STANDARDINDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE MODIFIED NET

 

1.       BASIC PROVISIONS ("BASIC PROVISION").

1.1      PARTIES: This Lease ("LEASE"), dated for reference purposesonly,

August 14, 1999, is made by and between B-L Newark 8371, LLC, a Delaware

Limited Liability Company ("LANDLORD") and SBS Technologics, Inc., a New

Mexico Corporation ("TENANT"), (collectively the "PARTIES," or individuallya

"PARTY").

         1.2(a)    PREMISES: That certain portion of the Building,including

all improvements therein or to be provided by Landlord under the terms of

this Lease, commonly known by the street address of 8371 Central Avenue,

Suites B & C, located in the City of Newark, County of Alameda, Stateof

California, with zip code 94560 as outlined on Exhibit A attached hereto

("PREMISES"). The "BUILDING" is that certain building containing thePremises

and generally described as (describe briefly the nature of the Building):a

multi-tenant industrial building.

In addition to Tenant's rights to use and occupy the Premises ashereinafter

specified, Tenant shall have non-exclusive rights to the Common Areas (as

defined in Paragraph 2.7 below) as hereinafter specified, but shall nothave

any rights to the roof, exterior walls or utility raceways of the Buildingor

to any other buildings in the Industrial Center. The Premises, theBuilding,

the Common Areas, the land upon which they are located, along with allother

buildings and improvements thereon, are herein collectively referred toas

the "INDUSTRIAL CENTER." (Also see Paragraph 2.)

         1.2(b)    PARKING: 100 unreserved vehicle parking spaces

("UNRESERVED PARKING SPACES"); and no reserved vehicle parking spaces

("RESERVED PARKING SPACES"). (Also, see Paragraph 2.6)

         1.3       TERM: 5 years and 0 months ("ORIGINAL TERM")commencing

                   December 1, 1999 ("COMMENCEMENT DATE") and ending

                   November 30, 2004 ("EXPIRATION DATE"). (Also Paragraph3.)

         1.3(b)    OPTION TO RENEW: 3 years and 0 months at 95% of thefair

                   market value of the Premises at the expiration of the

                   Original Term. ("OPTION") (Also, see Paragraph 39.)

         1.4       EARLY POSSESSION: N/A ("EARLY POSSESSION DATE"). (Also

                   Paragraphs 3.2 and 3.3.)

         1.5       BASE RENT: $24,064.20 per month ("BASE RENT"), payableon

the first day of each month commencing December 1, 1999 (Also seeParagraph

4.) Base Rent to be adjusted as follows:

                   Months 13-24 $26,738.00 per month; Months 25-36$29,411.80

                   per month;

                   Months 37-48 $32,085.60 per month; Months 49-60$34,759.40

                   per month.

         1.6(a)    BASE RENT PAID UPON EXECUTION: $24,064.20 as Base Rentfor

the period December 1, 1999 through December 31, 1999.

         1.6(b)    TENANT'S SHARE OF COMMON AREA OPERATING EXPENSES:80.44%

("TENANT'S SHARE") as determined by prorata square footage of the Premisesas

compared to the total square footage of the Building.

         1.7       SECURITY DEPOSIT: $35,000.00 ("SECURITY DEPOSIT").(Also

see Paragraph 5)

         1.8       PERMITTED USE: General office, sales, research and

development, and assembly of electronic components. ("PERMITTED USE")(Also

see Paragraph 5.)

         1.9       INSURING PARTY. Landlord is the "INSURING PARTY."(Also

see Paragraph 8)

         1.10(a)   REAL ESTATE BROKERS. The following real estatebroker(s)

(collectively, the "BROKERS") and brokerage relationships exist in this

transaction and are consented to by the Parties (check applicable boxes):

[X]      Cornish & Carey Commercial represents Landlord exclusively

("LANDLORD'S BROKER");

[ ]      N/A represents Tenant exclusively ("TENANT'S BROKER"); or

[X]      BT Commercial Real Estate represents both Landlord and Tenant("DUAL

AGENCY"). (/also see Par. 15.)

         1.10(b)   PAYMENT TO BROKERS. Upon the execution of this Leaseby

both Parties, Landlord shall pay to said Broker(s) according to separate

written agreement between Landlord and said Broker(s).

         1.11      GUARANTOR. The obligations of the Tenant under thisLease

are to be guaranteed by N/A ("GUARANTOR"). (Also see Paragraph 37.)

         1.12      ADDENDS AND EXHIBITS. Attached hereto is an Addendumor

Addenda consisting of Paragraphs N/A through N/A, and Exhibits A and B,all

of which constitute a part of this Lease.

 

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2.       PREMISES, PARKING AND COMMON AREAS.

         2.1       LETTING. Landlord hereby leases to Tenant, and Tenant

hereby leases from Landlord, the Premises, for the term, at the rental,and

upon all of the terms, covenants and conditions set forth in this Lease.

Unless otherwise provided herein, any statement of square footage setforth

in this Lease, or that may have been used in calculating rental and/orCommon

Area Operating Expenses, is an approximation which Landlord and Tenantagree

is reasonable and the rental and Tenant's Share (as defined in Paragraph

1.6(b) based thereon is not subject to revision whether or not the actual

square footage is more or less.

         2.2       CONDITION. Landlord shall deliver the Premises toTenant

clean and free of debris on the Commencement Date and warrants to Tenantthat

the existing plumbing, electrical systems, fire sprinkler system,lighting,

air conditioning and heating systems and loading doors, if any, in the

Premises, other that those constructed by Tenant, shall be in goodoperating

condition on the Commencement Date. If a non-compliance with saidwarranty

exists as of the Commencement Date, Landlord shall, except as otherwise

provided in this Lease, promptly after receipt of written notice fromTenant

setting forth with specificity the nature and extent of such non-compliance,

rectify same at Landlord's expense. If Tenant does not give Landlordwritten

notice of a non-compliance with the warranty within thirty (30) daysafter

the Commencement Date, correction of that non-compliance shall be the

obligation of Tenant at Tenant's sole cost and expense.

         2.3       COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDINGCODE.

Landlord warrants that any improvements (other than those constructed by

Tenant or at Tenant's direction) on or in the Premises which have been

constructed or installed by Landlord with Landlord's consent or atLandlord's

direction shall comply with all applicable covenants or restrictions ofrecord

and applicable building codes, regulations and ordinances in effect onthe

Commencement Date. Landlord further warrants to Tenant that Landlord hasno

knowledge of any claim having been made by any governmental agency that a

violation or violations of applicable building codes, relations, or

ordinances exist with regard to the Premises as of the Commencement Date.

Said warranties shall not apply to any Alterations or UtilityInstallations

(defined in Paragraph 7.3(a)) made or to be made by Tenant. If thePremises

do not comply with said warranties, Landlord shall, except as otherwise

provided in this Lease, promptly after receipt of written notice fromTenant

given within six (6) months following the Commencement Date and settingforth

with specificity the nature and extent of such non-compliance, take such

action, at Landlord's expense, as may be reasonable or appropriate torectify

the non-compliance. Landlord makes no warranty that the Permitted Use in

Paragraph 1.8 is permitted for the Premises under Applicable Laws (asdefined

in Paragraph 2.4).

         2.4       ACCEPTANCE OF PREMISES. Tenant hereby acknowledges:(a)

that it has been advised by the Broker(s) to satisfy itself with respectto

the condition of the Premises (including but not limited to theelectrical

and fire sprinkler system, security, environmental aspects, seismic and

earthquake requirements, and compliance with the American withDisabilities

Act and applicable zoning, municipal, county, state and federal laws,

ordinances and regulations and any covenants or restrictions of record

(collectively, "APPLICABLE LAWS") and the present and future suitabilityof

the Premises for Tenant's intended use; (b) that Tenant has made such

investigation as it deems necessary with reference to such matters, is

satisfied with reference thereto, and assumes all responsibility thereforeas

the same relate to Tenant's occupancy of the Premises and/or the terms of

this Lease; and (c) that neither Landlord, nor any of Landlord's agents,has

made any oral or written representations or warranties with respect tosaid

matters other than as set forth in this Lease.

         2.5       TENANT AS PRIOR OWNER/OCCUPANT. The warranties made by

Landlord in this Paragraph 2 shall be of no force or effect ifimmediately

prior to the date set forth in Paragraph 1.1 Tenant was the owner oroccupant

of the Premises. In such event, Tenant shall, at Tenant's sole cost and

expense, correct any non-compliance of the Premises with said warranties.

         2.6       VEHICLE PARKING. Tenant shall be entitled to use the

number of Unreserved Parking Spaces and Reserved Parking Spaces Specifiedin

Paragraph 1.2(b) on those portions of the Common Areas designated fromtime

to time by Landlord for parking. Tenant shall not use more parking spaces

than said number. Said parking spaces shall be used for parking byvehicles

no larger than full-size passenger automobiles or pick-up trucks, herein

called "PERMITTED SIZE VEHICLES." Vehicles other than Permitted SizeVehicles

shall be parked and loaded or unloaded as directed by Landlord in theRules

and Regulations (as defined in Paragraph 40) issued by Landlord. (Alsosee

Paragraph 2.9.)

                   (a)  Tenant shall not permit or allow any vehiclesthat

belong to or are controlled by Tenant or Tenant's employees, suppliers,

shippers, customers, contractors or invitees to be loaded, unloaded, or

parked in areas other than those designated by Landlord for suchactivities.

                   (b)  If Tenant permits or allows any of the prohibited

activities described in this Paragraph 2.6, then Landlord shall have the

right, without notice, in addition to such other rights and remedies thatit

may have, to remove or tow away the vehicle involved and charge the costto

Tenant, which cost shall be immediately payable upon demand by Landlord.

                   (c)  Landlord shall at the Commencement Date of this

Lease, provide the parking facilities required by Applicable Law.

         2.7       COMMON AREAS - DEFINITION. The term "COMMON AREAS" is

defined as all areas and facilities outside the Premises and within the

exterior boundary line of the Industrial Center and Interior utilityraceways

within the Premises that are provided and designated by the Landlord from

time to time for the general non-exclusive use of Landlord, Tenant andother

tenants of the Industrial Center and their respective employees,suppliers,

shippers, customers, contractors and invitees, including parking areas,

loading and unloading areas, trash areas, roadways, sidewalks, walkways,

parkways, driveways and landscaped areas.

 

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     2.8 COMMON AREAS - TENANT'S RIGHTS. Landlord hereby grants toTenant,

for the benefit of Tenant and its employees, suppliers, shippers,

contractors, customers and invitees, during the term of this Lease, the

non-exclusive right to use, in common with others entitled to such use,the

Common Areas as they exist from time to time, subject to any rights,powers,

and privileges reserved by Landlord under the terms hereof or under the

terms of any rules and regulations or restrictions governing the use ofthe

Industrial Center. Under no circumstances shall the right herein grantedto

use the Common Areas be deemed to include the right to store anyproperty,

temporarily or permanently, in the Common Areas. Only the prior written

consent of Landlord or Landlord's designated agent, which consent may be

revoked at any time, shall permit any such storage. In the event that any

unauthorized storage shall occur then Landlord shall have the right,without

notice, in addition to such other rights and remedies that it may have,to

remove the property and charge the cost to Tenant, which cost shall be

immediately payable upon demand by Landlord.

     2.9 COMMON AREAS - RULES AND REGULATIONS. Landlord or such other

person(s) as Landlord may appoint shall have the exclusive control and

management of the Common Areas and shall have the right, from time totime,

to establish, modify, amend and enforce reasonable Rules and Regulationswith

respect thereto. In accordance with Paragraph 40, Tenant agrees to abideby

and conform to all such Rules and Regulations and to cause its employees,

suppliers, shippers, customers, contractors and invitees to so abide and

conform. Landlord shall not be responsible to Tenant for the non-compliance

with said rules and regulations by other tenants of the IndustrialCenter.

     2.10 COMMON AREAS - CHANGES. Landlord shall have the right, in

Landlord's sole discretion and without materially effecting the operationof

Tenant, from time to time:

          (a) To make changes to the Common Areas, including, without

limitation, changes in the location, size, shape and number of driveways,

entrances, parking spaces, parking areas, loading and unloading areas,

ingress, egress, direction of traffic, landscaped areas, walkways andutility

raceways;

          (b) To close temporarily any of the Common Areas formaintenance

purposes so long as reasonable access to the Premises remains available;

          (c) To designate other land outside the boundaries of the

Industrial Center to be a part of the Common Areas;

          (d) To add additional buildings and improvements to the Common

Areas;

          (e) To use the Common Areas while engaged in making additional

improvements, repairs or alterations to the Industrial Center, or anyportion

thereof; and

          (f) To do and perform such other acts and make such otherchanges

in, to or with respect to the Common Areas and Industrial Center asLandlord

may, in the exercise of sound business judgment, deem to be appropriate.

3. TERM.

     3.1 TERM. The Commencement Date, Expiration Date and Original Termof

this Lease are as specified in Paragraph 1.3.

     3.2 EARLY POSSESSION. If an Early Possession Date is specified in

Paragraph 1.4 and if Tenant totally or partially occupies the Premisesafter

the Early Possession Date but prior to the Commencement Date, theobligation

to pay Base Rent shall be abated for the period of such early occupancy.All

other terms of this Lease, however, (including but not limited to the

obligations to pay Tenant's Share of Common Area Operating Expenses andto

carry the insurance required by Paragraph B) shall be in effect duringsuch

period. Any such early possession shall not affect nor advance theExpiration

Date of the Original Term.

     3.3 DELAY IN POSSESSION. If for any reason Landlord cannot deliver

possession of the Premises to Tenant by the Early Possession Date, if oneis

specified in Paragraph 1.4, or if no Early Possession Date is specified,by

the Commencement Date, Landlord shall not be subject to any liability

therefor, nor shall such failure affect the validity of this Lease, orthe

obligations of Tenant hereunder, or extend the term hereof, but in suchcase,

Tenant shall not, except as otherwise provided herein, be obligated topay

rent or perform any other obligation of Tenant under the terms of thisLease

until Landlord delivers possession of the Premises to Tenant. Ifpossession

of the Premises is not delivered to Tenant within sixty (60) days afterthe

Commencement Date, Tenant may, at its option, by notice in writing to

Landlord within ten (10) days after the end of sixty (60) day period,cancel

this Lease, in which event the parties shall be discharged from all

obligations hereunder; provided further, however, that if such writtennotice

of Tenant is not received by Landlord within said ten (10) day period,

Tenant's right to cancel this Lease hereunder shall terminate and be ofno

further force or effect. Except as may be otherwise provided, andregardless

of when the Original Term actually commences, if possession is nottendered

to Tenant when required by this Lease and Tenant does not terminate this

Lease, as foresaid, the period free of the obligation to pay Base Rent,if

any, that Tenant would otherwise have enjoyed shall run from the date of

delivery of possession and continue for a period equal to the periodduring

which the Tenant would have otherwise enjoyed under the terms hereof, but

minus any days of delay caused by the acts, changes or omissions ofTenant.

4. RENT.

     4.1 BASE RENT. Tenant shall pay Base Rent and other rent or charges,as

the same may be adjusted from time to time, to Landlord in lawful moneyof

the United States, without offset or deduction, on or before the day onwhich

it is due under the terms of this Lease. Base Rent and all other rent and

charges for any period during the term hereof which is for less than onefull

month shall be prorated based upon the actual number of days of the month

 

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involved. Payment of Base Rent and other charges shall be made to Landlordat

its address stated herein or to such other persons or at such otheraddresses

as Landlord may from time to time designate in writing to Tenant.

     4.2 COMMON AREA OPERATING EXPENSES. Tenant shall pay to Landlordduring

the term hereof, in addition to the Base Rent, Tenant's Share (asspecified

in Paragraph 1.6(b)) of all Common Area Operating Expenses, ashereinafter

defined, during each calendar year of the term of this Lease, inaccordance

with the following provisions:

          (a) "COMMON AREA OPERATING EXPENSES" are defined, for purposesof

this Lease, as all costs incurred by Landlord relating to the ownershipand

operation of the Industrial Center, including, but not limited to, the

following:

               (i) The operation, repair and maintenance, in neat, clean,

good order and condition, of the following:

                    (aa) The Common Areas, including parking areas,loading

and unloading areas, trash areas, roadways, sidewalks, walkways,parkways,

driveways, landscaped areas, striping, bumpers, irrigation systems,Common

Area lighting facilities, fences and gates, elevators and roof.

                    (bb) Exterior signs and any tenant directories.

                    (cc) Fire detection and sprinkler systems.

               (ii) The cost of water, gas, electricity and telephone to

service the Common Areas.

               (iii) Trash disposal, third party property management and

security services and the costs of any environmental inspections.

               (iv) Reserves in an amount not to exceed 1% of the grossrent

of the Building set aside for maintenance and repair of Common Areas.

               (v) Real Property Taxes (as defined in Paragraph 10.2) tobe

paid by Landlord for the Building and the Common Areas under Paragraph 10

hereof.

               (vi) The cost of the premiums for the insurance policies

maintained by Landlord under Paragraph 8 hereof.

               (vii) Any deductible portion of an insured loss concerningthe

building or the Common Areas.

               (viii) Any other services to be provided by Landlord thatare

stated elsewhere in this Lease to be a Common Area Operating Expense.

          (b) Any common Area Operating Expenses and Real Property Taxesthat

are specifically attributable to the Building or to any other building inthe

Industrial Center or to the operation, repair and maintenance thereof,shall

be allocated entirely to the Building or to such other building. However,any

Common Area Operating Expenses and Real Property Taxes that are not

specifically attributable to the Building or to any other building or tothe

operation, repair and maintenance thereof, shall be equitably allocatedby

Landlord to all buildings in the Industrial Center.

          (c) The inclusion of the improvements, facilities and servicesset

forth in subparagraph 4.2(a) shall not be deemed to impose an obligationupon

Landlord to either have said improvements or facilities or to providethose

services unless the Industrial Center already has the same, Landlordalready

provides the services, or Landlord has agreed elsewhere in this Lease to

provide the same or some of them.

          (d) Tenant's Share of Common Area Operating Expenses shall be

payable by Tenant within ten (10) days after a reasonably detailedstatement

of actual expenses is presented to Tenant by Landlord. At Landlord'soption,

however, an amount may be reasonably estimated by Landlord from time totime

of Tenant's Share of annual Common Area Operating Expenses and the sameshall

be payable monthly or quarterly, as Landlord shall designate, during each

12-month period of the Lease Term, on the same day as the Base Rent isdue

hereunder. Landlord shall deliver to Tenant within sixty (60) days afterthe

expiration of each calendar year a reasonably detailed statement showing

Tenant's Share of the actual Common Area Operating Expenses incurredduring

the preceding year. If Tenant's payments under this Paragraph 4.2(d)during

said preceding year exceed Tenant's Share as indicated on said statement,

Landlord shall be credited the amount of such over-payment againstTenant's

Share of Common Area Operating Expenses next becoming due. If Tenant's

payments under this Paragraph 4.2(d) during said preceding year were less

than Tenant's Share as indicated on said statement, Tenant shall pay to

Landlord the amount of the deficiency within ten (10) days after deliveryby

Landlord to Tenant of said statement, Tenant shall have the right torequest

an audit of Landlord's Common Area Charges within 30 days from receipt ofthe

end of year settlement statement from Landlord. The audit shall be paidfor

by Tenant. The audit shall be conducted at Landlord's office or at alocation

designated by Landlord. The date and time of the audit will be determinedby

mutual agreement between the Tenant and Landlord.

5. SECURITY DEPOSIT. Tenant shall deposit with Landlord upon Tenant's

execution hereof the Security Deposit set forth in Paragraph 1.7 assecurity

for Tenant's faithful performance of Tenant's obligations under this

 

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Lease. If Tenant fails to pay Base Rent or other rent or charges due

hereunder, or otherwise Defaults under this Lease (as defined inParagraph

13.1), Landlord may use, apply or retain all or any portion of saidSecurity

Deposit, Tenant shall within ten (10) days after written requesttherefore

deposit monies with Landlord sufficient to restore said Security Depositto

the full amount required by this Lease. Any time the Base Rent increases

during the term of this Lease, Tenant shall, upon written request from

Landlord, deposit additional monies with Landlord as an addition to the

Security Deposit so that the total amount of the Security Deposit shallat

all times bear the same proportion to the then current Base Rent as the

initial Security Deposit bears to the initial Base Rent set forth in

Paragraph 1.5. Landlord shall not be required to keep all or any part ofthe

Security Deposit separate from its general accounts. Landlord shall, atthe

expiration or earlier termination of the term hereof and after Tenant has

vacated the Premises, return to Tenant (or, at Landlord's option, to thelast

assignee, if any, of Tenant's interest herein), that portion of theSecurity

Deposit not used or applied by Landlord. Unless otherwise expressly agreedin

writing by Landlord, no part of the Security Deposit shall be consideredto

be held in trust, to bear interest or other increment for its use, or tobe

prepayment for any monies to be paid by Tenant under this Lease.

6. USE.

     6.1 PERMITTED USE.

          (a) Tenant shall use and occupy the Premises only for thePermitted

Use set forth in Paragraph 1.8. or any other legal use, which isreasonably

comparable thereto, and for no other purpose. Tenant shall not use orpermit

the use of the Premises in a manner that is unlawful, creates waste or a

nuisance, or that disturbs owners and/or occupants of, or causes damageto

the Premises or neighboring premises or properties.

          (b) Landlord hereby agrees to not unreasonably withhold ordelay

its consent to any written request by Tenant, Tenant's assignees or

subtenants, and by prospective assignees and subtenants of Tenant, its

assignees and subtenants, for a modification of said Permitted Use, solong

as the same will not impair the structural integrity of the improvementson

the Premises or in the Building or the mechanical or electrical systems

therein, does not conflict with uses by other Tenants, is notsignificantly

more burdensome to the Premises or the Building and the Improvementsthereon,

and is otherwise permissible pursuant to this Paragraph 6. If Landlordelects

to withhold such consent, Landlord shall within five (5) business daysafter

such request give a written notification of same, which notice shallinclude

an explanation of Landlord's reasonable objections to the change in use.

     6.2 HAZARDOUS SUBSTANCES.

          (a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUSSUBSTANCE"

as used in this Lease shall mean any product, substance, chemical,material

or waste whose presence, nature, quantity and/or intensity of existence,use,

manufacture, disposal, transportation, spill, release or effect, eitherby

itself or in combination with other materials expected to be on thePremises,

is either: (i) potentially injurious to the public health, safety orwelfare,

the environment, or the Premises; (ii) regulated or monitored by any

governmental authority; or (iii) a legitimate basis for potentialliability

of Landlord to any governmental agency or third party under anyapplicable

statute or common law theory. Hazardous Substance shall include, but notbe

limited to, hydrocarbons, petroleum, gasoline, crude oil or any productsor

by-products thereof. Tenant shall not engage in any activity in or aboutthe

Premises which constitutes a Reportable Use (as hereinafter defined) of

Hazardous Substances without the express prior written consent ofLandlord

and compliance in a timely manner (at Tenant's solo cost and expense)with

all Applicable Requirements (as defined in Paragraph 6.3). "REPORTABLEUSE"

shall mean (i) the installation or use of any above or below groundstorage

tank, (ii) the generation, possession, storage, use, transportation, or

disposal of a Hazardous Substance that requires a permit from, or with

respect to which a report, notice, registration or business plan isrequired

to be filed with, any governmental authority, and (iii) the presence in,on

or about the Premises of a Hazardous Substance with respect to which any

Applicable Laws require that a notice be given to persons entering or

occupying the Premises or neighboring properties. Notwithstanding the

foregoing, Tenant may, without Landlord's prior consent, but upon noticeto

Landlord and in compliance with all Applicable requirements, use anyordinary

and customary materials reasonably required to be used by Tenant in the

normal course of the Permitted Use, so long as such use is not aReportable

Use and does not expose the Premises or neighboring properties to any

meaningful risk of contamination or damage or expose Landlord to any

liability therefor. In addition, Landlord may (but without any obligationto

do so) condition its consent to any Reportable Use of any HazardousSubstance

by Tenant upon Tenant's giving Landlord such additional assurances as

Landlord, in its reasonable discretion, deems necessary to protectitself,

the public, the Premises and the environment against damage, contaminationor

injury and/or liability therefor, including but not limited to the

installation (and, at Landlord's option, removal on or before Leaseexpiration

or earlier termination) of reasonably necessary protective modificationsto

the Premises (such as concrete encasements) and/or the deposit of an

additional Security Deposit under Paragraph 5 hereof.

          (b) DUTY TO INFORM LANDLORD. If Tenant knows, or has reasonable

cause to believe, that a Hazardous Substance has come to be located in,on,

under or about the Premises or the Building, other than as previously

consented to by Landlord, Tenant shall immediately give Landlord written

notice thereof, together with a copy of any statement, report, notice,

registration, application, permit, business plan, license, claim, action,or

proceeding given to, or received from, any governmental authority orprivate

party concerning the presence, spill, release, discharge of, or exposureto,

such Hazardous Substance including but not limited to all such documentsas

may be involved in any Reportable Use involving the Premises. Tenantshall

not cause or permit any Hazardous Substance to be spilled or released in,on,

under or about the Premises (including, without limitation, through the

prompting or sanitary sewer system).

          (c) INDEMNIFICATION. Tenant shall indemnify, protect, defendand

hold Landlord, its agents, employees, lenders and ground lessor, if any,and

the Premises, harmless from and against any and all

 

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damages, liabilities, judgments, costs, claims, liens, expenses,penalties,

loss of permits and attorneys' and consultants' fees arising out of or

involving any Hazardous Substance brought onto the Premises by or forTenant

or by anyone under Tenant's control. Tenant's obligations under this

paragraph 6.2(c) shall include, but not be limited to, the effects of any

contamination or injury to person, property or the environment created or

suffered by Tenant, and the cost of investigation (including consultants'and

attorneys' fees and testing), removal, remediation, restoration and/or

abatement thereof, or of any contamination therein involved, and shall

survive the expiration or earlier termination of this Lease. Notermination,

cancellation or release agreement entered into by Landlord and Tenantshall

release Tenant from its obligations under this Lease with respect to

Hazardous Substances, unless specifically so agreed by Landlord in writingat

the time of such agreement.

          (d) Landlord represents to Tenant that to the best ofLandlord's

knowledge, there are no Hazardous Substances as defined by Paragraph6.2(a)

located in, under or upon the Premises as of the date of this Lease.

     6.3 TENANT'S COMPLIANCE WITH REQUIREMENTS. Tenant shall, at Tenant's

sole cost and expense, fully, diligently and in a timely manner, complywith

all "APPLICABLE REQUIREMENTS," which term is used in this Lease to meanall

laws, rules, regulations, ordinances, directives, covenants, easementsand

restrictions of record, permits, the requirements of any applicable fire

insurance underwriter or rating bureau, and the recommendations ofLandlord's

engineers and/or consultants, relating in any manner to Tenant's use ofthe

Premises (including but not limited to matters pertaining to (i)industrial

hygiene, (ii) environmental conditions on, in, under or about thePremises,

including soil and ground water conditions, and (iii) the use,generation,

manufacture, production, installation, maintenance, removal,transportation,

storage, spill, or release of any Hazardous Substance), now in effect or

which may hereafter come into effect. Tenant shall, within five (5) daysafter

receipt of Landlord's written request, provide Landlord with copies ofall

documents and information, including but not limited to permits,

registrations, manifests, applications, reports and certificates,evidencing

Tenant's compliance with any applicable Requirements specified byLandlord,

and shall immediately upon receipt, notify Landlord in writing (withcopies

of any documents involved) of any threatened or actual claim, notice,

citation, warning, complaint or report pertaining to or involving failureby

Tenant or the Premises to comply with any Applicable Requirements.

     6.4 INSPECTION; COMPLIANCE WITH LAW. Landlord, Landlord's agents,

employees, contractors and designated representatives, and the holders of

any mortgages, deeds of trust or ground leases on the Premises("LENDERS")

shall have the right to enter the Premises at any time in the case of an

emergency, and otherwise at reasonable times with at least a 48 hournotice,

for the purpose of inspecting the condition of the Premises and forverifying

compliance by Tenant with this Lease and all Applicable Requirements (as

defined in Paragraph 6.3), and Landlord shall be entitled to employexperts

and/or consultants in connection therewith to advise Landlord with respectto

Tenant's activities, including but not limited to Tenant's installation,

operation, use, monitoring, maintenance, or removal of any Hazardous

Substance on or from the Premises. The costs and expenses of any such

inspections shall be paid by the party requesting same, unless a Defaultor

Breach of this Lease by Tenant or a violation of Applicable Requirements ora

contamination, caused or materially contributed to by Tenant, is found to

exist or to be imminent, or unless the inspection is requested or orderedby

a governmental authority as the result of any such existing or imminent

violation or contamination. In such case, Tenant shall upon requestreimburse

Landlord or Landlord's Lender, as the case may be, for the costs andexpenses

of such inspections.

7. MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND

ALTERATIONS.

     7.1 TENANT'S OBLIGATIONS.

          (a) Subject to the provision of Paragraphs 2.2 (Condition), 2.3

(Compliance with Covenants, Restrictions and Building Code), 7.2(Landlord's

Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Tenantshall,

at Tenant's sole cost and expense and at all times, keep the Premises and

every part thereof in good order, condition and repair (whether or notsuch

portion of the Premises requiring repair, or the means of repairing thesame,

are reasonably or readily accessible to Tenant, and whether or not theneed

for such repairs occurs as a result of Tenant's use, any prior use, the

elements or the age of such portion of the Premises), including, without

limiting the generality of the foregoing, all equipment or facilities

specifically serving the Premises, such as plumbing, heating, air

conditioning, ventilating, electrical, lighting facilities, boilers, firedor

unfired pressure vessels, fire hose connections if within the Premises,

fixtures, interior walls, interior surfaces of exterior walls, ceilings,

floors, windows, doors, plate glass, and skylights, but excluding anyitems

which are the responsibility of Landlord pursuant to Paragraph 7.2 below.

Tenant, in keeping the Premises in good order, condition and repair,shall

exercise and perform good maintenance practices. Tenant's obligationsshall

include restorations, replacements or renewals when necessary to keep the

Premises and all improvements thereon or a part thereof in good order,

condition and state of repair.

          (b) Tenant shall, at Tenant's sole cost and expense, procureand

maintain a contract, with copies to Landlord, in customary form andsubstance

for and with a contractor specializing and experienced in the inspection,

maintenance and service of the heating, air conditioning and ventilation

system for the Premises. However, Landlord reserves the right, upon noticeto

Tenant, to procure and maintain the contract for the heating, air

conditioning and ventilating systems, and if Landlord so elects, Tenantshall

reimburse Landlord, upon demand, for the cost thereof.

          (c) If Tenant fails to perform Tenant's obligations under this

Paragraph 7.1, Landlord may enter upon the Premises after ten (10) days'

prior written notice to Tenant (except in the case of an emergency, inwhich

case no notice shall be required), perform such obligations on Tenant's

behalf, and put the Premises in good order, condition and repair, in

accordance with Paragraph 13.2 below.

     7.2 LANDLORD'S OBLIGATIONS. Subject to the provisions of Paragraphs2.2

(Condition), 2.3

 

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(Compliance with Covenants, Restrictions and Building Code). 4.2 (CommonArea

Operating Expenses), 7 (Use), 7.1 (Tenant's Obligations), 9 (Damage or

Destruction) and 14 (Condemnation), Landlord, subject to reimbursement

pursuant to Paragraph 4.2, shall keep in good order, condition and repairthe

foundations, exterior walls, structural condition of interior bearingwalls,

exterior roof, fire sprinkler and/or standpipe and hose (if located inthe

Common Areas) or other automatic fire extinguishing system including fire

alarm and/or smoke detection systems and equipment, fire hydrants,parking

lots, walkways, parkways, driveways, landscaping, fences, signs andutility

systems serving the Common Areas, the Premises and all parts thereof, aswell

as providing the services for which there is a Common Area OperatingExpense

pursuant to Paragraph 4.2.  Landlord shall not be obligated to paint the

exterior or interior surfaces of exterior walls nor shall Landlord be

obligated to maintain, repair or replace windows, doors or plate glass ofthe

Premises.  Tenant expressly waives the benefit of any statute now or

hereafter in effect which would otherwise afford Tenant the right to make

repairs at Landlord's expense or terminate this Lease because ofLandlord's

failure to keep the Building, Industrial Center or Common Areas in good

order, condition and repair.

     7.3     UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.

             (a)     DEFINITIONS; CONSENT REQUIRED.  The term "UTILITY

INSTALLATIONS" is used in this Lease to refer to all air lines, powerpanels,

electrical distribution, security, fire protections systems,communications

systems, lighting fixtures, heating, ventilating and air conditioning

equipment, plumbing, and fencing in, on or about the Premises.  The term

"TRADE FIXTURES" shall mean Tenant's machinery and equipment which can be

removed without doing material damage to the Premises.  The term

"ALTERATIONS" shall mean any modification of the improvements on thePremises

which are provided by Landlord under the terms of this Lease, other than

Utility Installations or Trade Fixtures.  "TENANT-OWNED ALTERATIONSAND/OR

UTILITY INSTALLATIONS" are defined as Alterations and/or UtilityInstallations

made by Tenant that are not yet owned by Landlord pursuant to Paragraph

7.4(a). Tenant shall not make nor cause to be made any Alterations orUtility

Installations in, on, under or about the Premises without Landlord'sprior

written consent which shall not be unreasonably withheld or delayed.Tenant

may, however, make non-structural Utility Installations to the interiorof

the Premises (excluding the roof) without Landlord's consent but uponnotice

to Landlord, so long as they are not visible from the outside of the

Premises, do not involve puncturing, relocating or removing the roof orany

existing walls, or changing or interfering with the fire sprinkler orfire

detection systems and the cumulative cost thereof during the term of this

Lease as extended does not exceed $2,500.00.

             (b)    CONSENT.  Any Alterations or Utility Installationsthat

Tenant shall desire to make and which require the consent of the Landlord

shall be presented to Landlord in written form with detailed plans.  All

consents given by Landlord, whether by virtue of Paragraph 7.3(a) or by

subsequent specific consent, shall be deemed conditioned upon: (i)Tenant's

acquiring all applicable permits required by governmental authorities;(ii)

the furnishing of copies of such permits together with a copy of theplans

and specifications for the Alteration or Utility Installation to Landlord

prior to commencement of the work thereon; and (iii) the compliance byTenant

with all conditions of said permits in a prompt and expeditious manner.Any

Alterations of Utility Installations by Tenant during the term of thisLease

shall be done in a good and workmanlike manner, with good and sufficient

materials, and be in compliance with all Applicable Requirements.  Tenant

shall promptly upon completion thereof furnish Landlord with as-builtplans

and specifications therefor.  Landlord may (but without obligation to doso)

condition its consent to any requested Alteration or Utility Installation

that costs $2,500.00 10,000.00 or more upon Tenant's providing Landlordwith

a lien and completion bond in an amount equal to one and one-half timesthe

estimated cost of such Alteration or Utility Installation.

             (c)     LIEN PROTECTION.  Tenant shall pay when due allclaims

for labor or materials furnished or alleged to have been furnished to orfor

Tenant at or for use on the Premises, which claims are or may be securedby

any mechanic's or materialmen's lien against the Premises or any interest

therein.  Tenant shall give Landlord not less than ten (10) days' notice

prior to the commencement of any work in, on, or about the Premises, and

Landlord shall have the right to post notices of non-responsibility in oron

the Premises as provided by law.  If Tenant shall, in good faith, contestthe

validity of any such lien, claim or demand, then Tenant shall, at itssole

expense, defend and protect itself, Landlord and the Premises against the

same and shall pay and satisfy any such adverse judgment that may berendered

thereon before the enforcement thereof against the Landlord or thePremises.

If Landlord shall require, Tenant shall furnish to Landlord a surety bond

satisfactory to Landlord in an amount equal to one and one-half times the

amount of such contested lien claim or demand, indemnifying Landlordagainst

liability for the same, as required by law for the holding of thePremises

free from the effect of such lien or claim.  In addition, Landlord may

require Tenant to pay Landlord's attorneys' fees and costs inparticipating

in such action if Landlord shall decide it is to its best interest to doso.

     7.4     OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.

             (a)     OWNERSHIP.  Subject to Landlord's right to requiretheir

removal and to cause Tenant to become the owner thereof as hereinafter

provided in this Paragraph 7.4, all Alterations and Utility Installations

made to the Premises by Tenant shall be the property of and owned byTenant,

but considered a part of the Premises.  Landlord may, at any time and atits

option, elect in writing to Tenant to be the owner of all or anyspecified

part of the Tenant-Owned Alterations and Utility Installations.  Unless

otherwise instructed per Subparagraph 7.4(b) hereof, all Tenant-Owned

Alterations and Utility Installations shall, at the expiration or earlier

termination of this Lease, become the property of Landlord and remainupon

the Premises and be surrendered with the Premises by Tenant.

             (b)     REMOVAL.  Unless otherwise agreed in writing,Landlord

may require that any or all Tenant-Owned Alterations or UtilityInstallations

be removed by the expiration or earlier termination of this Lease,

notwithstanding that their installation may have been consented to by

Landlord.  Landlord may require the removal at any time of all or any partof

any Alterations or Utility Installations made without the required consentof

Landlord.

 

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<PAGE>

             (c)     SURRENDER/RESTORATION.  Tenant shall surrender the

Premises by the end of the last day of the Lease term or any earlier

termination date, clean and free of debris and in good operating order,

condition and state of repair, ordinary wear and tear excepted.  Ordinary

wear and tear shall not include any damage or deterioration that wouldhave

been prevented by good maintenance practice or by Tenant performing allof

its obligations under this Lease.  Except as otherwise agreed orspecified

herein, the Premises, as surrendered, shall include the Alterations and

Utility Installations.  The obligation of Tenant shall include the repairof

any damage occasioned by the installation, maintenance or removal ofTenant's

Trade Fixtures, furnishings, equipment, and Tenant-Owned Alterations and

Utility Installations, as well as the removal of any storage tankinstalled

by or for Tenant and the removal, replacement, or remediation of anysoil,

material or ground water contaminated by Tenant, all as may then berequired

by Applicable Requirements and/or good practice.  Tenant's Trade Fixtures

shall remain the property of Tenant and shall be removed by Tenant subjectto

its obligation to repair and restore the Premises per this Lease.

8.   INSURANCE; INDEMNITY.

     8.1     PAYMENT OF PREMIUMS. The cost of the premiums for theinsurance

policies maintained by Landlord under this Paragraph 8 shall be a CommonArea

Operating Expense pursuant to Paragraph 4.2 hereof.  Premiums for policy

periods commencing prior to, or extending beyond, the term of this Lease

shall be prorated to coincide with the corresponding Commencement Date or

Expiration Date.

     8.2     LIABILITY INSURANCE.

             (a)     CARRIED BY TENANT.  Tenant shall obtain and keep in

force during the term of this Lease a Commercial General Liability policyof

insurance protecting Tenant, Landlord and any Lender(s) whose names havebeen

provided to Tenant in writing (as additional insured) against claims for

bodily injury, personal injury and property damage based upon, involvingor

arising out of the ownership, use, occupancy or maintenance of thePremises

and all areas appurtenant thereto.  Such insurance shall be on anoccurrence

basis providing single limit coverage in an amount not less than$1,000,000

per occurrence with an "Additional Insured-Managers or Landlords ofPremises:

endorsement and contain the "Amendment of the Pollution Exclusion"

endorsement for damage caused by heat, smoke or fumes from a hostilefire.

The policy shall not contain any intra-insured exclusion as betweeninsured

persons or organizations, but shall include coverage for liabilityassumed

under this Lease as an "INSURED CONTRACT" for the performance of Tenant's

indemnity obligations under this Lease.  The limits of said insurance

required by this Lease or as carried by Tenant shall not, however, limitthe

liability of Tenant nor relieve Tenant of any obligation hereunder.  All

insurance to be required by this Lease or as carried by Tenant shall not,

however, limit the liability of Tenant nor relieve Tenant of anyobligation

hereunder.  All insurance to be carried by Tenant shall be primary to andnot

contributory with any similar insurance carried by Landlord, whoseinsurance

shall be considered excess insurance only.

             (b)     CARRIED BY LANDLORD.  Landlord shall also maintain

liability insurance described in Paragraph 8.2(a) above, in addition toand

not in lieu of, the insurance required to be maintained by Tenant.Tenant

shall not be named as an additional insured therein.

     8.3     PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.

             (a)     BUILDING AND IMPROVEMENTS.  Landlord shall obtainand

keep in force during the term of this Lease a policy or policies in thename

of Landlord, with loss payable to Landlord and to any Lender(s), insuring

against loss or damage to the Premises.  Such insurance shall be for full

replacement cost, as the same shall exist from time to time or the amount

required by any Lender(s), but in no event more than the commercially

reasonable and available insurable value thereof if, by reason of theunique

nature or age of the improvements involved, such latter amount is lessthan

full replacement cost.  Tenant pursuant to Paragraph 8.4 shall insure

tenant-Owned Alterations and Utility Installations, Trade Fixtures and

Tenant's personal property.  If the coverage is available andcommercially

appropriate, Landlord's policy or policies shall insure against all risksof

direct physical loss or damage (except the perils of flood and/orearthquake

unless required by a Lender), including coverage for any additional costs

resulting from debris removal and reasonable amounts of coverage for the

enforcement of any ordinance or law regulating the reconstruction or

replacement of any undamaged sections of the Building required to be

demolished or removed by reason of the enforcement of any building,zoning,

safety or land use laws as the result of a covered loss, but notincluding

plate glass insurance.  Said policy or policies shall also contain anagreed

valuation provision in lieu of any co-insurance clause, waiver of

subrogation, and inflation guard protection causing an increase in theannual

property insurance coverage amount by a factor of not less than theadjusted

U.S. Department of Labor Consumer Price Index for All Urban Consumers forthe

city nearest to where the Premises are located.

             (b)     RENTAL VALUE.  Landlord shall also obtain and keepin

force during the term of this Lease a policy or policies in the name of

Landlord, with loss payable to Landlord and any Lender(s), insuring theloss

of the full rental and other charges payable by all tenants of theBuilding

to Landlord for one year (including all Real Property Taxes, insurancecosts,

all Common Area Operating Expenses and any scheduled rental increases).Said

insurance may provide that in the event the Lease is terminated by reasonof

an insured loss, the period of indemnity for such coverage shall beextended

beyond the date of the completion of repairs or replacement of thePremises,

to provide for one full year's loss of rental revenues from the date ofany

such loss.  Said insurance shall contain an agreed valuation provision in

lieu of any co-insurance clause, and the amount of coverage shall beadjusted

annually to reflect the projected rental income, Real Property Taxes,

insurance premium costs and other expenses, if any, otherwise payable,for

the next 12-month period. Common Area Operating Expenses shall includeany

deductible amount in the event of such loss.

             (c)     ADJACENT PREMISES.  Tenant shall pay for any increasein

the premiums for the

 

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<PAGE>

property insurance of the Building and for the Common Areas or other

buildings in the Industrial Center if said increase is caused by Tenant's

acts, omissions, use or occupancy of the Premises.

             (d)     TENANT'S IMPROVEMENTS.  Since Landlord is theInsuring

Party, Landlord shall not be required to insure Tenant-Owned Alterationsand

Utility Installations unless the item in question has become the propertyof

Landlord under the terms of this Lease.

     8.4     TENANT'S PROPERTY INSURANCE.  Subject to the requirements of

Paragraph 8.5, Tenant at its cost shall either by separate policy or, at

Landlord's option, by endorsement to a policy already carried, maintain

insurance coverage on all of Tenant's personal property, Trade Fixturesand

Tenant-Owned Alterations and Utility Installations in, on, or about the

Premises similar in coverage to that carried by Landlord as the Insuring

Party under Paragraph 8.3(a).  Such insurance shall be full replacementcost

coverage with a deductible not to exceed $1,000 per occurrence.  Tenantshall

use the proceeds from any such insurance for the replacement of personal

property and the restoration of Trade Fixtures and Tenant-OwnedAlterations

and Utility Installations.  Upon request from Landlord, Tenant shallprovide

Landlord with written evidence that such insurance is in force.

     8.5     INSURANCE POLICIES.  Insurance required hereunder shall bein

companies duly licensed to transact business in the state where thePremises

are located, and maintaining during the policy term a "GeneralPolicyholders

Rating" of at least B+, V, or such other rating as may be required by a

Lender, as set forth in the most current issue of "Best's InsuranceGuide."

Tenant shall not do or permit to be done anything which shall invalidatethe

insurance policies referred to in this Paragraph 8.  Tenant shall cause tobe

delivered to Landlord, within seven (7) days after the earlier of theEarly

Possession Date or the Commencement Date, certified copies of, orcertificates

evidencing the existence and amounts of, the insurance required under

Paragraph 8.2(a) and 8.4.  No such policy shall be cancelable or subjectto

modification except after thirty (30) days' prior written notice toLandlord.

Tenant shall at least thirty (30) days prior to the expiration of such

policies, furnish Landlord with evidence of renewals or "insurancebinders"

evidencing renewal thereof, or Landlord may order such insurance andcharge

the cost thereof to Tenant, which amount shall be payable by Tenant to

Landlord upon demand.

     8.6     WAIVER OF SUBROGATION.  Without affecting any other rightsor

remedies, Tenant and Landlord each hereby release and relieve the other,and

waive their entire right to recover damages (whether in contract or intort)

against the other, for loss or damage to their property arising out of or

incident to the perils required to be insured against under Paragraph 8.The

effect of such releases and waivers of the right to recover damages shallnot

be limited by the amount of insurance carried or required, or by any

deductibles applicable thereto.  Landlord and Tenant agree to have their

respective insurance companies issuing property damage insurance waiveany

right to subrogation that such companies may have against Landlord orTenant,

as the case may be, so long as the Insurance is not invalidated thereby.

     8.7     INDEMNITY.  Except for Landlord's negligence, willfulmisconduct

and/or breach of express warranties, Tenant shall indemnify, protect,defend

and hold harmless the Premises, Landlord and its agents, Landlord's masteror

ground lessor, partners and Lenders, from and against any and all claims,

loss of rents and/or damages, costs, liens, judgments, penalties, loss of

permits, attorneys' and consultants' fees, expense and/or liabilitiesarising

out of, involving, or in connection with, the occupancy of the Premisesby

Tenant, the conduct of Tenant's business, any act, omission or neglect of

Tenant, its agents, contractors, employees or invitees, and out of any

Default or Breach by Tenant in the performance in a timely manner of any

obligation on Tenant's part to be performed under this Lease.  Theforegoing

shall include, but not be limited to, the defense or pursuit of any claimor

any action or proceeding involved therein, and whether or not (in the caseof

claims made against Landlord) litigated and/or reduced to judgment.  Incase

any action or proceeding be brought against Landlord by reason of any ofthe

foregoing matters.  Tenant upon notice from Landlord shall defend the sameat

Tenant's expense by counsel reasonably satisfactory to Landlord andLandlord

shall cooperate with Tenant in such defense.  Landlord need not havefirst

paid any such claim in order to be so indemnified.

     8.8     EXEMPTION OF LANDLORD FROM LIABILITY.  Except for Landlord's

negligence, willful misconduct and/or breach of express warranties,Landlord

shall not be liable for injury or damage to the person or goods, wares,

merchandise or other property of Tenant, Tenant's employees, contractors,

invitees, customers, or any other person in or about the Premises,whether

such damage or injury is caused by or results from fire, steam,electricity,

gas, water or rain, or from the breakage, leakage, obstruction or other

defects of pipes, fire sprinklers, wires, appliances, plumbing, air

conditioning or lighting fixtures, or from any other cause, whether said

injury or damage results from conditions arising upon the Premises orupon

other portions of the Building of which the Premises are a part, fromother

sources or places, and regardless of whether the cause of such damage or

injury or the means of preparing the same is accessible or not.  Landlord

shall not be liable for any damages arising from any act or neglect ofany

other tenant of Landlord nor from the failure by Landlord to enforce the

provisions of any other lease in the Industrial Center.  Notwithstanding

Landlord's negligence or breach of this Lease, Landlord shall under no

circumstances be liable for injury to Tenant's business or for any lossof

income or profit therefrom.

9.   DAMAGE OR DESTRUCTION.

     9.1     DEFINITIONS.

             (a)     "PREMISES PARTIAL DAMAGE" shall mean damage or

destruction to the Premises, other than Tenant-Owned Alterations andUtility

Installations, the repair cost of which damage or destruction is lessthan

fifty percent (50%) of the then Replacement Cost (as defined in Paragraph

9.1(d) of the Premises (excluding the Tenant-Owned Alterations andUtility

Installations and Trade Fixtures) immediately prior to such damage or

destruction.

 

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<PAGE>

             (b)     "PREMISES TOTAL DESTRUCTION" shall mean damage or

destruction to the Premises, other than Tenant-Owned Alterations andUtility

Installations, the repair cost of which damage or destruction is fifty

percent (50%) or more of the then Replacement Cost of the Premises(excluding

Tenant-Owned Alterations and Utility Installations and Trade Fixtures)

immediately prior to such damage or destruction.  In addition, damage or

destruction to the Building, other than Tenant-Owned Alterations andUtility

Installations and Trade Fixtures of any tenants of the Building, the costof

which damage or destruction is fifty percent (50%) or more of the then

Replacement Cost (excluding Tenant-Owned Alterations and Utilityinstallations

and Trade Fixtures of any Tenants of the Building) of the Building shall,at

the option of Landlord, be deemed to be Premises total Destruction.

             (c)     "INSURED LOSS" shall mean damage or destruction tothe

Premises, other than Tenant-Owned Alterations and Utility Installationsand

Trade Fixtures, which was caused by an event required to be covered bythe

insurance described in Paragraph 8.3(a) irrespective of any deductible

amounts or coverage limits involved.

             (d)     "REPLACEMENT COST" shall mean the cost to repair or

rebuild the improvements owned by Landlord at the time of the occurrenceto

their condition existing immediately prior thereto, including demolition,

debris removal and upgrading required by the operation of applicablebuilding

codes, ordinances or laws, and without deduction for depreciation.

             (e)     "HAZARDOUS SUBSTANCE CONDITION" shall mean the

occurrence or discovery of a condition involving the presence of, or a

contamination by, a Hazardous Substance as defined in Paragraph 6.2(a),in,

on, or under the Premises.

     9.2     PREMISES PARTIAL DAMAGE - INSURED LOSS.  If Premises Partial

Damage that is an Insured Loss occurs, then Landlord shall, at Landlord's

expense, repair such damage (but not Tenant's Trade Fixtures or Tenant-Owned

Alterations and Utility installations) as soon as reasonably possible and

this Lease shall continue in full force and effect.  In the event,however,

that there is a shortage of insurance proceeds and such shortage is dueto

the fact that, by reason of the unique nature of the improvements in the

Premises, full replacement cost insurance coverage was not commercially

reasonable and available, Landlord shall have no obligation to pay forthe

shortage in insurance proceeds or to fully restore the unique aspects

of the Premises unless Tenant provides Landlord with the funds to coversame,

or adequate assurance thereof, within ten (10) days following receipt of

written notice of such shortage and request therefore.  If Landlordreceives

said funds or adequate assurance thereof within said ten (10) day period,

Landlord shall complete them as soon as reasonably possible and thisLease

shall remain in full force and effect.  If Landlord does not receive such

funds or assurance within said period, Landlord may nevertheless elect by

written notice to Tenant within ten (10) days thereafter to make such

restoration and repair as is commercially reasonable with Landlord payingany

shortage in proceeds, in which case this Lease shall remain in full forceand

effect.  If Landlord does not receive such funds or assurance within suchten

(10) day period, and if Landlord does not so elect to restore and repair,

then this Lease shall terminate sixty (60) days following the occurrenceof

the damage or destruction.  Unless otherwise agreed, Tenant shall in noevent

have any right to reimbursement from Landlord for any funds contributedby

Tenant to repair any such damage or destruction.  Premises Partial Damagedue

to flood or earthquake shall be subject to Paragraph 9.3 rather than

Paragraph 9.2, notwithstanding that there may be some insurance coverage,but

the net proceeds of any such insurance shall be made available for the

repairs if made either Party.

     9.3     PARTIAL DAMAGE - UNINSURED LOSS.  If Premises Partial Damage

that is not an insured Loss occurs, unless caused by a negligent orwillful

act of Tenant (in which event Tenant shall make the repairs at Tenant's

expense and this Lease shall continue in full force and effect), Landlordmay

at Landlord's option, either (i) repair such damage as soon as reasonably

possible at Landlord's expense, in which event this Lease shall continuein

full force and effect, or (ii) give written notice to Tenant withinthirty

(30) days after receipt by Landlord of knowledge of the occurrence ofsuch

damage of Landlord's desire to terminate this Lease as of the date sixty(60)

days following the date of such notice.  In the event Landlord elects togive

such notice of Landlord's intention to terminate this Lease, Tenant shall

have the right within ten (10) days after the receipt of such notice give

written notice to Landlord of Tenant's commitment to pay for the repairof

such damage totally at Tenant's expense and without reimbursement from

Landlord.  Tenant shall provide Landlord with the required funds or

satisfactory assurance thereof within thirty (30) days following such

commitment from Tenant.  In such event this Lease shall continue in full

force and effect, and Landlord shall proceed to make such repairs as soonas

reasonably possible after the required funds are available.  If Tenantdoes

not give such notice and provide the funds or assurance thereof withinthe

times specified above, this Lease shall terminate as of the date specifiedin

Landlord's notice of termination.

     9.4     TOTAL DESTRUCTION.  Notwithstanding any other provisionhereof,

if Premises Total Destruction occurs (including any destruction requiredby

any authorized public authority), this Lease shall terminate as of thedate

of such Premises Total Destruction, whether or not the damage ordestruction

is an insured Loss or was caused by a negligent or willful act of Tenant.In

the event, however, that the damage or destruction was caused by Tenant,

Landlord shall have the right to recover Landlord's damages from Tenant

except as released and waived in Paragraph 9.7.

     9.5     DAMAGE NEAR END OF TERM.  If at any time during the last six(6)

months of the term of this Lease there is damage for which the cost torepair

exceeds one month's Base Rent, whether or not an insured Loss, Landlordmay,

at Landlord's option, terminate this Lease effective sixty (60) days

following the date of occurrence of such damage by giving written noticeto

Tenant of Landlord's election to do so within thirty (30) days after thedate

of occurrence of such damage.  Provided, however, if Tenant at that timehas

an exercisable option to extend this Lease or to purchase the Premises,then

Tenant may preserve this Lease by (a) exercising such option, and (b)

providing Landlord with any shortage in insurance proceeds (or adequate

assurance thereof) needed to make the repairs on or before the earlier of(i)

the date which is ten (10) days after Tenant's receipt of Landlord'swritten

notice purporting to terminate this Lease, or (ii) the day prior to thedate

upon which such option expires.  If Tenant duly

 

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exercises such option during such period and provides Landlord with funds(or

adequate assurance thereof) to cover any shortage in insurance proceeds,

Landlord shall, at Landlord's expense repair such damage as soon as

reasonably possible and this Lease shall continue in full force andeffect.

If Tenant fails to exercise such option and provide such funds orassurance

during such period, then this Lease shall terminate as of the date setforth

in the first sentence of this Paragraph 9.5.

     9.6  ABATEMENT OF RENT; TENANT'S REMEDIES.

           (a)   In the event of (i) Premises Partial Damage or (ii)

Hazardous Substance Condition for which Tenant is not legallyresponsible,

the Base Rent, Common Area Operating Expenses and other charges, if any,

payable by Tenant hereunder for the period during which such damage or

condition, its repair, remediation or restoration continues, shall beabated

in proportion to the degree to which Tenant's use of the Premises is

impaired, but not in excess of proceeds from insurance required to becarried

under Paragraph 8.3(b). Except for abatement of Base Rent, Common Area

Operating Expenses and other charges, if any, as aforesaid, all other

obligations of Tenant hereunder shall be performed by Tenant, and Tenant

shall have no claim against Landlord for any damage suffered by reason ofany

such damage, destruction, repair, remediation or restoration.

           (b)   If Landlord shall be obligated to repair or restore the

Premises under the provisions of this Paragraph 9 and shall not commence,in

a substantial and meaningful way, the repair or restoration of thePremises

within ninety (90) days after such obligation shall accrue, Tenant may,at

any time prior to the commencement of such repair or restoration, give

written notice to Landlord and to any Lenders of which Tenant has actual

notice of Tenant's election to terminate this Lease on a date not lessthan

sixty (60) days following the giving of such notice. If Tenant gives such

notice to Landlord and such Lenders and such repair or restoration is not

commenced within thirty (30) days after receipt of such notice, thisLease

shall terminate as of the date specified in said notice. If Landlord or a

Lender commences the repair or restoration of the Premises within thirty(30)

days after the receipt of such notice, this Lease shall continue in full

force and effect. "COMMENCE" as used in this Paragraph 9.6 shall meaneither

the unconditional authorization of the preparation of the required plans,or

the beginning of the actual work on the Premises, whichever occurs first.

     9.7   HAZARDOUS SUBSTANCE CONDITIONS.  If a Hazardous Substance

Condition occurs, unless Tenant is legally responsible therefor (in which

case Tenant shall make the investigation and remediation thereof requiredby

Applicable Requirements and this Lease shall continue in full force and

effect, but subject to Landlord's rights under Paragraph 6.2(c) andParagraph

13), Landlord may at Landlord's option either (i) investigate andremediate

such Hazardous Substance Condition, if required, as soon as reasonably

possible at Landlord's expense, in which event this Lease shall continuein

full force and effect, or (ii) if the estimated cost to investigate and

remediate such condition exceeds twelve (12) times the then monthly BaseRent

or $100,000, whichever is greater, give written notice to Tenant within

thirty (30) days after receipt by Landlord of knowledge of the occurenceof

such Hazardous Substance Condition of Landlord's desire to terminate this

Lease as of the date sixty (60) days following the date of such notice.In

the event Landlord elects to give such notice of Landlord's intention to

terminate this Lease, Tenant shall have the right within ten (10) daysafter

receipt of such notice to give written notice to Landlord of Tenant's

commitment to pay for the excess costs of (a) investigation andremediation

of such Hazardous Substance Condition to the extent required byApplicable

Requirements, over (B) an amount equal to twelve (12) times the thenmonthly

Base Rent or $100,000, whichever is greater. Tenant shall provideLandlord

with the funds required of Tenant or satisfactory assurance thereofwithin

thirty (30) days following said commitment by Tenant. In such event this

Lease shall continue in full force and effect, and Landlord shall proceedto

make such investigation and remediation as soon as reasonable possibleafter

the required funds are available. If Tenant does not give such notice and

provide the required funds or assurance thereof within the time period

specified above, this Lease shall terminate as of the date specified in

Landlord's notice of termination.

     9.8   TERMINATION - ADVANCE PAYMENTS.  Upon termination of thisLease

pursuant to this Paragraph 9, Landlord shall return to Tenant any advance

payment made by Tenant to Landlord and so much of Tenant's SecurityDeposit

as has not been, or is not then required to be, used by Landlord underthe

terms of this Lease.

     9.9   WAIVER OF STATUTES.  Landlord and Tenant agree that the termsof

this Lease shall govern the effect of any damage to or destruction of the

Premises and the Building with respect to the termination of this Leaseand

hereby waive the provisions of any present or future statute to the extentit

is inconsistent herewith.

10.  REAL PROPERTY TAXES.

     10.1  PAYMENT OF TAXES.  Landlord shall pay the Real Property Taxes,as

defined in Paragraph 10.2, applicable to the Industrial Center, and exceptas

otherwise provided in Paragraph 10.3, any such amounts shall be includedin

the calculation of Common Area Operating Expenses in accordance with the

provisions of Paragraph 4.2.

     10.2  REAL PROPERTY TAX DEFINITION. As used herein, the term "REAL

PROPERTY TAXES" shall include any form of real estate tax or assessment,

general, special, ordinary or extraordinary, and any license fee,commercial

rental tax, improvement bond or bonds, levy or tax (other thaninheritance,

personal income or estate taxes) imposed upon the Industrial Center byany

authority having the direct or indirect power to tax, including any city,

state or federal government, or any school, agricultural, sanitary, fire,

street, drainage, or other improvement district thereof, levied againstany

legal or equitable interest of Landlord in the Industrial Center or any

portion thereof, Landlord's right to rent or other income therefrom,and/or

Landlord's business of leasing the Premises. The term "REAL PROPERTYTAXES"

shall also include any tax, fee, levy, assessment or charge, or anyincrease

therein, imposed by reason of events occurring, or changes in ApplicableLaw

taking effect, during the term of this Lease, including but not limited toa

change in the ownership of the Industrial Center or in the improvements

thereon, the

 

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execution of this Lease, or any modification, amendment or transferthereof,

and whether or not contemplated by the Parties. In calculating RealProperty

Taxes for any calendar year, the Real Property Taxes for any real estatetax

year shall be included in the calculation of Real Property Taxes for such

calendar year based upon the number of days which such calendar year andtax

year have in common.

     10.3  ADDITIONAL IMPROVEMENTS.  Common Area Operating Expenses shallnot

include Real Property Taxes specified in the tax assessor's records andwork

sheets as being caused by additional improvements placed upon theIndustrial

Center by other tenants or by Landlord for the exclusive enjoyment ofsuch

other Tenants. Notwithstanding Paragraph 10.1 hereof, Tenant shall,however,

pay to Landlord at the time Common Area Operating Expenses are payableunder

Paragraph 4.2, the entirety of any increase in Real Property Taxes if

assessed solely by reason of Alterations, Trade Fixtures or Utility

Installations placed upon the Premises by Tenant or at Tenant's request.

     10.4  JOINT ASSESSMENT.  If the Building is not separately assessed,

Real Property Taxes allocated to the Building shall be an equitable

proportion of the Real Property Taxes for all of the land andimprovements

included within the tax parcel assessed, such proportion to be determinedby

Landlord from the respective valuations assigned in the assessor's work

sheets or such other information as may be reasonably available.Landlord's

reasonable determination thereof, in good faith, shall be conclusive.

     10.5  TENANT'S PROPERTY TAXES.  Tenant shall pay prior todelinquency

all taxes assessed against and levied upon the Tenant-Owned Alterationsand

Utility Installations, Trade Fixtures, furnishings, equipment and all

personal property of Tenant contained in the Premises or stored withinthe

Industrial Center. When possible, Tenant shall cause its Tenant-Owned

Alterations and Utility Installations, Trade Fixtures, furnishings,equipment

and all other personal property to be assessed and billed separately fromthe

real property of Landlord. If any of Tenant's said property shall beassessed

with Landlord's real property, Tenant shall pay Landlord the taxes

attributable to Tenant's property within ten (10) days after receipt of a

written statement setting forth the taxes applicable to Tenant'sproperty.

11.  UTILITIES.  Tenant shall pay directly for all utilities and services

supplied to the Premises, including but not limited to electricity,

telephone, security, gas and cleaning of the Premises, together with any

taxes thereon. If any such utilities or services are not separatelymetered

to the Premises or separately billed to the Premises, Tenant shall pay to

Landlord a reasonable proportion to be determined by Landlord of all such

charges jointly metered or billed with other premises in the Building, inthe

manner and within the time periods set forth in Paragraph 4.2(d).

12.  ASSIGNMENT AND SUBLETTING.

     12.1  LANDLORD'S CONSENT REQUIRED.

           (a)   Tenant shall not voluntarily or by operation of lawassign,

transfer, mortgage or otherwise transfer or encumber (collectively,"assign")

or sublet all or any part of Tenant's interest in this Lease or in the

Premises without Landlord's prior written consent given under and subjectto

the terms of Paragraph 36. Not withstanding the above, no consent shallbe

required if the Lease is transferred to a wholly owned subsidiary, parent

corporation, a corporation under common control of Tenant, or resultingfrom

merger of Tenant with another entity as long as the use of the premisesis

the same and the financial position of the transferee is equal to orgreater

than Tenant's.

           (b)   A change in the control of Tenant shall constitute an

assignment requiring Landlord's consent. The transfer, on a cumulativebasis,

of fifty percent (50%) or more of the voting control of Tenant shall

constitute a change in control for this purpose.

           (c)   The involvement of Tenant or its assets in anytransaction,

or series of transactions (by way of merger, sale, acquisition,financing,

refinancing, transfer, leveraged buy-out or otherwise), whether or not a

formal assignment or hypothecation of this Lease or Tenant's assetsoccurs,

which results or will result in a reduction of the Net Worth of Tenant,as

hereinafter defined, by an amount equal to or greater than twenty-five

percent (25%) of such Net Worth of Tenant as it was represented toLandlord

at the time of full execution and delivery of this Lease or at the timeof

the most recent assignment to which Landlord has consented, or as itexists

immediately prior to said transaction or transactions consulting such

reduction, at whichever time said Net Worth of Tenant was or is greater,

shall be considered an assignment of this Lease by Tenant to whichLandlord

may reasonably withhold its consent. "NET WORTH OF TENANT" for purposes ofthis

Lease shall be the net worth of Tenant (excluding any Guarantors)established

under generally accepted accounting principles consistently applied.

           (d)   An assignment or subletting of Tenant's interest in this

Lease without Landlord's specific prior written consent shall, atLandlord's

option, be a Default curable after notice per Paragraph 13.1, or a

non-curable Breach without the necessity of any notice and grace period.If

Landlord elects to treat such unconsented to assignment or subletting asa

non-curable Breach, Landlord shall have the right to either: (i)terminate

this Lease, or (ii) upon thirty (30) days' written notice ("LANDLORD'S

NOTICE"), increase the monthly Base Rent for the Premises to the greaterof

the then fair market rental value of the Premises, as reasonablydetermined

by Landlord, or one hundred ten percent (110%) of the Base Rent then in

effect. Pending determination of the new fair market rental value, if

disputed by Tenant, Tenant shall pay the amount set forth in Landlord's

Notice, with any overpayment credited against the next installment(s) ofBase

Rent coming due, and any underpayment for the period retroactively to the

effective date of the adjustment being due and payable immediately uponthe

determination thereof. Further, in the event of such Breach and rental

adjustment, (i) the purchase price of any option to purchase the Premises

held by Tenant shall be subject to similar adjustment to the then fairmarket

value as reasonably determined by Landlord (without the Lease being

considered an encumbrance or any deduction for depreciation orobsolescence,

and

 

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<PAGE>

considering the Premises at its highest and best use and in goodcondition)

or one hundred ten percent (110%) of the price previously in effect, (ii)any

index-oriented rental or price adjustment formulas contained in thisLease

shall be adjusted to require that the base index be determined withreference

to the index applicable to the time of such adjustment, and (iii) any

fixed rental adjustments scheduled during the remainder of the Lease term

shall be increased in the same ratio as the new rental bears to the BaseRent

in effect immediately prior to the adjustment specified in Landlord'sNotice.

           (e)  Tenant's remedy for any breach of this Paragraph 12.1 by

Landlord shall be limited to compensatory damages and/or injunctiverelief.

      12.2  TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

            (a)  Regardless of Landlord's consent, any assignment or

subletting shall not (i) be effective without the express writtenassumption

by such assignee or subtenant of the obligations of Tenant under thisLease,

(ii) release Tenant of any obligations hereunder, nor (iii) alter theprimary

liability of Tenant for the payment of Base Rent and other sums dueLandlord

hereunder or for the performance of any other obligations to be performedby

Tenant under this Lease.

            (b)  Landlord may accept any rent or performance of Tenant's

obligations from any person other than Tenant pending approval ordisapproval

of an assignment. Neither a delay in the approval or disapproval of such

assignment nor the acceptance of any rent for performance shall constitutea

waiver or estoppel of Landlord's right to exercise its remedies for the

Default or Breach by Tenant of any of the terms, covenants or conditionsof

this Lease.

            (c)  The consent of Landlord to any assignment or subletting

shall not constitute a consent to any subsequent assignment or sublettingby

Tenant or to any subsequent or successive assignment or subletting by the

assignee or subtenant. However, Landlord may consent to subsequent or

successive assignment or subletting by the assignee or subtenant.However,

Landlord may consent to subsequent subletting and assignments of thesublease

or any amendments or modifications thereto without notifying Tenant oranyone

else liable under this Lease or the sublease and without obtaining their

consent, and such action shall not relieve such persons from liabilityunder

this Lease or the sublease.

            (d)  In the event of any Default or Breach of Tenant'sobligation

under this Lease, Landlord may proceed directly against Tenant, any

guarantors or anyone else responsible for the performance of the Tenant's

obligations under this Lease, including any subtenant, without first

exhausting Landlord's remedies against any other person or entityresponsible

therefor to Landlord, or any security held by Landlord.

            (e)  Each request for consent to an assignment or subletting

shall be in writing, accompanied by information relevant to Landlord's

determination as to the financial and operational responsibility and

appropriateness of the proposed assignee or subtenant, including but not

limited to the intended use and/or required modification of the Premises,if

any, together with a non-refundable deposit of $1,000, as reasonable

consideration for Landlord's considering and processing the request for

consent. Tenant agrees to provide Landlord with such other or additional

information and/or documentation as may be reasonably requested byLandlord.

            (f)  Any assignee of, or subtenant under, this Lease shall,by

reason of accepting such assignment or entering into such sublease, be

deemed, for the benefit of Landlord, to have assumed and agreed toconform

and comply with each and every term, covenant, condition and obligation

herein to be observed or performed by Tenant during the term of said

assignment or sublease, other than such obligations as are contrary to or

inconsistent with provisions of an assignment or sublease to whichLandlord

has specifically consented in writing.

      12.3  ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The

following terms and conditions shall apply to any subletting by Tenant ofall

or any part of the Premises and shall be deemed included in all subleases

under this Lease whether or not expressly incorporated therein:

            (a)  Tenant hereby assigns and transfers to Landlord all of

Tenant's interest in all rentals and income arising from any sublease ofall

or a portion of the Premises heretofore or hereafter made by Tenant, and

Landlord may collect such rent and income and apply same toward Tenant's

obligations under this Lease; provided, however, that until a Breach (as

defined in Paragraph 13.1) shall occur in the performance of Tenant's

obligations under this Lease, Tenant may, except as otherwise provided in

this Lease, receive, collect and enjoy the rents accruing under such

sublease. Landlord shall not, by reason of the foregoing provision or any

other assignment of such sublease to Landlord, nor by reason of the

collection of the rents from a subtenant, be deemed liable to thesubtenant

for any failure of Tenant to perform and comply with any of Tenant's

obligations to such subtenant under

 

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such Sublease. Tenant hereby irrevocably authorizes and directs any such

subtenant, upon receipt of a written notice from Landlord stating that a

Breach exists in the performance of Tenant's obligations under this Lease,to

pay to Landlord the rents and other charges due and to become due underthe

sublease. Subtenant shall rely upon any such statement and request from

Landlord and shall pay such rents and other charges to Landlord withoutany

obligation or right to inquire as to whether such Breach exists and

notwithstanding any notice from or claim from Tenant to the contrary.Tenant

shall have no right or claim against such subtenant, or, until the Breachhas

been cured, against Landlord, for any such rents and other charges so paidby

said subtenant to Landlord.

          (b)  In the event of a Breach by Tenant in the performance ofits

obligations under this Lease, Landlord, at its option and without any

obligation to do so, may require any subtenant to attorn to Landlord, in

which event Landlord shall undertake the obligations of the sub landlord

under such sublease from the time of the exercise of said option to the

expiration of such sublease; provided, however, Landlord shall not beliable

for any prepaid rents or security deposit paid by such subtenant to suchsub

landlord or for any other prior defaults or breaches of such sub landlord

under such sublease.

          (c)  Any matter or thing requiring the consent of the sublandlord

under a sublease shall also require the consent of Landlord herein.

          (d)  No subtenant under a sublease approved by Landlord shall

further assign or sublet all or any part of the Premises withoutLandlord's

prior written consent.

          (e)  Landlord shall deliver a copy of any notice of Default or

Breach by Tenant to the subtenant, who shall have the right to cure the

Default of Tenant within the grace period, if any, specified in suchnotice.

The subtenant shall have a right of reimbursement and offset from andagainst

Tenant for any such Defaults cured by the subtenant.

13.  DEFAULT; BREACH; REMEDIES.

     13.1  DEFAULT; BREACH.  Landlord and Tenant agree that if anyattorney

is consulted by Landlord in connection with a Tenant Default or Breach(as

hereinafter defined), $350.00 is a reasonable minimum sum per suchoccurrence

for legal services and costs in the preparation and service of a noticeof

Default, and that Landlord may include the cost of such services and costsin

said notice as rent due and payable to cure said default, a "DEFAULT" by

Tenant is defined as a failure by Tenant to observe, comply with orperform

any of the terms, covenants, conditions or rules applicable to Tenantunder

this Lease. A "BREACH" by Tenant is defined as the occurrence of any oneor

more of the following Defaults, and, where a grace period for cure after

notice is specified herein, the failure by Tenant to cure such Defaultprior

to the expiration of the applicable grace period, and shall entitleLandlord

to pursue the remedies set forth in Paragraphs 13.2 and/or 13.3.

           (a)  The vacating of the Premises without the intention to

reoccupy same, or the abandonment of the Premises.

           (b)  Except as expressly otherwise provided in this Lease, the

failure by Tenant to make any payment of Base Rent, Tenant's Share ofCommon

Area Operating Expenses, or any other monetary payment required to be madeby

Tenant hereunder as and when due, the failure by Tenant to provideLandlord

with reasonable evidence of insurance or surety bond required under this

Lease, or the failure of Tenant to fulfill any obligation under thisLease

which endangers or threatens life or property, where such failurecontinues

for a period of three (3) days following written notice thereof by or on

behalf of Landlord to Tenant.

           (c)  Except as expressly otherwise provided in this Lease, the

failure by Tenant to provide Landlord with reasonable written evidence(in

duly executed original form, if applicable) of (i) compliance withApplicable

Requirements per Paragraph 6.3, (ii) the inspection, maintenance andservice

contracts required under Paragraph 7.1(b), (iii) the rescission of an

unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy

Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination

of this Lease per Paragraph 30, (vi) the guaranty of the performance of

Tenant's obligations under this Lease if required under Paragraphs 1.11and

37, (vii) the execution of any document requested under Paragraph 42

(easements), or (viii) any other documentation or information whichLandlord

may reasonably require of Tenant under the terms of this lease, where any

such failure continues for a period of ten (10) days following writtennotice

by or on behalf of Landlord to Tenant.

           (d)  A Default by Tenant as to the terms covenants, conditionsor

provisions of this Lease, or of the rules adopted under Paragraph 40hereof

that are to be observed, complied with or performed by Tenant, other than

those described in Subparagraphs 13.1(a), (b), or (c), above, where such

Default continues for a period of thirty (30) days after written notice

thereof by or on behalf of Landlord to Tenant; provided however, that ifthe

nature of Tenant's Default is such that more than thirty (30) days are

reasonably required for its cure, then it shall not be deemed to be aBreach

of this Lease by Tenant if Tenant commences such cure within said thirty(30)

day period and thereafter diligently prosecutes such cure to completion.

           (e)  The occurrence of any of the following events: (i) themaking

by Tenant of any general arrangement or assignment for the benefit of

creditors; (ii) Tenant's becoming a "debtor" as defined in 11 U.S. Code

Section 101 or any successor statute thereto (unless, in the case of

a petition filed against Tenant, the same is dismissed within sixty (60)

days); (iii) the appointment of a trustee or receiver to take possessionof

substantially all of Tenant's assets located at the Premises or ofTenant's

interest in this Lease, where possession is not restored to Tenant within

thirty (30) days; or (iv) the attachment, execution or other judicialseizure

of substantially all of Tenant's assets located at the Premises or of

Tenant's interest in this Lease, where such seizure is not dischargedwithin

thirty (30) days; provided, however, in the event that any provision ofthis

Subparagraph 13.1(e) is contrary to

                                      --14--            Initials /s/ MB /JED

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<PAGE>

any applicable law, such provision shall be of no force or effect, andshall

not affect the validity of the remaining provisions.

          (f)   The discovery by Landlord that any financial statement of

Tenant or of any Guarantor, given to Landlord by Tenant or any Guarantor,was

materially false.

          (g)   If the performance of Tenant's obligations under thisLease

is guaranteed: (i) the death of a Guarantor, (ii) the termination of a

Guarantor's liability with respect to this Lease other than in accordancewith

the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the

subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the

guaranty, or (v) a Guarantor's breach of the guaranty obligation on an

anticipatory breach basis, and Tenant's failure, within sixty (60) days

following written notice by or on behalf of Landlord to Tenant of anysuch

event, to provide Landlord with written alternative assurances ofsecurity,

which, when coupled with the then existing resources of Tenant, equals or

exceeds the combined financial resources of Tenant and the Guarantorsthat

existed at the time of the execution of this Lease.

    13.2  REMEDIES. If Tenant fails to perform any affirmative duty or

obligation of Tenant under this Lease, within ten (10) days after written

notice to Tenant (or in case of an emergency, without notice), Landlordmay

at its option (but without obligation to do so), perform such duty or

obligation on Tenant's behalf, including but not limited to the obtainingof

reasonably required bonds, insurance policies, or governmental licenses,

permits or approvals. The costs and expenses of any such performance by

Landlord shall be due and payable by Tenant to Landlord upon invoice

therefor. If any check given to Landlord by Tenant shall not be honoredby

the bank upon which it is drawn, Landlord, at its own option, may requireall

future payments to be made under this Lease by Tenant to be made only by

cashier's check. In the event of a Breach of this Lease by Tenant (asdefined

in Paragraph 13.1), with or without further notice or demand, and without

limiting Landlord in the exercise of any right or remedy which Landlordmay

have by reason of such Breach, Landlord may:

          (a)   Terminate Tenant's right to possession of the Premises byany

lawful means, in which case this Lease and the term hereof shallterminate

and Tenant shall immediately surrender possession of the Premises to

Landlord. In such event Landlord shall be entitled to recover fromTenant:

(i) the worth at the time of the award of the unpaid rent which had been

earned at the time of termination; (ii) the worth at the time of award ofthe

amount by which the unpaid rent which would have been earned after

termination until the time of award exceeds the amount of such rentalloss

that the Tenant proves could have been reasonably avoided; (iii) the worthat

the time of award of the amount by which the unpaid rent for the balanceof

the term after the time of award exceeds the amount of such rental lossthat

the Tenant proves could be reasonably avoided; and (iv) any other amount

necessary to compensate Landlord for all the detriment proximately causedby

the Tenant's failure to perform its obligations under this Lease or whichin

the ordinary course of things would be likely to result therefrom,including

but not limited to the cost of recovering possession of the Premises,

expenses of reletting, including necessary renovation and alteration ofthe

Premises, reasonable attorneys' fees, and that portion of any leasing

commission paid by Landlord in connection with this Lease applicable tothe

unexpired term of this Lease. The worth at the time of award of theamount

referred to in provision (iii) of the immediately preceding sentence shallbe

computed by discounting such amount at the discount rate of the Federal

Reserve Bank of San Francisco or the Federal Reserve Bank District inwhich

the Premises are located at the time of award plus one percent (1%).Efforts

by Landlord to mitigate damages caused by Tenant's Default or Breach ofthis

Lease shall not waive Landlord's right to recover damages under this

Paragraph 13.2. If termination of this Lease is obtained through the

provisional remedy of unlawful detainer, Landlord shall have the right to

recover in such proceeding the unpaid rent and damages as are recoverable

therein, or Landlord may reserve the right to recover all or any partthereof

in a separate suit for such rent and/or damages. If a notice and graceperiod

required under Subparagraph 13.1 (b), (c) or (d) was not previously given,a

notice to pay rent or quit, or to perform or quit, as the case may be,given

to Tenant under any statute authorizing the forfeiture of leases forunlawful

detainer shall also constitute the applicable notice for grace period

purposes required by Subparagraph 13.1 (b), (c) or (d). In such case, the

applicable grace period under the unlawful detainer statute shall run

concurrently after the one such statutory notice, and the failure ofTenant

to cure the Default within the greater of the two (2) such grace periods

shall constitute both an unlawful detainer and a Breach of this Lease

entitling Landlord to the remedies provided for in this Lease and/or bysaid

statute.

          (b)  Continue the Lease and Tenant's right to possession ineffect

(in California under California Civil Code Section 1951.4) after Tenant's

Breach and recover the rent as it becomes due, provided Tenant has theright

to sublet or assign, subject only to reasonably limitations. Landlord and

Tenant agree that the limitations on assignment and subletting in thisLease

are reasonable. Acts of maintenance or preservation, efforts to relet the

Premises, or the appointment of a receiver to protect the Landlord'sinterest

under this Lease, shall not constitute a termination of the Tenant's rightto

possession.

          (c)  Pursue any other remedy now or hereafter available toLandlord

under the laws or judicial decisions of the state wherein the Premisesare

located.

          (d)  The expiration or termination of this Lease and/or the

termination of Tenant's right to possession shall not relieve Tenant from

liability under any indemnity provisions of this Lease as to mattersoccurring

or accruing during the term hereof or by reason of Tenant's  occupancy ofthe

Premises.

    13.3  INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement byLandlord

for free or abated rent or other charges applicable to the Premises, orfor

the giving or paying by Landlord to or for Tenant of any cash or otherbonus,

inducement or consideration for Tenant's entering into this Lease, all of

which concessions are hereinafter referred to as "INDUCEMENT PROVISIONS"

shall be deemed conditioned upon Tenant's full and faithful performanceof

all of the terms, covenants and conditions of this Lease to be performedor

observed by Tenant, any such Inducement Provision shall automatically be

deemed deleted from this Lease and of no further force or effect,

 

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<PAGE>

and any rent, other charge, bonus, inducement or considerationtheretofore

abated, given or paid by Landlord under such an Inducement Provision shallbe

immediately due and payable by Tenant to Landlord, and recoverable by

Landlord, as additional rent due under this Lease, notwithstanding any

subsequent cure of said Breach by Tenant. The acceptance by Landlord ofrent

or the cure of the Breach which initiated the operation of this Paragraph

13.3 shall not be deemed a waiver by Landlord of the provisions of this

Paragraph 13.3 unless specifically so stated in writing by Landlord atthe

time of such acceptance. LANDLORD AND TENANT ACKNOWLEDGE THAT THERE WASNO

INDUCEMENT OR CONSIDERATION GIVEN TO TENANT TO ENTER THIS LEASE.

     13.4  LATE CHARGES. Tenant hereby acknowledges that late payment by

Tenant to Landlord of rent and other sums due hereunder will causeLandlord

to incur costs not contemplated by this Lease, the exact amount of whichwill

be extremely difficult to ascertain. Such costs include, but are notlimited

to, processing and accounting charges, and late charges which may beimposed

upon Landlord by the terms of any ground lease, mortgage or deed of trust

covering the Premises. Accordingly, if any installment of rent or othersum

due from Tenant shall not be received by Landlord or Landlord's designee

within ten (10) days after such amount shall be due, then, without any

requirement for notice to Tenant, Tenant shall pay to Landlord a latecharge

equal to six percent (6%) of such overdue amount. The parties herebyagree

that such late charge represents a fair and reasonable estimate of thecosts

Landlord will incur by reason of late payment by Tenant. Acceptance ofsuch

late charge be Landlord shall in no event constitute a waiver of Tenant's

Default or Breach with respect to such overdue amount, nor preventLandlord

from exercising any of the other rights and remedies granted hereunder.In

the event that a late charge is payable hereunder, whether or notcollected,

for three (3) consecutive installments of Base Rent, then notwithstanding

Paragraph 4.1 or any other provision of this Lease to the contrary, BaseRent

shall, at Landlord's option, become due and payable quarterly in advance.

    13.5  BREACH BY LANDLORD. Landlord shall not be deemed in breach ofthis

Lease unless Landlord fails within a reasonable time to perform anobligation

required to be performed by Landlord. For purposes of this Paragraph 13.5,a

reasonable time shall in no event be less than thirty (30) days afterreceipt

by Landlord, and by any Lender(s) whose name and address shall have been

furnished to Tenant in writing for such purpose, of written noticespecifying

wherein such obligation of Landlord has not been performed; provided,

however, that if the nature of Landlord's obligation is such that morethan

thirty (30) days after such notice are reasonably required for its

performance, then Landlord shall not be in breach of this Lease if

performance is commenced within such thirty (30) day period andthereafter

diligently pursued to completion.

14. CONDEMNATION. If the Premises or any portion thereof are taken underthe

power of eminent domain or sold under the threat of the exercise of said

power (all of which are herein called "condemnation"), this Lease shall

terminate as to the part so taken as of the date the condemning authority

takes title or possession, whichever first occurs. If more than tenpercent

(10%) of the floor area of the Premises, or more than twenty-five percent

(25%) of the portion of the Common Areas designated for Tenant's parking,is

rendered unusable or taken by condemnation, Tenant may, at Tenant'soption,

to be exercised in writing within ten (10) days after Landlord shall have

given Tenant written notice of such taking (or in the absence of suchnotice,

within ten (10) days after the condemning authority shall have taken

possession) terminate this Lease as of the date the condemning authority

takes such possession. If Tenant does not terminate this Lease inaccordance

with the foregoing, this Lease shall remain in full force and effect asto

the portion of the Premises remaining, except that the Base Rent shall be

reduced in the same proportion as the rentable floor area of the Premises

taken bears to the total rentable floor area of the Premises. No reductionof

the Base Rent shall occur if the condemnation does not apply to anyportion

of the Premises or reduce the amount of parking allocated by this Leaseto

Tenant. Any award for the taking of all or any part of the Premises underthe

power of eminent domain or any payment made under threat of the exerciseof

such power shall be the property of Landlord, whether such award shall be

made as compensation for diminution of value of the leasehold or for the

taking of the fee, or as severance damages; provided, however, thatTenant

shall be entitled to any compensation, separately awarded to Tenant for

Tenant's relocation expenses and/or loss of Tenant's Trade Fixtures. Inthe

event that this Lease is not terminated by reason of such condemnation,

Landlord shall to the extent of its net severance damages received, overand

above Tenant's Share of the legal and other expenses incurred by Landlordin

the condemnation matter, repair any damage to the Premises caused by such

condemnation authority. Tenant shall be responsible for the payment ofany

amount in excess of such net severance damages required to complete such

repair.

15. BROKER'S FEES.

    15.1  PROCURING CAUSE. The Broker(s) named in Paragraph 1.10 is/arethe

procuring cause of this Lease.

    15.2  ADDITIONAL TERMS. Unless Landlord and Broker(s) have otherwise

agreed in writing, Landlord agrees that: (a) if Tenant exercises anyOption

(as defined in Paragraph 39.1) granted under this Lease or any Option

subsequently granted, or (b) if Tenant acquires any rights to the Premisesor

other premises in which Landlord has an interest, or (c) if Tenant remainsin

possession of the Premises with the consent of Landlord after theexpiration

of the term of this Lease after having failed to exercise an Option, or(d)

if said Brokers are the procuring cause of any other lease or saleentered

into between the Parties pertaining to the Premises and/or any adjacent

property in which Landlord has an interest, or (e) if Base Rent isincreased,

whether by agreement or operation of an escalation clause herein, then asto

any of said transactions, Landlord shall pay said Broker(s) a fee in

accordance with the schedule of said Broker(s) in effect at the time ofthe

execution of this Lease.

    15.3  ASSUMPTION OF OBLIGATIONS. Any buyer or transferee ofLandlord's

interest in this Lease, whether such transfer is by agreement or byoperation

of law, shall be deemed to have assumed Landlord's obligation under this

Paragraph 15. Each Broker shall be an intended third party beneficiary ofthe

provisions of Paragraph 1.10 and of this Paragraph 15 to the extent ofits

interest in any commission arising from this Lease and may enforce thatright

directly against Landlord and its successors.

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                                                                 ------------

<PAGE>

     15.4  REPRESENTATIONS AND WARRANTIES.  Tenant and Landlord each

represent and warrant to the other that it has had no dealings with any

person, firm, broker or finder other than as named in Paragraph 1.10(a)in

connection with the negotiation of this Lease and/or the consummation ofthe

transaction contemplated hereby, and that no broker or other person, firmor

entity other than said named Broker(s) is entitled to any commission or

finder's fee in connection with said transaction. Tenant and Landlord doeach

hereby agree to indemnify, protect, defend and hold the other harmlessfrom

and against liability for compensation or charges which may be claimed byany

such unnamed broker, finder or other similar party by reason of anydealings

or actions of the indemnifying Party, including any costs, expenses,and/or

attorneys' fees reasonably incurred with respect thereto.

16.  TENANCY AND FINANCIAL STATEMENT.

     16.1  TENANCY STATEMENT.  Each Party (as "RESPONDING PARTY") shall

within ten (10) days after written notice from the other Party (the

"REQUESTING PARTY") execute, acknowledge and deliver to the RequestingParty

a statement in writing in a form similar to the then most current"TENANCY

STATEMENT" form published by the American Industrial Real EstateAssociation,

plus such additional information, confirmation and/or statements as maybe

reasonably requested by the Requesting Party.

     16.2  FINANCIAL STATEMENT.  If Landlord desires to finance,refinance,

or sell the Premises or the Building, or any part thereof, Tenant and allthe

Guarantors shall deliver to any potential lender or purchaser designatedby

Landlord such financial statements of Tenant and such Guarantors as maybe

reasonably required by such lender or purchaser, including but not limitedto

Tenant's financial statements for the past three (3) years. All such

financial statements shall be received by Landlord and such lender or

purchaser in confidence and shall be used only for the purposes hereinset

forth.

17.  LANDLORD'S LIABILITY.  The term "LANDLORD" as used herein shall meanthe

owner or owners at the time in question of the fee title to the Premises.In

the event of a transfer of Landlord's title or interest in the Premises orin

this Lease, Landlord shall deliver to the transferee or assignee (in cashor

by credit) any unused Security Deposit held by Landlord at the time ofsuch

transfer or assignment. Except as provided in Paragraph 15.3, upon such

transfer or assignment and delivery of the Security Deposit, asaforesaid,

the prior Landlord shall be relieved of all liability with respect to the

obligations and/or covenants under this Lease thereafter to be performedby

Landlord.  Subject to the foregoing, the obligations and/or covenants inthis

Lease to be performed by the Landlord shall be binding only upon theLandlord

as herein above defined.

18.  SEVERABILITY.  The invalidity of any provision of this Lease, as

determined by a court of competent jurisdiction, shall in no way affectthe

validity of any other provision hereof.

19.  INTEREST ON PAST-DUE OBLIGATIONS.  Any monetary payment due Landlord

hereunder, other than late charges, not received by Landlord within ten(10)

days following the date on which it was due, shall bear interest from ten

(10) days after the date due at the prime rate charged by the largeststate

chartered bank in the state in which the Premises are located plus four

percent (4%) per annum, but not exceeding the maximum rate allowed by law,in

addition to the potential late charge provided for in Paragraph 13.4.

20.  TIME OF ESSENCE.  Time is of the essence with respect to theperformance

of all obligations to be performed or observed by the Parties under this

Lease.

21.  RENT DEFINED.  All monetary obligations of Tenant to Landlord underthe

terms of this Lease are deemed to be rent.

22.  NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER.  This Leasecontains

all agreements between the Parties with respect to any matter mentioned

herein, and no other prior or contemporaneous agreement or understanding

shall be effective. Landlord and Tenant each represents and warrants tothe

Brokers that it has made, and is relying solely upon, its own investigationas

to the nature, quality, character and financial responsibility of theother

Party to this Lease and as to the nature, quality and character of the

Premises. Brokers have no responsibility with respect thereto or withrespect

to any default or breach hereof by either Party. Each Broker shall be an

intended third party beneficiary of the provisions of this Paragraph 22.

23.  NOTICES.

     23.1  NOTICE REQUIREMENTS.  All notices required or permitted bythis

Lease shall be in writing and may be delivered in person (by hand or by

messenger or courier service) or may be sent by regular, certified or

registered mail or U.S. Postal Service Express Mail, with postage prepaid,or

by facsimile transmission during normal business hours, and shall bedeemed

sufficiently given if served in a manner specified in this Paragraph 23.The

addresses noted adjacent to a Party's signature on this Lease shall bethat

Party's address for delivery or mailing of notice purposes. Either Partymay

by written notice to the other specify a different address for notice

purposes, except that upon Tenant's taking possession of the Premises,the

Premises shall constitute Tenant's address for the purpose of mailing or

delivering notices to Tenant. A copy of all notices required or permittedto

be given to Landlord hereunder shall be concurrently transmitted to such

party or parties at such addresses as Landlord may from time to time

hereafter designate by written notice to Tenant.

     23.2  DATE OF NOTICE.  Any notice sent by registered or certifiedmail,

return receipt requested, shall be deemed given on the date of deliveryshown

on the receipt card, or if no delivery date is shown, the postmarkthereon.

If sent by regular mail, the notice shall be deemed given forty-eight(48)

hours after the same is addressed as required herein and mailed withpostage

prepaid. Notices delivered by United States Express Mail or overnight

 

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<PAGE>

courier that guarantees next day delivery shall be deemed given twenty-four

(24) hours after delivery of the same to the United States Postal Serviceor

courier. If any notice is transmitted by facsimile transmission orsimilar

means, the same shall be deemed served or delivered upon telephone or

facsimile confirmation of receipt of the transmission thereof, provided a

copy is also delivered via delivery or mail. If notice is received on a

Saturday or a Sunday or a legal holiday, it shall be deemed received onthe

next business day.

24.  WAIVERS.  No waiver by Landlord of the Default or Breach of any term

covenant or condition hereof by Tenant, shall be deemed a waiver of anyother

term, covenant or condition hereof, or of any subsequent Default or Breachby

Tenant of the same or any other term, covenant or condition hereof.

Landlord's consent to, or approval of, any such act shall not be deemedto

render unnecessary the obtaining of Landlord's consent to, or approvalof,

any subsequent or similar act by Tenant, or be construed as the basis ofan

estoppel to enforce the provision or provisions of this Lease requiringsuch

consent. Regardless of Landlord's knowledge of a Default or Breach at the

time of accepting rent, the acceptance of rent by Landlord shall not be a

waiver of any Default or Breach by Tenant of any provision hereof. Any

payment given Landlord by Tenant may be accepted by Landlord on accountof

moneys or damages due Landlord, notwithstanding any qualifying statementsor

conditions made by Tenant in connection therewith, which statementsand/or

conditions shall be of no force or effect whatsoever unless specifically

agreed to in writing by Landlord at or before the time of deposit of such

payment.

25.  RECORDING.  Either Landlord or Tenant shall, upon request of theother,

execute, acknowledge and deliver to the other a short term memorandum ofthis

Lease for recording purposes. The Party requesting recordation shall be

responsible for payment of any fees or taxes applicable thereto.

26.  NO RIGHT TO HOLDOVER.  Tenant has no right to retain possession ofthe

Premises or any part thereof beyond the expiration or earlier terminationof

this Lease. In the event that Tenant holds over in violation of this

Paragraph 26 then the Base Rent payable from and after the time of the

expiration or earlier termination of this Lease shall be increased to one

hundred fifty percent (150%) of the Base Rent applicable during the month

immediately preceding such expiration or earlier termination. Nothing

contained herein shall be construed as a consent by Landlord to anyholding

over by Tenant.

27.  CUMULATIVE REMEDIES.  No remedy or election hereunder shall bedeemed

exclusive but shall, wherever possible, be cumulative with all otherremedies

at law or in equity.

28.  COVENANTS AND CONDITIONS. All provisions of this Lease to be observedor

performed by Tenant are both covenants and conditions.

29.  BINDING EFFECT; CHOICE OF LAW.  This Lease shall be binding upon the

Parties, their personal representatives, successors and assigns and be

governed by the laws of the State in which the Premises are located. Any

litigation between the Parties hereto concerning this Lease shall be

initiated in the county in which the Premises are located.

30.  SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

     30.1  SUBORDINATION. This Lease and any Option granted hereby shallbe

subject and subordinate to any ground lease, mortgage, deed of trust, or

other hypothecation or security device (collectively, "SECURITY DEVICE"),now

or hereafter placed by Landlord upon the real property of which thePremises

are a part, to any and all advances made on the security thereof, and toall

renewals, modifications, consolidations, replacements and extensionsthereof.

Tenant agrees that the Lenders holding such Security Device shall have no

duty, liability or obligation to perform any of the obligations ofLandlord

under this Lease, but that in the event of Landlord's default with respectto

any such obligation, Tenant will give any Lender whose name and addresshave

been furnished Tenant in writing for such purpose notice of Landlord's

default pursuant to Paragraph 13.5. If any Lender shall elect to havethis

Lease and/or any Option granted hereby superior to the lien of itsSecurity

Device and shall give written notice thereof to Tenant, this Lease andsuch

Options shall be deemed prior to such Security Device, notwithstandingthe

relative dates of the documentation or recordation thereof.

     30.2  ATTORNMENT.  Subject to the non-disturbance provisions of

Paragraph 30.3, Tenant agrees to attorn to a Lender or any other partywho

acquires ownership of the Premises by reason of a foreclosure of aSecurity

Device, and that in the event of such foreclosure, such new owner shallnot:

(i) be liable for any act or omission of any prior Landlord or withrespect

to events occurring prior to acquisition of ownership, (ii) be subject toany

offsets or defenses which Tenant might have against any prior Landlord,or

(iii) be bound by prepayment of more than one month's rent.

     30.3  NON-DISTURBANCE.  With respect to Security Devices entered intoby

Landlord after the execution of this lease, Tenant's subordination ofthis

Lease shall be subject to receiving assurance (a "non-disturbanceagreement")

from the Lender that Tenant's possession and this Lease, including any

options to extend the term hereof, will not be disturbed so long as Tenantis

not in Breach hereof and attorn to the record owner of the Premises.

     30.4  SELF-EXECUTING.  The agreements contained in this Paragraph 30

shall be effective without the execution of any further documents;provided,

however, that upon written request from Landlord or a Lender inconnection

with a sale, financing or refinancing of Premises, Tenant and Landlordshall

execute such further writings as may be reasonably required to separately

document any such subordination or non-subordination, attornment and/or

non-disturbance agreement as is provided for herein.

31.  ATTORNEYS' FEES.  If any Party or Broker brings an action orproceeding

to enforce the terms hereof or

 

                                    --18--              Initials /s/ MB /JED

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<PAGE>

declare rights hereunder, the Prevailing Party (as hereafter defined) inany

such proceeding, action, or appeal thereon, shall be entitled toreasonable

attorneys' fees. Such fees may be awarded in the same suit or recovered ina

separate suit, whether or not such action or proceeding is pursued to

decision or judgment. The term "PREVAILING PARTY" shall include, without

limitation, a Party or Broker who substantially obtains or defeats therelief

sought, as the case may be whether by compromise, settlement, judgment,or

the abandonment by the other Party or Broker of its claim or defense. The

attorneys' fee award shall not be computed in accordance with any courtfee

schedule, but shall be such as to full reimburse all attorneys fees

reasonably incurred. Landlord shall be entitled to attorneys' fees, costsand

expenses incurred in preparation and service of notices of Default and

consultations in connection therewith, whether or not a legal action is

subsequently commenced in connection with such Default or resultingBreach.

Broker(s) shall be intended third party beneficiaries of this Paragraph31.

32.  LANDLORD'S ACCESS; SHOWING PREMISES; REPAIRS.  Landlord andLandlord's

agents shall have the right to enter the Premises at any time, in the caseof

an emergency, and otherwise at reasonable times for the purpose ofshowing

the same to prospective purchasers, lenders, or tenants, and make such

alterations, repairs, improvements or additions to the Premises or to the

Building, as Landlord may reasonably deem necessary. Landlord may at anytime

place on or about the Premises or Building any ordinary "For Sale" signsand

Landlord may at any time during the last one hundred eighty (180) days ofthe

term hereof place on or about the Premises any ordinary "For Lease"signs.

All such activities of Landlord shall be without abatement of rent or

liability to Tenant.

33.  AUCTIONS.  Tenant shall not conduct, nor permit to be conducted,either

voluntarily or involuntarily, any auction upon the Premises without first

having obtained Landlord's prior written consent. Notwithstanding anythingto

the contrary in this Lease, Landlord shall not be obligated to exerciseany

standard of reasonableness in determining whether to grant such consent.

34.  SIGNS.  Tenant shall not place any sign upon the exterior of the

Premises or the Building, except that Tenant may, with Landlord's prior

written consent, install (but not on the roof) such signs as arereasonably

required to advertise Tenant's own business so long as such signs are ina

location designated by Landlord and comply with Applicable Requirementsand

the signage criteria established for the Industrial Center by Landlord.The

installation of any sign on the Premises by or for Tenant shall be subjectto

the provisions of Paragraph 7 (Maintenance, Repairs, UtilityInstallations,

Trade Fixtures and Alterations). Unless otherwise expressly agreedherein,

Landlord reserves all rights to the use of the roof of the Building andthe

right to install advertising signs on the Building, including the roof,which

do not unreasonably interfere with the conduct of Tenant's business;Landlord

shall be entitled to all revenues from such advertising signs.

35.  TERMINATION; MERGER.  Unless specifically stated otherwise in writingby

Landlord, the voluntary or other surrender of this lease by Tenant, the

mutual termination or cancellation hereof, or a termination hereof by

Landlord for Breach by Tenant, shall automatically terminate any subleaseor

lesser estate in the Premises; provided, however, Landlord shall, in the

event of any such surrender, termination or cancellation, have the optionto

continue any one or all of any existing subtenancies. Landlord's failure

within ten (10) days of following any such event to make a writtenelection

to the contrary by written notice to the holder of any such lesserinterest,

shall constitute Landlord's election to have such event constitute the

termination of such interest.

36.  CONSENTS.

     (a)  Except for Paragraph 33 (Auctions) or as otherwise providedherein,

wherever in this Lease the consent of a Party is required to an act by orfor

the other Party, such consent shall not be unreasonably withheld ordelayed.

Landlord's actual reasonable costs and expenses (including but not limitedto

architects', attorneys', engineers' and other consultants' fees) incurredin

the consideration of, or response to, a request by Tenant for anyLandlord

consent pertaining to this Lease or the Premises, including but notlimited

to consents to an assignment a subletting or the presence or use of aHazardous

Substance, shall be paid by Tenant to Landlord upon receipt of an invoiceand

supporting documentation therefor. In addition to the deposit describedin

Paragraph 12.2(e), Landlord may, as condition to considering any suchrequest

by Tenant, require that Tenant deposit with Landlord an amount of money(in

addition to the Security Deposit held under Paragraph 5) reasonably

calculated by Landlord to represent the cost Landlord will incur in

considering and responding to Tenant's request. Any unused portion ofsaid

deposit shall be refunded to Tenant without interest. Landlord's consentto

any act, assignment of this Lease or subletting of the Premises by Tenant

shall not constitute an acknowledgement that no Default or Breach byTenant

of this Lease exists, nor shall such consent be deemed a waiver of anythen

existing Default or Breach, except as may be otherwise specifically statedin

writing by Landlord at the time of such consent.

     (b)  All conditions to Landlord's consent authorized by this Leaseare

acknowledged by Tenant as being reasonable. The failure to specify hereinany

particular condition to Landlord's consent shall not preclude theimpositions

by Landlord at the time of consent of such further or other conditions asare

then reasonable with reference to the particular matter for which consentis

being given.

37.  GUARANTOR.

     37.1  FORM OF GUARANTY.  If there are to be any Guarantors of thisLease

per Paragraph 1.11, the form of the guaranty to be executed by each such

Guarantor shall be in the form most recently published by the American

Industrial Real Estate Association, and each such Guarantor shall havethe

same obligations as Tenant under this lease, including but not limited to

the obligation to provide the Tenancy Statement and information requiredin

Paragraph 16.

     37.2  ADDITIONAL OBLIGATIONS OF GUARANTOR.  It shall constitute a

Default of the Tenant under this Lease if any such Guarantor fails orrefuses,

upon reasonable request by Landlord to give: (a) evidence of the due

 

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<PAGE>

execution of the guaranty called for by this Lease, including theauthority

of the Guarantor (and of the party signing on Guarantor's behalf) to

obligate such Guarantor on said guaranty, and resolution of its board of

directors authorizing the making of such guaranty, together with a

certificate of incumbency showing the signatures of the persons authorizedto

sign on its behalf, (b) current financial statements of Guarantor as mayfrom

time to time be requested by Landlord, (c) a Tenancy Statement, or (d)

written confirmation that the guaranty is still in effect.

38.  QUIET POSSESSION.  Upon payment by Tenant of the rent for thePremises

and the performance of all of the covenants, conditions and provisions on

Tenant's part to be observed and performed under this Lease, Tenant shall

have quiet possession of the Premises for the entire term hereof subjectto

all of the provisions of this Lease.

39.  OPTIONS.

     39.1  DEFINITION.  As used in this Lease, the word "Option" has the

following meaning: (a) the right to extend the term of this Lease or torenew

this Lease or to extend or renew any lease that Tenant has on otherproperty

of Landlord or the right of first offer to lease the Premises, or theright

of first refusal to lease other property of Landlord or the right offirst

offer to lease other property of Landlord; (c) the right to purchase the

Premises, or the right of first refusal to purchase the Premises, or the

right of first offer to purchase the Premises, or the right to purchaseother

property of Landlord, or the right of first refusal to purchase other

property of Landlord, or the right of first offer to purchase otherproperty

of Landlord.

     39.2  OPTIONS PERSONAL TO ORIGINAL TENANT.  Each Option granted to

Tenant in this Lease is personal to the original Tenant named inParagraph

1.1 hereof, and cannot be voluntarily or involuntarily assigned orexercised

by any person or entity other than said original Tenant while theoriginal

Tenant is in full and actual possession of the Premises and without the

intention of thereafter assigning or subletting. The Options, if any,herein

granted to Tenant are not assignable, either as a part of an assignmentof

this Lease or separately or apart therefrom, and no Option may be

separated from this Lease in any manner, by reservation or otherwise.

     39.3  MULTIPLE OPTIONS.  In the event that Tenant has any multiple

Options to extend or renew this Lease, a later option cannot be exercised

unless the prior Options to extend or renew this Lease have been validly

exercised.

     39.4  EFFECT OF DEFAULT ON OPTIONS.

           (a)  Tenant shall have no right to exercise an Option,

notwithstanding any provision in the grant of Option to the contrary: (i)

during the period commencing with the giving of any notice of Defaultunder

Paragraph 13.1 and continuing until the noticed Default is cured, or (ii)

during the period of time any monetary obligation due Landlord from Tenantis

unpaid (without regard to whether notice thereof is given Tenant), or(iii)

during the time Tenant is in Breach of this Lease, or (iv) in the eventthat

Landlord has given to Tenant three (3) or more notices of separateDefaults

under Paragraph 13.1 during the twelve (12) month period immediately

preceding the exercise of the Option, whether or not the Defaults arecured.

           (b)  The period of time within which an Option may beexercised

shall not be extended or enlarged by reason of Tenant's inability to

exercise an Option because of the provisions of Paragraph 39.4(a).

           (c)  All rights of Tenant under the provisions of an Optionshall

terminate and be of no further force or effect, notwithstanding Tenant'sdue

and timely exercise of the Option, if, after such exercise and during the

term of this Lease, (i) Tenant fails to pay to Landlord a monetaryobligation

of Tenant for a period of thirty (30) days after such obligation becomesdue

(without any necessity of Landlord to give notice thereof to Tenant), or(ii)

Landlord gives to Tenant three (3) or more notices of separate Defaults

under Paragraph 13.1 during any twelve (12) month period, whether or notthe

Defaults are cured, or (iii) if Tenant commits a Breach of this Lease.

40.  RULES AND REGULATIONS.  Tenant agrees that it will abide by, andkeep

and observe all reasonable rules and regulations ("Rules andRegulations")

which Landlord may make from time to time for the management, safety,care,

and cleanliness of the grounds, the parking and unloading of vehicles andthe

preservation of good order, as well as for the convenience of otheroccupants

or tenants of the Building and the Industrial Center and their invitees.

41.  SECURITY MEASURES.  Tenant hereby acknowledges that the rental payableto

Landlord hereunder does not include the cost of guard service or other

security measures, and that Landlord shall have no obligation whatsoeverto

provide same. Tenant assumes all responsibility for the protection of the

Premises, Tenant, its agents and invitees and their property from the actsof

third parties.

42.  RESERVATIONS.  Landlord reserves the right, from time to time, togrant,

without the consent or joinder of Tenant, such easements, rights of way,

utility raceways, and dedications that Landlord deems necessary, and tocause

the recordation of parcel maps and restrictions, so long as sucheasements,

rights of way, utility raceways, dedications, maps and restrictions donot

materially interfere with the use of the Premises by Tenant. Tenant agreesto

sign any documents reasonably requested by Landlord to effectuate anysuch

easement rights, dedication, map or restrictions.

43.  PERFORMANCE UNDER PROTEST.  If at any time a dispute shall arise asto

any amount or sum of money to be paid by one Party to the other under the

provisions hereof, the Party against whom the obligation to pay the moneyis

asserted shall have the right to make payment "under protest" and such

payment shall not be regarded as a voluntary payment and there shallsurvive

the right on the part of said Party to institute suit for recovery ofsuch

sum.  If it shall be adjudged that there was no legal obligation on thepart

of said Party to pay such sum or any part thereof, said Party shall be

entitled to recover such sum or so much thereof as it was not legally

required to pay under the

 

                                    --20--              Initials /s/ MB /JED

                                                                 ------------

<PAGE>

provisions of this Lease.

44.  AUTHORITY. If either Party hereto is a corporation, trust, limited

liability company, or general or limited partnership, each individual

executing this Lease on behalf of such entity represents and warrants thathe

or she is duly authorized to execute and deliver this Lease on it behalf.If

Tenant is a corporation, limited liability company, trust or partnership,

Tenant shall, within thirty (30 days after request by Landlord, deliverto

Landlord evidence satisfactory to Landlord of such authority.

45.  CONFLICT. Any conflict between the printed provisions of this Leaseand

the typewritten or handwritten provisioins shall be controlled by the

typewritten or handwritten provisions.

46.  OFFER. Preparation of this Lease by either Landlord or Tenant or

Landlord's agent or Tenant's agent and submission of same to Tenant or

Landlord shall not be deemed an offer to lease. This Lease is not intendedto

be binding until executed and delivered by all Parties hereto.

47.  AMENDMENTS. This Lease may be modified only in writing, signed bythe

parties in interest at the time of the modification. The Parties shallamend

this Lease from time to time to reflect any adjustments that are made tothe

Base Rent or other rent payable under this Lease. As long as they do not

materially change Tenant's obligations or RIGHTS hereunder, Tenant agreesto

make such reasonable non-monetary modification to this Lease as may be

reasonably required by an institutional insurance company or pension plan

Lender in connection with the obtaining of normal financing or refinancingof

the property of which the Premises are a part.

48.  MULTIPLE PARTIES. Except as otherwise expressly provided herein, ifmore

    than one person or entity is named herein as either Landlord orTenant,

    the obligations of such multiple parties shall be the joint andseveral

    responsibility of all persons or entities named herein as suchLandlord

    or Tenant.

49.  TENANT IMPROVEMENTS. Landlord, at Landlord's sole cost, shallconstruct

    tenant improvements based on a mutually agreeable floorplan whichshall

    be attached hereto as Exhibit B and shall consist of the following:100%

    HVAC with 2/3 office and 1/3 open manufacturing area. The officeshall

    have 15 private offices, 2 conference rooms, 1 lunchroom and an open

    office area. The balance of the premises shall be open manufacturing

    area. Standard office HVAC and electrical distribution are assumed.Any

    specialty electrical requirements of HVAC needs will be the

    responsibility of Tenant.

50.  EXPANSION OPTION. Lessee shall have the first right to offer on any

    expansion space in the building.

51.  SQUARE FOOTAGE ADJUSTMENT. Landlord and Tenant agree that the exact

    square footage of the Premises will be determined during the design

    process. The rent shall be adjusted accordingly when the floorplan is

    agreed upon and this Lease shall be amended, in writing, to reflectthe

    actual square footage.

LANDLORD AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACHTERM

AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOWTHEIR

INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, ATTHE

TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY

REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANTWITH

RESPECT TO THE PREMISES.

 

           THIS LEASE PREPARED FOR YOUR ATTORNEY'S REVIEW AND

           APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO THE

           PRESENCE OF ASBESTOS, UNDERGROUND STORAGE TANKS OR

           HAZARDOUS SUBSTANCES. NO REPRESENTATION OR

           RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL

           REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKERS

           OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE

           LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES

           OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES;

           THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF

           THEIR OWN COUNSEL AS TO THE LEGAL AND TAX

           CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY

           IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM

           THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE

           CONSULTED.

 

The parties hereto have executed this Lease at the place and on the dates

specified above their respective signatures.

 

 

Executed at: Fremont, CA                         Executed at: ALBUQUERQUE,NM

             -----------------------                          -----------------

 

                                    --21--              Initials /s/ MB /JED

                                                                 ------------

<PAGE>

 

on:  9/22/99                                on: SEPTEMBER 17, 1999

   -------------------------                    -------------------------------

 

By Landlord:                                By Tenant: SBS TECHNOLOGIES,INC.

B-L NEWARK 3175, LLC

 

By: /s/ MB                                  By: /s/ J.E. Dixon

   --------------------------                  --------------------------------

Name Printed: Marc Barkdull                 Name Printed: J.E. Dixon

                                                         ----------------------

Title: Manager                              Title: V.P. FINANCE &ADMINISTRATION

                                                  ------------------------------

 

Address:  4175 Business Center Drive        Address:   2400 LOUISIANA BLVD.NE

          Fremont, CA 94538                            AFC 5, SUITE 600

                                                       ALBUQUERQUE, NM87110

Telephone: (510) 226-6957                   Telephone: (505) 875-0600

                                                            -------------------

Facsimile: (510) 226-6905                   Facsimile: (505) 875-0404

                                                            -------------------

 

                                    --22--              Initials /s/ MB /JED

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