exv10w1



 






Exhibit
10.1


10/31/01 CALWEST MTIN

CALIFORNIA FORM 9/03




LEASE




CALWEST INDUSTRIAL HOLDINGS, LLC,

a Delaware limited liability company,




Landlord,




and




MTI TECHNOLOGY CORPORATION,

a Delaware corporation,




Tenant




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	USE AND RESTRICTIONS ON USE

	 	 	1	 
	TERM

	 	 	1	 
	RENT

	 	 	2	 
	RENT ADJUSTMENTS

	 	 	3	 
	SECURITY DEPOSIT

	 	 	4	 
	ALTERATIONS

	 	 	5	 
	REPAIR

	 	 	6	 
	LIENS

	 	 	7	 
	ASSIGNMENT AND SUBLETTING

	 	 	7	 
	INDEMNIFICATION

	 	 	8	 
	INSURANCE

	 	 	9	 
	WAIVER OF SUBROGATION

	 	 	9	 
	SERVICES AND UTILITIES

	 	 	9	 
	HOLDING OVER

	 	 	9	 
	SUBORDINATION

	 	 	10	 
	RULES AND REGULATIONS

	 	 	10	 
	REENTRY BY LANDLORD

	 	 	10	 
	DEFAULT

	 	 	10	 
	REMEDIES

	 	 	11	 
	TENANT’S BANKRUPTCY OR INSOLVENCY

	 	 	12	 
	QUIET ENJOYMENT

	 	 	13	 
	CASUALTY

	 	 	13	 
	EMINENT DOMAIN

	 	 	14	 
	SALE BY LANDLORD

	 	 	15	 
	ESTOPPEL CERTIFICATES

	 	 	15	 
	SURRENDER OF PREMISES

	 	 	15	 
	NOTICES

	 	 	16	 
	TAXES PAYABLE BY TENANT

	 	 	16	 
	RELOCATION OF TENANT

	 	 	16	 
	DEFINED TERMS AND HEADINGS

	 	 	16	 
	TENANT’S AUTHORITY

	 	 	17	 
	FINANCIAL STATEMENTS AND CREDIT REPORTS

	 	 	17	 
	COMMISSIONS

	 	 	17	 
	TIME AND APPLICABLE LAW

	 	 	17	 
	SUCCESSORS AND ASSIGNS

	 	 	17	 
	ENTIRE AGREEMENT

	 	 	17	 
	EXAMINATION NOT OPTION

	 	 	17	 





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TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page
	RECORDATION

	 	 	17	 
	LIMITATION OF LANDLORD’S LIABILITY

	 	 	18	 






ADDENDUM



EXHIBIT A — FLOOR PLAN DEPICTING THE PREMISES



EXHIBIT A-1 — SITE PLAN



EXHIBIT B — INITIAL ALTERATIONS



EXHIBIT C — COMMENCEMENT DATE MEMORANDUM



EXHIBIT D — RULES AND REGULATIONS



EXHIBIT E — HAZARDOUS MATERIALS



ii




 









 








MULTI-TENANT INDUSTRIAL NET LEASE




REFERENCE PAGES




	 	 	 
	BUILDING:

	 	Irvine Cartwright Business Park
	 
	 	 
	LANDLORD:

	 	CALWEST INDUSTRIAL HOLDINGS, LLC,
	 

	 	a Delaware limited liability company
	 
	 	 
	LANDLORD’S ADDRESS:

	 	7245 Garden Grove Blvd., Suite E
	 

	 	Garden Grove, CA 92841
	 
	 	 
	WIRE INSTRUCTIONS AND/OR ADDRESS FOR RENT PAYMENT:

	 	Calwest Industrial Holdings, LLC
	 

	 	File #30043
	 

	 	P.O. Box 60000
	 

	 	San Francisco, CA 94160
	 
	 	 
	LEASE REFERENCE DATE:

	 	July 21, 2005
	 
	 	 
	TENANT:

	 	MTI TECHNOLOGY CORPORATION,
	 

	 	a Delaware corporation
	 
	 	 
	TENANT’S NOTICE ADDRESS:
	 	 
	          (a) As of beginning of Term:

	 	17595 Cartwright Road
	 

	 	Irvine, CA 92714
	 
	 	 
	          (b) Prior to beginning of Term (if different):

	 	14661 Franklin Avenue
	 

	 	Tustin, CA 92780
	 
	 	 
	PREMISES ADDRESS:

	 	17595 Cartwright Road, Irvine, CA 92714
	 
	 	 
	PREMISES RENTABLE AREA:

	 	Approximately 25,000 sq. ft. (for
	 

	 	outline of Premises see Exhibit A)
	 
	 	 
	USE:

	 	General office and warehouse use,
	 

	 	including but not limited to use by a
	 

	 	computer systems integration and data
	 

	 	storage systems company, and ancillary
	 

	 	uses and for no other use.
	 
	 	 
	SCHEDULED COMMENCEMENT DATE:

	 	November 1, 2005
	 
	 	 
	TERM OF LEASE:

	 	Five (05) years, two (2) months and
	 

	 	zero (0) days beginning on the
	 

	 	Commencement Date and ending on the
	 

	 	Termination Date.
	 
	 	 
	TERMINATION DATE:

	 	December 31, 2010






v








 







ANNUAL RENT and MONTHLY INSTALLMENT OF

RENT(Article 3):




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Period	 	 	Rentable Square	 	 	Annual Rent	 	 	 	 	 	 	Monthly Installment	 
	from	 	through	 	 	Footage	 	 	Per Square Foot	 	 	Annual Rent	 	 	of Rent	 
	11/1/2005
	 	 	12/31/2005	 	 	 	25,000	 	 	$	0.00	 	 	$	0.00	 	 	$	0.00	 
	1/1/2006
	 	 	10/31/2006	 	 	 	25,000	 	 	$	15.84	 	 	$	396,000.00	 	 	$	33,000.00	 
	11/1/2006
	 	 	10/31/2007	 	 	 	25,000	 	 	$	16.47	 	 	$	411,840.00	 	 	$	34,320.00	 
	11/1/2007
	 	 	10/31/2008	 	 	 	25,000	 	 	$	17.13	 	 	$	428,313.64	 	 	$	35,692.80	 
	11/1/2008
	 	 	10/31/2009	 	 	 	25,000	 	 	$	17.82	 	 	$	445,446.12	 	 	$	37,120.51	 
	11/1/2009
	 	 	12/31/2010	 	 	 	25,000	 	 	$	18.53	 	 	$	463,263.96	 	 	$	38,605.33	 






	 	 	 	 	 
	INITIAL ESTIMATED MONTHLY INSTALLMENT OF RENT
ADJUSTMENTS (Article 4)

	 	$5,000.00 per month

	 
	 	 	 	 
	 

	 	Tenant shall be responsible for the

	 

	 	payment of Rent Adjustments during the

	 

	 	Free Rent Period.

	 
	 	 	 	 
	TENANT’S PROPORTIONATE SHARE:

	 	21.29% of the Building which measures

	 

	 	approximately 117,415 rentable square

	 

	 	feet; and 100% of the Premises which

	 

	 	measures approximately 25,000 rentable

	 

	 	square feet

	 
	 	 	 	 
	SECURITY DEPOSIT:

	 	$	390,144.80	 
	 
	 	 	 	 
	ASSIGNMENT/SUBLETTING FEE

	 	$	500.00	 
	 
	 	 	 	 
	REAL ESTATE BROKER DUE COMMISSION:

	 	Tenant’s Broker: CRESA Partners of

	 

	 	Orange County, Landlord’s Broker:

	 

	 	Voit Commercial Brokerage and RREEF

	 

	 	Management Company

	 
	 	 	 	 
	TENANT’S SIC CODE:

	 	 	7373	 






vi




 









 







The Reference Pages information is incorporated into and made a part of the Lease. In the event of
any conflict between any Reference Pages information and the Lease, the Lease shall control. This
Lease includes an Addendum and Exhibits A through E, all of which are made a part of this Lease.




	 	 	 	 	 	 	 
	LANDLORD:	 	TENANT:
	 
	 	 	 	 	 	 
	CALWEST INDUSTRIAL HOLDINGS, LLC,

a Delaware limited liability company	 	MTI TECHNOLOGY CORPORATION,

a Delaware corporation
	 
	 	 	 	 	 	 
	By:

	 	RREEF Management Company, a Delaware	 	 	 	 
	 

	 	corporation, Its Property Manager	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Scott Davis
	 	By:
	 	/s/ Thomas P. Raimondi, Jr.
	 

	 	 
	 	 	 	 
	 

	 	Scott Davis
	 	 	 	Thomas P. Raimondi, Jr.
	 
	 	 	 	 	 	 
	Title: Regional Manager	 	Title: President
	 
	 	 	 	 	 	 
	Dated:8/2/05	 	Dated: 8/1/05
	 
	 	 	 	 	 	 
	 	 	 	 	By: /s/ Scott Poteracki
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Scott Poteracki
	 
	 	 	 	 	 	 
	 	 	 	 	Title: Secretary
	 
	 	 	 	 	 	 
	 	 	 	 	Dated: 8/1/05






(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)




vii








 






LEASE




     By this Lease Landlord leases to Tenant and Tenant leases from Landlord the Premises in the
Building as set forth and described on the Reference Pages. The Premises are depicted on the floor
plan attached hereto as Exhibit A, and the Building is depicted on the site plan attached
hereto as Exhibit A-1. The Reference Pages, including all terms defined thereon, are
incorporated as part of this Lease.



1. USE AND RESTRICTIONS ON USE.




     1.1 The Premises are to be used solely for the purposes set forth on the Reference Pages.
Tenant shall not do or permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the Building or injure,
annoy, or disturb them, or create a nuisance, or allow the Premises to be used for any
improper, immoral, unlawful, or objectionable purpose, or commit any waste. Tenant shall not do,
permit or suffer in, on, or about the Premises the sale of any alcoholic liquor without the written
consent of Landlord first obtained. Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises and its occupancy and shall promptly comply with
all governmental orders and directions for the correction, prevention and abatement of any
violations in the Building or appurtenant land, caused or permitted by, or resulting from the
specific use by, Tenant, or in or upon, or in connection with, the Premises, all at Tenant’s sole
expense. Tenant shall not do or permit anything to be done on or about the Premises or bring or
keep anything into the Premises which will in any way increase the rate of, invalidate or prevent
the procuring of any insurance protecting against loss or damage to the Building or any of its
contents by fire or other casualty or against liability for damage to property or injury to persons
in or about the Building or any part thereof.



     1.2 Tenant shall not, and shall not direct, suffer or permit any of its agents, contractors,
employees, licensees or invitees (collectively, the “Tenant Entities”) to at any time handle, use,
manufacture, store or dispose of in or about the Premises or the Building any (collectively
“Hazardous Materials”) flammables, explosives, radioactive materials, hazardous wastes or
materials, toxic wastes or materials, or other similar substances, petroleum products or
derivatives or any substance subject to regulation by or under any federal, state and local laws
and ordinances relating to the protection of the environment or the keeping, use or disposition of
environmentally hazardous materials, substances, or wastes, presently in effect or hereafter
adopted, all amendments to any of them, and all rules and regulations issued pursuant to any of
such laws or ordinances (collectively “Environmental Laws”), nor shall Tenant suffer or permit any
Hazardous Materials to be used in any manner not fully in compliance with all Environmental Laws,
in the Premises or the Building and appurtenant land or allow the environment to become
contaminated with any Hazardous Materials. Notwithstanding the foregoing, Tenant may handle,
store, use or dispose of products containing small quantities of Hazardous Materials (such as
aerosol cans containing insecticides, toner for copiers, paints, paint remover and the like) to the extent customary and necessary for the use of the Premises for general office purposes; provided
that Tenant shall always handle, store, use, and dispose of any such Hazardous Materials in a safe
and lawful manner and never allow such Hazardous Materials to contaminate the Premises, Building
and appurtenant land or the environment. Tenant shall protect, defend, indemnify and hold each and
all of the Landlord Entities (as defined in Article 30) harmless from and against any and all loss,
claims, liability or costs (including court costs and attorney’s fees) incurred by reason of any
actual or asserted failure of Tenant to fully comply with all applicable Environmental Laws, or the
presence, handling, use or disposition in or from the Premises of any Hazardous Materials by Tenant
or any Tenant Entity (even though permissible under all applicable Environmental Laws or the
provisions of this Lease), or by reason of any actual or asserted failure of Tenant to keep,
observe, or perform any provision of this Section 1.2. See Exhibit E.



     1.3 Tenant and the Tenant Entities will be entitled to the non-exclusive use of the common
areas of the Building as they exist from time to time during the Term, including the parking
facilities, subject to Landlord’s rules and regulations regarding such use. However, in no event
will Tenant or the Tenant Entities park more vehicles in the parking facilities than Tenant’s
Proportionate Share of the total parking spaces available for common use. The foregoing shall not
be deemed to provide Tenant with an exclusive right to any parking spaces or any guaranty of the
availability of any particular parking spaces or any specific number of parking spaces.



2. TERM.




     2.1 The Term of this Lease shall begin on the date (“Commencement Date”) which shall be the
later of the Scheduled Commencement Date as shown on the Reference Pages and the date that Landlord
shall tender possession of the Premises to Tenant, and shall terminate on the date as shown on the
Reference Pages (“Termination Date”), unless sooner terminated by the provisions of this Lease.
Landlord shall tender possession of the Premises with all the work, if any, to be performed by
Landlord pursuant to Exhibit B to this Lease substantially completed. Tenant shall deliver
a punch list of items not completed within thirty (30) days after Landlord tenders possession of
the Premises and Landlord agrees to proceed with



1









 




due diligence to perform its obligations regarding
such items. Tenant shall, at Landlord’s request, execute and deliver a memorandum agreement
provided by Landlord in the form of Exhibit C attached hereto, setting forth the actual
Commencement Date, Termination Date and, if necessary, a revised rent schedule. Should Tenant fail
to do so within thirty (30) days after Landlord’s request, the information set forth in such
memorandum provided by Landlord shall be conclusively presumed to be agreed and correct.




     2.2 Tenant agrees that in the event of the inability of Landlord to deliver possession of the
Premises on the Scheduled Commencement Date for any reason, Landlord shall not be liable for any
damage resulting from such inability, but Tenant shall not be liable for any rent until the time
when Landlord can, after notice to Tenant, deliver possession of the Premises to Tenant. No such
failure to give possession on the Scheduled Commencement Date shall affect the other obligations of
Tenant under this Lease, except that if Landlord is unable to deliver possession of the Premises
within one hundred twenty (120) sixty (60) days after the Scheduled Commencement Date
(other than as a result of strikes, shortages of materials, holdover tenancies or similar matters
beyond the reasonable control of Landlord and Tenant is notified by Landlord in writing as to such
delay), Tenant shall have the option to terminate this Lease unless said delay is as a result of:
(a) Tenant’s failure to agree to plans and specifications and/or construction cost estimates or
bids; (b) Tenant’s request for materials, finishes or installations other than Landlord’s standard
except those, if any, that Landlord shall have expressly agreed to furnish without extension of
time agreed by Landlord; (c) Tenant’s change in any plans or specifications; or, (d) performance or
completion by a party employed by Tenant (each of the foregoing, a “Tenant Delay”). If any delay
is the result of a Tenant Delay, the Commencement Date and the payment of rent under this Lease
shall be accelerated by the number of days of such Tenant Delay.



     2.3 In the event Landlord permits Tenant, or any agent, employee or contractor of Tenant, to
enter, use or occupy the Premises prior to the Commencement Date, such entry, use or occupancy
shall be subject to all the provisions of this Lease other than the payment of rent, including,
without limitation, Tenant’s compliance with the insurance requirements of Article 11. Said early
possession shall not advance the Termination Date. It is hereby agreed that, notwithstanding
anything to the contrary contained in the Lease, Tenant may occupy the Premises on October 1,
2005, subject to the termination to the existing lease between Landlord and the current tenant.



3. RENT.




     3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from time to time by paying the
Monthly Installment of Rent then in effect on or before the first day of each full calendar month
during the Term, except that the first full month’s rent shall be paid upon the execution of this
Lease. The Monthly Installment of Rent in effect at any time shall be one-twelfth (1/12) of the
Annual Rent in effect at such time. Rent for any period during the Term which is less than a full
month shall be a prorated portion of the Monthly Installment of Rent based upon the number of days
in such month. Said rent shall be paid to Landlord, without deduction or offset and without notice
or demand, at the Rent Payment Address, as set forth on the Reference Pages, or to such other
person or at such other place as Landlord may from time to time designate in writing. If more
than one (1) an Event of Default occurs regarding the payment of rent within any twelve
(12) month period, Landlord may require by notice to Tenant that all subsequent rent payments
be made by an automatic payment from Tenant’s bank account to Landlord’s account, without cost to
Landlord. Tenant must implement such automatic payment system prior to the next scheduled rent
payment or within ten (10) days after Landlord’s notice, whichever is later. Unless specified in
this Lease to the contrary, all amounts and sums payable by Tenant to Landlord pursuant to this
Lease shall be deemed additional rent.



     3.2 Tenant recognizes that late payment of any rent or other sum due under this Lease will
result in administrative expense to Landlord, the extent of which additional expense is extremely
difficult and economically impractical to ascertain. Tenant therefore agrees that if rent or any
other sum is not paid within ten (10) days of the date when due and payable pursuant to
this Lease, a late charge shall be imposed in an amount equal to the greater of: (a) Fifty Dollars
($50.00), or (b) six percent (6%) of the unpaid rent or other payment. The amount of the late
charge to be paid by Tenant shall be reassessed and added to Tenant’s obligation for each
successive month until paid. The provisions of this Section 3.2 in no way relieve Tenant of the
obligation to pay rent or other payments on or before the date on which they are due, nor do the
terms of this Section 3.2 in any way affect Landlord’s remedies pursuant to Article 19 of this
Lease in the event said rent or other payment is unpaid after date due.



2









 





4. RENT ADJUSTMENTS.




     4.1 For the purpose of this Article 4, the following terms are defined as follows:



          4.1.1 Lease Year: Each fiscal year (as determined by Landlord from time to time) falling
partly or wholly within the Term.



          4.1.2 Expenses: All costs of operation, maintenance, repair, replacement and management of
the Building (including the amount of any credits which Landlord may grant to particular tenants of
the Building in lieu of providing any standard services or paying any standard costs described in
this Section 4.1.2 for similar tenants), as determined in accordance with generally accepted
accounting principles, including the following costs by way of illustration, but not limitation:
water and sewer charges; insurance charges of or relating to all insurance policies and
endorsements deemed by Landlord to be reasonably necessary or desirable and relating in any manner
to the protection, preservation, or operation of the Building or any part thereof; utility costs,
including, but not limited to, the cost of heat, light, power, steam, gas; waste disposal; the cost
of janitorial services; the cost of security and alarm services (including any central station
signaling system); costs of cleaning, repairing, replacing and maintaining the common areas,
including parking and landscaping, window cleaning costs; labor costs; costs and expenses of
managing the Building including management and/or administrative fees; air conditioning maintenance
costs; elevator maintenance fees and supplies; material costs; equipment costs including the cost
of maintenance, repair and service agreements and rental and leasing costs; purchase costs of
equipment; current rental and leasing costs of items which would be capital items if purchased;
tool costs; licenses, permits and inspection fees; wages and salaries; employee benefits and
payroll taxes; accounting and legal fees; any sales, use or service taxes incurred in connection
therewith. In addition, Landlord shall be entitled to recover, as additional rent (which, along
with any other capital expenditures constituting Expenses, Landlord may either include in Expenses
or cause to be billed to Tenant along with Expenses and Taxes but as a separate item), Tenant’s
Proportionate Share of: (i) an allocable portion of the cost of capital improvement items which are
reasonably calculated to reduce operating expenses; (ii) the cost of fire sprinklers and
suppression systems and other life safety systems; and (iii) and (ii) other capital
expenses which are required under any governmental laws, regulations or ordinances which were not
applicable to the Building at the time it was constructed; but the costs described in this sentence
shall be amortized over the reasonable life of such expenditures in accordance with such reasonable
life and amortization schedules as shall be determined by Landlord in accordance with generally
accepted accounting principles, with interest on the unamortized amount at one percent (1%) in
excess of the Wall Street Journal prime lending rate announced from time to time. Expenses shall
not include depreciation or amortization of the Building or equipment in the Building except as
provided herein, loan principal payments, costs of alterations of tenants’ premises, leasing
commissions, interest expenses on long-term borrowings or advertising costs.


Notwithstanding anything to the contrary in the Lease, “Expenses” shall not include and Tenant
shall in no event have any obligation to pay directly, or to reimburse Landlord for, all or any
portion of the following: (i) costs of alterations of tenant spaces (including all tenant
improvements to such spaces); (ii) costs of capital improvements, except as set forth in Section
4.12 above; (iii) depreciation, interest and principal payments on mortgages, and other debt costs,
if any; (iv) real estate brokers’ leasing commissions or compensation and advertising and other
marketing expenses; (v) payments to affiliates of the Landlord for goods and/or services in excess
of what would be paid to non-affiliated parties for such goods and/or services in an arm’s length
transaction; (vi) costs or other services or work performed for the singular benefit of another
tenant or occupant (other than for common areas of the Building); (vii) legal, space planning,
construction, and other expenses incurred in procuring tenants for the Building or renewing or
amending leases with existing tenants or occupants of the Building; (viii) costs of advertising and
public relations and promotional costs and attorneys’ fees associated with the leasing of the
Building; (ix) any expense for which Landlord actually receives reimbursement from insurance,
condemnation awards, other tenants or any other source; (x) costs incurred in connection with the
sale, financing, refinancing, mortgaging, or other change of ownership of the Building; (xi) all
expenses in connection with the installation, operation and maintenance of any broadcasting
facilities, luncheon club, athletic or recreation club, cafeteria, dining facility, or other
facility; (xii) Taxes; and (xiii) rental under any ground or underlying lease or leases; or (xiv)
costs for correcting patent defects to the Building existing prior to the Commencement Date.
Notwithstanding anything to the contrary contained herein, at the end of the Term, any Expenses
prepaid or attributable to a period following the Term shall be prorated.




          4.1.3 Taxes: Real estate taxes and any other taxes, charges and assessments which are levied
with respect to the Building or the land appurtenant to the Building, or with respect to any
improvements, fixtures and equipment or other property of Landlord, real or personal, located in
the Building and used in connection with the operation of the Building and said land, any payments
to any ground lessor in reimbursement of tax payments made by such lessor; and all fees, expenses
and costs incurred by Landlord in investigating, protesting, contesting or in any way seeking to
reduce or avoid increase in any assessments, levies or the tax rate pertaining to any Taxes to be
paid by Landlord in any Lease Year.



3









 




Taxes shall not include any corporate franchise, or estate,
inheritance or net income tax, or tax imposed upon any transfer by Landlord of its interest in this
Lease or the Building or any taxes to be paid by Tenant pursuant to Article 28.




     4.2 Tenant shall pay as additional rent for each Lease Year Tenant’s Proportionate Share of
Expenses and Taxes incurred for such Lease Year.



     4.3 The annual determination of Expenses shall be made by Landlord and shall be binding upon
Landlord and Tenant, subject to the provisions of this Section 4.3. During the Term, Tenant may
review, at Tenant’s sole cost and expense, the books and records supporting such determination in
an office of Landlord, or Landlord’s agent, during normal business hours, upon giving Landlord five
(5) days advance written notice within sixty (60) days after receipt of such determination, but in
no event more often than once in any one (1) year period, subject to execution of a confidentiality
agreement acceptable to Landlord, and provided that if Tenant utilizes an independent accountant to
perform such review it shall be one of national standing which is reasonably acceptable to
Landlord, is not compensated on a contingency basis and is also subject to such confidentiality
agreement. Tenant shall pay all costs of such audit including, without limitation, any and all
copying costs, unless the actual Expenses submitted to Tenant by Landlord for any fiscal period is
determined by the CPA to be overstated by fifteen percent (15%) or greater, in which event Landlord
shall pay for the audit. Any such audit shall occur only in such offices and such location, within
the County of Orange, as Landlord shall designate. The amount of Additional Rent payable by Tenant
to Landlord shall be appropriately adjusted on the basis of such audit and, if the audit shows (a)
that Landlord has overcharged Tenant, then Landlord shall credit such overcharge against the next
installment of Rent coming due hereunder, or if the Term has ended shall pay the amount of such
overcharge to Tenant within thirty (30) days following the completion of such audit or (b) that
Landlord has undercharged Tenant, then Tenant shall pay to Landlord such amount due as additional
rent within thirty (30) days following the completion of such audit. Landlord shall maintain
records of all Expenses and Taxes for no less than one (1) year following such fiscal period.
If Tenant fails to object to Landlord’s determination of Expenses within ninety (90) days after
receipt, or if any such objection fails to state with specificity the reason for the objection,
Tenant shall be deemed to have approved such determination and shall have no further right to
object to or contest such determination. In the event that during all or any portion of any Lease
Year or Base Year, the Building is not fully rented and occupied Landlord shall make an
appropriate adjustment in occupancy-related Expenses for such year for the purpose of avoiding
distortion of the amount of such Expenses to be attributed to Tenant by reason of variation in
total occupancy of the Building, by employing consistent and sound accounting and management
principles to determine Expenses that would have been paid or incurred by Landlord had the Building
been at least ninety-five percent (95%) rented and occupied, and the amount so determined shall be
deemed to have been Expenses for such Lease Year.



     4.4 Prior to the actual determination thereof for a Lease Year, Landlord may from time to time
estimate Tenant’s liability for Expenses and/or Taxes under Section 4.2, Article 6 and Article 28
for the Lease Year or portion thereof. Landlord will give Tenant written notification of the
amount of such estimate and Tenant agrees that it will pay, by increase of its Monthly Installments
of Rent due in such Lease Year, additional rent in the amount of such estimate. Any such increased
rate of Monthly Installments of Rent pursuant to this Section 4.4 shall remain in effect until
further written notification to Tenant pursuant hereto.



     4.5 When the above mentioned actual determination of Tenant’s liability for Expenses and/or
Taxes is made for any Lease Year and when Tenant is so notified in writing, then:



          4.5.1 If the total additional rent Tenant actually paid pursuant to Section 4.3 on account of
Expenses and/or Taxes for the Lease Year is less than Tenant’s liability for Expenses and/or Taxes,
then Tenant shall pay such deficiency to Landlord as additional rent in one lump sum within thirty
(30) days of receipt of Landlord’s bill therefor; and



          4.5.2 If the total additional rent Tenant actually paid pursuant to Section 4.3 on account of
Expenses and/or Taxes for the Lease Year is more than Tenant’s liability for Expenses and/or Taxes,
then Landlord shall credit the difference against the then next due payments of rent to be
made by Tenant under this Article 4, or, if the Lease has terminated, refund the difference in
cash.



     4.6 If the Commencement Date is other than January 1 or if the Termination Date is other than
December 31, Tenant’s liability for Expenses and Taxes for the Lease Year in which said Date occurs
shall be prorated based upon a three hundred sixty-five (365) day year.


5. SECURITY DEPOSIT. Tenant shall deposit the Security Deposit with Landlord upon the execution of
this Lease. Said sum shall be held by Landlord as security for the faithful performance by Tenant
of all the terms, covenants and conditions of this Lease to be kept and performed by Tenant and not
as an advance rental deposit or as a measure of Landlord’s damage in case of Tenant’s default. If
Tenant defaults with respect to any provision of this Lease, Landlord may




4









 







use any part of the
Security Deposit for the payment of any rent or any other sum in default, or for the payment of any
amount which Landlord may spend or become obligated to spend by reason of Tenant’s default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s
default. If any portion is so used, Tenant shall within five (5) days after written demand
therefor, deposit with Landlord an amount sufficient to restore the Security Deposit to its
original amount and Tenant’s failure to do so shall be a material breach of this Lease. Except to
such extent, if any, as shall be required by law, Landlord shall not be required to keep the
Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on
such deposit. If Tenant shall fully and faithfully perform every provision of this Lease to be
performed by it, the The Security Deposit or any balance thereof shall be returned to
Tenant at such time after termination of this Lease when Landlord shall have determined that all of
Tenant’s obligations under this Lease have been fulfilled, but in no event later than thirty
(30) days following the expiration or early termination of the same. Notwithstanding anything
to the contrary contained herein or in Article 23 hereof, Tenant hereby waives the provisions of
Section 1950.7 of the California Civil Code, or any similar or successor Regulations or other laws
now or hereinafter in effect.




6. ALTERATIONS.




     6.1 Except for those, if any, specifically provided for in Exhibit B to this Lease,
Tenant shall not make or suffer to be made any alterations, additions, or improvements, including,
but not limited to, the attachment of any fixtures or equipment in, on, or to the Premises or any
part thereof or the making of any improvements as required by Article 7, without the prior written
consent of Landlord. When applying for such consent, Tenant shall, if requested by Landlord,
furnish complete plans and specifications for such alterations, additions and improvements.
Landlord’s consent shall not be unreasonably withheld with respect to alterations which (i) are not
structural in nature, (ii) are not visible from the exterior of the Building, and (iii) do
not affect or require modification of the Building’s electrical, mechanical, plumbing, HVAC or
other systems, and (iv) in aggregate do not cost more than $5.00 per rentable square foot of that
portion of the Premises affected by the alterations in question.



     6.2 In the event Landlord consents to the making of any such alteration, addition or
improvement by Tenant, the same shall be made by using either Landlord’s contractor or a contractor
reasonably approved by Landlord, in either event at Tenant’s sole cost and expense. If Tenant
shall employ any contractor other than Landlord’s contractor and such other contractor or any
subcontractor of such other contractor shall employ any non-union labor or supplier, Tenant shall
be responsible for and hold Landlord harmless from any and all delays, damages and extra costs
suffered by Landlord as a result of any dispute with any labor unions concerning the wage, hours,
terms or conditions of the employment of any such labor. In any event, Landlord may charge Tenant
a construction management fee not to exceed five percent (5%) of the cost of such work to cover its
overhead as it relates to such proposed work, plus third-party costs actually incurred by Landlord
in connection with the proposed work and the design thereof, with all such amounts being due five
(5) days after Landlord’s demand. Notwithstanding the foregoing, Landlord shall not charge a
construction management fee for the Initial Alterations outlined in Exhibit B.



     6.3 All alterations, additions or improvements proposed by Tenant shall be constructed in
accordance with all government laws, ordinances, rules and regulations, using Building standard
materials where applicable, and Tenant shall, prior to construction, provide the additional
insurance required under Article 11 in such case, and also all such assurances to Landlord as
Landlord shall reasonably require to assure payment of the costs thereof, including but not limited
to, notices of non-responsibility, waivers of lien, surety company performance bonds and funded
construction escrows and to protect Landlord and the Building and appurtenant land against any loss
from any mechanic’s, materialmen’s or other liens. Tenant shall pay in addition to any sums due
pursuant to Article 4, any increase in real estate taxes attributable to any such alteration,
addition or improvement for so long, during the Term, as such increase is ascertainable; at
Landlord’s election said sums shall be paid in the same way as sums due under Article 4. Landlord
may, as a condition to its consent to any particular alterations or improvements, require Tenant to
deposit with Landlord the amount reasonably estimated by Landlord as sufficient to cover the cost
of removing be required to remove such alterations or improvements and restoring
restore the Premises, to the extent required under Section 26.2 upon the expiration or
earlier termination of this Lease.



     6.4 Landlord states that it has no actual knowledge that, as of the Commencement
Date, the Building and the Premises are not in compliance with all then applicable federal, state
and local ordinances, regulations and laws. Notwithstanding anything to the contrary contained in
this Lease, Tenant’s sole remedy in the event that the foregoing statement is inaccurate shall be
to cause Landlord to correct the non-compliance at Landlord’s sole cost and expense.



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7. REPAIR.




     7.1 Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint
the Premises, except as specified in Exhibit B if attached to this Lease and except that
Landlord shall repair and maintain the structural portions of the roof, foundation and walls of the
Building. By taking possession of the Premises, Tenant accepts them as being in good order,
condition and repair and in the condition in which Landlord is obligated to deliver them, except as
set forth in the punch list to be delivered pursuant to Section 2.1. It is hereby understood and
agreed that no representations respecting the condition of the Premises or the Building have been
made by Landlord to Tenant, except as specifically set forth in this Lease. Landlord shall not be
liable for any failure to make any repairs or to perform any maintenance unless such failure shall
persist for an unreasonable time after written notice of the need of such repairs or maintenance is
given to Landlord by Tenant.


Notwithstanding the foregoing, Landlord shall be responsible for capital replacements to the
main electrical, fire sprinkler and plumbing systems and to the heating, ventilation and air
conditioning systems serving the Premises. The cost of any such replacement shall be Landlord’s
responsibility and shall not be deemed an Expense as outlined in Article 4.1.2




     7.2 Tenant shall at its own cost and expense keep and maintain all parts of the Premises and
such portion of the Building and improvements as are within the exclusive control of Tenant in good
condition, promptly making all necessary repairs and replacements, whether ordinary or
extraordinary, with materials and workmanship of the same character, kind and quality as the
original (including, but not limited to, repair and replacement of all fixtures installed by
Tenant, water heaters serving the Premises, windows, glass and plate glass, doors, exterior stairs,
skylights, any special office entries, interior walls and finish work, floors and floor coverings,
heating and air conditioning systems serving the Premises, electrical systems and fixtures,
sprinkler systems, dock boards, truck doors, dock bumpers, plumbing work and fixtures, and
performance of regular removal of trash and debris). Tenant as part of its obligations hereunder
shall keep the Premises in a clean and sanitary condition. Tenant will, as far as possible keep
all such parts of the Premises from deterioration due to ordinary wear and from falling temporarily
out of repair, and upon termination of this Lease in any way Tenant will yield up the Premises to
Landlord in good the condition and repair delivered to Tenant, loss by fire or
other casualty and reasonable wear and tear excepted (but not excepting any damage to
glass). Tenant shall, at its own cost and expense, repair any damage to the Premises or the
Building resulting from and/or caused in whole or in part by the negligence or misconduct of
Tenant, its agents, employees, contractors, invitees, or any other person entering upon the
Premises as a result of Tenant’s business activities or caused by Tenant’s default hereunder.


With regard to Tenant’s repair obligations detailed under this Article 7.2, Landlord, on
Tenant’s behalf, shall coordinate all necessary maintenance, replacement and repair work for the
following building systems/services:





	 	(a)	 	heating, ventilation and air conditioning systems;
	 
	 	(b)	 	electrical systems and fixtures;
	 
	 	(c)	 	fire sprinkler systems;
	 
	 	(d)	 	plumbing work and fixtures; and
	 
	 	(e)	 	performance of regular removal of trash and debris.




Tenant shall pay for all costs associated with such maintenance and repair work within thirty
(30) days of receipt of Landlord’s bill therefor.




     7.3 Except as provided in Article 22, there shall be no abatement of rent and no liability of
Landlord by reason of any injury to or interference with Tenant’s business arising from the making
of any repairs, alterations or improvements in or to any portion of the Building or the Premises or
to fixtures, appurtenances and equipment in the Building. Tenant hereby waives any and all rights
under and benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of the California
Civil Code, or any similar or successor Regulations or other laws now or hereinafter in effect.



     7.4 Tenant shall, at its own cost and expense, enter into a regularly scheduled preventive
maintenance/service contract with a maintenance contractor approved by Landlord for servicing all
heating and air conditioning systems and equipment serving the Premises (and a copy thereof shall
be furnished to Landlord). The service contract must include all services suggested by the
equipment manufacturer in the operation/maintenance manual and must become effective within thirty
(30) days of the date Tenant takes possession of the Premises. Should Tenant fail to do so,
Landlord may, upon notice to Tenant, enter into such a maintenance/ service contract on behalf of
Tenant or perform the work and in either case, charge Tenant the cost thereof along with a
reasonable amount for Landlord’s overhead. Landlord shall enter into a contract for regularly
scheduled preventative maintenance services to the heating, ventilation and air conditioning
(“HVAC”) system. The cost of this preventative maintenance contract shall be paid by the Landlord
and reimbursed by the Tenant on a monthly



6









 




basis as part of the Expenses in accordance with Article
4.1.2. Tenant, at Tenant’s sole cost and expense, shall be responsible for all HVAC repairs and
replacements required in their Premises, in accordance with Article 7.2.




     7.5 Landlord shall coordinate any repairs and other maintenance of any railroad tracks serving
the Building and, if Tenant uses such rail tracks, Tenant shall reimburse Landlord or the railroad
company from time to time upon demand, as additional rent, for its share of the costs of such
repair and maintenance and for any other sums specified in any agreement to which Landlord or
Tenant is a party respecting such tracks, such costs to be borne proportionately by all tenants in
the Building using such rail tracks, based upon the actual number of rail cars shipped and received
by such tenant during each calendar year during the Term.


8. LIENS. Tenant shall keep the Premises, the Building and appurtenant land and Tenant’s leasehold
interest in the Premises free from any liens arising out of any services, work or materials
performed, furnished, or contracted for by Tenant, or obligations incurred by Tenant. In the event
that Tenant fails, within ten (10) days following the imposition of any such lien, to either cause
the same to be released of record or provide Landlord with insurance against the same issued by a
major title insurance company or such other protection against the same as Landlord shall accept
(such failure to constitute an Event of Default), Landlord shall have the right to cause the same
to be released by such means as it shall deem proper, including payment of the claim giving rise to
such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith
shall be payable to it by Tenant within five (5) days Landlord’s demand.



9. ASSIGNMENT AND SUBLETTING.




     9.1 Tenant shall not have the right to assign or pledge this Lease or to sublet the whole or
any part of the Premises whether voluntarily or by operation of law, or permit the use or occupancy
of the Premises by anyone other than Tenant, and shall not make, suffer or permit such assignment,
subleasing or occupancy without the prior written consent of Landlord, such consent not to be
unreasonably withheld, and said restrictions shall be binding upon any and all assignees of the
Lease and subtenants of the Premises. In the event Tenant desires to sublet, or permit such
occupancy of, the Premises, or any portion thereof, or assign this Lease, Tenant shall give written
notice thereof to Landlord at least sixty (60) thirty (30) days but no more than one
hundred twenty (120) days prior to the proposed commencement date of such subletting or assignment,
which notice shall set forth the name of the proposed subtenant or assignee, the relevant terms of
any sublease or assignment and copies of financial reports and other relevant financial information
of the proposed subtenant or assignee.



     9.2 Notwithstanding any assignment or subletting, permitted or otherwise, Tenant shall at all
times remain directly, primarily and fully responsible and liable for the payment of the rent
specified in this Lease and for compliance with all of its other obligations under the terms,
provisions and covenants of this Lease. Upon the occurrence of an Event of Default, if the
Premises or any part of them are then assigned or sublet, Landlord, in addition to any other
remedies provided in this Lease or provided by law, may, at its option, collect directly from such
assignee or subtenant all rents due and becoming due to Tenant under such assignment or sublease
and apply such rent against any sums due to Landlord from Tenant under this Lease, and no such
collection shall be construed to constitute a novation or release of Tenant from the further
performance of Tenant’s obligations under this Lease.



     9.3 In addition to Landlord’s right to approve of any subtenant or assignee, Landlord shall
have the option, in its sole discretion, in the event of any proposed subletting or assignment, to
terminate this Lease, or in the case of a proposed subletting of less than the entire Premises, to
recapture the portion of the Premises to be sublet, as of the date the subletting or assignment is
to be effective. The option shall be exercised, if at all, by Landlord giving Tenant written
notice given by Landlord to Tenant within thirty (30) days following Landlord’s receipt of Tenant’s
written notice as required above. However, if Tenant notifies Landlord, within five (5) days after
receipt of Landlord’s termination notice, that Tenant is rescinding its proposed assignment or
sublease, the termination notice shall be void and the Lease shall continue in full force and
effect. If this Lease shall be terminated with respect to the entire Premises pursuant to this
Section, the Term of this Lease shall end on the date stated in Tenant’s notice as the effective
date of the sublease or assignment as if that date had been originally fixed in this Lease for the
expiration of the Term. If Landlord recaptures under this Section only a portion of the Premises,
the rent to be paid from time to time during the unexpired Term shall abate proportionately based
on the proportion by which the approximate square footage of the remaining portion of the Premises
shall be less than that of the Premises as of the date immediately prior to such recapture. Tenant
shall, at Tenant’s own cost and expense, discharge in full any outstanding commission obligation
which may be due and owing as a result of Tenant’s involvement with a specific broker for the
purpose of any proposed assignment or subletting, whether or not the Premises are recaptured
pursuant to this Section 9.3 and rented by Landlord to the proposed tenant or any other tenant.



     9.4 In the event that Tenant sells, sublets, assigns or transfers this Lease, Tenant shall pay
to Landlord as additional rent an amount equal to one hundred percent (100%) fifty percent
(50%) of any Increased Rent (as defined below),



7









 




less the Costs Component (as defined below),
when and as such Increased Rent is received by Tenant. As used in this Section, “Increased Rent”
shall mean the excess of (i) all rent and other consideration which Tenant is entitled to
receives by reason of any sale, sublease, assignment or other transfer of this Lease, over
(ii) the rent otherwise payable by Tenant under this Lease at such time. For purposes of the
foregoing, any consideration received by Tenant in form other than cash shall be valued at its fair
market value as determined by Landlord in good faith. The “Costs Component” is that amount which,
if paid monthly, would fully amortize on a straight-line basis, over the entire period for which
Tenant is to receive Increased Rent, the reasonable costs incurred by Tenant for leasing
commissions, reasonable legal fees and tenant improvements in connection with such
sublease, assignment or other transfer.




     9.5 Notwithstanding any other provision hereof, it shall be considered reasonable for Landlord
to withhold its consent to any assignment of this Lease or sublease of any portion of the Premises
if at the time of either Tenant’s notice of the proposed assignment or sublease or the proposed
commencement date thereof, there shall exist any uncured default of Tenant or matter which will
become a default of Tenant with passage of time unless cured, or if the proposed assignee or
sublessee is an entity: (a) with which Landlord is already  currently in active
negotiations (b) is already an occupant of the Building unless Landlord is unable to
provide the amount of space required by such occupant; (c) is a governmental agency; (d) is
incompatible with the character of occupancy of the Building; (e) with which the payment for the
sublease or assignment is determined in whole or in part based upon its net income or profits; or
(f) would subject the Premises to a use which would: (i) involve increased personnel or wear upon
the Building; (ii) violate any exclusive right granted to another tenant of the Building; (iii)
require any addition to or modification of the Premises or the Building in order to comply with
building code or other governmental requirements; or, (iv) involve a violation of Section 1.2.
Tenant expressly agrees that for the purposes of any statutory or other requirement of
reasonableness on the part of Landlord, Landlord’s refusal to consent to any assignment or sublease
for any of the reasons described in this Section 9.5, shall be conclusively deemed to be
reasonable.



     9.6 Upon any request to assign or sublet, Tenant will pay to Landlord the
Assignment/Subletting Fee plus, on demand, a sum equal to all of Landlord’s costs, including
reasonable attorney’s fees, incurred in investigating and considering any proposed or purported
assignment or pledge of this Lease or sublease of any of the Premises, not to exceed
$1,000.00, regardless of whether Landlord shall consent to, refuse consent, or determine that
Landlord’s consent is not required for, such assignment, pledge or sublease. Any purported sale,
assignment, mortgage, transfer of this Lease or subletting which does not comply with the
provisions of this Article 9 shall be void.



     9.7 If Tenant is a corporation, limited liability company, partnership or trust, any transfer
or transfers of or change or changes within any twelve (12) month period in the number of the
outstanding voting shares of the corporation or limited liability company, the general partnership
interests in the partnership or the identity of the persons or entities controlling the activities
of such partnership or trust resulting in the persons or entities owning or controlling a majority
of such shares, partnership interests or activities of such partnership or trust at the beginning
of such period no longer having such ownership or control shall be regarded as equivalent to an
assignment of this Lease to the persons or entities acquiring such ownership or control and shall
be subject to all the provisions of this Article 9 to the same extent and for all intents and
purposes as though such an assignment. Notwithstanding the foregoing, this Section 9.7 shall
not be applicable if Tenant is a publicly traded company.


10. INDEMNIFICATION. None of the Landlord Entities shall be liable and Tenant hereby waives all
claims against them for any damage to any property or any injury to any person in or about the
Premises or the Building by or from any cause whatsoever (including without limiting the foregoing,
rain or water leakage of any character from the roof, windows, walls, basement, pipes, plumbing
works or appliances, the Building not being in good condition or repair, gas, fire, oil,
electricity or theft), except to the extent caused by or arising from the gross negligence or
willful misconduct of Landlord or its agents, employees or contractors. Tenant shall protect,
indemnify and hold the Landlord Entities harmless from and against any and all loss, claims,
liability or costs (including court costs and attorney’s fees) incurred by reason of (a) any damage
to any property (including but not limited to property of any Landlord Entity) or any injury
(including but not limited to death) to any person occurring in, on or about the Premises or the
Building to the extent that such injury or damage shall be caused by or arise from any actual or
alleged act, neglect, fault, or omission by or of Tenant or any Tenant Entity to meet any standards
imposed by any duty with respect to the injury or damage; (b) the conduct or management of any work
or thing whatsoever done by the Tenant in or about the Premises or from transactions of the Tenant
concerning the Premises; (c) Tenant’s failure to comply with any and all governmental laws,
ordinances and regulations applicable to the condition or use of the Premises or its occupancy; or
(d) any breach or default on the part of Tenant in the performance of any covenant or agreement on
the part of the Tenant to be performed pursuant to this Lease. The provisions of this Article
shall survive the termination of this Lease with respect to any claims or liability accruing prior
to such termination.




8









 








11. INSURANCE.




     11.1 Tenant shall keep in force throughout the Term: (a) a Commercial General Liability
insurance policy or policies to protect the Landlord Entities against any liability to the public
or to any invitee of Tenant or a Landlord Entity incidental to the use of or resulting from any
accident occurring in or upon the Premises with a limit of not less than $1,000,000 per occurrence
and not less than $2,000,000 in the annual aggregate, or such larger amount as Landlord may
prudently require from time to time, covering bodily injury and property damage liability and
$1,000,000 products/completed operations aggregate; (b) Business Auto Liability covering owned,
non-owned and hired vehicles with a limit of not less than $1,000,000 per accident; (c) insurance
protecting against liability under Worker’s Compensation Laws with limits at least as required by
statute; (d) Employers Liability with limits of $1,000,000 each accident, $1,000,000 disease policy
limit, $1,000,000 disease—each employee; (e) All Risk or Special Form coverage protecting Tenant
against loss of or damage to Tenant’s alterations, additions, improvements, carpeting, floor
coverings, panelings, decorations, fixtures, inventory and other business personal property
situated in or about the Premises to the full replacement value of the property so insured, (f)
Business Interruption Insurance for 100% of the 12 months actual loss sustained, and (g) Excess
Liability in the amount of $5,000,000.



     11.2 The aforesaid policies shall (a) be provided at Tenant’s expense; (b) name the Landlord
Entities and Landlord’s investment and property managers as additional insureds (General
Liability) and loss payee (Property—Special Form); (c) be issued by an insurance company with a
minimum Best’s rating of “A:VII” during the Term; and (d) provide that said insurance shall not be
canceled unless thirty (30) days prior written notice (ten days for non-payment of premium) shall
have been given to Landlord; a certificate of Liability insurance on ACORD Form 25 and a
certificate of Property insurance on ACORD Form 27 shall be delivered to Landlord by Tenant upon
the Commencement Date and at least thirty (30) days prior to each renewal of said insurance.



     11.3 Whenever Tenant shall undertake any alterations, additions or improvements in, to or
about the Premises (“Work”) the aforesaid insurance protection must extend to and include injuries
to persons and damage to property arising in connection with such Work, without limitation
including liability under any applicable structural work act, and such other insurance as Landlord
shall require; and the policies of or certificates evidencing such insurance must be delivered to
Landlord prior to the commencement of any such Work.


12. WAIVER OF SUBROGATION. So long as their respective insurers so permit, Tenant and Landlord
hereby mutually waive their respective rights of recovery against each other for any loss insured
by fire, extended coverage, All Risks or other insurance now or hereafter existing for the benefit
of the respective party but only to the extent of the net insurance proceeds payable under such
policies. Each party shall obtain any special endorsements required by their insurer to evidence
compliance with the aforementioned waiver.



13. SERVICES AND UTILITIES. Tenant shall have the right to use and access the Premises
twenty-four (24) hours per day, seven (7) days per week. Tenant shall pay for all water, gas,
heat, light, power, telephone, sewer, sprinkler system charges and other utilities and services
used on or from the Premises, together with any taxes, penalties, and surcharges or the like
pertaining thereto and any maintenance charges for utilities. Tenant shall furnish all electric
light bulbs, tubes and ballasts, battery packs for emergency lighting and fire extinguishers. If
any such services are not separately metered to Tenant, Tenant shall pay such proportion of all
charges jointly metered with other premises as determined by Landlord, in its sole reasonable
discretion, to be reasonable. Any such charges paid by Landlord and assessed against Tenant
shall be immediately payable to Landlord on demand and shall be additional rent hereunder. Tenant
will not, without the written consent of Landlord, contract with a utility provider to service the
Premises with any utility, including, but not limited to, telecommunications, electricity, water,
sewer or gas, which is not previously providing such service to other tenants in the Building.
Except to the extent caused by the gross negligence or willful misconduct of Landlord Entities,
Landlord shall in no event be liable for any interruption or failure of utility services on or
to the Premises.



14. HOLDING OVER. Tenant shall pay Landlord for each day Tenant retains possession of the Premises
or part of them after termination of this Lease by lapse of time or otherwise at the rate
(“Holdover Rate”) which shall be One Hundred Fifty Percent (150%) for the first thirty (30)
days of such holdover period, and  Two Hundred Percent (200%) for all periods
thereafter of the greater of (a) the amount of the Annual Rent for the last period prior to the
date of such termination plus all Rent Adjustments under Article 4; and (b) the then market rental
value of the Premises as determined by Landlord assuming a new lease of the Premises of the then
usual duration and other terms, in either case, prorated on a daily basis, and also pay all damages
sustained by Landlord by reason of such retention. If Landlord gives notice to Tenant of
Landlord’s election to such effect, such holding over shall constitute renewal of this Lease for a
period from month to month or one (1) year, whichever shall be specified in such notice, in either
case at the Holdover Rate, but if the Landlord does not so elect, no such renewal shall result
notwithstanding acceptance by Landlord of any sums due hereunder after such termination; and
instead, a




9









 







tenancy at sufferance at the Holdover Rate shall be deemed to have been created. In any
event, no provision of this Article 14 shall be deemed to waive Landlord’s right of reentry or any
other right under this Lease or at law.



15. SUBORDINATION. Without the necessity of any additional document being executed by Tenant for
the purpose of effecting a subordination, this Lease shall be subject and subordinate at all times
to ground or underlying leases and to the lien of any mortgages or deeds of trust now or hereafter
placed on, against or affecting the Building, Landlord’s interest or estate in the Building, or any
ground or underlying lease; provided, however, that if the lessor, mortgagee, trustee, or holder of
any such mortgage or deed of trust elects to have Tenant’s interest in this Lease be superior to
any such instrument, then, by notice to Tenant, this Lease shall be deemed superior, whether this
Lease was executed before or after said instrument. Notwithstanding the foregoing, Tenant
covenants and agrees to execute and deliver within ten (10) days of Landlord’s request such
further instruments evidencing such subordination or superiority of this Lease as may be required
by Landlord.



If requested in writing by Tenant, Landlord shall use commercially reasonable efforts to secure
non-disturbance protection for Tenant. However, in no event shall Landlord’s failure to secure
such protection relieve Tenant of its obligations under this Lease or be considered a default under
this Article 15. Notwithstanding anything to the contrary contained herein, Tenant’s possession of
the Premises shall not be disturb in the event of a foreclosure or upon the exercise of a power of
sale, under any mortgage, deed of trust or like encumbrance, so long as Tenant is not in default
under this Lease.



16. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with all the rules and
regulations as set forth in Exhibit D to this Lease and all reasonable and
non-discriminatory modifications of and additions to them from time to time put into effect by
Landlord. Landlord shall not be responsible to Tenant for the non-performance by any other tenant
or occupant of the Building of any such rules and regulations. The rules and regulations shall
apply to all tenants in a non-discriminatory manner. In the event of any conflict between the
rules and regulations and the terms and conditions of this Lease, the terms and conditions of this
Lease shall govern.



17. REENTRY BY LANDLORD.




     17.1 Upon one (1) business day’s prior written notice, except in the event of an emergency
when no notice shall be required, Landlord reserves and shall at all times have the right to
re-enter the Premises to inspect the same, to show said Premises to prospective purchasers,
mortgagees or tenants, and to alter, improve or repair the Premises and any portion of the
Building, without abatement of rent, and may for that purpose erect, use and maintain scaffolding,
pipes, conduits and other necessary structures and open any wall, ceiling or floor in and through
the Building and Premises where reasonably required by the character of the work to be performed,
provided entrance to the Premises shall not be blocked thereby, and further provided that the
business of Tenant shall not be interfered with unreasonably. Landlord shall have the right at any
time to change the arrangement and/or locations of entrances, or passageways, doors and doorways,
and corridors, windows, elevators, stairs, toilets or other public parts of the Building and to
change the name, number or designation by which the Building is commonly known. In the event that
Landlord damages any portion of any wall or wall covering, ceiling, or floor or floor covering
within the Premises, Landlord shall repair or replace the damaged portion to match the original as
nearly as commercially reasonable but shall not be required to repair or replace more than the
portion actually damaged. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment
of the Premises, and any other loss occasioned by any action of Landlord authorized by this Article
17. In the event that Landlord breaches its obligations under this Section 17.1, Tenant shall
have all rights and remedies afforded it at law and equity.



     17.2 For each of the aforesaid purposes, Landlord shall at all times have and retain a key
with which to unlock all of the doors in the Premises, excluding Tenant’s vaults and safes or
special security areas (designated in advance), and Landlord shall have the right to use any and
all means which Landlord may deem proper to open said doors in an emergency to obtain entry to any
portion of the Premises. As to any portion to which access cannot be had by means of a key or keys
in Landlord’s possession, Landlord is authorized to gain access by such means as Landlord shall
elect and the cost of repairing any damage occurring in doing so shall be borne by Tenant and paid
to Landlord within five (5) days of Landlord’s demand.


18. DEFAULT.





     18.1 Except as otherwise provided in Article 20, the following events shall be deemed to be
Events of Default under this Lease:



          18.1.1 Tenant shall fail to pay when due any sum of money becoming due to be paid to Landlord
under this Lease, whether such sum be any installment of the rent reserved by this Lease, any other
amount treated as additional



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rent under this Lease, or any other payment or reimbursement to
Landlord required by this Lease, whether or not treated as additional rent under this Lease, and
such failure shall continue for a period of five (5) days after written notice that such payment
was not made when due, but if any such notice shall be given, for the twelve (12) month period
commencing with the date of such notice, the failure to pay within five (5) days after due any
additional sum of money becoming due to be paid to Landlord under this Lease during such period
shall be an Event of Default, without notice. The notice required pursuant to this Section 18.1.1
shall replace rather than supplement any statutory notice required under California Code of Civil
Procedure Section 1161 or any similar or successor statute.




          18.1.2 Tenant shall fail to comply with any term, provision or covenant of this Lease which is
not provided for in another Section of this Article and shall not cure such failure within twenty
(20) days (forthwith, if the failure involves a hazardous condition) after written notice of such
failure to Tenant provided, however, that such failure shall not be an event of default if such
failure could not reasonably be cured during such twenty (20) day period, Tenant has commenced the
cure within such twenty (20) day period and thereafter is diligently pursuing such cure to
completion, but the total aggregate cure period shall not exceed ninety (90) days.



          18.1.3 Tenant shall fail to vacate the Premises immediately upon termination of this Lease, by
lapse of time or otherwise, or upon termination of Tenant’s right to possession only.



          18.1.4 Tenant shall become insolvent, admit in writing its inability to pay its debts
generally as they become due, file a petition in bankruptcy or a petition to take advantage of any
insolvency statute, make an assignment for the benefit of creditors, make a transfer in fraud of
creditors, apply for or consent to the appointment of a receiver of itself or of the whole or any
substantial part of its property, or file a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws, as now in effect or hereafter amended, or any other
applicable law or statute of the United States or any state thereof.



          18.1.5 A court of competent jurisdiction shall enter an order, judgment or decree adjudicating
Tenant bankrupt, or appointing a receiver of Tenant, or of the whole or any substantial part of its
property, without the consent of Tenant, or approving a petition filed against Tenant seeking
reorganization or arrangement of Tenant under the bankruptcy laws of the United States, as now in
effect or hereafter amended, or any state thereof, and such order, judgment or decree shall not be
vacated or set aside or stayed within sixty (60) days from the date of entry thereof.



19. REMEDIES.




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



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



               19.1.1.1 The Worth at the Time of Award of the unpaid rent which had been earned at the time
of termination;



               19.1.1.2 The Worth at the Time of Award of the amount by which the unpaid rent which would
have been earned after termination until the time of award exceeds the amount of such rent loss
that Tenant affirmatively proves could have been reasonably avoided;



               19.1.1.3 The Worth at the Time of Award of the amount by which the unpaid rent for the balance
of the Term after the time of award exceeds the amount of such rent loss that Tenant affirmatively
proves could be reasonably avoided;



               19.1.1.4 Any other amount necessary to compensate Landlord for all the detriment either
proximately caused by Tenant’s failure to perform Tenant’s obligations under this Lease or which in
the ordinary course of things would be likely to result therefrom; and



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               19.1.1.5 All such other amounts in addition to or in lieu of the foregoing as may be permitted
from time to time under applicable law.


The “Worth at the Time of Award” of the amounts referred to in parts 19.1.1.1 and 19.1.1.2 above,
shall be computed by allowing interest at the lesser of a per annum rate equal to: (i) the greatest
per annum rate of interest permitted from time to time under applicable law, or (ii) the Prime Rate
plus 5%. For purposes hereof, the “Prime Rate” shall be the per annum interest rate publicly
announced as its prime or base rate by a federally insured bank selected by Landlord in the State
of California. The “Worth at the Time of Award” of the amount referred to in part 19.1.1.3, above,
shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus 1%;




          19.1.2 Employ the remedy described in California Civil Code § 1951.4 (Landlord may continue
this Lease in effect after Tenant’s breach and abandonment and recover rent as it becomes due, if
Tenant has the right to sublet or assign, subject only to reasonable limitations); or



          19.1.3 Notwithstanding Landlord’s exercise of the remedy described in California Civil Code §
1951.4 in respect of an Event or Events of Default, at such time thereafter as Landlord may elect
in writing, to terminate this Lease and Tenant’s right to possession of the Premises and recover an
award of damages as provided above in Section 19.1.1.



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



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



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



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



     19.6 If more than one (1) Event of Default occurs during the Term or any renewal thereof,
Tenant’s renewal options, expansion options, purchase options and rights of first offer and/or
refusal, if any are provided for in this Lease, shall be null and void.



     19.7 If, on account of any breach or default Event of Default  by Tenant in
Tenant’s obligations under the terms and conditions of this Lease, it shall become necessary or
appropriate for Landlord to employ or consult with an attorney or collection agency concerning or
to enforce or defend any of Landlord’s rights or remedies arising under this Lease or to collect
any sums due from Tenant, Tenant agrees to pay all costs and fees so incurred by Landlord,
including, without limitation, reasonable attorneys’ fees and costs. TENANT EXPRESSLY WAIVES ANY
RIGHT TO: (A) TRIAL BY JURY; AND (B) SERVICE OF ANY NOTICE REQUIRED BY ANY PRESENT OR FUTURE LAW OR
ORDINANCE APPLICABLE TO LANDLORDS OR TENANTS BUT NOT REQUIRED BY THE TERMS OF THIS LEASE.



     19.8 Upon the occurrence of an Event of Default, Landlord may (but shall not be obligated
to) cure such default at Tenant’s sole expense. Without limiting the generality of the foregoing,
Landlord may, at Landlord’s option, enter into and upon the Premises if Landlord determines in its
sole discretion that Tenant is not acting within a commercially



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reasonable time to maintain, repair
or replace anything for which Tenant is responsible under this Lease or to otherwise effect
compliance with its obligations under this Lease and correct the same, without being deemed in any
manner guilty of trespass, eviction or forcible entry and detainer and without incurring any
liability for any damage or interruption of Tenant’s business resulting therefrom and Tenant agrees
to reimburse Landlord within five (5) days of Landlord’s demand as additional rent, for any
expenses which Landlord may incur in thus effecting compliance with Tenant’s obligations under this
Lease, plus interest from the date of expenditure by Landlord at the Wall Street Journal prime
rate.




20. TENANT’S BANKRUPTCY OR INSOLVENCY.




     20.1 If at any time and for so long as Tenant shall be subjected to the provisions of the
United States Bankruptcy Code or other law of the United States or any state thereof for the
protection of debtors as in effect at such time (each a “Debtor’s Law”):



          20.1.1 Tenant, Tenant as debtor-in-possession, and any trustee or receiver of Tenant’s assets
(each a “Tenant’s Representative”) shall have no greater right to assume or assign this Lease or
any interest in this Lease, or to sublease any of the Premises than accorded to Tenant in Article
9, except to the extent Landlord shall be required to permit such assumption, assignment or
sublease by the provisions of such Debtor’s Law. Without limitation of the generality of the
foregoing, any right of any Tenant’s Representative to assume or assign this Lease or to sublease
any of the Premises shall be subject to the conditions that:



               20.1.1.1 Such Debtor’s Law shall provide to Tenant’s Representative a right of assumption of
this Lease which Tenant’s Representative shall have timely exercised and Tenant’s Representative
shall have fully cured any default of Tenant under this Lease.



               20.1.1.2 Tenant’s Representative or the proposed assignee, as the case shall be, shall have
deposited with Landlord as security for the timely payment of rent an amount equal to the larger
of: (a) three (3) months’ rent and other monetary charges accruing under this Lease; and (b) any
sum specified in Article 5; and shall have provided Landlord with adequate other assurance of the
future performance of the obligations of the Tenant under this Lease. Without limitation, such
assurances shall include, at least, in the case of assumption of this Lease, demonstration to the
satisfaction of the Landlord that Tenant’s Representative has and will continue to have sufficient
unencumbered assets after the payment of all secured obligations and administrative expenses to
assure Landlord that Tenant’s Representative will have sufficient funds to fulfill the obligations
of Tenant under this Lease; and, in the case of assignment, submission of current financial
statements of the proposed assignee, audited by an independent certified public accountant
reasonably acceptable to Landlord and showing a net worth and working capital in amounts determined
by Landlord to be sufficient to assure the future performance by such assignee of all of the
Tenant’s obligations under this Lease.



               20.1.1.3 The assumption or any contemplated assignment of this Lease or subleasing any part of
the Premises, as shall be the case, will not breach any provision in any other lease, mortgage,
financing agreement or other agreement by which Landlord is bound.



               20.1.1.4 Landlord shall have, or would have had absent the Debtor’s Law, no right under
Article 9 to refuse consent to the proposed assignment or sublease by reason of the identity or
nature of the proposed assignee or sublessee or the proposed use of the Premises concerned.


21. QUIET ENJOYMENT. Landlord represents and warrants that it has full right and authority to
enter into this Lease and that Tenant, while paying the rental and performing its other covenants
and agreements contained in this Lease, shall peaceably and quietly have, hold and enjoy the
Premises for the Term without hindrance or molestation from Landlord subject to the terms and
provisions of this Lease. Landlord shall not be liable for any interference or disturbance by
other tenants or third persons, nor shall Tenant be released from any of the obligations of this
Lease because of such interference or disturbance.



22. CASUALTY




     22.1 In the event the Premises or the Building are damaged by fire or other cause and in
Landlord’s reasonable estimation such damage can be materially restored within one hundred eighty
(180) days, Landlord shall forthwith repair the same and this Lease shall remain in full force and
effect, except that Tenant shall be entitled to a proportionate abatement in rent from the date of
such damage. Such abatement of rent shall be made pro rata in accordance with the extent to which
the damage and the making of such repairs shall interfere with the use and occupancy by Tenant of
the Premises from time to



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time. Within forty-five (45) days from the date of such damage, Landlord
shall notify Tenant, in writing, of Landlord’s reasonable estimation of the length of time within
which material restoration can be made, and Landlord’s determination shall be binding on Tenant.
For purposes of this Lease, the Building or Premises shall be deemed “materially restored” if they
are in such condition as would not prevent or materially interfere with Tenant’s use of the
Premises for the purpose for which it was being used immediately before such damage.




     22.2 If such repairs cannot, in Landlord’s reasonable estimation, be made within one hundred
eighty (180) days, Landlord and Tenant shall each have the option of giving the other, at any time
within ninety (90) days after such damage, notice terminating this Lease as of the date of such
damage. In the event of the giving of such notice, this Lease shall expire and all interest of the
Tenant in the Premises shall terminate as of the date of such damage as if such date had been
originally fixed in this Lease for the expiration of the Term. In the event that neither Landlord
nor Tenant exercises its option to terminate this Lease, then Landlord shall repair or restore such
damage, this Lease continuing in full force and effect, and the rent hereunder shall be
proportionately abated as provided in Section 22.1.



     22.3 Landlord shall not be required to repair or replace any damage or loss by or from fire or
other cause to any panelings, decorations, partitions, additions, railings, ceilings, floor
coverings, office fixtures or any other property or improvements installed on the Premises by, or
belonging to, Tenant. Any insurance which may be carried by Landlord or Tenant against loss or
damage to the Building or Premises shall be for the sole benefit of the party carrying such
insurance and under its sole control.



     22.4 In the event that Landlord should fail to complete such repairs and material restoration
within sixty (60) days after the date estimated by Landlord therefor as extended by this Section
22.4, Tenant may at its option and as its sole remedy terminate this Lease by delivering written
notice to Landlord, within fifteen (15) days after the expiration of said period of time, whereupon
the Lease shall end on the date of such notice or such later date fixed in such notice as if the
date of such notice was the date originally fixed in this Lease for the expiration of the Term;
provided, however, that if construction is delayed because of changes, deletions or additions in
construction requested by Tenant, strikes, lockouts, casualties, Acts of God, war, material or
labor shortages, government regulation or control or other causes beyond the reasonable control of
Landlord, the period for restoration, repair or rebuilding shall be extended for the amount of time
Landlord is so delayed, but in no event more than thirty (30) days.



     22.5 Notwithstanding anything to the contrary contained in this Article: (a) Landlord shall
not have any obligation whatsoever to repair, reconstruct, or restore the Premises when the damages
resulting from any casualty covered by the provisions of this Article 22 occur during the last
twelve (12) months of the Term or any extension thereof, but if Landlord determines not to repair
such damages Landlord shall notify Tenant and if such damages shall render any material portion of
the Premises untenantable Tenant shall have the right to terminate this Lease by notice to Landlord
within fifteen (15) days after receipt of Landlord’s notice; and (b) in the event the holder of any
indebtedness secured by a mortgage or deed of trust covering the Premises or Building requires that
any insurance proceeds be applied to such indebtedness, then Landlord shall have the right to
terminate this Lease by delivering written notice of termination to Tenant within fifteen (15) days
after such requirement is made by any such holder, whereupon this Lease shall end on the date of
such damage as if the date of such damage were the date originally fixed in this Lease for the
expiration of the Term.



     22.6 In the event of any damage or destruction to the Building or Premises by any peril
covered by the provisions of this Article 22, it shall be Tenant’s responsibility to properly
secure the Premises and upon notice from Landlord to remove forthwith, at its sole cost and
expense, such portion of all of the property belonging to Tenant or its licensees from such portion
or all of the Building or Premises as Landlord shall request.



     22.7 Tenant hereby waives any and all rights under and benefits of Sections 1932(2) and
1933(4) of the California Code of Civil Procedure, or any similar or successor Regulations or other
laws now or hereinafter in effect.


23. EMINENT DOMAIN. If all or any substantial part of the Premises shall be taken or appropriated
by any public or quasi-public authority under the power of eminent domain, or conveyance in lieu of
such appropriation, either party to this Lease shall have the right, at its option, of giving the
other, at any time within thirty (30) days after such taking, notice terminating this Lease, except
that Tenant may only terminate this Lease by reason of taking or appropriation, if such taking or
appropriation shall be so substantial as to materially interfere with Tenant’s use and occupancy of
the Premises. If neither party to this Lease shall so elect to terminate this Lease, the rental
thereafter to be paid shall be adjusted on a fair and equitable basis under the circumstances. In
addition to the rights of Landlord above, if any substantial part of the Building shall be taken or
appropriated by any public or quasi-public authority under the power of eminent domain or
conveyance in lieu thereof, and regardless of whether the Premises or any part thereof are so taken
or appropriated, Landlord shall have the right, at its sole option, to terminate this Lease.
Landlord shall be entitled to any and all income, rent, award, or any interest




14









 







whatsoever in or
upon any such sum, which may be paid or made in connection with any such public or quasi-public use
or purpose, and Tenant hereby assigns to Landlord any interest it may have in or claim to all or
any part of such sums, other than any separate award which may be made with respect to Tenant’s
trade fixtures and moving expenses; Tenant shall make no claim for the value of any unexpired Term.
Tenant hereby waives any and all rights under and benefits of Section 1265.130 of the California
Code of Civil Procedure, or any similar or successor Regulations or other laws now or hereinafter
in effect.



24. SALE BY LANDLORD. In event of a sale or conveyance by Landlord of the Building, the same shall
operate to release Landlord from any future liability upon any of the covenants or conditions,
expressed or implied, contained in this Lease in favor of Tenant, and in such event Tenant agrees
to look solely to the responsibility of the successor in interest of Landlord in and to this Lease.
Except as set forth in this Article 24, this Lease shall not be affected by any such sale and
Tenant agrees to attorn to the purchaser or assignee. If any security has been given by Tenant to
secure the faithful performance of any of the covenants of this Lease, Landlord may transfer or
deliver said security, as such, to Landlord’s successor in interest and thereupon Landlord shall be
discharged from any further liability with regard to said security.



25. ESTOPPEL CERTIFICATES.  Within ten (10) fifteen (15) days following any written request
which Landlord may make from time to time, Tenant shall execute and deliver to Landlord or
mortgagee or prospective mortgagee a sworn statement certifying: (a) the date of commencement of
this Lease; (b) the fact that this Lease is unmodified and in full force and effect (or, if there
have been modifications to this Lease, that this Lease is in full force and effect, as modified,
and stating the date and nature of such modifications); (c) the date to which the rent and other
sums payable under this Lease have been paid; (d) the fact that there are no current defaults under
this Lease by either Landlord or Tenant except as specified in Tenant’s statement; and (e) such
other matters as may be requested by Landlord. Landlord and Tenant intend that any statement
delivered pursuant to this Article 25 may be relied upon by any mortgagee, beneficiary or
purchaser, and Tenant shall be liable for all reasonable loss, cost or expense resulting
from the failure of any sale or funding of any loan caused by any knowing material
misstatement contained in such estoppel certificate. Tenant irrevocably agrees that if Tenant
fails to execute and deliver such certificate within such ten (10) fifteen (15) day period
Landlord or Landlord’s beneficiary or agent may execute and deliver such certificate on Tenant’s
behalf, and that such certificate shall be fully binding on Tenant.



26. SURRENDER OF PREMISES.




     26.1 Landlord and Tenant shall arrange to meet Landlord  at mutually convenient
times for two (2) joint inspections of the Premises, the first to occur at least thirty (30)
days (but no more than sixty (60) days) before the last day of the Term, and the second to occur
not later than forty-eight (48) hours after Tenant has vacated the Premises. In the event of
Tenant’s failure to arrange such joint inspections and/or participate in either such inspection,
Landlord’s inspection at or after Tenant’s vacating the Premises shall be conclusively deemed
correct for purposes of determining Tenant’s responsibility for repairs and restoration.



     26.2 All alterations, additions, and improvements in, on, or to the Premises made or installed
by or for Tenant, including carpeting (collectively, “Alterations”), shall be and remain the
property of Tenant during the Term. Upon the expiration or sooner termination of the Term, all
Alterations shall become a part of the realty and shall belong to Landlord without compensation,
and title shall pass to Landlord under this Lease as by a bill of sale. At the end of the Term or
any renewal of the Term or other sooner termination of this Lease, Tenant will peaceably deliver up
to Landlord possession of the Premises, together with all Alterations then existing and by
whomsoever made, in the same conditions received or first installed, broom clean and free of all
debris, excepting only ordinary wear and tear and damage by fire or other casualty.
Notwithstanding the foregoing, if Landlord elects by notice given to Tenant at least ten (10) days
prior to expiration of the Term at the time Landlord consented to said Alterations, Tenant
shall, at Tenant’s sole cost, remove any Alterations, including carpeting, so designated by
Landlord’s notice, and repair any damage caused by such removal. Tenant must, at Tenant’s sole
cost, remove upon termination of this Lease, any and all of Tenant’s furniture, furnishings,
movable partitions of less than full height from floor to ceiling and other trade fixtures and
personal property (collectively, “Personalty”). Personalty not so removed shall be deemed
abandoned by the Tenant and title to the same shall thereupon pass to Landlord under this Lease as
by a bill of sale, but Tenant shall remain responsible for the cost of removal and disposal of such
Personalty, as well as any damage caused by such removal. In lieu of requiring Tenant to remove
Alterations and Personalty and repair the Premises as aforesaid, and provided Landlord notified
Tenant that such removal and restoration would be required, as provided for in Article 6,
Landlord may, by written notice to Tenant delivered at least thirty (30) days before the
Termination Date, require Tenant to pay to Landlord, as additional rent hereunder, the cost of such
removal and repair in an amount reasonably estimated by Landlord.



     26.3 All obligations of Tenant under this Lease not fully performed as of the expiration or
earlier termination of the Term shall survive the expiration or earlier termination of the Term
Upon the expiration or earlier termination of the



15









 




Term, Tenant shall pay to Landlord the amount, as
estimated by Landlord, necessary to repair and restore the Premises as provided in this Lease
and/or to discharge Tenant’s obligation for unpaid amounts due or to become due to Landlord. All
such amounts shall be used and held by Landlord for payment of such obligations of Tenant, with
Tenant being liable for any additional costs upon demand by Landlord, or with any excess to be
returned to Tenant after all such obligations have been determined and satisfied. Any otherwise
unused Security Deposit shall be credited against the amount payable by Tenant under this Lease.



27. NOTICES. Any notice or document required or permitted to be delivered under this Lease shall
be addressed to the intended recipient, by fully prepaid registered or certified United States Mail
return receipt requested, or by reputable independent contract delivery service furnishing a
written record of attempted or actual delivery, and shall be deemed to be delivered when tendered
for delivery to the addressee at its address set forth on the Reference Pages, or at such other
address as it has then last specified by written notice delivered in accordance with this Article
27, or if to Tenant at either its aforesaid address or its last known registered office or home of
a general partner or individual owner, whether or not actually accepted or received by the
addressee. Any such notice or document may also be personally delivered if a receipt is signed by
and received from, the individual, if any, named in Tenant’s Notice Address.



28. TAXES PAYABLE BY TENANT. In addition to rent and other charges to be paid by Tenant under this
Lease, Tenant shall reimburse to Landlord, upon demand, any and all taxes payable by Landlord
(other than net income taxes) whether or not now customary or within the contemplation of the
parties to this Lease: (a) upon, allocable to, or measured by or on the gross or net rent payable
under this Lease, including without limitation any gross income tax or excise tax levied by the
State, any political subdivision thereof, or the Federal Government with respect to the receipt of
such rent; (b) upon or with respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy of the Premises or any portion thereof, including any sales,
use or service tax imposed as a result thereof; (c) upon or measured by the Tenant’s gross receipts
or payroll or the value of Tenant’s equipment, furniture, fixtures and other personal property of
Tenant or leasehold improvements, alterations or additions located in the Premises; or (d) upon
this transaction or any document to which Tenant is a party creating or transferring any interest
of Tenant in this Lease or the Premises. In addition to the foregoing, Tenant agrees to pay,
before delinquency, any and all taxes levied or assessed against Tenant and which become payable
during the term hereof upon Tenant’s equipment, furniture, fixtures and other personal property of
Tenant located in the Premises.



29. RELOCATION OF TENANT. Landlord, at its sole expense, on at least sixty (60) days prior written
notice, may require Tenant to move from the Premises to other space of comparable size and decor in
order to permit Landlord to consolidate the space leased to Tenant with other adjoining space
leased or to be leased to another tenant. In the event of any such relocation, Landlord will pay
all expenses of preparing and decorating the new premises so that they will be substantially
similar to the Premises from which Tenant is moving, and Landlord will also pay the expense of
moving Tenant’s furniture and equipment to the relocated premises. In such event this Lease and
each and all of the terms and covenants and conditions hereof shall remain in full force and effect
and thereupon be deemed applicable to such new space except that revised Reference Pages and a
revised Exhibit A shall become part of this Lease and shall reflect the location of the new
premises.



30. DEFINED TERMS AND HEADINGS. The Article headings shown in this Lease are for convenience of
reference and shall in no way define, increase, limit or describe the scope or intent of any
provision of this Lease. Any indemnification or insurance of Landlord shall apply to and inure to
the benefit of all the following “Landlord Entities”, being Landlord, Landlord’s investment
manager, and the trustees, boards of directors, officers, general partners, beneficiaries,
stockholders, employees and agents of each of them. Any option granted to Landlord shall also
include or be exercisable by Landlord’s trustee, beneficiary, agents and employees, as the case may
be. In any case where this Lease is signed by more than one person, the obligations under this
Lease shall be joint and several. The terms “Tenant” and “Landlord” or any pronoun used in place
thereof shall indicate and include the masculine or feminine, the singular or plural number,
individuals, firms or corporations, and their and each of their respective successors, executors,
administrators and permitted assigns, according to the context hereof. The term “rentable area”
shall mean the rentable area of the Premises or the Building as calculated by the Landlord on the
basis of the plans and specifications of the Building including a proportionate share of any common
areas. Tenant hereby accepts and agrees to be bound by the figures for the rentable square footage
of the Premises and Tenant’s Proportionate Share shown on the Reference Pages; however, Landlord
may adjust either or both figures if there is manifest error, addition or subtraction to the
Building or any business park or complex of which the Building is a part, remeasurement or other
circumstance reasonably justifying adjustment. The term “Building” refers to the structure in
which the Premises are located and the common areas (parking lots, sidewalks, landscaping, etc.)
appurtenant thereto. If the Building is part of a larger complex of structures, the term
“Building” may include the entire complex, where appropriate (such as shared Expenses or Taxes) and
subject to Landlord’s reasonable discretion.




16









 







31. TENANT’S AUTHORITY. If Tenant signs as a corporation, partnership, trust or other legal entity
each of the persons executing this Lease on behalf of Tenant represents and warrants that Tenant
has been and is qualified to do business in the state in which the Building is located, that the
entity has full right and authority to enter into this Lease, and that all persons signing on
behalf of the entity were authorized to do so by appropriate actions. Tenant agrees to deliver to
Landlord, simultaneously with the delivery of this Lease, a corporate resolution, proof of due
authorization by partners, opinion of counsel or other appropriate documentation reasonably
acceptable to Landlord evidencing the due authorization of Tenant to enter into this Lease.
Tenant further agrees to deliver to Landlord, simultaneously with the delivery of this Lease,
documentation evidencing Tenant is qualified to do business in the state in which the Building is
located.



32. FINANCIAL STATEMENTS AND CREDIT REPORTS. At Landlord’s request, Tenant shall deliver to
Landlord a copy, certified by an officer of Tenant as being a true and correct copy, of Tenant’s
most recent audited financial statement, or, if unaudited, certified by Tenant’s chief financial
officer as being true, complete and correct in all material respects. Tenant hereby authorizes
Landlord to obtain one or more credit reports on Tenant at any time, and shall execute such further
authorizations as Landlord may reasonably require in order to obtain a credit report10-Q or
10-K filing with the Securities and Exchange Commission.



33. COMMISSIONS. Each of the parties represents and warrants to the other that it has not dealt
with any broker or finder in connection with this Lease, except as described on the Reference
Pages.



34. TIME AND APPLICABLE LAW. Time is of the essence of this Lease and all of its provisions. This
Lease shall in all respects be governed by the laws of the state in which the Building is located.



35. SUCCESSORS AND ASSIGNS. Subject to the provisions of Article 9, the terms, covenants and
conditions contained in this Lease shall be binding upon and inure to the benefit of the heirs,
successors, executors, administrators and assigns of the parties to this Lease.



36. ENTIRE AGREEMENT. This Lease, together with its exhibits, contains all agreements of the
parties to this Lease and supersedes any previous negotiations. There have been no representations
made by the Landlord or any of its representatives or understandings made between the parties other
than those set forth in this Lease and its exhibits. This Lease may not be modified except by a
written instrument duly executed by the parties to this Lease.



37. EXAMINATION NOT OPTION. Submission of this Lease shall not be deemed to be a reservation of
the Premises. Landlord shall not be bound by this Lease until it has received a copy of this Lease
duly executed by Tenant and has delivered to Tenant a copy of this Lease duly executed by Landlord,
and until such delivery Landlord reserves the right to exhibit and lease the Premises to other
prospective tenants. Notwithstanding anything contained in this Lease to the contrary, Landlord
may withhold delivery of possession of the Premises from Tenant until such time as Tenant has paid
to Landlord any security deposit required by Article 5, the first month’s rent as set forth in
Article 3 and any sum owed pursuant to this Lease.



38. RECORDATION. Tenant shall not record or register this Lease or a short form memorandum hereof
without the prior written consent of Landlord, and then shall pay all charges and taxes incident
such recording or registration.




(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)





17









 





39. LIMITATION OF LANDLORD’S LIABILITY. Redress for any claim against Landlord under this
Lease shall be limited to and enforceable only against and to the extent of Landlord’s interest in
the Building. The obligations of Landlord under this Lease are not intended to be and shall not be
personally binding on, nor shall any resort be had to the private properties of, any of its or its
investment manager’s trustees, directors, officers, partners, beneficiaries, members, stockholders,
employees, or agents, and in no case shall Landlord be liable to Tenant hereunder for any lost
profits, damage to business, or any form of special, indirect or consequential damages.




	 	 	 	 	 	 	 
	LANDLORD:


CALWEST INDUSTRIAL HOLDINGS, LLC,

a Delaware limited liability company	 	TENANT:


MTI TECHNOLOGY CORPORATION,

a Delaware corporation
	 
	 	 	 	 	 	 
	By:

	 	RREEF Management Company, a Delaware

corporation, Its Property Manager	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Scott Davis
	 	By:
	 	/s/ Thomas P. Raimondi, Jr.
	 

	 	 
	 	 	 	 
	 

	 	Scott Davis
	 	 	 	Thomas P. Raimondi, Jr.
	 
	 	 	 	 	 	 
	Title: Regional Manager	 	Title: President
	 
	 	 	 	 	 	 
	Dated: 8/2/05	 	Dated: 8/1/05
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Scott Poteracki
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Scott Poteracki
	 
	 	 	 	 	 	 
	 	 	 	 	Title: Secretary
	 
	 	 	 	 	 	 
	 	 	 	 	Dated: 8/1/05






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18









 






ADDENDUM TO LEASE




attached to and made a part of Lease bearing the Lease Reference Date of July 21,

2005, between CALWEST INDUSTRIAL HOLDINGS, LLC, a Delaware limited liability company,

as Landlord and MTI TECHNOLOGY CORPORATION, a Delaware corporation, as Tenant



In the event of any conflict between the terms of this Addendum to Lease and the Lease, the terms
of this Addendum to Lease shall control.



1. TENANT’S PROPORTIONATE SHARE.



Tenant’s Proportionate Share of the Building is defined as the percentage obtained by dividing the
Premises Rentable Area by the total number of rentable square feet of the Building. In the event
that the number of rentable square feet in either the Premises or the Building is modified,
Tenant’s Proportionate Share shall be adjusted.



2. ROOF MAINTENANCE.



Notwithstanding anything in the Lease to the contrary, Landlord shall maintain and repair the roof.
The cost of such maintenance and repair shall be paid by Landlord and reimbursed by Tenant in
Tenant’s pro-rata share of Expenses as described in Article 4.1.2.



3. PARKING.



During the term of the Lease and any agreed upon extension thereof, Tenant, its authorized
representatives and its invitees shall have the non-exclusive right to use the parking facilities
located at the Premises. Tenant agrees not to overburden the parking facilities located at the
Premises and agrees to cooperate with Landlord in the use of said parking facilities. Landlord
reserves the right, in the exercise of its sole and absolute discretion, to determine whether
Landlord’s parking facilities at the Premises are becoming overcrowded and, in such event, to
allocate parking spaces among the various tenants in the Building or to designate a specific area
or areas within which Tenant, its authorized representatives and its invitees must park. At all
times, Tenant shall be entitled to use the unreserved parking spaces at the Premises. Landlord
shall have the right at any time to make changes to the location of driveways, entrances, exits,
parking spaces, parking areas, or the direction of the flow of traffic. All responsibility for
damage and theft to vehicles is assumed by Tenant and Tenant’s employees, visitors and customers.
Tenant shall repair or cause to be repaired, at Tenant’s sole cost and expense, any and all damage
to the Premises, Common Areas and Building caused by Tenant, or Tenant’s employees, visitors, or
customer’s use of such parking areas. Landlord shall reasonably administer the parking rules and
regulations to all tenants.



4. TRASH DISPOSAL.



Tenant hereby agrees that all trash debris is to be deposited in receptacles provided within the
complex and all receptacles shall remain inside enclosures as provided by Landlord. If it is
determined that Tenant is regularly disposing of an unusually large amount of refuse Tenant shall,
within ten (10) days receipt of written notice from Landlord and at Tenant’s sole expense, provide
for an additional trash bin and pickup service at his or her leased premises. Landlord reserves
the right to stipulate the location of storage for Tenant’s additional receptacle. Tenant







Addendum Page 1




 









 







agrees not to store any items or leave any debris outside its Premises or in any of the common areas,
including the parking lot. In the event Landlord must remove items or debris, Landlord shall
charge the cost of removing said items or debris to Tenant.



Further, Tenant agrees not to use the parking lot or common areas for the storing or staging of any
items nor shall Tenant leave any debris in any of the common areas, the parking lot or areas
immediately outside its Premises. Upon notice from Landlord, Tenant shall immediately remove said
items and/or debris. If Tenant uses the parking lot and/or common areas of the Building for
staging and/or storing of any items, Landlord reserves the right to charge a storage fee in the
amount of $100.00 per day, until such items have been removed.



5. CONDITION OF PREMISES.



Prior to vacating the Premises, it must be left in good, clean condition with all systems in good
working order, normal wear and tear excepted. The items that will be inspected by Landlord are
listed below, but not limited to the following:





	 	a.	 	Subject to Article 7 of the Lease, service and repair all heating and air
conditioning equipment, exhaust fans and hot water heater. Provide Landlord’s office
with a copy of the inspection and service report provided by the mechanical contractor.
	 
	 	b.	 	All lights in the office and warehouse must be working.
	 
	 	c.	 	Overhead doors must be serviced and repaired.
	 
	 	d.	 	All exterior metal doors, including hardware should be serviced or replaced as
necessary.
	 
	 	e.	 	Repair all damaged sheet rock in the office area and in the warehouse along the
demising walls.
	 
	 	f.	 	Office and warehouse floors should be left in good, clean condition.
	 
	 	g.	 	Any exterior signage must be removed; repair and repaint the fascia as necessary.
	 
	 	h.	 	The bathrooms and any janitors’ sinks and closets must be cleaned with all plumbing
in good working order and condition, all lights and fans in good working condition and
all items removed from any cabinets.
	 
	 	i.	 	All data and electrical wiring for Tenant’s personal equipment and machinery needs
to be removed to nearest junction box or to the point of origin and any repairs from
damage made.




6. EXCESSIVE NOISE.



Neither Tenant nor Tenant Entities shall create any disturbance due to excessive noise either
within the Premises or the common areas, either by excessive equipment noise or by playing any type
of audio or audio/visual equipment at a volume which would at any time interfere with the quiet
enjoyment of any other tenant within the facility.



7. OPTION TO RENEW.



Tenant shall, provided the Lease is in full force and effect and Tenant is not and has not been, in
default under any of the other terms and conditions of the Lease at the time of notification or
commencement, have one (1) successive option to renew this Lease for a term of five (5) years, for
the portion of the Premises being leased by Tenant as of







Addendum Page 2




 









 







the date the renewal term is to commence, on the same terms and conditions set forth in the Lease, except as modified by the terms, covenants
and conditions as set forth below:





	 	a.	 	If Tenant elects to exercise said option, then Tenant shall provide Landlord with
written notice no earlier than the date which is two hundred seventy (270) days prior to
the expiration of the then current term of the Lease but no later than the date which is
one hundred eighty (180) days prior to the expiration of the then current term of this
Lease. If Tenant fails to provide such notice, Tenant shall have no further or additional
right to extend or renew the term of the Lease.
	 
	 	b.	 	The Annual Rent and Monthly Installment in effect at the expiration of the then current
term of the Lease shall be increased to reflect the current “Fair Market Rental” (as
defined below), as reasonably determined by Landlord, taking into account the specific
provisions of the Lease which will remain constant. Landlord shall advise Tenant of the
new Annual Rent and Monthly Installment for the Premises no later than forty-five (45) days
after receipt of Tenant’s written request therefor. Said request shall be made no earlier
than thirty (30) days prior to the first date on which Tenant may exercise its option under
this Paragraph. Said notification of the new Annual Rent may include a provision for its
escalation to provide for a change in fair market rental between the time of notification
and the commencement of the renewal term. In no event shall the Annual Rent and Monthly
Installment for any option period be less than the Annual Rent and Monthly Installment in
the preceding period.
	 
	 	 	 	“Fair Market Rental” shall mean and refer to the then-prevailing annual amount per rentable
square foot the being charged by landlords on leases for new or renewal non-subleased space
which space is (i) unencumbered by expansion or extension options or rights of first
negotiation of tenants, (ii) not occupied by tenants that possess an ownership interest in
addition to their leasehold interest in such space, and (iii) of comparable size, quality
and improvements to the Premises located in Irvine, California, comparable to the Buildings,
taking into consideration (A) annual rental rates per rentable square foot, (B) the type of
escalation clauses, (C) the floor level on which the leased premises are located, (D) tenant
improvements or allowances provided, or to be provided for such comparable space, if any,
(E) rental abatement concessions, if any, (F) the length of the relevant term, (G) the
extent of services to be provided to the leased premises, and (H) any other relevant terms
or conditions.
	 
	 	c.	 	This option is not transferable; the parties hereto acknowledge and agree that they
intend that the aforesaid option to renew this Lease shall be “personal” to Tenant as set
forth above and that in no event will any assignee or sublessee have any rights to exercise
the aforesaid option to renew.




8. SIGNS.



Tenant shall be entitled, at Tenant’s sole expense, to install building standard signage at the
entrance to the Premises, and signage on the exterior of the building in compliance with all
applicable laws, ordinances, regulations, and covenants and Landlord’s signage criteria. The
design and graphics of all such signage shall be approved by Landlord, in Landlord’s sole and
absolute discretion.



9. BROKER DISCLOSURE.



The Landlord’s Broker identified in the Reference Pages, who is a real estate broker licensed in
the State where the Building is located, has acted as agent for Landlord in this transaction and is
to be paid a commission by Landlord pursuant to a separate agreement. The Tenant’s Broker
identified in the Reference Pages, who is a real estate broker licensed in the State where the
Building is located, has acted as agent for Tenant in this transaction and is to be paid







Addendum Page 3




 









 







a commission by Landlord pursuant to a separate agreement. Landlord represents that Landlord has
dealt with no other broker other than the broker(s) identified herein. Landlord agrees that, if
any other broker makes a claim for a commission based upon the actions of Landlord, Landlord shall
indemnify, defend and hold Tenant harmless from any such claim. Tenant represents that Tenant has
dealt with no other broker other than the broker(s) identified herein. Tenant agrees that, if any
other broker makes a claim for a commission based upon the actions of Tenant, Tenant shall
indemnify, defend and hold Landlord harmless from any such claim.



10. LETTER OF CREDIT.



At Tenant’s option, the Security Deposit may be in the form of an Irrevocable Standby Letter of
Credit (the “letter of credit”), in which event the following terms and conditions shall apply:





	 	a.	 	The letter of credit shall be in favor of Landlord, shall be issued by a bank
acceptable to Landlord with a Standard & Poors rating of “A” or better, shall comply with
all of the terms and conditions of this paragraph and shall otherwise be in form reasonably
acceptable to Landlord. The initial letter of credit shall have an expiration date of.
	 
	 	b.	 	The letter of credit or any replacement letter of credit shall be irrevocable for the
term thereof and shall automatically renew on a year to year basis until a period ending
not earlier than two months subsequent to the Termination Date (the “LOC Expiration Date”)
without any action whatsoever on the part of Landlord; provided that the issuing bank shall
have the right not to renew the letter of credit by giving written notice to Landlord not
less than sixty (60) days prior to the expiration of the then current term of the letter of
credit that it does not intend to renew the letter of credit. Tenant understands that the
election by the issuing bank not to renew the letter of credit shall not, in any event,
diminish the obligation of Tenant to deposit the Security Deposit or maintain such an
irrevocable letter of credit in favor of Landlord through the LOC Expiration Date.
	 
	 	c.	 	Landlord, or its then managing agent, shall have the right from time to time to make
one or more draws on the letter of credit at any time that Landlord has the right to use
all or a part of the Security Deposit pursuant to Article 5 of this Lease, and the proceeds
may be applied as permitted under said Article 5. Funds may be drawn down on the letter of
credit upon presentation to the issuing bank of Landlord’s (or Landlord’s then managing
agent’s) certificate stating as follows:






“Beneficiary is entitled to the use of Applicant’s Security Deposit pursuant to
that certain Lease dated June 28, 2005 between CalWest Industrial Holdings,
LLC, a Delaware limited liability company, Landlord, and MTI Technology Corporation, a Delaware corporation,
Tenant, as amended from time to time.”




	 	d.	 	It is understood that if Landlord or its managing agent be a corporation, partnership
or other entity, then such statement shall be signed by an officer (if a corporation), a
general partner (if a partnership), or any authorized party (if another entity).
	 
	 	e.	 	Tenant acknowledges and agrees (and the letter of credit shall so state) that the
letter of credit shall be honored by the issuing bank without inquiry as to the truth of
the statements set forth in such draw request and regardless of whether the Tenant disputes
the content of such statement.
	 
	 	f.	 	In the event of a transfer of Landlord’s interest in the Premises, Landlord shall have
the right to transfer the letter of credit to the transferee and Tenant shall take whatever
action necessary to effectuate such transfer








Addendum Page 4




 









 









	 	 	 	and thereupon the Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor,
and it is agreed that the provisions hereof shall apply to every transfer or assignment of
said letter of credit to a new landlord; provided, however, that Landlord or the new
landlord pays all fees to the issuer necessary to evidence such transfer.
	 
	 	g.	 	Provided that prior to any Reduction Date in the following chart there has occurred no
Event of Default, whether subsequently cured or not, as of each Reduction Date Landlord
shall permit the amount of the letter of credit to be reduced (or a replacement letter of
credit may be issued in such lesser amount) as follows:





	 	 	 
	Reduction Date	 	New LOC Amount
	November 1, 2006

November 1, 2007

November 1, 2008

November 1, 2009
	 	$312,115.84

$234,086.88

$156,057.92

$78,028.96






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Addendum Page 5






 









 









	 	h.	 	Without limiting the generality of the foregoing, if the letter of credit expires
earlier than the LOC Expiration Date, or the issuing bank notifies Landlord that it shall
not renew the letter of credit, Landlord shall accept a renewal thereof or substitute
letter credit (such renewal or substitute letter of credit to be in effect not later than
thirty (30) days prior to the expiration thereof), irrevocable and automatically renewable
through the LOC Expiration Date upon the same terms as the expiring letter of credit or
upon such other terms as may be acceptable to Landlord. However, if (x) the letter of
credit is not timely renewed, or (y) a substitute letter of credit, complying with all of
the terms and conditions of this paragraph is not timely received, Landlord may present
such letter of credit to the issuing bank, and the entire sum so obtained shall be paid to
Landlord, to be held by Landlord in accordance with Article 5 of the Lease.
Notwithstanding the foregoing, Landlord shall be entitled to receive from Tenant a fee in
an amount not to exceed $1,000.00 for attorneys’ fees incurred in connection with the
review of any proposed substitute letter of credit pursuant to this paragraph.





	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:
	 
	CALWEST INDUSTRIAL HOLDINGS, LLC,	 	 	 	MTI TECHNOLOGY CORPORATION,
	a Delaware limited liability company	 	 	 	a Delaware corporation
	 
	 	 	 	 	 	 
	By:

	 	RREEF Management Company, a Delaware

corporation, Its Property Manager	 	 	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Scott Davis
	 	 	 	By:
	 	/s/ Thomas R. Raimondi, Jr.	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Scott Davis
	 	 	 	 	 	Thomas R. Raimondi, Jr.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Title: Regional Manager	 	 	 	Title: President
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	8/2/05
	 	 	 	Dated:
	 	8/1/05	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Scott Poteracki	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Scott Poteracki	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Title: Secretary
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Dated:
	 	8/1/05	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 





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Addendum Page 6




 









 








EXHIBIT A – FLOOR PLAN DEPICTING THE PREMISES




attached to and made a part of Lease bearing the

Lease Reference Date of July 21, 2005 between

CALWEST INDUSTRIAL HOLDINGS, LLC, a Delaware limited liability company, as Landlord

and MTI TECHNOLOGY CORPORATION, a Delaware corporation,

as Tenant



Exhibit A is intended only to show the general layout of the Premises as of the beginning of the
Term of this Lease. It does not in any way supersede any of Landlord’s rights set forth in Article
17 with respect to arrangements and/or locations of public parts of the Building and changes in
such arrangements and/or locations. It is not to be scaled; any measurements or distances shown
should be taken as approximate.









A-1









 








EXHIBIT A-1 – SITE PLAN




attached to and made a part of Lease bearing the

Lease Reference Date of July 21, 2005 between

CALWEST INDUSTRIAL HOLDINGS, LLC, a Delaware limited liability company, as Landlord

and MTI TECHNOLOGY CORPORATION, a Delaware corporation, as Tenant



Exhibit A-1 is intended only to show the general layout of the Premises as of the beginning of the
Term of this Lease. It does not in any way supersede any of Landlord’s rights set forth in Article
17 with respect to arrangements and/or locations of public parts of the Building and changes in
such arrangements and/or locations. It is not to be scaled; any measurements or distances shown
should be taken as approximate.









A-2









 








EXHIBIT B – INITIAL ALTERATIONS




attached to and made a part of Lease bearing the

Lease Reference Date of July 21, 2005 between

CALWEST INDUSTRIAL HOLDINGS, LLC, a Delaware limited liability company, as Landlord

and MTI TECHNOLOGY CORPORATION, a Delaware corporation, as Tenant





	1.	 	Delivery of Premises. Landlord shall deliver the Premises to Tenant on or before
October 1, 2005. The Premises shall be delivered “as is” with no additional improvements,
repairs or alterations. Tenant acknowledges that it has inspected the Premises and agrees to
accept the Premises in its existing condition and that Landlord shall have no obligation to
construct any improvements therein.
	 
	 	 	Landlord states that it has no actual knowledge that, as of the Commencement Date, the
Building and the Premises are not in compliance with all then applicable federal, state and
local ordinances, regulations and laws. Notwithstanding anything to the contrary contained
in this Lease, Tenant’s sole remedy in the event that the foregoing statement is inaccurate
shall be to cause Landlord to correct the non-compliance at Landlord’s sole cost and
expense.






	2.	 	Plans and Specifications.






	 	2.1	 	Tenant shall employ the following persons (“Consultants”) for preparation of
the necessary architectural, mechanical and electrical plans, drawings and
specifications (“Plans”) pertaining to the construction work which Tenant intends to
perform in the Premises in connection with Tenant’s initial occupancy (the “Work”):





	 	 	 
	 

	 	Space Planning Drawings                                                                                 
	 
	 	 
	 

	 	Architectural Working Drawings                                                                                 
	 
	 	 
	 

	 	Mechanical Working Drawings                                                                                 
	 
	 	 
	 

	 	Electrical Working Drawings                                                                                 







	 	 	 	or such other consultants designated by Tenant from time to time, with the approval
of Landlord, which shall not be unreasonably withheld or delayed. Tenant, at its
expense, shall furnish Landlord with architectural and design plans and
specifications (the “Tenant’s Plans”) prepared first in preliminary form
(“Preliminary Plans”), and thereafter in working form (“Working Drawings”), and
covering the Work. Tenant shall pay all costs and expenses relating to Tenant’s
Plans. All Tenant’s Plans shall meet the requirements set forth in Schedule
I. Tenant shall deliver the completed Plans to Landlord in accordance with the
following schedule:





	 	 	 
	 

	 	Space Plans Due Date:                                                             
	 
	 	 
	 

	 	Preliminary Plans Due Date:                                                             
	 
	 	 
	 

	 	Working Drawings Due Date:                                                             







	 	2.2	 	Upon submittal of any portion of Tenant’s Plans, Landlord shall review Tenant’s
Plans and shall either approve Tenant’s Plans or advise Tenant in writing of any aspect
of the design, engineering, construction or installation which is not acceptable to
Landlord. Landlord shall advise Tenant of its approval or comments on the Tenant’s
Plans within five (5) business days after Landlord’s receipt of the Tenant’s Plans. In
the event that Landlord shall disapprove of any portion of Tenant’s Plans, Tenant shall
have five (5) business days after Landlord’s notification of its disapproval to revise
Tenant’s Plans and resubmit them to Landlord. In the event Landlord fails to approve
or disapprove Tenant’s Plans or any changes thereto within the time period set forth
above, and if such failure continues thereafter for five (5) business days after
Landlord’s









B-1









 






	 	 	 	receipt of notice from Tenant requesting action on Tenant’s Plans, Tenant’s Plans or
the changes shall be deemed to be approved.
	 
	 	2.3	 	After approval of Tenant’s Plans or any portion thereof, Tenant shall not in
any way modify, revise or change such Plans without the prior written consent of
Landlord. If Landlord approves such request, the entire cost of such change, including
the cost of revising Tenant’s Plans or preparing new plans, shall be borne by Tenant
and any delay occasioned thereby shall not delay the Commencement Date.
	 
	 	2.4	 	Except for such matters, if any, as shall have been required by Landlord and
not requested by Tenant, it shall be Tenant’s responsibility that the Plans comply with
all applicable governmental and municipal codes and regulations and to procure and
deliver to Landlord upon request all such licenses, permits and approvals from all
governmental authorities as are necessary to permit the Work to be commenced and
continued to completion and the so constructed Premises to be occupied.






	3.	 	Cost Estimates and Payment Protection.






	 	3.1	 	Prior to commencing any of the Work, Tenant shall submit to Landlord a written
estimate of the cost of the Work, based upon competitive bids or a fixed-price contract
(an “Estimate”). Landlord may require Tenant to deposit One Hundred Twenty Percent
(120%) of the amount of the Estimate with Landlord within five (5) days after
Landlord’s written request therefor. Such deposit shall be held as security for the
payment of the costs of the Work, and shall be returned to Tenant, without interest,
upon satisfactory completion of the Work, as set forth in Paragraph 5 below.
	 
	 	3.2	 	At Landlord’s option, the deposit provided for in Paragraph 3.1 may be
disbursed through a construction escrow at a title insurance company selected by
Landlord. Each disbursement of the proceeds of the escrow shall be subject to
satisfaction of each of the following conditions as of the time of such disbursement:






	 	a.	 	 Landlord’s reasonable satisfaction that the Work completed as of
the date of such disbursement has an aggregate value at least equal to the
aggregate amount of proceeds then to be disbursed plus the total amount thereof
previously disbursed;
	 
	 	b.	 	 Receipt by Landlord and the title insurer of sworn statements,
waivers of lien and other documents and assurances pertaining to the Work
sufficient to protect Landlord against mechanics’ and other liens;
	 
	 	c.	 	 Receipt of assurances satisfactory to Landlord that the amount
remaining on deposit in the escrow after such disbursement is adequate to
complete the remaining Work; and
	 
	 	d.	 	 Tenant is then in full compliance with all the terms and
provisions of the Lease and has not committed or suffered any act or omission
which constitutes, or will constitute with the passage of time, an event of
default of Tenant under the Lease or a breach by Tenant of any term or provision
of this Agreement.






Any final disbursement from the escrow will also be conditioned upon Tenant’s
satisfaction of its obligations under Paragraph 5 below.




	 	3.3	 	 Landlord shall be entitled to deduct any sums properly due Landlord from Tenant
hereunder from the amounts held by Landlord or in escrow or from any other sums due to
Tenant under the Lease, but in such event Landlord shall notify Tenant of such
deduction and provide Tenant with appropriate information substantiating Landlord’s
claim.






	4.	 	Contracts and Contractors for the Work. Tenant shall make all such contracts and
arrangements as shall be necessary or desirable for the construction and installation of the
Work. Tenant agrees to retain contractors, subcontractors and materialmen who are of good
reputation and experienced in and favorably known for the construction of space comparable to
the Premises in the metropolitan area where the Building is located and that are properly
licensed for the work they are to perform. Tenant shall provide Landlord with a list of all
contractors, subcontractors and









B-2









 






	 	 	materialmen to be utilized by or for Tenant with respect to the Work and provide true,
correct and complete copies of all contracts relating to the Work. Such contractors,
subcontractors, materialmen and contracts must be satisfactory to Landlord in Landlord’s
reasonable discretion, and shall not be employed or executed, as the case may be, without
Landlord’s written approval first obtained. Tenant and Tenant’s contractors shall use
qualified craftsmen and laborers who are compatible with the trade unions operating in the
Building (if any) and Tenant shall take promptly upon Landlord’s demand all measures
necessary to avoid labor unrest in the Premises and in the Building which is caused by
Tenant or Tenant’s contractors. Tenant shall cause all contractors to procure performance
bonds and shall provide Landlord with evidence thereof.
	 
	5.	 	Construction. Promptly upon Landlord’s approval of the Plans, Tenant shall apply
for, and supply to Landlord upon issuance, a building permit and any other required
governmental permits, licenses or approvals. Upon issuance of such approvals, Tenant shall
commence the Work and shall diligently prosecute the Work to completion. Tenant agrees to
complete the Work on or before. Tenant agrees to cause the Work to be constructed in a good
and workmanlike manner using first-class quality materials, at its sole cost and expense in
accordance with the provisions of the Lease. Any costs incurred by Landlord in providing
utilities, the use of the freight elevator, supervision or other services needed for the
accomplishment of the Work shall be reimbursed by Tenant to Landlord. Upon completion of the
Work, Tenant shall provide to Landlord: (i) an architect’s certificate of final completion;
(ii) copies of all necessary governmental permits, including, but not limited to, a
certificate of occupancy; (iii) the sworn statement of the general contractor; (iv) final lien
waivers from all contractors, subcontractors and materialmen; and (v) any other information or
documentation reasonably requested by Landlord to evidence lien-free completion of
construction and payment of all of the cost thereof. Landlord shall have the right to observe
the performance of the Work and Tenant shall take all such actions with respect thereto as
Landlord may, in its good faith determination, deem advisable from time to time to assure that
the Work and the manner of performance thereof shall not be injurious to the engineering and
construction of the Building or the electrical, plumbing, heating, mechanical, ventilating or
air-conditioning systems of the Building and shall be in accordance with the Plans and the
provisions of this Lease.
	 
	6.	 	Tenant’s Default. If Tenant shall fail to comply with any term, provision or
agreement hereunder, and if any such matter is not remedied or resolved within fifteen (15)
days following written notice to Tenant, then, in addition to any other remedies granted
Landlord under the Lease in the case of default by Tenant and any other remedies available at
law or equity, Landlord may elect, upon notice to Tenant, to:






	 	a.	 	require Tenant to discontinue all work hereunder, and Tenant’s
obligation to pay rent shall commence as of the Scheduled Commencement Date,
without any abatement on account of any delay in connection with any work
relating to the Premises; or
	 
	 	b.	 	complete the construction of the Work pursuant to the Plans,
tendering possession to Tenant upon substantial completion thereof, and Tenant
shall immediately upon demand reimburse Landlord, as additional rent, for
Landlord’s costs of completing the Work; or
	 
	 	c.	 	cancel the Lease, effective immediately after Tenant receives
notice thereof, without incurring any liability on account thereof and the term
granted under the Lease is expressly limited accordingly. If Landlord cancels
the Lease pursuant to the terms hereof or as a result of Tenant’s default under
the Lease, such cancellation shall not affect Tenant’s liability for any sums
payable under the Lease.






	7.	 	Tenant Improvement Allowance






	 	7.1	 	Provided the Lease is in full force and effect and Tenant is not in default
thereunder, Landlord hereby agrees to pay to Tenant toward the cost of the Work and
Tenant’s Plans an amount equal to the lesser of: (i) the actual cost of the Work and
Tenant’s Plans; or (ii) Two Hundred Fifty-two Thousand Five Hundred Dollars and 00/100
($252,500.00) (the “Allowance”). Landlord shall pay Tenant the Allowance within thirty
(30) days of the last to occur of: (a) Tenant’s opening for business from the Premises;
(b) completion of the Work; (c) satisfaction of the provisions of Paragraph 5 of this
Work Letter and (d) payment of the first Monthly Installment of Rent.









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	 	7.2	 	Tenant shall have one (1) year within which to utilize the Allowance to improve
the Premises. However, Landlord’s obligation to pay the Allowance hereunder is
expressly conditioned upon Tenant completing the Work and meeting the requirements of
this Exhibit B by October 31, 2006. Should Tenant fail to do so by said date, Landlord
shall have no further obligation to pay the Allowance.






	8.	 	Miscellaneous






	 	8.1	 	All rights and remedies of Landlord herein created or otherwise existing at law
or equity are cumulative, and the exercise of one or more such rights or remedies shall
not be deemed to exclude or waive the right to the exercise of any other rights or
remedies. All such rights and remedies may be exercised and enforced concurrently and
whenever and as often as deemed desirable.
	 
	 	8.2	 	This Exhibit B shall not be deemed applicable to any additional space added to
the original Premises at any time or from time to time, whether by any options under
the Lease or otherwise, or to any portion of the original Premises or any additions
thereto in the event of a renewal or extension of the original term of the Lease,
whether by any options under the Lease or otherwise.
	 
	 	8.3	 	Tenant shall, before commencing any of the Work, and for so long as any Work
shall continue, comply with the insurance requirements in Schedule II. In the
event Tenant fails to so comply, Landlord shall have the option, but not the obligation
to procure the required insurance and charge Tenant the cost of such compliance as
additional rent.
	 
	 	8.4	 	Landlord’s contacts for the purpose of this Exhibit B shall be as follows:






Krysti Galvin

Property Manager

RREEF Management Company

7245 Garden Grove Boulevard, Suite E

Garden Grove, CA 92841

714.899.6006

714.899.6010





 




— AND —




 




Michael DeArmey

Operations Manager

RREEF Management Company

1630 S. Sunkist Avenue, Suite A

Anaheim, CA 92806

714.634.4664

714.634.2680



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SCHEDULE I




STANDARDS FOR PLANS





	1.	 	The space plan shall contain the following information:






	 	a.	 	A layout of the Premises showing demising, corridor and exterior walls in
relationship to the Building core. The locations of exterior window mullions, columns,
stairways and other building features shall also be shown on the Space Plans.
	 
	 	b.	 	The location and composition of all walls. Non-standard improvements, such as
walls requiring insulation, half walls, vinyl wall coverings or walls requiring special
construction must be clearly noted on the Space Plans. Sectional details must be
provided to adequately describe the construction of any non-standard wall.
	 
	 	c.	 	The location, size and swing of all doors. All doors shall conform with
Landlord’s standard door specifications, unless otherwise noted on the Space Plans.
	 
	 	d.	 	A description of flooring materials.
	 
	 	e.	 	A reflected ceiling plan showing the layout of lighting fixtures, switches, and
any other non-standard improvements which are to be located within the ceiling system.
	 
	 	f.	 	The location of all telephone and electrical outlets. Non-standard
improvements, such as outlets to be located more than twelve (12) inches above the
floor, dedicated circuit outlets or high amperage/voltage outlets must be clearly noted
on the Space Plans.






	2.	 	The working drawings shall be prepared at a scale of not less than 1/8"=1 foot and in
accordance with Landlord’s design/build specification.
	 
	3.	 	All working drawings shall be prepared based upon the use of Landlord’s Building Standard
Improvements as set forth in Schedule 1 attached hereto. All Improvements must conform to
Landlord’s design/build specifications.
	 
	4.	 	The Plans shall contain sufficient notations, specifications and details to describe all
Improvements, including but not limited to:






	 	a.	 	Insulated walls, special wall coverings, graphics, special painting or special
wall materials such as plate glass or glass block.
	 
	 	b.	 	Door dimensions, thickness, hardware or locks.
	 
	 	c.	 	Flooring materials.
	 
	 	d.	 	Electrical outlets requiring a dedicated circuit, more than 120 volts or more
than 15 amperes.
	 
	 	e.	 	Telephone outlets requiring more than 3/4 inch diameter conduit.
	 
	 	f.	 	Light fixtures, exhaust fans, ceiling heights, or ceiling designs using
non-standard materials.
	 
	 	g.	 	Any special conduits, receptacles or electrical devices necessary to serve
communications equipment, computers or other facilities to be installed by Tenant.
	 
	 	h.	 	Any special requirements to accommodate handicapped employees of Tenant within
the Premises.
	 
	 	i.	 	Any requirements for fire protection of computers, other equipment or materials
installed by Tenant.
	 
	 	j.	 	Any requirements for special fire detection or life safety equipment not
required by applicable building codes in effect at the time of construction.









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	 	k.	 	Any special reinforcing of the floor system which will be necessary to support
computers, filing systems, equipment or furnishings having a load exceeding fifty
pounds per square foot of floor area.
	 
	 	l.	 	Any special requirements for humidity control, temperature control, extra
air-conditioning capacity, ventilation or heating which would not be provided by
Landlord’s standard building systems. Such special requirements may arise as a result
of Tenant’s desire to install a computer or other equipment which generates heat, food
preparation facilities, bathrooms, laboratories, microfilm storage or other special
facilities, equipment or products.
	 
	 	m.	 	Any private bathrooms, wet-bars, kitchens, vending machines or other
installations requiring plumbing work or ventilation.
	 
	 	n.	 	Any cabinetry, wood paneling, reception desks, built-in shelving or furniture.
	 
	 	o	 	 Any improvement which will require modification of the Building’s structural,
mechanical or electrical components.
	 
	 	p.	 	Sufficient details, specifications and other information as may be necessary
for accurate pricing of any other non-standard Improvements.





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SCHEDULE II




INSURANCE REQUIREMENTS





	1.	 	Tenant shall cause to be maintained for Landlord’s benefit insurance in an insurance company
or companies which are “A” rated, Class VII or better in Best’s Key Rating Guide or such
lesser standard as shall be acceptable to Landlord and authorized to transact business in the
state in which the Building is located, protecting Landlord against liabilities arising out of
the operations of subcontractors and sub-subcontractors as well as Tenant’s contractor
(“Contractor”) with respect to all the Work, including at least and in amounts not less than:






	 	a.	 	Worker’s Compensation & Employers Liability: Statutory limits required by
applicable Worker’s Compensation Law and $500,000 per occurrence for Employers
Liability, without limitation including all liability arising under any applicable
structural work act and any other statute for the protection of employees.
	 
	 	b.	 	Commercial or Comprehensive Liability including Landlord’s and Contractor’s
Protective, products, and completed operations coverage, contractual liability
including Contractor’s indemnity agreements contained in the Contract Documents,
personal injury (employees’ exclusion deleted) $5,000,000 per occurrence Bodily Injury
and Property Damage, $5,000,000 combined single limit. Landlord may require deletion
of the “x, c, u” exclusion, if applicable.
	 
	 	c.	 	Comprehensive Auto Liability including owned, non-owned, and hired vehicles
coverage: $1,000,000 per occurrence Bodily Injury and Property Damage Liability
(Combined Single Limit).
	 
	 	d.	 	Builder’s Risk in an “all risk” form covering the Tenant Work against loss by
fire and other casualty in an amount equal to the full insurable value of the Tenant
Work.




Notwithstanding the foregoing, upon Tenant’s request Landlord shall provide the coverages set forth
in subparagraph (d) above and Tenant shall reimburse Landlord for the actual cost thereof.





	2.	 	Contractor shall either have the Landlord added as an additional named insured to the
preceding Commercial or Comprehensive General Liability insurance policy or shall supply a
separate Landlord’s Protective policy, with limits as specified, naming the Landlord as named
insured, and said General Liability or Landlord’s Protective policy shall be maintained in
force until the completion of the Work.
	 
	3.	 	Each insurance policy shall be written to cover all claims arising out of occurrences taking
place within the period of coverage; insurance written to cover only claims made within the
policy period is not acceptable without the express advance written consent of Landlord. To
the extent the policy is not a Landlord’s Protective policy, it shall be endorsed to indicate
that it is primary as respects Landlord, not contributory with any other insurance available
to the Landlord and not subject to reduction of coverage as to Landlord by reason of any claim
asserted against Contractor other than in connection with the Work or by reason of any
misstatement, act or omission of any party other than Landlord applying for or insured by such
insurance.
	 
	4.	 	Each insurance policy and any certificate furnished in lieu of a policy shall state that it
will not be cancelled, reduced or materially changed without twenty (20) days’ prior written
notice to Landlord. In the event Tenant fails to provide replacement coverage at least
fifteen (15) days prior to the expiration of any policy of insurance, Landlord may at its
option secure such insurance and Tenant shall reimburse Landlord for the cost thereof as
additional rent; but Landlord shall not have any obligation to secure any such insurance.
	 
	5.	 	If and so long as any monies shall be or be about to be owed to any lender upon the security
of an interest in the Premises or the Building, at Landlord’s request any insurance required
hereunder for Landlord’s protection shall also protect Landlord’s mortgagee and whenever
Landlord is to be an additional insured, Landlord’s mortgagee shall also be so insured.









B-7









 






	6.	 	Each of the aforesaid insurance coverages shall be placed into effect before any of the Work
is commenced and shall be maintained in force at all times while and for at least so long as
any of the Work is carried on, including without limitation, any and all activities performed
in fulfillment of any obligation of Contractor or any Subcontractor to correct defects in the
Work or under any other warranty. Before commencing any of the Work, and as often thereafter
as reasonably requested by Landlord, Tenant shall supply Landlord with either the policies
themselves or certificates of insurance satisfactory to Landlord, evidencing compliance with
all the foregoing requirements.
	 
	7.	 	No insurance policy purporting to insure Landlord or Landlord’s lender, as the case may be,
shall without the prior written consent of said party be so written as to limit or condition
any of the insurer’s obligations to said party with respect to any insured loss or liability
by any condition or requirement that said party bear, assume or pay any portion of such loss
or liability before the insurer’s obligation to said party shall come into effect.





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B-8









 








EXHIBIT C – COMMENCEMENT DATE MEMORANDUM




attached to and made a part of Lease bearing the

Lease Reference Date of July 21, 2005 between

CALWEST INDUSTRIAL HOLDINGS, LLC, a Delaware limited liability company, as Landlord

AND MTI TECHNOLOGY CORPORATION, a Delaware corporation, as Tenant




COMMENCEMENT DATE MEMORANDUM




     THIS MEMORANDUM, made as of ___, 20___, by and between ___(“Landlord”) and ___
(“Tenant”).



Recitals:





	 	A.	 	Landlord and Tenant are parties to that certain Lease, dated for reference
___, 20___ (the “Lease”) for certain premises (the “Premises”) consisting of
approximately ___ square feet at the building commonly known as ___.
	 
	 	B.	 	Tenant is in possession of the Premises and the Term of the Lease has
commenced.
	 
	 	C.	 	Landlord and Tenant desire to enter into this Memorandum confirming the Commencement Date,
the Termination Date and other matters under the Lease.





     NOW, THEREFORE, Landlord and Tenant agree as follows:



     1. The actual Commencement Date is ___.



     2. The actual Termination Date is ___.



     3. The schedule of the Annual Rent and the Monthly Installment of Rent set forth on the
Reference Pages is deleted in its entirety, and the following is substituted therefor: [insert
rent schedule]



     4. Capitalized terms not defined herein shall have the same meaning as set forth in the Lease.



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date and year first above written.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	                    DO_NOT_SIGN                    
	 	 	 	By:
	 	                    DO_NOT_SIGN                    	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Name:	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	Dated:	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	                    DO_NOT_SIGN                    	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Dated:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 








C-1









 






EXHIBIT D – RULES AND REGULATIONS




attached to and made a part of Lease bearing the

Lease Reference Date of July 21, 2005 between

CALWEST INDUSTRIAL HOLDINGS, LLC, a Delaware limited liability company, as Landlord

and MTI TECHNOLOGY CORPORATION, a Delaware corporation, as Tenant



1. Subject to Paragraph 10 of the Addendum to the Lease, no sign, placard, picture,
advertisement, name or notice (collectively referred to as “Signs”) shall be installed or displayed
on any part of the outside of the Building without the prior written consent of the Landlord which
consent shall be in Landlord’s sole discretion. All approved Signs shall be printed, painted,
affixed or inscribed at Tenant’s expense by a person or vendor approved by Landlord and shall be
removed by Tenant at Tenant’s expense upon vacating the Premises. Landlord shall have the right to
remove any Sign installed or displayed in violation of this rule at Tenant’s expense and without
notice.



2. If Landlord objects in writing to any curtains, blinds, shades or screens attached to or hung in
or used in connection with any window or door of the Premises or Building, Tenant shall immediately
discontinue such use. No awning shall be permitted on any part of the Premises. Tenant shall not
place anything or allow anything to be placed against or near any glass partitions or doors or
windows which may appear unsightly, in the opinion of Landlord, from outside the Premises.



3. Tenant shall not alter any lock or other access device or install a new or additional lock or
access device or bolt on any door of its Premises without the prior written consent of Landlord.
Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys or other means of
access to all doors.



4. If Tenant requires telephone, data, burglar alarm or similar service, the cost of purchasing,
installing and maintaining such service shall be borne solely by Tenant. No boring or cutting for
wires will be allowed without the prior written consent of Landlord. Landlord shall direct
electricians as to where and how telephone, data, and electrical wires are to be introduced or
installed. The location of burglar alarms, telephones, call boxes or other office equipment affixed
to the Premises shall be subject to the prior written approval of Landlord.



5. Tenant shall not place a load upon any floor of its Premises, including mezzanine area, if any,
which exceeds the load per square foot that such floor was designed to carry and that is allowed by
law. Heavy objects shall stand on such platforms as determined by Landlord to be necessary to
properly distribute the weight. Landlord will not be responsible for loss of or damage to any such
equipment or other property from any cause, and all damage done to the Building by maintaining or
moving such equipment or other property shall be repaired at the expense of Tenant.
Notwithstanding the foregoing, Landlord acknowledges certain areas of the Premises that have been
retrofitted to accommodate extraordinary weight load. Upon termination of the Lease, Tenant shall
be responsible for the repair of said areas, less reasonable wear and tear, as determined
by Landlord in its reasonable discretion.



6. Tenant shall not install any radio or television antenna, satellite dish, loudspeaker or other
device on the roof or exterior walls of the Building without Landlord’s prior written consent which
consent shall be in Landlord’s reasonable discretion not be unreasonably withheld.



7. Tenant shall not mark, drive nails, screw or drill into the partitions, woodwork, plaster or
drywall (except for pictures and general office uses) or in any way deface the Premises or any part
thereof. Tenant shall not affix any floor covering to the floor of the Premises or paint or seal
any floors in any manner except as approved by Landlord. Tenant shall repair any damage resulting
from noncompliance with this rule. Notwithstanding the foregoing, Landlord acknowledges the
existing epoxy floors in the warehouse portion of the Premises.



8. No cooking shall be done or permitted on the Premises, except that Underwriters’ Laboratory
approved microwave ovens or equipment for brewing coffee, tea, hot chocolate and similar beverages
shall be permitted, provided that such equipment and use is in accordance with all applicable
federal, state and city laws, codes, ordinances, rules and regulations.



9. Tenant shall not use any hand trucks except those equipped with the rubber tires and side
guards, and may use such other material-handling equipment as Landlord may approve. Tenant shall
not bring any other vehicles of any kind into the Building. Forklifts which operate on asphalt
areas shall only use tires that do not damage the asphalt. Notwithstanding the foregoing, Tenant
shall be permitted to operate a forklift within the warehouse portion of the Premises.







D-1









 







10. Tenant shall not use the name of the Building or any photograph or other likeness of the
Building in connection with or in promoting or advertising Tenant’s business except that Tenant may
include the Building name in Tenant’s address. Landlord shall have the right, exercisable without
notice and without liability to any tenant, to change the name and address of the Building.



11. All trash and refuse shall be contained in suitable receptacles at locations approved by
Landlord. Tenant shall not place in the trash receptacles any personal trash or material that
cannot be disposed of in the ordinary and customary manner of removing such trash without violation
of any law or ordinance governing such disposal.



12. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations
established by Landlord or any governing authority.



13. Tenant assumes all responsibility for securing and protecting its Premises and its contents
including keeping doors locked and other means of entry to the Premises closed.



14. Tenant shall not use any method of heating or air conditioning other than that supplied by
Landlord without Landlord’s prior written consent.



15. No person shall go on the roof without Landlord’s permission.



16. Tenant shall not permit any animals, other than seeing-eye assistance dogs, to be
brought or kept in or about the Premises or any common area of the property.



17. Tenant shall not permit any motor vehicles to be washed or mechanical work or maintenance of
motor vehicles to be performed on any portion of the Premises or parking lot.



18. These Rules and Regulations are in addition to, and shall not be construed to in any way modify
or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of any
premises in the Building. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any tenant or tenants, and any such waiver by Landlord shall not be construed as a
waiver of such Rules and Regulations for any or all tenants. The rules and regulations shall
apply to all tenants in a non-discriminatory manner.




19. Landlord reserves the right to make such other and reasonable rules and regulations as in its
judgment may from time to time be needed for safety and security, for care and cleanliness of the
Building and for the preservation of good order in and about the Building. Tenant agrees to abide
by all such rules and regulations herein stated and any additional rules and regulations which are
adopted. Tenant shall be responsible for the observance of all of the foregoing rules by Tenant’s
employees, agents, clients, customers, invitees and guests.



20. Any toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any
purpose other than that for which they were constructed and no foreign substance of any kind
whatsoever shall be thrown into them. The expense of any breakage, stoppage or damage resulting
from the violation of this rule shall be borne by the Tenant who, or whose employees or invitees,
shall have caused it.



21. Tenant shall not permit smoking or carrying of lighted cigarettes or cigars in areas reasonably
designated by Landlord or any applicable governmental agencies as non-smoking areas.



22. Any directory of the Building or project of which the Building is a part (“Project Area”), if
provided, will be exclusively for the display of the name and location of tenants only and Landlord
reserves the right to charge for the use thereof and to exclude any other names.



23. Canvassing, soliciting, distribution of handbills or any other written material in the Building
or Project Area is prohibited and each tenant shall cooperate to prevent the same. No tenant shall
solicit business from other tenants or permit the sale of any goods or merchandise in the Building
or Project Area without the written consent of Landlord.



24. Any equipment belonging to Tenant which causes noise or vibration that may be transmitted to
the structure of the Building or to any space therein to such a degree as to be objectionable to
Landlord or to any tenants in the Building shall be







D-2









 







placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or other devices
sufficient to eliminate the noise or vibration. Tenant shall use its best efforts to contain all
noise, odor and/or vibration resulting from its use within the Premises.



25. Driveways, sidewalks, halls, passages, exits, entrances and stairways (“Access Areas”) shall
not be obstructed by tenants or used by tenants for any purpose other than for ingress to and
egress from their respective premises. Access areas are not for the use of the general public and
Landlord shall in all cases retain the right to control and prevent access thereto by all persons
whose presence, in the judgement of Landlord, shall be prejudicial to the safety, character,
reputation and interests of the Building or its tenants.



26. Tenant and Tenant’s guests shall park between designated parking lines only and shall not park
motor vehicles in those areas designated by Landlord for loading and unloading. Vehicles in
violation of the above shall be subject to being towed at the vehicle owner’s expense. Vehicles
parked overnight for more than two (2) consecutive days without prior written consent of
the Landlord shall be deemed abandoned and shall be subject to being towed at vehicle owner’s
expense. Tenant will from time to time, upon the request of Landlord, supply Landlord with a list
of license plate numbers of vehicles owned or operated by its employees or agents.



27. No trucks, tractors or similar vehicles can be parked anywhere other than in Tenant’s own truck
dock area. Tractor-trailers which must be unhooked or parked with dolly wheels beyond the concrete
loading areas must use steel plates or wood blocks under the dolly wheels to prevent damage to the
asphalt paving surfaces. No parking or storing of such trailers will be permitted in the parking
areas or on streets adjacent thereto.



28. All products, materials or goods must be stored within the Tenant’s Premises and not in any
exterior areas, including, but not limited to, exterior dock platforms, against the exterior of the
Premises, parking areas and driveway areas. Tenant agrees to keep the exterior of the Premises
clean and free of nails, wood, pallets, packing materials, barrels and any other debris produced
from their operation.




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D-3









 








EXHIBIT E – HAZARDOUS MATERIALS




attached to and made a part of Lease bearing the

Lease Reference Date of July 21, 2005 between

CALWEST INDUSTRIAL HOLDINGS, LLC, a Delaware limited liability company, as Landlord

and MTI TECHNOLOGY CORPORATION, a Delaware corporation, as Tenant





	1.	 	Tenant agrees that Tenant, its agents and contractors, licensees, or invitees shall not
handle, use, manufacture, store or dispose of any flammables, explosives, radioactive
materials, hazardous wastes or materials, toxic wastes or materials, or other similar
substances, petroleum products or derivatives (collectively “Hazardous Materials”) on, under,
or about the Premises, without Landlord’s prior written consent (which consent shall not be
unreasonably withheld as long as Tenant demonstrates and documents to Landlord’s reasonable
satisfaction (i) that such Hazardous Materials (A) are necessary or useful to Tenant’s
business; and (B) will be used, kept, and stored in compliance with all laws relating to any
Hazardous Materials so brought or used or kept in or about the Premises; and (ii) that Tenant
will give all required notices concerning the presence in or on the Premises or the release of
such Hazardous Materials from the Premises) provided that Tenant may handle, store, use or
dispose of products containing small quantities of Hazardous Materials, which products are of
a type customarily found in offices and households (such as aerosol cans containing
insecticides, toner for copies, paints, paint remover, and the like), provided further that
Tenant shall handle, store, use and dispose of any such Hazardous Materials in a safe and
lawful manner and shall not allow such Hazardous Materials to contaminate the Premises or the
environment.
	 
	2.	 	Tenant further agrees that Tenant will not permit any substance suspected of causing cancer
or reproductive toxicity to come into contact with groundwater under the Premises. Any such
substance coming into contact with groundwater shall be considered a Hazardous Material for
purposes of this Exhibit E.
	 
	3.	 	(i) Notwithstanding the provisions of Paragraph (1), Tenant may handle, store, and use
Hazardous Materials, limited to the types, amounts, and use identified in the Hazardous
Materials Exhibit attached hereto. If no Hazardous Materials Exhibit is attached to this
Lease, then this Paragraph (3) shall be of no force and effect. Tenant hereby certifies to
Landlord that the information provided by Tenant pursuant to this Paragraph is true, correct,
and complete. Tenant covenants to comply with the use restrictions shown on the attached
Hazardous Materials Exhibit. Tenant’s business and operations, and more especially its
handling, storage, use and disposal of Hazardous Materials shall at all times comply with all
applicable laws pertaining to Hazardous Materials. Tenant shall secure and abide by all
permits necessary for Tenant’s operations on the Premises. Tenant shall give or post all
notices required by all applicable laws pertaining to Hazardous Materials. If Tenant shall at
any time fail to comply with this Paragraph, Tenant shall immediately notify Landlord in
writing of such noncompliance.
	 
	(ii)	 	Tenant shall provide Landlord with copies of any Material Safety Data Sheets (as required
by the Occupational Safety and Health Act) relating to any Hazardous Materials to be used,
kept, or stored at or on the Premises, at least 30 days prior to the first use, placement, or
storage of such Hazardous Material on the Premises. Landlord shall have 10 days following
delivery of such Material Safety Data Sheets to approve or forbid, in its sole discretion
subject to the limitation contained in Paragraph (a) above, such use, placement, or storage of
a Hazardous Material on the Premises.
	 
	(iii)	 	Tenant shall not store hazardous wastes on the premises for more than 90 days;
“hazardous waste” has the meaning given it by the Resource Conservation and Recovery Act of
1976, as amended. Tenant shall not install any underground or above ground storage tanks on
the Premises. Tenant shall not dispose of any Hazardous Material or solid waste on the
Premises. In performing any alterations of the Premises permitted by the Lease, Tenant shall
not install any Hazardous Material in the Premises without the specific consent of Landlord
attached as an exhibit to this Exhibit E.
	 
	(iv)	 	Any increase in the premiums for necessary insurance on the Property which arises from
Tenant’s use and/or storage of Hazardous Materials shall be solely at Tenant’s expense. Tenant
shall procure and maintain at its sole expense such additional insurance as may be necessary to
comply with any requirement of any Federal, State or local governmental agency with
jurisdiction.









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	4.	 	If Landlord, in its reasonable discretion, believes that the Premises or the environment have
become contaminated with Hazardous Materials that must be removed under the laws of the state
where the Premises are located, in breach of the provisions of this Lease, Landlord, in
addition to its other rights under this Lease, may enter upon the Premises and obtain samples
from the Premises, including without limitation the soil and groundwater under the Premises,
for the purposes of analyzing the same to determine whether and to what extent the Premises or
the environment have become so contaminated. Tenant shall reimburse Landlord for the costs of
any inspection, sampling and analysis that discloses contamination for which Tenant is liable
under the terms of this Exhibit E. Tenant may not perform any sampling, testing, or drilling
to locate any Hazardous Materials on the Premises without Landlord’s prior written consent.
	 
	5.	 	Without limiting the above, Tenant shall reimburse, defend, indemnify and hold Landlord
harmless from and against any and all claims, losses, liabilities, damages, costs and
expenses, including without limitation, loss of rental income, loss due to business
interruption, and attorneys fees and costs, arising out of or in any way connected with the
use, manufacture, storage, or disposal of Hazardous Materials by Tenant, its agents or
contractors on, under or about the Premises including, without limitation, the costs of any
required or necessary investigation, repair, cleanup or detoxification and the preparation of
any closure or other required plans in connection herewith, whether voluntary or compelled by
governmental authority. The indemnity obligations of Tenant under this clause shall survive
any termination of the Lease. At Landlord’s option, Tenant shall perform any required or
necessary investigation, repair, cleanup, or detoxification of the Premises. In such case,
Landlord shall have the right, in its sole discretion, to approve all plans, consultants, and
cleanup standards. Tenant shall provide Landlord on a timely basis with (i) copies of all
documents, reports, and communications with governmental authorities; and (ii) notice and an
opportunity to attend all meetings with regulatory authorities. Tenant shall comply with all
notice requirements and Landlord and Tenant agree to cooperate with governmental authorities
seeking access to the Premises for purposes of sampling or inspection. No disturbance of
Tenant’s use of the Premises resulting from activities conducted pursuant to this Paragraph
shall constitute an actual or constructive eviction of Tenant from the Premises.  In the event
that such cleanup extends beyond the termination of the Lease, Tenant’s obligation to pay rent
(including additional rent and percentage rent, if any) shall continue until such cleanup is
completed and any certificate of clearance or similar document has been delivered to Landlord.
Rent during such holdover period shall be at market rent; if the parties are unable to agree
upon the amount of such market rent, then Landlord shall have the option of (a) increasing the
rent for the period of such holdover based upon the increase in the cost-of-living from the
third month preceding the commencement date to the third month preceding the start of the
holdover period, using such indices and assumptions and calculations as Landlord in its sole
reasonable judgment shall determine are necessary; or (b) having Landlord and Tenant each
appoint a qualified MAI appraiser doing business in the area; in turn, these two independent
MAI appraisers shall appoint a third MAI appraiser and the majority shall decide upon the fair
market rental for Premises as of the expiration of the then current term. Landlord and Tenant
shall equally share in the expense of this appraisal except that in the event the rent is
found to be within fifteen percent of the original rate quoted by Landlord, then Tenant shall
bear the full cost of all the appraisal process. In no event shall the rent be subject to
determination or modification by any person, entity, court, or authority other than as set
forth expressly herein, and in no event shall the rent for any holdover period be less than
the rent due in the preceding period.
	 
	6.	 	Notwithstanding anything set forth in this Lease, Tenant shall only be responsible for
contamination of Hazardous Materials or any cleanup resulting directly therefrom, resulting
directly from matters occurring or Tenant’s employees, contractors or agents use of
Hazardous Materials deposited (other than by contractors, agents or representatives
controlled by Landlord) during the Lease term, and any other period of time during which
Tenant is in actual or constructive occupancy of the Premises. Tenant shall take reasonable
precautions to prevent the contamination of the Premise with Hazardous Materials by third
parties.
	 
	7.	 	It shall not be unreasonable for Landlord to withhold its consent to any proposed Assignment
or Sublease if (i) the proposed Assignee’s or Sublessee’s anticipated use of the premises
involves the generation, storage, use, treatment or disposal of Hazardous Materials; (ii) the
proposed Assignee or Sublessee has been required by any prior landlord, lender, or
governmental authority to take remedial action in connection with Hazardous Materials
contaminating a property if the contamination resulted from such Assignee’s or Sublessee’s
actions or use of the property in question; or (iii) the proposed Assignee or Sublessee is
subject to an enforcement order issued by any governmental authority in connection with the
use, disposal, or storage of a hazardous material.
	 
	8.	 	Any of Tenant’s insurance insuring against claims of the type dealt with in this Exhibit E
shall be considered primary coverage for claims against the Property arising out of or under
this Paragraph.









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	9.	 	In the event of (i) any transfer of Tenant’s interest under this Lease; or (ii) the
termination of this Lease, by lapse of time or otherwise, Tenant shall be solely responsible
for compliance with any and all then effective federal, state or local laws concerning (i) the
physical condition of the Premises, Building, or Property; or (ii) the presence of hazardous
or toxic materials in or on the Premises, Building, or Property (for example, the New Jersey
Environmental Cleanup Responsibility Act, the Illinois Responsible Property Transfer Act, or
similar applicable state laws), including but not limited to any reporting or filing
requirements imposed by such laws. Tenant’s duty to pay rent, additional rent, and percentage
rent shall continue until the obligations imposed by such laws are satisfied in full and any
certificate of clearance or similar document has been delivered to Landlord.  With respect
to this Paragraph 9, Tenant shall only be responsible for contamination of Hazardous Materials
or any cleanup resulting directly therefrom, resulting directly from Tenant’s employees,
contractors or agents use of Hazardous Materials deposited (other than by contractors, agents
or representatives controlled by Landlord) during the Lease term, and any other period of time
during which Tenant is in actual or constructive occupancy of the Premises.
	 
	10.	 	All consents given by Landlord pursuant to this Exhibit E shall be in writing and shall be
attached as amendments to this Exhibit E. If such consents are not attached to this Exhibit
E, then such consents will be deemed withheld.





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