Exhibit 10.17

 

CREEKSIDE BUSINESS PARK

 

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 SFII CREEKSIDE, LLC, a Delaware limited liability company ("Landlord"),
and GIGA-TRONICS INCORPORATED, a California corporation ("Tenant").

 

SUMMARY OF BASIC LEASE INFORMATION

 

TERMS OF LEASE

DESCRIPTION

 

1.

Date:    

January 4, 2017

 

2.

Premises (Article 1):

 

 

2.1 Building:  

The building located at
5990 - 5996 Gleason Drive
Dublin, California 94568
containing approximately 85,441 rentable square feet of space ("RSF")

         

 

2.2 Premises:  

Approximately 23,873 rentable square feet of space located in the Building with
a street address of 5990 Gleason Drive, as further set forth in Exhibit A to the
Office Lease.

 

3.

Lease Term (Article 2):

 

 

3.1 Length of Term:  

Approximately six (6) years and five (5) months.

         

 

3.2 Lease Commencement Date:  

The earlier to occur of (i) April 1, 2017 and (ii) the date upon which the
Premises are Ready for Occupancy, which is anticipated to be April 1, 2017.
Subject to the terms of Section 6.1 of the Tenant Work Letter attached to this
Lease as Exhibit B (the "Tenant Work Letter"), Landlord shall allow Tenant
approximately four (4) weeks prior access to the Premises prior to the
"Substantial Completion" (as that term is defined in Section 5.1 of the Tenant
Work Letter) of the Premises for the purpose of Tenant installing overstandard
equipment or fixtures (including Tenant's data and telephone equipment) in the
Premises.

         

 

3.3 Lease Expiration Date:  

If the Lease Commencement Date shall be the first day of a calendar month, then
the day immediately preceding the seventy-seventh (77th) "monthly" anniversary
of the Lease Commencement Date; or, if the Lease Commencement Date shall be
other than the first day of a calendar month, then the last day of the month in
which the seventy-seventh (77th) "monthly" anniversary of the Lease Commencement
Date occurs.

 

 

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4.

Base Rent (Article 3):

 

Lease Year

 

Annualized Base Rent

 

Monthly Installment

of Base Rent

 

Monthly Base Rent

per Rentable Square

Foot

1

 

$415,390.20

 

$34,615.85

 

$1.45

2

 

$429,714.00

 

$35,809.50

 

$1.50

3

 

$444,037.80

 

$37,003.15

 

$1.55

4

 

$458,361.60

 

$38,196.80

 

$1.60

5

 

$472,685.40

 

$39,390.45

 

$1.65

6

 

$487,009.20

 

$40,584.10

 

$1.70

7 (through Lease Expiration Date)

 

$501,333.00

 

$41,777.75

 

$1.75

 

*Note:      The Base Rent payable for the first five (5) months of the Lease
Term is subject to abatement as provided in Section 3.2 of the Office Lease.

 

5.

Tenant Improvement Allowance (Exhibit B):

$358,095.00 (i.e., $15.00 per rentable square foot of the Premises) 

     

6.

Tenant's Share (Article 4):

Approximately 27.94%; provided, however, (i) utilities are separately metered
and directly paid by Tenant to the applicable utility provider, and (ii)
janitorial service shall be paid by Tenant directly to the applicable janitorial
provider.

     

7.

Permitted Use (Article 5):

General office, research and development, engineering, laboratory, storage
and/or warehouse uses, including, but not limited to, administrative offices and
other lawful uses reasonably related to or incidental to such specified uses
consistent with the character of the building as of the date of this Lease and
in compliance with, and subject to, applicable laws and the terms of this Lease.

     

8.

Security Deposit (Article 21):

$167,111.00, subject to reduction pursuant to the express terms of Section 21.2
below.

     

9.

Parking Pass Ratio (Article 28):

3.2 unreserved parking passes, for every 1,000 rentable square feet of the
Premises. 

     

10.

Address of Tenant (Section 29.18):

Giga-tronics Incorporated

4650 Norris Canyon Road

San Ramon, CA 94583

Attention: Temi Oduozor

(Prior to Lease Commencement Date)

 

and

 

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Giga-tronics Incorporated

5990 Gleason Drive

Dublin, California 94568

Attention: Temi Oduozor

(After Lease Commencement Date)

     

11.

Address of Landlord (Section 29.18):

See Section 29.18 of the Lease.

     

12.

Brokers (Section 29.24):

Landlord:

 

Jones Lang LaSalle

1331 N. California Boulevard
Walnut Creek, California 94596

 

Tenant:

 

Colliers International

3825 Hopyard Road, Suite 195

Pleasanton, California 94588

 

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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 outline of the Premises is set forth in Exhibit A attached
hereto and each floor or floors of the Premises has the number of rentable
square feet as set forth in Section 2.2 of the Summary. The parties hereto agree
that the lease of the Premises is upon and subject to the terms, covenants and
conditions herein set forth, and Tenant 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 access ways to the
Premises or the "Project," as that term is defined in Section 1.1.2, below.
Except as specifically set forth in this Lease and in the Tenant Work Letter,
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 neither Landlord nor any agent of Landlord has made any 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. For purposes of Section 1938 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).

 

1.1.2     The Building and The Project. The Premises are a part of the building
set forth in Section 2.1 of the Summary (the "Building"). The Building is part
of an office project known as "Creekside Business Park". The term "Project," as
used in this Lease, shall mean (i) the Building and the adjacent building with
the address of 5875 Arnold Road (the "Adjacent Building") and the Common Areas,
(ii) the land (which is improved with landscaping and other improvements) upon
which the Building and the Common Areas are located, and (iii) at Landlord's
discretion, any additional real property, areas, land, buildings or other
improvements added thereto outside of the Project.

 

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, 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 (such areas, together with such
other portions of the Project designated by Landlord, in its 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"). The Common Areas shall consist of the "Project
Common Areas" and the "Building Common Areas." The term "Project Common Areas,"
as used in this Lease, shall mean the portion of the Project designated as such
by Landlord. The term "Building Common Areas," as used in this Lease, shall mean
the portions of the Common Areas located within the Building designated as such
by Landlord. The manner in which the 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. 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.

 

1.2     Rentable Square Feet of Premises and Building. For purposes of this
Lease, "rentable square feet" in the Premises and the Building, as the case may
be, shall be calculated pursuant to Landlord's then current method for measuring
rentable square footage. Landlord and Tenant hereby stipulate and agree that the
rentable area of the Premises is as set forth in Section 2.2 of the Summary.

 

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ARTICLE 2

LEASE TERM; OPTION TERM

 

2.1     Initial Lease Term. The terms and provisions of this Lease shall be
effective as of the date of this Lease. The term of this Lease (the "Lease
Term") shall be as set forth in Section 3.1 of the Summary, shall commence on
the date set forth in Section 3.2 of the Summary (the "Lease Commencement
Date"), and shall terminate on the date set forth in Section 3.3 of the Summary
(the "Lease Expiration Date") unless this Lease is sooner terminated as
hereinafter provided. If Landlord is unable for any reason to deliver possession
of the Premises to Tenant on any specific date, then Landlord shall not be
subject to any liability for its failure to do so, and such failure shall not
affect the validity of this Lease or the obligations of Tenant hereunder. For
purposes of this Lease, the term "Lease Year" shall mean each consecutive twelve
(12) calendar month period during the Lease Term; provided, however, that the
first Lease Year shall commence on the Lease Commencement Date and end on the
last day of the month in which the first anniversary of the Lease Commencement
Date occurs (or if the Lease Commencement Date is the first day of a calendar
month, then the first Lease Year shall commence on the Lease Commencement Date
and end on the day immediately preceding the first anniversary of the Lease
Commencement Date), and the second and each succeeding Lease Year shall commence
on the first day of the next calendar month; and further provided that the last
Lease Year shall end on the Lease Expiration 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. Tenant's failure to execute and return such notice to
Landlord within such time shall be conclusive upon Tenant that the information
set forth in such notice is as specified therein.

 

2.2     Option Term.

 

2.2.1     Option Right. Landlord hereby grants Tenant originally named in this
Lease (the "Original Tenant") one (1) option to extend the Lease Term for a
period of five (5) years (the "Option Term") with respect to the entire Premises
then leased by Tenant. Such option shall be exercisable only by written notice
delivered by Tenant to Landlord as provided below, provided that, as of the date
of delivery of such notice, Tenant is not in monetary or material non-monetary
default beyond applicable notice and grace periods under this Lease. Upon the
timely exercise of each such option to extend, the Lease Term shall be extended
for a period of five (5) years, on all of the same terms and conditions except
that the Base Rent shall be equal to the Option Rent, and except for such other
modifications as are then agreed upon by the parties. The rights contained in
this Section 2.2 shall be personal to the Original Tenant and may only be
exercised by the Original Tenant (and not any other assignee, sublessee or other
transferee of the Original Tenant's interest in this Lease other than a
Permitted Transferee Assignee).

 

2.2.2     Option Rent. The rent payable by Tenant during the Option Term (the
"Option Rent") shall be equal to the "Fair Market Rent" for such space as of the
commencement of the Option Term. As used herein, the "Fair Market Rent" shall be
the rent (including additional rent and considering any "base year" or "expense
stop" applicable thereto), including all escalations, at which, as of the
commencement of the Option Term, tenants are leasing non-sublease,
non-encumbered, non-equity space comparable in size, location and quality to the
Premises, for a term of five (5) years, which comparable space is located in the
Project and in "Comparable Buildings", as defined below (collectively, the
"Comparable Transactions"), giving appropriate consideration to the annual
rental rates per rentable square foot, the standard of measurement by which the
rentable square footage is measured, the ratio of rentable square feet to usable
square feet, and taking into consideration only, and granting only, the
following concessions (provided that the rent payable in Comparable Deals in
which the terms of such Comparable Deals are determined by use of a discounted
fair market rate formula shall be equitably increased in order that such
Comparable Deals will not reflect a discounted rate): (a) rental abatement
concessions, if any, being granted such tenants in connection with such
comparable spaces; (b) improvements or allowances provided or to be provided for
such comparable space, taking into account the value of the existing
improvements in the Premises, such value to be based upon the age, quality and
layout of the improvements and the extent to which the same could be utilized by
general office users as contrasted with this specific Tenant, (c) Proposition 13
protection, and (d) all other monetary concessions, if any, being granted such
tenants in connection with such comparable space; provided, however, that
notwithstanding anything to the contrary herein, no consideration shall be given
to the (I) any period of rental abatement, if any, granted to tenants in
Comparable Deals in connection with the design, permitting and construction of
improvements, or (II) fact that Landlord is or is not required to pay a real
estate brokerage commission in connection with the applicable term or the fact
that the Comparable Deals do or do not involve the payment of real estate
brokerage commissions. For purposes of this Lease, "Comparable Buildings" shall
mean the Building and other first-class institutionally-owned office buildings
which are comparable to the Building in terms of age (based upon the date of
completion of construction or major renovation as to the building containing the
portion of the Premises in question), quality of construction, level of services
and amenities (including the type (e.g., surface, covered, subterranean) and
amount of parking), size and appearance, and are located in the "Comparable
Area," which is the Dublin/Pleasanton submarket.

 

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2.2.3     Exercise of Option. The option contained in this Section 2.2 shall be
exercised by Tenant, if at all, only by Tenant's delivery of written notice to
Landlord not more than twelve (12) months and not less than nine (9) months
prior to the expiration of the then Lease Term, stating that Tenant is
irrevocably exercising its option (the "Exercise Notice"). Landlord, after
receipt of Tenant's notice, shall deliver notice (the "Option Rent Notice") to
Tenant not less than eight (8) months prior to the expiration of the then in
effect Lease Term, setting forth Landlord's estimate of the Option Rent. Tenant
shall have the right, within thirty (30) days after receipt of the Option Rent
Notice, to notify Landlord that Tenant accepts the Option Rent as determined by
Landlord. If Tenant fails to timely accept the Option Rent as determined by
Landlord, then the Option Rent shall be established as provided in
Section 2.2.4, below.

 

2.2.4     Determination of Market Rent. In the event Tenant objects to
Landlord's determination of Fair Market Rent in connection with the Option Rent,
Landlord and Tenant shall attempt to agree upon the Fair Market Rent using
reasonable good-faith efforts. If Landlord and Tenant fail to reach agreement
within thirty (30) days following Tenant's objection to the Landlord's Fair
Market Rent determination (the "Outside Agreement Date"), then, within five (5)
business days following such Outside Agreement Date, Landlord and Tenant shall
each concurrently submit a final, binding determination of the Fair Market Rent
to the "Neutral Arbitrator," as that term is defined in Section 2.2.4.1 of this
Lease, which determinations shall be submitted to arbitration in accordance with
Section 2.2.4.1 through 2.2.4.5, below.

 

2.2.4.1     Landlord and Tenant shall mutually, reasonably appoint one (1)
arbitrator who shall by profession be a real estate broker or appraiser who is
disinterested and who shall have been active over the five (5) year period
ending on the date of such appointment in the valuation or appraisal of office
leases in Comparable Buildings (the "Neutral Arbitrator"). The determination of
the Neutral Arbitrator shall be limited solely to the issue of whether
Landlord's Fair Market Rent calculation or Tenant's Fair Market Rent
calculation, each as submitted to the Neutral Arbitrator pursuant to
Section 2.2.4, above, is the closest to the actual Fair Market Rent defined in
Section 2.2.2, above, as determined by such Neutral Arbitrator. Such Neutral
Arbitrator shall be appointed within fifteen (15) days after the applicable
Outside Agreement Date. Neither the Landlord nor Tenant may, directly or
indirectly, consult with the Neutral Arbitrator prior to or subsequent to his or
her appearance. The Neutral Arbitrator shall be retained via an engagement
letter jointly prepared by Landlord's counsel and Tenant's counsel.

 

2.2.4.2     The Neutral Arbitrator shall, within thirty (30) days of his/her
appointment, reach a decision as to Fair Market Rent and determine whether the
Landlord's Fair Market Rent calculation or Tenant's Fair Market Rent
calculation, each as submitted to the Neutral Arbitrator pursuant to
Section 2.2.4, above, is closest to the Option Rent as determined by such
Neutral Arbitrator and simultaneously publish a ruling ("Award"). Following
notification of the Award, the Landlord's Fair Market Rent calculation or
Tenant's Fair Market Rent calculation, whichever is selected by the Neutral
Arbitrator as being closest to Fair Market Rent, shall become the then
applicable Option Rent.

 

2.2.4.3     The Award issued by such Neutral Arbitrator shall be binding upon
Landlord and Tenant.

 

2.2.4.4     If Landlord and Tenant fail to appoint the Neutral Arbitrator within
fifteen (15) days after the applicable Outside Agreement Date, either party may
petition the presiding judge of the Superior Court of Alameda County to appoint
such Neutral Arbitrator subject to the criteria in Section 2.2.4.1 of this
Lease, or if he or she refuses to act, either party may petition any judge
having jurisdiction over the parties to appoint such Neutral Arbitrator.

 

2.2.4.5     The cost of the Neutral Arbitrator shall be paid by Landlord and
Tenant equally.

 

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ARTICLE 3

BASE RENT

 

3.1     Base Rent. Tenant shall pay, without prior notice or demand and without
deduction, setoff or counterclaim, to Landlord or Landlord's agent at Landlord's
address, or, at Landlord's option, at such other place as Landlord may from time
to time designate in writing, by a check 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. The Base Rent for the first full month of the Lease Term which
occurs after the expiration of any free rent period 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 1/365 of the
applicable annual Rent. 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.

 

3.2     Abated Rent. Provided that Tenant is not then in default of the Lease,
after expiration of any applicable notice and cure periods, then during the five
(5) month period commencing on the Lease Commencement Date and ending on date
that is five (5) months thereafter (the “Rent Abatement Period”), Tenant shall
not be obligated to pay any Base Rent otherwise attributable to the Premises
during such Rent Abatement Period (the “Rent Abatement”). Tenant acknowledges
and agrees that the foregoing Rent Abatement has been granted to Tenant as
additional consideration for entering into this Lease, and for agreeing to pay
the Rent and perform the terms and conditions otherwise required under this
Lease. If Tenant shall be in default under the Lease, after expiration of any
applicable notice and cure period, or if the Lease is terminated as a result of
an Event of Default by Tenant, then Landlord may at its option, by notice to
Tenant, elect, in addition to any other remedies Landlord may have under this
Lease, that the dollar amount of the unapplied portion of the Rent Abatement as
of the date of such termination shall be converted to a credit to be applied to
the Base Rent applicable at the end of the Lease Term and Tenant shall
immediately be obligated to pay Base Rent for the Premises in full.

 

ARTICLE 4

ADDITIONAL RENT

 

4.1     General Terms.

 

4.1.1     Direct Expenses; Additional Rent. 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 Sections 4.2.6 and 4.2.2
of this Lease, respectively. Such payments by Tenant, together with any and all
other amounts payable by Tenant to Landlord 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.

 

4.1.2     Triple Net Lease. Landlord and Tenant acknowledge that, except as
otherwise provided to the contrary in this Lease, it is their intent and
agreement that this Lease be a "TRIPLE NET" lease and that as such, the
provisions contained in this Lease are intended to pass on to Tenant or
reimburse Landlord for the costs and expenses reasonably associated with this
Lease, the Building and the Project, and Tenant's operation therefrom. To the
extent such costs and expenses payable by Tenant cannot be charged directly to,
and paid by, Tenant, such costs and expenses shall be paid by Landlord but
reimbursed by Tenant as Additional Rent.

 

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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     [Intentionally Omitted]

 

4.2.2     "Direct Expenses" shall mean "Operating Expenses" and "Tax Expenses."

 

4.2.3     "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, provided that Landlord, upon notice to Tenant, may change the
Expense Year from time to time to any other twelve (12) consecutive month
period, and, in the event of any such change, Tenant's Share of Direct Expenses
shall be equitably adjusted for any Expense Year involved in any such change.

 

4.2.4     "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. 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 (but excluding the cost of electricity consumed in
the Premises and the premises of other tenants of the Building (as opposed to
the Common Areas) since Tenant is separately paying for the cost of electricity
services pursuant to Section 6.1.2 of the Lease), 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 governmentally mandated transportation system
management program or similar program; (iii) the cost of all insurance carried
by Landlord in connection with the Project as reasonably determined by Landlord;
(iv) the cost of landscaping, relamping, and all supplies, tools, equipment and
materials used in the operation, repair and maintenance of the Project, or any
portion thereof; (v) the cost of parking area operation, repair, restoration,
and maintenance; (vi) fees and other costs, including management and/or
incentive fees, consulting fees, legal fees and accounting fees, of all
contractors and consultants in connection with the management, operation,
maintenance and repair of the Project; (vii) payments under any equipment rental
agreements and the fair rental value of any management office space; (viii)
subject to item (f), below, 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 Project; (xi) the cost of janitorial (but excluding the cost of providing
janitorial service to the Premises and the premises of other tenants of the
Building (as opposed to the Common Areas) since Tenant is separately paying for
the cost of providing janitorial services to the Premises pursuant to Section
6.2 of this Lease), 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) over such period of
time as Landlord shall reasonably determine, 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 to reduce current or future Operating Expenses, or to
enhance the safety or security of the Project or its occupants, (B) that are
required to comply with present or anticipated conservation programs, (C) which
are performed for the purpose of enhancing the general security, health, safety
and/or welfare of the occupants of the Project, (D) that are less than $25,000
or have a useful life of less than five (5) years, or (E) that are required
under any governmental law or regulation; provided, however, that any capital
expenditure shall be amortized (including interest on the amortized cost) over
such period of time as Landlord shall reasonably determine; and (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 4.2.5, below,
(xv) cost of tenant relation programs reasonably established by Landlord, and
(xvi) payments under any easement, license, operating agreement, declaration,
restrictive covenant, or instrument pertaining to the sharing of costs by the
Building, including, without limitation, any covenants, conditions and
restrictions affecting the property, and reciprocal easement agreements
affecting the property, any parking licenses, and any agreements with transit
agencies affecting the Property (collectively, "Underlying Documents").
Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses
shall not, however, include:

 

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(a)     costs, including legal fees, space planners' fees, advertising and
promotional expenses (except as otherwise set forth above), and brokerage fees
incurred in connection with the original construction or development, or
original or future leasing of the Project, and costs, including permit, license
and inspection costs, incurred with respect to the installation of tenant
improvements made for new tenants initially occupying space in the Project after
the Lease Commencement Date or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for tenants or other occupants
of the Project (excluding, however, such costs relating to any common areas of
the Project or the parking facilities);

 

(b)     except as set forth in items (xii), (xiii), and (xiv) above,
depreciation, interest and principal payments on mortgages and other debt costs,
if any, penalties and interest, costs of capital repairs and alterations, and
costs of capital improvements and equipment;

 

(c)     costs for which the Landlord is reimbursed by any tenant or occupant of
the Project or by insurance by its carrier or any tenant's carrier or by anyone
else, and electric power costs for which any tenant directly contracts with the
local public service company;

 

(d)     any bad debt loss, rent loss, or reserves for bad debts or rent loss;

 

(e)     costs associated with the operation of the business of the partnership
or entity which constitutes the Landlord, as the same are distinguished from the
costs of operation of the Project (which shall specifically include, but not be
limited to, accounting costs associated with the operation of the Project).
Costs associated with the operation of the business of the partnership or entity
which constitutes the Landlord include costs of partnership accounting and legal
matters, costs of defending any lawsuits with any mortgagee (except as the
actions of the Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of the Landlord's interest in the
Project, and costs incurred in connection with any disputes between Landlord and
its employees, between Landlord and Project management, or between Landlord and
other tenants or occupants;

 

(f)     the wages and benefits of any employee who does not devote substantially
all of his or her employed time to the Project unless such wages and benefits
are prorated to reflect time spent on operating and managing the Project
vis-a-vis time spent on matters unrelated to operating and managing the Project;
provided, that in no event shall Operating Expenses for purposes of this Lease
include wages and/or benefits attributable to personnel above the level of
general manager;

 

(g)     amount, if any, paid as ground rental for the Project by the Landlord;

 

(h)     except for a Project management fee, overhead and profit increment paid
to the Landlord or to subsidiaries or affiliates of the Landlord for services in
the Project to the extent the same exceeds the costs of such services rendered
by qualified, first-class unaffiliated third parties on a competitive basis;

 

(i)     any compensation paid to clerks, attendants or other persons in
commercial concessions operated by the Landlord, provided that any compensation
paid to any concierge at the Project shall be includable as an Operating
Expense;

 

(j)     rentals and other related expenses incurred in leasing air conditioning
systems, elevators or other equipment which if purchased the cost of which would
be excluded from Operating Expenses as a capital cost, except equipment not
affixed to the Project which is used in providing janitorial or similar services
and, further excepting from this exclusion such equipment rented or leased to
remedy or ameliorate an emergency condition in the Project;

 

(k)     all items and services for which Tenant or any other tenant in the
Project reimburses Landlord or which Landlord provides selectively to one or
more tenants (other than Tenant) without reimbursement;

 

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(l)     any costs expressly excluded from Operating Expenses elsewhere in this
Lease;

 

(m)     rent for any office space occupied by Project management personnel to
the extent the size or rental rate of such office space exceeds the size or fair
market rental value of office space occupied by management personnel of the
comparable buildings in the vicinity of the Building, with adjustment where
appropriate for the size of the applicable project;

 

(n)     costs arising from property damage resulting from the gross negligence
or willful misconduct of Landlord or its agents, employees, vendors,
contractors, or providers of materials or services; and

 

(o)     costs incurred to comply with laws relating to the removal of hazardous
material (as defined under applicable law) which was in existence in the
Building or on the Project prior to the Lease Commencement Date, and was of such
a nature that a federal, State or municipal governmental authority, if it had
then had knowledge of the presence of such hazardous material, in the state, and
under the conditions that it then existed in the Building or on the Project,
would have then required the removal of such hazardous material or other
remedial or containment action with respect thereto; and costs incurred to
remove, remedy, contain, or treat hazardous material, which hazardous material
is brought into the Building or onto the Project after the date hereof by
Landlord or any other tenant of the Project and is of such a nature, at that
time, that a federal, State or municipal governmental authority, if it had then
had knowledge of the presence of such hazardous material, in the state, and
under the conditions, that it then exists in the Building or on the Project,
would have then required the removal of such hazardous material or other
remedial or containment action with respect thereto.

 

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
one hundred percent (100%) occupied during all or a portion of any Expense Year,
Landlord shall 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 one hundred percent (100%) occupied; and
the amount so determined shall be deemed to have been the amount of Operating
Expenses for such year.

 

4.2.5     Taxes.

 

4.2.5.1     "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, real estate excise 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 shall be paid or
accrued during any Expense Year (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.

 

4.2.5.2     Tax Expenses shall include, without limitation: (i) Any tax on the
rent, right to rent or other income from the Project, or any portion thereof, or
as against the business of leasing the Project, or any portion thereof; (ii) 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; (iii) Any
assessment, tax, fee, levy, or charge allocable to or measured by the area of
the Premises or the Rent payable hereunder, including, without limitation, any
business or gross income tax or excise tax with respect to the receipt of such
rent, or upon or with respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or
any portion thereof; and (iv) Any assessment, tax, fee, levy or charge, upon
this transaction or any document to which Tenant is a party, creating or
transferring an interest or an estate in the Premises or the improvements
thereon. All assessments which can be paid by Landlord in installments, shall be
paid by Landlord in the maximum number of installments permitted by law (except
to the extent inconsistent with the general practice of landlords of the
Comparable Buildings) and shall be included as Tax Expenses in the year in which
the installment is actually paid.

 

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4.2.5.3     Any costs and expenses (including, without limitation, reasonable
attorneys' and consultants' fees) incurred in attempting to protest, reduce or
minimize Tax Expenses shall be included in Tax Expenses in the Expense Year such
expenses are incurred. Tax refunds 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. Notwithstanding anything to the contrary contained in this
Section 4.2.5 (except as set forth in Section 4.2.5.1, 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,
and (iv) tax penalties incurred as a result of Landlord’s failure to make
payments and/or to file any tax or informational returns when due.

 

4.2.6     "Tenant's Share" shall mean the percentage set forth in Section 6 of
the Summary.

 

4.3     Allocation of Direct Expenses and Cost Pools.

 

4.3.1     Allocation of Direct Expenses. The parties acknowledge that the
Building is a part of a multi-building project and that the costs and expenses
incurred in connection with the Project (i.e., the Direct Expenses) should be
shared between the Building and the other buildings in the Project. Accordingly,
as set forth in Section 4.2 above, Direct Expenses (which consist of Operating
Expenses and Tax Expenses) are determined annually for the Project as a whole,
and a portion of the Direct Expenses, which portion shall be determined by
Landlord on an equitable basis, shall be allocated to the Building (as opposed
to other buildings in the Project). Such portion of Direct Expenses allocated to
the Building shall include all Direct Expenses attributable solely to the
Building and an equitable portion of the Direct Expenses attributable to the
Project as a whole, and shall not include Direct Expenses attributable solely to
other buildings in the Project.

 

4.3.2     Cost Pools. Landlord shall have the right, from time to time, to
equitably allocate some or all of the Direct Expenses for the Project among
different portions or occupants of the Project (the "Cost Pools"), in Landlord's
reasonable discretion. Such Cost Pools may include, but shall not be limited to,
the office space tenants of a building of the Project or of the Project, and the
retail space tenants of a building of the Project or of the Project. The Direct
Expenses within each such Cost Pool shall be allocated and charged to the
tenants within such Cost Pool in an equitable manner.

 

4.4     Calculation and Payment of Additional Rent. Tenant shall pay to
Landlord, in the manner set forth in Section 4.4.1, below, and as Additional
Rent, Tenant's Share of Direct Expenses for each Expense Year.

 

4.4.1     Statement of Actual Direct Expenses and Payment by Tenant. Landlord
shall endeavor to give to Tenant 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, and which shall indicate the amount of
Tenant's Share of Direct Expenses. Upon receipt of the Statement for each
Expense Year commencing or ending during the Lease Term, Tenant shall pay, with
its next installment of Base Rent due, the full amount of Tenant's Share of
Direct Expenses for such Expense Year, less the amounts, if any, paid during
such Expense Year as "Estimated Direct Expenses," as that term is defined in
Section 4.4.2, below, and if Tenant paid more as Estimated Direct Expenses than
the actual Tenant's Share of Direct Expenses, Tenant shall receive a credit in
the amount of Tenant's overpayment against Rent next due under this Lease. 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.
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, Tenant shall immediately pay to
Landlord such amount, and if Tenant paid more as Estimated Direct Expenses than
the actual Tenant's Share of Direct Expenses, Landlord shall, within thirty (30)
days, deliver a check payable to Tenant in the amount of the overpayment. The
provisions of this Section 4.4.1 shall survive the expiration or earlier
termination of the Lease Term.

 

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4.4.2     Statement of Estimated Direct Expenses. In addition, Landlord shall
endeavor to give Tenant a yearly expense estimate statement (the "Estimate
Statement") which shall set forth Landlord's reasonable estimate (the
"Estimate") of what the total amount of Direct Expenses for the then-current
Expense Year shall be and the estimated Tenant's Share of Direct Expenses (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 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 ten (10) days before
delinquency, taxes levied against Tenant's equipment, furniture, 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.

 

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 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.

 

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ARTICLE 5

USE OF PREMISES

 

5.1     Permitted Use. Tenant shall use the Premises solely for the Permitted
Use set forth in Section 7 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.

 

5.2     Prohibited Uses. 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, 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, or any Underlying Documents. 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, and Tenant's rights and
obligations under the Lease and Tenant's use of the Premises shall be subject
and subordinate to, all recorded easements, covenants, conditions, and
restrictions now or hereafter affecting the Project.

 

ARTICLE 6

SERVICES AND UTILITIES

 

6.1     In General. Tenant will be responsible, at its sole cost and expense,
for the furnishing of all services and utilities to the Premises, including, but
not limited to heating, ventilation and air-conditioning, electricity, water,
telephone, janitorial and interior Building security services.

 

6.1.1     All utilities (including without limitation, electricity, gas, sewer
and water) to the Building are separately metered at the Premises and shall be
paid directly by Tenant to the applicable utility provider.

 

6.1.2     Landlord shall provide janitorial services to the Common Areas, except
the date of observation of the Holidays, and window washing services in a manner
consistent with other comparable buildings in the vicinity of the Building. All
cleaning and janitorial services for the Premises shall be provided, at Tenant's
sole cost and expense, exclusively by or through Tenant (provided that Tenant
shall contract for such services utilizing the Building janitorial contractor)
in accordance with the provisions of this Lease. Tenant shall not cause any
unnecessary labor by carelessness or indifference to the good order and
cleanliness of the Premises. If Tenant fails to provide at least weekly
janitorial service for the Premises, Landlord shall have the right to do so, at
Tenant's sole cost, and Tenant shall reimburse Landlord for such cost within ten
(10) days of billing. Landlord shall have the right, from time to time, to
change its designated janitorial services provider for the Building, in which
event Tenant shall terminate its contract with Landlord’s previously designated
janitorial services provider and enter into a contract with Landlord’s newly
designated janitorial services provider. Landlord shall have the right to
inspect the Premises for purposes of confirming that Tenant is cleaning the
Premises as required by this Section 6.2, and to require Tenant to provide
additional cleaning, if necessary. In the event Tenant shall fail to provide any
of the services described in this Section 6.2 within five (5) days after notice
from Landlord, which notice shall not be required in the event of an emergency,
Landlord shall have the right to provide such services and any charge or cost
incurred by Landlord in connection therewith shall be deemed Additional Rent due
and payable by Tenant upon receipt by Tenant of a written statement of cost from
Landlord. Failure of Tenant to comply with any one or more of the foregoing
provisions shall be deemed to be a default under this Lease.

 

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. Provided that Landlord agrees to provide and maintain and keep
in continuous service utility connections to the Project, including electricity,
water and sewage connections, Landlord shall have no obligation to provide any
services or utilities to the Building, including, but not limited to heating,
ventilation and air-conditioning, electricity, water, telephone, janitorial and
interior Building security services.

 

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6.2     Interruption of Use. Tenant agrees that Landlord 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 beyond Landlord's reasonable
control; 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. 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 of the services or utilities as set forth in this Article
6.

 

ARTICLE 7

REPAIRS

 

7.1     Tenant Repair Obligations. Tenant shall, throughout the Lease Term, at
its sole cost and expense, maintain, repair, replace and improve as required,
the Premises and Building and every part thereof in a good standard of
maintenance, repair and replacement as required, and in good and sanitary
condition, all in accordance with the standards of a first class office
building, except for Landlord Repair Obligations, whether or not such
maintenance, repair, replacement or improvement is required in order to comply
with Applicable Laws ("Tenant's Repair Obligations"), including, without
limitation, the following: (1) glass, windows, window frames, window casements
(including the repairing, resealing, cleaning and replacing of both interior and
exterior windows) and skylights; (2) interior and exterior doors, door frames
and door closers; (3) interior lighting (including, without limitation, light
bulbs and ballasts); (4) the plumbing, sewer, drainage, electrical, fire
protection, elevator, escalator, life safety and security systems and equipment,
existing heating, ventilation and air-conditioning systems, and all other
mechanical, electrical and communications systems and equipment (collectively,
the "Building Systems"), including without limitation (i) any specialty or
supplemental Building Systems installed by or for Tenant and (ii) all electrical
facilities and equipment, including lighting fixtures, lamps, fans and any
exhaust equipment and systems, electrical motors and all other appliances and
equipment of every kind and nature located in, upon or about the Premises; (5)
all communications systems serving the Premises; (6) all of Tenant's security
systems in or about or serving the Premises; (7) Tenant's signage; (8) interior
demising walls and partitions (including painting and wall coverings),
equipment, floors, and any roll-up doors, ramps and dock equipment; and (9) the
non-structural portions of the roof of the Building, including the roof membrane
and coverings. Tenant’s Repair Obligations also includes the routine maintenance
of the load bearing and exterior walls of the Building, including, without
limitation, any painting, sealing, patching and waterproofing of such walls.
Tenant shall additionally be responsible, at Tenant’s sole cost and expense, to
furnish all expendables, including light bulbs, paper goods and soaps, used in
the Premises, and, to the extent that Landlord notifies Tenant in writing of its
intention to no longer arrange for such monitoring, cause the fire alarm systems
serving the Premises to be monitored by a monitoring or protective services firm
approved by Landlord in writing.

 

7.2     Service Contracts. All Building Systems, including HVAC, elevators, main
electrical, plumbing and fire/life-safety systems, shall be maintained, repaired
and replaced by Tenant (i) in a commercially reasonable first-class condition,
(ii) in accordance with any applicable manufacturer specifications relating to
any particular component of such Building Systems, (iii) in accordance with
applicable Laws. Tenant shall contract with a qualified, experienced
professional third party service companies (a "Service Contract"). Tenant shall
regularly, in accordance with commercially reasonable standards, generate and
maintain preventive maintenance records relating to each Building’s mechanical
and main electrical systems, including life safety, elevators and the central
plant (“Preventative Maintenance Records”). In addition, upon Landlord’s
request, Tenant shall deliver a copy of all current Service Contracts to
Landlord and/or a copy of the Preventative Maintenance Records.

 

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7.3     Landlord's Right to Perform Tenant's Repair Obligations. Tenant shall
notify Landlord in writing at least thirty (30) days prior to performing any
material Tenant's Repair Obligations, including without limitation, any Tenant's
Repair Obligation which affect the Building Systems or which is reasonably
anticipated to cost more than $100,000.00. Upon receipt of such notice from
Tenant, Landlord shall have the right to either (i) perform such material
Tenant's Repair Obligation by delivering notice of such election to Tenant
within thirty (30) days following receipt of Tenant's notice, and Tenant shall
pay Landlord the cost thereof (including Landlord's reasonable supervision fee)
within thirty (30) days after receipt of an invoice therefor, or (ii) require
Tenant to perform such Tenant's Repair Obligation at Tenant's sole cost and
expense. If Tenant fails to perform any Tenant's Repair Obligation within a
reasonable time period, as reasonably determined by Landlord, then Landlord may,
but need not, following delivery of notice to Tenant of such election, make such
Tenant Repair Obligation, and Tenant shall pay Landlord the cost thereof,
(including Landlord's reasonable supervision fee) within thirty (30) days after
receipt of an invoice therefor.

 

7.4     Landlord Repair Obligations. Landlord shall be responsible for repairs
to the exterior walls, foundation and roof of the Building, the structural
portions of the floors of the Building, except to the extent that such repairs
are required due to the negligence or willful misconduct of Tenant (the
"Landlord Repair Obligation"); provided, however, that if such repairs are due
to the negligence or willful misconduct of Tenant, Landlord shall nevertheless
make such repairs at Tenant's expense, or, if covered by Landlord's insurance,
Tenant shall only be obligated to pay any deductible in connection therewith.

 

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
be permitted to make Alterations following ten (10) business days' notice to
Landlord, but without Landlord's prior consent, to the extent that such
Alterations are decorative only (i.e., installation of carpeting or painting of
the Premises). For purposes of determining the cost of an Alteration, work done
in phases or stages shall be considered part of the same Alteration, and any
Alteration shall be deemed to include all trades and materials involved in
accomplishing a particular result. 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 reasonable 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,
and 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. 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 in which the Building is located (or
other applicable governmental authority), all in conformance with Landlord's
construction rules and regulations; provided, however, that prior to commencing
to construct any Alteration, Tenant shall meet with Landlord to discuss
Landlord's design parameters and code compliance issues. 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 (i) such Base Building changes shall be subject to Landlord's prior
approval in its sole discretion, (ii) if such changes are approved by Landlord,
Landlord shall, at Tenant's expense, make such changes to the Base Building, and
(iii) if such Base Building changes are not approved by Landlord, then Tenant
shall not have the right to perform such Alterations. The "Base Building" shall
include the structural portions of the Building, and the public restrooms,
elevators, exit stairwells and the systems and equipment located in the internal
core of the Building on the floor or floors on which the Premises are located.
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. 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 in which the Building is located in
accordance with Section 8182 of the Civil Code of the State of California or any
successor statute, and Tenant shall deliver to the Project construction manager
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 by Tenant directly to
contractors, Tenant shall (i) comply with Landlord's requirements for final lien
releases and waivers in connection with Tenant's payment for work to
contractors, and (ii) sign Landlord's standard contractor's rules and
regulations. If Tenant orders any work directly from Landlord, Tenant shall pay
to Landlord an amount equal to five percent (5%) of the cost of such work to
compensate Landlord for all overhead, general conditions, fees and other costs
and expenses arising from Landlord's involvement with such work. If Tenant does
not order any work directly from Landlord, Tenant shall reimburse Landlord for
Landlord's reasonable, actual, out-of-pocket costs and expenses actually
incurred in connection with Landlord's review of such work. At Landlord's
option, prior to the commencement of construction of any Alteration, Tenant
shall provide Landlord with the reasonably anticipated cost thereof, which
Landlord shall disburse during construction pursuant to Landlord's standard,
commercially reasonable disbursement procedure.

 

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 reasonably 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, Tenant's contractors and
subcontractors shall be required to carry Commercial General Liability insurance
in an amount approved by Landlord and otherwise in accordance with the
requirements of Article 10 of this Lease. 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, except that Tenant may remove any Alterations,
improvements, fixtures and/or equipment which Tenant can substantiate to
Landlord have not been paid for with any Tenant improvement allowance funds
provided to Tenant by Landlord, provided Tenant repairs any damage to the
Premises and Building caused by such removal and returns the affected portion of
the Premises to a building standard tenant improved condition as determined by
Landlord. Furthermore, Landlord may, 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 and/or
improvements and/or systems and equipment within 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. If Tenant fails to complete such removal
and/or to repair any damage caused by the removal of any Alterations and/or
improvements and/or systems and equipment in the Premises and return the
affected portion of the Premises to a building standard tenant improved
condition as reasonably determined by Landlord, 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.

 

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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 ten (10) business 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.

 

ARTICLE 10

INSURANCE

 

10.1     Indemnification and Waiver. Tenant hereby assumes all risk of damage to
property or injury to persons in, upon or about the Premises from any cause
whatsoever (including, but not limited to, any personal injuries resulting from
a slip and fall in, upon or about the Premises) and agrees that Landlord, its
partners, subpartners and their respective officers, agents, servants,
employees, and independent contractors (collectively, "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 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 (including, but not
limited to, a slip and fall), any acts, omissions or negligence of Tenant or of
any person claiming by, through or under Tenant, or of the contractors, agents,
servants, employees, invitees, guests or licensees of Tenant or any such person,
in, on or about the Project or any breach of the terms of this Lease, 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 Landlord. 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
reasonable appraisers', accountants' and attorneys' fees. 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 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.

 

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

 

10.3.1     Commercial General Liability Insurance on an occurrence form 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, and including products and completed
operations coverage, for limits of liability on a per location basis of not less
than:

 

Bodily Injury and
Property Damage Liability

$5,000,000 each occurrence

$5,000,000 annual aggregate

   

Personal Injury Liability

$5,000,000 each occurrence

$5,000,000 annual aggregate

0% Insured's participation

 

10.3.2     Physical Damage 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, (ii) the "Tenant Improvements,"
as that term is defined in the Tenant Work Letter, and any other improvements
which exist in the Premises as of the Lease Commencement Date (excluding the
Base Building) (the "Original Improvements"), and (iii) all other improvements,
alterations and additions to the Premises. Such insurance shall be written on an
"all risks" of physical loss or damage basis, for the full replacement cost
value (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 six (6) months.

 

10.3.3     Worker's Compensation and Employer's Liability or other similar
insurance pursuant to all applicable state and local statutes and regulations.

 

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, 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-:X 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 and noncontributory insurance as to all claims thereunder and
provide that any insurance carried by Landlord is excess and is non-contributing
with any insurance requirement of Tenant; and (v) be in form and content
reasonably acceptable to Landlord. Tenant hereby agrees that in the event of any
non-renewal or cancellation of the policies of insurance required herein, Tenant
shall provide Landlord with notice of such cancellation immediately upon
Tenant's first becoming aware of such cancellation or non-renewal. Tenant shall
deliver said policy or policies or certificates thereof to Landlord on or before
the Lease Commencement Date and at least ten (10) 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 coverage is agreed to be provided
hereunder. 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, but in no event in excess of the amounts
and types of insurance then being required by landlords of buildings comparable
to and in the vicinity of the Building.

 

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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
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, which are consistent with the character of the Project,
provided that access to the Premises and any common restrooms serving the
Premises shall not be materially impaired. Upon the occurrence of any damage to
the Premises, upon notice (the "Landlord Repair Notice") to Tenant from
Landlord, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Tenant's insurance
required under Section 10.3 of this Lease, and Landlord shall repair any injury
or damage to the Tenant Improvements and the Original Improvements installed in
the Premises and shall return such Tenant Improvements and Original Improvements
to their condition immediately prior to the casualty; provided that if the cost
of such repair by Landlord exceeds the amount of insurance proceeds received by
Landlord from Tenant's insurance carrier, as assigned by Tenant, the cost of
such repairs shall be paid by Tenant to Landlord prior to Landlord's
commencement of repair of the damage. In the event that Landlord does not
deliver the Landlord Repair Notice within sixty (60) days following the date the
casualty becomes known to Landlord, Tenant shall, at its sole cost and expense,
repair any injury or damage to the Tenant Improvements and the Original
Improvements installed in the Premises and shall return such Tenant Improvements
and Original Improvements to their original condition. Whether or not Landlord
delivers a Landlord Repair Notice, prior to the commencement of construction,
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 caused the
Premises or Common Areas to be rendered untenantable, and the Premises are not
occupied by Tenant as a result thereof, then during the time and to the extent
the Premises are unfit for occupancy, the Rent shall be abated in proportion to
the ratio that the amount of rentable square feet of the Premises which is unfit
for occupancy for the purposes permitted under this Lease bears to the total
rentable square feet of the Premises. In the event that Landlord shall not
deliver the Landlord Repair Notice, 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
sixty (60) days to vacate the Premises, but Landlord may so elect only if the
Building or Project shall be damaged by fire or other casualty or cause, whether
or not the Premises are affected, and one or more of the following conditions is
present: (i) in Landlord's reasonable judgment, repairs cannot reasonably be
completed within two hundred seventy (270) 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; (iv) Landlord decides to rebuild the
Building or Common Areas so that they will be substantially different
structurally or architecturally; (v) the damage occurs during the last twelve
(12) months of the Lease Term; or (vi) any owner of any other portion of the
Project, other than Landlord, does not intend to repair the damage to such
portion of the Project; provided, however, that if Landlord does not elect to
terminate this Lease pursuant to Landlord's termination right as provided above,
and the repairs cannot, in the reasonable opinion of Landlord, be completed
within two hundred seventy (270) days after being commenced, Tenant may elect,
no earlier than sixty (60) 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. Notwithstanding the provisions of
this Section 11.2, Tenant shall have the right to terminate this Lease under
this Section 11.2 only if each of the following conditions are satisfied: (a)
the damage to the Project by fire or other casualty was not caused by the gross
negligence or intentional act of Tenant or its partners or subpartners and their
respective officers, agents, servants, employees, and independent contractors;
(b) Tenant is not then in default under this Lease; (c) as a result of the
damage, Tenant's use of or ability to conduct business from the Premises is
materially impaired; and, (d) as a result of the damage to the Project, Tenant
does not occupy or use the Premises at all.

 

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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 use, reconstruction or remodeling of any part of the
Premises, Building or Project, or if Landlord shall grant a deed or other
instrument in lieu of such 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 eighty (180) 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 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, and for moving expenses, 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 and eighty (180) 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. 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 a copy of all
existing executed and/or proposed documentation pertaining to the proposed
Transfer, including all existing operative documents to be executed to evidence
such Transfer or the 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, (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 reasonably
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 in the form attached hereto as
Exhibit E. 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 reasonable review
and processing fees, as well as any reasonable professional fees (including,
without limitation, attorneys', accountants', architects', engineers' and
consultants' fees) incurred by Landlord, within thirty (30) days after written
request by Landlord.

 

14.2     Landlord's Consent. Landlord shall not unreasonably withhold or delay
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;

 

14.2.2     The Transferee intends to use the Subject Space for purposes which
are not permitted under this Lease;

 

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

 

14.2.4     The Transfer occurs during the period from the Lease Commencement
Date until the earlier of (i) the fourth anniversary of the Lease Commencement
Date or (ii) the date at least ninety five percent (95%) of the rentable square
feet of the Project is leased, and the rent charged by Tenant to such Transferee
during the term of such Transfer, calculated using a present value analysis, is
less than ninety-five percent (95%) of the rent being quoted by Landlord at the
time of such Transfer for comparable space in the Project for a comparable term,
calculated using a present value analysis;

 

14.2.5     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;

 

14.2.6     The proposed Transfer would cause a violation of another lease for
space in the Project, or would give an occupant of the Project a right to cancel
its lease; or

 

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 or has negotiated
with Landlord during the six (6) month period immediately preceding the date
Landlord receives the Transfer Notice, to lease space in the Project.

 

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 Premises or portion thereof, 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 suit for declaratory
judgment and an injunction for the relief sought, and Tenant hereby waives the
provisions of Section 1995.310 of the California Civil Code, or any successor
statute, and 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. "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, (ii) any free base rent reasonably provided to the Transferee in
connection with the Transfer (provided that such free rent shall be deducted
only to the extent the same is included in the calculation of total
consideration payable by such Transferee), and (iii) any brokerage commissions
in connection with the Transfer and (iv) legal fees reasonably incurred in
connection with the Transfer (collectively, "Tenant's Subleasing Costs").
"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. The determination of the amount of Landlord's applicable share of the
Transfer Premium shall be made on a monthly basis as rent or other consideration
is received by Tenant under the Transfer. For purposes of calculating the
Transfer Premium on a monthly basis, Tenant's Subleasing Costs shall be deemed
to be expended by Tenant in equal monthly amounts over the entire term of the
Transfer.

 

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14.4     Landlord's Options as to Subject Space. Notwithstanding anything to the
contrary contained in this Article 14, in the event Tenant contemplates a
Transfer which, together with all prior Transfers then remaining in effect,
would cause fifty percent (50%) or more of the Premises to be Transferred,
Landlord shall have the option, by giving written notice to Tenant within thirty
(30) days after receipt of any Transfer Notice, to (i) recapture the Subject
Space, or (ii) take an assignment or sublease of the Subject Space from Tenant.
Such recapture or sublease or assignment notice, shall cancel and terminate this
Lease, or create a sublease or assignment, as the case may be, with respect to
the Subject Space as of the date stated in the Transfer Notice as the effective
date of the proposed Transfer. In the event of a recapture by Landlord, if this
Lease shall be canceled with respect to less than the entire Premises, then
(A) 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; (B) 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; and (C) Landlord
shall construct or cause to be constructed a demising wall separating that
portion of the Premises recaptured by Landlord from that portion of the Premises
retained by Tenant; provided that, Tenant hereby agrees that, notwithstanding
Tenant's occupancy of its retained portion of the Premises during the
construction of such demising wall by Landlord, Landlord shall be permitted to
construct such demising wall during normal business hours, without any
obligation to pay overtime or other premiums, and the construction of such
demising wall by Landlord shall in no way constitute a constructive eviction of
Tenant nor entitle Tenant to any abatement of Rent, and 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 construction
of such demising wall, nor shall Tenant be entitled to any compensation or
damages from Landlord for loss of the use of the whole or any part of its
retained portion of the Premises or of Tenant's personal property or
improvements resulting from the construction of such demising wall, or for any
inconvenience or annoyance occasioned by the construction of such demising wall;
and provided further that, Tenant shall be responsible for, and shall pay to
Landlord promptly upon being billed therefor, fifty percent (50%) of all costs
related to the construction of such demising wall, including Landlord's standard
fee for its involvement with such demising wall. In the event Landlord elects to
take an assignment or sublease of the Subject Space from Tenant, (1) such
assignment or sublet shall be at a rental rate that shall be the lesser of (x)
the proposed rent to be paid by Transferee upon such Transfer, or (y) the Rent
then payable to Landlord pursuant to this Lease as of the effective date of such
Transfer (including any scheduled escalations thereof during the term of such
Transfer), pro rated for the number of rentable square feet in such Subject
Space, and (2) Landlord may, at Landlord's sole cost, construct improvements in
the Subject Space on the condition that, upon the termination of the term of
such Transfer, Landlord shall return the Subject Space to Tenant in
substantially the same condition as received by Landlord (i.e., prior to the
making of such improvements by Landlord), ordinary wear and tear excepted. If
Landlord declines, or fails to elect in a timely manner, to recapture, sublease
or take an assignment of 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.

 

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. 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 or limited liability company,
the withdrawal or change, voluntary, involuntary or by operation of law, of
fifty percent (50%) or more of the partners or members, or transfer of fifty
percent (50%) or more of partnership or membership interests, within a twelve
(12)-month period, or the dissolution of the partnership or membership 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 fifty percent (50%) 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
fifty percent (50%) or more of the value of the unencumbered assets of Tenant
within a twelve (12)-month period.

 

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14.7     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 the 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, 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.

 

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 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.

 

ARTICLE 16

HOLDING OVER

 

If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, 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 one hundred fifty percent (150%) of the Rent
applicable during the last rental period of the Lease Term under this Lease.
Such tenancy shall be subject to every other applicable term, covenant and
agreement contained herein. 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.

 

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ARTICLE 17

ESTOPPEL CERTIFICATES

 

Within ten (10) business days following a request in writing by Landlord
delivered by a nationally recognized overnight courier, Tenant shall execute,
acknowledge and deliver to Landlord an estoppel certificate, which, as submitted
by Landlord, shall be substantially in the form of Exhibit E, attached hereto
(or such other form as may be required by any prospective mortgagee or purchaser
of the Project, or any portion thereof), indicating therein any exceptions
thereto that may exist at that time, and shall also contain any other
information reasonably requested by Landlord or Landlord's mortgagee or
prospective mortgagee. Any such certificate may be relied upon by any
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 to provide Landlord with a current financial statement and financial
statements of the two (2) years prior to the current financial statement year.
Such statements shall be prepared in accordance with generally accepted
accounting principles and, if such is the normal practice of Tenant, shall be
audited by an independent certified public accountant. Failure of Tenant to
timely execute, acknowledge and deliver such estoppel certificate or other
instruments shall constitute an acceptance of the Premises and an acknowledgment
by Tenant that statements included in the estoppel certificate are true and
correct, without exception.

 

ARTICLE 18

SUBORDINATION

 

18.1     This Lease shall be subject and subordinate to all present and future
ground or underlying leases of the Building or Project (each, a “Ground Lease”)
and to any trust deed or mortgage now or hereafter in force against the Building
or Project or any part thereof (each, a “Mortgage”), the lien and security
interest imposed by such Mortgage, the rights and remedies of the holder or
beneficiary of such Mortgage (“Mortgagee”) to enforce such lien or security
interest, 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, unless the Mortgagee or the lessor under such Ground
Lease (“Ground Lessor”) requires in writing that this Lease be superior thereto.

 

18.2     Tenant covenants and agrees in the event any proceedings are brought
for the foreclosure of any Mortgage or deed in lieu thereof (or if any Ground
Lease is terminated), to attorn, without any deductions or set-offs whatsoever,
to the Mortgagee or purchaser or any successors thereto upon any such
foreclosure or deed in lieu thereof (or to the Ground Lessor if any Ground Lease
is terminated) (the “Successor Landlord”), if so requested to do so by the
Successor Landlord, and to recognize the Successor Landlord as the lessor under
this Lease, and this Lease shall continue in full force and effect as a direct
lease between Successor Landlord and Tenant; provided, however, in no event
shall Successor Landlord be liable for or bound by any of the following matters:
(a) any right or alleged right of Tenant to any offset, defense, claim,
counterclaim, reduction, deduction, or abatement against Tenant’s payment of
Rent or performance of Tenant’s other obligations under this Lease (“Offset
Right”) that Tenant may have against Landlord and any other party that was
landlord under this Lease at any time before the occurrence of any attornment
hereunder (“Former Landlord”) relating to any event or occurrence before the
date of attornment, including any claim for damages of any kind whatsoever as
the result of any breach by Former Landlord that occurred before the date of
attornment; (b) any act, omission, default, misrepresentation, or breach of
warranty, of any Former Landlord or obligations accruing prior to Successor
Landlord’s actual ownership of the Building or Project; (c) any payment of Rent
that Tenant may have made to Former Landlord more than thirty (30) days before
the date such Rent was first due and payable under this Lease with respect to
any period after the date of attornment other than, and only to the extent that,
this Lease expressly required such a prepayment; (d) any obligation (i) to pay
Tenant any sum(s) that any Former Landlord owed to Tenant, or (ii) with respect
to any security deposited with Former Landlord, unless such security was
actually delivered to Successor Landlord;(e) any modification or amendment of
this Lease, or any waiver of any terms of this Lease, made without Successor
Landlord’s written consent; (f) any consensual or negotiated surrender,
cancellation, or termination of this Lease, in whole or in part, agreed upon
between Former Landlord and Tenant, unless effected unilaterally by Tenant
pursuant to the express terms of this Lease; and (g) any obligation of Landlord
under this Lease to make, pay for, or reimburse Tenant for any alterations,
demolition, or other improvements or work at the Building or Project, including
the Premises.

 

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18.3     Notwithstanding anything to the contrary in this Lease, before
exercising any right of Tenant to cancel or terminate this Lease or to claim a
partial or total eviction arising (whether under this Lease or under applicable
law) from Landlord’s breach or default under this Lease (a “Termination Right”),
Tenant shall provide Mortgagee (after notification of the identity of such
Mortgagee and the mailing address thereof) with notice of the breach or default
by Landlord giving rise to same (the “Default Notice”) and, thereafter, the
opportunity to cure such breach or default as follows. After Mortgagee receives
a Default Notice, Mortgagee shall have a period of thirty (30) days beyond the
time available to Landlord under this Lease in which to cure the breach or
default by Landlord. Mortgagee shall have no obligation to cure (and shall have
no liability or obligation for not curing) any breach or default by Landlord,
except to the extent that Mortgagee agrees or undertakes otherwise in writing.
In addition, as to any breach or default by Landlord the cure of which requires
possession and control of the Building or Project, provided only that Mortgagee
undertakes to Tenant by written notice to Tenant within thirty (30) days after
receipt of the Default Notice to exercise reasonable efforts to cure or cause to
be cured by a receiver such breach or default within the period permitted by
this Section, Mortgagee’s cure period shall continue for such additional time as
Mortgagee may reasonably require to either (a) obtain possession and control of
the Building or Project and thereafter cure the breach or default with
reasonable diligence and continuity, or (b) obtain the appointment of a receiver
and give such receiver a reasonable period of time in which to cure the default.

 

18.4     Landlord's interest herein may be assigned as security at any time to
any Mortgagee. Tenant shall, within ten (10) 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 or Ground 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.

 

ARTICLE 19

DEFAULTS; REMEDIES

 

19.1     Events of Default. The occurrence of any of the following shall
constitute a default of this Lease 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; 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 thirty (30) 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 thirty (30) 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; or

 

19.1.3     Abandonment or vacation of all or a substantial portion of the
Premises by Tenant; or

 

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19.1.4     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 two (2) business days after notice from Landlord; or

 

19.1.5     Tenant's failure to occupy the Premises within ten (10) business days
after the Lease Commencement Date.

 

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 or damages therefor;
and Landlord may recover from Tenant the following:

 

(i)     The worth at the time of award of the 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 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 Sections 19.2.1(i) and
(ii), above, the "worth at the time of award" shall be computed by allowing
interest at the 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
Section 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.

 

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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.

 

19.3     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.

 

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 and subject to the terms of Section 18.3 above, 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.

 

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

 

21.1     In General. 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 8 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 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 and
Landlord shall have the right to commingle the Security Deposit with Landlord's
other funds. Tenant hereby irrevocably waives and relinquishes any and all
rights, benefits, or protections, if any, Tenant now has, or in the future may
have, under Section 1950.7 of the California Civil Code, any successor statute,
and all other provisions of law, now or hereafter in effect, including, but not
limited to, any provision of law which (i) establishes the time frame by which a
landlord must refund a security deposit under a lease, or (ii) provides that a
landlord may claim from a security deposit only those sums reasonably necessary
to remedy defaults in the payment of rent, to repair damage caused by a tenant,
or to clean the subject premises. Tenant acknowledges and agrees that that (A)
any statutory time frames for the return of a security deposit are superseded by
the express period identified in this Article 21, above, and (B) rather than be
so limited, Landlord may claim from the Security Deposit (i) any and all sums
expressly identified in this Article 21, above, and (ii) any additional sums
reasonably necessary to compensate Landlord for any and all losses or damages
caused by Tenant's default of this Lease, including, but not limited to, all
damages or rent due upon termination of this Lease pursuant to Section 1951.2 of
the California Civil Code.

 

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21.2     Reduction of Security Deposit. Subject to the terms hereof, provided
that as of the first day of the twenty-fifth (25th) full calendar month of the
Lease Term (the “First Determination Date”), Tenant has not previously been in
default under this Lease beyond all applicable notice and cure periods expressly
set forth in this Lease and is then not in default under this Lease beyond all
applicable notice and cure periods expressly set forth in this Lease, the
Security Deposit shall be reduced to equal $125,333.25, and Landlord shall pay
to Tenant the amount of $41,777.75 (the “First Reduction Amount”) within thirty
(30) days of the First Determination Date (and failure to pay as required shall
entitle Tenant to deduct the First Reduction Amount from the Rent next due). In
addition, subject to the terms hereof, provided that as of the first day of the
forty-ninth (49th) full calendar month of the Lease Term (the "Second
Determination Date"), Tenant has not previously been in default under this Lease
beyond all applicable notice and cure periods expressly set forth in this Lease
and is then not in default under this Lease beyond all applicable notice and
cure periods expressly set forth in this Lease, the Security Deposit shall be
further reduced to $83,555.50, and Landlord shall pay to Tenant the amount of
$41,777.75 (the “Second Reduction Amount”) within thirty (30) days of the Second
Determination Date (and failure to pay as required shall entitle Tenant to
deduct the Second Reduction Amount from the Rent next due).

 

ARTICLE 22

SUBSTITUTION OF PREMISES

 

Landlord acknowledge that Landlord has no express right pursuant to this Lease
to move Tenant to other space in the Project.

 

ARTICLE 23

SIGNS

 

23.1     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. 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.

 

23.2     Exterior Signage. Tenant, at Tenant's sole cost and expense, may
install Building standard Premises identification signage (i) at the entrance to
the Premises, (ii) on the Building parapet, and (iii) on the monument sign
facing Gleason Drive. All of such signs (collectively, the "Tenant's Signage")
shall be subject to the prior approval of Landlord (which shall not be
unreasonably withheld) and shall comply with all Applicable Laws and any
recorded covenants, conditions and restrictions.

 

23.3     Maintenance and Removal of Tenant Signage. Tenant shall keep the
Tenant's Signage in first-class condition and repair at all times during the
Lease Term. Upon the expiration or earlier termination of this Lease or Tenant's
right to exercise the Tenant's Signage right, Tenant shall, at Tenant's sole
cost and expense, cause Tenant's Signage to be removed and shall cause the areas
in which such Tenant's Signage was located to be restored to the condition
existing immediately prior to the placement of such Tenant's Signage. If Tenant
fails to timely remove such Tenant's Signage or to restore the areas in which
such Tenant's Signage was located, as provided in the immediately preceding
sentence, then Landlord may perform such work, and all costs incurred by
Landlord in so performing (including a percentage of the cost thereof sufficient
to reimburse Landlord for all overhead, general conditions, fees and other costs
or expenses arising from Landlord's involvement with such repairs and/or
maintenance) shall be reimbursed by Tenant to Landlord within thirty (30) days
after Tenant's receipt of an invoice therefor together with reasonable
supporting evidence. The terms of this Section 23.3 shall survive the expiration
or earlier termination of this Lease.

 

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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,
any such governmental regulations related to Hazardous Materials Laws (as
defined in Section 29.34 below). At its sole cost and expense, Tenant shall
promptly comply with such governmental measures. Should any standard or
regulation now or hereafter be imposed on Landlord or Tenant by a state, federal
or local governmental body charged with the establishment, regulation and
enforcement of occupational, health or safety standards for employers,
employees, landlords or tenants, then Tenant agrees, at its sole cost and
expense, to comply promptly with such standards or regulations and to cooperate
with Landlord, including, without limitation, by taking such actions as Landlord
may reasonably require, in Landlord's efforts to comply with such standards or
regulations. Tenant shall be responsible, at its sole cost and expense, to make
all alterations to the Premises as are required to comply with the governmental
rules, regulations, requirements or standards described in this Article 24. The
judgment of any court of competent jurisdiction or the admission of Tenant in
any judicial action, regardless of whether Landlord is a party thereto, that
Tenant has violated any of said governmental measures, shall be conclusive of
that fact as between Landlord and Tenant. Tenant shall promptly pay all fines,
penalties and damages that may arise out of or be imposed because of its failure
to comply with the provisions of this Article 24.

 

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) business days after
Tenant's receipt of written notice from Landlord that said amount is due, then
Tenant shall pay to Landlord a late charge equal to five percent (5%) of the
overdue amount plus any reasonable 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 the date they are due shall bear interest from the date when due
until paid at a rate per annum (the "Default Rate") equal to the lesser of (i)
the annual "Bank Prime Loan" rate cited in the Federal Reserve Statistical
Release Publication H.15(519), 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.

 

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 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.

 

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26.2     Tenant's Reimbursement. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, 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 reasonable 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 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, or to current or
prospective mortgagees, ground or underlying lessors or insurers or, during the
last twelve (12) months of the Lease Term, to prospective tenants; (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. Notwithstanding anything to
the contrary contained in this Article 27, Landlord may enter the Premises at
any time to (A) perform services required of Landlord, including janitorial
service; (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 may make any such entries without the abatement of Rent,
except as otherwise provided in this Lease, 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.

 

ARTICLE 28

TENANT PARKING

 

Tenant shall have the right to use, without charge, commencing on the Lease
Commencement Date, the amount of parking passes set forth in Section 9 of the
Summary, on a monthly basis throughout the Lease Term and any Option Term, which
parking passes shall pertain to the Project parking facility. 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 established by Landlord and the prohibition of
vehicle repair and maintenance activities in the Project's parking facilities),
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. Tenant's use of the Project parking facility shall be at Tenant's sole
risk and Tenant acknowledges and agrees that Landlord shall have no liability
whatsoever for damage to the vehicles of Tenant, its employees and/or visitors,
or for other personal injury or property damage or theft relating to or
connected with the parking rights granted herein or any of Tenant's, its
employees' and/or visitors' use of the parking facilities. 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.
Landlord may delegate its responsibilities hereunder to a parking operator in
which case such parking operator shall have all the rights of control attributed
hereby to the Landlord. Landlord and/or such parking operator may institute a
valet and/or a valet assist program at any time. 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 the Landlord
may establish, at the validation rate from time to time generally applicable to
visitor parking.

 

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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.

 

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) business 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) business 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.

 

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.

 

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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 lesser of (a) the interest of Landlord in the Building or (b) the equity
interest Landlord would have in the Building if the Building were encumbered by
third-party debt in an amount equal to eighty percent (80%) of the value of the
Building (as such value is determined by Landlord), 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.

 

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.

 

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29.16     Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, acts of war, terrorist acts, 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 (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) delivered by a nationally recognized overnight
courier, or (C) 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 10 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 below, 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 overnight courier
delivery is made, or (iii) the date personal delivery is made. As of the date of
this Lease, any Notices to Landlord must be sent, transmitted, or delivered, as
the case may be, to the following addresses:

 

SFII Creekside, LLC
260 California Street, Suite 300
San Francisco, California 94111
Attn: Craig Firpo

 

with a copy to:

 

Allen Matkins Leck Gamble Mallory & Natsis LLP
1901 Avenue of the Stars, Suite 1800
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.

 

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. In the event
that the Tenant is a married individual, the terms, covenants and conditions of
this Lease shall be binding upon the marital community of which the Tenant is a
member.

 

29.20     Authority. 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 the State of 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, if an entity, 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 the State
of California.

 

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' fees, incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgment.

 

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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) TO THE
EXTENT PERMITTED BY APPLICABLE LAW, 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.

 

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 12 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. The terms of this Section 29.24 shall survive the
expiration or earlier termination of the Lease Term.

 

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, Address and Signage. Landlord shall have the
right at any time to change the name and/or address of the Project or Building
and to install, affix and maintain any and all signs on the exterior and on the
interior of the Project or Building as Landlord may, in Landlord's sole
discretion, desire. Tenant shall not use the name of the Project or Building or
use pictures or illustrations of the Project or Building in advertising or other
publicity or for any purpose other than as the address of the business to be
conducted by Tenant in the Premises, 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. 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     Building Renovations. It is specifically understood and agreed that
Landlord has no obligation and has made no promises to alter, remodel, improve,
renovate, repair or decorate the Premises, 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 is
currently renovating or may during the Lease Term renovate, improve, alter, or
modify (collectively, the "Renovations") the Project, the Building and/or the
Premises. Tenant hereby agrees that 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 and shall not be liable to Tenant for any
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 for any
inconvenience or annoyance occasioned by such Renovations.

 

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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 serving
the Premises (collectively, the "Lines"), 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) any new or existing Lines servicing the
Premises shall comply with all applicable governmental laws and regulations,
(iii) 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 (iv) Tenant shall pay all
costs in connection therewith. All Lines shall be clearly marked with adhesive
plastic labels (or plastic tags attached to such Lines with wire) to show
Tenant's name, suite number, telephone number and the name of the person to
contact in the case of an emergency (A) every four feet (4') outside the
Premises (specifically including, but not limited to, the electrical room risers
and other Common Areas), and (B) at the Lines' termination point(s)
(collectively, the "Identification Requirements"). Landlord reserves the right,
upon notice to Tenant prior to the expiration or earlier termination of this
Lease, to require that Tenant, at Tenant's sole cost and expense, remove any
Lines located in or serving the Premises prior to the expiration or earlier
termination of this Lease.

 

29.32     Development of the Project.

 

29.32.1     Subdivision. Landlord reserves the right to further subdivide all or
a portion of the Project. Tenant agrees to execute and deliver, upon demand by
Landlord and in the form requested by Landlord, any additional documents needed
to conform this Lease to the circumstances resulting from such subdivision.

 

29.32.2     The Other Improvements. If portions of the Project or property
adjacent to the Project (collectively, the "Other Improvements") are owned by an
entity other than Landlord, Landlord, at its option, may enter into an agreement
with the owner or owners of any or all of the Other Improvements to provide
(i) for reciprocal rights of access and/or use of the Project and the Other
Improvements, (ii) for the common management, operation, maintenance,
improvement and/or repair of all or any portion of the Project and the Other
Improvements, provided that Tenant's rights under this Lease are not materially
impaired, (iii) for the allocation of a portion of the Direct Expenses to the
Other Improvements and the operating expenses and taxes for the Other
Improvements to the Project, and (iv) for the use or improvement of the Other
Improvements and/or the Project in connection with the improvement,
construction, and/or excavation of the Other Improvements and/or the Project.
Nothing contained herein shall be deemed or construed to limit or otherwise
affect Landlord's right to convey all or any portion of the Project or any other
of Landlord's rights described in this Lease.

 

29.32.3     Construction of Project and Other Improvements. Tenant acknowledges
that portions of the Project and/or the Other Improvements may be subject to
demolition or construction following Tenant's occupancy of the Premises, and
that such construction may result in levels of noise, dust, obstruction of
access, etc. which are in excess of that present in a fully constructed project.
Tenant hereby waives any and all rent offsets or claims of constructive eviction
which may arise in connection with such demolition or construction.

 

29.33     Transportation Management. Tenant shall fully comply with all present
or future programs intended to manage parking, transportation or traffic in and
around the Project and/or the Building, 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. Such programs may include,
without limitation: (i) restrictions on the number of peak-hour vehicle trips
generated by Tenant; (ii) increased vehicle occupancy; (iii) implementation of
an in-house ridesharing program and an employee transportation coordinator; (iv)
working with employees and any Project, Building or area-wide ridesharing
program manager; (v) instituting employer-sponsored incentives (financial or
in-kind) to encourage employees to rideshare; and (vi) utilizing flexible work
shifts for employees.

 

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29.34     Hazardous Materials. Landlord and Tenant agree as follows with respect
to the existence or use of "Hazardous Materials," as that term is defined in
Section 29.34.4, below, on the Project.

 

29.34.1     Hazardous Materials Disclosure Certificate. Upon request by Landlord
from time to time, Tenant shall deliver to Landlord an executed Hazardous
Materials disclosure statement, substantially in the form reasonably required by
Landlord from time to time describing Tenant's then-present use of Hazardous
Materials on the Premises, and shall also deliver any other reasonably necessary
documents as requested by Landlord. Tenant shall concurrently file with Landlord
a copy of any business response plan or inventory required to be maintained
and/or filed with any federal, state or local regulatory agency under any
applicable Laws. Landlord and Tenant acknowledge and agree that, as of the date
of this Lease, Tenant has fully and accurately completed Landlord's pre-leasing
environmental exposures questionnaire (the "Environmental Questionnaire" and the
Hazardous Materials set forth therein, the "Approved Hazardous Materials"), as
set forth on Exhibit F attached hereto (the "Approved Hazardous Materials
Exhibit").

 

29.34.2     Hazardous Materials Usage. Neither Tenant, nor Tenant’s employees,
contractors and subcontractors of any tier, entities with a contractual
relationship with Tenant (other than Landlord), or any entity acting as an agent
or sub-agent of Tenant, shall be entitled to produce, use, store, generate,
transport or dispose of any Hazardous Materials on, in, or about any portion of
the Premises, Building or the Project, nor cause or permit any Hazardous
Materials to be brought upon, placed, stored, manufactured, generated, blended,
handled, recycled, used or released on, in, under or about the Premises (herein
referred to as “Hazardous Materials Usage”) which were not specifically listed
on the Approved Hazardous Materials Exhibit, without, in each instance,
obtaining Landlord’s prior written consent thereto, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, however, that in the
event Tenant desires to use, store or dispose of Hazardous Materials which are
not similar to the Hazardous Materials specifically listed on the Approved
Hazardous Materials Exhibit in terms of their hazardous character, handling
profile, usage and quantity ("New Hazardous Materials Usage"), then Landlord
shall have the right to impose additional terms and conditions on this Lease
based upon such the hazardous character, handling profile, use, storage and/or
disposal of such New Hazardous Materials Usage, to the extent such additional
terms and conditions are consistent with the requirements of landlords of
comparable projects in the vicinity of the Project when leasing space to tenants
using Hazardous Materials materially similar to the New Hazardous Materials
Usage in terms of hazardous character, handling profile, usage and quantity.
Tenant shall not be entitled nor permitted to install any tanks under, on or
about the Premises, Building or Project for the storage of Hazardous Materials
without the express written consent of Landlord, which may be given or withheld
in Landlord’s sole and absolute discretion. If any information provided to
Landlord by Tenant on the Approved Hazardous Materials Exhibit, or otherwise
relating to information concerning Hazardous Materials is false, incomplete, or
misleading in any material respect, the same shall be deemed a default by Tenant
under this Lease. Any Hazardous Materials Usage by Tenant and Tenant’s Agents
after the date of this Lease on or about the Project shall strictly comply with
all applicable laws, including all Hazardous Materials Laws (as defined in
Section 29.34.4, below) now or hereinafter enacted. Such foregoing obligation
shall include, without limitation, maintaining, and complying with, all required
necessary licenses, certifications, permits and approvals appropriate or
required for any Hazardous Materials Usage by Tenant on the Premises. Landlord
shall have a continuing right, without obligation, to require Tenant to obtain,
and to review and inspect any and all such permits, licenses, certifications and
approvals, together with copies of any and all Hazardous Materials management
plans and programs, any and all Hazardous Materials risk management and
pollution prevention programs, and any and all Hazardous Materials emergency
response and employee training programs respecting Tenant’s Hazardous Materials
Usage. Upon request of Landlord, Tenant shall deliver to Landlord a narrative
description explaining the nature and scope of Tenant’s activities involving
Hazardous Materials and demonstrating to Landlord’s satisfaction Tenant's
compliance with all Hazardous Materials Laws and the terms of this Lease.

 

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29.34.3     Indemnity. Tenant shall indemnify, hold harmless, and, at Landlord’s
option (with such attorneys as Landlord may approve in advance and in writing),
defend Landlord and Landlord’s officers, directors, shareholders, partners,
members, managers, employees, contractors, property managers, agents and
mortgagees ("Landlord Parties") and other lien holders, from and against any and
all Losses (as hereinafter defined) arising from or related to: (a) any
violation or alleged violation by Tenant or any of Tenant’s Agents of any of the
Laws, including, without limitation, the Hazardous Materials Laws; (b) any
breach of the provisions of this Section 29.34 or any subsection thereof by
Tenant or any of Tenant’s Agents; (c) any Hazardous Materials Usage on, about or
from the Premises, the Project or Common Areas of any Hazardous Materials
approved by Landlord under this Lease, or (d) Landlord's exercise of its cure
rights in Article 26, below. The term “Losses” shall mean all claims, demands,
expenses, actions, judgments, damages, penalties, fines, liabilities, losses of
every kind and nature (including, without limitation, property damage,
diminution in value of Landlord’s interest in the Premises or the Project,
damages for the loss or restriction on use of any space or amenity within the
Building or the Project, damages arising from any adverse impact on marketing
space in the Project, sums paid in settlement of claims and any costs and
expenses associated with injury, illness or death to or of any person), suits,
administrative proceedings, costs and fees, including, but not limited to,
attorneys’ and consultants’ fees and expenses, and the costs of cleanup,
remediation, removal and restoration.

 

29.34.4     Hazardous Materials. As used herein, the term “Hazardous Materials”
means any hazardous, radioactive or toxic substance, material or waste which is
or becomes regulated by any local governmental authority, the State of
California or the United States Government or under any Hazardous Material Laws.
The term “Hazardous Materials,” includes, without limitation, hazardous
radioactive material, radioactive material, mixed waste, petroleum products,
asbestos, PCB’s, and any material or substance which is (i) listed under Article
9, or defined as hazardous or extremely hazardous pursuant to Article 11 of
Title 22, of the California Code of Regulations, Division 4, Chapter 20,
(ii) defined as a “hazardous waste” pursuant to Section 1004 of the federal
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903),
(iii) defined as a “hazardous substance” pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
9601 et seq. (42 U.S.C. 9601) or (iv) regulated as a radioactive material under
Title 17, Division 1, Chapter 5, Subchapter 4 of the California Code or
Regulations and Title 10, Code of Federal Regulations, part 20. As used herein,
the term “Hazardous Material Laws” shall mean any statute, law, ordinance, or
regulation of any governmental body or agency (including the U.S. Environmental
Protection Agency, the California Regional Water Quality Control Board, the
California Department of Public Health Radiologic Health Branch and the
California Department of Toxic Substances Control) which regulates the use,
storage, release or disposal of any Hazardous Material.

 

29.34.5     Survival. The obligations of Tenant under this Section 29.34 shall
survive the expiration or earlier termination of this Lease, and shall remain
effective until all of Tenant's obligations under this Section 29.34 have been
completely performed and satisfied. The rights and obligations of Landlord and
Tenant with respect to issues relating to Hazardous Materials are exclusively
established by this Section 29.34. In the event of any inconsistency between any
other part of this Lease and Section 29.34, the terms of this Section 29.34
shall control.

 

[Remainder of page intentionally left blank; signature pages to follow]

 

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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:

 

SFII Creekside, LLC,

a Delaware limited liability company

 

By: Swift Real Estate Partners Fund II REIT II,
LLC,
a Delaware limited liability company,
its manager

 

By: Swift Real Estate Partners Fund II, L.P.,
a Delaware limited partnership,
its manager

By:Swift Fund II GP, LLC,
a Delaware limited liability company,
its general partner

 

By:      ___________________________

Name:  ___________________________

Its:       ___________________________

TENANT:

 

GIGA-TRONICS INCORPORATED,
a California corporation

 

By:                                                                                     

Its:                                                                          

 

By: 
                                                                                   

Its:                                                                          

 

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EXHIBIT A

 

CREEKSIDE BUSINESS PARK

 

OUTLINE OF PREMISES

 

[ex_116275img001.jpg]

 

 

EXHIBIT A
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EXHIBIT B

 

CREEKSIDE BUSINESS PARK

 

TENANT WORK LETTER

 

 

 

This Tenant Work Letter shall set forth the terms and conditions relating to the
construction of the tenant improvements in the Premises. This Tenant Work Letter
is essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Tenant Work Letter
to Articles or Sections of "this Lease" shall mean the relevant portion of
Articles 1 through 29 of the Office Lease to which this Tenant Work Letter is
attached as Exhibit B and of which this Tenant Work Letter forms a part, and all
references in this Tenant Work Letter to Sections of "this Tenant Work Letter"
shall mean the relevant portion of Sections 1 through 6 of this Tenant Work
Letter.

 

SECTION 1

LANDLORD'S INITIAL CONSTRUCTION IN THE PREMISES

 

Landlord has constructed, at its sole cost and expense, the base, shell, and
core (i) of the Premises and (ii) of the floor of the Building on which the
Premises is located (collectively, the "Base, Shell, and Core"). The Base, Shell
and Core shall consist of those portions of the Premises which were in existence
prior to the construction of the tenant improvements in the Premises.
Notwithstanding anything set forth in this Tenant Work Letter to the contrary,
Tenant shall accept the Base, Shell and Core from Landlord in their presently
existing, "as-is" condition.

 

SECTION 2

TENANT IMPROVEMENTS

 

2.1     Tenant Improvement Allowance. Tenant shall be entitled to a one-time
tenant improvement allowance (the "Tenant Improvement Allowance"), in the amount
set forth in Section 5 of the Summary, for the costs relating to the initial
design and construction of Tenant's improvements which are permanently affixed
to the Premises (the "Tenant Improvements"). In no event shall Landlord be
obligated to make disbursements pursuant to this Tenant Work Letter in a total
amount which exceeds the Tenant Improvement Allowance and "Landlord's Drawing
Contribution," as that term is defined in Section 3.1, below. In the event that
the Tenant Improvement Allowance is not fully disbursed by Landlord to, or on
behalf of, Tenant on or before the date which is one (1) year following the
Lease Commencement Date, then such unused amounts shall revert to Landlord, and
Tenant shall have no further rights with respect thereto. Any Tenant
Improvements that require the use of Building risers, raceways, shafts and/or
conduits, shall be subject to Landlord's reasonable rules, regulations, and
restrictions, including the requirement that any cabling vendor must be selected
from a list provided by Landlord, and that the amount and location of any such
cabling must be approved by Landlord. All Tenant Improvements for which the
Tenant Improvement Allowance has been made available shall be deemed Landlord's
property under the terms of the Lease; provided, however, Landlord may, 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 Tenant Improvements and to repair any damage to the Premises and
Building caused by such removal and return the affected portion of the Premises
to their condition existing prior to the installment of such Tenant
Improvements.

 

2.2     Disbursement of the Tenant Improvement Allowance. Except as otherwise
set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be
disbursed by Landlord (each of which disbursements shall be made pursuant to
Landlord's disbursement process) only for the following items and costs
(collectively, the "Tenant Improvement Allowance Items"):

 

2.2.1     Payment of the fees of the "Architect" and the "Engineers," as those
terms are defined in Section 3.1 of this Tenant Work Letter, which fees shall,
notwithstanding anything to the contrary contained in this Tenant Work Letter,
not exceed an aggregate amount equal to $2.00 per rentable square foot of the
Premises, and payment of the fees incurred by, and the cost of documents and
materials supplied by, Landlord and Landlord's consultants in connection with
the preparation and review of the "Construction Drawings," as that term is
defined in Section 3.1 of this Tenant Work Letter;

 

EXHIBIT B
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2.2.2     The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements;

 

2.2.3     The cost of construction of the Tenant Improvements, including,
without limitation, testing and inspection costs, freight elevator usage,
hoisting and trash removal costs, and contractors' fees and general conditions;

 

2.2.4     The cost of any changes in the Base, Shell and Core when such changes
are required by the Construction Drawings (including if such changes are due to
the fact that such work is prepared on an unoccupied basis), such cost to
include all direct architectural and/or engineering fees and expenses incurred
in connection therewith;

 

2.2.5     The cost of any changes to the Construction Drawings or Tenant
Improvements required by all applicable building codes (the "Code"); and

 

2.2.6     The cost of connection of the Premises to the Building's energy
management systems.

 

2.3     Standard Tenant Improvement Package. Landlord has established
specifications (the "Specifications") for the Building standard components to be
used in the construction of the Tenant Improvements in the Premises
(collectively, the "Standard Improvement Package"), which Specifications shall
be supplied to Tenant by Landlord. The quality of Tenant Improvements shall be
equal to or of greater quality than the quality of the Specifications, provided
that Landlord may, at Landlord's option, require the Tenant Improvements to
comply with certain Specifications. Landlord may make changes to the
Specifications for the Standard Improvement Package from time to time.

 

SECTION 3

CONSTRUCTION DRAWINGS

 

3.1     Selection of Architect/Construction Drawings. Tenant shall retain the
architect/space planner designated by Landlord (the "Architect") to prepare the
"Construction Drawings," as that term is defined in this Section 3.1. Landlord
shall pay to Tenant, as a cost ("Landlord's Drawing Contribution") not to be
deducted from the Tenant Improvement Allowance but in an amount not to exceed
$0.12 per rentable square foot of the Premises, the cost of one (1) preliminary
space plan for the Premises, but not the cost of any revisions thereto requested
by Tenant or required by Landlord, and only to the extent such drawings reflect
items from the Building standards and no portion of the Landlord's Drawing
Contribution, if any, remaining after the completion of the Tenant Improvements
shall be available for use by Tenant. Tenant shall retain the engineering
consultants designated by Landlord (the "Engineers") to prepare all plans and
engineering working drawings relating to the structural, mechanical, electrical,
plumbing, HVAC, life safety, and sprinkler work of the Tenant Improvements. The
plans and drawings to be prepared by Architect and the Engineers hereunder shall
be known collectively as the "Construction Drawings." Tenant shall be required
to include in its contracts with the Architect and the Engineers a provision
which requires ownership of all Construction Drawings to be transferred to
Tenant upon the Substantial Completion of the Tenant Improvements and Tenant
hereby grants to Landlord a non-exclusive right to use such Construction
Drawings, including, without limitation, a right to make copies thereof. All
Construction Drawings shall comply with the drawing format and specifications as
determined by Landlord, and shall be subject to Landlord's approval. Tenant and
Architect shall verify, in the field, the dimensions and conditions as shown on
the relevant portions of the base Building plans, and Tenant and Architect shall
be solely responsible for the same, and Landlord shall have no responsibility in
connection therewith. Landlord's review of the Construction Drawings as set
forth in this Section 3, shall be for its sole purpose and shall not imply
Landlord's review of the same, or obligate Landlord to review the same, for
quality, design, Code compliance or other like matters. Accordingly,
notwithstanding that any Construction Drawings are reviewed by Landlord or its
space planner, architect, engineers and consultants, and notwithstanding any
advice or assistance which may be rendered to Tenant by Landlord or Landlord's
space planner, architect, engineers, and consultants, Landlord shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Construction Drawings, and Tenant's
waiver and indemnity set forth in this Lease shall specifically apply to the
Construction Drawings.

 

EXHIBIT B
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3.2     Final Space Plan. On or before the date set forth in Schedule 1,
attached hereto, Tenant and the Architect shall prepare the final space plan for
Tenant Improvements in the Premises (collectively, the "Final Space Plan"),
which Final Space Plan shall include a layout and designation of all offices,
rooms and other partitioning, their intended use, and equipment to be contained
therein, and shall deliver four (4) copies signed by Tenant of the Final Space
Plan to Landlord for Landlord's approval.

 

3.3     Final Working Drawings. On or before the date set forth in Schedule 1,
Tenant, the Architect and the Engineers shall complete the architectural and
engineering drawings for the Premises, and the final architectural working
drawings in a form which is complete to allow subcontractors to bid on the work
and to obtain all applicable permits (collectively, the "Final Working
Drawings") and shall submit two (2) copies signed by Tenant of the same to
Landlord for Landlord's approval.

 

3.4     Permits. The Final Working Drawings shall be approved by Landlord (the
"Approved Working Drawings") prior to the commencement of the construction of
the Tenant Improvements. Tenant shall immediately submit the Approved Working
Drawings to the appropriate municipal authorities for all applicable building
permits necessary to allow "Contractor," as that term is defined in Section 4.1,
below, to commence and fully complete the construction of the Tenant
Improvements (the "Permits"), and, in connection therewith, Tenant shall
coordinate with Landlord in order to allow Landlord, at its option, to take part
in all phases of the permitting process and shall supply Landlord, as soon as
possible, with all plan check numbers and dates of submittal and obtain the
Permits on or before the date set forth in Schedule 1. Notwithstanding anything
to the contrary set forth in this Section 3.4, Tenant hereby agrees that neither
Landlord nor Landlord's consultants shall be responsible for obtaining any
building permit or certificate of occupancy for the Premises and that the
obtaining of the same shall be Tenant's responsibility; provided however that
Landlord shall, in any event, cooperate with Tenant in executing permit
applications and performing other ministerial acts reasonably necessary to
enable Tenant to obtain any such permit or certificate of occupancy. No changes,
modifications or alterations in the Approved Working Drawings may be made
without the prior written consent of Landlord, provided that Landlord may
withhold its consent, in its sole discretion, to any change in the Approved
Working Drawings if such change would directly or indirectly delay the
"Substantial Completion" of the Premises as that term is defined in Section 5.1
of this Tenant Work Letter.

 

3.5     Time Deadlines. Tenant shall use its best, good faith, efforts and all
due diligence to cooperate with the Architect, the Engineers, and Landlord to
complete all phases of the Construction Drawings and the permitting process and
to receive the permits, and with Contractor for approval of the "Cost Proposal,"
as that term is defined in Section 4.2 of this Tenant Work Letter, as soon as
possible after the execution of the Lease, and, in that regard, shall meet with
Landlord on a scheduled basis to be determined by Landlord, to discuss Tenant's
progress in connection with the same. The applicable dates for approval of
items, plans and drawings as described in this Section 3, Section 4, below, and
in this Tenant Work Letter are set forth and further elaborated upon in
Schedule 1 (the "Time Deadlines"), attached hereto. Tenant agrees to comply with
the Time Deadlines.

 

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

 

4.1     Contractor. A contractor designated by Landlord ("Contractor") shall
construct the Tenant Improvements.

 

4.2     Cost Proposal. After the Approved Working Drawings are signed by
Landlord and Tenant, Landlord shall provide Tenant with a cost proposal in
accordance with the Approved Working Drawings, which cost proposal shall
include, as nearly as possible, the cost of all Tenant Improvement Allowance
Items to be incurred by Tenant in connection with the design and construction of
the Tenant Improvements (the "Cost Proposal"). Tenant shall approve and deliver
the Cost Proposal to Landlord within five (5) business days of the receipt of
the same, and upon receipt of the same by Landlord, Landlord shall be released
by Tenant to purchase the items set forth in the Cost Proposal and to commence
the construction relating to such items. The date by which Tenant must approve
and deliver the Cost Proposal to Landlord shall be known hereafter as the "Cost
Proposal Delivery Date".

 

EXHIBIT B
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4.3     Construction of Tenant Improvements by Contractor under the Supervision
of Landlord.

 

4.3.1     Over-Allowance Amount. On the Cost Proposal Delivery Date, Tenant
shall deliver to Landlord cash in an amount (the "Over-Allowance Amount") equal
to the difference between (i) the amount of the Cost Proposal and (ii) the
amount of the Tenant Improvement Allowance. The Over-Allowance Amount shall be
disbursed by Landlord prior to the disbursement of any then remaining portion of
the Tenant Improvement Allowance, and such disbursement shall be pursuant to the
same procedure as the Tenant Improvement Allowance. In the event that, after the
Cost Proposal Delivery Date, any revisions, changes, or substitutions shall be
made to the Construction Drawings or the Tenant Improvements, any additional
costs which arise in connection with such revisions, changes or substitutions or
any other additional costs shall be paid by Tenant to Landlord immediately upon
Landlord's request as an addition to the Over-Allowance Amount.

 

4.3.2     Landlord's Retention of Contractor. Landlord shall independently
retain Contractor, on behalf of Tenant, to construct the Tenant Improvements in
accordance with the Approved Working Drawings (subject to the following
sentence) and the Cost Proposal and Landlord shall supervise the construction by
Contractor, and Tenant shall pay a construction supervision and management fee
(the "Landlord Supervision Fee") to Landlord in an amount equal to the sum of
(i) an amount equal to three percent (3%) of the Tenant Improvement Allowance
plus the Over-Allowance Amount (as such Over-Allowance Amount may increase
pursuant to the terms of this Tenant Work Letter). In the event of a conflict
between the Approved Working Drawings and Landlord's construction rules and
regulations, Landlord, in its sole and absolute discretion, shall determine
which shall prevail. Notwithstanding anything set forth in this Tenant Work
Letter to the contrary, construction of the Tenant Improvements shall not
commence until (a) Landlord has a fully executed and delivered contract with
Contractor for the construction of the Tenant Improvements, (b) Tenant has
procured and delivered to Landlord a copy of all Permits, and (c) Tenant has
delivered to Landlord the Over-Allowance Amount.

 

4.3.3     Contractor's Warranties and Guaranties. Landlord hereby assigns to
Tenant all warranties and guaranties by Contractor relating to the Tenant
Improvements, and Tenant hereby waives all claims against Landlord relating to,
or arising out of the construction of, the Tenant Improvements.

 

4.3.4     Tenant's Covenants. Tenant hereby indemnifies Landlord for any loss,
claims, damages or delays arising from the actions of Architect on the Premises
or in the Building. Within ten (10) days after completion of construction of the
Tenant Improvements, Tenant shall cause Contractor and Architect to cause a
Notice of Completion to be recorded in the office of the County Recorder of the
county in which the Building is located in accordance with Section 8182 of the
Civil Code of the State of California or any successor statute and furnish a
copy thereof to Landlord upon recordation, failing which, Landlord may itself
execute and file the same on behalf of Tenant as Tenant's agent for such
purpose. In addition, within thirty (30) days following the Substantial
Completion of the Premises, Tenant shall have prepared and delivered to the
Building two (2) copies signed by Tenant of the "as built" plans and
specifications (including all working drawings) for the Tenant Improvements.

 

SECTION 5

COMPLETION OF THE TENANT IMPROVEMENTS;
LEASE COMMENCEMENT DATE

 

5.1     Ready for Occupancy. The Premises shall be deemed "Ready for Occupancy"
upon the Substantial Completion of the Premises. For purposes of this Lease,
"Substantial Completion" of the Premises shall occur upon the completion of
construction of the Tenant Improvements in the Premises pursuant to the Approved
Working Drawings, with the exception of any punch list items and any tenant
fixtures, work-stations, built-in furniture, or equipment to be installed by
Tenant or under the supervision of Contractor.

 

5.2     Delay of the Substantial Completion of the Premises. Except as provided
in this Section 5.2, the Lease Commencement Date shall occur as set forth in the
Lease and Section 5.1, above. If there shall be a delay or there are delays in
the Substantial Completion of the Premises or in the occurrence of any of the
other conditions precedent to the Lease Commencement Date, as set forth in the
Lease, as a direct, indirect, partial, or total result of:

 

EXHIBIT B
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5.2.1     Tenant's failure to comply with the Time Deadlines;

 

5.2.2     Tenant's failure to timely approve any matter requiring Tenant's
approval;

 

5.2.3     A breach by Tenant of the terms of this Tenant Work Letter or the
Lease;

 

5.2.4     Changes in any of the Construction Drawings after disapproval of the
same by Landlord or because the same do not comply with Code or other applicable
laws;

 

5.2.5     Tenant's request for changes in the Approved Working Drawings;

 

5.2.6     Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the Premises, as set forth in the
Lease, or which are different from, or not included in, the Standard Improvement
Package;

 

5.2.7     Changes to the Base, Shell and Core required by the Approved Working
Drawings; or

 

5.2.8     Any other acts or omissions of Tenant, or its agents, or employees;

 

then, notwithstanding anything to the contrary set forth in the Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the Premises, the date of the Substantial Completion of the
Premises shall be deemed to be the date the Substantial Completion of the
Premises would have occurred if no Tenant delay or delays, as set forth above,
had occurred.

 

SECTION 6

MISCELLANEOUS

 

6.1     Tenant's Entry Into the Premises Prior to Substantial Completion.
Provided that Tenant and its agents do not interfere with Contractor's work in
the Building and the Premises, Contractor shall allow Tenant approximately four
(4) weeks prior access to the Premises prior to the Substantial Completion of
the Premises for the purpose of Tenant installing overstandard equipment or
fixtures (including Tenant's data and telephone equipment) in the Premises.
Prior to Tenant's entry into the Premises as permitted by the terms of this
Section 6.1, Tenant shall submit a schedule to Landlord and Contractor, for
their approval, which schedule shall detail the timing and purpose of Tenant's
entry. Tenant shall hold Landlord harmless from and indemnify, protect and
defend Landlord against any loss or damage to the Building or Premises and
against injury to any persons caused by Tenant's actions pursuant to this
Section 6.1.

 

6.2     Freight Elevators. Landlord shall, consistent with its obligations to
other tenants of the Building, make the freight elevator reasonably available to
Tenant in connection with initial decorating, furnishing and moving into the
Premises.

 

6.3     Tenant's Representative. Tenant has designated Suresh Nair as its sole
representative with respect to the matters set forth in this Tenant Work Letter,
who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant Work
Letter.

 

6.4     Landlord's Representative. Landlord has designated Rod Collings as its
sole representative with respect to the matters set forth in this Tenant Work
Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.

 

EXHIBIT B
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6.5     Tenant's Agents. All contractors, subcontractors, laborers, materialmen,
and suppliers retained directly by Tenant shall be from a list of supplied by
Landlord and shall all be union labor in compliance with the then existing
master labor agreements.

 

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

 

6.7     Tenant's Lease Default. Notwithstanding any provision to the contrary
contained in this Lease, if an event of default as described in the Lease, or a
default by Tenant under this Tenant Work Letter, has occurred at any time on or
before the Substantial Completion of the Premises, then (i) in addition to all
other rights and remedies granted to Landlord pursuant to the Lease, Landlord
shall have the right to withhold payment of all or any portion of the Tenant
Improvement Allowance and/or Landlord may cause Contractor to cease the
construction of the Premises (in which case, Tenant shall be responsible for any
delay in the Substantial Completion of the Premises caused by such work stoppage
as set forth in Section 5 of this Tenant Work Letter), and (ii) all other
obligations of Landlord under the terms of this Tenant Work Letter shall be
forgiven until such time as such default is cured pursuant to the terms of the
Lease.

 

EXHIBIT B
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EXHIBIT C

 

CREEKSIDE BUSINESS PARK

 

NOTICE OF LEASE TERM DATES

 

To:

_______________________
_______________________
_______________________
_______________________

 

 

Re:

Office Lease dated ____________, 201_ between ____________________________, LLC,
a Delaware limited liability company ("Landlord"), and _______________________,
a _______________________ ("Tenant") concerning Suite ______ on floor(s)
__________ of the office building located at 5990 - 5996 Gleason Drive, Dublin,
California.

 

Gentlemen:

 

In accordance with the Office Lease (the "Lease"), we wish to advise you and/or
confirm as follows:

 

 

1.

The Lease Term shall commence on or has commenced on _____________ for a term of
_______________ ending on _______________.

 

 

2.

Rent commenced to accrue on ____________, in the amount of ____________.

 

 

3.

If the Lease Commencement Date is other than the first day of the month, the
first billing will contain a pro rata adjustment. Each billing thereafter, with
the exception of the final billing, shall be for the full amount of the monthly
installment as provided for in the Lease.

 

 

4.

Your rent checks should be made payable to __________ at ______________.

 

 

5.

The exact number of rentable square feet within the Premises is _________ square
feet.

 

 

6.

Tenant's Share as adjusted based upon the exact number of rentable square feet
within the Premises is ____________%.

 

 

"Landlord":

 

 

                                                                               
,
a                                                                              

 

By:                                                                           
      Its:                                                                     

 

EXHIBIT C
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Agreed to and Accepted as
of                 , 201  .

 

"Tenant":

 

                                                                               
,
a                                                                              

 

By:                                                                           
      Its:                                                                     

 

 

 

EXHIBIT C
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EXHIBIT D

 

CREEKSIDE BUSINESS PARK

 

RULES AND REGULATIONS

 

Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control.

 

1.     Tenant shall not alter any lock or install any new or additional locks or
bolts on any doors or windows of the Premises without obtaining Landlord's prior
written consent. Tenant shall bear the cost of any lock changes or repairs
required by Tenant. Two keys will be furnished by Landlord for the Premises, and
any additional keys required by Tenant must be obtained from Landlord at a
reasonable cost to be established by Landlord. Upon the termination of this
Lease, Tenant shall restore to Landlord all keys of stores, offices, and toilet
rooms, either furnished to, or otherwise procured by, Tenant and in the event of
the loss of keys so furnished, Tenant shall pay to Landlord the cost of
replacing same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such changes.

 

2.     All doors opening to public corridors shall be kept closed at all times
except for normal ingress and egress to the Premises, and except to the extent
required by applicable laws or codes.

 

3.     Landlord reserves the right to close and keep locked all entrance and
exit doors of the Building during such hours as are customary for comparable
buildings in the vicinity of the Building. Tenant, its employees and agents must
be sure that the doors to the Building are securely closed and locked when
leaving the Premises if it is after the normal hours of business for the
Building. Any tenant, its employees, agents or any other persons entering or
leaving the Building at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Building, may be required
to sign the Building register. Access to the Building may be refused unless the
person seeking access has proper identification or has a previously arranged
pass for access to the Building. Landlord will furnish passes to persons for
whom Tenant requests same in writing. Tenant shall be responsible for all
persons for whom Tenant requests passes and shall be liable to Landlord for all
acts of such persons. The Landlord and his agents shall in no case be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right to prevent access to the Building
or the Project during the continuance thereof by any means it deems appropriate
for the safety and protection of life and property.

 

4.     No equipment to be used by Tenant as part of Tenant's operations for the
Permitted Use shall be brought into the Building without prior notice to
Landlord. All moving activity into or out of the Building shall be scheduled
with Landlord and done only at such time and in such manner as Landlord
reasonably designates. Landlord shall have the right to prescribe the weight,
size and position of all safes and other heavy property brought into the
Building and also the times and manner of moving the same in and out of the
Building. Safes and other heavy objects shall, if considered necessary by
Landlord, stand on supports of such thickness as is necessary to properly
distribute the weight. Landlord will not be responsible for loss of or damage to
any such safe or property in any case. Any damage to any part of the Building,
its contents, occupants or visitors by moving or maintaining any such safe or
other property shall be the sole responsibility and expense of Tenant.

 

5.     No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except between
such hours, in such specific elevator and by such personnel as shall be
designated by Landlord.

 

6.     The requirements of Tenant will be attended to only upon application at
the management office for the Project or at such office location designated by
Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord.

 

EXHIBIT D
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7.     No sign, advertisement, notice or handbill shall be exhibited,
distributed, painted or affixed by Tenant on any part of the Premises or the
Building without the prior written consent of the Landlord. Tenant shall not
disturb, solicit, peddle, or canvass any occupant of the Project and shall
cooperate with Landlord and its agents of Landlord to prevent same.

 

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

 

9.     Tenant shall not overload the floor of the Premises, nor mark, drive
nails or screws, or drill into the partitions, woodwork or drywall or in any way
deface the Premises or any part thereof without Landlord's prior written
consent. Tenant shall not purchase spring water, ice, towel, linen, maintenance
or other like services from any person or persons not approved by Landlord.

 

10.     Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machine or machines other than fractional
horsepower office machines shall be installed, maintained or operated upon the
Premises without the written consent of Landlord.

 

11.     Tenant shall not use or keep in or on the Premises, the Building, or the
Project any kerosene, gasoline or other inflammable or combustible fluid,
chemical, substance or material, except as previously approved by Landlord
pursuant to the terms of this Lease (specifically including Section 29.34 of
this Lease).

 

12.     Tenant shall not without the prior written consent of Landlord use any
method of heating or air conditioning other than that supplied by Landlord.

 

13.     Tenant shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance in or on the Premises , except as previously approved
by Landlord pursuant to the terms of this Lease (specifically including Section
29.34 of this Lease), or permit or allow the Premises to be occupied or used in
a manner offensive or objectionable to Landlord or other occupants of the
Project by reason of noise, odors, or vibrations, or interfere with other
tenants or those having business therein, whether by the use of any musical
instrument, radio, phonograph, or in any other way. Tenant shall not throw
anything out of doors, windows or skylights or down passageways.

 

14.     Tenant shall not bring into or keep within the Project, the Building or
the Premises any firearms, animals, birds, aquariums, or, except in areas
designated by Landlord, bicycles or other vehicles.

 

15.     No cooking shall be done or permitted on the Premises, nor shall the
Premises be used for lodging or for any improper, objectionable or immoral
purposes. Notwithstanding the foregoing, Underwriters' laboratory-approved
equipment and microwave ovens may be used in the Premises for heating food and
brewing coffee, tea, hot chocolate and similar beverages for employees and
visitors, provided that such use is in accordance with all applicable federal,
state, county and city laws, codes, ordinances, rules and regulations.

 

16.     The Premises shall not be used for manufacturing or for the storage of
merchandise, except as previously approved by Landlord pursuant to the terms of
this Lease (specifically including Section 29.34 of this Lease). Tenant shall
not occupy or permit any portion of the Premises to be occupied as an office for
a messenger-type operation or dispatch office, public stenographer or typist, or
for the manufacture or sale of liquor, narcotics, or tobacco in any form, or as
a medical office, or as a barber or manicure shop, or as an employment bureau
without the express prior written consent of Landlord. Tenant shall not engage
or pay any employees on the Premises except those actually working for such
tenant on the Premises nor advertise for laborers giving an address at the
Premises.

 

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

 

EXHIBIT D
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18.     Tenant, its employees and agents shall not loiter in or on the
entrances, corridors, sidewalks, lobbies, courts, halls, stairways, elevators,
vestibules or any Common Areas for the purpose of smoking tobacco products or
for any other purpose, nor in any way obstruct such areas, and shall use them
only as a means of ingress and egress for the Premises.

 

19.     Tenant shall not waste electricity, water or air conditioning and agrees
to cooperate fully with Landlord to ensure the most effective operation of the
Building's heating and air conditioning system, and shall refrain from
attempting to adjust any controls.

 

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

 

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

 

22.     Any persons employed by Tenant to do janitorial work shall be subject to
the prior written approval of Landlord, and while in the Building and outside of
the Premises, shall be subject to and under the control and direction of the
Building manager (but not as an agent or servant of such manager or of
Landlord), and Tenant shall be responsible for all acts of such persons.

 

23.     No awnings or other projection shall be attached to the outside walls of
the Building without the prior written consent of Landlord, and no curtains,
blinds, shades or screens shall be attached to or hung in, or used in connection
with, any window or door of the Premises other than Landlord standard drapes.
All electrical ceiling fixtures hung in the Premises or spaces along the
perimeter of the Building must be fluorescent and/or of a quality, type, design
and a warm white bulb color approved in advance in writing by Landlord. Neither
the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the prior written consent of Landlord. Tenant shall abide by
Landlord's regulations concerning the opening and closing of window coverings
which are attached to the windows in the Premises, if any, which have a view of
any interior portion of the Building or Building Common Areas.

 

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

 

25.     Tenant must comply with written requests by the Landlord concerning the
informing of their employees of items of importance to the Landlord.

 

26.     Tenant must comply with the State of California "No-Smoking" law set
forth in California Labor Code Section 6404.5, and any local "No-Smoking"
ordinance which may be in effect from time to time and which is not superseded
by such State law.

 

27     Tenant hereby acknowledges that Landlord shall have no obligation to
provide guard service or other security measures for the benefit of the
Premises, the Building or the Project. Tenant hereby assumes all responsibility
for the protection of Tenant and its agents, employees, contractors, invitees
and guests, and the property thereof, from acts of third parties, including
keeping doors locked and other means of entry to the Premises closed, whether or
not Landlord, at its option, elects to provide security protection for the
Project or any portion thereof. Tenant further assumes the risk that any safety
and security devices, services and programs which Landlord elects, in its sole
discretion, to provide may not be effective, or may malfunction or be
circumvented by an unauthorized third party, and Tenant shall, in addition to
its other insurance obligations under this Lease, obtain its own insurance
coverage to the extent Tenant desires protection against losses related to such
occurrences. Tenant shall cooperate in any reasonable safety or security program
developed by Landlord or required by law.

 

EXHIBIT D
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28.     All equipment of any electrical or mechanical nature shall be placed by
Tenant in the Premises in settings consistent with manufacturers specifications,
to absorb or prevent any vibration, noise and annoyance.

 

29.     Tenant shall not use in any space or in the public halls of the
Building, any hand trucks except those equipped with rubber tires and rubber
side guards.

 

30.     No auction, liquidation, fire sale, going-out-of-business or bankruptcy
sale shall be conducted in the Premises without the prior written consent of
Landlord.

 

31.     No tenant shall use or permit the use of any portion of the Premises for
living quarters, sleeping apartments or lodging rooms.

 

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

 

EXHIBIT D
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EXHIBIT E

 

CREEKSIDE BUSINESS PARK

 

FORM OF TENANT'S ESTOPPEL CERTIFICATE

 

The undersigned as Tenant under that certain Office Lease (the "Lease") made and
entered into as of ___________, 201   by and between SFII CREEKSIDE, LLC, a
Delaware limited liability company, as Landlord, and the undersigned as Tenant,
for Premises on the ______________ floor(s) of the office building located at
5990 - 5996 Gleason Drive, Dublin, California, certifies as follows:

 

1.     Attached hereto as Exhibit A is a true and correct copy of the Lease and
all amendments and modifications thereto. The documents contained in Exhibit A
represent the entire agreement between the parties as to the Premises.

 

2.     The undersigned currently occupies the Premises described in the Lease,
the Lease Term commenced on __________, and the Lease Term expires on
___________, and the undersigned has no option to terminate or cancel the Lease
or to purchase all or any part of the Premises, the Building and/or the Project.

 

3.     Base Rent became payable on ____________.

 

4.     The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.

 

5.     Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows:

 

 

 

 

6.     Tenant shall not modify the documents contained in Exhibit A without the
prior written consent of Landlord's mortgagee.

 

7.     All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through ___________. The current monthly installment of Base Rent is
$_____________________.

 

8.     All conditions of the Lease to be performed by Landlord necessary to the
enforceability of the Lease have been satisfied and Landlord is not in default
thereunder. In addition, the undersigned has not delivered any notice to
Landlord regarding a default by Landlord thereunder.

 

9.     No rental has been paid more than thirty (30) days in advance and no
security has been deposited with Landlord except as provided in the Lease.

 

10.     As of the date hereof, there are no existing defenses or offsets, or, to
the undersigned's knowledge, claims or any basis for a claim, that the
undersigned has against Landlord.

 

11.     If Tenant is a corporation or partnership, each individual executing
this Estoppel Certificate on behalf of Tenant hereby represents and warrants
that Tenant is a duly formed and existing entity qualified to do business in the
State of California and that Tenant has full right and authority to execute and
deliver this Estoppel Certificate and that each person signing on behalf of
Tenant is authorized to do so.

 

EXHIBIT E
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12.     There are no actions pending against the undersigned under the
bankruptcy or similar laws of the United States or any state.

 

13.     Other than in compliance with all applicable laws and incidental to the
ordinary course of the use of the Premises, the undersigned has not used or
stored any hazardous substances in the Premises.

 

14.     To the undersigned's knowledge, all tenant improvement work to be
performed by Landlord under the Lease has been completed in accordance with the
Lease and has been accepted by the undersigned and all reimbursements and
allowances due to the undersigned under the Lease in connection with any tenant
improvement work have been paid in full.

 

The undersigned acknowledges that this Estoppel Certificate may be delivered to
Landlord or to a prospective mortgagee or prospective purchaser, and
acknowledges that said prospective mortgagee or prospective purchaser will be
relying upon the statements contained herein in making the loan or acquiring the
property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.

 

Executed at ______________ on the ____ day of ___________, 201_.

 

 

 

"Tenant":

 

                                                                               
,
a                                                                              

 

By:                                                                           
      Its:                                                                     

 

By:                                                                           
      Its:                                                                     

 

EXHIBIT E
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EXHIBIT F

 

CREEKSIDE BUSINESS PARK

 

 

APPROVED HAZARDOUS MATERIALS EXHIBIT

 

ENVIRONMENTAL QUESTIONNAIRE
FOR COMMERCIAL AND INDUSTRIAL PROPERTIES

 

Property Name:        Property Address:  

 

Instructions: The following questionnaire is to be completed by the Lessee
representative with knowledge of the planned operations for the specified
building/location. Please print clearly and attach additional sheets as
necessary.

 

1.0     PROCESS INFORMATION

 

Describe planned use, and include brief description of manufacturing processes
employed.

 

     

 

2.0     HAZARDOUS MATERIALS

 

Are hazardous materials used or stored? If so, continue with the next question.
If not, go to Section 3.0.

 

2.1     Are any of the following materials handled on the Property?     

Yes ☐ No ☐

 

(A material is handled if it is used, generated, processed, produced, packaged,
treated, stored, emitted, discharged, or disposed.) If so, complete this
section. If this question is not applicable, skip this section and go on to
Section 5.0.

 

☐ Explosives

☐ Fuels

☐ Oils

☐ Solvents

☐ Oxidizers

☐ Organics/Inorganics

☐ Acids

☐ Bases

☐ Pesticides

☐ Gases

☐ PCBs

☐ Radioactive Materials

☐ Other (please specify)

   

 

2-2.

If any of the groups of materials checked in Section 2.1, please list the
specific material(s), use(s), and quantity of each chemical used or stored on
the site in the Table below. If convenient, you may substitute a chemical
inventory and list the uses of each of the chemicals in each category
separately.

 

Material

Physical State (Solid, Liquid, or Gas)

Usage

Container Size

Number of Containers

Total Quantity

                                                           

 

EXHIBIT F
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2-3.

Describe the planned storage area location(s) for these materials. Please
include site maps and drawings as appropriate.

 

     

 

3.0     HAZARDOUS WASTES

 

Are hazardous wastes generated?     

Yes ☐ No ☐

 

If yes, continue with the next question. If not, skip this section and go to
section 4.0.

 

3.1

Are any of the following wastes generated, handled, or disposed of (where
applicable) on the Property?

 

☐ Hazardous wastes

☐ Industrial Wastewater

☐ Waste oils

☐ PCBs

☐ Air emissions

☐ Sludges

☐ Regulated Wastes

☐ Other (please specify)

 

3-2.

List and quantify the materials identified in Question 3-1 of this section.

 

WASTE

GENERATED

RCRA listed

Waste?

SOURCE

APPROXIMATE

MONTHLY QUANTITY

WASTE

CHARACTERIZATION

DISPOSITION

                                               

 

3-3.

Please include name, location, and permit number (e.g. EPA ID No.) for
transporter and disposal facility, if applicable). Attach separate pages as
necessary.

 

Transporter/Disposal Facility Name

Facility Location

Transporter (I) or Disposal (D) Facility

Permit Number

                               

 

3-4.  Are pollution controls or monitoring employed in the process to prevent or
minimize the release of wastes into the environment?     Yes ☐ No ☐    

3-5.

If so, please describe.

 

     

 

4.0         USTS/ASTS

 

4.1       Are underground storage tanks (USTs), aboveground storage tanks
(ASTs), or associated pipelines used for the storage of petroleum products,
chemicals, or liquid wastes present on site (lease renewals) or required for
planned operations (new tenants)?     Yes___     No___

 

If not, continue with section 5.0. If yes, please describe capacity, contents,
age, type of the USTs or ASTs, as well any associated leak detection/spill
prevention measures. Please attach additional pages if necessary.

 

EXHIBIT F
-2-

--------------------------------------------------------------------------------

 

 

Capacity

Contents

Year Installed

Type (Steel,

Fiberglass, etc)

Associated Leak Detection / Spill

Prevention Measures*

                             

 

*Note:

The following are examples of leak detection / spill prevention measures:

Integrity testing

Inventory reconciliation

Leak detection system

Overfill spill protection

Secondary containment

Cathodic protection

 

4-2.

Please provide copies of written tank integrity test results and/or monitoring
documentation, if available.

 

4-3. Is the UST/AST registered and permitted with the appropriate regulatory
agencies? Yes ☐ No ☐   If so, please attach a copy of the required permits.  

 

4-4.

If this Questionnaire is being completed for a lease renewal, and if any of the
USTs/ASTs have leaked, please state the substance released, the media(s)
impacted (e.g., soil, water, asphalt, etc.), the actions taken, and all remedial
responses to the incident.

 

     

 

4-5. If this Questionnaire is being completed for a lease renewal, have
USTs/ASTs been removed from the Property? Yes ☐ No ☐         If yes, please
provide any official closure letters or reports and supporting documentation
(e.g., analytical test results, remediation report results, etc.).         4-6.
 For Lease renewals, are there any above or below ground pipelines on site used
to transfer chemicals or wastes? Yes ☐ No ☐         For new tenants, are
installations of this type required for the planned operations?       Yes ☐ No ☐

   

If yes to either question, please describe.

 

     

 

5.0     ASBESTOS CONTAINING BUILDING MATERIALS

 

Please be advised that an asbestos survey may have been performed at the
Property. If provided, please review the information that identifies the
locations of known asbestos containing material or presumed asbestos containing
material. All personnel and appropriate subcontractors should be notified of the
presence of these materials, and informed not to disturb these materials. Any
activity that involves the disturbance or removal of these materials must be
done by an appropriately trained individual/contractor.

 

6.0 REGULATORY         6-1. Does the operation have or require a National
Pollutant Discharge Elimination System (NPDES) or equivalent permit? Yes ☐ No ☐
  If so, please attach a copy of this permit.  

 

EXHIBIT F
-3-

--------------------------------------------------------------------------------

 

 

6-2. Has a Hazardous Materials Business Plan been developed for the site? Yes ☐
No ☐   If so, please attach a copy.  

           

CERTIFICATION

 

I am familiar with the real property described in this questionnaire. By signing
below, I represent and warrant that the answers to the above questions are
complete and accurate to the best of my knowledge. I also understand that Lessor
will rely on the completeness and accuracy of my answers in assessing any
environmental liability risks associated with the property.

 

  Signature:            Name:           Title:            Date:          
Telephone:  

 

EXHIBIT F
-4-

--------------------------------------------------------------------------------

 

 

OFFICE LEASE

 

 

 

CREEKSIDE BUSINESS PARK

 

DUBLIN, CALIFORNIA

 

 

 

 

 

 

 

 

 

SFII CREEKSIDE, LLC,

 

a Delaware limited liability company,

 

as Landlord,

 

and

 

GIGA-TRONICS INCORPORATED,

 

a California corporation,

 

as Tenant.

 

 

 

--------------------------------------------------------------------------------

 

 

TABLE OF CONTENTS

 

 

    Page       ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS 4 ARTICLE
2 LEASE TERM; OPTION TERM 5 ARTICLE 3 BASE RENT 6 ARTICLE 4  ADDITIONAL RENT 7
ARTICLE 5 USE OF PREMISES 12 ARTICLE 6 SERVICES AND UTILITIES 13 ARTICLE 7
REPAIRS 15 ARTICLE 8 ADDITIONS AND ALTERATIONS 15 ARTICLE 9 COVENANT AGAINST
LIENS 17 ARTICLE 10 INSURANCE 17 ARTICLE 11 DAMAGE AND DESTRUCTION 19 ARTICLE 12
NONWAIVER 20 ARTICLE 13 CONDEMNATION   20 ARTICLE 14 ASSIGNMENT AND SUBLETTING
21 ARTICLE 15 SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES 24
ARTICLE 16 HOLDING OVER 25 ARTICLE 17 ESTOPPEL CERTIFICATES 25 ARTICLE 18
SUBORDINATION 25 ARTICLE 19 DEFAULTS; REMEDIES 26 ARTICLE 20 COVENANT OF QUIET
ENJOYMENT 28 ARTICLE 21 SECURITY DEPOSIT 28 ARTICLE 22 INTENTIONALLY OMITTED 29
ARTICLE 23 SIGNS 29 ARTICLE 24 COMPLIANCE WITH LAW 30 ARTICLE 25 LATE CHARGES 30
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT 31 ARTICLE 27
ENTRY BY LANDLORD 31 ARTICLE 28  TENANT PARKING 31 ARTICLE 29  MISCELLANEOUS
PROVISIONS 32

 

EXHIBITS

 

A OUTLINE OF PREMISES   B TENANT WORK LETTER   C FORM OF NOTICE OF LEASE TERM
DATES   D RULES AND REGULATIONS   E FORM OF TENANT'S ESTOPPEL CERTIFICATE   F
APPROVED HAZARDOUS MATERIALS EXHIBIT  

 

 

(i)

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INDEX

 

  Page(s)     Alterations 15 Approved Hazardous Materials  37 Approved Hazardous
Materials Exhibit  37 Award 6 Base Rent 7 Brokers 35 Building 4 Building Common
Areas 4 Common Areas 4 Comparable Area 6 Comparable Buildings 6 Cost Pools 11
Default Rate 30 Direct Expenses 8 Environmental Questionnaire 37 Estimate  12
Estimate Statement  12 Estimated Direct Expenses 12 Expense Year  8 Force
Majeure  33 Hazardous Material Laws 38 Hazardous Materials 38 Hazardous
Materials Usage 37 Identification Requirements  36 Landlord 1 Landlord Parties 
17, 37 Landlord Repair Notice 19 Lease 1 Lease Commencement Date 5 Lease
Expiration Date 5 Lease Term  5 Lease Year 5 Lines  36 Losses  37 Mail 34
Neutral Arbitrator  6 New Hazardous Materials Usage 37 Notices 34 Operating
Expenses 8 Original Improvements  18 Other Improvements  36 Outside Agreement
Date  6 Premises  4 Project  4 Proposition 13 10 Renovations 35 Rent Abatement 
7 rentable square feet  4 Security Deposit  28 Statement   11 Subject Space 21
Summary  1 Tax Expenses  10

 

(ii)

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  Page(s)     Tenant  1 Tenant's Share 11 Tenant's Subleasing Costs 22 Transfer
Notice 21 Transferee 21

 

(iii)