exv10w18



 









Exhibit 10.18




NET




INDUSTRIAL SPACE LEASE




by and between




Tasman V, LLC




as Landlord




and




Adeza Biomedical Corporation




as Tenant




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE I: REFERENCES
	 	 	1	 
	 
	 	 	 	 
	1.1REFERENCES
	 	 	 1	 
	 
	 	 	 	 
	ARTICLE 2: LEASED PREMISES, TERM AND POSSESSION
	 	 	2	 
	 
	 	 	 	 
	2.1 DEMISE OF LEASED PREMISES
	 	 	 2	 
	2.2 RIGHT TO USE COMMON AREAS
	 	 	 2	 
	2.3 LEASE COMMENCEMENT DATE AND LEASE TERM
	 	 	 2	 
	2.4 DELIVERY OF POSSESSION
	 	 	 2	 
	2.5 ACCEPTANCE OF POSSESSION
	 	 	 3	 
	2.6 SURRENDER OF POSSESSION
	 	 	 3	 
	2.7 EARLY OCCUPANCY
	 	 	 3	 
	 
	 	 	 	 
	ARTICLE 3: RENT, LATE CHARGES AND SECURITY DEPOSITS
	 	 	3	 
	 
	 	 	 	 
	3.1 BASE MONTHLY RENT
	 	 	 3	 
	3.2 ADDITIONAL RENT
	 	 	 4	 
	3.3 YEAR-END ADJUSTMENTS
	 	 	 4	 
	3.4 LATE CHARGE AND INTEREST ON RENT IN DEFAULT
	 	 	 4	 
	3.5 PAYMENT OF RENT
	 	 	 4	 
	3.6 PREPAID RENT
	 	 	 4	 
	3.7 SECURITY DEPOSIT
	 	 	 4	 
	 
	 	 	 	 
	ARTICLE 4: USE OF LEASED PREMISE AND COMMON AREAS
	 	 	5	 
	 
	 	 	 	 
	4.1 PERMITTED USE
	 	 	 5	 
	4.2 GENERAL LIMITATIONS ON USE
	 	 	 5	 
	4.3 NOISE AND EMISSIONS
	 	 	 5	 
	4.4 TRASH DISPOSAL
	 	 	 5	 
	4.5 PARKING
	 	 	 5	 
	4.6 SIGNS
	 	 	 6	 
	4.7 COMPLIANCE WITH LAWS
	 	 	 6	 
	4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS
	 	 	 6	 
	4.9 LANDLORD’S RIGHT TO ENTER
	 	 	 6	 
	4.10 CONTROL OF COMMON AREAS
	 	 	 6	 
	4.11 RULES AND REGULATIONS
	 	 	 7	 
	4.12 ENVIRONMENTAL PROTECTION
	 	 	 7	 
	 
	 	 	 	 
	ARTICLE 5: REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
	 	 	7	 
	 
	 	 	 	 
	5.1 REPAIRS AND MAINTENANCE
	 	 	 7	 
	5.2 SERVICES AND UTILITIES
	 	 	 7	 
	5.3 ENERGY AND RESOURCE CONSUMPTION
	 	 	 8	 
	5.4 LIMITATION OF LANDLORD’S LIABILITY
	 	 	 8	 
	 
	 	 	 	 
	ARTICLE 6: ALTERATIONS AND IMPROVEMENTS
	 	 	8	 
	 
	 	 	 	 
	6.1 BY TENANT
	 	 	 8	 
	6.2 OWNERSHIP OF IMPROVEMENTS
	 	 	 8	 
	6.3 ALTERATIONS REQUIRED BY LAW
	 	 	 8	 
	6.4 LIENS
	 	 	 9	 
	 
	 	 	 	 
	ARTICLE 7: ASSIGNMENT AND SUBLETTING BY TENANT
	 	 	9	 
	 
	 	 	 	 
	7.1 BY TENANT
	 	 	 9	 
	7.2 MERGER OR REORGANIZATION
	 	 	 9	 
	7.3 LANDLORD’S ELECTION
	 	 	 9	 
	7.4 CONDITIONS TO LANDLORD’S CONSENT
	 	 	 9	 
	7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTAL DEFINED
	 	 	10	 
	7.6 PAYMENTS
	 	 	10	 
	7.7 GOOD FAITH
	 	 	10	 
	7.8 EFFECT OF LANDLORD’S CONSENT
	 	 	10	 






 









 






	 	 	 	 	 
	ARTICLE 8: LIMITATIONS ON LANDLORD’S LIABILITY AND INDEMNITY
	 	 	10	 
	 
	 	 	 	 
	8.1 LIMITATION ON LANDLORD’S LIABILITY AND RELEASE
	 	 	10	 
	8.2 TENANT’S INDEMNIFICATION OF LANDLORD
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 9: INSURANCE
	 	 	11	 
	 
	 	 	 	 
	9.1 TENANT’S INSURANCE
	 	 	11	 
	9.2 LANDLORD’S INSURANCE
	 	 	12	 
	9.3 MUTUAL WAIVER OF SUBROGATION
	 	 	12	 
	 
	ARTICLE 10: DAMAGE TO LEASED PREMISES
	 	 	12	 
	 
	 	 	 	 
	10.1 LANDLORD’S DUTY TO RESTORE
	 	 	12	 
	10.2 LANDLORD’S RIGHT TO TERMINATE
	 	 	12	 
	10.3 TENANT’S RIGHT TO TERMINATE
	 	 	13	 
	10.4 TENANT’S WAIVER
	 	 	13	 
	10.5 ABATEMENT OF RENT
	 	 	13	 
	 
	 	 	 	 
	ARTICLE 11: CONDEMNATION
	 	 	13	 
	 
	 	 	 	 
	11.1 LANDLORD’S RIGHT TO TERMINATE
	 	 	13	 
	11.2 TENANT’S RIGHT TO TERMINATE
	 	 	13	 
	11.3 TEMPORARY TAKING
	 	 	13	 
	11.4 RESTORATION AND ABATEMENT OF RENT
	 	 	13	 
	11.5 DIVISION OF CONDEMNATION AWARD
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 12: DEFAULT AND REMEDIES
	 	 	14	 
	 
	 	 	 	 
	12.1 EVENTS OF TENANT’S DEFAULT
	 	 	14	 
	12.2 LANDLORD’S REMEDIES
	 	 	14	 
	12.3 LANDLORD’S DEFAULT AND TENANT’S REMEDIES
	 	 	15	 
	12.4 LIMITATION ON TENANT’S RECOURSE
	 	 	15	 
	12.5 TENANT’S WAIVER
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 13: GENERAL PROVISIONS
	 	 	15	 
	 
	 	 	 	 
	13.1 TAXES ON TENANT’S PROPERTY
	 	 	15	 
	13.2 HOLDING OVER
	 	 	16	 
	13.3 SUBORDINATION
	 	 	16	 
	13.4 TENANT’S ATTORNMENT UPON FORECLOSURE
	 	 	16	 
	13.5 LENDER PROTECTION
	 	 	16	 
	13.6 ESTOPPEL CERTIFICATES
	 	 	16	 
	13.7 TENANTS’ FINANCIAL INFORMATION
	 	 	16	 
	13.8 TRANSFER BY LANDLORD
	 	 	17	 
	13.9 FORCE MAJEURE
	 	 	17	 
	13.10 NOTICES
	 	 	17	 
	13.11 ATTORNEY’S FEES
	 	 	17	 
	13.12 DEFINITIONS
	 	 	17	 
	13.13 GENERAL WAIVERS
	 	 	18	 
	13.14 MISCELLANEOUS
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 14: CORPORATE AUTHORITY, BROKERS AND ENTIRE AGREEMENT
	 	 	19	 
	 
	 	 	 	 
	14.1 CORPORATE AUTHORITY
	 	 	19	 
	14.2 BROKERAGE COMMISSIONS
	 	 	19	 
	14.3 ENTIRE AGREEMENT
	 	 	19	 
	14.4 LANDLORD’S REPRESENTATIONS
	 	 	19	 
	 
	 	 	 	 
	ADDENDUM TO INDUSTRIAL SPACE LEASE
	 	 	20	 
	 
	 	 	 	 
	15.1 PAYMENT OF PROJECT MAINTENANCE COSTS
	 	 	20	 
	15.2 CONDITION OF THE PREMISES
	 	 	20	 
	15.3 EARLY OCCUPANCY
	 	 	20	 
	15.4 OPTION TO EXTEND
	 	 	20	 
	15.6 EFFECT OF ADDENDUM
	 	 	20	 






 









 






NET INDUSTRIAL SPACE LEASE




          THIS LEASE, dated July 12, 2006 for reference purposes only, is made by and
between Tasman V, LLC (“Landlord”) and Adeza Biomedical Corporation (“Tenant”), to
be effective and binding upon the parties as of the date of the designated signatories to the Lease
shall have executed this Lease (the “Effective Date of this Lease”).




ARTICLE I: 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:
	 	1240 Elko Drive	 
	 
	 	Sunnyvale, Ca 94089	 
	 
	 	 	 	 
	B. Tenant’s Representative:
	 	Emory V. Anderson	 
	    Phone Number:
	 	408-745-0975	 
	 
	 	 	 	 
	C. Landlord’s Address for Notices:
	 	c/o SARATOGA MANAGEMENT CO.	 
	 
	 	4125 Blackford Avenue, Suite 250	 
	 
	 	San Jose, CA 95117	 
	 
	 	 	 	 
	D. Landlord’s Representative:
	 	Saratoga Management Co.	 
	    Phone Number:
	 	408-249-8105	 
	E. Intended Commencement Date:
	 	August 1, 2006	 
	F. Intended Term:
	 	1240 Elko, 1237 Reamwood and	 
	 
	 	1239 Reamwood to be bundled and	 
	 
	 	co-terminus, with a one-year lease	 
	 
	 	and 2 one-year options.	 
	G. Lease Expiration Date:
	 	September 30, 2007	 
	H. Tenant’s Punch list Period:
	 	N/A	 
	I. First Month’s Prepaid Rent:
	 	$2,400.00 (for addition of 1239 Reamwood)	 
	J. Last Month’s Prepaid Rent:
	 	none	 
	K. Tenant’s Security Deposit:
	 	$2,400.00 (for addition of 1239 Reamwood)	 
	L. Late Charge Amount:
	 	Five-(5%) percent	 
	M. Real Property Tax Base Year:
	 	N/A, triple net	 
	N. Insurance Base Year:
	 	N/A, triple net	 
	O. Tenant’s Required Liability Coverage:
	 	$1,000,000 single limit	 
	P. Tenant’s Number of Parking Spaces:
	 	94	 
	Q. Brokers:
	 	Saratoga Management Co., Inc.	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 






     R. Project: That certain real property situated in the City of Sunnyvale County of
Santa Clara, State of California, as presently improved
with two (2) building(s), which real property is shown on the Site Plan attached
hereto at Exhibit “A” and is commonly known as or otherwise described as follows:



  A. 17,600 square feet, more or less, of the complex at 1240 ElkoDrive, Sunnyvale, CA.

  B. 5,000 square feet, more or less, of the complex at 1237 Reamwood Ave., Sunnyvale, CA.

  C. 4,800 square feet, more or less, of the complex at 1239 Reamwood Ave., Sunnyvale, CA.




     S. Buildings: Those certain Buildings within the Project in which the leased Premises are
located, which Buildings are shown outlined in black on Exhibit “A” hereto.



1









 





     T. 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.



     U. Leased Premises: That certain interior space within the Buildings which space is shown
outlined in black on the Floor Plan attached hereto as Exhibit “A” consisting of
approximately 27,400  square feet 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: that 9,800 square feet of a 20,000 square foot building at 1233-1239 Reamwood Avenue,
Sunnyvale CA. plus 17,600 square feet of a building at 1234-1240 Elko Drive, Sunnyvale, CA.



     V. Base Monthly Rent: The term “Base Monthly Rent” shall mean the following:



	 	 	 	 	 
	Period	 	Base Monthly Rent
	August 1, 2006 to September 30, 2007
	 	$	19,860.00	Total
	A. 1240 Elko Drive
	 	$	14,960.00	 
	B. 1237 Reamwood Ave.
	 	$	2,500.00	 
	C. 1239 Reamwood Ave.
	 	$	2,400.00	 






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



          Warehouse and office




     X. 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 Buildings in which
the Leased Premises are located.




          Exhibit “B” — Floor Plans outlining the Leased Premises.




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



          Paragraph 15.1 through 15.4.




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 I as the Leased Premises, reserving and excepting to Landlord the
exclusive right to 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 Lease Premises. Tenant’s Lease of the Leased Premises, together
with the appurtenant right to use the Common Areas as described in Paragraph 2.2 below, shall be
conditioned upon and be subject to the continuing compliance by Tenant with (I) all the terms and
conditions of this 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 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 deemed to have
occurred, on the Intended Commencement Date (as set forth in Article I) unless either (i) Landlord
is unable to deliver possession of the Leased Premises to Tenant on the Intended Commencement Date,
in which case the Lease Commencement Date shall be determined pursuant to Paragraph 2.4 below or
(ii) Tenant enters into possession of the Leased Premises prior to the Intended Commencement Date,
in which case the Lease Commencement Date shall be as determined pursuant to Paragraph 2.7 below
(the “Lease Commencement Date”). The term of this Lease shall end on the Lease Expiration Date (as
set forth in Article I), irrespective of whatever date the Lease Commencement Date is determined to
be pursuant to the foregoing sentence. 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”), unless
Tenant chooses to exercise either the first and/or second of its options to extend the Lease
Expiration Date for a period of one (1) year each.



     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 I) in their presently existing condition, broom clean,



2









 




unless Landlord shall have agreed, as a condition to Tenant’s obligation to accept possession of
the Leased Premises, pursuant to an 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 or before 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 one hundred
twenty days after the Intended Commencement Date (the “delivery grace period”); however, 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. 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 Force Majeure or 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 the 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 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 Addenda attached to
and made a part of this Lease to modify existing interior improvements or to make construction
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 Punch list Period (as set forth in Article I)
which shall commence on the date that Landlord notifies Tenant that the Leased Premises are Ready
for Occupancy, submit to Landlord a punch list of all incomplete and/or improper work performed by
Landlord. Upon the expiration of Tenant’s Punch list 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 punch list submitted to Landlord
prior to the expiration of said period. Landlord agrees to correct all items reasonably set forth
in Tenant’s Punch list, provided that such punch list was submitted to Landlord within Tenant’s
Punch list Period. Additionally, Landlord agrees to place in good working order all existing
plumbing, lighting, 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 five business days from the date Tenant so accepts possession of
the Lease Premises.



     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, reasonable wear and tear
excepted. Tenant shall repair all damage to the Leased Premises caused 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 repair or
replace all stained or damaged ceiling tiles, wall coverings and floor coverings to the reasonable
satisfaction of Landlord. 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 the same. Additionally, Tenant shall, prior to the
expiration or sooner termination of this Lease, remove any improvements constructed or installed by
Tenant which Landlord requests be so removed by Tenant and repair all damage caused by such
removal. If the Leased Premises are not surrendered to Landlord in the condition required by this
Paragraph 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 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. 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.



     2.7 EARLY OCCUPANCY



     If Tenant enters into possession of the Leased Premises prior to the Intended Commencement
Date (or permits its contractors to enter the Leased Premises prior to the Intended 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 Date (as determined pursuant to Paragraph 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 I (the “Base Monthly Rent”).



3









 





     3.2 ADDITIONAL RENT



     Commencing on the Lease Commencement Date (as determined pursuant to Paragraph 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 Project Maintenance Costs. Landlord may bill Tenant,
on a periodic basis not more frequently than monthly, Tenant’s Proportionate Share of such costs as
paid or incurred by Landlord, and Tenant shall pay to Landlord such share of such costs together
with an accounting fee equal to five percent of the amount so billed within ten days from the date
Landlord shall have billed Tenant for same.




          B. Tenant’s Proportionate Share of Landlord’s Insurance Costs and Real Property Taxes plus an
accounting fee equal to five percent of such amount. Payment shall be made by whichever of the
following methods is 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 Landlord’s Insurance Costs or Real Property Taxes, as paid or
incurred by Landlord during the current period together with an accounting fee equal to five
percent of the amount billed, within ten days after receipt of a written bill therefore from
Landlord; or



               (2) Landlord may deliver to Tenant Landlord’s reasonable estimate of Landlord’s Insurance
Costs and/or Real Property Taxes it anticipates will be paid or incurred for the ensuring calendar
or fiscal year, as the case requires, and Tenant shall pay its Proportionate Share for such year,
together with an accounting fee equal to five percent of the estimated amount, 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 Tenants its Proportionate Share or the
periodic basis on which such increases are billed.



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




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




          E. 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 Landlord’s
Insurance Costs and/or Real Property Taxes on an estimated basis in accordance with the provisions
of Paragraph 3.2B(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 Landlord’s Insurance Costs and/or Real Property Taxes paid or incurred during the just
ended calendar or fiscal year, as appropriate, (ii) the amount of Landlord’s Insurance Costs and/or
Real Property Taxes paid during the applicable Base Year, and (iii) Tenant’s Proportionate Share of
Landlord’s Insurance Costs and/or Real Property taxes for the just ended fiscal or calendar year,
as appropriate. If Tenant shall have paid more than its Proportionate Share for the previous year,
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 statements shall show that Tenant did
not pay its Proportionate Share in full, then Tenant shall pay to Landlord the amount of such
underpayment, together with the accounting fee applicable thereto, within ten days from Landlord’s
billing of same to Tenant. The provisions of this Paragraph shall survive the expiration or sooner
termination of this Lease.



     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 I
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.



     3.5 PAYMENT OF RENT



     All rent shall be paid in lawful money of the United States, without any abatement, deduction
of 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



     Tenant has paid to Landlord the amount set forth in Article I as “First Month’s Prepaid Rent”
as prepayment of rent for credit against the first installment(s) of Base Monthly Rent due
hereunder. Additionally, Tenant has paid to Landlord the amount set forth in Article I as “Last
Month’s Prepaid Rent” as prepayment of rent for credit against the last installment(s) of Base
Monthly Rent due hereunder, subject, however, to the provisions of Paragraph 3.7 below.



     3.7 SECURITY DEPOSIT



     Tenant has deposited with Landlord the amount set forth in Article I as the “Security Deposit”
as security for the performance by Tenant of the terms of this Lease to be performed by Tenant, and



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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 material men 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. If Tenant
fails to promptly restore the Security Deposit and if Tenant shall have paid to Landlord any sums
and “Last Month’s Prepaid Rent”, Landlord may, in addition to any other remedy Landlord may have
under this Lease, reduce the amount of Tenant’s Last Month’s Prepaid Rent by transferring all or
portions of such Last Month’s Prepaid Rent to Tenant’s Security Deposit until such Security Deposit
is restored to the amount set forth in Article I. 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. Tenants shall not be entitled to any
interest on the Security Deposit. If Landlord transfer the Building during the Lease Term,
Landlord may 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 restore 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 PREMISE 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 I and for no other purpose whatsoever. Tenant shall continuously and without
interruption use the Leased Premises for such purpose for the entire Lease Term. Any
discontinuance of such use for a period of thirty consecutive calendar days shall be, at Landlord’s
election, a default by Tenant under the terms of this Lease. Subject to the limitations contained
in this Article 4, Tenant shall have the right to use the Common Area, 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 anything to be done 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 or impair the efficient operation of any
electrical, plumbing, 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. Tenants shall not place any
explosive, flammable or harmful fluids 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 or permit to be committed any waste in or about the Leased
Premises, the Common Areas or the Project.



     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 business 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 business 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 I 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



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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
programs 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 supplier 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, Ten Dollars per day for each day or partial day that each
such vehicle is 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 Lease 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 Paragraph), 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



     Tenant shall not use or permit any person to use the Leased Premises in any manner, which
violates any Laws. Tenant shall abide by and shall promptly observe and comply with, at its sole
cost and expense, all Laws 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 such policies, (ii) could result in the termination of the
coverage afforded under any 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.



     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, mortgagee or tenants; (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. 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 Paragraph shall not under any circumstances be
construed or deemed to be a forcible or unlawful entry or a detainer of the Leased Premises, or an
eviction, actual or constructive, of Tenant from the Leased Premises or any portion thereof.



     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 of 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 for 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



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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 amendment 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.



ARTICLE 5: REPAIRS, MAINTENANCE, SERVICES AND UTILITIES




     5.1 REPAIRS 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. Tenant’s Obligation: Tenant shall, at all times during the Lease Term 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, floor and ceilings, (ii) all windows,
doors and skylights, (iii) all electrical wiring, conduits, connectors and fixtures, (iv) all
plumbing, pipes, sinks, toilets, faucets and drains, (v) all lighting fixtures, bulbs, and lamps,
(vi) all heating, ventilating and air conditions equipment located within the Leased Premises or
located outside the Leased Premises (e.g. rooftop compressors) and serving the Leased Premises
(other than Common Area HVAC as defined in Subparagraph 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 Paragraph 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 Tenant shall promptly replace any broken glass 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, sub flooring, load-bearing and exterior walls, and roof); (ii) the Common Areas; and
(iii) the electrical and plumbing systems located outside the Leased Premises which serve 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 serve,
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 Subparagraph 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 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.




          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 determines that Tenant is using more water than what
normally would be required for lavatory and drinking purposes, Landlord at its election may 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 cost




7









 







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 excess water usage shall include any
costs to Landlord in keeping account of such usage and all governmental fees, public charges of the
like attributable to or based upon (such as sewer usage fees) the use of water to the extent of
such excess 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. 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. 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.



     6.2 OWNERSHIP OF IMPROVEMENTS



     All modifications, alterations and 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 Paragraph 6.1 above. At the
expiration or sooner termination of this 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 Premises 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 the 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 REQUIRED BY LAW



     Tenant shall make all modifications, alterations and improvements to the Leased Premises, at
its sole cost, that are required by Law because of (i) Tenant’s use or occupancy of the Leased
Premises, (ii) Tenant’s application for any permit or governmental approval, or (iii) Tenant’s
making of any



8









 




modifications, alterations or improvements to or within the Leased Premises. If Landlord shall, at
any time during the Lease Term, be required by any governmental authority to make any
modifications, alterations or improvements to the Building or the Project, the cost incurred by
Landlord in making such modifications, alterations or improvements, including an eighteen percent
per annum cost of money factor, shall be amortized by Landlord over the useful like of such
modifications, alterations or improvements, as determined in accordance with generally accepted
accounting standards, and the monthly amortized cost of such modifications, alterations and
improvement as so amortized shall be considered a Project Maintenance Costs.




     6.4 LIENS



     Tenant shall keep the Leased Premises, the Building and the Project 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.



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, which should not be
unreasonably withheld, 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 Paragraph, 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



     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, voluntary, involuntary or by operation of Law,
of a general partner, or the dissolution of the partnership, shall be deemed a voluntary assignment
of Tenant’s interest in this Lease.



     7.3 LANDLORD’S ELECTION



     If Tenant shall desire to assign its interest under this Lease or to sublet the Leased
Premises, Tenant must first notify Landlord, in writing, of its intent to so assign or sublet, at
least ninety 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 one hundred eighty 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 within which to do one of the following: (a)
cancel and terminate this Lease effective as of the intended subletting or assignment date set
forth in Tenant’s notice, 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
compliance with the conditions set forth in Paragraph 7.4 below or (ii) refuse to so consent to
such requested assignment or subletting, provided that such consent shall not be unreasonably
refused. During said fifth day period, Tenant covenants and agrees to supply to Landlord, upon
request, all necessary or relevant information which Landlord may reasonably request respecting
such proposed assignment or subletting and/or the proposed assignee or sublessee.



     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 but prior to the satisfaction of each of the stated conditions, shall constitute a
material default by Tenant under this Lease giving Landlord the absolute right to terminate this
Lease unless such default is promptly cured by satisfying in full each such condition by the
assignee, sublessee or encumbrancer. The conditions are as follows:



          A. Landlord having approved in form and substance the assignment or sublease agreements (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 sublessee or 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 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 such assignment or subletting.




          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.




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          F. Tenant having paid, or having agreed in writing to pay as to future payments, to Landlord
one hundred 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 as follows:




               (1) If Tenant assigns its interest under this Lease and if all or a portion of the
consideration for such assignments is to be paid by the assignee at the time of the assignment,
that Tenant shall have paid to Landlord and Landlord shall have received an amount equal to one
hundred percent of the assignment consideration so paid or to be paid (whichever is greater) at the
time of the assignment by the assignee or;



               (2) If Tenant assigns its interest under this Lease and if Tenant is to receive all or a
portion of the consideration for such assignment in future installments, that Tenant and Tenant’s
assignee shall have entered into a written agreement with and for the benefit of Landlord
satisfactory to Landlord and its counsel whereby Tenant and Tenant’s assignee jointly agree to pay
to Landlord an amount equal to one hundred percent of all such future assignment consideration
installments to be paid by such assignee as and when such assignment consideration is so paid.



               (3) If Tenant subleases the Leased Premises, that Tenant and Tenant’s sublessee shall have
entered into a written agreement with and for the benefit of Landlord satisfactory to Landlord and
its counsel whereby Tenant and Tenant’s sublessee jointly agree to pay to Landlord one hundred
percent of all excess rentals to be paid by such sublessee as and when such excess rentals are so
paid.



     7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTAL DEFINED



     For purposes of this Article, the term “assignment consideration” shall mean all consideration
to be paid by the assignee to Tenant or to any other on Tenant’s behalf or for Tenant’s benefit as
consideration for such assignment, less any commissions paid by Tenant to a licensed real estate
broker for arranging such assignment (not to exceed then standard rates), and the term “excess
rentals” shall mean all consideration to be paid by the sublessee to Tenant or to any other on
Tenant’s behalf or for Tenant’s benefit for the sublease of the Leased Premises in excess of the
rent due Landlord under the terms of this Lease for the same period, less any commissions paid by
Tenant to a licensed real estate broker for arranging such sublease (not to exceed then standard
rates). Tenant agrees that the portion of any assignment consideration and/or excess rentals
arising from any assignment or subletting by Tenant which is to be paid to Landlord pursuant to
this Article now is and shall then be the property of Landlord and not the property of Tenant.



     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 when 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.



     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
generally 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.



     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 other
obligations to be performed by Tenant hereunder. Consent by Landlord to one or more assignments or
encumbrances of Tenant’s interest in this Lease 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 and 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 Paragraph 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.



ARTICLE 8: LIMITATIONS 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 damages 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;
(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
property (such as the HVAC systems; or (vii) the blockage of access to any portion of the Project,
the Building or the Leased Premises, except 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



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provisions of Law relating to releases, and particularly to those provisions contained in Section
1542 of the California Civil Code, which reads as follows:





A general release does not extend to claims which the creditor does not know or
suspect in his favor at the time of executing this 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 Paragraph 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 with respect to 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 Area 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), liability, penalties, or expense
whatsoever (including any legal fees incurred by Landlord with respect to defending such claims)
resulting therefrom, except to the extent proximately caused by the active negligence or willful
misconduct of Landlord. This indemnity agreement shall survive until the latter to occur of (i)
the date of the expiration, or sooner termination, of this Lease, or (ii) the date Tenant actually
vacates the Leased Premises.



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) Comprehensive general liability insurance insuring Tenant against liability for personal
injury, death and damage to property occurring within the Leased Premises, or resulting from
Tenant’s use or occupancy of the Leased Premises or the Common Areas, or resulting from Tenant’s
activities in or about the Leased Premises, with combined single limit coverage of not less than
the amount of Tenant’s Required Liability Coverage (as set forth in Article I), which insurance
shall contain a “broad form liability” endorsement insuring Tenant’s performance of Tenant’s
obligation in indemnifying Landlord as contained in Article 8.2.



               (2) Fire and property damage insurance or “fire and extended coverage” insuring Tenant against
loss from physical damage to Tenant’s personal property, inventory, 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) Pressure vessel insurance, if applicable;



               (5) Product Liability insurance (including, without limitation, if food and/or beverages are
distributed, sold and/or consumed within the Leased Premises, to the extent obtainable, coverage
for liability arising out of the distribution, sale or consumption of food and/or beverages
[including alcoholic beverages, if applicable] at the Leased Premises) for not less than Tenant’s
Required Liability Coverage (as set forth in Article 1);



               (6) Worker’s compensation insurance and any other employee benefit insurance sufficient to
comply with all Laws; and



               (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.



          B. Each policy of liability insurance required to be carried by Tenant pursuant to this
Paragraph or actually carried by Tenant with respect to the Leased Premises (i) shall, except with
respect to insurance required by Subparagraph A(6) above, name Landlord, and such others as are
designated by Landlord, as additional insured; (ii) shall be primary insurance providing that the
insurer shall be liable for the full amounts of the loss, up to and including the total amount of
liability set forth in the declaration of coverage, with the right of contribution from or prior
payment by any other insurance coverage of Landlord; (iii) shall be in a form satisfactory to
Landlord; (iv) shall be carried with companies reasonably acceptable to Landlord; (v) shall provide
that such policy shall not be subject to cancellation, lapse or change except after at least thirty
days prior written notice to Landlord; and (vi) shall contain a so-called “severability” or “cross
liability” endorsement. Each policy of property insurance maintained by Tenant with respect to the
Leased Premises or any property therein (i) shall provide that such policy shall not be subject to
cancellation, lapse or change except after at least thirty days prior written notice to Landlord
and (ii) shall contain a waiver and/or a permission to waive by the insurer of 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 Landlord, with respect to each policy of insurance required to be carried by Tenant
pursuant to the Article, a copy of such policy (appropriately authenticated by the insurer as
having been issued, premium paid) or a certificate of the insurer certifying in form satisfactory
to Landlord that a policy has been issued, premium paid, providing the coverage required by this
Paragraph and containing the provisions specified herein. With respect to each renewal or
replacement of any such insurance, the requirements of this Paragraph must be complied with not
less than thirty 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 amount of
coverage set forth in Paragraph 9.1A for any policy of insurance Tenant is required to carry
pursuant to this Article is not




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adequate, then Tenant shall increase the amount of coverage for such insurance to such greater
amount as Landlord’s Lender, insurance broker or advisor or counsel reasonably deems adequate;
provided, however, such increased level of coverage may not exceed the level of coverage for such
insurance commonly carried by comparable business similarly situated and operating under similar
circumstances.




     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, fire and
property damage insurance in so-called “fire and extended coverage” form insuring Landlord (and
such others as Landlord may designate) against loss from physical damage to the Building with
coverage of not less than ninety percent of the full actual replacement cost thereof and against
loss of rents for a period of not less than six months. Such fire and 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 “all risk” 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 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” not exceeding One Thousand
Dollars per occurrence (or up to five percent of the Building’s replacement value in the case of
earthquake and/or flood insurance). 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 comprehensive 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 insurance broker or
advisor or legal counsel is prudent to carry under the given circumstances.




     9.3 MUTUAL WAIVER OF SUBROGATION



     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 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 Paragraph, unless this
Lease is terminated by Landlord pursuant to Paragraph 10.2 or by Tenant pursuant to Paragraph 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 Paragraph 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 Paragraph 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 to 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 then
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 personal
property, inventory, trade fixtures and other improvements constructed by Tenant to like or similar
conditions at the time of such damage or destruction.



     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;




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          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, cannot 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 seven 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 nine months after the date of such damage; 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 ninety days after the
date such restoration is commenced; or




          C. Landlord does not complete the restoration of the Leased Premises within nine months from
the date of the damage, provided that such nine-month period of time shall be extended for such
number of days as Landlord may be delayed by reason of Force Majeure.




     10.4 TENANT’S WAIVER



     Landlord and Tenant agree that the provision of Paragraph 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.



ARTICLE 11: CONDEMNATION




     11.1 LANDLORD’S RIGHT TO TERMINATE



     Subject to Paragraph 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 to an entity having the power of
eminent domain under the threat of condemnation), (i) all or any part of the Leased Premises is so
taken, (ii) more than thirty-three and one-third percent of the Building’s leasable area is so
taken, (iii) more than thirty-three and one-third percent of the Common Areas 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 Paragraph 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 Paragraph 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 Areas, 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-deck 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 and taken by the condemnor or
(ii) the date Tenant vacates the Leased Premises.



     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 Paragraph 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



13









 




Premises by reason of any construction) 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; or




          B. Tenant shall have done or permitted to have been done any act, use or thing in its use,
occupancy or possession of the Leased Premises or in its use of the Common Areas which is
prohibited by the terms of this Lease; or




          C. 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 ten days after written
notice from Landlord to Tenant specifying the nature of such failure and requesting Tenant to
perform same.




          D. 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




          E. Tenant shall have abandoned the Leased Premises; or




          F. 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




          G. 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




          H. 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 property 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 Subparagraph if such decree or order is
rescinded or reversed within thirty days after its original entry.




          I. 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 or order.




     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 Subparagraph 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.



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          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 Subparagraphs B(1), (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, 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, such as taxes, insurance
premiums, 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) attorney’s 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 releasing 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:



          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 Subparagraph, 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 the assets of such business entity for the satisfaction o
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 assets owned by such business entity). 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 the assets of the partnership.




     12.5 TENANT’S WAIVER



     Landlord and Tenant agree that the provisions of Paragraph 12.3 above are intended to
supersede and replace the provisions of California Civil Code 1932(1), 1941 and 1942, and
accordingly, Tenant hereby waives the provisions of Section 1932(1), 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 to 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



15









 




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, Tenants
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 the 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 Paragraph. 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.



     13.3 SUBORDINATION



     This Lease is subject and subordinate to all 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 any Lender holding any such 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 Lender deem
necessary or desirable to make this Lease prior thereto. Tenant hereby consents to Landlord’s
encumbering the Building as security for future loans on such terms as Landlord shall desire, which
future deeds of trust shall be subject and subordinate to this Lease. However, if any Lender
holding such future deed of trust shall desire or require that this Lease be made subject and
subordinate to such future 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 Lender as may be necessary or proper to assure the
subordination of this Lease to such future deed of trust; but only if such 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, or
(ii) to any grantee or transferee designated in any deed given in lieu of foreclosure of any
security interest encumbering the Building.



     13.5 LENDER PROTECTION



     In the event of any default on the part of the Landlord, Tenant will give notice by certified
mail to any Lender who shall have requested, in writing, to Tenant that it be provided with such
notice, and Tenant shall offer such Lender a reasonable opportunity to cure the default, including
time to obtain possession of the Leased Premises by power of sale of 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 understand that any statement delivered
pursuant to this Paragraph 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 TENANTS’ FINANCIAL INFORMATION



     Tenant shall, within ten business days after Landlord’s request therefore, deliver to Landlord
a copy of a current financial statement and any such other information reasonably requested by
Landlord regarding Tenant’s financial condition. 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 Paragraph, unless the same becomes a part of the public domain without the fault
of Landlord.



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     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.



     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 depositing such
notice in the United States mail, registered or certified, 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. 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 ATTORNEY’S 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 attorney’s
fees, expert witness fees, court costs and other reasonable expenses incurred by the prevailing
party. In the event that Landlord shall be required to retain counsel to enforce any provision of
this Lease, and if Tenant shall thereafter cure (or desire to cure) such default, Landlord shall be
conclusively deemed the prevailing party and Tenant shall pay to Landlord all attorney’s fees,
expert witness fees, court costs and other reasonable expenses so incurred by Landlord promptly
upon demand. 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 meaning:



          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 rental 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




17









 







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.




          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 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.




          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 protecting, operating, maintaining, repairing and preserving the Project and all parts thereof,
including without limitation, (i) professional management fees (not to exceed three percent of the
Project’s scheduled gross rental income), (ii) the amortizing portion of any costs incurred by
Landlord in the making of any modifications, alterations or improvements required by any
governmental authority as set forth in Article 6, which are so amortized during the Lease Term, and
(iii) such other costs as may be paid or incurred with respect to operating, maintaining and
preserving the Project, such as repairing and resurfacing the exterior surfaces of the buildings
(including roofs), repairing and resurfacing paved areas, repairing structural parts of the
building, and replacing, when necessary, electrical, plumbing, heating, ventilating and air
conditioning systems serving the buildings.




          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 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 complete or is willing to so approve the construction of the
improvements as complete subject only to compliance with specified conditions which are the
responsibility of Tenant to satisfy.




          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. 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).




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




          I. 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 payments 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 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



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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.




ARTICLE 14: CORPORATE AUTHORITY, BROKERS AND ENTIRE AGREEMENT




     14.1 CORPORATE AUTHORITY



     If Tenant is a corporation, each individual executing this Lease on behalf of said Corporation
represents and warrants 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, that he 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, and that this Lease is binding upon Tenant in accordance with its
terms. Tenant shall, within thirty days after execution of this Lease, deliver to Landlord a
certified copy of the resolution of its Board of Directors authorizing or ratifying the execution
of this Lease, and if Tenant fails to do so, Landlord at its sole election may elect to (i) extend
the intended Commencement Date by such number of days that Tenant shall have delayed in so
delivering such corporate resolution to Landlord or (ii) terminate 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 1 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 liability 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.



     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, understanding 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.



     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
first above set forth.



	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	AS LANDLORD:
	 	 
	 

	 	 	 	 	 	Tasman V, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	Dated:
	 	9/19/06	 	 	 	Jack E. Horton	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	AS TENANT:	 	 
	 

	 	 	 	 	 	Adeza Biomedical Corporation	 	 
	 
	 	 	 	 	 	 	 	 
	Dated:
	 	9/15/06	 	 	 	Mark D. Fischer-Colbrie	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	Vice President, Finance and
Administration	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	and Chief Financial Officer	 	 
	 

	 	 	 	 	 	 	 	 





     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.



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ADDENDUM TO INDUSTRIAL SPACE LEASE



This Addendum relates to that Net Industrial Space Lease (“Lease”) dated July 12, 2006
for reference purposes, between Tasman V, LLC, as Landlord and Adeza Biomedical
Corporation, as Tenant.



The Addendum shall be part of the Lease and shall include the following provisions:




     15.1 PAYMENT OF PROJECT MAINTENANCE COSTS



     Landlord shall have the option to deliver to Tenant a written estimate of Tenant’s share of
the Project Maintenance Costs for the ensuing lease year. In the event that Landlord delivers such
a written estimate to Tenant, Tenant shall then pay to Landlord the estimated amount of the Project
Maintenance Costs in twelve (12) equal installments, in advance, commencing on the first day of
each month provided that such written notice shall be delivered to Tenant ten (10) days in advance
of the due date. Within sixty (60) days after the end of each lease year, Landlord shall furnish
to Tenant a statement showing in reasonable details the actual Project Maintenance Costs incurred
by Landlord during such lease year. If Tenant paid more than Tenant’s proportionate share,
Landlord shall either credit the amount of such overpayment toward the next subsequent payment or
payments due for Project Maintenance Costs that would otherwise become due, or refund in cash the
amount of such overpayment. If Tenant did not pay Tenant’s proportionate share in full, then
Tenant shall pay to Landlord the sum of such underpayment within ten (10) days from Landlord’s
written demand. Landlord reserves the right to change from time to time the method of billing
Tenant for Tenant’s proportionate share of the Project Maintenance Costs.



     15.2 CONDITION OF THE PREMISES



     Tenant has inspected the premises and agrees to accept possession of the premises in the “as
is” condition, without warranty, expressed or implied.



     15.3 OPTION TO EXTEND



     Provided Tenant is not in default under any provision of the Lease, Landlord hereby grants to
Tenant two one year options to extend the term of this Lease for an additional term when the
existing term expires, on the terms and conditions set forth in this paragraph. Tenant may
exercise this option by giving Landlord written notice of its intention not less than sixty (60)
days prior to the expiration of the existing term of this Lease. If this Option is exercised, the
Base Monthly Rent for the Premises shall equal the then current fair market monthly rent (“Fair
Market Rent”), which shall not be less than $19,860.00 per month for the Premises as of the
commencement date of the applicable extended term. If the parties cannot agree on the amount of the
“Fair Market Rent” and the annual adjustment to such Fair Market Rent within sixty (60) days prior
to the commencement of such extended term, then the Fair Market Rent and the annual adjustment
thereto shall be determined by an appraisal. All other terms and conditions contained in the Lease
and this Addendum, as the same may be amended from time to time by the parties in accordance with
the provisions of the Lease, shall remain in full force and effect and shall apply during the
Option term.



     If the fair market rental value for the Premises needs to be determined by appraisal, Landlord
and Tenant shall either agree to select one real estate appraiser or three real estate appraisers.
Any real estate appraiser selected shall be a member of the American Institute of Real Estate
Appraisers, shall have at least five (5) years experience appraising commercial space located in
the vicinity of the Premises, and shall act in accordance with the rules of the American Institute
of Real Estate Appraisers. The Fair Market Rent shall be based on rental of space of the same age,
construction, size and location as the Premises with the improvements installed therein. If only
one appraiser is selected, then each party shall pay one-half of the fees and expenses of that
appraiser. If proceeding with three appraisers, each party shall select one appraiser, who in turn
shall select the third appraiser. If three appraisers are selected, each party shall bear the fees
and expenses of the appraiser it selects and one-half of the fees and expenses of the third
appraiser.



     15.4 EFFECT OF ADDENDUM



     Each term used herein with initial capital letters shall have the meaning ascribed to such
term in the Lease unless specifically otherwise defined herein. In the event of any inconsistency
between this Addendum and the Lease, the terms of this Addendum shall prevail.



	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	Tasman V, LLC	 	 	 	Adeza Biomedical Corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	Jack E. Horton	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Mark D. Fischer-Colbrie	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Mark D. Fischer-Colbrie	 	 
	 

	 	 	 	 	 	 	 	Vice President, Finance and
Administration and
Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	9/19/06
	 	 	 	Date:
	 	9/15/06	 	 







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