Exhibit 10.5

 

Lease Agreement
(NNN)
Basic Lease Information

 

Lease Date:

 

April 16, 2009

 

 

 

Landlord:

 

FSP Montague Business Center Corp.,

 

 

a Delaware corporation

 

 

 

Landlord’s Address:

 

c/o Franklin Street Properties
401 Edgewater Place, Suite 200
Wakefield, MA 01880

 

 

 

Tenant:

 

AltiGen Communications, Inc.,
a Delaware corporation

 

 

 

Tenant’s Address:

 

410 East Plumeria Drive

San Jose, California 95134

 

 

 

Premises:

 

Approximately 27,576 rentable square feet as shown on Exhibit A

 

 

 

Premises Address:

 

410 East Plumeria Drive, San Jose, California

 

 

 

 

 

Building: Approximately 55,484 rentable square feet

 

 

Lot: The legal parcel upon which the building is situated

 

 

Montague Business Center (“Park”); Approximately 145,951 rentable square feet

 

 

 

Term:

 

Subject to Exhibit B attached hereto, the later of (i) fifteen (15) days
following the Substantial Completion of the Tenant Improvements (excluding the
Initial Cabling and Security System)(as each term is defined in Exhibit B
attached hereto) or (ii) June 1, 2009 (“Commencement Date”) through five
(5) years following the Commencement Date (“Expiration Date”)

 

 

 

Base Rent (¶3):

 

 

 

 

 

Months

 

Monthly Base Rent

 

 

 

01-12

 

$

17,924.40

 

 

 

13-24

 

$

23,439.60

 

 

 

25-36

 

$

24,818.40

 

 

 

37-48

 

$

26,197.20

 

 

 

49-60

 

$

27,576.00

 

 

Advance Rent (¶3):

 

Seventeen Thousand Nine Hundred Twenty Four and 40/100 Dollars ($17,924.40)

 

Letter of Credit: (Addendum 1):

 

One Hundred Thousand Dollars ($100,000.00)

 

Tenant’s Share of Operating Expenses (¶6.1):

 

18.9% of the Park, 49.7% of the Building

Tenant’s Share of Tax Expenses (¶6.2):

 

18.9% of the Park, 49.7% of the Building

Tenant’s Share of Common Area Utility Costs (¶7.2):

 

18.9% of the Park, 49.7% of the Building

Tenant’s Share of Utility Expenses (¶7.1):

 

18.9% of the Park, 49.7% of the Building

 

Permitted Uses (¶9):

 

Engineering, warehousing, research and development, manufacturing and assembly,
and administrative offices, but only to the extent permitted by the City of San
Jose and all agencies and governmental authorities having jurisdiction thereof.

 

 

 

Parking Spaces:

 

18.9% of the non-exclusive and non-designated spaces located at the Park

 

 

 

Broker (¶33):

 

Cornish & Carey for Tenant

 

 

[None for Landlord]

 

 

 

Exhibits:

 

Exhibit A -             Premises, Building, Lot and/or Park

 

 

Exhibit B -             Tenant Improvements

 

 

Exhibit C -            Rules and Regulations

 

 

Exhibit D -            Tenant’s Initial Hazardous Materials Disclosure
Certificate

 

 

Exhibit E -             Change of Commencement Date - Example

 

 

 

Addenda:

 

Addendum 1 -       Letter of Credit

 

 

Addendum 2 -       Option to Extend

 

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Table of Contents

 

Section Page

 

1.

 

Premises

 

1

2.

 

Occupancy; Adjustment of Commencement Date

 

1

3.

 

Rent

 

1

5.

 

Condition of Premises; Tenant Improvements

 

1

6.

 

Additional Rent

 

1

7.

 

Utilities and Services

 

3

8.

 

Late Charges

 

3

9.

 

Use of Premises

 

3

10.

 

Alterations; and Surrender of Premises

 

4

11.

 

Repairs and Maintenance

 

5

12.

 

Insurance

 

6

13.

 

Limitation of Liability and Indemnity

 

7

14.

 

Assignment and Subleasing

 

7

15.

 

Subordination

 

8

16.

 

Right of Entry

 

9

17.

 

Estoppel Certificate

 

9

18.

 

Tenant’s Default

 

9

19.

 

Remedies for Tenant’s Default

 

9

20.

 

Holding Over

 

10

21.

 

Landlord’s Default

 

10

22.

 

Parking

 

10

23.

 

Transfer of Landlord’s Interest

 

10

24.

 

Waiver

 

11

25.

 

Casualty Damage

 

11

26.

 

Condemnation

 

11

27.

 

Environmental Matters/Hazardous Materials

 

12

28.

 

Financial Statements

 

13

29.

 

General Provisions

 

13

30.

 

Signs

 

15

31.

 

Mortgagee Protection

 

15

32.

 

Warranties of Tenant

 

15

33.

 

Brokerage Commission

 

15

34.

 

Quiet Enjoyment

 

16

35.

 

Rooftop Equipment

 

16

 

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NNN Tenant Improvements
Lease Agreement

 

The Basic Lease Information and this Lease are, and shall be construed as, a
single instrument.

 

1.       Premises

 

Landlord leases the Premises to Tenant upon the terms and conditions contained
herein. Tenant shall have the right to use, on a non-exclusive basis, parking
areas and ancillary facilities located within the Common Areas of the Project,
subject to the terms of this Lease. For purposes of this Lease, (i) as of the
Lease Date, the rentable square footage area of each of the Premises, the
Building and the Park shall be deemed to be the number of rentable square feet
as set forth in the Basic Lease Information, (ii) the rentable square footage of
the Premises may include a proportionate share of certain areas used in common
by all occupants of the Building and/or the Park (for example corridors, common
restrooms, an electrical room or telephone room) and (iii) the number of
rentable square feet of any of the Building and the Park may subsequently change
after the Lease Date commensurate with any physical modifications to any of the
foregoing by Landlord, and Tenant’s Share shall accordingly change. The term
“Project” means and collectively refers to the Building, Common Areas, Lot and
Park.

 

2.             Occupancy; Adjustment of Commencement Date

 

2.1          If Landlord, for any reason whatsoever, cannot deliver possession
of the Premises to Tenant on the Commencement Date in the condition specified in
Section 5 hereof, Landlord shall neither be subject to any liability nor shall
the validity of this Lease be affected. If the commencement date and/or the
expiration date of this Lease is other than the Commencement Date and Expiration
Date specified in the Basic Lease Information, the parties shall execute a
written amendment to this Lease, substantially in the form of Exhibit E hereto
specifying the actual commencement date, expiration date and the date on which
Tenant is to commence paying Rent. Tenant shall execute and return such
amendment to Landlord within fifteen (15) days after Tenant’s receipt thereof.
The word “Term” means the initial term of this Lease and any valid
extension(s) thereof.

 

2.2          Provided that the Tenant Improvements (excluding the Initial
Cabling and Security System) (as defined in Exhibit B) are Substantially
Complete (as defined in Exhibit B), Tenant may occupy the Premises prior to the
actual Commencement Date, such occupancy shall be at Tenant’s sole risk and
subject to all the provisions of this Lease (excluding the obligation to pay
Base Rent or Tenant’s Share of Operating Expenses or Tax Expenses).
Additionally, Landlord shall have the right to impose additional reasonable
conditions on Tenant’s early occupancy.

 

3.             Rent

 

On the date that Tenant executes this Lease, Tenant shall deliver to Landlord
the original executed Lease, the Advance Rent (which shall be applied against
Rent payable for the first month(s) Tenant is required to pay Rent), the Letter
of Credit, and all insurance certificates required to be delivered under
Section 12 and Exhibit B of this Lease. Tenant agrees to pay Landlord without
prior notice or demand, abatement, offset, deduction or claim, in advance at
Landlord’s Address, on the Commencement Date and thereafter on the first (1st)
day of each month throughout the Term (i) Base Rent and (ii) as Additional Rent,
Tenant’s Share of Operating Expenses, Tax Expenses, Common Area Utility Costs,
and Utility Expenses. The term “Rent” means the aggregate of all these amounts.
If Landlord permits Tenant to occupy the Premises without requiring Tenant to
pay rental payments for a period of time, the waiver of the requirement to pay
rental payments shall only apply to the waiver of Base Rent. If any rental
payment date (including the Commencement Date) falls on a day of the month other
than the first day of such month or if any rental payment is for a period which
is shorter than one (1) month, then the rental for any such fractional month
shall be a proportionate amount of a full calendar month’s rental based on the
proportion that the number of days in such fractional month bears to the number
of days in the calendar month during which the fractional month occurs. All
other payments or adjustments required to be made under the terms of this Lease
that require proration on a time basis shall be prorated in the same manner. To
the extent not already paid as part of the Advance Rent any prorated Rent shall
be paid on the Commencement Date, and any prorated Rent for the final calendar
month shall be paid on the first day of the calendar month in which the date of
expiration or termination occurs.

 

4.             Intentionally omitted.

 

5.             Condition of Premises; Tenant Improvements

 

Tenant agrees (i) to accept the Premises on the Commencement Date (and by taking
possession of the Premises Tenant shall be deemed to have accepted the Premises)
as then being suitable for Tenant’s intended use and in good operating order,
condition and repair in its then existing “AS IS” condition, except as otherwise
set forth in Exhibit B hereto and herein, (ii) that neither Landlord nor any of
Landlord’s agents, representatives or employees has made any representations,
express or implied, as to the suitability, merchantability, fitness, quality or
condition of the Premises for the conduct of Tenant’s business or for any other
purpose, including without limitation, any storage incidental thereto and (iii)
the Premises, Building and Park fully comply with any of Landlord’s covenants
and obligations hereunder; provided, however, Landlord shall deliver the
Premises to Tenant clean and free of debris with the carpets cleaned and all
existing plumbing, electrical systems, fires sprinkler system, lighting, air
conditioning and heating systems and loading doors, if any, in the Premises in
good operating condition on the Commencement Date. The Tenant Improvements
(defined in Exhibit B) shall be installed in accordance with the terms and
provisions of Exhibit B. Tenant hereby waives, to the extent permitted by law,
any claim or cause of action based upon any warranties, either express or
implied, as to habitability, merchantability, suitability, quality, condition or
fitness for any particular purpose with regard to the premises, the Building or
the Park. Tenant represents and warrants to Landlord that Tenant has had an
opportunity to measure the actual dimensions of the Premises and the building
and agrees to the square footage calculations set forth in this Lease for all
purposes.

 

6.             Additional Rent

 

Landlord and Tenant intend that this Lease be a “triple net lease.” The costs
and expenses described in this Section 6 and all other sums, charges, costs and
expenses specified in this Lease other than Base Rent are to be paid by Tenant
to Landlord as additional rent (collectively, “Additional Rent”).

 

6.1          Operating Expenses:

 

                                6.1.1       Definition of Operating Expenses:
Tenant shall pay to Landlord Tenant’s Share of all Operating Expenses as
Additional Rent. The term “Operating Expenses” means the total amounts paid or
payable by Landlord in connection with the ownership, management, maintenance,
repair and operation of the Premises and Project. The term “Common Areas” means
all areas and facilities within the Project exclusive of the Premises and other
portions of the Project leasable exclusively to other tenants. The Common Areas
include, but are not limited to, interior lobbies, mezzanines, parking areas,
access and perimeter roads, sidewalks, rail spurs (if any), and landscaped
areas. Operating Expenses may include, but are not limited to, Landlord’s cost
of: (i) repairs to, and maintenance (but excluding replacement) of the roof
membrane, the non-structural portions of the roof and the non-structural
elements of the perimeter exterior walls of the Building; (ii) maintaining the
Common Areas of the Project; (iii) annual insurance premium(s) for any and all
insurance Landlord elects to obtain, including without limitation, “all risk” or
“special purpose” coverage, earthquake and flood for the Project, rental value
insurance and any commercially reasonable deductible (provided that any
earthquake

 

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deductible shall be amortized on a straight-line basis over the estimated useful
life of the repaired or replaced improvements, as reasonably determined by
Landlord, together with reasonable interest on the unamortized balance);
(iv) (a) modifications and/or new improvements to any portion of the Project
occasioned by any rules, laws or regulations effective subsequent to the Lease
Date; (b) reasonably necessary replacement improvements to any portion of the
Project after the Commencement Date; and (c) new improvements to the Project
that are intended to reduce operating costs or improve life/safety conditions,
all of the foregoing as reasonably determined by Landlord; provided, if such
costs are of a capital nature, then such costs or allocable portions thereof
shall be amortized on a straight-line basis over the estimated useful life of
the capital item, as reasonably determined by Landlord, together with reasonable
interest on the unamortized balance; (v) the management and administration of
the Project, including, without limitation, a property management fee,
accounting, auditing, billing, postage, salaries and benefits for employees,
whether located on the Project or off-site, payroll taxes and legal and
accounting costs and all fees, licenses and permits related to the ownership,
operation and management of the Project, provided that any management and
administration fee shall not exceed three percent (3%) of the gross rents for
the Project; (vi) preventative maintenance and repair contracts including, but
not limited to, contracts for elevator systems (if any), heating, ventilation
and air conditioning systems and lifts for disabled persons; (vii) security and
fire protection services for any portion of the Project, if and to the extent,
in Landlord’s sole discretion, such services are provided; (viii) the creation
and modification of any licenses, easements or other similar undertakings with
respect to the Project; (ix) supplies, materials, equipment, rental equipment
and other similar items used in the operation and/or maintenance of the Project
and any reasonable reserves established for replacement or repair of any Common
Area improvements or equipment; (x) any and all levles, charges, fees and/or
assessments payable to any applicable owner’s association or similar body; (xi)
any barrier removal work or other required improvements, alterations or work to
any portion of the Project generally required under the ADA (defined below) (the
“AM Work”); provided, (a) if such costs are of a capital nature, then such costs
or allocable portions thereof shall be amortized on a straight-line basis over
the estimated useful life of the capital item, as reasonably determined by
Landlord in accordance with sound accounting principles, together with
reasonable interest on the unamortized balance; and (b), If such ADA Work is
required under the ADA due to Tenant’s use of the Premises or any Alteration
(defined below) made to the Premises by or on behalf of Tenant, then the cost of
such ADA Work shall be borne solely by Tenant and shall not be included as part
of the Operating Expenses; and (xii) the repairs and maintenance items set forth
in Section 11.2 below. Landlord shall have the right, from time to time, to
equitably allocate and prorate some or all of the Operating Expenses among
different tenants and/or different buildings of the Project and/or on a building
by building basis (the “Cost Pools”). In such event, Tenant’s Share shall be
commensurately revised to reflect any such increases or decreases.

 

6.1.2       Operating Expense Exclusions: The term “Operating Expenses” shall
not include: (i) costs (including permit, license, and inspection fees) incurred
in renovating, improving or decorating vacant space or space for other tenants
within the Project; (ii) costs incurred because Landlord or another tenant
actually violated the terms and conditions of any lease within the Project;
(iii) legal and auditing fees (other than those fees reasonably incurred in
connection with the maintenance and operation of any portion the Project),
leasing commissions, advertising expenses, and other costs incurred in
connection with the original leasing of the Project or future re-leasing of any
portion of the Project; (iv) depreciation of the Building or any other
improvements situated within the Project; (v) any Items for which Landlord is
actually reimbursed; (vi) costs of repairs or other work necessitated by
casualty (excluding any deductibles) and/or costs of repair or other work
necessitated by the exercise of the right of eminent domain to the extent
insurance proceeds or a condemnation award, as applicable, is actually received
by Landlord for such purposes; provided, such costs of repairs or other work
shall be paid by the parties in accordance with the provisions of Sections 25
and 26, below; (vii) other than any interest charges for capital improvements
referred to in Section 6.1.1(iv) hereinabove, any interest or payments on any
financing for the Building or the Project, interest and penalties incurred as a
result of Landlord’s late payment of any invoice (provided that Tenant pays
Tenant’s Share of Operating Expenses and Tax Expenses to Landlord when due as
set forth herein), and any bad debt loss, rent loss or reserves for same;
(viii) costs associated with the investigation and/or remediation of Hazardous
Materials (hereafter defined) present in, on or about any portion of the
Project, unless such costs and expenses are the responsibility of Tenant as
provided in Section 27 hereof, in which event such costs and expenses shall be
paid solely by Tenant in accordance with Section 27 hereof; (ix) Landlord’s cost
for the repairs and maintenance items set forth in Section 11.3; (x) overhead
and profit increment paid to Landlord or to subsidiaries or affiliates of
Landlord for goods and/or services in the Project to the extent the same exceeds
the costs of such by unaffiliated third parties on a competitive basis; or any
costs included in Operating Expenses representing an amount paid to any entity
related to Landlord which is in excess of the amount which would have been paid
in the absence of such relationship; (xi) any payments under a ground lease or
master lease; (xii) any costs incurred by Landlord in order to obtain additional
or different types of insurance coverages than carried by Landlord as of the
Lease Date (for example, if Landlord does not carry flood insurance as of the
Lease Date, then Operating Expenses shall not include the cost of same); and
(xiii) capital expenditures, improvements or structural changes made to the
Premises, the Building or the Project, other than those expressly permitted in
Section 6.1.1 above; (xiv) management fees in excess of three percent (3%) of
the gross revenues of the Project; and (xv) capital costs to correct any
construction or design defects in the original construction of the Building or
the Project.

 

6.2          Tax Expenses: Tenant shall pay to Landlord Tenant’s Share of all
Tax Expenses applicable to the Project. Prior to delinquency, Tenant shall pay
any and all taxes and assessments levied upon Tenant’s Property (defined below
in Section 10) located or installed in or about the Premises by, or on behalf of
Tenant. To the extent any such taxes or assessments are not separately assessed
or billed to Tenant, then Tenant shall pay the amount thereof as invoiced by
Landlord. Tenant shall also reimburse and pay Landlord, as Additional Rent,
within ten (10) days after demand therefor, one hundred percent (100%) of
(i) any increase in real property taxes attributable to any and all Alterations
(defined below in Section 10), Tenant Improvements, fixtures, equipment or other
improvements of any kind whatsoever placed in, on or about the Premises for the
benefit of, at the request of, or by Tenant, and (ii) taxes and assessments
levied or assessed upon or with respect to the possession, operation, use or
occupancy by Tenant of the Premises or any other portion of the Project. “Tax
Expenses” means, without limitation, any form of tax and assessment (general,
special, supplemental, ordinary or extraordinary), commercial rental tax,
payments under any improvement bond or bonds, license fees, license tax,
business license fee, rental tax, transaction tax or levy imposed by any
authority having the direct or indirect power of tax (including any
governmental, school, agricultural, lighting or other improvement district) as
against any legal or equitable interest of Landlord in the Premises or Project
or any other tax, fee, or excise, however described, including, but not limited
to, any tax imposed in substitution (partially or totally) of any tax previously
included within the definition of Tax Expenses. “Tax Expenses” shall not include
(a) any franchise, estate, inheritance, net income, or excess profits tax
imposed upon Landlord, (b) any penalty or fee imposed solely as a result of
Landlord’s failure to pay Tax Expenses when due, and (c) any items included as
Operating Expenses.

 

6.3          Payment of Expenses: Landlord shall estimate Tenant’s Share of the
Operating Expenses and Tax Expenses for the calendar year in which the Lease
commences. Commencing on the Commencement Date, one-twelfth (1/12th) of this
estimated amount shall be paid by Tenant to Landlord, as Additional Rent, and
thereafter on the first (1st) day of each month throughout the remaining months
of such calendar year. Thereafter, Landlord may estimate such expenses for each
calendar year during the Term of this Lease and Tenant shall pay one-twelfth
(1/12th) of such estimated amount as Additional Rent on the first (1st) day of
each month throughout the Term. Tenant’s obligation to pay Tenant’s Share of
Operating Expenses and Tax Expenses shall survive the expiration or earlier
termination of this Lease.

 

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6.4          Annual Reconciliation: By June 30th of each calendar year, Landlord
shall furnish Tenant with an accounting of actual and accrued Operating Expenses
and Tax Expenses (“Statement”); provided, failure by Landlord to give such
Statement by such date shall not constitute a waiver by Landlord of its right to
collect any underpayment by Tenant at any time. Within thirty (30) days of
Landlord’s delivery of such Statement, Tenant shall pay to Landlord the amount
of any underpayment. Landlord shall credit the amount of any overpayment by
Tenant toward the next estimated monthly installment(s) falling due, or if the
Term of the Lease has expired, refund the amount of overpayment to Tenant as
soon as possible thereafter. If the Term of the Lease expires prior to the
annual reconciliation of expenses Landlord shall have the right to reasonably
estimate Tenant’s Share of such expenses, and Tenant shall pay any such
underpayment to Landlord within ten (10) days fallowing written demand. Failure
by Landlord to accurately estimate Tenant’s Share of such expenses or to
otherwise perform such reconciliation shall not constitute a waiver of
Landlord’s right to collect any underpayment at any time during the Term or
after the expiration or earlier termination of this Lease, provided that Tenant
shall not be required to pay any such underpayment if Tenant has not received
written notice of such unpaid amount on or before the date twelve (12) months
after the end of the calendar year in which such underpayment occurred.

 

6.5          Audit: After delivery to Landlord of at least thirty (30) days
prior written notice, Tenant, at its sole cost and expense through any
accountant designated by It, shall have the right to examine and/or audit the
books and records evidencing such expenses for the previous one (1) calendar
year, during Landlord’s reasonable business hours but not more frequently than
once during any calendar year. Tenant may not compensate any such accountant on
a contingency fee basis. The results of any such audit (and any negotiations
between the parties related thereto) shall be maintained strictly confidential
by Tenant and its accounting firm and shall not be disclosed, published or
otherwise disseminated to any other party other than to Landlord and its
authorized agents, except as may be required by law. Landlord and Tenant each
shall use its commercially reasonable efforts to cooperate in such negotiations
and to promptly resolve any discrepancies between Landlord and Tenant in the
accounting of such expenses. If such audit reveals that Landlord’s determination
of Operating Expenses overstated the Operating Expenses by at least five percent
(5%), Landlord shall give Tenant a credit against future rental amounts for an
amount equal to the reasonable cost of the audit (provided that in no event
shall such credit exceed $3,500.00).

 

7.             Utilities and Services

 

Tenant shall pay the cost of all (i) water, sewer use, sewer discharge fees and
sewer connection fees, gas, electricity, telephone, telecommunications, cabling
and other utilities billed or metered separately to the Premises and (ii) refuse
pickup and janitorial service to the Premises.

 

7.1          Utility Expenses: Tenant shall pay to Landlord Tenant’s Share of
any utility fees, use charges, or similar services provided to any portion of
the Project that are not billed or metered separately to Tenant or another
tenant (collectively, “Utility Expenses”). If Landlord reasonably determines
that Tenant’s Share of Utility Expenses is not commensurate with Tenant’s use of
such services, Tenant shall pay to Landlord the amount which is attributable to
Tenant’s use of the utilities or similar services, as reasonably estimated and
determined by Landlord, based upon factors such as size of the Premises and
intensity of use of such utilities by Tenant such that Tenant shall pay the
portion of such charges reasonably consistent with Tenant’s use of such
utilities and similar services. Tenant shall also pay Tenant’s Share of any
assessments, charges and fees included within any tax bill for the Lot on which
the Premises are situated, including without limitation, entitlement fees,
allocation unit fees and sewer use fees.

 

7.2          Common Area Utility Costs: Tenant shall pay to Landlord, as
Additional Rent, Tenant’s Share of any Common Area utility fees, charges and
expenses (collectively, “Common Area Utility Costs”). Tenant shall pay to
Landlord one-twelfth (1/12th) of the estimated annual amount of Tenant’s Share
of the Common Area Utility Casts on the Commencement Date and thereafter on the
first (1st) day of each month throughout the Term. Any reconciliation thereof
shall be substantially in the same manner as set forth in Section 6.4 above.

 

7.3          Miscellaneous: Tenant acknowledges that the Premises may become
subject to the rationing of utility services or restrictions on utility use as
required by a public utility company, governmental agency or other similar
entity having jurisdiction thereof. Tenant agrees that its tenancy and occupancy
hereunder shall be subject to such rationing restrictions as may be imposed upon
Landlord, Tenant, the Premises, or other portions of the Project, and Tenant
shall in no event be excused or relieved from any covenant or obligation to be
kept or performed by Tenant by reason of any such rationing or restrictions.

 

8.             Late Charges

 

The sums and charges set forth in this Section 8 shall be “Additional Rent”.
Tenant acknowledges that late payment (the second (2nd) day of each month or any
time thereafter) of Rent and all other sums due hereunder, will cause Landlord
to incur costs not contemplated by this Lease. Such costs may include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Landlord by the terms of any note secured by any encumbrance against
the Premises, and late charges and penalties due to the late payment of real
property taxes on the Premises. Therefore, if any installment of Rent or any
other sum payable by Tenant is not received by Landlord within five (5) days of
the date due, Tenant shall promptly pay to Landlord a late charge, as liquidated
damages, in an amount equal to five percent (5%) of such delinquent amount plus
interest thereon at ten percent (10%) per annum for every month or portion
thereof that such sums remain unpaid. Notwithstanding the foregoing, Tenant
shall not be obligated to pay such late charge for the first such late payment
in any twelve (12) month period, provided that such payment is made within three
(3) days after notice from Landlord that such amount was not paid when due. If
Tenant delivers to Landlord two (2) checks for which there are not sufficient
funds, Landlord may require Tenant to replace such check with a cashier’s check
for the amount of such check and all other charges payable hereunder. The
parties agree that this late charge and the other charges referenced above
represent a fair and reasonable estimate of the costs that Landlord will incur
by reason of such late payment by Tenant, excluding attorneys’ fees and costs.
Acceptance of any late charge or other charges shall not constitute a waiver by
Landlord of Tenant’s Default with respect to the delinquent amount, nor prevent
Landlord from exercising any of the other rights and remedies available to
Landlord for any other Default of Tenant under this Lease.

 

9.            Use of Premises

 

                9.1          Compliance with Laws, Recorded Matters, and
Rules and Regulations: The Premises shall be used solely for the permitted uses
specified in the Basic Lease Information and for no other uses without
Landlord’s prior written consent. Landlord’s consent shall not be unreasonably
withheld or delayed so long as the proposed change in use (i) does not involve
the use of Hazardous Materials other than as expressly permitted under the
provisions of Section 27 below, (ii) does not require any additional parking
spaces, and (iii) is compatible and consistent with the other uses then being
made in the Project, as reasonably determined by Landlord. The use of the
Premises by Tenant and its employees, representatives, agents, invitees,
licensees, subtenants, customers or contractors (collectively, “Tenant’s
Representatives”) shall be subject to, and at all times in compliance with,
(a) any and all applicable laws, rules, codes, ordinances, statutes, orders and
regulations as same exist from time to time throughout the Term (collectively,
the “Laws”), including without limitation, the requirements of the Americans
with Disabilities Act, a federal law codified at 42 U.S.C. 12101 et seq.,
including, but not limited to Title III thereof, all regulations and guidelines
related thereto and all requirements of Title 24 of the State of California
(collectively, the “ADA”), (b) any and all instruments, licenses, restrictions,
easements or similar instruments, conveyances or encumbrances which are at any
time required to be made by or given by Landlord relating to the initial
development of the Project and/or the construction, from time to time, of any
additional improvements in the Project, including without limitation, any Tenant
Improvements (collectively, “Development Documents”), (c) any and all documents,
easements, covenants, conditions and restrictions, and similar instruments,
together with any and all amendments and supplements thereto made, from time to
time, each of

 

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which has been or hereafter is recorded in any official or public records with
respect to the Premises or any other portion of the Project (collectively,
“Recorded Matters”), and (d) any and all rules and regulations set forth in
Exhibit C hereto, any other reasonable rules and regulations now or hereafter
promulgated by Landlord, and any rules, restrictions and/or regulations imposed
by any applicable owners association or similar entity (collectively, “Rules and
Regulations”). Landlord reserves to itself the right, from time to time, to
grant, without the consent of Tenant, such easements, rights and dedications
that Landlord deems reasonably necessary, and to cause the recordation of parcel
or subdivision maps and/or restrictions, so long as such easements, rights,
dedications, maps and restrictions, as applicable, do not materially and
adversely interfere with Tenant’s operations in the Premises. Tenant agrees to
sign promptly any documents reasonably requested by Landlord to effectuate any
such easements, rights, dedications, maps or restrictions. Tenant agrees to, and
does hereby, assume full and complete responsibility (x) to ensure that the
Premises, including without limitation, the Tenant Improvements, are in
compliance with all applicable Laws throughout the Term and (y) for the payment
of all costs, fees and expenses associated with any modifications, improvements
or other Alterations to the Premises and/or any other portion of the Project
occasioned by the enactment of, or changes to, any Laws arising from Tenant’s
particular use of the Premises or Alterations or other improvements made to the
Premises regardless of when such Laws became effective. Tenant shall have no
right to initiate, submit an application for, or otherwise request, any land use
approvals or entitlements with respect to the Premises or any other portion of
the Project.

 

9.2          Prohibition on Use: Tenant shall not use the Premises or permit
anything to be done in or about the Premises nor keep or bring anything therein
which will increase the existing rate of or affect any policy of insurance upon
the Building or any of its contents, or cause a cancellation of any insurance
policy. No auctions may be conducted in, on or about any portion of the Premises
or the Project without Landlord’s prior written consent thereto. Tenant shall
not do or permit anything to be done in or about the Premises which will
obstruct or interfere with the rights of Landlord or other tenants or occupants
of any portion of the Project. The Premises shall not be used for any unlawful
purpose. Tenant shall not cause, maintain or permit any private or public
nuisance in, on or about any portion of the Premises or the Project, including,
but not limited to, any offensive odors, noises, fumes or vibrations. Tenant
shall not damage or deface or otherwise commit or suffer to be committed any
waste in, upon or about the Premises or any other portion of the Project. Tenant
shall not place or store, nor permit any other person or entity to place or
store, any property, equipment, materials, supplies or personal property outside
of the Premises. Except as otherwise provided in Section 35 of this Lease,
Tenant shall not permit any animals, including, but not limited to, any
household pets, to be brought or kept in or about the Premises. Tenant shall
neither install any radio or television antenna, satellite dish, microwave or
other device on the roof or exterior walls of the Building or any other portion
of the Project nor make any penetrations of or to the roof of the Building,
without Landlord’s prior written consent, which may be withheld in Landlord’s
sole discretion. Tenant shall not interfere with radio, telecommunication, or
television broadcasting or reception from or in the Building or elsewhere.
Tenant shall place no loads upon the floors, walls, or ceilings in excess of the
maximum designed load permitted by the applicable Uniform Building Code or which
may damage the Building or outside areas within the Project.

 

10.          Alterations; and Surrender of Premises

 

10.1         Alterations: Tenant shall be permitted to make, at its sole cost
and expense, non-structural Alterations (as hereinafter defined) to the interior
of the Premises without obtaining Landlord’s prior written consent, provided
said Alterations are not part of Tenant’s Wi-Fi Network (defined hereinbelow),
do not affect the Building systems and the cost of such Alterations does not
exceed Thirty Thousand Dollars ($30,000.00) each job and Sixty Thousand Dollars
($60,000.00) cumulatively each calendar year (individually, a “Permitted
Improvement, and collectively, the “Permitted Improvements”). Tenant, however,
shall first notify Landlord and submit to Landlord a description, including
without limitation, plans and specifications (if applicable) of such Permitted
Improvements so that Landlord may post a Notice of Non-Responsibility on the
Premises, as provided hereinafter. Except for the Permitted Improvements, Tenant
shall neither install any signs, fixtures or improvements, nor make or permit
any other alterations or additions (individually, an “Alteration”, and
collectively, “Alterations”) to the Premises without the prior written consent
of Landlord, which consent shall not be unreasonably withheld so long as any
such Alteration does not affect the Building systems, structural integrity or
structural components of the Premises or Building. If Landlord’s consent is
required and given hereunder to any Alteration proposed by Tenant, Landlord
shall notify Tenant in writing with Landlord’s consent whether any of such
proposed Alterations are required to be removed at the expiration or earlier
termination of this Lease. If any such Alteration is expressly permitted by
Landlord or is a Permitted Improvement, Tenant shall deliver at least ten
(10) days prior written notice to Landlord, from the date Tenant commences
construction, sufficient to enable Landlord to post and record a Notice of
Non-Responsibility. Tenant shall obtain all permits or other governmental
approvals prior to commencing any work and deliver a copy of same to Landlord.
All Alterations shall be (i) at Tenant’s sole cost and expense in accordance
with plans and specifications which have been previously submitted to and
approved in writing by Landlord, and shall be installed by a licensed, insured
(and bonded, at Landlord’s option) contractor (reasonably approved by Landlord)
in compliance with all applicable Laws, Development Documents, Recorded Matters,
and Rules and Regulations and (ii) performed in a good and workmanlike manner
and so as not to obstruct access to any portion of the Project or any business
of Landlord or any other tenant. Landlord’s approval of any plans,
specifications or working drawings for Tenant’s Alterations shall neither create
nor impose any responsibility or liability on the part of Landlord for their
completeness, design sufficiency, or compliance with any Laws. As Additional
Rent, Tenant shall reimburse Landlord, within thirty (30) days after demand, for
actual legal, engineering, architectural, planning and other expenses incurred
by Landlord in connection with Tenant’s Alterations. If Tenant makes any
Alterations, Tenant shall carry “Builder’s All Risk” insurance, in an amount
approved by Landlord and such other insurance as Landlord may require. All such
Alterations shall be insured by Tenant in accordance with Section 12 of this
Lease immediately upon completion. Tenant shall keep the Premises and the Lot on
which the Premises are situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by or on behalf of
Tenant. Tenant shall, prior to commencing any Alterations, (a) cause its
contractor(s) and/or major subcontractor(s) to provide insurance as reasonably
required by Landlord, and (b) provide such assurances to Landlord, including
without limitation, waivers of lien, as Landlord shall require to assure payment
of the costs thereof to protect Landlord and the Project from and against any
mechanic’s, materialmen’s or other liens.

 

                                10.1.1     Wi-Fi Network: Without limiting the
generality of the foregoing, in the event Tenant desires to install wireless
intranet, Internet and communications network (“Wi-Fi Network”) in the Premises
for the use by Tenant and its employees, then the same shall be subject to the
provisions of this Section 10.1.1 (in addition to the other provisions of this
Section 10). Tenant shall, in accordance with Section 10.2 below, remove the
Wi-Fi Network from the Premises prior to the termination of the Lease. Tenant
shall use the Wi-Fi Network so as not to cause any interference to other tenants
in the Building or to other tenants at the Park or with any other tenant’s
communication equipment, and not to damage the Building or Park or interfere
with the normal operation of the Building or Park and Tenant hereby agrees to
indemnify, defend and hold Landlord harmless from and against any and all
claims, costs, damages, expenses and liabilities (including attorneys’ fees)
arising out of Tenant’s failure to comply with the provisions of this
Section 10.1.1, except to the extent same is caused by the gross negligence or
willful misconduct or Landlord and which is not covered by the insurance carried
by Tenant under this Lease (or which would not be covered by the insurance
required to be carried by Tenant under this Lease). For the purposes of this
Section 10.1.1, interference shall be defined to mean interference in violation
of the rules and regulations of the Federal Communications Commission (“FCC”).
Should any interference occur, Tenant shall take all necessary steps as soon as
reasonably possible and no later than three (3) calendar days following written
notice to correct such interference. If such interference continues after such
three (3) day period, Tenant shall immediately cease operating such Wi-Fi
Network until such interference is corrected or remedied to be in compliance
with the rules and regulations of the FCC. Tenant acknowledges that Landlord has
granted and/or may grant telecommunication rights to other tenants and occupants
of the Building and to telecommunication service providers and in no event shall
Landlord be liable to Tenant for any interference of the same with such Wi-Fi
Network, Landlord makes no representation that the Wi-Fi Network will be able to
receive or transmit communication signals without interference or disturbance.
Tenant shall (i) be solely responsible for any damage caused as a result of the
Wi-Fi Network, (ii) promptly

 

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pay any tax, license or permit fees charged pursuant to any laws or regulations
in connection with the installation, maintenance or use of the Wi-Fi Network and
comply with all precautions and safeguards recommended by all governmental
authorities, and (iii) pay for all necessary repairs, replacements to or
maintenance of the Wi-Fi Network.

 

10.2        Surrender of Premises: At the expiration of the Term or earlier
termination of this Lease, Tenant shall surrender the Premises to Landlord
(a) in good condition and repair (damage by acts of God, casualty, and ordinary
wear and tear excepted), but with all interior walls cleaned, any carpets
cleaned, all floors cleaned and waxed, all non-working light bulbs and ballasts
replaced and all roll-up doors and plumbing fixtures in good condition and
working order, and (b) in accordance with Section 27 hereof. The term “ordinary
wear and tear” shall not include any damage or deterioration that could have
been prevented by Tenant’s employment of ordinary prudence, care and diligence
in the occupancy and use of the Premises and the performance of all of its
obligations under this Lease. Items not considered ordinary wear and tear
hereunder include the following for which Tenant shall bear the obligation for
repair and restoration: (i) excessively soiled, stained, worn or marked surfaces
or finishes; (ii) damage, including holes in building surfaces (e.g., cabinets,
doors, walls, ceilings and floors) caused by the Installation or removal of
Tenant’s trade fixtures, furnishings, decorations, equipment, alterations,
utility installations, security systems, communication systems (including
cabling, wiring and conduits), displays and signs; (iii) damage to any
component, fixture, hardware, system or component part thereof within the
Premises, and any such damage to the Building caused by Tenant or its agents,
contractors or employees, and not fully recovered by Landlord from insurance
proceeds. On or before the expiration or earlier termination of this Lease,
Tenant shall remove (i) all of Tenant’s Property (defined below) and Tenant’s
signage from the Premises and other portions of the Project, (ii) any
Alterations that Landlord has, by notice to Tenant given with Landlord’s written
consent to such Alterations, advised Tenant that removal is required; provided,
however, in the event that Landlord’s consent was not required to be obtained
pursuant to Section 10.1 hereof and Landlord did not otherwise notify Tenant in
writing prior to Tenant’s installation of any such Permitted Alteration that
removal would not be required, then Landlord shall have the right to notify
Tenant, not later than ninety (90) days prior to the Expiration Date (except in
the event of a termination of this Lease prior to the scheduled Expiration Date,
in which event no advance notice shall be required), that Tenant shall be
required, at Tenant’s expense, to remove such Alterations, and Tenant shall
repair any damage caused by all of such removal activities; provided, however,
that Tenant shall not be required to remove (x) the Tenant Improvements
(excluding the Initial Cabling (as defined in Exhibit B), which shall be subject
to the provisions of this Section 10.2 relating to Cabling) or (y) any cabling
(excluding the Initial Cabling) Which exists in the Premises prior to the
Commencement Date, “Tenant’s Property” means all equipment, trade fixtures,
furnishings, all telephone, data, and other cabling and wiring (including any
cabling and wiring associated with the Wi-Fi Network, if any) installed or
caused to be installed by Tenant (including any cabling and wiring, installed
above the ceiling of the Premises or below the floor of the Premises),
inventories, goods and personal property of Tenant. Any of Tenant’s Property not
so removed by Tenant as required herein shall be deemed abandoned and may be
stored, removed, and disposed of by Landlord at Tenant’s expense, and Tenant
waives all claims against Landlord for any damages resulting from Landlord’s
retention and disposition of such property; provided, however, Tenant shall
remain liable to Landlord for all costs incurred in storing and disposing of
such abandoned property of Tenant. Landlord may elect to take responsibility to
remove any such wiring or cabling installed above the ceiling or beneath the
floors of the Premises, in which case Tenant shall pay Landlord for the actual
cost Incurred by Landlord therefor, within thirty (30) days after being billed
for the same. Notwithstanding anything to the contrary contained herein, Tenant
shall prior to the expiration of this Lease, at Tenant’s expense and in
compliance with the National Electric Code and other applicable Laws, remove all
electronic, fiber, phone and data cabling and related equipment that has been
installed by or for the benefit of Tenant in or around the Premises
(collectively, the “Cabling”); provided, however, Tenant shall not remove such
Cabling if Tenant receives a written notice from Landlord at least fifteen (15)
days prior to the expiration of the Lease authorizing such Cabling to remain in
place, in which event the Cabling shall be surrendered with the Premises upon
the expiration or earlier termination of this Lease, All Alterations except
those which Landlord requires Tenant to remove shall remain in the Premises as
the property of Landlord. If the Premises are not surrendered at the expiration
of the Term or earlier termination of this Lease, and in accordance with this
Section 10 and Section 27 below, Tenant shall continue to be responsible for the
payment of Rent (as the same may be increased pursuant to Section 20 below)
until the Premises are so surrendered in accordance with said provisions. Tenant
shall indemnify, defend and hold the Indemnitees (hereafter defined) harmless
from and against any and all Claims (defined below) (A) arising from any delay
by Tenant in so surrendering the Premises including, without limitation, any
Claims made against Landlord by any succeeding tenant or prospective tenant
founded on or resulting from such delay and (B) suffered by Landlord due to lost
opportunities to lease any portion of the Premises to any such succeeding tenant
or prospective tenant.

 

11.          Repairs and Maintenance

 

               11.1         Tenant’s Repairs and Maintenance Obligations: Except
for those portions of the Building to be maintained by Landlord, as provided in
Sections 11.2 and 11.3 below, Tenant shall, at its sole cost and expense, keep
and maintain all parts of the Premises and such portions of the Building as are
within the exclusive control of Tenant in good, clean and safe condition and
repair, promptly making all necessary repairs and replacements, whether ordinary
or extraordinary, with materials and workmanship of the same character, kind and
quality as the original thereof, all of the foregoing in accordance with the
applicable provisions of Section 10 hereof, and to the reasonable satisfaction
of Landlord including, but not limited to, repairing any damage (and replacing
any property so damaged) caused by Tenant or any of Tenant’s Representatives, or
due to or associated with unusually heavy people loads (defined as more than one
person per two hundred (200) rentable square feet), unusually heavy utility use,
unusually heavy floor loads, or other unusual occupancy factors, and restoring
the Premises and other portions of the Project to the condition existing prior
to the occurrence of such damage. Without limiting any of the foregoing, Tenant
shall be solely responsible for promptly maintaining, repairing and replacing
(a) all mechanical systems, heating, ventilation and air conditioning systems
exclusively serving the Premises, unless maintained by Landlord, (b) all
plumbing work and fixtures in the Premises, (c) electrical wiring systems,
fixtures and equipment exclusively serving the Premises, (d) all interior
lighting (Including, without limitation, light bulbs and/or ballasts) and
exterior lighting exclusively serving the Premises, (e) all glass, windows,
window frames, window casements, skylights, interior and exterior doors, door
frames and door closers within the Premises, (f) all roll-up doors, ramps and
dock equipment, including without limitation, dock bumpers, dock plates, dock
seals, dock levelers and dock lights within the Premises or on the exterior of
the Premises, (g) all Tenant signage, (h) lifts for disabled persons exclusively
serving the Premises, (i) sprinkler systems, fire protection systems and
security systems within the Premises, except to the extent maintained by
Landlord, and (j) all partitions, fixtures, equipment, interior painting,
interior walls and floors, and floor coverings of the Premises and every part
thereof (including, without limitation, any demising walls contiguous to any
portion of the Premises). Any such work shall be performed by licensed, insured
and bonded contractors and subcontractors reasonably approved by Landlord.
Additionally, Tenant shall be solely responsible for the performance of the
regular removal of trash and debris. Tenant’s maintenance and repair obligations
pursuant to Section 11.1(a) above shall include the procurement and maintenance
of a heating, ventilation and air conditioning systems preventative maintenance
and repair contract(s) for any HVAC unit(s) exclusively servicing the Premises;
such contract(s) to provide for maintenance on a quarterly basis. Landlord
reserves the right, but without the obligation to do so, to procure and maintain
the heating, ventilation and air conditioning systems preventative maintenance
and repair contract(s) and, if Landlord so elects to procure and maintain any
such contract(s), Tenant will reimburse Landlord for the cost thereof in
accordance with the provisions of Section 6 above, provided that the cost of
such contract is commercially reasonable. If Tenant procures and maintains any
of such contract(s), Tenant will promptly deliver to Landlord a true and
complete copy of each such contract and any and all renewals or extensions
thereof, and each service report or other summary received by Tenant pursuant to
or in connection with such contract(s). Upon prior written notice to Landlord,
Tenant shall be permitted to access the roof of the Premises to the extent
necessary to service the HVAC pursuant to Tenant’s HVAC maintenance and repair
contract.

 

11.2        Maintenance by Landlord: Subject to the provisions of Section 11.1,
and further subject to Tenant’s obligation

 

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under Section 6 to reimburse Landlord, in the form of Additional Rent, for
Tenant’s Share of the cost and expense of the following described items,
Landlord shall repair and maintain the following items: fire protection
services; the roof coverings and membrane (provided that Tenant installs no
additional air conditioning or other equipment on the roof that damages the roof
coverings, in which event Tenant shall pay all costs relating to the presence of
such additional equipment) and non-structural portions of the roof; the plumbing
and mechanical systems serving the Building, excluding the plumbing, mechanical
and electrical systems exclusively serving the Premises; any rail spur and rail
crossing; exterior painting of the Building; and the parking areas, pavement,
landscaping, sprinkler systems, sidewalks, driveways, curbs, and lighting
systems in the Common Areas. If Landlord elects to perform any repair or
restoration work required to be performed by Tenant, Tenant shall reimburse
Landlord within thirty (30) days of demand for all costs and expenses incurred
by Landlord in connection therewith. Tenant shall promptly report, in writing,
to Landlord any defective condition known to it which Landlord is required to
repair.

 

11.3         Landlord’s Repairs and Maintenance Obligations: Subject to the
provisions of Sections 11.1, 25 and 26, and except for repairs rendered
necessary by the intentional or negligent acts or omissions of Tenant or any of
Tenant’s Representatives, Landlord shall, at Landlord’s sole cost and expense,
keep in good repair the structural portions of the roof, floors, foundations and
exterior perimeter walls of the Building (exclusive of glass and exterior
doors).

 

11.4         Tenant’s Failure to Perform Repairs and Maintenance Obligations: If
Tenant refuses or neglects to repair and maintain the Premises and the other
areas properly as required herein and to the reasonable satisfaction of
Landlord, (i) Landlord may, but without obligation to do so, at any time make
such repairs or maintenance without Landlord having any liability to Tenant for
any loss or damage that may accrue to Tenant’s Property or to Tenant’s business
by reason thereof, except to the extent any damage is caused by the willful
misconduct or gross negligence of Landlord or its authorized agents and
representatives and (ii) Tenant shall pay to Landlord, as Additional Rent,
Landlord’s costs and expenses incurred therefor. Tenant’s obligations under this
Section 11 shall survive the expiration of the Term or earlier termination
thereof. Tenant hereby waives any right to repair at the expense of Landlord
under any applicable Laws now or hereafter in effect.

 

12.          Insurance

 

12.1         Types of Insurance: Tenant shall maintain in full force and effect
at all times during the Term, at Tenant’s sole cost and expense, for the
protection of Tenant and Landlord, as their interests may appear, policies of
insurance issued by carriers reasonably acceptable to Landlord and its lender
which afford the following coverages: (i) worker’s compensation and employer’s
liability, as required by law; (ii) commercial general liability insurance
(occurrence form) providing coverage against any and all claims for bodily
injury and property damage occurring in, on or about the Premises arising out of
Tenant’s and Tenant’s Representatives’ use or occupancy of the Premises and such
insurance shall (a) include coverage for blanket contractual liability, fire
damage, premises, personal injury, completed operations and products liability
and with respect to completed operations and products, a $1,000,000 aggregate,
and (b) have a combined single limit of not less than Two Million Dollars
($2,000,000) per occurrence and a Three Million Dollar ($3,000,000) aggregate
limit and excess/umbrella insurance in the amount of at least Three million
Dollars.,($3,000,000); (iii) comprehensive automobile liability insurance with a
combined single limit of at least $1,000,000 per occurrence for claims arising
out of any company owned automobiles; (iv) “all risk” or “special purpose”
property insurance, including without limitation, sprinkler leakage, covering
damage to or loss of any of Tenant’s Property and the Tenant Improvements
located in, on or about the Premises, together with, if the property of any of
Tenant’s invitees, vendors or customers is to be kept in the Premises,
warehouser’s legal liability or ballee customers insurance for the full
replacement cost of the property belonging to such parties and located in the
Premises. Such insurance shall be written on a replacement cost basis (without
deduction for depreciation) in an amount equal to one hundred percent (100%) of
the full replacement value of the aggregate of the items referred to in this
clause (iv); (v) employers liability with limits of $1,000,000 each accident,
$1,000,000 disease policy limit, $1,000,000 disease-each employee; (vi) business
interruption insurance with limit of liability representing loss of at lease
approximately six (6) months of income; and (vii) such other insurance or higher
limits of liability as is then customarily required for similar types of
buildings within the general vicinity of the Project or as may be reasonably
required by any of Landlord’s renders.

 

12.2         Insurance Policies: Insurance required to be maintained by Tenant
shall be written by companies (i) licensed to do business in the State of
California, (ii) domiciled in the United States of America, and (iii) having a
“General Policyholders Rating” of at least A-:_VIII (or such higher rating as
may be required by a lender having a lien on the Premises) as set forth in the
most current issue of “A.M. Best’s Rating Guides.” Any deductible amounts under
any of the insurance policies required hereunder shall not exceed Ten Thousand
Dollars ($10,000). Tenant shall deliver to Landlord certificates of insurance
and true and complete copies of any and all endorsements required herein for all
insurance required to be maintained by Tenant hereunder at the time of execution
of this Lease by Tenant. Tenant shall, at least ten (10) days prior to
expiration of each policy, furnish Landlord with certificates of renewal or
“binders” thereof. Each certificate shall expressly provide that such policies
shall not be cancelable or otherwise subject to material modification except
after thirty (30) days prior written notice to the parties named as additional
insureds as required in this Lease (except for cancellation for nonpayment of
premium, in which event cancellation shall not take effect until at least ten
(10) days’ notice has been given to Landlord). Tenant shall have the right to
provide insurance coverage which it is obligated to carry pursuant to the terms
of this Lease under a blanket insurance policy, provided such blanket policy
expressly affords coverage for the Premises and Landlord as required by this
Lease.

 

12.3         Additional Insureds and Coverage: Each of landlord, Landlord’s
property management company or agent, and Landlord’s lender(s) having a lien
against the Premises or any other portion of the Project shall be named as
additional insureds or loss payees (as applicable) under all of the policies
required in Section 12.1(ii) and, with respect to the Tenant Improvements, in
Section 12.1(iv) hereof. All such policies shall provide for severability of
interest. All insurance to be maintained by Tenant shall, except for workers’
compensation and employer’s liability insurance, be primary, without right of
contribution from insurance maintained by Landlord. Any umbrella/excess
liability policy (which shall be in “following form”) shall provide that if the
underlying aggregate is exhausted, the excess coverage will drop down as primary
insurance. The limits of insurance maintained by Tenant shall not limit Tenant’s
liability under this Lease, It Is the parties’ intention that the insurance to
be procured and maintained by Tenant as required herein shall provide coverage
for any and all damage or injury arising from or related to Tenant’s operations
of its business and/or Tenant’s or Tenant’s Representatives’ use of the Premises
and any of the areas within the Project. Notwithstanding anything to the
contrary contained herein, to the extent Landlord’s cost of maintaining
insurance with respect to the Building and/or any other buildings within the
Project is increased as a result of Tenant’s acts, omissions, Alterations,
improvements, use or occupancy of the Premises, Tenant shall pay one hundred
percent (100%) of, and for, each such increase as Additional Rent.

 

                12.4        Failure of Tenant to Purchase and Maintain
Insurance: If Tenant fails to obtain and maintain the insurance required herein
throughout the Term, Landlord may, but without obligation to do so, purchase the
necessary insurance and pay the premiums therefor. If Landlord so elects to
purchase such insurance, Tenant shall promptly pay to Landlord as Additional
Rent, the amount so paid by Landlord, upon Landlord’s demand therefor. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
Additional Rent, any and all Claims which Landlord may incur due to Tenant’s
failure to obtain and maintain such insurance.

 

12.5         Waiver of Subrogation: Landlord and Tenant mutually waive their
respective rights of recovery against each other for any loss of, or damage to,
either parties’ property to the extent that such loss or damage is insured by an
insurance policy required to be in effect at the time of such loss or damage.
Each party shall obtain any special endorsements, if required by its insurer,
whereby the insurer waives its rights of subrogation against the other party.
This provision is intended to waive fully, and for the benefit of the parties
hereto, any rights and/or claims which might give rise to a right of subrogation
in favor of any insurance carrier.

 

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The foregoing waiver shall not apply to losses or damages in excess of actual or
required policy limits (whichever is greater) nor to any deductible applicable
under any policy obtained by the waiving party. The failure of either party (the
“Defaulting Party”) to take out or maintain any insurance policy required under
this Lease shall be a defense to any claim asserted by the Defaulting Party
against the other party hereto by reason of any loss sustained by the Defaulting
Party that would have been covered by any such required policy. The waivers set
forth in the immediately preceding sentence shall be in addition to, and not in
substitution for, any other waivers, indemnities, or exclusions of liabilities
set forth in this lease.

 

13.          Limitation of Liability and Indemnity

 

Except to the extent of Claims (defined below) resulting from the gross
negligence or willful misconduct of Landlord or its authorized representatives,
Tenant agrees to protect, defend (with counsel reasonably acceptable to
Landlord) and hold Landlord and Landlord’s lenders, partners, members, property
management company (if other than Landlord), agents, directors, officers,
employees, representatives, contractors, successors and assigns and each of
their respective partners, members, directors, officers, employees,
representatives, agents, contractors, heirs, successors and assigns
(collectively, the “Indemnitees”) harmless and indemnify the Indemnitees from
and against all liabilities, damages, demands, penalties, costs, claims, losses,
judgments, charges and expenses (including reasonable attorneys’ fees, costs of
court and expenses necessary in the prosecution or defense of any litigation
including the enforcement of this provision) (collectively, “Claims”) arising
from or in any way related to, directly or indirectly, (i) Tenant’s or Tenant’s
Representatives’ use of the Premises and other portions of the Project, (ii) the
conduct of Tenant’s business, (iii) from any activity, work or thing done,
permitted or suffered by Tenant in or about the Premises, and/or (iv) Tenant’s
failure to perform any covenant or obligation of Tenant. Tenant agrees that the
obligations of Tenant herein shall survive the expiration or earlier termination
of this Lease.

 

Except to the extent of Claims resulting from the gross negligence or willful
misconduct of any Indemnitee, to the fullest extent permitted by law, neither
Landlord nor any other Indemnitee shall be liable for damages to Tenant or any
party claiming through Tenant for any injury to or death of any person or damage
to property or for interruption or damage to business resulting from any of the
following reasons: (a) any act, omission or negligence of Tenant or Tenant’s
Representatives; (b) any act, omission or negligence of any other tenant within
the Building, or any of their respective employees, agents, contractors,
tenants, assignees, licensees, invitees or customers; (c) the repair,
alteration, maintenance, damage or destruction of the Premises or any other
portion of the Building (including the construction of leasehold improvements
for other tenants of the Building), except to the extent caused by the gross
negligence or willful misconduct of Landlord or any other Indemnitee;
(d) vandalism, theft, burglary and other criminal acts (other than those
committed by Landlord’s employees); (e) any defect in or failure of equipment,
pipes, wiring, heating or air conditioning equipment, stairs, elevators, or
sidewalks, the bursting of any pipes or the leaking, escaping or flowing of gas,
water, steam, electricity, or oil, broken glass, or the backing up of any
drains, except to the extent caused by the gross negligence or willful
misconduct of Landlord or any other Indemnitee; (f) injury done or occasioned by
wind, snow, rain or ice, fire, act of God, public enemy, injunction, riot,
strike, insurrection, war, court order, requisition, or order of any
governmental body or authority, (g) any other cause beyond the reasonable
control of Landlord or (h) the passive or active negligence of any Indemnitee.
Under no circumstances shall Landlord or any other Indemnitee be liable for
damages related to business Interruption or loss of profits. The provisions of
this Section 13 shall not limit the obligations of Landlord or the rights of
Tenant under this Lease not involving a claim for damages.

 

14.          Assignment and Subleasing

 

14.1         Prohibition: Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, hypothecate, encumber, grant any license or
concession, pledge or otherwise transfer this Lease or any interest herein,
permit any assignment or other transfer of this Lease by operation of law,
sublet the Premises or any part thereof, or permit the use of the Premises by
any persons other than Tenant and Tenant’s Representatives (collectively,
”Transfers” and any entity to whom any Transfer is made or sought to be made is
sometimes referred to as a “Transferee”). No consent to any Transfer shall
constitute a waiver of the provisions of this Section 14. All Transfers shall be
made only with the prior written consent of Landlord, which consent shall not be
unreasonably withheld, conditioned or delayed, but which consent shall be
subject to the provisions of this Section 14.

 

14.2         Request for Consent: If Tenant seeks to make a Transfer, Tenant
shall notify Landlord, in writing (“Tenant’s Notice), and deliver to Landlord at
least fifteen (15) days prior to the proposed commencement date of the Transfer
(“Proposed Effective Date”) the following: (i) a description of the portion of
the Premises to be transferred (the “Subject Space”); (ii) all of the terms of
the proposed Transfer, including without limitation, the Proposed Effective
Date, the name and address of the proposed Transferee, and a copy of the
existing or proposed assignment, sublease or other agreement governing the
proposed Transfer; (iii) current financial statements of the proposed Transferee
certified by an officer, member, partner or owner thereof, and audited financial
statements for the previous three (3) most recent consecutive fiscal years; and
(iv) such other information as Landlord may then reasonably require. Within
fifteen (15) days after Landlord’s receipt of the Tenant’s Notice (the “Landlord
Response Period”) Landlord shall notify Tenant, in writing, of its determination
with respect to such requested proposed Transfer and Landlord’s election as set
forth in Section 14.5. If Landlord does not elect to recapture pursuant to
Section 14.5 and Landlord does consent to the requested proposed Transfer,
Tenant may thereafter assign its interests in and to this Lease or sublease all
or a portion of the Premises to the same party and on the same terms as set
forth in the Tenant’s Notice.

 

14.3         Criteria for Consent: Tenant agrees that, among other circumstances
for which Landlord could reasonably withhold consent to a proposed Transfer, it
shall be reasonable for Landlord to withhold its consent where (a) Tenant is in
Default of its obligations under this Lease beyond applicable notice and cure
periods or at any time during the Term of this Lease Tenant has been in Chronic
Default, (b) the use to be made of the Premises by the proposed Transferee is
prohibited, or differs from the uses permitted, under this Lease, (c) the
proposed Transferee or its business is subject to compliance with additional
requirements of the ADA beyond those requirements which are applicable to
Tenant, (d) the proposed Transferee does not intend to occupy the Premises,
(e) Landlord reasonably disapproves of the proposed Transferee’s business
operating ability or history, or creditworthiness, (f) the proposed Transferee
is a governmental agency or unit or an existing tenant in the Project, (g) the
proposed Transfer would cause Landlord to violate another agreement or
obligation to which Landlord is a party or otherwise subject, or (h) the
proposed Transferee will use, store or handle Hazardous Materials (defined
below) of a type, nature or quantity not then being used by Tenant.

 

               14.4         Effectiveness of Transfer and Continuing
Obligations: Prior to the date on which any permitted Transfer becomes
effective, Tenant shall deliver to Landlord (i) a counterpart of the fully
executed Transfer document, (ii) an executed Hazardous Materials Disclosure
Certificate substantially in the form of Exhibit D hereto (the “Transferee
HazMat Certificate”), and (iii) Landlord’s standard form of Consent to
Assignment or Consent to Sublease, as applicable, executed by Tenant and the
Transferee in which each of Tenant and the Transferee confirms its obligations
under this Lease. Failure or refusal of a Transferee to execute any such consent
instrument shall not release or discharge the Transferee from its obligation to
do so or from any liability as provided herein. The voluntary, involuntary or
other surrender of this Lease by Tenant, or a mutual cancellation by Landlord
and Tenant, shall not work a merger, and any such surrender or cancellation
shall, at the option of Landlord, either terminate all or any existing subleases
or operate as an assignment to Landlord of any or all of such subleases. Each
permitted Transferee shall assume and be deemed to assume this Lease and shall
be and remain liable jointly and severally with Tenant for payment of Rent and
for the due performance of, and compliance with all the terms, covenants,
conditions and agreements herein contained on Tenant’s part to be performed or
complied with, for the Term of this Lease. No Transfer shall affect the
continuing primary liability of Tenant (which, following assignment, shall be
joint and several with the assignee) under this Lease whether occurring before
or after such Transfer, and Tenant shall not be released from performing any of
the terms, covenants and conditions of this Lease. An assignee of Tenant shall
become directly liable to Landlord for all obligations of Tenant hereunder. The
acceptance of any Rent by Landlord from any other

 

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person (whether or not such person is an occupant of the Premises) shall not be
deemed to be a waiver by Landlord of any provision of this Lease or to be a
consent to any Transfer. For purposes hereof, if Tenant is a business entity,
direct or Indirect transfer of fifty percent (50%) or more of the ownership
interest of the entity (whether in a single transaction or in the aggregate
through more than one transaction) shall be deemed a Transfer and shall be
subject to this Section 14. Any and all options, rights of refusal, improvement
allowances and other similar rights granted to Tenant in this Lease, if any,
shall not be assignable by Tenant unless expressly authorized in writing by
Landlord. Any transfer made without Landlord’s prior written consent, shall, at
Landlord’s option, be null, void and of no effect, and shall, at Landlord’s
option, constitute a material default by Tenant of this Lease. As Additional
Rent, Tenant shall promptly reimburse Landlord for actual legal and other
expenses incurred by Landlord in connection with any actual or proposed
Transfer.

 

14.5        Recapture: If the Transfer (i) by itself or taken together with then
existing or pending Transfers covers or totals, as the case may be, more than
fifty percent (50%) of the rentable square feet of the Premises, and (ii) is for
a term which by itself or taken together with then existing or pending Transfers
is greater than fifty percent (50%) of the period then remaining in the Term of
this Lease as of the time of the Proposed Effective Date, then Landlord shall
have the right, to be exercised by giving written notice to Tenant, to recapture
the Subject Space described in the Tenant’s Notice. If such recapture notice is
given, it shall serve to terminate this Lease with respect to the proposed
Subject Space, or, if the proposed Subject Space covers all the Premises, it
shall serve to terminate the entire Term of this Lease, in either case, as of
the Proposed Effective Date. If this Lease is terminated with respect to less
than the entire Premises, Rent shall be adjusted on the basis of the proportion
of rentable square feet retained by Tenant to the rentable square feet
originally demised and this Lease as so amended shall continue thereafter in
full force and effect.

 

14.6        Transfer Premium: If Landlord consents to a Transfer, as a condition
thereto, Tenant shall pay to Landlord monthly, as Additional Rent, at the same
time as the monthly Installments of Rent are payable hereunder, fifty percent
(50%) of any Transfer Premium. The term “Transfer Premium” shall mean all rent,
additional rent and other consideration payable by such Transferee which either
initially or over the term of the Transfer exceeds the Rent or pro rata portion
of the Rent, as the case may be, for the Subject Space, after first deducting
commercially reasonable commissions, reasonable attorneys’ fees and tenant
improvement allowance(s) incurred in connection with the procurement of the
Transfer (collectively, “Transfer Costs”); provided, such Transfer Costs, in the
case of a Transfer that is a sublease, shall be deducted in equal monthly
installments from the monthly Rent due over the term of the sublease.

 

14.7        Waiver: Notwithstanding any Transfer, or any indulgences, waivers or
extensions of time granted by Landlord to any Transferee, or failure by Landlord
to take action against any Transferee, Tenant agrees that Landlord may, at its
option, proceed against Tenant without having taken action against or joined
such Transferee, except that Tenant shall have the benefit of any indulgences,
waivers and extensions of time granted to any such Transferee.

 

14.8        Affiliates. The assignment or subletting by Tenant of all or any
portion of this Lease or the Premises to (i) a parent or subsidiary of Tenant,
or (ii) any person or entity which controls, is controlled by or under the
common control with Tenant, or (iii) any entity which purchases all or
substantially all of the assets of Tenant, or (iv) any entity into which Tenant
is merged or consolidated (all such persons or entities described in clauses
(i), (ii), (iii) and (iv) being sometimes herein referred to as “Affiliates”)
shall not be subject to obtaining Landlord’s prior consent or a recapture and no
Transfer Premium shall be payable, provided in all instances that:

 

(a)           No Default then exists under this Lease;

 

(b)           Any such Affiliate was not formed as a subterfuge to avoid the
obligations of this Section 14;

 

(c)           Tenant gives Landlord prior notice of any such Transfer to an
Affiliate at least fifteen (15) days prior to the effective date of the proposed
Transfer (unless such Transfer is not disclosed to the public, then upon such
disclosure to the public);

 

(d)           the successor of Tenant shall have, as of the effective date of
any such Transfer, a tangible net worth and net assets, in the aggregate,
computed in accordance with generally accepted accounting principles (but
excluding goodwill as an asset), which is sufficient to meet the obligations of
Tenant under this Lease, as reasonably determined by Landlord;

 

(e)           any such Transfer shall be subject to all of the terms and
provisions of this Lease, and such proposed Transferee (i.e. any such
Affiliate), other than in the case of an Affiliate resulting from a merger or
consolidation described in Section 14.8(iv) above, shall assume, in a written
document reasonably satisfactory to Landlord and delivered to Landlord upon or
prior to the effective date of such assignment or sublease, all the obligations
of Tenant under this Lease;

 

(f)            Tenant and any guarantor shall remain fully liable for all
obligations to be performed by Tenant under this Lease; and

 

(g)           Tenant’s notice to Landlord shall include information and
documentation showing that each of the above conditions has been satisfied. If
requested by landlord, Tenant’s successor shall sign a commercially reasonable
form of assumption agreement.

 

15.          Subordination

 

To the fullest extent permitted by law, this Lease, the rights of Tenant under
this Lease and Tenant’s leasehold interest shall be subject and subordinate at
all times to: (i) all ground leases or underlying leases which may now exist or
hereafter be executed affecting the Building, the Lot, or any other portion of
the Project, and (ii) the lien of any mortgage or deed of trust which may now or
hereafter exist for which the Building, the Lot, ground leases or underlying
leases, any other portion of the Project or Landlord’s interest or estate
therein is specified as security, provided, however, that any such subordination
to any subsequent ground lease, underlying lease, mortgage or deed of trust
shall be conditioned upon the ground lessor, mortgagee or beneficiary executing
a commercially reasonable non-disturbance agreement in favor of Tenant.
Notwithstanding the foregoing, Landlord or any such ground lessor, mortgagee, or
any beneficiary shall have the right to require this Lease be superior to any
such ground leases or underlying leases or any such liens, mortgage or deed of
trust. If any ground lease or underlying lease terminates for any reason or any
mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure
is made for any reason, Tenant shall attorn to and become the Tenant of the
successor in interest to Landlord, provided such successor in interest will not
disturb Tenant’s use, occupancy or quiet enjoyment of the Premises if Tenant is
not in Default of this Lease. The successor in interest to Landlord following
foreclosure, sale or deed in lieu thereof shall not be: (a) liable for any act
or omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (b) subject to any offsets or defenses which Tenant
might have against any prior lessor; (c) bound by prepayment of more than one
(1) month’s Rent; or (d) liable to Tenant for any Security Deposit not actually
received by such successor in interest to the extent any portion of such
Security Deposit has not already been forfeited by, or refunded to, Tenant. If
Landlord receives a Security Deposit, Landlord shall be liable to Tenant for all
or any portion of the Security Deposit not forfeited by, or refunded to Tenant,
until and unless Landlord transfers such Security Deposit to the successor in
interest. Tenant covenants and agrees to execute (and acknowledge if required by
Landlord, any lender or ground lessor) and deliver, within ten (10) business
days of a written demand or request by Landlord and in the form reasonably
requested by Landlord, ground lessor, mortgagee or beneficiary, any additional

 

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documents evidencing the priority or subordination of this Lease with respect to
any such ground leases or underlying leases or the lien of any such mortgage or
deed of trust, provided that such documents include a provision whereby such
ground lessor, mortgagee or beneficiary agrees that it shall not disturb
Tenant’s use, occupancy or quiet enjoyment of the Premises if Tenant is not in
Default of this Lease.

 

16.          Right of Entry

 

Landlord and its agents shall have the right to enter the Premises at all
reasonable times, upon reasonable prior notice, for purposes of inspection,
exhibition, posting of notices, investigation, replacements, repair, maintenance
and alteration. It is further agreed that Landlord shall have the right to use
any and all means Landlord deems necessary to enter the Premises in an
emergency. Landlord shall have the right to place (i) “for rent” or “for lease”
signs on the outside of the Premises, the Building and in the Common Areas, and
(ii) “for sale” signs on the outside of the Building and in the Common Areas.
Tenant hereby waives any Claim from damages or for any injury or inconvenience
to or interference with Tenant’s business, or any other loss occasioned thereby
except for any Claim for any of the foregoing arising out of the sole active
gross negligence or willful misconduct of Landlord or its authorized
representatives.

 

17.          Estoppel Certificate

 

Tenant shall execute (and acknowledge if required by any lender or ground
lessor) and deliver to Landlord, within ten (10) business days after Landlord
provides such to Tenant, a statement in writing certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification), the date to which the Rent and other charges are paid in
advance, if any, acknowledging that there are not, to Tenant’s knowledge, any
uncured defaults on the part of Landlord hereunder or specifying such defaults
as are claimed, and such other matters as Landlord may reasonably require. Any
such statement may be conclusively relied upon by Landlord and any prospective
purchaser or encumbrancer of the Building or other portions or the Project.
Tenant’s failure to deliver such statement within such time shall be conclusive
upon the Tenant that (a) this Lease is in full force and effect, without
modification except as may be represented by Landlord; (b) there are no uncured
defaults in Landlord’s performance; and (c) not more than one month’s Rent has
been paid in advance.

 

18.          Tenant’s Default

 

The occurrence of any one or more of the following events shall, at Landlord’s
option, constitute a “Default” by Tenant of the provisions of this Lease:

 

18.1        The abandonment of the Premises by Tenant, as abandonment is
statutorily defined in California Civil Code Section 1951.3 or all similar or
successor laws;

 

18.2        The failure by Tenant to make any payment of Rent, Additional Rent
or any other payment or charge required hereunder within three (3) business days
following Landlord’s delivery of written notice that said payment is due;
provided, any such written notice shall be in lieu of, and not in addition to,
any notice required under California Code of Civil Procedure Sections 1161 et
seq. and all similar or successor laws;

 

18.3        Except as otherwise provided in Section 19.4 hereof, the failure by
Tenant to observe, perform or comply with any of the conditions, covenants or
provisions of this Lease (except failure to make any payment of Rent and/or
Additional Rent and any other payment or charge required hereunder) and such
failure is not cured within (i) thirty (30) days of the date on which Landlord
delivers written notice of such failure to Tenant for all failures other than
with respect to (a) Hazardous Materials (defined in Section 27 hereof),
(b) Tenant making the repairs, maintenance and replacements required under the
provisions of Section 11.1 hereof, or (c) Tenant’s failure to timely deliver a
subordination agreement as set forth in Section 15 above, a counterpart of a
fully executed Transfer document and a consent thereto (collectively, the
“Transfer Documents”), an estoppel certificate and insurance certificates
(except as set forth in (ii) hereof), (ii) ten (10) days of the date on which
Landlord delivers written notice of such failure to Tenant for all failures in
any way related to Hazardous Materials, Tenant failing to timely make the
repairs, maintenance or replacements required by section 11.1, or any default
with respect to any provision of this Lease relating to subordination agreement,
Transfer Documents, assignment and sublease, estoppel certificates and insurance
(except as set forth in (ii) hereof). However, provided a Chronic Default has
not occurred, Tenant shall not be in default of its obligations hereunder if
such failure (other than any failure of Tenant to timely and properly make the
repairs, maintenance, or replacements required by Section 11.1, or timely
deliver a subordination agreement, the Transfer Documents, an estoppel
certificate or insurance certificates) cannot reasonably be cured within such
thirty (30) or ten (10) day period, as applicable, and Tenant promptly
commences, and thereafter diligently proceeds with same to completion, all
actions necessary to cure such failure as soon as is reasonably possible, but in
no event shall the completion of such cure be later than sixty (60) days after
the date on which Landlord delivers to Tenant written notice of such failure,
unless Landlord, acting reasonably and in good faith, otherwise expressly agrees
in writing to a longer period of time based upon the circumstances relating to
such failure as well as the nature of the failure and the nature of the actions
necessary to cure such failure. Any such written notice provided hereunder shall
be in lieu of, and not in addition to, any notice required under California Code
of Civil Procedure Sections 1161, et seq. and all similar or successor laws; or

 

18.4        The making of a general assignment by Tenant for the benefit of
creditors, the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant’s creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing, the appointment of a receiver or other custodian to take possession of
substantially all of Tenant’s assets or this leasehold, Tenant’s insolvency or
inability to pay Tenant’s debts or failure generally to pay Tenant’s debts when
due, any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant’s assets, Tenant taking
any action toward the dissolution or winding up of Tenant’s affairs, the
cessation or suspension of Tenant’s use of the Premises, or the attachment,
execution or other judicial seizure of substantially all of Tenant’s assets or
this leasehold.

 

19.          Remedies for Tenant’s Default

 

                19.1        Landlord’s Rights: In the event of Tenant’s Default
under this Lease, Landlord may terminate Tenant’s right to possess the Premises
by any lawful means. Following delivery of written notice by Landlord, this
Lease shall terminate on the date specified in such notice and Tenant shall
immediately surrender possession of the Premises to Landlord. In addition,
whether or not this Lease is terminated, Landlord shall have the right to
immediately re-enter the Premises, and if Landlord’s right of re-entry is
exercised following Tenant’s abandonment of the Premises, all of Tenant’s
Property left on the Premises or in the Project shall be deemed abandoned. If
Landlord relets the Premises or any portion thereof, Tenant shall immediately be
liable to Landlord for all costs Landlord incurs in reletting the Premises or
any part thereof, including, without limitation, broker’s commissions, expenses
of cleaning, redecorating, and further improving the Premises and other similar
costs (collectively, the “Reletting Costs”). All Reletting Costs shall be fully
chargeable to Tenant and shall not be prorated or otherwise amortized in
relation to any new lease for the Premises or any portion thereof. Reletting may
be for a period shorter or longer than the remaining term of this Lease. In no
event shall Tenant be entitled to any excess rent received by Landlord. No act
by Landlord other than giving written notice to Tenant shall terminate this
Lease or Tenant’s right to possess the Premises, including without limitation,
acts of maintenance, efforts to relet the Premises or the appointment of a
receiver on Landlord’s initiative to protect Landlord’s interest under this
Lease. At all times Landlord shall have the right to remedy any Default of
Tenant, to maintain or improve the Premises, to cause a receiver to be appointed
to administer the

 

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Premises and any new or existing subleases and to add to the Rent payable
hereunder all of Landlord’s reasonable costs in so doing, with interest at the
maximum rate permitted by law from the date of such expenditure.

 

19.2        Damages Recoverable: If Tenant breaches this Lease and abandons the
Premises before the end of the Term, or if Landlord terminates Tenant’s right to
possession following Tenant’s Default under this Lease, then in either such
case, Landlord may recover from Tenant all damages suffered by Landlord as a
result of Tenant’s failure to perform its obligations hereunder, including
without limitation, the unamortized cost of any Tenant Improvements constructed
by or on behalf of Tenant pursuant to Exhibit B hereto to the extent Landlord
has paid for such improvements, the unamortized portion of any broker’s or
leasing agent’s commission incurred with respect to the leasing of the Premises
to Tenant for the balance of the Term remaining after the date on which Tenant
is in Default of its obligations hereunder (to the extent the foregoing is not
covered by the unpaid Rent collected for the balance of the Term), and all
Reletting Costs, and the worth at the time of the award (computed in accordance
with paragraph (3) of Subdivision (a) of Section 1951.2 of the California Civil
Code) of the amount by which the Rent then unpaid hereunder for the balance of
the Lease Term exceeds the amount of such loss of Rent for the same period which
Tenant proves could be reasonably avoided by Landlord and in such case, Landlord
prior to the award, may relet the Premises for the purpose of mitigating damages
suffered by Landlord because of Tenant’s failure to perform its obligations
hereunder; provided, however, that even if Tenant abandons the Premises
following such breach, this Lease shall nevertheless continue in full force and
effect for as long as Landlord does not terminate Tenant’s right of possession,
and until such termination, Landlord shall have the remedy described in
Section 1951.4 of the California Civil Code (Landlord may continue this Lease in
effect after Tenant’s breach and abandonment and recover Rent as it becomes due,
if Tenant has the right to sublet or assign, subject only to reasonable
limitations) and may enforce all its rights and remedies under this Lease,
including the right to recover the Rent from Tenant as it becomes due hereunder.
The “worth at the time of the award” within the meaning of Subparagraphs
(a)(1) and (a)(2) of Section 1951.2 of the California Civil Code shall be
computed by allowing interest at the rate of ten percent (10%) per annum. Tenant
hereby waives for itself and for all those claiming under Tenant its right to
obtain redemption or relief from forfeiture under California Code of Civil
Procedure Sections 1174 and 1179 (or any successor or substitute statute), or
under any other present or future law, in the event judgment for possession
enters against Tenant or Landlord takes possession of the Premises following any
Default of Tenant hereunder.

 

19.3        Audit Rights: In the event of Tenant’s Default of this Lease,
Landlord or its designated agent shall have the right to audit and/or inspect
Tenant’s records, books, accounts and other data relating to the Premises and
this Lease. Landlord shall give Tenant not less than five (5) days’ written
notice of its intention to conduct any such audit. Furthermore, in such event,
Tenant, within five (5) days after Landlord’s request therefor, shall deliver to
Landlord the then current audited financial statements of Tenant (including
interim periods following the end of the last fiscal year for which annual
statements are available). If audited financial statements have not been
prepared, Tenant shall provide Landlord with unaudited financial statements
(certified by an authorized representative or officer of Tenant) and such other
information, the type and form of which are reasonably acceptable to Landlord,
which reflect the financial condition of Tenant.

 

19.4        Chronic Default: The term “Chronic Default” as used in this Lease
shall mean that Tenant has Defaulted in the performance of any of its
obligations under this Lease more than three (3) times during any calendar year,
regardless of whether or not Tenant cures any such Default, A Chronic Default is
not curable by Tenant. Upon the occurrence of a Chronic Default and at all times
thereafter during the balance of the Term of this Lease, Landlord shall no
longer be obligated to provide Tenant written notice of default as set forth in
Section 18.3 hereof and Tenant shall no longer be entitled to any cure period
set forth in this Lease, including without limitation, those cure periods set
forth in Section 18.3. Following a Chronic Default, Landlord, in its sole
discretion, may elect to provide written notice of default to Tenant or grant
Tenant a period during which it may cure any such default, however, no Such
delivery of written notice or grant of a cure period by Landlord shall in any
way obligate Landlord to provide Tenant any subsequent written notices of
default or cure periods.

 

19.5        Rights and Remedies Cumulative: The foregoing rights and remedies of
Landlord are not exclusive; they are cumulative in addition to any rights and
remedies now or hereafter existing at law, in equity, by statute or otherwise,
and to any remedies Landlord may have under bankruptcy laws or laws affecting
creditors’ rights generally. In addition to all of the remedies set forth above,
if Tenant Defaults under this Lease, all options granted to Tenant hereunder
shall automatically terminate, unless otherwise expressly agreed to in writing
by Landlord.

 

20.          Holding Over

 

If Tenant holds over after the expiration of the Term, with or without the
express or implied consent of Landlord, such tenancy shall be from
month-to-month only, and shall not constitute a renewal hereof or an extension
for any further term, and in such case Base Rent shall be payable at a monthly
rate equal to one hundred fifty percent (150%) of the Base Rent applicable
during the last rental period of the Term under this Lease. Such month-to-month
tenancy shall be subject to every other term and provision contained herein.
Landlord hereby expressly reserves the right to require Tenant to surrender
possession of the Premises to Landlord in the condition required herein upon the
expiration or earlier termination of this Lease. The provisions of this
Section 20 shall not be deemed to limit or constitute a waiver of any other
rights or remedies of Landlord provided herein or at law. If Tenant fails to
surrender the Premises upon the expiration or earlier termination of this Lease,
in addition to any other liabilities to Landlord accruing therefrom, Tenant
shall protect, defend, indemnify and hold Landlord harmless from all Claims
resulting from such failure, including but not limited to, any Claims made by
any succeeding tenant founded upon such failure to surrender, and any lost
profits to Landlord resulting therefrom.

 

21.          Landlord’s Default

 

Landlord shall not be considered in default of this Lease unless Landlord fails
within a reasonable time to perform an obligation required to be performed by
Landlord hereunder. For purposes hereof, a reasonable time shall in no event be
less than thirty (30) days after receipt by Landlord of written notice
specifying the nature of the obligation Landlord has not performed;
provided, however, that if the nature of Landlord’s obligation is such that more
than thirty (30) days, after receipt of written notice, is reasonably necessary
for its performance, then Landlord shall not be in default of this Lease if
performance of such obligation is commenced within such thirty (30) day period
and thereafter diligently pursued to completion.

 

22.          Parking

 

Tenant may use the number of non-designated and non-exclusive parking spaces
specified in the Basic Lease Information, Landlord shall exercise reasonable
efforts to ensure that such spaces are available to Tenant for its use, but
Landlord shall not be required to enforce Tenant’s right to use the same. Tenant
and Tenant’s Representatives shall not park or permit any parking of vehicles
overnight.

 

23.          Transfer of Landlord’s Interest

 

Tenant acknowledges that Landlord has the right to transfer all or any portion
of its interest in the Premises, Building, Project and this Lease. Tenant
expressly agrees that in the event of any such transfer, Landlord shall
automatically be entirely released from all liability under this Lease and
Tenant agrees to look solely to such transferee for the performance of
Landlord’s obligations hereunder after the date of such transfer. Landlord shall
use commercially reasonable efforts to cause each such transferee to agree to
perform Landlord’s obligations hereunder arising or accruing after the date of
such transfer. A ground lease or similar long term lease by Landlord of the
entire Building or Lot, of which the Premises are a part, shall be deemed a sale
within the meaning of this Section 23. Tenant agrees to

 

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attorn to such new owner provided such new owner does not disturb Tenant’s use,
occupancy or quiet enjoyment of the Premises so long as Tenant is not in Default
of this Lease.

 

24.          Waiver

 

No delay or omission in the exercise of any right or remedy of either party on
any default by the other party shall impair such a right or remedy or be
construed as a waiver. The subsequent acceptance of Rent by Landlord after
Default by Tenant of this Lease shall not be deemed a waiver of such Default,
other than a waiver of timely payment for the particular Rent payment involved,
and shall not prevent Landlord from maintaining an unlawful detainer or other
action based on such Default. No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly Rent and other sums due hereunder shall be deemed
to be other than on account of the earliest Rent or other sums due, nor shall
any endorsement or statement on any check or accompanying any check or payment
be deemed an accord and satisfaction; and Landlord may accept such payment
without prejudice to Landlord’s right to recover the balance of such Rent or
other sum or pursue any other remedy provided in this Lease. No failure, partial
exercise or delay on the part of the Landlord in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.

 

25.          Casualty Damage

 

25.1        Casualty: If the Premises or any part [excluding any of Tenant’s
Property, any Wi-Fi Network, any Tenant Improvements and any Alterations
installed by or for the benefit of Tenant (collectively, “Tenant’s FF&E”) shall
be damaged or destroyed by fire or other casualty, then within sixty (60) days
after such casualty, Landlord shall notify Tenant, in writing, of the following
time period within which the necessary repairs can reasonably be made, as
estimated by Landlord: (a) within one hundred eighty (180) days, or (b) in more
than one hundred eighty (180) days, from the date of such casualty. Provided
such insurance is available at commercially reasonable rates, Landlord agrees to
maintain rental loss insurance during the Term hereof. All costs of such
insurance maintained by Landlord hereunder shall be included in Operating
Expenses.

 

25.1.1     Minor Insured Damage: If the Premises (other than Tenant’s FF&E) are
damaged only to such extent that repairs, rebuilding and/or restoration can be
reasonably completed within one hundred eighty (180) days from the date of such
casualty, this Lease shall not terminate and, provided that insurance proceeds
are available and paid to Landlord to fully repair the damage and/or Tenant
otherwise voluntarily contributes any shortfall thereof, Landlord shall repair
the Premises to substantially the same condition that existed prior to the
occurrence of such casualty, except Landlord shall not be required to rebuild,
repair, or replace any of Tenant’s FF&E. The Rent payable hereunder shall be
abated proportionately from the date and to the extent Tenant vacates the
affected portions of the Premises until any and all repairs required herein to
be made by Landlord are substantially completed, but such abatement shall
(i) only be to the extent of the portion of the Premises which is actually
rendered unusable and unfit for occupancy or inaccessible, (ii) only be during
the time Tenant is not actually using same, and (iii) only apply to the extent
Landlord receives rental loss insurance proceeds therefor.

 

25.1.2     Major Insured Damage: If the Premises (other than Tenant’s FF&E) are
damaged to such extent that repairs, rebuilding and/or restoration cannot be
reasonably completed, as reasonably determined by Landlord, within one hundred
eighty (180) days from the date of such casualty, then either Landlord or Tenant
may terminate this Lease by giving written notice within twenty (20) days after
notice from Landlord regarding the time period of repair. If either party
notifies the other of its intention to so terminate this Lease, then this Lease
shall terminate and the Rent shall be abated from the date of the occurrence of
such damage, provided Tenant diligently proceeds to and expeditiously vacates
the Premises (but, in all events Tenant must vacate and surrender the Premises
to Landlord by no later than ten (10) business days thereafter or there shall
not be any abatement of Rent until Tenant so vacates the Premises). If neither
party elects to terminate this Lease, Landlord shall promptly commence and
diligently prosecute to completion the repairs to the Premises, provided
insurance proceeds are available and paid to Landlord to fully repair the damage
or Tenant voluntarily contributes any shortfall thereof (except that Landlord
shall not be required to rebuild, repair, or replace any of Tenant’s FF&E).
During the time when Landlord is prosecuting such repairs to substantial
completion, the Rent payable hereunder shall be abated proportionately from the
date and to the extent Tenant actually vacates the affected portions of the
Premises until any and all repairs required herein to be made by Landlord are
substantially completed, but such abatement shall (i) only be to the extent of
the portion of the Premises which is actually rendered unusable and unfit for
occupancy or inaccessible, (ii) only be during the time Tenant is not actually
using same, and (iii) apply only to the extent Landlord receives rental loss
insurance proceeds therefor.

 

25.1.3     Damage Near End of Term: Notwithstanding anything to the contrary
contained in this Lease except for the provisions of Section 25.3 below, if the
Premises are substantially damaged during the last year of then applicable term
of this Lease, either Landlord or Tenant may, at their option, cancel and
terminate this Lease by giving written notice to the other party of its election
to do so within forty-five (45) days after receipt by Landlord or notice from
Tenant of the occurrence of such casualty. If either party so elects to
terminate this Lease, all rights of Tenant hereunder shall cease and terminate
ten (10) days after Tenant’s receipt or delivery of such notice, as applicable,
and Tenant shall immediately vacate the Premises and surrender possession
thereof to Landlord.

 

25.2        Intentionally omitted.

 

25.3        Tenant’s Fault and Lender’s Rights: Notwithstanding anything to the
contrary contained herein, if the Premises (other than Tenant’s FF&E) or any
other portion of the Building is damaged by fire or other casualty due to the
acts or omissions of Tenant or any of Tenant’s Representatives, (i) the Rent
shall only be abated during the repair of such damage to the extent Landlord
receives rental loss insurance proceeds therefor, (ii) Tenant will not have any
right to terminate this Lease due to the occurrence of such casualty, and
(iii) Tenant will be responsible for the excess cost and expense of the repair
and restoration of the Building (including any deductible) to the extent not
covered by insurance proceeds. Notwithstanding anything to the contrary
contained herein, if the holder of any indebtedness secured by the Premises or
any other portion of the Project requires that the insurance proceeds be applied
to such indebtedness, then Landlord shall have the right to terminate this Lease
by delivering written notice of termination to Tenant within thirty (30) days
after the date of notice to Tenant of such event, whereupon all rights of Tenant
shall cease and terminate ten (10) days after Tenant’s receipt of such notice,
and Tenant shall immediately vacate the Premises and surrender possession
thereof to Landlord.

 

25.4        Tenant’s Waiver: Landlord shall not be liable for any inconvenience
or annoyance to Tenant, injury to the business of Tenant, loss of use of any
part of the Premises by Tenant or loss of Tenant’s Property, resulting in any
way from such damage or the repair thereof. With respect to any damage which
Landlord is obligated to repair or may elect to repair, Tenant waives all rights
to terminate this Lease or offset any amounts against Rent pursuant to rights
accorded Tenant by any law currently existing or hereafter enacted, including
without limitation, all rights pursuant to California Civil Code Sections 1932
(2.), 1933 (4.), 1941 and 1942 and any similar or successor laws.

 

26.          Condemnation

 

If twenty-five percent (25%) or more of the Premises is condemned by eminent
domain, inversely condemned or sold in lieu of condemnation for any public or
quasi-public use or purpose (“Condemned”), then Tenant or Landlord may terminate
this Lease as of the date when physical possession of the Premises is taken and
title vests in such condemning authority, and Rent shall be adjusted to the date
of termination. Tenant shall not because of such condemnation assert any claim
against Landlord or the condemning authority for any compensation because of
such condemnation, and Landlord shall be entitled to receive the entire amount
of any

 

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award without deduction for any estate of interest or other interest of Tenant;
provided, however, the foregoing shall not preclude Tenant, at Tenant’s sole
cost and expense, from obtaining any separate award to Tenant for loss of, or
damage to, Tenant’s Property or for damages for cessation or interruption of
Tenant’s business provided such award is separate from Landlord’s award and does
not diminish nor otherwise impair the award otherwise payable to Landlord. In
addition to the foregoing, Tenant shall be entitled to seek compensation for the
relocation costs recoverable by Tenant pursuant to the provisions of California
Government Code Section 7262. If neither party elects to terminate this Lease,
Landlord shall, if necessary, promptly proceed to restore the Premises or the
Building, as applicable, to substantially the same condition prior to such
partial condemnation, allowing for the reasonable effects of such partial
condemnation, and a proportionate allowance shall be made to Tenant, as
determined by Landlord, for the Rent corresponding to the time during which, and
to the part of the Premises of which, Tenant is deprived on account of such
partial condemnation and restoration. Landlord shall not be required to spend
funds for restoration in excess of the condemnation proceeds received by
Landlord.

 

27.          Environmental Matters/Hazardous Materials

 

27.1        Hazardous Materials Disclosure Certificate: Simultaneously herewith,
Tenant has delivered to Landlord Tenant’s executed initial Hazardous Materials
Disclosure Certificate (the “Initial HazMat Certificate”), a copy of which is
attached hereto as Exhibit D. Tenant covenants, represents and warrants to
Landlord that the information in the Initial HazMat Certificate is true and
correct and accurately describes the use(s) of Hazardous Materials which will be
made and/or used on the Premises by Tenant. Tenant, upon Landlord’s written
request and/or if any of the information in the Initial Hazardous Materials
Certificate or the Hazardous Materials Certificate (as defined below), most
recently provided to Landlord has changed, shall deliver to Landlord, an
executed Hazardous Materials Disclosure Certificate (“the “HazMat Certificate”),
in substantially the form attached hereto as Exhibit D, describing Tenant’s then
present use of Hazardous Materials on the Premises, and any other reasonably
necessary documents as requested by Landlord.

 

27.2        Definition of Hazardous Materials: “Hazardous Materials” means
(a) any hazardous or toxic wastes, materials or substances, and other pollutants
or contaminants, which are or become regulated by any Environmental Laws;
(b) petroleum, petroleum by products, gasoline, diesel fuel, crude oil or any
fraction thereof; (c) asbestos and asbestos containing material, in any form,
whether friable or nonfriable; (d) polychlorinated biphenyls; (e) radioactive
materials; (f) lead and lead-containing materials; (g) any other material, waste
or substance displaying toxic, reactive, ignitable or corrosive characteristics,
as all such terms are used in their broadest sense, and are defined or become
defined by any Environmental Law (defined below); (h) any materials which cause
or threatens to cause a nuisance upon or waste to any portion of the Project or
any surrounding property; or (i) any materials which pose or threaten to pose a
hazard to the health and safety of persons on the Premises, any other portion of
the Project or any surrounding property. For purposes of this Lease, “Hazardous
Materials” shall not include nominal amounts of ordinary household cleaners,
office supplies and janitorial supplies which are not actionable under any
Environmental Laws.

 

27.3        Prohibition; Environmental Laws: Tenant shall not be entitled to use
or store any Hazardous Materials on, in, or about any portion of the Premises or
Project not disclosed in the Initial HazMat Certificate, or subsequent HazMat
Certificate approved by Landlord, without, in each instance, obtaining
Landlord’s prior written consent thereto. If Landlord, in its sole discretion,
consents to any such usage or storage, then Tenant shall be permitted to use
and/or store only those Hazardous Materials and in such quantities (A) that are
necessary for Tenant’s business, (B) to the extent disclosed in the most recent
HazMat Certificate, and (C) expressly approved by Landlord in writing. In all
events such usage and storage must at all times be in full compliance with any
and all applicable local, state and federal environmental, health and/or
safety-related laws, statutes, orders, standards, courts’ decisions, ordinances,
rules and regulations (as interpreted by judicial and administrative decisions),
decrees, directives, guidelines, permits or permit conditions, currently
existing and as amended, enacted, issued or adopted in the future (collectively,
the “Environmental Laws”). Tenant agrees that any changes to the type and/or
quantities of Hazardous Materials specified in the most recent HazMat
Certificate may be implemented only with the prior written consent of Landlord,
which consent may be given or withheld in Landlord’s sole discretion, however,
any changes that are not material in the types and quantities of Hazardous
Materials specified in the most recent HazMat Certificate, then Landlord’s
consent shall not be unreasonably withheld. Tenant shall not be entitled nor
permitted to install any tanks under, on or about the Premises for the storage
of Hazardous Materials without the express written consent of Landlord, which
may be given or withheld in Landlord’s sole discretion. Landlord shall have the
right at all times during the Term to (i) inspect the Premises, (ii) conduct
tests and investigations to determine whether Tenant is in compliance with this
Section 27 or to determine if Hazardous Materials are present in, on or about
the Project, and (iii) request lists of all Hazardous Materials used, stored or
otherwise located on, under or about any portion of the Premises and/or the
Common Areas. The cost of all such inspections, tests and investigations
(collectively, “Inspections”) shall be borne by Tenant, if Tenant or any of
Tenant’s Representatives are directly or indirectly responsible for any
contamination revealed by such Inspections. The aforementioned rights granted
herein to Landlord and its representatives shall not create (a) a duty on
Landlord’s part to perform Inspections, monitor or otherwise observe the
Premises or Tenant’s and Tenant’s Representatives’ activities with respect to
Hazardous Materials, including without limitation, Tenant’s operation, use and
any remediation related thereto, or (b) liability on the part of Landlord and
its representatives for Tenant’s use, storage, disposal or remediation of
Hazardous Materials, it being understood that Tenant shall be solely responsible
for all liability in connection therewith. Landlord has not, to its actual
knowledge, without inquiry or investigation, as of the date of execution of this
Lease, received written notice of any existing violations of Environmental Laws
within the Premises from any governmental agency having jurisdiction over the
Project.

 

                27.4        Tenant’s Environmental Obligations: Tenant shall
give to Landlord immediate verbal and follow-up written notice of any spills,
releases, discharges, disposals, emissions, migrations, removals or
transportation of Hazardous Materials on, under or about any portion of the
Premises or in any Common Areas (collectively, a “Release”); provided that
Tenant has knowledge of such event(s). Tenant, at its sole cost and expense,
covenants and warrants to promptly investigate, clean up, remove, restore and
otherwise remediate (including, without limitation, preparation of any
feasibility studies or reports and the performance of any and all closures) any
Release of Hazardous Materials arising from or related to the acts or omissions
of Tenant or Tenant’s Representatives such that the affected portions of the
Project and any adjacent property are returned to the condition existing prior
to the appearance of such Hazardous Materials. Any such investigation, clean up,
removal, restoration and other remediation shall only be performed after Tenant
has obtained Landlord’s prior written consent, which consent shall not be
unreasonably withheld so long as such actions would not potentially have a
material adverse long-term or short-term effect on any portion of the Project.
Notwithstanding the foregoing, Tenant shall be entitled to respond immediately
to an emergency without first obtaining Landlord’s prior written consent.
Tenant, at its sole cost and expense, shall conduct and perform, or cause to be
conducted and performed, all closures as required by any Environmental Laws or
any agencies or other governmental authorities having jurisdiction thereof. If
Tenant fails to so promptly investigate, clean up, remove, restore, provide
closure or otherwise so remediate, Landlord may, but without obligation to do
so, take any and all steps necessary to rectify the same and Tenant shall
promptly reimburse Landlord, upon written demand, for all costs and expenses to
Landlord of performing investigation, clean up, removal, restoration, closure
and remediation work. All such work undertaken by Tenant, as required herein,
shall be performed in such a manner so as to enable Landlord to make full
economic use of the Premises and the other portions of the Project after the
satisfactory completion of such work. Tenant shall neither be liable for nor
otherwise obligated to Landlord under any provision of this Lease with respect
to any claim, liability, cause of action, attorneys’ fees, consultants’ cost,
expense or damage (collectively, “Hazardous Materials Claims”) resulting from
any Hazardous Material present in, on or about the Premises or the Project to
the extent neither caused nor otherwise permitted, directly or indirectly, by
Tenant (and for the purposes of this Section 27.4, the term “Tenant” includes
Tenant’s agents, invitees, employees and contractors); provided, however, Tenant
shall be fully liable for and otherwise obligated to Landlord for all Hazardous
Materials Claims, to the extent (a) Tenant contributes to the presence of, or
Tenant exacerbates the conditions caused by, such Hazardous Materials, or
(b) Tenant does not take all reasonably appropriate actions to prevent Tenant’s
agents, employees, invitees and/or contractors from causing the presence of

 

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Hazardous Materials in, on, under, through or about any portion of the Premises
or the Project.

 

27.5        Environmental Indemnity: Tenant shall, protect, indemnify, defend
(with counsel acceptable to Landlord) and hold Landlord and the other
Indemnitees harmless from and against any and all Claims (including, without
limitation, diminution in value of any portion of the Premises or the Project,
damages for the loss of or restriction on the use of rentable or usable space,
and from any adverse impact of Landlord’s marketing of any space within the
Project) arising at any time during or after the Term in connection with or
related to, directly or indirectly, the use, presence or Release of Hazardous
Materials on, in or about any portion of the Project as a result (directly or
indirectly) of the acts or omissions of Tenant or any of Tenant’s
Representatives. Neither the written consent of Landlord to the presence, use or
storage of Hazardous Materials in, on, under or about any portion of the Project
nor the strict compliance by Tenant with all Environmental Laws shall excuse
Tenant from its obligations of indemnification pursuant hereto. Tenant shall not
be relieved of its indemnification obligations under the provisions of this
Section 27.5 due to Landlord’s status as either an “owner” or “operator” under
any Environmental Laws.

 

27.6        Mold: If Tenant discovers the existence of any mold or any
conditions that reasonably can be expected to give rise to mold, Tenant will
notify Landlord and, if requested by Landlord, retain an industrial hygienist or
other professional mold consultant to conduct an inspection and prepare a report
for Tenant and Landlord. If the inspection report concludes that mold is present
in the Premises, Tenant, at its sole cost and expense, will hire a contractor
that satisfies the requirements of Section 10 that specializes in mold
remediation to prepare a remediation plan for the Premises. If the inspection
report concludes that mold is present in the Premises due substantially to
actions, omissions or negligence of Tenant, Tenant will be responsible for the
cost of such inspection and the cost of remediation to the extent of Tenant’s
responsibility for the presence of mold at or within the Premises; however, if
the inspection report concludes that mold is present in the Premises and is not
substantially due to actions, omissions or negligence of Tenant, Landlord will
be responsible for the cost of such inspection and the cost of remediation to
the extent of Landlord’s responsibility for the presence of mold at or within
the Premises. Any remediation plan will be subject to the approval of Landlord,
which approval will not be unreasonably withheld or delayed. Upon Landlord’s
approval of the plan, the contractor will promptly carry out the work
contemplated in the plan in accordance with Laws. To the extent required by
applicable state or local health or safety requirements, occupants and visitors
to the Premises will be notified of the conditions and the schedule for the
remediation. Landlord will have a reasonable opportunity to inspect the
remediated portion of the Premises after completion of the remediation. The
contractor performing the remediation will provide a written certification to
Landlord and Tenant that the remediation has been completed in accordance with
Laws. Tenant covenants and agrees to indemnify, protect, defend (by counsel
reasonably acceptable to Landlord) and save Landlord and any Indemnitee harmless
against and from any and all Claims, known or unknown, foreseen or unforeseen,
contingent or otherwise, which may at any time be imposed upon, incurred by or
asserted or awarded against Landlord, any Indemnitee or the Premises (which for
purposes of this Section shall be deemed to include any parking and/or storage
space) or any portion thereof and arising from or out of any mold on, in, under
or affecting all or any portion of the Premises, introduced by Tenant or any
Tenant Representative including, without limitation, (i) the costs of removal of
any and all mold from all or any portion of the Premises, (ii) additional costs
required to take necessary precautions to protect against the release of mold
on, in, under or affecting the Premises, into the air, any body of water, any
other public domain or any surrounding areas, and (iii) any costs incurred to
comply with all Environmental Laws. The foregoing indemnity shall not apply to
mold which (i) was not introduced by Tenant or any Tenant Representative and/or
(ii) may be located in the Premises at or prior to the occupancy of the Premises
or any other part of the Building by Tenant or any Tenant Representative or, if
sooner, the initial commencement (heretofore or hereafter) of any work,
construction, repairs or alterations therein by Tenant or any Tenant
Representative.

 

27.7        Survival: Tenant’s obligations and liabilities under this Section 27
shall survive the expiration or earlier termination of this Lease, If Landlord
determines that the condition of any portion of the Project violates the
provisions of this Lease with respect to Hazardous Materials, and such violation
prevents, inhibits or delays Landlord from leasing the Premises or any portion
thereof to another tenant, or from selling or refinancing the Building, then
Landlord may require Tenant to hold over possession of the Premises until Tenant
can surrender the Premises to Landlord in the condition in which the Premises
existed prior to the appearance of such Hazardous Materials (except for
reasonable wear and tear), including without limitation, performing closures as
required by any Environmental Laws. For purposes hereof, the term “reasonable
wear and tear” shall not include any deterioration in the condition or
diminution of the value of any portion of the Project in any manner whatsoever
related to directly, or indirectly, Hazardous Materials. Any such holdover by
Tenant will be with Landlord’s consent and will not be terminable by Tenant in
any event or circumstance.

 

28.         Financial Statements

 

Tenant represents and warrants that any financial statements provided by it to
Landlord were true, correct and complete when provided, and that no material
adverse change has occurred since that date that would render them inaccurate or
misleading. Subject to restrictions on disclosure under applicable Law, Tenant,
within fifteen (15) days after request, shall provide Landlord with most current
audited or certified financial statements and such other information with
respect to Tenant and any guarantor hereunder as Landlord may reasonably request
in order to create a “business profile” of Tenant and determine Tenant’s ability
to fulfill its obligations under this Lease. In addition, Tenant agrees upon
prior written request to meet with Landlord, any lender or prospective purchaser
during normal business hours at mutually convenient times, from time to time, to
discuss such information about Tenant’s business and financial condition
requested by Landlord.

 

29.         General Provisions

 

29.1        Time: Time is of the essence in this Lease and with respect to each
and all of its provisions in which performance is a factor.

 

29.2        Successors and Assigns: The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.

 

29.3        Recordation: Tenant shall not record this Lease or a short form
memorandum hereof.

 

29.4        Landlord Exculpation: The liability of Landlord to Tenant for any
default by Landlord under the terms of this Lease shall be limited to the actual
interest of Landlord and its present or future partners or members in the
Building, and Tenant agrees to look solely to Landlord’s interest in the
Building for satisfaction of any liability and shall not look to other assets of
Landlord nor seek any recourse against the assets of the individual partners,
members, directors, officers, shareholders, agents or employees of Landlord,
including without limitation, any property management company of Landlord
(collectively, the “Landlord Parties”). It is the parties’ intention that
Landlord and the Landlord Parties shall not in any event or circumstance be
personally liable, in any manner whatsoever, for any judgment or deficiency
hereunder or with respect to this Lease. The liability of Landlord under this
Lease is limited to its actual period of ownership of title to the Building.

 

29.5        Severability and Governing Law: Any provisions of this Lease which
shall prove to be invalid, void or illegal shall in no way affect, impair or
invalidate any other provisions hereof and such other provisions shall remain in
full force and effect. This Lease shall be enforced, governed by and construed
in accordance with the laws of the State of California.

 

29.6        Attorneys’ Fees: Tenant shall pay to Landlord on demand all
reasonable attorney’s fees, costs and expenses incurred by Landlord in recovery
of any Rent or enforcement of Landlord’s rights under this Lease. Furthermore,
if Landlord or Tenant employs an attorney to assert or defend any action arising
out of the breach of any term, covenant or provision of this Lease, or to

 

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bring legal action for the unlawful detainer of the Premises, the prevailing
party shall be entitled to recover from the non-prevailing party reasonable
attorney’s fees and costs of suit incurred in connection therewith. For purposes
of this Section 29.6 a party shall be considered to be the “prevailing party” to
the extent that (i) such party initiated the litigation and substantially
obtained the relief which it sought (whether by judgment, voluntary agreement or
action of the other party, trial, or alternative dispute resolution process),
(ii) such party did not initiate the litigation and either (1) received a
judgment in its favor, or (2) did not receive judgment in its favor, but the
party receiving the judgment did not substantially obtain the relief which it
sought, or (iii) the other party to the litigation withdrew its claim or action
without having substantially received the relief which it was seeking. With
respect to any matter as to which Tenant requests Landlord’s consent or approval
hereunder, or if Tenant requests any waiver, modification, or amendment of any
provisions hereof, Tenant shall, whether or not any such consent, approval,
waiver, modification or amendment, is agreed to, pay to Landlord as Rent
hereunder all of Landlord’s out of pocket costs (including, without limitation,
attorneys’ fees and engineers’ fees) incurred by Landlord in connection with the
review of such matter and preparation and negotiation of documentation in
connection therewith.

 

29.7        Entire Agreement: It is understood and agreed that there are no oral
agreements between the parties hereto affecting this Lease and this Lease
(including all exhibits and addenda) supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and understandings, if any,
between the parties hereto or displayed by Landlord to Tenant with respect to
the subject matter thereof, and none thereof shall be used to interpret or
construe this Lease. This Lease, all exhibits and addenda attached hereto and
any separate agreement executed by Landlord and Tenant in connection with this
Lease and dated of even date herewith (a) contain all of the terms, covenants,
conditions, warranties and agreements of the parties relating in any manner to
the rental, use and occupancy of the Premises, and (b) shall be considered to be
the only agreement between the parties hereto and their representatives and
agents. This Lease may not be modified, deleted or added to except by a writing
signed by the parties hereto. All negotiations and oral agreements have been
merged into and are included herein. There are no other representations or
warranties between the parties, and all reliance with respect to representations
is based totally upon the representations and agreements contained in this
Lease. The parties acknowledge that (i) each party and/or its counsel have
reviewed and revised this Lease, and (ii) no rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall be
employed in the interpretation or enforcement of this Lease or any amendments or
exhibits to this Lease or any document executed and delivered by either party in
connection with this Lease.

 

29.8        Warranty of Authority: On the date that Tenant executes this Lease,
Tenant shall deliver to Landlord an original certificate of status for Tenant
issued by the California Secretary of State or a duly recorded statement of
partnership for Tenant, as applicable, and such other documents as Landlord may
reasonably request with regard to the lawful existence of Tenant. Each person
executing this Lease on behalf of a party represents and warrants that (i) such
person is duly and validly authorized to do so on behalf of the entity it
purports to so bind, and (ii) if such party is a limited liability company,
partnership, corporation or trustee, that such limited liability company,
partnership, corporation or trustee has full right and authority to enter into
this Lease and perform all of its obligations hereunder. Tenant hereby warrants
that this Lease is legal, valid and binding upon Tenant and enforceable against
Tenant in accordance with its terms.

 

29.9        Notices: All notices, demands, statements or communications
(collectively, “Notices”) given or required to be given by either party to the
other hereunder shall be in writing, shall be sent by United States certified or
registered mail, postage prepaid, return receipt requested, delivered by a
nationally recognized same-day or overnight courier (e.g. FedEx or UPS) or
delivered personally (i) to Tenant at the Tenant’s Address set forth in the
Basic Lease Information, or to such other place as Tenant may from time to time
designate in a Notice to Landlord; or (ii) to Landlord at Landlord’s Address set
forth in the Basic Lease Information, or to such other firm or to such other
place as Landlord may from time to time designate in a Notice to Tenant. Any
Notice will be deemed given on the date it is mailed as provided in this Section
29.9, upon the first (1st) business day after delivery to a nationally
recognized courier, or upon the date personal delivery is made.

 

29.10      Joint and Several; Covenants and Conditions: If Tenant consists of
more than one person or entity, the obligations of all such persons or entities
shall be joint and several. Each provision to be performed by Tenant hereunder
shall be deemed to be both a covenant and a condition.

 

29.11      Confidentiality: Tenant acknowledges that the contents of this Lease
and any related documents are confidential information. Tenant shall keep and
maintain such information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant’s financial,
legal and space planning consultants, prospective assignees or subtenants, and
except as Tenant may be required pursuant to any public filings or other public
disclosures.

 

29.12      Landlord Renovations: Tenant acknowledges that Landlord may from time
to time, at Landlord’s sole option, renovate, improve, develop, alter, or modify
(collectively, “Renovations”) portions of the Building, Premises, Common Areas
and the Project, including without limitation, systems and equipment, roof, and
structural portions of the same; provided Landlord shall utilize commercially
reasonable efforts to minimize the disruption and interference with Tenant’s
business and operations at the Premises. In connection with such Renovations,
Landlord may, among other things, erect scaffolding or other necessary
structures in the Building, limit or eliminate access to portions of the
Project, including portions of the Common Areas, or perform work in the
Building, which work may create noise, dust or leave debris in the Building.
Tenant hereby agrees that such Renovations and Landlord’s actions in connection
with such Renovations shall in no way constitute a constructive eviction of
Tenant nor entitle Tenant to any abatement of Rent. Landlord shall have no
responsibility, or for any reason be liable to Tenant, for any direct or
indirect injury to or interference with Tenant’s business arising from the
Renovations, nor shall Tenant be entitled to any compensation or damages from
Landlord for loss of the use of the whole or any part of the Premises or of
Tenant’s Property, Alterations or improvements resulting from the Renovations or
Landlord’s actions in connection with such Renovations, or for any inconvenience
or annoyance occasioned by such Renovations or Landlord’s actions in connection
with such Renovations; provided Landlord shall utilize commercially reasonable
efforts to minimize the disruption and interference with Tenant’s business and
operations at the Premises.

 

29.13      Waiver of Jury Trial: To the extent permitted by Law, the parties
hereto shall and they hereby do waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other on any
matters whatsoever arising out of or in any way related to this Lease, the
relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises,
Building, Park or Project and/or any claim of injury, loss or damage.

 

29.14      Submission of Lease: Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or an option for lease,
and it is not effective as a lease or otherwise until execution and delivery by
both Landlord and Tenant.

 

29.15      Anti-Terrorism Provisions:

 

(i)    Tenant represents and warrants as of the date of this Lease and
throughout the Term of this Lease that: (a) Tenant is and will continue to be in
compliance with the Anti-Terrorism Laws (as defined below); (b) Tenant is not,
and will not be, a Prohibited Person (as defined below); (c) Tenant does not and
will not knowingly: (A) conduct any business or engage in any transaction or
dealing with any Prohibited Person, or (B) deal in, or otherwise engage in any
transaction relating to, any property or interests in property blocked pursuant
to Executive Order 13224 (as defined below); and (d) Tenant has not entered into
this Lease directly or indirectly on behalf of, and Tenant is not otherwise
acting, directly or indirectly, for or on behalf of any Prohibited Person.
Tenant shall promptly notify Landlord if it has reason to believe that any of
the foregoing representations and warranties are no longer

 

14

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correct.

 

(ii)   For the purposes hereof: (a) “Anti-Terrorism Laws” means any laws related
to terrorism or money laundering, including Executive Order 13224 and the USA
Patriot Act (as defined below), and any regulations promulgated under either of
them; (b) “Executive Order 13224” means Executive Order Number 13224 on
Terrorism Financing, effective September 24, 2001; (c) “Person” means any
individual, corporation, partnership, joint venture, limited liability company,
association, bank, joint-stock company, trust, unincorporated organization or
government, or an agency or political subdivision thereof; (d) “Prohibited
Person” means (A) a Person subject to the provisions of Executive Order 13224;
(B) a Person owned or controlled by, or acting for or on behalf of, en entity
that is subject to the provisions of Executive Order 13224; (C) a Person with
whom Tenant is prohibited from dealing by any of the Anti-Terrorism Laws; (D) a
Person that commits, threatens or conspires to commit or supports “terrorism” as
defined In Executive Order 13224; (E) a Person or entity that is named as a
“specially designated national and blocked person” on the most current list
published by the U.S. Treasury Department’s Office of Foreign Assets Control; or
(F) a Person who is affiliated with a Person described In clauses (A) through
(E) above; and (e) “USA Patriot Act” means the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, H.R. 3162, Public Law 107-56, as may be amended from time to time.

 

(iii)  Tenant shall defend, indemnify, and hold harmless Landlord, its members,
trustees and agents and its and their respective employees, officers, directors
and members from and against any and all Claims, arising from or related to any
breach of the foregoing representations and warranties.

 

(iv)  Tenant acknowledges and agrees that, notwithstanding anything to the
contrary in this Lease, Landlord may withhold its consent to any Transfer if the
prospective assignee or subtenant is a Prohibited Person.

 

29.16      Independent Obligations: The obligation of Tenant to pay Rent
hereunder and the obligation of Tenant to perform Tenant’s other covenants and
duties hereunder constitute independent, unconditional obligations to be
performed at all times provided for hereunder and are independent of the
Landlord’s performance of Landlord’s duties and obligations hereunder. Except as
expressly provided in this Lease, Tenant waives and relinquishes all rights
which Tenant might have to claim any nature of lien against or withhold, abate
or deduct from, or offset against Rent.

 

30.          Signs

 

All signs and graphics of every kind visible in or from public view shall be
subject to (i) Landlord’s prior written approval and (ii), and in compliance
with, all applicable Laws, Development Documents, Recorded Matters, Rules and
Regulations, and Landlord’s sign criteria (“Sign Criteria”) as same may exist
from time to time. Notwithstanding and without limiting the foregoing, subject
to Landlord’s prior review and written approval of specifications relating to
such signage, including without limitation, design, colors and materials
relating to such signage, and the approval of all applicable governmental
authorities and agencies, Tenant shall be permitted, at Tenant’s sole cost and
expense, to install its logo or name on: (i) the tenant monument sign presently
situated in the landscape area in front of the Premises, (ii) the project
monument sign presently situated on the corner of Montague/E. Plumeria and
Junction E. Plumeria, and (iii) the glass adjacent to the entry to the Premises.
Tenant shall remove all such signs and graphics prior to the expiration or
earlier termination of this Lease. Such installations and removals shall be made
in a manner as to avoid damage or defacement of the Premises and all other
affected portions of the Project. Tenant shall repair any such damage, including
without limitation, discoloration caused by such installation or removal. Tenant
shall pay to Landlord, within thirty (30) days following written demand
therefor, such sums as are reasonably necessary to remove such signs and make
any repairs necessitated by such removal. Notwithstanding the foregoing, in no
event shall any: (a) neon, flashing or moving sign(s) or (b) sign(s) which are
likely to interfere with the visibility of any sign, canopy, advertising matter,
or decoration of any kind of any other business or occupant of the Building or
other portions of the Project be permitted hereunder. Tenant further agrees to
maintain each such sign and graphics, as may be approved, in good condition and
repair at all times.

 

31.          Mortgagee Protection

 

Upon any default on the part of Landlord, Tenant will give written Notice by
registered or certified mail to any beneficiary of a deed of trust or mortgagee
of a mortgage covering the Premises who has provided Tenant with Notice of their
interest together with an address for receiving Notice, and shall offer such
beneficiary or mortgagee a reasonable opportunity to cure the default, including
time to obtain possession of the Premises by power of sale or a judicial
foreclosure, If such should prove necessary to effect a cure. if such default
cannot be cured within such time period, then such additional time as may be
necessary will be given to such beneficiary or mortgagee to effect such cure so
long as such beneficiary or mortgagee has commenced the cure within the original
time period and thereafter diligently pursues such cure to completion, in which
event this Lease shall not be terminated while such cure is being diligently
pursued. Tenant agrees that each lender to whom this Lease has been assigned by
Landlord is an express third party beneficiary hereof. Tenant shall not make any
prepayment of Rent more than one (1) month in advance without the prior written
consent of each such lender. Tenant waives the collection of any deposit from
each such lender or purchaser at a foreclosure sale unless said lender or
purchaser shall have actually received and not refunded the deposit. Tenant
agrees to make all payments under this Lease to the lender with the most senior
encumbrance upon receiving a direction, in writing, to pay said amounts to such
lender. Tenant shall comply with such written direction to pay without
determining whether an event of default exists under such lender’s loan to
Landlord. If, in connection with obtaining financing for the Premises or any
other portion of the Project, Landlord’s lender shall request reasonable
modification(s) to this Lease as a condition to such financing, Tenant shall not
unreasonably withhold, delay or defer its consent thereto, provided such
modifications do not materially and adversely affect Tenant’s rights hereunder,
including Tenant’s use, occupancy or quiet enjoyment of the Premises.

 

32.          Warranties of Tenant

 

Tenant warrants and represents to Landlord, for the express benefit of Landlord,
that Tenant has undertaken a complete and independent evaluation of the risks
inherent in the execution of this Lease and the operation of the Premises for
the use permitted hereby, and that, based upon said independent evaluation,
Tenant has elected to enter into this Lease and hereby assumes all risks with
respect thereto. Tenant further warrants and represents to Landlord, for the
express benefit of Landlord, that in entering into this Lease, Tenant has not
relied upon any statement, fact, promise or representation (whether express or
implied, written or oral) not specifically set forth herein and that any
statement, fact, promise or representation (whether express or implied, written
or oral) made at any time to Tenant, which is not expressly incorporated herein,
is hereby waived by Tenant.

 

33.          Brokerage Commission

 

Landlord and Tenant each represents and warrants for the benefit of the other
that it has had no dealings with any real estate broker, agent or finder in
connection with the Premises and/or the negotiation of this Lease, except for
the Broker(s) specified in the Basic Lease Information, and that it knows of no
other real estate broker, agent or finder who is or might be entitled to a real
estate brokerage commission or finder’s fee in connection with this Lease or
otherwise based upon contacts between the claimant and Tenant. Each party shall
indemnify and hold harmless the other from and against any and all Claims with
respect to a fee or commission by any real estate broker, agent or finder in
connection with the Premises and this Lease other than the Broker(s) (if any)
resulting from the actions of the indemnifying party. Unless expressly agreed to
in writing by Landlord and the Broker(s), no real estate brokerage commission or
finder’s fee shall be owed to, or otherwise payable to, the Broker(s) for any
renewals or other extensions of the initial

 

15

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term of this Lease or for any additional space leased by Tenant other than the
Premises as same exists as of the Lease Date. Tenant further represents and
warrants to Landlord that Tenant will not receive (i) any portion of any
brokerage commission or finder’s fee payable to the Broker(s) in connection with
this Lease, or (ii) any other form of compensation or incentive from the Broker
(s) with respect to this Lease.

 

34.          Quiet Enjoyment

 

Landlord covenants with Tenant, upon the paying of Rent and observing and
keeping the covenants, agreements and conditions of this Lease on its part to be
kept, during the periods that Tenant is not otherwise in Default of this Lease,
and subject to the rights of any of Landlord’s lenders, (i) that Tenant shall
and may peaceably and quietly have, hold, occupy and enjoy the Premises and
Common Areas during the Term, and (ii) neither Landlord, nor any successor or
assign of Landlord, shall disturb Tenant’s occupancy or enjoyment of the
Premises and Common Areas. The foregoing covenant is in lieu of any other
covenant express or implied.

 

35.          Rooftop Equipment

 

Provided that this Lease is then in full force and effect, Tenant shall be
permitted, subject to the terms and conditions of the Lease and this Article 35
and approval by all applicable governmental authorities, to install, maintain
and operate, at Tenant’s sole cost and expense, panel, whip or dish antennas
(not to exceed six (6) antennas) and associated equipment on the roof of the
Building (collectively, the “Rooftop Equipment”). The type, size, weight and
precise location of the Rooftop Equipment shall be subject to Landlord’s prior
written approval, which shall not be unreasonably withheld, conditioned or
delayed, provided that all of the Rooftop Equipment shall: (i) be at Tenant’s
sole cost and expense, (ii) be located on the portion of the roof directly above
the Premises and shall not extend above the height of the then existing antenna
screening material, (iii) be installed, maintained and operated to Landlord’s
reasonable specifications and in accordance with all Laws. Tenant shall submit
to Landlord, for Landlord’s prior written approval, all plans and specifications
relating to all Rooftop Equipment proposed by Tenant for installation. All work
in connection with the Rooftop Equipment shall be performed at Tenant’s sole
cost and expense by Landlord’s roof contractor or another contractor approved by
Landlord in Landlord’s sole discretion. All modifications to the Building, if
any, including the portion of the roof designated by Landlord for the location
of the Dishes, and any rooftop penetrations required in connection with the
installation of the Rooftop Equipment shall be approved by Landlord in
Landlord’s sole but reasonable discretion, prior to the commencement of any work
with respect to the Rooftop Equipment. Tenant will obtain, at its sole cost and
expense, all Federal Communications Commission (“FCC”) and other licenses or
approvals required to install and operate the Rooftop Equipment and shall repair
any and all damage to the Project (including, but not limited to, the roof of
the Building) caused as a result of Tenant’s installation of the Rooftop
Equipment. The Rooftop Equipment is and shall remain the property of Tenant, and
Landlord and Tenant agree that the Rooftop Equipment are not, and installation
of the Rooftop Equipment at the Project shall not cause the Rooftop Equipment to
become, a fixture pursuant to this Lease or by operation of law. Tenant shall
not be entitled to receive any income from any third-party individual or entity
for the use of the Rooftop Equipment. Tenant shall be responsible for the
operation, repair and maintenance of the Rooftop Equipment during the Term, at
Tenant’s sole cost and expense, and upon the expiration or other termination of
this Lease, Tenant shall remove the Rooftop Equipment and repair any and all
damage to the Project (including, but not limited to, the roof of the Building)
caused as a result of such removal, and shall restore the roof and any other
portion of the Building or Project affected by the Rooftop Equipment to its
original condition as of the initial installation of the Rooftop Equipment.
Tenant may not assign, lease, rent, sublet or otherwise transfer any of its
interest in the Rooftop Equipment or the portion of the roof on which the
Rooftop Equipment is located. The rights granted to Tenant pursuant to this
Section 35 are personal to Tenant and shall terminate upon any assignment of
this Lease or sublease of all or any portion of the Premises (other than to an
Affiliate). Each of the other provisions of this Lease shall be applicable to
the Rooftop Equipment and Tenant’s use of the portion of the roof on which the
Rooftop Equipment are situated, including, without limitation, Section 10 and 13
and the Rules and Regulations. Tenant agrees to operate the Rooftop Equipment in
such a manner so as not to interfere with or impair the operation of other
antennas or telecommunication equipment of Landlord or other tenants or
occupants of the Project. For the purposes of this Section 35, interference
shall mean such interference as not permitted by the FCC. If Tenant’s use of the
Rooftop Equipment shall cause such interference or impairment, Tenant shall, at
its sole cost and expense, promptly eliminate such condition, including, but not
limited to, relocating the Rooftop Equipment to an alternate location designated
by Landlord, or otherwise. In the event Landlord repairs or replaces the roof
during the Term, Tenant will relocate or, if necessary, remove the Rooftop
Equipment from the roof at Tenant’s sole cost upon receipt of written request
from Landlord during the time of such repair or replacement. Landlord shall use
commercially reasonable efforts to avoid the removal of the Rooftop Equipment
during any such repair or replacement of the roof. If removal of the Rooftop
Equipment is required in connection with any roof repairs, Tenant shall be
permitted to place the Rooftop Equipment on the roof, at Tenant’s sole cost and
expense and subject to the terms and conditions of this Lease, including,
without limitation, this Section 35, after Landlord completes repairing or
replacing the roof. Landlord may have its representative present at the
installation or any reinstallation of the Rooftop Equipment.

 

Landlord assumes no liability or responsibility for interference with the Dishes
caused by other tenants placing similar equipment on the roof of any building in
the Project. The Dishes shall be included within the coverage of all insurance
policies required to be maintained by Tenant under the Lease and Tenant shall
obtain at its sole cost all permits required by governmental authorities for the
Dishes. The Dishes shall be used solely in connection with the business
operations in the Premises, and shall not be used by any party who is not a
tenant of the Premises. Tenant shall indemnify defend and hold harmless Landlord
from any and all claims, demands, liabilities, damages, costs and expenses
(including reasonable attorneys’ fees) Landlord may suffer or incur arising out
of or relating to the installation, use, operation, maintenance, replacement
and/or removal of the Rooftop Equipment or any portion thereof.

 

///signature page follows///

 

16

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///continued from previous page///

 

IN WITNESS WHEREOF, this Lease is executed by the parties as of the Lease Date
specified in the Basic Lease Information.

 

 

TENANT:

 

LANDLORD:

 

 

 

ALTIGEN COMMUNICATIONS, INC.,

 

FSP MONTAGUE BUSINESS CENTER CORP.,

a Delaware corporation

 

a Delaware corporation

 

 

 

 

 

 

By:

/s/ Jerry Fleming

 

By:

/s/ George J. Carter

Name:

Jerry Fleming

 

Name:

George J. Carter

Title:

President

 

Title:

President

 

 

 

 

 

 

 

 

 

 

By:

/s/ Phil McDermott

 

 

 

Name:

Phil McDermott

 

 

 

Title:

Secretary

 

 

 

 

 

[NOTE: If Tenant is a CORPORATION, the authorized officers must sign on behalf
of the corporation and indicate the capacity in which they are signing. This
Lease must be executed by the president or vice-president and the secretary or
assistant secretary, Unless the bylaws or a resolution of the board of directors
shall otherwise provide, in which event, the bylaws or a certified copy of the
resolution, as the case may be, must be attached to this Lease.]

 

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Exhibit A
Premises

 

This exhibit, entitled “Premises”, is and shall constitute Exhibit A to that
certain Lease Agreement dated April     , 2009 (the “Lease”), by and between FSP
Montague Business Center Corp., a Delaware corporation (“Landlord”) and AltiGen
Communications, Inc., a Delaware corporation (“Tenant”) for the leasing of
certain premises located in the Montague Business Park at 410 East Plumeria
Drive, San Jose, California (the “Premises”).

 

The Premises Consist of the rentable square footage of space specified in the
Basic Lease Information and has the address specified in the Basic Lease
Information. The Premises are a part of and are contained in the Building
specified in the Basic Lease Information. The cross-hatched area depicts the
Premises within the [Building, Project]:

 

[Picture of Premises]

 

1

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Exhibit B

Tenant Improvements

 

This Exhibit B, entitled “Tenant Improvements,” is and shall constitute
Exhibit B to that certain Lease Agreement, dated April            , 2009 (the
“Lease”), by and between FSP Montague Business Center Corp., a Delaware
corporation (“Landlord”), and AltiGen Communications, Inc., a Delaware
corporation (“Tenant”) for the leasing of certain premises located at 410 East
Plumeria Drive, San Jose, California (the “Premises”). The terms, conditions and
provisions of this Exhibit B are hereby incorporated into and made a part of
this Lease. All capitalized terms used but not otherwise defined in this
Exhibit B shaft have the meanings ascribed to them in the Lease.

 

Tenant acknowledges and agrees that Tenant shall accept the Premises in the
condition set forth in Section 5 of the Lease; provided, however, that Landlord
shall construct certain modifications to the interior of the Premises pursuant
to the Approved Working Drawings in accordance with the following provisions of
this Exhibit B.

 

SECTION 1

 

CONSTRUCTION DRAWINGS FOR THE PREMISES

 

1.1           Final Space Plan, As of the Lease Date, Landlord and Tenant have
approved the detailed space plan for construction of certain improvements in the
Premises, which space plan has been prepared by Doerr Design Group (“Architect”)
and is attached hereto as Schedule 2 and incorporated herein by this reference
(the “Final Space Plan”). On or prior to thirty (30) days following execution
and delivery of this Lease by Landlord and Tenant, Tenant shall submit to
Landlord, for Landlord’s approval, plans and specifications relating to the
Security System and Cabling (as such terms are hereinafter defined).

 

1.2           Working Drawings. Based upon and in conformity with the Final
Space Plan, and the Building Standards attached hereto as Schedule 1 and
incorporated herein by this reference (“Building Standards”), Landlord shall
cause Architect and engineers (if necessary), to prepare and deliver to Tenant,
for Tenant’s approval subject to the terms hereof, specifications and engineered
working drawings containing sufficient detail for the issuance of building
permits for the tenant improvements shown on the Final Space Plan (the “Working
Drawings”). The Working Drawings shall incorporate modifications to the Final
Space Plan as necessary, in Landlord’s sole discretion, to comply with the floor
load and other structural and system requirements of the Building and applicable
requirements. To the extent that the finishes and specifications are not
completely set forth in the Final Space Plan for any portion of the tenant
improvements depicted thereon, the actual specifications and finish work shall
be in accordance with the Building Standards. Within five (5) business days
after Tenant’s receipt of the Working Drawings, Tenant shall approve or
disapprove the same; provided, however, that Tenant may only disapprove the
Working Drawings if: (a) the tenant improvements shown on such Working Drawings
are inconsistent with the Final Space Plan and the Building Standards and do not
constitute changes which would result in any of the circumstances described in
items (i) through (iv) below, and (b) Tenant delivers to Landlord, within such
five (5) business day period, notice of Tenant’s disapproval and specific
changes proposed by Tenant which are consistent with the Final Space Plan and
the Building Standards. If Tenant falls to approve the Working Drawings within
such five (5) business day period (and has not notified Landlord of its
disapproval in accordance with the terms hereof), then Tenant shall be deemed to
have approved such Working Drawings. If any such revisions are timely and
properly proposed by Tenant, Landlord shall cause Architect and engineers (If
necessary) to revise the Working Drawings to incorporate such revisions and
submit the same for Tenant’s approval in accordance with the foregoing
provisions, and the parties shall follow the foregoing procedures for approving
the Working Drawings until the same are finally approved by Landlord and Tenant.
Upon Tenant’s approval (or deemed approval) of the Working Drawings, the same
shall be known as the “Approved Working Drawings”.

 

1.3           Changes to Approved Working Drawings. Once the Approved Working
Drawings have been approved (or are deemed approved) by Tenant, neither party
shall make changes, change orders or modifications thereto without Tenant’s
reasonable and prompt consent (with respect to Landlord requested changes) or
the prior written consent of Landlord (with respect to Tenant requested
changes), which consent shall not be unreasonably withheld by Landlord;
provided, however, Tenant and Landlord acknowledge and agree that in the event
any governmental authority requires that changes be made to the Approved Working
Drawings as a condition to the issuance of a building permit or otherwise, the
Approved Working Drawings shall be modified to comply with such governmental
authority requirements. Tenant acknowledges and agrees that it shall be
reasonable for Landlord to withhold Landlord’s consent to any Tenant requested
changes, if in Landlord’s reasonable discretion, such change or modification
would (i) be of a quality lower than the quality of the Building Standards;
and/or (ii) require any changes to the exterior of the Building, systems or
equipment of the Building (including, without limitation, the mechanical,
electrical and plumbing systems) or structural improvements of the Building.
Notwithstanding the foregoing, if Landlord approves of any such change or
modification proposed by Tenant to the Approved Working Drawings, (a) Landlord
may, require, as a condition to its approval, that Tenant pay to Landlord, prior
to the commencement of work relating to the changes or modifications, any
additional costs to be incurred by Landlord in connection with such changes or
modifications if the contemplated change will result in the Tenant Improvement
Costs (defined below) to exceed the Allowance, and in such event Tenant shall be
responsible only for the amount by which the Tenant Improvement Costs is
projected to exceed the Allowance; and (b) any delays in the Substantial
Completion of the Tenant Improvements as a direct, indirect, partial or total
result of such changes or modifications shall be deemed a Tenant Delay (defined
below). The Final Space Plan, Working Drawings and Approved Working Drawings
shall be collectively referred to herein as, the “Construction Drawings”. The
tenant improvements shown on the Approved Working Drawings Shall be referred to
herein as the “Tenant Improvements”.

 

SECTION 2

 

CONSTRUCTION AND PAYMENT FOR COSTS OF TENANT IMPROVEMENTS

 

2.1           Contractor. Landlord shall cause a general contractor selected by
Landlord (“Contractor”) to (i) obtain all applicable building permits for
construction of the Tenant Improvements, and (ii) construct the Tenant
Improvements as depicted on the Approved Working Drawings, in compliance with
such building permits and all applicable laws in effect at the time of
construction, and in good workmanlike manner.

 

                2.2           Payment of Tenant Improvement Costs. Landlord
shall pay for the cost of the design, architectural/engineering, permits, fees
and construction of the Tenant Improvements in an amount up to but not exceeding
Four Hundred Forty Nine Thousand and 00/100 Dollars ($449,000.00) (the
“Allowance”). As of the Lease Date, Landlord and Tenant have approved of the
preliminary budget attached hereto as Schedule 3 and incorporated herein by this
reference (the “Preliminary Budget”), which Preliminary Budget sets forth an
estimate, based upon the Final Space Plan, of all costs to be expended by
Landlord in connection with the construction of the Tenant Improvements,
including without limitation, all costs to be expended in connection with the
design, architecture/engineering, permits, fees and construction of the Tenant
Improvements, Landlord’s Fee and Tenant’s Project Manager Fee (as each term is
defined below) (collectively, the “Tenant Improvement Costs”). Tenant expressly
acknowledges and agrees that the Preliminary Budget is attached hereto without
representation or warranty by Landlord, and that the items and amounts set forth
in the Preliminary Budget may be subject to modification after the Lease Date.
On or prior to three (3) days following Tenant’s notice to

 

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Landlord of its approval (or deemed approval) of the Approved Working Drawings,
Landlord shall prepare and deliver a final budget (the “Final Budget”) to
Tenant, which Final Budget shall not exceed the Preliminary Budget and shall be
prepared based upon the Approved Working Drawings, and shall include but not be
limited to the Tenant Improvement Costs. Thereafter, Landlord shall notify
Tenant in writing of any changes to the Approved Working Drawings that are
required by any governmental authority and deliver Landlord’s written estimate
of the increase (if any) in Tenant Improvement Costs as a result of such
required changes. In the event the Tenant Improvement Costs exceed the Allowance
as a result of such required changes, Tenant shall have the right to request
changes to the Approved Working Drawings in order to reduce Tenant Improvement
Costs (and Landlord and Landlord’s Contractor will cooperate reasonably with
Tenant in attempting to identify cost reductions); provided, if following such
efforts, the Tenant Improvement Costs continue to exceed the Allowance, such
excess shall be paid by Tenant to Landlord within five (5) business days after
written notification by Landlord to Tenant (the “Estimated Over-Allowance
Amount”). Upon completion of the Tenant Improvements, Landlord shall prepare a
final billing setting forth the total Tenant Improvement Costs (collectively,
the “Final Cost”) and Tenant shall pay to Landlord in cash, within five
(5) business days following Landlord’s delivery to Tenant of the statement of
Final Cost, the amount, if any, by which the Final Cost exceeds the Allowance
(the “Over-Allowance Amount”), less any amounts previously paid by Tenant to
Landlord for any Estimated Over-Allowance Amount (and in the event Tenant has
overpaid any Estimated Over-Allowance Amounts, Landlord shall promptly refund
such overpayments to Tenant). The Final Cost shall include, without limitation
all costs incurred by Landlord in completing the Tenant Improvement including
but not limited to permits, fees, architecture/engineering fees, and
(a) Landlord’s construction supervision and management fee (“Landlord’s Fee”) in
an amount equal to the product of (i) two and one-half percent (2-1/2%) and (ii)
the cost of constructing the Tenant Improvements as detailed in the final
billing from Contractor and (b) if prior to commencement of construction, Tenant
has advised Landlord in writing that Tenant has hired a project manager
(“Tenant’s Project Manager), a construction and management fee (“Tenant’s
Project Manager Fee”) payable to Tenant’s Project Manager, in an amount not to
exceed Ten Thousand Dollars ($10,000.00). If the Final Cost is less than the
Allowance (subject to the limitations set forth below relating to the Security
System Cap Amount and the Cabling Cap Amount), Tenant shall have the right to
utilize the remaining portion of the Allowance for additional improvements
Tenant desires to the Premises so long as such improvement work is performed
within six (6) months following the Commencement Date. Tenant and Landlord shall
agree upon the party performing such work and the method of payment therefor
(i.e., reimbursement of Tenant if Tenant performs the work or payment by
Landlord if Landlord performs the work). Except as set forth in the immediately
preceding sentence, Tenant shall not be entitled to receive in cash or, as a
credit against any rental or otherwise, any portion of the Allowance not used to
pay for the costs of the design and construction of the Tenant Improvements.

 

2.3           Security System and Cabling. The Tenant Improvements shall include
(i) a separate security system for the Premises (the “Security System”) and
(ii) data/telephone cabling for the Premises (the “Initial Cabling”), which
shall be detailed in plans and specifications (to be submitted to and approved
by Landlord) prepared by Platinum Builders, the subcontractor chosen by Tenant
(“Tenant’s Subcontractor”) prior to any commencement of construction work
associated with either the Security System or Initial Cabling. In no event shall
the Allowance be utilized to pay for amounts in excess of: (a) Fifty Thousand
Dollars ($50,000.00) (the “Cabling Cap Amount”), or (b) Six Thousand Five
Hundred Dollars ($6,500.00) (the “Security System Cap Amount”), for the work
associated with installation of the Initial Cabling or Security System,
respectively. Landlord shall cause Contractor to enter into a contract with
Tenant’s Subcontractor to perform the construction and installation of the
Initial Cabling and the Security System during the course of construction of the
Tenant Improvements; provided, for purposes of this Lease, “Substantial
Completion” of the Tenant Improvements shall be deemed to occur upon Substantial
Completion of the Tenant Improvements (excluding the Initial Cabling and
Security System) and in no event shall the Commencement Date be delayed, or
Tenant be entitled to any compensation or damages or abatement of Rent as a
result of the completion of the Security System and Initial Cabling after the
Substantial Completion of the Tenant Improvements. Landlord shall have the right
to confirm that Tenant’s Subcontractor is licensed and in good standing in the
State of California, and insured in accordance with the insurance requirements
of Landlord.

 

2.4           Moving Allowance. In no event shall Landlord be obligated to pay
for any of Tenant’s furniture, computer systems, telephone systems, equipment or
other personal property which may be depicted on the Construction Drawings; and
all of such items shall be paid for by Tenant; provided, however, in addition to
Landlord’s obligation to contribute the Allowance to the Tenant Improvement
Costs and Final Cost, as set forth above, Tenant shall have the right to receive
up to One Hundred Twenty Five Thousand Dollars ($125,000.00) (the “Moving
Allowance”), to reimburse Tenant for its actual out-of-pocket costs (as
evidenced by written invoices from third party vendors) of (a) the purchase and
installation of furniture, fixtures and equipment (the “FF & E”) for the
Premises and (b) Tenant’s moving expenses, such as the hiring of movers,
furniture installation and such other moving expenses (collectively, “Tenant’s
Moving Expenses”), all as may be reasonably approved by Landlord. Landlord shall
reimburse Tenant for the costs of purchase and installation of the FF & E and
Tenant’s Moving Costs within fifteen (15) days of Landlord’s receipt of
(i) copies of invoices from third party vendors evidencing Tenant’s payment in
full of such FF& E and Tenant’ Moving Costs; (ii) satisfactory evidence of lien
free completion of any work performed in connection with the installation of
such FF & E; and (iii) to the extent applicable to the work performed,
unconditional lien release(s) from any applicable vendors. Landlord’s obligation
to pay Tenant the Moving Allowance, as provided herein, shall be subject to
Tenant’s submission to Landlord of the foregoing documentation in connection
with the FF &E and Tenant’s Moving Expenses on or prior to six (6) months
following the Commencement Date. Notwithstanding anything to the contrary
contained herein, any FF & E, the cost of which Landlord has reimbursed Tenant
for pursuant to the terms of this Section 2.4, shall be deemed to be the
property of Landlord immediately upon its acquisition and/or installation by
Tenant in the Premises, and shall be surrendered with the Premises upon the
expiration or earlier termination of the Lease. For purposes of this Lease,
Landlord and Tenant agree that the FF & E owned by Landlord pursuant to the
terms hereof, shall be the FF & E described on the invoices submitted by Tenant
to Landlord pursuant to the terms of this Section 2.4. Notwithstanding the
foregoing, Tenant shall be responsible for maintaining and keeping such FF & E
in good working order and condition throughout the Term, and Landlord shall have
no responsibility with respect to the insurance, repair and/or maintenance of
such FF & E.

 

SECTION 3

 

SUBSTANTIAL COMPLETION OF THE TENANT IMPROVEMENTS

 

“Substantial Completion” of the Tenant Improvements shall occur upon the
(i) completion of construction of the Tenant Improvements (excluding the Initial
Cabling and Security System) in the Premises pursuant to the Approved Working
Drawings, with the exception of any punch list items and any tenant fixtures,
work-stations, built-in furniture, or equipment to be installed by Tenant or
under the supervision of Contractor and-(ii) delivery of possession of the
Premises to Tenant.

 

SECTION 4

 

TENANT DELAYS

 

If there shall be a delay or there are delays in the Substantial Completion of
the Tenant Improvements as a direct, indirect, partial or total result of any of
the following (collectively, “Tenant Delays”):

 

(a)                                  Tenant’s failure to timely approve the
Working Drawings, the Preliminary Budget or any other matter requiring Tenant’s
approval in accordance with the terms of this Tenant Exhibit B;

 

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(b)                                 A breach by Tenant of the terms of this
Exhibit B or the Lease;

 

(c)                                  Tenant’s request for changes in the
Approved Working Drawings after construction has commenced;

 

(d)                                 Tenant’s requirement for materials,
components, finishes or improvements which are not available in a commercially
reasonable time, provided that if any such materials, components, finishes or
improvements are not available, Landlord shall inform Tenant of such
unavailability and such unavailability shall be a “Tenant Delay” in the event
that Landlord notifies Tenant that such materials are not available and Tenant
does not accept or propose an available alternative; or

 

(e)                                  Any other acts or omissions of Tenant, its
agents or employees;

 

then, notwithstanding anything to the contrary set forth in the Lease and
regardless of the actual date of Substantial Completion, the Commencement Date
shall be deemed to be the date the Commencement Date would have occurred if no
Tenant Delay or Delays, as set forth above, had occurred and Tenant shall pay to
Landlord, within ten (10) days following written demand therefor, all costs and
expenses arising from or related to such Tenant Delays.

 

SECTION 5

 

MISCELLANEOUS

 

5.1           Tenant’s Entry Into the Premises Prior to Substantial Completion.
Provided that Tenant and its agents do not interfere with, or delay,
Contractor’s work in the Building or the Premises, Landlord shall allow Tenant
access to the Premises five (5) days prior to the Commencement Date for the
purpose of Tenant installing overstandard equipment or fixtures (including
Tenant’s data and telephone equipment) in the Premises and preparing the
Premises for Tenant’s occupancy. Prior to Tenant’s entry into the Premises as
permitted by the terms of this Section 5.1, Tenant shall submit a schedule to
Landlord and Contractor, for their approval, which schedule shall detail the
timing and purpose of Tenant’s entry. Tenant shall hold Landlord harmless from
and indemnify, protect and defend Landlord against any claim, liability,
judgment, loss, damage, cost or expense (including attorneys’ fees) arising from
or related to Tenant’s entry.

 

5.2           Tenant’s Representative. Tenant has designated Phil McDermott as
its sole representative with respect to the matters set forth in this Tenant
Exhibit B, who shall have full authority and responsibility to act on behalf of
the Tenant as required in this Tenant Exhibit B.

 

5.3           Landlord’s Representative. Landlord has designated Mike Tamas as
its sole representative with respect to the matters set forth in this Exhibit B,
who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Exhibit B.

 

5.4           Time of the Essence. Unless otherwise indicated, all references
herein to a “number of days” shall mean and refer to calendar days. In all
instances where Tenant is required to approve or deliver an item, if no written
notice of approval is given or the item is not delivered within the stated time
period, at Landlord’s sole option, at the end of said period the item shall
automatically be deemed approved or delivered by Tenant and the next succeeding
time period shall commence.

 

5.5           Tenant’s Lease Default. Notwithstanding any provision to the
contrary contained in the Lease, if there shall have occurred a Default under
this Lease, including without limitation, this Exhibit B, at any time on or
before the Substantial Completion of the Tenant Improvements, then (i) in
addition to all other rights and remedies granted to Landlord pursuant to the
Lease, Landlord may cause Contractor to cease the construction of the Tenant
Improvements until such time as such Default is cured pursuant to the terms of
the Lease (in which case, Tenant shall be responsible for any delay in the
Substantial Completion caused by such work stoppage), and (ii) all other
obligations of Landlord under the terms of this Exhibit B shall be forgiven
until such time as such Default is cured pursuant to the terms of the Lease.

 

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Exhibit C

Rules & Regulations

 

This exhibit, entitled “Rules & Regulations”, is and shall constitute Exhibit C
to that certain Lease Agreement dated for reference purposes as of April     ,
2009 (the “Lease”), by and between FSP Montague Business Center Corp., a
Delaware corporation (“Landlord”) and AltiGen Communications, Inc., a Delaware
corporation (“Tenant”) for the leasing of certain premises located in the
Montague Business Park at 410 East Plumeria Drive, San Jose, California (the
“Premises”). The terms, conditions and provisions of this Exhibit C are hereby
incorporated into and are made a part of the Lease. Any capitalized terms used
herein and not otherwise defined herein shall have the meaning ascribed to such
terms as set forth in the Lease:

 

1.             Subject to Section 30 of the Lease, no advertisement, picture or
sign of any sort shall be displayed on or outside the Premises or the Building
without the prior written consent of Landlord. Landlord shall have the right to
remove any such unapproved item without Notice and at Tenant’s expense.

 

2.             Tenant shall park motor vehicles in those general parking areas,
as designated by Landlord, except for loading and unloading. During those
periods of loading and unloading, Tenant shall not unreasonably interfere with
(i) traffic flow within the Project and (ii) loading and unloading activities of
other tenants. Tenant shall not regularly park motor vehicles in designated
parking areas after the conclusion of normal daily business activity.

 

3.             Tenant shall not use any method of heating or air conditioning
other than that supplied by Landlord without the prior written consent of
Landlord, which consent shall not be unreasonably withheld.

 

4.              All window coverings installed by Tenant and visible from the
outside of the Building require the prior written approval of Landlord.

 

5.              Subject to Section 27 of the Lease, Tenant shall not use, keep
or permit to be used or kept any foul or noxious gas or substance or any
flammable or combustible materials in or around the Premises, the Building or
any portion of the Project.

 

6.              Tenant shall not alter any lock or install any new locks or
bolts on any door at the Premises without the prior consent of Landlord. Tenant
agrees not to make any duplicate keys without the prior consent of Landlord.

 

7.              Tenant shall not disturb, solicit or canvas any occupant of the
Project and shall cooperate to prevent same.

 

8.              No person shall go on the roof without prior notice to and
scheduling with Landlord. Landlord shall have the right to require that all such
persons be accompanied by Landlord’s representative.

 

9.              Business machines and mechanical equipment belonging to Tenant
which cause noise or vibration that may be transmitted to the structure of the
Building, to such a degree as to be objectionable to Landlord or other tenants,
shall be placed and maintained by Tenant, at Tenant’s expense, on vibration
eliminators or other devices sufficient to eliminate noise or vibration.

 

10.            All goods, including material used to store goods, delivered to
the Premises shall be immediately moved into the Premises and shall not be left
in parking or receiving areas overnight. Tenant shall not store or permit the
storage or placement of goods, merchandise, pallets or equipment of any sort
outside of the Premises, Building or in any of the Common Areas. No displays or
sales of merchandise are allowed in the parking lots or other portions of the
Common Areas.

 

11.            Tractor trailers which must be unhooked or parked with dolly
wheels beyond the concrete loading areas must use steel plates or wood blocks
under the dolly wheels to prevent damage to the asphalt paving surfaces. No
parking or storing of such trailers will be permitted in the auto parking areas
of the Project or on streets adjacent thereto.

 

12.            Forklifts which operate on asphalt paving areas shall not have
solid rubber tires and shall only use tires that do not damage the asphalt.

 

13.            Tenant is responsible for the storage and removal of all trash
and refuse. All such trash and refuse shall be contained in suitable receptacles
and stored behind screened enclosures at locations approved by Landlord.

 

14.            Tenant shall not permit any animals, including, but not limited
to, any household pets, to be brought or kept in the Premises, Building, Common
Areas or Project.

 

15.            Tenant shall not permit (i) any motor vehicles to be washed in
any portion of the Premises or Common Areas, and (ii) any mechanical work or
maintenance of motor vehicles to be performed in any portion of the Premises or
Common Areas.

 

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Exhibit D
Hazardous Materials Disclosure Certificate

 

Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Landlord (identified below) to evaluate and finalize a lease agreement
with you as Tenant. After a lease agreement is signed by you and the Landlord
(the “Lease Agreement”), on an annual basis in accordance with the provisions of
Section 27 of the signed Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. The information
contained in the initial Hazardous Materials Disclosure Certificate and each
annual certificate provided by you thereafter will be maintained in
confidentiality by Landlord subject to release and disclosure as required by
(i) any lenders and owners and their respective environmental consultants,
(ii) any prospective purchaser(s) of all or any portion of the property on which
the Premises are located, (iii) Landlord to defend itself or its lenders,
partners or representatives against any claim or demand, and (iv) any laws,
rules, regulations, orders, decrees, or ordinances, including, without
limitation, court orders or subpoenas. Any and all capitalized terms used
herein, which are not otherwise defined herein, shall have the same meaning
ascribed to such term in the signed Lease Agreement. Any questions regarding
this certificate should be directed to, and when completed, the certificate
should be delivered to:

 

Landlord: FSP Montague Business Center Corp., a Delaware corporation

 

 

Name of (Prospective) Tenant: AltiGen Communications, Inc., a Delaware
corporation

 

Mailing Address: 410 East Plumeria Drive, San Jose, California 95314

 

Contact Person, Title and Telephone Number(s):

 

Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s):

 

 

Address of (Prospective) Premises: 410 East Plumeria Drive, San Jose, California

 

Length of (Prospective) Initial Term: Five (5) years

 

1.

General Information:

 

 

 

Describe the initial proposed operations to take place in, on, or about the
Premises, including, without limitation, principal products processed,
manufactured or assembled services and activities to be provided or otherwise
conducted. Existing Tenants should describe any proposed changes to on-going
operations.

 

 

 

 

2.

Use, Storage and Disposal of Hazardous Materials

 

 

 

2.1

Will any Hazardous Materials be used, generated, stored or disposed of in, on or
about the Premises? Existing Tenants should describe any Hazardous Materials
which continue to be used, generated, stored or disposed of in, on or about the
Premises.

 

 

 

 

 

Wastes

 

Yes o

 

No o

 

 

Chemical Products

 

Yes o

 

No o

 

 

Other

 

Yes o

 

No o

 

 

 

 

 

If Yes is marked, please explain:

 

 

 

 

 

 

 

2.2

If “Yes” is marked in Section 2.1, attach a list of any Hazardous Materials to
be used, generated, stored or disposed of in, on or about the Premises,
including the applicable hazard class and an estimate of the quantities of such
Hazardous Materials at any given time; estimated annual throughout; the proposed
location(s) and method of storage (excluding nominal amounts of ordinary
household cleaners and janitorial supplies which are not regulated by any
Environmental Laws); and the proposed location(s) and method of disposal for
each Hazardous Material, including, the estimated frequency, and the proposed
contractors or subcontractors. Existing Tenants should attach a list setting
forth the information requested above and such list should include actual data
from on-going operations and the identification of any variations in such
information from the prior year’s certificate.

 

 

 

3.

Storage Tanks and Sumps

 

 

 

 

3.1

Is any above or below ground storage of gasoline, diesel, petroleum, or other
Hazardous Materials in tanks or sumps proposed in, on or about the Premises?
Existing Tenants should describe any such actual or proposed activities.

 

 

 

 

 

Yes o

 

No o

 

 

 

 

 

 

 

If yes, please explain:

 

 

 

 

 

 

4.

Waste Management

 

 

 

 

4.1

Has your company been issued an EPA Hazardous Waste Generator I.D. Number?
Existing Tenants should describe any additional identification numbers issued
since the previous certificate.

 

 

 

 

 

Yes o

 

No o

 

 

 

 

 

 

4.2

Has your company filed a biennial or quarterly reports as a hazardous waste
generator? Existing Tenants should describe any new reports filed.

 

 

 

 

 

Yes o

 

No o

 

 

 

 

 

 

 

If yes, attach a copy of the most recent report filed.

 

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5.

Wastewater Treatment and Discharge

 

 

 

5.1

Will your company discharge wastewater or other wastes to:

 

 

          storm drain?

 

          sewer?

 

 

          surface water?

 

          no wastewater or other wastes discharged.

 

 

 

Existing Tenants should indicate any actual discharges. If so, describe the
nature of any proposed or actual discharge(s).

 

 

 

 

 

5.2

Will any such wastewater or waste be treated before discharge?

 

 

 

 

 

 

 

Yes o

 

No o

 

 

 

 

 

 

If yes, describe the type of treatment proposed to be conducted. Existing
Tenants should describe the actual treatment conducted.

 

 

 

 

 

 

6.

Air Discharges

 

 

 

6.1

Do you plan for any air filtration systems or stacks to be used in your
company’s operations in, on or about the Premises that will discharge into the
air; and will such air emissions be monitored? Existing Tenants should indicate
whether or not there are any such air filtration systems or stacks in use in, on
or about the Premises which discharge into the air and whether such air
emissions are being monitored.

 

 

 

Yes o

 

No o

 

 

 

 

 

 

 

If yes, please describe:

 

 

 

 

 

 

 

6.2

Do you propose to operate any of the following types of equipment, or any other
equipment requiring an air emissions permit? Existing Tenants should specify any
such equipment being operated in, on or about the Premises.

 

 

 

 

 

          Spray booth(s) 

 

          Incinerator(s)

 

 

          Dip tank(s) 

 

          Other (Please describe)

 

 

          Drying oven(s)

 

          No Equipment Requiring Air Permits

 

 

 

 

 

 

 

If yes, please describe:

 

 

 

 

 

 

 

 

7.

Hazardous Materials Disclosures

 

 

 

7.1

Has your company prepared or will it be required to prepare a Hazardous
Materials management plan (“Management Plan”) pursuant to Fire Department or
other governmental or regulatory agencies’ requirements? Existing Tenants should
indicate whether or not a Management Plan is required and has been prepared.

 

 

 

 

 

 

 

Yes o

 

No o

 

 

 

 

 

 

If yes, attach a copy of the Management Plan. Existing Tenants should attach a
copy of any required updates to the Management Plan.

 

 

 

 

 

 

7.2

Are any of the Hazardous Materials, and in particular chemicals, proposed to be
used in your operations in, on or about the Premises regulated under Proposition
65? Existing Tenants should indicate whether or not there are any new Hazardous
Materials being so used which are regulated under Proposition 65.

 

 

 

 

 

 

 

Yes o

 

No o

 

 

 

 

 

 

 

If yes, please explain:

 

 

 

 

 

 

8.

Enforcement Actions and Complaints

 

 

 

8.1

With respect to Hazardous Materials or Environmental Laws, has your company ever
been subject to any-agency enforcement actions, administrative orders, or
consent decrees or has your company received requests for information, notice or
demand letters, or any other inquiries regarding its operations? Existing
Tenants should indicate whether or not any such actions, orders or decrees have
been, or are in the process of being, undertaken or if any such requests have
been received.

 

 

 

 

 

 

 

Yes o

 

No o

 

 

 

 

 

 

If yes, describe the actions, orders or decrees and any continuing compliance
obligations imposed as a result of these actions, orders or decrees and also
describe any requests, notices or demands, and attach a copy of all such
documents. Existing Tenants should describe and attach a copy of any new
actions, orders, decrees, requests, notices or demands not already delivered to
Landlord pursuant to the provisions of Section 27 of the signed Lease Agreement.

 

 

 

 

 

 

 

8.2

Have there ever been, or are there now pending, any lawsuits against your
company regarding any environmental or health and safety concerns?

 

 

 

 

 

 

 

Yes o

 

No o

 

 

 

 

 

 

If yes, describe any such lawsuits and attach copies of the complaint(s),
cross-complaint(s), pleadings and all other documents related thereto as
requested by Landlord. Existing Tenants should describe and attach a copy of any
new complaint(s), cross-complaint(s), pleadings and other related documents not
already delivered to Landlord pursuant to the provisions of Section 27 of the
signed Lease Agreement.

 

 

 

 

 

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8.3

Have there been any problems or complaints from adjacent Tenants, owners or
other neighbors at your company’s current facility with regard to environmental
or health and safety concerns? Existing Tenants should indicate whether or not
there have been any such problems or complaints from adjacent Tenants, owners or
other neighbors at, about or near the Premises.

 

 

 

 

 

Yes o

 

No o

 

 

 

 

 

 

If yes, please describe. Existing Tenants should describe any such problems or
complaints not already disclosed to Landlord under the provisions of the signed
Lease Agreement.

 

 

 

 

9.

Permits and Licenses

 

 

 

 

 

 

9.1

Attach copies of all Hazardous Materials permits and licenses including a
Transporter Permit number issued to your company with respect to its proposed
operations in, on or about the Premises, including, without limitation, any
wastewater discharge permits, air emissions permits, and use permits or
approvals. Existing Tenants should attach copies of any new permits and licenses
as well as any renewals of permits or licenses previously issued.

 

The undersigned hereby acknowledges and agrees that (A) this Hazardous Materials
Disclosure Certificate is being delivered in connection with, and as required
by, Landlord in connection with the evaluation and finalization of a Lease
Agreement and will be attached thereto as an exhibit; (B) that this Hazardous
Materials Disclosure Certificate is being delivered in accordance with, and as
required by, the provisions of Section 27 of the Lease Agreement; and (C) that
Tenant shall have and retain full and complete responsibility and liability with
respect to any of the Hazardous Materials disclosed in the HazMat Certificate
notwithstanding Landlord’s/Tenant’s receipt and/or approval of such certificate.
Tenant further agrees that none of the following described acts or events shall
be construed or otherwise interpreted as either (a) excusing, diminishing or
otherwise limiting Tenant from the requirement to fully and faithfully perform
its obligations under the Lease with respect to Hazardous Materials, including,
without limitation, Tenant’s indemnification of the Indemnitees and compliance
with all Environmental Laws, or (b) imposing upon Landlord, directly or
indirectly, any duty or liability with respect to any such Hazardous Materials,
including, without limitation, any duty on Landlord to investigate or otherwise
verify the accuracy of the representations and statements made therein or to
ensure that Tenant is in compliance with all Environmental Laws; (i) the
delivery of such certificate to Landlord and/or Landlord’s acceptance of such
certificate, (ii) Landlord’s review and approval of such certificate, (iii)
Landlord’s failure to obtain such certificate from Tenant at any time, or
(iv) Landlord’s actual or constructive knowledge of the types and quantities of
Hazardous Materials being used, stored, generated, disposed of or transported on
or about the Premises by Tenant or Tenant’s Representatives. Notwithstanding the
foregoing or anything to the contrary contained herein, the undersigned
acknowledges and agrees that Landlord and its partners, lenders and
representatives may, and will, rely upon the statements, representations,
warranties, and certifications made herein and the truthfulness thereof in
entering into the Lease Agreement and the continuance thereof throughout the
term, and any renewals thereof, of the Lease Agreement.

 

I (print name)                                             , acting with full
authority to bind the (proposed) Tenant and on behalf of the (proposed) Tenant,
certify, represent and warrant that the information contained in this
certificate is true and correct.

 

(Prospective) Tenant:

 

By:

 

 

 

 

 

Title:

 

 

 

 

 

Date:

 

 

 

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Exhibit E
First Amendment to Lease Agreement
Change of Commencement Date

 

This First Amendment to Lease Agreement (the “Amendment”) is made and entered
into to be effective as of                , by and between FSP Montague Business
Center Corp., a Delaware corporation (“Landlord”) and AltiGen Communications,
Inc., a Delaware corporation (“Tenant”), with reference to the following facts:

 

Recitals

 

A.         Landlord and Tenant have entered into that certain Lease Agreement
dated                , 2009 (the “Lease”), for the leasing of certain premises
containing approximately                 rentable square feet of space located
at                , San Jose, California (the “Premises”), as such Premises are
more fully described in the Lease.

 

B.          Landlord and Tenant wish to amend the Commencement Date of the
Lease.

 

NOW, THEREFORE, In consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:

 

1.          Recitals: Landlord and Tenant agree that the above recitals are true
and correct.

 

2.          The Commencement Date of the Lease shall be
                              .

 

3.          The last day of the Term of the Lease (the “Expiration Date”) shall
be                         .

 

4.          The dates on which the Base Rent will be adjusted are:

 

for the period               to               the monthly Base Rent shall be
$               ;

for the period               to               the monthly Base Rent shall be
$             ; and

for the period               to               the monthly Base Rent shall be
$               .

 

5.          Effect of Amendment: Except as modified herein, the terms and
conditions of the Lease shall remain unmodified and continue in full force and
effect. In the event of any conflict between the terms and conditions of the
Lease and this Amendment, the terms and conditions of this Amendment shall
prevail.

 

6.          Definition: Unless otherwise defined in this Amendment, all terms
not defined in this Amendment shall have the meaning set forth in the Lease.

 

7.          Authority: Subject to the provisions of the Lease, this Amendment
shall be binding upon and inure to the benefit of the parties hereto, their
respective heirs, legal representatives, successors and assigns. Each party
hereto and the persons signing below warrant that the person signing below on
such party’s behalf is authorized to do so and to bind such party to the terms
of this Amendment.

 

8.          The terms and provisions of the Lease are hereby incorporated in
this Amendment.

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and
year first above written.

 

TENANT:

 

LANDLORD:

 

 

 

AltiGen Communications, Inc.,
a Delaware corporation

 

FSP MONTAGUE BUSINESS CENTER CORP.,
a Delaware corporation

 

 

 

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

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Addendum 1

Letter of Credit

 

This LETTER OF CREDIT Addendum (“LC Addendum”) is made and entered into by and
between FSP Montague Business Center Corp., a Delaware corporation (“Landlord”)
and AltiGen Communications, Inc., a Delaware corporation (“Tenant”), and is
dated as of the date of the Lease Agreement (“Lease”) by and between Landlord
and Tenant to which this LC Addendum is attached. The agreements set forth in
this Letter of Credit Addendum shall have the same force and effect as if set
forth in the Lease. To the extent the terms of this LC Addendum are inconsistent
with the terms of the Lease, the terms of this LC Addendum shall control.

 

1.             Concurrently with Tenant’s execution of the Lease, Tenant shall
deliver to Landlord, as collateral for the full and faithful performance by
Tenant of all of its obligations under the Lease and to compensate Landlord for
all losses and damages Landlord may suffer as a result of any Default by Tenant
under the Lease, an irrevocable and unconditional negotiable standby letter of
credit (the “Letter of Credit”), in the form attached hereto as Exhibit 1 and
containing the terms required herein, payable in the greater San Francisco Bay
Area, running in favor of Landlord issued by Wells Fargo Bank, N.A., or a
solvent, nationally recognized bank with a long term rating of BBB or higher as
rated by Moody’s Investors Service or Standard & Poor’s, under the supervision
of the Superintendent of Banks of the State of California, or a national banking
association (“Bank”), In the amount of One Hundred Thousand Dollars
($100,000.00) (the “Letter of Credit Amount”). The Letter of Credit shall be
(i) at sight, irrevocable and unconditional, (ii) maintained in effect, whether
through replacement, renewal or extension, for the period from the Lease
Commencement Date and continuing until the date (the “LC Expiration Date”) which
is sixty (60) days after the Lease Expiration Date, and Tenant shall deliver a
new Letter of Credit or certificate of renewal or extension to Landlord at least
twenty (20) days prior to the expiration of the Letter of Credit then held by
Landlord, without any action whatsoever on the part of Landlord, (iii) subject
to the International Standby Practice (1998 Revision) International Chamber of
Commerce Publication #590, (iv) fully assignable by Landlord, and (v) permit
partial draws. In addition to the foregoing, the form and terms of the Letter of
Credit and the Bank shall be acceptable to Landlord, in Landlord’s reasonable
discretion, and shall provide, among other things, in effect that: (A) Landlord,
or its then managing agent, shall have the right to draw down an amount up to
the face amount of the Letter of Credit (1) upon the presentation to the Bank of
Landlord’s (or Landlord’s then managing agent’s) written statement that such
amount is due to Landlord under the terms and conditions of the Lease, or (2) in
the event Tenant, as applicant, shall have failed to provide to Landlord a new
or renewal Letter of Credit satisfying the terms of this LC Addendum at least
twenty (20) days prior to the expiration of the Letter of Credit then held by
Landlord, it being understood that if Landlord or its managing agent be a
limited liability company, corporation, partnership or other entity, then such
statement shall be signed by a managing member (if a limited liability company),
an officer (if a corporation), a general partner (if a partnership), or any
authorized party (if another entity) and (B) the Letter of Credit will be
honored by the Bank without inquiry as to the accuracy thereof and regardless of
whether Tenant disputes the content of such statement.

 

2.             The Letter of Credit shall also provide that Landlord may, at any
time and without notice to Tenant and without first obtaining Tenant’s consent
thereto, transfer all or any portion of its interest in and to the Letter of
Credit to another party, person or entity, regardless of whether or not such
transfer is separate from or as a part of the assignment by Landlord of its
rights and interests in and to the Lease. In the event of a transfer of
Landlord’s interest in the Building, Landlord shall transfer the Letter of
Credit, in whole or in part (or cause a substitute letter of credit to be
delivered, as applicable) to the transferee and thereupon Landlord shall,
without any further agreement between the parties, be released by Tenant from
all liability therefor, and it is agreed that the provisions hereof shall apply
to every transfer or assignment of the whole or any portion of said Letter of
Credit to a new landlord. In connection with any such transfer of the Letter of
Credit by Landlord, Tenant shall, at Tenant’s sole cost and expense, execute and
submit to the Bank such applications, documents and instruments as may be
necessary to effectuate such transfer and, Tenant shall be responsible for
paying the Bank’s transfer and processing fees in connection therewith.

 

3.             If, as result of any application or use by Landlord of all or any
part of the Letter of Credit, the amount of the Letter of Credit shall be less
than the Letter of Credit Amount, Tenant shall, within five (5) days thereafter,
provide Landlord with additional letter(s) of credit in an amount equal to the
deficiency (or a replacement letter of credit in the total Letter of Credit
Amount), and any such additional (or replacement) letter of credit shall comply
with all of the provisions of this LC Addendum, and if Tenant fails to comply
with the foregoing, notwithstanding anything to the contrary contained in
Section 18 of the Lease, the same shall constitute an incurable default by
Tenant. Tenant further covenants and warrants that it will neither assign nor
encumber the Letter of Credit or any part thereof and that neither Landlord nor
its successors or assigns will be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance. Without limiting the generality
of the foregoing, if the Letter of Credit expires earlier than the LC Expiration
Date, a renewal thereof or substitute letter of credit, as applicable, shall be
delivered to Landlord not later than twenty (20) days prior to the expiration of
the Letter of Credit, which shall be irrevocable and automatically renewable as
above provided through the LC Expiration Date upon the same terms as the
expiring Letter of Credit. However, if the Letter of Credit is not timely
renewed or a substitute letter of credit is not timely received, or if Tenant
falls to maintain the Letter of Credit in the amount and in accordance with the
terms set forth in this LC Addendum, Landlord shall have the right to present
the Letter of Credit to the Bank in accordance with the terms of this LC
Addendum, and the proceeds of the Letter of Credit may be applied by Landlord
for Tenant’s failure to fully and faithfully perform all of Tenant’s obligations
under this Lease and against any Rent payable by Tenant under this Lease that is
not paid when due and/or to pay for all losses and damages that Landlord has
suffered or that Landlord reasonably estimates that it will suffer as a result
of any Default by Tenant under this Lease. Any unused proceeds shall constitute
the property of Landlord and need not be segregated from Landlord’s other
assets.

 

4.             Tenant hereby acknowledges and agrees that Landlord is entering
into the Lease in material reliance upon the ability of Landlord to draw upon
the Letter of Credit in the event Tenant fails to fully and faithfully perform
all of Tenant’s obligations under this Lease and to compensate Landlord for all
losses and damages Landlord may suffer as a result of the occurrence of any
Default on the part of Tenant under the Lease and Landlord may, at any time, but
without obligation to do so, and without notice, draw upon the Letter of Credit,
in part or in whole, for such purposes. Tenant agrees not to interfere in any
way with payment to Landlord of the proceeds of the Letter of Credit, either
prior to or following a “draw” by Landlord of any portion of the Letter of
Credit, regardless of whether any dispute exists between Tenant and Landlord as
to Landlord’s right to draw from the Letter of Credit. No condition or term of
the Lease shall be deemed to render the Letter of Credit conditional to justify
the issuer of the Letter of Credit in failing to honor a drawing upon such
Letter of Credit in a timely manner. Tenant agrees and acknowledges that Tenant
has no property interest whatsoever in the Letter of Credit or the proceeds
thereof and that, in the event Tenant becomes a debtor under any chapter of the
Federal Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s bankruptcy
estate shall have any right to restrict or limit Landlord’s claim and/or rights
to the Letter of Credit and/or the proceeds thereof by application of
Section 502(b)(6) of the Federal Bankruptcy Code.

 

           5.             Landlord and Tenant acknowledge and agree that in no
event or circumstance shall the Letter of Credit or any renewal thereof or
substitute therefor be (i) deemed to be or treated as a “security deposit”
within the meaning of California Civil Code Section 1950.7, (ii) subject to the
terms of such Section 1950.7, or (iii) intended to serve as a “security deposit”
within the meaning of such Section 1950.7. The parties hereto (A) recite that
the Letter of Credit is not intended to serve as a security deposit and such
Section 1950.7 and any and all other laws, rules and regulations applicable to
security deposits in the commercial context (“Security Deposit Laws”) shall have
no applicability or relevancy thereto and (B) waive any and all rights, duties
and obligations either party may now or, in the future, will have relating to or
arising from the Security Deposit Laws.

 

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6.             Notwithstanding anything to the contrary contained in this LC
Addendum, upon Tenant’s written request to Landlord made not earlier than the
expiration of the twenty-eighth (28th) month of the Term of this Lease, Tenant
shall have the right to reduce the Letter of Credit Amount to Fifty Thousand
Dollars ($50,000.00) provided each of the following conditions are met:
(i) Tenant shall not have been in Default at any time prior to such written
request; and (ii) at the time of such written request, Tenant’s current
financial statements shall evidence that the cumulative amount of short term
securities and cash held by Tenant are a minimum of Eight Million Two Hundred
Fifty Thousand Dollars ($8,250,000.00).

 

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EXHIBIT 1 TO LC ADDENDUM

 

 

 

Contact Phones:                       

 

IRREVOCABLE STANDBY LETTER OF CREDIT

 

                  , 20

 

Our irrevocable standby Letter of Credit:

Beneficiary:

 

No.

[LANDLORD ENTITY AND ADDRESS]

 

Applicant:

 

 

 

 

 

Amount: Exactly USD $

 

 

(                     and   /100 Dollars)

 

 

Final Date of Expiration:                 [INSERT

 

 

DATE WHICH IS 60 DAYS AFTER LEASE EXPIRATION DATE]

 

We (the “Bank”) hereby issue our irrevocable standby Letter of Credit No.
                      in Beneficiary’s favor for the account of the
above-referenced Applicant, in the aggregate amount of exactly USD
$                 .

 

This Letter of Credit is available with us at our above office by presentation
of your draft drawn on us at sight bearing the clause: “Drawn
under           [INSERT NAME OF BANK] Letter of Credit No.                 ” and
accompanied by the following:

 

1.                              Beneficiary’s signed certification purportedly
signed by an authorized officer or agent stating:

 

(A)        “ Beneficiary, as landlord, is now entitled to draw upon this Letter
of Credit pursuant to the terms and conditions of that certain lease agreement
dated                         for premises located at
                                            ”; or

 

(B)         “The Bank has notified us that this Letter of Credit will not be
extended beyond the current expiration date of this Letter of Credit and
Applicant has not delivered to Beneficiary at least thirty (30) days prior to
the current expiration of this Letter of Credit a replacement Letter of Credit
satisfactory to Beneficiary.”

 

2.                               The original of this Letter of Credit.

 

Special conditions:

 

Partial draws under this Letter of Credit are permitted. Notwithstanding
anything to the contrary contained herein, this Letter of Credit shall expire
permanently without renewal on                             [INSERT DATE WHICH IS
60 DAYS AFTER LEASE EXPIRATION DATE].

 

This Letter of Credit shall be automatically extended for an additional period
of one (1) year, without amendment, from the present or each future expiration
date but in any event not beyond                            [INSERT DATE WHICH
IS 60 DAYS AFTER LEASE EXPIRATION DATE] which shall be the final expiration date
of this Letter of Credit, unless, at least thirty (30) days prior to the then
current expiration date we notify you by registered mail/overnight courier
service at the above address that this Letter of Credit will not be extended
beyond the current expiration date.

 

We hereby agree with you that all drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored upon presentation to us of
the documents described in Paragraph 1 above on or before the expiration date of
this Letter of Credit, without inquiry as to the accuracy thereof and regardless
of whether Applicant disputes the content of any such documents or
certifications.

 

This Letter of Credit is transferable and any such transfer may be effected by
us, provided that you deliver to us your written request for transfer in form
and substance reasonably satisfactory to us. Beneficiary may, at any time and
without notice to Applicant and without first obtaining Applicant’s consent
thereto, transfer all or any portion of Beneficiary’s interest in and to the
Letter of Credit to another party, person or entity, regardless of whether or
not such transfer is separate from or as a part of the assignment by Beneficiary
of Beneficiary’s rights and interests in and to the Lease. The original of this
Letter of Credit together with any amendments thereto must accompany any such
transfer request:

 

Except so far as otherwise expressly stated, this documentary credit is subject
to the International Standby Practice (1998 Revision), International Chamber Of
Commerce Publication No. 590.

 

By:

 

 

 

Authorized signature

 

 

 

Please direct any correspondence including drawing or inquiry quoting our
reference number to the above referenced address.

 

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Addendum 2
Option to Extend

 

This Option to Extend Addendum (the “Addendum”) is Incorporated as part of that
certain Lease dated for reference purposes as of April   , 2009, by and between
FSP Montague Business Center Corp., a Delaware corporation (“Landlord”) and
AltiGen Communications, Inc., a Delaware corporation (“Tenant”) for the leasing
of certain premises located in the Montague Business Park at 410 East Plumeria
Drive, San Jose, California (the “Premises”). Any capitalized terms used herein
and not otherwise defined herein shall have the meaning ascribed to such terms
as set forth in the Lease.

 

1.             Grant of Extension Option. subject to the provisions, limitations
and conditions set forth in Paragraph 5 below, Tenant shall have an option
(“Option”) to extend the initial term of the Lease for five (5) years (the
“Extended Term”).

 

2.             Tenant’s Option Notice. Tenant shall have the right to deliver
written notice to Landlord of its intent to exercise this Option (the “Option
Notice”). If Landlord does not receive the Option Notice from Tenant on a date
which is neither more than two hundred seventy (270) days nor less than one
hundred eighty (180) days prior to the end of the initial term of the Lease, all
rights under this Option shall automatically terminate and shall be of no
further force or effect. Upon the proper exercise of this Option, subject to the
provisions, limitations and conditions set forth in Paragraph 5 below, the
initial term of the Lease shall be extended for the Extended Term.

 

3.             Establishing the Initial Monthly Base Rent for the Extended Term.
The initial monthly Base Rent for the Extended Term shall be equal to the then
Fair Market Rental Rate, as hereinafter defined. As used herein, the “Fair
Market Rental Rate” payable by Tenant for the Extended Term shall mean the Base
Rent for the highest and best use for comparable space at which non-equity
tenants with credit quality equivalent to Tenant, as of the commencement of the
lease term for the Extended Term, will be leasing non-sublease, non-equity,
unencumbered space comparable in size, location and quality to the Premises for
a comparable term, which comparable space is located in the Building and in
other comparable buildings in the vicinity of the Building, taking into
consideration all out-of-pocket concessions generally being granted at such time
for such comparable space, including the condition and value of existing tenant
improvements in the Premises. The Fair Market Rental Rate shall include the
periodic rental increases that would be included for space leased for the period
of the Extended Term.

 

Following Landlord’s receipt of the Option Notice, Landlord shall deliver to
Tenant the proposed Fair Market Rental Rate for the Extended Term. Tenant shall
have fifteen (15) days following Tenant’s receipt of Landlord’s proposed Fair
Market Rental Rate for the Extended Term in which to give written notice to
Landlord that Tenant (a) disagrees with Landlord’s proposed Fair Market Rental
Rate, or (b) accepts Landlord’s proposed Fair Market Rental Rate. If Tenant
fails to deliver such written notice within such 15-day period, Tenant shall be
deemed to have disagreed with Landlord’s proposed Fair Market Rental Rate for
the Extended Term. If Tenant notifies Landlord in writing that Tenant disagrees
with Landlord’s proposed Fair Market Rental Rate within such 15-day period, or
if Tenant is deemed to have disagreed with Landlord’s proposed Fair Market
Rental Rate, then Landlord and Tenant shall endeavor in good faith to agree upon
the Fair Market Rental Rate within the next twenty (20) days. If Landlord and
Tenant are unable to agree upon the Fair Market Rental Rate within such 20-day
period, then Landlord and Tenant each, at its cost and by giving notice to the
other party, shall appoint a competent and impartial commercial real estate
broker or MAI certified appraiser (hereinafter “broker”) with at least five
(5) years’ full-time commercial real estate brokerage experience in the
geographical area of the Premises to set the Fair Market Rental Rate for the
Extended Term. If either Landlord or Tenant does not appoint a broker within ten
(10) days after the other party has given notice of the name of its broker, the
single broker appointed shall be the sole broker and shall set the Fair Market
Rental Rate for the Extended Term. If two (2) brokers are appointed by Landlord
and Tenant as stated in this paragraph, they shall meet promptly and attempt to
set the Fair Market Rental Rate. If the two (2) brokers are unable to agree upon
the Fair Market Rental Rate within ten (10) days after the second broker has
been appointed, the two (2) brokers shall attempt to select a third broker,
meeting the qualifications stated in this paragraph within ten (10) days after
the last day the two (2) brokers are given to set the Fair Market Rental Rate.
If the two (2) brokers are unable to agree on the third broker, either Landlord
or Tenant by giving ten (10) days’ notice to the other party, can apply to the
Presiding Judge of the Superior Court of the county in which the Premises is
located for the selection of a third broker who meets the qualifications stated
in this paragraph. Landlord and Tenant each shall bear one-half (1/2) of the
cost of appointing the third broker and of paying the third broker’s fee. The
third broker, however selected, shall be a person who has not previously acted
in any capacity for either Landlord or Tenant. Within fifteen (15) days after
the selection of the third broker, the third broker shall select one of the two
Fair Market Rental Rate submitted by the first two brokers as the Fair Market
Rental Rate for the Extended Term, which selection shall be final and binding
upon Landlord and Tenant. If either of the first two (2) brokers falls to submit
their opinion of the Fair Market Rental Rate within the time frames set forth
above, then the single Fair Market Rental Rate submitted shall automatically be
the initial monthly Base Rent for the Extended Term and shall be final and
binding on the parties. Each party shall pay the cost of its own appraiser and
shall share equally the cost of the third appraiser.

 

In no event shall the monthly Base Rent for any period of the Extended Term as
determined pursuant to this Addendum, be less than the highest monthly Base Rent
charged during the initial term of the Lease. Upon determination of the initial
monthly Base Rent for the Extended Term pursuant to the terms outlined above,
Landlord and Tenant shall immediately execute an amendment to the Lease. Such
amendment shall set forth among other things, the initial monthly Base Rent for
the Extended Term and the actual commencement date and expiration date of the
Extended Term. Tenant shall have no other right to further extend the initial
term of the Lease under this Addendum unless Landlord and Tenant otherwise
expressly agree in writing.

 

4.             Condition of Premises and Brokerage Commissions for the Extended
Term. If Tenant timely and properly exercises this Option, in strict accordance
with the terms contained herein: (1) Tenant shall accept the Premises in its
then “As-Is” condition and, accordingly, Landlord shall not be required to
perform any additional improvements to the Premises; and (2) Tenant hereby
agrees that it will be solely responsible for any and all brokerage commissions
and finder’s fees payable to any broker now or hereafter procured or hired by
Tenant or who otherwise claims a commission based on any act or statement of
Tenant (“Tenant’s Broker”) in connection with the Option. Tenant hereby further
agrees that Landlord shall in no event or circumstance be responsible for the
payment of any such commissions and fees to Tenant’s Broker, and Tenant shall
indemnify, defend and hold Landlord free and harmless against any liability,
claim, judgment, or damages with respect thereto, including attorneys’ fees and
costs.

 

5.             Limitations On, and Conditions To, Extension Option. This Option
is personal to Tenant and may not be assigned, voluntarily or involuntarily,
separate from or as part of the Lease, except that this Option may be assigned
to an Affiliate pursuant to a Transfer of this Lease to an Affiliate. At
Landlord’s option, all rights of Tenant under this Option shall terminate and be
of no force or effect if any of the following individual events occur or any
combination thereof occur: (1) Tenant has been in Chronic Default at any time
during the initial term of the Lease, or is in Default of any provision of the
Lease on the date Landlord receives the Option Notice; and/or (2) Tenant has
assigned its rights and obligations under all or part of the Lease or Tenant has
subleased all or part of the Premises (except to an Affiliate); and/or
(3) Tenant’s financial condition is not sufficient at the time the Option Notice
is delivered to Landlord to meet Tenant’s obligations during the Extended Term;
and/or (4) Tenant has failed to exercise property this Option in a timely manner
in strict accordance with the provisions of this Addendum; and/or (5) Tenant no
longer has possession of all or any part of the Premises under the Lease, or if
the Lease has been terminated earlier, pursuant to the terms and provisions of
the Lease.

 

6.             Time is of the Essence. Time is of the essence with respect to
each and every time period set forth in this Addendum.

 

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