File
      No.
      ______________________

    


    INDUSTRIAL
      SPACE LEASE

    (MULTI-TENANT
      NET)

    


    This
      Lease,
      dated
      October __, 2006 for reference purposes only, is made by and between
Renco
      Bayside Investors,
      a
      California Limited Partnership (“Landlord”), and Rackable
      Systems, Inc.,
      a
      Delaware corporation (“Tenant”), to be effective and binding upon the parties as
      of the date the last of the designated signatories to this Lease shall have
      executed this Lease (the “Effective Date of this Lease”).

    


    ARTICLE
      1

    


    References

    


    1.1 References.
      All
      references in this Lease (subject to any further clarifications contained in
      this Lease) to the following terms shall have the following meaning or refer
      to
      the respective address, person, date, time period, amount, percentage, calendar
      year or fiscal year as below set forth:

    


    
      	
              A.

            	
              Tenant’s
                Address for Notices:

            	
              46600
                Landing Parkway

            
	 	 	
              Fremont,
                CA 94538

            
	 	 	 
	
              B.

            	
              Tenant’s
                Representative:

            	
              Jennifer
                Pratt

            
	 	
              Phone
                Number:

            	
              (408)
                240-8300

            
	 	 	 
	
              C.

            	
              Landlord’s
                Address for Notices:

            	
              Renco
                Bayside Investors

            
	 	 	
              615
                National Avenue

            
	 	 	
              Mountain
                View, CA 94043

            
	 	 	 
	
              D.

            	
              Landlord’s
                Representative:

            	
              William
                N. Neidig

            
	 	
              Phone
                Number:

            	
              (408)
                730-5500

            
	 	 	 
	
              E.

            	
              Lease
                Commencement Date:

            	
              The
                Lease shall commence on the later of (i) substantial completion of
                the
                tenant improvements, or (ii) March 1, 2007.

            
	 	 	 
	
              F.

            	
              Intended
                Term:

            	
              Six
                (6) years and ten (10) months or a total of 82 months

            
	 	 	 
	
              G.

            	
              Lease
                Expiration Date:

            	
              The
                last day of the eighty-second (82nd) full calendar month following
                the
                Commencement Date

            
	 	 	 
	
              H.

            	
              Tenant’s
                Punchlist Period:

            	
              Ten
                (10) Business Days

            
	 	 	 
	
              I.

            	
              First
                Month’s Prepaid Rent:

            	
              $13,304.00

            
	 	 	 
	
              J.

            	
              Last
                Month’s Prepaid Rent:

            	
              N/A

            
	 	 	 
	
              K.

            	
              Tenant’s
                Security Deposit:

            	
              $40,316.00

            
	 	 	 
	
              L.

            	
              Late
                Charge Amount:

            	
              Five
                (5%) percent of any delinquent amount due

            
	 	 	 
	
              M.

            	
              Tenant’s
                Required Liability Coverage:

            	
              $3,000,000
                Single Limit

            
	 	 	 
	
              N.

            	
              Tenant’s
                Number of Parking Spaces:

            	
              150
                unreserved parking spaces

            
	 	 	 
	
              O.

            	
              Brokers:

            	
              Terry
                Haught - Cornish & Carey Commercial - representing Tenant and Chris
                Shaffer & Kurt Heinrich - Cornish & Carey Commercial -
                representing Landlord

            


    

    


    P. Project
      or Property.
      That
      certain real property situated in the City of Fremont, County of Alameda, State
      of California, as presently improved with one (1) building, which real property
      is shown on the Site Plan attached hereto as Exhibit “A” and is commonly
      known as or otherwise described as follows:

    


    RENCO
      40

    46600
      - 46610 Landing Parkway

    Fremont,
      CA 94538

    


    Q. Building.
      That
      certain Building within the Project in which the Leased Premises are located,
      which Building is shown outlined in red on Exhibit “A” hereto.

    


    
      
         

      

      
        1.

        
          

        

      

      
         

      

    

    R. Common
      Areas.
      The
“Common Areas” shall mean those areas within the Project which are located
      outside the buildings and which are provided and designated by Landlord from
      time to time for general use by tenants of the Project including driveways,
      pedestrian walkways, parking spaces, landscaped areas and enclosed trash
      disposal areas.

    


    S. Leased
      Premises.
      That
      certain space which is a portion of the Building, which space is shown outlined
      in red on the Floor Plan attached hereto as Exhibit “B” consisting of
      approximately 40,316 square feet of gross leasable area and, for purposes of
      this Lease, agreed to contain said number of square feet. The Leased Premises
      are commonly known as or otherwise described as follows:

    


    46600
      Landing Parkway

    Fremont,
      CA 94538

    


    T. Base
      Monthly Rent.
      The term
“Base Monthly Rent” pursuant to paragraph 3.1 shall mean the
      following:

     

    
      	
              Months

            	 	 	 
	
              From

            	
              To

            	
              #
                Mos

            	 	
              Base
                Monthly Rent

            
	
              1

            	
              5

            	
              5

            	
              (a)

            	
              $0.00

            
	
              6

            	
              12

            	
              7

            	 	
              $13,304.00

            
	
              13

            	
              24

            	
              12

            	 	
              $30,237.00

            
	
              25

            	
              36

            	
              12

            	 	
              $32,253.00

            
	
              37

            	
              48

            	
              12

            	 	
              $34,269.00

            
	
              49

            	
              60

            	
              12

            	 	
              $36,284.00

            
	
              61

            	
              72

            	
              12

            	 	
              $38,300.00

            
	
              73

            	
              82

            	
              10

            	 	
              $40,316.00

            
	
              Total

            	
              82

            	 	 


    

    


    
      	 	
              (a)

            	
              Tenant
                shall not pay Landlord the Base Monthly Rent for the initial five
                months
                of the Lease Term; however, Tenant shall pay Landlord the monthly
                Additional Rent Charges during the initial five months of the Lease
                Term.

            


    

    


    U. Permitted
      Use.
      The term
“Permitted Use” shall mean the following:

    


    General
      office, sales, engineering, marketing, manufacturing, warehouse and other
      legally related uses.

    


    V. Exhibits.
      The term
“Exhibits” shall mean the Exhibits to this Lease which are described as
      follows:

    


    Exhibit
      “A” - Site
      Plan
      showing the Project and delineating the Building in which the Leased Premises
      are located.

    


    Exhibit
      “B” - Floor
      Plan outlining the Leased Premises.

    


    Exhibit
      “C” - Subordination
      Agreement

    


    Exhibit
      “D” - Tenant
      Estoppel Certificate

    


    Exhibit
      “E” - Acceptance
      Agreement

    


    Exhibit
      “F” - Tenant
      Improvement Agreement

    


    W. Addenda.
      The term
“Addenda” shall mean the Addendum (or Addenda) to this Lease which is (or are)
      described as follows: N/A

    


    ARTICLE
      2

    


    Leased
      Premises, Term and Possession

    


    2.1 Demise
      of Leased Premises.
      Landlord
      hereby leases to Tenant and Tenant hereby leases from Landlord for Tenant’s own
      use in the conduct of Tenant’s business and not for purposes of speculating in
      real estate, for the Lease Term and upon the terms and subject to the conditions
      of this Lease, that certain interior space described in Article 1(s) as the
      Leased Premises, reserving and excepting to Landlord the exclusive right to
      50%
      of all profits to be derived from any assignments or sublettings by Tenant
      during the Lease Term by reason of the appreciation in the fair market rental
      value of the Leased Premises. Landlord further reserves the right to install,
      maintain, use and replace ducts, wires, conduits and pipes leading through
      the
      Leased Premises in locations which will not materially interfere with Tenant’s
      use of the Leased Premises. Tenant’s lease of the Leased Premises, together with
      the appurtenant right to use the Common Areas as described in Article 2.2 below,
      shall be subject to the continuing compliance by Tenant with (i) all the
      terms and conditions of the Lease, (ii) all Laws governing the use of the
      Leased Premises and the Project, (iii) all Private Restrictions, easements
      and other matters now of public record respecting the use of the Leased Premises
      and the Project, and (iv) all reasonable rules and regulations from time to
      time established by Landlord.

    


    
      
         

      

      
        2.

        
          

        

      

      
         

      

    

    2.2 Right
      To Use Common Areas.
      As an
      appurtenant right to Tenant’s right to the use of the Leased Premises, Tenant
      shall have the non-exclusive right to use the Common Areas in conjunction with
      other tenants of the Project and their invitees, subject to the limitations
      on
      such use as set forth in Article 4, and solely for the purposes for which they
      were designed and intended. Tenant’s right to use the Common Areas shall
      terminate concurrently with any termination of this Lease.

    


    2.3 Lease
      Commencement Date and Lease Term.
      The term
      of this Lease shall begin, and the Lease Commencement Date shall be determined
      pursuant to Article 2.4 below but in no event prior to March 1, 2007 unless
      Tenant occupies the Leased Premises for the purpose of conducting business
      therein prior to such date, in which case the Lease Commencement Date shall
      be
      as determined pursuant to Article 2.7 below. The term of this Lease shall end
      on
      the Lease Expiration Date (as set forth in Article 1). The Lease Term shall
      be
      that period of time commencing on the Lease Commencement Date and ending on
      the
      Lease Expiration Date (the “Lease Term”).

    


    2.4 Delivery
      of Possession.
      Landlord
      shall deliver to Tenant possession of the Leased Premises on or before the
      Intended Commencement Date (as set forth in Article 1) in their presently
      existing condition, broom clean, unless Landlord shall have agreed, as a
      condition to Tenant’s obligation to accept possession of the Leased Premises,
      pursuant to an Exhibit or Addenda attached to and made a part of this Lease
      to
      modify existing interior improvements or to make, construct and/or install
      additional specified improvements within the Leased Premises, in which case
      Landlord shall deliver to Tenant possession of the Leased Premises on the
      Intended Commencement Date as so modified and/or improved. If Landlord is unable
      to so deliver possession of the Leased Premises to Tenant on or before the
      Intended Commencement Date, for whatever reason, Landlord shall not be in
      default under this Lease, nor shall this Lease be void, voidable or cancelable
      by Tenant until the lapse of ninety (90) days after the Intended Commencement
      Date (the “delivery grace period”). The Lease Commencement Date shall not be
      deemed to have occurred until such date as Landlord notifies Tenant that the
      Leased Premises are Ready for Occupancy and delivers possession of the Leased
      Premises to Tenant. Additionally, the delivery grace period above set forth
      shall be extended for such number of days as Landlord may be delayed in
      delivering possession of the Leased Premises to Tenant by reason of the actions
      of Tenant. If Landlord is unable to deliver possession of the Leased Premises
      to
      Tenant within the described delivery grace period (including any extensions
      thereof by reason of Force Majeure or the actions of Tenant), then Tenant’s sole
      remedy shall be to cancel and terminate this Lease, and in no event shall
      Landlord be liable to Tenant for such delay. Tenant may not cancel this Lease
      at
      any time after the date Landlord notifies Tenant the Leased Premises are Ready
      for Occupancy.

    


    2.5 Acceptance
      of Possession.
      Tenant
      acknowledges that it has inspected the Leased Premises and is willing to accept
      them in their existing condition, broom clean, unless Landlord shall have
      agreed, as a condition to Tenant’s obligation to accept possession of the Leased
      Premises, pursuant to an Exhibit or Addenda attached to and made a part of
      this
      Lease to modify existing interior improvements or to make, construct and/or
      install additional specified improvements within the Leased Premises, in which
      case Tenant agrees to accept possession of the Leased Premises when Landlord
      has
      substantially completed such modifications or improvements and the Leased
      Premises are Ready for Occupancy. If Landlord shall have so modified existing
      improvements or constructed additional improvements within the Leased Premises
      for Tenant, Tenant shall, within Tenant’s Punchlist Period (as set forth in
      Article 1) which shall commence on the date that Landlord notifies Tenant
      that the Leased Premises are Ready for Occupancy and delivers possession of
      the
      Leased Premises to Tenant, submit to Landlord a signed copy of the Acceptance
      Agreement attached hereto as Exhibit “E” together with a punchlist of all
      incomplete and/or improper work performed by Landlord. Upon the expiration
      of
      Tenant’s Punchlist Period, Tenant shall be conclusively deemed to have accepted
      the Leased Premises in their then-existing condition as so delivered by Landlord
      to Tenant, except as to those items reasonably set forth in the punchlist
      submitted to Landlord prior to the expiration of said period. Landlord agrees
      to
      correct promptly all items reasonably set forth in Tenant’s punchlist,
provided
      that
      such
      punchlist was submitted to Landlord within Tenant’s Punchlist Period.
      Additionally, Landlord agrees to place in good working order all existing
      plumbing, lighting, electrical, life safety, access control, heating,
      ventilating and air conditioning systems within the Leased Premises and all
      man
      doors and roll-up truck doors serving the Leased Premises to the extent that
      such systems and/or items are not in good operating condition as of the date
      Tenant accepts possession of the Leased Premises; provided
      that,
      and
      only if, Tenant notifies Landlord in writing of such failures or deficiencies
      within the Punchlist Period.

    


    2.6 Surrender
      of Possession.
      Immediately prior to the expiration or upon the sooner termination of this
      Lease, Tenant shall remove all of Tenant’s signs from the exterior of the
      Building and shall remove all of Tenant’s equipment, trade fixtures, furniture,
      supplies, wall decorations and other personal property from the Leased Premises,
      and shall vacate and surrender the Leased Premises to Landlord in the same
      condition, broom clean, as existed at the Lease Commencement Date. Tenant shall
      repair all damage to the Leased Premises caused by Tenant or by Tenant’s removal
      of Tenant’s property and all damage to the exterior of the Building caused by
      Tenant’s removal of Tenant’s signs. Tenant shall patch and refinish, to
      Landlord’s reasonable satisfaction, all penetrations made by Tenant or its
      employees to the floor, walls or ceiling of the Leased Premises, whether such
      penetrations were made with Landlord’s approval or not. Tenant shall clean,
      repair or replace all stained or damaged ceiling tiles, wall coverings and
      clean
      or replace as may be required floor coverings to the reasonable satisfaction
      of
      Landlord. Tenant shall replace all burned out light bulbs and damaged light
      lenses, and clean and repaint all painted walls. Tenant shall repair all damage
      caused by Tenant to the exterior surface of the Building and the paved surfaces
      of the outside areas adjoining the Leased Premises and, where necessary, replace
      or resurface same. Additionally, Tenant shall, prior to the expiration or sooner
      termination of this Lease, remove any improvements installed by Tenant (other
      than the initial tenant improvements install pursuant to Exhibit F) and repair
      all damage caused by such removal, unless Landlord, at the time it consented
      to
      such improvements waived the right to require such removal. If the Leased
      Premises are not surrendered to Landlord in the condition required by this
      Article at the expiration or sooner termination of this Lease, Landlord may,
      at
      Tenant’s expense, so remove Tenant’s signs, property and/or improvements not so
      removed and make such repairs and replacements not so made or hire, at Tenant’s
      expense, independent contractors to perform such work. Tenant shall be liable
      to
      Landlord for all costs incurred by Landlord in returning the Leased Premises
      to
      the required condition, plus interest on all costs incurred from the date paid
      by Landlord at the then maximum rate of interest not prohibited by Law until
      paid, payable by Tenant to Landlord within ten days after receipt of a statement
      therefore from Landlord, and Tenant shall be deemed to have impermissibly held
      over until such time as such required work is completed, and Tenant shall pay
      Base Monthly Rent and Additional Rent in accordance with the terms of Section
      13.2 (Holding Over) until such work is completed. Tenant shall indemnify
      Landlord against loss or liability resulting from delay by Tenant in so
      surrendering the Leased Premises, including, without limitation, any claims
      made
      by any succeeding tenant or any losses to Landlord due to lost opportunities
      to
      lease to succeeding tenants.

    


    
      
         

      

      
        3.

        
          

        

      

      
         

      

    

    2.7 Early
      Occupancy.
      Provided
      that Tenant and its agents do not interfere with Landlord performance of the
      Tenant Improvement Work, Landlord shall allow Tenant access to the Leased
      Premises not less than thirty (30) days prior to the Substantial Completion
      of
      the Tenant Improvements for the purpose of Tenant installing furniture,
      equipment or fixtures (including Tenant’s data and telephone equipment) in the
      Leased Premises and otherwise prepare the Leased Premises for occupancy.
      Tenant’s entry shall be subject to the terms of this Lease, except that Base
      Monthly Rent shall not commence until the Lease Commencement Date. If Tenant
      occupies the Leased Premises for the purpose of conducting its business therein
      prior to the Lease Commencement Date, unless otherwise agreed in writing by
      Landlord, the Lease Commencement Date shall be deemed to have occurred on such
      sooner date, and Tenant shall be obligated to perform all its obligations under
      this Lease, including the obligation to pay rent, from that sooner date.


    


    ARTICLE
      3

    


    Rent,
      Late Charges and Security Deposits

    


    3.1 Base
      Monthly Rent.
      Commencing on the Lease Commencement Dated (as determined pursuant
      Article 2.3 above) and continuing throughout the Lease Term, Tenant shall
      pay to Landlord, without prior demand therefore, in advance on the first day
      of
      each calendar month, as base monthly rent, the amount set forth as “Base Monthly
      Rent” in Article 1 (the Base Monthly Rent”).

    


    3.2 Additional
      Rent.
      Commencing on the Lease Commencement Date (as determined pursuant to Article
      2.3
      above) and continuing throughout the Lease Term, in addition to the Base Monthly
      Rent, Tenant shall pay to Landlord as additional rent (the “Additional Rent”)
      the following amounts:

    


    A. Tenant’s
      Proportionate Share of all Building Operating Expenses (as defined in Article
      13).
      Payment
      shall be made by whichever of the following methods (or combination of methods)
      is (are) from time to time designated by Landlord:

    


    (1) Landlord
      may bill to Tenant, on a periodic basis not more frequently than monthly,
      Tenant’s Proportionate Share of such expenses (or group of expenses) as paid or
      incurred by Landlord, and Tenant shall pay such share of such expenses within
      ten days after receipt of a written bill therefore from Landlord;
      and/or

    


    (2) Landlord
      may deliver to Tenant Landlord’s reasonable estimate of any given expense (or
      group of expenses, such as Landlord’s Insurance Costs or Real Property Taxes)
      which it anticipates will be paid or incurred for the ensuing calendar or fiscal
      year, as Landlord may determine, and Tenant shall pay its Proportionate Share
      of
      such expenses for such year in equal monthly installments during such year
      with
      the installments of Base Monthly Rent. Landlord reserves the right to change
      from time to time the method of billing Tenant its Proportionate Share of such
      expenses or the periodic basis on which such expenses are billed.

    


    B. Landlord’s
      share of the consideration received by Tenant upon certain assignments and
      sublettings as required by Article 7;

    


    C. Any
      legal
      fees and costs that Tenant is obligated to pay or reimburse to Landlord pursuant
      to Article 13; and

    


    D. Any
      other
      charges or reimbursements due Landlord from Tenant pursuant to the terms of
      this
      Lease.

    


    3.3 Year-End
      Adjustments.
      If
      Landlord shall have elected to charge Tenant its Proportionate Share of the
      Building Operating Expenses (or any group of such expenses) on an estimated
      basis in accordance with the provisions of Article 3.2A(2) above, Landlord
      shall
      furnish to Tenant within three months following the end of the applicable
      calendar or fiscal year, as the case may be, a statement setting forth (i)
      the
      amount of such expenses paid or incurred during the just ended calendar or
      fiscal year, as appropriate, and (ii) Tenant’s Proportionate Share of such
      expenses for such period. If Tenant shall have paid more than its Proportionate
      Share of such expenses for the stated period, Landlord shall, at its election,
      either (i) credit the amount of such overpayment toward the next ensuing payment
      or payments of Additional Rent that would otherwise be due or (ii) refund in
      cash to Tenant the amount of such overpayment. If such year-end statement shall
      show that Tenant did not pay its Proportionate Share of any such expenses in
      full, then Tenant shall pay to Landlord the amount of such underpayment within
      thirty (30) days from Landlord’s billing of same to Tenant. The provisions of
      this Article shall survive the expiration or sooner termination of this
      Lease.

    


    
      
         

      

      
        4.

        
          

        

      

      
         

      

    

    3.4 Late
      Charge and Interest on Rent in Default.
      Tenant
      acknowledges that the late payment by Tenant of any monthly installment of
      Base
      Monthly Rent or any Additional Rent will cause Landlord to incur certain costs
      and expenses not contemplated under this Lease, the exact amounts of which
      are
      extremely difficult or impractical to fix. Such costs and expenses will include,
      without limitation, administration and collection costs and processing and
      accounting expenses. Therefore, if any installment of Base Monthly Rent is
      not
      received by Landlord from Tenant within six calendar days after the same becomes
      due, Tenant shall immediately pay to Landlord a late charge in an amount equal
      to the amount set forth in Article 1 as the “Late Charge Amount”, and if any
      Additional Rent is not received by Landlord within six calendar days after
      same
      becomes due, Tenant shall immediately pay to Landlord a late charge in an amount
      equal to ten percent of the Additional Rent not so paid. Landlord and Tenant
      agree that this late charge represents a reasonable estimate of such costs
      and
      expenses and is fair compensation to Landlord for its loss suffered by reason
      of
      Tenant’s failure to make timely payment. In no event shall this provision for a
      late charge be deemed to grant to Tenant a grace period or extension of time
      within which to pay any rental installment or prevent Landlord from exercising
      any right or remedy available to Landlord upon Tenant’s failure to pay each
      rental installment due under this Lease when due, including the right to
      terminate this Lease. If any rent remains delinquent for a period in excess
      of
      six calendar days, then, in addition to such late charge, Tenant shall pay
      to
      Landlord interest on any rent that is not so paid from said sixth day at the
      then maximum rate of interest not prohibited by Law until paid. Notwithstanding
      the above, once but only once in any twelve (12) month period during the Lease
      Term, Tenant shall be entitled to written notice of non-receipt of Base Monthly
      Rent or Additional Rent from Landlord, and Tenant shall not be liable for any
      Late Charge Amount, interest or other late charge hereunder if such installment
      of Base Monthly Rent or Additional Rent is received by Landlord within five
      (5)
      days after Tenant’s receipt of such notice from Landlord.

    


    3.5 Payment
      of Rent.
      All rent
      shall be paid in lawful money of the United States, without any abatement,
      deduction or offset for any reason whatsoever, to Landlord at such address
      as
      Landlord may designate from time to time. Tenant’s obligation to pay Base
      Monthly Rent and all Additional Rent shall be prorated at the commencement
      and
      expiration of the Lease Term. The failure by Tenant to pay any Additional Rent
      as required pursuant to this Lease when due shall be treated the same as a
      failure by Tenant to pay Base Monthly Rent when due, and Landlord shall have
      the
      same rights and remedies against Tenant as Landlord would have if Tenant failed
      to pay the Base Monthly Rent when due.

    


    3.6 Prepaid
      Rent.
      Upon
      signing this Lease, Tenant shall immediately pay to Landlord the amount set
      forth in Article 1 as “First Month’s Prepaid Rent” as prepayment of rent for
      credit against the first installment(s) of Base Monthly Rent due
      hereunder.

    


    3.7 Security
      Deposit.
      Upon
      signing this Lease, Tenant shall immediately deposit with Landlord the amount
      set forth in Article 1 as the “Security Deposit” as security for the performance
      by Tenant of the terms of this Lease to be performed by Tenant, and not as
      prepayment of rent. Landlord may apply such portion or portions of the Security
      Deposit as are reasonably necessary for the following purposes: (i) to remedy
      any default by Tenant in the payment of Base Monthly Rent or Additional Rent
      or
      a late charge or interest on defaulted rent; (ii) to repair damage to the Leased
      Premises caused by Tenant; (iii) to clean and repair the Leased Premises
      following their surrender to Landlord if not surrendered in the condition
      required pursuant to the provisions of Article 2; and (iv) to remedy any other
      default of Tenant to the extent permitted by Law including, without limitation,
      paying in full on Tenant’s behalf any sums claimed by materialmen or contractors
      of Tenant to be owing to them by Tenant for work done or improvements made
      at
      Tenant’s request to the Leased Premises. In this regard, Tenant hereby waives
      any restriction on the uses to which the Security Deposit may be applied as
      contained in Section 1950.7(c) of the California Civil Code and/or any successor
      statute. In the event the Security Deposit or any portion thereof is so used,
      Tenant shall pay to Landlord, promptly upon demand, an amount in cash sufficient
      to restore the Security Deposit to the full original sum. Landlord shall not
      be
      deemed a trustee of the Security Deposit. Landlord may use the Security Deposit
      in Landlord’s ordinary business and shall not be required to segregate it from
      its general accounts. Tenant shall not be entitled to any interest on the
      Security Deposit. If Landlord transfers the Building during the Lease Term,
      Landlord shall pay the Security Deposit to any subsequent owner in conformity
      with the provisions of Section 1950.7 of the California Civil Code and/or any
      successor statute, in which event the transferring landlord shall be released
      from all liability for the return of the Security Deposit. Tenant specifically
      grants to Landlord (and hereby waives the provisions of California Civil Code
      Section 1950.7 to the contrary) a period of sixty days following a surrender
      of
      the Leased Premises by Tenant to Landlord within which to return the Security
      Deposit (less permitted deductions) to Tenant, it being agreed between Landlord
      and Tenant that sixty days is a reasonable period of time within which to
      inspect the Leased Premises, make required repairs, receive and verify workmen’s
      billings therefore, and prepare a final accounting with respect to such deposit.
      In no event shall the Security Deposit, or any portion thereof, be considered
      prepaid rent.

    


    ARTICLE
      4

    


    Use
      of Leased Premises and Common Areas

    


    4.1 Permitted
      Use.
      Tenant
      shall be entitled to use the Leased Premises solely for the “Permitted Use” as
      set forth in Article 1 and for no other purpose whatsoever. Subject to the
      limitations contained in this Article 4, Tenant shall have the right to use
      the
      Common Areas, in conjunction with other tenants and during normal business
      hours, solely for the purposes for which they were intended and for no other
      purposes whatsoever. Tenant shall not have the right to use the exterior
      surfaces of exterior walls, the area beneath the floor or the area above the
      ceiling of the Leased Premises.

    


    4.2 General
      Limitations on Use.
      Tenant
      shall not do or permit any person for whom Tenant is responsible to do anything
      in or about the Leased Premises, the Building, the Common Areas or the Project
      which does or could (i) interfere with the rights of other tenants or
      occupants of the Building or the Project, (ii) jeopardize the structural
      integrity of the Building or (iii) cause damage to any part of the Building
      or the Project. Tenant shall not operate any equipment within the Leased
      Premises which does or could (i) injure, vibrate or shake the Leased
      Premises or the Building, (ii) damage, overload, corrode, or impair the
      efficient operation of any electrical, plumbing, sewer, heating, ventilating
      or
      air conditioning systems within or servicing the Leased Premises or the Building
      or (iii) damage or impair the efficient operation of the sprinkler system
      (if any) within or servicing the Leased Premises or the Building. Tenant shall
      not install any equipment or antennas on or make any penetrations of the
      exterior walls or roof of the Building. Tenant shall not affix any equipment
      to
      or make any penetrations or cuts in the floor, ceiling or walls of the Leased
      Premises. Tenant shall not place any loads upon the floors, walls, ceiling
      or
      roof systems which could endanger the structural integrity of the Building
      or
      damage its floors, foundations or supporting structural components. Tenant
      shall
      not place any explosive, flammable or harmful fluids, including Hazardous
      Materials, or other waste materials in the drainage systems of the Building
      or
      the Project. Tenant shall not drain or discharge any fluids in the landscaped
      areas or across the paved areas of the Project. Tenant shall not use any area
      located outside the Leased Premises for the storage of its materials, supplies,
      inventory or equipment, and all such materials, supplies, inventory and
      equipment shall at all times be stored within the Leased Premises. Tenant shall
      not commit nor permit to be committed any waste in or about the Leased Premises,
      the Common Areas or the Project.

    


    
      
         

      

      
        5.

        
          

        

      

      
         

      

    

    4.3 Noise
      and Emissions.
      All
      noise generated by Tenant in its use of the Leased Premises shall be confined
      or
      muffled so that it does not interfere with the businesses of or annoy other
      tenants of the Building or the Project. All dust, fumes, odors and other
      emissions generated by Tenant’s use of the Leased Premises shall be sufficiently
      dissipated in accordance with sound environmental practices and exhausted from
      the Leased Premises in such a manner so as not to interfere with the businesses
      of or annoy other tenants of the Building or the Project, or cause any damage
      to
      the Leased Premises or the Building or any component part thereof or the
      property of other tenants of the Building or the Project.

    


    4.4 Trash
      Disposal.
      Tenant
      shall provide trash and garbage disposal facilities inside the Leased Premises
      for all of its trash, garbage and waste requirements and shall cause such trash,
      garbage and waste to be regularly removed from the Leased Premises at Tenant’s
      sole cost. Tenant shall keep all areas outside the Leased Premises and all
      fire
      corridors and mechanical equipment rooms in or about the Leased Premises free
      and clear of all trash, garbage, waste and boxes containing same at all
      times.

    


    4.5 Parking.
      Tenant
      is allocated, and Tenant and its employees and invitees shall have the
      non-exclusive right to use, not more than the number of parking spaces set
      forth
      in Article 1 as “Tenant’s Number of Parking Spaces”. Tenant shall not, at any
      time, use or permit its employees or invitees to use more parking spaces than
      the number so allocated to Tenant. Tenant shall not have the exclusive right
      to
      use any specific parking space, and Landlord reserves the right to designate
      from time to time the location of the parking spaces allocated for Tenant’s use.
      In the event Landlord elects or is required by any Law to limit or control
      parking within the Project, whether by validation of parking tickets or any
      other method, Tenant agrees to participate in such validation or other program
      as reasonably established by Landlord. Tenant shall not, at any time, park
      or
      permit to be parked any trucks or vehicles adjacent to entryways or loading
      areas within the Project so as to interfere in any way with the use of such
      areas, nor shall Tenant, at any time, park or permit the parking of Tenant’s
      trucks or other vehicles, or the trucks and vehicles of Tenant’s suppliers or
      others, in any portion of the Common Areas not designated by Landlord for such
      use by Tenant. Tenant shall not, at any time, park or permit to be parked any
      recreational vehicles, inoperative vehicles or equipment on any portion of
      the
      common parking area or other Common Areas of the Project. Tenant agrees to
      assume responsibility for compliance by its employees and invitees with the
      parking provisions contained herein. If Tenant or its employees park any vehicle
      within the Project in violation of these provisions, then Landlord may charge
      Tenant, as Additional Rent, and Tenant agrees to pay, as Additional Rent, Fifty
      Dollars per day for each day or partial day that each such vehicle is illegally
      parked, or parked in any area other than that designated. Tenant hereby
      authorizes Landlord, at Tenant’s sole expense, to tow away from the Project and
      store until redeemed by its owner any vehicle belonging to Tenant or Tenant’s
      employees parked in violation of these provisions.

    


    4.6 Signs.
      Tenant
      shall not place or install on or within any portion of the Leased Premises,
      the
      Building, the Common Areas or the Project any sign (other than a business
      identification sign first approved by Landlord in accordance with this Article),
      advertisements, banners, placards or pictures which are visible from the
      exterior of the Leased Premises. Tenant shall not place or install on or within
      any portion of the Leased Premises, the Building, the Common Areas or the
      Project any business identification sign which is visible from the exterior
      of
      the Leased Premises until Landlord shall have first approved in writing the
      location, size, content, design, method of attachment and material to be used
      in
      the making of such sign. Any signs, once approved by Landlord, shall be
      installed only in strict compliance with Landlord’s approval, at Tenant’s
      expense, using a person first approved by Landlord to install same. Landlord
      may
      remove any signs (not first approved in writing by Landlord), advertisements,
      banners, placards or pictures so placed by Tenant on or within the Leased
      Premises, the Building, the Common Areas or the Project and charge to Tenant
      the
      cost of such removal, together with any costs incurred by Landlord to repair
      any
      damage caused thereby, including any cost incurred to restore the surface upon
      which such sign was so affixed to its original condition. Tenant shall remove
      any such signs, repair any damage caused thereby, and restore the surface upon
      which the sign was affixed to its original condition, all to Landlord’s
      reasonable satisfaction, upon the termination of this Lease.

    


    4.7 Compliance
      With Laws and Private Restrictions.
      Tenant
      shall not use or permit any person for whom Tenant is responsible to use the
      Leased Premises in any manner which violates any Laws or Private Restrictions.
      Tenant shall abide by and shall promptly observe and comply with, at its sole
      cost and expense, all Laws and Private Restrictions respecting the use and
      occupancy of the Leased Premises, the Building, the Common Areas or the Project
      and shall defend with competent counsel, indemnify and hold Landlord harmless
      from any claims, damages or liability resulting from Tenant’s failure to do
      so.

    


    4.8 Compliance
      With Insurance Requirements.
      With
      respect to any insurance policies carried by Landlord in accordance with the
      provisions of this Lease, Tenant shall not conduct (nor permit any other person
      to conduct) any activities within the Leased Premises, or store, keep or use
      anything within the Leased Premises which (i) is prohibited under the terms
      of
      any of such policies, (ii) could result in the termination of the coverage
      afforded under any of such policies, (iii) could give to the insurance carrier
      the right to cancel any of such policies, or (iv) could cause an increase in
      the
      rates (over standard rates) charged for the coverage afforded under any of
      such
      policies. Tenant shall comply with all requirements of any insurance company,
      insurance underwriter, or Board of Fire Underwriters which are necessary to
      maintain, at standard rates, the insurance coverages carried by either Landlord
      or Tenant pursuant to this Lease.

    


    
      
         

      

      
        6.

        
          

        

      

      
         

      

    

    4.9 Landlord’s
      Right to Enter.
      Landlord
      and its agents shall have the right to enter the Leased Premises during normal
      business hours and subject to Tenant’s reasonable security measures for the
      purpose of (i) inspecting the same; (ii) supplying any services to be provided
      by Landlord to Tenant; (iii) showing the Leased Premises to prospective
      purchasers or mortgagees (or prospective tenants for the Leased Premises during
      the last six (6) months of the Lease Term); (iv) making necessary alterations,
      additions or repairs; (v) performing any of Tenant’s obligations when
      Tenant has failed to do so after giving Tenant reasonable written notice of
      its
      intent to do so; and (vi) posting notices of non-responsibility or “For Lease”
or “For Sale” signs. Additionally, Landlord shall have the right to enter the
      Leased Premises at times of emergency. Any entry into the Leased Premises or
      portions thereof obtained by Landlord in accordance with this Article shall
      not
      under any circumstances be construed or deemed to be a forcible or unlawful
      entry into, or a detainer of, the Leased Premises, or an eviction, actual or
      constructive, of Tenant from the Leased Premises or any portion thereof. In
      exercising its right to enter the Leased Premises for any reason, Landlord
      shall
      use commercially reasonable efforts not to interfere with Tenant’s use of and
      operations within the Leased Premises and its access thereto, including
      parking.

    


    4.10 Control
      of Common Areas.
      Landlord
      shall at all times have exclusive control of the Common Areas. Landlord shall
      have the right, without the same constituting an actual or constructive eviction
      and without entitling Tenant to any reduction in or abatement of rent, to:
      (i)
      temporarily close any part of the Common Areas to whatever extent required
      in
      the opinion of Landlord’s counsel to prevent a dedication thereof or the accrual
      of any prescriptive rights therein; (ii) temporarily close all or any part
      of
      the Common Areas to perform maintenance or for any other reason deemed
      sufficient by Landlord; (iii) change the shape, size, location, number and
      extent of improvements within the Common Areas including, without limitation,
      changing the location of driveways, entrances, exits, parking spaces, parking
      areas, sidewalks, directional or locator signs, or the direction of the flow
      of
      traffic; and (iv) to make additions to the Common Areas including, without
      limitation, the construction of parking structures. Landlord shall have the
      right to change the name or address of the Building. Tenant, in its use of
      the
      Common Areas, shall keep the Common Areas free and clear of all obstructions
      created or permitted by Tenant. If, in the opinion of Landlord, unauthorized
      persons are using any of the Common Areas by reason of, or under claim of,
      the
      express or implied authority or consent of Tenant, then Tenant, upon demand
      of
      Landlord, shall restrain, to the fullest extent then allowed by Law, such
      unauthorized use, and shall initiate such appropriate proceedings as may be
      required to so restrain such use. Nothing contained herein shall affect the
      right of Landlord at any time to remove any unauthorized person from the Common
      Areas or to prohibit the use of the Common Areas by unauthorized persons,
      including, without limitation, the right to prohibit mobile food and beverage
      vendors. In exercising any such right regarding the Common Areas, Landlord
      shall
      make a reasonable effort to minimize any disruption to Tenant’s
      business.

    


    4.11 Rules
      and Regulations.
      Landlord
      shall have the right from time to time to establish reasonable rules and
      regulations and/or amendments or additions thereto respecting the use of space
      within the Project and the use of the Common Areas for the care and orderly
      management of the Project and the safety of its tenants, occupants and invitees.
      Upon delivery to Tenant of a copy of such rules and regulations or any
      amendments or additions thereto, Tenant shall comply with such rules and
      regulations. A violation by Tenant of any of such rules and regulations shall
      constitute a default by Tenant under this Lease. If there is a conflict between
      the rules and regulations and any of the provisions of this Lease, the
      provisions of this Lease shall prevail. Landlord shall not be responsible or
      liable to Tenant for the violation of such rules and regulations by any other
      tenant of the Project.

    


    4.12 Environmental
      Protection.
      Landlord
      may voluntarily cooperate in a reasonable manner with the efforts of all
      governmental agencies in reducing actual or potential environmental damage.
      Tenant shall not be entitled to terminate this Lease or to any reduction in
      or
      abatement of rent by reason of such compliance or cooperation. Tenant agrees
      at
      all times to cooperate fully with Landlord and to abide by all rules and
      regulations and requirements which Landlord may reasonably prescribe in order
      to
      comply with the requirements and recommendations of governmental agencies
      regulating, or otherwise involved in, the protection of the environment.


    


    4.13 Outside
      Areas.
      No
      materials, pallets, supplies, tanks or containers whether above or below ground
      level, equipment, finished products or semi-finished products, raw materials,
      inoperable vehicles or articles of any nature shall be stored upon or permitted
      to remain outside of the Leased Premises except in fully fenced and screened
      areas outside the Building which have been designed for such purpose and have
      been approved in writing by Landlord for such use by Tenant.

    


    4.14 Hazardous
      Materials.
      Landlord
      and Tenant agree as follows with respect to the existence or use of Hazardous
      Materials on the Property:

    


    A. Any
      handling, transportation, storage, treatment, disposal or use of Hazardous
      Materials by Tenant, Tenant’s Agents, or any other party after the Effective
      Date of this Lease in or about the Property shall strictly comply with all
      applicable Hazardous Materials Laws. Tenant shall indemnify, defend upon demand
      with counsel reasonably acceptable to Landlord, and hold harmless Landlord
      from
      and against any and all liabilities, losses, claims, damages, lost profits,
      consequential damages, interest, penalties, fines, court costs, remediation
      costs, investigation costs, and other expenses which result from or arise in
      any
      manner whatsoever out of the use, storage, treatment, transportation, release,
      or disposal of Hazardous Materials on or about the Property by Tenant, or
      Tenant’s Agents or Permitees after the Effective Date.

    


    
      
         

      

      
        7.

        
          

        

      

      
         

      

    

    B. If
      the
      presence of Hazardous Materials on the Property caused or permitted by Tenant
      or
      Tenant’s Agents or Permitees after the Effective Date of this Lease results in
      contamination or deterioration of water or soil or any other part of the
      Property, then Tenant shall promptly take any and all action necessary to
      investigate and remediate such contamination. Tenant shall further be solely
      responsible for, and shall defend, indemnify and hold Landlord and its agents
      harmless from and against all claims, costs and liabilities, including
      attorney’s fees and costs, arising out of or in connection with any
      investigation and remediation (including investigative analysis, removal,
      cleanup, and/or restoration work) required hereunder to return the Leased
      Premises, Building, Common Areas, Outside Areas, and/or Property and any other
      property of whatever nature to their condition existing prior to the appearance
      of such Hazardous Materials.

    


    C. Landlord
      and Tenant shall each give written notice to the other as soon as reasonably
      practicable of (i) any communication received from any governmental authority
      concerning Hazardous Materials which relates to the Property, and (ii) any
      contamination of the Property by Hazardous Materials which constitutes a
      violation of any Hazardous Materials Law. Tenant acknowledges that Landlord,
      as
      the owner of the Property, at Landlord’s election, shall have the sole right at
      Tenant’s expense to negotiate, defend, approve, and/or appeal any action taken
      or order issued with regard to Hazardous Materials by any applicable
      governmental authority. Tenant may use small quantities of household chemicals
      such as adhesive, lubricants, and cleaning fluids in order to conduct its
      business at the Premises and such other Hazardous Materials as are necessary
      to
      the operation of Tenant’s business of which Landlord receives notice prior to
      such Hazardous Materials being brought onto the Property (or any portion
      thereof) and which Landlord consents in writing may be brought onto the
      Property. In granting Landlord’s consent, Landlord may specify the location and
      manner or use, storage, or handling of any Hazardous Material. Landlord’s
      consent shall in no way relieve Tenant from any of its obligations as contained
      herein. Tenant shall notify Landlord in writing at least ten (10) days prior
      to
      the first introduction by Tenant of any Hazardous Material on the Leased
      Premises, Building, Common Areas, Outside Areas, and/or Property. Tenant shall
      provide Landlord with a list of all Hazardous Materials and the quantities
      of
      each Hazardous Material to be stored, or used, on any portion of the Property,
      and upon Landlord’s request Tenant shall provide Landlord with copies of any and
      all Hazardous Materials Management Plans, Material Safety Data Sheets, Hazardous
      Waste Manifests, and other documentation maintained or received by Tenant
      pertaining to the Hazardous Materials used, stored, or transported or to be
      used, stored, or transported on any portion of the Property. At any time during
      the Lease Term, Tenant shall, within five days after written request therefor
      received from Landlord, disclose in writing all Hazardous Materials that are
      being used by Tenant on the Property (or have been used on the Property), the
      nature of such use, and the manner of storage and disposal.

    


    D. Landlord
      may cause testing wells to be installed on the Property and may cause the ground
      water to be tested to detect the presence of Hazardous Material by the use
      of
      such tests as are then customarily used for such purposes. If Tenant so
      requests, Landlord shall supply Tenant with copies of such test results. The
      cost of such tests and of the installation, maintenance, repair and replacement
      of such wells shall be paid by Landlord unless such tests disclose the existence
      of facts which give rise to liability of Tenant pursuant to its indemnity given
      in A and/or B above. If reasonably required due to Tenant’s use of the Leased
      Premises, Landlord may retain consultants to inspect the Property, conduct
      periodic environmental audits, and review any information provided by Tenant.
      Tenant shall pay the reasonable cost of fees charged by Landlord’s
      consultants.

    


    E. Upon
      the
      expiration or earlier termination of the Lease, Tenant, at its sole cost, shall
      remove from the Property all Hazardous Materials introduced by Tenant and shall
      provide a certificate to Landlord from a registered consultant satisfactory
      to
      Landlord, certifying that Tenant has caused no contamination of building(s),
      soil or groundwater in or about the Leased Premises, Building, Common Areas,
      Outside Areas, or Property. If Tenant fails to so surrender the Property, Tenant
      shall indemnify and hold Landlord harmless from all damages resulting from
      Tenant’s failure to surrender the Property as required by this Subsection,
      including, without limitation, any claims or damages in connection with the
      condition of the Property including, without limitation, damages occasioned
      by
      the inability to Lease the Property (or any portion thereof) or a reduction
      in
      the fair market and/or rental value of the Property, Building, Common Areas,
      Outside Areas, and/or Property by reason of the existence of any Hazardous
      Materials in or around the Leased Premises, Building, Common Areas, Outside
      Areas, and/or Property. If any action is required to be taken by a governmental
      authority to test, monitor, and/or clean up Hazardous Materials from the Leased
      Premises, Building, Common Areas, Outside Areas, and/or Property and such action
      is not completed prior to the expiration or earlier termination of the Lease,
      Tenant shall be deemed to have impermissibly held over until such time as such
      required action is completed, and Tenant shall pay Base Monthly Rent and
      Additional Rent in accordance with the terms of Section 13.2 (Holding Over).
      In
      addition, Landlord shall be entitled to all damages directly or indirectly
      incurred in connection with such holding over, including without limitation,
      damages occasioned by the inability to Lease the Property or a reduction of
      the
      fair market and/or rental value of the Leased Premises, Building, Common Areas,
      Outside Areas, and/or Property. 

    


    F. As
      used
      herein, the term “Hazardous Materials(s)” means any hazardous or toxic
      substance, material or waste, which is or becomes regulated by any federal,
      state, regional or local governmental authority because it is in any way
      hazardous, toxic, carcinogenic, mutagenic or otherwise adversely affects any
      part of the environment or creates risks of any such hazards or effects,
      including, but not limited to, petroleum; asbestos, and polychlorinated bipheyls
      and any material, substance, or waste (a) defined as a “hazardous waste,”
“extremely hazardous waste” or “restricted hazardous waste” under Sections
      25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California
      Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law);
      (b) defined as a “hazardous substance” under Section 25316 of the California
      Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley Tanner
      Hazardous Substance Account Act); (c) defined as a “hazardous material,”
“hazardous substance” or “hazardous waste” under Section 25501 of the California
      Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release
      Response Plans and Inventory); (d) defined as a “hazardous substance” under
      Section 25281 of the California Health and Safety Code, Division 20, Chapter
      6.7
      (Underground Storage of Hazardous Substances); (e) defined as a “hazardous
      substance” pursuant to Section 311 of the Clean Water Act, 33 United States Code
      Sections 1251 et
      seq.
      (33
      U.S.C. 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C.
      1317); (f) defined as a “hazardous waste” pursuant to Section 1004 of the
      Resource Conservation and Recovery Act, 42 United States Code Sections 6901
      et
      seq.
      (42
      U.S.C. 6903); or (g) defined as a “hazardous substance” pursuant to Section 101
      of the Comprehensive Environmental Response, Compensation, and Liability Act,
      42
      United States Code Section 9601 et
      seq.
      (42
      U.S.C. 9601) or (h) defined as a “hazardous substance” pursuant to Section 311
      of the Federal Water Pollution Control Act, 33 U.S.C. 1251 et
      seq.
      or (i)
      listed pursuant to Section 307 of the Federal Water Pollution Control Act (33
      U.S.C. 1317 ) or (j) regulated under the Toxic Substances Control Act (15 U.S.C.
      2601 et
      seq.)
      or (k)
      defined as a “hazardous material “under Section 66680 or 66084 of Title 22 of
      the California Code of Regulations (Administrative Code) (l) listed in the
      United States Department of Transportation Hazardous Materials Table (49 C.F.R.
      172.101) or (m) listed by the Environmental Protection Agency as “hazardous
      substances” ( 4 0 C.F.R. Part 302 ) and amendments thereto. The term “Hazardous
      Material Laws” shall mean (i) all of the foregoing laws as amended from time to
      time and (ii) any other federal, state, or local law, ordinance, regulation,
      or
      order regulating Hazardous Materials.

    


    
      
         

      

      
        8.

        
          

        

      

      
         

      

    

    G. Tenant’s
      failure to comply with any of the requirements of this Section regarding the
      storage, use, disposal, or transportation of Hazardous Materials, or the
      appearance of any Hazardous Materials on the Leased Premises, Building, Common
      Area, Outside Area, and/or the Property without Landlord’s consent shall be an
      Event of Default as defined in this Lease. The obligations of Landlord and
      Tenant under this Section shall survive the expiration or earlier termination
      of
      the Lease Term as to occurrences during Tenant’s occupancy. The rights and
      obligations of Landlord and Tenant within respect to issues relating to
      Hazardous Materials are exclusively established by this section. In the event
      of
      any inconsistency between any other part of this Lease and this Section, the
      terms of this Section shall control.

    


    ARTICLE
      5

    


    Repairs,
      Maintenance, Services And Utilities

    


    5.1 Repair
      and Maintenance.
      Except
      in the case of damage to or destruction of the Leased Premises, the Building
      or
      the Project caused by an Act of God or other peril, in which case the provisions
      of Article 10 shall control, the parties shall have the following obligations
      and responsibilities with respect to the repair and maintenance of the Leased
      Premises, the Building and the Common Areas.

    


    A. Tenants
      Obligation.
      Tenant
      shall, at all times during the Lease Term and at its sole cost and expense,
      regularly clean and continuously keep and maintain in good order, condition
      and
      repair the Leased Premises and every part thereof and all appurtenances thereto,
      including, without limiting the generality of the foregoing, (i) all interior
      walls, floors and ceilings, (ii) all windows, doors and skylights, (iii) all
      interior electrical wiring, conduits, connectors and fixtures, (iv) all interior
      plumbing, pipes, sinks, toilets, faucets and drains, (v) all interior lighting
      fixtures, bulbs and lamps, (vi) all heating, ventilating and air conditioning
      equipment located within the Leased Premises or located outside the Leased
      Premises (e.g.,
      rooftop
      compressors) and serving the Leased Premises only (other than Common HVAC as
      defined in Subarticle B below), and (vii) all entranceways to the Leased
      Premises. Tenant, if requested to do so by Landlord, shall hire, at Tenant’s
      sole cost and expense, a licensed heating, ventilating and air conditioning
      contractor to regularly, and periodically inspect (not less frequently than
      every three months) and perform required maintenance on the heating, ventilating
      and air conditioning equipment and systems serving the Leased Premises, or
      alternatively, Landlord may, at its election, contract in its own name for
      such
      regular and periodic inspections of and maintenance on such heating, ventilating
      and air conditioning equipment and systems and charge to Tenant, as Additional
      Rent, the cost thereof. Tenant shall, at its sole cost and expense, repair
      all
      damage to the Building, the Common Areas or the Project caused by the activities
      of Tenant, its employees, invitees or contractors promptly following written
      notice from Landlord to so repair such damage. If Tenant shall fail to perform
      the required maintenance or fail to make repairs required of it pursuant to
      this
      Article within a reasonable period of time following notice from Landlord to
      do
      so, then Landlord may, at its election and without waiving any other remedy
      it
      may otherwise have under this Lease or at Law, perform such maintenance or
      make
      such repairs and charge to Tenant, as Additional Rent, the costs so incurred
      by
      Landlord for same. All glass within or a part of the Leased Premises, both
      interior and exterior, is at the sole risk of Tenant and any broken glass shall
      promptly be replaced by Tenant at Tenant’s expense with glass of the same kind,
      size and quality.

    


    B. Landlord’s
      Obligation.
      Landlord
      shall, at all times during the Lease Term, maintain in good condition and
      repair: (i) the exterior and structural parts of the Building (including the
      foundation, subflooring, load-bearing and exterior walls, and roof); (ii) the
      Common Areas; and (iii) the electrical and plumbing systems located outside
      the
      Leased Premises which service the Building. Additionally, to the extent that
      the
      Building contains central heating, ventilating and/or air conditioning systems
      located outside the Leased Premises which are designed to service, and are
      then
      servicing, more than a single tenant within the Building (“Common HVAC”),
      Landlord shall maintain in good operating condition and repair such Common
      HVAC
      equipment and systems. The provisions of this Subarticle B shall in no way
      limit
      the right of Landlord to charge to tenants of the Project, as Additional Rent
      pursuant to Article 3, the costs incurred by Landlord in making such repairs
      and/or performing such maintenance.

    


    5.2 Services
      and Utilities.
      The
      parties shall have the following responsibilities and obligations with respect
      to obtaining and paying the cost of providing the following utilities and other
      services to the Leased Premises.

    


    A. Gas
      and Electricity.
      Tenant
      shall arrange, at its sole cost and expense and in its own name, for the supply
      of gas and electricity to the Leased Premises. In the event that such services
      are not separately metered, Tenant shall, at its sole expense, cause such meters
      to be installed. Tenant shall be responsible for determining if the local
      supplier of gas and/or electricity can supply the needs of Tenant and whether
      or
      not the existing gas and/or electrical distribution systems within the Building
      and the Leased Premises are adequate for Tenant’s needs. Tenant shall pay all
      charges for gas and electricity as so supplied to the Leased
      Premises.

    


    
      
         

      

      
        9.

        
          

        

      

      
         

      

    

    B. Water.
      Landlord
      shall provide the Leased Premises with water for lavatory and drinking purposes
      only. Tenant shall pay, as Additional Rent, the cost to Landlord of providing
      water to the Leased Premises. In the event Landlord believes that Tenant is
      using more water than what normally would be required for lavatory and drinking
      purposes, Landlord at its election may (i) periodically charge Tenant, as
      Additional Rent, a sum equal to Landlord’s estimate of the cost of Tenant’s
      excess water usage or (ii) install (or require Tenant to install at Tenant’s
      sole cost) a separate meter for purposes of measuring Tenant’s water usage and,
      based upon such meter readings, periodically charge Tenant, as Additional Rent,
      a sum equal to Landlord’s estimate of the cost of Tenant’s excess water usage.
      In the event that Landlord shall so install such a separate meter, Tenant shall
      pay to Landlord, upon demand, the costs incurred by Landlord in purchasing
      and
      installing such meter and thereafter all costs incurred by Landlord in
      maintaining said meter. The cost of Tenant’s water usage shall include any costs
      to Landlord in keeping account of such usage and all governmental fees, public
      charges or the like attributable to or based upon (such as sewer usage fees)
      the
      use of water to the extent of such usage.

    


    C. Security
      Service.
      Tenant
      acknowledges that Landlord is not responsible for the security of the Leased
      Premises or the protection of Tenant’s property or Tenant’s employees, invitees
      or contractors, and that to the extent Tenant determines that such security
      or
      protection services are advisable or necessary, Tenant shall arrange for and
      pay
      the costs of providing same.

    


    D. Trash
      Disposal.
      Tenant
      acknowledges that Landlord is not responsible for the disposal of Tenant’s
      waste, garbage or trash and that Tenant shall arrange, in its own name and
      at
      its sole cost, for the regular and periodic removal of such waste, garbage
      or
      trash from the Leased Premises. In no event shall Landlord be required to
      provide trash bins for the disposal of Tenant’s waste, garbage or
      trash.

    


    5.3 Energy
      and Resource Consumption.
      Landlord
      may voluntarily cooperate in a reasonable manner with the efforts of
      governmental agencies and/or utility suppliers in reducing energy or other
      resource consumption within the Project. Tenant shall not be entitled to
      terminate this Lease or to any reduction in or abatement of rent by reason
      of
      such compliance or cooperation. Tenant agrees at all times to cooperate fully
      with Landlord and to abide by all reasonable rules established by Landlord
      (i)
      in order to maximize the efficient operation of the electrical, heating,
      ventilating and air conditioning systems and all other energy or other resource
      consumption systems within the Project and/or (ii) in order to comply with
      the
      requirements and recommendations of utility suppliers and governmental agencies
      regulating the consumption of energy and/or other resources.

    


    5.4 Limitation
      of Landlord’s Liability.
      Landlord
      shall not be liable to Tenant for injury to Tenant, its employees, agents,
      invitees or contractors, damage to Tenant’s property or loss of Tenant’s
      business or profits, nor shall Tenant be entitled to terminate this Lease or
      to
      any reduction in or abatement of rent by reason of (i) Landlord’s failure
      to perform any maintenance or repairs to the Project until Tenant shall have
      first notified Landlord, in writing, of the need for such maintenance or
      repairs, and then only after Landlord shall have had a reasonable period of
      time
      following its receipt of such notice within which to perform such maintenance
      or
      repairs, or (ii) any failure, interruption, rationing or other curtailment
      in the supply of water, electric current, gas or other utility service to the
      Leased Premises, the Building or the Project from whatever cause (other than
      Landlord’s active negligence or willful misconduct), or (iii) the unauthorized
      intrusion or entry into the Leased Premises by third parties (other than
      Landlord).

    


    ARTICLE
      6

    


    Alterations
      and Improvements

    


    6.1 By
      Tenant.
      Tenant
      shall not make any alterations to or modifications of the Leased Premises or
      construct any improvements to or within the Leased Premises without Landlord’s
      prior written approval, and then not until Landlord shall have first approved,
      in writing, the plans and specifications therefore, which approval shall not
      be
      unreasonably withheld. Notwithstanding the foregoing, Tenant shall be permitted
      to make alterations following not less than ten (10) business days notice to
      Landlord, but without Landlord’s prior approval, to the extent any such
      alteration is merely cosmetic in nature (i.e.,
      re-painting and re-carpeting) and together with all other such alterations
      in
      any calendar year costs less than $20,000, and provided
      that
      such
      alteration does not (a) affect the exterior of the Building, (b) affect the
      structure of the Building or the systems and equipment of the Building, and/or
      (c) interfere with Building services or the use of the Property or the Building
      by other tenants or occupants. All such modifications, alterations or
      improvements, once so approved, shall be made, constructed or installed by
      Tenant at Tenant’s expense, using a licensed contractor first approved by
      Landlord, in substantial compliance with the Landlord-approved plans and
      specifications therefore. All work undertaken by Tenant shall be done in
      accordance with all Laws and in a good and workmanlike manner using new
      materials of good quality that match or complement the original improvements
      existing as of the Lease Commencement Date. Tenant shall not commence the making
      of any such modifications or alterations or the construction of any such
      improvements until (i) all required governmental approvals and permits shall
      have been obtained, (ii) all requirements regarding insurance imposed by this
      Lease have been satisfied, (iii) Tenant shall have given Landlord at least
      five
      business days prior written notice of its intention to commence such work so
      that Landlord may post and file notices of non-responsibility, and (iv) if
      requested by Landlord, Tenant shall have obtained contingent liability and
      broad
      form builder’s risk insurance in an amount satisfactory to Landlord to cover any
      perils relating to the proposed work not covered by insurance carried by Tenant
      pursuant to Article 9. In no event shall Tenant make any modifications,
      alterations or improvements to the Common Areas or any areas outside of the
      Leased Premises. As used in this Article, the term “modifications, alterations
      and/or improvements” shall include, without limitation, the installation of
      additional electrical outlets, overhead lighting fixtures, drains, sinks,
      partitions, doorways, or the like. If Landlord reserves the right to require
      Tenant to remove any alterations or modifications at the end of the Lease Term,
      and the cost of such removal and restoration together with the cost of removal
      and restoration of all other alterations and modifications which Landlord may
      require Tenant to remove exceeds $25,000.00, then as a condition to granting
      its
      consent, Landlord may require Tenant to increase the amount of its Security
      Deposit hereunder to cover such costs to the extent they exceed $25,000.00.
      Tenant shall pay Landlord’s reasonable costs to inspect the construction of
      Tenant’s alterations or modifications and to have Landlord’s architect revise
      Landlord’s drawings to show the work performed by Tenant.

    


    
      
         

      

      
        10.

        
          

        

      

      
         

      

    

    6.2 Ownership
      Of Improvements.
      All
      modifications, alterations or improvements made or added to the Leased Premises
      by Tenant (other than Tenant’s inventory, equipment, movable furniture, wall
      decorations and trade fixtures) shall be deemed real property and a part of
      the
      Leased Premises, but shall remain the property of Tenant during the Lease Term.
      Any such modifications, alterations or improvements, once completed, shall
      not
      be altered or removed from the Leased Premises during the Lease Term without
      Landlord’s written approval first obtained in accordance with the provisions of
      Article 6.1 above. At the expiration or sooner termination of the Lease, all
      such modifications, alterations and improvements (other than Tenant’s inventory,
      equipment, movable furniture, wall decorations and trade fixtures) shall
      automatically become the property of Landlord and shall be surrendered to
      Landlord as a part of the Leased Premise as required pursuant to Article 2,
      unless Landlord shall require Tenant to remove any of such modifications,
      alterations or improvements in accordance with the provisions of Article 2,
      in
      which case Tenant shall so remove same. Landlord shall have no obligation to
      reimburse to Tenant all or any portion of the cost or value of any such
      modifications, alterations or improvements so surrendered to Landlord. All
      modifications, alterations or improvements which are installed or constructed
      on
      or attached to the Leased Premises by Landlord at Landlord’s expense shall be
      deemed real property and a part of the Leased Premises and shall be the property
      of Landlord. All lighting, plumbing, electrical, heating, ventilating and air
      conditioning fixtures, partitioning, window coverings, wall coverings and floor
      coverings installed by Tenant shall be deemed improvements to the Leased
      Premises and not trade fixtures of Tenant.

    


    6.3 Alterations.
      Landlord, at its sole cost and expense and not as a Project Maintenance Cost,
      shall be responsible for correcting any violations of applicable laws
      (including, without limitation, Title III of the Americans with Disabilities
      Act) with respect to the Leased Premises, Building and the Project existing
      as
      of the Lease Commencement Date. At its sole cost, Tenant shall make all
      modifications, alterations and improvements to the Leased Premises that are
      required by any Law because of (i) Tenant’s use or occupancy of the Leased
      Premises, the Building, the Outside Areas, or the Property, (ii) Tenant’s
      application for any permit or governmental approval, or (iii) Tenant’s making of
      any modifications, alterations or improvements to or within the Leased Premises.
      If Landlord shall, at any time during the Lease Term, (i) be required by any
      governmental authority to make any modifications, alterations or improvements
      to
      the Building or the Project, (ii) modify the existing (or construct additional)
      capital improvements or provide building service equipment for the purpose
      of
      reducing the consumption of utility services or project maintenance costs for
      the property, the cost incurred by Landlord in making such modifications,
      alterations or improvements shall be considered a Project Maintenance
      Cost.

    


    6.4 Liens.
      Tenant
      shall keep the Leased Premises, the Building and the Property free from any
      liens and shall pay when due all bills arising out of any work performed,
      materials furnished, or obligations incurred by Tenant, its agents, employees
      or
      contractors relating to the Leased Premises. If any such claim of lien is
      recorded against Tenant’s interest in this Lease, the Leased Premises, the
      Building or the Project, Tenant shall bond against, discharge or otherwise
      cause
      such lien to be entirely released within ten days after the same has been so
      recorded.

    


    6.5 Tenant
      Improvements By Landlord.
      Pursuant
      to Exhibit “F” Tenant Improvement Work Letter; Landlord agrees to construct the
      tenant improvements as outlined in the mutually agreed upon and approved Tenant
      Improvement Plan and Specifications to be prepared by Habitect and to be
      attached to this Lease as Exhibit “F-1”. Said tenant improvements shall
      include the construction of new private offices, conference rooms, upgraded
      lobby, install glass windows in the roll-up door, remodel existing kitchen
      with
      appliances, install new carpet and VCT where necessary. Any additional cost
      related to changes Tenant may make to the tenant improvement plan after said
      plan has been approved by Landlord shall be Tenant’s responsibility.


    


    ARTICLE
      7

    


    Assignment
      and Subletting By Tenant

    


    7.1 By
      Tenant.
      Tenant
      shall not sublet the Leased Premises (or any portion thereof) or assign or
      encumber its interest in this Lease, whether voluntarily or by operation of
      Law,
      without Landlord’s prior written consent first obtained in accordance with the
      provisions of this Article 7. Any attempted subletting, assignment or
      encumbrance without Landlord’s prior written consent, at Landlord’s election,
      shall constitute a default by Tenant under the terms of this Lease. The
      acceptance of rent by Landlord from any person or entity other than Tenant,
      or
      the acceptance of rent by Landlord from Tenant with knowledge of a violation
      of
      the provisions of this Article, shall not be deemed to be a waiver by Landlord
      of any provision of this Article or this Lease or to be a consent to any
      subletting by Tenant or any assignment or encumbrance of Tenant’s interest in
      this Lease.

    


    7.2 Merger
      or Reorganization.
      If
      Tenant is a corporation, any dissolution, merger, consolidation or other
      reorganization of Tenant, or the sale or other transfer in the aggregate over
      the Lease Term of a controlling percentage of the capital stock of Tenant,
      shall
      be deemed a voluntary assignment of Tenant’s interest in this Lease. The phrase
“controlling percentage” means the ownership of and the right to vote stock
      possessing more than fifty percent of the total combined voting power of all
      classes of Tenant’s capital stock issued, outstanding and entitled to vote for
      the election of directors. If Tenant is a partnership, a withdrawal or change,
      whether voluntary, involuntary or by operation of Law, of any general partner,
      or the dissolution of the partnership, shall be deemed a voluntary assignment
      of
      Tenant’s interest in this Lease.

    


    
      
         

      

      
        11.

        
          

        

      

      
         

      

    

    7.3 Landlord’s
      Election.
      If
      Tenant or Tenant’s successors shall desire to assign its interest under this
      Lease or to sublet the Leased Premises, Tenant and Tenant’s successors must
      first notify Landlord, in writing, of its intent to so assign or sublet, at
      least thirty days in advance of the date it intends to so assign its interest
      in
      this Lease or sublet the Leased Premises but not sooner than sixty days in
      advance of such date, specifying in detail the terms of such proposed assignment
      or subletting, including the name of the proposed assignee or sublessee, the
      proposed assignee’s or Sublessee’s intended use of the Leased Premises, a
      current financial statement of such proposed assignee or sublessee and the
      form
      of documents to be used in effectuating such assignment or subletting. Landlord
      shall have a period of fifteen days following receipt of such notice and receipt
      of all information requested by Landlord regarding the proposed assignee or
      sublessee within which to do one of the following: (a) in the case of an
      assignment or of a sublease of all or substantially all the Leased Premises
      for
      all or substantially all the then remaining Lease Term, terminate this Lease,
      or
      (b) if Landlord shall not have elected to cancel and terminate this Lease,
      to
      either (i) consent to such requested assignment or subletting subject to
      Tenant’s and Tenant’s successors’ compliance with the conditions set forth in
      Article 7.4 below or (ii) refuse to so consent to such requested assignment
      or
      subletting, provided
      that
      such
      consent shall not be unreasonably refused. If Landlord elects to terminate
      this
      Lease, the Lease shall so terminate in its entirety fifteen (15) days after
      Landlord has notified Tenant and Tenant’s successors in writing of such
      election. Landlord and Tenant or Tenant’s successors shall execute a
      cancellation agreement with respect to the Lease to effect such termination.
      It
      shall not be unreasonable for Landlord to withhold its consent to any proposed
      assignment or subletting if (i) the proposed assignee’s or subtenant’s
      anticipated use of the Leased Premises is more intensive than Tenant’s and/or
      involves the storage, use or disposal of a Hazardous Material; (ii) if the
      proposed assignee or subtenant has been required by any prior landlord, lender
      or governmental authority to clean up Hazardous Materials unlawfully discharged
      by the proposed assignee or subtenant; or (iii) if the proposed assignee or
      subtenant is subject to investigation or enforcement order or proceeding by
      any
      governmental authority in connection with the use, disposal or storage of a
      Hazardous Material. Tenant and Tenant’s successors covenant and agree to supply
      to Landlord, upon request, with all necessary or relevant information which
      Landlord may reasonably request respecting such proposed assignment or
      subletting and/or the proposed assignee or sublessee. Landlord’s review period
      shall not commence until Landlord has received all information requested by
      Landlord.

    


    7.4 Conditions
      to Landlord’s Consent.
      If
      Landlord elects to consent, or shall have been ordered to so consent by a court
      of competent jurisdiction, to such requested assignment, subletting or
      encumbrance, such consent shall be expressly conditioned upon the occurrence
      of
      each of the conditions below set forth, and any purported assignment, subletting
      or encumbrance made or ordered prior to the full and complete satisfaction
      of
      each of the following conditions shall be void and, at the election of Landlord,
      which election may be exercised at any time following such a purported
      assignment, subletting or encumbrance shall constitute a material default by
      Tenant under this Lease giving Landlord the absolute right to terminate this
      Lease. The conditions are as follows:

    


    A. Landlord
      having approved in form and substance the assignment or sublease agreement
      (or
      the encumbrance agreement), which approval shall not be unreasonably withheld
      by
      Landlord if the requirements of this Article 7 are otherwise complied
      with.

    


    B. Each
      such
      assignee having agreed, in writing satisfactory to Landlord and its counsel
      and
      for the benefit of Landlord, to assume, to be bound by, and to perform the
      obligations of this Lease to be performed by Tenant (or, in the case of an
      encumbrance, each such encumbrancer having similarly agreed to assume, be bound
      by and to perform Tenant’s obligations upon a foreclosure or transfer in lieu
      thereof).

    


    C. Tenant
      having fully and completely performed all of its obligations under the terms
      of
      this Lease through and including the date of the requested consent, as well
      as
      through and including the date such assignment or subletting is to become
      effective.

    


    D. Tenant
      having reimbursed to Landlord all reasonable costs and attorneys fees incurred
      by Landlord in conjunction with the processing and documentation of any such
      requested subletting, assignment or encumbrance.

    


    E. Tenant
      having delivered to Landlord a complete and fully-executed duplicate original
      of
      such sublease agreement, assignment agreement or encumbrance (as applicable)
      and
      all related agreements.

    


    F. Tenant
      having paid, or having agreed in writing to pay as to future payments, to
      Landlord fifty percent of all assignment consideration or excess rentals to
      be
      paid to Tenant or to any other on Tenant’s behalf or for Tenant’s benefit for
      such assignment or subletting after deduction of broker’s
      commissions.

    


    7.5 Intentionally
      Deleted.

    


    7.6 Payments.
      All
      payments required by this Article to be made to Landlord shall be made in cash
      in full as and when they become due. At the time Tenant, Tenant’s assignee or
      sublessee makes each such payment to Landlord, Tenant or Tenant’s assignee or
      sublessee, as the case may be, shall deliver to Landlord an itemized statement
      in reasonable detail showing the method by which the amount due Landlord was
      calculated and certified by the party making such payment as true and correct.
      Landlord may require that fifty (50%) percent of the Excess Rentals and/or
      Assignment Consideration, less reasonable subleasing brokerage fee, to be made
      hereunder be made directly to Landlord by such Transferee.

    


    7.7 Good
      Faith.
      The
      rights granted to Tenant by this Article are granted in consideration of
      Tenant’s express covenant that all pertinent allocations which are made by
      Tenant between the rental value of the Leased Premises and the value of any
      of
      Tenant’s personal property which may be conveyed or leased concurrently with and
      which may reasonably be considered a part of the same transaction as the
      permitted assignment or subletting shall be made fairly, honestly and in good
      faith. If Tenant shall breach this Covenant of Good Faith, Landlord may
      immediately declare Tenant to be in default under the terms of this Lease and
      terminate this Lease and/or exercise any other rights and remedies Landlord
      would have under the terms of this Lease in the case of a material default
      by
      Tenant under this Lease.

    


    
      
         

      

      
        12.

        
          

        

      

      
         

      

    

    7.8 Effect
      of Landlord’s Consent.
      No
      subletting, assignment or encumbrance, even with the consent of Landlord, shall
      relieve Tenant of its personal and primary obligation to pay rent and to perform
      all of the obligations to be performed by Tenant hereunder. Consent by Landlord
      to one or more assignments or encumbrances of Tenant’s interest in this Lease or
      to one or more sublettings of the Leased Premises shall not be deemed to be
      a
      consent to any subsequent assignment, encumbrance or subletting. If Landlord
      shall have been ordered by a court of competent jurisdiction to consent to
      a
      requested assignment or subletting, or such an assignment or subletting shall
      have been ordered over the objection of Landlord, such assignment or subletting
      shall not be binding between the assignee (or sublessee) and Landlord until
      such
      time as all conditions set forth in Article 7.4 above have been fully satisfied
      (to the extent not then satisfied) by the assignee or sublessee, including,
      without limitation, the payment to Landlord of all agreed assignment
      considerations and/or excess rentals then due Landlord.

    


    7.9 Permitted
      Transfers.
      Notwithstanding the above Tenant shall have the right, without Landlord’s
      consent and without triggering Landlord’s recapture or rent sharing rights, (A)
      to enter into an occupancy agreement, license, assignment or sublease with:
      (i)
      a parent corporation or entity; (ii) any subsidiary corporation or entity of
      Tenant or Tenant’s parent corporation or entity; (iii) an affiliated entity in
      which Tenant, or its subsidiaries or parent corporation or entity holds a
      controlling share of the outstanding shares or ownership interest; (iii) any
      person or entity that acquires all or substantially all of Tenant’s assets or
      all the capital stock or other ownership interest in Tenant; (iv) any entity
      with which Tenant merges, regardless of whether Tenant is the surviving entity,
      or (v) any person or entity that acquires all or substantially all of the
      business or assets operated or located on the Premises; or (B) to cause a sale
      or transfer of a controlling interest or all the capital stock or other
      ownership interests in Tenant (each such transaction in (A) or (B) above being
      referred to herein as a “Permitted Transfer and each such occupant, licensee,
      assignee or sublessee being referred to herein as a “Permitted Transferee”);
provided
      that
      in all
      cases the transaction is not a subterfuge intended to avoid Tenant’s obligations
      hereunder. If Tenant enters into to a Permitted Transfer, Tenant shall promptly
      following the effective date thereof deliver written notice of such transfer
      to
      Landlord with a copy of the operative documents.

    


    ARTICLE
      8

    


    Limitation
      on Landlord’s Liability and Indemnity

    


    8.1 Limitation
      on Landlord’s Liability and Release.
      Landlord
      shall not be liable to Tenant for, and Tenant hereby releases Landlord and
      its
      partners and officers from, any and all liability, whether in contract, tort
      or
      on any other basis, for any injury to or any damage sustained by Tenant, its
      agents, employees, contractors or invitees; any damage to Tenant’s property; or
      any loss to Tenant’s business, loss of Tenant’s profits or other financial loss
      of Tenant resulting from or attributable to the condition of, the management
      of,
      the maintenance of, or the protection of the Leased Premises, the Building,
      the
      Project or the Common Areas, including, without limitation, any such injury,
      damage or loss resulting from (i) the failure, interruption, rationing or other
      curtailment or cessation in the supply of electricity, water, gas or other
      utility service to the Project, the Building or the Leased Premises; (ii) the
      vandalism or forcible entry into the Building or the Leased Premises; (iii)
      the
      penetration of water into or onto any portion of the Leased Premises through
      roof leaks or otherwise; (iv) the failure to provide security and/or adequate
      lighting in or about the Project, the Building or the Leased Premises; (v)
      the
      existence of any design or construction defects within the Project, the Building
      or the Leased Premises; (vi) the failure of any mechanical systems to function
      properly (such as the HVAC systems); or (vii) the blockage of access to any
      portion of the Project, the Building or the Leased Premises, except in any
      matter covered by subsections 8.1(i) through (vii) above to the extent such
      damage was proximately caused by Landlord’s active negligence or willful
      misconduct, or Landlord’s failure to perform an obligation expressly undertaken
      pursuant to this Lease but only if Tenant shall have given Landlord prior
      written notice to perform such obligation and Landlord shall have failed to
      perform such obligation within a reasonable period of time following receipt
      of
      written notice from Tenant to so perform such obligation. In this regard, Tenant
      acknowledges that it is fully apprised of the provisions of Law relating to
      releases, and particularly to those provisions contained in Section 1542 of
      the
      California Civil Code which read as follows: A general release does not extend
      to claims which the creditor does not know or suspect to exist in his favor
      at
      the time of executing the release, which if known by him must have materially
      affected his settlement with the debtor. Notwithstanding such statutory
      provision, and for the purpose of implementing a full and complete release
      and
      discharge, Tenant hereby (i) waives the benefit of such statutory provision
      and
      (ii) acknowledges that, subject to the exceptions specifically set forth herein,
      the release and discharge set forth in this Article is a full and complete
      settlement and release and discharge of all claims and is intended to include
      in
      its effect, without limitation, all claims which Tenant, as of the date hereof,
      does not know of or suspect to exist in its favor.

    


    8.2 Tenant’s
      Indemnification of Landlord.
      Tenant
      shall defend, with competent counsel satisfactory to Landlord, any claims made
      or legal actions filed or threatened by third parties against Landlord which
      result in the death, bodily injury, personal injury, damage to property or
      interference with contractual or other rights suffered by any third party
      (including other tenants within the Project) which (i) occurred within the
      Leased Premises or (ii) resulted from Tenant’s use or occupancy of the
      Leased Premises or the Common Areas or (iii) resulted from Tenant’s activities
      in or about the Leased Premises, the Building or the Project, and Tenant shall
      indemnify and hold Landlord, Landlord’s principals, employees and agents
      harmless from any loss (including loss of rents by reason of vacant space which
      otherwise would have been leased but for such activities), liabilities,
      penalties, or expense whatsoever (including all legal fees incurred by Landlord
      with respect to defending such claims) resulting therefrom, except in any event
      to the extent proximately caused by the active negligence or willful misconduct
      of Landlord or Landlord’s failure to perform an obligation expressly undertaken
      pursuant to this Lease but only if Tenant shall have given Landlord prior
      written notice to perform such obligation and Landlord shall have failed to
      perform such obligation within a reasonable period of time following receipt
      of
      written notice from Tenant to so perform such obligation. This indemnity
      agreement shall survive the expiration or sooner termination of this Lease,
      provided
      that
      Tenant
      shall not be required to indemnify Landlord under this section 8.2 with respect
      to events that first occur after the later of (a) the date of the expiration,
      or
      sooner termination, of this Lease, or (b) the date Tenant actually vacates
      the
      Premises, provided
      that
      Landlord
      has actual notice of such vacation.

    


    
      
         

      

      
        13.

        
          

        

      

      
         

      

    

    ARTICLE
      9

    


    Insurance

    


    9.1 Tenant’s
      Insurance.
      Tenant
      shall maintain insurance complying with all of the following:

    


    A. Tenant
      shall procure, pay for and keep in full force and effect, at all times during
      the Lease Term, the following:

    


    (1) Commercial
      General Liability insurance insuring Tenant against liability for bodily injury,
      death, property damage and personal injury occurring at the Leased Premises,
      or
      resulting from Tenant’s use or occupancy of the Leased Premises or the Building,
      Outside Areas, Property, or Common Areas or resulting from Tenant’s activities
      in or about the Leased Premises. Such insurance shall be on an occurrence basis
      with a combined single limit of liability of not less than the amount of
      Tenant’s Required Liability Coverage (as set forth in Article 1). The
      policy or policies shall be endorsed to name Landlord and such others as are
      designated by Landlord as additional insureds in the form equivalent to
      CG20111185 or successor and shall contain the following additional endorsement:
      “The insurance afforded to the additional insureds is primary insurance. If
      the
      additional insureds have other insurance which is applicable to the loss on
      a
      contributing, excess or contingent basis, the amount of this insurance company’s
      liability under this policy shall not be reduced by the existence of such other
      insurance. Any insurance carried by the additional insureds shall be excess
      and
      non contributing with the insurance provided by the Tenant.” The policy shall
      not be canceled or reduced without at least 10 days written notice to additional
      insureds. If the policy insures more than one location, it shall be endorsed
      to
      show that the limits and aggregate apply per location using endorsement
      CG25041185 or successor. Tenant’s policy shall also contain the severability of
      interest and cross-liability endorsement or clauses.

    


    (2) Fire
      and
      property damage insurance in so-called Special Form (except earthquake and
      flood) insuring Tenant against loss from physical damage to Tenant’s personal
      property, inventory, stock, trade fixtures and improvements within the Leased
      Premises with coverage for the full actual replacement cost
      thereof;

    


    (3) Plate-glass
      insurance, at actual replacement cost;

    


    (4) Boiler
      and Machinery insurance, if applicable;

    


    (5) Product
      Liability insurance (including without limitation Liquor Liability insurance
      for
      liability arising out of the distribution, sale, or consumption of food and/or
      beverages including alcoholic beverages at the Leased Premises for not less
      than
      the Tenant’s Required Liability Coverage as set forth in Article 1;

    


    (6) Workers’
      compensation insurance and any other employee benefit insurance sufficient
      to
      comply with all Laws which policy shall be endorsed to provide thirty (30)
      days
      written notice of cancellation to Landlord;

    


    (7) With
      respect to making of alterations or the construction of improvements or the
      like
      undertaken by Tenant, contingent liability and builder’s risk insurance, in an
      amount and with coverage satisfactory to Landlord;

    


    (8) Business
      Income Insurance at a minimum of 50% co-insurance including coverage for loss
      of
      business income due to damage to equipment from perils covered under the
      so-called Special Form excepting perils of earth quake and flood;
      and

    


    (9) Comprehensive
      Auto Liability insurance with a combined single limit coverage of not less
      than
      the amount of Tenant’s Required Liability Coverage (as set forth in Article l)
      for bodily injury and/or property damage liability for: (a) Owned autos, (b)
      Hired or borrowed autos, and (c) Non-owned autos. The policy shall be endorsed
      to provide 10 days written notice of cancellation to Landlord.

    


    B. Each
      policy of liability insurance required to be carried by Tenant pursuant to
      this
      Article or actually carried by Tenant with respect to the Leased Premises or
      the
      Property (i) shall be in a form satisfactory to Landlord, (ii) Shall be provided
      by carriers admitted to do business in the state of California, with a Best
      rating of “A/VI” or better and/or acceptable to Landlord. Property insurance
      shall contain a waiver and/or a permission to waive by the insurer any right
      of
      subrogation against Landlord, its principals, employees, agents and contractors
      which might arise by reason of any payment under such policy or by reason of
      any
      act or omission of Landlord, its principals, employees, agents or
      contractors.

    


    C. Prior
      to
      the time Tenant or any of its contractors enters the Leased Premises, Tenant
      shall deliver to the Landlord with respect to each policy of insurance required
      to be carried by Tenant pursuant to this Article, a certificate of the insurer
      certifying, in a form satisfactory to the Landlord, that the policy has been
      issued and premium paid providing the coverage required by this Article and
      containing the provisions herein. Attached to such a certificate shall be
      endorsements naming Landlord as additional insured, and including the wording
      under primary insurance above. With respect to each renewal or replacement
      of
      any such insurance, the requirements of this Article must be complied with
      not
      less than 10 days prior to the expiration or cancellation of the policy being
      renewed or replaced. Landlord may at any time and from time-to-time inspect
      and/or copy any and all insurance policies required to be carried by Tenant
      pursuant to this article. If Landlord’s lender, insurance broker or advisor or
      counsel reasonably determines at any time that the form or amount of coverage
      set forth in Article 9.1.(A) for any policy of insurance Tenant is required
      to
      carry pursuant to this Article is not adequate, then Tenant shall increase
      the
      amount of coverage for such insurance to such greater amount or change the
      form
      as Landlord’s lender, insurance broker or advisor or counsel reasonably deems
      adequate (provided,
      however,
      such
      increase level of coverage may not exceed the level of coverage for such
      insurance commonly carried by comparable businesses similarly situated and
      operating under similar circumstances).

    


    
      
         

      

      
        14.

        
          

        

      

      
         

      

    

    D. The
      Commercial General Liability insurance carried by Tenant shall specifically
      insure the performance by Tenant of the Indemnification provisions set forth
      in
      Article 8.2 of this lease; provided,
      however,
      nothing
      contained in this Article 9 shall be construed to limit the liability of Tenant
      under the Indemnification provisions set forth in said Article 8.2.

    


    9.2 Landlord’s
      Insurance.
      With
      respect to insurance maintained by Landlord:

    


    A. Landlord
      shall maintain, as the minimum coverage required of it by this Lease, property
      insurance in so-called “Special” form insuring Landlord (and such others as
      Landlord may designate) against loss from physical damage to the Building with
      coverage of not less than one hundred percent of the full actual replacement
      cost thereof and against loss of rents for a period of not less than twelve
      months. Such property damage insurance, at Landlord’s election but without any
      requirement on Landlord’s behalf to do so, (i) may be written in so-called
      Special Form, excluding only those perils commonly excluded from such coverage
      by Landlord’s then property damage insurer; (ii) may provide coverage for
      physical damage to the improvements so insured for up to the entire full actual
      replacement cost thereof; (iii) may be endorsed to include (or separate policies
      which may be carried to cover) loss or damage caused by any additional perils
      against which Landlord may elect to insure, including earthquake and/or flood;
      (iv) may provide coverage for loss of rents for a period of up to twelve months;
      and/or (v) may contain “deductibles” per occurrence in an amount reasonably
      acceptable to Landlord. Landlord shall not be required to cause such insurance
      to cover any of Tenant’s personal property, inventory and trade fixtures, or any
      modifications, alterations or improvements made or constructed by Tenant to
      or
      within the Leased Premises.

    


    B. Landlord
      shall maintain Commercial General Liability insurance insuring Landlord (and
      such others as are designated by Landlord) against liability for personal
      injury, bodily injury, death, and damage to property occurring in, on or about,
      or resulting from the use or occupancy of the Project, or any portion thereof,
      with combined single limit coverage of at least Two Million Dollars. Landlord
      may carry such greater coverage as Landlord or Landlord’s Lender, insurance
      broker or advisor or counsel may from time to time determine is reasonably
      necessary for the adequate protection of Landlord and the Project.

    


    C. Landlord
      may maintain any other insurance which in the opinion of its lender, insurance
      broker or advisor, or legal counsel is prudent to carry under the given
      circumstances.

    


    9.3 Mutual
      Waiver of Subrogation.
      Notwithstanding anything to the contrary set forth in this Lease, Landlord
      hereby releases Tenant, and Tenant hereby releases Landlord and its respective
      partners and officers, agents, employees and servants, from any and all
      liability for loss, damage or injury to the property of the other in or about
      the Leased Premises which is caused by or results from a peril or event or
      happening which would be covered by insurance required to be carried under
      the
      terms of this Lease, or is covered by insurance actually carried and in force
      at
      the time of the loss, by the party sustaining such loss; provided,
      however,
      that
      such waiver shall be effective only to the extent permitted by the insurance
      covering such loss and to the extent such insurance is not prejudiced
      thereby.

    


    ARTICLE
      10

    


    Damage
      to Leased Premises

    


    10.1 Landlord’s
      Duty to Restore.
      If the
      Leased Premises are damaged by any peril after the Effective Date of this Lease,
      Landlord shall restore the Leased Premises, as and when required by this
      Article, unless this Lease is terminated by Landlord pursuant to Article 10.2
      or
      by Tenant pursuant to Article 10.3. All insurance proceeds available from the
      fire and property damage insurance carried by Landlord shall be paid to and
      become the property of Landlord. If this Lease is terminated pursuant to either
      Article 10.2 or 10.3, all insurance proceeds available from insurance carried
      by
      Tenant which cover loss to property that is Landlord’s property or would become
      Landlord’s property on termination of this Lease shall be paid to and become the
      property of Landlord, and the remainder of such proceeds shall be paid to and
      become the property of Tenant. If this Lease is not terminated pursuant to
      either Article 10.2 or 10.3, all insurance proceeds available from insurance
      carried by Tenant which cover loss to property that is Landlord’s property shall
      be paid to and become the property of Landlord, and all proceeds available
      which
      cover loss to property which would become the property of Landlord upon the
      termination of this Lease shall be paid to and remain the property of Tenant.
      If
      this Lease is not so terminated, then upon receipt of the insurance proceeds
      (if
      the loss is covered by insurance) and the issuance of all necessary governmental
      permits, Landlord shall commence and diligently prosecute to completion the
      restoration of the Leased Premises, to the extent then allowed by Law, to
      substantially the same condition in which the Leased Premises existed as of
      the
      Lease Commencement Date. Landlord’s obligation to restore shall be limited to
      the Leased Premises and interior improvements constructed by Landlord. Landlord
      shall have no obligation to restore any other improvements to the Leased
      Premises or any of Tenant’s personal property, inventory or trade fixtures. Upon
      completion of the restoration by Landlord, Tenant shall forthwith replace or
      fully repair all of Tenant’s trade fixtures and other improvements constructed
      by Tenant to like or similar condition as existed at the time of such damage
      or
      destruction.

    


    
      
         

      

      
        15.

        
          

        

      

      
         

      

    

    10.2 Landlord’s
      Right to Terminate.
      Landlord
      shall have the option to terminate this Lease in the event any of the following
      occurs, which option may be exercised only by delivery to Tenant of a written
      notice of election to terminate within thirty days after the date of such damage
      or destruction:

    


    A. The
      Building is damaged by any peril covered by valid and collectible insurance
      actually carried by Landlord and in force at the time of such damage or
      destruction (an “insured peril”) to such an extent that the estimated cost to
      restore the Building exceeds the lesser of (i) the insurance proceeds available
      from insurance actually carried by Landlord, or (ii) seventy-five percent of
      the
      then actual replacement cost thereof;

    


    B. The
      Building is damaged by an uninsured peril, which peril Landlord was required
      to
      insure against pursuant to the provisions of Article 9 of this Lease, to such
      an
      extent that the estimated cost to restore the Building exceeds the lesser of
      (i)
      the insurance proceeds which would have been available had Landlord carried
      such
      required insurance, or (ii) seventy-five percent of the then actual replacement
      cost thereof;

    


    C. The
      Building is damaged by an uninsured peril, which peril Landlord was not required
      to insure against pursuant to the provisions of Article 9 of this Lease, to
      any
      extent.

    


    D. The
      Building is damaged by any peril and, because of the Laws then in force, the
      Building (i) can not be restored at reasonable cost or (ii) if restored, can
      not
      be used for the same use being made thereof before such damage.

    


    10.3 Tenant’s
      Right to Terminate.
      If the
      Leased Premises are damaged by any peril and Landlord does not elect to
      terminate this Lease or is not entitled to terminate this Lease pursuant to
      this
      Article, then as soon as reasonably practicable, Landlord shall furnish Tenant
      with the written opinion of Landlord’s architect or construction consultant as
      to when the restoration work required of Landlord may be complete. Tenant shall
      have the option to terminate this Lease in the event any of the following
      occurs, which option may be exercised in the case of A or B below only by
      delivery to Landlord of a written notice of election to terminate within fifteen
      days after Tenant receives from Landlord the estimate of the time needed to
      complete such restoration:

    


    A. The
      Leased Premises are damaged by any peril and, in the reasonable opinion of
      Landlord’s architect or construction consultant, the restoration of the Leased
      Premises cannot be substantially completed within ninety (90) days after the
      date of such notice from Landlord; or

    


    B. The
      Leased Premises are damaged by any peril within nine months of the last day
      of
      the Lease Term and, in the reasonable opinion of Landlord’s architect or
      construction consultant, the restoration of the Leased Premises cannot be
      substantially completed within sixty days after the date such restoration is
      commenced.

    


    10.4 Tenant’s
      Waiver.
      Landlord
      and Tenant agree that the provisions of Article 10.3 above, captioned “Tenant’s
      Right to Terminate”, are intended to supersede and replace the provisions
      contained in California Civil Code, Section 1932, Subdivision 2, and California
      Civil Code, Section 1934, and accordingly, Tenant hereby waives the provisions
      of said Civil Code Sections and the provisions of any successor Code Sections
      or
      similar Laws hereinafter enacted.

    


    10.5 Abatement
      of Rent.
      In the
      event of damage to the Leased Premises which does not result in the termination
      of this Lease, the Base Monthly Rent (and any Additional Rent) shall be
      temporarily abated during the period of restoration in proportion to the degree
      to which Tenant’s use of the Leased Premises is impaired by such damage and
      repair.

    


    ARTICLE
      11

    


    Condemnation

    


    11.1 Landlord’s
      Right To Terminate.
      Subject
      to Article 11.3, Landlord shall have the option to terminate this Lease if,
      as a
      result of a taking by means of the exercise of the power of eminent domain
      (including inverse condemnation and/or a voluntary sale or transfer by Landlord
      under threat of condemnation to an entity having the power of eminent domain),
      (i) all or any part of the Leased Premises is so taken, (ii) more than
      thirty-three and one-third percent of the Buildings leasable area is so taken,
      (iii) more than thirty-three and one-third percent of the Common Area is so
      taken, or (iv) because of the Laws then in force, the Leased Premises may not
      be
      used for the same use being made thereof before such taking, whether or not
      restored as required by Article 11.4 below. Any such option to terminate by
      Landlord must be exercisable within a reasonable period of time, to be effective
      as of the date possession is taken by the condemnor.

    


    11.2 Tenant’s
      Right to Terminate.
      Subject
      to Article 11.3, Tenant shall have the option to terminate this Lease if, as
      a
      result of any taking by means of the exercise of the power of eminent domain
      (including inverse condemnation and/or a voluntary sale or transfer by Landlord
      to an entity having the power of eminent domain under threat of condemnation),
      (i) all of the Leased Premises is so taken, (ii) thirty-three and
      one-third percent or more of the Leased Premises is so taken and the part of
      the
      Leased Premises that remains cannot, within a reasonable period of time, be
      made
      reasonably suitable for the continued operation of the Tenant’s business, or
      (iii) there is a taking of a portion of the Common Area and, as a result of
      such taking, Landlord cannot provide parking spaces within the Project (or
      within a reasonable distance therefrom) equal in number to at least sixty-six
      and two-thirds percent of Tenant’s Number of Parking Spaces (as set forth in
      Article 1), whether by rearrangement of the remaining parking areas in the
      Common Area (including, if Landlord elects, construction of multi-dock parking
      structures or restriping for compact cars where permitted by Law), or by
      providing alternative parking facilities on other land within reasonable walking
      distance of the Leased Premises. Tenant must exercise such option within a
      reasonable period of time, to be effective on the later to occur of (i) the
      date
      that possession of that portion of the Common Area or the Leased Premises that
      is condemned is taken by the condemnor or (ii) the date Tenant vacates the
      Leased Premises.

    


    
      
         

      

      
        16.

        
          

        

      

      
         

      

    

    11.3 Temporary
      Taking.
      If any
      portion of the Leased Premises is temporarily taken for one year or less, this
      Lease shall remain in effect. If any portion of the Leased Premises is
      temporarily taken for a period which either exceeds one year or which extends
      beyond the natural expiration of the Lease Term, then Landlord and Tenant shall
      each independently have the option to terminate this Lease, effective on the
      date possession is taken by the condemnor.

    


    11.4 Restoration
      and Abatement of Rent.
      If any
      part of the Leased Premises is taken by condemnation and this Lease is not
      terminated, then Landlord shall repair any damage occasioned thereby to the
      remainder of the Leased Premises to a condition reasonably suitable for Tenant’s
      continued operations and otherwise, to the extent practicable, in the manner
      and
      to the extent provided in Article 10.1. As of the date possession is taken
      by
      the condemning authority, (i) the Base Monthly Rent shall be reduced in the
      same
      proportion that the area of that part of the Leased Premises so taken (less
      any
      addition to the area of the Leased Premises by reason of any reconstruction)
      bears to the area of the Leased Premises immediately prior to such taking,
      and
      (ii) Tenant’s Proportionate Share shall be appropriately adjusted.

    


    11.5 Division
      of Condemnation Award.
      Any
      award made for any condemnation of the Project, the Building, the Common Areas
      or the Leased Premises, or any portion thereof, shall belong to and be paid
      to
      Landlord, and Tenant hereby assigns to Landlord all of its right, title and
      interest in any such award; provided,
      however,
      that
      Tenant shall be entitled to receive any condemnation award that is made directly
      to Tenant (i) for the taking of personal property, inventory or trade fixtures
      belonging to Tenant, (ii) for the interruption of Tenant’s business or its
      moving costs, (iii) for loss of Tenant’s goodwill, or (iv) for any temporary
      taking where this Lease is not terminated as a result of such taking. The rights
      of Landlord and Tenant regarding any condemnation shall be determined as
      provided in this Article, and each party hereby waives the provisions of Section
      1265.130 of the California Code of Civil Procedure, and the provisions of any
      similar law hereinafter enacted, allowing either party to petition the Superior
      Court to terminate this Lease and/or allocating condemnation awards between
      Landlord and Tenant in the event of a taking of the Leased
      Premises.

    


    ARTICLE
      12

    


    Default
      and Remedies

    


    12.1 Events
      of Tenant’s Default.
      Tenant
      shall be in default of its obligations under this Lease if any of the following
      events occur:

    


    A. Tenant
      shall have failed to pay Base Monthly Rent or any Additional Rent when due
      and
      such failure continues for more than five (5) days after written notice of
      delinquency from Landlord; or

    


    B. Tenant
      shall have failed to perform any term, covenant or condition of this Lease,
      except those requiring the payment of Base Monthly Rent or Additional Rent,
      within 30 days after written notice from Landlord to Tenant specifying the
      nature of such failure and requesting Tenant to perform same; provided,
      however,
      that in
      the event such act, use, thing or failure and the consequences thereof are
      curable but completing such cure is not reasonable within said thirty (30)
      day
      period, then Tenant shall have a reasonable time to cure such default provided
      Tenant commences such cure within such thirty (30) days and diligently
      prosecutes such cure to completion; or

    


    C. Tenant
      shall have sublet the Leased Premises or assigned or encumbered its interest
      in
      this Lease in violation of the provisions contained in Article 7, whether
      voluntarily or by operation of Law; or

    


    D. Tenant
      or
      any Guarantor of this Lease shall have permitted or suffered the sequestration
      or attachment of, or execution on, or the appointment of a custodian or receiver
      with respect to, all or any substantial part of the property or assets of Tenant
      (or such Guarantor) or any property or asset essential to the conduct of
      Tenant’s (or such Guarantor’s) business, and Tenant (or such Guarantor) shall
      have failed to obtain a return or release of the same within thirty days
      thereafter, or prior to sale pursuant to such sequestration, attachment or
      levy,
      whichever is earlier; or

    


    E. Tenant
      or
      any Guarantor of this Lease shall have made a general assignment of all or
      a
      substantial part of its assets for the benefit of its creditors; or

    


    F. Tenant
      or
      any Guarantor of this Lease shall have allowed (or sought) to have entered
      against it a decree or order which: (i) grants or constitutes an order for
      relief, appointment of a trustee, or confirmation of a reorganization plan
      under
      the bankruptcy laws of the United States; (ii) approves as properly filed a
      petition seeking liquidation or reorganization under said bankruptcy laws or
      any
      other debtor’s relief law or similar statute of the United States or any state
      thereof; or (iii) otherwise directs the winding up or liquidation of Tenant;
      provided,
      however,
      if any
      decree or order was entered without Tenant’s consent or over Tenant’s objection,
      Landlord may not terminate this Lease pursuant to this Subarticle if such decree
      or order is rescinded or reversed within sixty days after its original
      entry.

    


    G. Tenant
      or
      any Guarantor of this Lease shall have availed itself of the protection of
      any
      debtor’s relief law, moratorium law or other similar Law which does not require
      the prior entry of a decree of order. 

    


    
      
         

      

      
        17.

        
          

        

      

      
         

      

    

    12.2 Landlord’s
      Remedies.
      In the
      event of any default by Tenant, and without limiting Landlord’s right to
      indemnification as provided in Article 8.2, Landlord shall have the following
      remedies, in addition to all other rights and remedies provided by Law or
      otherwise provided in this Lease, to which Landlord may resort cumulatively,
      or
      in the alternative:

    


    A. Landlord
      may, at Landlord’s election, keep this Lease in effect and enforce, by an action
      at law or in equity all of its rights and remedies under this Lease including,
      without limitation, (i) the right to recover the rent and other sums as they
      become due by appropriate legal action, (ii) the right to make payments required
      of Tenant, or perform Tenant’s obligations and be reimbursed by Tenant for the
      cost thereof with interest at the then maximum rate of interest not prohibited
      by Law from the date the sum is paid by Landlord until Landlord is reimbursed
      by
      Tenant, and (iii) the remedies of injunctive relief and specific performance
      to
      prevent Tenant from violating the terms of this Lease and/or to compel Tenant
      to
      perform its obligations under this Lease, as the case may be.

    


    B. Landlord
      may, at Landlord’s election, terminate this Lease by giving Tenant written
      notice of termination, in which event this Lease shall terminate on the date
      set
      forth for termination in such notice. Any termination under this Subarticle
      shall not relieve Tenant from its obligation to pay to Landlord all Base Monthly
      Rent and Additional Rent then or thereafter due, or any other sums due or
      thereafter accruing to Landlord, or from any claim against Tenant for damages
      previously accrued or then or thereafter accruing. In no event shall any one
      or
      more of the following actions by Landlord, in the absence of a written election
      by Landlord to terminate this Lease, constitute a termination of this
      Lease:

    


    (1) Appointment
      of a receiver or keeper in order to protect Landlord’s interest
      hereunder;

    


    (2) Consent
      to any subletting of the Leased Premises or assignment of this Lease by Tenant,
      whether pursuant to the provisions hereof or otherwise; or

    


    (3) Any
      other
      action by Landlord or Landlord’s agents intended to mitigate the adverse effects
      of any breach of this Lease by Tenant, including, without limitation, any action
      taken to maintain and preserve the Leased Premises or any action taken to relet
      the Leased Premises, or any portion thereof, for the account of Tenant and
      in
      the name of Tenant.

    


    C. In
      the
      event Tenant breaches this Lease and abandons the Leased Premises, Landlord
      may
      terminate this Lease, but this Lease shall not terminate unless Landlord gives
      Tenant written notice of termination. No act by or on behalf of Landlord
      intended to mitigate the adverse effect of such breach, including those
      described by Subarticles B(l), (2) and (3) immediately preceding, shall
      constitute a termination of Tenant’s right to possession unless Landlord gives
      Tenant written notice of termination. If Landlord does not terminate this Lease
      by giving written notice of termination, Landlord may enforce all its rights
      and
      remedies under this Lease, including the right to recover rent as it becomes
      due
      under this Lease as provided in California Civil Code Section 1951.4, as in
      effect on the Effective Date of this Lease.

    


    D. In
      the
      event Landlord terminates this Lease, Landlord shall be entitled, at Landlord’s
      election, to damages in an amount as set forth in California Civil Code Section
      1951.2, as in effect on the Effective Date of this Lease. For purposes of
      computing damages pursuant to said Section 1951.2, an interest rate equal to
      the
      maximum rate of interest then not prohibited by Law shall be used where
      permitted. Such damages shall include, without limitation:

    


    (1) 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
      Tenant proves could be reasonably avoided, computed by discounting such amount
      at the discount rate of the Federal Reserve Bank of San Francisco at the time
      of
      award plus one percent; and

    


    (2) Any
      other
      amount necessary to compensate Landlord for all detriment proximately caused
      by
      Tenant’s failure to perform Tenant’s obligations under this Lease, or which in
      the ordinary course of things would be likely to result therefrom, including,
      without limitation, the following: (i) expenses for cleaning, repairing or
      restoring the Leased Premises; (ii) expenses for altering, remodeling or
      otherwise improving the Leased Premises for the purpose of reletting, including
      removal of existing leasehold improvements and/or installation of additional
      leasehold improvements (regardless of how the same is funded, including
      reduction of rent, a direct payment or allowance to a new tenant, or otherwise);
      (iii) broker’s fees, advertising costs and other expenses of reletting the
      Leased Premises; (iv) costs of carrying the Leased Premises, which costs would
      have been billed to Tenant as Additional Rent had Tenant not defaulted and
      which
      include, but are not limited to; taxes, insurance premiums, landscape
      maintenance, HVAC maintenance, utility charges and security precautions; (v)
      expenses incurred in removing, disposing of and/or storing any of Tenant’s
      personal property, inventory or trade fixtures remaining therein; (vi)
      attorneys’ fees, expert witness fees, court costs and other reasonable expenses
      incurred by Landlord (but not limited to taxable costs) in retaking possession
      of the Leased Premises, establishing damages hereunder, and re-leasing the
      Leased Premises; and (vii) any other expenses, costs or damages otherwise
      incurred or suffered as a result of Tenant’s default.

    


    12.3 Landlord’s
      Default and Tenant’s Remedies.
      In the
      event Landlord fails to perform any of its obligations under this Lease,
      Landlord shall nevertheless not be in default under the terms of this Lease
      until such time as Tenant shall have first given Landlord written notice
      specifying the nature of such failure to perform its obligations, and then
      only
      after Landlord shall have had a reasonable period of time following its receipt
      of such notice within which to perform such obligations. In the event of
      Landlord’s default as above set forth, then, and only then, Tenant shall have
      the following remedies only:

    


    
      
         

      

      
        18.

        
          

        

      

      
         

      

    

    A. Tenant
      may then proceed in equity or at law to compel Landlord to perform its
      obligations and/or to recover damages proximately caused by such failure to
      perform (except as and to the extent Tenant has waived its right to damages
      as
      provided in this Lease).

    


    B. Tenant,
      at its option, may then cure any default of Landlord at Landlord’s cost. If,
      pursuant to this Subarticle, Tenant reasonably pays any sum to any third party
      or does any act that requires the payment of any sum to any third party at
      any
      time by reason of Landlord’s default, the sum paid by Tenant shall be
      immediately due from Landlord to Tenant at the time Tenant supplies Landlord
      with an invoice therefore (provided such invoice sets forth and is accompanied
      by a written statement of Tenant setting forth in reasonable detail the amount
      paid, the party to whom it was paid, the date it was paid, and the reasons
      giving rise to such payment), together with interest at twelve percent per
      annum
      from the date of such invoice until Tenant is reimbursed by Landlord. Tenant
      may
      not offset such sums against any installment of rent due Landlord under the
      terms of this Lease.

    


    12.4 Limitation
      on Tenant’s Recourse.
      If
      Landlord is a corporation, trust, partnership, joint venture, unincorporated
      association, or other form of business entity, Tenant agrees that (i) the
      obligations of Landlord under this Lease shall not constitute personal
      obligations of the officers, directors, trustees, partners, joint venturers,
      members, owners, stockholders, or other principals of such business entity
      and
      (ii) Tenant shall have recourse only to Landlord’s then equity interest, if any,
      in the Property, rental income, sales and financing proceeds, and insurance
      proceeds for the satisfaction of such obligations and not against the assets
      of
      such officers, directors, trustees, partners, joint venturers, members, owners,
      stockholders or principals (other than to the extent of their interest in the
      Property). Tenant shall look exclusively to such interests of Landlord, if
      any,
      in the Property for payment and discharge of any obligations imposed upon
      Landlord hereunder, and Landlord is hereby released and relieved of any other
      obligations hereunder. Additionally, if Landlord is a partnership, then Tenant
      covenants and agrees:

    


    A. No
      partner of Landlord shall be sued or named as a party in any suit or action
      brought by Tenant with respect to any alleged breach of this Lease (except
      to
      the extent necessary to secure jurisdiction over the partnership and then only
      for that sole purpose);

    


    B. No
      service of process shall be made against any partner of Landlord except for
      the
      sole purpose of securing jurisdiction over the partnership; and

    


    C. No
      writ
      of execution shall be levied against the assets of any partner of Landlord
      other
      than to the extent of his interest in Property. 

    


    Tenant
      further agrees that each of the foregoing covenants and agreements shall be
      enforceable by Landlord and by any partner of Landlord and shall be applicable
      to any actual or alleged misrepresentation or non-disclosure made respecting
      this Lease or the Leased Premises or any actual or alleged failure, default
      or
      breach of any covenant or agreement either expressly or implicitly contained
      in
      this Lease or imposed by statute or at common law.

    


    12.5 Tenant’s
      Waiver.
      Landlord
      and Tenant agree that the provisions of Article 12.3 above are intended to
      supersede and replace the provisions of California Civil Code 1932(l), 1941
      and
      1942, and accordingly, Tenant hereby waives the provisions of Section 1932(l),
      1941 and 1942 of the California Civil Code and/or any similar or successor
      Law
      regarding Tenant’s right to terminate this Lease or to make repairs and deduct
      the expenses of such repairs from the rent due under this Lease. Tenant hereby
      waives any right of redemption or relief from forfeiture under the Laws of
      the
      State of California, or under any other present or future Law, in the event
      Tenant is evicted or Landlord takes possession of the Leased Premises by reason
      of any default by Tenant.

    


    ARTICLE
      13

    


    General
      Provisions

    


    13.1 Taxes
      on Tenant’s Property.
      Tenant
      shall pay before delinquency any and all taxes, assessments, license fees,
      use
      fees, permit fees and public charges of whatever nature or description levied,
      assessed or imposed against Tenant or Landlord by a governmental agency arising
      out of, caused by reason of or based upon Tenant’s estate in this Lease,
      Tenant’s ownership of property, improvements made by Tenant to the Leased
      Premises, improvements made by Landlord for Tenant’s use within the Leased
      Premises, Tenant’s use (or estimated use) of public facilities or services or
      Tenant’s consumption (or estimated consumption) of public utilities, energy,
      water or other resources. On demand by Landlord, Tenant shall furnish Landlord
      with satisfactory evidence of these payments. If any such taxes, assessments,
      fees or public charges are levied against Landlord, Landlord’s property, the
      Building or the Project, or if the assessed value of the Building or the Project
      is increased by the inclusion therein of a value placed upon same, then
      Landlord, after giving written notice to Tenant, shall have the right,
      regardless of the validity thereof, to pay such taxes, assessment, fee or public
      charge and bill Tenant, as Additional Rent, the amount of such taxes,
      assessment, fee or public charge so paid on Tenant’s behalf. Tenant shall,
      within ten days from the date it receives an invoice from Landlord setting
      forth
      the amount of such taxes, assessment, fee or public charge so levied, pay to
      Landlord, as Additional Rent, the amount set forth in said invoice. Failure
      by
      Tenant to pay the amount so invoiced within said ten day period shall be
      conclusively deemed a default by Tenant under this Lease. Tenant shall have
      the
      right, and with Landlord’s full cooperation if Tenant is not then in default
      under the terms of this Lease, to bring suit in any court of competent
      jurisdiction to recover from the taxing authority the amount of any such taxes,
      assessment, fee or public charge so paid.

    


    13.2 Holding
      Over.
      This
      Lease shall terminate without further notice on the Lease Expiration Date (as
      set forth in Article 1). Any holding over by Tenant after expiration of the
      Lease Term shall neither constitute a renewal nor extension of this Lease nor
      give Tenant any rights in or to the Leased Premises except as expressly provided
      in this Article. Any such holding over shall be deemed an unlawful detainer
      of
      the Leased Premises unless Landlord has consented to same. Any such holding
      over
      to which Landlord has consented shall be construed to be a tenancy from month
      to
      month, on the same terms and conditions herein specified insofar as applicable,
      except that the Base Monthly Rent shall be increased to an amount equal to
      one
      hundred fifty percent of the Base Monthly Rent payable during the last full
      month immediately preceding such holding over.

    


    
      
         

      

      
        19.

        
          

        

      

      
         

      

    

    13.3 Subordination
      to Mortgages.
      This
      Lease is subject and subordinate to all underlying ground leases and to all
      mortgages and deeds of trust which affect the Building and are of public record
      as of the Effective Date of this Lease, and to all renewals, modifications,
      consolidations, replacements and extensions thereof. However, if the lessor
      under any such ground lease or any Lender holding any such mortgage or deed
      of
      trust shall advise Landlord that it desires or requires this Lease to be made
      prior and superior thereto, then, upon written request of Landlord to Tenant,
      Tenant shall promptly execute, acknowledge and deliver any and all documents
      or
      instruments which Landlord and such lessor or Lender deem necessary or desirable
      to make this Lease prior thereto. Tenant hereby consents to Landlord’s ground
      leasing the land underlying the Building and/or encumbering the Building as
      security for future loans on such terms as Landlord shall desire, all of which
      future ground leases, mortgages or deeds of trust shall be subject and
      subordinate to this Lease. However, if any lessor under any such future ground
      lease or any Lender holding such future mortgage or deed of trust shall desire
      or require that this Lease be made subject and subordinate to such future ground
      lease, mortgage or deed of trust, then Tenant agrees, within ten days after
      Landlord’s written request therefore, to execute, acknowledge and deliver to
      Landlord any and all documents or instruments requested by Landlord or such
      lessor or Lender as may be necessary or proper to assure the subordination
      of
      this Lease to such future ground lease, mortgage or deed of trust; but only
      if
      such lessor or Lender agrees to recognize Tenant’s rights under this Lease and
      not to disturb Tenant’s quiet possession of the Leased Premises so long as
      Tenant is not in default under this Lease.

    


    13.4 Tenant’s
      Attornment Upon Foreclosure.
      Tenant
      shall, upon request, attorn (i) to any purchaser of the Building at any
      foreclosure sale or private sale conducted pursuant to any security instrument
      encumbering the Building, (ii) to any grantee or transferee designated in any
      deed given in lieu of foreclosure of any security interest encumbering the
      Building, or (iii) to the lessor under any underlying ground lease of the land
      underlying the Building, should such ground lease be terminated; provided
      that
      such
      purchaser, grantee or lessor recognizes Tenant’s rights under this
      Lease.

    


    13.5 Mortgagee
      Protection.
      In the
      event of any default on the part of Landlord, Tenant will give notice by
      registered mail to any Lender or lessor under any underlying ground lease who
      shall have requested, in writing, to Tenant that it be provided with such
      notice, and Tenant shall offer such Lender or lessor a reasonable opportunity
      to
      cure the default, including time to obtain possession of the Leased Premises
      by
      power of sale or judicial foreclosure or other appropriate legal proceedings
      if
      reasonably necessary to effect a cure.

    


    13.6 Estoppel
      Certificates.
      Tenant
      will, following any request by Landlord, promptly execute and deliver to
      Landlord an estoppel certificate (i) certifying that this Lease is unmodified
      and in full force and effect, or, if modified, stating the nature of such
      modification and certifying that this Lease, as so modified, is in full force
      and effect, (ii) stating the date to which the rent and other charges are paid
      in advance, if any, (iii) acknowledging that there are not, to Tenant’s
      knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
      such defaults if any are claimed, and (iv) certifying such other information
      about this Lease as may be reasonably requested by Landlord. Tenant’s failure to
      execute and deliver such estoppel certificate within ten days after Landlord’s
      request therefore shall be a material default by Tenant under this Lease, and
      Landlord shall have all of the rights and remedies available to Landlord as
      Landlord would otherwise have in the case of any other material default by
      Tenant, including the right to terminate this Lease and sue for damages
      proximately caused thereby, it being agreed and understood by Tenant that
      Tenant’s failure to so deliver such estoppel certificate in a timely manner
      could result in Landlord being unable to perform committed obligations to other
      third parties which were made by Landlord in reliance upon this covenant of
      Tenant. Landlord and Tenant intend that any statement delivered pursuant to
      this
      Article may be relied upon by any Lender or purchaser or prospective Lender
      or
      purchaser of the Building, the Project, or any interest therein.

    


    13.7 Tenant’s
      Financial Information.
      Tenant
      shall, within ten business days after Landlord’s request therefore, deliver to
      Landlord a copy of a current financial statement, including an income statement
      and balance sheet, and any such other information reasonably requested by
      Landlord regarding Tenant’s financial condition. Tenant acknowledges that
      Landlord has and will rely on the truth and accuracy of the information provided
      by Tenant to Landlord both prior to and during the term of the Lease. Landlord
      shall be entitled to disclose such financial statements or other information
      to
      its Lender, to any present or prospective principal of or investor in Landlord,
      or to any prospective Lender or purchaser of the Building, the Project or any
      portion thereof or interest therein. Any such financial statement or other
      information which is marked “confidential” or “company secrets” (or is otherwise
      similarly marked by Tenant) shall be confidential and shall not be disclosed
      by
      Landlord to any third party except as specifically provided in this Article,
      unless the same becomes a part of the public domain without the fault of
      Landlord.

    


    13.8 Transfer
      By Landlord.
      Landlord
      and its successors in interest shall have the right to transfer their interest
      in the Building, the Project, or any portion thereof at any time and to any
      person or entity. In the event of any such transfer, the Landlord originally
      named herein (and in the case of any subsequent transfer, the transferor),
      from
      the date of such transfer, (i) shall be automatically relieved, without any
      further act by any person or entity, of all liability for the performance of
      the
      obligations of the Landlord hereunder which may accrue after the date of such
      transfer and (ii) shall be relieved of all liability for the performance of
      the
      obligations of the Landlord hereunder which have accrued before the date of
      transfer if its transferee agrees to assume and perform all such prior
      obligations of the Landlord hereunder. Tenant shall attorn to any such
      transferee. After the date of any such transfer, the term “Landlord” as used
      herein shall mean the transferee of such interest in the Building or the
      Project.

    


    
      
         

      

      
        20.

        
          

        

      

      
         

      

    

    13.9 Force
      Majeure.
      The
      obligations of each of the parties under this Lease (other than the obligation
      to pay money) shall be temporarily excused if such party is prevented or delayed
      in performing such obligation by reason of any strikes, lockouts or labor
      disputes; inability to obtain labor, materials, fuels or reasonable substitutes
      therefore; governmental restrictions, regulations, controls, action or inaction;
      civil commotion; inclement weather, fire or other acts of God; or other causes
      (except financial inability) beyond the reasonable control of the party
      obligated to perform (including acts or omissions of the other party for a
      period equal to the period of any such prevention, delay or
      stoppage.

    


    13.10 Notices.
      Any
      notice required or desired to be given by a party regarding this Lease shall
      be
      in writing and shall be personally served, or in lieu of personal service may
      be
      given by: (i) delivery by Federal Express, United Parcel Service or similar
      commercial service, (ii) electronic facsimile transmission, or (iii) by
      depositing such notice in the United States mail, postage prepaid, addressed
      to
      the other party as follows:

    


    A. If
      addressed to Landlord, to Landlord at its Address for Notices (as set forth
      in
      Article 1).

    


    B. If
      addressed to Tenant, to Tenant at its Address for Notices (as set forth in
      Article 1). 

    


    Any
      notice given by registered mail shall be deemed to have been given on the third
      business day after its deposit in the United States mail. Any notice given
      by
      certified mail shall be deemed given on the date receipt was acknowledged to
      the
      postal authorities. Any notice given by mail other than registered or certified
      mail shall be deemed given only if received by the other party, and then on
      the
      date of receipt. In the event of notice by electronic facsimile transmission
      or
      commercial carrier, notice shall be deemed received on the business day
      following the date of confirmation documented by the transmission or carrier.
      Each party may, by written notice to the other in the manner aforesaid, change
      the address to which notices addressed to it shall thereafter be
      mailed.

    


    13.11 Attorneys’
      Fees.
      In the
      event any party shall bring any action, arbitration proceeding or legal
      proceeding alleging a breach of any provision of this Lease to recover rent,
      to
      terminate this Lease, or to enforce, protect, determine or establish any term
      or
      covenant of this Lease or rights or duties hereunder of either party, the
      prevailing party shall be entitled to recover from the non-prevailing party
      as a
      part of such action or proceeding, or in a separate action for that purpose
      brought within one year from the determination of such proceeding, reasonable
      attorneys’ fees, expert witness fees, court costs and other reasonable expenses
      incurred by the prevailing party. Landlord may enforce this provision by either
      (i) requiring Tenant to pay such fees and costs as a condition to curing its
      default or (ii) bringing a separate action to enforce such payment, it being
      agreed by and between Landlord and Tenant that Tenant’s failure to pay such fees
      and costs upon demand shall constitute a breach of this Lease in the same manner
      as a failure by Tenant to pay the Base Monthly Rent, giving Landlord the same
      rights and remedies as if Tenant failed to pay the Base Monthly
      Rent.

    


    13.12 Definitions.
      Any term
      that is given a special meaning by any provision in this Lease shall, unless
      otherwise specifically stated, have such meaning whenever used in this Lease
      or
      in any Addenda or amendment hereto. In addition to the terms defined in Article
      1, the following terms shall have the following meanings:

    


    A. Real
      Property Taxes.
      The term
“Real Property Tax” or “Real Property Taxes” shall each mean (i) all taxes,
      assessments, levies and other charges of any kind or nature whatsoever, general
      and special, foreseen and unforeseen (including all installments of principal
      and interest required to pay any general or special assessments for public
      improvements and any increases resulting from reassessments caused by any change
      in ownership or new construction), now or hereafter imposed by any governmental
      or quasi-governmental authority or special district having the direct or
      indirect power to tax or levy assessments, which are levied or assessed for
      whatever reason against the Project or any portion thereof, or Landlord’s
      interest therein, or the fixtures, equipment and other property of Landlord
      that
      is an integral part of the Project and located thereon, or Landlord’s business
      of owning, leasing or managing the Project or the gross receipts, income or
      rentals from the Project; (ii) all charges, levies or fees imposed by any
      governmental authority against Landlord by reason of or based upon the use
      of or
      number of parking spaces within the Project, the amount of public services
      or
      public utilities used or consumed (e.g.,
      water,
      gas, electricity, sewage or surface water disposal) at the Project, the number
      of persons employed by tenants of the Project, the size (whether measured in
      area, volume, number of tenants or whatever) or the value of the Project, or
      the
      type of use or uses conducted within the Project; and (iii) all costs and fees
      (including attorneys’ fees) incurred by Landlord in contesting any Real Property
      Tax and in negotiating with public authorities as to any Real Property Tax.
      If,
      at any time during the Lease Term, the taxation or assessment of the Project
      prevailing as of the Effective Date of this Lease shall be altered so that
      in
      lieu of or in addition to any Real Property Tax described above there shall
      be
      levied, assessed or imposed (whether by reason of a change in the method of
      taxation or assessment, creation of a new tax or charge, or any other cause)
      an
      alternate, substitute, or additional tax or charge (i) on the value, size,
      use
      or occupancy of the Project or Landlord’s interest therein or (ii) on or
      measured by the gross receipts, income or rentals from the Project, or on
      Landlord’s business of owning, leasing or managing the Project or (iii) computed
      in any manner with respect to the operation of the Project, then any such tax
      or
      charge, however designated, shall be included within the meaning of the terms
      “Real Property Tax” or “Real Property Taxes” for purposes of this Lease. If any
      Real Property Tax is partly based upon property or rents unrelated to the
      Project, then only that part of such Real Property Tax that is fairly allocable
      to the Project shall be included within the meaning of the terms “Real Property
      Tax” or “Real Property Taxes”. Notwithstanding the foregoing, the terms “Real
      Property Tax” or “Real Property Taxes” shall not include estate, inheritance,
      transfer, gift or franchise taxes of Landlord or the federal or state income
      tax
      imposed on Landlord’s income from all sources or any documentary transfer
      taxes.

    


    B. Landlord’s
      Insurance Costs.
      The term
“Landlord’s Insurance Costs” shall mean the costs to Landlord to carry and
      maintain the policies of fire and property damage insurance, including quake
      and
      flood, for the Project and general liability insurance required, or permitted,
      to be carried by Landlord pursuant to Article 9, together with any deductible
      amounts paid by Landlord upon the occurrence of any insured casualty or loss;
      provided
      that with
      respect to any deductible applied to any cost which is capitalized in accordance
      with generally accepted accounting principles, such deductible shall be
      amortized as provided in Paragraph 13.12C below.

    


    
      
         

      

      
        21.

        
          

        

      

      
         

      

    

    C. Project
      Maintenance Costs.
      The term
“Project Maintenance Costs” shall mean all costs and expenses (except Landlord’s
      Insurance Costs and Real Property Taxes) paid or incurred by Landlord in owning,
      protecting, operating, maintaining, repairing and preserving the Project and
      all
      parts thereof, including without limitation, (i) professional management fees
      (equal to three percent of the annualized Base Monthly Rent), (ii) the costs
      incurred by Landlord in the making of any modifications, alterations or
      improvements as set forth in Article 6 including costs of complying with any
      governmental regulation or court order coming into effect after the Lease
      Commencement Date such as costs associated with complying with the Americans
      with Disabilities Act (ADA) or any similar laws or court cases, (iii) costs
      of
      complying with governmental regulations governing Tenant’s use of Hazardous
      Materials, and Landlord’s costs of monitoring Tenant’s use of Hazardous
      Materials including fees charged by Landlord’s consultants to periodically
      inspect the Premises and the Property, (iv) all costs, fees, expenses,
      assessments, and the like charged by any public or private maintenance
      association or district whether such costs are incurred on or off the Project,
      for the benefit of the Project, also including any costs required to be paid
      by
      Landlord pursuant to any covenants, conditions, and/or restrictions effecting
      the Project for the benefit of any common property owners association, and
      (v)
      such other costs as may be paid or incurred with respect to owning, operating,
      maintaining and preserving the Project, such as repairing, replacing and
      resurfacing the exterior surfaces of the buildings (including roofs), repairing,
      replacing, and resurfacing paved areas, repairing structural parts of the
      buildings, cleaning, maintaining, repairing, or replacing the interior of the
      Leased Premises both during the Lease Term and upon termination of the Lease,
      and maintaining, repairing or replacing, when necessary electrical, plumbing,
      sewer, drainage, heating, ventilating and air conditioning systems serving
      the
      buildings, providing utilities to the common areas, maintenance, repair,
      replacement or installation of lighting fixtures, directional or other signs
      and
      signals, irrigation or drainage systems, trees, shrubs, materials, maintenance
      of all landscaped areas, and depreciation and financing costs on maintenance
      and
      operating machinery and equipment (if owned) and rental paid for such machinery
      and equipment (if leased). As to the costs of capital improvements,
      replacements, repairs, equipment and other capital costs (“Capital Items”), such
      costs shall be included in Project Maintenance Costs as follows: (i) as to
      Capital Items with a reasonable useful life of less than five (5) years, all
      such costs shall be included in the calendar year during which such costs were
      paid, and (ii) as to Capital Items with a reasonable useful life of five (5)
      years or more, the first $20,000 of such costs shall be included in Project
      Maintenance Costs for the calendar year during which such costs were paid and
      the remaining amount shall be amortized over the reasonable useful life of
      the
      Capital Item, as determined by Landlord in accordance with generally accepted
      accounting principles, at an interest rate announced from time to time by Wells
      Fargo Bank as its “prime rate” plus 2%, provided further that such amortized
      costs included in Project Maintenance Costs shall not exceed $40,000 in any
      calendar year.

    


    Exclusions
      from Project Maintenance Costs.
      Notwithstanding the above, Project Maintenance Costs shall not include the
      following:

    


    (i) Interest,
      principal, depreciation, and other lender costs and closing costs on any
      mortgage or mortgages, ground lease payments, or other debt instrument
      encumbering the Building or Project;

    


    (ii) Any
      bad
      debt loss, rent loss, or reserves for bad debt or rent loss;

    


    (iii) Costs
      associated with operation of the business of the ownership of the Building
      or
      Project or entity that constitutes Landlord or Landlord’s property manager, as
      distinguished from the cost of Building operations, including the costs of
      partnership or corporate accounting and legal matters; defending or prosecuting
      any lawsuit with any mortgagee, lender, ground lessor, broker, tenant, occupant,
      or prospective tenant or occupant; selling or syndicating any of Landlord’s
      interest in the Building or Project; and disputes between Landlord and
      Landlord’s property manager;

    


    (iv) Landlord’s
      general corporate or partnership overhead and general administrative expenses,
      including the salaries of management personnel who are not directly related
      to
      the Building or Project and primarily engaged in the operation, maintenance,
      and
      repair of the Building or Project, except to the extent that those costs and
      expenses are included in the management fees;

    


    (v) Advertising,
      promotional expenditures and leasing expenses primarily directed toward leasing
      tenant space in the Project;

    


    (vi) Leasing
      commissions, space-planning costs, attorney fees and costs, disbursements,
      and
      other expenses incurred in connection with leasing, other negotiations, or
      disputes with tenants, occupants, prospective tenants, or other prospective
      occupants of the Project, or associated with the enforcement of any
      leases;

    


    (vii) Charitable
      or political contributions;

    


    (viii) Costs
      for
      which Landlord is reimbursed; and

    


    (ix) Fees
      paid
      to any affiliate or party related to Landlord to the extent such fees exceed
      the
      charges for comparable services rendered by unaffiliated third parties of
      comparable skill, stature and reputation in the same market.

     

    D. Ready
      For Occupancy.
      The term
“Ready for Occupancy” shall mean the date upon which (i) the Leased Premises are
      available for Tenant’s occupancy in a broom clean condition and (ii) the
      improvements, if any, to be made to the Leased Premises by Landlord as a
      condition to Tenant’s obligation to accept possession of the Leased Premises
      have been substantially completed as evidenced by a Certificate of Completion
      by
      Tenant’s architect and the appropriate governmental building department
      (i.e.,
      the
      City building department, if the Project is located within a City, or otherwise
      the County building department) shall have approved the construction of the
      improvements as substantially complete or is willing to so approve the
      construction of such improvements as substantially complete subject only to
      compliance with specified conditions which are the responsibility of Tenant
      to
      satisfy or is willing to allow Tenant to occupy subject to its receiving
      assurances that specified work will be completed within 30 days.

    


    
      
         

      

      
        22.

        
          

        

      

      
         

      

    

    E. Tenant’s
      Proportionate Share.
      The term
“Tenant’s Proportionate Share” or “Tenant’s Share”, as used with respect to an
      item pertaining to the Building, shall each mean that percentage obtained by
      dividing the leasable square footage contained within the Leased Premises (as
      set forth in Article 1) by the total leasable square footage contained within
      the Building as the same from time to time exists or, as used with respect
      to an
      item pertaining to the Project, shall each mean that percentage obtained by
      dividing the leasable square footage contained within the Leased Premises (as
      set forth in Article 1) by the total leasable square footage contained within
      the Project as the same from time to time exists, unless, as to any given item,
      such a percentage allocation unfairly burdens or benefits a given tenant(s),
      in
      which case Landlord shall have the exclusive right to equitably allocate such
      item so as to not unfairly burden or benefit any given tenant(s). Landlord’s
      determination of any such special allocation shall be final and binding upon
      Tenant unless made in bad faith.

    


    F. Building’s
      Proportionate Share.
      The term
“Building’s Proportionate Share” or “Building’s Share” shall each mean that
      percentage which is obtained by dividing the leasable square footage contained
      within the Building by the leasable square footage contained within all
      buildings located within the Project, unless, as to any given item, such a
      percentage allocation unfairly burdens or benefits a given building(s), in
      which
      case Landlord shall have the exclusive right to equitably allocate such item
      so
      as to not unfairly burden or benefit any given building(s). Landlord’s
      determination of any such special allocation shall be final and binding upon
      Tenant unless made in bad faith.

    


    G. Building
      Operating Expenses.
      The term
“Building Operating Expenses” shall mean and include the Building’s Share of all
      Real Property Taxes, plus the Building’s Share of all Landlord’s Insurance
      Costs, plus the Building’s Share of all Project Maintenance Costs plus an
      accounting fee equal to three percent (3%) of Building Operating Expenses (other
      than said fee).

    


    H. Law.
      The term
“Law” shall mean any judicial decision and any statute, constitution, ordinance,
      resolution, regulation, rule, administrative order, or other requirement of
      any
      municipal, county , state, federal, or other governmental agency or authority
      having jurisdiction over the parties to this Lease, the Leased Premises, the
      Building or the Project, or any of them in effect either at the Effective Date
      of this Lease or at any time during the Lease Term, including, without
      limitation, any regulation, order, or policy of any quasi-official entity or
      body (e.g.,
      a board
      of fire examiners or a public utility or special district).

    


    I. Lender.
      The term
“Lender” shall mean the holder of any Note or other evidence of indebtedness
      secured by the Project or any portion thereof.

    


    J. Private
      Restrictions.
      The term
“Private Restrictions” shall mean all recorded covenants, conditions and
      restrictions, private agreements, easements, and any other recorded instruments
      affecting the use of the Project, as they may exist from time to
      time.

    


    K. Rent.
      The term
“rent” shall mean collectively Base Monthly Rent and all Additional
      Rent.

    


    13.13 General
      Waivers.
      One
      party’s consent to or approval of any act by the other party, requiring the
      first party’s consent or approval shall not be deemed to waive or render
      unnecessary the first party’s consent to or approval of any subsequent similar
      act by the other party. No waiver of any provision hereof or any breach of
      any
      provision hereof shall be effective unless in writing and signed by the waiving
      party. The receipt by Landlord of any rent or payment with or without knowledge
      of the breach of any other provision hereof shall not be deemed a waiver of
      any
      such breach. No waiver of any provision of this Lease shall be deemed a
      continuing waiver unless such waiver specifically states so in writing and
      is
      signed by both Landlord and Tenant. No delay or omission in the exercise of
      any
      right or remedy accruing to either party upon any breach by the other party
      under this Lease shall impair such right or remedy or be construed as a waiver
      of any such breach theretofore or thereafter occurring. The waiver by either
      party of any breach of any provision of this Lease shall not be deemed to be
      a
      waiver of any subsequent breach of the same or any other provisions herein
      contained.

    


    13.14 Miscellaneous.
      Should
      any provision of this Lease prove to be invalid or illegal, such invalidity
      or
      illegality shall in no way affect, impair or invalidate any other provision
      hereof, and such remaining provisions shall remain in full force and effect.
      Time is of the essence with respect to the performance of every provision of
      this Lease in which time of performance is a factor. Any copy of this Lease
      which is executed by the parties shall be deemed an original for all purposes.
      This Lease shall, subject to the provisions regarding assignment, apply to
      and
      bind the respective heirs, successors, executors, administrators and assigns
      of
      Landlord and Tenant. The term “party” shall mean Landlord or Tenant as the
      context implies. If Tenant consists of more than one person or entity, then
      all
      members of Tenant shall be jointly and severally liable hereunder. This Lease
      shall be construed and enforced in accordance with the Laws of the State in
      which the Leased Premises are located. The language in all parts of this Lease
      shall in all cases be construed as a whole according to its fair meaning, and
      not strictly for or against either Landlord or Tenant. The captions used in
      this
      Lease are for convenience only and shall not be considered in the construction
      or interpretation of any provision hereof. When the context of this Lease
      requires, the neuter gender includes the masculine, the feminine, a partnership
      or corporation or joint venture, and the singular includes the plural. The
      terms
“must”, “shall”, “will” and “agree” are mandatory. The term “may” is permissive.
      When a party is required to do something by this Lease, it shall do so at its
      sole cost and expense without right of reimbursement from the other party unless
      specific provision is made therefore. Where Tenant is obligated not to perform
      any act or is not permitted to perform any act, Tenant is also obligated to
      restrain any others reasonably within its control, including agents, invitees,
      contractors, subcontractors and employees, from performing said act. Landlord
      shall not become or be deemed a partner or a joint venturer with Tenant by
      reason of any of the provisions of this Lease.

    


    
      
         

      

      
        23.

        
          

        

      

      
         

      

    

    13.15 Tenant’s
      Audit Right.
      Tenant
      shall have the right, to be exercised not more than once during any calendar
      year, within ninety (90) days after Landlord’s final statement, to audit
      Building Operating Expenses for the prior year, and to examine Landlord’s
      records relating to the same. The costs of any such audit shall be borne by
      Tenant, provided,
      however,
      that in
      the event such audit reveals that the amounts charged to Tenant were more than
      five percent (5%) greater than the amounts permitted by this Lease to be charged
      to Tenant, then Landlord shall pay the reasonable costs of that audit. In
      addition, Landlord shall pay to Tenant, within ten (10) days of notice thereof,
      any amounts determined to be owed to Tenant as a result of such
      audit.

    


    ARTICLE
      14

    


    Corporate
      Authority

    Brokers
      And Entire Agreement

    


    14.1 Corporate
      Authority.
      If
      Tenant is a corporation, the Tenant represents and warrants that each individual
      executing this Lease on behalf of said corporation is duly authorized to execute
      and deliver this Lease on behalf of Tenant in accordance with the bylaws and/or
      a board of directors’ resolution of Tenant, that Tenant is validly formed and
      duly authorized and existing, that Tenant is qualified to do business in the
      State in which the Leased Premises are located, that Tenant has the full right
      and legal authority to enter into this Lease, and that this Lease is binding
      upon Tenant in accordance with its terms. Tenant shall, within thirty days
      after
      Landlord’s written request, deliver to Landlord a certified copy of the
      resolution of its board of directors authorizing or ratifying the execution
      of
      this Lease.

    


    14.2 Brokerage
      Commissions.
      Tenant
      warrants that it has not had any dealings with any real estate broker(s),
      leasing agent(s), finder(s) or salesmen, other than those persons or entities
      named in Article I as the “Brokers” with respect to the lease by it of the
      Leased Premises pursuant to this Lease, and that it will indemnify, defend
      with
      competent counsel, and hold Landlord harmless from any liabilities for the
      payment of any real estate brokerage commissions, leasing commissions or
      finder’s fees claimed by any other real estate broker(s), leasing agent(s),
      finder(s) or salesmen to be earned or due and payable by reason of Tenant’s
      agreement or promise (implied or otherwise) to pay (or have Landlord pay) such
      a
      commission or finder’s fee by reason of its leasing the Leased Premises pursuant
      to this Lease. Landlord shall pay all commissions due to the Brokers on account
      of this Lease.

    


    14.3 Entire
      Agreement.
      This
      Lease, the Exhibits (as described in Article 1) and the Addenda (as described
      in
      Article 1), which Exhibits and Addenda are by this reference incorporated
      herein, constitute the entire agreement between the parties, and there are
      no
      other agreements, understandings or representations between the parties relating
      to the lease by Landlord of the Leased Premises to Tenant, except as expressed
      herein. No subsequent changes, modifications or additions to this Lease shall
      be
      binding upon the parties unless in writing and signed by both Landlord and
      Tenant.

    


    14.4 Landlord’s
      Representations.
      Tenant
      acknowledges that neither Landlord nor any of its agents made any
      representations or warranties respecting the Project, the Building or the Leased
      Premises, upon which Tenant relied in entering into this Lease, which are not
      expressly set forth in this Lease. Tenant further acknowledges that neither
      Landlord nor any of its agents made any representations as to (i) whether the
      Leased Premises may be used for Tenant’s intended use under existing Law or (ii)
      the suitability of the Leased Premises for the conduct of Tenant’s business or
      (iii) the exact square footage of the Leased Premises, and that Tenant relied
      solely upon its own investigations respecting said matters. Tenant expressly
      waives any and all claims for damage by reason of any statement, representation,
      warranty, promise or other agreement of Landlord or Landlord’s agent(s), if any,
      not contained in this Lease or in any Addenda hereto.

    


    ARTICLE
      15

    


    Option
      to Renew

    


    15.1 Option
      to Renew.
      Landlord
      hereby grants to Tenant one (1) option to renew the Lease, for a period of
      an
      additional three (3) years (the “Renewal Term”). The Renewal Term shall commence
      upon the expiration of the preceding lease term (the “Renewal Commencement
      Date”) such that there shall not be a gap in the time between the Lease Term and
      the Renewal Term. 

    


    1. The
      lease
      of the Leased Premises for the Renewal Term shall be on the same terms and
      conditions as set forth in the Lease, except: 

    


    A. That
      the
      rental for the Leased Premises during the Renewal Term shall be as set forth
      below in Paragraph 3, and

    


    B. That
      the
      Security Deposit shall be increased to the rental amount for the final month
      of
      the Renewal Term as determined in Paragraph 3 (the “Increased Security Deposit
      Amount”).

    


    
      
         

      

      
        24.

        
          

        

      

      
         

      

    

    2. Tenant
      shall notify Landlord of Tenant’s exercise of its right to renew the Lease for
      the Renewal Term only by giving to Landlord written notice one hundred eighty
      (180) days prior to the Renewal Commencement Date (time is expressly of the
      essence to Landlord). Any attempted exercise of this Option made other than
      within the time period stated or in the manner stated shall be void and of
      no
      force or effect. In the event that Tenant does not or is not entitled to
      exercise its option Tenant shall have no further rights hereunder. 

    


    3. If
      Tenant
      shall have properly and timely exercised its right to extend the term of the
      Lease, the term of the Lease shall be so extended for the Renewal Term on the
      same terms and conditions contained in the Lease; provided,
      however,
      the Base
      Monthly Rent for each month of the Renewal Term shall be the Then Market Rental
      Rate for the Leased Premises.

    


    4. The
      term
“Then Monthly Market Rental Rate” shall be determined by mutual agreement
      between Landlord and Tenant or, in the event such agreement cannot be made
      within thirty (30) days from the date Tenant shall have exercised this option,
      Landlord and Tenant shall each appoint a real estate appraiser with at least
      five (5) years full-time commercial/industrial appraisal experience in Alameda
      County to appraise and determine the fair market monthly rental rate the Leased
      Premises, in their then existing condition for the use specified in the Lease
      could be leased for, on the same terms and conditions set forth in the Lease,
      to
      a qualified tenant ready, willing and able to lease the Leased Premises for
      a
      term equal to the Renewal Term. If either party does not appoint an appraiser
      within ten (10) days after the other party has given notice of the name of
      its
      appraiser, the other party can then apply to the President of the Alameda County
      Real Estate Board or the presiding Judge of the Superior Court of that County
      for the selection of a second appraiser who meets the qualifications stated
      above. The failing party shall bear the cost of appointing the second appraiser
      and of paying the second appraiser’s fee. The two appraisers shall attempt to
      establish the Then Fair Market Rental Rate for the Leased Premises. If the
      two
      appraisers are unable to agree on the Then Fair Market Rental Rate for the
      Leased Premises within ten (10) days after the second appraiser has been
      selected or appointed, then the two appraisers shall attempt to select a third
      appraiser meeting the qualifications stated above. If they fail to agree on
      a
      third appraiser, either party can follow the above procedure for having an
      appraiser appointed by the Real Estate Board or a judiciary. Each of the parties
      shall bear one-half (1/2) of the cost of appointing the third appraiser and
      of
      paying the third appraiser’s fee. Unless the three appraisers are able to agree
      on the Then Fair Market Rental Rate for the Leased Premises within ten (10)
      days
      after the selection or appointment of the third appraiser, the two appraisal
      amounts being calculated most closely together, after having discarded the
      appraisal amount which most greatly varies from the other two appraisal amounts,
      shall be added together then divided by two (2). The resulting rental amount
      shall be defined as the Then Fair Market Rental Rate for the Leased
      Premises.

    


    In
      Witness Whereof,
      Landlord
      and Tenant have executed this Lease as of the respective dates below set forth
      with the intent to be legally bound thereby as of the Effective Date of this
      Lease.

    


    
      	
              As
                Landlord:

            	
              As
                Tenant:

            
	 	 
	
              Renco
                Bayside Investors,

            	
              Rackable
                Systems, Inc.,

            
	
              a
                California limited partnership

            	
              a
                Delaware corporation

            
	 	 
	
              By: 
                Renco Properties I

            	 
	
              a
                California general partnership

            	
              By:
                /s/ Tom
                Barton                            
                

            
	 	 
	
              By: 
                Renco Properties, Inc.

            	
              Title:
                CEO                                            
                

            
	
              a
                California corporation

            	 
	
              Its: 
                General Partner

            	 
	 	
              By:
                /s/ Todd
                Ford                              
                

            
	 	 
	
              By:
                /s/ James
                Burton                           
                

            	
              Title:
                President                                   
                

            
	 	 
	
              Title:
                President                                     
                

            	 
	 	 
	 	 
	
              By:
                /s/ Richard T.
                Perry                       
                

            	 
	 	 
	
              Title:Trustee
                UTA dated 7/20/77

            	 
	 	 
	
              (Richard
                T. Perry Separate Property Trust)

            	 
	 	 
	
              Date:
                11/1/06                                          
                

            	
              Date:
                11/1/06                                       
                

            


    

    


    If
      Tenant
      is a CORPORATION, the authorized officers must sign on behalf of the corporation
      and indicate the capacity in which they are signing. This Lease must be executed
      by the chairman of the board, president or vice president, and the secretary,
      assistant secretary, the chief financial officer or assistant treasurer, unless
      the bylaws or a resolution of the board of directors shall otherwise provide,
      in
      which event a certified copy of the bylaws or a certified copy of the
      resolution, as the case may be, must be attached to this Lease.

    


    
      
         

      

      
        25.

        
          

        

      

      
         

      

    

     

    
      EXHIBIT
        “A”




    
      
         

      

      
        26.

        
          

        

      

      
         

      

    

    EXHIBIT
      “B”

    


    Floor
      Plan Outlining the Premises

    



    
      
         

      

      
        27.

        
          

        

      

      
         

      

    


    EXHIBIT
      “C”

    Subordination
      Agreement

    


    
      	
               

              RECORDING
                REQUESTED

              BY
                AND WHEN 

              RECOFRDED
                RETURN TO:

               

              ________________________,
                Esq.

              ________________________

              ________________________

              ________________________

               

            


    

    


    SUBORDINATION
      

    NONDISTURBANCE

    AND
      ATTORNMENT AGREEMENT

    


    
      	OTICE:	
              THIS
                SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT RESULTS IN
                YOUR
                LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER
                PRIORITY
                THAN THE LIEN OF SOME OTHER OR LATER SECURITY
                INSTRUMENT.

            


    

    


    TABLE
      OF
      DEFINITIONS

    


    
      	
              Execution
                Date:

            
	
              Beneficiary
                & Address:

               

               

              Attn.
                

            
	
              Tenant
                & Address:

               

            
	
              Landlord
                & Address:

               

            
	
              Loan:
                A first mortgage loan in the original principal amount of $

              From
                Beneficiary to Landlord

            
	
              Note:
                A Promissory Note executed by Landlord in favor of Beneficiary in
                the
                amount of the Loan date as of

               

            
	
              Deed
                of Trust: A Deed of Trust and Security Agreement with Assignment
                of Rents
                and Fixture Filing dated as of         executed
                by
                Landlord, to         as
                Trustee, in
                favor of Beneficiary securing repayment of the Note to be recorded
                in the
                records of the County in which the Property is located.

            
	
              Property:   
                [Property Name]

              [Street
                Address 1]

              [City,
                State, Zip]

               

              The
                Property is more particularly described on Exhibit
                A.

               

            


    

    


    THIS
      SUBORDINATION, NODISTURBANCE AND ATTORNMENT AGREEMENT (the “Agreement”) is made
      by and among Tenant, Landlord, and Beneficiary and affects the Property
      described in Exhibit
      A.
      Certain
      terms used in this Agreement are defined in the Table of Definitions. This
      Agreement is entered into as of the Execution Date with reference to the
      following facts:

    


    
      
         

      

      
        28.

        
          

        

      

      
         

      

    

    A. Landlord
      and Tenant have entered into the Lease covering certain space in the
      improvements located in and upon the Property (the “Premises”).

    B. Beneficiary
      has made or is making the Loan to Landlord evidenced by the Note. The Note
      is
      secured, among other documents, by the Deed of Trust.

    


    C. 
      Landlord, Tenant and Beneficiary all wish to subordinate the Lease to the lien
      of the Deed of Trust.

    


    D. Tenant
      has requested that Beneficiary agree not to disturb Tenant’s rights in the
      Premises pursuant to the Lease in the event Beneficiary forecloses the Deed
      of
      Trust, or acquires the Property pursuant to the trustee’s power of sale
      contained in the Deed of Trust or a receives a transfer of the Property by
      a
      conveyance in lieu of foreclosure of the Property (collectively, a “Foreclosure
      Sale”) but only if Tenant is not then in default under the Lease and Tenant
      attorns to Beneficiary or a third party purchaser at the Foreclosure Sale (a
      “Foreclosure Purchaser”).

    


    NOW
      THEREFORE, in the consideration of the premises and the mutual covenants
      contained herein, the parties agree as follows:

    


    1. Subordination.
      The
      Lease and the leasehold estate created by the Lease and all of Tenant’s rights
      under the Lease are and shall remain subordinate to the Deed of Trust and the
      lien of the Deed of Trust, to all rights of Beneficiary under the Deed of Trust
      and to all renewals, amendments, modifications and extensions of the Deed of
      Trust.

    


    2. Acknowledgements
      by Tenant.
      Tenant
      agrees that: (a) Tenant has notice that the Lease and the rent and all other
      sums due under the Lease have been or are to be assigned to Beneficiary as
      security for the Loan. In the event that Beneficiary notifies Tenant of a
      default under the Deed of Trust and requests Tenant to pay its rent and all
      others sums due under the Lease to Beneficiary, Tenant shall pay such sums
      directly to Beneficiary or as Beneficiary may otherwise request. (b) Tenant
      shall send a copy of any notice or statement under the Lease to Beneficiary
      at
      the same time Tenant sends such notice or statement to Landlord. (c) This
      Agreement satisfies any condition or requirement in the Lease relating to the
      granting of a nondisturbance agreement.

    


    3. Foreclosure
      and Sale. In the event of a Foreclosure Sale,

    


    (a) So
      long
      as Tenant complies with the Agreement and is not in default under any of the
      provisions of the Lease, the Lease shall continue in full force and effect
      as a
      direct lease between Beneficiary and Tenant, and Beneficiary will not disturb
      the possession of Tenant, subject to this Agreement. Tenant agrees to attorn
      to
      and accept Beneficiary as landlord under the Lease and to be bound by and
      perform all of the obligations imposed by the Lease. Upon Beneficiary’s
      acquisition of title to the Property, Beneficiary will perform all of the
      obligations imposed on the Landlord by the Lease except as set forth in this
      Agreement; provided, however, that Beneficiary shall not be: (i) liable for
      any
      act or omission of a prior landlord (including Landlord); or (ii) subject to
      any
      offsets or defenses that Tenant might have against any prior landlord (including
      Landlord); or (iii) bound by any rent or additional rent which Tenant might
      have
      paid in advance to any prior landlord (including Landlord) beyond one month’s
      rental; or (iv) bound by any amendment, modification, assignment or termination
      of the Lease made without the written consent of Beneficiary; (v) obligated
      or
      liable with respect to any warranties, or (vi) liable for o Tenant or any other
      party for any conflict between the provisions of the Lease and the provisions
      of
      any other lease affecting the Property which is not entered into by
      Beneficiary.

    


    (b) Upon
      the
      written request of Beneficiary after a Foreclosure Sale, the parties shall
      execute a lease of the Premises upon the same provisions as contained in the
      Lease between Landlord and Tenant, except as set forth in this Agreement, for
      the unexpired term of the Lease. 

    


    (c)
       Notwithstanding
      any provisions of the Lease to the contrary, from and after that Beneficiary
      acquires title to the Property as a result of a Foreclosure Sale, (i)
      Beneficiary will not be obligated to expend any monies to restore casualty
      damage in excess of available insurance proceeds; (ii) tenant shall not have
      the
      right to make repairs and deduct the cost of such repairs from the rent without
      a judicial determination that Beneficiary is in default of its obligations
      under
      the Lease; (iii) Beneficiary shall not be required to grant nondisturbance
      to
      any subtenants of Tenant; (iv) in no event will Beneficiary be obligated to
      indemnify Tenant, except where Beneficiary is in breach of its obligations
      under
      the Lease or where Beneficiary has been actively negligent in the performance
      of
      its obligations as landlord; and (v) other than determination of fair market
      value, no disputes under the Lease shall be subject to arbitration unless
      Beneficiary and Tenant agree to submit a particular dispute to arbitration.
      

    


    
      
         

      

      
        29.

        
          

        

      

      
         

      

    

    4. Subordination
      and Release of Purchase Options. Lessee
      represents that it has no right or option of any nature to purchase the Property
      or any portion of the Property or any interest in the Borrower. To the extent
      Tenant has or acquires any such right or option, these rights or options are
      acknowledged to be subject and subordinate to the Mortgage and are waived and
      released as to Beneficiary and any Foreclosure Purchaser.

    


    5. Acknowledgement
      by Landlord.
      In the
      event of a default under the Deed of Trust, at the election of Beneficiary,
      Tenant shall and is directed to pay all rent and all other sums due under the
      Lease to Beneficiary.

    


    6. Construction
      of Improvements.
      Beneficiary shall not have any obligation or incur any liability with respect
      to
      the completion of the improvements in which the Premises are located at the
      commencement of the term of the Lease or upon any renewal or extension of the
      Lease or upon the addition of additional space, pursuant to any expansion rights
      contained in the Lease.

    


    7. Notice.
      All
      notices under this Agreement shall be deemed to have been properly given if
      delivered by overnight courier service or mailed by United States certified
      mail, with return receipt requested, postage prepaid to the party receiving the
      notice at its address set forth in the Table of Definitions (or at such other
      address as shall be given in writing by such party to the other parties) and
      shall be deemed complete upon receipt or refusal of delivery.

    


    8. Miscellaneous.
      Beneficiary shall not be subject to any provision of the Lease that is
      inconsistent with this Agreement. Nothing contained in the Agreement shall
      be
      construed to derogate from or in any way impair or affect the lien or the
      provisions of the Deed of Trust. This Agreement shall be governed by and
      construed in accordance with the laws of the State of in which the Property
      is
      located.

    


    9. Liability
      and Successors and Assigns.
      In the
      event that Beneficiary acquires title to the Premises or the Property,
      Beneficiary shall have no obligation nor incur any liability beyond
      Beneficiary’s then equity interest in the Premises. This Agreement shall run
      with the land and shall inure to the benefit of the parties and, their
      respective successors and permitted assigns including a Foreclosure Purchaser.
      If a Foreclosure Purchaser acquires the Property or if Beneficiary assigns
      or
      transfers its interest in the Note and Deed of Trust or the Property, all
      obligations and liabilities of Beneficiary under this Agreement shall terminate
      and be the responsibility of the Foreclosure Purchaser or other party to whom
      Beneficiary’s interest is assigned or transferred. The interest of Tenant under
      this Agreement may not be assigned or transferred except in connection with
      an
      assignment of its interest in the Lease which has been consented to by
      Beneficiary. 

    


    IN
      WITNESS WHEREOF, the parties have executed this Subordination, Nondisturbance
      and Attornment Agreement as of the Execution Date.

    


    
      	NOTICE:	
              THIS
                SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT CONTAINS PROVISIONS
                WHICH ALLOW THE PERSON OBLIGATED ON THE LEASE TO OBTAIN A LOAN, A
                PORTION
                OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENTS OF
                THE
                PROPERTY.

            


    

    


    IT
      IS
      RECOMMENDED THAT THE PARTIES CONSULT WITH THEIR ATTORNEYS PRIOR TO THE EXECUTION
      OF THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT.

     

     

    BENEFICIARY:

    
      	 	
              By
                ________________________________________

               

              Its
                _________________________________________

            


    

     

    
       

      
        	
                TENANT:

              	
                __________________________________________

                 

                
                  a
                    _________________________________________  

                  


                  By
                    ________________________________________

                   

                  Its
                    ________________________________________

                

              


      

    

    
       

      
        
           

        

        
          30.

          
            

          

        

        
           

        

      

      
        	
                LANDLORD:

              	
                __________________________________________

                 

                
                  a
                    _________________________________________  

                  


                  By
                    ________________________________________

                   

                  Its
                    ________________________________________

                

              


      

      
         

        
           

        

        
          31.

          
            

          

        

        
           

        

         

      

    

    EXHIBIT
      “D”

    Estoppel
      Certificate

    


    


    TENANT
      ESTOPPEL CERTIFICATE

    


    _______________,
      20__

    


    To:
      Lender

    


    Gentlemen:

    


    The
      undersigned, _____________ (“Tenant”), as tenant under a lease (“the “Lease”) of
      certain premises dated _________, executed by Tenant and __________ (“Landlord”)
      does hereby state, declare, represent and warrant as follows:

    


    1.
       The
      copy
      of the Lease attached hereto as Exhibit “A” is a true and correct copy of the
      Lease and the Lease is in full force and effect and has not been amended,
      supplemented or changed, except as follows [if none, so state]:
      ________________________

    ___________________________________________________________________________

    


    2. Tenant
      has accepted possession of the premises demised under the Lease, and all items
      of an executory nature have been completed under the terms of the Lease,
      including, but not limited to, completion of construction of the demised
      premises (and all other improvements required under the Lease) in accordance
      with applicable plans and specifications and within the time periods set forth
      in the Lease and otherwise in accordance with the Lease, and payment of any
      improvement allowance or other funds owing by Landlord to Tenant. Tenant further
      acknowledges that the term commenced on __________ and shall expire on
      _____________, unless sooner terminated or extended in accordance with the
      terms
      of the Lease. 

    


    3. No
      default or event that with the passing of time or the giving of notice, or
      both,
      would constitute a default (referred to herein collectively as a “default”) on
      the part of the undersigned exists under the Lease in the performance of the
      terms, covenants and conditions of the Lease required to performed on the part
      of the undersigned. 

    


    4. No
      default on the part of Landlord exists under the Lease in the performance of
      the
      terms, covenants, and conditions of the Lease required to be performed on the
      part of Landlord. 

    


    5. Tenant
      has no option to renew the Lease or to expand and no right to purchase the
      property of which the premises are a part, or any part thereof.

    


    6. No
      rentals are accrued and unpaid under the Lease.

    


    7. No
      prepayments of rentals due under the Lease have been made and no security or
      deposits as security have been made thereunder, except as set forth in the
      Lease.

    


    8. The
      undersigned has no defense as to its obligations under the Lease and claims
      no
      setoff or counterclaim against Landlord.

    


    9. The
      undersigned has not received notice of any assignment, hypothecation, mortgage,
      or pledge of Landlord’s interest in the Lease or the rents or other amounts
      payable thereunder. 

    


    10. The
      undersigned agrees to notify you of any default on the part of Landlord under
      the Lease which would entitle the undersigned to cancel the Lease or the abate
      the rent payable thereunder, and further agrees that, notwithstanding any
      provisions of the Lease, no 

    notice
      or
      cancellation thereof shall be effective unless you have received said notice
      and
      have failed within thirty (30) days after the expiration of the cure period
      provided to Landlord under the Lease to cure or commence to cure the default
      which gave rise to the notice of cancellation. 

    


    
      
         

      

      
        32.

        
          

        

      

      
         

      

       

    

    11. The
      undersigned understands and acknowledges that you are about to make a loan
      to
      Landlord and receive as part of the security for such loan (i) a Deed of Trust
      and Security Agreement with Assignment of Rents and Fixture Filing encumbering
      Landlord’s fee interest in the property of which the leased premises are a
      portion and the rents, issues and profits of the Lease and (ii) an Assignment
      of
      Lease which affects the Lease, and that you are relying upon the representations
      and warranties contained herein in making such loan.

    


    
      	 	 
	 	
              TENANT:

            
	 	 
	 	
              By:
                _____________________________

            
	 	 
	 	
              Its:
                _____________________________

            
	 	 
	 	
              By:
                _____________________________

            
	 	 
	 	
              Its:
                _____________________________

            


    

    


    
      
         

      

      
        33.

        
          

        

      

      
         

      

    


    EXHIBIT
      “E”

    


    ACCEPTANCE
      AGREEMENT

    


    


    This
      Acceptance Agreement is made as of ___________
      by
      and
      between the parties hereto with regard to the Lease dated _________, 2006 and
      between Renco
      Bayside Investors, a California Limited Partnership (“Landlord”)
      and Rackable
      Systems, Inc., a Delaware corporation (“Tenant”),
      affecting those premises commonly known as Renco 40, located at 46600-46610
      Landing Parkway, Fremont, State of California
      (the
“Premises:). The parties agree as follows:

    


    
      	
            	1.	
              All
                improvements required to be constructed by Landlord by the Lease
                have
                been completed in accordance with the terms of the Lease and are
                hereby
                accepted by Tenant, subject to the completion of punch list items
                identified
                on Exhibit “A” attached hereto.

            


    

    


    
      	 	
              2.

            	
              Possession
                of the Premises has been delivered to Tenant and Tenant has accepted
                and
                taken possession of the Premises.

            


    

    


    
      	
            	3.	
              The
                Lease Commencement Date is
                ______________________

            


    

    


    
      	 	
              4.

            	
              The
                Lease Term shall expire on __________ unless sooner terminated according
                to the terms of the Lease or by mutual
                agreement.

            


    

    


    
      	
            	5.	
              Base
                Monthly Rent due pursuant to the Lease is as
                follows:

            


    

    


    
      	
            	6.	
              Landlord
                has received a Security Deposit in the amount
                of

            


    

    ($)______________

    


    
      	
            	7.	
              Landlord
                has received prepaid Rent in the amount of


            


    

    ($)_________ ,
      which
      shall be applied to the first installment of Base Monthly Rent.

    


    
      	 	
              8.

            	
              The
                Lease is in full force and effect, neither party is in default of
                its
                obligations under the Lease, and Tenant has no set offs, claims or
                defenses to the enforcement of the
                Lease

            


    

    


    


    
      	
              As
                Landlord:

            	
              As
                Tenant:

            
	 	 
	
              Renco
                Bayside Investors,

            	
              Rackable
                Systems, Inc.,

            
	
              a
                California limited partnership

            	
              a
                Delaware corporation

            
	 	 
	
              By:  Renco
                Properties I

            	 
	
              a
                California general partnership

            	
              By:
                ___________________________

            
	 	 
	
              By: 
                Renco Properties, Inc.

            	
              Title:
                __________________________

            
	
              a
                California corporation

            	 
	
              Its: 
                General Partner

            	 
	 	
              By:
                ___________________________

            
	 	 
	
              By:
                ___________________________

            	
              Title:
                __________________________

            
	
               

            	 
	
              Title:
                __________________________

            	 
	 	 
	 	 
	
              By:____________________________

            	 
	 	 
	
              Title:
                __________________________

            	 
	 	 
	
              Date:
                _____________________________

            	
              Date:
                _____________________________

            


    

    


    
      
         

      

      
        34.

        
          

        

      

      
         

      

    

    


    EXHIBIT
      “F”

    TENANT
      IMPROVEMENT

    WORK
      LETTER AGREEMENT

    


    In
      connection with the Tenant Improvements to be installed on the Premises Landlord
      and Tenant hereby agree as follows:

    


    1. Plans
      and Specifications for Tenant Improvements.
      Attached to this Agreement as Exhibit B is the Preliminary Floor Plan for the
      Tenant Improvements, prepared by Habitec
      Architects (“Architect”),
      dated October 25, 2006 (“Approved Plans”). Landlord and Tenant hereby approve
      said Approved Plans. Landlord shall engage to prepare the final working
      architectural, engineering plans and specifications for the Tenant Improvements
      to be constructed on the Premises based upon the approved space plan (“Final
      Plans and Specifications”). Tenant shall cooperate diligently with Architect,
      and shall furnish to Architect, within five (5) days after Landlord’s approval
      of the space plan, all information required by Architect for the completion
      of
      the Final Plans and Specifications. Landlord and Tenant shall indicate their
      approval of the Final Plans and Specifications by initialing, dating and
      attaching the Final Plans and Specifications to this Lease as Exhibit B. Upon
      completion of the Final Plans and Specifications and approval thereof by
      Landlord and Tenant, Landlord shall obtain bids from general contractors
      (“Contractor”). Landlord and Tenant agree to approve the construction drawings
      to the extent that they are consistent with Exhibit B.

    


    2. Landlord
      to Construct Tenant Improvements.
      Landlord shall complete construction of the Tenant Improvements in a good and
      workmanlike manner in compliance with (a) the Final Plans and Specifications
      approved by Landlord and Tenant, (b) all applicable laws, rules, regulations,
      and (c) the building permit issued by the City of Fremont for such construction.
      Landlord shall enter into a construction contract with the selected Contractor
      for completion of the Tenant Improvements in accordance with the Final Plans
      and
      Specifications. 

    


    3. Change
      Requests.
      No
      revisions to the approved Final Plans and Specifications shall be made by either
      Landlord or Tenant unless approved in writing by both parties. Landlord agrees
      to make all changes: (i) required by any public agency to conform with
      governmental regulations, or (ii) reasonably requested in writing by Tenant
      and
      approved by Landlord, which approval shall not be unreasonably withheld. Any
      costs related to such changes as described in this paragraph 3 (ii) shall be
      Tenant’s responsibility and Tenant shall pay Landlord for said changes within
      ten (10) days upon receipt of Landlord’s invoice. Costs related to such changes
      shall include, without limitation, any architectural or design fees and
      Landlord's general contractor's price for effecting the change. In the event
      that any Tenant caused changes result in a delay in the completion of
      construction of the Tenant Improvements and provided that landlord so notifies
      Tenant at the time such alleged delay is occurring, , Tenant agrees that the
      Commencement Date of the Lease and the date for payment of rent shall commence
      as if such Tenant caused delay had not occurred, as reasonably documented by
      Landlord.

    


    4. Termination.
      If the
      Lease is terminated by Landlord for any reason due to the default of Tenant
      under this Work Letter Agreement, Tenant shall pay to Landlord in addition
      to
      any other damages to which Landlord may be entitled at law or equity, within
      five (5) days of receipt of a statement therefor, any unamortized costs incurred
      by Landlord through the date of termination in connection with the Tenant
      Improvements.

    


    


    5. Substantial
      Completion.
      The
      Commencement Date of the Lease shall be effective upon the Substantial
      Completion of the Tenant Improvements. Substantial Completion shall be defined
      as to the date that the City of Fremont issues temporary occupancy of the
      premises or upon the City’s execution of the final building permit, whichever
      occurs sooner provided that the Architect delivers a Certificate of Completion
      confirming that the Tenant Improvements have been constructed substantially
      in
      accordance with the Final Plans and Specifications.

    


    Landlord
      Initial: ____________

    


    Tenant
      Initial: ____________

    


    
      
         

      

      
        35.

        
          

        

      

      
         

      

       

    

    6. Payment
      for Tenant Improvements.
      Landlord shall construct the Tenant Improvements including those items listed
      as
      Items 1 through 16 on the Approved Plans and the costs of designing and
      constructing such Tenant Improvements shall be at Landlord’s sole cost and
      expense (“Landlord Work”). Landlord shall also contribute up to $85,000.00
      toward the cost of the Tenant Improvements other than the Landlord Work
      (“Allowance”). The amount of Allowance applied shall be repaid by Tenant, as an
      increase in the Base Monthly Rent, amortized over the initial Lease Term, at
      interest accruing at ten percent (10%) per annum commencing as of the Lease
      Commencement Date. Any cost of designing and constructing the Tenant
      Improvements other than Landlord’s Work and in excess of the Allowance shall be
      at Tenant’s expense. Tenant shall reimburse Landlord for such costs within ten
      (10) days after Landlord delivers to Tenant written documentation reasonably
      satisfactory to Tenant that Landlord has incurred expenses for which Tenant
      is
      liable hereunder. If Landlord's estimate of the cost of construction shall
      exceed the Allowance, Landlord, prior to commencing any construction, shall
      submit to Tenant a written estimate setting forth the anticipated cost of the
      work, including but not limited to labor and materials, contractor's fees and
      permit fees. Within five (5) business days thereafter, Tenant shall either
      notify Landlord in writing of its approval of the cost estimate, or specify
      its
      objections thereto and any desired changes to the Approved Plans. If Tenant
      notifies Landlord of such objections and desired changes, Tenant shall work
      with
      Landlord to reach a mutually acceptable alternative cost estimate and if the
      parties cannot agree upon such alternative cost estimate within five (5)
      business days, Landlord shall not be required to accept any changes to the
      Approved Plans arising from Tenant’s objection. In the event that any Tenant
      caused changes result in a delay in the completion of construction of the Tenant
      Improvements and provided that Landlord so notifies Tenant at the time such
      alleged delay is occurring, Tenant agrees that the Commencement Date of the
      Lease and the date for payment of rent shall commence as if such Tenant caused
      delay had not occurred, as reasonably documented by Landlord. 

    


    


    


    


    Landlord
      Initial: ____________

    


    Tenant
      Initial: ____________

    


    
      
         

      

      
        36.