STANDARD OFFICE LEASE

 

 

 

1. Basic Lease Provisions.

 

1.1 Date: July 2, 2012

 

1.2 Landlord: The Realty Associates Fund VII, L.P.,

a Delaware limited partnership

 

1.3 Tenant: Motivating the Masses, Inc.

a Nevada corporation

 

1.4 Building Address: 2121 Palomar Airport Road, Carlsbad, California 92011

 

1.5 Suite Number(s): 300

 

1.6 Rentable Area of Premises: 3,159

(in square feet)

 

1.7 Load Factor Percentage: 14%

 

1.8 Use: General office and administrative use

 

1.9 Term: Thirty-six (36) months

 

1.10 Estimated Commencement Date: August 1, 2012

 

1.11 Monthly Base Rent: Month 1-12: $3,127.41

Month 13-24: $5,686.20

Month 25-36: $5,844.15

 

1.12 Base Rent Paid Upon Execution: $3,127.41

 

Applied To: First (1st) full month of Lease Term

(insert month(s))

 

1.13 Security Deposit: $6,428.57

 

1.14 Tenant's Share: See section 4.2(a)

 

1.15 Base Year: 2013

 

1.16 Business Hours: 7:00 a.m. through 6:00 p.m. Monday through Friday and

8:00 a.m. through 1:00 p.m. on Saturday, excluding Holidays

 

1.17 Non-Business Hours HVAC Charge: $35.00 per hour per HVAC zone

 

1.18 Number of Parking Spaces:

 

Reserved: Zero (0)

 

Unreserved: Eleven (11)

 

1.19 Initial Monthly Parking

Rates Per Vehicle:

 

Reserved: Zero (0)

 

Unreserved: Zero (0)

 

1.20 Real Estate Broker:

 

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Landlord: Cassidy Turley

 

Tenant: Stone Miller

 

1.21 Exhibits Attached to Lease: Exhibit A - "Premises"; Exhibit B –
"Verification Letter";

Exhibit C -"Rules and Regulations"; Exhibit D – “Addendum to Standard Office
Lease”

 

1.22 Addresses for Notices:

 

Landlord: The Realty Associates Fund VII, L.P.

c/o TA Associates Realty

1301 Dove Street, Suite 860

Newport Beach, California 92660

Attention: Asset Manager/Carlsbad Executive Plaza

 

and

 

The Realty Associates Fund VII, L.P.

c/o TA Associates Realty

28 State Street, Tenth Floor

Boston, Massachusetts 02109

Attention: Asset Manager/ Carlsbad Executive Plaza

 

With a Copy to: SENTRE Partners

2131 Palomar Airport Road, Suite 200

Carlsbad, California 92011

Attention: Property Manager/Carlsbad Executive Plaza

 

Tenant: Motivating the Masses, Inc.

2121 Palomar Airport Road, Suite 300

Carlsbad, CA 92011

Attention: __________________

 

Guarantor: None

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1.23 Interpretation. The Basic Lease Provisions shall be interpreted in
conjunction with all of the other terms and conditions of this Lease. Other
terms and conditions of this Lease modify and expand on the Basic Lease
Provisions. If there is a conflict between the Basic Lease Provisions and the
other terms and conditions of this Lease, the other terms and conditions shall
control.

 

2. Premises.

 

2.1 Lease of Premises and Definition of Project. The "Premises" shall mean the
area shown on Exhibit "A" to this Lease. Landlord hereby leases to Tenant, and
Tenant hereby leases from Landlord, upon all of the conditions set forth herein
the Premises, together with certain rights to the Common Areas (as defined
below) as hereinafter specified. The Premises shall not include an easement for
light, air or view. The building of which the Premises is a part (the
"Building"), the Common Areas, the land upon which the same are located, along
with all other buildings and improvements designated by Landlord, including all
parking facilities, are herein collectively referred to as the "Project."

 

2.2 Calculation of Size of Building and Premises. The number of rentable square
feet included within the Building(s) has been calculated in accordance with the
methods of measuring rentable square feet, as that method is described in the
American National Institute Publication ANSI Z65.1-1996, as promulgated by the
Building Owners and Managers Association (the "BOMA Standard"). The number of
rentable square feet in the Premises has been calculated by measuring the number
of usable square feet within the Premises calculated in accordance with the BOMA
Standard and increasing the number of usable square feet by the Load Factor
Percentage (as defined in Section 1.7). If the rentable square feet in the
Premises changes after this Lease is executed by Landlord and Tenant, the Base
Rent and any advance rent shall be adjusted by multiplying the new number of
rentable square feet in the Premises by the per square foot rental obtained by
dividing the Base Rent initially set forth in Section 1.11 by the number of
rentable square feet initially set forth in Section 1.6. If the number of
rentable square feet in the Premises is changed, Tenant's Share shall be
adjusted as provided in Section 4.2(a).

 

2.3 Common Areas-Defined. The term "Common Areas" is defined as all areas and
facilities outside the Premises and within the exterior boundary line of the
Project that are designated by Landlord from time to time for the general
non-exclusive use of Landlord, Tenant and the other tenants of the Project and
their respective employees, suppliers, customers and invitees, including, but
not limited to, common entrances, lobbies, corridors, stairwells, public
restrooms, elevators, parking areas, loading and unloading areas, roadways and
sidewalks. Tenant shall not store any property in the Common Areas or use the
Common Areas for any purpose not approved by Landlord, in Landlord’s sole
discretion. Landlord may also designate other land and improvements outside the
boundaries of the Project to be a part of the Common Areas, provided that such
other land and improvements have a reasonable and functional relationship to the
Project.

 

3. Term.

 

3.1 Term and Commencement Date. The term and Commencement Date of this Lease are
as specified in Sections 1.9 and 1.10. The Commencement Date set forth in
Section 1.10 is an estimated Commencement Date. Subject to the limitations
contained in Section 3.3 below, the actual Commencement Date shall be the date
possession of the Premises is tendered to Tenant in accordance with Section 3.4
below; provided, however, that the Commencement Date shall not occur prior to
the date set forth in Section 1.10. If the actual Commencement Date does not
occur on the first day of a calendar month, the term of this Lease shall be
extended by the number of days between the actual Commencement Date and the
first day of the next calendar month, it being the intention of Landlord and
Tenant that the term of the Lease end on the last day of a calendar month. When
the actual Commencement Date is established by Landlord, Landlord shall complete
the letter attached hereto as Exhibit B and Tenant shall, within five (5) days
after Landlord's request, execute the letter and deliver it to Landlord.
Tenant's failure to execute the letter within said five (5) day period shall be
a default hereunder and shall constitute Tenant's acknowledgment of the truth of
the facts contained in the letter delivered by Landlord to Tenant.

 

3.2 Delay in Possession. Notwithstanding the estimated Commencement Date
specified in Section 1.10, if for any reason Landlord cannot deliver possession
of the Premises to Tenant on said date or any other date, Landlord shall not be
subject to any liability therefor, nor shall such failure affect the validity of
this Lease or the obligations of Tenant hereunder; provided, however, in such a
case, Tenant shall not be obligated to pay rent or perform any other obligation
of Tenant under this Lease, except as may be otherwise provided in this Lease,
until possession of the Premises is tendered to Tenant, as defined in
Section 3.4. If Landlord shall not have tendered possession of the Premises to
Tenant within one hundred twenty (120) days following the estimated Commencement
Date specified in Section 1.10, as the same may be adjusted in accordance with
this Section 3.2 or Section 3.3 or in accordance with the terms of any work
letter agreement attached to this Lease, Tenant may, at Tenant's option, by
notice in writing to Landlord within ten (10) days after the expiration of the
one hundred twenty (120) day period, terminate this Lease. If Tenant terminates
this Lease as provided in the preceding sentence, the parties shall be
discharged from all obligations hereunder, except that Landlord shall return any
money previously deposited with Landlord by Tenant; and provided further, that
if such written notice by Tenant is not received by Landlord within said ten
(10) day period, Tenant shall not have the right to terminate this Lease as
provided above unless Landlord fails to tender possession of the Premises to
Tenant within two hundred forty (240) days following the estimated Commencement
Date specified in Section 1.10, as the same may be adjusted in accordance with
this Section 3.2 or Section 3.3 or in accordance with the terms of any work
letter agreement attached to this Lease. If Landlord is unable to deliver
possession of the Premises to Tenant on the estimated Commencement Date
specified in Section 1.10, as the same may be adjusted in accordance with this
Section 3.2 or Section 3.3 or in accordance with the terms of any work letter
agreement attached to this Lease, due to a Force Majeure Event (as defined

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below), such Commencement Date shall be extended by the period of the delay
caused by the Force Majeure Event. A “Force Majeure Event” shall mean fire,
earthquake, weather delays or other acts of God, strikes, boycotts, war, riot,
insurrection, embargoes, shortages of equipment, labor or materials, delays in
issuance of governmental permits or approvals, or any other cause beyond the
reasonable control of Landlord.

 

3.3 Delays Caused by Tenant. There shall be no abatement of rent, and the one
hundred twenty (120) day period and the two hundred forty (240) day period
specified in Section 3.2 shall be deemed extended, to the extent of any delays
caused by acts or omissions of Tenant, Tenant's agents, employees and
contractors, or for Tenant delays as defined in any work letter agreement
attached to this Lease, if any (hereinafter "Tenant Delays"). Tenant shall pay
to Landlord an amount equal to one thirtieth (1/30th) of the Base Rent due for
the first full calendar month of the Lease term for each day of Tenant Delay.
For purposes of the foregoing calculation, the Base Rent payable for the first
full calendar month of the term of this Lease shall not be reduced by any abated
rent, conditionally waived rent, free rent or similar rental concessions, if
any. Landlord and Tenant agree that the foregoing payment constitutes a fair and
reasonable estimate of the damages Landlord will incur as the result of a Tenant
Delay. Within thirty (30) days after Landlord tenders possession of the Premises
to Tenant, Landlord shall notify Tenant of Landlord's reasonable estimate of the
date Landlord could have delivered possession of the Premises to Tenant but for
the Tenant Delays. After delivery of said notice, Tenant shall immediately pay
to Landlord the amount described above for the period of Tenant Delay.

 

3.4 Tender of Possession. Possession of the Premises shall be deemed tendered to
Tenant when Landlord's architect or agent has determined that (a) the
improvements to be provided by Landlord pursuant to a work letter agreement, if
any, are substantially completed, and, if necessary, have been approved by the
appropriate governmental entity, (b) the Project utilities are ready for use in
the Premises, (c) Tenant has reasonable access to the Premises, and (d) three
(3) days shall have expired following advance written notice to Tenant of the
occurrence of the matters described in (a), (b) and (c) above of this
Section 3.4. If improvements to the Premises are constructed by Landlord, the
improvements shall be deemed "substantially" completed when the improvements
have been completed except for minor items or defects which can be completed or
remedied after Tenant occupies the Premises without causing substantial
interference with Tenant's use of the Premises.

 

3.5 Early Possession. If Tenant occupies the Premises prior to the Commencement
Date, such occupancy shall be subject to all provisions of this Lease, such
occupancy shall not change the termination date, and, except as provided below,
Tenant shall pay Base Rent and all other charges provided for in this Lease
during the period of such occupancy. Provided that Tenant does not interfere
with or delay the completion by Landlord or its agents or contractors of the
construction of any tenant improvements, and provided that Landlord has
possession of the Premises, Tenant shall have the right to enter the Premises up
to fourteen (14) days prior to the anticipated Commencement Date for the sole
purpose of installing furniture, trade fixtures, equipment, and similar items,
and Tenant shall have no obligation to begin paying Base Rent or other charges
based solely on its installation of these items. Tenant shall be liable for any
damages or delays caused by Tenant's activities at the Premises, and Section 21
shall apply to Tenant’s activities. Prior to entering the Premises Tenant shall
obtain all insurance it is required to obtain by the Lease and shall provide
certificates of said insurance to Landlord. Tenant shall coordinate such entry
with Landlord's building manager, and such entry shall be made in compliance
with all terms and conditions of this Lease and the Rules and Regulations
attached hereto.

 

4. Rent.

 

4.1 Base Rent. Tenant shall pay to Landlord the Base Rent for the Premises set
forth in Section 1.11, without offset, demand or deduction on or before the
first day of each calendar month. At the time Tenant executes this Lease it
shall pay to Landlord the advance Base Rent described in Section 1.12. Base Rent
for any period during the term hereof which is for less than one month shall be
prorated based upon the actual number of days of the calendar month involved.
Base Rent and all other amounts payable to Landlord hereunder shall be payable
to Landlord in lawful money of the United States, and Tenant shall be
responsible for delivering said amounts to Landlord at the address stated herein
or to such other persons or to such other places as Landlord may designate in
writing.

 

4.2 Operating Expense Increases. Tenant shall pay to Landlord during the term
hereof, in addition to the Base Rent, Tenant's Share of the amount by which all
Operating Expenses for each Comparison Year exceeds the amount of all Operating
Expenses for the Base Year. If less than 95% of the rentable square feet in the
Project is occupied by tenants or Landlord is not supplying services to 95% of
the rentable square feet of the Project at any time during any calendar year
(including the Base Year), Operating Expenses for such calendar year shall be an
amount equal to the Operating Expenses which would normally be expected to be
incurred had 95% of the Project's rentable square feet been occupied and had
Landlord been supplying services to 95% of the Project's rentable square feet
throughout such calendar year. Tenant's Share of Operating Expense increases
shall be determined in accordance with the following provisions:

 

(a) Notwithstanding anything to the contrary contained in Section 1.14, Landlord
shall have the right to determine Tenant's Share of the cost of Operating
Expenses using any one of the following methods or any combination of the
following methods, and Tenant hereby agrees that the following methods of
allocation are reasonable: (i) by multiplying the cost of all Operating Expenses
by a fraction, the numerator of which is the number of square feet of rentable
space in the Premises and the denominator of which is the number of square feet
of rentable space in all buildings in the Project; or (ii) with respect to an
Operating Expense attributable solely to the Building in which the Premises is
located, requiring Tenant to pay that portion of the cost of the Operating
Expense that is obtained by multiplying such cost by a fraction, the numerator
of which is the number of

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square feet of rentable space in the Premises and the denominator of which is
the number of square feet of rentable space in the Building in which the
Premises is located or (iii) by allocating an Operating Expense in any other
reasonable manner, as determined by Landlord.

 

(b) "Comparison Year" is defined as each calendar year during the term of this
Lease after the Base Year. Tenant's Share of the Operating Expense increases for
the last Comparison Year of the Lease term shall be prorated according to that
portion of such Comparison Year as to which Tenant is responsible for a share of
such increase.

 

(c) Subject to the limitations set forth in (d) below, "Operating Expenses"
shall include all costs, expenses and fees incurred by Landlord in connection
with or attributable to the Project, including but not limited to, the following
items: (i) all costs, expenses and fees associated with or attributable to the
ownership, management, operation, repair, maintenance, improvement, alteration
and replacement of the Project, or any part thereof, including but not limited
to, the following: (A) all surfaces, coverings, decorative items, carpets,
drapes, window coverings, parking areas, loading and unloading areas, trash
areas, roadways, sidewalks, stairways, walls, structural elements, landscaped
areas, striping, bumpers, irrigation systems, lighting facilities, building
exteriors and roofs, fences and gates; (B) all heating, ventilating and air
conditioning equipment ("HVAC"), plumbing, mechanical, and electrical systems,
life safety systems and equipment, telecommunication equipment, elevators,
tenant directories, fire detection systems including sprinkler system
maintenance and repair; (ii) the cost of trash disposal, janitorial services and
security services and systems; (iii) the cost of all insurance purchased by
Landlord and enumerated in Section 8 of this Lease, including any deductibles;
(iv) the cost of water, sewer, gas, electricity, and other utilities available
at the Project and paid by Landlord; provided, however, that electricity charges
paid by tenants directly to Landlord pursuant to section 11.2 shall not be
included in Operating Expenses; (v) the cost of labor, salaries and applicable
fringe benefits incurred by Landlord; (vi) the cost of materials, supplies and
tools used in managing, maintaining and/or cleaning the Project; (vii) the cost
of accounting fees, management fees, legal fees and consulting fees attributable
to the ownership, operation, management, maintenance and repair of the Project
plus the cost of any space occupied by the property manager and leasing agent
(if Landlord is the property manager, Landlord shall be entitled to receive a
fair market management fee); (viii) the cost of operating, replacing, modifying
and/or adding improvements or equipment mandated by any law, statute, regulation
or directive of any governmental agency and any repairs or removals necessitated
thereby (including, but not limited to, the cost of complying with the Americans
With Disabilities Act and regulations of the Occupational Safety and Health
Administration); (ix) payments made by Landlord under any easement, license,
operating agreement, declaration, restrictive covenant, or instrument pertaining
to the payment or sharing of costs among property owners; (x) any business
property taxes or personal property taxes imposed upon the fixtures, machinery,
equipment, furniture and personal property used in connection with the operation
of the Project; (xi) the cost of all business licenses, any gross receipt taxes
based on rental income or other payments received by Landlord, commercial rental
taxes or any similar taxes or fees; (xii) transportation taxes, fees or
assessments, including but not limited to, mass transportation fees, metrorail
fees, trip fees, regional and transportation district fees, (xiii) the cost of
installing intrabuilding network cabling ("INC") and maintaining, repairing,
securing and replacing existing INC; and (xiv) the cost of any other service
provided by Landlord or any cost that is elsewhere stated in this Lease to be an
"Operating Expense." Real Property Taxes shall be paid in accordance with
Section 10 below and shall not be included in Operating Expenses. Landlord shall
have the right but not the obligation, from time to time, to equitably allocate
some or all of the Operating Expenses among different tenants of the Project or
among the different buildings which comprise the Project (the "Cost Pools").
Such Cost Pools may include, but shall not be limited to, the office space
tenants of the Project and the retail space tenants of the Project.

 

(d) Notwithstanding anything to the contrary contained in the Lease, Operating
Expenses shall be defined so as to exclude the following: (i) all costs
associated with defending any lawsuits with any mortgagee or tenant and costs of
selling, syndicating, financing, mortgaging or hypothecating any of the
Landlord's interest in the Building; (ii) all costs (including permit, license
and inspection fees) incurred in order to construct tenant improvements in space
to be occupied exclusively by tenants or in renovating or redecorating vacant
space which is intended for the exclusive occupancy by tenants in the future,
including the cost of alterations or improvements to the Premises; (iii) leasing
commissions and attorney fees incurred in connection with leasing space in the
Project to tenants; (iv) reserves for equipment or capital replacement; (v)
depreciation and amortization of the Building; (vi) interest on debt or
amortization payments on any mortgages or deeds of trust or any other debt
instrument encumbering the Building; (vii) bad debt loss, rent loss, or reserves
for bad debt or rent loss; (viii) costs of services, supplies or other materials
provided by Landlord or its affiliates to the extent that the cost of such
services, supplies or materials exceeds the fair market value of such services,
supplies or materials; (ix) advertising and promotional costs; (x) Landlord's
income taxes, inheritance taxes and estate taxes; (xi) the cost of repairs or
other work undertaken by reason of fire, windstorm or other casualty to the
extent that Landlord actually receives reimbursement for such costs from
insurance proceeds (except that insurance deductibles shall be included in
Operating Expenses); (xii) costs of repair or replacement for any item covered
by a warranty if the cost of repair is actually reimbursed to Landlord by the
entity providing the warranty; (xiii) costs for which Landlord actually receives
reimbursement by its insurance carrier or by any tenant's insurance carrier;
(xiv) fines, penalties or interest resulting from the gross negligence or
willful misconduct of the Landlord; (xv) rental payments and any related costs
pursuant to any ground lease of land underlying all or any portion of the
Building; (xvi) costs, fees, dues, contributions or similar expenses for
political or charitable organizations (Operating Expenses may include the cost
of fees and dues of industry associations) and (xvii) costs of items considered
capital replacements or improvements under generally accepted accounting
principles consistently applied (“Capital Items”), except for (1) the annual
amortized cost incurred by Landlord after the Commencement Date for any capital
improvements installed or paid for by Landlord and required by any new (or
change in) laws, rules or regulations of any governmental or quasi governmental
authority which are enacted or first enforced after the Commencement Date; (2)
the annual amortized cost of any equipment, device or capital improvement
purchased or incurred as a labor saving measure or to affect other economics in
the operation or maintenance of the Building and/or Project; or (3) during

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each Comparison Year, the unamortized cost of minor capital improvements, tools
or expenditures incurred in that year to the extent each item costs less than
$25,000. If, in any calendar year following the Base Year, (a “Subsequent
Year”), a new type of expense item (e.g. earthquake insurance) is included in
Operating Expenses which was not included in the Base Year Operating Expenses,
then the cost of such new type of item shall be added to the Base Year Operating
Expenses for purposes of determining the Operating Expenses payable under this
Lease for such Subsequent Year; provided, however, in no event shall any Capital
Item ever be included in the Base Year Operating Expenses. During each
Subsequent Year, the same amount shall continue to be included in the
computation of Operating Expenses for the Base Year, resulting in each such
Subsequent Year Operating Expenses only including the increase in the cost of
such new item over the Base Year, as so adjusted. However, if in any Subsequent
Year thereafter, such new item is not included in Operating Expenses, no such
addition shall be made to Base Year Operating Expenses. Conversely, as
reasonably determined by Landlord, when an expense item that was originally
included in the Base Year Operating Expenses is, in any Subsequent Year, no
longer included in Operating Expenses, then the cost of such item shall be
deleted from the Base Year Operating Expenses for purposes of determining the
Operating Expenses payable under this Lease for such Subsequent Year. The same
amount shall continue to be deleted from the Base Year Operating Expenses for
each Subsequent Year thereafter that the item is not included.

 

(e) If pursuant to (d) above Landlord is required to amortize a capital
improvement, the cost shall be amortized over the useful life of the capital
improvement, as reasonably determined by Landlord, together with an interest
factor on the unamortized cost of such item equal to the lesser of twelve
percent (12%) per annum or the maximum rate of interest permitted by applicable
law.

 

(f) Tenant's Share of Operating Expense increases shall be payable by Tenant
within ten (10) days after a reasonably detailed statement of actual expenses is
presented to Tenant by Landlord. At Landlord's option, however, Landlord may,
from time to time, estimate what Tenant's Share of Operating Expense increases
will be, and the same shall be payable by Tenant monthly during each Comparison
Year of the Lease term, on the same day as the Base Rent is due hereunder. In
the event that Tenant pays Landlord's estimate of Tenant's Share of Operating
Expense increases, Landlord shall use commercially reasonable efforts to deliver
to Tenant within one hundred eighty (180) days after the expiration of each
Comparison Year a reasonably detailed statement (the "Statement") showing
Tenant's Share of the actual Operating Expense increases incurred during such
year. Landlord's failure to deliver the Statement to Tenant within said period
shall not constitute Landlord's waiver of its right to collect said amounts or
otherwise prejudice Landlord's rights hereunder. If Tenant's payments under this
Section 4.2(f) during said Comparison Year exceed Tenant's Share as indicated on
the Statement, Tenant shall be entitled to credit the amount of such overpayment
against Tenant's Share of Operating Expense increases next falling due. If
Tenant's payments under this Section 4.2(f) during said Comparison Year were
less than Tenant's Share as indicated on the Statement, Tenant shall pay to
Landlord the amount of the deficiency within thirty (30) days after delivery by
Landlord to Tenant of the Statement. Landlord and Tenant shall forthwith adjust
between them by cash payment any balance determined to exist with respect to
that portion of the last Comparison Year for which Tenant is responsible for
Operating Expense increases, notwithstanding that the Lease term may have
terminated before the end of such Comparison Year; and this provision shall
survive the expiration or earlier termination of the Lease.

 

(g) The computation of Tenant's Share of Operating Expense increases is intended
to provide a formula for the sharing of costs by Landlord and Tenant and will
not necessarily result in the reimbursement to Landlord of the exact costs it
has incurred. Landlord shall not collect or be entitled to collect Operating
Expenses from all of its tenants in an amount which is in excess of 100% of the
Operating Expenses actually paid by Landlord in connection with the operation of
the Project.

 

(h) If Tenant disputes the amount set forth in the Statement, Tenant shall have
the right, at Tenant's sole expense, not later than sixty (60) days following
receipt of such Statement, to cause Landlord's books and records with respect to
the calendar year which is the subject of the Statement to be audited by a
certified public accountant mutually acceptable to Landlord and Tenant. The
audit shall take place at the offices of Landlord where its books and records
are located at a mutually convenient time during Landlord's regular business
hours. Tenant's Share of Operating Expenses shall be appropriately adjusted
based upon the results of such audit, and the results of such audit shall be
final and binding upon Landlord and Tenant. Tenant shall have no right to
conduct an audit or to give Landlord notice that it desires to conduct an audit
at any time Tenant is in default under the Lease. The accountant conducting the
audit shall be compensated on an hourly basis and shall not be compensated based
upon a percentage of overcharges it discovers. No subtenant shall have any right
to conduct an audit, and no assignee shall conduct an audit for any period
during which such assignee was not in possession of the Premises. Tenant's right
to undertake an audit with respect to any calendar year shall expire sixty (60)
days after Tenant's receipt of the Statement for such calendar year, and such
Statement shall be final and binding upon Tenant and shall, as between the
parties, be conclusively deemed correct, at the end of such sixty (60) day
period, unless prior thereto Tenant shall have given Landlord written notice of
its intention to audit Operating Expenses for the calendar year which is the
subject of the Statement. If Tenant gives Landlord notice of its intention to
audit Operating Expenses, it must commence such audit within sixty (60) days
after such notice is delivered to Landlord, and the audit must be completed
within one hundred twenty (120) days after such notice is delivered to Landlord.
If Tenant does not commence and complete the audit within such periods, the
Statement which Tenant elected to audit shall be deemed final and binding upon
Tenant and shall, as between the parties, be conclusively deemed correct. Tenant
agrees that the results of any Operating Expense audit shall be kept strictly
confidential by Tenant and shall not be disclosed to any other person or entity.

 

5. Security Deposit. Tenant shall deliver to Landlord at the time it executes
this Lease the security deposit set forth in Section 1.13 as security for
Tenant's faithful performance of Tenant's obligations hereunder. If Tenant fails
to pay Base Rent or

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other charges due hereunder, or otherwise defaults with respect to any provision
of this Lease, Landlord may use all or any portion of said deposit for the
payment of any Base Rent or other charge due hereunder, to pay any other sum to
which Landlord may become obligated by reason of Tenant's default, or to
compensate Landlord for any loss or damage which Landlord may suffer thereby. If
Landlord so uses or applies all or any portion of said deposit, Tenant shall
within ten (10) business days after written demand therefor deposit cash with
Landlord in an amount sufficient to restore said deposit to its full amount.
Landlord shall not be required to keep said security deposit separate from its
general accounts. If Tenant performs all of Tenant's obligations hereunder, said
deposit, or so much thereof as has not heretofore been applied by Landlord,
shall be returned, without payment of interest or other amount for its use, to
Tenant (or, at Landlord's option, to the last assignee, if any, of Tenant's
interest hereunder) within thirty (30) days after the expiration of the term
hereof, and after Tenant has vacated the Premises. No trust relationship is
created herein between Landlord and Tenant with respect to said security
deposit. Tenant acknowledges that the security deposit is not an advance payment
of any kind or a measure of Landlord's damages in the event of Tenant's default.
Tenant hereby waives the provisions of any law which is inconsistent with this
Section 5 including, but not limited to, Section 1950.7 of the California Civil
Code.

 

6. Use.

 

6.1 Use. The Premises shall be used and occupied only for the purpose set forth
in Section 1.8 and for no other purpose. If Section 1.8 gives Tenant the right
to use the Premises for general office use, by way of example and not
limitation, general office use shall not include medical office use or any
similar use, laboratory use, classroom use, an executive suite or similar use,
any use not characterized by applicable zoning and land use restrictions as
general office use, any use which would require Landlord or Tenant to obtain a
conditional use permit or variance from any federal, state or local authority,
or any other use not compatible, in Landlord's sole judgment, with a first class
office building. Notwithstanding any permitted use inserted in Section 1.8,
Tenant shall not use the Premises for any purpose which would violate the
Project's certificate of occupancy, any conditional use permit or variance
applicable to the Project or violate any covenants, conditions or other
restrictions applicable to the Project. No exclusive use has been granted to
Tenant hereunder. In no event shall Tenant use the Premises for the sale of
medical marijuana or any use associated with the sale of medical marijuana.

 

6.2 Compliance with Law.

 

(a) Landlord warrants to Tenant that to Landlord’s actual knowledge the
Premises, in the state existing as of the date set forth in Section 1.1, but
without regard to alterations or improvements to be made by Tenant or the use
for which Tenant will occupy the Premises, does not violate any covenants or
restrictions of record, or any applicable building code, regulation or ordinance
in effect on such date. Landlord’s actual knowledge shall mean and be limited to
the actual knowledge of the person who is the Building owner’s asset manager
(not the Building’s property manager) on the date set forth in Section 1.1,
without duty of investigation, and such asset manager shall have no personal
liability if such representation or warranty is untrue. Landlord’s
representation and warranty that improvements comply with applicable building
codes, regulations and ordinances shall mean that to Landlord’s actual knowledge
the improvements complied with the codes, regulations and ordinances in effect
when the improvements were originally constructed. If Tenant occupies the
Premises at the time this Lease is executed, this warranty shall be of no force
or effect.

 

(b) Tenant shall, at Tenant's sole expense, promptly comply with all applicable
laws, ordinances, rules, regulations, orders, certificates of occupancy,
conditional use or other permits, variances, covenants and restrictions of
record, the recommendations of Landlord's engineers or other consultants, and
requirements of any fire insurance underwriters, rating bureaus or government
agencies, now in effect or which may hereafter come into effect, whether or not
they reflect a change in policy from that now existing, during the term or any
part of the term hereof, relating in any manner to the Premises or the
occupation and use by Tenant of the Premises (“Legal Requirements”). Tenant
shall, at Tenant's sole expense, comply with all requirements of the Americans
With Disabilities Act that relate to the Premises, and all federal, state and
local laws and regulations governing occupational safety and health.
Notwithstanding the foregoing, in no event shall Tenant be required to make
changes required by Legal Requirements to the Building's electrical, HVAC,
plumbing, life safety or similar systems, or to the structural components of the
Premises ("Landlord Changes"), unless such changes are required due to Tenant’s
negligence or misuse of the Premises, Tenant's alteration of the Premises or
Tenant’s particular use of the Premises. If the changes are required due to
Tenant’s negligence or misuse of the Premises, Tenant's alteration of the
Premises or Tenant’s particular use of the Premises, Landlord shall make such
changes and Tenant shall reimburse Landlord for the reasonable cost thereof.
With respect to other Landlord Changes, Landlord shall cause same to be
completed, and subject to the other limitations contained in this Lease, the
cost thereof may be included in Operating Expenses. Tenant shall conduct its
business and use the Premises in a lawful manner and shall not use or permit the
use of the Premises or the Common Areas in any manner that will tend to create
dangerous situations, waste or a nuisance or shall tend to disturb other
occupants of the Project. Tenant shall obtain, at its sole expense, any permit
or other governmental authorization required to operate its business from the
Premises. Landlord shall not be liable for the failure of any other tenant or
person to abide by the requirements of this section or to otherwise comply with
applicable laws and regulations, and Tenant shall not be excused from the
performance of its obligations under this Lease due to such a failure.

 

6.3 Condition of Premises. Except as otherwise provided in this Lease, Tenant
hereby accepts the Premises and the Project in their condition existing as of
the date this Lease is executed by Landlord and Tenant, subject to all
applicable federal, state and local laws, ordinances, regulations and permits
governing the use of the Premises, the Project's certificate of occupancy, any
applicable conditional use permits or variances, and any easements, covenants or
restrictions affecting the use

7

 

of the Premises or the Project. Tenant acknowledges that it has satisfied itself
by its own independent investigation that the Premises and the Project are
suitable for its intended use and that its use is permitted by applicable laws
and regulations, and that neither Landlord nor Landlord's agents has made any
representation or warranty as to the present or future suitability of the
Premises, or the Project for the conduct of Tenant's business.

 

7. Maintenance, Repairs and Alterations.

 

7.1 Landlord's Obligations. Landlord shall keep the Project (excluding the
interior of the Premises and space leased to other occupants of the Project) in
good condition and repair. If plumbing pipes, electrical wiring, HVAC system
ducts or vents within the Premises are in need of repair, Tenant shall
immediately notify Landlord, and Landlord shall cause the repairs to be
completed within a reasonable time, and Tenant shall immediately pay the entire
cost of the repairs to Landlord if such repairs are necessitated by Tenant’s
negligence or misuse. Except as provided in Section 9.3, there shall be no
abatement of rent or liability to Tenant on account of any injury or
interference with Tenant's business with respect to any improvements,
alterations or repairs made by Landlord to the Project or any part thereof.
Tenant expressly waives the benefits of any statute now or hereafter in effect
which would otherwise afford Tenant the right to make repairs at Landlord's
expense or to terminate this Lease because of Landlord's failure to keep the
Project in good order, condition and repair.

 

7.2 Tenant's Obligations.

 

(a) Subject to the requirements of Section 7.3, Tenant shall be responsible for
keeping the Premises in good condition and repair, at Tenant's sole expense. By
way of example, and not limitation, Tenant shall be responsible, at Tenant's
sole expense, for repairing and/or replacing, carpet, marble, tile or other
flooring, paint, wall coverings, corridor and interior doors and door hardware,
telephone and computer equipment, interior glass, window treatments, ceiling
tiles, shelving, cabinets, millwork and other tenant improvements. In addition,
Tenant shall be responsible for the installation, maintenance and repair of all
telephone, computer and related cabling from the telephone terminal room on the
floor on which the Premises is located to and throughout the Premises, and
Tenant shall be responsible for any loss, cost, damage, liability and expense
(including attorneys' fees) arising out of or related to the installation,
maintenance, repair and replacement of such cabling. If Tenant fails to keep the
Premises in good condition and repair, Landlord may, but shall not be obligated
to, make any necessary repairs. If Landlord makes such repairs, Landlord may
bill Tenant for the cost of the repairs as additional rent, and said additional
rent shall be payable by Tenant within ten (10) days.

 

(b) On the last day of the term hereof, or on any sooner termination, Tenant
shall surrender the Premises to Landlord in the same condition as received,
ordinary wear and tear and casualty damage excepted, clean and free of debris
and Tenant's personal property. Tenant shall repair any damage to the Premises
occasioned by the installation or removal of Tenant's trade fixtures,
furnishings and equipment. Tenant shall leave the electrical distribution
systems, plumbing systems, lighting fixtures, HVAC ducts and vents, window
treatments, wall coverings, carpets and other floor coverings, doors and door
hardware, millwork, ceilings and other tenant improvements at the Premises in
good condition, ordinary wear and tear excepted. Landlord shall have the right
to require Tenant to (i) remove any telecommunications or other cabling
installed by Tenant in the Premises as part of the original tenant improvements
(whether constructed by Landlord or Tenant) or at later times during the term of
the Lease (collectively, “Cabling”) or (ii) leave all or part of the Cabling. If
Landlord requires Tenant to remove all or part of the Cabling, each individual
cable left by Tenant shall be tagged by Tenant both at the end of the cable in
the Premises and at the end of the cable in the riser closet so that Landlord
can easily determine where each individual cable begins and ends. Each tag shall
specify Tenant’s name, the type of cable, where the cable terminates in the
Premises or the riser closet, as applicable, and what the cable was being used
for by Tenant. If Landlord requires Tenant to remove some or all of the Cabling
and Tenant fails to do so prior to the last day of the term of any sooner
termination, Landlord may, but shall not be obligated to, remove such Cabling
and, in this event, Tenant shall reimburse Landlord for all costs Landlord
incurs in removing the such cable within ten (10) days after written demand.

 

7.3 Alterations and Additions.

 

(a) Except as provided below, Tenant shall not, without Landlord's prior written
consent, which may be given or withheld in Landlord's sole discretion, make any
alterations, improvements, additions, utility installations or repairs
(hereinafter collectively referred to as "Alterations") in, on or about the
Premises or the Project. Alterations shall include, but shall not be limited to,
the installation or alteration of security or fire protection systems,
communication systems, millwork, shelving, file retrieval or storage systems,
carpeting or other floor covering, painting, window and wall coverings,
electrical distribution systems, lighting fixtures, telephone or computer system
wiring, HVAC and plumbing. Landlord shall not unreasonably withhold its consent
to Tenant making cosmetic, non-structural alterations ("Cosmetic Alterations")
to the inside of the Premises (e.g., paint and carpet, communication systems,
telephone and computer system wiring) that do not (i) involve the expenditure of
more than $5,000 in the aggregate in any calendar year, (ii) affect the exterior
appearance of the Building, (iii) affect the Building’s electrical, plumbing,
HVAC, life, fire, safety or security systems, (iv) affect the structural
elements of the Building or (v) adversely affect any other tenant of the
Project. At the expiration of the term, Landlord may require the removal of any
Alterations installed by Tenant and the restoration of the Premises and the
Project to their prior condition, at Tenant's expense. If a work letter
agreement is entered into by Landlord and Tenant, Tenant shall not be obligated
to remove the tenant improvements constructed in accordance with the work letter
agreement. If, as a result of any Alteration made by Tenant, Landlord is
obligated to comply with the Americans With Disabilities Act or any other law or
regulation and such compliance requires Landlord to make any improvement or
Alteration to any portion of the Project, as a condition to Landlord's consent,

8

 

Landlord shall have the right to require Tenant to pay to Landlord prior to the
construction of any Alteration by Tenant, the entire cost of any improvement or
alteration Landlord is obligated to complete by such law or regulation. Should
Landlord permit Tenant to make its own Alterations, Tenant shall use only such
contractor as has been expressly approved by Landlord, and Landlord may require
Tenant to provide to Landlord, at Tenant's sole cost and expense, a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alterations, to insure Landlord against any liability for mechanic's and
materialmen's liens and to insure completion of the work. In addition, Tenant
shall pay to Landlord a fee equal to the lesser of (i) the actual amount
Landlord pays to its property manager to supervise such alterations, or (ii)
three percent (3%) of the cost of the Alterations to compensate Landlord for the
overhead and other costs it incurs in reviewing the plans for the Alterations
and in monitoring the construction of the Alterations (the “Landlord Fee”). If
Landlord incurs architectural, engineering or other consultants’ fees in
evaluating such Alterations, Tenant shall reimburse Landlord for these fees in
addition to the Landlord Fee. If Tenant proposes Alterations to Landlord but
subsequently elects not to construct the Alterations, and Landlord has incurred
costs in reviewing Tenant’s proposed Alterations (e.g., architect’s, engineer’s
or property management fees), Tenant shall reimburse Landlord for the costs
incurred by Landlord within ten (10) days after written demand. Should Tenant
make any Alterations without the prior approval of Landlord, or use a contractor
not expressly approved by Landlord, Landlord may, at any time during the term of
this Lease, require that Tenant remove all or part of the Alterations and return
the Premises to the condition it was in prior to the making of the Alterations.
In the event Tenant makes any Alterations, Tenant agrees to obtain or cause its
contractor to obtain, prior to the commencement of any work, "builders all risk"
insurance in an amount approved by Landlord and workers compensation insurance.

 

(b) Any Alterations in or about the Premises that Tenant shall desire to make
shall be presented to Landlord in written form, with plans and specifications
which are sufficiently detailed to obtain a building permit. If Landlord
consents to an Alteration, the consent shall be deemed conditioned upon Tenant
acquiring a building permit from the applicable governmental agencies,
furnishing a copy thereof to Landlord prior to the commencement of the work, and
compliance by Tenant with all conditions of said permit in a prompt and
expeditious manner. Tenant shall provide Landlord with as-built plans and
specifications for any Alterations made to the Premises.

 

(c) Tenant shall pay, when due, all claims for labor or materials furnished or
alleged to have been furnished to or for Tenant at or for use in the Premises,
which claims are or may be secured by any mechanic's or materialmen's lien
against the Premises or the Project, or any interest therein. If Tenant shall,
in good faith, contest the validity of any such lien, Tenant shall furnish to
Landlord a surety bond satisfactory to Landlord in an amount equal to not less
than one and one half times the amount of such contested lien claim indemnifying
Landlord against liability arising out of such lien or claim. Such bond shall be
sufficient in form and amount to free the Project from the effect of such lien.
In addition, Landlord may require Tenant to pay Landlord's reasonable attorneys'
fees and costs incurred as a result of any such lien.

 

(d) Tenant shall give Landlord not less than ten (10) days' advance written
notice prior to the commencement of any work in the Premises by Tenant, and
Landlord shall have the right to post notices of non-responsibility in or on the
Premises or the Project.

 

(e) All Alterations (whether or not such Alterations constitute trade fixtures
of Tenant) which may be made to the Premises by Tenant shall be paid for by
Tenant, at Tenant's sole expense, and shall be made and done in a good and
workmanlike manner and with new materials satisfactory to Landlord, and such
Alteration shall be the property of Landlord and remain upon and be surrendered
with the Premises at the expiration of the Lease term, unless Landlord requires
their removal pursuant to Section 7.3(a). Provided Tenant is not in default,
Tenant's personal property and equipment, other than that which is affixed to
the Premises so that it cannot be removed without material damage to the
Premises or the Project, shall remain the property of Tenant and may be removed
by Tenant subject to the provisions of Section 7.2(b).

 

7.4 Failure of Tenant to Remove Property. If this Lease is terminated due to the
expiration of its term or otherwise, and Tenant fails to remove its property as
required by Section 7.2(b), in addition to any other remedies available to
Landlord under this Lease, and subject to any other right or remedy Landlord may
have under applicable law, Landlord may remove any property of Tenant from the
Premises and store the same elsewhere at the expense and risk of Tenant.

 

8. Insurance.

 

8.1 Insurance-Tenant.

 

(a) Tenant shall obtain and keep in force during the term of this Lease a
commercial general liability policy of insurance with coverages acceptable to
Landlord, in Landlord's reasonable discretion, which, by way of example and not
limitation, protects Tenant and Landlord (as an additional insured) against
claims for bodily injury, personal injury and property damage based upon,
involving or arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing coverage in an amount not less than $2,000,000 per
occurrence and not less than $3,000,000 in the aggregate with an "Additional
Insured-Managers and Landlords of Premises Endorsement" and contain the
"Amendment of the Pollution Exclusion" for damage caused by heat, smoke or fumes
from a hostile fire. The policy shall not contain any intra-insured exclusions
as between insured persons or organizations, but shall include coverage for
liability assumed under this Lease as an "insured contract" for the performance
of Tenant's indemnity obligations under this Lease.

 

9

 

(b) Tenant shall obtain and keep in force during the term of this Lease “Causes
of Loss – Special Form” extended coverage property insurance (previously known
as “all risk” property insurance) with coverages acceptable to Landlord, in
Landlord's reasonable discretion. Said insurance shall be written on a one
hundred percent (100%) replacement cost basis on Tenant's personal property, all
tenant improvements installed at the Premises by Landlord or Tenant, Tenant's
trade fixtures and other property. By way of example, and not limitation, such
policies shall provide protection against any peril included within the
classification "fire and extended coverage," against vandalism and malicious
mischief, theft and sprinkler leakage. Tenant’s policy shall include
endorsements to insure Tenant against losses to valuable papers, records and
computer equipment and to compensate Tenant for the cost of recovering lost
data. To the extent that Tenant’s policy covers tenant improvements to the
Premises, Landlord shall be a loss payee on such policy. Tenant shall also
obtain earthquake insurance, and if the Project is in Flood Zone A or V, Tenant
shall obtain flood insurance, and the terms of such insurance policies shall be
reasonably acceptable to Landlord. If this Lease is terminated as the result of
a casualty in accordance with Section 9, the proceeds of said insurance
attributable to the replacement of all tenant improvements at the Premises shall
be paid to Landlord. If insurance proceeds are available to repair the tenant
improvements, at Landlord's option, all insurance proceeds Tenant is entitled to
receive to repair the tenant improvements shall be paid by the insurance company
directly to Landlord, Landlord shall select the contractor to repair and/or
replace the tenant improvements, and Landlord shall cause the tenant
improvements to be repaired and/or replaced to the extent insurance proceeds are
available.

 

(c) Tenant shall, at all times during the term hereof, maintain the following
insurance with coverages reasonably acceptable to Landlord: (i) workers'
compensation insurance as required by applicable law, (ii) employers liability
insurance with limits of at least $1,000,000 per occurrence, (iii) automobile
liability insurance for owned, non-owned and hired vehicles with limits of at
least $1,000,000 per occurrence and (iv) business interruption and extra expense
insurance. In addition to the insurance required in (i), (ii), (iii) and (iv)
above, Landlord shall have the right to require Tenant to increase the limits of
its insurance and/or obtain such additional insurance as is customarily required
by landlords owning similar real property in the geographical area of the
Project.

 

8.2 Insurance-Landlord.

 

(a) Landlord shall obtain and keep in force a policy of general liability
insurance with coverage against such risks and in such amounts as Landlord deems
advisable insuring Landlord against liability arising out of the ownership,
operation and management of the Project.

 

(b) Landlord shall also obtain and keep in force during the term of this Lease a
policy or policies of insurance covering loss or damage to the Project in the
amount of the replacement cost thereof (excluding foundations and similar
items), as determined by Landlord from time to time. The terms and conditions of
said policies, their deductibles and the perils and risks covered thereby shall
be determined by Landlord, from time to time, in Landlord's sole discretion. In
addition, at Landlord's option, Landlord shall obtain and keep in force, during
the term of this Lease, a policy of rental interruption insurance, with loss
payable to Landlord, which insurance shall, at Landlord's option, also cover all
Operating Expenses. At Landlord's option, Landlord may obtain insurance
coverages and/or bonds related to the operation of the parking areas. At
Landlord's option, Landlord may obtain coverage for flood and earthquake
damages. In addition, Landlord shall have the right to obtain such additional
insurance as is customarily carried by owners or operators of other comparable
office buildings in the geographical area of the Project. Tenant will not be
named as an additional insured in any insurance policies carried by Landlord and
shall have no right to any proceeds therefrom. The policies purchased by
Landlord shall contain such deductibles as Landlord may determine. In addition
to amounts payable by Tenant in accordance with Section 4.2, Tenant shall pay
any increase in the property insurance premiums for the Project over what was
payable immediately prior to the increase to the extent the increase is
specified by Landlord's insurance carrier as being caused by the nature of
Tenant's occupancy or any act or omission of Tenant.

 

8.3 Insurance Policies. Tenant shall deliver to Landlord certificates for the
insurance policies required under Section 8.1 concurrently with the execution of
this Lease using an ACORD 28 form or a similar form approved by Landlord.
Tenant's insurance policies shall not be cancelable or subject to reduction of
coverage or other modification except after thirty (30) days prior written
notice to Landlord. Tenant shall, at least thirty (30) days prior to the
expiration of such policies, furnish Landlord with renewals thereof. Tenant's
insurance policies shall be issued by insurance companies authorized to do
business in the state in which the Project is located, and said companies shall
maintain during the policy term a "General Policyholder's Rating" of at least A
and a financial rating of at least "Class X" (or such other rating as may be
required by any lender having a lien on the Project) as set forth in the most
recent edition of "Best Insurance Reports." All insurance obtained by Tenant
shall be primary to and not contributory with any similar insurance carried by
Landlord, whose insurance shall be considered excess insurance only. Landlord,
Landlord’s property manager and lender(s) and their respective officers,
shareholders, directors, partners, members, managers, employees, successors and
assigns, shall be included as additional insureds under Tenant’s commercial
general liability policy and under the Tenant’s excess or umbrella policy, if
any, using ISO additional insured endorsement CG 20 11 or a substitute providing
equivalent coverage. Tenant's insurance policies shall not include deductibles
in excess of $5,000.

 

8.4 Waiver of Subrogation. Landlord waives any and all rights of recovery
against Tenant and Tenant’s employees and agents for or arising out of damage
to, or destruction of, the Project to the extent that Landlord's insurance
policies then in force insure against such damage or destruction (or to the
extent of what would have been covered had Landlord maintained the insurance
required to be carried under this Lease) and permit such waiver. Tenant waives
any and all rights of

10

 

recovery against Landlord and Landlord's employees and agents for or arising out
of damage to, or destruction of, the Project to the extent that Tenant's
insurance policies then in force insure against such damage or destruction (or
to the extent of what would have been covered had Tenant maintained the
insurance required to be carried under this Lease) and permit such waiver.
Tenant shall cause the insurance policies it obtains in accordance with Section
8.1 relating to property damage to provide that the insurance company waives all
right of recovery by subrogation against Landlord in connection with any
liability or damage covered by Tenant's insurance policies.

 

8.5 Coverage. Landlord makes no representation to Tenant that the limits or
forms of coverage specified above or approved by Landlord are adequate to insure
Tenant's property or Tenant's obligations under this Lease, and the limits of
any insurance carried by Tenant shall not limit Tenant's obligations or
liability under any indemnity provision included in this Lease or under any
other provision of this Lease.

 

9. Damage or Destruction.

 

9.1 Effect of Damage or Destruction. If all or part of the Project is damaged by
fire, earthquake, flood, explosion, the elements, riot, the release or existence
of Hazardous Substances (as defined below) or by any other cause whatsoever
(hereinafter collectively referred to as "Damages"), but the Damages are not
material (as defined in Section 9.2 below), Landlord shall repair the Damages to
the Project as soon as is reasonably possible, and this Lease shall remain in
full force and effect. If all or part of the Project is destroyed or materially
damaged (as defined in Section 9.2 below), Landlord shall have the right, in its
sole and complete discretion, to repair or to rebuild the Project or to
terminate this Lease. Landlord shall within one hundred twenty (120) days after
the discovery of such material damage or destruction notify Tenant in writing of
Landlord's intention to repair or to rebuild or to terminate this Lease. Tenant
shall in no event be entitled to compensation or damages on account of annoyance
or inconvenience in making any repairs, or on account of construction, or on
account of Landlord's election to terminate this Lease. Notwithstanding the
foregoing, if Landlord shall elect to rebuild or repair the Project after
material damage or destruction, but in good faith determines that the Premises
cannot be substantially repaired within three hundred sixty (360) days after the
date of the discovery of the material damage or destruction, without payment of
overtime or other premiums, and the damage to the Project will render the entire
Premises unusable during said three hundred sixty (360) day period, Landlord
shall notify Tenant thereof in writing at the time of Landlord's election to
rebuild or repair, and Tenant shall thereafter have a period of fifteen (15)
days within which Tenant may elect to terminate this Lease, upon thirty (30)
days' advance written notice to Landlord. Tenant's termination right described
in the preceding sentence shall not apply if the damage was caused by the
negligent or intentional acts of Tenant or its employees, agents, contractors or
invitees. Failure of Tenant to exercise said election within said fifteen (15)
day period shall constitute Tenant's agreement to accept delivery of the
Premises under this Lease whenever tendered by Landlord, provided Landlord
thereafter pursues reconstruction or restoration diligently to completion,
subject to delays caused by Force Majeure Events. If Landlord is unable to
repair the damage to the Premises or the Project during such three hundred sixty
(360) day period due to Force Majeure Events, the three hundred sixty (360) day
period shall be extended by the period of delay caused by the Force Majeure
Events. Subject to Section 9.3 below, if Landlord or Tenant terminates this
Lease in accordance with this Section 9.1, Tenant shall continue to pay all Base
Rent, Operating Expense increases and other amounts due hereunder which arise
prior to the date of termination.

 

9.2 Definition of Material Damage. Damage to the Project shall be deemed
material if, in Landlord's reasonable judgment, the uninsured cost of repairing
the damage will exceed $25,000. If insurance proceeds are available to Landlord
in an amount which is sufficient to pay the entire cost of repairing all of the
damage to the Project, the damage shall be deemed material if the cost of
repairing the damage exceeds $100,000. Damage to the Project shall also be
deemed material if (a) the Project cannot be rebuilt or repaired to
substantially the same condition it was in prior to the damage due to laws or
regulations in effect at the time the repairs will be made, (b) the holder of
any mortgage or deed of trust encumbering the Project requires that insurance
proceeds available to repair the damage in excess of $25,000 be applied to the
repayment of the indebtedness secured by the mortgage or the deed of trust, or
(c) the damage occurs during the last twelve (12) months of the Lease term.

 

9.3 Abatement of Rent. In the event that Tenant is prevented from using, and
does not use, the Premises or any portion thereof, for five (5) consecutive
business days (the “Pre-Abatement Period”) as a result of damage to the
Premises, and the damage was not caused by the negligence or intentional acts of
Tenant or its employees, agents, contractors or invitees, then Tenant's Base
Rent and Tenant's Share of Operating Expense or Real Property Tax increases
shall be abated or reduced, as the case may be, after expiration of the
Pre-Abatement Period for such time that Tenant continues to be so prevented from
using, and does not use, the Premises or a portion thereof, in the proportion
that the rentable area of the portion of the Premises that Tenant is prevented
from using, and does not use, bears to the total rentable area of the Premises.

 

9.4 Tenant's Acts. If such damage or destruction occurs as a result of the
negligence or the intentional acts of Tenant or Tenant's employees, agents,
contractors or invitees, and the proceeds of insurance which are actually
received by Landlord are not sufficient to pay for the repair of all of the
damage, Tenant shall pay, at Tenant's sole cost and expense, to Landlord upon
demand, the difference between the cost of repairing the damage and the
insurance proceeds received by Landlord.

 

9.5 Tenant's Property. As more fully set forth in Section 47, Landlord shall not
be liable to Tenant or its employees, agents, contractors, invitees or customers
for loss or damage to merchandise, tenant improvements, fixtures, automobiles,
furniture, equipment, computers, files or other property (hereinafter
collectively "Tenant's property") located at the

11

 

Project. Tenant shall repair or replace all of Tenant's property at Tenant's
sole cost and expense. Tenant acknowledges that it is Tenant's sole
responsibility to obtain adequate insurance coverage to compensate Tenant for
damage to Tenant's property.

 

9.6 Waiver. Landlord and Tenant hereby waive the provisions of any present or
future statutes which relate to the termination of leases when leased property
is damaged or destroyed and agree that such event shall be governed by the terms
of this Lease.

 

10. Real and Personal Property Taxes.

 

10.1 Payment of Taxes. Tenant shall pay to Landlord during the term of this
Lease, in addition to Base Rent and Tenant's Share of Operating Expense
increases, Tenant's Share of the amount by which all "Real Property Taxes" (as
defined in Section 10.2 below) for each Comparison Year exceeds the amount of
all Real Property Taxes for the Base Year. Tenant's Share of Real Property Tax
increases shall be payable by Tenant at the same time, in the same manner and
under the same terms and conditions as Tenant pays Tenant's Share of Operating
Expense increases as provided in Section 4.2(f) of this Lease. Except as
expressly provided in Section 10.4 below, if the Real Property Taxes incurred
during any Comparison Year are less than the Real Property Taxes incurred during
the Base Year, Tenant shall not be entitled to receive any credit, offset,
reduction or benefit as a result of said occurrence.

 

10.2 Definition of "Real Property Tax". As used herein, the term "Real Property
Taxes" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, improvement bond or bonds imposed on the
Project or any portion thereof by any authority having the direct or indirect
power to tax, including any city, county, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage or other improvement
district thereof, as against any legal or equitable interest of Landlord in the
Project or in any portion thereof, unless such tax is defined as an Operating
Expense by Section 4.2(c). Real Property Taxes shall not include income,
inheritance and gift taxes.

 

10.3 Personal Property Taxes. Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings, equipment and all
other personal property of Tenant contained in the Premises or related to
Tenant's use of the Premises. If any of Tenant's personal property shall be
assessed with Landlord's real or personal property, Tenant shall pay to Landlord
the taxes attributable to Tenant within ten (10) days after receipt of a written
statement from Landlord setting forth the taxes applicable to Tenant's property.

 

10.4 Reassessments. From time to time Landlord may challenge the assessed value
of the Project as determined by applicable taxing authorities and/or Landlord
may attempt to cause the Real Property Taxes to be reduced on other grounds. If
Landlord is successful in causing the Real Property Taxes to be reduced or in
obtaining a refund, rebate, credit or similar benefit (hereinafter collectively
referred to as a "Reduction"), Landlord shall, to the extent practicable, credit
the Reduction(s) to Real Property Taxes for the calendar year to which a
Reduction applies and recalculate the Real Property Taxes owed by Tenant for
years after the year in which the Reduction applies based on the reduced Real
Property Taxes (if a Reduction applies to Tenant's Base Year, the Base Year Real
Property Taxes shall be reduced by the amount of the Reduction and Tenant's
Share of Real Property Tax increases shall be recalculated for all Comparison
Years following the year of the Reduction based on the lower Base Year amount).
All costs incurred by Landlord in obtaining and/or processing the Real Property
Tax reductions (e.g., consulting fees, accounting fees, costs of recalculating
Base Years and Comparison Years etc.) may be included in Operating Expenses or
deducted from the Reduction. Landlord shall have the right to compensate a
person or entity it employs to obtain a Reduction by giving such person or
entity a percentage of any Reduction obtained.

 

11. Utilities.

 

11.1 Services Provided by Landlord. Subject to all governmental rules,
regulations and guidelines applicable thereto, Landlord shall use commercially
reasonable efforts to provide (a) HVAC to the Premises for a typical office use
during the times described in Section 11.5, (b) subject to Section 11.2 below,
provide on a monthly basis, an amount of electricity not to exceed five (5)
watts multiplied by the number of usable square feet in the Premises multiplied
by the total number of Business Hours in the month (“Maximum Electrical
Consumption”), (c) water in the Premises or in the Common Area for reasonable
and normal drinking and lavatory use, (d) replacement light bulbs and/or
fluorescent tubes and ballasts for standard overhead fixtures, and (e) building
standard janitorial services.

 

11.2 Electricity. In addition to Base Rent, Operating Expenses and Real Property
Taxes, Tenant shall pay for all electrical power used for the following: (a)
lighting the Premises, (b) providing electrical power to equipment in the
Premises, (c) providing electrical power to equipment exclusively serving the
Premises and (d) for providing electrical power to convenience outlets in the
Premises (“Premises Electrical Consumption”). If Premises Electrical Consumption
is separately metered to the Premises by the public utility entity providing
electricity to the Building, Tenant shall contract directly with the such public
utility for such electrical service (the "Public Electrical Service Provider").
Tenant shall pay the Public Electrical Service Provider for all such
electricity, at Tenant's sole cost and expense. If some or all of the Premises
Electrical Consumption is not separately metered by and paid directly to a
Public Electrical Service Provider (such electricity is hereinafter referred to
as “Landlord Electricity”), Landlord shall have no obligation to install
separate meters or other measuring devices to measure Tenant’s use of Landlord
Electricity. Landlord shall have the right to estimate the amount of Landlord
Electricity used by Tenant using a methodology selected by Landlord, in
Landlord’s sole and absolute discretion. Tenant acknowledges and agrees that
Landlord’s calculation of the cost of Landlord Electricity used in the Premises
will not produce the exact actual cost of the Landlord

12

 

Electricity used in the Premises, and that Landlord’s estimate of the Landlord
Electricity Cost shall nevertheless be final and binding on Tenant. From time to
time Landlord shall have the right to notify Tenant of Landlord’s monthly
estimate of the cost of Landlord Electricity (a “Monthly Estimate”). When
Landlord notifies Tenant of the Monthly Estimate, Tenant shall thereafter pay
the Monthly Estimate on the first day of each month with its Base Rent without
further notice or demand by Landlord. Landlord shall have the right to change
the Monthly Estimate from time to time upon written notice to Tenant. Landlord's
failure to bill Tenant for its Landlord Electricity Consumption for any given
period shall not constitute Landlord's waiver of its right to collect such
amount at a later date or otherwise prejudice Landlord's rights hereunder.

 

11.3 Intrabuilding Network Cabling. In addition to the items described in 11.1
above, Landlord shall also provide Tenant with access to a reasonable amount of
INC. For purposes of this Section 11.3, a reasonable amount of INC shall not
exceed six (6) cable pairs per one thousand (1,000) usable square feet of space
in the Premises. If Tenant requires additional INC capacity, the cost of
providing, maintaining, repairing and replacing such capacity shall be borne
solely by Tenant. Additional INC capacity may only be installed, maintained,
repaired and replaced by a contractor approved by Landlord, in Landlord's
reasonable discretion. The Building's minimum point of entry ("MPOE") for
telephone service, the INC risers and the telephone terminal rooms located on
each floor of the Building may only be accessed with Landlord's prior consent
and by contractors approved by Landlord, in Landlord's reasonable discretion.
Tenant shall be responsible for any loss, cost, damage, liability and expense
(including attorneys' fees) arising out of or related to the installation,
maintenance, repair and replacement of additional INC capacity.

 

11.4 Occupant Density. Tenant shall maintain a ratio of not more than one
Occupant (as defined below) for each two hundred fifty (250) square feet of
rentable area in the Premises (hereinafter, the “Occupant Density”). If Landlord
has a reasonable basis to believe that Tenant is exceeding the Occupant Density,
upon request by Landlord, Tenant shall maintain on a daily basis an accurate
record of the number of employees, visitors, contractors and other people that
visit the Premises (collectively "Occupants"). Landlord shall have the right to
audit Tenant's Occupant record and, at Landlord's option, Landlord shall have
the right to periodically visit the Premises without advance notice to Tenant in
order to track the number of Occupants working at the Premises. For purposes of
this section, "Occupants" shall not include people not employed by Tenant that
deliver or pick up mail or other packages at the Premises, employees of Landlord
or employees of Landlord's agents or contractors. Tenant acknowledges that
increased numbers of Occupants causes additional wear and tear on the Premises
and the Common Areas, additional use of HVAC, electricity, water and other
utilities, and additional demand for other Building services. Tenant's failure
to comply with the requirements of this section shall constitute a default under
Section 13.1 and Landlord shall have the right, in addition to any other
remedies it may have at law or equity, to specifically enforce Tenant's
obligations under this section. Nothing contained in this section shall be
interpreted to entitle Tenant to use more parking spaces than the number
permitted by Section 1.18.

 

11.5 Hours of Service. Building services, HVAC and utilities shall be provided
during Business Hours (as defined in Section 1.16). Times other than Business
Hours are hereinafter referred to as “Non-Business Hours”. Janitorial services
shall be provided five (5) times per week excluding Holidays (as defined below).
Tenant acknowledges that there will be no air circulation or temperature control
within the Premises when the HVAC is not operating and, consequently, during
such times the Premises may not be suitable for human occupation or for the
operation of computers and other heat sensitive equipment. Nationally recognized
holidays (hereinafter, “Holidays”) shall include, but shall not necessarily be
limited to, New Years Day, Martin Luther King Jr. Day, Presidents' Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Landlord
shall use commercially reasonable efforts to provide HVAC to the Premises during
Non-Business Hours subject to (a) the payment by Tenant of Landlord's standard
charge, as determined by Landlord from time to time, in Landlord's sole
discretion, for Non-Business Hours HVAC (the “Non-Business Hours HVAC Charge”)
and (b) Tenant providing to Landlord at least one (1) business day's advance
written notice of Tenant's need for Non-Business Hours HVAC. As of the date of
this Lease, and subject to future increases, the Non-Business Hours HVAC Charge
is set forth in Section 1.17, and the Non-Business Hours HVAC Charge shall be
payable by Tenant in addition to the cost of the electricity consumed by the
HVAC units due to such Non-Business Hours use. The Non-Business Hours HVAC
Charge applies to each HVAC zone in the Building that Non-Business Hours HVAC is
provided to and Non-Business Hours HVAC is charged in minimum increments of
three (3) consecutive hours. Tenant shall pay to Landlord all Non-Business Hours
HVAC Charges within ten (10) days after Landlord bills Tenant for said charges.
Subject to applicable laws and regulations, Landlord shall have no obligation to
provide lighting to the Common Areas during Non-Business Hours.

 

11.6 Excess Usage by Tenant.

 

(a) Notwithstanding the use set forth in Section 1.8, Tenant shall not use
Building utilities or services in excess of those used by a typical office
building tenant using its premises for ordinary office use. Tenant shall only
install in the Premises the type and amount of office equipment that a typical
office tenant would install, and Tenant shall not install in the Premises office
equipment, lighting fixtures or similar items which will generate above average
heat, noise or vibration at the Premises or which will adversely effect the
temperature maintained by the HVAC system. If Landlord believes Tenant is using
electricity in excess of that used by a typical office building tenant using its
premises for ordinary office use, Landlord shall have the right, in addition to
any other rights or remedies it may have under this Lease, to (i) at Tenant's
expense, install separate metering devices at the Premises to measure Tenant’s
electrical usage, (ii) require Tenant to pay to Landlord all costs, expenses and
damages incurred by Landlord as a result of such excess usage, and/or (iii)
require Tenant to stop using electricity in excess of the Maximum Electrical
Consumption. If pursuant to any provision of this Lease Tenant is directly
paying any public utility company or other entity (hereinafter, an “Electricity
Provider”) for electricity it uses in the Premises, Tenant hereby authorizes

13

 

Landlord from time to time to review the bills it pays to the Electricity
Provider (the “Electricity Bills”). Landlord shall have the right to require
Tenant to provide Landlord with copies of the Electricity Bills it receives from
an Electricity Provider within ten (10) days after Landlord’s written request
or, at Landlord’s option, Landlord shall have the right to obtain copies of the
Electricity Bills from the Electricity Provider. Within ten (10) days after
Landlord’s request, Tenant shall execute and deliver to Landlord an agreement
provided by Landlord authorizing the Electricity Provider to (a) permit Landlord
to view the Electricity Bills on the Electricity Provider’s website (if such a
website exists), (b) provide copies of the Electricity Bills to Landlord and/or
(c) provide other information to Landlord concerning Tenant’s electrical usage
at the Premises.

 

(b) If the Premises contains a computer room, telecommunications room or other
area that is serviced by a separate HVAC unit on a continuous basis (a “Separate
HVAC Unit”), Tenant shall pay at Tenant’s sole expense the entire cost of all
electricity used by the Separate HVAC Unit (the “Separate HVAC Unit Electrical
Cost”). Landlord may determine the Separate HVAC Unit Electrical Cost by
installing, at Tenant’s expense, a separate metering device or by estimating the
cost of such usage. The Separate HVAC Unit Electrical Cost shall be paid by
Tenant within ten (10) days after Landlord provides to Tenant a bill for such
usage. In addition, if there is an existing Separate HVAC Unit in the Premises
when Tenant leases the Premises, Tenant accepts such existing Separate HVAC Unit
in its “as is” condition. Tenant shall pay, at Tenant’s sole cost and expense,
the entire cost of maintaining, repairing and, when necessary, replacing any
Separate HVAC Unit. Tenant shall continuously maintain, at Tenant’s sole cost
and expense, maintenance contracts for all Separate HVAC Units, using
maintenance contract forms and with companies approved by Landlord, in
Landlord’s sole discretion (the “Maintenance Contracts”). Tenant shall provide
copies of the Maintenance Contracts to Landlord within ten (10) days after the
Commencement Date, and within ten (10) days after such contracts are modified or
renewed, and at other times upon Landlord’s request.

 

11.7 Interruptions. Tenant agrees that Landlord shall not be liable to Tenant
for its failure to furnish gas, electricity, telephone service, water, HVAC or
any other utility services or building services when such failure is occasioned,
in whole or in part, by repairs, replacements, or improvements, by any strike,
lockout or other labor trouble, by inability to secure electricity, gas, water,
telephone service or other utility at the Project, by any accident, casualty or
event arising from any cause whatsoever, including the negligence of Landlord,
its employees, agents and contractors, by act, negligence or default of Tenant
or any other person or entity, or by any other cause, and such failures shall
never be deemed to constitute an eviction or disturbance of Tenant's use and
possession of the Premises or relieve Tenant from the obligation of paying rent
or performing any of its obligations under this Lease. Furthermore, Landlord
shall not be liable under any circumstances for loss of property or for injury
to, or interference with, Tenant's business, including, without limitation, loss
of profits, however occurring, through or in connection with or incidental to a
failure to furnish any such services or utilities. Landlord may comply with
voluntary controls or guidelines promulgated by any governmental entity relating
to the use or conservation of energy, water, gas, light or electricity or the
reduction of automobile or other emissions without creating any liability of
Landlord to Tenant under this Lease.

 

12. Assignment and Subletting.

 

12.1 Landlord's Consent Required. Tenant shall not voluntarily or by operation
of law assign, transfer, hypothecate, mortgage, sublet, or otherwise transfer or
encumber all or any part of Tenant's interest in this Lease or in the Premises
(hereinafter collectively a "Transfer"), without Landlord's prior written
consent, which shall not be unreasonably withheld. Landlord shall respond to
Tenant's written request for consent hereunder within thirty (30) days after
Landlord's receipt of the written request from Tenant. Any attempted Transfer
without such consent shall be void and shall constitute a default and breach of
this Lease. Tenant's written request for Landlord's consent shall include, and
Landlord's thirty (30) day response period referred to above shall not commence,
unless and until Landlord has received from Tenant, all of the following
information: (a) financial statements for the proposed assignee or subtenant
prepared in accordance with generally accepted accounting principles for the
lesser of (i) the past two (2) years or (ii) the time period the assignee or
subtenant has been in existence, (b) federal tax returns for the proposed
assignee or subtenant for the lesser of (i) the past two (2) years or (ii) the
time period the assignee or subtenant has been in business, (c) a TRW credit
report or similar report on the proposed assignee or subtenant, (d) a detailed
description of the business the assignee or subtenant intends to operate at the
Premises, (d) the proposed effective date of the assignment or sublease, (f) a
copy of the proposed sublease or assignment agreement which includes all of the
terms and conditions of the proposed assignment or sublease, (g) a detailed
description of any ownership or commercial relationship between Tenant and the
proposed assignee or subtenant and (h) a detailed description of any Alterations
the proposed assignee or subtenant desires to make to the Premises. If the
obligations of the proposed assignee or subtenant will be guaranteed by any
person or entity, Tenant's written request shall not be considered complete
until the information described in (a), (b) and (c) of the previous sentence has
been provided with respect to each proposed guarantor. "Transfer" shall also
include the transfer (a) if Tenant is a corporation, and Tenant's stock is not
publicly traded over a recognized securities exchange, of more than twenty five
percent (25%) of the voting stock of such corporation during the term of this
Lease (whether or not in one or more transfers) or the dissolution, merger or
liquidation of the corporation, or (b) if Tenant is a partnership or other
entity, of more than twenty five percent (25%) of the profit and loss
participation in such partnership or entity during the term of this Lease
(whether or not in one or more transfers) or the dissolution, merger or
liquidation of the partnership. If Tenant is a limited or general partnership
(or is comprised of two or more persons, individually or as co-partners), Tenant
shall not be entitled to change or convert to (i) a limited liability company,
(ii) a limited liability partnership or (iii) any other entity which possesses
the characteristics of limited liability without the prior written consent of
Landlord, which consent may be given or withheld in Landlord's sole discretion.
Tenant's sole remedy in the event that Landlord shall wrongfully withhold
consent to or disapprove any assignment or sublease shall be to obtain an order
by a court of competent jurisdiction that Landlord grant such consent; in no
event shall Landlord be liable for damages with respect to its granting or
withholding consent to any

14

 

proposed assignment or sublease. If Landlord shall exercise any option to
recapture the Premises, or shall deny a request for consent to a proposed
assignment or sublease, Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all losses, liabilities, damages, costs and
claims that may be made against Landlord by the proposed assignee or subtenant,
or by any brokers or other persons claiming a commission or similar compensation
in connection with the proposed assignment or sublease.

 

12.2 Leveraged Buy-out. The involvement by Tenant or its assets in any
transaction, or series of transactions (by way of merger, sale, acquisition,
financing, refinancing, transfer, leveraged buy-out or otherwise) whether or not
a formal assignment or hypothecation of this Lease or Tenant's assets occurs,
which results or will result in a reduction of the "Net Worth" of Tenant as
hereinafter defined, by an amount equal to or greater than twenty-five percent
(25%) of such Net Worth of Tenant as it is represented to Landlord at the time
of the execution by Landlord of this Lease, or as it exists immediately prior to
said transaction or transactions constituting such reduction, at whichever time
said Net Worth of Tenant was or is greater, shall be considered to be an
assignment of this Lease by Tenant to which Landlord may reasonably withhold its
consent. "Net Worth" of Tenant for purposes of this Section 12.2 shall be the
net worth of Tenant (excluding any guarantors) established under generally
accepted accounting principles consistently applied.

 

12.3 Standard For Approval. Landlord shall not unreasonably withhold its consent
to a Transfer provided that Tenant has complied with each and every requirement,
term and condition of this Section 12. Tenant acknowledges and agrees that each
requirement, term and condition in this Section 12 is a reasonable requirement,
term or condition. It shall be deemed reasonable for Landlord to withhold its
consent to a Transfer if any requirement, term or condition of this Section 12
is not complied with or: (a) the Transfer would cause Landlord to be in
violation of its obligations under another lease or agreement to which Landlord
is a party; (b) in Landlord's reasonable judgment, a proposed assignee or
subtenant has a smaller net worth than Tenant had on the date this Lease was
entered into with Tenant or is less able financially to pay the rents due under
this Lease as and when they are due and payable; (c) a proposed assignee's or
subtenant's business will impose a burden on the Project's parking facilities,
elevators, Common Areas or utilities that is greater than the burden imposed by
Tenant, in Landlord's reasonable judgment; (d) the terms of a proposed
assignment or subletting will allow the proposed assignee or subtenant to
exercise a right of renewal, right of expansion, right of first offer, right of
first refusal or similar right held by Tenant; (e) a proposed assignee or
subtenant refuses to enter into a written assignment agreement or sublease,
reasonably satisfactory to Landlord, which provides that it will abide by and
assume all of the terms and conditions of this Lease for the term of any
assignment or sublease and containing such other terms and conditions as
Landlord reasonably deems necessary; (f) the use of the Premises by the proposed
assignee or subtenant is not permitted by this Lease; (g) any guarantor of this
Lease refuses to consent to the Transfer or to execute a written agreement
reaffirming the guaranty; (h) Tenant is in default as defined in Section 13.1 at
the time of the request; (i) if requested by Landlord, the assignee or subtenant
refuses to sign a non-disturbance and attornment agreement in favor of
Landlord's lender; (j) Landlord has sued or been sued by the proposed assignee
or subtenant or has otherwise been involved in a legal dispute with the proposed
assignee or subtenant; (k) the assignee or subtenant is involved in a business
which is not in keeping with the then current standards of the Project; (l) the
proposed assignee or subtenant is an existing tenant of the Project or is a
person or entity then negotiating with Landlord for the lease of space in the
Project; (m) the assignment or sublease will result in there being more than one
subtenant of the Premises (e.g., the assignee or subtenant intends to use the
Premises as an executive suite); (n) the assignee or subtenant is a person or
entity to whom Landlord has agreed not to lease space in the Project pursuant to
a lease with another tenant or (o) the assignee or subtenant is a governmental
or quasi-governmental entity or an agency, department or instrumentality of a
governmental or quasi-governmental agency.

 

12.4 Additional Terms and Conditions. The following terms and conditions shall
be applicable to any Transfer:

 

(a) Regardless of Landlord's consent, no Transfer shall release Tenant from
Tenant's obligations hereunder or alter the primary liability of Tenant to pay
the rent and other sums due Landlord hereunder and to perform all other
obligations to be performed by Tenant hereunder or release any guarantor from
its obligations under its guaranty.

 

(b) Landlord may accept rent from any person other than Tenant pending approval
or disapproval of an assignment or subletting.

 

(c) Neither a delay in the approval or disapproval of a Transfer, nor the
acceptance of rent, shall constitute a waiver or estoppel of Landlord's right to
exercise its rights and remedies for the breach of any of the terms or
conditions of this Section 12.

 

(d) The consent by Landlord to any Transfer shall not constitute a consent to
any subsequent Transfer by Tenant or to any subsequent or successive Transfer by
an assignee or subtenant. However, Landlord may consent to subsequent Transfers
or any amendments or modifications thereto without notifying Tenant or anyone
else liable on the Lease and without obtaining their consent, and such action
shall not relieve such persons from liability under this Lease.

 

(e) In the event of any default under this Lease, Landlord may proceed directly
against Tenant, any guarantors or anyone else responsible for the performance of
this Lease, including any subtenant or assignee, without first exhausting
Landlord's remedies against any other person or entity responsible therefor to
Landlord, or any security held by Landlord.

 

15

 

(f) Landlord's written consent to any Transfer by Tenant shall not constitute an
acknowledgment that no default then exists under this Lease nor shall such
consent be deemed a waiver of any then existing default.

 

(g) The discovery of the fact that any financial statement relied upon by
Landlord in giving its consent to an assignment or subletting was materially
false shall, at Landlord's election, render Landlord's consent null and void.

 

(h) Landlord shall not be liable under this Lease or under any sublease to any
subtenant.

 

(i) No assignment or sublease may be modified or amended without Landlord's
prior written consent.

 

(j) The occurrence of a transaction described in Section 12.2 shall give
Landlord the right (but not the obligation) to require that Tenant immediately
provide Landlord with an additional security deposit equal to three (3) times
the monthly Base Rent payable under the Lease, and Landlord may make its receipt
of such amount a condition to Landlord's consent to such transaction.

 

(k) Any assignee of, or subtenant under, this Lease shall, by reason of
accepting such assignment or entering into such sublease, be deemed, for the
benefit of Landlord, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Tenant during the term of said assignment or sublease, other than
such obligations as are contrary or inconsistent with provisions of an
assignment or sublease to which Landlord has specifically consented in writing.

 

12.5 Additional Terms and Conditions Applicable to Subletting. The following
terms and conditions shall apply to any subletting by Tenant of all or any part
of the Premises and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein:

 

(a) Tenant hereby absolutely and unconditionally assigns and transfers to
Landlord all of Tenant's interest in all rentals and income arising from any
sublease entered into by Tenant, and Landlord may collect such rent and income
and apply same toward Tenant's obligations under this Lease; provided, however,
that until a default shall occur in the performance of Tenant's obligations
under this Lease, Tenant may receive, collect and enjoy the rents accruing under
such sublease. Landlord shall not, by reason of this or any other assignment of
such rents to Landlord nor by reason of the collection of the rents from a
subtenant, be deemed to have assumed or recognized any sublease or to be liable
to the subtenant for any failure of Tenant to perform and comply with any of
Tenant's obligations to such subtenant under such sublease, including, but not
limited to, Tenant's obligation to return any security deposit. Tenant hereby
irrevocably authorizes and directs any such subtenant, upon receipt of a written
notice from Landlord stating that a default exists in the performance of
Tenant's obligations under this Lease, to pay to Landlord the rents due as they
become due under the sublease. Tenant agrees that such subtenant shall have the
right to rely upon any such statement and request from Landlord, and that such
subtenant shall pay such rents to Landlord without any obligation or right to
inquire as to whether such default exists and notwithstanding any notice from or
claim from Tenant to the contrary.

 

(b) In the event Tenant shall default in the performance of its obligations
under this Lease, Landlord at its option and without any obligation to do so,
may require any subtenant to attorn to Landlord, in which event Landlord shall
undertake the obligations of Tenant under such sublease from the time of the
exercise of said option to the termination of such sublease; provided, however,
Landlord shall not be liable for any prepaid rents or security deposit paid by
such subtenant to Tenant or for any other prior defaults of Tenant under such
sublease.

 

12.6 Transfer Premium from Assignment or Subletting. Landlord shall be entitled
to receive from Tenant (as and when received by Tenant) as an item of additional
rent one-half of all amounts received by Tenant from the assignee or subtenant
in excess of the amounts payable by Tenant to Landlord hereunder (the “Transfer
Premium”). The Transfer Premium shall be reduced by the reasonable brokerage
commissions, tenant improvement costs and legal fees actually paid by Tenant in
order to assign the Lease or to sublet all or part of the Premises. "Transfer
Premium" shall mean all Base Rent, additional rent or other consideration of any
type whatsoever payable by the assignee or subtenant in excess of the Base Rent
and additional rent payable by Tenant under this Lease. If less than all of the
Premises is subleased, for purposes of calculating the Transfer Premium, the
Base Rent and the additional rent due under this Lease shall be allocated to the
subleased premises on a per rentable square foot basis (e.g., if one-half of the
Premises is subleased, for purposes of determining the amount of the Transfer
Premium, one-half of the Base Rent and additional rent due under this Lease
would be allocated to the subleased premises, and this amount would be
subtracted from the base rent, additional rent and other monies payable to
Tenant under the sublease). "Transfer Premium" shall also include, but not be
limited to, key money and bonus money paid by the assignee or subtenant to
Tenant in connection with such Transfer, and any payment in excess of fair
market value for services rendered by Tenant to the assignee or subtenant or for
assets, fixtures, inventory, equipment, or furniture transferred by Tenant to
the assignee or subtenant in connection with such Transfer. Landlord and Tenant
agree that the foregoing Transfer Premium is reasonable.

 

12.7 Landlord's Option to Recapture Space. Notwithstanding anything to the
contrary contained in this Section 12, Landlord shall have the option, by giving
written notice to Tenant within thirty (30) days after receipt of any request by
Tenant to assign this Lease or to sublease space in the Premises, to terminate
this Lease with respect to said space as of the date thirty (30) days after
Landlord's election. In the event of a recapture by Landlord, if this Lease
shall be canceled with

16

 

respect to less than the entire Premises, the Base Rent, Tenant's Share of
Operating Expense increases and the number of parking spaces Tenant may use
shall be adjusted on the basis of the number of rentable square feet retained by
Tenant in proportion to the number of rentable square feet contained in the
original Premises, and this Lease as so amended shall continue thereafter in
full force and effect, and upon request of either party, the parties shall
execute written confirmation of same. If Landlord recaptures only a portion of
the Premises, it shall construct and erect at its sole cost such partitions as
may be required to sever the space to be retained by Tenant from the space
recaptured by Landlord. Landlord may, at its option, lease any recaptured
portion of the Premises to the proposed subtenant or assignee or to any other
person or entity without liability to Tenant. Tenant shall not be entitled to
any portion of the profit, if any, Landlord may realize on account of such
termination and reletting. Tenant acknowledges that the purpose of this
Section 12.7 is to enable Landlord to receive profit in the form of higher rent
or other consideration to be received from an assignee or subtenant, to give
Landlord the ability to meet additional space requirements of other tenants of
the Project and to permit Landlord to control the leasing of space in the
Project. Tenant acknowledges and agrees that the requirements of this
Section 12.7 are commercially reasonable and are consistent with the intentions
of Landlord and Tenant.

 

12.8 Landlord's Expenses. In the event Tenant shall assign this Lease or sublet
the Premises or request the consent of Landlord to any Transfer, then Tenant
shall pay (a) $500 to Landlord to compensate Landlord for its internal
administrative costs in processing the request plus (b) Landlord's reasonable
out-of-pocket costs and expenses incurred in connection therewith, including,
but not limited to, attorneys', architects', accountants', engineers' or other
consultants' fees.

 

13. Default; Remedies.

 

13.1 Default by Tenant. Landlord and Tenant hereby agree that the occurrence of
any one or more of the following events is a default by Tenant under this Lease
and that said default shall give Landlord the rights described in Section 13.2.
Landlord or Landlord's authorized agent shall have the right to execute and to
deliver any notice of default, notice to pay rent or quit or any other notice
Landlord gives Tenant.

 

(a) Tenant's failure to make any payment of Base Rent, Tenant's Share of
Operating Expense increases, Tenant's Share of Real Property Taxes, parking
charges, Non-Business Hours HVAC Charges, late charges, or any other payment
required to be made by Tenant hereunder, as and when due, where such failure
shall continue for a period of three (3) days after written notice thereof from
Landlord to Tenant. In the event that Landlord serves Tenant with a notice to
pay rent or quit pursuant to applicable unlawful detainer statutes, such notice
shall also constitute the notice required by this Section 13.1(a).

 

(b) The abandonment of the Premises by Tenant coupled with the nonpayment of
rent in which event Landlord shall not be obligated to give any notice of
default to Tenant.

 

(c) The failure of Tenant to comply with any of its obligations under
Sections 6.1, 6.2(b), 7.2, 7.3, 8, 12, 18, 19, 21, 23, 24, 26, 34, 35 and 56
where Tenant fails to comply with its obligations or fails to cure any earlier
breach of such obligation within ten (10) days following written notice from
Landlord to Tenant. In the event Landlord serves Tenant with a notice to quit or
any other notice pursuant to applicable unlawful detainer statutes, said notice
shall also constitute the notice required by this Section 13.1(c).

 

(d) The failure by Tenant to observe or perform any of the covenants, conditions
or provisions of this Lease to be observed or performed by Tenant (other than
those referenced in Sections 13.1(a), (b) and (c), above), where such failure
shall continue for a period of ten (10) days after written notice thereof from
Landlord to Tenant; provided, however, that if the nature of Tenant's
non-performance is such that more than ten (10) days are reasonably required for
its cure, then Tenant shall not be deemed to be in default if Tenant commences
such cure within said ten (10) day period and thereafter diligently pursues such
cure to completion. In the event that Landlord serves Tenant with a notice to
quit or any other notice pursuant to applicable unlawful detainer statutes, said
notice shall also constitute the notice required by this Section 13.1(d).

 

(e) (i) The making by Tenant or any guarantor of Tenant's obligations hereunder
of any general arrangement or general assignment for the benefit of creditors;
(ii) Tenant or any guarantor becoming a "debtor" as defined in 11 U.S.C. 101 or
any successor statute thereto (unless, in the case of a petition filed against
Tenant or guarantor, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Lease,
where possession is not restored to Tenant within thirty (30) days; (iv) the
attachment, execution or other judicial seizure of substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease, where such
seizure is not discharged within thirty (30) days; or (v) the insolvency of
Tenant. In the event that any provision of this Section 13.1(e) is unenforceable
under applicable law, such provision shall be of no force or effect.

 

(f) The discovery by Landlord that any financial statement, representation or
warranty given to Landlord by Tenant, or by any guarantor of Tenant's
obligations hereunder, was materially false at the time given. Tenant
acknowledges that Landlord has entered into this Lease in material reliance on
such information.

 

(g) If Tenant is a corporation, limited liability company or a partnership, the
dissolution or liquidation of Tenant.

17

 

 

(h) If Tenant's obligations under this Lease are guaranteed: (i) the death of a
guarantor, (ii) the termination of a guarantor's liability with respect to this
Lease other than in accordance with the terms of such guaranty, (iii) a
guarantor's becoming insolvent or the subject of a bankruptcy filing, (iv) a
guarantor's refusal to honor the guaranty, (v) a guarantor's breach of its
guaranty obligation on an anticipatory breach basis or (vi) if the guarantor is
a corporation, limited liability company or partnership, the dissolution of the
guarantor or the termination of the guarantor’s existence.

 

13.2 Remedies.

 

(a) In the event of any default or breach of this Lease by Tenant, Landlord may,
at any time thereafter, with or without notice or demand, and without limiting
Landlord in the exercise of any right or remedy which Landlord may have by
reason of such default:

 

(i) terminate Tenant's right to possession of the Premises by any lawful means,
in which case this Lease and the term hereof shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. If Landlord
terminates this Lease, Landlord may recover from Tenant (A) the worth at the
time of award of the unpaid rent which had been earned at the time of
termination; (B) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; (C) the worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided; and
(D) any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant's failure to perform its obligations under the
Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, the cost of recovering possession of
the Premises, expenses of releasing, including necessary renovation and
alteration of the Premises, reasonable attorneys' fees, any real estate
commissions actually paid by Landlord and the unamortized value of any free
rent, reduced rent, tenant improvement allowance or other economic concessions
provided by Landlord. The "worth at time of award" of the amounts referred to in
Section 13.2(a)(i)(A) and (B) shall be computed by allowing interest at the
lesser of ten percent (10%) per annum or the maximum interest rate permitted by
applicable law. The worth at the time of award of the amount referred to in
Section 13.2(a)(i)(C) shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%). For purposes of this Section 13.2(a)(i), "rent" shall be
deemed to be all monetary obligations required to be paid by Tenant pursuant to
the terms of this Lease;

 

(ii) maintain Tenant's right of possession in which event Landlord shall have
the remedy described in California Civil Code Section 1951.4 which permits
Landlord to continue this Lease in effect after Tenant's breach and abandonment
and recover rent as it becomes due. In the event Landlord elects to continue
this Lease in effect, Tenant shall have the right to sublet the Premises or
assign Tenant's interest in the Lease subject to the reasonable requirements
contained in Section 12 of this Lease and provided further that Landlord shall
not require compliance with any standard or condition contained in Section 12
that has become unreasonable at the time Tenant seeks to sublet or assign the
Premises pursuant to this Section 13.2(a)(ii);

 

(iii) collect sublease rents (or appoint a receiver to collect such rent) and
otherwise perform Tenant's obligations at the Premises, it being agreed,
however, that the appointment of a receiver for Tenant shall not constitute an
election by Landlord to terminate this Lease; and

 

(iv) pursue any other remedy now or hereafter available to Landlord under the
laws or judicial decisions of the state in which the Premises are located.

 

(b) No remedy or election hereunder shall be deemed exclusive, but shall,
wherever possible, be cumulative with all other remedies at law or in equity.
The expiration or termination of this Lease and/or the termination of Tenant's
right to possession of the Premises shall not relieve Tenant of liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term of the Lease or by reason of Tenant's occupancy of the Premises.

 

(c) If Tenant abandons the Premises, Landlord may re-enter the Premises and such
re-entry shall not be deemed to constitute Landlord's election to accept a
surrender of the Premises or to otherwise relieve Tenant from liability for its
breach of this Lease. No surrender of the Premises shall be effective against
Landlord unless Landlord has entered into a written agreement with Tenant in
which Landlord expressly agrees to accept a surrender of the Premises and
relieve Tenant of liability under the Lease. The delivery by Tenant to Landlord
of possession of the Premises shall not constitute the termination of the Lease
or the surrender of the Premises.

 

13.3 Default by Landlord. Landlord shall not be in default under this Lease
unless Landlord fails to perform obligations required of Landlord within thirty
(30) days after written notice by Tenant to Landlord and to the holder of any
mortgage or deed of trust encumbering the Project whose name and address shall
have theretofore been furnished to Tenant in writing, specifying wherein
Landlord has failed to perform such obligation; provided, however, that if the
nature of Landlord's obligation is such that more than thirty (30) days are
required for its cure, then Landlord shall not be in default if Landlord
commences performance within such thirty (30) day period and thereafter
diligently pursues the same to completion. In no event shall Tenant have the
right to terminate this Lease as a result of Landlord's default, and Tenant's
remedies shall be limited to damages and/or an injunction. Tenant hereby waives
its right to recover consequential damages (including, but not limited to,

18

 

lost profits) or punitive damages arising out of a Landlord default. This Lease
and the obligations of Tenant hereunder shall not be affected or impaired
because Landlord is unable to fulfill any of its obligations hereunder or is
delayed in doing so, if such inability or delay is caused by reason of a Force
Majeure Event, and the time for Landlord's performance shall be extended for the
period of any such delay. Any claim, demand, right or defense by Tenant that
arises out of this Lease or the negotiations which preceded this Lease shall be
barred unless Tenant commences an action thereon, or interposes a defense by
reason thereof, within six (6) months after the date of the inaction, omission,
event or action that gave rise to such claim, demand, right or defense.

 

13.4 Late Charges. Tenant hereby acknowledges that late payment by Tenant to
Landlord of Base Rent, Tenant's Share of Operating Expense or Real Property Tax
increases, parking charges, Non-Business Hours HVAC Charges, or other sums due
hereunder will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges and late
charges which may be imposed on Landlord by the terms of any mortgage or trust
deed encumbering the Project. Accordingly, if any installment of Base Rent,
Tenant's Share of Operating Expense or Real Property Tax increases, parking
charges, Non-Business Hours HVAC Charges or any other sum due from Tenant shall
not be received by Landlord when such amount shall be due, then, without any
requirement for notice or demand to Tenant, Tenant shall immediately pay to
Landlord a late charge equal to six percent (6%) of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payment by Tenant.
Acceptance of such late charge by Landlord shall in no event constitute a waiver
of Tenant's default with respect to such overdue amount, nor prevent Landlord
from exercising any of the other rights and remedies granted hereunder including
the assessment of interest under Section 13.5.

 

13.5 Interest on Past-due Obligations. Except as expressly herein provided, any
amount due to Landlord that is not paid when due shall bear interest at the
lesser of ten percent (10%) per annum or the maximum rate permitted by
applicable law. Payment of such interest shall not excuse or cure any default by
Tenant under this Lease; provided, however, that interest shall not be payable
on late charges incurred by Tenant nor on any amounts upon which late charges
are paid by Tenant.

 

13.6 Payment of Rent and Security Deposit after Default. If Tenant fails to pay
Base Rent, Tenant's Share of Operating Expense or Real Property Tax increases,
parking charges or any other monetary obligation due hereunder on the date it is
due, after Tenant's third failure to pay any monetary obligation on the date it
is due, at Landlord's option, all monetary obligations of Tenant hereunder shall
thereafter be paid by cashiers check, and Tenant shall, upon demand, provide
Landlord with an additional security deposit equal to three (3) months' Base
Rent. If Landlord has required Tenant to make said payments by cashiers check or
to provide an additional security deposit, Tenant's failure to make a payment by
cashiers check or to provide the additional security deposit shall be a default
hereunder.

 

14. Landlord's Right to Cure Default; Payments by Tenant. All covenants and
agreements to be kept or performed by Tenant under this Lease shall be performed
by Tenant at Tenant's sole cost and expense and without any reduction of rent.
If Tenant shall fail to perform any of its obligations under this Lease, within
a reasonable time after such performance is required by the terms of this Lease,
Landlord may, but shall not be obligated to, after three (3) days prior written
notice to Tenant, make any such payment or perform any such act on Tenant's
behalf without waiving its rights based upon any default of Tenant and without
releasing Tenant from any obligations hereunder. Tenant shall pay to Landlord,
within ten (10) days after delivery by Landlord to Tenant of statements
therefore, an amount equal to the expenditures reasonably made by Landlord in
connection with the remedying by Landlord of Tenant's defaults pursuant to the
provisions of this Section 14.

 

15. Condemnation. If any portion of the Premises or the Project are taken under
the power of eminent domain, or sold under the threat of the exercise of said
power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs; provided that if so much of the
Premises or Project are taken by such condemnation as would substantially and
adversely affect the operation and profitability of Tenant's business conducted
from the Premises, and said taking lasts for ninety (90) days or more, Tenant
shall have the option, to be exercised only in writing within thirty (30) days
after Landlord shall have given Tenant written notice of such taking (or in the
absence of such notice, within thirty (30) days after the condemning authority
shall have taken possession), to terminate this Lease as of the date the
condemning authority takes such possession. If a taking lasts for less than
ninety (90) days, Tenant's rent shall be abated during said period but Tenant
shall not have the right to terminate this Lease. If Tenant does not terminate
this Lease in accordance with the foregoing, this Lease shall remain in full
force and effect as to the portion of the Premises remaining, except that the
rent and Tenant's Share of Operating Expenses shall be reduced in the proportion
that the usable floor area of the Premises taken bears to the total usable floor
area of the Premises. Common Areas taken shall be excluded from the Common Areas
usable by Tenant and no reduction of rent shall occur with respect thereto or by
reason thereof. Landlord shall have the option in its sole discretion to
terminate this Lease as of the taking of possession by the condemning authority,
by giving written notice to Tenant of such election within thirty (30) days
after receipt of notice of a taking by condemnation of any part of the Premises
or the Project. Any award for the taking of all or any part of the Premises or
the Project under the power of eminent domain or any payment made under threat
of the exercise of such power shall be the property of Landlord, whether such
award shall be made as compensation for diminution in value of the leasehold,
for good will, for the taking of the fee, as severance damages, or as damages
for tenant improvements; provided, however, that Tenant shall be entitled to any
separate award for loss of or damage to Tenant's removable personal property and
for moving expenses. In the event that this Lease is not terminated by reason of
such condemnation, and subject to the requirements of any lender that has made a
loan to Landlord encumbering the Project, Landlord shall to the extent of
severance damages received by Landlord in connection with such condemnation,
repair any damage to the Project caused by such condemnation

19

 

except to the extent that Tenant has been reimbursed therefor by the condemning
authority. This section, not general principles of law or California Code of
Civil Procedure Sections 1230.010 et seq., shall govern the rights and
obligations of Landlord and Tenant with respect to the condemnation of all or
any portion of the Project.

 

16. Vehicle Parking.

 

16.1 Use of Parking Facilities. During the term and subject to the rules and
regulations attached hereto as Exhibit "C," as modified by Landlord from time to
time (the "Rules"), Tenant shall be entitled to use the number of parking spaces
set forth in Section 1.18 in the parking facility of the Project. Tenant
acknowledges that its right to use the unreserved parking spaces is on a first
come first served basis and that Landlord gives Tenant no assurance that any
number of unreserved parking spaces will always be available for Tenant’s use.
Landlord may, in its sole discretion, assign tandem parking spaces to Tenant and
designate the location of any reserved parking spaces. For purposes of this
Lease, a "parking space" refers to the space in which one (1) motor vehicle is
intended to park (e.g., a tandem parking stall includes two parking spaces).
Landlord reserves the right at any time to relocate Tenant's reserved and
unreserved parking spaces. If Tenant commits or allows in the parking facility
any of the activities prohibited by the Lease or the Rules, then Landlord shall
have the right, without notice, in addition to such other rights and remedies
that it may have, to remove or tow away the vehicle involved and charge the cost
to Tenant, which cost shall be immediately payable by Tenant upon demand by
Landlord. Tenant's parking rights are the personal rights of Tenant and Tenant
shall not transfer, assign, or otherwise convey its parking rights separate and
apart from this Lease.

 

16.2 Parking Charges. The initial monthly parking rate per parking space is set
forth in Section 1.19 and is subject to change by Landlord, in Landlord's sole
discretion, upon five (5) days prior written notice to Tenant ; provided
however, during the initial three (3) year term of this lease, Tenant shall not
pay any parking charges for the spaces described in Section 1.18. Tenant shall
pay the required monthly parking charges for all of the parking spaces described
in Section 1.18 whether or not Tenant actually uses all of the parking spaces
described in Section 1.18. Monthly parking fees shall be payable in advance
prior to the first day of each calendar month. Visitor parking rates shall be
determined by Landlord from time to time in Landlord's sole discretion. The
parking rates charged to Tenant or Tenant's visitors may not be the lowest
parking rates charged by Landlord for the use of the parking facility.
Notwithstanding anything to the contrary contained herein, any tax imposed on
the privilege of occupying space in the parking facility, upon the revenues
received by Landlord from the parking facility or upon the charges paid for the
privilege of using the parking facility by any governmental or
quasi-governmental entity may be added by Landlord to the monthly parking
charges paid by Tenant at any time, or Landlord may require Tenant and other
persons using the parking facility to pay said amounts directly to the taxing
authority.

 

17. Broker's Fee. Tenant and Landlord each represent and warrant to the other
that neither has had any dealings or entered into any agreements with any
person, entity, broker or finder other than the persons, if any, listed in
Section 1.20, in connection with the negotiation of this Lease, and no other
broker, person, or entity is entitled to any commission or finder's fee in
connection with the negotiation of this Lease, and Tenant and Landlord each
agree to indemnify, defend and hold the other harmless from and against any
claims, damages, costs, expenses, attorneys' fees or liability for compensation
or charges which may be claimed by any such unnamed broker, finder or other
similar party by reason of any dealings, actions or agreements of the
indemnifying party.

 

18. Estoppel Certificate.

 

18.1 Delivery of Certificate. Tenant shall from time to time upon not less than
ten (10) business days' prior written notice from Landlord execute, acknowledge
and deliver to Landlord a statement in writing certifying such information as
Landlord may reasonably request including, but not limited to, the following:
(a) that this Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification and certifying that this Lease, as so
modified, is in full force and effect) (b) the date to which the Base Rent and
other charges are paid in advance and the amounts so payable, (c) that there are
not, to Tenant's knowledge, any uncured defaults or unfulfilled obligations on
the part of Landlord, or specifying such defaults or unfulfilled obligations, if
any are claimed, (d) that all tenant improvements to be constructed by Landlord,
if any, have been completed in accordance with Landlord's obligations and (e)
that Tenant has taken possession of the Premises. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Project.

 

18.2 Failure to Deliver Certificate. At Landlord's option, the failure of Tenant
to deliver such statement within such time shall constitute a default of Tenant
hereunder, or it shall be conclusive upon Tenant that this (a)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, (c) not more than
one month's Base Rent has been paid in advance, (d) all tenant improvements to
be constructed by Landlord, if any, have been completed in accordance with
Landlord's obligations and (e) Tenant has taken possession of the Premises.

 

19. Financial Information. From time to time, at Landlord's request, but not
more than once in any calendar year, Tenant shall cause the following financial
information to be delivered to Landlord, at Tenant's sole cost and expense, upon
not less than ten (10) days' advance written notice from Landlord: (a) a current
financial statement for Tenant and Tenant's financial statements for the
previous two accounting years, (b) a current financial statement for any
guarantor(s) of this Lease and the guarantor'(s) financial statements for the
previous two accounting years and (c) such other financial information
pertaining to Tenant or any guarantor as Landlord or any lender or purchaser of
Landlord may reasonably request. All financial statements shall be prepared in
accordance with generally accepted accounting principles consistently applied
and, if such is the normal

20

 

practice of Tenant, shall be audited by an independent certified public
accountant. Tenant hereby authorizes Landlord, from time to time, without notice
to Tenant, to obtain a credit report or credit history on Tenant from any credit
reporting company.

 

20. Landlord's Liability. Tenant acknowledges that Landlord shall have the right
to transfer all or any portion of its interest in the Project and to assign this
Lease to the transferee. Tenant agrees that in the event of such a transfer
Landlord shall automatically be released from all liability under this Lease;
and Tenant hereby agrees to look solely to Landlord's transferee for the
performance of Landlord's obligations hereunder after the date of the transfer.
Upon such a transfer, Landlord shall, at its option, return Tenant's security
deposit to Tenant or transfer Tenant's security deposit to Landlord's transferee
and, in either event, Landlord shall have no further liability to Tenant for the
return of its security deposit. Subject to the rights of any lender holding a
mortgage or deed of trust encumbering all or part of the Project, Tenant agrees
to look solely to Landlord's equity interest in the Project for the collection
of any judgment requiring the payment of money by Landlord arising out of (a)
Landlord's failure to perform its obligations under this Lease or (b) the
negligence or willful misconduct of Landlord, its partners, employees and
agents. No other property or assets of Landlord shall be subject to levy,
execution or other enforcement procedure for the satisfaction of any judgment or
writ obtained by Tenant against Landlord. No partner, employee or agent of
Landlord shall be personally liable for the performance of Landlord's
obligations hereunder or be named as a party in any lawsuit arising out of or
related to, directly or indirectly, this Lease and the obligations of Landlord
hereunder. The obligations under this Lease do not constitute personal
obligations of the individual partners of Landlord, if any, and Tenant shall not
seek recourse against the individual partners of Landlord or their assets.

 

21. Indemnity. Tenant hereby agrees to indemnify, defend and hold harmless
Landlord and its employees, partners, agents, property managers, contractors,
lenders and ground lessors (said persons and entities are hereinafter
collectively referred to as the "Indemnified Parties") from and against any and
all liability, loss, cost, damage, claims, loss of rents, liens, judgments,
penalties, fines, settlement costs, investigation costs, the cost of consultants
and experts, attorneys fees, court costs and other legal expenses, the effects
of environmental contamination, the cost of environmental testing, the removal,
remediation and/or abatement of Hazardous Substances or Medical Waste (as said
terms are defined below), insurance policy deductibles and other expenses
(hereinafter collectively referred to as "Damages") arising out of or related to
an "Indemnified Matter" (as defined below). For purposes of this Section 21, an
"Indemnified Matter" shall mean any matter for which one or more of the
Indemnified Parties incurs liability or Damages if the liability or Damages
arise out of or involve, directly or indirectly, Tenant's or its employees,
agents, contractors or invitees (all of said persons or entities are hereinafter
collectively referred to as "Tenant Parties") use or occupancy of the Premises
or the Project, or any act, omission or neglect of a Tenant Party, Tenant's
failure to perform any of its obligations under the Lease, the existence, use or
disposal of any Hazardous Substance (as defined in Section 23 below) brought on
to the project by a Tenant Party, the existence, use or disposal of any Medical
Waste (as defined in Section 24 below) brought on to the Project by a Tenant
Party or any other matters for which Tenant has agreed to indemnify Landlord
pursuant to any other provision of this Lease. Tenant's obligations hereunder
shall include, but shall not be limited to compensating the Indemnified Parties
for Damages arising out of Indemnified Matters within ten (10) days after
written demand from an Indemnified Party and providing a defense, with counsel
reasonably satisfactory to the Indemnified Party, at Tenant's sole expense,
within ten (10) days after written demand from the Indemnified Party, of any
claims, action or proceeding arising out of or relating to an Indemnified Matter
whether or not litigated or reduced to judgment and whether or not well founded.
If Tenant is obligated to compensate an Indemnified Party for Damages arising
out of an Indemnified Matter, Landlord shall have the immediate and
unconditional right, but not the obligation, without notice or demand to Tenant,
to pay the damages and Tenant shall, upon ten (10) days advance written notice
from Landlord, reimburse Landlord for the costs incurred by Landlord. By way of
example, and not limitation, Landlord shall have the immediate and unconditional
right to cause any damages to the Common Areas, another tenant's premises or to
any other part of the Project to be repaired and to compensate other tenants of
the Project or other persons or entities for Damages arising out of an
Indemnified Matter. The Indemnified Parties need not first pay any Damages to be
indemnified hereunder. Tenant's obligations under this section shall not be
released, reduced or otherwise limited because one or more of the Indemnified
Parties are or may be actively or passively negligent with respect to an
Indemnified Matter or because an Indemnified Party is or was partially
responsible for the Damages incurred. This indemnity is intended to apply to the
fullest extent permitted by applicable law. Tenant's obligations under this
section shall survive the expiration or termination of this Lease unless
specifically waived in writing by Landlord after said expiration or termination.
Notwithstanding anything to the contrary contained in this section, Tenant shall
not be obligated to indemnify an Indemnified Party from liability to the extent
such liability arises out of the Indemnified Party's negligence.

 

22. Signs. Tenant shall not place any sign upon the Premises (including on the
inside or the outside of the doors or windows of the Premises) or the Project
without Landlord's prior written consent, which may be given or withheld in
Landlord's sole discretion. Landlord shall have the right to place any sign it
deems appropriate on any portion of the Project except the interior of the
Premises. Any sign Landlord permits Tenant to place upon the Premises shall be
maintained by Tenant, at Tenant's sole expense. If Landlord permits Tenant to
include its name in the Building's directory, the cost of placing Tenant's name
in the directory and the cost of any subsequent modifications thereto shall be
paid by Tenant, at Tenant's sole expense.

 

23. Hazardous Substances.

 

23.1 Definition and Consent. The term "Hazardous Substance" as used in this
Lease shall mean any product, substance, chemical, material or waste whose
presence, nature, quantity and/or intensity of existence, use, manufacture,
disposal, transportation, spill, release or affect, either by itself or in
combination with other materials expected to be on the Premises, is either: (a)
potentially injurious to the public health, safety or welfare, the environment
or the Premises, (b) regulated or monitored by any governmental entity, (c) a
basis for liability of Landlord to any governmental entity or third party under
any

21

 

federal, state or local statute or common law theory or (d) defined as a
hazardous material or substance by any federal, state or local law or
regulation. Except for small quantities of ordinary office supplies such as
copier toner, liquid paper, glue, ink and common household cleaning materials,
Tenant shall not cause or permit any Hazardous Substance to be brought, kept, or
used in or about the Premises or the Project by Tenant, its agents, employees,
contractors or invitees.

 

23.2 Duty to Inform Landlord. If Tenant knows, or has reasonable cause to
believe, that a Hazardous Substance, or a condition involving or resulting from
same, has come to be located in, on or under or about the Premises or the
Project, Tenant shall immediately give written notice of such fact to Landlord.
Tenant shall also immediately give Landlord (without demand by Landlord) a copy
of any statement, report, notice, registration, application, permit, license,
given to or received from, any governmental authority or private party, or
persons entering or occupying the Premises, concerning the presence, spill,
release, discharge of or exposure to, any Hazardous Substance or contamination
in, on or about the Premises or the Project.

 

23.3 Inspection; Compliance. Landlord and Landlord's employees, agents,
contractors and lenders shall have the right to enter the Premises at any time
in the case of an emergency, and otherwise at reasonable times, for the purpose
of inspecting the condition of the Premises and for verifying compliance by
Tenant with this Section 23. Landlord shall have the right to employ experts
and/or consultants in connection with its examination of the Premises and with
respect to the installation, operation, use, monitoring, maintenance, or removal
of any Hazardous Substance on or from the Premises. The costs and expenses of
any such inspections shall be paid by the party requesting same, unless a
contamination, caused or materially contributed to by Tenant, is found to exist
or be imminent, or unless the inspection is requested or ordered by governmental
authority as the result of any such existing or imminent violation or
contamination. In any such case, Tenant shall upon request reimburse Landlord
for the cost and expenses of such inspection.

 

23.4 No Liability for Acts of Others. Notwithstanding anything to the contrary
contained in this Lease, Tenant shall only be liable pursuant to this Section 23
for the acts of Tenant and Tenant Parties, and Tenant shall not be liable for
the acts of persons or entities other than Tenant and Tenant Parties nor shall
Tenant be responsible or liable for contamination that existed at the Premises
on the Commencement Date or for contamination emanating from neighboring land.

 

24. Medical Waste.

 

24.1 Definition. The term "Medical Waste" shall mean the types of waste
described in Section 117690 of California's Health and Safety Code and any
similar type of waste. Unless specifically permitted by Section 6 of this Lease
to use the Premises for medical office uses, Tenant shall not cause or permit
any Medical Waste to be brought, kept or used in or about the Premises or the
Project by Tenant, its employees, agents, contractors or invitees.

 

24.2 Disposal of Medical Waste. Tenant hereby agrees, at Tenant's sole expense,
to dispose of its Medical Waste in compliance with all federal, state and local
laws, rules and regulations relating to the disposal of Medical Waste and to
dispose of the Medical Waste in a prudent and reasonable manner. Tenant shall
not place any Medical Waste in refuse containers emptied by Landlord's
janitorial staff or in the Project's refuse containers. At Landlord's option, in
Landlord's sole discretion, Landlord shall have the right, upon sixty (60) days'
advance written notice to Tenant, at any time and from time to time, to elect to
provide Medical Waste disposal services to Tenant. If Landlord elects to provide
Medical Waste disposal services to Tenant, all costs incurred by Landlord in
providing such services shall be paid by Tenant to Landlord as additional rent.
Landlord may bill Tenant for said costs based upon the actual cost of providing
said services to Tenant, as determined by Landlord, in Landlord's sole
discretion, or Landlord may bill said expenses based upon Tenant's Share of the
total cost of providing said services.

 

24.3 Duty to Inform Landlord. Within ten (10) days following Landlord's written
request, Tenant shall provide Landlord with any information requested by
Landlord concerning the existence, generation or disposal of Medical Waste at
the Premises, including, but not limited to, the following information: (a) the
name, address and telephone number of the person or entity employed by Tenant to
dispose of its Medical Waste, including a copy of any contract with said person
or entity, (b) a list of each type of Medical Waste generated by Tenant at the
Premises and a description of how Tenant disposes of said Medical Waste, (c) a
copy of any laws, rules or regulations in Tenant's possession relating to the
disposal of the Medical Waste generated by Tenant, and (d) copies of any
licenses or permits obtained by Tenant in order to generate or dispose of said
Medical Waste. Tenant shall also immediately provide to Landlord (without demand
by Landlord) a copy of any notice, registration, application, permit, or license
given to or received from any governmental authority or private party, or
persons entering or occupying the Premises, concerning the presence, release,
exposure or disposal of any Medical Waste in or about the Premises or the
Project.

 

24.4 Inspection; Compliance. Landlord and Landlord's employees, agents,
contractors and lenders shall have the right to enter the Premises at any time
in the case of an emergency, and otherwise at reasonable times, for the purpose
of verifying compliance by Tenant with this Section 24. Landlord shall have the
right to employ experts and/or consultants in connection with its examination of
the Premises and with respect to the generation and disposal of Medical Waste on
or from the Premises. The cost and expenses of any such inspection shall be paid
by Landlord, unless it is determined that Tenant is not disposing of its Medical
Waste in a manner permitted by applicable law, in which case Tenant shall
immediately reimburse Landlord for the cost of such inspection.

 

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25. Tenant Improvements. Tenant acknowledges and agrees that Landlord shall not
be obligated to construct any tenant improvements on behalf of Tenant unless it
is obligated to do so pursuant to a work letter agreement (the "Work Letter")
that is attached to this Lease as an exhibit. Except as set forth in a Work
Letter, it is specifically understood and agreed that Landlord has no obligation
and has made no promises to alter, remodel, improve, renovate, repair or
decorate the Premises, the Project, or any part thereof, or to provide any
allowance for such purposes, and that no representations respecting the
condition of the Premises or the Project have been made by Landlord to Tenant.

 

26. Subordination.

 

26.1 Effect of Subordination. This Lease, and any Option (as defined in
Section 27 below) granted hereby, upon Landlord's written election, shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or any
other hypothecation or security now or hereafter placed upon the Project and to
any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Tenant's right to quiet possession of the
Premises shall not be disturbed if Tenant is not in default and so long as
Tenant shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. At the
request of any mortgagee, trustee or ground lessor, Tenant shall attorn to such
person or entity. If any mortgagee, trustee or ground lessor shall elect to have
this Lease and any Options granted hereby prior to the lien of its mortgage,
deed of trust or ground lease, and shall give written notice thereof to Tenant,
this Lease and such Options shall be deemed prior to such mortgage, deed of
trust or ground lease, whether this Lease or such Options are dated prior or
subsequent to the date of said mortgage, deed of trust or ground lease or the
date of recording thereof. In the event of the foreclosure of a security device,
the new owner shall not (a) be liable for any act or omission of any prior
landlord or with respect to events occurring prior to its acquisition of title,
(b) be liable for the breach of this Lease by any prior landlord, (c) be subject
to any offsets or defenses which Tenant may have against the prior landlord or
(d) be liable to Tenant for the return of its security deposit.

 

26.2 Execution of Documents. Tenant agrees to execute and acknowledge any
documents Landlord reasonably requests that Tenant execute to effectuate an
attornment, a subordination, or to make this Lease or any Option granted herein
prior to the lien of any mortgage, deed of trust or ground lease, as the case
may be. Tenant acknowledges that the subordination agreement may give the lender
the right, in the lender's sole discretion, to continue this Lease in effect or
to terminate this Lease in the event of a foreclosure sale. Tenant's failure to
execute such documents within ten (10) days after written demand shall
constitute a default by Tenant hereunder or, at Landlord's option, Landlord
shall have the right to execute such documents on behalf of Tenant as Tenant's
attorney-in-fact. Tenant does hereby make, constitute and irrevocably appoint
Landlord as Tenant's attorney-in-fact and in Tenant's name, place and stead, to
execute such documents in accordance with this Section 26.2.

 

27. Options.

 

27.1 Definition. As used in this Lease, the word "Option" has the following
meaning: (1) the right or option to extend the term of this Lease or to renew
this Lease, (2) the option or right of first refusal to lease the Premises or
the right of first offer to lease the Premises or the right of first refusal to
lease other space within the Project or the right of first offer to lease other
space within the Project, and (3) the right or option to terminate this Lease
prior to its expiration date or to reduce the size of the Premises. Any Option
granted to Tenant by Landlord must be evidenced by a written option agreement
attached to this Lease as a rider or addendum or said option shall be of no
force or effect. For purposes of this section, an Option shall also include any
Option contained in any subsequent amendment to this Lease.

 

27.2 Options Personal. Each Option granted to Tenant in this Lease, if any, is
personal to the original Tenant and may be exercised only by the original Tenant
while occupying the entire Premises and may not be exercised or be assigned,
voluntarily or involuntarily, by or to any person or entity other than Tenant,
including, without limitation, any permitted transferee as defined in
Section 12. The Options, if any, herein granted to Tenant are not assignable
separate and apart from this Lease, nor may any Option be separated from this
Lease in any manner, either by reservation or otherwise. If at any time an
Option is exercisable by Tenant, the Lease has been assigned, or a sublease
exists as to any portion of the Premises, the Option shall be deemed null and
void and neither Tenant nor any assignee or subtenant shall have the right to
exercise the Option.

 

27.3 Multiple Options. In the event that Tenant has multiple Options to extend
or renew this Lease a later Option cannot be exercised unless the prior Option
to extend or renew this Lease has been so exercised.

 

27.4 Effect of Default on Options. Tenant shall have no right to exercise an
Option (i) during the time commencing from the date Landlord gives to Tenant a
notice of default pursuant to Section 13.1 and continuing until the
noncompliance alleged in said notice of default is cured, or (ii) if Tenant is
in default of any of the terms, covenants or conditions of this Lease. The
period of time within which an Option may be exercised shall not be extended or
enlarged by reason of Tenant's inability to exercise an Option because of the
provisions of this Section 27.4.

 

27.5 Limitations on Options. Notwithstanding anything to the contrary contained
in any rider or addendum to this Lease, any options, rights of first refusal or
rights of first offer granted hereunder shall be subject and secondary to
Landlord's right to first offer and lease any such space to any tenant who is
then occupying or leasing such space at the time the space becomes available for
leasing and shall be subject and subordinated to any other options, rights of
first refusal or rights of first offer previously given to any other person or
entity.

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27.6 Notice of Exercise of Option. Notwithstanding anything to the contrary
contained in Section 41, Tenant shall give written notice exercising the Option
using certified mail return receipt requested or some other method where the
person delivering the package containing the notice obtains a signature of the
person accepting the package containing the notice (e.g., by FedEx with the
requirement that the FedEx delivery person obtain a signature from the person
accepting the package). It shall be the obligation of Tenant to prove that
Landlord received the notice exercising the Option in a timely manner.

 

27.7 Guarantees. Notwithstanding anything to the contrary contained in any rider
or addendum to this Lease, Tenant's right to exercise and the effectiveness of
an Option is conditioned upon Landlord's receipt from any prior tenant that has
not been expressly released from liability under this Lease, and any guarantor
of any obligation of Tenant under this Lease, of a written agreement
satisfactory to Landlord, in Landlord’s sole discretion, reaffirming such
person's obligations under this Lease or the guaranty, as modified by Tenant's
exercise of the Option.

 

28. Landlord Reservations. Landlord shall have the right: (a) to change the name
and address of the Project or Building upon not less than ninety (90) days prior
written notice; (b) to, at Tenant's expense, provide and install Building
standard graphics on or near the door of the Premises and such portions of the
Common Areas as Landlord shall determine, in Landlord's sole discretion; (c) to
permit any tenant the exclusive right to conduct any business as long as such
exclusive right does not conflict with any rights expressly given herein; and
(d) to place signs, notices or displays upon the roof, interior, exterior or
Common Areas of the Project. Tenant shall not use a representation (photographic
or otherwise) of the Building or the Project or their name(s) in connection with
Tenant's business or suffer or permit anyone, except in an emergency, to go upon
the roof of the Building. Landlord reserves the right to use the exterior walls
of the Premises, and the area beneath, adjacent to and above the Premises
together with the right to install, use, maintain and replace equipment,
machinery, pipes, conduits and wiring through the Premises, which serve other
parts of the Project provided that Landlord's use does not unreasonably
interfere with Tenant's use of the Premises.

 

29. Changes to Project. Landlord shall have the right, in Landlord's sole
discretion, from time to time, to make changes to the size, shape, location,
number and extent of the improvements comprising the Project (hereinafter
referred to as "Changes") including, but not limited to, the Project interior
and exterior, the Common Areas, elevators, escalators, restrooms, HVAC,
electrical systems, communication systems, fire protection and detection
systems, plumbing systems, security systems, parking control systems, driveways,
entrances, parking spaces, parking areas and landscaped areas. In connection
with the Changes, Landlord may, among other things, erect scaffolding or other
necessary structures at the Project, 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 Changes and Landlord's actions in connection with
such Changes shall in no way constitute a constructive eviction of Tenant or
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 Changes, nor shall Tenant
be entitled to any compensation or damages from Landlord for any inconvenience
or annoyance occasioned by such Changes or Landlord's actions in connection with
such Changes. Landlord shall use commercially reasonable efforts to minimize
disruption to Tenant's business operations caused by Changes.

 

30. Substitution of Other Premises. Landlord shall have the right at any time to
move Tenant to any other leasable space in the Project provided that said space
shall be approximately the same size as the Premises and that Landlord shall pay
the cost of moving Tenant's furniture and equipment to the new space. The new
space shall include tenant improvements that are substantially equivalent to the
tenant improvements contained in the Premises, and the cost of any required
tenant improvements shall be paid by Landlord. If Landlord elects to relocate
Tenant, Landlord shall give Tenant written notice of its election and Tenant
shall have thirty (30) days thereafter to agree to be relocated in accordance
with the terms and conditions of this Section 30 or to elect to terminate this
Lease. If Tenant elects to terminate this Lease within said thirty (30) day
period or fails to respond to Landlord's notice within said thirty (30) day
period, this Lease shall then terminate on the date which is sixty (60) days
after the date Landlord gave Tenant its written notice electing to relocate
Tenant. Landlord shall have no liability to Tenant as a result of Tenant's
election to terminate this Lease. Prior to said termination, Landlord and Tenant
shall perform all of their obligations under this Lease. If Tenant elects to be
relocated, Landlord shall deliver substitute space to Tenant not more than one
hundred eighty (180) days after (a) Tenant agrees to be relocated and (b)
approves plans for the construction of required tenant improvements at the new
space, if any. Tenant shall not unreasonably withhold or delay its approval of
any plans for the construction of tenant improvements. Landlord shall give
Tenant thirty (30) days advance notice of the estimated move in date. Prior to
the date that Tenant is moved to the new space, Tenant shall remain in the
Premises and shall continue to perform all of its obligations under this Lease.
After Tenant moves into the new space, this Lease shall remain in full force and
effect and be deemed applicable to such new space, except as to Base Rent,
Tenant's Share of Operating Expense increases and the number of parking spaces
Tenant shall be entitled to use, all of which shall be adjusted based on the
relationship between the number of rentable square feet in the original Premises
and the number of rentable square feet in the substituted space. Upon Tenant's
election to be relocated, Landlord and Tenant shall amend this Lease to provide
for the relocation of the Premises.

 

31. Holding Over. If Tenant remains in possession of the Premises or any part
thereof after the expiration or earlier termination of the term hereof with
Landlord's consent, such occupancy shall be a tenancy from month to month upon
all the terms and conditions of this Lease pertaining to the obligations of
Tenant, except that the Base Rent payable shall be one hundred fifty percent
(150%) of the Base Rent payable immediately preceding the termination date of
this Lease, and all Options, if any, shall be deemed terminated and be of no
further effect. If Tenant remains in possession of the Premises or any

24

 

part thereof after the expiration of the term hereof without Landlord's consent,
Tenant shall, at Landlord's option, be treated as a tenant at sufferance or a
trespasser. Nothing contained herein shall be construed to constitute Landlord's
consent to Tenant holding over at the expiration or earlier termination of the
Lease term or to give Tenant the right to hold over after the expiration or
earlier termination of the Lease term. Tenant hereby agrees to indemnify, hold
harmless and defend Landlord from any cost, loss, claim or liability (including
attorneys' fees) Landlord may incur as a result of Tenant's failure to surrender
possession of the Premises to Landlord upon the termination of this Lease.

 

32. Landlord's Access.

 

32.1 Access. Landlord and Landlord's agents, contractors and employees shall
have the right to enter the Premises at reasonable times upon reasonable advance
telephonic notice to Tenant (except in the case of any emergency, where no
advance notice shall be required) for the purpose of inspecting the Premises,
performing any services required of Landlord, showing the Premises to
prospective purchasers, lenders, or tenants, undertaking safety measures and
making alterations, repairs, improvements or additions to the Premises or to the
Project. In the event of an emergency, Landlord may gain access to the Premises
by any reasonable means, and Landlord shall not be liable to Tenant for damage
to the Premises or to Tenant's property resulting from such access. Landlord may
at any time place on or about the Building or the Project for sale or for lease
signs.

 

32.2 Keys. Landlord shall have the right to retain keys to the locks on the
entry doors to the Premises and all interior doors at the Premises. At
Landlord's option, Landlord may require Tenant to obtain all keys to door locks
at the Premises from Landlord's engineering staff or Landlord's locksmith and to
only use Landlord's engineering staff or Landlord's locksmith to change locks at
the Premises. Tenant shall pay Landlord's or its locksmith's standard charge for
all keys and other services obtained from Landlord's engineering staff or
locksmith.

 

33. Security Measures. Tenant hereby acknowledges that Landlord shall have no
obligation whatsoever to provide guard service or other security measures for
the benefit of the Premises or the Project, and Landlord shall have no liability
to Tenant due to its failure to provide such services. Tenant assumes all
responsibility for the protection of Tenant, its agents, employees, contractors
and invitees and the property of Tenant and of Tenant's agents, employees,
contractors and invitees from acts of third parties. Nothing herein contained
shall prevent Landlord, at Landlord's sole option, from implementing security
measures for the Project or any part thereof, in which event Tenant shall
participate in such security measures and the cost thereof shall be included
within the definition of Operating Expenses, and Landlord shall have no
liability to Tenant and its agents, employees, contractors and invitees arising
out of Landlord's negligent provision of security measures. Landlord shall have
the right, but not the obligation, to require all persons entering or leaving
the Project to identify themselves to a security guard and to reasonably
establish that such person should be permitted access to the Project. In no
event shall Tenant or its employees, agents or contractors bring firearms or
other weapons to the Project or the Premises, and Tenant shall not have the
right to employ armed security guards.

 

34. Easements. Landlord reserves to itself the right, from time to time, to
grant such easements, rights and dedications that Landlord deems necessary or
desirable, and to cause the recordation of parcel maps and restrictions, so long
as such easements, rights, dedications, maps and restrictions do not
unreasonably interfere with the use of the Premises by Tenant. Tenant shall sign
any of the aforementioned documents within ten (10) days after Landlord's
request and Tenant's failure to do so shall constitute a default by Tenant. The
obstruction of Tenant's view, air, or light by any structure erected in the
vicinity of the Project, whether by Landlord or third parties, shall in no way
affect this Lease or impose any liability upon Landlord.

 

35. Transportation Management. Tenant shall fully comply at its sole expense
with all present or future programs implemented or required by any governmental
or quasi-governmental entity or Landlord to manage parking, transportation, air
pollution, or traffic in and around the Project or the metropolitan area in
which the Project is located.

 

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

 

37. Time of Essence. Time is of the essence with respect to each of the
obligations to be performed by Tenant and Landlord under this Lease.

 

38. Definition of Additional Rent. All monetary obligations of Tenant to
Landlord under the terms of this Lease, including, but not limited to, Base
Rent, Tenant's Share of Operating Expenses and Real Property Taxes, parking
charges, late charges and Non-Business Hours HVAC Charges shall be deemed to be
rent.

 

39. Incorporation of Prior Agreements. This Lease and the attachments listed in
Section 1.21 contain all agreements of the parties with respect to the lease of
the Premises and any other matter mentioned herein. No prior or contemporaneous
agreement or understanding pertaining to any such matter shall be effective.
Except as otherwise stated in this Lease, Tenant hereby acknowledges that no
real estate broker nor Landlord or any employee or agents of any of said persons
has made any oral or written warranties or representations to Tenant concerning
the condition or use by Tenant of the Premises or the Project or concerning any
other matter addressed by this Lease.

 

25

 

40. Amendments. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification.

 

41. Notices. Subject to the requirements of Section 27.6 of this Lease, all
notices required or permitted by this Lease shall be in writing and may be
delivered (a) in person (by hand, by messenger or by courier service), (b) by
U.S. Postal Service regular mail, (c) by U.S. Postal Service certified mail,
return receipt requested, (d) by U.S. Postal Service Express Mail, Federal
Express or other overnight courier, or (e) by facsimile transmission, and shall
be deemed sufficiently given if served in a manner specified in this Section 41.
Any notice permitted or required hereunder, and any notice to pay rent or quit
or similar notice, shall be deemed personally delivered to Tenant on the date
the notice is personally delivered to any employee of Tenant at the Premises.
The addresses set forth in Section 1.22 of this Lease shall be the address of
each party for notice purposes. Landlord or Tenant may by written notice to the
other specify a different address for notice purposes, except that upon Tenant's
taking possession of the Premises, the Premises shall constitute Tenant's
address for the purpose of mailing or delivering notices to Tenant. A copy of
all notices required or permitted to be given to Landlord hereunder shall be
concurrently transmitted to such party or parties at such addresses as Landlord
may from time to time hereinafter designate by written notice to Tenant. Any
notice sent by regular mail or by certified mail, return receipt requested,
shall be deemed given three (3) days after deposited with the U.S. Postal
Service. Notices delivered by U.S. Express Mail, Federal Express or other
courier shall be deemed given on the date delivered by the carrier to the
appropriate party's address for notice purposes. If any notice is transmitted by
facsimile transmission, the notice shall be deemed delivered upon telephone
confirmation of receipt of the transmission thereof at the appropriate party's
address for notice purposes. A copy of all notices delivered to a party by
facsimile transmission shall also be mailed to the party on the date the
facsimile transmission is completed. If notice is received on Saturday, Sunday
or a legal holiday, it shall be deemed received on the next business day.
Nothing contained herein shall be construed to limit Landlord's right to serve
any notice to pay rent or quit or similar notice by any method permitted by
applicable law, and any such notice shall be effective if served in accordance
with any method permitted by applicable law whether or not the requirements of
this section have been met.

 

42. Waivers. No waiver by Landlord or Tenant of any provision hereof shall be
deemed a waiver of any other provision hereof or of any subsequent breach by
Landlord or Tenant of the same or any other provision. Landlord's consent to, or
approval of, any act shall not be deemed to render unnecessary the obtaining of
Landlord's consent to or approval of any subsequent act by Tenant. The
acceptance of rent hereunder by Landlord shall not be a waiver of any preceding
breach by Tenant of any provision hereof, other than the failure of Tenant to
pay the particular rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent. No acceptance by
Landlord of partial payment of any sum due from Tenant shall be deemed a waiver
by Landlord of its right to receive the full amount due, nor shall any
endorsement or statement on any check or accompanying letter from Tenant be
deemed an accord and satisfaction. Tenant hereby waives California Code of Civil
Procedure Section 1179 and Civil Code Section 3275 which allow tenants to obtain
relief from the forfeiture of a lease. Tenant hereby waives for Tenant and all
those claiming under Tenant all rights now or hereafter existing to redeem by
order or judgment of any court or by legal process or writ, Tenant's right of
occupancy of the Premises after any termination of this Lease.

 

43. Covenants. This Lease shall be construed as though Landlord's covenants
contained herein are independent and not dependent and Tenant hereby waives the
benefit of any statute to the contrary. All provisions of this Lease to be
observed or performed by Tenant are both covenants and conditions.

 

44. Binding Effect; Choice of Law. Subject to any provision hereof restricting
assignment or subletting by Tenant, this Lease shall bind the parties, their
heirs, personal representatives, successors and assigns. This Lease shall be
governed by the laws of the state in which the Project is located and any
litigation concerning this Lease between the parties hereto shall be initiated
in the county in which the Project is located.

 

45. Attorneys' Fees. If Landlord or Tenant brings an action to enforce the terms
hereof or declare rights hereunder, the prevailing party in any such action, or
appeal thereon, shall be entitled to its reasonable attorneys' fees and court
costs to be paid by the losing party as fixed by the court in the same or
separate suit, and whether or not such action is pursued to decision or
judgment. The attorneys' fee award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse all attorneys' fees
and court costs reasonably incurred in good faith. Landlord shall be entitled to
reasonable attorneys' fees and all other costs and expenses incurred in the
preparation and service of notices of default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such default. Landlord and Tenant agree that attorneys' fees incurred with
respect to defaults and bankruptcy are actual pecuniary losses within the
meaning of Section 365(b)(1)(B) of the Bankruptcy Code or any successor statute.

 

46. Auctions. Tenant shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common Areas.
The holding of any auction on the Premises or Common Areas in violation of this
Section 46 shall constitute a default hereunder.

 

47. Exemption of Landlord from Liability. Tenant hereby agrees that Landlord and
its property manager and their respective officers, directors, employees,
representatives and agents (collectively, “Landlord Parties”) shall not be
liable for injury to Tenant's business or any loss of income therefrom or for
loss of or damage to the merchandise, tenant improvements, fixtures, furniture,
equipment, computers, files, automobiles, or other property of Tenant, Tenant's
employees, agents, contractors or invitees, or any other person in or about the
Project, nor shall Landlord Parties be liable for injury to the person of

26

 

Tenant, Tenant's employees, agents, contractors or invitees, whether such damage
or injury is caused by or results from any cause whatsoever including, but not
limited to, theft, criminal activity at the Project, negligent security
measures, bombings or bomb scares, acts of terrorism, Hazardous Substances or
Medical Waste (as defined above), fire, steam, electricity, gas, water or rain,
flooding, breakage of pipes, sprinklers, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether said damage or injury results from
conditions arising upon the Premises or upon other portions of the Project, or
from other sources or places, or from new construction or the repair, alteration
or improvement of any part of the Project, and regardless of whether the cause
of the damage or injury arises out of the active negligence, passive negligence
or intentional acts of Landlord Parties. Landlord Parties shall not be liable
for any damages arising from any act or neglect of any employees, agents,
contractors or invitees of any other tenant, occupant or user of the Project,
nor from the failure of Landlord Parties to enforce the provisions of the lease
of any other tenant of the Project. Tenant, as a material part of the
consideration to Landlord hereunder, hereby assumes all risk of damage to
Tenant's property or business or injury to persons, in, upon or about the
Project arising from any cause, including the active or passive negligence of
Landlord Parties, and Tenant hereby waives all claims in respect thereof against
Landlord Parties.

 

48. Merger. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, or a termination by Landlord, shall not result in
the merger of Landlord's and Tenant's estates, and shall, at the option of
Landlord, terminate all or any existing subtenancies or may, at the option of
Landlord, operate as an assignment to Landlord of any or all of such
subtenancies.

 

49. Quiet Possession. Subject to the other terms and conditions of this Lease,
and the rights of any lender, and provided Tenant is not in default hereunder,
Tenant shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.

 

50. Authority. If Tenant is a corporation, trust, or general or limited
partnership, Tenant, and each individual executing this Lease on behalf of such
entity, represents and warrants that such individual is duly authorized to
execute and deliver this Lease on behalf of said entity, that said entity is
duly authorized to enter into this Lease, and that this Lease is enforceable
against said entity in accordance with its terms. If Tenant is a corporation,
trust or partnership, Tenant shall deliver to Landlord upon demand evidence of
such authority satisfactory to Landlord.

 

51. Conflict. Any conflict between the typewritten provisions of this Lease and
handwritten provisions, if any, shall be controlled by the handwritten
provisions; provided, however, handwritten provisions shall have no force or
effect unless separately initialed by both Landlord and Tenant.

 

52. Multiple Parties. If more than one person or entity is named as Tenant
herein, the obligations of Tenant shall be the joint and several responsibility
of all persons or entities named herein as Tenant. Service of a notice in
accordance with Section 41 on one Tenant shall be deemed service of notice on
all Tenants.

 

53. Interpretation. This Lease shall be interpreted as if it was prepared by
both parties and ambiguities shall not be resolved in favor of Tenant because
all or a portion of this Lease was prepared by Landlord. The captions contained
in this Lease are for convenience only and shall not be deemed to limit or alter
the meaning of this Lease. As used in this Lease the words tenant and landlord
include the plural as well as the singular. Words used in the neuter gender
include the masculine and feminine gender.

 

54. Prohibition Against Recording. Neither this Lease, nor any memorandum,
affidavit or other writing with respect thereto, shall be recorded by Tenant or
by anyone acting through, under or on behalf of Tenant. Landlord shall have the
right to record a memorandum of this Lease, and Tenant shall execute,
acknowledge and deliver to Landlord for recording any memorandum prepared by
Landlord.

 

55. Relationship of Parties. Nothing contained in this Lease shall be deemed or
construed by the parties hereto or by any third party to create the relationship
of principal and agent, partnership, joint venturer or any association between
Landlord and Tenant.

 

56. Rules and Regulations. Tenant agrees to abide by and conform to the Rules
and to cause its employees, suppliers, customers and invitees to so abide and
conform. Landlord shall have the right, from time to time, to modify, amend and
enforce the Rules in a non-discriminatory manner. Landlord shall not be
responsible to Tenant for the failure of other persons including, but not
limited to, other tenants, their agents, employees and invitees to comply with
the Rules.

 

57. Right to Lease. Landlord reserves the absolute right to effect such other
tenancies in the Project as Landlord in its sole discretion shall determine, and
Tenant is not relying on any representation that any specific tenant or number
of tenants will occupy the Project.

 

58. Security for Performance of Tenant's Obligations. Notwithstanding any
security deposit held by Landlord pursuant to Section 5, Tenant hereby agrees
that in the event of a default by Tenant, Landlord shall be entitled to seek and
obtain a writ of attachment and/or a temporary protective order and Tenant
hereby waives any rights or defenses to contest such a writ of attachment and/or
temporary protective order on the basis of California Code of Civil Procedure
Section 483.010 or any other related statute or rule.

27

 

 

59. Attachments. The items listed in Section 1.21 are a part of this Lease and
are incorporated herein by this reference.

 

60. Patriot Act. Tenant represents to Landlord that, (i) neither Tenant nor any
person or entity that directly owns a 10% or greater equity interest in it nor
any of its officers, directors or managing members is a person or entity (each,
a “Prohibited Person”) with whom U.S. persons or entities are restricted from
doing business under regulations of the Office of Foreign Asset Control (“OFAC”)
of the Department of the Treasury (including those named on OFAC’s Specially
Designated and Blocked Persons List) or under Executive Order 13224 (the
“Executive Order”) signed on September 24, 2001, and entitled “Blocking Property
and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism), or other governmental action, (ii) Tenant’s activities do
not violate the International Money Laundering Abatement and Financial
Anti-Terrorism Act of 2001 or the regulations or orders promulgated thereunder
(as amended from time to time, the “Money Laundering Act”) and (iii) throughout
the term of this Lease, Tenant shall comply with the Executive Order and with
the Money Laundering Act.

 

61. Confidentiality. Tenant acknowledges and agrees that the terms of this Lease
are confidential and constitute proprietary information of Landlord. Disclosure
of the terms hereof could adversely affect the ability of Landlord to negotiate
other leases with respect to the Project and may impair Landlord's relationship
with other tenants of the Project. Tenant agrees that it and its partners,
officers, directors, employees, brokers, and attorneys, if any, shall not
disclose the terms and conditions of this Lease to any other person or entity
without the prior written consent of Landlord which may be given or withheld by
Landlord, in Landlord's sole discretion. It is understood and agreed that
damages alone would be an inadequate remedy for the breach of this provision by
Tenant, and Landlord shall also have the right to seek specific performance of
this provision and to seek injunctive relief to prevent its breach or continued
breach.

 

62. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, LANDLORD
AND TENANT HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF
ACTION, CLAIM, COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING AND/OR
HEARING BROUGHT BY EITHER LANDLORD AGAINST TENANT OR TENANT AGAINST LANDLORD ON
ANY MATTER WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS LEASE,
THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE
PREMISES, OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY
UNDER ANY LAW, STATUTE, OR REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER
IN EFFECT.

 

LANDLORD AND TENANT ACKNOWLEDGE THAT THEY HAVE CAREFULLY READ AND REVIEWED THIS
LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS
LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY
AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND
TENANT WITH RESPECT TO THE PREMISES. TENANT ACKNOWLEDGES THAT IT HAS BEEN GIVEN
THE OPPORTUNITY TO HAVE THIS LEASE REVIEWED BY ITS LEGAL COUNSEL PRIOR TO ITS
EXECUTION. PREPARATION OF THIS LEASE BY LANDLORD OR LANDLORD'S AGENT AND
SUBMISSION OF SAME TO TENANT SHALL NOT BE DEEMED AN OFFER BY LANDLORD TO LEASE
THE PREMISES TO TENANT OR THE GRANT OF AN OPTION TO TENANT TO LEASE THE
PREMISES. THIS LEASE SHALL BECOME BINDING UPON LANDLORD ONLY WHEN FULLY EXECUTED
BY BOTH PARTIES AND WHEN LANDLORD HAS DELIVERED A FULLY EXECUTED ORIGINAL OF
THIS LEASE TO TENANT. THE DELIVERY OF A DRAFT OF THIS LEASE TO TENANT SHALL NOT
CONSTITUTE AN AGREEMENT BY LANDLORD TO NEGOTIATE IN GOOD FAITH, AND LANDLORD
EXPRESSLY DISCLAIMS ANY LEGAL OBLIGATION TO NEGOTIATE IN GOOD FAITH.

 

LANDLORD:

 

The Realty Associates Fund VII, L.P.,

a Delaware limited partnership

 

By: Realty Associates Fund VII, LLC

its General Partner

 

By: Realty Associates Advisors LLC, its Manager

 

By: Realty Associates Advisors Trust,

its Manager

 

By: /s/ Scott W. Amling

Scott W. Amling

Regional Director

Officer

 

TENANT*:

 

Motivating the Masses, Inc.

28

 

a Nevada corporation

 

 

By:/s/ Lisa Nicols

 

Lisa Nicols

(print name)

 

Its:         CEO

(print title)

 

 

By:_____________________________

 

_____________________________

(print name)

 

Its: ____________________________

(print title)

 

 

*If Tenant is a corporation, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. The 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.

 

29

 

EXHIBIT A

 

PREMISES

 

Exhibit A is intended only to show the general layout of the Premises, and shall
not be interpreted to increase or decrease the size of the Premises beyond the
number of rentable square feet set forth in Section 1.6. Exhibit A is not to be
scaled and any measurements or distances shown on Exhibit A are approximates
only.

 

 

[exhibita.jpg]

 

 

 

 

30

 

EXHIBIT B

 

VERIFICATION LETTER

 

 

Motivating the Masses, Inc., a Nevada corporation ("Tenant"), hereby certifies
that it has entered into a lease with The Realty Associates Fund VII, L.P., a
Delaware limited partnership ("Landlord"), and verifies the following
information as of the ____ day of __________, 201_:

 

 

Address of Building : 2141 Palomar Airport Road Suite 300

 

 

Number of Rentable Square Feet in Premises :
__________________________________________

 

Commencement Date : August 1, 2012

 

Lease Termination Date : July 31, 2015

 

Tenant’s Share : _________________________________________%

 

Initial Base Rent : $3,127.41

 

Billing Address for Tenant : __________________________________________

 

__________________________________________

 

__________________________________________

 

Attention : __________________________________________

 

Telephone Number : (___)______________________________________

 

Federal Tax I.D. No. : __________________________________________

 

 

Tenant acknowledges and agrees that all tenant improvements Landlord is
obligated to make to the Premises, if any, have been completed to Tenant's
satisfaction, that Tenant has accepted possession of the Premises, and that as
of the date hereof, there exist no offsets or defenses to the obligations of
Tenant under the Lease.

 

TENANT:

 

Motivating the Masses, Inc.

a Nevada corporation

 

 

By:/s/ Lisa Nicols

 

Lisa Nicols

(print name)

 

Its: CEO

(print title)

 

 

By:_____________________________

 

_____________________________

(print name)

 

Its: ____________________________

(print title)

31

 

EXHIBIT C

 

RULES AND REGULATIONS

GENERAL RULES

 

Tenant shall faithfully observe and comply with the following Rules and
Regulations.

 

1. Tenant shall not alter any locks or install any new or additional locks or
bolts on any doors or windows of the Premises without obtaining Landlord's prior
written consent. Tenant shall bear the cost of any lock changes or repairs
required by Tenant. Keys required by Tenant must be obtained from Landlord at a
reasonable cost to be established by Landlord. If card keys are used to gain
access to the Project, Landlord may (a) charge Tenant for the cost of any card
keys issued to Tenant and charge Tenant for the cost of replacing lost or stolen
card keys, (b) collect deposits for card keys issued to Tenant (and retain a
deposit applicable to a card key if the card key is not returned) and (c)
require Tenant to immediately return card keys that are no longer in use. Tenant
shall only provide card keys or other keys to its Premises to its employees, and
Tenant shall at all times keep an accurate list of the name of each employee to
whom it has provided a card key or regular key. Tenant shall immediately notify
Landlord of any lost or stolen card keys or regular keys, and on the day that
the employment of an employee ends, Tenant shall obtain all card keys and
regular keys from the employee. Tenant shall return all card keys and regular
keys upon the termination of the Lease.

 

2. All doors opening to public corridors shall be kept closed at all times
except for normal ingress and egress to the Premises. Tenant shall assume any
and all responsibility for protecting the Premises from theft, robbery and
pilferage, which includes keeping doors locked and other means of entry to the
Premises closed.

 

3. Landlord reserves the right to close and keep locked all entrance and exit
doors of the Project except during the Project's normal hours of business as
defined in Section 11.4 of the Lease. Tenant, its employees and agents must be
sure that the doors to the Project are securely closed and locked when leaving
the Premises if it is after the normal hours of business of the Project. Tenant,
its employees, agents or any other persons entering or leaving the Project at
any time when it is so locked, or any time when it is considered to be after
normal business hours for the Project, may be required to sign the Project
register. Access to the Project may be refused unless the person seeking access
has proper identification or has a previously received authorization for access
to the Project. Landlord and its agents shall in no case be liable for damages
for any error with regard to the admission to or exclusion from the Project of
any person. In case of invasion, mob, riot, public excitement, or other
commotion, Landlord reserves the right to prevent access to the Project during
the continuance thereof by any means it deems appropriate for the safety and
protection of life and property.

 

4. Landlord reserves the right, in Landlord's sole and absolute discretion, to
close or limit access to the Project and/or the Premises, from time to time, due
to the failure of utilities, due to damage to the Project and/or the Premises,
to ensure the safety of persons or property or due to government order or
directive, and Tenant agrees to immediately comply with any such decision by
Landlord. If Landlord closes or limits access to the Project and/or the Premises
for the reasons described above, Landlord's actions shall not constitute a
breach of the Lease.

 

5. No furniture, freight or equipment of any kind shall be brought into the
Project without Landlord's prior authorization. Tenant shall only move in and
out of the Premises at times designated by Landlord, in Landlord's sole
discretion (e.g., Landlord could require that all moves in and out of the
Premises only occur on weekends or on weekdays between 5:00 p.m. and 11:00
p.m.). All moves in and out of the Premises shall be scheduled with Landlord in
advance, on a first come, first served basis. All property shall be moved in and
out of the Premises using the freight elevator. Landlord shall have the right,
in its sole discretion, to permit only one tenant to move in or out of the
Project at a time. When moving equipment, furniture and other items into and out
of the Premises, Tenant shall take whatever precautions Landlord designates to
protect the Project from damage (e.g., placing plastic or other protective
material on carpets in the common areas and the Premises). Landlord shall have
the right to prescribe the weight, size and position of all safes and other
heavy property brought into the Project and also the times and manner of moving
the same in and out of the Project. Safes and other heavy objects shall, if
considered necessary by Landlord, stand on supports of such thickness as is
necessary to properly distribute the weight, and Tenant shall be solely
responsible for the cost of installing all supports. Landlord will not be
responsible for loss of or damage to any such safe or property in any case. Any
damage to any part of the Project, its contents, occupants or visitors by moving
or maintaining any such safe or other property shall be the sole responsibility
and expense of Tenant.

 

6. The requirements of Tenant will be attended to only upon application at the
management office for the Project or at such office location designated by
Landlord. Tenant shall not ask employees of Landlord to do anything outside
their regular duties without special authorization from Landlord.

 

7. Tenant shall not disturb, solicit, or canvass any occupant of the Project and
shall cooperate with Landlord and its agents to prevent the same. Tenant, its
employees and agents shall not loiter in or on the entrances, corridors,
sidewalks, lobbies, halls, stairways, elevators, or any Common Areas for the
purpose of smoking tobacco products or for any other purpose, nor in any way
obstruct such areas, and shall use them only as a means of ingress and egress
for the Premises. Smoking shall not be permitted in the Common Areas.

 

32

 

8. The toilet rooms, urinals and wash bowls shall not be used for any purpose
other than that for which they were constructed, and no foreign substance of any
kind whatsoever shall be thrown therein. The expense of any breakage, stoppage
or damage resulting from the violation of this rule shall be borne by the tenant
who, or whose employees or agents, shall have caused it.

 

9. Except for vending machines intended for the sole use of Tenant's employees
and invitees, no vending machine or machines other than fractional horsepower
office machines shall be installed, maintained or operated upon the Premises
without the written consent of Landlord. All vendors or other persons visiting
the Premises shall be subject to the reasonable control of Landlord. Tenant
shall not permit its vendors or other persons visiting the Premises to solicit
other tenants of the Project.

 

10. Tenant shall not use or keep in or on the Premises or the Project any
kerosene, gasoline or other inflammable or combustible fluid or material. Tenant
shall not bring into or keep within the Premises or the Project any animals,
birds, bicycles or other vehicles.

 

11. Tenant shall not use, keep or permit to be used or kept, any foul or noxious
gas or substance in or on the Premises, or permit or allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Project by reason of noise, odors, or vibrations, or to
otherwise interfere in any way with the use of the Project by other tenants.

 

12. No cooking shall be done or permitted on the Premises, nor shall the
Premises be used for the storage of merchandise, for loading or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' Laboratory approved equipment and microwave ovens may be used in
the Premises for heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors of Tenant, provided that such use is in
accordance with all applicable federal, state and city laws, codes, ordinances,
rules and regulations; and provided further that such cooking does not result in
odors escaping from the Premises.

 

13. Landlord shall have the right to approve where and how telephone wires are
to be introduced to the Premises. No boring or cutting for wires shall be
allowed without the consent of Landlord. The location of telephone call boxes
and other office equipment affixed to the Premises shall be subject to the
approval of Landlord. Tenant shall not mark, drive nails or screws, or drill
into the partitions, woodwork or plaster contained in the Premises or in any way
deface the Premises or any part thereof without Landlord's prior written
consent. Tenant shall not install any radio or television antenna, satellite
dish, loudspeaker or other device on the roof or exterior walls of the Project.
Tenant shall not interfere with broadcasting or reception from or in the Project
or elsewhere.

 

14. Landlord reserves the right to exclude or expel from the Project any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.

 

15. Tenant shall not waste electricity, water or air conditioning and agrees to
cooperate fully with Landlord to ensure the most effective operation of the
Project's heating and air conditioning system, and shall refrain from attempting
to adjust any controls. Tenant shall not without the prior written consent of
Landlord use any method of heating or air conditioning other than that supplied
by Landlord. Tenant shall not use electric fans or space heaters in the
Premises.

 

16. Tenant shall store all its trash and garbage within the interior of the
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash in the vicinity of the
Project without violation of any law or ordinance governing such disposal. All
trash, garbage and refuse disposal shall be made only through entry-ways and
elevators provided for such purposes at such times as Landlord shall designate.

 

17. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

 

18. No awnings or other projection shall be attached to the outside walls or
windows of the Project by Tenant. No curtains, blinds, shades or screens shall
be attached to or hung in any window or door of the Premises without the prior
written consent of Landlord. Landlord shall have the right to require Tenant to
use Landlord's standard curtains or window coverings. Tenant shall not place any
signs in the windows of the Premises or the Project. All electrical ceiling
fixtures hung in the Premises must be fluorescent and/or of a quality, type,
design and bulb color approved by Landlord. Tenant shall abide by Landlord's
regulations concerning the opening and closing of window coverings which are
attached to the windows in the Premises. The skylights, windows, and doors that
reflect or admit light and air into the halls, passageways or other public
places in the Project shall not be covered or obstructed by Tenant, nor shall
any bottles, parcels or other articles be placed on the windowsills.

 

19. Tenant shall not employ any person or persons other than the janitor of
Landlord for the purpose of cleaning the Premises unless otherwise agreed to in
writing by Landlord. Except with the prior written consent of Landlord, no
person or persons other than those approved by Landlord shall be permitted to
enter the Project for the purpose of cleaning same. Landlord shall in no way be
responsible to Tenant for any loss of property on the Premises, however
occurring, or for any damage done to the effects of Tenant or any of its
employees or other persons by the janitor of Landlord. Landlord shall not be
obligated to notify Tenant of the times at which the janitorial staff will enter
the Premises, and Tenant hereby authorizes the

33

 

janitorial staff to enter the Premises at any time, without notice. Janitor
service shall include ordinary dusting and cleaning by the janitor assigned to
such work and shall not include cleaning of carpets or rugs, except normal
vacuuming, or moving of furniture and other special services. Window cleaning
shall be done only by Landlord at reasonable intervals and as Landlord deems
necessary.

 

20. Tenant acknowledges that the local fire department has previously required
Landlord to participate in a fire and emergency preparedness program or may
require Landlord and/or Tenant to participate in such a program in the future.
Tenant agrees to take all actions necessary to comply with the requirements of
such a program including, but not limited to, designating certain employees as
"fire wardens" and requiring them to attend any necessary classes and meetings
and to perform any required functions.

 

21. Tenant and its employees shall comply with all federal, state and local
recycling and/or resource conversation laws and shall take all actions requested
by Landlord in order to comply with such laws. Tenant and its employees shall
participate in any recycling or resource conservation program implemented by
Landlord, at Tenant's sole expense.

 

PARKING RULES

 

1. Parking areas shall be used only for parking by vehicles no longer than full
size, passenger automobiles, or sport utility vehicles. Tenant and its employees
shall park automobiles within the lines of the parking spaces. Landlord may
designate the areas in the parking facilities that will be available for
unreserved or reserved parking, in Landlord’s sole discretion.

 

2. Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant's employees, suppliers, shippers, customers, or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Landlord for such activities. Users of the parking area will obey all posted
signs and park only in the areas designated for vehicle parking.

 

3. Landlord may require Tenant and Tenant’s employees to use parking cards,
parking stickers or other identification devices. Parking stickers, parking
cards and other identification devices shall be the property of Landlord and
shall be returned to Landlord by the holder thereof upon termination of the
holder's parking privileges. Landlord may require Tenant and each of its
employees to give Landlord a deposit when a parking card or other parking device
is issued. Landlord shall not be obligated to return the deposit unless and
until the parking card or other device is returned to Landlord. Tenant will pay
such replacement charges as is reasonably established by Landlord for the loss
of such devices. Loss or theft of parking identification stickers or devices
from automobiles must be reported to the parking operator immediately. Any
parking identification stickers or devices reported lost or stolen found on any
unauthorized car will be confiscated and the illegal holder will be subject to
prosecution.

 

4. Landlord reserves the right to relocate all or a part of parking spaces
within the parking area and/or to reasonably adjacent off site locations(s), and
to allocate them between compact and standard size and tandem spaces, as long as
the same complies with applicable laws, ordinances and regulations. If access to
the parking areas are not now controlled with gates or similar devices, Landlord
shall have the right, but not the obligation, to install gates or other devices
to control access to the parking areas, and Tenant shall comply with all of
Landlord’s rules and regulations relating to access to the parking areas.

 

 

5. Unless otherwise instructed, every person using the parking area is required
to park and lock his own vehicle. Landlord will not be responsible for any
damage to vehicles, injury to persons or loss of property, all of which risks
are assumed by the party using the parking area.

 

6. Validation of visitor parking, if established, will be permissible only by
such method or methods as Landlord may establish at rates determined by
Landlord, in Landlord's sole discretion. Only persons visiting Tenant at the
Premises shall be permitted by Tenant to use the Project's visitor parking
facilities.

 

7. The maintenance, washing, waxing or cleaning of vehicles in the parking
structure or Common Areas is prohibited.

 

8. Tenant shall be responsible for seeing that all of its employees, agents and
invitees comply with the applicable parking rules, regulations, laws and
agreements. Parking area managers or attendants, if any, are not authorized to
make or allow any exceptions to these Parking Rules and Regulations. Landlord
reserves the right to terminate parking rights for any person or entity that
willfully refuses to comply with these rules and regulations.

 

9. Every driver is required to park his own car. Where there are tandem spaces,
the first car shall pull all the way to the front of the space leaving room for
a second car to park behind the first car. The driver parking behind the first
car must leave his key with the parking attendant. Failure to do so shall
subject the driver of the second car to a $50.00 fine. Refusal of the driver to
leave his key when parking in a tandem space shall be cause for termination of
the right to park in the parking facilities. The parking operator, or his
employees or agents, shall be authorized to move cars that are parked in tandem
should it be necessary for the operation of the parking facilities. Tenant
agrees that all responsibility for damage to cars or the theft of or from cars
is assumed by the driver, and further agrees that Tenant will hold Landlord
harmless for any such damages or theft.

 

10. No vehicles shall be parked in the parking areas overnight. The parking
areas shall only be used for daily parking and no vehicle or other property
shall be stored in a parking space.

34

 

 

11. Any vehicle parked by Tenant, its employees, contractors or visitors in a
reserved parking space or in any area of the parking area that is not designated
for the parking of such a vehicle may, at Landlord's option, and without notice
or demand, be towed away by any towing company selected by Landlord, and the
cost of such towing shall be paid for by Tenant and/or the driver of said
vehicle.

 

12. At Landlord's request, Tenant shall provide Landlord with a list which
includes the name of each person using the parking facilities based on Tenant's
parking rights under this Lease and the license plate number of the vehicle
being used by that person. Tenant shall provide Landlord with an updated list
within five (5) days after any part of the list becomes inaccurate.

 

Landlord reserves the right at any time to change or rescind any one or more of
these Rules and Regulations, or to make such other and further reasonable Rules
and Regulations as in Landlord's judgment may from time to time be necessary for
the management, safety, care and cleanliness of the Project, and for the
preservation of good order therein, as well as for the convenience of other
occupants and tenants therein. Landlord may waive any one or more of these Rules
and Regulations for the benefit of any particular tenant, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in favor
of any other tenant, nor prevent Landlord from thereafter enforcing any such
Rules or Regulations against any or all tenants of the Project. Tenant shall be
deemed to have read these Rules and Regulations and to have agreed to abide by
them as a condition of its occupancy of the Premises.

 

 

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Exhibit D

 

Addendum to Standard Office Lease (the "Lease")

dated the 2nd day of July 2012 Between

THE REALTY ASSOCIATES FUND VII, L.P. ("Landlord") and

MOTIVATING THE MASSES, INC. ("Tenant")

 

 

It is hereby agreed by Landlord and Tenant that the provisions of this Addendum
are a part of the Lease. If there is a conflict between the terms and conditions
of this Addendum and the terms and conditions of the Lease, the terms and
conditions of this Addendum shall control. Capitalized terms in this Addendum
shall have the same meaning as capitalized terms in the Lease, and, if a Work
Letter Agreement is attached to this Lease, as those terms have been defined in
the Work Letter Agreement.

 

 

1. Tenant Improvements. Prior to the Commencement Date, Landlord, at Landlord’s
sole cost and expense construct the following improvements to the Premises:

 

(a) Professionally clean the carpets of the Premises

(b) Provide/Install hot water to the sink and dishwasher in the kitchen

 

Landlord shall construct the improvements in a good and workmanlike manner.
Other than the above mentioned tenant improvements Tenant shall accept Premises
in “as-is” condition. The improvements shall be deemed "substantially" completed
when the improvements have been completed except for minor items or defects
which can be completed or remedied after Tenant occupies the Premises without
causing substantial interference with Tenant's use of the Premises.

 

2. Option to Extend - One Option Period. Landlord hereby grants to Tenant the
option to extend the term of the Lease for one (1) three (3)-year period (the
"Extension Option") commencing when the initial lease term expires upon each and
all of the following terms and conditions:

 

(a) On a date which is prior to the date that the option period would commence
(if exercised) by at least two hundred seventy (270) days, Landlord shall have
received from Tenant a written notice of the exercise of the option to extend
the Lease for said additional term (an “Exercise Notice”), time being of the
essence. If the Exercise Notice is not so given and received, the Extension
Option shall automatically expire, Tenant shall no longer have the right to give
an Exercise Notice and this section shall be of no further force or effect.
Tenant shall give the Exercise Notice using certified mail return receipt
requested or some other method where the person delivering the package
containing the Exercise Notice obtains a signature of the person accepting the
package containing the Exercise Notice (e.g., by FedEx with the requirement that
the FedEx delivery person obtain a signature from the person accepting the
package). It shall be the obligation of Tenant to prove that Landlord received
the Exercise Notice in a timely manner. Once Tenant gives an Exercise Notice its
exercise of the Extension Option shall be irrevocable.

 

(b) All of the terms and conditions of the Lease except where specifically
modified by this section shall apply.

 

(c) The monthly Base Rent payable during the option term shall be the Market
Rate on the date the option term commences; provided, however, that at no time
during the term of the Extension Option shall the Base Rent be less than the
Base Rent due immediately preceding the commencement of the term of the
Extension Option.

 

(d) The term "Market Rate" shall mean the annual amount per rentable square foot
that a willing, comparable renewal tenant would pay and a willing, comparable
landlord of a similar office building would accept at arm's length for similar
space, giving appropriate consideration to the following matters: (i) annual
rental rates per rentable square foot; (ii) the type of escalation clauses
(including, but without limitation, operating expense, real estate taxes, and
CPI) and the extent of liability under the escalation clauses (i.e., whether
determined on a "net lease" basis or by increases over a particular base year or
base dollar amount); (iii) rent abatement provisions reflecting free rent and/or
no rent during the lease term; (iv) length of lease term; (v) size and location
of premises being leased; and (vi) other generally applicable terms and
conditions of tenancy for similar space; provided, however, Tenant shall not be
entitled to any tenant improvement allowance. If renewal tenant’s exercising
similar market rate extension options are receiving a tenant improvement
allowance, this fact shall be taken into consideration in determining the Market
Rate. The Market Rate may also designate periodic rental increases, a new Base
Year and similar economic adjustments.

 

(e) If Tenant exercises the Extension Option, Landlord shall determine the
Market Rate by using its good faith judgment. Landlord shall provide Tenant with
written notice of such amount on or before the date that is ninety (90) days
prior to the date that the term of the Extension Option will commence. Tenant
shall have fifteen (15) days ("Tenant's Review Period") after receipt of
Landlord's notice of the new rental within which to accept such rental. In the
event Tenant fails to accept in writing such rental proposal by Landlord, then
such proposal shall be deemed rejected, and Landlord and Tenant shall attempt to
agree upon such Market Rate, using their best good faith efforts. If Landlord
and Tenant fail to reach agreement

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within fifteen (15) days following Tenant's Review Period ("Outside Agreement
Date"), then each party shall place in a separate sealed envelope their final
proposal as to the Market Rate, and such determination shall be submitted to
arbitration in accordance with subsections (i) through (v) below.

 

(i) Landlord and Tenant shall meet with each other within five (5) business days
after the Outside Agreement Date and exchange their sealed envelopes and then
open such envelopes in each other's presence. If Landlord and Tenant do not
mutually agree upon the Market Rate within one (1) business day of the exchange
and opening of envelopes, then, within ten (10) business days of the exchange
and opening of envelopes, Landlord and Tenant shall agree upon and jointly
appoint a single arbitrator who shall by profession be a real estate broker or
agent who shall have been active over the five (5) year period ending on the
date of such appointment in the leasing of similar buildings in the geographical
area of the Premises. Neither Landlord nor Tenant shall consult with such broker
or agent as to his or her opinion as to the Market Rate prior to the
appointment. The determination of the arbitrator shall be limited solely to the
issue of whether Landlord's or Tenant's submitted Market Rate for the Premises
is the closest to the actual Market Rate for the Premises as determined by the
arbitrator, taking into account the requirements for determining Market Rate set
forth herein. Such arbitrator may hold such hearings and require such briefs as
the arbitrator, in his or her sole discretion, determines is necessary. In
addition, Landlord or Tenant may submit to the arbitrator with a copy to the
other party within five (5) business days after the appointment of the
arbitrator any market data and additional information such party deems relevant
to the determination of the Market Rate ("MR Data"), and the other party may
submit a reply in writing within five (5) business days after receipt of such MR
Data.

 

(ii) The arbitrator shall, within thirty (30) days of his or her appointment,
reach a decision as to whether the parties shall use Landlord's or Tenant's
submitted Market Rate and shall notify Landlord and Tenant of such
determination.

 

(iii) The decision of the arbitrator shall be final and binding upon Landlord
and Tenant.

 

(iv) If Landlord and Tenant fail to agree upon and appoint an arbitrator, then
the appointment of the arbitrator shall be made by the presiding judge of the
Superior Court for the county in which the Premises is located (or if there is
no Superior Court in the county, a similar court), or, if he or she refuses to
act, by any judge having jurisdiction over the parties.

 

(v) The cost of the arbitration shall be paid by Landlord and Tenant equally.

 

(vi) Landlord shall have the right to require Tenant to execute and to deliver
to Landlord an amendment to the Lease that accurately sets forth the extended
term of the Lease and the new Base Rent and other economic terms, if any. Within
ten (10) days after Landlord provides the amendment to Tenant, Tenant shall
execute the amendment and deliver the amendment to Landlord. Landlord’s election
not to require Tenant to execute an amendment shall not invalidate Tenant’s
exercise of the Extension Option.

 

 

IN WITNESS WHEREOF, the parties hereto have respectively executed this Addendum.

 

 

LANDLORD:

 

The Realty Associates Fund VII, L.P.,

a Delaware limited partnership

 

By: Realty Associates Fund VII, LLC

its General Partner

 

By: Realty Associates Advisors LLC, its Manager

 

By: Realty Associates Advisors Trust,

its Manager

 

By: /s/ Scott W. Amling,

Scott W. Amling

Regional Director

                    Officer

 

TENANT:

 

Motivating The Masses, Inc.,

a Nevada corporation

 

 

By: /s/ Lisa Nicols

Lisa Nicols

(PRINT NAME)

 

Its: CEO
(PRINT TITLE)

 

 

By:

(PRINT NAME)

 

Its:
(PRINT TITLE)

 

 

 

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