Exhibit 10.2


 


OFFICE SPACE LEASE


 


BETWEEN


 


UTC PROPERTIES LLC


 


AND


 


INFOSONICS CORPORATION


 


 

















 


OFFICE SPACE LEASE


 


THIS
LEASE is made as of the10th day of September 2007, by and between UTC PROPERTIES LLC,
a Delaware limited liability company, hereafter called “Landlord,” and INFOSONICS CORPORATION, a Maryland corporation, hereafter
called “Tenant.”


 


ARTICLE I. BASIC LEASE PROVISIONS


 


Each
reference in this Lease to the “Basic Lease Provisions” shall mean and refer to
the following collective terms, the application of which shall be governed by
the provisions in the remaining Articles of this Lease.


 


1.       Tenant’s Trade Name:  N/A


 


2.       Premises: Suite No. 100 (the Premises are more particularly described
in Section 2.1).


 


Address of Building:  4350
Executive Drive, San Diego, California, 92101


 


Project Description:  Park
Plaza


 


3.       Use of Premises:  General office and for no other
use.


 


4.       Estimated  Commencement Date:  October 1, 2007


 


5.       Lease Term:   The
term of this Lease shall expire sixty (60) months following the Commencement
Date, plus any additional days as are necessary to cause this Lease to expire
at the end of a calendar month.


 


6.       Basic Rent:   Twenty Thousand Three Hundred
Sixty-One Dollars ($20,361.00) per month.


 


Rental Adjustments:


 


Commencing
on October 1, 2008, the Basic Rent shall be Twenty Thousand Nine Hundred
Ninety-Three Dollars ($20,993.00) per month.


 


Commencing
October 1, 2009, the Basic Rent shall be Twenty-One Thousand Six Hundred
Twenty-Five Dollars ($21,625.00) per month.


 


Commencing
October 1, 2010, the Basic Rent shall be Twenty-Two Thousand Two Hundred
Fifty-Seven Dollars ($22,257.00) per month.


 


Commencing
October 1, 2011, the Basic Rent shall be Twenty-Two Thousand Eight Hundred
Eighty-Eight Dollars ($22,888.00) per month.


 


7.       Property Tax Base:  The
Property Taxes per rentable square foot incurred by Landlord and attributable
to the twelve month period ending June 30, 2008 (the “Base Year”).


 


Building Cost Base:  The
Building Costs per rentable square foot incurred by Landlord and attributable
to the Base Year.


 


Expense Recovery Period:  Every
twelve month period during the Term (or portion thereof during the first and
last Lease years) ending June 30.


 


8.       Floor Area of Premises: 
approximately 7,021 rentable square feet


 


9.       Security Deposit:  Twenty-Five Thousand One
Hundred Seventy-Seven Dollars ($25,177.00)


 


10.     Broker(s): 
Irvine Realty Company (“Landlord’s Broker”) and Grubb & Ellis/BRE
Commercial (“Tenant’s Broker”)


 


11.     Plan Approval Date:  August 9, 2007


 


12.     Parking:  Twenty-Four (24) unreserved vehicle parking
spaces.


 


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13.     Address for Payments and Notices:


 


	
  LANDLORD

  	
  TENANT

  
	
  Payment
  Address:

   

  UTC
  Properties LLC

  Department
  #6967

  Los
  Angeles, CA  90084-6967

   

  Notice
  Address:

   

  UTC
  Properties LLC

  9255
  Towne Centre Drive, Suite 800

  San
  Diego, CA  92121

  Attn:  Property Manager

   

  with
  a copy of notices to:

   

  THE
  IRVINE COMPANY LLC

  P.O.
  Box 6370

  Newport
  Beach, CA 92658-6370

  Attn:  Vice President, Operations,

  Office
  Properties/San Diego

  	
   

   

  Infosonics
  Corporation

  4350
  Executive Drive, Suite 100

  San
  Diego, CA  92121

  



 


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ARTICLE II. PREMISES


 


SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant rents
from Landlord the premises shown in Exhibit A (the “Premises”), containing
approximately the floor area set forth in Item 8 of the Basic Lease Provisions
and known by the suite number identified in Item 2 of the Basic Lease
Provisions. The Premises are located in the building identified in Item 2 of
the Basic Lease Provisions (the “Building”), which is a portion of the project
described in Item 2 (the “Project”). If, upon completion of the space plans for
the Premises, Landlord’s architect or space planner determines that the
rentable square footage of the Premises differs from that set forth in the
Basic Lease Provisions, then Landlord shall so notify Tenant and the Basic Rent
(as shown in Item 6 of the Basic Lease Provisions) shall be promptly adjusted
in proportion to the change in square footage. Within five (5) days following
Landlord’s request, the parties shall memorialize the adjustments by executing
an amendment to this Lease prepared by Landlord. The Premises has been measured
by Stevensons Systems, which uses a modified BOMA standard.


 


SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither Landlord
nor any representative of Landlord has made any representation or warranty with
respect to the Premises or the Building or the suitability or fitness of either
for any purpose, except as set forth in this Lease. The taking of possession or
use of the Premises by Tenant for any purpose other than construction shall
conclusively establish that the Premises and the Building were in satisfactory
condition and in conformity with the provisions of this Lease in all respects,
except for those matters which Tenant shall have brought to Landlord’s
attention on a written punch list. The list shall be limited to any items
required to be accomplished by Landlord under the Work Letter (if any) attached
as Exhibit X, and shall be delivered to Landlord within thirty (30) days after
the term (“Term”) of this Lease commences as provided in Article III below. If
there is no Work Letter, or if no items are required of Landlord under the Work
Letter, by taking possession of the Premises Tenant accepts the improvements in
their existing condition, and waives any right or claim against Landlord
arising out of the condition of the Premises. Nothing contained in this Section
shall affect the commencement of the Term or the obligation of Tenant to pay
rent. Landlord shall diligently complete all punch list items of which it is
notified as provided above.


 


SECTION 2.3. BUILDING NAME, ADDRESS AND DEPICTION. Tenant shall not utilize any name selected
by Landlord from time to time for the Building and/or the Project as any part
of Tenant’s corporate or trade name. Landlord shall have the right to change
the name, number or designation of the Building or Project without liability to
Tenant. Tenant shall not use any picture of the Building in its advertising,
stationery or in any other manner.


 


ARTICLE III. TERM


 


SECTION 3.1. GENERAL. The Term shall be for the period shown in
Item 5 of the Basic Lease Provisions. The Term shall commence (“Commencement
Date”) on the earlier of (a) the date the Premises are deemed ready for
occupancy in accordance with Section 3.2, or (b) the date Tenant commences its
business activities within the Premises. Promptly following request by
Landlord, the parties shall memorialize on a form provided by Landlord (the “Commencement
Memorandum”) the actual Commencement Date and the expiration date (“Expiration
Date”) of this Lease; should Tenant fail to execute and return the Commencement
Memorandum to Landlord within five (5) business days (or provide specific
written objections thereto within that period), then Landlord’s determination
of the Commencement and Expiration Dates as set forth in the Commencement
Memorandum shall be conclusive.


 


SECTION 3.2. DELAY IN POSSESSION. If Landlord, for any reason whatsoever,
cannot deliver possession of the Premises to Tenant on or before the Estimated
Commencement Date set forth in Item 4 of the Basic Lease Provisions, this Lease
shall not be void or voidable nor shall Landlord be liable to Tenant for any
resulting loss or damage. However, Tenant shall not be liable for any rent and
the Commencement Date shall not occur until Landlord delivers possession of the
Premises and the Premises are in fact ready for occupancy as defined below,
except that if Landlord’s failure to so deliver possession is attributable to
any action or inaction by Tenant (including without limitation any Tenant Delay
described in the Work Letter, if any, attached to this Lease), then the
Premises shall be deemed ready for occupancy, and Landlord shall be entitled to
full performance by Tenant (including the payment of rent), as of the date
Landlord would have been able to deliver the Premises to Tenant but for Tenant’s
delay(s). Subject to the foregoing, the Premises shall be deemed ready for
occupancy if and when Landlord, to the extent applicable, (a) has put into
operation all building services essential for the use of the Premises by
Tenant, (b) has provided reasonable access to the Premises for Tenant so that
they may be used without unnecessary interference, (c) has substantially
completed all the work required to be done by Landlord in this Lease, and (d)
has obtained requisite governmental approvals to Tenant’s occupancy.


 


SECTION 3.4. TENANT’S RIGHT TO CANCEL FOR LATE DELIVERY. If Landlord fails to deliver possession of the
Premises, ready for occupancy, by the “Outside Date” as defined below, then
Tenant shall have the right to terminate this lease by giving written notice
thereof to Landlord after the 


 


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Outside
Date, but prior to Landlord’s delivery of the Premises ready for Tenant’s
occupancy as aforesaid. If, from time to time prior to the Outside Date,
Landlord determines that it will not be able to deliver possession of the
Premises, ready for occupancy, by the Outside Date, Landlord shall deliver to
Tenant a written notice setting forth Landlord’s opinion as to the revised
outside date by which it shall be able to deliver the Premises to Tenant, ready
for occupancy. Within five (5) business days following delivery of that notice,
Tenant may elect by written notice to Landlord to terminate this Lease;
otherwise, the Outside Date shall be deemed extended to the revised date set
forth in Landlord’s notice. For purposes hereof, the “Outside Date” shall mean
November 30, 2007; provided that the Outside Date shall be extended on a
day-for-day basis for the period of any Tenant Delays and for any other delays
resulting from matters beyond Landlord’s control as set forth in Section 20.9.


 


ARTICLE IV. RENT AND OPERATING EXPENSES


 


SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant
shall pay to Landlord without deduction or offset a Basic Rent for the Premises
in the total amount shown (including subsequent adjustments, if any) in Item 6
of the Basic Lease Provisions. If the Commencement Date is other than the first
day of a calendar month, any rental adjustment shown in Item 6 shall be deemed
to occur on the first day of the next calendar month following the specified
monthly anniversary of the Commencement Date. The rent shall be due and payable
in advance commencing on the Commencement Date and continuing thereafter on the
first day of each successive calendar month of the Term, as prorated for any
partial month. No demand, notice or invoice shall be required. An installment
of rent in the amount of one (1) full month’s Basic Rent at the initial rate
specified in Item 6 of the Basic Lease Provisions shall be delivered to
Landlord concurrently with Tenant’s execution of this Lease and shall be
applied against the Basic Rent first due hereunder; the next installment of
Basic Rent shall be due on the first day of the second calendar month of the
Term, which installment shall, if applicable, be appropriately prorated to
reflect the amount prepaid for that calendar month.


 


SECTION 4.2. OPERATING EXPENSE INCREASE.


 


(a)        Tenant shall compensate Landlord, as additional rent, for Tenant’s
proportionate shares of “Building Costs” and “Property Taxes,” as those terms
are defined below, incurred by Landlord in the operation of the Building and
Project. Property Taxes and Building Costs are mutually exclusive and may be
billed separately or in combination as determined by Landlord. Tenant’s
proportionate share of Property Taxes shall equal the product of the rentable
floor area of the Premises multiplied by the difference of (i) Property Taxes
per rentable square foot less (ii) the Property Tax Base set forth in Item 7 of
the Basic Lease Provisions. Tenant’s proportionate share of Building Costs
shall equal the product of the rentable floor area of the Premises multiplied
by the difference of (i) Building Costs per rentable square foot less (ii) the
Building Cost Base set forth in Item 7 of the Basic Lease Provisions. Tenant acknowledges
Landlord’s rights to make changes or additions to the Building and/or Project
from time to time pursuant to Section 6.5 below, in which event the total
rentable square footage within the Building and/or Project may be adjusted. For
convenience of reference, Property Taxes and Building Costs may sometimes be
collectively referred to as “Operating Expenses.”


 


(b)        Commencing prior to the start of the first full “Expense Recovery Period”
of the Lease (as defined in Item 7 of the Basic Lease Provisions), and prior to
the start of each full or partial Expense Recovery Period thereafter, Landlord
shall give Tenant a written estimate of the amount of Tenant’s proportionate
shares of Building Costs and Property Taxes for the Expense Recovery Period or
portion thereof. Tenant shall pay the estimated amounts to Landlord in equal
monthly installments, in advance, with Basic Rent. If Landlord has not
furnished its written estimate for any Expense Recovery Period by the time set
forth above, Tenant shall continue to pay cost reimbursements at the rates
established for the prior Expense Recovery Period, if any; provided that when
the new estimate is delivered to Tenant, Tenant shall, at the next monthly
payment date, pay any accrued cost reimbursements based upon the new estimate. Landlord
may from time to time change the Expense Recovery Period to reflect a calendar
year or a new fiscal year of Landlord, as applicable, in which event Tenant’s
share of Operating Expenses shall be equitably prorated for any partial year.


 


(c)        Within one hundred twenty (120) days after the end of each Expense
Recovery Period, Landlord shall furnish to Tenant a statement setting forth the
actual or prorated Property Taxes and Building Costs attributable to that
period, and the parties shall within thirty (30) days thereafter make any
payment or allowance necessary to adjust Tenant’s estimated payments, if any,
to Tenant’s actual proportionate shares as shown by the annual statement. If
Tenant has not made estimated payments during the Expense Recovery Period, any
amount owing by Tenant pursuant to subsection (a) above shall be paid to
Landlord in accordance with Article XVI. If actual Property Taxes or Building
Costs allocable to Tenant during any Expense Recovery Period are less than the
Property Tax Base or the Building Cost Base, respectively, Landlord shall not
be required to pay that differential to Tenant, although Landlord shall refund
any applicable estimated payments collected from Tenant. Should Tenant fail to
object in writing to Landlord’s determination of actual Operating Expenses
within one hundred twenty (120) days following delivery of Landlord’s expense
statement, Landlord’s 


 


4

















 


determination
of actual Operating Expenses for the applicable Expense Recovery Period shall
be conclusive and binding on Tenant.


 


(d)        Even though the Lease has terminated and the Tenant has vacated the
Premises, when the final determination is made of Tenant’s share of Property
Taxes and Building Costs for the Expense Recovery Period in which the Lease
terminates, Tenant shall upon notice pay the entire increase due over the
estimated expenses paid; conversely, any overpayment made in the event expenses
decrease shall be rebated by Landlord to Tenant. However, in lieu thereof,
Landlord may deliver a reasonable estimate of the anticipated reconciliation
amount to Tenant prior to the expiration of the Term, in which event the
appropriate party shall fund that amount by the termination date.


 


(e)        If, at any time during any Expense Recovery Period, any one or more of
the Operating Expenses are increased to a rate(s) or amount(s) in excess of the
rate(s) or amount(s) used in calculating the estimated expenses for the year,
then Tenant’s estimated share of Property Taxes or Building Costs, as
applicable, shall be increased for the month in which the increase becomes
effective and for all succeeding months by an amount equal to Tenant’s
proportionate share of the increase. Landlord shall give Tenant written notice
of the amount or estimated amount of the increase, the month in which the
increase will become effective, Tenant’s monthly share thereof and the months
for which the payments are due. Tenant shall pay the increase to Landlord as a
part of Tenant’s monthly payments of estimated expenses as provided in
paragraph (b) above, commencing with the month in which effective.


 


(f)         The term “Building Costs” shall include all charges and expenses
pertaining to the operation, management, maintenance and repair of the Building
and the Project, together with all appurtenant Common Areas (as defined in
Section 6.2), and shall include the following charges by way of illustration
but not limitation:  water and sewer
charges; insurance premiums or reasonable premium equivalents should Landlord
elect to self-insure any risk or deductible that Landlord is authorized to
insure hereunder; license, permit, and inspection fees; heat; light; power;
janitorial services; the cost of equipping, staffing and operating an on-site
and/or off-site management office for the Building and Project; all labor and
labor-related costs for personnel applicable to the Building and Project,
including both Landlord’s personnel and outside personnel; a commercially
reasonable Landlord overhead/management fee; reasonable fees for consulting
services; access control/security costs, inclusive of the reasonable cost of
improvements made to enhance access control systems and procedures; repairs;
air conditioning; supplies; materials; equipment; tools; tenant services;
programs instituted to comply with transportation management requirements; any
expense incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and 10.2 and Exhibits
B and C below; costs incurred (capital or otherwise) on a regular recurring
basis every three (3) or more years for normal maintenance projects (e.g.,
parking lot slurry coat or replacement of lobby, corridor and elevator cab
carpets and coverings); and the amortized cost of capital improvements (as
distinguished from replacement parts or components installed in the ordinary
course of business) which are intended to maintain the quality, appearance or
safety of the Building and/or Project, reduce other operating costs or
increases thereof, or upgrade Building and/or Project security, or which are
required to bring the Building and/or Project into compliance with applicable
laws and building codes. Landlord shall amortize the cost of capital
improvements on a straight-line basis over the lesser of the Payback Period (as
defined below) or the useful life of the capital improvement as reasonably
determined by Landlord. Any amortized Building Cost item may include, at
Landlord’s option, an actual or imputed interest rate that Landlord would
reasonably be required to pay to finance the cost of the item, applied on the
unamortized balance. “Payback Period” shall mean the reasonably estimated
period of time that it takes for the cost savings, if any, resulting from a
capital improvement item to equal the total cost of the capital improvement. It
is understood that Building Costs shall include competitive charges for direct
services provided by any subsidiary or division of Landlord. If any Building
Cost is applicable to one or more buildings or properties in addition to the
Building, then that cost shall be equitably prorated and apportioned among the
Building and such other buildings or properties. The term “Property Taxes” as
used herein shall include the following: 
(i) all real estate taxes or personal property taxes, as such property
taxes may be reassessed from time to time; and (ii) other taxes, charges and
assessments which are levied with respect to this Lease or to the Building
and/or the Project, and any improvements, fixtures and equipment and other
property of Landlord located in the Building and/or the Project, except that
general net income and franchise taxes imposed against Landlord shall be
excluded; and (iii) any tax, surcharge or assessment which shall be levied in
addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (iv) costs and expenses incurred in
contesting the amount or validity of any Property Tax by appropriate
proceedings. A copy of Landlord’s unaudited statement of expenses shall be made
available to Tenant upon request. Property Taxes for the Base Year and all
subsequent years shall be calculated based upon a fully re-assessed tax
liability (as reasonably and in good faith estimated by the Landlord, for the
sale of the Building which occurred on April 2, 2007, with any necessary
adjustments to be made following the actual re-assessment). The Building Costs,
inclusive of those for the Base Year, shall be extrapolated by Landlord to
reflect at least ninety-five percent (95%) occupancy of the rentable area of
the Building.


 


(g)        Notwithstanding the
foregoing, Operating Expenses shall exclude the following:


 


(i)        Any ground lease rental;


 


5

















 


(ii)     Costs incurred by Landlord
with respect to goods and services other than parking (including utilities sold
and supplied to tenants and occupants of the Building) to the extent that
Landlord is entitled to reimbursement for such costs other than through the
Operating Expense pass-through provisions of such tenants’ lease;


 


(iii)    Costs incurred by Landlord for
repairs, replacements and/or restoration to or of the Building to the extent
that Landlord is reimbursed by insurance or condemnation proceeds or by tenants
(other than through Operating Expense pass-throughs), warrantors or other third
persons;


 


(iv)    Costs, including permit,
license and inspection costs, incurred with respect to the installation of
tenant improvements made for other tenants in the Building or incurred in
renovating or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants of the Building;


 


(v)     Costs arising from Landlord’s
charitable or political contributions;


 


(vi)    Attorneys’ fees and other
costs and expenses incurred in connection with negotiations or disputes with present
or prospective tenants or other occupants of the Building, except those
attorneys’ fees and other costs and expenses incurred in connection with
negotiations, disputes or claims relating to items of Operating Expenses,
enforcement of rules and regulations of the Building and such other matters
relating to the maintenance of standards required of Landlord under this Lease;


 


(vii)   Capital expenditures as
determined in accordance with generally accepted accounting principles,
consistently applied, except as otherwise provided in subsection (f) above;


 


(viii)  Brokers commissions, finders’
fees, attorneys’ fees, entertainment and travel expenses and other costs
incurred by Landlord in leasing or attempting to lease space in the Building;


 


(ix)    Expenses in connection with
services or other benefits which are not offered to Tenant or for which Tenant
is charged for directly but which are provided to another tenant or occupant of
the Building;


 


(x)     Costs, fines or penalties
incurred by Landlord due to the violation by Landlord of (i) any governmental
rule or regulation (provided that costs of complying with such governmental
requirements may be included unless otherwise provided herein) or (ii) the
terms and conditions of any lease of space in the Building;


 


(xi)    Overhead and profit increments
paid to subsidiaries or affiliates of Landlord for services provided to the
Building to the extent the same exceeds the costs that would generally be
charged for such services if rendered on a competitive basis (based upon a
standard of similar office buildings in the general market area of the
Premises) by unaffiliated third parties capable of providing such service;


 


(xii)   Interest on debt or
amortization on any mortgage or mortgages encumbering the Building;


 


(xiii)  Landlord’s general corporate
overhead, except as it relates to the specific management of the Building or
Project;


 


(xiv)  Costs of installing the initial
landscaping and the initial sculpture, paintings and objects of art for the
Building and Project; and


 


(xv)   Advertising expenditures.


 


6

















 


(h)        Provided Tenant is not
then in default hereunder, Tenant shall have the right to cause a certified
public accountant, engaged on a non-contingency fee basis, to audit Operating
Expenses by inspecting Landlord’s general ledger of expenses not more than once
during any Expense Recovery Period. However, to the extent that insurance
premiums or any other component of Operating Expenses is determined by Landlord
on the basis of an internal allocation of costs utilizing information Landlord
in good faith deems proprietary, such expense component shall not be subject to
audit so long as it does not exceed the amount per square foot typically
imposed by landlords of other first class office projects in San Diego,
California. Tenant shall give notice to Landlord of Tenant’s intent to audit
within sixty (60) days after Tenant’s receipt of Landlord’s expense statement
which sets forth Landlord’s actual Operating Expenses. Such audit shall be
conducted at a mutually agreeable time during normal business hours at the
office of Landlord or its management agent where such accounts are maintained. If
Tenant’s audit determines that actual Operating Expenses have been overstated
by more than five percent (5%), then subject to Landlord’s right to review
and/or contest the audit results, Landlord shall reimburse Tenant for the
reasonable out-of-pocket costs of such audit. Tenant’s rent shall be
appropriately adjusted to reflect any overstatement in Operating Expenses. In
addition, if any component of Operating Expenses is determined to be either
inappropriate or excessive during an Expense Recovery Period, and if the
Building Cost Base or Property Tax Base also included such component, then the
appropriate Base shall concurrently be adjusted if and to the extent
appropriate. In the event of a dispute between Landlord and Tenant regarding
such audit, either party may elect to submit the matter for binding arbitration
with the American Arbitration Association under its Arbitration Rules for the
Real Estate Industry, and judgment on the arbitration award may be entered in
any court having jurisdiction thereof. All of the information obtained by
Tenant and/or its auditor in connection with such audit, as well as any
compromise, settlement, or adjustment reached between Landlord and Tenant as a
result thereof, shall be held in strict confidence and, except as may be
required pursuant to litigation, shall not be disclosed to any third party,
directly or indirectly, by Tenant or its auditor or any of their officers,
agents or employees. Landlord may require Tenant’s auditor to execute a
separate confidentiality agreement affirming the foregoing as a condition
precedent to any audit. In the event of a violation of this confidentiality
covenant in connection with any audit, then in addition to any other legal or
equitable remedy available to Landlord, Tenant shall forfeit its right to any
reconciliation or cost reimbursement payment from Landlord due to said audit
(and any such payment theretofore made by Landlord shall be promptly returned
by Tenant), and Tenant shall have no further audit rights under this Lease. Notwithstanding
the foregoing, Tenant shall have no right of audit with respect to any Expense
Recovery Period unless the total Operating Expenses per square foot for such
Expense Recovery Period, as set forth in Landlord’s annual expense
reconciliation, exceed the total Operating Expenses per square foot during the
Base Year, as increased by the percentage change in the United States
Department of Labor, Bureau of Labor Statistics, Consumer Price Index for all
Urban Consumers, Los Angeles - Riverside - Orange County Area Average, all
items (1982-84 = 100) (the “Index”), which change in the Index shall be
measured by comparing the Index published for January of the Base Year with the
Index published for January of the applicable Expense Recovery Period.


 


SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant’s delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions (the “Security Deposit”), to be held by Landlord as
security for the full and faithful performance of Tenant’s obligations under
this Lease to pay any rental sums, including without limitation such additional
rent as may be owing under any provision hereof, and to maintain the Premises
as required by Sections 7.1 and 15.3 or any other provision of this Lease. For
purposes of the foregoing and notwithstanding any provision of Section 1950.7
of the California Civil Code to the contrary, rental sums shall include
prospective rent that would have been payable by Tenant but for the early
termination of this Lease due to Tenant’s default or insolvency. Upon any
breach of the foregoing obligations by Tenant, Landlord may apply all or part
of the Security Deposit as full or partial compensation. If any portion of the
Security Deposit is so applied, Tenant shall within five (5) days after written
demand by Landlord deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to its original amount. Landlord shall not be
required to keep this Security Deposit separate from its general funds, and
Tenant shall not be entitled to interest on the Security Deposit. In no event
may Tenant utilize all or any portion of the Security Deposit as a payment
toward any rental sum due under this Lease. Any unapplied balance of the
Security Deposit shall be returned to Tenant or, at Landlord’s option, to the
last assignee of Tenant’s interest in this Lease within thirty (30) days
following the termination of this Lease and Tenant’s vacation of the Premises.


 


ARTICLE V. USES


 


SECTION 5.1. USE. Tenant shall use the Premises only for the
purposes stated in Item 3 of the Basic Lease Provisions. The parties agree that
any contrary use shall be deemed to cause material and irreparable harm to
Landlord and shall entitle Landlord to injunctive relief in addition to any
other available remedy. The uses prohibited under this Lease shall include, without
limitation, use of the Premises or a portion thereof for (i) offices of any
agency or bureau of the United States or any state or political subdivision
thereof; (ii) offices or agencies of any foreign governmental or political
subdivision thereof; (iii) offices of any health care professionals or service
organization; (iv) schools, temporary employment agencies or other training
facilities which are not ancillary to corporate, executive or professional
office use; (v) retail or restaurant uses; or (vi) communications firms such as
radio and/or television stations. Tenant shall not do or permit anything to be
done in or about the Premises which 


 


7

















 


will
in any way interfere with the rights or quiet enjoyment of other occupants of
the Building or the Project, or use or allow the Premises to be used for any
unlawful purpose, nor shall Tenant permit any nuisance or commit any waste in
the Premises or the Project. Tenant shall not do or permit to be done anything
which will invalidate or increase the cost of any insurance policy(ies)
covering the Building, the Project and/or their contents, and shall comply with
all applicable insurance underwriters rules. Tenant shall comply at its expense
with all present and future laws, ordinances and requirements of all
governmental authorities that pertain to Tenant or its use of the Premises,
including without limitation all federal and state occupational health and
safety and handicap access requirements, whether or not Tenant’s compliance
will necessitate expenditures or interfere with its use and enjoyment of the
Premises. Tenant shall not generate, handle, store or dispose of hazardous or
toxic materials (as such materials may be identified in any federal, state or
local law or regulation) in the Premises or Project without the prior written
consent of Landlord; provided that the foregoing shall not be deemed to
proscribe the use by Tenant of customary office supplies in normal quantities
so long as such use comports with all applicable laws. Tenant agrees that it
shall promptly complete and deliver to Landlord any disclosure form regarding
hazardous or toxic materials that may be required by any governmental agency. Tenant
shall also, from time to time upon request by Landlord, execute such affidavits
concerning Tenant’s best knowledge and belief regarding the presence of
hazardous or toxic materials in the Premises. Landlord shall have the right at
any time to perform an assessment of the environmental condition of the Premises
and of Tenant’s compliance with this Section. As part of any such assessment,
Landlord shall have the right, upon reasonable prior notice to Tenant, to enter
and inspect the Premises and to perform tests, provided those tests are
performed in a manner that minimizes disruption to Tenant. Tenant will
cooperate with Landlord in connection with any assessment by, among other
things, promptly responding to inquiries and providing relevant documentation
and records. The reasonable cost of the assessment/testing shall be reimbursed
by Tenant to Landlord if such assessment/testing determines that Tenant failed
to comply with the requirements of this Section. In all events Tenant shall
indemnify each of the “Indemnified Parties” (as defined in Section 10.3) in
the manner elsewhere provided in this Lease from any release of hazardous or
toxic materials caused by Tenant, its agents, employees, contractors,
subtenants or licensees. The foregoing covenants shall survive the expiration
or earlier termination of this Lease.


 


SECTION 5.2. SIGNS. Landlord shall affix and maintain a sign
(restricted solely to Tenant’s name as set forth herein or such other name as
Landlord may consent to in writing) adjacent to the entry door of the Premises,
together with a directory listing of Tenant’s name as set forth herein in the
lobby directory of the Building. Any subsequent changes to that initial signage
shall be at Tenant’s sole expense. All signage shall conform to the criteria
for signs established by Landlord and shall be ordered through Landlord. Tenant
shall not place or allow to be placed any other sign, decoration or advertising
matter of any kind that is visible from the exterior of the Premises. Any
violating sign or decoration may be immediately removed by Landlord at Tenant’s
expense without notice and without the removal constituting a breach of this
Lease or entitling Tenant to claim damages.


 


SECTION
5.3. MONUMENT SIGNAGE. Tenant shall have the right to install
non-exclusive signage on the top slot of the monument sign adjacent to the
Building and facing Executive Drive, which signage shall consist only of the
name “Infosonics Corporation.”  The type,
location and design of such signage shall be subject to the prior written
approval of Landlord and the City of San Diego, and shall be consistent with
Landlord’s signage criteria for the Project. Fabrication, installation,
insurance, and maintenance of such signage shall be at Tenant’s sole cost and
expense. Commencing on the 13th month of the initial Term, Tenant
shall pay a rental fee for signage rights in the amount of Two Hundred Fifty
Dollars ($250.00) per month. Tenant understands and agrees that it shall use
Landlord’s designated contractor for installing the monument signage. Should
Tenant fail to have the monument signage installed by February 28, 2008, then
Tenant’s right to install same thereafter shall be deemed null and void. Except
for the foregoing, no sign, advertisement or notice visible from the exterior
of the Premises shall be inscribed, painted or affixed by Tenant on any part of
the Premises without prior consent of Landlord. Tenant’s signage right shall
belong solely to Tenant and may not be transferred or assigned (except in
connection with an assignment of this Lease to a Tenant Affiliate as described
in Section 9.1(f) hereof) without Landlord’s prior written consent, which may
be withheld by Landlord in Landlord’s sole discretion. In the event Tenant,
exclusive of any subtenant(s), fails to occupy the entire Premises, then Tenant
shall, within thirty (30) days following notice from Landlord, remove the
monument signage at Tenant’s expense. Tenant shall also remove such signage
promptly following the expiration or earlier termination of the Lease. Any such
removal shall be at Tenant’s sole expense, and Tenant shall bear the cost of
any resulting repairs to the monument that are reasonably necessary due to the
removal.


 


ARTICLE VI. LANDLORD SERVICES


 


SECTION 6.1. UTILITIES AND SERVICES. Landlord shall furnish to the Premises the
utilities and services described in Exhibit B, subject to the conditions and
payment obligations and standards set forth in this Lease. Landlord shall not
be liable for any failure to furnish any services or utilities when the failure
is the result of any accident or other cause beyond Landlord’s reasonable
control, nor shall Landlord be liable for damages resulting from power surges
or any breakdown in telecommunications facilities or services. Landlord’s
temporary inability to furnish any services or 


 


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utilities
shall not entitle Tenant to any damages, relieve Tenant of the obligation to
pay rent or constitute a constructive or other eviction of Tenant, except that
Landlord shall diligently attempt to restore the service or utility promptly. However,
if the Premises, or a material portion of the Premises, are made untenantable
for a period in excess of 5 consecutive business days as a result of a service
interruption that is reasonably within the control of Landlord to correct, then
Tenant, as its sole remedy, shall be entitled to receive an abatement of rent
payable hereunder during the period beginning on the 6th consecutive
business day of the service interruption and ending on the day the service has
been restored. If the entire Premises have not been rendered untenantable by
the service interruption, the amount of abatement shall be equitably prorated.  Tenant shall
comply with all rules and regulations which Landlord may reasonably establish
for the provision of services and utilities, and shall cooperate with all
reasonable conservation practices established by Landlord. Landlord shall at
all reasonable times have free access to all electrical and mechanical
installations of Landlord.


 


SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term, Landlord shall operate all
Common Areas within the Building and the Project. The term “Common Areas” shall
mean all areas within the Building and other buildings in the Project which are
not held for exclusive use by persons entitled to occupy space, and all other
appurtenant areas and improvements provided by Landlord for the common use of
Landlord and tenants and their respective employees and invitees, including
without limitation parking areas and structures, driveways, sidewalks, loading
docks, landscaped and planted areas, hallways and interior stairwells not
located within the premises of any tenant, common entrances and lobbies,
elevators, and restrooms not located within the premises of any tenant.


 


SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the Premises
shall include the use of the Common Areas in common with Landlord and with all
others for whose convenience and use the Common Areas may be provided by
Landlord, subject, however, to compliance with all rules and regulations as are
prescribed from time to time by Landlord. Landlord shall at all times during
the Term have exclusive control of the Common Areas, and may restrain or permit
any use or occupancy, except as otherwise provided in this Lease or in Landlord’s
rules and regulations. Tenant shall keep the Common Areas clear of any
obstruction or unauthorized use related to Tenant’s operations. Landlord may
temporarily close any portion of the Common Areas for repairs, remodeling
and/or alterations, to prevent a public dedication or the accrual of
prescriptive rights, or for any other reasonable purpose.


 


SECTION 6.4. PARKING. Parking shall be provided in accordance with
the provisions set forth in Exhibit C to this Lease.


 


SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the right to make
alterations or additions to the Building or the Project, or to the attendant
fixtures, equipment and Common Areas. No change shall entitle Tenant to any
abatement of rent or other claim against Landlord, provided that the change
does not deprive Tenant of reasonable access to or use of the Premises.


 


ARTICLE VII. MAINTAINING THE PREMISES


 


SECTION 7.1. TENANT’S MAINTENANCE AND REPAIR. Subject to Article XI, Tenant at its sole
expense shall make all repairs necessary to keep the Premises and all
improvements and fixtures therein in the condition as existed on the
Commencement Date (or on any later date that the applicable improvements may
have been installed), excepting ordinary wear and tear. Notwithstanding Section
7.2 below, Tenant’s maintenance obligation shall include without limitation all
appliances, non-building standard lighting/electrical systems, and plumbing
fixtures and installations located within the Premises, together with any
supplemental HVAC equipment servicing only the Premises. All repairs shall be
at least equal in quality to the original work, shall be made only by a
licensed, bonded contractor approved in writing in advance by Landlord and
shall be made only at the time or times approved by Landlord. Any contractor
utilized by Tenant shall be subject to Landlord’s standard requirements for
contractors, as modified from time to time. Landlord may impose reasonable
restrictions and requirements with respect to repairs, as provided in Section
7.3, and the provisions of Section 7.4 shall apply to all repairs. Alternatively,
should Landlord or its management agent agree to make a repair on behalf of
Tenant and at Tenant’s request, Tenant shall promptly reimburse Landlord as
additional rent for all costs incurred (including the standard coordination fee
of Landlord’s management agent) upon submission of an invoice.


 


SECTION 7.2. LANDLORD’S MAINTENANCE AND REPAIR. Subject to Article XI, Landlord shall
provide service, maintenance and repair with respect to the heating,
ventilating and air conditioning (“HVAC”) equipment of the Building (exclusive
of any supplemental HVAC equipment servicing only the Premises) and shall
maintain in good repair the Common Areas, roof, foundations, footings, the
exterior surfaces of the exterior walls of the Building, and the structural,
electrical, mechanical and plumbing systems of the Building except as provided
in Section 7.1 above. Landlord shall have the right to employ or designate any
reputable person or firm, including any employee or agent of Landlord or any of
Landlord’s affiliates or divisions, to perform any service, repair or 


 


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maintenance
function. Landlord need not make any other improvements or repairs except as
specifically required under this Lease, and nothing contained in this Section
shall limit Landlord’s right to reimbursement from Tenant for maintenance,
repair costs and replacement costs as provided elsewhere in this Lease. Tenant
understands that it shall not make repairs at Landlord’s expense or by rental
offset. Except as provided in Sections 11.1 and 12.1 below, there shall be no
abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant’s business arising from the making of any repairs,
alterations or improvements to any portion of the Building, including repairs
to the Premises, nor shall any related activity by Landlord constitute an
actual or constructive eviction; provided, however, that in making repairs,
alterations or improvements, Landlord shall interfere as little as reasonably
practicable with the conduct of Tenant’s business in the Premises.


 


SECTION 7.3. ALTERATIONS. Tenant shall make no alterations, additions
or improvements to the Premises without the prior written consent of Landlord. Landlord’s
consent shall not be unreasonably withheld as long as the proposed changes do
not affect the structural, electrical or mechanical components or systems of
the Building, are not visible from the exterior of the Premises, and utilize
only building standard materials. Landlord may impose, as a condition to its
consent, any requirements that Landlord in its discretion may deem reasonable
or desirable, including but not limited to a requirement that all work be
covered by a lien and completion bond satisfactory to Landlord and requirements
as to the manner, time, and contractor for performance of the work. Without
limiting the generality of the foregoing, Tenant shall use Landlord’s
designated mechanical and electrical contractors for all work affecting the
mechanical or electrical systems of the Building. Should Tenant perform any
work that would necessitate any ancillary Building modification or other
expenditure by Landlord, then Tenant shall promptly fund the cost thereof to
Landlord. Tenant shall obtain all required permits for the work and shall
perform the work in compliance with all applicable laws, regulations and
ordinances, and Landlord shall be entitled to a supervision fee in the amount
of five percent (5%) of the cost of the work. Under no circumstances shall
Tenant make any improvement which incorporates asbestos-containing construction
materials into the Premises. In no event shall Tenant prosecute any alteration
work that results in picketing or labor demonstrations in or about the Building
or Project. Any request for Landlord’s consent shall be made in writing and
shall contain architectural plans describing the work in detail reasonably
satisfactory to Landlord. Landlord may elect to cause its architect to review
Tenant’s architectural plans, and the reasonable cost of that review shall be
reimbursed by Tenant. Should the work proposed by Tenant modify the internal
configuration of the Premises, then Tenant shall, at its expense, furnish
Landlord with as-built drawings and CAD disks compatible with Landlord’s
systems. Unless Landlord otherwise agrees in writing, all alterations,
additions or improvements affixed to the Premises (excluding moveable trade
fixtures and furniture) shall become the property of Landlord and shall be
surrendered with the Premises at the end of the Term, except that Landlord may,
by notice to Tenant given at the time of Landlord’s consent to the alteration
or improvement, require Tenant to remove by the Expiration Date, or sooner
termination date of this Lease, all or any alterations, decorations, fixtures,
additions, improvements and the like installed either by Tenant or by Landlord
at Tenant’s request. Tenant shall repair any damage to the Premises arising from
that removal and restore the affected area to its pre-existing condition,
reasonable wear and tear excepted. Landlord may require Tenant to remove an
improvement provided as part of the initial build-out pursuant to Exhibit X, if
any, if and only if the improvement is a non-building standard item and Tenant
is notified of the requirement prior to the build-out. Except as otherwise
provided in this Lease or in any Exhibit to this Lease, should Landlord make
any alteration or improvement to the Premises at the request of Tenant,
Landlord shall be entitled to prompt payment from Tenant of the cost thereof,
inclusive of the standard coordination fee of Landlord’s management agent.


 


SECTION 7.4. MECHANIC’S LIENS. Tenant shall keep the Premises free from any
liens arising out of any work performed, materials furnished, or obligations
incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly
cause any such lien to be released by posting a bond in accordance with
California Civil Code Section 3143 or any successor statute. In the event that
Tenant shall not, within thirty (30) days following the imposition of any lien,
cause the lien to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other available remedies, the right to
cause the lien to be released by any means it deems proper, including payment
of or defense against the claim giving rise to the lien. All expenses so
incurred by Landlord, including Landlord’s attorneys’ fees, shall be reimbursed
by Tenant promptly following Landlord’s demand, together with interest from the
date of payment by Landlord at the maximum rate permitted by law until paid. Tenant
shall give Landlord no less than twenty (20) days’ prior notice in writing
before commencing construction of any kind on the Premises so that Landlord may
post and maintain notices of nonresponsibility on the Premises.


 


SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times have
the right to enter the Premises to inspect them, to supply services in
accordance with this Lease, to protect the interests of Landlord in the
Premises, to make repairs and renovations as reasonably deemed necessary by
Landlord, and to submit the Premises to prospective or actual purchasers or encumbrance
holders (or, during the final twelve months of the Term or when an uncured
Tenant default exists, to prospective tenants), all without being deemed to
have caused an eviction of Tenant and without abatement of rent except as
provided elsewhere in this Lease. Landlord shall at all times have and retain a
key which unlocks all of the doors in the Premises, excluding Tenant’s vaults
and safes, and Landlord shall have the right to use any and all means which
Landlord may deem proper to open the doors in an emergency in order to obtain
entry to the Premises, and any entry to the 


 


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Premises
obtained by Landlord shall not under any circumstances be deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises, or any
eviction of Tenant from the Premises.


 


SECTION 7.6.
SPACE PLANNING AND SUBSTITUTION. Landlord shall have the right, upon providing not less than
forty-five (45) days written notice, to move Tenant to other space of
comparable size in the Building or in the Project. The new space must contain
similar finishes as the Premises, and approximately the same rentable square
footage as the Premises and the same number of work stations, offices,
breakrooms and reception areas as are contained in the Premises as of the date
Tenant receives Landlord’s notice of relocation.The total monthly Basic Rent
for the new space shall in no event exceed the total monthly Basic Rent for the
Premises prior to the relocation, and Tenant’s proportionate share for the new
space shall in no event exceed Tenant’s proportionate share for the Premises
prior to the relocation. Landlord shall pay the reasonable out-of-pocket costs
to relocate and reconnect Tenant’s personal property and equipment within the
new space; provided that Landlord may elect to cause such work to be done by
its contractors. Landlord shall also reimburse Tenant for such other reasonable
out-of-pocket costs that Tenant may incur in connection with the relocation,
including without limitation necessary stationery revisions, provided that a
reasonable estimate thereof is given to Landlord within twenty (20) days
following Landlord’s notice. In no event, however, shall Landlord be obligated
to incur or fund total relocation costs, exclusive of tenant improvement
expenditures, in an amount in excess of two (2) months of Basic Rent at the
rate then payable hereunder. Landlord shall also reimburse Tenant for the
reasonable cost to install and connect telecommunication and data cabling in
the new space in the manner and to the extent such cabling existed in the
Premises prior to the relocation. Within ten (10) days following request by
Landlord, Tenant shall execute an amendment to this Lease prepared by Landlord
to memorialize the relocation. Should Tenant fail timely to execute and deliver
the amendment to Landlord, or should Tenant thereafter fail to comply with the
terms thereof, then Landlord may at its option elect to terminate this Lease
upon not less than sixty (60) days prior written notice to Tenant. Upon the
effective date of any termination of this Lease, Tenant shall vacate the
Premises in accordance with Section 15.3.


 


ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT’S
PROPERTY


 


Tenant
shall be liable for and shall pay before delinquency, all taxes and assessments
levied against all personal property of Tenant located in the Premises. When
possible Tenant shall cause its personal property to be assessed and billed
separately from the real property of which the Premises form a part. If any
taxes on Tenant’s personal property are levied against Landlord or Landlord’s
property and if Landlord pays the same, or if the assessed value of Landlord’s
property is increased by the inclusion of a value placed upon the personal
property of Tenant and if Landlord pays the taxes based upon the increased
assessment, Tenant shall pay to Landlord the taxes so levied against Landlord
or the proportion of the taxes resulting from the increase in the assessment.


 


ARTICLE IX. ASSIGNMENT AND SUBLETTING


 


SECTION 9.1. RIGHTS OF PARTIES.


 


(a)        Except as otherwise specifically provided herein, Tenant may not, either
voluntarily or by operation of law, assign, sublet, encumber, or otherwise
transfer all or any part of Tenant’s interest in this Lease, or permit the
Premises to be occupied by anyone other than Tenant, without Landlord’s prior
written consent, which consent shall not unreasonably be withheld in accordance
with the provisions of Section 9.1(c). For purposes of this Lease, references
to any subletting, sublease or variation thereof shall be deemed to apply not
only to a sublease effected directly by Tenant, but also to a sub-subletting or
an assignment of subtenancy by a subtenant at any level. No assignment (whether
voluntary, involuntary or by operation of law) and no subletting shall be valid
or effective without Landlord’s prior written consent and, at Landlord’s
election, shall constitute a material default of this Lease. Landlord shall not
be deemed to have given its consent to any assignment or subletting by any
other course of action, including its acceptance of any name for listing in the
Building directory. To the extent not prohibited by provisions of the
Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the “Bankruptcy Code”),
including Section 365(f)(1), Tenant on behalf of itself and its creditors,
administrators and assigns waives the applicability of Section 365(e) of the
Bankruptcy Code unless the proposed assignee of the Trustee for the estate of
the bankrupt meets Landlord’s standard for consent as set forth in Section
9.1(c) of this Lease. If this Lease is assigned to any person or entity
pursuant to the provisions of the Bankruptcy Code, any and all monies or other
considerations to be delivered in connection with the assignment shall be
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to
have assumed all of the obligations arising under this Lease on and after the
date of the assignment, and shall upon demand execute and deliver to Landlord
an instrument confirming that assumption.


 


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(b)        The sale of all or substantially all of the assets of Tenant (other than
bulk sales in the ordinary course of business) shall be deemed an assignment
within the meaning and provisions of this Article.


 


(c)        Except as otherwise specifically provided herein, if Tenant or any
subtenant hereunder desires to transfer an interest in this Lease, Tenant shall
first notify Landlord and request in writing Landlord’s consent to the transfer.
Tenant shall also submit in writing to Landlord:  (i) the name and address of the proposed
transferee; (ii) the nature of any proposed subtenant’s or assignee’s business
to be carried on in the Premises; (iii) the terms and provisions of any
proposed sublease or assignment (including without limitation the rent and
other economic provisions, term, improvement obligations and commencement
date); (iv) evidence that the proposed assignee or subtenant will comply with
the requirements of Exhibit D to this Lease; and (v) any other information requested
by Landlord and reasonably related to the transfer. Except as provided in
Subsection (d) of this Section, Landlord shall not unreasonably withhold its
consent, provided:  (1) the use of the
Premises will be consistent with the provisions of this Lease and with Landlord’s
commitment to other tenants of the Building and Project; (2) any proposed
subtenant or assignee demonstrates that it is financially responsible by
submission to Landlord of all reasonable information as Landlord may request
concerning the proposed subtenant or assignee, including, but not limited to, a
balance sheet of the proposed subtenant or assignee as of a date within ninety
(90) days of the request for Landlord’s consent and statements of income or
profit and loss of the proposed subtenant or assignee for the two-year period
preceding the request for Landlord’s consent; (3) the proposed subtenant or
assignee is, in Landlord’s good faith determination, appropriate for tenancy in
a first class office project; (4) the proposed assignee or subtenant is neither
an existing tenant or occupant of the Building or Project nor a prospective
tenant with whom Landlord has been actively negotiating; and (5) the proposed
transferee is not an SDN (as defined below) and will not impose additional
burdens or security risks on Landlord. If Landlord consents to the proposed
transfer, then the transfer may be effected within ninety (90) days after the
date of the consent upon the terms described in the information furnished to
Landlord; provided that any material change in the terms shall be subject to
Landlord’s consent as set forth in this Section. Landlord shall approve or
disapprove any requested transfer within thirty (30) days following receipt of
Tenant’s written notice and the information set forth above. Tenant shall pay
to Landlord a transfer fee of Five Hundred Dollars ($500.00) if and when any
transfer request submitted by Tenant is approved.


 


(d)        Notwithstanding the provisions of Subsection (c) above, in lieu of
consenting to a proposed assignment or subletting, Landlord may elect to (i)
sublease the Premises (or the portion proposed to be subleased), or take an
assignment of Tenant’s interest in this Lease, upon the same terms as offered
to the proposed subtenant or assignee (excluding terms relating to the purchase
of personal property, the use of Tenant’s name or the continuation of Tenant’s
business), or (ii) terminate this Lease as to the portion of the Premises
proposed to be subleased or assigned with a proportionate abatement in the rent
payable under this Lease, effective on the date that the proposed sublease or
assignment would have commenced. Landlord may thereafter, at its option, assign
or re-let any space so recaptured to any third party, including without
limitation the proposed transferee identified by Tenant.


 


(e)        Should any assignment or subletting occur, Tenant shall promptly pay or
cause to be paid to Landlord, as additional rent, fifty percent (50%) of any
amounts paid by the assignee or subtenant, however described and whether funded
during or after the Lease Term, to the extent such amounts are in excess of the
sum of (i) the scheduled rental sums payable by Tenant hereunder (or, in the
event of a subletting of only a portion of the Premises, the rent allocable to
such portion as reasonably determined by Landlord) and (ii) the direct
out-of-pocket costs, as evidenced by third party invoices provided to Landlord,
incurred by Tenant to effect the transfer, which costs shall be amortized over
the remaining Term of this Lease or, if shorter, over the term of the sublease.
Upon request by Landlord, Tenant and all other parties to the transfer shall
memorialize in writing the amounts to be paid pursuant to this paragraph.


 


(f)         Notwithstanding the foregoing, provided Tenant is not then in default
hereunder, Tenant may, without Landlord’s prior consent but with prior written
notice to Landlord and subject to the provisions of Section 9.2, assign or
transfer its right, title and interest in this Lease or sublease the Premises
to any of the following: (i) any entity resulting from a merger or
consolidation with Tenant; (ii) any entity succeeding to the business and
assets of Tenant; or (iii) any entity controlling, controlled by, or under
common control with, Tenant (collectively, “Tenant Affiliate”). Promptly
following the effectiveness of any such transfer, Tenant shall provide to
Landlord copies of all pertinent transfer documents and such other information
pertaining thereto as Landlord may reasonably request.


 


SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant, or any successor-in-interest to
Tenant hereunder, of its obligation to pay rent and to perform all its other
obligations under this Lease. Moreover, Tenant shall indemnify and hold
Landlord harmless, as provided in Section 10.3, for any act or omission by an
assignee or subtenant. Each assignee, other than Landlord, shall be deemed to
assume all obligations of Tenant under this Lease and shall be liable jointly
and severally with Tenant for the payment of all rent, and for the due
performance of all of Tenant’s obligations, under this Lease. Such joint and
several liability shall not be discharged or impaired by any subsequent
modification or extension of this Lease. No transfer shall be binding on
Landlord unless any document memorializing the transfer is delivered to
Landlord, both the assignee/subtenant and Tenant deliver to Landlord an
executed consent to transfer 


 


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instrument
prepared by Landlord and consistent with the requirements of this Article, and
the assignee/subtenant independently complies with all of the insurance
requirements of Tenant as set forth in Exhibit D and evidence thereof is
delivered to Landlord. The acceptance by Landlord of any payment due under this
Lease from any other person shall not be deemed to be a waiver by Landlord of
any provision of this Lease or to be a consent to any transfer. Consent by
Landlord to one or more transfers shall not operate as a waiver or estoppel to
the future enforcement by Landlord of its rights under this Lease. In addition
to the foregoing, no change in the status of Tenant or any party jointly and
severally liable with Tenant as aforesaid (e.g., by conversion to a limited
liability company or partnership) shall serve to abrogate the liability of any
person or entity for the obligations of Tenant, including any obligations that
may be incurred by Tenant after the status change by exercise of a pre-existing
right in this Lease.


 


SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions shall
apply to any subletting by Tenant of all or any part of the Premises and shall
be included in each sublease:


 


(a)        Tenant hereby irrevocably assigns to Landlord all of Tenant’s interest
in all rentals and income arising from any sublease of the Premises, and
Landlord may collect such rent and income and apply same toward Tenant’s
obligations under this Lease; provided, however, that until a default occurs in
the performance of Tenant’s obligations under this Lease, Tenant shall have the
right to receive and collect the sublease rentals. Landlord shall not, by
reason of this assignment or the collection of sublease rentals, be deemed
liable to the subtenant for the performance of any of Tenant’s obligations
under the sublease. Tenant hereby irrevocably authorizes and directs any
subtenant, upon receipt of a written notice from Landlord stating that an
uncured default exists in the performance of Tenant’s obligations under this
Lease, to pay to Landlord all sums then and thereafter due under the sublease. Tenant
agrees that the subtenant may rely on that notice without any duty of further
inquiry and notwithstanding any notice or claim by Tenant to the contrary. Tenant
shall have no right or claim against the subtenant or Landlord for any rentals
so paid to Landlord. In the event Landlord collects amounts from subtenants
that exceed the total amount then due from Tenant hereunder, Landlord shall
promptly remit the excess to Tenant.


 


(b)        In the event of the termination of this Lease, Landlord may, at its sole
option, take over Tenant’s entire interest in any sublease and, upon notice
from Landlord, the subtenant shall attorn to Landlord. In no event, however,
shall Landlord be liable for any previous act or omission by Tenant under the
sublease or for the return of any advance rental payments or deposits under the
sublease that have not been actually delivered to Landlord, nor shall Landlord
be bound by any sublease modification executed without Landlord’s consent or
for any advance rental payment by the subtenant in excess of one month’s rent. The
general provisions of this Lease, including without limitation those pertaining
to insurance and indemnification, shall be deemed incorporated by reference
into the sublease despite the termination of this Lease.


 


(c)        Tenant agrees that Landlord may, at its sole option, authorize a
subtenant of the Premises to cure a default by Tenant under this Lease. Should
Landlord accept such cure, the subtenant shall have a right of reimbursement
and offset from and against Tenant under the applicable sublease.


 


ARTICLE X. INSURANCE AND INDEMNITY


 


SECTION 10.1. TENANT’S INSURANCE. Tenant, at its sole cost and expense, shall
provide and maintain in effect the insurance described in Exhibit D. Evidence
of that insurance must be delivered to Landlord prior to the Commencement Date.


 


SECTION 10.2. LANDLORD’S INSURANCE. Landlord may, at its election, provide any
or all of the following types of insurance, with or without deductible and in
amounts and coverages as may be determined by Landlord in its discretion:  property insurance, subject to standard
exclusions, covering the Building or Project, and such other risks as Landlord
or its mortgagees may from time to time deem appropriate, and commercial
general liability coverage. Landlord shall not be required to carry insurance
of any kind on any tenant improvements or alterations in the Premises installed
by Tenant or its contractors or otherwise removable by Tenant (collectively, “Tenant
Installations”), as well as any trade fixtures, furnishings, equipment,
interior plate glass, signs and all items of personal property in the Premises,
and Landlord shall not be obligated to repair or replace any of the foregoing
items should damage occur. All proceeds of insurance maintained by Landlord
upon the Building and Project shall be the property of Landlord, whether or not
Landlord is obligated to or elects to make any repairs.


 


SECTION 10.3. TENANT’S INDEMNITY. To the fullest extent permitted by law, but
subject to Section 10.5 below, Tenant shall defend, indemnify and hold harmless
Landlord, its agents, lenders, and any and all affiliates of Landlord
(collectively, the “Indemnified Parties”), from and against any and all claims,
liabilities, costs or expenses arising either before or after the Commencement
Date from Tenant’s use or occupancy of the Premises, the Building or the Common
Areas, or from the conduct of its business, or from any activity, work, or
thing done, permitted or suffered by Tenant or its agents, employees,
subtenants, vendors, contractors, invitees or licensees in or about the
Premises, the 


 


13

















 


Building
or the Common Areas, or from any default in the performance of any obligation
on Tenant’s part to be performed under this Lease, or from any act or
negligence of Tenant or its agents, employees, subtenants, vendors,
contractors, invitees or licensees. Landlord may, at its option, require Tenant
to assume Landlord’s defense in any action covered by this Section through
counsel reasonably satisfactory to Landlord.


 


SECTION 10.4. LANDLORD’S NONLIABILITY. Landlord shall not be liable to Tenant, its
employees, agents and invitees, and Tenant hereby waives all claims against
Landlord, its employees and agents for loss of or damage to any property, or
any injury to any person, or loss or interruption of business or income,
resulting from any condition including, but not limited to, fire, explosion,
falling plaster, steam, gas, electricity, water or rain which may leak or flow
from or into any part of the Premises or from the breakage, leakage,
obstruction or other defects of the pipes, sprinklers, wires, appliances,
plumbing, air conditioning, electrical works or other fixtures in the Building,
whether the damage or injury results from conditions arising in the Premises or
in other portions of the Building. It is understood that any such condition may
require the temporary evacuation or closure of all or a portion of the Building.
Should Tenant elect to receive any service from a concessionaire, licensee or
third party tenant of Landlord, Tenant shall not seek recourse against Landlord
for any breach or liability of that service provider. Neither Landlord nor its
agents shall be liable for interference with light or other similar intangible
interests. Tenant shall immediately notify Landlord in case of fire or accident
in the Premises, the Building or the Project and of defects in any improvements
or equipment.


 


SECTION
10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby
waives all rights of recovery against the other on account of loss and damage
occasioned to the property of such waiving party to the extent that the waiving
party is entitled to proceeds for such loss and damage under any property
insurance policies carried or otherwise required to be carried by this Lease. By
this waiver it is the intent of the parties that neither Landlord nor Tenant
shall be liable to any insurance company (by way of subrogation or otherwise)
insuring the other party for any loss or damage insured against under any
property insurance policies, even though such loss or damage might be
occasioned by the negligence of such party, its agents, employees, contractors
or invitees. The foregoing waiver by Tenant shall also inure to the benefit of
Landlord’s management agent for the Building.


 


ARTICLE XI. DAMAGE OR DESTRUCTION


 


SECTION 11.1. RESTORATION.


 


(a)        If the Building of which the Premises are a part is damaged as the
result of an event of casualty, then subject to the provisions below, Landlord
shall repair that damage as soon as reasonably possible unless:  (i) Landlord reasonably determines that the
cost of repair would exceed ten percent (10%) of the full replacement cost of
the Building (“Replacement Cost”) and the damage is not covered by Landlord’s
fire and extended coverage insurance (or by a normal extended coverage policy
should Landlord fail to carry that insurance); or (ii) Landlord reasonably determines
that the cost of repair would exceed twenty-five percent (25%) of the
Replacement Cost; or (iii) Landlord reasonably determines that the cost of
repair would exceed ten percent (10%) of the Replacement Cost and the damage
occurs during the final twelve (12) months of the Term. Should Landlord elect
not to repair the damage for one of the preceding reasons, Landlord shall so
notify Tenant in the “Casualty Notice” (as defined below), and this Lease shall
terminate as of the date of delivery of that notice.


 


(b)        As soon as reasonably practicable following the casualty event but not
later than sixty (60) days thereafter, Landlord shall notify Tenant in writing
(“Casualty Notice”) of Landlord’s election, if applicable, to terminate this
Lease. If this Lease is not so terminated, the Casualty Notice shall set forth
the anticipated period for repairing the casualty damage. If the anticipated
repair period exceeds two hundred seventy (270) days and if the damage is so
extensive as to reasonably prevent Tenant’s substantial use and enjoyment of
the Premises, then Tenant may elect to terminate this Lease by written notice
to Landlord within ten (10) days following delivery of the Casualty Notice.


 


(c)        To the extent and for the period that Landlord is entitled to
reimbursement from the proceeds of rental interruption insurance carried by
Landlord as part of Operating Expenses, the rental to be paid under this Lease
shall be abated in the same proportion that the floor area of the Premises that
is rendered unusable by the damage from time to time bears to the total floor
area of the Premises.


 


(d)        Notwithstanding the provisions of subsections (a), (b) and (c) of this
Section, but subject to Section 10.5, the cost of any repairs shall be borne by
Tenant, and Tenant shall not be entitled to rental abatement or termination
rights, if the damage is due to the fault or neglect of Tenant or its
employees, subtenants, contractors, invitees or representatives. In addition,
the provisions of this Section shall not be deemed to require Landlord to
repair any Tenant Installations, fixtures and other items that Tenant is
obligated to insure pursuant to Exhibit D or any other provision of this Lease.


 


SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of
law.


 


14

















 


ARTICLE XII. EMINENT DOMAIN


 


SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the Premises
is taken by any lawful authority by exercise of the right of eminent domain, or
sold to prevent a taking, either Tenant or Landlord may terminate this Lease
effective as of the date possession is required to be surrendered to the
authority. In the event title to a portion of the Building or Project, other
than the Premises, is taken or sold in lieu of taking, and if Landlord elects
to restore the Building in such a way as to alter the Premises materially,
either party may terminate this Lease, by written notice to the other party,
effective on the date of vesting of title. In the event neither party has
elected to terminate this Lease as provided above, then Landlord shall
promptly, after receipt of a sufficient condemnation award, proceed to restore
the Premises to substantially their condition prior to the taking, and a
proportionate allowance shall be made to Tenant for the rent corresponding to
the time during which, and to the part of the Premises of which, Tenant is
deprived on account of the taking and restoration. In the event of a taking,
Landlord shall be entitled to the entire amount of the condemnation award
without deduction for any estate or interest of Tenant; provided that nothing
in this Section shall be deemed to give Landlord any interest in, or prevent
Tenant from seeking any award against the taking authority for, the taking of
personal property and fixtures belonging to Tenant or for relocation or
business interruption expenses recoverable from the taking authority.


 


SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed ninety (90)
days.


 


SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a taking of the
parking area such that Landlord can no longer provide sufficient parking to
comply with this Lease, Landlord may substitute reasonably equivalent parking
in a location reasonably close to the Building; provided that if Landlord fails
to make that substitution within ninety (90) days following the taking and if
the taking materially impairs Tenant’s use and enjoyment of the Premises,
Tenant may, at its option, terminate this Lease by written notice to Landlord. If
this Lease is not so terminated by Tenant, there shall be no abatement of rent
and this Lease shall continue in effect.


 


ARTICLE XIII. SUBORDINATION;
ESTOPPEL CERTIFICATE


 


SECTION 13.1. SUBORDINATION. At the option of Landlord or any of its
mortgagees/deed of trust beneficiaries, this Lease shall be either superior or
subordinate to all ground or underlying leases, mortgages and deeds of trust,
if any, which may hereafter affect the Building, and to all renewals,
modifications, consolidations, replacements and extensions thereof; provided,
that so long as Tenant is not in default under this Lease, this Lease shall not
be terminated or Tenant’s quiet enjoyment of the Premises disturbed in the
event of termination of any such ground or underlying lease, or the foreclosure
of any such mortgage or deed of trust, to which this Lease has been
subordinated pursuant to this Section. In the event of a termination or
foreclosure, Tenant shall become a tenant of and attorn to the
successor-in-interest to Landlord upon the same terms and conditions as are
contained in this Lease, and shall promptly execute any instrument reasonably
required by Landlord’s successor for that purpose. Tenant shall also, within
ten (10) days following written request of Landlord (or the beneficiary under
any deed of trust encumbering the Building), execute and deliver all
instruments as may be required from time to time by Landlord or such
beneficiary (including without limitation any subordination, nondisturbance and
attornment agreement in the form customarily required by such beneficiary) to
subordinate this Lease and the rights of Tenant under this Lease to any ground
or underlying lease or to the lien of any mortgage or deed of trust; provided,
however, that any such beneficiary may, by written notice to Tenant given at
any time, subordinate the lien of its deed of trust to this Lease. Tenant shall
agree that any purchaser at a foreclosure sale or lender taking title under a
deed in lieu of foreclosure shall not be responsible for any act or omission of
a prior landlord, shall not be subject to any offsets or defenses Tenant may
have against a prior landlord, and shall not be liable for the return of any
security deposit not actually recovered by such purchaser or bound by any rent
paid in advance of the calendar month in which the transfer of title occurred;
provided that the foregoing shall not release the applicable prior landlord
from any liability for those obligations. Tenant acknowledges that Landlord’s
mortgagees and successors-in-interest and all beneficiaries under deeds of trust
encumbering the Building are intended third party beneficiaries of this
Section.


 


SECTION 13.2. ESTOPPEL CERTIFICATE. Tenant shall, within ten (10) days following
written notice from Landlord, execute, acknowledge and deliver to Landlord, in
any form that Landlord may reasonably require, a statement in writing in favor
of Landlord and/or any prospective purchaser or encumbrancer of the Building
(i) certifying that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of the modification and certifying that this
Lease, as modified, is in full force and effect) and the dates to which the
rental, additional rent and other charges have been paid in advance, if any,
and (ii) acknowledging that, to Tenant’s knowledge, there are no uncured
defaults on 


 


15

















 


the
part of Landlord, or specifying each default if any are claimed, and (iii)
setting forth all further information that Landlord may reasonably require. Tenant’s
statement may be relied upon by any prospective purchaser or encumbrancer of
all or any portion of the Building or Project. In addition to Landlord’s other
rights and remedies, Tenant’s failure to deliver any estoppel statement within
the provided time shall be conclusive upon Tenant that (i) this Lease is in
full force and effect, without modification except as may be represented by
Landlord, (ii) there are no uncured defaults in Landlord’s performance, and
(iii) not more than one month’s rental has been paid in advance.


 


ARTICLE XIV. DEFAULTS AND REMEDIES


 


SECTION 14.1. TENANT’S DEFAULTS. In addition to any other event of default
set forth in this Lease, the occurrence of any one or more of the following
events shall constitute a default by Tenant:


 


(a)        The failure by Tenant to make any payment of rent required to be made by
Tenant, as and when due, where the failure continues for a period of three (3)
days after written notice from Landlord to Tenant; provided, however, that any
such notice shall be in lieu of, and not in addition to, any notice required
under California Code of Civil Procedure Section 1161 as amended. For purposes
of these default and remedies provisions, the term “additional rent” shall be
deemed to include all amounts of any type whatsoever other than Basic Rent to
be paid by Tenant pursuant to the terms of this Lease.


 


(b)        The assignment, sublease, encumbrance or other transfer of the Lease by
Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means, without the prior
written consent of Landlord unless otherwise authorized herein.


 


(c)        The discovery by Landlord that any financial statement provided by
Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.


 


(d)        The failure or inability by Tenant to observe or perform any of the
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in any other subsection of this Section, where the
failure continues for a period of thirty (30) days after written notice from
Landlord to Tenant; provided, however, that any such notice shall be in lieu
of, and not in addition to, any notice required under California Code of Civil
Procedure Section 1161 as amended. However, if the nature of the failure is
such that more than thirty (30) days are reasonably required for its cure, then
Tenant shall not be deemed to be in default if Tenant commences the cure within
thirty (30) days, and thereafter diligently pursues the cure to completion.


 


(e)        (i)  The making by Tenant of any
general assignment for the benefit of creditors; (ii) the filing by or against
Tenant of a petition to have Tenant adjudged a Chapter 7 debtor under the
Bankruptcy Code or to have debts discharged or a petition for reorganization or
arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenant, the same is dismissed within sixty (60) days);
(iii) the appointment of a trustee or receiver to take possession of substantially
all of Tenant’s assets located at the Premises or of Tenant’s interest in this
Lease, if possession is not restored to Tenant within thirty (30) days; (iv)
the attachment, execution or other judicial seizure of substantially all of
Tenant’s assets located at the Premises or of Tenant’s interest in this Lease,
where the seizure is not discharged within thirty (30) days; or (v) Tenant’s
convening of a meeting of its creditors for the purpose of effecting a
moratorium upon or composition of its debts. Landlord shall not be deemed to
have knowledge of any event described in this subsection unless notification in
writing is received by Landlord, nor shall there be any presumption
attributable to Landlord of Tenant’s insolvency. In the event that any provision
of this subsection is contrary to applicable law, the provision shall be of no
force or effect.


 


SECTION 14.2. LANDLORD’S REMEDIES.


 


(a)            In the event of any default by Tenant, then in
addition to any other remedies available to Landlord, Landlord may exercise the
following remedies:


 


(i)            Landlord may terminate Tenant’s right to
possession of the Premises by any lawful means, in which case this Lease shall
terminate and Tenant shall immediately surrender possession of the Premises to
Landlord. Such termination shall not affect any accrued obligations of Tenant
under this Lease. Upon termination, Landlord shall have the right to reenter
the Premises and remove all persons and property. Landlord shall also be
entitled to recover from Tenant:


 


(1)     The worth at the time of award of the unpaid rent and additional rent
which had been earned at the time of termination;


 


(2)     The worth at the time of award of the amount by which the unpaid rent
and additional rent which would have been earned after termination until the
time of award exceeds the amount of such loss that Tenant proves could have
been reasonably avoided;


 


16
















 


(3)     The worth at the time of award of the
amount by which the unpaid rent and additional rent for the balance of the Term
after the time of award exceeds the amount of such loss that Tenant proves
could be reasonably avoided;


 


(4)     Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant’s failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result from Tenant’s default, including, but not
limited to, the cost of recovering possession of the Premises, commissions and
other expenses of reletting, including necessary repair, renovation,
improvement and alteration of the Premises for a new tenant, reasonable
attorneys’ fees, and any other reasonable costs; and


 


(5)     At Landlord’s election, all other amounts
in addition to or in lieu of the foregoing as may be permitted by law. The term
“rent” as used in this Lease shall be deemed to mean the Basic Rent and all
other sums required to be paid by Tenant to Landlord pursuant to the terms of
this Lease, including without limitation any sums that may be owing from Tenant
pursuant to Section 4.3 of this Lease. Any sum, other than Basic Rent, shall be
computed on the basis of the average monthly amount accruing during the
twenty-four (24) month period immediately prior to default, except that if it
becomes necessary to compute such rental before the twenty-four (24) month
period has occurred, then the computation shall be on the basis of the average
monthly amount during the shorter period. As used in subparagraphs (1) and (2)
above, the “worth at the time of award” shall be computed by allowing interest
at the rate of ten percent (10%) per annum. As used in subparagraph (3) above,
the “worth at the time of award” shall be computed by discounting the amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).


 


(ii)    Landlord may elect not to terminate Tenant’s
right to possession of the Premises, in which event Landlord may continue to
enforce all of its rights and remedies under this Lease, including the right to
collect all rent as it becomes due. Efforts by the Landlord to maintain,
preserve or relet the Premises, or the appointment of a receiver to protect the
Landlord’s interests under this Lease, shall not constitute a termination of
the Tenant’s right to possession of the Premises. In the event that Landlord
elects to avail itself of the remedy provided by this subsection (ii), Landlord
shall not unreasonably withhold its consent to an assignment or subletting of
the Premises subject to the reasonable standards for Landlord’s consent as are
contained in this Lease.


 


(b)          The various rights and remedies
reserved to Landlord in this Lease or otherwise shall be cumulative and, except
as otherwise provided by California law, Landlord may pursue any or all of its
rights and remedies at the same time. No delay or omission of Landlord to
exercise any right or remedy shall be construed as a waiver of the right or
remedy or of any breach or default by Tenant. The acceptance by Landlord of
rent shall not be a (i) waiver of any preceding breach or default by Tenant of
any provision of this Lease, other than the failure of Tenant to pay the
particular rent accepted, regardless of Landlord’s knowledge of the preceding
breach or default at the time of acceptance of rent, or (ii) a waiver of
Landlord’s right to exercise any remedy available to Landlord by virtue of the
breach or default. The acceptance of any payment from a debtor in possession, a
trustee, a receiver or any other person acting on behalf of Tenant or Tenant’s
estate shall not waive or cure a default under Section 14.1. No payment by
Tenant or receipt by Landlord of a lesser amount than the rent required by this
Lease shall be deemed to be other than a partial payment on account of the
earliest due stipulated rent, nor shall any endorsement or statement on any
check or letter be deemed an accord and satisfaction and Landlord shall accept
the check or payment without prejudice to Landlord’s right to recover the
balance of the rent or pursue any other remedy available to it. Tenant hereby
waives any right of redemption or relief from forfeiture under California Code
of Civil Procedure Section 1174 or 1179, or under any other present or future
law, in the event this Lease is terminated by reason of any default by Tenant. No
act or thing done by Landlord or Landlord’s agents during the Term shall be
deemed an acceptance of a surrender of the Premises, and no agreement to accept
a surrender shall be valid unless in writing and signed by Landlord. No
employee of Landlord or of Landlord’s agents shall have any power to accept the
keys to the Premises prior to the termination of this Lease, and the delivery
of the keys to any employee shall not operate as a termination of the Lease or
a surrender of the Premises.


 


SECTION 14.3. LATE PAYMENTS.


 


(a)        Any rent due under this Lease that is
not paid to Landlord within five (5) days of the date when due shall bear
interest at the maximum rate permitted by law from the date due until fully
paid. The payment of interest shall not cure any default by Tenant under this
Lease. In addition, Tenant acknowledges that the late payment by Tenant to
Landlord of rent will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult and impracticable
to ascertain. Those costs may include, but are not limited to, administrative,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any ground lease, mortgage or trust deed covering the
Premises. Accordingly, if any rent due from Tenant shall not be received by
Landlord or Landlord’s designee within five (5) days after the date due, then
Tenant shall pay to Landlord, in addition to the interest provided above, a
late charge for each delinquent payment equal to the greater of (i) five
percent (5%) of that delinquent payment or (ii) One Hundred Dollars ($100.00). Acceptance
of a late charge by Landlord shall not constitute a waiver of 


 


17

















 


Tenant’s
default with respect to the overdue amount, nor shall it prevent Landlord from
exercising any of its other rights and remedies.


 


(b)        Following each second consecutive
installment of Basic Rent that is not paid within five (5) days following
notice of nonpayment from Landlord, Landlord shall have the option (i) to
require that beginning with the first payment of Basic Rent next due, Basic
Rent shall no longer be paid in monthly installments but shall be payable
quarterly three (3) months in advance and/or (ii) to require that Tenant
increase the amount, if any, of the Security Deposit by one hundred percent
(100%). Should Tenant deliver to Landlord, at any time during the Term, two (2)
or more insufficient checks, the Landlord may require that all monies then and
thereafter due from Tenant be paid to Landlord by cashier’s check.


 


SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be performed
by Tenant under this Lease shall be performed at Tenant’s sole cost and expense
and without any abatement of rent or right of set-off. If Tenant fails to pay
any sum of money, or fails to perform any other act on its part to be performed
under this Lease, and the failure continues beyond any applicable grace period
set forth in Section 14.1, then in addition to any other available remedies,
Landlord may, at its election, make the payment or perform the other act on
Tenant’s part. Landlord’s election to make the payment or perform the act on
Tenant’s part shall not give rise to any responsibility of Landlord to continue
making the same or similar payments or performing the same or similar acts. Tenant
shall, promptly upon demand by Landlord, reimburse Landlord for all sums paid
by Landlord and all necessary incidental costs, together with interest at the
maximum rate permitted by law from the date of the payment by Landlord.


 


SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease unless and until
it has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion.


 


SECTION 14.6. EXPENSES AND LEGAL FEES. Should either Landlord or Tenant bring any
action in connection with this Lease, the prevailing party shall be entitled to
recover as a part of the action its reasonable attorneys’ fees, and all other
costs. The prevailing party for the purpose of this paragraph shall be
determined by the trier of the facts.


 


SECTION 14.7. WAIVER OF JURY TRIAL/JUDICIAL REFERENCE.


 


(a)        LANDLORD
AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF
COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHT TO TRIAL BY JURY, AND EACH
PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY
HERETO AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF
THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE.


 


(b)        IN
THE EVENT THAT THE JURY WAIVER PROVISIONS OF SECTION 14.7(a) ARE NOT
ENFORCEABLE UNDER CALIFORNIA LAW, THEN THE PROVISIONS OF THIS SECTION 14.7(b)
SHALL APPLY. IT IS THE DESIRE AND INTENTION OF THE PARTIES TO AGREE UPON A
MECHANISM AND PROCEDURE UNDER WHICH CONTROVERSIES AND DISPUTES ARISING OUT OF
THIS LEASE OR RELATED TO THE PREMISES WILL BE RESOLVED IN A PROMPT AND
EXPEDITIOUS MANNER. ACCORDINGLY, EXCEPT WITH RESPECT TO ACTIONS FOR UNLAWFUL OR
FORCIBLE DETAINER OR WITH RESPECT TO THE PREJUDGMENT REMEDY OF ATTACHMENT, ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE
OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR SUBSIDIARY
OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY
CLAIM OF INJURY OR DAMAGE, SHALL BE HEARD AND RESOLVED BY A REFEREE UNDER THE
PROVISIONS OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, SECTIONS 638 – 645.1,
INCLUSIVE (AS SAME MAY BE AMENDED, OR ANY SUCCESSOR STATUTE(S) THERETO) (THE “REFEREE
SECTIONS”). ANY FEE TO INITIATE THE JUDICIAL REFERENCE PROCEEDINGS SHALL BE
PAID BY THE PARTY INITIATING SUCH PROCEDURE; PROVIDED HOWEVER, THAT THE COSTS
AND FEES, INCLUDING ANY INITIATION FEE, OF SUCH PROCEEDING SHALL ULTIMATELY BE
BORNE IN ACCORDANCE WITH SECTION 14.6 ABOVE. THE VENUE OF THE PROCEEDINGS SHALL
BE IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. WITHIN TEN (10) DAYS OF
RECEIPT BY ANY PARTY OF A WRITTEN REQUEST TO RESOLVE ANY DISPUTE OR CONTROVERSY
PURSUANT TO THIS SECTION 14.7(b), THE PARTIES SHALL AGREE UPON A SINGLE REFEREE
WHO SHALL TRY ALL ISSUES, WHETHER OF FACT OR LAW, AND REPORT A FINDING AND
JUDGMENT ON SUCH ISSUES AS REQUIRED BY THE REFEREE SECTIONS. 


 


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IF THE
PARTIES ARE UNABLE TO AGREE UPON A REFEREE WITHIN SUCH TEN (10) DAY PERIOD,
THEN ANY PARTY MAY THEREAFTER FILE A LAWSUIT IN THE COUNTY IN WHICH THE
PREMISES ARE LOCATED FOR THE PURPOSE OF APPOINTMENT OF A REFEREE UNDER
CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 AND 640, AS SAME MAY BE AMENDED
OR ANY SUCCESSOR STATUTE(S) THERETO. IF THE REFEREE IS APPOINTED BY THE COURT,
THE REFEREE SHALL BE A NEUTRAL AND IMPARTIAL RETIRED JUDGE WITH SUBSTANTIAL
EXPERIENCE IN THE RELEVANT MATTERS TO BE DETERMINED, FROM JAMS/ENDISPUTE, INC.,
THE AMERICAN ARBITRATION ASSOCIATION OR SIMILAR MEDIATION/ARBITRATION ENTITY. THE
PROPOSED REFEREE MAY BE CHALLENGED BY ANY PARTY FOR ANY OF THE GROUNDS LISTED
IN SECTION 641 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, AS SAME MAY BE
AMENDED OR ANY SUCCESSOR STATUTE(S) THERETO. THE REFEREE SHALL HAVE THE POWER
TO DECIDE ALL ISSUES OF FACT AND LAW AND REPORT HIS OR HER DECISION ON SUCH
ISSUES, AND TO ISSUE ALL RECOGNIZED REMEDIES AVAILABLE AT LAW OR IN EQUITY FOR
ANY CAUSE OF ACTION THAT IS BEFORE THE REFEREE, INCLUDING AN AWARD OF ATTORNEYS’
FEES AND COSTS IN ACCORDANCE WITH CALIFORNIA LAW. THE REFEREE SHALL NOT,
HOWEVER, HAVE THE POWER TO AWARD PUNITIVE DAMAGES, AND THE PARTIES HEREBY WAIVE
ANY RIGHT TO RECOVER ANY SUCH DAMAGES. THE REFEREE SHALL OVERSEE DISCOVERY AND
MAY ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE,
WITH RIGHTS TO REGULATE DISCOVERY AND TO ISSUE AND ENFORCE SUBPOENAS,
PROTECTIVE ORDERS AND OTHER LIMITATIONS ON DISCOVERY AVAILABLE UNDER CALIFORNIA
LAW; PROVIDED, HOWEVER, THAT THE REFEREE SHALL LIMIT DISCOVERY TO THAT WHICH IS
ESSENTIAL TO THE EFFECTIVE PROSECUTION OR DEFENSE OF THE ACTION, AND IN NO
EVENT SHALL DISCOVERY BY EITHER PARTY INCLUDE MORE THAN ONE NON-EXPERT WITNESS
DEPOSITION UNLESS BOTH PARTIES OTHERWISE AGREE. THE REFERENCE PROCEEDING SHALL
BE CONDUCTED IN ACCORDANCE WITH CALIFORNIA LAW (INCLUDING THE RULES OF
EVIDENCE), AND IN ALL REGARDS, THE REFEREE SHALL FOLLOW CALIFORNIA LAW
APPLICABLE AT THE TIME OF THE REFERENCE PROCEEDING. IN ACCORDANCE WITH SECTION
644 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, THE DECISION OF THE REFEREE UPON
THE WHOLE ISSUE MUST STAND AS THE DECISION OF THE COURT, AND UPON THE FILING OF
THE STATEMENT OF DECISION WITH THE CLERK OF THE COURT, OR WITH THE JUDGE IF
THERE IS NO CLERK, JUDGMENT MAY BE ENTERED THEREON IN THE SAME MANNER AS IF THE
ACTION HAD BEEN TRIED BY THE COURT. THE PARTIES SHALL PROMPTLY AND DILIGENTLY
COOPERATE WITH ONE ANOTHER AND THE REFEREE, AND SHALL PERFORM SUCH ACTS AS MAY
BE NECESSARY TO OBTAIN A PROMPT AND EXPEDITIOUS RESOLUTION OF THE DISPUTE OR
CONTROVERSY IN ACCORDANCE WITH THE TERMS OF THIS SECTION 14.7(b). TO THE EXTENT
THAT NO PENDING LAWSUIT HAS BEEN FILED TO OBTAIN THE APPOINTMENT OF A REFEREE,
ANY PARTY, AFTER THE ISSUANCE OF THE DECISION OF THE REFEREE, MAY APPLY TO THE
COURT OF THE COUNTY IN WHICH THE PREMISES ARE LOCATED FOR CONFIRMATION BY THE
COURT OF THE DECISION OF THE REFEREE IN THE SAME MANNER AS A PETITION FOR
CONFIRMATION OF AN ARBITRATION AWARD PURSUANT TO CODE OF CIVIL PROCEDURE
SECTION 1285 ET SEQ. (AS SAME MAY BE AMENDED OR ANY SUCCESSOR STATUTE(S)
THERETO).


 


ARTICLE XV. END OF TERM


 


SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after
the expiration shall not constitute a renewal or extension of this Lease, or
give Tenant any rights under this Lease, except when in writing signed by both
parties. If Tenant holds over for any period after the expiration (or earlier
termination) of the Term, Landlord may, at its option, treat Tenant as a tenant
at sufferance only, commencing on the first (1st) day following the
termination of this Lease. However, should Landlord accept the payment of
monthly hold-over rent by Tenant, then a month-to-month tenancy shall be deemed
effected and neither party shall terminate this Lease without thirty (30) days
prior written notice to the other party. Any hold-over by Tenant shall be
subject to all of the terms of this Lease, except that the monthly rental shall
be one hundred fifty percent (150%) of the total monthly rental for the month
immediately preceding the date of termination, subject to Landlord’s right to
modify same upon thirty (30) days notice to Tenant. The acceptance by Landlord
of monthly hold-over rental in a lesser amount shall not constitute a waiver of
Landlord’s right to recover the full amount due unless otherwise agreed in
writing by Landlord. If Tenant fails to surrender the Premises upon the
expiration of this Lease despite demand to do so by Landlord, Tenant shall
indemnify and hold Landlord harmless from all loss or liability, including
without limitation, any claims made by any succeeding tenant relating to such
failure to surrender. The foregoing provisions of this Section are in addition
to and do not affect Landlord’s right of re-entry or any other rights of
Landlord under this Lease or at law.


 


SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of this
Lease by Tenant, or a mutual termination of this Lease, shall terminate any or
all existing subleases unless Landlord, at its option, elects in writing to
treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.


 


19

















 


SECTION 15.3. SURRENDER OF PREMISES;  REMOVAL OF PROPERTY. Upon the Expiration Date or upon any earlier
termination of this Lease, Tenant shall quit and surrender possession of the
Premises to Landlord in as good order, condition and repair as when received or
as hereafter may be improved by Landlord or Tenant, reasonable wear and tear
and repairs which are Landlord’s obligation excepted, and shall remove or fund
to Landlord the cost of removing all wallpapering and voice and/or data
transmission cabling installed by or for Tenant, together with all personal
property and debris, except for any items that Landlord may by written
authorization allow to remain. Tenant shall repair all damage to the Premises
resulting from the removal and restore the affected area to its pre-existing
condition, reasonable wear and tear excepted, provided that Landlord may
instead elect to repair any structural damage at Tenant’s expense. If Tenant
shall fail to comply with the provisions of this Section, Landlord may effect
the removal and/or make any repairs, and the cost to Landlord shall be
additional rent payable by Tenant upon demand. If requested by Landlord, Tenant
shall execute, acknowledge and deliver to Landlord an instrument in writing
releasing and quitclaiming to Landlord all right, title and interest of Tenant
in the Premises.


 


ARTICLE XVI. PAYMENTS AND NOTICES


 


All
sums payable by Tenant to Landlord shall be paid, without deduction or offset,
in lawful money of the United States to Landlord at its address set forth in
Item 13 of the Basic Lease Provisions, or at any other place as Landlord may
designate in writing. Unless this Lease expressly provides otherwise, as for
example in the payment of rent pursuant to Section 4.1, all payments shall be
due and payable within five (5) days after demand. All payments requiring
proration shall be prorated on the basis of the number of days in the pertinent
calendar month or year, as applicable. Any notice, election, demand, consent,
approval or other communication to be given or other document to be delivered
by either party to the other may be delivered to the other party, at the
address set forth in Item 13 of the Basic Lease Provisions, by personal service
or electronic facsimile transmission, or by any courier or “overnight” express
mailing service, or may be deposited in the United States mail, postage prepaid.
Either party may, by written notice to the other, served in the manner provided
in this Article, designate a different address. If any notice or other document
is sent by mail, it shall be deemed served or delivered three (3) business days
after mailing or, if sooner, upon actual receipt. The refusal to accept
delivery of a notice, or the inability to deliver the notice (whether due to a
change of address for which notice was not duly given or other good reason),
shall be deemed delivery and receipt of the notice as of the date of attempted
delivery. If more than one person or entity is named as Tenant under this
Lease, service of any notice upon any one of them shall be deemed as service
upon all of them.


 


ARTICLE XVII. RULES AND REGULATIONS


 


Tenant
agrees to comply with the Rules and Regulations attached as Exhibit E, and any
reasonable and nondiscriminatory amendments, modifications and/or additions as
may be adopted and published by written notice to tenants by Landlord for the
safety, care, security, good order, or cleanliness of the Premises, Building,
Project and/or Common Areas. Landlord shall not be liable to Tenant for any
violation of the Rules and Regulations or the breach of any covenant or
condition in any lease or any other act or conduct by any other tenant, and the
same shall not constitute a constructive eviction hereunder. One or more
waivers by Landlord of any breach of the Rules and Regulations by Tenant or by
any other tenant(s) shall not be a waiver of any subsequent breach of that rule
or any other. Tenant’s failure to keep and observe the Rules and Regulations
shall constitute a default under this Lease. In the case of any conflict
between the Rules and Regulations and this Lease, this Lease shall be
controlling.


 


ARTICLE XVIII. BROKER’S COMMISSION


 


The
parties recognize as the broker(s) who negotiated this Lease the firm(s) whose
name(s) is (are) stated in Item 10 of the Basic Lease Provisions, and agree
that Landlord shall be responsible for the payment of brokerage commissions to
those broker(s) unless otherwise provided in this Lease. It is understood that
Landlord’s Broker represents only Landlord in this transaction and Tenant’s
Broker (if any) represents only Tenant. Each party warrants that it has had no
dealings with any other real estate broker or agent in connection with the
negotiation of this Lease, and agrees to indemnify and hold the other party
harmless from any cost, expense or liability (including reasonable attorneys’
fees) for any compensation, commissions or charges claimed by any other real
estate broker or agent employed or claiming to represent or to have been
employed by the indemnifying party in connection with the negotiation of this
Lease. The foregoing agreement shall survive the termination of this Lease.


 


20

















 


ARTICLE XIX. TRANSFER OF LANDLORD’S INTEREST


 


In
the event of any transfer of Landlord’s interest in the Premises, the
transferor shall be automatically relieved of all obligations on the part of
Landlord accruing under this Lease from and after the date of the transfer,
provided that Tenant is duly notified of the transfer. Any funds held by the
transferor in which Tenant has an interest shall be turned over, subject to
that interest, to the transferee. No holder of a mortgage and/or deed of trust
to which this Lease is or may be subordinate shall be responsible in connection
with the Security Deposit unless the mortgagee or holder of the deed of trust
actually receives the Security Deposit. It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall, subject to
the foregoing, be binding on Landlord, its successors and assigns, only during
and in respect to their respective successive periods of ownership.


 


ARTICLE XX. INTERPRETATION


 


SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease requires,
the words “Landlord” and “Tenant” shall include the plural as well as the
singular, and words used in neuter, masculine or feminine genders shall include
the others.


 


SECTION 20.2. HEADINGS. The captions and headings of the articles
and sections of this Lease are for convenience only, are not a part of this
Lease and shall have no effect upon its construction or interpretation.


 


SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or entity is named
as Tenant, the obligations imposed upon each shall be joint and several and the
act of or notice from, or notice or refund to, or the signature of, any one or
more of them shall be binding on all of them with respect to the tenancy of
this Lease, including, but not limited to, any renewal, extension, termination
or modification of this Lease.


 


SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights
and liabilities given to or imposed upon Landlord and Tenant shall extend to
and bind their respective heirs, executors, administrators, successors and
assigns. Nothing contained in this Section is intended, or shall be construed,
to grant to any person other than Landlord and Tenant and their successors and
assigns any rights or remedies under this Lease.


 


SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.


 


SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California. Should any
litigation be commenced between the parties in connection with this Lease, such
action shall be prosecuted in the applicable State Court of California in the
county in which the Building is located.


 


SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material
benefit by either party or the deletion of which is consented to by the party
adversely affected, shall be held invalid or unenforceable to any extent, the
remainder of this Lease shall not be affected and each term and provision of
this Lease shall be valid and enforceable to the fullest extent permitted by
law.


 


SECTION 20.8. WAIVER. One or more waivers by Landlord or Tenant of
any breach of any term, covenant or condition contained in this Lease shall not
be a waiver of any subsequent breach of the same or any other term, covenant or
condition. Consent to any act by one of the parties shall not be deemed to
render unnecessary the obtaining of that party’s consent to any subsequent act.
No breach of this Lease shall be deemed to have been waived unless the waiver
is in a writing signed by the waiving party.


 


SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall be delayed
or hindered in or prevented from the performance of any work or in performing
any act required under this Lease by reason of any cause beyond the reasonable
control of that party, then the performance of the work or the doing of the act
shall be excused for the period of the delay and the time for performance shall
be extended for a period equivalent to the period of the delay. The provisions
of this Section shall not operate to excuse Tenant from the prompt payment of
rent.


 


SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further effect. Tenant
waives its rights to rely on any representations or promises made by Landlord
or others which are not contained in this Lease. No verbal agreement or implied
covenant shall be held to modify the provisions of this Lease, any statute,
law, or custom to the contrary notwithstanding.


 


21

















 


SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of all
the covenants, terms and conditions on Tenant’s part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall have
the right of quiet enjoyment and use of the Premises for the Term without
hindrance or interruption by Landlord or any other person claiming by or
through Landlord.


 


SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of
the respective parties and their successors and assigns.


 


ARTICLE XXI. EXECUTION AND RECORDING


 


SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.


 


SECTION 21.2. CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a corporation, limited
liability company or partnership, each individual executing this Lease on
behalf of the entity represents and warrants that he is duly authorized to
execute and deliver this Lease and that this Lease is binding upon the
corporation, limited liability company or partnership in accordance with its
terms. Tenant shall, at Landlord’s request, deliver a certified copy of its
organizational documents or an appropriate certificate authorizing or
evidencing the execution of this Lease.


 


SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of this Lease to Tenant shall
be for examination purposes only, and shall not constitute an offer to or
option for Tenant to lease the Premises. Execution of this Lease by Tenant and
its return to Landlord shall not be binding upon Landlord, notwithstanding any
time interval, until Landlord has in fact executed and delivered this Lease to
Tenant, it being intended that this Lease shall only become effective upon
execution by Landlord and delivery of a fully executed counterpart to Tenant.


 


SECTION 21.4. RECORDING. Tenant shall not record this Lease without
the prior written consent of Landlord. Tenant, upon the request of Landlord,
shall execute and acknowledge a “short form” memorandum of this Lease for
recording purposes.


 


SECTION 21.5. AMENDMENTS. No amendment or mutual termination of this
Lease shall be effective unless in writing signed by authorized signatories of
Tenant and Landlord, or by their respective successors in interest. No actions,
policies, oral or informal arrangements, business dealings or other course of
conduct by or between the parties shall be deemed to modify this Lease in any
respect.


 


ARTICLE XXII. MISCELLANEOUS


 


SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees that the
terms of this Lease are confidential and constitute proprietary information of
Landlord. Disclosure of the terms could adversely affect the ability of
Landlord to negotiate other leases and impair Landlord’s relationship with
other tenants. Accordingly, Tenant agrees that it, and its partners, officers,
directors, employees and attorneys, shall not intentionally and voluntarily
disclose the terms and conditions of this Lease to any other tenant or apparent
prospective tenant of the Building or Project, either directly or indirectly,
without the prior written consent of Landlord, provided, however, that Tenant
may disclose the terms to prospective subtenants or assignees under this Lease
or pursuant to any legal requirement.


 


SECTION 22.2. REPRESENTATIONS BY TENANT. The application, financial statements and
tax returns, if any, submitted and certified to by Tenant as an accurate
representation of its financial condition have been prepared, certified and
submitted to Landlord as an inducement and consideration to Landlord to enter
into this Lease. The application and statements are represented and warranted
by Tenant to be correct and to accurately and fully reflect Tenant’s true
financial condition as of the date of execution of this Lease by Tenant. Tenant
shall during the Term promptly furnish Landlord with current annual financial
statements accurately reflecting Tenant’s financial condition upon written
request from Landlord.


 


SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with obtaining financing
for the Building, the lender shall request reasonable modifications in this
Lease as a condition to the financing, Tenant will not unreasonably withhold or
delay its consent, provided that the modifications do not materially increase
the obligations of Tenant or materially and adversely affect the leasehold
interest created by this Lease.


 


22

















 


SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the part of
Landlord which would otherwise entitle Tenant to be relieved of its obligations
hereunder or to terminate this Lease shall result in such a release or
termination unless (a) Tenant has given notice by registered or certified mail
to any beneficiary of a deed of trust or mortgage covering the Building whose
address has been furnished to Tenant and (b) such beneficiary is afforded a
reasonable opportunity to cure the default by Landlord, including, if necessary
to effect the cure, time to obtain possession of the Building by power of sale
or judicial foreclosure provided that such foreclosure remedy is diligently
pursued.


 


SECTION 22.5. SDN LIST. Tenant hereby represents and warrants that
neither Tenant nor any officer, director, employee, partner, member or other
principal of Tenant (collectively, “Tenant Parties”) is listed as a Specially
Designated National and Blocked Person (“SDN”) on the list of such persons and
entities issued by the U.S. Treasury Office of Foreign Assets Control (OFAC). In
the event Tenant or any Tenant Party is or becomes listed as an SDN, Tenant
shall be deemed in breach of this Lease and Landlord shall have the right to
terminate this Lease immediately upon written notice to Tenant.


 


 




	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  UTC
  PROPERTIES LLC

  	
   

  	
  INFOSONICS
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By
  

  	
  /S/
  Joseph Ram

  	
   

  
	
  By
  

  	
  /s/
  Steven M. Case

  	
   

  	
   

  	
   

  
	
   

  	
  Steven
  M. Case

  	
   

  	
  Printed
  Name Joseph Ram

  
	
   

  	
  Senior
  Vice President, Leasing

  	
   

  	
   

  
	
   

  	
   

  	
  Title
  CEO

  
	
   

  	
   

  	
   

  
	
  By
  

  	
  /s/
  Michael T. Bennett

  	
   

  	
   

  	
  By
  

  	
  /s/
  Joshua Haims

  	
   

  
	
   

  	
  Michael
  T. Bennett

  	
   

  	
   

  
	
   

  	
  Vice
  President, Operations

  	
   

  	
  Printed
  Name Joshua Haims

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title
  VP Finance and Operations

  
	
   

  	
   

  	
   

  
										






 


23

















 





 


4350 Executive Drive, Suite 100


 





 


 


Exhibit A


 

















 


EXHIBIT B


 


UTILITIES AND SERVICES


 


The
following standards for utilities and services shall be in effect at the
Building. Landlord reserves the right to adopt nondiscriminatory modifications
and additions to these standards. In the case of any conflict between these
standards and the Lease, the Lease shall be controlling. Subject to all of the
provisions of the Lease, including but not limited to the restrictions
contained in Section 6.1, the following shall apply:


 


1.
Landlord shall make available to the Premises during the hours of 8:00 a.m. to
6:00 p.m., Monday through Friday, and if requested by Tenant, from 9:00 a.m. to
1:00 p.m. on Saturdays (“Building Hours”), generally recognized national
holidays excepted, reasonable HVAC services. Subject to the provisions set
forth below, Landlord shall also furnish the Building with elevator service (if
applicable), reasonable amounts of electric current for normal lighting by
Landlord’s standard overhead fluorescent and incandescent fixtures and for the
operation of office equipment consistent in type and quantity with that
utilized by typical office tenants of the Building and Project, and water for
lavatory purposes. Tenant will not, without the prior written consent of
Landlord, connect any apparatus, machine or device with water pipes or electric
current (except through existing electrical outlets in the Premises) for the
purpose of using electric current or water. Because the Building systems have
been designed for normal occupancy of approximately four persons per one
thousand usable square feet, Tenant understands that excess occupancy of the
Premises may result in excessive use of power and other services and may
inhibit the efficient cooling of the Premises. This paragraph shall at all
times be subject to applicable governmental regulations.


 


2.
Upon written request from Tenant delivered to Landlord at least 24 hours prior
to the period for which service is requested, but during normal business hours,
Landlord will provide any of the foregoing building services to Tenant at such
times when such services are not otherwise available. Tenant agrees to pay
Landlord for those after-hour services at rates that Landlord may establish
from time to time. As of the date hereof, Landlord’s after-hours HVAC is
$35.00, per hour, per zone, subject to change from time to time. If Tenant
requires electric current in excess of that which Landlord is obligated to
furnish under this Exhibit B, Tenant shall first obtain the consent of
Landlord, and Landlord may cause an electric current meter to be installed in
the Premises to measure the amount of electric current consumed. The cost of
installation, maintenance and repair of the meter shall be paid for by Tenant,
and Tenant shall reimburse Landlord promptly upon demand for all electric
current consumed for any special power use as shown by the meter. The
reimbursement shall be at the rates charged for electrical power by the local
public utility furnishing the current, plus any additional expense incurred in
keeping account of the electric current consumed.


 


3.
Landlord shall furnish water for drinking, personal hygiene and lavatory
purposes only. If Tenant requires or uses water for any purposes in addition to
ordinary drinking, cleaning and lavatory purposes, Landlord may, in its
discretion, install a water meter to measure Tenant’s water consumption. Tenant
shall pay Landlord for the cost of the meter and the cost of its installation,
and for consumption throughout the duration of Tenant’s occupancy. Tenant shall
keep the meter and installed equipment in good working order and repair at
Tenant’s own cost and expense, in default of which Landlord may cause the meter
to be replaced or repaired at Tenant’s expense. Tenant agrees to pay for water
consumed, as shown on the meter and when bills are rendered, and on Tenant’s
default in making that payment Landlord may pay the charges on behalf of Tenant.
Any costs or expenses or payments made by Landlord for any of the reasons or
purposes stated above shall be deemed to be additional rent payable by Tenant
to Landlord upon demand.


 


4.
In the event that any utility service to the Premises is separately metered or
billed to Tenant, Tenant shall pay all charges for that utility service to the
Premises and the cost of furnishing the utility to tenant suites shall be
excluded from the Operating Expenses as to which reimbursement from Tenant is
required in the Lease. If any utility charges are not paid when due Landlord
may pay them, and any amounts paid by Landlord shall immediately become due to
Landlord from Tenant as additional rent. If Landlord elects to furnish any
utility service to the Premises, Tenant shall purchase its requirements of that
utility from Landlord as long as the rates charged by Landlord do not exceed
those which Tenant would be required to pay if the utility service were
furnished it directly by a public utility.


 


5.
Landlord shall provide janitorial services five days per week, equivalent to
that furnished in comparable buildings, and window washing as reasonably
required; provided, however, that Tenant shall pay for any additional or
unusual janitorial services required by reason of any nonstandard improvements
in the Premises, including without limitation wall coverings and floor
coverings installed by or for Tenant, or by reason of any use of Premises other
than exclusively as offices. The cleaning services provided by Landlord shall
also exclude refrigerators, eating utensils (plates, drinking containers and
silverware), and interior glass partitions. Tenant shall pay to Landlord the
cost of removal of any of Tenant’s refuse and rubbish, to the extent that they
exceed the refuse and rubbish usually attendant with general office usage.


 


1

















 


6.
Tenant shall have access to the Building 24 hours per day, 7 days per week, 52
weeks per year; provided that Landlord may install access control systems as it
deems advisable for the Building. Such systems may, but need not, include full
or part-time lobby supervision, the use of a sign-in sign-out log, a card
identification access system, building parking and access pass system, closing
hours procedures, access control stations, fire stairwell exit door alarm
system, electronic guard system, mobile paging system, elevator control system
or any other access controls. In the event that Landlord elects to provide any
or all of those services, Landlord may discontinue providing them at any time
with or without notice. Landlord may impose a reasonable charge for access
control cards and/or keys issued to Tenant. Landlord shall have no liability to
Tenant for the provision by Landlord of improper access control services, for
any breakdown in service, or for the failure by Landlord to provide access
control services. Tenant further acknowledges that Landlord’s access systems
may be temporarily inoperative during building emergency and system repair
periods. Tenant agrees to assume responsibility for compliance by its employees
with any regulations established by Landlord with respect to any card key
access or any other system of building access as Landlord may establish. Tenant
shall be liable to Landlord for any loss or damage resulting from its or its
employees use of any access system.


 


7.
The costs of operating, maintaining and repairing any supplemental air
conditioning unit serving only the Premises shall be borne solely by Tenant. Such
costs shall include all metered electrical charges as described above in this
Exhibit, together with the cost, as reasonably estimated by Landlord, to supply
cooling water or other means of heat dissipation for the unit. Should Tenant
desire to install such a unit, the plans and specifications must be submitted
in advance to Landlord and approved in writing by Landlord. Such installation
shall be at Tenant’s sole expense and shall include installation of a separate
meter for the operation of the unit. Landlord may require Tenant to remove at
Lease expiration any such unit installed by or for Tenant and to repair any
resulting damage to the Premises or Building.


 


2

















 


EXHIBIT C


 


PARKING


 


The
following parking regulations shall be in effect at the Building. Landlord
reserves the right to adopt reasonable, nondiscriminatory modifications and
additions to the regulations by written notice to Tenant. In the case of any
conflict between these regulations and the Lease, the Lease shall be
controlling.


 


1.
Landlord agrees to maintain, or cause to be maintained, an automobile parking
area (“Parking Area”) in reasonable proximity to the Building for the benefit
and use of the visitors and patrons and, except as otherwise provided,
employees of Tenant, and other tenants and occupants of the Building. The
Parking Area shall include, whether in a surface parking area or a parking
structure, the automobile parking stalls, driveways, entrances, exits,
sidewalks and attendant pedestrian passageways and other areas designated for
parking. Landlord shall have the right and privilege of determining the nature
and extent of the automobile Parking Area, whether it shall be surface,
underground or other structure, and of making such changes to the Parking Area
from time to time which in its opinion are desirable and for the best interests
of all persons using the Parking Area. Landlord shall keep the Parking Area in
a neat, clean and orderly condition, and shall repair any damage to its
facilities. Landlord shall not be liable for any damage to motor vehicles of
visitors or employees, for any loss of property from within those motor
vehicles, or for any injury to Tenant, its visitors or employees, unless
ultimately determined to be caused by the sole active negligence or willful
misconduct of Landlord. Unless otherwise instructed by Landlord, every parker
shall park and lock his or her own motor vehicle. Landlord shall also have the
right to establish, and from time to time amend, and to enforce against all
users of the Parking Area all reasonable rules and regulations (including the
designation of areas for employee parking) as Landlord may deem necessary and
advisable for the proper and efficient operation and maintenance of the Parking
Area. Garage managers or attendants are not authorized to make or allow any
exceptions to these regulations.


 


2.
Landlord may, if it deems advisable in its sole discretion, charge for parking
and may establish for the Parking Area a system or systems of permit parking
for Tenant, its employees and its visitors, which may include, but not be
limited to, a system of charges against nonvalidated parking, verification of
users, a set of regulations governing different parking locations, and an
allotment of reserved or nonreserved parking spaces based upon the charges paid
and the identity of users. In no event shall Tenant or its employees park in
reserved stalls leased to other tenants or in stalls within designated visitor
parking zones, nor shall Tenant or its employees utilize more than the number of
parking stalls allotted in this Lease to Tenant. It is understood that Landlord
shall not have any obligation to cite improperly parked vehicles or otherwise
attempt to enforce reserved parking rules during hours when parking attendants
are not present at the Parking Area. Tenant shall comply with such system in
its use (and in the use of its visitors, patrons and employees) of the Parking
Area, provided, however, that the system and rules and regulations shall apply
to all persons entitled to the use of the Parking Area, and all charges to
Tenant for use of the Parking Area shall be no greater than Landlord’s then
current scheduled charge for parking.


 


3.
Tenant shall, upon request of Landlord from time to time, furnish Landlord with
a list of its employees’ names and of Tenant’s and its employees’ vehicle
license numbers. Tenant agrees to acquaint its employees with these regulations
and assumes responsibility for compliance by its employees with these parking
provisions, and shall be liable to Landlord for all unpaid parking charges
incurred by its employees. Any amount due from Tenant shall be deemed
additional rent. Tenant authorizes Landlord to tow away from the Building any
vehicle belonging to Tenant or Tenant’s employees parked in violation of these
provisions, and/or to attach violation stickers or notices to those vehicles. In
the event Landlord elects or is required to limit or control parking by
tenants, employees, visitors or invitees of the Building, whether by validation
of parking tickets, parking meters or any other method of assessment, Tenant
agrees to participate in the validation or assessment program under reasonable
rules and regulations as are established by Landlord and/or any applicable
governmental agency.


 


4.
Landlord may establish an identification system for vehicles of Tenant and its
employees which may consist of stickers, magnetic parking cards or other
parking access devices supplied by Landlord. All such parking access devices
shall remain the property of Landlord, shall be displayed as required by
Landlord or upon request and may not be mutilated or obliterated in any manner.
Those devices shall not be transferable and any such device in the possession
of an unauthorized holder shall be void and may be confiscated. Landlord may
impose a reasonable fee for access devices and a replacement charge for devices
which are lost or stolen. Each access device shall be returned to Landlord
promptly following the Expiration Date or sooner termination of this Lease. Loss
or theft of parking access devices shall be reported to Landlord or its Parking
Area operator immediately and a written report of the loss filed if requested
by Landlord or its Parking Area operator.


 


5. Persons using the
Parking Area shall observe all directional signs and arrows and any posted
speed limits. Unless otherwise posted, in no event shall the speed limit of 5
miles per hour be exceeded. All vehicles shall be parked entirely within
painted stalls, and no vehicles shall be 


 


1

















 


parked in areas which
are posted or marked as “no parking” or on or in ramps, driveways and aisles. Only
one vehicle may be parked in a parking space. In no event shall Tenant
interfere with the use and enjoyment of the Parking Area by other tenants of
the Building or their employees or invitees.


 


6.
Parking Areas shall be used only for parking vehicles. Washing, waxing,
cleaning or servicing of vehicles, or the parking of any vehicle on an
overnight basis, in the Parking Area (other than emergency services) by any
parker or his or her agents or employees is prohibited unless otherwise
authorized by Landlord. Tenant shall have no right to install any fixtures,
equipment or personal property (other than vehicles) in the Parking Area, nor
shall Tenant make any alteration to the Parking Area.


 


7. It is understood that the employees of Tenant and
the other tenants of Landlord within the Building and Project shall not be
permitted to park their automobiles in the portions of the Parking Area which may
from time to time be designated for patrons of the Building and/or Project and
that Landlord shall at all times have the right to establish rules and
regulations for employee parking. Landlord shall lease to Tenant, and Tenant
shall be obligated to lease from Landlord for the Term of this Lease, the total
number of vehicle parking spaces set forth in Item 12 of the Basic Lease
Provisions (the “Allotted Stalls”). During the initial Term, Tenant shall not
be obligated to pay a parking charge for the Allotted Stalls. After the initial
Term, Tenant shall pay to Landlord for the lease of the Allotted Stalls the
monthly amounts as Landlord shall from time to time determine. Should any
monthly parking charge, if any, not be paid within five (5) days following the
date due, then a late charge shall be payable by Tenant equal to the greater of
(i) five percent (5%) of the delinquent installment or (ii) One Hundred Dollars
($100.00), which late charge shall be separate and in addition to any late
charge that may be assessed pursuant to Section 14.3 of the Lease for other
than delinquent monthly parking charges. Landlord may authorize persons other
than those described above, including occupants of other buildings, to utilize
the Parking Area. In the event of the use of the Parking Area by other persons,
those persons shall pay for that use in accordance with the terms established
above; provided, however, Landlord may allow those persons to use the Parking
Area on weekends, holidays, and at other non-office hours without payment.


 


8.
Notwithstanding the foregoing paragraphs 1 through 7, Landlord shall be
entitled to pass on to Tenant its proportionate share of any charges or parking
surcharge or transportation management costs levied by any governmental agency.
The foregoing parking provisions are further subject to any governmental
regulations which limit parking or otherwise seek to encourage the use of
carpools, public transit or other alternative transportation forms or traffic
reduction programs. Tenant agrees that it will use its best efforts to
cooperate, including registration and attendance, in programs which may be
undertaken to reduce traffic. Tenant acknowledges that as a part of those
programs, it may be required to distribute employee transportation information,
participate in employee transportation surveys, allow employees to participate
in commuter activities, designate a liaison for commuter transportation
activities, distribute commuter information to all employees, and otherwise
participate in other programs or services initiated under a transportation
management program.


 


9.
Should any parking spaces be allotted by Landlord to Tenant, either on a
reserved or nonreserved basis, Tenant shall not assign or sublet any of those
spaces, either voluntarily or by operation of law, without the prior written
consent of Landlord, except in connection with an authorized assignment of this
Lease or subletting of the Premises.


 


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EXHIBIT
D


 


TENANT’S
INSURANCE


 


The
following requirements for Tenant’s insurance shall be in effect at the
Building, and Tenant shall also cause any subtenant to comply with the
requirements. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to these requirements. Tenant agrees to obtain and
present evidence to Landlord that it has fully complied with the insurance
requirements.


 


1.
Tenant shall, at its sole cost and expense, commencing on the date Tenant is
given access to the Premises for any purpose and during the entire Term,
procure, pay for and keep in full force and effect:  (i) commercial general liability insurance
with respect to the Premises and the operations of or on behalf of Tenant in,
on or about the Premises, including but not limited to coverage for personal
injury, contractual liability, independent contractors, broad form property
damage, fire legal liability, products liability (if a product is sold from the
Premises), and liquor law liability (if alcoholic beverages are sold, served or
consumed within the Premises), which policy(ies) shall be written on an “occurrence”
basis and for not less than $2,000,000 combined single limit (with a $50,000
minimum limit on fire legal liability) per occurrence for bodily injury, death,
and property damage liability, or the current limit of liability carried by
Tenant, whichever is greater, and subject to such increases in amounts as
Landlord may determine from time to time; (ii) workers’ compensation insurance
coverage as required by law, together with employers’ liability insurance
coverage of at least $1,000,000; (iii) with respect to improvements,
alterations, and the like required or permitted to be made by Tenant under this
Lease, builder’s risk insurance, in an amount equal to the replacement cost of
the work; (iv) insurance against fire, vandalism, malicious mischief and such
other additional perils as may be included in a standard “special form” policy,
insuring all Tenant Installations, trade fixtures, furnishings, equipment and
items of personal property in the Premises, in an amount equal to not less than
ninety percent (90%) of their actual replacement cost (with replacement cost
endorsement), which policy shall also include business interruption coverage in
an amount sufficient to cover one (1) year of loss. In no event shall the
limits of any policy be considered as limiting the liability of Tenant under
this Lease.


 


2.
All policies of insurance required to be carried by Tenant pursuant to this
Exhibit shall be written by responsible insurance companies authorized to do
business in the State of California and with a general policyholder rating of
not less than “A-” and financial rating of not less than “VIII” in the most
current Best’s Insurance Report. The deductible or other retained limit under
any policy carried by Tenant shall be commercially reasonable, and Tenant shall
be responsible for payment of such retained limit with full waiver of
subrogation in favor of Landlord. Any insurance required of Tenant may be
furnished by Tenant under any blanket policy carried by it or under a separate
policy. A certificate of insurance, certifying that the policy has been issued,
provides the coverage required by this Exhibit and contains the required
provisions, together with endorsements acceptable to Landlord evidencing the
waiver of subrogation and additional insured provisions required below, shall
be delivered to Landlord prior to the date Tenant is given the right of
possession of the Premises. Proper evidence of the renewal of any insurance
coverage shall also be delivered to Landlord not less than thirty (30) days
prior to the expiration of the coverage. In the event of a loss covered by any
policy under which Landlord is an additional insured, Landlord shall be
entitled to review a copy of such policy.


 


3.
Each policy evidencing insurance required to be carried by Tenant pursuant to
this Exhibit shall contain the following provisions and/or clauses satisfactory
to Landlord:  (i) with respect to Tenant’s
commercial general liability insurance, a provision that the policy and the
coverage provided shall be primary and that any coverage carried by Landlord
shall be excess of and noncontributory with any policies carried by Tenant,
together with a provision including Landlord, The Irvine Company LLC, and any
other parties in interest designated by Landlord as additional insureds;  (ii) except with respect to Tenant’s
commercial general liability insurance, a waiver by the insurer of any right to
subrogation against Landlord, its agents, employees, contractors and
representatives which arises or might arise by reason of any payment under the
policy or by reason of any act or omission of Landlord, its agents, employees,
contractors or representatives; and (iii) a provision that the insurer will not
cancel or change the coverage provided by the policy without first giving
Landlord thirty (30) days prior written notice. Tenant shall also name Landlord
as an additional insured on any excess or umbrella liability insurance policy
carried by Tenant.


 


4.
In the event that Tenant fails to procure, maintain and/or pay for, at the
times and for the durations specified in this Exhibit, any insurance required
by this Exhibit, or fails to carry insurance required by any governmental
authority, Landlord may at its election procure that insurance and pay the
premiums, in which event Tenant shall repay Landlord all sums paid by Landlord,
together with interest at the maximum rate permitted by law and any related
costs or expenses incurred by Landlord, within ten (10) days following Landlord’s
written demand to Tenant.


 


NOTICE TO TENANT:  IN
ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT MUST PROVIDE EVIDENCE OF THE
REQUIRED INSURANCE TO LANDLORD’S MANAGEMENT AGENT PRIOR TO BEING AFFORDED
ACCESS TO THE PREMISES.


 


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EXHIBIT E


 


RULES AND REGULATIONS


 


The
following Rules and Regulations shall be in effect at the Building. Landlord
reserves the right to adopt reasonable nondiscriminatory modifications and
additions at any time. In the case of any conflict between these regulations
and the Lease, the Lease shall be controlling.


 


1.
Except with the prior written consent of Landlord, or unless otherwise
specifically authorized in this Lease, Tenant shall not sell or permit the
retail sale of goods or services in or from the Premises, nor shall Tenant
allow the Premises to be utilized for any manufacturing or medical practice.


 


2.
The sidewalks, halls, passages, elevators, stairways, and other common areas
shall not be obstructed by Tenant or used by it for storage, for depositing
items, or for any purpose other than for ingress to and egress from the
Premises. The halls, passages, entrances, elevators, stairways, balconies and
roof are not for the use of the general public, and Landlord shall in all cases
retain the right to control and prevent access to those areas of all persons
whose presence, in the judgment of Landlord, shall be prejudicial to the
safety, character, reputation and interests of the Building and its tenants. Should
Tenant have access to any balcony or patio area, Tenant shall not place any
furniture or other personal property in such area without the prior written
approval of Landlord. Nothing contained in this Lease shall be construed to
prevent access to persons with whom Tenant normally deals only for the purpose
of conducting its business on the Premises (such as clients, customers, office
suppliers and equipment vendors and the like) unless those persons are engaged
in illegal activities. Neither Tenant nor any employee or contractor of Tenant
shall go upon the roof of the Building without the prior written consent of
Landlord.


 


3.
The sashes, sash doors, windows, glass lights, solar film and/or screen, and
any lights or skylights that reflect or admit light into the halls or other
places of the Building shall not be covered or obstructed. The toilet rooms,
water and wash closets and other water apparatus shall not be used for any
purpose other than that for which they were constructed, and no foreign substance
of any kind shall be thrown in those facilities, and the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by Tenant.


 


4.
No sign, advertisement or notice visible from the exterior of the Premises shall
be inscribed, painted or affixed by Tenant on any part of the Building or the
Premises without the prior written consent of Landlord. If Landlord shall have
given its consent at any time, whether before or after the execution of this
Lease, that consent shall in no way operate as a waiver or release of any of
the provisions of this Lease, and shall be deemed to relate only to the
particular sign, advertisement or notice so consented to by Landlord and shall
not be construed as dispensing with the necessity of obtaining the specific
written consent of Landlord with respect to any subsequent sign, advertisement
or notice. If Landlord, by a notice in writing to Tenant, shall object to any
curtain, blind, tinting, shade or screen attached to, or hung in, or used in
connection with, any window or door of the Premises, the use of that curtain,
blind, tinting, shade or screen shall be immediately discontinued and removed
by Tenant. No awnings shall be permitted on any part of the Premises. No
antenna or satellite dish shall be installed by Tenant that is either located
or visible from outside the Premises without the prior written agreement of
Landlord.


 


5.
Tenant shall not do or permit anything to be done in the Premises, or bring or
keep anything in the Premises, which shall in any way increase the rate of fire
insurance on the Building, or on the property kept in the Building, or obstruct
or interfere with the rights of other tenants, or in any way injure or annoy
them, or conflict with the regulations of the Fire Department or the fire laws,
or with any insurance policy upon the Building, or any portion of the Building
or its contents, or with any rules and ordinances established by the Board of
Health or other governmental authority.


 


6.
The installation and location of any unusually heavy equipment in the Premises,
including without limitation file storage units, safes and electronic data
processing equipment, shall require the prior written approval of Landlord. Landlord
may restrict the weight and position of any equipment that may exceed the
weight load limits for the structure of the Building, and may further require,
at Tenant’s expense, the reinforcement of any flooring on which such equipment
may be placed and/or an engineering study to be performed to determine whether
the equipment may safely be installed in the Building and the necessity of any
reinforcement. The moving of large or heavy objects shall occur only between
those hours as may be designated by, and only upon previous written notice to,
Landlord, and the persons employed to move those objects in or out of the
Building must be reasonably acceptable to Landlord. Without limiting the
generality of the foregoing, no freight, furniture or bulky matter of any
description shall be received into or moved out of the lobby of the Building or
carried in any elevator other than the freight elevator designated by Landlord
unless approved in writing by Landlord.


 


7.
Landlord shall clean the Premises as provided in the Lease, and except with the
written consent of Landlord, no person or persons other than those approved by
Landlord will be permitted to enter the Building for that purpose. Tenant shall
not cause unnecessary labor by reason of 


 


1

















 


Tenant’s
carelessness and indifference in the preservation of good order and cleanliness.
Landlord shall not be responsible to Tenant or its employees for loss or damage
to property in connection with the provision of janitorial services by third
party contractors.


 


8.
Tenant shall not sweep or throw, or permit to be swept or thrown, from the
Premises any dirt or other substance into any of the corridors or halls or
elevators, or out of the doors or windows or stairways of the Building, and
Tenant shall not use, keep or permit to be used or kept any foul or noxious gas
or substance in the Premises, or permit or suffer the Premises to be occupied
or used in a manner offensive or objectionable to Landlord or other occupants
of the Building by reason of noise, odors and/or vibrations, or interfere in
any way with other tenants or those having business with other tenants, nor
shall any animals or birds be kept by Tenant in or about the Building. Smoking
or carrying of lighted cigars, cigarettes, pipes or similar products anywhere
within the Premises or Building is strictly prohibited, and Landlord may
enforce such prohibition pursuant to Landlord’s leasehold remedies. Smoking is
permitted outside the Building and within the project only in areas designated
by Landlord.


 


9.
No cooking shall be done or permitted by Tenant on the Premises, except
pursuant to the normal use of a U.L. approved microwave oven and coffee maker
for the benefit of Tenant’s employees and invitees, nor shall the Premises be
used for the storage of merchandise or for lodging. Any pipes or tubing used by
Tenant to transmit water to an appliance or device in the Premises must be made
of copper or stainless steel, and in no event shall plastic tubing be used for
that purpose.


 


10.
Tenant shall not use or keep in the Building any kerosene, gasoline, or
inflammable fluid or any other illuminating material, or use any method of
heating other than that supplied by Landlord.


 


11.
If Tenant desires telephone, telegraph, burglar alarm or similar connections,
Landlord will direct electricians as to where and how the wires are to be
introduced. No boring or cutting for wires or otherwise shall be made without
directions from Landlord.


 


12.
Upon the termination of its tenancy, Tenant shall deliver to Landlord all the
keys to offices, rooms and toilet rooms and all access cards which shall have
been furnished to Tenant or which Tenant shall have had made.


 


13.
Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork or plaster or in any way deface the Premises, except to install normal
wall hangings. Tenant shall not affix any floor covering to the floor of the
Premises in any manner except by a paste, or other material which may easily be
removed with water, the use of cement or other similar adhesive materials being
expressly prohibited. The method of affixing any floor covering shall be
subject to approval by Landlord. The expense of repairing any damage resulting
from a violation of this rule shall be borne by Tenant.


 


14.
On Saturdays, Sundays and legal holidays, and on other days between the hours
of 6:00 p.m. and 8:00 a.m., access to the Building, or to the halls, corridors,
elevators or stairways in the Building, or to the Premises, may be refused
unless the person seeking access complies with any access control system that
Landlord may establish. Landlord shall in no case be liable for damages for the
admission to or exclusion from the Building of any person whom Landlord has the
right to exclude under Rules 2 or 18 of this Exhibit. In case of invasion, mob,
riot, public excitement, or other commotion, or in the event of any other
situation reasonably requiring the evacuation of the Building, Landlord
reserves the right at its election and without liability to Tenant to prevent
access to the Building by closing the doors or otherwise, for the safety of the
tenants and protection of property in the Building.


 


15.
Tenant shall be responsible for protecting the Premises from theft, which
includes keeping doors and other means of entry closed and securely locked. Tenant
shall cause all water faucets or water apparatus to be shut off before Tenant
or Tenant’s employees leave the Building, and that all electricity, gas or air
shall likewise be shut off, so as to prevent waste or damage, and for any default
or carelessness Tenant shall make good all injuries sustained by other tenants
or occupants of the Building or Landlord.


 


16.
Tenant shall not alter any lock or install a new or additional lock or any bolt
on any door of the Premises without the prior written consent of Landlord. If
Landlord gives its consent, Tenant shall in each case promptly furnish Landlord
with a key for any new or altered lock.


 


17.
Tenant shall not install equipment, such as but not limited to electronic
tabulating or computer equipment, requiring electrical or air conditioning
service in excess of that to be provided by Landlord under the Lease except in
accordance with Exhibit B.


 


18.
Landlord shall have full and absolute authority to regulate or prohibit the
entrance to the Premises of any vendor, supplier, purveyor, petitioner,
proselytizer or other similar person if, in the good faith judgment of
Landlord, such person will be involved in general solicitation activities, or
the proselytizing, petitioning, or disturbance of other tenants or their
customers or invitees, or engaged or likely to engage in conduct which may in
Landlord’s opinion distract from the use of the Premises for 


 


2

















 


its
intended purpose. Notwithstanding the foregoing, Landlord reserves the absolute
right and discretion to limit or prevent access to the Buildings by any food or
beverage vendor, whether or not invited by Tenant, and Landlord may condition
such access upon the vendor’s execution of an entry permit agreement which may
contain provisions for insurance coverage and/or the payment of a fee to
Landlord.


 


19.
Tenant shall, at its expense, be required to utilize the third party contractor
designated by Landlord for the Building to provide any telephone wiring
services from the minimum point of entry of the telephone cable in the Building
to the Premises.


 


20.
Tenant shall, upon request by Landlord, supply Landlord with the names and
telephone numbers of personnel designated by Tenant to be contacted on an after-hours
basis should circumstances warrant.


 


21.
Tenant shall cause its employees and agents, and shall endeavor to instruct its
invitees, to wear attire suitable for a first class office project while such
persons are in the Building or Project.


 


22.
Landlord may from time to time grant tenants individual and temporary variances
from these Rules, provided that any variance does not have a material adverse
effect on the use and enjoyment of the Premises by Tenant.


 


3

















 


EXHIBIT
X


 


WORK
LETTER/BUILD TO SUIT


 


Landlord shall cause
its contractor to construct the tenant improvements for the Premises as shown
in the space plan (the “Plan”) prepared by Gensler Architects and dated August
9, 2007, exclusive of Alternates A, C, and D, and the cost estimate (the “Cost
Estimate”) prepared by Bycor and dated August 15, 2007. Any additional cost
resulting from changes requested by Tenant shall be borne solely by Tenant and
paid to Landlord prior to the commencement of construction. Unless otherwise
specified in the Plan or Cost Estimate or hereafter agreed in writing by
Landlord, all materials and finishes utilized in constructing the tenant
improvements shall be Landlord’s building standard. Should Landlord submit any
additional plans, equipment specification sheets, or other matters to Tenant
for approval or completion, Tenant shall respond in writing, as appropriate,
within five (5) business days unless a shorter period is provided herein. Tenant
shall not unreasonably withhold its approval of any matter, and any disapproval
shall be limited to items not previously approved by Tenant in the Plan or
otherwise.


 


In the event that Tenant
requests in writing a revision in the Plan or in any other plans hereafter
approved by Tenant, then provided such change request is acceptable to
Landlord, Landlord shall advise Tenant by written change order of any
additional cost and/or Tenant Delay (as defined below) such change would cause.
Tenant shall approve or disapprove such change order in writing within two (2)
business days following its receipt. Tenant’s approval of a change order shall
not be effective unless accompanied by payment in full of the additional cost
of the tenant improvement work resulting from the change order. It is understood
that Landlord shall have no obligation to interrupt or modify the tenant
improvement work pending Tenant’s approval of a change order.


 


Notwithstanding any
provision in the Lease to the contrary, if Tenant fails to comply with any of
the time periods specified in this Work Letter, requests any changes to the
work, fails to make timely payment of any sum due hereunder, furnishes
inaccurate or erroneous specifications or other information, or otherwise
delays in any manner the completion of the tenant improvements or the issuance
of an occupancy certificate (any of the foregoing being referred to in this
Lease as a “Tenant Delay”), then Tenant shall bear any resulting additional
construction cost or other expenses and the delivery date shall be deemed to
have occurred for all purposes as of the date Landlord reasonably determines
that it would have been able to deliver the Premises to Tenant but for the
collective Tenant Delays.


 


Landlord shall permit
Tenant and its agents to enter the Premises prior to the delivery date of the
Lease in order that Tenant may perform any work to be performed by Tenant
hereunder through its own contractors, subject to Landlord’s prior written
approval, and in a manner and upon terms and conditions and at times satisfactory
to Landlord’s representative. The foregoing license to enter the Premises prior
to the delivery date is, however, conditioned upon Tenant’s contractors and
their subcontractors and employees working in harmony and not interfering with
the work being performed by Landlord. If at any time that entry shall cause
disharmony or interfere with the work being performed by Landlord, this license
may be withdrawn by Landlord upon twenty-four (24) hours written notice to
Tenant. That license is further conditioned upon the compliance by Tenant’s
contractors with all requirements imposed by Landlord on third party
contractors, including without limitation the maintenance by Tenant and its
contractors and subcontractors of workers’ compensation and public liability and
property damage insurance in amounts and with companies and on forms
satisfactory to Landlord, with certificates of such insurance being furnished
to Landlord prior to proceeding with any such entry. The entry shall be deemed
to be under all of the provisions of the Lease except as to the covenants to
pay rent. Landlord shall not be liable in any way for any injury, loss or
damage which may occur to any such work being performed by Tenant, the same
being solely at Tenant’s risk. In no event shall the failure of Tenant’s
contractors to complete any work in the Premises extend the delivery date
beyond the date that Landlord has substantially completed its tenant
improvement work and tendered the Premises to Tenant.


 


Tenant hereby designates
Jeff Klausner, Telephone No. (760) 431-7949, as its representative, agent and
attorney-in-fact for the purpose of receiving notices, approving submittals and
issuing requests for changes, and Landlord shall be entitled to rely upon
authorizations and directives of such person(s) as if given by Tenant. Tenant
may amend the designation of its construction representative(s) at any time
upon delivery of written notice to Landlord.


 


1