Blueprint





 







Exhibit 10.16


 


INDUSTRIAL
LEASE


 


BACKLOT
BURBANK





 


Between


 


PSIP
SN BURBANK LLC


 


as


 


Landlord


 


and


 


MUSCLEPHARM
CORPORATION


 


as


 


Tenant


 





	

 









 








 





 



TABLE OF CONTENTS







	


 

	



Page



	


1. PREMISES 

	


1


	
 

	
 


	


2. TERM

	


2


	
 

	
 


	


3. RENT  

	


2


	
 

	
 


	


4. PREPAID RENT  

	


6


	
 

	
 


	


5. SECURITY DEPOSIT  

	


6


	
 

	
 


	


6. USE OF THE PREMISES AND BUILDING
FACILITIES  

	


7


	
 

	
 


	


7. SIGNAGE  

	


8


	
 

	
 


	


8. PERSONAL PROPERTY TAXES  

	


8


	
 

	
 


	


9. PARKING 

	


 8


	
 

	
 


	


10. UTILITIES  

	


8


	
 

	
 


	


11. MAINTENANCE 

	


 8


	
 

	
 


	


12. ALTERATIONS  

	


9


	
 

	
 


	


13. RELEASE AND INDEMNITY.  

	


10


	
 

	
 


	


14. INSURANCE 

	


 11


	
 

	
 


	


15. DESTRUCTION. 

	


 12


	
 

	
 


	


16. CONDEMNATION.  

	


13


	
 

	
 


	


17. ASSIGNMENT OR SUBLEASE 

	


 13


	
 

	
 


	


18. DEFAULT  

	


16


	
 

	
 


	


19. LANDLORD’S REMEDIES 

	


 16


	
 

	
 


	


20. ENTRY ON PREMISES 

	


 17


	
 

	
 


	


21. SUBORDINATION AND ATTORNMENT 

	


 18


	
 

	
 


	


22. NOTICE 

	


 18


	
 

	
 


	


23. WAIVER 

	


 18


	
 

	
 


	


24. SURRENDER OF PREMISES; HOLDING OVER 

	


 18


	
 

	
 


	


25. LANDLORD DEFAULT/LIMITATION OF LIABILITY AND
TIME  

	


19


	
 

	
 


	


26. HAZARDOUS MATERIALS AND INDOOR AIR
QUALITY  

	


20


	
 

	
 


	


27. SECURITY MEASURES  

	


21


	
 

	
 


	


28. TELEPHONE AND DATA EQUIPMENT 

	


 21


	
 

	
 


	


29. MISCELLANEOUS PROVISIONS 

	


 21






 



 


- i -







 






 



TABLE OF CONTENTS


(continued)

 



EXHIBITS TO LEASE

 


	


“A-1”

	


PREMISES AND PROJECT DEPICTION


	


 

	


 


	


“A-2”

	


PARKING PLAN


	


 

	


 


	


“B”

	


DESIRED IMPROVEMENTS


	


 

	


 


	


“C”

	


TENANT INSURANCE REQUIREMENTS


	


 

	


 


	


“D”

	


INDEPENDENT CONTRACTOR INSURANCE REQUIREMENTS


	


 

	


 


	


“E”

	


EXTENSION OPTIONS


	


 

	


 


	


“F”

	


BACKLOT BURBANK RULES AND REGULATIONS


	


 

	


 


	


“G”

	


APPROVED SIGNAGE






 

 




 


- ii -








 





 



INDUSTRIAL LEASE


 



BASIC LEASE TERMS


 


 


	
 a.

	
 Reference
Date:

	
This Lease
(“Lease”) is
dated for reference purposes only as of August 4, 2017


	
 

	
  

	
 


	
 b.

	
 Tenant:

	
MusclePharm
Corporation, a Nevada corporation


	
 

	
  

	
 


	
 

	
 Address
for Notices

 (Section
22):

	
To
the Premises

Attention: Ryan
Drexler

Telephone:
310-922-2000

Facsimile: 800-490-7165

Email: ryandrexler@ymail.com







	
 

	




	

	
 

	

with a
copy to:


	
 

	

 


Kasowitz Benson
Torres LLP


1633
Broadway


New
York, New York 10019


Attention: Adam M.
Endick, Esq.


Telephone:
212-506-1837


Facsimile: 212-835-5249


Email: aendick@kasowitz.com


	

 

	

 

	

 


	

 

	

 

	

 


	

c.

	

Guarantor:

	

None


 


	

d.

	

Landlord:

	

PSIP SN
Burbank LLC,


a
Delaware limited liability company


 


	
 

	

Address
for Notices


(Section 22):

	

PSIP SN
Burbank LLC


c/o
Penwood Real Estate Investment Management, LLC


One
Financial Plaza, 12th Floor


755
Main Street


Hartford, CT
06103


Attention: Karen
Nista and Joseph Koziol


Telephone:
860-218-6533 and 860-218-6532


Facsimile:
860-218-6540


Email: Karen.Nista@penwoodre.com and


Joseph.Koziol@penwoodre.com


 


	
 

	

with a
copy to:


 


	
 

	

PSIP SN
Burbank LLC


c/o SN
Burbank, LLC


901
Dove Street, Suite 225


Newport
Beach, CA 92660


Attention: Lonnie
Nadal


Telephone:
949-752-4100


Facsimile:
949-752-4101


Email: lnadal@snrinvestors.com







 




 


- iii -








 






 


	
  e. 

	
Tenant’s
Use of Premises

(Section 6):

	
General office and
industrial/warehouse and showroom use for the purpose of receiving,
storing, displaying and shipping products, materials and
merchandise made and/or distributed by Tenant and private fitness
studio use for professional athletes who are either employees of
Tenant or paid endorsers of Tenant’s products, and related
legal uses.

 


	
  f. 

	
Leased
Premises

(Section 1.1):

	
That certain building
containing 27,226 rentable square feet, located at 4400-4404
Vanowen Street, Burbank, California (the “Building”), located within the
Project (as defined below) having a street address of
4100-4210 W. Vanowen Place and
2303-2333 N. Valley Street, Burbank, California.

 


	
  g. 

	
Total
Project Area

(Section
3.3):

 

	
302,869 rentable
square feet

 


	
  h. 

	
Tenant’s
Pro Rata Share

(Section
3.3):

 

	
8.99%; provided,
however that Tenant’s Pro Rata Share of Real Property Taxes
only shall be 58.44%


	
  i. 

	
Term
of Lease

(Section 2):

	
The term of this
Lease shall be five (5) years and zero (0) months (plus any partial
month for any period between the Term Commencement Date and the
first day of the next month if the Term Commencement Date is not
the first day of a calendar month) (the “Original Term”), subject to
extension as provided in Exhibit “E” attached hereto
and incorporated herein. “Term” shall mean the Original Term
and any extensions or renewals thereof.

 


	
 Term
Commencement Date

 (Section 2):

 

	


October
1, 2017

 


	
  j. 

	
Base
Monthly Rent

	
Base Monthly Rent
shall be the following amounts for the following

 


	
           
(Section 3.1):

	


periods
of time:

 






 


	
 
Months Base
Monthly Rent

 


	
 $1–1236,400.00 


	
 $13–2437,495.00 


	
 $25–3638,620.00 


	
 $37–4839,775.00 


	
 $49–6040,970.00 






 


	
  k. 

	
Initial Estimate of Additional Rent for Common
Area Operating Expenses (Section 3.3)

 

	
$6,265.00 per month,
subject to annual reconciliation (see Section 3.3). This Lease
shall be a triple net lease.


	
  l. 

	
Prepaid Rent (Section 4): (payable upon Lease execution, which
shall include Base Monthly Rent and Additional Rent
forCommon Area
Operating Expenses)

 

	
$42,665.00 


	
  m. 

	
Security Deposit
(Section 5): (payable upon Lease
execution)

	
$75,000.00 

 

 







	
 
n.

	

Parking (Section 9):


 

	

Exclusive right to
use all of the in-common, unreserved passenger automobile parking
spaces as depicted on Exhibit “A-2” as more fully set
forth in Section 9.


	
 
o.

	

Exhibits:

	

Exhibits lettered
“A-1” through “G” are attached hereto and
made a part hereof









 

 

 



 


- iv -







 





 



MULTI-TENANT INDUSTRIAL LEASE


 

 


 



1.             

PREMISES.





 


 

1.1 Landlord leases to
Tenant the premises described in the Basic Lease Terms and in
Exhibit
“A-1” (the “Premises”), which is a part of a
project consisting of twelve (12) buildings designated as buildings
1 through 12 (including the Building), together with use of the
land on which such buildings are located, including the driveways,
parking facilities, loading dock areas, roadways and all other
improvements and easements associated with the foregoing or the
operation thereof as depicted on Exhibit “A-1” (the
“Project”). For
purposes of this Lease, the terms “Premises” and
“Building” shall have the same meaning and may be used
interchangeably. Tenant acknowledges that access to the side and
rear areas outside the Building shall be via an electronic security
gate that is shared with two other tenants of the Project, and
Landlord shall provide cards for Tenant’s employees to
operate the gate. Upon full execution of this Lease and delivery by
Tenant to Landlord of the Prepaid Rent set forth in the Basic Lease
Terms, the Security Deposit and evidence of insurance required
under this Lease, Tenant may occupy the Premises prior to the Term
Commencement Date (the “Early
Occupancy Period”) for the sole purposes of installing
the Desired Improvements (as defined in Section 12 below) and
Tenant’s furniture, fixtures and equipment; provided,
however, that access to, and use and occupancy of, the Premises by
Tenant prior to the Term Commencement Date shall be subject to all
of the provisions of this Lease other than payment of rent.By entry
on the Premises, Tenant acknowledges that it has examined the
Premises and accepts the Premises in their present, as-is condition
subject only to the following: On the Term Commencement Date,
Landlord shall deliver to Tenant possession of the entire Premises
vacant, broom-clean and free and clear of all tenants and
occupants, and Landlord shall remedy, at Landlord’s sole cost
and expense, any failure of (i) the electrical, plumbing and/or
lighting systems serving the Premises, (ii) the heating,
ventilating and air conditioning system servicing the office area
of the Premises, and/or (iii) roof or the loading doors in the
Premises to be in good working order, condition and repair, so long
as (a) such failure is not the result of any acts or omissions of
Tenant or any of its employees, agents, contractors or
representatives (including, without limitation, any Alterations of
the Premises by or on behalf of Tenant, including, without
limitation, the Desired Improvements), provided that such failure
shall not be considered to be the result of any acts or omissions
of Tenant to the extent it is merely discovered by Tenant absent
misuse or alteration of the item in question, and (b) Tenant,
acting reasonably and in good faith, specifically identifies and
describes such failure in a written notice together with reasonable
supporting documentation delivered to Landlord within forty-five
(45) days after the Term Commencement Date of this Lease (the
“Warranty
Period”), it being understood that, except for any
items so identified and described by Tenant during the Warranty
Period, the Building, the Premises and all such systems shall be
conclusively deemed to have been delivered in compliance with all
applicable Laws and in good working order, condition and repair. In
addition, Landlord intends to replace the roof membrane on the
Building prior to the Term Commencement Date at Landlord’s
sole cost and expense.

 

1.2 Tenant and
Tenant’s employees, suppliers, shippers, customers and
invitees, during the Term of this Lease shall have the nonexclusive
right to use the Common Areas with other present and future tenants
in the Project, and subject to the rules and regulations attached
as Exhibit
“F” hereto and to other reasonable rules and
regulations which Landlord may deem advisable for the Common Areas
(including without limitation the hours during which they are open
for use, provided Tenant and its employees, agents, and all other
permitted invitees and permitted licensees shall have access and
the right to operate out of the Building twenty-four (24) hours a
day, seven (7) days a week, three hundred and sixty-five (365) days
a year (or, if applicable, three hundred and sixty-six
(366)
days a year)). The term “Common Areas” means all areas and
facilities outside the Premises and/or exterior boundaries of the
Project that are provided and designated by Landlord from time to
time for the general use and convenience of Tenant and other
tenants of the Project and their respective employees, agents,
representatives, invitees and licensees. The Common Areas shall
include, without limitation, the common roadways, sidewalks,
walkways, parkways, parking areas, driveways and landscaped areas
and similar areas and facilities in the Project which are made
available for the use or benefit of all Project tenants and their
invitees and other visitors.

 

1.3 Landlord reserves
the right from time to time without unreasonable interference with
Tenant’s use or access to the Building: (a) to make changes
to the Common Areas and any components thereof, including, without
limitation, changes in the location, size, shape and number of
driveways, entrances, parking spaces, parking areas, loading and
unloading areas, ingress, egress, direction of traffic, landscaped
areas and walkways; (b)




 

- 1 -








 





 


to
temporarily close or designate for other uses any of the Common
Areas for purposes of improvement, maintenance or repair, so long
as reasonable access to the Premises remains available; (c) to
designate other land outside the boundaries of the Project and
other buildings to be a part of the Common Areas; (d) to add
additional improvements to the Common Areas or the Project; (e) to
use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Building or the
Project, or any portion thereof; and (f) to do and perform such
other acts and make such other changes in, to or with respect to
the Common Areas, the Building or the Project as Landlord may, in
the exercise of sound business judgment, deem to be
appropriate.

 


 

2. TERM. The Original Term of this Lease is
for the period set forth in the Basic Lease Terms, beginning on the
Term Commencement Date. If Landlord, for any reason, cannot deliver
possession of the Premises to Tenant on the Term Commencement Date,
this Lease shall not be void or voidable, nor shall Landlord be
liable to Tenant for any loss, damage or liability resulting from
such delay. However, provided such delay is not caused by Tenant,
Tenant shall not be responsible for payment of Rent until the Term
Commencement Date. For purposes of this Lease, a
“Lease Year”
shall consist of twelve (12) consecutive calendar months. The first
Lease Year shall begin on the Term Commencement Date or, if the
Term Commencement Date does not occur on the first day of a
calendar month, on the first day of the calendar month next
following the Term Commencement Date. Each succeeding Lease Year
shall commence on the annual anniversary of the first Lease
Year.

 

3. RENT. Base Monthly Rent and additional
rent for Operating Expenses and other charges, fees and payments
due to Landlord (“Additional
Rent”) are sometimes collectively referred to in this
Lease as “Rent.”


 

3.1 Base Rent. Beginning on the Term
Commencement Date, Tenant shall pay Landlord monthly base rent in
the initial amount in the Basic Lease Terms which shall be payable
monthly in advance on the first day of each and every calendar
month (“Base Monthly
Rent”) provided, however, Prepaid Rent is due and
payable upon execution of this Lease as and to the extent set forth
in Section 4 below.

 


For
purposes of Section 467 of the Internal Revenue Code, the parties
to this Lease hereby agree to allocate the stated rents, provided
herein, to the periods which correspond to the actual Rent payments
as provided under the terms and conditions of this
Lease.


 

3.2 Rental Adjustments. The Base Monthly
Rent shall be adjusted as and to the extent set forth in the Basic
Lease Terms.

 

3.3 Additional Rent for Operating Expenses.
The purpose of this Section 3.3 is to ensure that Tenant bears a
share of all expenses related to the use, maintenance, ownership,
repair or replacement of the Project, including Real Property
Taxes, Maintenance Fees, and Insurance Charges for the Project
(each as hereinafter defined). Accordingly, Tenant shall pay to
Landlord, in accordance with the provisions of this Section 3.3,
Tenant’s Pro Rata Share (as set forth in the Basic Lease
Terms and defined below) of Operating Expenses (defined
below).

 


3.3.1            Definitions.

 

(a) Operating
Expenses Defined.

 

(i) Operating Expenses.
“Operating
Expenses” means all expenses and disbursements that
Landlord incurs in connection with the ownership, operation, and
maintenance of the Project, determined in accordance with sound
accounting principles consistently applied, including but not
limited to the following costs: (1) wages and salaries of all
on-site employees engaged in the operation, maintenance or security
of the Project (together with Landlord’s reasonable
allocation of expenses of off-site employees who perform a portion
of their services in connection with the operation, maintenance or
security of the Project), including taxes, insurance and benefits
relating thereto; (2) all supplies and materials used in the
operation, maintenance, repair, replacement, and security of the
Project; (3) cost of all utilities including electricity, fuel,
gas, water, sewer, and other service for the Project and all
portions thereof; (4) the cost of mechanical, electrical and
telecommunications rooms and other areas used for the benefit of
the Project or tenants of the Project generally, as reasonably
determined by Landlord; (5) repairs,




 

- 2 -








 





 


replacements, and
general maintenance of the Project; (6) refuse collection/removal
and maintenance of refuse receptacles; (7) gardening, including
planting, replanting and pruning of landscaping; (8) pest control;
(9) service, maintenance and management contracts with independent
contractors for the operation, maintenance, management, repair,
replacement, and security of the Project (including alarm service
and window cleaning); (10) property management fees including
management fees paid to Landlord if Landlord elects to self-manage
the Project (in any case, not to exceed three percent (3%) of gross
revenues from the Project); (11) costs of professional services,
including but not limited to managers, attorneys and accountants,
rendered for the general benefit of the Project; (12) Insurance
Charges, as hereinafter defined, and any other insurance; (13)
intentionally omitted; (14) costs of permits and licenses for the
Project; (15) Real Property Taxes, as hereinafter defined, for the
Project; (16) Maintenance Fees, as hereinafter defined, that are
assessed by any owner’s association or similar body against
the Project and all or any portions thereof; and (17) costs for
improvements made in order to comply with any law.

 

(ii) Capital
Expenditures. To the extent any Operating Expenses are
considered capital expenditures, such capital expenditures shall be
amortized over their useful life (as reasonably determined by
Landlord), but in any event not to exceed ten (10) years, using
Landlord’s actual cost of funds.

 

(iii) Operating
Expense Exclusions. Notwithstanding anything in this Lease
to the contrary, Operating Expenses shall not include the
following: (1) interest, amortization or other payments on loans to
Landlord, finance and debt services fees, principal and/or interest
on debt or amortization payments on any mortgage; (2) depreciation
allowance or expense, expense reserves and other non-cash items;
(3) any bad debt loss, rent loss, or reserves for bad debts or rent
loss; (4) leasing commissions, attorneys’ fees,
disbursements, and other costs and expenses incurred in procuring
prospective tenants, negotiating and executing leases, and
constructing improvements required solely to prepare for a new
tenant’s occupancy; (5) ground lease rental; (6) salaries of
officers, executives and partners of Landlord; (7) Landlord’s
general corporate overhead and general administrative expenses; (8)
advertising and promotional expenditures, and costs of signs in or
on the Premises identifying the owner of the Premises; (9) costs
arising from Landlord’s charitable or political
contributions; (10) costs (including in connection therewith all
attorney’s fees and costs of settlement judgments and
payments in lieu thereof) arising from claims, disputes or
potential disputes in connection with Landlord and/or the Premises,
except to the extent such claims, disputes or potential disputes
(i) relate to or arise in connection with Tenant’s
obligations under this Lease or any acts or omissions of any of the
Tenant’s Parties or (ii) are reasonably anticipated to
benefit Tenant; (11) costs associated with the operation of the
business of the entity which constitutes Landlord as the same are
distinguished from the costs of operation of the Premises,
including partnership or corporate accounting and legal matters,
costs of defending any lawsuits with any mortgagee (except to the
extent such lawsuits (i) relate to or arise in connection with
Tenant’s obligations under this Lease or any acts or
omissions of any of the Tenant’s Parties or (ii) are
reasonably anticipated to benefit Tenant), costs of selling,
syndicating, financing, mortgaging or hypothecating any of
Landlord’s interest in the Premises, costs of any disputes
between Landlord and its employees (if any) not engaged in Premises
operation, disputes of Landlord with Premises management; (12) any
entertainment, dining or travel expenses for any purpose; (13)
attorneys’ fees, costs, disbursements and other expenses
incurred in connection with negotiations or disputes with
prospective tenants, preparation of deal memos, letters of intent,
leases, subleases and/or assignments (except as may relate to a
proposed Transfer), or associated with the defense of
Landlord’s title to or interest in the Premises or any part
thereof, except to the extent such defense (i) relates to or arises
in connection with Tenant’s obligations under this Lease or
any acts or omissions of any of the Tenant’s Parties or (ii)
is reasonably anticipated to benefit Tenant; and (14) profits paid
to Landlord or to subsidiaries or affiliates of Landlord for goods
and/or services in the Premises to the extent the profit exceeds
the costs of such goods and/or services rendered by unaffiliated
third parties on a competitive basis for similar
projects.




 

- 3 -








 





 

(b) Insurance Charges Defined.
“Insurance
Charges” means the cost of the following
insurance:

 

(i) All Risk Insurance. All Risk
insurance insuring the Project (other than the Tenant’s
inventory, trade fixtures, Alterations (defined below)) against
loss or damage by

(a) fire, sprinkler
damage, vandalism, terrorism and all other perils customarily
covered under an All Risk policy, (b) earthquake, (c) at the
election of Landlord in its discretion, flood, and (d) such other
perils or risks, insurance against which is required by a Lender
from time to time, or which Landlord determines is customarily
carried in comparable projects, in each case in an amount equal to
their full replacement cost, less such deductibles as Landlord
shall determine. “Lender” for all purposes under
this Lease shall mean any lender having a secured interest in the
Premises or in any portion thereof and any purchaser who purchases
or otherwise acquires the Premises at any foreclosure sale, through
deed in lieu of foreclosure or similar conveyance;

 

(ii) Public
Liability Insurance. Public liability and property damage
insurance with respect to the Project with limits in such amounts
as Landlord shall determine;

 


 

(iii) Other.
Such other insurance coverage with respect to the Project as shall
be required from time to time by any Lender or as shall be
determined by Landlord to be customarily carried with respect to
comparable projects.

 

(c) Maintenance Fees Defined.
“Maintenance
Fees” means all maintenance fees and other assessments
that are assessed by any owner’s association or any similar
body against the Project or portions thereof.


 

(d) Real Property Taxes Defined.
“Real Property
Taxes” means (i) any and all forms of tax, assessment,
license fee, excise, bond, levy, charge or imposition (collectively
referred to herein as “Taxes”), general, special,
ordinary or extraordinary, imposed, levied or assessed against the
Premises or Project or any interest of Landlord in the same, by any
authority or entity having the direct or indirect power to tax,
including without limitation, any city, county, state or federal
government, or any fire, school, redevelopment, agricultural,
sanitary, street, lighting, security, drainage or other authority,
political subdivision or improvement district thereof, (ii) any Tax
in substitution, partially or totally, of any Taxes now or
previously included within the definition of Real Property Taxes,
including without limitation, those imposed, levied or assessed to
increase tax increments to governmental agencies, or for services
such as (but not limited to) fire protection, police protection,
street, sidewalk and road maintenance, refuse removal or other
governmental services previously provided without charge (or for a
lesser charge) to property owners and/or occupants, (iii) any Taxes
allocable to the Premises or Project or any Rent or Operating
Expenses payable hereunder, including without limitation, any gross
receipts tax or General Excise Tax on the receipt of such Rent or
upon the possession, leasing, operation, maintenance, repair, use
or occupancy by Tenant or Landlord of the Premises or Project or
Operating Expenses, and (iv) any Taxes on the transfer or a
transaction directly or indirectly represented by this Lease, by
any subleases or assignments hereunder, by any document to which
Tenant is a party, creating or transferring (or reflecting the
creation or transfer) of an interest or estate in the Premises or
Project or in Tenant or Landlord. Real Property Taxes shall not
include any general franchise, income, estate or inheritance tax
imposed on Landlord. Tenant shall have the right, at Tenant’s
sole cost and expense, to contest the assessed amount of Real
Property Taxes, provided: (1) Tenant delivers to Landlord written
notice of Tenant’s desire to contest the assessment amount
and Landlord does not notify Tenant within ten (10) business days
thereafter that Landlord will undertake contest; (2) any such
contest shall be undertaken either through tax counsel licensed
with the California State Bar or through a real property tax
consultant approved by Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed; (3) any such contest
shall be coordinated with any contest then being undertaken or
planned by Landlord; (4) Tenant shall cooperate and coordinate with
any other tenants of the Project whose premises are part of the tax
parcel that is the subject of any such contest; and (5) Tenant
shall indemnify, defend (with counsel reasonably acceptable to
Landlord) and hold Landlord harmless against and from any and all
Claims (as hereinafter defined) arising from or related to any
contest of Real Property Taxes initiated by or on behalf of
Tenant.




 

- 4 -








 





 

(e) Tenant’s Pro Rata Share Defined.
“Tenant’s Pro Rata
Share” is the percentage number representing from time
to time a fraction, the numerator of which is the number of
rentable square feet contained in the Premises, and the denominator
of which is the number of rentable square feet contained in the
Project; provided, however, that “Tenant’s Pro Rata
Share” with respect to Real Property Taxes only is the
percentage number representing from time to time, a fraction, the
numerator of which is the number of rentable square feet contained
in the Premises and the denominator of which is 46,586, which is
the number of rentable square feet contained in the tax parcel on
which the Building is located. Landlord and Tenant stipulate that
the number of rentable square feet in the Premises and
Tenant’s Pro Rata Share set forth in the Basic Lease Terms
are conclusive and shall be binding upon them; provided, however,
that if Landlord should sell any portion of the Project or
otherwise add or subtract building square footage to or from the
Project, Tenant’s Pro Rata Share shall be adjusted
accordingly. Based on Tenant’s Pro Rata Share as set forth in
the Basic Lease Terms, the initial estimate of Additional Rent for
Operating Expenses is set forth in the Basic Lease
Terms.


 

(f) Exceptions. From time to time Landlord
may make arrangements with one or more tenants to handle separately
all or a portion of some element or elements of Operating Expenses.
In such case, costs incurred with respect to such element or
elements as to such tenants shall not be included in Operating
Expenses, and Tenant’s Pro Rata Share of each such element
(to the extent the costs of which is not entirely borne by the
other tenants with whom the arrangement is made) shall be
calculated as the percentage number representing a fraction, the
numerator of which is the number of rentable square feet of space
contained in the Premises and the denominator of which is the
number of rentable square feet of space contained in the Project
which are not subject to any such separate
arrangement.

 

3.3.2 Procedures.
Tenant shall pay to Landlord Tenant’s Pro Rata Share of
Operating Expenses. Landlord shall endeavor to deliver to Tenant by
April 1 following the end of each calendar year in which any part
of the Term occurs (each, an “Operating Year”), a reasonable
written estimate of Tenant’s Pro Rata Share of the projected
Operating Expenses for the subsequent Operating Year
(“Estimated
Statement”). If, however, Landlord shall furnish an
Estimated Statement subsequent to the commencement of any such
Operating Year, then until the first day of the month following the
month in which such Estimated Statement is furnished to Tenant,
Tenant shall pay to Landlord on the first day of each month an
amount equal to the monthly sum payable by Tenant to Landlord under
this Section 3.3.2 in respect of the last month of the preceding
Operating Year. Tenant shall pay to Landlord such estimated
Tenant’s Pro Rata Share in equal monthly installments, in
advance on the first day of each month, and Landlord shall endeavor
to submit to Tenant by April 1 following the end of each such
Operating Year, a statement showing in reasonable detail the actual
Operating Expenses during such period (“Actual Statement”), and the
parties shall make any payment or allowance necessary to adjust
Tenant’s estimated payments to the actual Tenant’s Pro
Rata Share of Operating Expenses for such period as indicated by
the Actual Statement. Any payment due Landlord shall be payable by
Tenant within thirty (30) days after receipt by Tenant of an
invoice therefor from Landlord. Any amount due Tenant shall be
credited against installments next becoming due from Tenant to
Landlord under this Lease. Despite the expiration or early
termination of this Lease, when the final determination is made of
Tenant’s Pro Rata Share of Operating Expenses for the year in
which the expiration or early termination occurs, Tenant shall pay
on demand any adjustment due to Landlord and any amount due to
Tenant shall be promptly paid by Landlord. Notwithstanding the
foregoing, any amounts which would otherwise be payable hereunder
but which are not included in an Actual Statement submitted to
Tenant within one (1) year after the end of the Operating Year with
respect to which the same is applicable, shall be deemed to have
been waived.

 

3.3.3 Audit
Rights. In the event Tenant objects in writing to any Actual
Statement within sixty (60) days after receipt of such Actual
Statement, then Tenant may request a meeting with Landlord to
discuss its objections and, in any event, shall have the right,
during the six (6) month period following delivery of such Actual
Statement, at Tenant's sole cost, to review in Landlord's offices
Landlord's records relevant to such Actual Statement and Landlord
shall maintain and make available all records, statements and bills
materially relating to and supporting the Actual Statement. Such
review shall be carried out only by a nationally reputable
accounting firm that is not being compensated on a contingency or
other incentive basis, and shall be subject to Landlord's
reasonable audit procedures. If, as of the date sixty (60) days
after Tenant's receipt of such Actual Statement, Tenant shall not
have objected thereto in writing, or if, during the six (6) month
period following delivery of such Actual Statement, Tenant shall
not have carried out a review of Landlord's records, then such
Actual Statement shall be final and binding upon Landlord and
Tenant, and Tenant shall have no further right to object to such
Actual




 

- 5 -








 





 


Statement under
this Lease. If Tenant timely delivers a written objection to an
Actual Statement and, within such six (6) month period, Tenant
conducts an audit and delivers to Landlord a written statement
specifying objections to such Actual Statement, then Tenant and
Landlord shall meet to attempt to resolve such objection within ten
(10) days after delivery of the objection statement. If such
objection is not resolved within such ten (10) day period, then
either party shall have the right, at any time within thirty (30)
days after the expiration of such ten (10) day period, to require
that the dispute be submitted to binding arbitration under the
rules of the American Arbitration Association. If neither Landlord
nor Tenant commences an arbitration proceeding within such thirty
(30) day period, then the Actual Statement in question shall be
final and binding on Landlord and Tenant. Notwithstanding that any
such dispute remains unresolved, Tenant shall be obligated to pay
Landlord all Rent as and when due (including any disputed amount).
The audit and arbitration procedures set forth herein shall be
Tenant's exclusive remedy with respect to the calculation of the
amount of Tenant's obligations under Section 3.3. If the result of
the audit procedures and, if applicable, the arbitration procedures
set forth herein is that Tenant made overpayments in excess of five
percent (5%) of Operating Expenses for the year in question,
Landlord shall pay for the actual and reasonable cost of the audit
within thirty (30) days following receipt of Tenant’s invoice
therefor. If a dispute is submitted to binding arbitration as
provided above, then the prevailing party in such arbitration shall
be entitled to its reasonable attorneys’ fees and other costs
incurred in connection with such arbitration.

 

3.4 Tenant Specific Charges. Notwithstanding
the provisions of Section 3.3, Additional Rent for Operating
Expenses shall not include the cost for Tenant requested service
calls (“Tenant Specific
Charges”). Tenant Specific Charges shall be separately
invoiced to Tenant and shall be paid as Additional Rent hereunder
with the next installment of Rent.


 

3.5 Rent Without Offset and Late
Charge. All Rent
shall be paid by Tenant to Landlord monthly in advance on the first
day of every calendar month, at the address shown in the Basic
Lease Terms, or such other places as Landlord may designate in
writing from time to time. All Rent shall be paid without prior
demand or notice and without any deduction or offset whatsoever.
All Rent shall be paid in lawful currency of the United States of
America. All Rent due for any partial month shall be pro rated at
the rate of 1/30th of the total monthly Rent per day. Tenant
acknowledges that late payment by Tenant to Landlord of Rent or
other sums due under this Lease will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of such costs
being extremely difficult and impracticable to ascertain. Such
costs include, without limitation, processing and accounting
charges and late charges that may be imposed on Landlord by the
terms of any encumbrance or note secured by the Premises.
Therefore, if Rent or other sum due from Tenant is not received on
the due date, Tenant shall pay to Landlord an additional sum equal
to five percent (5%) of such overdue payment. Landlord and Tenant
hereby agree that such late charge represents a fair and reasonable
estimate of the costs that Landlord will incur by reason of any
such late payment. Additionally, all such delinquent Rent or other
sums, plus this late charge, shall bear interest at the lesser of
ten percent (10%) or the then maximum lawful rate permitted to be
charged by Landlord (the “Default Rate”). Any payments of
any kind returned for insufficient funds will be subject to an
additional handling charge of Fifty Dollars ($50.00). Additionally,
following any three (3) consecutive late payments of Rent, Landlord
shall have the option to require that Tenant increase the Security
Deposit by one hundred percent (100%).

 

4. PREPAID RENT. Upon the execution of this
Lease and as a condition for Landlord’s benefit to the
effectiveness of this Lease, Tenant shall pay to Landlord the
Prepaid Rent set forth in the Basic Lease Terms. Such Prepaid Rent
shall be applied toward the first month for which Rent is due for
the Original Term. Landlord’s obligations with respect to the
Prepaid Rent are those of a debtor and not of a trustee, and
Landlord can commingle the Prepaid Rent with Landlord’s
general funds. Landlord shall not be required to pay Tenant
interest on the Prepaid Rent. Landlord shall be entitled to
immediately endorse and cash Tenant’s Prepaid
Rent.

 

5. SECURITY DEPOSIT. Upon execution of this
Lease and as a condition for Landlord’s benefit to the
effectiveness of this Lease, Tenant shall deposit the Security
Deposit set forth in the Basic Lease Terms with Landlord, in part
as security for the performance by Tenant of the provisions of this
Lease and in part as a cleaning fee. Upon the occurrence of a
Tenant Default (including expiration of any applicable notice and
cure period), Landlord may use the Security Deposit or any portion
of it to cure the default or to compensate Landlord for any damages
sustained by Landlord resulting from Tenant’s default
(including, without limitation, all rent due following Lease
termination to the extent permitted by California Civil Code
Section 1951.2). Within ten (10) business days after written
request therefor, Tenant shall pay to Landlord a sum equal to the
portion of the Security Deposit




 

- 6 -








 





 


expended or applied
by Landlord to maintain the Security Deposit in the amount
initially deposited with Landlord. If Tenant is not in default at
the expiration or termination of this Lease, Landlord shall return
the entire Security Deposit to Tenant, less any accrued Rent and
costs incurred to repair any damages. Landlord’s obligations
with respect to the Security Deposit are those of a debtor and not
of a trustee, and Landlord can commingle the Security Deposit with
Landlord’s general funds. Landlord shall not be required to
pay Tenant interest on the Security Deposit. Landlord shall be
entitled to immediately endorse and cash the Security Deposit;
however, such endorsement and cashing shall not constitute
Landlord’s acceptance of this Lease. In the event Landlord
does not accept this Lease, Landlord shall return the Security
Deposit, without any interest thereon. In no event shall Tenant be
entitled to apply the Security Deposit to the last month’s
rental installment due and payable under the Lease.


Tenant
acknowledges and agrees that the Security Deposit may be applied
towards any Rent or other sum in default or otherwise owing to
Landlord by Tenant following the expiration or earlier termination
of this Lease as allowed under applicable Laws, including, without
limitation, Section 1950.7 of the California Civil Code and/or any
successor statute. In connection therewith, Tenant hereby waives
the provisions of any applicable Laws to the contrary, including,
without limitation, Section 1950.7(c) of the California Civil Code
and/or any successor statute.

 

6. USE OF THE PREMISES AND BUILDING
FACILITIES. Tenant shall use the Premises solely for the
purposes set forth in the Basic Lease Terms and for no other
purpose without Landlord’s prior written consent, which
consent may be withheld in Landlord’s sole and absolute
discretion. Tenant acknowledges that neither Landlord nor any agent
of Landlord has made any representation or warranty with respect to
the Premises or the Project or with respect to the suitability of
the Premises or Project for the conduct of Tenant’s business,
nor has Landlord agreed to undertake any modification, alteration
or improvement to the Premises or Project, except as provided in
writing in this Lease. Tenant acknowledges that Landlord may from
time to time, at its sole discretion, make such modifications,
alterations, deletions or improvements to the Building and/or the
Project as Landlord may deem necessary or desirable, without
compensation to Tenant, provided that no such necessary
modifications, alterations, deletions or improvements have a
material, adverse impact on Tenant’s use of or access to the
Premises and no such merely desirable (but not necessary)
alterations, deletions or improvements have more than a
de minimis impact on
Tenant’s use of or access to the Premises. Tenant shall
promptly comply with all federal, state and local laws, statutes,
ordinances, orders and regulations, now or hereinafter enacted,
affecting the Premises and the Project, including, without
limitation, The Americans with Disabilities Act of 1990 (42 U.S.C.
Section 1211 et seq.) and
regulations and guidelines promulgated thereunder as all of the
same may be amended and supplemented from time to time
(collectively, the “ADA”), and Title 24 of the
California Code of Regulations and any amendments thereto
(collectively, “Laws”), and the rules and
regulations attached to this Lease as Exhibit “F” and to
any reasonable modifications to these rules and regulations as
Landlord may adopt from time to time. To the extent of any
inconsistency between the terms and conditions of this Lease and
the terms and conditions of such rules and regulations, the terms
and conditions of this Lease shall control. Notwithstanding any
factors developed by the courts as a means of allocating the
obligation to make alterations to the Premises and/or the Project
in order to comply with present or future applicable laws,
ordinances or regulations, it is the intention of the parties that
such obligations are those of Tenant. Landlord makes no
representation or warranty as to the compliance of the Premises
and/or the Project with the ADA. The parties hereby agree that: (a)
Tenant shall be responsible for ADA Title III compliance in the
Premises, including any tenant improvements or other work to be
performed in the Premises under or in
connection with this Lease, and (b) Landlord may require that
Tenant perform, and Tenant shall be responsible for the cost of,
ADA Title III “path of travel” requirements triggered
by any tenant improvements or alterations to the Premises, or as a
result of Tenant’s use of the Premises, if so required in
writing by an applicable governmental authority. Tenant shall be
solely responsible for requirements under Title I of the ADA
relating to Tenant's employees. Nothing in Section 29.18 below
shall in any way alter the allocation of responsibility for
compliance with Laws, including, without limitation, the ADA, set
forth in this Section 6. Tenant shall not do or permit anything to
be done in or about the Premises or bring or keep anything in the
Premises that will in any way increase the premiums for fire or
casualty insurance carried by other tenants in the Project, or
subject Landlord to a claim of damages or liability arising from
hazardous or toxic waste or by-products associated with or arising
from Tenant’s use of the Premises and/or the Project. Tenant
shall comply with all rules, orders, regulations, and requirements
of any local Fire Rating Bureau or any other organization
performing a similar function. Tenant shall, within thirty (30)
days after written request therefor, reimburse Landlord for any
additional insurance premium charged by reason of Tenant’s
failure to comply with the provisions of this Section 6. Tenant will not perform any act or carry on
any practice that may injure the Premises or the Project that may
be a nuisance or menace to other tenants in the Project; or that
shall in any way interfere with the quiet enjoyment of such other
tenants. If sound or vibration insulation is required to muffle
noise produced by Tenant on the Premises, or ventilation and/or
insulation is required to
remove fumes generated by Tenant, Tenant at its own cost shall
provide all necessary insulation and/or ventilation. Tenant shall
not do anything on or about the Premises which will overload any
existing parking or service to the Premises.




 

- 7 -








 





 

 

7. SIGNAGE. All signage shall be at
Tenant’s sole cost and expense, shall comply with the City of
Burbank sign ordinance and all other applicable Laws. No exterior
signage shall be erected by Tenant without the prior written
consent of Landlord, which consent shall not be unreasonably
withheld, conditioned or delayed; provided that, subject to the
immediately preceding sentence, Landlord hereby approves the
exterior signage shown on Exhibit “G” hereto.
Tenant shall place no window covering (e.g., shades, blinds,
curtains, drapes, screens, tinting material or security bars),
stickers, signs, lettering, banners or advertising or display
material on or near exterior windows or doors if such materials are
visible from the exterior of the Premises, without Landlord’s
prior written consent; provided, however, interior white vertical
blinds shall be permitted. Similarly, Tenant may not install any
alarm boxes, foil protection tape or other security equipment on
the Premises without Landlord’s prior written consent, which
may not be unreasonably withheld, conditioned or delayed. Any
material violating this provision may be destroyed by Landlord
without compensation to Tenant. Additionally, upon the expiration
or earlier termination of this Lease, Tenant shall pay Landlord for
the costs incurred by Landlord to remove any of Tenant’s
signage.

 

8. PERSONAL PROPERTY TAXES; BUSINESS TAXES.
Tenant shall pay before delinquency all taxes, assessments, license
fees and public charges levied, assessed or imposed upon its
business operations as well as upon other personal property in or
about the Premises.

 

9. PARKING. During the Term of this Lease
and so long as no Tenant Default is continuing, Tenant shall have
the exclusive right (at no cost to Tenant) to use all of the
unreserved, in-common passenger automobile spaces designated on
attached Exhibit
“A-2”, which parking spaces shall in no event be
fewer than forty-five (45) spaces (inclusive of handicapped
spaces), all for use only by Tenant, Tenant’s customers,
suppliers, employees, licensees and business invitees.
Tenant’s parking shall be limited to passenger cars and/or
pickup utility vehicles. Tenant shall not cause large trucks or
other large vehicles to be parked within such parking area.
Vehicles shall be parked only in striped parking spaces and not in
driveways, loading areas or other locations not specifically
designated for parking. Overnight parking and storage outside the
Premises are prohibited. Landlord reserves the right at any time to
promulgate reasonable rules and regulations relating to the use of
such parking areas, including reasonable restrictions on parking by
tenants and employees, to designate specific spaces for the use of
any tenant, to make changes in the parking layout from time to
time, and to establish reasonable time limits on
parking.

 


Any
vehicle violating the vehicle regulations herein or other vehicle
regulations promulgated by Landlord shall be subject to removal at
the owner’s expense. Any reasonable, out-of-pocket costs
(including, without limitation, reasonable attorneys’ fees)
incurred by Landlord in connection with the enforcement of the
provisions of this Section 9 against
Tenant or against any employee, contractor, agent, customer,
supplier or business invitee or licensee of Tenant shall be
reimbursed to Landlord by Tenant as Additional Rent.

 

10. UTILITIES. Tenant shall pay for all
water, gas, heat, light, power, sewer, electricity, telephone or
other service metered, chargeable or provided to the Premises.
Landlord reserves the right to install separate meters for any such
utility and to charge Tenant for the reasonable, out-of-pocket cost
of such installation. Tenant shall contract directly with the
utility companies to provide such utilities, and for the
maintenance of any utility lines, including, without limitation
telephone equipment, cabling and/or wiring.

 

11. MAINTENANCE. Landlord shall maintain the
Building foundation (excluding the slab, which shall be the
Tenant’s sole obligation) exterior bearing walls, steel roof
trusses and roof decking and the Common Areas in good condition,
which obligation shall include the maintenance, replacement and
repair of the electrical, plumbing, sprinkler, and sewage systems
serving the entire Building, including those located under the
floor slab of the Premises and including those portions (if any) of
the systems lying outside the Premises, electrical room doors,
window frames, exterior glass cleaning, gutters and downspouts on
the Building; provided, however, the cost of all such maintenance
shall be considered “Operating Expenses” for purposes
of Section 3.3. Except as provided above, Tenant shall maintain and
repair the Premises in good condition, including, without
limitation, maintaining and repairing all Building Cable (as
hereinafter defined), interior plumbing (including any hot water
heaters and adjoining pipes), electrical, plumbing, sprinkler,
sewage, heating, ventilating and air conditioning, and any and
all




 

- 8 -








 





 


other
systems servicing the Premises, all walls, floors, slab, ceilings,
roof membrane, skylights, insulation, exterior doors servicing the
Premises (including truck doors), plate glass, exterior and
interior windows and fixtures as well as damage caused by Tenant,
its agents, employees or invitees. Upon expiration or termination
of this Lease, Tenant shall surrender the Premises to Landlord in
accordance with Sections 12 and 24 of this Lease, except for damage caused by
fire or other casualty for which Landlord has received all funds
necessary for restoration of the Premises from insurance proceeds.
The term “Building
Cable” is used in this Lease to refer to all Building
telephone cable, fiber optic wiring and other communications
cabling and wiring within the Building.

 

12. ALTERATIONS. Tenant shall not make any
alterations to the Premises or Project, including any changes to
the existing landscaping, without Landlord’s prior written
consent, which consent may be withheld in Landlord’s sole,
subjective and absolute discretion. Tenant shall, however, have the
right to make interior, non-structural alterations to the Premises
with Landlord’s prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, Tenant shall be entitled to make
interior, non-structural alterations without Landlord’s
consent, provided that such alterations do not cost more than
$25,000 individually or


$100,000 in the
aggregate over the Lease Term and provided that Tenant gives
Landlord prior written notice thereof. Landlord’s consent
shall be deemed to have been given as to interior, non-structural
alterations to the Premises if not withheld by the thirtieth (30th)
day following Landlord’s receipt of all plans, specifications
and working drawings determined by Landlord’s architect to be
sufficient to permit an informed decision with respect to the
proposed interior non-structural alteration. In the event that
Landlord shall not approve any such request, Landlord shall provide
Tenant with an explanation of the basis for such disapproval. If
Landlord gives its consent to such alterations, Landlord may post
notices of nonresponsibility and require Tenant to comply with
other rules and regulations as Landlord may establish from time to
time, including submission of plans and specifications for
Landlord’s approval, the posting of performance and payment
bonds for any alterations that cost more than


$100,000 (to the
extent consistent with standard industry bonding practices for
comparable projects), and reimbursement to Landlord for the
reasonable, out-of-pocket cost of any engineering or consulting
firms required by Landlord to review Tenant’s proposed plans
and for an independent roofing consultant and any roofing
contractor required by Landlord if said alterations involve roof
penetrations or other work on the roof. Any alterations made shall
remain on and be surrendered with the Premises upon expiration or
termination of this Lease, except that Landlord, in its sole and
absolute discretion, may elect to require Tenant at Tenant’s
cost to remove any alterations (including any initial tenant
improvements) which Tenant may have made to the Premises. As part
of any approval of proposed alterations, Tenant may request that
Landlord notify Tenant of the extent to which Landlord shall
require Tenant to remove such alterations upon the expiration or
earlier termination of this Lease. Tenant’s failure to
request such notification and/or Landlord’s failure to
provide such notification shall be deemed to be Landlord’s
determination that the alterations are subject to Landlord’s
removal election. If Landlord so elects, Tenant , at Tenant’s
cost, shall restore the Premises to the condition designated by
Landlord in its election, before the last day of the Term or within
thirty (30) days after notice of its election is given, whichever
is later.


 


Should
Landlord consent in writing to Tenant’s alteration of the
Premises, Tenant shall contract with a duly licensed contractor
reasonably approved by Landlord, for the construction of such
alterations, shall secure all appropriate governmental approvals
and permits, and shall complete such alterations with due diligence
in compliance with plans and specifications approved by Landlord.
All permitted alterations performed by or through Tenant under this
Section 12 shall comply with all laws,
statutes, rules, regulations, ordinances, and orders, now and
hereinafter in effect. Any valuations or cost analyses of any
alterations which are to be submitted to any governmental authority
or with the County must be approved by Landlord in its reasonable
discretion. All such construction shall be performed in a manner
which will not unreasonably interfere with the quiet enjoyment of
other tenants of the Project. Tenant shall pay all costs for such
construction and shall keep the Premises and the Project free and
clear of all mechanics’, materialmen’s, design
professionals’, and other liens which may result from
construction by or through Tenant. In the event any such lien is
filed as a result of any work undertaken by or through Tenant and
such lien is not removed or bonded within ten (10) days after
written demand by Landlord, Landlord shall have the right (but not
the obligation) to satisfy the claim or post a release bond in the
statutory amount, in which case any and all costs incurred by
Landlord (including any attorneys’ fees) shall be reimbursed
by Tenant to Landlord as Additional Rent with the next ensuing
payment of Base Monthly Rent.

 


Landlord
acknowledges that Tenant desires to perform the following work in
the Premises after the Effective Date (collectively, as, when and
to the extent approved by Landlord, the “Desired Improvements”): (i) build
an additional 2,000 square feet of office space (which would
include the addition of one (1) single ADA




 

- 9 -








 





 


restroom) in the
portion of the Premises depicted on Exhibit “B”
attached hereto; (ii) build an approximately 1,000 square foot
locker room with additional restrooms and showers in the rear of
the warehouse portion of the Premises depicted on Exhibit “B”
attached hereto; (iii) install a window in the east wall of the
mezzanine office area overlooking the bullpen in order to allow
more natural light into the mezzanine area; and (iv) install air
conditioning throughout the warehouse portion of the Premises so
that the fitness area can be climate controlled. The Desired
Improvements shall be considered alterations to the Premises and
shall be subject to the terms of this Section 12 in all respects,
including, without limitation, that Tenant shall be required to
obtain Landlord’s prior written consent of the specific
details of the Desired Improvements (including, without limitation,
their exact location, plans and specifications and contractor).
Notwithstanding anything to the contrary in this Section 12,
Landlord’s consent shall be deemed to have been given as to
the Desired Improvements if not withheld by (a) the fifteenth
(15th) day following Landlord’s receipt of all plans,
specifications and working drawings determined by Landlord’s
architect to be sufficient to permit an informed decision with
respect to the proposed Desired Improvements and (b) two (2)
business days following a reminder notice delivered by Tenant to
Landlord on or after such fifteenth (15th) day.

 




13.             

RELEASE
AND INDEMNITY.





 

13.1 From and after the date of
execution hereof by Landlord, Tenant shall indemnify, defend and
hold Landlord and its Lenders, Landlord’s successors and
assigns, constituent partners, members, trustees, beneficiaries,
co-managing directors, agents, and employees (collectively, the
“Indemnified
Parties”) harmless against and from any and all
claims, demands, actions, causes of actions, judgments, damages,
liabilities, losses, obligations, costs and expenses, including,
without limitation, attorneys’ and consultants’ fees
(individually, a “Claim” and collectively,
“Claims”)
arising from or in connection with (i) the construction, repair,
alteration, improvement,


use,
occupancy or enjoyment of the Premises by Tenant, by any
Tenant’s Parties (as defined in Section 13.2, below), by any other person permitted
thereon, including, without limitation, any labor dispute involving
Tenant and/or any failure by Tenant to comply with any laws,
ordinances or regulations governing construction within the
Premises or access to the Premises by disabled persons, (ii) any
activity, work or thing done, permitted or suffered by Tenant or
any Tenant’s Parties in or about the Premises, the Common
Areas or the Project, (iii) any breach or default in the
performance of any obligation on Tenant’s part to be
performed under the terms of this Lease,

(i) any injuries
suffered by Tenant’s employees, or (v) any negligent (whether
active or passive) or wrongful act or omission of Tenant, of any
Tenant Parties, or of any other guest or invitee of Tenant in or
about the Project. The foregoing shall include, but not be limited
to, the defense or pursuit of any claim or any action or proceeding
involved therein, and whether or not (in the case of claims made
against Landlord) litigated and/or reduced to judgment. In case any
action or proceeding is brought against the Indemnified Parties or
any of them by reason of any such Claim, Tenant upon notice from
Landlord, shall defend the same at Tenant’s expense. Neither
Landlord nor any of the other Indemnified Parties need to have
first paid any such claim in order to be so indemnified. With
respect to the indemnifications provided in this Section 13.1,
Tenant shall have the right to select counsel and control the
defense of any matter or claim (subject to applicable attorney
conflict of interest principles), provided, that counsel selected
by Tenant shall be reasonably satisfactory to Landlord (it being
acknowledged that, absent conflict of interest, counsel selected by
any insurance company responsible for coverage in respect of any
claim shall be deemed to be reasonably satisfactory to Landlord).
Landlord shall, to the extent any matter or claim is not covered by
insurance, not settle any matter or claim without the consent of
Tenant, such consent to not be unreasonably withheld, delayed or
conditioned. Tenant’s obligations under this Section 13.1 shall survive the expiration or earlier
termination of this Lease.

 

13.2 No Indemnified Party and no other
tenant or subtenant of the Project shall be liable to Tenant or its
partners, members, directors, officers, shareholders, contractors,
agents, employees, invitees, sublessees or licensees (collectively,
“Tenant’s
Parties”) for any loss or damage to any of
Tenant’s Parties except to the extent caused solely by the
gross negligence or intentional misconduct of Landlord in the
operation or maintenance of the Project or Landlord’s
material breach of this Lease beyond applicable notice and cure
periods. Further, under no circumstances shall any Indemnified
Party be liable for consequential damages arising out of this
Lease. In addition, Tenant’s liability for consequential
damages arising out of this Lease shall not exceed One Million and
00/100 Dollars ($1,000,000.00); provided, however, that such
limitation shall not apply to Tenant’s
liability for any actual damages arising out of this Lease nor to
Tenant’s liability for consequential damages under
Tenant’s indemnity obligations set forth in the last sentence
of Section 24 below. The effect of such releases and waivers of the
right to recover damages shall not be limited by the amount of
insurance carried or required, or by any deductibles applicable
thereto.




 

- 10 -








 





 




14.             

INSURANCE.





 

14.1 Tenant
shall, at Tenant’s expense, obtain and keep in full force
during the Term the types of insurance meeting the requirements set
forth on attached Exhibit
“C” Concurrently with its execution and delivery
of this Lease and thereafter within five (5) business days
following written demand therefor from Landlord, Tenant shall
deliver certificates of such insurance with all endorsements
required hereunder. In the event Tenant fails to provide
certificates evidencing renewal of each such policy at least ten
(10) days before expiration of the policy (as required pursuant to
attached Exhibit
“C”) or within five (5) business days after
written request by Landlord,

 


Landlord shall have
the right, but not the obligation, to order such insurance and
charge the cost thereof plus a five (5%) administrative fee to
Tenant, which amount shall be payable by Tenant to Landlord upon
demand. Failure of Landlord to demand such certificate or other
evidence of full compliance with the insurance requirements
contained in this Lease or failure of Landlord to identify a
deficiency from evidence that is provided to Landlord shall not be
construed as a waiver of Tenant’s obligation to maintain such
insurance. By requiring insurance herein, Landlord does not
represent that coverage and limits will necessarily be adequate to
protect Tenant, and such coverage and limits shall not be deemed as
a limitation on Tenant’s liability under the indemnities
granted to Landlord in this Lease. Tenant’s failure to
procure the required insurance shall not excuse Tenant from any
obligations hereunder and shall subject Tenant to contractual
damages.

 

14.2 During
the Term, Landlord shall insure the Building and the Project (in
addition to, and not in lieu of any insurance which Tenant is
obligated to maintain) against damage with all risk insurance and
public liability insurance, and any other coverages Landlord
reasonably determines or its Lender determines to be appropriate,
all in such amounts and with such deductibles as Landlord
reasonably considers appropriate. Landlord may, but shall not be
obligated to, obtain and carry any other form or forms of insurance
as may reasonably determine or its Lender may determine advisable.
Such insurance may be procured through a policy of blanket
insurance. The allocated costs of such insurance shall be borne by
Tenant pursuant to Section 3.3. Tenant shall not be named as an
additional insured therein. Notwithstanding any contribution by
Tenant to the cost of insurance premiums as provided under this
Lease, Tenant acknowledges that it has no right to receive any
proceeds from any insurance policies carried by
Landlord.

 

14.3 Tenant
will not keep, use, sell or offer for sale in or upon the Premises
any article which may be prohibited by any insurance policy
periodically in force covering the Building and/or the Project or
which shall invalidate the insurance policies carried by Tenant or
Landlord. If Tenant’s use of the Premises, whether or not
Landlord has consented to the same, results in any increase in
premiums for the insurance periodically carried by Landlord with
respect to the Building and/or the Project, Tenant shall pay any
such increase in premiums as Additional Rent within thirty (30)
days after being billed therefor by Landlord. In determining
whether increased premiums are a result of Tenant’s use of
the Premises, a schedule issued by the organization computing the
insurance rate on the Building, the Project or any tenant
improvements, if any, showing the various components of such rate
shall be conclusive evidence of the several items and charges which
make up such rate. Tenant shall promptly comply with all reasonable
requirements of the insurance authority or any present or future
insurer relating to the Premises. If any of Landlord’s
insurance policies shall be canceled or cancellation shall be
threatened or the premium or coverage thereunder changed or
threatened to be changed in any way because of the use of the
Premises or any part thereof by Tenant or any assignee or subtenant
of Tenant or by anyone Tenant permits on the Premises and, if
Tenant fails to remedy the condition giving rise to such threatened
or actual cancellation, or threatened or actual change in coverage
or premiums, then, within forty-eight (48) hours after notice
thereof, Landlord may, at its option, either terminate this Lease
or enter upon the Premises and attempt to remedy such condition,
and Tenant shall promptly pay the cost thereof to Landlord as
Additional Rent. Landlord shall not be liable for any damage or
injury caused to any property of Tenant or of others located on the
Premises resulting from such entry. If Landlord is unable or elects
not to remedy such condition, then Landlord shall have all of the
remedies for a Tenant default provided for in this
Lease.

 

14.4 Without
limiting the foregoing, any contractor (including, without
limitation, the janitorial contractor) or any other third party
engaged by or through Tenant to perform any alterations,
maintenance, repairs, or other services within the Premises or
Project (including, without limitation, within any telephone or
electrical rooms) shall deliver to Landlord evidence of liability
insurance meeting the requirements set forth on attached
Exhibit
“D” or shall otherwise satisfy Landlord as to
such contractor’s financial capability as determined by
Landlord in Landlord’s reasonable discretion.




 

- 11 -








 





 

14.5 Each
policy of insurance obtained by Landlord and Tenant shall expressly
waive all rights of subrogation against the other and their
respective officers, directors, general partners, employees, agents
and representatives or shall contain the ISO endorsement CG 2404 or
its equivalent (subrogation waiver). Landlord and Tenant waive any
rights of recovery (whether in contract or in tort) against the
other for injury or loss due to hazards covered by policies of
insurance containing such a waiver of subrogation clause or
endorsement to the extent of the injury or loss covered thereby.
All casualty insurance required to be provided by Tenant under this
Lease shall release Landlord from any claims for damage to any
person on the Premises and elsewhere on the Project and to
Tenant’s fixtures, personal property, improvements and
alterations in or on the Premises or the Project, caused by or
resulting from risks insured against under the insurance policies
required to be carried by Tenant and in force at the time of such
damage.

 




15. 

DESTRUCTION.





 

15.1 If
the Premises are damaged by fire or other casualty (a
“Casualty”),
Landlord shall, as soon as reasonably practicable but in any event
within ninety (90) days after such Casualty, deliver to Tenant a
good faith estimate (the “Damage Notice”) of the time needed
to repair the damage caused by such Casualty.


 

15.2 If
a material portion of the Premises is damaged by Casualty such that
Tenant is prevented from conducting its business in the Premises in
a manner reasonably comparable to that conducted immediately before
such Casualty and Landlord estimates that the damage caused thereby
cannot be repaired within two hundred seventy (270) days after the
commencement of repairs (the “Repair Period”), then Tenant may
terminate this Lease by delivering written notice to Landlord of
its election to terminate within thirty (30) days after the Damage
Notice has been delivered to Tenant; provided, however, that if
such damage occurs within twelve (12) months of the last day of the
Term and the time estimated to substantially complete the repair
exceeds fifty percent (50%) of the then remaining Term, then Tenant
may terminate this Lease by delivering written notice to Landlord
of its election to terminate within thirty (30) days after the
Damage Notice has been delivered to Tenant .

 


 

15.3 If
a Casualty damages the Premises or a material portion thereof and
(a) Landlord estimates that the damage to the Premises cannot be
repaired within the Repair Period, (b) the damage to the Premises
exceeds fifty percent (50%) of the replacement cost thereof
(excluding foundations and footings), as estimated by Landlord, and
such damage occurs during the last two (2) years of the Term, (c)
regardless of the extent of damage to the Premises, the damage is
not fully covered by Landlord’s insurance policies or
Landlord makes a good faith determination that restoring the
Premises would be uneconomical, or (d) Landlord is required to pay
any insurance proceeds arising out of the Casualty to any
beneficiary or mortgagee with a lien on the Premises or Project,
then Landlord may terminate this Lease by giving written notice of
its election to terminate within thirty (30) days after the Damage
Notice has been delivered to Tenant.

 


 

15.4 If
neither party elects to terminate this Lease following a Casualty,
then Landlord shall, within a reasonable time after such Casualty,
begin to repair the Premises and shall proceed with reasonable
diligence to restore the Premises to substantially the same
condition as they existed immediately before such Casualty;
however, Landlord shall not be required to repair or replace any
alterations or betterments within the Premises (which shall be
promptly and with due diligence repaired and restored by Tenant at
Tenant’s sole cost and expense) or any furniture, equipment,
trade fixtures or personal property of Tenant or others in the
Premises, and Landlord’s obligation to repair or restore the
Premises shall be limited to the extent of the insurance proceeds
actually received by Landlord for the Casualty in question. If this
Lease is terminated under the provisions of this Section 15,
Landlord shall be entitled to the full proceeds of the insurance
policies providing coverage for all alterations, improvements and
betterments in the Premises (and, if Tenant has failed to maintain
insurance on such items as required by this Lease, Tenant shall pay
Landlord an amount equal to the proceeds Landlord would have
received had Tenant maintained insurance on such items as required
by this Lease).

 

15.5 If the Premises are damaged by
Casualty, Rent for the portion of the Premises rendered
untenantable by the damage shall be equitably abated based on the
nature and degree of the interference with Tenant’s use of
the Premises from the date of damage until the completion of
Landlord’s repairs (or until the date of termination of this
Lease by Landlord or Tenant as provided above, as the case may be),
unless Tenant or any of Tenant’s Parties negligently or
willfully caused such damage, in which case, Tenant shall continue
to pay Rent without abatement.




 

- 12 -








 





 

15.6 This
Section 15 shall provide Tenant’s sole and exclusive remedy
in the event of damage or destruction to the Premises, and Tenant,
as a material inducement to Landlord entering into this Lease,
irrevocably waives and releases Tenant’s rights under
California Civil Code Sections 1932(2), 1933(4), 1941 and 1942. No
damages, compensation or claim shall be payable by Landlord for any
inconvenience, any interruption or cessation of Tenant’s
business, or any annoyance, arising from any damage to or
destruction of all or any portion of the Premises, except for the
abatement of rent provided in Section 15.5 above.

 




16. 

CONDEMNATION.





 

16.1 If
the entire Premises are taken by right of eminent domain or
conveyed in lieu thereof (a “Taking”), this Lease shall
terminate as of the date of the Taking.

 

16.2 If any part of the Premises
becomes subject to a Taking and such Taking will prevent Tenant
from conducting on a permanent basis its business in the Premises
in a manner reasonably comparable to that conducted immediately
before such Taking, then Tenant may terminate this Lease as of the
date of such Taking by giving written notice to Landlord within
thirty (30) days after the Taking, and Base Monthly Rent and
Additional Rent shall be apportioned as of the date of such Taking.
If Tenant does not terminate this Lease, then Rent shall be abated
on a reasonable basis as to that portion of the Premises rendered
untenantable by the Taking.

 

16.3 If
any material portion, but less than all, of the Premises becomes
subject to a Taking, or if Landlord is required to pay any of the
proceeds arising from a Taking to any beneficiary or mortgagee with
a lien on the Premises or Project, then Landlord may terminate this
Lease by delivering written notice thereof to Tenant within thirty
(30) days after such Taking, and Base Monthly Rent and Additional
Rent shall be apportioned as of the date of such Taking. If
Landlord does not so terminate this Lease, then this Lease will
continue, but if any portion of the Premises has been taken, Rent
shall abate as provided in the last sentence of Section 16.2.

 

16.4 If all or any portion of the
Premises becomes subject to a Taking for a limited period of time,
this Lease shall remain in full force and effect and Tenant shall
continue to perform all of the terms, conditions and covenants of
this Lease, including the payment of Base Monthly Rent and all
other amounts required hereunder. If any such temporary Taking
terminates prior to the expiration of the Term, Tenant shall
restore the Premises as nearly as possible to the condition prior
to such temporary Taking, at Tenant’s sole cost and expense.
Landlord shall be entitled to receive the entire award for any such
temporary Taking, except that Tenant shall be entitled to receive
the portion of such award which (1) compensates Tenant for its loss
of use of the Premises within the Term and (2) reimburses Tenant
for the reasonable out-of-pocket costs actually incurred by Tenant
to restore the Premises as required by this Section 16.4.


 

16.5 If
any Taking occurs, then Landlord shall receive the entire award or
other compensation for the Premises and other improvements taken;
however, Tenant may separately pursue a claim (to the extent it
will not reduce Landlord’s award) against the condemnor for
the value of Tenant’s personal property which Tenant is
entitled to remove under this Lease, moving costs, loss of
business, and other claims it may have. The rights of Landlord and
Tenant regarding any Taking shall be determined as provided in this
Section, and each party hereby waives the provisions of Section
1265.130 of the California Code of Civil Procedure, and the
provisions of any similar law hereinafter enacted, allowing either
party to petition the Supreme Court to terminate this Lease and/or
otherwise allocate condemnation awards between Landlord and Tenant
in the event of a Taking.

 




17. 

ASSIGNMENT
OR SUBLEASE.





 

17.1 Tenant
shall not assign or sublease all or any part of the Premises or
allow any other person or entity to occupy or use all or any part
of the Premises (collectively, a “Transfer”) without first obtaining
Landlord’s consent, which may be given or withheld in
accordance with the standards set forth in this Section 17, which
the parties agree are reasonable restrictions and conditions
pursuant to any applicable Laws, including, without limitation,
California Civil Code Section 1995.250. A Transfer shall include
any indirect or direct transfer, assignment, sale or encumbrance of
any interest in Tenant, including, without limitation: (a)
transfers by operation of law; (b) transfers of more than 25% of
the direct or indirect ownership interests in Tenant; (c) the
transfer, sale or encumbrance of 50% or more of Tenant’s
assets (in one or more transactions); (d) transfers resulting in a
reduction by 25% or more of the net worth of Tenant, and/or (e) (i)
if Tenant becomes a bankrupt or




 

- 13 -








 





 


insolvent, makes an
assignment for the benefit of creditors, or institutes proceedings
under the Bankruptcy Act in which Tenant is a bankrupt (or, if
Tenant is a partnership or consists of more than one person or
entity, if any partner of the partnership or such other person or
entity becomes a bankrupt or insolvent, or makes an assignment for
the benefit of creditors), (ii) a writ of attachment or execution
is levied on this Lease, or (iii) if in any proceeding to which
Tenant is a party, a receiver is appointed with the authority to
take possession of the Premises. No withholding of consent by
Landlord for any reason deemed sufficient by Landlord shall give
rise to any claim by Tenant or any proposed assignee or subtenant
or entitle Tenant to terminate this Lease, to recover contract
damages or to any abatement of Rent. In this connection, Tenant
hereby expressly waives any rights to the contrary under applicable
Laws, including, without limitation, California Civil Code Section
1995.310. If Tenant is a partnership, a withdrawal or change,
voluntary, involuntary or by operation of law of any general
partner, or the dissolution of the partnership, shall be deemed a
Transfer. If Tenant consists of more than one person, a purported
assignment, voluntary or involuntary or by operation of law from
one person to the other shall be deemed a Transfer.


 

17.2 In
connection with any proposed Transfer, at least thirty (30) days
before the effective date of the proposed Transfer, Tenant shall
provide Landlord with written notice of Tenant’s intent to
assign or sublet (“Tenant’s Notice”) and shall
furnish (i) the name and identity of the proposed assignee or
sublessee (“Transferee”); (ii) such financial
and related information respecting the Transferee as Landlord shall
reasonably request; (iii) such business history and experience
information as Landlord shall reasonably request; (iv) all terms
and conditions of the proposed Transfer, including a copy of the
proposed Transfer documents (which may constitute a term sheet or
letter of intent); (v) the name and description of business
experience of the individuals and entities who are the owners of
the equity interests in the proposed Transferee; and (vi) if a
guarantee is to be provided, it shall be in a form and substance
reasonably satisfactory to Landlord’s legal counsel and its
shall be accompanied by financial statements (prepared in
accordance with generally accepted accounting principles) for the
two most recently completed fiscal years of the proposed
guarantor(s) of the proposed Transferee’s obligations as to
“Tenant”
hereunder. Whether Landlord refuses to consent to such Transfer, or
consents to such Transfer, then this Lease shall remain in full
force and effect in accordance with it terms. Whether or not
Landlord consents to a proposed Transfer under the provisions of
this Section 17, (i) Tenant shall pay Landlord’s processing
and investigation costs, which shall be the greater of Five Hundred
Dollars ($500.00) or actual reasonable out-of- pocket costs,
including reasonable attorneys’ fees incurred in determining
whether or not to so consent, and

 


(ii)
Tenant shall not be relieved of any responsibility under this
Lease. If Landlord consents to any Transfer, Tenant shall pay to
Landlord, as Additional Rent, fifty percent (50%) of all net sums
or other consideration received by Tenant promptly after its
receipt. As used in this Paragraph, “net sums or other consideration”
shall include without limitation the then fair value of any
non-cash consideration and shall be calculated after first
deducting reasonable costs incurred by Tenant in connection with
the Transfer, including commissions payable to a broker not
affiliated with Tenant, space modification costs in connection with
the Transfer, reasonable legal costs, rent concessions to the
Transferee, and lease take-over costs. Landlord’s waiver of
or consent to any Transfer shall not relieve Tenant from
Tenant’s primary obligations under this Lease whether or not
accrued. Any Transferee approved by Landlord shall execute an
agreement reasonably acceptable to Landlord agreeing to be bound by
the terms of this Lease. If this Lease is assigned or if the
Premises or any part thereof is subleased or occupied by anybody
other than Tenant, Landlord may collect Rent from the assignee,
subtenant, or occupant and apply the net amount collected to the
Rent due hereunder, but no such assignment, underletting,
subleasing, occupancy or collection shall be deemed an acceptance
of the assignee, subtenant, or occupant as tenant (except as
expressly set forth in this Section 17) or as a release of Tenant
from the further performance by Tenant of the covenants on the part
of the Tenant to be performed as herein contained. The acceptance
of Rent from any other person shall not be deemed to be a waiver of
any of the provisions of this Lease or the consent to a Transfer of
the Premises. Tenant shall not mortgage or encumber this Lease or
Tenant’s interest thereon.

 

17.3 Landlord
shall not unreasonably withhold, condition or delay its consent to
a proposed Transfer; provided, however, Landlord’s consent
shall be deemed to be reasonably withheld if the proposed Transfer
does not satisfy all of the following conditions: (a) the Transfer
shall be on substantially the same terms and conditions set forth
in Tenant’s Notice given to Landlord; (b) no Transfer shall
be valid, and no Transferee shall take possession of any of the
Premises until an original of the duly executed counterpart of the
Transfer documentation (signed by authorized signatories of both
Tenant and Transferee) has been delivered to Landlord; (c) no
Transferee shall have the right to further assign or sublet without
the consent of Landlord; (d) any proposed subletting will not
result in more than two subleases of portions of the Premises being
in effect at any one time during the Term; (e)




 

- 14 -








 





 


other
than for a proposed sublease of this Lease of the Premises, the net
effective Base Monthly Rent (adjusted on a square foot basis) shall
be at or higher than the Base Monthly Rent then being agreed upon
by Landlord on new leases in the Project for comparable size space
for comparable terms, and Tenant shall not grant greater
concessions to the Transferee than are then being offered by
Landlord (adjusted on a square foot basis) to new tenants leasing a
comparable amount of space for a comparable amount of time; (f) the
proposed Transferee shall not be an existing tenant of the Project
nor have been negotiating with Landlord or with any affiliate of
Landlord during the last six (6) months for space in the Project or
for space within buildings owned by any such affiliate; (g) no
Transferee shall be a governmental entity; (h) the portion of the
Premises to be sublet or assigned shall be regular in shape with
appropriate means of ingress and egress; (i) the proposed use of
the Premises by the Transferee shall be permitted by the use
provisions of this Lease; (j) intentionally omitted; (k) the
Transferee has the financial capability to fulfill the obligations
imposed by the Transfer; (l) the Transferee is not a real estate
developer or landlord and/or is not acting directly or indirectly
on behalf of a real estate developer or a landlord;

 


(m)
intentionally omitted; (n) the Transferee demonstrates, in
Landlord’s business judgment, that it is able to perform the
obligations on Transferee’s part to be performed under the
Lease; and (o) the Transferee shall not have been involved in any
civil, criminal or administrative litigation, investigations or
proceedings with its prior landlord or landlords or is otherwise
involved in any civil, criminal or administrative litigation,
investigations or proceedings which are unsatisfactory in the
reasonable opinion of Landlord. Tenant acknowledges that the
foregoing conditions to a requested Transfer are
reasonable.

 

17.4 Notwithstanding
anything to the contrary contained in this Section 17, provided
that no Tenant Default has occurred and continues uncured, Tenant
may Transfer all or part of its interest in this Lease (a
"Permitted Transfer") to the
following types of entities (a "Permitted Transferee") without the
written consent of Landlord:

 




(a)

an affiliate of
Tenant, so long as (i) Tenant's obligations hereunder are assumed
by such affiliate; (ii) such affiliate has substantial experience
operating the same line of business as Tenant; (iii) Tenant shall
remain directly and primarily liable to Landlord for Tenant’s
obligations under the Lease, which obligations shall continue
unaffected by the Permitted Transfer; and (iv) the Net Worth of
such affiliate is at least equal to Tenant’s Net Worth at the
time of execution of this Lease; or





 




(b)

any corporation,
limited partnership, limited liability partnership, limited
liability company or other business entity in which or with which
Tenant, or its corporate successors or assigns, is merged or
consolidated, in accordance with applicable statutory provisions
governing merger and consolidation of business entities, so long as
(i) Tenant's obligations hereunder are assumed by the entity
surviving such merger or created by such consolidation; (ii) such
surviving or created entity has substantial experience operating
the same line of business as Tenant; and (iii) the Net Worth of
such surviving or created entity is at least equal to
Tenant’s Net Worth at the time of execution of this Lease;
or





 




(c)

any corporation,
limited partnership, limited liability partnership, limited
liability company or other business entity acquiring all or
substantially all of Tenant's assets, so long as (i) Tenant's
obligations hereunder are assumed by such entity; (ii) such entity
has substantial experience operating the same line of business as
Tenant; (iii) Tenant shall remain directly and primarily liable to
Landlord for Tenant’s obligations under the Lease, which
obligations shall continue unaffected by the Permitted Transfer;
and (iv) the Net Worth of such entity is at least equal to
Tenant’s Net Worth at the time of execution of this
Lease.





 


Tenant
shall promptly notify Landlord of any such Permitted Transfer.
Additionally, the Permitted Transferee shall comply with all of the
terms and conditions of this Lease, including the Permitted Use,
and the use of the Premises by the Permitted Transferee may not
violate any other agreements affecting the Premises or Landlord. No
later than thirty (30) days after the effective date of any
Permitted Transfer, Tenant agrees to furnish Landlord with (A)
copies of the instrument effecting any Permitted Transfer, and (B)
evidence of insurance as required under this Lease with respect to
the Permitted Transferee. The occurrence of a Permitted Transfer
shall not waive Landlord’s rights as to any subsequent
Transfers. “Net
Worth” for purposes of this Lease shall be the
tangible, unconsolidated net worth of the person or entity in
question (excluding any guarantors) established under generally
accepted accounting principles consistently applied or any other
method of accounting reasonably acceptable to
Landlord.




 

- 15 -








 





 

17.5 Landlord
may, within thirty (30) days after submission of Tenant’s
Notice for a proposed assignment of this Lease or subletting of all
or substantially all of the Premises, cancel this Lease as to the
portion of the Premises proposed to be sublet or assigned as of the
date the proposed transfer is to be effective. If Landlord cancels
this Lease as to any portion of the Premises, then this Lease shall
cease for such portion of the Premises and Tenant shall pay to
Landlord all Rent accrued through the cancellation date relating to
the portion of the Premises covered by the proposed Transfer.
Thereafter, Landlord may lease such portion of the Premises to the
prospective transferee (or to any other person) without liability
to Tenant.

 

17.6 The
violation by Tenant of any provision of this Section 17 shall give
Landlord the right (but not the obligation) to require that the
Security Deposit be increased by an amount equal to three (3) times
the then Base Monthly Rent.

 

18. DEFAULT. The occurrence of any one or
more of the following events shall constitute a default hereunder
by Tenant (each, a “Tenant
Default”):

 

18.1 Intentionally
omitted;

 

18.2 The failure by Tenant to make any
payment of Rent or any other payment required to be made by Tenant
under this Lease, as and when due, where such failure shall
continue for a period of five (5) days after written notice thereof
from Landlord to Tenant; provided, however, that any such notice
shall be in lieu of, and not in addition to, any notice required
under applicable Laws regarding unlawful detainer actions;
provided, further, however, a Tenant Default shall occur hereunder
without any obligation of Landlord to give any notice if Tenant
fails to pay Rent when due and, during the twelve (12) month
interval preceding such failure, Landlord has given Tenant written
notice of failure to pay Rent on two or more
occasions;

 




18.3

The failure by
Tenant to observe or perform according to the provisions of
Sections 14, 21, 29.7, 29.8 and 29.9 where
such failure continues for more than three (3) business days after
notice from Landlord.









18.4 Except
where a specific time period is otherwise set forth for
Tenant’s performance in this Lease, the failure by Tenant to
observe or perform any of the express or implied covenants or
provisions of this Lease to be observed or performed by Tenant,
other than as specified in Sections 18.1, 18.2 or 18.3,
where such failure shall continue for a period of thirty (30) days
after written notice thereof from Landlord to Tenant. Any such
notice shall be in lieu of, and not in addition to, any notice
required under applicable Laws regarding unlawful detainer actions.
If the nature of Tenant’s default is such that it is
reasonably capable of being cured but more than

 


thirty
(30) days are required for its cure, then Tenant shall not be
deemed to be in default if Tenant shall commence such cure within
the thirty (30)-day period and thereafter diligently prosecute such
cure to completion, which completion shall occur not later than
ninety (90) days from the date of such notice from Landlord. The
foregoing shall not however limit Landlord’s rights to
perform Tenant’s obligations and charge Tenant for the costs
thereof pursuant to Section 19,
below;

 




18.5

An Act of
Insolvency that is not discharged within sixty (60) days;
and/or





 

18.6 If
the performance of Tenant’s obligations under this Lease is
guaranteed: (i) the death of a guarantor, (ii) the termination of a
guarantor’s liability with respect to this Lease other than
in accordance with the terms of such guaranty, (iii) a guarantor
becoming insolvent or the subject of a bankruptcy filing, or (iv) a
guarantor’s refusal to honor the guaranty.

 

19. LANDLORD’S REMEDIES. Landlord
shall have the following remedies in the event of a Tenant Default,
which remedies are not exclusive; they are cumulative and in
addition to any remedies now or later allowed by law:

 

19.1 Landlord
may terminate Tenant’s right to possession of the Premises at
any time by written notice to Tenant. No act by Landlord other than
giving notice to Tenant shall terminate this Lease. Acts of
maintenance, efforts to relet the Premises, or the appointment of a
receiver on Landlord’s initiative to protect Landlord’s
interest under this Lease shall not constitute a termination of
Tenant’s right to possession. Landlord shall terminate
this




 

- 16 -








 





 


Lease
and any and all rights of Tenant hereunder, by any lawful means, in
which event, Landlord, without the requirement of any further
notice to Tenant, shall have the right immediately to enter the
Premises and take full possession thereof, in which event Landlord
shall be entitled, at Landlord’s election, to the rights and
remedies provided in California Civil Code Section 1951.2, as in
effect as of the date hereof. For purposes of computing damages
pursuant to Section 1951.2, an interest rate equal to the Default
Rate. Such damages shall include, without limitation, (i) the worth
at the time of award made on account of the default resulting in
such termination (“Award”), together with interest
thereon at the Default Rate, of any unpaid portion of the Rent
which had been earned by Landlord at the time of such termination,
(ii) the worth at the time of Award, together with interest thereon
at the Default Rate, of the amount by which any unpaid portion of
the Rent which would have been earned after such termination until
the time of Award exceeds the amount of loss of any unpaid portion
of the Rent which Tenant proves could have reasonably been avoided,
(iii) the worth at the time of Award, together with interest
thereon at the Default Rate, of the amount by which any unpaid
portion of the Rent for the balance of the Term exceeds the amount
of loss of any unpaid portion of the Rent which Tenant proves could
have reasonably been avoided, and (iv) any and all other amounts
necessary to compensate Landlord for all detriment proximately
caused by such Tenant Default or which in the ordinary course of
business would be likely to result therefrom, including, without
limitation, any costs or expenses incurred by Landlord in
maintaining or preserving the Premises after such Tenant Default,
preparing the Premises for reletting to a new tenant, accomplishing
any repairs or alterations to the Premises for purposes of such
reletting, rectifying any damage thereto occasioned by the act or
omission of Tenant and any other costs necessary or appropriate to
relet the Premises.


 

19.2 Alternatively,
Landlord may continue this Lease in full force and effect and
enforce any of its other rights and remedies hereunder, including,
without limitation, the rights and remedies provided by California
Civil Code Section 1951.4 (“lessor may continue lease in
effect after lessee’s breach and abandonment and recover rent
as it becomes due, if lessee has right to sublet or assign, subject
only to reasonable limitations”), as in effect on the date
hereof. However, any acts of maintenance or preservation or efforts
to relet the Premises by Landlord or the appointment of a receiver
by Landlord to protect its right, title and interest in and to the
Premises or any portion thereof or this Lease shall neither
constitute termination of this Lease nor interference with such
rights of Tenant to possession, assignment and
sublease.

 

19.3 Without
limiting Landlord’s rights and remedies set forth herein, if
Tenant fails to perform any affirmative duty or obligation of
Tenant under this Lease within thirty (30) days, after written
notice to Tenant (or in case of an emergency, without notice),
Landlord may at its option (but without obligation to do so),
perform such duty or obligation on Tenant’s behalf, including
but not limited to the performance of required maintenance, repairs
and/or replacements, the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals.
The costs and expenses of any such performance by Landlord plus a
ten


percent
(10%) administrative fee shall be due and payable as Additional
Rent by Tenant to Landlord upon invoice therefor. If any check
given to Landlord by Tenant shall not be honored by the bank upon
which it is drawn, Landlord, at its option, may require all future
payments to be made under this Lease by Tenant to be made only by
cashier’s check.


 

20. ENTRY ON PREMISES. Landlord and its
authorized representatives shall have the right, upon reasonable
prior notice, but in any event not less than forty-eight (48) hours
(or, in the case of an emergency, without notice) to enter the
Premises at all reasonable times for any of the following purposes:
(a) to examine and/or inspect the Premises to determine whether
Tenant is complying with its obligations under this Lease; (b) to
do any necessary maintenance and to make any restoration to the
Premises that Landlord has the right or obligation to perform; (c)
to post “for
sale” signs at any time during the Term, to post
“for rent” or
“for lease”
signs during the last one hundred eighty (180) days of the Term, or
during any period while Tenant is in default; (d) to show the
Premises to prospective brokers, agents, buyers, lenders, tenants
or persons interested in an exchange, at any time during the Term;
or (e) to repair, maintain or improve the Building and to erect
scaffolding and protective barricades around and about the Premises
but not so as to prevent entry to the Premises and to do any other
act or thing necessary for the safety or preservation of the
Premises or the Project. Landlord shall not be liable in any manner
for any inconvenience, disturbance, loss of business, nuisance or
other damage arising out of Landlord’s entry onto the
Premises as provided in this Section 20,
provided that Landlord complies with the terms and conditions of
this Section 20. Tenant shall not be entitled to an abatement or
reduction of Rent if Landlord exercises any rights reserved in this
Section 20. Landlord shall conduct its
activities on the Premises as provided herein in a manner
that




 

- 17 -








 





 


is
reasonable and will cause the least inconvenience, annoyance or
disturbance to Tenant. Tenant or Tenant’s representative
shall have the right to be present for any such access by
Landlord.

 

21. SUBORDINATION AND ATTORNMENT. Unless
Landlord or any beneficiary or mortgagee with a lien on the
Building or Project or any ground lessor with respect to the
Building or Project elects otherwise as provided below, this Lease
shall be subject and subordinate at all times to the following
without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination:

 

(a) The lien and
provisions of any mortgage, deed of trust, or declaration of
covenants, conditions and restrictions which may now exist or
hereafter be executed by which the Building, the Project, any
ground lease, or Landlord’s interest or estate in any of
those items, is encumbered; and

 




(b)

All ground leases
which may now exist or hereafter be executed affecting the Building
or the





 


Project.


 


Landlord, any such
beneficiary or mortgagee, or any such ground lessor, shall at any
time have the right to elect to subordinate or cause to be
subordinated to this Lease any such liens and provisions or ground
lease. Any such election under the preceding sentence shall be made
by giving notice thereof to Tenant at least sixty (60) days before
the election is to become effective. If any ground lease terminates
for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant
shall, at the election of any successor-in-interest to Landlord and
notwithstanding any subordination, attorn to and become the Tenant
of the successor-in-interest to Landlord. Tenant waives any right
to declare this Lease terminated or otherwise ineffectual because
of any such foreclosure, conveyance or ground lease termination.
Tenant shall execute and deliver, within ten (10) days after demand
by Landlord and in the form and content reasonably requested by
Landlord, any additional documents required by a Lender evidencing
the priority or subordination of this Lease and Tenant’s
obligation to attorn to and become the Tenant of any
successor-in-interest to Landlord as provided for under this
Section 21; provided that such
additional documents shall not (i) increase Tenant’s monetary
obligations under this Lease, (ii) extend or reduce the Term, (iii)
except to a de minimis
extent, otherwise decrease Landlord's obligations or Tenant’s
rights under this Lease or (iv) except to a de minimis extent, otherwise increase
Tenant's other obligations or Landlord’s rights under this
Lease. Tenant hereby irrevocably appoints Landlord as
attorney-in-fact of Tenant to execute, deliver and record any such
subordination, non-disturbance and attornment agreement in the name
and on behalf of Tenant.

 

22. NOTICE. All notices and other
communications given pursuant to this Lease shall be in writing and
shall be (1) mailed by first class, United States Mail, postage
prepaid, certified, with return receipt requested, and addressed to
the parties hereto at the address specified in the Basic Lease
Terms, (2) hand delivered to the intended addressee, (3) sent by a
nationally recognized overnight courier service, or (4) sent by
facsimile or email transmission during normal business hours
followed by a confirmatory letter sent in another manner permitted
hereunder. All notices shall be effective upon delivery to the
address of the addressee. The parties hereto may change their
addresses by giving notice thereof to the other in conformity with
this provision.

 

23. WAIVER. No delay or omission in the
exercise of any right or remedy by Landlord shall impair such right
or remedy or be construed as a waiver. No act or conduct of
Landlord, including without limitation, acceptance of the keys to
the Premises, shall constitute an acceptance of the surrender of
the Premises by Tenant before the expiration of the Term. Only
written notice from Landlord to Tenant shall constitute acceptance
of the


Premises and
accomplish termination of the Lease. Landlord’s consent to or
approval of any act by Tenant requiring Landlord’s consent or
approval shall not be deemed to waive or render unnecessary
Landlord’s consent to or approval of any subsequent act by
Tenant. Any waiver by Landlord of any default must be in writing
and shall not be a waiver of any other default concerning the same
or any other provision of the Lease.

 

24. SURRENDER OF PREMISES; HOLDING OVER.
Upon expiration of the Term, Tenant shall surrender to Landlord the
Premises and all improvements and alterations in good condition,
except for ordinary wear and tear and alterations Tenant is
obligated to remove under the provisions of Section 12 herein. “Ordinary wear and tear” shall not
include any damage or deterioration that would have been prevented
by good maintenance practice or by Tenant performing all of its
obligations under this Lease. Additionally, upon the expiration or
earlier termination of this Lease, Tenant shall pay Landlord for
the costs incurred by Landlord to remove any of
Tenant’s




 

- 18 -








 





 


signage. Tenant
shall remove all personal property including, without limitation,
all wallpaper, paneling and other decorative improvements or
fixtures and shall perform all restoration made necessary by the
removal of any alterations or Tenant’s personal property
before the expiration of the Term, including for example, restoring
all wall surfaces to their condition prior to the commencement of
this Lease. Landlord may elect to retain or dispose of in any
manner Tenant’s personal property not removed from the
Premises by Tenant prior to the expiration of the Term. Tenant
waives all claims against Landlord for any damage to Tenant
resulting from Landlord’s retention or disposition of
Tenant’s personal property. Tenant shall be liable to
Landlord for Landlord’s costs for storage, removal or
disposal of Tenant’s personal property. Upon the expiration
or earlier termination of this Lease, Tenant shall, at
Landlord’s sole option and at Tenant’s sole cost and
expense, either (i) remove all Building Cable existing within the
Premises, using all necessary care in removing such Building Cable
in order to avoid any damage to the Building, or (ii) not remove
all or any portion of the Building Cable, provided that Tenant
shall leave any such Building Cable clearly labeled and in good
working order with all connections intact. Notwithstanding any of
the foregoing to the contrary, upon the expiration of this Lease
and Tenant’s vacation of the Premises, Tenant shall not be
required to remove from the Premises any alterations or
improvements existing on the Term Commencement Date.


 


If
Tenant, with Landlord’s written consent, remains in
possession of the Premises after expiration or termination of the
Term, or after the date in any notice given by Landlord to Tenant
terminating this Lease, such possession by Tenant shall be deemed
to be a month-to-month tenancy terminable on written thirty
(30)-day notice at any time, by either party. All provisions of
this Lease, except those pertaining to term and Rent, shall apply
to the month-to-month tenancy, except Tenant shall pay monthly Rent
in an amount equal to one hundred fifty

 


percent
(150%) of Base Monthly Rent for the last full calendar month during
the regular term plus one hundred percent (100%) of all Additional
Rent. If Tenant fails to surrender the Premises within thirty (30)
days of the termination or sooner expiration of this Lease, in
addition to any other liabilities to Landlord accruing therefrom,
Tenant shall protect, defend, indemnify and hold Landlord harmless
from all loss, costs (including, without limitation, reasonable
attorneys’ fees) and liability resulting from such failure,
including, without limitation, any claims made by any succeeding
tenant founded upon such failure to surrender and/or any lost
profits to Landlord resulting therefrom.

 

25. LANDLORD DEFAULT/LIMITATION OF LIABILITY AND
TIME. If Landlord fails to perform any obligations on its
part to be performed under this Lease, no Landlord default shall
arise unless and until Landlord fails to cure such default within
ten (10) days following actual receipt of written notice setting
forth in detail the alleged default (provided, however, if such
default cannot reasonably be cured within such ten (10)-day period,
Landlord shall not be in default if Landlord commences such cure as
soon as reasonably possible and diligently prosecutes it to
completion, it being understood that the following actions by
Landlord shall, by way of example but not limitation, constitute
commencement of a cure: contacting applicable contractors or other
consultants, and/or engaging in communications or analysis,
regarding the scope, schedule and pricing for such cure).
Notwithstanding anything to the contrary in this Lease, Tenant
expressly waives the benefit of any statute now or in the future in
effect which would otherwise afford Tenant the right to make
repairs at Landlord’s expense or to terminate this Lease
because of Landlord’s failure to keep the Premises and/or the
Project in good order, condition and repair. In consideration of
the benefits accruing under this Lease, Tenant and all successors
and assigns agree that, in the event of any actual or alleged
failure, breach or default under this Lease by
Landlord:

 


(a) in
no event shall Tenant have the right to terminate this Lease as a
result of Landlord’s default, and Tenant’s remedies
shall be limited to damages and/or injunctive relief; (b) the sole
and exclusive remedy shall be against Landlord’s interest in
the Building and the rents, profits and proceeds therefrom; (c) no
partner, member, shareholder or employee of Landlord shall be named
as a party in any suit or proceeding (except as may be necessary to
secure jurisdiction of the partnership, if applicable); (d) no
partner, member, shareholder or employee of Landlord shall be
required to answer or otherwise plead to any service of process;
(e) no judgment will be taken against any partner, member,
shareholder or employee of Landlord; (f) no writ of execution will
ever be levied against the assets of any partner, member,
shareholder or employee of Landlord; and (g) the obligations of
Landlord under this Lease do not constitute personal obligations of
the individual partners, members, directors, officers or
shareholders of Landlord, and Tenant shall not seek recourse
against the individual partners, directors, officers, employees or
shareholders of Landlord or any of their personal assets for
satisfaction of any liability in respect to this
Lease.


 




 

- 19 -








 





 

26. HAZARDOUS MATERIALS AND INDOOR AIR
QUALITY. Landlord and Tenant agree as follows with respect
to the existence or use of “Hazardous Material” (as
defined below) on the Premises and the Project:

 

26.1 Tenant shall not cause or permit
any Hazardous Material to be brought upon, kept or used in or about
the Premises or the Project or transported to or from the Premises
or the Project by Tenant, its agents, employees, contractors or
invitees (for purposes of this Section 26.1, “Tenant”), without the prior
written consent of Landlord which Landlord shall not unreasonably
withhold as long as Tenant demonstrates to Landlord’s
reasonable satisfaction that such Hazardous Material is necessary
for Tenant’s business, will be used, stored and transported
only in incidental quantities, and will be used, kept, stored and
transported in a manner that complies with all Laws pertaining to
any such Hazardous Material. If Tenant breaches the obligations
stated in the preceding sentence, or if the presence,
transportation or release of Hazardous Material on, to or from the
Premises caused or permitted by or through Tenant (whether
affirmatively or through Tenant’s active or passive
negligence) results in contamination or alleged contamination of
the Premises or the Project or any surrounding property, or if
contamination of the Premises or the Project or any surrounding
property by Hazardous Material otherwise occurs for which Tenant is
legally liable to Landlord for damage resulting therefrom, then
Tenant shall indemnify, defend and hold the Indemnified Parties
harmless from any and all claims, judgments, damages, penalties,
fines, costs, liabilities or losses (including, without limitation,
diminution in value of the Premises or the Project, damages for the
loss or restriction on use of rentable or usable space or of any
amenity of the Premises or the Project, damages arising from any
adverse impact on marketing of space in the Building and/or the
Project, and sums paid in settlement of claims, attorneys’
fees, consultant fees and expert fees) which arise during or after
the Term as a result of such contamination. This indemnification of
the Indemnified Parties by Tenant includes, without limitation,
costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal or restoration work
required by any federal, state or local governmental agency or
political subdivision because of Hazardous Material present or
alleged to be present in the soil or groundwater on or under the
Premises or the Project. Without limiting the foregoing, if the
presence or alleged presence, release or transportation of any
Hazardous Material on the Premises caused or permitted by Tenant
results in any contamination of the Premises or the Project or
surrounding property, Tenant shall promptly take all actions at its
sole expense as are necessary to return the Premises or the Project
or surrounding property to the condition existing prior to the
introduction of any such Hazardous Material to the Premises or the
Project or surrounding property; provided that (i) Landlord’s
approval of the proposed remedial actions shall first be obtained,
which approval shall not be unreasonably withheld so long as the
proposed remedial actions would not potentially have any adverse
long-term or short-term effect on the Premises or the Project, and
(ii) such actions are calculated to cause the least amount of
inconvenience to other tenants. The provisions of this Section
26.1 shall survive the expiration or
earlier termination of this Lease.

 

26.2 Notwithstanding
anything in this Lease to the contrary, it shall not be
unreasonable for Landlord to withhold its consent to any proposed
assignment, sublease or transfer of the Premises or this Lease if
(i) the proposed transferee’s anticipated use of the Premises
involves the generation, storage, use, treatment, disposal or
transportation of Hazardous Material; (ii) the proposed transferee
has been required by any prior landlord, lender or governmental
authority to take remedial action in connection with Hazardous
Material contaminating a property if the contamination resulted
from such transferee’s actions or use of the property in
question; or (iii) the proposed transferee is subject to any
enforcement order issued by any governmental authority in
connection with the use, disposal, transportation or storage of a
Hazardous Material.

 

26.3 As
used in this Lease, the term “Hazardous Material” means any
flammable items, explosives, radioactive materials, hazardous or
toxic substances, material or waste or related materials, including
any substances defined as or included in the definition of
“hazardous substances”, “hazardous wastes”,
“hazardous materials”, or “toxic
substances” now or subsequently regulated under any
applicable Laws, including without limitation, petroleum-based
products and materials, paints, solvents, lead, cyanide, DDT,
printing inks, acids, pesticides, ammonia compounds and other
chemical products, asbestos, petroleum (or fractions thereof), PCBs
and similar compounds, and Contaminants (as defined below), and
including any different products and materials which are
subsequently found to have adverse effects on the environment or
the health or safety of persons.

 

26.4 Without
limiting the foregoing provisions of this Section 26, to prevent the generation, growth, or
deposit of any mold, mildew, bacillus, virus, pollen or other
micro-organism (collectively, “Biologicals”) and the deposit,
release or circulation of any indoor contaminants, including
emissions from paint, carpet and drapery




 

- 20 -








 





 


treatments,
cleaning, maintenance and construction materials and supplies,
pesticides, pressed wood products, insulation, and other materials
and products (collectively with Biologicals, “Contaminants”), that could
adversely affect the health, safety or welfare of any tenant,
employee, or other occupant of the Building or Project or their
invitees (each, an “Occupant”), Tenant shall, at
Tenant’s sole cost and expense, at all times during the
Term:


(i)
maintain the humidity level and the air exchange rate within the
Premises at a level reasonably expected to prevent or minimize the
growth of any Biologicals and the circulation of any other
Contaminants, (ii) maintain, operate and repair the Premises
pursuant to Section 11, in such a manner
to prevent or minimize the accumulation of stagnant water and
moisture in planters, kitchen appliances and vessels, carpeting,
insulation, water coolers and any other locations where stagnant
water and moisture could accumulate, and (iii) otherwise maintain,
operate and repair the Premises to prevent the generation, growth,
deposit, release or circulation of any Contaminants. Tenant shall
comply with the foregoing obligations irrespective of the source of
the moisture. Tenant shall immediately advise Landlord if Tenant
observes any condition in the Premises giving rise to a reasonable
suspicion of the presence of any Contaminants, and, in any event,
if any governmental entity or any Occupant alleges that its health,
safety or welfare has been or could be adversely affected by any
such Contaminants.


 

27. SECURITY MEASURES. Tenant acknowledges
that Landlord shall have no obligation whatsoever to provide guard
service, security systems or other security measures for the
benefit of Tenant, the Premises or the Project. As material
consideration to Landlord under this Lease, Tenant hereby assumes
all responsibility for the protection of Tenant, its employees,
agents, licensees and invitees (collectively, “Tenant’s Personnel”) and the
property (including inventory) of Tenant and Tenant’s
Personnel from the actions (including the criminal actions) of
third parties. Landlord may elect, but shall have no obligation, to
provide security services to the Premises and/or the Project, in
which event the cost thereof shall be included within the
definition of Operating Expenses as set forth in Section
3.3.1.

 


 

28. TELEPHONE AND DATA EQUIPMENT. Landlord
shall have no responsibility for providing to Tenant any telephone
equipment, including wiring, within the Premises or for providing
telephone service or connections from the utility to the Premises,
except as required by law. Tenant shall not alter, modify, add to
or disturb any telephone or data wiring in the Premises without
Landlord’s prior written consent. Any telephone or data
equipment installed by Tenant within the Premises or used by Tenant
or any of its agents, employees and invitees within the Premises
shall at all times comply with all applicable Laws and shall not
cause any interference with (1) any of the Project’s
mechanical and electrical equipment and machinery, and any of the
elevator, air ventilation and cooling, life-safety or other Project
systems, or (2) any Project wireless system or telecommunications
facilities in place as of the date of installation of such
telephone or data equipment by Tenant. Tenant agrees to consult
with Landlord in advance of any installation of any system or
equipment under this Section that may result in such interference
at the earliest practicable state of consideration of such project.
Tenant shall be liable to Landlord for any damage to the telephone
or data wiring in the Project due to the act, negligent
(affirmatively or through Tenant’s active or passive
negligence) or otherwise, of Tenant or any employee, contractor or
other agent of Tenant. Tenant’s access to the telephone
closets within the Project shall be pursuant to reasonable
procedures established by Landlord. Tenant shall promptly notify
Landlord of any actual or suspected failure of telephone or data
service to the Premises or Project. All costs incurred by Landlord
for the installation, maintenance, repair and replacement of
telephone wiring within the Premises shall be charged to Tenant
plus a ten percent (10%) administrative fee, which amount shall be
payable by Tenant to Landlord upon demand. Landlord shall not be
liable to Tenant and Tenant waives all claims against Landlord
whatsoever, whether for personal injury, property damage, loss of
use of the Premises, or otherwise, due to the interruption or
failure of telephone services to the Premises. Tenant hereby holds
Landlord harmless and agrees to indemnify, protect and defend
Landlord from and against any liability for any damage, loss or
expense due to any failure or interruption of telephone or data
service to the Premises for any reason and to the Project caused by
Tenant.

 




29. 

MISCELLANEOUS
PROVISIONS.





 

29.1 Time
of Essence. Time is of the essence of each provision of this
Lease.

 

29.2 Successor.
This Lease shall be binding on and inure to the benefit of the
parties and their successors, except as provided in Section 17
herein.




 

- 21 -








 





 

29.3 Landlord’s
Consent. Any consent required by Landlord under this Lease
must be granted in writing and, except as otherwise expressly
provided in the Lease, may be withheld by Landlord in its sole and
absolute discretion.

 


 

29.4 Attorneys’
Fees and Other Charges. If Landlord becomes a party to any
litigation concerning this Lease, the Premises or the Project, by
reason of any act or omission by, through, or on behalf of Tenant
and/or any Tenant’s Parties, Tenant shall be liable to
Landlord for reasonable attorneys’ fees and court costs
incurred by Landlord in the litigation. If either party commences
an action against the other party arising out of or in connection
with this Lease, the prevailing party shall be entitled to recover
from the other party reasonable attorneys’ fees and costs of
suit. If Landlord employs a collection agency to recover delinquent
charges, Tenant agrees to pay all collection agency fees charged to
Landlord in addition to rent, late charges, interest and other sums
payable under this Lease.


 

29.5 Landlord’s
Successors. In the event of a sale or conveyance by Landlord
of the Building or the Project the same shall operate to release
Landlord from any liability under this Lease after the date of such
sale or conveyance, and in such event Landlord’s successor in
interest shall be solely responsible for all obligations of
Landlord under this Lease. If the Building or the Project is sold,
Landlord shall transfer the Security Deposit (to the extent not
previously applied by Landlord) to the buyer.

 


 

29.6 Interpretation.
This Lease shall be construed and interpreted in accordance with
the Laws of the state in which the Premises are located. This Lease
constitutes the entire agreement between the parties with respect
to the Premises and the Project, except for such guarantees or
modifications as may be executed in writing by the parties from
time to time and any addenda and exhibits attached to this Lease.
All previous representations, preliminary negotiations and
agreements of whatsoever kind with respect to the Premises or the
Project, except those contained herein, are superseded and of no
further force or effect. No person, firm or corporation has at any
time any authority from Landlord to make representations or
promises on behalf of Landlord and Tenant expressly agrees that if
any such representations or promises have been made, Tenant hereby
waives all right to rely thereon, unless they are specifically
included in this Lease in writing. No verbal agreement or implied
covenant shall be held to vary the provisions hereof, any statute,
law or custom to the contrary notwithstanding. When required by the
context of this Lease, the singular shall include the plural, and
the masculine shall include the feminine and/or neuter.
“Party” shall
mean Landlord or Tenant. If more than one person or entity
constitutes Landlord or Tenant, the obligations imposed upon that
party shall be joint and several. The enforceability, invalidity or
illegality of any provision shall not render the other provisions
unenforceable, invalid or illegal.


 

29.7 Estoppel Certificates. Tenant, for
itself and its subtenants, hereby covenants and agrees (i) to
execute, acknowledge and deliver to Landlord, from time to time
during the Term within ten (10) days after Landlord provides Tenant
with written notice to do so, an estoppel certificate substantially
in the form reasonably requested by Landlord or any prospective
lender or purchaser certifying in writing (a) that this Lease is in
full force and effect, unmodified or modified solely as set forth
in such estoppel certificate, and (b) that Tenant has fully and
completely performed and complied with each and all of its
covenants, agreements, terms and conditions under this Lease
without exception or except only as set forth in such estoppel
certificate, (ii) that any such estoppel certificate may be
conclusively relied upon by a prospective purchaser or encumbrance
of the Premises, and


(iii)
that the failure of Tenant to so deliver such estoppel certificate
in such period of time shall be conclusive upon Tenant (a) that
this Lease is in full force and effect, without modification except
as may be represented by Landlord, (b) that the Rent has not been
prepaid under this Lease, except as required pursuant to the
provisions of the Basic Lease Terms of this Lease, and (c) that
Landlord has as of the date on which Tenant failed to deliver such
estoppel certificate, fully and completely performed and complied
with each and all of its covenants, agreements, terms and
conditions under this Lease, without exception. Landlord shall
provide an estoppel certificate on a form specified by Tenant and
reasonably acceptable to Landlord within twenty (20) days after a
written request from Tenant, provided that Tenant not make such
request more than twice per calendar year.

 


 

29.8 Financing. In the event any of
Landlord’s Lenders require, as a condition to financing,
modifications to this Lease which do not materially increase any of
Tenant’s obligations (when viewed cumulatively) or materially
diminish Tenant’s rights hereunder, Landlord shall submit to
Tenant such written amendment with the required modifications. If
Tenant fails to execute and return the same within ten (10) days
after the amendment has been submitted, Landlord shall have the
right, without limiting any other rights and




 

- 22 -








 





 


remedies available
to Landlord under this Lease and/or at law or equity, to act as
Tenant’s attorney in fact (and Tenant hereby so irrevocably
appoints Landlord) with full power and authority to execute and
deliver such amendment for and in the name of Tenant.

 

29.9 Financial Statements. When reasonably
requested by Landlord, Tenant shall, upon ten (10) days’
notice from Landlord, provide Landlord with a current income
statement, balance sheet and statement of cash flows (collectively,
“Financial
Statements”) and Financial Statements of the two (2)
years prior to the current Financial Statement year. Such Financial
Statements shall be safeguarded by Landlord and shall be prepared
in accordance with generally accepted accounting principles (or any
other method of accounting reasonably acceptable to Landlord) and,
if such is the normal practice of Tenant, shall be audited by an
independent certified public accountant. If and for so long as
Tenant is a publicly traded corporation, Tenant may satisfy its
obligations hereunder by providing to Landlord Tenant’s most
recent annual and quarterly reports. Tenant shall not be required
to deliver the Financial Statements required under this Section
29.9 more than once in any twelve (12)-month period unless
requested by an actual or prospective buyer or lender of the
Building or Project or a Tenant Default occurs.

 

29.10 Recording.
Tenant shall not under any circumstances record this Lease, nor any
form of evidence of this Lease, including, without limitation, any
memorandum of lease.

 

29.11 Exhibits.
The Exhibits attached hereto are made a part of this Lease and
incorporated herein by reference.

 

29.12 Waiver
of Trial by Jury and Filing of Lis Pendens. LANDLORD AND
TENANT WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY LANDLORD OR TENANT AGAINST THE OTHER WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE, TENANT’S USE AND OCCUPANCY OF THE PREMISES, THE
PROJECT OR ANY PART THEREOF, OR THE RELATIONSHIP OF LANDLORD AND
TENANT. NOTWITHSTANDING THE FOREGOING TO THE CONTRARY, IF THE JURY
TRIAL WAIVER CONTAINED HEREIN SHALL BE HELD OR DEEMED TO BE
UNENFORCEABLE, EACH PARTY HERETO HEREBY EXPRESSLY AGREES TO SUBMIT
TO JUDICIAL REFERENCE PURSUANT TO CALIFORNIA CODE OF CIVIL
PROCEDURE SECTIONS 638 THROUGH 645.1 ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING HEREUNDER FOR WHICH A JURY TRIAL WOULD
OTHERWISE BE APPLICABLE OR AVAILABLE. PURSUANT TO SUCH JUDICIAL
REFERENCE, THE PARTIES AGREE TO THE APPOINTMENT OF A SINGLE REFEREE
AND SHALL USE THEIR BEST EFFORTS TO AGREE ON THE SELECTION OF A
REFEREE. IF THE PARTIES ARE UNABLE TO AGREE ON A SINGLE A REFEREE,
A REFEREE SHALL BE APPOINTED BY THE COURT UNDER CALIFORNIA CODE OF
CIVIL PROCEDURE SECTIONS 638 AND 640 TO HEAR ANY DISPUTES HEREUNDER
IN LIEU OF ANY SUCH JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES
THAT THE APPOINTED REFEREE SHALL HAVE THE POWER TO DECIDE ALL
ISSUES IN THE APPLICABLE ACTION OR PROCEEDING, WHETHER OF FACT OR
LAW, AND SHALL REPORT A STATEMENT OF DECISION THEREON; PROVIDED,
HOWEVER, THAT ANY MATTERS WHICH WOULD NOT OTHERWISE BE THE SUBJECT
OF A JURY TRIAL WILL BE UNAFFECTED BY THIS WAIVER AND THE
AGREEMENTS CONTAINED HEREIN. THE PARTIES HERETO HEREBY AGREE THAT
THE PROVISIONS CONTAINED HEREIN HAVE BEEN FAIRLY NEGOTIATED ON AN
ARMS LENGTH BASIS, WITH BOTH SIDES AGREEING TO THE SAME KNOWINGLY
AND BEING AFFORDED THE OPPORTUNITY TO HAVE THEIR RESPECTIVE LEGAL
COUNSEL CONSENT TO THE MATTERS CONTAINED HEREIN. ANY PARTY TO THIS
LEASE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY AND THE
AGREEMENTS CONTAINED HEREIN REGARDING THE APPLICATION OF JUDICIAL
REFERENCE IN THE EVENT OF THE INVALIDITY OF SUCH JURY TRIAL WAIVER.
IN THE EVENT OF ANY SUCH COMMENCEMENT OF LITIGATION, THE PREVAILING
PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY SUCH COSTS
AND REASONABLE ATTORNEYS’ FEES AS MAY HAVE BEEN INCURRED,
INCLUDING ANY AND ALL COSTS INCURRED IN ENFORCING, PERFECTING AND
EXECUTING SUCH JUDGMENT. AS FURTHER MATERIAL CONSIDERATION TO
LANDLORD ENTERING INTO THIS LEASE WITH TENANT, TENANT HEREBY WAIVES
ALL RIGHTS TO RECORD A LIS PENDENS




 

- 23 -








 





 


AGAINST
THE PREMISES, THE PROJECT OR ANY PART THEREOF UNDER SECTIONS 405 ET
SEQ. OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, OR ANY OTHER
PROVISION OF LAW, IF A DISPUTE ARISES CONCERNING THIS LEASE OR
TENANT’S USE OR OCCUPANCY OF THE PREMISES, THE PROJECT OR ANY
PART THEREOF. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE
EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.

 

29.13 Tenant
as Corporation, Partnership or Limited Liability Company,
Prohibited Persons and Transactions. If Landlord or Tenant
is a corporation, (a) each individual executing this Lease on
behalf of such party represents and warrants (1) that he or she is
duly authorized to execute and deliver this Lease on behalf of such
party in accordance with a duly adopted resolution of the Board of
Directors in accordance with the governing documents of such party,
and (2) that this Lease is binding upon and enforceable against
such party in accordance with its terms, and (b) each party shall,
within thirty (30) days after execution of this Lease, deliver to
the other a certified copy of a resolution of its Board of
Directors authorizing or ratifying the execution of this Lease. If
Landlord or Tenant is a partnership or limited liability company,
each individual executing this Lease on behalf of such party
represents and warrants (1) that he or she is duly authorized to
execute and deliver this Lease on behalf of such party in
accordance with the terms of the partnership agreement or operating
agreement for such party, as the case may be, or has received such
authorization pursuant to the terms of such partnership agreement
or operating agreement, as the case may be, and (2) that this Lease
is binding upon and enforceable against such party in accordance
with its terms. In addition to the foregoing, if Tenant is a
partnership, (a) each general partner shall be jointly and
severally liable for keeping, observing and performing all of the
provisions of this Lease to be kept, observed or performed by
Tenant, and (b) the term “Tenant” shall mean and include
each of them jointly and severally and the act of or notice from,
or notice or refund to, or the signature of, any one or more of
them, with respect to this Lease, shall be binding upon Tenant and
each and all of the general partners of Tenant with the same effect
as if each of them had so acted or so given or received such notice
or refund or so signed. Dissolution of any partnership which is
“Tenant” under this Lease shall be deemed to be an
assignment, jointly to all of the partners, who shall thereafter be
subject to the terms of this Lease as if each such former partners
had initially signed this Lease as individuals. Landlord and Tenant
represent and warrant that neither Landlord nor Tenant, nor any of
their respective affiliates, nor any of their respective partners,
members, shareholders or other equity owners, and none of their
respective employees, officers, directors, representatives or
agents is, nor will they become, a person or entity with whom U.S.
persons or entities are restricted from doing business under
regulations of the Office of Foreign Asset Control
(“OFAC”) of the
Department of the Treasury (including those named on OFAC’s
Specially Designated and Blocked Persons List) or under any
statute, executive order (including the September 24, 2001,
Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit, or Support Terrorism), or
other governmental action and is not and will not Transfer this
Lease to, contract with or otherwise engage in any dealings or
transactions or be otherwise associated with such persons or
entities.

 

29.14 No
Offer. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of the
Premises, offer, or option for lease, and it is not effective as a
lease or otherwise until execution by and delivery to both Landlord
and Tenant.

 

29.15 Brokerage.
Neither Landlord nor Tenant has dealt with any broker or agent in
connection with the negotiation or execution of this Lease, other
than CBRE, Inc., representing Landlord, and NAI Capital,
representing Tenant, which commissions for both CBRE, Inc. and NAI
Capital shall be paid by Landlord pursuant to a separate written
agreement. Tenant and Landlord shall each indemnify the other
against all costs, expenses, attorneys’ fees, liens and other
liability for commissions or other compensation claimed by any
broker or agent claiming the same by, through, or under the
indemnifying party.

 

29.16 Quiet
Enjoyment. Provided no Tenant Default is continuing,
Landlord covenants and agrees that Tenant shall peacefully and
quietly have, hold and enjoy the Premises, without hindrance from
Landlord or any party claiming by, through, or under Landlord, but
not otherwise, subject to the terms and conditions of this
Lease.


 

29.17 Counterparts;
Electronic Signatures. This Lease may be signed by
facsimile, PDF or other electronic signature mechanism and/or in
multiple counterparts which, when signed by all parties, shall
constitute a binding agreement.




 

- 24 -








 





 

29.18 Accessibility
Inspection Disclosure (California Civil Code Section 1938).
A Certified Access Specialist (CASp) can inspect the Premises and
determine whether the Premises comply with all of the applicable
construction-related accessibility standards under state law.
Although state law does not require a CASp inspection of the
Premises, Landlord may not prohibit Tenant from obtaining a CASp
inspection of the Premises for the occupancy or potential occupancy
of Tenant, if requested by Tenant. The parties shall mutually agree
on the arrangements for the time and manner of the CASp inspection,
the payment of the fee for the CASp inspection and the cost of
making any repairs necessary to correct violations of
construction-related accessibility standards within the Premises.
In the event of any conflict between the terms of this Section
29.18 and Section 6 above, the terms of Section 6 shall
control.


 


 

 


 


	

LANDLORD:

	

PSIP SN
Burbank LLC,


a
Delaware limited liability company

 


 


By:    
SN Burbank, LLC,


a
Delaware limited liability company,


its
Member

 


 


By:    
Shubin Nadal Associates, LLC,


a
Delaware limited liability company,


its
Managing Member

 


 


By:
Shubin Nadal Realty Investors, LLC,


a
Delaware limited liability company,


its
Managing Member


 

 


 


By: /s/
Lonnie
Nadal                                                     


Name:
Lonnie Nadal 


Title:
Manager



	

 

 


 


TENANT:

	

 

 


 


MusclePharm
Corporation,


a
Nevada corporation


 

 


 


By: /s/
Ryan Drexler 


Its: 
CEO










 

- 25 -








 





 


EXHIBIT
“A-1”


 





 







PREMISES AND PROJECT DEPICTION


 


 




 








 





 


EXHIBIT
“A-2” PARKING
PLAN


 

 




 


 

  EXHIBIT
“A-2”

Page 1 of
1



 




 








 





 


EXHIBIT
“B” DESIRED
IMPROVEMENTS


 



 




EXHIBIT “B”

Page 1 of
1


 




 








 





 


EXHIBIT
“C”

 



TENANT INSURANCE REQUIREMENTS


 


Tenant
shall procure and maintain at all times, at Tenant’s own
expense, during the term of this Lease, the insurance coverages and
requirements specified below, insuring all operations related to
the Lease.

 


The
kinds and amounts of insurance are as follows:

 




(a)

Workers’
Compensation and Employers Liability Insurance.





 


As and
to the extent required by applicable law, statutory workers’
compensation insurance and employer’s liability insurance
with limits not less than legally required limits; including (if
applicable) a Longshoremen’s and Harbor Workers’
Compensation Act coverage endorsement.

 




(b)

Commercial General
Liability Insurance.





 


Commercial general
liability insurance, including coverage for contractual liability,
tenants legal liability, products-completed operations liability,
personal and advertising injury liability with respect to Tenant's
use, maintenance and occupancy of the Premises, in amounts of not
less than

 


$1,000,000.00 per
occurrence and $2,000,000.00 in the aggregate for property damage
and bodily injury, including death. If liquor is stored, served or
distributed on or from the Premises, Tenant shall also maintain
liquor liability insurance in a minimum amount of $1,000,000.00
either as an endorsement to the commercial general liability policy
or as a separate policy.


 




(c)

Umbrella Liability
Insurance.





 


Umbrella and/or
excess liability insurance with limits not less than $2,000,000
each occurrence and in the aggregate.

 




(d)

Commercial
Automobile Insurance (Primary and Umbrella).





 


If and
when any motor vehicles (owned, non owned and hired) are used in
connection with work to be performed, the Tenant shall provide
automobile liability insurance with minimum limits of

 


$1,000,000.00 each
accident or combined single limit, including coverage for all
owned, non- owned, hired and borrowed vehicles that are driven on
to the Premises or Project.

 




(e)

All Risk Property
Insurance.





 


Property insurance
for loss or damage to Tenant’s business personal property,
including permanently installed improvements and betterments, and
trade fixtures. Coverage shall be provided on an
“all-risk” basis using the Special Cause of Loss form
with replacement cost valuation and shall include the perils of
wind and flood, including coverage for loss of business
income.

 


An
Additional Insured Endorsement shall be attached to the Certificate
of Insurance listing Landlord and any other party reasonably
designated by Landlord as additional insureds on the commercial
general liability, umbrella liability, and commercial automobile
insurance policies. All insurance policies required to be carried
by Tenant pursuant to this Lease shall be primary and
non-contributory.

 


Tenant
shall additionally comply, at Tenant’s sole cost and expense,
with any and all insurance requirements now or in the future
required by any Lender.




 








 





 


EXHIBIT
“D”

 



INDEPENDENT CONTRACTOR INSURANCE REQUIREMENTS


 

 




1.

Insurance Carrier: All policies shall be
maintained with insurance companies holding a General Policyholders
Best’s Rating of “A-” or better and a Financial
Rating of “XI” or better.






 



2. 

General Liability
Insurance:





 




A.

Commercial General
Liability Insurance with a combined single limit of not less than
Three Million Dollars ($3,000,000), (combined primary and
excess-umbrella) for bodily injury and property damage;
and






 




B.

Comprehensive
Automobile Liability Insurance (covering owned vehicles, leased
vehicles, and all other vehicles) with a combined single limit of
not less than One Million Dollars ($1,000,000) which shall include
bodily injury and property damage.





 




3.

Workers’ Compensation and Employers
Liability: Statutory Workers’ Compensation Insurance
in accordance with law with a Waiver of Subrogation, and
Employer’s Liability Insurance with a minimum coverage of One
Million Dollars ($1,000,000);






 




4.

Landlord is Specifically Named as an Additional
Insured: An Additional Insured Endorsement shall be attached
to the Certificate of Insurance listing Landlord and any other
party reasonably designated by Landlord as additional insureds on
the commercial general liability and commercial automobile
insurance policies.





 


Each of
the policies of insurance required to be carried pursuant to the
terms of this Paragraph shall contain:

 




(i)

a clause requiring
written notice to be delivered to Landlord by the insurer not less
than thirty (30) days prior to any cancellation of such policy of
insurance, in whole or in part, or a reduction as to coverage or
amount thereunder,





 




(ii)

the condition that
such insurance is primary and any liability insurance maintained by
Landlord or any other additional insured is excess and
non-contributory, and





 




(iii)

Severability of
Interest and Cross Liability clauses.








 








 





 


EXHIBIT
“E” EXTENSION
OPTIONS

 


 

 

1. So long as
MusclePharm Corporation, a Nevada corporation, or any Permitted
Transferee is the Tenant hereunder and occupies the entirety of the
Premises, and subject to the condition set forth in clause (b)
below, Tenant shall have two (2) options to extend the Term of this
Lease with respect to the entirety of the Premises, the first for a
period of five (5) years from the expiration of the Original Term
(the “First Extension
Period”), and the second (the “Second Extension
Period”) for a period of five (5) years from the
expiration of the First Extension Period, subject to the following
conditions:

 

(a) Each option to
extend shall be exercised, if at all, by notice of exercise given
to Landlord by Tenant not more than nine (9) months nor less than
six (6) months prior to the expiration of the Original Term or the
expiration of the First Extension Period, as
applicable;

 

(b) Anything herein to
the contrary notwithstanding, if Tenant is in default under any of
the terms, covenants or conditions of this Lease beyond any
applicable notice and cure period, either at the time Tenant
exercises either extension option or on the commencement date of
the First Extension Period or the Second Extension Period, as
applicable, Landlord shall have, in addition to all of
Landlord’s other rights and remedies provided in this Lease,
the right to terminate such option(s) to extend upon notice to
Tenant.

 

2. In the event the
applicable option is exercised in a timely fashion, the Lease shall
be extended for the term of the applicable extension period upon
all of the terms and conditions of this Lease, provided that (a)
commencing on the first day of the First Extension Period and every
twelve (12) months thereafter during the First Extension Period
(each, an “Adjustment
Date”), the Base Monthly Rent for the First Extension
Period shall be increased by three percent (3%), calculated by
multiplying the Base Monthly Rent in effect on the day immediately
prior to the applicable Adjustment Date by 1.03, and (b) the Base
Monthly Rent for the Second Extension Period shall be the
“Fair Market Rent” for the Premises. For purposes
hereof, “Fair Market
Rent” shall mean the base rent for the Premises, based
upon the rental rate per square foot that an unaffiliated landlord
and tenant would agree to for a lease on the terms of this Lease
for the Second Extension Period for comparable premises in the
vicinity of the Project and taking into account all relevant
factors, determined pursuant to the process described below. In no
event, however, shall any adjustment of Base Monthly Rent during
the Second Extension Period pursuant to this paragraph result in a
decrease of the Base Monthly Rent for the Premises below the amount
due from Tenant on the last day of the First Extension
Period.

 

3. Within thirty (30)
days after receipt of Tenant’s notice of exercise to extend
the Term for the Second Extension Period, Landlord shall notify
Tenant in writing of Landlord’s estimate of the Base Monthly
Rent for the Second Extension Period, based on the provisions of
Paragraph 2 above. Within thirty (30)
days after receipt of such notice from Landlord, Tenant shall have
the right either to (i) accept Landlord’s statement of Base
Monthly Rent for the Second Extension Period; or (ii) elect to
arbitrate Landlord’s estimate of Fair Market Rent, such
arbitration to be conducted pursuant to the provisions hereof.
Failure on the part of Tenant to require arbitration of Fair Market
Rent within such 30-day period shall constitute acceptance of the
Base Monthly Rent for the Second Extension Period as calculated by
Landlord. If Tenant elects arbitration, the arbitration shall be
concluded within ninety (90) days after the date of Tenant’s
election, subject to extension for an additional 30-day period if a
third arbitrator is required and does not act in a timely manner.
To the extent that arbitration has not been completed prior to the
expiration of any preceding period for which Base Monthly Rent has
been determined, Tenant shall pay Base Monthly Rent at the rate
calculated by Landlord, with the potential for an adjustment to be
made once Fair Market Rent is ultimately determined by
arbitration.


 

4. In the event of
arbitration, the judgment or the award rendered in any such
arbitration may be entered in any court having jurisdiction and
shall be final and binding between the parties. The arbitration
shall be conducted and determined in the City of Burbank,
California in accordance with the then prevailing rules of the
American Arbitration Association or its successor for arbitration
of commercial disputes except to the extent that the procedures
mandated by such rules shall be modified as follows:




 








 





 

(a) Tenant shall make
demand for arbitration in writing within thirty (30) days after
service of Landlord’s determination of Fair Market Rent given
under Paragraph 3 above, specifying
therein the name and address of the person to act as the arbitrator
on its behalf. The arbitrator shall be qualified as a real estate
appraiser familiar with the Fair Market Rent of similar industrial,
research and development, or office space in the vicinity of the
Project who would qualify as an expert witness over objection to
give opinion testimony addressed to the issue in a court of
competent jurisdiction. Failure on the part of Tenant to make a
proper demand in a timely manner for such arbitration shall
constitute a waiver of the right thereto. Within fifteen (15) days
after the service of the demand for arbitration, Landlord shall
give notice to Tenant, specifying the name and address of the
person designated by Landlord to act as arbitrator on its behalf
who shall be similarly qualified. If Landlord fails to notify
Tenant of the appointment of its arbitrator, within or by the time
above specified, then the arbitrator appointed by Tenant shall be
the arbitrator to determine the issue.

 

(b) In the event that
two (2) arbitrators are chosen pursuant to Paragraph 4(a) above, the arbitrators so chosen shall,
within fifteen (15) days after the second arbitrator is appointed
determine the Fair Market Rent. If the two (2) arbitrators shall be
unable to agree upon a determination of Fair Market Rent within
such 15-day period, the arbitrators shall appoint a third
arbitrator, who shall be a competent and impartial person with
qualifications similar to those required of the first two (2)
arbitrators pursuant to 4(a). In the
event the arbitrators are unable to agree upon such appointment
within seven (7) days after expiration of such 15-day period, the
third arbitrator shall be selected by Landlord and Tenant, if they
can agree thereon, within a further period of fifteen (15) days. If
Landlord and Tenant do not so agree, then either party, on behalf
of both, may request appointment of such a qualified person by the
then Chief Judge of the United States District Court having
jurisdiction over the county in which the Project is located,
acting in his private and not in his official capacity, and the
other party shall not raise any question as to such Judge’s
full power and jurisdiction to entertain the application for and
make the appointment. The three (3) arbitrators shall decide the
dispute if it has not previously been resolved by following the
procedure set forth below.


 

(c) Where an issue
cannot be resolved by agreement between the two (2) arbitrators
selected by Landlord and Tenant or settlement between the parties
during the course of arbitration, the issue shall be resolved by
the three arbitrators within fifteen (15) days of the appointment
of the third arbitrator in accordance with the following procedure.
The arbitrator selected by each of the parties shall state in
writing his determination of the Fair Market Rent supported by the
reasons therefor with counterpart copies to each party. The
arbitrators shall arrange for a simultaneous exchange of such
proposed resolutions. The role of the third arbitrator shall be to
select which of the two (2) proposed resolutions most closely
approximates his determination of Fair Market Rent. The third
arbitrator shall have no right to propose a middle ground or any
modification of either of the two (2) proposed resolutions. The
resolution he chooses as most closely approximating his
determination shall constitute the decision of the arbitrators and
be final and binding upon the parties.

 

(d) In the event of a
failure, refusal or inability of any arbitrator to act, his
successor shall be appointed by him, but in the case of the third
arbitrator, his successor shall be appointed in the same manner as
provided for appointment of the third arbitrator. The arbitrators
shall decide the issue within fifteen (15) days after the
appointment of the third arbitrator. Any decision in which the
arbitrator appointed by Landlord and the arbitrator appointed by
Tenant concur shall be binding and conclusive upon the parties.
Each party shall pay the fee and expenses of its respective
arbitrator and both shall share the fee and expenses of the third
arbitrator, if any, and the attorneys’ fees and expenses of
counsel for the respective parties and of witnesses shall be paid
by the respective party engaging such counsel or calling such
witnesses.

 


 

(e) The arbitrators
shall have the right to consult experts and competent authorities
to obtain factual information or evidence pertaining to a
determination of Fair Market Rent, but any such consultation shall
be made in the presence of both parties with full right on their
part to cross-examine. The arbitrators shall render their decision
and award in writing with counterpart copies to each party. The
arbitrators shall have no power to modify the provisions of this
Lease.




 








 





 


EXHIBIT
“F”

 



BACKLOT BURBANK RULES AND REGULATIONS

 




 

1. Tenant, upon the
termination of its tenancy, shall deliver to Landlord the keys to
all doors which have been furnished to Tenant.

 

2. If Tenant requires
telephone, data, fiber, burglar alarm or similar service,
purchasing, installing and maintaining such service shall be borne
solely by Tenant. Additionally, Tenant shall reimburse Landlord for
all costs, fees and expenses incurred by Landlord in connection
with analyzing such service or the plans therefor, including
without limitation, costs and fees for Landlord’s consultant.
No boring or cutting for wires will be allowed without the prior
written consent of Landlord, which may be given or withheld in
Landlord’s sole and absolute discretion. The location of
burglar alarms, telephones, call boxes or other office equipment
affixed to the Building shall be subject to the prior written
approval of Landlord, which may be given or withheld in
Landlord’s sole and absolute discretion.


 

3. 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. Any damage
done to the Building, its floor, or any other part of the Project
by maintaining or moving such equipment or other property shall be
repaired at the sole expense of Tenant.

 

4. 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 and absolute
discretion.


 

5. No cooking shall be
done or permitted on or within the Premises, except with
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 federal, state and city laws,
codes, ordinances, rules and regulations.

 

6. Tenant shall not
use any hand trucks or forklifts except those equipped with the
rubber tires and side guards, and may use such other
material-handling equipment as Landlord may reasonably approve.
Tenant shall not bring any other vehicles of any kind into the
Building at any time. Forklifts which operate inside the building
shall only use tires that do not damage the building’s slab
or the outside asphalt.

 

7. All trash and
refuse shall be contained in suitable trash bins at locations
designated by Landlord. Tenant shall not place in the trash bins
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. No trash
or refuse shall be placed outside the trash bins or trash
enclosures. Landlord reserves the right to haul trash placed
outside of designated trash bins, at Tenant’s sole cost and
expense. 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 when
appropriate.

 

8. 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 the Project.

 

9. Any toilet rooms,
toilets, urinals, wash bowls and other sinks 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.

 

10. Tenant shall not
permit smoking, vaping or similar activities in the Premises or the
project, except in any areas specifically designated by Landlord as
smoking areas.




 








 





 

11. Canvassing,
soliciting, distribution of advertisements or any other written
material in the Building or the Project is prohibited and each
tenant shall cooperate to prevent the same.

 

12. 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.

 

13. Driveways,
sidewalks, passages, exits, entrances and stairways (collectively,
“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.

 

14. Landlord reserves
the right to designate the use of parking areas and spaces. Tenant
shall not park in 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 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.

 

15. 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.

 

16. 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.

 

17. Tenant shall comply
with all crime prevention programs, hazardous materials disclosure
and control programs, and water conservation programs in which
Landlord is required to participate pursuant to applicable
laws.

 

18. No sign, placard,
picture, advertisement, name or notice shall be installed or
displayed on any part of the outside or inside of the Building or
the Project without the prior written consent of Landlord, which
may be given or withheld in Landlord’s sole and absolute
discretion. Landlord shall have the right to remove at
Tenant’s expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or
lettering on doors and walls shall comply with all then-applicable
governmental requirements and shall be printed, painted, affixed or
inscribed at the expense of Tenant by a person or company
designated by Landlord and part of the Sign Criteria. Tenant shall
not place anything against or near glass partitions or doors or
windows, other than the Building standard window covering, which is
visible from outside the Premises.

 

19. Tenant shall not
use or keep in the Premises any firearms, explosives, kerosene,
gasoline or inflammable or combustible fluid or material other than
those limited quantities necessary for the operation or maintenance
of office equipment, refrigerators, microwaves, vending machines
and the like.


 

20. Tenant shall not
use or permit to be used in the Premises any foul or noxious gas or
substance, or permit or allow the Premises to be occupied or used
in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odor or
vibrations.




 








 





 

21. Tenant shall not
engage in or permit any activities in or about the Premises related
to the use, possession, cultivation, manufacturing, distribution,
sale, processing and/or handling of marijuana and/or marijuana-
related products.

 


 


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.

 


 


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 the Project
and for the preservation of good order in and about the Building
and the Project. 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.




 








 





 


EXHIBIT
“G”


 



APPROVED SIGNAGE

 


 

 


Signage
to be placed above main entry door to the Premises:

 



 


 


Signage
to be placed in the lawn area outside the Premises, with the exact
location to be approved by Landlord in its reasonable
discretion:

 




 

 






EXHIBIT “G”

Page 1 of
1