Exhibit 10.12


 




 





SUNSET CENTER AT TANASBOURNE


 


OFFICE LEASE AGREEMENT


 


 


Between


 


MARK TANASBOURNE LLC,


an Oregon limited liability company


 


(“Landlord”)


 


 


And


 


 


MATHSTAR,


a Minnesota corporation


 


(“Tenant”)


 


 


Dated:  June 1, 2005




 





 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  SECTION 1 DEMISE AND PREMISES

  	
   

  
	
   

  	
  1.1

  	
  Demise

  	
   

  
	
   

  	
  1.2

  	
  Premises

  	
   

  
	
   

  	
  1.3

  	
  Commencement and Expiration Dates

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  SECTION 2 RENT

  	
   

  
	
   

  	
  2.1

  	
  Rents

  	
   

  
	
   

  	
  2.2

  	
  Base Rent

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  SECTION 3 ADDITIONAL RENT

  	
   

  
	
   

  	
  3.1

  	
  Operating
  Expenses

  	
   

  
	
   

  	
  3.2

  	
  Operating Expense Exclusions

  	
   

  
	
   

  	
  3.3

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  SECTION 4 PAYMENT OF
  ADDITIONAL RENT

  	
   

  
	
   

  	
  4.1

  	
  Written Statement of Estimate

  	
   

  
	
   

  	
  4.2

  	
  Final Written Statement

  	
   

  
	
   

  	
  4.3

  	
  Adjustment for Reduced Occupancy

  	
   

  
	
   

  	
  4.4

  	
  Tenant
  Examination

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  SECTION 5 SECURITY DEPOSIT

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  SECTION 6 USE

  	
   

  
	
   

  	
  6.1

  	
  General

  	
   

  
	
   

  	
  6.2

  	
  Negative Covenants as to Use

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  SECTION 7 SUBORDINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  SECTION 8 TRANSFERS BY TENANT

  	
   

  
	
   

  	
  8.1

  	
  General

  	
   

  
	
   

  	
  8.2

  	
  Landlord’s Option to Recapture Premises

  	
   

  
	
   

  	
  8.3

  	
  Landlord’s Option to Increase Rent

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  SECTION 9 LIABILITY AND
  INSURANCE

  	
   

  
	
   

  	
  9.1

  	
  Waiver
  of Subrogation

  	
   

  
	
   

  	
  9.2

  	
  Tenant’s
  Insurance

  	
   

  
	
   

  	
  9.3

  	
  Delivery of Policies; Cancellation

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  SECTION 10 ALTERATIONS

  	
   

  
	
   

  	
  10.1

  	
  General

  	
   

  
	
   

  	
  10.2

  	
  Bonds

  	
   

  
	
   

  	
  10.3

  	
  Permits

  	
   

  
	
   

  	
  10.4

  	
  Manner

  	
   

  
	
   

  	
  10.5

  	
  Indemnification of Landlord

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  SECTION 11 LANDLORD’S
  AND TENANT’S PROPERTY

  	
   

  
	
   

  	
  11.1

  	
  Landlord’s
  Property

  	
   

  
	
   

  	
  11.2

  	
  Tenant’s
  Property

  	
   

  
	
   

  	
  11.3

  	
  Abandonment

  	
   

  



 


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  12.

  	
  SECTION 12 REPAIRS AND
  MAINTENANCE

  	
   

  
	
   

  	
  12.1

  	
  Landlord’s Obligations

  	
   

  
	
   

  	
  12.2

  	
  General

  	
   

  
	
   

  	
  12.3

  	
  Manner

  	
   

  
	
   

  	
  12.4

  	
  Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  SECTION13 ELECTRIC ENERGY

  	
   

  
	
   

  	
  13.1

  	
  High Voltage Equipment

  	
   

  
	
   

  	
  13.2

  	
  Cost of Increasing Capacity

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  SECTION 14 CLIMATE CONTROL

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  SECTION 15 OTHER SERVICES

  	
   

  
	
   

  	
  15.1

  	
  Elevators

  	
   

  
	
   

  	
  15.2

  	
  Cleaning

  	
   

  
	
   

  	
  15.3

  	
  Removal of Excess Refuse

  	
   

  
	
   

  	
  15.4

  	
  Building
  Directory

  	
   

  
	
   

  	
  15.5

  	
  Signs

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  SECTION 16 ACCESS

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  SECTION 17 INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  SECTION 18 DAMAGE OR
  DESTRUCTION

  	
   

  
	
   

  	
  18.1

  	
  General

  	
   

  
	
   

  	
  18.2

  	
  Rent
  Abatement

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  SECTION 19 EMINENT DOMAIN

  	
   

  
	
   

  	
  19.1

  	
  Total
  Condemnation

  	
   

  
	
   

  	
  19.2

  	
  Partial
  Condemnation

  	
   

  
	
   

  	
  19.3

  	
  Effect of Termination or Continuation

  	
   

  
	
   

  	
  19.4

  	
  Award

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  SECTION 20 SURRENDER

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  SECTION 21 EVENTS OF DEFAULT

  	
   

  
	
   

  	
  21.1

  	
  Events
  of Default

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  SECTION 22 REMEDIES UPON
  DEFAULT

  	
   

  
	
   

  	
  22.1

  	
  Remedies

  	
   

  
	
   

  	
  22.2

  	
  Cumulative
  Remedies

  	
   

  
	
   

  	
  22.3

  	
  Interest
  on Damages

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  SECTION 23 CURING TENANT’S
  DEFAULTS

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  SECTION 24 BROKER

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  SECTION 24 NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  SECTION 26 ESTOPPEL
  CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  27.

  	
  SECTION 27 RELOCATION OF
  PREMISES

  	
   

  
	
   

  	
   

  	
   

  
	
  28.

  	
  SECTION 28 PARKING

  	
   

  



 


ii





















 


	
  29.

  	
  SECTION 29 MISCELLANEOUS

  	
   

  
	
   

  	
  29.1

  	
  Entire
  Agreement

  	
   

  
	
   

  	
  29.2

  	
  Successors and Assigns

  	
   

  
	
   

  	
  29.3

  	
  Nonrecourse
  Lease

  	
   

  
	
   

  	
  29.4

  	
  Force
  Majeure

  	
   

  
	
   

  	
  29.5

  	
  Effect of Failure to Consent

  	
   

  
	
   

  	
  29.6

  	
  Rules and
  Regulations

  	
   

  
	
   

  	
  29.7

  	
  Tenant
  Holdover

  	
   

  
	
   

  	
  29.8

  	
  Tenant Representations

  	
   

  
	
   

  	
  29.9

  	
  Non-Waiver

  	
   

  
	
   

  	
  29.10

  	
  Square Footage Calculations Approximate

  	
   

  
	
   

  	
  29.11

  	
  Time

  	
   

  
	
   

  	
  29.12

  	
  Late
  Fees

  	
   

  
	
   

  	
  29.13

  	
  Attorneys’
  Fees

  	
   

  
	
   

  	
  29.14

  	
  Quiet
  Enjoyment

  	
   

  
	
   

  	
  29.15

  	
  Severability

  	
   

  
	
   

  	
  29.16

  	
  Incorporation of Exhibits

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A – Outline of Premises

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A-1 – Outline of Expansion Space

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit B – Legal
  Description of Land

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C – TV&
  Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C-1 – Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C-2 –
  General Specifications for Tenant Improvements

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C-3 – Construction Budget Sheet

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit D – Estoppel
  Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit E – Rules and
  Regulations

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit F1 – Monument View 1

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit F-2 – Monument View 2

  	
   

  
	
   

  	
   

  	
   

  
	
  Addendum
  to Lease

  	
   

  
						



 


iii





















 


SUMMARY OF FUNDAMENTAL PROVISIONS


 


	
  DATED:

  	
   

  	
  June 1,
  2005

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BETWEEN:

  	
   

  	
  MARK
  TANASBOURNE LLC, an Oregon limited liability company

  	
   

  	
  (“Landlord”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  MATHSTAR,
  a Minnesota corporation

  	
   

  	
  (“Tenant”)

  



 


1.                                       TERM:


 


A.                                   Estimated
Commencement Date:  July 1, 2005 (see Section 1.3).


 


B.                                     Estimated
Expiration Date:  December 31, 2010 (see Section 1.3).


 


C.                                     Length
of Term:  Sixty-six (66) months


 


2.                                       BUILDING: 
19075 NW Tanasbourne Drive,
Hillsboro, Oregon 97124.


 


3.                                       PROJECT: 
Sunset Center at Tanasbourne.


 


4.                                       PREMISES: 
6,473 rentable square feet
on the second (2nd) floor(s) of
the Building (see Exhibit ”A”).


 


5.                                       BASE RENT:


 


	
  Months 

  	
   

  	
  Annual Rate Per

  Rentable Square Foot

  	
   

  	
  Monthly Base Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commencement Date through 6th month

  	
   

  	
  $21.00

  	
   

  	
  Abated

  	
   

  
	
  7th month – 18th month

  	
   

  	
  $21.00

  	
   

  	
  $11,327.75

  	
   

  
	
  19th month – 30th month

  	
   

  	
  $21.63

  	
   

  	
  $11,667.58

  	
   

  
	
  31st month – 42nd month

  	
   

  	
  $22.28

  	
   

  	
  $12,018.20

  	
   

  
	
  43rd month – 54th month

  	
   

  	
  $22.95

  	
   

  	
  $12,379.61

  	
   

  
	
  55th month – 66th month

  	
   

  	
  $23.64

  	
   

  	
  $12,751.81

  	
   

  



 


6.                                       SECURITY DEPOSIT: 
$12,751.81 (see Section 5).


 


7.                                       TENANT’S PROPORTIONATE SHARE OF OPERATING EXPENSES AND
OF TAXES:  9.3 percent (see Section 3 and Section 4).


 


8.                                       BASE YEAR: 
2005


 


9.                                       USE OF PREMISES:  Office Use.


 


10.                                 PARKING SPACES:  1 space for
every 250 rentable square feet of leased Premises.


 


11.                                 NOTICE ADDRESSES:


 


	
   

  	
  Landlord:

  	
  Mark Tanasbourne
  LLC

  
	
   

  	
   

  	
  c/o Melvin Mark
  Brokerage Company

  
	
   

  	
   

  	
  111 SW Columbia
  Street, Suite 1380

  
	
   

  	
   

  	
  Portland, OR
  97201

  



 





















 


	
   

  	
  Tenant:

  	
  MathStar,
  a Minnesota corporation

  
	
   

  	
   

  	
  19075
  NW Tanasbourne Drive, Suite 200

  
	
   

  	
   

  	
  Hillsboro,
  OR  97124

  



 


12.                                 LANDLORD’S BROKER:                                                 M.
James Mark, Melvin Mark Brokerage Company


 


13.                                 TENANT’S BROKER:                                                                      Gordon
King, Colliers International


 





















 


OFFICE LEASE AGREEMENT


 


	
  DATED:

  	
   

  	
  May 18,
  2005

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BETWEEN:

  	
   

  	
  MARK
  TANASBOURNE LLC, an Oregon limited liability company

  	
   

  	
  (“Landlord”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  MathStar,
  a Minnesota corporation

  	
   

  	
  (“Tenant”)

  



 


SECTION 1          DEMISE AND PREMISES


 


1.1                                 Demise


 


Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, upon the terms and conditions set forth in this Lease, the Premises
described in Section 1.2 in the Building described in the Summary of
Fundamental Provisions (the “Building”). 
The Building is located upon the land described on the attached Exhibit B
(the “Land”).  The Land, the Building,
and all other improvements on the Land whether now in existence or constructed
during the term of this Lease are part of Sunset Center at Tanasbourne (the “Project”).


 


1.2                                 Premises


 


The Premises (the “Premises”) leased to Tenant are identified by the
outlining on the floor plan(s) attached as Exhibit A and are described in
the Summary of Fundamental Provisions.


 


1.3                                 Commencement and Expiration Dates


 


The term of this Lease shall commence on the earlier of (a) the
date on which Tenant takes possession of the Premises or (b) the date on
which Landlord’s work, if any, in the Premises as described in the Work
Agreement attached as Exhibit C to the Lease (“Landlord’s Work”) is
substantially completed.  If Landlord is
unable to give possession of the Premises on the estimated commencement date
set forth in the Summary of Fundamental Provisions, Landlord shall not be
subject to any liability, and the validity of this Lease shall not be impaired
under such circumstances, but Base Rent and Additional Rent shall be abated
(provided Tenant is not responsible for the delay) until Landlord has given
notice to Tenant that the Premises are ready for Tenant’s possession.  If Landlord has given Tenant permission to
take possession of the Premises prior to the date on which Landlord’s Work is
substantially completed, such possession shall be deemed to be upon all the
terms, covenants, conditions and provisions of this Lease, including, without
limitation, the payment of Base Rent and the Additional Rent.  The term of this Lease shall expire, unless
sooner terminated pursuant to the provisions of this Lease, sixty-six (66) months after the
Commencement Date (the “Expiration Date”).


 


SECTION 2          RENT


 


2.1                                 Rents


 


Tenant agrees to pay to Landlord rent consisting of Base Rent and
Additional Rent described in Section 3 of this Lease (which may, along
with all other sums which become payable to Landlord by Tenant, be referred to
in this Lease as “Rents”).  All Rents
shall be paid in advance on the first day of each month unless otherwise
expressly provided in this Lease.  All
Rents shall be paid in lawful money of the United States to Landlord at its
office set forth in the Summary of Fundamental Provisions, or such other place
as Landlord shall designate by written notice to Tenant.  Tenant shall pay all Rents promptly when due
without notice or demand therefor and without any abatement, deduction or
setoff, for any reason whatsoever, except as may be expressly provided in this
Lease.  If the Commencement Date occurs
on a day other than the first day of a calendar month, the Rents for that
partial calendar month shall be prorated based on the number of days in such
month.


 


1





















 


2.2                                 Base Rent


 


The Base Rent shall be as set forth in the Summary of Fundamental
Provisions.


 


SECTION 3          ADDITIONAL RENT


 


3.1                                 Operating Expenses


 


Tenant agrees to pay its Proportionate Share of all increases in Operating
Expenses in excess of those incurred by Landlord during the Base Year.  Tenant’s Proportionate Share of Operating
Expenses is set forth in the Summary of Fundamental Provisions and is
determined by dividing the number of rentable square feet in the Premises by
the number of rentable square feet in the Building.  The term “Operating Expenses” shall mean all
costs, fees, and expenses paid or incurred by Landlord or on Landlord’s behalf
as determined by Landlord to be necessary or appropriate for the efficient
operation, maintenance, repair, replacement, management, administration and
insurance of the Project and the curbs, sidewalks, common areas, parking
garage, and plazas adjoining the Project, except for Taxes which shall be paid
in accordance with Sections 3.3 and 4 below.  Operating Expenses include, without
limitation, the following:


 


3.1.1                        Salaries,
wages, medical, insurance, union and general welfare benefits, pension
payments, payroll taxes, worker’s compensation insurance, uniforms and related
expenses and benefits of persons engaged in the repair, operation, maintenance,
management, administration, engineering and security of the Project;


 


3.1.2                        All
expenses incurred for gas, electricity, heat, ventilation, air-conditioning,
water, sewer, garbage and waste disposal, recycling, elevator service and other
services or utilities furnished to the Project, together with any taxes
thereon;


 


3.1.3                        All
maintenance, repair, and replacement costs relating to the Project including,
but not limited to, the public and service areas of the Project including, but
not limited to, sidewalks, landscaping, parking, service areas, mechanical
rooms and improvement exteriors;


 


3.1.4                        The cost
of all insurance charges, including but not limited to rent loss insurance, casualty,
liability, fire with extended coverage endorsement, and other insurance
covering the Project;


 


3.1.5                        The cost
or rental of all supplies, including without limitation, cleaning supplies,
light bulbs, tubes and ballasts, materials and equipment, and all taxes
thereon;


 


3.1.6                        The cost
of hand tools and other moveable equipment used in the repair, maintenance or
operation of the Project;


 


3.1.7                        The cost
of all charges for window and other cleaning, janitorial and security services;


 


3.1.8                        Charges of
independent contractors performing repairs or services to the Project not
otherwise charged to a specific tenant;


 


3.1.9                        Repairs,
replacements and general maintenance made by Landlord or on Landlord’s behalf;


 


3.1.10                  Alterations and
improvements to the Project made by reason of the laws and requirements of any
public authorities or the requirements of insurance bodies;


 


3.1.11                  Management fees
paid to a third party, or, if no managing agent is employed by Landlord,
Landlord shall be entitled to charge a management fee which is not in excess of
the then-prevailing rates for management fees of other first-class office
projects in the Portland, Oregon metropolitan area;


 


2





















 


3.1.12                  The costs of any
capital improvements or repairs to the Project and/or of any machinery or
equipment installed in the Project amortized over the useful life of the
improvements, machinery and/or equipment as estimated by Landlord, which is
made or becomes operational, as the case may be, after the completion of the
initial construction of the Building;


 


3.1.13                  The rental costs
or rental value of the management offices serving the Project;


 


3.1.14                  Legal,
accounting and other professional fees incurred in connection with operation,
maintenance and management of the Project; and


 


3.1.15                  All other
charges properly allocable to the operation of the Project in accordance with
standard real estate accounting practices in the Portland, Oregon metropolitan
area.


 


3.2                                 Operating Expense Exclusions


 


The
following expenses shall be excluded from Operating Expenses:  (a) depreciation or amortization on the
initial construction of the Project; (b) debt service (including without
limitation, interest, principal and any impound payments) required to be made
on any mortgage or deed of trust recorded with respect to the Project; (c) rent
on any ground lease; (d) the cost of leasehold improvements made for
Tenant or any tenants of the Project; (e) leasing commissions, attorneys’
fees, costs and disbursements and other expenses (including advertising)
incurred in connection with leasing, renovating, or improving space for tenants
or other occupants of the Project; (f) repairs, replacements, alterations
and general maintenance paid for by insurance proceeds or by Tenant or third
parties; and (g) specific costs incurred for the account of, or separately
billed to and paid by, specific tenants of the Project.


 


3.3                                 Taxes


 


Tenant
agrees to pay its Proportionate Share of all increases in Taxes (as defined
below) in excess of the Taxes payable by Landlord during the Base Year.  Tenant’s Proportionate Share of Taxes shall
be the same as Tenant’s Proportionate Share of Operating Expenses, as provided
in Section 3.1 of this Lease.  “Taxes”
shall mean all taxes and assessments of all public, quasi-public, and
governmental authorities and owner associations against the Project or the
ownership, management, or operation of the Project, all rent taxes, local
improvement districts, special and general assessments, gross receipts taxes, taxes
on Landlord’s interest under this Lease, all taxes in lieu of or in addition to
the foregoing, whether or not such taxes are now in effect (excluding, however,
any tax based upon Landlord’s net income and any inheritance taxes), and the
cost of contesting any such taxes or assessments.


 


SECTION 4          PAYMENT OF ADDITIONAL RENT


 


4.1                                 Written Statement of Estimate


 


Prior
to the beginning of each calendar year during the term of this Lease after the
Base Year, or as soon thereafter as practical, Landlord shall furnish Tenant
with a written statement setting forth Tenant’s Proportionate Share of the increase in the estimated Operating
Expenses and Taxes for the next calendar year. 
Failure of Landlord to deliver the statement of estimated Operating
Expenses and Taxes shall not relieve Tenant of its obligation to pay Tenant’s
Proportionate Share of Operating Expenses and Taxes.  Tenant shall each month pay to Landlord as
Additional Rent an amount equal to Tenant’s Proportionate Share as shown in
Landlord’s written statement.


 


4.2                                 Final Written Statement


 


Within
ninety (90) days after the close of each calendar year after the Base Year
during the term of this Lease, or as soon thereafter as practical, Landlord
shall deliver to Tenant a written statement (the “Operating Statement”) setting
forth Tenant’s actual Proportionate Share of the increases, if any, in
Operating Expenses and of the Taxes for the preceding calendar year over the
Base Year.  In the event Tenant’s share
of the actual Operating Expenses is in excess of the amount actually paid by
Tenant for Operating Expenses on an estimated basis for the


 


3





















 


year in question, Tenant
shall pay the amount of such deficiency to Landlord within thirty (30) days
following the date of such statement.  In
the event Tenant’s share of actual Operating Expenses is less than the amount
actually paid by Tenant for Operating Expenses on an estimated basis for the
year in question, then Landlord shall either apply the overpayment to Tenant’s
next Rent payment, or promptly reimburse the excess to Tenant.  In the event Tenant’s share of the actual
Taxes is in excess of the amount actually paid by Tenant for Taxes on an
estimated basis for the year in question, Tenant shall pay the amount of such
deficiency to Landlord within thirty (30) days following the date of such
statement.  In the event Tenant’s share
of actual Taxes is less than the amount actually paid by Tenant for Taxes on an
estimated basis for the year in question, then Landlord shall either apply the
overpayment to Tenant’s next Rent payment, or promptly reimburse the excess to
Tenant.  In no event shall Base Rent
decrease pursuant to the provisions of Section 3 or Section 4 of this
Lease.


 


4.3                                 Adjustment for Reduced Occupancy


 


If
during any calendar year, less than 95 percent of the rentable area of the
Building is occupied, Landlord’s estimation and determination of Operating
Expenses shall be based on Landlord’s estimate of Operating Expenses as if the
Building were at least 95 percent occupied. 
Landlord shall use sound accounting and management principles to make
appropriate adjustments in occupancy-related Operating Expenses for the year in
question for the purpose of avoiding distortion in the amount of Operating
Expenses by reason of variation in the total occupancy of the Building.  The amount so determined by Landlord shall be
deemed to be the Operating Expenses for the Building for the year in question.


 


4.4                                 Tenant Examination


 


Any
objections by Tenant to the Operating Statement shall be made in writing given
to Landlord within 60 days after the Operating Statement is submitted to
Tenant.  If no objections are made within
such time period, the Operating Statement shall be conclusive and binding on
Tenant.  If Tenant makes any such
objection within the time period required by this Section 4.4, Tenant
shall have the right to inspect, at Tenant’s sole cost and expense, Landlord’s
records pertaining to the computation of Operating Expenses and Taxes, so long
as the following provisions are complied with: 
(a) Tenant shall perform such inspection within 75 days following
the receipt of the Operating Statement pertaining to the year in question, (b) Tenant
shall provide to Landlord a copy of the inspection report, (c) Tenant
shall keep the report confidential and shall not share the contents, results,
or the fact that Tenant is investigating the Operating Expenses or the Taxes,
or adjustments with any other person, except for its advisors on a need-to-know
basis, and (d) Tenant shall pay to Landlord within ten (10) days
following its inspection any amount determined to be owing by Tenant.  Tenant’s inspection may only be conducted by
Tenant’s employees, advisors or by
Tenant’s certified public accountant paid on an hourly basis (and not a
contingent fee basis).  Landlord agrees
to pay Tenant any amount determined to be owing to Tenant within ten (10) days
following Landlord’s receipt of the inspection report or, if Landlord does not
agree with Tenant’s inspection report, as determined by an independent
certified public accountant within ten (10) days following the date on
which a report by such independent certified public accountant is given to
Landlord and Tenant.  Such independent
certified public accountant shall be selected by Landlord and approved in
advance by Tenant, which approval shall not be unreasonably withheld.


 


SECTION 5          SECURITY DEPOSIT


 


Tenant
has deposited with Landlord the sum shown on the Summary of Fundamental
Provisions as security for the full and faithful performance by Tenant of
Tenant’s obligations under this Lease. 
The security deposit shall not earn interest, and shall not be
considered an advance payment of rent or a measure of Landlord’s damages in the
event of a default by Tenant.  If Tenant
defaults in the performance of any of Tenant’s obligations under this Lease,
including the payment of Rents, Landlord may, but shall not be obligated to,
use, apply or retain all or any part of the security deposit to the extent
required for the payment of any sum in default. 
If Landlord shall so use, apply or retain all or any part of the
security deposit, Tenant shall upon demand immediately deposit with Landlord a
sum equal to the amount so used, applied or retained.  If Tenant shall fully and faithfully comply
with all of Tenant’s obligations under this Lease, the security deposit or any
balance thereof shall be paid to Tenant within thirty (30) days after the date
on which this Lease shall expire or sooner terminate, and after delivery to
Landlord of possession of the Premises and after all payments required to be
made by Tenant in this Lease, have been paid.


 


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SECTION 6          USE


 


6.1                                 General


 


Tenant
shall use and occupy the Premises continuously during the term of this Lease
for general office use and for no other purpose without the prior written
consent of Landlord.  If any governmental
license or permit shall be required for the proper and lawful conduct of Tenant’s
business in the Premises, Tenant, at its expense, shall procure, maintain and
comply with the terms and conditions of each such license or permit.  Tenant shall, at Tenant’s expense, comply
with all laws, codes, rules, statutes, regulations, orders and other
requirements of public authorities (“Laws”) relating to Tenant’s use and
occupancy of the Premises.


 


6.2                                 Negative Covenants as to Use


 


Tenant
shall not, without the prior written consent of Landlord, use any apparatus,
machinery or device in or about the Premises which will cause any noise,
vibration, fumes or electronic interference or which will overload the floors
or structure of the Premises.  Tenant
shall not at any time use or occupy, or suffer or permit anyone to use or
occupy the Premises, or permit anything to be done in the Premises, in any
manner which:  (a) violates the
Certificate of Occupancy for the Premises or for the Building; or (b) causes
or is liable to cause injury to the Premises or the Building or any equipment,
facilities or systems therein; or (c) constitutes a violation of Laws or
the requirements of insurance bodies; or (d) impairs or tends to impair
the character, reputation or appearance of the Building as a first-class office
building; or (e) impairs or tends to impair the proper and economic
maintenance, operation and repair of the Building and/or its equipment,
facilities or systems; or (f) annoys or inconveniences or tends to annoy
or inconvenience other tenants or occupants of the Project; or (g) generates,
releases, stores, or deposits on or about the Premises any environmentally
hazardous or toxic substances, materials, wastes, pollutants, oils, or
contaminants, as defined by any Law.


 


SECTION 7          SUBORDINATION


 


This
Lease, and all rights of Tenants hereunder, are and shall be subject and
subordinate to any ground leases or master leases (“Master Leases”) covering
the Land and/or the Building now or hereafter existing, and to all mortgages,
trust deeds and other financing and security instruments (“Mortgages”), which
may now or hereafter affect the Land and/or the Building, and to all renewals,
modifications, replacements and extensions of such Master Leases and
Mortgages.  This Section shall be
self-operative, and no further instrument of subordination shall be
required.  In confirmation of such
subordination, Tenant shall execute, acknowledge and deliver to Landlord any
instrument that Landlord may reasonably request to evidence such subordination
within ten days after a request therefor. 
If the interest of Landlord under this Lease is transferred, whether
through possession, foreclosure or delivery of a new lease or deed, then Tenant
shall recognize the party succeeding to Landlord’s rights and obligations (the “Successor
Landlord”) as the Landlord under this Lease and shall promptly execute and
deliver any instrument that such Successor Landlord may reasonably request to
evidence such attornment.  Upon such
attornment, Tenant’s rights hereunder shall continue in full force and effect
as a direct Lease between the Successor Landlord and Tenant upon all of the
terms, conditions and covenants as set forth in this Lease so long as Tenant is
not in default.  Landlord shall use commercially reasonable effort to
obtain customary nondisturbance agreements from holders of encumbrances in the
building.


 


SECTION 8          TRANSFERS BY TENANT


 


8.1                                 General


 


Tenant
shall not assign this Lease or any interest therein, or sublet the Premises or
any part thereof, or mortgage, encumber or otherwise transfer or dispose of
Tenant’s interest in the Premises, either voluntarily or involuntarily, without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed.  If Tenant requests consent to a proposed
transfer, Tenant shall pay for Landlord’s reasonable legal and administrative
expenses incurred in reviewing the request for consent to transfer.  Consent to one such transfer shall not imply
any future consent, and all subsequent transfers shall be made only upon
obtaining prior written consent of Landlord. 
Assignees shall become directly liable to Landlord for all obligations
of Tenant


 


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hereunder, but Tenant
shall remain liable for all obligations under this Lease.  Tenant agrees that the instrument by which
any transfer consented to by Landlord is accomplished shall expressly provide
that the transferee will perform and observe all the agreements, covenants,
conditions and provisions to be performed and observed by Tenant under this
Lease and that Landlord will have the right to enforce such agreements,
covenants and conditions directly against such transferee.  It shall be the responsibility of Tenant to
provide Landlord, in a manner reasonably acceptable to Landlord, with such
information as Landlord determines is necessary for Landlord to grant or
withhold its consent.  Landlord may
withhold its consent if the proposed transferee fails to satisfy the criteria
then generally (but not necessarily uniformly) used by Landlord in selecting
new tenants, which criteria may include, without limitation, financial capability,
business reputation, business experience, existing and future space
requirements of other tenants, existing and future space requirements of the
proposed transferee, the intended use, and the
anticipated demand for services by the transferee., and the transferee’s
anticipated contribution to the prestige of the Project.  Landlord shall not be obligated to approve a
transfer to an existing Project tenant or another party with whom Landlord has
been negotiating to lease space in the Project. 
If Tenant is a corporation or other entity, then any merger,
consolidation, liquidation, change in the ownership or power to vote the
majority of voting stock or equity interests of tenant shall constitute a
transfer for the purposes of this Section 8.


 


8.2                                 Landlord’s Option to Recapture Premises


 


Tenant
shall, together with any request for Landlord’s consent to assign this Lease or
to sublet the Premises, or any part thereof, offer to Landlord the right to
recapture all or any part of the Premises which Tenant desires to assign or
sublet.  Landlord shall have fifteen (15) thirty (30) days following
receipt of Tenant’s notice to make an election to recapture under this Section 8.2.  Landlord may require Tenant to assign or
sublease to Landlord all or any portion of the Premises Tenant desires to
assign or sublease.  In the event
Landlord shall elect to recapture all or any portion of the Premises, Base Rent
shall be reduced by a fraction the numerator of which is the Net Rentable area
of that portion of the Premises being recaptured by Landlord and the
denominator of which is the total Net Rentable area of the Premises.


 


8.3                                 Landlord’s Option to Increase Rent


 


In the
event Landlord consents to Tenant’s proposed transfer, Landlord, at its option,
may require Tenant to pay, when paid by the transferee to Tenant, the following
sums which shall be added to and included in Base Rent:  all of any rents, additional charges or other
consideration payable pursuant to the transfer to Tenant (including all sums
payable for the sale or rental of Tenant’s leasehold improvements or fixtures
but reduced by any marketing expenses paid to third parties incurred in
connection with reletting the Premises or any portion thereof) by the
transferee which are in excess of the Base Rent and Additional Rent payable by
Tenant with respect to the space in question pursuant to the terms of this
Lease.  The sums payable under Section 8.3
shall be paid to Landlord as and when paid by the transferee to Tenant.


 


SECTION 9          LIABILITY AND INSURANCE


 


9.1                                 Waiver of Subrogation


 


Tenant
and Landlord shall each secure appropriate clauses in, or endorsements upon,
each insurance policy obtained by them which cover or are applicable to the
Premises or the personal property, fixtures and equipment located therein, pursuant
to which the insurance companies waive subrogation or permit the insureds,
prior to any loss, to agree with a third party to waive any claim they might
have against said third party without invalidating the coverage under the
insurance policies.  Tenant’s waiver of
subrogation or permission for waiver of any claim shall extend to Landlord and
its agents and employees.  Landlord’s
waiver of subrogation or permission of waiver of any claim shall extend to
Tenant and its agents and employees. 
Tenant and Landlord hereby release each other and their respective
agents and employees in respect of any claim which they might otherwise have
against each other or their respective agents or employees for loss, damage or
other casualty occurring during the term of this Lease and covered under a fire
insurance policy with extended coverage endorsement in the form normally used
in respect of similar property in the Portland, Oregon, metropolitan area.


 


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9.2                                 Tenant’s Insurance


 


Tenant,
at its expense, shall procure and maintain at all times during the term of this
Lease, commercial general liability insurance in respect of the Premises and
the conduct or operation of business therein, with Landlord and its managing
agent, if any, and any party to a Master Lease or any Mortgagee whose name and
address shall previously have been furnished to Tenant, as additional named
insureds, with limits of not less than $2,000,000 for bodily injury or death to
any one person and $3,000,000 for bodily injury or death to any number of
persons in any one occurrence, and $2,000,000 for property damage.  All such insurance shall insure the
performance by Tenant of the indemnity agreement as to liability for injury to,
illness of, or death of persons and damage to property set forth in this
Lease.  Tenant shall maintain at Tenant’s
expense, insurance with extended coverage endorsement covering Tenant’s
Property as defined in Section 11.2 of this Lease.


 


9.3                                 Delivery of Policies; Cancellation


 


Tenant
shall deliver to Landlord and any additional named insureds evidence of the
policies or certificates of insurance required by Section 9.2 in a form
reasonably satisfactory to Landlord issued by an insurance company authorized
to issue insurance in the State of Oregon, at least ten (10) days before
the Commencement Date.  Tenant shall
procure and pay for renewals of such insurance prior to the time for the
expiration of such policies, and Tenant shall deliver to Landlord and any
additional named insureds evidence of such renewal policies at least thirty
(30) days before the expiration of any existing policy.  All such policies shall contain a provision
whereby the policies cannot be canceled or modified unless Landlord and any
additional named insureds are given at least thirty (30) days prior written
notice of such cancellation or modification.


 


SECTION 10        ALTERATIONS


 


10.1                           General


 


Except
for any initial improvements which Landlord has expressly agreed to provide
pursuant to the attached Exhibit C, Tenant is leasing the Premises “AS IS”
on the date of this Lease.  Tenant shall
make no changes, additions, alterations or improvements to the Premises, or
attach any fixtures or equipment (the “Alterations”) without the prior written
consent of Landlord.  Before proceeding
with any Alterations, Tenant shall submit to Landlord for Landlord’s approval,
plans and specifications for the proposed work to be done.  Tenant shall not proceed with such work until
Tenant obtains Landlord’s approval. 
Tenant shall pay to Landlord upon demand the cost and expense incurred
by Landlord in reviewing or having reviewed, said plans and specifications, and
inspecting the Alterations to determine whether the same are being performed in
accordance with the approved plans and specifications and all Laws including,
without limitation, the reasonable fees of any architect or engineer employed
by Landlord for such purpose.


 


10.2                           Bonds


 


Before
proceeding with any approved Alterations, at Landlord’s request, Tenant shall
obtain and deliver to Landlord a performance bond and labor and materials
payment bond (issued by a corporate surety licensed to do business in the State
of Oregon), each in an amount equal to the estimated cost of the Alterations
and in form satisfactory to Landlord.


 


10.3                           Permits


 


Tenant,
at its expense, shall obtain all necessary governmental permits and
certificates for the commencement and prosecution of the Alterations and for
final approval thereof upon completion, and shall cause the Alterations to be
performed in compliance with all such permits and certificates, applicable Laws
and all applicable requirements of insurance.


 


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10.4                           Manner


 


The
Alterations shall, at Landlord’s option, be performed by Landlord or by contractors
designated or first approved by Landlord, which approval shall not be
unreasonably withheld.  Tenant shall pay
any construction supervision fees charged by Landlord or its construction
supervision to supervise any such work. 
The Alterations shall be performed in such manner as not to interfere
with or delay, and as not to impose any additional expense upon, Landlord in
the construction, maintenance, repair or operation of the Project; and if any
such additional expense shall be incurred by Landlord as a result of Tenant’s
performance of the Alterations, Tenant shall pay such additional expense upon
demand.  In performing the Alterations,
Tenant shall fully and promptly comply with and observe the Rules and
Regulations of Landlord then in force with respect to the making of the
Alterations.


 


10.5                           Indemnification of Landlord


 


Tenant,
at its expense, shall procure the cancellation or discharge of all notices of
violation and/or liens arising from or otherwise connected with the
Alterations, or any other work, labor, services or materials done for or
supplied to Tenant, or any other person claiming through or under Tenant.  Tenant shall defend, indemnify and save
harmless Landlord and any Master Lessor and Mortgagee from and against any and
all mechanics and other liens and encumbrances filed in connection with the
Alterations, or any other work, labor, services or materials done for or
supplied to Tenant, or any person claiming through or under Tenant.  Tenant, at its expense, shall procure the
satisfaction or discharge of record of all such liens and encumbrances of
record within fifteen (15) days after the filing thereof.


 


SECTION 11        LANDLORD’S AND TENANT’S PROPERTY


 


11.1                           Landlord’s Property


 


All
fixtures, equipment, improvements, wires, cables, conduits and appurtenances
attached to or built into the Premises, whether or not by or at the expense of
Tenant, shall be and remain a part of the Premises, shall be deemed the
property of Landlord and shall not be removed by Tenant, except as provided in Section 11.2;
and except that, at Landlord’s written request, Tenant shall, at its sole
expense upon termination of the Lease, remove those items specified by
Landlord, which are deemed herein the property of Landlord, except for Building
Standard office improvements which are installed as part of Landlord’s Work
which Tenant shall not be required to remove.


 


11.2                           Tenant’s Property


 


All
unattached business and trade fixtures, machinery and equipment, communications
equipment and office equipment which are installed in the Premises by or for
the account of Tenant without expense to Landlord and which can be removed
without structural damage to the Building and all furniture, furnishings
(excluding window coverings) and other articles of movable personal property
owned by Tenant and located in the Premises (“Tenant’s Property”) shall be and
remain the property of Tenant, may be removed by Tenant at any time during the
term of this Lease, and shall be removed prior to the Expiration Date, or
earlier termination date, of this Lease; provided, that if any of Tenant’s
Property is removed, Tenant shall repair or pay the cost of repairing any
damage to the Premises or to the Project resulting from the installation and/or
removal thereof.


 


11.3                           Abandonment


 


Any
items of Tenant’s Property which shall remain in the Premises after the
Expiration Date of this Lease, or any earlier termination of this Lease, at the
option of Landlord, may be deemed to have been abandoned, and in such case such
items may be retained by Landlord, and Landlord may deal with Tenant’s Property
in such manner as Landlord shall determine, at Tenant’s expense.


 


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SECTION 12        REPAIRS AND MAINTENANCE


 


12.1                           Landlord’s Obligations


 


Landlord
shall cause to be made all structural repairs to the roof, walls, subflooring,
and foundations of the Building as and when needed in or about the Premises and
the cost thereof shall be an item of Operating Expenses, except for those
repairs for which Tenant is responsible pursuant to any of the provisions of
this Lease.


 


12.2                           General


 


Tenant
shall, at its expense, throughout the term of this Lease, take good care of the
Premises, the fixtures and appurtenances therein and Tenant’s Property.  Tenant, at its expense, shall promptly
replace all scratched, damaged or broken doors and glass (except for exterior window glass) in and
about the Premises and shall be responsible for all repairs, maintenance and
replacement of wall and floor coverings in the Premises and for the repair and
maintenance of all sanitary and electrical fixtures and equipment therein reasonable wear and tear excepted.  Tenant shall be responsible for all repairs,
interior and exterior, structural and non-structural, ordinary and
extraordinary, in and to the Premises and the Building and the facilities
systems thereof, the need for which arises out of the performance or existence
of Tenant’s Alterations; the installation, use or operation of Tenant’s
Property in the Premises; the moving of Tenant’s Property in or out of the
Building; or the act, omission, misuse or neglect of Tenant or any of its
subtenants or its or their employees, agents, contractors or invitees.


 


12.3                           Manner


 


Tenant
shall promptly make, at Tenant’s expense, all repairs in or to the Premises for
which Tenant is responsible, and any such repairs required to be made by Tenant
to the mechanical, electrical, sanitary, heating, ventilating, air-conditioning
or other systems of the Building.  Such
work shall be performed only by contractor(s) designated or approved in writing
by Landlord.  Any other repairs in or to
the Building and the facilities and systems thereof for which Tenant is
responsible may be performed by Landlord at Tenant’s expense; but Landlord may,
at its option, before commencing any such work or at any time thereafter,
require Tenant to furnish to Landlord such security, bond or surety in a form
and amount as Landlord shall deem necessary to assure the payment for such work
by Tenant.


 


12.4                           Waiver


 


In each case, time being of the essence, Landlord
shall have no liability to Tenant, nor shall Tenant’s covenants and obligations
under this Lease be reduced or abated in any manner whatsoever, by reason of
any inconvenience, annoyance, interruption of or injury to Tenant’s business
arising from Landlord’s making any repairs or changes which Landlord is
required or permitted by this Lease or required by law to make in or to any
portion of the Project, or in or to the fixtures, equipment or appurtenances of
the Project.


 


SECTION 13        ELECTRIC ENERGY


 


13.1                           High Voltage Equipment


 


Tenant
shall not, without the prior written consent of Landlord, which consent will
not be unreasonably withheld, use any equipment, machine, apparatus or device
within the Premises which individually uses electric current in excess of 110
volts.


 


13.2                           Cost of Increasing Capacity


 


Should
Landlord consent to installation of equipment or a design load for the Premises
in excess of that existing upon the Commencement Date, the additional equipment
required to increase the capacity for Tenant’s excess equipment or design load
shall be provided by Landlord.  Tenant
shall, upon installation, pay to Landlord the cost to purchase, install,
service and maintain such additional equipment. 
The cost of the electric


 


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energy used in excess of
the original design load for the Premises as determined by Landlord and its
engineers and consultants shall not be an Operating Expense of the Building but
shall be paid for by Tenant on a monthly basis with the Base Rent commencing on
the date the additional electric energy is made available to Tenant.


 


SECTION 14        CLIMATE CONTROL


 


Landlord
shall maintain and operate the heating, ventilating and air-conditioning
systems serving the Premises and shall furnish heat, ventilating and
air-conditioning in the Premises, the expense of which shall be included in
Operating Expenses, (except as otherwise provided in this Lease and except for
any special requirements of Tenant for its particular use of the Premises) for
occupancy of the Premises during Business Hours of Business Days.  As used herein, “Business Hours” shall mean
generally customary daytime business hours, but not before 7:00 a.m. or
after 6:00 p.m. on weekdays and not before 8:00 a.m. or after 1:00 p.m.
on Saturdays, and “Business Days” shall mean all days except Sundays and days
observed by the Federal or the State government as legal holidays.  If Tenant shall require heat or
air-conditioning service at any other time, Landlord shall furnish such service
upon not less than forty-eight (48) hours’ advance notice from Tenant, and
Tenant shall pay to Landlord upon demand Landlord’s then-established charges
therefor.


 


SECTION 15        OTHER SERVICES


 


15.1                           Elevators


 


Landlord
shall provide elevator service to the Premises during Business Hours of
Business Days and Landlord shall have at least one elevator subject to call at
all other times.  The expense of
providing elevator service shall be included in Operating Expenses.


 


15.2                           Cleaning


 


The
expenses for the cleaning of the Premises, including the exterior and interior
of the windows of the Building, shall be included in the Operating
Expenses.  Landlord shall not be required
to clean any portions of the Premises used for the preparation, serving or
consumption of food or beverages, training rooms, data processing or
reproduction operations or private lavatory or toilets.  Tenant shall pay Landlord on demand the costs
incurred by Landlord for extra cleaning work in the Premises required because
of:  (a) misuse or neglect on the
part of Tenant or the Tenant Related Parties; or (b) interior glass
partitions or surfaces; or (c) non-building standard materials or finishes
installed by Tenant or at Tenant’s request; or (d) the use of the Premises
by Tenant or the Tenant Related Parties other than during Business Hours on
Business Days.


 


15.3                           Removal of Excess Refuse


 


Tenant
shall pay to Landlord on demand for the costs of removal from the Premises and
the Building of any refuse and rubbish of Tenant in excess of that ordinarily
accumulated in business office occupancy or at times other than Landlord’s
standard cleaning times.


 


15.4                           Building Directory


 


Landlord,
at Tenant’s request and expense, shall provide listings on the Building
directory of the names of Tenant, and the names of any of Tenant’s officers and
employees, provided that the names so listed shall not use more than Tenant’s
proportionate share of the space on the Building directory, as reasonably
determined by Landlord.


 


15.5                           Signs


 


Tenant
shall not inscribe, post, place or in any manner display any sign, notice,
picture, placard or any advertising matter whatsoever, anywhere in, on or about
the Premises or the Project without first obtaining Landlord’s prior written
consent.  All such approved signs shall
be removed by Tenant upon the expiration or earlier termination of this Lease
and any damage caused by such removal shall be repaired at Tenant’s
expense.  Landlord


 


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shall provide a sign for
Tenant’s entrance door and at the first floor directory at Landlord’s sole cost
and expense.  Tenant, at Tenant’s sole
cost and expense, shall have the right to place its name on an exterior
Building sign (not attached to the building, but a common monument sign with up
to six other Tenants in the Building, if (a) Landlord first approves the
sign, which approval shall not be unreasonably withheld or delayed, (b) the
sign complies with all applicable Laws, and (c) the sign complies with all
recorded covenants, conditions, and restrictions related to the Project
including without limitation the Tanasbourne Corporate Center Protective
Covenants and the Tanasbourne Corporate Center Design and Development
Guidelines (“CC&Rs”).  Tenant shall
maintain the sign in good condition and repair throughout the Term, pay all
costs associated with the sign, and remove the sign on or before the expiration
of the Lease or its earlier termination.  Tenant shall be allowed exterior monument
signage including MathStar’s name prominently displayed on an entry monument as
shown on Exhibit ”F”.  The final
design is subject to review by the City of Hillsboro, OR and to comply with all
recorded covenants, conditions, and restrictions related to the Project
including without limitation the Tanasbourne Corporate Center Protective
Covenants and the Tanasbourne Corporate Center Design and Development
Guidelines (“CC&Rs”).  Tenant shall
have the use of the top position on the monument.


 


SECTION 16        ACCESS


 


Landlord
shall have access to the Premises at all reasonable times to:  (a) inspect the Premises; or (b) exhibit
the Premises to prospective purchasers, lenders or tenants; or (c) determine
whether Tenant is complying with all its obligations hereunder; or (d) supply
janitor service and any other service to be provided by Landlord to Tenant
hereunder; or (e) post notices of non-responsibility; or (f) make
repairs required of Landlord hereunder or repairs to any adjoining space or
utility services or make repairs, alterations or improvements to any other
portion of the Building, provided, however, that all such work shall be done as
promptly as possible and so as to cause as little interference with the Tenant’s
use of the Premises as reasonably possible. 
Tenant hereby waives any claim against Landlord for damages for any
injury or inconvenience to or interference with Tenant’s business, any loss of
occupancy or quiet enjoyment of the Premises or any other loss occasioned by
such entry except to the extent caused by the gross negligence or intentional
misconduct of Landlord.


 


SECTION 17        INDEMNIFICATION


 


Tenant
shall indemnify, defend, and hold harmless Landlord and all parties to any
Master Lease and/or Mortgagees and their respective partners, directors,
officers, agents and employees (the “Landlord Related Parties”) from and
against any and all claims arising from or in connection with (a) the
conduct or management of the Premises or any business therein, or any condition
created (other than by Landlord or the Landlord Related Parties) in or about
the Premises; or (b) any act, omission or negligence of Tenant or any of
its subtenants, licensees, or partners, directors, officers, agents, employees,
invitees or contractors (collectively, the “Tenant Related Parties”); or (c) any
accident, injury or damage whatever (unless caused by Landlord’s or the
Landlord Related Parties’ negligence) occurring in, at or upon the Premises; or
(d) any breach or default by Tenant in the full and prompt payment and
performance of Tenant’s obligations under this Lease; together with all costs,
expenses and liabilities incurred or in connection with each such claim or
action or proceeding brought thereon, including, without limitation, all
attorneys’ fees and expenses; provided,
however that Tenant shall not be required to indemnify, defend or hold harmless
Landlord to the extent any such claim is caused by Landlord’s negligence or
willful conduct.  Further, Tenant’s
obligations under Section 17 shall not extend to the acts of Tenant’s
invitees outside the Premises. 
Landlord shall not be liable for any loss or damage to any person or
property, which may be caused by theft, or by any act or neglect of any tenant
or occupant of the Project.  Neither
Landlord nor any of the Landlord Related Parties shall be liable for any loss,
injury or damage to Tenant or to any other person, or to its or their property,
irrespective of the cause of such injury, damage or loss, except to the extent
caused by or resulting from the negligence of Landlord or the Landlord Related
Parties, in the operation or maintenance of the Premises or the Project.  Further, neither Landlord nor of the Landlord
Related Parties shall be liable for any such damage caused by other tenants or
persons in, upon or about the Project, even if negligent, for consequential damages,
including lost profits, of Tenant or any person claiming through or under
Tenant.


 


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SECTION 18        DAMAGE OR DESTRUCTION


 


18.1                           General


 


In the
event the Premises shall be destroyed or rendered untenantable either wholly or
in part, by fire or other unavoidable casualty, Landlord may, at its option,
apply any insurance proceeds to the restoration of the Premises to their
previous condition.  This Lease shall
remain in full force and effect unless Landlord, within sixty (60) days
after the happening of any such casualty, shall notify Tenant of its election
not to restore said Premises, in which event this Lease shall terminate as of
the date of the casualty.  Any restoration
by Landlord shall not include replacement of furniture, equipment or other
items designated as Tenant’s Property. 
Tenant shall be responsible for restoration of Tenant’s Property.  If the Building shall be destroyed or damaged
by fire or other casualty insured against under Landlord’s fire and extended
coverage insurance policy to the extent that more than twenty percent (20%)
thereof, as determined by Landlord’s architect, is rendered untenantable, or in
the case the Building shall be materially destroyed or damaged by any other
casualty, Landlord may, at its election, terminate this Lease by notice to
Tenant within sixty (60) days after such destruction or damage.  Such notice shall be effective thirty (30)
days after receipt thereof by Tenant.


 


18.2                           Rent Abatement


 


If all
or part ads Premises shall be damaged or destroyed or rendered untenantable as
a result of fire or other casualty, the Base Rent and Additional Rent provided
herein shall be abated or reduced, as the case may be, in the proportion that
the untenantable area of the Premises bears to the total area of the Premises,
for the period from the date of the damage or destruction to the date the
damage to the Premises shall be substantially repaired, or the date on which
Tenant again uses the untenantable portion, whichever first occurs.


 


SECTION 19        EMINENT DOMAIN


 


19.1                           Total Condemnation


 


If the
whole of the Building or the Premises shall be taken by condemnation or in any
other manner for any public or quasi-public use or purpose, (including a sale
under threat of condemnation) this Lease shall terminate as of the date of
vesting of title on such taking (the “Date of Taking”), and the Base Rent and
Additional Rent shall be prorated and adjusted as of Date of Taking.


 


19.2                           Partial Condemnation


 


If a
part of the Building or the Land shall be so taken, this Lease shall be
unaffected by such taking, except that:


 


19.2.1                  Landlord may, at
its option, terminate this Lease by giving Tenant notice to that effect within
ninety (90) days after the Date of Taking; and


 


19.2.2                  If twenty
percent (20%) or more of the Premises shall be so taken and the remaining area
of the Premises shall not be reasonably sufficient for Tenant to continue
feasible operation of its business, Tenant may terminate this Lease by giving
Landlord notice to that effect within ninety (90) days after the Date of
Taking.


 


19.3                           Effect of Termination or Continuation


 


This
Lease shall terminate on the date that such notice from the Landlord or Tenant
to the other shall be given, and the Base Rent and Additional Rent shall be prorated
and adjusted as of such termination date. 
Upon a partial taking this Lease shall continue in force as to the
remaining part of the Premises, and the Base Rent and Additional Rent shall be
adjusted according to the rentable area remaining.


 


12





















 


19.4                           Award


 


Landlord
shall be entitled to receive the entire award or payment in connection with any
taking without deduction therefrom for any estate vested in Tenant by this
Lease and Tenant shall receive no part of such award.  Tenant shall have no claim against Landlord
or the condemning authority for the unexpired portion of the Lease term.  Nothing contained in this Section 20.4
shall be deemed to prevent Tenant from making a separate claim proceeding for
the value of any of Tenant’s Property which is included in the taking.


 


SECTION 20        SURRENDER


 


On the
last day of the term of this Lease, or upon any earlier termination of this
Lease, or upon re-entry by Landlord upon the Premises, Tenant shall quit and
surrender the Premises to Landlord “broom-clean” and in good order, condition
and repair, except for ordinary wear and tear and in accordance with the
provisions of Section 11 of this Lease.


 


SECTION 21        EVENTS OF DEFAULT


 


21.1                           Events of Default


 


The
occurrence of any one or more of the following events of default shall
constitute a breach of this Lease by Tenant:


 


21.1.1                  Failure of
Tenant to make any Base Rent or Additional Rent payment, or any other payment
under this Lease when it is due within five (5) days
written notice from Landlord that payment is past due.


 


21.1.2                  Tenant makes any
transfer without Landlord’s prior written consent as required under Section 10.


 


21.1.3                  Tenant vacates
or abandons the Premises during the Term, unless such failure is excused under
other provisions of this Lease.


 


21.1.4                  Failure of
Tenant to deliver the instruments described in Section 7 or Section 26
as and when required in such Sections, as applicable, or failure of Tenant to
comply with any applicable Law when and as required by the applicable
governmental authority.


 


21.1.5                  Failure of
Tenant to comply with any other term or condition of this Lease or to fulfill
any other obligation of this Lease within 15 days after written notice by
Landlord specifying the nature of the failure with reasonable
particularity.  No notice and no
opportunity to cure shall be required if Landlord has previously given Tenant
notice of failure to comply with such term or condition or fulfill such other
obligation of this Lease more than twice
in any twelve-month period during the Term.


 


21.1.6                  Dissolution,
termination of existence, insolvency on a balance sheet basis or business
failure of Tenant; the commencement by Tenant of a voluntary case under the
federal bankruptcy laws or under any other federal or state law relating to
insolvency or debtor’s relief; the entry of a decree or order for relief
against Tenant in an involuntary case under the federal bankruptcy laws or
under any other applicable federal or state law relating to insolvency or debtor’s
relief; the appointment of or the consent by Tenant to the appointment of a
receiver, trustee or custodian of Tenant or of any of Tenant’s property; an
assignment for the benefit of creditors by Tenant; Tenant’s failure generally
to pay its debts as such debts become due; the making or suffering by Tenant of
a fraudulent transfer under applicable federal or state law; concealment by
Tenant of any of its property in fraud of creditors; or the imposition of a
lien through legal proceedings or distraint upon any of the property of Tenant
which is not discharged or bonded. 
During any period in which there is a Guarantor(s) of this Lease, each
reference to “Tenant” in this paragraph shall be deemed to refer to “Guarantor
or Tenant” separately.


 


13





















 


SECTION 22        REMEDIES UPON DEFAULT


 


22.1                           Remedies


 


Upon
the occurrence of an event of default, Landlord may exercise any one or more of
the remedies set forth in this Section, or any other remedy available under
applicable law, at equity, or contained in this Lease.


 


22.1.1                  To the extent
permitted by law, Landlord may re-enter and retake possession of the Premises,
without notice, either through self-help, by summary proceedings, any other
applicable action or proceeding, or other means.  Landlord may use the Premises for Landlord’s
own purposes or relet it upon any reasonable terms without prejudice to any
other remedies that Landlord may have by reason of Tenant’s default.  None of these actions will be deemed an acceptance
of surrender by Tenant.  To the extent
permitted by law, and except as expressly provided in this Lease, Tenant waives
the service of any notice of intention to terminate this Lease or to retake the
Premises, and waives service of any demand for payment of rent or for
possession, and of any and every other notice or demand required or permitted
under applicable law.


 


22.1.2                  Landlord at its
option may relet the whole or any part of the Premises, from time to time
either in the name of Landlord or otherwise, to such tenants, for such terms
ending before, on, or after the expiration date of the Term, at such rentals
and upon such other conditions (including concessions and free rent periods) as
Landlord, in its sole discretion, may determine to be appropriate.  Landlord shall have no obligation to relet
the Premises or any part and shall not be liable for refusal or failure to
relet the Premises, or in the event of any such reletting, for refusal or
failure to collect any rent due upon such reletting.  No such refusal or failure shall operate to
relieve Tenant of any liability under this Lease or otherwise affect Tenant’s
liability.  If there is other comparable
unleased space in the Project, Landlord shall have no obligation to attempt to
relet the Premises prior to leasing other space in the Project.


 


22.1.3                  Whether or not
Landlord retakes possession of or relets the Premises, Landlord may recover all
damages caused by the default (including but not limited to unpaid rent,
attorneys’ fees reasonably incurred, and costs of reletting).  Landlord may sue periodically to recover
damages as they accrue during the remainder of the Term without barring a later
action for further damages.  Landlord may
at any time bring an action for accrued damages plus damages for the remaining
Term as allowed by law.


 


22.2                           Cumulative Remedies


 


The
remedies provided for in this Lease are cumulative and in addition to any other
remedy available to Landlord at law or in equity.


 


22.3                           Interest on Damages


 


In
addition to any other remedies Landlord may have under this Lease, if any
Rents, damages or other sums payable hereunder by Tenant to Landlord are not
paid within five (5) days after their due date the same shall bear
interest at a rate equal to the prime rate established by Wells Fargo Bank (or
its successor) on the due date plus two percent (2%), accruing from the due
date to the date of payment.


 


SECTION 23        CURING TENANT’S DEFAULTS


 


If
Tenant shall default in the performance of any of Tenant’s obligations under
this Lease, Landlord, without waiving such default, may (but shall not be
obligated to) perform the same for the account and expense of Tenant, without
notice in a case of emergency, and in any other case only if such default
continues after the expiration of five (5) days from the date
Landlord gives Tenant notice of the default. 
Tenant agrees to reimburse Landlord upon demand for any expenses which
Landlord may incur in complying with the terms of this Lease on behalf of
Tenant.


 


14





















 


SECTION 24        BROKER


 


Tenant
covenants, warrants and represents that it has not engaged any broker, agent or
finder who would be entitled to any commission or fee in connection with the
negotiation and execution of this Lease except as set forth in the Summary of
Fundamental Provisions attached hereto. 
Tenant agrees to indemnify and hold harmless Landlord against and from
any claims for any brokerage commissions and all costs, expenses and
liabilities in connection therewith, including attorneys’ fees and expenses,
arising out of any charge or claim for a commission or fee by any broker, agent
or finder on the basis of any agreements made or alleged to have been made by
or on behalf of Tenant.  The provisions
of this Section 24 shall not apply to any brokers named on the Summary of
Fundamental Provisions.


 


SECTION 25        NOTICES5


 


Any
notice or other communication required or permitted to be given by either party
to the other pursuant to this Lease shall be in writing and delivered in person
to the Landlord or Tenant or sent postage prepaid by registered or certified
mail, addressed to the other party at the address set forth in the Summary of
Fundamental Provisions or such other address which may be designated by a party
in writing.  Notice shall be considered
given and effective on the date of delivery or, if mailed, on the date of such
mailing.


 


SECTION 26        ESTOPPEL CERTIFICATES


 


Each
party agrees that at any time requested by the other party, with not less than
ten business (10) days’ prior
notice, to execute and deliver to the other a statement certifying that this
Lease is unmodified and in full force and effect (or if there have been
modifications, that the Lease is in full force and effect as modified and
stating the modifications), certifying the dates to which the Base Rent and
Additional Rent have been paid, stating whether or not, to the best knowledge
of the signer, the other party is in default in performance of any of its
obligations under this Lease, and, if so, specifying each such default of which
the signer shall have knowledge, and stating whether or not, to the best
knowledge of the signer, any event has occurred which with the giving of notice
or passage of time, or both, would constitute such a default, and, if so,
specifying each such event; it being intended that any such statement delivered
pursuant hereto shall be deemed a representation and warranty to be relied upon
by the party requesting the certificate and by others with whom such party may
be dealing, regardless of independent investigation.  Tenant shall also include in any such
statement such other information concerning this Lease as Landlord may
reasonably request.  Within ten days
after the Commencement Date, Tenant shall execute and deliver to Landlord a
completed estoppel certificate in the form attached as Exhibit D.


 


SECTION 27        RELOCATION OF PREMISES


 


If the
Premises contain less than 3,000 rentable square feet, Landlord may elect by
notice to Tenant to substitute for the Premises other office space in the
Project (herein called “Substitute Premises”) designated by Landlord; provided
that the Substitute Premises contain at least the same useable square foot area
as the Premises and have a configuration substantially similar to that of the
Premises.  Tenant shall vacate and
surrender the Premises and shall occupy the Substitute Premises promptly (and,
in any event, not later than fifteen (15) days after Landlord has
substantially completed the work to be performed by Landlord in the Substitute
Premises pursuant to this Section).  Base
Rent for the remainder of the Lease term shall be adjusted such that the Base
Rent payable by Tenant per net leasable square foot of the Substitute Premises
shall be the same as that for the Premises. 
Additional Rent payable for the Substitute Premises shall be calculated
in accordance with Section 4. 
Landlord shall, at Landlord’s expense: 
furnish and install in the Substitute Premises fixtures, equipment,
improvements and appurtenances at least equal in kind and quality to those
contained in the Premises at the time such notice of substitution is given by
Landlord; and promptly reimburse Tenant for any other actual and reasonable
out-of-pocket costs incurred by Tenant in connection with Tenant’s move from
the Premises to the Substitute Premises provided such costs are approved by
Landlord in advance, which approval shall not be unreasonably withheld.


 


15





















 


SECTION 28        PARKING


 


Tenant
shall have the nonexclusive right, in common with others, to use up to the
number of parking spaces listed in the Summary of Fundamental Provisions for
automobile parking.  Landlord reserves
the right to grant parking rights to other tenants, to make rules and
regulations relating to the use of parking areas, including reasonable
restrictions on parking by tenants and employees, to designate specific spaces
for the use by any tenant, and to change the parking layout from time to
time.  Tenant shall not park nor allow
the Tenant Related Parties collectively to park in excess of the number of
parking spaces listed in the Summary of Fundamental Provisions in the Project
at any point in time.


 


SECTION 29        MISCELLANEOUS


 


29.1                           Entire Agreement


 


All
understandings and agreements between the parties are merged in this Lease and
neither party is relying upon any statement or representation not embodied in
this Lease.  No agreement shall be
effective to change or modify this Lease, unless such agreement is in writing,
refers expressly to this Lease and is signed by the party against whom
enforcement is sought.


 


29.2                           Successors and Assigns


 


Except
as otherwise expressly provided in this Lease, the obligations of this Lease
bind and benefit the successors and assigns of the parties.


 


29.3                           Nonrecourse Lease


 


Tenant
shall look only to Landlord’s estate and property in the Land and the Building
(or the proceeds thereof) for the satisfaction of Tenant’s remedies for the
collection of a judgment (or other judicial process) requiring the payment of
money by Landlord in the event of any default by Landlord hereunder, and no
other property or assets of Landlord or its partners or principals, disclosed
or undisclosed, shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant’s remedies under or with respect to
this Lease.


 


29.4                           Force Majeure


 


The
obligations of Tenant hereunder shall in no way be affected, impaired or
excused, nor shall Landlord have any liability whatsoever to Tenant,
because:  Landlord is unable to fulfill,
or is delayed in fulfilling, any of its obligations under this Lease by reason
of strike, other labor trouble, governmental preemption of priorities or other
controls in connection with a national or other public emergency or shortages
of fuel, supplies or labor resulting therefrom, or any other cause, whether
similar or dissimilar, beyond Landlord’s reasonable control; or of any failure
or defect in the supply, quantity or character of electricity, water or other
utilities furnished to the Premises, by reason of any requirement, act or
omission of the public utility or others serving the Building with electric
energy, oil, gas or water, or for any other reason whether similar or
dissimilar, beyond Landlord’s reasonable control.


 


29.5                           Effect of Failure to Consent


 


If
Tenant shall request Landlord’s consent and Landlord shall fail or refuse to
give such consent, Tenant shall not be entitled to any damages for any
withholding by Landlord of its consent, it being intended that Tenant’s sole
remedy shall be an action for specific performance or injunction, and that such
remedy shall be available only in those cases where Landlord has expressly
agreed in writing not unreasonably to withhold its consent or where as a matter
of law Landlord may not unreasonably withhold its consent.


 


16





















 


29.6                           Rules and Regulations


 


Tenant
and its employees and agents shall faithfully observe and comply with the rules and
regulations attached to this Lease as Exhibit E and such changes therein
as Landlord may from time to time hereafter make and give notice of to Tenant
(the “Rules and Regulations”). 
Landlord shall not be liable to Tenant for violation of the Rules and
Regulations by any other tenant or its employees, agents, invitees or
licensees.


 


29.7                           Tenant Holdover


 


If,
without objection by Landlord, Tenant fails to vacate the Premises after the
Expiration Date of this Lease, or any earlier termination hereof, Tenant shall
at the election of Landlord become a tenant from month to month upon the terms
of this Lease; provided, however that Base Rent shall be adjusted beginning on
the first day after the Expiration Date to be the equal to 110% of the Base Rent in effect at the
expiration of the Lease for the first two (2) months
and 200% of the Base Rent in effect at the expiration of the Lease thereafter.  Notwithstanding anything contained herein to
the contrary, Tenant shall be liable to Landlord for any and all damages caused
by such failure to vacate the Premises after the Expiration Date of this Lease
or any earlier termination hereof, including but not limited to incidental and
consequential damages to Landlord.


 


29.8                           Tenant Representations


 


If
Tenant is a corporation or other entity, each person executing this Lease on
behalf of Tenant hereby covenants and warrants that Tenant is duly formed and
validly existing under the laws of its state of formation; Tenant has full
right and authority to enter into this Lease and to perform all Tenant’s
obligations hereunder; and each person (and both of the persons if more than
one signs) signing this Lease on behalf of Tenant is duly and validly
authorized to do so.


 


29.9                           Non-Waiver


 


No
provision of this Lease shall be deemed to have been waived by Landlord unless
such waiver is in writing signed by Landlord. 
Landlord’s waiver of a breach of any term or condition of this Lease
shall not be deemed a waiver of any subsequent breach.  Acceptance of any Rents or other payments
shall not be deemed a waiver of such breach.


 


29.10                     Square Footage Calculations Approximate


 


The
parties acknowledge and agree that any calculations of square footage in the
Premises and in the Project are approximations. 
No recalculation of square footage shall affect the obligation of Tenant
under this Lease including, without limitation, the amount of Base Rent payable
by Tenant or the amount of Tenant’s Proportionate Share of Operating Expenses
or the amount of Tenant’s Proportionate Share of Taxes.


 


29.11                     Time


 


Time
is of the essence of this Lease.


 


29.12                     Late Fees


 


Tenant
acknowledges that late payment by Tenant to Landlord of any Rent due hereunder
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain.  Such costs may include, without limitation,
processing and accounting charges and late charges which may be imposed on
Landlord under the terms of any Mortgage. 
Accordingly, if any Rent payment is not received by Landlord within five
days after it is due, Tenant shall pay to Landlord a late charge equal to ten
percent (10%) of the overdue amount.  The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs incurred by Landlord by reason of the late payment by
Tenant.  Acceptance of any late charge by
Landlord shall in no event constitute a waiver of Tenant’s default with respect
to the overdue amount in question, nor prevent Landlord from exercising any of
the other rights and remedies granted hereunder.


 


17





















 


29.13                     Attorneys’ Fees


 


In the
event a suit, action, arbitration, or other proceeding of any nature
whatsoever, including without limitation any proceeding under the U.S.
Bankruptcy Code, is instituted, or the services of an attorney are retained, to
interpret or enforce any provision of this Lease or with respect to any dispute
relating to this Lease, the prevailing or non defaulting party shall be
entitled to recover from the losing or defaulting party its attorneys’,
paralegals’, accountants’, and other experts’ fees and all other fees, costs,
and expenses actually incurred and reasonably necessary in connection
therewith.  In the event of suit, action,
arbitration, or other proceeding, the amount thereof shall be determined by the
judge or arbitrator, shall include fees and expenses incurred on any appeal or
review, and shall be in addition to all other amounts provided by law.


 


29.14                     Quiet Enjoyment


 


So
long as Tenant pays all Rents and complies with all of the terms and conditions
of this Lease, Tenant shall peaceably and quietly have, hold and enjoy the
Premises.  This covenant shall be binding
upon the subsequent successors in interest of Landlord’s interest in this
Lease.


 


29.15                     Severability


 


If any
portion of this Lease is held to be illegal, invalid or unenforceable under
present or future law effective during the term of this Lease, the remainder of
this Lease shall not be affected thereby.


 


29.16                     Incorporation of Exhibits


 


Exhibit A
(Floor Plans), Exhibit B (Legal Description of Project), Exhibit C
(Work Agreement), Exhibit D (Estoppel Certificate) and Exhibit E (Rules and
Regulations) are attached to this Lease and by this reference made a part
hereof.


 


IN
WITNESS WHEREOF, Landlord and Tenant have duly executed this lease as of the
day and year first above written.


 


	
   

  	
  LANDLORD:

  	
  MARK TANASBOURNE
  LLC,

  
	
   

  	
  an Oregon
  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Mark Properties
  Limited Partnership,

  
	
   

  	
   

  	
  an Oregon
  limited partnership, Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Mark Management,
  LLC,

  
	
   

  	
   

  	
   

  	
  an Oregon
  limited liability company, General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
  /s/ M. James
  Mark

  	
   

  
	
   

  	
   

  	
       M. James Mark,
  Co-Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  	
  MATHSTAR,
  a Minnesota corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Daniel
  Sweeney

  	
   

  
	
   

  	
  Its 

  	
  Chief Operating
  Officer

  	
   

  
									



 


18





















 


Exhibits


 


A:  Outline of Premises


A-1:  Outline of Expansion Space


B:  Legal Description of Land


C:  Work Agreement


C-1:  Plan


C-2:  General Specifications for Tenant
Improvements


C-3:  Construction Budget Sheet


D:  Estoppel Certificate


E:  Rules and Regulations


F-1:  Monument View 1


F-2:  Monument View 2


Addendum


 


19





















 





 


A





















 





 


A-1





















 


EXHIBIT B


 


LEGAL DESCRIPTION


 


Situated in the East
one-half of Section 25, Township 2 North, Range 1 West, of the Willamette
Meridian, in the City of Hillsboro, County of Washington and State of Oregon
and being a portion of Lots 15 and 16, Plat of TANASBOURNE CORPORATE CENTER,
recorded in Book 49, pages 47-49, Plat Records of said county and
being described as follows:


 


Beginning at the
Southwest corner of said Lot 15, said point also being on the North
right-of-way line of N.W. Tanasbourne Drive and running thence North 29o55’47”
East, on the West line of said Lot l5 at a distance of 569.73 feet to a point
on the South right-of-way line of the Sunset Highway (US Highway 26); thence
South 49o04’l7” East, on said South right-of way line a distance of 265.21 feet
to a point on a non-tangent 2035.98 foot radius curve right; thence on said
curve through a central angle of 06o18’39” (the long chord of which bears South
53o35’21” East, a distance of 224.13 feet) an arc distance of 224.25 feet to a
point on a non-tangent 829.93 foot radius curve right; thence on said curve
through a central angle of 02o15’27” (the long chord of which bears South 47o34’25”
East, a distance of 32.70 feet) an arc distance of 32.70 feet to a point;
thence leaving said South right-of-way line and running South 49o31’34” West, a
distance of 275.00 feet; thence South 89o16’17” West, a distance of 32.02 feet
to a point on a non-tangent 65.00 foot radius curve left, said point also being
on the North right-of-way line of N.W. Stucki Place; thence on the North and
West right-of-way lines of said N.W. Stucki Place the following courses:  on said curve through a central angle of
150o43’58” (the long chord of which bears South 78o52’34” West, a distance of
125.78 feet) an arc distance of 171.00 feet to the end thereof and the
beginning of a tangent 25.00 foot radius curve right; thence on said curve through
a central angle of 43o45’40”(the long chord of which bears South 25o23’26”
West, a distance of 18.63 feet) an arc distance of 19.09 feet to the end
thereof; thence South 47o16’17” West, a distance of 122.75 feet to the
beginning of a tangent 25.00 foot radius curve right; thence on said curve
through a central angle of 90o00’00”(the long chord of which bears North 87o43’43”
West, a distance of 35.36 feet) an arc distance of 39.27 feet to a point on the
North right-of-way line of N.W. Tanasbourne Drive; thence on said North
right-of-way line the following courses: 
North 42o43’43” West, a distance of 4.25 feet to the beginning of a
tangent 430.00 foot radius curve left; thence on said curve through a central
angle of 16o04’39” (the long chord of which bears North 50o46’03” West, a
distance of 120.26 feet) an arc distance of 120.66 feet to the end thereof;
thence North 58o48’22” West, a distance of 110.44 feet to the point of
beginning.


 


TOGETHER WITH:


 


A parcel of land located
in the northeast one-quarter of section 25, township 1 north, range 2
west, Willamette meridian, Washington County, Oregon, and being portions of
lots 13 and 14 of “Tanasbourne Corporate Center”, described as follows:


 


Beginning at the
southeast corner of said lot 14; thence along the east line of said lot north
29o 55’ 47” east 569.72 feet to a point on the south right-of-way line of
sunset highway (highway 26) as established in deed document no. 92017391;
thence leaving said lot line along said right-of-way line north 49o 04’ 17” west
55.11 feet to a point on the north line of said lot 14 and the south
right-of-way line of sunset highway (highway 26) as shown on the plat of “Tanasbourne
Corporate Center”, thence along said right-of-way line and the north lines of
lot 14 and lot 13 north 60o 04’ 13” west 501.90 feet; thence leaving said line
south 29o 55’ 47” west 605.84 feet to a point on the south line of said lot 13
and the north right-of-way line of N.W. Tanasbourne Drive; thence along said
lot line and right-of-way line on a non-tangent curve concave to the north, the
radius point of which bears north 23o 29’ 50” east, having a radius of 3,970.00
feet, through a central angle of 00o 59’ 50”, an arc length of 69.10 feet
(chord bears south 67o 00’ 05” east 69.10 feet) to a point of reverse
curvature; thence on a curve concave to the south, having a radius of 2,430.00
feet, through a central angle of 08o 41’ 38”, an arc length of 368.72 feet
(chord bears south 63o 09’ 11” east 368.37 feet) to the point of beginning.


 


B-1





















 


EXCEPTING THEREFROM the
following described property:


 


A parcel of land located
in the northeast one-quarter of section 25, township 1 north, range 2
West, Willamette meridian, Washington County, Oregon and being a portion of lot
13, “Tanasbourne Corporate Center”, described as follows:


 


Beginning at the
southeast corner of said lot 13; thence along the east line north 29o 55’ 47”
east 586.25 feet to the northeast corner; thence along the north line north 60o
04’ 13” west 171.00 feet; thence leaving said line south 29o 55’ 47”
west 605.74 feet to a point on the south line of said lot 13 and a point on the
north right-of-way line on N.W. Tanasbourne Drive; thence along said lot line
and right-of-way line on a non-tangent curve concave to the north the radius
point of which bears north 23o 29’ 50” having a radius of 3,970.00 feet,
through a central angle of 00o 59’ 50”, an arc length of 69.10 feet (chord
bears south 67o 00’ 05” east 69.10 feet) to a point of reverse curvature;
thence on a curve concave to the south, having a radius of 2,430.00 feet,
through a central angel of 02o 25’ 44”, an arc length of 103.02 feet (chord
bears south 66o 17’ 08” east 103.01 feet) to the point of beginning.


 


B-2





















 


EXHIBIT C


 


WORK AGREEMENT


 


SECTION 1.                            GENERAL


 




Landlord
agrees to provide certain improvements in the Premises in accordance with this
Work Agreement.  Landlord shall pay  all costs 
towards the cost of designing and construction the improvements in the Premises

as provided in the attached Exhibit C-1
Plans and further described by the Exhibit C-2 General Outline
Specification for Tenant Improvements and Exhibit C-3 Construction
Budget Sheet.    Throughout the process of design and
construction of the Tenant improvements, Dan
Sweeney (“Tenant’s Construction Representative”) shall be available
for onsite and telephone consultations and decisions as necessary.  Tenant’s Construction Representative’s
address is 5900 Green Oak Drive, Minneapolis
MN 55343 and his telephone number is 503-310-2254. 
Tenant’s Construction Representative shall have the authority to bind
Tenant as to all matters relating to the tenant improvements. 




 


SECTION 2.                            DESIGN
OF TENANT IMPROVEMENTS


 









 




2.2                                 




 









 




2.4                                 Tenant
shall be responsible for delays and additional costs in completion of the
design and construction of Tenant’s improvements caused by changes made by Tenant to the attached plans.  




 


SECTION 3.                            CONSTRUCTION
OF TENANT IMPROVEMENTS


 




3.1                                 




 


C-1





















 









 




3.2                                 




 


3.3                                 If
Tenant desires any change to its improvements, Tenant shall submit a written
request for such change to Landlord, together with all plans and specifications
necessary to show and explain changes from the approved Working Plans.  Any such change shall be subject to Landlord’s
approval.  If Landlord’s contractor is
constructing Tenant’s improvements, Landlord or such contractor shall notify
Tenant in writing of the amount, if any, which will be charged or credited to
Tenant to reflect the cost of such change.


 


SECTION 4.                            COMPLETION
AND INSPECTION


 


4.1                                 Substantial Completion Date.  Landlord shall be deemed to have met its
obligation to substantially complete Landlord’s Work in conformity with the
working drawings for construction upon (a) the issuance by the City of
Hillsboro of a certificate of occupancy or a temporary certificate of occupancy
for the Building (or any comparable approval of Landlord’s work) which does not
contain any condition preventing occupancy and the use of the Building (herein
the “Certificate of Occupancy’), and (b) the issuance by the Architect of
a certificate stating that, except for any then remaining Punchlist Items,
construction of Landlord’s work has been substantially completed according to
the Final Plans and Specifications (herein the “Architect’s Certificate”).  The date upon which substantial completion
occurs is herein referred to as the “Substantial Completion Date.”


 


4.2                                 Inspection and Creation of Punchlist.  Approximately thirty (30) days prior to the
date which Landlord anticipates to be the Substantial Completion Date, Landlord
shall deliver to Tenant written notice of the expected Substantial Completion
Date.  Approximately five (5) days
prior to the anticipated Substantial Completion Date, representatives of
Landlord and Tenant shall make a joint inspection of the Building to create an
agreed upon list of items of Landlord’s Work yet to be substantially
completed.  The items included in such
list are herein referred to as the “Punchlist Items.” If the parties are unable
to agree whether any particular item is to be included as a Punchlist Item,
then the decision of the Architect as to such item shall be binding.


 


4.3                                 Performance of Punchlist Work; Final Completion.  Landlord shall complete Punchlist Items after
the Substantial Completion Date.  The
existence of Punchlist Items shall not delay delivery of possession nor the
Lease Commencement Date.  Tenant shall be
given possession of the Premises upon the Substantial Completion Date, but
Landlord shall continue to have complete access to the Premises for the purpose
of taking any and all steps related to then remaining Punchlist Items, and
Tenant shall cooperate to facilitate such steps.  The obligation of Landlord to perform
punchlist work shall be to perform the same to an industry standard level, not
to perfection; any disagreement as to whether an item of punchlist work has
been performed to industry standard shall be resolved by the Architect.  If Landlord fails to complete any particular
Punchlist Item within ninety (90) days after written notice from Tenant that the
same remains


 


C-2





















 


uncompleted,
and if such failure is not due to a cause beyond the reasonable control of
Landlord, then Tenant may perform the necessary correction, in which event
Landlord shall reimburse Tenant for all actual out-of-pocket expenses incurred
in such correction upon deliver by Tenant of substantiation of amount of such
expenses.  Landlord shall be deemed to
have fully and finally completed its construction obligations hereunder upon
the date (herein the “Final Completion Date”) that Landlord shall have
completed its punchlist obligations.


 


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C-1





















 


EXHIBIT C-2


 


SUNSET CENTER AT TANASBOURNE


 


General Outline Specifications for Tenant Improvements


 


Project
Description:                                       Work
shall include demising walls to underside of structure; interior walls to
underside of suspended ceiling; general office finishes including floors, walls
doors frames and hardware, suspended acoustic ceilings; HVAC in offices; wet
fire sprinkler system; restroom and plumbing; electrical and lighting systems.


 


General
Requirements:


 


•                                          All
construction permits are included as part of the Improvement Cost.


•                                          Fire and
extended coverage insurance (Builder’s Risk) shall be provided by Landlord as
part of the Improvement Cost.


•                                          All work
shall be in accordance with the Uniform Building Code and local jurisdictions.


 


Cabinetry:


 


•                                          Cabinets
shall be particle-board construction with melamine faced interiors and plastic
laminate at all exposed surfaces. 
Countertops and splashes shall be plastic laminate.


•                                          Tenant
reception counter is 0 allowance.


 


Insulation:


 


•                                          3 1/2”
unfaced batt insulation in demising walls and ceilings.


 


Door, Frames &
Hardware:


 


•                                          Interior
doors shall be 3’0” x 8’ 10” x 1-3/4” flush, solid core (AWI grade
Premium) with maple quarter sawn veneer face (AWI Type II) and pre-finished
with clear lacquer.


•                                          Interior door
frames shall be knock-down metal drywall type (Timely) 18 ga; primed.  Color: 
Match wall color.


•                                          Interior door
hardware shall be 1-1/2” pr. 4-1/2” butt hinges; Schlage 625
latchsets and locksets in lever handles, Option 03 chrome finish; wall
stops.


 


Partitions:


 


•                                          Interior
walls shall be 3-1/2” metal studs @ 24” o.c. to underside of suspended
ceiling (9’ typical); one layer of 5/8” drywall on each side with smooth
finish; two coats; of latex enamel paint; 4” rubber base.


 


Suspended Ceiling:


 


•                                          Suspension
system shall be 2’ x 4’ exposed T-bar grid supported from roof structure.  Ceiling tile shall be non-directional,
fissured mineral fiberboard with standard white finish at all offices
(Armstrong #733 “Second Look”) at 9’0” above finished floor.  Suspension system is included.


 


Floor Coverings:


 


Office Carpet:


 


	
  Style:

  	
   

  	
  Shaw Design
  Services V (5A032) or equivalent

  
	
  Gauge:

  	
   

  	
  1/10

  
	
  Stitches Per
  Inch:

  	
   

  	
  9.5

  



 


C-2-1





















 


	
  Production Yarn
  Weight:

  	
  30 oz./SY

  
	
  Finished Pile
  Thickness:

  	
  201 inches

  
	
  Average Density:

  	
  5,373 oz./CY

  
	
  Warranty:

  	
  10 year
  Commercial Ltd.

  



 


Sheet Vinyl:


 


	
  Type:

  	
  Classic Corlon
  Sheet Vinyl Flooring

  	
   

  
	
  Width:

  	
  6 Feet

  	
   

  
	
  Style:

  	
  Seagate

  	
   

  
	
  Reference
  Specification:

  	
  Grade 1, Class A
  backing

  	
   

  
	
  Gauge:

  	
  2.16 mm
  overall/1.27 mm wear/layer

  	
   

  
	
  Load Limit:

  	
  500 psi

  	
   

  
	
  Manufacturer:

  	
  Armstrong
  “Seagate”

  	
   

  



 


•                                          Sheet vinyl
(Armstrong “Seagate’) in Janitors closet.


•                                          Vinyl cove
base; 4” in carpeted areas; 4” in sheet vinyl and VCT areas.


 


Painting Finishing:


 


•                                          Interior
drywall paint shall be a two coat, one color application; wood doors to be
pre-finished maple quarter sawn veneer with clear lacquer.  Miscellaneous metals receive an enamel
finish.


 


Window Coverings:


 


•                                          Hunter
Douglas color 724 Crème de la crème (pearl) Blinds on any interior relites are
not included.


 


Plumbing:


 


•                                          Complete and
code approved domestic water and sanitary sewer systems shall be provided.


•                                          Plumbing
fixtures shall be Kohler (or equal); including toilet, lavs (in countertops);
faucets.  Water heater; capacity as
required.  Drinking fountain as required
by code.  All fixtures to meet all
applicable ADA requirements.


 


Fire Protection:


 


•                                          Office
areas shall have semi-recessed heads with chrome escutcheons complete per code.


 


Electrical/Exterior,
Exit and Emergency Lighting:


 


•                                          Exit and
emergency lighting shall be provided to meet UBC and ADA requirements.


 


Electrical/Interior
Lighting:


 


•                                          Office areas
shall have 2’ x 4’ florescent “lay-in” Lithonia 18 cell parabolic
fixtures.  Cost of these fixtures is
included in the overall shell cost.


•                                          Light control
switching minimum requirements shall be: 
offices – one switch on wall near door; conference rooms - two switches
on wall near door; restrooms and lunch rooms – one switch on wall near door;
corridors – two switches.


 


Electrical/Power:


 


•                                          Receptacles
shall be provided as required by code in all areas.


•                                          Service panel
will be a 100 amp, 42 circuit for the floor.


 


C-2-2





















 


Electrical/Telephone &
Data:


 


•                                          Telephone
and/or data outlets shall be wall mounted mud rings with pull cords only to
above the ceiling line.  Telephone
equipment, signaling and intercom are not included.


•                                          Data and/or
computer wiring by Tenant.


 


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C-3





















 


EXHIBIT D


 


ESTOPPEL CERTIFICATE


 


	
  Landlord:

  	
   

  	
  Mark Tanasbourne
  LLC, an Oregon limited liability company

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Premises:

  	
   

  	
                                                                ,
  Sunset Center at Tanasbourne

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Area:

  	
   

  	
                                               
  Rentable Sq. Ft.

  	
  Lease Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender:

  	
   

  	
   

  	
   

  	
   

  
						



 


The
undersigned Landlord and Tenant of the above-referenced Lease (the “Lease”)
hereby ratify the Lease and certify to Lender as mortgagee of the real property
of which the premises demised under the Lease (the “Premises”) is a part, as
follows:


 


1.                                       That
the term of the Lease commenced on                                   ,
19      , Tenant is in full and complete
possession of the Premises demised under the Lease, and Tenant has commenced
full occupancy and use of the Premises, such possession having been delivered
by Landlord and having been accepted by the Tenant.


 


2.                                       That
the Lease presently calls for monthly Base Rent installments of $                             
and that Tenant is paying monthly installments of Base Rent of $                          
which commenced (or will commence) to accrue on the                       
day of                           ,
19       .


 


3.                                       That
no advance rental or other payment has been made in connection with the Lease,
except rental for the current month, and that: 
(initial one)


 


( )                                     there
is no “free rent” or other concession under the remaining term of the Lease and
the rent has been paid to and including                               ,
19      .


 


( )                                     there
is “free rent” which extends through                               ,
19      , that the first month following the free
rent period has been paid in advance, and no further free rent or prepaid rent
exists throughout the remaining term of the Lease.


 


4.                                       That
a security deposit in the amount of $                              
is being held by Landlord, which amount is not subject to any set-off or
reduction or to any increase for interest or other credit due to Tenant.


 


5.                                       That
all obligations and conditions under said Lease to be performed to date by
Landlord or Tenant have been satisfied, free of defenses and set-offs including
construction work in the Premises.


 


6.                                       That
the Lease is a valid lease and in full force and effect and represents the
entire agreement between the parties; that there is no existing default on the
part of Landlord or Tenant in any of the terms and conditions thereof and no
event has occurred which, with the passing of time or giving of notice or both,
would constitute an event of default; and that said Lease has:  (initial one)


 


( )                                     not
been amended, modified, supplemented, extended, renewed or assigned.


 


D-1





















 


( )                                     been
amended, modified, supplemented, extended, renewed or assigned as follows by
the following described agreements:


 


 


7.                                       That
the Lease provides for a primary term of                           
months; the term of the Lease expires on the               
day of                           ,
19       ; and that (initial one)


 


( )                                     neither
the Lease nor any of the documents listed above in Paragraph 6 (if any),
contain an option for any additional term or terms.


 


( )                                     the
Lease and/or the documents listed above in Paragraph 6 contain an option for                               
additional term(s) of                               
year(s) and                               
month(s) (each) at a rent to be determined as follows:


	
   

  
	
   

  
	
                                                                                                                                               .

  



 


8.                                       That
Landlord has not rebated, reduced or waived any amounts due from Tenant under
the Lease, either orally or in writing, nor has a Landlord provided financing
for, made loans or advances to, or invested in the business of Tenant.


 


9.                                       That,
to the best of Tenant’s knowledge, there is no apparent or likely contamination
of the Premises by Hazardous Materials, and Tenant does not use, nor has Tenant
disposed of, Hazardous Materials in violation of Environmental Laws on the real
property or the Premises.


 


10.                                 That
there are no actions, voluntary or involuntary, pending against Tenant under
the bankruptcy laws of the United States or any state thereof.


 


11.                                 That
this certification is made knowing that Lender is relying upon the
representations herein made.


 


LANDLORD:                                                                         MARK
TANASBOURNE LLC,


an
Oregon limited liability company


 


By:                              Mark
Properties Limited Partnership,


an
Oregon limited partnership, Managing Member


 


By:                              Mark
Management, LLC,


an
Oregon limited liability company, General Partner


 


	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
                       M.
  James Mark, Co-Manager

  
	
   

  	
   

  



 


	
  TENANT:

  	
  MATHSTAR,
  a Minnesota corporation

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  



 


D-2





















 


EXHIBIT E


 


RULES AND REGULATIONS


 


1.                                       The
entrances, halls, corridors, stairways, exits, and elevators shall not be
obstructed by any of the tenants or used for any purpose other than for ingress
and egress from their respective premises. 
The entrances, halls, corridors, stairways, exits, and elevators are not
intended for use by the general public but for the tenant and its employees,
licensees and invitees.  Landlord
reserves the right to control and operate the public portions of the Project
and the public facilities as well as facilities furnished for the common use of
the tenants, in such manner as it in its reasonable judgment deems best for the
benefit of the tenants generally.  No
tenant shall invite to the tenant’s premises, or permit the visit of, persons
in such numbers or under such conditions as to interfere with the use and
enjoyment of any of the plazas, entrances, corridors, elevators and other
facilities of the Project by any other tenants. 
Fire exits and stairways are for emergency use only, and they shall not
be used for any other purpose.


 


2.                                       Landlord
may refuse admission to the Building outside of Business Hours on Business Days
(as such terms are defined in the Lease) to any person not producing
identification satisfactory to Landlord. 
If Landlord issues identification passes, Tenant shall be responsible
for all persons for whom it issues any such pass and shall be liable to
Landlord for all acts or omissions of such persons.


 


3.                                       No
awnings or other projections shall be attached to the outside walls of the
Building.  No curtains, blinds, shades or
screens, if any, which are different from the standards adopted by Landlord for
the Building shall be attached to or hang in any exterior window or door of the
premises of any tenant without the prior written consent of Landlord.


 


4.                                       No
sign, placard, picture, name lettering, advertisement, notice or object visible
from the exterior of any tenant’s premises shall be displayed in or on the
exterior windows or doors, or on the outside of any tenant’s premises, or at
any point inside any tenant’s premises where the same might be visible outside
of such premises, without the prior written consent of Landlord.  Landlord shall adopt and furnish to tenants
general guidelines relating to signs inside the Building.  Tenant shall conform to such guidelines.  All approved signs or lettering shall be
prepared, printed, affixed, or inscribed at the expense of the tenant and shall
be of a size, color and style acceptable to Landlord.


 


5.                                       The
windows that reflect or admit light and air into the halls, passageways or
other public places in the Building shall not be covered or obstructed by any
tenant, nor shall any bottles, parcels or other articles be placed on the
window sills.


 


6.                                       No
showcases or other articles shall be put in front of or affixed to any part of
the exterior of the Building, nor placed in the halls, corridors or vestibules.


 


7.                                       No
bicycles, vehicles, animals, fish or birds of any kind shall be brought into or
kept in or about the premises of any tenant or the Building.


 


8.                                       No
noise, including, but not limited to, music or the playing of musical
instruments, recordings, radio or television, which, in the judgment of
Landlord, might disturb other tenants in the Project, shall be made or
permitted by any tenant.


 


9.                                       No
tenant, nor any tenant’s contractors, employees, agents, visitors, invitees or
licensees, shall at any time bring into or keep upon the premises or the
Building any inflammable, combustible, explosive, environmentally hazardous or
otherwise dangerous fluid, chemical or substance.


 


10.                                 All
movement of freight, furniture, packages, boxes, crates or any other object or
matter of any description must take place during such hours and in such
elevators, and in such manner as Landlord or its


 


E-1





















 


agent may determine from
time to time.  Any labor and engineering
costs incurred by Landlord in connection with any moving herein specified,
shall be paid by Tenant to Landlord, on demand.


 


11.                                 No
tenant shall occupy or permit any portion of its premises to be occupied as an
office for a public stenographer, public word processor, printer or
photocopier.  No tenant shall use its
premises, or permit any part thereof to be used, for manufacturing or the sale
at retail or auction of merchandise, goods or property of any kind.


 


12.                                 Landlord
shall have the right to prescribe the weight and position of safes and other
objects of excessive weight, and no safe or other object whose weight exceeds
the lawful load for the area upon which it would stand shall be brought into or
kept upon any tenant’s premises.  If, in
the judgment of Landlord, it is necessary to distribute the concentrated weight
of any heavy object, the work involved in such distribution shall be done at
the expense of the tenant and in such manner as Landlord shall determine.


 


13.                                 Landlord,
its contractors, and their respective employees, shall have the right to use,
without charge therefor, all light, power and water in the premises of any
tenant while cleaning or making repairs or alterations in the premises of such
tenant.


 


14.                                 No
premises of any tenant shall be used for lodging or sleeping or for any immoral
or illegal purpose.


 


15.                                 The
requirements of tenants for any services by Landlord will be attended to only
upon prior application to the Landlord. 
Employees of Landlord shall not perform any work or do anything outside
of their regular duties, unless under special instructions from Landlord.


 


16.                                 Canvassing,
soliciting and peddling in the Project are prohibited and each tenant shall
cooperate to prevent the same.


 


17.                                 Each
tenant shall store its trash and garbage within its premises.  No material shall be placed in the trash
boxes or receptacles if such material is of such nature that it may not be
disposed of in the ordinary and customary manner of removing and disposing of
office building trash and garbage in the City of Hillsboro without being in
violation of any law or ordinance governing such disposal.  All garbage and refuse disposal shall be made
only through entryways and elevators provided for such purposes and at such
times as Landlord shall designate.  No
tenant shall cause or permit any unusual or objectionable odors to emanate from
its premises which would annoy other tenants or create a public or private
nuisance.


 


18.                                 No
coin vending machine, video game, coin or token operated amusement device or
similar machine shall be used or installed in any tenant’s premises without
Landlord’s prior written consent


 


19.                                 No
bankruptcy, going out of business, liquidation or other form of distress sale
shall be held on any of tenant’s premises. 
No advertisement shall be done by loudspeaker, barkers, flashing lights
or displays or other methods not consistent with the character of a
high-quality office building.


 


20.                                 Nothing
shall be done or permitted in any tenant’s premises, and nothing shall be
brought into or kept in any tenant’s premises, which would impair or interfere
with the economic heating, cleaning or other servicing of the Building or the
premises, or the use or enjoyment by any other tenant of any other premises,
nor shall there be installed by any tenant any ventilating, air conditioning,
electrical or other equipment of any kind which, in the reasonable judgment of
Landlord, might cause any such impairment or interference.


 


21.                                 No
acids, vapors or other similar caustic materials shall be discharged or
permitted to be discharged into the waste lines, vents or flues of the Building
other than the vent for hard soldering as
provided in the initial improvements.  The water and wash closets and other plumbing
fixtures in or serving any tenant’s premises shall not be used for any purpose
other than the purposes for which they were designed or constructed, and no
sweepings, rubbish, rags, acids or other foreign substances shall be deposited therein.  All damages resulting


 


E-2





















 


from any misuse of the
fixtures shall be borne by the tenant who, or whose servants, employees,
agents, invitees, visitors or licensees shall have caused the same.


 


22.                                 All
entrance doors in each tenant’s premises shall be left locked and all windows
shall be left closed by the tenant when the tenant’s premises are not in
use.  Entrance doors to the tenant’s
premises shall not be left open at any time. 
Each tenant, before closing and leaving its premises at any time, shall
turn out all lights.


 


23.                                 Hand
trucks not equipped with rubber tires and side guards shall not be used within
the Building.


 


24.                                 Window
coverings for all windows in each tenant’s premises above the ground floor
shall be lowered as reasonably required because of the position of the sun,
during the operation of the Building air-conditioning system to cool or
ventilate the tenant’s premises.


 


25.                                 Landlord
reserves the right to rescind, modify, alter or waive any rule or
regulation at any time prescribed for the Project when, in its reasonable
judgment, it deems it necessary, desirable or proper for its best interest and
for the best interests of the tenants generally, and no alteration or waiver of
any rule or regulation in favor of one tenant shall operate as an
alteration or waiver in favor of any other tenant.  Landlord shall not be responsible to any
tenant for the non-observance or violation by any other tenant of any of the rules and
regulations at any time prescribed for the Project.


 


26.                                 Landlord
reserves the right to add to, modify or otherwise change these Rules and
Regulations.  Such changes shall become
effective when written notice thereof is provided to tenants of the Project.


 


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F-2





















 


ADDENDUM TO THE LEASE
DATED JUNE 1, 2005 BY AND BETWEEN


SUNSET CENTER, LLC, AN OREGON LIMITED LIABILITY COMPANY, LANDLORD


AND MATHSTAR, A MINNESOTA CORPORATION, TENANT


 


29.17                 OPTION TO
EXPAND.


 


So long as Tenant is not
then in default of the Lease beyond any applicable cure periods, Tenant shall
have a one-time option to expand the Premises (the “Second Floor Expansion
Option”) by adding approximately 2,072 rentable square feet located on the
second floor of the Building as outlined on the attached Exhibit A-1
((the “Second Floor Expansion Option”), in accordance with the terms of this Section 29.17.  If Tenant wishes to exercise the Second Floor
Expansion Option, Tenant shall do so by giving Landlord written notice of its
exercise of the Second Floor Expansion Option (the “Second Floor Expansion
Notice”) no later than on June 30, 2006. 
If Tenant does not give Landlord a written notice exercising Tenant’s
Second Floor Expansion Option, then the Option shall terminate and shall be of
no further force or effect.


 


If Tenant gives Landlord
written notice of is exercise of the Second Floor Expansion Option on or before
June 30, 2006, then, effective on the earlier of (a) the date on
which tenant improvements in the Second Floor Expansion Space are substantially
completed or (b) September 1, 2006 (the “Second Floor Expansion Space
Commencement Date”), the Second Floor Expansion Space shall be added to the
Premises.  The annual Base Rent for the
Second Floor Expansion Space (the “Second Floor Expansion Space Base Rent”)
shall equal the rate per square foot at the time of the Second Floor Expansion
Space Commencement Date, as set forth in the Summary of Fundamental Provisions,
Item #5 of this Lease, multiplied by 2,072, and the Second Floor Expansion
Space Base Rent shall increase as set forth in the Summary of Fundamental
Provisions, Item #5 of the Lease.  The
tenant improvement allowance to be provided by Landlord for the Second Floor
Expansion Space shall equal $23.86 per rentable square foot.


 


Effective on the Second
Floor Expansion Space Commencement Date, the following shall occur:  (a) the Second Floor Expansion Space
shall be added to the Premises for the remainder of the Term of the Lease, (b) Base
Rent for the Premises shall be increased by an amount equal to the Second Floor
Base Rent determined as provided in this Section 29.17, and (c) Tenant’s
Proportionate Share of Operating Expenses shall increase proportionately based
on the increase the square footage in the Premises.  Subject to the tenant improvement allowance
to be provided by Landlord and Landlord’s obligations regarding common areas
described above in this Section 29.17, Tenant shall lease the Second Floor
Expansion Space in its “as-is” condition as of the Second Floor Expansion Space
Commencement Date.  The terms of the work
agreement attached as Exhibit C to this Amendment shall apply to the
improvements to the Second Floor Expansion Space and the use of such tenant
improvement allowance as if the Second Floor Expansion Space were the original
Premises leased under this Lease.


 


29.18                 RIGHT OF FIRST
REFUSAL.


 


During the first eighteen
(18) months of the Lease, in the event a third party is interested in space on
the second floor, Landlord agrees to give Tenant prior written notice.  Tenant shall have seventy-two (72) hours to
respond to the notice and to negotiate a lease satisfactory to Landlord, or
Landlord may lease the area to the third party and Tenant shall have no further
rights to this space.  The same terms and
conditions shall apply to said expansion space including, but not limited to,
the base rental rate and an improvement allowance equal to $.46 per foot for
each month remaining in the lease term effective with the addition of the
additional space to the leased Premises. 
This Right of First Refusal shall expire on December 31, 2006.


 


29.19                 OPTION TO TERMINATION.


 


Provided Tenant is not in
default, Tenant shall have the option to terminate the Lease effective December 31,
2008 by giving Landlord one hundred eighty (180) days prior written
notice.  Upon said termination, Tenant
shall be required to pay Landlord the unamortized balance of the cost of tenant
improvements and a leasing commissions.


 


The balance shall be
computed on the basis of an even payment amortization over the lease term at 6%
annual interest and shall be due and payable on the date that the termination
notice is given to Landlord.


 


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