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Exhibit 10.2.1  


 
 

RENEWAL OF GARDEN GROVE LEASE    
    











5410/31/01 MTIN

Revised 9/03

CALIFORNIA FORM 


[STAMP]



LEASE  


        
CABOT INDUSTRIAL VENTURE A, LLC,

a Delaware limited liability company 


Landlord, 


and

DPAC TECHNOLOGIES CORP.,

a California corporation 


Tenant 








   TABLE OF CONTENTS  



	 
	 	 
	 	Page

	1.	 	USE AND RESTRICTIONS ON USE	 	1
	2.	 	TERM	 	3
	3.	 	RENT	 	3
	4.	 	RENT ADJUSTMENTS	 	4
	5.	 	SECURITY DEPOSIT	 	5
	6.	 	ALTERATIONS	 	6
	7.	 	REPAIR	 	7
	8.	 	LIENS	 	8
	9.	 	ASSIGNMENT AND SUBLETTING	 	8
	10.	 	INDEMNIFICATION	 	10
	11.	 	INSURANCE	 	10
	12.	 	WAIVER OF SUBROGATION	 	11
	13.	 	SERVICES AND UTILITIES	 	11
	14.	 	HOLDING OVER	 	11
	15.	 	SUBORDINATION	 	11
	16.	 	RULES AND REGULATIONS	 	12
	17.	 	REENTRY BY LANDLORD	 	12
	18.	 	DEFAULT	 	12
	19.	 	REMEDIES	 	13
	20.	 	TENANT'S BANKRUPTCY OR INSOLVENCY	 	15
	21.	 	QUIET ENJOYMENT	 	16
	22.	 	CASUALTY	 	16
	23.	 	EMINENT DOMAIN	 	17
	24.	 	SALE BY LANDLORD	 	17
	25.	 	ESTOPPEL CERTIFICATES	 	18
	26.	 	SURRENDER OF PREMISES	 	18
	27.	 	NOTICES	 	19
	28.	 	TAXES PAYABLE BY TENANT	 	19
	29.	 	RELOCATION OF TENANT	 	19
	30.	 	DEFINED TERMS AND HEADINGS	 	19
	31.	 	TENANT'S AUTHORITY	 	20
	32.	 	FINANCIAL STATEMENTS AND CREDIT REPORTS	 	20
	33.	 	COMMISSIONS	 	20
	34.	 	TIME AND APPLICABLE LAW	 	20
	35.	 	SUCCESSORS AND ASSIGNS	 	20
	36.	 	ENTIRE AGREEMENT	 	20
	 	 	 	 	 





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	37.	 	EXAMINATION NOT OPTION	 	20
	38.	 	RECORDATION	 	21
	39.	 	LIMITATION OF LANDLORD'S LIABILITY	 	22
	EXHIBIT A—FLOOR PLAN DEPICTING THE PREMISES	 	 
	EXHIBIT A-1—SITE PLAN	 	 
	EXHIBIT B—INITIAL ALTERATIONS	 	 
	EXHIBIT B-1 INITIAL ALTERATIONS MAP	 	 
	EXHIBIT C—RULES AND REGULATIONS	 	 





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   MULTI-TENANT INDUSTRIAL NET LEASE

REFERENCE PAGES  



	

BUILDING:	
 	

7321 - 7341 LINCOLN WAY

GARDEN GROVE, CA 92841
	

LANDLORD:	
 	

CABOT INDUSTRIAL VENTURE A, LLC,

a Delaware limited liability company
	

LANDLORD'S ADDRESS:	
 	

1630 S. Sunkist Street, Suite A

Anaheim, California 92806
	

WIRE INSTRUCTIONS AND/OR ADDRESS FOR RENT PAYMENT:	
 	

75 Remittance Drive

Suite 1414

Chicago, Illinois 60675-1414
	

LEASE REFERENCE DATE:	
 	

December 29, 2003
	

TENANT:	
 	

DPAC TECHNOLOGIES CORP.,

a California corporation
	

TENANT'S NOTICE ADDRESS:	
 	

7321-7331 Lincoln Way

Garden Grove, California 92841
	 	
 (a) As of beginning of Term:	
 	

7321-7331 Lincoln Way

Garden Grove, California 92841
	 	
 (b) Prior to beginning of Term (if different):	
 	

7321-7341 Lincoln Way

Garden Grove, California 92841
	

PREMISES ADDRESS:	
 	

7321-7331 Lincoln Way,

Garden Grove, California 92841
	

PREMISES RENTABLE AREA:	
 	

Approximately 27,857 sq. ft. (for outline of Premises see Exhibit A)
	

USE:	
 	

Warehouse and lab areas relating to the research and development, manufacture, assembly and shipment of Tenant's products and general and administrative offices, and for no other purpose.
	

COMMENCEMENT DATE:	
 	

February 1, 2004
	

TERM OF LEASE:	
 	

Approximately Three (3) years, Three (3) months, Zero (0) days beginning on the Commencement Date and ending on the Termination Date.
	

TERMINATION DATE:	
 	

April 30, 2007





	 	 	
	 	

	

 	
 	

Initials




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ANNUAL
RENT and MONTHLY INSTALLMENT OF

RENT(Article 3): 



	Period

	 	 
	 	 
	 	 

	from
 
	 	through
	 	Annual Rent
	 	Monthly Installment

of Rent
	 	 

	2/1/2004	 	4/30/2004	 	$	0.00	 	$	0.00	 	 
	5/1/2004	 	1/31/2005	 	$	277,453.56	 	$	23,121.13	 	 
	2/1/2005	 	1/31/2006	 	$	285,812.82	 	$	23,817.74	 	 
	2/1/2006	 	4/30/2007	 	$	294,169.92	 	$	24,514.16	 	 





	

TENANT'S PROPORTIONATE SHARE:	
 	

75.2%
	

SECURITY DEPOSIT:	
 	

$31,501.00 (see also Addendum to Lease—Security Deposit Transfer)
	

ASSIGNMENT/SUBLETTING FEE	
 	

$1,000.00
	

REAL ESTATE BROKER DUE COMMISSION:	
 	

In no event shall Landlord be obligated to pay any Brokerage Commission in accordance with this Lease. Tenant shall indemnify Landlord with respect to any broker(s) claiming they are owed a fee related to this transaction.





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        The
Reference Pages information is incorporated into and made a part of the Lease. In the event of any conflict between any Reference Pages information and the Lease, the Lease shall
control. This Lease includes Exhibits A through C and Addendum Items 1 through 8, all of which are made a part of this Lease. 



	LANDLORD:	 	TENANT:
	

CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company	
 	

DPAC TECHNOLOGIES CORP., a California corporation
	

By:	

RREEF Management Company, a

Delaware corporation, its Property

Manager	
 	

 	

 
	

By:	

 	
 	

By:	

 
	 	
	 	 	

	

Name:	

Scott Recknor	
 	

Name:	

Richard Dadamo
	

Title:	

District Manager	
 	

Title:	

Chairman of the Board of Directors
	

Dated: ___________________, 2004	
 	

Dated: ___________________, 2004
	

 	

 	
 	

By:	

 
	 	 	 	 	

	

 	

 	
 	

Name:	

William M. Stowell
	

 	

 	
 	

Title:	

Chief Financial Officer
	

 	

 	
 	

Dated: ___________________, 2004





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   LEASE  


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


1.     USE AND RESTRICTIONS ON USE.  


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



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



        1.3   Tenant
and the Tenant Entities will be entitled to the non-exclusive use of the common areas of the Building as they exist from time to time during the Term,
including the parking facilities, subject 


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to
Landlord's rules and regulations regarding such use. However, in no event will Tenant or the Tenant Entities park more vehicles in the parking facilities than Tenant's Proportionate Share of the
total parking spaces available for common use. The foregoing shall not be deemed to provide Tenant with an exclusive right to any parking spaces or any guaranty of the availability of any particular
parking spaces or any specific number of parking spaces. 


        1.4   Tenant
acknowledges that neither Landlord nor any agent of Landlord has made any representation as to the condition of the Premises or the suitability of the Premises
for Tenant's intended use. Tenant hereby acknowledges: (i) that it has satisfied itself with respect to the condition of the Premises (including, but not limited to, the electrical and fire
sprinkler systems, security, environmental aspects, seismic and earthquake requirements), and compliance with the Americans with Disabilities Act (the
"ADA") and applicable zoning, municipal, county, state and federal laws, ordinances and regulations and any covenants or restrictions of record and the
present and future suitability of the Premises for Tenant's intended use, (ii) that it has made such investigations as it deems necessary with reference to such matters, is satisfied with
reference thereto, and assumes all responsibility therefor as the same relate to Tenant's occupancy of the Premises and/or the provisions of this Lease and (iii) that it accepts the Premises in
its "as-is" condition and currently occupies the Premises under a prior lease. This Lease is not contingent upon Tenant's ability to obtain any approvals and permits for its use of the
Premises from any other applicable governmental entities or owners association. Landlord shall cooperate with Tenant in connection with Tenant seeking such permits and approvals, but at no cost to
Landlord. Tenant acknowledges that it is obligated under this Lease even if all or part of its permitted use is not permitted at the Premises. 


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2.     TERM.  


        2.1   The
Term of this Lease shall begin on the date ("Commencement Date") which shall be the Commencement Date as shown on the Reference Pages Premises to Tenant, and shall
terminate on the date as shown on the Reference Pages ("Termination Date"), unless sooner terminated by the provisions of this Lease. 


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


        2.3   In
the event Landlord permits Tenant, or any agent, employee or contractor of Tenant, to enter, use or occupy the Premises prior to the Commencement Date, such entry,
use or occupancy shall be subject to all the provisions of this Lease other than the payment of rent, including, without limitation, Tenant's compliance with the insurance requirements of
Article 11. Said early possession shall not advance the Termination Date. 


3.     RENT.  


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


        3.2   Tenant
recognizes that late payment of any rent or other sum due under this Lease will result in administrative expense to Landlord, the extent of which additional
expense is extremely difficult and economically impractical to ascertain, Tenant therefore agrees that if rent or any other sum is not paid when due and payable pursuant to this Lease, a late charge
shall be imposed in an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) six percent (6%) of the unpaid rent or other payment. The amount of the late charge to be paid
by Tenant shall be reassessed and added to Tenant's obligation for 


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each
successive month until paid. The provisions of this Section 3.2 in no way relieve Tenant of the obligation to pay rent or other payments on or before the date on which they are due, nor do
the terms of this Section 3.2 in any way affect Landlord's remedies pursuant to Article 19 of this Lease in the event said rent or other payment is unpaid after date due. 



4.     RENT ADJUSTMENTS.  


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



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


        4.1.2    Expenses:    All costs of operation, maintenance, repair and management fees of the
Building not exceeding 5% of Landlord's gross receipts from the Building (including the amount of any credits which Landlord may grant to particular tenants of the Building in lieu of providing any
standard services or paying any standard costs described in this Section 4.1.2 for similar tenants), as determined in accordance with generally accepted accounting principles, including the
following costs by way of illustration, but not limitation: water and sewer charges; insurance charges of or relating to all insurance policies and endorsements deemed by Landlord to be reasonably
necessary or desirable and relating in any manner to the protection, preservation, or operation of the Building or any part thereof; utility costs, including, but not limited to, the cost of heat,
light, power, steam, gas; waste disposal; the cost of janitorial services; the cost of security and alarm services (including any central station signaling system); costs of cleaning, repairing,
replacing and maintaining the common areas, including parking and landscaping, window cleaning costs; labor costs; costs and expenses of managing the Building including management fees not exceeding
5% of Landlord's gross receipts from the Building; air conditioning maintenance costs; elevator maintenance fees and supplies; material costs; equipment costs including the cost of maintenance, repair
and service agreements and rental and leasing costs; purchase costs of equipment; current rental and leasing costs of items which would be capital items if purchased; tool costs; licenses, permits and
inspection fees; wages and salaries; employee benefits and payroll taxes; accounting and legal fees; any sales, use or service taxes incurred in connection therewith. In
addition, Landlord shall be entitled to recover, as additional rent (which, along with any other capital expenditures constituting Expenses, Landlord may either include in Expenses or cause to be
billed to Tenant along with Expenses and Taxes but as a separate item), Tenant's Proportionate Share of: (i) an allocable portion of the cost of capital improvement items which are reasonably
calculated to reduce operating expenses; (ii) the cost of fire sprinklers and suppression systems and other life safety systems; and (iii) other capital expenses which are required under
any governmental laws, regulations or ordinances which were not applicable to the Building at the time it was constructed; but the costs described in this sentence shall be amortized over the
reasonable life of such expenditures in accordance with such reasonable life and amortization schedules as shall be determined by Landlord in accordance with generally accepted accounting principles,
with interest on the unamortized amount at one percent (1%) in excess of the Wall Street Journal prime lending rate announced from time to time. Expenses shall not include depreciation or amortization
of the Building or equipment in the Building except as provided herein, loan principal payments, costs of alterations of tenants' premises, leasing commissions, interest expenses on
long-term borrowings or advertising costs. 


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



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




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


        4.3   The
annual determination of Expenses shall be made by Landlord and shall be binding upon Landlord and Tenant, subject to the provisions of this Section 4.3.
During the Term, Tenant may review, at Tenant's sole cost and expense, the books and records supporting such determination in an office of Landlord, or Landlord's agent, during normal business hours,
upon giving Landlord five (5) days advance written notice within sixty (60) days after receipt of such determination, but in no event more often than once in any one (1) year
period, subject to execution of a confidentiality agreement acceptable to Landlord, and provided that if Tenant utilizes an independent accountant to perform such review it shall be one of national
standing which is reasonably acceptable to Landlord, is not compensated on a contingency basis and is also subject to such confidentiality agreement. If Tenant fails to object to Landlord's
determination of Expenses within ninety (90) days after receipt, or if any such objection fails to state with specificity the reason for the objection, Tenant shall be deemed to have approved
such determination and shall have no further right to object to or contest such determination. In the event that during all or any portion of any Lease Year or Base Year, the Building is not fully
rented and occupied Landlord shall make an appropriate adjustment in occupancy-related Expenses for such year for the purpose of avoiding distortion of the amount of such Expenses to be attributed to
Tenant by reason of variation in total occupancy of the Building, by employing consistent and sound accounting and management principles to determine Expenses that would have been paid or incurred by
Landlord had the Building been at least ninety-five percent (95%) rented and occupied, and the amount so determined shall be deemed to have been Expenses for such Lease Year. 


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


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



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


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




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


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


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If
Tenant defaults with respect to any provision of this Lease, Landlord may use any part of the Security Deposit for the payment of any rent or any other sum in default, or for the payment of any
amount which Landlord may spend or become obligated to spend by reason of Tenant's default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's
default. If any portion is so used, Tenant shall within five (5) days after written demand therefor, deposit with Landlord an amount sufficient to restore the Security Deposit to its original
amount and Tenant's failure to do so shall be a material breach of this Lease. Except to such extent, if any, as shall be required by law, Landlord shall not be required to keep the Security Deposit
separate from its general funds, and Tenant shall not be entitled to interest on such deposit. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned to Tenant at such time after termination of this Lease when Landlord shall have determined that all of Tenant's obligations under this Lease
have been fulfilled. Notwithstanding anything to the contrary contained herein or in Article 23 hereof, Tenant hereby waives the provisions of Section 1950.7 of the California Civil
Code, or any similar or successor Regulations or other laws now or hereinafter in effect. 


6.     ALTERATIONS.  


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


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


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


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by
Landlord as sufficient to cover the cost of removing such alterations or improvements and restoring the Premises, to the extent required under Section 26.2 



7.     REPAIR.  


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


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


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


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


7









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


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


9.     ASSIGNMENT AND SUBLETTING.  


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



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


        9.3   In
addition to Landlord's right to approve of any subtenant or assignee, Landlord shall have the option, in its sole discretion, in the event of any proposed subletting
or assignment, to terminate this Lease, or in the case of a proposed subletting of less than the entire Premises, to recapture the portion of the Premises to be sublet, as of the date the subletting
or assignment is to be effective. The option shall be exercised, if at all, by Landlord giving Tenant written notice given by Landlord to Tenant within thirty (30) days following Landlord's
receipt of Tenant's written notice as required above. However, if Tenant notifies Landlord, within five (5) days after receipt of Landlord's termination notice, that Tenant is rescinding its
proposed assignment or sublease, the termination notice shall be void and the Lease shall continue in full force and effect. If this Lease shall be terminated with respect to the entire Premises
pursuant to this Section, the Term of this Lease shall end on the date stated in 


8







 



Tenant's
notice as the effective date of the sublease or assignment as if that date had been originally fixed in this Lease for the expiration of the Term. If Landlord recaptures under this Section
only a portion of the Premises, the rent to be paid from time to time during the unexpired Term shall abate proportionately based on the proportion by which the approximate square footage of the
remaining portion of the Premises shall be less than that of the Premises as of the date immediately prior to such recapture. Tenant shall, at Tenant's own cost and expense, discharge in full any
outstanding commission obligation which may be due and owing as a result of any proposed assignment or subletting, whether or not the Premises are recaptured pursuant to this Section 9.3 and
rented by Landlord to the proposed tenant or any other tenant. 


        9.4   In
the event that Tenant sells, sublets, assigns or transfers this Lease, Tenant shall pay to Landlord as additional rent an amount equal to one hundred percent (100%)
of any Increased Rent (as defined below), less the Costs Component (as defined below), when and as such Increased Rent is received by Tenant. As used in this Section, "Increased Rent" shall mean the
excess of (i) all rent and other consideration which Tenant is entitled to receive by reason of any sale, sublease, assignment or other transfer of this Lease, over (ii) the rent
otherwise payable by Tenant under this Lease at such time. For purposes of the foregoing, any consideration received by Tenant in form other than cash shall be valued at its fair market value as
determined by Landlord in good faith. The "Costs Component" is that amount which, if paid monthly, would fully amortize on a straight-line basis, over the entire period for which Tenant is
to receive Increased Rent, the reasonable costs incurred by Tenant for leasing commissions and tenant improvements in connection with such sublease, assignment or other transfer. 



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



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


        9.7   If
Tenant is a corporation, limited liability company, partnership or trust, any transfer or transfers of or change or changes within any twelve (12) month period
in the number of the outstanding voting shares of the corporation or limited liability company, the general partnership interests in the partnership or the identity of the persons or entities
controlling the activities of such partnership or trust resulting in the persons or entities owning or controlling a majority of such shares, partnership interests or activities of such partnership or
trust at the beginning of such period no longer 


9







 



having
such ownership or control shall be regarded as equivalent to an assignment of this Lease to the persons or entities acquiring such ownership or control and shall be subject to all the
provisions of this Article 9 to the same extent and for all intents and purposes as though such an assignment. 


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


11.   INSURANCE.  


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


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


10







 



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


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


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


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


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


11







 



Landlord
shall request a reasonable and customary non-disturbance letter from its mortgagee, but the failure to obtain such non-disturbance letter shall not be a breach of this
Lease. 


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


17.   REENTRY BY LANDLORD.  


        17.1 Landlord
reserves and shall at all times have the right to re-enter the Premises to inspect the same, to show said Premises to prospective purchasers,
mortgagees or tenants, and to alter, improve or repair the Premises and any portion of the Building, without abatement of rent, and may for that purpose erect, use and maintain scaffolding, pipes,
conduits and other necessary structures and open any wall, ceiling or floor in and through the Building and Premises where reasonably required by the character of the work to be performed, provided
entrance to the Premises shall not be blocked thereby, and further provided that the business of Tenant shall not be interfered with unreasonably. Landlord shall have the right at any time to change
the arrangement and/or locations of entrances, or passageways, doors and doorways, and corridors, windows, elevators, stairs, toilets or other public parts of the Building and to change the name,
number or designation by which the Building is commonly known. In the event that Landlord damages any portion of any wall or wall covering, ceiling, or floor or floor covering within the Premises,
Landlord shall repair or replace the damaged portion to match the original as nearly as commercially reasonable but shall not be required to repair or replace more than the portion actually damaged.
Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned by any action of Landlord authorized by this Article 17. 


        17.2 Landlord
shall have the right to use any and all means which Landlord may deem proper to open said doors in an emergency to obtain entry to any portion of the Premises.
Landlord is authorized to gain access by such means as Landlord shall elect and the cost of repairing any damage occurring in doing so shall be borne by Tenant and paid to Landlord within five
(5) days of Landlord's demand. 


18.   DEFAULT.  


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



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


        18.1.2 Tenant
shall fail to comply with any term, provision or covenant of this Lease which is not provided for in another Section of this Article and shall not cure such
failure within twenty (20) days (forthwith, if the failure involves a hazardous condition) after written notice of such failure to Tenant provided, however, that such failure shall not be an
event of default if such 



12







 




failure
could not reasonably be cured during such twenty (20) day period, Tenant has commenced the cure within such twenty (20) day period and thereafter is diligently pursuing such cure
to completion, but the total aggregate cure period shall not exceed ninety (90) days. 



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


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


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




19.   REMEDIES.  


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



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



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



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


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


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


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





The
"Worth at the Time of Award" of the amounts referred to in parts 19.1.1.1 and 19.1.1.2 above, shall be computed by allowing interest at the lesser of a per annum rate equal to: (i) the
greatest per annum rate of interest permitted from time to time under applicable law, or (ii) the Prime Rate plus 5%. For purposes hereof, the "Prime Rate" shall be the per annum interest rate
publicly announced as 


13







 

its
prime or base rate by a federally insured bank selected by Landlord in the State of California. The "Worth at the Time of Award" of the amount referred to in part 19.1.1.3, above, shall be
computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus 1%; 



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


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




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


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


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


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


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



        19.7 If,
on account of any breach or default by Tenant in Tenant's obligations under the terms and conditions of this Lease, it shall become necessary or appropriate for
Landlord to employ or consult with an attorney or collection agency concerning or to enforce or defend any of Landlord's rights or remedies arising under this Lease or to collect any sums due from
Tenant, Tenant agrees to pay all costs and fees so incurred by Landlord, including, without limitation, reasonable attorneys' fees and costs. TENANT EXPRESSLY WAIVES ANY RIGHT TO: (A) TRIAL BY
JURY; AND (B) SERVICE OF ANY NOTICE REQUIRED BY ANY PRESENT OR FUTURE LAW OR 


14







 



ORDINANCE
APPLICABLE TO LANDLORDS OR TENANTS BUT NOT REQUIRED BY THE TERMS OF THIS LEASE. 


        19.8 Upon
the occurrence of an Event of Default, Landlord may (but shall not be obligated to) cure such default at Tenant's sole expense. Without limiting the generality of
the foregoing, Landlord may, at Landlord's option, enter into and upon the Premises if Landlord determines in its sole discretion that Tenant is not acting within a commercially reasonable time to
maintain, repair or replace anything for which Tenant is responsible under this Lease or to otherwise effect compliance with its obligations under this Lease and correct the same, without being deemed
in any manner guilty of trespass, eviction or forcible entry and detainer and without incurring any liability for any damage or interruption of Tenant's business resulting therefrom and Tenant agrees
to reimburse Landlord within five (5) days of Landlord's demand as additional rent, for any expenses which Landlord may incur in thus effecting compliance with Tenant's obligations under this
Lease, plus interest from the date of expenditure by Landlord at the Wall Street Journal prime rate. 


20.   TENANT'S BANKRUPTCY OR INSOLVENCY.  



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



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



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


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


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




15







 





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





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


22.   CASUALTY  


        22.1 In
the event the Premises or the Building are damaged by fire or other cause and in Landlord's reasonable estimation such damage can be materially restored within one
hundred eighty (180) days, Landlord shall forthwith repair the same at Landlord's expense subject to Article 4 and this Lease shall remain in full force and effect, except that Tenant
shall be entitled to a proportionate abatement in rent from the date of such damage. Such abatement of rent shall be made pro rata in accordance with the extent to which the damage and the making of
such repairs shall interfere with the use and occupancy by Tenant of the Premises from time to time. Within forty-five (45) days from the date of such damage, Landlord shall notify
Tenant, in writing, of Landlord's reasonable estimation of the length of time within which material restoration can be made, and Landlord's determination shall be binding on Tenant. For purposes of
this Lease, the Building or Premises shall be deemed "materially restored" if they are in such condition as would not prevent or materially interfere with Tenant's use of the Premises for the purpose
for which it was being used immediately before such damage. 


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


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



        22.4 In
the event that Landlord should fail to complete such repairs and material restoration within sixty (60) days after the date estimated by Landlord therefor as
extended by this Section 22.4, Tenant may at its option and as its sole remedy terminate this Lease by delivering written notice to Landlord, within fifteen (15) days after the
expiration of said period of time, whereupon the Lease shall end on the date of such notice or such later date fixed in such notice as if the date of such notice was the date originally fixed in this
Lease for the expiration of the Term; provided, however, that if construction is delayed because of changes, deletions or additions in construction requested by Tenant, strikes, lockouts, casualties,
Acts of God, war, material or labor shortages, government regulation or control or other causes beyond the reasonable control of Landlord, the period for restoration, repair or rebuilding shall be
extended for the amount of time Landlord is so delayed. 


16











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


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


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


23.    EMINENT DOMAIN.    If all or any substantial part of the Premises shall
betaken or appropriated by any public or quasi-public authority under the power of eminent domain, or conveyance in lieu of such appropriation, either party to this Lease shall have the right, at its
option, of giving the other, at any time within thirty (30) days after such taking, notice terminating this Lease, except that Tenant may only terminate this Lease by reason of taking or
appropriation, if such taking or appropriation shall be so substantial as to materially interfere with Tenant's use and occupancy of the Premises. If neither party to this Lease shall so elect to
terminate this Lease, the rental thereafter to be paid shall be adjusted on a fair and equitable basis under the circumstances. In addition to the rights of Landlord above, if any substantial part of
the Building shall be taken or appropriated by any public or quasi-public authority under the power of eminent domain or conveyance in lieu thereof, and regardless of whether the Premises or any part
thereof are so taken or appropriated, Landlord shall have the right, at its sole option, to terminate this Lease. Landlord shall be entitled to any and all income, rent, award, or any interest
whatsoever in or upon any such sum, which may be paid or made in connection with any such public or quasi-public use or purpose, and Tenant hereby assigns to Landlord any interest it may have in or
claim to all or any part of such sums, other than any separate award which may be made with respect to Tenant's trade fixtures and moving expenses; Tenant shall make no claim for the value of any
unexpired Term. Tenant hereby waives any and all rights under and benefits of Section 1265.130 of the California Code of Civil Procedure, or any similar or successor Regulations or other laws
now or hereinafter in effect. 


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


17







 



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


26.   SURRENDER OF PREMISES.


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


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


        26.3 All
obligations of Tenant under this Lease not fully performed as of the expiration or earlier termination of the Term shall survive the expiration or earlier
termination of the Term Upon the expiration or earlier termination of the Term, Tenant shall pay to Landlord the amount, as estimated by Landlord, necessary to repair and restore the Premises as
provided in this Lease and/or to discharge Tenant's obligation for unpaid amounts due or to become due to Landlord. All such amounts shall be 


18







 



used
and held by Landlord for payment of such obligations of Tenant, with Tenant being liable for any additional costs upon demand by Landlord, or with any excess to be returned to Tenant after all
such obligations have been determined and satisfied. Any otherwise unused Security Deposit shall be credited against the amount payable by Tenant under this Lease. 



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


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


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


30.    DEFINED TERMS AND HEADINGS.    The Article headings shown in this Lease are
for convenience of reference and shall in no way define, increase, limit or describe the scope or intent of any provision of this Lease. Any indemnification or insurance of Landlord shall apply to and
inure to the benefit of all the following "Landlord Entities", being Landlord, Landlord's investment manager, and the trustees, boards of directors, officers, general partners, beneficiaries,
stockholders, employees and agents of each of them. Any option granted to Landlord shall also include or be exercisable by Landlord's trustee, beneficiary, agents and employees, as the case may be. In
any case where this Lease is signed by more than one person, the obligations under this Lease shall be joint and several. The terms "Tenant" and "Landlord" or any pronoun used in place thereof shall
indicate and include the masculine or feminine, the singular or plural number, individuals, firms or corporations, and their and 


19







 



each
of their respective successors, executors, administrators and permitted assigns, according to the context hereof. The term "rentable area" shall mean the rentable area of the Premises or the
Building as calculated by the Landlord on the basis of the plans and specifications of the Building including a proportionate share of any common areas. Tenant hereby accepts and agrees to be bound by
the figures for the rentable square footage of the Premises and Tenant's Proportionate Share shown on the Reference Pages; however, Landlord may adjust either or both figures if there is manifest
error, addition or subtraction to the Building or any business park or complex of which the Building is a part, remeasurement or other circumstance reasonably justifying adjustment. The term
"Building" refers to the structure in which the Premises are located and the common areas (parking lots, sidewalks, landscaping, etc.) appurtenant thereto. If the Building is part of a larger complex
of structures, the term "Building" may include the entire complex, where appropriate (such as shared Expenses or Taxes) and subject to Landlord's reasonable discretion. 


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


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


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


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


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



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


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


20







 



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


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21







 

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



	LANDLORD:	 	TENANT:
	
CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company	
 	
DPAC TECHNOLOGIES CORP., a California corporation
	

By:	
 	

RREEF Management Company, a Delaware corporation, its Property Manager	
 	

 	
 	

 
	

By:	
 	

 	
 	

By:	
 	

 
	 	 	
	 	 	 	

	Name:	 	Scot Recknor	 	Name:	 	Richard Dadamo
	Title:	 	District Manager	 	Title:	 	Chairman of the Board of Directors
	Dated:	 	, 2004
	 	Dated:	 	, 2004

	

 	
 	

 	
 	

By:	
 	

, 2004

	 	 	 	 	Name:	 	William M. Stowell
	 	 	 	 	Title:	 	Chief Financial Officer
	 	 	 	 	Dated:	 	 
	 	 	 	 	 	 	





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22








ADDENDUM TO LEASE  


        attached to and made a part of Lease bearing the

Lease Reference Date of December 29, 2003, between

CABOT INDUSTRIAL VENTURE A, LLC, A DELAWARE LIMITED LIABILITY COMPANY,

as Landlord and DPAC TECHNOLOGIES CORP., a California corporation, as Tenant  


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


1.     SCHEDULE OF RENTS.


        All
additional rent shall be payable from the Commencement Date of the Lease including, but not limited to, Insurance, Expenses, Taxes,  etc. as defined as in the Lease. 


2.     TENANT'S PROPORTIONATE SHARE.



        Tenant's
Proportionate Share is defined as the percentage obtained by dividing the number of square feet in the Leased Premises by the total number of leasable square feet at the
Building. In the event that the number of square feet in either the Leased Premises or the entire Building is modified, at Landlord's option, Tenant's Proportionate Share shall thereafter be adjusted
accordingly. If any Expenses or Taxes are not separately assessed or charged to the Building, Tenant's liability shall be an equitable proportion of such Expenses or Taxes, such proportion to be
determined by Landlord. 


3.     MAINTANTENANCE OF AIR CONDITIONING AND HEATING UNITS.



        Notwithstanding
anything in the Lease to the contrary, Landlord shall maintain and repair the HVAC system ("HVAC") for the Premises. Landlord's actual cost of such maintenance and repair
shall be paid by Landlord and reimbursed by Tenant to the Landlord as part of Expenses. 


4.     ROOF MAINTENANCE.


        Notwithstanding
anything in the Lease to the contrary, Landlord shall maintain and repair the roof. The cost of such maintenance and repair shall be paid by Landlord and reimbursed by
Tenant as part of Expenses. 


5.     SECURITY DEPOSIT TRANSFER.



        The
Security Deposit in the amount of $31,501.00 held by Landlord under that certain Lease Agreement dated June 19, 1995, as amended by that certain First Amendment to Lease dated
December 2000 shall be transferred in its entirety to this Lease. The Security Deposit shall be subject to all of the provisions of this Lease, including without limitation, Article 5. 


6.     PARKING.  


        During the term of the Lease and any agreed upon extension thereof, Tenant, its authorized representatives and its invitees shall have the
non-exclusive right to use the parking facilities located at the Building, jointly and in common with all others entitled to the use thereof. Tenant agrees not to overburden the parking
facilities located at the Building and agrees to cooperate with Landlord and other tenants at the Building in the use of said parking facilities. Landlord reserves the right, in the exercise of its
sole and absolute discretion, to determine whether Landlord's parking facilities at the Building are becoming overcrowded and, in such event, to allocate parking spaces among the various tenants in
the Building or to designate a specific area or areas within which Tenant, its authorized representatives and its invitees must park. Tenant shall be entitled to use Sixty-seven (67) unreserved "In
Common" parking spaces at the Building. Tenant expressly agrees and understands that the Sixty-seven (67) parking spaces are not reserved and that Landlord, in the exercise of its sole and absolute
discretion, may designate the area or areas of the parking facilities located at the Building where said in common parking spaces are to be located. Landlord shall have the right at any time to make 










changes
to the location of driveways, entrances, exits, parking spaces, parking areas, or the direction of the flow of traffic. All responsibility for damage and theft to vehicles is assumed by Tenant
and Tenant's employees, visitors and customers. Tenant shall repair or cause to be repaired, at Tenant's sole cost and expense, any and all damage to the Premises, Common Areas and Building caused by
Tenant, or Tenant's employees, visitors, or customers use of such parking areas. 


7.     VACATION OF PORTION OF BUILDING.  


        The parties acknowledge that Tenant currently occupies the entire Building pursuant to an earlier lease. Tenant agrees to vacate the portion of the Building not
covered by this Lease prior to the Commencement Date. Such vacated portion of the Building shall be returned to Landlord in accordance with the provisions of the prior lease covering such premises. If
Tenant does not vacate the portion of the Building not comprising the Premises prior to the Commencement Date, Tenant shall pay rent on the entire Building at the rate of $34,064.32 per month (plus
Tenant's share of Expenses and Taxes) until such space is vacated. 


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8.     PREMISES CONDITION.  


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



	1.
	Service
and repair all heating and air conditioning equipment, exhaust fans and hot water heater. Provide Landlord's office with a copy of the inspection and service report provided by
the mechanical contractor.



	2.
	All
lights in the office and warehouse must be working. Re-lamp and/or re-ballast the fixtures as necessary.



	3.
	Overhead
doors must be serviced and repaired.



	4.
	All
exterior metal doors, including hardware should be serviced or replaced as necessary.



	5.
	Repair
all damaged sheet rock in the office area and in the warehouse along the demising walls.



	6.
	Office
and warehouse floors should be left in good, clean condition.



	7.
	Any
exterior signage must be removed; repair and repaint the fascia as necessary.



	8.
	The
bathrooms and any janitors' sinks and closets must be cleaned with all plumbing in good working order and condition, all lights and fans in good working condition and all items
removed from any cabinets.



	9.
	All
data and electrical wiring for Tenant's personal equipment and machinery needs to be removed to the point of origin and any repairs from damage made. 







	LANDLORD:	 	TENANT:
	
CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company	
 	
DPAC TECHNOLOGIES CORP., a California corporation
	

By:	
 	

RREEF Management Company,

a Delaware corporation, its Property Manager	
 	

 	
 	

 
	

By:	
 	

 	
 	

By:	
 	

 
	 	 	
	 	 	 	

	Name:	 	Scott Recknor	 	Name:	 	Richard Dadamo
	Title:	 	District Manager	 	Title:	 	Chairman of the Board of Directors
	Dated:	 	, 2004
	 	Dated:	 	, 2004

	

 	
 	

 	
 	

By:	
 	


	 	 	 	 	Name:	 	William M. Stowell
	 	 	 	 	Title:	 	Chief Financial Officer
	 	 	 	 	Dated:	 	, 2004
	 	 	 	 	 	 	











EXHIBIT A—FLOOR PLAN DEPICTING THE PREMISES  


          attached to and made a part of Lease bearing the

Lease Reference Date of December 29, 2003 between

CABOT INDUSTRIAL VENTURE A, LLC a Delaware limited liability company, as Landlord and

DPAC TECHNOLOGIES CORP., a California corporation, as Tenant  


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




  



	 	 	
	 	

	

 	
 	

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EXHIBIT A-1—SITE PLAN  


          attached to and made a part of Lease bearing the

Lease Reference Date of December 29, 2003 between

CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company, as Landlord and

DPAC TECHNOLOGIES CORP., a California corporation, as Tenant  


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




  



	 	 	
	 	

	

 	
 	

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EXHIBIT B—INITIAL ALTERATIONS  


          attached to and made a part of Lease bearing the

Lease Reference Date of December 29, 2003 between

CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company, as Landlord and

DPAC TECHNOLOGIES CORP., a California corporation, as Tenant  


Landlord, at Landlord's sole cost and expense, shall provide the following Initial Alterations within a reasonable time after the Commencement Date: 



	•
	Demise
the Premises in general accordance with Exhibit B-1 by closing up walls and doorways to create a demising wall.



	•
	Make
minor modifications to the HVAC and electrical to properly separate crossover between the two spaces. 




All
work to be performed will be done with standard materials used in the Lincoln Tech Center. The surface of the demising wall facing into the Premises shall be drywalled, sanded and painted with
standard materials used in the Lincoln Tech Center. Tenant shall be responsible to relocate any furniture, equipment and fixtures to and from the areas in which the Landlord will be making the
above-described Initial Alterations. Said Initial Alterations shall be made during regular (non-holiday) business hours on weekdays. Other than this work, Tenant accepts the Premises in
it's as-is condition and Landlord is not obligated to perform any other Initial Alterations. 


In
no event shall Landlord be responsible for any other Initial Alterations work other than as outlined above. Any Initial Alterations work other than as outlined above shall be the sole
responsibility of the Tenant and any and all costs other than as outlined above shall be paid directly by Tenant. 


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EXHIBIT B-1—INITIAL ALTERATIONS  


          attached to and made a part of Lease bearing the

Lease Reference Date of December 29, 2003 between

CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company, as Landlord and

DPAC TECHNOLOGIES CORP., a California corporation, as Tenant  




  



	 	 	
	 	

	

 	
 	

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   EXHIBIT C—RULES AND REGULATIONS

attached to and made a part of Lease bearing the

Lease Reference Date of December 29, 2003 between

CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company, as Landlord and

DPAC TECHNOLOGIES CORP., a California corporation, as Tenant  



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


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


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



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


        5.     Tenant
shall not place a load upon any floor of its Premises, including mezzanine area, if any, which exceeds the load per square foot that such floor was designed to
carry and that is allowed by law. Heavy objects shall stand on such platforms as determined by Landlord to be necessary to properly distribute the weight. Landlord will not be responsible for loss of
or damage to any such equipment or other property from any cause, and all damage done to the Building by maintaining or moving such equipment or other property shall be repaired at the expense of
Tenant. 


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



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



	 	 	

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



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


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


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


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


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


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


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


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


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


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


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



	 	 	

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


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


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


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


        24.   Any
equipment belonging to Tenant which causes noise or vibration that may be transmitted to the structure of the Building or to any space therein to such a degree as to
be objectionable to Landlord or to any tenants in the Building shall be placed and maintained by Tenant, at Tenant's expense, on vibration eliminators or other devices sufficient to eliminate the
noise or vibration. 


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


        26.   Landlord
reserves the right to designate the use of parking areas and spaces. Tenant shall not park in visitor, reserved, or unauthorized parking areas. Tenant and
Tenant's guests shall park between designated parking lines only and shall not park motor vehicles in those areas designated by Landlord for loading and unloading. Vehicles in violation of the above
shall be subject to being towed at the vehicle owner's expense. Vehicles parked overnight without prior written consent of the Landlord shall be deemed abandoned and shall be subject to being towed at
vehicle owner's expense. Tenant will from time to time, upon the request of Landlord, supply Landlord with a list of license plate numbers of vehicles owned or operated by its employees or agents. 


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


        28.   During
periods of loading and unloading, Tenant shall not unreasonably interfere with traffic flow and loading and unloading areas of other tenants. All products,
materials or goods must be stored within the Tenant's Premises and not in any exterior areas, including, but not limited to, exterior dock platforms, against the exterior of the Building, parking
areas and driveway areas. Tenant agrees to keep the exterior of the Premises clean and free of nails, wood, pallets, packing materials, barrels and any other debris produced from their operation. 


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