exv10w26



 





Exhibit 10.26




LEASE




RREEF AMERICA REIT II CORP. DDD,

a Maryland corporation




Landlord,



and



SCM MICROSYSTEMS, INC.,

a Delaware corporation




Tenant




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	page
	 	 	 
	 	 	 	 
	1.	 	USE AND RESTRICTIONS ON USE
	 	 	1	 
	2.	 	TERM
	 	 	2	 
	3.	 	RENT
	 	 	2	 
	4.	 	RENT ADJUSTMENTS
	 	 	3	 
	5.	 	SECURITY DEPOSIT
	 	 	6	 
	6.	 	ALTERATIONS
	 	 	6	 
	7.	 	REPAIR
	 	 	7	 
	8.	 	LIENS
	 	 	8	 
	9.	 	ASSIGNMENT AND SUBLETTING
	 	 	8	 
	10.	 	INDEMNIFICATION
	 	 	10	 
	11.	 	INSURANCE
	 	 	11	 
	12.	 	WAIVER OF SUBROGATION
	 	 	11	 
	13.	 	SERVICES AND UTILITIES
	 	 	11	 
	14.	 	HOLDING OVER
	 	 	12	 
	15.	 	SUBORDINATION
	 	 	12	 
	16.	 	RULES AND REGULATIONS
	 	 	12	 
	17.	 	REENTRY BY LANDLORD
	 	 	13	 
	18.	 	DEFAULT
	 	 	13	 
	19.	 	REMEDIES
	 	 	14	 
	20.	 	TENANT’S BANKRUPTCY OR INSOLVENCY
	 	 	15	 
	21.	 	QUIET ENJOYMENT
	 	 	16	 
	22.	 	CASUALTY
	 	 	16	 
	23.	 	EMINENT DOMAIN
	 	 	17	 
	24.	 	SALE BY LANDLORD
	 	 	17	 
	25.	 	ESTOPPEL CERTIFICATES
	 	 	18	 
	26.	 	SURRENDER OF PREMISES
	 	 	18	 
	27.	 	NOTICES
	 	 	19	 
	28.	 	TAXES PAYABLE BY TENANT
	 	 	19	 
	29.	 	RELOCATION OF TENANT
	 	 	19	 
	30.	 	DEFINED TERMS AND HEADINGS
	 	 	19	 
	31.	 	TENANT’S AUTHORITY
	 	 	19	 
	32.	 	FINANCIAL STATEMENTS AND CREDIT REPORTS
	 	 	20	 
	33.	 	COMMISSIONS
	 	 	20	 
	34.	 	TIME AND APPLICABLE LAW
	 	 	20	 
	35.	 	SUCCESSORS AND ASSIGNS
	 	 	20	 
	36.	 	ENTIRE AGREEMENT
	 	 	20	 
	37.	 	EXAMINATION NOT OPTION
	 	 	20	 






i









 





TABLE OF CONTENTS
 (continued)





	 	 	 	 	 	 	 
	 	 	 	 	page
	 	 	 
	 	 	 	 
	38.	 	RECORDATION
	 	 	20	 
	39.	 	SIGNAGE
	 	 	20	 
	40.	 	OPTION TO RENEW
	 	 	21	 
	41.	 	LIMITATION OF LANDLORD’S LIABILITY
	 	 	21	 





EXHIBIT A – FLOOR PLAN DEPICTING THE PREMISES



EXHIBIT A-1 – SITE PLAN



EXHIBIT B – INITIAL ALTERATIONS



EXHIBIT C – COMMENCEMENT DATE MEMORANDUM



EXHIBIT D – RULES AND REGULATIONS




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




ii









 





MULTI-TENANT INDUSTRIAL NET LEASE




REFERENCE PAGES




	 	 	 
	BUILDING:

	 	41638 – 41758 Christy Street
	 
	 	 
	PROJECT:

	 	Fremont Commerce Center
	 
	 	 
	LANDLORD:

	 	RREEF AMERICA REIT II CORP. DDD,
	 

	 	a Maryland corporation
	 
	 	 
	LANDLORD’S ADDRESS:

	 	26120 Eden Landing Road, Suite 2
	 

	 	Hayward, California 94545
	 

	 	Attn: Property Manager
	 
	 	 
	WIRE INSTRUCTIONS AND/OR ADDRESS FOR RENT PAYMENT:

	 	Fremont Commerce Center
	 

	 	Dept# 2037
	 

	 	P.O. Box 39000
	 

	 	San Francisco, California 94139
	 
	 	 
	LEASE REFERENCE DATE:

	 	June 23, 2006
	 
	 	 
	TENANT:

	 	SCM MICROSYSTEMS, INC.,
	 

	 	a Delaware corporation
	 
	 	 
	TENANT’S NOTICE ADDRESS:
	 	 
	 
	 	 
	          (a) As of beginning of Term:

	 	The Premises
	 
	 	 
	          (b) Prior to beginning of
Term (if different):

	 	466 Kato Terrace
	 

	 	Fremont, California 94539
	 

	 	Attn: Chief Financial Officer
	 
	 	 
	PREMISES ADDRESS:

	 	41740 Christy Street
	 

	 	Fremont, California 94568
	 
	 	 
	PREMISES RENTABLE AREA:

	 	Approximately 6,200 sq. ft.
(for outline of Premises see
Exhibit A)
	 
	 	 
	USE:

	 	General office use, software
engineering, laboratory,
warehouse, engineering, sales
and related uses in conformity
with the municipal zoning
requirements of the City of
Fremont.
	 
	 	 
	COMMENCEMENT DATE:

	 	September 1, 2006
	 
	 	 
	TERM OF LEASE:

	 	Approximately twenty-five (25)
months beginning on the
Commencement Date and ending on
the Termination Date.
	 
	 	 
	TERMINATION DATE:

	 	September 30, 2008






[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




iii









 




ANNUAL RENT and MONTHLY INSTALLMENT OF RENT (Article 3):




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Period	 	Rentable Square	 	Annual Rent	 	 	 	 	 	Monthly Installment
	from	 	through	 	Footage	 	Per Square Foot	 	Annual Rent	 	of Rent
	9/1/2006

	 	8/31/2007
	 	 	6,200	 	 	$	7.68	 	 	$	47,616.00	 	 	$	3,968.00*	 
	9/1/2007

	 	9/30/2008
	 	 	6,200	 	 	$	7.92	 	 	$	49,104.00	 	 	$	4,092.00	 








 




			
	*	 	Monthly Installment of Rent for the first calendar month of the Term shall be abated pursuant
to Section 3.3 of the Lease.





	 	 	 	 	 
	INITIAL ESTIMATED MONTHLY INSTALLMENT OF RENT ADJUSTMENTS
(Article 4):

	 	$	992.00	 
	 
	 	 	 	 
	TENANT’S PROPORTIONATE SHARE OF THE BUILDING:

	 	 	6.33	%
	 
	 	 	 	 
	TENANT’S PROPORTIONATE SHARE OF THE PROJECT:

	 	 	1.86	%
	 
	 	 	 	 
	SECURITY DEPOSIT:

	 	$	5,500.00	 
	 
	 	 	 	 
	ASSIGNMENT/SUBLETTING FEE:

	 	$	1,000.00	 
	 
	 	 	 	 
	REAL ESTATE BROKER:

	 	None

	 
	 	 	 	 
	TENANT’S SIC CODE:

	 	 	7372	 
	 
	 	 	 	 
	AMORTIZATION RATE:

	 	 	N/A	 





The Reference Pages information is incorporated into and made a part of the Lease. In the event of
any conflict between any Reference Pages information and the Lease, the Lease shall control. The
Lease includes Exhibits A through D, all of which are made a part of the Lease.



IN WITNESS WHEREOF, Landlord and Tenant have entered into the Lease as of the Lease Reference Date
set forth above.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RREEF AMERICA REIT II CORP. DDD,	 	 	 	SCM MICROSYSTEMS, INC., a	 	 
	a Maryland corporation	 	 	 	Delaware corporation	 	 
	 
	By:	 	RREEF Management Company, a Delaware	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	corporation, its Authorized Agent	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Stephen J. George	 	By:	 	/s/ Stephan Rohaly	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Name:	 	Stephen J. George	 	 	 	Name:	Stephan Rohaly	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Title:	 	Regional Director 	 	 	 	 	 	Title:	 	Chief Financial Officer 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Dated:	 	 	 	August 1 	 	,  2006	 	 	 	Dated:	July 14 	 	,  2006	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 






iv









 






LEASE




     By this Lease Landlord leases to Tenant and Tenant leases from Landlord the Premises in the
Building as set forth and described on the Reference Pages. The Premises are depicted on the floor
plan attached hereto as Exhibit A, and the Building is depicted on the site plan attached
hereto as Exhibit A-1. The Reference Pages, including all terms defined thereon, are
incorporated as part of this Lease.



1. USE AND RESTRICTIONS ON USE.




     1.1 The Premises are to be used solely for the purposes set forth on
the Reference Pages. Tenant shall not do or permit anything to be done in or about the Premises
which will in any way obstruct or interfere with the rights of other tenants or occupants of the
Building or injure, annoy, or disturb them, or allow the Premises to be used for any improper,
immoral, unlawful, or objectionable purpose, or commit any waste. Tenant shall not do, permit or
suffer in, on, or about the Premises the sale of any alcoholic liquor without the written consent
of Landlord first obtained. Tenant shall comply with all federal, state and city laws, codes,
ordinances, rules and regulations (collectively, “Regulations”) applicable to the use of the
Premises and its occupancy and shall promptly comply with all governmental orders and directions
for the correction, prevention and abatement of any violations in the Building or appurtenant land,
caused or permitted by, or resulting from the specific use by, Tenant, or in or upon, or in
connection with, the Premises, all at Tenant’s sole expense. Tenant shall not do or permit
anything to be done on or about the Premises or bring or keep anything into the Premises which will
in any way increase the rate of, invalidate or prevent the procuring of any insurance protecting
against loss or damage to the Building or any of its contents by fire or other casualty or against
liability for damage to property or injury to persons in or about the Building or any part thereof.
Landlord will, at Landlord’s expense, perform all acts required to comply with Regulations in
effect as of the date of this Lease and as interpreted and enforced in the county in which the
Premises is located, with respect to the foregoing as the same affect the common areas of the
Building and the Premises. Landlord will perform all acts required to comply with Regulations in
effect (and as interpreted and enforced) after the date of this Lease with respect to the common
areas only and such costs shall be a part of Expenses as provided in Article 4 of this Lease.
Notwithstanding the foregoing, Landlord shall have the right to contest any alleged violation of
any Regulations in good faith, including, without limitation, the right to apply for and obtain a
waiver or deferment of compliance, the right to assert any and all defenses allowed by law and the
right to appeal any decisions, judgments or rulings to the fullest extent permitted by Regulations.
Landlord, after the exhaustion of any and all rights to appeal or contest, will make all repairs,
additions, alterations or improvements necessary to comply with the terms of any final order or
judgment, provided that if Landlord elects not to contest any alleged violation, Landlord will
promptly make necessary all repairs, additions, alterations or improvements. Notwithstanding
anything to the contrary contained herein, Tenant, not Landlord, shall be responsible for the
correction of any violations that arise out of or in connection with the specific nature of
Tenant’s business in the Premises (other than general office use), the acts or omissions of Tenant,
its agents, employees or contractors, Tenant’s arrangement of any furniture, equipment or other
property in the Premises, any repairs, alterations, additions or improvements performed by or on
behalf of Tenant (including the Initial Alterations described on Exhibit B hereto) and any design
or configuration of the Premises.



     1.2 Tenant shall not, and shall not direct, suffer or permit any of
its agents, contractors, employees, licensees or invitees (collectively, the “Tenant Entities”) to
at any time handle, use, manufacture, store or dispose of in or about the Premises or the Building
any (collectively “Hazardous Materials”) flammables, explosives, radioactive materials, hazardous
wastes or materials, toxic wastes or materials, or other similar substances, petroleum products or
derivatives or any substance subject to regulation by or under any federal, state and local laws
and ordinances relating to the protection of the environment or the keeping, use or disposition of
environmentally hazardous materials, substances, or wastes, presently in effect or hereafter
adopted, all amendments to any of them, and all rules and regulations issued pursuant to any of
such laws or ordinances (collectively “Environmental Laws”), nor shall Tenant suffer or permit any
Hazardous Materials to be used in any manner not fully in compliance with all Environmental Laws,
in the Premises or the Building and, if the same may affect or impact the Building and/or the
parcel of land upon which the Building is located, or any portions of land benefiting the foregoing
by easement, license or other similar rights, any appurtenant land, or allow the environment to
become contaminated with any Hazardous Materials if the same may affect or impact the Building
and/or the parcel of land upon which the Building is located, or any portions of land benefiting
the foregoing by easement, license or other similar rights. Notwithstanding the foregoing, Tenant
may handle, store, use or dispose of products containing small quantities of Hazardous Materials
(such as aerosol cans containing insecticides, toner for copiers, paints, paint remover and the
like) to the extent customary and necessary for the use of the Premises for general office
purposes; provided that Tenant shall always handle, store, use, and dispose of any such Hazardous
Materials in a safe and lawful manner and never allow such Hazardous Materials to contaminate the
Premises, Building and appurtenant land or the environment. Tenant shall protect, defend,
indemnify and hold each and all of the Landlord Entities (as defined in Article 30) harmless from
and against any and all loss, claims, liability or costs (including court costs and attorney’s
fees) incurred by reason of any actual or asserted failure of



1









 







Tenant to fully comply with all applicable Environmental Laws, or the presence, handling, use
or disposition in or from the Premises of any Hazardous Materials by Tenant or any Tenant Entity
(even though permissible under all applicable Environmental Laws or the provisions of this Lease),
or by reason of any actual or asserted failure of Tenant to keep, observe, or perform any provision
of this Section 1.2. As of the date hereof, Landlord has not received notice from any governmental
agencies that the Building is in violation of any Environmental Laws. Further, to Landlord’s
actual knowledge, there are no Hazardous Materials at the Building other than small quantities of
Hazardous Materials (such as aerosol cans containing insecticides, toner for copiers, paints, paint
remover and the like) to the extent customary and necessary for the use of the Premises for general
office purposes. For purposes of this Section, “Landlord’s actual knowledge” shall be deemed to
mean and limited to the current actual knowledge of Nicole Aamoth, Property Manager for the
Building, at the time of execution of the Lease and not any implied, imputed, or constructive
knowledge of said individual or of Landlord or any parties related to or comprising Landlord and
without any independent investigation or inquiry having been made or any implied duty to
investigate or make any inquiries; it being understood and agreed that such individual shall have
no personal liability in any manner whatsoever hereunder or otherwise related to the transactions
contemplated hereby.



     1.3 Tenant and the Tenant Entities will be entitled to the
non-exclusive use of the common areas of the Building as they exist from time to time during the
Term, including the parking facilities, subject to Landlord’s reasonable rules and regulations
regarding such use. The rules and regulations shall be generally applicable, and generally applied
in the same manner, to all tenants of the Building. However, in no event will Tenant or the Tenant
Entities park more vehicles in the parking facilities than Tenant’s Proportionate Share of the
total parking spaces available for common use. The foregoing shall not be deemed to provide Tenant
with an exclusive right to any parking spaces or any guaranty of the availability of any particular
parking spaces or any specific number of parking spaces.



2. TERM.




     2.1 The Term of this Lease shall begin on the date (“Commencement
Date”) as shown on the Reference Pages as the Commencement Date and shall terminate on the date as
shown on the Reference Pages as the Termination Date (“Termination Date”), unless sooner terminated
by the provisions of this Lease. Tenant shall, at Landlord’s request, execute and deliver a
memorandum agreement provided by Landlord in the form of Exhibit C attached hereto, setting
forth the actual Commencement Date, Termination Date and, if necessary, a revised rent schedule.
Should Tenant fail to do so within thirty (30) days after Landlord’s request, the information set
forth in such memorandum provided by Landlord shall be conclusively presumed to be agreed and
correct.



     2.2 Tenant agrees that in the event of the inability of Landlord to
deliver possession of the Premises on the Commencement Date set forth on the Reference Pages for
any reason, Landlord shall not be liable for any damage resulting from such inability, but except
to the extent such delay is the result of the acts or omissions of Tenant or any Tenant Entities,
Tenant shall not be liable for any rent until the time when Landlord delivers possession of the
Premises to Tenant. No such failure to give possession on the Commencement Date shall affect the
other obligations of Tenant under this Lease, except that the actual Commencement Date shall be
postponed until the date that Landlord delivers possession of the Premises to Tenant, except to the
extent that such delay is as a result of the acts or omissions of Tenant or any Tenant Entity.



     2.3 In the event Landlord permits Tenant, or any agent, employee or
contractor of Tenant, to enter, use or occupy the Premises prior to the Commencement Date, such
entry, use or occupancy shall be subject to all the provisions of this Lease other than the payment
of rent, including, without limitation, Tenant’s compliance with the insurance requirements of
Article 11. Said early possession shall not advance the Termination Date.



3. RENT.




     3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from
time to time by paying the Monthly Installment of Rent then in effect on or before the first day of
each full calendar month during the Term, except that the second Monthly Installment of Rent and
the Security Deposit shall be paid upon the execution of this Lease. The Monthly Installment of
Rent in effect at any time shall be one-twelfth (1/12) of the Annual Rent in effect at such time.
Rent for any period during the Term which is less than a full month shall be a prorated portion of
the Monthly Installment of Rent based upon the number of days in such month. Said rent shall be
paid to Landlord, without deduction or offset and without notice or demand, at the Rent Payment
Address, as set forth on the Reference Pages, or to such other person or at such other place as
Landlord may from time to time designate in writing. If an Event of Default occurs three (3) times
or more in any twelve (12) month period during the Term, Landlord may require that Tenant submit
Base Rent and Tenant’s Proportionate Share of Expenses and Taxes to Landlord on a quarterly basis
(due on or before the first day of each calendar quarter) for the



2









 







following 12 month period. Unless specified in this Lease to the contrary, all amounts and
sums payable by Tenant to Landlord pursuant to this Lease shall be deemed additional rent.



     3.2 Tenant recognizes that late payment of any rent or other sum due
under this Lease will result in administrative expense to Landlord, the extent of which additional
expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees
that if rent or any other sum is not paid when due and payable pursuant to this Lease, a late
charge shall be imposed in an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b)
five percent (5%) of the unpaid rent or other payment; provided that Tenant shall be entitled to a
grace period of five (5) days for the first late payment of rent or other sum due in a given
calendar year. The amount of the late charge to be paid by Tenant shall be reassessed and added to
Tenant’s obligation for each successive month until paid. The provisions of this Section 3.2 in no
way relieve Tenant of the obligation to pay rent or other payments on or before the date on which
they are due, nor do the terms of this Section 3.2 in any way affect Landlord’s remedies pursuant
to Article 19 of this Lease in the event said rent or other payment is unpaid after date due.



     3.3 Notwithstanding anything in this Lease to the contrary, so long
as Tenant is not in default under this Lease, Tenant shall be entitled to an abatement of Monthly
Installment of Rent with respect to the Premises, as originally described in this Lease, in the
amount of $3,968.00 (the “Abated Monthly Installment of Rent”) for the first calendar month of the
Term. If Tenant defaults under this Lease at any time during the Term and fails to cure such
default within any applicable cure period under this Lease, then all Abated Monthly Installment of
Rent shall immediately become due and payable. Only Monthly Installment of Rent shall be abated
pursuant to this Section, as more particularly described herein, and Tenant’s Proportionate Share
of Expenses and Taxes all other rent and other costs and charges specified in this Lease shall
remain as due and payable pursuant to the provisions of this Lease.



4. RENT ADJUSTMENTS.




     4.1 For the purpose of this Article 4, the following terms are
defined as follows:



          4.1.1 Lease Year: Each fiscal year (as determined by Landlord from time
to time) falling partly or wholly within the Term.




          4.1.2 Expenses: All costs of operation, maintenance, repair, replacement
and management of the Building, as determined in accordance with generally accepted accounting
principles, including the following costs by way of illustration, but not limitation: water and
sewer charges; insurance charges of or relating to all insurance policies and endorsements deemed
by Landlord to be reasonably necessary or desirable and relating in any manner to the protection,
preservation, or operation of the Building or any part thereof; utility costs, including, but not
limited to, the cost of heat, light, power, steam, gas; waste disposal; the cost of janitorial
services; the cost of security and alarm services (including any central station signaling system);
costs of cleaning, repairing, replacing and maintaining the common areas, including parking and
landscaping, window cleaning costs; labor costs; costs and expenses of managing the Building
including management and/or administrative fees (subject to the limitations expressly set forth
below); air conditioning maintenance costs; elevator maintenance fees and supplies; material costs;
equipment costs including the cost of maintenance, repair and service agreements and rental and
leasing costs; purchase costs of equipment; current rental and leasing costs of items which would
be capital items if purchased; tool costs; licenses, permits and inspection fees; wages and
salaries for personnel below the level of vice president (provided that if any employee performs
services in connection with the Building and other buildings, costs associated with such employee
may be proportionately included in Expenses based on the percentage of time such employee spends in
connection with the operation, maintenance and management of the Building); employee benefits and
payroll taxes; accounting and legal fees; any sales, use or service taxes incurred in connection
therewith. In addition, Landlord shall be entitled to recover, as additional rent (which, along
with any other capital expenditures constituting Expenses, Landlord may either include in Expenses
or cause to be billed to Tenant along with Expenses and Taxes but as a separate item), Tenant’s
Proportionate Share of: (i) an allocable portion of the cost of capital improvement items which are
reasonably calculated to reduce operating expenses; (ii) the cost of fire sprinklers and
suppression systems and other life safety systems (provided that to the extent the foregoing is a
capital improvement, the cost thereof shall be amortized over the reasonable life of such
expenditures as provided in the following clause (iii)); and (iii) other capital expenses which are
required under any governmental laws, regulations or ordinances which were not applicable to the
Building as of the date of this Lease; but the costs described in this sentence shall be amortized
over the reasonable life of such expenditures in accordance with such reasonable life and
amortization schedules as shall be determined by Landlord in accordance with generally accepted
accounting principles, with interest on the unamortized amount at one percent (1%) in excess of the
Wall Street Journal prime lending rate announced from time to time. Expenses shall not include
depreciation or amortization of the Building or equipment in the Building except as provided
herein, loan principal payments, costs of alterations of tenants’ premises, leasing commissions,
interest expenses on long-term borrowings, advertising costs including the cost of brochures




3









 







and
marketing supplies, legal fees in negotiating and preparing lease documents, and construction,
improvement and
decorating costs in preparing space for initial occupancy by a specific tenant. The following
items are also excluded from Expenses and in no event shall Tenant have any obligation to perform,
pay directly or reimburse Landlord for any of the following except to the extent expressly provided
herein:




     (a) Sums paid to subsidiaries or other affiliates of Landlord for services on or to the
Building and/or Premises, but only to the extent that the costs of such services exceed the
competitive cost for such services rendered by persons or entities of similar skill, competence and
experience.



     (b) Any fines, penalties or interest resulting from the negligence or willful misconduct of
the Landlord or its agents, contractors, or employees.



     (c) Fines, costs or penalties incurred as a result and to the extent of a violation by
Landlord or other tenants of the project of which Building is a part of any applicable laws.



     (d) Landlord’s charitable and political contributions.



     (e) Ground lease rental.



     (f) Attorney’s fees and other expenses incurred in connection with negotiations or disputes
with prospective tenants or tenants or other occupants of the Building.



     (g) The cost or expense of any services or benefits provided generally to other tenants in the
Building and not provided or available to Tenant.



     (h) All costs of purchasing or leasing major sculptures, paintings or other major works or
objects of art (as opposed to decorations purchased or leased by Landlord for display in the common
areas of the Building).



     (i) Any expenses for which Landlord has received actual reimbursement (other than through
Expenses).



     (j) Costs incurred by Landlord in connection with the correction of defects in design and
original construction of the Building.



     (k) Any cost or expense related to removal, cleaning, abatement or remediation of Hazardous
Materials in or about the Building or the common areas, including, without limitation, hazardous
substances in the ground water or soil, except to the extent such removal, cleaning, abatement or
remediation is related to the general repair and maintenance of the Building and the common areas.



     (l) Costs incurred by Landlord in connection with the correction of defects in design and
original construction of the Building.



     (m) Any costs, fines or penalties incurred due to violations by Landlord of any law, order,
rule or regulations of any governmental authority which was in effect (and as interpreted and
enforced) as of the date of this Lease.



     (n) Penalties, interest and other costs incurred by Landlord in connection with Landlord’s
failure to comply with conditions, covenants and restrictions applicable to the Building.



     (o) The cost of repairs and maintenance equitably allocated by Landlord to buildings other
than the Building.



     (p) Principal payments of mortgage debt of Landlord.



     (q) Interest (except as provided in this Lease for the amortization of capital improvements).



     (r) Costs of capital improvements except to the extent expressly set forth in this Lease.



     (s) Expense reserves.



4









 





          4.1.3 Taxes: Real estate taxes and any other taxes, charges and
assessments which are levied with respect to the Building or the land appurtenant to the Building,
or with respect to any improvements, fixtures and equipment or other property of Landlord, real or
personal, located in the Building and used in connection with the operation of the Building and
said land, any payments to any ground lessor in reimbursement of tax payments made by such lessor;
and
all fees, expenses and costs incurred by Landlord in investigating, protesting, contesting or
in any way seeking to reduce or avoid increase in any assessments, levies or the tax rate
pertaining to any Taxes to be paid by Landlord in any Lease Year. Taxes shall not include any
corporate franchise, capital levy, capital stock, gift, estate, inheritance or net income tax, or
tax imposed upon any transfer by Landlord of its interest in this Lease or the Building, any
property taxes allocated to buildings other than the Building and any taxes to be paid by Tenant
pursuant to Article 28. In the event that Landlord may elect to pay a special assessment in one
payment or over a period of time, regardless of Landlord’s election, any such assessment shall be
included in Taxes only to the extent it would have been due over time.




     4.2 Tenant shall pay as additional rent for each Lease Year Tenant’s
Proportionate Share of Expenses and Taxes incurred for such Lease Year.



     4.3 The annual determination of Expenses shall be made by Landlord
and shall be binding upon Landlord and Tenant, subject to the provisions of this Section 4.3.
During the Term, Tenant may review, at Tenant’s sole cost and expense, the books and records
supporting such determination in an office of Landlord, or Landlord’s agent, during normal business
hours, upon giving Landlord five (5) days advance written notice within ninety (90) days after
receipt of such determination, but in no event more often than once in any one (1) year period,
subject to execution of a confidentiality agreement acceptable to Landlord, and provided that if
Tenant utilizes an independent accountant to perform such review it shall be one of national
standing which is reasonably acceptable to Landlord, is not compensated on a contingency basis and
is also subject to such confidentiality agreement. Tenant shall be solely responsible for all
costs, expenses and fees incurred for such review. However, notwithstanding the foregoing, if
Landlord and Tenant determine that Expenses for the Building for the year in question were less
than stated by more than 5%, Landlord, within 30 days after its receipt of paid invoices therefor
from Tenant, shall reimburse Tenant for the reasonable amounts paid by Tenant to third parties in
connection with such review by Tenant. If Tenant fails to object to Landlord’s determination of
Expenses within ninety (90) days after receipt, or if any such objection fails to state with
specificity the reason for the objection, Tenant shall be deemed to have approved such
determination and shall have no further right to object to or contest such determination. In the
event that during all or any portion of any Lease Year or Base Year, the Building is not fully
rented and occupied Landlord shall make an appropriate adjustment in occupancy-related Expenses
for such year for the purpose of avoiding distortion of the amount of such Expenses to be
attributed to Tenant by reason of variation in total occupancy of the Building, by employing
consistent and sound accounting and management principles to determine Expenses that would have
been paid or incurred by Landlord had the Building been at least ninety-five percent (95%) rented
and occupied, and the amount so determined shall be deemed to have been Expenses for such Lease
Year.



     4.4 Prior to the actual determination thereof for a Lease Year,
Landlord may from time to time estimate Tenant’s liability for Expenses and/or Taxes under Section
4.2, Article 6 and Article 28 for the Lease Year or portion thereof. Landlord will give Tenant
written notification of the amount of such estimate and Tenant agrees that it will pay, by increase
of its Monthly Installments of Rent due in such Lease Year, additional rent in the amount of such
estimate. Any such increased rate of Monthly Installments of Rent pursuant to this Section 4.4
shall remain in effect until further written notification to Tenant pursuant hereto.



     4.5 When the above mentioned actual determination of Tenant’s
liability for Expenses and/or Taxes is made for any Lease Year and when Tenant is so notified in
writing, then:



          4.5.1 If the total additional rent Tenant actually paid pursuant to
Section 4.3 on account of Expenses and/or Taxes for the Lease Year is less than Tenant’s liability
for Expenses and/or Taxes, then Tenant shall pay such deficiency to Landlord as additional rent in
one lump sum within thirty (30) days of receipt of Landlord’s bill therefor; and




          4.5.2 If the total additional rent Tenant actually paid pursuant to
Section 4.3 on account of Expenses and/or Taxes for the Lease Year is more than Tenant’s liability
for Expenses and/or Taxes, then Landlord shall credit the difference against the then next due
payments to be made by Tenant under this Article 4, or, if this Lease has terminated, refund the
difference in cash.




     4.6 If the Commencement Date is other than January 1 or if the
Termination Date is other than December 31, Tenant’s liability for Expenses and Taxes for the Lease
Year in which said Date occurs shall be prorated based upon a three hundred sixty-five (365) day
year.



5









 




5. SECURITY DEPOSIT. Tenant shall deposit the Security Deposit with
Landlord upon the execution of this Lease. Landlord may commingle the Security Deposit with other
funds and shall in no event be required to pay interest or any other charges or fees to Tenant with
respect to the Security Deposit. Said sum shall be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants and conditions of this Lease to be kept and
performed by
Tenant and not as an advance rental deposit or as a measure of Landlord’s damage in case of
Tenant’s default. If Tenant defaults with respect to any provision of this Lease beyond the
expiration of any applicable notice and cure periods, Landlord may use any part of the Security
Deposit for the payment of any rent or any other sum in default, or for the payment of any amount
which Landlord may spend or become obligated to spend by reason of Tenant’s default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s
default. If any portion is so used, Tenant shall within five (5) days after written demand
therefor, deposit with Landlord an amount sufficient to restore the Security Deposit to its
original amount and Tenant’s failure to do so shall be a material breach of this Lease. Except to
such extent, if any, as shall be required by law, Landlord shall not be required to keep the
Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on
such deposit. If Tenant shall fully and faithfully perform every provision of this Lease to be
performed by it, the Security Deposit or any balance thereof shall be returned to Tenant at such
time after termination of this Lease when Landlord shall have determined that all of Tenant’s
obligations under this Lease have been fulfilled. If Tenant is not in default at the termination
of this Lease, Landlord shall return any unapplied balance of the Security Deposit to Tenant within
30 days after Tenant surrenders the Premises to Landlord in accordance with this Lease. In
addition to any other deductions Landlord is entitled to make pursuant to the terms hereof,
Landlord shall have the right to make a good faith estimate of any unreconciled Expenses and/or
Taxes as of the Termination Date and to deduct any anticipated shortfall from the Security Deposit.
Such estimate shall be final and binding upon Tenant. Tenant hereby waives the provisions of
Section 1950.7 of the California Civil Code, or any similar or successor Regulations or other laws
now or hereinafter in effect to the extent the same conflicts with any of the terms and conditions
of this Lease.




6. ALTERATIONS.




     6.1 Except for those, if any, specifically provided for in
Exhibit B to this Lease, Tenant shall not make or suffer to be made any alterations,
additions, or improvements, including, but not limited to, the attachment of any fixtures or
equipment in, on, or to the Premises or any part thereof or the making of any improvements as
required by Article 7, without the prior written consent of Landlord. So long as the same do not
affect the structure of the Building or any of the Building systems, Tenant may install
non-attached trade fixtures in the Premises without Landlord’s prior consent but otherwise in
accordance with the terms of this Article 6. When applying for such consent, Tenant shall, if
requested by Landlord, furnish complete plans and specifications for such alterations, additions
and improvements. Landlord’s consent shall not be unreasonably withheld with respect to alterations
which (i) are not structural in nature, (ii) are not visible from the exterior of the Building,
(iii) do not affect or require modification of the Building’s electrical, mechanical, plumbing,
HVAC or other systems, and (iv) in aggregate do not cost more than $5.00 per rentable square foot
of that portion of the Premises affected by the alterations in question.



     6.2 In the event Landlord consents to the making of any such
alteration, addition or improvement by Tenant, the same shall be made by using either Landlord’s
contractor or a contractor reasonably approved by Landlord, in either event at Tenant’s sole cost
and expense. If Tenant shall employ any contractor other than Landlord’s contractor and such other
contractor or any subcontractor of such other contractor shall employ any non-union labor or
supplier, Tenant shall be responsible for and hold Landlord harmless from any and all delays,
damages and extra costs suffered by Landlord as a result of any dispute with any labor unions
concerning the wage, hours, terms or conditions of the employment of any such labor. In any event
Landlord may charge Tenant a construction management fee not to exceed five percent (5%) of the
cost of such work to cover its overhead as it relates to such proposed work, plus third-party costs
actually incurred by Landlord in connection with the proposed work and the design thereof, with all
such amounts being due five (5) days after Landlord’s demand.



     6.3 All alterations, additions or improvements proposed by Tenant
shall be constructed in accordance with all Regulations, using Building standard materials where
applicable, and Tenant shall, prior to construction, provide the additional insurance required
under Article 11 in such case, and also all such assurances to Landlord as Landlord shall
reasonably require to assure payment of the costs thereof, including but not limited to, notices of
non-responsibility, waivers of lien and surety company performance bonds to protect Landlord and
the Building and appurtenant land against any loss from any mechanic’s, materialmen’s or other
liens. Tenant shall pay in addition to any sums due pursuant to Article 4, any increase in real
estate taxes attributable to any such alteration, addition or improvement for so long, during the
Term, as such increase is ascertainable; at Landlord’s election said sums shall be paid in the same
way as sums due under Article 4.



     6.4 Notwithstanding anything to the contrary contained herein, so
long as Tenant’s written request for consent for a proposed alteration or improvements contains the
following statement in large, bold and capped font “PURSUANT TO



6









 




SECTION 6 OF THE LEASE, IF LANDLORD
CONSENTS TO THE SUBJECT ALTERATION, LANDLORD SHALL NOTIFY TENANT IN WRITING (1) WHETHER OR NOT
LANDLORD WILL REQUIRE SUCH ALTERATION TO BE REMOVED AT THE EXPIRATION OR EARLIER TERMINATION OF THE
LEASE AND, (2) IF SUCH REMOVAL IS REQUIRED, WHETHER OR NOT TENANT SHALL BE REQUIRED TO DEPOSIT WITH
LANDLORD THE AMOUNT REASONABLY ESTIMATED BY LANDLORD AS SUFFICIENT TO COVER THE COST
OF REMOVING SUCH ALTERATIONS OR IMPROVEMENTS AND RESTORING THE PREMISES AND, IF SO, SUCH
ESTIMATED AMOUNT.”, at the time Landlord gives its consent for any alterations or improvements, if
it so does, Tenant shall also be notified (i) whether or not Landlord will require that such
alterations or improvements be removed upon the expiration or earlier termination of this Lease
and, (ii) to the extent that such removal is required, whether Landlord shall require Tenant to
deposit with Landlord the amount reasonably estimated by Landlord as sufficient to cover the cost
of removing such alterations or improvements and restoring the Premises, to the extent required
under Section 26.2, and the estimated amount thereof. Notwithstanding anything to the contrary
contained in this Lease, at the expiration or earlier termination of this Lease and otherwise in
accordance with Article 26 hereof, Tenant shall be required to remove all alterations or
improvements made to the Premises except for any such alterations or improvements which Landlord
expressly indicates or is deemed to have indicated shall not be required to be removed from the
Premises by Tenant. If Tenant’s written notice strictly complies with the foregoing and if
Landlord fails to so notify Tenant whether Tenant shall be required to remove the subject
alterations or improvements at the expiration or earlier termination of this lease, Tenant is
entitled to deliver to Landlord a second written notice (the “Second Notice”) in compliance with
the foregoing requirements but also stating in large, bold and capped font the following: “THIS IS
TENANT’S SECOND NOTICE TO LANDLORD. LANDLORD FAILED TO RESPOND TO TENANT’S FIRST NOTICE IN
ACCORDANCE WITH THE TERMS OF ARTICLE 6 OF THE LEASE. IF LANDLORD FAILS TO RESPOND TO THIS NOTICE
IN FIVE BUSINESS DAYS WITH RESPECT TO THE DEPOSIT OF REMOVAL AND RESTORATION FUNDS, TENANT SHALL
HAVE NO OBLIGATION TO DEPOSIT WITH LANDLORD THE AMOUNT REASONABLY ESTIMATED BY LANDLORD AS
SUFFICIENT TO COVER THE COST OF REMOVING SUCH ALTERATIONS OR IMPROVEMENTS AND RESTORING THE
PREMISES. IF LANDLORD FAILS TO RESPOND TO THIS NOTICE IN FIVE BUSINESS DAYS WITH RESPECT TO
TENANT’S OBLIGATION TO REMOVE THE SUBJECT ALTERATION, TENANT SHALL HAVE NO OBLIGATION TO REMOVE THE
SUBJECT ALTERATION AT THE EXPIRATION OR EARLIER TERMINATION OF ITS LEASE ”. If Landlord fails to
respond to the Second Notice within five business days of Landlord’s receipt thereof, it shall be
assumed that, with respect to Tenant’s obligation to remove the subject alterations or
improvements, Landlord shall not require the removal of the subject alterations or improvements.
If Landlord fails to respond to the Second Notice within five business days of Landlord’s receipt
thereof, it shall be assumed that, with respect to Tenant’s obligation to deposit sufficient funds
with Landlord for the removal of the subject alterations or improvements, Landlord shall not
require any such deposit from Tenant with respect thereto.




7. REPAIR.




     7.1 Landlord shall have no obligation to alter, remodel, improve,
repair, decorate or paint the Premises except that Landlord shall repair and maintain the
following, the cost of which may be included in Expenses as provided in Article 4 of this Lease:
the structural portions of the roof, the roof membrane, the common areas, foundation and walls of
the Building and the Building mechanical, sprinkler/life safety systems, electrical and plumbing
systems servicing the project in general (not specifically servicing the Premises, the repair and
maintenance of which shall be Tenant’s responsibility hereunder); provided, however, that, subject
to the terms hereof, Tenant, not Landlord shall repair and maintain the heating, ventilating and
air conditioning unit(s) servicing the Premises. Notwithstanding the foregoing, Landlord’s repair
and maintenance obligations with respect to the following shall be at Landlord’s sole cost and
expense: the foundation and the exterior walls of the Building. By taking possession of the
Premises, Tenant accepts them as being in good order, condition and repair and in the condition in
which Landlord is obligated to deliver them except as otherwise expressly stated in this Lease. It
is hereby understood and agreed that no representations respecting the condition of the Premises or
the Building have been made by Landlord to Tenant, except as specifically set forth in this Lease.
Landlord shall not be liable for any failure to make any repairs or to perform any maintenance
unless such failure shall persist for an unreasonable time after written notice of the need of such
repairs or maintenance is given to Landlord by Tenant. Notwithstanding the foregoing, Landlord
shall perform and construct, and Tenant shall have no responsibility to perform or construct, any
repair, maintenance or improvements (a) necessitated by the negligence or willful misconduct of
Landlord, and (b) which Landlord shall determine to be capital improvement (the cost thereof may be
an Expense pursuant to Section 4.1.2 of this Lease).



     7.2 To the extent the same is not an express obligation of Landlord
pursuant to Section 7.1 above, Tenant shall at its own cost and expense keep and maintain all parts
of the Premises and such portion of the Building and improvements as are within the exclusive
control of Tenant (including, without limitation, electrical and plumbing systems servicing the
Premises) in good condition, promptly making all necessary repairs and replacements, whether
ordinary or extraordinary, with materials and workmanship of the same character, kind and quality
as the original (including, but not limited to, repair



7









 




and replacement of all fixtures installed by
Tenant, water heaters serving the Premises, windows, glass and plate glass, doors, exterior stairs,
skylights, if any, any special office entries, interior walls and finish work, floors and floor
coverings, heating and air conditioning systems serving the Premises, electrical systems and
fixtures, sprinkler systems, dock boards, truck doors, dock bumpers, plumbing work and fixtures,
and performance of regular removal of trash and debris). Tenant as part of its obligations
hereunder shall keep the Premises in a clean and sanitary condition. Tenant
will, as far as possible keep all such parts of the Premises from falling temporarily out of
repair, and upon termination of this Lease in any way Tenant will yield up the Premises to Landlord
in good condition and repair, loss by fire or other casualty excepted (but not excepting any damage
to glass). Subject to the waiver of subrogation provided in Section 12, Tenant shall, at its own
cost and expense, repair any damage to the Premises or the Building resulting from and/or caused in
whole or in part by the negligence or misconduct of Tenant, its agents, employees, contractors,
invitees, or any other person entering upon the Premises as a result of Tenant’s business
activities or caused by Tenant’s default hereunder.




     7.3 Except as provided in Article 22, there shall be no abatement of
rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business
arising from the making of any repairs, alterations or improvements in or to any portion of the
Building or the Premises or to fixtures, appurtenances and equipment in the Building. Tenant hereby
waives any and all rights under and benefits of subsection 1 of Section 1932 and Sections 1941 and
1942 of the California Civil Code, or any similar or successor Regulations or other laws now or
hereinafter in effect. Except in emergency situations as determined by Landlord, Landlord shall
exercise reasonable efforts not to unreasonably interfere with the conduct of the business of
Tenant in the Premises.



     7.4 Tenant shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor approved by
Landlord for servicing all heating and air conditioning systems and equipment serving the Premises
(and a copy thereof shall be furnished to Landlord). The service contract must include all
services suggested by the equipment manufacturer in the operation/maintenance manual and must
become effective within thirty (30) days of the date Tenant takes possession of the Premises.
Should Tenant fail to do so, Landlord may, upon notice to Tenant, enter into such a maintenance/
service contract on behalf of Tenant or perform the work and in either case, charge Tenant the cost
thereof along with a reasonable amount for Landlord’s overhead.


8. LIENS. Tenant shall keep the Premises, the Building and appurtenant
land and Tenant’s leasehold interest in the Premises free from any liens arising out of any
services, work or materials performed, furnished, or contracted for by Tenant, or obligations
incurred by Tenant. In the event that Tenant fails, within ten (10) days following the imposition
of any such lien, to either cause the same to be released of record or provide Landlord with
insurance against the same issued by a major title insurance company or such other protection
against the same as Landlord shall accept (such failure to constitute an Event of Default),
Landlord shall have the right to cause the same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord
and all expenses incurred by it in connection therewith shall be payable to it by Tenant within
five (5) days after Landlord’s demand.



9. ASSIGNMENT AND SUBLETTING.




     9.1 Tenant shall not have the right to assign or pledge this Lease or
to sublet the whole or any part of the Premises whether voluntarily or by operation of law, or
permit the use or occupancy of the Premises by anyone other than Tenant, and shall not make, suffer
or permit such assignment, subleasing or occupancy without the prior written consent of Landlord,
such consent not to be unreasonably withheld, and said restrictions shall be binding upon any and
all assignees of this Lease and subtenants of the Premises. In the event Tenant desires to sublet,
or permit such occupancy of, the Premises, or any portion thereof, or assign this Lease, Tenant
shall give written notice thereof to Landlord at least thirty (30) days prior to the proposed
commencement date of such subletting or assignment, which notice shall set forth the name of the
proposed subtenant or assignee, the relevant terms of any sublease or assignment and copies of
financial reports and other relevant financial information of the proposed subtenant or assignee.
To the extent reasonably necessary, upon written request by Tenant, Landlord shall enter into a
commercially reasonable confidentiality agreement covering any confidential information that is
disclosed by Tenant with respect to the financial reports and other relevant financial information
of the proposed subtenant or assignee.



     9.2 Notwithstanding any assignment or subletting, permitted or
otherwise, Tenant shall at all times remain directly, primarily and fully responsible and liable
for the payment of the rent specified in this Lease and for compliance with all of its other
obligations under the terms, provisions and covenants of this Lease. Upon the occurrence of an
Event of Default, if the Premises or any part of them are then assigned or sublet, Landlord, in
addition to any other remedies provided in this Lease or provided by law, may, at its option,
collect directly from such assignee or subtenant all rents due and becoming due to Tenant under
such assignment or sublease and apply such rent against any sums due to Landlord from



8









 




Tenant under
this Lease, and no such collection shall be construed to constitute a novation or release of Tenant
from the further performance of Tenant’s obligations under this Lease.




     9.3 In addition to Landlord’s right to approve of any subtenant or
assignee, Landlord shall have the option, in its sole discretion, in the event of any proposed
assignment of this Lease, or with respect to a subletting, (i) for a term which is for more than
50% of the then remaining Term of this Lease (as the same may have been extended) or (ii) of 30% or
more of the Premises, to terminate this Lease, or in the case of a proposed subletting of less than
the entire Premises,
to recapture the portion of the Premises to be sublet, as of the date the subletting or
assignment is to be effective. The foregoing shall not apply to Permitted Transfers, Affiliated
Parties, and any Corporate Successors (as each such term is defined in Section 9.8 below). The
option shall be exercised, if at all, by Landlord giving Tenant written notice given by Landlord to
Tenant within twenty (20) days following Landlord’s receipt of Tenant’s written notice as required
above. However, if Tenant notifies Landlord, within five (5) days after receipt of Landlord’s
termination notice, that Tenant is rescinding its proposed assignment or sublease, the termination
notice shall be void and the Lease shall continue in full force and effect. If this Lease shall be
terminated with respect to the entire Premises pursuant to this Section, the Term of this Lease
shall end on the date stated in Tenant’s notice as the effective date of the sublease or assignment
as if that date had been originally fixed in this Lease for the expiration of the Term. If
Landlord recaptures under this Section only a portion of the Premises, the rent to be paid from
time to time during the unexpired Term shall abate proportionately based on the proportion by which
the approximate square footage of the remaining portion of the Premises shall be less than that of
the Premises as of the date immediately prior to such recapture. Tenant shall, at Tenant’s own
cost and expense, discharge in full any outstanding commission obligation which may be due and
owing as a result of any proposed assignment or subletting, whether or not the Premises are
recaptured pursuant to this Section 9.3 and rented by Landlord to the proposed tenant or any other
tenant.



     9.4 In the event that Tenant sells, sublets, assigns or transfers
this Lease, Tenant shall pay to Landlord as additional rent an amount equal to seventy-five percent
(75%) of any Increased Rent (as defined below), less the Costs Component (as defined below), when
and as such Increased Rent is received by Tenant. As used in this Section, “Increased Rent” shall
mean the excess of (i) all rent and other consideration which Tenant is entitled to receive by
reason of any sale, sublease, assignment or other transfer of this Lease, over (ii) the rent
otherwise payable by Tenant under this Lease at such time. For purposes of the foregoing, any
consideration received by Tenant in form other than cash shall be valued at its fair market value
as determined by Landlord in good faith. The “Costs Component” is that amount which, if paid
monthly, would fully amortize on a straight-line basis, over the entire period for which Tenant is
to receive Increased Rent, the reasonable costs incurred by Tenant for legal fees, leasing
commissions and tenant improvements constructed by or on behalf of Tenant and performed solely to
bring about such sublease, assignment or other transfer.



     9.5 Notwithstanding any other provision hereof, it shall be
considered reasonable for Landlord to withhold its consent to any assignment of this Lease or
sublease of any portion of the Premises if at the time of either Tenant’s notice of the proposed
assignment or sublease or the proposed commencement date thereof, there shall exist any uncured
Event of Default of Tenant or matter which will become an Event of Default of Tenant with passage
of time unless cured, or if the proposed assignee or sublessee is an entity: (a) with which
Landlord is already in negotiation; (b) is already an occupant of the Building unless Landlord is
unable to provide the amount of space required by such occupant; (c) is a governmental agency; (d)
is incompatible with the character of occupancy of the Building; (e) with which the payment for the
sublease or assignment is determined in whole or in part based upon its net income or profits; or
(f) would subject the Premises to a use which would: (i) involve increased wear upon the Building;
(ii) violate any exclusive right granted to another tenant of the Building; (iii) require any
addition to or modification of the Premises or the Building in order to comply with building code
or other governmental requirements; or, (iv) involve a violation of Section 1.2. Tenant expressly
agrees that for the purposes of any statutory or other requirement of reasonableness on the part of
Landlord, Landlord’s refusal to consent to any assignment or sublease for any of the reasons
described in this Section 9.5, shall be conclusively deemed to be reasonable.



     9.6 Upon any request to assign or sublet, Tenant will pay to Landlord
the Assignment/Subletting Fee plus, on demand, a sum equal to all of Landlord’s costs, including
reasonable attorney’s fees, incurred in investigating, considering reviewing and documenting any
proposed or purported assignment or pledge of this Lease or sublease of any of the Premises (the
“Review Reimbursement” and together with the Assignment/Subletting Fee, collectively, the “Total
Reimbursement”), regardless of whether Landlord shall consent to, refuse consent, or determine that
Landlord’s consent is not required for, such assignment, pledge or sublease. Except as otherwise
expressly provided herein, the Total Reimbursement shall not exceed $1,000.00 (the “Cap”). Any
purported sale, assignment, mortgage, transfer of this Lease or subletting which does not comply
with the provisions of this Article 9 shall be void. Landlord shall notify Tenant if Landlord
reasonably estimates that the Total Reimbursement shall exceed the Cap and shall inform Tenant of
the amount of Landlord’s reasonable estimate of the Total Reimbursement (the “Estimated Fees”). If
the Estimated Fees exceed the Cap, then the Cap shall not apply and Tenant shall pay to Landlord
the amount of the Total Reimbursement up to an amount not to exceed one hundred twenty percent
(120%) of the amount of the Estimated Fees.



9









 





     9.7 If Tenant is a corporation, limited liability company,
partnership or trust, any transfer or transfers of or change or changes within any twelve (12)
month period in the number of the outstanding voting shares of the corporation or limited liability
company, the general partnership interests in the partnership or the identity of the persons or
entities controlling the activities of such partnership or trust resulting in the persons or
entities owning or controlling a majority of such shares, partnership interests or activities of
such partnership or trust at the beginning of such period no
longer having such ownership or control shall be regarded as equivalent to an assignment of
this Lease to the persons or entities acquiring such ownership or control and shall be subject to
all the provisions of this Article 9 to the same extent and for all intents and purposes as though
such an assignment; provided, however, to the extent Tenant is a corporation, the foregoing shall
not apply to a single transfer (or series of related transfers that are part of the same general
transaction and which proximately occur) of all or substantially all of the capital stock of Tenant
to one recipient (whether an individual or an entity) so long as there is no diminution of the
Tenant’s tangible net worth as a result thereof.



     9.8 So long as Tenant is not entering into the Permitted Transfer (as
defined herein) for the purpose of avoiding or otherwise circumventing the remaining terms of this
Article 9, Tenant may assign its entire interest under this Lease, without the consent of Landlord,
to (i) an affiliate, subsidiary, or parent of Tenant, or a corporation, partnership or other legal
entity wholly owned by Tenant (collectively, an “Affiliated Party”), or (ii) a successor to Tenant
by purchase, merger, consolidation or reorganization (a “Corporate Successor”), provided that all
of the following conditions are satisfied (each such transfer a “Permitted Transfer”): (1) Tenant
is not in default under this Lease; (2) the Permitted Use does not allow the Premises to be used
for retail purposes; (3) Tenant shall give Landlord written notice at least fifteen (15) days prior
to the effective date of the proposed Permitted Transfer; provided, however, that to the extent
that Tenant is prohibited by any applicable law, rule, regulation, ordinance of code from providing
the foregoing notice, Tenant shall provide notice to Landlord as soon as is reasonably possible but
in no event later than two (2) business days following the effective date of any such Permitted
Transfer; (4) with respect to a proposed Permitted Transfer to an Affiliated Party, the proposed
transferee has a tangible net worth, financial standing and financial resources, as evidenced by
current financial statements satisfactory to Landlord and certified by an independent certified
public accountant, prepared in accordance with generally accepted accounting principles that are
consistently applied, reasonably sufficient, taking into account all expected obligations of the
transferee with respect to the proposed transfer and all of its other contingent and noncontingent
obligations, to service when due the obligations of the transferee with respect to the proposed
Permitted Transfer; and (5) with respect to a purchase, merger, consolidation or reorganization or
any Permitted Transfer which results in Tenant ceasing to exist as a separate legal entity, (a)
Tenant’s successor shall own all or substantially all of the assets of Tenant, and (b) Tenant’s
successor shall have a tangible net worth which is at least equal to Ten Million Dollars
($10,000,000.00) as evidenced by current financial statements satisfactory to Landlord and
certified by an independent certified public accountant, prepared in accordance with generally
accepted accounting principles that are consistently applied. Tenant’s notice to Landlord shall
include information and documentation showing that each of the above conditions has been satisfied.
If requested by Landlord, Tenant’s successor shall sign a commercially reasonable form of
assumption agreement. As used herein, (A) “parent” shall mean a company which owns a majority of
Tenant’s voting equity; (B) “subsidiary” shall mean an entity wholly owned by Tenant or at least
fifty-one percent (51%) of whose voting equity is owned by Tenant; and (C) “affiliate” shall mean
an entity controlled, controlling or under common control with Tenant. Notwithstanding the
foregoing, if any parent, affiliate or subsidiary to which this Lease has been assigned or
transferred subsequently sells or transfers its voting equity or its interest under this Lease
other than to another parent, subsidiary or affiliate of the original Tenant named hereunder, such
sale or transfer shall be deemed to be a transfer requiring the consent of Landlord hereunder.


10. INDEMNIFICATION. None of the Landlord Entities shall be liable and
Tenant hereby waives all claims against them for any damage to any property or any injury to any
person in or about the Premises or the Building by or from any cause whatsoever (including without
limiting the foregoing, rain or water leakage of any character from the roof, windows, walls,
basement, pipes, plumbing works or appliances, the Building not being in good condition or repair,
gas, fire, oil, electricity or theft), except to the extent caused by or arising from the active
negligence or willful misconduct of Landlord or its agents, employees or contractors or a breach of
this Lease by Landlord. Tenant shall protect, indemnify and hold the Landlord Entities harmless
from and against any and all loss, claims, liability or costs (including court costs and attorney’s
fees) incurred by reason of (a) any damage to any property (including but not limited to property
of any Landlord Entity) or any injury (including but not limited to death) to any person occurring
in, on or about the Premises or the Building to the extent that such injury or damage shall be
caused by or arise from any actual or alleged act, neglect, fault, or omission by or of Tenant or
any Tenant Entity to meet any standards imposed by any duty with respect to the injury or damage;
(b) the conduct or management of any work or thing whatsoever done by the Tenant in or about the
Premises or from transactions of the Tenant concerning the Premises; (c) Tenant’s failure to comply
with any and all Regulations applicable to the condition or use of the Premises or its occupancy;
or (d) any breach or default on the part of Tenant in the performance of any covenant or agreement
on the part of the Tenant to be performed pursuant to this Lease. The provisions of this Article
shall survive the termination of this Lease with respect to any claims or liability accruing prior
to such termination.




10









 








11. INSURANCE.




     11.1 Tenant shall keep in force throughout the Term: (a) a Commercial
General Liability insurance policy or policies to protect the Landlord Entities against any
liability to the public or to any invitee of Tenant or a Landlord Entity incidental to the use of
or resulting from any accident occurring in or upon the Premises with a limit of not less than
$1,000,000 per occurrence and not less than $2,000,000 in the annual aggregate, or such larger
amount as Landlord
may prudently require from time to time so long as such larger amounts are typically carried
by similar commercial tenants in similar buildings and in the same geographic area in which the
Building is located, covering bodily injury and property damage liability and $1,000,000
products/completed operations aggregate; (b) Business Auto Liability covering owned, non-owned and
hired vehicles with a limit of not less than $1,000,000 per accident; (c) Worker’s Compensation
Insurance with limits as required by statute and Employers Liability with limits of $500,000 each
accident, $500,000 disease policy limit, $500,000 disease—each employee; (d) All Risk or Special
Form coverage protecting Tenant against loss of or damage to Tenant’s alterations, additions,
improvements, carpeting, floor coverings, panelings, decorations, fixtures, inventory and other
business personal property situated in or about the Premises to the full replacement value of the
property so insured; and, (e) Business Interruption Insurance with limit of liability representing
loss of at least approximately six (6) months of income.



     11.2 The aforesaid policies shall (a) be provided at Tenant’s expense;
(b) name the Landlord Entities as additional insureds (General Liability) and loss payee
(Property—Special Form); (c) be issued by an insurance company with a minimum Best’s rating of
“A-:VII” during the Term; and (d) provide that said insurance shall not be canceled unless thirty
(30) days prior written notice (ten days for non-payment of premium) shall have been given to
Landlord; a certificate of Liability insurance on ACORD Form 25 and a certificate of Property
insurance on ACORD Form 27 shall be delivered to Landlord by Tenant upon the Commencement Date and
at least thirty (30) days prior to each renewal of said insurance.



     11.3 Whenever Tenant shall undertake any alterations, additions or
improvements in, to or about the Premises (“Work”) the aforesaid insurance protection must extend
to and include injuries to persons and damage to property arising in connection with such Work,
without limitation including liability under any applicable structural work act, and such other
insurance as Landlord shall require; and the policies of or certificates evidencing such insurance
must be delivered to Landlord prior to the commencement of any such Work.



     11.4 Landlord shall keep in force throughout the Term Commercial General
Liability Insurance and All Risk or Special Form coverage insuring the Landlord and the Building,
in such amounts and with such deductibles as Landlord determines from time to time in accordance
with sound and reasonable risk management principles. The cost of all such insurance is included in
Expenses.


12. WAIVER OF SUBROGATION. Notwithstanding anything in this Lease to the
contrary, Landlord and Tenant hereby waive, and shall cause their respective insurance carriers to
waive, any and all rights of recovery, claim, action or causes of action against the other and
their respective trustees, principals, beneficiaries, partners, officers, directors, agents, and
employees, by subrogation, to the extent the same is insured against (or is required to be insured
against under the terms hereof) for any loss or damage that may occur to Landlord or Tenant or any
party claiming by, through or under Landlord or Tenant, as the case may be, with respect to
Tenant’s personal property, the Premises, the Building, the project of which the Building is a
part, any additions or improvements to the Premises, the Building or the project of which the
Building is a part, or any contents thereof, including all rights of recovery, claims, actions or
causes of action arising out of the negligence of Landlord or any parties related to or comprising
Landlord or the negligence of Tenant or parties related to or comprising Tenant, which loss or
damage is (or would have been, had the insurance required by this Lease been carried and as if the
All Risk or Special Form coverage insuring the Landlord and the Building and required to be carried
by Landlord pursuant to Paragraph 12 above is carried at full replacement value) covered by
property damage insurance.



13. SERVICES AND UTILITIES. Tenant shall pay for all water, gas, heat,
light, power, telephone, sewer, sprinkler system charges and other utilities and services used on
or from the Premises, together with any taxes, penalties, and surcharges or the like pertaining
thereto and any maintenance charges for utilities. Tenant shall furnish all electric light bulbs,
tubes and ballasts, battery packs for emergency lighting and fire extinguishers. If any such
services are not separately metered to Tenant, Tenant shall pay such proportion of all charges
jointly metered with other premises as determined by Landlord, in its sole discretion, to be
reasonable. Any such charges paid by Landlord and assessed against Tenant shall be immediately
payable to Landlord on demand and shall be additional rent hereunder. Tenant will not, without the
written consent of Landlord, contract with a utility provider to service the Premises with any
utility, including, but not limited to, telecommunications, electricity, water, sewer or gas, which
is not previously providing such service to other tenants in the Building; provided that Landlord
shall not unreasonably withhold its consent to a telecommunications provider if the
telecommunication services affect only the Premises and if any agreement between Tenant and such
telecommunications provider is terminable at will (and which agreement Tenant hereby agrees to
terminate if reasonably requested by Landlord). Landlord shall have no obligations to such
telecommunications provider or any other party either in connection with Tenant’s agreement with
such telecommunications





11









 







provider or otherwise. Landlord shall in no event be liable for any
interruption or failure of utility services on or to the Premises. Notwithstanding the foregoing,
if Tenant is prevented from using, and does not use, all or part of the Premises (the “Affected
Area”) as a result of a Essential Services Interruption Event as defined below, and the remaining
portions of the Premises are not reasonably sufficient to allow Tenant to conduct its business in
the
Premises and if this Essential Services Interruption Event continues for three (3) consecutive
business days after Landlord’s receipt of notice from Tenant of the Essential Services Interruption
Event (the “Eligibility Period”), the Rent payable under this Lease shall be abated after the
expiration of the Eligibility Period for such time that Tenant continues to be prevented from
using, and does not use, the Affected Area in the proportion that the rentable area of the Affected
Area bears to the total rentable area of the Premises. If, however, Tenant reoccupies any portion
of the Premises during this period, the Rent allocable to this reoccupied portion (based on the
proportion that the rentable area of the reoccupied portion of the Premises bears to the total
rentable area of the Premises) shall be payable by Tenant from the date on which Tenant reoccupies
this portion of the Premises. An “Essential Services Interruption Event” shall mean the failure of
or interruption in essential services required to be supplied by Landlord to the Premises during
ordinary business hours of generally recognized business days which occurs solely as a result of
Landlord’s active negligence or willful misconduct. In the event of a stoppage or interruption of
services, Landlord shall diligently attempt to resume such services as promptly as practicable.



14. HOLDING OVER. Tenant shall pay Landlord for each day Tenant retains
possession of the Premises or part of them after termination of this Lease by lapse of time or
otherwise at the rate (“Holdover Rate”) which shall be One Hundred Fifty Percent (150%) of the
greater of (a) the amount of the Annual Rent for the last period prior to the date of such
termination plus Tenant’s Proportionate Share of Expenses and Taxes under Article 4; and (b) the
then market rental value of the Premises as determined by Landlord assuming a new lease of the
Premises of the then usual duration and other terms, in either case, prorated on a daily basis, and
also pay all damages sustained by Landlord by reason of such retention. If Landlord gives notice
to Tenant of Landlord’s election to such effect, such holding over shall constitute renewal of this
Lease for a period from month to month or one (1) year, whichever shall be specified in such
notice, in either case at the Holdover Rate, but if the Landlord does not so elect, no such renewal
shall result notwithstanding acceptance by Landlord of any sums due hereunder after such
termination; and instead, a tenancy at sufferance at the Holdover Rate shall be deemed to have been
created. In any event, no provision of this Article 14 shall be deemed to waive Landlord’s right
of reentry or any other right under this Lease or at law.



15. SUBORDINATION. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, this Lease shall be subject and
subordinate at all times to ground or underlying leases and to the lien of any mortgages or deeds
of trust now or hereafter placed on, against or affecting the Building, Landlord’s interest or
estate in the Building, or any ground or underlying lease; provided, however, that if the lessor,
mortgagee, trustee, or holder of any such mortgage or deed of trust elects to have Tenant’s
interest in this Lease be superior to any such instrument, then, by notice to Tenant, this Lease
shall be deemed superior, whether this Lease was executed before or after said instrument.
Notwithstanding the foregoing, Tenant covenants and agrees to execute and deliver within ten (10)
days of Landlord’s request such further instruments evidencing such subordination or superiority of
this Lease as may be required by Landlord.



16. RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with all the rules and regulations as set forth in Exhibit D to this Lease and all
reasonable and non-discriminatory modifications of and additions to them from time to time put into
effect by Landlord, provided that any such modification and/or additions shall not materially
increase Tenant’s obligations or decrease Tenant’s rights or parking ratio as provided in this
Lease. Landlord shall not be responsible to Tenant for the non-performance by any other tenant or
occupant of the Building of any such rules and regulations. If there is a conflict between this
Lease and any rules and regulations enacted after the date of this Lease, the terms of this Lease
shall control. The rules and regulations shall be generally applicable, and generally applied in
the same manner, to all tenants of the Building.





12









 








17. REENTRY BY LANDLORD.




     17.1 Landlord reserves and shall at all times have the right to re-enter
the Premises to inspect the same, to show said Premises to prospective purchasers or mortgagees,
and to alter, improve or repair the Premises and any portion of the Building, and, during the last
nine (9) months of the Term, to show said Premises to prospective tenants, without abatement of
rent, and may for that purpose erect, use and maintain scaffolding, pipes, conduits and other
necessary structures and open any wall, ceiling or floor in and through the Building and Premises
where reasonably required by the character of the work to be performed, provided entrance to the
Premises shall not be blocked thereby, and further provided that the business of Tenant shall not
be interfered with unreasonably. Except in emergencies, Landlord shall provide Tenant with
reasonable prior notice of entry into the Premises, which may be given orally. During any entry by
Landlord to the Premises as provided herein, Landlord shall comply with all reasonable security
measures pertaining to the Premises and of which Tenant has provided reasonable advance written
notice to Landlord. Landlord shall have the right at any time to change the arrangement and/or
locations of entrances, or passageways, doors and doorways, and corridors, windows, elevators,
stairs, toilets or other public parts of the Building and to change the name, number or designation
by which the Building is commonly known. Landlord shall use reasonable efforts to give Tenant at
least sixty (60) days prior notice with respect to a change in the Building’s street address that
will prohibit Tenant from receiving mail at its current address, and if Landlord fails to provide
Tenant with such prior notice, Landlord shall reimburse Tenant for the cost of replacing all
business stationery and business cards on hand (not to exceed a two (2) month supply) at the
effective date of such change. Landlord shall provide to Tenant at least thirty (30) days prior
notice before any change is made to the name, number or designation by which the Building is
commonly known. In the event that Landlord damages any portion of any wall or wall covering,
ceiling, or floor or floor covering within the Premises, Landlord shall repair or replace the
damaged portion to match the original as nearly as commercially reasonable but shall not be
required to repair or replace more than the portion actually damaged. Tenant hereby waives any
claim for damages for any injury or inconvenience to or interference with Tenant’s business, any
loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned by any action
of Landlord authorized by this Article 17; provided, however, that Tenant shall not be entitled to
receive any consequential, special or indirect damages based upon a claim that Landlord violated
the terms and conditions of this Section 17.1. Instead, any such claim of Tenant shall be limited
to the foreseeable, direct and actual damages incurred by Tenant.



     17.2 For each of the aforesaid purposes, Landlord shall at all times
have and retain a key with which to unlock all of the doors in the Premises, excluding Tenant’s
vaults and safes or special security areas (designated in advance), and Landlord shall have the
right to use any and all means which Landlord may deem proper to open said doors in an emergency to
obtain entry to any portion of the Premises. As to any portion to which access cannot be had by
means of a key or keys in Landlord’s possession, Landlord is authorized to gain access by such
means as Landlord shall elect and the cost of repairing any damage occurring in doing so shall be
borne by Tenant and paid to Landlord within five (5) days of Landlord’s written demand.


18. DEFAULT.




     18.1 Except as otherwise provided in Article 20, the following events
shall be deemed to be Events of Default under this Lease:



          18.1.1 Tenant shall fail to pay when due any sum of money becoming due to be
paid to Landlord under this Lease, whether such sum be any installment of the rent reserved by this
Lease, any other amount treated as additional rent under this Lease, or any other payment or
reimbursement to Landlord required by this Lease, whether or not treated as additional rent under
this Lease, and such failure shall continue for a period of five (5) days after written notice that
such payment was not made when due, but if any such notice shall be given, more than two (2) times
in such twelve (12) month period commencing with the date of such notice, the failure to pay within
five (5) days after due any additional sum of money becoming due to be paid to Landlord under this
Lease the third (3rd) time during such period shall be an Event of Default, without notice. So
long as a notice delivered to Tenant pursuant to this Section 18.1.1 is in compliance with
California Code of Civil Procedure Section 1161 or any successor statute, such notice shall
concurrently satisfy the statutory requirement as well as the notice requirement of this Lease
described in this Section 18.1.1.




          18.1.2 Tenant shall fail to comply with any term, provision or covenant of
this Lease which is not provided for in another Section of this Article and shall not cure such
failure within thirty (30) days (forthwith, if the failure involves a hazardous condition) after
written notice of such failure to Tenant provided, however, that such failure shall not be an event
of default if such failure could not reasonably be cured during such thirty (30) day period, Tenant
has commenced the cure within such thirty (30) day period and thereafter is diligently pursuing
such cure to completion, but the total aggregate cure period shall not exceed ninety (90) days.





13









 








          18.1.3 Tenant shall fail to vacate the Premises immediately upon termination
of this Lease, by lapse of time or otherwise, or upon termination of Tenant’s right to possession
only.




          18.1.4 Tenant shall become insolvent, admit in writing its inability to pay
its debts generally as they become due, file a petition in bankruptcy or a petition to take
advantage of any insolvency statute, make an assignment for the benefit of creditors, make a
transfer in fraud of creditors, apply for or consent to the appointment of a receiver of itself or
of the whole or any substantial part of its property, or file a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws, as now in effect or hereafter
amended, or any other applicable law or statute of the United States or any state thereof.




          18.1.5 A court of competent jurisdiction shall enter an order, judgment or
decree adjudicating Tenant bankrupt, or appointing a receiver of Tenant, or of the whole or any
substantial part of its property, without the consent of Tenant, or approving a petition filed
against Tenant seeking reorganization or arrangement of Tenant under the bankruptcy laws of the
United States, as now in effect or hereafter amended, or any state thereof, and such order,
judgment or decree shall not be vacated or set aside or stayed within sixty (60) days from the date
of entry thereof.




19. REMEDIES.




     19.1 Upon the occurrence of any Event or Events of Default under this
Lease, whether enumerated in Article 18 or not, Landlord shall have the option to pursue any one or
more of the following remedies without any notice (except as expressly prescribed herein) or demand
whatsoever (and without limiting the generality of the foregoing, Tenant hereby specifically waives
notice and demand for payment of rent (except to the extent required herein) or other obligations
and waives any and all other notices or demand requirements imposed by applicable law):



          19.1.1 Terminate this Lease and Tenant’s right to possession of the Premises
and recover from Tenant an award of damages equal to the sum of the following:




               19.1.1.1 The Worth at the Time of Award of the unpaid rent which had
been earned at the time of termination;



               19.1.1.2 The Worth at the Time of Award of the amount by which the
unpaid rent which would have been earned after termination until the time of award exceeds the
amount of such rent loss that Tenant affirmatively proves could have been reasonably avoided;



               19.1.1.3 The Worth at the Time of Award of the amount by which the
unpaid rent for the balance of the Term after the time of award exceeds the amount of such rent
loss that Tenant affirmatively proves could be reasonably avoided;



               19.1.1.4 Any other amount necessary to compensate Landlord for all the
detriment either proximately caused by Tenant’s failure to perform Tenant’s obligations under this
Lease or which in the ordinary course of things would be likely to result therefrom; and



               19.1.1.5 All such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time under applicable law.


The “Worth at the Time of Award” of the amounts referred to in parts 19.1.1.1 and 19.1.1.2
above, shall be computed by allowing interest at the lesser of a per annum rate equal to: (i) the
greatest per annum rate of interest permitted from time to time under applicable law, or (ii) the
Prime Rate plus 5%. For purposes hereof, the “Prime Rate” shall be the per annum interest rate
publicly announced as its prime or base rate by a federally insured bank selected by Landlord in
the State of California. The “Worth at the Time of Award” of the amount referred to in part
19.1.1.3, above, shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus 1%;




          19.1.2 Employ the remedy described in California Civil Code § 1951.4
(Landlord may continue this Lease in effect after Tenant’s breach and abandonment and recover rent
as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable
limitations); or





14









 








          19.1.3 Notwithstanding Landlord’s exercise of the remedy described in
California Civil Code § 1951.4 in respect of an Event or Events of Default, at such time thereafter
as Landlord may elect in writing, to terminate this Lease and Tenant’s right to possession of the
Premises and recover an award of damages as provided above in Section 19.1.1.




     19.2 The subsequent acceptance of rent hereunder by Landlord shall not
be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord’s knowledge of such preceding breach at the time of acceptance of such rent. No waiver by
Landlord of any breach hereof shall be effective unless such waiver is in writing and signed by
Landlord.



     19.3 TENANT HEREBY WAIVES ANY AND ALL RIGHTS CONFERRED BY SECTION 3275
OF THE CIVIL CODE OF CALIFORNIA AND BY SECTIONS 1174 (c) AND 1179 OF THE CODE OF CIVIL PROCEDURE OF
CALIFORNIA AND ANY AND ALL OTHER REGULATIONS AND RULES OF LAW FROM TIME TO TIME IN EFFECT DURING
THE TERM PROVIDING THAT TENANT SHALL HAVE ANY RIGHT TO REDEEM, REINSTATE OR RESTORE THIS LEASE
FOLLOWING ITS TERMINATION BY REASON OF TENANT’S BREACH. TENANT ALSO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR RELATING TO
THIS LEASE.



     19.4 No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy, and each and every right and remedy shall be
cumulative and in addition to any other right or remedy given hereunder or now or hereafter
existing by agreement, applicable law or in equity. In addition to other remedies provided in this
Lease, Landlord shall be entitled, to the extent permitted by applicable law, to injunctive relief,
or to a decree compelling performance of any of the covenants, agreements, conditions or provisions
of this Lease, or to any other remedy allowed to Landlord at law or in equity. Forbearance by
Landlord to enforce one or more of the remedies herein provided upon an Event of Default shall not
be deemed or construed to constitute a waiver of such Event of Default.



     19.5 This Article 19 shall be enforceable to the maximum extent such
enforcement is not prohibited by applicable law, and the unenforceability of any portion thereof
shall not thereby render unenforceable any other portion..



     19.6 If more than one (1) Event of Default occurs during the Term or any
renewal thereof, Tenant’s renewal options, expansion options, purchase options and rights of first
offer and/or refusal, if any are provided for in this Lease, shall be null and void.



     19.7 If, on account of any breach or default by Tenant in Tenant’s
obligations under the terms and conditions of this Lease, it shall become necessary or appropriate
for Landlord to employ or consult with an attorney or collection agency concerning or to enforce or
defend any of Landlord’s rights or remedies arising under this Lease or to collect any sums due
from Tenant, Tenant agrees to pay all costs and fees so incurred by Landlord, including, without
limitation, reasonable attorneys’ fees and costs. TENANT EXPRESSLY WAIVES ANY RIGHT TO SERVICE OF
ANY NOTICE REQUIRED BY ANY PRESENT OR FUTURE LAW OR ORDINANCE APPLICABLE TO LANDLORDS OR TENANTS
BUT NOT REQUIRED BY THE TERMS OF THIS LEASE.



     19.8 Upon the occurrence of an Event of Default, Landlord may (but shall
not be obligated to) cure such default at Tenant’s sole expense. Without limiting the generality
of the foregoing, Landlord may, at Landlord’s option, enter into and upon the Premises if Landlord
determines in its sole discretion that Tenant is not acting within a commercially reasonable time
to maintain, repair or replace anything for which Tenant is responsible under this Lease or to
otherwise effect compliance with its obligations under this Lease and correct the same, without
being deemed in any manner guilty of trespass, eviction or forcible entry and detainer and without
incurring any liability for any damage or interruption of Tenant’s business resulting therefrom and
Tenant agrees to reimburse Landlord within five (5) days of Landlord’s demand as additional rent,
for any expenses which Landlord may incur in thus effecting compliance with Tenant’s obligations
under this Lease, plus interest from the date of expenditure by Landlord at the Wall Street Journal
prime rate.


20. TENANT’S BANKRUPTCY OR INSOLVENCY.




     20.1 If at any time and for so long as Tenant shall be subjected to the
provisions of the United States Bankruptcy Code or other law of the United States or any state
thereof for the protection of debtors as in effect at such time (each a “Debtor’s Law”):



15









 





          20.1.1 Tenant, Tenant as debtor-in-possession, and any trustee or receiver of
Tenant’s assets (each a “Tenant’s Representative”) shall have no greater right to assume or assign
this Lease or any interest in this Lease, or to sublease any of the Premises than accorded to
Tenant in Article 9, except to the extent Landlord shall be required to permit such assumption,
assignment or sublease by the provisions of such Debtor’s Law. Without limitation of the
generality of the
foregoing, any right of any Tenant’s Representative to assume or assign this Lease or to
sublease any of the Premises shall be subject to the conditions that:




               20.1.1.1 Such Debtor’s Law shall provide to Tenant’s Representative a
right of assumption of this Lease which Tenant’s Representative shall have timely exercised and
Tenant’s Representative shall have fully cured any default of Tenant under this Lease.



               20.1.1.2 Tenant’s Representative or the proposed assignee, as the case
shall be, shall have deposited with Landlord as security for the timely payment of rent an amount
equal to the larger of: (a) three (3) months’ rent and other monetary charges accruing under this
Lease; and (b) any sum specified in Article 5; and shall have provided Landlord with adequate other
assurance of the future performance of the obligations of the Tenant under this Lease. Without
limitation, such assurances shall include, at least, in the case of assumption of this Lease,
demonstration to the satisfaction of the Landlord that Tenant’s Representative has and will
continue to have sufficient unencumbered assets after the payment of all secured obligations and
administrative expenses to assure Landlord that Tenant’s Representative will have sufficient funds
to fulfill the obligations of Tenant under this Lease; and, in the case of assignment, submission
of current financial statements of the proposed assignee, audited by an independent certified
public accountant reasonably acceptable to Landlord and showing a net worth and working capital in
amounts determined by Landlord to be sufficient to assure the future performance by such assignee
of all of the Tenant’s obligations under this Lease.



               20.1.1.3 The assumption or any contemplated assignment of this Lease or
subleasing any part of the Premises, as shall be the case, will not breach any provision in any
other lease, mortgage, financing agreement or other agreement by which Landlord is bound.



               20.1.1.4 Landlord shall have, or would have had absent the Debtor’s Law,
no right under Article 9 to refuse consent to the proposed assignment or sublease by reason of the
identity or nature of the proposed assignee or sublessee or the proposed use of the Premises
concerned.


21. QUIET ENJOYMENT. Landlord represents and warrants that it has full
right and authority to enter into this Lease and that Tenant, while paying the rental and
performing its other covenants and agreements contained in this Lease within applicable notice and
cure periods, shall peaceably and quietly have, hold and enjoy the Premises for the Term without
hindrance or molestation from Landlord subject to the terms and provisions of this Lease. Landlord
shall not be liable for any interference or disturbance by other tenants or third persons, nor
shall Tenant be released from any of the obligations of this Lease because of such interference or
disturbance.



22. CASUALTY.




     22.1 In the event the Premises or the Building are damaged by fire or
other cause and in Landlord’s reasonable estimation such damage can be materially restored within
one hundred eighty (180) days, Landlord shall forthwith repair the same and this Lease shall remain
in full force and effect, except that Tenant shall be entitled to a proportionate abatement in rent
from the date of such damage. Such abatement of rent shall be made in proportion to the extent to
which the damage and the making of such repairs shall interfere with the Permitted Use and
occupancy by Tenant of the Premises from time to time. Within forty-five (45) days from the date
of such damage, Landlord shall notify Tenant, in writing, of Landlord’s reasonable estimation of
the length of time within which material restoration can be made, and Landlord’s determination
shall be binding on Tenant. For purposes of this Lease, the Building or Premises shall be deemed
“materially restored” if they are in a substantially similar condition as of the date of this
Lease, reasonable wear and tear excepted, and provided that Landlord shall have no obligation to
restore and/or replace the Improvements or any alterations or other improvements made to the
Premises.



     22.2 If such repairs cannot, in Landlord’s reasonable estimation, be
made within one hundred eighty (180) days, Landlord and Tenant shall each have the option of giving
the other, at any time within ninety (90) days after such damage, notice terminating this Lease as
of the date of such damage. In the event of the giving of such notice, this Lease shall expire and
all interest of the Tenant in the Premises shall terminate as of the date of such damage as if such
date had been originally fixed in this Lease for the expiration of the Term. In the event that
neither Landlord nor Tenant exercises its option to terminate this Lease, then Landlord shall
repair or restore such damage, this Lease continuing in full force and effect, and the



16









 




rent
hereunder shall be proportionately abated as provided in Section 22.1. Landlord shall not in bad
faith terminate this Lease pursuant to the terms of this Section 22.2 solely for the purpose of
replacing Tenant with a successor tenant.




     22.3 Landlord shall not be required to repair or replace any damage or
loss by or from fire or other cause to any panelings, decorations, partitions, additions, railings,
ceilings, floor coverings, office fixtures or any other
property or improvements installed on the Premises by, or belonging to, Tenant. Any insurance
which may be carried by Landlord or Tenant against loss or damage to the Building or Premises shall
be for the sole benefit of the party carrying such insurance and under its sole control.



     22.4 In the event that Landlord should fail to complete such repairs and
material restoration within ninety (90) days after the date estimated by Landlord therefor as
extended by this Section 22.4, Tenant may at its option and as its sole remedy terminate this Lease
by delivering written notice to Landlord, within fifteen (15) days after the expiration of said
period of time, whereupon this Lease shall end on the date of such notice or such later date fixed
in such notice as if the date of such notice was the date originally fixed in this Lease for the
expiration of the Term; provided, however, that if construction is delayed because of changes,
deletions or additions in construction requested by Tenant, strikes, lockouts, casualties, Acts of
God, war, material or labor shortages, government regulation or control or other causes beyond the
reasonable control of Landlord, the period for restoration, repair or rebuilding shall be extended
for the amount of time Landlord is so delayed.



     22.5 Notwithstanding anything to the contrary contained in this Article:
(a) Landlord shall not have any obligation whatsoever to repair, reconstruct, or restore the
Premises when the damages resulting from any casualty covered by the provisions of this Article 22
occur during the last twelve (12) months of the Term or any extension thereof, but if Landlord
determines not to repair such damages Landlord shall notify Tenant and if such damages shall render
any material portion of the Premises untenantable Tenant shall have the right to terminate this
Lease by notice to Landlord within fifteen (15) days after receipt of Landlord’s notice; and (b) in
the event the holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises or Building requires that any insurance proceeds be applied to such indebtedness, then
Landlord shall have the right to terminate this Lease by delivering written notice of termination
to Tenant within fifteen (15) days after such requirement is made by any such holder, whereupon
this Lease shall end on the date of such damage as if the date of such damage were the date
originally fixed in this Lease for the expiration of the Term.



     22.6 In the event of any damage or destruction to the Building or
Premises by any peril covered by the provisions of this Article 22, it shall be Tenant’s
responsibility to properly secure the Premises and upon notice from Landlord to remove forthwith,
at its sole cost and expense, such portion of all of the property belonging to Tenant or its
licensees from such portion or all of the Building or Premises as Landlord shall request.



     22.7 Tenant hereby waives any and all rights under and benefits of
Sections 1932(2) and 1933(4) of the California Civil Code, or any similar or successor Regulations
or other laws now or hereinafter in effect.


23. EMINENT DOMAIN. If all or any substantial part of the Premises shall
be taken or appropriated by any public or quasi-public authority under the power of eminent domain,
or conveyance in lieu of such appropriation, either party to this Lease shall have the right, at
its option, of giving the other, at any time within thirty (30) days after such taking, notice
terminating this Lease, except that Tenant may only terminate this Lease by reason of taking or
appropriation, if such taking or appropriation shall be so substantial as to materially interfere
with Tenant’s use and occupancy of the Premises. If neither party to this Lease shall so elect to
terminate this Lease, the rental thereafter to be paid shall be adjusted on a fair and equitable
basis under the circumstances and based upon the proportion of the Premises so taken. In addition
to the rights of Landlord above, if any substantial part of the Building shall be taken or
appropriated by any public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, and regardless of whether the Premises or any part thereof are so taken
or appropriated, Landlord shall have the right, at its sole option, to terminate this Lease.
Landlord shall be entitled to any and all income, rent, award, or any interest whatsoever in or
upon any such sum, which may be paid or made in connection with any such public or quasi-public use
or purpose, and Tenant hereby assigns to Landlord any interest it may have in or claim to all or
any part of such sums, other than any separate award which may be made with respect to Tenant’s
trade fixtures, moving expenses and the value of leasehold improvements to the extent paid for
solely by Tenant (except for those alterations approved by Landlord and which will become the
property of Landlord upon the expiration or termination of this Lease); Tenant shall make no claim
for the value of any unexpired Term. Tenant hereby waives any and all rights under and benefits of
Section 1265.130 of the California Code of Civil Procedure, or any similar or successor Regulations
or other laws now or hereinafter in effect.



24. SALE BY LANDLORD. In event of a sale or conveyance by Landlord of the
Building, the same shall operate to release Landlord from any future liability upon any of the
covenants or conditions, expressed or implied, contained in this




17









 







Lease in favor of Tenant and in
such event Tenant agrees to look solely to the responsibility of the successor in interest of
Landlord in and to this Lease. In the event of a sale, such successor-in-interest shall assume in
writing Landlord’s obligations under this Lease. Except as set forth in this Article 24, this Lease
shall not be affected by any such sale and Tenant agrees to attorn to the purchaser or assignee.
If any security has been given by Tenant to secure the faithful performance of any of the covenants
of this Lease, Landlord shall transfer or deliver said security, as such, to Landlord’s successor
in interest and thereupon Landlord shall be discharged from any further liability with regard to
said security.



25. ESTOPPEL CERTIFICATES. Within ten (10) days following any written
request which Landlord may make from time to time, Tenant shall execute and deliver to Landlord or
mortgagee or prospective mortgagee a sworn statement certifying: (a) the date of commencement of
this Lease; (b) the fact that this Lease is unmodified and in full force and effect (or, if there
have been modifications to this Lease, that this lease is in full force and effect, as modified,
and stating the date and nature of such modifications); (c) the date to which the rent and other
sums payable under this Lease have been paid; (d) the fact that there are no current defaults under
this Lease by either Tenant or, to Tenant’s actual knowledge, Landlord, except as specified in
Tenant’s statement; and (e) such other matters as may be reasonably requested by Landlord.
Landlord and Tenant intend that any statement delivered pursuant to this Article 25 may be relied
upon by any mortgagee, beneficiary or purchaser, and Tenant shall be liable for all loss, cost or
expense resulting from the failure of any sale or funding of any loan caused by any material
misstatement contained in such estoppel certificate. Tenant irrevocably agrees that if Tenant
fails to execute and deliver such certificate within such ten (10) day period, such certificate as
prepared by Landlord shall be deemed executed by Tenant and accordingly shall be fully binding on
Tenant. The parties agree that Tenant’s obligation to furnish such estoppel certificates in a
timely fashion is a material inducement for Landlord’s execution of this Lease, and shall be an
Event of Default (without any cure period that might be provided under this Lease) if Tenant fails
to fully comply or makes any material misstatement in any such certificate.



26. SURRENDER OF PREMISES.




     26.1 Landlord shall arrange to meet Tenant for two (2) joint inspections
of the Premises, the first to occur at least ten (10) days (but no more than sixty (60) days)
before the last day of the Term, and the second to occur not later than five (5) days after Tenant
has vacated the Premises. In the event of Landlord’s failure to arrange such joint inspections or
Tenant’s failure to participate in either such inspection, Landlord’s inspection at or after
Tenant’s vacating the Premises shall be conclusively deemed correct for purposes of determining
Tenant’s responsibility for repairs and restoration.



     26.2 All alterations, additions, and improvements in, on, or to the
Premises made or installed by or for Tenant, including, without limitation, carpeting
(collectively, “Alterations”), shall be and remain the property of Tenant during the Term. Upon
the expiration or sooner termination of the Term, all Alterations shall become a part of the realty
and shall belong to Landlord without compensation, and title shall pass to Landlord under this
Lease as by a bill of sale. At the end of the Term or any renewal of the Term or other sooner
termination of this Lease, Tenant will peaceably deliver up to Landlord possession of the Premises,
together with all Alterations by whomsoever made, in the same conditions received or first
installed, broom clean and free of all debris, excepting only ordinary wear and tear and damage by
fire or other casualty. Notwithstanding the foregoing, and subject to the terms of Article 6 of
this Lease, if Landlord elects by notice given to Tenant at least ten (10) days prior to expiration
of the Term, Tenant shall, at Tenant’s sole cost, remove any Alterations, including carpeting, so
designated by Landlord’s notice, and repair any damage caused by such removal. Further, nothing
contained in this Section 26.2 shall increase Tenant’s obligation to remediate or remove Hazardous
Materials as the same is expressly provided in this Lease. Tenant must, at Tenant’s sole cost,
remove upon termination of this Lease, any and all of Tenant’s furniture, furnishings, movable
partitions of less than full height from floor to ceiling and other trade fixtures and personal
property (collectively, “Personalty”). The Personalty shall be and remain the property of Tenant
during the Term. Personalty not so removed shall be deemed abandoned by the Tenant and title to
the same shall thereupon pass to Landlord under this Lease as by a bill of sale, but Tenant shall
remain responsible for the cost of removal and disposal of such Personalty, as well as any damage
caused by such removal. If Tenant fails to remove such alterations or Tenant’s trade fixtures or
furniture or the Personalty, Landlord may keep and use them or remove any of them and cause them to
be stored or sold in accordance with applicable law, at Tenant’s sole expense.



     26.3 All obligations of Tenant under this Lease not fully performed as
of the expiration or earlier termination of the Term shall survive the expiration or earlier
termination of the Term To the extent Tenant has failed to do the same, upon the expiration or
earlier termination of the Term, Tenant shall pay to Landlord the amount, as reasonably estimated
by Landlord, necessary to repair and restore the Premises as provided in this Lease and/or to
discharge Tenant’s obligation for unpaid amounts due or to become due to Landlord. All such
amounts shall be used and held by Landlord for payment of such obligations of Tenant, with Tenant
being liable for any additional costs upon demand by Landlord, or with any excess to be promptly
returned to Tenant after all such obligations have been determined and satisfied. Any otherwise
unused Security Deposit shall be credited against the amount payable by Tenant under this Lease.



18









 




27. NOTICES. Any notice or document required or permitted to be delivered
under this Lease shall be addressed to the intended recipient, by fully prepaid registered or
certified United States Mail return receipt requested, or by reputable independent contract
delivery service furnishing a written record of attempted or actual delivery, and shall be deemed
to be delivered when tendered for delivery to the addressee at its address set forth on the
Reference Pages, or at such other address as it has then last specified by written notice delivered
in accordance with this Article 27, or if to Tenant at either its aforesaid address or its last
known registered office or home of a general partner or individual owner, whether or not actually
accepted
or received by the addressee. Any such notice or document may also be personally delivered if a
receipt is signed by and received from, the individual, if any, named in Tenant’s Notice Address.



28. TAXES PAYABLE BY TENANT. In addition to rent and other charges to be
paid by Tenant under this Lease, Tenant shall reimburse to Landlord, upon demand, any and all taxes
payable by Landlord (other than net income taxes) whether or not now customary or within the
contemplation of the parties to this Lease: (a) upon or measured by the Tenant’s gross receipts or
payroll or the value of Tenant’s equipment, furniture, fixtures and other personal property of
Tenant or leasehold improvements, alterations or additions located in the Premises; or (b) upon
this transaction or any document to which Tenant is a party creating or transferring any interest
of Tenant in this Lease or the Premises. If due to a future change in the method of taxation, any
franchise, income or profit or other tax shall be levied in substitution in whole or in part or in
lieu of any tax which would otherwise constitute a part of Taxes under this Lease, such franchise,
income, profit or other tax shall be deemed to be a part of Taxes for the purposes of this Lease.
In addition to the foregoing, Tenant agrees to pay, before delinquency, any and all taxes levied or
assessed against Tenant and which become payable during the term hereof upon Tenant’s equipment,
furniture, fixtures and other personal property of Tenant located in the Premises. In addition to
and wholly apart from Tenant’s obligation to pay Tenant’s Proportionate Share of Expenses and
Taxes, Tenant shall be responsible for and shall pay prior to delinquency any taxes or governmental
service fees, possessory interest taxes, fees or charges in lieu of any such taxes, capital levies,
or other charges imposed upon, levied with respect to or assessed against its fixtures or
Personalty, on the value of any alterations or other improvements within the Premises, and on
Tenant’s interest pursuant to this Lease, or any increase in any of the foregoing based on such
alterations and/or improvements.



29. RELOCATION OF TENANT. Intentionally Omitted



30. DEFINED TERMS AND HEADINGS. The Article headings shown in this Lease
are for convenience of reference and shall in no way define, increase, limit or describe the scope
or intent of any provision of this Lease. Any indemnification or insurance of Landlord shall apply
to and inure to the benefit of all the following “Landlord Entities”, being Landlord, Landlord’s
investment manager, and the trustees, boards of directors, officers, general partners,
beneficiaries, stockholders, employees and agents of each of them. Any option granted to Landlord
shall also include or be exercisable by Landlord’s trustee, beneficiary, agents and employees, as
the case may be. In any case where this Lease is signed by more than one person, the obligations
under this Lease shall be joint and several. The terms “Tenant” and “Landlord” or any pronoun used
in place thereof shall indicate and include the masculine or feminine, the singular or plural
number, individuals, firms or corporations, and their and each of their respective successors,
executors, administrators and permitted assigns, according to the context hereof. The term
“rentable area” shall mean the rentable area of the Premises or the Building as calculated by the
Landlord on the basis of the plans and specifications of the Building including a proportionate
share of any common areas. Tenant hereby accepts and agrees to be bound by the figures for the
rentable square footage of the Premises and Tenant’s Proportionate Share shown on the Reference
Pages; however, Landlord may adjust either or both figures if there is manifest error, addition or
subtraction to the Building or any business park or complex of which the Building is a part,
remeasurement or other circumstance reasonably justifying adjustment. The term “Building” refers
to the structure in which the Premises are located and the common areas (parking lots, sidewalks,
landscaping, etc.) appurtenant thereto. If the Building is part of a larger complex of structures,
the term “Building” may include the entire complex, where appropriate (such as shared Expenses or
Taxes) and subject to Landlord’s reasonable discretion.



31. TENANT’S AUTHORITY.




     31.1 If Tenant signs as a corporation, partnership, trust or other legal
entity each of the persons executing this Lease on behalf of Tenant represents and warrants that
Tenant has been and is qualified to do business in the state in which the Building is located, that
the entity has full right and authority to enter into this Lease, and that all persons signing on
behalf of the entity were authorized to do so by appropriate actions. Tenant agrees to deliver to
Landlord, simultaneously with the delivery of this Lease, a corporate resolution, proof of due
authorization by partners, opinion of counsel or other appropriate documentation reasonably
acceptable to Landlord evidencing the due authorization of Tenant to enter into this Lease.



     31.2 Tenant hereby represents and warrants that neither Tenant, nor any
persons or entities holding any legal or beneficial interest whatsoever in Tenant, are (i) the
target of any sanctions program that is established by Executive Order of



19









 




the President or
published by the Office of Foreign Assets Control, U.S. Department of the Treasury (“OFAC”); (ii)
designated by the President or OFAC pursuant to the Trading with the Enemy Act, 50 U.S.C. App. §
5, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, the Patriot Act, Public
Law 107-56, Executive Order 13224 (September 23, 2001) or any Executive Order of the President
issued pursuant to such statutes; or (iii) named on the following list that is published by OFAC:
“List of Specially Designated Nationals and Blocked Persons.” If the foregoing representation is
untrue at any time during the Term, an Event of Default will be deemed to have occurred, without
the necessity of notice to Tenant.



32. FINANCIAL STATEMENTS AND CREDIT REPORTS. At Landlord’s request,
Tenant shall deliver to Landlord a copy, certified by an officer of Tenant as being a true and
correct copy, of Tenant’s most recent audited financial statement, or, if unaudited, certified by
Tenant’s chief financial officer as being true, complete and correct in all material respects.
Tenant hereby authorizes Landlord to obtain one or more credit reports on Tenant at any time, and
shall execute such further authorizations as Landlord may reasonably require in order to obtain a
credit report. The foregoing shall not apply to the extent Tenant is a publicly traded entity on
the “over-the-counter” market or any recognized national or international securities exchange and,
accordingly, Tenant’s audited financial statements are available to the public.



33. COMMISSIONS. Each of the parties represents and warrants to the other
that it has not dealt with any broker or finder in connection with this Lease. Tenant shall
indemnify and hold Landlord and its employees and affiliates harmless from all claims of any
brokers claiming to have represented Tenant in connection with this Lease. Landlord agrees to
indemnify and hold Tenant and its employees and affiliates harmless from all claims of any brokers
claiming to have represented Landlord in connection with this Lease.



34. TIME AND APPLICABLE LAW. Time is of the essence of this Lease and all
of its provisions. This Lease shall in all respects be governed by the laws of the state in which
the Building is located.



35. SUCCESSORS AND ASSIGNS. Subject to the provisions of Article 9, the
terms, covenants and conditions contained in this Lease shall be binding upon and inure to the
benefit of the heirs, successors, executors, administrators and assigns of the parties to this
Lease.



36. ENTIRE AGREEMENT. This Lease, together with its exhibits, contains
all agreements of the parties to this Lease and supersedes any previous negotiations. There have
been no representations made by the Landlord or any of its representatives or understandings made
between the parties other than those set forth in this Lease and its exhibits. This Lease may not
be modified except by a written instrument duly executed by the parties to this Lease.



37. EXAMINATION NOT OPTION. Submission of this Lease shall not be deemed
to be a reservation of the Premises. Landlord shall not be bound by this Lease until it has
received a copy of this Lease duly executed by Tenant and has delivered to Tenant a copy of this
Lease duly executed by Landlord, and until such delivery Landlord reserves the right to exhibit and
lease the Premises to other prospective tenants. Notwithstanding anything contained in this Lease
to the contrary, Landlord may withhold delivery of possession of the Premises from Tenant until
such time as Tenant has paid to Landlord any security deposit required by Article 5, the first
month’s rent as set forth in Article 3 and any sum owed pursuant to this Lease.



38. RECORDATION. Tenant shall not record or register this Lease or a
short form memorandum hereof without the prior written consent of Landlord, and then shall pay all
charges and taxes incident such recording or registration.



39. SIGNAGE. Tenant shall not place, install, affix, paint or maintain
any signs, notices, graphics or banners whatsoever or any window decor which is visible in or from
public view or corridors, the common areas or the exterior of the Premises or the Building, in or
on any exterior window or window fronting upon any common areas or service area or upon any truck
doors or man doors without Landlord’s prior written approval which Landlord shall have the right to
withhold in its absolute and sole discretion; provided that Tenant’s name shall be included in any
Building-standard door and directory signage, if any, in accordance with Landlord’s Building
signage program, including without limitation, payment by Tenant of any fee charged by Landlord for
maintaining such signage, which fee shall constitute additional rent hereunder. Any installation
of signs, notices, graphics or banners on or about the Premises approved by Landlord shall be
subject to any applicable Regulations and to any signage specifications for the Building and other
reasonable requirements imposed by Landlord. Tenant shall remove all such signs or graphics by the
expiration or any earlier termination of this Lease. Such installations and removals shall be made
in such manner as to avoid injury to or defacement of the Premises and the Building and any other
improvements contained therein, and Tenant shall repair any injury or defacement including without
limitation discoloration caused by such installation or removal.




20









 








40. OPTION TO RENEW.




     40.1 Provided this Lease is in full force and effect and Tenant is not in default under
any of the other terms and conditions of this Lease at the time of notification or commencement,
Tenant shall have one (1) option to renew (the “Renewal Option”) this Lease for a term of one (1)
year (the “Renewal Term”), for the portion of the Premises being leased by Tenant as of the date
the Renewal Term is to commence, on the same terms and conditions set forth in this Lease, except
as modified by the terms, covenants and conditions as set forth below:



          40.1.1 If Tenant elects to exercise the Renewal Option, then Tenant shall provide Landlord
with written notice no earlier than the date which is two hundred seventy (270) days prior to the
expiration of the Term of this Lease but no later than the date which is one hundred twenty (120)
days prior to the expiration of the Term of this Lease. If Tenant fails to provide such notice,
Tenant shall have no further or additional right to extend or renew the Term of this Lease.




          40.1.2 The Annual Rent and Monthly Installment of Rent in effect at the expiration of the Term
of this Lease shall be increased to reflect the current fair market rental for comparable space in
the Building and in other similar buildings in the same rental market as of the date the Renewal
Term is to commence, taking into account the specific provisions of this Lease which will remain
constant. Landlord shall advise Tenant of the new Annual Rent and Monthly Installment of Rent for
the Premises no later than thirty (30) days after receipt of Tenant’s written request therefor.
Said request shall be made no earlier than thirty (30) days prior to the first date on which Tenant
may exercise its Renewal Option under this Article 40. Said notification of the new Annual Rent
may include a provision for its escalation to provide for a change in fair market rental between
the time of notification and the commencement of the Renewal Term. In no event shall the Annual
Rent and Monthly Installment of Rent for the Renewal Term be less than the Annual Rent and Monthly
Installment of Rent in the preceding period.




          40.1.3 This Renewal Option is not transferable; the parties hereto acknowledge and agree that
they intend that the aforesaid option to renew this Lease shall be “personal” to Tenant as set
forth above and that in no event will any assignee or sublessee have any rights to exercise the
aforesaid option to renew.




          40.1.4 If the Renewal Option is validly exercised or if Tenant
fails to validly exercise the Renewal Option, Tenant shall have no further right to extend the term
of this Lease.




          40.1.5 Notwithstanding anything herein to the contrary, the Renewal
Option is subject and subordinate to the expansion rights (whether such rights are designated as a
right of first offer, right of first refusal, expansion option or otherwise) of any tenant of the
Building existing on the date hereof.



41. LIMITATION OF LANDLORD’S LIABILITY. Redress for any claim
against Landlord under this Lease shall be limited to and enforceable only against and to the
extent of Landlord’s interest in the Building in which the Premises is located. The obligations of
Landlord under this Lease are not intended to be and shall not be personally binding on, nor shall



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





21









 







any resort be had to the private properties of, any of its or its investment manager’s trustees,
directors, officers, partners, beneficiaries, members, stockholders, employees, or agents, and in
no case shall Landlord be liable to Tenant hereunder for any lost profits, damage to business, or
any form of special, indirect or consequential damages.



IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the Lease Reference Date set
forth in the Reference Pages of this Lease.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RREEF AMERICA REIT II CORP. DDD,	 	 	 	SCM MICROSYSTEMS, INC.,	 	 
	a Maryland corporation	 	 	 	a Delaware corporation	 	 
	 
	By:	 	RREEF Management Company, a Delaware	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	corporation, its Authorized Agent	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Stephen J. George 	 	 	By:	 	/s/ Stephan Rohaly 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Name:	 	Stephen J. George 	 	 	Name:	 	Stephan Rohaly 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Title:	 	Regional Director 	 	 	 	 	Title:	 	 	 	Chief Financial Officer 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Dated:	 	 	 	August 1 	 	,  2006	 	 	 	Dated:	 	July 14 	 	,  2006	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 







22









 








EXHIBIT A – FLOOR PLAN DEPICTING THE PREMISES




attached to and made a part of the Lease bearing the

Lease Reference Date of June 23, 2006 between

RREEF AMERICA REIT II CORP. DDD, a Maryland corporation, as Landlord and

SCM MICROSYSTEMS, INC., a Delaware corporation, as Tenant



Exhibit A is intended only to show the general layout of the Premises as of the beginning of the
Term of the Lease. It does not in any way supersede any of Landlord’s rights set forth in Article
17 of the Lease with respect to arrangements and/or locations of public parts of the Building and
changes in such arrangements and/or locations. It is not to be scaled; any measurements or
distances shown should be taken as approximate.




A-1









 





EXHIBIT A-1 – SITE PLAN




attached to and made a part of the Lease bearing the

Lease Reference Date of June 23, 2006 between

RREEF AMERICA REIT II CORP. DDD, a Maryland corporation, as Landlord and

SCM MICROSYSTEMS, INC., a Delaware corporation, as Tenant



Exhibit A-1 is intended only to show the general location of the Building and/or the project of
which the Building is a part as of the beginning of the Term of the Lease. It does not in any way
supersede any of Landlord’s rights set forth in Article 17 of the Lease with respect to
arrangements and/or locations of public parts of the Building and changes in such arrangements
and/or locations. It is not to be scaled; any measurements or distances shown should be taken as
approximate.





A-2









 








EXHIBIT B – INITIAL ALTERATIONS




attached to and made a part of the Lease bearing the

Lease Reference Date of June 23, 2006 between

RREEF AMERICA REIT II CORP. DDD, a Maryland corporation, as Landlord and

SCM MICROSYSTEMS, INC., a Delaware corporation, as Tenant



1. Tenant, following the delivery of the Premises by Landlord and the full and final execution and
delivery of the Lease to which this Exhibit B is attached and all prepaid rental, the
Security Deposit and insurance certificates required under the Lease, shall have the right to
perform alterations and improvements in the Premises (the “Initial Alterations”). Notwithstanding
the foregoing, Tenant and its contractors shall not have the right to perform Initial Alterations
in the Premises unless and until Tenant has complied with all of the terms and conditions of
Article 6 of the Lease, including, without limitation, approval by Landlord of the final plans for
the Initial Alterations and the contractors to be retained by Tenant to perform such Initial
Alterations. Tenant shall be responsible for all elements of the design of Tenant’s plans
(including, without limitation, compliance with law, functionality of design, the structural
integrity of the design, the configuration of the premises and the placement of Tenant’s furniture,
appliances and equipment), and Landlord’s approval of Tenant’s plans shall in no event relieve
Tenant of the responsibility for such design. Landlord’s approval of the contractors to perform
the Initial Alterations shall not be unreasonably withheld. The parties agree that Landlord’s
approval of the general contractor to perform the Initial Alterations shall not be considered to be
unreasonably withheld if any such general contractor (a) does not have trade references reasonably
acceptable to Landlord, (b) does not maintain insurance as required pursuant to the terms of the
Lease, (c) does not have the ability to be bonded for the work in an amount of no less than one
hundred fifty percent (150%) of the total estimated cost of the Initial Alterations, (d) does not
provide current financial statements reasonably acceptable to Landlord, or (e) is not licensed as a
contractor in the state/municipality in which the Premises is located. Tenant acknowledges the
foregoing is not intended to be an exclusive list of the reasons why Landlord may reasonably
withhold its consent to a general contractor.



2. Provided Tenant is not in default, Landlord agrees to contribute the sum of $4,154.00 (the
“Allowance”) toward the cost of performing the Initial Alterations in preparation of Tenant’s
occupancy of the Premises.  The Allowance may only be used for the cost of preparing design
and construction documents and mechanical and electrical plans for the Initial Alterations and for
hard costs in connection with the Initial Alterations. The Allowance shall be paid to Tenant or,
at Landlord’s option, to the order of the general contractor that performed the Initial
Alterations, within thirty (30) days following receipt by Landlord of (a) receipted bills covering
all labor and materials expended and used in the Initial Alterations; (b) a sworn contractor’s
affidavit from the general contractor and a request to disburse from Tenant containing an approval
by Tenant of the work done; (c) full and final waivers of lien; (d) as-built plans of the Initial
Alterations; and (e) the certification of Tenant and its architect that the Initial Alterations
have been installed in a good and workmanlike manner in accordance with the approved plans, and in
accordance with applicable laws, codes and ordinances. The Allowance shall be disbursed in the
amount reflected on the receipted bills meeting the requirements above. Notwithstanding anything
herein to the contrary, Landlord shall not be obligated to disburse any portion of the Allowance
during the continuance of an uncured default under the Lease, and Landlord’s obligation to disburse
shall only resume when and if such default is cured.



3. In no event shall the Allowance be used for the purchase of equipment, furniture or other items
of personal property of Tenant. If Tenant does not submit a request for payment of the entire
Allowance to Landlord in accordance with the provisions contained in this Exhibit B by
November 30, 2006, any unused
amount shall accrue to the sole benefit of Landlord, it being understood that Tenant shall not be
entitled to any credit, abatement or other concession in connection therewith. Tenant shall be
responsible for all applicable state sales or use taxes, if any, payable in connection with the
Initial Alterations and/or Allowance.



4. Tenant agrees to accept the Premises in its “as-is” condition and configuration, it being agreed
that Landlord shall not be required to perform any work or, except as provided above with respect
to the Allowance, incur any costs in connection with the construction or demolition of any
improvements in the Premises.



5. This Exhibit B shall not be deemed applicable to any additional space added to the
Premises at any time or from time to time, whether by any options under the Lease or otherwise, or
to any portion of the original Premises or any additions to the Premises in the event of a renewal
or extension of the original Term of the Lease, whether by any options under the Lease or
otherwise, unless expressly so provided in the Lease or any amendment or supplement to the Lease.





B-1









 








EXHIBIT C – COMMENCEMENT DATE MEMORANDUM




attached to and made a part of the Lease bearing the

Lease Reference Date of June 23, 2006 between

RREEF AMERICA REIT II CORP. DDD, a Maryland corporation, as Landlord and

SCM MICROSYSTEMS, INC., a Delaware corporation, as Tenant




COMMENCEMENT DATE MEMORANDUM




     THIS MEMORANDUM, made as of ___, 20___, by and between RREEF AMERICA REIT II CORP. DDD, a
Maryland corporation (“Landlord”) and SCM MICROSYSTEMS, INC., a Delaware corporation (“Tenant”).



Recitals:





	 	 	 	 
	 
	 	A.	 	Landlord and Tenant are parties to that certain Lease, dated for reference June 23,
2006 (the “Lease”) for certain premises (the “Premises”) consisting of approximately
6,200 square feet at the building commonly known as 41740 Christy Street, Fremont,
California.
	 
	 	B.	 	Tenant is in possession of the Premises and the Term of the
Lease has commenced.
	 
	 	C.	 	Landlord and Tenant desire to enter into this Memorandum
confirming the Commencement Date, the Termination Date and other matters under the
Lease.





     NOW, THEREFORE, Landlord and Tenant agree as follows:




	 	1.	 	The actual Commencement Date is ___.
	 
	 	2.	 	The actual Termination Date is ___.
	 
	 	3.	 	The schedule of the Annual Rent and the Monthly Installment of Rent set forth
on the Reference Pages is deleted in its entirety, and the following is substituted
therefor:





[insert rent schedule]





	 	4.	 	Capitalized terms not defined herein shall have the same meaning as set forth in the
Lease.





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date and year first above written.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RREEF AMERICA REIT II CORP. DDD,	 	 	 	SCM MICROSYSTEMS, INC.,	 	 
	a Maryland corporation	 	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	RREEF Management Company, a	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Delaware corporation, its Authorized Agent	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	 	 	 	 	By:	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Name:	 	 	 	 	 	 	 	Name:	 	DO NOT SIGN 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 
	 
	Title:	 	 	 	 	 	 	 	 	 	Title:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Dated:	 	 	 	 	 	 	 	Dated:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






C-1









 








EXHIBIT D – RULES AND REGULATIONS




attached to and made a part of the Lease bearing the

Lease Reference Date of June 23, 2006 between

RREEF AMERICA REIT II CORP. DDD, a Maryland corporation, as Landlord and

SCM MICROSYSTEMS, INC., a Delaware corporation, as Tenant



1. No sign, placard, picture, advertisement, name or notice
(collectively referred to as “Signs”) shall be installed or displayed on any part of the outside of
the Building without the prior written consent of the Landlord which consent shall be in Landlord’s
sole discretion. All approved Signs shall be printed, painted, affixed or inscribed at Tenant’s
expense by a person or vendor approved by Landlord and shall be removed by Tenant at Tenant’s
expense upon vacating the Premises. Landlord shall have the right to remove any Sign installed or
displayed in violation of this rule at Tenant’s expense and without notice.



2. If Landlord objects in writing to any curtains, blinds, shades or
screens attached to or hung in or used in connection with any window or door of the Premises or
Building, Tenant shall immediately discontinue such use. No awning shall be permitted on any part
of the Premises. Tenant shall not place anything or allow anything to be placed against or near
any glass partitions or doors or windows which may appear unsightly, in the opinion of Landlord,
from outside the Premises.



3. Tenant shall not alter any lock or other access device or install a
new or additional lock or access device or bolt on any door of its Premises without the prior
written consent of Landlord. Tenant, upon the termination of its tenancy, shall deliver to
Landlord the keys or other means of access to all doors.



4. If Tenant requires telephone, data, burglar alarm or similar
service, the cost of purchasing, installing and maintaining such service shall be borne solely by
Tenant. No boring or cutting for wires will be allowed without the prior written consent of
Landlord. Landlord shall direct electricians as to where and how telephone, data, and electrical
wires are to be introduced or installed. The location of burglar alarms, telephones, call boxes or
other office equipment affixed to the Premises shall be subject to the prior written approval of
Landlord.



5. Tenant shall not place a load upon any floor of its Premises,
including mezzanine area, if any, which exceeds the load per square foot that such floor was
designed to carry and that is allowed by law. Heavy objects shall stand on such platforms as
determined by Landlord to be necessary to properly distribute the weight. Landlord will not be
responsible for loss of or damage to any such equipment or other property from any cause, and all
damage done to the Building by maintaining or moving such equipment or other property shall be
repaired at the expense of Tenant.



6. Tenant shall not install any radio or television antenna, satellite
dish, loudspeaker or other device on the roof or exterior walls of the Building without Landlord’s
prior written consent which consent shall be in Landlord’s sole discretion.



7. Tenant shall not mark, drive nails, screw or drill into the
partitions, woodwork, plaster or drywall (except for pictures and general office uses) or in any
way deface the Premises or any part thereof. Tenant shall not affix any floor covering to the
floor of the Premises or paint or seal any floors in any manner except as approved by Landlord.
Tenant shall repair any damage resulting from noncompliance with this rule.



8. No cooking shall be done or permitted on the Premises, except that
Underwriters’ Laboratory approved microwave ovens or equipment for brewing coffee, tea, hot
chocolate and similar beverages shall be permitted, provided that such equipment and use is in
accordance with all applicable Regulations.



9. Tenant shall not use any hand trucks except those equipped with the
rubber tires and side guards, and may use such other material-handling equipment as Landlord may
approve. Tenant shall not bring any other vehicles of any kind into the Building. Forklifts which
operate on asphalt areas shall only use tires that do not damage the asphalt.



10. Tenant shall not use the name of the Building or any photograph or
other likeness of the Building in connection with or in promoting or advertising Tenant’s business
except that Tenant may include the Building name in Tenant’s address. Landlord shall have the
right, exercisable without notice and without liability to any tenant, to change the name and
address of the Building.



11. All trash and refuse shall be contained in suitable receptacles at
locations approved by Landlord. Tenant shall not place in the trash receptacles any personal trash
or material that cannot be disposed of in the ordinary and customary manner of removing such trash
without violation of any law or ordinance governing such disposal.




D-1









 







12. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governing authority.



13. Tenant assumes all responsibility for securing and protecting its
Premises and its contents including keeping doors locked and other means of entry to the Premises
closed.



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



15. No person shall go on the roof without Landlord’s permission.



16. Tenant shall not permit any animals, other than seeing-eye dogs, to be
brought or kept in or about the Premises or any common area of the property.



17. Tenant shall not permit any motor vehicles to be washed or mechanical
work or maintenance of motor vehicles to be performed on any portion of the Premises or parking
lot.



18. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and
conditions of any lease of any premises in the Building. Landlord may waive any one or more of
these Rules and Regulations for the benefit of any tenant or tenants, and any such waiver by
Landlord shall not be construed as a waiver of such Rules and Regulations for any or all tenants.



19. Landlord reserves the right to make such other and reasonable rules
and regulations as in its judgment may from time to time be needed for safety and security, for
care and cleanliness of the Building and for the preservation of good order in and about the
Building. Tenant agrees to abide by all such rules and regulations herein stated and any
additional rules and regulations which are adopted. Tenant shall be responsible for the observance
of all of the foregoing rules by Tenant’s employees, agents, clients, customers, invitees and
guests.



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



21. Tenant shall not permit smoking or carrying of lighted cigarettes or
cigars in areas reasonably designated by Landlord or any applicable governmental agencies as
non-smoking areas.



22. Any directory of the Building or project of which the Building is a
part (“Project Area”), if provided, will be exclusively for the display of the name and location of
tenants only and Landlord reserves the right to charge for the use thereof and to exclude any other
names.



23. Canvassing, soliciting, distribution of handbills or any other written
material in the Building or Project Area is prohibited and each tenant shall cooperate to prevent
the same. No tenant shall solicit business from other tenants or permit the sale of any goods or
merchandise in the Building or Project Area without the written consent of Landlord.



24. Any equipment belonging to Tenant which causes noise or vibration that
may be transmitted to the structure of the Building or to any space therein to such a degree as to
be objectionable to Landlord or to any tenants in the Building shall be placed and maintained by
Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient to eliminate the
noise or vibration.



25. Driveways, sidewalks, halls, passages, exits, entrances and stairways
(“Access Areas”) shall not be obstructed by tenants or used by tenants for any purpose other than
for ingress to and egress from their respective premises. Access areas are not for the use of the
general public and Landlord shall in all cases retain the right to control and prevent access
thereto by all persons whose presence, in the judgment of Landlord, shall be prejudicial to the
safety, character, reputation and interests of the Building or its tenants.



26. Landlord reserves the right to designate the use of parking areas and
spaces. Tenant shall not park in visitor, reserved, or unauthorized parking areas. Tenant and
Tenant’s guests shall park between designated parking lines only and shall not park motor vehicles
in those areas designated by Landlord for loading and unloading. Vehicles in violation of the above
shall be subject to being towed at the vehicle owner’s expense. Vehicles parked overnight without
prior written




D-2









 







consent of the Landlord shall be deemed abandoned and shall be subject to being towed
at vehicle owner’s expense. Tenant will from time to time, upon the request of Landlord, supply
Landlord with a list of license plate numbers of vehicles owned or operated by its employees or
agents.



27. No trucks, tractors or similar vehicles can be parked anywhere other
than in Tenant’s own truck dock area. Tractor-trailers which must be unhooked or parked with dolly
wheels beyond the concrete loading areas must use steel plates or wood blocks under the dolly
wheels to prevent damage to the asphalt paving surfaces. No parking or storing of such trailers
will be permitted in the parking areas or on streets adjacent thereto.



28. During periods of loading and unloading, Tenant shall not unreasonably
interfere with traffic flow and loading and unloading areas of other tenants. All products,
materials or goods must be stored within the Tenant’s Premises and not in any exterior areas,
including, but not limited to, exterior dock platforms, against the exterior of the Building,
parking areas and driveway areas. Tenant agrees to keep the exterior of the Premises clean and free
of nails, wood, pallets, packing materials, barrels and any other debris produced from their
operation.




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





D-3