EXHIBIT 10.19


 


STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT
LEASE — GROSS

(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)


 


1.                                      Basic Provisions (“Basic
Provisions”).


1.1                                 Parties: This Lease (“Lease”), dated for
reference purposes only, February 23,
2004, is
made by and between William Cash
Forman, a married man ( “Lessor”) and Hoefer, Inc., a Delaware corporation (“Lessee”), (collectively
the “Parties,”
or
individually a “Party”).


1.2                                 Premises: That certain real
property, including all improvements therein or to be provided by Lessor under
the terms of this Lease, and commonly known as 953 Indiana Street , located in the County of San Francisco , State of California , and generally described as (describe briefly the nature of the
property and, if applicable, the “Project”, if the property is located within a
Project) a concrete industrial
building (“Premises”). (See also
Paragraph 2)


1.3                                 Term: 10 years and 0 months (“Original
Term”)
commencing March 1, 2004 (“Commencement Date”) and ending February 28, 2014 (“Expiration Date”). (See also
Paragraph 3)


1.4                                 Early Possession: February 24, 2004 (“Early Possession Date”). (See also
Paragraphs 3.2 and 3.3 and
Addendum Paragraph #52 Prior Occupancy)


1.5                                 Base Rent: $ 16,995.00 per month (“Base Rent”) commencing May 23, 2004, and thereafter payable on the first (1st) day of each month. (See also Paragraph 4)


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


1.6                                 Base Rent and Other Monies
Paid Upon Execution:


(a)
Base
Rent: $ 16,995.00 monthly for the period May 23, 2004 through February 28, 2005. (See also Paragraph
51)


(b) Security Deposit: $ 20,000.00 (“Security Deposit”). (See also Paragraph 5)


(c) Association Fees: $ n/a for the period n/a


(d) Other: $ n/a
for n/a.


(e) Total Due Upon Execution of this Lease: $ 36,995.00.


1.7                                 Agreed Use: Development, light manufacturing and
distribution of electrophoresis equipment and supplies (See also Paragraph
6)


1.8                                 Insuring Party: Lessor is the “Insuring Party”. The annual “Base Premium” is $ 6,612.00  (See also Paragraph 8)


1.9                                 Real Estate Brokers: (See also Paragraph
15)


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


ý      HC&M Commercial Properties, Inc.
represents Lessor exclusively (“Lessor’s
Broker”);


ý      Whitney Cressman represents Lessee
exclusively (“Lessee’s Broker”);
or


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


(b)
Payment
to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall
pay to the Broker the fee agreed to in their separate written agreement for the
brokerage services rendered by the Brokers. See addendum Paragraphs #54 and #55.


1.10                           Intentionally Omitted.


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


ý      an Addendum consisting of Paragraphs 51 through 56


ý      a plot plan depicting the Premises;


o      a current set of the Rules and
Regulations;


o      a Work Letter;


ý      other (specify): Addenda Paragraphs 57 and 58.


 


2.                                       Premises.


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


2.2                                 Condition.
Lessor
shall deliver the Premises to Lessee broom clean and free of debris on the
Commencement Date or the Early Possession Date, whichever first occurs (“Start Date”), and warrants that the
surface and structural elements of the roof, bearing walls and foundation of
any buildings on the Premises (the “Building”)
shall be free of material defects as of the Start Date. If a non-compliance
with said warranty exists as of the Start Date, Lessor shall, as Lessor’s sole
obligation with respect to such matter, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, malfunction or
failure, rectify same at Lessor’s expense. 
Notwithstanding anything contained herein to the contrary , Seller has
not received any written notice and has no current actual knowledge that any
government agency or any employee or official considers the construction of the
Premises or its operation or use to have failed to comply with any Applicable
Requirement, as defined in Paragraph 2.3 below, or that any investigation has
been commenced or is contemplated respecting any such possible failure of
compliance.


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


 


3.                                       Term.


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


3.2                                 Early Possession. Lessee shall be permitted to occupy the Premises prior to the Commencement Date, and the obligation to pay Base Rent shall be
abated for the period of such early possession. All other terms of this Lease
(including but not limited to the obligations to pay insurance premiums and to
maintain the Premises) shall, however, be in effect during such period. Any
such early possession shall not affect the Expiration Date.


 


	
  Initials

  	
   

  	
   

  	
   

  	
  Initials

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ©2001 - American Industrial Real Estate Association

  	
   

  	
  REVISED

  	
   

  	
  FORM
  STG-8-7/01E.

  



 


1

















 


3.3                                 Delay In Possession. Lessor agrees to
use its best commercially reasonable efforts to deliver possession of the
Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor
is unable to deliver possession by such date, Lessor shall not be subject to
any liability therefore, nor shall such failure affect the validity of this
Lease. Lessee shall not, however, be obligated to pay Rent or perform its other
obligations until Lessor delivers possession of the Premises and any period of
rent abatement that Lessee would otherwise have enjoyed shall run from the date
of delivery of possession and continue for a period equal to what Lessee would
otherwise have enjoyed under the terms hereof, but minus any days of delay
caused by the acts or omissions of Lessee. 
If possession is not delivered within 60 days after the Commencement
Date, Lessee may, at its option, by notice in writing within 10 days after the
end of such 60 day period, cancel this Lease, in which event the Parties shall
be discharged from all obligations hereunder. If such written notice is not
received by Lessor within said 10-day period, Lessee’s right to cancel shall
terminate. If possession of the Premises is not delivered within 120 days after
the Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.


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


 


4.                                       Rent.


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


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


 


5.                                       Security Deposit. Lessee shall
deposit with Lessor upon execution hereof the Security Deposit as security for
Lessee’s faithful performance of its obligations under this Lease. If Lessee fails
to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or
retain all or any portion of said Security Deposit for the payment of any
amount due Lessor or to reimburse or compensate Lessor for any liability,
expense, loss or damage which Lessor may suffer or incur by reason thereof. If
Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10 days after written request therefore deposit monies with Lessor
sufficient to restore said Security Deposit to the full amount required by this
Lease.  Lessor shall not be required to
keep the Security Deposit separate from its general accounts. Within 14 days
after the expiration or termination of this Lease, if Lessor elects to apply
the Security Deposit only to unpaid Rent, and otherwise within 30 days after
the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall
return that portion of the Security Deposit not used or applied by Lessor. No
part of the Security Deposit shall be considered to be held in trust, to bear
interest or to be prepayment for any monies to be paid by Lessee under this
Lease.


 


6.                                       Use.


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


6.2                                 Hazardous Substances.


(a) Reportable Uses/Compliance. The
term “Hazardous Substance” as used
in this Lease shall mean any product, substance, or waste whose presence, use,
manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either: (i)
potentially injurious to the public health, safety or welfare, the environment
or the Premises, (ii) regulated or monitored by any governmental authority, or
(iii) a basis for potential liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.
Lessee shall not engage in any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances fully complying with all Applicable
Requirements. “Reportable Use” shall
mean (i) the installation or use of any above or below ground storage tank,
(ii) the generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with, any
governmental authority, and/or (iii) the presence at the Premises of a
Hazardous Substance with respect to which any Applicable Requirements requires
that a notice be given to persons entering or occupying the Premises or neighboring
properties. Notwithstanding the foregoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal course of the
Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.)
and common household cleaning materials, so long as such use is in compliance
with all Applicable Requirements, is not a Reportable Use, and does not expose
the Premises or neighboring property to any meaningful risk of contamination or
damage or expose Lessor to any liability therefore. In addition, Lessor may
condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public,
the Premises and/or the environment against damage, contamination, injury
and/or liability, including, but not limited to, the installation (and removal
on or before Lease expiration or termination) of protective modifications (such
as concrete encasements) and/or increasing the Security Deposit.


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


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


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


 


2

















 


agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.


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


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


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


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


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


 


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


7.1                                 Lessee’s Obligations.


(a)
In
General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3
(Compliance), 6.3 (Lessee’s Compliance with Applicable Requirements), 7.2
(Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation),
Lessee shall, at Lessee’s sole expense, keep the Premises, “Utility
Installations” (as defined in
Paragraph 7.3(a)) (intended for Lessee’s exclusive use, no matter where located), and
“Alterations” (as defined in
Paragraph 7.3(a)) in good order, condition and repair (whether or not the portion of the
Premises requiring repairs, or the means of repairing the same, are reasonably
or readily accessible to Lessee, and whether or not the need for such repairs
occurs as a result of Lessee’s use, any prior use, the elements or the age of
such portion of the Premises), including, but not limited to, all equipment or
facilities, such as plumbing, HVAC equipment, electrical, lighting facilities,
boilers, pressure vessels, fire protection system, fixtures, walls (non-bearing), ceilings, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots, fences, retaining
walls, signs, Premises. Lessee is also responsible for keeping the roof and
roof drainage clean and free of debris. Lessor shall keep the surface and structural
elements of the roof, foundations, and bearing walls in good repair (see
Paragraph 7.2). Lessee, in keeping the Premises in good order, condition and
repair, shall exercise and perform good maintenance practices. Lessee’s
obligations shall include restorations, replacements or renewals when necessary
to keep the Premises and all improvements thereon or a part thereof in good
order, condition and state of repair. Lessee shall, during the term of this
Lease, keep the exterior appearance of the Building in a first-class condition
(including, e.g. graffiti removal) consistent with the exterior appearance of
other similar facilities of comparable age and size in the vicinity, including,
when necessary, the exterior repainting of the Building. 
Notwithstanding anything contained herein to the contrary, Lessee shall
not be required to replace the HVAC system or any other building system during
the last two (2) years of the term hereof and same shall be Lessor’s
responsibility (except that Lessor shall not have any obligation to replace the
HVAC system), provided however that in the event Lessee exercises its right to
terminate pursuant to Paragraph 55 below, the “last two (2) years of the term”
shall not include the sixth and seventh years of the term.


(b)
Failure to Perform. If Lessee fails to
perform Lessee’s obligations under this Paragraph 7.1, Lessor may enter upon
the Premises after 20 days’ prior written
notice to Lessee (except in the case of an emergency, in which case no notice
shall be required), perform such obligations on Lessee’s behalf, and put the
Premises in good order, condition and repair, and Lessee shall promptly pay to
Lessor a sum equal to 115% of the cost thereof.


7.2                                 Lessor’s Obligations. Subject to the
provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 9 (Damage or
Destruction) and 14 (Condemnation), it is intended by the Parties hereto that
Lessor have no obligation, in any manner whatsoever, to repair and maintain the
Premises, or the equipment therein, all of which obligations are intended to be
that of the Lessee, except for the surface and structural elements of the roof,
foundations and bearing walls, the repair of which shall be the responsibility
of Lessor upon receipt of written notice that such a repair is necessary. It is
the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to
the extent it is inconsistent with the terms of this Lease.


7.3                                 Utility Installations; Trade
Fixtures; Alterations.


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


(b)
Consent.
Lessee
shall not make any Alterations or Utility Installations to the Premises without
Lessor’s prior written consent. Lessee may, however, make non-structural
Utility Installations to the interior of the Premises (excluding the roof)
without such consent 


 


3

















 


but
upon notice to Lessor, as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof or any existing walls, will
not affect the electrical, plumbing, HVAC, and/or life safety systems, and the
cumulative cost thereof during this Lease as extended does not exceed a sum
equal to 3 month’s Base Rent in the aggregate or a sum equal to one month’s
Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not make
or permit any roof penetrations and/or install anything on the roof without the
prior written approval of Lessor. Lessor may, as a precondition to granting
such approval, require Lessee to utilize a contractor chosen and/or approved by
Lessor. Any Alterations or Utility Installations that Lessee shall desire to
make and which require the consent of the Lessor shall be presented to Lessor
in written form with detailed plans. Consent shall be deemed conditioned upon
Lessee’s: (i) acquiring all applicable governmental permits, (ii) furnishing
Lessor with copies of both the permits and the plans and specifications prior
to commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon
completion furnish Lessor with as-built plans and specifications. For work
which costs an amount in excess of one month’s Base Rent, Lessor may condition
its consent upon Lessee providing a lien and completion bond in an amount equal
to 150% of the estimated cost of such Alteration or Utility Installation and/or
upon Lessee’s posting an additional Security Deposit with Lessor. Notwithstanding anything contained herein to
the contrary, Lessor has consented to the initial Alterations to the Premises
being undertaken by Lessee as described in Paragraph 53 of the Addendum.


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


7.4                                 Ownership; Removal;
Surrender; and Restoration.


(a)
Ownership.
Subject
to Lessor’s right to require removal or elect ownership as hereinafter
provided, all Alterations and Utility Installations made by Lessee shall be the
property of Lessee, but considered a part of the Premises. Unless otherwise
instructed per Paragraph 7.4(b) hereof, and except for the items described in Exhibit A which items must be
removed prior to the expiration of this Lease by Lessee, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or termination
of this Lease, become the property of Lessor and be surrendered by Lessee with
the Premises.


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


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


 


8.                                       Insurance; Indemnity.


8.1                                 Payment of Premium Increases.


(a)
Commencing on the first
(1st) day of the second (2nd) year of the Term of the Lease, Lessee shall pay to
Lessor any insurance cost increase (“Insurance Cost Increase”) occurring during
the term of this Lease. Insurance Cost Increase is defined as any increase in
the actual cost of the insurance required under Paragraph 8.3(a) and 8.3(b) (“Required Insurance”), over and above
the Base Premium as hereinafter defined calculated on an annual basis.
Insurance Cost Increase shall include but not be limited to increases resulting
from the nature of Lessee’s occupancy, any act or omission of Lessee,
requirements of the holder of mortgage or deed of trust covering the Premises,
increased valuation of the Premises and/or a premium rate increase. The Parties
are encouraged to fill in the Base Premium in Paragraph 1.8 with a reasonable
premium for the Required Insurance based on the Agreed Use of the Premises. If
the Parties fail to insert a dollar amount in Paragraph 1.8, then the Base
Premium shall be the lowest annual premium reasonably obtainable for the
Required Insurance as of the commencement of the Original Term for the Agreed
Use of the Premises


(b)
Lessee shall pay any such Insurance Cost Increase to Lessor within 30 days
after receipt by Lessee of a copy of the premium statement or other reasonable
evidence of the amount due. If the insurance policies maintained hereunder
cover other property besides the Premises, Lessor shall also deliver to Lessee
a statement of the amount of such Insurance Cost Increase attributable only to
the Premises showing in reasonable detail the manner in which such amount was
computed. Premiums for policy periods commencing prior to, or extending beyond
the term of this Lease, shall be prorated to correspond to the term of this
Lease.


8.2                                 Liability Insurance.


(a)
Carried
by Lessee. Lessee shall obtain and keep in force a Commercial General Liability
policy of insurance protecting Lessee and Lessor as an additional insured
against claims for bodily injury, personal injury and property damage based
upon or arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$2,000,000 per occurrence with an annual aggregate of not less than $5,000,000,
an “Additional Insured-Managers or Lessors of Premises Endorsement” and contain
the “Amendment of the Pollution Exclusion Endorsement” for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an “insured
contract” for the performance of Lessee’s indemnity obligations under this
Lease. The limits of said insurance shall not, however, limit the liability of
Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by
Lessee shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.


8.3                                 Property Insurance -
Building, Improvements and Rental Value.


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


 


4

















 


are
located. If such insurance coverage has a deductible clause, the deductible
amount shall not exceed $1,000 per occurrence, and Lessee shall be liable for
such deductible amount in the event of an Insured Loss.


(b)
Rental
Value. The Insuring Party shall obtain and keep in force a policy or policies
in the name of Lessor with loss payable to Lessor and any Lender, insuring the
loss of the full Rent for one year with an extended period of indemnity for an
additional 180 days (“Rental Value Insurance”).
Said Rental Value Insurance shall contain an
agreed valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by Lessee, for the next 12 month period. Lessee shall be liable for any
deductible amount in the event of such loss.


8.4                                 Lessee’s Property; Business
Interruption Insurance.


(a)
Property
Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility
Installations. Such insurance shall be full replacement cost coverage with a
deductible to be at reasonable market level. The proceeds from any such
insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.


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


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


8.5                                 Insurance Policies. Insurance required
herein shall be by companies duly licensed or admitted to transact business in
the state where the Premises are located, and maintaining during the policy
term a “General Policyholders Rating” of at least B+, V, as set forth in the
most current issue of “Best’s Insurance Guide”, or such other rating as may be
required by a Lender. Lessee shall not do or permit to be done anything which
invalidates the required insurance policies. Lessee shall, prior to the Start
Date, deliver to Lessor certified copies of policies of such insurance or
certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after 30 days
prior written notice to Lessor. Lessee shall, at least 30 days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
“insurance binders” evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same.


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


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


8.8                                 Exemption of Lessor from
Liability. Lessor shall not be liable for injury or damage to the person or goods,
wares, merchandise or other property of Lessee, Lessee’s employees,
contractors, invitees, customers, or any other person in or about the Premises,
whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or
lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises or upon other portions of the
building of which the Premises are a part, or from other sources or places, unless same was caused by Landlord’s gross
negligence or willful misconduct. 
Notwithstanding Lessor’s negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee’s business or for
any loss of income or profit therefrom.


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


 


9.                                       Damage or Destruction.


9.1                                 Definitions.


(a)
“Premises
Partial Damage” shall mean damage or destruction to the improvements on the Premises,
other than Lessee Owned Alterations and Utility Installations, which can
reasonably be repaired in 6 months or less from the date of the damage or
destruction. Lessor shall notify Lessee in writing within 30 days from the date
of the damage or destruction as to whether or not the damage is Partial or
Total.


(b)
“Premises
Total Destruction” shall mean damage or destruction to the Premises, other than Lessee
Owned Alterations and Utility Installations and Trade Fixtures, which cannot
reasonably be repaired in 6 months or less from the date of the damage or
destruction. Lessor shall notify Lessee in writing within 30 days from the date
of the damage or destruction as to whether or not the damage is Partial or
Total.


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


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


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


9.2                                 Partial Damage - Insured
Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor
shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures
or Lessee Owned Alterations and Utility Installations) as soon as reasonably
possible and this Lease shall continue in full force and effect; provided,
however, that Lessee shall, at Lessor’s election, make the repair of any damage
or destruction the total cost to repair of which is $10,000 or less, and, in
such event, Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing,
if the required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly contribute
the shortage in proceeds (except as to the deductible which is Lessee’s responsibility)
as and when required to complete said repairs. In the event, however, such
shortage was due to the fact that, by reason of the unique nature of the
improvements, full replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the
shortage in insurance proceeds or to fully restore the unique aspects of the
Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within 10 days following receipt of written notice
of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within said 10 day period, the Party responsible 


 


5

















 


for
making the repairs shall complete them as soon as reasonably possible and this
Lease shall remain in full force and effect. If such funds or assurance are not
received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this
Lease shall remain in full force and effect, or (ii) have this Lease terminate
30 days thereafter. Lessee shall not be entitled to reimbursement of any funds
contributed by Lessee to repair any such damage or destruction. Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.


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


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


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


9.6                                 Abatement of Rent; Lessee’s
Remedies.


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


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


9.7                                 Termination; Advance
Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph
9, an equitable adjustment shall be made concerning advance Base Rent and any
other advance payments made by Lessee to Lessor. Lessor shall, in addition,
return to Lessee so much of Lessee’s Security Deposit as has not been, or is
not then required to be, used by Lessor.


9.8                                 Waive Statutes. Lessor and Lessee
agree that the terms of this Lease shall govern the effect of any damage to or
destruction of the Premises with respect to the termination of this Lease and
hereby waive the provisions of any present or future statute to the extent
inconsistent herewith.


 


10.                                 Real Property Taxes.


10.1                           Definition. As used herein, the
term “Real
Property Taxes” shall include any form of assessment; real estate, general, special,
ordinary or extraordinary, or rental levy or tax (other than inheritance,
personal income or estate taxes); improvement bond; and/or license fee imposed
upon or levied against any legal or equitable interest of Lessor in the
Premises or the Project, Lessor’s right to other income therefrom, and/or
Lessor’s business of leasing, by any authority having the direct or indirect
power to tax and where the funds are generated with reference to the Building
address and where the proceeds so generated are to be applied by the city,
county or other local taxing authority of a jurisdiction within which the
Premises are located. Real Property Taxes shall also include any tax, fee,
levy, assessment or charge, or any increase therein: (i) imposed by reason of
events occurring during the term of this Lease, including but not limited to, a
change in the ownership of the Premises, and (ii) levied or assessed on
machinery or equipment provided by Lessor to Lessee pursuant to this Lease.


10.2


(a)
Payment
of Taxes. Lessor shall pay the Real Property Taxes applicable to the Premises
provided, however, that commencing
on the first (1st) day of the second (2nd) year of the Term of this Lease, Lessee shall pay to
Lessor the amount, if any, by which Real Property Taxes applicable to the
Premises have increased over the fiscal tax
year during which the Commencement Date occurs (“Tax Increase”). Payment of any such Tax Increase shall be made
by Lessee to Lessor within 30 days after receipt of Lessor’s written statement
setting forth the amount due and computation thereof. If any such taxes shall
cover any period of time prior to or after the expiration or termination of
this Lease, Lessee’s share of such taxes shall be prorated to cover only that
portion of the tax bill applicable to the period that this Lease is in effect.
In the event lessee incurs a late charge on any Rent payment, Lessor may
estimate the current Real Property Taxes, and require that the Tax Increase be
paid in advance to Lessor by Lessee monthly in advance with the payment of the
Base Rent. Such monthly payment shall be an amount equal to the amount of the
estimated installment of the Tax Increase divided by the number of months
remaining before the month in which said installment becomes delinquent. When
the actual amount of the applicable Tax Increase is known, the amount of such
equal monthly advance payments shall be adjusted as required to provide the
funds needed to pay the applicable Tax Increase. If the amount collected by
Lessor is insufficient to pay the Tax Increase when due, Lessee shall pay
Lessor, upon demand, such additional sums as are necessary to pay such
obligations. Advance payments may be intermingled with other moneys of Lessor
and shall not bear interest. In the event of a Breach by Lessee in the
performance of its obligations under this Lease, then any such advance payments
may be treated by Lessor as an additional Security Deposit.


(b)
Additional
Improvements. Notwithstanding anything to the contrary in this Paragraph 10.2, Lessee
shall pay to Lessor upon demand therefor the entirety of any increase in Real
Property Taxes assessed by reason of Alterations or Utility Installations
placed upon the Premises by Lessee or at Lessee’s request.


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


 


6

















 


11.                                 Utilities and Services. Lessee shall pay
for all water, gas, heat, light, power, telephone, trash disposal and other
utilities and services supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered or billed to Lessee,
Lessee shall pay a reasonable proportion, to be determined by Lessor, of all
charges jointly metered or billed. There shall be no abatement of rent and
Lessor shall not be liable in any respect whatsoever for the inadequacy,
stoppage, interruption or discontinuance of any utility or service due to riot,
strike, labor dispute, breakdown, accident, repair or other cause beyond
Lessor’s reasonable control or in cooperation with governmental request or
directions.


 


12.                                 Assignment and Subletting.


12.1                           Lessor’s Consent Required.


(a)
Lessee shall not voluntarily or by operation of law assign, transfer, mortgage
or encumber (collectively, “assign” or  “assignment”) or sublet all or any part of Lessee’s
interest in this Lease or in the Premises without Lessor’s prior written consent, which shall not be unreasonably withheld or
delayed.  It shall be reasonable to
withhold consent if the proposed assignee or sublessee has a net worth at the
time of the proposed assignment that is less than the “Net Worth of Lessee” as
defined in Paragraph 12.1(c) at the time of execution of the Lease.  In addition, assignment of the Lease to an
affiliate, parent, or subsidiary shall be permitted without Landlord’s consent,
provided Lessee remains liable hereunder.


(b)
Unless Lessee is a corporation and its stock is publicly traded on a national
stock exchange, a change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of 30% or more of the voting control of Lessee shall
constitute a change in control for this purpose.


(c)
The involvement of Lessee or its assets in any transaction, or series of
transactions (by way of merger, sale, acquisition, financing, transfer,
leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee’s assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its
consent. “Net Worth of Lessee” shall mean the net worth of Lessee (excluding any
guarantors) established under generally accepted accounting principles.


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


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


12.2                           Terms and Conditions
Applicable to Assignment and Subletting.


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


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


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


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


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


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


(g)
Lessor’s consent to any assignment or subletting shall not transfer to the
assignee or sublessee any Option granted to the original Lessee by this Lease
unless such transfer is specifically consented to by Lessor in writing. (See
Paragraph 39.2)


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


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


(b)
In the event of a Breach by Lessee, Lessor may, at its option, require
sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.


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


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


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


 


13.                                 Default; Breach; Remedies.


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


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


 


7

















 


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


(c)
The failure by Lessee to provide (i) reasonable written evidence of compliance
with Applicable Requirements, (ii) the rescission of an unauthorized assignment
or subletting, (iii) an Estoppel
Certificate, (iv) a requested subordination, (v) evidence concerning any
guaranty and/or Guarantor, (vi) any document requested under Paragraph 42, or
(vii)  any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of 10 days following
written notice to Lessee.


(d)
A Default by Lessee as to the terms, covenants, conditions or provisions of
this Lease, or of the rules adopted under Paragraph 40 hereof, other than those
described in subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of 30 days after written notice; provided, however, that
if the nature of Lessee’s Default is such that more than 30 days are reasonably
required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently
prosecutes such cure to completion.


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


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


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


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


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


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


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


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


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


13.6                           Breach by Lessor.


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


 


8

















 


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


 


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


 


15.                                 Brokerage Fees.


15.1                           Intentionally Deleted.


15.2                           Assumption of Obligations. Any buyer or
transferee of Lessor’s interest in this Lease shall be deemed to have assumed
Lessor’s obligation hereunder. Brokers shall be third party beneficiaries of
the provisions of Paragraphs 1.9, 15, 22 and 31. If Lessor fails to pay to
Brokers any amounts due as and for brokerage fees pertaining to this Lease when
due, then such amounts shall accrue Interest. In addition, if Lessor fails to
pay any amounts to Lessee’s Broker when due, Lessee’s Broker may send written
notice to Lessor and Lessee of such failure and if Lessor fails to pay such
amounts within 10 days after said notice, Lessee shall pay said monies to its
Broker and offset such amounts against Rent. In addition, Lessee’s Broker shall
be deemed to be a third party beneficiary of any commission agreement entered
into by and/or between Lessor and Lessor’s Broker for the limited purpose of
collecting any brokerage fee owed.


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


 


16.                                 Estoppel Certificates.


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


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


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


 


17.                                 Definition of Lessor. The term “Lessor” as used herein
shall mean the owner or owners at the time in question of the fee title to the
Premises, or, if this is a sublease, of the Lessee’s interest in the prior
lease. In the event of a transfer of Lessor’s title or interest in the Premises
or this Lease, Lessor shall deliver to the transferee or assignee (in cash or
by credit) any unused Security Deposit held by Lessor. Except as provided in
Paragraph 15, upon such transfer or assignment and delivery of the Security
Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with
respect to the obligations and/or covenants under this Lease thereafter to be
performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only
upon the Lessor as hereinabove defined.


 


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


 


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


 


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


 


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


 


22.                                 No Prior or Other Agreements;
Broker Disclaimer. This Lease contains all agreements between the Parties with respect to
any matter mentioned herein, and no other prior or contemporaneous agreement or
understanding shall be effective. Lessor and Lessee each represents and
warrants to the Brokers that it has made, and is relying solely upon, its own
investigation as to the nature, quality, character and financial responsibility
of the other Party to this Lease and as to the use, nature, quality and
character of the Premises. Brokers have no responsibility with respect thereto
or with respect to any default or breach hereof by either Party. The liability
(including court costs and attorneys’ fees), of any Broker with respect to
negotiation, execution, delivery or performance by either Lessor or Lessee
under this Lease or any amendment or modification hereto shall be limited to an
amount up to the fee received by such Broker pursuant to this Lease; provided,
however, that the foregoing limitation on each Broker’s liability shall not be
applicable to any gross negligence or willful misconduct of such Broker.


 


23.                                 Notices.


23.1                           Notice Requirements. All notices
required or permitted by this Lease or applicable law shall be in writing and
may be delivered in person (by hand or by courier) or may be sent by regular,
certified or registered mail or U.S. Postal Service Express Mail, with postage


 


9

















 


prepaid,
or by facsimile transmission, and shall be deemed sufficiently given if served
in a manner specified in this Paragraph 23. The addresses noted adjacent to a
Party’s signature on this Lease shall be that Party’s address for delivery or
mailing of notices. Either Party may by written notice to the other specify a
different address for notice, except that upon Lessee’s taking possession of
the Premises, the Premises shall constitute Lessee’s address for notice. A copy
of all notices to Lessor shall be concurrently transmitted to such Party or
Parties at such addresses as Lessor may from time to time hereafter designate
in writing.


23.2                           Date of Notice. Any notice sent by
registered or certified mail, return receipt requested, shall be deemed given
on the date of delivery shown on the receipt card, or if no delivery date is
shown, the postmark thereon. If sent by regular mail the notice shall be deemed
given 48 hours after the same is addressed as required herein and mailed with
postage prepaid. Notices delivered by United States Express Mail or overnight
courier that guarantee next day delivery shall be deemed given 24 hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon
telephone confirmation of receipt (confirmation report from fax machine is
sufficient), provided a copy is also delivered via delivery or mail. If notice
is received on a Saturday, Sunday or legal holiday, it shall be deemed received
on the next business day.


 


24.                                 Waivers. No waiver by Lessor
of the Default or Breach of any term, covenant or condition hereof by Lessee,
shall be deemed a waiver of any other term, covenant or condition hereof, or of
any subsequent Default or Breach by Lessee of the same or of any other term,
covenant or condition hereof. Lessor’s consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor’s consent to,
or approval of, any subsequent or similar act by Lessee, or be construed as the
basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. The acceptance of Rent by Lessor shall not be a waiver
of any Default or Breach by Lessee. Any payment by Lessee may be accepted by
Lessor on account of moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.


 


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


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


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


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


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


Lessor
and Lessee should carefully read all agreements to assure that they adequately
express their understanding of the transaction. A real estate agent is


a
person qualified to advise about real estate. If legal or tax advice is desired,
consult a competent professional.


(b)
Brokers have no responsibility with respect to any default or breach hereof by
either Party. The liability (including court costs and attorneys’ fees), of any
Broker with respect to any breach of duty, error or omission relating to this
Lease shall not exceed the fee received by such Broker pursuant to this Lease;
provided, however, that the foregoing limitation on each Broker’s liability
shall not be applicable to any gross negligence or willful misconduct of such
Broker.


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


 


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


 


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


 


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


 


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


 


30.                                 Subordination; Attornment;
Non-Disturbance.


 


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


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


 


10

















 


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


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


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


 


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


 


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


 


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


 


34.                                 Signs. Lessor may place on
the Premises ordinary “For Sale” signs at any time and ordinary “For Lease”
signs during the last 6 months of the term hereof. Lessee shall have the right to place signs upon the Premises without Lessor’s prior written
consent, provided such signs comply with
all Applicable Requirements.


 


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


 


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


 


37.                                 INTENTIONALLY OMITTED.


 


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


 


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


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


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


39.3                           Effect of Default on Options.


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


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


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


 


11

















 


40.                                 Multiple Buildings. If the Premises are
a part of a group of buildings controlled by Lessor, Lessee agrees that it will
abide by and conform to all reasonable rules and regulations which Lessor may
make from time to time for the management, safety, and care of said properties,
including the care and cleanliness of the grounds and including the parking, loading
and unloading of vehicles, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessee also agrees
to pay its fair share of common expenses incurred in connection with such rules
and regulations.


 


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


 


42.                                 Reservations. Lessor reserves to
itself the right, from time to time, to grant, without the consent or joinder
of Lessee, such easements, rights and dedications that Lessor deems necessary,
and to cause the recordation of parcel maps and restrictions, so long as such
easements, rights, dedications, maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement
rights, dedication, map or restrictions.


 


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


 


44.                                 Authority; Multiple Parties;
Execution.


 


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


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


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


 


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


 


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


 


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


 


48.                                 Waiver of Jury Trial. THE
PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT. Each Party executing this
Agreement has been advised and understands that this provision is not required
by law to be a part of the Agreement but is subject to negotiation between the
Parties.


48.1                           Each Party to this Agreement
hereby waives his/its right to a jury trial of any controversy, dispute or
claim or whatever nature arising out of, in connection with or in relation to
the interpretation, performance or breach of this Agreement, including any
claim based on contract, tort, or statute.


48.2                           Notice:  By initialing in the space below, you are
stating that you have read all of the terms of the “Waiver of Jury Trial”
provision of this agreement and that you are agreeing that any dispute arising
out of or related to the matters included in the “Waiver of Jury Trial”
provision shall be decided by a judge, as provided by California law, and you
are giving up any rights you might possess to have the controversy, claim, or
dispute litigated in a jury trial; by initialing in the space below, you are
giving up your right to a jury trial. Your agreement to this provision is
voluntary.


48.3                           We have read and understand
the foregoing and agree to submit all controversies, disputes or claims of, in
connection with or in relation to the interpretation, performance, or breach of
this Agreement, including any claim based on contract, tort, or statute
included in the “Waiver of Jury Trial” provision to a judge.


 


Lessee’s
Initials:                                Lessor’s Initials:
                          


 


49.                                 Mediation and Arbitration of
Disputes. An Addendum requiring the Mediation and/or the Arbitration of all
disputes between the Parties and/or Brokers arising out of this Lease ý is o is not attached to this
Lease. Prior to filing any action
or lawsuit, any controversy, dispute or claim of whatever nature arising out
of, in connection with or in relation to the interpretation, performance or
breach of this Agreement, including any claim based on contract, tort, or
statute, a Party to this Agreement must first attempt a good faith mediation
before a retired judge or justice from the JAMS panel in accordance with the
then existing Rules of Practice and Procedure of JAMS, or as may otherwise be
mutually agreed by the Parties.  Failure
of any Party to participate in the mediation process shall result in a
forfeiture of the nonparticipating Party of the right to prosecute or defend
the claim which is the subject of the action or lawsuit.


 


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


 


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


 


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


 


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


 


12

















 


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


 


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


 


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


 


	
  Executed at:

  	
  San
  Francisco

  	
   

  	
  Executed at:

  	
  San
  Francisco

  	
   

  
	
  on:

  	
  February 23,
  2004

  	
   

  	
  on:

  	
  February 23,
  2004

  	
   

  
	
  By LESSOR:

  	
  William Cash
  Forman

  	
   

  	
  By LESSEE:

  	
  Hoefer, Inc.

  	
   

  
														



 


	
  By:

  	
  /s/ William
  Cash Forman

  	
   

  	
  By:

  	
  /s/ Hugh
  Douglas Jr.

  	
   

  
	
  Name
  Printed:

  	
  William Cash
  Forman

  	
   

  	
  Name
  Printed:

  	
  Hugh Douglas
  Jr.

  	
   

  
	
  Title:

  	
  Owner

  	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name
  Printed:

  	
   

  	
   

  	
  Name
  Printed:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
  Telephone/Facsimile:

  	
  415 648-2400

  	
   

  	
  Telephone/Facsimile:

  	
  415 550-3431

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal ID
  No.

  	
   

  	
   

  	
  Federal ID
  No.

  	
  200277014

  	
   

  
																																				



 


 


	
  BROKER:

  	
  HC&M
  Commercial Properties, Inc.

  	
   

  	
  BROKER:

  	
  GVA Whitney
  Cressman

  	
   

  
	
  Attn:

  	
  David Becker

  	
   

  	
  Attn:

  	
  James
  Bennett

  	
   

  
	
  Title:

  	
  Title:

  	
  Senior
  Advisor

  	
   

  
	
  Address:

  	
  1234
  Mariposa Street

  	
   

  	
  Address:

  	
  505 Sansome
  Street, Suite 300

  	
   

  
	
  San
  Francisco, CA 94107

  	
   

  	
  San
  Francisco, CA 94111

  	
   

  
	
  Telephone/Facsimile:

  	
  415-865-3740/415-865-3753

  	
   

  	
  Telephone/Facsimile:

  	
  415-229-8948/415-229-8987

  	
   

  
	
  Federal ID
  No.

  	
   

  	
   

  	
  Federal ID
  No.

  	
   

  	
   

  
																									



 


 


NOTE: These forms
are often modified to meet the changing requirements of law and industry needs.
Always write or call to make sure you are utilizing the most current form:
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower Street, Suite 600,
Los Angeles, California 90017. (213) 687-8777. Fax No. (213) 687-8616


 


13

















 


Addendum to Standard Industrial/Commercial
Single-Tenant Lease-Gross Dated October 23, 2003, between William Cash
Forman (Lessor) and Hoefer, Inc. (Lessee), For the Premises Known as 953
Indiana Street, San Francisco


 


In the event of any conflict or inconsistency between the printed
provisions of the Lease Agreement and the provisions of this Addendum, the
provisions of this Addendum shall control.


 


51.                               Lease Term Rent Table.


A base rent of
$16,995.00 paid monthly with three and a half percent (3.5%) annual increases
over the ten (10) year term.


 


	
  Year

  	
   

  	
  Monthly
  Rent

  	
   

  
	
  5/23/2004 – 2/28/2005:

  	
   

  	
  $

  	
  16,995.00

  	
   

  
	
  3/1/2005 – 2/28/2006:

  	
   

  	
  $

  	
  17,590.00

  	
   

  
	
  3/1/2006 – 2/28/2007:

  	
   

  	
  $

  	
  18,205.00

  	
   

  
	
  3/1/2007 – 2/29/2008:

  	
   

  	
  $

  	
  18,843.00

  	
   

  
	
  3/1/2008 – 2/28/2009:

  	
   

  	
  $

  	
  19,502.00

  	
   

  
	
  3/1/2009 – 2/28/2010:

  	
   

  	
  $

  	
  20,185.00

  	
   

  
	
  3/1/2010 – 2/28/2011:

  	
   

  	
  $

  	
  20,891.00

  	
   

  
	
  3/1/2011 – 2/29/2012:

  	
   

  	
  $

  	
  21,622.00

  	
   

  
	
  3/1/2012 – 2/28/2013:

  	
   

  	
  $

  	
  22,379.00

  	
   

  
	
  3/1/2013 – 2/28/2014:

  	
   

  	
  $

  	
  23,162.00

  	
   

  



 


 


52.                               Prior Occupancy.


Lessee shall
have the right to occupy said Premises as of the date of execution of this
Lease by Lessor.  Lessee shall pay no
base rent prior to May 23, 2004.  During
this time, all provisions of the Lease (including but not limited to the obligation
to pay insurance premiums and to maintain the Premises), except the provisions
relating to rent, shall be in full force and effect.


 


53.                               Tenant Improvement Allowance.


Lessor shall provide Lessee with a base building improvement allowance
of Seventy-Five Thousand Dollars ($75,000.00). 
Lessee shall undertake and complete the following work (“Lessee’s
Work”):


 


A.           Construct a loading dock with new access
door


B.             Provide an ADA accessible entrance to
building


C.             Provide ADA compliant restrooms


D.            Repair and re-stripe parking area as per
their requirements and City code


E.              Provide additional floor load capability


F.              Ensure the operation of all plumbing
fixtures as are currently in the premises


G.             Ensure the operation of existing
electrical system


H.            Ensure the operation of the HVAC equipment
to their satisfaction


I.                 Any other improvements which Lessee
deems necessary to make the Premises ready for Tenant’s occupancy, all as shown
on the plans previously submitted to Lessor; provided, however, that such
improvements shall be limited in scope so that the improvements shall not
trigger any seismic upgrade requirements to the Building pursuant to all
Applicable Requirements.


 


Upon receipt by Lessor of Lessee’s demand for reimbursement after
substantial completion of all of the above work, Lessor shall have 30 days to
make reimbursement payment to Lessee. 
In the event Lessor fails to make such payment, in addition to any and
all other remedies Lessee may have for non-payment thereof, Lessee may deduct
and setoff such Tenant Improvement Allowance amount against future Rent and
other charges due and owing hereunder.


 


Notwithstanding anything contained herein to the contrary, any and all
seismic improvements to the Premises required by the City of San Francisco
prior to Lessee’s occupancy or as a result of Lessee’s Work or occupancy shall
be undertaken by Lessor and completed by Lessor at Lessor’s sole cost and
expense.  In the event Lessee changes
its use of the Premises or performs any work after the execution of the Lease
that is not a part of Lessee’s Work, which change or work triggers any seismic
upgrade requirements to the 


 


14

















 


Building pursuant to all Applicable Requirements, said upgrade
requirements shall be performed by Lessee at its sole cost and expense.


 


54.                               Broker Commission.


Upon mutual
execution of a formal Lease, Lessor shall compensate brokers with a commission
based on the below listed schedule.  The
commission shall be split equally (50/50) between Whitney Cressman and HC&M
Commercial Properties, Inc.:


 


	
  Rent

  	
   

  	
  X  Months

  	
   

  	
  Total

  	
   

  	
  X%=

  	
   

  	
  Commission

  	
   

  
	
  $16,995.00

  	
   

  	
  12

  	
   

  	
  $

  	
  203,940

  	
   

  	
  6

  	
  %

  	
  $

  	
  12,236.40

  	
   

  
	
  $17,590.00

  	
   

  	
  12

  	
   

  	
  $

  	
  211,077

  	
   

  	
  6

  	
  %

  	
  $

  	
  12,664.67

  	
   

  
	
  $18,205.00

  	
   

  	
  12

  	
   

  	
  $

  	
  218,465

  	
   

  	
  5

  	
  %

  	
  $

  	
  10,923.28

  	
   

  
	
  $18,843.00

  	
   

  	
  12

  	
   

  	
  $

  	
  226,111

  	
   

  	
  5

  	
  %

  	
  $

  	
  11,305.60

  	
   

  
	
  $19,502.00

  	
   

  	
  12

  	
   

  	
  $

  	
  234,025

  	
   

  	
  4

  	
  %

  	
  $

  	
  9,361.03

  	
   

  
	
  $20,185.00

  	
   

  	
  12

  	
   

  	
  $

  	
  242,216

  	
   

  	
  3

  	
  %

  	
  $

  	
  7,266.50

  	
   

  
	
  $20,891.00

  	
   

  	
  12

  	
   

  	
  $

  	
  250,694

  	
   

  	
  3

  	
  %

  	
  $

  	
  7,520.83

  	
   

  
	
  $21,622.00

  	
   

  	
  12

  	
   

  	
  $

  	
  259,468

  	
   

  	
  3

  	
  %

  	
  $

  	
  7,784.06

  	
   

  
	
  $22,379.00

  	
   

  	
  12

  	
   

  	
  $

  	
  268,550

  	
   

  	
  3

  	
  %

  	
  $

  	
  8,056.50

  	
   

  
	
  $23,162.00

  	
   

  	
  12

  	
   

  	
  $

  	
  277,949

  	
   

  	
  3

  	
  %

  	
  $

  	
  8,338.48

  	
   

  
	
  Total lease consideration:

  	
   

  	
   

  	
   

  	
  $

  	
  2,392,500

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total commission due:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  95,457.35

  	
   

  



 


Commission fee to be due as follows:


 


a)                                      50% due upon
lease signing,


b)                                     50% (final) due at
the first month of the term (3/1/2004)


 


Should the option to extend be exercised, Lessor shall compensate above
listed brokers with a commission based on the following schedule upon
written notice of Lessee exercising said option:


 


2.5% of the rent for the five-year term.


 


55.                               Termination Right.


Notwithstanding anything contained in the Lease to the contrary, Lessee
shall have the right to terminate this Lease at any time after the seventh
(7th) anniversary of the Commencement Date by delivery of written notice to
Lessor at least one hundred eighty (180) days prior to the effective date of
such termination and the payment of a termination fee equal to the sum of (i)
the unamortized portion of the Tenant Improvement Allowance as of the effective
date of such termination, plus (ii) the amount of any leasing commission to be
paid by Lessor after the date of the lease termination applicable to the then
remaining lease term.


 


56.                               Lessor’s Work.


Lessor has notified Lessee that Lessor will perform certain seismic
repair work to the Building (“Lessor’s Work”),
in Lessor’s sole discretion, commencing on or near the date of the full
execution of this Lease, and to be completed within the first year of the term,
more or less.  Lessor’s Work shall
generally consist of installing lateral tie-ins along the roof perimeter and
shear bolting of ledgers to concrete walls of the Building. As a result,
Lessor’s Work may be performed simultaneously with the work to be performed by
Lessee pursuant to Paragraph 53, above, at the Premises (“Lessee’s Work”).  To the extent commercially reasonable, Lessor’s and Lessee’s
contractors shall perform their respective work in a manner and at times which
do not impede or delay the other’s contractor in the completion of the Premises
as provided in this Lease. Any such delays in the completion of the Premises
shall not delay the Commencement Date (Paragraph 1.3) nor the date upon which
Base Rent shall commence (Paragraph 1.5), nor any other time for performance by
Lessee of any of the provisions of this Lease. Any damage to any of Lessor’s
Work caused by Lessee’s contractor shall be repaired to Lessor’s reasonable
satisfaction at the sole cost and expense of Lessee.


 


15