**Exhibit 10.1**

 

**STANDARD OFFICE LEASE - GROSS**

 

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

 

 

**1.**              **Basic Lease****Provisions** (“Basic Lease Provisions”)

 

**1.1****                               Parties:**This Lease, dated, for reference purposes only, April 1, 2003, is made byand between CFD-Mesa Ridge Partners, L.P., (herein called “Lessor”) and AltrisSoftware, Inc. a California Corporation, doing business under the name ofSpescom Software Inc, (herein called “Lessee”).

 

**1.2****                               Premises:** Suite Numbers(s) 100, first floors,consisting of approximately 12,192 rentable sf feet, more or less, as definedin paragraph 2 and as shown on Exhibit “A” hereto (the “Premises”).

 

**1.3****                               Building:**Commonly described as being located at 10052 Mesa Ridge Court, in the City ofSan Diego, County of San Diego, State of California, as more particularlydescribed in Exhibit A hereto, and as defined in paragraph 2.

 

**1.4****                               Use:**general office, subject to paragraph 6.

 

**1.5****                               Term:**72 months commencing September 1, 2003 (“Commencement Date”) and ending August31, 2009 Subject to Section 3.2 below and Section 51(b) of theAddendum.        , as defined in paragraph3.

 

**1.6****                               BaseRent:** $18,897.60 per month, payable on the first day of each month, perparagraph 4.1.

 

**1.7****                               BaseRent Increase:** On each anniversary date of the commencement date themonthly Base Rent payable under paragraph 1.6 above shall be adjusted asprovided the attached addendum (Paragraph 50)

 

**1.8****                               RentPaid Upon Execution:** $18,897.60 for the first month of occupancy.

 

**1.9****                               SecurityDeposit:** $21,907.50.

 

**1.10****                        Lessee’sShare of Operating Expense Increase:** 27.27% as defined in paragraph 4.2.

 

**2.****              Premises, Parkingand Common Areas.**

 

**2.1****                               Premises:**The Premises are a portion of a building, herein sometimes referred to as the“Building” identified in paragraph 1.3 of the Basic Lease Provisions.  “Building” shall include adjacent parkingstructures used in connection therewith. The Premises, the Building, the Common Areas, the land upon which thesame are located, along with all other buildings and improvements thereon orthereunder, are herein collectively referred to as the “Office BuildingProject.”  Lessor hereby leases toLessee and Lessee leases from Lessor for the term, at the rental, and upon allof the conditions set forth herein, the real property referred to in the BasicLease Provisions, paragraph 1.2, as the “Premises”, including rights to theCommon Areas as hereinafter specified. See Addendum Paragraph 67

 

**2.2****                               VehicleParking:** So long as Lessee is not in default, and subject to the rules andregulations attached hereto, and as established by Lessor from time to time,Lessee shall be entitled to use 48 parking spaces in the Office BuildingProject at no charge to Lessee or its Invitees

 

2.2.1    IfLessee commits, permits or allows any of the prohibited activities described inthe Lease or the rules then in effect, then Lessor shall have the right, afterthree days written notice and the failure of Lessee to cease such prohibitedactivity, in addition to such other rights and remedies that it may have, toremove or tow away the vehicle involved and charge the cost to Lessee, whichcost shall be immediately payable upon demand by Lessor.

 

**2.3****                               CommonAreas****- Definition.**  The term “Common Areas” is defined as allareas and facilities outside the Premises and within the exterior boundary lineof the Office Building Project that are provided and designated by the Lessorfrom time to time for the general non-exclusive use of Lessor,  Lessee and of other lessees of the OfficeBuilding Project and their respective employees, suppliers, shippers, customersand invitees, including but not limited to common entrances, lobbies,corridors, stairways and stairwells, public restrooms, elevators, escalators,parking areas to the extent not otherwise prohibited by this Lease, loading andunloading areas, trash areas, roadways, sidewalks, walkways, parkways, ramps,driveways, landscaped areas and decorative walls.

 

**2.4****                               CommonAreas****– Rules and Regulations.**  Lessee agrees to abide by and conform to therules and regulations attached hereto as Exhibit B with respect to the OfficeBuilding Project and Common Areas, and to cause its employees, suppliers,shippers, customers, and invitees to so abide and conform.  Lessor or such other person(s) as Lessor mayappoint shall have the exclusive control and management of the Common Areas andshall have the right, from time to time, to modify, amend and enforce saidrules and regulations, in a non-discriminatory manner.  Lessor shall not be responsible to Lessee forthe non-compliance and said rules and regulations by other lessees, theiragents, employees and invitees of the Office Building Project.

 

**2.5****                               CommonAreas****- Changes.**  Lessor shall have the right, in Lessor’ssole discretion, from time to time:

 

(a)          To make changes to theBuilding interior and exterior and Common Areas, including, without limitation,changes in the location, size shape, number, and appearance thereof, includingbut not limited to the lobbies, windows, stairways, air shafts, elevators,escalators, restrooms, driveways, entrances, parking spaces, parking areas,loading and unloading areas, ingress, egress, direction of traffic, decorativewalls, landscaped areas and walkways; provided, however, Lessor shall at alltimes provide the parking facilities required by applicable law;

 

(b)         To close temporarily anyof the Common Areas for maintenance purposes so long as reasonable access tothe Premises remains available;

 

(c)          To designate other landand improvements outside the boundaries of the Office Building Project to be apart of the Common Areas, provided that such other land and improvements have areasonable and functional relationship to the Office Building Project;

 

(d)         To add additionalbuildings and improvements to the Common Areas;

 

(e)          To use the Common Areaswhile engaged in making additional improvements, repairs or alterations to theOffice Building Project, or any portion thereof;

 

(f)            To do and perform suchother acts and make such other changes in, to or with respect to the CommonAreas and Office Building Project as Lessor may, in the exercise of soundbusiness judgment deem to be appropriate. See Addendum Paragraph 68

 

**3.****              Term.**

 

**3.1****                               Term. **See Addendum Paragraph 69 The term andCommencement Date of this Lease shall be as specified in paragraph 1.5 ofthe Basic Lease Provisions.

 

**3.2****                               DelayIn Possession.**  Notwithstanding saidCommencement Date, if for any reason Lessor cannot deliver possession of thePremises to Lessee on said date and subject to paragraph 3.2.2,  Lessor shall not be subject to any liabilitytherefor, nor shall such failure affect the validity of this Lease or theobligations of Lessee hereunder or extend the term hereof; but in such case,Lessee shall not be obligated to pay rent or perform any other obligation ofLessee under the terms of this Lease, except as may be otherwise provided inthis Lease, until possession of the Premises is tendered to Lessee, as

 
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hereinafter defined; provided, however, that a Lessor shall not havedelivered possession of the Premises within sixty (60) days following saidCommencement Date, as the same may be extended under the terms of a Work Letterexecuted by Lessor and Lessee, Lessee may, at Lessee’s option, by notice inwriting to Lessor within ten (10) days thereafter, cancel this Lease, in whichevent the parties shall be discharged from all obligations hereunder; provided,however, that, as to Lessee’s obligations, Lessee first reimburses Lessor forall costs incurred for Non-Standard Improvements and, as to Lessor’sobligations, Lessor shall return any money previously deposited by Lessee (lessany offsets due Lessor for Non-Standard Improvements); and provided further,that if such written notice by Lessee is not received by Lessor within said ten(10) day period, Lessee’s right to cancel this Lease hereunder shall terminateand be of no further force or effect.

 

**3.2.1****                                             PossessionTendered****- Defined.**  Possession of the Premises shall be deemedtendered to Lessee (“Tender of Possession”) when (1) the improvements to beprovided by Lessor under this Lease are substantially completed, (2) theBuilding utilities are ready for use in the Premises, (3) Leases has reasonableaccess to the Premises, and (4) ten (10) days shall have expired followingadvance written notice to Lessee of the occurrence of the matters described in(1), (2) and (3), above of this paragraph 3.2.1.

 

**3.2.2****                                             DelaysCaused by Lessee.**  There shall be noabatement of rent, and the sixty (60) day period following the CommencementDate before which Lessee’s right to cancel this Lease accrues under paragraph3.2, shall be deemed extended to the extent of any delays caused by acts or omissionsof Lessee, Lessee’s agents, employees and contractors.  See Addendum Paragraph 70

 

**3.3****                               EarlyPossession.**  If Lessee occupies thePremises prior to said Commencement Date, such occupancy shall be subject toall provisions of this Lease, such occupancy shall not change the terminationdate.

 

**3.4****                               UncertainCommencement.**  In the eventcommencement of the Lease term is defined as the completion of theimprovements, Lessee and Lessor shall execute an amendment to this Leaseestablishing the date of Tender of Possession (as defined in paragraph 3.2.1)or the actual taking of possession by Lessee, whichever first occurs, as theCommencement Date.

 

**4.****              Rent.**

 

**4.1****                               BaseRent.**  Subject to adjustment ashereinafter provided in paragraph 4.3, and except as may be otherwise expresslyprovided in this Lease, Lessee shall pay to Lessor the Base Rent for thePremises set forth in paragraph 1.6 of the Basic Lease Provisions, withoutoffset or deduction.  Lessee shall payLessor upon execution hereof the advance Base Rent described inparagraph 1.8 of the Basic Lease Provisions.  Rent for any period during the term hereof which is for less thanone month shall be prorated based upon the actual number of days of thecalendar month involved.  Rent shall bepayable in lawful money of the United States to Lessor at the address statedherein or to such other persons or at such other places as Lessor may designatein writing.

 

**4.2****                               OperatingExpense Increase.**  Lessee shall payto Lessor during the term hereof, in addition to the Base Rent, Lessee’s Share,as hereinafter defined, of the amount by which all Operating Expenses, ashereinafter defined, for each Comparison Year exceeds the amount of allOperating Expenses for the Base Year, such excess being hereinafter referred toas the “Operating Expense Increase”, in accordance with the followingprovisions:

 

(a)          “Lessee’s Share” isdefined, for purposes of this Lease, as the percentage set forth in paragraph1.10 of the Basic Lease Provisions, which percentage has been determined by dividingthe approximate square footage of the Premises by the total approximate squarefootage of the rentable space contained in the Office Building Project.  It is understood and agreed that the squarefootage figures set forth in the Basic Lease Provisions are approximationswhich Lessor and Lessee agree are reasonable and shall not be subject torevision except in connection with an actual change in the size of the Premisesor a change in the space available for lease in the Office Building Project.

 

(b)         “Base Year” is defined asthe calendar year in which the Lease term commences.

 

(c)          “Comparison Year” isdefined as each calendar year during the term of this Lease subsequent to theBase Year; provided, however, Lessee shall have no obligation to pay a share ofthe Operating Expense Increase applicable to the first twelve (12) months ofthe Lease Term (other than such as are mandated by a governmental authority, asto which government mandated expenses Lessee shall pay Lessee’s Share,notwithstanding they occur during the first twelve (12) months).  Lessee’s Share of the Operating ExpenseIncrease for the first and last Comparison Years of the Lease Term shall beprorated according to that portion of such Comparison Year as to which Lesseeis responsible for a share of such increase.

 

(d)         “Operating Expenses” isdefined, for purposes of this Lease, to include all costs, if any, incurred byLessor in the exercise of its reasonable discretion, for:

 

(i)                                     Theoperation, repair, maintenance, and replacement, in neat, clean, safe, goodorder and condition, of the Office Building Project, including but not limitedto, the following:

 

(aa)                             TheCommon Areas, including their surfaces, coverings, decorative items, carpets,drapes and window coverings, and including parking areas, loading and unloadingareas, trash areas, roadways, sidewalks, walkways, stairways, parkways,driveways, landscaped areas, striping, bumpers, irrigation systems, Common Arealighting facilities, building exteriors and roofs, fences and gates;

 

(bb)                           All heating, airconditioning, plumbing, electrical systems, life safety equipment,telecommunication and other equipment used in common by, or for the benefit of,lessees or occupants of the Office Building Project, including elevators andescalators, tenant directories, fire detection systems including sprinklersystem maintenance and repair.

 

(ii)                                  Trashdisposal, janitorial and security services;

 

(iii)                               Anyother service to be provided by Lessor that is elsewhere in this Lease statedto be an “Operating Expense”;

 

(iv)                              Thecost of the premiums for the liability and property insurance polices to bemaintained by Lessor under paragraph 8 hereof;

 

(v)                                 Theamount of the real property taxes to be paid by Lessor under paragraph 10.1hereof;

 

(vi)                              Thecost of water, sewer, gas, electricity, and other publicly mandated services tothe Office Building Project;

 

(vii)                           Labor,salaries, and applicable fringe benefits and costs, materials, supplies andtools, used in maintaining and/or cleaning the Office Building Project andaccounting and a management fee (not to exceed 5%) of the gross revenues of theproject for such year attributable to the operation of the Office BuildingProject;

 

(viii)                        Replacingand/or adding improvements mandated by any governmental agency and any repairsor removals necessitated thereby amortized over its useful life according toFederal income tax regulations or guidelines for depreciation thereof(including interest on the unamortized balance as is then reasonable in thejudgment of Lessor’s accountants);

 

(ix)                                Replacementof equipment or improvements that have a useful life for depreciation purposesaccording to Federal income tax guidelines of five (5) years or less, asamortized over such life.

 

(e)          Operating Expenses shallnot include the costs of replacements of equipment or improvements that have auseful life for Federal income tax purposes in excess of five (5) years unlessit is of the type described in paragraph 4.2(d) (viii), in which case theircost shall be included as above provided.

 

(f)            Operating Expensesshall not include any expenses paid by any lessee directly to third parties, oras to which Lessor is otherwise reimbursed by any third party, other tenant, orby insurance proceeds.

 

(g)         Lessee’s Share ofOperating Expense increase shall be payable by Lessee within ten (10) daysafter a reasonably detailed statement of actual expenses is presented to Lesseeby Lessor.  At Lessor’s option, however,an amount may be estimated by Lessor from time to time in advance of Lessee’sShare of the Operating Expense Increase for any Comparison Year, and the sameshall be payable monthly or quarterly, as Lessor shall designate, during eachComparison Year of the Lease term, on the same day as the Base Rent is duehereunder.  In the event that Lesseepays Lessor’s estimate of Lessee’s Share of Operating Expense Increase asaforesaid, Lessor shall deliver to Lessee within sixty (60) days after theexpiration of each Comparison Year a reasonably detailed statement showingLessee’s Share of the actual Operating Expense Increase incurred during suchyear.  If Lessee’s payments under thisparagraph 4.2(g) during said Comparison Year exceed Lessee’s Share as indicatedon said statement, Lessee shall be entitled to credit the amount of such overpaymentagainst Lessee’s Share of Operating Expense Increase next falling due.  If Lessee’s payments under this paragraphduring said Comparison Year were less than Lessee’s Share as indicated on saidstatement, Lessee shall pay to Lessor the amount of the deficiency within ten(10) days after delivery by Lessor to Lessee of said statement.  Lessor and Lessee shall forthwith adjustbetween them by cash payment any balance determined to exist with respect tothat portion of the last Comparison Year for which Lessee is responsible as toOperating Expense Increases, notwithstanding that the Lease term may haveterminated before the end of such Comparison Year.

 

**4.3****                               RentIncrease.**  (see addendum)

 

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**5.****              Security Deposit.**  Lessee shall deposit with Lessor uponexecution hereof the security deposit set forth in paragraph 1.9 of the BasicLease Provisions as security for Lessee’s faithful performance of Lessee’sobligations hereunder.  If Lessee failsto pay rent or other charges due hereunder, or otherwise defaults with respectto any provision of this Lease, Lessor may use, apply or retain all or anyportion of said deposit for the payment of any rent or other charge in defaultfor the payment of any other sum to which Lessor may become obligated by reasonof Lessee’s default, or to compensate Lessor for any loss or damage whichLessor may suffer thereby.  If Lessor souses or applies all or any portion of said deposit, Lessee shall within ten(10) days after written demand therefor deposit cash with Lessor in an amountsufficient to restore said deposit to the full amount then required ofLessee.  Lessor shall not be required tokeep said security deposit separate from its general accounts.  If Lessee performs all of Lessee’sobligations hereunder, said deposit, or so much thereof as has not heretoforebeen applied by Lessor, shall be returned, without payment of interest or otherincrement for its use, to Lessee (or, at Lessor’s option, to the last assignee,if any, of Lessee’s interest hereunder) at the expiration of the term hereof,and after Lessee has vacated the Premises. No trust relationship is created herein between Lessor and Lessee withrespect to said Security Deposit.

 

**6.****              Use.**

 

**6.1****                               Use.**  The Premises shall be used and occupied onlyfor the purpose set forth in paragraph 1.4 of the Basic Lease Provisions.

 

**6.2****                               Compliancewith Law.**

 

(a)          Lessor warrants toLessee that the Premises, in the state existing on the date that the Lease termcommences, but without regard to alterations or improvements made by Lessee orthe use for which Lessee will occupy the Premises, does not violate anycovenants or restrictions of record, or any applicable building code,regulation or ordinance in effect on such Lease term Commencement Date.  See Addendum Paragraph 71 In the event it isdetermined that this warranty has been violated, then it shall be theobligation of the Lessor, after written notice from Lessee, to promptly, atLessor’s sole cost and expense, rectify any such violation.

 

(b)         Except as provided inparagraph 6.2(a) Lessee shall, at Lessee’s expense, promptly comply with allapplicable statutes, ordinances, rules, regulations, orders, covenants andrestrictions of record, and requirements of any fire insurance underwriters orrating bureaus, now in effect or which may hereafter come into effect, whetheror not they reflect a change in policy from that now existing, during the termor any part of the term hereof, relating in any manner to the Premises and theoccupation and use by Lessee of the Premises. Lessee shall conduct its business in a lawful manner and shall not useor permit the use of the Premises or the Common Areas in any manner that willtend to create waste or a nuisance or shall tend to disturb other occupants ofthe Office Building Project.

 

**6.3****                               Conditionof Premises.**

 

(a)          Lessor shall deliver thePremises to Lessee in a clean condition on the Lease Commencement Date (unlessLessee is already in possession) and Lessor warrants to Lessee that the plumbing,lighting, air conditioning, and heating system in the Premises shall be in goodoperating condition.  In the event thatit is determined that this warranty has been violated, then it shall be theobligation of Lessor, after receipt of written notice from Lessee setting forthwith specificity the nature of the violation, to promptly, at Lessor’s solecost, rectify such violation.

 

(b)         Except as otherwiseprovided in this Lease, Lessee hereby accepts the Premises and the OfficeBuilding Project in their condition existing as of the Lease Commencement Dateor the date that Lessee takes possession of the Premises, whichever is earlier,subject to all applicable zoning, municipal, county and state laws, ordinancesand regulations governing and regulating the use of the Premises, and anyeasements, covenants or restrictions of record, and accepts this Lease subjectthereto and to all matters disclosed thereby and by any exhibits attachedhereto.  Lessee acknowledges that it hassatisfied itself by its own independent investigation that the Premises aresuitable for its intended use, and that neither Lessor nor Lessor’s agent oragents has made any representation or warranty as to the present or futuresuitability of the Premises, Common Areas, or Office Building Project for theconduct of Lessee’s business.  SeeAddendum Paragraph 72

 

**7.****              Maintenance,Repairs, Alterations and Common Area Services.**

 

**7.1****                               Lessor’sObligations.**  Lessor shall keep theOffice Building Project, including the Premises, interior and exterior walls,roof, and common areas, and the equipment whether used exclusively for thePremises or in common with other premises, in good condition and repair;provided, however, Lessor shall not be obligated to paint, repair or replacewall coverings, or to repair or replace any improvements that are notordinarily a part of the Building or are above then Building standards.  Except as provided in paragraph 9.5,there shall be no abatement of rent or liability of Lessee on account of anyinjury or interference with Lessee’s business with respect to any improvements,alterations or repairs made by Lessor to the Office Building Project or anypart thereof.  Lessee expressly waivesthe benefits of any statute now or hereafter in effect which would otherwiseafford Lessee the right to make repairs at Lessor’s expense or to terminatethis Lease because of Lessor’s failure to keep the Premises in good order,condition and repair.

 

**7.2****                               Lessee’sObligations.**

 

(a)          Notwithstanding Lessor’sobligation to keep the Premises in good condition and repair, Lessee shall beresponsible for payment of the cost thereof to Lessor as additional rent forthat portion of the cost of any maintenance and repair of the Premises, or anyequipment (wherever located) that serves only Lessee or the Premises, to theextent such cost is attributable to causes beyond normal wear and tear.  Lessee shall be responsible for the cost ofpainting, repairing or replacing wall coverings, and to repair or replace anyPremises improvements that are not ordinarily a part of the Building or thatare above then Building standards. Lessor may, at its option, upon reasonable notice, elect to have Lesseeperform any particular such maintenance or repairs the cost of which isotherwise Lessee’s responsibility hereunder.

 

(b)         On the last day of theterm hereof, or on any sooner termination, Lessee shall surrender the Premisesto Lessor in the same condition as received, ordinary wear and tear excepted,clean and free of debris.  Any damage ordeterioration of the Premises shall not be deemed ordinary wear and tear if thesame could have been prevented by good maintenance practices by Lessee.  Lessee shall repair any damage to thePremises occasioned by the installation or removal of Lessee’s trade fixtures,alterations, furnishings and equipment. Except as otherwise stated in this Lease, Lessee shall leave the airlines, power panels, electrical distribution systems, lighting fixtures, airconditioning, window coverings, wall coverings, carpets, wall panelling, ceilingsand plumbing on the Premises and in good operating condition.

 

**7.3****                               Alterationsand Additions.**

 

(a)          Lessee shall not,without Lessor’s prior written consent make any alterations, improvements,additions, Utility Installations or repairs in, on or about the Premises, orthe Office Building Project.  As used inthis paragraph 7.3 the term “Utility Installation” shall mean carpeting, windowand wall coverings, power panels, electrical distribution systems, lightingfixtures, air conditioning, plumbing, and telephone and telecommunicationwiring and equipment.  At the expirationof the term, Lessor may require the removal of any or all of said alterations,improvements, additions or Utility Installations, and the restoration of thePremises and the Office Building Project to their prior condition, at Lessee’sexpense.  See Addendum Paragraph 73Should Lessor permit Lessee to make its own alterations, improvements,additions or Utility Installations, Lessee shall use only such contractor ashas been expressly approved by Lessor, and Lessor may require Lessee to provideLessor, at Lessee’s sole cost and expense, a lien and completion bond in anamount equal to one and one-half times the estimated cost of such improvements,to insure Lessor against any liability for mechanic’s and materialmen’s liensand to insure completion of the work. Should Lessee

 

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make any alterations, improvements, additions or Utility Installationswithout the prior approval of Lessor, or use a contractor not expresslyapproved by Lessor, Lessor may, at any time during the term of this Lease,require that Lessee remove any part or all of the same.

 

(b)         Anyalterations, improvements, additions or Utility Installations in or about thePremises or the Office Building Project that Lessee shall desire to make shallbe presented to Lessor in written form, with proposed detailed plans.  If Lessor shall give its consent to Lessee’smaking such alteration, improvement, addition or Utility Installation, theconsent shall be deemed conditioned upon Lessee acquiring a permit to do sofrom the applicable governmental agencies, furnishing a copy thereof to Lessorprior to the commencement of the work, and compliance by Lessee with allconditions of said permit in a prompt and expeditious manner.

 

(c)          Lesseeshall pay, when due, all claims for labor or materials furnished or alleged tohave been furnished to or for Lessee at or for use in the Premises, whichclaims are or may be secured by any mechanic’s or materialmen’s lien againstthe Premises, the Building or the Office Building Project, or any interesttherein.

 

(d)         Lesseeshall give Lessor not less than ten (10) days’ notice prior to the commencementof any work in the Premises by Lessee, and Lessor shall have the right to postnotices of non-responsibility in or on the Premises or the Building as providedby law.  If Lessee shall, in good faith,contest the validity of any such lien, claim or demand, then Lessee shall, atits sole expense defend itself and Lessor against the same and shall pay andsatisfy any such adverse judgment that may be rendered thereon before theenforcement thereof against the Lessor or the Premises, the Building or theOffice Building Project, upon the condition that if Lessor shall require,Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in anamount equal to such contested lien claim or demand indemnifying Lessor againstliability for the same and holding the Premises, the Building and the OfficeBuilding Project free from the effect of such lien or claim.  In addition, Lessor may require Lessee topay Lessor’s reasonable attorneys fees and costs in participating in suchaction if Lessor shall decide it is to Lessor’s best interest so to do.

 

(e)          Allalterations, improvements, additions and Utility Installations (whether or notsuch Utility Installations constitute trade fixtures of Lessee), which may bemade to the Premises by Lessee, including but not limited to, floor coverings,panelings, doors, drapes, built-ins, moldings, sound attenuation, and lightingand telephone or communication systems, conduit, wiring and outlets, shall bemade and done in a good and workmanlike manner and of good and sufficientquality and materials and shall be the property of Lessor and remain upon andbe surrendered with the Premises at the expiration of the Lease term, unlessLessor requires their removal pursuant to paragraph 7.3(a).  Provided Lessee is not in default,notwithstanding the provisions of this paragraph 7.3(e), Lessee’s personalproperty and equipment, other than that which is affixed to the Premises sothat it cannot be removed without material damage to the Premises or theBuilding, and other than Utility Installations, shall remain the property ofLessee and may be removed by Lessee subject to the provisions of paragraph 7.2.

 

(f)            Lesseeshall provide Lessor with as-built plans and specifications for anyalterations, improvements, additions or Utility installations.

 

**7.4****                               UtilityAdditions.**  Lessor reserves theright to install new or additional utility facilities throughout the OfficeBuilding Project for the benefit of Lessor or Lessee, or any other lessee ofthe Office Building Project, including, but not by way of limitation, suchutilities as plumbing, electrical systems, communication systems, and fireprotection and detection systems, so long as such installations do notunreasonably interfere with Lessee’s use of the Premises.

 

**8.****              Insurance;Indemnity.**

 

**8.1****                               LiabilityInsurance****- Lessee. **Lessee shall, at Lessee’sexpense, obtain and keep in force during the term of this Lease a policy ofComprehensive General Liability insurance utilizing an Insurance ServicesOffice standard form with Broad Form General Liability Endorsement: (GL0404),or equivalent, in an amount of not less than $1,000,000 per occurrence ofbodily injury and property damage combined or in a greater amount as reasonablydetermined by Lessor and shall insure Lessee with Lessor as an additionalinsured against liability arising out of the use, occupancy or maintenance ofthe Premises.  Compliance with the aboverequirement shall not, however, limit the liability of Lessee hereunder.

 

**8.2****                               LiabilityInsurance** - **Lessor. **Lessor shall obtain and keep inforce during the term of this Lease a policy of Combined Single Limit BodilyInjury and Broad Form Property Damage Insurance, plus coverage against suchother risks Lessor deems advisable from time to time, insuring Lessor, but notLessee, against liability arising out of the ownership, use, occupancy ormaintenance of the Office Building Project in an amount not less than$2,000,000.00 per occurrence.

 

**8.3****                               PropertyInsurance****- Lessee. **Lessee shall, at Lessee’sexpense, obtain and keep in force during the term of this Lease for the benefitof Lessee, replacement cost fire and extended coverage insurance, withvandalism and malicious mischief, sprinkler leakage and earthquake sprinklerleakage endorsements, in an amount sufficient to cover not less than 100% ofthe full replacement cost, as the same may exist from time to time, of all ofLessee’s personal property, fixtures, equipment and tenant improvements.

 

**8.4****                               PropertyInsurance****- Lessor. **Lessor shall obtain and keep inforce during the term of this Lease a policy or policies of insurance coveringloss or damage to the Office Building Project improvements, but not Lessee’spersonal property, fixtures, equipment or tenant improvements, in the amount ofthe full replacement cost thereof, as the same may exist from time to time,utilizing Insurance Services Office standard form, or equivalent, providingprotection against all perils included within the classification of fire,extended coverage, vandalism, malicious mischief, plate glass, and such otherperils as Lessor deems advisable or may be required by a lender having a lienon the Office Building Project.  Inaddition, Lessor shall obtain and keep in force, during the term of this Lease,a policy of rental value insurance covering a period of one year, with losspayable to Lessor, which insurance shall also cover all Operating Expenses forsaid period.  Lessee will not be namedin any such policies carried by Lessor and shall have no right to any proceedstherefrom.  The policies required bythese paragraphs 8.2 and 8.4 shall contain such deductibles as Lessor or theaforesaid lender may determine.  In theevent that the Premises shall suffer an insured loss as defined in paragraph9.1(f) hereof, the deductible amounts under the applicable insurance policies shallbe deemed an Operating Expense.  Lesseeshall not do or permit to be done anything which shall invalidate the insurancepolicies carried by Lessor.  Lesseeshall pay the entirety of any increase in the property insurance premium forthe Office Building Project over what it was immediately prior to thecommencement of the term of this Lease if the increase is specified by Lessor’sinsurance carrier as being caused by the nature of Lessee’s occupancy or anyact or omission of Lessee.

 

**8.5****                               InsurancePolicies.**  Lessee shall deliver toLessor copies of liability insurance policies required under paragraph 8.1 orcertificates evidencing the existence and amounts of such insurance withinseven (7) days after the Commencement Date of this Lease.  No such policy shall be cancelable orsubject to reduction of coverage or other modification except after thirty (30)days prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to the expiration of suchpolicies, furnish Lessor with renewals thereof.

 

**8.6****                               Waiverof Subrogation.**  Lessee and Lessoreach hereby release and relieve the other, and waive their entire right ofrecovery against the other, for direct or consequential loss or damage arisingout of or incident to the perils covered by property insurance carried by suchparty, whether due to the negligence of Lessor or Lessee or their agents,employees, contractors and/or invitees. If necessary all property insurance policies required under this Leaseshall be endorsed to so provide.

 

**8.7****                               Indemnity.**  Lessee shall indemnify and hold harmlessLessor and its agents, Lessor’s master or ground lessor, partners and lenders,from and against any and all claims for damage to the person or property ofanyone or any entity arising from Lessee’s use of the Office Building Project,or from the conduct of Lessee’s business or from any activity, work or thingsdone, permitted or suffered by Lessee in or about the Premises or elsewhere andshall further indemnify and hold harmless Lessor from and against any and allclaims, costs and expenses arising from any breach or default in theperformance of any obligation on Lessee’s part to be performed under the termsof this Lease, or arising from any act or omission of Lessee, or any ofLessee’s agents, contractors, employees or invitees, and from and against allcosts, attorney’s fees, expenses and liabilities incurred by Lessor as theresult of any such use, conduct, activity, work, things done, permitted orsuffered, breach, default or negligence, and in dealing reasonably therewith,including but not limited to the defense or pursuit of any claim or any actionor proceeding involved therein; and in case any action or proceeding be broughtagainst Lessor by reason of any such matter, Lessee upon notice from Lessorshall defend the same at Lessee’s expense by counsel reasonably satisfactory toLessor and Lessor shall cooperate with Lessee in such defense.  Lessor need not have first paid any suchclaim in order to be so indemnified. Lessee, as a material part of the consideration to Lessor, hereby assumesall risk of damage to property of Lessee or injury to persons, in, upon orabout the Office Building Project arising from any cause and Lessee herebywaives all claims in respect thereof against Lessor.

 

**8.8****                               Exemptionof Lessor from Liability.**  See AddendumParagraph 74 Lessee hereby agrees that Lessor shall not be liable for injury toLessee’s business or any loss of income therefrom or for loss of or damage tothe goods, wares, merchandise or other property of Lessee, Lessee’s employees,invitees, customers, or any other person in or about the Premises or the OfficeBuilding Project, nor shall Lessor be liable for injury to the person ofLessee, Lessee’s employees, agents or contractors, whether such damage orinjury is caused by or results from theft, fire, steam, electricity, gas, wateror rain, or from the breakage, leakage, obstruction or other defects of pipes,sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures,or from any other cause, whether said damage or injury results from conditionsarising upon the Premises or upon other portions of the Office BuildingProject, or from other sources or places, or from new construction or therepair, alteration or improvement of any part of the Office Building Project,or of the equipment, fixtures or appurtenances

 

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applicable thereto, and regardless of whether the cause of such damageor injury or the means of repairing the same is inaccessible, Lessor shall notbe liable for any damages arising from any act or neglect of any other lessee,occupant or user of the Office Building Project, nor from the failure of Lessorto enforce the provisions of any other lease of any other lessee of the OfficeBuilding Project.

 

**8.9****                               NoRepresentation of Adequate Coverage.** Lessor makes no representation that the limits or forms of coverage ofinsurance specified in this paragraph 8 are adequate to cover Lessee’s propertyor obligations under this Lease.

 

**9.****              Damage orDestruction.**

 

**9.1****                               Definitions.**

 

(a)          “Premises Damage” shallmean if the Premises are damaged or destroyed to any extent.

 

(b)         “Premises BuildingPartial Damage” shall mean if the Building of which the Premises are a part isdamaged or destroyed to the extent that the cost to repair is less than fiftypercent (50%) of the then Replacement Cost of the Building.

 

(c)          “Premises Building TotalDestruction” shall mean if the Building of which the Premises are a part isdamaged or destroyed to the extent that the cost to repair is fifty percent(50%) or more of the then Replacement Cost of the Building.

 

(d)         “Office Building ProjectBuildings” shall mean all of the buildings on the Office Building Project site.

 

(e)          “Office Building ProjectBuildings Total Destruction” shall mean if the Office Building ProjectBuildings are damaged or destroyed to the extent that the cost to repair isfifty percent (50%) or more of the then Replacement Cost of the Office BuildingProject Buildings.

 

(f)            “Insured Loss” shallmean damage or destruction which was caused by an event required to be coveredby the insurance described in paragraph 8. The fact that an Insured Loss has a deductible amount shall not make theloss an uninsured loss.

 

(g)         “Replacement Cost” shallmean the amount of money necessary to be spent in order to repair or rebuildthe damaged area to the condition that existed immediately prior to the damageoccurring, excluding all improvements made by lessees, other than thoseinstalled by Lessor at Lessee’s expense.

 

**9.2****                               PremisesDamage; Premises Building Partial Damage.**

 

(a)          Insured Loss:  Subject to the provisions of paragraphs 9.4and 9.5, if at any time during the term of this Lease there is damage which isan Insured Loss and which falls into the classification of either Premises Damageor Premises Building Partial Damage, then Lessor shall, as soon as reasonablypossible and to the extent the required materials and labor are readilyavailable through usual commercial channels, at Lessor’s expense, repair suchdamage (but not Lessee’s fixtures, equipment or tenant improvements originallypaid for by Lessee) to its condition existing at the time of the damage, andthis Lease shall continue in full force and effect.

 

(b)         Uninsured Loss: Subjectto the provisions of paragraphs 9.4 and 9.5, if at any time during the term ofthis Lease there is damage which is not an Insured Loss and which falls withinthe classification of Premises Damage or Premises Building Partial Damage,unless caused by a negligent or willful act of Lessee (in which event Lessee shallmake the repairs at Lessee’s expense), which damage prevents Lessee from makingany substantial use of the Premises, Lessor may at Lessor’s option either (i)repair such damage as soon as reasonably possible at Lessor’s expense, in whichevent this Lease shall continue in full force and effect, or (ii) give writtennotice to Lessee within thirty (30) days after the date of the occurrence ofsuch damage of Lessor’s intention to cancel and terminate this Lease as of thedate of the occurrence of such damage, in which event this Lease shallterminate as of the date of the occurrence of such damage.

 

**9.3****                               PremisesBuilding Total Destruction;****OfficeBuilding Project Total Destruction.** Subject to the provisions of paragraphs 9.4 and 9.5, if at any timeduring the term of this Lease there is damage, whether or not it is an InsuredLoss, which falls into the classifications of either (i) Premises BuildingTotal Destruction, or (ii) Office Building Project Total Destruction, thenLessor may at Lessor’s option either (i) repair such damage or destruction assoon as reasonably possible at Lessor’s expense (to the extent the requiredmaterials are readily available through usual commercial channels) so itscondition existing at the time of the damage, but not Lessee’s fixtures,equipment or tenant improvements, and this Lease shall continue in full forceand effect, or (ii) give written notice to Lessee within thirty (30) days afterthe date of occurrence of such damage of Lessor’s intention to cancel andterminate this Lease, in which case this Lease shall terminate as of the dateof the occurrence of such damage.

 

**9.4****                               DamageNear End of Term.**

 

(a)          Subject to paragraph9.4(b), if at any time during the last twelve (12) months of the term of thisLease there is substantial damage to the Premises, Lessor may at Lessor’soption cancel and terminate this Lease as of the date of occurrence of suchdamage by giving written notice to Lessee of Lessor’s election to do so within30 days after the date of occurrence of such damage.  See Addendum Paragraph 75

 

(b)         Notwithstanding paragraph9.4(a), in the event that Lessee has an option to extend or renew this Lease,and the time within which said option may be exercised has not yet expired,Lessee shall exercise such option, if it is to be exercised at all, no laterthan twenty (20) days after the occurrence of an Insured Loss falling withinthe classification of Premises Damage during the last twelve (12) months of theterm of this Lease.  If Lessee dulyexercises such option during said twenty (20) day period.  Lessor shall, at Lessor’s expense, repairsuch damage, but not Lessee’s fixtures, equipment or tenant improvements, assoon as reasonably possible and this Lease shall continue in full force andeffect.  If Lessee fails to exercisesuch option during said twenty (20) day period, then Lessor may at Lessor’soption terminate and cancel this Lease as of the expiration of said twenty (20)day period by giving written notice to Lessee of Lessor’s election to do sowithin ten (10) days after the expiration of said twenty (20) day period,notwithstanding any term or provision in the grant of option to the contrary.

 

**9.5****                               Abatementof Rent; Lessee’s Remedies.**

 

(a)          In the event Lessorrepairs or restores the Building or Premises pursuant to the provisions of thisparagraph 9, and any part of the Premises are not usable (including loss of usedue to loss of access or essential services), the rent payable hereunder(including Lessee’s Share of Operating Expense Increase) for the period duringwhich such damage, repair or restoration continues shall be abated, provided(1) the damage was not the result of the negligence of Lessee, and (2) suchabatement shall only be to the extent the operation of Lessee’s business asoperated from the Premises is adversely affected.  Except for said abatement of rent, if 

any, Lessee shall have no claimagainst Lessor for any damage suffered by reason of any such damage,destruction, repair or restoration.

 

(b)         If Lessor shall beobligated to repair or restore the Premises or the Building under theprovisions of this Paragraph 9 and shall not commence such repair orrestoration within ninety (90) days after such occurrence, or if Lessor shallnot complete the restoration and repair within six (6) months after suchoccurrence, Lessee may at Lessee’s option cancel and terminate this Lease bygiving Lessor written notice of Lessee’s election to do so at any time prior tothe commencement or completion, respectively, of such repair or restoration.  In such event this Lease shall terminate asof the date of such notice.

 

(c)          Lessee agrees tocooperate with Lessor in connection with any such restoration and repair,including but not limited to the approval and/or execution of plans andspecifications required.

 

**9.6****                               Termination- Advance payments.**  Upontermination of this Lease pursuant to this paragraph 9, an equitable adjustmentshall be made concerning advance rent and any advance payments made by Lesseeto Lessor.  Lessor shall, in addition,return to Lessee so much of Lessee’s security deposit as has not theretoforebeen applied by Lessor.

 

**9.7****                               Waiver.**  Lessor and Lessee waive the provisions ofany statute which relate to termination of leases when leased property isdestroyed and agree that such event shall be governed by the terms of thisLease, including without limitation, Section 1932, Subdivision 2, andSection 1933, Subdivision 4 of the California Civil Code.

 

**10.****       Real Property Taxes.**

 

**10.1****                        Payment ofTaxes.**  Lessor shall pay the realproperty tax, as defined in paragraph 10.3, applicable to the Office BuildingProject subject to reimbursement by Lessee of Lessee’s Share of such taxes inaccordance with the provisions of paragraph 4.2, except as otherwiseprovided in paragraph 10.2.

 

**10.2****                        AdditionalImprovements.**  Lessee shall not beresponsible for paying any increase in real property tax specified in the taxassessor’s records and work sheets as being caused by additional improvementsplaced upon the Office Building Project by other lessees or by Lessor for theexclusive enjoyment of any other lessee. Lessee shall, however, pay to Lessor at the time that Operating Expensesare payable under paragraph 4.2(c) the entirety of any increase in realproperty tax if assessed solely by reason of additional improvements placedupon the Premises by Lessee or at Lessee’s request.

 

**10.3****                        Definitionof “Real Property Tax”.**  As usedherein, the term “real property tax” shall include any form of real estate taxor assessment, general, special, ordinary or extraordinary, and any licensefee, commercial rental tax, improvement bond or bonds, levy or tax (other thaninheritance, personal income or estate taxes) imposed on the Office BuildingProject or any portion thereof by any authority having the direct or indirectpower to tax, including any city, county, state or federal government, or anyschool, agricultural, sanitary, fire, street, drainage or other improvementdistrict thereof, as against any legal or equitable interest of Lessor in theOffice Building Project or in any portion thereof, as against Lessor’s right torent or other income therefrom, and as

 

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against Lessor’s business of leasing the Office Building Project.  The term “real property tax” shall alsoinclude any tax, fee, levy, assessment or charge (i) in substitution of,partially or totally, any tax, fee, levy, assessment or charge hereinaboveincluded within the definition of “real property tax”, or (ii) the nature ofwhich was hereinbefore included within the definition of “real property tax”,or (iii) which is imposed for a service or right not charged prior toJune 1, 1978 or, if previously charged, has been increased sinceJune 1, 1978, or (iv) which is imposed as a result of a change in ownership,as defined by applicable local statutes for property tax purposes, of theOffice Building Project or which is added to a tax or charge hereinbeforeincluded within the definition of real property tax by reason of such change ofownership, or (v) which is imposed by reason of this transaction, anymodifications or changes hereto, or any transfers hereof.

 

**10.4****                        JointAssessment.**  If the improvements orproperty, the taxes for which are to be paid separately by Lessee underparagraph 10.2 or 10.5 are not separately assessed, Lessee’s portion of thattax shall be equitably determined by Lessor from the respective valuationsassigned in the assessor’s work sheets or such other information (which mayinclude the cost of construction) as may be reasonably available.  Lessor’s reasonable determination thereof,in good faith, and absent manifest error, shall be conclusive.

 

**10.5****                        PersonalProperty Taxes.**

 

(a)          Lesseeshall pay prior to delinquency all taxes assessed against and levied upon tradefixtures, furnishings, equipment and all other personal property of Lesseecontained in the Premises or elsewhere.

 

(b)         Ifany of Lessee’s said personal property shall be assessed with Lessor’s realproperty, Lessee shall pay to Lessor the taxes attributable to Lessee withinten (10) days after receipt of a written statement setting forth the taxesapplicable to Lessee’s property.

 

**11.****       Utilities.**

 

**11.1****                        ServicesProvided by Lessor. **Lessor shallprovide heating, ventilation, air conditioning, and janitorial service asreasonably required, reasonable amounts of electricity for normal lighting andoffice machines, water for reasonable and normal drinking and lavatory use, andreplacement light bulbs and/or fluorescent tubes and ballasts for standardoverhead fixtures.

 

**11.2****                        ServicesExclusive to Lessee. **Lessee shallpay for all water, gas, heat, light, power, telephone and other utilities andservices specially or exclusively supplied and/or metered exclusively to thePremises or to Lessee, together with any taxes thereon.  If any such services are not separatelymetered to the Premises.  Lessee shallpay at Lessor’s option, either Lessee’s Share or a reasonable proportion to bedetermined by Lessor of all charges jointly metered with other premises in theBuilding.

 

**11.3****                        Hours ofService. **Said services andutilities shall be provided during generally accepted business days and hoursor such other days or hours as may hereafter be set forth.  Utilities and services required at othertimes shall be subject to advance request and reimbursement by Lessee to Lessorof the cost thereof.  (see addendumparagraph 59)

 

**11.4****                        ExcessUsage by Lessee.**  Lessee shall notmake connection to the utilities except by or through existing outlets andshall not install or use machinery or equipment in or about the Premises thatuses excess water, lighting or power, or suffer or permit any act that causesextra burden upon the utilities or services, including but not limited tosecurity services, over standard office usage for the Office Building Project.  Lessor shall require Lessee to reimburseLessor for any excess expenses or costs that may arise out of a breach of thissubparagraph by Lessee.  Lessor may, inits sole discretion, install at Lessee’s expense supplemental equipment and/orseparate metering applicable to Lessee’s excess usage or loading.

 

**11.5****                        Interruptions.**  There shall be no abatement of rent andLessor shall not be liable in any respect whatsoever for the inadequacy,stoppage, interruption or discontinuance of any utility or service due to riot,strike, labor dispute, breakdown, accident, repair or other cause beyondLessor’s reasonable control or in cooperation with governmental request ordirections.

 

**12.****       Assignment and subletting.**

 

**12.1****                        Lessor’sConsent Required.**  Lessee shall notvoluntarily or by operation of law assign, transfer, mortgage, sublet, orotherwise transfer or encumber all or any part of Lessee’s interest in theLease or in the Premises, without Lessor’s prior written consent, which Lessorshall not unreasonably withhold.  Lessorshall respond to Lessee’s request for consent hereunder in a timely manner andany attempted assignment, transfer, mortgage, encumbrance or subletting withoutsuch consent shall be void, and shall constitute a material default and breachof this Lease without the need for notice to Lessee under paragraph 13.1.  “Transfer” within the meaning of thisparagraph 12 shall include the transfer or transfers aggregating: (a) If Lesseeis a corporation, more than forty-nine percent (49%) of the voting stock ofsuch corporation, or (b) if Lessee is a partnership, more than twenty-fivepercent (25%) of the profit and loss participation in such partnership.

 

**12.2****                        LesseeAffiliate.**  Notwithstanding theprovisions of paragraph 12.1 hereof, Lessee may assign or sublet the Premises,or any portion thereof, without Lessor’s consent, to any corporation whichcontrols, is controlled by or is under common control with Lessee, or to anycorporation resulting from the merger or consolidation with Lessee, or to anyperson or entity which acquires all the assets of Lessee as a going concern ofthe business that is being conducted on the Premises, all of which are referredto as “Lessee Affiliate”; provided that before such assignment shall beeffective, (a) said assignee shall assume, in full, the obligations of Lesseeunder this Lease and (b) Lessor shall be given written notice of suchassignment and assumption.  Any suchassignment shall not, in any way, affect or limit the liability of Lessee underthe terms of this Lease even if after such assignment or subletting the termsof this Lease are materially changed or altered without the consent of Lessee,the consent of whom shall not be necessary.

 

**12.3****                        Terms andConditions Applicable to Assignment and Subletting.**

 

(a)          Regardlessof Lessor’s consent, no assignment or subletting shall release Lessee ofLessee’s obligation hereunder or alter the primary liability of Lessee to paythe rent and other sums due Lessor hereunder including Lessee’s Share ofOperating Expense Increase, and to perform all other obligations to beperformed by Lessee hereunder.

 

(b)         Lessormay accept rent from any person other than Lessee pending approval ordisapproval of such assignment.

 

(c)          Neithera delay in the approval or disapproval of such assignment or subletting, northe acceptance of rent, shall constitute a waiver or estoppel of Lessor’s rightto exercise its remedies for the breach of any of the terms or conditions ofthis paragraph 12 or this Lease.

 

(d)         IfLessee’s obligation under this Lease have been guaranteed by third parties,then an assignment or sublease, and Lessor’s consent thereto, shall not beeffective unless said guarantors give their written consent to such subleaseand the terms thereof.

 

(e)          Theconsent by Lessor to any assignment or subletting shall not constitute aconsent to any subsequent assignment or subletting by Lessee or to anysubsequent or successive assignment or subletting by the sublessee.  However, Lessor may consent to subsequentsublettings and assignments of the sublease or any amendments or modificationsthereto without notifying Lessee or anyone else liable on the Lease or subleaseand without obtaining their consent and such action shall not relieve suchpersons from liability under this Lease or said sublease; however, such personsshall not be responsible to the extent any such amendment or modificationenlarges or increases the obligations of the Lessee or sublessee under thisLease or such sublease.

 

(f)            Inthe event of any default under this Lease, Lessor may proceed directly againstLessee, any guarantors or anyone else responsible for the performance of thisLease, including the sublessee, without first exhausting Lessor’s remediesagainst any other person or entity responsible therefor to Lessor, or any securityheld by Lessor or Lessee.

 

(g)         Lessor’swritten consent to any assignment or subletting of the Premises by Lessee shallnot constitute an acknowledgment that no default then exists under this Leaseof the obligations to be performed by Lessee nor shall such consent be deemed awaiver of any then existing default, except as may be otherwise stated byLessor at the time.

 

(h)         Thediscovery of the fact that any financial statement relied upon by Lessor ingiving its consent to an assignment or subletting was materially false shall,at Lessor’s election, render Lessor’s said consent null and void.

 

**12.4****                        AdditionalTerms and Conditions Applicable to Subletting.**  Regardless of Lessor’s consent, the following terms andconditions shall apply to any subletting by Lessee of all or any part of thePremises and shall be deemed included in all subleases under this Lease whetheror not expressly incorporated therein:

 

(a)          Lesseehereby assigns and transfers to Lessor all of Lessee’s interest in all rentalsand income arising from any sublease heretofore or hereafter made by Lessee,and Lessor may collect such rent and income and apply same toward Lessee’sobligations under this Lease; provided, however, that until a default shalloccur in the performance of Lessee’s obligations under this Lease.  Lessee may receive, collect and enjoy therents accruing under such sublease. Lessor shall not, by reason of this or any other assignment of such subleaseto Lessor nor by reason of the collection of the rents from a sublessee, bedeemed liable to the sublessee for any failure of Lessee to perform and complywith any of Lessee’s obligations to such sublessee under such sublease.  Lessee hereby irrevocably authorizes anddirects any such sublessee, upon receipt of a written notice from Lessorstating that a default exists in the performance of Lessee’s obligations underthis Lease, to pay to Lessor the rents due and to become due under thesublease.  Lessee agrees that suchsublessee shall have the right to rely upon any such statement and request fromLessor, and that such sublessee shall pay such rents to Lessor without an

 

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obligation or right to inquire as to whether such default exists andnotwithstanding any notice from or claim from Lessee to the contrary Lesseeshall have no right or claim against said sublessee or Lessor for any suchrents so paid by said sublessee to Lessor.

 

(b)         Nosublease entered into by Lessee shall be effective unless and until it has beenapproved in writing by Lessor.  Inentering into any sublease, Lessee shall use only such form of sublease as issatisfactory to Lessor, and once approved by Lessor, such sublease shall not bechanged or modified without Lessor’s prior written consent.  Any sublease shall, by reason of enteringinto a sublease under this Lease, be deemed for the benefit of Lessor, to haveassumed and agreed to conform and comply with each and every obligation hereinto be performed by Lessee other than such obligations as are contrary to orinconsistent with provisions contained in a sublease to which Lessor hasexpressly consented in writing.

 

(c)          Inthe event Lessee shall default in the performance of its obligations under thisLease, Lessor at its option and without any obligation to do so, may requireany sublessee to attorn to Lessor, in which event Lessor shall undertake theobligations of Lessee under such sublease from the time of the exercise of saidoption to the termination of such sublease; provided, however, Lessor shall notbe liable for any prepaid rents or security deposit paid by such sublessee toLessee or for any other prior defaults of Lessee under such sublease.

 

(d)         Nosublessee shall further assign or sublet all or any part of the Premiseswithout Lessor’s prior written consent.

 

(e)          Withrespect to any subletting to which Lessor has consented, Lessor agrees todeliver a copy of any notice of default by Lessee to the sublessee.  Such sublessee shall have the right to curea default of Lessee within three (3) days after service of said notice ofdefault upon such sublessee, and the sublessee shall have a right ofreimbursement and offset from and against Lessee for any such defaults cured bythe sublessee.

 

**12.5****                        Lessor’sExpenses.**  In the event Lessee shallassign or sublet the Premises or request the consent of Lessor to anyassignment or subletting or if Lessee shall request the consent of Lessor forany act Lessee proposes to do then Lessee shall pay Lessor’s reasonable costsand expenses incurred in connection therewith, including attorneys’,architects’, engineers’ or other consultants’ fees.

 

**12.6****                        Conditionsto Consent.**  Lessor reserves theright to condition any approval to assign or sublet upon Lessor’s determinationthat (a) the proposed assignee or sublessee shall conduct a business on thePremises of a quality substantially equal to that of Lessee and consistent withthe general character of the other occupants of the Office Building Project andnot in violation of any exclusives or rights then held by other tenants, and(b) the proposed assignee or sublessee shall be financially responsible.  The proposed assignee shall **NOT** be at least as financiallyresponsible as Lessee was expected to be at the time of the execution of thisLease or of such assignment or subletting, whichever is greater.

 

**13.****       Default; Remedies.**

 

**13.1****                        Default.**  The occurrence of any one or more of thefollowing events shall constitute a material default of this Lease by Lessee:

 

(a)          Thevacation or abandonment of the Premises by Lessee.  Vacation of the Premises shall include the failure to occupy thePremises for a continuous period of sixty (60) days or more, whether or not therent is paid.

 

(b)         Thebreach by Lessee of any of the covenants, conditions or provisions ofparagraphs 7.3(a), (b) or (d) (alterations), 12.1 (assignment or subletting),13.1(a) (vacation or abandonment), 13.1(e) (insolvency), 13.1(f) (falsestatement), 16(a) (estoppel certificate), 30(b) (subordination), 33 (auctions),or 41.1 (easements), all of which are hereby deemed to be material, non-curabledefaults without the necessity of any notice by Lessor to Lessee thereof.  See Addendum Paragraph 76

 

(c)          Thefailure by Lessee to make any payment of rent or any other payment required tobe made by Lessee hereunder, as and when due, where such failure shall continuefor a period of three (3) days after written notice thereof from Lessor toLessee.  In the event that Lessor servesLessee with a Notice to Pay Rent or Quit pursuant to applicable UnlawfulDetainer statutes such Notice to Pay Rent or Quit shall also constitute thenotice required by this subparagraph.

 

(d)         Thefailure by Lessee to observe or perform any of the covenants, conditions orprovisions of this Lease to be observed or performed by Lessee other than thosereferenced in subparagraphs (b) and (c), above, where such failure shallcontinue for a period of thirty (30) days after written notice thereof fromLessor to Lessee; provided, however, that if the nature of Lessee’snoncompliance is such that more than thirty (30) days are reasonably requiredfor its cure, then Lessee shall not be deemed to be in default if Lesseecommenced such cure within said thirty (30) day period and thereafterdiligently pursues such cure to completion. To the extent permitted by law, such thirty (30) day notice shallconstitute the sole and exclusive notice required to be given to Lessee underapplicable Unlawful Detainer statutes.

 

(e)          (i)The making by Lessee of any general arrangement or general assignment for thebenefit of creditors; (ii) Lessee becoming a “debtor” as defined in 11 U.S.C.§101 or any successor statute thereto (unless, in the case of a petition filedagainst Lessee, the same is dismissed within sixty (60) days; (iii) theappointment of a trustee or receiver to take possession of substantially all ofLessee’s assets located at the Premises or of Lessee’s interest in this Lease,where possession is not restored to Lessee within thirty (30) days; or (iv) theattachment, execution or other judicial seizure of substantially all ofLessee’s assets located at the Premises or of Lessee’s interest in this Lease,where such seizure is not discharged within thirty (30) days.  In the event that any provision of thisparagraph 13.1(e) is contrary to any applicable law, such provision shall be ofno force or effect.

 

(f)            Thediscovery by Lessor that any financial statement given to Lessor by Lessee, orits successor in interest or by any guarantor of Lessee’s obligation hereunder,was materially false.

 

**13.2****                        Remedies.**  In the event of any material default orbreach of this Lease by Lessee, Lessor may at any time thereafter, with orwithout notice or demand and without limiting Lessor in the exercise of anyright or remedy which Lessor may have by reason of such default:

 

(a)          TerminateLessee’s right to possession of the Premises by any lawful means, in which casethis Lease and the term hereof shall terminate and Lessee shall immediatelysurrender possession of the Premises to Lessor.  In such event Lessor shall be entitled to recover from Lessee alldamages incurred by Lessor by reason of Lessee’s default including, but notlimited to, the cost of recovering possession of the Premises; expenses ofreletting, including necessary renovation and alteration of the Premises,reasonable attorney’s fees, and any real estate commission actually paid; theworth at the time of award by the court having jurisdiction thereof of theamount by which the unpaid rent for the balance of the term after the time ofsuch award exceeds the amount of such rental loss for the same period thatLessee proves could be reasonably avoided; that portion of the leasingcommission paid by Lessor pursuant to 

paragraph 15 applicable to the unexpired term of this Lease, and allother remedies provided by California Civil Code Section 1951.2

 

(b)         MaintainLessee’s right to possession in which case this Lease shall continue in effectwhether or not Lessee shall have vacated or abandoned the Premises.  In such event Lessor shall be entitled toenforce all of Lessor’s rights and remedies under this Lease, including theright to recover the rent as it becomes due hereunder, and all other remediesprovided by California Civil.

 

(c)          Pursueany other remedy now or hereafter available to Lessor under the laws orjudicial decisions of the state wherein the Premises are located.  Unpaid installments of rent and other unpaidmonetary obligations of Lessee under the terms of this Lease shall bearinterest from the date due at the maximum rate then allowable by law.

 

**13.3****                        Default byLessor.**  Lessor shall not be indefault unless Lessor fails to perform obligations required of Lessor within areasonable time, but in no event later than thirty (30) days after writtennotice by Lessee to Lessor and to the holder of any first mortgage or deed oftrust covering the Premises whose name and address shall have theretofore beenfurnished to Lessee in writing, specifying wherein Lessor has failed to performsuch obligation; provided, however, that if the nature of Lessor’s obligationis such that more than thirty (30) days are required for performance thenLessor shall not be in default if Lessor commences performance within such30-day period and thereafter diligently pursues the same to completion.

 

**13.4****                        LateCharges.**  Lessee hereby acknowledgesthat late payment by Lessee to Lessor of Base Rent, Lessee’s Share of OperatingExpense Increase or other sums due hereunder will cause Lessor to incur costsnot contemplated by this Lease, the exact amount of which will be extremelydifficult to ascertain.  Such costsinclude, but are not limited to, processing and accounting charges, and latecharges which may be imposed on Lessor by the terms of any mortgage or trustdeed covering the Office Building Project. Accordingly, if any installment of Base Rent, Operating Expenseincrease, or any other sum due from Lessee shall not be received by Lessor orLessor’s designee within ten (10) days after such amount shall be due, then,without any requirement for notice to Lessee, Lessee shall pay to Lessor a latecharge equal to 6% of such overdue amount. The parties hereby agree that such late charge represents a fair andreasonable estimate of the costs Lessor will incur by reason of late payment byLessee.  Acceptance of such late chargeby Lessor shall in no event constitute a waiver of Lessee’s default withrespect to such overdue amount, nor prevent Lessor from exercising any of theother rights and remedies granted hereunder.

 

**14.****       Condemnation.**  If the Premises or any portion thereof orthe Office Building Project are taken under the power of eminent domain, orsold under the threat of the exercise of said power (all of which are hereincalled “condemnation”), this Lease shall terminate as to the part so taken asof the date the condemning authority takes title or possession, whichever firstoccurs; provided that is so much of the Premises or the Office Building Projectare taken by such condemnation as would substantially and adversely affect theoperation and profitability of Lessee’s business conducted from thePremises.  Lessee shall have the option,to be exercised only in writing within thirty (30) days after Lessor shall havegiven Lessee written notice of such taking (or in the absence of such notice,within thirty (30) days after the condemning authority shall have takenpossession), to terminate this Lease as of the date the

 

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condemning authority takes such possession.  If Lessee does not terminate this Lease in accordance with theforegoing, this Lease shall remain in full force and effect as to the portionof the Premises remaining, except that the rent and Lessee’s Share of OperatingExpense increase shall be reduced in the proportion that the floor area of thePremises taken bears to the total floor area of the Premises.  Common Areas taken shall be excluded fromthe Common Areas usable by Lessee and no reduction of rent shall occur withrespect thereto or by reason thereof. Lessor shall have the option in its sole discretion to terminate this Leaseas of the taking of possession by the condemning authority, by giving writtennotice to Lessee of such election within thirty (30) days after receipt ofnotice of a taking by condemnation of any part of the Premises or the OfficeBuilding Project.  Any award for thetaking of all or any part of the Premises or the Office Building Project underthe power of eminent domain or any payment made under threat of the exercise ofsuch power shall be the property of Lessor, whether such award shall be made ascompensation for diminution in value of the leasehold or for the taking of thefee, or as severance damages; provided, however, that Lessee shall be entitledto any separate award for loss of or damage to Lessee’s trade fixtures,removable personal property and unamortized tenant improvements that have beenpaid for by Lessee.  For that purposethe cost of such improvements shall be amortized over the original term of thisLease excluding any options.  In theevent that this Lease is not terminated by reason of such condemnation, Lessorshall to the extent of severance damages received by Lessor in connection withsuch condemnation, repair any damage to the Premises caused by suchcondemnation except to the extent that Lessee has been reimbursed therefor by thecondemning authority.  Lessee shall payany amount in excess of such severance damages required to complete suchrepair.

 

**15.****      Broker’s Fee.**

 

(a)                                  The brokers involvedin this transaction are Voit Commercial Brokerage as “listing broker” and TheStaubach Company as “cooperating broker,” licensed real estate broker(s).  A “cooperating broker” is defined as anybroker other than the listing broker entitled to a share of any commissionarising under this Lease.  Uponexecution of this Lease by both parties, Lessor shall pay to said brokersjointly, or in such separate shares as they may mutually designate in writing,a fee as set forth in a separate agreement between Lessor and said broker(s).

 

(d)                                 Lessee and Lessor eachrepresent and warrant to the other that neither has had any dealings with anyperson, firm, broker or finder (other than the person(s), if any, whose namesare set forth in paragraph 15(a), above) in connection with the negotiation ofthis Lease and/or the consummation of the transaction contemplated hereby, andno other broker or other person, firm or entity is entitled to any commissionor finder’s fee in connection with said transaction and Lessee and Lessor doeach hereby indemnify and hold the other harmless from and against any costs,expenses, attorney’s fees or liability for compensation or charges which may beclaimed by any such unnamed broker, finder or other similar party by reason ofany dealings or actions of the indemnifying party.

 

**16.****       Estoppel Certificate.**

 

(a)                                  Each party (as “respondingparty”) shall at any time upon not less than ten (10) days’ prior writtennotice from the other party (“requesting party”) execute, acknowledge anddeliver to the requesting party a statement in writing (i) certifying that thisLease is unmodified and in full force and effect (or, if modified, stating thenature of such modification and certifying that this Lease, as so modified, isin full force and effect) and the date to which the rent and other charges arepaid in advance, if any, and (ii) acknowledging that there are not, to theresponding party’s knowledge, any uncured defaults on the part of therequesting party, or specifying such defaults if any are claimed.  Any such statement may be conclusively reliedupon by any prospective purchaser or encumbrancer of the Office BuildingProject or of the business of Lessee.

 

(b)                                 At the requestingparty’s option, the failure to deliver such statement within such time shall bea material default of this Lease by the party who is to respond, without any furthernotice to such party, or it shall be conclusive upon such party that (i) thisLease is in full force and effect, without modification except as may berepresented by the requesting party, (ii) there are no uncured defaults in therequesting party’s performance, and (iii) if Lessor is the requesting party,not more than one month’s rent has been paid in advance.

 

(c)                                  If Lessor desires tofinance, refinance, or sell the Office Building Project, or any part thereof,Lessee hereby agrees to deliver to any lender or purchaser designated by Lessorsuch financial statements of Lessee as may be reasonably required by suchlender or purchaser.  Such statementsshall include the past three (3) years’ financial statements of Lessee.  All such financial statements shall bereceived by Lessor and such lender or purchaser in confidence and shall be usedonly for the purposes herein set forth.

 

**17.****       Lessor’s Liability.**  The term “Lessor” as used herein shall meanonly the owner or owners, at the time in question, of the fee title or alessee’s interest in a ground lease of the Office Building Project, and exceptas expressly provided in paragraph 15, in the event of any transfer of suchtitle or interest.  Lessor herein named(and in case of any subsequent transfers then the grantor) shall be relievedfrom and after the date of such transfer of all liability as respects Lessor’sobligations thereafter to be performed, provided that any funds in the hands ofLessor or the then grantor at the time of such transfer, in which Lessee has aninterest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Lessor shall,subject as aforesaid, be binding on Lessor’s successors and assigns, only duringtheir respective periods of ownership.

 

**18.****       Severability.**  The invalidity of any provision of thisLease as determined by a court of competent jurisdiction shall in no way affectthe validity of any other provision hereof.

 

**19.****       Interest on Past-dueObligations.**  Except as expresslyherein provided, any amount due to Lessor not paid when due shall bear interestat the maximum rate then allowable by law or judgments from the date due.  Payment of such interest shall not excuse orcure any default by Lessee under this Lease; provided, however, that interestshall not be payable on late charges incurred by Lessee nor on any amounts uponwhich late charges are paid by Lessee.

 

**20.****       Time of Essence.**  Time is of the essence with respect to theobligations to be performed under this Lease.

 

**21.****       Additional Rent.**  All monetary obligations of Lessee to Lessorunder the terms of this Lease, including but not limited to Lessee’s Share ofOperating Expense increase and any other expenses payable by Lessee hereundershall be deemed to be rent.

 

**22.****       Incorporation of PriorAgreements; Amendments.**  This Leasecontains all agreements of the parties with respect to any matter mentionherein.  No prior or contemporaneousagreement or understanding pertaining to any such matter shall beeffective.  This Lease may be modifiedin writing only, signed by the parties in interest at the time of themodification.  Except as otherwisestated in this Lease, Lessee hereby acknowledges that neither the real estatebroker listed in paragraph 15 hereof nor any cooperating broker on thistransaction nor the Lessor or any employee or agents of any of said persons has

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made any oral or writtenwarranties or representations to Lessee relative to the condition or use byLessee of the Premises or the Office Building Project and Lesseeacknowledges that Lessee assumes all responsibility regarding the OccupationalSafety Health Act, the legal use and adaptability of the Premises and thecompliance thereof with all applicable laws and regulations in effect duringthe term of this Lease.

 

**23.****       Notices. **Any notice required or permitted to begiven hereunder shall be in writing and may be given by personal delivery or bycertified or registered mail, and shall be deemed sufficiently given if deliveredor addressed to Lessee or to Lessor at the address noted below or adjacent tothe signature of the respective parties, as the case may be.  Mailed notices shall be deemed given uponactual receipt at the address required, or forty-eight hours following depositin the mail, postage prepaid, whichever first occurs.  Either party may by notice to the other specify a differentaddress for notice purposes except that upon Lessee’s taking possession of thePremises, the Premises shall constitute Lessee’s address for noticepurposes.  A copy of all noticesrequired or permitted to be given to Lessor hereunder shall be concurrentlytransmitted to such party or parties at such addresses as Lessor may from timeto time hereafter designate by notice to Lessee.

 

**24.****       Waivers.**  No waiver by Lessor of any provision hereofshall be deemed a waiver of any other provision hereof or of any subsequentbreach by Lessee of the same or any other provision.  Lessor’s consent to, or approval of, any act shall not be deemedto render unnecessary the obtaining of Lessor’s consent to or approval of anysubsequent act by Lessee.  Theacceptance of rent hereunder by Lessor shall not be a waiver of any precedingbreach by Lessee of any provision hereof, other than the failure of Lessee topay the particular rent so accepted, regardless of Lessor’s knowledge of suchpreceding breach at the time of acceptance of such rent.

 

**25.****       Recording. **Either Lessor or Lessee shall, uponrequest of the other, execute, acknowledge and deliver to the other a “shortform” memorandum of this Lease for recording purposes.

 

**26.****       Holding Over. **If Lessee, with Lessor’s consent,remains in possession of the Premises or any part thereof after the expirationof the term hereof, such occupancy shall be a tenancy from month to month uponall the provisions of this Lease pertaining to the obligations of Lessee,except that the rent payable shall be one hundred and fifty percent (150%) ofthe rent payable immediately preceding the termination date of this Lease, andall Options, if any, granted under the terms of this Lease shall be deemedterminated and be of no further effect during said month to month tenancy.

 

**27.****       Cumulative Remedies. **No remedy or election hereunder shall bedeemed exclusive but shall, wherever possible, be cumulative with all otherremedies at law or in equity.

 

**28.****       Covenants andConditions. **Each provision of thisLease performable by Lessee shall be deemed both a covenant and a condition.

 

**29.****       Binding Effect; Choice ofLaw. **Subject to any provisionshereof restricting assignment or subletting by Lessee and subject to theprovision of paragraph 17, this Lease shall bind the parties, their personalrepresentatives, successors and assign. This Lease shall be governed by the laws of the State where the OfficeBuilding Project is located and any litigation concerning this Lease betweenthe parties hereto shall be initiated in the county in which the OfficeBuilding Project is located.

 

**30.****       Subordination.**

 

(a)                                  This Lease, and anyOption or right of first refusal granted hereby, at Lessor’s option, shall besubordinate to any ground lease, mortgage, deed of trust, or any otherhypothecation or security now or hereafter placed upon the Office BuildingProject and to any and all advances made on the security thereof and to allrenewals, modifications, consolidations, replacements and extensionsthereof.  Notwithstanding suchsubordination, Lessee’s right to quiet possession of the Premises shall not bedisturbed if Lessee is not in default and so long as Lessee shall pay the rentand observe and perform all of the provisions of this Lease, unless this Leaseis otherwise terminated pursuant to its terms. If any mortgagee, trustee or ground lessor shall elect to have thisLease and any Options granted hereby prior to the lien of its mortgage, deed oftrust or ground lease, and shall give written notice thereof to Lessee, thisLease and such Option shall be deemed prior to such mortgage, deed of trust orground lease, whether this Lease or such Options are dated prior or subsequentto the date of said mortgage, deed of trust or ground lease or the date ofrecording thereof.

 

(b)                                 Lessee agrees toexecute any documents reasonably required to effectuate an Attornment, asubordination, or to make this Lease or any Option granted herein prior to thelien of any mortgage, deed of trust or ground lease, as the case may be.  Lessee’s failure to execute such documentswithin ten (10) days after written demand shall constitute a material defaultby Lessee hereunder without further notice to Lessee or, at Lessor’s option,Lessor shall execute such documents on behalf of Lessee as Lessee’sattorney-in-fact.  Lessee does herebymake, constitute and irrevocably appoint Lessor as Lessee’s attorney-in-factand in Lessee’s name, place and stead, to execute such documents in accordancewith this paragraph 30(b).

 

**31.****       Attorneys’ Fees.**

 

31.1                           Ifeither party or the broker(s) named herein bring an action to enforce the termshereof or declare rights hereunder, the prevailing party in any such action,trial, or appeal thereon, shall be entitled to his reasonable attorneys’ feesto be paid by the losing party as fixed by the court in the same or separatesuit, and whether or not such action is pursued to decision or judgment.  The provisions of this paragraph shall inureto the benefit of the broker named herein who seeks to enforce a righthereunder.

 

31.2                           Theattorneys’ fee award shall not be computed in accordance with any court feeschedule, but shall be such as to fully reimburse all attorneys’ feesreasonably incurred in good faith.

 

31.3                           Lessorshall be entitled to reasonable attorneys’ fees and all other costs andexpenses incurred in the preparation and service of notices of default andconsultations in connection therewith, whether or not a legal transaction issubsequently commenced in connection with such default.

 

**32.****       Lessor’s Access.**

 

32.1                           Lessorand Lessor’s agents shall have the right to enter the Premises at reasonabletimes for the purpose of inspecting the same, performing any services requiredof Lessor, showing the same to prospective purchasers, lenders, or lessees,taking such safety measures, erecting such scaffolding or other necessarystructures, making such alterations, repairs, improvements or additions to thePremises or to the Office Building Project as Lessor may reasonably deemnecessary or desirable and the erecting, using and maintaining of utilities,services, pipes and conduits through the Premises and/or other premises as longas there is no material adverse effect to Lessee’s use of the Premises.  Lessor may at any time place on or about thePremises or the Building any ordinary “For Sale” signs and Lessor may at anytime during the last 120 days of the term hereof place on or about the Premisesany ordinary “For Lease” signs.  SeeAddendum Paragraph 77

 

32.2                           Allactivities of Lessor pursuant to this paragraph shall be without abatement ofrent, nor shall Lessor have any liability to Lessee for the same.

 

32.3                           Lessorshall have the right to retain keys to the Premises and to unlock all doors inor upon the Premises other than to files, vaults and sales, and in the case ofemergency to enter the Premises by any reasonably appropriate means, and anysuch entry shall not be deemed a forceable or unlawful entry or detainer of thePremises or an eviction.  Lessee waivesany charges for damages or injuries or interference with Lessee’s property orbusiness in connection therewith.

 

**33.****       Auctions. **Lessee shall not conduct, nor permit tobe conducted, either voluntarily or involuntarily, any auction upon thePremises or the Common Areas without first having obtained Lessor’s priorwritten consent.  Notwithstandinganything to the contrary in this Lease, Lessor shall not be obligated toexercise any standard of reasonableness in determining whether to grant suchconsent.  The holding of any auction onthe Premises or Common Areas in violation of this paragraph shall constitute amaterial default of this Lease.

 

**34.****       Signs. **Lessee shall not place any sign upon thePremises or the Office Building Project without Lessor’s prior writtenconsent.  Under no circumstances shallLessee place a sign on any roof of the Office Building Project.  (see addendum paragraph 57)

 

**35.****       Merger. **The voluntary or other surrender of thisLease by Lessee, or a mutual cancellation thereof, or a termination by Lessor,shall not work a merger, and shall, at the option of Lessor, terminate all orany existing subtenancies or may, at the option of Lessor, operate as anassignment to Lessor of any or all

 

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of such subtenancies.

 

**36.****       Consents. **Except for paragraphs 33 (auctions) and34 (signs) hereof, wherever in this Lease the consent of one party is requiredto an act of the other party such consent shall not be unreasonably withheld ordelayed.

 

**37.****       Guarantor. **In the event that there is a guarantorof this Lease, said guarantor shall have the same obligations as Lessee underthis Lease.

 

**38.****       Quiet Possession. **Upon Lessee paying the rent for thePremises and observing and performing all of the covenants, conditions andprovisions on Lessee’s part to be observed and performed hereunder, Lesseeshall have quiet possession of the Premises for the entire term hereof subjectto all of the provisions of this Lease. The individuals executing this Lease on behalf of Lessor represent andwarrant to Lessee that they are fully authorized and legally capable ofexecuting this Lease on behalf of Lessor and that such execution is bindingupon all parties holding an ownership interest in the Office Building Project.

 

**39.****       Options.**

 

**39.1****                        Definition.**  As used in this paragraph the word “Option”has the following meaning: (1) the right or option to extend the term of thisLease or to renew this Lease or to extend or renew any lease that Lessee has onother property of Lessor; (2) the option of right of first refusal to lease thePremises or the right of first offer to lease the Premises or the right offirst refusal to lease other space within the Office Building Project or otherproperty of Lessor or the right of first offer to lease other space within theOffice Building Project or other property of Lessor; (3) the right or option topurchase the Premises or the Office Building Project, or the right of firstrefusal to purchase the Premises or the Office Building Project or the right offirst offer to purchase the Premises or the Office Building Project, or theright or option to purchase other property of Lessor, or the right of firstrefusal to purchase other property of Lessor or the right of first offer topurchase other property of Lessor.

 

**39.2****                        OptionsPersonal.**  Each Option granted toLessee in this Lease is personal to the original Lessee and may be exercisedonly by the original Lessee while occupying the Premises who does so withoutthe intent of thereafter assigning this Lease or subletting the Premises or anyportion thereof, and may not be exercised or be assigned, voluntarily orinvoluntarily, by or to any person or entity other than Lessee; provided,however, that an Option may be exercised by or assigned to any Lessee Affiliateas defined in paragraph 12.2 of this Lease. The Options, if any, herein granted to Lessee are not assignableseparate and apart from this Lease, nor may any Option be separated from thisLease in any manner, either by reservation or otherwise.  See Addendum Paragraph 78

 

**39.3****                        MultipleOptions.**  In the event that Lesseehas any multiple options to extend or renew this Lease a later option cannot beexercised unless the prior option to extend or renew this Lease has been soexercised.

 

**39.4****                        Effect ofDefault on Options.**

 

(a)          Lessee shall have no right to exercise anOption, notwithstanding any provision in the grant of Option to the contrary,(i) during the time commencing from the date Lessor gives to Lessee a notice ofdefault pursuant to paragraph 13.1(c) or 13.1(d) and continuing until thenoncompliance alleged in said notice of default is cured, or (ii) during theperiod of time commencing on the day after a monetary obligation to Lessor isdue from Lessee and unpaid (without any necessity for notice thereof to Lessee)and continuing until the obligation is paid, or (iii) in the event that Lessorhas given to Lessee three or more notices of default under paragraph 13.1(c),or paragraph 13.1(d), whether or not the defaults are cured, during the 12month period of time immediately prior to the time that Lessee attempts toexercise the subject Option, (iv) if Lessee has committed any non-curablebreach, including without limitation those described in paragraph 13.1(b), oris otherwise in default of any of the terms, covenants or conditions of thisLease.

 

(b)         The period of time within which an Option maybe exercised shall not be extended or enlarged by reason of Lessee’s inabilityto exercise an Option because of the provisions of paragraph 39.4(a).

 

(c)          All rights of Lessee under the provisions ofan Option shall terminate and be of no further force or effect, notwithstandingLessee’s due and timely exercise of the Option, if, after such exercise andduring the term of this Lease, (i) Lessee fails to pay to Lessor a monetaryobligation of Lessee for a period of thirty (30) days after such obligationbecomes due (without any necessity of Lessor to give notice thereof to Lessee),or (ii) Lessee fails to commence to cure a default specified in paragraph 13.1(d) within thirty (30) days after the date that Lessor gives notice to Lesseeof such default and/or Lessee fails thereafter to diligently prosecute saidcure to completion, or (iii) Lessor gives to Lessee three or more notices ofdefault under paragraph 13.1(c), or paragraph 13.1(d), whether or not thedefaults are cured, or (iv) if Lessee has committed any non-curable breach,including without limitation those described in paragraph 13.1(b), or isotherwise in default of any of the terms, covenants and conditions of thisLease.

 

**40.****       Security Measures -Lessor’s Reservations.**

 

40.1                           Lesseehereby acknowledges that Lessor shall have no obligation whatsoever to provideguard service or other security measures for the benefit of the Premises or theOffice Building Project.  Lessee assumesall responsibility for the protection of Lessee, its agents, and invitees andthe property of Lessee and of Lessee’s agents and invitees from acts of thirdparties.  Nothing herein contained shallprevent Lessor, at Lessor’s sole option, from providing security protection forthe Office Building Project or any part thereof, in which event the costthereof shall be included within the definition of Operating Expenses, as setforth in paragraph 4.2(b).

 

40.2                           Lessorshall have the following rights:

 

(a)          To change the name, address or title of theOffice Building Project or building in which the Premises are located upon notless than 90 days prior written notice;

 

(b)         To, at Lessee’s expense, provide and installBuilding standard graphics and such portions of the Common Areas as Lessorshall reasonably deem appropriate;

 

(c)          To permit any lessee the exclusive right toconduct any business as long as such exclusive does not conflict with anyrights expressly given herein;

 

(d)         To place such signs, notices or displays asLessor reasonably deems necessary or advisable upon the roof, exterior of thebuildings or the Office Building Project or on pole signs in the Common Areas;

 

40.3                           Lesseeshall not:

 

(a)          Use a representation (photographic orotherwise) of the Building or the Office Building Project or their name(s) inconnection with Lessee’s business:

 

(b)         Suffer or permit anyone, except in emergency,to go upon the roof of the Building.

 

**41.****       Easements.**

 

41.1                           Lessorreserves to itself the right, from time to time, to grant such easements,rights and dedications that Lessor deems necessary or desirable, and to causethe recordation of Parcel Maps and restrictions, so long as such easements,rights, dedications, Maps and restrictions do not unreasonably interfere withthe use of the Premises by Lessee. Lessee shall sign any of the aforementioned documents upon request ofLessor and failure to do so shall constitute a material default of this Leaseby Lessee without the need for further notice to Lessee.

 

41.2                           Theobstruction of Lessee’s view, air, or light by any structure erected in thevicinity of the Building, whether by Lessor or third parties, shall in no wayaffect this Lease or impose any liability upon Lessor.

 

**42.****       Performance Under Protest.**  If at any time a dispute shall arise as toany amount or sum of money to be paid by one party to the other under theprovisions hereof, the party against whom the obligation to pay the money isasserted shall have the right to make payment “under protest” and such paymentshall not be regarded as a voluntary payment, and there shall survive the righton the part of said party to institute suit for recovery of such sum.  If it shall be adjudged that there was nolegal obligation on the part of said party to pay such sum or any part thereof,said party shall be entitled to recover such sum or so much thereof as it wasnot legally required to pay under the provisions of this Lease.

 

**43.****       Authority.**  If Lessee is a corporation, trust, orgeneral or limited partnership, Lessee, and each individual executing thisLease on behalf of such entity represent and warrant that such individual isduly authorized to execute and deliver this Lease on behalf of saidentity.  If Lessee is a corporation,trust or partnership, Lessee shall, within thirty (30) days after execution ofthis Lease, deliver to Lessor evidence of such authority satisfactory toLessor.

 

**44.****       Conflict.**  Any conflict between the printed provisions,Exhibits or Addenda of this Lease and the typewritten or handwrittenprovisions, if any, shall be

 

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controlled by the typewritten or handwritten provisions.

 

**45.****       No Offer.**  Preparation of this Lease by Lessor orLessor’s agent and submission of same to Lessee shall not be deemed an offer toLessee to lease.  This Lease shallbecome binding upon Lessor and Lessee only when fully executed by both parties.

 

**46.****       Lender Modification.**  Lessee agrees to make such reasonablemodifications to this Lease as may be reasonably required by an institutionallender in connection with the obtaining of normal financing or refinancing ofthe Office Building Project.

 

**47.****       Multiple Parties.**  If more than one person or entity is namedas either Lessor or Lessee herein, except as otherwise expressly providedherein, the obligations of the Lessor or Lessee herein shall be the joint andseveral responsibility of all persons or entities named herein as such Lessor orLessee, respectively.

 

**48.****       Work Letter.**  This Lease is supplemented by that certainWork Letter of even date executed by Lessor and Lessee, attached hereto asExhibit C, and incorporated herein by this reference.

 

**49.****       Attachments.**  Attached hereto are the following documentswhich constitute a part of this Lease:

 

A.                    Addendumto Lease

B.                      Exhibit“A” – Approved Space Plan and Notes

C.                      Exhibit“A–1” – Approved Electrical Plan

D.                     Exhibit“B” – The Rules and Regulation

E.                       Exhibit“C” – Janitorial Services

 

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACHTERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIRINFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THETERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT ANDPURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

 

IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TOYOUR ATTORNEY FOR HIS APPROVAL.  NOREPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATEASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THELEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THETRANSACTION RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OFTHEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

 
| **LESSOR**                              |                                                                                                                                                                                                                                                                                                        | **LESSEE**                           |                    |
|-----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|-------------------------|
|                                    |                                                                                                                                                                                                                                                                                                        |                                 |                    |
| CFD – Mesa Ridge Partners, L.P., a |                                                                                                                                                                                                                                                                                                        | Altris Software, Inc a California    |                    |
| California Limited Partnership          |                                                                                                                                                                                                                                                                                                        | Corporation dba Spescom Software Inc |                    |
|                                    |                                                                                                                                                                                                                                                                                                        |                                 |                    |
| By                                      | CT Cal Manager, Inc., a California                                                                                                                                                                                                                                                                          |                                 | By                      | /s/ Carl Mostert |   |
|                                    | Corporation                                                                                                                                                                                                                                                                                                 |                                 |                    | Carl Mostert |   |
|                                    |                                                                                                                                                                                                                                                                                                        |                                 |                    |
| Its                                     | General Manager                                                                                                                                                                                                                                                                                             |                                 | Its                     | Chief Executive Officer |   |
|                                    |                                                                                                                                                                                                                                                                                                        |                                 |                    |
| By                                      | /s/ [ILLEGIBLE]                                                                                                                                                                                                                                                                                             |                                 | By:                     | /s/ John W. Low |   |
| Its                                     | Director                                                                                                                                                                                                                                                                                                    |                                 |                    | John Low |   |
|                                    | /s/ [ILLEGIBLE]                                                                                                                                                                                                                                                                                             |                                 |                    |   |
|                                    |                                                                                                                                                                                                                                                                                                        | Its                                  | Chief Financial Officer |   |
|                                    |                                                                                                                                                                                                                                                                                                        |                                 |                    |
| Executed at                             | Newport Beach, CA 92660                                                                                                                                                                                                                                                                                     |                                 | Executed at             | San Diego, CA 92121 |   |
|                                    |                                                                                                                                                                                                                                                                                                        |                                 |                    |
| on                                      |                                                                                                                                                                                                                                                                                                        |                                 | on                      | 4/14/03 |   |
|                                    |                                                                                                                                                                                                                                                                                                        |                                 |                    |
| Address                                 | 20151 SW Birch Street, Suite 200                                                                                                                                                                                                                                                                            |                                 | Address                 | 10052 Mesa Ridge Court, Suite 100 |   |
|                                    |                                                                                                                                                                                                                                                                                                        |                                 |                    | San Diego, CA 92121 |   |
|                                    |                                                                                                                                                                                                                                                                                                        |                                 |                    |   |   |
|                                    |                                                                                                                                                                                                                                                                                                        |                                 |                    |   |   |
| NOTE:                                   | These forms are often modified to meet changing requirements of law  and needs of the industry.  Always  write or call to make sure you are utilizing the most current form: AMERICAN  INDUSTRIAL REAL ESTATE ASSOCIATION, 700 South Flower Street, Suite 600, Los  Angeles, CA 90017. (213) 687-8777. |
|                                         |                                                                                                                                                                                                                                                                                                             |                                      |                         |  |  |  |  |  |  |  |  |  |

 

11

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**ADDENDUM TO THAT STANDARD OFFICE LEASE -GROSSDATED APRIL 1, 2003, BY AND BETWEEN CFD-MESA RIDGE PARTNERS, L.P.(“LESSOR”),**

**AND**

**ALTRIS SOFTWARE, INC. A CALIFORNIACORPORATION DBA: SPESCOM SOFTWARE, INC. (“LESSEE”)**

 

50.**                                 BaseRent:** The monthly Base Rent shallbe paid as follows (subject to paragraph 63: Rental Abatement):

 
| **Months** |   | **Monthly Rent**                                                 |
|------------|--------|------------------------------------------------------------------|
| 01-12      |   | $18,897.60 plus Tenant to Pay for Separately Metered Electricity |
| 13-24      |   | $19,464.53 plus Tenant to Pay for Separately Metered Electricity |
| 25-36      |   | $20,048.46 plus Tenant to Pay for Separately Metered Electricity |
| 37-48      |   | $20,649.92 plus Tenant to Pay for Separately Metered Electricity |
| 49-60      |   | $21,269.42 plus Tenant to Pay for Separately Metered Electricity |
| 61-72      |   | $21,907.50 plus Tenant to Pay for Separately Metered Electricity |

 

51.                                 **Early Free Occupancy.**  Lessor shall grant to Lessee three (3)months of Early Free Occupancy commencing upon completion of the tenantimprovements, estimated to be June 1, 2003 (“Occupancy Date”).  During the Early Free Occupancy period allthe terms and conditions of this Lease, including payment of separately meteredelectricity, shall be in effect except for the payment of rent.

 

(a)                                  Beginning on theEarly Free Occupancy Date, Lessee shall occupy the Premises free of Base Rentuntil the Commencement Date (Early Occupancy). The Early Occupancy Date shall be the later of (a) June 1, 2003, or(b) upon Substantial Completion of the Premises as outlined in Paragraph 61 ofthis Lease.  The Commencement Date shallbe ninety  (90)  days following Substantial Completion oftenant improvements and is estimated to be September 1, 2003.

 

(b)                                 Lessor and Lesseeagree to execute a Lease Commencement Memorandum establishing the exact EarlyFree Occupancy Date and the Commencement Date when those dates have beenestablished.  If for any reason Lessorcannot deliver possession of the Premises to Lessee substantially completed bythe estimated Occupancy Date set forth in Paragraph 51 of the Lease, Lessorshall not be subject to any liability therefore, nor shall such failure affectthe validity of this Lease, or the obligations of Lessee hereunder, but in suchcase, the Commencement Date shall be adjusted to ninety (90) days following theSubstantial Completion Date, as defined in Paragraph 61, and all obligationsunder the Lease shall be delayed, including payment of Monthly Base Rent,Lessee’s share of Operating Expenses and all other monetary obligations underthe Lease.

 

52.                                 **Assignment and Subletting.**

Provided that Lessee is not in default of the Lease, fifty percent(50%) of any sums or other economic consideration received by Lessee as aresult of any assignment or subletting entered into pursuant to Paragraph 12 ofthe Lease, however denominated under the assignment or sublease, which exceed,in the aggregate (a) the total sums which Lessee is obligated to pay Lessorunder this Lease (prorated to reflect obligations allocable to any portion ofthe Premises subleased), plus (b) (i) reasonable real estate brokeragecommissions or fees payable by Lessee in connection with such assignment orsubletting and  (ii)  reasonable costs of tenant  improvements required to be constructed byLessee for any such assignee or sublessee, shall be paid by Lessee to Lessor asadditional rent under this Lease without affecting or reducing any obligationsof Lessee hereunder.  Lesseeunderstands, acknowledges and agrees that Lessor’s right to recapture anyconsideration paid in connection with an approved assignment or subletting is amaterial inducement for Lessor’s agreement to lease the Premises to Lessee uponthe terms and conditions set forth.

 

12

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53.                                 **Operating Expenses. **If the Office Building Project is less than ninety-fivepercent (95%) occupied during all or a portion of any Comparison Year(including Base Year), Lessor shall make an appropriate adjustment to thevariable components of Operating Expenses for such year or applicable portionthereof, to determine the amount of Operating Expenses that would have beenpaid had the Office Building Project been ninety-five percent (95%) occupied;and the amount so determined shall be deemed to have been the amount ofOperating Expenses for such Comparison Year, or applicable portion thereof.

 

54.                                 **Liability of Lessor. **Lessee agrees to look solely to Lessor’s interest in theOffice Building Project (or the proceeds thereof) for the satisfaction of anyremedy of Lessee for the collection of a judgement (or any judicial process)requiring the payment of money by Lessor in the event of any default by Lessorhereunder, and no other property or assets of Lessor, or any officer, director,shareholder, partner, trustee, agent, servant or employee of Lessor shall besubject to levy, execution or other enforcement procedure for the satisfactionof Lessee remedies under or with respect to this Lease, the relationship ofLessor and Lessee hereunder, or Lessee use or occupancy of the Premises.

 

55.**                                 EnvironmentalCompliance; Hazardous Materials or Activities. **Lessee shall at all times and in all respects comply with allfederal, state and local laws, ordinances and regulations relating toindustrial hygiene, environmental protection and/or the use, analysis,generation, manufacture, storage, presence, disposal or transportation of any“Hazardous Materials” (as hereinafter defined).  Lessee shall not cause or permit any hazardous wastes, toxicsubstances or toxic or hazardous materials (collectively, “HazardousMaterials”) to be brought upon, used, generated, stored or disposed of on,under or about, or transported to or from, the Premises (collectively,“Hazardous Materials”) without first receiving Lessor’s written consent, whichconsent may be withheld by Lessor in its absolute discretion and may be revokedat any time.  If Lessor consents to anysuch Hazardous Materials Activities, Lessee shall conduct them in strict compliance(at Lessee’s sole cost and expense) with all applicable Regulations, ashereinafter defined, and using all necessary and appropriate precautions.  Lessor shall not be liable to Lessee for anyHazardous Materials Activities by Lessee, Lessee’s employees, agents,contractors, licensees, or invitees, whether or not consented to byLessor.  For purposes hereof, HazardousMaterials shall include, but not be limited to, substances defined as“hazardous substances”, “toxic substances”, or hazardous wastes” in theComprehensive Environmental Response, Comprehensive and Liability Act of 1980;Resource Conservation and Recovery Act of 1976; Hazardous MaterialsTransportation Act; section 25117 of the California Health and Safety Code; allother laws and ordinances governing similar matters; and any regulationsadopted and publications promulgated pursuant to said laws (collectively,“Regulations”).  Prior to using, storingor maintaining any Hazardous Materials on or about the Premises, Lessee shallprovide Lessor with a list of the types and quantities thereof, and shallupdate such list as necessary for continued accuracy.  Lessee shall also provide Lessor with a copy of any HazardousMaterials inventory statement required by any applicable Regulation, and any updatefiled in accordance with any applicable Regulation.  If Lessee’s activities violate or create a risk of violation ofany Regulation, Lessee shall cease such activities immediately, including (butnot limited to) upon notice from Lessor. Lessee shall immediately notify Lessor both by telephone and in writingof any spill unauthorized discharge of Hazardous Materials or of any conditionconstituting an “imminent hazard” under any Regulation.  Lessor, Lessor’s representatives andemployees shall have the right to enter the Premises at any time in the case ofemergency, and otherwise at reasonable times, for the purpose of inspecting thecondition of the Premises and for verifying compliance by Lessee with the Leaseand all laws, rules, regulations, ordinances and directives relating in any mannerto the Premises, including but not limited to matters pertaining to the use,generation, manufacture, production, installation, maintenance, removal,transportation, storage, spill or release of any Hazardous Materials.  Lessee shall indemnify, protect, defend(with counsel acceptable to Lessor) and hold Lessor, its agents, employees,lenders and the Premises, harmless from and against any all loss of rentsand/or damages, liabilities, judgments, costs, claims, liens, expenses,penalties, permit fees, and attorney’s and consultant fees arising out of orinvolving any Hazardous Materials brought onto, manufactured, produced orstored at, discharged or transported from, the Premises by or for Lessee, itsagents, contractors, invitees, successors or assigns, or in any way underLessee’s control.  Lessee’s obligationsunder this Paragraph shall include, but not be limited to, the effects of anycontamination or injury to any person, property or the environment created orpermitted by Lessee, and the cost of investigation (including consultant’s andattorney’s fees and testing), removal, remediation, restoration and/orabatement thereof, or of any contamination therein

 

13

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involved, and shall survive the expiration or earlier termination ofthe Lease.  No termination, cancellationor release agreement entered into by Lessor and Lessee shall release from itsobligations under this Lease with respect to Hazardous Materials Activities,unless specifically so agreed by Lessor in writing at the time of suchagreement.  Lessee shall not be liableto Lessor for any Hazardous Materials Activities of Lessor, Lessor’s employees,agents, contractors, licensees or invitees nor for any such Hazardous MaterialsActivities prior to the Commencement Date.

 

56.                                 **Notification Address.**  Pursuant to Paragraph 23, Lessor shall benoticed at:

 
| **c/o Essex Realty  Management Inc.**                                                                                                                                                                                                                                  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1550 Hotel Circle Court                                                                                                                                                                                                                                                |
| San Diego, CA 92108                                                                                                                                                                                                                                                    |
| (619) 220-5995                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                   |
| Lessee shall be noticed at:                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                   |
| Altris Software, Inc a California  Corporation dba Spescom Software Inc                                                                                                                                                                                                |
| 10052 Mesa Ridge Court, Suite 100                                                                                                                                                                                                                                      |
| San Diego, CA 92121                                                                                                                                                                                                                                                    |
| (     )                                       - |

 

57.                                 **Signage.** Lessee shall be allowed building eyebrow signage directly above theentrance to their premises.  Lessoragrees to reimburse Lessee up to a maximum of $5,000.00 (“SignageAllowance”).  The specific design,location and size of said signage shall mutually be agreed upon and subject toCity approval.  If the building signageis not available, said signage allowance may be used by Lessee toward amutually acceptable alternative signage solution and/or toward the payment ofrent.

 

58.                                 **Option to Renew.**

a.                                       OptionRight:  Lessor hereby grants to theLessee named in the Basic Lease Provisions one (1) option to extend the Term ofthe Lease for a period of five (5) years (the “Option Term”), which optionshall be exercisable only by written notice delivered by Lessee to Lessor notless than nine (9) months prior to and not more than twelve (12) months priorto the expiration of the term, provided that, as of the date of delivery ofsuch notice, Lessee is not in default under the Lease beyond any applicablenotice and cure periods.  Upon properexercise of such option to extend, and provided that, as of the end of theinitial Term of the Lease, Lessee is not in default under the Lease beyond anyapplicable notice and cure periods, the Term of the Lease shall be extended forthe Option Term.

 

b.                                      OptionRent:  The Base Rent payable by Lesseeduring the Option Term (the “Option Rent”) shall be the “Fair Market RentalRate” for the Premises.  The term “FairMarket Rental Rate” shall mean the annual amount per rentable square foot thata willing, non-equity, non-sublease tenant would pay and a willing Lessor wouldaccept on a non-sublease, basis, at arm’s length, for unencumbered spacecomparable to the Premises in the Building and in comparable Class “B” officebuildings in the Sorrento Mesa market.

 

59.                                 **HVAC Operating Hours.**  Standard operating hours included within theBase Year Operating Expenses shall be weekdays from 7:00 a.m. to 6:00 p.m. andSaturdays from 9:00 a.m. to 3:00 p.m., excluding Sundays and normallyrecognized national holidays. Thereafter, Lessee shall pay for such additional use beyond theaforementioned hours at a rate equal to Lessor’s actual operating costs anddepreciation.

 

60.                                 **Tenant Improvements.**  Lessor, at Lessor’s sole cost and expense,shall, in accordance with the Approved Space Plan using materials as stated inthe Notes to the Approved Space Plan, build the Premises in accordance with theattached Exhibit A and A-1 as generally outlined as follows:

 

a.                                       Theaddition of a dedicated double door entry for the exclusive use of Tenantlocated on the perimeter of the Building, subject to Tenant’s reasonable reviewand approval of the design of the same.

b.                                      Eight(8) perimeter executive offices.

c.                                       Interioropen floor plan to accommodate approximately thirty (30) workstations(approximately 8’X8’).

d.                                      Two(2) conference rooms (seating for eight).

e.                                       One(1) training room to hold approximately twelve (12) students.

f.                                         Smallphone PBX/computer server room with sufficient climate control.

 

14

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g.                                      Storeroom.

h.                                      Breakroom.

i.                                          Smalllobby/reception area.

 

Substantial Completion:  For thepurposes of this Lease, “Substantial Completion” of the Premises shall meanthat, with the exception of any tenant figures, work stations, built-infurniture, or equipment to be installed by the Lessee and punch list itemswhich would not prevent the use or occupancy of the Premises for the permitteduse thereof, the tenant improvements are completed in accordance with theApproved Space Plan and the Approved Electrical Plan and all mechanical systemsserving the Premises are in good working order.

 

Construction Representatives: Landlord hereby appoints the following person(s) as Landlord’srepresentative (“Landlord’s Representative”) to act for Landlord in all mattersrelated to the construction of tenant improvements as provided herein:  Dan Culler. Tenant hereby appoints John Low as Tenant’s representative (“Tenant’sRepresentative”) to act for Tenant in all matters related to the constructionof tenant improvements as provided herein. All communications with respect to the matters related to theconstruction of tenant improvements shall be made to Landlord’s Representativeor Tenant’s Representative, as the case may be.  Either party may change its representative at any time by writtennotice to the other party.

 

Changes in Plans:  Any changesin the Approved Space Plan, Approved Electrical Plan or other plans andspecification after approval or deemed approval thereof by Lessee shall beapproved by Lessor and prepared at Lessee’s sole cost and expense.  Lessor’s approval of Lessee’s changes shallnot be unreasonably withheld. Furthermore, Lessee shall be liable for any resulting delays incompleting the tenant improvements for the increased costs in completing thetenant improvements, if any, resulting from such delays.

 

61.                                 **Rental Abatement.** Provided Lessee is not in Default of theLease, Lessee shall receive month thirteen (13) of this Lease ($19,464.53) freeof monthly base rent.

 

62.                                 **Early Access.**  Lessee shall be allowed early access to the premises commencingMay 15, 2003 for the purpose of installing network cabling, phone systems,etc. Lessee shall not cause any delay in the completion of the improvements.

 

63.                                 **Termination Right.** Lessee shall have a one-time right toterminate the Lease at the end of the 48th month by giving writtennotice to Lessor during month forty-two (42) of the Lease of Lessee’s intent toterminate accompanied with a payment in the amount of $20,649.92 in immediatelyavailable funds.  In the event thatLessee fails to give such notice and payment during the 42nd monthof the Lease, Lessee shall be deemed to have waived its rights to terminate theLease pursuant to this paragraph 65.

 

64.                                 **Non-disturbance Agreement:** Lessor shall use reasonable commercialefforts to provide Lessee a commercially reasonable non-disturbance agreementfrom Lessor’s current lender within thirty (30) days after the full executionand delivery of this Lease by both parties, as well as all future lenders ofthe project and in the case of a Sublessee, from the Master Lessor.

 

65.                                 **Lessee’s Audit Rights. **If Lessee disputes the amount of Operating Expenses(including the Comparison Year) set forth in any statement of OperatingExpenses delivered by Lessor to Lessee pursuant to Section 4.2(g) of the Lease(“Actual Statement”), Lessee shall have the right, at its own cost and expenseto audit or inspect Lessor’s detailed records each year with respect to theOperating Expenses, as well as all other additional rent payable by Lesseepursuant to the Lease for any Lease Year (not to exceed one time per year) tobe exercised, if at all, not later than three (3) months following receipt ofsuch Actual Statement.  Lessee shall beallowed to inspect such records with fifteen (15) days prior written notice atLessor’s office.  The amounts payableunder paragraph 4.2 of the Lease by Lessor to Lessee or by Lessee to Lessor asthe case may be shall be appropriately adjusted on the basis of suchaudit.  Should a dispute arise betweenthe parties regarding the results of Lessee’s audit, either party may cause thedispute to be submitted to JAMS/ENDISPUTE (“JAMS”) in San Diego County,California, for binding arbitration. The arbitration shall be conducted in accordance with the rules ofpractice and procedure of JAMS and otherwise pursuant to the CaliforniaArbitration Act (Code of Civil Procedures Section 1280 et. seq.).  The arbitrator shall apportion the costs ofthe arbitration, together with the attorneys’ fees of the parties, in themanner deemed equitable by the arbitrator, it being the intention of theparties that the prevailing party ordinarily be entitled to recover itsreasonable costs and fees.”

 

66.                                 **Janitorial Services.** Subject to reimbursement pursuant to Section4.2(d)(ii) of the Lease, Lessor shall provide the janitorial services describedin Exhibit C attached to the Lease.”

 

15

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# **ADDITIONAL MODIFICATIONS TO THE LEASE**

# ** **

67.                                 **At the end of Section 2.1, add the following:**  “Notwithstanding the foregoing, Lessee shallhave the right at anytime on or before June 1, 2003 to measure andrecalculate the rentable square feet of the Premises in accordance with BOMASIOR standards for a multiple tenant occupancy in a two-story building usingexterior wall methodology.  In the eventthat Lessee notifies Lessor on or before June 1, 2003 of a variationbetween Lessee’s calculations and the square footage amount specified inparagraph 1.2 above and the actual variation is determined to be greater thantwo (2%) of the square footage amount specified in paragraph 1.2, the Base Rentand Lessee’s Share shall be adjusted accordingly.  The Office Building Project consists of approximately 44,709rentable square feet.”

 

68.                                 **At the end of Section 2.5, add the following:** “Notwithstanding the foregoing, Lessor shalltake no action in the Common Areas which would materially adversely affect: (i)access to the Premises, (ii) the view from the Premises, or (iii) the parkingratio required for the Project.”

 

69.                                 **Preface Section 3.1 with the clause:**  “Subject to the other provisions of thisParagraph 3,...”

 

70.                                 **Add at the end of Section 3.2.2 the followingsentence:**  “In order to havethe benefit of any such delays, Lessor shall give Lessee written notice of anysuch delay and the number of days attributable to such delay.”

 

71.                                 **In Section 6.2(a), insert the words: **“, including, the Americans withDisabilities Act as enforced by the City of San Diego” at the end of the firstsentence.

 

72.                                 **At the end of Section 6.3, add the following:** “In addition, except as otherwise provided inthis Lease, Lessee hereby accepts the Premises and the Office Building Projectin their condition existing as of the Lease Commencement Date or the date thatLessee takes possession of the Premises, whichever is earlier, without anyobligation on Lessor’s part to make any alterations, upgrades or improvementsthereto, except as provided in paragraph 61 of the Addendum and the repair ofany latent structural defects in the Building or Premises (excluding anyportion of the Premises constructed by Lessee), which  have a material adverse effect on Lessee’s use of the Premisesand which are disclosed by Lessee and specified in written notice to Lessorwithin ten (10) business days after Lessee first learns of or discovers suchlatent structural defects.  Lessor shallcause all such latent structural defects so specified by notice from Lessee tobe completed and/or repaired, at Lessor’s sole cost.”

 

73.                                 **In Section 7.3(a), add at end of the third sentencethe following:** provided thatLessor notifies Lessee at the time Lessor consents to any such alterations,improvements, additions or Utility Installations (“Tenant Changes”) that Lessorwill require removal of such Tenant Changes and restoration of the Premises andthe Office Building Project to their prior condition on the expiration orsooner termination of this Lease.”

 

74.                                 **Preface Section 8.8 with the clause: **“except for Lessor’s grossnegligence or willful misconduct,...”

 

75.                                 **At the end of Section 9.4(a), add the following:** “If at any time during the last six (6) monthsof the term of the Lease there is substantial damage to the Premises andLessor’s contractor estimates in a writing delivered to the parties that therepair, reconstruction or restoration of such damage cannot be completed withinthe earlier to occur of (i) the scheduled expiration date of the Lease, or (ii)sixty (60) days after the occurrence of such damage, Lessee may at Lessee’soption cancel and terminate this Lease by giving written notice to Lessor ofLessor’s election to do so within thirty (30) days after the date of occurrenceof such damage.”

 

76.                                 **In Section 13.1(b),**defaults under Section30(b) shall not be non-curable defaults if Lessee is negotiating in good faiththe terms and conditions of the required subordination agreement.

 

77.                                 **At the end of Section 32.1,**add thefollowing provision:  “Notwithstandingthe foregoing, Lessor shall use commercially reasonable efforts not tomaterially interfere with or interrupt the conduct of business by Lessee in thePremises.”

 

78.                                 **In Section 39.2** Lessee may assign itsoption rights to any assignee that is approved by Lessor in connection with anassignment of the Lease.

 

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| **LESSOR**                                                                               |                                                | **LESSEE**                                                                   |
|------------------------------------------------------------------------------------------|-----------------------------------------------------|------------------------------------------------------------------------------|
|                                                                                     |                                                |
| **CFD-Mesa Ridge Partners,  Performance Group, Inc.,  a California Limited Partnership** |                                                | **Altris Software, Inc. a California  Corporation dba Spescom Software Inc** |
|                                                                                     |                                                |
| **By:**                                                                                  | **CT Cal Manager, Inc.,  A California Corporation** |                                                                         | **By:** | /s/ Carl Mostert |
|                                                                                     |                                                | **Carl Mostert**                                                             |
|                                                                                     |                                                |                                                                         |
| **Its:**                                                                                 | **General Manager**                                 | **Its:**                                                                     | **Chief Executive  Officer** |
|                                                                                     |                                                |
| **By:**                                                                                  | David P. [ILLEGIBLE]                                |                                                                         | **By:** | /s/ John Low |
|                                                                                     |                                                | **John Low**                                                                 |
|                                                                                     |                                                |
| **Its:**                                                                                 | **Director**                                        |                                                                         | **Its:** | **Chief Financial  Officer** |
|                                                                                     |                                                |
| **By:**                                                                                  | /s/ [ILLEGIBLE]                                     |                                                                         | **Date:** | 4/14/03 |
|                                                                                     |                                                |
| **Its:**                                                                                 | EVP                                                 |                                                                         |   |
|                                                                                     |                                                |
| **Date:**                                                                                |                                                |                                                                         |   |
|                                                                                          |                                                     |                                                                              |  |  |  |  |  |  |  |

 

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**EXHIBITA – APPROVED SPACE PLANS**

 

[GRAPHIC]

 

18

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[GRAPHIC]

 

19

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**EXHIBITA – SPACE PLAN NOTES**

 

ROOM SCHEDULE

 

101                              OPENOFFICE

102                              STORAGE

103                              CONFERENCE

104                              OFFICE

105                              RECEPTION

106                              OFFICE

107                              TRAININGROOM

108                              CONFERENCE

109                              OFFICE

110                              OFFICE

111                              OFFICE

112                              OFFICE

113                              OFFICE

114                              OFFICE

115                              OFFICE

116                              LOUNGE

117                              SERVERROOM

118                              OPENOFFICE

119                              OFFICE

120                              OPENOFFICE

 

KEYNOTES

 

1.               NEW DOUBLE DOORENTRY

2.               REPAIR OR REPLACEDOOR - SEE CONSTRUCTION NOTE 4

 

FINISH NOTES

 

1.               EXISTING CARPET ANDBASE TO REMAIN. INSTALL NEW BASE TO ALL NEW WALLS, MATCH EXISTING.  SERVER ROOM AND LOUNGE TO RECEIVE NEW VCTFLOORING. CARPET IN NEW STORAGE ROOM TO BE PATCHED TO MATCH EXISTING CARPET.

 

2.               ALL NEW WALLS TO BEPAINTED TO MATCH EXISTING WALLS.

 

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CONSTRUCTION NOTES 

 

1.               NEW DOUBLE DOORENTRY DOORS TO MATCH OTHER EXISTING ENTRY DOORS IN STYLE AND SIZE.  PROVIDE AND INSTALL NEW CONCRETE LANDINGOUTSIDE.  NEW ENTRY. PROVIDE AND INSTALLNEW SIDEWALK TO CONNECT LANDING TO EXISTING SIDEWALK.

 

2.               LOUNGE CABINETRY TOBE STANDARD BASE AND UPPER CABINETS WITH EQUAL SIZED DOORS, ONE ADJUSTABLESHELF IN BASE, TWO ADJUSTABLE SHELVES IN UPPER CABINET.  CABINETRY TO INCLUDE A 3’ WIDE SPACE FORTENANT PROVIDED REFRIGERATOR AND SPACE FOR TENANT PROVIDED DISHWASHER, ASTAINLESS STEEL SINK WITH GOOSENECK HARDWARE, GARBAGE DISPOSAL, AND HOT WATERHEATER.  ALL SURFACES TO BE PLASTICLAMINATE, SOLID COLOR, FORMICA OR EQUAL. CABINET TO BE 6’ WIDE.

 

3.               DOOR TO ROOM 12 HASHOLES AROUND LEVER HARDWARE.  REPAIR ORREPLACE DOOR.

 

4.               REMOVE CARPETSTAINS OUTSIDE OF ROOM 112 DUE TO WATER DAMAMGE. 

 

KEY

 

•                  EXISTINGWALL TO REMAIN

 

•                  NEWINTERIOR PARTITION TO UNDERSIDE OF CEILING GRID

 

•                  NEW1-HOUR RATED WALL TO MATCH EXISTING CORRIDOR WALL

 

DOOR SCHEDULE

 

1.               EXISTING DOOR TOREMAIN

 

2.               NEWBUILDING STANDARD NON-RATED DOOR TIMELY OAK LEGACY STYLE. 3’- 0” W X 7’-0”HWITH BUILDING STANDARD FRAME, BUILDING STANDARD LEVER HARDWARE PASSAGE

 

3.               NEWDOUBLE DOOR ENTRY - PAIR OF 3’- 0”W, MIN. 7’- 0”H STOREFRONT DOOR MATCHEXISTING STOREFRONT DOORS

 

4.               NEWBUILDING STANDARD NON-RATED DOOR TIMELY OAK LEGACY STYLE, 3’- 0” W X 7’ - 0”HWITH BUILDING STANDARD FRAME, BUILDING STANDARD LEVER HARDWARE, LOCKSET

 

5.               NEWWINDOW, 4’-10”H X 7’W X 3” AFF, CLIP SASH FRAME, WITH FROSTED/PATTERNED FILM

 

DOOR NOTES

 

1.               NEWDOOR HARDWARE TO MATCH EXISTING HARDWARE.

 

2.               ADDLOCKSET HARDWARE TO EXISTING DOORS IN ROOMS 104, 106, 109, 110, 111, 113 AND118.

 

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**EXHIBIT A–1 APPROVEDELECTRICAL PLAN**

 

[GRAPHIC]

 

22

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[GRAPHIC]

 

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# **EXHIBIT A–1ELECTRICAL NOTES**

** **

ELECTRICAL NOTES

 

1.               ALLRECEPTACLES SHOWN ARE EXISTING UNLESS OTHERWISE LABELED WITH “R” FOR REMOVE OR“N” FOR NEW. “B” INDICATES EXISTING FACEPLATE TO BE REPLACED WITH NEW BLANKFACE PLATE.

** **

2.               WORKSTATIONS SHOWNARE FOR REFERENCE ONLY.  TO BE PROVIDEDAND INSTALLED BY TENANT.

ELECTRICAL CONTRACTORTO HARD-WIRE TENANTS WORKSTATIONS TO BUILDING POWER.

 

3.               ELECTRICALCONTRACTOR TO COORDINATE WITH TENANT ON LOCATIONS OF JUNCTION BOXES ABOVECEILING FOR SYSTEMS FURNITURE CONNECTIONS. LOCATIONS SHOWN ARE FOR REFERENCE ONLY.

 

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**EXHIBIT “B”**

### **RULES AND REGULATIONS**

# **ATTACHED TO AND MADE A PART OF STANDARDOFFICE LEASE**

 

**The following Rules and Regulations shall bein effect at the Office Building Project. Lessor reserves the right to adopt reasonable modifications andadditions hereto.  In the case of anyconflict between theses Rules and Regulations and the Lease, the Lease shall becontrolling.**

 

1.                                       Except with theprior written consent of Lessor, no Lessee shall conduct any retail sales orany manufacturing of any kind in or from the Premises, or any business otherthan that specifically provided for in the Lease.

 

2.                                       Lessor reservesthe right to prohibit personal goods and services vendors from access to theOffice Building Project except upon such reasonable terms and conditions,including but not limited to the payment of a reasonable fee and provision forinsurance coverage, as are related to the safety, care and cleanliness of theOffice Building Project, the preservation of good order thereon, and the reliefof any financial or other burden on Lessor occasioned by the presence of suchvendors or the sale by them of personal goods or services to the Lessee or itsemployees.  If reasonably necessary forthe accomplishment of these purposes, Lessor may exclude a particular vendorentirely or limit the number of vendors who may be present at any one time inthe Office Building Project.  The term“personal goods or services vendors” means persons who periodically enter theOffice Building Project of which the Premises are a part for the purpose ofselling goods or services to a Lessee, other than goods or services, which areused by a Lessee only for the purpose of conducting its business on thePremises.  “Personal goods or services”include, but are not limited to, drinking water and other beverages, food,barbering services, and shoe shining services. This Section 2 shall not apply to Lessee’s vendors and suppliers inconnection with Lessee’s operation of its business.

 

3.                                       The sidewalks,halls, passages, elevators and stairways shall not be obstructed by any Lesseeor used by it for any purpose other than for ingress to and egress from theirrespective Premises.  The halls,passages, entrances, elevators, stairways, balconies and roof are not for the useof the general public, and Lessor shall in all cases retain the right tocontrol and prevent access thereto of all persons whose presence in thejudgment of Lessor shall be prejudicial to the safety, character, reputationand interests of the Office Building Project and its Lessees, provided thatnothing herein contained shall be construed to prevent such access to personswith whom Lessee normally deals only for the purpose of  conducting its business on the Premises(such as clients, customers, office suppliers and equipment vendors, and thelike), unless such persons are engaged in illegal activities.  No Lessee and no employees of any Lesseeshall go upon the roof of the Building without the written consent ofLessor.  This section 3 shall not apply toLessee’s vendors and suppliers in connection with Lessee’s operation of itsbusiness.

 

4.                                       The sashes, sashdoors, windows, glass lights, and any lights or skylights that reflect or admitlight into the halls or other places of the Building shall not be covered orobstructed.  The toilet rooms, water andwash closets and other water apparatus shall not be used for any purpose otherthan that for which they were constructed, and no foreign substance of any kindwhatsoever shall be thrown therein, and the expense of any breakage, stoppageor damage, resulting from the violation of this rule shall be borne by theLessee who, or whose clerks, agents, employees, or visitors, shall have causedit.

 

5.                                       No sign,advertisement or notice visible from the exterior of the Premises or Buildingshall be inscribed, painted or affixed by Lessee on any part of the OfficeBuilding Project or the Premises without the prior written consent ofLessor.  If Lessor shall have given suchconsent at any time, whether before or after the execution of this Lease, suchconsent shall in no way operate as a waiver or release of any of the provisionshereof or of this Lease, and shall be deemed to relate only to the particularsign, advertisement or notice so consented to by Lessor and shall not beconstrued as dispensing with the necessity of obtaining the specific writtenconsent of Lessor with respect to each and every such sign, advertisement ornotice, as the case may be, so consented to by Lessor.  Lessor shall have the right to remove anynon-approved sign, advertisement or notice, without notice to and at theexpense of Lessee, and Lessor shall not be liable in damages for such removal.

 

6.                                       In order tomaintain the outward professional appearance of the Office Building Project,all window coverings to be installed at the Premises shall be subject toLessor’s prior approval.  If Lessor, bya notice in writing to Lessee, shall object to any curtain, blind, shade orscreen attached to, or hung ink, or used in connection with, any window or doorof the Premises, such use of such curtain, blind, shade or screen shall beforthwith discontinued by Lessee.  Noawnings shall be permitted on any part of the Premises.

 

7.                                       Lessee shall notlay linoleum, tile, carpet or other similar floor covering so that the sameshall be affixed to the floor of the Premises in any manner except as approvedby Lessor.

 

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8.                                       Lessee shall notdo or permit anything to be done in the Premises, or bring or keep anythingtherein, which shall in any way increase the rate of fire insurance on theOffice Building Project, or on the property kept therein, or obstruct orinterfere with the rights of other lessees, or in any way injure or annoy them,or conflict with the regulations of the Fire Department or the fire laws, orwith any insurance policy upon the Office Building Project, or any partthereof, or with any rules and ordinances established by the Board of Health orother governmental authority.

 

9.                                       No Lessee shallsweep or throw or permit to be swept or thrown from the Premises any dirt orother substance into any of the corridors or halls or elevators, or out of thedoors or windows or stairways of the Building. Lessee shall not use, keep or permit to be used any foul or noxious gasor substance in the Premises, or permit or suffer the Premises to be occupiedor used in a manner offensive or objectionable to Lessor or other occupants ofthe Office Building Project by reason of noise, odors, fire hazards and/or vibrations,or interfere in any way with other lessees or those having business therein,nor shall any animals or birds be kept in or about the Office Building Project.

 

10.                                 Lessee and itsemployees, agents and invitees shall not smoke any tobacco products or anyother smoking materials whatsoever in the Premises, Building, common areas orany other area of the Project, except in such areas, if any, as shall bedesignated by Lessor for smoking, in Lessor’s sole and absolute discretion.

 

11.                                 No cooking shall be doneor permitted by Lessee on the Premises, except for the use of a microwave ovenfor food or Underwriter’s Laboratory approved equipment for brewing coffee,tea, and similar beverages shall be permitted, provided that such use is incompliance with law.  Offices in theOffice Building Project shall not be used for the storage or merchandise or forsleeping or lodging.

 

12.                                 Lessee, upon thetermination of its tenancy, shall deliver to Lessor all the keys of offices,rooms and toilet rooms which shall have been furnished Lessee or which Lesseeshall have had made, and in the event of loss of any keys so furnished, shallpay Lessor therefore.

 

13.                                 On Saturdays after6:00 p.m., Sundays and legal holidays, and on other days between the hours of7:00 p.m. and 7:00 a.m., access to the Office Building Project or to thehalls, corridors, elevators or stairways in the Building, or to the Premisesmay be refused unless the person seeking access is known to the buildingwatchman, if any, in charge and has a pass or is properly identified.  Lessor shall in no case be liable fordamages for the admission to or exclusion from the Office Building Project ofany person whom Lessor has the right to exclude under Rule 3 above.  In case of invasion, mob, riot, publicexcitement, or other commotion, Lessor reserves the right, but shall not beobligated, to prevent access to the Office Building Project during thecontinuance of the same by closing the doors or otherwise, for the safety ofthe tenants and protection of property in the Office Building Project.

 

14.                                 Lessee shall see thatthe windows and doors of the Premises are closed and securely locked beforeleaving the Building and Lessee shall exercise extraordinary care and cautionthat all water faucets or water apparatus are entirely shut off before Lesseeor Lessee’s employees leave the Building, and that all electricity, gas or airshall likewise be carefully shut off, so as to prevent waste or damage, and forany default or carelessness Lessee shall make good all injuries sustained byother lessees or occupants of the Building or Lessor.

 

15.                                 Lessee shall not alterany lock or install a new or additional lock or any bolt on any door of thePremises without prior written consent of Lessor.  If Lessor shall gives its consent, Lessee shall in each casefurnish Lessor with a key for any such lock.

 

16.                                 Lessee shall notinstall equipment such as, but not limited to, electronic tabulating orcomputer equipment requiring electrical or air conditioning service in excessof those to be provided by Lessor under the Lease and any such equipment shallbe placed in the Premises in settings approved by Lessor to absorb or preventany vibration, noise or annoyance.

 

17.                                 No bicycle, orshopping cart, or other vehicle or any animal shall be brought into thePremises or the halls, corridors, elevators or any part of the Building byLessee.

 

18.                                 Lessor shall have theright to prohibit the use of the name of the Office Building Project or anyother publicity by Lessee, which in Landlord’s opinion tends to impair thereputation of the Office Building Project, or their desirability for otherlessees, and upon written notice from Lessor, Lessee will refrain from ordiscontinue such publicity.

 

19.                                 Lessee shall not erectany aerial or antenna on the roof or exterior walls of the Premises, theBuilding or the Office Building Project.

 

20.                                 Lessee shall notoverload the floor of the Premises.  Inaddition, Lessee shall not mark, drive nails, screw or drill into partitions,ceilings or floor of the Premises or deface the Premises.

 

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21.                                 No furniture, freightor equipment of any kind shall be brought into the Building or the Building’selevator without the consent of Lessor and all moving of the same into or outof the Building shall be done at such time and in such manner as Lessor shalldesignate.  Lessor shall have the rightto prescribe the weight, size and position of all safes and other heavyequipment brought into the Building and also the times and manner of moving thesame in and out of the Office Building Project.  Safes or other heavy objects shall, if considered necessary byLessor, stand on wood strips of such thickness as is necessary to properlydistribute the weight.  However,Lessor’s consent to placement of Lessee’s safes, heavy equipment or furnitureshall not constitute a representation or warranty by Lessor that the safe,heavy equipment or furniture complies, with regard to distribution of weightand/or vibration, with the provisions of this Rule 21 nor relieve Lessee fromresponsibility for the consequences of non-compliance.  Lessor will not be responsible for loss ofor damage to any such safe or property from any cause and all damage done tothe Building by moving or maintaining any such safe or other property shall berepaired at the expense of Lessee. There shall not be used in any space, or in the public halls of theBuilding, either by any lessee or others, any hand trucks except those equippedwith rubber tires and side guards.

 

22.                                 Except with thewritten consent of Lessor, no person or persons other than those approved byLessor shall be permitted to enter the Building for their purpose of cleaningthe same.  Lessee shall not cause anyunnecessary labor by reason of Lessee’s carelessness or indifference in thepreservation of good order and cleanliness. Lessor shall in no way beresponsible to any Lessee for any loss of property on the Premises, howeveroccurring, or for any damage done to the effects of any lessee by the janitor orany other employee or any other person. Janitor service shall include ordinary dusting and cleaning by thejanitor assigned to such work and shall not include cleaning of carpets orrugs, except normal vacuuming, or moving of furniture and other special services.  Janitor services may not be furnished onnights when rooms are occupied after 9:00 p.m.

 

23.                                 Lessor will directelectricians as to where and how the telephone wires are to be introduced intothe Building.  No boring or cutting forwires into the Building will be allowed without consent of Lessor.  The location of telephone wires, datacabling and other office equipment within the Premises shall not require theapproval of Lessor.

 

24.                                 No furniture,packages, supplies, equipment or merchandise will be received in the Buildingor carried up or down in the elevators or the stairs except between such hoursand in such elevators or stairs as shall be designated by Lessor.

 

25.                                 Lessor reserves theright to exclude or expel from the Office Building Project any person who, inthe judgment of Lessor, is intoxicated or under the influence of liquor orillegal, non-prescription drugs, or who shall in any manner do any act inviolation of any of the Rules and Regulations of the Office Building Project.

 

26.                                 The requirements ofLessee will be attended to only upon application to Lessor.  Contractors, vendors and employees of Lessorshall not perform any work or do anything outside of their regular dutiesunless under special instructions from the Lessor or Lessor’s agent.

 

27.                                 No vending machineshall be installed, maintained or operated upon the Premises without thewritten consent of the Lessor.

 

28.                                 Lessor will giveLessee reasonable notice and, in addition, reimburse Lessee for reasonablecharges for changes to its stationery up to a total aggregate cost of $250.00.

 

29.                                 Lessee agrees that itshall comply with all fire and security regulations that may be issued fromtime to time by Lessor and Lessee also shall provide Lessor with the name of adesignated responsible employee to represent Lessee in all matters pertainingto such fire or security regulations.

 

30.                                 Lessor reserves theright by written notice to Lessee, to rescind, alter or waive any rule orregulation at any time prescribed for the Office Building Project, when, inLessor’s judgment, it is necessary, desirable or proper for the best interestof the Office Building Project and its lessees.

 

31.                                 Lessees shall notdisturb, solicit, or canvas any occupant of the Office Building Project andshall cooperate to prevent same.

 

32.                                 Standard operatinghours included within the Base Year Operating Expenses shall be weekdays from7:00 a.m. to 6:00 p.m. and Saturdays from 9:00 a.m. to 3:00 p.m.,excluding Sundays and normally recognized national holidays.  Thereafter, Lessee shall pay for suchadditional use beyond the aforementioned hours at a rate equal to Lessor’sactual operating costs and depreciation.

 

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33.                                 Lessee shall cooperatewith Lessor in obtaining maximum effectiveness of the cooling system by closingblinds when the sun’s rays fall directly on windows of the Premises.  Lessee shall not obstruct alter, or in anyway impair the efficient operation of Lessor’s heating, ventilating and airconditioning system.  Lessee shall nottamper with or change the setting of any thermostats or control valves.

 

34.                                 Parking:

a.                                       The parking lotshall be accessible twenty-four (24) hours per day, subject to parking card orother reasonable identification or security restriction as may be reasonablyestablished by Lessor from time to time. Lessee agrees to cooperate with Lessor in completing regular maintenanceof the parking lot.

b.                                      Automobiles mustbe parked entirely within the stall lines.

c.                                       All directionalsigns and arrows must be observed and the speed limit shall be 5 miles perhour.

d.                                      Parking isprohibited in areas not striped for parking.

e.                                       Lessor mayrefuse to permit any person who violates the within rules to park in theparking lot, and any violation of the rules shall subject the automobile toremoval from the parking lot at the parker’s expense.

f.                                         Every parkeris required to park and lock his or her own automobile.  All responsibility for any loss or damage toautomobiles or any personal property therein is assumed by the parker.

g.                                      The parking lotis for the sole purpose of parking one automobile per space.  Washing, waxing, cleaning or servicing ofany vehicles by the parker or his agents is prohibited.

h.                                      Storage ofvehicles in the parking facilities is prohibited.  Lessee and Lessee’s employees and visitors shall not leavevehicles in the parking lot overnight, except that in connection with routinebusiness trips by Lessee’s employees only, Lessee may park up to threepassenger vehicles for a period not to exceed three calendar days, providedthat in no event shall Lessor incur any liability for or be responsible for anydamage or loss to any such vehicle.

i.                                          Lessorreserves the right to restrict customer, Lessee and Lessee’s employees parkingto a limited designated area or areas.

 

35.                                 Lessee agrees tocomply and acquaint its employees with such reasonable rules and regulations inthe use of such Common Areas as Lessor may adopt from time to time for theorderly and proper operation of said Common Areas.

 

36.                                 Lessor reserves theright to make such other and further reasonable and non-discriminatory rulesand regulations as in its judgment may be for the safety, care and cleanlinessof the Office Building Project and for the preservation of good order therein.  Lessee agrees to abide by these Rules andRegulations herein above stated and any additional rules and regulations, whichare adopted hereafter.

 

 
| Date:                   | 4/17/03     |   | Date:                   | 4/14/03     |
|-------------------------|-------------|--------|-------------------------|-------------|
|                    |        |   |
|                    |        |   |
| Lessor’s Initials: | [ILLEGIBLE] |   | Lessee’s Initials: | [ILLEGIBLE] |
|                         |             |        |                         |             |  |  |

 

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**EXHIBIT C JANITORIAL SERVICES**

 

**CRISTAL MAINTENANCE SERVICESSPECIFICATIONS**

 

 

#### **OFFICE AREAS**

 

**Daily Services    **Five(5) days per week

 

 

•                  Collect alltrash and deposit in designated areas.

 

•                  Empty and cleanall ashtrays.

 

•                  Replace plasticwaste basket liners as necessary.

 

•                  Dust key areasand highly visible areas - desks and credenzas.  Papers and folders left on desks not to be moved.

 

•                  Clean glassentrance doors.

 

•                  Clean and polishdrinking fountains.

 

•                  Sweep all tilefloors with chemically treated dust mop control.

 

•                  Mop all tilefloors.

 

•                  Return chairsand waste baskets to proper positions.

 

•                  Vacuum allcarpeted areas.

 

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#### **Weekly  Services:**

 

 

•                  Dust allhorizontal surfaces-bookcases, file cabinets, water cooler, coffee tables,chair arms and rungs, window ledges, etc.

 

•                  Vacuum cornersand edges

 

•                  Spot clean allcarpeted areas

 

•                  Remove smudges& finger prints from light switches, doors, file cabinets, etc.

 

•                  Spot clean allpartition glass.

 

•                  Clean fabricfurniture with a wisk broom to remove any dust and paper bits.

 

•                  Clean elevatorthresholds (If applicable).

 

•                  Maintainjanitor’s closet/ area & clean all equipment.

 

•                  Clean frontoffice windows.

 

 

**Monthly Services:**

 

 

•                  Dust high andlow surfaces - lamp shades, ceiling vents, venetian blinds, wall hangings.

 

•                  Vacuum allfabric - covered and/ or upholstered furniture.

 

•                  Wipe down kickplates, thresholds and metal work on doors.

 

•                  Thoroughly cleanvents on restroom doors.

 

 

**Quarterly Services:**

 

•                  Vacuum wall andceiling vents.

 

•                  Wax tile floors(If requested additional service)

 

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