Exhibit 10.99 

 

OFFICE LEASE

 

This Office Lease (the "Lease"), dated as of the date set forth in Section 1 of
the Summary of Basic Lease Information (the "Summary"), below, is made by and
between PACIFIC CENTER OWNER, LLC, a Delaware limited liability company
("Landlord"), and COLLECTORS UNIVERSE, INC., a Delaware corporation ("Tenant").

 

SUMMARY OF BASIC LEASE INFORMATION

 

TERMS OF LEASE

DESCRIPTION

   

1.             Date:

February 3, 2017

   

2.             Premises

     

2.1          Building:

That certain two (2) story office building containing approximately 205,004
rentable square feet of space commonly known as 1610 East St. Andrew Place,
Santa Ana, California, as depicted on Exhibit A-1 to this Lease.

   

2.2          Premises:

Approximately 62,444 rentable square feet of space located on the first (1st)
and second (2nd) floors of the Building and commonly known as Suites 150 and
250, as depicted on Exhibit A to this Lease.

   

3.             Lease Term

(Article 2).

     

3.1          Length of Term:

Approximately one hundred thirty (130) months.

   

3.2          Lease Commencement Date:

The earlier to occur of (i) the date upon which Tenant first commences to
conduct business in the Premises, and (ii) fifteen (15) days following the date
upon which the Premises are delivered to Tenant pursuant to the terms of
Section 2.3 of the Lease (provided the Premises are Ready for Occupancy as of
such date); provided, however, under no circumstances shall the Lease
Commencement Date occur prior to January 1, 2018.

   

3.3          Lease Expiration Date:

The last day of the one hundred and thirtieth (130th) full calendar month
following the Lease Commencement Date.

  

 
 

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4.             Base Rent (Article 3):

     

4.1          Amount Due:

Months

Approximate Monthly

Base Rent Rate
per Rentable
Square Foot

Monthly
Installment
of Base Rent

 

*1 – 12

$1.60

**$99,911.00

 

13 – 24

$1.65

$103,033.00

 

25 – 36

$1.70

$106,155.00

 

37 – 48

$1.75

$109,277.00

 

49 – 60

$1.80

$112,400.00

 

61 – 72

$1.86

$116,146.00

 

73 – 84

$1.91

$119,268.00

 

85 – 96

$1.97

$123,015.00

 

97 – 108

$2.03

$126,761.00

 

109 – 120

$2.09

$130,508.00

 

121 – 130

$2.15

$134,255.00

 

 

*Including any partial month occurring at the beginning of the Lease Term.

 

**Notwithstanding the foregoing, provided Tenant is not in Default under this
Lease, Landlord hereby agrees to abate Tenant's obligation to pay Base Rent
during the second (2nd) through the eleventh (11th) full calendar months,
inclusive, of the initial Lease Term (such total amount of abated Base Rent,
i.e., $999,110.00 in the aggregate, being hereinafter referred to as the "Abated
Amount"). During such abatement period, Tenant will still be responsible for the
payment of all other monetary obligations under this Lease. Tenant acknowledges
that any Default by Tenant under this Lease will cause Landlord to incur costs
not contemplated hereunder, the exact amount of such costs being extremely
difficult and impracticable to ascertain, therefore, should Tenant at any time
during the Lease Term be in Default, then the total unamortized sum of such
Abated Amount (amortized on a straight line basis over the last 120 full
calendar months of the initial Lease Term) so conditionally excused shall become
immediately due and payable by Tenant to Landlord and any remaining Abated
Amount shall no longer be available to Tenant as a rent credit from the date of
such Default. Tenant acknowledges and agrees that nothing in this paragraph is
intended to limit any other remedies available to Landlord at law or in equity
under applicable law (including, without limitation, the remedies under Civil
Code Section 1951.2 and/or 1951.4 and any successor statutes or similar laws),
in the event Tenant Defaults under this Lease.

 

4.2      Rent Payment Address:

Pacific Center Owner, LLC

c/o Brookhollow Management Company

151 Kalmus Drive, Suite F-1

Costa Mesa, CA 92626
Attention: Property Manager

 

So long as Landlord provides Tenant with its bank account information, payments
shall be made by wire or ACH to the extent practical. Payment shall be made
exactly as set forth above (including the entity name).

   

5.             Tenant's Share

(Article 4):

30.5% (based on 62,444 rentable square feet in the Premises and 205,004 rentable
square feet in the Building).

   

Current Estimated Direct Expenses

(Article 4):

$0.42 per rentable square foot (i.e., estimated as of the date hereof).    

6.             Permitted Use

(Article 5):

Warehousing, storing, shipping, receiving, researching, grading, authenticating,
selling, auctioning and displaying coins, currency, trading cards, sports
equipment, tickets, stamps, documents, instruments and other valuable items and
collectibles, and general office uses ancillary thereto, all consistent with a
first-class office building in the Central Orange County/Santa Ana, Tustin,
Orange submarket, and to the extent permitted by Laws and the Development CC&R's
existing as of the date of this Lease.

  

 
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7.             Security Deposit

(Article 21):

$126,137.00 (i.e., approximately $2.02 per rentable square foot located within
the Premises), subject to reduction in accordance with the terms of Article 21
below.

   

8.             Parking Passes

(Article 28):

Four and 64/100 (4.64) unreserved parking passes for every 1,000 rentable square
feet of the Premises, which equals two hundred ninety (290) unreserved parking
passes based upon the Premises containing 62,444 rentable square feet of space.
All such parking passes shall be utilized subject to applicable Laws and
pursuant to the terms of Article 28 of this Lease.

   

9.             Address of Tenant

(Section 29.18):

Collectors Universe, Inc.

1921 E. Alton Ave., Suite 200

Santa Ana, CA 92705

Attention: Joe Wallace, CEO

 

With Copy To:

 

Keith A. Attlesey

Attlesey Storm, LLP

2552 Walnut Ave., Suite 100

Tustin, CA 92780

 

(Prior to Lease Commencement Date)

   

and

Collectors Universe, Inc.

1610 East St. Andrew Place

Suite 150

Santa Ana, CA 92705

Attention: Joe Wallace, CFO

 

With Copy To:

 

Keith A. Attlesey

Attlesey Storm, LLP

2552 Walnut Ave., Suite 100
Tustin, CA 92780

 

(After Lease Commencement Date)

   

10.           Address of Landlord

(Section 29.18):

 

 

 

 

and

 

 

Pacific Center Owner, LLC

c/o Brookhollow Management Company

151 Kalmus Drive, Suite F-1

Costa Mesa, CA 92626

Attention: Property Manager

 

Allen Matkins Leck Gamble Mallory & Natsis LLP
1900 Main Street, 5th Floor
Irvine, California 92614
Attention: Brad H. Nielsen, Esq.

  

 
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11.           Broker(s)

(Section 29.24):

CBRE, Inc. (for Landlord)
Lee & Associates (for Tenant)

 

12.           Tenant Improvement Allowance

(Section 2 of Exhibit B):

$2,809,980.00 (based on $45.00 per rentable square foot of the Premises).

   

  

 
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ARTICLE 1

PREMISES, BUILDING, PROJECT, AND COMMON AREAS

 

1.1           Premises, Building, Project and Common Areas.

 

1.1.1     The Premises. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the premises set forth in Section 2.2 of the Summary (the
"Premises"). The parties hereto agree that the lease of the Premises is upon and
subject to the terms, covenants and conditions herein set forth, and each party
covenants as a material part of the consideration for this Lease to keep and
perform each and all of such terms, covenants and conditions by it to be kept
and performed and that this Lease is made upon the condition of such
performance. The parties hereto hereby acknowledge that the purpose of Exhibit A
is to show the approximate location of the Premises in the "Building," as that
term is defined in Section 1.1.2, below, only, and such Exhibit is not meant to
constitute an agreement, representation or warranty as to the construction of
the Premises, the precise area thereof or the specific location of the "Common
Areas," as that term is defined in Section 1.1.3, below, or the elements thereof
or of the accessways to the Premises or the "Project", as that term is defined
in Section 1.1.2, below.

 

1.1.2     The Building and The Project. The Premises will be a part of the
building set forth in Section 2.1 of the Summary (the "Building"). The term
"Project," as used in this Lease, shall mean (i) the Building, the building
located at 1600 East St. Andrew Place, Santa Ana, California, and the Common
Areas, (ii) the land (which is improved with landscaping, parking facilities and
other improvements) upon which the Building, the other buildings described
above, and the Common Areas are located, and (iii) at Landlord's discretion,
subject to the conditions set forth in Section 1.1.3, below, any additional real
property, areas, land, buildings or other improvements added thereto outside of
the Project. The Project is part of a mixed-use development known as "Pacific
Center," and is subject to the "Development CC&R's," as that term is defined in
Section 29.33 below.

 

1.1.3     Common Areas. Tenant shall have the non-exclusive right to use in
common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease and the Development CC&R's,
those portions of the Project which are provided, from time to time, for use in
common by Landlord, Tenant and any other tenants of the Project, including (i)
the areas on the ground floor and all other floors of the Project devoted to
non-exclusive uses such as corridors, stairways, loading and unloading areas,
walkways, driveways, fire vestibules, elevators and elevator foyers, lobbies,
electric and telephone closets, restrooms, mechanical areas, janitorial closets
and other similar facilities for the general use of and/or benefit of all
tenants and invitees of the Project, (ii) those areas of the Project devoted to
mechanical and service rooms servicing more than one (1) floor or the Project as
a whole and which service the Project tenants as a whole, and (iii) Project
atriums and plazas, if any (such areas, together with such other portions of the
Project designated by Landlord, in its reasonable discretion, including certain
areas designated for the exclusive use of certain tenants, or to be shared by
Landlord and certain tenants, are collectively referred to herein as the "Common
Areas"); provided, however, Tenant agrees not to use, and to cause its agents,
employees and invitees not to use, the portion of the Common Areas designated on
Exhibit A-2 attached hereto as "Area 1 Patio" and/or "Area 2 1600 Outdoor Area"
(collectively, the "Prohibited Common Areas"). Landlord and Tenant acknowledge
and agree that the remainder of the Project common areas depicted on Exhibit A-2
attached hereto, including, without limitation, "Area 3 Bocce Ball Court", shall
be deemed to be part of the Common Areas for all purposes of this Lease. The
manner in which the Building, Project and Common Areas are maintained and
operated shall be at the sole discretion of Landlord and the use thereof shall
be subject to such rules, regulations and restrictions as Landlord may make from
time to time (including, without limitation, any rules regulations or
restrictions contained in or promulgated under the Development CC&R's). Landlord
reserves the right to close temporarily, make alterations or additions to, or
change the location of elements of the Project and the Common Areas.

 

 
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1.2           Verification of Rentable and Usable Square Feet. For purposes of
this Lease, the term "usable area," "usable square footage" or "usable square
feet" means the usable area as determined substantially in accordance with the
Standard Method for Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.3 –
2009 Gross Area Standard Classification and accompanying guidelines (the "BOMA
Standard"); and the term "rentable area," "rentable square footage" or "rentable
square feet" means the rentable area measured substantially in accordance with
the BOMA Standard. The rentable and usable square feet of the Building and the
Project (but not the Premises) are subject to verification from time to time by
Landlord's space planner/architect/consultant and such verification shall be
made in accordance with the provisions of this Section 1.2. Tenant acknowledges
that Landlord has used "Stevenson Systems" to determine the rentable and usable
square footage of the Premises, the Building and/or the Project. In the event
Stevenson Systems or such other space planner/architect/consultant determines
that the usable and rentable square footage of the Building and/or the Project
(but not the Premises) differ from those set forth in Section 2 of this Summary,
all amounts, percentages and figures appearing or referred to in this Lease
based upon such incorrect amount (including, without limitation, "Tenant's
Share,” but expressly excluding the amount of "Base Rent," any "Security
Deposit" and the "Tenant Improvement Allowance") shall be modified in accordance
with such determination. Landlord and Tenant stipulate and agree that the
Premises contains 68,676 rentable square feet for all purposes of this Lease and
is not subject to remeasurement.

 

1.3           Condition of the Premises. Except as specifically set forth in
this Lease and in the Tenant Work Letter attached hereto as Exhibit B (the
"Tenant Work Letter"), Tenant shall accept the Premises and the Building,
including the base, shell, and core of (i) the Premises and (ii) the floor of
the Building on which the Premises is located (collectively, the "Base, Shell,
and Core") in their "AS-IS" condition as of the Lease Commencement Date and
Landlord shall not be obligated to provide or pay for any improvement work or
services related to the improvement of the Premises. Tenant also acknowledges
that Landlord has made no representation or warranty regarding the condition of
the Premises, the Building or the Project or with respect to the suitability of
any of the foregoing for the conduct of Tenant's business, except as
specifically set forth in this Lease and the Tenant Work Letter. The taking of
possession of the Premises by Tenant shall conclusively establish that the
Premises and the Building were at such time in good and sanitary order,
condition and repair.

 

1.4           Right to Lease. Landlord hereby grants to the originally named
Tenant herein ("Original Tenant") or any "Non-Transferee Assignee," as that term
is defined in Section 14.7, below, a right to lease the remaining space located
within the Building (the "First Offer Space"). Tenant's right to lease shall be
on the terms and conditions set forth in this Section 1.4.

 

1.4.1     Procedure for Offer. Landlord shall notify Tenant (a "First Offer
Notice") from time to time when the First Offer Space or any portion thereof
becomes available for lease to third parties and the subject of correspondence
between Landlord and a third party tenant interested in leasing all or any
portion of the First Offer Space. Pursuant to such First Offer Notice, Landlord
shall offer to lease to Tenant the then available First Offer Space. A First
Offer Notice shall describe the space so offered to Tenant and shall set forth
the lease term for such space (which shall be coterminous with the initial Lease
Term hereunder so long as at least five (5) full years remain in the initial
Lease Term measured from the commencement of the Lease Term applicable to the
First Offer Space), the parking ratio applicable to such space (which Tenant
acknowledges shall not exceed 4/1,000 rsf) and the other economic terms upon
which Landlord is willing to lease such space to Tenant. The rentable square
footage of the space so offered to Tenant shall be determined in accordance with
the terms of Section 1.2 of this Lease.

 

1.4.2     Procedure for Acceptance. If Tenant wishes to exercise Tenant's right
to lease with respect to the space described in a First Offer Notice, then
within ten (10) business days of delivery of such First Offer Notice to Tenant,
Tenant shall deliver written notice to Landlord irrevocably exercising its right
to lease with respect to the entire space described in such First Offer Notice
on the terms contained in such notice. If Tenant does not so notify Landlord
within the ten (10) business day period, then Landlord shall be free to lease
the space described in such First Offer Notice to anyone to whom Landlord
desires and on any economic and noneconomic terms desired by Landlord; provided,
however, if Landlord does not enter into a lease with a third party for the
applicable First Offer Space within 270-days after delivery of the First Offer
Notice to Tenant, Landlord shall not thereafter engage in other lease
negotiations with respect to the First Offer Space without again delivering a
First Offer Notice to Tenant and making such First Offer Space available to
Tenant on the terms contained in this Section 1.4. Notwithstanding anything to
the contrary contained herein, Tenant must elect to exercise its right to lease,
if at all, with respect to all of the space offered by Landlord to Tenant at any
particular time, and Tenant may not elect to lease only a portion thereof. If
Tenant does not exercise its right to lease with respect to any space described
in a First Offer Notice or if Tenant fails to respond to a First Offer Notice
within ten (10) business days of delivery thereof, then, subject to Landlord's
above described obligation to re-offer the applicable First Offer Space to
Tenant if it fails to enter into a lease with a third party for the applicable
First Offer Space within 270-days after delivery of the First Offer Notice to
Tenant, Tenant's right to lease as set forth in this Section 1.4 shall terminate
as to all of the space described in such First Offer Notice.

 

 
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1.4.3     Construction In First Offer Space. Except as set forth in the First
Offer Notice, Tenant shall accept the First Offer Space in its then existing "as
is" condition and the construction of improvements in the First Offer Space, if
any, shall comply with the terms of Article 8 of this Lease.

 

1.4.4     Amendment to Lease. If Tenant timely exercises Tenant's right to lease
First Offer Space as set forth herein, then, within fifteen (15) days
thereafter, Landlord and Tenant shall execute a lease amendment (or, at
Landlord's option, a separate lease) for such First Offer Space upon the terms
and conditions as set forth in the First Offer Notice therefor and this
Section 1.4. Tenant shall commence payment of Rent for such First Offer Space,
and the term of such First Offer Space (the "First Offer Term") shall commence,
upon the date of delivery of such First Offer Space to Tenant (the "First Offer
Commencement Date") and terminate on the date set forth in the First Offer
Notice therefor.

 

1.4.5     Termination of Right to Lease. The rights contained in this
Section 1.4 shall be personal to Original Tenant and any Non-Transferee
Assignee, and may only be exercised by Original Tenant or a Non-Transferee
Assignee (and not by any other assignee, sublessee or other "Transferee," as
that term is defined in Section 14.1 of this Lease, of Tenant's interest in this
Lease) if Original Tenant or a Non-Transferee Assignee occupies the entire
Premises. Subject to the terms of Section 1.4.2 above, the right to lease
granted herein shall terminate as to particular First Offer Space upon the
failure by Tenant to exercise its right to lease with respect to such First
Offer Space as offered by Landlord. Tenant shall not have the right to lease
First Offer Space, as provided in this Section 1.4, if, as of the date of the
attempted exercise of any right to lease by Tenant, or as of the scheduled date
of delivery of such First Offer Space to Tenant, Tenant is in Default under this
Lease or Tenant has previously been in Default under this Lease more than twice.

 

ARTICLE 2

LEASE TERM

 

2.1           Lease Term. The terms and provisions of this Lease shall be
effective as of the date of this Lease except for the provisions of this Lease
relating to the payment of Rent. The term of this Lease (the "Lease Term") shall
be as determined in accordance with Section 3.1 of the Summary, shall commence
on the date determined in accordance with Section 3.2 of the Summary (the "Lease
Commencement Date"), and shall terminate on the date determined in accordance
with Section 3.3 of the Summary (the "Lease Expiration Date") unless this Lease
is sooner terminated as hereinafter provided. For purposes of this Lease, the
term "Lease Year" shall mean each consecutive twelve (12) month period during
the Lease Term. This Lease shall not be void, voidable or subject to
termination, nor shall Landlord be liable to Tenant for any loss or damage,
resulting from Landlord's inability to deliver the Premises to Tenant by any
particular date. At any time during the Lease Term, Landlord may deliver to
Tenant a notice in the form as set forth in Exhibit C, attached hereto, as a
confirmation only of the information set forth therein, which Tenant shall
execute and return to Landlord within five (5) days of receipt thereof.
Notwithstanding the foregoing, if the Substantial Completion (as defined in
Section 5.1 of the Tenant Work Letter) of the Premises fails to occur on or
before the later of July 1, 2018 or that date which is ten (10) months following
the date the Permits (as defined in Section 3.4 of the Tenant Work Letter) are
obtained and delivered to Landlord (the "Outside Substantial Completion Date"),
as such failure shall be extended to the extent of any delays of Force Majeure
(as defined in Section 29.16 below) or Tenant Delays (as defined in Section 5.2
of the Tenant Work Letter), then as Tenant's sole and exclusive remedy, Tenant
shall receive one (1) day of Base Rent credit for each day beyond the Outside
Substantial Completion Date that the Substantial Completion of the Premises
fails to occur.

 

2.2           Option Term.

 

2.2.1     Option Right. Landlord hereby grants to the Original Tenant or any
"Non-Transferee Assignee," as that term is defined in Section 14.7, below,
one (1) option to extend the Lease Term for a period of five (5) years (the
"Option Term"), which option shall be exercisable only by written notice
delivered by Tenant to Landlord as provided below, provided that the following
conditions (the "Option Conditions") are satisfied: (i) as of the date of
delivery of the "Option Rent Notice," as that term is defined in Section 2.2.4,
below, this Lease remains in full force and effect, Tenant is not in Default
under this Lease and has not previously been in Default under this Lease more
than twice, and Original Tenant or a Non-Transferee Assignee occupies the entire
Premises; (ii) as of the date of delivery of the "Option Exercise Notice," as
that term is defined in Section 2.2.4, below, this Lease remains in full force
and effect, Tenant is not in Default under this Lease and has not previously
been in Default under this Lease more than twice, and Original Tenant or a
Non-Transferee Assignee occupies the entire Premises; and (iii) as of the end of
the immediately previous Lease Term, this Lease remains in full force and
effect, Tenant is not in Default under this Lease and has not previously been in
Default under this Lease more than twice, and Original Tenant or a
Non-Transferee Assignee occupies the entire Premises. Landlord may, at
Landlord's option, exercised in Landlord's sole and absolute discretion, waive
any of the Option Conditions in which case the option, if otherwise properly
exercised by Tenant, shall remain in full force and effect. Upon the proper
exercise of such option to extend, and provided that Tenant satisfies all of the
Option Conditions (except those, if any, which are waived by Landlord), the
Lease Term, as it applies to the Premises and the First Offer Space (if
applicable), shall be extended for a period of five (5) years. The rights
contained in this Section 2.2 shall be personal to Original Tenant and any
Non-Transferee Assignee, and may be exercised only by Original Tenant or a
Non-Transferee Assignee (and not by any other assignee, sublessee or other
"Transferee," as that term is defined in Section 14.1, below, of Tenant's
interest in this Lease).

 

 
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2.2.2     Option Rent. The annual Rent payable by Tenant during the Option Term
(the "Option Rent") shall be equal to the Fair Rental Value for the Premises for
the Option Term. Notwithstanding the foregoing, the Base Rent component of the
Option Rent shall be adjusted accordingly such that Tenant shall continue to pay
Tenant's Share of Direct Expenses during the Option Term in accordance with
Article 4, below.

 

2.2.3     Fair Rental Value. As used in this Lease, "Fair Rental Value" shall be
equal to the rent (including additional rent and considering any "base year" or
"expense stop" applicable thereto, if any) on an annual per rentable square foot
basis, including all escalations, at which, as of the commencement of the
applicable Option Term, tenants are leasing non-sublease, non-encumbered,
non-equity space which is comparable in size, location and quality to the
Premises, for a comparable lease term, in an arm's length transaction
consummated during the twelve (12) month period prior to the date on which
Landlord delivers the "Option Rent Notice," as that term is defined in
Section 2.2.4, below, which comparable space is located in the Project, or if
there are not a sufficient number of comparable transactions in the Project,
then in other similar buildings in general vicinity of the Building (the
"Comparable Buildings"), taking into consideration the following concessions
(collectively, the "Concessions"): (a) rental abatement concessions, if any,
being granted such tenants in connection with such comparable space; (b) tenant
improvements or allowances provided or to be provided for such comparable space,
and taking into account the value of the existing improvements in the subject
space, such value to be based upon the age, condition, design, quality of
finishes and layout of the improvements and the extent to which the same could
be utilized by a general office user (but taking into consideration, as
applicable, the fact that the precise tenant improvements existing in the
Premises are specifically suitable to Tenant); (c) that Landlord is providing an
above market number of parking passes to Tenant (i.e., 0.5/1,000 rsf above
market as of the date hereof); and (d) other reasonable monetary concessions
being granted such tenants in connection with such comparable space; provided,
however, that in calculating the Fair Rental Value, no consideration shall be
given to any period of rental abatement, if any, granted to tenants in
comparable transactions in connection with the design, permitting and
construction of tenant improvements in such comparable spaces. The Fair Rental
Value shall additionally include a determination as to whether, and if so to
what extent, Tenant must provide Landlord with financial security, such as a
letter of credit or guaranty, for Tenant's Rent obligations during the
applicable Option Term. Such Concessions, at Landlord's election, either
(A) shall be reflected in the effective rental rate payable by Tenant (which
effective rental rate shall take into consideration the total dollar value of
such Concessions as amortized on a straight-line basis over the applicable term
of the comparable transaction), in which case such Concessions evidenced in the
effective rental rate shall not be granted to Tenant, or (B) shall be granted to
Tenant in kind. Notwithstanding the foregoing, the base rent component of the
Option Rent on an annual, per rentable square foot basis shall in no event be
less than the Base Rent paid by Tenant for the month immediately prior to the
applicable Option Term.

 

2.2.4     Exercise of Option. The option contained in this Section 2.2 shall be
exercised by Tenant, if at all, only in the following manner: (i) Tenant shall
deliver written notice thereof to Landlord (the "Option Exercise Notice") not
more than twelve (12) months nor less than nine (9) months prior to the
expiration of the initial Lease Term exercising its option for the entire
Premises then being leased by Tenant; (ii) Landlord, after receipt of Tenant's
Option Exercise Notice, shall deliver notice (the "Option Rent Notice") to
Tenant, on or before that date which is thirty (30) days after receipt of
Tenant's Option Exercise Notice, setting forth the Option Rent; provided that
within five (5) business days after the date of the Option Rent Notice, Tenant
may, at its option, object to the Option Rent contained in the Option Rent
Notice, in which case the parties shall follow the procedure, and the Option
Rent shall be determined, as set forth in Section 2.2.5, below.

 

 
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2.2.5      Determination of Option Rent. In the event Tenant timely and
appropriately objects to the Option Rent, Landlord and Tenant shall attempt to
agree upon the Option Rent using reasonable, good-faith efforts. If Landlord and
Tenant fail to reach agreement within thirty (30) days following Tenant's timely
and appropriate objection to the Option Rent (the "Outside Agreement Date"),
then each party shall make a separate determination of the Option Rent within
ten (10) business days after the Outside Agreement Date, and such determinations
shall be submitted to arbitration in accordance with Sections 2.2.5.1 through
2.2.5.7, below.

 

2.2.5.1     Landlord and Tenant shall each appoint one arbitrator who shall by
profession be a real estate appraiser who shall have been active over the five
(5) year period ending on the date of such appointment in the appraisal of
similar commercial properties in the North/Central Orange County, California
area. The determination of the arbitrators shall be limited solely to the issue
of whether Landlord's or Tenant's submitted Option Rent is the closest to the
actual Option Rent as determined by the arbitrators, taking into account only
the requirements of Section 2.2.3 of this Lease (i.e., the arbitrators may only
select Landlord's or Tenant's determination and shall not be entitled to make a
compromise determination). Each such arbitrator shall be appointed within
fifteen (15) business days after the Outside Agreement Date.

 

2.2.5.2     The two (2) arbitrators so appointed shall within ten (10) business
days of the appointment of the last appointed arbitrator agree upon and appoint
a third (3rd) arbitrator who shall be qualified under the same criteria set
forth hereinabove for qualification of the initial two (2) arbitrators.

 

2.2.5.3     The three (3) arbitrators shall within thirty (30) days of the
appointment of the third (3rd) arbitrator reach a decision as to whether the
parties shall use Landlord's or Tenant's submitted Option Rent and shall notify
Landlord and Tenant thereof.

 

2.2.5.4     The decision of the majority of the three (3) arbitrators shall be
binding upon Landlord and Tenant.

 

2.2.5.5     If either Landlord or Tenant fails to appoint an arbitrator within
fifteen (15) business days after the Outside Agreement Date, then the arbitrator
appointed by one of them shall reach a decision, notify Landlord and Tenant
thereof, and such arbitrator's decision shall be binding upon Landlord and
Tenant.

 

2.2.5.6     If the two (2) arbitrators fail to agree upon and appoint a third
(3rd) arbitrator, or both parties fail to appoint an arbitrator, then the
appointment of the third (3rd) or any arbitrator shall be dismissed and the
matter to be decided shall be forthwith submitted to arbitration under the
provisions of the American Arbitration Association, but subject to the
instructions set forth in this Section 2.2.5.

 

2.2.5.7     The cost of arbitration shall be split evenly between the parties.

 

2.3           Early Access Period. Notwithstanding the fact that the Lease Term
has not commenced, Landlord agrees to use its commercially reasonable efforts to
permit Tenant to enter the Premises in order to commence the installation of its
equipment and personal property approximately fifteen (15) days prior to the
Lease Commencement Date and on that date (the "Estimated Early Access Date")
(such early access period being hereinafter referred to as the "Early Access
Period"). Such entry shall be subject to all of the conditions set forth in this
paragraph below. Such early entry is conditioned upon Tenant and its
contractors, employees, agents and invitees working in harmony and not
interfering with Landlord and its contractors and Landlord may immediately
terminate such early entry in the event of any such interference. Tenant agrees
that any such early entry is subject to all of the terms and conditions of this
Lease, except for those relating to the payment of rent and other recurring
monetary obligations which have a specific commencement time, which provisions
will become applicable in accordance with the terms of this Lease; provided,
however, if Tenant occupies and commences operation of its business from within
any portion of the Premises prior to the Lease Commencement Date, then Tenant
shall be obligated to pay to Landlord the actual electricity, gas, water, waste
disposal and janitorial costs incurred by Landlord with respect to the Premises
prior to the Lease Commencement Date. Without limiting the generality of the
foregoing, such early occupancy shall be conditioned upon Tenant first
delivering to Landlord proof of Tenant's insurance as required hereunder and
Tenant shall be specifically bound by the terms of Articles 5 (Use of Premises)
and 10 (Insurance) of this Lease during such Early Access Period.

 

 
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ARTICLE 3

BASE RENT

 

Tenant shall pay, without prior notice or demand, to Landlord or Landlord's
agent at the address set forth in Section 4.2 of the Summary, or, at Landlord's
option, at such other place as Landlord may from time to time designate by
delivering written notice to Tenant at Tenant's notice address as set forth
herein, by a check or wire transfer for currency which, at the time of payment,
is legal tender for private or public debts in the United States of America,
base rent ("Base Rent") as set forth in Section 4 of the Summary, payable in
equal monthly installments as set forth in Section 4 of the Summary in advance
on or before the first day of each and every calendar month during the Lease
Term, without any setoff or deduction whatsoever. The Base Rent for the first
full month of the Lease Term shall be paid at the time of Tenant's execution of
this Lease. If any Rent payment date (including the Lease Commencement Date)
falls on a day of the month other than the first day of such month or if any
payment of Rent is for a period which is shorter than one month, the Rent for
any fractional month shall accrue on a daily basis for the period from the date
such payment is due to the end of such calendar month or to the end of the Lease
Term at a rate per day which is equal to 1/360 of the applicable annual Rent. It
is intended that this Lease be a "triple net lease," and that the Rent to be
paid hereunder by Tenant will be received by Landlord without any deduction or
offset whatsoever by Tenant, foreseeable or unforeseeable. Except as expressly
provided to the contrary in this Lease, Landlord shall not be required to make
any expenditure, incur any obligation, or incur any liability of any kind
whatsoever in connection with this Lease or the ownership, construction,
maintenance, operation or repair of the Premises, Building or Project. All other
payments or adjustments required to be made under the terms of this Lease that
require proration on a time basis shall be prorated on the same basis.

 

ARTICLE 4

ADDITIONAL RENT

 

4.1          General Terms. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "Tenant's Share" of the annual "Direct
Expenses," as those terms are defined in Section 5 of the Summary and
Section 4.2.1 of this Lease, respectively. Such payments by Tenant, together
with any and all other amounts payable by Tenant to Landlord or Landlord's
property manager pursuant to the terms of this Lease, are hereinafter
collectively referred to as the "Additional Rent", and the Base Rent and the
Additional Rent are herein collectively referred to as "Rent." All amounts due
under this Article 4 as Additional Rent shall be payable for the same periods
and in the same manner as the Base Rent. Without limitation on other obligations
of Tenant which survive the expiration of the Lease Term, the obligations of
Tenant to pay the Additional Rent provided for in this Article 4 shall survive
the expiration of the Lease Term.

 

4.2           Definitions of Key Terms Relating to Additional Rent. As used in
this Article 4, the following terms shall have the meanings hereinafter set
forth:

 

4.2.1     "Direct Expenses" shall mean, collectively, the "Operating Expenses"
and the "Tax Expenses."

 

4.2.2     "Expense Year" shall mean each calendar year in which any portion of
the Lease Term falls, through and including the calendar year in which the Lease
Term expires.

 

 
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4.2.3     "Operating Expenses" shall mean all expenses, costs and amounts of
every kind and nature which Landlord pays or accrues during any Expense Year
because of or in connection with the ownership, management, maintenance,
security, repair, replacement, restoration or operation of the Project, or any
portion thereof; provided, however, Operating Expenses shall not include Tax
Expenses (as defined below) or any of the following expenses since Tenant is
required to pay for the actual cost of the same (with no markup or
administrative fee charged by Landlord) directly to Landlord or the applicable
utility/service provider, at Landlord's sole option: Premises electricity,
Premises janitorial and Premises security. Without limiting the generality of
the foregoing, Operating Expenses shall specifically include any and all of the
following: (i) the cost of supplying all utilities (other than electricity
provided to the Premises, which is Tenant's sole responsibility), the cost of
operating, repairing, maintaining, and renovating the utility, telephone,
mechanical, sanitary, storm drainage, and elevator systems, and the cost of
maintenance and service contracts in connection therewith; (ii) the cost of
licenses, certificates, permits and inspections and the cost of contesting any
governmental enactments which may affect Operating Expenses, and the costs
incurred in connection with a Project wide mandatory or Landlord implemented
transportation system management program or similar program; (iii) the cost of
all insurance carried by Landlord or the property manager of Landlord in
connection with the Project in such amounts as Landlord may reasonably determine
or as may be required by the Development CC&R's, any mortgagees or the lessor of
any underlying or ground lease affecting the Project and/or the Building;
(iv) the cost of landscaping, relamping, all supplies, tools, equipment and
materials used in the operation, repair and maintenance of the Project, or any
portion thereof (provided, however, under no circumstances shall Tenant be
liable under this clause (iv) for more than $5,000.00 of tools and equipment
costs in any Lease Year); (v) costs incurred in connection with the parking
areas servicing the Project; (vi) fees and other costs, including management
fees, consulting fees, legal fees and accounting fees, of all contractors and
consultants in connection with the management, operation, maintenance or
security of the Project (other than security provided to the Premises, which is
Tenant's sole responsibility), and employer's Social Security taxes,
unemployment taxes or insurance, and any other taxes which may be levied on such
wages, salaries, compensation and benefits; provided, that if any employees of
Landlord or its property manager provide services for more than one project,
then a prorated portion of such employees' wages, benefits and taxes shall be
included in Operating Expenses based on the portion of their working time
devoted to the Project; (vii) payments under any equipment rental agreements and
the fair rental value of any management office space and the cost of furnishings
in such management office space; (viii) wages, salaries and other compensation
and benefits, including taxes levied thereon, of all persons engaged in the
operation, maintenance and security of the Project; (ix) costs under any
instrument pertaining to the sharing of costs by the Project; (x) operation,
repair, maintenance and replacement of all systems and equipment and components
thereof of the Building and/or the Project; (xi) the cost of janitorial (other
than janitorial provided to the Premises, which is Tenant's sole
responsibility), alarm, security and other services, replacement of wall and
floor coverings, ceiling tiles and fixtures in common areas, maintenance and
replacement of curbs and walkways, repair to roofs and re-roofing;
(xii) amortization (including interest on the unamortized cost) of the cost of
acquiring or the rental expense of personal property used in the maintenance,
operation and repair of the Project, or any portion thereof; (xiii) the cost of
capital improvements or other costs incurred in connection with the Project
(A) which are intended to effect economies in the operation or maintenance of
the Project, or any portion thereof, or (B) that are required under any
governmental law or regulation; provided, however, that any capital expenditure
shall be amortized with interest over the lesser of its useful life or, if
applicable, the period of time in which the savings from such capital
expenditure is equal to or greater than the cost of the capital expenditure, as
Landlord shall reasonably determine; (xiv) costs, fees, charges or assessments
imposed by, or resulting from any mandate imposed on Landlord by, any federal,
state or local government for fire and police protection, trash removal,
community services, or other services which do not constitute "Tax Expenses" as
that term is defined in Section 4.2.4, below; and (xv) payments under any
easement, license, operating agreement, declaration, restrictive covenant, or
instrument pertaining to the sharing of costs by the Building, including,
without limitation, all assessments levied against Landlord or the Project
pursuant to the Development CC&R's (whether or not the same would otherwise be
includable in Operating Expenses pursuant to this Section 4.2).

 

Notwithstanding the foregoing, following calendar year 2017, Tenant's Share of
"Controllable Operating Expenses" shall not increase by more than four
percent (4%) per annum. As used herein, the term "Controllable Operating
Expenses" means all Operating Expenses other than (a) insurance costs,
(b) utility costs, (c) costs levied, assessed or imposed by, or at the direction
of, or resulting from statutes or regulations or interpretations thereof
promulgated by, any federal, state, regional, municipal or local governmental
authority in connection with the use or occupancy of the Building or the Project
or the parking facility serving the Building or the Project, and (d) cost of
capital replacements and/or the amortization thereof. For purposes of clarity
and since the defined term Operating Expenses does not include Tax Expenses,
under no circumstances shall Tax Expenses be deemed part of the Controllable
Operating Expenses.

 

 
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If Landlord is not furnishing any particular work or service (the cost of which,
if performed by Landlord, would be included in Operating Expenses) to a tenant
who has undertaken to perform such work or service in lieu of the performance
thereof by Landlord, Operating Expenses shall be deemed to be increased by an
amount equal to the additional Operating Expenses which would reasonably have
been incurred during such period by Landlord if it had at its own expense
furnished such work or service to such tenant. If the Project is not at least
ninety-five percent (95%) occupied during all or a portion of any Expense Year,
Landlord may elect to make an appropriate adjustment to the components of
Operating Expenses for such year to determine the amount of Operating Expenses
that would have been incurred had the Project been ninety-five percent (95%)
occupied; and the amount so determined shall be deemed to have been the amount
of Operating Expenses for such year.

 

Operating Expenses shall not, however, include (A) except as otherwise
specifically provided in this Section 4.2, to the extent Landlord is reimbursed
by insurance proceeds, the costs of repairs or other work occasioned by fire,
windstorm or other casualty (other than those amounts within the deductible
limits of insurance policies actually carried by Landlord, which amounts shall
be includable as Operating Expenses so long as such deductibles are within the
generally prevailing range of deductibles to policies carried by landlords of
comparable first-class office buildings located in the vicinity of the
Building); (B) costs of leasing commissions, attorneys' fees and other costs and
expenses incurred in connection with negotiations or disputes with present or
prospective tenants or other occupants of the Building; (C) except as otherwise
specifically provided in this Section 4.2, costs incurred by Landlord in the
repairs, capital additions, alterations or replacements made or incurred to
rectify or correct defects in design, materials or workmanship in connection
with any portion of the Building; (D) costs (including permit, license and
inspection costs) incurred in renovating or otherwise improving, decorating or
redecorating rentable space for other tenants or vacant rentable space; (E) cost
of utilities or services sold to Tenant or others for which Landlord is entitled
to and actually receives reimbursement (other than through any operating cost
reimbursement provision identical or substantially similar to the provisions set
forth in this Lease); (F) except as otherwise specifically provided in this
Section 4.2, costs incurred by Landlord for alterations to the Building which
are considered capital improvements and replacements under sound real estate
management principles, consistently applied; (G) costs of depreciation and
amortization, except on materials, small tools and supplies purchased by
Landlord to enable Landlord to supply services Landlord might otherwise contract
for with a third party, where such depreciation and amortization would otherwise
have been included in the charge for such third party services, all as
determined in accordance with sound real estate management principles,
consistently applied; (H) costs of services or other benefits which are not
available to Tenant but which are provided to other tenants of the Building; (I)
costs incurred due to the violation by Landlord or any other tenant of the terms
and conditions of any lease of space in the Building or costs incurred which are
the express responsibility of any other tenant of the Building pursuant to the
terms of its lease; (J) except as otherwise specifically provided in this
Section 4.2, costs of principal or interest on debt or amortization on any
mortgages, and rent and other charges, costs and expenses payable under any
mortgage, if any; (K) the amount of the management fee paid by Landlord in
connection with the management of the Building and the Project to the extent
such management fee is in excess of the greater of (1) three percent (3%) of the
gross revenues of the Project (which shall be grossed up by Landlord up to one
hundred percent (100%) occupancy on an annual basis), and (2) management fees
customarily paid or charged by landlords of other first-class office buildings
located in the vicinity of the Project; (L) costs of any compensation and
employee benefits paid to clerks, attendants or other persons in a commercial
concession operated by Landlord, except the parking facilities for the Project;
(M) costs of rentals and other related expenses incurred in leasing HVAC,
elevators or other equipment ordinarily considered to be of a capital nature
except equipment which is used in providing janitorial or similar services and
which is not affixed to the Building; (N) costs of advertising and promotion;
(O) costs of electrical power for which Tenant directly contracts with and pays
a local public service company; (P) costs incurred to rectify any violation of
law within the Building or Common Areas existing as of the date of this Lease;
(Q) costs incurred in connection with adding or deleting floors in the Building;
(R) costs (including credits or allowances) for the design and construction or
renovation of the initial tenant improvements for the Premises of Tenant or the
premises of other tenants or occupants, excluding repairs, maintenance and
replacement of elements of the Premises or other premises of the Building and/or
the Project; (S) amounts paid as ground rental for the Building, if any; (T) any
bad debt loss, rent loss, or reserves of any kind; (U) any costs expressly
excluded from Operating Expenses elsewhere in this Lease; (V) the cost of
special services, goods or materials provided to or specific costs incurred for
the account of, and separately billed to Tenant or other tenants of the
Building; (W) any increase in Operating Expenses attributable solely to the
activity of Tenant or any other tenant of the Building, which increase Landlord
is contractually entitled to bill directly as rent to Tenant or the other tenant
of the Building causing such increase; (X) overhead and profit increment paid to
Landlord or to subsidiaries or affiliates of Landlord for goods and/or services
in or to the Building to the extent the same exceeds the costs of such goods
and/or services rendered by unaffiliated third parties on a competitive basis;
(Y) Landlord's general corporate overhead and general and administrative
expenses; including salaries of officers, executives and partners of Landlord
above the level of portfolio manager; (Z) costs incurred in connection with
upgrading the Building or Project to comply with life, fire and safety codes,
ordinances, statutes or other laws in effect prior to the date of this Lease,
including, without limitation, the ADA, including penalties or damages incurred
due to such non-compliance; (AA) tax penalties incurred as a result of
Landlord's failure to make tax payments and/or to file any tax or informational
returns when due; (BB) any and all costs arising from the presence of Hazardous
Materials (as defined in Section 5.3 below) in or about the Premises, the
Building or the Project prior to the date of this Lease; (CC) costs arising from
Landlord's charitable or political contributions; and (DD) costs for the
acquisition of (as contrasted with the maintenance of) sculpture, paintings or
other objects of art.

 

 
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4.2.4       Taxes.

 

4.2.4.1     "Tax Expenses" shall mean all federal, state, county, or local
governmental or municipal taxes, fees, charges or other impositions of every
kind and nature, whether general, special, ordinary or extraordinary (including,
without limitation, real estate taxes, general and special assessments, transit
taxes, leasehold taxes or taxes based upon the receipt of rent, including gross
receipts or sales taxes applicable to the receipt of rent, unless required to be
paid by Tenant, personal property taxes imposed upon the fixtures, machinery,
equipment, apparatus, systems and equipment, appurtenances, furniture and other
personal property used in connection with the Project, or any portion thereof),
which are applicable to any Expense Year or any portion thereof (without regard
to any different fiscal year used by such governmental or municipal authority)
because of or in connection with the ownership, leasing and operation of the
Project, or any portion thereof. Tax Expenses are separate from and in addition
to Operating Expenses.

 

4.2.4.2     Tax Expenses shall include, without limitation, any assessment, tax,
fee, levy or charge in addition to, or in substitution, partially or totally, of
any assessment, tax, fee, levy or charge previously included within the
definition of real property tax, it being acknowledged by Tenant and Landlord
that Proposition 13 was adopted by the voters of the State of California in the
June 1978 election ("Proposition 13") and that assessments, taxes, fees, levies
and charges may be imposed by governmental agencies for such services as fire
protection, street, sidewalk and road maintenance, refuse removal and for other
governmental services formerly provided without charge to property owners or
occupants, and, in further recognition of the decrease in the level and quality
of governmental services and amenities as a result of Proposition 13, Tax
Expenses shall also include any governmental or private assessments or the
Project's contribution towards a governmental or private cost-sharing agreement
for the purpose of augmenting or improving the quality of services and amenities
normally provided by governmental agencies.

 

4.2.4.3     Any costs and expenses (including, without limitation, reasonable
attorneys' fees) reasonably incurred in attempting to protest, reduce or
minimize Tax Expenses shall be included in Tax Expenses in the Expense Year such
expenses are paid. Refunds of Tax Expenses shall be credited against Tax
Expenses and refunded to Tenant regardless of when received, based on the
Expense Year to which the refund is applicable, provided that in no event shall
the amount to be refunded to Tenant for any such Expense Year exceed the total
amount paid by Tenant as Additional Rent under this Article 4 for such Expense
Year. If Tax Expenses for any period during the Lease Term or any extension
thereof are increased after payment thereof for any reason, including, without
limitation, error or reassessment by applicable governmental or municipal
authorities, Tenant shall pay Landlord upon demand Tenant's Share of any such
increased Tax Expenses included by Landlord as Tax Expenses pursuant to the
terms of this Lease; provided, however, Tax Expenses shall not include any
assessments to the extent solely applicable to any period of time not occurring
during the Lease Term. Notwithstanding anything to the contrary contained in
this Section 4.2.4 (except as set forth in Section 4.2.4.1, above), there shall
be excluded from Tax Expenses (i) all excess profits taxes, franchise taxes,
gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes,
federal and state income taxes, and other taxes to the extent applicable to
Landlord's general or net income (as opposed to rents, receipts or income
attributable to operations at the Project), (ii) any items included as Operating
Expenses, and (iii) any items paid by Tenant under Section 4.5 of this Lease.

 

4.3           Cost Pools. Landlord shall have the right, from time to time, to
reasonably and equitably allocate some or all of the Direct Expenses for the
Building and Project among different portions or occupants of the Building and
Project, including retail and office areas (the "Cost Pools"), in Landlord's
reasonable discretion. The Direct Expenses within each such Cost Pool shall be
allocated and charged to the tenants within such Cost Pool in an equitable
manner. Additionally, Landlord shall have the right, from time to time, to
reasonably and equitably allocate some or all of the Direct Expenses for the
Building and Project among different buildings within the Project, in Landlord's
reasonable discretion, in which event Tenant's Share shall be based on the
Building's share of such Direct Expenses, as so allocated.

 

 
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4.4           Calculation and Payment of Additional Rent.

 

4.4.1     Statement of Actual Direct Expenses and Payment by Tenant. Landlord
shall give to Tenant within one hundred twenty (120) days following the end of
each Expense Year, a statement (the "Statement") which shall state the Direct
Expenses incurred or accrued for such preceding Expense Year. If for any Expense
Year ending or commencing within the Lease Term, Tenant's Share of Direct
Expenses for such Expense Year exceeds the Estimated Direct Expenses actually
paid by Tenant and received by Landlord, then Tenant shall pay to Landlord, in
the manner set forth hereinbelow, and as Additional Rent, an amount equal to the
excess (the "Excess"). Except as expressly provided below, Landlord and Tenant
hereby acknowledge and agree that the failure of Landlord to timely furnish the
Statement for any Expense Year shall not prejudice Landlord or Tenant from
enforcing its rights under this Article 4. Upon receipt of the Statement for
each Expense Year commencing or ending during the Lease Term, if an Excess is
present, Tenant shall pay, with its next installment of Base Rent due, the full
amount of the Excess for such Expense Year. Even though the Lease Term has
expired and Tenant has vacated the Premises, when the final determination is
made of Tenant's Share of Direct Expenses for the Expense Year in which this
Lease terminates, if an Excess is present, Tenant shall immediately pay to
Landlord such amount following receipt by Tenant of the Statement setting forth
the Excess. Notwithstanding anything to the contrary contained in this Lease, in
the event Landlord fails to charge to Tenant any item of Operating Expense or
Tax Expense on or before December 31 of the year following the calendar year
(the “Inclusion Year”) for which such item should have been included in
Operating Expenses or Tax Expenses, as applicable, Landlord waives its right to
collect such item from Tenant for the Inclusion Year only, except where the
failure to provide such billing as to any particular item is beyond Landlord's
reasonable control (e.g., tax assessments that are late in arriving from the tax
assessor), in which case such one (1) year limit shall not be applicable to such
items. In the event that a Statement shall indicate that Tenant has paid more as
Estimated Direct Expenses than Tenant's Share of Direct Expenses in connection
with any Expense Year (an "Overage"), Tenant shall receive a credit against the
Rent next due under this Lease in the amount of such Overage (or, in the event
that this Lease shall have terminated, Tenant shall receive a refund from
Landlord in the amount of such Overage). The provisions of this Section 4.4.1
shall survive the expiration or earlier termination of the Lease Term.

 

4.4.2     Statement of Estimated Direct Expenses. In addition, at least
fifteen (15) days prior to the end of each Expense Year, Landlord shall give
Tenant a yearly expense estimate statement (the "Estimate Statement") which
shall set forth Landlord's estimate (the "Estimate") of what the total amount of
Direct Expenses for the then-current Expense Year shall be (the "Estimated
Direct Expenses"). The failure of Landlord to timely furnish the Estimate
Statement for any Expense Year shall not preclude Landlord from enforcing its
rights to collect any Estimated Direct Expenses under this Article 4, nor shall
Landlord be prohibited from revising any Estimate Statement or Estimated Direct
Expenses theretofore delivered to the extent necessary. Thereafter, Tenant shall
pay, with its next installment of Base Rent due, a fraction of the Estimated
Direct Expenses for the then-current Expense Year (reduced by any amounts
already paid pursuant to the last sentence of this Section 4.4.2). Such fraction
shall have as its numerator the number of months which have elapsed in such
current Expense Year, including the month of such payment, and twelve (12) as
its denominator. Until a new Estimate Statement is furnished (which Landlord
shall have the right to deliver to Tenant at any time), Tenant shall pay
monthly, with the monthly Base Rent installments, an amount equal to one-twelfth
(1/12) of the total Estimated Direct Expenses set forth in the previous Estimate
Statement delivered by Landlord to Tenant.

 

4.5           Taxes and Other Charges for Which Tenant Is Directly Responsible.

 

4.5.1     Tenant shall be liable for and shall pay at least ten (10) days before
delinquency, taxes levied against Tenant's equipment, furniture, trade fixtures
and any other personal property located in or about the Premises. If any such
taxes on Tenant's equipment, furniture, fixtures and any other personal property
are levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.

 

 
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4.5.2     If the tenant improvements in the Premises, whether installed and/or
paid for by Landlord or Tenant and whether or not affixed to the real property
so as to become a part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which tenant improvements conforming to
Landlord's "building standard" in other space in the Building are assessed, then
the Tax Expenses levied against Landlord or the property by reason of such
excess assessed valuation shall be deemed to be taxes levied against personal
property of Tenant and shall be governed by the provisions of Section 4.5.1,
above.

 

4.5.3     Notwithstanding any contrary provision herein, Tenant shall pay prior
to delinquency any (i) rent tax or sales tax, service tax, transfer tax or value
added tax, or any other applicable tax on the rent or services herein or
otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Project, including
the Project parking facility; or (iii) taxes assessed upon this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises.

 

4.6           Landlord's Books and Records. Within forty-five (45) days after
receipt of a Statement by Tenant, if Tenant disputes the amount of Direct
Expenses set forth in the Statement, an independent certified public accountant
(which accountant is a member of a nationally or regionally recognized
accounting firm and which accountant shall not be compensated on a contingency
fee or similar basis related to the result of such audit), designated by Tenant,
may, after reasonable notice to Landlord and at reasonable times subject to
Landlord's reasonable scheduling requirements, inspect Landlord's records at
Landlord's offices; provided that Tenant is not then in default under this Lease
and Tenant has paid all amounts required to be paid under the applicable
Statement; and further provided that such inspection must be completed within
ten (10) business days after Landlord's records are made available to Tenant.
Tenant agrees that any records of Landlord reviewed under this Section 4.6 shall
constitute confidential information of Landlord, which Tenant shall not
disclose, nor permit to be disclosed by Tenant or Tenant's accountant. If,
within ten (10) days after such inspection, Tenant notifies Landlord in writing
that Tenant still disputes such Direct Expenses included in the Statement, then
a certification as to the proper amount shall be made, at Tenant's expense, by
an independent certified public accountant mutually and reasonably selected by
Landlord and Tenant, which certification shall be final and conclusive;
provided, however, if the actual amount of Direct Expenses due for that Expense
Year, as determined by such certification, is determined to have been overstated
by more than five percent (5%), then Landlord shall pay the costs associated
with such certification. Tenant's failure (i) to take exception to any Statement
within forty-five (45) days after Tenant's receipt of such Statement or (ii) to
timely complete its inspection of Landlord's records or (iii) to timely notify
Landlord of any remaining dispute after such inspection shall be deemed to be
Tenant's approval of such Statement and Tenant, thereafter, waives the right or
ability to dispute the amounts set forth in such Statement, which Statement
shall be considered final and binding. Notwithstanding anything in this
Section 4.6 to the contrary, Tenant may not inspect Landlord's records pursuant
to this Section 4.6 more than once during any twelve (12) month period.

 

ARTICLE 5

USE OF PREMISES

 

5.1           Permitted Use. Tenant shall use the Premises solely for the
Permitted Use described in Section 6 of the Summary and Tenant shall not use or
permit the Premises or the Project to be used for any other purpose or purposes
whatsoever without the prior written consent of Landlord, which may be withheld
in Landlord's sole discretion.

 

 
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5.2           Prohibited Uses. The uses prohibited under this Lease shall
include, without limitation, use of the Premises or a portion thereof for
(i) offices of any agency or bureau of the United States or any state or
political subdivision thereof; (ii) offices or agencies of any foreign
governmental or political subdivision thereof; (iii) offices of any health care
professionals or service organization; (iv) schools or other training facilities
which are not ancillary to corporate, executive or professional office use;
(v) retail or restaurant uses; (vi) communications firms such as radio and/or
television stations, or (vii) an executive suites subleasing business or
operation. Tenant further covenants and agrees that Tenant shall not use, or
suffer or permit any person or persons to use, the Premises or any part thereof
for any use or purpose contrary to the provisions of the Rules and Regulations
set forth in Exhibit D, attached hereto, as the same may be amended by Landlord
from time to time, or in violation of the laws of the United States of America,
the State of California, or the ordinances, regulations or requirements of the
local municipal or county governing body or other lawful authorities having
jurisdiction over the Project) including, without limitation, any such laws,
ordinances, regulations or requirements relating to hazardous materials or
substances, as those terms are defined by applicable laws now or hereafter in
effect. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way damage the reputation of the Project or obstruct
or interfere with the rights of other tenants or occupants of the Building, or
injure or annoy them or use or allow the Premises to be used for any improper,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises. Tenant shall comply with all recorded
covenants, conditions, and restrictions now or hereafter affecting the Project.

 

5.3          Hazardous Materials; Tenant. Except for ordinary and general office
supplies typically used in the ordinary course of business within office
buildings, such as copier toner, liquid paper, glue, ink and common household
cleaning materials (some or all of which may constitute "Hazardous Materials" as
defined in this Lease) and those types and quantities of Hazardous Materials
identified on Exhibit E attached hereto, Tenant agrees not to cause or knowingly
permit any Hazardous Materials to be brought upon, stored, used, handled,
generated, released or disposed of on, in, under or about the Premises, the
Building, the Common Areas or any other portion of the Project by Tenant, its
agents, employees, subtenants, assignees, licensees, contractors or invitees
(collectively, "Tenant's Parties"), without the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion. Upon the expiration or earlier termination of this Lease, Tenant
agrees to promptly remove from the Premises, the Building and the Project, at
its sole cost and expense, any and all Hazardous Materials, including any
equipment or systems containing Hazardous Materials which are installed, brought
upon, stored, used, generated or released upon, in, under or about the Premises,
the Building and/or the Project or any portion thereof by Tenant or any of
Tenant's Parties. To the fullest extent permitted by law, Tenant agrees to
promptly indemnify, protect, defend and hold harmless Landlord and Landlord's
partners, officers, directors, employees, agents, successors and assigns from
and against any and all claims, damages, judgments, suits, causes of action,
losses, liabilities, penalties, fines, expenses and costs (including, without
limitation, clean-up, removal, remediation and restoration costs, sums paid in
settlement of claims, attorneys' fees, consultant fees and expert fees and court
costs) which arise or result from the presence of Hazardous Materials on, in,
under or about the Premises, the Building or any other portion of the Project
and which are caused or permitted by Tenant or any of Tenant's Parties. Tenant
agrees to promptly notify Landlord of any release of Hazardous Materials at the
Premises, the Building or any other portion of the Project which Tenant becomes
aware of during the Lease Term, whether caused by Tenant or any other persons or
entities. In the event of any release of Hazardous Materials caused or permitted
by Tenant or any of Tenant's Parties, Landlord shall have the right, but not the
obligation, to cause Tenant to immediately take all steps Landlord deems
necessary or appropriate to remediate such release and prevent any similar
future release to the satisfaction of Landlord and Landlord's mortgagee(s). As
used in this Lease, the term "Hazardous Materials" shall mean and include any
hazardous or toxic materials, substances or wastes as now or hereafter
designated under any law, statute, ordinance, rule, regulation, order or ruling
of any agency of the state in which the Building is located, the United States
Government or any local governmental authority, including, without limitation,
asbestos, petroleum, petroleum hydrocarbons and petroleum based products, urea
formaldehyde foam insulation, polychlorinated biphenyls ("PCBs"), and freon and
other chlorofluorocarbons. The provisions of this Section 5.3 will survive the
expiration or earlier termination of this Lease.

 

5.4           Hazardous Materials; Landlord. Landlord represents and warrants to
Tenant that, without independent investigation or inquiry whatsoever and except
as set forth in that certain Phase I Environmental Site Assessment Report dated
May 1, 2015 (Project No. 15-138253.1), a copy of which has been delivered to
Tenant prior to the date of this Lease, it has no current, actual knowledge of
the presence of Hazardous Materials in, on or at the Premises, Building or
Project in excess of legally permissible levels as of the date of execution of
this Lease. Landlord shall clean up and remove from the Premises and Building
all Hazardous Materials located therein or thereon as of the Lease Commencement
Date as and when required by applicable governmental regulations, at no cost to
Tenant, except if and to the extent such cleanup and removal is required by
virtue of the acts of Tenant or any of Tenant's Parties. Subject to the
limitations set forth in Section 29.13 of this Lease, Landlord agrees to
indemnify and hold Tenant harmless from and against any and all liability,
claims, damages, losses or causes of action whatsoever (except consequential
damages, including, without limitation, lost profits) incurred by Tenant by
reason of any Hazardous Materials on or in the Premises, the Building or the
Project prior to Tenant's first entry into the Premises, or thereafter
introduced in, on or at the Premises, the Building or the Project by Landlord or
any Landlord Parties.

 

 
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ARTICLE 6

SERVICES AND UTILITIES

 

6.1         Standard Tenant Services. Landlord (or Landlord's property manager)
shall provide the following services on all days (unless otherwise stated below)
during the Lease Term as part of Direct Expenses.

 

6.1.1     Subject to limitations imposed by all governmental rules, regulations
and guidelines applicable thereto, Landlord shall provide heating and air
conditioning ("HVAC") when necessary for normal comfort for normal office use in
the Premises from 6:00 A.M. to 7:00 P.M. Monday through Friday, and on Saturdays
from 7:00 A.M. to 4:00 P.M. (collectively, the "Building Hours"), except for the
date of observation of New Year's Day, Presidents' Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day and, at Landlord's
discretion, other nationally recognized holidays (collectively, the "Holidays").

 

6.1.2     Landlord shall provide adequate electrical wiring and facilities for
normal general office use, as reasonably determined by Landlord, provided Tenant
acknowledges that it shall be required to separately contract for and pay for
the electricity service supplied to the Premises (as such electrical usage is
measured by an E-mon D-mon or other submetering system to be installed by
Landlord prior to the Early Access Date, the "Submeter System"). Tenant shall
bear the cost of replacement of lamps, starters and ballasts for non-Building
standard lighting fixtures within the Premises. Landlord shall provide copies of
the actual Submeter System readings and supporting calculations on a monthly
basis at the same time and in the same manner as other statements delivered to
Tenant by Landlord pursuant to this Lease.

 

6.1.3     Landlord shall provide city water from the regular Building outlets
for drinking, lavatory and toilet purposes and for any business office type
kitchens in the Premises and the Common Areas.

 

6.1.4     Landlord shall provide nonexclusive, non-attended automatic passenger
elevator service during the Building Hours, except on Holidays, and shall have
one elevator available at all other times, except on the Holidays.

 

Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems.

 

6.2         Overstandard Tenant Use. Tenant shall not, without Landlord's prior
written consent, use heat-generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
Building standard lights in the Premises, which may affect the temperature
otherwise maintained by the air conditioning system or increase the water
normally furnished for the Premises by Landlord (or Landlord's property manager)
pursuant to the terms of Section 6.1 of this Lease. If such consent is given,
Landlord (or Landlord's property manager) shall have the right to install
supplementary air conditioning units or other facilities in the Premises,
including supplementary or additional metering devices, and the cost thereof,
including the cost of installation, operation and maintenance, increased wear
and tear on existing equipment and other similar charges, shall be paid by
Tenant to Landlord (or Landlord's property manager) upon billing by Landlord (or
Landlord's property manager). If Tenant uses water, heat or air conditioning in
excess of that supplied by Landlord (or Landlord's property manager) pursuant to
Section 6.1 of this Lease, Tenant shall pay to Landlord (or Landlord's property
manager), upon billing, the cost of such excess consumption and the cost of the
installation, operation, and maintenance of equipment which is installed in
order to supply such excess consumption, and the cost of the increased wear and
tear on existing equipment caused by such excess consumption; and Landlord (or
Landlord's property manager) may install devices to separately meter any
increased use and in such event Tenant shall pay the increased cost directly to
Landlord (or Landlord's property manager), upon billing, at the rates charged by
the public utility company furnishing the same, including the cost of such
additional metering devices. Tenant's use of electricity shall never exceed the
capacity of the feeders to the Project or the risers or wiring installation, and
subject to the terms of Section 29.32, below, Tenant shall not install or use or
permit the installation or use of any computer or electronic data processing
equipment in the Premises, without the prior written consent of Landlord.

 

 
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6.3           Interruption of Use. Tenant agrees that Landlord (or Landlord's
property manager) shall not be liable for damages, by abatement of Rent or
otherwise, for failure to furnish or delay in furnishing any service (including
telephone and telecommunication services), or for any diminution in the quality
or quantity thereof, when such failure or delay or diminution is occasioned, in
whole or in part, by breakage, repairs, replacements, or improvements, by any
strike, lockout or other labor trouble, by inability to secure electricity, gas,
water, or other fuel at the Building or Project after reasonable effort to do
so, by any riot or other dangerous condition, emergency, accident or casualty
whatsoever, by act or default of Tenant or other parties, or by any other cause;
and such failures or delays or diminution shall never be deemed to constitute an
eviction or disturbance of Tenant's use and possession of the Premises or
relieve Tenant from paying Rent or performing any of its obligations under this
Lease. Notwithstanding anything to the contrary contained in this Lease, if
Tenant's use of all or a material part of the Premises is materially impaired
due to any of the causes identified in subparagraphs (i) through (v) below as a
result of the wrongful act or negligence of Landlord ("Eligible Causes") and
such disruption materially interferes with the conduct of Tenant's business in
the Premises for five (5) consecutive business days (such five (5) consecutive
business day period is referred to herein as the "Eligibility Period"), as any
such Eligibility Period may be extended due to Force Majeure (as defined in
Section 29.16 of this Lease) or delays caused by Tenant, Base Rent shall
thereafter be abated in the same proportion that the floor area of the Premises
rendered unusable from time to time bears to the total floor area of the
Premises until the Premises are again usable by Tenant; provided, however, if
Landlord is diligently pursuing the repair of such utilities or services and
Landlord provides substitute services reasonably suitable for Tenant's purposes,
such as for example, bringing in portable air-conditioning equipment, then there
shall not be any abatement of Base Rent. As used herein, "Eligible Causes" shall
mean (i) an interruption of utility or mechanical services to the Premises,
(ii) an inability to access the Premises or parking areas within the Project
which Tenant is entitled to use pursuant to this Lease unless resulting from
governmental mandate, (iii) entry upon the Premises by Landlord or Landlord's
employees, agents or contractors, (iv) repairs, maintenance or other work
required to be made to the Premises or Building which are the responsibility of
Landlord under this Lease or which otherwise are performed by or on behalf of
Landlord, and/or (v) Landlord's failure to conduct repairs, maintenance or other
work required to be made to the Premises or Building which are the
responsibility of Landlord under this Lease or which otherwise are performed by
or on behalf of Landlord. Any impairment of Tenant's use of the Premises
resulting from acts or omissions of Tenant or any of Tenant's Parties shall not
constitute Eligible Causes. The foregoing provisions shall be Tenant’s sole
recourse and remedy in the event of such an interruption of services, and shall
not apply in case of damage to, or destruction of, the Premises (which shall be
governed by the provisions of Article 11 of this Lease). Furthermore, Landlord
(or Landlord's property manager) shall not be liable under any circumstances for
a loss of, or injury to, 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 of the services or utilities as set forth in this Article 6. Landlord (or
Landlord's property manager) 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 (or Landlord's property
manager) to Tenant under this Lease, provided that the Premises are not thereby
rendered untenantable.

 

ARTICLE 7

REPAIRS

 

Tenant shall, at Tenant's own expense, pursuant to the terms of this Lease,
including without limitation Article 8 hereof, keep the Premises, including all
improvements, fixtures and furnishings therein, in good order, repair and
condition at all times during the Lease Term. In addition, Tenant shall, at
Tenant's own expense, but under the supervision and subject to the prior
approval of Landlord, and within any reasonable period of time specified by
Landlord, pursuant to the terms of this Lease, including without limitation
Article 8 hereof, promptly and adequately repair all damage to the Premises and
replace or repair all damaged, broken, or worn fixtures and appurtenances,
except for damage caused by ordinary wear and tear or beyond the reasonable
control of Tenant; provided however, that, at Landlord's option, or if Tenant
fails to make such repairs, Landlord (or Landlord's property manager) may, but
need not, make such repairs and replacements, and Tenant shall pay Landlord (or
Landlord's property manager) the cost thereof, including a percentage of the
cost thereof (to be uniformly established for the Building and/or the Project)
sufficient to reimburse Landlord (or Landlord's property manager's) for all
overhead, general conditions, fees and other costs or expenses arising from
Landlord's (or Landlord's property manager) involvement with such repairs and
replacements forthwith upon being billed for same. Landlord may, but shall not
be required to, enter the Premises at all reasonable times to make such repairs,
alterations, improvements or additions to the Premises or to the Project or to
any equipment located in the Project as Landlord shall desire or deem necessary
or as Landlord may be required to do by governmental or quasi-governmental
authority or court order or decree. Tenant hereby waives any and all rights
under and benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of
the California Civil Code or under any similar law, statute, or ordinance now or
hereafter in effect.

 

 
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ARTICLE 8

ADDITIONS AND ALTERATIONS

 

8.1           Landlord's Consent to Alterations. Tenant may not make any
improvements, alterations, additions or changes to the Premises or any
mechanical, plumbing or HVAC facilities or systems pertaining to the Premises
(collectively, the "Alterations") without first procuring the prior written
consent of Landlord to such Alterations, which consent shall be requested by
Tenant not less than thirty (30) days prior to the commencement thereof, and
which consent shall not be unreasonably withheld by Landlord, provided it shall
be deemed reasonable for Landlord to withhold its consent to any Alteration
which adversely affects the structural portions or the systems or equipment of
the Building or is visible from the exterior of the Building. Notwithstanding
the foregoing, Tenant shall have the right, without Landlord's prior consent,
but upon not less than ten (10) business days prior written notice to Landlord,
to make strictly cosmetic, non-structural Alterations to the Premises that
(i) do not affect any of the Building systems, (ii) do not affect the Building
structure, (iii) are not visible from the exterior of the Premises or the
Building, and, (iv) do not involve the expenditure of more than Ten Thousand
Dollars ($10,000) per Alteration or Thirty Thousand Dollars ($30,000) in the
aggregate in any Lease Year. The construction of the initial improvements to the
Premises shall be governed by the terms of the Tenant Work Letter and not the
terms of this Article 8.

 

8.2           Manner of Construction. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord in its sole discretion may deem
desirable, including, but not limited to, the requirement that Tenant utilize
for such purposes only contractors, subcontractors, materials, mechanics and
materialmen selected by Tenant from a list provided and approved by Landlord,
the requirement that upon Landlord's request, Tenant shall, at Tenant's expense,
remove such Alterations upon the expiration or any early termination of the
Lease Term, and the requirement that all Alterations conform in terms of quality
and style to the building's standards established by Landlord. Landlord's
approval of the plans, specifications and working drawings for Tenant's
Alterations shall create no responsibility or liability on the part of Landlord
for their completeness, design sufficiency, or compliance with all Laws. Tenant
shall construct such Alterations and perform such repairs in a good and
workmanlike manner, in conformance with any and all applicable federal, state,
county or municipal laws, rules and regulations and pursuant to a valid building
permit, issued by the City of Santa Ana, all in conformance with Landlord's
construction rules and regulations and the plans and specifications previously
approved by Landlord. In the event Tenant performs any Alterations in the
Premises which require or give rise to governmentally required changes to the
"Base Building," as that term is defined below, then Landlord (or Landlord's
property manager) shall, at Tenant's expense, make such changes to the Base
Building. The "Base Building" shall mean the Building structure and the Building
systems. In performing the work of any such Alterations, Tenant shall have the
work performed in such manner so as not to obstruct access to the Project or any
portion thereof, by any other tenant of the Project, and so as not to obstruct
the business of Landlord or other tenants in the Project. Tenant shall not use
(and upon notice from Landlord shall cease using) contractors, services,
workmen, labor, materials or equipment that, in Landlord's reasonable judgment,
would disturb labor harmony with the workforce or trades engaged in performing
other work, labor or services in or about the Building or the Common Areas and
in that respect, Landlord shall have the right, in connection with the
construction of any Alterations and/or any tenant improvements constructed in
the Premises pursuant to the terms of the Tenant Work Letter, to require that
all subcontractors, laborers, materialmen, and suppliers retained directly by
Tenant and/or Landlord (unless Landlord elects otherwise) be union labor in
compliance with the then existing master labor agreements. In addition to
Tenant's obligations under Article 9 of this Lease, upon completion of any
Alterations, Tenant agrees to cause a Notice of Completion to be recorded in the
office of the Recorder of the County of Orange in accordance with Section 3093
of the California Civil Code or any successor statute and furnish a copy thereof
to Landlord upon recordation, and timely give all notices required pursuant to
Section 3259.5 of the California Civil Code or any successor statute (failing
which, Landlord may itself execute and file such Notice of Completion and give
such notices on behalf of Tenant as Tenant's agent for such purpose), and Tenant
shall deliver to the Project management office a reproducible copy of the "as
built" drawings of the Alterations as well as all permits, approvals and other
documents issued by any governmental agency in connection with the Alterations.

 

 
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8.3           Payment for Improvements. If payment is made directly to
contractors, Tenant shall comply with Landlord's requirements for final lien
releases and waivers in connection with Tenant's payment for work to
contractors. Whether or not Tenant orders any work directly from Landlord (or
Landlord's property manager), Tenant shall pay to Landlord (or Landlord's
property manager) a percentage of the cost of such work sufficient to compensate
Landlord (or Landlord's property manager) for all overhead, general conditions,
fees and other costs and expenses arising from Landlord's (or Landlord's
property manager's) involvement with such work, which percentage shall be
determined by Landlord from time to time; such percentage is currently fifteen
percent (15%) of the cost of such work.

 

8.4           Construction Insurance. In addition to the requirements of
Article 10 of this Lease, in the event that Tenant makes any Alterations, prior
to the commencement of such Alterations, Tenant shall provide Landlord with
evidence that Tenant carries "Builder's All Risk" insurance in an amount
approved by Landlord covering the construction of such Alterations, and such
other insurance as Landlord may require, it being understood and agreed that all
of such Alterations shall be insured by Tenant pursuant to Article 10 of this
Lease immediately upon completion thereof. In addition, Landlord may, in its
discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Landlord in an amount sufficient to
ensure the lien-free completion of such Alterations and naming Landlord as a
co-obligee.

 

8.5           Landlord's Property. All Alterations, improvements, fixtures,
equipment and/or appurtenances which may be installed or placed in or about the
Premises, from time to time, shall be at the sole cost of Tenant and shall be
and become the property of Landlord. Landlord may, however, by written notice to
Tenant prior to the end of the Lease Term, or given following any earlier
termination of this Lease, require Tenant, at Tenant's expense, to remove any
Alterations or improvements in the Premises, and to repair any damage to the
Premises and Building caused by such removal and return the affected portion of
the Premises to a building standard tenant improved condition as determined by
Landlord; provided, however, Landlord acknowledges and agrees that none of the
initial Tenant Improvements (other than Tenant's vault and other improvements
ancillary to such vault) constructed by Landlord on behalf of Tenant in
accordance with the Tenant Work Letter and that certain initial test fit plan
attached hereto as Schedule 2 to Exhibit B shall be required by Landlord to be
removed from the Premises. If Tenant fails to complete such removal and/or to
repair any damage caused by the removal of any Alterations or improvements in
the Premises, and return the affected portion of the Premises to a building
standard tenant improved condition as determined by Landlord, then at Landlord's
option, either (A) Tenant shall be deemed to be holding over in the Premises and
Rent shall continue to accrue in accordance with the terms of Article 16, below,
until such work shall be completed, or (B) Landlord may do so and may charge the
cost thereof to Tenant. Tenant hereby protects, defends, indemnifies and holds
Landlord harmless from any liability, cost, obligation, expense or claim of lien
in any manner relating to the installation, placement, removal or financing of
any such Alterations, improvements, fixtures and/or equipment in, on or about
the Premises, which obligations of Tenant shall survive the expiration or
earlier termination of this Lease.

 

ARTICLE 9

COVENANT AGAINST LIENS

 

Tenant shall keep the Project and Premises free from any liens or encumbrances
arising out of the work performed, materials furnished or obligations incurred
by or on behalf of Tenant, and shall protect, defend, indemnify and hold
Landlord harmless from and against any claims, liabilities, judgments or costs
(including, without limitation, reasonable attorneys' fees and costs) arising
out of same or in connection therewith. Tenant shall give Landlord notice at
least twenty (20) days prior to the commencement of any such work on the
Premises (or such additional time as may be necessary under applicable laws) to
afford Landlord the opportunity of posting and recording appropriate notices of
non-responsibility. Tenant shall remove any such lien or encumbrance by bond or
otherwise within five (5) days after notice by Landlord, and if Tenant shall
fail to do so, Landlord may pay the amount necessary to remove such lien or
encumbrance, without being responsible for investigating the validity thereof.
The amount so paid shall be deemed Additional Rent under this Lease payable upon
demand, without limitation as to other remedies available to Landlord under this
Lease. Nothing contained in this Lease shall authorize Tenant to do any act
which shall subject Landlord's title to the Building or Premises to any liens or
encumbrances whether claimed by operation of law or express or implied contract.
Any claim to a lien or encumbrance upon the Building or Premises arising in
connection with any such work or respecting the Premises not performed by or at
the request of Landlord shall be null and void, or at Landlord's option shall
attach only against Tenant's interest in the Premises and shall in all respects
be subordinate to Landlord's title to the Project, Building and Premises.

 

 
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ARTICLE 10

INSURANCE

 

10.1       Indemnification and Waiver. Except to the extent caused by the gross
negligence or willful misconduct of Landlord, its partners, subpartners and
their respective officers, agents, servants, and employees (collectively,
"Landlord Parties") and subject to the terms of Section 10.5 below, Tenant
hereby assumes all risk of damage to property or injury to persons in, upon or
about the Premises from any cause whatsoever and agrees that the Landlord
Parties shall not be liable for, and are hereby released from any responsibility
for, any damage either to person or property or resulting from the loss of use
thereof, which damage is sustained by Tenant or by other persons claiming
through Tenant. Tenant shall indemnify, defend, protect, and hold harmless the
Landlord Parties from any and all claims, loss, cost, damage, expense and
liability (including without limitation court costs and reasonable attorneys'
fees) incurred in connection with or arising from any cause in, on or about the
Premises, any violation of any of the requirements, ordinances, statutes,
regulations or other laws, including, without limitation, any environmental
laws, any acts, omissions or negligence of Tenant or of Tenant's Parties, in, on
or about the Project or any breach of the terms of this Lease by Tenant, either
prior to, during, or after the expiration of the Lease Term, provided that the
terms of the foregoing indemnity shall not apply to the negligence or willful
misconduct of the Landlord Parties. Except to the extent any suit arises from
the negligence or willful misconduct of the Landlord Parties, should Landlord be
named as a defendant in any suit brought against Tenant in connection with or
arising out of Tenant's occupancy of the Premises, Tenant shall pay to Landlord
its costs and expenses incurred in such suit, including without limitation, its
actual professional fees such as appraisers', accountants' and attorneys' fees.
Further, Tenant's agreement to indemnify Landlord pursuant to this Section 10.1
is not intended to and shall not relieve any insurance carrier of its
obligations under policies required to be carried by Tenant pursuant to the
provisions of this Lease, to the extent such policies cover the matters subject
to Tenant's indemnification obligations; nor shall they supersede any
inconsistent agreement of the parties set forth in any other provision of this
Lease. The provisions of this Section 10.1 shall survive the expiration or
sooner termination of this Lease with respect to any claims or liability arising
in connection with any event occurring prior to such expiration or termination.

 

10.2       Tenant's Compliance with Landlord's Fire and Casualty Insurance.
Tenant shall, at Tenant's expense, comply with all customary insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.

 

10.3         Tenant's Insurance. Tenant shall maintain the following coverages
in the following amounts.

 

10.3.1     Commercial General Liability Insurance covering the insured against
claims of bodily injury, personal injury and property damage (including loss of
use thereof) arising out of Tenant's operations, and contractual liabilities
(covering the performance by Tenant of its indemnity agreements) including a
Broad Form endorsement covering the insuring provisions of this Lease and the
performance by Tenant of the indemnity agreements set forth in Section 10.1 of
this Lease, for limits of liability not less than:

 

Bodily Injury and

Property Damage Liability

$3,000,000 each occurrence

$3,000,000 annual aggregate

   

Personal Injury Liability

$3,000,000 each occurrence

$3,000,000 annual aggregate

0% Insured's participation

  

 
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10.3.2     Special Form (Causes of Loss) Property Insurance covering (i) all
office furniture, business and trade fixtures, office equipment, free-standing
cabinet work, movable partitions, merchandise and all other items of Tenant's
property on the Premises installed by, for, or at the expense of Tenant, and
(ii) all Alterations. Such insurance shall be for the full replacement cost
(subject to reasonable deductible amounts) new without deduction for
depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include coverage for damage or
other loss caused by fire or other peril including, but not limited to,
vandalism and malicious mischief, theft, water damage of any type, including
sprinkler leakage, bursting or stoppage of pipes, and explosion, and providing
business interruption coverage for a period of one year.

 

10.3.3     Worker's Compensation and Employer's Liability or other similar
insurance pursuant to all applicable state and local statutes and regulations
including waivers of subrogation in favor of the Landlord Parties.

 

10.3.4     Business auto insurance, including owned, non-owned or hired coverage
with minimum policy limits of $1,000,000.

 

10.4         Form of Policies. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall (i) name Landlord, Landlord's
lender, the Landlord Parties, and any other party the Landlord so specifies, as
an additional insured, including Landlord's managing agent, if any;
(ii) specifically cover the liability assumed by Tenant under this Lease,
including, but not limited to, Tenant's obligations under Section 10.1 of this
Lease; (iii) be issued by an insurance company having a rating of not less than
A-:VIII in Best's Insurance Guide or which is otherwise acceptable to Landlord
and licensed to do business in the State of California; (iv) be primary
insurance as to all claims thereunder and provide that any insurance carried by
Landlord or the Landlord Parties is excess and is non-contributing with any
insurance requirement of Tenant; (v) be in form and content reasonably
acceptable to Landlord; and (vi) contain a cross-liability endorsement or
severability of interest clause acceptable to Landlord; and (vii) provide that
said insurance shall not be canceled or coverage changed unless thirty (30)
days' prior written notice shall have been given to Landlord and any mortgagee
of Landlord. Tenant shall deliver said policy or policies or certificates
thereof to Landlord on or before the Lease Commencement Date and at least
thirty (30) days before the expiration dates thereof. In the event Tenant shall
fail to procure such insurance, or to deliver such policies or certificate,
Landlord may, at its option, procure such policies for the account of Tenant,
and the cost thereof shall be paid to Landlord within five (5) days after
delivery to Tenant of bills therefor.

 

10.5         Subrogation. Landlord and Tenant intend that their respective
property loss risks shall be borne by reasonable insurance carriers to the
extent above provided, and Landlord and Tenant hereby agree to look solely to,
and seek recovery only from, their respective insurance carriers in the event of
a property loss to the extent that such loss is the result of a risk insurable
under policies of property damage insurance. Notwithstanding anything to the
contrary in this Lease, the parties each hereby waive all rights and claims
against each other for such losses, and waive all rights of subrogation of their
respective insurers, provided such waiver of subrogation shall not affect the
right to the insured to recover thereunder. The parties agree that their
respective insurance policies are now, or shall be, endorsed such that the
waiver of subrogation shall not affect the right of the insured to recover
thereunder, so long as no material additional premium is charged therefor.

 

10.6       Additional Insurance Obligations. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10 and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord.

 

 
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ARTICLE 11

DAMAGE AND DESTRUCTION

 

11.1        Repair of Damage to Premises by Landlord. Tenant shall promptly
notify Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any Common Areas serving or providing access to the
Premises shall be damaged by fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord's reasonable control, and subject to all other terms of
this Article 11, restore the Base Building and such Common Areas. Such
restoration shall be to substantially the same condition of the Base Building
(including the initial Tenant Improvements) and the Common Areas prior to the
casualty, except for modifications required by zoning and building codes and
other laws or by the holder of a mortgage on the Building or Project or any
other modifications to the Common Areas deemed desirable by Landlord, provided
that access to the Premises and any common restrooms serving the Premises shall
not be materially impaired. Tenant shall, at its sole cost and expense, repair
any injury or damage to any Alterations in the Premises and shall return such
Alterations to their original condition. Tenant shall submit to Landlord, for
Landlord's review and approval, all plans, specifications and working drawings
relating thereto, and Landlord shall select the contractors to perform such
improvement work. Landlord shall not be liable for any inconvenience or
annoyance to Tenant or its visitors, or injury to Tenant's business resulting in
any way from such damage or the repair thereof; provided however, that if such
fire or other casualty shall have damaged the Premises or Common Areas necessary
to Tenant's occupancy, Landlord shall allow Tenant a proportionate abatement of
Rent to the extent Landlord is reimbursed from the proceeds of rental
interruption insurance purchased by Landlord as part of Operating Expenses,
during the time and to the extent the Premises are unfit for occupancy for the
Permitted Use, and not occupied by Tenant as a result thereof; provided,
further, however, that if the damage or destruction is due to the negligence or
willful misconduct of Tenant or any of its agents, employees, contractors,
invitees or guests, Tenant shall be responsible for any reasonable, applicable
insurance deductible (which shall be payable to Landlord upon demand) and there
shall be no rent abatement. Tenant's right to rent abatement pursuant to the
preceding sentence shall terminate as of the date which is reasonably determined
by Landlord to be the date Tenant should have completed repairs to the Premises
assuming Tenant used reasonable due diligence in connection therewith.

 

11.2         Landlord's Option to Repair. Notwithstanding the terms of
Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises, Building and/or Project, and instead terminate this Lease, by
notifying Tenant in writing of such termination within sixty (60) days after the
date of discovery of the damage, such notice to include a termination date
giving Tenant one hundred eighty (180) days to vacate the Premises, but Landlord
may so elect only if the Building shall be damaged by fire or other casualty or
cause, and one or more of the following conditions is present: (i) in Landlord's
reasonable judgment, repairs cannot reasonably be completed within three hundred
sixty (360) days after the date of discovery of the damage (when such repairs
are made without the payment of overtime or other premiums); (ii) the holder of
any mortgage on the Building or Project or ground lessor with respect to the
Building or Project shall require that the insurance proceeds or any portion
thereof be used to retire the mortgage debt, or shall terminate the ground
lease, as the case may be; (iii) the damage is not fully covered by Landlord's
insurance policies and the damage is not caused by Landlord's or Landlord's
Parties' gross negligence or willful misconduct; or (v) the damage occurs during
the last twelve (12) months of the Lease Term and the damage is not caused by
Landlord's or Landlord's Parties' gross negligence or willful misconduct;
provided, however, that if such fire or other casualty shall have damaged the
Premises or a portion thereof or Common Areas necessary to Tenant's occupancy
and as a result of such damage the Premises are unfit for occupancy, and
provided that Landlord does not elect to terminate this Lease pursuant to
Landlord's termination right as provided above, and either (a) the repairs
cannot, in the reasonable opinion of Landlord's contractor, be completed within
three hundred sixty (360) days after being commenced, or (b) the damage occurs
during the last twelve months of the Lease Term and will reasonably require in
excess of thirty (30) days to repair, Tenant may elect, no earlier than ten (10)
days after the date of the damage and not later than ninety (90) days after the
date of such damage, to terminate this Lease by written notice to Landlord
effective as of the date specified in the notice, which date shall not be less
than thirty (30) days nor more than sixty (60) days after the date such notice
is given by Tenant. In addition, if neither Landlord nor Tenant elect to
terminate the Lease as set forth herein, and the repairs to be made by Landlord
have not been substantially completed within three hundred sixty (360) days
after being commenced or such longer period as Landlord's contractor had
estimated would be required to complete such repairs (subject to extension for
delays caused by Force Majeure and delays caused by Tenant), then Tenant shall
have the right, within five (5) business days after the end of such period, and
thereafter during the first five (5) business days of each calendar month
following the end of such period until such time as such repairs are
substantially completed, to terminate this Lease by notice to Landlord (the
"Damage Termination Notice"), effective as of a date set forth in the Damage
Termination Notice (the "Damage Termination Date"), which Damage Termination
Date shall not be less than five (5) business days following the end of such
period or each such month, as the case may be. Notwithstanding the foregoing, if
Tenant delivers a Damage Termination Notice to Landlord, then Landlord shall
have the right to suspend the occurrence of the Damage Termination Date for a
period ending thirty (30) days after the delivery by Tenant of the Damage
Termination Notice by delivering to Tenant, within five (5) business days of
Landlord's receipt of the Damage Termination Notice, a certificate of Landlord's
contractor responsible for the repair of the damage certifying that it is such
contractor's good faith judgment that the repairs to be made by Landlord shall
be substantially completed within thirty (30) days after delivery by Tenant of
the Damage Termination Notice. If such repairs shall be substantially completed
prior to the expiration of such thirty (30) day period, then the Damage
Termination Notice shall be of no force or effect, but if such repairs are not
substantially completed within such thirty (30) day period, then this Lease
shall terminate upon the expiration of such thirty (30) day period.

 

 
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11.3        Waiver of Statutory Provisions. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.

 

ARTICLE 12

NONWAIVER

 

No provision of this Lease shall be deemed waived by either party hereto unless
expressly waived in a writing signed thereby. The waiver by either party hereto
of any breach of any term, covenant or condition herein contained shall not be
deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, 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 of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord's right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.

 

ARTICLE 13

CONDEMNATION

 

If the whole or any part of the Premises, Building or Project shall be taken by
power of eminent domain or condemned by any competent authority for any public
or quasi-public use or purpose, or if any adjacent property or street shall be
so taken or condemned, or reconfigured or vacated by such authority in such
manner as to require the reconstruction of any material part of the Premises,
Building or Project, or if Landlord shall grant a deed or other instrument in
lieu of such material taking by eminent domain or condemnation, Landlord shall
have the option to terminate this Lease effective as of the date possession is
required to be surrendered to the authority. If more than twenty-five percent
(25%) of the rentable square feet of the Premises is taken, or if access to the
Premises is substantially impaired, in each case for a period in excess of one
hundred fifty (150) days, Tenant shall have the option to terminate this Lease
effective as of the date possession is required to be surrendered to the
authority. Tenant shall not because of such taking assert any claim against
Landlord or the authority for any compensation because of such taking and
Landlord shall be entitled to the entire award or payment in connection
therewith, except that Tenant shall have the right to file any separate claim
available to Tenant for (a) any taking of Tenant's personal property and
fixtures belonging to Tenant and removable by Tenant upon expiration of the
Lease Term pursuant to the terms of this Lease, (b) moving expenses, and (c) any
other damages incurred by Tenant in connection with such taking, so long as such
claims do not diminish the award available to Landlord, its ground lessor with
respect to the Building or Project or its mortgagee, and such claim is payable
separately to Tenant. All Rent shall be apportioned as of the date of such
termination. If any part of the Premises shall be taken, and this Lease shall
not be so terminated, the Rent shall be proportionately abated. Tenant hereby
waives any and all rights it might otherwise have pursuant to Section 1265.130
of The California Code of Civil Procedure. Notwithstanding anything to the
contrary contained in this Article 13, in the event of a temporary taking of all
or any portion of the Premises for a period of one hundred fifty (150) days or
less, then this Lease shall not terminate but the Base Rent and the Additional
Rent shall be abated for the period of such taking in proportion to the ratio
that the amount of rentable square feet of the Premises taken bears to the total
rentable square feet of the Premises. Except as expressly provided in this
Article 13 above, Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.

 

 
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ARTICLE 14

ASSIGNMENT AND SUBLETTING

 

14.1         Transfers. Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder, permit
any assignment, or other transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or enter into any
license or concession agreements or otherwise permit the occupancy or use of the
Premises or any part thereof by any persons other than Tenant and its employees
and contractors (all of the foregoing are hereinafter sometimes referred to
collectively as "Transfers" and any person to whom any Transfer is made or
sought to be made is hereinafter sometimes referred to as a "Transferee"). If
Tenant desires Landlord's consent to any Transfer, Tenant shall notify Landlord
in writing, which notice (the "Transfer Notice") shall include (i) the proposed
effective date of the Transfer, which shall not be less than thirty (30) days
nor more than one hundred eighty (180) days after the date of delivery of the
Transfer Notice, (ii) a description of the portion of the Premises to be
transferred (the "Subject Space"), (iii) all of the terms of the proposed
Transfer and the consideration therefor, including calculation of the "Transfer
Premium", as that term is defined in Section 14.3 below, in connection with such
Transfer, the name and address of the proposed Transferee, and an executed copy
of all documentation effectuating the proposed Transfer, including all operative
documents to evidence such Transfer and all agreements incidental or related to
such Transfer, provided that Landlord shall have the right to require Tenant to
utilize Landlord's standard Transfer documents in connection with the
documentation of such Transfer, and provided further that the terms of the
proposed Transfer shall provide that such proposed Transferee shall not be
permitted to further assign or sublease its interest in the Subject Space and/or
Lease, (iv) current financial statements of the proposed Transferee certified by
an officer, partner or owner thereof, business credit and personal references
and history of the proposed Transferee and any other information required by
Landlord which will enable Landlord to determine the financial responsibility,
character, and reputation of the proposed Transferee, nature of such
Transferee's business and proposed use of the Subject Space and (v) an executed
estoppel certificate from Tenant stating the information set forth in items (a)
through (d) in Article 17 below. Any Transfer made without Landlord's prior
written consent shall, at Landlord's option, be null, void and of no effect, and
shall, at Landlord's option, constitute a default by Tenant under this Lease.
Whether or not Landlord consents to any proposed Transfer, Tenant shall pay
Landlord's (or Landlord's property manager's) review and processing fees (which
currently equal $1,500.00 for each proposed Transfer), as well as any reasonable
professional fees (including, without limitation, attorneys', accountants',
architects', engineers' and consultants' fees) incurred by Landlord (or
Landlord's property manager), within thirty (30) days after written request by
Landlord.

 

 
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14.2        Landlord's Consent. Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:

 

14.2.1    The Transferee is of a character or reputation or engaged in a
business which is not consistent with the quality of the Building or the
Project, or would be a significantly less prestigious occupant of the Building
than Tenant;

 

14.2.2     The Transferee is either a governmental agency or instrumentality
thereof;

 

14.2.3     The Transfer occurs during the period from the Lease Commencement
Date until the second (2nd) anniversary of the Lease Commencement Date;

 

14.2.4     The Transferee is not a party of reasonable financial worth and/or
financial stability in light of the responsibilities to be undertaken in
connection with the Transfer on the date consent is requested;

 

14.2.5     The proposed Transfer would cause a violation of another lease for
space in the Project (i.e., a violation of an existing exclusive use provision),
or would give an occupant of the Project a right to cancel its lease;

 

14.2.6     The terms of the proposed Transfer will allow the Transferee to
exercise a right of renewal, right of expansion, right to lease additional
space, or other similar right held by Tenant (or will allow the Transferee to
occupy space leased by Tenant pursuant to any such right);

 

14.2.7     Either the proposed Transferee, or any person or entity which
directly or indirectly, controls, is controlled by, or is under common control
with, the proposed Transferee, (i) occupies space in the Project at the time of
the request for consent, or (ii) is negotiating with Landlord (which for
purposes of this item (ii) and (iii), below, shall be evidenced by the
transmittal of one or more letters of intent, draft proposals or lease documents
by such Transferee to Landlord or Landlord to such Transferee) to lease space in
the Project at such time, or (iii) has negotiated with Landlord during the three
(3)-month period immediately preceding the Transfer Notice;

 

14.2.8     The Transferee does not intend to occupy the entire Subject Space and
conduct its business therefrom for a substantial portion of the term of the
Transfer; or

 

14.2.9     The portion of the Premises to be sublet or assigned is irregular in
shape with inadequate means of ingress and/or egress.

 

Notwithstanding anything to the contrary contained herein, in no event shall
Tenant enter into any Transfer for the possession, use, occupancy or utilization
(collectively, "use") of the part of the Premises which (i) provides for a
rental or other payment for such use based in whole or in part on the income or
profits derived by any person from the Premises (other than an amount based on a
fixed percentage or percentages of gross receipts or sales), and Tenant agrees
that all Transfers of any part of the Premises shall provide that the person
having an interest in the use of the Premises shall not enter into any lease or
sublease which provides for a rental or other payment for such use based in
whole or in part on the income or profits derived by any person from the
Premises (other than an amount based on a fixed percentage or percentages of
gross receipts of sales), or (ii) would cause any portion of the amounts payable
to Landlord hereunder to not constitute "rents from real property" within the
meaning of Section 512(b)(3) of the Internal Revenue Code of 1986, and any such
purported Transfer shall be absolutely void and ineffective as a conveyance of
any right or interest in the possession, use, occupancy or utilization of any
part of the Premises.

 

In the calculations of the Rent paid during each annual period for the Subject
Space shall be computed after adjusting such rent to the actual effective rent
to be paid, taking into consideration any and all reasonable leasehold
concessions granted in connection therewith, including, but not limited to, any
rent credit and tenant improvement allowance. For purposes of calculating any
such effective rent all such concessions shall be amortized on a straight-line
basis over the relevant term.

 

 
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If Landlord consents to any Transfer pursuant to the terms of this Section 14.2
(and does not exercise any recapture rights Landlord may have under Section 14.4
of this Lease), Tenant may within six (6) months after Landlord's consent, but
not later than the expiration of said six-month period, enter into such Transfer
of the Subject Space, upon substantially the same terms and conditions as are
set forth in the Transfer Notice furnished by Tenant to Landlord pursuant to
Section 14.1 of this Lease, provided that if there are any changes in the terms
and conditions from those specified in the Transfer Notice (i) such that
Landlord would initially have been entitled to refuse its consent to such
Transfer under this Section 14.2, or (ii) which would cause the proposed
Transfer to be more favorable to the Transferee than the terms set forth in
Tenant's original Transfer Notice, Tenant shall again submit the Transfer to
Landlord for its approval and other action under this Article 14 (including
Landlord's right of recapture, if any, under Section 14.4 of this Lease).
Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent under Section 14.2 or otherwise has breached or acted unreasonably
under this Article 14, their sole remedies shall be a declaratory judgment and
an injunction for the relief sought without any monetary damages, and Tenant
hereby waives all other remedies, including, without limitation, any right at
law or equity to terminate this Lease, on its own behalf and, to the extent
permitted under all applicable laws, on behalf of the proposed Transferee.

 

14.3        Transfer Premium. If Landlord consents to a Transfer, as a condition
thereto which the parties hereby agree is reasonable, Tenant shall pay to
Landlord fifty percent (50%) of any "Transfer Premium," as that term is defined
in this Section 14.3, received by Tenant from such Transferee in any particular
calendar month, which amount shall be paid to Landlord immediately following
Tenant's receipt of the same. "Transfer Premium" shall mean all rent, additional
rent or other consideration payable by such Transferee in connection with the
Transfer in excess of the Rent and Additional Rent payable by Tenant under this
Lease during the term of the Transfer on a per rentable square foot basis if
less than all of the Premises is transferred, after deducting the reasonable
expenses incurred by Tenant for (i) any changes, alterations and improvements to
the Premises in connection with the Transfer, and (ii) any market rate, third
party brokerage commissions incurred in connection with the Transfer
(collectively, the "Subleasing Costs"); provided, however, that if, at the time
of any such sublease or assignment, Landlord determines that the foregoing
"Transfer Premium" formula may result in the receipt by Landlord of amounts that
the Landlord may not be permitted to receive pursuant to any requirements,
obligation or understanding applicable to Landlord, the parties agree to enter
into an amendment to this Lease which revises the "Transfer Premium" formula in
a manner that (x) is mutually agreed to by the parties and (y) does not result
in any material increase in the expected costs or benefits to either party under
this Section 14.3. "Transfer Premium" shall also include, but not be limited to,
key money, bonus money or other cash consideration paid by Transferee to Tenant
in connection with such Transfer, and any payment in excess of fair market value
for services rendered by Tenant to Transferee or for assets, fixtures,
inventory, equipment, or furniture transferred by Tenant to Transferee in
connection with such Transfer; provided, however, that if, at the time of any
such sublease or assignment, Landlord determines that Landlord's receipt of the
foregoing amounts may result in the receipt by Landlord of amounts that the
Landlord may not be permitted to receive pursuant to any requirements,
obligation or understanding applicable to Landlord, the parties agree to enter
into an amendment to this Lease which revises such amounts in a manner that
(x) is mutually agreed to by the parties and (y) does not result in any material
increase in the expected costs or benefits to either party under this
Section 14.3.

 

14.4         Landlord's Option as to Subject Space. Notwithstanding anything to
the contrary contained in this Article 14, Landlord shall have the option, by
giving written notice to Tenant (a "Recapture Notice") within thirty (30) days
after receipt of any Transfer Notice, to recapture the Subject Space for the
remainder of the Lease Term; provided, however, if Landlord delivers a Recapture
Notice to Tenant, Tenant shall have the right to revoke and cancel its
previously delivered Transfer Notice within five (5) business days following
Tenant's receipt of such Recapture Notice. Such Recapture Notice shall cancel
and terminate this Lease with respect to the Subject Space as of the date stated
in the Transfer Notice as the effective date of the proposed Transfer (or at
Landlord's option, shall cause the Transfer to be made to Landlord or its agent,
in which case the parties shall execute the Transfer documentation promptly
thereafter). In the event of a recapture by Landlord, if this Lease shall be
canceled with respect to less than the entire Premises, the Rent reserved herein
shall be prorated 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
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 the same. If Landlord declines, or fails to elect in a timely
manner to recapture the Subject Space under this Section 14.4, then, provided
Landlord has consented to the proposed Transfer, Tenant shall be entitled to
proceed to transfer the Subject Space to the proposed Transferee, subject to
provisions of this Article 14.

 

 
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14.5         Effect of Transfer. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space. In no event shall any
Transferee assign, sublease or otherwise encumber its interest in this Lease or
further sublet any portion of the Subject Space, or otherwise suffer or permit
any portion of the Subject Space to be used or occupied by others. Landlord or
its authorized representatives shall have the right at all reasonable times to
audit the books, records and papers of Tenant relating to any Transfer, and
shall have the right to make copies thereof. If the Transfer Premium respecting
any Transfer shall be found understated, Tenant shall, within thirty (30) days
after demand, pay the deficiency, and if understated by more than two percent
(2%), Tenant shall pay Landlord's costs of such audit.

 

14.6        Additional Transfers. For purposes of this Lease, the term
"Transfer" shall also include (i) if Tenant is a partnership, the withdrawal or
change, voluntary, involuntary or by operation of law, of twenty-five percent
(25%) or more of the partners, or transfer of twenty-five percent (25%) or more
of partnership interests, within a twelve (12)-month period, or the dissolution
of the partnership without immediate reconstitution thereof, and (ii) if Tenant
is a closely held corporation (i.e., whose stock is not publicly held and not
traded through an exchange or over the counter), (A) the dissolution, merger,
consolidation or other reorganization of Tenant or (B) the sale or other
transfer of an aggregate of twenty-five percent (25%) or more of the voting
shares of Tenant (other than to immediate family members by reason of gift or
death), within a twelve (12)-month period, or (C) the sale, mortgage,
hypothecation or pledge of an aggregate of twenty-five percent (25%) or more of
the value of the unencumbered assets of Tenant within a twelve (12)-month
period.

 

14.7         Non-Transfers. Notwithstanding anything to the contrary contained
in this Article 14, (i) an assignment of Tenant's interest in this Lease, or a
subletting of all or a portion of the Premises, to an affiliate of Tenant (i.e.,
an entity which is controlled by, controls, or is under common control with,
Tenant), (ii) an assignment of Tenant's interest in this Lease to an entity
which acquires all or substantially all of the assets of Tenant, or (iii) an
assignment of Tenant's interest in this Lease to an entity which is the
resulting entity of a merger or consolidation of Tenant during the Lease Term,
shall not be deemed a Transfer under this Article 14 (any such assignment or
subletting described in items (i) through (iii) of this Section 14.7 hereinafter
referred to as a "Permitted Non-Transfer" and any such assignee or sublessee
pursuant to a Permitted Non-Transfer hereinafter referred to as a "Permitted
Non-Transferee"), provided that (A) Tenant notifies Landlord of any such
Permitted Non-Transfer and promptly supplies Landlord with any documents or
information reasonably requested by Landlord regarding such Permitted
Non-Transfer or such Permitted Non-Transferee, (B) such Permitted Non-Transfer
is not a subterfuge by Tenant to avoid its obligations under this Lease, and
(C) such Permitted Non-Transferee shall have a tangible net worth (not including
good will as an asset) computed in accordance with generally accepted accounting
principles ("Net Worth") at least equal to the greater of (1) the Net Worth of
Tenant immediately prior to such Permitted Non-Transfer, or (2) the Net Worth of
the Original Tenant on the date of this Lease. An assignee of Original Tenant's
entire interest in this Lease which assignee is a Permitted Non-Transferee may
also be referred to herein as a "Non-Transferee Assignee." As used in this
Section 14.7, "control" shall mean the ownership, directly or indirectly, of at
least fifty-one percent (51%) of the voting securities of, or possession of the
right to vote, in the ordinary direction of its affairs, of at least fifty-one
percent (51%) of the voting interest in, any person or entity.

 

14.8         Occurrence of Default. Any Transfer hereunder shall be subordinate
and subject to the provisions of this Lease, and if this Lease shall be
terminated during the term of any Transfer, Landlord shall have the right to:
(i) treat such Transfer as cancelled and repossess the Subject Space by any
lawful means, or (ii) require that such Transferee attorn to and recognize
Landlord as its landlord under any such Transfer. If Tenant shall be in default
under this Lease, Landlord is hereby irrevocably authorized, as Tenant's agent
and attorney-in-fact, to direct any Transferee to make all payments under or in
connection with such Transfer directly to Landlord (which Landlord shall apply
towards Tenant's obligations under this Lease) until such default is cured. Such
Transferee shall rely on any representation by Landlord that Tenant is in
default hereunder, without any need for confirmation thereof by Tenant. Upon any
assignment of Tenant's interest in this Lease, the assignee shall assume in
writing all obligations and covenants of Tenant thereafter to be performed or
observed under this Lease. No collection or acceptance of rent by Landlord from
any Transferee shall be deemed a waiver of any provision of this Article 14 or
the approval of any Transferee or a release of Tenant from any obligation under
this Lease, whether theretofore or thereafter accruing. In no event shall
Landlord's enforcement of any provision of this Lease against any Transferee be
deemed a waiver of Landlord's right to enforce any term of this Lease against
Tenant or any other person. If Tenant's obligations hereunder have been
guaranteed, Landlord's consent to any Transfer shall not be effective unless the
guarantor also consents to such Transfer.

 

 
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14.9      Preapproved Sublease. Notwithstanding the foregoing terms of this
Section 14, Landlord and Tenant hereby acknowledge and agree that: (i) following
the mutual execution and delivery of this Lease, Tenant intends to enter into a
Sublease Agreement in a form materially similar to the form attached hereto as
Exhibit F (the "Preapproved Sublease") whereby David Hall or an affiliated
entity owned or controlled by David Hall (the "Preapproved Subtenant") will
sublease a portion of the Premises from Tenant; (ii) within ten (10) business
days following Landlord's receipt of the fully executed Preapproved Sublease
materially in the form attached hereto as Exhibit F and a copy of that certain
Landlord's Consent to Sublease attached hereto as Exhibit F-1 (the "Landlord's
Consent to Preapproved Sublease") executed by Tenant and Preapproved Subtenant,
Landlord agrees to countersign the Landlord's Consent to Preapproved Sublease,
which document shall evidence Landlord's approval of and consent to the
Preapproved Sublease; and (iii) the Preapproved Sublease shall not be subject to
any further consent of Landlord under this Section 14; provided, however, if the
Preapproved Sublease received by Landlord as described above substantially or
materially differs from the Preapproved Sublease form attached hereto as
Exhibit F, then Landlord shall be entitled to review and approve the form of the
Preapproved Sublease submitted to Landlord, such approval not to be unreasonably
withheld, conditioned or delayed by Landlord.

 

ARTICLE 15

SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES

 

15.1        Surrender of Premises. No act or thing done by Landlord or any agent
or employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in writing by Landlord. The delivery of keys to the
Premises to Landlord or any agent or employee of Landlord shall not constitute a
surrender of the Premises or effect a termination of this Lease, whether or not
the keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not, or
a mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises or terminate any or all such sublessees or
subtenancies.

 

15.2        Removal of Tenant Property by Tenant. Upon the expiration of the
Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject
to the provisions of this Article 15, quit and surrender possession of the
Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, business and trade
fixtures, free-standing cabinet work, movable partitions, cabling installed by
or at the request of Tenant that is not contained in protective conduit or metal
raceway and other articles of personal property owned by Tenant or installed or
placed by Tenant at its expense in the Premises, and such similar articles of
any other persons claiming under Tenant, as Landlord may, in its sole
discretion, require to be removed, and Tenant shall repair at its own expense
all damage to the Premises and Building resulting from such removal.

 

 
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ARTICLE 16

HOLDING OVER

 

If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable at a monthly rate equal to the product of 150% of the greater of
(i) the Rent applicable during the last rental period of the Lease Term under
this Lease, or (ii) the then current market rent (as determined by Landlord).
Such month-to-month tenancy shall be subject to every other applicable term,
covenant and agreement contained herein. For purposes of this Article 16, a
holding over shall include Tenant’s remaining in the Premises after the
expiration or earlier termination of the Lease Term, as required pursuant to the
terms of this Lease or the Tenant Work Letter, to remove any Alterations or
Above Building Standard Tenant Improvements located within the Premises and
replace the same with Building Standard Tenant Improvements. Nothing contained
in this Article 16 shall be construed as consent by Landlord to any holding over
by Tenant, and Landlord expressly reserves the right to require Tenant to
surrender possession of the Premises to Landlord as provided in this Lease upon
the expiration or other termination of this Lease. The provisions of this
Article 16 shall not be deemed to limit or constitute a waiver of any other
rights or remedies of Landlord provided herein or at law. If Tenant fails to
surrender the Premises upon the termination or expiration of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
protect, defend, indemnify and hold Landlord harmless from all loss, costs
(including reasonable attorneys' fees) and liability resulting from such
failure, including, without limiting the generality of the foregoing, any claims
made by any succeeding tenant founded upon such failure to surrender and any
lost profits to Landlord resulting therefrom.

 

ARTICLE 17

ESTOPPEL CERTIFICATES

 

Within ten (10) business days following a request in writing by Landlord, Tenant
shall execute, acknowledge and deliver to Landlord an estoppel certificate,
stating (a) that this Lease is unmodified and is in full force and effect (or,
if there have been modifications, that this Lease is in full force and effect as
modified, and setting forth such modifications), (b) the dates to which Rent and
other sums payable hereunder have been paid, (c) either that, to the knowledge
of Tenant, no default exists hereunder or, specifying each such default of which
such Tenant has knowledge and (d) any other information reasonably requested by
Landlord or Landlord's current or prospective mortgagee. Any such certificate
may be relied upon by any current or prospective mortgagee or purchaser of all
or any portion of the Project. Tenant shall execute and deliver whatever other
instruments may be reasonably required for such purposes. At any time during the
Lease Term, Landlord may require Tenant, and to the extent applicable, any
guarantor(s), to provide Landlord with a current audited financial statement and
audited financial statements of the two (2) years prior to the current financial
statement year. Such statements shall be delivered by Tenant and such
guarantor(s) to Landlord within ninety (90) days after Landlord's written
request therefor and be prepared in accordance with generally accepted
accounting principles and, if such is the normal practice of Tenant or such
guarantor(s), shall be audited by an independent certified public accountant
with copies of the auditor's statement, reflecting Tenant's or such
guarantor(s)', as applicable, then-current financial condition in such form and
detail as Landlord may reasonably request. The failure of Tenant and any such
guarantor(s) to timely execute, acknowledge and deliver such estoppel
certificate or other instruments, shall constitute an acceptance of the Premises
and an acknowledgment by Tenant and such guarantor(s) that statements included
in the estoppel certificate are true and correct, without exception.

 

ARTICLE 18

SUBORDINATION

 

This Lease shall be subject and subordinate to all present and future ground or
underlying leases of the Building or Project and to the lien of any mortgage,
trust deed or other encumbrances now or hereafter in force against the Building
or Project or any part thereof, if any, and to all renewals, extensions,
modifications, consolidations and replacements thereof, and to all advances made
or hereafter to be made upon the security of such mortgages or trust deeds,
unless the holders of such mortgages, trust deeds or other encumbrances, or the
lessors under such ground lease or underlying leases, require in writing that
this Lease be superior thereto. Tenant covenants and agrees in the event any
proceedings are brought for the foreclosure of any such mortgage or deed in lieu
thereof (or if any ground lease is terminated), to attorn, without any
deductions or set-offs whatsoever, to the lienholder or purchaser or any
successors thereto upon any such foreclosure sale or deed in lieu thereof (or to
the ground lessor), if so requested to do so by such purchaser or lienholder or
ground lessor, and to recognize such purchaser or lienholder or ground lessor as
the lessor under this Lease, provided such lienholder or purchaser or ground
lessor shall agree to accept this Lease and not disturb Tenant's occupancy, so
long as Tenant timely pays the rent and observes and performs the terms,
covenants and conditions of this Lease to be observed and performed by Tenant.
Landlord's interest herein may be assigned as security at any time to any
lienholder. Tenant shall, within five (5) days of request by Landlord, execute
such further instruments or assurances as Landlord may reasonably deem necessary
to evidence or confirm the subordination or superiority of this Lease to any
such mortgages, trust deeds, ground leases or underlying leases. Tenant waives
the provisions of any current or future statute, rule or law which may give or
purport to give Tenant any right or election to terminate or otherwise adversely
affect this Lease and the obligations of the Tenant hereunder in the event of
any foreclosure proceeding or sale.

 

 
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ARTICLE 19

DEFAULTS; REMEDIES

 

19.1         Events of Default. The occurrence of any of the following shall
constitute a default of this Lease ("Default") by Tenant:

 

19.1.1     Any failure by Tenant to pay any Rent or any other charge required to
be paid under this Lease, or any part thereof, when due, where such failure
continues for more than three (3) business days after notice from Landlord; or

 

19.1.2     Except where a specific time period is otherwise set forth for
Tenant's performance in this Lease, in which event the failure to perform by
Tenant within such time period shall be a default by Tenant under this Section
19.1.2, any failure by Tenant to observe or perform any other provision,
covenant or condition of this Lease to be observed or performed by Tenant where
such failure continues for ten (10) days after written notice thereof from
Landlord to Tenant; provided that if the nature of such default is such that the
same cannot reasonably be cured within a ten (10) day period, Tenant shall not
be deemed to be in default if it diligently commences such cure within such
period and thereafter diligently proceeds to rectify and cure such default, but
in no event exceeding a period of time in excess of thirty (30) days after
written notice thereof from Landlord to Tenant; or

 

19.1.3     The failure by Tenant to observe or perform according to the
provisions of Articles 5, 14, 17 or 18 of this Lease where such failure
continues for more than three (3) business days after notice from Landlord; or

 

19.1.4     Tenant's failure to comply with the terms of the Development CC&R's,
where such failure continues for ten (10) days after written notice thereof from
Landlord to Tenant; provided that if the nature of such default is such that the
same cannot reasonably be cured within a ten (10) day period, Tenant shall not
be deemed to be in default if it diligently commences such cure within such
period and thereafter diligently proceeds to rectify and cure such default, but
in no event exceeding a period of time in excess of thirty (30) days after
written notice thereof from Landlord to Tenant; or

 

19.1.5     To the extent permitted by law, a general assignment by Tenant or any
guarantor of this Lease for the benefit of creditors, or the taking of any
corporate action in furtherance of bankruptcy or dissolution whether or not
there exists any proceeding under an insolvency or bankruptcy law, or the filing
by or against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant's assets located upon
the Premises or of Tenant's interest in this Lease, unless such seizure is
discharged within thirty (30) days; or

 

 
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The notice periods provided herein are in lieu of, and not in addition to, any
notice periods provided by law.

 

19.2         Remedies Upon Default. Upon the occurrence of any event of default
by Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity (all of which remedies shall be distinct, separate
and cumulative), the option to pursue any one or more of the following remedies,
each and all of which shall be cumulative and nonexclusive, without any notice
or demand whatsoever.

 

19.2.1     Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may,
without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession of the Premises and expel or
remove Tenant and any other person who may be occupying the Premises or any part
thereof, without being liable for prosecution or any claim for damages therefor;
and Landlord may recover from Tenant the following:

 

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

 

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

 

(iii)     The worth at the time of award of the amount by which the unpaid rent
for the balance of the Lease Term after the time of award exceeds the amount of
such rental loss that Tenant proves could have been reasonably avoided; plus

 

(iv)     Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, specifically including but not limited to, brokerage commissions and
advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant (whether performed by Landlord or Landlord's
property manager), whether for the same or a different use, and any special
concessions made to obtain a new tenant; and

 

(v)     At Landlord's election, such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by applicable law.

 

The term "rent" as used in this Section 19.2 shall be deemed to be and to mean
all sums of every nature required to be paid by Tenant pursuant to the terms of
this Lease, whether to Landlord or to others. As used in Paragraphs 19.2.1(i)
and (ii), above, the "worth at the time of award" shall be computed by allowing
interest at the Interest Rate set forth in Article 25 of this Lease, but in no
case greater than the maximum amount of such interest permitted by law. As used
in Paragraph 19.2.1(iii) above, the "worth at the time of award" 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%).

 

19.2.2     Landlord shall have the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in effect after lessee's breach and
abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.

 

19.2.3     Landlord shall at all times have the rights and remedies (which shall
be cumulative with each other and cumulative and in addition to those rights and
remedies available under Sections 19.2.1 and 19.2.2, above, or any law or other
provision of this Lease), without prior demand or notice except as required by
applicable law, to seek any declaratory, injunctive or other equitable relief,
and specifically enforce this Lease, or restrain or enjoin a violation or breach
of any provision hereof.

 

 
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19.3         Form of Payment After Default. Following the occurrence of an event
of default by Tenant, Landlord shall have the right to require that any or all
subsequent amounts paid by Tenant to Landlord hereunder, whether to cure the
default in question or otherwise, be paid in the form of cash, money order,
cashier's or certified check drawn on an institution acceptable to Landlord, or
by other means approved by Landlord, notwithstanding any prior practice of
accepting payments in any different form.

 

19.4          Efforts to Relet. No re-entry or repossession, repairs,
maintenance, changes, alterations and additions, reletting, appointment of a
receiver to protect Landlord's interests hereunder, or any other action or
omission by Landlord shall be construed as an election by Landlord to terminate
this Lease or Tenant's right to possession, or to accept a surrender of the
Premises, nor shall same operate to release Tenant in whole or in part from any
of Tenant's obligations hereunder, unless express written notice of such
intention is sent by Landlord to Tenant. Tenant hereby irrevocably waives any
right otherwise available under any law to redeem or reinstate this Lease.

 

19.5         Landlord Default. Notwithstanding anything to the contrary set
forth in this Lease, Landlord shall not be in default in the performance of any
obligation required to be performed by Landlord pursuant to this Lease unless
Landlord fails to perform such obligation within thirty (30) days after the
receipt of notice from Tenant specifying in detail Landlord's failure to
perform; provided, however, if the nature of Landlord's obligation is such that
more than thirty (30) days are required for its performance, then Landlord shall
not be in default under this Lease if it shall commence such performance within
such thirty (30) day period and thereafter diligently pursue the same to
completion. Upon any such default by Landlord under this Lease, Tenant may,
except as otherwise specifically provided in this Lease to the contrary,
exercise any of its rights provided at law or in equity.

 

19.6         Subleases of Tenant. Whether or not Landlord elects to terminate
this Lease on account of any default by Tenant, as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.

 

ARTICLE 20

COVENANT OF QUIET ENJOYMENT

 

Landlord covenants that Tenant, on paying the Rent, charges for services and
other payments herein reserved and on keeping, observing and performing all the
other terms, covenants, conditions, provisions and agreements herein contained
on the part of Tenant to be kept, observed and performed, shall, during the
Lease Term, peaceably and quietly have, hold and enjoy the Premises subject to
the terms, covenants, conditions, provisions and agreements hereof without
interference by any persons lawfully claiming by or through Landlord. The
foregoing covenant is in lieu of any other covenant express or implied.

 

ARTICLE 21

SECURITY DEPOSIT

 

Concurrent with Tenant's execution of this Lease, Tenant shall deposit with
Landlord a security deposit (the "Security Deposit") in the amount set forth in
Section 7 of the Summary, as security for the faithful performance by Tenant of
all of its obligations under this Lease. If Tenant defaults with respect to any
provisions of this Lease, including, but not limited to, the provisions relating
to the payment of Rent, the removal of property and the repair of resultant
damage, Landlord may, without notice to Tenant, but shall not be required to
apply all or any part of the Security Deposit for the payment of any Rent or any
other sum in default or for the payment of any amount that Landlord may
reasonably spend or may become obligated to spend by reason of Tenant's default,
or to compensate Landlord for any other loss or damage that Landlord may suffer
by reason of Tenant's default and Tenant shall, upon demand therefor, restore
the Security Deposit to its original amount. Any unapplied portion of the
Security Deposit shall be returned to Tenant, or, at Landlord's option, to the
last assignee of Tenant's interest hereunder, within sixty (60) days following
the expiration of the Lease Term. Tenant shall not be entitled to any interest
on the Security Deposit. Tenant hereby waives the provisions of Section 1950.7
of the California Civil Code, or any successor statute. Notwithstanding anything
to the contrary in this Article 21, provided Tenant is not then in Default and
has not previously been in Default under this Lease as of the last day of the
thirty-sixth (36th) full calendar month of the initial Lease Term, on the first
day of the thirty-seventh (37th) full calendar month of the initial Lease Term
(the "First Adjustment Date"), Landlord shall apply one-third (1/3) of the
initial Security Deposit amount against the Base Rent then payable by Tenant for
such thirty-seventh (37th) full calendar month. Furthermore, provided Tenant is
not then in Default and has not previously been in Default under this Lease as
of the last day of seventy-second (72nd) full calendar month of the initial
Lease Term, on the first day of the seventy-third (73rd) full calendar month of
the initial Lease Term (the "Second Adjustment Date"), Landlord shall apply
one-third (1/3) of the initial Security Deposit amount against the Base Rent
then payable by Tenant for such seventy-third (73rd) full calendar month.
Finally, provided Tenant is not then in Default and has not previously been in
Default under this Lease as of the last day of the one hundred eighth (108th)
full calendar month of the initial Lease Term, on the first day of the one
hundred ninth (109th) full calendar month of the initial Lease Term (the "Final
Adjustment Date"), Landlord shall apply one-third (1/3) of the initial Security
Deposit amount (i.e., the then remaining Security Deposit assuming the first two
reductions described above previously occurred) against the Base Rent then
payable by Tenant for such one hundred ninth (109th) full calendar month. There
shall be no reduction in the Security Deposit if Tenant is in Default as of the
applicable Adjustment Date, or if Tenant has been in Default under this Lease at
any time prior to the First Adjustment Date, Second Adjustment Date, or Final
Adjustment Date, as the case may be.

 

 
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ARTICLE 22

SUBSTITUTION OF OTHER PREMISES

 

Intentionally Omitted.

 

ARTICLE 23

SIGNS

 

23.1         Interior Premises Signage. Subject to Landlord's prior written
approval, in its reasonable discretion, and provided all signs are in keeping
with the quality, design and style of the Building and Project, Tenant, at its
sole cost and expense, may install identification signage anywhere in the
Premises including in the elevator lobby of the Premises, provided that such
signs must not be visible from the exterior of the Building.

 

23.2        Prohibited Signage and Other Items. Any signs, notices, logos,
pictures, names or advertisements which are installed and that have not been
separately approved by Landlord may be removed without notice by Landlord at the
sole expense of Tenant. Except as expressly permitted pursuant to the terms of
Section 23.3 below, Tenant may not install any signs on the exterior or roof of
the Project or the Common Areas. Any signs, window coverings, or blinds (even if
the same are located behind the Landlord-approved window coverings for the
Building), or other items visible from the exterior of the Premises or Building,
shall be subject to the prior approval of Landlord, in its sole discretion.

 

23.3         Exterior Signage. Effective as of the Lease Commencement Date,
Tenant shall have the right to install (A) one (1) Building top sign on the
Building directly above the main entrance to the Premises (the "Building Top
Sign"), (B) one (1) slot on one (1) side of the monument sign located at the
east entrance to the Project, the exact location of such slot to be specified by
Landlord, and (C) one (1) slot on one (1) side of a to-be-constructed
directional sign located within the Project, the exact location of such
directional sign and slot to be specified by Landlord (each such sign, including
the Building Top Sign, an "Exterior Sign," and collectively, the "Exterior
Signs"). Notwithstanding the foregoing, Tenant shall not be entitled to install
any Exterior Sign if: (a) Tenant has previously assigned its interest in this
Lease (except in connection with a Permitted Non-Transfer), (b) Tenant has
previously sublet any portion of the Premises (except in connection with a
Permitted Non-Transfer), or (c) Tenant is in Default under this Lease.
Furthermore, Tenant’s right to install the Exterior Signs is expressly subject
to and contingent upon Tenant receiving the approval and consent to the Exterior
Sign from the City of Santa Ana, California, its architectural review board (if
applicable), any other applicable governmental or quasi-governmental
governmental agency and any architectural review committee under any covenants,
conditions and restrictions recorded against the Project. Tenant, at its sole
cost and expense, shall obtain all other necessary building permits, zoning,
regulatory and other approvals in connection with the Exterior Signs. All costs
of approval, consent, design, installation, supervision of installation, wiring,
maintaining, repairing and removing the Exterior Signs will be at Tenant’s sole
cost and expense. Tenant shall submit to Landlord reasonably detailed drawings
of its proposed Exterior Signs, including without limitation, the size,
material, shape, location, coloring and lettering for review and approval by
Landlord. The Exterior Signs shall be subject to (i) Landlord’s prior review and
written approval thereof, (ii) the terms, conditions and restrictions of any
recorded covenants, conditions and restrictions encumbering the Project and/or
the Building and shall conform to the Building sign criteria and Project sign
criteria, if any, and the other reasonable standards of design and motif
established by Landlord for the exterior of the Building and/or the Project.
Tenant shall reimburse Landlord for any reasonable out-of-pocket costs
associated with Landlord's review and supervision as hereinbefore provided
including, but not limited to, engineers and other professional consultants.
Tenant will be solely responsible for any damage to the Exterior Signs and any
damage that the installation, maintenance, repair or removal thereof may cause
to the Building or the Project. Tenant agrees upon the expiration date or sooner
termination of this Lease, upon Landlord's request, to remove the Exterior Signs
and restore any damage to the Building and the Project at Tenant's expense. In
addition, Landlord shall have the right to remove either or both of the Exterior
Signs at Tenant's sole cost and expense, if, at any time during the Lease Term:
(i) Tenant assigns this Lease (except in connection with a Permitted
Non-Transfer), (ii) Tenant sublets any portion of the Premises (except in
connection with a Permitted Non-Transfer), or (iii) Tenant is in Default under
this Lease. Notwithstanding anything to the contrary contained herein, if Tenant
fails to install any Exterior Sign (other than the Building Top Sign) in
accordance with the terms of this Section 23.5 on or before the twelfth (12th)
month anniversary of the Lease Commencement Date (the "Outside Exterior Sign
Installation Date"), Tenant's right to erect any such Exterior Sign (other than
the Building Top Sign) shall terminate as of the Outside Exterior Sign
Installation Date and shall thereupon be deemed null and void and of no further
force and effect.

 

 
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ARTICLE 24

COMPLIANCE WITH LAW

 

Tenant shall not do anything or suffer anything to be done in or about the
Premises or the Project which will in any way conflict with any law, statute,
ordinance or other governmental rule, regulation or requirement now in force or
which may hereafter be enacted or promulgated, including, without limitation,
the Americans with Disabilities Act of 1990 (as may be amended) (collectively,
the "Laws"). At its sole cost and expense, Tenant shall promptly comply with all
such Laws, including, without limitation, the making of any alterations and
improvements to the Premises. Notwithstanding the foregoing to the contrary,
Landlord shall be responsible, as part of Operating Expenses to the extent
permitted under Article 4 above, for making all alterations to the following
portions of the Building and Project required by applicable Laws: (a) structural
portions of the Premises and Building, but not including Tenant Improvements or
any Alterations installed by or at the request of Tenant; and (b) those portions
of the Building and Project located outside the Premises; provided, however,
(i) Tenant acknowledges that the parking areas serving the Premises may or may
not be in compliance with Laws and that Landlord shall not be required to cause
such parking areas to be in compliance with Laws unless and until mandated by
any applicable governmental authority and shall not be liable to Tenant for such
noncompliance, if applicable, and (ii) Tenant shall reimburse Landlord (or
Landlord's property manager), within ten (10) days after invoice, for the costs
of any such improvements and alterations and other compliance costs to the
extent necessitated by or resulting from (A) any Alterations or Tenant
Improvements installed by or on behalf of Tenant, (B) the negligence or willful
misconduct of Tenant or any of Tenant's Parties that is not covered by insurance
obtained by Landlord and as to which the waiver of subrogation applies, and/or
(C) Tenant's specific manner of use of the Premises (as distinguished from
general office use).

 

ARTICLE 25

LATE CHARGES

 

If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to five
percent (5%) of the overdue amount plus any attorneys' fees incurred by Landlord
by reason of Tenant's failure to pay Rent and/or other charges when due
hereunder. The late charge shall be deemed Additional Rent and the right to
require it shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord's remedies in any manner. In addition to the late charge
described above, any Rent or other amounts owing hereunder which are not paid
within ten (10) days after that the date they are due shall bear interest from
the date when due until paid at a rate per annum equal to the lesser of (i) the
annual "Bank Prime Loan" rate cited in the Federal Reserve Statistical Release
Publication G.13(415), published on the first Tuesday of each calendar month (or
such other comparable index as Landlord and Tenant shall reasonably agree upon
if such rate ceases to be published) plus four (4) percentage points, and
(ii) the highest rate permitted by applicable law (as applicable, the "Interest
Rate").

 

 
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ARTICLE 26

LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

 

26.1         Landlord's Cure. 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, except to the extent,
if any, otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and, except in case of an emergency, such failure
shall continue in excess of the time allowed under Section 19.1.2, above, unless
a specific time period is otherwise stated in this Lease, Landlord may, but
shall not be obligated to, make any such payment or perform any such act on
Tenant's part without waiving its rights based upon any default of Tenant and
without releasing Tenant from any obligations hereunder.

 

26.2         Tenant's Reimbursement. Except as may be specifically provided to
the contrary in this Lease, Tenant shall pay to Landlord (or Landlord's property
manager), upon delivery by Landlord to Tenant of statements therefor: (i) sums
equal to expenditures reasonably made and obligations incurred by Landlord in
connection with the remedying by Landlord of Tenant's defaults pursuant to the
provisions of Section 26.1; (ii) sums equal to all losses, costs, liabilities,
damages and expenses referred to in Article 10 of this Lease; and (iii) sums
equal to all expenditures made and obligations incurred by Landlord in
collecting or attempting to collect the Rent or in enforcing or attempting to
enforce any rights of Landlord under this Lease or pursuant to law, including,
without limitation, all legal fees and other amounts so expended. Tenant's
obligations under this Section 26.2 shall survive the expiration or sooner
termination of the Lease Term.

 

ARTICLE 27

ENTRY BY LANDLORD

 

Landlord (or Landlord's property manager) reserves the right at all reasonable
times and upon reasonable notice to Tenant (except in the case of an emergency)
to enter the Premises to (i) inspect them; (ii) show the Premises to prospective
purchasers, mortgagees or tenants, or to current or prospective mortgagees,
ground or underlying lessors or insurers; (iii) post notices of
nonresponsibility; or (iv) alter, improve or repair the Premises or the
Building, or for structural alterations, repairs or improvements to the Building
or the Building's systems and equipment. Landlord (or Landlord's property
manager) may enter the Premises at any time to (A) perform services required of
Landlord; (B) take possession due to any breach of this Lease in the manner
provided herein; and (C) perform any covenants of Tenant which Tenant fails to
perform. Landlord (or Landlord's property manager) may make any such entries
without the abatement of Rent and may take such reasonable steps as required to
accomplish the stated purposes. Tenant hereby waives any claims for damages or
for any injuries or inconvenience to or interference with Tenant's business,
lost profits, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned thereby. For each of the above purposes, Landlord shall at
all times have a key with which to unlock all the doors in the Premises,
excluding Tenant's vaults, safes and special security areas designated in
advance by Tenant. In an emergency, Landlord shall have the right to use any
means that Landlord may deem proper to open the doors in and to the Premises.
Any entry into the Premises by Landlord in the manner hereinbefore described
shall not be deemed to be a forcible or unlawful entry into, or a detainer of,
the Premises, or an actual or constructive eviction of Tenant from any portion
of the Premises. No provision of this Lease shall be construed as obligating
Landlord to perform any repairs, alterations or decorations except as otherwise
expressly agreed to be performed by Landlord herein.

 

 
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Notwithstanding the foregoing, except with respect to Landlord's rights under
clause (B) of this Article 27 above, Tenant desires to maintain the portion of
the Premises located on the first (1st) floor of the Building (excluding the
lobby area, corridors and staircase) as a secure area within the Premises (a
"Secure Area"). The Secure Area is more particularly depicted on Exhibit A-4
attached hereto. Such Secure Area is subject to change in Tenant's reasonable
discretion during the Term of this Lease upon no less than thirty (30) days
prior written notice from Tenant to Landlord. Landlord shall have no right to
access such Secure Area without a representative of Tenant present (which
representative Tenant agrees to make reasonably available); provided, however,
if access to such Secure Area is reasonably required in order for Landlord to
perform any of its obligations under this Lease, and if after request by
Landlord, Landlord is not timely provided with access to such Secure Area, then
Landlord shall have no liability to Tenant for Landlord's failure to perform
such obligations as a result thereof, and Tenant hereby waives all claims
against Landlord at law or in equity as a result of such failure by Landlord.
Additionally, notwithstanding anything in this Lease to the contrary, if access
to such Secure Area is reasonably required in order for Landlord to perform any
of its obligations under this Lease, and if any damage accrues during the period
of time from the time of Landlord's request for access to such Secure Area to
the time such access is granted by Tenant, then (a) Landlord shall have no
liability to Tenant for any damage accrued during any such period, (b) Tenant
hereby waives all claims against Landlord at law or in equity as a result
thereof and (c) Tenant agrees to indemnify, defend, protect, and hold harmless
the Landlord Parties from any and all claims, loss, cost, damage, expense and
liability (including without limitation court costs and reasonable attorneys'
fees) incurred in connection with or arising from Landlord's inability to access
the Secure Area.

 

ARTICLE 28

TENANT PARKING

 

28.1        Tenant Parking Passes. Tenant shall rent from Landlord, commencing
on the Lease Commencement Date, the number of parking passes set forth in
Section 8 of the Summary, on a monthly basis throughout the Lease Term, which
parking passes shall pertain to the Project parking facility and shall entitle
Tenant and/or its personnel to park one (1) vehicle in one (1) parking space per
pass rented. At Landlord's sole election, a portion of such parking passes shall
relate to parking spaces in locations in the Project parking facility designated
by Landlord (i.e., initially in those locations specified on Exhibit A-3
attached hereto ("Tenant's Designated Parking Area"), as such area may be
modified by Landlord from time to time). The remainder of Tenant's parking
passes not located in Tenant's Designated Parking Area shall relate the
unreserved parking spaces available to the remainder of the Project's tenants on
a first come first serve basis. Tenant shall pay to Landlord for automobile
parking passes on a monthly basis the prevailing rate charged from time to time
at the location of such parking passes; provided, however, during the period of
early access pursuant to Section 2.3 above, the initial Lease Term and any
Option Term, there shall be no charge for the parking passes allocated to Tenant
pursuant to the terms of Section 8 of the Summary. In addition, Tenant shall be
responsible for the full amount of any taxes imposed by any governmental
authority in connection with the renting of such parking passes by Tenant or the
use of the parking facility by Tenant. Tenant's continued right to use the
parking passes is conditioned upon Tenant abiding by all rules and regulations
which are prescribed from time to time for the orderly operation and use of the
parking facility where the parking passes are located, including any sticker or
other identification system and/or valet parking program established by
Landlord, Tenant's cooperation in seeing that Tenant's employees and visitors
also comply with such rules and regulations and Tenant not being in default
under this Lease. In addition, Tenant shall comply with all applicable
governmental resolutions, laws, rules and regulations. Accordingly, Tenant
hereby agrees that Tenant shall not charge its employees for the parking passes
utilized by such employees at the Project (notwithstanding any charge which may
be imposed upon Tenant for such parking passes pursuant to the terms of this
Lease).

 

28.2         Other Terms. Landlord specifically reserves the right to change the
size, configuration, design, layout and all other aspects of the Project parking
facility at any time and Tenant acknowledges and agrees that Landlord may,
without incurring any liability to Tenant and without any abatement of Rent
under this Lease, from time to time, close-off or restrict access to the Project
parking facility for purposes of permitting or facilitating any such
construction, alteration or improvements. Tenant agrees that Landlord shall not
be liable for damages, by abatement of Rent or otherwise, for failure to provide
any parking, including any failure to provide reserved parking spaces, when such
failure is occasioned, in whole or in part, by construction, alteration,
improvements, repairs or replacements, by any strike, lockout or other labor
trouble, by inability to resolve any dispute with any other party to the
Development CC&R's after reasonable effort to do so, by any riot or other
dangerous condition, emergency, accident or casualty whatsoever, by act or
default of Tenant or other parties, 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 paying Rent or performing
any of its obligations under this Lease. Furthermore, Landlord shall not be
liable under any circumstances for a loss of, or injury to, 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 parking as set forth in this Article 28.
The parking passes rented by Tenant pursuant to this Article 28 are provided to
Tenant solely for use by Tenant's own personnel and such passes may not be
transferred, assigned, subleased or otherwise alienated by Tenant without
Landlord's prior approval. Tenant may validate visitor parking by such method or
methods as may be established from time to time, at the validation rate from
time to time generally applicable to visitor parking.

 

 
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28.3         Parking Procedures. Landlord shall have no obligation to monitor
the use of such parking facility, nor shall Landlord be responsible for any loss
or damage to any vehicle or other property or for any injury to any person.
Tenant's parking passes shall be used only for parking of automobiles no larger
than full size passenger automobiles, sport utility vehicles or pick-up trucks
in connection with Tenant's business operations at the Premises only during the
hours that Tenant and/or its personnel are conducting business operations from
the Premises; provided, however, occasional overnight parking associated with
Tenant's or its personnel's conduct of business from the Premises shall be
permitted, subject to Tenant's and/or its personnel's compliance with Landlord's
rules related to such overnight parking. Tenant shall comply with all rules and
regulations which may be prescribed from time to time with respect to parking
and/or the parking facilities servicing the Project. Tenant shall not at any
time use more parking spaces in the Project parking facility than the number of
parking passes so allocated to Tenant or park its vehicles or the vehicles of
others in any portion of the Project parking facility not designated by Landlord
as a non-exclusive parking area. Tenant shall not use any parking spaces located
outside of Tenant's Designated Parking Area. All trucks (other than pick-up
trucks) and delivery vehicles shall be (i) parked at the designated areas of the
surface parking lot (which designated areas are subject to change by Landlord at
any time), (ii) loaded and unloaded in a manner which does not interfere with
the businesses of other occupants of the Project, and (iii) permitted to remain
on the Project only so long as is reasonably necessary to complete loading and
unloading. In the event Landlord elects in its sole and absolute discretion or
is required by any law or by the Development CC&R's to limit or control parking,
whether by validation of parking tickets or any other method of assessment,
Tenant agrees to participate in such validation or assessment program under such
reasonable rules and regulations as are from time to time established by
Landlord. Notwithstanding the foregoing, Tenant may park trucks and oversized
vehicles overnight in the area depicted on Exhibit A-5 attached hereto.

 

ARTICLE 29

MISCELLANEOUS PROVISIONS

 

29.1        Terms; Captions. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The necessary grammatical
changes required to make the provisions hereof apply either to corporations or
partnerships or individuals, men or women, as the case may require, shall in all
cases be assumed as though in each case fully expressed. The captions of
Articles and Sections are for convenience only and shall not be deemed to limit,
construe, affect or alter the meaning of such Articles and Sections.

 

29.2         Binding Effect. Subject to all other provisions of this Lease, each
of the covenants, conditions and provisions of this Lease shall extend to and
shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective heirs, personal
representatives, successors or assigns, provided this clause shall not permit
any assignment by Tenant contrary to the provisions of Article 14 of this Lease.

 

29.3         No Air Rights. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant's obligations under this Lease.

 

 
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29.4         Modification of Lease. Should any current or prospective mortgagee
or ground lessor for the Building or Project require a modification of this
Lease, which modification will not cause an increased cost or expense to Tenant
or in any other way materially and adversely change the rights and obligations
of Tenant hereunder, then and in such event, Tenant agrees that this Lease may
be so modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) days following a
request therefor. At the request of Landlord or any mortgagee or ground lessor,
Tenant agrees to execute a short form of Lease and deliver the same to Landlord
within ten (10) days following the request therefor.

 

29.5        Transfer of Landlord's Interest. Tenant acknowledges that Landlord
has the right to transfer all or any portion of its interest in the Project or
Building and in this Lease, and Tenant agrees that in the event of any such
transfer, Landlord shall automatically be released from all liability under this
Lease and Tenant agrees to look solely to such transferee for the performance of
Landlord's obligations hereunder after the date of transfer and such transferee
shall be deemed to have fully assumed and be liable for all obligations of this
Lease to be performed by Landlord, including the return of any Security Deposit,
and Tenant shall attorn to such transferee. Tenant further acknowledges that
Landlord may assign its interest in this Lease to a mortgage lender as
additional security and agrees that such an assignment shall not release
Landlord from its obligations hereunder and that Tenant shall continue to look
to Landlord for the performance of its obligations hereunder.

 

29.6         Prohibition Against Recording. Except as provided in Section 29.4
of this Lease, 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.

 

29.7         Landlord's Title. Landlord's title is and always shall be paramount
to the title of Tenant. Nothing herein contained shall empower Tenant to do any
act which can, shall or may encumber the title of Landlord.

 

29.8        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.

 

29.9       Application of Payments. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease, regardless of Tenant's
designation of such payments, to satisfy any obligations of Tenant hereunder, in
such order and amounts as Landlord, in its sole discretion, may elect.

 

29.10       Time of Essence. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.

 

29.11       Partial Invalidity. If any term, provision or condition contained in
this Lease shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term, provision or condition to persons
or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.

 

29.12       No Warranty. In executing and delivering this Lease, Tenant has not
relied on any representations, including, but not limited to, any representation
as to the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that Landlord is furnishing the same
services to other tenants, at all, on the same level or on the same basis, or
any warranty or any statement of Landlord which is not set forth herein or in
one or more of the exhibits attached hereto.

 

29.13     Landlord Exculpation. The liability of Landlord or the Landlord
Parties to Tenant for any default by Landlord under this Lease or arising in
connection herewith or with Landlord's operation, management, leasing, repair,
renovation, alteration or any other matter relating to the Project or the
Premises shall be limited solely and exclusively to an amount which is equal to
the interest of Landlord in the Building, provided that in no event shall such
liability extend to any sales or insurance proceeds received by Landlord or the
Landlord Parties in connection with the Project, Building or Premises. Neither
Landlord, nor any of the Landlord Parties shall have any personal liability
therefor, and Tenant hereby expressly waives and releases such personal
liability on behalf of itself and all persons claiming by, through or under
Tenant. The limitations of liability contained in this Section 29.13 shall inure
to the benefit of Landlord's and the Landlord Parties' present and future
partners, beneficiaries, officers, directors, trustees, shareholders, agents and
employees, and their respective partners, heirs, successors and assigns. Under
no circumstances shall any present or future partner of Landlord (if Landlord is
a partnership), or trustee or beneficiary (if Landlord or any partner of
Landlord is a trust), have any liability for the performance of Landlord's
obligations under this Lease. Notwithstanding any contrary provision herein,
neither Landlord nor the Landlord Parties shall be liable under any
circumstances for injury or damage to, or interference with, Tenant's business,
including but not limited to, loss of profits, loss of rents or other revenues,
loss of business opportunity, loss of goodwill or loss of use, in each case,
however occurring.

 

 
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29.14       Entire Agreement. It is understood and acknowledged that there are
no oral agreements between the parties hereto affecting this Lease and this
Lease constitutes the parties' entire agreement with respect to the leasing of
the Premises and supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter thereof, and none thereof shall be used to interpret or construe this
Lease. None of the terms, covenants, conditions or provisions of this Lease can
be modified, deleted or added to except in writing signed by the parties hereto.

 

29.15       Right to Lease. Landlord reserves the absolute right to effect such
other tenancies in the Project as Landlord in the exercise of its sole business
judgment shall determine to best promote the interests of the Building or
Project. Tenant does not rely on the fact, nor does Landlord represent, that any
specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.

 

29.16      Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, acts of war, acts of terrorism, inability
to obtain services, labor, or materials or reasonable substitutes therefor,
governmental actions, civil commotions, fire or other casualty, and other causes
beyond the reasonable control of the party obligated to perform, except with
respect to the obligations imposed with regard to Rent and other charges to be
paid by Tenant pursuant to this Lease and except as to Tenant's obligations
under Articles 5 and 24 of this Lease (collectively, a "Force Majeure"),
notwithstanding anything to the contrary contained in this Lease, shall excuse
the performance of such party for a period equal to any such prevention, delay
or stoppage and, therefore, if this Lease specifies a time period for
performance of an obligation of either party, that time period shall be extended
by the period of any delay in such party's performance caused by a Force
Majeure.

 

29.17       Waiver of Redemption by Tenant. Tenant hereby waives, for Tenant and
for all those claiming under Tenant, any and all rights now or hereafter
existing to redeem by order or judgment of any court or by any legal process or
writ, Tenant's right of occupancy of the Premises after any termination of this
Lease.

 

29.18       Notices. All notices, demands, statements, designations, approvals
or other communications (collectively, "Notices") given or required to be given
by either party to the other hereunder or by law shall be in writing, shall be
(A) sent by United States certified or registered mail, postage prepaid, return
receipt requested ("Mail"), (B) transmitted by facsimile, if such facsimile is
promptly followed by a Notice sent by Mail, (C) delivered by a nationally
recognized overnight courier, or (D) delivered personally. Any Notice shall be
sent, transmitted, or delivered, as the case may be, to Tenant at the
appropriate address set forth in Section 9 of the Summary, or to such other
place as Tenant may from time to time designate in a Notice to Landlord, or to
Landlord at the addresses set forth in Section 10 of the Summary, or to such
other places as Landlord may from time to time designate in a Notice to Tenant.
Any Notice will be deemed given (i) three (3) days after the date it is posted
if sent by Mail, (ii) the date the telecopy is transmitted, (iii) the date the
overnight courier delivery is made, or (iv) the date personal delivery is made
or attempted to be made. If Tenant is notified of the identity and address of
Landlord's mortgagee or ground or underlying lessor, Tenant shall give to such
mortgagee or ground or underlying lessor written notice of any default by
Landlord under the terms of this Lease by registered or certified mail, and such
mortgagee or ground or underlying lessor shall be given a reasonable opportunity
to cure such default prior to Tenant's exercising any remedy available to
Tenant.

 

29.19       Joint and Several. If there is more than one Tenant, the obligations
imposed upon Tenant under this Lease shall be joint and several.

 

 
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29.20       Authority; Tenant Representation. If Tenant is a corporation, trust,
partnership or limited liability company, each individual executing this Lease
on behalf of Tenant hereby represents and warrants that Tenant is a duly formed
and existing entity qualified to do business in California and that Tenant has
full right and authority to execute and deliver this Lease and that each person
signing on behalf of Tenant is authorized to do so. In such event, Tenant shall,
within ten (10) days after execution of this Lease, deliver to Landlord
satisfactory evidence of such authority and, upon demand by Landlord, also
deliver to Landlord satisfactory evidence of (i) good standing in Tenant's state
of formation and (ii) qualification to do business in California. Tenant hereby
represents to Landlord that neither Tenant nor any members, partners,
subpartners, parent organization, affiliate or subsidiary, or their respective
officers, directors, contractors, agents, servants, employees, invitees or
licensees (collectively, "Tenant Individuals"), to Tenant's current actual
knowledge, appears on any of the following lists (collectively, "Government
Lists") maintained by the United States government:

 

29.20.1      The two (2) lists maintained by the United States Department of
Commerce (Denied Persons and Entities; the Denied Persons list can be found at
http://www.bis.doc.gov/dpl/thedeniallist.asp; the Entity List can be found at
http://www.bis.doc.gov/entities/default.htm);

 

29.20.2      The list maintained by the United States Department of Treasury
(Specially Designated Nationals and Blocked Persons, which can be found at
http://www.ustreas.gov/ofac/t11sdn.pdf);

 

29.20.3      The two (2) lists maintained by the United States Department of
State (Terrorist Organizations and Debarred Parties; the State Department List
of Terrorists can be found at
http://www.state.gov/s/ct/rls/other/des/123085.html; the List of Debarred
Parties can be found at http://www.pmddtc.state.gov/compliance/debar.html); and

 

29.20.4      Any other list of terrorists, terrorist, organizations or narcotics
traffickers maintained pursuant to any of the rules and regulations of the
Office of Foreign Assets Control, United States Department of Treasury, or by
any other government or agency thereof.

 

29.20.5     Should any Tenant Individuals appear on any Government Lists at any
time during the Lease Term, Landlord shall be entitled to terminate this Lease
by written notice to Tenant effective as of the date specified in such notice.

 

29.21      Attorneys' Fees. In the event that either Landlord or Tenant should
bring suit for the possession of the Premises, for the recovery of any sum due
under this Lease, or because of the breach of any provision of this Lease or for
any other relief against the other, then all costs and expenses, including
reasonable attorneys', experts' and arbitrators' fees and costs, incurred by the
prevailing party therein shall be paid by the other party, which obligation on
the part of the other party shall be deemed to have accrued on the date of the
commencement of such action and shall be enforceable whether or not the action
is prosecuted to judgment.

 

29.22      Governing Law; WAIVER OF TRIAL BY JURY. This Lease shall be construed
and enforced in accordance with the laws of the State of California. IN ANY
ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO
(I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA,
(II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN
THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE
OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S
USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY
EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY
PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT
SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH
COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE
RELEGATED TO AN INDEPENDENT ACTION AT LAW.

 

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

 

29.24      Brokers. Landlord and Tenant hereby warrant to each other that they
have had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, excepting only the real estate brokers or agents
specified in Section 11 of the Summary (the "Brokers"), and that they know of no
other real estate broker or agent who is entitled to a commission in connection
with this Lease. Each party agrees to indemnify and defend the other party
against and hold the other party harmless from any and all claims, demands,
losses, liabilities, lawsuits, judgments, costs and expenses (including without
limitation reasonable attorneys' fees) with respect to any leasing commission or
equivalent compensation alleged to be owing on account of any dealings with any
real estate broker or agent, other than the Brokers, occurring by, through, or
under the indemnifying party.

 

29.25      Independent Covenants. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or to any setoff of the Rent or other amounts owing
hereunder against Landlord.

 

29.26       Project or Building Name and Signage. Landlord shall have the right
at any time to change the name of the Project and to install, affix and maintain
any and all signs on the exterior and on the interior of the Project as Landlord
may, in Landlord's sole discretion, desire. Tenant may use the name of the
Project or use pictures or illustrations of the Project in advertising or other
publicity or for any other legitimate business purpose, without the prior
written consent of Landlord.

 

29.27      Counterparts. This Lease may be executed in counterparts with the
same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.

 

29.28      Confidentiality. Tenant acknowledges that the content of this Lease
and any related documents are confidential information. Except as otherwise
required by laws applicable to a publicly traded company, Tenant shall keep such
confidential information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant's financial,
legal, and space planning consultants.

 

29.29      Transportation Management. Tenant, at its sole cost and expense,
shall fully comply with all present or future government-mandated programs (and
self-manage such compliance, subject to Landlord's reasonable approval) intended
to manage parking, transportation or traffic in and around the Building and
within Tenant's Designated Parking Area, and in connection therewith, Tenant
shall take responsible action for the transportation planning and management of
all employees located at the Premises by working directly with Landlord, any
governmental transportation management organization or any other
transportation-related committees or entities.

 

29.30      No Violation. Tenant hereby warrants and represents that neither its
execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord harmless against any claims, demands, losses, damages, liabilities,
costs and expenses, including, without limitation, reasonable attorneys' fees
and costs, arising from Tenant's breach of this warranty and representation.

 

29.31      Communications and Computer Lines. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "Lines") at the Project in or serving the Premises, provided
that (i) Tenant shall obtain Landlord's prior written consent, use an
experienced and qualified contractor approved in writing by Landlord, and comply
with all of the other provisions of Articles 7 and 8 of this Lease, (ii) an
acceptable number of spare Lines and space for additional Lines shall be
maintained for existing and future occupants of the Project, as determined in
Landlord's reasonable opinion, (iii) the Lines therefor (including riser cables)
shall be appropriately insulated to prevent excessive electromagnetic fields or
radiation, and shall be surrounded by a protective conduit reasonably acceptable
to Landlord, (iv) any new or existing Lines servicing the Premises shall comply
with all applicable governmental laws and regulations, (v) as a condition to
permitting the installation of new Lines, Landlord may require that Tenant
remove existing Lines located in or serving the Premises and repair any damage
in connection with such removal, and (vi) Tenant shall pay all costs in
connection therewith, including any fees charged by Landlord for Tenant's use of
the Building's telecommunications capacity in excess of Tenant's pro rata share
thereof. Landlord reserves the right to require that Tenant remove any Lines
located in or serving the Premises which are installed in violation of these
provisions, or which are at any time in violation of any laws or represent a
dangerous or potentially dangerous condition.

 

 
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29.32      Office and Communications Services.

 

29.32.1     The Provider. Landlord has advised Tenant that certain office and
communications services may be offered to tenants of the Building by a
concessionaire under contract to Landlord ("Provider"). Tenant shall be
permitted to contract with Provider for the provision of any or all of such
services on such terms and conditions as Tenant and Provider may agree.

 

29.32.2     Other Terms. Tenant acknowledges and agrees that: (i) Landlord has
made no warranty or representation to Tenant with respect to the availability of
any such services, or the quality, reliability or suitability thereof; (ii) the
Provider is not acting as the agent or representative of Landlord in the
provision of such services, and Landlord shall have no liability or
responsibility for any failure or inadequacy of such services, or any equipment
or facilities used in the furnishing thereof, or any act or omission of
Provider, or its agents, employees, representatives, officers or contractors;
(iii) Landlord shall have no responsibility or liability for the installation,
alteration, repair, maintenance, furnishing, operation, adjustment or removal of
any such services, equipment or facilities; and (iv) any contract or other
agreement between Tenant and Provider shall be independent of this Lease, the
obligations of Tenant hereunder, and the rights of Landlord hereunder, and,
without limiting the foregoing, no default or failure of Provider with respect
to any such services, equipment or facilities, or under any contract or
agreement relating thereto, shall have any effect on this Lease or give to
Tenant any offset or defense to the full and timely performance of its
obligations hereunder, or entitle Tenant to any abatement of rent or additional
rent or any other payment required to be made by Tenant hereunder, or constitute
any accrual or constructive eviction of Tenant, or otherwise give rise to any
other claim of any nature against Landlord.

 

29.33      Development CC&R's. This Lease and the terms hereof shall be subject
in all respects to the provisions of the Development CC&R's. The term
"Development CC&R's," as used in this Lease, shall collectively mean and refer
to any and all covenants, conditions and restrictions encumbering the Project
and recorded in the Official Records of Orange County, California, as amended.

 

29.34      Moving Allowance. Following Tenant's move into the Premises, provided
Tenant has accepted the Premises and paid its Security Deposit and first
installment of Rent as required pursuant to the terms of this Lease, Landlord
agrees to reimburse Tenant for its actual and reasonable third party expenses
incurred in moving to the Premises, not to exceed $2.00 per rentable square foot
of the Premises (the "Moving Allowance"), i.e., $124,888.00 based upon the
Premises containing 62,444 rentable square feet of space. In no event shall
Landlord be required to pay Tenant any portion of the Moving Allowance until
thirty (30) days following receipt by Landlord of evidence reasonably
satisfactory to Landlord that Tenant has incurred such costs and paid them in
full. To the extent Landlord is not appropriately invoiced by Tenant on or
before the date which is ninety (90) days following the Lease Commencement Date,
Landlord will be relieved of all further obligations and liability under this
Section 29.34.

 

29.35      Building Renovations. It is specifically understood and agreed that
Landlord has made no representation or warranty to Tenant and has no obligation
and has made no promises to alter, remodel, improve, renovate, repair or
decorate the Premises, Building, or any part thereof and that no representations
respecting the condition of the Premises or the Building have been made by
Landlord to Tenant except as specifically set forth herein or in the Tenant Work
Letter. However, Tenant hereby acknowledges that Landlord may during the Lease
Term renovate, improve, alter, or modify (collectively, the "Renovations") the
Project, the Building and/or the Premises including without limitation the
parking structure, Common Areas, systems and equipment, roof, and structural
portions of the same, which Renovations may include, without limitation, (i)
installing sprinklers in the Building Common Areas and tenant spaces, (ii)
modifying the Common Areas and tenant spaces to comply with applicable laws and
regulations, including regulations relating to the physically disabled, seismic
conditions, and building safety and security, and (iii) installing new floor
covering, lighting, and wall coverings in the Building Common Areas, and in
connection with any Renovations, Landlord may, among other things, erect
scaffolding or other necessary structures in the Building, limit or eliminate
access to portions of the Project, including portions of the Common Areas, or
perform work in the Building, which work may create noise, dust or leave debris
in the Building. Tenant hereby agrees that such Renovations and Landlord's
actions in connection with such Renovations shall in no way constitute a
constructive eviction of Tenant nor entitle Tenant to any abatement of Rent.
Landlord shall have no responsibility or for any reason be liable to Tenant for
any direct or indirect injury to or interference with Tenant's business arising
from the Renovations, nor shall Tenant be entitled to any compensation or
damages from Landlord for loss of the use of the whole or any part of the
Premises or of Tenant's personal property or improvements resulting from the
Renovations or Landlord's actions in connection with such Renovations, or for
any inconvenience or annoyance occasioned by such Renovations or Landlord's
actions.

 

 
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29.36      Energy Performance Disclosure. Tenant hereby acknowledges that
Landlord may be required to disclose certain information concerning the energy
performance of the Building pursuant to California Public Resources Code
Section 25402.10 and the regulations adopted pursuant thereto (collectively the
“Energy Disclosure Requirements”). Tenant acknowledges that pursuant to the
Energy Disclosure Requirements, Landlord may be required in the future to
disclose information concerning Tenant’s energy usage to certain third parties,
including, without limitation, prospective purchasers, lenders and tenants of
the Building (the “Tenant Energy Use Disclosure”). Tenant hereby (a) consents to
all such Tenant Energy Use Disclosures, (b) acknowledges that Landlord shall not
be required to notify Tenant of any Tenant Energy Use Disclosure, and (c) agrees
that upon request from Landlord, Tenant shall provide Landlord with any energy
usage data for the Premises, including, without limitation, copies of utility
bills for the Premises. Further, Tenant hereby releases Landlord from any and
all losses, costs, damages, expenses and liabilities relating to, arising out of
and/or resulting from any Tenant Energy Use Disclosure. The terms of this
Section 29.36 shall survive the expiration or earlier termination of this Lease.

 

29.37      Premises Security Services. Tenant shall have the right to provide
and perform security services in the Premises, as Tenant deems reasonably
desirable or necessary and at Tenant's sole cost and expense. Tenant shall have
the right to implement reasonable security procedures and protocols with respect
to the Premises, including, subject to the terms of Section 8, the installation
of cameras (inside the Premises only), access control systems, turnstiles and
the like.

 

29.38       CASp. For purposes of Section 1938(a) of the California Civil Code,
Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, that the
Premises have not undergone inspection by a Certified Access Specialist (CASp).
In addition, the following notice is hereby provided pursuant to Section 1938(e)
of the California Civil Code: "A Certified Access Specialist (CASp) can inspect
the subject premises and determine whether the subject premises comply with all
of the applicable construction-related accessibility standards under state law.
Although state law does not require a CASp inspection of the subject premises,
the commercial property owner or lessor may not prohibit the lessee or tenant
from obtaining a CASp inspection of the subject premises for the occupancy or
potential occupancy of the lessee or tenant, if requested by the lessee or
tenant. The parties shall mutually agree on the arrangements for the time and
manner of the CASp inspection, the payment of the fee for the CASp inspection,
and the cost of making any repairs necessary to correct violations of
construction-related accessibility standards within the premises." In
furtherance of and in connection with such notice: (i) Tenant, having read such
notice and understanding Tenant's right to request and obtain a CASp inspection
and with advice of counsel, hereby elects not to obtain such CASp inspection and
forever waives its rights to obtain a CASp inspection with respect to the
Premises, Building and/or Project to the extent permitted by applicable Laws now
or hereafter in effect; and (ii) if the waiver set forth in clause (i)
hereinabove is not enforceable pursuant to applicable Laws now or hereafter in
effect, then Landlord and Tenant hereby agree as follows (which constitute the
mutual agreement of the parties as to the matters described in the last sentence
of the foregoing notice): (A) Tenant shall have the one-time right to request
for and obtain a CASp inspection, which request must be made, if at all, in a
written notice delivered by Tenant to Landlord on or before the Lease
Commencement Date; (B) any CASp inspection timely requested by Tenant shall be
conducted (1) between the hours of 9:00 a.m. and 5:00 p.m. on any business day,
(2) only after ten (10) days' prior written notice to Landlord of the date of
such CASp inspection, (3) in a professional manner by a CASp designated by
Landlord and without any testing that would damage the Premises, Building or
Project in any way, and (4) at Tenant's sole cost and expense, including,
without limitation, Tenant's payment of the fee for such CASp inspection, the
fee for any reports prepared by the CASp in connection with such CASp inspection
(collectively, the "CASp Reports") and all other costs and expenses in
connection therewith; (C) Tenant shall deliver a copy of any CASp Reports to
Landlord within two (2) business days after Tenant's receipt thereof; (D)
Tenant, at its sole cost and expense, shall be responsible for making any
improvements, alterations, modifications and/or repairs to or within the
Premises to correct violations of construction-related accessibility standards
including, without limitation, any violations disclosed by such CASp inspection;
and (E) if such CASp inspection identifies any improvements, alterations,
modifications and/or repairs necessary to correct violations of
construction-related accessibility standards relating to those items of the
Building and Project located outside the Premises that are Landlord's obligation
to repair as set forth in this Lease, then Landlord shall perform such
improvements, alterations, modifications and/or repairs as and to the extent
required by applicable Laws to correct such violations, and Tenant shall
reimburse Landlord for the cost of such improvements, alterations, modifications
and/or repairs within ten (10) business days after Tenant's receipt of an
invoice therefor from Landlord.

 

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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed
the day and date first above written.

 

 

LANDLORD:

 

PACIFIC CENTER OWNER, LLC,
a Delaware limited liability company

 

By:    Brookhollow Pacific Center, LLC

a California limited liability company
Its: Managing Member

 

By:     /s/ Gregory J. Knapp

            Name: Gregory J. Knapp

            Title: Manager

 

TENANT:

 

COLLECTORS UNIVERSE INC.,
a Delaware corporation

 

 

By:     /s/ Joseph Wallace                                              

Name:      Joseph Wallace                                              

Title:      Chief Financial Officer                                    

 

 

By:     /s/ David Rosenberg                                           

Name:      David Rosenberg                                           

Title:      Vice President Operations                              

  

 
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OFFICE LEASE 

 

 

 

 

 

PACIFIC CENTER OWNER, LLC,

 

a Delaware limited liability company,

 

as Landlord,

 

and

 

COLLECTORS UNIVERSE, INC.,

 

a Delaware corporation,

 

as Tenant.