable to the original party
signing this Lease as Tenant or any transferee under a Permitted Transfer (as
defined in Section 21.5 hereof);

 

(h)          The alterations must be performed in a manner such that they will
not interfere with the quiet enjoyment of the other Tenants in the Complex.

 

12.3                        Liens. Tenant shall keep the Leased Premises and the
Complex in which the Leased Premises are situated free from any liens arising
out of any work performed, materials furnished or obligations incurred by
Tenant. In the event a mechanic’s or other lien is filed against the Leased
Premises, Building or the Complex

 

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as a result of a claim arising through Tenant, Landlord may demand that Tenant
furnish to Landlord a surety bond satisfactory to Landlord in an amount equal to
at least one hundred fifty percent (150%) of the amount of the contested lien
claim or demand, indemnifying Landlord against liability for the same and
holding the Leased Premises free from the effect of such lien or claim. Such
bond must be posted within ten (10) days following notice from Landlord. In
addition, Landlord may require Tenant to pay Landlord’s reasonable attorneys’
fees and costs in participating in any action to foreclose such lien if Landlord
shall decide it is to its best interest to do so. If Tenant fails to post such
bond within said time period, Landlord after five (5) days prior written notice
to Tenant may pay the claim prior to the enforcement thereof, in which event
Tenant shall reimburse Landlord in full, including attorneys’ fees, for any such
expense, as additional rent, with the next due rental.

 

12.4                        Restoration. Tenant shall return the Leased Premises
to Landlord at the expiration or earlier termination of this Lease in good and
sanitary order, condition and repair, free of rubble and debris, broom clean,
reasonable wear and tear excepted. However, Tenant shall ascertain from Landlord
at least thirty (30) days prior to the termination of this Lease, whether
Landlord desires the Leased Premises, or any part thereof, restored to its
condition prior to the making of permitted alterations, installations and
improvements, and if Landlord shall so desire, then Tenant shall forthwith
restore said Leased Premises or the designated portions thereof as the case may
be, to its original condition, entirely at its own expense, excepting normal
wear and tear. All damage to the Leased Premises caused by the removal of such
trade fixtures and other personal property that Tenant is permitted to remove
under the terms of this Lease and/or such restoration shall be repaired by
Tenant at its sole cost and expense prior to termination. Notwithstanding the
foregoing, Tenant shall not have to remove the initial Leasehold Improvements
being constructed by Tenant pursuant to Exhibit C attached hereto to the extent
such Leasehold Improvements consist of general office tenant improvements rather
than Tenant’s trade fixtures, furniture, personal property and special
improvements given Tenant’s particular use (such as vaults, safes, special
security devices and the like).

 

ARTICLE 13 PROPERTY INSURANCE

 

13.1                        Use of Premises. No use shall be made or permitted
to be made on the Leased Premises, nor acts done, which will increase the
existing rate of insurance upon the building in which the Leased Premises are
located or upon any other Building in the Complex or cause the cancellation of
any insurance policy covering the Building, or any part thereof, nor shall
Tenant sell, or permit to be kept, used or sold, in or about the Leased
Premises, any article which may be prohibited by the standard form of “All Risk”
fire insurance policies. Tenant shall, at its sole cost and expense, comply with
any and all requirements pertaining to the Leased Premises, of any insurance
organization or company, necessary for the maintenance of reasonable property
damage and commercial general liability insurance, covering the Leased Premises,
the Building, or the Complex.

 

13.2                        Increase in Premiums. Tenant agrees to pay Landlord,
as additional Rent, within ten (10) days after receipt by Tenant of Landlord’s
billing therefor, any increase in premiums for insurance policies which may be
carried by Landlord on the Leased Premises, Building or Complex resulting from
any negligent or intentional act or omission of Tenant or any of its
contractors, partners, officers, employees or agents.

 

13.3                        Personal Property Insurance. Tenant shall maintain
in full force and effect on all of its fixtures, furniture, equipment and other
business personal property in the Leased Premises a policy or policies providing
protection against any peril included within the classification “All Risk” to
the extent of at least ninety percent (90%) of their replacement cost, or that
percentage of the replacement cost required to negate the effect of a
co-insurance provision, whichever is greater. No such policy shall have a
deductible in a greater amount than FIVE THOUSAND DOLLARS ($5,000.00). Tenant
shall also insure in the same manner the physical value of all its alterations
and leasehold improvements in the Leased Premises, other than the Leasehold
Improvements which are attached and affixed to the Premises and do not consist
of Tenant’s trade fixture, furniture, equipment and other business personal
property or special equipment. The parties acknowledge and agree that Landlord
shall

 

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at all time own such Leasehold Improvements described in the preceding sentence.
During the term of this Lease, the proceeds from any such policy or policies of
insurance shall be used for the repair or replacement of the fixtures,
equipment, and leasehold improvements so insured. Landlord shall have no
interest in said insurance, and will sign all documents necessary or proper in
connection with the settlement of any claim or loss by Tenant. Tenant shall also
maintain business interruption insurance and insurance for all plate glass upon
the Leased Premises. All insurance specified in this Section 13.3 to be
maintained by Tenant shall be maintained by Tenant at its sole cost.

 

13.4                        Landlord’s Insurance. In addition to any other
insurance Landlord elects to maintain, Landlord agrees to maintain standard fire
and extended coverage insurance covering the Building in an amount not less than
ninety percent (90%) of the replacement cost thereof (or such greater percentage
as may be necessary to comply with the provisions of any co-insurance clauses of
the policy). Such insurance shall be issued in the names of Landlord and its
lender, as their interests appear, and shall be for the sole benefit of such
parties and under their sole control.

 

ARTICLE 14 INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION

 

14.1                        Intent and Purpose. This Article 14 is written and
agreed to in respect of the intent of the parties to assign the risk of loss,
whether resulting from negligence of the parties or otherwise, to the party who
is obligated hereunder to cover the risk of such loss with insurance. Thus, the
indemnity and waiver of claims provisions of this Lease have as their object, so
long as such object is not in violation of public policy, the assignment of risk
for a particular casualty to the party carrying the insurance for such risk,
without respect to the causation thereof.

 

14.2                        Waiver of Subrogation. Landlord and Tenant release
each other, and their respective authorized representatives, from any claims for
damage to the Leased Premises and the Building and other improvements in which
the Leased Premises are located, and to the furniture, fixtures, and other
business personal property, Tenant’s improvements and alterations of either
Landlord or Tenant, in or on the Leased Premises and the Building and other
improvements in which the Leased Premises are located, including loss of income,
that are caused by or result from risks insured or required under the terms of
this Lease to be insured against under any property insurance policies carried
or to be carried by either of the parties.

 

14.3                        Form of Policy. Each party shall cause each such
insurance policy obtained by it to provide that the insurance company waives all
rights of recovery by way of subrogation against either party in connection with
any damage covered by such policy. Neither party shall be liable to the other
for any damage caused by any peril included within the classification “All Risk”
which is insured against under any property insurance policy carried under the
terms of this Lease.

 

14.4                        Indemnity. Tenant, as a material part of the
consideration to be rendered to Landlord, shall indemnify, defend, protect and
hold harmless Landlord against all actions, claims, demands, damages,
liabilities, losses, penalties, or expenses of any kind which may be brought or
imposed upon Landlord or which Landlord may pay or incur by reason of (a) injury
or death to person or damage to property, from whatever cause, including,
without limitation, the negligence of the parties hereto, all or in any way
connected with the condition or use of the Leased Premises, or the improvements
or personal property therein or thereon, including without limitation any
liability or injury to the person or property of Tenant, its agents, officers,
employees or invitees, and (b) any injury or death to any person or damage to
property caused by the negligence of Tenant or any of its officers, partners,
employees or agents anywhere in the Complex. Nothing contained herein shall
obligate Tenant to indemnify Landlord against the gross negligence or willful
acts of Landlord or its officers, employees or agents. Landlord agrees to
indemnify Tenant for all actions, claims, demands, liabilities, losses, costs
and expenses arising out of the gross negligence or willful misconduct of
Landlord or its officers, employees and agents anywhere in the Complex.

 

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14.5                        Defense of Claims. In the event any action, suit or
proceeding is brought against Landlord by reason of any such occurrence, Tenant,
upon Landlord’s request, will at Tenant’s expense resist and defend such action,
suit or proceeding, or cause the same to be resisted and defended by counsel
designated either by Tenant or by the insurer whose policy covers the occurrence
and in either case approved by Landlord. The obligations of Tenant under this
Section arising by reason of any occurrence taking place during the Lease term
shall survive any termination of this Lease.

 

14.6                        Waiver of Claims. Tenant, as a material part of the
consideration to be rendered to Landlord, hereby waives all claims against
Landlord for damages or injury, as described below, from any cause arising at
any time, for the negligence of the parties hereto except to the extent such
damages or injury are caused by the gross negligence or willful actions of
Landlord, its agents, officers and employees:

 

(a)         damages to goods, wares, merchandise and loss of business in, upon
or about the Leased Premises and injury to Tenant, its agents, employees,
invitees or third persons, in, upon or about the Leased Premises, Building or
Complex; and

 

(b)         (notwithstanding anything to the contrary contained in this Lease,
including, without limitation, the definition of Operating Costs which includes
“policing”) damages to goods, wares, merchandise and loss of business, in, upon
or about the Leased Premises or the Complex, and injury to Tenant, its agents,
employees, invitees or third persons in, upon or about the Leased Premises or
the Complex, where such damage or injury results from Landlord’s failure to
police or provide security for the Complex or Landlord’s negligence in
connection therewith.

 

14.7                        References. Wherever in this Article the term
Landlord or Tenant is used and such party is to receive the benefit of a
provision contained in this Article, such term shall refer not only to that
party but also to its shareholders, officers, directors, employees, partners,
members, managers, mortgagees and agents.

 

ARTICLE 15 LIABILITY INSURANCE

 

15.1                        Tenant’s Insurance. Tenant shall, at Tenant’s
expense, obtain and keep in force during the term of this Lease, a commercial
general liability insurance policy insuring Tenant against the risks of, bodily
injury and property damage, personal injury, contractual liability, completed
operations, products liability, host liquor liability, owned and non-owned
automobile liability arising out of the ownership, use, occupancy or maintenance
of the Leased Premises and all areas appurtenant thereto. Such insurance shall
be a combined single limit policy in an amount not less than ONE MILLION DOLLARS
($1,000,000.00) per occurrence with a TWO MILLION DOLLAR ($2,000,000.00) annual
aggregate. Landlord and any lender and any other party in interest designated by
Landlord shall be named as additional insured(s). The policy shall contain cross
liability endorsements with coverage for Landlord for the negligence of Tenant
even though Landlord is named as an additional insured; shall insure performance
by Tenant of the indemnity provisions of this Lease; shall be primary, not
contributing with, and not in excess of coverage which Landlord may carry; shall
provide for severability of interest; shall provide that an act or omission of
one of the insured or additional insureds which would void or otherwise reduce
coverage shall not void or reduce coverages as to the other insured or
additional insureds; and shall afford coverage after the term of this Lease (by
separate policy or extension if necessary) for all claims based on acts,
omissions, injury or damage which occurred or arose (or the onset of which
occurred or arose) in whole or in part during the term of this Lease. The limits
of said insurance shall not limit any liability of Tenant hereunder. Not more
frequently than every year, if, in the reasonable opinion of Landlord, the
amount of liability insurance required hereunder is not adequate, Tenant shall
promptly increase said insurance coverage as required by Landlord.

 

15.2                        Workers’ Compensation Insurance. Tenant shall carry
Workers’ Compensation insurance as required by law, including an employers’
liability endorsement.

 

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ARTICLE 16 INSURANCE POLICY REQUIREMENTS & INSURANCE DEFAULTS

 

16.1                        General Requirements. All insurance policies
required to be carried by Tenant (except Tenant’s business personal property
insurance) hereunder shall conform to the following requirements:

 

(a)         The insurer in each case shall carry a designation in “Best’s
Insurance Reports” as issued from time to time throughout the term as follows:
Policyholders’ rating of A; financial rating of not less than VII;

 

(b)         The insurer shall be qualified to do business in the state in which
the Leased Premises are located;

 

(c)          The policy shall be in a form and include such endorsements as are
acceptable to Landlord;

 

(d)         Certificates of insurance shall be delivered to Landlord at
commencement of the term and certificates of renewal at least thirty (30) days
prior to the expiration of each policy;

 

(e)          Each policy shall require that Landlord be notified in writing by
the insurer at least thirty (30) days prior to any cancellation or expiration of
such policy, or any reduction in the amounts of insurance carried.

 

16.2                        Tenant’s Insurance Defaults. If Tenant fails to
obtain any insurance required of it under the terms of this Lease, Landlord may,
at its option, but is not obligated to, obtain such insurance on behalf of
Tenant and bill Tenant, as additional rent, for the cost thereof. Payment shall
be due within ten (10) days of receipt of the billing therefor by Tenant.

 

ARTICLE 17 FORFEITURE OF PROPERTY AND LESSOR’S LIEN

 

17.1                        Removal of Personal Property. Tenant agrees that as
at the date of termination of this Lease or repossession of the Leased Premises
by Landlord, by way of default or otherwise, it shall remove all personal
property to which it has the right to ownership pursuant to the terms of this
Lease. Any and all such property of Tenant not removed by such date shall, at
the option of Landlord, irrevocably become the sole property of Landlord. Tenant
waives all rights to notice and all common law and statutory claims and causes
of action which it may have against Landlord subsequent to such date as regards
the storage, destruction, damage, loss of use and ownership of the personal
property affected by the terms of this Article. Tenant acknowledges Landlord’s
need to relet the Leased Premises upon termination of this Lease or repossession
of the Leased Premises and understands that the forfeitures and waivers provided
herein are necessary to aid said reletting, and to prevent Landlord incurring a
loss for inability to deliver the Leased Premises to a prospective Tenant.

 

ARTICLE 18 MAINTENANCE AND REPAIRS

 

18.1                        Landlord’s Obligations. Subject to the other
provisions of this Lease imposing obligations in this respect upon Tenant,
Landlord shall repair, replace and maintain the external and Structural parts of
the Building and Common Areas of the Complex which do not comprise a part of the
Leased Premises and are not leased to others, janitor and equipment closets and
shafts within the Leased Premises designated by Landlord for use by it in
connection with the operation and maintenance of the Complex, and all Common
Areas. Landlord shall perform such repairs, replacements and maintenance with
reasonable dispatch, in a good and workmanlike manner; but Landlord shall not be
liable for any damages, direct, indirect or consequential, or for damages for
personal discomfort, illness or inconvenience of Tenant by reason of failure of
such equipment, facilities or systems or reasonable delays in the performance of
such repairs, replacements and maintenance, unless caused by the gross
negligence or deliberate act or omission of Landlord. Subject to any limitations
set forth elsewhere in this Lease, the cost for such repairs, maintenance and
replacement shall be included in Operating Costs.

 

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18.2                        Negligence of Tenant. If the Building, the
elevators, boilers, engines, pipes or apparatus used for the purpose of climate
control of the Building or operating the elevators, or if the water pipes,
drainage pipes, electric lighting or other equipment of the Building, or the
roof or the outside walls of the Building, fall into a state of disrepair or
become damaged or destroyed through the gross negligence or intentional act of
Tenant, its agents, officers, partners, employees or servants, the cost of the
necessary repairs, replacements or alterations shall be borne by Tenant who
shall pay the same to Landlord as additional charges forthwith on demand, except
to the extent provided in section 14.2 (the waiver of subrogation) hereof.

 

18.3                        Tenant’s Obligations. Tenant shall repair the Leased
Premises, including without limiting the generality of the foregoing, all
interior partitions and walls, fixtures, Leasehold Improvements and alterations
in the Leased Premises, fixtures and shelving, and special mechanical and
electrical equipment which equipment is not a normal part of the Leased Premises
installed by or for Tenant, reasonable wear and tear, damage with respect to
which Landlord has an obligation to repair as provided in Section 18.1 and
Section 19 hereof only excepted. Landlord may enter and view the state of repair
and Tenant will repair in a good and workmanlike manner according to notice in
writing. Tenant shall not be responsible for any repair costs to the extent for
which: (i) Landlord was required to insure against; (ii) structural portions of
the Leased Premises (unless due to the negligence or willful misconduct of
Tenant or any of its employees, contractors or agents, but subject to the waiver
of subrogation provisions of Section 14.2), or (iii) are associated with
construction defects with respect to improvement work performed by Landlord or
Landlord’s contractors.

 

18.4                        Cleaning. Tenant agrees at the end of each business
day to leave the Leased Premises in a reasonably clean condition for the purpose
of the performance of Landlord’s cleaning services referred to herein.

 

18.5                        Waiver. Tenant waives all rights it may have under
law to make repairs at Landlord’s expense.

 

18.6                        Acceptance. Except as to the construction
obligations of Landlord, if any, stated in Exhibit C to this Lease, Tenant shall
accept the Leased Premises in “as is” condition as of the date of execution of
this Lease by Tenant, and subject to the punch list items referenced in section
4.5, Tenant acknowledges that the Leased Premises in such condition are in good
and sanitary order, condition and repair.

 

ARTICLE 19 DESTRUCTION

 

19.1                        Rights of Termination. In the event the Leased
Premises suffers (a) an “uninsured property loss” (as hereinafter defined) or
(b) a property loss which cannot be repaired within one hundred eight (180) days
from the date of destruction under the laws and regulations of state, federal,
county or municipal authorities, or other authorities with jurisdiction,
Landlord may terminate this Lease as of the date of the damage within twenty
(20) days of written notice from Landlord to Tenant that the damage from the
casualty was an uninsured property loss or that time to restore will exceed such
one hundred eight (180) day period. In the event of a property loss to the
Leased Premises which cannot be repaired within one hundred eight (180) days of
the occurrence thereof, Tenant shall also have the right to terminate the Lease
by written notice to Landlord within twenty (20) days following notice from
Landlord that the time for restoration shall exceed one hundred eight (180)
days. For purposes of this Lease, the term “uninsured property loss” shall mean
any loss arising from a peril not covered by the standard form of “All Risk”
property insurance policy.

 

19.2                        Repairs. In the event of a property loss which may
be repaired within one hundred eight (180) days from the date of the damage, or,
in the alternative, in the event the parties do not elect to terminate this
Lease under the terms of Section 19.1 above, then this Lease shall continue in
full force and effect and Landlord shall forthwith undertake to make such
repairs to reconstitute the Leased Premises to as near the condition as existed
prior to the property loss as practicable. Such partial destruction shall in no
way annul or void this Lease except that Tenant shall be entitled to a
proportionate reduction of Minimum Monthly Rent following the property loss and
until the time the Leased Premises are restored. Such reduction shall be based

 

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on the ratio that the square footage of the damaged portion of the Leased
Premises bears to the total square footage of the Leased Premises. So long as
Tenant conducts its business in the Leased Premises, there shall be no abatement
until the parties agree on the amount thereof. If the parties cannot agree
within forty-five (45) days of the property loss, the matter shall be submitted
to arbitration under the rules of the American Arbitration Association. Upon the
resolution of the dispute, the settlement shall be retroactive and Landlord
shall within ten (10) days thereafter refund to Tenant any sums due in respect
of the reduced rental from the date of the property loss. Landlord’s obligations
to restore shall in no way include any construction originally performed by
Tenant or subsequently undertaken by Tenant.

 

19.3                        Repair Costs. The cost of any repairs to be made by
Landlord, pursuant to Section 19.2 of this Lease, shall be paid by Landlord
utilizing available insurance proceeds. Tenant shall reimburse Landlord upon
completion of the repairs for any deductible for which no insurance proceeds
will be obtained under Landlord’s insurance policy, or if other premises are
also repaired, a pro rata share based on total costs of repair equitably
apportioned to the Leased Premises. Tenant shall, however, not be responsible to
pay any deductible or its share of any deductible to the extent that Tenant’s
payment would be in excess of $5,000, and Tenant shall not be responsible for
payment of any insurance deductible for damage to other leased premises in the
Building.

 

19.4                        Waiver. Tenant hereby waives all statutory or common
law rights of termination in respect to any partial destruction or property loss
which Landlord is obligated to repair or may elect to repair under the terms of
this Article.

 

19.5                        Landlord’s Election. In the event that the Complex
or Building is destroyed to the extent of not less than thirty-three and
one-third percent (33-1/3%) of the replacement cost thereof, Landlord may elect
to terminate this Lease, whether the Leased Premises be injured or not, in the
same manner as in Section 19.1 above. In all events, a total destruction of the
Complex or Building shall terminate this Lease.

 

19.6                        Damage Near End of Term. If at any time during the
last twelve (12) months of the term of this Lease there is, in Landlord’s sole
opinion, substantial damage to the Leased Premises or the Building, whether or
not such casualty is covered in whole or in party by insurance, Landlord may at
Landlord’s option cancel and terminate this Lease as of the date of occurrence
of such damage by giving written notice to Tenant of Landlord’s election to do
so within thirty (30) days after the date of occurrence of such damage and
Landlord shall have no further liability hereunder. Substantial damage shall be
defined as damage that will cost over $50,000.00 to repair.

 

ARTICLE 20 CONDEMNATION

 

20.1                        Definitions.

 

(a)           “Condemnation” means (i) the exercise of any governmental power,
whether by legal proceedings or otherwise, by a condemnor and/or (ii) a
voluntary sale or transfer by Landlord to any condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending.

 

(b)           “Date of taking” means the date the condemnor has the right to
possession of the property being condemned.

 

(c)            “Award” means all compensation, sums or anything of value
awarded, paid or received on a total or partial condemnation.

 

(d)           “Condemnor” means any public or quasi-public authority, or private
corporation or individual, having the power of condemnation.

 

20.2                        Total Taking. If the Leased Premises are totally
taken by condemnation, this Lease shall terminate on the date of taking.

 

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20.3                        Partial Taking; Common Areas.

 

(a)         If any portion of the Leased Premises is taken by condemnation, this
Lease shall remain in effect, except that Tenant can elect to terminate this
Lease if 33-1/3% or more of the total number of square feet in the Leased
Premises is taken.

 

(b)         If any part of the Common Areas of the Complex is taken by
condemnation, this Lease shall remain in full force and effect so long as there
is no material interference with the access to the Leased Premises, except that
if thirty percent (30%) or more of the Common Areas is taken by condemnation,
Landlord or Tenant shall have the election to terminate this Lease pursuant to
this Section.

 

(c)          If fifty percent (50%) or more of the Building in which the Leased
Premises are located is taken, Landlord shall have the election to terminate
this Lease in the manner prescribed herein.

 

20.4                        Termination or Abatement. If either party elects to
terminate this Lease under the provisions of Section 20.3 (such party is
hereinafter referred to as the “Terminating Party”), it must terminate by giving
notice to the other party (the “Nonterminating Party”) within thirty (30) days
after the nature and extent of the taking have been finally determined (the
“Decision Period”). The Terminating Party shall notify the Nonterminating Party
of the date of termination, which date shall not be earlier than one hundred
twenty (120) days after the Terminating Party has notified the Nonterminating
Party of its election to terminate nor later than the date of taking. If Notice
of Termination is not given within the Decision Period, the Lease shall continue
in full force and effect except that Minimum Monthly Rent shall be reduced by
subtracting therefrom an amount calculated by multiplying the Minimum Monthly
Rent in effect prior to the taking by a fraction the numerator of which is the
number of square feet taken from the Leased Premises and the denominator of
which is the number of square feet in the Leased Premises prior to the taking.

 

20.5                        Restoration. If there is a partial taking of the
Leased Premises and this Lease remains in full force and effect pursuant to this
Article, Landlord, at its cost, shall accomplish all necessary restoration so
that the Leased Premises is returned as near as practical to its condition
immediately prior to the date of the taking, but in no event shall Landlord be
obligated to expend more for such restoration than the extent of funds actually
paid to Landlord by the condemnor.

 

20.6                        Award. Any award arising from the condemnation or
the settlement thereof shall belong to and be paid to Landlord except that
Tenant shall receive from the award compensation for the following if specified
in the award by the condemning authority, so long as it does not reduce
Landlord’s award in respect of the real property: Tenant’s trade fixtures,
tangible personal property, goodwill, loss of business and relocation expenses.
At all events, Landlord shall be solely entitled to all award in respect of the
real property, including the bonus value of the leasehold. Tenant shall not be
entitled to any award until Landlord has received the above sum in full.

 

ARTICLE 21 ASSIGNMENT AND SUBLETTING

 

21.1                        Lease is Personal. The purpose of this Lease is to
transfer possession of the Leased Premises to Tenant for Tenant’s personal use
in return for certain benefits, including rent, to be transferred to the
Landlord. Tenant acknowledges and agrees that it has entered into this Lease in
order to occupy the Leased Premises for its own personal use and not for the
purpose of obtaining the right to assign or sublet the leasehold to others.

 

21.2                        “Transfer of the Leased Premises” Defined. Except
for transfer described in section 21.5 hereof, the terms “Transfer of the Leased
Premises” or “Transfer” as used herein shall include any assignment of all or
any part this Lease (including an assignment by operation of law), subletting of
all or any part the Leased Premises or transfer of possession, or right of
possession or contingent right of possession of all or any portion of the Leased
Premises including, without limitation, concession, mortgage, deed of trust,
devise,

 

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hypothecation, agency, franchise or management agreement, or the occupancy or
use by any other person (the agents and servants of Tenant excepted) of any
portion of the Leased Premises. If Tenant is a corporation which is not deemed a
public corporation, or is an unincorporated association , partnership or limited
liability company or partnership, or consists of more than one party, the
transfer, assignment or hypothecation of any stock or interest in such
corporation, association, partnership, limited liability company or ownership
interest, in the aggregate (whether in a single transaction or series of
separate but related transactions over a period of time) of twenty-five percent
(25%) or more, shall be deemed a Transfer of the Leased Premises.

 

21.3                        No Transfer Without Consent. Except for a Transfer
described in section 21.5 hereof, Tenant shall not suffer a Transfer of the
Leased Premises or any interest therein, or any part thereof, or any right or
privilege appurtenant thereto without the prior written consent of Landlord, and
a consent to one Transfer of the Leased Premises shall not be deemed to be a
consent to any subsequent Transfer of the Leased Premises. Any Transfer of the
Leased Premises without such consent shall be void, and shall, at the option of
Landlord, terminate this Lease. Any Transfer of the Leased Premises without such
consent shall (i) be voidable, and (ii) terminate this Lease, in either case, at
the option of Landlord. The consent by Landlord to any Transfer shall not
include consent to the assignment or transferring of any lease renewal option
rights or space option rights of the Leased Premises, special privileges or
extra services granted to Tenant by this Lease, or addendum or amendment thereto
or letter of agreement (and such options, rights, privileges or services shall
terminate upon such assignment), unless Landlord specifically grants in writing
such options, rights, privileges or services to such assignee or subtenant.

 

21.4                        When Consent Granted. The consent of Landlord to a
Transfer may not be unreasonably withheld, provided that it is agreed to be
reasonable for Landlord to consider any of the following reasons, which list is
not exclusive, in electing to deny consent:

 

(a)         The financial strength of the proposed transferee at the time of the
proposed Transfer is not at least equal to that of Tenant at the time of
execution of this Lease;

 

(b)         A proposed transferee whose occupation of the Leased Premises would
cause a diminution in the reputation of the Complex or the other businesses
located therein;

 

(c)          A proposed transferee whose impact or affect on the common
facilities or the utility, efficiency or effectiveness of any utility or
telecommunication system serving the Building or the Complex or the other
occupants of the Complex would be adverse, disadvantageous or require
improvements or changes in any utility or telecommunication capacity currently
serving the Building or the Complex;

 

(d)         A proposed transferee whose occupancy will require a variation in
the terms of this Lease (including, without limitation, a variation in the use
clause) or which otherwise adversely affects any interest of Landlord;

 

(e)          Tenant agrees that its personal business skills and philosophy were
an important inducement to Landlord for entering into the Lease and that
Landlord may reasonably object to the Transfer of the Leased Premises to another
whose proposed use, while permitted by the use clause of this Lease, would
involve a quality, manner or type of business skills different from those of
Tenant;

 

(f)           The existence of any default by Tenant under any provision of this
Lease;

 

(g)          A proposed transferee who is or is likely to be, or whose business
is or is likely to be, subject to compliance with additional laws or other
governmental requirements beyond those to which Tenant or Tenant’s business is
subject;

 

(h)         Either the proposed transferee, or any person or entity which
directly or indirectly,

 

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controls, is controlled by, or is under common control with, the proposed
transferee or an affiliate of the proposed transferee, (i) occupies space in the
Building at the time of the request for consent, or (ii) is negotiating with
Landlord to lease space in the Building or in the Complex at such time;

 

(i)             the proposed Transferee is a governmental agency or unit or an
existing tenant in the Complex;

 

(j)            Landlord otherwise determines that the proposed Transfer would
have the effect of decreasing the value of the Building or the Complex, or
increasing the expenses associated with operating, maintaining and repairing the
Building or the Complex;

 

(k)         the proposed Transferee will use, store or handle Hazardous
Materials (defined below) in or about the Leased Premises of a type, nature or
quantity not then acceptable to Landlord.

 

21.5                        Permitted Transfer. Notwithstanding anything to the
contrary in Article 21 or elsewhere in this Lease, Tenant shall have the right,
without the consent of Landlord, but upon prior written notice to Landlord and
after delivery to Landlord of a copy of the executed Transfer document whereby
the transferee expressly assumes Tenant’s obligations under this Lease, to enter
into a Transfer to any party which directly or indirectly (i) wholly owns or
controls Tenant; (ii) is wholly owned or controlled by Tenant; (iii) is under
common ownership or control with Tenant; or (iv) into which Tenant or any of the
foregoing parties is merged, consolidated or reorganized, or to which all or
substantially all of tenant’s assets or ay such other part’s assets are sold,
provided that the transferee following a Transfer under this clause (iv) has a
net worth not less than the net worth of Tenant as evidenced by such
transferee’s current audited financial statements. Any Transfer under this
Section 21.5 shall be referred to herein as a “Permitted Transfer.” The
provisions of Sections 21.1 through 21.10 (other that this Section 21.5) shall
not apply to a Permitted Transfer. However, any Permitted Transfer shall not
release Tenant of any of its obligations under this Lease.

 

21.6                        Procedure for Obtaining Consent. With respect to a
Transfer requiring Landlord’s consent, Landlord need not commence its review of
any proposed Transfer, or respond to any request by Tenant with respect to such,
unless and until it has received from Tenant adequate descriptive information
concerning the business to be conducted by the proposed transferee, the
transferee’s financial capacity, and such other information as may reasonably be
required in order to form a prudent judgment as to the acceptability of the
proposed Transfer, including, without limitation, the following;

 

(a)         The past two years’ Federal Income Tax returns of the proposed
transferee if such transferee is a privately owned entity, or in the alternative
the past two years’ audited annual Balance Sheets and Profit and Loss
statements, certified correct by a Certified Public Accountant;

 

(b)         Banking references of the proposed transferee;

 

(c)          A resume of the business background and experience of the proposed
transferee;

 

(d)         At least five (5) business and three (3) personal references for the
proposed transferee; and

 

(e)          An executed copy of the instrument by which Tenant proposes to
effectuate the Transfer.

 

21.7                        Recapture. By written notice to Tenant (the
“Termination Notice”) within thirty (30) days following submission to Landlord
by Tenant of the information specified in section 21.6, Landlord may
(1) terminate this Lease in the event of an assignment of this Lease or sublet
of the entire Leased Premises, or (2) terminate this Lease as to the portion of
the Leased Premises to be sublet, if the sublet is to be of less than the entire
Leased Premises. If Landlord elects to terminate under the provisions hereof,
and the area to be terminated is less than the entire Leased Premises, an
amendment to this Lease shall be executed in which Tenant’s obligations for rent
and other charges shall be reduced in proportion to the reduction in the size of
the

 

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Leased Premises caused thereby by restating the description of the Leased
Premises, and its monetary obligations hereunder shall be reduced by multiplying
such obligations by a fraction, the numerator of which is the Rentable Area of
the Leased Premises offered for sublease and the denominator of which is the
Rentable Area of the Leased Premises immediately prior to such termination, as
determined by Landlord in its sole and absolute discretion.

 

21.8                        Reasonable Restriction. The restrictions on Transfer
described in this Lease are acknowledged by Tenant to be reasonable for all
purposes, including, without limitation, the provisions of California Civil Code
(the “Code”) Section 1951.4(b)(2). Tenant expressly waives any rights which it
might otherwise be deemed to possess pursuant to applicable law, including,
without limitation, Section 1997.040 of the Code, to limit any remedy of
Landlord pursuant to Section 1951.2 or 1951.4 of the Code by means of proof that
enforcement of a restriction on use of the Leased Premises would be
unreasonable.

 

21.9                        Effect of Transfer. If Landlord consents to a
Transfer and does not elect to recapture as provided in section 21.7, the
following conditions shall apply:

 

(a)         Each and every covenant, condition or obligation imposed upon Tenant
by this Lease and each and every right, remedy or benefit afforded Landlord by
this Lease shall not be impaired or diminished as a result of such Transfer.

 

(b)         Tenant shall pay to Landlord on a monthly basis, eighty percent
(80%) of the excess of any sums of money, or other economic consideration
received by Tenant from the Transferee in such month (whether or not for a
period longer than one month), including higher rent, bonuses, key money, or the
like over the aggregate of (i) the amortized portion of the reasonable and
customary expenses actually paid by Tenant to unrelated third parties for
brokerage commissions, design fees, tenant improvements and legal fees incurred
as a direct consequence of the Transfer, and (ii) the total sums which Tenant
pays Landlord under this Lease in such month, or the prorated portion thereof if
the Leased Premises transferred is less than the entire Leased Premises. The
amount so derived shall be paid with Tenant’s payment of Minimum Monthly Rent.
The term “amortized portion” is that portion of the applicable expenses derived
by dividing such expenses by the number of months in the original term
(excluding extension options) of the Transfer transaction.

 

(c)          No Transfer, whether or not consent of Landlord is required
hereunder, shall relieve Tenant of its primary obligation to pay the rent and to
perform all other obligations to be performed by Tenant hereunder. The
acceptance of rent by Landlord from any person shall not be deemed to be a
waiver by Landlord of any provision of this Lease or to be a consent to any
Transfer of the Leased Premises.

 

(d)         If Landlord consents to a sublease, such sublease shall not extend
beyond the expiration of the Term of this Lease.

 

(e)          No Transfer shall be valid and no transferee shall take possession
of the Leased Premises or any part thereof unless, Tenant shall deliver to
Landlord, at least ten (10) days prior to the effective date of such Transfer, a
duly executed duplicate original of the Transfer instrument in form satisfactory
to Landlord which provides that (i) the transferee assumes Tenant’s obligations
for the payment of rent and for the full and faithful observance and performance
of the covenants, terms and conditions contained herein, (ii) such transferee
will, at Landlord’s election, attorn directly to Landlord in the event Tenant’s
Lease is terminated for any reason on the terms set forth in the instrument of
transfer and (iii) such instrument of transfer contains such other assurances as
Landlord reasonably deems necessary.

 

21.10                 Costs. Tenant shall reimburse Landlord as additional rent
for Landlord’s reasonable costs and attorneys’ fees incurred in conjunction with
the processing and documentation of any proposed Transfer of the Leased
Premises, whether or not consent is granted.

 

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ARTICLE 22 ENTRY BY LESSOR

 

22.1                        Rights of Landlord. Tenant shall permit Landlord and
Landlord’s agents and any mortgagee under a mortgage or beneficiary under a deed
of trust encumbering the Building containing the Leased Premises and such
party’s agents to enter the Leased Premises at all reasonable times for the
purpose of (a) inspecting the same, (b) maintaining the Building, (c) making
repairs, replacements, alterations or additions to any portion of the Building,
including the erection and maintenance of such scaffolding, canopies, fences and
props as may be required, (d) posting notices of non-responsibility for
alterations, additions or repairs, (c) placing upon the Building any usual or
ordinary “for sale” signs and showing the space to prospective purchasers,
investors and lenders, without any rebate of rent and without any liability to
Tenant for any loss of occupation or quiet enjoyment of the Leased Premises
thereby occasioned, and (e) placing on the Leased Premises any “to let” or “to
lease” signs and marketing and showing the Leased Premises to prospective
tenants at any time within six (6) months prior to the expiration of this Lease.
This Section in no way affects the maintenance obligations of the parties
hereto.

 

ARTICLE 23 SIGNS

 

23.1                        Approval, Installation and Maintenance. Tenant shall
not place on the Leased Premises or on the Building or Common Areas of the
Complex, any exterior signs or advertisements nor any interior signs or
advertisements that are visible from the exterior of the Leased Premises,
without Landlord’s prior written consent, which Landlord reserves the right to
withhold for any aesthetic or other reason in its sole and absolute discretion.
The cost of installation and regular maintenance of any such signs approved by
Landlord shall be at the sole expense of Tenant. At the termination of this
Lease, or any extension thereof, Tenant shall remove all its signs, and all
damage caused by such removal shall be repaired at Tenant’s expense.
Notwithstanding the foregoing, Landlord agrees to provide a listing of Tenant on
the Building directory in the ground floor lobby, and Tenant shall be entitled
to install and maintain, on or near the entrance door to the Leased Premises,
signage identifying Tenant, subject to Landlord’s reasonable discretion as to
the type, sign, color and design of such sign.

 

ARTICLE 24 DEFAULT

 

24.1                        Definition. The occurrence of any of the following
shall constitute a material default and breach of this Lease by Tenant:

 

(a)         Payment. Any failure by Tenant to pay the rent or to make any other
payment required to be made by Tenant hereunder when due;

 

(b)         Other Covenants. A failure by Tenant to observe and perform any
other provision of this Lease to be observed or performed by Tenant, where such
failure continues for ten (10) days after written notice thereof by Landlord to
Tenant; provided, however, that if the nature of the default is such that the
same cannot reasonably be cured within the ten (10) day period allowed, Tenant
shall not be deemed to be in default if Tenant shall, within such ten (10) day
period, commence to cure and thereafter diligently prosecute the same to
completion; or

 

(c)          Receivership. Either (1) the appointment of a receiver (except a
receiver appointed at the instance or request of Landlord) to take possession of
all or substantially all of the assets of Tenant, or (2) a general assignment by
Tenant for the benefit of creditors, or (3) any action taken or suffered by
Tenant under any insolvency or bankruptcy act shall constitute a breach of this
Lease by Tenant. In such event, Landlord may, at its option, declare this Lease
terminated and forfeited by Tenant, and Landlord shall be entitled to immediate
possession of the Leased Premises. Upon such notice of termination, this Lease
shall terminate immediately and automatically by its own limitation.

 

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ARTICLE 25 REMEDIES UPON DEFAULT

 

25.1                        Termination and Damages. In the event of any default
by Tenant, then in addition to any other remedies available to Landlord herein
or at law or in equity, Landlord shall have the immediate option to terminate
this Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. In the event that Landlord shall elect to so terminate
this Lease, then Landlord may recover from Tenant:

 

(a)         The worth at the time of award of any unpaid rent which had been
earned at the time of such termination; plus

 

(b)         The worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award
exceeds the amount of such rental loss Tenant proves could have been reasonably
avoided; plus

 

(c)          The worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided; plus

 

(d)         Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant’s failure to perform its obligations
under this Lease or which in the ordinary course of events would be likely to
result therefrom; and

 

(e)          At Landlord’s election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by the applicable
law in the state in which the Leased Premises are located.

 

25.2                        Definition. As used in subsections 26.1(a) and
(b) above, the “worth at the time of award” is computed by allowing interest at
the rate often percent (10%) per annum. As used in subsection 26.1(c) above, the
“worth at the time of award” is computed by discounting such amount at the
discount rate of the Federal Reserve Bank for the region in which the Complex is
located at the time of award plus one percent (1%).

 

25.3                        Personal Property. In the event of any default by
Tenant, Landlord shall also have the right and option, with or without
terminating this Lease, to do any one or combination of the following:

 

(a)         to reenter the Leased Premises and remove all persons and property
from the Leased Premises;

 

(b)         to have all of Tenant’s fixtures, furniture, equipment,
improvements, additions, alterations and other personal property remain upon the
Leased Premises during the length of any default by Tenant or a lesser period;
or

 

(c)          to require Tenant to forthwith remove such property.

 

Landlord shall have the sole right to take exclusive possession of such property
and to use it, rent, or charge free, until all defaults are cured. If Landlord
shall remove property from the Leased Premises, Landlord may, in its sole and
absolute discretion, store such property in the Complex, in a public warehouse
or elsewhere. All costs incurred by Landlord under this section, including,
without limitation, those for removal and storage (including, without
limitation, charges imposed by Landlord for storage within the Complex), shall
be at the sole cost of and for the account of Tenant. The rights stated herein
are in addition to Landlord’s rights described in Article 17.

 

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25.4        Recovery of Rent; Reletting.

 

(a)         In the event of the vacation or abandonment of the Leased Premises
by Tenant or in the event that Landlord shall elect to reenter as provided in
Section 25.3 above, or shall take possession of the Leased Premises pursuant to
legal proceeding or pursuant to any notice provided by law, then if Landlord
does not elect to terminate this Lease as provided in Section 25.1 above, 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, without limitation, Landlord’s right from
time to time, without terminating this Lease, to either recover all rental as it
becomes due or relet the Leased Premises or any part thereof for such term or
terms and at such rental or rentals and upon such other terms and conditions as
Landlord, in its sole discretion, may deem advisable with the right to make
alterations and repairs to the Leased Premises. Acts of maintenance or
preservation or efforts to relet the Leased Premises or the appointment of a
receiver upon initiation of Landlord or other legal proceeding granting Landlord
or its agent possession to protect Landlord’s interest under this Lease shall
not constitute a termination of Tenant’s right to possession.

 

(b)         In the event that Landlord shall elect to so relet, then rentals
received by Landlord from such reletting shall be applied: first, to the payment
of any indebtedness other than rent due hereunder from Tenant to Landlord;
second, to the payment of any cost of such reletting; third, to the payment of
the cost of any alterations and repairs to the Leased Premises ; fourth, to the
payment of rent due and unpaid hereunder; and the residue, if any, shall be held
by Landlord and applied in payment of future rent as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied by the payment of rent hereunder,
be less than the rent payable during that month by Tenant hereunder, then Tenant
shall pay such deficiency to Landlord immediately upon demand therefor by
Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and expenses incurred by
Landlord in such reletting or in making such alterations and repairs not covered
by the rentals received from such reletting.

 

(c)          No reentry or taking possession of the Leased Premises or any other
action under this Section shall be construed as an election to terminate this
Lease unless a written notice of such intention be given to Tenant or unless the
termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord because of any
default by Tenant, Landlord may at any time after such reletting elect to
terminate this Lease for any such default.

 

(d)         Landlord has the remedy described in California Civil Code
Section 1951.4 (Landlord may continue Lease in effect after Tenant’s breach and
abandonment and recover rent as it becomes due, if Tenant has right to sublet or
assign, subject only to reasonable limitations).

 

25.5                        No Waiver. Efforts by Landlord to mitigate the
damages caused by Tenant’s default in this Lease shall not constitute a waiver
of Landlord’s right to recover damages hereunder, nor shall Landlord have any
obligation to mitigate damages hereunder.

 

25.6                        Curing Defaults. Should Tenant fail to repair,
maintain, and/or service the Leased Premises, or any part or contents thereof at
any time or times, or perform any other obligations imposed by this Lease or
otherwise, then after having given Tenant reasonable notice of the failure or
failures and a reasonable opportunity which in no case shall exceed thirty (30)
days, to remedy the failure, Landlord may perform or contract for the
performance of the repair, maintenance, or other Tenant obligation, and Tenant
shall pay Landlord for all direct and indirect costs incurred in connection
therewith within ten (10) days of receiving a bill therefor from Landlord.

 

25.7                        Cumulative Remedies. The various rights, options,
election powers, and remedies of Landlord contained in this Article and
elsewhere in this Lease shall be construed as cumulative and no one of them
exclusive of any others or of any legal or equitable remedy which Landlord might
otherwise have in the event of breach or default, and the exercise of one right
or remedy by Landlord shall not in any way impair its right to any other right
or remedy.

 

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ARTICLE 26 BANKRUPTCY

 

26.1                        Bankruptcy Events. If at any time during the term of
this Lease there shall be filed by or against Tenant in any court pursuant to
any statute either of the United States or of any state a petition in bankruptcy
or insolvency or for reorganization or for the appointment of a receiver or
trustee of all or a portion of Tenant’s property, or if a receiver or trustee
takes possession of any of the assets of Tenant, or if the leasehold interest
herein passes to a receiver, or if Tenant makes an assignment for the benefit of
creditors or petitions for or enters into an arrangement (any of which are
referred to herein as “a bankruptcy event”), then the following provisions shall
apply:

 

(a)         Assume or Reject. At all events any receiver or trustee in
bankruptcy or Tenant as debtor in possession (“debtor”) shall either expressly
assume or reject this Lease within the earlier of sixty (60) days following the
entry of an “Order for Relief” or such earlier period of time provided by law.

 

(b)         Cure. In the event of an assumption of the Lease by a debtor,
receiver or trustee, such debtor, receiver or trustee shall immediately after
such assumption (1) cure any default or provide adequate assurances that
defaults will be promptly cured; and (2) compensate Landlord for actual
pecuniary loss or provide adequate assurances that compensation will be made for
actual pecuniary loss; and (3) provide adequate assurance of future performance.

 

(c)          Adequate Assurance. For the purposes of paragraph 26.1(b), adequate
assurance of future performance of all obligations under this Lease shall
include, but is not limited to:

 

(1)            written assurance that rent and any other consideration due under
the Lease shall first be paid before any other of Tenant’s costs of operation of
its business in the Leased Premises is paid;

 

(2)            written agreement that assumption of this Lease will not cause a
breach of any provision hereof including, but not limited to, any provision
relating to use or exclusivity in this or any other Lease, or agreement relating
to the Leased Premises, or if such a breach is caused, the debtor, receiver or
trustee will indemnify Landlord against such loss (including costs of suit and
attorneys’ fees), occasioned by such breach;

 

(d)         Landlord’s Obligation. Where a default exists under the Lease, the
party assuming the Lease may not require Landlord to provide services or
supplies incidental to the Lease before its assumption by such trustee or
debtor, unless Landlord is compensated under the terms of the Lease for such
services and supplies provided before the assumption of such Lease.

 

(e)          Assignment. The debtor, receiver, or trustee may assign this Lease
only if adequate assurance of future performance by the assignee is provided,
whether or not there has been a default under the Lease. Any consideration paid
by any assignee in excess of the rental reserved in the Lease shall be the sole
property of, and paid to, Landlord. Upon assignment by the debtor or trustee,
the obligations of the Lease shall be deemed to have been assumed, and the
assignee shall execute an assignment agreement on request of Landlord.

 

(f)           Fair Value. Landlord shall be entitled to the fair market value
for the Leased Premises and the services provided by Landlord (but in no event
less than the rental reserved in the Lease) subsequent to the commencement of a
bankruptcy event.

 

(g)          Reservation of Rights. Landlord specifically reserves any and all
remedies available to Landlord in Article 25 hereof or at law or in equity in
respect of a bankruptcy event by Tenant to the extent such remedies are
permitted by law.

 

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ARTICLE 27 SURRENDER OF LEASE

 

27.1                        No Merger. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work as a merger,
and shall, at the option of Landlord, terminate all or any existing subleases or
subtenancies, or may, at the option of Landlord, operate as an assignment to it
of any or all such subleases or subtenancies.

 

ARTICLE 28 LANDLORD’S EXCULPATION

 

28.1                        Limited Liability. In the event of default, breach,
or violation by Landlord (which term includes Landlord’s partners, members,
managers, co-venturers, co-tenants, officers, directors, employees, agents, or
representatives) of any Landlord’s obligations under this Lease, Landlord’s
liability to Tenant shall be limited to its ownership interest in the Leased
Premises (or its interest in the Building, if applicable) or the proceeds of a
public sale of such interest pursuant to foreclosure of a judgment against
Landlord.

 

ARTICLE 29 ATTORNEYS’ FEES

 

29.1                        Attorneys’Fees. In the event of any litigation or
arbitration (if each party in its sole and absolute discretion elects to use
arbitration) proceeding between the parties with respect to this Lease, then all
costs and expenses, including without limitation, all reasonable professional
fees such as appraisers’, accountants’ and attorneys’ fees, incurred by the
prevailing party therein shall be paid or reimbursed by the other party. The
“prevailing party” means the party determined by the court or arbitrator (if the
parties elected to use arbitration) to have most nearly prevailed, even if such
party did not prevail in all matters, not necessarily the one in whose favor a
judgment is rendered. Further, in the event of any default by a party under this
Agreement after notice and the expiration of the applicable cure period, such
defaulting party shall pay all the expenses and attorneys’ fees incurred by the
other party in connection with such default, whether or not any litigation is
commenced. Should Landlord be named as a defendant or requested or required to
appear as a witness or produce any documents in any suit brought by Tenant
against any other party or 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 without limitation, all reasonable
professional fees such as appraisers’, accountants’ and attorneys’ fees. The
provisions of this section shall survive the expiration or termination of this
Lease.

 

ARTICLE 30 NOTICES

 

30.1                        Writing. All notices, demands and requests required
or permitted to be given or made under any provision of this Lease shall be in
writing and shall be given or made by personal service or by mailing same by
registered or certified mail, return receipt requested, postage prepaid, or
overnight by Fed Ex or reputable courier which provides written evidence of
delivery or other means of confirmation of delivery (such as computer
confirmation by Fed Ex), or by facsimile with facsimile confirmation that the
notice was sent, addressed to the respective party at the address set forth in
Section 1.2 of this Lease or at such other address as the party may from time to
time designate, by a written notice sent to the other in the manner aforesaid.

 

30.2                        Effective Date. Any such notice, demand or request
(“notice”) shall be deemed given or made on the third day after the date so
mailed. Notwithstanding the foregoing, notice given by personal delivery or by
fax to the party at its address or fax number as aforesaid shall be deemed given
on the day on which delivery is made or the fax is sent, respectively. Notice
given overnight by a reputable courier service which provides written evidence
of delivery shall be deemed given on the business day immediately following
deposit with the courier service.

 

30.3                        Authorization to Receive. Each person and/or entity
whose signature is affixed to this Lease as Tenant or as guarantor of Tenant’s
obligations (“obligor”) designates such other obligor its agent for the

 

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purpose of receiving any notice pertaining to this Lease or service of process
in the event of any litigation or dispute arising from any obligation imposed by
this Lease.

 

ARTICLE 31 SUBORDINATION AND FINANCING PROVISIONS

 

31.1                        Priority of Encumbrances. This Lease shall be
subordinate to any ground lease, mortgage, deed of trust or any other
hypothecation for security now or hereafter placed upon the real property of
which the Leased Premises are a part and to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Notwithstanding such subordination,
Tenant’s right to quiet possession of the Leased Premises shall not be disturbed
if Tenant is not in default and so long as Tenant shall pay the rent and observe
and perform all the provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgagee, trustee or ground lessor
shall elect to have this Lease prior to the lien of its mortgage, deed of trust
or ground lease, and shall give written notice thereof to Tenant, this Lease
shall be deemed prior to such mortgage, deed of trust or ground lease, whether
this Lease is dated prior or subsequent to the date of said mortgage, deed of
trust or ground lease or the date of recording thereof.

 

31.2                        Execution of Documents. Tenant agrees to execute any
documents required to effectuate such subordination or to make this Lease prior
to the lien of any mortgage, deed of trust or ground lease, as the case may be.
It is understood by all parties that Tenant’s failure to execute the
subordination documents referred to above may cause Landlord serious financial
damage by causing the failure of a financing or sale transaction.

 

31.3                        Attornment. If the holder of any ground lease,
mortgage, deed of trust or security described above (or its
successor-in-interest), enforces its remedies provided by law or under the
pertinent mortgage, deed of trust or security instrument and succeeds to
Landlord’s interest in the Leased Premises, Tenant shall, upon request of any
person succeeding to the interest of such lender as result of such enforcement,
automatically become the Tenant of said successor-in-interest without change in
the terms or other provisions of this Lease, provided, however, that said
successor-in-interest shall not be (i) bound by any payment of rent for more
than thirty (30) days in advance, except prepayment in the nature of security
for the performance by Tenant of its obligations under this Lease, (ii) liable
for any act or omission of any previous landlord (including Landlord),
(iii) subject to any offset, defense, recoupment or counterclaim that Tenant may
have given to any previous landlord (including Landlord), or (iv) liable for any
deposit that Tenant may have given to any previous landlord (including Landlord)
that has not, as such, been transferred to said successor-in-interest. Within
ten (10) days after receipt of request by said successor-in-interest, Tenant
shall execute and deliver an instrument or instruments confirming such
attornment, including a non-disturbance, attornment and subordination agreement
in a form required by any such successor-in-interest.

 

31.4                        Notice and Right to Cure Default. Tenant agrees to
give any mortgagee(s) and/or trust deed holders, by registered mail, a copy of
any notice of default served upon Landlord, provided that prior to such notice
Tenant has been notified, in writing (by way of Notice of Assignment of Rents
and Leases, or otherwise), of the address of such mortgagees and/or trust deed
holders. Tenant further agrees that if Landlord shall have failed to cure such
default within the time provided for in this Lease, then the mortgagees and/or
trust deed holders shall have an additional thirty (30) days within which to
cure such default or, if such default cannot be cured within that time, then
such additional time as may be necessary if, within such thirty (30) days, any
mortgagee and/or trust deed holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings, if necessary to effect such cure), in
which event this Lease shall not be terminated while such remedies are being so
diligently pursued.

 

ARTICLE 32 ESTOPPEL CERTIFICATES

 

32.1                        Execution by Tenant. Within ten (10) days after
receipt of written request by Landlord, Tenant shall execute and deliver to
Landlord an estoppel certificate acknowledging such facts regarding this Lease
as

 

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Landlord may reasonably require, including without limitation, that to the
extent of Tenant’s knowledge (i) this Lease is in full force and effect, binding
and enforceable in accordance with its terms and unmodified (or if modified,
specifying the written modification documents); (ii) no default exists on the
part of Landlord or Tenant under this Lease; (iii) there are no events which
with the passage of time, or the giving of notice, or both, would create a
default under this Lease; (iv) no rent in excess of one month’s rent has been
paid in advance; (v) Tenant has not received any written notice of any other
sale, assignment, transfer, mortgage or pledge of this Lease or the rent due
hereunder; and (vi) Tenant has no defense, setoff, recoupment or counterclaim
against Landlord. Any such estoppel certificate may be relied upon by Landlord,
any lender and any prospective purchaser of the Building or Complex or any
interest therein. Failure to comply with this Article shall be a material breach
of this Lease by Tenant giving Landlord all rights and remedies under this
Lease, as well as a right to damages caused by the loss of a loan or sale which
may result from such failure by Tenant.

 

32.2                        Financing. If Landlord desires to finance or
refinance the Leased Premises, or any part thereof, or the Building, Tenant
hereby agrees to deliver to any lender designated by Landlord such financial
statements of Tenant as may be reasonably required by such lender. Such
statements shall include the past three (3) years’ financial statements of
Tenant. All such financial statements shall be received by Landlord and such
lender in confidence and shall be used only for the purposes herein set forth.

 

ARTICLE 33 MISCELLANEOUS PROVISIONS

 

33.1                        Effect of Waiver. The waiver by Landlord or Tenant
of any breach of any Lease provision by the other party shall not be deemed to
be a waiver of such Lease provision or any subsequent breach of the same or any
other term, covenant or condition therein contained. The subsequent acceptance
of rent hereunder by Landlord shall not be deemed to be a waiver of any
preceding breach by Tenant of any provision of this Lease, other than the
failure of Tenant to pay the particular rental so accepted, regardless of
Landlord’s knowledge of such preceding breach at the time of acceptance of such
rent. Any failure by Landlord or Tenant to insist upon strict performance by the
other of this Lease of any of the terms and provisions of the Lease or any
guaranty of this Lease shall not be deemed to be a waiver of any of the terms or
provisions of the Lease or such guaranty, and Landlord or Tenant, as the case
may be, shall have the right thereafter to insist upon strict performance by the
other of any and all of them.

 

33.2                        Month-to-Month Tenancy on Acceptance. If Tenant
should remain in possession of the Leased Premises after the expiration of the
Lease term and without executing a new Lease, then, upon acceptance of rent by
Landlord, such holding over shall be construed as a tenancy from month-to-month,
subject to all the conditions, provisions and obligations of this Lease as
existed during the last month of the term hereof, so far as applicable to a
month to month tenancy, except that the Minimum Monthly Rent shall be equal one
hundred fifty percent (150%) of the greater of (a) the Minimum Monthly Rent
payable immediately prior to the expiration or sooner termination of the Lease,
or (b) the then fair market rent; provided, however, that Tenant shall also be
liable for any and all damages suffered or sustained by Landlord as a result of
such holdover, including, without limitation, any loss of rental income from any
other tenant that was interested in leasing all or any portion of the Leased
Premises, brokerage commissions, design fees and any other damages as a result.
Additionally, in the event that upon termination of the Lease, Tenant has not
fulfilled its obligation with respect to repairs and cleanup of the Leased
Premises or any other Tenant obligations as set forth in this Lease, then
Landlord shall have the right to perform any such obligations as it deems
necessary at Tenant’s sole cost and expense, and any time required by Landlord
to complete such obligations shall be considered a period of holding over and
the terms of this section shall apply.

 

33.3                        Binding Effect. The covenants and conditions herein
contained shall, subject to the provisions as to assignment, apply to and bind
the heirs, successors, executors, administrators and assigns of all of the
parties hereto; and all of the parties hereto shall be jointly and severally
liable hereunder.

 

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33.4                        Time of the Essence. Time is of the essence of this
Lease with respect to each and every article, section and subsection hereof.

 

33.5                        Release of Landlord. If, during the term of this
Lease, Landlord shall sell its interest in the Building or Complex of which the
Leased Premises form a part, or the Leased Premises, then from and after the
effective date of the sale or conveyance, Landlord shall be released and
discharged from any and all obligations and responsibilities under this Lease,
except those already accrued.

 

33.6                        Rules and Regulations. Landlord or such other
person(s) as Landlord may appoint shall have the exclusive control and
management of the Common Areas and Building and shall have the right, from time
to time, to establish, modify, amend and enforce reasonable rules and
regulations with respect thereto. Tenant agrees to abide by and conform to all
such rules and regulations, and to cause its employees, suppliers, shippers,
customers, and invitees to so abide and conform. Landlord shall not be
responsible to Tenant for the noncompliance with said rules and regulations by
other tenants of the Building or Complex.

 

33.7                        Transfer to Purchaser. If any security be given by
Tenant to secure the faithful performance of all or any of the covenants of this
Lease on the part of Tenant, Landlord may transfer and/or deliver the security,
as such, to the purchaser of the reversion, in the event that the reversion be
sold, and thereupon Landlord shall be discharged from any further liability in
reference thereto.

 

33.8                        Late Charges. Tenant acknowledges that late payment
by Tenant to Landlord of rent or any other payment due hereunder will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of such
costs being extremely difficult and impractical to fix. Such costs include,
without limitation, processing and accounting charges, and late charges that may
be imposed on Landlord by the terms of any encumbrance and note secured by any
encumbrance covering the Leased Premises. Therefore, if any installment of rent,
or any other payment due hereunder from Tenant is not received by Landlord when
due, Tenant shall pay to Landlord an additional sum of ten percent (10%) of such
rent or other charge as a late charge; provided, however, that Landlord agrees
that Tenant shall not have to pay such late charge if it makes its payment in
full within five (5) days after receipt of written notice from Landlord, except
that this notice and cure period shall only be applicable for the first two
times each calendar year that Tenant fails to pay any Minimum Monthly Rent or
any additional rent when due. If Landlord has provided two notices of a late
payment or default during a calendar year, Landlord shall not be obligated to
provide any notice thereafter for the remainder of such calendar year and such
late charge shall be due if payment is not made when due without any grace
period or notice. The parties agree that this late charge represents a fair and
reasonable estimate of the cost that Landlord will incur by reason of late
payment by Tenant. Acceptance of any late charge shall not constitute a waiver
of Tenant default with respect to the overdue amount, or prevent Landlord from
exercising any other rights or remedies available to Landlord

 

33.9                        Interest. Any amount owed by Tenant to Landlord
which is not paid when due shall bear interest at the lesser of ten percent
(10%) per annum or the maximum rate of interest permitted to be contracted for
by law. However, interest shall not be payable on late charges to be paid by
Tenant under this Lease. The payment of interest on such amounts shall not
excuse or cure any default by Tenant under this Lease.

 

33.10                 Authorization to Execute. If Tenant is a corporation,
limited liability company, partnership or other entity, each individual
executing this Lease on behalf of said organization represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
organization in accordance with a duly adopted resolution or other applicable
authorization of said organization, and that this Lease is binding upon said
organization in accordance with its terms. Further, Tenant shall, within thirty
(30) days after execution of this Lease, deliver to Landlord a copy of a
resolution or other applicable authorization of said organization authorizing or
ratifying the execution of this Lease.

 

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33.11                 Captions. The captions of this Lease are for convenience
only and are not a part of this Lease and do not in any way limit or amplify the
terms and provisions of this Lease.

 

33.12                 Number and Gender. Whenever the singular number is used in
this Lease and when required by the context, the same shall include the plural,
the plural shall include the singular, and the masculine gender shall include
the feminine and neuter genders, and the word “person” shall include
corporation, firm or association. If there be more than one Tenant, the
obligations imposed under this Lease upon Tenant shall be joint and several.

 

33.13                 Modifications. This instrument contains all of the
agreements, conditions and representations made between the parties to this
Lease and may not be modified orally or in any other manner than by an agreement
in writing signed by all of the parties to this Lease.

 

33.14                 Payments. Except as otherwise expressly stated, each
payment required to be made by Tenant shall be in addition to and not in
substitution for other payments to be made by Tenant.

 

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

 

33.16                 No Offer. The preparation and submission of a draft of
this Lease by either party to the other shall not constitute an offer, nor shall
either party be bound to any terms of this Lease or the entirety of the Lease
itself until both parties have fully executed a final document and an original
signature document has been received by both parties. Until such time as
described in the previous sentence, either party is free to terminate
negotiations with no obligation to the other.

 

33.17                 Light, Air and View. No diminution of light, air, or view
by any structure which may hereafter be erected (whether or not by Landlord)
shall entitle Tenant to any reduction of Rent, result in any liability of
Landlord to Tenant, or in any other way affect this Lease or Tenant’s
obligations hereunder.

 

33.18                 Public Transportation Information. Tenant shall establish
and maintain during the Term hereof a program to encourage maximum use of public
transportation by personnel of Tenant employed on the Leased Premises, including
without limitation the distribution to such employees of written materials
explaining the convenience and availability of public transportation facilities
adjacent or proximate to the Complex, staggering working hours of employees, and
encouraging use of such facilities, all at Tenant’s sole reasonable cost and
expense. Tenant shall comply with all requirements of any local transportation
management ordinance.

 

33.19                 Joint and Several Liability. Should Tenant consist of more
than one person or entity, they shall be jointly and severally liable on this
Lease.

 

33.20                 Survival of Obligations. All obligations of Tenant which
may accrue or arise during the term of this Lease or as a result of any act or
omission of Tenant during said term shall, to the extent they have not been
fully performed, satisfied or discharged, survive the expiration or termination
of this Lease.

 

33.21                 Real Estate Brokers. Landlord and Tenant each represents
and warrants to the other party that it has not authorized or employed, or acted
by implication to authorize or employ, any real estate broker or salesman to act
for it in connection with this Lease, except for the Broker identified in
Article 1. Landlord and Tenant shall each indemnify, defend and hold the other
party harmless from and against any and all claims by any real estate broker or
salesman whom the indemnifying party authorized or employed, or acted by
implication to authorize or employ, to act for the indemnifying party in
connection with this Lease.

 

33.22                 Waiver of California Code Sections. In this Lease,
numerous provisions have been negotiated by the parties, some of which
provisions are covered by statute. Whenever a provision of this Lease and a
provision of any statute or other law cover the same matter, the provisions of
this Lease shall control.

 

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Therefore, Tenant waives (for itself and all persons claiming under Tenant) the
provisions of Civil Code Sections 1932(2) and 1933(4) with respect to the
destruction of the Leased Premises; Civil Code Sections 1941 and 1942 with
respect to Landlord’s repair duties and Tenant’s right to repair; Code of Civil
Procedure Section 1265.130, allowing either party to petition the Superior Court
to terminate this Lease in the event of a partial taking of the Leased Premises
by condemnation as herein defined; and any right of redemption or reinstatement
of Tenant under any present or future case law or statutory provision (including
Code of Civil Procedure Section 1179 and Civil Code Section 3275) in the event
Tenant is dispossessed from the Leased Premises for any reason. This waiver
applies to future statutes enacted in addition to or in substitution for the
statutes specified herein.

 

33.23                 Quiet Enjoyment. So long as Tenant pays all of the Minimum
Monthly Rent, all additional rent and other sums and charges under the Lease and
otherwise performs all of its obligations in the Lease, Tenant shall have the
right to possession and quiet enjoyment of the Leased Premises free from any
unreasonable disturbance or interference, subject to the terms and provisions of
the Lease. Landlord represents and warrants that it has the full right and power
to execute and perform this Lease and to grant the estate demised herein.

 

33.24                 Counterparts. This Lease may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one agreement.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day
and year first written above.

 

LANDLORD:

 

TENANT:

 

 

 

SJ PLAZA, LLC,

 

HERITAGE BANK OF COMMERCE

a Delaware limited liability company

 

 

 

 

 

 

By:

Divco West Group, LLC

 

By:

/s/ Rossell

 

a Delaware limited liability company

 

Name:

Rossell

 

Its Agent

 

Its:

CEO

 

 

 

 

 

By:

/s/ Scott L. Smithers

 

Dated: April 13, 2000

 

Name:

Scott L. Smithers

 

 

 

Its:

PRESIDENT

 

 

 

 

 

 

Dated: April 17 2000

 

 

 

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EXHIBIT C

 

WORK LETTER

 

This Exhibit C forms a part of that certain Lease (the “Lease”) by and between
SJ PLAZA, LLC, as Landlord, and HERITAGE BANK OF COMMERCE, as Tenant, to which
this Exhibit is attached. If there is any conflict between this Exhibit and the
Lease, this Exhibit shall govern. All capitalized terms referred to in this
Exhibit shall have the same meaning provided in the Lease, except where
expressly provided to the contrary in this Exhibit.

 

ARTICLE 1 DEFINITIONS

 

1.                                      Additional Definitions. Each of the
following terms shall have the following meaning:

 

Architect: The architectural firm selected by Tenant and reasonably approved by
Landlord to prepare the “Preliminary Plans” and “Final Plans” (as such terms are
hereinafter defined).

 

Contractor: The general contractor selected by Tenant and reasonably approved by
Landlord. The general contractor must be licensed and bondable in the State of
California. Tenant may request that Landlord approve three (3) or more
Contractors prior to competitive bidding, in which case Tenant may select any
one of the Contractors approved by Landlord.

 

Landlord’s Allowance: An amount equal to $15.00 per square foot of usable area
in the Leased Premises based on the Landlord’s architect’s calculations of the
usable area in the Leased Premises using the standard approved June 7, 1996 by
the Building Owners and Managers Association International for measuring usable
area in office buildings. Any unused portion of Landlord’s Allowance for the
Tenant Improvements shall remain the property of Landlord, and Tenant shall have
no interest in said funds.

 

Substantial Completion, Substantially Complete, and Substantially Completed (or
similar phrase): The foregoing shall mean when the following have occurred or
would have occurred but for any delay cause by Tenant:

 

(a)                                 Tenant has delivered to Landlord a
certificate from the Architect, in a form reasonably approved by Landlord, that
the Tenant Improvements have been Substantially Completed substantially in
accordance with the Final Plans, except “punch list” items which may be
completed within thirty (30) days without impairing Tenant’s use of the Leased
Premises or a material portion thereof, and Landlord has approved of the work in
its reasonable discretion; and

 

(b)                                 Tenant has obtained from the appropriate
governmental authority all building permits with all inspections approved and
all other approvals and permits for the Leased Premises permitting occupancy and
use of the Leased Premises for its permitted use under the Lease.

 

Tenant Improvements: The improvements to be constructed in accordance with the
Final Plans. Said work shall include architectural, mechanical and electrical
work and life safety systems, and shall be in accordance with the criteria,
procedures and schedules referred to in this Exhibit. The Tenant Improvements
shall comply in all respects with all applicable laws, statutes, ordinances,
building codes and regulations (collectively, “Applicable Laws”).

 

Construction Costs: All costs, expenses, fees, taxes and charges to construct
the Tenant Improvements, including, without limitation, the following:

 

(1)                                 architects, engineers and consultants in the
preparation of the Preliminary Plans and the Final Plans, including mechanical,
electrical, plumbing and structural drawings and of all other aspects of

 

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such plans for the Tenant Improvements, and for processing governmental
applications and applications for payment, observing construction of the work,
and other customary engineering, architectural, interior design and space
planning services;

 

(2)                                 surveys, reports, environmental and other
tests and investigations of the site and any improvements thereon;

 

(3)                                 labor, materials, equipment and fixtures
supplied by the Contractor, its subcontractors and/or materialmen, including,
without limitation, charges for a job superintendent and project representative;

 

(4)                                 the furnishing and installation of all
heating, ventilation and air conditioning duct work, terminal boxes,
distributing defusers and accessories required for completing the heating,
ventilation and air-conditioning system in the Leased Premises, including costs
of meter and key control for after-hour usage, if required by Landlord;

 

(5)                                 all electrical circuits, wiring, lighting
fixtures, and tube outlets furnished and installed throughout the Leased
Premises, including costs of meter;

 

(6)                                 all window and floor coverings in the Leased
Premises, including, without limitation, all treatment and preparatory work
required for the installation of floor coverings over the concrete or other
structural floor;

 

(7)                                 all fire and life safety control systems ,
such as fire walls, wiring and accessories installed within the Building;

 

(8)                                 all plumbing, fixtures, pipes and
accessories installed within the Building;

 

(9)                                 fees charged by the city and/or county where
the Building is located (including, without limitation, fees for building
permits and approvals and plan checks) required for the work in the Building;

 

(10)                          all taxes, fees, charges and levies by
governmental and quasi-governmental agencies for authorization, approvals,
licenses and permits; and all sales, use and excise taxes for the materials
supplied and services rendered in connection with the installation and
construction of the Tenant Improvements; and

 

(11)                          all costs and expenses incurred to comply with all
Applicable Laws of any governmental authority for any work at the Project in
order to construct the Tenant Improvements.

 

The term Construction Costs under this Exhibit shall not include (i) any fees,
costs, expenses, compensation or other consideration payable to Tenant, or any
of its officers, directors, employees or affiliates, or (ii) the cost any of
Tenant’s furniture, artifacts, trade fixtures, telephone and computer systems
and related facilities, or equipment. Any fees or costs referred to in clauses
(i) or (ii) above shall be paid by Tenant without resort to Landlord’s
Allowance.

 

ARTICLE 2 CONSTRUCTION OF TENANT IMPROVEMENTS

 

2.1                               Preparation of Plans.

 

(a)                                 Preliminary Plans. As soon as is reasonably
possible after the date of the Lease, Tenant shall submit to its Architect all
additional information, including occupancy requirements for the Leased Premises
(“Information”), necessary to enable the Architect to prepare preliminary plans
for the Tenant Improvements, to the extent necessary given the scope of the
Tenant Improvements, showing, among other things, all demising walls,

 

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corridors, entrances, exits, doors, interior design and partition, and the
locations of all display and storage rooms and bathrooms. As soon as is
commercially reasonable after the date hereof, Tenant shall cause the Architect
to prepare preliminary plans for the Tenant Improvements and shall deliver two
copies of same to Landlord for its review and written approval in its reasonable
discretion. Within ten (10) days after receipt of the preliminary plans (but
Landlord shall use its good faith efforts to respond earlier), Landlord shall
notify Tenant in writing that (i) Landlord approves of such preliminary plans or
(ii) Landlord disapproves of such preliminary plans, the basis for disapproval
and the changes requested by Landlord. Tenant shall cause the preliminary plans
to be revised and shall submit the revised plans to Landlord for its review and
approval as provided in this section. After approval of the preliminary plans as
provided above, the preliminary plans shall be referred to as the “ Preliminary
Plans.”

 

(b)                                 Final Plans. Tenant shall cause the
Architect to prepare final working drawings, which shall be consistent with the
Preliminary Plans, compatible with the design, construction and equipment of the
Building, comply with all Applicable Laws, and shall contain all such
information as may be required for obtaining all permits and other governmental
approvals for the construction of the Tenant Improvements (the “Working
Drawings”). As soon as is commercially reasonable after approval of the
Preliminary Plans are approved by the parties as provided above, Tenant shall
submit two copies of the Working Drawings to Landlord for its review and
approval in its reasonable discretion. Within ten (10) days after receipt of the
Working Drawings (but Landlord shall use its good faith efforts to respond
earlier), Landlord shall notify Tenant in writing that (i) Landlord approves of
such Working Drawings, or (ii) Landlord disapproves of such Working Drawings,
the basis for disapproval and the changes requested by Landlord. Tenant shall
cause the Working Drawings to be revised and shall submit the revised Working
Drawings to Landlord for its review and approval as provided in this section.
The Working Drawings approved in writing by the parties shall be referred to as
the “Final Plans.”

 

(c)                                  General. It is the responsibility of Tenant
to assure that the Final Plans and the Tenant Improvements constructed
thereunder conform to all of the Applicable Laws. Tenant shall submit to
Landlord one (1) reproducible and four (4) prints of the Final Plans.

 

2.2                               Special Subcontractors & Construction
Contract. Any subcontractor performing any work on the life safety or alarm
systems or work affecting the roof shall be subject to Landlord’s prior written
approval in its sole and absolute discretion and Landlord may require Tenant to
use Landlord’s specific subcontractor for any such work affecting the life
safety, HVAC or alarm systems or the roof. Landlord shall provide written notice
of approval or disapproval within five (5) business days after Tenant’s request
for such approval. The construction contract shall require, among other things,
that the Contractor (a) obtain and deliver to Landlord evidence of insurance
required by Landlord, and (b) execute, obtain and deliver to Tenant lien waivers
in the form required under Applicable Law from the Contractor and all of its
subcontractors and suppliers, and (c) monthly progress payments, with a ten
percent (10%) retention.

 

2.3                               Information Provided by Landlord. Acceptance
or approval of any plan, drawing or specification, including, without
limitation, the Preliminary Plans and the Final Plans, by Landlord shall not
constitute the assumption of any responsibility by Landlord for the accuracy or
sufficiency of such plans and material, and Tenant shall be solely responsible
therefor. Tenant agrees and understands that the review of all plans pursuant to
the Lease or this Exhibit by Landlord is to protect the interests of Landlord in
the Building, and Landlord shall not be the guarantor of, nor responsible for,
the correctness, completeness or accuracy of any such plans or compliance of
such plans with Applicable Laws. Any information that may have been furnished to
Tenant by Landlord or others about the mechanical, electrical, structural,
plumbing or other characteristics of the Building (hereinafter referred to as
the “Site Characteristics”) are for Tenant’s convenience only, and Landlord does
not represent or warrant that the Site Characteristics are accurate, complete or
correct or that the Site Characteristics are as indicated. Any information that
has been furnished by Landlord to Tenant has been delivered on the expressed
condition and understanding that Tenant will independently verify whether such
information is accurate, complete or correct and not rely on such information
provided by Landlord.

 

2.4                               No Responsibility of Landlord. Landlord’s
approval of any plans, including, without limitation, the Preliminary Plans or
the Final Plans, shall not: (i) constitute an opinion or agreement by Landlord
that such

 

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plans and Tenant Improvements are in compliance with all Applicable Laws,
(ii) impose any present or future liability on Landlord; (iii) constitute a
waiver of Landlord’s rights hereunder or under the Lease or this Exhibit;
(iv) impose on Landlord any responsibility for a design and/or construction
defect or fault in the Tenant Improvements, or (v) constitute a representation
or warranty regarding the accuracy, completeness or correctness thereof.

 

2.5                               Changes. After approval of the Preliminary
Plans or Final Plans by Landlord and Tenant, any changes in the Preliminary
Plans or Final Plans shall require the prior written consent of Landlord in its
reasonable discretion and the parties shall follow the same process as was
required under sections 2.1 for approval of plans. Any change requested by
Tenant that is approved in writing by Landlord shall be prepared by the
Architect and shall be subject to the review and approval of Landlord’s
architect in its reasonable discretion. The cost of such changes, including the
cost to revise such plans, obtain any additional permits and construct any
additional improvements required as a result thereof, and the cost for materials
and labor, and all other additional costs incurred by Landlord from resulting
delays in completing the Tenant Improvements, shall be included as part of the
Construction Costs for the Tenant Improvements.

 

2.6                               Construction Budget for Tenant Improvements.
After approval of the Final Plans by Landlord and Tenant as provided above,
Tenant shall prepare a detailed estimate of the Construction Costs for the
Tenant Improvements. Tenant shall deliver a copy of the construction budget to
Landlord.

 

2.7                               Building Permits and Approvals. Not later than
after approval by Landlord and Tenant of the Final Plans and Construction Budget
as provided above, Tenant or its Contractor shall submit the Final Plans to the
appropriate governmental body for plan checking and all building permits and
other governmental and quasi-governmental approvals to the extent necessary
under Applicable Law given the scope of the Tenant Improvements.

 

2.8                               Conduct of Work. Tenant shall confine the
construction activity to the inside of the Leased Premises as much as possible
and shall work in an orderly manner removing trash and debris from the Building
on a daily basis. All such work shall be undertaken in compliance with all
Applicable Laws and Landlord rules and regulations. If Tenant fails to comply
with these requirements, Landlord shall have the right, but not the obligation,
to cause remedial action (at Tenant’s cost) as deemed necessary by Landlord to
protect the public. Tenant shall complete construction of the Tenant
Improvements free and clear of all liens, security interests and encumbrances of
any kind.

 

(a)                                 Pre-construction Submittals to Landlord. A
minimum of ten (10) days prior to the commencement of construction, Tenant shall
submit the following items to Landlord:

 

(1)                                 A written statement setting forth the
proposed commencement date of construction and the estimated completion dates of
construction work, fixturing work and projected opening date;

 

(2)                                 Certificates of all insurance required of
the Contractor under this Exhibit;

 

(3)                                 Copies of all building permits, and all
other permits and approvals required by governmental agencies to construct the
Tenant Improvements; and

 

(4)                                 Copies of all the construction contract with
Tenant’s Contractor.

 

(b)                                 Delays. Tenant shall with reasonable
diligence prosecute construction of the Tenant Improvements to complete all work
by the Commencement Date. Any delay in completing such work, including any delay
as a result of governmental delays, acts of God and other events beyond the
control of Tenant, shall not extend or delay the time for the commencement of
payment Rent or any other sum under the Lease. Tenant acknowledges and agrees
that the Tenant Improvements will not be completed by the Commencement Date, but
such fact shall not relieve Tenant from the obligation to commence paying Rent
from and after the date provided in the Lease. Tenant acknowledges and accepts
the various inconveniences that may be associated with the use of the

 

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Leased Premises and Common Areas during the construction of the improvements,
such as construction obstacles, noise and debris, the passage of work crews,
uneven air conditioning service and other typical conditions incident to the
construction of improvements. Tenant agrees that such inconveniences and
annoyances shall not give Tenant any rights against Landlord pursuant to the
Lease.

 

(c)                                  Correction of Work. Landlord may reject any
portion of the Tenant Improvements which is defective or not in conformity with
the Final Plans. Landlord shall not be responsible for correcting the portions
of the Tenant Improvements which were defective or not in compliance with the
Final Plans; all such work shall be the responsibility of Tenant at its sole
cost and expense.

 

2.9                               Notice of Completion; Copy of Record set of
Plans. Within ten (10) days after completion of construction of the Tenant
Improvements, Tenant shall cause a notice of completion (or the equivalent
notice required under local law to provide notice to all contractors,
subcontractors and materialmen that the work is completed and the time for
filing any mechanic’s lien is running) to be recorded in the Official Records of
the County where the Building is located, and shall furnish a copy thereof to
Landlord upon such recordation. If Tenant fails to do so, Landlord may execute
and file the same on behalf of Tenant as Tenant’s agent for such purpose, at
Tenant’s sole cost and expense. At the conclusion of construction: (i) Tenant
shall cause the Architect and Contractor (A) to update the Final Plans as
necessary to reflect all changes made to the Final Plans during the course of
construction, (B) to certify to the best of their knowledge that the
“record-set” of as-built drawings are true and correct, which certification
shall survive the expiration or termination of this Lease, and (C) to deliver to
Landlord two (2) sets of copies of such record set of drawings within ninety
(90) days following issuance of a certificate of occupancy for the Leased
Premises; and (ii) Tenant shall deliver to Landlord a copy of all signed
building permits and certificates of occupancy, and all warranties, guaranties,
and operating manuals and information relating to the improvements, equipment
and systems in the Leased Premises.

 

2.10                        Tenant’s Parties and Insurance. The Contractor and
all subcontractors, laborers, materialmen, and suppliers used by Tenant
collectively shall be referred to as “Tenant’s Parties”.

 

(a)                                 Indemnity. Tenant’s indemnity of Landlord as
set forth in the Lease shall also apply with respect to any and all costs,
losses, damages, injuries and liabilities related in any way to any act or
omission of Tenant or Tenant’s Parties, or any one directly or indirectly
employed by any of them, or in connection with Tenant’s non-payment of any
amount arising out of the Tenant Improvements and/or Tenant’s disapproval of all
or any portion of any request for payment.

 

(b)                                 Requirements of Tenant’s Parties. Contractor
shall guarantee to Tenant and for the benefit of Landlord that the portion of
the Tenant Improvements for which it is responsible shall be free from any
defects in workmanship and materials for a period of not less than one (1) year
from the date of completion thereof. Contractor shall be responsible for the
replacement or repair, without additional charge, of all work done or furnished
in accordance with its contract that shall become defective within one (1) year
after the later to occur of (i) completion of the work performed by such
contractor or subcontractors, and (ii) the date when the Tenant Improvements
have been Substantially Completed. The correction of such work shall include,
without additional charge, all additional expenses and damages incurred in
connection with such removal or replacement of all or any part of the Tenant
Improvements, and/or the Building and/or common areas that may be damaged or
disturbed thereby. Tenant covenants to give to Landlord any assignment or other
assurances which may be necessary to effect such right of direct enforcement.

 

(c)                                  Insurance Requirements. In addition to the
insurance requirements set forth in the Lease, Tenant shall comply with the
following requirements:

 

(1)                                 General Coverages. All of Tenant’s Parties
shall carry worker’s compensation insurance covering all of their respective
employees, and shall also carry commercial liability insurance, including
property damage, all with limits, in form and with companies as are required to
be carried by Tenant as set forth in the Lease.

 

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(2)                                 Special Coverage. Tenant shall carry
“Builder’s All Risk” insurance in an amount approved by Landlord covering the
construction of the Tenant Improvements, and such other insurance as Landlord
may require; provided, however, that the original party signing the Lease as
Tenant may elect to self insure for such the risks covered under Builder’s All
Risk insurance, but no such self-insurance shall diminish the rights and
privileges to which Landlord would otherwise have been entitled under the terms
of the Lease had there been a third party insurer, e.g. waiver of subrogation.
Tenant’s Contractor shall be required to carry commercially liability insurance
in the amounts required of Tenant under the Lease and name Landlord and its
designees as an additional insured.

 

(3)                                 General Terms. Certificates for all
insurance carried pursuant to the foregoing sections shall be delivered to
Landlord before the commencement of construction of the Tenant Improvements and
before the Contractor’s equipment is moved onto the site. All such policies of
insurance must contain a provision that the company writing said policy will
give Landlord thirty (30) days’ prior written notice of any cancellation or
lapse of the effective date or any reduction in the amounts of such insurance.
In the event that the Tenant Improvements are damaged by any cause during the
course of the construction thereof, Tenant shall immediately repair the same at
Tenant’s sole cost and expense. All policies carried under this section shall
insure Landlord and Tenant, as their interests may appear, as well as Contractor
and Tenant’s Parties. All insurance, except Workers’ Compensation, maintained by
Tenant’s Parties shall preclude or waive subrogation claims by the insurer
against anyone insured thereunder. Such insurance shall provide that it is
primary insurance as respects the Landlord and that any other insurance
maintained by Landlord is excess and noncontributing with the insurance required
hereunder. The requirements for the foregoing insurance shall not derogate from
the provisions for indemnification of Landlord by Tenant under the Lease or this
Exhibit.

 

2.11                        Miscellaneous. The Tenant Improvements shall be
subject to the inspection and approval of Landlord and its supervisory
personnel.

 

ARTICLE 3 PAYMENT OF CONSTRUCTIONS COSTS

 

3.1                               Payment of Costs. Tenant shall pay for the
Tenant Improvements, except for the Landlord’s Allowance which Landlord shall
advance as hereinafter provided. Landlord shall only be responsible for payment
of up to the amount of Landlord’s Allowance for the Tenant Improvements. If the
Construction Costs for the Tenant Improvements are greater than the amount of
the Landlord’s Allowance, Tenant shall be solely responsible for such additional
costs.

 

3.2                               Payment by Landlord. Landlord shall make one
payment of the Landlord’s Allowance within thirty (30) days after receipt by
Landlord of (i) copies of all applicable building permits reflecting final
sign-off by the local governmental authority, (ii) a copy of the as-built Final
Plans for the Tenant Improvements, and (iii) unconditional lien waivers from the
general contractor and all subcontractors and suppliers, and (iv) receipt and
approval by Landlord of the Architect’s certificate referred to in the
definition of Substantial Completion in this Exhibit.

 

[g264982ke13i001.jpg]

 

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EXHIBIT D

 

ACKNOWLEDGEMENT OF COMMENCEMENT DATE

 

This Acknowledgement of Commencement Date is dated as of               , 2000
between SJ Plaza, LLC, a Delaware limited liability company (“Landlord”), and
Heritage Bank of Commerce (“Tenant”), who entered into a lease dated for
reference purposes as of               covering certain premises located in
Suite 300 of the building at 150 Almaden Blvd., San Jose, California. All
capitalized terms, if not defined herein, shall be defined as they are defined
in the Lease.

 

1.                                      The parties to this document hereby
agree that the date of                 , is the “Commencement Date” of the Term.

 

2.                                      Tenant hereby confirms that it has
accepted possession of Leased Premises pursuant to the terms of the Lease.

 

3.                                      This agreement, each and all of the
provisions hereof, shall inure to the benefit, or bind, as the case may require,
the parties hereto, and their respective heirs, successors, and assigns subject
to the restrictions upon assignment and subletting contained in the Lease.

 

LANDLORD:

 

TENANT:

 

 

 

101 PARK, LLC,

 

HERITAGE BANK OF COMMERCE

a Delaware limited liability company

 

 

 

 

 

 

 

 

By:

/s/ Rossell

By:

Divco West Group, LLC

 

Name:

Rossell

 

A Delaware limited liability company

 

Its:

CEO

 

Its Agent

 

 

 

 

 

 

 

By:

/s/ Scott L. Smithers

 

 

 

Name:

Scott L. Smithers

 

 

 

Its:

PRESIDENT

 

 

 

>>>>Left Side: Sig/name: Scott L. Smithers, Its: President Right Side: By/Name:
Rossell Its: CEO -- per Machelle

 

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EXHIBIT E

 

RULES AND REGULATIONS

 

All capitalized terms referred to in this Exhibit shall have the same meaning
provided in the Office Lease to which this Exhibit is attached, except where
expressly provided to the contrary in this Exhibit.

 

1.                                      No sidewalks, entrance, passages,
courts, elevators, vestibules, stairways, corridors or halls shall be obstructed
or encumbered by Tenant or used for any purpose other than ingress and egress to
and from the Leased Premises and if the Leased Premises are situated on the
ground floor of the Building, Tenant shall further, at Tenant’s own expense,
keep the sidewalks and curb directly in front of the Leased Premises clean and
free from rubbish.

 

2.                                      No awning or other projection shall be
attached to the outside walls or windows of the Building or Complex without the
prior written consent of Landlord in its sole and absolute discretion. No
curtains, blinds, shades, drapes or screens shall be attached to or hung in, or
used in connection with any window or door of the Leased Premises, without the
prior written consent of Landlord in its sole and absolute discretion. Such
awnings, curtains, blinds, shades, drapes, screens and other fixtures must be of
a quality, type, design, color, material and general appearance approved by
Landlord, and shall be attached in the manner approved by Landlord in its sole
and absolute discretion. All lighting fixtures hung in offices or spaces along
the perimeter of the Leased Premises must be of a quality, type, design, bulb
color, size and general appearance approved by Landlord.

 

3.                                      No sign, advertisement, notice,
lettering, decoration or other thing shall be exhibited, inscribed, painted or
affixed by Tenant on any part of the outside or inside of the Leased Premises or
of the Building, without the prior written consent of Landlord in its sole and
absolute discretion. In the event of the violation of the foregoing by Tenant,
Landlord may remove same without any liability, and may charge the expense
incurred by such removal to Tenant.

 

4.                                      The sashes, sash doors, skylights,
windows and doors that reflect or admit light or air into the halls, passageways
or other public places in the Building or Complex shall not be covered or
obstructed by Tenant, nor shall any bottles, parcels or other articles be placed
on the window sills or in the public portions of the Building or Complex.

 

5.                                      No show cases or other articles shall be
put in front of or affixed to any part of the exterior of the Building or
Complex, nor placed in public portions thereof without the prior written consent
of Landlord.

 

6.                                      The restrooms, toilets, wash bowls, and
other apparatus shall not be used for any purpose other than that for which they
were constructed, and no sweepings, rubbish, rages or other foreign substance of
any kind shall be thrown into them. The expense of any breakage, stoppage, or
damage resulting from violation of this rule shall be borne by the tenant who
caused, or whose agents, servants, employees, contractors, visitors or licensees
caused, the breakage, stoppage, or damage.

 

7.                                      Tenant shall not mark, paint, drill into
or in any way deface any part of the Leased Premises or the Building or Complex.
No boring, cutting or stringing of wires shall be permitted, except with the
prior written consent of Landlord, and as Landlord may direct, in its sole and
absolute discretion.

 

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8.                                      No animal or bird or bicycle or vehicle
of any kind shall be brought into or kept in or about the Leased Premises,
Building or Complex, except seeing-eye dogs or other seeing-eye animals or other
animals or equipment required by any disabled employee or invitee of Tenant.

 

9.                                      Prior to leaving the Leased Premises for
the day, Tenant shall draw or lower window coverings and extinguish all lights.
Tenant shall assume all responsibility, including keeping doors locked and other
means of entry to the Premises closed, for protecting the Premises from theft,
robbery, and pilferage.

 

10.                               Tenant shall not make, or permit to be made,
any unseemly or disturbing noises or disturb or interfere with any occupant of
the Building or Complex, or neighboring buildings or premises, or those having
business with them. Tenant shall not harass or annoy any occupant of the
Building or Complex, including, without limitation, any act or conduct that may
violate, breach or infringe upon any federal, state or local laws or civil
rights, including those pertaining to the protection of the civil rights of any
person based on sex, race, religion, sexual preference, age or other
consideration. Tenant shall not throw anything out of the doors, windows or
skylights or down the passageways.

 

11.                               Neither Tenant nor any of Tenant’s agents,
servants, employees, contractors, visitors or licensees shall at any time bring
or keep upon the Leased Premises, Building or Complex any flammable, combustible
or explosive fluid, chemical or substance.

 

12.                               No additional locks, bolts or mail slots of
any kind shall be placed upon any of the doors or windows by Tenant, nor shall
any change be made in existing locks or the mechanism thereof. Tenant must, upon
the termination of the tenancy, restore to Landlord all keys of stores, offices
and toilet rooms, either furnished to, or otherwise procured by Tenant, and in
the event of the loss of any keys so furnished, Tenant shall pay to Landlord the
cost thereof.

 

13.                               No furniture, freight, or equipment of any
kind may be brought into or out of the Building without prior notice to
Landlord. All moving activity into or out of the Building must be scheduled with
Landlord and done only at the time and in the manner designated by Landlord. No
service deliveries (other than messenger services) shall be allowed between the
hours of 7:00 a.m. and 9:00 a.m., 12:00 p.m. and 1:00 p.m., and 4:00 p.m. and
6:00 p.m., Monday through Friday. Landlord may at any time restrict the
elevators and areas of the Building into which messengers may enter and may
require that deliveries be left at the lobby security desk for pickup by Tenant.
Landlord may prescribe the weight, size, and position of all safes and other
heavy property brought into the Building and the times and manner of moving
those items within and out of the Building. Tenant shall not overload the floor
of the Leased Premises. If considered necessary by Landlord, safes and other
heavy objects must stand on supports that are adequate to distribute the weight
properly. Landlord shall not be responsible for loss of or damage to any safe or
property. Any damage to any part of the Building or to its contents, occupants,
or visitors caused by moving or maintaining any safe or other property referred
to in this clause shall be the sole responsibility and expense of Tenant.
Landlord reserves the right to inspect all safes, freight or other bulky
articles to be brought into the Building and to exclude from the Building all
safes, freight or other bulky articles which violate any of these Rules and
Regulations or the Lease of which these Rules and Regulations are a part. No
packages, supplies, equipment, or merchandise may be received in the Building or
carried up or down in the elevators, except between those hours and in that
specific elevator that Landlord shall designate.

 

14.                               Landlord shall have the right to prohibit any
advertising or business conducted by Tenant referring to the Building which, in
Landlord’s good faith opinion, tends to impair the reputation of the

 

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Building or its desirability as a first class building for offices and/or
commercial services and upon notice from Landlord, Tenant shall refrain from or
discontinue such advertising.

 

15.                               Landlord reserves the right to exclude from
the Building between the hours of 6:00 p.m. and 8:00 a.m. Monday through Friday,
after 1:00 p.m. on Saturdays and at all hours Sundays and legal holidays, all
persons who do not present a pass to the Building issued by Landlord. Such hours
are subject to change in Landlord’s sole and absolute discretion upon written
Landlord notice from Landlord. Landlord may furnish passes to Tenant so that
Tenant may validate and issue same. Tenant shall safeguard said passes and shall
be responsible for all acts of persons in or about the Building who possess a
pass issued to Tenant. Landlord reserves the right to exclude or expel from the
Building and Complex any person who, in Landlord’s judgment, is under the
influence of alcohol or drugs or commits any act in violation of any of these
Rules and Regulations.

 

16.                               When departing after the Building’s normal
business hours, Tenant and Tenant’s employees and agents must be sure that the
doors to the Building are securely closed and locked. Any person, including
Tenant and Tenant’s employees and agents, who enters or leaves the Building at
any time when it is locked or at any time considered to be after the Building’s
normal business hours, may be required to sign the Building register. Access to
the Building may be refused unless the person seeking access has proper
identification or has previously arranged a pass for access to the Building.
Landlord and its agents shall not be liable for damages for any error concerning
the admission to, or exclusion from, the Building of any person. Landlord
reserves the right, in the event of invasion, mob, riot, public excitement, or
other commotion, to prevent access to the Building or Complex during the
continuance of that event by any means it considers appropriate for the safety
and protection of life and property.

 

17.                               Tenant’s contractors shall, while in the
Leased Premises, Building or elsewhere in the Complex, be subject to and under
the control and direction of the Building Manager (but not as agent or servant
of said Building Manager or of Landlord).

 

18.                               If the Leased Premises is or becomes infested
with vermin as a result of the use or any misuse or neglect of the Leased
Premises by Tenant, its agents, servants, employees, contractors, visitors or
licensees, Tenant shall forthwith at Tenant’s expense cause the same to be
exterminated from time to time to the satisfaction of Landlord and shall employ
such licensed exterminators as shall be approved in writing in advance by
Landlord.

 

19.                               The requirements of Tenant will be attended to
only upon application at the office of the Building. Building personnel shall
not perform any work or do anything outside of their regular duties unless under
special instructions from the office of the Landlord.

 

20.                               Tenant and Tenant’s employees, agents,
contractors and invitees shall not loiter in or on the entrances, corridors,
sidewalks, lobbies, halls, stairways, elevators, or common areas for the purpose
of smoking tobacco products or for any other purpose. Tenant and Tenant’s
employees and agents shall not obstruct those areas but use them only as a means
of ingress to and egress from the Leased Premises, Building or Complex.
Canvassing, soliciting and peddling in the Building or Common Areas of the
Complex are prohibited and Tenant shall cooperate to prevent the same.

 

21.                               No air conditioning unit or system or other
apparatus shall be installed or used by Tenant without the written consent of
Landlord in its sole and absolute discretion. Tenant shall not waste
electricity, water, or air-conditioning and shall cooperate fully with Landlord
to ensure the most effective operation of the Building’s heating and
air-conditioning system.

 

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22.                               There shall not be used in any premises, or in
the public halls, plaza areas, lobbies, or elsewhere in the Building or Complex,
either by Tenant or by jobbers or others, in the delivery or receipt of
merchandise, any hand trucks or dollies, except those equipped with rubber tires
and sideguards.

 

23.                               Tenant, Tenant’s agents, servants, employees,
contractors, licensees, or visitors shall not park any vehicles in any
driveways, service entrances, or areas posted “No Parking” and shall comply with
any other parking restrictions imposed by Landlord from time to time.

 

24.                               Tenant shall install and maintain, at Tenant’s
sole cost and expense, an adequate visibly marked (at all times properly
operational) fire extinguisher next to any duplicating or photocopying machine
or similar heat producing equipment, which may or may not contain combustible
material, in the Leased Premises, Building or Complex.

 

25.                               Tenant shall keep its window coverings closed
during any period of the day when the sun is shining directly on the windows of
the Leased Premises.

 

26.                               Tenant shall not use the name of the Building
for any purpose other than as the address of the business to be conducted by
Tenant in the Leased Premises, nor shall Tenant use any picture of the Building
in its advertising, stationery or in any other manner without the prior written
permission of Landlord. Landlord expressly reserves the right at any time to
change said name without in any manner being liable to Tenant therefor.

 

27.                               Tenant shall not prepare any food nor do any
cooking, operate or conduct any restaurant, luncheonette or cafeteria for the
sale or service of food or beverages to its employees or to others, except that
food and beverage preparation by Tenant’s employees using microwave ovens or
coffee makers shall be permitted; provided, however, no popcorn may be cooked,
heated or otherwise prepared in any microwave oven or any other equipment in the
Leased Premises and no odors of cooking or other processes may emanate from the
Leased Premises. Tenant shall not install or permit the installation or use of
any vending machine or permit the delivery of any food or beverage to the Leased
Premises except by such persons and in such manner as are approved in advance in
writing by Landlord.

 

28.                               Business machines and mechanical equipment
shall be placed and maintained by Tenant at Tenant’s expense in settings
sufficient in Landlord’s judgment to absorb and prevent vibration, noise and
annoyance. Tenant shall not install any machine or equipment which causes noise,
heat, cold or vibration to be transmitted to the structure of the Building in
which the Leased Premises are located without Landlord’s prior written consent
in its sole and absolute discretion. Tenant shall not place a load upon any
floor of the Leased Premises exceeding the floor load per square foot which such
floor was designed to carry and which is allowed by law.

 

29.                               Smoking is prohibited in the Building,
including, without limitation, the main lobby, all hallways, all elevators, all
elevator lobbies and all restrooms.

 

30.                               Tenant shall store all trash and garbage
within the interior of the Leased Premises. Tenant shall not place or have
placed in the trash boxes or receptacles any material that may not or cannot be
disposed of in the ordinary and customary manner of removing and disposing of
trash in the vicinity of the Building. In disposing of trash and garbage, Tenant
shall comply fully with any law or ordinance governing that disposal. All trash,
garbage, and refuse disposal shall be made only through entry-ways and elevators
provided for that purpose and shall be made only at times designated by
Landlord.

 

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31.                               Tenant shall comply with requests by Landlord
that Tenant inform Tenant’s employees of items of importance to Landlord.

 

32.                               Tenant may not introduce telephone, cable or
other communication or telecommunication wires or other wires into the Leased
Premises without first obtaining Landlord’s approval of the method and location
of such introduction. No boring or cutting for telephone wires or other wires
shall be allowed without Landlord’s consent. The location of telephones, call
boxes, and other office equipment affixed to the Premises shall be subject to
Landlord’s prior approval

 

33.                               Landlord reserves the right at any time to
change or rescind any one or more of these Rules and Regulations or to make any
additional reasonable Rules and Regulations that, in Landlord’s sole and
absolute discretion, may be necessary for:

 

(a)         The management, safety, care, and cleanliness of the Leased
Premises, Building or Complex;

 

(b)         The preservation of good order; or

 

(c)          The convenience of other occupants and tenants in the Building or
Complex.

 

Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenants. No waiver by Landlord shall be construed as a
waiver of those Rules and Regulations in favor of any other tenant, and no
waiver shall prevent Landlord from enforcing those Rules or Regulations against
any other tenant of the Building or Complex.

 

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EXHIBIT F

 

DECLARATION OF RESTRICTIONS

 

That certain Ninth Amended Park Center Redevelopment Plan adopted June 25, 1996,
City Council Ordinance No. 25112.

 

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ADDENDUM NO. 1

 

This ADDENDUM NO. 1 (this “Addendum”) is made in connection with and is a part
of that certain Lease, dated as of April 13, 2000, by and between SJ Plaza, LLC,
a Delaware limited liability company, as Landlord, and Heritage Bank of
Commerce, as Tenant, (the “Lease”).

 

1.                                      Definitions and Conflict. All
capitalized terms referred to in this Addendum shall have the same meaning as
provided in the Lease, except as expressly provided to the contrary in this
Addendum. In case of any conflict between any term or provision of the Lease and
any exhibits attached thereto and this Addendum, this Addendum shall control.

 

2.                                      Parking. Tenant shall have the right to
not more than a total of 25 monthly parking spaces, 13 of which shall be in the
P-2 level and 12 of which shall be in the P-3 level of the parking garage at the
office building located at 150 Almaden Blvd., San Jose, California, for the Term
of the Lease at the then prevailing market rate as set forth by the tenant
and/or operator of each such parking garage (each such parking facility shall be
referred to herein as (the “Parking Garage”). To exercise its rights to use any
or all of such spaces, Tenant agrees that it must enter into a parking
agreement, in the form required by the applicable tenant or operator of the
applicable Parking Garage, and comply with the requirements of such tenant or
operator of said Parking Garage.

 

2.1                               Notice of Exercise. Tenant hereby elects to
have all of said parking spaces. If Tenant does not enter into the parking
agreement with the tenant or operator of the Parking Garage or if Tenant elects
on not less than thirty (30) days prior written notice to Landlord and the
tenant and/or operator of the Parking Garage to discontinue using all or any
specified number of parking spaces Tenant previously elected to use, then Tenant
shall not have any right to use the parking spaces for which it did not enter
into a parking agreement or for which it rejected or subsequently discontinued,
which spaces may be available to Landlord, and any parking rights for Tenant
hereunder as to such rejected and subsequently discontinued spaces shall be null
and void.

 

2.2                               General Procedures. The parking spaces will
not be separately identified and Landlord shall have no obligation to monitor
the use of the Parking Garage, nor shall Landlord be responsible for any loss or
damage to any vehicle or other property at the Parking Garage or for any injury
to any person. Said parking spaces shall be used only for parking of automobiles
no larger than full size passenger automobiles or pick-up trucks. Tenant shall
comply with all rules and regulations of the tenant or operator of the Parking
garage where the parking spaces are located. A failure by Tenant or any of its
employees, suppliers, shippers, customers or invitees to comply with the
foregoing provisions shall subject Tenant to the loss of use of such parking
spaces, in which case the Lease shall continue without any abatement in rent or
charge to Landlord.

 

2.3                               Force Majeure. Landlord’s agreement to provide
or arrange for the parking spaces as provided herein shall be subject to
casualties, Acts of God and other events beyond the control of Landlord.

 

2.4                               Condition. Tenant’s rights to any parking
spaces under this section are expressly conditioned upon (a) Tenant not being in
default (after notice and the expiration of the applicable cure period) of any
term or provision of this Lease, and (b) Tenant being in occupancy of the Leased
Premises.

 

2.5                               Limitation. Landlord shall not be responsible
for any loss or damage to property or injury to persons in or about the Parking
Garage; it being acknowledged by the parties that Tenant

 

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assumes all risk of loss or damage at or about any parking garage. The parking
rights available to Tenant hereunder are personal to Tenant, but not any
assignee, sublessee or transferee under any Transfer referred to in the Lease.

 

3.                                      Other Lease at 100 Park Center. Landlord
and Tenant are the current parties to that certain Office Lease dated as of
March 18, 1997, as amended by that certain First Amendment to Lease dated as of
February 28, 2000, for the lease of space in Suites 430 and 365 of the building
located at 100 Park Center Plaza, San Jose, California (the “100 Park Center
Lease”). Tenant shall not be required to pay “Base Rent” and “Tenant’s Prorata
Share” of increases in “Taxes” and Operating Expenses” (as such terms are
defined in the 100 Park Center Lease) for Suites 430 and 365 during the first
three (3) months from and after the Commencement Date of the Lease if (a) Tenant
performs all of its obligations under the Lease and the 100 Park Center Lease,
and (b) the condition precedent set forth in section 4 below is satisfied. In
addition, Landlord shall not issue a 30 day notice terminating the tenancy to
Suites 430 and 365 under the 100 Park Center Lease if such tenancy would
terminate during the three month free rent period referenced herein, nor shall
Landlord shall not issue a 30 day notice terminating tenancy for Suites 430 and
365 with an effective date of termination of such tenancy prior to the date
Landlord completes the Tenant Improvements as defined in Exhibit C attached to
the Lease to allow Tenant sufficient time to relocate from such suites to the
Leased Premises under the Lease, except for any delay beyond said three month
free rent period in completing the Tenant Improvements that is due to any Tenant
Delay (as defined in Exhibit C to the Lease); provided, however, that Landlord
shall not be limited in exercising its rights and remedies, including without
limitation, the right to have the 100 Park Center Lease terminated, due to a
default by Tenant under the 100 Park Center Lease or due to any casualty or
condemnation to the extent Landlord has such right under the 100 Park Center
Lease.

 

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