Exhibit 10.22


 


FULL SERVICE
LEASE


 


Date:        March 22, 2004


 


Lessor:     PS
Business Parks, L.P., a California Limited Partnership


 


Lessee:    Digimarc Corporation, a Delaware Corporation


 


1.             Lease
Terms


 


1.01         The Premises is the Building
whose address is 9405 SW Gemini Drive,
Beaverton, OR 97008.  The
Premises contains approximately 46,083
rentable square feet and is shown on Exhibit “A-1.”  “The Building contains approximately 46,083 rentable square feet and ii
shown on Exhibit “A-2”.  The Project is
depicted on Exhibit “A-3” and contains approximately 111,870
rentable square feet.  The Property is
depicted on Exhibit “A-4” and is commonly referred to as Creekside Corporate Park and
contains approximately 584,493
rentable square feet.


 


1.02         Lessee’s Notice Address:  Lessee’s Notice Address is the address of the
premises stated in Paragraph 1.01 above.


 


1.03         Lessor’s Notice Address:  15455 NW Greenbrier
Parkway, Suite 245, Beaverton, OR 97006.


 


1.04         Lessee’s Permitted Use:
Lessee shall use the Premises and for no other purpose whatsoever:  General office uses.


 


1.05         Lease Term:  The Lease Term commences on September 1, 2004 or such
other date as is determined by the provisions of this Lease (the “Commencement
Date”) and ends on the final day of the 84th full
calendar month thereafter.


 


1.06         Base Rent:  Base Rent shall be paid monthly in the amounts
specified below:


 


	
  $

  	
  0.00

  	
   

  	
  Beginning September 1, 2004

  	
   

  	
  Ending February 28, 2005

  
	
  $

  	
  46,667

  	
   

  	
  Beginning March 1, 2005

  	
   

  	
  Ending August 31, 2005

  
	
  $

  	
  63,287

  	
   

  	
  Beginning September 1, 2005

  	
   

  	
  Ending August 31, 2006

  
	
  $

  	
  65,169

  	
   

  	
  Beginning September 1, 2006

  	
   

  	
  Ending August 31, 2007

  
	
  $

  	
  67,128

  	
   

  	
  Beginning September 1, 2007

  	
   

  	
  Ending August 31, 2008

  
	
  $

  	
  69,125

  	
   

  	
  Beginning September 1, 2008

  	
   

  	
  Ending August 31, 2009

  
	
  $

  	
  71,237

  	
   

  	
  Beginning September 1, 2009

  	
   

  	
  Ending August 31, 2010

  
	
  $

  	
  73,349

  	
   

  	
  Beginning September 1, 2010

  	
   

  	
  Ending August 31, 2011

  



 


1.07         Security Deposit:       $  75,000.00


 


1.08         Initial Monthly Rent
Charges:           Base Rent $46,667.00.


 


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1.09         Proportionate Share:
Lessee’s Proportionate Share of t e Property, which represents the approximate
Proportionate Share of the Premises to the Property, is 7.8842%.  Lessee’s Proportionate Share of the Project,
which represents the approximate Proportionate Share of the Premises to the
Project, is 39.0964%.  Lessee’s Proportionate Share of the Building
within which the Premises is located, which represents the approximate
Proportionate Share of the Premises to the building, is 100%.
 Proportionate Share may be adjusted by
Lessor during the Lease Term if the size of he Project, Premises or Building
changes.


 


1.10         Expense Base Year:  2005.


 


1.11         Broker(s):  Hume Myers Tenant Counsel L.L.C.
for Lessee;  Grubb & Ellis for Lessor.


 


1.12         Automatic Payments:
Unless Lessor otherwise directs in writing, all payments of Base Rent and the
monthly estimated payments of Lessee’s Proportionate Share of Operating
Expenses shall be made by electronic payment. 
Lessee shall execute such necessary and reasonable documents, provide such
necessary and reasonable information, and follow such necessary and reasonable
procedures as are requested by Lessor from time to time to facilitate such
payments.  If, by reason of insufficient
funds or other reason, any such payment is not fully made and received, such event
shall be deemed a failure of Lessee to make the required payment.  Payment shall be deemed made by Lessee on the
date funds are actually received by Lessor, provided, if Lessee is then in
default, Lessor shall have the right to return all or a part of any payment
received within ten (10) business days of receipt, in which event the
returned amount shall be deemed to have not been paid by Lessee or received by
Lessor.  Receipt of any funds pursuant to
this Paragraph shall not constitute a waiver by Lessor of any Default by Lessee
whether or not such Default is known to Lessor.


 


2.             Lease
of Premises


 


2.01         Lessor leases to Lessee,
and Lessee leases from Lessor, the Premises, upon the terms of this Lease.  The Premises are leased “AS IS” except only
for the improvements, if any, which are to be constructed by Lessor pursuant to
Exhibit “B.”  Any such improvements
to be constructed by Lessor pursuant to Exhibit “B” are herein referred to
as “Lessor’s Work.”  Except as provided
herein, Lessee acknowledges that neither Lessor nor any agent of Lessor has made
any representation or warranty regarding the Premises.  The square footages set forth in this Lease are
approximate and agreed.  Use of the terms
“rentable” and “usable” is for convenience only and represents Lessor’s
interpretation of such terms.  Lessor
will deliver the Premises to Lessee with existing plumbing, electrical, fire
sprinkler, lighting, air conditioning, heating and mechanical systems located
in the Premises, if any, in good working condition.


 


2.02         Lessor’s Work, if any,
shall be installed by Lessor in compliance with all then applicable codes.  Lessee, at its sole expense, agrees to comply
with all laws, codes, ordinances and other legal requirements (including
covenants and restrictions) applicable to the Premises (herein “Laws”);
provided, however, that Lessor, in conjunction with the Lessor’s work, shall
affect any repairs and improvements required under any Laws as of the
Commencement Date.  Lessee agrees to
cause the Premises to comply with all Laws, including by making any changes to
the Premises nessitated by any Lessee activity, including but not limited to
changes required


 


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by (a) any Lessee Improvements or Lessee Alterations (as defined
below), or (b) any use of the Premises or Property by Lessee; provided,
Lessor reserves the right to accomplish such changes itself at the expense of
Lessee.  If any activity of Lessee
necessitates changes to the Project other than the Premises, then Lessor shall
elect that Lessor accomplish the same at the expense of Lessee or that Lessee
accomplish the same at its own expense.  Notwithstanding
anything to the contrary herein, Lessee shall not be responsible for making any
structural modifications to the Premises except to the extent Lessee’s space
plan requires structural modifications.


 


2.03         If for any reason Lessor
cannot deliver possession of the Premises three (3) weeks prior to the
estimated Commencement Date of the Lease Term, Lessor will not be subject to
any liability nor will the validity of this Lease be affected in any manner.  Rather, the Commencement Date shall be delayed
until three (3) weeks after delivery of possession to allow Lessee to fixturize
the Premises in which event the expiration date of the Lease Term shall be
extended to include the same number of full calendar months as set forth in
Paragraph 1 above (plus any partial test month); provided, in the event
delivery of possession is delayed by any act, omission or request of Lessee,
then the Premises shall be deemed to have been delivered (and the Commencement
Date shall occur) on the earlier of the actual date of delivery or the date
delivery would have occurred absent the number of days of such delay
attributable to Lessee and the term shall then be for such number of full
calendar months (plus any partial first month). 
If for any reason possession of the Premises is not delivered on the
scheduled Commencement Date set forth in Paragraph 1 above, Lessee may a)
receive two (2) days free rent for each day of delay beyond the scheduled
commencement date, and b) terminate this Lease by written notice given after a
forty-five (45) day period beyond the scheduled commencement date but prior to
delivery of possession; provided, such forty-five (45) day period shall be
extended by (a) the number of days of delays attributable to Lessee
(including but not limited to delays in approval of plans or cost estimates,
delays related to changes in plans requested by Lessee whether or not approved
by Lessor, delays caused by Lessee installing any “Lessee Improvements,” delays
caused by other early entry or early occupancy by Lessee, and/or other delays
attributable to Lessee), plus (b) the number of days of delays caused by
events beyond the reasonable control of Lessor (including but not limited to
fire, earthquake, other casualty, inclement weather, acts of God, shortages of
labor or material, lead times on ordered items, strike, acts or omissions of
government, and/or delays in governmental permits, inspections or approvals).  Any such termination shall be without
liability of Lessor to Lessee.  Any such
termination by Lessee shall be Lessee’s sole remedy for delay in delivery of
possession.


 


2.04         Upon expiration or
termination of this Lease, Lessee agrees to return the Premises to Lessor in
the same condition as received by Lessee, normal wear and tear excepted, with
all removal, repair, and restoration duties of Lessee being fully performed.


 


2.05         Upon request made by
Lessor following the Commencement Date, Lessee shall execute and deliver an
agreement setting forth the Commencement Date, the date upon which the Lease
Term shall expire, and such other matters regarding the commencement of this
Lease as Lessor shall request.  If Lessee,
with Lessor’s prior written consent, occupies the Premises prior to the
Commencement Date, Lessee’s occupancy of the Premises shall be subject to all
the provisions of the Lease.  Early
occupancy of the Premises shall not advance the expiration date of the Lease.


 


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3.             Base
Rent


 


On or before the first day of each calendar
month of the Lease Term, Lessee will pay to Lessor the Base Rent for such month.  Base Rent for any first partial month and for
the first full calendar month of the Lease Term, is due and payable upon due
date called for in this Lease.  Security
deposit is due and payable upon Lease execution.  Monthly rent for any partial calendar month
will be prorated.  All sums payable by
Lessee to Lessor hereunder shall be deemed rent.  Base Rent and all other amounts required to
be paid by Lessee hereunder shall be paid without deduction or offset and
without prior notice or demand.  All such
amounts shall be paid in lawful money of the United State of America and shall
be paid to Lessor at the address stated herein or to such other persons or to such
other places as Lessor may designate in writing from time to time.  Amounts payable hereunder shall be deemed paid
when actually received by Lessor.


 


4.             Additional
Rent


 


4.01         Unless otherwise
specifically stated in this Lease, any charge payable by Lessee under this
Lease other than Base Rent is called “Additional Rent.”  The term “rent” whenever used in this Lease
means Base Rent, Additional Rent and/or any other monies payable by Lessee
under the terms of this Lease.


 


4.02         “Operating Expenses” as
used herein shall include all costs and expenses related to the ownership,
management, operation, maintenance, replacement, improvement and repair of the
Premises, Building, Project and/or Property, or any part thereof, incurred by
Lessor including but not limited to: (1) Property supplies, materials,
labor, equipment, and tools; (2) Lessor-incurred Utility and Service Costs
(as further described in Paragraph 4.03B below), security, janitorial,
trash removal, and all applicable service and maintenance agreements; (3) Property
related legal, accounting and consulting fees, costs and expenses, including
but not limited to the cost of contests of Real Property Taxes; (4) Insurance
Premiums for all policies deemed reasonably necessary by Lessor and/or its
lenders, and all deductible amounts under such policies (as further described
in Paragraph 4.03C below); (5) costs and expenses of operating,
maintaining, and repairing the Property, including but not limited to all
interior areas and also driving, parking, loading, and other paved or unpaved
areas (including but not limited to, resurfacing and striping and any snow and
ice removal Lessor elects to conduct), landscaped areas (including but not
limited to, tree trimming), building exteriors (including but not limited to,
painting and roof work), signs and directories, and lighting; (6) capital
improvements and replacements (including but not limited to, all financing costs
and interest charges); (7) compensation (including but not limited to, any
payroll taxes, worker’s compensation for employees, and customary employee
benefits) of all persons, including independent contractors, who perform
duties, or render services on behalf of, or in connection with the Property, or
any part thereof, including but not limited to, Property operations,
maintenance, repair, and rehabilitation; (8) Property management fees not
exceeding 5% of Annual Base Rent and the reasonable cost of providing space
used by the Property manager; and (9) Real Property Taxes (as further
described in Paragraph 4.03A, below). 
All Operating Expenses other than Real Property Taxes, Utility and
Service Costs, and Insurance Premiums, are herein referred to as Common Area
Expenses (CAM).  Any increases in CAM
expenses shall be limited to a non-cumulative 5% per year.  In addition, in the event Lessor effects any
capital improvements or


 


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replacements, the cost of the same shall be amortized over the number
of years equal to the useful life of any such capital improvements or
replacements.


 


4.03A      “Real
Property Taxes” shall include any fee, license fee, tax, levy, charge, or
assessment (hereinafter individually and/or collectively referred to as “Tax”)
imposed by any authority having the direct or indirect power to tax and where
such Tax is imposed against the Property, or any part thereof, or Lessor in
connection with its ownership or operation of the Property, including but not
limited to: (1) any Tax on rent or Tax against Lessor’s business of
leasing the Property; (2) any Tax by any authority for services or
maintenance provided to the Property, or any part thereof, including but not
limited to, fire protection, streets, sidewalks, and utilities; (3) any
Tax on real estate or personal property levied with respect to the Property, or
any part thereof, and any fixtures and equipment and other property used in
connection with the Property; (4) any Tax based upon a reassessment of the
Property due to a change in ownership or transfer of all or part of Lessor’s
interest in the Property; and, (5) any Tax replacing, substituting for, or
in addition to any Tax previously included in this definition.  Real Property Taxes do not include Lessor’s
federal or state net income taxes.


 


4.03B      “Utility
and Service Costs” shall include all Lessor incurred utility and service costs
and expenses including but not limited to costs related to water and plumbing,
electricity, gas, lighting, steam, sewer, waste disposal, and HVAC, and all
costs related to plumbing mechanical, electrical, elevator, HVAC, and other
systems.


 


4.03C      “Insurance
Premiums” shall include all insurance premiums for all insurance policies
maintained by Lessor from time to time related to the Property.


 


4.04         Throughout the Lease Term
following the Base Year, Lessee will pay as Additional Rent its Proportionate
Share (of the Project and/or Building, as designated from time to time by
Lessor) of the amount by which total Operating Expenses in each calendar year
exceed total Operating Expenses for the Base Year, subject to the limitation
set forth in Section 4.02 above.  Estimated
payments shall be made monthly on or before the first day of each calendar
month each in the amount of Lessor’s then current estimate as outlined below.  Lessee’s Proportionate Share will be prorated
for partial months.  All Operating
Expenses will be adjusted, at the election of Lessor, to reflect 100% occupancy
during any calendar year in which the Project is not fully occupied (in which
event Operating Expenses for the Base Year shall also be so adjusted).


 


4.05         Lessee’s Proportionate
Share of Operating Expenses shall be determined and paid as follows:


 


4.05A.     Lessee’s
Operating Expense estimates:  On or about
April 1st of each calendar year, Lessor will provide Lessee with a statement
of: (1) Lessee’s annual share of estimated Operating Expenses in excess of
Base Year Operating Expenses for the then current calendar year; (2) Lessee’s
monthly Operating Expense estimate for the then current year; and, (3) Lessee’s
retroactive estimate correction billing (for the period of January 1st
through the date immediately prior to the commencement date of Lessee’s new
monthly Operating Expense estimate) for the difference between Lessee’s new and
previously billed monthly Operating Expense estimates for the then current
year.


 


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4.05B      Lessee’s
Proportionate Share of actual annual Operating Expenses: Each year, Lessor will
provide Lessee with a statement reflecting the total Operating Expenses for the
previous calendar year.  If the total of
Lessee’s Operating Expense estimates billed for the previous calendar year are
less than Lessee’s Proportionate Share of the actual Operating Expenses in
excess of Base Year Operating Expenses, the statement will indicate the payment
amount and date due.  If Lessee has paid
more than its Proportionate Share of excess Operating Expenses for the
preceding calendar year, Lessor will credit the overpayment toward Lessee’s
future Operating Expense obligations.  Monthly
Operating Expense estimates are due on the 1st of each month and
shall commence in the month specified by Lessor.  Lessee’s retroactive estimate correction, and
actual annual Operating Expense charges, if any, shall be due, in full, on the
date(s) specified by Lessor.


 


4.06         Unless Lessor otherwise
elects, Lessee shall pay each Operating Expense in accordance with Lessee’s
Proportionate Share of the Building or Lessee’s Proportionate Share of the
Project, whichever is designated by Lessor. 
Lessor shall have the right to make allocations (“Allocations”) to
Lessee of any one or more Operating Expenses on a different basis.  Lessor shall have the right to make any such
Allocations in any manner which Lessor deems reasonable (including use of
estimates).  For example, if Lessor deems
it reasonable to do so, Lessor shall have the right to elect at any time and
from time to time (a) to make any Allocation of one or more Operating
Expenses based upon Lessee’s Proportionate Share of the Building and to make
other Allocations on Lessee’s Proportionate Share of the Project, (b) to
make Allocations of certain Operating Expense items among less than all lessees
and/or other than based upon the respective square footages of the lessees, (c) to
make different Allocations for different Operating Expenses, and/or (d) to
alter an Allocation or the method of determining an Allocation from time to
time.  In no event shall Lessor be liable
to Lessee based upon any incorrect or disputed Allocation nor shall Lessee have
any right to terminate this Lease by reason of any such Allocation.


 


4.07         In the event Lessee
wishes to audit any Operating Expense charge, such an audit shall be limited to
an audit of the annual statement delivered under Paragraph 4.05B above.  Such audit shall be performed only if, at the
time of the audit request and at all times thereafter to and during the course
of the audit, Lessee has paid in full all Operating Expenses billed and is not
in Default (as defined in Section 20.02 below).  Any audit shall be conducted at a time and
location designated by Lessor.  Lessor
and Lessee agree that any Lessee audit must be requested by Lessee by written
notice given within six (6) months of the date that Lessor provides the
applicable annual statement under Paragraph 4.05B above, and must be
completed by Lessee within thirty (30) days of its written notice requesting
the audit; if Lessee does not give such written notice within the period of
time allowed, or fails to complete the audit within the time allowed, Lessee’s
right to audit is waived, and the Operating Expenses, as billed, including all
calculations used as the basis for Lessor’s charges (including any “Allocations”
and any applicable Expense Base Year or expense stop calculations), shall be
deemed conclusive and final for all purposes under this Lease.  All calculations by Lessor of Operating
Expenses for the Expense Base Year shall be conclusive and final, and Lessee
shall have no right to audit the same, except only Lessee may audit the same as
part of an audit of Operating Expenses for the first Expense Comparison Year.  Any audit shall be conducted only by Lessee
and the CPA then used by Lessee for the preparation of its tax returns and
financial statements; no agent of Lessee employed in connection with the audit
shall be employed on any contingent payment basis.


 


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Lessee shall maintain as strictly confidential, and shall cause its
auditor to execute in favor of Lessor a confidentiality agreement (in form
prepared by Lessor) regarding, all financial information audited, the results
of any such audit, and the resolution of any disputed issues arising in
connection with such audit.  Lessor shall
not be bound by the result of any such audit. 
If the parties do not agree upon the inclusion or amount of any
Operating Expense charged by Lessor, the sole remedy of Lessee shall be to
conduct an audit within the time specified in this Lease and, if still in
disagreement with Lessor, to submit the matter to arbitration pursuant to Section 27.17
below within thirty (30) days after completion of the audit to request an
adjustment to any disputed Operating Expense item to cause the same to not
exceed the amount that Lessor has the right to collect hereunder for such item.  In no event will this Lease be terminable nor
shall Lessor be liable for damages based upon any disagreement regarding or
adjustment of Operating Expenses.


 


5.             Late
Charges


 


If any sum payable by Lessee to Lessor is not
received by Lessor within five (5) days after it becomes due, Lessee shall pay
a late charge equal to fifty dollars ($50.00) or five (5%) of the then
delinquent amount, whichever is greater. 
A fifty dollar ($50.00) handling fee will be paid to Lessor by Lessee
for each bank returned check, and Lessee will be required to make all future
payments to Lessor by wire or electronic transfer or by cashier’s check.  The acceptance of late charges and returned
check charges by Lessor will not constitute a waiver of Lessee’s Default nor
any other rights or remedies of Lessor.  Lessee
shall not be in default of this Lease the first time in a twelve (12)
consecutive month period that Lessee fails to pay rent when due so long as
Lessee pays such overdue rent within five (5) days of written notice from
Lessor that such overdue amount is due.


 


6.             Security
Deposit and Financial Reporting


 


6.01         Upon Lessee’s execution
of this Lease, Lessee will deposit with Lessor an initial Security Deposit in
the amount specified in Paragraph 1 as security for Lessee’s full and
faithful performance of every provision under this Lease.  Lessor will not be required to keep the
Security Deposit separate from its general funds and has no obligation or
liability for payment of interest thereon (except when required by law).  Lessee hereby grants to Lessor a security
interest in the Security Deposit.  Lessee
will not have the right to apply any part of the Security Deposit to any
amounts payable under the terms of this Lease nor is it a measure or limitation
of Lessor’s damages in event of a Default by Lessee.  If Lessee fails to pay any rent due herein,
or otherwise is in Default of any provision of this Lease, Lessor may, without
waiver of the Default or of any other right or remedy, use, apply or retain all
or any portion of the Security Deposit for the payment of any amount due Lessor
or to compensate Lessor for any loss or damage suffered by Lessee’s Default.  Within five (5) days after written notification
by Lessor, Lessee will restore the Security Deposit to the full amount required
under this Lease.


 


6.02         Within ten (10) days
after written request from Lessor but not more often than annually, Lessee
shall deliver to Lessor such financial statements as Lessor reasonably requests
regarding Lessee or any assignee, subtenant, or guarantor of Lessee.  Lessee represents and warrants to Lessor that
each financial statement is a true and accurate statement.  Lessor shall use such statements only for valid
business purposes.  Lessor shall have the
right to make such


 


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financial statements and the other contents of its files available to
law enforcement or other governmental agencies upon request.


 


7.             Use
of Premises


 


7.01         The Premises will be used
and occupied only for Lessee’s Permitted Use. 
Lessee will, at its sole expense, comply with all conditions and
covenants of this Lease, and all Laws.  Lessee
will not use or permit the use of the Premises, the Property or any part
thereof, in a manner that is unlawful, diminishes the appearance or aesthetic
quality of any part of the Property, creates waste or a nuisance, or causes
damage to the Property.  Lessee shall not
permit any objectionable or unpleasant odors, smoke, dust, gas, noise or
vibrations to emanate from the Premises nor take or permit any other action in
the Premises that would endanger, annoy, or interfere with the operations of,
Lessor or any other tenant of the Project. 
Lessee shall obtain, at its sole expense, any permit or other
governmental authorization required to operate its business from the Premises.  Any animals, excepting guide dogs, on or
about the Property or any part thereof are expressly prohibited.


 


7.02         In the event of any excessive
trash in or outside the Premises, as determined by Lessor in its sole
discretion, Lessor will have the right to remove such excess trash, charge all
costs and expenses attributable to its removal to Lessee.  Lessee will not cause, maintain or permit any
outside storage on or about the Property without prior written consent by
Lessor.  In the event of any unauthorized
outside storage by Lessee, Lessor will have the right, without notice, in
addition to such other rights and remedies it may have, to remove any such
storage at the expense of Lessee.


 


8.             Parking


 


All parking will comply with the terms and
conditions of this Lease and the parking rules and regulations included in Exhibit “D.”  Lessee will have a non-exclusive privilege to
use of one-hundred eighty (180) parking spaces designated by Lessor for public
parking and four (4) designated visitor parking spaces at the entry to the
Premises.  Vehicles parked in public
parking areas will be no larger than full-sized passenger automobiles or
standard pick-up trucks.  Lessor reserves
the right, without notice to Lessee, to tow away at Lessee’s sole cost and
expense any vehicles parked in any parking area for any continuous period of 24
hours or more, or earlier if Lessor, in its sole discretion, determines such
parking to be a hazard or inconvenience to other lessees or Lessor, or violates
any rules or regulations or posted notices related to parking.  Lessor shall not be responsible for enforcing
Lessee’s parking rights against third parties. 
From time to time, Lessor reserves the right, upon written notice to
Lessee, to change the location, the availability and nature of parking spaces,
establish reasonable time limits on parking, and, on an equitable basis, to
assign specific spaces with or without charge to Lessee as Additional Rent.  The parking privileges granted to Lessee are
personal to Lessee; Lessee shall not assign or sublet parking privileges.


 


9.             Utilities
and Services


 


9.01         Subject to the other
provisions of this Lease, the following services are provided.


 


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A.            Electricity,
water, and elevator service (if elevators presently serve the Premises) are
provided.


 


B.            Heating
and air conditioning are provided 7:00 a.m. to 6:00 p.m. Monday
through Saturday, except holidays.  If
Lessee desires such service during other hours, Lessee must prearrange the same
with Lessor and pay an additional charge for such service.


 


C.            Five
days per week janitorial service, periodic window cleaning, supplies for
Building operation, and other customary services.


 


If Lessee uses any utility or service in
excess of normal usage levels, as determined by Lessor in its sole discretion,
Lessor shall have the right to charge Lessee for such excess use and to charge
Lessee the cost to separately meter such use.


 


9.02         Lessor will not be liable
or deemed in Lessor Default, nor will there be any abatement of rent or right
to terminate this Lease, for (a) any interruption or reduction of
utilities, utility services or telecommunication services not caused by Lessor,
(b) any telecommunications or other company (whether selected by Lessor or
Lessee) failing to provide such utilities or services or providing the same
defectively, and/or (c) any utility interruption in the nature of blackouts,
brownouts, or rolling interruptions.  Lessee
agrees to comply with any energy conservation programs required by law or
implemented by Lessor.  Lessee
acknowledges that utility and service costs and availability may fluctuate
significantly, due to power shortages or other events and factors, and Lessee
accepts the risks of such fluctuations.  Lessor
reserves the right, in its reasonable discretion, to designate, at any time,
the utility and service providers for Lessee’s use within the Property; no such
designation shall impose liability upon Lessor.


 


9.03         Lessee has satisfied
itself as to the adequacy of any Lessor owned utility equipment and the
quantity of telephone lines and other service connections to the Building
available for Lessee’s use.


 


10.           Lessee
Improvements; Lessee Alterations and Mechanic’s Liens


 


10.01       Any improvements to be
constructed in the Premises by Lessee prior to Lessee initially commencing use
of the Premises are referred to throughout this Lease as “Lessee Improvements.”  All Lessee Improvements will be performed in
accordance with the terms and conditions outlined in Exhibit “B” and also
in accordance with the provisions set forth in this Paragraph 10 regarding
Lessee Alterations.


 


10.02       The following provisions
apply to “Lessee Alterations” which means and includes (a) any alterations
or improvements to the Premises undertaken by Lessee (other than nonstructural
installation of equipment or trade fixtures), (b) any utility
installations at the Premises undertaken by Lessee, and (c) any repair,
restoration, replacement, or maintenance work at the Premises undertaken by
Lessee whether or not Lessee is required to undertake such work pursuant to
this Lease.  Lessee shall not commence
any Lessee Alteration without first obtaining the prior written consent of
Lessor in each instance which consent may be withheld or conditioned in Lessor’s
reasonable discretion.  Lessee shall
submit such information regarding the intended Lessee Alteration as Lessor may
reasonably require, and no request for consent


 


9





















 


shall be deemed complete until such information is delivered.  The following provisions apply to all Lessee
Alterations.


 


(a)           Lessee
shall hire a licensed general contractor who, in turn, shall hire only licensed
subcontractors.  All work shall be
conducted expeditiously and be completed within a reasonable time.


 


(b)           Lessee
shall obtain all required permits and deliver a copy of the same to Lessor.  Lessee shall install all Lessee Alterations
in strict compliance with all permits, any plans approved by Lessor, and all
conditions to Lessor’s approval.


 


(c)           Unless
Lessor elects otherwise in its applicable prior written consent, Lessee shall
remove each Lessee Alteration at the end of this Lease or Lessee’s right of
possession and restore the Premises to its prior condition, all at Lessee’s
expense.


 


(d)           Lessee
shall deliver to Lessor, within ten (10) days following installation of each
Lessee Alteration, (w) accurate, reproducible as-built plans, (x) proof
of final inspection and approval by all governmental authorities, (y) complete
lien waivers for all costs of the Lessee Alteration, and (z) a copy of a
recorded notice of completion.


 


10.03       Lessor shall have the right
to inspect all Lessee Alterations.  Lessee
shall pay to Lessor a fee equal to 5% of total project cost up to $50,000 and
2.5% thereafter, to compensate Lessor for review of plans, inspection of work,
and other activities regarding any Lessee Alterations.  Approval of any plans or inspection of any
work is for the sole benefit of Lessor and is not a representation by Lessor
that any work is suitable or complies with applicable requirements.  Lessor’s approval of any Lessee Improvements
and Lessee Alterations and/or Lessor’s approval or designation of any general
contractor, subcontractor, supplier or other project participant will not
create any liability whatsoever on the part of Lessor.


 


10.04       Lessee shall pay all costs
of Lessee Alterations as and when due.  Lessee
shall not allow any lien to be filed.  Lessee
shall obtain advance lien waivers and third-party beneficiary agreements from
all contractors, subcontractors, suppliers, and others providing equipment,
labor, materials, or services, in the form required by Lessor.  If any lien is filed, then, without waiver of
any other right or remedy, Lessor shall have the right to cause such lien to be
removed by any means allowed by law, including bond, deposit, and/or payment of
the underlying claim.  All sums expended
by Lessor in connection with such lien and/or its removal, including attorney
fees, shall be immediately due from Lessee to Lessor, together with interest at
the rate of 12%.


 


10.05       All Lessee Improvements and
Lessee Alterations are part of the realty and belong to Lessor.  Lessee shall be solely responsible to insure
all Lessee Alterations and to restore the same following any casualty.  As a condition of Lessor consenting to any
Lessee Improvements or Lessee Alterations, Lessor reserves the right, at any
time to elect to make Lessee the owner of all or any specified part of the
Lessee Improvements or Lessee Alterations and/or to require Lessee, upon
termination of this Lease, to remove none, all, or part of the same at its sole
cost and expense.  The provisions of this
Paragraph shall survive the termination of this Lease.


 


10





















 


10.06       Notwithstanding any other
provision of this Lease, Lessee shall remove, at or prior to the expiration or
termination of this Lease, at its expense, all wiring and cabling installed at
the Premises which shall have been installed by Lessee or which Lessor shall
have installed pursuant to this Lease or at the request of Lessee.  Such wiring and cabling shall include but not
be limited to (a) wiring and cabling above the ceiling panels, behind or
within walls, and under or within floors, (b) wiring and cabling for
voice, data, security or other purposes, (c) wiring and cabling installed
pursuant to this Paragraph 10, pursuant to Exhibit B, or otherwise,
and (d) all related installations, equipment and items whatsoever.


 


11.           Repairs


 


11.01       Subject to Paragraph 11.02
below, Lessee shall, at all times and at its sole cost and expense, keep
all parts of the Premises (including Lessee Improvements and Lessee
Alterations) in good order, and in a neat, clean and safe condition.  If Lessee does not perform required
maintenance, Lessor shall have the right, without waiver of Default nor of any
other right or remedy, to perform such obligations of Lessee on Lessee’s
behalf, and Lessee will reimburse Lessor for any costs incurred immediately
upon demand.


 


11.02       Lessor shall perform all
repairs required in the Premises.  All
costs incurred by Lessor in making such repairs shall be Operating Expenses;
provided, Lessee shall reimburse Lessor for 100% of any such costs incurred by
Lessor (a) due to the act or omission of Lessee (including but not limited
to clogging of plumbing, stain removal, and repair of damage to the Premises),
or (b) for repairs or maintenance in excess of or other than routine
Building standard repairs and maintenance as determined by Lessor in its
reasonable discretion (for example, maintenance of any above standard dedicated
HVAC unit, repair of built-in appliances, or periodic replacing of above standard
light bulbs).


 


12.           Insurance


 


12.01       Lessee will not do or
permit anything to be done within or about the Premises or the Property which
will increase the existing rate of any insurance on any portion of the Property
or cause the cancellation of any insurance policy covering any portion of the
Property.  Lessee will, at its sole cost
and expense, comply with any requirements of any insurer of Lessor.


 


12.02       Lessee agrees to maintain
policies of insurance described in this Paragraph.  Lessor reserves the right, from time to time,
to require additional coverage’s (including, for example, flood insurance, if
the Premises is located in a flood hazard zone), and/or to require higher
amounts of coverage’s.  Any additional
and/or higher must conform to reasonable industry standards.  No insurance policy of Lessee shall have a
deductible greater than $50,000.


 


	
  (a)           Workers’
  Compensation

  Employer’s Liability

  	
   

  	
  Statutory Requirements

  Not less than $1,000,000.00

  
	
   

  	
   

  	
   

  
	
  (b)           Commercial
  General Liability

  	
   

  	
  Not less than $1,000,000.00

  
	
   

  	
   

  	
   

  
	
  Combined single limit per

  occurrence this location

  	
   

  	
  Not less than $2,000,000.00

  aggregate

  



 


11





















 


The Commercial
General Liability policies shall insure on an occurrence and not a claims-made
basis and cover the Premises, Project and Property.  Such policies shall cover liability arising
from premises, operations, independent contractors, products-completed
operations, personal injury, advertising injury and liability assumed under an
insured contract (specifically insuring performance of the indemnity
obligations of Lessee hereunder); such policies shall not be excess.


 


	
  (c)           Automobile
  Liability single

  limit including property damage

  	
   

  	
  Not less than $300,000.00 combined

  
	
   

  	
   

  	
   

  
	
  (d)           “Causes
  of Loss — Special Form” coverage including endorsements for flood coverage,
  earthquake sprinkler leak coverage, and such endorsements and supplemental as
  Lessor may require from time to time. 
  This insurance coverage must be upon the Premises and all property owned
  by Lessee, for which Lessee is legally liable, which Lessee is obligated to
  repair and restore hereunder, and/or which was installed at the expense of or
  at the request of Lessee, including but not limited to, any Lessee
  Improvements, Lessee Alterations, furniture, fixtures, equipment,
  installations and any other personal property of Lessee, in an amount not
  less than their full replacement value. 
  All proceeds of this insurance shall only be used for the repair and
  replacement of property so insured; Lessee hereby assigns to Lessor all its
  rights to receive any proceeds of such insurance policies attributable to any
  Lessee Improvements and Lessee Alterations if this Lease is terminated due to
  damage or destruction.

  



 


The limits of
the insurance coverage required under this Lease will not limit the liability
of Lessee nor relieve Lessee of any obligation hereunder.  All insurance to be carried by Lessee will be
primary to, and non-contributory with, Lessor’s insurance, and contain
cross-liability endorsements and will in addition to the above coverage
specifically insure Lessor against any damage or loss that may result either
directly or indirectly from any default of Lessee under Paragraph 14
(Hazardous Materials) herein.  Any
similar insurance carried by Lessor will be considered excess insurance only.


 


12.03       Lessee will name Lessor
(and, at Lessor’s request, any mortgagee) and Lessor’s agents as additional
insured’s on all insurance policies required of Lessee under this Lease, other
than Worker’s Compensation, Employer’s Liability, Automobile Liability, and
Fire and Extended coverage (except on Lessee Improvements or Lessee Alterations
to the Premises for which Lessor shall be named an additional insured) insuring
Lessor and such other additional insured’s regardless of any defenses the
insurer may have against Lessee and regardless of whether the subject claim is
also made against Lessee.  All insurance
policies carried by Lessee will permit the insured, prior to any loss, to agree
with a third party to waive any claim it might have against said third party
without invalidating the coverage under the insurance policy, and will release
Lessor (and Lessor’s affiliates and subsidiaries, and all officers, partners,
directors, and employees of Lessor and/or of any such subsidiary or affiliate),
from any claims for damage


 


12





















 


to any person, to the Property of which the Premises are a part, any
existing improvements, Lessee Improvements and Lessee Alterations to the
Premises, and to any furniture, fixtures, equipment, installations and any
other personal property of Lessee caused by or resulting from, risks which are
to be insured against by Lessee under this Lease, regardless of cause.


 


12.04       Lessee will deliver to
Lessor (and, at Lessor’s request, to any mortgagee or to any other third
party), simultaneously with its execution of this Lease and thereafter at least
thirty (30) days prior to expiration, cancellation or change in insurance,
certificates of insurance evidencing, at a minimum, the coverage specified in Paragraph 12.02.  All such certificates shall be in form and
substance satisfactory to Lessor, shall affirmatively demonstrate all and
requirements set forth in this Lease, shall contain no disclaimers of coverage,
and shall include a firm and unconditional obligation to give to Lessor at
least 10 days’ prior written notice prior to cancellation or change in any
coverage.  All insurance required
hereunder will be with companies licensed and authorized to do business in the
state in which the Property is located and holding a “General Policyholders
Rating” of “A VIII” or better, as set forth in the most current Best’s
Insurance Guide.


 


12.05       Lessor will secure and
maintain insurance coverage in such limits as Lessor may deem reasonable in its
reasonable judgment to afford Lessor adequate protection.  The premiums for such coverage are “Insurance
Premiums” under Paragraph 4.03C above. 
Any proceeds of such insurance shall be the sole property of Lessor to
use as Lessor determines.  Lessor makes
no representation that the insurance policies and coverage amounts specified to
be carried by Lessee or Lessor under the terms of this Lease are adequate to
protect Lessee.  Lessee will provide, at
its own expense, all insurance as Lessee deems adequate to protect its
interests.


 


12.06       Without limiting the effect
of any other waiver of or limitation on the liability of Lessor set forth
herein, and except as provided in Paragraph 13 and/or Paragraph 14
below, neither Lessor nor Lessee shall be liable to the other party or to any
insurance company (by way of subrogation or otherwise) for any loss of or
damage to tangible property due to casualty regardless of negligence.  For purposes of this Paragraph 12.06, “Lessor”
shall include Lessor’s affiliates and subsidiaries, and all officers, partners,
directors, and employees of Lessor or of any such subsidiary or affiliate.


 


13.           Waiver
of Claims and Indemnification


 


Lessee waives all claims against Lessor for
any damage to any property in or about the Property, for any loss of business
or income, and for injury to or death of any persons, regardless of the cause
of any such loss or event or time of occurrence, except loss, injury or death
caused by Lessor’s gross negligence or willful misconduct.  Lessee will indemnify, protect, defend and
hold harmless Lessor from and against all claims, losses, damages, causes of
action, costs, expenses and liabilities, including legal fees, arising out of
Lessee’s occupancy of the Premises or presence on the Property, the conduct of
Lessee’s business, any Default by Lessee, and/or any act, omission or neglect
of Lessee, its agents, contractors, employees, suppliers, licensees or invitees.  For purposes of this Paragraph 13, “Lessor”
shall include also Lessor’s affiliates and subsidiaries, and all officers,
partners, directors, and employees of Lessor or of any such subsidiary or
affiliate.


 


13





















 


14.           Hazardous
Materials


 


14.01       “Hazardous Materials” will
mean any substance commonly referred to, or defined in any Law, as a hazardous
material or hazardous substance (or other similar term), including but not be
limited to, chemicals, solvents, petroleum products, flammable materials,
explosives, asbestos, urea formaldehyde, PCB’s, chlorofluorocarbons, Freon or
radioactive materials.  Lessee will not
cause or permit any Hazardous Materials to be brought upon, kept, stored,
discharged, released or used in, under or about any portion of the Property by
Lessee, or its agents without the prior written consent of Lessor, which
consent may be withheld or conditioned in Lessor’s sole discretion; provided,
Lessee may bring into the Premises small amounts of Hazardous Materials (such
as cleaning products and copy toner) which are readily available to Lessee by
unregulated retail purchase if the same are necessary in Lessee’s normal
business operations.  If Lessee brings
any Hazardous Materials to the Premises or Property, with or without the prior
written consent of Lessor (without waiver of the requirement of prior written
consent), Lessee shall: (1) use such Hazardous Material only as is
reasonably necessary to Lessee’s business, in small, properly labeled
quantities; (2) handle, use, keep, store, and dispose of such Hazardous
Material using the highest accepted industry standards and in compliance with
all applicable Laws; (3) maintain at all times with Lessor a copy of the
most current MSDS sheet for each such Hazardous Material; and (4) comply
with such other rules and requirements Lessor may from time to time impose.  Upon expiration or earlier termination of
this Lease, Lessee will, at Lessee’s sole cost and expense, cause all Hazardous
Materials brought to the Premises or the Property by Lessee, its agents,
contractors, employees, suppliers, licensees or invitees, to be removed from
the Property in compliance with any and all applicable Laws.


 


14.02       If Lessee or its agents
violate the provisions of this Paragraph 14, or performs any act or
omission which contaminates or expands the scope of contamination of the
Premises, the Property, or any part thereof, the underlying groundwater, or any
property adjacent to the Property, then Lessee will promptly, at Lessee’s
expense, take all investigatory and/or remedial action (collectively called “Remediation”)
that is necessary to fully clean up, remove and dispose of such Hazardous
Materials and any contamination so caused and shall do so in compliance with
any applicable Laws.  Lessee will also
repair any damage to the Premises and any other affected portion(s) of the
Property caused by such contamination and Remediation.


 


14.03       Lessee shall immediately
provide to Lessor written notice of any investigation or claim arising out of
the use by Lessee of Hazardous Materials at the Property or the violation of
any provision of this Paragraph 14 and shall keep Lessor fully advised
regarding the same.  Lessee shall provide
to Lessor all reports regarding the use of Hazardous Materials by Lessee at the
Property and any incidents regarding the same, regardless of whether any such
documentation is considered by Lessee to be confidential.  Lessor retains the right to participate in
any legal actions affecting the Property involving Hazardous Materials.


 


14.04       Lessee will indemnify,
protect, defend and forever hold Lessor, its lenders and ground lessor, if any,
and the Premises, the Property, or any portion thereof, harmless from any and
all damages, causes of action, fines, losses, liabilities, judgments,
penalties, claims, and other costs arising out of any failure of Lessee to
observe any covenants of this Paragraph 14 of this Lease.  All provisions of this Paragraph 14
shall survive the expiration of this Lease and any termination of this Lease or
of Lessee’s right of possession.  For purposes
of this


 


14





















 


Paragraph 14.04, “Lessor” shall include also Lessor’s affiliates
and subsidiaries, and all officers, partners, directors, and employees of
Lessor or of any such subsidiary or affiliate.


 


15.           Lessor’s
Access


 


Lessor, its agents, contractors, consultants,
servants and employees, will have the right to enter the Premises at any time
in the case of an emergency, and otherwise at reasonable times upon reasonable
notice to examine the Premises, perform work in the Premises, show the
Premises, exercise any right or remedy, or for any other purpose.  For each of these purposes, Lessor will at
all times have and retain any necessary keys. 
Lessee will not alter any lock or install new or additional locks or
bolts on any door in or about the Premises without obtaining Lessor’s prior
written approval and will, in each event, furnish Lessor with a new key.  Access by Lessor will not give Lessee the
right to terminate this Lease, and will be without abatement of rent or
liability on the part of Lessor.


 


16.           Damage
or Destruction


 


16.01       If the Premises is damaged
or destroyed by fire or other casualty, Lessee will immediately give written
notice to Lessor of the casualty.  Lessor
will have the right to terminate this Lease following a casualty if any of the
following occur by giving notice to Lessee within sixty (60) days of the
casualty: (i) insurance proceeds actually paid to Lessor and available for
use are not sufficient to pay the full cost to fully repair the damage; (ii) Lessor
determines that the Premises or the Building cannot be fully repaired within
180 days; (iii) the Premises are damaged or destroyed within the last
twelve (12) months of the Lease Term; (iv) Lessee is in Default of this
Lease at the time of the casualty; (v) Lessor would be required under this
Lease to abate or reduce Lessee’s rent for a period in excess of six (6) months
if the repairs were undertaken; or (vi) the Project, or the Building in
which the Premises is located, is damaged such that the cost of repair of the
same would exceed 10% of the replacement cost of the same.  If Lessor elects to terminate this Lease,
Lessor will be entitled to retain all applicable Lessee insurance proceeds
excepting those attributable to Lessee’s furniture, fixtures, equipment, and
any other personal property.


 


16.02       If this Lease is not
terminated pursuant to Paragraph 16.01, Lessor will repair the Premises
and this Lease shall continue.  The
repair obligation of Lessor shall be limited to repair of the Premises
excluding any Lessee Improvements, Lessee Alterations, and any personal
property and trade fixtures of Lessee.  During
the period of repair, rent will be abated or reduced in proportion to the
degree to which Lessee’s use of the Premises is impaired, as determined by
Lessor, not to exceed the total amount of rent loss insurance proceeds,
directly attributable to Lessee’s Premises, Lessor has received.  However, rent will not be abated if Lessee or
any of its agents is the cause of the casualty.


 


17.           Transfer
(Assignment/Subletting)


 


17.01       Lessee will not,
voluntarily or by operation of law, assign, sell, convey, sublet or otherwise
transfer all or any part of Lessee’s right or interest in this Lease, or allow
any other person or entity to occupy or use all or any part of the Premises
(collectively called “Transfer”) without first obtaining the written consent of
Lessor which may be withheld or conditioned by


 


15





















 


Lessor in its reasonable discretion. 
Any Transfer without the prior written consent of Lessor shall be void.  Without limiting the generality of the
definition of “Transfer,” it is agreed that each of the following shall be
deemed a “Transfer” for purposes of this Paragraph: (a) an entity other
than Lessee becoming the tenant hereunder by merger, consolidation, or other
reorganization; and (b) a transfer of any ownership interest in Lessee
(unless Lessee is an entity whose stock is publicly traded).  Lessee shall provide to Lessor all information
requested by Lessor concerning a Transfer. 
If Lessor has not granted consent in writing to a Transfer within thirty
(30) days of Lessee’s request hereunder and delivery of all such information,
Lessor will be deemed to have rejected Lessee’s request.  In no event shall Lessee mortgage, encumber,
pledge or assign for security purposes all or any part of its interest in this
Lease.  Notwithstanding the foregoing,
Lessee may assign this Lease or sublease the Premises, in whole or in part,
without the express written consent of Lessor to: (i) any corporation into
which or with which Lessee has merged or consolidated; (ii) any parent,
subsidiary, successor, or affiliated corporation of Lessee; (iii) any
corporation which acquires all or substantially all of the assets or issued and
outstanding shares of capital stock of Lessee; (iv) any partnership, the
majority interest of which shall be owned by the parent of Lessee; provided the
resulting entity from such merger or consolidation or the transferee, other
than a parent, subsidiary or affiliated corporation of Lessee, from any such
acquisition, shall have a net worth not less than Lessee’s prior to the merger,
consolidation, or acquisition; and provided further any such assignee or
successor shall agree in writing to assume and perform all of the terms and
conditions of this Lease on Lessee’s part to be performed from and after the
effective date of such assignment or subletting, so long as the resulting
entity’s use of the Premises does not violate any provision of this Lease or
any applicable governmental law, rule or regulation.


 


17.02       In the event Lessor
consents to a Transfer, the Transfer will not be effective until Lessor
receives a fully executed agreement regarding the Transfer, in a form and of substance
acceptable to Lessor, any documents or information required by such agreement
(including any estoppel certificate and any subordination agreement required by
any lender of Lessor), an amount equal to all attorneys fees and other expenses
of Lessor incurred in connection with the Transfer, and a Transfer fee in an
amount determined by Lessor (a minimum fee of $250 is payable).  Lessee agrees to pay to Lessor an amount
equal to all attorneys’ fees and other expenses incurred by Lessor related to a
request for consent to Transfer regardless of whether such consent is granted
and regardless of whether the Transfer is consummated.


 


17.03       Fifty percent (50%) of any
consideration paid to Lessee solely for assignment of this Lease, less any
reasonable brokerage commission and reasonable tenant improvements paid by
Lessee with respect to such assignment, shall be immediately paid to Lessor.  In the event of a sublease of all or a
portion of the Premises, fifty percent (50%) of all rents payable by the
subtenant in excess of rents payable hereunder (allocated on a per square foot
basis in the event of a partial sublease) shall be immediately due and payable
to Lessor; provided, excess rental shall be calculated taking into account
straight-line amortization, without interest, of any reasonable brokerage
commission less any reasonable tenant improvements paid by Lessee in connection
with the subject sublease transaction.


 


17.04       Lessor may, within thirty
(30) days after submission of Lessee’s written request for Lessor’s consent to
a Transfer, terminate this Lease (or, as to a partial subletting, terminate
this Lease as to the portion of the Premises proposed to be sublet) as of the
date the proposed


 


16





















 


Transfer was to be effective.  If
Lessor terminates this Lease as to only a portion of the Premises, then (a) this
Lease shall cease as to such portion of the Premises, (b) Lessee shall pay
to Lessor all Base Rent and other amounts accrued through the termination date
relating to the portion of the Premises covered by the proposed Transfer
(allocated on an equitable basis determined by Lessor), and (c) Lessee
shall execute, upon request of Lessor, an amendment hereto setting forth
matters related to such partial termination. 
Lessor may physically separate the recaptured portion of the Premises
and lease such portion of the Premises to the prospective transferee (or to any
other person) without liability to Lessee.


 


17.05       Regardless of whether
consent by Lessor is granted in connection with any Transfer, no Transfer shall
release Lessee from any obligation or liability hereunder, Lessee shall remain
primarily liable to pay all rent and other sums due hereunder to Lessor and to
perform all other obligations hereunder. 
Similarly, no Transfer, with or without the consent of Lessor, shall
release any guarantor from its obligations under its guaranty.  Upon any assignment or sublease, any rights,
options or opportunities granted to Lessee hereunder to extend or renew the
Lease Term, to shorten the Lease Term, or to lease additional space shall be
null and void.


 


18.           Default


 


Time is of the essence in the performance of
all covenants of Lessee.  Lessee will be
in Default if any of the following events occurs:


 


18.01       Lessee fails to make within
five (5) days of when due, any payment of Base Rent, Additional Rent, or any
other monetary payment required to be made by Lessee herein and Lessee does not
cure such failure within three (3) days after Lessor gives written notice of
such failure to Lessee; provided, if Lessor has given such a written notice
with respect to two (2) payments due in any calendar year, then the failure by
Lessee to pay any other payment due in such calendar year, on or before the
date when first due, shall be a Default hereunder without any written notice
from Lessor and without any grace or cure period.  Notwithstanding the foregoing, Lessee shall
not be in default of this Lease the first time in a twelve (12) month period
that Lessee fails to pay rent when due so long as Lessee pays such overdue rent
within five (5) days of written notice from Lessor that such overdue amount is
due.


 


18.02       Lessor discovers that any
representation or warranty made by Lessee or any guarantor was materially false
when made or that any financial statement of Lessee or of any guarantor of this
Lease given to Lessor was materially false.


 


18.03       Lessee makes any general
arrangement or assignment for the benefit of creditors, becomes a “debtor” in a
bankruptcy proceeding, is unable to pay its debts or obligations as they occur,
or has an attachment, execution or other seizure of substantially all of its
assets located at the Property or its interest in this Lease.


 


18.04       Lessee fails to observe,
perform or comply with any of the non-monetary terms, covenants, conditions,
provisions or rules and regulations applicable to Lessee under this Lease other
than as specified above in this Paragraph 18; provided, if such failure is
a curable failure, then such failure shall not be a “Default” unless Lessee
does not cure such failure as soon as practicable possible but in no event
later than thirty (30) days following written notice of such


 


17





















 


failure from Lessor; provided, however, that if said default cannot be
cured within said thirty (30) day period using reasonable diligence, no Default
shall be deemed to have occurred if Lessee commences action to cure the Default
within said thirty (30) day period and diligently pursues a cure thereafter.


 


18.05       Any guarantor becomes
insolvent, becomes a “debtor” in a bankruptcy proceeding, fails to perform any
obligation under its guaranty, or attempts to revoke its guaranty.


 


19.           Remedies
of Lessor


 


19.01       If Lessee fails to perform
any duty or obligation of Lessee under this Lease, Lessor may at its option,
without waiver of Default nor any other right or remedy, perform any such duty
or obligation on Lessee’s behalf.  The
costs and expenses of any such performance by Lessor will be immediately due
and payable by Lessee upon receipt from Lessor of the reimbursement amount
required.


 


19.02       Upon a Default, with or
without notice or demand, and without limiting any other of Lessor’s rights or
remedies, Lessor may:


 


(a)           Terminate
this Lease and/or terminate Lessee’s right to possession of the Premises.  Upon any such termination, Lessee will
immediately surrender possession of the Premises to Lessor.  On termination of this Lease or Lessee’s
right of possession, Lessor will be entitled to recover from Lessee: (i) the
worth at the time of the award of the unpaid rent which had been earned at the
time of the termination; (ii) the worth at the time of the award of the
amount by which the unpaid rents which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Lessee
proves could have been avoided; (iii) the worth at the time of the award
of the amount by which the unpaid rents for the balance of the Lease Term after
the time of award exceeds the amount of such rental loss for such period that
Lessee proves could be reasonably avoided; and (iv) the worth at the time
of the award of any other amount necessary to compensate Lessor for all the
damage proximately caused by Lessee’s failure to perform its obligations under this
Lease, including specifically the unamortized portion of all brokerage
commissions paid in connection with this Lease and all costs of Lessor’s Work
(amortized without interest on a straight line basis over the initial Lease
Term), and reimbursement of any free rent, deferred rent or other Lease
execution inducement.  The expiration or
termination of this Lease, and/or the termination of Lessee’s right to
possession, will not release Lessee from any liability under this Lease.


 


(b)           Continue
the Lease and Lessee’s right to possession and recover rent as it becomes due.  Acts of maintenance or preservation, efforts
to relet the Premises, removal or storage of Lessee’s personal property or the
appointment of a receiver to protect Lessor’s interest under this Lease, will
not constitute a termination of Lessee’s right to possession.


 


18





















 


(c)           Pursue
any other remedy now or hereafter available to Lessor under the laws or
judicial decisions of the state wherein the Premises are located.


 


19.03       The “worth at the time of
award” referred to in Paragraph 19.02(a)(i), 19.02(a)(ii), and
19.02(a)(iv) will additionally include interest computed by allowing interest
at the rate of 12% per annum (or, if lower, at the maximum rate allowed by law).  The “worth at the time of award” referred to
in Paragraph 19.02(a)(iii) will be computed by discounting the amount at
the discount rate of the Federal Reserve Bank of San Francisco in effect at the
time of award, plus one percent (1%).


 


19.04       No right or remedy
conferred upon or reserved to Lessor in this Lease is intended to be exclusive
of any right or remedy granted to Lessor by statute or common law, and each and
every such right and remedy will be cumulative.


 


20.           Condemnation


 


If any portion of the Premises or any portion
of the Building in which the Premises is located, or any portion of the
Property which would substantially interfere with Lessor’s ownership, or Lessor’s
or Lessee’s ability to conduct business is taken for any public or quasi-public
purpose by any governmental authority, including but not limited to, by
exercise of the right of appropriation, inverse condemnation, condemnation or
eminent domain, or sold in lieu of such taking, Lessor, at its option, may
terminate this Lease without recourse by Lessee.  If this Lease is not terminated, Lessor will
promptly proceed to restore the Premises and/or any portion of the Property
used in common by all lessees to substantially the same condition as prior to
such taking allowing for any reasonable effects of such taking.  Should a portion of the Premises be taken in
a case where Lessor does not exercise its right to terminate this Lease, Lessor
will abate the rent corresponding to the term during which, and to the part of
the Premises which, Lessee is deprived on account of such taking.  Any award for any taking or payment made in
lieu of exercise of such power will be the property of Lessor, whether such
award be made as compensation for diminution of value of the leasehold or for
the taking of the fee, or as severance damages; however, Lessee will be
entitled to any compensation, separately awarded to Lessee for Lessee’s
relocation expenses.


 


21.           Estoppel
Certificate


 


Lessee will execute and deliver to Lessor,
within ten (10) days after written request from Lessor, a written Estoppel
Certificate in form prepared by Lessor certifying: (i) that this Lease is
unmodified and in full force and effect (or, if modified, specifying each such
modification); (ii) the Commencement Date and expiration of the Lease
Term; (iii) the absence or status of any rights of Lessee to renew,
extend, or otherwise alter the Lease Term or to lease additional space or alter
the definition of the Premises; (iv) the date to which rent and any other
charges are paid in advance, if any; (v) that there are not, to Lessee’s
knowledge, any uncured Defaults on the part of Lessor, or stating the nature of
any uncured Defaults; (vi) the current Base Rent amount and the amount and
form of the Security Deposit on deposit with Lessor; (vii) that Lessor has
completed any promised improvements to the Premises and paid any promised
improvement allowance (or detailing any work to be performed or allowance to be
paid); and (viii) any other information requested, including but not
limited to, any requested information regarding


 


19





















 


Hazardous Materials.  Any such
Estoppel Certificate may be relied upon by Lessor, and also by any actual or
prospective buyer or lender of the Property and any other third party
designated by Lessor (the “Beneficiaries”). 
If Lessee fails to execute and deliver such Estoppel Certificate within
such ten (10) day period, then without waiver of Default or of any other right
or remedy of Lessor, Lessor shall have the right to deliver to the
Beneficiaries a completed Substitute Estoppel Certificate regarding this Lease
certifying the matters which Lessee was requested to certify in the Estoppel
Certificate.  A notice enclosing a copy
of the Substitute Estoppel Certificate shall be simultaneously sent to Lessee.  Each statement in the Substitute Estoppel
Certificate shall be deemed true, and shall be binding upon Lessee, unless
Lessee provides, within five (5) days of the receipt of Lessor’s notice,
written notice addressed to Lessor and the Beneficiaries disagreeing with such
statement on specific grounds.  Lessee
shall defend and indemnify Lessor regarding any claim that a statement in the
Substitute Estoppel Certificate to which Lessee did not so disagree is
inaccurate.


 


22.           Notices


 


All communications and notices required under
this Lease shall be in writing and shall be addressed to the respective address
of the receiving party set forth in Paragraph 1 above.  All notices to Lessee shall be given by reputable
overnight courier, U. S. mail (First Class, postage prepaid), or hand delivery,
and shall be deemed received (i) if mailed, on the earlier of actual
receipt or three (3) days after such mailing, (ii) one business day
following delivery by Lessor to such an overnight courier, or (iii) upon
hand delivery.  Any notice to Lessee may
also be given by posting at the Premises and shall be effective upon such
posting.  Notices to Lessor shall be sent
to Lessor by U. S. mail, postage prepaid, registered or certified mail with
return receipt requested to the address indicated in Paragraph 1 and shall
be deemed received five (5) days after such mailing.  At any time during the Lease Term, Lessor or
Lessee may specify a different Notice Address by providing written notification
to the other.


 


23.           Holdover


 


If Lessee remains in possession of all or any
part of the Premises with Lessor’s prior written consent after the expiration
or termination of this Lease or of Lessee’s right to possession, such
possession will constitute a month-to-month tenancy which may be terminated by
either Lessor or Lessee upon thirty (30) days written notice and will not
constitute a renewal or extension of the Lease Term.  If Lessee remains in possession after such
expiration or termination without Lessor’s prior written permission, such
possession will constitute a tenancy-at-will terminable upon forty-eight (48)
hours’ notice by Lessor and will not constitute a month-to-month tenancy nor a
renewal or extension of the Lease Term.  In
the event of a month-to-month tenancy or tenancy-at-will under this Paragraph,
Lessee’s Base Rent will be two hundred percent (200%) of the Base Rent payable
during the last month of the Lease Term, any other sums due under this Lease
will be payable in the amounts and at the times specified in this Lease, and
all options, rights of refusal, expansions and/or renewals shall be null and
void.  Any tenancy under this Paragraph will
be subject to every other term, condition and covenant contained in this Lease.  Lessee agrees to defend, indemnify and hold
Lessor harmless from any claim or cause of action arising out of related to the
failure of Lessee to surrender possession of the Premises to Lessor upon the
expiration of this Lease or upon any such termination.  Notwithstanding the foregoing, Lessee shall
have the option to holdover for a period of up to


 


20





















 


three (3) months following the expiration of the lease term at 115% of
the last rent due under the terms of the lease. 
Lessee shall be required to provide Lessor one-hundred eighty (180) days
notice prior to lease the lease expiration date.


 


24.           Default
by Lessor; Limitation of Liability; Real Estate Investment Trust


 


24.01       In the event Lessor fails
to perform any obligation required to be performed under this Lease, Lessee
will notify Lessor in writing of such failure. 
Lessor shall not be deemed in Lessor Default hereunder unless and until
such notice is actually received by Lessor and Lessor fails within thirty (30)
days of receipt of such notice to commence to make a good faith effort to cure
the failure or thereafter ceases to pursue such cure to completion.


 


24.02       The obligations of Lessor
under this Lease shall be binding only on the undersigned Lessor and not upon
any of its subsidiaries or affiliates nor upon any partners, investors,
trustees, directors, officers, employees, agents, shareholders, advisors or
managers of Lessor in their individual capacities.  With respect to any obligations of Lessor to
Lessee under this Lease and with respect to any liabilities arising at the
Property, Lessee’s sole and exclusive remedy shall be a claim against the
undersigned Lessor.


 


24.03       In consideration of the
benefits accruing hereunder, Lessee on behalf of itself and all of its
Transferees covenants and agrees that, in the event of any actual or alleged
Lessor Default of this Lease or in the event of any other claim or cause of
action by Lessee, Lessee’s recourse against Lessor for any monetary damages
(over and above damages actually paid by available insurance, if any) will be
limited to Lessor’s interest in the amount of equity Lessor would have in the
Property if the Property were encumbered by debt in an amount equal to fifty
percent (50%) of the value of the Property; calculations of equity shall be
made as of the initial date Lessee notifies Lessor of the actual or alleged
Default or other claim the Property.  Any
judgment against Lessor shall be satisfied only out of an offset against Rents
and out of the Property; no other assets of Lessor shall be subject to levy,
execution or other enforcement procedure for the satisfaction of any judgment
by Lessee against Lessor.  Any claims by
Lessee against Lessor will be limited to actual damages only and will not,
under any circumstances, include lost profits or consequential damages.


 


24.04       If Lessor is a real estate
investment trust, and if Lessor in good faith determines that its status as a
real estate investment trust under the applicable provisions of the Internal Revenue
Code of 1986, as heretofore or hereafter amended, will be jeopardized because
of any provision of this Lease, Lessor may require reasonable amendments to
this Lease and Lessee shall not unreasonably withhold or delay its consent
thereto, provided that such modifications do not in any way, (i) increase
the obligations of Lessee under this Lease or (ii) adversely affect any
rights or benefits to Lessee under this Lease. 
Lessor shall pay all reasonable costs incurred by Lessee, including
without limitation, legal fees incurred for reviewing any such proposed
modifications.


 


24.05       Lessee represents that, to
its knowledge, no person or entity who is a significant indirect owner of
Lessor, owns actually or constructively a 10% or more interest in Lessee.  Lessee will promptly notify Lessor if it
learns that any such ownership interest exists.


 


21





















 


Significant owners of Lessor at this time include Public Storage, Inc.
and New York Common Retirement Fund.


 


24.06       Lessor and any successor
Lessor have the right to sell the Property or any portion of it, or to assign
its interest in this Lease, at any time and from time to time.  Upon the sale or any other conveyance by
Lessor of the Property, or a portion thereof which includes the Premises,
Lessor will be released from all obligations and liability under this Lease
arising out of any act, event, occurrence or omission occurring or existing
after the date of such conveyance.


 


25.           Subordination


 


Without the necessity of any additional
document being executed by Lessee for the purposes of effecting a
subordination, and at the election of Lessor or any mortgagee or any ground
lessor with respect to the land of which the Premises are a part, this Lease
will be subject and subordinate at all times to: (i) all ground leases or
underlying leases which may now exist or hereafter be executed affecting the
Property, and (ii) the lien of any mortgage or deed of trust which may now
exist or hereafter be executed in any amount for which the Property, ground
leases or underlying leases, or Lessor’s interest or estate in any of said
items is specified as security.  Lessor
or any mortgagee or ground lessor will have the right, at its election, to
subordinate or cause to be subordinated any ground lessee or underlying leases
or any such liens to this Lease.  If
Lessor’s interest in the Premises is acquired by any ground lessor or
mortgagee, or in the event any proceedings are brought for the foreclosure of,
or in the event of exercise of power of sale under, any mortgage or deed of
trust made by Lessor covering the Premises, or in the event a conveyance in
lieu of foreclosure is made for any reason, Lessee will, notwithstanding any
subordination and upon the request of such successor in interest to Lessor,
attorn to and become the Lessee of the successor in interest to Lessor and
recognize such successor in interest as the Lessor under this Lease, provided
Lessee’s interests hereunder shall not be disturbed so long as Lessee is not in
Default hereunder.  Lessee acknowledges
that although this Paragraph is self-executing, Lessee covenants and agrees to
execute and deliver, upon demand by Lessor and in the form requested by Lessor,
or any other mortgagee or ground lessor, any additional documents evidencing
the priority or subordination of this Lease with respect to any such ground
leases or underlying leases or the lien of any such mortgage or deed of trust,
provided Lessee’s interests hereunder shall not be disturbed so long as Lessee
is not in Default hereunder.  Lessee
agrees that any person or entity who acquires title to the Premises pursuant to
a foreclosure of a deed of trust or mortgage, or deed in lieu thereof, or the
termination of an underlying ground lease or master lease (a “Foreclosing Party”),
even if such Foreclosing Party elects to have Lessee attorn to the Foreclosing
Party under this Lease, shall not be (i) liable for any act or omission of
any prior lessor or with respect to events occurring prior to its acquisition
of ownership, (ii) subject to any offsets or defenses which Lessee might
have against any prior lessor, (iii) bound by prepayment of more than one
month’s rent, (iv) liable for any security deposit not actually received
by such person or entity, (v) bound by any amendment or modification to
this Lease not consented to in writing by the holder of the mortgage, deed of
trust, ground lease or master lease or the Foreclosing Party, or (vi) liable
for any obligation or liability accruing under this Lease after the Foreclosing
Party assigns its interest under this Lease to a third party.  Any such Foreclosing Party is expressly made
a third party beneficiary of the foregoing provisions, and all other provisions
of this Lease which are for the benefit of a Foreclosing Party, which rights
shall survive a foreclosure of the deed of trust or mortgage.


 


22





















 


26.           Force
Majeure


 


Lessor will not be deemed in Lessor Default
or have liability to Lessee, nor will Lessee have any right to terminate this
Lease or abate rent or assert a claim of partial or constructive eviction,
because of Lessor’s failure to perform any of its obligations under this Lease
if the failure is due in part or in full to reasons beyond Lessor’s reasonable
control.  If this Lease specifies a time
period for performance of an obligation by Lessor, that time period will be
extended by the period of any delay in Lessor’s performance caused by such
events as described herein.


 


27.           Miscellaneous
Provisions


 


27.01       Whenever the context of
this Lease requires, the word “person” shall include any entity, and the
singular shall include the plural and the plural shall include the singular.  If more than one person or entity is Lessee,
the obligations of each such person or entity under this Lease will be joint
and several.  Without diminishing the
provisions of Paragraph 17, the terms, conditions and provisions of this
Lease will apply to and bind the heirs, successors, executors, administrators
and assigns of Lessor and Lessee.


 


27.02       The captions and headings
of this Lease are used for the purpose of convenience only and shall not be
construed to interpret, limit or extend the meaning of any part of this Lease.  This Lease contains all of the agreements and
conditions made between Lessor and Lessee and may not be modified in any manner
other than by a written agreement signed by both Lessor and Lessee.  Any statements, promises, agreements,
warranties or representations, whether oral or written, not expressly contained
herein will in no way bind Lessor and Lessee expressly waives all claims for
damages by reason of any statements, promises, agreements, warranties or
representations, if any, not contained in this Lease.  No provision of this Lease shall be deemed to
have been waived by Lessor unless such waiver is in writing signed by a
regional vice president or higher of Lessor or of Lessor’s management company,
and no custom or practice which may develop between the parties during the
Lease Term shall waive or diminish the Lessor’s right to enforce strict
performance by Lessee of any terms of the Lease.  No waiver by Lessor of a Default by Lessee of
any term, covenant or condition of this Lease will be deemed a waiver of any
other term, covenant or condition of this Lease, or of any subsequent Default
by Lessee of the same or any other term, covenant or condition of this Lease.  No delay or omission by Lessor to seek a
remedy for any Lessee Default of this Lease shall be deemed a waiver by Lessor
of its remedies or rights with respect to such Default.  Additionally, regardless of Lessor’s
knowledge of a Default at the time of such acceptance, the acceptance of rent
or any other payment by Lessor will not constitute a waiver by Lessor of any
Default by Lessee.  The duties and warranties
of Lessor are limited to those expressly stated in this Lease and do not and
shall not include any implied duties or implied warranties, now or in the
future.  No representations or warranties
have been made by Lessor other than those contained in this Lease.  This Lease is governed and construed in
accordance with the laws of the state in which the Premises are located, and
venue of any legal action will be in the county where the Premises are located.


 


27.03       Time is of the essence for
the performance of each term, condition and covenant of this Lease.


 


23





















 


27.04       This Lease has been fully
reviewed by both parties and shall not be strictly or adversely construed
against the drafter.  If any provision
contained herein is determined to be invalid, illegal or unenforceable in any
respect, then (a) such provision shall be enforced to the fullest extent
allowed, and (b) such invalidity, illegality, or unenforceability will not
affect any other provision of this Lease.


 


27.05       Lessee hereby agrees not to
disclose any terms of this Lease without the prior written consent of Lessor.  Lessee shall not record this Lease or any
short form memorandum hereof.


 


27.06       The rights and obligations
of the parties under this Lease shall survive the expiration of this Lease and
the termination of this Lease and/or of Lessee’s right of possession.


 


27.07       Lessor and Lessee each
warrant to the other that it has not dealt with any broker or agent in
connection with this Lease, other than the person(s) listed in Paragraph 1
above.  Lessor and Lessee each agree to
indemnify the other against all costs, expenses, legal fees and other liability
for commissions or other compensation claimed by any other broker or agent by
reason of the act or agreement of the indemnifying party.


 


27.08       Lessee shall not permit or
allow any activity in the Premises which will have an adverse effect on indoor
air quality, including smoking and any remodeling activity or introduction of
materials which would have such an effect. 
Lessor shall have the right, but not the obligation, to monitor indoor
air quality within the Project.  Lessee
shall take such steps to protect and to improve indoor air quality as Lessor
may request from time to time.


 


27.09       Lessor has no duty to
provide security for any portion of the Project.  To the extent Lessor elects to provide any
security, Lessor is not warranting the effectiveness of any security personnel,
services, procedures or equipment and Lessee shall not rely on any such personnel,
services, procedures or equipment.  Lessor
shall not be liable for failure of any such security personnel, services,
procedures or equipment to prevent or control, or to apprehend anyone suspected
of, personal injury or property damage in, on or around the Project.


 


27.10       The grant of any consent or
approval required from Lessor under this Lease shall be proved only by proof of
a written document signed and delivered by Lessor expressly setting forth such
consent or approval.  Unless otherwise specified
herein, any such consent or approval may be withheld in Lessor’s sole
discretion.  Any consent may be issued
subject to conditions determined by Lessor, in its sole discretion.  Notwithstanding any other provision of this
Lease, the sole and exclusive remedy of Lessee for any alleged or actual
improper withholding, delaying or conditioning of any consent or approval by
Lessor shall be the right to specifically enforce any right of Lessee to
require issuance of such consent or approval on conditions allowed by this
Lease; in no event shall Lessee have the right to terminate this Lease, to
collect monetary damages, or to pursue any other remedy for any actual or
alleged improper withholding, delaying or conditioning of any consent or
approval, regardless of whether this Lease requires that such consent or
approval not be unreasonably withheld, conditioned or delayed.


 


24





















 


27.11       Lessee agrees to abide by,
keep and observe all Rules and Regulations set forth in Exhibit “D” and
all additions and amendments to the same of which Lessor provides written
notice to Lessee.  Lessor will not be
responsible to Lessee for any nonperformance by any other lessee, occupant or
invitee of the Property of any said Rules and Regulations.


 


27.12       Lessee will not place any
signage on or about the Property, or on any part thereof, without the prior
written consent of Lessor which Lessor may withhold or condition in its sole
discretion.  All Lessee signage will
comply with the terms and conditions of this Lease, the sign criteria set forth
in Exhibit “C” and Exhibit “D,” or other criteria which Lessor may
establish from time to time.


 


27.13       Lessee will not vacate or
abandon the Premises, or permit the Premises to remain unoccupied for any
period longer than fifteen (15) consecutive days any time during the Lease Term.  If Lessee abandons, vacates, or surrenders
the Premises, or is dispossessed by process of law, or otherwise, any personal
property belonging to Lessee left in or about the Premises will, at the option
of Lessor, be deemed abandoned and may be disposed of by Lessor at the expense
and risk of Lessee.


 


27.14       In the event any party to
this Lease initiates litigation to enforce the terms of this Lease or to
declare rights under this Lease, the prevailing party will be entitled to
collect its reasonable attorneys fees shall include all attorneys fees incurred
at and in preparation for discovery, arbitration, trial, appeal and review,
including deposition attorney’s fees.  This
attorney’s fee provision shall also apply to all litigation and other
proceedings in Bankruptcy Court.


 


27.15       Submission of this document
for examination and signature by Lessee is not an offer to lease and does not
create a reservation or option to lease. 
This document will become effective and binding only upon full execution
and delivery by both Lessee and Lessor.


 


27.16       OPTION TO RENEW LEASE


 


Provided Lessee is not in Default of the
Lease at the time it exercises this option and has not been in Default during
any other period of the Lease Term that has not been cured, Lessee is hereby
granted one option to renew this Lease for an additional five (5) years at the
Base Rent rate then in effect for comparable space in the market at the
effective date of the commencement of such renewal term, but not less than the
last monthly rental amount payable by Lessee prior to commencement of such
renewal term.  Such leasing for the
renewal term shall be, at the election of Lessor, on the same terms and
conditions as set forth in this Lease or on the terms and conditions of the
standard lease form then used by Lessor with respect to the Project.  The within option shall be exercised by
Lessee, if at all, by written notice given no sooner than twelve (12) full
calendar months and no later than eight (8) full calendar months prior to the
expiration of the Lease Term; Lessee shall include with such notice a complete
set of current financial statements of Lessee and all guarantors.


 


In the event Lessor and Lessee are unable to
agree as to the Base Rent rate applicable to such renewed term within thirty
(30) days of Lessee’s exercise of its option to renew, both parties agree to
mediate their disagreement.  If mediation
does not resolve the disagreement in


 


25





















 


fair market value, Lessee shall have the option to refer the matter to
an MAI certified appraisal procedure to determine the Base Rent rate.  Lessor and Lessee shall appoint an MAI
certified appraiser, such appraiser shall determine the current market rent (to
be not less than the minimum rent set forth above in this Section) and such
determination shall be binding upon Lessor and Lessee.  Lessor and Lessee shall each pay one-half of
the fees and costs of such appraiser.


 


Upon determination of the Base Rent rate,
Lessor shall deliver to Lessee either an amendment to this Lease renewing the
Lease Term, or a new lease for the renewal term based upon the form of the
standard lease then used by Lessor with respect to the Project.  Lessee shall execute and deliver the
submitted document to Lessor within ten (10) days accompanied by payment of the
amount of money which, when added to any existing Security Deposit, shall
increase the Security Deposit amount to a sum which bears the same relationship
to the renewal Base Rent as the original Security Deposit bears to the Base
Rent with respect to the initial Lease Term.


 


Notwithstanding any provision hereof, during
the thirty (30) day period allowed for the parties to agree upon the renewal
Base Rent rate, Lessor shall have the right to rescind the exercise of the
renewal option by written notice in the event Lessor determines, in its
reasonable discretion, that the financial statements delivered by Lessee with
the renewal notice are not satisfactory to Lessor.


 


The rights of Lessee under this Paragraph are
not assignable separately from this Lease. 
Such rights of Lessee shall terminate upon: (a) any assignment,
sublease, or other Transfer, and/or (b) any monetary default and/or (c) any
termination of this Lease or of Lessee’s right of possession hereunder;
provided, however, in the event Lessee shall have exercised this renewal option
and Lessor subsequently terminates this Lease or Lessee’s right of possession
hereunder for Default, the damages to which Lessor shall be entitled shall
include damages with respect to the renewal term.


 


27.17       Mediation
First


 


Any disputes under the Lease, after first
attempting to be resolved through mediation, including with respect to the
determination of Additional Rent and/or Fair Market Rent, shall be resolved by
binding arbitration under the rules of the Arbitration Service of Portland, or
such other procedures as shall be mutually agreed upon between Lessor and
Lessee, as set for the in the lease.  Pending
the final determination of any dispute, Lessee shall pay the last Base Rent
amount due under the Initial Term and make up any shortfall immediately after
final determination of Fair Market Rent.


 


27.18       The following Exhibits are
attached to this Lease and by this reference made a part hereof:  “A-1”, “A-2”, “A-3”, “A-4”, “B”, “C”, and “D”.


 


IN WITNESS WHEREOF, Lessor and Lessee have
executed this Lease as of the Lease Execution Date.


 


THIS LEASE, WHETHER OR NOT EXECUTED BY
LESSEE, IS SUBJECT TO ACCEPTANCE BY LESSOR, ACTING BY ITSELF OR BY ITS AGENT BY
THE


 


26





















 


SIGNATURE ON THIS LEASE OF ITS SENIOR VICE PRESIDENT, VICE PRESIDENT,
REGIONAL MANAGER OR DIRECTOR OF LEASING.


 


	
  LESSOR:

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
   

  
	
  PS
  Business Parks, L.P.

  	
   

  	
  Digimarc
  Corporation

  
	
  A
  California Limited Partnership

  	
   

  	
  A
  Delaware Corporation

  
	
  By PS
  Business Parks, Inc.

  	
   

  	
   

  
	
  Its
  General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/Coby
  A. Holley

  	
   

  	
   

  	
  /s/ Paul
  R. Gifford

  	
   

  
	
  By: Coby
  A. Holley, Vice President

  	
   

  	
  By: Paul
  R. Gifford, President & COO

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  3-24-04

  	
   

  	
  Date:

  	
  3-22-04

  
	
   

  	
   

  	
   

  
	
  Lease
  Execution Date

  	
   

  	
   

  
							



 


27





















 


PREMISES “A-1” FIRST FLOOR


 


 


[map of premises]


 


A-1





















 


PREMISES “A-1” SECOND FLOOR


 


 


[map of premises]


 


A-1





















 


BUILDING “A-2”


 


Creekside Corporate Park


 


SW Nimbus Avenue and Hall Boulevard,
Beaverton, Oregon


 


[map of premises location]


 


A-2





















 


PROJECT “A-3”


 


Creekside Corporate Park


 


SW Nimbus Avenue and Hall Boulevard,
Beaverton, Oregon


 


[map of premises location]


 


A-3





















 


PROPERTY “A-4”


 


Creekside Corporate Park


 


SW Nimbus Avenue and Hall Boulevard,
Beaverton, Oregon


 


[map of premises location]


 


A-4





















 


EXHIBIT B


 


WORK LETTER


 


1.             Lessor’s Work.


 


1.1.          Plans and Costs.


 


If Lessor has
agreed to alter or improve the Premises prior to delivery of possession to
Lessee, then this box is checked:þ.
 All such alterations and improvements
shall be described on plans and specifications to be approved by the parties as
described below (the “Plans”).


 


(a)           Approval of Plans.  Lessor
shall have Plans prepared and shall submit the same to Lessee for review,
comment, and approval.  The parties shall
agree upon the final Plans and a related estimate of the “Costs of Lessor’s
Work” by May 1, 2004 (the “Plan
Approval Date”).  If Lessee does not
approve plans by the plan Approval Date, the number of days of delay in such
approval beyond the Plan Approval Date shall be deemed days of delay
attributable to and caused by Lessee.


 


(b)           Lessor’s Work Defined. 
The work to be performed by Lessor as shown on the Plans, as the same
may be modified by change order as discussed below, is referred to as “Lessor’s
Work.”


 


(c)           Costs.  The “Costs of
Lessor’s Work” shall include all costs incurred by Lessor in connection with
Lessor’s Work including but not limited to all design costs (architectural,
engineering, mechanical and other design costs), all hard and soft construction
costs, and all costs of materials, general conditions, permits and inspection
fees.  In addition, Lessee may use a
portion of the Work Allowance for moving costs, cabling, furniture, fixtures
and equipment.  Lessee understands and
agrees that (i) the actual Costs of Lessors Work can only be determined
after all Lessor’s Work is completed, (ii) the actual Costs of Lessor’s
Work may exceed the estimate and also any other estimate communicated to Lessee
prior to or during the course of completing Lessor’s Work, and (iii) the
actual Costs of Lessor’s Work may increase for reasons, including but not
limited to, Change Orders, increased costs resulting from any act or omission
of Lessee, unforeseen or hidden conditions discovered during the course of
construction, or additional costs or delays caused by any governmental
authority or agency requirement.  The
Costs of Lessor’s Work shall include a reasonable fee as compensation to Lessor
for coordination and supervision of Lessor’s Work and any Lessee Improvements.


 


(d)           Payment.  Lessor shall
pay the Costs of Lessor’s Work up to $1,555,301 ($33.75 per square foot) (the “Lessor’s
Work Allowance”).  In the event the
initial estimate of the Costs of Lessor’s Work approved pursuant to the above
provisions exceeds the Lessor’s Work Allowance, Lessee shall pay the excess to
Lessor upon approval of the Plans and such initial estimate.  Seventy-five (75%) percent shall be due prior
to commencement of construction and twenty-five (25%) percent shall be due at
Substantial Completion.


 


(e)           Payment Delays.  If
Lessee fails to pay to Lessor any amount required by this Work Letter, as and
when due, then, without waiver of default or of other rights


 


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and remedies, Lessor shall have
the right to suspend Lessor’s Work until payment is received; the number of
days by which any such suspension delays substantial completion shall be deemed
days of delay attributable to and caused by Lessee.


 


(f)            Architects/Space Planning. 
Lessor has engaged LRS Architects to complete space plan and design
development drawings.  If Lessee is
dissatisfied with the space plan, Lessee shall have the option at their cost to
select their own architect, subject to the reasonable approval of Lessor.  Such costs can be included in the cost of
Lessor’s Work.


 


1.2.          Construction.  The
construction obligation of Lessor is to substantially complete Lessor’s Work
substantially in accordance with the Plans. 
Lessor shall use reasonable efforts to substantially complete Lessor’s
Work three weeks prior to the scheduled Commencement Date set forth in Section 1
of the Lease; provided the consequences of delay in substantial completion of
Lessor’s Work are those set forth in the Lease. 
Both the initial Tenant improvement work, as well as any subsequent
major work in the premises shall be performed by Lessor.  Lessee shall have the benefit of competitive
bidding for work to be performed by Lessor’s contractor.  Any fees for overhead or supervision of
Lessor’s work in the premises shall be consistent with reasonable industry
standards and all costs for work to be performed in the premises shall be
subject to Lessor and Lessee prior approvals.


 


1.3.          Changes in the Plans.


 


(a)           A
“Change Order” is a Lessor required or Lessee requested change to the Plan.


 


(b)           Lessor
shall have the right to require a Change Order based on applicable codes,
actual site conditions, and/or ambiguities or inconsistencies in the Plans.


 


(c)           Lessee
may request from time to time a Change Order. 
If Lessee wishes to request a Change Order, Lessee will submit in
writing to Lessor a detailed request of the change.  Lessor is not obligated to approve any Lessee
requested change.  If Lessor does approve
the same, Lessor will deliver to Lessee a written statement, hereinafter
referred to as “Lessor’s Change Order Statement”, of the estimated costs and
expenses of the change with a reasonable estimate, if applicable, of the
additional time required for substantial completion of Lessor’s Work.


 


(d)           Within
three (3) business days following receipt by Lessee of Lessor’s Change Order
Statement, Lessee will provide Lessor its written authorization to proceed with
the change.  If the change increases the
Costs of Lessor’s Work and the total Costs of Lessor’s Work exceed the
Allowance, Lessee shall pay the amount required at the time of providing
authorization to proceed.  If Lessee does
not provide such written authorization to Lessor’s Change Order Statement
accompanied by payment of such required amount within this time period, Lessee’s
request for a Change Order shall be deemed cancelled.  All delays attributable to Lessee requested
changes, whether or not approved by Lessor and whether or not cancelled by
Lessee, shall be deemed delays caused by Lessee.  Lessee shall pay to Lessor any costs incurred
by Lessor regarding a Lessee requested change that is cancelled.


 


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1.4.          Completion and Delivery.  Possession of the Premises shall be delivered
to Lessee when Lessor’s Work is substantially completed in accordance with the
Plans, as reasonably determined by Lessor or on such earlier date, if any, as
is determined pursuant to the operation of Section 2.03 of the Lease.  Within three (3) days of written request by
Lessor, Lessee shall execute and deliver to Lessor a confirmation letter
prepared by Lessor affirming substantial completion of Lessor’s Work, the date
of Lessor’s delivery of the Premises, and such other matters as Lessor may
reasonably request.


 


1.5           Punch list Work.  Lessor’s
Work shall be deemed substantially completed even if minor items of work which
do not materially adversely affect Lessee’s ability to conduct its business
remain to be completed or corrected (hereinafter referred to as “Punch list
Items”).  Lessee shall notify Lessor of
any Punch list Items by written notice given within ten (10) days following
receipt of Lessor’s written notification of substantial completion of Lessor’s
Work.  Lessee shall be deemed to have
approved Lessor’s Work if Lessee does not deliver such a list to Lessor within
such time period and to have approved all of Lessor’s Work except only properly
and timely listed Punch list Items.  The
obligation of Lessor regarding Punch list Items shall be to complete the same
to industry standard.  Lessor shall have
complete access to the Premises for the purpose of performing punch list work.  Any dispute as to Punch list Items shall be
resolved by an architect or other qualified professional designated by Lessor,
but such dispute shall not delay the date upon which Lessor’s Work is deemed
substantially complete.


 


2.             Lessee Improvements.  Any
work of improvement Lessee proposes to undertake which is within the definition
of “Lessee Improvements” set forth in Section 10.01 of the Lease shall be
subject to the following provisions (and also subject to the provisions of Section 10
of the Lease).  If no such Lessee
Improvements are to be undertaken by Lessee, then the provisions of Paragraph 2
of this Work Letter shall be disregarded.


 


2.1.          Lessee Plans.  Lessee
must obtain the prior written approval of Lessor regarding complete plans and
specifications for the Lessee Improvements. 
If such plans and specifications are already approved, the approved
plans and specifications (or a list of the same) are attached as Schedule 2;
otherwise, Lessee shall submit plans and specifications for the approval of
Lessor pursuant to Paragraph 10 of the Lease.


 


2.2.          Scheduling; Avoidance of Inconvenience.  Following completion of Lessor’s Work, subject
to a punch list, Lessor shall deliver a C.O. or temporary C.O. to Lessee and
grant a period of three (3) weeks prior occupancy to move-in to the Premises
which will include installation of FF&E, telecommunications and computer
cabling.  In the event Lessor separately
gives written permission to Lessee allowing any portion of Lessee Improvements
to be installed or materials to be delivered prior to substantial completion of
Lessor’s Work, then (a) Lessee waives any claims for delays in its work
and shall instruct its contractor to follow the directives and orders of Lessor’s
contractor, and (b) Lessee shall schedule its work such that union and
non-union workers will not be working side by side at the Premises, and (c) any
damage to Lessor’s Work shall be deemed to have been caused by Lessee and its
contractor unless conclusively proved otherwise by Lessee.  Lessee shall have the right to retain its own
specialty contractors to perform any portion of the work necessary to construct
and outfit the Premises (which will not be part of the general contractor’s
scope of work nor shall a mark-up be added). 
The Lessee’s contractors’ work shall include, but not be limited to,
data cabling,


 


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telephone and data equipment,
security, audio/visual equipment, and furniture systems.  Lessee’s contractor(s) and Lessor’s contractor(s)
shall work in harmony during the period of Lessee fit-up.  Lessee and Lessee’s contractors shall have
reasonable access to the Premises during the construction (to be coordinated
with the General Contractor to install cabling and for the purpose of
inspecting the work in progress).


 


2.3.          Inspection.  Lessor
and Lessor’s agents shall have the right, but not the obligation, to inspect
the construction of Lessee Improvements from time to time.  If Lessor shall give Lessee written notice of
faulty construction or any other deviation from the approved plans, Lessee
shall promptly make the necessary corrections to Lessor’s reasonable
satisfaction.  However, neither the right
herein granted to Lessor to make such inspections, nor the making of such inspections
by Lessor, shall operate as a waiver of any rights of Lessor to require good
and workmanlike performance of all Lessee Improvements in strict accordance
with plans approved by Lessor.  Notwithstanding
any inspection by Lessor, Lessee acknowledges that Lessors sole interest in
doing so is to protect the Building and Lessor’s interests.  Accordingly, Lessee shall not rely upon
Lessor’s inspections or approvals, and agrees that Lessor shall not be the
guarantor of, nor responsible for, the quality of any of Lessee Improvements or
the conformity of any Lessee Improvements with approved plans or with any
applicable legal requirements.  Lessee
shall be solely responsible for, and shall remedy, at Lessee’s sole expense,
any and all defects and nonconformities in Lessee Improvements that may appear
during or after the completion thereof.


 


2.4.          Ownership of Lessee Improvements.  Unless otherwise specified by Lessor,
ownership of and responsibility for all Lessee Improvements shall be governed
by the provisions of the Lease.


 


2.5.          Delays.  The parties
expressly acknowledge and agree that none of Lessee’s obligations under the
Lease (including Lessee’s obligation to pay rent) shall be delayed, terminated
or otherwise affected on account of any delay in completion of the Lessee
Improvements from any cause other than the fault of Lessor.


 


2.6.          Compliance.  Access to
the Premises for Lessee to install Lessee Improvements is granted, when
authorized under Section 2.2 above, subject to all provisions of the Lease
and this Work Letter and Lessee shall be bound by and comply with all such
provisions.


 


2.7.          Costs.  Lessee shall
pay all costs and expenses related to Lessee Improvements as and when due in
compliance with Paragraph 10 of the Lessee.


 


2.8.          Lessee Allowance.  Lessor
agrees to reimburse Lessee for the costs of Lessee’s Work paid by Lessee from
the Lessor’s Work Allowance.  The Lessor’s
Work Allowance can only be used to reimburse hard and soft costs of
improvements to the Premises including design costs or the purchase of
furniture or equipment.  Lessor shall pay
to Lessee within forty-five (45) days after the date that Lessee requests the
same; any such request shall be made only after (a) Lessee submits to
Lessor satisfactory evidence of qualified expenditures, final completion of and
full payment for all Lessee Improvements and expenses, and compliance with all
requirements of the Lease and this Work Letter regarding the Lessee
Improvements,


 


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(b) Lessee accepts the
Premises and Lessor’s Work and takes full occupancy of the Premises, and (c) General
Contractor and all other service providers are paid in full.  Lessor shall have no obligation to pay the TI
Allowance at any time that a Lessee Default occurs and is outstanding, at any
time following termination of the Lease or of Lessee’s right of possession, or
if proper request for the same is not made on or before ninety (90) days
following the Commencement Date.


 


3.             Default.  Any failure
by Lessee under the terms of this Work Letter shall constitute a Default under
the Lease in accordance with the provisions of the Lease, and shall entitle
Lessor to exercise all remedies set forth in the Lease.


 


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EXHIBIT “C”


 


SIGN CRITERIA


 


Conformity by
Lessee to the following Sign Criteria requirements shall be strictly enforced
and are terms and conditions of the Lease.


 


1.             GENERAL
REQUIREMENTS


 


1A.          The
term “Signage” as used herein and elsewhere within the Lease shall include, but
not be limited to, any signs, placards, banners, pennants, lettering,
insignias, trademarks, marquees, art work, and any and all other display and
advertising materials.


 


1B.          Lessee
shall not install or display any Signage anywhere on the Premises, Project or
Property without Lessor’s prior written consent, such consent not to be
unreasonably withheld, delayed or conditioned. 
Such Signage approval by Lessor, shall include, but not be limited to,
Lessee Signage installed or displayed on or attached to any glass areas, doors,
roofs, walls, landscaped areas, walkways, vehicles, machinery or other
apparatus, whether permanently affixed to or from time to time on or about the
Property.  Lessor hereby consents to
Lessee’s installation of signage on the Building’s roof, eyebrow and at Project
monuments.


 


1C.          Lessor
reserves the right to designate the location and quantity of all Lessee
Signage.


 


1D.          The
size, design, content, color and other physical aspects of Lessee Signage, as
well as the materials, fabrication and installation methods to be employed,
must be approved by Lessor, in writing, prior to commencement of any Signage
fabrication or installation.  No exposed
conduit, tubing, “J” box or raceway is permitted on any Lessee Signage.  Flashing, moving or audible Lessee Signage is
prohibited.  The composition, size,
style, height, color, etc. of Lessor approved signage is attached hereto.


 


1E.           All
Lessee Signage must comply with any and all governing laws, codes, regulations,
covenants and restrictions.  No labels
will be permitted on the exposed surface of any Lessee Signage, except those
labels required by any governing authority.


 


1F.           The
Lease Section 27.12 shall control with respect to the allocation of the
cost and expense related to signage.


 


1G.          Should
Lessee fail to maintain its Signage at a standard to be determined by Lessor in
its reasonable discretion, then Lessor may, without any recourse by Lessee or
liability by Lessor to Lessee, remove or restore such sub-standard Signage.  Any Lessee Signage removed or restored on
behalf of Lessee by Lessor, shall be at Lessee’s sole cost and expense, payable
immediately upon demand by Lessor.


 


1H.          Lessor
reserves the right to require Lessee to have Signage and, if so required,
Lessee Signage must be completed and installed within GO days after Lessee’s
Lease Term commences.  Lessor reserves
the right to require Lessee to utilize vendors preapproved or designated by
Lessor for all Lessee Signage and Signage related matters.  In the event Lessor


 


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designates, refers or approves a specific
sign vendor, Lessor shall not be responsible or liable in any way for any
disputes between such vendor and Lessee.


 


1I.            All
Lessee Signage shall only contain Lessee’s choice of either its legal name or
its Trade Name as it appears in the Lease. 
No Lessee Signage or Lessee Signage content shall create any claim,
expressed or implied, of a Transfer as defined in the Lease.


 


1J.           Upon
expiration or earlier termination of the Lease, or if Lessee installs or
displays Signage which does not comply with the terms and conditions of this
Sign Criteria, Lessor, in addition to any other remedy, reserves the right to
require Lessee to remove its Signage, or any part thereof, and to require
Lessee to repair and restore all areas and surfaces of the Property affected by
such removal.  Such restoration and
repair work shall include, but not be limited to, removal of any associated
electrical wiring, patching of damaged areas and painting to match surrounding
surfaces.  Should Lessee, after demand by
Lessor, fail to remove any Signage designated for removal by Lessor or fail to
repair and restore any affected areas, Lessor shall have the right to do so at
Lessee’s sole cost and expense.


 


1K.          Subject
to the other terms hereof, Lessee will have the right to display Lessee’s
signage on the sign monument to be located outside the Building, as well as on
the walls of elevator lobbies of the floors of the Premises adjacent to entry
doors and on the lobby directory for the Premises.  All interior signs shall be provided at the
sole cost of Lessor, with any and all costs and expenses incurred in connection
with the monument sign for Lessee to be included as part of the Costs of Lessor’s
Work and deducted from the Lessor’s Total Work Allowance.  Section 27.12 of the Lease shall govern
with respect to the requirement of Lessor’s approval for Lessee’s signage.


 


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EXHIBIT “D”


 


RULES AND REGULATIONS


 


1.01         The
following Rules and Regulations now in effect govern Lessee’s use of the
Premises and any part of the Project or Property used in common by Lessee.  Lessee will be bound by such Rules and
Regulations and agrees to use its reasonable efforts to cause Lessee’s
employees, agents, contractors, suppliers, invitees and licensees to observe
the same.


 


1.02         Wherever
Lessor provides standard window coverings, such coverings shall not be altered,
removed or replaced by Lessee.  Wherever
Lessor does not provide standard window coverings, selection and installation
of window coverings by Lessee shall be subject to Lessor’s prior written
approval, such approval not to be unreasonably withheld, delayed or conditioned.  If Lessor objects to any item attached to, or
used in connection with or on any window, other glass area, or interior or
exterior wall, Lessee will immediately upon notification remove such
objectionable item or discontinue such use. 
Further, Lessee agrees not to place anything in close proximity to any
window or glass area of the Premises that may appear from the outside of the
Premises.


 


1.03         Lessee
will not use any sidewalks, hallways, entrances, elevators, stairways, exits,
lobbies or any other areas used in common by lessees of the Property other than
for normal ingress or egress; Lessee shall not obstruct use of any such area.  Lessor will in all cases retain the right to
control and prevent access to such areas by all persons whose presence in the
reasonable judgment of Lessor would be prejudicial to the safety, character,
reputation and/or interest of the Property and/or its lessees.  Neither Lessee nor its employees, agents,
contractors, suppliers, invitees or licensees shall go on any roof or ladder,
in any mechanical rooms, or climb on any exterior structures of any nature on
the Property without Lessor’s prior written consent, such consent not to be
unreasonably withheld, delayed or conditioned.


 


1.04         Lessor
reserves the right, exercisable without notice and without liability to Lessee,
to change the name, street and/or address of any part of the Property.  With the exception of Lessee’s address,
Lessee shall not use the name of the Property or any part thereof in connection
with promoting or advertising Lessee’s business.  Lessor will have the right to prohibit
publicity by Lessee, which in Lessor’s reasonable opinion impairs the
reputation or marketability of the Property or any part thereof.


 


1.05         Lessee
shall not keep or allow to be used any foul or noxious gas or substance in or
about the Premises.  Nor shall Lessee
occupy or use the Premises in any manner that is objectionable or offensive to
other lessees or Lessor by reason of odor, noise, vibration or interference in
any way.  Any equipment or device of
Lessee which causes noise or vibration that may be transmitted to any
structural portion of the Property or to any part therein to such a degree as
to be objectionable to any lessee or Lessor must be approved in writing by
Lessor prior to its installation and be placed and maintained by Lessee, at
Lessee’s expense, on vibration eliminators or other devices sufficient to
eliminate such noise or vibration.  Lessee
shall keep the Premises free of rodents, insects and other vermin.


 


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1.06         Lessee
will not use or keep in the Premises, or on or about the Property, any
kerosene, gasoline or flammable or combustible fluid or material other than
those limited quantities necessary for the operation or maintenance of general
office equipment.


 


1.07         Lessor
reserves the right to exclude or expel from the Property any person who, in
Lessor’s reasonable judgment, is intoxicated or under the influence of liquor
or drugs or who is in violation of any of the rules and regulations of the
Property.


 


1.08         Lessee
shall not alter or re-key any lock or bolt or install any new or additional
locks or bolts on any doors of the Premises without prior written consent from
Lessor, such consent not to be unreasonably withheld, delayed or conditioned.  Upon the termination of its tenancy, Lessee
will provide Lessor with all keys, whether furnished or otherwise procured, and
shall be responsible for the cost of replacing any keys that are lost.


 


1.09         The
Premises will not be used for lodging or for any improper, immoral or objectionable
purpose.  No cooking will be done or
permitted on the Premises (except in the kitchen area) or elsewhere on the
Property without Lessor’s consent, except that the preparation of coffee, tea,
hot chocolate and similar beverages and employee use of a microwave oven will
be permitted, provided that such equipment and use is in accordance with all
applicable federal, state, county and city laws, codes, ordinances and any
manufacturer’s guidelines and recommendations. 
Tenant will be allowed to barbeque on a deck or on the parking area
behind the Premises.


 


1.10         Lessee
will not solicit business from other lessees of the Property.  Canvassing, soliciting, peddling and
distribution of handbills or any other written material is prohibited, and
Lessee will cooperate with Lessor to prevent such activities.


 


1.11         Lessee
agrees to comply with and not to restrict or impair in any way, all safety,
fire protection and evacuation procedures and regulations established by Lessor
or any governmental agency.  Lessee shall
not do or permit any act or bring anything on the Property or any part thereof
which shall obstruct or unreasonably interfere with the rights of other
lessees.


 


1.12         Except
for the ordinary hanging of pictures and wall decorations, Lessee will not mark,
drive nails, screw, cut or drill into the partitions, woodwork, ceilings or
plaster, or in any way deface, mar, paint or penetrate the Premises or any part
of the Property, except in accordance with the Lessee Alteration provision of
the Lease.  Additionally, Lessee will not
affix any floor covering to the floor of the Premises in any manner except as
approved by Lessor.


 


1.13         No
electrical wiring, outlets or apparatus shall be installed or altered by
Lessee, except in accordance with the Lessee Alteration provisions of the Lease.  Lessor reserves the right to direct where and
how telephone and other telecommunication wires are to be introduced to the
Premises.  Lessee may not alter or
overburden the designed capacity of any existing electrical outlets.


 


1.14         Lessee
shall not place or affix any radio or television antennas, satellite dishes,
loudspeakers or other similar devices, awnings, outside furniture, etc. on the
roof, exterior walls or outside of any building or on any other part of the
Property without Lessor’s prior written approval, such approval not to be
unreasonably withheld, delayed or conditioned. 
Additionally


 


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Lessee will not place any signs, advertising,
billboards, lighting, or any other devices or means of advertising or
identification on property adjacent to the Property that in Lessor’s opinion
obstructs, impairs, restricts or in any way, in Lessor’s reasonable opinion,
negatively affects the Property or would not be permitted by the terms of this
Lease or these Rules and Regulations if such action were taken on the Property.


 


1.15         Lessor
reserves the right to prescribe the weight, size and position of all equipment,
materials, furniture or other property brought on to the Property.  Such Lessor approved items shall be moved in
or about the Property under the direction of Lessor and in a manner and at such
times that will not inconvenience any lessee. 
Lessor reserves the right to prohibit or impose conditions upon the
installation of objects which may overload any floor.


 


1.16         Subject
to the terms of Paragraph 8 of this Lease, all parking facilities of the
Property shall be regulated by Lessor and may be modified or amended as Lessor
deems necessary.  Lessee shall not permit
or allow any vehicles that belong to or that are controlled by Lessee or Lessee’s
employees, customers or invitees to be loaded, unloaded or parked in areas
other than those designated by Lessor for such activities.  Users of the parking areas will obey all
posted signs and not impede the flow of traffic.  For sale signs for vehicles must be on the
vehicle.  Washing, waxing, cleaning or
servicing of any vehicle is prohibited.  No
campers, recreational vehicles or trailers are permitted and all disabled
vehicles must be removed within 24 hours. 
No vehicles shall be brought into or kept in the Premises.  Lessor reserves the right to tow, without
cost or liability to Lessor, any vehicle: 1) parked in an unauthorized or
illegal parking area or; 2) whose audio theft alarm system remains engaged for
an unreasonable period; and 3) belonging to any violator of any of Lessor’s
parking rules and regulations.  Further,
in addition to all of its other rights and remedies, Lessor reserves the right
to refuse to permit any person to park within the Property who violates any of
these or any other rules or regulations which Lessor may establish.


 


1.17         Lessee
shall not do any act that will create any additional costs to maintain the
appearance or cleanliness of any part of the Property.  No dirt or other substances shall be disposed
of anywhere on the Property, including but not limited to in any hallways,
stairways, elevators or lobbies or on any parking areas, landscaping, walkways
or in any other areas used in common with other lessees.


 


1.18         Lessee
assumes any and all responsibility for protecting its Premises from theft,
robbery and pilferage, which includes keeping Premises doors locked and all
doors into common areas such as doors into entrances, public corridors,
lobbies, etc., closed, except for normal ingress and egress.


 


1.19         No
signage, notices or advertisements may be placed by Lessee anywhere outside of
its Premises and all signage must comply with the Sign Criteria exhibit
attached to and made a part of this Lease and any other terms and conditions of
these Rules and Regulations and the Lease.


 


1.20         Lessee
shall not use any method of heating or air conditioning other than as provided
by Lessor without Lessor’s prior written consent, such consent not to be
unreasonably withheld, delayed or conditioned.


 


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1.21         Lessor
may prohibit smoking within Lessee’s Premises, the Project, or any part
thereof, and may require Lessee and any of its agents, employees, suppliers,
customers, guests and invitees who desire to smoke, to smoke within
specifically designated smoking areas which Lessor may change from time to time.  It will be Lessee’s sole responsibility to
ascertain from Lessor the specific smoking program in effect at the Property at
the time of its lease commencement.  Any
smoking program implemented by Lessor will be strictly enforced.


 


1.22         Rest
room partitions, mirrors, wash basins and other plumbing fixtures shall not be
used for any purpose other than that for which they were constructed and no
sweepings, trash or other substances shall be disposed of therein.  Any damage or injuries caused by Lessee, its
employees, agents, contractors, suppliers, invitees or licensees shall be borne
directly by Lessee.


 


1.23         No
heavy items may be transported by elevator if such item or items exceed the
load capacity of the elevator.  Lessee’s
initial move in and subsequent deliveries of bulky items, such as furniture,
equipment, supplies, merchandise, safes and similar items will be subject to
reasonable scheduling and approval of persons moving such items by Lessor.  Deliveries during normal office hours shall
be limited to normal office supplies and other small items.  Lessee shall be responsible for protecting
elevator interior and exterior finishes and flooring whenever items are
transported in them on Lessee’s behalf.


 


1.24         Lessee
will not waste electricity, water or air conditioning and agrees to cooperate
fully with Lessor in this regard and to comply with any Lessor or governmental
energy-saving rules, laws and regulations.


 


1.25         Lessee
understands that air conditioning and heating systems supply cool air and heat
to large zones regulated by zonal thermostats. 
Lessor shall determine the locations of, make any modifications to, and
have exclusive control over all such thermostats, their settings, the zones and
all parts of the system.  Lessee agrees
to cooperate with other parties within its zone(s) to maximize the comfort
level of all parties and shall not touch, adjust, tamper with, or otherwise
affect any thermostat or any part of the heating/cooling systems.  Lessee will direct all problems related to
heating/cooling systems directly to Lessor.


 


1.26         Subject
to the terms of Paragraph 9 of this Lease, Lessor shall be under no
obligation to provide heating or air conditioning services to the building
during off-hours (between 6:00 p.m. and 7:00 a.m., Monday through
Friday and on non-business days).  Lessee
may request additional heating or air conditioning during off hours and, should
Lessor agree to supply such service, Lessee will reimburse Lessor for all costs
and expenses incurred, as determined by Lessor in its sole discretion.


 


1.27         Lessor
and its agents reserve the right to exclude from the building any unknown
person, or any person otherwise improperly identified.  Lessor shall in no case be liable for any
damages for any error with regard to the admission to or exclusion from the
building of any person.  In the case of
invasion, mob, riot, public excitement or any other circumstance which Lessor,
in its sole discretion, believes will place lessees and/or the Property in
jeopardy, Lessor reserves the right to prevent access to the building during
the continuance of same by such action as Lessor may deem appropriate.


 


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1.28         Lessee’s
designated representative shall notify Lessor promptly of any required
maintenance items for which Lessor is responsible.  Employees of Lessor will not perform any work
or do anything outside of their regular duties unless under special instruction
by Lessor.


 


1.29         No
Lessee shall employ any person or persons other than the janitor of Lessor for
the purpose of cleaning its Premises unless otherwise agreed to by Lessor in
writing.  No Lessee shall cause any unnecessary
labor by reason of Lessee’s carelessness or indifference in the preservation of
good order and cleanliness.  Lessor shall
not be responsible to any lessee for any loss of property on the Premises or on
or about the Property, however occurring, or for any damage done to any effects
of any lessee by the janitor or any other employee or any other person.


 


1.30         Neither
Lessee nor any of its employees, agents, contractors, suppliers, invitees or
licensees may use on any portion of the Premises, Project or Property any hand
truck except those equipped with rubber tires and side guards or such other
material-handling equipment as Lessor may approve or require.


 


1.31         These
Rules and Regulations impose obligations upon Lessee which are in addition to
the obligations of Lessee set forth in the Lease.  Nothing in these Rules and Regulations will
be construed in any way to diminish or to waive, in whole or in part, the
terms, covenants, agreements and conditions of the Lease.  In the event that provisions of both these
Rules and Regulations and also of the Lease regulate the same subject matter,
Lessee shall comply with all such provisions; if any such provisions are in
direct conflict, the provisions of the Lease shall control.  Lessor shall enforce these Rules and
Regulations in a nondiscriminatory manner as against all tenants of the
Building and Project subject to reasonable variances granted by Lessor.


 


1.32         Lessor
reserves the right to adopt such additional reasonable and nondiscriminatory
Rules and Regulations (whether similar or dissimilar to these Rules and
Regulations), and/or such amendments to any Rule or Regulation, as, in its
judgment, may from time to time be appropriate and Lessee agrees to abide by
all such additional Rules and Regulations and amendments which may be adopted.


 


1.33         Notwithstanding
anything to the contrary contained in the Lease, Lessee shall have the right,
on a first come-first served, reservation basis to use the common conference
rooms located on the Property.


 


1.34         Landlord
agrees to allow Tenant to place a bike rack outside the Premises.


 


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