exhibit1015.htm


     

    
       

      
         


        
          

        

      

       

    

    EXHIBIT
10.15

    AIR
COMMERCIAL REAL ESTATE ASSOCIATION

     

    STANDARD
INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — NET

     

    (DO
NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

     

    
      	
              1.

            	
              Basic
      Provisions (“Basic Provisions”).

            


    

     

    1.1           Parties: This Lease (“Lease”), dated for reference
purposes only September
20,
2005                          
, is made by and between KML
Fremont Investors LLC                                             
(“Lessor”) and MERIX
San Jose, Inc., “A California Corporation”                                                                    
                                                                                                                                                    
(“Lessee”),
(collectively the “Parties,” or individually a
“Party”).

     

    1.2           Premises: That certain real
property, including all improvements therein or to be provided by Lessor under
the terms of this Lease, and
commonly known as 340
Turtle Creek Court                           
, located in the County of Santa
Clara                                      
, State of California                                          ,
and generally described as (describe briefly the nature of the property and, if
applicable, the “Project”, if the property is
located within a Project) Approximately
13,566 Square Feet of building on approximately 37,026 Square Feet of
land.                                                      
                                                                                                                                                                        
                                                                                                         
(“Premises”). (See also
Paragraph 2)

     

    1.3           Term: Five
(5)     
years and Zero
(0)    
months (“Original Term”)
commencing October 1,
2005          
(“Commencement Date”)
and ending September
30, 2010                                   
(“Expiration Date”).
(See also Paragraph 3)

     

    1.4           Early Possession: N/A                                                                                          
(“Early Possession
Date”). (See also Paragraphs 3.2 and 3.3)

     

    1.5           Base
Rent:
$11,124.00 per month (“Base
Rent”),
payable on the first          day of each month
commencing October 1,
2005                                                                          
                                                                                                                                 . (See also Paragraph
4)

     

    o If this box is checked,
there are provisions in this Lease for the Base Rent to be
adjusted.

     

    1.6           Base
Rent and Other Monies Paid Upon Execution:

     

    
      	
               
      

            	
              (a)

            	
              Base Rent: $11,124.00        for the period October
      2005                                         

            


    

    
      	
               
      

            	
                                                                                                                                                                                    
..

            


    

     

    
      	
               
      

            	
              (b)

            	
              Security Deposit: $6,700.00         
      (“Security
      Deposit”). (See also Paragraph
5)

            


    

     

    
      	
               
      

            	
              (c)

            	
              Association Fees: $                       
      for the period                                                  

            


    

     

    
      	
               
      

            	
              (d)

            	
              Other: $                    
      for                                                                                          

            


    

    
      	
               
      

            	
                                                                                                                                                                                    
..

            


    

     

    
      	
               
      

            	
              (e)

            	
              Total Due Upon Execution of
      this Lease: $ 11,124.00                                  
      .

            


    

     

    1.7           Agreed
Use: Administrative offices,
record storage and other allied
permitted uses.

     

                                                                                                                                    
.. (See also Paragraph 6)

    
      	 
      	 
      	 
      
	
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    1.8           Insuring Party: Lessor is the
“Insuring Party” unless
otherwise stated herein. (See also Paragraph 8)

     

    1.9           Real Estate Brokers: (See also
Paragraph 15)

     

    (a) Representation: The following
real estate brokers (the “Brokers”) and brokerage
relationships exist in this transaction (check applicable boxes):

     

    o                                                                                         represents Lessor
exclusively (“Lessor’s
Broker”);

     

    o                                                                                   represents Lessee
exclusively (“Lessee’s
Broker”);
or

     

    o                                                                                      represents both Lessor
and Lessee (“Dual
Agency”).

    (b) Payment to Brokers: Upon
execution and delivery of this Lease by both Parties, Lessor shall pay to the
Broker the fee agreed to in their separate written agreement (or if there is no
such agreement, the sum of _________________ or ___________ % of the total Base
Rent) for the brokerage services rendered by the Brokers.

     

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

    1.11           Attachments. Attached hereto
are the following, all of which constitute a part of this Lease:

     

    þ an Addendum consisting
of Paragraphs 51                          through
53                    
;

     

    þ a plot plan depicting
the Premises;

     

    o a current set of the
Rules and Regulations;

     

    o a Work
Letter;

     

    þ other (specify):
Landlord
agreement (KML Fremont Investors LLC) Wachevia Bank                                    

     

                                                                                                                                                                            

     

                                                                                                                                                                           .

     

    2.           Premises.

     

    2.1           Letting. Lessor hereby leases
to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term,
at the rental, and
upon all of the terms, covenants and conditions set forth in this Lease. Unless
otherwise provided herein, any statement of size set forth in this Lease, or
that may have been used in calculating Rent, is an approximation which the
Parties agree is reasonable and any
payments based thereon are not subject to revision whether or not the actual
size is more or less. Note:
Lessee is advised to verify the actual size prior to executing this
Lease.

    
      	 
      	 
      	 
      
	
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    2.2           Condition. Lessor shall
deliver the Premises to Lessee broom clean and free of debris on the
Commencement Date or the Early Possession Date, whichever first occurs (“Start Date”), and, so long as
the required service contracts described in Paragraph 7.1(b) below are obtained
by Lessee and in effect within thirty days following the Start Date, warrants
that the existing electrical, plumbing, fire sprinkler, lighting, heating,
ventilating and air conditioning systems (“HVAC”). loading doors, sump pumps, if
any, and all other such elements in the Premises, other than those constructed
by Lessee, shall be in good operating
condition on said date and that the structural elements of the roof, bearing
walls and foundation of any buildings on the Premises (the “Building”) shall be
free of material defects. If a non-compliance with said warranty exists as of
the Start Date, or if one of such systems or elements should malfunction or fail
within the appropriate warranty period, Lessor shall, as Lessor’s sole
obligation with respect to such matter, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, malfunction or
failure, rectify same at Lessor’s expense. The warranty periods shall be as
follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to the
remaining systems and other elements of the Building. If Lessee does not give
Lessor the required notice within the appropriate warranty period, correction
of any such
non-compliance, malfunction or failure shall be the obligation of Lessee at
Lessee’s sole cost and expense.

     

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

     

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

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

     

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

     

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

     

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

     

    3.           Term.

     

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

     

    3.2           Early Possession. If Lessee
totally or partially occupies the Premises prior to the Commencement Date, the
obligation to pay Base Rent shall be abated for the period of such early
possession. All other terms of this Lease (including but not-limited to the
obligations to pay Real Property Taxes and insurance premiums and to maintain
the Premises) shall, however, be in effect during such period. Any such early
possession shall not affect the Expiration Date.

    
      	 
      	 
      	 
      	 
      
	
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    3.3           Delay in Possession. Lessor
agrees to use its best commercially reasonable efforts to deliver possession of
the Premises to Lessee by the Commencement Date. If, despite, said efforts,
Lessor is unable to deliver possession by such date, Lessor shall not be subject
to any liability therefor, nor shall such failure affect the validity of this
Lease. Lessee shall not, however, be obligated to pay Rent or perform its other
obligations until Lessor delivers possession of the Premises and any period of
rent abatement that Lessee would otherwise have enjoyed shall run from the date
of delivery of possession and continue for a period equal to what Lessee would
otherwise have enjoyed under the terms hereof, but minus any days of delay
caused by the acts or omissions of Lessee. If possession is not delivered within
60 days after the Commencement Date, Lessee may, at its option, by notice in
writing within 10 days after the end of such 60 day period, cancel this Lease,
in which event the Parties shall be discharged from alI obligations hereunder.
If such written notice is not received by Lessor within said 10 day period,
Lessee’s right to cancel shall terminate. If possession of the Premises is not
delivered within 120 days after the Commencement Date, this Lease shall
terminate unless other agreements are reached between Lessor and Lessee, in
writing.

     

    3.4           Lessee Compliance. Lessor
shall not be required to deliver possession of the Premises to Lessee until
Lessee complies with its obligation to provide evidence of insurance (Paragraph
8.5). Pending delivery of such evidence, Lessee shall be required to perform all
of its obligations under this Lease from and after the Start Date, including the
payment of Rent, notwithstanding Lessor’s election to withhold possession
pending receipt of such evidence of insurance. Further, if Lessee is required to
perform any other conditions prior to or concurrent with the Start Date, the
Start Date shall occur but Lessor may elect to withhold possession until such
conditions are satisfied.

     

    4.           Rent.

     

    4.1.           Rent Defined. All monetary
obligations of Lessee to Lessor under the terms of this Lease (except for the
Security Deposit) are deemed to be rent (“Rent”).

     

    4.2           Payment. Lessee shall cause
payment of Rent to be received by Lessor in lawful money of the United States on
or before the day on which it is due, without offset or deduction (except as
specifically permitted in this Lease). Rent for any period during the term
hereof which is for less than one full calendar month shall be prorated based
upon the actual number of days of said month. Payment of Rent shall be made to
Lessor at its address stated herein or to such other persons or place as Lessor
may from time to time designate in writing. Acceptance of a payment which is
less than the amount then due shall not be a waiver of Lessor’s rights to the
balance of such Rent, regardless of Lessor’s endorsement of
any check so stating. In the event that any check, draft, or other instrument of
payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to
pay to Lessor the sum of $25 in addition to any Late Charge and Lessor, at its
option, may require all future payments to be made by Lessee to be by cashier’s
check. Payments will be applied first to accrued late charges and attorney’s
fees, second to accrued interest, then to Base Rent and Operating Expense
Increase, and any remaining amount to any other outstanding charges or
costs.

     

    4.3           Association Fees. In addition
to the Base Rent, Lessee shall pay to Lessor each month an amount equal to any
owner’s association or condominium fees levied or assessed against the Premises.
Said monies shall be paid at the same time and in the same manner as the Base
Rent.

    
      	 
      	 
      	 
      	 
      
	
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    5.           Security Deposit. Lessee shall
deposit with Lessor upon execution hereof the Security Deposit as security for
Lessee’s faithful performance of its obligations under this Lease. If Lessee
fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply
or retain all or any portion of said Security Deposit for the payment of any
amount due Lessor or to reimburse or compensate Lessor for any liability,
expense, loss or damage which Lessor may suffer or incur by reason thereof. If
Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10 days after written request therefor deposit monies with Lessor
sufficient to restore said Security Deposit to the full amount required by this
Lease. If the Base Rent increases during the term of this Lease, Lessee shall,
upon written request from Lessor, deposit additional moneys with Lessor so that
the total amount of the Security Deposit shall at all times bear the same
proportion to the increased Base Rent as the initial Security Deposit bore to
the initial Base Rent. Should the Agreed Use be amended to accommodate a
material change in the business of Lessee or to accommodate a sublessee
or assignee, Lessor shall have the right to increase the Security Deposit to the
extent necessary, in Lessor’s reasonable judgment, to account for any Increased
wear and tear that the Premises may suffer as a result thereof. If a change in
control of Lessee occurs during this Lease and following such change the
financial condition of Lessee is, in Lessor’s reasonable judgment, significantly
reduced, Lessee shall deposit such additional monies with Lessor as shall be
sufficient to cause the Security Deposit to be at a commercially reasonable
level based on such change in financial condition. Lessor shall not be required
to keep the Security Deposit separate from its general accounts. Within 14 days
after the expiration or termination of this Lease, if Lessor elects to apply the
Security Deposit only to unpaid Rent, and otherwise within 30 days after
the Premises have
been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that
portion of the Security Deposit not used or applied by Lessor. No part of the
Security Deposit shall be considered to be held in trust, to bear interest or to
the prepayment for any monies so be paid by Lessee under this
Lease.

     

    6.           Use.

     

    6.1           Use. Lessee shall use
and occupy the Premises only for the Agreed Use, or any other legal use which is
reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful, creates damage,
waste or a nuisance, or that
disturbs occupants of or causes damage to neighboring premises or properties.
Lessor shall not unreasonably withhold a delay its consent to
any written request for a modification of the Agreed Use, so long as the same
will not impair the structural integrity of the improvements on the Premises or
the mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall
within 7 days after such request give written notification of same, which notice
shall include an explanation of Lessor’s objections to the change in the Agreed
Use.

    
      	 
      	 
      	 
      	 
      
	
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    6.2           Hazardous
Substances.

     

    (a) Reportable Uses Require
Consent. The term “Hazardous Substance” as used
in this Lease shall mean any product, substance, or waste whose presence, use,
manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either: (i)
potentially injurious to the public health, safety or welfare, the environment
or the Premises, (ii) regulated or monitored by any governmental authority, or
(iii) a basis for potential liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.
Lessee shall not engage in any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee’s expense) with all
Applicable Requirements. “Reportable Use” shall mean (I) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use,
transportation, or disposal of a Hazardous Substance
that requires a permit from, or with respect to which a report, notice,
registration or business plan is required to be filed with, any governmental
authority, and/or (iii) the presence at the Premises of a Hazardous Substance
with respect to which, any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing. Lessee may use any ordinary and customary
materials reasonably required to be used in the normal course of the Agreed Use,
ordinary office supplies (copier toner, liquid paper, glue, etc.) and common
household cleaning materials, so long as such use is in compliance with all
Applicable Requirements, is not a Reportable use, and does not expose
the Premises or neighboring property to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor. In addition, Lessor may
condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public,
the Premises and/or the environment against damage, contamination, injury and/or
liability, including, but not limited to, the installation (and removal on or
before Lease expiration or termination) of protective modifications (such as
concrete encasements) and/or increasing the Security Deposit.

     

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

     

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

    
      	 
      	 
      	 
      
	
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    (d) Lessee Indemnification.
Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders
and ground lessor, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties, and
attorneys’ and consultants’ fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee, or any third party
(provided, however, that Lessee shall have no liability under this Lease with
respect to underground migration of any Hazardous Substance under the Premises
from adjacent properties not caused or contributed to by Lessee). Lessee’s
obligations shall Include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances, unless specifically so agreed by Lessor in
writing at the time of such agreement.

     

    (e) Lessor Indemnification.
Lessor and its successors and assigns shall indemnify, defend, reimburse and
hold Lessee, its employees and lenders, harmless from and against any and all
environmental damages, including the cost of remediation, which result from
Hazardous Substances which existed on the Premises prior to Lessee’s occupancy
or which are caused by the gross negligence or willful misconduct of Lessor, its
agents or employees. Lessor’s obligations, as and when required by the
Applicable Requirements, shall include, but not be limited to, the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease.

     

    (f) Investigations and
Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having
jurisdiction with respect to the existence of Hazardous Substances on the
Premises prior to Lessee’s occupancy, unless such remediation measure is
required as a result of Lessee’s use (including “Alterations”, as defined in
paragraph 7.3(a) below) of the Premises, in which event Lessee shall be
responsible for such payment. Lessee shall cooperate fully in any such
activities at the request of Lessor, including allowing Lessor and Lessor’s
agents to have reasonable access to the Premises at reasonable times in order to
carry out Lessor’s investigative and remedial responsibilities.

     

    (g) Lessor Termination Option.
If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term
of this Lease, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by the
Applicable Requirements and this Lease shall continue in full force and effect,
but subject to Lessor’s rights under Paragraph 6.2(d) and Paragraph 13), Lessor
may, at Lessor’s option, either (i) investigate and remediate such Hazardous
Substance Condition, if required, as soon as reasonably possible at Lessor’s
expense, in which event this Lease shall continue in full force and effect, or
(ii) if the estimated cost to remediate such condition exceeds 12 times the then
monthly Base Rent or $100,000, whichever is greater, give written notice to
Lessee, within 30 days after receipt by Lessor of knowledge of the occurrence of
such Hazardous Substance Condition, of Lessor’s desire to terminate this Lease
as of the date 60 days following the date of such notice. In the event Lessor
elects to give a termination notice, Lessee may, within 10 days thereafter, give
written notice to Lessor of Lessee’s commitment to pay the amount by which the
cost of the remediation of such Hazardous Substance Condition exceeds an amount
equal to 12 times the then monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within 30 days following such commitment. In such event, this Lease shall
continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time provided, this Lease shall terminate as of the
date specified in Lessor’s notice of termination.

    
      	 
      	 
      	 
      
	
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    6.3           Lessee’s Compliance with Applicable
Requirements. Except as otherwise provided in this Lease, Lessee shall,
at Lessee’s sole expense, fully, diligently and in a timely manner, materially
comply with all Applicable Requirements, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor’s
engineers and/or consultants which relate in any manner to the such
Requirements, without regard to whether such Requirements are now in effect or
become effective after the Start Date. Lessee shall, within 10 days after
receipt of Lessor’s written request, provide Lessor with copies of all permits
and other documents, and other information evidencing Lessee’s compliance with
any Applicable Requirements specified by Lessor, and shall immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with
any Applicable Requirements.

     

    6.4           Inspection; Compliance. Lessor
and Lessor’s “Lender” (as defined in Paragraph 30) and consultants shall have
the right to enter into Premises at any time, in the case of an emergency, and
otherwise at reasonable times after reasonable notice, for the purpose of
inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease. The cost of any such inspections shall be paid by Lessor,
unless a vidation of Applicable Requirements, or a Hazardous Substance Condition
(see paragraph 9.1) is found to exist or be imminent, or the inspection is
requested or ordered by a governmental authority. In such case, Lessee shall
upon request reimburse Lessor for the cost of such inspection, so long as such
inspection is reasonably related to the violation or contamination. In addition,
Lessee shall provide copies of all relevant material safety data sheets (MSDS)
to Lessor within 10 days of the receipt of a written request
therefor.

     

    
      	
              7.

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

            


    

     

    
      	
               
      

            	
              7.1

            	
              Lessee’s
      Obligations.

            


    

     

    (a) In General. Subject to the
provisions of Paragraph 2.2. (Condition), 2.3 (Compliance).

    6.3
(Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations),
9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole
expense, keep the Premises, Utility installations (intended for Lessee’s
exclusive use, no matter where located), and Alterations in good order,
condition and repair (whether or not the portion of the Premises requiring
repairs, or the means of repairing the same, are reasonably or readily
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee’s use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing. HVAC equipment, electrical, lighting facilities, boilers,
pressure vessels, fire protection system, fixtures, walls (interior and
exterior), foundations, ceilings, roofs, roof drainage systems, floors, windows,
doors, plate glass, skylights, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located in, on, or adjacent to
the Premises. Lessee, in keeping the Premises in good order, condition and
repair, shall exercise and perform good maintenance practices, specifically
including the procurement and maintenance of the service contracts required by
Paragraph 7.1(b) below. Lessee’s obligations shall include restorations,
replacements or renewals when necessary to keep the Premises and all
improvements thereon or a part thereof in good order, condition and state of
repair. Lessee shall, during the term of this Lease, keep the exterior
appearance of the Building in a first-class condition (including, e.g. graffiti
removal) consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the exterior
repainting of the Building.

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

     

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

     

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

     

    7.2           Lessor’s Obligations. Subject
to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 9 (Damage or
Destruction) and 14 (Condemnation), it is intended by the Parties hereto that
Lessor have no obligation, in any manner whatsoever, to repair and maintain the
Premises, or the equipment therein, all of which obligations are intended to be
that of the Lessee. It is the intention of the Parties that the terms of this
Lease govern the respective obligations of the Parties as to maintenance and
repair of the Premises, and they expressly waive the benefit of any statute now
or hereafter in effect to the extent it is inconsistent with the terms of this
Lease.

     

    7.3           Utility
Installations; Trade Fixtures; Alterations.

     

    (a) Definitions. The term
“Utility Installations”
refers to all floor and window coverings, air and/or vacuum lines, power panels,
electrical distribution, security and fire protection systems, communication
cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the
Premises. The term “Trade
Fixtures” shall mean Lessee’s machinery and equipment that can be removed
without doing material damage to the Premises. The term “Alterations” shall mean any
modification of the improvements, other than Utility Installations or Trade
Fixtures, whether by addition or deletion. “Lessee Owned Alterations and/or
Utility Installations” are defined as Alterations and/or Utility
Installations made by Lessee that are not yet owned by Lessor pursuant to
Paragraph 7.4(a).

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

     

    (c) Liens; Bonds. Lessee shall
pay, when due, all claims for labor or materials furnished or alleged to have
been furnished to or for Lessee at or for use on the Premises, which claims are
or may be secured by any mechanic’s or materialmen’s lien against the Premises
or any interest therein. Lessee shall give Lessor not less than 10 days notice
prior to the commencement of any work in, on or about the Premises, and Lessor
shall have the right to post notices of non-responsibility. If Lessee shall
contest the validity of any such lien, claim or demand, then Lessee shall, at
its sole expense defend and protect itself. Lessor and the Premises against the
same and shall pay and satisfy any such adverse judgment that may be rendered
thereon before the enforcement thereof. If Lessor shall require, Lessee shall
furnish a surety bond in an amount equal to 150% of the amount of such contested
lien, claim or demand, indemnifying Lessor against liability for the same. If
Lessor elects to participate in any such action, Lessee shall pay Lessor’s
attorneys’ fees and costs.

     

    7.4           Ownership;
Removal; Surrender; and Restoration.

     

    (a) Ownership. Subject to
Lessor’s right to require removal or elect ownership as hereinafter provided,
all Alterations and Utility Installations made by Lessee shall be the property
of Lessee, but considered a part of the Premises. Lessor may, at any time, elect
in writing to be the owner of all or any specified part of the Lessee Owned
Alterations and Utility Installations. Unless otherwise instructed per paragraph
7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at
the expiration or termination of this Lease, become the property of Lessor and
be surrendered by Lessee with the Premises.

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

     

    (c) Surrender; Restoration.
Lessee shall surrender the Premises by the Expiration Date or any earlier
termination date, with all of the improvements, parts and surfaces thereof broom
clean and free of debris, and in good operating order, condition and state of
repair, ordinary wear and tear excepted. “Ordinary wear and tear” shall not
include any damage or deterioration that would have been prevented by good
maintenance practice. Notwithstanding the foregoing, if this Lease is for 12
months or less, then Lessee shall surrender the Premises in the same condition
as delivered to Lessee on the Start Date with NO allowance for ordinary wear and
tear. Lessee shall repair any damage occasioned by the installation, maintenance
or removal of Trade Fixtures, Lessee owned Alterations and/or Utility
installations, furnishings, and equipment as well as the removal of any storage
tank installed by or for Lessee. Lessee shall completely remove from the
Premises any and all Hazardous Substances brought onto the Premises by or for
Lessee, or any third party (except Hazardous Substances which were deposited via
underground migration from areas outside of the Premises, or if applicable, the
Project) even if such removal would require Lessee to perform or pay for work
that exceeds statutory requirements. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. Any personal property of Lessee not
removed on or before the Expiration Date or any earlier termination date shall
be deemed to have been abandoned by Lessee and may be disposed of or retained by
Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises
pursuant to this Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26
below.

     

    8.           Insurance;
Indemnity.

     

    8.1           Payment For Insurance. Lessee
shall pay for all insurance required under Paragraph 8 except to the extent of
the cost attributable to liability insurance carried by Lessor under Paragraph
8.2(b) in excess of $2,000,000 per occurrence. Premiums for policy periods
commencing prior to or extending beyond the Lease term shall be prorated to
correspond to the Lease term. Payment shall be made by Lessee to Lessor within
10 days following receipt of an invoice.

     

    8.2           Liability
Insurance.

     

    (a) Carried by Lessee. Lessee
shall obtain and keep in force a Commercial General Liability policy of
insurance protecting Lessee and Lessor as an additional insured against claims
for bodily injury, personal injury and property damage based upon or arising out
of the ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $1,000,000 per occurrence with
an annual aggregate of not less than $2,000,000, an “Additional Insured-Managers
or Lessors of Premises Endorsement” and contain the “Amendment of the Pollution
Exclusion Endorsement” for damage caused by heat, smoke or fumes from a hostile
fire. The policy shall not contain any intra-insured exclusions as between
insured persons or organizations, but shall include coverage for liability
assumed under this Lease as an “insured contract” for the performance of
Lessee’s indemnity obligations under this Lease. The limits of said insurance
shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. All insurance carried by Lessee shall be primary to and
not contributory with any similar insurance carried by Lessor, whose insurance
shall be considered excess insurance only.

     

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

    
      	
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    8.3           Property
Insurance - Building, Improvements and Rental Value.

     

    (a) Building and Improvements.
The Insuring Party shall obtain and keep in force a policy or policies in the
name of Lessor, with loss payable to Lessor, any ground-lessor, and to any
Lender insuring loss or damage to the Premises. The amount of such insurance
shall be equal to the full replacement cost of the Premises, as the same shall
exist from time to time, or the amount required by any Lender, but in no event
more than the commercially reasonable and available insurable value thereof. If
Lessor is the Insuring Party, however, Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee’s personal property shall be insured
by Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is
available and commercially appropriate, such policy or policies shall insure
against all risks of direct physical loss or damage (except the perils of flood
and/or earthquake unless required by a Lender), including coverage for debris
removal and the enforcement of any Applicable Requirements requiring the
upgrading, demolition, reconstruction or replacement of any portion of the
Premises as the result of a covered loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss.

     

    (b) Rental Value. The Insuring
Party shall obtain and keep in force a policy a policies in the name of Lessor
with loss payable to Lessor and any Lender, Insuring the loss of the full Rent
for one year with an extended period of indemnity for an additional 180 days
(“Rental Value insurance”). Said insurance shall contain an agreed valuation
provision in lieu of any coinsurance clause, and the amount of coverage shall be
adjusted annually to reflect the projected Rent otherwise payable by Lessee, for
the next 12 month period. Lessee shall be liable for any deductible amount in
the event of such loss.

     

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

     

    8.4           Lessee’s
Property; Business Interruption Insurance.

     

    (a) Property Damage. Lessee
shall obtain and maintain insurance coverage on all of Lessee’s personal
property, Trade Fixtures, and Lessee Owned Alterations, and Utility
Installations. Such insurance shall be full replacement cost coverage with a
deductible of not to exceed $1,000 per occurrence. The proceeds from any such
insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in
force.

     

    (b) Business Interruption.
Lessee shall obtain and maintain loss of income and extra expense insurance in
amounts as will reimburse Lessee for direct or indirect loss of earnings
attributable to all perils commonly insured against by prudent lessees in the
business of Lessee or attributable to prevention of access to the Premises as a
result of such perils.

     

    (c) No Representation of Adequate
Coverage. Lessor makes no representation that the limits or forms of
coverage of insurance specified herein are adequate to cover Lessee’s property,
business operations or obligations under this Lease.

    
      	 
      	 
      	 
      
	
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    8.5           Insurance Policies. Insurance
required herein shall be by companies duly licensed or admitted to transact
business in the state where the Premises are located, and maintaining during the
policy term a “General Policyholders Rating” of at least B+, V, as set forth in
the most current issue of “Best’s Insurance Guide”, or such other rating as may
be required by a Lender. Lessee shall not do or permit to be done anything which
invalidates the required insurance policies. Lessee shall, prior to the Start
Date, deliver to Lessor certified copies at policies of such insurance or
certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after 30 days
prior written notice to Lessor. Lessee shall, at least 30 days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
“insurance binders” evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to procure and
maintain the same.

     

    8.6           Waiver of Subrogation. Without
affecting any other rights or remedies. Lessee and Lessor each hereby release
and relieve the other, and waive their entire right to recover damages against
the other, for loss of or damage to its property arising out of or incident to
the perils required to be insured against herein. The effect of such releases
and waivers is not limited by the amount of insurance carried or required, or by
any deductibles applicable hereto. The Parties agree to have their respective
property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.

     

    8.7           Indemnity. Except for Lessor’s
gross negligence or willful misconduct, Lessee shall indemnify, protect, defend
and hold harmless the Premises, Lessor and its agents, Lessor’s master or ground
lessor, partners and Lenders, from and against any and all claims, loss of rents
and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the use and/or occupancy of the Premises by Lessee. If any action or proceeding
is brought against Lessor by reason of any of the foregoing matters, Lessee
shall upon notice defend the same at Lessee’s expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense.
Lessor need not have first paid any such claim in order to be defended or
indemnified.

     

    8.8           Exemption of Lessor from
Liability. Lessor shall not be liable for injury or damage to the person
or goods, wares, merchandise or other property of Lessee, Lessee’s employees,
contractors, invitees, customers, or any other person in or about the Premises,
whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or
lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises or upon other portions of the
building of which the Premises are a part, or from other sources or places.
Lessor shall not be liable for any damages arising from any act or neglect of
any other tenant of Lessor nor from the failure of Lessor to enforce the
provisions of any other lease in the Project. Notwithstanding Lessor’s
negligence or breach of this Lease, Lessor shall under no circumstances be
liable for injury to Lessee’s business or for any loss of income or profit
therefrom.

    
      	 
      	 
      	 
      
	
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    8.9           Failure to Provide Insurance.
Lessee acknowledges that any failure on its part to obtain or maintain the
insurance required herein will expose Lessor to risks and potentially cause
Lessor to incur costs not contemplated by this Lease, the extent of which will
be extremely difficult to ascertain. Accordingly, for any month or portion
thereof that Lessee does not maintain the required Insurance and/or does not
provide Lessor with the required binders or certificates evidencing the
existence of the required insurance, the Base Rent shall be automatically
increased, without any requirement for notice to Lessee, by an amount equal to
10% of the then existing Base Rent or $100, whichever is greater. The parties
agree that such increase in Base Rent represents fair and reasonable
compensation for the additional risk/ costs that Lessor will incur by reason of
Lessee’s failure to maintain the required insurance. Such increase in Base Rent
shall in no event constitute a waiver of Lessee’s Default or Breach with respect
to the failure to maintain such insurance, prevent the exercise of any of the
other rights and remedies granted hereunder, nor relieve Lessee of its
obligation to maintain the insurance specified in this Lease.

     

    9.           Damage
or Destruction.

     

    9.1           Definitions.

     

    (a)
“Premises Partial
Damage” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owed Alterations and Utility Installations, which
can reasonably be repaired in 6 months or less from the date of the damage or
destruction. Lessor shall notify Lessee in writing within 30 days from the date
of the damage or destruction as to whether or not the damage is Partial or
Total.

     

    (b)
“Premises Total
Destruction” shall mean damage or destruction to the Premises, other than
Lessee Owned Alterations and Utility Installations and Trade Fixtures, which
cannot reasonably be repaired in 6 months or less from the date of the damage or
destruction. Lessor shall notify Lessee in writing within 30 days from the date
of the damage or destruction as to whether or not the damage is Partial or
Total.

     

    (c)
“Insured Loss” shall
mean damage or destruction to improvements on the Premises, other than Lessee
Owned Alternations and Utility Installations and Trade Fixtures, which was
caused by an event required to be covered by the insurance described in
Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits
involved.

     

    (d)
“Replacement Cost” shall
mean the cost to repair or rebuild the improvements owned by Lessor at the time
of the occurrence to their condition existing immediately prior thereto,
including demolition, debris removal and upgrading required by the operation of
Applicable Requirements, and without deduction for depreciation.

     

    (e)
“Hazardous Substance
Condition” shall mean the occurrence or discovery of a condition
involving the presence of, or a contamination by, a Hazardous Substance as
defined in Paragraph 6.2(a). In, on, or under the Premises which requires
repair, remediation, or restoration.

    
      	 
      	 
      	 
      
	
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    9.2           Partial Damage - Insured Loss.
If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall,
at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or
Lessee Owned Alterations and Utility Installations) as soon as reasonably
possible and this Lease shall continue in full force and effect; provided,
however, that Lessee shall, at Lessor’s election, make the repair of any damage
or destruction the total cost to repair of which is $10,000 or less, and, in
such event, Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if
the required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly contribute
the shortage in proceeds (except as to the deductible which is Lessee’s
responsibility) as and when required to complete said repairs. In the event,
however, such shortage was due to the fact that, by reason of the unique nature
of the improvements, full replacement cost insurance coverage was not
commercially reasonable and available, Lessor shall have no obligation to pay
for the shortage in insurance proceeds or to fully restore the unique aspects of
the Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within 10 days following receipt of written notice
of such shortage and request therefor. If Lessor receives said funds or adequate
assurance thereof within said 10 day period, the party responsible for making
the repairs shall complete them as soon as reasonably possible and this Lease
shall remain in full force and effect. If such funds or assurance are not
received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect, or (ii) have this Lease terminate 30 days
thereafter. Lessee shall not be entitled to reimbursement of any funds
contributed by Lessee to repair any such damage or destruction. Premises Partial
Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.

     

    9.3           Partial Damage - Uninsured
Loss. If a Premises Partial Damage that is not an Insured Loss occurs,
unless caused by a negligent or willful act of Lessee (in which event Lessee
shall make the repairs at Lessee’s expense). Lessor may either: (i) repair such
damage as soon as reasonably possible at Lessor’s expense, in which event this
Lease shall continue in full force and effect, or (ii) terminate this Lease by
giving written notice to Lessee within 30 days after receipt by Lessor of
knowledge of the occurrence of such damage. Such termination shall be effective
60 days following the date of such notice. In the event Lessor elects to
terminate this Lease, Lessee shall have the right within 10 days after receipt
of the termination notice to give written notice to Lessor of Lessee’s
commitment to pay for the repair of such damage without reimbursement from
Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within 30 days after making such commitment. In such event this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
repairs as soon as reasonably possible after the required funds are available.
If Lessee does not make the required commitment, this Lease shall terminate as
of the date specified in the termination notice.

     

    9.4           Total Destruction.
Notwithstanding any other provision hereof, if a Premises Total Destruction
occurs, this Lease shall terminate 60 days following such Destruction. If the
damage or destruction was caused by the gross negligence or willful misconduct
of Lessee, Lessor shall have the right to recover Lessor’s damages from Lessee,
except as provided in Paragraph 8.6.

    
      	 
      	 
      	 
      
	
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    9.5           Damage Near End of Term. If at
any time during the last 6 months of this Lease there is damage for which the
cost to repair exceeds one month’s Base Rent, whether or not an Insured Loss,
Lessor may terminate this Lease effective 60 days following the date of
occurrence of such damage by giving a written termination notice to Lessee
within 30 days after the date of occurrence of such damage. Notwithstanding the
foregoing, if Lessee at that time has an exercisable option to extend this Lease
or to purchase the Premises, then Lessee may preserve this Lease by, (a)
exercising such option and (b) providing Lessor with any shortage in insurance
proceeds (or adequate assurance thereof) needed to make the repairs on or before
the earlier of (i) the date which is 10 days after Lessee’s receipt of Lessor’s
written notice purporting to terminate this Lease, or (ii) the day prior to the
date upon which such option expires. If Lessee duty exercises such option during
such period and provides Lessor with funds (or adequate assurance thereof) to
cover any shortage in insurance proceeds, Lessor shall, at Lessor’s commercially
reasonable expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee fails to exercise such
option and provide such funds or assurance during such period, then this Lease
shall terminate on the date specified in the termination notice and Lessee’s
option shall be extinguished.

     

    9.6           Abatement
of Rent; Lessee’s Remedies.

     

    (a) Abatement. In the event of
Premises Partial Damage or Premises Total Destruction or a Hazardous Substance
Condition for which Lessee is not responsible under this Lease, the Rent payable
by Lessee for the period required for the repair, remediation or restoration of
such damage shall be abated in proportion to the degree to which Lessee’s
use of the
Premises is impaired, but not to exceed the proceeds received from the Rental
Value Insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.

     

    (b) Remedies. If Lessor shall
be obligated to repair or restore the Premises and does not commence. In a
substantial and meaningful way, such repair or restoration within 90 days after
such obligation shall accrue, Lessee may, at any time prior to the commencement
of such repair or restoration, give written notice to Lessor and to any Lenders
of which Lessee has actual notice, of Lessee’s election to terminate this Lease
on a date not less than 60 days following the giving of such notice. If Lessee
gives such notice and such repair a restoration is not commenced
within 30 days thereafter, this Lease shall terminate as of the date specified
in said notice. If the repair of restoration is commenced within such 30 days,
this Lease shall continue in full force and effect. “Commence” shall mean either
the unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first
occurs.

     

    9.7           Termination; Advance Payments.
Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an
equitable adjustment shall be made concerning advance Base Rent and any other
advance payments made by Lessee to Lessor. Lessor shall, in addition, return to
Lessee so much of Lessee’s Security Deposit as has not been, or is not then
required to be, used by Lessor.

     

    9.8           Waive Statutes. Lessor and
Lessee agree that the terms of this Lease shall govern the effect of any damage
to or destruction of the Premises with respect to the termination of this Lease
and hereby waive the provisions of any present or future statute to the extent
inconsistent herewith.

    
      	 
      	 
      	 
      
	
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    10.           Real
Property Taxes.

     

    10.1           Definition. As used herein,
the term “Real Property Taxes” shall include any form of assessment; real
estate, general, special, ordinary or extraordinary, or rental levy or tax
(other than inheritance, personal income or estate taxes); improvement bond;
and/or license fee imposed upon or levied against any legal or equitable
interest of Lessor in the Premises or the Project. Lessor’s right to other
income therefrom, and/or Lessor’s business of leasing, by any authority having
the direct or indirect power to tax and where the funds are generated with
reference to the Building address and where the proceeds so generated are to be
applied by the city, county or other local taxing authority of a jurisdiction
within which the Premises are located. Real Property Taxes shall also include
any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed
by reason of events occurring during the term of this Lease, including but not
limited to, a change in the ownership of the Premises, and (ii) levied or
assessed on machinery or equipment provided by Lessor to Lessee pursuant to this
Lease.

     

    10.2           Payment of Taxes. In addition
to Base Rent, Lessee shall pay to Lessor an amount equal to the Real Property
Tax installment due at least 20 days prior to the applicable delinquency date.
If any such installment shall cover any period of time prior to or after the
expiration or termination of this Lease, Lessee’s share of such installment
shall be prorated. In the event Lessee incurs a late charge on any Rent payment,
Lessor may estimate the current Real Property Taxes, and require that such taxes
be paid in advance to Lessor by Lessee monthly in advance with the payment of
the Base Rent. Such monthly payments shall be an amount equal to the amount of
the estimated installment of taxes divided by the number of months remaining
before the month in which said installment becomes delinquent. When the actual
amount of the applicable tax bill is known, the amount of such equal monthly
advance payments shall be adjusted as required to provide the funds needed to
pay the applicable taxes. If the amount collected by Lessor is insufficient to
pay such Real Property Taxes when due. Lessee shall pay Lessor, upon demand,
such additional sum as is necessary. Advance payments may be intermingled with
other moneys of Lessor and shall not bear interest. In the event of a Breach by
Lessee in the performance of its obligations under this Lease, then any such
advance payments may be treated by Lessor as an additional Security
Deposit.

     

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

     

    10.4           Personal Property Taxes.
Lessee shall pay, prior to delinquency, all taxes assessed against and levied
upon Lessee Owned Alterations, Utility Installations, Trade Fixtures,
furnishings, equipment and all personal property of Lessee. When possible,
Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade
Fixtures, furnishings, equipment and all other personal property to be assessed
and billed separately from the real property of Lessor. If any of Lessee’s said
property shall be assessed with
Lessor’s real property, Lessee shall pay Lessor the taxes attributable to
Lessee’s property within 10 days after receipt of a written statement setting
forth the taxes applicable to Lessee’s property.

     

    11.           Utilities and Services. Lessee
shall pay for all water, gas, heat, light, power, telephone, trash disposal and
other Utilities and services supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered of billed to Lessee,
Lessee shall pay a reasonable proportion, to be determined by Lessor, of all
charges jointly metered or billed. There shall be no abatement of rent and
Lessor shall not be liable in any respect whatsoever for the inadequacy,
stoppage, interruption or discontinuance of any utility or service due to riot,
strike, labor dispute, breakdown, accident, repair or other cause beyond Lessors
reasonable control or in cooperation with governmental request or
directions.

    
      	 
      	 
      	 
      
	
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    12.           Assignment
and Subletting.

     

    12.1           Lessor’s
Consent Required.

     

    (a)
Lessee shall not voluntarily or by operation of law assign, transfer, mortgage
or encumber (collectively, “assign or assignment”) or sublet all or any part of
Lessee’s interest in this Lease or in the Premises without Lessor’s prior
written consent.

     

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

     

    (c) The
involvement of Lessee or its assets in any transaction, or series of
transactions (by way of merger, sale, acquisition, financing, transfer,
leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee’s assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of this execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was of is greater, shall be considered an
assignment of this Lease to which Lessor may withhold its consent. “Net Worth of
Lessee” shall mean the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles.

     

    (d) An
assignment or subletting without consent shall, at Lessor’s option, be a Default
curable after notice per Paragraph 13.1(c), or a noncurable Breach without the
necessity of any notice and grace period. If Lessor elects to treat such
unapproved assignment or subletting as a noncurable Breach, Lessor may either:
(i) terminate this Lease, or (ii) upon 30 days written notice, increase the
monthly Base Rent to 110% of the Base Rent then in effect. Further, in the event
of such Breach and rental adjustment, (i) the purchase price of any option to
purchase the Premises held by Lessee shall be subject to similar adjustment to
110% of the price previously in effect, and (ii) all fixed and non-fixed rental
adjustments scheduled during the remainder of the Lease term shall be increased
to 110% of the scheduled adjusted rent.

     

    (e)
Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited to
compensatory damages and/or injunctive relief.

     

    12.2           Terms
and Conditions Applicable to Assignment and Subletting.

     

    (a)
Regardless of Lessor’s consent, no assignment or subletting shall: (i) be
effective without the express written assumption by such assignee or sublessee
of the obligations of Lessee under this Lease, (ii) release Lessee of any
obligations hereunder, or (iii) after the primary liability of Lessee for the
payment of Rent or for the performance of any other obligations to be performed
by Lessee.

     

    (b)
Lessor may accept Rent or performance of Lessee’s obligations from any person
other than Lessee pending approval or disapproval of an assignment. Neither a
delay in the approval or disapproval of such assignment nor the acceptance of
Rant or performance shall constitute a waiver or estoppel of Lessor’s right to
exercise its remedies for Lessee’s Default a Breach.

     

    (c)
Lessor’s consent to any assignment or subletting shall not constitute a consent
to any subsequent assignment or subletting.

     

    (d) In
the event of any Default or Breach by Lessee, Lessor may proceed directly
against Lessee, any Guarantors or anyone else responsible for the performance of
Lessee’s obligations under this Lease, including any assignee or sublessee,
without first exhausting Lessor’s remedies against any other person or entity
responsible therefor to Lessor, or any security held by Lessor.

    
      	 
      	 
      	 
      
	
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    (e) Each
request for consent to an assignment or subletting shall be in writing,
accompanied by information relevant to Lessor’s determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $500 as
consideration for Lessor’s considering and processing said request. Lessee
agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested. (See also Paragraph
36)

     

    (f) Any
assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment or entering into such sublease, be deemed to have assumed and agreed
to conform and comply with each and every term, covenant, condition and
obligation herein to be observed or performed by Lessee during the term of said
assignment or sublease, other than such obligations as are contrary to or
inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.

     

    (g)
Lessor’s consent to any assignment or subletting shall not transfer to the
assignee or sublessee any Option granted to the original Lessee by this Lease
unless such transfer is specifically consented to by Lessor in writing. (See
Paragraph 39.2)

     

    12.3           Additional Terms and Conditions
Applicable to Subletting. The following terms and conditions shall apply
to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly
incorporated therein:

     

    (a)
Lessee hereby assigns and transfers to Lessor all of Lessee’s Interest in all
Rent payable on any sublease, and Lessor may collect such Rent and apply same
toward Lessee’s obligations under this Lease; provided, however, that until a
Breach shall occur in the performance of Lessee’s obligations, Lessee may
collect said Rent. In the event that the amount collected by Lessor exceeds
Lessee’s obligations any such excess shall be refunded to Lessee. Lessor shall
not, by reason of the foregoing or any assignment of such sublease, nor by
reason of the collection of Rent, be deemed liable to the sublessee for any
failure of Lessee to perform and comply with any of Lessee’s obligations to such
sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor staling that a Breach exists in the
performance of Lessee’s obligations under this Lease, to pay to Lessor all Rent
due and to become due under the sublease. Sublessee shall rely upon any such
notice from Lessor and shall pay all Rents to Lessor without any obligation or
right to inquire as to whether such Breach exists, notwithstanding any claim
from Lessee to the contrary.

     

    (b) In
the event of a Breach by Lessee, Lessor may, at its option, require sublessee to
altorn to Lessor, in which event Lessor shall undertake the obligations of the
sublessor under such sublease from the time of the exercise of said option to
the expiration of such sublease; provided, however, Lessor shall not be liable
for any prepaid rents or security deposit paid by such sublessee to such
sublessor or for any prior Defaults or Breaches of such sublessor.

     

    (c) Any
matter requiring the consent of the sublessor under a sublease shall also
require the consent of Lessor.

     

    (d) No
sublessee shall further assign or sublet all or any part of the Premises without
Lessor’s prior written consent.

     

    (e)
Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the
sublessee, who shall have the right to cure the Default of Lessee within the
grace period, if any, specified in such notice. The sublessee shall have a right
of reimbursement and offset from and against Lessee for any such Defaults cured
by the sublessee.

    
      	 
      	 
      	 
      
	
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    13.           Default;
Breach; Remedies.

     

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

     

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

     

    (b) The
failure of Lessee to make any payment of Rent or any Security Deposit required
to be made by Lessee hereunder, whether to Lessor or to a third party, when due,
to provide reasonable evidence of insurance or surely bond, or to fulfill any
obligation under this Lease which endangers or threatens life or property, where
such failure continues for a period of 3 business days following written notice
to Lessee.

     

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

     

    (d) A
Default by Lessee as to the terms, covenants, conditions or provisions of this
Lease, or of the rules adopted under Paragraph 40 hereof, other than those
described in subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of 30 days after written notice; provided, however, that
if the nature of Lessee’s Default is such that more than 30 days are reasonably
required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently
prosecutes such cure to completion.

     

    (e) The
occurrence of any of the following events: (i) the making of any general
arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11
U.S.C. §101 or any successor statute thereto (unless, in the case of a petition
filed against Lessee, the same is dismissed within 60 days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee’s assets located at the Premises or of Lessee’s Interest in this Lease,
where possession is not restored to Lessee within 30 days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee’s
assets located at the Premises or of Lessee’s interest in this Lease, where such
seizure is not discharged within 30 days; provided, however, in the event that
any provision of this subparagraph (e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.

     

    (f) The
discovery that any financial statement of Lessee or of any Guarantor given to
Lessor was materially false.

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

     

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

     

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

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

     

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

     

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

     

    13.4           Late Charges. Lessee hereby
acknowledges that late payment by Lessee of Rent will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor
within 5 days after such amount shall be due, then, without any requirement for
notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge
equal to 10% of each such overdue amount or $100, whichever is greater. The
Parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of such late payment.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee’s Default or Breach with respect to such overdue amount, nor prevent
the exercise of any of the other rights and remedies granted hereunder. In the
event that a late charge is payable hereunder, whether or not collected, for 3
consecutive installments of Base Rent, then notwithstanding any provision of
this Lease to the contrary. Base Rent shall, at Lessor’s option, become due and
payable quarterly in advance.

     

    13.5           Interest. Any monetary payment
due Lessor hereunder, other than late charges, not received by Lessor, when due
as to scheduled payments (such as Base Rent) or within 30 days following the
date on which it was due for non-scheduled payment, shall bear interest from the
date when due, as to scheduled payments, or the 31st day after it was due as to
non-scheduled payments. The interest (“Interest”) charged shall be computed at
the rate of 10% per annum but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4.

    
      	 
      	 
      	 
      
	
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    13.6           Breach
by Lessor.

     

    (a) Notice of Breach. Lessor shall
not be deemed in breach of this Lease unless Lessor fails within a reasonable
time to perform an obligation required to be performed by Lessor. For purposes
of this Paragraph, a reasonable time shall in no event be less than 30 days
after receipt by Lessor, and any Lender whose name and address shall have been
furnished Lessee in writing for such purpose, of written notice specifying
wherein such obligation of Lessor has not been performed; provided, however,
that if the nature of Lessor’s obligation is such that more than 30 days are
reasonably required for its performance, then Lessor shall not be in breach if
performance is commenced within such 30 day period and thereafter diligently
pursued to completion.

     

    (b) Performance by Lessee on Behalf of
Lessor. In the event that neither Lessor nor Lender cures said breach
within 30 days after receipt of said notice, or if having commenced said cure
they do not diligently pursue it to completion, then Lessee may elect to cure
said breach at Lessee’s expense and offset from Rent the actual and reasonable
cost to perform such cure, provided however, that such offset shall not exceed
an amount equal to the greater of one month’s Base Rent or the Security Deposit,
reserving Lessee’s right to seek reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to
Lessor.

     

    14.           Condemnation. If the Premises
or any portion thereof are taken under the power of eminent domain or sold under
the threat of the exercise of said power (collectively “Condemnation”), this
Lease shall terminate as to the part taken as of the date the condemning
authority takes title or possession, whichever first occurs, if more than 10% of
the Building, or more than 25% of that portion of the Premises not occupied by
any building, is taken by Condemnation, Lessee may, at Lessee’s option, to be
exercised in writing within 10 days after Lessor shall have given Lessee written
notice of such taking (or in the absence of such notice, within 10 days after
the condemning authority shall have taken possession) terminate this Lease as of
the date the condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall remain
in full force and effect as to the portion of the Premises remaining, except
that the Base Rent shall be reduced in proportion to the reduction in utility of
the Premises caused by such Condemnation. Condemnation awards and/or payments
shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be
entitled to any compensation for Lessee’s relocation expenses, loss of business
goodwill and/or Trade Fixtures, without regard to whether or not this Lease is
terminated pursuant to the provisions of this Paragraph. All Alterations and
Utility Installations made to the Premises by Lessee, for purposes of
Condemnation only, shall be considered the property of the Lessee and Lessee
shall be entitled to any and an compensation which is payable therefor. In the
event that this Lease is not terminated by reason of the Condemnation, Lessor
shall repair any damage to the Premises caused by such
Condemnation.

     

    15.           Brokerage
Fees.

     

    15.1           Additional Commission. In
addition to the payments owed pursuant to Paragraph 1.9 above, and unless Lessor
and the Brokers otherwise agree in writing, Lessor agrees that: (a) if Lessee
exercises any Option, (b) if Lessee acquires any rights to the Premises or other
premises owned by Lessor and located within the same Project, if any, within
which the Premises is located, (c) If Lessee remains in possession of the
Premises, with the consent of Lessor, after the expiration of this Lease, or (d)
if Base Rent is increased, whether by agreement or operation of an escalation
clause herein, then, Lessor shall pay Brokers a fee in accordance with the
schedule of the Brokers in effect at the time of the execution of this
Lease.

    
      	 
      	 
      	 
      
	
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    15.2           Assumption of Obligations. Any
buyer or transferee of Lessor’s interest in this Lease shall be deemed to have
assumed Lessor’s obligation hereunder. Brokers shall be third party
beneficiaries of the provisions of Paragraphs 1.9. 15, 22 and 31. If Lessor
fails to pay to Brokers any amounts due as and for brokerage fees pertaining to
this Lease when due, then such amounts shall accrue interest. In addition, if
Lessor fails to pay any amounts to Lessee’s Broker when due, Lessee’s Broker may
send written notice to Lessor and Lessee of such failure and if Lessor fails to
pay such amounts within 10 days after said notice, Lessee shall pay said monies
to its Broker and offset such amounts against Rent. In addition, Lessee’s Broker
shall be deemed to be a third party beneficiary of any commission agreement
entered into by and/or between Lessor and Lessor’s Broker for the limited
purpose of collecting any brokerage fee owed.

     

    15.3           Representations and Indemnities of
Broker Relationships. Lessee and Lessor each represent and warrant to the
other that it has had no dealings with any person, firm, broker or finder (other
than the Brokers, if any) in connection with this Lease, and that no one other
than said named Brokers is entitled to any commission or finder’s fee in
connection herewith. Lessee and Lessor do each hereby agree to indemnify,
protect, defend and hold the other harmless from and against liability for
compensation or charges which may be claimed by any such unnamed broker, finder
or other similar party by reason of any dealings or actions of the indemnifying
Party, including any costs, expenses, attorneys’ fees reasonably incurred with
respect thereto.

     

    16.           Estoppel
Certificates.

     

    (a) Each
Party (as “Responding
Party”) shall within 10 days after written notice from the other Party
(the “Requesting Party”)
execute, acknowledge and deliver to the Requesting Party a statement in writing
in form similar to the then most current “Estoppel Certificate” form
published by the AIR Commercial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.

     

    (b) If
the Responding Party shall fail to execute or deliver the Estoppel Certificate
within such 10 day period, the Requesting Party may execute an Estoppel
Certificate stating that: (i) the Lease is in full force and effect without
modification except as may be represented by the Requesting Party, (ii) there
are no uncured defaults in the Requesting Party’s performance, and (iii) if
Lessor is the Requesting Party, not more than one month’s rent has been paid in
advance. Prospective purchasers and encumbrancers may rely upon the Requesting
Party’s Estoppel Certificate, and the Responding Party shall be estopped from
denying the truth of the facts contained in said Certificate.

     

    (c) If
Lessor desires to finance, refinance, or sell the Premises, or any part thereof,
Lessee and all Guarantors shall deliver to any potential tender or purchaser
designated by Lessor such financial statements as may be reasonably required by
such lender or purchaser, including but not limited to Lessee’s financial
statements for the past 3 years. All such financial statements shall be received
by Lessor and such lender or purchaser in confidence and shall be used only for
the purposes herein set forth.

     

    17.           Definition of Lessor. The term
“Lessor” as used herein
shall mean the owner or owners at the time in question of the fee title to the
Premises, or, if this is a sublease, of the Lessee’s Interest in the prior
lease. In the event of a transfer of Lessor’s title or interest in the Premises
or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor. Except as provided in
Paragraph 15, upon such transfer or assignment and delivery of the Security
Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with
respect to the obligations and/or covenants under this Lease thereafter to be
performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon
the Lessor as hereinabove defined.

    
      	 
      	 
      	 
      
	
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    18.           Severability. The invalidity
of any provision of this Lease, as determined by a court of competent
jurisdiction, shall in no way affect the validity of any other provision
hereof.

     

    19.           Days. Unless otherwise
specifically indicated to the contrary, the word “days” as used in this Lease
shall mean and refer to calendar days.

     

    20.           Limitation on Liability. The
obligations of Lessor under this Lease shall not constitute personal obligations
of Lessor or its partners, members, directors, officers or shareholders, and
Lessee shall look to the Premises, and to no other assets of Lessor, for the
satisfaction of any liability of Lessor with respect to this Lease, and shall
not seek recourse against Lessor’s partners, members, directors, officers or
shareholders, or any of their personal assets for such
satisfaction.

     

    21.           Time of Essence. Time is of
the essence with respect to the performance of all obligations to be performed
or observed by the Parties under this Lease.

     

    22.           No Prior or Other Agreements; Broker
Disclaimer. This Lease contains all agreements between the Parties with
respect to any matter mentioned herein, and no other prior or contemporaneous
agreement or understanding shall be effective. Lessor and Lessee each represents
and warrants to the Brokers that it has made, and is relying solely upon, its
own investigation as to the nature, quality, character and financial
responsibility of the other Party to this Lease and as to the use, nature,
quality and character of the Premises. Brokers have no responsibility with
respect thereto or with respect to any default or breach hereof by either Party.
The liability (including court costs and attorneys’ fees), of any Broker with
respect to negotiation, execution, delivery or performance by either Lessor or
Lessee under this Lease or any amendment or modification hereto shall be limited
to an amount up to the fee received by such Broker pursuant to this Lease:
provided, however, that the foregoing limitation on each Broker’s liability
shall not be applicable to any gross negligence or willful misconduct of such
Broker.

     

    23.           Notices.

     

    23.1           Notice Requirements. All
notices required or permitted by this Lease or applicable law shall be in
writing and may be delivered in person (by hand or by courier) or may be sent by
regular, certified or registered mail or U.S. Postal Service Express Mail, with
postage prepaid, or by facsimile transmission, and shall be deemed sufficiently
given if served in a manner specified in this Paragraph 23. The addresses noted
adjacent to a Party’s signature on this Lease shall be that Party’s address for
delivery or mailing of notices. Either party may by written notice to the other
specify a different address for notice, except that upon Lessee’s taking
possession of the Premises, the Premises shall constitute Lessee’s address for
notice. A copy of all notices to Lessor shall be concurrently transmitted to
such party or parties at such addresses as Lessor may from time to time
hereafter designate in writing.

     

    23.2           Date of Notice. Any notice
sent by registered or certified mail, return receipt requested, shall be deemed
given on the date of delivery shown on the receipt card, or if no delivery date
is shown, the postmark thereon. If sent by regular mail the notice shall be
deemed given 48 hours after the same is addressed as required herein and mailed
with postage prepaid. Notices delivered by United States Express Mail or
overnight courier that guarantee next day delivery shall be deemed given 24
hours after delivery of the Same to the Postal Service or courier. Notices
transmitted by facsimile transmission or similar means shall be deemed delivered
upon telephone confirmation of receipt (confirmation report from fax machine is
sufficient), provided a copy is also delivered via delivery or mail. It notice
is received on a Saturday, Sunday or legal holiday, it shall be deemed received
on the next business day.

    
      	 
      	 
      	 
      
	
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    24.           Waivers. No waiver by Lessor
of the Default or Breach of any term, covenant or condition hereof by Lessee,
shall be deemed a waiver of any other term, covenant or condition hereof, or of
any subsequent Default or Breach by Lessee of the same of or any other term,
covenant or condition hereof. Lessor’s consent to, or approval of, any act shall
not be deemed to render unnecessary the obtaining of Lessor’s consent to, or
approval of, any subsequent or similar act by Lessee, or be construed as the
basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. The acceptance of Rent by Lessor shall not be a waiver
of any Default or Breach by Lessee. Any payment by Lessee may be accepted by
Lessor on account of moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.

     

    25.           Disclosures Regarding The Nature of a Real Estate Agency
Relationship.

     

    (a)           When
entering into a discussion with a real estate agent regarding a real estate
transaction, a Lessor or Lessee should from the outset understand what type of
agency relationship or representation it has with the agent or agents in the
transaction. Lessor and Lessee acknowledge being advised by the Brokers in this
transaction as follows:

     

    (i)           Lessor’s Agent. A
Lessor’s agent under a listing agreement with the Lessor acts as the agent for
the Lessor only. A Lessor’s agent or subagent has the following affirmative
obligations: To the
Lessor: A fiduciary duty of utmost care, integrity, honesty, and loyalty
in dealings with the Lessor. To the Lessee and the
Lessor: a. Diligent exercise of reasonable skills and care in performance
of the agent’s duties. b. A duty of honest and fair dealing and good faith. c. A
duty to disclose all facts known to the agent materially affecting the value or
desirability of the property that are not known to, or within the diligent
attention and observation of, the Parties. An agent is not obligated to reveal
to either Party any confidential information obtained from the other Party which
does not involve the affirmative duties set forth above.

     

    (ii)           Lessee’s Agent. An
agent can agree to act as agent for the Lessee only. In these situations, the
agent is not the Lessor’s agent, even it by agreement the agent may receive
compensation for services rendered, either in full or in part from the Lessor.
An agent acting only for a Lessee has the following affirmative obligations.
To the Lessee:
A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings
with the Lessee. To
the Lessee and the Lessor: a. Diligent exercise of reasonable skills and
care in performance of the agent’s duties. b. A duty of honest and fair dealing
and good faith. c. A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not known to, or
within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from
the other Party which does not involve the affirmative duties set forth
above.

     

    (iii)           Agent Representing Both
Lessor and Lessee. A real estate agent, either acting directly or through
one or more associate licenses, can legally be the agent of both the Lessor and
the Lessee in a transaction, but only with the knowledge and consent of both the
Lessor and the Lessee. In a dual agency situation, the agent has the following
affirmative obligations to both the Lessor and the Lessee: a. A fiduciary duty
of ulmost care, Integrity, honesty and loyalty in the dealings with either
Lessor or the Lessee. b. Other duties to the Lessor and the Lessee as stated
above in subparagraphs (i) or (ii). In representing both Lessor and Lessee, the
agent may not without the express permission of the respective Party, disclose
to the other Party that the Lessor will accept rent in an amount less than that
indicated in the listing or that the Lessee is willing to pay a higher rent than
that offered. The above duties of the agent in a real estate transaction do not
relieve a Lessor or Lessee from the responsibility to protect their own
interests. Lessor and Lessee should carefully read all agreements to assure that
they adequately express their understanding of the transaction. A real estate
agent is a person qualified to advise about real estate. If legal or tax advice
is desired, consult a competent professional.

    
      	 
      	 
      	 
      
	
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    (b)
Brokers have no responsibility with respect to any default or breach hereof by
either Party. The liability (including court costs and attorneys’ fees), of any
Broker with respect to any breach of duty, error or omission relating to this
Lease shall not exceed the fee received by such Broker pursuant to this Lease;
provided, however, that the foregoing limitation on each Broker’s liability
shall not be applicable to any gross negligence or willful misconduct of such
Broker.

     

    (c)
Lessor and Lessee agree to identify to Brokers as “Confidential” any
communication or information given Brokers that is considered by such Party to
be confidential.

     

    26.           No Right To Holdover. Lessee
has no right to retain possession of the Premises or any part thereof beyond the
expiration or termination of this Lease. In the event that Lessee holds over,
then the Base Rent shall be increased to 150% of the Base Rent applicable
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by
Lessee.

     

    27.           Cumulative Remedies. No remedy
or election hereunder shall be deemed exclusive but shall, wherever possible, be
cumulative with all other remedies at law or in equity.

     

    28.           Covenants and Conditions;
Construction of Agreement. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions. In construing this Lease,
all headings and titles are for the convenience of the Parties only and shall
not be considered a part of this Lease. Whenever required by the context, the
singular shall include the plural and vice versa. This Lease shall not be
construed as if prepared by one of the Parties, but rather according to its fair
meaning as a whole, as if both Parties had prepared it.

     

    29.           Binding Effect; Choice of Law.
This Lease shall be binding upon the Parties, their personal representatives,
successors and assigns and be governed by the laws of the State in which the
Premises are located. Any litigation between the Parties hereto concerning this
Lease shall be initiated in the county in which the Premises are
located.

     

    30.           Subordination;
Attornment; Non-Disturbance.

     

    30.1           Subordination. This Lease and
any Option granted hereby shall be subject and subordinate to any ground lease,
mortgage, deed of trust, or other hypothecation or security device
(collectively, “Security
Device”), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and
extensions thereof. Lessee agrees that the holders of any such Security Devices
(in this Lease together referred to as “Lender”) shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease. Any
Lender may elect to have this Lease and/or any Option granted hereby superior to
the lien of its Security Device by giving written notice thereof to Lessee,
whereupon this Lease and such Options shall be deemed prior to such Security
Device, notwithstanding the relative dates of the documentation or recordation
thereof.

    
      	 
      	 
      	 
      
	
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    30.2           Attornment. In the event that
Lessor transfers title to the Premises, or the Premises are acquired by another
upon the foreclosure or termination of a Security Device to which this Lease is
subordinated (i) Lessee shall, subject to the non-disturbance provisions of
Paragraph 30.3, altorn to such new owner, and upon request, enter into a new
lease, containing all of the terms and provisions of this Lease, with such new
owner for the remainder of the term hereof, or, at the election of such new
owner, this Lease shall automatically become a new Lease between Lessee and such
new owner, upon all of the terms and conditions hereof, for the remainder of the
term hereof, and (ii) Lessor shall thereafter be relieved of any further
obligations hereunder and such new owner shall assume all of Lessor’s
obligations hereunder, except that such new owner shall not: (a) be liable for
any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (b) be subject to any offsets or defenses
which Lessee might have against any prior lessor, (c) be bound by prepayment of
more than one month’s rent, or (d) be liable for the return of any security
deposit paid to any prior lessor.

     

    30.3           Non-Disturbance. With respect
to Security Devices entered into by Lessor after the execution of this Lease,
Lessee’s subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”)
from the Lender which Non-Disturbance Agreement provides that Lessee’s
possession of the Premises, and this Lease, including any options to extend the
term hereof, will not be disturbed so long as Lessee is not in Breach hereof and
attorns to the record owner of the Premises. Further, within 60 days after the
execution of this Lease. Lessor shall use its commercially reasonable efforts to
obtain a Non-Disturbance Agreement from the holder of any pre-existing Security
Device which is secured by the Premises. In the event that Lessor is unable to
provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at
Lessee’s option, directly contact Lender and attempt to negotiate for the
execution and delivery of a Non-Disturbance Agreement.

     

    30.4           Self-Executing. The agreements
contained in this Paragraph 30 shall be effective without the execution of any
further documents; provided, however, that, upon written request from Lessor or
a Lender in connection with a sale, financing or refinancing of the Premises,
Lessee and Lessor shall execute such further writings as may be reasonably
required to separately document any subordination, attornment and/or
Non-Disturbance Agreement provided for herein.

     

    31.           Attorneys’ Fees. If any Party
or Broker brings an action or proceeding involving the Premises whether founded
in fort, contract or equity, or to declare rights hereunder, the Prevailing
Party (as hereafter defined) in any such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term, “prevailing Party” shall
include, without limitation, a Party or Broker who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, Judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorneys’ fees award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorneys’ fees reasonably incurred. In addition Lessor shall be entitled to
attorneys’ fees, costs and expenses incurred in the preparation and service of
notices of Default and consultations in connection therewith, whether or not a
legal action is subsequently commenced in connection with such Default or
resulting Breach ($200 is a reasonable minimum per occurrence for such services
and consultation).

     

    32.           Lessor’s Access; Showing Premises;
Repairs. Lessor and Lessor’s agents shall have the right to enter the
Premises at any time, in the case of an emergency, and otherwise at reasonable
times after reasonable prior notice for the purpose of showing the same to
prospective purchasers, lenders, or tenants, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary
or desirable and the erecting, using and maintaining of utilities, services,
pipes and conduits through the Premises and/or other premises as long as there
is no material adverse effect to Lessee’s use of the Premises. All such
activities shall be without abatement of rent or liability to
Lessee.

    
      	 
      	 
      	 
      
	
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    33.           Auctions. Lessee shall not
conduct, nor permit to be conducted, any auction upon the Premises without
Lessor’s prior written consent. Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to permit an
auction.

     

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

     

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

     

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

     

    37.           Guarantor.

     

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

     

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

     

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

     

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

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

     

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

     

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

     

    39.4           Effect
of Default on Options.

     

    (a)
Lessee Shall have no right to exercise an Option: (i) during the period
commencing with the giving of any notice of Default and continuing until said
Default is cured, (ii) during the period of time any Rent is unpaid (without
regard to whether notice thereof is given Lessee), (iii) during the time Lessee
is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or
more notices of separate Default, whether or not the Defaults are cured, during
the 12 month period immediately preceding the exercise of the
Option.

     

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

     

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

     

    40.           Multiple Buildings. If the
Premises are a part of a group of buildings controlled by Lessor, Lessee agrees
that it will abide by and conform to all reasonable rules and regulations which
Lessor may make from time to time for the management, safety, and care of said
properties, including the care and cleanliness of the grounds and including the
parking, loading and unloading of vehicles, and to cause its employees,
suppliers, shippers, customers, contractors and invitees to so abide and
conform. Lessee also agrees to pay its fair share of common expenses incurred in
connection with such rules and regulations.

     

    41.           Security Measures. Lessee
hereby acknowledges that the Rent payable to Lessor hereunder does not include
the cost of guard service or other security measures, and that Lessor shall have
no obligation whatsoever to provide same. Lessee assumes all responsibility for
the protection of the Premises, Lessee, its agents and invitees and their
property from the acts of third parties.

     

    42.           Reservations. Lessor reserves
to itself the right, from time to time, to grant, without the consent or joinder
of Lessee, such easements, rights and dedications that Lessor deems necessary,
and to cause the recordation of parcel maps and restrictions, so long as such
easements, rights, dedications, maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.

    
      	 
      	 
      	 
      
	
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    43.           Performance Under Protest. If
at any time a dispute shall arise as to any amount or sum of money to be paid by
one Party to the other under the provisions hereof, the Party against whom the
obligation to pay the money is asserted shall have the right to make payment
“under protest” and such payment shall not be regarded as a voluntary payment
and there shall survive the right on the part of said Party to Institute suit
for recovery of such sum. If it shall be adjudged that there was no legal
obligation on the part of said Party to pay such sum or any part thereof, said
Party shall be entitled to recover such sum or so much thereof as it was not
legally required to pay.

     

    44.           Authority;
Multiple Parties; Execution.

     

    (a)           If
either Party hereto is a corporation, trust, limited liability company,
partnership, or similar entity, each individual executing this Lease on behalf
of such entity represents and warrants that he or she is duly authorized to
execute and deliver this Lease on its behalf. Each party shall, within 30 days
after request, deliver to the other party satisfactory evidence of such
authority.

     

    (b)           If
this Lease is executed by more than one person or entity as “Lessee”, each such
person or entity shall be jointly and severally liable hereunder. It is agreed
that any one of the named Lessees shall be empowered to execute any amendment to
this Lease, or other document ancillary thereto and bind all of the named
Lessees, and Lessor may rely on the same as if all of the named Lessees had
executed such document.

     

    (c)           This
Lease may be executed by the Parties in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument.

     

    45.           Conflict. Any conflict between
the printed provisions of this Lease and typewritten or handwritten provisions
shall be controlled by the typewritten or handwritten provisions.

     

    46.           Offer. Preparation of this
Lease by either Party or their agent and submission of same to the other Party
shall not be deemed an offer to lease to the other Party. This Lease is not
intended to be binding until executed and delivered by all Parties
hereto.

     

    47.           Amendments. This Lease may be
modified only in writing, signed by the Parties in interest at the time of the
modification. As long as they do not materially change Lessee’s obligations
hereunder, Lessee agrees to make such reasonable non-monetary modifications to
this Lease as may be reasonably required by a Lender in connection with the
obtaining of normal financing or refinancing of the Premises.

     

    48.          Waiver
of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY
IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS
AGREEMENT.

     

    49.          Mediation and Arbitration of
Disputes. An Addendum requiring the Mediation and/or the Arbitration of
all disputes between the Parties and/or Brokers arising out of this lease o is o is not attached to this
Lease.

     

    50.          Americans with Disabilities
Act. Since compliance with the Americans with Disabilities Act (ADA) is
dependent upon Lessee’s specific use of the Premises. Lessor makes no warranty
or representation as to whether or not the Premises comply with ADA or any
similar legislation. In the event that Lessee’s use of the Premises requires
modifications or additions to the Premises in order to be in ADA compliance,
Lessee agrees to make any such necessary modifications and/or additions at
Lessee’s expense.

    
      	 
      	 
      	 
      
	
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      - AIR COMMERCIAL REAL ESTATE ASSOCIATION

            	
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      STN-7-4/01E

            


    


    
      
        
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    LESSOR
AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

     

    ATTENTION: NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES
ARE URGED TO:

     

    1.
SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.

     

    2.
RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY
OF THE PREMISES FOR LESSEE’S INTENDED USE.‘

     

    WARNING: IF THE
PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE
LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE
PREMISES IS LOCATED.

     

    The
parties hereto have executed this Lease at the place and on the dates specified
above their respective signatures.

    
      	 
      	 
      	 
      
	
              Executed
      at:

            	
              San
      Jose

            	 
      	
              Executed
      at:

            	
              San
      Jose

            
	
              On:

            	 
      	 
      	
              On:

            	
              12/13/05

            
	 
      	 
      	 
      
	
              By
      LESSOR:

            	 
      	
              By
      LESSEE:

            
	
              MERIX
      San Jose, Inc.

            	 
      	
              KML
      Fremont Investors, LLC

            
	
              “A
      California Corporation”

            	 
      	 
      
	 
      	 
      	 
      
	
              By:

            	
              /s/ Ed Barclay

            	 
      	
              By:

            	
              /s/ Reggie Lee

            
	
              Name
      Printed:

            	
              Ed
      Barclay

            	 
      	
              Name
      Printed:

            	
              Reggie
      Lee

            
	
              Title:

            	
              V.
      P. of Financial

            	 
      	
              Title:

            	
              Managing
      Partner

            
	
              By:

            	 
      	 
      	
              By:

            	 
      
	
              Name
      Printed:

            	 
      	 
      	
              Name
      Printed:

            	 
      
	
              Title:

            	 
      	 
      	
              Title:

            	 
      
	
              Address:

            	
              355
      Turtle Creek Court

            	 
      	
              Address:

            	
              34
      W. Santa Clara Street

            
	
              San
      Jose, CA 95128

            	 
      	
              San
      Jose, CA 95126

            
	
              Telephone:
      (408)

            	
              280
      - 0422

            	 
      	
              Telephone:
      (408)

            	
              971
      - 2700

            
	
              Facsimile:
      (408)

            	
              280
      - 0641

            	 
      	
              Facsimile:
      (408)

            	
              971
      - 1600

            
	
              Federal
      ID No.

            	
              94-2782496

            	 
      	
              Federal
      ID No.

            	 
      


    

    


    
      	 
      	 
      	 
      	 
      
	
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      - AIR COMMERCIAL REAL ESTATE ASSOCIATION

            	
              FORM
      STN-7-4/01E

            


    


    
      
        
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              BROKER:

            	 
      	
              BROKER:

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Attn:

            	 
      	 
      	
              Attn:

            	 
      
	
              Title:

            	 
      	 
      	
              Title:

            	 
      
	
              Address:

            	 
      	 
      	
              Address:

            	 
      
	 
      	 
      	 
      
	
              Telephone:
      (     )

            	 
      	 
      	
              Telephone:
      (     )

            	 
      
	
              Facsimile:
      (     )

            	 
      	 
      	
              Facsimile:
      (     )

            	 
      
	
              Federal
      ID No.

            	 
      	 
      	
              Federal
      ID No.

            	 
      


    

     

    NOTE:
These forms are often modified to meet the changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: AIR COMMERCIAL REAL ESTATE ASSOCIATION, 700 So. Flower Street,
Suite 600, Los Angeles, California 90017. (213) 687-8777. Fax No, (213)
687-8616

     

    ©
Copyright 2001 - By AIR Commercial Real Estate Association. All rights
reserved.

     

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

    
      	 
      	 
      	 
      	 
      
	
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      - AIR COMMERCIAL REAL ESTATE ASSOCIATION

            	
              FORM
      STN-7-4/01E

            


    


    
      
        
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    ADDENDUM
TO STANDARD INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE - NET BETWEEN KML FREMONT
INVESTORS, LLC AS “LESSOR” AND MERIX SAN JOSE, INC., “A CALIFORNIA CORPORATION
AS “LESSEE”.

     

    
      	
              51.

            	
              Base
      Rent:

            


    

    
      	 
      	 
      
	
              Months

            	
              Monthly
      Rent

            
	
              October
      1, 2005 - September 30, 2008

            	
              $11,124.00
      NNN

            
	
              October
      1, 2008 - September 30, 2009

            	
              $11,458.00
      NNN

            
	
              October
      1, 2009 - September 30, 2010

            	
              $11,687.00
      NNN

            


    

     

    52.           Option
to Extend Lease:

    a)          Provided
Lessee is not in default of the Lease, Lessor will grant two (2) five (5) year
options to extend the Lease. The options to extend the Lease shall be at the
then current market rent, the options shall have annual CPI Adjustments, but in
no event will the rent be less than the last month of the lease payment from the
proceeding year.

    b)          Lessee
shall provide a one hundred and eighty (180) day written notice of its intent to
exercise its option to extend Lease. If written notification if not given for
each option, the options shall be terminated with no further obligation to
extend the Lease.

     

    53.           Tenant
Improvements:

    Lessee
can build tenant improvements for its use by submitting plans to Lessor for its
approval. These tenant improvements are Lessee’s responsibility to obtain
permits and plans and are at Lessee’s sole cost and expense. In the event Lessee
vacates premises, it is Lessee’s sole responsibility to remove these
improvements at Lessor’s request, and return to its original floor plan, Exhibit
“A”.

    
      	 
      	 
      	 
      
	
              READ
      AND ACKNOWLEDGE:

            	 
      	 
      
	 
      	 
      	 
      
	
              By

            	
              /s/ Ed Barclay

            	 
      	
              By

            	
              /s/ Reggie Lee

            
	
              Its:

            	
              V.P.
      of Finance

            	 
      	
              Its:

            	
              Managing
      Partner

            
	
              Date:

            	
              12/1/05

            	 
      	
              Date:

            	
              12/13/05

            


    


    
      
        
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    340
TURTLE CREEK COURT

     

      EXHIBIT
B


    
      	 
      	
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              ILLEGIBLE

            


    

    


     

    LANDLORD
AGREEMENT

     

    (KML Fremont Investors
LLC)

     

    Wachovia
Bank, National Association, in its capacity as agent pursuant to the Loan
Agreement (as hereinafter defined) acting for and on behalf of the financial
institutions which are parties thereto as lenders (together with its successors
and assigns in such capacity, “Agent”) and the financial institutions which are
parties to the Loan Agreement (as hereinafter defined) as lenders (collectively,
“Lenders”) have entered or are about to enter into financing arrangements with
Merix San Jose, Inc., a California corporation formerly known as Data Circuit
Systems, Inc. (“Debtor”), pursuant to which Agent has been granted &
security interest in all of Debtor’s and certain of its affiliates’ inventory
(hereinafter “Personal Property”). For purposes of this Agreement, the term
“Personal Property” does not include plumbing and electrical fixtures, heating,
ventilation and air conditioning, wall and floor coverings, walls or ceilings
and other fixtures not constituting trade fixtures. Some of the Personal
Property has or may from time to time become affixed to or be located on, wholly
or in part, the real property leased by Debtor or its affiliates located at 340
Turtle Creek Court, San Jose, California 95125 (the “Premises.”) The undersigned
is the owner or lessor of the Premises. The term “Loan Agreement” as used herein
shall mean the Loan and Security Agreement by and among Debtor, certain of its
affiliates, Agent and Lenders, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or
replaced.

     

    In order
for Agent and Lenders to consider making loans or providing other financial
accommodations to Debtor or its affiliates in reliance upon the Personal
Property as collateral, the undersigned agrees as follows:

     

    1.           The
undersigned waives and relinquishes any landlord’s lien, rights of levy or
distraint, claim, security interest or other interest the undersigned may now or
hereafter have in or with respect to any of the Personal Property, whether for
rent or otherwise.

     

    2.           The
Personal Property may be installed in or located on the Premises and is not and
shall not be deemed a fixture or part of the real property but shall at all
times be considered personal property.

     

    3.           Agent,
at its option, for itself and for the benefit of Lenders, may enter and use the
Premises for the purpose of repossessing, removing, selling or otherwise dealing
with any of the Personal Property, and such license shall be irrevocable and
shall continue from me date Agent enters the Premises pursuant to the rights
granted to it herein for a period not to exceed one hundred twenty (120) days or
if later, until the receipt by Agent of written notice from the undersigned
directing removal of the Personal Property; provided, that, (a) for each
day that Agent uses the Premises pursuant to the rights granted to it herein,
unless the undersigned has otherwise been paid rent in respect of any of such
period, Agent shall pay the regularly scheduled rent provided under the lease
relating to the Premises between the undersigned and Debtor (the “Lease”),
prorated on a per diem basis to be determined on a thirty (30) day month,
without thereby assuming the Lease or incurring any other obligations of Debtor,
and (b) any damage to the Premises caused by Agent or its representatives will
be repaired by Agent at the sole expense of Lenders.

    
      	 
      	
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    4.           The
undersigned agrees to send notice in writing of any termination of, or default,
abandonment or surrender under the Lease to:

     

    Wachovia
Bank, National Association, as Agent

    1133
Avenue of the Americas

    New York,
New York 10036

    Attention:
Portfolio Manager

    Telephone
No.: (212) 840-2000

    Telecopy
No.: (212) 545-4283

     

    Upon
receipt of such notice, Agent shall have the right, but not the obligation, to
cure such default within ten (10) days thereafter. Any payment made or act done
by Agent to cure any such default shall not constitute an assumption of the
Lease or any obligations of Debtor.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK.]

    
      	 
      	
              __________

            
	
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      B

            	
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    5.           This
Agreement may not be changed or terminated orally or by course of conduct. The
undersigned shall notify any purchaser of the Premises or of its business of
this Agreement and its terms and this Agreement is binding upon the undersigned
and the heirs, personal representatives, successors and assigns of the
undersigned and inures to the benefit of Agent, Lenders and their respective
successors and assigns.

     

    Dated
this 7 day of
August,
2005.

    
      	 
      	 
      
	 
      	
              KML
      FREMONT INVESTORS LLC

            
	 
      	 
      
	 
      	
              By:

            	
                   /s/
      Reggie Lee

            
	 
      	 
      
	 
      	
              Name:

            	
                   Reggie
      Lee

            
	 
      	 
      
	 
      	
              Title:

            	
                   [ILLEGIBLE]

            


    

    


    
      	 
      	
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    LANDLORD
ACKNOWLEDGMENT

     

    (LIMITED
LIABILITY COMPANY)

     

    STATE OF
CALIF

    ss:

    COUNTY OF
SANTA
CLARA

     

    I, L. Rock, a Notary
Public within and for said County, in the State aforesaid, duly commissioned and
acting, do hereby certify that on this 7 day of SEPT.    ,
2005, personally appeared before me REGGIE LEE (Name of
Signer for Landlord) to me personally known to be the person who signed the
foregoing Landlord Agreement, and who, being by me duly sworn and being informed
of the contents of said Landlord Agreement, stated and acknowledged to me under
oath that he/she is MANAGING PARTNER
(Title) of KML Fremont
Investors LLC, the limited liability company named in and which executed
the said Landlord Agreement, and that same was signed, sealed, executed and
delivered by him in the name of and on behalf of the said limited liability
company by authority of its member(s) and/or manager(s) and that the execution
of said Landlord Agreement was his/her free and voluntary act and deed in
his/her said capacity and acknowledged to me that said limited liability company
executed the same as its voluntary act and deed and was by him/her voluntarily
executed, on behalf of said limited liability company for the uses, purposes and
consideration therein mentioned and set forth.

     

    WITNESS
my hand and seal as such Notary Public the day and year in this certificate
above written.

     

    
      	 
      	
              L. Rock

            
	 
      	
              Notary
      Public

            


    

     

     

    
      	 
      	
              __________

            
	
                                                EXHIBIT
      B

            	
              INITIAL