Exhibit 10.8


 


	
  

  	
  AMERICAN INDUSTRIAL REAL
  ESTATE ASSOCIATION

  



 


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, September 9,
2003, is made by and between  Bravante-Curci
Investors, L.P. (“Lessor”) and DPAC Technologies Corp., a
California 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 3545 Howard Way, located in the County of Orange, 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) an approximate 24,026
rentable square foot, two-story, corporate headquarters building further
described as APN 415 112 20 (“Premises”).  (See also Paragraph 2)


1.3           Term:
5 years and -0- months (“Original Term”)
commencing June 1, 2004 (“Commencement Date”)
and ending May 31, 2009 (“Expiration Date”).  (See also Paragraph 3)


1.4           Early
Possession: upon lease execution through May 31, 2004 (“Early Possession Date”). (See also
Paragraphs 3.2 and 3.3)


1.5           Base
Rent:  $22,344.00 per month (“Base Rent”), payable on the 1st day of
each month commencing June 1, 2004. 
(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: $ 22,344.00 for the period June 2004.


(b)     Security Deposit: $ 25,227.00 (“Security Deposit”).  (See also Paragraph 5)


(c)     Association Fees: $                               for the period
                                                            


(d)     Other: $                  for
                                                                                                                                       .


(e)     Total Due Upon Execution of this Lease: $
47,571.


1.7           Agreed
Use: general office, warehouse, assembly, and manufacturing (See
also Paragraph 6)


1.8           Insuring
Party:  Lessor is the “Insuring Party”.  The annual “Base Premium”
is $                 (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  Lee & Associates - Newport Beach, Inc. (Brian Garbutt and Mike
Meisenbach) represents Lessor exclusively (“Lessor’s Broker”); 


ý  Staubach (Ken
Ward and Ryan Hawkins) 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 (or if there is no such agreement, the sum of                    or
                  % of the total Base Rent) for the brokerage
services rendered by the Brokers.


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


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;


o   a
plot plan depicting the Premises;


o   a
current set of the Rules and Regulations;


ý   a
Work Letter; Appendix A


ý   other
(specify): Exhibit “B” - Signage.


 


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, so long as the required service contracts described in Paragraph 7.1(b)
below are obtained by Lessee and in effect within thirty days following the
Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, sump pumps, if any,
and all other such elements in the Premises, other than those constructed by
Lessee, shall be in good operating condition on said date and 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.  If a
non-compliance with said warranty exists as of the Start Date, or if one of
such systems or


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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  ©1997 -
  American Industrial Real Estate Association

  	
  REVISED

  	
  FORM STG-8-7/01E

  



 


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elements should malfunction or fail within
the appropriate warranty period, Lessor shall, as Lessor’s sole obligation with
respect to such matter, except as  otherwise
provided in this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense.  The warranty periods shall be as follows:
(i) 12 months as to the HVAC
systems, and elevator,  (ii) six
months to the remaining systems and other elements of the Building from occupancy.  If Lessee does not give Lessor the required notice within the
appropriate warranty period, correction of any such non-compliance, malfunction
or failure shall be the obligation of Lessee at Lessee’s sole cost and expense,
except for the roof, foundations, and bearing walls which are handled as
provided in paragraph 7.


2.3           Compliance.  Lessor warrants that the improvements on the
Premises comply with the building codes, applicable laws, covenants or
restrictions of record, regulations, and ordinances (“Applicable Requirements”) that were in effect at the time
that each improvement, or portion thereof, was constructed.  Said warranty does not apply to the use to
which Lessee will put the Premises, modifications which may be required by the
Americans with Disabilities Act or any similar laws as a result of Lessee’s use
(see Paragraph 50), or to any Alterations or Utility Installations (as defined
in Paragraph 7.3(a)) made or to be made by Lessee.  NOTE: Lessee is responsible for
determining whether or not the Applicable Requirements, and especially the
zoning, are appropriate for Lessee’s intended use, and acknowledges that past
uses of the Premises may no longer be allowed.  If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor’s expense.  If Lessee does not give Lessor written
notice of a non-compliance with this warranty within 6 months following the
Start Date, correction of that non-compliance shall be the obligation of Lessee
at Lessee’s sole cost and expense.  If
the Applicable Requirements are hereafter changed so as to require during the
term of this Lease the construction of an addition to or an alteration of the
Premises and/or Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Unit, Premises and/or
Building (“Capital Expenditure”),
Lessor and Lessee shall allocate the cost of such work as follows:


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


(b)
If such Capital Expenditure is not the result of the specific and unique use of
the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph 7.1(d); provided, however,
that if such Capital Expenditure is required during the last 2 years of this
Lease or if Lessor reasonably determines that it is not economically feasible
to pay its share thereof, Lessor shall have the option to terminate this Lease
upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in
writing, within 10 days after receipt of Lessor’s termination notice that
Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure, Lessee
may advance such funds and deduct same, with Interest, from Rent until Lessor’s
share of such costs have been fully paid. 
If Lessee is unable to finance Lessor’s share, or if the balance of the
Rent due and payable for the remainder of this Lease is not sufficient to fully
reimburse Lessee on an offset basis, Lessee shall have the right to terminate
this Lease upon 30 days written notice to Lessor.


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


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


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


 


3.             Term.


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


3.2           Early
Possession.  If Lessee
totally or partially occupies the Premises prior to the Commencement Date, the
obligation to pay Base Rent shall be abated for the period of such early
possession.  All other terms of this Lease
(including but not limited to the obligations to pay Real Property Taxes and
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.


3.3           Delay
In Possession.  Lessor agrees
to use its best commercially reasonable efforts to deliver possession of the
Premises to Lessee by the Early Possession Date.  If, despite said efforts, Lessor is unable to deliver possession
by such date, Lessor shall not be subject to any liability therefor, 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 Early Possession 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 Early Possession 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 therefor deposit monies with Lessor sufficient to
restore said Security Deposit to the full amount required by this Lease.  If the Base Rent increases during the 


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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term of this Lease, Lessee shall, upon written
request from Lessor, deposit additional moneys with Lessor so that the total
amount of the Security Deposit shall at all times bear the same proportion to
the increased Base Rent as the initial Security Deposit bore to the initial
Base Rent.  Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase
the Security Deposit to the extent necessary, in Lessor’s reasonable judgment,
to account for any increased wear and tear that the Premises may suffer as a
result thereof.  If a change in control
of Lessee occurs during this Lease and following such change the financial
condition of Lessee is, in Lessor’s reasonable judgment, significantly reduced,
Lessee shall deposit such additional monies with Lessor as shall be sufficient
to cause the Security Deposit to be at a commercially reasonable level based on
such change in financial condition. 
Lessor shall not be required to keep the Security Deposit separate from
its general accounts.  Within 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 Require Consent.  The term “Hazardous
Substance” as used in this Lease shall mean any product, substance,
or waste whose presence, use, manufacture, disposal, transportation, or
release, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public health,
safety or welfare, the environment or the Premises, (ii) regulated or monitored
by any governmental authority, or (iii) a basis for potential liability of
Lessor to any governmental agency or third party under any applicable statute
or common law theory.  Hazardous
Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions
thereof.  Lessee shall not engage in any
activity in or on the Premises which constitutes a Reportable Use of Hazardous
Substances without the express prior written consent of Lessor and timely
compliance (at Lessee’s expense) with all Applicable Requirements.  “Reportable
Use” shall mean (i) the installation or use of any above or below
ground storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and/or (iii) the
presence at the Premises of a Hazardous Substance with respect to which any
Applicable Requirements requires that a notice be given to persons entering or
occupying the Premises or neighboring properties.  Notwithstanding the foregoing, 
Lessee may use any ordinary and customary materials reasonably required
to be used in the normal course of the Agreed Use, ordinary office supplies
(copier toner, liquid paper, glue, etc.) and common household cleaning
materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. 
In addition, Lessor may condition its consent to any Reportable Use upon
receiving such additional assurances as Lessor reasonably deems necessary to
protect itself, the public, the Premises and/or the environment against damage,
contamination, injury and/or liability, including, but not limited to, the
installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the
Security Deposit.


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


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


(d)
Lessee Indemnification.  Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys’ and consultants’ fees arising out
of or involving any Hazardous Substance brought onto the Premises by or for
Lessee, or any third party (provided, however, that Lessee shall have no
liability under this Lease with respect to underground migration of any
Hazardous Substance under the Premises from 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 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 therefor (in which case Lessee shall make the investigation
and remediation thereof required by the Applicable Requirements and this Lease
shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i)
investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably possible at Lessor’s expense, in which event this Lease
shall continue in full force and effect, or (ii) if the estimated cost to
remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within 30 days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition, of Lessor’s desire to terminate this Lease as of the date
60 days following the date of such notice. 
In the event Lessor elects to give a termination notice, Lessee may,
within 10 days thereafter, give written notice to Lessor of Lessee’s commitment
to pay the amount by which the cost of the remediation of such Hazardous
Substance Condition exceeds an amount equal to 12 times the then monthly Base
Rent or $100,000, whichever is greater. 
Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within 30 days following such commitment.  In such event, this Lease shall continue in full force and
effect, and Lessor shall proceed to make such remediation as soon as reasonably
possible after the required funds are available.  If Lessee does not give such notice and provide the required
funds or assurance thereof within the time provided, this Lease shall terminate
as of the date specified in Lessor’s notice of termination.


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


7.1           Lessee’s
Obligations.


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


(b)
Service Contracts.  Lessee shall, at Lessee’s sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises:  (i) HVAC
equipment, (ii) boiler, and pressure vessels, (iii) fire extinguishing systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v) clarifiers, (vi) basic utility feed to the perimeter of the
Building, and (viii) any other equipment, if reasonably required by
Lessor.  However, Lessor reserves the
right, upon notice to Lessee, to procure and maintain any or all of such
service contracts, and if Lessor so elects, Lessee shall reimburse Lessor, upon
demand, for the cost thereof.


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


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


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


(c)
Liens; Bonds.  Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic’s or 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.  Lessor may, at
any time, elect in writing to be the owner of all or any specified part of the
Lessee Owned Alterations and Utility Installations.  Unless otherwise instructed per paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises.


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


(c)
Surrender; Restoration.  Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good
operating order, condition and state of repair, ordinary wear and tear
excepted.  “Ordinary wear and tear”
shall not include any damage or deterioration that would have been prevented by
good maintenance practice. Notwithstanding the foregoing, if this Lease is for
12 months or less, then Lessee shall surrender the Premises in the same
condition as delivered to Lessee on the Start Date with NO allowance for
ordinary wear and tear.  Lessee shall
repair any damage occasioned by the installation, maintenance or removal of Trade
Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings,
and equipment as well as the removal of any storage tank installed by or for
Lessee.  Lessee shall 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)
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 8.2(b), 8.3(a) and
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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 1.9 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 1.9, 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. In no event, however, shall
Lessee be responsible for any portion of the increase in the premium cost
attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in
excess of $2,000,000 per occurrence.


(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 $1,000,000 per occurrence with an annual aggregate of not less
than $2,000,000, 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.


(b)
Carried by Lessor.  Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. 
Lessee shall not be named as an additional insured therein.


8.3           Property
Insurance - Building, Improvements and Rental Value.


(a)
Building and Improvements.  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 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 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.


(c)
Adjacent Premises.  If the Premises are part of a larger
building, or of a group of buildings owned by Lessor which are adjacent to the
Premises, the Lessee shall pay for any increase in the premiums for the
property insurance of such building or buildings if said increase is caused by
Lessee’s acts, omissions, use or occupancy of the Premises.


8.4           Lessee’s
Property; Business Interruption Insurance.


(a)
Property Damage.  Lessee shall obtain and maintain insurance
coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. 
Such insurance shall be full replacement cost coverage with a deductible
of not to exceed $5,000.00 per
occurrence.  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.  Lessor shall not be liable for
any damages arising from any act or neglect of any other tenant of Lessor nor
from the failure of Lessor to enforce the provisions of any other lease in the
Project. 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 existance of
the required insurance, the Base Rent shall be automatically increased, without
any requirement for notice to Lessee, by an amount equal to 10% of the then
existing Base Rent or $100, whichever is greater.  The parties agree that such increase in Base Rent represents fair
and reasonable compensation for the additional risk/ costs that Lessor will
incur by reason of Lessee’s failure to maintain the required insurance.  Such increase in Base Rent shall in no event
constitute a waiver of Lessee’s Default or Breach with respect to the failure
to maintain such insurance, prevent the exercise of any of the other rights and
remedies granted hereunder, nor relieve Lessee of its obligation to maintain
the insurance specified in this Lease.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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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 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 gross 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 Lessee shall pay to Lessor
the amount, if any, by which Real Property Taxes applicable to the Premises
increase 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
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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         Joint
Assessment.  If the Premises
are not separately assessed, Lessee’s liability shall be an equitable
proportion of the Tax Increase for all of the land and improvements included
within the tax parcel assessed, such proportion to be conclusively determined
by Lessor from the respective valuations assigned in the assessor’s work sheets
or such other information as may be reasonably available.


10.4         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.


 


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.


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


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


(f) Any profits shall be
split 50/50 between Lessor and Lessee.


 


13.
          Default; Breach; Remedies.


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


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


(b)
The failure of Lessee to make any payment of Rent or any Security Deposit
required to be made by Lessee hereunder, whether to Lessor or to a third party,
when due, to provide reasonable evidence of insurance or surety bond, or to
fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of 5 days following written notice to Lessee.


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


(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.


(g)
If the performance of Lessee’s obligations under this Lease is guaranteed: (i)
the death of a Guarantor, (ii) the termination of a Guarantor’s liability with
respect to this Lease other than in accordance with the terms of such guaranty,
(iii) a Guarantor’s becoming insolvent or the subject of a bankruptcy filing,
(iv) a Guarantor’s refusal to honor the guaranty, or (v) a Guarantor’s breach
of its guaranty obligation on an anticipatory basis, and Lessee’s failure,
within 60 days following written notice of any such event, to provide written
alternative assurance or security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the Guarantors that existed at the time of execution of this Lease.


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


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


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


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


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


13.4            Late
Charges.  Lessee hereby
acknowledges that late payment by Lessee of Rent will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain.  Such
costs include, but are not limited to, processing and accounting charges, and
late charges which may be imposed upon Lessor by any Lender.  Accordingly, if any Rent shall not be
received by Lessor within 10 days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to 5% 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.


(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
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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.


15.2         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 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
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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 110% of the Base Rent applicable immediately preceding the expiration
or termination up to 3 months and then 125% of the base rent thereafter.  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 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.


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.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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


 


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


 


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


 


37.              Guarantor.


37.1         Execution.  The Guarantors, if any, shall each execute a
guaranty in the form most recently published by the American Industrial Real
Estate Association, and each such Guarantor shall have the same obligations as
Lessee under this Lease.


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


 


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


 


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


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


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


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


39.4         Effect
of Default on Options.


(a)
Lessee shall have no right to exercise an Option:  (i) during the period commencing with the giving of any notice of
monetary breach and continuing
until said monetary breach 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 monetary breach,
whether or not the monetary breaches
are cured, during the 12 month period immediately preceding the exercise of the
Option.


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


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


 


40.              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
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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.


 


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 o  is  o  is not 
attached to this Lease.


 


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.


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:

  	
   

  	
   

  	
  Executed at:

  	
   

  
	
  on:

  	
   

  	
   

  	
  on:

  	
   

  
	
   

  	
   

  	
   

  
	
  By  LESSOR:

  	
   

  	
  By  LESSEE:

  
	
   

  	
   

  	
   

  
	
  Bravante-Curci Investors, L.P.

  	
   

  	
  DPAC Technologies Corp., a California

  
	
   

  	
   

  	
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
  Telephone/Facsimile:

  	
   

  	
   

  	
  Telephone/Facsimile:

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BROKER:

  	
   

  	
  BROKER:

  
	
  Lee & Associates - Newport Beach, Inc.

  	
   

  	
  Staubach

  
	
   

  	
   

  	
   

  
	
  Attn:

  	
  Brian Garbutt / Mike Meisenbach

  	
   

  	
  Attn:

  	
  Ken Ward / Ryan Hawkins

  
	
  Title: 

  	
  Senior Vice President

  	
   

  	
  Title:

  	
   

  
	
  Address: 

  	
  3991 MacArthur Blvd., Suite 100

  	
   

  	
  Address: 

  	
  610 Newport Center Drive

  
	
  Newport Beach, CA 92660

  	
   

  	
  Newport Beach, CA 92660

  
	
  Telephone/Facsimile:

  	
   (949) 724-1000

  	
   

  	
  Telephone/Facsimile: 

  	
  (949) 698-1100

  
	
  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


GARBUTT/GROSS LEASE-3545 HOWARD WAY


 


© Copyright 1997 - By American Industrial Real Estate
Association.  All rights reserved.


No part of these works may be reporduced in any form without
permission in writing.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  



 


12

















 


Addendum to that Standard Single-Tenant Commercial Lease
Gross

Dated September 8, 2003

By and Between

Bravante-Curci Investors, L.P. (“Lessor”)

and

DPAC Technologies Corp., a California Corporation (“Lessee”)

for that certain real property located at

3545 Howard Way, Costa Mesa, California




	
  52.

  	
   

  	
  Rental
  Rate Increases:

  	
   

  	
  Base monthly rental rate
  shall Increase per the following schedule:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2/1/05-1/31/06:

  	
  $23,064.96 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  2/1/06-1/31/07:

  	
  $23,785.74 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  2/1/07-1/31/08:

  	
  $24,506.52 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  2/1/08-5/31/09:

  	
  $25,227.30 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  53.

  	
   

  	
  Termination Option:

  	
   

  	
  Lesssee
  may at its option terminate this Lease in its entirety (the “Termination
  Option”) effective as of June 1, 2007 (the “Early Termination Date”) by
  delivering notice of its intent to terminate this Lease (the “Termination
  Notice”) to Lessor on or before the sixth (6th) month prior to the
  Early Termination Date, and paying a termination fee.  If Lesssee fails to deliver its
  termination Notice Timely, Lesssee will be deemed to have waived such
  Termination Option.  If there are any
  uncured defaults by Lesssee under this Lease as of the date Lesssee delivers
  the Termination Notice or as of the Early Termination Date.  The Termination Option shall be void, and
  the Lease shall remain in effect.  If
  Lesssee properly exercises its Termination Option, this shall terminate as of
  the Early Termination Date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  The
  termination fee for exercise of the Termination Option will be one hundred
  and forty thousand and seven hundred and ninety seven dollars ($140,797),
  which shall be payable upon delivery of the Termination Notice.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  54.

  	
   

  	
  Signage:

  	
   

  	
  Lessee
  shall have the right to top building and monument signage, in compliance with
  city of Costa Mesa as depicted on the signage exhibit attached hereto as
  exhibit B, which id hereby approved by Lessor.  All costs associated with installation and maintenance of Sign
  shall be the sole responsibility and expense of Lessee.  Such signage shall be removed upon the
  expiration of the Lease at Lessee’s sole cost and expense.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  55.

  	
   

  	
  Parking:

  	
   

  	
  Tenant
  shall have access to all the parking at 3545 Howard Way, free of charge.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  56.

  	
   

  	
  Option to Extend:

  	
   

  	
  Provided
  Tenant is not in default of any term and conditions of the lease, Landlord
  shall grant Tenant one (1) five (5) year option to extend the term by
  providing Landlord prior written notice no sooner than twelve (12) months and
  no later than nine (9) months at the following base rental rate:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Months 61-72:

  	
  $26,428 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  Months 73-84:

  	
  $27,149 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  Months 85-96:

  	
  $27,870 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  Months 97-108:

  	
  $28,591 MG, per month

  
	
   

  	
   

  	
   

  	
   

  	
  Months
  109-120:

  	
  $29,312
  MG, per month

  
							



 

















 


	
  AGREED AND ACCEPTED: Lessor

  	
  AGREED AND ACCEPTED: Lessee

  
	
  Bravante-Curci
  Investors, L.P.

  	
  DPAC
  Technologies Corp., a

  
	
   

  	
  California
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date: