exv10w3



 






Exhibit 10.3 Lease Agreement




OFFICE LEASE AGREEMENT




     THIS OFFICE LEASE AGREEMENT (the “Lease”) is made and entered into as of the 22nd day of July,
2005, by and between CA-4600 NORRIS TECH LIMITED PARTNERSHIP, a Delaware limited partnership
(“Landlord”) and GIGA-TRONICS INCORPORATED, a California corporation (“Tenant”). The following
exhibits and attachments are incorporated into and made a part of the Lease: Exhibit A (Outline and
Location of Premises), Exhibit B (Expenses and Taxes), Exhibit C (Work Letter), Exhibit D
(Commencement Letter), Exhibit E (Building Rules and Regulations), Exhibit F (Additional
Provisions), Exhibit G (Parking Agreement), Exhibit H (Hazardous Materials Questionnaire), Exhibit
H-1 (Initial Hazardous Materials) and Exhibit H-2 (Potential Hazardous Materials).




	1.	 	Basic Lease Information.






	 	1.01	 	“Building” shall mean the building located at 4600 Norris Canyon Road, San Ramon,
California, commonly known as 4600 Norris Tech Center. “Rentable Square Footage of the
Building” is deemed to be 96,535 square feet.
	 
	 	1.02	 	“Premises” shall mean the area shown on Exhibit A to this Lease. The Premises is
located on the 1st floor of the Building (which is also known by the Tenant as 4650 Norris
Canyon Road, San Ramon, California) and known as suite number 100. If the Premises include
one or more floors in their entirety, all corridors and restroom facilities located on such
full floor(s) shall be considered part of the Premises. The “Rentable Square Footage of the
Premises” is deemed to be 47,397 square feet. Landlord and Tenant stipulate and agree that
the Rentable Square Footage of the Building and the Rentable Square Footage of the Premises
are correct.
	 
	 	1.03	 	“Base Rent”:






	 	(a)	 	Initial Base Rent.





	 	 	 	 	 	 	 	 	 
	 	 	Annual Rate	 	Monthly
	Period or Months of Term	 	Per Square Foot	 	Base Rent
	January 1, 2007 – December 31, 2007

	 	$	13.30	 	 	$	52,531.67	 







	 	 	 	Notwithstanding anything in this Section of the Lease to the contrary, so long as
Tenant is not in default under this Lease, Tenant shall be entitled to an abatement
of Base Rent in the amount of $52,531.67 per month for 3 consecutive full calendar
months of the Term, beginning with the first full calendar month of the Term (the
“Base Rent Abatement Period”). The total amount of Base Rent abated during the Base
Rent Abatement Period shall equal $157,595.01 (the “Abated Base Rent”). If Tenant
defaults at any time during the Term, Tenant fails to cure such default within any
applicable cure period under the Lease, and Landlord terminates this Lease as a
result thereof, the unamortized portion of the Abated Base Rent shall immediately
become due and payable. The payment by Tenant of the unamortized portion of Abated
Base Rent in such event shall not limit or affect any of Landlord’s other rights,
pursuant to this Lease or at law or in equity. During the Base Rent Abatement
Period, only Base Rent shall be abated, and all Additional Rent and other costs and
charges specified in this Lease shall remain as due and payable pursuant to the
provisions of this Lease.






	 	(b)	 	CPI Adjustment. Adjustments shall be made to the Base Rent (the “Base Rent
Adjustment”) to reflect increases in the CPI (as hereinafter defined) in accordance
with the following:






     (i) Beginning on January 1, 2008 and on each succeeding January 1st throughout
the Lease Term (each such date shall be referred to as a “Rent Adjustment Date” and
each period between the Rent Adjustment Dates shall be referred to as an “Adjustment
Period”) the Base Rent payable under the Lease for the Adjustment Period, or portion
thereof, in which the applicable Rent Adjustment Date occurs shall be adjusted to
reflect any increases in the CPI. Such Base Rent Adjustment shall be accomplished
by multiplying the Base Rent for such Adjustment Period, or portion thereof (which
shall not be diminished by any credits or abatements granted in this Lease or any
amendments thereto, including, without limitation, the Abated Base Rent) by a
fraction, the numerator of which shall be the most recently published CPI index
number prior to the applicable Rent Adjustment Date and the denominator of which
shall be the most recently published CPI Index number prior to the Commencement Date
of the Lease, provided that in no event shall the Base Rent for any Adjustment
Period be less than Base Rent payable for the preceding Adjustment Period.




     (ii) Landlord shall notify Tenant of the Base Rent Adjustment for the
applicable Adjustment Period, or portion thereof, in writing prior to the applicable
Rent



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Adjustment Date, or as soon thereafter as is practical. Tenant shall pay such Base
Rent (as hereby adjusted) on or before the first day of each month during the
applicable Adjustment Period in accordance with Section 4 of the Lease. If Landlord
does not notify Tenant of the Base Rent Adjustment by any given Rent Adjustment
Date, Tenant shall continue to pay Base Rent based on the previous years adjustment,
if any, until such time as Landlord provides Tenant with notice of the new adjusted
Base Rent. Upon determination of the new Base Rent Adjustment, an adjustment shall
be made for any month with respect to which Tenant paid Base Rent based on the
previous year’s Base Rent Adjustment. Tenant shall pay Landlord for any
underpayment within 30 days written demand.




     (iii) For purposes hereof, “CPI” shall mean the Revised Consumer Price Index
for San Francisco/Bay Area All Consumers published by the Bureau of Labor Statistics
of the United States Department of Labor, for United States City Average, All Items
(1982-84 = 100). If the manner in which the CPI is calculated shall be
substantially revised or if the 1982-84 average shall no longer be used, Landlord
and Tenant shall select a means to adjust such revised Index which would produce
results equivalent, as practicable, to those which would have been obtained if the
CPI had not been so revised. If the CPI shall become unavailable to the public
because publication is discontinued, or otherwise, Landlord and Tenant shall select
a comparable substitute index based upon changes in the cost of living or purchasing
power of the consumer dollar published by any other governmental agency, or if no
such index shall then be available, a comparable index published by a major bank or
other financial institution or by a university or a recognized financial
publication. In the event the U.S. Department of Labor, Bureau of Labor Statistics
changes the publication frequency of the CPI so that a CPI is not available to make
an adjustment for the period in question, the adjustment shall be based on the
percentage increase in the CPI for the twelve (12) month period beginning with the
closest month preceding the period in question for which a CPI is available.




	 	1.04	 	“Tenant’s Pro Rata Share”: 49.0983%.
	 
	 	1.05	 	Intentionally Omitted.
	 
	 	1.06	 	“Term”: A period of 60 months and 0 days. Subject to Section 3, the Term shall
commence on January 1, 2007 (the “Commencement Date”) and, unless terminated early in
accordance with this Lease, end on December 31, 2011 (the “Termination Date”).
	 
	 	1.07	 	Allowance(s): $236,985.00, as more particularly described on Exhibit C attached hereto.
	 
	 	1.08	 	“Security Deposit”: $100,000.00, as more fully described in Section 6.
	 
	 	1.09	 	“Guarantor(s)”: None.
	 
	 	1.10	 	“Broker(s)”: Cushman & Wakefield.
	 
	 	1.11	 	“Permitted Use”: General office use, warehouse and light industrial (including, without
limitation, light manufacturing and assembly).
	 
	 	1.12	 	“Notice Address(es)”:





	 	 	 
	Landlord:

	 	Tenant:
	 
	 	 
	CA-4600 Norris Tech Limited Partnership
	 	GIGA-TRONICS INCORPORATED
	c/o Equity Office Management, L.L.C.

	 	4650 Norris Canyon Road
	1255 Treat Boulevard, Suite 150

	 	San Ramon, California
	Walnut Creek, California 94597

	 	Attention: Chief Financial Officer
	Attn: Property Manager

	 	 







A copy of any notices to Landlord shall be sent to Equity Office One Market, Spear
Street Tower, Suite 600, San Francisco, California 94105, Attn: San Francisco
Regional Counsel.




	 	1.13	 	“Business Day(s)” are Monday through Friday of each week, exclusive of New Year’s Day,
Presidents Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day (“Holidays”). Landlord may designate additional Holidays that are commonly recognized
by other office buildings in the area where the Building is located. “Building Service
Hours” are 8:00 a.m. to 6:00 p.m. on Business Days.
	 
	 	1.14	 	“Landlord Work” means the work, if any, that Landlord is obligated to perform in the
Premises pursuant to a separate agreement (the “Work Letter”), if any, attached to this
Lease as Exhibit C.




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	 	1.15	 	“Property” means the Building and the parcel(s) of land on which it is located and, at
Landlord’s discretion, the parking facilities and other improvements, if any, serving the
Building and the parcel(s) of land on which they are located.






	2.	 	Lease Grant.





     The Premises are hereby leased to Tenant from Landlord, together with the right to use any
portions of the Property that are designated by Landlord for the common use of tenants and others
(the “Common Areas”).




	3.	 	Adjustment of Commencement Date; Possession.





     3.01 If Landlord is required to perform Landlord Work prior to the Commencement Date: (a) the
date set forth in Section 1.06 as the Commencement Date shall instead be defined as the “Target
Commencement Date”; (b) the actual Commencement Date shall be the date on which the Landlord Work
is Substantially Complete (defined below); and (c) the Termination Date will be the last day of the
Term as determined based upon the actual Commencement Date. Landlord’s failure to Substantially
Complete the Landlord Work by the Target Commencement Date shall not be a default by Landlord or
otherwise render Landlord liable for damages. Promptly after the determination of the Commencement
Date, Landlord and Tenant shall enter into a commencement letter agreement in the form attached as
Exhibit D. Tenant’s failure to execute and return the commencement letter, or to provide written
objection to the statements contained in the letter, within 30 days after the date of the letter
shall be deemed an approval by Tenant of the statements contained therein. If the Termination Date
does not fall on the last day of a calendar month, Landlord and Tenant may elect to adjust the
Termination Date to the last day of the calendar month in which the Termination Date occurs by the
mutual execution of a commencement letter agreement setting forth such adjusted date. The Landlord
Work shall be deemed to be “Substantially Complete” on the date that all Landlord Work has been
performed, other than any details of construction, mechanical adjustment or any other similar
matter, the non-completion of which does not materially interfere with Tenant’s use of the
Premises. If Landlord is delayed in the performance of the Landlord Work as a result of the acts or
omissions of Tenant, the Tenant Related Parties (defined in Section 13) or their respective
contractors or vendors, including, without limitation, changes requested by Tenant to approved
plans, Tenant’s failure to comply with any of its obligations under this Lease, or the
specification of any materials or equipment with long lead times (a “Tenant Delay”), the Landlord
Work shall be deemed to be Substantially Complete on the date that Landlord could reasonably have
been expected to Substantially Complete the Landlord Work absent any Tenant Delay.



     3.02 Subject to Landlord’s obligation, if any, to perform Landlord Work, the Premises are
accepted by Tenant in “as is” condition and configuration without any representations or warranties
by Landlord. By taking possession of the Premises, Tenant agrees that the Premises are in good
order and satisfactory condition. Landlord shall not be liable for a failure to deliver possession
of the Premises or any other space due to the holdover or unlawful possession of such space by
another party, however Landlord shall use reasonable efforts to obtain possession of the space.
The commencement date for the space, in such event, shall be postponed until the date Landlord
delivers possession of the Premises to Tenant free from occupancy by any party. If Tenant takes
possession of the Premises before the Commencement Date pursuant to the terms of this Lease (and
not pursuant to any other agreement), such possession shall be subject to the terms and conditions
of this Lease and Tenant shall pay Rent (defined in Section 4.01) to Landlord for each day of
possession before the Commencement Date. However, except for the cost of services requested by
Tenant (e.g. freight elevator usage), Tenant shall not be required to pay Rent for any days of
possession before the Commencement Date during which Tenant, with the approval of Landlord, is in
possession of the Premises for the sole purpose of performing improvements or installing furniture,
equipment or other personal property.




	4.	 	Rent.





     4.01 Tenant shall pay Landlord, without any setoff or deduction, unless expressly set forth
in this Lease, all Base Rent and Additional Rent due for the Term (collectively referred to as
“Rent”). “Additional Rent” means all sums (exclusive of Base Rent) that Tenant is required to pay
Landlord under this Lease. Tenant shall pay and be liable for all rental, sales and use taxes (but
excluding income taxes), if any, imposed upon or measured by Rent. Base Rent and recurring monthly
charges of Additional Rent shall be due and payable in advance on the first day of each calendar
month without notice or demand. All other items of Rent shall be due and payable by Tenant on or
before 30 days after billing by Landlord. Rent shall be made payable to the entity, and sent to
the address, Landlord designates and shall be made by good and sufficient check or by other means
acceptable to Landlord. Tenant shall pay Landlord an administration fee equal to 5% of all past
due Rent, provided that Tenant shall be entitled to a grace period of 5 days for the first 2 late
payments of Rent in a calendar year. In addition, past due Rent shall accrue interest at 8% per
annum. Landlord’s acceptance of less than the correct amount of Rent shall be considered a payment
on account of the earliest Rent due. Rent for any partial month during the Term shall be prorated.
No endorsement or statement on a check or letter accompanying payment shall be considered an accord
and satisfaction. Tenant’s covenant to pay Rent is independent of every other covenant in this
Lease.



     4.02 Tenant shall pay Tenant’s Pro Rata Share of Taxes and Expenses in accordance with
Exhibit B of this Lease.



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	5.	 	Compliance with Laws; Use.





     The Premises shall be used for the Permitted Use and for no other use whatsoever. Tenant shall
comply with all statutes, codes, ordinances, orders, rules and regulations of any municipal or
governmental entity whether in effect now or later, including the Americans with Disabilities Act
(“Law(s)”), regarding the operation of Tenant’s business and the use, condition, configuration and
occupancy of the Premises. In addition, Tenant shall, at its sole cost and expense, promptly comply
with any Laws that relate to the “Base Building” (defined below), but only to the extent such
obligations are triggered by Tenant’s use of the Premises, other than for general office use, or
Alterations or improvements in the Premises performed or requested by Tenant. “Base Building”
shall include the structural portions of the Building, the public restrooms and the Building
mechanical, electrical and plumbing systems and equipment located in the internal core of the
Building on the floor or floors on which the Premises are located. Tenant shall promptly provide
Landlord with copies of any notices it receives regarding an alleged violation of Law. Tenant
shall comply with the rules and regulations of the Building attached as Exhibit E and such other
reasonable rules and regulations adopted by Landlord from time to time, including rules and
regulations for the performance of Alterations (defined in Section 9).




	6.	 	Security Deposit.





     The Security Deposit shall be delivered to Landlord upon the Commencement Date and held by
Landlord without liability for interest (unless required by Law) as security for the performance of
Tenant’s obligations. The Security Deposit is not an advance payment of Rent or a measure of
damages. Landlord may use all or a portion of the Security Deposit to satisfy past due Rent, to
cure any Default (defined in Section 18) by Tenant, or to satisfy any other loss or damage
resulting from Tenant’s Default as provided in Section 19. If Landlord uses any portion of the
Security Deposit, Tenant shall, within 15 days after demand, restore the Security Deposit to its
original amount. Landlord shall return any unapplied portion of the Security Deposit to Tenant
within 45 days after the later to occur of: (a) determination of the final Rent due from Tenant; or
(b) the later to occur of the Termination Date or the date Tenant surrenders the Premises to
Landlord in compliance with Section 25. Landlord may assign the Security Deposit to a successor or
transferee and, following the assignment, Landlord shall have no further liability for the return
of the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from
its other accounts. Tenant hereby waives the provisions of Section 1950.7 of the California Civil
Code, or any similar or successor Laws now or hereinafter in effect.




	7.	 	Building Services.





     7.01 Landlord shall furnish Tenant with the following services: (a) water for use in the Base
Building lavatories; (b) customary heat and air conditioning in season during Building Service
Hours, although Tenant shall have the right to receive HVAC service during hours other than
Building Service Hours by paying Landlord’s then standard charge for additional HVAC service and
providing such prior notice as is reasonably specified by Landlord; (c) standard janitorial service
on Business Days; (d) electricity in accordance with the terms and conditions in Section 7.02; (e)
access to the Building for Tenant and its employees 24 hours per day/7 days per week, subject to
the terms of this Lease and such protective services or monitoring systems, if any, as Landlord may
reasonably impose, including, without limitation, sign-in procedures and/or presentation of
identification cards; and (f) such other services as Landlord reasonably determines are necessary
or appropriate for the Property. As of the date hereof, Landlord’s charge for after hours heating
and air conditioning service is $47.00 per hour, which amount is representative of Landlord’s
actual cost of providing after hours heating and air conditioning service (taking into
consideration (i) depreciation of the equipment used in connection therewith and (ii) as a result
of certain services being separately metered, those costs that Tenant has or will pay for such
after hours heating and air conditioning service) and which cost is subject to change from time to
time.



     7.02 Electricity used by Tenant in the Premises shall, at Landlord’s option, be paid for by
Tenant either: (a) through inclusion in Expenses (except as provided for excess usage); (b) by a
separate charge payable by Tenant to Landlord; or (c) by separate charge billed by the applicable
utility company and payable directly by Tenant. Without the consent of Landlord, Tenant’s use of
electrical service shall not exceed, either in voltage, rated capacity, use beyond Building Service
Hours or overall load, that which Landlord reasonably deems to be standard for the Building.
Landlord shall have the right to measure electrical usage by commonly accepted methods, including
the installation of measuring devices such as submeters and check meters.



     7.03 Landlord’s failure to furnish, or any interruption, diminishment or termination of
services due to the application of Laws, the failure of any equipment, the performance of repairs,
improvements or alterations, utility interruptions or the occurrence of an event of Force Majeure
(defined in Section 26.03) (collectively a “Service Failure”) shall not render Landlord liable to
Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, nor
relieve Tenant from the obligation to fulfill any covenant or agreement. However, if the Premises,
or a material portion of the Premises, are made untenantable for a period in excess of 3
consecutive Business Days as a result of a Service Failure that is reasonably within the control of
Landlord to correct, then Tenant, as its sole remedy, shall be entitled to receive an abatement of
Rent payable hereunder during the period beginning on the 4th consecutive Business Day
of the Service Failure and ending on the day the service has been restored. If the entire Premises
have not been rendered untenantable by the Service Failure, the amount of abatement shall be
equitably prorated.



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	8.	 	Leasehold Improvements.





     All improvements in and to the Premises, including any Alterations (defined in Section 9.03)
(collectively, “Leasehold Improvements”) shall remain upon the Premises at the end of the Term
without compensation to Tenant, provided that Tenant, at its expense, in compliance with the
National Electric Code or other applicable Law, shall remove any Cable (defined in Section 9.01
below). In addition, Landlord, by written notice to Tenant at least 30 days prior to the
Termination Date, may require Tenant, at its expense, to remove any improvements or other
Alterations that are installed after the execution date of this Lease pursuant to the terms of this
Lease or otherwise and are, in Landlord’s reasonable judgment, of a nature that would require
removal and repair costs that are materially in excess of the removal and repair costs associated
with standard office improvements (the Cable and such other items collectively are referred to as
“Required Removables”). Required Removables shall include, without limitation, internal stairways,
raised floors, personal baths and showers, vaults, rolling file systems and structural alterations
and modifications. The Required Removables shall be removed by Tenant before the Termination Date.
Tenant shall repair damage caused by the installation or removal of Required Removables. If Tenant
fails to perform its obligations in a timely manner, Landlord may perform such work at Tenant’s
expense. Tenant, at the time it requests approval for a proposed Alteration or other improvement,
including any Initial Alterations, as such term is defined in the Work Letter attached as Exhibit
C, may request in writing that Landlord advise Tenant whether the Alteration or other improvement,
including any Initial Alterations, or any portion thereof, is a Required Removable. Within 10 days
after receipt of Tenant’s request, Landlord shall advise Tenant in writing as to which portions of
the alteration or other improvements are Required Removables.




	9.	 	Repairs and Alterations.





     9.01 Tenant shall promptly provide Landlord with notice of any conditions that are Landlord’s
responsibility to repair and maintain hereunder. Tenant shall, at its sole cost and expense,
perform all maintenance and repairs to the Premises that are not Landlord’s express responsibility
under this Lease, and keep the Premises in good condition and repair, reasonable wear and tear
excepted. Tenant’s repair and maintenance obligations include, without limitation, repairs to: (a)
floor covering; (b) interior partitions; (c) doors; (d) the interior side of demising walls; (e)
electronic, fiber, phone and data cabling and related equipment that is installed by or for the
exclusive benefit of Tenant, whether installed after the execution date of this Lease pursuant to
the terms of this Lease or otherwise (collectively, “Cable”); (f) supplemental air conditioning
units, kitchens, including hot water heaters, plumbing, and similar facilities exclusively serving
Tenant; and (g) Alterations. Subject to the terms of Section 15 below, to the extent Landlord is
not reimbursed by insurance proceeds, Tenant shall reimburse Landlord for the cost of repairing
damage to the Building caused by the acts of Tenant, Tenant Related Parties and their respective
contractors and vendors. If Tenant fails to make any repairs to the Premises for more than 15 days
after written notice from Landlord (although notice shall not be required in an emergency),
Landlord may make the repairs, and Tenant shall pay the reasonable cost of the repairs, together
with an administrative charge in an amount equal to either 7% of the cost of the repairs if the
cost is equal to or less than $100,000.00 or 4% of the cost of the repairs if the cost is greater
than $100,000.00.



     9.02 Landlord shall keep and maintain in good repair and working order and perform
maintenance upon the: (a) structural elements of the Building; (b) mechanical (including HVAC),
electrical, plumbing and fire/life safety systems serving the Building in general; (c) Common
Areas; (d) roof of the Building; (e) exterior windows of the Building; and (f) elevators serving
the Building. Landlord shall promptly make repairs for which Landlord is responsible. Tenant hereby
waives any and all rights under and benefits of subsection 1 of Section 1932, and Sections 1941 and
1942 of the California Civil Code, or any similar or successor Laws now or hereinafter in effect.
Subject to the limitation set forth herein below in this Section 9.02, in the case of fire, other
casualty or condemnation (in which case Sections 16 and 17 of the Lease will control) and in
addition to, and not in lieu or reduction of, Tenant’s rights and remedies hereunder, if Tenant
provides notice (the “Repair Notice”) to Landlord of an event or circumstance which pursuant to the
terms of this Section 9.02 that requires Landlord to repair and/or maintain the Premises (a
“Required Action”), and Landlord fails to provide the Required Action within the time period
required by this Lease, or a reasonable period of time, if no specific time period is specified
herein, after the receipt of the Repair Notice (the “Notice Date”), or, in any event, does not
commence the Required Action within 15 Business Days after the Notice Date (provided that, unless
specifically provided to the contrary herein, if the nature of the Required Action is such that the
same cannot reasonably be completed within a 30 day period, Landlord’s time period for completion
shall not be deemed to have expired if Landlord diligently commences such cure within such 15
Business Day period and thereafter diligently proceeds to rectify and complete the Required Action,
as soon as possible), then Tenant may (but shall not be obligated to) proceed to take the Required
Action, pursuant to the terms of this Lease, and shall deliver a second notice to Landlord
specifying that Tenant is about to take the Required Action (the “Second Notice”). Tenant shall
not be permitted to take any Required Action if it is outside of the Premises or otherwise involves
or effects the Building systems or structure, the Common Areas of the Building, the structural
integrity of the Building, the exterior appearance of the Building, or any other tenant’s leased
space. If, within 30 days after receipt of Tenant’s written demand for payment of Tenant’s costs
incurred in taking the Required Action (including a reasonably particular statement of such costs),
Landlord has not paid the amount of the invoice or delivered to Tenant a detailed written objection
to it, Tenant may deduct from Rent payable by Tenant under the Lease the amount set forth in the
invoice. Tenant shall not be entitled to this deduction from Rent, however, if within 30 days
after receipt of Tenant’s invoice, Landlord, in good faith, delivers to Tenant a written objection
to its payment, setting forth with reasonable particularity Landlord’s reasons for its claim that
Landlord did not have to take all or some of the Required Actions under the terms of the Lease or
that the charges were excessive (in which case the Landlord shall pay



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the amount it contends would not have been excessive). If Landlord and Tenant are unable to
resolve this disagreement, Tenant’s sole remedy shall be to institute legal proceedings against
Landlord to collect the amount set forth in Tenant’s invoice.



     9.03 Tenant shall not make alterations, repairs, additions or improvements or install any
Cable (collectively referred to as “Alterations”) without first obtaining the written consent of
Landlord in each instance, which consent shall not be unreasonably withheld or delayed. However,
Landlord’s consent shall not be required for any Alteration that satisfies all of the following
criteria (a “Cosmetic Alteration”): (x) (a) is of a cosmetic nature such as painting,
wallpapering, hanging pictures and installing carpeting; (b) is not visible from the exterior of
the Premises or Building; (c) will not affect the Base Building; and (d) does not require work to
be performed inside the walls or above the ceiling of the Premises or (y) (a) will not affect the
Base Building, and (b) the cost of which will not exceed $100,000.00. Cosmetic Alterations shall
be subject to all the other provisions of this Section 9.03. Prior to starting work, Tenant shall
furnish Landlord with plans and specifications; names of contractors reasonably acceptable to
Landlord (provided that Landlord may designate specific contractors with respect to Base Building);
required permits and approvals; evidence of contractor’s and subcontractor’s insurance in amounts
reasonably required by Landlord and naming Landlord as an additional insured; and any security for
performance in amounts reasonably required by Landlord. Changes to the plans and specifications
must also be submitted to Landlord for its approval. Alterations shall be constructed in a good and
workmanlike manner using materials of a quality reasonably approved by Landlord. Tenant shall
reimburse Landlord for any sums paid by Landlord for third party examination of Tenant’s plans for
non-Cosmetic Alterations. In addition, Tenant shall pay Landlord a fee for Landlord’s oversight
and coordination of any non-Cosmetic Alterations equal to either 7% of the cost of the non-Cosmetic
Alterations if the cost is equal to or less than $100,000.00 or 4% of the cost of the non-Cosmetic
Alterations if the cost is greater than $100,000.00. Upon completion, Tenant shall furnish
“as-built” plans for non-Cosmetic Alterations, completion affidavits and full and final waivers of
lien. Landlord’s approval of an Alteration shall not be deemed a representation by Landlord that
the Alteration complies with Law.




	10.	 	Entry by Landlord.





     Landlord may enter the Premises to inspect, show or clean the Premises or to perform or
facilitate the performance of repairs, alterations or additions to the Premises or any portion of
the Building. Except in emergencies or to provide Building services, Landlord shall provide Tenant
with reasonable prior verbal notice of entry and shall use reasonable efforts to minimize any
interference with Tenant’s use of the Premises. If reasonably necessary, Landlord may temporarily
close all or a portion of the Premises to perform repairs, alterations and additions. However,
except in emergencies, Landlord will not close the Premises if the work can reasonably be completed
on weekends and after Building Service Hours. Entry by Landlord shall not constitute a
constructive eviction or entitle Tenant to an abatement or reduction of Rent.




	11.	 	Assignment and Subletting.





     11.01 Except in connection with a Permitted Transfer (defined in Section 11.04), Tenant shall
not assign, sublease, transfer or encumber any interest in this Lease or allow any third party to
use any portion of the Premises (collectively or individually, a “Transfer”) without the prior
written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed if Landlord does not exercise its recapture rights under Section 11.02. If the entity(ies)
which directly or indirectly controls the voting shares/rights of Tenant changes at any time, such
change of ownership or control shall constitute a Transfer unless Tenant is an entity whose
outstanding stock is listed on a recognized securities exchange or if at least 80% of its voting
stock is owned by another entity, the voting stock of which is so listed. Tenant hereby waives the
provisions of Section 1995.310 of the California Civil Code, or any similar or successor Laws, now
or hereinafter in effect, and all other remedies, including, without limitation, any right at law
or equity to terminate this Lease, on its own behalf and, to the extent permitted under all
applicable Laws, on behalf of the proposed transferee. Any Transfer in violation of this Section
shall, at Landlord’s option, be deemed a Default by Tenant as described in Section 18, and shall be
voidable by Landlord. In no event shall any Transfer, including a Permitted Transfer, release or
relieve Tenant from any obligation under this Lease.



     11.02 Tenant shall provide Landlord with financial statements for the proposed transferee, a
fully executed copy of the proposed assignment, sublease or other Transfer documentation and such
other information as Landlord may reasonably request. Within 15 Business Days after receipt of the
required information and documentation, Landlord shall either: (a) consent to the Transfer by
execution of a consent agreement in a form reasonably designated by Landlord; (b) reasonably refuse
to consent to the Transfer in writing; or (c) in the event of an assignment of this Lease or
subletting of more than 20% of the Rentable Square Footage of the Premises for more than 50% of the
remaining Term (excluding unexercised options), recapture the portion of the Premises that Tenant
is proposing to Transfer. If Landlord exercises its right to recapture, this Lease shall
automatically be amended (or terminated if the entire Premises is being assigned or sublet) to
delete the applicable portion of the Premises effective on the proposed effective date of the
Transfer, although Landlord may require Tenant to execute a reasonable amendment or other document
reflecting such reduction or termination. Tenant shall pay Landlord a review fee of $1,500.00 for
Landlord’s review of any Permitted Transfer or requested Transfer. Notwithstanding the above, if
Landlord would be entitled to terminate this Lease with respect to all or any portion of the
Premises in connection with a proposed Transfer, Tenant, prior to entering into a sublease or
assignment, shall have the right to advise Landlord (the “Prior Notice”) of its intention to sublet
the Premises or assign this Lease. In the Prior Notice, Tenant shall describe whether Tenant
intends to



6









 







assign its interest under the Lease or whether Tenant intends to sublease all or a portion of
the Premises (and the portion of the Premises Tenant intends to sublease), and the expected
effective date of the proposed assignment or sublease. Landlord, by providing notice within 15
days after receipt of the Prior Notice, shall have the right to terminate this Lease, effective as
of the effective date set forth in the Prior Notice, with respect to the Premises, if Tenant
intends to assign its interest under the Lease, or with respect to the space that Tenant intends to
sublet if Tenant intends to sublease all or a portion of the Premises. Notwithstanding the
foregoing provisions of this Section 11, if Landlord has a right to recapture or terminate this
Lease with respect to all or a portion of the Premises as a result of a proposed Transfer and/or
delivery of a Prior Notice, and if Landlord fails to exercise such right with respect thereto, then
Landlord shall no longer have such recapture or termination right with respect to that portion of
the Premises that was the subject of the proposed Transfer or Prior Notice.



     11.03 Tenant shall pay Landlord 50% of all rent and other consideration which Tenant receives
as a result of a Transfer that is in excess of the Rent payable to Landlord for the portion of the
Premises and Term covered by the Transfer. Tenant shall pay Landlord for Landlord’s share of the
excess within 30 days after Tenant’s receipt of the excess. Tenant may deduct from the excess, on
a straight-line basis, all reasonable and customary expenses directly incurred by Tenant
attributable to the Transfer. If Tenant is in Default, Landlord may require that all sublease
payments be made directly to Landlord, in which case Tenant shall receive a credit against Rent in
the amount of Tenant’s share of payments received by Landlord.



     11.04 Tenant may assign this Lease to a successor to Tenant by purchase, merger, consolidation
or reorganization (an “Ownership Change”) or assign this Lease or sublet all or a portion of the
Premises to an Affiliate without the consent of Landlord, provided that all of the following
conditions are satisfied (a “Permitted Transfer”): (a) Tenant is not in Default; (b) in the event
of an Ownership Change, Tenant’s successor shall own substantially all of the assets of Tenant and
have a net worth which is at least equal to Tenant’s net worth as of the day prior to the proposed
Ownership Change, or in the event of a Transfer to an Affiliate (defined below), Tenant continues
to have a net worth equal to or greater than Tenant’s net worth at the date of this Lease or the
Affiliate has a net worth equal to Tenant’s net worth at the date of this Lease; (c) the Permitted
Use does not allow the Premises to be used for retail purposes; and (d) Tenant shall give Landlord
written notice at least 15 Business Days prior to the effective date of the Permitted Transfer.
Tenant’s notice to Landlord shall include information and documentation evidencing the Permitted
Transfer and showing that each of the above conditions has been satisfied. If requested by
Landlord, Tenant’s successor shall sign a commercially reasonable form of assumption agreement.
“Affiliate” shall mean an entity controlled by, controlling or under common control with Tenant.




	12.	 	Liens.





     Tenant shall not permit mechanics’ or other liens to be placed upon the Property, Premises or
Tenant’s leasehold interest in connection with any work or service done or purportedly done by or
for the benefit of Tenant or its transferees. Tenant shall give Landlord notice at least 15 days
prior to the commencement of any work in the Premises to afford Landlord the opportunity, where
applicable, to post and record notices of non-responsibility. Tenant, within 10 days of notice
from Landlord, shall fully discharge any lien by settlement, by bonding or by insuring over the
lien in the manner prescribed by the applicable lien Law and, if Tenant fails to do so, Tenant
shall be deemed in Default under this Lease and, in addition to any other remedies available to
Landlord as a result of such Default by Tenant, Landlord, at its option, may bond, insure over or
otherwise discharge the lien. Tenant shall reimburse Landlord for any amount paid by Landlord,
including, without limitation, reasonable attorneys’ fees.




	13.	 	Indemnity and Waiver of Claims.





     Except to the extent caused by the negligence or willful misconduct of Landlord or any
Landlord Related Parties (defined below), Tenant shall indemnify, defend and hold Landlord and
Landlord Related Parties harmless against and from all liabilities, obligations, damages,
penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable
attorneys’ fees and other professional fees (if and to the extent permitted by Law) (collectively
referred to as “Losses”), which may be imposed upon, incurred by or asserted against Landlord or
any of the Landlord Related Parties by any third party and arising out of or in connection with any
damage or injury occurring in the Premises during the Term hereof or any acts or omissions
(including violations of Law) of Tenant, the Tenant Related Parties (defined below) or any of
Tenant’s transferees, contractors or licensees during the Term hereof. Except to the extent caused
by the negligence or willful misconduct of Tenant or any Tenant Related Parties, Landlord shall
indemnify, defend and hold Tenant, its trustees, members, principals, beneficiaries, partners,
officers, directors, employees and agents (“Tenant Related Parties”) harmless against and from all
Losses which may be imposed upon, incurred by or asserted against Tenant or any of the Tenant
Related Parties by any third party and arising out of or in connection with the acts or omissions
(including violations of Law) of Landlord or the Landlord Related Parties. Tenant hereby waives
all claims against and releases Landlord and its trustees, members, principals, beneficiaries,
partners, officers, directors, employees, Mortgagees (defined in Section 23) and agents (the
“Landlord Related Parties”) from all claims for any injury to or death of persons, damage to
property or business loss in any manner related to (a) Force Majeure, (b) acts of third parties,
(c) the bursting or leaking of any tank, water closet, drain or other pipe, (d) the inadequacy or
failure of any security or protective services, personnel or equipment, or (e) any matter not
within the reasonable control of Landlord and/or Landlord Related Parties.



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	14.	 	Insurance.





     Tenant shall maintain the following insurance (“Tenant’s Insurance”): (a) Commercial General
Liability Insurance applicable to the Premises and its appurtenances providing, on an occurrence
basis, a minimum combined single limit of $2,000,000.00; (b) Property/Business Interruption
Insurance written on an All Risk or Special Cause of Loss Form, including earthquake sprinkler
leakage, at replacement cost value and with a replacement cost endorsement covering all of Tenant’s
business and trade fixtures, equipment, movable partitions, furniture, merchandise and other
personal property within the Premises (“Tenant’s Property”) and any Leasehold Improvements
performed by or for the benefit of Tenant whether pursuant to this Lease or otherwise; (c) Workers’
Compensation Insurance in amounts required by Law; and (d) Employers Liability Coverage of at least
$1,000,000.00 per occurrence. Any company writing Tenant’s Insurance shall have an A.M. Best
rating of not less than A-VIII; provided, however, that Tenant’s Worker’s Compensation Insurance
may be issued by the California State Compensation Fund. All Commercial General Liability
Insurance policies shall name as additional insureds Landlord (or its successors and assignees),
the managing agent for the Building (or any successor), EOP Operating Limited Partnership, Equity
Office Properties Trust and their respective members, principals, beneficiaries, partners,
officers, directors, employees, and agents, and other designees of Landlord and its successors as
the interest of such designees shall appear. In addition, Landlord shall be named as a loss payee
with respect to Property/Business Interruption Insurance on the Leasehold Improvements. All
policies of Tenant’s Insurance shall contain endorsements that the insurer(s) shall give Landlord
and its designees at least 30 days’ advance written notice of any cancellation, termination,
material change or lapse of insurance. Tenant shall provide Landlord with a certificate of
insurance evidencing Tenant’s Insurance prior to the earlier to occur of the Commencement Date or
the date Tenant is provided with possession of the Premises, and thereafter as necessary to assure
that Landlord always has current certificates evidencing Tenant’s Insurance. So long as the
coverage afforded Landlord, the other additional insureds and any designees of Landlord shall not
be reduced or otherwise adversely affected, all or part of Tenant’s insurance may be carried under
a blanket policy covering the Premises and any other of Tenant’s locations, or by means of a so
called “Umbrella” policy. So long as the same is available at commercially reasonable rates,
Landlord shall maintain so called All Risk property insurance on the Building at replacement cost
value as reasonably estimated by Landlord, together with such other insurance coverage as Landlord,
in its reasonable judgment, may elect to maintain.




	15.	 	Subrogation.





     Landlord and Tenant hereby waive and shall cause their respective insurance carriers to waive
any and all rights of recovery, claims, actions or causes of action against the other for any loss
or damage with respect to Tenant’s Property, Leasehold Improvements, the Building, the Premises, or
any contents thereof, including rights, claims, actions and causes of action based on negligence,
which loss or damage is (or would have been, had the insurance required by this Lease been carried)
covered by insurance. For the purposes of this waiver, any deductible with respect to a party’s
insurance shall be deemed covered by and recoverable by such party under valid and collectable
policies of insurance.




	16.	 	Casualty Damage.





     16.01 If all or any portion of the Premises becomes untenantable by fire or other casualty to
the Premises (collectively a “Casualty”), Landlord, with reasonable promptness, shall cause a
general contractor selected by Landlord to provide Landlord and Tenant with a written estimate of
the amount of time required using standard working methods to Substantially Complete the repair and
restoration of the Premises and any Common Areas necessary to provide access to the Premises
(“Completion Estimate”). If the Completion Estimate indicates that the Premises or any Common
Areas necessary to provide access to the Premises cannot be made tenantable within 270 days from
the date the repair is started, then either party shall have the right to terminate this Lease upon
written notice to the other within 10 days after receipt of the Completion Estimate. In addition,
Landlord, by notice to Tenant within 90 days after the date of the Casualty, shall have the right
to terminate this Lease if: (1) the Premises have been materially damaged and there is less than
2 years of the Term remaining on the date of the Casualty; (2) any Mortgagee requires that the
insurance proceeds be applied to the payment of the mortgage debt; or (3) a material uninsured loss
to the Building or Premises occurs. In addition, Tenant shall have the right to terminate this
Lease if: (a) a substantial portion of the Premises has been damaged by fire or other Casualty and
such damage cannot reasonably be repaired within 60 days after the Casualty; (b) there is less than
1 year of the Term remaining on the date of such Casualty; and (c) Tenant provides Landlord with
written notice of its intent to terminate within 30 days after the date of the fire or other
Casualty.



     16.02 If this Lease is not terminated, Landlord shall promptly and diligently, subject to
reasonable delays for insurance adjustment or other matters beyond Landlord’s reasonable control,
restore the Premises and Common Areas. Such restoration shall be to substantially the same
condition that existed prior to the Casualty, except for modifications required by Law or any other
modifications to the Common Areas deemed desirable by Landlord. Upon notice from Landlord, Tenant
shall assign or endorse over to Landlord (or to any party designated by Landlord) all property
insurance proceeds payable to Tenant under Tenant’s Insurance with respect to any Leasehold
Improvements performed by or for the benefit of Tenant; provided if the estimated cost to repair
such Leasehold Improvements exceeds the amount of insurance proceeds received by Landlord from
Tenant’s insurance carrier, the excess cost of such repairs shall be paid by Tenant to Landlord
prior to Landlord’s commencement of repairs. Within 15 days of demand, Tenant shall also pay
Landlord for any additional excess costs that are determined during the performance of the repairs.
In no event shall Landlord be required to spend more for the restoration than



8









 






	 	 	the Landlord’s and Tenant’s insurance proceeds received by Landlord, the Landlord’s
deductibles on its insurance, and other proceeds received by Landlord. Landlord shall not be
liable for any inconvenience to Tenant, or injury to Tenant’s business resulting in any way from
the Casualty or the repair thereof. Provided that Tenant is not in Default, during any period of
time that all or a material portion of the Premises is rendered untenantable as a result of a
Casualty, the Rent shall abate for the portion of the Premises that is untenantable and not used by
Tenant.






     16.03 The provisions of this Lease, including this Section 16, constitute an express
agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all
or any part of the Premises or the Property, and any Laws, including, without limitation, Sections
1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between the parties, and
any similar or successor Laws now or hereinafter in effect, shall have no application to this Lease
or any damage or destruction to all or any part of the Premises or the Property.




	 	17.	 	Condemnation.






     Either party may terminate this Lease if any material part of the Premises is taken or
condemned for any public or quasi-public use under Law, by eminent domain or private purchase in
lieu thereof (a “Taking”). Landlord shall also have the right to terminate this Lease if there is
a Taking of any portion of the Building or Property which would have a material adverse effect on
Landlord’s ability to profitably operate the remainder of the Building. Tenant shall also have a
right to terminate this Lease if there is a Taking of any portion of the Building or Property that
has a material adverse impact on Tenant’s operations at the Premises. The terminating party shall
provide written notice of termination to the other party within 45 days after it first receives
notice of the Taking. The termination shall be effective as of the effective date of any order
granting possession to, or vesting legal title in, the condemning authority. If this Lease is not
terminated, Base Rent and Tenant’s Pro Rata Share shall be appropriately adjusted to account for
any reduction in the square footage of the Building or Premises. All compensation awarded for a
Taking shall be the property of Landlord. The right to receive compensation or proceeds are
expressly waived by Tenant, however, Tenant may file a separate claim for Tenant’s Property and
Tenant’s reasonable relocation expenses, provided the filing of the claim does not diminish the
amount of Landlord’s award. If only a part of the Premises is subject to a Taking and this Lease
is not terminated, Landlord, with reasonable diligence, will restore the remaining portion of the
Premises as nearly as practicable to the condition immediately prior to the Taking. Tenant hereby
waives any and all rights it might otherwise have pursuant to Section 1265.130 of the California
Code of Civil Procedure, or any similar or successor Laws.




	 	18.	 	Events of Default.






     In addition to any other default specifically described in this Lease, each of the following
occurrences shall be a “Default”: (a) Tenant’s failure to pay any portion of Rent when due, if the
failure continues for 5 days after written notice to Tenant (“Monetary Default”); (b) Tenant’s
failure (other than a Monetary Default) to comply with any term, provision, condition or covenant
of this Lease, if the failure is not cured within 10 Business Days after written notice to Tenant
provided, however, if Tenant’s failure to comply cannot reasonably be cured within 10 Business
Days, Tenant shall be allowed additional time (not to exceed 60 days) as is reasonably necessary to
cure the failure so long as Tenant begins the cure within 10 Business Days and diligently pursues
the cure to completion; (c) Tenant permits a Transfer without Landlord’s required approval or
otherwise in violation of Section 11 of this Lease; (d) Tenant or the Guarantor, if any, becomes
insolvent, makes a transfer in fraud of creditors, makes an assignment for the benefit of
creditors, admits in writing its inability to pay its debts when due or forfeits or loses its right
to conduct business; (e) the appointment of a receiver or trustee to take possession of the
Tenant’s interest in the Lease, or the execution or other judicially authorized seizure of Tenant’s
interest in the Lease; (f) in the case of any ground floor or retail Tenant, Tenant does not take
possession of or abandons the Premises; or (g) Tenant is in default beyond any notice and cure
period under any other lease or agreement with Landlord at the Building or Property. If Landlord
provides Tenant with notice of Tenant’s failure to comply with any specific provision of this Lease
on 3 separate occasions during any 12 month period (and Landlord provides Tenant with written
notice after the 3rd occurrence that a subsequent violation of the same provision shall
be a Default hereunder pursuant to this Section 18), then Tenant’s subsequent violation of such
provision shall, at Landlord’s option, be an incurable Default by Tenant. All notices sent under
this Section shall be in satisfaction of, and not in addition to, notice required by Law.




	 	19.	 	Remedies.






     19.01 Upon the occurrence of any Default under this Lease, whether enumerated in Section 18
or not, Landlord shall have the option to pursue any one or more of the following remedies without
any notice (except as expressly prescribed herein) or demand whatsoever (and without limiting the
generality of the foregoing, Tenant hereby specifically waives notice and demand for payment of
Rent or other obligations, except for those notices specifically required pursuant to the terms of
Section 18 or this Section 19, and waives any and all other notices or demand requirements imposed
by applicable law):


(a) Terminate this Lease and Tenant’s right to possession of the Premises and recover from Tenant
an award of damages equal to the sum of the following:





	 	(i)	 	The Worth at the Time of Award of the unpaid Rent which had
been earned at the time of termination;




9









 






	 	(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 Rent loss that Tenant affirmatively 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 Rent loss that Tenant affirmatively proves could be reasonably
avoided;
	 
	 	(iv)	 	Any other amount necessary to compensate Landlord for all the
detriment either proximately caused by Tenant’s failure to perform Tenant’s
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom; and
	 
	 	(v)	 	All such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time under applicable law.






	 	 	 	The “Worth at the Time of Award” of the amounts referred to in parts (i) and (ii)
above, shall be computed by allowing interest at the lesser of a per annum rate
equal to: (A) the greatest per annum rate of interest permitted from time to time
under applicable law, or (B) the Prime Rate plus 5%. For purposes hereof, the
“Prime Rate” shall be the per annum interest rate publicly announced as its prime or
base rate by a federally insured bank selected by Landlord in the State of
California. The “Worth at the Time of Award” of the amount referred to in part
(iii), above, shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award plus 1%;






	 	(b)	 	Employ the remedy described in California Civil Code § 1951.4 (Landlord may
continue this Lease in effect after Tenant’s breach and abandonment and recover Rent as
it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable
limitations); or
	 
	 	(c)	 	Notwithstanding Landlord’s exercise of the remedy described in California Civil
Code § 1951.4 in respect of an event or events of default, at such time thereafter as
Landlord may elect in writing, to terminate this Lease and Tenant’s right to possession
of the Premises and recover an award of damages as provided above in Paragraph
19.01(a).





     19.02 The subsequent acceptance of Rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other
than the failure of Tenant to pay the particular Rent so accepted, regardless of Landlord’s
knowledge of such preceding breach at the time of acceptance of such Rent. No waiver by Landlord
of any breach hereof shall be effective unless such waiver is in writing and signed by Landlord.



     19.03 TENANT HEREBY WAIVES ANY AND ALL RIGHTS CONFERRED BY SECTION 3275 OF THE CIVIL CODE OF
CALIFORNIA AND BY SECTIONS 1174 (c) AND 1179 OF THE CODE OF CIVIL PROCEDURE OF CALIFORNIA AND ANY
AND ALL OTHER LAWS AND RULES OF LAW FROM TIME TO TIME IN EFFECT DURING THE LEASE TERM PROVIDING
THAT TENANT SHALL HAVE ANY RIGHT TO REDEEM, REINSTATE OR RESTORE THIS LEASE FOLLOWING ITS
TERMINATION BY REASON OF TENANT’S BREACH. TENANT ALSO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
LEASE.



     19.04 No right or remedy herein conferred upon or reserved to Landlord is intended to be
exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and
in addition to any other right or remedy given hereunder or now or hereafter existing by agreement,
applicable law or in equity. In addition to other remedies provided in this Lease, Landlord shall
be entitled, to the extent permitted by applicable law, to injunctive relief, or to a decree
compelling performance of any of the covenants, agreements, conditions or provisions of this Lease,
or to any other remedy allowed to Landlord at law or in equity. Forbearance by Landlord to enforce
one or more of the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default.



     19.05 If Tenant is in Default of any of its non-monetary obligations under the Lease,
Landlord shall have the right to perform such obligations. Tenant shall reimburse Landlord for the
cost of such performance upon demand together with an administrative charge equal to 10% of the
cost of the work performed by Landlord.



     19.06 This Section 19 shall be enforceable to the maximum extent such enforcement is not
prohibited by applicable law, and the unenforceability of any portion thereof shall not thereby
render unenforceable any other portion.




	20.	 	Limitation of Liability.





     NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD
(AND OF ANY SUCCESSOR LANDLORD) SHALL BE LIMITED TO THE



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LESSER OF (A) THE INTEREST OF LANDLORD IN THE PROPERTY, OR (B) THE EQUITY INTEREST LANDLORD
WOULD HAVE IN THE PROPERTY IF THE PROPERTY WERE ENCUMBERED BY THIRD PARTY DEBT IN AN AMOUNT EQUAL
TO 70% OF THE VALUE OF THE PROPERTY. TENANT SHALL LOOK SOLELY TO LANDLORD’S INTEREST IN THE
PROPERTY FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST LANDLORD OR ANY LANDLORD RELATED PARTY.
NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE PERSONALLY LIABLE FOR ANY JUDGMENT OR
DEFICIENCY, AND IN NO EVENT SHALL LANDLORD OR ANY LANDLORD RELATED PARTY BE LIABLE TO TENANT FOR
ANY LOST PROFIT, DAMAGE TO OR LOSS OF BUSINESS OR ANY FORM OF SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGE. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE
MORTGAGEE(S) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES (DEFINED IN SECTION 23 BELOW), NOTICE AND
REASONABLE TIME TO CURE THE ALLEGED DEFAULT.




	21.	 	Relocation. Intentionally Omitted.






	22.	 	Holding Over.





     If Tenant fails to surrender all or any part of the Premises at the termination of this Lease,
occupancy of the Premises after termination shall be that of a tenancy at sufferance. Tenant’s
occupancy shall be subject to all the terms and provisions of this Lease, and Tenant shall pay an
amount (on a prorated per day basis) equal to 150% of the sum of the Base Rent and Additional Rent
due for the period immediately preceding the holdover. No holdover by Tenant or payment by Tenant
after the termination of this Lease shall be construed to extend the Term or prevent Landlord from
immediate recovery of possession of the Premises by summary proceedings or otherwise. If Landlord
is unable to deliver possession of the Premises to a new tenant or to perform improvements for a
new tenant as a result of Tenant’s holdover and Tenant fails to vacate the Premises within 15 days
after notice from Landlord, Tenant shall be liable for all damages that Landlord suffers from the
holdover.




	23.	 	Subordination to Mortgages; Estoppel Certificate.





     Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of trust, ground
lease(s) or other lien(s) now or subsequently arising upon the Premises, the Building or the
Property, and to renewals, modifications, refinancings and extensions thereof (collectively
referred to as a “Mortgage”). The party having the benefit of a Mortgage shall be referred to as a
“Mortgagee”. This clause shall be self-operative, but upon request from a Mortgagee, Tenant shall
execute a commercially reasonable subordination agreement in favor of the Mortgagee. As an
alternative, a Mortgagee shall have the right at any time to subordinate its Mortgage to this
Lease. Upon request, Tenant, without charge, shall attorn to any successor to Landlord’s interest
in this Lease. Landlord and Tenant shall each, within 10 days after receipt of a written request
from the other, execute and deliver a commercially reasonable estoppel certificate to those parties
as are reasonably requested by the other (including a Mortgagee or prospective purchaser). Without
limitation, such estoppel certificate may include a certification as to the status of this Lease,
the existence of any defaults and the amount of Rent that is due and payable. Notwithstanding the
foregoing in this Section to the contrary, as a condition precedent to the future subordination of
this Lease to a future Mortgage, Landlord shall be required to provide Tenant with a
non-disturbance, subordination, and attornment agreement in favor of Tenant from any Mortgagee who
comes into existence after the Commencement Date. Such non-disturbance, subordination, and
attornment agreement in favor of Tenant shall provide that, so long as Tenant is paying the Rent
due under the Lease and is not otherwise in default under the Lease beyond any applicable cure
period, its right to possession and the other terms of the Lease shall remain in full force and
effect. Such non-disturbance, subordination, and attornment agreement may include other
commercially reasonable provisions in favor of the Mortgagee.




	24.	 	Notice.





     All demands, approvals, consents or notices (collectively referred to as a “notice”) shall be
in writing and delivered by hand or sent by registered or certified mail with return receipt
requested or sent by overnight or same day courier service at the party’s respective Notice
Address(es) set forth in Section 1. Each notice shall be deemed to have been received on the
earlier to occur of actual delivery or the date on which delivery is refused, or, if Tenant has
vacated the Premises or any other Notice Address of Tenant without providing a new Notice Address,
3 days after notice is deposited in the U.S. mail or with a courier service in the manner described
above. Either party may, at any time, change its Notice Address (other than to a post office box
address) by giving the other party written notice of the new address.




	25.	 	Surrender of Premises.





     At the termination of this Lease or Tenant’s right of possession, Tenant shall remove Tenant’s
Property from the Premises, and quit and surrender the Premises to Landlord, broom clean, and in
good order, condition and repair, ordinary wear and tear and damage which Landlord is obligated to
repair hereunder excepted. If Tenant fails to remove any of Tenant’s Property within 7 days after
termination of this Lease or Tenant’s right to possession, Landlord, at Tenant’s sole cost and
expense, shall be entitled (but not obligated) to remove and store Tenant’s Property. Landlord
shall not be responsible for the value, preservation or safekeeping of Tenant’s Property. Tenant
shall pay Landlord, upon demand, the expenses and storage charges incurred. If Tenant fails to
remove Tenant’s Property from the Premises or storage, within 30 days after notice, Landlord may
deem all or any part of Tenant’s Property to be abandoned and title to Tenant’s Property shall vest
in Landlord.



11









 






	26.	 	Miscellaneous.





     26.01 This Lease shall be interpreted and enforced in accordance with the Laws of the State
of California and Landlord and Tenant hereby irrevocably consent to the jurisdiction and proper
venue of such state. If any term or provision of this Lease shall to any extent be void or
unenforceable, the remainder of this Lease shall not be affected. If there is more than one Tenant
or if Tenant is comprised of more than one party or entity, the obligations imposed upon Tenant
shall be joint and several obligations of all the parties and entities, and requests or demands
from any one person or entity comprising Tenant shall be deemed to have been made by all such
persons or entities. Notices to any one person or entity shall be deemed to have been given to all
persons and entities. Tenant represents and warrants to Landlord that each individual executing
this Lease on behalf of Tenant is authorized to do so on behalf of Tenant and that Tenant is not,
and the entities or individuals constituting Tenant or which may own or control Tenant or which may
be owned or controlled by Tenant are not, (i) in violation of any laws relating to terrorism or
money laundering, or (ii) among the individuals or entities identified on any list compiled
pursuant to Executive Order 13224 for the purpose of identifying suspected terrorists or on the
most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its
official website, http://www.treas.gov/ofac/tllsdn.pdf or any replacement website or other
replacement official publication of such list.



     26.02 If either party institutes a suit against the other for violation of or to enforce any
covenant, term or condition of this Lease, the prevailing party shall be entitled to reimbursement
of all of its costs and expenses, including, without limitation, reasonable attorneys’ fees.
Landlord and Tenant hereby waive any right to trial by jury in any proceeding based upon a breach
of this Lease. Either party’s failure to declare a default immediately upon its occurrence, or
delay in taking action for a default, shall not constitute a waiver of the default, nor shall it
constitute an estoppel.



     26.03 Whenever a period of time is prescribed for the taking of an action by Landlord or
Tenant (other than the payment of the Security Deposit or Rent), the period of time for the
performance of such action shall be extended by the number of days that the performance is actually
delayed due to strikes, acts of God, shortages of labor or materials, war, terrorist acts, civil
disturbances and other causes beyond the reasonable control of the performing party (“Force
Majeure”).



     26.04 Landlord shall have the right to transfer and assign, in whole or in part, all of its
rights and obligations under this Lease and in the Building and Property. Upon transfer Landlord
shall be released from any further obligations hereunder and Tenant agrees to look solely to the
successor in interest of Landlord for the performance of such obligations, provided that, any
successor pursuant to a voluntary, third party transfer (but not as part of an involuntary transfer
resulting from a foreclosure or deed in lieu thereof) shall have assumed Landlord’s obligations
under this Lease.



     26.05 Landlord has delivered a copy of this Lease to Tenant for Tenant’s review only and the
delivery of it does not constitute an offer to Tenant or an option. Tenant represents that it has
dealt directly with and only with the Broker as a broker in connection with this Lease. Landlord
shall pay such Broker a fee in connection herewith, pursuant to a separate agreement between the
Landlord and Broker. Tenant shall indemnify and hold Landlord and the Landlord Related Parties
harmless from all claims of any other brokers claiming to have represented Tenant in connection
with this Lease. Landlord shall indemnify and hold Tenant and the Tenant Related Parties harmless
from all claims of any brokers claiming to have represented Landlord in connection with this Lease.
Equity Office Properties Management Corp. (“EOPMC”) is an affiliate of Landlord and represents only
the Landlord in this transaction. Any assistance rendered by any agent or employee of EOPMC in
connection with this Lease or any subsequent amendment or modification hereto has been or will be
made as an accommodation to Tenant solely in furtherance of consummating the transaction on behalf
of Landlord, and not as agent for Tenant.



     26.06 Time is of the essence with respect to Tenant’s exercise of any expansion, renewal or
extension rights granted to Tenant. The expiration of the Term, whether by lapse of time,
termination or otherwise, shall not relieve either party of any obligations which accrued prior to
or which may continue to accrue after the expiration or termination of this Lease.



     26.07 Tenant may peacefully have, hold and enjoy the Premises, subject to the terms of this
Lease, provided Tenant pays the Rent and fully performs all of its covenants and agreements. This
covenant shall be binding upon Landlord and its successors only during its or their respective
periods of ownership of the Building.



     26.08 This Lease does not grant any rights to light or air over or about the Building.
Landlord excepts and reserves exclusively to itself any and all rights not specifically granted to
Tenant under this Lease. This Lease constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings related to the Premises, including all lease
proposals, letters of intent and other documents. Neither party is relying upon any warranty,
statement or representation not contained in this Lease. This Lease may be modified only by a
written agreement signed by an authorized representative of Landlord and Tenant.



12









 





     Landlord and Tenant have executed this Lease as of the day and year first above written.



	 	 	 	 	 	 	 	 	 	 	 
	 	 	LANDLORD:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	CA-4600 NORRIS TECH LIMITED PARTNERSHIP, a Delaware limited partnership
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By: EOM GP, L.L.C., a Delaware limited liability company, its general partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Equity Office Management, L.L.C., a Delaware limited liability company, its
non-member manager
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	/s/ Mark Geisrelter
	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: 
	Mark Geisrelter
	 

	 	 	 	 	 	Title:
	Senior Vice President
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	GIGA-TRONICS INCORPORATED,

a California corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ George A. Bruns, Jr.	 	 
	 	 	 	 	 	 	 
	 	 	Name:	 	George A. Bruns, Jr.	 	 
	 	 	Title:	 	Chairman and Chief
Executive
Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Tenant’s Tax ID Number (SSN or FEIN):	 	 
	 	 	 	 	 
	 	 	 	 	 






13









 








EXHIBIT A




OUTLINE AND LOCATION OF PREMISES


This Exhibit is attached to and made a part of the Lease by and between CA-4600 NORRIS TECH LIMITED
PARTNERSHIP, a Delaware limited partnership (“Landlord”) and GIGA-TRONICS INCORPORATED, a
California corporation (“Tenant”) for space in the Building located at 4600 Norris Canyon Road, San
Ramon, California.





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EXHIBIT B




EXPENSES AND TAXES



          This Exhibit is attached to and made a part of the Lease by and between CA-4600 NORRIS TECH
LIMITED PARTNERSHIP, a Delaware limited partnership (“Landlord”) and GIGA-TRONICS INCORPORATED, a
California corporation (“Tenant”) for space in the Building located at 4600 Norris Canyon Road, San
Ramon, California.




	1.	 	Payments.





     1.01 Tenant shall pay Tenant’s Pro Rata Share of the total amount of Expenses and Taxes for
each calendar year during the Term. Landlord shall provide Tenant with a good faith estimate of the
total amount of Expenses and Taxes for each calendar year during the Term. On or before the first
day of each month, Tenant shall pay to Landlord a monthly installment equal to one-twelfth of
Tenant’s Pro Rata Share of Landlord’s estimate of the total amount of Expenses and Taxes. If
Landlord determines that its good faith estimate was incorrect by a material amount, Landlord may
provide Tenant with a revised estimate. After its receipt of the revised estimate, Tenant’s
monthly payments shall be based upon the revised estimate. If Landlord does not provide Tenant
with an estimate of the total amount of Expenses and Taxes by January 1 of a calendar year, Tenant
shall continue to pay monthly installments based on the previous year’s estimate until Landlord
provides Tenant with the new estimate. Upon delivery of the new estimate, an adjustment shall be
made for any month for which Tenant paid monthly installments based on the previous year’s
estimate. Tenant shall pay Landlord the amount of any underpayment within 30 days after receipt of
the new estimate. Any overpayment shall be refunded to Tenant within 30 days or credited against
the next due future installment(s) of Additional Rent.



     1.02 As soon as is practical following the end of each calendar year, Landlord shall furnish
Tenant with a statement of the actual amount of Expenses and Taxes for the prior calendar year and
Tenant’s Pro Rata Share of Expenses and Taxes for the prior calendar year. If the estimated amount
of Expenses and Taxes for the prior calendar year is more than the actual amount of Expenses and
Taxes for the prior calendar year, Landlord shall apply any overpayment by Tenant against
Additional Rent due or next becoming due, provided if the Term expires before the determination of
the overpayment, Landlord shall refund any overpayment to Tenant after first deducting the amount
of Rent due. If the estimated amount of Expenses and Taxes for the prior calendar year is less
than the actual amount of Expenses and Taxes for such prior year, Tenant shall pay Landlord, within
30 days after its receipt of the statement of Expenses and Taxes, any underpayment for the prior
calendar year.




	2.	 	Expenses.





     2.01 “Expenses” means all costs and expenses incurred in each calendar year in connection
with operating, maintaining, repairing, and managing the Building and the Property. Landlord
agrees to act in a commercially reasonable manner in incurring Expenses, taking into consideration
the class and the quality of the Building. “Expenses” shall include, but not be limited to: (a)
all labor and labor related costs, including wages, salaries, bonuses, taxes, insurance, uniforms,
training, retirement plans, pension plans and other employee benefits; (b) management fees
(however, in no event shall the management fees for the Building exceed 3.5% of gross receipts for
the Building); (c) the cost of equipping, staffing and operating an on-site and/or off-site
management office for the Building, provided if the management office services one or more other
buildings or properties, the shared costs and expenses of equipping, staffing and operating such
management office(s) shall be equitably prorated and apportioned between the Building and the other
buildings or properties; (d) accounting costs; (e) the cost of services; (f) rental and purchase
cost of parts, supplies, tools and equipment; (g) insurance premiums and deductibles; (h)
electricity, gas and other utility costs; and (i) the amortized cost of capital improvements (as
distinguished from replacement parts or components installed in the ordinary course of business)
which are: (1) performed primarily to reduce current or future operating expense costs, upgrade
Building security or otherwise improve the operating efficiency of the Property; or (2) required to
comply with any Laws that are enacted, or first interpreted to apply to the Property, after the
date of this Lease. The cost of capital improvements shall be amortized by Landlord over the
lesser of the Payback Period (defined below) or the useful life of the capital improvement as
reasonably determined by Landlord. The amortized cost of capital improvements may, at Landlord’s
option, include actual or imputed interest at the rate that Landlord would reasonably be required
to pay to finance the cost of the capital improvement. “Payback Period” means the reasonably
estimated period of time that it takes for the cost savings resulting from a capital improvement to
equal the total cost of the capital improvement. Landlord, by itself or through an affiliate, shall
have the right to directly perform, provide and be compensated for any services under this Lease.
If Landlord incurs Expenses for the Building or Property together with one or more other buildings
or properties, whether pursuant to a reciprocal easement agreement, common area agreement or
otherwise, the shared costs and expenses shall be equitably prorated and apportioned between the
Building and Property and the other buildings or properties.



     2.02 Expenses shall not include: the cost of capital improvements (except as set forth
above); depreciation; principal payments of mortgage and other non-operating debts of Landlord; the
cost of repairs or other work to the extent Landlord is reimbursed by insurance or condemnation
proceeds; costs in connection with leasing space in the Building, including brokerage commissions;
lease concessions, rental abatements and construction allowances granted to specific tenants; costs
incurred in connection with the sale, financing or refinancing of the Building; fines, interest and
penalties incurred due to the late payment of Taxes or Expenses; any expenses for which Landlord
has received actual reimbursement (other than through Expenses); fines or penalties incurred as a
result of violation by Landlord of any



1









 







applicable Laws; organizational expenses associated with the creation and operation of the
entity which constitutes Landlord; or any penalties or damages that Landlord pays to Tenant under
this Lease or to other tenants in the Building under their respective leases.



     2.03 If the Building is not at least 95% occupied during any calendar year or if Landlord is
not supplying services to at least 95% of the total Rentable Square Footage of the Building at any
time during a calendar year, Expenses shall, at Landlord’s option, be determined as if the Building
had been 95% occupied and Landlord had been supplying services to 95% of the Rentable Square
Footage of the Building during that calendar year. Notwithstanding the foregoing, Landlord may
calculate the extrapolation of Expenses under this Section based on 100% occupancy and service so
long as such percentage is used consistently for each year of the Term. The extrapolation of
Expenses under this Section shall be performed in accordance with the methodology specified by the
Building Owners and Managers Association.


3. “Taxes” shall mean: (a) all real property taxes and other assessments on the Building and/or
Property, including, but not limited to, gross receipts taxes, assessments for special improvement
districts and building improvement districts, governmental charges, fees and assessments for
police, fire, traffic mitigation or other governmental service of purported benefit to the
Property, taxes and assessments levied in substitution or supplementation in whole or in part of
any such taxes and assessments and the Property’s share of any real estate taxes and assessments
under any reciprocal easement agreement, common area agreement or similar agreement as to the
Property; (b) all personal property taxes for property that is owned by Landlord and used in
connection with the operation, maintenance and repair of the Property; and (c) all costs and fees
incurred in connection with seeking reductions in any tax liabilities described in (a) and (b),
including, without limitation, any costs incurred by Landlord for compliance, review and appeal of
tax liabilities. Without limitation, Taxes shall not include any income, capital levy, transfer,
capital stock, gift, estate or inheritance tax. If a change in Taxes is obtained for any year of
the Term during which Tenant paid Tenant’s Pro Rata Share of any Taxes, then Taxes for that year
will be retroactively adjusted and Landlord shall provide Tenant with a credit, if any, based on
the adjustment. Tenant shall pay Landlord the amount of Tenant’s Pro Rata Share of any such
increase in Taxes within 30 days after Tenant’s receipt of a statement from Landlord.



4. Audit Rights. Tenant, within 365 days after receiving Landlord’s statement of Expenses, may
give Landlord written notice (“Review Notice”) that Tenant intends to review Landlord’s records of
the Expenses for that calendar year to which the statement applies. Within a reasonable time after
receipt of the Review Notice, Landlord shall make all pertinent records available for inspection
that are reasonably necessary for Tenant to conduct its review. If any records are maintained at a
location other than the management office for the Building, Tenant may either inspect the records
at such other location or pay for the reasonable cost of copying and shipping the records. If
Tenant retains an agent to review Landlord’s records, the agent must be with a CPA firm licensed to
do business in the state where the Property is located. Notwithstanding the foregoing, Landlord
agrees that Tenant may retain a third party agent to review Landlord’s books and records which is
not a CPA firm, so long as the third party agent retained by Tenant shall have expertise in and
familiarity with general industry practice with respect to the operation of and accounting for a
first class office building and whose compensation shall in no way be contingent upon or correspond
to the financial impact on Tenant resulting from the review. Tenant shall be solely responsible
for all costs, expenses and fees incurred for the audit. However, notwithstanding the foregoing,
if Landlord and Tenant determine that Expenses for the Building for the year in question were less
than stated by more than 5%, Landlord, within 30 days after its receipt of paid invoices therefore
from Tenant, shall reimburse Tenant for the reasonable amounts paid by Tenant to third parties in
connection with such review by Tenant. Within 90 days after the records are made available to
Tenant, Tenant shall have the right to give Landlord written notice (an “Objection Notice”) stating
in reasonable detail any objection to Landlord’s statement of Expenses for that year. If Tenant
fails to give Landlord an Objection Notice within the 90 day period or fails to provide Landlord
with a Review Notice within the 365 day period described above, Tenant shall be deemed to have
approved Landlord’s statement of Expenses and shall be barred from raising any claims regarding the
Expenses for that year. If Tenant provides Landlord with a timely Objection Notice, Landlord and
Tenant shall work together in good faith to resolve any issues raised in Tenant’s Objection Notice.
If Landlord and Tenant determine that Expenses for the calendar year are less than reported,
Landlord shall provide Tenant with a credit against the next installment of Rent in the amount of
the overpayment by Tenant. Likewise, if Landlord and Tenant determine that Expenses for the
calendar year are greater than reported, Tenant shall pay Landlord the amount of any underpayment
within 30 days. The records obtained by Tenant shall be treated as confidential.





2









 








EXHIBIT C




WORK LETTER



          This Exhibit is attached to and made a part of the Lease by and between CA-4600 NORRIS TECH
LIMITED PARTNERSHIP, a Delaware limited partnership (“Landlord”) and GIGA-TRONICS INCORPORATED, a
California corporation (“Tenant”) for space in the Building located at 4600 Norris Canyon Road, San
Ramon, California.




	1.	 	Alterations and Allowance.






	 	A.	 	Tenant, following the Commencement Date and all prepaid rental and security
deposits required under such agreement, shall have the right to perform alterations and
improvements in the Premises (the “Initial Alterations”). Notwithstanding the
foregoing, Tenant and its contractors shall not have the right to perform Initial
Alterations in the Premises unless and until Tenant has complied with all of the terms
and conditions of Section 9 of the Lease, including, without limitation, approval by
Landlord of the final plans for the Initial Alterations and the contractors to be
retained by Tenant to perform such Initial Alterations. Tenant shall be responsible for
all elements of the design of Tenant’s plans (including, without limitation, compliance
with law, functionality of design, the structural integrity of the design, the
configuration of the premises and the placement of Tenant’s furniture, appliances and
equipment), and Landlord’s approval of Tenant’s plans shall in no event relieve Tenant
of the responsibility for such design. Landlord’s approval of the contractors to
perform the Initial Alterations shall not be unreasonably withheld. The parties agree
that Landlord’s approval of the general contractor to perform the Initial Alterations
shall not be considered to be unreasonably withheld if any such general contractor (i)
does not have trade references reasonably acceptable to Landlord, (ii) does not
maintain insurance as required pursuant to the terms of this Lease, (iii) does not have
the ability to be bonded for the work in an amount of no less than 150% of the total
estimated cost of the Initial Alterations, (iv) does not provide current financial
statements reasonably acceptable to Landlord, or (v) is not licensed as a contractor in
the state/municipality in which the Premises is located. Tenant acknowledges the
foregoing is not intended to be an exclusive list of the reasons why Landlord may
reasonably withhold its consent to a general contractor.
	 
	 	B.	 	Provided Tenant is not in default, Landlord agrees to contribute the sum of
$236,985.00 (the “Allowance”) toward the cost of performing the Initial Alterations in
preparation of Tenant’s occupancy of the Premises. The Allowance may only be used for
the cost of preparing design and construction documents and mechanical and electrical
plans for the Initial Alterations and for hard costs in connection with the Initial
Alterations. The Allowance shall be paid to Tenant or, at Landlord’s option, to the
order of the general contractor that performed the Initial Alterations, within 30 days
following receipt by Landlord of (1) receipted bills covering all labor and materials
expended and used in the Initial Alterations; (2) a sworn contractor’s affidavit from
the general contractor and a request to disburse from Tenant containing an approval by
Tenant of the work done; (3) full and final waivers of lien; (4) as-built plans of the
Initial Alterations; and (5) the certification of Tenant and its architect that the
Initial Alterations have been installed in a good and workmanlike manner in accordance
with the approved plans, and in accordance with applicable laws, codes and ordinances.
The Allowance shall be disbursed in the amount reflected on the receipted bills meeting
the requirements above. Notwithstanding anything herein to the contrary, Landlord
shall not be obligated to disburse any portion of the Allowance during the continuance
of an uncured default under the Lease, and Landlord’s obligation to disburse shall only
resume when and if such default is cured.
	 
	 	C.	 	In no event shall the Allowance be used for the purchase of equipment,
furniture or other items of personal property of Tenant. Notwithstanding the
foregoing, if the cost of the Initial Alterations is less than the Allowance (or if the
Tenant chooses not to perform any Initial Alterations), Tenant, provided it is not in
default under the Lease, shall be entitled to apply all of or a portion of the unused
Allowance (the “Cabling Allowance”) toward the cost of purchasing and installing
telephone and computer cabling in the Premises. All such costs, as evidenced by
invoices for same, are referred to herein as the “Cabling Costs”. Landlord shall
disburse the Cabling Allowance, or applicable portion thereof (not to exceed the actual
Cabling Costs), to Tenant within thirty (30) days after the later to occur of (i)
receipt of paid invoices from Tenant with respect to Tenant’s actual Cabling Costs, and
(ii) completion of the Initial Alterations. If Tenant does not submit a request for
payment of the entire Allowance (including the Cabling Allowance) to Landlord in
accordance with the provisions contained in this Exhibit by the Abatement Date (as
hereinafter defined), then Landlord shall apply the unused portion of the Allowance
against subsequent installments of Base Rent and Additional Rent due under this Lease.
Tenant shall be responsible for all applicable state sales or use taxes, if any,
payable in connection with the Initial Alterations and/or Allowance. As used herein,
the “Abatement Date” shall mean the earlier of (x) December 31, 2007, and (y) the date
following April 1, 2007 that Tenant delivers written notice to Landlord that Tenant
desires the Landlord to apply any remaining balance of the Allowance against Rent next
due.




1









 






	 	D.	 	Tenant agrees to accept the Premises in its “as-is” condition and
configuration, it being agreed that Landlord shall not be required to perform any work
or, except as provided above with respect to the Allowance, incur any costs in
connection with the construction or demolition of any improvements in the Premises.




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





2









 








EXHIBIT F




ADDITIONAL PROVISIONS



     This Exhibit is attached to and made a part of the Lease by and between CA-4600 NORRIS TECH
LIMITED PARTNERSHIP, a Delaware limited partnership (“Landlord”) and GIGA-TRONICS INCORPORATED, a
California corporation (“Tenant”) for space in the Building located at 4600 Norris Canyon Road, San
Ramon, California.




	1.	 	Hazardous Materials.






	 	A.	 	General Restrictions. Tenant shall conduct its business and shall cause each
Tenant Related Party to act in such a manner as to (a) not release or permit the
release of any Hazardous Material in, under, on or about the Premises, Building or
Property, and (b) not use, store, generate, treat, discharge, disperse, handle,
manufacture, transport or dispose of (collectively, “Handle”) any Hazardous Materials
(other than incidental amounts of customary cleaning and office supplies) in or about
the Premises, Building or Property without the prior written consent of Landlord, which
consent Landlord may withhold in its sole and absolute discretion (“Hazardous Materials
Consent Requirements”). “Hazardous Material” means any hazardous, explosive,
radioactive or toxic substance, material or waste which is or becomes regulated by any
local, state or federal governmental authority or agency, including, without
limitation, any material or substance which is (i) defined or listed as a “hazardous
waste,” “extremely hazardous waste,” “restricted hazardous waste,” “hazardous
substance,” “hazardous material,” “pollutant” or “contaminant” under any regulation,
(ii) petroleum or petroleum derivative, (iii) a flammable explosive, (iv) a radioactive
material or waste, (v) a polychlorinated biphenyl, (vi) asbestos or asbestos containing
material, (vii) infectious waste, or (viii) a carcinogen (collectively, the
“Regulations”).
	 
	 	B.	 	Required Disclosures. Prior to Tenant (and at least 5 days prior to any
assignee or any subtenant of Tenant) taking possession of any part of the Premises
pursuant to this Lease, and on each anniversary of the Commencement Date (each such
date is hereinafter referred to as a “Disclosure Date”), until and including the first
Disclosure Date occurring after the expiration or sooner termination of the Lease,
Tenant shall disclose to Landlord in writing the names and amounts of all Hazardous
Materials, or any combination thereof, which were Handled on, in, under or about the
Premises, Building, or Property for the 12-month period prior to such Disclosure Date,
or which Tenant intends to Handle on, under or about the Premises, Building or Property
during the 12-month period following the Disclosure Date by executing and delivering to
Landlord a “Hazardous Materials Questionnaire”, in the form attached hereto as Exhibit
H (as updated and modified by Landlord, from time to time). Tenant’s disclosure
obligations under this Section 1 of Exhibit F shall include a requirement that, to the
extent any information contained in a Hazardous Materials Questionnaire previously
delivered by Tenant shall become inaccurate in any material respect, Tenant shall
immediately deliver to Landlord a new updated Hazardous Materials Questionnaire.
	 
	 	C.	 	Additional Obligations. If any Hazardous Materials shall be released into the
environment comprising or surrounding the Premises, Building or Property in connection
with the acts, omissions or operations of Tenant or any Tenant Related Party, Tenant
shall at its sole expense promptly prepare a remediation plan therefor consistent with
applicable Regulations and recommended industry practices (and approved by Landlord and
all governmental agencies having jurisdiction) to fully remediate such release, and
thereafter shall prosecute the remediation plan so approved to completion with all
reasonable diligence and to the satisfaction of Landlord and applicable governmental
agencies. If any Hazardous Materials are Handled in, under, on or about the Premises
during the Term, or any extension, holdover or renewal thereof, or if Landlord
determines in good faith that any release of any Hazardous Material or violation of
Hazardous Materials Regulations may have occurred in, on, under or about the Premises
during the Term or any extension, holdover or renewal thereof, Landlord may require
Tenant to at Tenant’s sole expense, (i) retain a qualified environmental consultant
reasonably satisfactory to Landlord to conduct a reasonable investigation (an
“Environmental Assessment”) of a nature and scope reasonably approved in writing in
advance by Landlord with respect to the existence of any Hazardous Materials in, on,
under or about the Premises and providing a review of all Hazardous Materials
activities of Tenant and the Tenant Related Parties, and (ii) provide to Landlord a
reasonably detailed, written report, prepared in accordance with the institutional real
estate standards, of the Environmental Assessment.
	 
	 	D.	 	Indemnity. Tenant shall indemnify, defend (by counsel reasonably acceptable to
Landlord), protect and hold Landlord and the Landlord Related Parties harmless from and
against any and all claims, liabilities, losses, costs, loss of rents, liens, damages,
injuries or expenses (including attorneys’ and consultants’ fees and court costs),
demands, causes of action, or judgments directly or indirectly arising out of or
related to the use, generation, storage, release, or disposal of Hazardous Materials by
Tenant or any of the Tenant Related Parties in, on, under or about the Premises,
Building, or Property, which




1









 






	 	 	 	indemnity shall include, without limitation, damages for personal or bodily injury,
property damage, damage to the environment or natural resources occurring on or off
the Premises, Building or Property, losses attributable to diminution in value or
adverse effects on marketability, the cost of any investigation, monitoring,
government oversight, repair, removal, remediation, restoration, abatement, and
disposal, and the preparation of any closure or other required plans, whether such
action is required or necessary prior to or following the expiration or earlier
termination of the Lease. Neither the consent by Landlord to the use, generation,
storage, release or disposal of Hazardous Materials nor the strict compliance by
Tenant with all Laws pertaining to Hazardous Materials shall excuse Tenant from
Tenant’s obligation of indemnification pursuant to this Section 1 of Exhibit F.
Tenant’s obligations pursuant to the foregoing indemnity shall survive the
expiration or earlier termination of the Lease.




E. In compliance with all Laws and Regulations and the terms of this Lease, Tenant may use in the
Premises the Hazardous Materials described on Exhibit H-1 (the “Initial Hazardous Materials”).
Attached hereto as Exhibit H-2 (the “Potential Hazardous Materials”) are two questionnaires
identifying Tenant’s (or its affiliates’ or subsidiaries’) use of Hazardous Materials at locations
other than the Building. If Tenant desires to use such Potential Hazardous Materials within the
Premises, Tenant may do so long as such use is in compliance with all Laws and Regulations and the
terms of this Lease.





	 	2.	 	Monument Signage.






	 	A.	 	So long as (i) Tenant is not in default under the terms of the Lease, beyond
any applicable notice and cure period; (ii) Tenant has not abandoned the Premises; and
(iii) Tenant has not assigned the Lease to a non-affiliated entity, Tenant shall have
the right to have its name listed on the shared Building monument sign located adjacent
to Camino Ramon Boulevard in San Ramon, California (the “Sign”). Following
installation of Tenant’s name on the Sign, Tenant shall be liable for all costs related
to the maintenance and, if applicable, illumination of the sign. In the event that
additional names are listed on the Sign, all future costs of maintenance and repair
shall be prorated between Tenant and the other parties that are listed on such Sign.
	 
	 	B.	 	Tenant shall be solely responsible for the costs in connection with the design,
fabrication and installation of Tenant’s name on the Sign. Tenant must obtain
Landlord’s written consent to any proposed signage and lettering prior to its
fabrication and installation. Landlord reserves the right to withhold consent to any
sign that, in the sole judgment of Landlord, is not harmonious with the design
standards of the Building and Sign. To obtain Landlord’s consent, Tenant shall submit
design drawings to Landlord showing the type and sizes of all lettering; the colors,
finishes and types of materials used; and (if applicable and Landlord consents) any
provisions for illumination.
	 
	 	C.	 	If during the Lease Term (and any extensions thereof) (a) Tenant is in default
under the terms of the Lease after the expiration of applicable cure periods; or (b)
Tenant abandons the Premises; or (c) Tenant assigns the Lease to a non-affiliated
entity, then Tenant’s rights granted herein will terminate and Landlord may remove
Tenant’s name from the Sign at Tenant’s sole cost and expense.






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