**Exhibit10.16**

 

**OFFICEBUILDING LEASE**

 

**BETWEEN**

 

**SUNNYVALEMATHILDA INVESTORS, LLCa California limited liability company**

 

**LANDLORD**

 

**AND**

 

**MONOLITHICSYSTEM TECHNOLOGY, INC., dba MOSYS,a Delaware corporation**

 

**TENANT**

 

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**OFFICEBUILDING LEASE**

 

**TABLE OF CONTENTS**

 
| ** **            | **Page**                                                                |
|-----------------------|-------------------------------------------------------------------------|
| OFFICE BUILDING LEASE | 1                                                                       |
| 1.                    | BASIC LEASE TERMS                                                       | 1 |
| 2.                    | PREMISES AND COMMON AREAS                                               | 2 |
| 3.                    | TERM                                                                    | 3 |
| 4.                    | POSSESSION                                                              | 3 |
| 5.                    | RENT                                                                    | 3 |
| 6.                    | OPERATING EXPENSES                                                      | 4 |
| 7.                    | SECURITY DEPOSIT                                                        | 5 |
| 8.                    | USE.                                                                    | 5 |
| 9.                    | NOTICES                                                                 | 6 |
| 10.                   | BROKERS                                                                 | 6 |
| 11.                   | SURRENDER; HOLDING OVER                                                 | 6 |
| 12.                   | TAXES ON TENANT’S PROPERTY                                         | 7 |
| 13.                   | ALTERATIONS                                                             | 7 |
| 14.                   | REPAIRS                                                                 | 9 |
| 15.                   | LIENS                                                                   | 9 |
| 16.                   | ENTRY BY LANDLORD                                                       | 10 |
| 17.                   | UTILITIES AND SERVICES                                                  | 10 |
| 18.                   | ASSUMPTION OF RISK AND INDEMNIFICATION                                  | 10 |
| 19.                   | INSURANCE                                                               | 11 |
| 20.                   | DAMAGE OR DESTRUCTION                                                   | 13 |
| 21.                   | EMINENT DOMAIN                                                          | 15 |
| 22.                   | DEFAULTS AND REMEDIES                                                   | 15 |
| 23.                   | LANDLORD’S DEFAULT                                                 | 17 |
| 24.                   | ASSIGNMENT AND SUBLETTING                                               | 17 |
| 25.                   | SUBORDINATION                                                           | 19 |
| 26.                   | ESTOPPEL CERTIFICATE                                                    | 20 |
| 27.                   | RULES AND REGULATIONS                                                   | 20 |
| 28.                   | MODIFICATION AND CURE RIGHTS OF LANDLORD’S MORTGAGEES AND  LESSORS | 20 |
| 29.                   | DEFINITION OF LANDLORD                                                  | 21 |
| 30.                   | WAIVER                                                                  | 21 |
| 31.                   | PARKING                                                                 | 21 |
| 32.                   | FORCE MAJEURE                                                           | 22 |
| 33.                   | SIGNS                                                                   | 22 |
| 34.                   | LIMITATION ON LIABILITY                                                 | 22 |
| 35.                   | FINANCIAL STATEMENTS                                                    | 22 |
| 36.                   | QUIET ENJOYMENT                                                         | 22 |
| 37.                   | MISCELLANEOUS                                                           | 22 |
| 38.                   | EXECUTION OF LEASE                                                      | 24 |
| 39.                   | EARLY OCCUPANCY                                                         | 24 |
| 40.                   | OPTION TO EXTEND                                                        | 24 |
| 41.                   | CONDITIONS PRECEDENT                                                    | 25 |

 

**EXHIBITS:**

 
| A | Outline of Floor Plan  of Premises    |   |
|---|---------------------------------------|--------|
| B | Tenant Improvements                   |   |
| C | Definition of Operating  Expenses     |   |
| D | Standards for Utilities  and Services |   |
| E | Rules and Regulations                 |   |
| F | Memorandum of Lease                   |   |
| G | Quitclaim of Memorandum  of Lease     |   |

 

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**OFFICE BUILDING LEASE**

 

This OFFICE BUILDINGLEASE (“Lease”) is entered into as of the 6th day of May, 2005 by and between SUNNYVALEMATHILDA INVESTORS, LLC, a California limited liability company (“Landlord”),and MONOLITHIC SYSTEM TECHNOLOGY, INC., dba MOSYS , a Delaware corporation (“Tenant”).

 

1.         **BASIC LEASE TERMS.**  For purposes of this Lease, the followingterms have the following definitions and meanings:

 

(a)       **Landlord:**  SUNNYVALE MATHILDA INVESTORS, LLC, aCalifornia limited liability company.

 

(b)       **Landlord’s Address (ForNotices):**

 

SUNNYVALE MATHILDAINVESTORS, LLCc/o Matteson Real Estate Equities, Inc.1991 Broadway, Suite 300Redwood City, CA 94063-1994Attention:  James A. Blake

 

or such other place asLandlord may from time to time designate by notice to Tenant.

 

(c)       **Tenant:**  MONOLITHIC SYSTEM TECHNOLOGY, INC., dba MOSYS , a Delaware corporation.

 

(d)       **Tenant’s Address (ForNotices):**

 

MOSYS, INC.

755 No. MathildaAvenue, Suite 100

Sunnyvale,California 94086

Attention:  Chief Financial Officer

 

(e)       **Project:**  The parcel(s) of real property (the “Land”)commonly known as 755 N. Mathilda Avenue/680 Vaqueros Avenue, and located inthe City of Sunnyvale (the “City”), County of Santa Clara (the “County”), Stateof California (“State”).  The project(the “Project”) includes the Land, the Building (described below) and appurtenant surface parking areas,landscaping, walkways and other common areas located on the Land.

 

(f)        **Building:**  A two (2) story office/research anddevelopment building within the Project (the “Building”), which Buildingcontains approximately 52,500 Rentable Square Feet, with the street address of755 North Mathilda Avenue, Sunnyvale, California.

 

(g)       **Premises:**  Those certain premises comprising all of the First Floor of the Building asgenerally shown on the floor plan attached hereto as Exhibit ”A”,which Premises contains approximately 26,250total Rentable Square Feet.

 

(h)       **Tenant’s Percentage:**  Tenant’s percentage of the Building on aRentable Square Foot basis, which is 50%.

 

(i)        **Term:**  Five(5) years.

 

(j)        **Commencement Date:**  June27, 2005.  The Commencement Date shallnot be delayed by reason of a delay resulting from Force Majeure (as defined inParagraph 32 below), or for any other reason.

 

            **Expiration Date:**  June30, 2010.

 

(k)       **Intentionally Omitted.**

 

(l)        **Intentionally Omitted.**

 

m)        **Monthly Base Rent:**  This Lease is intended to be a “triple netlease” as more fully described in Paragraph 6 below.  Monthly Base Rent is set forth below in thefollowing table, subject to adjustment as provided in this Lease:

 

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| **Months**   | ** ** | **Monthly Rent/RSF** | ** ** | **Monthly  Base Rent** | ** ** |
|--------------|------------|----------------------|------------|------------------------|------------|
| 1 – 12  |       | $                    | 1.00       |                   | $          | 26,250.00 |   |
| 13 – 24 |       | $                    | 1.05       |                   | $          | 27,562.50 |   |
| 25 – 36 |       | $                    | 1.10       |                   | $          | 28,875.00 |   |
| 37 – 48 |       | $                    | 1.15       |                   | $          | 30,187.50 |   |
| 49 – 60 |       | $                    | 1.20       |                   | $          | 31,500.00 |   |

 

Tenant’s obligation topay its share of Operating Expenses shall be 100% abated for the first month ofthe Term but not thereafter.

 

(n)       **Intentionally Omitted.**

 

(o)       **Security Deposit:**  $31,500.00.

 

(p)       **IntentionallyOmitted.**

 

(q)       **IntentionallyOmitted.**

 

(r)        **Permitted Use:**  General office use and administration,research and development and related uses, but no other use without the writtenconsent of Landlord.

 

(s)       **Parking:**  Eighty-three(83) unassigned parking spaces,subject to the terms and conditions of Paragraphs 32 and 43 below and the Rulesand Regulations regarding parking contained in Exhibit ”E”.

 

(t)        **IntentionallyOmitted.**

 

(u)       **IntentionallyOmitted.**

 

(v)       **Interest Rate:**  The greater of ten percent (10%) per annum ortwo percent (2%) in excess of the prime lending or reference rate of WellsFargo Bank N.A. or any successor bank in effect on the twenty-fifth (25th) dayof the calendar month immediately prior to the event giving rise to the InterestRate imposition; provided, however, the Interest Rate will in no event exceedthe maximum interest rate permitted to be charged by California law.

 

(w)      **Exhibits:**  A through E, inclusive, which Exhibits areattached to this Lease and incorporated herein by this reference.

 

This Paragraph 1represents a summary of the basic terms and definitions of this Lease.  In the event of any inconsistency between theterms contained in this Paragraph 1 and any specific provision of this Lease,the terms of the more specific provision shall prevail.

 

2.         **PREMISES AND COMMON AREAS.**

 

(a)       **Premises.**  Landlord hereby leases to Tenant and Tenanthereby leases from Landlord the Premises as improved or to be improved with theTenant Improvements described in Exhibit ”B”.

 

(b)       **Mutual Covenants.**  Landlord and Tenant agree that the lettingand hiring of the Premises is upon and subject to the terms, covenants andconditions contained in this Lease and each party covenants as a material partof the consideration for this Lease to keep and perform their respectiveobligations under this Lease.

 

(c)       **Tenant’s Use of CommonAreas.**  During the Term ofthis Lease, Tenant shall have the nonexclusive right to use in common withLandlord and all persons, firms and corporations conducting business in theProject and their respective customers, guests, licensees, invitees,subtenants, employees and agents (collectively, “Project Occupants”), subjectto the terms of this Lease, the Rules and Regulations referenced in Paragraph32 below and all covenants, conditions and restrictions now or hereafteraffecting the Project, the following common areas of the Building and/or theProject (collectively, the “Common Areas”):

 

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(i)        The Building’s common entrances,hallways, lobbies, public restrooms on multi-tenant floors, elevators,stairways and accessways, loading docks, ramps, drives and platforms and anypassageways and serviceways thereto, and the common pipes, conduits, wires andappurtenant equipment within the Building which serve the Premises(collectively, “Building Common Areas”); and

 

(ii)       The parking facilities of the Projectwhich serve the Building, loading and unloading areas, trash areas, roadways,sidewalks, walkways, parkways, driveways, landscaped areas, plaza areas,fountains and similar areas and facilities situated within the Project andappurtenant to the Building which are not reserved for the exclusive use of anyProject Occupants (collectively, “Project Common Areas”).

 

(d)       **Landlord’s Reservation ofRights.**  Provided Tenant’s useof and access to the Premises and parking to be provided to Tenant under thisLease is not interfered with in an unreasonable manner, Landlord reserves foritself the right from time to time to: (i) install, use, maintain, repair, replace and relocate pipes, ducts,conduits, wires and appurtenant meters and equipment above the ceilingsurfaces, below the floor surfaces, within the walls and in the central coreareas of the Building; (ii) make changes to the design and layout of theProject, including, without limitation, changes to buildings, driveways,entrances, loading and unloading areas, direction of traffic, landscaped areasand walkways, and parking spaces and parking areas; provided, however, that anymaterial adverse changes to the Building Common Areas, or any reduction in theparking available to Tenant, shall require Tenant’s prior approval, which shallnot be unreasonably withheld; and (iii) use or close temporarily the BuildingCommon Areas, the Project Common Areas and/or other portions of the Projectwhile engaged in making improvements, repairs or alterations to the Building,the Project, or any portion thereof.

 

3.         **TERM.**  The term of this Lease (“Term”) will be forthe period designated in Subparagraph 1(i), commencing on the CommencementDate, and ending on the Expiration Date, subject to the terms of thisLease.  Each consecutive twelve (12)month period of the Term of this Lease, commencing on the first day of themonth following the month in which the Commencement Date occurs, will bereferred to herein as a “Lease Year”.

 

4.         **POSSESSION.**  Landlord represents and warrants to Tenantthat as of the Commencement Date only,(i) the roof, exterior and structuralcomponents of the Project shall be in good condition and repair andwater-tight, and the electrical, mechanical, plumbing, HVAC, security, elevatorand lighting systems shall be in good working condition, free of materialdefects and in compliance with all applicable laws and (ii) to Landlord’sactual knowledge, there are no Hazardous Materials (as defined in Section 8(c)in, on, under or about the Premises, the Building or the Project (collectively,the “Landlord Reps”).  Landlord agrees todeliver possession of the Premises to Tenant in accordance with the terms of Exhibit“B”.  By taking possession of thePremises, subject only to the Landlord Reps, Tenant is deemed to have acceptedthe Premises in its “AS-IS” and “WITH ALL FAULTS” condition on the CommencementDate except as to any latent defects and to have acknowledged that there are noitems known to Tenant needing work or repair which are Landlord’sresponsibility.  Tenant acknowledges thatexcept for the Landlord Reps, neither Landlord nor any agent of Landlord hasmade any representation or warranty with respect to the Premises, the Building,the Project or any portions thereof or with respect to the suitability of samefor the conduct of Tenant’s business and Tenant further acknowledges thatLandlord will have no obligation to construct or complete any improvementswithin the Project.

 

5.         **RENT.**

 

(a)       **Monthly Base Rent.**  Tenant agrees to pay Landlord the MonthlyBase Rent for the Premises (subject to adjustment as hereinafter provided) inadvance on the first day of each calendar month during the Term without priornotice or demand, except that Tenant agrees to pay (i) the Monthly Base Rentfor the first month of the Term and (ii) estimated Operating Expenses for thesecond month of the Term directly to Landlord concurrently with Tenant’sdelivery of the executed Lease to Landlord. If the Term of this Lease commences or ends on a day other than thefirst day of a calendar month, then the rent for such period will be proratedin the proportion that the number of days this Lease is in effect during suchperiod bears to the number of days in such month.  All rent must be paid to Landlord, withoutany deduction or offset, in lawful money of the United States of America, atthe address designated by Landlord or to such other person or at such otherplace as Landlord may from time to time designate in writing.  Monthly Base Rent will be adjusted during theTerm of this Lease as provided in Subparagraph l(m).

 

(b)       **Additional Rent.**  All amounts and charges to be paid by Tenanthereunder, including, without limitation, payments for Operating Expenses,insurance, repairs and parking, will be considered additional rent for purposesof this Lease, and the word “rent” as used in this Lease will include all suchadditional rent unless the context specifically or clearly implies that onlyMonthly Base Rent is intended.

 

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(c)       **Late Payments.**  Late payments of Monthly Base Rent and/or anyitem of additional rent will be subject to interest and a late charge asprovided in Subparagraph 22(f) below.

 

6.         **OPERATING EXPENSES.**

 

(a)       **Operating Expenses.**  Commencing on the date which is one (1) monthfollowing the Commencement Date and throughout the Term of this Lease, Tenantagrees to pay Landlord as additional rent in accordance with the terms of thisParagraph 6, Tenant’s Percentage of Operating Expenses as defined in Exhibit“C” attached hereto.  It is intendedthat this Lease be a “triple net lease” and, except as expressly provided tothe contrary in this Lease, Landlord shall not be required to make anyexpenditure or incur any liability in connection with this Lease or theownership, construction, maintenance, operation or repair of the Premises whichis not to be reimbursed by Tenant on a pro rata basis as Tenant’s Percentage ofOperating Expenses.

 

(b)       **Estimate Statement.**  Prior to the Commencement Date and on orabout March 1st of each subsequent calendar year during the Term of this Lease,Landlord will endeavor to deliver to Tenant a statement (“Estimate Statement”)wherein Landlord will estimate both the Operating Expenses and Tenant’sPercentage of Operating Expenses for the then current calendar year.  Tenant agrees to pay Landlord, as “AdditionalRent”, one-twelfth (1/12th) of Tenant’s Percentage of Operating Expenses eachmonth thereafter, beginning with the next installment of rent due, until suchtime as Landlord issues a revised Estimate Statement or the Estimate Statementfor the succeeding calendar year; except that, concurrently with the regular monthlyrent payment next due following the receipt of each such Estimate Statement,Tenant agrees to pay Landlord an amount equal to one monthly installment ofTenant’s Percentage of Operating Expenses (less any applicable OperatingExpenses already paid) multiplied by the number of months from January, in thecurrent calendar year, to the month of such rent payment next due, all monthsinclusive.  If at any time during theTerm of this Lease, but not more often than quarterly, Landlord reasonablydetermines that Tenant’s Percentage of Operating Expenses for the currentcalendar year will be greater than the amount set forth in the then currentEstimate Statement, Landlord may issue a revised Estimate Statement and Tenantagrees to pay Landlord, within thirty (30) days of receipt of the revisedEstimate Statement, the difference between the amount owed by Tenant under suchrevised Estimate Statement and the amount owed by Tenant under the originalEstimate Statement for the portion of the then current calendar year which hasexpired.  Thereafter Tenant agrees to payTenant’s Percentage of Operating Expenses based on such revised EstimateStatement until Tenant receives the next calendar year’s Estimate Statement ora new revised Estimate Statement for the current calendar year.

 

(c)       **Actual Statement.**  By June 1st of each calendar year duringthe Term of this Lease, Landlord will also endeavor to deliver to Tenant astatement (“Actual Statement”) which states the actual Operating Expenses forthe preceding calendar year.  If theActual Statement reveals that Tenant’s Percentage of the actual OperatingExpenses is more than the total Additional Rent paid by Tenant for OperatingExpenses on account of the preceding calendar year, Tenant agrees to payLandlord the difference in a lump sum within thirty (30) days of receipt of theActual Statement.  If the ActualStatement reveals that Tenant’s Percentage of the actual Operating Expenses isless than the Additional Rent paid by Tenant for Operating Expenses on accountof the preceding calendar year, Landlord will credit any overpayment toward thenext monthly installment(s) of Tenant’s Percentage of the Operating Expensesdue to Tenant under this Lease; provided that in the last year of the Term,Landlord shall refund any overpayment within thirty (30) days of the end of theTerm.

 

(d)       **Miscellaneous.**  Any delay or failure by Landlord indelivering any Estimate Statement or Actual Statement pursuant to thisParagraph 6 will not constitute a waiver of its right to require an increase inrent nor will it relieve Tenant of its obligations pursuant to this Paragraph6, except that Tenant will not be obligated to make any payments based on suchEstimate Statement or Actual Statement until thirty (30) days after receipt ofsuch Estimate Statement or Actual Statement. Even though the Term has expired and Tenant has vacated the Premises,when the final determination is made of Tenant’s Percentage of the actualOperating Expenses for the year in which this Lease terminates, Tenant agreesto promptly pay any increase due over the estimated expenses paid and,conversely, any overpayment made in the event said expenses decrease shallpromptly be rebated by Landlord to Tenant. Such obligation will be a continuing one which will survive theexpiration or earlier termination of this Lease.  Prior to the expiration or sooner terminationof the Lease Term and Landlord’s acceptance of Tenant’s surrender of thePremises, Landlord will have the right to estimate the actual OperatingExpenses for the then current Lease Year and to collect from Tenant prior toTenant’s surrender of the Premises, Tenant’s Percentage of any excess of suchactual Operating Expenses over the estimated Operating Expenses paid by Tenantin such Lease Year. Landlord shall maintain its books and records pertaining toOperating Expenses for at least three (3) years.Tenant shallhave the right, upon reasonable notice and during ordinary business hours, toinspect Landlord’s books and records relating to Operating Expenses at Landlord’soffices.  If Tenant disputes the amountof Operating Expenses set forth in any Actual Statement, Tenant shall have theright to cause Landlord’s books and records to be audited by a certified publicaccountant who is paid on an hourly 

 

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basis (and not contingentfee basis).  The amounts payablehereunder by Landlord to Tenant or by Tenant to Landlord as the case may beshall be appropriately adjusted on the basis of such audit.

 

7.         **SECURITY DEPOSIT.**  Concurrently with Tenant’s execution of thisLease, Tenant will deposit with Landlord the Security Deposit designated inSubparagraph 1(o).  The Security Depositwill be held by Landlord as security for the full and faithful performance by Tenantof all of the terms, covenants, and conditions of this Lease to be kept andperformed by Tenant during the Term hereof. If Tenant fully and faithfully performs its obligations under thisLease, including, without limitation, surrendering the Premises upon theexpiration or sooner termination of this Lease in compliance with Subparagraph11(a) below, the Security Deposit or any balance thereof will be returned toTenant (or, at Landlord’s option, to the last assignee of Tenant’s interesthereunder) within thirty (30) days following the expiration of the Lease Termor as required under applicable law, provided that Landlord may retain theSecurity Deposit until such time as any outstanding rent or additional rentamount has been determined and paid in full. The Security Deposit is not, and may not be construed by Tenant toconstitute, rent for the last month or any portion thereof.  If Tenant defaults with respect to anyprovisions of this Lease including, but not limited to, the provisions relatingto the payment of rent or additional rent, Landlord may (but will not berequired to) use, apply or retain all or any part of the Security Deposit forthe payment of any rent or any other sum in default, or for the payment of anyother amount which Landlord may spend or become obligated to spend by reason ofTenant’s default or to compensate Landlord for any loss or damage whichLandlord may suffer by reason of Tenant’s default.  If any portion of the Security Deposit is soused or applied, Tenant agrees, within five (5) days after Landlord’s writtendemand therefor, to deposit cash with Landlord in an amount sufficient torestore the Security Deposit to its original amount and Tenant’s failure to doso shall constitute a default under this Lease. Landlord is not required to keep Tenant’s Security Deposit separate fromits general funds, and Tenant is not entitled to interest on such SecurityDeposit.  Should Landlord sell itsinterest in the Premises during the Term hereof, Landlord will comply with itsobligations under California Civil Code Section 1950.7(d) with regard tothe relief of Landlord for further liability with respect to the SecurityDeposit.

 

8.         **USE.**

 

(a)       **Tenant’s Use of thePremises.**  The Premises may beused for the use or uses set forth in Subparagraph 1(r) only, and Tenant willnot use or permit the Premises to be used for any other purpose without theprior written consent of Landlord, which consent Landlord may withhold in itssole discretion.  Nothing in this Leasewill be deemed to give Tenant any exclusive right to such use in the Buildingor the Project.

 

(b)       **Compliance.**  At Tenant’s sole cost and expense, Tenantagrees to procure, maintain and hold available for Landlord’s inspection, allgovernmental licenses and permits required for the proper and lawful conduct ofTenant’s business from the Premises, if any. Tenant agrees not to use, alter or occupy the Premises or allow thePremises to be used, altered or occupied in violation of, and Tenant, at itssole cost and expense, agrees to use and occupy the Premises and cause thePremises to be used and occupied in compliance with:  (i) any and all laws, statutes, zoningrestrictions, ordinances, rules, regulations, orders and rulings now orhereafter in force and any requirements of any insurer, insurance authority orduly constituted public authority having jurisdiction over the Premises, theBuilding or the Project now or hereafter in force, including, withoutlimitation, the provisions of Title III of the Americans With Disabilities Actof 1990, as same has been and may be subsequently amended, and all rules andregulations promulgated pursuant thereto (the “ADA”), as it relates to Tenant’sparticular use, alteration and occupancy of the Premises, (ii) the requirementsof the Board of Fire Underwriters and any other similar body, and (iii) anyrecorded covenants, conditions and restrictions and similar regulatoryagreements, if any, which affect the use, occupation or alteration of thePremises and/or the Building. Notwithstanding the foregoing, Landlord shall be responsible forensuring that the Building Common Areas are in compliance with all laws,statutes, zoning restrictions, ordinances, rules, regulations, orders andrulings (including those promulgated pursuant to the ADA) as they pertain generallyto facilities for office, administration, research and development use.  Tenant agrees to comply with the Rules andRegulations referenced in Paragraph 28 below. Tenant agrees not to do or permit anything to be done in or about thePremises which will unreasonably obstruct or interfere with the rights of othertenants or occupants of the Building, or injure or unreasonably annoy them, oruse or allow the Premises to be used for any unlawful or unreasonablyobjectionable purpose.  Tenant agrees notto cause, maintain or permit any nuisance or waste in, on, under or about thePremises or elsewhere within the Project.

 

(c)       **Hazardous Materials.**  Except for ordinary and general officesupplies typically used in the ordinary course of business within officebuildings, such as copier toner, liquid paper, glue, ink and common householdcleaning materials (some or all of which may constitute “Hazardous Materials”as defined in this Lease) which are used in strict compliance with allapplicable environmental laws, Tenant agrees not to cause or permit anyHazardous Materials to be brought upon, stored, used, handled, generated,released or disposed of on, in, under or about the Premises, the Building, theCommon Areas or any other portion of the Project by Tenant, its agents,employees, subtenants, 

 

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assignees, licensees,contractors or invitees (collectively, “Tenant’s Parties”), without the priorwritten consent of Landlord, which consent Landlord may withhold in its soleand absolute discretion.  Notwithstandingthe foregoing, Tenant shall have the right to use acetone in amounts reasonablynecessary for the conduct of its business if and only if the acetone is used,treated, stored, handled, transported and disposed of in strict compliance withall environmental laws and such use does not expose the Premises, the Buildingor the soil, air or groundwater in or around the Premises to risk ofcontamination or expose Landlord to any liability therefor.  Landlord shall have the right to review andinspect Tenant’s use, treatment, storage, handling, transportation and disposalof the acetone and Tenant’s records pertaining to the same.  Upon the expiration or earlier termination ofthis Lease, Tenant agrees to promptly remove from the Premises, the Buildingand the Project, at its sole cost and expense, any and all Hazardous Materials,including any equipment or systems containing Hazardous Materials which areinstalled, brought upon, stored, used, generated or released upon, in, under orabout the Premises, the Building and/or the Project or any portion thereof byTenant or any of Tenant’s Parties. Except for ordinary and general office supplies typically used in theordinary course of business within office buildings, such as copier toner,liquid paper, glue, ink and common household cleaning materials (some or all ofwhich may constitute “Hazardous Materials” as defined in this Lease), Landlordagrees not to cause or permit any Hazardous Materials to be brought upon, stored,used, handled, generated, released or disposed of on, in, under or about thePremises, the Building, the Common Areas or any other portion of the Project byLandlord, its agents, employees, assignees, or s (collectively, “Landlord’sParties”).  To the fullest extentpermitted by law, Tenant agrees to promptly indemnify, protect, defend and holdharmless Landlord and Landlord’s partners, officers, directors, employees,agents, successors and assigns (collectively, “Landlord Indemnified Parties”)from and against any and all claims, damages, judgments, suits, causes ofaction, losses, liabilities, penalties, fines, expenses and costs (including,without limitation, clean-up, removal, remediation and restoration costs, sumspaid in settlement of claims, attorneys’ fees, consultant fees and expert feesand court costs) which arise or result from the presence of Hazardous Materialson, in, under or about the Premises, the Building or any other portion of theProject and which are caused or permitted by Tenant or any of Tenant’s Parties(regardless of whether or not Landlord consented to Tenant’s use of suchHazardous Materials). To the fullest extent permitted by law, Landlord agreesto promptly indemnify, protect, defend and hold harmless Tenant and Tenant’spartners, officers, directors, employees, agents, successors and assigns(collectively, “Tenant Indemnified Parties”) from and against any and allclaims, damages, judgments, suits, causes of action, losses, liabilities,penalties, fines, expenses and costs (including, without limitation, clean-up,removal, remediation and restoration costs, sums paid in settlement of claims,attorneys’ fees, consultant fees and expert fees and court costs) which ariseor result from the presence of Hazardous Materials on, in, under or about thePremises, the Building or any other portion of the Project and which are causedor permitted by Landlord or any of Landlord’s Parties.

 

 Each party agrees to promptly notify the otherof any release of Hazardous Materials at the Premises, the Building or anyother portion of the Project which such party becomes aware of during the Termof this Lease, whether caused by such party or any other persons orentities.  In the event of any release ofHazardous Materials caused or permitted by Tenant or any of Tenant’s Parties,Landlord shall have the right, but not the obligation, to cause Tenant toimmediately take all steps Landlord deems necessary or appropriate to remediatesuch release and prevent any similar future release to the satisfaction ofLandlord and Landlord’s mortgagee(s).  Asused in this Lease, the term “Hazardous Materials” shall mean and include anyhazardous or toxic materials, substances or wastes as now or hereafterdesignated under any law, statute, ordinance, rule, regulation, order or rulingof any agency of the State, the United States Government or any localgovernmental authority, including, without limitation, asbestos, petroleum,petroleum hydrocarbons and petroleum based products, urea formaldehyde foaminsulation, polychlorinated biphenyls (“PCBs”), and freon and otherchlorofluorocarbons.  The provisions ofthis Subparagraph 8(c) will survive the expiration or earlier terminationof this Lease.

 

9.         **NOTICES.**  Any notice required or permitted to be givenhereunder must be in writing and may be given by personal delivery (includingdelivery by overnight courier or an express mailing service) or by mail, ifsent by registered or certified mail. Notices to Tenant shall be sufficient if delivered to Tenant at the addressdesignated in Subparagraph 1(d) and notices to Landlord shall be sufficient ifdelivered to Landlord at the address designated in Subparagraph 1(b).  Either party may specify a different addressfor notice purposes by written notice to the other, except that the Landlordmay in any event use the Premises as Tenant’s address for notice purposes.

 

10.       **IntentionallyOmitted.**

 

11.       **SURRENDER; HOLDING OVER.**

 

(a)       **Surrender.**  The voluntary or other surrender of thisLease by Tenant, or a mutual cancellation thereof, shall not constitute amerger, and shall, at the option of Landlord, operate as an assignment toLandlord of any or all subleases or subtenancies.  Upon the expiration or earlier termination ofthis 

 

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Lease, Tenant agrees topeaceably surrender the Premises to Landlord broom clean and in a state of goodorder, repair and condition, ordinary wear and tear and casualty damage (ifthis Lease is terminated as a result thereof pursuant to Paragraph 20) excepted,with all of Tenant’s personal property and Alterations (as defined in Paragraph13) removed from the Premises to the extent required under Paragraph 13 and alldamage caused by such removal repaired as required by Paragraph 13.  Prior to the date Tenant is to actuallysurrender the Premises to Landlord, Tenant agrees to give Landlord reasonableprior notice of the exact date Tenant will surrender the Premises so thatLandlord and Tenant can schedule a walk-through of the Premises to review the conditionof the Premises and identify the Alterations and personal property which are toremain upon the Premises and which items Tenant is to remove, as well as anyrepairs Tenant is to make upon surrender of the Premises.  The delivery of keys to any employee ofLandlord or to Landlord’s agent or any employee thereof alone will not besufficient to constitute a termination of this Lease or a surrender of thePremises.

 

(b)       **Holding Over.**  Tenant will not be permitted to hold overpossession of the Premises after the expiration or earlier termination of theTerm without the express written consent of Landlord, which consent Landlordmay withhold in its sole and absolute discretion.  If Tenant holds over after the expiration orearlier termination of the Term, Landlord may, at its option, treat Tenant as atenant at sufferance only, and such continued occupancy by Tenant shall besubject to all of the terms, covenants and conditions of this Lease, so far asapplicable, except that the Monthly Base Rent for any such holdover periodshall be equal to the greater of (i) one hundred twenty-five percent (125%) ofthe Monthly Base Rent in effect under this Lease immediately prior to suchholdover, or (ii) the then currently scheduled rental rate for comparable spacein the Building, in either event prorated on a daily basis.  Acceptance by Landlord of rent after suchexpiration or earlier termination will not result in a renewal of thisLease.  The foregoing provisions of thisParagraph 11 are in addition to and do not affect Landlord’s right of re-entryor any rights of Landlord under this Lease or as otherwise provided bylaw.  If Tenant fails to surrender thePremises upon the expiration of this Lease in accordance with the terms of thisParagraph 11 despite demand to do so by Landlord, Tenant agrees to promptlyindemnify, protect, defend and hold Landlord harmless from all claims, damages,judgments, suits, causes of action, losses, liabilities, penalties, fines,expenses and costs (including attorneys’ fees and costs), including, withoutlimitation, costs and expenses incurred by Landlord in returning the Premisesto the condition in which Tenant was to surrender it and claims made by anysucceeding tenant founded on or resulting from Tenant’s failure to surrenderthe Premises.  The provisions of thisSubparagraph 11(b) will survive the expiration or earlier termination of thisLease.

 

12.       **TAXES ON TENANT’SPROPERTY.**  Tenant agrees topay before delinquency, all taxes and assessments (real and personal) leviedagainst (a) any personal property or trade fixtures placed by Tenant in orabout the Premises (including any increase in the assessed value of thePremises based upon the value of any such personal property or trade fixtures);and (b) any Tenant Improvements or Alterations in the Premises (whetherinstalled and/or paid for by Landlord or Tenant) to the extent such items areassessed at a valuation higher than the valuation at which tenant improvementsconforming to Landlord’s building standard tenant improvements areassessed.  If any such taxes orassessments are levied against Landlord or Landlord’s property, Landlord may,after written notice to Tenant (and under proper protest if requested byTenant) pay such taxes and assessments, in which event Tenant agrees toreimburse Landlord all amounts paid by Landlord within thirty (30) businessdays after demand by Landlord; provided, however, Tenant, at its sole cost andexpense, will have the right, with Landlord’s cooperation, to bring suit in anycourt of competent jurisdiction to recover the amount of any such taxes andassessments so paid under protest.

 

13.       **ALTERATIONS.**  After installation of the initial TenantImprovements for the Premises pursuant to Exhibit ”B”, Tenant may,at its sole cost and expense, make alterations, additions, improvements anddecorations to the Premises (collectively, “Alterations”) subject to and uponthe following terms and conditions:

 

(a)       **Prohibited Alterations.**  Tenant may not make any Alterationswhich:  (i) affect any area outsidethe Premises; (ii) affect the Building’s structure, equipment, services orsystems, or the proper functioning thereof, or Landlord’s access thereto;(iii) affect the outside appearance, character or use of the Building orthe Building Common Areas; (iv) in the reasonable opinion of Landlord,lessen the value of the Building; or (v) will violate or require a changein any occupancy certificate applicable to the Premises.

 

(b)       **Landlord’s Approval.**  Before proceeding with any Alterations whichare not prohibited in Subparagraph 13(a) above, Tenant must first obtainLandlord’s written approval of the plans, specifications and working drawingsfor such Alterations, which approval Landlord will not unreasonably withhold ordelay; provided, however, Landlord’s prior approval will not be required forany such Alterations which are not prohibited by Subparagraph 13(a) aboveand which cost less than Five Thousand Dollars ($ 5,000) as long as(i) such Alterations do not require a building permit, (ii) Tenant deliversto Landlord notice and a copy of any final plans, specifications and workingdrawings for any such Alterations at least ten (10) days prior to commencementof the work thereof and (iii) the 

 

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other conditions of thisParagraph 13 are satisfied, including, without limitation, conforming toLandlord’s rules, regulations and insurance requirements which governcontractors.  Landlord’s approval ofplans, specifications and/or working drawings for Alterations will not createany responsibility or liability on the part of Landlord for their completeness,design sufficiency, or compliance with applicable permits, laws, rules andregulations of governmental agencies or authorities.  In approving any Alterations, Landlordreserves the right to require Tenant to increase its Security Deposit toprovide Landlord with additional reasonable security for the removal of suchAlterations by Tenant as may be required by this Lease.

 

(c)       **Contractors.**  Alterations may be made or installed only bycontractors and subcontractors which have been approved by Landlord, whichapproval Landlord will not unreasonably withhold or delay.  Before proceeding with any Alterations,Tenant agrees to provide Landlord with ten (10) days prior written notice andTenant’s contractors must obtain and maintain, on behalf of Tenant and atTenant’s sole cost and expense: (i) all necessary governmental permits and approvals for thecommencement and completion of such Alterations; and (ii) if requested by Landlord,a completion and lien indemnity bond, or other surety, reasonably satisfactoryto Landlord for such Alterations. Throughout the performance of any Alterations, Tenant agrees to obtain,or cause its contractors to obtain, workers compensation insurance and generalliability insurance in compliance with the provisions of Paragraph 19 ofthis Lease.

 

(d)       **Manner of Performance.**  All Alterations must be performed:(i) in accordance with the approved plans, specifications and workingdrawings; (ii) in a lien-free and first-class and workmanlike manner;(iii) in compliance with all applicable permits, laws, statutes,ordinances, rules, regulations, orders and rulings now or hereafter in effectand imposed by any governmental agencies and authorities which assertjurisdiction; (iv) in such a manner so as not to unreasonably interferewith the occupancy of any other tenant in the Building, nor impose anyadditional expense upon nor delay Landlord in the maintenance and operation ofthe Building; and (v) at such times, in such manner, and subject to suchrules and regulations as Landlord may from time to time reasonably designate.

 

(e)       **Ownership.**  The Tenant Improvements, including, withoutlimitation, all affixed sinks, dishwashers, microwave ovens and other fixtures,and all Alterations will become the property of Landlord and will remain uponand be surrendered with the Premises at the end of the Term of this Lease;provided, however, Landlord may, by written notice delivered to Tenantconcurrently with Landlord’s approval of the final working drawings for anyAlterations, identify those Alterations which Landlord will require Tenant toremove at the end of the Term of this Lease. Landlord may also require Tenant to remove Alterations which Landlorddid not have the opportunity to approve as provided in this Paragraph 13.  If Landlord requires Tenant to remove anyAlterations, Tenant, at its sole cost and expense, agrees to remove theidentified Alterations on or before the expiration or earlier termination ofthis Lease and repair any damage to the Premises caused by such removal (or, atLandlord’s option, Tenant agrees to pay to Landlord all of Landlord’s costs ofsuch removal and repair).

 

(f)        **Plan Review.**  Tenant agrees to pay Landlord, as additionalrent, the reasonable costs of professional services and costs for generalconditions of Landlord’s third party consultants if utilized by Landlord (butnot Landlord’s “in-house” personnel) for review of all plans, specificationsand working drawings for any Alterations, within thirty (30) business daysafter Tenant’s receipt of invoices either from Landlord or such consultants.

 

(g)       **Personal Property.**  All articles of personal property owned byTenant or installed by Tenant at its expense in the Premises (including Tenant’sbusiness and trade fixtures, furniture, movable partitions and equipment [suchas telephones, copy machines, computer terminals, refrigerators and facsimilemachines]) will be and remain the property of Tenant, and must be removed byTenant from the Premises, at Tenant’s sole cost and expense, on or before theexpiration or earlier termination of this Lease.  Tenant agrees to repair any damage caused bysuch removal at its cost on or before the expiration or earlier termination of thisLease.

 

(h)       **Removal of Alterations.**  If Tenant fails to remove by the expirationor earlier termination of this Lease all of its personal property, or anyAlterations identified by Landlord for removal, Landlord may, at its option,treat such failure as a hold-over pursuant to Subparagraph 11(b) above, and/orLandlord may (without liability to Tenant for loss thereof) treat such personalproperty and/or Alterations as abandoned and, at Tenant’s sole cost andexpense, and in addition to Landlord’s other rights and remedies under thisLease, at law or in equity: (a) remove and store such items; and/or(b) upon ten (10) days prior notice to Tenant, sell, discard or otherwisedispose of all or any such items at private or public sale for such price asLandlord may obtain or by other commercially reasonable means.  Tenant shall be liable for all costs ofdisposition of Tenant’s abandoned property and Landlord shall have no liabilityto Tenant with respect to any such abandoned property.  Landlord agrees to apply the proceeds of anysale of any such property to any amounts due to Landlord under this Lease from 

 

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Tenant (includingLandlord’s attorneys’ fees and other costs incurred in the removal, storageand/or sale of such items), with any remainder to be paid to Tenant.

 

14.       **REPAIRS.**

 

(a)       **Landlord’s Obligations.**  Landlord agrees to repair and maintain ingood condition and working order the structural portions of the Building andthe plumbing, heating, ventilating, air conditioning, elevator and electricalsystems installed or furnished by Landlord, unless such maintenance and repairsare (i) attributable to items installed in Tenant’s Premises which are abovestandard interior improvements (such as, for example, custom lighting, specialHVAC and/or electrical panels or systems, kitchen or restroom facilities andappliances constructed or installed within Tenant’s Premises) or (ii) caused inpart or in whole by the act, neglect or omission of any duty by Tenant, itsagents, servants, employees or invitees, in which case Tenant will pay toLandlord as direct reimbursement and not as part of shared Operating Expenses,as additional rent, the cost of such maintenance and repairs.  Landlord will not be liable for any failureto make any such repairs or to perform any maintenance unless such failureshall persist for an unreasonable time after written notice of the need of suchrepairs or maintenance is given to Landlord by Tenant.  Except as provided in Paragraph 20, Tenantwill not be entitled to any abatement of rent and Landlord will not have anyliability by reason of any injury to or interference with Tenant’s businessarising from the making of any repairs, alterations or improvements in or toany portion of the Building or the Premises or in or to fixtures, appurtenancesand equipment therein.  Landlord shalluse commercially reasonable efforts to minimize any unreasonable interferencewith Tenant’s use and enjoyment of the Premises.  Tenant waives the right to make repairs atLandlord’s expense under any law, statute, ordinance, rule, regulation, orderor ruling (including, without limitation, the provisions of California CivilCode Sections 1941 and 1942 and any successor statutes or laws of asimilar nature).

 

(b)       **Tenant’s Obligations.**  Tenant agrees to keep, maintain and preservethe Premises in good condition and repair and, when and if needed, at Tenant’ssole cost and expense, to make all repairs to the Premises and every partthereof which are not Landlord’s obligation hereunder.   Tenant agrees to cause any mechanics’ liensor other liens arising as a result of work performed by Tenant or at Tenant’sdirection to be eliminated as provided in Paragraph 15 below.  Except as provided in Subparagraph 14(a)above and Exhibit “B”, Landlord has no obligation to alter, remodel,improve, repair, decorate or paint the Premises or any part thereof.

 

(c)       **Tenant’s Failure toRepair.**  Tenant shall have ten(10) days from the date on which Landlord makes a written demand on Tenant to repairand maintain the Premises properly, as required hereunder to the reasonablesatisfaction of Landlord, to perform such repairs and maintenance (or commenceto perform, if the nature of the performance is such that more than ten (10)days is reasonably required), or, if Tenant is required to use the Landlord’scontractor, as provided in Paragraph 14(b), upon such date as Landlord’scontractor is able to complete such repairs. If Tenant fails to perform such repairs or maintenance as required underthis Lease, Landlord may enter upon the Premises and make such repairs and/ormaintenance.  If Landlord does enter uponthe Premises for such purposes as discussed herein, Landlord shall exercisecommercially reasonable efforts to not unreasonably interfere with Tenant’s useof the Premises in performing such repairs and/or maintenance, shall performsuch repairs and/or maintenance in the presence of a representative of Tenant(except in the case of emergencies) and shall take appropriate measures toprotect the confidentiality of Tenant’s files. Upon completion of such repairs and/or maintenance, Tenant agrees to payto Landlord as additional rent, Landlord’s costs for making such repairs plusan amount not to exceed ten percent (10%) of such costs for overhead, withinthirty (30) days of receipt from Landlord of a written itemized billtherefor.  Any amounts not reimbursed byTenant within such thirty (30) day period will bear interest at the InterestRate until paid by Tenant.

 

15.       **LIENS.**  Tenant agrees not to permit any mechanic’s,materialmen’s or other liens to be filed against all or any part of theProject, the Building or the Premises, nor against Tenant’s leasehold interestin the Premises, by reason of or in connection with any repairs, alterations, improvementsor other work contracted for or undertaken by Tenant or any other act oromission of Tenant or Tenant’s agents, employees, contractors, licensees orinvitees.  At Landlord’s request, Tenantagrees to provide Landlord with enforceable, conditional and final lienreleases (or other evidence reasonably requested by Landlord to demonstrateprotection from liens) from all persons furnishing labor and/or materials atthe Premises.  Landlord will have theright at all reasonable times to post on the Premises and record any notices ofnon-responsibility which it deems necessary for protection from suchliens.  If any such liens are filed,Tenant will, at its sole cost, promptly cause such liens to be released of recordor bonded so that it no longer affects title to the Project, the Building orthe Premises.  If Tenant fails to causeany such liens to be so released or bonded within ten (10) days after filingthereof, such failure will be deemed a material breach by Tenant under thisLease without the benefit of any additional notice or cure period described inParagraph 22 below, and Landlord may, without waiving its rights and remediesbased on such breach, and without releasing Tenant from any of its obligations,cause such liens to be released by any means it shall deem proper, includingpayment in satisfaction of the claims giving rise to such liens.  Tenant agrees to pay to 

 

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Landlord within ten (10)days after receipt of invoice from Landlord, any sum paid by Landlord to removesuch liens, together with interest at the Interest Rate from the date of suchpayment by Landlord.

 

16.       **ENTRY BY LANDLORD.**  Landlord and its employees and agents will atall times have the right to enter the Premises to inspect the same, to supplyjanitorial service and any other service to be provided by Landlord to Tenanthereunder, to show the Premises to prospective purchasers or tenants, to postnotices of nonresponsibility, and/or to repair the Premises as permitted or requiredby this Lease.  In exercising such entryrights, Landlord will endeavor to minimize, as reasonably practicable, theinterference with Tenant’s business, and will provide Tenant with reasonableadvance notice of any such entry (except in emergency situations).  Landlord may, in order to carry out suchpurposes, erect scaffolding and other necessary structures where reasonablyrequired by the character of the work to be performed.  Landlord will at all times have and retain akey with which to unlock all doors in the Premises, excluding Tenant’s vaultsand safes.  Landlord will have the rightto use any and all means which Landlord may reasonably deem proper to open saiddoors in an emergency in order to obtain entry to the Premises.  Any entry to the Premises obtained byLandlord by any of said means, or otherwise, will not be construed or deemed tobe a forcible or unlawful entry into the Premises, or an eviction of Tenantfrom the Premises.  Landlord will not be liableto Tenant for any damages or losses for any entry by Landlord effected by theforegoing.

 

17.       **UTILITIES AND SERVICES.**  Throughout the Term of the Lease so long asthe Premises are occupied, Landlord agrees to furnish or cause to be furnishedto the Premises the utilities and services described in the Standards forUtilities and Services attached hereto as Exhibit “D”, subject to theconditions and in accordance with the standards set forth therein.  Landlord may require Tenant from time to timeto provide Landlord with a list of Tenant’s employees and/or agents which areauthorized by Tenant to subscribe on behalf of Tenant for any additionalservices which may be provided by Landlord. Any such additional services will be provided to Tenant at Tenant’scost.  Landlord will not be liable toTenant for any failure to furnish any of the foregoing utilities and servicesif such failure is caused by all or any of the following: (i) accident,breakage or repairs; (ii) strikes, lockouts or other labor disturbance or labordispute of any character; (iii) governmental regulation, moratorium or othergovernmental action or inaction; (iv) inability despite the exercise ofreasonable diligence to obtain electricity, water or fuel; or (v) any othercause beyond Landlord’s reasonable control. In addition, in the event of any stoppage or interruption of services orutilities, Tenant shall not be entitled to any abatement or reduction of rent(except as expressly provided below or in Subparagraphs 20(f) or 21(b) if suchfailure results from a damage or taking described therein), no eviction ofTenant will result from such failure and Tenant will not be relieved from theperformance of any covenant or agreement in this Lease because of such failure;provided, however, that if such failure is caused solely by the negligence orwillful misconduct of Landlord or Landlord’s Parties and Tenant is unable toconduct its business in the Premises for a period exceeding five (5)consecutive calendar days, then and only in such event, Base Rent shall beabated from the sixth calendar day of such interruption until such time asTenant is able to recommence its business operations in the Premises.  In the event of any failure, stoppage orinterruption thereof, Landlord agrees to diligently attempt to resume servicepromptly.  If Tenant requires or utilizesmore water or electrical power than is considered reasonable or normal byLandlord, Landlord may at its option require Tenant to pay, as additional rent,the cost, as fairly determined by Landlord, incurred by such extraordinaryusage and/or Landlord may install separate meter(s) for the Premises, at Tenant’ssole expense, and Tenant agrees thereafter to pay all charges of the utilityproviding service and Landlord will make an appropriate adjustment to Tenant’sOperating Expenses calculation to account for the fact Tenant is directlypaying such metered charges, provided Tenant will remain obligated to pay itsproportionate share of Operating Expenses subject to such adjustment.  Landlord shall have the right at any time andfrom time-to-time during the Term of the Lease to contract for service from anycompany or companies providing electricity service (“Service Provider”).  Tenant shall cooperate with Landlord and theService Provider at all times and, as reasonably necessary, shall allowLandlord and Service Provider reasonable access to the Building’s electriclines, feeders, risers, wiring, and any other machinery within thePremises.  Landlord shall in no way beliable or responsible for any loss, damage, or expense that Tenant may sustainor incur by reason of any change, failure, interference, disruption, or defectin the supply or character of the electric energy furnished to the Premises, orif the quantity or character of the electric energy supplied by the Service Provideris no longer available or suitable for Tenant’s requirements, no such change,failure, defect, unavailability, or unsuitability shall constitute an actual orconstructive eviction, in whole or in part, or entitle Tenant to any abatementor diminution of rent, or relieve Tenant from any of its obligations under theLease.

 

18.       **ASSUMPTION OF RISK ANDINDEMNIFICATION.**

 

(a)       **Assumption of Risk.**  Tenant, as a material part of theconsideration to Landlord, hereby agrees that neither Landlord nor any LandlordIndemnified Parties (as defined in Subparagraph 8(c) above) will be liable toTenant for, and Tenant expressly assumes the risk of and waives any and allclaims it may have against Landlord or any Landlord Indemnified Parties withrespect to, (i) any and all damage to property or injury to persons in,upon or about the Premises, the Building or the Project 

 

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resulting from any act oromission of Landlord (except for Landlord’s or any Landlord Parties’ activenegligence or intentionally wrongful act or omission or breach of this Lease),(ii) any such damage caused by other tenants or persons in or about theBuilding or the Project, or caused by quasi-public work,  (iii) any damage to property entrusted toemployees of the Building, (iv) any loss of or damage to property by theftor otherwise, or (v) any injury or damage to persons or property resultingfrom any casualty, explosion, falling plaster or other masonry or glass, steam,gas, electricity, water or rain which may leak from any part of the Building orany other portion of the Project or from the pipes, appliances or plumbingworks therein or from the roof, street or subsurface or from any other place,or resulting from dampness; provided that in no event shall the foregoingwaiver apply to any damage or injury to the extent caused by the activenegligence, willful misconduct or breach of this Lease by Landlord or anyLandlord Parties.  Notwithstandinganything to the contrary contained in this Lease, neither Landlord nor anyLandlord Indemnified Parties will be liable for any special, consequential orpunitive damages arising out of any loss of the use of the Premises or anyequipment or facilities therein by Tenant or any Tenant Parties.  Tenant agrees to give prompt notice toLandlord in case of fire or accidents in the Premises or the Building, or ofdefects therein or in the fixtures or equipment.

 

(b)       **Indemnification.**  Tenant will be liable for, and agrees, to themaximum extent permissible under applicable law, to promptly indemnify,protect, defend and hold harmless Landlord and all Landlord IndemnifiedParties, from and against, any and all claims, damages, judgments, suits,causes of action, losses, liabilities, penalties, fines, expenses and costs,including attorneys’ fees and court costs (collectively, “Indemnified Claims”),arising or resulting from (i) any act or omission of Tenant or any TenantParties (as defined in Subparagraph 8(c) above); (ii) the use of thePremises and Common Areas and conduct of Tenant’s business by Tenant or anyTenant Parties, or any other activity, work or thing done, permitted orsuffered by Tenant or any Tenant Parties, in or about the Premises, theBuilding or elsewhere within the Project; and/or (iii) any default byTenant of any obligations on Tenant’s part to be performed under the terms ofthis Lease. In case any action or proceeding is brought against Landlord or anyLandlord Indemnified Parties by reason of any such Indemnified Claims, Tenant,upon written notice from Landlord, agrees to promptly defend the same at Tenant’ssole cost and expense by counsel approved in writing by Landlord, whichapproval Landlord will not unreasonably withhold.

 

Landlord will be liablefor, and agrees, to the maximum extent permissible under applicable law, topromptly indemnify, protect, defend and hold harmless Tenant and all TenantIndemnified Parties, from and against, any and all claims, damages, judgments,suits, causes of action, losses, liabilities, penalties, fines, expenses andcosts, including attorneys’ fees and court costs (collectively, “IndemnifiedClaims”), arising or resulting from (i) any active negligence or willfulmisconduct of Landlord or any Landlord Parties (as defined in Subparagraph 8(c)above) and/or (ii) any default by Landlord of any obligations on Landlord’spart to be performed under the terms of this Lease. In case any action orproceeding is brought against Tenant or any Tenant Indemnified Parties byreason of any such Indemnified Claims, Landlord, upon written notice fromTenant, agrees to promptly defend the same at Landlord’s sole cost and expenseby counsel approved in writing by Tenant, which approval Tenant will notunreasonably withhold.

 

(c)       **Survival; No Release ofInsurers.**  Tenant’s indemnificationobligations under Subparagraph 18(b) are not in any way limited by the amountof insurance proceeds available to Tenant under Tenant’s Insurance Policiesdescribed in Section 19 below and will survive the expiration or earliertermination of this Lease.  Tenant’scovenants, agreements and indemnification obligation in Subparagraphs 18(a) and18(b) above, are not intended to and will not relieve any insurance carrier ofits obligations under policies required to be carried by Tenant pursuant to theprovisions of this Lease.

 

19.       **INSURANCE.**

 

(a)       **Tenant’s Insurance.**  On or before the earlier to occur of (i) theCommencement Date, or (ii) the date Tenant commences any work of any type inthe Premises pursuant to this Lease (which may be prior to the CommencementDate), and continuing throughout the entire Term hereof and any other period ofoccupancy, Tenant agrees to keep in full force and effect, at its sole cost andexpense, the following insurance:

 

(i)        “All Risks” property insurance includingat least the following perils:  fire andextended coverage, smoke damage, vandalism, malicious mischief, sprinklerleakage (including earthquake sprinkler leakage).  This insurance policy shall insure allproperty owned by Tenant, for which Tenant is legally liable, or which isinstalled at Tenant’s expense, and which is located in the Building including,without limitation, any Tenant Improvements which satisfy the foregoingqualification and any Alterations, and all furniture, fittings, installations,fixtures and any other personal property of Tenant, in an amount not less thanthe full replacement cost thereof.

 

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(ii)       One (1) year insurance coverage forbusiness interruption and loss of income and extra expense insuring the sameperils described in Subparagraph 19(a)(i) above, in such amounts as willreimburse Tenant for any direct or indirect loss of earnings attributable toany such perils including prevention of access to the Premises, Tenant’sparking areas or the Building as a result of any such perils.

 

(iii)      Commercial General Liability Insurance orComprehensive General Liability Insurance (on an occurrence form) insuringbodily injury, personal injury and property damage including the following divisionsand extensions of coverage:  Premises andOperations; blanket contractual liability (including coverage for Tenant’sindemnity obligations under this Lease); products and completed operations; andfire and water damage legal liability including Tenant Improvements, that arerented under the terms of this Lease. Such insurance must have the following minimum limits of liability:  bodily injury, personal injury and propertydamage - $2,000,000 each occurrence; provided that if liability coverage is providedby a Commercial General Liability policy the general aggregate limit shallapply separately and in total to this location only (per location generalaggregate), and provided further, such minimum limits of liability may beadjusted from year to year to reflect reasonable and prudent increases incoverages as recommended by Landlord’s insurance carrier as being prudent andcommercially reasonable for tenants of buildings comparable to the Building,rounded to the nearest five hundred thousand dollars, as reasonably agreed byLandlord and Tenant.

 

(iv)      Comprehensive Automobile Liabilityinsuring bodily injury and property damage arising from all owned, non-ownedand hired vehicles, if any, with minimum limits of liability of $1,000,000 peraccident.

 

(v)       Worker’s Compensation as required by thelaws of the State with the following minimum limits of liability:  Coverage A - statutory benefits; Coverage B -$1,000,000 per accident and disease. Tenant shall also obtain and furnish evidence to Landlord of the waiverby Tenant’s worker’s compensation insurance carrier of all rights of recoveryby way of subrogation against Landlord, so long as the insurance is notinvalidated thereby.

 

(vi)      Any other form or forms of insurance asTenant or Landlord or any mortgagees of Landlord may reasonably require fromtime to time in form, in amounts, and for insurance risks against which, aprudent tenant would protect itself, but only to the extent coverage for suchrisks and amounts are available in the insurance market at commerciallyacceptable rates.  Landlord makes norepresentation that the limits of liability required to be carried by Tenantunder the terms of this Lease are adequate to protect Tenant’s interests andTenant should obtain such additional insurance or increased liability limits asTenant deems appropriate.

 

(b)       **Supplemental TenantInsurance Requirements.**

 

(i)        All policies must be in a formreasonably satisfactory to Landlord and issued by an insurer admitted to dobusiness in the State.

 

(ii)       All policies must be issued by insurerswith a policyholder rating of “A-” and a financial rating of “VII” in the mostrecent version of Best’s Key Rating Guide.

 

(iii)      All policies must contain a requirement tonotify Landlord (and Landlord’s property manager and any mortgagees or groundlessors of Landlord who are named as additional insureds, if any) in writingnot less than thirty (30) days prior to any material change, reduction incoverage, cancellation or other termination thereof.  Tenant agrees to deliver to Landlord, as soonas practicable after placing the required insurance, but in any event withinthe time frame specified in Subparagraph 19(a) above, certificate(s) ofinsurance evidencing the existence of such insurance and Tenant’s compliancewith the provisions of this Paragraph 19. Tenant agrees to cause certificates of insurance to be delivered toLandlord not less than thirty (30) days prior to the expiration of any suchpolicy or policies.  If any such initialor replacement policies or certificates are not furnished within the time(s)specified herein, Tenant will be deemed to be in material default under thisLease without the benefit of any additional notice or cure period provided inSubparagraph 22(a)(iii) below, and Landlord will have the right, but notthe obligation, to procure such insurance as Landlord deems necessary toprotect Landlord’s interests at Tenant’s expense.  If Landlord obtains any insurance that is theresponsibility of Tenant under this Paragraph 19, Landlord agrees to deliverto Tenant a written statement setting forth the cost of any such insurance andshowing in reasonable detail the manner in which it has been computed andTenant agrees to promptly reimburse Landlord for such costs as additional rent.

 

(iv)      General Liability policies underSubparagraphs 19(a)(iii) and 19(a)(iv) must name Landlord and Landlord’sproperty manager (and at Landlord’s request, Landlord’s mortgagees and groundlessors of which Tenant has been informed in writing) as additional insuredsand 

 

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must also contain a provision that the insuranceafforded by such policy is primary insurance and any insurance carried byLandlord and Landlord’s property manager or Landlord’s mortgagees or groundlessors, if any, will be excess over and non-contributing with Tenant’sinsurance.

 

(c)       **Tenant’s Use.**  Tenant will not keep, use, sell or offer forsale in or upon the Premises any article which may be prohibited by anyinsurance policy periodically in force covering the Building or the ProjectCommon Areas.  If Tenant’s occupancy orbusiness in, or on, the Premises, whether or not Landlord has consented to thesame, results in any increase in premiums for the insurance periodicallycarried by Landlord with respect to the Building or the Project Common Areas orresults in the need for Landlord to maintain special or additional insurance,Tenant agrees to pay Landlord the cost of any such increase in premiums orspecial or additional coverage as additional rent within thirty (30)  days after being billed therefor byLandlord.  In determining whetherincreased premiums are a result of Tenant’s use of the Premises, a scheduleissued by the organization computing the insurance rate on the Building, theProject Common Areas or the Tenant Improvements showing the various componentsof such rate, will be conclusive evidence of the several items and chargeswhich make up such rate.  Tenant agreesto promptly comply with all reasonable requirements of the insurance authority orany present or future insurer relating to the Premises.

 

(d)       **Cancellation of Landlord’sPolicies.**  If any of Landlord’sinsurance policies are cancelled or cancellation is threatened or the coveragereduced or threatened to be reduced in any way because of the use of thePremises or any part thereof by Tenant or any assignee or subtenant of Tenantor by anyone Tenant permits on the Premises and, if Tenant fails to remedy thecondition giving rise to such cancellation, threatened cancellation, reductionof coverage, threatened reduction of coverage, increase in premiums, orthreatened increase in premiums, within forty-eight (48)  hours after notice thereof, Tenant will bedeemed to be in material default of this Lease and Landlord may, at its option,either terminate this Lease or enter upon the Premises and attempt to remedysuch condition, and Tenant shall promptly pay Landlord the reasonable costs ofsuch remedy as additional rent.  IfLandlord is unable, or elects not to remedy such condition, then Landlord willhave all of the remedies provided for in this Lease in the event of a defaultby Tenant.

 

(e)       **Waiver of Claims; Waiverof Subrogation.**

 

(i)            Landlordand Tenant hereby waive their rights against each other with respect to anyclaims or damages or losses which are caused by or result from (a) damageto property or loss of income insured against under any insurance policycarried by Landlord or Tenant (as the case may be) pursuant to the provisionsof this Lease and enforceable at the time of such damage or loss, or(b) damage to property or loss of income which would have been coveredunder any insurance required to be obtained and maintained by Landlord orTenant (as the case may be) under this Paragraph 19 of this Lease (asapplicable) had such insurance been obtained and maintained as requiredtherein.  The foregoing waivers shall bein addition to, and not a limitation of, any other waivers or releasescontained in this Lease.

 

(ii)           Eachparty shall cause each property and loss of income insurance policy required tobe obtained by it pursuant to this Paragraph 19 to provide that the insurerwaives all rights of recovery by way of subrogation against either Landlord orTenant, as the case may be, in connection with any claims, losses and damages coveredby such policy.  If either party fails tomaintain property or loss of income insurance required hereunder, suchinsurance shall be deemed to be self-insured with a deemed full waiver ofsubrogation as set forth in the immediately preceding sentence.

 

20.       **DAMAGE OR DESTRUCTION.**

 

(a)       **Partial Destruction.**  If the Premises or the Building are damagedby fire or other casualty to an extent not exceeding twenty-five percent (25%)of the full replacement cost thereof, and Landlord’s contractor reasonably estimatesin a writing delivered to Landlord and Tenant that the damage thereto may berepaired, reconstructed or restored to substantially its condition immediatelyprior to such damage within two hundred forty (240) days from the date of suchcasualty, and Landlord will receive insurance proceeds sufficient to cover thecosts of such repairs, reconstruction and restoration (including proceeds fromTenant and/or Tenant’s insurance which Tenant is required to deliver toLandlord pursuant to Subparagraph 20(e) below to cover Tenant’s obligation forthe costs of repair, reconstruction and restoration of any portion of theTenant Improvements and any Alterations for which Tenant is responsible underthis Lease), then Landlord agrees to commence and proceed diligently with thework of repair, reconstruction and restoration and this Lease will continue infull force and effect.

 

(b)       **Substantial Destruction.**  Any damage or destruction to the Premises orthe Building which Landlord is not obligated to repair pursuant to Subparagraph20(a) above will be deemed a substantial destruction.  In the event of a substantial destruction,Landlord may elect to either

 

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(i) repair, reconstructand restore the portion of the Building or the Premises damaged by suchcasualty, in which case this Lease will continue in full force and effect,subject to Tenant’s termination right contained in Subparagraph 20(d) below; or(ii) terminate this Lease effective as of the date which is thirty (30) daysafter Tenant’s receipt of Landlord’s election to so terminate.

 

(c)       **Notice.**  Under any of the conditions of Subparagraph20(a) or (b) above, Landlord agrees to give written notice to Tenant of itsintention to repair or terminate, as permitted in such paragraphs, within thelater of thirty (30) days after the occurrence of such casualty, or ten (10)days after Landlord’s receipt of the estimate from Landlord’s contractor (theapplicable time period to be referred to herein as the “Notice Period”).

 

(d)       **Tenant’s TerminationRights.**  If Landlord elects torepair, reconstruct and restore pursuant to Subparagraph 20(b)(i) hereinabove,and if Landlord’s contractor estimates that as a result of such damage, Tenantcannot be given reasonable use of and access to the Premises within two hundredforty (240) days after the date of such damage, then Tenant may terminate thisLease effective upon delivery of written notice to Landlord within ten (10)days after Landlord delivers notice to Tenant of its election to so repair,reconstruct or restore.

 

(e)       **Tenant’s Costs andInsurance Proceeds.**  In theevent of any damage or destruction of all or any part of the Premises, Tenantagrees to immediately (i) notify Landlord thereof, and (ii) deliver to Landlordall property insurance proceeds received by Tenant with respect to any TenantImprovements installed by or at the cost of Tenant and any Alterations, butexcluding proceeds for Tenant’s furniture, fixtures, equipment and otherpersonal property, whether or not this Lease is terminated as permitted in thisParagraph 20, and Tenant hereby assigns to Landlord all rights to receive suchinsurance proceeds.  If, as a result ofTenant’s failure to obtain insurance required pursuant to this Lease Tenantfails to receive insurance proceeds covering the full replacement cost of anyTenant Improvements installed by or at the cost of Tenant and any Alterationswhich are damaged, Tenant will be deemed to have self-insured the replacementcost of such items, and upon any damage or destruction thereto, Tenant agreesto immediately pay to Landlord the full replacement cost of such items, lessany insurance proceeds actually received by Landlord from Landlord’s or Tenant’sinsurance with respect to such items.

 

(f)        **Abatement of Rent.**  In the event of any damage, repair,reconstruction and/or restoration described in this Paragraph 20, rent will beabated or reduced, as the case may be, from the date of such casualty, inproportion to the degree to which Tenant’s use of the Premises is impairedduring such period of repair until such use is restored.  Except for abatement of rent as providedhereinabove, Tenant will not be entitled to any compensation or damages forloss of, or interference with, Tenant’s business or use or access of all or anypart of the Premises or for lost profits or any other consequential damages ofany kind or nature, which result from any such damage, repair, reconstructionor restoration.

 

(g)       **Inability to Complete.**  Notwithstanding anything to the contrary containedin this Paragraph 20, if Landlord is obligated or elects to repair, reconstructand/or restore the damaged portion of the Building or the Premises pursuant toSubparagraph 20(a) or 20(b)(i) above, but is delayed from completing suchrepair, reconstruction and/or restoration beyond the date which is ninety (90)days after the date estimated by Landlord’s contractor for completion thereofby reason of any causes (other than delays caused by Tenant, its subtenants,employees, agents or contractors or delays which are beyond the reasonablecontrol of Landlord as described in Paragraph 33), then either Landlord orTenant may elect to terminate this Lease upon ten (10) days prior writtennotice given to the other after the expiration of such ninety (90) day period.

 

(h)       **Damage Near End of Term.**  Landlord and Tenant shall each have the rightto terminate this Lease if any damage to the Premises occurs during the lasttwelve (12) months of the Term of this Lease where Landlord’s contractorestimates in a writing delivered to Landlord and Tenant that the repair,reconstruction or restoration of such damage cannot be completed within sixty(60) days after the date of such casualty. If either party desires to terminate this Lease under this Subparagraph(h), it shall provide written notice to the other party of such election withinten (10) days after receipt of Landlord’s contractor’s repair estimates.

 

(i)        **Waiver of TerminationRight.**  Landlord and Tenantagree that the foregoing provisions of this Paragraph 20 are to govern theirrespective rights and obligations in the event of any damage or destruction andsupersede and are in lieu of the provisions of any applicable law, statute,ordinance, rule, regulation, order or ruling now or hereafter in force which provideremedies for damage or destruction of leased premises (including, withoutlimitation, the provisions of California Civil Code Section 1932, Subsection 2,and Section 1933, Subsection 4 and any successor statute or laws of a similarnature).

 

(j)        **Termination.**  Upon any termination of this Lease under anyof the provisions of this Paragraph 20, the parties will be releasedwithout further obligation to the other from the date 

 

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possession of the Premisesis surrendered to Landlord except for any items which have accrued and areunpaid as of the date of termination and matters which are to survive anytermination of this Lease as provided herein.

 

21.       **EMINENT DOMAIN.**

 

(a)       **Substantial Taking.**  If the whole of the Premises or the Project,or such part thereof as shall substantially interfere with Tenant’s use andoccupancy of the Premises, as contemplated by this Lease, is taken for anypublic or quasi-public purpose by any lawful power or authority by exercise ofthe right of appropriation, condemnation or eminent domain, or sold to preventsuch taking, either party will have the right to terminate this Lease effectiveas of the date possession is required to be surrendered to such authority.

 

(b)       **Partial Taking; Abatementof Rent.**  In the event of ataking of a portion of the Premises, the Project, or the parking spaces for theProject or any portion thereof, which does not substantially interfere withTenant’s use and occupancy of the Premises, then, neither party will have theright to terminate this Lease and Landlord will thereafter proceed to make afunctional unit of the remaining portion of the Premises or the Project (butonly to the extent Landlord receives proceeds therefor from the condemning authority),and rent will be abated with respect to the part of the Premises which Tenantis deprived of on account of such taking.

 

(c)       **Condemnation Award.**  In connection with any taking of the Premisesor the Building, Landlord will be entitled to receive the entire amount of anyaward which may be made or given in such taking or condemnation, withoutdeduction or apportionment for any estate or interest of Tenant, it beingexpressly understood and agreed by Tenant that no portion of any such awardwill be allowed or paid to Tenant for any so-called bonus or excess value ofthis Lease, and such bonus or excess value will be the sole property ofLandlord.  Tenant agrees not to assertany claim against Landlord or the taking authority for any compensation becauseof such taking (including any claim for bonus or excess value of this Lease);provided, however, if any portion of the Premises is taken, Tenant will havethe right to recover from the condemning authority (but not from Landlord) thevalue of Tenant Improvements or Alterations to the Premises installed by or atthe cost of Tenant, and any other compensation as may be separately awarded orrecoverable by Tenant for the taking of Tenant’s furniture, fixtures, equipmentand other personal property within the Premises, for Tenant’s relocationexpenses, and for any loss of goodwill or other damage to Tenant’s business byreason of such taking.

 

(d)       **Temporary Taking.**  In the event of taking of the Premises or anypart thereof for temporary use, (i) this Lease will remain unaffectedthereby and rent will abate for the duration of the taking in proportion to theextent Tenant’s use of the Premises is interfered with, and (ii) Landlordwill be entitled to receive such portion or portions of any award made for suchuse provided that if such taking remains in force at the expiration or earliertermination of this Lease, Tenant will then pay to Landlord a sum equal to thereasonable cost of performing Tenant’s obligations under Paragraph 11 withrespect to surrender of the Premises and upon such payment Tenant will beexcused from such obligations.  Forpurpose of this Subparagraph 21(d), a temporary taking shall be defined as ataking for a period of ninety (90) days or less.

 

22.       **DEFAULTS AND REMEDIES.**

 

(a)       **Defaults**.  The occurrence of any one or more of thefollowing events will be deemed a default by Tenant:

 

(i)            Theabandonment of the Premises as defined in California Civil Code Section 1951.3.

 

(ii)           Thefailure by Tenant to make any payment of rent or additional rent or any otherpayment required to be made by Tenant hereunder, as and when due, where suchfailure continues for a period of three (3) days after written notice thereoffrom Landlord to Tenant; provided, however, that Landlord shall only berequired to give written notice of such monetary default once in any twelve(12) month period, and thereafter Tenant shall be in default of this Lease ifTenant fails to pay rent or additional rent or any other payment required to bemade by Tenant hereunder on its due date without any requirement that Landlordgive Tenant written notice of such default; and provided further that suchthree (3) day notice will be in lieu of, and not in addition to, any noticerequired under applicable law (including, without limitation, the provisions ofCalifornia Code of Civil Procedure Section 1161 regarding unlawful detaineractions or any successor statute or law of a similar nature).

 

(iii)          Thefailure by Tenant to observe or perform any of the express or implied covenantsor provisions of this Lease to be observed or performed by Tenant, other thanas specified in Subparagraph 22(a)(i) or (ii) above, where such failurecontinues (where no other period of time is expressly provided) for a period often (10) days after written notice thereof from Landlord to Tenant.  

 

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The provisions of any such notice will be in lieu of,and not in addition to, any notice required under applicable law (including,without limitation, California Code of Civil Procedure Section 1161 regardingunlawful detainer actions and any successor statute or similar law).  If the nature of Tenant’s default is suchthat more than ten (10) days are reasonably required for its cure, then Tenantwill not be deemed to be in default if Tenant, commences such cure within suchten (10) day period and thereafter diligently prosecutes such cure tocompletion.

 

(iv)          (A)The making by Tenant of any general assignment for the benefit of creditors;(B) the filing by or against Tenant of a petition to have Tenant adjudged abankrupt or a petition for reorganization or arrangement under any law relatingto bankruptcy (unless, in the case of a petition filed against Tenant, the sameis dismissed within sixty (60) days); (C) the appointment of a trustee orreceiver to take possession of substantially all of Tenant’s assets located atthe Premises or of Tenant’s interest in this Lease, where possession is notrestored to Tenant within thirty (30) days; or (D) the attachment, execution orother judicial seizure of substantially all of Tenant’s assets located at thePremises or of Tenant’s interest in this Lease where such seizure is notdischarged within thirty (30) days.

 

(b)       **Landlord’s Remedies;Termination.**  In the event ofany default by Tenant, in addition to any other remedies available to Landlordat law or in equity under applicable law (including, without limitation, theremedies of Civil Code Section 1951.4 and any successor statute or similarlaw), Landlord will have the immediate right and option to terminate this Leaseand all rights of Tenant hereunder.  IfLandlord elects to terminate this Lease then, to the extent permitted underapplicable law, Landlord may recover from Tenant (i) The worth at the time ofaward of any unpaid rent which had been earned at the time of such termination;plus (ii) the worth at the time of award of the amount by which the unpaid rentwhich would have been earned after termination until the time of award exceedsthe amount of such rent loss that Tenant proves could have been reasonablyavoided; plus (iii) the worth at the time of award of the amount by which theunpaid rent for the balance of the Term after the time of award exceeds theamount of such rent loss that Tenant proves could be reasonably avoided; plus(iv) any other amount necessary to compensate Landlord for all the detrimentproximately caused by Tenant’s failure to perform its obligations under thisLease or which, in the ordinary course of things, results therefrom including,but not limited to: reasonable attorneys’ fees and costs; brokers’ commissions;the costs of refurbishment, alterations, renovations and repair of the Premisesand removal (including the repair of any damage caused by such removal) andstorage (or disposal) of Tenant’s personal property, equipment, fixtures,Alterations, the Tenant Improvements and any other items which Tenant isrequired under this Lease to remove but does not remove, as well as theunamortized value of any free rent, reduced rent, free parking, reduced rateparking and any Tenant Improvement allowance or other costs or economicconcessions provided, paid, granted or incurred by Landlord pursuant to thisLease.  The unamortized value of suchconcessions shall be determined by taking the total value of such concessionsand multiplying such value by a fraction, the numerator of which is the numberof months of the Lease Term not yet elapsed as of the date on which the Leaseis terminated, and the denominator of which is the total number of months ofthe Lease Term.  As used in Subparagraphs22(b)(i) and (ii) above, the “worth at the time of award” is computed byallowing interest at the Interest Rate. As used in Subparagraph 22(b)(iii) above, the “worth at the time ofaward” is computed by discounting such amount at the discount rate of theFederal Reserve Bank of San Francisco at the time of award plus one percent(1%).

 

(c)       **Landlord’s Remedies;Re-Entry Rights.**  In the eventof any default by Tenant, in addition to any other remedies available to Landlordunder this Lease, at law or in equity, Landlord will also have the right, withor without terminating this Lease, to re-enter the Premises and remove allpersons and property from the Premises; such property may be removed and storedin a public warehouse or elsewhere and/or disposed of at the sole cost andexpense of and for the account of Tenant in accordance with the provisions ofSubparagraph 13(h) of this Lease or any other procedures permitted byapplicable law.  No re-entry or takingpossession of the Premises by Landlord pursuant to this Subparagraph 22(c) willbe construed as an election to terminate this Lease unless a written notice ofsuch intention is given to Tenant or unless the termination thereof is decreedby a court of competent jurisdiction.

 

(d)       **Landlord’s Remedies;Re-Letting.**  In the event ofabandonment of the Premises by Tenant under Paragraph 22(a)(i) above or in theevent that Landlord elects to re-enter the Premises or takes possession of thePremises pursuant to legal proceeding or pursuant to any notice provided bylaw, then if Landlord does not elect to terminate this Lease, Landlord may fromtime to time, without terminating this Lease, either recover all rent as itbecomes due or relet the Premises or any part thereof on terms and conditionsas Landlord in its sole and absolute discretion may deem advisable with theright to make alterations and repairs to the Premises in connection with suchreletting.  If Landlord elects to reletthe Premises, then rents received by Landlord from such reletting will beapplied: first, to the payment of any indebtedness other than rent duehereunder from Tenant to Landlord; second, to the payment of any cost of suchreletting; third, to the payment of the cost of any alterations and repairs tothe Premises incurred in connection with such reletting; fourth, to the 

 

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payment of rent due andunpaid hereunder and the residue, if any, will be held by Landlord and appliedto payment of future rent as the same may become due and payablehereunder.  Should that portion of suchrents received from such reletting during any month, which is applied to thepayment of rent hereunder, be less than the rent payable during that month byTenant hereunder, then Tenant agrees to pay such deficiency to Landlordimmediately upon demand therefor by Landlord. Such deficiency will be calculated and paid monthly.

 

(e)       **Landlord’s Remedies;Performance for Tenant.**  Allcovenants and agreements to be performed by Tenant under any of the terms ofthis Lease are to be performed by Tenant at Tenant’s sole cost and expense andwithout any abatement of rent except as expressly set forth herein.  If Tenant fails to pay any sum of money owedto any party other than Landlord, for which it is liable under this Lease, orif Tenant fails to perform any other act on its part to be performed hereunder,and such failure continues for ten (10) days after notice thereof by Landlord,Landlord may, without waiving or releasing Tenant from its obligations, butshall not be obligated to, make any such payment or perform any such other actto be made or performed by Tenant. Tenant agrees to reimburse Landlord upon demand for all sums so paid byLandlord and all necessary incidental costs, together with interest thereon atthe Interest Rate, from the date of such payment by Landlord until reimbursedby Tenant.  This remedy shall be inaddition to any other right or remedy of Landlord set forth in thisParagraph 22.

 

(f)        **Late Payment.**  If Tenant fails to pay any installment ofrent within five (5) days of when due or if Tenant fails to make any otherpayment for which Tenant is obligated under this Lease within five (5) days ofwhen due, such late amount will accrue interest at the Interest Rate and Tenantagrees to pay Landlord as additional rent such interest on such amount from thedate such amount becomes due until such amount is paid.  In addition, Tenant agrees to pay to Landlordconcurrently with such late payment amount, as additional rent, a late chargeequal to five percent (5%) of the amount due to compensate Landlord for theextra costs Landlord will incur as a result of such late payment.  The parties agree that (i) it would beimpractical and extremely difficult to fix the actual damage Landlord willsuffer in the event of Tenant’s late payment, (ii) such interest and latecharge represents a fair and reasonable estimate of the detriment that Landlordwill suffer by reason of late payment by Tenant, and (iii) the payment ofinterest and late charges are distinct and separate in that the payment ofinterest is to compensate Landlord for the use of Landlord’s money by Tenant,while the payment of late charges is to compensate Landlord for Landlord’sprocessing, administrative and other costs incurred by Landlord as a result ofTenant’s delinquent payments.  Acceptanceof any such interest and late charge will not constitute a waiver of the Tenant’sdefault with respect to the overdue amount, or prevent Landlord from exercisingany of the other rights and remedies available to Landlord.  If Tenant incurs a late charge more thanthree (3) times in any period of twelve (12) months during the Lease Term,then, notwithstanding that Tenant cures the late payments for which such latecharges are imposed, Landlord will have the right to require Tenant thereafterto pay all installments of Monthly Base Rent quarterly in advance throughoutthe remainder of the Lease Term.

 

(g)       **Rights and RemediesCumulative.**  All rights,options and remedies of Landlord contained in this Lease will be construed andheld to be cumulative, and no one of them will be exclusive of the other, andLandlord shall have the right to pursue any one or all of such remedies or anyother remedy or relief which may be provided by law or in equity, whether ornot stated in this Lease.  Nothing inthis Paragraph 22 will be deemed to limit or otherwise affect Tenant’sindemnification of Landlord pursuant to any provision of this Lease.

 

23.       **LANDLORD’S DEFAULT.**  Landlord will not be in default in theperformance of any obligation required to be performed by Landlord under thisLease unless Landlord fails to perform such obligation within thirty (30) daysafter the receipt of written notice from Tenant specifying in detail Landlord’sfailure to perform; provided however, that if the nature of Landlord’sobligation is such that more than thirty (30) days are required forperformance, then Landlord will not be deemed in default if it commences suchperformance within such thirty (30) day period and thereafter diligentlypursues the same to completion.  Upon anydefault by Landlord, Tenant may exercise any of its rights provided at law orin equity, subject to the limitations on liability set forth in Paragraph 35 ofthis Lease.

 

24.       **ASSIGNMENT AND SUBLETTING.**

 

(a)       **Restriction on Transfer.**  Except as expressly provided in thisParagraph 24, Tenant will not, either voluntarily or by operation of law,assign or encumber this Lease or any interest herein or sublet the Premises orany part thereof, or permit the use or occupancy of the Premises by any partyother than Tenant (any such assignment, encumbrance, sublease or the like willsometimes be referred to as a “Transfer”), without the prior written consent ofLandlord, which consent Landlord will not unreasonably withhold.

 

(b)       **Corporate and PartnershipTransfers.**  For purposes ofthis Paragraph 24, if Tenant is a corporation, partnership or other entity, anytransfer, assignment, encumbrance or hypothecation of 

 

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fifty percent (50%) ormore (individually or in the aggregate) of any stock or other ownershipinterest in such entity, and/or any transfer, assignment, hypothecation orencumbrance of any controlling ownership or voting interest in such entity,will be deemed a Transfer and will be subject to all of the restrictions andprovisions contained in this Paragraph 24. Notwithstanding the foregoing, the immediately preceding sentence willnot apply to any transfers of stock of Tenant if Tenant is a publicly-heldcorporation and such stock is transferred publicly over a recognized securityexchange or over-the-counter market.

 

(c)       **Permitted ControlledTransfers.**  Notwithstandingthe provisions of this Paragraph 24 to the contrary, Tenant may assign thisLease or sublet the Premises or any portion thereof (“Permitted Transfer”),without Landlord’s consent and without extending any sublease terminationoption to Landlord, to any parent, subsidiary or affiliate corporation whichcontrols, is controlled by or is under common control with Tenant, or to anycorporation resulting from a merger or consolidation with Tenant, or to anyperson or entity which acquires all the assets of Tenant’s business as a goingconcern, provided that: (i) at least twenty (20) days prior to suchassignment or sublease, Tenant delivers to Landlord the financial statementsand other financial and background information of the assignee or sublesseedescribed in Subparagraph 24(d) below; (ii) if an assignment, theassignee assumes, in full, the obligations of Tenant under this Lease (or if asublease, the sublessee of a portion of the Premises or Term assumes, in full,the obligations of Tenant with respect to such portion); (iii) thefinancial net worth of the assignee or sublessee as of the time of the proposedassignment or sublease equals or exceeds that of Tenant as of the date ofexecution of this Lease or is adequate, in Landlord’s reasonable judgment, toperform the Tenant’s obligations herein; (iv) Tenant remains fully liableunder this Lease; and (v) the use of the Premises under Paragraph 8remains unchanged.

 

(d)       **Transfer Notice.**  If Tenant desires to effect a Transfer, otherthan a Permitted Transfer, then at least thirty (30) days prior to the datewhen Tenant desires the Transfer to be effective (the “Transfer Date”), Tenantagrees to give Landlord a notice (the “Transfer Notice”), stating the name,address and business of the proposed assignee, sublessee or other transferee(sometimes referred to hereinafter as “Transferee”), reasonable information(including references) concerning the character, ownership, and financialcondition of the proposed Transferee, the Transfer Date, any ownership orcommercial relationship between Tenant and the proposed Transferee, and theconsideration and all other material terms and conditions of the proposedTransfer, all in such detail as Landlord may reasonably require.  If Landlord reasonably requests additionaldetail, the Transfer Notice will not be deemed to have been received untilLandlord receives such additional detail, and Landlord may withhold consent toany Transfer until such information is provided to it.

 

(e)       **Landlord’s Options.**  Within fifteen (15) days of Landlord’sreceipt of any Transfer Notice, and any additional information requested byLandlord concerning the proposed Transferee’s financial responsibility,Landlord will elect to do one of the following (i) consent to the proposedTransfer; (ii) refuse such consent, which refusal shall be on reasonablegrounds including, without limitation, those set forth inSubparagraph 24(f) below; or (iii) if the sublease or assignment is forSixty Percent (60%) or more of the Premises and for substantially the balanceof the Lease Term, terminate this Lease as to all or such portion of thePremises which is proposed to be sublet or assigned and recapture all or suchportion of the Premises for reletting by Landlord.

 

(f)        **Reasonable Disapproval.**  Landlord and Tenant hereby acknowledge thatLandlord’s disapproval of any proposed Transfer pursuant to Subparagraph 24(e)will be deemed reasonably withheld if based upon any reasonable factor,including, without limitation, any or all of the following factors:  (i) the proposed Transferee is agovernmental entity; (ii) the portion of the Premises to be sublet orassigned is irregular in shape with inadequate means of ingress and egress;(iii) the use of the Premises by the Transferee (A) is not permittedby the use provisions in Paragraph 8 hereof, (B) violates any exclusiveuse granted by Landlord to another tenant in the Building, or (C) otherwiseposes a risk of increased liability to Landlord; (iv) the Transfer wouldlikely result in a significant and inappropriate increase in the use of theparking areas or Project Common Areas by the Transferee’s employees orvisitors, and/or significantly increase the demand upon utilities and servicesto be provided by Landlord to the Premises; (v) the Transferee does nothave the financial capability to fulfill the obligations imposed by the Transferand this Lease; (vi) the Transferee is not in Landlord’s reasonableopinion consistent with Landlord’s desired tenant mix; or (vii) the Transfereeposes a business or other economic risk which Landlord reasonably deemsunacceptable.  Notwithstanding anythingto the contrary contained in this Lease, it is expressly understood and agreedthat no further subletting under any sublease shall be permitted under anycircumstances, except in the event Landlord (with no obligation to do so)sub-subleases the Premises (or any portion thereof) from such sublessee.  Any sublease to which Landlord consents shallexpressly prohibit any such further subletting.

 

(g)       **Additional Conditions.**  A condition to Landlord’s consent to anyTransfer of this Lease will be the delivery to Landlord of a true copy of thefully executed instrument of assignment, sublease, transfer or hypothecation,and, in the case of an assignment, the delivery to Landlord of an 

 

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agreement executed by theTransferee in form and substance reasonably satisfactory to Landlord, wherebythe Transferee assumes and agrees to be bound by all of the terms andprovisions of this Lease and to perform all of the obligations of Tenanthereunder.  As a condition for grantingits consent to any assignment or sublease, Landlord may require that in theevent of an uncured default by Tenant under this Lease, the assignee orsublessee remit directly to Landlord on a monthly basis, all monies due toTenant by said assignee or sublessee.  Asa condition to Landlord’s consent to any sublease, such sublease must providethat it is subject and subordinate to this Lease and to all mortgages; thatLandlord may enforce the provisions of the sublease, including collection of rent;that in the event of termination of this Lease for any reason, includingwithout limitation a voluntary surrender by Tenant, or in the event of anyreentry or repossession of the Premises by Landlord, Landlord may, at itsoption, either (i) terminate the sublease, or (ii) take over all of the right,title and interest of Tenant, as sublessor, under such sublease, in which casesuch sublessee will attorn to Landlord, but that nevertheless Landlord will not(1) be liable for any previous act or omission of Tenant under such sublease,(2) be subject to any defense or offset previously accrued in favor of thesublessee against Tenant, or (3) be bound by any previous modification of anysublease made without Landlord’s written consent, or by any previous prepaymentby sublessee of more than one month’s rent.

 

(h)       **Excess Rent.**  If Landlord consents to any assignment ofthis Lease, Tenant agrees to pay to Landlord, as additional rent, one-half(50%) of all sums and other consideration payable to and for the benefit ofTenant by the assignee on account of the assignment, as and when such sums andother consideration are due and payable by the assignee to or for the benefitof Tenant (or, if Landlord so requires, and without any release of Tenant’sliability for the same, Tenant agrees to instruct the assignee to pay such sumsand other consideration directly to Landlord). If for any sublease, Tenant receives rent or other consideration, eitherinitially or over the term of the sublease, in excess of the rent fairlyallocable to the portion of the Premises which is subleased based on squarefootage, Tenant agrees to pay to Landlord as additional rent one-half (50%) ofthe excess of each such payment of rent or other consideration received byTenant promptly after its receipt.  Incalculating excess rent or other consideration which may be payable to Landlordunder this paragraph, Tenant will be entitled to deduct solely (i) commerciallyreasonable third party brokerage commissions and marketing costs (ii) reasonableattorneys’ fees actually expended by Tenant in connection with such assignmentor subletting; (iii) the reasonable and properly documented costs of any tenantimprovements paid by Tenant in connection with the sublease; (iv) and any otherreasonable and customary costs incurred directly in connection with thesublease if acceptable written evidence of such expenditures is provided toLandlord.

 

(i)        (j)                **No Release.**  NoTransfer will release Tenant of Tenant’s obligations under this Lease or alterthe primary liability of Tenant to pay the rent and to perform all otherobligations to be performed by Tenant hereunder.  If Tenant is in default of this Lease afterexpiration of any applicable cure or notice period, Landlord may require thatany Transferee remit directly to Landlord on a monthly basis, all monies dueTenant by said Transferee, however, the acceptance of rent by Landlord from anyother person will not be deemed to be a waiver by Landlord of any provisionhereof.  Consent by Landlord to oneTransfer will not be deemed consent to any subsequent Transfer.  In the event of default by any Transferee ofTenant or any successor of Tenant in the performance of any of the termshereof, Landlord may proceed directly against Tenant without the necessity ofexhausting remedies against such Transferee or successor.  Landlord may consent to subsequentassignments of this Lease or sublettings or amendments or modifications to thisLease with assignees of Tenant, without notifying Tenant, or any successor ofTenant, and without obtaining its or their consent thereto and any such actionswill not relieve Tenant of liability under this Lease.

 

(k)       **Administrative andAttorneys’ Fees.**  If Tenanteffects a Transfer or requests the consent of Landlord to any Transfer (whetheror not such Transfer is consummated), then, upon demand, Tenant agrees to payLandlord a non-refundable administrative fee of Two Hundred Fifty Dollars($250.00), plus any reasonable attorneys’ and paralegal fees incurred byLandlord in connection with such Transfer or request for consent (whetherattributable to Landlord’s in-house or outside attorneys or paralegals orotherwise) not to exceed Two Thousand Dollars ($2000.00) if Tenant effects suchTransfer or requests the consent of Landlord to a transfer using Landlord’sstandard documents.  Acceptance of theTwo Hundred Fifty Dollar ($250.00) administrative fee and/or reimbursement ofLandlord’s attorneys’ and paralegal fees will in no event obligate Landlord toconsent to any proposed Transfer.

 

25.       **SUBORDINATION.**  Subject to the provisions of this Section 25,at the election of Landlord or any mortgagee or beneficiary with a deed oftrust encumbering the Building and/or the Project, or any lessor of a ground orunderlying lease with respect to the Building, this Lease will be subject andsubordinate at all times to: (i) all ground leases or underlying leases which may now exist orhereafter be executed affecting the Building; and (ii) the lien of anymortgage or deed of trust which may now exist or hereafter be executed forwhich the Building, the Project or any leases thereof, or Landlord’s interestand estate in any of said items, is specified as security.  Landlord shall exercise its commerciallyreasonable efforts to obtain from any existing ground lessor, mortgagee orbeneficiary 

 

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under a deed of trust onor before the date which is thirty (30) days following the Commencement Date acommercially reasonable nondisturbance agreement pursuant to which such groundlessor, mortgagee or beneficiary of a deed of trust agrees not to disturbTenant’s right to possession of the Premises so long as Tenant is not indefault under this Lease.  If,notwithstanding Landlord’s exercise of its commercially reasonable efforts,Landlord is unable to obtain the above-referenced nondisturbance agreementwithin thirty (30) days following the Commencement Date of this Lease, Landlordshall give Tenant written notice of Landlord’s inability to obtain suchnondisturbance agreement and Tenant shall have three (3) business daysfollowing receipt of Landlord’s written notice in which to elect to terminatethis Lease, in which event this Lease shall terminate and the parties shall bereleased from their respective obligations hereunder except that Landlord shallpromptly refund to Tenant the Security Deposit and any prepaid Rent.  Tenant’s obligation to subordinate to anyfuture mortgages, deeds of trust or ground leases affecting the Building shallbe subject to Tenant’s receipt of a commercially reasonable nondisturbanceagreement from any such future mortgagee, beneficiary under a deed of trust orground lessor.  Notwithstanding theforegoing, Landlord reserves the right to subordinate any such ground leases orunderlying leases or any such liens to this Lease.  If any such ground lease or underlying leaseterminates for any reason or any such mortgage or deed of trust is foreclosedor a conveyance in lieu of foreclosure is made for any reason, at the electionof Landlord’s successor in interest, Tenant agrees to attorn to and become thetenant of such successor in which event Tenant’s right to possession of thePremises will not be disturbed as long as Tenant is not in default under thisLease.  Tenant hereby waives its rightsunder any law which gives or purports to give Tenant any right to terminate orotherwise adversely affect this Lease and the obligations of Tenant hereunderin the event of any such foreclosure proceeding or sale.  Subject to Tenant’s receipt of a commerciallyreasonable nondisturbance agreement, Tenant covenants and agrees to execute anddeliver, upon demand by Landlord and in the form reasonably acceptable toTenant and Landlord, any additional documents evidencing the priority orsubordination of this Lease and Tenant’s attornment agreement with respect toany such ground lease or underlying leases or the lien of any such mortgage ordeed of trust.  If Tenant fails toexecute and acknowledge any such documents within ten (10) business days ofreceipt of such documents from Landlord, Tenant will be in default hereunder.

 

26.       **ESTOPPEL CERTIFICATE.**

 

(a)       **Tenant’s Obligations.**  Within ten business (10) days following anywritten request which Landlord may make from time to time, Tenant agrees toexecute and deliver to Landlord a statement, in a form as may reasonably berequired by Landlord or Landlord’s lender, certifying:  (i) the date of commencement of thisLease; (ii) the fact that this Lease is unmodified and in full force andeffect (or, if there have been modifications, that this Lease is in full forceand effect, and stating the date and nature of such modifications);(iii) the date to which the rent and other sums payable under this Leasehave been paid; (iv) that there are no current defaults under this Lease byeither Landlord or Tenant except as specified in Tenant’s statement; and(v) such other matters reasonably requested by Landlord.  Landlord and Tenant intend that any statementdelivered pursuant to this Paragraph 26 may be relied upon by any mortgagee,beneficiary, purchaser or prospective purchaser of the Building or any interesttherein.

 

(b)       **Tenant’s Failure toDeliver.**  Tenant’s failure todeliver such statement within such time will be conclusive upon Tenant(i) that this Lease is in full force and effect, without modificationexcept as may be represented by Landlord, (ii) that there are no uncureddefaults in Landlord’s performance, and (iii) that not more than one (1)month’s rent has been paid in advance. Without limiting the foregoing, if Tenant fails to deliver any suchstatement within such ten (10) business day period, Landlord may deliver toTenant an additional request for such statement and Tenant’s failure to deliversuch statement to Landlord within ten (10) business days after delivery of suchadditional request will constitute a default under this Lease.  Tenant agrees to indemnify and protectLandlord from and against any and all claims, damages, losses, liabilities andexpenses (including attorneys’ fees and costs) attributable to any failure byTenant to timely deliver any such estoppel certificate to Landlord as requiredby this Paragraph 26.

 

27.       **RULES AND REGULATIONS.**  Tenant agrees to faithfully observe andcomply with the “Rules and Regulations,” a copy of which is attached hereto andincorporated herein by this reference as Exhibit “E”, and all reasonableand nondiscriminatory modifications thereof and additions thereto from time totime put into effect by Landlord. Landlord shall use its commercially reasonable efforts to enforce suchRules and Regulations against other tenants and occupants of the Building;however, Landlord will not be responsible to Tenant for the violation ornon-performance by any other tenant or occupant of the Building of any of theRules and Regulations.

 

28.       **MODIFICATION AND CURERIGHTS OF LANDLORD’S MORTGAGEES AND LESSORS.**

 

(a)       **Modifications.**  If, in connection with Landlord’s obtainingor entering into any financing or ground lease for any portion of the Buildingor the Project, the lender or ground lessor requests modifications to thisLease, Tenant, within ten (10) business days after request therefor, agrees to 

 

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execute an amendment tothis Lease incorporating such modifications, provided such modifications arereasonable and do not increase the obligations of Tenant under this Lease oradversely affect the leasehold estate created by this Lease.

 

(b)       **Cure Rights.**  In the event of any default on the part ofLandlord, Tenant will give notice by registered or certified mail to anybeneficiary of a deed of trust or mortgage covering the Premises or groundlessor of Landlord whose address has been furnished to Tenant, and Tenantagrees to offer such beneficiary, mortgagee or ground lessor a reasonableopportunity to cure the default (including with respect to any such beneficiaryor mortgagee, time to obtain possession of the Premises, subject to this Leaseand Tenant’s rights hereunder, by power of sale or a judicial foreclosure, ifsuch should prove necessary to effect a cure).

 

29.       **DEFINITION OF LANDLORD.**  The term “Landlord,” as used in this Lease,so far as covenants or obligations on the part of Landlord are concerned, meansand includes only the owner or owners, at the time in question, of the feetitle of the Premises or the lessees under any ground lease, if any.  In the event of any transfer, assignment orother conveyance or transfers of any such title (other than a transfer forsecurity purposes only), Landlord herein named (and in case of any subsequenttransfers or conveyances, the then grantor) will be automatically relieved fromand after the date of such transfer, assignment or conveyance of all liabilityas respects the performance of any covenants or obligations on the part of Landlordcontained in this Lease thereafter to be performed, so long as the transfereeassumes in writing all such covenants and obligations of Landlord arising afterthe date of such transfer and the transferee has the financial capabilities toperform Landlord’s obligations under this Lease.  Landlord and Landlord’s transferees andassignees have the absolute right to transfer all or any portion of theirrespective title and interest in the Project, the Building, the Premises and/orthis Lease without the consent of Tenant, and such transfer or subsequenttransfer will not be deemed a violation on Landlord’s part of any of the termsand conditions of this Lease.

 

30.       **WAIVER.**  The waiver by either party of any breach ofany term, covenant or condition herein contained will not be deemed to be awaiver of any subsequent breach of the same or any other term, covenant orcondition herein contained, nor will any custom or practice which may developbetween the parties in the administration of the terms hereof be deemed awaiver of or in any way affect the right of either party to insist uponperformance in strict accordance with said terms.  The subsequent acceptance of rent or anyother payment hereunder by Landlord will not be deemed to be a waiver of anypreceding 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 ofacceptance of such rent.  No acceptanceby Landlord of a lesser sum than the basic rent and additional rent or othersum then due will be deemed to be other than on account of the earliestinstallment of such rent or other amount due, nor will any endorsement orstatement on any check or any letter accompanying any check be deemed an accordand satisfaction, and Landlord may accept such check or payment withoutprejudice to Landlord’s right to recover the balance of such installment orother amount or pursue any other remedy provided in this Lease.  The consent or approval of Landlord to or ofany act by Tenant requiring Landlord’s consent or approval will not be deemedto waive or render unnecessary Landlord’s consent or approval to or of anysubsequent similar acts by Tenant.

 

31.       **PARKING.**

 

(a)       **Grant of Parking Rights.**  So long as this Lease is in effect andprovided Tenant is not in default hereunder after expiration of any applicablecure or notice period, Landlord grants to Tenant a license to use the numberand type of parking spaces designated in Subparagraph 1(s) subject to theterms and conditions of this Paragraph 31, and the Rules and Regulationsregarding parking contained in Exhibit ”E” attached hereto.  Tenant agrees to submit to Landlord or, atLandlord’s election, directly to Landlord’s parking operator with a copy toLandlord, written notice in a form reasonably specified by Landlord containingthe names, office addresses and telephone numbers of those persons who areauthorized by Tenant to use Tenant’s parking spaces on a monthly basis (“Tenant’sAuthorized Users”) and shall use its best efforts to identify each vehicle ofTenant’s Authorized Users by make, model and license number.  Tenant agrees to deliver such notice prior tothe beginning of the Term of this Lease and to periodically update such noticeas well as upon specific request by Landlord or Landlord’s parking operator toreflect changes to Tenant’s Authorized Users or their vehicles.  Tenant will not use or allow any of Tenant’sAuthorized Users to use any parking spaces which have been specificallyassigned by Landlord to other tenants or occupants or for other uses such asvisitor parking or which have been designated by any governmental entity asbeing restricted to certain uses.

 

(b)       **Parking Rules andRegulations.**  Tenant andTenant’s Authorized Users shall comply with all rules and regulations regardingparking set forth in Exhibit ”E” attached hereto and Tenant agreesto cause its employees, subtenants, assignees, contractors, suppliers,customers and invitees to comply with such rules and regulations.  Landlord reserves the right from time to timeto modify and/or adopt 

 

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such other reasonable andnon-discriminatory rules and regulations for the parking facilities as it deemsreasonably necessary for the operation of the parking facilities.

 

32.       **FORCE MAJEURE.**  If either Landlord or Tenant is delayed,hindered in or prevented from the performance of any act required under thisLease by reason of strikes, lock-outs, labor troubles, inability to procurestandard materials, unusual and unforeseeable delay in the course ofconstruction, failure of power, restrictive governmental laws, regulations ororders or governmental action or inaction (including failure, refusal or delayin issuing permits, approvals and/or authorizations which is not the result ofthe action or inaction of the party claiming such delay), riots, civil unrestor insurrection, war, fire, earthquake, flood or other natural disaster,unusual and unforeseeable delay which results from an interruption of anypublic utilities (e.g., electricity, gas, water, telephone) or otherunusual and unforeseeable delay not within the reasonable control of the partydelayed in performing work or doing acts required under the provisions of thisLease, then performance of such act will be excused for the period of the delayand the period for the performance of any such act will be extended for aperiod equivalent to the period of such delay. The provisions of this Paragraph 32 will not operate to excuseTenant from prompt payment of rent or any other payments required under theprovisions of this Lease.

 

33.       **SIGNS.**  At Tenant’s sole cost and expense, Tenantshall be entitled to have Building standard identity signs installed andmaintained in place throughout the Term (on a non-exclusive basis) (a) at theBuilding monument sign and (b) on the exterior of the Building, subject(i) to Landlord’s reasonable prior approval, (ii) applicable Cityordinances and (iii) the signage rights of all existing tenants.  Tenant agrees to have Landlord maintainTenant’s foregoing identification signs in such designated locations inaccordance with this Paragraph 33 at Tenant’s sole cost and expense.  Tenant has no right to install Tenant identificationsigns in any other location in, on or about the Premises or the Project, tochange the name upon any such signage and Tenant will not display or erect anyother signs, displays or other advertising materials that are visible from theexterior of the Building or from within the Building in any interior orexterior common areas.

 

34.       **LIMITATION ON LIABILITY.**  In consideration of the benefits accruinghereunder, Tenant on behalf of itself and all successors and assigns of Tenantcovenants and agrees that, in the event of any actual or alleged failure,breach or default hereunder by Landlord: (a)  Tenant’s recourse againstLandlord for monetary damages will be limited to Landlord’s interest in theBuilding including, subject to the prior rights of any Mortgagee, Landlord’sinterest in the rents of the Building and any insurance proceeds payable toLandlord; (b)  Except as may be necessaryto secure jurisdiction of the partnership or company, no partner or member ofLandlord shall be sued or named as a party in any suit or action and no serviceof process shall be made against any partner or member of Landlord; (c)  No partner or member of Landlord shall berequired to answer or otherwise plead to any service of process; (d)  No judgment will be taken against any partneror member of Landlord and any judgment taken against any partner or member ofLandlord may be vacated and set aside at any time after the fact; (e)  No writ of execution will be levied against theassets of any partner or member of Landlord; (f)  The obligations under this Lease do notconstitute personal obligations of the individual members, partners, directors,officers or shareholders of Landlord, and Tenant shall not seek recourseagainst the individual members, partners, directors, officers or shareholdersof Landlord or any of their personal assets for satisfaction of any liabilityin respect to this Lease; and (g)  Thesecovenants and agreements are enforceable both by Landlord and also by anypartner or member of Landlord.

 

35.       **FINANCIAL STATEMENTS.**  Prior to the execution of this Lease byLandlord and at any time during the Term of this Lease, upon ten (10) daysprior written notice from Landlord, Tenant agrees to provide Landlord with acurrent financial statement for Tenant and any guarantors of Tenant andfinancial statements for the two (2) years prior to the current financialstatement year for Tenant and any guarantors of Tenant.  Such statements are to be prepared inaccordance with generally accepted accounting principles and, if such is thenormal practice of Tenant, audited by an independent certified publicaccountant.

 

36.       **QUIET ENJOYMENT.**  Landlord covenants and agrees with Tenantthat upon Tenant paying the rent required under this Lease and paying all othercharges and performing all of the covenants and provisions on Tenant’s part tobe observed and performed under this Lease, Tenant may peaceably and quietlyhave, hold and enjoy the Premises in accordance with this Lease withouthindrance or molestation by Landlord or its employees or agents.

 

37.       **MISCELLANEOUS.**

 

(a)       **Conflict of Laws.**  This Lease shall be governed by and construedsolely pursuant to the laws of the State, without giving effect to choice oflaw principles thereunder.

 

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(b)       **Successorsand Assigns.**  Except asotherwise provided in this Lease, all of the covenants, conditions andprovisions of this Lease shall be binding upon and shall inure to the benefitof the parties hereto and their respective heirs, personal representatives,successors and assigns.

 

(c)       **ProfessionalFees and Costs.**  If eitherLandlord or Tenant should bring suit against the other with respect to thisLease, then all costs and expenses, including without limitation, actualprofessional fees and costs such as appraisers’, accountants’ and attorneys’fees and costs, incurred by the party which prevails in such action, whether byfinal judgment or out of court settlement, shall be paid by the other party,which obligation on the part of the other party shall be deemed to have accruedon the date of the commencement of such action and shall be enforceable whetheror not the action is prosecuted to judgment. As used herein, attorneys’ fees and costs shall include, withoutlimitation, attorneys’ fees, costs and expenses incurred in connection with any(i) postjudgment motions; (ii) contempt proceedings; (iii) garnishment, levy,and debtor and third party examination; (iv) discovery; and (v) bankruptcylitigation.

 

(d)       **Terms andHeadings.**  The words “Landlord”and “Tenant” as used herein shall include the plural as well as thesingular.  Words used in any genderinclude other genders.  The paragraphheadings of this Lease are not a part of this Lease and shall have no effectupon the construction or interpretation of any part hereof.

 

(e)       **Time.**  Time is of the essence with respect to theperformance of every provision of this Lease in which time of performance is afactor.

 

(f)        **PriorAgreement; Amendments.**  ThisLease constitutes and is intended by the parties to be a final, complete andexclusive statement of their entire agreement with respect to the subjectmatter of this Lease.  This Leasesupersedes any and all prior and contemporaneous agreements and understandingsof any kind relating to the subject matter of this Lease.  There are no other agreements,understandings, representations, warranties, or statements, either oral or inwritten form, concerning the subject matter of this Lease.  No alteration, modification, amendment orinterpretation of this Lease shall be binding on the parties unless containedin a writing which is signed by both parties.

 

(g)       **Separability.**  The provisions of this Lease shall beconsidered separable such that if any provision or part of this Lease is everheld to be invalid, void or illegal under any law or ruling, all remainingprovisions of this Lease shall remain in full force and effect to the maximumextent permitted by law unless the provision invalidated is required for Tenant’spractical realization of the benefits of this Lease.

 

(h)       **Recording.**  Neither Landlord nor Tenant shall record thisLease nor any memorandum thereof without the prior written consent of theother; provided, however, that if and only if Landlord fails to obtain andrecord a subordination, nondisturbance and attornment agreement from itsexisting lender on or before the Commencement Date, than and solely in suchevent the parties shall (i) execute, acknowledge and record a memorandum oflease (“Memorandum”) in the form attached hereto as Exhibit F in theOfficial Records of the County of Santa Clara (“Official Records”) and (ii)Tenant shall execute, acknowledge and deliver to Landlord a quitclaim of theMemorandum (“Quitclaim”) in the form attached hereto as Exhibit G.  Tenant hereby irrevocably authorizes anddirects Landlord to record the Quitclaim in the Official Records upon theearlier to occur of the expiration of the term of the Lease or earliertermination of the Lease pursuant to the terms of this Lease.

 

(i)        **Counterparts.**  This Lease may be executed in one or morecounterparts, each of which shall constitute an original and all of which shallbe one and the same agreement.

 

(j)        **Nondisclosureof Lease Terms.**  Tenantacknowledges and agrees that the terms of this Lease are confidential andconstitute proprietary information of Landlord. Disclosure of the terms could adversely affect the ability of Landlordto negotiate other leases and impair Landlord’s relationship with othertenants.  Accordingly, Tenant agrees thatit, and its partners, officers, directors, employees, agents and attorneys,shall not intentionally and voluntarily disclose the terms and conditions ofthis Lease to any newspaper or other publication or any other tenant orapparent prospective tenant of the Building or other portion of the Project, orreal estate agent, either directly or indirectly, without the prior writtenconsent of Landlord, provided, however, that Tenant may disclose the terms toprospective subtenants or assignees under this Lease, lenders and investors andprospective lenders and investors, and to the extent required by law.

 

(k)       **Non-Discrimination**.  Tenant acknowledges and agrees that thereshall be no discrimination against, or segregation of, any person, group ofpersons, or entity on the basis of race, color, creed, religion, age, sex,marital status, national origin, or ancestry in the leasing, subleasing,transferring, assignment, occupancy, tenure, use, or enjoyment of the Premises,or any portion thereof.

 

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38.       **EXECUTION OF LEASE.**

 

(a)       **Joint andSeveral Obligations.**  If morethan one person executes this Lease as Tenant, their execution of this Leasewill constitute their covenant and agreement that (i) each of them is jointlyand severally liable for the keeping, observing and performing of all of theterms, covenants, conditions, provisions and agreements of this Lease to bekept, observed and performed by Tenant, and (ii) the term “Tenant” as used inthis Lease means and includes each of them jointly and severally.  The act of or notice from, or notice orrefund to, or the signature of any one or more of them, with respect to thetenancy of this Lease, including, but not limited to, any renewal, extension,expiration, termination or modification of this Lease, will be binding uponeach and all of the persons executing this Lease as Tenant with the same forceand effect as if each and all of them had so acted or so given or received suchnotice or refund or so signed.

 

(b)       **Tenant asCorporation or Partnership.** If Tenant executes this Lease as a corporation or partnership, thenTenant and the persons executing this Lease on behalf of Tenant represent andwarrant that such entity is duly qualified and in good standing to do businessin California and that the individuals executing this Lease on Tenant’s behalfare duly authorized to execute and deliver this Lease on its behalf, and in thecase of a corporation, in accordance with a duly adopted resolution of theboard of directors of Tenant, a copy of which is to be delivered to Landlord onexecution hereof, if requested by Landlord, and in accordance with the by-lawsof Tenant, and, in the case of a partnership, in accordance with thepartnership agreement and the most current amendments thereto, if any, copiesof which are to be delivered to Landlord on execution hereof, if requested byLandlord, and that this Lease is binding upon Tenant in accordance with itsterms.

 

(c)       **Examinationof Lease.**  Submission of thisinstrument by Landlord to Tenant for examination or signature by Tenant doesnot constitute a reservation of or option for lease, and it is not effective asa lease or otherwise until execution by and delivery to both Landlord andTenant.

 

39**.       EARLYOCCUPANCY.****  **Landlord shall permit Tenant to haveearly occupancy of the Premises following execution of this Lease and paymentof the sums required upon Lease execution, for the purposes of preparing thePremises for use by Tenant, subject to the rights and use of the current tenantin occupancy.

 

40.**       OPTION TO EXTEND. **Landlord hereby grants to Tenanttwo options (the “Option” or “Options”) to extend the term of the Lease, for anadditional period of five (5) years each (each, an “Option Term”).  The Option must be exercised, if at all, bywritten notice (an “Option Notice”) delivered by Tenant to Landlord not laterthan nine (9) months prior to the end of the term then in effect.  Further, the Option shall not be deemed to beproperly exercised if, as of the date of the Option Notice or at the end of theterm then in effect, Tenant (i) is in default under the Lease, which defaulthas not been cured as of the date in question, (ii) has assigned all or anyportion of this Lease or its interest therein or (iii) has sublet sixty percent(60%) or more of the Premises.  ProvidedTenant has properly and timely exercised the Option, the term of the Leaseshall be extended by the Option Term, and all terms, covenants and conditionsof the Lease shall remain unmodified and in full force and effect, except that(y) Tenant shall pay initial base rent determined as set forth below in thisparagraph, and (z) after the exercise of the second Option, Tenant shall haveno further options remaining.  Landlordshall have no obligation whatsoever in connection with any extension of theterm of this Lease to remodel, alter or improve the Premises for use by Tenant,to provide any improvement or construction allowance to Tenant, or to pay orreimburse Tenant for any remodeling, alterations or improvements to thePremises.  The initial base rent duringeach Option Term shall be ninety-five percent (95%) of the fair market rentalvalue of the Premises as of the commencement of such Option Term, determined asprovided below. As used herein, “fair market rental value” shall mean theprojected prevailing rental rate as of the first day of the Option Term forsimilar commercial space improved or presumed to be improved with tenantimprovements of substantially similar age, quality and layout as then existingin the Premises and situated in similar office buildings in the Sunnyvalemarket area including without limitation annual increases in the baserent.  Promptly after delivery of anOption Notice, Landlord and Tenant shall meet and confer and attempt to agreeupon the fair market rental value of the Premises.  If they are not able to agree, either partymay give written notice to the other that the fair market rental value is to bedetermined by appraisal as provided herein. Within twenty (20) days following such notice, each party shall bywritten notice to the other appoint an independent and qualifiedappraiser.  Each of such appraisersshall, within thirty (30) days following appointment, give written notice toboth parties of the appraiser’s determination of fair market rental value.  If the determinations of such appraisers arein agreement, the initial base rent for the Option Term shall be ninety-fivepercent (95%) of the fair market rental value so determined.  If the difference between such determinationsis five percent (5%) of the higher appraisal or less, the average of the twodeterminations shall be the fair market rental value.  If the difference is more than suchpercentage, then during the ten-day period following the appraisers’determinations, Landlord and Tenant shall again meet and confer and attempt toagree upon the fair market rental value of the Premises.  If they are unable to agree, the twoappraisers shall appoint an independent M.A.I. appraiser with not less thanfive (5) years experience with office leases in the area 

 

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in which the building is located.  Within thirty (30) days followingappointment, the third appraiser shall on written notice to the partiesdetermine the fair market rental value, which determination shall be bindingupon the parties.  Each party shall paythe fees and expenses of the appraiser appointed by it and one-half of the feesand expenses of the third appraiser.  Ifbase rent has not been determined as of the commencement of the Option Term,Tenant shall pay the Base Rent in the amount specified by Landlord until baserent is finally determined.  Upon suchdetermination.

 

41.**       CONDITIONS PRECEDENT. **This Lease is subject to thefollowing condition precedent which must be satisfied or waived by Landlord onor before April 30, 2005:  Landlord shallhave obtained the consent of its first mortgage lender to this Lease.

IN WITNESS WHEREOF, the parties have caused this Lease to be dulyexecuted by their duly authorized representatives as of the date first abovewritten.

 

 
| TENANT:                            | LANDLORD:                              |
|------------------------------------|----------------------------------------|
|                               |                                   |
| MONOLITHIC SYSTEM TECHNOLOGY, INC. | SUNNYVALE MATHILDA INVESTORS, LLC      |
| a Delaware corporation             | a California limited liability company |
|                               |                                   |
|                               | By:                                    | Matteson Real Estate Equities, Inc. |
| By:                                | /s/ Mark Voll                          |   |   | Manager |
|                               | Print Name:                            | Mark Voll |   |   |
|                               | Print Title:                           | Chief Financial Officer |   |   | By: | James A. Blake |
|                               |                                   |   |   |   |   |
|                               |                                   | Its: | Executive Vice President |
|                                    |                                        |  |  |  |  |  |  |  |

 

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**OUTLINE OF FLOORPLAN OF PREMISES**

 

[To be supplied]

 

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**TENANT IMPROVEMENTS**

 

1.         **TENANTIMPROVEMENTS**.  As used inthe Lease and this Exhibit B, the term “Tenant Improvements” or “TenantImprovement Work” or “Tenant’s Work” means those items of general tenantimprovement construction shown on the Final Plans (described in Section 4below), more particularly described in Section 5 below.

 

2.         **WORKSCHEDULE**.  Prior tocommencing construction, Tenant will deliver to Landlord, for Landlord’s reviewand approval, a schedule (“Work Schedule”) which will set forth the timetable forthe planning and completion of the installation of the TenantImprovements.  Subject to receipt of anacceptable Work Schedule, Tenant shall be granted access to the Premises priorto the Commencement Date for the sole purpose of beginning construction of itsTenant Improvement Work subject to all of the terms and provisions of thisLease except for the payment of Rent and Operating Expenses.

 

3.         **CONSTRUCTIONREPRESENTATIVES**.  Landlordhereby appoints the following person(s) as Landlord’s representative (“Landlord’sRepresentative”) to act for Landlord in all matters covered by this ExhibitB: Anne Risberg. Tenant hereby appoints the following person(s) as Tenant’srepresentative (“Tenant’s Representative”) to act for Tenant in all matterscovered by this Exhibit B:

 

                                                                                                                                                                                 .

 

All communications with respect to the matters covered by this WorkLetter Agreement are to be made to Landlord’s Representative or Tenant’sRepresentative, as the case may be, in writing in compliance with the noticeprovisions of the Lease.  Either partymay change its representative under this Exhibit B at any time by writtennotice to the other party in compliance with the notice provisions of theLease.

 

4.         **TENANTIMPROVEMENT PLANS**.

 

(a)       **Preparationof Space Plans**.  Inaccordance with the Work Schedule, Landlord agrees to meet with Tenant’sarchitect and/or space planner for the purpose of promptly preparingpreliminary space plans for the layout of Premises (“Space Plans”).  The Space Plans are to be sufficient toconvey the architectural design of the Premises and layout of the TenantImprovements therein and are to be submitted to Landlord in accordance with theWork Schedule for Landlord’s approval. If Landlord reasonably disapproves any aspect of the Space Plans,Landlord will advise Tenant in writing of such disapproval and the reasonstherefor in accordance with the Work Schedule. Tenant will then submit to Landlord for Landlord’s approval, inaccordance with the Work Schedule, a redesign of the Space Plans incorporatingthe revisions reasonably required by Landlord. Landlord’s failure to deliverwritten notice of disapproval within the time frame set forth in the WorkSchedule shall be deemed approval.

 

(b)       **Preparationof Final Plans**.  Based onthe approved Space Plans, and in accordance with the Work Schedule, Tenant’sarchitect will prepare complete architectural plans, drawings andspecifications and complete engineered mechanical, structural and electricalworking drawings for all of the Tenant Improvements for the Premises(collectively, the “Final Plans”).  TheFinal Plans will show (a) the subdivision (including partitions andwalls), layout, lighting, finish and decoration work (including carpeting andother floor coverings) for the Premises; (b) all internal and externalcommunications and utility facilities which will require conduiting or otherimprovements from the base Building shell work and/or within common areas; and(c) all other specifications for the Tenant Improvements.  The Final Plans will be submitted to Landlordfor signature to confirm that they are consistent with the Space Plans.  At the time Landlord approves the FinalPlans, Landlord shall inform Tenant in writing of any tenant improvements whichLandlord will require Tenant to remove upon the expiration or earliertermination of this Lease.  If Landlordreasonably disapproves any aspect of the Final Plans based on any inconsistencywith the Space Plans, Landlord agrees to advise Tenant in writing of suchdisapproval and the reasons therefor within the time frame set forth in theWork Schedule.  Landlord’s failure todeliver written notice of disapproval within the time frame set forth in theWork Schedule shall be deemed approval. In accordance with the Work Schedule, Tenant will then cause Tenant’sarchitect to redesign the Final Plans incorporating the revisions reasonablyrequested by Landlord so as to make the Final Plans consistent with the SpacePlans.

 

(c)       **Requirementsof Tenant’s Final Plans**. Tenant’s Final Plans will include locations and complete dimensions, andthe Tenant Improvements, as shown on the Final Plans, will:  (i) be compatible with the Buildingshell and with the design, construction and equipment of the Building;(ii) if not comprised of the Building standards set forth in the writtendescription thereof (the “Standards”), then compatible with and of at least equalquality as the Standards and approved by 

 

EXHIBIT “B”

 

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Landlord; (iii) comply with all applicable laws, ordinances, rulesand regulations of all governmental authorities having jurisdiction, and allapplicable insurance regulations; (iv) not require Building service beyondthe level normally provided to other tenants in the Building and will notoverload the Building floors; and (v) be of a nature and qualityconsistent with the overall objectives of Landlord for the Building, asdetermined by Landlord in its reasonable but subjective discretion.

 

(d)       **Submittalof Final Plans**.  Onceapproved by Landlord and Tenant, Tenant’s architect will submit the Final Plansto the appropriate governmental agencies for plan checking and the issuance ofa building permit.  Tenant’s architect,with Landlord’s cooperation, will make any changes to the Final Plans which arerequested by the applicable governmental authorities to obtain the buildingpermit.  After approval of the FinalPlans no further changes may be made without the prior written approval of bothLandlord and Tenant, and then only after agreement by Tenant to pay any excesscosts resulting from the design and/or construction of such changes.

 

(e)       **Changesto Shell of Building**.  Ifthe Final Plans or any amendment thereof or supplement thereto shall requirechanges in the Building shell, the increased cost of the Building shell workcaused by such changes will be paid for by Tenant or charged against the “Allowance”described in Section 5 below.

 

(f)        **Work CostEstimate and Statement**. Prior to the commencement of construction of any of the TenantImprovements shown on the Final Plans, Tenant will submit to Landlord a writtenestimate of the cost to complete the Tenant Improvement Work, which writtenestimate will be based on the Final Plans taking into account any modificationswhich may be required to reflect changes in the Final Plans required by theCity or County in which the Premises are located (the “Work Cost Estimate”).  Landlord will either approve the Work CostEstimate or disapprove specific items and submit to Tenant revisions to theFinal Plans to reflect deletions of and/or substitutions for such disapproveditems; provided that Landlord’s approval shall not be unreasonably withheld orconditioned.  Submission and approval ofthe Work Cost Estimate will proceed in accordance with the Work Schedule.  Landlord’s failure to disapprove the WorkCost Estimate within the time frame required by the Work Schedule shall bedeemed approval.  Upon Landlord’sapproval or deemed approval of the Work Cost Estimate (such approved Work CostEstimate to be hereinafter known as the “Work Cost Statement”), Tenant willhave the right to purchase materials and to commence the construction of theitems included in the Work Cost Statement pursuant to Section 6hereof.  If the total costs reflected inthe Work Cost Statement exceed the Allowance described in Section 5 below,Tenant agrees to pay such excess.

 

5.         **PAYMENT FOR THE TENANTIMPROVEMENTS**.

 

(a)       **Allowance**.  Landlord hereby grants to Tenant a tenantimprovement allowance of Twelve Dollars ($12.00) per Rentable Square Foot ofthe Premises, i.e., Three Hundred Fifteen Thousand Dollars ($315,000) (the “Allowance”).  The Allowance is to be used only for:

 

(i)        Payment of the cost of preparing theSpace Plans and the Final Plans, including mechanical, electrical, plumbing andstructural drawings and of all other aspects necessary to complete the FinalPlans.

 

(ii)       The payment of plan check, permit andlicense fees relating to construction of the Tenant Improvements.

 

(iii)      Construction of the Tenant Improvements,including, without limitation, the following:

 

(aa)             Installation within the Premises ofall partitioning, doors, floor coverings, ceilings, wall coverings andpainting, millwork and similar items;

 

(bb)             All electrical wiring, lightingfixtures, outlets and switches, and other electrical work necessary for thePremises;

 

(cc)             The furnishing and installation ofall duct work, terminal boxes, diffusers and accessories necessary for theheating, ventilation and air conditioning systems within the Premises,including the cost of meter and key control for after-hour air conditioning;

 

(dd)             Any additional improvements to thePremises required for Tenant’s use of the Premises including, but not limitedto, odor control, special heating, ventilation and air conditioning, noise orvibration control or other special systems or improvements;

 

(ee)             All fire and life safety controlsystems such as fire walls, sprinklers, halon, fire alarms, including piping,wiring and accessories, necessary for the Premises;

 

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(ff)               All plumbing, fixtures, pipes andaccessories necessary for the Premises; and

 

(gg)             Testing and inspection costs.

 

(iv)          All costs incurred by Landlord forconstruction or planning of the Tenant Improvements in the Premises.

 

In the event that Tenantdoes not use or apply the entire Allowance for the items set forth in clauses(i) through (iv) above, then Tenant shall be entitled to apply such unusedportion of the Allowance, not to exceed One Hundred Twenty-Five ThousandDollars ($125,000), for reimbursement of Tenant’s reasonable and properlydocumented moving expenses and cabling, fixtures, furnishings, telephone andsecurity systems and equipment installed by Tenant in the Premises.

 

(b)       **ExcessCosts**.  The cost of eachitem referenced in Section 5(a) above shall be charged against theAllowance.  If the work cost exceeds theAllowance, Tenant shall be solely responsible for payment of all excess costs,which shall be paid to Landlord within five (5) business days after invoicetherefor.  Except to the extent providedin the last paragraph of Section 5(a) above, in no event will the Allowance beused to pay for Tenant’s furniture, artifacts, equipment, telephone systems orany other item of personal property which is not affixed to the Premises.

 

(c)       **Changes**.  Any changes to the Final Plans will beapproved by Landlord and Tenant in the manner set forth in Section 4above.  Tenant shall be solelyresponsible for any additional costs associated with such changes Landlord willhave the right to decline Tenant’s request for a change to the Final Plans ifsuch changes are inconsistent with the provisions of Section 4 above.

 

(d)       **GovernmentalCost Increases**.  Ifincreases in the cost of the Tenant Improvements as set forth in the Work CostStatement are due to requirements of any governmental agency, Tenant shall besolely responsible for such additional costs; provided, however, that Landlordwill first apply toward any such increase any remaining balance of theAllowance.

 

(e)       **Disbursementof the Allowance**. Provided Tenant is not in default following the giving of notice and passageof any applicable cure period under the Lease or this Work Letter Agreement,Landlord shall disburse the Allowance to Tenant to reimburse Tenant for theactual construction costs which Tenant incurs in connection with theconstruction of the Tenant Improvements in accordance with the following:

 

(i)            Twenty-fivepercent (25%) of the Allowance shall be disbursed to Tenant when Landlord shallhave received “Evidence of Completion and Payment” as to fifty percent (50%) ofTenant’s Work having been completed and paid for by Tenant as describedhereinbelow;

 

(ii)           Anadditional Fifty percent (50%) of the Allowance shall be disbursed to Tenantwhen Landlord shall have received “Evidence of Completion and Payment” as toseventy-five percent (75%) of Tenant’s Work having been completed and paid forby Tenant as described hereinbelow;

 

(iii)          Fifteenpercent (15%) of the Allowance shall be disbursed to Tenant when Landlord shallhave received “Evidence of Completion and Payment” as to ninety percent (90%)of Tenant’s Work having been completed and paid for by Tenant as describedhereinbelow; and

 

(iv)          Thefinal ten percent (10%) of the Allowance shall be disbursed to Tenant whenLandlord shall have received “Evidence of Completion and Payment” as to onehundred percent (100%) of Tenant’s Work having been completed and paid for byTenant as described hereinbelow and satisfaction of the items described insubparagraph (vi) below.

 

(v)           Asto each phase of completion of Tenant’s Work described insubparagraphs (i) through (iii) above, the appropriate portion of theAllowance shall be disbursed to Tenant only when Landlord has received thefollowing “Evidence of Completion and Payment”:

 

(A)          Tenant has delivered to Landlord adraw request (“Draw Request”) in a form satisfactory to Landlord with respectto the Improvements specifying that the requisite portion of Tenant’s Work hasbeen completed, together with invoices, receipts and bills evidencing the costsand expenses set forth in such Draw Request and evidence of payment by Tenantfor all costs which are payable in connection with such Tenant’s Work coveredby the Draw Request.  The Draw Requestshall constitute a representation by Tenant that the Tenant’s Work identifiedtherein has been completed in a good and workmanlike manner and in accordancewith the Final Plans and the Work Schedule and has been paid for;

 

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(B)           The architect for the TenantImprovements has certified to Landlord that the Tenant Improvements have beencompleted to the level indicated in the Draw Request in accordance with theFinal Plans;

 

(C)           Tenant has delivered to Landlord suchother evidence of Tenant’s payment of the general contractor and subcontractorsfor the portions of Tenant’s Work covered by the Draw Request and the absenceof any liens generated by such portions of the Tenant’s Work as may be requiredby Landlord (i.e., either unconditional lien releases in accordance withCalifornia Civil Code Section 3262 or release bond(s) in accordance withCalifornia Civil Code Sections 3143 and 3171);

 

(D)          Landlord or Landlord’s architect orconstruction representative has inspected the Tenant Improvements anddetermined that the portion of Tenant’s Work covered by the Draw Request hasbeen completed in a good and workmanlike manner;

 

(vi)          Thefinal disbursement of the balance of the Allowance under subparagraph (iv)above shall be disbursed to Tenant only when Landlord has received Evidence ofCompletion and Payment as to all of Tenant’s Work as provided hereinabove andthe following conditions have been satisfied:

 

(A)          Thirty-five (35) days shall haveelapsed following the filing of a valid notice of completion by Tenant for theTenant Improvements;

 

(B)           A certificate of occupancy for theTenant Improvements and the Premises has been issued by the appropriategovernmental body; and

 

(C)         The satisfaction of any otherrequirements or conditions which may be required or imposed by Landlord’slender with respect to the construction of the Tenant Improvements.

 

(vii)         Allconstruction costs in excess of the Allowance shall have been paid by Tenant.

 

(g)       **Books andRecords**.  At its option,Landlord, at any time within twelve (12) months after final disbursement of theAllowance to Tenant, and upon at least ten (10) days prior written notice toTenant, may cause an audit to be made of Tenant’s books and records relating toTenant’s expenditures in connection with the construction of the TenantImprovements.  Tenant shall maintaincomplete and accurate books and records in accordance with generally acceptedaccounting principles of these expenditures for at least twelve (12).  Tenant shall make available to Landlord’sauditor at the Premises within ten (10) business days following Landlord’snotice requiring the audit, all books and records maintained by Tenantpertaining to the construction and completion of the Tenant Improvements.  In addition to all other remedies whichLandlord may have pursuant to the Lease, Landlord may recover from Tenant thereasonable cost of its audit if the audit discloses that Tenant falselyreported to Landlord expenditures which were not in fact made or falselyreported a material amount of any expenditure or the aggregate expenditures.

 

6.         **CONSTRUCTIONOF TENANT IMPROVEMENTS**. Following Landlord’s approval of the Final Plans and the Work CostStatement described in Section 4(f) above, Tenant’s contractor (selectedas provided in Paragraph 9(n)) will commence and diligently proceed withthe construction of the Tenant Improvements. Tenant shall use diligent efforts to cause its contractor to completethe Tenant Improvements in a good and workmanlike manner in accordance with theFinal Plans and the Work Schedule. Tenant agrees to use diligent efforts to cause construction of theTenant Improvements to commence promptly following the issuance of a buildingpermit for the Tenant Improvements. Landlord shall have the right to enter upon the Premises to inspectTenant’s construction activities following reasonable advance notice to Tenant.

 

7.         **MISCELLANEOUSCONSTRUCTION COVENANTS**.

 

(a)       **No Liens**.  Tenant shall not allow the TenantImprovements or the Building or any portion thereof to be subjected to anymechanic’s, materialmen’s or other liens or encumbrances arising out of theconstruction of the Tenant Improvements.

 

(b)       **DiligentConstruction**.  Tenant willpromptly, diligently and continuously pursue construction of the TenantImprovements to successful completion in full compliance with the Final Plans,the Work Schedule and this Work Letter Agreement.  Landlord and Tenant shall cooperate with oneanother during the performance of Tenant’s Work to effectuate such work in atimely and compatible manner.

 

(c)       **Compliancewith Laws**.  Tenant willconstruct the Tenant Improvements in a safe and lawful manner.  Tenant shall, at its sole cost and expense,comply with all applicable laws and all regulations and requirements of, andall licenses and permits issued by, all municipal or other 

 

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governmental bodies with jurisdiction which pertain to the installationof the Tenant Improvements.  Copies ofall filed documents and all permits and licenses shall be provided toLandlord.  Any portion of the TenantImprovements which is not acceptable to any applicable governmental body,agency or department, or not reasonably satisfactory to Landlord, shall bepromptly repaired or replaced by Tenant at Tenant’s expense.  Notwithstanding any failure by Landlord toobject to any such Tenant Improvements, Landlord shall have no responsibilitytherefor.

 

(d)       **Indemnification**.  Subject to the terms of the Lease regardinginsurance and waiver of subrogation by the parties, Tenant hereby indemnifiesand agrees to defend and hold Landlord, the Premises and the Building harmlessfrom and against any and all suits, claims, actions, losses, costs or expenses(including, without limitation, claims for workers’ compensation) of any naturewhatsoever, together with reasonable attorneys’ fees for counsel of Landlord’schoice, arising out of or in connection with the Tenant Improvements or theperformance of Tenant’s Work (including, but not limited to, claims for breachof warranty, personal injury or property damage).

 

(e)       **Insurance**.  Construction of the Tenant Improvements shallnot proceed without Tenant first acquiring workers’ compensation andcomprehensive general public liability insurance and property damage insuranceas well as “All Risks” builders’ risk insurance, with minimum coverage of$2,000,000 or such other amount as may be approved by Landlord in writing andissued by an insurance company reasonably satisfactory to Landlord.  Not less than thirty (30) days beforecommencing the construction of the Tenant Improvements, certificates of suchinsurance shall be furnished to Landlord or, if requested, the originalpolicies thereof shall be submitted for Landlord’s approval.  All such policies shall provide that thirty(30) days prior notice must be given to Landlord before modification,termination or cancellation.  All insurancepolicies maintained by Tenant pursuant to this Exhibit B shall name Landlordand any lender with an interest in the Premises as additional insureds andcomply with all of the applicable terms and provisions of the Lease relating toinsurance.  Tenant’s contractor shall berequired to maintain the same insurance policies as Tenant, and such policiesshall name Tenant, Landlord and any lender with an interest in the Premises asadditional insureds.

 

(f)        **ConstructionDefects**.  Landlord shallhave no responsibility for the Tenant Improvements and Tenant will remedy, atTenant’s own expense, and be responsible for any and all defects in the TenantImprovements that may appear during or after the completion thereof whether thesame shall affect the Tenant Improvements in particular or any parts of thePremises in general.

 

(g)       **AdditionalServices**.  If theconstruction of the Tenant Improvements shall require that additional servicesor facilities (including, but not limited to, hoisting, cleanup or other cleaningservices, trash removal, field supervision, or ordering of materials) beprovided by Landlord, then Tenant shall pay Landlord for such items at Landlord’scost or at a reasonable charge if the item involves time of Landlord’spersonnel only.  Electrical power andheating, ventilation and air conditioning shall be available to Tenant duringnormal business hours for construction purposes at no charge to Tenant.

 

(h)       **Coordinationof Labor**.  All of Tenant’scontractors, subcontractors, employees, servants and agents must work inharmony with and shall not interfere with any labor employed by Landlord, orLandlord’s contractors or by any other tenant or its contractors with respectto the any portion of the Project. Nothing in this Work Letter shall, however, require Tenant to use unionlabor.

 

(i)        **Work inAdjacent Areas**.  Any workto be performed in areas adjacent to the Premises shall be performed only afterobtaining Landlord’s express written permission, which shall not beunreasonably withheld, conditioned or delayed, and shall be done only if anagent or employee of Landlord is present; Tenant will reimburse Landlord forthe expense of any such employee or agent.

 

(j)        **HVACSystems**.  Tenant agrees tobe entirely responsible for the maintenance or the balancing of any heating,ventilating or air conditioning system installed by Tenant and/or maintenanceof the electrical or plumbing work installed by Tenant and/or for maintenanceof lighting fixtures, partitions, doors, hardware or any other installationsmade by Tenant.

 

(k)       **Coordinationwith Lease**.  Nothingherein contained shall be construed as (i) constituting Tenant as Landlord’sagent for any purpose whatsoever, or (ii) a waiver by Landlord or Tenantof any of the terms or provisions of the Lease. Any default by Tenant following the giving of notice and the passage ofany applicable cure period with respect to any portion of this Exhibit B shallbe deemed a breach of the Lease for which Landlord shall have all the rightsand remedies as in the case of a breach of said Lease.

 

(l)        **Approvalof Plans**.  Landlord willnot check Tenant drawings for building code compliance.  Approval of the Final Plans by Landlord isnot a representation that the drawings are in compliance with the requirementsof governing authorities, and it shall be Tenant’s responsibility to meet and 

 

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comply with all federal, state, and local code requirements.  Approval of the Final Plans does notconstitute assumption of responsibility by Landlord or its architect for theiraccuracy, sufficiency or efficiency, and Tenant shall be solely responsible forsuch matters.

 

(m)      **Tenant’sDeliveries**.  Tenant shalldeliver to Landlord, at least five (5) days prior to the commencement of constructionof Tenant’s Work, the following information:

 

(i)        The names, addresses, telephone numbers,and primary contacts for the general, mechanical and electrical contractorsTenant intends to engage in the performance of Tenant’s Work; and

 

(ii)       The date on which Tenant’s Work willcommence, together with the estimated dates of completion of Tenant’sconstruction and fixturing work.

 

(n)       **Qualificationof Contractors**.  Once theFinal Plans have been proposed and approved, Tenant shall select and retain acontractor and subcontractors from a list of contractors and subcontractorsapproved by Landlord for the construction of the Tenant Improvement Work inaccordance with the Final Plans.  Allcontractors engaged by Tenant shall be bondable, licensed contractors,possessing good labor relations, capable of performing quality workmanship andworking in harmony with Landlord’s general contractor and other contractors onthe job, if any, all as reasonably determined by Landlord. All work shall becoordinated with general construction work on the Site, if any.

 

(o)       **Warranties**.  Tenant shall cause its contractor to providewarranties for not less than one (1) year (or such shorter time as may becustomary and available without additional expense to Tenant) against defectsin workmanship, materials and equipment, which warranties shall run to thebenefit of Landlord or shall be assignable to Landlord to the extent thatLandlord is obligated to maintain any of the improvements covered by suchwarranties.

 

(p)       **Landlord’sPerformance of Work**. Within ten (10) working days after receipt of Landlord’s written noticeof Tenant’s failure to perform its obligations under this Exhibit B, if Tenantshall fail to commence to cure such failure, Landlord shall have the right, butnot the obligation, to perform, on behalf of and for the account of Tenant,subject to reimbursement of the cost thereof by Tenant, any and all of Tenant’sWork which Landlord determines, in its reasonable discretion, should beperformed immediately and on an emergency basis for the best interest of thePremises including, without limitation, work which pertains to structuralcomponents, mechanical, sprinkler and general utility systems, roofing andremoval of unduly accumulated construction material and debris; provided,however, Landlord shall use reasonable efforts to give Tenant at least ten (10)days prior written notice to the performance of any of Tenant’s Work.

 

(q)       **As-BuiltDrawings**.  Tenant shallcause “As-Built Drawings” (excluding furniture, fixtures and equipment) to bedelivered to Landlord and/or Landlord’s representative no later than sixty (60)days after the completion of Tenant’s Work. In the event these drawings are not received by such date, Landlord may,at its election, cause said drawings to be obtained and Tenant shall pay toLandlord, as additional rent, the cost of producing these drawings.

 

**8. LANDLORD’S FURNITURE. **Tenant is hereby given theright to use all of Landlord’s office furniture, cubicles, cabling, telephonesand related furnishings located in the Premises as of the date of this Lease,without additional charge, including any such furniture or furnishings locatedelsewhere in the Building and not currently being used by any othertenant.  Tenant shall be responsible forinsuring all such furniture and furnishings under its “All Risks” policyrequired under Section 19(a)(i) of the Lease. Landlord and Tenant shall jointly prepare and sign an inventory of allsuch furnishings to be located within the Premises and used by Tenant duringthe term of this Lease on or before Tenant’s occupancy of the Premises.  In the event Tenant leases the Premisesthroughout the initial term and option terms of this Lease, Tenant shall beallowed, but not required, to assume ownership of such furnishings at the endof the final option term, and Landlord shall convey such furnishings to Tenantby bill of sale at the end of the final option term without representation orwarranty by Landlord of any nature whatsoever. If Tenant does not lease the Premises for such period, the furnishingsas set forth on the inventory shall remain the property of Landlord and shallbe surrendered to Landlord by Tenant upon Lease expiration in the samecondition as received, reasonable wear and tear excepted.

 

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**DEFINITION OF OPERATING EXPENSES**

 

1.         **ItemsIncluded in Operating Expenses**. The term “Operating Expenses” as used in the Lease to which this Exhibit ”C”is attached means:  all costs andexpenses of operation and maintenance of the Building and the Common Areas (assuch terms are defined in the Lease), as determined by standard accountingpractices, including the following costs by way of illustration but notlimitation, but excluding those items specifically set forth in Paragraph 3below:

 

(a)       Real Property Taxes andAssessments (as defined in Paragraph 2 below) and any taxes or assessmentsimposed in lieu thereof;

 

(b)       any and all assessmentsimposed with respect to the Building pursuant to any covenants, conditions andrestrictions affecting the Project, the Common Areas or the Building;

 

(c)       water and sewer chargesand the costs of electricity, heating, ventilating, air conditioning and otherutilities;

 

(d)       utilities surcharges andany other costs, levies or assessments resulting from statutes or regulationspromulgated by any government or quasi-government authority in connection withthe use, occupancy or alteration of the Building or the Premises or the parkingfacilities serving the Building or the Premises;

 

(e)       costs of insuranceobtained by Landlord;

 

(f)        waste disposal andjanitorial services;

 

(g)       labor;

 

(h)       costs incurred in themanagement of the Building, including, without limitation:  (i) supplies, (ii) wages and salaries(and payroll taxes and similar governmental charges related thereto) ofemployees used in the management, operation and maintenance of the Building(with wages and salaries of any employees employed at the Building only on apart-time basis being equitably allocated by Landlord), (iii) Buildingmanagement office rental, supplies, equipment and related operating expenses,and (iv) a management/administrative fee in an amount not to exceed threepercent (3%) of the monthly base rent.

 

(i)        supplies, materials,equipment and tools including rental of personal property used for maintenance;

 

(j)        repair and maintenanceof the elevators and the structural portions of the Building, including theplumbing, heating, ventilating, air-conditioning and electrical systemsinstalled or furnished by Landlord;

 

(k)       maintenance, costs andupkeep of all parking and Project Common Areas;

 

(l)        depreciation on astraight line basis and rental of personal property used in maintenance;

 

(m)      amortization on astraight line basis over the useful life [together with interest at theInterest Rate on the unamortized balance] of all capitalized expenditures whichare: (i) reasonably intended to produce a reduction in operating chargesor energy consumption; or (ii) required under any governmental law or regulationthat was not applicable to the Building at the time it was originallyconstructed; or (iii) for replacement of any Building equipment needed tooperate the Building at the same quality levels as prior to the replacement;

 

(n)       costs and expenses ofgardening and landscaping;

 

(o)       maintenance of signs(other than signs of tenants of the Building);

 

(p)       personal property taxeslevied on or attributable to personal property used in connection with theBuilding or the Common Areas;

 

(q)       reasonable accounting,audit, verification, legal and other consulting fees; and

 

(r)        costs and expenses ofrepairs, resurfacing, repairing, maintenance, painting, lighting, cleaning,refuse removal, security and similar items, including appropriate reserves.

 

2.         **RealProperty Taxes and Assessments**. The term “Real Property Taxes and Assessments”, as used in this Exhibit“C”, means:  any form of assessment,license fee, license tax, business license 

 

EXHIBIT “C”

 

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fee, commercial rental tax, levy, charge, improvement bond, tax orsimilar imposition imposed by any authority having the direct power to tax,including any city, county, state or federal government, or any school,agricultural, lighting, drainage or other improvement or special assessmentdistrict thereof, as against any legal or equitable interest of Landlord in thePremises, Building, Common Areas or the Project (as such terms are defined inthe Lease), including the following by way of illustration but not limitation:

 

(a)       any tax on Landlord’s “right”to rent or “right” to other income from the Premises or as against Landlord’sbusiness of leasing the Premises;

 

(b)       any assessment, tax,fee, levy or charge in substitution, partially or totally, of any assessment,tax, fee, levy or charge previously included within the definition of realproperty tax, it being acknowledged by Tenant and Landlord that Proposition 13was adopted by the voters of the State of California in the June, 1978 electionand that assessments, taxes, fees, levies and charges may be imposed bygovernmental agencies for such services as fire protection, street, sidewalkand road maintenance, refuse removal and for other governmental servicesformerly provided without charge to property owners or occupants.  It is the intention of Tenant and Landlordthat all such new and increased assessments, taxes, fees, levies and charges beincluded within the definition of “real property taxes” for the purposes ofthis Lease;

 

(c)       any assessment, tax,fee, levy or charge allocable to or measured by the area of the Premises orother premises in the Building or the rent payable by Tenant hereunder or othertenants of the Building, including, without limitation, any gross receipts taxor excise tax levied by state, city or federal government, or any politicalsubdivision thereof, with respect to the receipt of such rent, or upon or withrespect to the possession, leasing, operation, management, maintenance,alteration, repair, use or occupancy by Tenant of the Premises, or any portionthereof but not on Landlord’s other operations;

 

(d)       any assessment, tax,fee, levy or charge upon this transaction or any document to which Tenant is aparty, creating or transferring an interest or an estate in the Premises;and/or

 

(e)       any assessment, tax,fee, levy or charge by any governmental agency related to any transportationplan, fund or system (including assessment districts) instituted within thegeographic area of which the Building is a part.

 

3.         **ItemsExcluded From Operating Expenses**.  Notwithstanding the provisions of Paragraphs1 and 2 above to the contrary, “Operating Expenses” will not include:

 

(a)       Landlord’s federal orstate or local income, franchise, inheritance or estate taxes and transfertaxes;

 

(b)       any ground lease rental;

 

(c)       costs incurred byLandlord for the repair of damage to the Building to the extent that Landlordis reimbursed by insurance or condemnation proceeds or by tenants, warrantorsor other third persons;

 

(d)       depreciation,amortization and interest payments, except as specifically provided herein, andexcept on materials, tools, supplies and vendor-type equipment purchased byLandlord to enable Landlord to supply services Landlord might otherwisecontract for with a third party, where such depreciation, amortization andinterest payments would otherwise have been included in the charge for suchthird party’s services, all as determined in accordance with standardaccounting practices;

 

(e)       brokerage commissions,finders’ fees, attorneys’ fees, space planning costs, marketing costs and othercosts incurred by Landlord in leasing or attempting to lease space in theBuilding;

 

(f)        costs of a capitalnature, including, without limitation, capital improvements, capitalreplacements, capital repairs, capital equipment and capital tools, all asdetermined in accordance with standard accounting practices; except for thecapital expenditures set forth in Subparagraph 1(m) above;

 

(g)       interest, principal,points and fees on debt or amortization on any mortgage, deed of trust or otherdebt encumbering the Building or the Project;

 

(h)       costs, including permit,license and inspection costs, incurred with respect to the installation oftenant improvements for tenants in the Building (including the original TenantImprovements for the Premises), or incurred in renovating or otherwiseimproving, decorating, painting or redecorating space for tenants or otheroccupants of the Building, including space planning and interior design costsand fees;

 

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(i)        attorneys’ fees andother costs and expenses incurred in connection with negotiations or disputeswith present or prospective tenants or other occupants of the Building;provided, however, that Operating Expenses will include those attorneys’ feesand other costs and expenses incurred in connection with negotiations, disputesor claims relating to items of Operating Expenses, enforcement of rules andregulations of the Building, and such other matters relating to the maintenanceof standards required of Landlord under the Lease;

 

(j)        except for theadministrative/management fees described in Subparagraph 1(h) above, costsof Landlord’s general corporate overhead;

 

(k)       all items and servicesfor which Tenant or any other tenant in the Building reimburses Landlord (otherthan through operating expense pass-through provisions);

 

(l)        electric power costsfor which any tenant directly contracts with the local public service company;

 

(m)      costs arising fromLandlord’s charitable or political contributions;

 

(n)       costs incurred inconnection with the original construction of the Building;

 

(o)       expenses directlyresulting from the gross negligence and/or intentional misconduct of Landlord,its agents, contractors or employees;

 

(p)       any bad debt loss, rentloss, or reserves for bad debts or rent loss;

 

(q)       the wages of anyemployee who does not devote substantially all of his or her time to theBuilding shall be equitably allocated to the Building;

 

(r)        fines, penalties andinterest;

 

(s)       costs incurred byLandlord with respect to goods and services (including utilities sold andsupplied to tenants and occupants of the Building) to the extent that Landlordis reimbursed such costs other than through operating expense payments; and

 

(t)        rentals and otherrelated expenses incurred in leasing air conditioning systems, elevators orother equipment ordinarily considered to be of a capital nature, exceptequipment not affixed to the Building which is used while repairs are beingundertaken or in providing janitorial or similar services.

 

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**STANDARDS FOR UTILITIES AND SERVICES**

** **

The following standards for utilities and services are in effect.  Landlord reserves the right to adoptnondiscriminatory modifications and additions hereto.

 

Subject to the terms and conditions of the Lease and provided Tenantremains in occupancy of the Premises, Landlord will provide or make availablethe following utilities and services:

 

1.         Provide non-attendedautomatic elevator available for Tenant’s nonexclusive use at all times.

 

2.         On Monday throughFriday, except holidays, from 8 a.m. to 6 p.m. (and other times for areasonable additional charge to be fixed by Landlord), ventilate the Premisesand furnish air conditioning or heating on such days and hours, when in thereasonable judgment of Landlord it may be required for the comfortableoccupancy of the Premises.  “Holidays”shall mean New Year’s Day, President’s Day, Memorial Day, Independence Day,Labor Day, Thanksgiving Day, the day after Thanksgiving and Christmas Day andsuch other national holidays as are adopted by Landlord as holidays for theBuilding.  The air conditioning systemachieves maximum cooling when the window coverings are extended to the fulllength of the window opening and adjusted to a 45° angle upwards.  Landlord will not be responsible for roomtemperatures if Tenant does not keep all window coverings in the Premisesextended to the full length of the window opening and adjusted to a 45° angleupwards whenever the system is in operation. Tenant agrees to cooperate fully at all times with Landlord, and toabide by all reasonable regulations and requirements which Landlord mayprescribe for the proper function and protection of said air conditioningsystem.  Tenant agrees not to connect anyapparatus, device, conduit or pipe to the chilled and hot water airconditioning supply lines of the Building. Tenant further agrees that neither Tenant nor its servants, employees,agents, visitors, licensees or contractors shall at any time enter themechanical installations or facilities of the Building or the Project oradjust, tamper with, touch or otherwise in any manner affect said installationsor facilities.  The cost of maintenanceand service calls to adjust and regulate the air conditioning system will becharged to Tenant if the need for maintenance work results from either Tenant’sadjustment of room thermostats or Tenant’s failure to comply with itsobligations under this Exhibit, including keeping window coverings extended tothe full length of the window opening and adjusted to a 45° angle upwards.  Initially, Tenant shall pay for after-hoursHVAC services at the rate of Thirty-Five Dollars ($35.00) per hour.

 

3.         Landlord will makeavailable to the Premises, 24 hours per day, seven days a week, electriccurrent as required by the Building standard office lighting and fractionalhorsepower office business machines including copiers, personal computers andword processing equipment in an amount not to exceed five (5) watts per squarefoot per normal business day.****Tenant agrees,should its electrical installation or electrical consumption be in excess ofthe aforesaid quantity or extend beyond normal business hours, to reimburseLandlord monthly for the measured consumption at the average cost per kilowatthour charged to the Building during the period. If a separate meter is not installed at Tenant’s cost, such excess costwill be established by an estimate agreed upon by Landlord and Tenant, and ifthe parties fail to agree, such cost will be established by an independentlicensed engineer selected in Landlord’s reasonable discretion, whose fee shallbe shared equally by Landlord and Tenant. Tenant agrees not to use any apparatus or device in, upon or about thePremises (other than standard office business machines, personal computers andword processing equipment) which may in any way increase the amount of suchservices usually furnished or supplied to said Premises, and Tenant furtheragrees not to connect any apparatus or device with wires, conduits or pipes, orother means by which such services are supplied, for the purpose of usingadditional or unusual amounts of such services without the written consent ofLandlord.  Should Tenant use the same toexcess, the refusal on the part of Tenant to pay upon demand of Landlord theamount established by Landlord for such excess charge will constitute a breachof the obligation to pay rent under this Lease and will entitle Landlord to therights therein granted for such breach. Tenant’s use of electric current will never exceed the capacity of thefeeders to the Building, or the risers or wiring installation and Tenants willnot install or use or permit the installation or use of any computer orelectronic data processing equipment in the Premises (except standard officebusiness machines, personal computers and word processing equipment) withoutthe prior written consent of Landlord.

 

4.         Water will be availablein public areas for drinking and lavatory purposes only, but if Tenantrequires, uses or consumes water for any purpose in addition to ordinarydrinking and lavatory purposes, of which fact Tenant constitutes Landlord to bethe sole judge so long as Landlord is reasonable, Landlord may install a watermeter and thereby measure Tenant’s water consumption for all purposes.  Tenant agrees to pay Landlord for the cost ofthe meter and the cost of the installation thereof and throughout the durationof Tenant’s occupancy Tenant will keep said meter and installation equipment ingood working order and repair at Tenant’s own cost and expense, in default ofwhich Landlord may cause such meter and equipment to be replaced or repairedand collect the cost thereof from Tenant. Tenant agrees to pay for water consumed, as shown on such meter, as 

 

EXHIBIT "D"

 

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and when bills are rendered, and on default in making such payment,Landlord may pay such charges and collect the same from Tenant.  Any such costs or expenses incurred, orpayments made by Landlord for any of the reasons or purposes hereinabove statedwill be deemed to be additional rent payable by Tenant and collectible byLandlord as such.

 

5.         Landlord will providejanitorial service to the Premises at least five (5) days per week on eachbusiness day, provided the same are used exclusively as permitted in thisLease, and are kept reasonably in order by Tenant, and unless otherwise agreedto by Landlord and Tenant no one other than persons approved by Landlord shallbe permitted to enter the Premises for such purposes.  If the Premises are not used exclusively aspermitted in this Lease, they will be kept clean and in order by Tenant, atTenant’s expense, and to the satisfaction of Landlord, and by persons approvedby Landlord.  Tenant agrees to pay toLandlord the cost of removal of any of Tenant’s refuse and rubbish to theextent that the same exceeds the refuse and rubbish usually attendant upon theuse of the Premises as offices.

 

6.         Landlord reserves theright to stop service of the elevator, plumbing, ventilation, air conditioningand electrical systems, when necessary, by reason of accident or emergency orfor repairs, alterations or improvements, when in the judgment of Landlord suchactions are desirable or necessary to be made, until said repairs, alterationsor improvements shall have been completed, and Landlord will have noresponsibility or liability for failure to supply elevator facilities,plumbing, ventilating, air conditioning or electric service, when preventedfrom so doing by strike or accident or by any cause beyond Landlord’sreasonable control, or by laws, rules, orders, ordinances, directions,regulations or by reason of the requirements of any federal, state, county ormunicipal authority or failure of gas, oil or other suitable fuel supply orinability by exercise of reasonable diligence to obtain gas, oil or othersuitable fuel supply.  It is expresslyunderstood and agreed that any covenants on Landlord’s part to furnish anyservices pursuant to any of the terms, covenants, conditions, provisions oragreements of this Lease, or to perform any act or thing for the benefit ofTenant, will not be deemed breached if Landlord is unable to furnish or performthe same by virtue of a strike or labor trouble or any other cause whatsoeverbeyond Landlord’s control.

 

7.         As part of OperatingExpenses, Landlord shall provide security services for the Building and theProject, including, without limitation, equipment, personnel, systems andprocedures as reasonably determined by Landlord in its sole discretion.

 

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**RULES AND REGULATIONS**

 

A.        **GeneralRules and Regulations**. The following rules and regulations govern the use of the Building andthe Project Common Areas.  Tenant will bebound by such rules and regulations and agrees to cause Tenant’s AuthorizedUsers, its employees, subtenants, assignees, contractors, suppliers, customersand invitees to observe the same.

 

1.         Except as specificallyprovided in the Lease to which these Rules and Regulations are attached, nosign, placard, picture, advertisement, name or notice may be installed ordisplayed on any part of the outside or inside of the Building or the Project(but not including decorations placed within the Premises) without the priorwritten consent of Landlord.  Landlordwill have the right to remove, at Tenant’s expense and without notice, any signinstalled or displayed in violation of this rule.  All approved signs or lettering on doors andwalls are to be printed, painted, affixed or inscribed at the expense of Tenantand under the direction of Landlord by a person or company designated orapproved by Landlord.

 

2.         If Landlord objects inwriting to any curtains, blinds, shades, screens or hanging plants or othersimilar objects attached to or used in connection with any window or door ofthe Premises, or placed on any windowsill, which is visible from the exteriorof the Premises, Tenant will immediately discontinue such use.  Tenant agrees not to place anything againstor near glass partitions or doors or windows which may appear unsightly fromoutside the Premises including from within any interior common areas.

 

3.         Tenant will notobstruct any sidewalks, halls, passages, exits, entrances, elevators,escalators, or stairways of the Project. The halls, passages, exits, entrances,elevators and stairways are not open to the general public, but are open,subject to reasonable regulations, to Tenant’s business invitees. Landlord willin all cases retain the right to control and prevent access thereto of allpersons whose presence in the reasonable judgment of Landlord would beprejudicial to the safety, character, reputation and interest of the Projectand its tenants, provided that nothing herein contained will be construed toprevent such access to persons with whom any tenant normally deals in theordinary course of its business, unless such persons are engaged in illegal orunlawful activities.  No tenant and noemployee or invitee of any tenant will go upon the roof of the Building.

 

4.         Tenant will not obtainfor use on the Premises ice, food vendors, towel or other similar services oraccept barbering or bootblacking service upon the Premises, except at suchreasonable hours and under such reasonable regulations as may be fixed byLandlord. Tenant shall have the right to obtain food and beverage service toserve its employees, agents, contractors, clients and invitees. Landlordexpressly reserves the right to absolutely prohibit solicitation, canvassing,distribution of handbills or any other written material, peddling, sales anddisplays of products, goods and wares in all portions of the Project except asmay be expressly permitted under the Lease. Landlord reserves the right to restrict and regulate the use of thecommon areas of the Project and Building by invitees of tenants providingservices to tenants on a periodic or daily basis including food and beveragevendors.  Such restrictions may includelimitations on time, place, manner and duration of access to a tenant’spremises for such purposes.  Withoutlimiting the foregoing, Landlord may require that such parties use serviceelevators, halls, passageways and stairways for such purposes to preserveaccess within the Building for tenants and the general public.

 

5.         Landlord reserves theright to require tenants to periodically provide Landlord with a written listof any and all business invitees which periodically or regularly provide goodsand services to such tenants at the premises. Landlord reserves the right to preclude all vendors from entering orconducting business within the Building and the Project if such vendors are notlisted on a tenant’s list of requested vendors.

 

6.         Landlord reserves theright to exclude from the Building between the hours of 6 p.m. and 8 a.m. thefollowing business day, or such other hours as may be established from time totime by Landlord, and on Sundays and legal holidays, any person unless thatperson is known to the person or employee in charge of the Building or has apass or is properly identified.  Tenantwill be responsible for all persons for whom it requests passes and will beliable to Landlord for all acts of such persons.  Landlord will not be liable for damages forany error with regard to the admission to or exclusion from the Building of anyperson.  Landlord reserves the right toprevent access to the Building in case of invasion, mob, riot, publicexcitement or other commotion by closing the doors or by other appropriateaction.

 

EXHIBIT"E"

 

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7.         The directory of theBuilding or the Project will be provided exclusively for the display of thename and location of tenants only and Landlord reserves the right to excludeany other names therefrom.

 

8.         All cleaning andjanitorial services for the Project and the Premises will be providedexclusively through Landlord, and except with the written consent of Landlord,no person or persons other than those approved by Landlord will be employed byTenant or permitted to enter the Project for the purpose of cleaning thesame.  Tenant will not cause anyunnecessary labor by carelessness or indifference to the good order andcleanliness of the Premises.

 

9.         Landlord will furnishTenant, free of charge, with two keys to each entry door lock in thePremises.  Landlord may make a reasonablecharge for any additional keys.  Tenantshall not make or have made additional keys, and Tenant shall not alter anylock or install any new additional lock or bolt on any door of thePremises.  Tenant, upon the terminationof its tenancy, will deliver to Landlord the keys to all doors which have beenfurnished to Tenant, and in the event of loss of any keys so furnished, will payLandlord therefor.

 

10.       If Tenant requirestelegraphic, burglar alarm, satellite dishes, antennae or similar services, itwill first obtain Landlord’s approval, which approval shall not be unreasonablywithheld, conditioned or delayed, and comply with, Landlord’s reasonable rulesand requirements applicable to such services, which may include separatelicensing by, Landlord.

 

11.       The elevator will beavailable for use by all tenants in the Building, subject to such reasonablescheduling as Landlord, in its discretion, deems appropriate.  No equipment, materials, furniture, packages,supplies, merchandise or other property will be received in the Building orcarried in the elevators except between such hours and in such elevators as maybe reasonably designated by Landlord. Tenant’s initial move in and subsequent deliveries of bulky items, suchas furniture, safes and similar items will, unless otherwise agreed in writingby Landlord, be made during the hours of 6:00 p.m. to 6:00 a.m. or on Saturdayor Sunday.  Deliveries during normaloffice hours shall be limited to normal office supplies and other small items,unless Tenant gives prior notice to Landlord of other deliveries.  No deliveries will be made which unreasonablyimpede or interfere with other tenants or the operation of the Building.

 

12.       Tenant will not place aload upon any floor of the Premises which exceeds the load per square footwhich such floor was designed to carry and which is allowed by law.  Landlord will have the right to reasonablyprescribe the weight, size and position of all safes, heavy equipment, files,materials, furniture or other property brought into the Building.  Heavy objects will, if considered necessaryby Landlord, stand on such platforms as determined by Landlord to be necessaryto properly distribute the weight, which platforms will be provided at Tenant’sexpense.  Business machines andmechanical equipment belonging to Tenant, which cause noise or vibration thatmay be transmitted to the structure of the Building or to any space therein tosuch a degree as to be objectionable to any tenants in the Building orLandlord, are to be placed and maintained by Tenant, at Tenant’s expense, onvibration eliminators or other devises sufficient to eliminate noise orvibration.  Tenant will be responsiblefor all structural engineering required to determine structural load, as wellas the expense thereof.  The personsemployed to move such equipment in or out of the Building must be reasonablyacceptable to Landlord.  Landlord willnot be responsible for loss of, or damage to, any such equipment or otherproperty from any cause, and all damage done to the Building by maintaining ormoving such equipment or other property will be repaired at the expense ofTenant.

 

13.       Tenant will not use orkeep in the Premises any kerosene, gasoline or inflammable or combustible fluidor material other than those limited quantities necessary for the operation ormaintenance of office equipment.  Tenantwill not use or permit to be used in the Premises any foul or noxious gas orsubstance, or permit or allow the Premises to be occupied or used in a manneroffensive or objectionable to Landlord or other occupants of the Building byreason of noise, odors or vibrations, nor will Tenant bring into or keep in orabout the Premises any birds or animals.

 

14.       Tenant will not use anymethod of heating or air conditioning other than that supplied by Landlordwithout Landlord’s prior written consent.

 

15.       Tenant will not wasteelectricity, water or air conditioning and agrees to cooperate fully withLandlord to assure the most effective operation of the Building’s heating andair conditioning and to comply with any governmental energy-saving rules, lawsor regulations of which Tenant has actual notice, and will refrain fromattempting to adjust controls.  Tenantwill keep corridor doors closed, and shall keep all window coverings pulleddown.

 

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16.       Landlord reserves theright, exercisable without notice and without liability to Tenant, to change thename and street address of the Building. Without the prior written consent of Landlord, which Landlord will notunreasonably withhold or delay, Tenant will not use the name, photograph orlikeness of the Building or the Project except in connection with or inpromoting or advertising the business of Tenant.

 

17.       Tenant will close andlock the doors of its Premises and entirely shut off all water faucets or otherwater apparatus, and lighting or gas before Tenant and its employees leave thePremises.  Tenant will be responsible forany damage or injuries sustained by other tenants or occupants of the Buildingor by Landlord for noncompliance with this rule.

 

18.       The toilet rooms,toilets, urinals, wash bowls and other apparatus will not be used for any purposeother than that for which they were constructed and no foreign substance of anykind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from anyviolation of this rule will be borne by the tenant who, or whose employees orinvitees, break this rule.  Cleaning ofequipment of any type is prohibited. Shaving is prohibited.

 

19.       Tenant will not sell, orpermit the sale at retail of newspapers, magazines, periodicals, theatertickets or any other goods or merchandise to the general public in or on thePremises.  Tenant will not use thePremises for any business or activity other than that specifically provided forin this Lease.  Tenant will not conduct,nor permit to be conducted, either voluntarily or involuntarily, any auctionupon the Premises without first having obtained Landlord’s prior writtenconsent, which consent Landlord may withhold in its sole and absolutediscretion.

 

20.       Tenant will not installany radio or television antenna, loudspeaker, satellite dishes or other deviceson the roof(s) or exterior walls of the Building or the Project.  Tenant will not interfere with satellitedish, radio or television broadcasting or transmission or reception from or in theProject or elsewhere.

 

21.       Except for the ordinaryhanging of pictures and wall decorations, Tenant will not mark, drive nails,screw or drill into the partitions, woodwork or plaster or in any way defacethe Premises or any part thereof, except in accordance with the provisions ofthe Lease pertaining to alterations. Landlord reserves the right to direct electricians as to where and howtelephone and telegraph wires are to be introduced to the Premises.  Tenant will not cut or bore holes forwires.  Tenant will not affix any floorcovering to the floor of the Premises in any manner except as approved byLandlord.  Tenant shall repair any damageresulting from noncompliance with this rule.

 

22.       Tenant will not install,maintain or operate upon the Premises any vending machines without the writtenconsent of Landlord, except for food and beverage vending machines intended toserve Tenant’s employees.

 

23.       Landlord reserves theright to exclude or expel from the Project any person who, in Landlord’sjudgment, is intoxicated or under the influence of liquor or drugs or who is inviolation of any of the Rules and Regulations of the Building.

 

24.       Tenant will store allits trash and garbage within its Premises or in other facilities provided byLandlord.  Tenant will not place in anytrash box or receptacle any material which cannot be disposed of in theordinary and customary manner of trash and garbage disposal.  All garbage and refuse disposal is to be madein accordance with directions issued from time to time by Landlord.

 

25.       The Premises will not beused for lodging or for the storage of merchandise held for sale to the generalpublic, or for lodging or for manufacturing of any kind, nor shall the Premisesbe used for any improper, immoral or objectionable purpose.  No cooking will be done or permitted on thePremises without Landlord’s consent, except the use by Tenant of Underwriters’Laboratory approved equipment for brewing coffee, tea, hot chocolate andsimilar beverages shall be permitted, and the use of a microwave oven foremployees use will be permitted, provided that such equipment and use is inaccordance with all applicable federal, state, county and city laws, codes,ordinances, rules and regulations.

 

26.       Neither Tenant nor anyof its employees, agents, customers and invitees may use in any space or in thepublic halls of the Building or the Project any hand truck except thoseequipped with rubber tires and side guards or such other material-handlingequipment as Landlord may approve. Tenant will not bring any other vehicles of any kind into the Building.

 

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27.       Tenant agrees to complywith all safety, fire protection and evacuation procedures and regulationsestablished by Landlord or any governmental agency.

 

28.       Tenant assumes any andall responsibility for protecting its Premises from theft, robbery andpilferage, which includes keeping doors locked and other means of entry to thePremises closed.

 

29.       To the extent Landlordreasonably deems it necessary to exercise exclusive control over any portionsof the Common Areas for the mutual benefit of the tenants in the Building orthe Project, Landlord may do so subject to reasonable, non-discriminatoryadditional rules and regulations which do not deprive Tenant of its quietenjoyment of the Premises or parking.

 

30.       Landlord may prohibitsmoking in the Building and may require Tenant and any of its employees,agents, clients, customers, invitees and guests who desire to smoke, to smokewithin designated smoking areas within the Project.

 

31.       Tenant’s requirementswill be attended to only upon appropriate application to Landlord’s assetmanagement office for the Project by an authorized individual of Tenant.  Employees of Landlord will not perform anywork or do anything outside of their regular duties unless under specialinstructions from Landlord, and no employee of Landlord will admit any person(Tenant or otherwise) to any office without specific instructions fromLandlord.

 

32.       These Rules andRegulations are in addition to, and will not be construed to in any way modifyor amend, in whole or in part, the terms, covenants, agreements and conditionsof the Lease.  Landlord may waive any oneor more of these Rules and Regulations for the benefit of Tenant or any othertenant, but no such waiver by Landlord will be construed as a waiver of suchRules and Regulations in favor of Tenant or any other tenant, nor preventLandlord from thereafter enforcing any such Rules and Regulations against anyor all of the tenants of the Project.

 

33.       Landlord reserves theright to make such other reasonable and non-discriminatory Rules andRegulations as, in its judgment, may from time to time be needed for safety andsecurity, for care and cleanliness of the Project and for the preservation ofgood order therein.  Tenant agrees toabide by all such Rules and Regulations herein above stated and any additionalreasonable and non-discriminatory rules and regulations which are adopted.  Tenant is responsible for the observance ofall of the foregoing rules by Tenant’s employees, agents, clients, customers,invitees and guests.

 

B.        **ParkingRules and Regulations**. The following rules and regulations govern the use of the parkingfacilities which serve the Building. Tenant will be bound by such rules and regulations and agrees to causeits employees, subtenants, assignees, contractors, suppliers, customers andinvitees to observe the same:

 

1.         Tenant will not permitor allow any vehicles that belong to or are controlled by Tenant or Tenant’semployees, subtenants, customers or invitees to be loaded, unloaded or parkedin areas other than those designated by Landlord for such activities.  No vehicles are to be left in the parkingareas overnight and no vehicles are to be parked in the parking areas otherthan passenger automobiles, vans, sport utility vehicles, motorcycles andpick-up trucks.  No extended term storageof vehicles is permitted.

 

2.         Vehicles must be parkedentirely within painted stall lines of a single parking stall.

 

3.         All directional signsand arrows must be observed.

 

4.         The speed limit withinall parking areas shall be five (5) miles per hour.

 

5.         Parking isprohibited:  (a) in areas not striped forparking; (b) in aisles or on ramps; (c) where “no parking” signs are posted;(d) in cross-hatched areas; and (e) in such other areas as may be designatedfrom time to time by Landlord.

 

6.         Landlord reserves theright, without cost or liability to Landlord, to tow any vehicle if suchvehicle’s audio theft alarm system remains engaged for an unreasonable periodof time.

 

7.         Washing, waxing,cleaning or servicing of any vehicle in any area not specifically reserved forsuch purpose is prohibited.

 

8.         Landlord may refuse topermit any person to park in the parking facilities who violates these ruleswith unreasonable frequency, and any violation of these rules shall subject the

 

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violator’s car to removal, at such car owner’s expense.  Tenant agrees to use its best efforts toacquaint its employees, subtenants, assignees, contractors, suppliers,customers and invitees with these parking provisions, rules and regulations.

 

9.         Parking stickers,access cards, or any other device or form of identification supplied byLandlord as a condition of use of the parking facilities shall remain theproperty of Landlord.  Parkingidentification devices, if utilized by Landlord, must be displayed as requestedand may not be mutilated in any manner. The serial number of the parking identification device may not beobliterated.  Parking identificationdevices, if any, are not transferable and any device in the possession of anunauthorized holder will be void. Landlord reserves the right to refuse the sale of monthly stickers orother parking identification devices to Tenant or any of its agents, employeesor representatives who willfully refuse to comply with these rules andregulations and all unposted city, state or federal ordinances, laws oragreements.

 

10.       Loss or theft of parkingidentification devices or access cards must be reported to the managementoffice in the Project immediately, and a lost or stolen report must be filed bythe Tenant or user of such parking identification device or access card at thetime.  Landlord has the right to excludeany vehicle from the parking facilities that does not have a parkingidentification device or valid access card. Any parking identification device or access card which is reported lostor stolen and which is subsequently found in the possession of an unauthorizedperson will be confiscated and the illegal holder will be subject toprosecution.

 

11.       Landlord reserves theright, without cost or liability to Landlord, to tow any vehicles which areused or parked in violation of these rules and regulations.

 

12.       Landlord reserves theright from time to time to modify and/or adopt such other reasonable andnon-discriminatory rules and regulations for the parking facilities as it deemsreasonably necessary for the operation of the parking facilities.

 

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EXHIBIT F

 
| RECORDING REQUESTED BY AND              | ) |   |
|-----------------------------------------|---|--------|
| WHEN RECORDED MAIL TO:                  | ) |   |
|                                    | ) |   |
| Sunnyvale Mathilda Investors, LLC       | ) |   |
| c/o Matteson Real Estate Equities, Inc. | ) |   |
| 1991 Broadway, Suite 300                | ) |   |
| Redwood City, CA 94063-1994             | ) |   |
| Attn:   James A. Blake        | ) |   |

 

**MEMORANDUM OF LEASE**

 

THIS MEMORANDUM OF LEASE(“Memorandum”) is made and entered into this      day of                      2005, by and between SUNNYVALE MATHILDA INVESTORS, LLC, a California limitedliability company (“Landlord”) and MONOLITHIC SYSTEM TECHNOLOGY, INC., dbaMOSYS,  a Delaware corporation (“Tenant”).

 

1.             Terms and Premises.            By that certain Office Building Lease dated April     ,2005 (“Lease”) between Landlord and Tenant, Landlord hereby leases to Tenant,and Tenant hereby hires from Landlord, the premises commonly known as 755 No.Mathilda Avenue, Suite 100, Sunnyvale, California 94086, forming a part of thatcertain real property located in the City of Sunnyvale, County of Santa Clara,State of California, as shown and described on Exhibit A attached heretoand incorporated herein by this reference (the “Premises”).  The term of the Lease is five (5) years withtwo (2) five (5) year options commencing on [insert actual Commencement Dateprior to recording] and ending on [insert actual Expiration Date prior torecording], unless sooner terminated in accordance with the terms of the Lease.

 

2.             Other Terms. All terms and conditions of the Lease are set forth fully in the Lease.

 

IN WITNESS WHEREOF,Landlord and Tenant have executed this Memorandum as of the date and year firstabove written.

 
| TENANT:                                                    |         | LANDLORD:                                                                 |
|------------------------------------------------------------|--------------|---------------------------------------------------------------------------|
|                                                       |         |                                                                      |
| MONOLITHIC SYSTEM TECHNOLOGY, INC., a Delaware corporation |         | SUNNYVALE MATHILDA INVESTORS, LLC a California limited liability  company |
|                                                       |         |                                                                      |
| By:                                                        |         |                                                                      | By: | Matteson Real Estate Equities, Inc. |
|                                                       | Print Name:  |                                                                      |   |   | Manager |
|                                                       | Print Title: |                                                                      |   |   |   |   |
|                                                       |         |                                                                      |   | By: |   |
|                                                       |         |                                                                      |   | Its: |   |
|                                                            |              |                                                                           |  |  |  |  |  |  |

 

EXHIBIT "F"

 

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EXHIBIT A

DESCRIPTION OF PREMISES

 

The ground floor of thatcertain real property situated in the City of Sunnyvale, County of Santa Clara,State of California, described as follows:

 

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| STATE OF CALIFORNIA | ) |   |
|---------------------|---|--------|
|                | ) | ss.    |
| COUNTY OF           | ) |   |

 

On this                      day of                  2005,before me, the undersigned, a Notary Public in and for the State of California,personally appeared                                 ,personally known to me (or proved to me on the basis of satisfactory evidence)to be the person whose name is subscribed to the within instrument, andacknowledged to me that he executed the same in his authorized capacity; andthat by his signature on the instrument the person, or the entity upon behalfof which the person acted, executed the instrument.

 

WITNESS my hand andofficial seal.

 
|   |                |   |
|--------|---------------------|--------|
|   | Signature of Notary |   |

 

[SEAL]

 

 
| STATE OF CALIFORNIA | ) |   |
|---------------------|---|--------|
|                | ) | ss.    |
| COUNTY OF           | ) |   |

 

On this                       day of                 2005, before me, the undersigned, a Notary Public in and for the State ofCalifornia, personally appeared                                               ,personally known to me (or proved to me on the basis of satisfactory evidence)to be the person whose name is subscribed to the within instrument, andacknowledged to me that he executed the same in his authorized capacity; andthat by his signature on the instrument the person, or the entity upon behalfof which the person acted, executed the instrument.

 

WITNESS my hand andofficial seal.

 
|   |                |   |
|--------|---------------------|--------|
|   | Signature of Notary |

 

[SEAL]

 

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EXHIBIT G

 
| RECORDING REQUESTED BY AND              | ) |   |
|-----------------------------------------|---|--------|
| WHEN RECORDED MAIL TO:                  | ) |   |
|                                    | ) |   |
| Sunnyvale Mathilda Investors, LLC       | ) |   |
| c/o Matteson Real Estate Equities, Inc. | ) |   |
| 1991 Broadway, Suite 300                | ) |   |
| Redwood City, CA 94063-1994             | ) |   |
| Attn:   James A. Blake        | ) |   |

 

**QUITCLAIM**

 

The undersigned,MONOLITHIC SYSTEM TECHNOLOGY, INC., dba MOSYS, a Delaware corporation, herebyirrevocably quitclaims, releases and relinquishes to SUNNYVALE MATHILDAINVESTORS, LLC, a California limited liability company, all of the undersigned’sright, title and interest, if any, in, to and under (i) that certain Memorandumof Lease recorded on [insert date of recording] as Instrument No. [insert exactrecording information] in the Official Records of Santa Clara County,California (the “Memorandum”), (ii) the Lease (as defined in the Memorandum)and (iii) the Premises (as defined in the Memorandum).

 

IN WITNESS WHEREOF, thisQuitclaim has been executed as of                             ,2005.

 
| MONOLITHIC SYSTEM TECHNOLOGY, INC., a   Delaware corporation |         |
|--------------------------------------------------------------|--------------|
|                                                         |         |
| By:                                                          |         |   |
|                                                         | Print Name:  |   |   |
|                                                         | Print Title: |   |   |
|                                                              |              |  |  |  |  |

 

EXHIBIT "G"

 

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| STATE OF CALIFORNIA | ) |   |
|---------------------|---|--------|
|                | ) | ss.    |
| COUNTY OF           | ) |   |

 

On this                        day of                   2005, before me, the undersigned, a Notary Public in and for the State ofCalifornia, personally appeared                                  ,personally known to me (or proved to me on the basis of satisfactory evidence)to be the person whose name is subscribed to the within instrument, andacknowledged to me that he executed the same in his authorized capacity; andthat by his signature on the instrument the person, or the entity upon behalfof which the person acted, executed the instrument.

 

WITNESS my hand andofficial seal.

 
|   |                |   |
|--------|---------------------|--------|
|   | Signature of Notary |

 

 

[SEAL]

 

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