**EXHIBIT 10.1**

 

**LEASE**

**(Single Tenant; Net)**

 

 

**BETWEEN**

 

 

**THE IRVINE COMPANY**

 

 

**AND**

 

 

**RAINING DATA CORPORATION**

 

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**INDEX TO LEASE**

 
| ARTICLE I. BASIC  LEASE PROVISIONS                             |                                           |
|----------------------------------------------------------------|------------------------------------------------|
|                                                           |                                           |
| ARTICLE II. PREMISES                                           |                                           |
| **SECTION 2.1.**                                               | **LEASED  PREMISES**                           | ** ** |
| **SECTION 2.2.**                                               | **ACCEPTANCE  OF PREMISES**                    | ** ** |
| **SECTION 2.3.**                                               | **BUILDING  NAME AND ADDRESS**                 | ** ** |
| ** **                                                     | ** **                                     | ** ** |
| ARTICLE III. TERM                                         |                                           |
| **SECTION 3.1.**                                               | **GENERAL**                                    | ** ** |
| **SECTION 3.2.**                                               | **DELAY  IN POSSESSION**                       | ** ** |
| **SECTION 3.3.**                                               | **RIGHT TO EXTEND THIS  LEASE**                | ** ** |
| ** **                                                     | ** **                                     | ** ** |
| ARTICLE IV. RENT AND OPERATING EXPENSES                        |                                           |
| **SECTION 4.1.**                                               | **BASIC  RENT**                                | ** ** |
| **SECTION 4.2.**                                               | **OPERATING  EXPENSES**                        | ** ** |
| **SECTION 4.3.**                                               | **SECURITY  DEPOSIT**                          | ** ** |
| ** **                                                     | ** **                                     | ** ** |
| ARTICLE V. USES                                           |                                           |
| **SECTION 5.1.**                                               | **USE**                                        | ** ** |
| **SECTION 5.2.**                                               | **SIGNS**                                      | ** ** |
| **SECTION 5.3.**                                               | **HAZARDOUS  MATERIALS**                       | ** ** |
| ** **                                                     | ** **                                     | ** ** |
| ARTICLE VI. COMMON AREAS; SERVICES                             |                                           |
| **SECTION 6.1.**                                               | **UTILITIES  AND SERVICES**                    | ** ** |
| **SECTION 6.2.**                                               | **OPERATION  AND MAINTENANCE OF COMMON AREAS** | ** ** |
| **SECTION 6.3.**                                               | **USE  OF COMMON AREAS**                       | ** ** |
| **SECTION 6.4.**                                               | **PARKING**                                    | ** ** |
| **SECTION 6.5.**                                               | **CHANGES  AND ADDITIONS BY LANDLORD**         | ** ** |
| ** **                                                     | ** **                                     | ** ** |
| ARTICLE VII. MAINTAINING THE PREMISES                          |                                           |
| **SECTION 7.1.**                                               | **TENANT’S  MAINTENANCE AND REPAIR**      | ** ** |
| **SECTION 7.2.**                                               | **LANDLORD’S  MAINTENANCE AND REPAIR**    | ** ** |
| **SECTION 7.3.**                                               | **ALTERATIONS**                                | ** ** |
| **SECTION 7.4.**                                               | **MECHANIC’S  LIENS**                     | ** ** |
| **SECTION 7.5.**                                               | **ENTRY  AND INSPECTION**                      | ** ** |
| ** **                                                     | ** **                                     | ** ** |
| ARTICLE VIII. TAXES AND ASSESSMENTS ON  TENANT’S PROPERTY |                                           |
|                                                           |                                           |   |
| ARTICLE IX. ASSIGNMENT AND SUBLETTING                          |                                           |
| **SECTION 9.1.**                                               | **RIGHTS  OF PARTIES**                         | ** ** |
| **SECTION 9.2.**                                               | **EFFECT  OF TRANSFER**                        | ** ** |
| **SECTION 9.3.**                                               | **SUBLEASE  REQUIREMENTS**                     | ** ** |
| **SECTION 9.4.**                                               | **CERTAIN  TRANSFERS**                         | ** ** |
| ** **                                                     | ** **                                     | ** ** |
| ARTICLE X. INSURANCE AND INDEMNITY                             |                                           |
| **SECTION 10.1.**                                              | **TENANT’S  INSURANCE**                   | ** ** |
| **SECTION 10.2.**                                              | **LANDLORD’S  INSURANCE**                 | ** ** |
| **SECTION 10.4.**                                              | **LANDLORD’S  NONLIABILITY**              | ** ** |
| **SECTION 10.5.**                                              | **WAIVER  OF SUBROGATION**                     | ** ** |
| ** **                                                     | ** **                                     | ** ** |
| ARTICLE XI. DAMAGE OR DESTRUCTION                              |                                           |
| **SECTION  11.1.**                                             | **RESTORATION**                                | ** ** |
| **SECTION  11.2.**                                             | **LEASE GOVERNS**                              | ** ** |
|                                                           |                                           |   |
| ARTICLE XII. EMINENT DOMAIN                                    |                                           |
| **SECTION  12.1.**                                             | **TOTAL OR PARTIAL TAKING**                    | ** ** |
| **SECTION  12.2.**                                             | **TEMPORARY TAKING**                           | ** ** |
| **SECTION  12.3.**                                             | **TAKING OF PARKING AREA**                     | ** ** |
| ** **                                                     | ** **                                     | ** ** |
| ARTICLE XIII. SUBORDINATION; ESTOPPEL  CERTIFICATE; FINANCIALS |                                           |
| **SECTION  13.1.**                                             | **SUBORDINATION**                              | ** ** |
| **SECTION 13.2.**                                              | **ESTOPPEL  CERTIFICATE**                      | ** ** |
| **SECTION  13.3.**                                             | **FINANCIALS**                                 | ** ** |
| ** **                                                     | ** **                                     | ** ** |
| ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES                    |                                           |
| **SECTION  14.1.**                                             | **TENANT’S DEFAULTS**                     | ** ** |
| **SECTION  14.2.**                                             | **LANDLORD’S REMEDIES**                   | ** ** |
| **SECTION  14.3.**                                             | **LATE PAYMENTS**                              | ** ** |
| **SECTION  14.4.**                                             | **RIGHT OF LANDLORD TO PERFORM**               | ** ** |
| **SECTION  14.5.**                                             | **DEFAULT BY LANDLORD**                        | ** ** |

 

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| **SECTION  14.6.**                                 | **EXPENSES AND LEGAL FEES**                                         | ** ** |
|----------------------------------------------------|---------------------------------------------------------------------|------------|
| **SECTION  14.7.**                                 | **WAIVER OF JURY TRIAL**                                            | ** ** |
| **SECTION  14.8.**                                 | **SATISFACTION OF JUDGMENT**                                        | ** ** |
| ** **                                         | ** **                                                          | ** ** |
| ARTICLE XV. END OF TERM                            |                                                                |
| **SECTION  15.1.**                                 | **HOLDING OVER**                                                    | ** ** |
| **SECTION  15.2.**                                 | **MERGER ON TERMINATION**                                           | ** ** |
| **SECTION  15.3.**                                 | **SURRENDER OF PREMISES; REMOVAL OF PROPERTY**                      | ** ** |
| ** **                                         | ** **                                                          | ** ** |
| ARTICLE XVI. PAYMENTS AND NOTICES                  |                                                                |
|                                               |                                                                |       |
| ARTICLE XVII. RULES AND REGULATIONS                |                                                                |
|                                               |                                                                |       |
| ARTICLE XVIII. BROKER’S COMMISSION            |                                                                |
|                                               |                                                                |       |
| ARTICLE XIX. TRANSFER OF LANDLORD’S  INTEREST |                                                                |
|                                               |                                                                |       |
| ARTICLE XX. INTERPRETATION                         |                                                                |
| **SECTION  20.1.**                                 | **GENDER AND NUMBER**                                               | ** ** |
| **SECTION  20.2.**                                 | **HEADINGS**                                                        | ** ** |
| **SECTION  20.3.**                                 | **JOINT AND SEVERAL LIABILITY**                                     | ** ** |
| **SECTION  20.4.**                                 | **SUCCESSORS**                                                      | ** ** |
| **SECTION  20.5.**                                 | **TIME OF ESSENCE**                                                 | ** ** |
| **SECTION  20.6.**                                 | **CONTROLLING LAW/VENUE**                                           | ** ** |
| **SECTION  20.7.**                                 | **SEVERABILITY**                                                    | ** ** |
| **SECTION  20.8.**                                 | **WAIVER AND CUMULATIVE REMEDIES**                                  | ** ** |
| **SECTION  20.9.**                                 | **INABILITY TO PERFORM**                                            | ** ** |
| **SECTION  20.10.**                                | **ENTIRE AGREEMENT**                                                | ** ** |
| **SECTION  20.11.**                                | **QUIET ENJOYMENT**                                                 | ** ** |
| **SECTION  20.12.**                                | **SURVIVAL**                                                        | ** ** |
| **SECTION  20.13.**                                | **INTERPRETATION**                                                  | ** ** |
| ** **                                         | ** **                                                          | ** ** |
| ARTICLE XXI. EXECUTION AND RECORDING               |                                                                |
| **SECTION  21.1.**                                 | **COUNTERPARTS**                                                    | ** ** |
| **SECTION  21.2.**                                 | **CORPORATE, LIMITED LIABILITY COMPANY AND  PARTNERSHIP AUTHORITY** | ** ** |
| **SECTION  21.3.**                                 | **EXECUTION OF LEASE; NO OPTION OR OFFER**                          | ** ** |
| **SECTION  21.4.**                                 | **RECORDING**                                                       | ** ** |
| **SECTION  21.5.**                                 | **AMENDMENTS**                                                      | ** ** |
| **SECTION  21.6.**                                 | **EXECUTED COPY**                                                   | ** ** |
| **SECTION  21.7.**                                 | **ATTACHMENTS**                                                     | ** ** |
| ** **                                         | ** **                                                          | ** ** |
| ARTICLE XXII. MISCELLANEOUS                        |                                                                |
| **SECTION  22.1.**                                 | **NONDISCLOSURE OF LEASE TERMS**                                    | ** ** |
| **SECTION  22.2.**                                 | **GUARANTY**                                                        | ** ** |
| **SECTION  22.3.**                                 | **CHANGES REQUESTED BY LENDER**                                     | ** ** |
| **SECTION  22.4.**                                 | **MORTGAGEE PROTECTION**                                            | ** ** |
| **SECTION  22.5.**                                 | **COVENANTS AND CONDITIONS**                                        | ** ** |
| **SECTION  22.6.**                                 | **SECURITY MEASURES**                                               | ** ** |
| **SECTION  22.7.**                                 | **JAMS**                                                            | ** ** |
| **SECTION  22.8.**                                 | **APPROVALS**                                                       | ** ** |
| ** **                                         | ** **                                                          |
| **EXHIBITS**                                       |                                                                |
| **Exhibit A**                                      | **Description of Premises**                                         |       |
| **Exhibit B**                                      | **Environmental  Questionnaire**                                    |       |
| **Exhibit C**                                      | **Landlord’s  Disclosures**                                    |       |
| **Exhibit  D**                                     | **Insurance Requirements**                                          |       |
| **Exhibit  E**                                     | **Rules and Regulations**                                           |       |
| **Exhibit  X**                                     | **Work Letter**                                                     |       |
| **Exhibit Y**                                      | **Project Site Plan**                                               |       |
|                                                    |                                                                     |            |  |

 

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**LEASE**

**(SingleTenant; Net)**

 

THISLEASE is made as of the 9th day of November, 2004, by and betweenTHE IRVINE COMPANY, a Delaware corporation hereafter called “**Landlord**,” and RAINING DATA CORPORATION, a Delawarecorporation, hereinafter called “**Tenant**.”

 

# **ARTICLE I.  BASIC LEASE PROVISIONS**

 

Eachreference in this Lease to the “**Basic Lease Provisions**”shall mean and refer to the following collective terms, the application ofwhich shall be governed by the provisions in the remaining Articles of thisLease.

 

1.                                       Premises:  (the Premises are more particularly describedin Section 2.1).

 

Address of Building: 25A Technology Drive, Irvine, CA

 

2.                                       ProjectDescription (if applicable):  25-29Technology Drive, Irvine, CA

 

3.                                       Useof Premises:  General office andengineering and any other use permitted under the applicable zoning ordinance,except that no retail uses shall be permitted.

 

4.                                       EstimatedCommencement Date:  November 1, 2005

 

5.                                       Term:   Sixty (60) months, plus such additional daysas may be required to cause this Lease to terminate on the final day of thecalendar month.

 

6.                                       BasicRent: Commencing on the Commencement Date, the Basic Rent shall be Thirty NineThousand Five Hundred Ninety-Two Dollars ($39,592.00) per month, based on $1.36per rentable square foot.

 

Basic Rent is subject to adjustment as follows:

 

Commencing twelve (12) months following the Commencement Date, theBasic Rent shall be Forty-One Thousand Forty Eight Dollars ($41,048.00) per month,based on $1.41 per rentable square foot.

Commencing twenty four (24) months following the Commencement Date, theBasic Rent shall be Forty-Two Thousand Five Hundred Four Dollars ($42,504.00)per month, based on $1.46 per rentable square foot.

Commencing thirty six (36) months following the Commencement Date, theBasic Rent shall be Forty-Three Thousand Nine Hundred Fifty Nine Dollars($43,959.00) per month, based on $1.51 per rentable square foot.

 

Commencing forty eight (48) months following the CommencementDate, the Basic Rent shall be Forty Five Thousand Four Hundred Fifteen Dollars($45,415.00) per month, based on $1.56 per rentable square foot.

 

7.                                       Guarantor(s):  None.

 

8.                                       FloorArea:  Approximately 29,112 rentablesquare feet

 

9.                                       SecurityDeposit:  $ 49,957.00

 

10.                                 Broker(s):  Julien J. Studley, Inc.

 

11.                                 AdditionalInsureds:  None

 

1

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12.                                 Addressfor Payments and Notices:

 
| **LANDLORD**                                                                                                                                  | ** ** | **TENANT**                                                                                                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |       |                                                                                                                        |
| THE IRVINE COMPANY  dba Office Properties  111 Innovation Drive  Irvine, CA 92617  Attn: Vice President, Operations, Technology Portfolio     |       | Prior to Commencement Date:RAINING DATA CORPORATION  17500 Cartwright Road  Irvine, CA 92614  Attn: Chief Financial Officer |
|                                                                                                                                          |       |                                                                                                                        |
| with a copy of notices to:                                                                                                                    |       | After the Commencement Date:                                                                                                |
|                                                                                                                                          |       |                                                                                                                        |
| THE IRVINE COMPANY  dba Office Properties  111 Innovation Drive  Irvine, CA 92617  Attn: Senior Vice President, Operations  Office Properties |       | RAINING DATA CORPORATION  25A Technology Drive  Irvine, CA 92618  Attn: Chief Financial Officer                             |

 

13.                                 Tenant’sLiability Insurance Requirement: $2,000,000.00

 

14.                                 VehicleParking Spaces: One Hundred Five (105)

 

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# ** **

# **ARTICLE II**.  PREMISES

# ** **

**SECTION 2.1****.      LEASED PREMISES**.  Landlord leases to Tenant and Tenant leasesfrom Landlord the premises shown in Exhibit A (the “**Premises**”),containing approximately the rentable square footage set forth as the “**Floor Area**”****in Item 8 ofthe Basic Lease Provisions.  The Premisesconsist of all of the Floor Area within the building identified in Item 1 ofthe Basic Lease Provisions (the Premises together with such building and theunderlying real property, are called the “**Building**”), andis a portion of the project identified in Item 2 of the Basic Lease Provisionsand shown in Exhibit Y, if any (the “**Project**”).  Landlord makes no representation that theProject will not be changed from the Project as shown on Exhibit Y(subject, however, to the provisions of Section 6.5 of this Lease).  All references to “Floor Area” in this Leaseshall mean the rentable square footage set forth in Item 8 of the BasicLease Provisions.  The rentable squarefootage set forth in Item 8 may include or have been adjusted by variousfactors, including, without limitation, a load factor for any verticalpenetrations, stairwells or similar features or areas of the Building.  Tenant agrees that the Floor Area set forthin Item 8 shall be binding on Landlord and Tenant for purposes of this Leaseregardless of whether any future or differing measurements of the Premises orthe Building are consistent or inconsistent with the Floor Area set forth inItem 8.

 

**SECTION 2.2****.      ACCEPTANCE OF PREMISES**.  Tenant acknowledges that neither Landlord norany representative of Landlord has made any representation or warranty withrespect to the Premises, the Building or the Project (except as expresslyprovided in this Lease).  Not by way oflimitation of the foregoing, no representation or warranty has been made withrespect to the suitability or fitness for any purposes of the Premises, theBuilding or the Project, nor regarding the compliance of Tenant’s use of thePremises with the applicable zoning or regarding any other land use matters,and Tenant shall be solely responsible as to such matters.  Further, neither Landlord nor anyrepresentative of Landlord has made any representations or warranties regarding(i) what other tenants or uses may be permitted or intended in theBuilding or the Project, (ii) any exclusivity of use by Tenant withrespect to its permitted use of the Premises as set forth in Item 3 of theBasic Lease Provisions, or (iii) any construction of portions of theProject not yet completed.  Tenantfurther acknowledges that neither Landlord nor any representative of Landlordhas agreed to undertake any alterations or additions or construct anyimprovements to the Premises except as expressly provided in this Lease.  As of the Commencement Date, Tenant shall beconclusively deemed to have accepted the Premises and those portions of theBuilding and Project in which Tenant has any rights under this Lease, whichacceptance shall mean that it is conclusively established that the Premises andthose portions of the Building and Project in which Tenant has any rights underthis Lease were in satisfactory condition and in conformity with the provisionsof this Lease, subject only to (A) those defective or incomplete portions ofthe Tenant Improvements constructed by Landlord pursuant to the Work Letter, ifany, attached hereto as Exhibit X (“**Work Letter**”),which Tenant shall have itemized on a written punch list and delivered toLandlord within thirty (30) days after the Commencement Date (as defined inSection 3.1), and (B) Landlord’s obligations expressly contained in Section 2.4of this Lease. Nothing contained in this Section shall affect the commencementof the Term or the obligation of Tenant to pay rent.  Landlord shall diligently complete all punchlist items of which it is notified as provided above.

 

**SECTION 2.3****.      BUILDING NAME AND ADDRESS**.  Tenant shall not utilize any name selected byLandlord from time to time for the Building and/or the Project as any part ofTenant’s corporate or trade name. Landlord shall have the right to change the name, address, number ordesignation of the Building or Project without liability to Tenant.  Notwithstanding the foregoing, Landlord shallreimburse Tenant for all reasonable out-of-pocket expenses incurred by Tenant,including, without limitation, Tenant’s costs of obtaining new business cards,stationery and informing Tenant’s customers and vendors of Tenant’s newaddress, not to exceed Five Thousand Dollars ($5,000.00) in the aggregate,resulting from any changed name, address, number or designation of the Buildingor Project initiated by Landlord.

 

**SECTION 2.4.      LANDLORD’SRESPONSIBILITIES.**

 

(a)           Notwithstanding the provisions ofSection 7.2 of this Lease, during the initial 60-month Term of this Lease (assame may be extended by Tenant pursuant to Section 3.3 below), Landlord agreesto repair and/or replace, at its sole cost and expense and not as a “ProjectCost”, all structural walls, foundations, structural elements of the roof ofthe Building, and underground utility pipes and and/or facilities serving theBuilding (the “**Structural Elements**”).  Notwithstanding the foregoing, Landlord’sobligation contained in this Section 2.4(a) to bear such costs andexpenses shall not apply:  (i) to thecosts and expenses of periodic maintenance of the Structural Elements, nor (ii)to the extent of the negligence or willful misconduct by Tenant, its employees,agents, contractors, licensees or invitees (in which case Tenant shall beresponsible for the reasonable costs of such repairs and/or replacements).  Tenant shall give Landlord prompt notice whenTenant becomes aware of any repairs or replacements required of Landlordpursuant to this Section 2.4(a), and such repairs shall be made promptlyfollowing notice from Tenant.

 

(b)           Landlord warrants to Tenant asfollows: (i) that the roof, plumbing, fire sprinkler system, lighting,heating, ventilation and air conditioning systems and electrical systemsserving the Premises shall be in good operating condition on the CommencementDate, and (ii) that the Premises shall be delivered to Tenant on theCommencement Date in a vacant and “broom clean” condition.  Provided that Tenant shall notify Landlord ofany non-compliance with the foregoing warranties contained in subsections(i) and/or (ii) above not later than thirty (30) days following theCommencement Date, then Landlord shall, except as otherwise provided in thisLease, promptly after receipt of written notice from Tenant setting forth thenature and extent of such non-compliance, rectify same at Landlord’s sole costand expense and not as a Project Cost.

 

3

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(c)           Landlord shall correct, repair and/orreplace any non-compliance of the Building, the Tenant Improvements, and/or theCommon Areas with all applicable building permits and codes in effect as of thedate of the issuance of building permit(s) therefor, including withoutlimitation, the provisions of Title III of the Americans With Disabilities Act(“**ADA**”). Said costs of compliance shallbe Landlord’s sole cost and shall not be part of Project Costs; including anycosts of bringing to code compliance any portions of the Building, the TenantImprovements and/or the Common Areas which were in compliance when they werebuilt but are nonetheless required by the applicable governmental entity to beupgraded to current codes, such upgrading requirement, however, not tobe triggered as the result of either Alterations by Tenant or by any furtherrevisions or amendments to the codes themselves.  Landlord shall correct, repair or replace anynon-compliance of the Building, the Tenant Improvements and/or the Common Areaswith any further revisions or amendments to applicable building codes(including, without limitation, the ADA) becoming effective after the date ofissuance of the applicable building permit(s) therefor, provided that, subjectto the first sentence of this Section 2.4(c), the amortized cost of suchrepairs or replacements (amortized over the useful life thereof in accordancewith generally accepted accounting principles, consistently applied, and usinga market cost of funds reasonably determined by Landlord) shall be included asProject Costs payable by Tenant, and provided that any compliance work “triggered”by Landlord’s performance of the Tenant Improvements Work shall be Landlord’ssole cost.  All other ADA complianceissues which pertain to the Premises, including without limitation, inconnection with Tenant’s construction of any Alterations or other improvementsin the Premises (and any resulting ADA compliance requirements in the CommonAreas if Landlord shall consent to same as more particularly provided inSection 7.3 of this Lease) and the operation of Tenant’s business andemployment practices in the Premises, shall be the responsibility of Tenant atits sole cost and expense.  The repairs,corrections or replacements required of Landlord or of Tenant under theforegoing provisions of this Section 2.4(c) shall be made promptlyfollowing notice of non-compliance from any applicable governmental agency.

 

# **ARTICLE III**.  TERM

# ** **

**SECTION 3.1****.      GENERAL**.  The term of this Lease (**“Term”**)shall be for the period shown in Item 5 of the Basic Lease Provisions.  Subject to the provisions of Section 3.2below, the Term shall commence (“**Commencement Date**”)on the earlier of (a) the date Tenant commences use of the Premises for itsregular business operations therein, or (b) the later of the EstimatedCommencement Date set forth in Item 4 of the Basic Lease Provisions orthe date upon which all of the following have occurred: the Premises aretendered to Tenant with the tenant improvements to be constructed by Landlordpursuant to the Work Letter (“**Tenant Improvements**”)substantially completed but for minor “punch list” matters that do notmaterially interfere with the use of the Premises for Tenant’s regular businessoperations therein (provided Landlord has then obtained all governmentalapprovals required for the legal of occupancy for the Premises for thepermitted use) (the “**substantial completion**”of the Tenant Improvements, or the Tenant Improvements **“substantiallycompleted**” herein). The date on which this Lease is scheduled toterminate is referred to as the “**Expiration Date**.”  Prior to Tenant’s taking of possession of thePremises, the parties shall memorialize on a form provided by Landlord theactual Commencement Date and the Expiration Date of this Lease.  Tenant’s failure to execute that form shallnot affect the validity of Landlord’s determination of those dates or Tenant’sobligation to pay rent hereunder.

 

**SECTION 3.2****.      DELAY IN POSSESSION**.  If Landlord, for any reason whatsoever, cannotdeliver possession of the Premises to Tenant on or before the EstimatedCommencement Date as set forth in Item 4 of the Basic Lease Provisions (“**Estimated Commencement****Date**”), thisLease shall not be void or voidable nor shall Landlord be liable to Tenant forany resulting loss or damage.  However,Tenant shall not be liable for any rent and the Commencement Date shall notoccur until Landlord tenders possession of the Premises in accordance withSection 3.1 above, except that if Landlord cannot so tender possession ofthe Premises on or after the Estimated Commencement Date due to any “TenantDelay” described in the Work Letter attached to this Lease, then Landlord shallbe entitled to the payment of Basic Rent and Operating Expenses from Tenantfrom the date Landlord would have been able to deliver the Premises to Tenantbut for such Tenant Delay, but in no event sooner than the EstimatedCommencement Date.

 

If theCommencement Date has not occurred for any reason whatsoever by that date whichis thirty (30) days from and after the Estimated Commencement Date (whichthirty (30) day period shall be extended by one (1) day for each day theCommencement Date is actually delayed due to “Tenant Delay”), Landlord shallnot be liable to Tenant for any resulting loss or damage, but Tenant shall beentitled to: (i) one-half (1⁄2) day of credit against Basic Rent first coming dueunder this Lease for each such day that the Commencement Date is so delayed forthe initial thirty (30) days of such delay, and (ii) one (1) day of creditagainst Basic Rent first coming due under this Lease for each such day that theCommencement Date is so delayed for the next succeeding sixty (60) days of suchdelay; provided, however, that the foregoing period of delay for which Tenant shallbe entitled to rent credits as provided in the foregoing Subsections (i) and(ii) shall not exceed ninety (90) days of delay in the aggregate.  In addition, if the Commencement Date has notoccurred for any reason whatsoever by that date which is ninety (90) days fromand after the Estimated Commencement Date (which ninety (90) day period shallbe extended by one (1) day for each day the Commencement Date is actuallydelayed due to “Tenant Delay” or due to matters beyond Landlord’s reasonablecontrol (such extension of the 90-day period due to matters beyond Landlord’sreasonable control, however, not to exceed thirty (30) days in the aggregate),Landlord shall not be liable to Tenant for any resulting loss or damage, butTenant may terminate this Lease by written notice to Landlord given at any timethereafter (but prior to the actual occurrence of the Commencement Date),whereupon any monies previously paid by Tenant to Landlord shall be reimbursedto Tenant.  Landlord agrees to usecommercially reasonable efforts to cause the Tenant Improvements to besubstantially completed on or before the Estimated Commencement Date, butTenant’s sole recourse and remedy for Landlord’s failure to so complete theTenant Improvements shall be the rent credit and termination rights describedin the foregoing sentences.  Any disputesconcerning the foregoing provisions of this Section 3.2 shall be submittedto and resolved by JAMS arbitration pursuant to Section 22.7 of thisLease.

 

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**SECTION3.3****.      RIGHT TO EXTEND THIS LEASE**.  Provided that no Event of Default hasoccurred and is continuing under any provision of this Lease at the time ofexercise of the extension right granted herein and provided further that Tenanthas not assigned its interest in this Lease or sublet more than twenty-fivepercent (25%) of the Floor Area of the Premises (in the aggregate), to otherthan a “Permitted Transferee” (as hereinafter defined), then Tenant may extendthe Term of this Lease for one (1) period of thirty-six (36) months.  Tenant shall exercise its right to extend theTerm by and only by delivering to Landlord, not less than nine (9) months ormore than twelve (12) months prior to the expiration date of the Term, Tenant’sirrevocable written notice of its commitment to extend (the “**Commitment Notice**”). The Basic Rent payable under the Lease during any extension of the Termshall be determined as provided in the following provisions.

 

If Landlord and Tenant have not by then been able to agree upon theBasic Rent for the extension of the Term, then within one hundred twenty (120)and ninety (90) days prior to the expiration date of the Term, Landlord shallnotify Tenant in writing of the Basic Rent that would reflect the prevailingmarket rental rate for a 36-month renewal of comparable space in “freewayfronting” projects owned by Landlord in the Irvine Spectrum (“**Comparable Projects**”) (together with any increases thereofduring the extension period) as of the commencement of the extension period (“**Landlord’s Determination**”). Should Tenant disagree with the Landlord’s Determination, then Tenantshall, not later than twenty (20) days thereafter, notify Landlord in writingof Tenant’s determination of those rental terms (“**Tenant’sDetermination**”).  Within ten(10) days following delivery of the Tenant’s Determination, the parties shallattempt to agree on an appraiser to determine the fair market rental.  If the parties are unable to agree in thattime, then each party shall designate an appraiser within ten (10) daysthereafter.  Should either party fail toso designate an appraiser within that time, then the appraiser designated bythe other party shall determine the fair market rental.  Should each of the parties timely designatean appraiser, then the two appraisers so designated shall appoint a thirdappraiser who shall, acting alone, determine the fair market rental for thePremises.  Any appraiser designatedhereunder shall have an MAI certification with not less than five (5) yearsexperience in the valuation of commercial industrial buildings in the vicinityof the Comparable Projects.

 

Within thirty (30) days following the selection of the appraiser andsuch appraiser’s receipt of the Landlord’s Determination and the Tenant’sDetermination, the appraiser shall determine whether the rental rate determinedby Landlord or by Tenant more accurately reflects the fair market rental ratefor the 36-month renewal of the Lease for the Premises, as reasonablyextrapolated to the commencement of the extension period.  Accordingly, either the Landlord’sDetermination or the Tenant’s Determination shall be selected by the appraiseras the fair market rental rate for the extension period.   In making such determination, the appraisershall consider rental comparables for the Comparable Projects (provided that ifthere are an insufficient number of comparables within the Comparable Projects,the appraiser shall consider rental comparables for similarly improved spacewithin the vicinity of the Comparable Projects with appropriate adjustment forlocation and quality of project), including, without limitation, factors fortenant improvement allowances or “free rent” provisions then being granted bylandlords for renewals of leases, but the appraiser shall not attribute anyfactor for brokerage commissions or any improvements paid for by Tenant inmaking its determination of the fair market rental rate.  At any time before the decision of theappraiser is rendered, either party may, by written notice to the other party,accept the rental terms submitted by the other party, in which event such termsshall be deemed adopted as the agreed fair market rental.  The fees of the appraiser(s) shall be borneentirely by the party whose determination of the fair market rental rate wasnot accepted by the appraiser.

 

Within twenty (20) days after the determination of the fair marketrental, Landlord shall prepare an appropriate amendment to this Lease incommercially reasonable form for the extension period, and Tenant shall executeand return same to Landlord within twenty (20) days after Tenant’s receipt ofsame.  Should the fair market rental notbe established by the commencement of the extension period, then Tenant shallcontinue paying rent at the rate in effect during the last month of the initialTerm, and a lump sum adjustment shall be made promptly upon the determinationof such new rental.

 

If Tenant fails to timely comply with any of the provisions of thisparagraph, Tenant’s right to extend the Term shall be extinguished and theLease shall automatically terminate as of the expiration date of the Term,without any extension and without any liability to Landlord.  Any attempt to assign or transfer any rightor interest created by this paragraph other than to a “Permitted Transferee”shall be void from its inception.  Tenantshall have no other right to extend the Term beyond the single thirty-six (36)month extension period created by this paragraph.  Unless agreed to in a writing signed byLandlord and Tenant, any extension of the Term, whether created by an amendmentto this Lease or by a holdover of the Premises by Tenant, or otherwise, shallbe deemed a part of, and not in addition to, any duly exercised extensionperiod permitted by this paragraph.

 

# **ARTICLE IV**.  RENT ANDOPERATING EXPENSES

# ** **

**SECTION 4.1****.      BASIC RENT.**  From and after the Commencement Date, Tenantshall pay to Landlord without deduction or offset, the rental amount for thePremises shown in Item 6 of the Basic Lease Provisions (the “**Basic Rent**”), including subsequent adjustments, if any.  Any rental adjustment to Basic Rent shown inItem 6 shall be deemed to occur on the specified monthly anniversary of theCommencement Date, whether or not the Commencement Date occurs at the end of acalendar month.  The rent shall be dueand payable in advance commencing on the Commencement Date (as prorated for anypartial month) and continuing thereafter on the first day of each successivecalendar month of the Term.  No demand,notice or invoice shall be required for the payment of Basic Rent.

 

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### **SECTION4.2**.      OPERATING EXPENSES.

### ** **

(a)           From and after the Commencement Date,Tenant shall pay to Landlord, as additional rent, Tenant’s Share of allOperating Expenses, as defined in Section 4.2(f), incurred by Landlord in theoperation of the Building and the Project. The term “**Tenant’s Share**” means one hundredpercent (100%) of Operating Expenses reasonably determined by Landlord tobenefit or relate substantially to the Building rather than the entire Project,plus that portion of any Operating Expenses reasonably determined bymultiplying the cost of such item by a fraction, the numerator of which is theFloor Area and the denominator of which is the total rentable square footage,as reasonably determined from time to time by Landlord, of (i) all of thebuildings in the Project, as reasonably determined by Landlord, for expensesreasonably determined by Landlord to benefit or relate substantially to theentire Project rather than any specific building or (ii) all or some of thebuildings within the Project as well as all or a portion of other propertyowned by Landlord and/or its affiliates, for expenses reasonably determined byLandlord which benefit or relate to such buildings within the Project and suchother real property.  In the event thatLandlord reasonably determines that these Premises have incurred anon-proportional benefit from any expense, or is the non-proportional cause ofany such expense, Landlord may allocate a greater percentage of such OperatingExpense to these Premises.  The fullamount of any management fee payable by Landlord for the management of Tenant’sPremises that is calculated as a percentage of the rent payable by Tenant shallbe paid in full by Tenant as additional rent.

 

(b)           Prior to the start of each fullExpense Recovery Period (as defined in this Section 4.2), Landlord shall giveTenant a written estimate of the amount of Tenant’s Share of Operating Expensesfor the applicable Expense Recovery Period. Failure to provide such estimate shall not relieve Tenant from itsobligation to pay Tenant’s Share of Operating Expenses or estimated amountsthereof, if and when Landlord provides such estimate or final paymentamount.  Tenant shall pay the estimatedamounts to Landlord in equal monthly installments, in advance concurrently withpayments of Basic Rent.  If Landlord hasnot furnished its written estimate for any Expense Recovery Period by the timeset forth above, Tenant shall continue to pay monthly the estimated Tenant’sShare of Operating Expenses in effect during the prior Expense Recovery Period;provided that when the new estimate is delivered to Tenant, Tenant shall, atthe next monthly payment date, pay any accrued estimated Tenant’s Share ofOperating Expenses based upon the new estimate. For purposes hereof, “**Expense Recovery Period**”shall mean every twelve month period during the Term (or portion thereof forthe first and last lease years) commencing July 1 and ending June 30,provided that Landlord shall have the right to change the date on which anExpense Recovery Period commences in which event appropriate reasonableadjustments shall be made to Tenant’s Share of Operating Expenses so that theamount payable by Tenant shall not materially vary as a result of such change.

 

(c)           Within one hundred twenty (120) daysafter the end of each Expense Recovery Period, Landlord shall furnish to Tenanta statement showing in reasonable detail the actual or prorated Tenant’s Shareof Operating Expenses incurred by Landlord during the period, and the partiesshall within thirty (30) days thereafter make any payment or allowancenecessary to adjust Tenant’s estimated payments of Tenant’s Share of OperatingExpenses, if any, to the actual Tenant’s Share of Operating Expenses as shownby the annual statement.  Any delay orfailure by Landlord in delivering any statement hereunder shall not constitutea waiver of Landlord’s right to require Tenant to pay Tenant’s Share ofOperating Expenses pursuant hereto.  Anyamount due Tenant shall be credited against installments of Basic Rent andOperating Expenses next coming due, and any deficiency shall be paid by Tenanttogether with the next installment of Basic Rent.  Should Tenant fail to object in writing toLandlord’s determination of Tenant’s Share of Operating Expenses, or fail togive written notice of its intent to audit Landlord’s Operating Expensespursuant to the provisions of the next succeeding paragraph, within one hundredeighty (180) days following delivery of Landlord’s expense statement, Landlord’sdetermination of Tenant’s Share of Operating Expenses for the applicableExpense Recovery Period shall be conclusive and binding on the parties for allpurposes and any future claims to the contrary shall be barred.

 

Provided no Event of Default has occurred and is continuing, Tenantshall have the right to cause a certified public accountant, engaged on anon-contingency fee basis, to audit Operating Expenses by inspecting Landlord’sgeneral ledger of expenses not more than once during any Expense RecoveryPeriod.  However, to the extent thatinsurance premiums or any other component of Operating Expenses is determinedby Landlord on the basis of an internal allocation of costs utilizing informationLandlord in good faith deems proprietary, such expense component shall not besubject to audit so long as it does not exceed the amount per square foottypically imposed by landlords of other first class business parks in OrangeCounty, California.  Tenant shall givenotice to Landlord of Tenant’s intent to audit within one hundred eighty (180)days after Tenant’s receipt of Landlord’s expense statement which sets forthTenant’s Share of Landlord’s actual Operating Expenses.  Such audit shall be conducted at a mutuallyagreeable time during normal business hours at the office of Landlord or itsmanagement agent where such accounts are maintained.  If Tenant’s audit determines that actualOperating Expenses have been overstated by more than five percent (5%), thensubject to Landlord’s right to review and/or contest the audit results,Landlord shall reimburse Tenant for the reasonable out-of-pocket costs of suchaudit.  Tenant’s rent shall beappropriately adjusted to reflect any overstatement in Operating Expenses.  In the event of a dispute between Landlordand Tenant regarding such audit, such dispute shall be submitted and resolvedby binding arbitration pursuant to Section 22.7 below.  All of the information obtained by Tenantand/or its auditor in connection with such audit, as well as any compromise,settlement, or adjustment reached between Landlord and Tenant as a resultthereof, shall be held in strict confidence and, except as may be requiredpursuant to litigation, shall not be disclosed to any third party, directly orindirectly, by Tenant or its auditor or any of their officers, agents oremployees.  Landlord may require Tenant’sauditor to execute a separate confidentiality agreement affirming the foregoingas a condition precedent to any audit. In the 

 

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event of a violation of this confidentiality covenant in connectionwith any audit, then in addition to any other legal or equitable remedyavailable to Landlord, Tenant shall forfeit its right to any reconciliation orcost reimbursement payment from Landlord due to said audit (and any suchpayment theretofore made by Landlord shall be promptly returned by Tenant), andTenant shall have no further audit rights under this Lease.  Notwithstanding the foregoing, Tenant shallhave no right of audit with respect to any Expense Recovery Period unless thetotal Operating Expenses per square foot for such Expense Recovery Period, asset forth in Landlord’s annual expense reconciliation, exceed the total OperatingExpenses per square foot during the initial Expense Recovery Period during theTerm, as increased by the percentage change in the United States Department ofLabor, Bureau of Labor Statistics, Consumer Price Index for all UrbanConsumers, Los Angeles – Riverside – Orange County Area Average, all items(1982-84 = 100) (the “**Index**”),which change in the Index shall be measured by comparing the Index publishedfor January of the initial Expense Recovery Period during the Term withthe Index published for January of the applicable Expense Recovery Period.

 

(d)           Even though this Lease has terminatedand the Tenant has vacated the Premises, when the final determination is madeof Tenant’s Share of Operating Expenses for the Expense Recovery Period inwhich this Lease terminates, Tenant shall within thirty (30) days of writtennotice pay the entire increase over the estimated Tenant’s Share of OperatingExpenses already paid.  Conversely, anyoverpayment by Tenant shall be rebated by Landlord to Tenant not later thanthirty (30) days after such final determination.

 

(e)           If, at any time during any ExpenseRecovery Period, any one or more of the Operating Expenses are increased to arate(s) or amount(s) in excess of the rate(s) or amount(s) used in calculating theestimated Tenant’s Share of Operating Expenses for the year, then the estimateof Tenant’s Share of Operating Expenses may be increased by written notice fromLandlord for the month in which such rate(s) or amount(s) becomes effective andfor all succeeding months by an amount equal to Tenant’s Share of theincrease.  If Landlord gives Tenantwritten notice of the amount or estimated amount of the increase, the month inwhich the increase will or has become effective, then Tenant shall pay theincrease to Landlord as a part of Tenant’s monthly payments of the estimatedTenant’s Share of Operating Expenses as provided in Section 4.2(b),commencing with the month following Tenant’s receipt of Landlord’s notice.  In addition, Tenant shall pay upon written requestany such increases which were incurred prior to the Tenant commencing to paysuch monthly increase.

 

(f)            The term “**OperatingExpenses**” shall mean and include all Project Costs, as defined insubsection (g), and Property Taxes, as defined in subsection (h).

 

(g)           The term “**ProjectCosts**” shall include all expenses of operation, repair andmaintenance of the Building and the Project, including without limitation allappurtenant Common Areas (as defined in Section 6.2), and shall include thefollowing charges by way of illustration but not limitation:  water and sewer charges; insurance premiumsand deductibles and/or reasonable premium and deductible equivalents shouldLandlord elect to self-insure all or any portion of any risk that Landlord isauthorized to insure hereunder (provided, however, that Tenant’s Share of anysuch deductible or deductible equivalent shall not exceed the amount of FiftyThousand Dollars ($50,000.00) per occurrence for any casualty); license,permit, and inspection fees (but excluding business management and/or brokerlicenses); light; power; window washing; trash pickup; heating, ventilating andair conditioning; supplies; materials; equipment; tools; the cost of anyinsurance, tax or other consultant utilized by Landlord in connection with theBuilding and/or Project; establishment of reasonable reserves for replacementsand/or repairs (provided, however, that Landlord shall first exhaust suchreserves in performing such replacement or repair work and Landlord shall onlybe entitled to include, as a Project Cost, only the amount by which the cost toperform such work exceeds the existing reserve as amortized pursuant to theapplicable provisions hereof); costs incurred in connection with compliancewith any laws, or changes in laws becoming effective after the CommencementDate applicable to the Building or the Project (provided that, except for lawsor changes in laws that pertain particularly to Tenant or to Tenant’sparticular use of the Premises (which shall be the sole responsibility ofTenant at its cost), to the extent such laws or change in laws requireexpenditures of a “capital” nature (as determined by generally acceptedaccounting principles, consistently applied), then such “capital” expenditureshall be amortized (using a market cost of funds as reasonably determined byLandlord) over the useful life of such asset and only the amortized costthereof shall be includable in Project Costs during the remaining Term of theLease); the cost of any capital expenditures or replacements in accordance withgenerally accepted accounting principles, consistently applied (other thantenant improvements for specific tenants), to the extent of the amortizedamount thereof over the useful life of such capital expenditures or replacementsin accordance with generally accepted accounting principles, consistentlyapplied, calculated at a market cost of funds, as reasonably determined byLandlord, for each such year of useful life during the Term; costs associatedwith the maintenance of an air conditioning, heating and ventilation serviceagreement; labor; reasonably allocated wages and salaries, fringe benefits, andpayroll taxes for administrative and other personnel directly applicable to theBuilding and/or Project, including both Landlord’s personnel and outsidepersonnel; any expense incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and10.2; and a market competitive overhead/management fee for the professionaloperation of the Project.  It is understoodand agreed that Project Costs may include competitive charges for directservices (including without limitation, management and/or operations services)provided by any subsidiary, division or affiliate of Landlord.  Notwithstanding anything to the contraryherein, “Project Costs” shall not include and Tenant shall in no event have anyobligation to perform or to pay directly, or to reimburse Landlord for, all orany portion of the following repairs, maintenance, improvements, replacements,premiums, claims, losses, fees, charges, costs and expenses (collectively, “**Costs**”): (i) Costs occasioned by the breach by Landlord of any of itsobligations under this Lease; (ii) Costs of any renovation, improvements,painting or redecorating of any leasable space within Project not madeavailable for Tenant’s use; (iii) Costs incurred in connection withnegotiations or disputes with any other occupant of the Project;(iv) Costs incurred in connection with the presence of any HazardousMaterial, except to the extent Tenant is responsible therefor pursuant toSection 5.3 of this Lease; (v) interest, charges and fees incurred ondebt incurred by

 

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Landlord; (vi) Costs occasioned by casualties or by the exercise of thepower of eminent domain (as described in Sections 11.1(a) and 12.1 of thisLease, respectively); (viii) Costs for which Landlord is responsible asexpressly provided in Section 2.4 of this Lease (or elsewhere in thisLease, where such condition is set forth as Landlord’s “sole cost and expense”);(ix) Costs which could properly be capitalized under generally acceptedaccounting principles, consistently applied, except to the extent amortizedover the useful life of the item in question as set forth above and (x) Costsoccasioned by the violation of any law by Landlord, its authorized agents,employees or contractors.

 

(h)           The term “**PropertyTaxes**” as used herein shall include any form of federal, state,county or local government or municipal taxes, fees, charges or otherimpositions of every kind (whether general, special, ordinary or extraordinary)related to the ownership, leasing or operation of the Premises, Building orProject, including without limitation, the following:  (i) all real estate taxes or personalproperty taxes, as such property taxes may be reassessed from time to time; and(ii) other taxes, charges and assessments which are levied with respect to thisLease or to the Building and/or the Project, and any improvements, fixtures andequipment and other property of Landlord located in the Building and/or theProject, (iii) all assessments and fees for public improvements, services, andfacilities and impacts thereon, including without limitation arising out of anyCommunity Facilities Districts, “Mello Roos” districts, similar assessmentdistricts, and any traffic impact mitigation assessments or fees; (iv) anytax, surcharge or assessment which shall be levied in addition to or in lieu ofreal estate or personal property taxes, other than taxes covered by ArticleVIII; and (v) taxes based on the receipt of rent (including gross receipts orsales taxes applicable to the receipt of rent), and (vi) costs and expensesincurred in contesting the amount or validity of any Property Tax byappropriate proceedings.  Notwithstandingthe foregoing, general net income or franchise taxes imposed against Landlordshall be excluded, and “**Property Taxes**”shall not include and Tenant shall not be required to pay any portion of anytax or assessment expense or any increase therein (i) in excess of the amountwhich would be payable if such tax or assessment expense were paid ininstallments over the longest permitted term; (ii) imposed on land andimprovements other than the Building or the Project; or (iii) attributable toLandlord’s inheritance, gift or estate taxes.

 

**SECTION 4.3****.      SECURITY DEPOSIT.**  Concurrently with Tenant’s delivery of thisLease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 ofthe Basic Lease Provisions, to be held by Landlord as security for the full andfaithful performance of all of Tenant’s obligations under this Lease (the “**Security Deposit**”). Landlord shall not be required to keepthis Security Deposit separate from its general funds, and Tenant shall not beentitled to interest on the Security Deposit. Subject to the last sentence of this Section, the Security Deposit shallbe understood and agreed to be the property of Landlord upon Landlord’s receiptthereof, and may be utilized by Landlord in its sole and absolute discretiontowards the payment of all expenses by Landlord for which Tenant would berequired to reimburse Landlord under this Lease, including without limitationbrokerage commissions and Tenant Improvement costs.  Upon any Event of Default by Tenant (asdefined in Section 14.1), Landlord may, in its sole and absolute discretion,retain, use or apply the whole or any part of the Security Deposit to pay anysum which Tenant is obligated to pay under this Lease, sums that Landlord mayexpend or be required to expend by reason of the Event of Default by Tenant orany loss or damage that Landlord may suffer by reason of the Event of Defaultor costs incurred by Landlord in connection with the repair or restoration ofthe Premises pursuant to Section 15.3 of this Lease upon expiration or earliertermination of this Lease.  In no eventshall Landlord be obligated to apply the Security Deposit upon an Event ofDefault and Landlord’s rights and remedies resulting from an Event of Default,including without limitation, Tenant’s failure to pay Basic Rent, Tenant’sShare of Operating Expenses or any other amount due to Landlord pursuant tothis Lease, shall not be diminished or altered in any respect due to the factthat Landlord is holding the Security Deposit. If any portion of the Security Deposit is applied by Landlord aspermitted by this Section, Tenant shall within five (5) days after writtendemand by Landlord deposit cash with Landlord in an amount sufficient torestore the Security Deposit to its original amount. If Tenant fully performsits obligations under this Lease, the Security Deposit shall be returned toTenant (or, at Landlord’s option, to the last assignee of Tenant’s interest inthis Lease) within thirty (30) days after the expiration of the Term.

 

# **ARTICLE V**.  USES

# ** **

**SECTION 5.1****.      USE.**  Tenant shall use the Premises only for thepurposes stated in Item 3 of the Basic Lease Provisions, all in accordance withapplicable laws and restrictions and pursuant to approvals to be obtained byTenant from all relevant and required governmental agencies andauthorities.  The parties agree that anycontrary use shall be deemed to cause material and irreparable harm to Landlordand shall entitle Landlord to injunctive relief in addition to any otheravailable remedy.  Tenant, at itsexpense, shall procure, maintain and make available for Landlord’s inspectionthroughout the Term, all governmental approvals, licenses and permits requiredfor the proper and lawful conduct of Tenant’s permitted use of thePremises.  Tenant shall not do or permitanything to be done in or about the Premises which will in any way interferewith the rights of other occupants of the Building or the Project, or use orallow the Premises to be used for any unlawful purpose, nor shall Tenant permitany nuisance or commit any waste in the Premises or the Project.  Tenant shall not perform any work or conductany business whatsoever in the Project other than inside the Premises.  Tenant shall not do or permit to be doneanything which will invalidate or increase the cost of any insurancepolicy(ies) covering the Building, the Project and/or their contents unlessTenant pays for such increase, and shall comply with all applicable insuranceunderwriters rules.  Tenant shall complyat its expense with all present and future laws, ordinances, restrictions,regulations, orders, rules and requirements of all governmental authoritiesthat pertain to Tenant or its use of the Premises, including without limitationall federal and state occupational health and safety requirements, whether or notTenant’s compliance will necessitate expenditures or interfere with its use andenjoyment of the Premises.  Tenant shallcomply at its expense with all existing covenants, conditions, easements orrestrictions now affecting or encumbering the Building and/or Project,including without limitation the payment by Tenant of any periodic or specialdues or assessments charged against the Premises or Tenant which may beallocated to the Premises or Tenant in accordance with the provisions

 

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thereof.  Tenant shall alsocomply at its expense with any future amendments or modifications to suchexisting covenants, conditions, easements or reservations, and with any futurecovenants, conditions, easements or restrictions hereafter affecting orencumbering the Building and/or the Project, provided same do not materiallyimpair Tenant’s use and enjoyment of the Premises.  Tenant shall promptly upon demand reimburseLandlord for any additional insurance premium charged by reason of Tenant’sfailure to comply with the provisions of this Section, and shall indemnifyLandlord from any liability and/or expense resulting from Tenant’snoncompliance.  Notwithstanding anythingto the contrary contained in this Section 5.1, in the event Tenant’sobligation for compliance with all future and present laws, ordinances,restrictions, regulations, orders, rules and requirements of all governmentalauthorities, and with all present and future covenants, conditions, easementsor restrictions now or hereafter affecting or encumbering the Building and/orthe Project, results in a “capital” expenditure (as determined by generallyaccepted accounting principles, consistently applied) on Tenant’s part (orTenant’s being obligated to reimburse Landlord for a “capital” expenditure),Tenant shall only be responsible for the amortized cost of such “capital”expenditure (amortized at a market cost of funds as reasonably determined byLandlord) over the useful life of said improvement during the Term, except inthe event each obligation for capital expenditure is required due to Tenant’sparticular use of the Premises (in which case Tenant shall be fully responsiblefor the entire cost of such “capital” expenditure).

 

**SECTION 5.2****.      SIGNS.**  Provided Tenant or any Permitted Transfereecontinues to lease the entire Building: (i) Tenant shall have the exclusiveright to one (1) exterior building top sign, one (1) exterior “eyebrow” sign onthe Building (at least one of which foregoing signs may face the I-5 Freeway)and signage on the glass entry to the Premises, for Tenant’s name and/orgraphics and in locations designated by Landlord, subject to Landlord’s rightof prior approval that such exterior signage is in compliance with the SignageCriteria (defined below), and (ii) Landlord will not place or authorize to beplaced any other signs on or about the Building.  Except as provided in the foregoing, and forsignage within the lobby of the Premises which shall be subject to Landlord’sprior right of approval of the specifications therefor, Tenant shall have noright to maintain signs in any location in, on or about the Premises, theBuilding or the Project that are visible from the exterior of theBuilding.  The size, design, graphics,material, style, color and other physical aspects of any permitted sign shallbe subject to Landlord’s written determination, as determined solely byLandlord, prior to installation, that signage is in compliance with anycovenants, conditions or restrictions encumbering the Premises and Landlord’ssignage program for the Project, as in effect from time to time and approved bythe City in which the Premises are located (“**SignageCriteria**”).  Prior to placingor erecting any such signs, Tenant shall obtain and deliver to Landlord a copyof any applicable municipal or other governmental permits and approvals andcomply with any applicable insurance requirements for such signage.  Tenant shall be responsible for the cost ofany permitted sign, including the fabrication, installation, maintenance andremoval thereof and the cost of any permits therefor.  If Tenant fails to maintain its sign in goodcondition, or if Tenant fails to remove same upon termination of this Lease andrepair and restore any damage caused by the sign or its removal, Landlord maydo so at Tenant’s expense.  Landlordshall have the right to temporarily remove any signs in connection with anyrepairs or maintenance in or upon the Building. The term “sign” as used in this Section shall include all signs,designs, monuments, displays, advertising materials, logos, banners, projectedimages, pennants, decals, pictures, notices, lettering, numerals or graphics.

 

### **SECTION5.3**.      HAZARDOUS MATERIALS.

### ** **

(a)           For purposes of this Lease, the term “**Hazardous Materials**” includes (i) any “hazardousmaterial” as defined in Section 25501(o) of the California Health andSafety Code, (ii) hydrocarbons, polychlorinated biphenyls or asbestos, (iii)any toxic or hazardous materials, substances, wastes or materials as definedpursuant to any other applicable state, federal or local law or regulation, and(iv) any other substance or matter which may result in liability to anyperson or entity as result of such person’s possession, use, release ordistribution of such substance or matter under any statutory or common lawtheory.

 

(b)           Tenant shall not cause or knowinglypermit its agents, employees, contractors, licensees or invitees to bring upon,store, use, generate, release or dispose of any Hazardous Materials on, under,from or about the Premises (including without limitation the soil andgroundwater thereunder) without the prior written consent of Landlord, whichconsent may be given or withheld in Landlord’s sole and absolutediscretion.  Notwithstanding theforegoing, Tenant shall have the right, without obtaining prior written consentof Landlord, to utilize within the Premises a reasonable quantity of standardoffice products that may contain Hazardous Materials (such as photocopy toner, “WhiteOut”, and the like), providedhowever, that (i) Tenant shallmaintain such products in their original retail packaging, shall follow allinstructions on such packaging with respect to the storage, use and disposal ofsuch products, and shall otherwise comply with all applicable laws with respectto such products, and (ii) all of the other terms and provisions of thisSection 5.3 shall apply with respect to Tenant’s storage, use and disposalof all such products.  Landlord may, inits sole and absolute discretion, place such conditions as Landlord deemsappropriate with respect to Tenant’s use of any such Hazardous Materials, andmay further require that Tenant demonstrate that any such Hazardous Materialsare necessary or useful to Tenant’s business and will be generated, stored,used and disposed of in a manner that complies with all applicable laws andregulations pertaining thereto and with good business practices.  Tenant understands that Landlord may utilizean environmental consultant to assist in determining conditions of approval inconnection with the storage, generation, release, disposal or use of HazardousMaterials by Tenant on or about the Premises, and/or to conduct periodicinspections of the storage, generation, use, release and/or disposal of suchHazardous Materials by Tenant on and from the Premises, and in the event anyviolations of this Section 5.3 are found, then Tenant agrees that any costsincurred by Landlord in connection therewith shall be reimbursed by Tenant toLandlord as additional rent hereunder upon demand.

 

(c)           Prior to the execution of this Lease,Tenant shall complete, execute and deliver to Landlord an EnvironmentalQuestionnaire and Disclosure Statement (the “**EnvironmentalQuestionnaire**”) in the form of

 

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Exhibit B attached hereto.  The completed Environmental Questionnaireshall be deemed incorporated into this Lease for all purposes, and Landlordshall be entitled to rely fully on the information contained therein.  On each anniversary of the Commencement Dateuntil the expiration or sooner termination of this Lease, Tenant shall discloseto Landlord in writing the names and amounts of all Hazardous Materials whichwere stored, generated, used, released and/or disposed of on, under or aboutthe Premises by Tenant or its agents, employees, contractors, licensees orinvitees for the twelve-month period prior thereto, and which Tenant desires tostore, generate, use, release and/or dispose of on, under or about the Premisesfor the succeeding twelve-month period. In addition, to the extent Tenant is permitted to utilize HazardousMaterials upon the Premises, Tenant shall promptly provide Landlord withcomplete and legible copies of all the following environmental documentsrelating thereto:  reports filed pursuantto any self-reporting requirements; permit applications, permits, monitoringreports, emergency response or action plans, workplace exposure and communityexposure warnings or notices and all other reports, disclosures, plans ordocuments (even those which may be characterized as confidential) relating towater discharges, air pollution, waste generation or disposal, and undergroundstorage tanks for Hazardous Materials; orders, reports, notices, listings andcorrespondence (even those which may be considered confidential) of orconcerning the release, investigation of, compliance, cleanup, remedial andcorrective actions, and abatement of Hazardous Materials; and all complaints,pleadings and other legal documents filed by or against Tenant related to Tenant’suse, handling, storage, release and/or disposal of Hazardous Materials.

 

(d)           Landlord and its agents shall havethe right, but not the obligation, to inspect, sample and/or monitor thePremises and/or the soil or groundwater thereunder at any time to determinewhether Tenant is complying with the terms of this Section 5.3, and inconnection therewith Tenant shall provide Landlord with full access to allfacilities, records and personnel related thereto.  If Tenant is not in compliance with any ofthe provisions of this Section 5.3, or in the event of a release of anyHazardous Material on, under or about the Premises caused or permitted byTenant, its agents, employees, contractors, licensees or invitees, Landlord andits agents shall have the right, but not the obligation, without limitationupon any of Landlord’s other rights and remedies under this Lease, toimmediately enter upon the Premises without notice and to discharge Tenant’sobligations under this Section 5.3 at Tenant’s expense, including withoutlimitation the taking of emergency or long-term remedial action.  Landlord and its agents shall endeavor tominimize interference with Tenant’s business in connection therewith, but shallnot be liable for any such interference. In addition, Landlord, at Tenant’s expense, shall have the right, butnot the obligation, to join and participate in any legal proceedings or actionsinitiated in connection with any claims arising out of the storage, generation,use, release and/or disposal by Tenant or its agents, employees, contractors,licensees or invitees of Hazardous Materials on, under, from or about thePremises.

 

(e)           If the storage, use, generation,release or disposal of any Hazardous Materials on, under, from or about thePremises or the Project caused or knowingly permitted by Tenant or its agents,employees, contractors, licensees or invitees results in (i) injury to anyperson, (ii) injury to or any contamination of the Premises or theProject, or (iii) injury to or contamination of any real or personalproperty wherever situated, Tenant, at its expense, shall promptly take allactions necessary to return the Premises and the Project and any other affectedreal or personal property owned by Landlord to the condition existing prior tothe introduction of such Hazardous Materials and to remedy or repair any suchinjury or contamination, including without limitation, any cleanup,remediation, removal, disposal, neutralization or other treatment of any suchHazardous Materials as required by law. Notwithstanding the foregoing, Tenant shall not, without Landlord’sprior written consent, which consent may be given or withheld in Landlord’ssole and absolute discretion, take any remedial action in response to thepresence of any Hazardous Materials on, from, under or about the Premises orthe Project or any other affected real or personal property owned by Landlordor enter into any similar agreement, consent, decree or other compromise withany governmental agency with respect to any Hazardous Materials claims;provided however, Landlord’s prior written consent shall not be necessary inthe event that the presence of Hazardous Materials on, under or about thePremises or the Project or any other affected real or personal property ownedby Landlord (i) imposes an immediate threat to the health, safety orwelfare of any individual and (ii) is of such a nature that an immediateremedial response is necessary and it is not possible to obtain Landlord’sconsent before taking such action.  Tothe fullest extent permitted by law, Tenant shall indemnify, hold harmless,protect and defend (with attorneys reasonably acceptable to Landlord) Landlordand any successors to all or any portion of Landlord’s interest in the Premisesand the Project and any other real or personal property owned by Landlord fromand against any and all liabilities, losses, damages, diminution in value,judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses(including without limitation reasonable attorneys’ fees, court costs and otherprofessional expenses), whether foreseeable or unforeseeable, arising directlyor indirectly out of the use, generation, storage, treatment, release, on- oroff-site disposal or transportation of Hazardous Materials on, into, from,under or about the Premises, the Building or the Project and any other real orpersonal property owned by Landlord caused or knowingly permitted by Tenant,its agents, employees, contractors, licensees or invitees.  Such indemnity obligation shall specificallyinclude, without limitation, the cost of any required or necessary repair,restoration, cleanup or detoxification of the Premises, the Building and theProject and any other real or personal property owned by Landlord, thepreparation of any closure or other required plans, whether or not such actionis required or necessary during the Term or after the expiration of this Leaseand any loss of rental due to the inability to lease the Premises or anyportion of the Building or Project as a result of such Hazardous Material orremediation thereof.  If it is at anytime discovered that Tenant may have knowingly permitted its agents, employees,contractors, licensees or invitees to release a Hazardous Material on, under,from or about the Premises, the Building or the Project or any other real orpersonal property owned by Landlord, or caused such release, Tenant shall, atLandlord’s request, immediately prepare and submit to Landlord a comprehensiveplan, subject to Landlord’s approval, specifying the actions to be taken byTenant to return the Premises, the Building or the Project or any other real orpersonal property owned by Landlord to the condition existing prior to theintroduction of such Hazardous Materials. Upon Landlord’s approval of such cleanup plan, Tenant shall, at itsexpense, and without limitation of any rights and remedies of Landlord underthis Lease or at law or in equity, immediately implement such plan and proceedto cleanup such Hazardous Materials in accordance with

 

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all applicable laws and as required by such plan and this Lease.  The provisions of this Section 5.3(e) shallexpressly survive the expiration or sooner termination of this Lease.

 

(f)            Landlord hereby discloses to Tenant,and Tenant hereby acknowledges, certain facts relating to Hazardous Materialsat the Project known by Landlord to exist as of the date of this Lease, as moreparticularly described in Exhibit C attached hereto.  Tenant shall have no liability orresponsibility with respect to the Hazardous Materials facts described in Exhibit C,nor with respect to any Hazardous Materials which Tenant proves were neitherreleased on the Premises during the Term nor caused by Tenant, its agents,employees, contractors, licensees or invitees. Tenant hereby acknowledges that this disclosure satisfies any obligationof Landlord to Tenant pursuant to California Health & Safety Code Section25359.7, or any amendment or substitute thereto or any other disclosureobligations of Landlord.  Landlord shalltake responsibility, at its sole cost and expense and not as a Project Cost,for any governmentally-ordered clean-up, remediation, removal, disposal,neutralization or other treatment of Hazardous Materials conditions describedin this Section 5.3(f).  Theforegoing obligation on the part of Landlord shall include the reasonable costs(including, without limitation, reasonable attorney’s fees) of defending Tenant(with attorneys reasonably acceptable to Tenant) from and against any legalaction or proceeding instituted by any governmental agency in connection withsuch clean-up, remediation, removal, disposal, neutralization or othertreatment of such conditions, provided that Tenant promptly tenders suchdefense to Landlord.  Tenant agrees tonotify its agent employees, contractors, licensees, and invitees of anyexposure or potential exposure to Hazardous Materials at the Premises thatLandlord brings to Tenant’s attention.

 

### **(g)           Inthe event of any foreclosure of a mortgage or deed of trust encumbering theBuilding and/or the Project, the obligations on the part of Landlord containedin Section 5.3(f) above shall be personal to Landlord and shall not bebinding on nor inure against any lender acquiring the Building and/or theProject by foreclosure of its mortgage or deed of trust or deed in lieu offoreclosure, or any successor in interest to such lender**

### ** **

(h)           Except as disclosed inSection 5.3(f) above (and/or as may otherwise be disclosed to Tenant inwriting), Landlord represents that to “Landlord’s knowledge” (as hereinafterdefined), there are no Hazardous Materials in or about the Project which are inviolation of any applicable federal, state or local law, ordinance orregulation.  As used herein, “Landlord’sknowledge” shall mean the actual knowledge, without duty of inquiry orinvestigation, of the current employees or authorized agents of Landlordresponsible for Hazardous Materials compliance matters.

 

# **ARTICLE VI**.  COMMONAREAS; SERVICES

# ** **

**SECTION 6.1****.      UTILITIES AND SERVICES.**  Tenant shall be responsible for and shall paypromptly, directly to the appropriate supplier, all charges for water, gas,electricity, sewer, heat, light, power, telephone, telecommunications service,refuse pickup, janitorial service, interior landscape maintenance and all otherutilities, materials and services furnished directly to Tenant or the Premisesor used by Tenant in, on or about the Premises during the Term, together withany taxes thereon.  If any utilities orservices are not separately metered or assessed to Tenant, Landlord shall makea reasonable determination of Tenant’s proportionate share of the cost of suchutilities and services, and Tenant shall pay such amount to Landlord, as anitem of additional rent, within ten (10) days after receipt of Landlord’sstatement or invoice therefor. Alternatively, Landlord may elect to include such cost in the definitionof Project Costs in which event Tenant shall pay Tenant’s proportionate shareof such costs in the manner set forth in Section 4.2.  Tenant shall also pay to Landlord as an itemof additional rent, within ten (10) days after receipt of Landlord’s statementor invoice therefor, a reasonable charge (which shall be in addition to theelectricity charge paid to the utility provider) for Tenant’s “after hours”usage of each HVAC unit servicing the Premises (other than the HVAC unitsinstalled as part of the Tenant Improvements or otherwise installed byTenant).  “After hours” shall mean morethan two hundred eighty-three (283) hours of usage of each HVAC unit servicingthe Premises (other than the HVAC units installed as part of the TenantImprovements or otherwise installed by Tenant) during any month during theTerm, and shall be determined based upon the operation of the applicable HVACunit during each month on a “non-cumulative” basis (without regard to Tenant’susage or nonusage of said unit during other months during the Term).  Landlord shall not be liable for damages orotherwise for any failure or interruption of any utility or other service furnishedto the Premises, and no such failure or interruption shall be deemed aneviction or entitle Tenant to terminate this Lease or withhold or abate anyrent due hereunder.  Landlord shall atall reasonable times have free access to the Building and Premises to install,maintain, repair, replace or remove all electrical and mechanical installationsof Landlord.  Tenant acknowledges thatthe costs incurred by Landlord related to providing above-standard utilities toTenant, including, without limitation, telephone lines, may be charged toTenant.

 

Notwithstanding the foregoing, if as a result of the direct actions ofLandlord, its employees, contractors or authorized agents, for more than three(3) consecutive business days following written notice to Landlord there is noHVAC or electricity services to all or a portion of the Premises, or such aninterruption of other essential utilities and building services, such as fireprotection or water, so that all or a portion of the Premises cannot be used byTenant, then Tenant’s Basic Rent (or an equitable portion of such Basic Rent tothe extent that less than all of the Premises are affected) shall thereafter beabated until the Premises are again usable by Tenant; provided, however, thatif Landlord is diligently pursuing the repair of such utilities or services andLandlord provides substitute services reasonably suitable for Tenant’spurposes, as for example, bringing in portable air-conditioning equipment, thenthere shall not be an abatement of Basic Rent. The foregoing provisions shall be Tenant’s sole recourse and remedy inthe event of such an interruption of services, and shall not apply in case ofthe actions of parties other than Landlord, its employees, contractors orauthorized agents, or in the case of damage to, or destruction of, the Premises(which shall be governed by the provisions of Article XI of theLease).  Any disputes concerning theforegoing provisions shall be submitted to and resolved by JAMS arbitrationpursuant to Section 22.7 of this Lease.

 

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**SECTION 6.2****.      OPERATION AND MAINTENANCEOF COMMON AREAS.**  During theTerm, Landlord shall operate all Common Areas within the Project and theBuilding in a first class manner as Landlord shall determine to beappropriate.  The term “**Common Areas**” shall mean all areas which are not held forexclusive use by persons entitled to occupy space, and all other appurtenantareas and improvements within the Project provided by Landlord for the commonuse of Landlord and tenants and their respective employees and invitees,including without limitation parking areas and structures, driveways,sidewalks, landscaped and planted areas, hallways and interior stairwells notlocated within the premises of any tenant, common electrical rooms and roofaccess entries, common entrances and lobbies, elevators, and restrooms notlocated within the premises of any tenant.

 

**SECTION 6.3****.      USE OF COMMON AREAS.**  The occupancy by Tenant of the Premises shallinclude the use of the Common Areas in common with Landlord and with all othersfor whose convenience and use the Common Areas may be provided by Landlord,subject, however, to compliance with all rules and regulations as areprescribed from time to time by Landlord. All costs incurred by Landlord for the maintenance and operation of theCommon Areas shall be included in Project Costs (to the extent properlyincluded therein) except to the extent any particular cost incurred is relatedto or associated with a specific tenant and can be charged to such tenant ofthe Project.  Landlord shall at all timesduring the Term have exclusive control of the Common Areas, and may restrain orpermit any use or occupancy, except as authorized by Landlord’s rules andregulations.  Tenant shall keep theCommon Areas clear of any obstruction or unauthorized use related to Tenant’soperations or use of Premises, including without limitation, planters andfurniture.  Nothing in this Lease shallbe deemed to impose liability upon Landlord for any damage to or loss of theproperty of, or for any injury to, Tenant, its invitees or employees.  Landlord may temporarily close any portion ofthe Common Areas for repairs, remodeling and/or alterations, to prevent apublic dedication or the accrual of prescriptive rights, or for any otherreason deemed sufficient by Landlord, without liability to Landlord.

 

**SECTION 6.4****.      PARKING.**  Tenant shall be entitled to the number ofvehicle parking spaces set forth in Item 14 of the Basic Lease Provisions,which spaces shall be unreserved and unassigned, on those portions of theCommon Areas designated by Landlord for parking.  Tenant shall not use more parking spaces thansuch number.  All parking spaces shall beused only for parking of vehicles no larger than full size passengerautomobiles, sports utility vehicles or pickup trucks.  Tenant shall not permit or allow any vehiclesthat belong to or are controlled by Tenant or Tenant’s employees, suppliers,shippers, customers or invitees to be loaded, unloaded or parked in areas otherthan those designated by Landlord for such activities.  If Tenant permits or allows any of theprohibited activities described above, then Landlord shall have the right,without notice, in addition to such other rights and remedies that Landlord mayhave, to remove or tow away the vehicle involved and charge the costs toTenant.  Parking within the Common Areasshall be limited to striped parking stalls, and no parking shall be permittedin any driveways, access ways or in any area which would prohibit or impede thefree flow of traffic within the Common Areas. There shall be no parking of any vehicles for longer than a forty-eight(48) hour period unless otherwise authorized by Landlord, and vehicles whichhave been abandoned or parked in violation of the terms hereof may be towedaway at the owner’s expense.  Landlordshall have the right to establish, and from time to time amend, and to enforceagainst all users all reasonable rules and regulations (including thedesignation of areas for employee parking) that Landlord may deem necessary andadvisable for the proper and efficient operation and maintenance of parkingwithin the Common Areas.  Landlord shallhave the right to construct, maintain and operate lighting facilities withinthe parking areas; to change the area, level, location and arrangement of theparking areas and improvements therein; to restrict parking by tenants, theirofficers, agents and employees to employee parking areas; after the expirationof the initial 60-month Term of this Lease, to enforce parking charges (byoperation of meters or otherwise, provided Landlord is then generally enforcingparking changes throughout its technology building portfolio); and to do andperform such other acts in and to the parking areas and improvements thereinas, in the use of good business judgment, Landlord shall determine to beadvisable.  Any person using the parkingarea shall observe all directional signs and arrows and any posted speed limits.  In no event shall Tenant interfere with theuse and enjoyment of the parking area by other tenants of the Project or theiremployees or invitees.  Parking areasshall be used only for parking vehicles. Washing, waxing, cleaning or servicing of vehicles, or the storage ofvehicles for longer than 48-hours, is prohibited unless otherwise authorized byLandlord.  Tenant shall be liable for anydamage to the parking areas caused by Tenant or Tenant’s employees, suppliers,shippers, customers or invitees, including without limitation damage fromexcess oil leakage.  Tenant shall have noright to install any fixtures, equipment or personal property in the parkingareas.

 

**SECTION 6.5****.      CHANGES AND ADDITIONS BYLANDLORD.**  Landlord reservesthe right to make alterations or additions to the Building or the Project, orto the attendant fixtures, equipment and Common Areas.  Landlord may at any time relocate or removeany of the various buildings, parking areas, and other Common Areas, and mayadd buildings and areas to the Project from time to time; provided, however,that such change does not (i) deprive Tenant of reasonable access to or use ofthe Premises, or (ii) reduce the number of parking spaces granted under thisLease.  No change shall entitle Tenant toany abatement of rent or other claim against Landlord.

 

**ARTICLEVII.****  MAINTAINING THE PREMISES**

 

**SECTION 7.1****.      TENANT’S MAINTENANCE ANDREPAIR.**  Except as set forthin Section 7.2 below and subject to Landlord’s obligations expressly containedin Section 2.4 of this Lease, Tenant at its sole expense shall maintain andmake all repairs and replacements necessary to keep the Premises and theBuilding in the condition as existed on the Commencement Date (or on any laterdate that the improvements may have been installed), excepting ordinary wearand tear, casualty and condemnation, including without limitation all interiorglass, doors, door closures, hardware, fixtures, fire extinguisher equipmentand other equipment installed in the Premises and all Alterations constructedby Tenant pursuant to Section 7.3 below. Any damage or deterioration of

 

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the Premises shall not be deemed ordinary wear and tear if the samecould have been prevented by good maintenance practices by Tenant.  As part of its maintenance obligationshereunder, Tenant shall, at Landlord’s request, provide Landlord with copies ofall maintenance schedules, reports and notices prepared by, for or on behalf ofTenant.  All repairs and replacementsshall be at least equal in quality to the original work, shall be made only bya licensed contractor reasonably approved in writing in advance byLandlord.  Any contractor utilized byTenant shall be subject to Landlord’s standard requirements for contractors, asmodified from time to time.  Landlord mayimpose reasonable restrictions and requirements with respect to repairs, asprovided in Section 7.3, and the provisions of Section 7.4 shall apply to allrepairs.  If Tenant fails to properlymaintain and/or repair the Premises as herein provided following Landlord’snotice and the expiration of the applicable cure period (or earlier if Landlorddetermines that such work must be performed prior to such time in order toavoid damage to the Premises or Building or other detriment), then Landlord mayelect, but shall have no obligation, to perform any repair or maintenancerequired hereunder on behalf of Tenant and at Tenant’s expense, and Tenantshall reimburse Landlord upon demand for all reasonable costs incurred uponsubmission of an invoice.  Notwithstandinganything to the contrary in this Section 7.1, Landlord shall perform andconstruct, and Tenant shall have no responsibility to perform or construct, anyrepair, maintenance or improvements which could be treated as a “capital”expenditure under generally accepted accounting principles, consistentlyapplied; provided, however, that Tenant shall pay for its share of such “capitalexpenditures” to the extent such costs are properly included in OperatingExpenses.

 

**SECTION 7.2****.      LANDLORD’S MAINTENANCE ANDREPAIR.**  Subject to Section7.1 and Article XI, Landlord shall provide service, maintenance and repair withrespect to any air conditioning, ventilating or heating equipment which servesthe Premises (exclusive, however, of any HVAC units installed as part of theTenant Improvements or by Tenant after the Commencement Date, which shall beserviced, maintained and repaired by Tenant), and shall maintain in good repairthe roof (including the roof membrane), foundations, footings, the exteriorsurfaces of the exterior walls of the Building (including exterior glass), andthe structural, electrical, plumbing, life safety and mechanical systems,except that Tenant at its expense shall make all repairs resulting from the actor negligence of Tenant, its agents, employees, invitees, subtenants orcontractors.  Landlord shall have theright to employ or designate any reputable person or firm, including anyemployee or agent of Landlord or any of Landlord’s affiliates or divisions, toperform any service, repair or maintenance function. Landlord need not make anyother improvements or repairs except as specifically required under this Lease,and nothing contained in this Section shall limit Landlord’s right toreimbursement from Tenant for maintenance, repair costs and replacement costsas provided elsewhere in this Lease. Tenant understands that it shall not make repairs at Landlord’s expenseor by rental offset.  Except for normalpreventive maintenance, which Landlord shall perform regardless of any noticefrom Tenant, Tenant further understands that Landlord shall not be required tomake any repairs to the roof, foundations, footings, the exterior surfaces ofthe exterior walls of the Building (excluding exterior glass), or structural,electrical or mechanical systems unless and until Tenant has notified Landlordin writing of the need for such repair and Landlord shall have a reasonableperiod of time thereafter to commence and complete said repair, ifwarranted.  Subject to the expressprovisions of Section 2.4 above and to the limitations set forth in Section4.2, all costs of any maintenance, repairs and replacement on the part ofLandlord provided hereunder shall be considered part of Project Costs.  Tenant further agrees that if Tenant fails toreport any such need for repair in writing within sixty (60) days of itsdiscovery by Tenant, Tenant shall be responsible for any costs and expenses andother damages related to such repair which are in excess of those which wouldhave resulted had such need for repair been reported to Landlord within suchsixty (60) day period.

 

**SECTION 7.3****.      ALTERATIONS.**  Except as otherwise provided in this Section,Tenant shall make no alterations, additions, fixtures or improvements (“**Alterations**”)****to thePremises or the Building without the prior written consent of Landlord, whichconsent shall not be unreasonably withheld. Notwithstanding the foregoing, Tenant may make Alterations to thePremises costing less than One Dollars ($1.00) per square foot of the improvedportion of the Premises during each calendar year of the Term without Landlord’sconsent, provided, however, that any Alterations which change the structural,electrical or mechanical systems of the Premises, or which require agovernmental permit as a prerequisite to the construction thereof, shallrequire Landlord’s prior written consent, which shall not be unreasonablywithheld.  Notwithstanding anything tothe contrary contained in either of the foregoing sentences, however, noAlterations shall:  (i) affect theexterior of the Building or outside areas (or be visible from adjoining sites),or (ii) adversely affect or penetrate any of the structural portions ofthe Building, including but not limited to the roof, or (iii) require anychange to the basic floor plan of the Premises (including, without limitation,the adding of any additional “office” square footage) or any change to anystructural or mechanical systems of the Premises, or (iv) fail to comply withany applicable governmental, or (v) result in the Premises requiring buildingservices beyond the level normally provided to other tenants, or(vi) interfere in any manner with the proper functioning of, or Landlord’saccess to, any mechanical, electrical, plumbing or HVAC systems, facilities orequipment located in or serving the Building, or (vii) diminish the valueof the Premises including, without limitation, using lesser quality materialsthan those existing in the Premises, or (viii) alter or replace StandardImprovements.  Further, in the event thatany Alteration would result in a change from Landlord’s building standardmaterials and specifications for the Project (“**StandardImprovements**”), then subject to Landlord’s election contained in thelast paragraph of this Section 7.3, Tenant shall be responsible for the cost ofreplacing such non-standard improvement (“**Non-Standard Improvement**”)with the applicable Standard Improvement (“**Replacements**”)which Replacements shall be completed prior to the Expiration Date or earliertermination of this Lease.  Landlord mayimpose any reasonable condition to its consent, including but not limited to arequirement that the installation and/or removal of all Alterations andReplacements in excess of One Hundred Thousand Dollars ($100,000.00) be coveredby a lien and completion bond satisfactory to Landlord in its reasonablediscretion.  Landlord shall in allevents, whether or not Landlord’s consent is required, have the right toreasonably approve the contractor performing the installation and removal ofAlterations and Replacements and Tenant shall not permit any contractor notapproved by Landlord to perform any work on the Premises or on theBuilding.  Tenant shall obtain allrequired permits for the installation and removal of Alterations andReplacements and shall

 

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perform the installation and removal of Alterations and Replacements incompliance with all applicable laws, regulations and ordinances, includingwithout limitation the Americans with Disabilities Act, all covenants,conditions and restrictions affecting the Project, and the Rules andRegulations as described in Article XVII. Tenant understands and agrees that Landlord shall be entitled to asupervision fee in the amount of five percent (5%) of the cost of suchAlterations either requiring a permit from the City of Irvine or affecting anymechanical, electrical, plumbing or HVAC systems, facilities or equipmentlocated in or serving the Building. Under no circumstances shall Tenant make any Alterations or Replacementswhich incorporate any Hazardous Materials, including without limitationasbestos-containing construction materials into the Premises, the Building orthe Common Area.  If any governmentalentity requires, as a condition to any proposed Alterations by Tenant, thatimprovements be made to the Common Areas, and if Landlord consents to suchimprovements to the Common Areas (which consent may be withheld in the sole andabsolute discretion of Landlord), then Tenant shall, at Tenant’s sole expense,make such improvements to the Common Areas required by law and in such manner,utilizing such materials, and with such contractors, architects and engineersas Landlord may require in its sole and absolute discretion.  Any request for Landlord’s consent to anyproposed Alterations shall be made in writing and shall contain architecturalplans or other written materials describing the work in detail reasonablysatisfactory to Landlord.  Landlord mayelect to cause its architect to review Tenant’s architectural plans and thereasonable cost of that review shall be reimbursed by Tenant.  Should the work proposed by Tenant andconsented to by Landlord modify the basic floor plan of the Premises, thenTenant shall, at its expense, furnish Landlord with as-built drawings and CADdisks compatible with Landlord’s systems and standards.  Unless Landlord otherwise agrees in writing,all Alterations made or affixed to the Premises, the Building or to the CommonArea (excluding moveable trade fixtures, equipment, personal property andfurniture), **[**including without limitation allTenant Improvements constructed pursuant to the Work Letter (except asotherwise provided in the Work Letter)**]**, shall becomethe property of Landlord and shall be surrendered with the Premises at the endof the Term; except that Landlord may, as provided in the next succeedingparagraph of this Section 7.3, require Tenant to remove by the ExpirationDate, or sooner termination date of this Lease, all or any of the Alterationsinstalled either by Tenant or by Landlord at Tenant’s request and to repair anydamage to the Premises, the Building or the Common Area arising from thatremoval and restore the Premises to their condition prior to making suchAlterations.  The foregoing provisions forremoval of Alterations, however, shall not be applicable to the TenantImprovements constructed pursuant to the Work Letter, which Work Letter itselfshall govern any removal of the Tenant Improvements upon the expiration of theTerm.

 

IfLandlord conditions its consent on the same, Landlord shall have the right torequire Tenant to remove any Alterations, and to replace the same with theapplicable Replacements, as of the Expiration Date or sooner termination of theLease.  Any Alterations for whichLandlord’s consent is not given, however, shall be subject to Landlord’s right,exercisable at any time, to require same to be removed (and replaced with theReplacements) at the Expiration Date or sooner termination of this Lease.

 

**SECTION 7.4****.      MECHANIC’S LIENS.**  Tenant shall keep the Premises free from anyliens arising out of any work performed, materials furnished, or obligationsincurred by or for Tenant.  Upon requestby Landlord, Tenant shall promptly (but in no event later than five (5)business days following such request) cause any such lien to be released byposting a bond in accordance with California Civil Code Section 3143 or anysuccessor statute.  In the event thatTenant shall not, within thirty (30) days following Tenant’s actual notice ofthe imposition of any lien, cause the lien to be released of record by paymentor posting of a proper bond, Landlord shall have, in addition to all otheravailable remedies, the right to cause the lien to be released by any means itdeems proper, including payment of or defense against the claim giving rise tothe lien.  All reasonable expenses soincurred by Landlord, including Landlord’s attorneys’ fees, and anyconsequential or other damages incurred by Landlord arising out of such lien,shall be reimbursed by Tenant upon demand, together with interest from the dateof payment by Landlord at the maximum rate permitted by law until paid.  Tenant shall give Landlord no less than ten(10) days’ prior notice in writing before commencing construction of any kindon the Premises or Common Area and shall again notify Landlord thatconstruction has commenced, such notice to be given on the actual date on whichconstruction commences, so that Landlord may post and maintain notices ofnonresponsibility on the Premises or Common Area, as applicable, which noticesLandlord shall have the right to post and which Tenant agrees it shall notdisturb.  Tenant shall also provideLandlord notice in writing within ten (10) days following the date on whichsuch work is substantially completed. The provisions of this Section shall expressly survive the expiration orsooner termination of this Lease.

 

**SECTION 7.5****.      ENTRY AND INSPECTION.**  Landlord shall at all reasonable times, uponwritten or oral notice (except in emergencies, when no notice shall berequired) have the right to enter the Premises to inspect them, to supplyservices in accordance with this Lease, to have access to install, repair,maintain, replace or remove all electrical and mechanical installations ofLandlord and to protect the interests of Landlord in the Premises, and tosubmit the Premises to prospective or actual purchasers or encumbrance holders(or, during the last one hundred and eighty (180) days of the Term or when anuncured Tenant Event of Default exists, to prospective tenants), all withoutbeing deemed to have caused an eviction of Tenant and without abatement of rentexcept as provided elsewhere in this Lease. Landlord shall have the right, if desired, to retain a key which unlocksall of the doors in the Premises, excluding Tenant’s vaults and safes, andLandlord shall have the right to use any and all means which Landlord may deemproper to open the doors in an emergency in order to obtain entry to thePremises, and any entry to the Premises obtained by Landlord shall not underany circumstances be deemed to be a forcible or unlawful entry into, or adetainer of, the Premises, or any eviction of Tenant from the Premises.  In exercising any of Landlord’s rights ofentry, inspection, repair, maintenance and construction under this Lease,including, without limitation, under Sections 5.3(d), 6.1, 6.5 and 7.5,Landlord shall comply with Tenant’s reasonable security measures and operatingprocedures and shall use commercially reasonable efforts to minimize any disruptionto Tenant.  Further, Landlord shall notexercise any such rights in any such manner as would unreasonably interferewith Tenant’ use of, access to, or parking at the Premises.

 

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# **ARTICLE VIII.**  TAXES AND ASSESSMENTS ON TENANT’S PROPERTY

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Tenantshall be liable for and shall pay before delinquency, all taxes and assessmentslevied against all personal property of Tenant located in the Premises, and, ifrequired by Landlord, against all Non Standard Improvements to the Premises (asdefined in Section 7.3) made by Landlord or Tenant, and against any Alterations(as defined in Section 7.3) made to the Premises or the Building by or onbehalf of Tenant.  If requested byLandlord, Tenant shall cause its personal property, Non-Standard Improvements****and Alterations to be assessed and billed separately fromthe real property of which the Premises form a part.  If any taxes required to be paid by Tenant onTenant’s personal property, Non-Standard Improvements and/or Alterations arelevied against Landlord or Landlord’s property and if Landlord pays the same,or if the assessed value of Landlord’s property is increased by the inclusionof a value placed upon the personal property, Non-Standard Improvements and/orAlterations and if Landlord pays the taxes based upon the increased assessment,Landlord shall have the right to require that Tenant pay to Landlord the taxesso levied against Landlord or the proportion of the taxes resulting from theincrease in the assessment.  Incalculating what portion of any tax bill which is assessed against Landlordseparately, or Landlord and Tenant jointly, is attributable to Tenant’sNon-Standard Improvements, Alterations and personal property, Landlord’sreasonable determination shall be conclusive.

 

# **ARTICLE IX**.  ASSIGNMENTAND SUBLETTING

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### **SECTION9.1**.      RIGHTS OF PARTIES.

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(a)           Notwithstanding any provision of thisLease to the contrary, and except as to transfers expressly permitted withoutLandlord’s consent pursuant to Section 9.4, Tenant will not, either voluntarilyor by operation of law, assign, sublet, encumber, or otherwise transfer all orany part of Tenant’s interest in this Lease or the Premises, or permit thePremises to be occupied by anyone other than Tenant, without Landlord’s priorwritten consent, which consent shall not unreasonably be withheld in accordancewith the provisions of Section 9.1(b). Except as to transfers expressly permitted without Landlord’s consentpursuant to Section 9.4, no assignment (whether voluntary, involuntary or byoperation of law) and no subletting shall be valid or effective withoutLandlord’s prior written consent and, at Landlord’s election, any suchassignment or subletting shall be void and of no force and effect.  Landlord shall not be deemed to have givenits consent to any assignment or subletting by any course of action other thanwritten consent.  To the extent notprohibited by provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., (the “**BankruptcyCode**”), including Section 365(f)(1), Tenant on behalf of itself andits creditors, administrators and assigns waives the applicability of Section365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee forthe estate of the bankrupt meets Landlord’s standard for consent as set forthin Section 9.1(b) of this Lease.  If thisLease is assigned to any person or entity pursuant to the provisions of theBankruptcy Code, any and all monies or other considerations to be delivered inconnection with the assignment shall be delivered to Landlord, shall be andremain the exclusive property of Landlord and shall not constitute property ofTenant or of the estate of Tenant within the meaning of the BankruptcyCode.  Any person or entity to which thisLease is assigned pursuant to the provisions of the Bankruptcy Code shall bedeemed to have assumed all of the obligations arising under this Lease on andafter the date of the assignment,  andshall upon demand execute and deliver to Landlord an instrument confirming thatassumption.

 

(b)           If Tenant desires to transfer aninterest in this Lease or the Premises, it shall first notify Landlord of itsdesire and shall submit in writing to Landlord: (i) the name and address of the proposed transferee; (ii) the nature ofany proposed transferee’s business to be carried on in the Premises; (iii) theterms and provisions of any proposed sublease, assignment or other transfer,including a copy of the proposed assignment, sublease or transfer form;(iv) evidence that the proposed assignee, subtenant or transferee willcomply with the requirements of Exhibit D hereto; (v) acompleted Environmental Questionnaire from the proposed assignee, subtenant ortransferee; (vi) any other information requested by Landlord and reasonablyrelated to the transfer and (vii) the fee described in Section 9.1(e).  Except as provided in Section 9.1 (c),Landlord shall not unreasonably withhold its consent, provided that the partiesagree that it shall be reasonable for Landlord to withhold its consent if:  (1) the use of the Premises will not beconsistent with the provisions of this Lease or with Landlord’s commitment toother tenants of the Building and Project; (2) insurance requirements of theproposed assignee or subtenant may not be brought into conformity with Landlord’sthen current leasing practice; (3) a proposed subtenant or assignee has failedto submit to Landlord all reasonable information as requested by Landlordconcerning the proposed subtenant or assignee, including, but not limited to,current financial statements; (4) the proposed assignee or subtenant is anexisting tenant of the Building or Project or a prospect with whom Landlord is “activelynegotiating” (as herein with defined) to become a tenant at the Building orProject (provided Landlord has available space in the Project for such existingtenant or prospect); or (7) the proposed transfer will impose additionalburdens or adverse tax effects on Landlord. As used herein, “actively negotiating” shall mean that the prospectshall have countered a written proposal from Landlord in writing within four(4) months prior to Tenant’s proposed transfer for the lease of space in theBuilding or the Project.  Tenant’sexterior sign rights under this Lease are personal to Tenant and any PermittedTransferee, and may not be assigned or transferred to any assignee of thisLease or subtenant of the Premises other than a Permitted Transferee withoutLandlord’s prior written consent, which may be withheld in Landlord’s sole andabsolute discretion.  Notwithstanding theforegoing, Landlord shall not unreasonably withhold its consent to a transferof such signage rights in connection with Tenant’s assignment of this Lease orsublease of the entire Premises, provided that Landlord shall have the right ofprior approval that such signage continues to comply with the Sign Criteria andthe other requirements of Section 5.2 of this Lease, and provided furtherthat any name and/or graphics on such signage do not materially devalue theProject as determined by Landlord in its sole and absolute discretion.

 

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IfLandlord consents to the proposed transfer, Tenant may within ninety (90) daysafter the date of the consent effect the transfer upon the terms described inthe information furnished to Landlord; provided that any material change in theterms shall be subject to Landlord’s consent as set forth in this Section9.1.  Landlord shall approve ordisapprove any requested transfer within fifteen (15) business days followingreceipt of Tenant’s written request, the information set forth above, and thefee set forth below.

 

(c)           Except with respect to an assignmentor subletting to a Permitted Transferee, in the event of an assignment of thisLease or a subletting or more than twenty-five percent (25%) of the Floor Areaof the Premises (in the aggregate) in lieu of consenting to a proposedassignment or subletting, Landlord may elect, within the fifteen (15) businessday period permitted for Landlord to approve or disapprove a requestedtransfer, to terminate this Lease as to the portion of the Premises proposed tobe subleased or assigned with a proportionate abatement in the Basic Rent andOperating Expenses payable under this Lease, effective thirty (30) days’following written notice by Landlord of its election to so sublease orterminate.  Landlord may thereafter, atits option, assign, sublet or re-let any space so sublet, obtained byassignment or obtained by termination to any third party, including withoutlimitation the proposed transferee of Tenant.

 

(d)           Except with respect to an assignmentor subletting to a Permitted Transferee, in the event that Landlord approvesthe requested assignment or subletting, Tenant agrees that fifty percent (50%)of any amounts paid by the assignee or subtenant, however described, in excessof (i) the Basic Rent and Operating Expenses payable by Tenant hereunder,or in the case of a sublease of a portion of the Premises, in excess of theBasic Rent and Operating Expenses reasonably allocable to such portion asdetermined by Landlord, plus (ii) Tenant’s direct out-of-pocket costswhich Tenant certifies to Landlord have been paid to provide occupancy relatedservices to such assignee or subtenant of a nature commonly provided by landlordsof similar space (including, without limitation, brokerage commissions, legalfees and tenant improvements costs paid by Tenant in connection with suchsubletting or assignment), shall be the property of Landlord and such amountsshall be payable directly to Landlord by the assignee or subtenant or, atLandlord’s option, by Tenant within ten (10) days of Tenant’s receiptthereof.  Landlord shall have the rightto review or audit the books and records of Tenant, or have such books andrecords reviewed or audited by an outside accountant, to confirm any suchdirect out-of-pocket costs.  In the eventthat such direct out-of-pocket costs claimed by Tenant are overstated by morethan five percent (5%), Tenant shall reimburse Landlord for any of Landlord’scosts related to such review or audit. At Landlord’s request, a written agreement shall be entered into by andamong Tenant, Landlord and the proposed assignee or subtenant confirming therequirements of this Section 9.1(d).

 

(e)           Tenant shall pay to Landlord a feeequal to the greater of (i) Landlord’s actual and reasonable costs related tosuch assignment, subletting or other transfer or (ii) Five Hundred Dollars($500.00), to process any request by Tenant for an assignment, subletting orother transfer under this Lease.  Tenantshall pay Landlord the sum of Five Hundred Dollars ($500.00) concurrently withTenant’s request for consent to any assignment, subletting or other transfer,and Landlord shall have no obligation to consider such request unless accompaniedby such payment.  Tenant shall payLandlord upon demand any costs in excess of such payment to the extent Landlord’sactual and reasonable costs related to such request exceeds $500.00.  Such fee is hereby acknowledged as areasonable amount to reimburse Landlord for its costs of review and evaluationof a proposed transfer.

 

**SECTION 9.2****.      EFFECT OF TRANSFER.**  No subletting or assignment, even with theconsent of Landlord, shall relieve Tenant of its obligation to pay rent and toperform all its other obligations under this Lease.  Moreover, Tenant shall indemnify and holdLandlord harmless, as provided in Section 10.3, for any act or omission by anassignee or subtenant.  Each assignee,other than Landlord, shall assume all obligations of Tenant under this Leaseand shall be liable jointly and severally with Tenant for the payment of allrent, and for the due performance of all of Tenant’s obligations, under thisLease.  No assignment or subletting shallbe effective or binding on Landlord unless documentation in form and substancesatisfactory to Landlord in its reasonable discretion evidencing the transfer,and in the case of an assignment, the assignee’s assumption of the obligationsof Tenant under this Lease, is delivered to Landlord and both the assignee/subtenantand Tenant deliver to Landlord an executed consent to transfer instrumentprepared by Landlord in a commercially reasonable form and consistent with therequirements of this Article.  Theacceptance by Landlord of any payment due under this Lease from any otherperson shall not be deemed to be a waiver by Landlord of any provision of thisLease or to be a consent to any transfer. Consent by Landlord to one or more transfers shall not operate as awaiver or estoppel to the future enforcement by Landlord of its rights underthis Lease or as a consent to any subsequent transfer.

 

**SECTION 9.3****.      SUBLEASE REQUIREMENTS.**  The following terms and conditions shallapply to any subletting by Tenant of all or any part of the Premises and shallbe deemed included in each sublease:

 

(a)           Such subletting and any subtenant ofthe Premises shall be subject to each and every provision contained in thisLease.

 

(b)           Tenant hereby irrevocably assigns toLandlord all of Tenant’s interest in all rentals and income arising from anysublease of the Premises, and Landlord may collect such rent and income andapply same toward Tenant’s obligations under this Lease; provided, however,that until there is an Event of Default by Tenant, Tenant shall have the rightto receive and collect the sublease rentals. Landlord shall not, by reason of this assignment or the collection ofsublease rentals, be deemed liable to the subtenant for the performance of anyof Tenant’s obligations under the sublease. Tenant hereby irrevocably authorizes and directs any subtenant, uponreceipt of a written notice from Landlord stating that an uncured Event ofDefault exists in the performance of Tenant’s obligations under this Lease, topay to Landlord all sums then and thereafter due under the sublease.  Tenant agrees that the subtenant may rely onthat notice without any duty of further inquiry and notwithstanding any noticeor

 

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claim by Tenant to the contrary. Tenant shall have no right or claim against the subtenant or Landlordfor any rentals so paid to Landlord; provided, however, that any such amountsreceived by Landlord shall be credited towards any amount Tenant owes underthis Lease.

 

(c)           In the event of the termination ofthis Lease for any reason, including without limitation as the result of anEvent of Default by Tenant or by the mutual agreement of Landlord and Tenant,Landlord may, at its sole option, take over Tenant’s entire interest in anysublease and, upon notice from Landlord, the subtenant shall attorn toLandlord.  In no event, however, shallLandlord be liable for any previous act or omission by Tenant under thesublease or for the return of any advance rental payments or deposits under thesublease that have not been actually delivered to Landlord, nor shall Landlordbe bound by any sublease modification executed without Landlord’s consent orfor any advance rental payment by the subtenant in excess of one month’srent.  The general provisions of thisLease, including without limitation those pertaining to insurance andindemnification, shall be deemed incorporated by reference into the subleasedespite the termination of this Lease. In the event Landlord does not elect to take over Tenant’s interest in asublease in the event of any such termination of this Lease, such subleaseshall terminate concurrently with the termination of this Lease and suchsubtenant shall have no further rights under such sublease and Landlord shallhave no obligations to such subtenant.

 

**SECTION 9.4****.      CERTAIN TRANSFERS.**  Notwithstanding anything to the contrarycontained in this Article IX, Landlord’s consent shall not be required andTenant may, without Landlord’s prior written consent and without constitutingan assignment or sublease hereunder, sublet the Premises or assign the Lease to(A) an entity controlling, under common control with or controlled by Tenant (“**Affiliate**”), (B) a successor entity relatedto Tenant by purchase, merger, consolidation, nonbankruptcy reorganization, orgovernment action, or (C) a purchaser of substantially all of Tenant’s assetslocated in the Premises ((A), (B) and (C) are collectively referred to hereinas a “**Permitted Transferees**” andindividually as a “**Permitted Transferee**”and transfers to such Permitted Transferees shall be collectively referred toherein as “**Permitted Transfers**”),so long as (i) the net worth of the Permitted Transferee is at least equalto the net worth of Tenant immediately prior to the date of such PermittedTransfer, or, in Landlord’s reasonable determination, such Permitted Transfereehas sufficient net worth to perform Tenant’s obligations under this Lease,evidence of which, satisfactory to Landlord, shall be presented to Landlordprior to such Permitted Transfer, (ii) Tenant shall provide to Landlord,prior to such Permitted Transfer, written notice of such Permitted Transfer andsuch assignment documentation and other information as Landlord may reasonablyrequire in connection therewith, and (iii) all of the other terms and requirementsSection 9.2 and 9.3 (but not of Section 9.1) shall apply withrespect to such Permitted Transfer.  Asale or transfer of Tenant’s capital stock shall not be deemed an assignment,subletting or any other transfer of this Lease or the Premises.

 

# **ARTICLE X**.  INSURANCEAND INDEMNITY

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**SECTION 10.1****.    TENANT’S INSURANCE.**  Tenant, at its sole cost and expense, shallprovide and maintain in effect the insurance described in Exhibit D.  Evidence of that insurance must be deliveredto Landlord prior to the Commencement Date.

 

**SECTION 10.2****.    LANDLORD’S INSURANCE.**  Landlord shall provide the following types ofinsurance, with or without deductible and in amounts and coverages as Landlordmay from time to time deem appropriate: property insurance, including fire, vandalism, malicious mischief andsuch other additional perils as may be included in a standard “special form”policy, subject to standard exclusions (such as, but not limited to, earthquakeand flood exclusions), covering the full replacement value of the Buildingincluding all Tenant Improvements constructed pursuant to the Work Letter (the “**Property Policy**”).  In addition, Landlord may, at its election,obtain insurance for such other risks as Landlord or its mortgages may fromtime to time deem appropriate, including without limitation, coverage forearthquake, flood, and commercial general liability. Landlord shall not berequired to carry insurance of any kind on Tenant’s Alterations or on Tenant’sother property, including, without limitation, Tenant’s trade fixtures,furnishings, equipment, signs and all other items of personal property, andLandlord shall not be obligated to repair or replace that property shoulddamage occur.  All proceeds of insurancemaintained by Landlord upon the Building and/or Project shall be the propertyof Landlord, whether or not Landlord is obligated to or elects to make anyrepairs.  At Landlord’s option, Landlordmay self-insure all or any portion of the risks for which Landlord elects or isobligated to provide insurance hereunder.

 

**SECTION10.3.    JOINT INDEMNITY.**

 

### **(a)           Tothe fullest extent permitted by law, Tenant shall defend, indemnify, protect,save and hold harmless Landlord, its agents, and any and all affiliates ofLandlord, including, without limitation, any corporations or other entitiescontrolling, controlled by or under common control with Landlord, from andagainst any and all claims, liabilities, costs or expenses arising eitherbefore or after the Commencement Date from Tenant’s use or occupancy of thePremises, the Building or the Common Areas, including without limitation, theuse by Tenant, its agents, employees, invitees or licensees of any recreationalfacilities within the Common Areas, or from the conduct of its business, orfrom any activity, work, or thing done, permitted or suffered by Tenant or itsagents, employees, invitees or licensees in or about the Premises, the Buildingof the Common Areas, or from any default in the performance of any obligationon Tenant’s part to be performed under this Lease, or from any act ornegligence or willful misconduct of Tenant or its agents, employees, visitors,patrons, guests, invites or licensees. In cases of alleged negligence asserted by third parties againstLandlord which arise out of, are occasioned by, or in any way attributable toTenant, its agents, employees, contractors, licensees or invitees use andoccupancy of the Premises, the Building or the Common Areas, or from theconduct of its business or from any activity, work or thing done, permitted orsuffered by Tenant or its agents, employees, invitees or licensees on Tenant’spart to be performed under this Lease, or from any negligence or willfulmisconduct of Tenant, its agents, employees, licensees or**

 

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invitees, Tenant shall accept any tender of defense for Landlord andshall, notwithstanding any allegation of negligence or willful misconduct onthe part of the Landlord, defend Landlord with counsel reasonably satisfactoryto Landlord and protect and hold Landlord harmless and pay all costs, expensesand attorneys’ fees incurred in connection with such litigation, provided thatTenant shall not be liable for any such injury or damage, and Landlord shallreimburse Tenant for the reasonable attorneys’ fees and costs for the attorneyrepresenting both parties, all to the extent and in the proportion that suchinjury or damage is ultimately determined by a court of competent jurisdiction(or in connection with any negotiated settlement agreed to by Landlord) to beattributable to the active negligence or willful misconduct of Landlord.  Upon Landlord’s request, Tenant shall atTenant’s sole cost and expense, retain a separate attorney reasonably selectedby Landlord to represent Landlord in any such suit if Landlord reasonablydetermines that the representation of both Tenant and Landlord by the sameattorney would cause a conflict of interest; provided, however, that to theextent and in the proportion that the injury or damage which is the subject ofthe suit is ultimately determined by a court of competent jurisdiction (or inconnection with any negotiated settlement agreed to by Landlord) to beattributable to the active negligence or willful misconduct of Landlord,Landlord shall reimburse Tenant for the reasonable legal fees and costs of theseparate attorney retained by Tenant. The provisions of this Section 10.3(a) shall expressly survive theexpiration or sooner termination of this Lease.

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(b)           To the fullest extent permitted bylaw, but subject to the express limitations on liability contained in thisLease (including, without limitation, the provisions of Sections 10.5 and 14.8of this Lease, Tenant shall not indemnify Landlord for, and Landlord shalldefend, indemnify, protect, save and hold harmless Tenant, its agents and anyand all affiliates of Tenant, including without limitation, any corporations,or other entities controlling, controlled by or under common control withTenant, from and against, any and all claims, liabilities, costs or expenses arisingeither before or after the Commencement Date from the active negligence orwillful misconduct of Landlord, its employees or authorized agents inconnection with the operation, maintenance or repair of the Common Areas of theProject.  The provisions of thisSubsection 10.3(b) shall expressly survive the expiration or sooner terminationof this Lease.

 

**SECTION 10.4****.    LANDLORD’S NONLIABILITY.**  Subject only to the express indemnityobligations contained in Section 10.3(b) of this Lease but notwithstandingany other provision of this Lease to the contrary, Landlord shall not be liableto Tenant, its employees, agents and invitees, and Tenant hereby waives allclaims against Landlord, for injuries to or deaths of persons whatsoeverresulting from fire, explosion, falling plaster, steam, gas, electricity, wateror rain which may leak or flow from or into any part of the Premises or fromthe breakage, leakage, obstruction or other defects of the pipes, sprinklers,wires, appliances, plumbing, air conditioning, electrical works or otherfixtures in the Building, whether such injury or death results from conditionsarising in the Premises or in other portions of the Building.  Notwithstanding any provision of this Leaseto the contrary, including, without limitation, the provisions of Section10.3(b) of this Lease, Landlord shall not be liable to Tenant, its employees,agents and invitees, and Tenant hereby waives all claims against Landlord, forloss of or damage to any property, or any other loss, cost, damage, injury orliability to property whatsoever resulting from fire, explosion, fallingplaster, steam, gas, electricity, water or rain which may leak or flow from orinto any part of the Premises or from the breakage, leakage, obstruction orother defects of the pipes, sprinklers, wires, appliances, plumbing, airconditioning, electrical works or other fixtures in the Building, whether thedamage or injury results from conditions arising in the Premises or in otherportions of the Building.  It isunderstood that any such condition may require the temporary evacuation orclosure of all or a portion of the Building. Notwithstanding any provision of this Lease to the contrary, including,without limitation, the provisions of Section 10.3(b) of this Lease,Landlord shall in no event be liable to Tenant, its employees, agents, andinvitees, and Tenant hereby waives all claims against Landlord, for loss orinterruption of Tenant’s business or income (including, without limitation, anyconsequential damages and lost profit or opportunity costs), or any other loss,cost, damage, injury or liability resulting from Acts of God (except withrespect to restoration obligations pursuant to Article XI below), acts ofcivil disobedience or insurrection, acts or omissions (criminal or otherwise)of any third parties (other than Landlord’s employees or authorized agents),including without limitation, any other tenants within the Project or theiragents, employees, contractors, guests or invitees.  Landlord shall have no liability (includingwithout limitation consequential damages and lost profit or opportunity costs)and, except as provided in Sections 11.1 and 12.1 below, there shall be noabatement of rent, by reason of any injury to or interference with Tenant’sbusiness arising from the making of any repairs, alterations or improvements toany portion of the Building, including repairs to the Premises, nor shall anyrelated activity by Landlord constitute an actual or constructive eviction;provided, however, that in making repairs, alterations or improvements,Landlord shall interfere as little as reasonably practicable with the conductof Tenant’s business in the Premises. Should Tenant elect to receive any service or products from aconcessionaire, licensee or third party tenant of Landlord, Landlord shall haveno liability for any services or products so provided or for any breach ofcontract by such third party provider. Neither Landlord nor its agents shall be liable for interference withlight or other similar intangible interests. Tenant shall immediately notify Landlord in case of fire or accident inthe Premises, the Building or the Project and of defects in any improvements orequipment.

 

**SECTION 10.5****.    WAIVER OF SUBROGATION.**  Notwithstanding anything to the contrarycontained in this Lease, Landlord and Tenant each hereby waives all rights ofrecovery against the other and the other’s agents on account of loss and damageoccasioned to the property of such waiving party to the extent that the waivingparty is entitled to proceeds for such loss or damage under any propertyinsurance policies carried or required to be carried by the provisions of thisLease (including, without limitation, the Property Policy required of Landlordin the first sentence of Section 10.2 of this Lease); provided however, thatthe foregoing waiver shall not apply to the extent of Tenant’s obligations topay deductibles under any such policies and this Lease.  By this waiver it is the intent of theparties that neither Landlord nor Tenant shall be liable to any insurancecompany (by way of subrogation or otherwise) insuring the other party for anyloss or damage insured against under any property insurance policiescontemplated by this Lease, even though such loss or damage might be occasionedby the negligence of such party, its agents, employees, contractors, guests orinvitees.  All of Landlord’s and Tenant’srepair and indemnity obligations under this Lease shall be subject to thewaiver contained in this Section 10.5.

 

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# **ARTICLE XI**.  DAMAGE OR DESTRUCTION

 

### **SECTION11.1**.           RESTORATION.

 

(a)                                  Ifthe Premises or the Building or a part thereof are materially damaged by anyfire, flood, earthquake or other casualty, Landlord shall have the right toterminate this Lease upon written notice to Tenant if:  (i) Landlord reasonably determines thatproceeds necessary to pay the full cost of repair is not available fromLandlord’s Property Policy (or if Landlord chooses to self-insure all or anyportion of such Property Policy coverage, that the necessary proceeds would nothave been available if the Property Policy had been in place throughthird-party insurers) and/or from its other property insurance policies (ifany), including without limitation, proceeds to cover any earthquake casualty,plus such additional amounts Tenant elects, at its option, to contribute,excluding however the deductible (for which Tenant shall be responsible forTenant’s Share not to exceed Fifty Thousand Dollars ($50,000.00) for any singlecasualty); (ii) Landlord reasonably determines that the Premises cannot,with reasonable diligence, be fully repaired by Landlord (or cannot be safelyrepaired because of the presence of hazardous factors, including withoutlimitation Hazardous Materials, earthquake faults, and other similar dangers)within two hundred seventy (270) days after the date of the damage;(iii) an uncured Event of Default by Tenant has occurred and iscontinuing; or (iv) the material damage occurs during the final twelve(12) months of the Term.  Landlord shallnotify Tenant in writing (“**Landlord’s Notice**”)within sixty (60) days after the damage occurs as to (A) whether Landlord isterminating this Lease as a result of such material damage and (B) if Landlordis not terminating this Lease, the number of days within which Landlord hasestimated that the Premises, with reasonable diligence, are likely to be fullyrepaired.  In the event Landlord electsto terminate this Lease, this Lease shall terminate as of the date specifiedfor termination by Landlord’s Notice (which termination date shall in no eventbe later than sixty (60) days following the date of the damage, or, if no suchdate is specified, such termination shall be the date of Landlord’s Notice).

 

(b)                                 IfLandlord has the right to terminate this Lease pursuant to Section 11.1(a) anddoes not elect to so terminate this Lease, and provided that at the time ofLandlord’s Notice neither an uncured Event of Default exists nor has Landlorddelivered Tenant a notice of any failure by Tenant to fulfill an obligationunder this Lease which, unless cured by Tenant within the applicable graceperiod, would constitute an Event of Default, then within ten (10) businessdays following delivery of Landlord’s Notice pursuant to Section 11.1(a),Tenant may elect to terminate this Lease by written notice to Landlord, butonly if (i) Landlord’s Notice specifies that Landlord has determined that thePremises cannot be repaired, with reasonable diligence, within two hundredseventy (270) days after the date of damage or (ii) the casualty has occurredwithin the final twelve (12) months of the Term and such material damage has amaterially adverse impact on Tenant’s continued use of the Premises.  If Tenant fails to provide such terminationnotice within such ten (10) business day period, Tenant shall be deemed to havewaived any termination right under this Section 1l.1(b) or any other applicablelaw.

 

(c)                                  Inthe event that neither Landlord nor Tenant terminates this Lease pursuant tothis Section 11.1 as a result of material damage to the Building or Premisesresulting from a casualty, Landlord shall repair all material damage to thePremises or the Building as soon as reasonably possible and this Lease shallcontinue in effect for the remainder of the Term.  Subject to any provision to the contrary inthe Work Letter, such repair by Landlord shall include repair of materialdamage to the Tenant Improvements constructed pursuant to the Work Letter.  Landlord shall have the right, but not theobligation, to repair or replace any other leasehold improvements made byTenant or any Alterations (as defined in Section 7.3) constructed byTenant.  If Landlord elects to repair orreplace such leasehold improvements and/or Alterations, all insurance proceedsavailable for such repair or replacement shall be made available toLandlord.  Landlord shall have noliability to Tenant in the event that the Premises or the Building has not beenfully repaired within the time period specified by Landlord in Landlord’sNotice to Tenant as described in Section 11.1(a).  Notwithstanding the foregoing, the repair ofdamage to the Premises to the extent such damage is not material shall begoverned by Sections 7.1 and 7.2.

 

Notwithstandinganything to the contrary contained in this Section 11.1(c), if for any reasonsother than delays caused by Tenant, or other matters beyond Landlord’sreasonable control (not to exceed thirty (30) days in the aggregate), thePremises and/or the Building have not been substantially repaired within thetime period specified in Landlord’s Notice to Tenant as described in Section11.1(a), then Tenant may, by written notice to Landlord given at any timethereafter but prior to the actual date of the substantial completion of therepair of the Premises or the Building, elect to terminate this Lease.  Notwithstanding the foregoing, if at any timeduring the construction period, Landlord reasonably determines that thesubstantial completion of said repairs will be delayed beyond the time periodspecified in Landlord’s Notice (for reasons other than Tenant-caused delaysand/or force majeure delays not exceeding 30 days in the aggregate), thenLandlord may notify Tenant in writing of such determination and of a newoutside date for completion of such repairs, and Tenant must elect within ten(10) days of receipt of such notice to either terminate this Lease or waive itsright to terminate this Lease provided such repairs are substantially completedprior to the new outside date established by Landlord in such notice to Tenant.  Tenant’s failure to elect to terminate thisLease within such ten (10) day period shall be deemed Tenant’s waiver of itsright to terminate this Lease as provided in this paragraph as to the previousoutside date, but not as to the new outside date established by said notice.

 

(d)                                 Commencingon the date of such material damage to the Building, and ending on the soonerof the date the damage is repaired or the date this Lease is terminated, therental to be paid under this Lease shall be abated in the same proportion thatthe Floor Area of the Premises that is rendered unusable by the damage fromtime to time bears to the total Floor Area of the Premises, as reasonablydetermined by Landlord.

 

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(e)                                  Tenantshall fully cooperate with Landlord in removing Tenant’s personal property andany debris from the Premises to facilitate all inspections of the Premises andthe making of any repairs. Notwithstanding anything to the contrary contained in this Lease, ifLandlord in good faith believes there is a risk of injury to persons or damageto property from entry into the Building or Premises following any damage ordestruction thereto, Landlord may restrict entry into the Building or thePremises by Tenant, its employees, agents and contractors in anon-discriminatory manner, without being deemed to have violated Tenant’srights of quiet enjoyment to, or made an unlawful detainer of, or evictedTenant from, the Premises.  Upon request,Landlord shall consult with Tenant to determine if there are safe methods ofentry into the Building or the Premises solely in order to allow Tenant toretrieve files, data in computers, and necessary inventory, subject however toall indemnities and waivers of liability from Tenant to Landlord contained inthis Lease and any additional indemnities and waivers of liability whichLandlord may reasonably require.

 

**SECTION 11.2****.****           LEASEGOVERNS.**  Tenant agrees that theprovisions of this Lease, including without limitation Section 11.1, shallgovern any damage or destruction and shall accordingly supersede any contrarystatute or rule of law.

 

# **ARTICLE XII**.  EMINENT DOMAIN

# ** **

**SECTION12.1****.****           TOTALOR PARTIAL TAKING.**  If all or amaterial portion of the Premises is taken by any lawful authority by exerciseof the right of eminent domain, or sold to prevent a taking, either Tenant orLandlord may terminate this Lease effective as of the date possession isrequired to be surrendered to the authority. In the event title to a portion of the Building or Project, whether ornot including a portion of the Premises, is taken or sold in lieu of taking,and if Landlord elects to restore the Building in such a way as to alter thePremises materially, either party may terminate this Lease, by written noticeto the other party, effective on the date of vesting of title.  In the event neither party has elected toterminate this Lease as provided above, then Landlord shall promptly, afterreceipt of a sufficient condemnation award, proceed to restore the Premises tosubstantially their condition prior to the taking, and a proportionateallowance shall be made to Tenant for the rent corresponding to the time duringwhich, and to the part of the Premises of which, Tenant is deprived on accountof the taking and restoration.  In theevent of a taking, Landlord shall be entitled to the entire amount of thecondemnation award without deduction for any estate or interest of Tenant;provided that nothing in this Section shall be deemed to give Landlord anyinterest in, or prevent Tenant from seeking any award against the takingauthority for, the taking of personal property and fixtures belonging to Tenantor for relocation or business interruption expenses recoverable from the takingauthority.

 

**SECTION 12.2****.****           TEMPORARYTAKING.**  No temporary taking of thePremises shall terminate this Lease or give Tenant any right to abatement ofrent, and any award specifically attributable to a temporary taking of thePremises shall belong entirely to Tenant. A temporary taking shall be deemed to be a taking of the use oroccupancy of the Premises for a period of not to exceed ninety (90) days.

 

**SECTION 12.3****.****           TAKING OFPARKING AREA.**  In the event thereshall be a taking of the parking area such that Landlord can no longer providesufficient parking to comply with this Lease, Landlord may substitutereasonably equivalent parking in a location reasonably close to the Building;provided that if Landlord fails to make that substitution within ninety (90)days following the taking and if the taking materially impairs Tenant’s use andenjoyment of the Premises, Tenant may, at its option, terminate this Lease bywritten notice to Landlord.  If thisLease is not so terminated by Tenant, there shall be no abatement of rent andthis Lease shall continue in effect.

 

# **ARTICLE XIII**.  SUBORDINATION; ESTOPPEL CERTIFICATE;FINANCIALS

# ** **

**SECTION 13.1****.****           SUBORDINATION.**  At the option of Landlord or any lender ofLandlord’s that obtains a security interest in the Building, this Lease shallbe either superior or subordinate to all ground or underlying leases, mortgagesand deeds of trust, if any, which may hereafter affect the Building, and to allrenewals, modifications, consolidations, replacements and extensions thereof;provided, that so long as no uncured Event of Default exists under this Lease,Tenant’s possession and quiet enjoyment of the Premises shall not be disturbedand this Lease shall not terminate in the event of termination of any suchground or underlying lease, or the foreclosure of any such mortgage or deed oftrust, to which this Lease has been subordinated pursuant to this Section.  Tenant shall, at any time upon not less thantwenty (20) days prior written notice from Landlord, execute and deliver any documentsor agreements that are in commercially reasonable form and are requested byLandlord or such lessor or lender which provide Tenant with the non-disturbanceprotections set forth in this Section. In the event of a termination or foreclosure, Tenant shall become atenant of and attorn to the successor-in-interest to Landlord upon the sameterms and conditions as are contained in this Lease, and shall execute anyinstrument reasonably required by Landlord’s successor for that purpose.  Tenant shall also, upon written request ofLandlord, execute and deliver all instruments as may be required from time totime to subordinate the rights of Tenant under this Lease to any ground orunderlying lease or to the lien of any mortgage or deed of trust (provided thatsuch instruments include the nondisturbance and attornment provisions set forthabove and are in commercially reasonable form), or, if requested by Landlord,to subordinate, in whole or in part, any ground or underlying lease or the lienof any mortgage or deed of trust to this Lease. Tenant agrees that any purchaser at a foreclosure sale or lender takingtitle under a deed-in-lieu of foreclosure shall not be responsible for any actor omission of a prior landlord, shall not be subject to any offsets ordefenses Tenant may have against a prior landlord, and shall not be liable forthe return of the security deposit to the extent it is not actually received bysuch purchaser or bound by any rent paid for more than the current month inwhich the foreclosure occurred.

 

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As ofthe execution of this Lease, the Project is encumbered by the lien of a deed oftrust executed by Landlord in favor of Prudential Insurance Company of America(“**Prudential**”).  From and after the execution of this Lease, Landlordshall use its commercially reasonable efforts to cause Prudential to execute aSubordination, Non-Disturbance and Attornment Agreement (the “**SNDA**”) in the form and with the content of EXHIBIT Fattached hereto with and for the benefit of Tenant; provided: (i) Landlordshall pay only the $750.00 “administrative” fee charged by Prudential for theSNDA, and (ii) Tenant shall pay any and all additional fees charged byPrudential for such SNDA.

 

### **SECTION 13.2.**           ESTOPPEL CERTIFICATE.

### ** **

(a)                                  Tenantshall, at any time upon not less than twenty (20) days prior written noticefrom Landlord, execute, acknowledge and deliver to Landlord, in anycommercially reasonable form that Landlord may reasonably require, a statementin writing (i) certifying that this Lease is unmodified and in full force andeffect (or, if modified, stating the nature of the modification and certifyingthat this Lease, as modified, is in full force and effect) and the dates towhich the rental, additional rent and other charges have been paid in advance,if any, and (ii) acknowledging that, to Tenant’s knowledge, there are nouncured defaults on the part of Landlord, or specifying each default if any areclaimed, and (iii) setting forth all further information that Landlord or anypurchaser or encumbrancer may reasonably require.  Tenant’s statement may be relied upon by anyprospective purchaser or encumbrancer of all or any portion of the Building orProject.

 

(b)                                 Notwithstandingany other rights and remedies of Landlord, Tenant’s failure to deliver anyestoppel statement within the provided time shall be conclusive upon Tenantthat (i) this Lease is in full force and effect, without modification except asmay be represented by Landlord, (ii) there are no uncured Events of Default inLandlord’s performance, and (iii) not more than one month’s rental has beenpaid in advance.

 

### **SECTION13.3**.           FINANCIALS.

### ** **

(a)                                  Tenantshall deliver to Landlord, prior to the execution of this Lease and thereafterat any time within twenty (20) days upon Landlord’s request (but not morefrequently than once during any calendar year during the Term), Tenant’scurrent tax returns and financial statements, certified true, accurate andcomplete by the chief financial officer of Tenant, including a balance sheetand profit and loss statement for the most recent prior year, or, in the eventTenant is a publicly traded corporation on a nationally recognized stockexchange, Tenant’s current financial reports filed with the Securities andExchange Commission (collectively, the “**Statements**”),which Statements shall accurately and completely reflect the financialcondition of Tenant.  Landlord agreesthat it will keep the Statements confidential, except that Landlord shall havethe right to deliver the same to any proposed purchaser of the Building orProject, and to any encumbrancer of all or any portion of the Building orProject.

 

(b)                                 Tenantacknowledges that Landlord is relying on the Statements in its determination toenter into this Lease, and Tenant represents to Landlord, which representationshall be deemed made on the date of this Lease, that no material change in thefinancial condition of Tenant, as reflected in the Statements, has occurredsince the date Tenant delivered the Statements to Landlord.  The Statements are represented and warrantedby Tenant to be correct and to accurately and fully reflect Tenant’s truefinancial condition as of the date of submission by any Statements to Landlord.

 

# **ARTICLE XIV**.  EVENTS OFDEFAULT AND REMEDIES

# ** **

**SECTION 14.1****.****           TENANT’SDEFAULTS.**  In addition to any otherbreaches of this Lease which are defined as Events of Default in this Lease,the occurrence of any one or more of the following events, and the expirationof any “cure” period without cure by Tenant, shall constitute an Event of Defaultby Tenant:

 

(a)                                  Thefailure by Tenant to make any payment of Basic Rent or additional rent requiredto be made by Tenant, as and when due, where the failure continues for a periodof five (5) days after written notice from Landlord to Tenant; provided,however, that any such notice shall be in lieu of, and not in addition to, anynotice required under California Code of Civil Procedure Section 1161 and1161(a) as amended.  For purposes ofthese Events of Default and remedies provisions, the term “**additionalrent**” shall be deemed to include all amounts of any type whatsoeverother than Basic Rent to be paid by Tenant pursuant to the terms of this Lease.

 

(b)                                 Exceptas provided in Article IX of this Lease, the assignment, sublease,encumbrance or other transfer of this Lease by Tenant, either voluntarily or byoperation of law, whether by judgment, execution, transfer by intestacy ortestacy, or other means, where such assignment, sublease, encumbrance or othertransfer remains in effect for a period of fifteen (15) days after writtennotice from Landlord to Tenant.

 

(c)                                  Thediscovery by Landlord that any financial statement provided by Tenant, or byany affiliate, successor or guarantor of Tenant, was materially false.

 

(d)                                 Thefailure of Tenant to timely and fully provide any subordination agreement,estoppel certificate or financial statements in accordance with therequirements of Article XIII, where the failure continues for a period ofthree (3) business days after written notice from Landlord to Tenant.

 

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(e)                                  Theabandonment of the Premises by Tenant.

 

(f)                                    Thefailure or inability by Tenant to observe or perform any of the express orimplied covenants or provisions of this Lease to be observed or performed byTenant, other than as specified in this Section 14.1, where the failurecontinues for a period of thirty (30) days after written notice from Landlordto Tenant or such shorter period as is specified in any other provision of thisLease; provided, however, that any such notice shall be in lieu of, and not inaddition to, any notice required under California Code of Civil ProcedureSection 1161 and 1161(a) as amended (but the foregoing shall not limit ormodify the cure periods specifically set forth in this Section 14).However, if the nature of the failure is such that more than thirty (30) daysare reasonably required for its cure, then Tenant shall not be deemed to havecommitted an Event of Default if Tenant commences the cure within thirty (30)days, and thereafter diligently pursues the cure to completion.

 

(g)                                 (i)The making by Tenant of any general assignment for the benefit of creditors;(ii) the filing by or against Tenant of a petition to have Tenant adjudged aChapter 7 debtor under the Bankruptcy Code or to have debts discharged or apetition for reorganization or arrangement under any law relating to bankruptcy(unless, in the case of a petition filed against Tenant, the same is dismissedwithin sixty (60) days); (iii) the appointment of a trustee or receiver to takepossession of substantially all of Tenant’s assets located at the Premises orof Tenant’s interest in this Lease, if possession is not restored to Tenantwithin sixty (60) days; (iv) the attachment, execution or other judicialseizure of substantially all of Tenant’s assets located at the Premises or ofTenant’s interest in this Lease, where the seizure is not discharged withinsixty (60) days; (v) Tenant’s convening of a meeting of its creditors for thepurpose of effecting a moratorium upon or composition of its debts or (vi) thefailure of Tenant to pay its material obligations to creditors as and when theybecome due and payable, other than as a result of a good faith dispute byTenant as to the amount due to such creditors. Landlord shall not be deemed to have knowledge of any event described inthis Section 14.1(g) unless notification in writing is received by Landlord,nor shall there be any presumption attributable to Landlord of Tenant’sinsolvency.  In the event that anyprovision of this Section 14.1(g) is contrary to applicable law, the provisionshall be of no force or effect.

 

### **SECTION14.2**.           LANDLORD’S REMEDIES.

### ** **

(a)                                  Ifan Event of Default by Tenant occurs, then in addition to any other remediesavailable to Landlord, Landlord may exercise the following remedies:

 

(i)                                     Landlordmay terminate Tenant’s right to possession of the Premises by any lawful means,in which case this Lease shall terminate and Tenant shall immediately surrenderpossession of the Premises to Landlord. Such termination shall not affect any accrued obligations of Tenantunder this Lease.  Upon termination,Landlord shall have the right to reenter the Premises and remove all personsand property.  Landlord shall also beentitled to recover from Tenant:

 

(1)                                  Theworth at the time of award of the unpaid Basic Rent and additional rent whichhad been earned at the time of termination;

 

(2)                                  Theworth at the time of award of the amount by which the unpaid Basic Rent andadditional rent which would have been earned after termination until the timeof award exceeds the amount of such loss that Tenant proves could have beenreasonably avoided;

 

(3)                                  Theworth at the time of award of the amount by which the unpaid Basic Rent andadditional rent for the balance of the Term after the time of award exceeds theamount of such loss that Tenant proves could be reasonably avoided;

 

(4)                                  Anyother amount necessary to compensate Landlord for all the detriment proximatelycaused by Tenant’s failure to perform its obligations under this Lease or whichin the ordinary course of things would be likely to result from Tenant’s Eventof Default, including, but not limited to, the cost of recovering possession ofthe Premises, refurbishment of the Premises, marketing costs, commissions andother expenses of reletting, including necessary repair, the unamortizedportion of any tenant improvements and brokerage commissions funded by Landlordin connection with this Lease, reasonable attorneys’ fees, and any otherreasonable costs; and

 

(5)                                  AtLandlord’s election, all other amounts in addition to or in lieu of theforegoing as may be permitted by law. The term “rent” as used in the Lease shall be deemed to mean the BasicRent, Tenant’s Share of Operating Expenses and any other sums required to bepaid by Tenant to Landlord pursuant to the terms of this Lease, including,without limitation, any sums that may be owing from Tenant pursuant to Section4.3 of this Lease.  Any sum, other thanBasic Rent, shall be computed on the basis of the average monthly amountaccruing during the twenty-four (24) month period immediately prior to theEvent of Default, except that if it becomes necessary to compute such rentalbefore the twenty-four (24) month period has occurred, then the computation shallbe on the basis of the average monthly amount during the shorter period.  As used in Sections 14.2(a)(i) (1) and (2)above, the “worth at the time of award” shall be computed by allowing interestat the rate of ten percent (10%) per annum. As used in Section 14.2(a)(i)(3) above, the “worth at the time of award”shall be computed by discounting the amount at the discount rate of the FederalReserve Bank of San Francisco at the time of award plus one percent (1%).

 

(ii)                                  Landlordmay elect not to terminate Tenant’s right to possession of the Premises, inwhich event Landlord may continue to enforce all of its rights and remediesunder this Lease, including the right to

 

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collect all rent as it becomes due.  Efforts by the Landlord to maintain, preserveor relet the Premises, or the appointment of a receiver to protect the Landlord’sinterests under this Lease, shall not constitute a termination of the Tenant’sright to possession of the Premises.  Inthe event that Landlord elects to avail itself of the remedy provided by thisSection 14.2(a)(ii), Landlord shall not unreasonably withhold its consent to anassignment or subletting of the Premises subject to the reasonable standardsfor Landlord’s consent as are contained in this Lease.

 

(b)                                 Thevarious rights and remedies reserved to Landlord in this Lease or otherwiseshall be cumulative and, except as otherwise provided by California law,Landlord may pursue any or all of its rights and remedies at the same time.

 

(c)                                  Nodelay or omission of Landlord to exercise any right or remedy shall beconstrued as a waiver of the right or remedy or of any breach or Event ofDefault by Tenant.  The acceptance byLandlord of rent shall not be a (i) waiver of any preceding breach or Event ofDefault by Tenant of any provision of this Lease, other than the failure ofTenant to pay the particular rent accepted, regardless of Landlord’s knowledgeof the preceding breach or Event of Default at the time of acceptance of rent,or (ii) a waiver of Landlord’s right to exercise any remedy available toLandlord by virtue of the breach or Event of Default.  No payment by Tenant or receipt by Landlordof a lesser amount than the rent required by this Lease shall be deemed to beother than a partial payment on account of the earliest due stipulated rent,nor shall any endorsement or statement on any check or letter be deemed anaccord and satisfaction and Landlord shall accept the check or payment withoutprejudice to Landlord’s right to recover the balance of the rent or pursue anyother remedy available to it.  No act orthing done by Landlord or Landlord’s agents during the Term shall be deemed anacceptance of a surrender of the Premises, and no agreement to accept asurrender shall be valid unless in writing and signed by Landlord.  No employee of Landlord or of Landlord’sagents shall have any power to accept the keys to the Premises prior to thetermination of this Lease, and the delivery of the keys to any employee shallnot operate as a termination of this Lease or a surrender of the Premises.

 

### **SECTION14.3**.           LATE PAYMENTS.

### ** **

(a)                                  Anypayment due to Landlord under this Lease, including without limitation BasicRent, Tenant’s Share of Operating Expenses or any other payment due to Landlordunder this Lease, that is not received by Landlord within five (5) daysfollowing the date due shall bear interest at the maximum rate permitted by lawfrom the date due until fully paid.  Thepayment of interest shall not cure any breach or Event of Default by Tenantunder this Lease.  In addition, Tenantacknowledges that the late payment by Tenant to Landlord of Basic Rent andTenant’s Share of Operating Expenses will cause Landlord to incur costs notcontemplated by this Lease, the exact amount of which will be extremelydifficult and impracticable to ascertain. Those costs may include, but are not limited to, administrative,processing and accounting charges, and late charges which may be imposed onLandlord by the terms of any ground lease, mortgage or trust deed covering thePremises.  Accordingly, if any Basic Rentor Tenant’s Share of Operating Expenses due from Tenant shall not be receivedby Landlord or Landlord’s designee within five (5) days following the date due,then Tenant shall pay to Landlord, in addition to the interest provided above,a late charge, which the Tenant agrees is reasonable, in a sum equal to thegreater of five percent (5%) of the amount overdue or Two Hundred Fifty Dollars($250.00) for each delinquent payment. Notwithstanding the foregoing, the late fee for the initial late paymentof Basic Rent and/or Operating Expenses during each calendar year of the Termshall be waived.  Acceptance of a latecharge by Landlord shall not constitute a waiver of Tenant’s breach or Event ofDefault with respect to the overdue amount, nor shall it prevent Landlord fromexercising any of its other rights and remedies.

 

(b)                                 Followingeach second installment of Basic Rent and/or the payment of Tenant’s Share ofOperating Expenses within any twelve (12) month period that is not paid withinfive (5) days following the date due, Landlord shall have the option to requirethat beginning with the first payment of Basic Rent next due, Basic Rent andthe Tenant’s Share of Operating Expenses shall no longer be paid in monthlyinstallments but shall be payable quarterly three (3) months in advance.  Should Tenant deliver to Landlord, at anytime during the Term, two (2) or more insufficient checks, the Landlord mayrequire that all monies then and thereafter due from Tenant be paid to Landlordby cashier’s check.  If any check for anypayment to Landlord hereunder is returned by the bank for any reason, suchpayment shall not be deemed to have been received by Landlord and Tenant shallbe responsible for any applicable late charge, interest payment and the chargeto Landlord by its bank for such returned check.  Nothing in this Section shall be construed tocompel Landlord to accept Basic Rent, Tenant’s Share of Operating Expenses orany other payment from Tenant if there exists an Event of Default unless suchpayment fully cures any and all such Event of Default.  Any acceptance of any such payment shall notbe deemed to waive any other right of Landlord under this Lease.  Any payment by Tenant to Landlord may beapplied by Landlord, in its sole and absolute discretion, in any orderdetermined by Landlord to any amounts then due to Landlord.

 

**SECTION 14.4****.****           RIGHT OFLANDLORD TO PERFORM.**  All covenantsand agreements to be performed by Tenant under this Lease shall be performed atTenant’s sole cost and expense and without any abatement of rent or right ofset-off.  If Tenant fails to pay any sumof money, other than rent payable to Landlord, or fails to perform any otheract on its part to be performed under this Lease, and the failure continuesbeyond any applicable grace period set forth in Section 14.1, then in additionto any other available remedies, Landlord may, at its election make the paymentor perform the other act on Tenant’s part and Tenant hereby grants Landlord theright to enter onto the Premises in order to carry out such performance.  Landlord’s election to make the payment orperform the act on Tenant’s part shall not give rise to any responsibility ofLandlord to continue making the same or similar payments or performing the sameor similar acts nor shall Landlord be responsible to Tenant for any damagecaused to Tenant as the result of such performance by Landlord.  Tenant shall, promptly upon demand byLandlord, reimburse Landlord for all sums paid by Landlord and all necessaryincidental costs, together with interest at the maximum rate permitted by law(not to exceed ten percent (10%) per annum) from the date of the payment byLandlord.

 

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**SECTION 14.5****.****           DEFAULTBY LANDLORD.**  Landlord shall not bedeemed to be in default in the performance of any obligation under this Lease,and Tenant shall have no rights to take any action against Landlord, unless anduntil Landlord has failed to perform the obligation within thirty (30) daysafter written notice by Tenant to Landlord specifying in reasonable detail thenature and extent of the failure; provided, however, that if the nature ofLandlord’s obligation is such that more than thirty (30) days are required forits performance, then Landlord shall not be deemed to be in default if itcommences performance within the thirty (30) day period and thereafterdiligently pursues the cure to completion. In the event of Landlord’s default under this Lease, Tenant’s soleremedies shall be to seek damages or specific performance from Landlord,provided that any damages shall be limited to Tenant’s actual out-of-pocketexpenses and shall in no event include any consequential damages, lost profitsor opportunity costs.

 

**SECTION 14.6****.****           EXPENSESAND LEGAL FEES.**  All sums reasonablyincurred by Landlord in connection with any Event of Default by Tenant underthis Lease or holding over of possession by Tenant after the expiration orearlier termination of this Lease, or any action related to a filing forbankruptcy or reorganization by Tenant, including without limitation allreasonable costs, expenses and actual accountants, appraisers, attorneys andother professional fees, and any collection agency or other collection charges,shall be due and payable to Landlord on demand, and shall bear interest at therate of ten percent (10%) per annum. Should either Landlord or Tenant bring any action in connection withthis Lease, the prevailing party shall be entitled to recover as a part of theaction its reasonable attorneys’ fees, and all other costs.  The prevailing party for the purpose of thisSection shall be determined by the trier of the facts.

 

**SECTION 14.7****.****           WAIVER OFJURY TRIAL.  LANDLORD AND TENANT EACHACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITSCHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY, AND EACH PARTY DOES HEREBYEXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY INANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINSTTHE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ORSUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF ORIN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THEPREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE.**  **FURTHERMORE, THIS WAIVERAND RELEASE OF ALL RIGHTS TO A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACHAND EVERY OTHER PROVISION, COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.**

 

**SECTION 14.8****.****           SATISFACTIONOF JUDGMENT.**  The obligations ofLandlord do not constitute the personal obligations of the individual partners,trustees, directors, officers or shareholders of Landlord or its constituentpartners.  Should Tenant recover a moneyjudgment against Landlord, such judgment shall be satisfied only from theinterest of Landlord in the Project and out of the rent or other income fromsuch property receivable by Landlord or out of consideration received byLandlord from the sale or other disposition of all or any part of Landlord’sright, title or interest in the Project and no action for any deficiency may besought or obtained by Tenant.

 

# **ARTICLE XV.** END OF TERM

# ** **

**SECTION 15.1****.****           HOLDINGOVER.**  This Lease shall terminatewithout further notice upon the expiration of the Term, and any holding over byTenant after the expiration shall not constitute a renewal or extension of thisLease, or give Tenant any rights under this Lease, except when in writingsigned by both parties.  Any period oftime following the Expiration Date or earlier termination of this Leaserequired for Tenant to remove its property or to place the Premises in thecondition required pursuant to Section 15.3 (or for Landlord to do so ifTenant fails to do so) shall be deemed a holding over by Tenant.  If Tenant holds over for any period after theExpiration Date (or earlier termination) of the Term without the prior writtenconsent of Landlord, such possession shall constitute a tenancy at sufferanceonly and an Event of Default under this Lease; such holding over with the priorwritten consent of Landlord shall constitute a month-to-month tenancycommencing on the first (1st) day following the termination of this Lease andterminating thirty (30) days following delivery of written notice oftermination by either Landlord or Tenant to the other.  In either of such events, possession shall besubject to all of the terms of this Lease, except that the monthly Basic Rentshall be the greater of (a) one hundred fifty percent (150%) of the BasicRent for the month immediately preceding the date of termination or (b) thethen currently scheduled Basic Rent for comparable space in the Project.  The acceptance by Landlord of monthlyholdover rental in a lesser amount shall not constitute a waiver of Landlord’sright to recover the full amount due for any holdover by Tenant, unlessotherwise agreed in writing by Landlord. If Tenant fails to surrender the Premises upon the expiration of thisLease despite demand to do so by Landlord, Tenant shall indemnify and holdLandlord harmless from all loss or liability, including without limitation, anyclaims made by any succeeding tenant relating to such failure tosurrender.  The foregoing provisions ofthis Section are in addition to and do not affect Landlord’s right of re-entryor any other rights of Landlord under this Lease or at law.

 

**SECTION 15.2****.****           MERGER ONTERMINATION.**  The voluntary or othersurrender of this Lease by Tenant, or a mutual termination of this Lease, shallterminate any or all existing subleases unless Landlord, at its option, electsin writing to treat the surrender or termination as an assignment to it of anyor all subleases affecting the Premises.

 

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**SECTION 15.3****.****           SURRENDEROF PREMISES; REMOVAL OF PROPERTY.** Subject to the provisions of 7.3 of this Lease, upon the Expiration Dateor upon any earlier termination of this Lease, Tenant shall quit and surrenderpossession of the Premises to Landlord in as good order, condition and repairas when received or as hereafter may be improved by Landlord or Tenant,reasonable wear and tear, casualty, condemnation and repairs which are Landlord’sobligation excepted, and shall, without expense to Landlord, remove or cause tobe removed from the Premises all personal property and debris, except for anyitems that Landlord may by written authorization allow to remain.  Tenant shall repair all damage to thePremises resulting from the removal, which repair shall include the patchingand filling of holes and repair of structural damage, provided that Landlordmay instead elect to repair any structural damage at Tenant’s expense.  If Tenant shall fail to comply with theprovisions of this Section, Landlord may effect the removal and/or make anyrepairs, and the cost to Landlord shall be additional rent payable by Tenantupon demand.  If Tenant fails to removeTenant’s personal property from the Premises upon the expiration of the Term,Landlord may remove, store, dispose of and/or retain such personal property, atLandlord’s option, in accordance with then applicable laws, all at the expenseof Tenant.  If requested by Landlord,Tenant shall execute, acknowledge and deliver to Landlord an instrument inwriting releasing and quitclaiming to Landlord all right, title and interest ofTenant in the Premises.

 

# **ARTICLE XVI.** PAYMENTS AND NOTICES

# ** **

Allsums payable by Tenant to Landlord shall be deemed to be rent under this Leaseand shall be paid, without deduction or offset, in lawful money of the UnitedStates to Landlord at its address set forth in Item 12 of the Basic LeaseProvisions, or at any other place as Landlord may designate in writing.  Unless this Lease expressly providesotherwise, as for example in the payment of Basic Rent and the Tenant’s Share ofOperating Costs pursuant to Sections 4.1 and 4.2, all payments shall bedue and payable within five (5) days after demand.  All payments requiring proration shall beprorated on the basis of a thirty (30) day month and a three hundred sixty(360) day year.  Any notice, election,demand, consent, approval or other communication to be given or other documentto be delivered by either party to the other may be delivered in person or bycourier or overnight delivery service to the other party, or may be depositedin the United States mail, duly registered or certified, postage prepaid,return receipt requested, and addressed to the other party at the address setforth in Item 12 of the Basic Lease Provisions. Either party may, by written notice to the other, served in the mannerprovided in this Article, designate a different address.  If any notice or other document is sent bymail, it shall be deemed served or delivered three (3) business days aftermailing.  If more than one person orentity is named as Tenant under this Lease, service of any notice upon any oneof them shall be deemed as service upon all of them.

 

# **ARTICLE XVII. **RULES AND REGULATIONS

# ** **

Tenantagrees to observe faithfully and comply strictly with the Rules andRegulations, attached as Exhibit E, and any reasonable andnondiscriminatory amendments, modifications and/or additions as may be adoptedand published by written notice to tenants by Landlord for the safety, care,security, good order, or cleanliness of the Premises, Building, Project andCommon Areas.  Landlord shall not beliable to Tenant for any violation of the Rules and Regulations or the breachof any covenant or condition in any lease by any other tenant or such tenant’sagents, employees, contractors, guests or invitees.  One or more waivers by Landlord of any breachof the Rules and Regulations by Tenant or by any other tenant(s) shall not be awaiver of any subsequent breach of that rule or any other.  Tenant’s failure to keep and observe theRules and Regulations shall constitute a breach of this Lease.  In the case of any conflict between the Rulesand Regulations and this Lease, this Lease shall be controlling.

 

# **ARTICLE XVIII.** BROKER’S COMMISSION

# ** **

Theparties recognize as the broker(s) who negotiated this Lease the firm(s), ifany, whose name(s) is (are) stated in Item 10 of the Basic LeaseProvisions, and agree that Landlord shall be responsible for the payment ofbrokerage commissions to those broker(s) unless otherwise provided in thisLease.  Each party warrants that it hashad no dealings with any other real estate broker or agent in connection withthe negotiation of this Lease, and each party agrees to indemnify and hold theother party harmless from any cost, expense or liability (including reasonableattorneys’ fees) for any compensation, commissions or charges claimed by anyother real estate broker or agent employed or claiming to represent or to havebeen employed by the indemnifying party in connection with the negotiation ofthis Lease.  The foregoing agreement shallsurvive the termination of this Lease. If Tenant fails to take possession of the Premises or if this Leaseotherwise terminates prior to the Expiration Date as the result of failure ofperformance by Tenant, Landlord shall be entitled to recover from Tenant theunamortized portion of any brokerage commission funded by Landlord in additionto any other damages to which Landlord may be entitled.

 

# **ARTICLE XIX. **TRANSFER OF LANDLORD’SINTEREST

# ** **

In theevent of any transfer of Landlord’s interest in the Premises, but provided thetransferee assumes in writing the transferor’s obligations under this Leaseaccruing from and after the effective date of said transfer, the transferorshall be automatically relieved of all further obligations on the part ofLandlord, and the transferor shall be relieved of any obligation to pay anyfunds in which Tenant has an interest to the extent that such funds have beenturned over, subject to that interest, to the transferee and Tenant is notifiedof the transfer as required by law .  Nobeneficiary of a deed of trust to which this Lease is or may be subordinate,and no landlord under a so-called sale-leaseback, shall be responsible inconnection with the Security Deposit, unless the mortgagee or beneficiary underthe deed of trust or the landlord actually receives the Security Deposit.  It is intended that the covenants andobligations contained in this Lease on the part of Landlord shall, subject tothe foregoing, be binding on Landlord, its successors and assigns, only duringand in respect to their respective successive periods of ownership.

 

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# **ARTICLE XX.** INTERPRETATION

# ** **

**SECTION 20.1****.****           GENDERAND NUMBER.**  Whenever the context ofthis Lease requires, the words “**Landlord**” and “**Tenant**” shall include the plural as well as the singular,and words used in neuter, masculine or feminine genders shall include theothers.

 

**SECTION 20.2****.****           HEADINGS.**  The captions and headings of the articles andsections of this Lease are for convenience only, are not a part of this Leaseand shall have no effect upon its construction or interpretation.

 

**SECTION 20.3****.****           JOINT ANDSEVERAL LIABILITY.**  If more than oneperson or entity is named as Tenant, the obligations imposed upon each shall bejoint and several and the act of or notice from, or notice or refund to, or thesignature of, any one or more of them shall be binding on all of them withrespect to the tenancy of this Lease, including, but not limited to, anyrenewal, extension, termination or modification of this Lease.

 

**SECTION 20.4****.****           SUCCESSORS.**  Subject to Articles IX and XIX, all rightsand liabilities given to or imposed upon Landlord and Tenant shall extend toand bind their respective heirs, executors, administrators, successors andassigns.  Nothing contained in thisSection is intended, or shall be construed, to grant to any person other thanLandlord and Tenant and their successors and assigns any rights or remediesunder this Lease.

 

**SECTION 20.5****.****           TIME OFESSENCE.**  Time is of the essence withrespect to the performance of every provision of this Lease.

 

**SECTION 20.6****.****           CONTROLLINGLAW/VENUE.**  This Lease shall begoverned by and interpreted in accordance with the laws of the State ofCalifornia.  Any litigation commencedconcerning any matters whatsoever arising out of or in any way connected tothis Lease shall be initiated in the Superior Court of the county in which theProject is located.

 

**SECTION 20.7****.****           SEVERABILITY.**  If any term or provision of this Lease, thedeletion of which would not adversely affect the receipt of any materialbenefit by either party or the deletion of which is consented to by the partyadversely affected, shall be held invalid or unenforceable to any extent, theremainder of this Lease shall not be affected and each term and provision ofthis Lease shall be valid and enforceable to the fullest extent permitted bylaw.

 

**SECTION 20.8****.****           WAIVERAND CUMULATIVE REMEDIES.**  One or morewaivers by Landlord or Tenant of any breach of any term, covenant or conditioncontained in this Lease shall not be a waiver of any subsequent breach of thesame or any other term, covenant or condition. Consent to any act by one of the parties shall not be deemed to renderunnecessary the obtaining of that party’s consent to any subsequent act.  No breach by Tenant of this Lease shall bedeemed to have been waived by Landlord unless the waiver is in a writing signedby Landlord.  The rights and remedies ofLandlord under this Lease shall be cumulative and in addition to any and allother rights and remedies which Landlord may have.

 

**SECTION 20.9****.****           INABILITYTO PERFORM.**  In the event that eitherparty shall be delayed or hindered in or prevented from the performance of anywork or in performing any act required under this Lease by reason of any cause beyondthe reasonable control of that party, other than financial inability, then theperformance of the work or the doing of the act shall be excused for the periodof the delay and the time for performance shall be extended for a periodequivalent to the period of the delay. The provisions of this Section shall not operate to excuse Tenant fromthe prompt payment of rent or from the timely performance of any otherobligation under this Lease within Tenant’s reasonable control.

 

**SECTION 20.10****.****    ENTIRE AGREEMENT.**  This Lease and its exhibits and otherattachments cover in full each and every agreement of every kind between theparties concerning the Premises, the Building, and the Project, and allpreliminary negotiations, oral agreements, understandings and/or practices,except those contained in this Lease, are superseded and of no furthereffect.  Tenant waives its rights to relyon any representations or promises made by Landlord or others which are notcontained in this Lease.  No verbalagreement or implied covenant shall be held to modify the provisions of thisLease, any statute, law, or custom to the contrary notwithstanding.

 

**SECTION 20.11****.****    QUIET ENJOYMENT.**  Upon the observance and performance of allthe covenants, terms and conditions on Tenant’s part to be observed andperformed, and subject to the other provisions of this Lease, Tenant shall havethe right of quiet enjoyment and use of the Premises for the Term withouthindrance or interruption by Landlord or any other person claiming by or throughLandlord.

 

**SECTION 20.12****.****    SURVIVAL.**  All covenants of Landlord or Tenant whichreasonably would be intended to survive the expiration or sooner termination ofthis Lease, including without limitation any warranty or indemnity hereunder,shall so survive and continue to be binding upon and inure to the benefit ofthe respective parties and their successors and assigns.

 

**SECTION 20.13****.****    INTERPRETATION. **This Lease shall not be construed infavor of or against either party, but shall be construed as if both partiesprepared this Lease.

 

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# **ARTICLE XXI**.  EXECUTIONAND RECORDING

# ** **

**SECTION 21.1****.****           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.

 

**SECTION 21.2****.****           CORPORATE,LIMITED LIABILITY COMPANY AND PARTNERSHIP AUTHORITY.**  If Tenant is a corporation, limited liabilitycompany or partnership, Tenant represents and warrants that each individualexecuting this Lease on behalf of the corporation, limited liability company orpartnership is duly authorized to execute and deliver this Lease on behalf ofthe corporation, limited liability company or partnership, and that this Leaseis binding upon the corporation, limited liability company or partnership inaccordance with its terms.

 

**SECTION 21.3****.****           EXECUTIONOF LEASE; NO OPTION OR OFFER.**  Thesubmission of this Lease to Tenant shall be for examination purposes only, andshall not constitute an offer to or option for Tenant to lease thePremises.  Execution of this Lease byTenant and its return to Landlord shall not be binding upon Landlord,notwithstanding any time interval, until Landlord has in fact executed anddelivered this Lease to Tenant, it being intended that this Lease shall onlybecome effective upon execution by Landlord and delivery of a fully executedcounterpart to Tenant.

 

**SECTION 21.4****.****           RECORDING.**  Tenant shall not record this Lease withoutthe prior written consent of Landlord. Tenant, upon the request of Landlord, shall execute and acknowledge a “**short form**” memorandum of this Lease for recording purposes.

 

**SECTION 21.5****.****           AMENDMENTS.**  No amendment or termination of this Leaseshall be effective unless in writing signed by authorized signatories of Tenantand Landlord, or by their respective successors in interest.  No actions, policies, oral or informalarrangements, business dealings or other course of conduct by or between theparties shall be deemed to modify this Lease in any respect.

 

**SECTION 21.6****.****           EXECUTEDCOPY.**  Any fully executed photocopyor similar reproduction of this Lease shall be deemed an original for allpurposes.

 

**SECTION 21.7****.****           ATTACHMENTS.**  All exhibits, amendments, riders and addendaattached to this Lease are hereby incorporated into and made a part of thisLease.

 

# **ARTICLE XXII. **MISCELLANEOUS

# ** **

**SECTION 22.1****.****           NONDISCLOSUREOF LEASE TERMS.**  Tenant acknowledgesand agrees that the terms of this Lease are confidential and constituteproprietary 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 and attorneys, shall notintentionally and voluntarily disclose, by public filings or otherwise, theterms and conditions of this Lease (“**ConfidentialInformation**”) to any third party, either directly or indirectly,without the prior written consent of Landlord, which consent may be given orwithheld in Landlord’s sole and absolute discretion.  The foregoing restriction shall not apply ifeither: (i) Tenant is required to disclose the Confidential Information inresponse to a subpoena or other regulatory, administrative or court order, (ii)Tenant is required to disclose the Confidential Information to, or file a copyof this Lease with, any governmental agency or any stock exchange; providedhowever, that if disclosure of the Confidential Information is required bysubpoena or other regulatory, administrative or court order, Tenant shallprovide Landlord with as much advance notice of the possibility of suchdisclosure as practical so that Landlord may attempt to stop such disclosure orobtain an order concerning such disclosure. In addition, Tenant may disclose the terms of this Lease to (i)prospective assignees of this Lease and prospective subtenants under this Leasewith whom Tenant is actively negotiating such an assignment or sublease, (ii)to Tenant’s attorneys, accountants and financial advisors, and (iii) inconnection with any acquisition of Tenant by merger, consolidation,nonbankruptcy reorganization, or government action, a sale of substantially allof Tenant’s assets, any sale or transfer of Tenant’s capital stock or any financingby Tenant.

 

**SECTION 22.2****.****           GUARANTY.**  [Intentionally Deleted]

 

**SECTION 22.3****.****           CHANGESREQUESTED BY LENDER.**  If, inconnection with obtaining financing for the Project, the lender shall requestreasonable modifications in this Lease as a condition to the financing, Tenantwill not unreasonably withhold or delay its consent, provided that themodifications do not materially increase the obligations of Tenant ormaterially and adversely affect the leasehold interest created by this Lease.

 

**SECTION 22.4****.****           MORTGAGEEPROTECTION**.  No act or failure to acton the part of Landlord which would otherwise entitle Tenant to be relieved ofits obligations hereunder shall result in such a release or termination unless(a) Tenant has given notice by registered or certified mail to any beneficiaryof a deed of trust or mortgage covering the Building whose address has beenfurnished to Tenant and (b) such beneficiary is afforded a reasonableopportunity to cure the default by Landlord (which in no event shall be less thansixty (60) days), including, if necessary to effect the cure, time to obtainpossession of the Building by power of sale or judicial foreclosure providedthat such foreclosure remedy is diligently pursued.  Tenant agrees that each beneficiary of a deedof trust or mortgage covering the Building is an express third partybeneficiary hereof, Tenant shall have no right or claim for the collection ofany deposit from such beneficiary or from any purchaser at a foreclosure saleunless such beneficiary or purchaser shall have actually received and notrefunded the deposit, and Tenant shall comply with any

 

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written directions by any beneficiary to pay rent due hereunderdirectly to such beneficiary without determining whether a default exists undersuch beneficiary’s deed of trust.

 

**SECTION 22.5****.****           COVENANTSAND CONDITIONS.**  All of theprovisions of this Lease shall be construed to be conditions as well ascovenants as though the words specifically expressing or imparting covenantsand conditions were used in each separate provision.

 

**SECTION 22.6****.****           SECURITYMEASURES.**  Tenant hereby acknowledgesthat Landlord shall have no obligation whatsoever to provide guard service orother security measures for the benefit of the Premises or the Project.  Tenant assumes all responsibility for theprotection of Tenant, its employees, agents, invitees and property from acts ofthird parties.  Nothing herein containedshall prevent Landlord, at its sole option, from providing security protectionfor the Project or any part thereof, in which event the cost thereof shall beincluded within the definition of Project Costs.

 

**SECTION22.7****.****           JAMS.**

 

(a)                                  Allclaims or disputes between Landlord and Tenant arising out of, or relating tothe Lease which either party is expressly authorized by a provision hereof tosubmit to arbitration, shall be decided by the JAMS/ENDISPUTE, or itssuccessor, in Orange, California (“**JAMS**”),unless the parties mutually agree otherwise. Within ten (10) business days following submission to JAMS, JAMS shalldesignate three arbitrators and each party may, within five (5) business daysthereafter, veto one of the three persons so designated.  If two different designated arbitrators havebeen vetoed, the third arbitrator shall hear and decide the matter.  Any arbitration pursuant to this Section 22.7shall be decided within thirty (30) days of submission of JAMS.  The decision of the arbitrator shall be finaland binding on the parties.  In no eventshall the arbitrator be empowered or authorized to award consequential orpunitive damages (including any award for lost profit or opportunity costs orloss or interruption of business or income). All costs associated with arbitration shall be awarded to the prevailingparty as determined by the arbitrator.

 

(b)                                 Noticeof the demand for arbitration by either party to the Lease shall be filed inwriting with the other party to the Lease and with JAMS and shall be madewithin a reasonable time after the dispute has arisen.  The award rendered by the arbitrators shallbe final, and judgment may be entered upon it in accordance with applicable lawin any court having jurisdiction thereof. Except by written consent of the person or entity sought to be joined,no arbitration arising out of or relating to the Lease shall include, byconsolidation, joinder or in any other manner, any person or entity not a partyto the Lease under which such arbitration is filed unless (1) such person orentity is substantially involved in a common question of fact or law, (2) thepresence of such person or entity is required if complete relief is to beaccorded in the arbitration, or (3) the interest or responsibility of suchperson or entity in the matter is not insubstantial.

 

(c)                                  Theagreement herein among the parties to the Lease and any other written agreementto arbitrate referred to herein shall be specifically enforceable underprevailing law.

 

**SECTION22.8****. APPROVALS.**  Whenever this Lease requires an approval,consent, determination, selection or judgment by either Landlord or Tenant,unless another standard is expressly set forth, such approval, consent,determination, selection or judgment and any conditions imposed thereby shallbe reasonable and shall not be unreasonably withheld or delayed.

 
| **LANDLORD:**          | **TENANT:**                              |
|------------------------|------------------------------------------|
|                   |                                     |   |   |
| **THE IRVINE COMPANY** | **RAINING DATA CORPORATION**,            |
|                   |                                     | a Delaware corporation |
|                   |                                     |   |   |
|                   |                                     |   |   |
| By:                    | /s/ Steven Case                          |   | By: | /s/ Brian C. Bezdek |   |
|                   | Steven Case                              |   | Name: | Brian C. Bezdek |
|                   | Senior Vice President, Office Properties |   | Title: | Vice President, Chief Financial Officer  and Corporate Secretary |
|                   |                                     |   |   |
|                   |                                     |   |   |
| By:                    | /s/ Danielle M. Sim                      |   |   |   |
|                   | Danielle M. Sim, Senior Vice President,  |   |   |
|                   | Operations, Office Properties            |   |   |
|                        |                                          |  |  |  |  |  |

 

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**EXHIBIT B**

 

THE IRVINE COMPANY – INVESTMENT PROPERTIESGROUP

 

HAZARDOUS MATERIAL SURVEY FORM

 

The purpose of this form is to obtain information regarding the use ofhazardous substances on Investment Properties Group (“IPG”) property.  Prospective tenants and contractors shouldanswer the questions in light of their proposed activities on thepremises.  Existing tenants andcontractors should answer the questions as they relate to ongoing activities onthe premises and should update any information previously submitted.

 

If additional space is needed to answer the questions, you may attachseparate sheets of paper to this form. When completed, the form should be sent to the following address:

 

THE IRVINE COMPANY MANAGEMENT OFFICE

8105 Irvine Center Drive, Suite 350

Irvine, CA 92618

 

Your cooperation in this matter is appreciated.  If you have any questions, please call yourproperty manager at (949) 720-4400 for assistance.

 

1.                                       GENERALINFORMATION.

 
| Name of Responding Company: |   |
|-----------------------------|--------|
| Check all that apply:       |   | Tenant           o |   |   |   | Contractor           o |   |
|                        |   | Prospective    o |   |   |   | Existing  o |   |

 

Mailing Address:

Contact person & Title:

Telephone Number:  (  )

 

Current TIC Tenant(s):

 

Address of Lease Premises:

 

Length of Lease or Contract Term:

 

Prospective TIC Tenant(s):

 

Address of Leased Premises:

 

Address of Current Operations:

 

Describe the proposed operations to take place on the property,including principal products manufactured or services to be conducted.  Existing tenants and contractors shoulddescribe any proposed changes to ongoing operations.

 

 

 

 

2.                                       HAZARDOUSMATERIALS.  For the purposes of thisSurvey Form, the term “hazardous material” means any raw material, product oragent considered hazardous under any state or federal law.  The term does not include wastes which areintended to be discarded.

 

2.1                                 Will any hazardousmaterials be used or stored on site?

 
| Chemical Products                      |   | Yes | o |   | No | o |
|----------------------------------------|--------|-----|---|--------|----|---|
| Biological Hazards/  Infectious Wastes |   | Yes | o |   | No | o |
| Radioactive Materials                  |   | Yes | o |   | No | o |
| Petroleum Products                     |   | Yes | o |   | No | o |

 

2.2                                 List any hazardousmaterials to be used or stored, the quantities that will be on-site at anygiven time, and the location and method of storage (e.g., bottles in storagecloset on the premises).

 

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| **Hazardous  Materials** | ** ** | **Location and Method  of Storage** | ** ** | **Quantity** |
|--------------------------|------------|-------------------------------------|------------|--------------|
| ** **               | ** ** | ** **                          | ** ** | ** **   |
| ** **               | ** ** | ** **                          | ** ** | ** **   |
| ** **               | ** ** | ** **                          | ** ** | ** **   |

 

2.3                                 Is any undergroundstorage of hazardous materials proposed or currently conducted on the premises?Yes o  No o

 

If yes, describe the materials to be stored, and the size andconstruction of the tank.  Attach copiesof any permits obtained for the underground storage of such substances.  

 

 

 

3.                                       HAZARDOUSWASTE.  For the purposes of thisSurvey Form, the term “hazardous waste” means any waste (including biological,infectious or radioactive waste) considered hazardous under any state orfederal law, and which is intended to be discarded.

 

3.1                                 List any hazardouswaste generated or to be generated on the premises, and indicate the quantitygenerated on a monthly basis.

 
| **Hazardous  Materials** | ** ** | **Location and Method  of Storage** | ** ** | **Quantity** |
|--------------------------|------------|-------------------------------------|------------|--------------|
| ** **               | ** ** | ** **                          | ** ** | ** **   |
| ** **               | ** ** | ** **                          | ** ** | ** **   |
| ** **               | ** ** | ** **                          | ** ** | ** **   |

 

3.2                                 Describe the method(s)of disposal (including recycling) for each waste.  Indicate where and how often disposal willtake place.

 
| **Hazardous  Materials** | ** ** | **Location and Method  of Storage** | ** ** | **Disposal Method** |
|--------------------------|------------|-------------------------------------|------------|---------------------|
| ** **               | ** ** | ** **                          | ** ** | ** **          |
| ** **               | ** ** | ** **                          | ** ** | ** **          |
| ** **               | ** ** | ** **                          | ** ** | ** **          |

 

3.3                                 Is any treatment orprocessing of hazardous, infectious or radioactive wastes currently conductedor proposed to be conducted on the premise?

 

Yes o   No  o

 

If yes, please describe any existing or proposed treatment methods. 

 

 

 

 

3.4                                 Attachcopies of any hazardous waste permits or licenses issued to your company withrespect to its operations on the premises.

 

4.                                                                                       SPILLS

 

4.1                                 During the past year,have any spills or releases of hazardous materials occurred on the premises?           Yeso                                                Noo

 

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If so, please describe the spill and attachthe results of any testing conducted to determine the extent of such spills. 

 

 

 

4.2                                 Were any agenciesnotified in connection with such spills?                      Yes  o              Noo

 

If so, attach copies of any spill reports or other correspondence withregulatory agencies.

 

4.3                                 Were any clean-upactions undertaken in connection with the spills?

Yes  o                                                         No  o

 

If so, briefly describe the actionstaken.  Attach copies of any clearanceletters obtained from any regulatory agencies involved and the results of anyfinal soil or groundwater sampling done upon completion of the clean-upwork.  

 

 

5.                                                                                       WASTEWATERTREATMENT/DISCHARGE

 

 

 

5.1                                 Do you dischargeindustrial wastewater to:

 
|      storm drain?   |   |      sewer?                  |
|----------------------------------------------|--------|-------------------------------------------------------|
|                                         |   |                                                  |
|      surface water? |   |      no industrial discharge |

 

5.2                                 Is your industrialwastewater treated before discharge?                                            Yes  o   No  o

 

If yes, describe the type of treatment conducted. 

 

 

 

5.3                                 Attachcopies of any wastewater discharge permits issued to your company with respectto its operations on the premises.

 

6.                                       AIRDISCHARGES.

 

6.1                                 Do you have any airfiltration systems or stacks that discharge into the air?

Yes  o                                                          No  o

 

6.2                                 Do you operate anyequipment that require air emissions permits?

Yes  o                                                          No  o

 

6.3                                 Attachcopies of any air discharge permits pertaining to these operations.

 

7.                                       HAZARDOUSMATERIALS DISCLOSURES.

 

7.1                                 Does your companyhandle an aggregate of at least 500 pounds, 55 gallons or 200 cubic feet ofhazardous material at any given time?  Yes  o            No  o

 

7.2                                 Has your companyprepared a Hazardous Materials Disclosure – Chemical Inventory and BusinessEmergency Plan or similar disclosure document pursuant to state or countyrequirements?                     Yes  o         No  o

 

If so, attach a copy.

 

7.3                                 Are any of thechemicals used in your operations regulated under Proposition 65?

 

If so, describe the procedures followed to comply with theserequirements. 

 

 

 

7.4                                 Isyour company subject to OSHA Hazard Communication Standard Requirements?

Yes  o                                                          No  o

 

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If so, describe the procedures followed tocomply with these requirements.  

 

 

 

8.                                                                                       ANIMALTESTING.

 

8.1                                 Does your companybring or intend to bring live animals onto the premises for research ordevelopment purposes?   Yes  o                                         No  o

 

If so, describe the activity. 

 

 

 

8.2                                 Does your companybring or intend to bring animal body parts or bodily fluids onto the premisesfor research or development purposes?       Yes  o  No  o

 

If so, describe the activity. 

 

 

 

9.                                                                                       ENFORCEMENTACTIONS, COMPLAINTS.

 

9.1                                 Hasyour company ever been subject to any agency enforcement actions,administrative orders, lawsuits, or consent orders/decrees regardingenvironmental compliance or health and safety?   Yes  o                                             No  o

 

If so, describe the actions and any continuing obligations imposed as aresult of these actions. 

 

 

 

9.2                                 Hasyour company ever received any request for information, notice of violation ordemand letter, complaint, or inquiry regarding environmental compliance orhealth and safety?

Yes   o             No   o

 

9.3                                 Hasan environmental audit ever been conducted which concerned operations oractivities on premises occupied by you?           Yes  o           No  o

 

9.4                                 If you answered “yes”to any questions in this section, describe the environmental action orcomplaint and any continuing compliance obligation imposed as a result of thesame.  

 

 

 

 
|   |   |   |
|--------|--------|--------|
|   |   |   |
|   |   |   |
|   | By:    |   |
|   | Name:  |   |
|   | Title: |   |
|   | Date:  |   |

 

4

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**EXHIBITC**

 

**LANDLORD’SDISCLOSURES**

 

**SPECTRUM**

 

The capitalized terms used and not otherwise defined in this Exhibitshall have the same definitions as set forth in the Lease.  The provisions of this Exhibit shallsupersede any inconsistent or conflicting provisions of the Lease.

 

1.                                         Landlordhas been informed that the El Toro Marine Corps Air Station (MCAS) has beenlisted as a Federal Superfund site as a result of chemical releases occurringover many years of occupancy.  Variouschemicals including jet fuel, motor oil and solvents have been discharged inseveral areas throughout the MCAS site. A regional study conducted by the Orange County Water District hasestimated that groundwaters beneath more than 2,900 acres have been impacted byTrichloroethlene (TCE), an industrial solvent. There is a potential that this substance may have migrated into theground water underlying the Premises. The U.S. Environmental Protection Agency, the Santa Ana Region QualityControl Board, and the Orange County Health Care Agency are overseeing theinvestigation/cleanup of this contamination. To the Landlord’s current actual knowledge, the ground water in thisarea is used for irrigation purposes only, and there is no practical impedimentto the use or occupancy of the Premises due to the El Toro discharges.

 

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**EXHIBITD**

 

**TENANT’SINSURANCE**

 

The following requirements for Tenant’s insurance shall be in effect atthe Building, and Tenant shall also cause any subtenant to comply with theserequirements. Tenant agrees to obtain and present evidence to Landlord that ithas fully complied with the insurance requirements.

 

1.                                       Tenantshall, at its sole cost and expense, commencing on the date Tenant is givenaccess to the Premises for any purpose and during the entire Term, procure, payfor and keep in full force and effect: (i) commercial general liability insurance with respect to the Premisesand the operations of or on behalf of Tenant in, on or about the Premises,including but not limited to coverage for personal injury, independentcontractors, broad form property damage, fire and water legal liability,products liability (if a product is sold from the Premises), and liquor lawliability (if alcoholic beverages are sold, served or consumed within thePremises), which policy(ies) shall be written on an “occurrence” basis and fornot less than the amount set forth in Item 13 of the Basic LeaseProvisions, with a combined single limit (with a $50,000 minimum limit on firelegal liability) per occurrence for bodily injury, death, and property damageliability, or the current limit of liability carried by Tenant, whichever isgreater; (ii) workers’ compensation insurance coverage as required by law,together with employers’ liability insurance of at least One Million Dollars($1,000,000.00); (iii) with respect to Alterations and the like required orpermitted to be made by Tenant under this Lease, builder’s risk insurance, inan amount equal to the replacement cost of the work; (iv) insurance againstfire, vandalism, malicious mischief and such other additional perils as may beincluded in a standard “special form” policy, insuring Tenant’s Alterations,trade fixtures, furnishings, equipment and items of personal property of Tenantlocated in the Premises, in an amount equal to not less than ninety percent(90%) of their actual replacement cost (with replacement cost endorsement); and(v) business interruption insurance in amounts satisfactory to cover one (1)year of loss.  In no event shall thelimits of any policy be considered as limiting the liability of Tenant underthis Lease.

 

2.                                       Inthe event Landlord consents to Tenant’s use, generation or storage of HazardousMaterials on, under or about the Premises pursuant to Section 5.3 of thisLease, Landlord shall have the continuing right to require Tenant, at Tenant’ssole cost and expense (provided the same is available for purchase uponcommercially reasonable terms), to purchase insurance specified and approved byLandlord, with coverage not less than Five Million Dollars ($5,000,000.00),insuring (i) any Hazardous Materials shall be removed from the Premises, (ii)the Premises shall be restored to a clean, healthy, safe and sanitarycondition, and (iii) any liability of Tenant, Landlord and Landlord’s officers,directors, shareholders, agents, employees and representatives, arising fromsuch Hazardous Materials.

 

3.                                       Allpolicies of insurance required to be carried by Tenant pursuant to this Exhibit Dcontaining a deductible exceeding Twenty Thousand Dollars ($20,000.00) peroccurrence must be approved in writing by Landlord prior to the issuance ofsuch policy.  Tenant shall be solelyresponsible for the payment of all deductibles.

 

4.                                       Allpolicies of insurance required to be carried by Tenant pursuant to this ExhibitD shall be written by responsible insurance companies authorized to dobusiness in the State of California and with a general policyholder rating ofnot less than “A-” and financial rating of not less than “VIII” in the mostcurrent Best’s Insurance Report.  Anyinsurance required of Tenant may be furnished by Tenant under any blanketpolicy carried by it or under a separate policy.  A true and exact copy of each paid up policyevidencing the insurance (appropriately authenticated by the insurer) or acertificate of insurance, certifying that the policy has been issued, providesthe coverage required by this Exhibit D and contains the requiredprovisions, together with endorsements acceptable to Landlord evidencing thewaiver of subrogation and additional insured provisions required below, shallbe delivered to Landlord prior to the date Tenant is given the right ofpossession of the Premises.  Properevidence of the renewal of any insurance coverage shall also be delivered toLandlord not less than thirty (30) days prior to the expiration of thecoverage.  Landlord may at any time, andfrom time to time, inspect and/or copy any and all insurance policies requiredby this Lease.

 

5.                                       Eachpolicy evidencing insurance required to be carried by Tenant pursuant to this Exhibit Dshall contain the following provisions and/or clauses satisfactory toLandlord:  (i) with respect to Tenant’scommercial general liability insurance, a provision that the policy and thecoverage provided shall be primary and that any coverage carried by Landlordshall be noncontributory with respect to any policies carried by Tenant,together with a provision including Landlord, the Additional Insuredsidentified in Item 11 of the Basic Lease Provisions, and any other parties ininterest designated by Landlord, as additional insureds; (ii) except withrespect to Tenant’s commercial general liability insurance, a waiver by theinsurer of any right to subrogation against Landlord, its agents, employees,contractors and representatives which arises or might arise by reason of anypayment under the policy or by reason of any act or omission of Landlord, itsagents, employees, contractors or representatives; and (iii) a provision thatthe insurer will not cancel or reduce the coverage provided by the policywithout first giving Landlord thirty (30) days prior written notice.

 

6.                                       Inthe event that Tenant fails to procure, maintain and/or pay for, at the timesand for the durations specified in this Exhibit D, any insurancerequired by this Exhibit D, or fails to carry insurance required by anygovernmental authority, Landlord may at its election procure that insurance andpay the premiums, in which event Tenant shall repay Landlord all sums paid byLandlord, together with interest at the maximum rate permitted by law and anyrelated costs or expenses incurred by Landlord, within ten (10) days followingLandlord’s written demand to Tenant.

 

**NOTICE TO TENANT:  IN ACCORDANCE WITH THE TERMS OF THIS LEASE,TENANT MUST PROVIDE EVIDENCE OF THE REQUIRED INSURANCE TO LANDLORD’S MANAGEMENTAGENT PRIOR TO BEING AFFORDED ACCESS TO THE PREMISES.**

 

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**EXHIBIT E**

 

**RULES ANDREGULATIONS**

 

This Exhibit sets forth the rules and regulations governing Tenant’suse of the Premises leased to Tenant pursuant to the terms, covenants andconditions of the Lease to which this Exhibit is attached and therein made partthereof.  In the event of any conflict orinconsistency between this Exhibit and the Lease, the Lease shall control.

 

1.                                       Tenantshall not place anything or allow anything to be placed near the glass of anywindow, door, partition or wall, which may appear unsightly from outside thePremises.

 

2.                                       Thewalls, walkways, sidewalks, entrance passages, elevators, stairwells, courtsand vestibules shall not be obstructed or used for any purpose other thaningress and egress of pedestrian travel to and from the Premises, and shall notbe used for smoking, loitering or gathering, or to display, store or place anymerchandise, equipment or devices, or for any other purpose.  The walkways, sidewalks, entrancepassageways, courts, vestibules and roof are not for the use of the generalpublic and Landlord shall in all cases retain the right to control and preventaccess thereto by all persons whose presence in the judgment of the Landlordshall be prejudicial to the safety, character, reputation and interests of theBuilding and its tenants, provided that nothing herein contained shall beconstrued to prevent such access to persons with whom Tenant normally deals inthe ordinary course of Tenant’s business unless such persons are engaged inillegal activities.  Smoking is permittedoutside the building and within the project only in areas designated by Landlord.  No tenant or employee or invitee or agent ofany tenant shall be permitted upon the roof of the Building without priorwritten approval from Landlord.

 

3.                                       Noawnings or other projection shall be attached to the outside walls of theBuilding.  No security bars or gates,curtains, blinds, shades or screens shall be attached to or hung in, or used inconnection with, any window or door of the Premises without the prior writtenconsent of Landlord.  Neither the interiornor exterior of any windows shall be coated or otherwise sunscreened withoutthe express written consent of Landlord.

 

4.                                       Exceptas permitted under the Lease, Tenant shall not mark, nail, paint, drill into,or in any way deface any part of the Premises or the Building except to affixstandard pictures or other wall hangings on the interior walls of the premisesso long as they are not visible from the exterior of the building.  Tenant shall not lay linoleum, tile, carpetor other similar floor covering so that the same shall be affixed to the floorof the Premises in any manner except as approved by Landlord in writing.  The expense of repairing any damage resultingfrom a violation of this rule or removal of any floor covering shall be borneby Tenant.

 

5.                                       Thetoilet rooms, urinals, wash bowls and other plumbing apparatus shall not beused for any purpose other than that for which they were constructed and noforeign substance of any kind whatsoever shall be thrown therein.  Any pipes or tubing used by Tenant totransmit water to an appliance or device in the Premises must be made of copperor stainless steel, and in no event shall plastic tubing be used for thatpurpose.  The expense of any breakage,stoppage or damage resulting from the violation of this rule shall be borne bythe tenant who, or whose employees or invitees, caused it.

 

6.                                       Landlordshall direct electricians as to the manner and location of any future telephonewiring.  No boring or cutting for wireswill be allowed without the prior consent of Landlord.  The locations of the telephones, call boxesand other office equipment affixed to the Premises shall be subject to theprior written approval of Landlord.

 

7.                                       ThePremises shall not be used for manufacturing or for the storage of merchandiseexcept as permitted in the Lease.  Noexterior storage shall be allowed at any time without the prior writtenapproval of Landlord.  The Premises shallnot be used for cooking or washing clothes without the prior written consent ofLandlord, or for lodging or sleeping or for any immoral or illegalpurposes.  Notwithstanding anything tothe contrary herein or in the Lease, Tenant shall be permitted, withoutLandlord’s consent, to use such standard kitchen appliances as are typicallyfound in an office kitchenette, including microwave ovens, refrigerators,dishwashers and beverage dispensers.

 

8.                                       Tenantshall not make, or permit to be made, any unseemly or disturbing noises ordisturb or interfere with occupants of this or neighboring buildings orpremises or those having business with them, whether by the use of any musicalinstrument, radio, phonograph, noise, or otherwise.  Tenant shall not use, keep or permit to beused, or kept, any foul or obnoxious gas or substance in the Premises or permitor suffer the Premises to be used or occupied in any manner offensive orobjectionable to Landlord or other occupants of this or neighboring buildingsor premises by reason of any odors, fumes or gases.

 

9.                                       Noanimals, except for seeing eye dogs, shall be permitted at any time within thePremises.

 

10.                                 Tenantshall not use the name of the Building or the Project in connection with or inpromoting or advertising the business of Tenant, except as Tenant’s address,without the written consent of Landlord. Landlord shall have the right to prohibit any advertising by any Tenantwhich, in Landlord’s reasonable opinion, tends to impair the reputation of theProject or its desirability for its intended uses, and upon written notice fromLandlord any Tenant shall refrain from or discontinue such advertising.

 

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11.  Canvassing, soliciting, peddling, parading, picketing, demonstrating orotherwise engaging in any conduct that unreasonably impairs the value or use ofthe Premises or the Project are prohibited and each Tenant shall cooperate toprevent the same.  Landlord shall havefull and absolute authority to regulate or prohibit the entrance to thePremises of any vendor, supplier, purveyor, petitioner, proselytizer or othersimilar person if, in the good faith judgment of Landlord, such person will beinvolved in general solicitation activities, or the proselytizing, petitioning,or disturbance of other tenants or their customers or invitees, or engaged orlikely to engage in conduct which may in Landlord’s opinion distract from theuse of the Premises for its intended purpose. Notwithstanding the foregoing, Landlord reserves the absolute right anddiscretion to limit or prevent access to the Buildings by any food or beveragevendor, whether or not invited by Tenant, and Landlord may condition suchaccess upon the vendor’s execution of an entry permit agreement which maycontain provisions for insurance coverage and/or the payment of a fee toLandlord.

 

12.                                 No equipment of anytype shall be placed on the Premises which in Landlord’s opinion exceeds theload limits of the floor or otherwise threatens the soundness of the structureor improvements of the Building.

 

13.                                 Exceptas permitted under the Lease or in connection with the Tenant Improvements, noair conditioning unit or other similar apparatus shall be installed or used byany Tenant without the prior written consent of Landlord.

 

14.                                 Theentire Premises, including vestibules, entrances, parking areas, doors,fixtures, windows and plate glass, shall at all times be maintained in a safe,neat and clean condition by Tenant.  Alltrash, refuse and waste materials shall be regularly removed from the Premisesby Tenant and placed in the containers at the locations designated by Landlordfor refuse collection.  All cardboardboxes must be “broken down” prior to being placed in the trash container.  All styrofoam chips must be bagged orotherwise contained prior to placement in the trash container, so as not toconstitute a nuisance.  Pallets must beimmediately disposed of by tenant and may not be disposed of in the Landlordprovided trash container or enclosures. Pallets may be neatly stacked in an exterior location on a temporarybasis (no longer than 5 days) so long as Landlord has provided prior writtenapproval.  The burning of trash, refuseor waste materials is prohibited.

 

15.                                 Tenantshall use at Tenant’s cost such pest extermination contractor as Landlord maydirect and at such intervals as Landlord may require.

 

16.                                 Allkeys for the Premises shall be provided to Tenant by Landlord and Tenant shallreturn to Landlord any of such keys so provided upon the termination of theLease.  Tenant shall not change locks orinstall other locks on doors of the Premises, without the prior written consentof Landlord.  In the event of loss of anykeys furnished by Landlord for Tenant, Tenant shall pay to Landlord the coststhereof.  Upon the termination of itstenancy, Tenant shall deliver to Landlord all the keys to lobby(s), suite(s)and telephone & electrical room(s) which have been furnished to Tenant orwhich Tenant shall have had made.

 

17.                                 Noperson shall enter or remain within the Project while intoxicated or under theinfluence of liquor or drugs.  Landlordshall have the right to exclude or expel from the Project any person who, inthe absolute discretion of Landlord, is under the influence of liquor or drugs.

 

18.                                 Themoving of large or heavy objects shall occur only between those hours as may bedesignated by, and only upon previous written notice to, Landlord, and thepersons employed to move those objects in or out of the Building must bereasonably acceptable to Landlord. Without limiting the generality of the foregoing, no freight, furnitureor bulky matter of any description shall be received into or moved out of thelobby of the Building or carried in the elevator.

 

19.                                 Tenant shall notinstall equipment, such as but not limited to electronic tabulating or computerequipment, requiring electrical or air conditioning service in excess of thatto be provided by Landlord under the Lease without prior written consent ofLandlord.

 

20.                                 Landlordmay from time to time grant other tenants of the project individual andtemporary variances from these Rules, provided that any variance does not havea material adverse effect on the use and enjoyment of the Premises by Tenant.

 

Landlord reserves the right to amend or supplement the foregoing Rulesand Regulations and to adopt and promulgate additional rules and regulationsapplicable to the Premises.  Notice ofsuch rules and regulations and amendments and supplements thereto, if any,shall be given to the Tenant.

 

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**EXHIBIT X**

** **

**INDUSTRIAL WORK LETTER**

 

The tenant improvement work to be contracted for by Landlord hereunder(“**Tenant Improvement Work**”) shall consistof the design and construction of all tenant improvements (“**Tenant Improvements**”), including work in place as of thedate hereof, required for the Premises pursuant to the approved final WorkingDrawings and Specifications (as hereinafter defined).  All of the Tenant Improvement Work shall beperformed by the “TI Contractor” (as defined below) selected by Landlord and inaccordance with the procedures and requirements set forth below.

 

I.                                         ARCHITECTURALAND CONSTRUCTION PROCEDURES.

 

A.                                   Tenant and Landlordhave approved both (i) a plan dated September 8, 2004 and revised September 30,2004 prepared by Landlord’s architect, LPA, Inc. (the “**Preliminary Plan**”), and (ii) an estimate ofthe cost to complete the Tenant Improvements in accordance with the PreliminaryPlan dated October 5, 2004 and prepared by Landlord (the “**Preliminary Cost Estimate**”).  A copy of the Preliminary Plan and thePreliminary Cost Estimate are attached hereto as EXHIBIT X-1 and EXHIBITX-2, respectively.  The TenantImprovements Work shall include the work shown on the Preliminary Plan,including the “Capital Alternates” but not including the “Alternates”(as described on the Preliminary Plan). Except as otherwise noted in the Preliminary Plan the Preliminary CostEstimate, the Tenant Improvement Work shall incorporate Landlord’s buildingstandard tenant improvements, materials and specifications for the Project asset forth in Schedule 1 attached hereto (“**Building Standard Improvements**”).

 

B.                                     Within ten (10)days following Landlord’s architect’s request, Tenant shall provide in writingto Landlord or Landlord’s architect all specifications and informationrequested by Landlord for the preparation of final construction documents andcosting, including without limitation Tenant’s final selection of paint andfloor finishes, complete specifications and locations (including electrical,load and HVAC requirements) of Tenant’s equipment (collectively, “**Programming Information**”). Subject to the provisions of Section I.G below, Tenant’s failure toprovide the Programming Information within the specified time period shallconstitute a Tenant Delay for purposes of this Lease.  Tenant understands that final constructiondocuments for the Tenant Improvements shall be predicated on the ProgrammingInformation, and accordingly that such information must be accurate andcomplete and that Landlord shall have no obligation or liability for anydefects or problems arising from any incomplete or inaccurate Programming Information.  Subject to the provisions of Section I.Gbelow, any delays in the completion of the Tenant Improvements due toincomplete or inaccurate Programming Information shall constitute a TenantDelay.

 

C.                                     Not later thanApril 1, 2005, Landlord’s architect and engineers shall prepare and deliver toTenant working drawings and specifications for the Tenant Improvements Workbased on the approved Preliminary Plan (“**Working Drawings andSpecifications**”). Tenant shall have five (5) business days from thereceipt thereof to approve or disapprove the Working Drawings andSpecifications.  Tenant shall notunreasonably withhold or delay its approval, and any disapproval or requestedmodification shall be limited to items not consistent with the approvedPreliminary Plan or Preliminary Cost Estimate, subject to Tenant’s right torequest a Change pursuant to Section I.D below. Should Tenant disapprove the Working Drawings and Specifications, suchdisapproval shall be accompanied by specific reasons for disapproval and adetailed list of requested revisions. The parties shall confer and negotiate in good faith to reach agreementon revisions to the Working Drawings and Specifications, and the PreliminaryCost Estimate as a consequence of such revisions.  Any revision so requested by Tenant andaccepted by Landlord shall be incorporated into a revised set of WorkingDrawings and Specifications, and Tenant shall approve same in writing withinfive (5) business days of receipt without further revision.  Subject to the provisions of Section I.Gbelow, Tenant’s failure to comply in a timely manner with any of therequirements of this paragraph shall constitute a Tenant Delay as definedbelow.

 

D.                                    In the event thatTenant subsequently requests in writing a revision to the Working Drawings andSpecifications approved by the parties pursuant to Section I.C above, (a “**Change**”), and Landlord so approves such Change as providedin Section I.E below, Landlord shall advise Tenant by written change order (a “**Change Order**”) as soon as is practical of any net costincrease above the Preliminary Cost Estimate (taking into account any costsavings attributable to such Change Order together with previous Change Orders)and the amount of any Tenant Delay such Change would cause.  Tenant shall approve or disapprove suchChange Order and Tenant Delay, if any, in writing within two (2) business daysfollowing Tenant’s receipt of such Change Order.  If Tenant approves any such Change Order,Landlord, at its election, may either (i) require as a condition to theeffectiveness of such Change Order that Tenant pay the cost increase set forthin such Change Order concurrently with delivery of Tenant’s approval of theChange Order, or (ii) defer Tenant’s payment of such increase until the dateten (10) days after delivery of invoices for same, provided however, that suchpayment must in any event be paid in full prior to Tenant’s commencingoccupancy of the

 

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Premises.  If Tenant disapprovesany such Change Order, Tenant shall nonetheless be responsible for thereasonable architectural and/or planning fees incurred in preparing such ChangeOrder.  Landlord shall have no obligationto interrupt or modify the Tenant Improvement Work pending Tenant’s approval ofa Change Order, but if Tenant fails to timely approve a Change Order, Landlordmay (but shall not be required to) suspend the applicable Tenant ImprovementWork, in which event, subject to the provisions of Section I.G below, anyrelated critical path delays because of such suspension shall constitute TenantDelays hereunder.  In no event shallLandlord have the right to make any revisions to the Working Drawings andSpecifications without Tenant’s prior written consent, which consent shall notbe unreasonably withheld or delayed.

 

E.                                      Landlord mayconsent in writing, in its reasonable discretion, to Tenant’s request for aChange, including any modification of a StandardImprovement shown in the Preliminary Plan to other than a StandardImprovement (a “**Non-Standard Improvement**”)or any other modification of the Working Drawings and Specifications, ifrequested in writing by Tenant. Notwithstanding the foregoing, Landlord shall in no event be required toapprove any Non-Standard Improvement if Landlord determines that suchImprovement:  (i) is of a lesserquality than the corresponding Standard Improvements, (ii) fails toconform to applicable governmental requirements, (iii) requires buildingservices beyond the level normally provided to other tenants, (iv) would delayconstruction of the Tenant Improvements beyond the Estimated Commencement Dateand Tenant declines to accept such delay in writing as a Tenant Delay, (v)interferes in any manner with the proper functioning of, or Landlord’s accessto, any mechanical, electrical, plumbing or HVAC systems, facilities orequipment in or serving the Building,  or(vi) would have an adverse aesthetic impact to the Premises or cause additionalexpenses to Landlord in reletting the Premises. All Standard Improvements and Non-Standard Improvements shall become theproperty of Landlord and shall be surrendered with the Premises at the end ofthe Term; except that Landlord may, by notice to Tenant given at the time ofLandlord’s approval of any Non-Standard Improvements incorporated into theTenant Improvements as a “Change”, require Tenant either to remove all or anyof such Non-Standard Improvements, to repair any damage to the Premises or theCommon Area arising from such removal, and to replace such Non-Standard Improvementswith the applicable Building Standard, or to reimburse Landlord for thereasonable cost of such removal, repair and replacement upon demand.  Any such removals, repairs and replacementsby Tenant shall be completed by the Expiration Date, or sooner termination ofthis Lease.

 

F.                                      Promptlyfollowing the approval of the Working Drawings and Specifications by theparties pursuant to Section I.C. above, Landlord shall submit the WorkingDrawings and Specifications to a competitive bidding process involving at leastthree (3) licensed and reputable general contractors.  If requested by Tenant, Landlord shallprovide copies of the bid responses to Tenant. After adjustments for any inconsistent assumptions to reflect an “applesto apples” comparison, Landlord shall select the lowest qualified bidder. Inthe event Landlord selects other than the lowest bidder, it shall do so basedon commercially reasonable factors which it shall demonstrate to Tenant.  Upon selection of the bidder, Landlord shallenter into a “lump sum” or “fixed price” construction contract with the chosencontractor (the “**TI Contractor**”)in the amount of the bid so selected for the construction of the TenantImprovements in accordance with the approved and final Working Drawings and Specifications(the “**TI Contract**”).  The TI Contractor is the contractor only ofLandlord and Tenant shall have no liability to the Contractor of the TIContract.

 

G.                                     Notwithstandingany provision in the Lease to the contrary, and not by way of limitation of anyother rights or remedies of Landlord, if Tenant fails to comply with any of thetime periods specified in this Work Letter, fails otherwise to approve orreasonably disapprove any submittal within the time period specified herein forsuch response (or if no time period is so specified, within five (5) daysfollowing Tenant’s receipt thereof), fails to provide all of the ProgrammingInformation requested by Landlord within the time period specified therefor,fails to approve in writing the Working Drawings and Specifications within thetime specified therefor, fails to timely deliver payment of any net increasedcosts specified in a Change Order in accordance with Section I.D above,requests any Changes and thereafter accepts a Change Order containing Landlord’sgood faith estimate of resulting Tenant Delay, or otherwise actually delays inany manner for more than one (1) business day following written or oralnotification thereof the completion of the Tenant Improvements (includingwithout limitation by specifying materials that are not readily available) orthe issuance of an occupancy certificate beyond the Estimated Commencement Date(any of the foregoing being referred to in this Lease as a “**Tenant Delay**”), then, subject to and as provided in Section3.2 of the Lease, the date Tenant otherwise would commence the payment of rentunder the Lease shall be advanced by the number of days that Landlordreasonably determines that it was actually delayed in delivering the Premisesto Tenant following the Estimated Commencement Date due to such TenantDelay.  Any Change Order delivered byLandlord shall include a good faith estimate of the amount of any Tenant Delayand a binding estimate of the net cost increase above the Preliminary CostEstimate (taking into account any cost savings attributable to such ChangeOrder together with previous Change Orders). Promptly upon Landlord’s realization that the actual amount of TenantDelay due to Change Order will exceed the amount of delay in Landlord’s goodfaith estimate, Landlord shall advise Tenant orally or in writing of theadditional amount of delay Landlord estimates in its good faith will resulttherefrom.  Should Landlord determinethat the rent

 

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commencement date should be advanced in accordance with the foregoing,it shall so notify Tenant in writing. Landlord’s determination shall be conclusive unless Tenant notifiesLandlord in writing, within five (5) days thereafter, of Tenant’s election tocontest same by arbitration pursuant to Section 22.7 of this Lease.

 

H.                                    Landlord shallpermit Tenant and its agents to enter the Premises for at least the fourteen(14) days prior to the Commencement Date of the Lease in order that Tenant mayinstall fixtures, furniture, cabling and other personal property through Tenant’sown contractors prior to the Commencement Date. Any such work shall be subject to Landlord’s prior written approval, andshall be performed in a manner and upon terms and conditions and at times satisfactoryto Landlord’s representative.  Theforegoing license to enter the Premises prior to the Commencement Date is,however, conditioned upon Tenant’s contractors and their subcontractors andemployees working in harmony and not interfering with the work being performedby Landlord as determined by Landlord in Landlord’s sole and absolutediscretion.  If at any time that entryshall cause disharmony or interfere with the work being performed by Landlordas defined by Landlord in Landlord’s sole and absolute discretion, this licensemay be withdrawn by Landlord upon twenty-four (24) hours written notice toTenant.  This license is furtherconditioned upon the compliance by Tenant’s contractors with all requirementsimposed by Landlord on third party contractors, including without limitationthe maintenance by Tenant and its contractors and subcontractors of workers’compensation and public liability and property damage insurance in amounts andwith companies and on forms satisfactory to Landlord, with certificates of suchinsurance being furnished to Landlord prior to proceeding with any suchentry.  The entry shall be deemed to beunder all of the provisions of the Lease except as to the covenants to payBasic Rent and Operating Expenses. Landlord shall not be liable in any way for any injury, loss or damagewhich may occur to any such work being performed by Tenant, the same beingsolely at Tenant’s risk.

 

I.                                         Tenant herebydesignates Brian Bezdek (“**Tenant’s ConstructionRepresentative**”), Telephone No. (949) 260-5149, as its agent for allmatters related to the Tenant Improvement Work, including but not by way oflimitation, for purposes of receiving notices, approving submittals and issuingrequests for Changes, and Landlord shall be entitled to rely upon authorizationsand directives of such person(s) as if given directly by Tenant.  The foregoing authorization is intended toprovide assurance to Landlord that it may rely upon the directives and decisionmaking of the Tenant’s Construction Representative with respect to the TenantImprovement Work and is not intended to limit or reduce Landlord’s rightto reasonably rely upon any decisions or directives given by other officers orrepresentatives of Tenant.   Tenant mayamend the designation of its Tenant’s Construction Representative(s) at anytime upon delivery of written notice to Landlord.

 

II.                                     COSTOF TENANT IMPROVEMENTS

 

A.                                        Landlordshall complete, or cause to be completed, the Tenant Improvements, at its solecost and expense (subject to increases for Landlord approved Changes to be paidfor by Tenant as set forth in this Work Letter), in accordance with finalWorking Drawings and Specifications approved by both Landlord and Tenant.  The Tenant Improvements shall be constructedby Landlord in accordance with all rules, regulations, codes, ordinances,statutes, and laws of any governmental or quasi-governmental authority ineffect as of the date of the issuance of the applicable building permit(s)therefor, and in a good and workman-like manner using material and equipment ofnew and otherwise of good quality. Landlord shall use commercially reasonable efforts to obtain standardwarranties on the HVAC units installed as part of the Tenant Improvements andfor other elements of the Tenant Improvements that Tenant is responsible formaintaining under the Lease and shall assign to Tenant, or otherwise cooperateto make available to Tenant the benefit of, all such warranties.

 

B.                                          Inthe event that the cost of completing the Tenant Improvement Work (includingboth “hard” and “soft” costs) shall actually be reduced due solely toChange(s) requested by Tenant (and approved by Landlord pursuant to theapplicable provisions of this Work Letter), which Change(s) have eithereliminated portions of the Tenant Improvement Work as shown in the approvedPlan and Cost Estimate or substituted materials or specifications for portionsof the Tenant Improvement Work, then Tenant may apply such savings, in anaggregate amount of up to, but not exceeding, $2.00 per usable square foot ofthe Premises, towards Tenant’s out-of-pocket moving costs incurred in moving tothe Premises.

 

III.                                 DISPUTERESOLUTION

 

All claims or disputes between Landlord and Tenant arising out of, orrelating to, this Work Letter shall be decided by JAMS as provided in Section22.7 of the Lease.

 

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