Exhibit 10.28


 





 


STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE -
NET


AIR COMMERCIAL REAL ESTATE ASSOCIATION


 


1.                                       Basic Provisions (“Basic Provisions”).


 


1.1           Parties: This Lease (“Lease”), dated for reference purposes only June 26,
2008, is made by and between T. Drive Partners, LP (“Lessor”)
and AXT, Inc. (“Lessee”),
(collectively the “Parties”, or individually a “Party”).


 


1.2(a)      Premises: That certain portion of the Project (as
defined below), including all improvements therein or to be provided by Lessor
under the terms of this Lease, commonly known by the street address of 4281
Technology Drive, located in the City of Fremont, County of Alameda, State of
California, with zip code 94538, as outlined on Exhibit “A” attached
hereto (“Premises”) and generally described as (describe
briefly the nature of the Premises): A +/-27, 760 square foot portion of a
+/-58,000 square foot, single-story, office/warehouse space. In addition to
Lessee’s rights to use and occupy the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to the any utility raceways of the building
containing the Premises (“Building”)
and to the common Areas (as defined in Paragraph 2.7 below), but shall not have
any rights to the roof or exterior walls of the Building or to any other
buildings in the Project. The Premises, the Building, the Common Areas, the
land upon which they are located, along with all other buildings and
improvements thereon, are herein collectively referred to as the “Project.”  (See
also Paragraph 2)


 


1.2(b)      Parking: See Item #55 unreserved vehicle parking
spaces. (See also Paragraph 2.6)


 


1.3           Term: seven (7) years and none (0) months (“Original
Term”) commencing December 1, 2008 (“Commencement Date”)
and ending November 30, 2015 (“Expiration Date”). (See also Paragraph 3)


 


1.4           Early Possession: Lessee is currently in possession of the
Premises, and shall continue occupancy during tenant improvement work. (“Early
Possession Date”).  Lessor and Lessee shall work together to
accommodate Lessee’s need to install fixtures, equipment, cabling during the
buildout process. (See also Paragraphs 3.2 and 3.3)


 


1.5           Base Rent: $19,987.20 per month (“Base Rent”), payable on the first day of each
month commencing December 1, 2008. (See also Paragraph 4)


 


x If this box is checked, there are provisions
in this Lease for the Base Rent to be adjusted.


 


1.6           Lessee’s Share of Common
Area Operating Expenses:
forty-eight percent (48%) (“Lessee’s Share”).
Lessee’s Share has been calculated by dividing the approximate square footage
of the Premises by the approximate square footage of the Project. In the event
that the size of the Premises and/or the Project are modified during the term
of this Lease, Lessor shall recalculate Lessee’s Share to reflect such
modification.


 


1.7           Base Rent and Other Monies
Paid Upon Execution:


 


(a)           Base Rent: $                        for the period N/A.


 


(b)           Common Area Operating
Expenses:
$                                      
for the period                                         
..


 


(c)           Security Deposit: $50,000.00 (“Security Deposit”).
(See also Paragraph 5)


 


(d)           Other:
$                              for


 


(e)           Total Due Upon Execution of
this Lease: $50,000.00.


 


1.8           Agreed Use: semiconductor
design/manufacture/office/warehouse/distribution display design/manufacture/warehouse/distribution
display and sales.


 


	
    

  	
   

  	
    

  
	
  INITIALS

  	
   

  	
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  ©1999 - AIR COMMERCIAL REAL ESTATE ASSOCIATION

  	
  FORM MTN-6-3/06E

  



 


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                                                                                                                                          .
(See also Paragraph 6)


 


1.9           Insuring Party. Lessor is the “Insuring Party”. (See also
Paragraph 8)


 


1.10         Real Estate Brokers: (See also Paragraph 15)


 


(a)           Representation: The following real estate brokers (the “Brokers”) and
brokerage relationships exist in this transaction (check applicable boxes):


 


o N/A represents Lessor exclusively (“Lessor’s Broker”);


 


o N/A represents Lessee exclusively (“Lessee’s Broker”); or


 


o N/A represents both Lessor and Lessee (“Dual Agency”).


 


(b)           Payment to Brokers: Upon execution and delivery of this Lease by
both Parties, Lessor shall pay to the Brokers the brokerage fee agreed to in a
separate written agreement (or if there is no such agreement, the sum of          
or         % of the total Base
Rent for the brokerage services rendered by the Brokers).


 


1.11         Guarantor. The obligations of the Lessee under this
Lease are to be guaranteed by N/A (“Guarantor”). (See also Paragraph 37)


 


1.12         Attachments. Attached hereto are the following, all of
which constitute a part of this Lease:


 


x an Addendum consisting of Paragraphs Exhibit “A”
through Exhibit “E”;


 


o a site plan depicting the Premises;


 


o a site plan depicting the Project;


 


o a current set of the Rules and
Regulations for the Project;


 


o a current set of the Rules and
Regulations adopted by the owners’ association;


 


o a Work Letter;


 


o other (specify); Exhibit A: Final
Plans; Exhibit B: Work Letter; Exhibit C: Option to Extend; Exhibit D:
Amortization Schedule; Exhibit E: Common Area Operating Expense
Exclusions.


 


2.             Premises.


 


2.1           Letting.
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all of the terms, covenants and
conditions set forth in this Lease. Unless otherwise provided herein, any
statement of size set forth in this Lease, or that may have been used in
calculating Rent, is an approximation which the Parties agree is reasonable and
any payments based thereon are not subject to revision whether or not the
actual size is more or less. NOTE: Lessee is
advised to verify the actual size prior to executing this Lease.


 


2.2           Condition.
Lessor shall deliver that portion of the Premises contained within the Building
(“Unit”) to Lessee broom clean and free
of debris on the Commencement Date or the Early Possession Date, whichever
first occurs (“Start Date”), and, so long as
the required service contracts described in Paragraph 7.1(b) below are
obtained by Lessee and in effect within thirty days following the Start Date,
warrants that the existing electrical, plumbing, fire sprinkler, lighting,
heating, ventilating and air conditioning systems (“HVAC”),
loading doors, sump pumps, if any, and all other such elements in the Unit,
other than those constructed by Lessee, shall be in good operating condition on
said date, that the structural elements of the roof, bearing walls and
foundation of the Unit shall be free of material defects, and that the Unit
does not contain hazardous levels of any mold or fungi defined as toxic under
applicable state or federal law. If a non-compliance with such warranty exists
as of the Start Date, or if one of such systems or elements should malfunction
or fail within the appropriate warranty period, Lessor shall, as Lessor’s sole
obligation with respect to such matter, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, malfunction or
failure, rectify same at Lessor’s expense. The warranty periods shall be as
follows: (i) 6 months as to the new HVAC equipment systems, and (ii) 30
days as to the remaining systems and other elements of the Unit. if Lessee does
not give Lessor the required notice within the appropriate warranty period,
correction of any such non-compliance, malfunction or failure shall be the
obligation of Lessee at Lessee’s sole cost and expense (except for the repairs
to the fire sprinkler systems, roof, foundations, and/or bearing walls - see
Paragraph 7).


 


2.3           Compliance.
Lessor warrants that to the best of its knowledge the improvements on the
Premises and the Common Areas comply with the building codes that were in
effect at the time that each such improvement, or portion thereof, was
constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances in effect on the Start Date (“Applicable Requirements”). Said warranty does not apply to
the use to which Lessee will put the Premises, modifications which may be
required by the Americans with Disabilities Act or any similar laws as a result
of Lessee’s use (see Paragraph 49), or to any Alterations or Utility
Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for determining whether or not the
Applicable Requirements and especially the zoning are appropriate for Lessee’s
intended use, and acknowledges that past uses of the Premises may no longer be
allowed. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided, promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same at Lessor’s expense. If Lessee does not give
Lessor written notice of a non-compliance with this warranty within 6 months
following the Start Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee’s sole cost and expense. If the Applicable Requirements
are hereafter changed so as to require during the term of this Lease the
construction of an addition to or an alteration of the Unit, Premises and/or
Building, the remediation of any Hazardous Substance, or the reinforcement or
other physical modification of the


 


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Unit, Premises and/or Building (“Capital Expenditure”), Lessor and Lessee shall allocate
the cost of such work as follows:


 


(a)           Subject to Paragraph 2.3(c) below, if
such Capital Expenditures are required as a result of the specific and unique
use of the Premises by Lessee as compared with uses by tenants in general,
Lessee shall be fully responsible for the cost thereof, provided, however that
if such Capital Expenditure is required during the last 2 years of this Lease
and the cost thereof exceeds 6 months’ Base Rent, Lessee may instead terminate
this Lease unless Lessor notifies Lessee, in writing, within 10 days after
receipt of Lessee’s termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the amount equal to 6 months’
Base Rent. If Lessee elects termination, Lessee shall immediately cease the use
of the Premises which requires such Capital Expenditure and deliver to Lessor
written notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.


 


(b)           If such Capital Expenditure is not the
result of the specific and unique use of the Premises by Lessee (such as,
governmentally mandated seismic modifications), then Lessor shall pay for such
Capital Expenditure and Lessee shall only be obligated to pay, each month
during the remainder of the term of this Lease, on the date that on which the
Base Rent is due, an amount equal to 144th of the portion of such costs
reasonably attributable to the Premises. Lessee shall pay Interest on the
balance but may prepay its obligation at any time. If, however, such Capital
Expenditure is required during the last 2 years of this Lease or if Lessor
reasonably determines that it is not economically feasible to pay its share
thereof, Lessor shall have the option to terminate this Lease upon 90 days
prior written notice to Lessee unless Lessee notifies Lessor, in writing,
within 10 days after receipt of Lessor’s termination notice that Lessee will
pay for such Capital Expenditure. If Lessor does not elect to terminate, and
fails to tender its share of any such Capital Expenditure, Lessee may advance
such funds and deduct same, with Interest, from Rent until Lessor’s share of
such costs have been fully paid. If Lessee is unable to finance Lessor’s share,
or if the balance of the Rent due and payable for the remainder of this Lease
is not sufficient to fully reimburse Lessee on an offset basis, Lessee shah
have the right to terminate this Lease upon 30 days written notice to Lessor.


 


(c)           Notwithstanding the above, the provisions
concerning Capital Expenditures are intended to apply only to non-voluntary,
unexpected, and new Applicable Requirements. If the Capital Expenditures are
instead triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises then, and in that
event, Lessee shall either: (i) immediately cease such changed use or
intensity of use and/or take such other steps as may be necessary to eliminate
the requirement for such Capital Expenditure, or (ii) complete such
Capital Expenditure at its own expense. Lessee shall not have any right to
terminate this Lease.


 


2.4           Acknowledgements. Lessee acknowledges that: (a) it has
been advised by Lessor and/or Brokers to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical, HVAC
and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements and the Americans with Disabilities Act), and
their suitability for Lessee’s intended use, (b) Lessee has made such
investigation as it deems necessary with reference to such matters and assumes
all responsibility therefor as the same relate to its occupancy of the
Premises, and (c) neither Lessor, Lessor’s agents, nor Brokers have made
any oral or written representations or warranties with respect to said matters
other than as set forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers
have made no representations, promises or warranties concerning Lessee’s
ability to honor the Lease or suitability to occupy the Premises, and (ii) it
is Lessor’s sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.


 


2.5           Lessee as Prior
Owner/Occupant. The
warranties made by Lessor in Paragraph 2 shall be of no force or effect if
immediately prior to the Start Date Lessee was the owner or occupant of the
Premises. In such event, Lessee shall be responsible for any necessary
corrective work.


 


2.6           Vehicle Parking. Lessee shall be entitled to use the number
of parking spaces specified in Paragraph 1.2(b) on those portions of the
Common Areas designated from time to time by Lessor for parking. Lessee shall
not use more parking spaces than said number. Said parking spaces shall be used
for parking by vehicles no larger than full-size passenger automobiles or
pick-up trucks, herein called “Permitted Size Vehicles.”  Lessor may regulate the loading
and unloading of vehicles by adopting Rules and Regulations as provided in
Paragraph 2.9. No vehicles other than Permitted Size Vehicles may be parked in
the Common Area without the prior written permission of Lessor. In addition:


 


(a)           Lessee shall not permit or allow any vehicles
that belong to or are controlled by Lessee or Lessee’s employees, suppliers,
shippers, customers, contractors or invitees to be loaded, unloaded, or parked
in areas other than those designated by Lessor for such activities.


 


(b)           Lessee shall not service or store any
vehicles in the Common Areas.


 


(c)           If Lessee permits or allows any of the
prohibited activities described in this Paragraph 2.6, then Lessor shall have
the right, without notice, in addition to such other rights and remedies that
it may have, to remove or tow away the vehicle involved and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.


 


2.7           Common Areas - Definition. The term “Common Areas”  is defined as all areas
and facilities outside the Premises and within the exterior boundary line of
the Project and interior utility raceways and installations within the Unit
that are provided and designated by the Lessor from time to time for the
general non-exclusive use of Lessor, Lessee and other tenants of the Project
and their respective employees, suppliers, shippers, customers, contractors and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, walkways, driveways and landscaped areas.


 


2.8           Common Areas - Lessee’s
Rights. Lessor grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers,


 


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contractors, customers and invitees, during the term of this Lease, the
non-exclusive right to use, in common with others entitled to such use, the
Common Areas as they exist from time to time, subject to any rights, powers,
and privileges reserved by Lessor under the terms hereof or under the terms of
any rules and regulations or restrictions governing the use of the
Project. Under no circumstances shall the right herein granted to use the
Common Areas be deemed to include the right to store any property, temporarily
or permanently, in the Common Areas. Any such storage shall be permitted only
by the prior written consent of Lessor or Lessor’s designated agent, which
consent may be revoked at any time. In the event that any unauthorized storage
shall occur then Lessor shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove the property and
charge the cost to Lessee, which cost shall be immediately payable upon demand
by Lessor.


 


2.9           Common Areas - Rules and
Regulations. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
establish, modify, amend and enforce reasonable rules and regulations (“Rules and
Regulations”) for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the
preservation of good order, as well as for the convenience of other occupants or
tenants of the Building and the Project and their invitees. Lessee agrees to
abide by and conform to all such Rules and Regulations, and shall use its
best efforts to cause its employees, suppliers, shippers, customers,
contractors and invitees to so abide and conform. Lessor shall not be
responsible to Lessee for the non-compliance with said Rules and
Regulations by other tenants of the Project.


 


2.10         Common Areas - Changes. Lessor shall have the right, in Lessor’s sole
discretion, from time to time:


 


(a)           To make changes to the Common Areas,
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, walkways and
utility raceways;


 


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


 


(c)           To designate other land outside the
boundaries of the Project to be a part of the Common Areas;


 


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


 


(e)           To use the Common Areas while engaged in
making additional improvements, repairs or alterations to 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 and Project as
Lessor may, in the exercise of sound business judgment, deem to be appropriate.


 


3.             Term.


 


3.1           Term. The Commencement Date, Expiration Date and
Original Term of this Lease are as specified in Paragraph 1.3.


 


3.2           Early Possession. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this
Lease (including but not limited to the obligations to pay Lessee’s Share of
Common Area Operating Expenses, Real Property Taxes and insurance premiums and
to maintain the Premises) shall be in effect during such period. Any such early
possession shall not affect the Expiration Date.


 


3.3           Delay In Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease or change the
Expiration Date. Lessee shall not, however, be obligated to pay Rent or perform
its other obligations until Lessor delivers possession of the Premises and any
period of rent abatement that Lessee would otherwise have enjoyed shall run
from the date of the delivery of possession and continue for a period equal to
what Lessee would otherwise have enjoyed, but minus any days of delay caused by
the acts or omissions of Lessee. If possession is not delivered within 60 days
after the Commencement Date, Lessee may, at its option, by notice in writing
within 10 days after the end of such 60 day period, cancel this Lease, in which
event the Parties shall be discharged from all obligations hereunder. If such
written notice is not received by Lessor within said 10 day period, Lessee’s
right to cancel shall terminate. Except as otherwise provided, if possession is
not tendered to Lessee by the Start Date and Lessee does not terminate this
Lease, as aforesaid, any period of rent abatement that Lessee would otherwise
have enjoyed shall run from the date of delivery of possession and continue for
a period equal to what Lessee would otherwise have enjoyed under the terms
hereof, but minus any days of delay caused by the acts or omissions of Lessee.
If possession of the Premises is not delivered within 4 months after the
Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.


 


3.4           Lessee Compliance. Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of insurance (Paragraph 8.5). Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under this
Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor’s election to withhold possession pending receipt of such
evidence of insurance. Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start Date shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied.


 


4.             Rent.


 


4.1           Rent Defined. All monetary obligations of Lessee to
Lessor under the terms of this Lease (except for the Security Deposit) are
deemed to be rent (“Rent”).


 


4.2           Common
Area Operating Expenses. Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent, Lessee’s


 


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Share (as specified in Paragraph 1.6) of all
Common Area Operating Expenses, as hereinafter defined, during each calendar
year of the term of this Lease, in accordance with the following provisions:


 


(a)           “Common
Area Operating Expenses”  are
defined, for purposes of this Lease, as all costs incurred by Lessor relating
to the ownership and operation of the Project, including, but not limited to,
the following:


 


(i)            The operation, repair and maintenance, in
neat, clean, good order and condition, and if necessary the replacement, of the
following:


 


(aa)         The Common Areas and Common Area
improvements, including parking areas, loading and unloading areas, trash
areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers,
irrigation systems, Common Area lighting facilities, fences and gates,
elevators, roofs, and roof drainage systems.


 


(bb)         Exterior signs and any tenant directories.


 


(cc)         Any fire sprinkler systems.


 


(ii)           The cost of water, gas, electricity and
telephone to service the Common Areas and any utilities not separately metered.


 


(iii)          The cost of trash disposal, pest control
services, property management, security services, owners’ association dues and
fees, the cost to repaint the exterior of any structures and the cost of any
environmental inspections.


 


(iv)          Reserves set aside for maintenance, repair
and/or replacement of Common Area improvements and equipment.


 


(v)           Real Property Taxes (as defined in Paragraph
10).


 


(vi)          The cost of the premiums for the insurance
maintained by Lessor pursuant to Paragraph 8.


 


(vii)         Any deductible portion of an insured loss
concerning the Building or the Common Areas.


 


(viii)        Auditors’, accountants’ and attorneys’ fees
and costs related to the operation, maintenance, repair and replacement of the
Project.


 


(ix)           The cost of any capital improvement to the
Building or the Project not covered under the provisions of Paragraph 2.3
provided; however, that Lessor shall allocate the cost of any such capital
improvement over a 12 year period and Lessee shall not be required to pay more
than Lessee’s Share of 1/144th of the cost of such capital improvement in any
given month.


 


(x)            The cost of any other services to be provided
by Lessor that are stated elsewhere in this Lease to be a Common Area Operating
Expense.


 


Notwithstanding anything to the contrary in
this Lease, Common Area Operating Expenses shall not include the costs set
forth on Exhibit E, attached hereto.


 


(b)           Any Common Area Operating Expenses and Real
Property Taxes that are specifically attributable to the Unit, the Building or
to any other building in the Project or to the operation, repair and
maintenance thereof, shall be allocated entirely to such Unit, Building, or
other building. However, any Common Area Operating Expenses and Real Property
Taxes that are not specifically attributable to the Building or to any other
building or to the operation, repair and maintenance thereof, shall be
equitably allocated by Lessor to all buildings in the Project.


 


(c)           The inclusion of the improvements, facilities
and services set forth in Subparagraph 4.2(a) shall not be deemed to
impose an obligation upon Lessor to either have said improvements or facilities
or to provide those services unless the Project already has the same, Lessor
already provides the services, or Lessor has agreed elsewhere in this Lease to
provide the same or some of them.


 


(d)           Lessee’s Share of Common Area Operating
Expenses is payable monthly on the same day as the Base Rent is due hereunder.
The amount of such payments shall be based on Lessor’s estimate of the annual
Common Area Operating Expenses. Within 60 days after the end of each calendar
year during the term and for one (1) year thereafter, written request (but not
more than once each year) Lessor shall deliver to Lessee a reasonably detailed
statement showing Lessee’s Share of the actual Common Area Operating Expenses
incurred during the preceding year. If Lessee’s payments during such year
exceed Lessee’s Share, Lessor shall credit the amount of such over-payment
against Lessee’s future payments. If Lessee’s payments during such year were
less than Lessee’s Share, Lessee shall pay to Lessor the amount of the
deficiency within 10 days after delivery by Lessor to Lessee of the statement.


 


(e)           Common Area Operating Expenses shall not
include any expenses paid by any tenant directly to third parties, or as to
which Lessor is otherwise reimbursed by any third party, other tenant, or
insurance proceeds.


 


(f)            Lessee may review Lessor’s books and
records relating to Common Area Operating Expenses in order to verify the
accuracy of all amounts charged to Lessee, provided that: (i) Lessee
specifically designates the fiscal year(s) that Lessee intends to audit,
which request shall be made in writing within ninety (90) days of receipt of
the applicable expense statement; and (ii) such audit will be conducted
only during regular business hours at the office where Landlord maintains such
records and only after Lessee gives Lessor thirty (30) days prior notice.
Lessee shall deliver to Landlord a copy of the results of such audit within
fifteen (15) days of its receipt by Lessee. Any overpayment or underpayment of
Lessee’s Share of Common Area


 


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Operating Expenses revealed by
such audit shall be adjusted by the parties by payment by lessee, in case of
any underpayment, or payment by lessor or credit to lessee, as designated by
lessor, in case of any overpayment, within (30) days after lessor’s receipt of
lessee’s audit results. If Lessee’s audit disclosed that Lessee’s Share of
Common Area Operating Expenses has been overstated by ten percent (10%) or
more, Lessor shall pay the reaosnable cost of such audit.


 


4.3           Payment. Lessee shall cause payment of Rent to be
received by Lessor in lawful money of the United States, without offset or
deduction (except as specifically permitted in this Lease), on or before the
day on which it is due. All monetary amounts shall be rounded to the nearest whole
dollar. In the event that any invoice prepared by Lessor is inaccurate such
inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay
the amount set forth in this Lease. Rent for any period during the term hereof
which is for less than one full calendar month shall be prorated based upon the
actual number of days of said month. Payment of Rent shall be made to Lessor at
its address stated herein or to such other persons or place as Lessor may from
time to time designate in writing. Acceptance of a payment which is less than
the amount then due shall not be a waiver of Lessor’s rights to the balance of
such Rent, regardless of Lessor’s endorsement of any check so stating. In the
event that any check, draft, or other instrument of payment given by Lessee to
Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of
$25 in addition to any Late Charge and Lessor, at its option, may require all
future Rent be paid by cashier’s check. Payments will be applied first to accrued
late charges and attorney’s fees, second to accrued interest, then to Base Rent
and Common Area Operating Expenses, and any remaining amount to any other
outstanding charges or costs.


 


5.             Security Deposit. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit as security for Lessee’s faithful performance of
its obligations under this Lease. If Lessee fails to pay Rent, or otherwise
Defaults under this Lease, Lessor may use, apply or retain all or any portion
of said Security Deposit for the payment of any amount due already due Lessor,
for Rents which will be due in the future, and/ or to reimburse or compensate
Lessor for any liability, expense, loss or damage which Lessor may suffer or
incur by reason thereof. If Lessor uses or applies all or any portion of the
Security Deposit, Lessee shall within 10 days after written request therefor
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease.  If
the Base Rent increases during the term of this Lease, Lessee shall, upon
written request from Lessor, deposit additional monies with Lessor so that the
total amount of the Security deposit shall at all times bear the same
proportion to the increased Base Rent as the Initial Security Deposit bore to
the initial Base Rent. Should the Agreed Use be amended to accommodate a
material change in the business of Lessee or to accommodate a sublessee or
assignee, Lessor shall have the right to Increase the Security. Deposit to the
extent necessary, in Lessor’s reasonable judgment, to account for any increased
wear and tear that the Premises may suffer as a result thereof. If a change in
control of Lessee occurs during this Lease and following such change the
financial condition of Lessee is, in Lessor’s reasonable judgment,
significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially
reasonable level based on such change in financial condition. Lessor shall not
be required to keep the Security Deposit separate from its general accounts.
Within 90 days after the expiration or termination of this Lease, Lessor shall
return that portion of the Security Deposit not used or applied by Lessor. No
part of the Security Deposit shall be considered to be held in trust, to bear
interest or to be prepayment for any monies to be paid by Lessee under this
Lease.


 


6.             Use.


 


6.1           Use.
Lessee shall use and occupy the Premises only for the Agreed Use, or any other
legal use which is reasonably comparable thereto, and for no other purpose.
Lessee shall not use or permit the use of the Premises in a manner that is
unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or
causes damage to neighboring premises or properties. Other than guide, signal
and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets,
animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or
delay its consent to any written request for a modification of the Agreed Use,
so long as the same will not impair the structural integrity of the Building or
the mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Project. If Lessor elects to withhold consent, Lessor shall
within 7 days after such request give written notification of same, which
notice shall include an explanation of Lessor’s objections to the change in the
Agreed Use.


 


6.2           Hazardous Substances.


 


(a)           Reportable Uses Require
Consent. The term “Hazardous Substance”
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself or in combination with other materials expected to be on the Premises,
is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or monitored by
any governmental authority, or (iii) a basis for potential liability of
Lessor to any governmental agency or third party under any applicable statute
or common law theory. Hazardous Substances shall include, but not be limited
to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products,
by-products or fractions thereof. Lessee shall not engage in any activity in or
on the Premises which constitutes a Reportable Use of Hazardous Substances
without the express prior written consent of Lessor and timely compliance (at
Lessee’s expense) with all Applicable Requirements. Notwithstanding the
foregoing, Lessor is aware that Lessee may use or store Hazardous Substances
from time to time in connection with Lessee’s use of the Premises, and this is
acceptable to Lessor as long as Lessee’s usage is fully compliant with all
applicable City, County and other governmental


 


6

















 


guidelines and
regulations. “Reportable Use”  shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation,
possession, storage, use, transportation, or disposal of a Hazardous Substance
that requires a permit from, or with respect to which a report, notice,
registration or business plan is required to be filed with, any governmental
authority, and/or (iii) the presence at the Premises of a Hazardous
Substance with respect to which any Applicable Requirements requires that a
notice be given to persons entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal course of the
Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.)
and common household cleaning materials, so long as such use is in compliance
with all Applicable Requirements, is not a Reportable Use, and does not expose
the Premises or neighboring property to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor. In addition, Lessor may
condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public,
the Premises and/or the environment against damage, contamination, injury
and/or liability, including, but not limited to, the installation (and removal
on or before Lease expiration or termination) of protective modifications (such
as concrete encasements) and/or increasing the Security Deposit.


 


(b)           Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide
Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.


 


(c)           Lessee Remediation. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about the
Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee’s expense, comply with all Applicable Requirements and take
all investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.


 


(d)           Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys’ and consultants’ fees arising out
of or involving any Hazardous Substance brought onto the Premises by or for
Lessee, or any third party (provided, however, that Lessee shall have no
liability under this Lease with respect to underground migration of any
Hazardous Substance under the Premises from areas outside of the Project not
caused or contributed to by Lessee). Lessee’s obligations shall include, but
not be limited to, the effects of any contamination or injury to person,
property or the environment created or suffered by Lessee, and the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement.


 


(e)           Lessor Indemnification. Lessor and its successors and assigns shall
indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which are suffered as a direct result of Hazardous Substances
on the Premises prior to Lessee taking possession or which are caused by the
gross negligence or willful misconduct of Lessor, its agents or employees.
Lessor’s obligations, as and when required by the Applicable Requirements,
shall include, but not be limited to, the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration or
termination of this Lease.


 


(f)            Investigations and
Remediations. Lessor shall
retain the responsibility and pay for any investigations or remediation measures
required by governmental entities having jurisdiction with respect to the
existence of Hazardous Substances on the Premises prior to the Lessee taking
possession, unless such remediation measure is required as a result of Lessee’s
use (including “Alterations”,
as defined in paragraph 7.3(a) below) of the Premises, in which event
Lessee shall be responsible for such payment. Lessee shall cooperate fully in
any such activities at the request of Lessor, including allowing Lessor and
Lessor’s agents to have reasonable access to the Premises at reasonable times
in order to carry out Lessor’s investigative and remedial responsibilities.


 


(g)           Lessor Termination Option. If a Hazardous Substance Condition (see
Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is
legally responsible therefor (in which case Lessee shall make the investigation
and remediation thereof required by the Applicable Requirements and this Lease
shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either
(i) investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor’s expense, in which event
this Lease shall continue in full force and effect, or (ii) if the
estimated cost to remediate such condition exceeds 12 times the then monthly
Base Rent or $100,000, whichever is greater, give written notice to Lessee,
within 30 days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition, of Lessor’s desire to terminate this Lease as of
the date 60 days following the date of such notice. In the event Lessor elects
to give a termination notice, Lessee may, within 10 days thereafter, give
written notice to Lessor of Lessee’s commitment to pay the amount by which the
cost of the remediation of such Hazardous Substance Condition exceeds an amount
equal to 12 times the then monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within 30 days following such commitment, in such event, this Lease shall
continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds
or assurance thereof within the time provided, this Lease shall terminate as of
the date specified in Lessor’s notice of termination.


 


7

















 


6.3           Lessee’s
Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee shall, at Lessee’s sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor’s engineers and/or consultants
which relate in any manner to such Requirements, without regard to whether said
Requirements are now in effect or become effective after the Start Date. Lessee
shall, within 10 days after receipt of Lessor’s written request, provide Lessor
with copies of all permits and other documents, and other information
evidencing Lessee’s compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure
of Lessee or the Premises to comply with any Applicable Requirements, Likewise,
Lessee shall immediately give written notice to Lessor of: (i) any water
damage to the Premises and any suspected seepage, pooling, dampness or other
condition conducive to the production of mold; or (ii) any mustiness or
other odors that might indicate the presence of mold in the Premises.


 


6.4           Inspection; Compliance. Lessor and Lessor’s. “Lender”  (as
defined in Paragraph 30) and consultants shall have the right to enter into
Premises at any time, in the case of an emergency, and otherwise at reasonable
times after reasonable notice, for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease. The cost
of any such inspections shall be paid by Lessor, unless a violation of
Applicable Requirements, or a Hazardous Substance Condition (see Paragraph 9.1)
is found to exist or be imminent, or the inspection is requested or ordered by
a governmental authority. In such case, Lessee shall upon request reimburse
Lessor for the cost of such inspection, so long as such inspection is
reasonably related to the violation or contamination. In addition, Lessee shall
provide copies of all relevant material safety data sheets (MSDS) to Lessor within 10 days of the
receipt of written request therefor.


 


7.             Maintenance; Repairs,
Utility Installations; Trade Fixtures and Alterations.


 


7.1           Lessee’s Obligations.


 


(a)           In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliance with Applicable
Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations (intended for Lessee’s exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee’s use, any prior use, the
elements or the age of such portion of the Premises), including, but not
limited to, all equipment or facilities, such as plumbing, HVAC equipment,
electrical, lighting facilities, boilers, pressure vessels, fixtures, interior
walls, interior surfaces of exterior walls, ceilings, floors, windows, doors,
plate glass, and skylights but excluding any items which are the responsibility
of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good
order, condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the
service contracts required by Paragraph 7.1(b) below. Lessee’s obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order,
condition and state of repair.


 


(b)           Service Contracts. Lessee shall, at Lessee’s sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler and
pressure vessels, and (iii) clarifiers. However, Lessor reserves the
right, upon notice to Lessee, to procure and maintain any or all of such
service contracts, and Lessee shall reimburse Lessor, upon demand, for the cost
thereof.


 


(c)           Failure to Perform. If Lessee fails to perform Lessee’s
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 days’ prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform such obligations on Lessee’s
behalf, and put the Premises in good order, condition and repair, and Lessee
shall promptly pay to Lessor a sum equal to 115% of the cost thereof.


 


(d)           Replacement. Subject to Lessee’s indemnification of
Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of
liability resulting from Lessee’s failure to exercise and perform good
maintenance practices, if an item described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such item, then such item shall be replaced by Lessor, and the cost thereof
shall be prorated between the Parties and Lessee shall only be obligated to
pay, each month during the remainder of the term of this Lease, on the date on
which Base Rent is due, an amount equal to the product of multiplying the cost
of such replacement by a fraction, the numerator of which is one, and the
denominator of which is 144 (ie. 1/144th of the cost per month). Lessee shall
pay Interest on the unamortized balance but may prepay its obligation at any
time.


 


7.2           Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use),
7.1 (Lessee’s Obligations), 9 (Damage or Destruction) and 14 (Condemnation),
Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke detection systems, fire hydrants, parking
lots, walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas and all parts thereof, as well as providing
the services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives
the benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease.


 


8
















 


7.3           Utility Installations; Trade
Fixtures; Alterations.


 


(a)           Definitions. The term “Utility Installations” refers to all
floor and window coverings, air and/or vacuum lines, power panels, electrical
distribution, security and fire protection systems, communication cabling,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term “Trade
Fixtures” shall mean Lessee’s machinery and equipment that can be
removed without doing material damage to the Premises. The term “Alterations”
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. “Lessee Owned Alterations
and/or  Utility Installations”
are defined as Alterations and/or Utility Installations made by Lessee that are
not yet owned by Lessor pursuant to Paragraph 7.4(a).


 


(b)           Consent.
Lessee shall not make any Alterations or Utility Installations to the Premises
without Lessor’s prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises (excluding
the roof) without such consent but upon notice to Lessor, as long as they are
not visible from the outside, do not involve puncturing, relocating or removing
the roof or any existing walls, will not affect the electrical, plumbing, HVAC,
and/or life safety systems, and the cumulative cost thereof during this Lease
as extended does not exceed a sum equal to 3 month’s Base Rent in the aggregate
or a sum equal to one month’s Base Rent in any one year, Notwithstanding the
foregoing, Lessee shall not make or permit any roof penetrations and/or install
anything on the roof without the prior written approval of Lessor. Lessor may,
as a precondition to granting such approval, require Lessee to utilize a
contractor chosen and/or approved by Lessor. Any Alterations or Utility
Installations that Lessee shall desire to make and which require the consent of
the Lessor shall be presented to Lessor in written form with detailed plans.
Consent shall be deemed conditioned upon Lessee’s: (i) acquiring all
applicable governmental permits, (ii) furnishing Lessor with copies of
both the permits and the plans and specifications prior to commencement of the
work, and (iii) compliance with all conditions of said permits and other Applicable
Requirements in a prompt and expeditious manner. Any Alterations or Utility
Installations shall be performed in a workmanlike manner with good and
sufficient materials. Lessee shall promptly upon completion furnish Lessor with
as-built plans and specifications. For work which costs an amount in excess of
one month’s Base Rent, Lessor may condition its consent upon Lessee providing a
lien and completion bond in an amount equal to 150% of the estimated cost of
such Alteration or Utility Installation and/or upon Lessee’s posting an
additional Security Deposit with Lessor.


 


(c)           Liens; Bonds. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic’s or materialman’s lien against the Premises or any interest therein.
Lessee shall give Lessor not less than 10 days notice prior to the commencement
of any work in, on or about the Premises, and Lessor shall have the right to
post notices of non-responsibility. If Lessee shall contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety
bond in an amount equal to 150% of the amount of such contested lien, claim or
demand, indemnifying Lessor against liability for the same. If Lessor elects to
participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and
costs.


 


7.4           Ownership; Removal;
Surrender; and Restoration.


 


(a)           Ownership. Subject to Lessor’s right to require removal
or elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per paragraph 7.4(b) hereof,
all Lessee Owned Alterations and Utility Installations shall, at the expiration
or termination of this Lease, become the property of Lessor and be surrendered
by Lessee with the Premises.


 


(b)           Removal. By delivery to Lessee of written notice from
Lessor not earlier than 90 and not later than 30 days prior to the end of the
term of this Lease, Lessor may require that any or all Lessee Owned Alterations
or Utility Installations be removed by the expiration or termination of this
Lease. Lessor may require the removal at any time of all or any part of any
Lessee Owned Alterations or Utility Installations made without the required
consent.


 


(c)           Surrender; Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good
operating order, condition and state of repair, ordinary wear and tear
excepted-.  “Ordinary wear and tear” shall not include any damage or
deterioration that would have been prevented by good maintenance practice.
Notwithstanding the foregoing, if this Lease is for 12 months or less, then
Lessee shall surrender the Premises in the same condition as delivered to
Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee
shall repair any damage occasioned by the installation, maintenance or removal
of Trade Fixtures, Lessee owned Alterations and/or Utility Installations,
furnishings, and equipment as well as the removal of any storage tank installed
by or for Lessee. Lessee shall also completely remove from the Premises any and
all Hazardous Substances brought onto the Premises by or for Lessee, or any
third party (except Hazardous Substances which were deposited via underground
migration from areas outside of the Project) even if such removal would require
Lessee to perform or pay for work that exceeds statutory requirements. Trade
Fixtures shall remain the property of Lessee and shall be removed by Lessee.
Any personal property of Lessee not removed on or before the Expiration Date or
any earlier termination date shall be deemed to have been abandoned by Lessee
and may be disposed of or retained by Lessor as Lessor may desire. The failure
by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without
the express written consent of Lessor shall constitute a holdover under the
provisions of Paragraph 26 below.


 


8.             Insurance; Indemnity.


 


8.1           Payment of Premiums. The cost of the premiums for the insurance
policies required to be carried by Lessor, pursuant to


 


9

















 


Paragraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common Area Operating
Expense. Premiums for policy periods commencing prior to, or extending beyond,
the term of this Lease shall be prorated to coincide with the corresponding
Start Date or Expiration Date.


 


8.2           Liability Insurance.


 


(a)           Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor
as additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount
not less than $1,000,000 per occurrence with an annual aggregate of not less
than $2,000,000. Lessee shall add Lessor as an additional insured by means of
an endorsement at least as broad as the Insurance Service Organization’s “Additional Insured-Managers or Lessors of
Premises” Endorsement. The policy shall not contain any intra-insured
exclusions as between insured persons or organizations, but shall include
coverage for liability assumed under this Lease as an “insured contract”  for
the performance of Lessee’s indemnity obligations under this Lease. The limits
of said insurance shall not, however, limit the liability of Lessee nor relieve
Lessee of any obligation hereunder. Lessee shall provide an endorsement on its
liability policy(ies) which provides that its insurance shall be primary to and
not contributory with any similar insurance carried by Lessor, whose insurance
shall be considered excess insurance only.


 


(b)           Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8,2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.


 


8.3           Property Insurance -
Building, Improvements and Rental Value.


 


(a)           Building and Improvements. Lessor shall obtain and keep in force a
policy or policies of insurance in the name of Lessor, with loss payable to
Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Project
Premises. The amount of such insurance shall be equal to the full
insurable replacement cost of the Project Premises, as the same shall
exist from time to time, or the amount required by any Lender, but in no event
more than the commercially reasonable and available insurable value thereof.
Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee’s
personal property shall be insured by Lessee under Paragraph 8.4. If the
coverage is available and commercially appropriate, such policy or policies
shall insure against all risks of direct physical loss or damage (except the
perils of flood and/or earthquake unless required by a Lender), including
coverage for debris removal and the enforcement of any Applicable Requirements
requiring the upgrading, demolition, reconstruction or replacement of any
portion of the Premises as the result of a covered loss. Said policy or
policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a
factor of not less than the adjusted U.S. Department of Labor Consumer Price
Index for All Urban Consumers for the city nearest to where the Premises are
located. If such insurance coverage has a deductible clause, the deductible
amount shall not exceed $1,000 per occurrence.


 


(b)           Rental Value. Lessor shall also obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one year with and including,
only if required by Lessor’s lender, an extended period of indemnity for an
additional 180 days (“Rental Value insurance”). Said insurance shall
contain an agreed valuation provision in lieu of any coinsurance clause, and
the amount of coverage shall be adjusted annually to reflect the projected Rent
otherwise payable by Lessee, for the next 12 month period.


 


(c)           Adjacent Premises. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Project if said increase is caused by Lessee’s acts,
omissions, use or occupancy of the Premises.


 


(d)           Lessee’s Improvements. Since Lessor is the Insuring Party, Lessor
shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.


 


8.4           Lessee’s Property; Business
Interruption Insurance.


 


(a)           Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $10,000 $1,000 per
occurrencs. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property, Trade Fixtures and Lessee Owned
Alterations and Utility Installations. Lessee shall provide Lessor with written
evidence that such insurance is in force.


 


(b)           Business Interruption. Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.


 


(c)           No Representation of
Adequate Coverage. Lessor
makes no representation that the limits or forms of coverage of insurance
specified herein are adequate to cover Lessee’s property, business operations
or obligations under this Lease.


 


8.5           Insurance Policies. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a “General Policyholders Rating” of at
least A-, VI, as set forth in the most current issue of “Best’s Insurance Guide”, or such other rating as may be
required by a Lender. Lessee shall not do or permit to be done anything which
invalidates the required insurance policies. Lessee shall, prior to the Start
Date, deliver to Lessor certified copies of policies of such insurance or
certificates evidencing the existence and amounts of the required insurance, No
such policy shall be cancelable or subject to modification except after 30 days
prior written notice to Lessor. Lessee shall, at least 10 days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or


 


10

















 


“insurance binders” evidencing renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall
be payable by Lessee to Lessor upon demand. Such policies shall be for a term
of at least one year, or the length of the remaining term of this Lease,
whichever is less. If either Party shall fail to procure and maintain the insurance
required to be carried by it, the other Party may, but shall not be required
to, procure and maintain the same.


 


8.6           Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages against the other, for loss of or
damage to its property arising out of or incident to the perils required to be
insured against herein. The effect of such releases and waivers is not limited
by the amount of insurance carried or required, or by any deductibles
applicable hereto. The Parties agree to have their respective property damage
insurance carriers waive any right to subrogation that such companies may have
against Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.


 


8.7           Indemnity. Except for Lessor’s gross negligence or
willful misconduct, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor’s master or ground lessor, partners
and Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee’s expense by counsel reasonably satisfactory
to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need
not have first paid any such claim in order to be defended or indemnified.


 


8.8           Exemption of Lessor and its
Agents from Liability.
Notwithstanding the negligence or breach of this Lease by Lessor or its agents,
neither Lessor nor its agents shall be liable under any circumstances for: (i) injury
or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee’s employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, indoor air quality,
the presence of mold or from the breakage, leakage, obstruction or other
defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or
lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises or upon other portions of the
Building, or from other sources or places, (ii) any damages arising from any
act or neglect of any other tenant of Lessor or from the failure of Lessor or
its agents to enforce the provisions of any other lease in the Project, or (iii) injury
to Lessee’s business or for any loss of income or profit therefrom. Instead, it
is intended that Lessee’s sole recourse in the event of such damages or injury
be to file a claim on the insurance policy(ies) that Lessee is required to
maintain pursuant to the provisions of paragraph 8.


 


8.9           Failure to Provide Insurance. Lessee acknowledges that any failure on its
part to obtain or maintain the insurance required herein will expose Lessor to
risks and potentially cause Lessor to incur costs not contemplated by this
Lease, the extent of which will be extremely difficult to ascertain. Accordingly,
for any month or portion thereof that Lessee does not maintain the required
insurance and/or does not provide Lessor with the required binders or
certificates evidencing the existence of the required insurance, the Base Rent
shall be automatically increased, without any requirement for notice to Lessee,
by an amount equal to 10% of the then existing Base Rent or $100, whichever is
greater. The parties agree that such increase in Base Rent represents fair and
reasonable compensation for the additional risk/costs that Lessor will incur by
reason of Lessee’s failure to maintain the required insurance. Such increase in
Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach
with respect to the failure to maintain such insurance, prevent the exercise of
any of the other rights and remedies granted hereunder, nor relieve Lessee of
its obligation to maintain the insurance specified in this Lease.


 


9.             Damage or Destruction.


 


9.1           Definitions.


 


 (a)          “Premises
Partial Damage” shall mean
damage or destruction to the improvements on the Premises, other than Lessee
Owned Alterations and Utility Installations, which can reasonably be repaired
in 3 months or less from the date of the damage or destruction, and the cost
thereof does not exceed a sum equal to 6 month’s Base Rent. Lessor shall notify
Lessee in writing within 30 days from the date of the damage or destruction as
to whether or not the damage is Partial or Total. Notwithstanding the
foregoing, Premises Partial Damage shall not include damage to windows, doors,
and/or other similar items which Lessee has the responsibility to repair or
replace pursuant to the provisions of Paragraph 7.1.


 


 (b)          “Premises
Total Destruction” shall
mean damage or destruction to the improvements on the Premises, other than
Lessee Owned Alterations and Utility Installations and Trade Fixtures, which
cannot reasonably be repaired in 3 months or less from the date of the damage
or destruction and/or the cost thereof exceeds a sum equal to 6 month’s Base
Rent. Lessor shall notify Lessee in writing within 30 days from the date of the
damage or destruction as to whether or not the damage is Partial or Total.


 


 (c)          “Insured
Loss” shall mean damage or
destruction to improvements on the Premises, other than Lessee Owned Alterations
and Utility Installations and Trade Fixtures, which was caused by an event
required to be covered by the insurance described in Paragraph 8.3(a),
irrespective of any deductible amounts or coverage limits involved.


 


 (d)          “Replacement
Cost” shall mean the cost to
repair or rebuild the improvements owned by Lessor at the time of the
occurrence to their condition existing immediately prior thereto, including
demolition, debris removal and upgrading required by the operation of
Applicable Requirements, and without deduction for depreciation.


 


 (e)          “Hazardous
Substance Condition”  shall
mean the occurrence or discovery of a condition involving the presence of, or a
contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on,
or under the Premises which requires repair, remediation, or


 


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restoration.


 


9.2           Partial
Damage - Insured Loss. If a Premises Partial Damage that is an
Insured, Loss occurs, then Lessor shall, at Lessor’s expense, repair such
damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for
that purpose. Notwithstanding the foregoing, if the required insurance was not
in force or the insurance proceeds are not sufficient to effect such repair,
the Insuring Party shall promptly contribute the shortage in proceeds as and
when required to complete said repairs. In the event, however, such shortage
was due to the fact that, by reason of the unique nature of the improvements,
full replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within 10 days following receipt of written notice of such shortage and request
therefor. If Lessor receives said funds or adequate assurance thereof within
said 10 day period, the party responsible for making the repairs shall complete
them as soon as reasonably possible and this Lease shall remain in full force
and effect. If such funds or assurance are not received, Lessor may
nevertheless elect by written notice to Lessee within 10 days thereafter to: (i) make
such restoration and repair as is commercially reasonable with Lessor paying
any shortage in proceeds, in which case this Lease shall remain in full force
and effect, or (ii) have this Lease terminate 30 days thereafter. Lessee
shall not be entitled to reimbursement of any funds contributed by Lessee to
repair any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance shall be
made available for the repairs if made by either Party.


 


9.3           Partial Damage - Uninsured
Loss. If a Premises Partial
Damage that is not an Insured Loss occurs, unless caused by a negligent or
willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s
expense), Lessor may either: (i) repair such damage as soon as reasonably
possible at Lessor’s expense, in which event this Lease shall continue in full
force and effect, or (ii) terminate this Lease by giving written notice to
Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of
such damage. Such termination shall be effective 60 days following the date of
such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within 10 days after receipt of the termination notice to give
written notice to Lessor of Lessee’s commitment to pay for the repair of such
damage without reimbursement from Lessor. Lessee shall provide Lessor with said
funds or satisfactory assurance thereof within 30 days after making such
commitment. In such event this Lease shall continue in full force and effect,
and Lessor shall proceed to make such repairs as soon as reasonably possible
after the required funds are available. If Lessee does not make the required
commitment, this Lease shall terminate as of the date specified in the
termination notice.


 


9.4           Total Destruction. Notwithstanding any other provision hereof,
if a Premises Total Destruction occurs, this Lease shall terminate 60 days
following such Destruction. If the damage or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.


 


9.5           Damage Near End of Term. If at any time during the last 6 months of
this Lease there is damage for which the cost to repair exceeds one month’s
Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease
effective 60 days following the date of occurrence of such damage by giving a
written termination notice to Lessee within 30 days after the date of
occurrence of such damage. Notwithstanding the foregoing, if Lessee at that
time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such
option and (b) providing Lessor with any shortage in insurance proceeds
(or adequate assurance thereof) needed to make the repairs on or before the
earlier of (i) the date which is 10 days after Lessee’s receipt of Lessor’s
written notice purporting to terminate this Lease, or (ii) the day prior
to the date upon which such option expires. If Lessee duly exercises such
option during such period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s
commercially reasonable expense, repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect. If Lessee
fails to exercise such option and provide such funds or assurance during such
period, then this Lease shall terminate on the date specified in the
termination notice and Lessee’s option shall be extinguished.


 


9.6           Abatement of Rent; Lessee’s
Remedies.


 


 (a)          Abatement.
In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this
Lease, the Rent payable by Lessee for the period required for the repair,
remediation or restoration of such damage shall be abated in proportion to the
degree to which Lessee’s use of the Premises is impaired, but not to exceed the
proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no
liability for any such damage, destruction, remediation, repair or restoration
except as provided herein.


 


 (b)          Remedies.
If Lessor is obligated to repair or restore the Premises and does not commence,
in a substantial and meaningful way, such repair or restoration within 90 days
after such obligation shall accrue, Lessee may, at any time prior to the
commencement of such repair or restoration, give written notice to Lessor and
to any Lenders of which Lessee has actual notice, of Lessee’s election to
terminate this Lease on a date not less than 60 days following the giving of
such notice. If Lessee gives such notice and such repair or restoration is not
commenced within 30 days thereafter, this Lease shall terminate as of the date
specified in said notice. If the repair or restoration is commenced within such
30 days, this Lease shall continue in full force and effect. “Commence” shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, which shall be pursued diligently
to completion, whichever first occurs.


 


9.7           Termination; Advance
Payments. Upon termination
of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable


 


12

















 


adjustment shall be made concerning advance Base Rent and any other
advance payments made by Lessee to Lessor. Lessor shall, in addition, return to
Lessee so much of Lessee’s Security Deposit as has not been, or is not then
required to be, used by Lessor.


 


10.           Real Property Taxes.


 


10.1         Definition. As used herein, the term “Real Property Taxes” shall
include any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income
or estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Project, Lessor’s right
to other income therefrom, and/or Lessor’s business of leasing, by any
authority having the direct or indirect power to tax and where the funds are
generated with reference to the Project address and where the proceeds so
generated are to be applied by the city, county or other local taxing authority
of a jurisdiction within which the Project is located. The term “Real Property Taxes” shall also
include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed
by reason of events occurring during the term of this Lease, including but not
limited to, a change in the ownership of the Project, provided, however, that
Real Property Tax increases attributable to any change in Ownership of the
Premises shall be limited to one (1) change in ownership, and in no event
shall such increases in Real Property Taxes exceed One Thousand Dollars
($1,000) per month. (ii) a change in the improvements thereon, and/or (iii) levied
or assessed on machinery or equipment provided by Lessor to Lessee pursuant to
this Lease. In calculating Real Property Taxes for any calendar year, the Real
Property Taxes for any real estate tax year shall be included in the
calculation of Real Property Taxes for such calendar year based upon the number
of days which such calendar year and tax year have in common.


 


10.2         Payment of Taxes. Except as otherwise provided in Paragraph
10.3, Lessor shall pay the Real Property Taxes applicable to the Project, and
said payments shall be included in the calculation of Common Area Operating
Expenses in accordance with the provisions of Paragraph 4.2.


 


10.3         Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor’s records and work
sheets as being caused by additional improvements placed upon the Project by
other lessees or by Lessor for the exclusive enjoyment of such other lessees.
Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at
the time Common Area Operating Expenses are payable under Paragraph 4.2, the
entirety of any increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade Fixtures or Utility Installations placed upon the Premises
by Lessee or at Lessee’s request or by reason of any alterations or
improvements to the Premises made by Lessor subsequent to the execution of this
Lease by the Parties.


 


10.4         Joint Assessment. If the Building is not separately assessed,
Real Property Taxes allocated to the Building shall be an equitable proportion
of the Real Property Taxes for all of the land and improvements included within
the tax parcel assessed, such proportion to be determined by Lessor from the
respective valuations assigned in the assessor’s work sheets or such other
information as may be reasonably available. Lessor’s reasonable determination
thereof, in good faith, shall be conclusive.


 


10.5         Personal Property Taxes. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises. When possible, Lessee shall cause its
Lessee Owned Alterations and Utility Installations, Trade Fixtures,
furnishings, equipment and all other personal property to be assessed and
billed separately from the real property of Lessor. If any of Lessee’s said
property shall be assessed with Lessor’s real property, Lessee shall pay Lessor
the taxes attributable to Lessee’s property within 10 days after receipt of a
written statement setting forth the taxes applicable to Lessee’s property.


 


11.           Utilities and Services. Lessee shall pay for all water, gas, heat,
light, power, telephone, trash disposal and other utilities and services
supplied to the Premises, together with any taxes thereon. Notwithstanding the
provisions of Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessor
determines that Lessee is using a disproportionate amount of water, electricity
or other commonly metered utilities, or that Lessee is generating such a large
volume of trash as to require an increase in the size of the trash receptacle
and/or an increase in the number of times per month that it is emptied, then
Lessor may increase Lessee’s Base Rent by an amount equal to such increased
costs. There shall be no abatement of Rent and Lessor shall not be liable in
any respect whatsoever for the inadequacy, stoppage, interruption or
discontinuance of any utility or service due to riot, strike, labor dispute,
breakdown, accident, repair or other cause beyond Lessor’s reasonable control
or in cooperation with governmental request or directions.


 


12.           Assignment and Subletting.


 


 12.1        Lessor’s Consent Required.


 


(a)           Lessee shall not voluntarily or by operation
of law assign, transfer, mortgage or encumber (collectively, “assign or assignment”)  or
sublet all or any part of Lessee’s interest in this Lease or in the Premises
without Lessor’s prior written consent.


 


(b)           Unless Lessee is a corporation and its stock
is publicly traded on a national stock exchange, a change in the control of
Lessee shall constitute an assignment requiring consent. The transfer, on a
cumulative basis, of 25% or more of the voting control of Lessee shall
constitute a change in control for this purpose.


 


(c)           The involvement of Lessee or its assets in
any transaction, or series of transactions (by way of merger, sale,
acquisition, financing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee’s assets
occurs, which results or will result in a reduction of the Net Worth of Lessee
by an amount greater than 25% of such Net Worth as it was represented at the
time of the execution of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said


 


13

















 


transaction or transactions constituting such reduction, whichever was
or is greater, shall be considered an assignment of this Lease to which Lessor
may withhold its consent. “Net Worth of Lessee” shall mean the net worth of
Lessee (excluding any guarantors) established under generally accepted
accounting principles.


 


(d)           An assignment or subletting without consent
shall, at Lessor’s option, be a Default curable after notice per Paragraph
13.1(c), or a noncurable Breach without the necessity of any notice and grace
period. If Lessor elects to treat such unapproved assignment or subletting as a
noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon
30 days written notice, increase the monthly Base Rent to 110% of the Base Rent
then in effect.Further, in the event of such Breach and rental adjustment, (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to 110% of the price previously in effect, and (ii) all
fixed and non-fixed rental adjustment scheduled during the remainder of the
Lease term shall be increased to 110% of the scheduled adjusted rent.


 


(e)           Lessee’s remedy for any breach of Paragraph
12.1 by Lessor shall be limited to compensatory damages and/or injunctive
relief.


 


(f)            Lessor may reasonably withhold consent to a
proposed assignment or subletting if Lessee is in Default at the time consent
is requested.


 


(g)           Notwithstanding the foregoing, allowing a de
minimis portion of the Premises, ie. 20 square feet or less, to be used by a
third party vendor in connection with the installation of a vending machine or
payphone shall not constitute a subletting.


 


12.2         Terms and Conditions Applicable
to Assignment and Subletting.


 


 (a)          Regardless
of Lessor’s consent, no assignment or subletting shall: (i) be effective
without the express written assumption by such assignee or sublessee of the
obligations of Lessee under this Lease, (ii) release Lessee of any
obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee.


 


 (b)          Lessor
may accept Rent or performance of Lessee’s obligations from any person other
than Lessee pending approval or disapproval of an assignment. Neither a delay
in the approval or disapproval of such assignment nor the acceptance of Rent or
performance shall constitute a waiver or estoppel of Lessor’s right to exercise
its remedies for Lessee’s Default or Breach.


 


 (c)          Lessor’s
consent to any assignment or subletting shall not constitute consent to any
subsequent assignment or subletting.


 


 (d)          In
the event of any Default or Breach by Lessee, Lessor may proceed directly against
Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s
obligations under this Lease, including any assignee or sublessee, without
first exhausting Lessor’s remedies against any other person or entity
responsible therefore to Lessor, or any security held by Lessor.


 


 (e)          Each
request for consent to an assignment or subletting shall be in writing,
accompanied by information relevant to Lessor’s determination as to the
financial and operational responsibility and appropriateness and any notice of
a permitted transfer pursuant to Section 12.4 of the proposed assignee or
sublessee, including but not limited to the intended use and/or required
modification of the Premises, if any, together with a fee of $500 as
consideration for Lessor’s considering and processing said request. Lessee
agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested. (See also Paragraph 36)


 


 (f)           Any
assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment, entering into such sublease, or entering into possession of the
Premises or any portion thereof, be deemed to have assumed and agreed to
conform and comply with each and every term, covenant, condition and obligation
herein to be observed or performed by Lessee during the term of said assignment
or sublease, other than such obligations as are contrary to or inconsistent
with provisions of an assignment or sublease to which Lessor has specifically
consented to in writing.


 


 (g)          Lessor’s
consent to any assignment or subletting shall not transfer to the assignee or
sublessee any Option granted to the original Lessee by this Lease unless such
transfer is specifically consented to by Lessor in writing.; provided, however,
that the foregoing shall not apply to any permitted transfer, pursuant to Section 12.4
(See Paragraph 39.2)


 


12.3              Additional Terms and
Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by
Lessee of all or any part of the Premises and shall be deemed included in all
subleases under this Lease whether or not expressly incorporated therein:


 


 (a)          Lessee
hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent
payable on any sublease, and Lessor may collect such Rent and apply same toward
Lessee’s obligations under this Lease; provided, however, that until a Breach
shall occur in the performance of Lessee’s obligations, Lessee may collect said
Rent. In the event that the amount collected by Lessor exceeds Lessee’s then
outstanding obligations any such excess shall be refunded to Lessee. Lessor
shall not, by reason of the foregoing or any assignment of such sublease, nor
by reason of the collection of Rent, be deemed liable to the sublessee for any
failure of Lessee to perform and comply with any of Lessee’s obligations to
such sublessee. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach
exists in the performance of Lessee’s obligations under this Lease, to pay to
Lessor all Rent due and to become due under the sublease. Sublessee shall rely
upon any such notice from Lessor and shall pay all Rents to Lessor without any
obligation or right to inquire as to whether such Breach exists,
notwithstanding any claim from Lessee to the contrary.


 


 (b)          In
the event of a Breach by Lessee, Lessor may, at its option, require sublessee
to attorn to Lessor, in which event Lessor shall undertake the obligations of
the sublessor under such sublease from the time of the exercise of said option
to the expiration of such


 


14

















 


sublease; provided, however, Lessor shall not be liable for any prepaid
rents or security deposit paid by such sublessee to such sublessor or for any
prior Defaults or Breaches of such sublessor.


 


(c)           Any matter requiring the consent of the
sublessor under a sublease shall also require the consent of Lessor.


 


(d)           No sublessee shall further assign or sublet
all or any part of the Premises without Lessor’s prior written consent.


 


(e)           Lessor shall deliver a copy of any notice of
Default or Breach by Lessee to the sublessee, who shall have the right to cure
the Default of Lessee within the grace period, if any, specified in such
notice. The sublessee shall have a right of reimbursement and offset from and
against Lessee for any such Defaults cured by the sublessee.


 


12.4         Nothwithstanding anything to the contrary in
this Artcile 12, Lessee shall have the right to assign this Lease or sublet all
or a protion of the Premises, without the requirement of obtaining Lessor’s
consent, to any entity (a) with which Lessee is merged or consolidated, (b) which
acquires all or subtanially all of Lessee’s assets, or (c) which control,
is controlled by or is under common control with Lessee (collectively “Permitted
Transfers”); provided, however, that Lessee shall (i) provide written
notice of any Permitted Transfer to Lessor within ten (10) business days
after the effective date thereof, (ii) unless Lessee does not survive a
merger transaction, remain primarily liable under this Lease; and (iii) upon
Lessor’s written request provide a copy of any assignment and assumption
document to Lessor under which such transferee agrees to be bound by all the
terms and conditions of this Lease.


 


13.           Default; Breach; Remedies.


 


13.1         Default; Breach. A “Default”  is defined as a
failure by the Lessee to comply with or perform any of the terms, covenants,
conditions or Rules and Regulations under this Lease. A “Breach”  is
defined as the occurrence of one or more of the following Defaults, and the
failure of Lessee to cure such Default within any applicable grace period:


 


 (a)          The
abandonment of the Premises; or the vacating of the Premises without providing
a commercially reasonable level of security, or where the coverage of the
property insurance described in Paragraph 8.3 is jeopardized as a result
thereof, or without providing reasonable assurances to minimize potential
vandalism.


 


 (b)          The
failure of Lessee to make any payment of Rent or any Security Deposit required
to be made by Lessee hereunder, whether to Lessor or to a third party, when
due, to provide reasonable evidence of insurance or surety bond, or to fulfill
any obligation under this Lease which endangers or threatens life or property,
where such failure continues for a period of 3 business days following written
notice to Lessee.


 


 (c)          The
commission of waste, act or acts constituting public or private nuisance,
and/or an illegal activity on the Premises by Lessee, where such actions
continue for a period of 3 business days following written notice to Lessee.


 


 (d)          The
failure by Lessee to provide (i) reasonable written evidence of compliance
with Applicable Requirements, (ii) the service contracts, (iii) the
rescission of an unauthorized assignment or subletting, (iv) an Estoppel
Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under
Paragraph 41, (viii) material data safety sheets (MSDS), or (ix) any
other documentation or information which Lessor may reasonably require of
Lessee under the terms of this Lease, where any such failure continues for a
period of 10 days following written notice to Lessee.


 


 (e)          A Default
by Lessee as to the terms, covenants, conditions or provisions of this Lease,
or of the rules adopted under Paragraph 2.9 hereof, other than those
described in subparagraphs 13.1 (a), (b), (c) or (d), above, where such
Default continues for a period of 30 days after written notice; provided,
however, that if the nature of Lessee’s Default is such that more than 30 days
are reasonably required for its cure, then it shall not be deemed to be a
Breach if Lessee commences such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.


 


 (f)           The
occurrence of any of the following events: (i) the making of any general
arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor”  as
defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the
case of a petition filed against Lessee, the same is dismissed within 60 days);
(iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where such seizure is not discharged within 30 days;
provided, however, in the event that any provision of this subparagraph is
contrary to any applicable law, such provision shall be of no force or effect,
and not affect the validity of the remaining provisions.


 


 (g)          The
discovery that any financial statement of Lessee or of any Guarantor given to
Lessor was materially false.


 


 (h)          If
the performance of Lessee’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’s becoming insolvent or the subject of a bankruptcy
filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a
Guarantor’s breach of its guaranty obligation on an anticipatory basis, and
Lessee’s failure, within 60 days following written notice of any such event, to
provide written alternative assurance or security, which, when coupled with the
then existing resources of Lessee, equals or exceeds the combined financial
resources of Lessee and the Guarantors


 


15

















 


that existed at the time of execution of this Lease.


 


13.2              Remedies. If Lessee fails to perform any of its
affirmative duties or obligations, within 10 days after written notice (or in
case of an emergency, without notice), Lessor may, at its option, perform such
duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental
licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to
115% of the costs and expenses incurred by Lessor in such performance upon
receipt of an invoice therefor. In the event of a Breach, Lessor may, with or
without further notice or demand, and without limiting Lessor in the exercise
of any right or remedy which Lessor may have by reason of such Breach:


 


 (a)          Terminate Lessee’s right
to possession of the Premises by any lawful means, in which case this Lease
shall terminate and Lessee shall immediately surrender possession to Lessor. In
such event Lessor shall be entitled to recover from Lessee: (i) the unpaid
Rent which had been earned at the time of termination; (ii) the worth at the
time of award of the amount by which the unpaid rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that the Lessee proves could have been reasonably avoided; (iii) the
worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such rental
loss that the Lessee proves could be reasonably avoided; and (iv) any
other amount necessary to compensate Lessor for all the detriment proximately
caused by the Lessee’s failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom,
including but not limited to the cost of recovering possession of the Premises,
expenses of reletting, including necessary renovation and alteration of the
Premises, reasonable attorneys’ fees, and that portion of any leasing
commission paid by Lessor in connection with this Lease applicable to the
unexpired term of this Lease. The worth at the time of award of the amount
referred to in provision (iii) of the immediately preceding sentence shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of the District within which the Premises are located at the time
of award plus one percent. Efforts by Lessor to mitigate damages caused by
Lessee’s Breach of this Lease shall not waive Lessor’s right to recover damages
under Paragraph 12. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding any unpaid Rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay
rent or quit, or to perform or quit given to Lessee under the unlawful detainer
statute shall also constitute the notice required by Paragraph 13.1. In such
case, the applicable grace period required by Paragraph 13.1 and the unlawful
detainer statute shall run concurrently, and the failure of Lessee to cure the
Default within the greater of the two such grace periods shall constitute both
an unlawful detainer and a Breach of this Lease entitling Lessor to the
remedies provided for in this Lease and/or by said statute.


 


 (b)          Continue
the Lease and Lessee’s right to possession and recover the Rent as it becomes
due, in which event Lessee may sublet or assign, subject only to reasonable limitations.
Acts of maintenance, efforts to relet, and/or the appointment of a receiver to
protect the Lessor’s interests, shall not constitute a termination of the
Lessee’s right to possession.


 


 (c)          Pursue
any other remedy now or hereafter available under the laws or judicial
decisions of the state wherein the Premises are located. The expiration or
termination of this Lease and/or the termination of Lessee’s right to
possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee’s occupancy of the Premises.


 


13.3         Inducement Recapture. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee’s entering into
this Lease, all of which concessions are hereinafter referred to as “Inducement Provisions”,  shall
be deemed conditioned upon Lessee’s full and faithful performance of all of the
terms, covenants and conditions of this Lease. Upon Breach of this Lease by
Lessee, any such Inducement Provision shall automatically be deemed deleted
from this Lease and of no further force or effect, and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or paid by Lessor
under such an Inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee.
The acceptance by Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not be deemed a waiver by Lessor of the
provisions of this paragraph unless specifically so stated in writing by Lessor
at the time of such acceptance.


 


13.4         Late Charges. Lessee hereby acknowledges that late payment
by Lessee of Rent will cause Lessor to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain. Such
costs include, but are not limited to, processing and accounting charges, and
late charges which may be imposed upon Lessor by any Lender. Accordingly, if
any Rent shall not be received by Lessor within 5 days after such amount shall
be due, then, without any requirement for notice to Lessee, Lessee shall
immediately pay to Lessor a one-time late charge equal to 10% of each such
overdue amount or $100, whichever is greater. The parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason of such late payment. Acceptance of such late charge by
Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with
respect to such overdue amount, nor prevent the exercise of any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for 3 consecutive installments of
Base Rent, then notwithstanding any provision of this Lease to the contrary,
Base Rent shall, at Lessor’s option, become due and payable quarterly in
advance.


 


13.5         Interest. Any monetary payment due Lessor hereunder,
other than late charges, not received by Lessor, when due as to scheduled
payments (such as Base Rent) or within 30 days following the date on which it
was due for non-scheduled payment, shall bear interest from the date when due,
as to scheduled payments, or the 31st day after it was due as to non-scheduled
payments. The interest (“Interest”) charged shall be computed at the rate of
10% per annum but shall not exceed the maximum rate allowed by law. Interest
is payable in addition to the potential late charge provided for in Paragraph
13.4.


 


16
















 


13.6              Breach by Lessor.


 


(a)           Notice of Breach. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a
reasonable time shall in no event be less than 30 days after receipt by Lessor,
and any Lender whose name and address shall have been furnished Lessee in
writing for such purpose, of written notice specifying wherein such obligation
of Lessor has not been performed; provided, however, that if the nature of
Lessor’s obligation is such that more than 30 days are reasonably required for
its performance, then Lessor shall not be in breach if performance is commenced
within such 30 day period and thereafter diligently pursued to completion.


 


(b)           Performance by Lessee on
Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within 30 days after receipt of
said notice, or if having commenced said cure they do not diligently pursue it
to completion, then Lessee may elect to cure said breach at Lessee’s expense
and offset from Rent the actual and reasonable cost to perform such cure,
provided however, that such offset shall not exceed an amount equal to the
greater of one month’s Base Rent or the Security Deposit, reserving Lessee’s
right to reimbursement from Lessor for any such expense in excess of such
offset. Lessee shall document the cost of said cure and supply said
documentation to Lessor.


 


14.           Condemnation. If the Premises or any portion thereof are
taken under the power of eminent domain or sold under the threat of the
exercise of said power (collectively “Condemnation”), this Lease shall terminate as to the part taken as of the date
the condemning authority takes title or possession, whichever first occurs. If
more than 10% of the floor area of the Unit, or more than 25% of Lessee’s
Reserved Parking Spaces, is taken by Condemnation, Lessee may, at Lessee’s
option, to be exercised in writing within 10 days after Lessor shall have given
Lessee written notice of such taking (or in the absence of such notice, within
10 days after the condemning authority shall have taken possession) terminate
this Lease as of the date the condemning authority takes such possession. If
Lessee does not terminate this Lease in accordance with the foregoing, this
Lease shall remain in full force and effect as to the portion of the Premises
remaining, except that the Base Rent shall be reduced in proportion to the
reduction in utility of the Premises caused by such Condemnation. Condemnation
awards and/or payments shall be the property of Lessor, whether such award
shall be made as compensation for diminution in value of the leasehold, the
value of the part taken, or for severance damages; provided, however, that
Lessee shall be entitled to any compensation paid by the condemnor for Lessee’s
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.


 


15.           Brokerage Fees.


 


15.1         Additional Commission.  In addition to the payments owed pursuant to Paragraph 1.10 above, and
unless Lessor and the Brokers otherwise agree in writing, Lessor agrees that: (a) if
Lessee exercises any Option, (b) if Lessee or anyone affiliated with
Lessee acquires from Lessor any rights to the Premises or other premises owned
by Lessor and located within the Project, (c) if Lessee remains in
possession of the Premises, with the consent of Lessor, after the expiration of
this Lease, or (d) if Base Rent is increased, whether by agreement or
operation of an escalation clause herein, then, Lessor shall pay Brokers a fee in
accordance with the schedule of the Brokers in effect at the time of the
execution of this Lease.


 


15.2         Assumption of Obligations.  Any buyer or transferee of Lessor’s interest in this Lease shall be
deemed to have assumed Lessor’s obligation hereunder. Brokers shall be third
party beneficiaries of the provisions of Paragraphs 1.10,15, 22 and 31. If
Lessor fails to pay to Brokers any amounts due as and for brokerage fees
pertaining to this Lease when due, then such amounts shall accrue Interest. In
addition, if Lessor fails to pay any amounts to Lessee’s Broker when due,
Lessee’s Broker may send written notice to Lessor and Lessee of such failure
and if Lessor fails to pay such amounts within 10 days after said notice,
Lessee shall pay said monies to its Broker and offset such amounts against
Rent. In addition, Lessee’s Broker shall be deemed to be a third party
beneficiary of any commission agreement entered into by and/or between Lessor
and Lessor’s Broker for the limited purpose of collecting any brokerage fee
owed.


 


15.3         Representations and
Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the other that it has
had no dealings with any person, firm, broker or finder (other than the
Brokers, if any) in connection with this Lease, and that no one other than said
named Brokers is entitled to any commission or finder’s fee in connection
herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend
and hold the other harmless from and against liability for compensation or
charges which may be claimed by any such unnamed broker, finder or other
similar party by reason of any dealings or actions of the indemnifying Party,
including any costs, expenses, attorneys’ fees reasonably incurred with respect
thereto.


 


16.           Estoppel Certificates.


 


(a)           Each Party (as “Responding Party”) shall within 10
days after written notice from the other Party (the “Requesting Party”) execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current “Estoppel Certificate” form published by the AIR Commercial
Real Estate Association, plus such additional information, confirmation and/or
statements as may be reasonably requested by the Requesting Party.


 


(b)           If the Responding Party shall fail to execute
or deliver the Estoppel Certificate within such 10 day period, the Requesting
Party may execute an Estoppel Certificate stating that: (i) the Lease is
in full force and effect without modification except as may be represented by
the Requesting Party, (ii) there are no uncured defaults in the Requesting
Party’s performance, and (iii) if Lessor is the Requesting Party, not more
than one month’s rent has been paid in advance. Prospective purchasers and
encumbrancers may rely upon the Requesting Party’s Estoppel Certificate, and
the


 


17

















 


Responding Party shall be estopped from denying the truth of the facts
contained in said Certificate.


 


(c)           If Lessor desires to finance, refinance, or
sell the Premises, or any part thereof, Lessee and all Guarantors shall deliver
to any potential lender or purchaser designated by Lessor such financial
statements as may be reasonably required by such lender or purchaser, including
but not limited to Lessee’s financial statements for the past 3 years. All such
financial statements shall be received by Lessor and such lender or purchaser
in confidence and shall be used only for the purposes herein set forth.


 


17.           Definition of Lessor. The term “Lessor”  as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or,
if this is a sublease, of the Lessee’s interest in the prior lease. In the
event of a transfer of Lessor’s title or interest in the Premises or this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor. Upon such transfer or,
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed
by the Lessor shall be binding only upon the Lessor as hereinabove defined.


 


18.           Severability. The invalidity of any provision of this
Lease, as determined by a court of competent jurisdiction, shall in no way
affect the validity of any other provision hereof.


 


19.           Days. Unless otherwise specifically indicated to the
contrary, the word “days”
as used in this Lease shall mean and refer to calendar days.


 


20.           Limitation on Liability. The obligations of Lessor under this Lease
shall not constitute personal obligations of Lessor, or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease, and shall not seek recourse against Lessor’s
partners, members, directors, officers or shareholders, or any of their
personal assets for such satisfaction.


 


21.           Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.


 


22.           No Prior or Other Agreements;
Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the
nature, quality, character and financial responsibility of the other Party to
this Lease and as to the use, nature, quality and character of the Premises.
Brokers have no responsibility with respect thereto or with respect to any
default or breach hereof by either Party.


 


23.           Notices.


 


23.1         Notice Requirements. All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party’s
signature on this Lease shall be that Party’s address for delivery or mailing
of notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee’s taking possession of the
Premises, the Premises shall constitute Lessee’s address for notice. A copy of
all notices to Lessor shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter designate
in writing.


 


23.2         Date of Notice. Any notice sent by registered or certified
mail, return receipt requested, shall be deemed given on the date of delivery
shown on the receipt card, or if no delivery date is shown, the postmark
thereon. If sent by regular mail the notice shall be deemed given 72 hours
after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given 24 hours after delivery of
the same to the Postal Service or courier. Notices transmitted by facsimile
transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt (confirmation report from fax machine is sufficient), provided
a copy is also delivered via delivery or mail. If notice is received on a
Saturday, Sunday or legal holiday, it shall be deemed received on the next
business day.


 


24.           Waivers.


 


(a)           No waiver by Lessor of the Default or Breach
of any term, covenant or condition hereof by Lessee, shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent Default
or Breach by Lessee of the same or of any other term, covenant or condition
hereof. Lessor’s consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Lessor’s consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent.


 


(b)           The acceptance of Rent by Lessor shall not be
a waiver of any Default or Breach by Lessee. Any payment by Lessee may be
accepted by Lessor on account of moneys or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.


 


(c)           THE PARTIES AGREE THAT THE TERMS OF THIS
LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE
THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE
IS INCONSISTENT WITH THIS LEASE.


 


18

















 


25.           Disclosures Regarding The
Nature of a Real Estate Agency Relationship.


 


(a)           When entering into a discussion with a real
estate agent regarding a real estate transaction, a Lessor or Lessee should
from the outset understand what type of agency relationship or representation
it has with the agent or agents in the transaction. Lessor and Lessee
acknowledge being advised by the Brokers in this transaction, as follows:


 


(i)            Lessor’s Agent. A Lessor’s agent under a listing agreement
with the Lessor acts as the agent for the Lessor only. A Lessor’s agent or
subagent has the following affirmative obligations: To the Lessor: A
fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with
the Lessor. To the Lessee and the Lessor: (a) Diligent exercise of
reasonable skills and care in performance of the agent’s duties. (b) A
duty of honest and fair dealing and good faith. (c) A duty to disclose all
facts known to the agent materially affecting the value or desirability of the
property that are not known to, or within the diligent attention and
observation of, the Parties. An agent is not obligated to reveal to either
Party any confidential information obtained from the other Party which does not
involve the affirmative duties set forth above.


 


(ii)           Lessee’s Agent. An agent can agree to act as agent for the
Lessee only. In these situations, the agent is not the Lessor’s agent, even if
by agreement the agent may receive compensation for services rendered, either
in full or in part from the Lessor. An agent acting only for a Lessee has the
following affirmative obligations. To the Lessee: A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To
the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and
care in performance of the agent’s duties. (b) A duty of honest and fair
dealing and good faith. (c) A duty to disclose all facts known to the
agent materially affecting the value or desirability of the property that are
not known to, or within the diligent attention and observation of, the Parties.
An agent is not obligated to reveal to either Party any confidential
information obtained from the other Party which does not involve the
affirmative duties set forth above.


 


(iii)          Agent Representing Both Lessor
and Lessee. A real estate
agent, either acting directly or through one or more associate licenses, can
legally be the agent of both the Lessor and the Lessee in a transaction, but
only with the knowledge and consent of both the Lessor and the Lessee. In a
dual agency situation, the agent has the following affirmative obligations to
both the Lessor and the Lessee: (a) A fiduciary duty of utmost care,
integrity, honesty and loyalty in the dealings with either Lessor or the Lessee.
(b) Other duties to the Lessor and the Lessee as stated above in
subparagraphs (i) or (ii). In representing both Lessor and Lessee, the
agent may not without the express permission of the respective Party, disclose
to the other Party that the Lessor will accept rent in an amount less than that
indicated in the listing or that the Lessee is willing to pay a higher rent
than that offered. The above duties of the agent in a real estate transaction
do not relieve a Lessor or Lessee from the responsibility to protect their own
interests. Lessor and Lessee should carefully read all agreements to assure
that they adequately express their understanding of the transaction. A real
estate agent is a person qualified to advise about real estate. If legal or tax
advice is desired, consult a competent professional.


 


(b)           Brokers have no responsibility with respect
to any Default or Breach hereof by either Party. The Parties agree that no
lawsuit or other legal proceeding involving any breach of duty, error or
omission relating to this Lease may be brought against Broker more than one
year after the Start Date and that the liability (including court costs and
attorneys’ fees), of any Broker with respect to any such lawsuit and/or legal
proceeding shall not exceed the fee received by such Broker pursuant to this
Lease; provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or willful misconduct
of such Broker.


 


(c)           Buyer and Seller agree to identify to Brokers
as “Confidential” any communication
or information given Brokers that is considered by such Party to be
confidential.


 


26.           No Right To Holdover. Lessee has no right to retain possession of
the Premises or any part thereof beyond the expiration or termination of this
Lease. In the event that Lessee holds over, then the Base Rent shall be
increased to 150% of the Base Rent applicable immediately preceding the
expiration or termination. Nothing contained herein shall be construed as
consent by Lessor to any holding over by Lessee.


 


27.           Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.


 


28.           Covenants and Conditions;
Construction of Agreement. All
provisions of this Lease to be observed or performed by Lessee are both
covenants and conditions. In construing this Lease, all headings and titles are
for the convenience of the Parties only and shall not be considered a part of
this Lease. Whenever required by the context, the singular shall include the
plural and vice versa. This Lease shall not be construed as if prepared by one
of the Parties, but rather according to its fair meaning as a whole, as if both
Parties had prepared it.


 


29.           Binding Effect; Choice of
Law. This Lease shall be
binding upon the parties, their personal representatives, successors and
assigns and be governed by the laws of the State in which the Premises are
located. Any litigation between the Parties hereto concerning this Lease shall
be initiated in the county in which the Premises are located.


 


30.           Subordination; Attornment;
Non-Disturbance.


 


30.1         Subordination. This Lease and any Option granted hereby
shall be subject and subordinate to any ground lease, mortgage, deed of trust,
or other hypothecation or security device (collectively, “Security Device”),
now or hereafter placed upon the Premises, to any and all advances made on the
security thereof, and to all renewals, modifications, and extensions thereof.
Lessee agrees that the holders of any such Security Devices (in this Lease
together referred to as “Lender”) shall have no liability or obligation to perform
any of the obligations of Lessor under this Lease. Any Lender may elect to have
this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this
Lease and such Options shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation or recordation thereof.


 


30.2         Attornment. In the event that Lessor transfers title to
the Premises, or the Premises are acquired by another upon the foreclosure or
termination of a Security Devise to which this Lease is subordinated (i) Lessee
shall, subject to the non-disturbance provisions of Paragraph 30.3,


 


19

















 


attorn to such new owner, and upon request, enter into a new lease,
containing all of the terms and provisions of this Lease, with such new owner
for the remainder of the term hereof, or, at the election of the new owner,
this Lease will automatically become a new lease between Lessee and such new
owner, and (ii) Lessor shall thereafter be relieved of any further
obligations hereunder and such new owner shall assume all of Lessor’s obligations,
except that such new owner shall not: (a) be liable for any act or
omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (b) be subject to any offsets or defenses which
Lessee might have against any prior lessor, (c) be bound by prepayment of
more than one month’s rent, or (d) be liable for the return of any
security deposit paid to any prior lessor which was not paid or credited to
such new owner.


 


30.3         Non-Disturbance. With respect to Security Devices entered into
by Lessor after the execution of this Lease, Lessee’s subordination of this
Lease shall be subject to receiving a commercially reasonable non-disturbance
agreement (a “Non-Disturbance
Agreement”) from the Lender which Non-Disturbance Agreement provides
that Lessee’s possession of the Premises, and this Lease, including any options
to extend the term hereof, will not be disturbed so long as Lessee is not in
Breach hereof and attorns to the record owner of the Premises. Further, within
60 days after the execution of this Lease, Lessor shall, if requested by
Lessee, use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.


 


30.4         Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with
a sale, financing or refinancing of the Premises, Lessee and Lessor shall
execute such further writings as may be reasonably required to separately
document any subordination, attornment and/or Non-Disturbance Agreement
provided for herein.


 


31.           Attorneys’ Fees. If any Party or Broker
brings an action or proceeding involving the Premises whether founded in tort,
contract or equity, or to declare rights hereunder, the Prevailing Party (as
hereafter defined) in any such proceeding, action, or appeal thereon, shall be
entitled to reasonable attorneys’ fees. Such fees may be awarded in the same
suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term, “Prevailing Party”  shall include,
without limitation, a Party or Broker who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement, judgment,
or the abandonment by the other Party or Broker of its claim or defense. The
attorneys’ fees award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys’ fees
reasonably incurred. In addition. Lessor shall be entitled to attorneys’ fees,
costs and expenses incurred in the preparation and service of notices of
Default and consultations in connection therewith, whether or not a legal
action is subsequently commenced in connection with such Default or resulting
Breach ($200 is a reasonable minimum per occurrence for such services and
consultation).


 


32.           Lessor’s Access; Showing
Premises; Repairs. Lessor
and Lessor’s agents shall have the right to enter the Premises at any time, in
the case of an emergency, and otherwise at reasonable times after reasonable
prior notice for the purpose of showing the same to prospective purchasers,
lenders, or tenants, and making such alterations, repairs, improvements or
additions to the Premises as Lessor may deem necessary or desirable and the
erecting, using and maintaining of utilities, services, pipes and conduits
through the Premises and/or other premises as long as there is no material
adverse effect on Lessee’s use of the Premises. All such activities shall be
without abatement of rent or liability to Lessee.


 


33.           Auctions. Lessee shall not conduct, nor permit to be
conducted, any auction upon the Premises without Lessor’s prior written
consent. Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.


 


34.           Signs. Lessor may place on the Premises ordinary “For Sale” signs at any time and
ordinary “For Lease” signs
during the last 6 months of the term hereof. Except for ordinary “For Sublease” signs which may be
placed only on the Premises, Lessee shall not place any sign upon the Project
without Lessor’s prior written consent. All signs must comply with all
Applicable Requirements.


 


35.           Termination; Merger. Unless specifically stated otherwise in
writing by Lessor, the voluntary or other surrender of this Lease by Lessee,
the mutual termination or cancellation hereof, or a termination hereof by
Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, that Lessor may elect to
continue any one or all existing subtenancies. Lessor’s failure within 10 days
following any such event to elect to the contrary by written notice to the
holder of any such lesser interest, shall constitute Lessor’s election to have
such event constitute the termination of such interest.


 


36.           Consents. Except as otherwise provided herein, wherever
in this Lease the consent of a Party is required to an act by or for the other
Party, such consent shall not be unreasonably withheld or delayed. Lessor’s
actual reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including but not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor. Lessor’s consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular condition to Lessor’s consent
shall not preclude the imposition by Lessor at the time of consent of such
further or other conditions as are then reasonable with reference to the
particular matter for which consent is being given. In the event that either
Party disagrees with any determination made by the other hereunder and
reasonably requests the reasons for such determination, the determining party
shall furnish its reasons in writing and in reasonable detail within 10
business days following such request.


 


20

















 


37.           Guarantor.


 


37.1              Execution. The Guarantors, if any, shall each execute a
guaranty in the form most recently published by the AIR Commercial Real Estate
Association.


 


37.2              Default. It shall constitute a Default of the Lessee
if any Guarantor fails or refuses, upon request to provide: (a) evidence of
the execution of the guaranty, including the authority of the party signing on
Guarantor’s behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements,
(c) an Estoppel Certificate, or (d) written confirmation that the
guaranty is still in effect.


 


38.      Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessee’s part to be observed and
performed under this Lease, Lessee shall have quiet possession and quiet
enjoyment of the Premises during the term hereof.


 


39.      Options. If Lessee is granted an option, as defined below, then the following provisions
shall apply.


 


39.1              Definition. “Option”  shall mean: (a) the right to extend the
term of or renew this Lease or to extend or renew any lease that Lessee has on
other property of Lessor; (b) the right of first refusal or first offer to
lease either the Premises or other property of Lessor; (c) the right to
purchase or the right of first refusal to purchase the Premises or other
property of Lessor.


 


39.2              Options Personal To Original
Lessee. Any Option granted
to Lessee in this Lease is personal to the original Lessee, and any transferee
under a permitted transfer, pursuant to Section 12.4, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.


 


39.3              Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised
unless the prior Options have been validly exercised.


 


39.4              Effect of Default on
Options.


 


(a)           Lessee shall have no right to exercise an
Option: (i) during the period commencing with the giving of any notice of
Default and continuing until said Breach or Default is cured, or (ii) during
the period of time any Rent is unpaid (without regard to whether notice thereof
is given Lessee), (iii) during the time Lessee is in Breach of this
Lease, or (iv) in the event that Lessee has been given 3 or more notices
of separate Default, whether or not the Defaults are cured, during the 12 month
period immediately preceding the exercise of the Option.


 


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


 


(c)           An Option shall terminate and be of no
further force or effect, notwithstanding Lessee’s due and timely exercise of
the Option, if, after such exercise and prior to the commencement of the
extended term or completion of the purchase, (i) Lessee fails to pay Rent
for a period of 30 days after such Rent becomes due (without any necessity of
Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this
Lease.


 


40.      Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder
does not include the cost of guard service or other security measures, and that
Lessor shall have no obligation whatsoever to provide same. Lessee assumes all
responsibility for the protection of the Premises, Lessee, its agents and
invitees and their property from the acts of third parties.


 


41.      Reservations. Lessor reserves the right: (i) to grant, without the consent or
joinder of Lessee, such easements, rights and dedications that Lessor deems
necessary, (ii) to cause the recordation of parcel maps and restrictions,
and (iii) to create and/or install new utility raceways, so long as such
easements, rights, dedications, maps, restrictions, and utility raceways do not
unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate such rights.


 


42.      Performance Under Protest. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a
voluntary payment and there shall survive the right on the part of said Party
to institute suit for recovery of such sum. If it shall be adjudged that there
was no legal obligation on the part of said Party to pay such sum or any part
thereof, said Party shall be entitled to recover such sum or so much thereof as
it was not legally required to pay. A Party who does not initiate suit for the
recovery of sums paid “under protest”
within 6 months shall be deemed to have waived its right to protest such
payment.


 


43.      Authority; Multiple Parties; Execution.


 


(a)           If either Party hereto is a corporation,
trust, limited liability company, partnership, or similar entity, each
individual executing this Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
its behalf . Each Party shall, within 30 days after request, deliver to the
other Party satisfactory evidence of such authority.


 


(b)           If this Lease is executed by more than one
person or entity as “Lessee”,
each such person or entity shall be jointly and severally liable hereunder. It
is agreed that any one of the named Lessees shall be empowered to execute any
amendment to this Lease, or other document ancillary thereto and bind all of
the named Lessees, and Lessor may rely on the same as if all of the named
Lessees had executed such document.


 


(c)           This Lease may be executed by the Parties in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.


 


44.      Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the


 


21

















 


typewritten
or handwritten provisions.


 


45.      Offer. Preparation of this Lease by either party or their agent and submission
of same to the other Party shall not be deemed an offer to lease to the other
Party. This Lease is not intended to be binding until executed and delivered by
all Parties hereto.


 


46.      Amendments. This Lease may be modified only in writing, signed by the Parties in
interest at the time of the modification. As long as they do not materially
change Lessee’s obligations hereunder, Lessee agrees to make such reasonable
non-monetary modifications to this Lease as may be reasonably required by a
Lender in connection with the obtaining of normal financing or refinancing of
the Premises.


 


47.      Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE
PROPERTY OR ARISING OUT OF THIS AGREEMENT.


 


48.      Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or
the Arbitration of all disputes between the Parties and/or Brokers arising out
of this Lease o is x is
not attached to this Lease.


 


49.      Americans with Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent upon Lessee’s specific use of the Premises,
Lessor makes no warranty or representation as to whether or not the Premises
comply with ADA or any similar legislation. In the event that Lessee’s use of
the Premises requires modifications or additions to the Premises in order to be
in ADA compliance, Lessee agrees to make any such necessary modifications
and/or additions at Lessee’s expense.


 


50.      Renewal Options: Three (3) five (5) year options to renew, with base rental for each option term to be established at fair market value,
pursuant to Exhibit “C”. In
no case shall the base rental
rate be less than the base rental rate in effect immediately prior to the commencement of such option
term. The option may only be exercised
by providing Landlord with irrevocable written notice not less than 120 days and not more than 150 days, prior
to expiration.


 


51.      Restrooms/Common Areas: Lessee
shall be responsible to
maintain, at its sole cost, any
common areas or restrooms used by AXT, until such time as any portion of the remaining vacant space is re-leased.


 


52.      Termination of Existing Lease: As long as Lessee and Lessor enter into
a new lease, as contemplated herein, Lessor will accept termination of existing lease per Lessee’s termination notice, which was not executed or delivered in a timely
manner, effective March 10, 2008,
All the provisions of the existing lease shall apply, including forfeiture
of the existing lease deposit, per Article 53, and Lessee shall continue to holdover the entire building on a
month-to-month basis until this new lease starts on December 1, 2008;
provided, however, that any such holding over shall be at the
same rental rates payable under such terminated lease, without any holdover premium, which rates shall
also be applicable to any
holding over by Lessee in
portions of the building intended to be
surrendered by Lessee to Lessor on or before December 1, 2008,
limited to a maximum of ninety (90)
days, after which the holover premium
in such lease shall be applicable.


 


53.      Termination Agreement: Lessee may terminate the Lease, effective November 30, 2013, by
providing written notice to Lessor via registered mail and hand delivery, and
received no later than 3:00 pm
on July 1, 2013 and no sooner than
May 1, 2013. Lessee shall provide, with the
termination notice, a check in
the amount of $180,992.24 for the unamortized tenant improvements plus $142,391
as a termination penalty, totaling $323,383.24. In addition, Lessee will
forfeit $40,00 of the new $50,000 security deposit when
Lessee vacates. Should Lessee not vacate by November 30, 2013, after delivering timely notice then
the holdover provisions of the lease shall apply until Lessee vacates and then the tenancy shall be month-to-month and Lessee shall be obligated to pay the rent and
shall not be entitled to any
credits or refunds of any of the termination or unamortized tenant improvement
monies paid by Lessee to Lessor with the delivery of Lessee’s Termination
Notice. If Lessee does not give
timely notice to terminate, as described herein, then Lessee shall no longer have the option to terminate
the lease. However, if Lessee does not terminate the lease,
as described herein, then as
long as Lessee is not in default on
any of the terms and conditions of the lease, Lessee shall be entitled to a base rent credit for
two months rent, the first month being April 2014 and the


 


22

















 


second
being April 2015, in addition to Lessor contributing $97,160 to Lessee as a space refresher allowance, to be used at Lessee’s sole discretion, to be paid by Lessor
within 30 days of Lessee’s written notice, anytime during the sixty-first month
of the Lease Term.


 


54.      Annual
Increases: Rent shall increase by 4.5% per annum, commencing with Year 2 of the Lease Term as follows: Year 2: $20,887 per month; Year 3: $21,826
per month; Year 4: $22,809 per month; Year 5: $23,835 per month; Year 6:
$24,908; Year 7: $26,028.


 


55.      Parking: There are +/-200 parking
spaces for the entire building.
Lessee’s allotment of 96 parking spaces is based on Lessee’s prorata share (48%) of occupancy of the entire
building. Lessee may use available, additional parking for its employees and
guests; however, Lessor shall
have the right to restrict and reserve
parking spaces to accommodate new
tenant(s) based on their
prorata share of occupancy. All
parking shall be subject to all
applicable governmental rules and regulations.


 


56.      Tenant
Improvements: Lessor shall provide turnkey buildout pursuant to plans, dated April 11,
2008, and attached hereto as Exhibit A.
Lessor shall undertake its best efforts to complete such work on or before December 1, 2008, and if such work is subtantially
complete prior to such time Lessee shall be certified to early entry and use of the Premises without acceleration of the Commencement Date. Lessee is solely
responsible for the cost and installation of furniture, modular walls,
telecommunications equipment and any additional improvements not shown in Exhibit A,
and any compliance with any requirements due to use of hazardous or toxic
materials. Lessor shall incur all other costs as described in Exhibit A.
For the purpose of amortization and lease
termination the parties agree
to a fixed amount of $575,000, whether
the cost is more or less, and shall amortize such costs into the base rent at
4% interest over 7 years. Therefore, concurrent with the monthly rent, Lessee
shall pay an additional $7,859,56 per month, and shall have the obligation to
pay the unamortized balance if the Lease is terminated per Article #53.
This payment, along the first month’s rent, shall be due monthly, commencing December 1, 2008, without
offset, regardless of whether the tenant improvement work is completed,
and shall be subject to late
fees, interest and any applicable rental obligations, pursuant to the Lease, if the rent is not paid by the due date; provided, however, that Lessee’s obligation to commence making such payments shall
not arrive until completion of Lessor’s work and delivery of the Premises to Lessee, and in case of any delay in the
commencement of such payments by
Lessee, any such abated installments shall be paid by Lessee as a ‘balloon payment” together with the final
installment paid by Lessee.


 


LESSOR AND
LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION
CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND
VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.


 


ATTENTION:
NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES
ARE URGED TO:


 


1.             SEEK ADVICE OF
COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.


 


2.             RETAIN APPROPRIATE
CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES, SAID
INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF
HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE
CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH
DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.


 


WARNING:
IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS
OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE
IN WHICH THE PREMISES ARE LOCATED.


 


The parties
hereto have executed this Lease at the place and on the dates specified above
their respective signatures.




	
  Executed at:

  	
  /s/ [ILLEGIBLE]

  	
   

  	
  Executed at:

  	
  /s/ [ILLEGIBLE]

  






 


23

















 


	
  On:

  	
  July 2, 2008

  	
   

  	
  On:

  	
  July 2, 2008

  
	
   

  	
   

  	
   

  
	
  By
  LESSOR:

  	
   

  	
  By
  LESSEE:

  
	
  T. Drive
  Partners, LP

  	
   

  	
  AXT., Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Len
  Epstein

  	
   

  	
  By:

  	
  /s/ Wilson
  Cheung

  
	
  Name Printed:

  	
  Len Epstein

  	
   

  	
  Name
  Printed:

  	
  Wilson
  Cheung

  
	
  Title:

  	
  Managing
  General Partner

  	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name
  Printed:

  	
   

  	
   

  	
  Name
  Printed:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Address:

  	
  300 Frank H.
  Ogawa Plaza, Suite 340

  	
   

  	
  Address:

  	
  4281
  Technology Drive

  
	
  Oakland, CA
  94612

  	
   

  	
  Fremont, CA
  94538

  
	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (510)
  268-8500

  	
   

  	
  Telephone:

  	
  (510)
  638-5900

  
	
  Facsimile:

  	
  (510)
  834-5380

  	
   

  	
  Facsimile:

  	
  (510)
  438-4793

  
	
  Federal ID
  No:

  	
   

  	
   

  	
  Federal ID
  No:

  	
   

  
	
   

  	
   

  	
   

  
	
  BROKER:

  	
   

  	
  BROKER:

  
	
  N/A

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attn:

  	
   

  	
   

  	
  Attn:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (      )

  	
   

  	
  Telephone:

  	
  (      )

  
	
  Facsimile:

  	
  (      )

  	
   

  	
  Facsimile:

  	
  (      )

  
	
  Email:

  	
   

  	
   

  	
  Email:

  	
   

  
	
  Federal ID
  No:

  	
   

  	
   

  	
  Federal ID
  No:

  	
   

  
																					



 


NOTICE:
These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite 800,
Los Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.: (213)
687-8616.


 


©Copyright 1999 By AIR Commercial Real Estate
Association.


 


All rights reserved. No part of these works
may be reproduced in any form without permission in writing.


 


24
















 





 

















 





 

















 





 

















 





 

















 





 

















 





 

















 





 

















 





 
















 


EXHIBIT B – (Work Letter)

TENANT IMPROVEMENTS For 4281 Technology Drive, Fremont, CA


 


Attached to and made a part of the Lease, dated
June 26, 2008, between T. Drive Partners, LP, (“Lessor”),

and AXT, Inc, (“Lessee”)


 


1.                                       Lessor’s obligation to construct the Tenant
improvements in the Premises is conditioned upon Lessor being able to obtain
any and all permits for the construction of the leasehold improvements in the
Premises as shown on the Final Plans known as Exhibit A. Upon lease
signing, Lessor shall commence seeking from all appropriate governmental
agencies all such required permits. If Lessor is unable to obtain such permits,
as provided in the preceding paragraph, then the parties agree to modify the
Final Plans to the extent necessary to enable Lessor to obtain all required
permits.


 


2.                                       Upon the issuance of all required permits,
Lessor at its sole cost and expense (subject to the terms and provisions of
Section 3 below) shall perform improvements to the Premises in accordance
with the architectural plans dated 4/11/08 and attached as Exhibit A,
using Building standard methods, materials and finishes. The improvements to be
performed in accordance with Exhibit A are hereinafter referred to as the “Tenant Improvements”, Lessor shall enter into a direct
contract for the Tenant Improvements with a general contractor selected by
Lessor. In addition, Lessor shall have the right to select and/or approve of
any subcontractors used in connection with the Tenant Improvements.
Notwithstanding anything to the contrary contained herein or in the Lease,
Lessor shall provide Lessee with notice (which notice may be oral or written)
of Lessor’s intent to commence the Tenant Improvements, and not later than
three (3) days following the date of such notice by Lessor, Lessee shall
remove, at Lessee’s sole cost and expense all of Lessee’s furniture, fixtures
and other personal property located within the effected Premises (collectively,
“Lessee’s Property”) from the floors and walls of the effected Premises in a
manner reasonably satisfactory to Lessor in order to enable Lessor to perform
the Tenant Improvements. Lessee shall move such Lessee’s Property back into the
Premises at Lessee’s sole cost and expense only at such time that Lessor has
notified Lessee that the Tenant Improvements (or the portion thereof affected
by the placement of Lessee’s Property) has been completed. Lessee hereby
acknowledges and agrees that Lessor shall have no obligation to move any of
Lessee’s Property and shall not commence any of the Tenant Improvements until
such Lessee’s Property is removed by Lessee in accordance with this
Section 2.


 


3.                                       Any other work and upgrades requested by
Lessee, subject to Lessor’s approval, shall be at Lessee’s sole cost and
expense, plus any applicable state sales or use tax thereon, payable upon
demand as additional rent under the Lease. Lessee shall be responsible for any
delay in completion of the Tenant Improvements resulting from any such other
work and upgrades requested or performed by Lessee, or any failure by Lessee to
remove Lessee’s Property from the Premises in accordance with Section 1
above. Any subsequent change, modification or alteration to any
previously-approved plans requested by Lessee shall be processed by Lessor’s
project architect, and any additional charges, expenses or costs related
thereto, including the project architect’s fees, and administrative fees of 5%
of the cost, shall be at the sole cost and expense of Lessee. Lessor shall have
the right to demand payment for any such change, modification or alteration
prior to Lessor’s performance of any work in the Premises. No such change,
modification or alteration to any previously-approved plans shall be made
without the written consent of Lessor after written request by Lessee. Lessor
shall not be obligated to consent to any requested change, modification or
alteration to any previously-approved plans if Lessor


 


	
   

  	
    

  
	
   

  	
  Initials

  



 


A-1

















 


unreasonably
expects that such change, modification or alteration will delay the completion
of the construction of the leasehold improvements in the Premises as shown on
Exhibit A.


 


4.                                       Lessor’s supervision or performance of any
additional work for or on behalf of Lessee shall not be deemed to be a
representation by Lessor that such work complies with applicable insurance
requirements, building codes, ordinances, laws or regulations or that the
improvements constructed will be adequate for Lessee’s use.


 


5.                                       Lessor and Lessee agree to cooperate with
each other in order to enable the Tenant Improvements to be performed in a
timely manner and with as little inconvenience to the operation of Lessee’s
business as is reasonably possible. Notwithstanding anything herein to the
contrary, any delay in the completion of the Tenant Improvements or
inconvenience suffered by Lessee during the performance of the Tenant
Improvements shall subject Lessor to any liability for any loss or damage
resulting therefrom or entitle Lessee to any credit, abatement, offests or
adjustment of rent or other sums payable under the Lease as long as Lessor or
its agents are acting in a reasonable and professional manner.


 


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


 


7.                                       In the event of disputes the project
architect shall have final say over all construction disputes regarding
interpretation and construction of the premises as described in Exhibit A.


 


8.                                       The following are excluded from Lessor’s
obligations:


 


a)              Telephone wiring, instruments or equipment.
Wall boxes and pull strings, per Exhibit A, are provided.


 


b)             Data conduits, outlets or wiring.


 


9.                                       Lessee agrees that upon Lessor’s substantial
completion of the construction of the leasehold improvements in the Premises as
set forth in Exhibit A and upon delivery of possession of the Premises to
Lessee, Lessee will accept possession of the Premises subject to a punch list
of incomplete and/or defective items prepared by the parties. “Substantial
completion” or “substantially completed” shall mean that stage in the progress
of the construction of the leasehold improvements in the Premises when the
leasehold improvements are sufficiently complete in accordance with
Exhibit A to allow Lessee to occupy and use the Premises for their
intended use and when Lessee has full and complete access to the Premises.


 


	
   

  	
    

  
	
   

  	
  Initials

  



 


A-2
















 





 


OPTION(S) TO EXTEND


STANDARD LEASE ADDENDUM


EXHIBIT “C”


 


	
   

  	
  Dated

  	
  (for
  reference purposes only) June 26, 2008

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By and Between (Lessor)

  	
  T.
  Drive Partners, LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By and Between (Lessee)

  	
  AXT, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address of Premises:

  	
  4281
  Technology Drive

  
	
   

  	
   

  	
  Fremont,
  CA 94538

  



 


Paragraph


 


A.
OPTION(S) TO EXTEND:


 


Lessor hereby grants to Lessee the option to extend the term of this
Lease for  three (3) additional sixty (60) month period(s)
commencing when the prior term expires upon each and all of the following terms
and conditions:


 


(i)             In order to exercise an option to extend,
Lessee must give written notice of such election to Lessor and Lessor must
receive the same at least 120 but not more than 150 months prior to the date that the option period would commence, time
being of the essence. If proper notification of the exercise of an option is
not given and/or received, such option shall automatically expire. Options (if
there are more than one) may only be exercised consecutively.


 


(ii)          The provisions of paragraph 39, including
those relating to Lessee’s Default set forth in paragraph 39.4 of this Lease,
are conditions of this Option.


 


(iii)       Except for the provisions of this Lease
granting an option or options to extend the term, all of the terms and conditions
of this Lease except where specifically modified by this option shall apply.


 


(iv)      This Option is personal to the original Lessee, and cannot be assigned
or exercised by anyone other than said original Lessee and only while the
original Lessee is in full possession of the Premises and without the intention
of thereafter assigning or subletting – provided, however,  that the foregoing limitations
shall not be applicable to any permitted transferee under Section 12.4 of
this Lease.


 


(v)         The monthly rent for each month of the option
period shall be calculated as follows, using the method(s) indicated
below: (Check Method(s) to be Used and Fill in Appropriately)


 


o                 1.    Cost of Living
Adjustment(s) (COLA)


                             a.    On (Fill in COLA Dates):


 


the
Base Rent shall be adjusted by the change, if any, from the Base Month
specified below, in the Consumer Price Index of the Bureau of Labor Statistics
of the U.S. Department of Labor for (select one): o CPI W (Urban Wage Earners and Clerical
Workers) or o CPl
U (All Urban Consumers), for (Fill in Urban Area):


 


	
    

  	
   

  	
    

  
	
  INITIALS

  	
   

  	
  INITIALS

  



 


	
  ©2000 - AIR COMMERCIAL REAL ESTATE
  ASSOCIATION

  	
   

  	
  FORM OE-3-8/00E

  



 


1

















 


All
Items (1982-1984 = 100), herein referred to as “CPI”.


 


b.              The monthly rent payable in accordance with
paragraph A.I.a. of this Addendum shall be calculated as follows: the Base Rent
set forth in paragraph 1.5 of the attached Lease, shall be multiplied by a
fraction the numerator of which shall be the CPI of the calendar month 2 months
prior to the month(s) specified in paragraph A.I.a. above during which the
adjustment is to take effect, and the denominator of which shall be the CPI of
the calendar month which is 2 months prior to (select one): o the first month of the term of this Lease as
set forth in paragraph 1.3 (“Base Month”) or q (Fill
in Other “Base Month”):


 


The
sum so calculated shall constitute the new monthly rent hereunder, but in no
event, shall any such new monthly rent be less than the rent payable for the
month immediately preceding the rent adjustment.


 


c.               In the event the compilation and/or
publication of the CPI shall be transferred to any other governmental
department or bureau or agency or shall be discontinued, then the index most
nearly the same as the CPI shall be used to make such calculation. In the event
that the Parties cannot agree on such alternative index, then the matter shall
be submitted for decision to the American Arbitration Association in accordance
with the then rules of said Association and the decision of the
arbitrators shall be binding upon the parties. The cost of said Arbitration
shall be paid equally by the Parties.


 


x              II.          Market Rental Value Adjustment(s) (MRV)


 


a.               On (Fill in MRV Adjustment Date(s))          Option
1: 12/1/2015 ; Option 2: 12/1/2020; Option 3: 12/1/25 Starting with year 2 of
each Option Term, the base rent shall increase by 4% annually over the previous year.


 


the
Base Rent shall be adjusted to the “Market Rental Value” of the property as
follows:


 


1)  Four
months prior to each Market Rental Value Adjustment Date described above, the
Parties shall attempt to agree upon what the new MRV will be on the adjustment
date. If agreement cannot be reached, within thirty days, then:


 


(a)  Lessor and Lessee shall immediately appoint a mutually
acceptable appraiser or broker to establish the new MRV within the next 30
days. Any associated costs will be split equally between the Parties, or


 


(b)  Both Lessor and Lessee shall each immediately
make a reasonable determination of the MRV and submit such determination, in
writing, to arbitration in accordance with the following provisions:


 


 (i)      Within 15 days
thereafter, Lessor and Lessee shall each select an q  appraiser or q broker
(“Consultant” - check one) of their choice to act as an
arbitrator. The two arbitrators so appointed shall immediately select a third
mutually acceptable Consultant to act as a third arbitrator.


 


 (ii)     The 3 arbitrators
shall within 30 days of the appointment of the third arbitrator reach a decision
as to what the actual MRV for the Premises is, and whether Lessor’s or Lessee’s
submitted MRV is the closest thereto. The decision of a majority of the
arbitrators shall be binding on the Parties. The submitted MRV which is
determined to be the closest to the actual MRV shall thereafter be used by the
Parties.


 


 (iii)    If either of the
Parties fails to appoint an arbitrator within the specified 15 days, the
arbitrator timely appointed by one of them shall reach a decision on his or her
own, and said decision shall be binding on the Parties.


 


 (iv)    The entire cost of
such arbitration shall be paid by the party whose submitted MRV is not
selected, ie. the one that is NOT the closest to the actual MRV.


 


2)  Notwithstanding
the foregoing, the new MRV shall not be less than the rent payable for the
month immediately preceding the rent adjustment.


 


b.    Upon the establishment of each New Market
Rental Value:


 


1)  the
new MRV will become the new “Base Rent” for the purpose of calculating any
further Adjustments, and


2)  the
first month of each Market Rental Value term shall become the new “Base Month”
for the purpose of calculating any further Adjustments.


 


o                III.   Fixed
Rental Adjustment(s) (FRA)


 


The
Base Rent shall be increased to the following amounts on the dates set forth below:


 


On (Fill in FRA Adjustment Date(s)):                           The
New Base Rent shall be:


 


2

















 


B.   NOTICE:


 


Unless specified otherwise herein, notice of any
rental adjustments, other than Fixed Rental Adjustments, shall be made as
specified in paragraph 23 of the Lease.


 


C.   BROKER’S-FEE


 


The Brokers shall be paid a Brokerage Fee for
each adjustment specified above in accordance with paragraph 15 of the Lease


 


NOTICE: These forms are often modified to meet changing
requirements of law and industry needs. Always write or call to make sure you
are utilizing the most current form: AIR Commercial Real Estate Association,
800 W 6th Street, Suite 800, Los Angeles, CA 90017. Telephone
No. (213) 687-8777. Fax No.: (213) 687-8616.


 


3

















 


EXHIBIT “D” TO LEASE BETWEEN AXT AND T. DRIVE PARTNERS


 


	
  AXT TI Loan  

  	
   

  	
  $

  	
  575,000  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  annual
  interest rate 

  	
   

  	
  4%

  	
   

  	
   

  	
   

  	
  FIRST PAYMENT DUE 

  	
   

  
	
  monthly payment 

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
   

  	
   

  	
  DECEMBER
  1, 2008

  	
   

  
	
  term

  	
   

  	
  7
  Years

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
   

  	
   

  	
  Amount

  	
   

  	
  Interest

  	
   

  	
  Payment

  	
   

  	
  Balance

  	
   

  	
  Due Date

  	
   

  
	
  1

  	
   

  	
  $

  	
  575,000.00

  	
   

  	
  $

  	
  1,916.67

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  569,057.11

  	
   

  	
  12/1/2008

  	
   

  
	
  2

  	
   

  	
  $

  	
  569,057.11

  	
   

  	
  $

  	
  1,896.86

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  563,094.40

  	
   

  	
  1/1/2009

  	
   

  
	
  3

  	
   

  	
  $

  	
  563,094.40

  	
   

  	
  $

  	
  1,876.98

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  557,111.83

  	
   

  	
  2/1/2009

  	
   

  
	
  4

  	
   

  	
  $

  	
  557,111.83

  	
   

  	
  $

  	
  1,857.04

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  551,109.30

  	
   

  	
  3/1/2009

  	
   

  
	
  5

  	
   

  	
  $

  	
  551,109.30

  	
   

  	
  $

  	
  1,837.03

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  545,086.78

  	
   

  	
  4/1/2009

  	
   

  
	
  6

  	
   

  	
  $

  	
  545,086.78

  	
   

  	
  $

  	
  1,816.96

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  539,044.17

  	
   

  	
  5/1/2009

  	
   

  
	
  7

  	
   

  	
  $

  	
  539,044.17

  	
   

  	
  $

  	
  1,796.81

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  532,981,43

  	
   

  	
  6/1/2009

  	
   

  
	
  8

  	
   

  	
  $

  	
  532,981.43

  	
   

  	
  $

  	
  1,776.60

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  526,898.47

  	
   

  	
  7/1/2009

  	
   

  
	
  9

  	
   

  	
  $

  	
  526,898.47

  	
   

  	
  $

  	
  1,756.33

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  520,795.24

  	
   

  	
  8/1/2009

  	
   

  
	
  10

  	
   

  	
  $

  	
  520,795.24

  	
   

  	
  $

  	
  1,735.98

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  514,671.66

  	
   

  	
  9/1/2009

  	
   

  
	
  11

  	
   

  	
  $

  	
  514,671.66

  	
   

  	
  $

  	
  1,715.57

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  508,527.67

  	
   

  	
  10/1/2009

  	
   

  
	
  12

  	
   

  	
  $

  	
  508,527.67

  	
   

  	
  $

  	
  1,695.09

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  502,363.21

  	
   

  	
  11/1/2009

  	
   

  
	
  13

  	
   

  	
  $

  	
  502,363.21

  	
   

  	
  $

  	
  1,674.54

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  496,178.19

  	
   

  	
  12/1/2009

  	
   

  
	
  14

  	
   

  	
  $

  	
  496,178.19

  	
   

  	
  $

  	
  1,653.93

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  489,972.56

  	
   

  	
  1/1/2010

  	
   

  
	
  15

  	
   

  	
  $

  	
  489,972.56

  	
   

  	
  $

  	
  1,633.24

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  483,746.24

  	
   

  	
  2/1/2010

  	
   

  
	
  16

  	
   

  	
  $

  	
  483,746.24

  	
   

  	
  $

  	
  1,612.49

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  477,499.17

  	
   

  	
  3/1/2010

  	
   

  
	
  17

  	
   

  	
  $

  	
  477,499.17

  	
   

  	
  $

  	
  1,591.66

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  471,231.27

  	
   

  	
  4/1/2010

  	
   

  
	
  18

  	
   

  	
  $

  	
  471,231.27

  	
   

  	
  $

  	
  1,570.77

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  464,942.48

  	
   

  	
  5/1/2010

  	
   

  
	
  19

  	
   

  	
  $

  	
  464,942.48

  	
   

  	
  $

  	
  1,549.81

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  458,632.73

  	
   

  	
  6/1/2010

  	
   

  
	
  20

  	
   

  	
  $

  	
  458,632.73

  	
   

  	
  $

  	
  1,528.78

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  452,301.95

  	
   

  	
  7/1/2010

  	
   

  
	
  21

  	
   

  	
  $

  	
  452,301.95

  	
   

  	
  $

  	
  1,507.67

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  445,950.06

  	
   

  	
  8/1/2010

  	
   

  
	
  22

  	
   

  	
  $

  	
  445,950.06

  	
   

  	
  $

  	
  1,486.50

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  439,577.00

  	
   

  	
  9/1/2010

  	
   

  
	
  23

  	
   

  	
  $

  	
  439,577.00

  	
   

  	
  $

  	
  1,465.26

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  433,182.70

  	
   

  	
  10/1/2010

  	
   

  
	
  24

  	
   

  	
  $

  	
  433,182.70

  	
   

  	
  $

  	
  1,443.94

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  426,767.08

  	
   

  	
  11/1/2010

  	
   

  
	
  25

  	
   

  	
  $

  	
  426,767.08

  	
   

  	
  $

  	
  1,422.56

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  420,330.08

  	
   

  	
  12/1/2010

  	
   

  
	
  26

  	
   

  	
  $

  	
  420,330.08

  	
   

  	
  $

  	
  1,401.10

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  413,871.62

  	
   

  	
  1/1/2011

  	
   

  
	
  27

  	
   

  	
  $

  	
  413,871.62

  	
   

  	
  $

  	
  1,379.57

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  407,391.63

  	
   

  	
  2/1/2011

  	
   

  
	
  28

  	
   

  	
  $

  	
  407,391.63

  	
   

  	
  $

  	
  1,357.97

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  400,890.04

  	
   

  	
  3/1/2011

  	
   

  
	
  29

  	
   

  	
  $

  	
  400,890.04

  	
   

  	
  $

  	
  1,336.30

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  394,366.78

  	
   

  	
  4/1/2011

  	
   

  
	
  30

  	
   

  	
  $

  	
  394,366.78

  	
   

  	
  $

  	
  1,314.56

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  387,821.78

  	
   

  	
  5/1/2011

  	
   

  
	
  31

  	
   

  	
  $

  	
  387,821.78

  	
   

  	
  $

  	
  1,292.74

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  381,254.96

  	
   

  	
  6/1/2011

  	
   

  
	
  32

  	
   

  	
  $

  	
  381,254.96

  	
   

  	
  $

  	
  1,270.85

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  374,666.25

  	
   

  	
  7/1/2011

  	
   

  
	
  33

  	
   

  	
  $

  	
  374,666.25

  	
   

  	
  $

  	
  1,248.89

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  368,055.57

  	
   

  	
  8/1/2011

  	
   

  
	
  34

  	
   

  	
  $

  	
  368,055.57

  	
   

  	
  $

  	
  1,226.85

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  361,422.86

  	
   

  	
  9/1/2011

  	
   

  
	
  35

  	
   

  	
  $

  	
  361,422.86

  	
   

  	
  $

  	
  1,204.74

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  354,768.05

  	
   

  	
  10/1/2011

  	
   

  
	
  36

  	
   

  	
  $

  	
  354,768.05

  	
   

  	
  $

  	
  1,182.56

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  348,091.05

  	
   

  	
  11/1/2011

  	
   

  
	
  37

  	
   

  	
  $

  	
  348,091.05

  	
   

  	
  $

  	
  1,160.30

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  341,391.79

  	
   

  	
  12/1/2011

  	
   

  
	
  38

  	
   

  	
  $

  	
  341,391.79

  	
   

  	
  $

  	
  1,137.97

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  334,670.20

  	
   

  	
  1/1/2012

  	
   

  
	
  39

  	
   

  	
  $

  	
  334,670.20

  	
   

  	
  $

  	
  1,115.57

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  327,926,21

  	
   

  	
  2/1/2012

  	
   

  
	
  40

  	
   

  	
  $

  	
  327,926.21

  	
   

  	
  $

  	
  1,093.09

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  321,159.74

  	
   

  	
  3/1/2012

  	
   

  
	
  41

  	
   

  	
  $

  	
  321,159.74

  	
   

  	
  $

  	
  1,070.53

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  314,370.71

  	
   

  	
  4/1/2012

  	
   

  
	
  42

  	
   

  	
  $

  	
  314,370.71

  	
   

  	
  $

  	
  1,047.90

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  307,559.05

  	
   

  	
  5/1/2012

  	
   

  
	
  43

  	
   

  	
  $

  	
  307,559.05

  	
   

  	
  $

  	
  1,025.20

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  300,724.69

  	
   

  	
  6/1/2012

  	
   

  
	
  44

  	
   

  	
  $

  	
  300,724.69

  	
   

  	
  $

  	
  1,002.42

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  293,867.55

  	
   

  	
  7/1/2012

  	
   

  
	
  45

  	
   

  	
  $

  	
  293,867.55

  	
   

  	
  $

  	
  979.56

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  286,987.54

  	
   

  	
  8/1/2012

  	
   

  



 

















 


	
  46

  	
   

  	
  $

  	
  286,987.54

  	
   

  	
  $

  	
  956.63

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  280,084.61

  	
   

  	
  9/1/2012

  	
   

  
	
  47

  	
   

  	
  $

  	
  280,084.61

  	
   

  	
  $

  	
  933.62

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  273,158.66

  	
   

  	
  10/1/2012

  	
   

  
	
  48

  	
   

  	
  $

  	
  273,158.66

  	
   

  	
  $

  	
  910.53

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  266,209.63

  	
   

  	
  11/1/2012

  	
   

  
	
  49

  	
   

  	
  $

  	
  266,209.63

  	
   

  	
  $

  	
  887.37

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  259,237.44

  	
   

  	
  12/1/2012

  	
   

  
	
  50

  	
   

  	
  $

  	
  259,237.44

  	
   

  	
  $

  	
  864.12

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  252,242.00

  	
   

  	
  1/1/2013

  	
   

  
	
  51

  	
   

  	
  $

  	
  252,242.00

  	
   

  	
  $

  	
  840.81

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  245,223.25

  	
   

  	
  2/1/2013

  	
   

  
	
  52

  	
   

  	
  $

  	
  245,223.25

  	
   

  	
  $

  	
  817.41

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  238,181.10

  	
   

  	
  3/1/2013

  	
   

  
	
  53

  	
   

  	
  $

  	
  238,181.10

  	
   

  	
  $

  	
  793.94

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  231,115.48

  	
   

  	
  4/1/2013

  	
   

  
	
  54

  	
   

  	
  $

  	
  231,115.48

  	
   

  	
  $

  	
  770.38

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  224,026.30

  	
   

  	
  5/1/2013

  	
   

  
	
  55

  	
   

  	
  $

  	
  224,026.30

  	
   

  	
  $

  	
  746.75

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  216,913.50

  	
   

  	
  6/1/2013

  	
   

  
	
  56

  	
   

  	
  $

  	
  216,913.50

  	
   

  	
  $

  	
  723.04

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  209,776.98

  	
   

  	
  7/1/2013

  	
   

  
	
  57

  	
   

  	
  $

  	
  209,776.98

  	
   

  	
  $

  	
  699.26

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  202,616.68

  	
   

  	
  8/1/2013

  	
   

  
	
  58

  	
   

  	
  $

  	
  202,616.68

  	
   

  	
  $

  	
  675.39

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  195,432.51

  	
   

  	
  9/1/2013

  	
   

  
	
  59

  	
   

  	
  $

  	
  195,432.51

  	
   

  	
  $

  	
  651.44

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  188,224.39

  	
   

  	
  10/1/2013

  	
   

  
	
  60

  	
   

  	
  $

  	
  188,224.39

  	
   

  	
  $

  	
  627.41

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  180,992.24

  	
   

  	
  11/1/2013

  	
   

  
	
  61

  	
   

  	
  $

  	
  180,992.24

  	
   

  	
  $

  	
  603.31

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  173,735.99

  	
   

  	
  12/1/2013

  	
   

  
	
  62

  	
   

  	
  $

  	
  173,735.99

  	
   

  	
  $

  	
  579.12

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  166,455.55

  	
   

  	
  1/1/2014

  	
   

  
	
  63

  	
   

  	
  $

  	
  166,455.55

  	
   

  	
  $

  	
  554.85

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  159,150.84

  	
   

  	
  2/1/2014

  	
   

  
	
  64

  	
   

  	
  $

  	
  159,150.84

  	
   

  	
  $

  	
  530.50

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  151,821.79

  	
   

  	
  3/1/2014

  	
   

  
	
  65

  	
   

  	
  $

  	
  151,821.79

  	
   

  	
  $

  	
  506.07

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  144,468.30

  	
   

  	
  4/1/2014

  	
   

  
	
  66

  	
   

  	
  $

  	
  144,468.30

  	
   

  	
  $

  	
  481.56

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  137,090.30

  	
   

  	
  5/1/2014

  	
   

  
	
  67

  	
   

  	
  $

  	
  137,090.30

  	
   

  	
  $

  	
  456.97

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  129,687.71

  	
   

  	
  6/1/2014

  	
   

  
	
  68

  	
   

  	
  $

  	
  129,687.71

  	
   

  	
  $

  	
  432.29

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  122,260.44

  	
   

  	
  7/1/2014

  	
   

  
	
  69

  	
   

  	
  $

  	
  122,260.44

  	
   

  	
  $

  	
  407.53

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  114,808.42

  	
   

  	
  8/1/2014

  	
   

  
	
  70

  	
   

  	
  $

  	
  114,808.42

  	
   

  	
  $

  	
  382.69

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  107,331.55

  	
   

  	
  9/1/2014

  	
   

  
	
  71

  	
   

  	
  $

  	
  107,331.55

  	
   

  	
  $

  	
  357.77

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  99,829.76

  	
   

  	
  10/1/2014

  	
   

  
	
  72

  	
   

  	
  $

  	
  99,829.76

  	
   

  	
  $

  	
  332.77

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  92,302.97

  	
   

  	
  11/1/2014

  	
   

  
	
  73

  	
   

  	
  $

  	
  92,302.97

  	
   

  	
  $

  	
  307.68

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  84,751.08

  	
   

  	
  12/1/2014

  	
   

  
	
  74

  	
   

  	
  $

  	
  84,751.08

  	
   

  	
  $

  	
  282.50

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  77,174.03

  	
   

  	
  1/1/2015

  	
   

  
	
  75

  	
   

  	
  $

  	
  77,174.03

  	
   

  	
  $

  	
  257.25

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  69,571.71

  	
   

  	
  2/1/2015

  	
   

  
	
  76

  	
   

  	
  $

  	
  69,571.71

  	
   

  	
  $

  	
  231.91

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  61,944.06

  	
   

  	
  3/1/2015

  	
   

  
	
  77

  	
   

  	
  $

  	
  61,944.06

  	
   

  	
  $

  	
  206.48

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  54,290.98

  	
   

  	
  4/1/2015

  	
   

  
	
  78

  	
   

  	
  $

  	
  54,290.98

  	
   

  	
  $

  	
  180.97

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  46,612.39

  	
   

  	
  5/1/2015

  	
   

  
	
  79

  	
   

  	
  $

  	
  46,612.39

  	
   

  	
  $

  	
  155.37

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  38,908.20

  	
   

  	
  6/1/2015

  	
   

  
	
  80

  	
   

  	
  $

  	
  38,908.20

  	
   

  	
  $

  	
  129.69

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  31,178.34

  	
   

  	
  7/1/2015

  	
   

  
	
  81

  	
   

  	
  $

  	
  31,178.34

  	
   

  	
  $

  	
  103.93

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  23,422.71

  	
   

  	
  8/1/2015

  	
   

  
	
  82

  	
   

  	
  $

  	
  23,422.71

  	
   

  	
  $

  	
  78.08

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  15,641.22

  	
   

  	
  9/1/2015

  	
   

  
	
  83

  	
   

  	
  $

  	
  15,641.22

  	
   

  	
  $

  	
  52.14

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  7,833.80

  	
   

  	
  10/1/2015

  	
   

  
	
  84

  	
   

  	
  $

  	
  7,833.80

  	
   

  	
  $

  	
  26.11

  	
   

  	
  $

  	
  7,859.56

  	
   

  	
  $

  	
  0.35

  	
   

  	
  11/1/2015

  	
   

  



 

















 


EXHIBIT E


 


Common Area Operating Expense Exclusions


 


As
used in the Lease, the term “Common Area Operating Expenses” shall not include
the following:


 


1.                                       marketing costs, costs of leasing
commissions, renovations, attorneys’ fees and other costs and expenses incurred
in connection with negotiations, disputes or litigation with present or
prospective tenants or other occupants of the Project;


 


2.                                       any expense to the extent resulting from the
gross negligence or willful misconduct of Lessor, its agents, contractors or
employees;


 


3.                                       interest, principal; points and
fees on debts or amortization on any mortgage or mortgages or any other debt
instrument encumbering the Project;


 


4.                                       the original costs of constructing the
Project and depreciation of any such expenses;


 


5.                                       expenses to the extent Lessor is reimbursed
by another source, including without limitation replacement of any items
covered by warranties;


 


6.                                       expenses for the defense of Lessor’s title to
the Project;


 


7.                                       charitable or political contributions;


 


8.                                       costs to correct any latent defects in the
design, construction or equipment of the Building;


 


9.                                       any expenses incurred in repair, restoration
or other work necessitated by fire or other casualty, save and except
deductibles to the extent expressly permitted in the Lease; and


 


10.                                 rental on ground leases or other underlying
leases.


 


 


	
   

  	
   

  	
    

  
	
   

  	
   

  	
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