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Exhibit 10.16  

 
 

California Chapters of the
  Society of Industrial and Office Realtors, Inc.    
  

INDUSTRIAL REAL ESTATE LEASE

(SINGLE-TENANT FACILITY)  

ARTICLE ONE: BASIC TERMS  

        This
Article One contains the Basic Terms of this Lease between the Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the Lease referred to in this Article One
explain and define the Basic Terms and are to be read in conjunction with the Basic Terms. 

	        Section 1.01. Date of Lease:      November 18,
1999      
	

        Section 1.02. Landlord (include legal entity):       Cypress Corporate Services, a California corporation, or
Assignee      
	Address of Landlord:          8413 Jackson Road, Suite B Sacramento, CA 95826      
	

        Section 1.03. Tenant (include legal entity):          Gametech International, Inc. A Delaware
Corporation      
	Address of Tenant:          2209 West First Street, Suite 113 Tempe, AZ 85281      
	

        Section 1.04. Property: (include street address, approximate square footage and description)      An approximately 40,000
square foot office and warehouse facility to be built on approximately 2.74 acres in the South Meadows Business Park in Reno, NV. The parcel is further described on the legal description attached as
Exhibit A.      
	

        Section 1.05. Lease Term      Ten      years      0      months
beginning on July 1, 2000 or such other date as is specified in this Lease, and ending on      July 31,
2010.      
	

        Section 1.06. Permitted Uses: (See Article Five)      General office and warehousing of small electronics and associated
materials as allowed per applicable code      
	

        Section 1.07. Tenant Guarantor: (If none, so state)      None      
	

        Section 1.08. Brokers: (See Article Fourteen) (If none, so state)

        Landlord's Broker:      None      

        Tenant's Broker:      Deborah Sasz & Sue Smith of Commercial Properties of Nevada      
	

        Section 1.09. Commission Payable to Landlord's Broker: (See Article Fourteen)      Per Separate
Agreement      
	

        Section 1.10. Initial Security Deposit: (See Section 3.03)      $80,769 (first and last month's rent)
      
	

Section 1.11. Vehicle Parking Spaces Allocated to Tenant:      As required by applicable code and per the site plan attached hereto as
Exhibit B.      

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        Section 1.12. Rent and Other Charges Payable to Tenant: See the addendum
	

  (a) BASE RENT:      or (ii) See Addendum to Lease, Paragraph 1.      
	

  (b) OTHER PERIODIC PAYMENTS:      (i) Real Property Taxes (See Section 4.02); (ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See Section 4.04); (iv) Impounds
for Insurance Premiums and Property Taxes (See Section 4.07); (v) Maintenance, Repairs and Alterations (See Article Six).
	

        Section 1.13. Landlord's Share of Profit on Assignment or Sublease: (See Section 9.05)
      Fifty       percent       (50%)       of the Profit (the "Landlord's Share").
	

        Section 1.14. Riders: The following Riders are attached to and made a part of this Lease: (If none, so state)

                  Addendum to Lease      
	

                  Hazardous Materials Rider      
	

                  Exhibit A—Legal Description      
	

                  Exhibit B—Site Plan      
	

                  Exhibit C—Construction Specifications/Allowances      
	

                  Exhibit D—Guaranty of Landlord Lease Responsibilities      

ARTICLE TWO: LEASE TERM  

        Section
2.01.    Lease of Property For Lease Term.    Landlord leases the Property to Tenant and Tenant leases the
Property from Landlord for the Lease Term. The Lease Term is for the period stated in Section 1.05. above and shall begin and end on the dates specified in Section 1.05 above, unless the beginning or
end of the Lease Term is changed under any provision of this Lease. The "Commencement Date" shall be the date specified in Section 1.05 above for the beginning of the Lease Term, unless advanced or
delayed under any provision of this Lease. 

        Section
2.02.    Delay in Commencement.    Landlord and Tenant shall, upon such delivery, execute an amendment to this
Lease setting forth the actual Commencement Date and expiration date of the Lease. Failure to execute such amendment shall not affect the actual Commencement Date and expiration date of the Lease. 

        Section
2.03.    Early Occupancy.    If Tenant occupies the Property prior to the Commencement Date, Tenant's
occupancy of the Property shall be subject to all of the provisions of this Lease. Early occupancy of the Property shall not advance the expiration date of this Lease. 

        Section
2.04.    Holding Over.    Tenant shall vacate the Property upon the expiration or earlier termination of this
Lease. Tenant shall reimburse Landlord for and indemnify Landlord against all damages which Landlord incurs from Tenant's delay in vacating the Property. If Tenant does not vacate the Property upon
the expiration or earlier termination of the Lease and Landlord thereafter accepts rent from Tenant, Tenant's occupancy of the Property shall be a "month-to-month" tenancy, subject to all of the terms
of this Lease applicable to a month-to-month tenancy, except that the Base Rent then in effect shall be increased by twenty-five percent(25%). 

ARTICLE THREE: BASE RENT  

        Section
3.01.    Time and Manner of Payment.    Upon execution of this Lease, Tenant shall pay Landlord the Base Rent
in the amount stated in Paragraph 1.12(a) above for the first month of the 

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Lease Term. On the first day of the second month of the Lease Term and each month thereafter, Tenant shall pay Landlord the Base Rent, in advance, without offset, deduction or prior demand. The Base
Rent shall be payable at Landlord's address or at such other place as Landlord may designate in writing. 

        Section
3.02     

        Section 3.03.    Security Deposit; Increases.    

        (a)  Upon
the execution of this Lease, Tenant shall deposit with Landlord a cash Security Deposit in the amount set forth in Section 1.10 above. Landlord may apply all or
part of the Security Deposit to any unpaid rent or other charges due from Tenant or to cure any other defaults of Tenant. If Landlord uses any part of the Security Deposit, Tenant shall restore the
Security Deposit to its full amount within
thirty (30) days after Landlord's written request. Tenant's failure to do so shall be a material default under this Lease. No interest shall be paid on the Security Deposit. Landlord shall not be
required to keep the Security Deposit separate form its other accounts and no trust relationship is created with respect to the Security Deposit. 

        (b)  Each
time the Base Rent is increased, Tenant shall deposit additional funds with Landlord sufficient to increase the Security Deposit to an amount which bears the same
relationship to the adjusted Base Rent as the initial Security Deposit bore to the initial Base Rent. Landlord shall invoice Tenant for any required increases in the security deposit. If Landlord
fails to invoice Tenant, Tenant shall not be deemed to be in default. 

        Section
3.04.    Termination; Advance Payments.    Upon termination of this Lease under Article Seven (Damage or
Destruction), Article Eight (Condemnation) or any other termination not resulting from Tenant's default, and after Tenant has vacated the Property in the manner required by this Lease, Landlord shall
refund or credit to Tenant (or Tenant's successor) the unused portion of the Security Deposit per Nevada law, any advance rent or other advance payments made by Tenant to Landlord, and any amounts
paid for real property taxes and other reserves which apply to any time periods after termination of the Lease. 

ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT  

        Section
4.01.    Additional Rent.    All charges payable by Tenant other than Base Rent are called "Additional Rent."
Unless this Lease provides otherwise, Tenant shall pay all Additional Rent then due with the next monthly installment of Base Rent. The term "rent" shall mean Base Rent and Additional Rent. The term
"Additional Rent" shall include, but is not limited to, AB property insurance, property taxes, and association dues. 

        Section
4.02.    Property Taxes.    

        (a)    Real Property Taxes.    Tenant shall pay all real property taxes on the Property
(including any fees, taxes or assessments against, or as a result of, any tenant improvements installed on the Property by or for the benefit of Tenant) during the Lease Term. Subject to Paragraph
4.02(c) and Section 4.07 below, such payment shall be made at least ten(10) days prior to the delinquency date of the taxes. Within such ten (10)-day period, Tenant shall furnish Landlord with
satisfactory evidence that the real property taxes have been paid. Landlord shall reimburse Tenant for any real property taxes paid by Tenant covering any period of time prior to or after the Lease
Term. If Tenant fails to pay the real property taxes when due, Landlord may pay the taxes and Tenant shall reimburse Landlord for the amount of such tax payment as Additional Rent. 

        (b)    Definition of "Real Property Tax."    "Real property tax" means: (i) any fee,
license fee, license tax, business license fee, commercial rental tax, levy, charge, assessment, penalty or tax imposed by any taxing authority against the Property; (ii) any tax on the
Landlord's right to 

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receive, or the receipt of, rent or income from the Property or against Landlord's business of leasing the Property; (iii) any tax or charge for fire protection, streets, sidewalks, road
maintenance, refuse or other services provided to the Property by any governmental agency; (iv) any tax imposed upon this transaction or based upon a re-assessment of the Property due to a
change of ownership, as defined by applicable law, or other transfer of all or part of Landlord's interest in the Property; and (v) any charge or fee replacing any tax previously included
within the definition of real property tax. "Real property tax" does not, however, include Landlord's federal or state income, franchise, inheritance or estate taxes. 

        (c)    Joint Assessment. If the property is not separately assessed, Landlord shall
reasonably determine
Tenant's share of the real property tax payable by Tenant under Paragraph 4.02(a) from the assessor's worksheets or other reasonably available information. Tenant shall pay such share to
Landlord within fifteen (15) days after receipt of Landlord's written statement. 

        (d)    Personal Property Taxes.    

          (i)  Tenant
shall pay all taxes charged against trade fixtures, furnishings, equipment or any other personal property belonging to Tenant. Tenant shall attempt to have all
have personal property taxed separately from the Property and provide to Landlord copies of all correspondence supporting that effort. 

        (ii)  If
any of Tenant's personal property is taxed with the Property, Tenant shall pay Landlord the taxes for the personal property within fifteen (15) days after Tenant
receives a written statement from Landlord for such personal property taxes. 

        (e)    Tenant's Right to Contest Taxes.    Tenant may attempt to have the assessed valuation
of the Property reduced or may initiate proceedings to contest the real property taxes. If required by law, Landlord shall join in the proceedings brought by Tenant, however, Tenant shall pay Tenant's
costs of the proceedings. If Tenant requests landlord's assistance, Tenant shall pay Landlord's costs as well. Upon the final determination of any proceeding or contest, Tenant shall immediately pay
the real property taxes due, together with all costs, charges, interest and penalties incidental to the proceedings. 

        Section 4.03.    Utilities.    Tenant shall pay, directly to the appropriate supplier, the cost of all natural
gas, heat, light, power, sewer service, telephone, water, refuse disposal and other utilities and services supplied to the Property. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant's proportionate share of the cost of such
utilities and services and Tenant shall pay such share to Landlord within fifteen (15) days after receipt of Landlord's written statement. 

        Section 4.04.    Insurance Policies.    

        (a)    Liability Insurance.    During the Lease Term, Tenant shall maintain a policy of
commercial general liability insurance (sometimes known as broad form comprehensive general liability insurance) insuring Tenant against liability for bodily injury, property damage (including loss of
use of property) and personal injury arising out of the operation, use or occupancy of the Property. Tenant shall name Landlord as an additional insured under such policy. The initial amount of such
insurance shall be One Million Dollars ($1,000,000) per occurrence and shall be subject to periodic increase based upon inflation, increased liability awards, recommendation of Landlord's professional
insurance advisers and other relevant factors. The liability insurance obtained by Tenant under this Paragraph 4.04(a) shall (i) be primary and non-contributing; (ii) contain
cross-liability endorsements; and (iii) insure Landlord against Tenant's performance under Section 5.05, if the matters giving rise to the indemnity under Section 5.05 result from
the negligence of Tenant. The amount and coverage of such insurance shall not limit Tenant's liability nor relieve Tenant of any other obligation under this Lease. Landlord may also obtain
comprehensive public liability insurance in an amount and with coverage determined by Landlord 

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insuring Landlord against liability arising out of ownership, operation, use or occupancy of the Property. The policy obtained by Landlord shall not be contributory and shall not provide primary
insurance. 

        (b)    Property and Rental Income Insurance.    During the Lease Term, Landlord shall maintain
policies of insurance covering loss of or damage to the Property in the full amount of its replacement value. Such policy shall contain an Inflation Guard Endorsement and shall provide protection
against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended perils (all risk), sprinkler leakage and any other perils which
Landlord deems reasonably necessary. Landlord shall have the right to obtain flood and earthquake insurance if required by any lender holding a security interest in the Property, Landlord shall not
obtain insurance for Tenant's fixtures or equipment or building improvements installed by Tenant on the Property. During the Lease Term, Landlord shall also maintain a rental income insurance policy,
with loss payable to Landlord, in an amount equal to one year's Base Rent, plus estimated real property taxes and insurance premiums. Tenant shall be liable for the payment of any deductible amount
under Landlord's or Tenant's insurance policies maintained pursuant to this Section 4.04, in an amount not to exceed Ten Thousand Dollars ($10,000). Tenant shall not do or permit anything to be
done which invalidates any such insurance policies. 

        (c)    Payment of Premiums.    Subject to Section 4.07, Tenant shall pay all premiums
for the insurance policies described in Paragraphs 4.04(a) and (b) (whether obtained by Landlord or Tenant) within fifteen (15) days after Tenant's receipt of a copy of the premium statement or
other evidence of the amount due, except Landlord shall pay all premiums for non-primary comprehensive public liability insurance which Landlord elects to obtain as provided in Paragraph 4.04(a). If
insurance policies
maintained by Landlord cover improvements on real property other than the Property, Landlord shall deliver to Tenant a statement of the premium applicable to the Property showing in reasonable detail
how Tenant's share of the premium was computed. If the Lease Term expires before the expiration of an insurance policy maintained by Landlord, Tenant shall be liable for Tenant's prorated share of the
insurance premiums. Before the Commencement Date, Tenant shall deliver to Landlord a copy of any policy of insurance which Tenant is required to maintain under this Section 4.04. At least
thirty (30) days prior to the expiration of any such policy, Tenant shall deliver to Landlord a renewal of such policy. As an alternative to providing a policy of insurance, Tenant shall have the
right to provide Landlord a certificate of insurance, executed by an authorized officer of the insurance company, showing that the insurance which Tenant is required to maintain under this
Section 4.04 is in full force and effect and containing such other information which Landlord reasonably requires. 

        (d)    General Insurance Provisions.    

          (i)  Any
insurance which Tenant is required to maintain under this Lease shall include a provision which requires the insurance carrier to give Landlord not less than thirty
(30) days' written notice prior to any cancellation or modification of such coverage. 

        (ii)  If
Tenant fails to deliver any policy, certificate or renewal to Landlord required under this Lease within the prescribed time period or if any such policy is canceled
or modified during the Lease Term without Landlord's consent, Landlord may obtain such insurance, in which case Tenant shall reimburse Landlord for the cost of such insurance within fifteen (15) days
after receipt of a statement that indicates the cost of such insurance. 

        (iii)  Tenant
shall maintain all insurance required under this Lease with companies holding a "General Policy Rating" of A-6 or better, as set forth in the most current issue
of "Best Key Rating Guide". Landlord and Tenant acknowledge the insurance markets are rapidly changing and that insurance in the form and amounts described in this Section 4.04 may not be
available in the future. Tenant acknowledges that the insurance described in this Section 4.04 is for the primary benefit of Landlord. If at any time during the Lease Term, Tenant is unable 

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to maintain the insurance required under the Lease, Tenant shall nevertheless maintain insurance coverage which is customary and commercially reasonable in the insurance industry for Tenant's type of
business, as that coverage may change from time to time. Landlord makes no representation as to the adequacy of such insurance to protect Landlord's or Tenant's interests. Therefore, Tenant shall
obtain any such additional property or liability insurance which Tenant deems necessary to protect Landlord and Tenant. 

        (iv)  Unless
prohibited under any applicable insurance policies maintained, Landlord and Tenant each hereby waive any and all rights of recovery against the other, or against
the officers, employees, agents or representatives of the other, for loss of or damage to its property or the property of others under its control, if such loss or damage is covered by any insurance
policy in force (whether or not described in this Lease) at the time of such loss or damage. Upon obtaining the required policies of insurance, Landlord and Tenant shall give notice to the insurance
carriers of this mutual waiver of subrogation. 

        Section 4.05.    Late Charges.    Tenant's failure to pay rent promptly may cause Landlord to incur
unanticipated costs. The exact amount of such costs are impractical or extremely difficult to ascertain. Such costs may include, but are not limited to, processing and accounting charges and late
charges which may be imposed on Landlord by any ground lease, mortgage or trust deed encumbering the Property. Therefore, if Landlord does not receive any rent payment within ten (10) days after it
becomes due, Tenant shall pay Landlord a late charge equal to ten percent (10%) of the overdue amount. The parties agree that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of such late payment. 

        Section 4.06.    Interest on Past Due Obligations.    Any amount owed by Tenant to Landlord which is not paid
when due shall bear interest at the rate of fifteen percent (15%) per annum from the due date of such amount. However, interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any default by Tenant under this Lease. If the interest rate specified in this Lease is higher than the rate permitted by law,
the interest rate is hereby decreased to the maximum legal interest rate permitted by law. 

        Section 4.07.    Impounds for Insurance Premiums and Real Property Taxes.    If requested by any ground lessor
or lender to whom Landlord has granted a security interest in the Property, or if Tenant is more than ten (10) days late in the payment of rent more than twice in any consecutive twelve (12)
-month period, Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of the annual real property taxes and insurance premiums payable by Tenant under this Lease, together with each payment of
Base Rent. Landlord shall hold such payments in a non-interest bearing impound account. If unknown, Landlord shall reasonably estimate the amount of real property taxes and insurance premiums when
due. Tenant shall pay any deficiency of funds in the impound account to Landlord upon written request. If Tenant defaults under this Lease, Landlord may apply any funds in the impound account to any
obligation then due under this Lease. 

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   ARTICLE FIVE:    USE OF PROPERTY  

        Section 5.01.    Permitted Uses.    Tenant may use the Property only for the Permitted Uses set forth in
Section 1.06 above. 

        Section 5.02.    Manner of Use.    Tenant shall not cause or permit the Property to be used in any way which
constitutes a violation of any law, ordinance, or governmental regulation or order, which annoys or interferes with the rights of other tenants of Landlord, or which constitutes a nuisance or waste.
Tenant shall obtain and pay for all permits, including a Certificate of Occupancy, required for Tenant's occupancy of the Property and shall promptly take all actions necessary to comply with all
applicable statutes, ordinances, rules, regulations, orders and requirements regulating the use by Tenant of the Property, including the Occupational Safety and Health Act. 

See
attached "Hazardous Materials Rider" 

        Section 5.03.    Hazardous Materials.    As used in this Lease, the term "Hazardous Material" means any
flammable items, explosives, radioactive materials, hazardous or toxic substances, material or waste or related materials, including any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic substances" now or subsequently regulated under any applicable federal, state or local laws or regulations, including
without limitation petroleum-based products, paints, solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonia compounds and other chemical products, asbestos, PCBs and similar
compounds, and including any different products and materials which are subsequently found to have adverse effects on the environment or the health and safety of persons. Tenant shall not cause or
permit any Hazardous Material to be generated, produced, brought upon, used, stored, treated or disposed of in or about the Property by Tenant, its agents, employees, contractors, sublessees or
invitees without the prior written consent of Landlord, Landlord shall be entitled to take into account such other factors or facts as Landlord may reasonably determine to be relevant in determining
whether to grant or withhold consent to Tenant's proposed activity with respect to Hazardous Material. In no event, however, shall Landlord be required to consent to the installation or use of any
storage tanks on the Property. 

        Section 5.04.    Signs and Auctions.    Tenant shall not place any signs on the Property without Landlord's
prior written consent, which shall not be unreasonably withheld. Tenant shall not conduct or permit any auctions or sheriff's sales at the Property. Tenant shall not place any signs on the property
without obtaining approval from the City of Reno and complying with the CC&R's of South Meadows Business Park. 

        Section 5.05
(a).    Indemnity by Tenant.    Tenant shall indemnify Landlord against and hold Landlord harmless
from any and all costs, claims or liability arising from: (i) Tenant's use of the Property; (ii) the conduct of Tenant's business or anything else done or permitted by Tenant to be done
in or about the Property, including any contamination of the Property or any other property resulting from the presence or use of Hazardous Material caused or permitted by Tenant; (iii) any
breach or default in the performance of Tenant's obligations under this Lease; (iv) any misrepresentation or breach of warranty by Tenant under this Lease; or (v) other acts or omissions
of Tenant. Tenant shall defend Landlord against any such cost, claim or liability at Tenant's expense with counsel reasonably acceptable to Landlord or, at Landlord's election, Tenant shall reimburse
Landlord for any legal fees or costs incurred by Landlord in connection with any such claim. As a material part of the consideration to Landlord, Tenant assumes all risk of damage to property or
injury to persons in or about the Property arising from any cause, and Tenant hereby waives all claims in respect thereof against Landlord, except for any claim arising out of Landlord's gross
negligence or willful misconduct. As used in this Section, the term "Tenant" shall include Tenant's employees, agents, contractors and invitees, if applicable. 

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        Section 5.05
(b).    Indemnity by Landlord.    Landlord shall indemnify Tenant against and hold Tenant harmless
from any and all costs, claims or liability arising from (i) the presence or use of Hazardous Material caused or permitted by Landlord during Landlord's ownership of the Property and not caused
by Tenant or any of its employees, agents, contractor, invitees or affiliated entities or; (ii) any misrepresentation or breach of warranty by Landlord under this Lease. In the event of the
occurrence of any of the above events, Landlord shall defend Tenant against any such cost, claim or liability at Landlord's expense with council reasonably acceptable to Tenant. 

        Section 5.06.    Landlord's Access.    Landlord or its agents may enter the Property at all reasonable times to
show the Property to potential buyers, investors or tenants or other parties; to do any other act or to inspect and conduct tests in order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous Material; or for any other purpose Landlord deems necessary. Landlord shall give Tenant forty-eight (48) hours prior notice
of such entry, except in the case of an emergency. Landlord may place customary "For Sale" or "For Lease" signs on the Property within 6 months of termination of the lease. 

        Section 5.07.    Quiet Possession.    If Tenant pays the rent and complies with all other terms of this Lease,
Tenant may occupy and enjoy the Property for the full Lease Term, subject to the provisions of this Lease. 

ARTICLE SIX:    CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS  

        Section 6.01.    Existing Conditions.    At the beginning of the 13th month of the lease, Tenant accepts the
Property in its condition as of the Commencement/Occupancy Date, subject to all recorded matters, laws, ordinances, and governmental regulations and orders, and Contractor warranties. Landlord agrees
to assign to the Tenant all contractor's warranties. Except as provided herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation that the condition of
the Property, except Landlord warrants that the property is in good condition and was constructed in accordance with the project specifications, or as to the suitability of the Property for Tenant's
intended use. As of the Commencement/Occupancy Date, Tenant represents and warrants that Tenant has made its own inspection of and inquiry regarding the condition of the Property, and is not relying
on any representations of Landlord (except as set forth within) or any Broker with respect thereto. 

        Section 6.02.    Exemption of Landlord from Liability.    Landlord shall not be liable for any damage or injury
to the person, business (or any loss of income therefrom), goods, wares, merchandise or other property of Tenant, Tenant's employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a) fire, steam, electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures or any other cause; (c) conditions arising in or about the Property or from other sources or places; or
(d) any act or omission of any other tenant of Landlord. Landlord shall not be liable for any such damage or injury even though the cause of or the means of repairing such damage or injury are
not accessible to Tenant. The provisions of this Section 6.02 shall not, however, exempt Landlord from liability for Landlord's negligence or willful misconduct, or defects in the construction,
which is the responsibility of the Landlord. 

        Section 6.03.    Landlord's Obligations.    Subject to the provisions of Article Seven (Damage or
Destruction) and Article Eight (Condemnation) and providing Landlord does not collect maintenance and repair fees per Section 4.01, Landlord shall have absolutely no responsibility to
repair, maintain or replace any portion of the Property at any time unless Landlord charges Tenant through triple net charges. 

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        Section 6.04.    Tenant's Obligations.    

        (a)  Except
as provided in Article Seven (Damage or Destruction) and Article Eight (Condemnation), Tenant shall keep all portions of the Property (including
nonstructural, interior, exterior, and landscaped areas, portions, systems and equipment) in good order, condition and repair (including interior repainting and refinishing, as needed). If any portion
of the Property or any system or
equipment in the Property which Tenant is obligated to repair cannot be fully repaired or restored, Tenant shall promptly replace such portion of the Property or system or equipment in the Property,
regardless of whether the benefit of such replacement extends beyond the Lease Term; but if the benefit or useful life of such replacement extends beyond the Lease Term (as such term may be extended
by exercise of any options), the useful life of such replacement shall be prorated over the remaining portion of the Lease Term (as extended), and Tenant shall be liable only for that portion of the
cost which is applicable to the Lease Term (as extended). Tenant shall maintain a preventive maintenance contract providing for the regular inspection and maintenance of the heating and air
conditioning system by a licensed heating and air conditioning contractor. If any part of the Property is damaged by any act or omission of Tenant, Tenant shall pay Landlord the cost of repairing or
replacing such damaged property, whether or not Landlord would otherwise be obligated to pay the cost of maintaining or repairing such property. It is the intention of Landlord and Tenant that at all
times Tenant shall maintain the portions of the Property which Tenant is obligated to maintain in an attractive, first-class and fully operative condition. Landlord shall maintain the structural
integrity of the building as well as the roofing membrane (maintenance by the Tenant) during the firm term of the lease at Landlord's expense. 

        (b)  Tenant
shall fulfill all of Tenant's obligations under this Section 6.04 at Tenant's sole expense. If Tenant fails to maintain, repair or replace the Property as
required by this Section 6.04, Landlord may, upon ten (10) days' prior notice to Tenant (except that no notice shall be required in the case of an emergency), enter the Property and
perform such maintenance or repair (including replacement, as needed) on behalf of Tenant. In such case, Tenant shall reimburse Landlord for all costs incurred in performing such maintenance or repair
immediately upon demand. 

        Section 6.05.    Alterations, Additions, and Improvements.    

        (a)  Tenant
shall not make any alterations, additions, or improvements to the Property without Landlord's prior written consent, which consent shall not be unreasonably
withheld, except for non-structural alterations which do not exceed Ten Thousand Dollars ($10,000) in cost cumulatively over the Lease Term and which are not visible from the outside of any building
of which the Property is part. Landlord may require Tenant to provide demolition and/or lien and completion bonds in form and amount satisfactory to Landlord. Tenant shall promptly remove any
alterations, additions, or improvements constructed (unless prior approval from Landlord is obtained) in violation of this Paragraph 6.05(a) upon Landlord's written request. All alterations,
additions, and improvements shall be done in a good and workmanlike manner, in conformity with all applicable laws and regulations, and by a contractor approved by Landlord. Upon completion of any
such work, Tenant shall provide Landlord with "as built" plans, copies of all construction contracts, and proof of payment for all labor and materials. 

        (b)  Tenant
shall pay when due all claims for labor and material furnished to the Property. Tenant shall give Landlord at least twenty (20) days' prior written notice of the
commencement of any work on the Property, regardless of whether Landlord's consent to such work is required. Landlord may elect to record and post notices of non-responsibility on the Property. 

        Section 6.06.    Condition upon Termination.    Upon the termination of the Lease, Tenant shall surrender the
Property to Landlord, broom clean and in the same condition as received except for 

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ordinary wear and tear which Tenant was not otherwise obligated to remedy under any provision of this Lease. However, Tenant shall not be obligated to repair any damage which Landlord is required to
repair under Article Seven (Damage or Destruction). In addition, Landlord may require Tenant to remove any alterations, additions or improvements prior to the expiration of the Lease and to
restore the Property to its prior condition, all at Tenant's expense. All alterations, additions and improvements which Landlord has not required Tenant to remove shall become Landlord's property and
shall be surrendered to Landlord upon the expiration or earlier termination of the Lease, except that Tenant may remove any of Tenant's machinery or equipment which can be removed without material
damage to the Property. Tenant shall repair, at Tenant's expense, any damage to the Property caused by the removal of any such machinery or equipment. In no event, however, shall Tenant remove any of
the following materials or equipment (which shall be deemed Landlord's property) without Landlord's prior written consent: any power wiring or power panels; lighting or lighting fixtures; wall
coverings; drapes, blinds or other window coverings; carpets or other floor coverings; heaters, air conditioners or any other heating or air conditioning equipment; fencing or security gates; or other
similar building operating equipment and decorations. 

ARTICLE SEVEN:    DAMAGE OR DESTRUCTION  

        Section 7.01.    Partial Damage to Property.    

        (a)  Tenant
shall notify Landlord in writing immediately upon the occurrence of damage to the Property. If the Property is only partially damaged (i.e., less than fifty
percent (50%) of the Property is untenantable as a result of such damage or less than fifty percent (50%) of Tenant's operations are materially impaired) and if the proceeds received by Landlord from
the insurance policies described in Paragraph 4.04(b) are sufficient to pay for the necessary repairs, this Lease shall remain in effect and Landlord shall repair the damage as soon as reasonably
possible. Landlord may elect (but is not required) to repair any damage to Tenant's fixtures, equipment, or improvements. 

        (b)  If
the insurance proceeds received by Landlord are not sufficient to pay the entire cost of repair where the Property is only partially damaged as defined in 7.01(a), or
if the cause of the damage is not covered by the insurance policies which Landlord maintains under Paragraph 4.04(b) Landlord may elect either to (i) repair the damage as soon as
reasonably possible, in which case this Lease shall remain in full force and effect, or (ii) terminate this Lease as of the date the damage occurred. Landlord shall notify Tenant within thirty
(30) days after receipt of notice of the occurrence of the damage whether Landlord elects to repair the damage or terminate the Lease. If Landlord elects to repair the damage, Tenant shall pay
Landlord the "deductible amount" (if any) under Landlord's insurance policies and, if the damage was due to an act or omission of Tenant, or Tenant's employees, agents, contractors or invitees, the
difference between the actual cost of repair and any insurance
proceeds received by Landlord. If Landlord elects to terminate this Lease, Tenant may elect to continue this Lease in full force and effect, in which case Tenant shall repair any damage to the
Property and any building in which the Property is located. Tenant shall pay the cost of such repairs, except that upon satisfactory completion of such repairs, Landlord shall deliver to Tenant any
insurance proceeds received by Landlord for the damage repaired by Tenant. Tenant shall give Landlord written notice of such election within ten (10) days after receiving Landlord's termination
notice. 

        (c)  If
the damage to the Property occurs during the last six (6) months of the Lease Term and such damage will require more than thirty (30) days to repair, either
Landlord or Tenant may elect to terminate this Lease as of the date the damage occurred, regardless of the sufficiency of any insurance proceeds. The party electing to terminate this Lease shall give
written notification to the other party of such election within thirty (30) days after Tenant's notice to Landlord of the occurrence of the damage. 

10

 

        Section 7.02.    Substantial or Total Destruction.    If the Property is substantially or totally destroyed by
any cause whatsoever (i.e., the damage to the Property is greater than partial damage as described in Section 7.01), and regardless of whether Landlord receives any insurance proceeds, this
Lease shall terminate as of the date the destruction occurred unless said destruction occurred due to events or actions of Tenant or events beyond Landlord's control, it will be at Tenant's election
to terminate. Notwithstanding the preceding sentence, if the Property can be rebuilt within six (6) months after the date of destruction, Landlord may elect to rebuild the Property at
Landlord's own expense, in which case this Lease shall remain in full force and effect. Landlord shall notify Tenant of such election within thirty (30) days after Tenant's notice of the occurrence of
total or substantial destruction. If Landlord so elects, Landlord shall rebuild the Property at Landlord's sole expense, except that if the destruction was caused by an act or omission of Tenant,
Tenant shall pay Landlord the difference between the actual cost of rebuilding and any insurance proceeds received by Landlord. 

        Section 7.03.    Temporary Reduction of Rent.    If the Property is destroyed or damaged and Landlord or Tenant
repairs or restores the Property pursuant to the provisions of this Article Seven, any rent payable during the period of such damage, repair and/or restoration shall be reduced according to the
degree, if any, to which Tenant's use of the Property is impaired. However, the reduction shall not exceed the sum of one year's payment of Base Rent, insurance premiums and real property taxes.
Except for such possible reduction in Base Rent, insurance premiums and real property taxes, Tenant shall not be entitled to any compensation, reduction, or reimbursement from Landlord as a result of
any damage, destruction, repair, or restoration of or to the Property if said damage or destruction was caused by an act of the Tenant or events beyond Landlord's control, unless damage is caused by
Landlord. 

        Section 7.04.    Waiver.    Tenant waives the protection of any statute, code or judicial decision which grants
a tenant the right to terminate a lease in the event of the substantial or total destruction of the leased property. Tenant agrees that the provisions of Section 7.02 above shall govern the
rights and obligations of Landlord and Tenant in the event of any substantial or total destruction to the Property. 

ARTICLE EIGHT:    CONDEMNATION  

        If all or any portion of the Property is taken under the power of eminent domain or sold under the threat of that power (all of which are called "Condemnation"),
this Lease shall terminate as to the part taken or sold on the date the condemning authority takes title or possession, whichever occurs first. If more than twenty percent (20%) of the floor area of
the building in which the Property is located, or which is located on the Property, is taken, either Landlord or Tenant may terminate this Lease as of the date the condemning authority takes title or
possession, by delivering written notice to the other within ten (10) days after receipt of written notice of such taking (or in the absence of such notice, within ten (10) days after
the condemning authority takes title or possession). If neither Landlord nor Tenant terminates this Lease, this Lease shall remain in effect as to the portion of the Property not taken, except that
the Base Rent and Additional Rent shall be reduced in proportion to the reduction in the floor area of the Property. Any Condemnation award or payment shall be distributed in the following order:
(a) first, to any ground lessor, mortgagee or beneficiary under a deed of trust encumbering the Property, the amount of its interest in the Property; (b) second, to Tenant, only the
amount of any award specifically designated for loss of or damage to Tenant's trade fixtures or removable personal property; and (c) third, to Landlord, the remainder of such award, whether as
compensation for reduction in the value of the leasehold, the taking of the fee, or otherwise. If this Lease is not terminated, Landlord shall repair any damage to the Property caused by the
Condemnation, except that Landlord shall not be obligated to repair any damage for which Tenant has been reimbursed by the condemning authority. If the severance damages received by Landlord are not
sufficient to pay for such repair, Landlord shall have the right to either terminate this Lease or make such repair at Landlord's expense. 

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ARTICLE NINE:    ASSIGNMENT AND SUBLETTING  

        Section 9.01.    Landlord's Consent Required.    No portion of the Property or of Tenant's interest in this
Lease may be acquired by any other person or entity, whether by sale, assignment, mortgage, sublease, transfer, operation of law, or act of tenant, without Landlord's prior written consent, except as
provided in Section 9.02 below. Landlord has the right to grant or withhold its consent as provided in Section 9.05 below. Any attempted transfer without consent shall be void and shall
constitute a non-curable breach of this Lease. If Tenant is a partnership, any cumulative transfer of more than twenty percent (20%) of the partnership interests shall require Landlord's consent. If
Tenant is a corporation, any change in the ownership of a controlling interest of the voting stock of the corporation shall require Landlord's consent. 

        Section 9.02.    Tenant Affiliate.    Tenant may assign this Lease or sublease the Property, without Landlord's
consent, to any corporation which controls, is controlled by or is under common control with Tenant, or
to any corporation resulting from the merger of or consolidation with Tenant ("Tenant's Affiliate"). In such case, any Tenant's Affiliate shall assume in writing all of Tenant's obligations under this
Lease. 

        Section 9.03.    No Release of Tenant.    No transfer permitted by this Article Nine, whether with or
without Landlord's consent, shall release Tenant or change Tenant's primary liability to pay the rent and to perform all other obligations of Tenant under this Lease. Landlord's acceptance of rent
from any other person is not a waiver of any provision of this Article Nine. Consent to one transfer is not a consent to any subsequent transfer. If Tenant's transferee defaults under this
Lease, Landlord may proceed directly against Tenant without pursuing remedies against the transferee. Landlord may consent to subsequent assignments or modifications of this Lease by Tenant's
transferee, without notifying Tenant or obtaining its consent. Such action shall not relieve Tenant's liability under this Lease. 

        Section 9.04.    Offer to Terminate.    If Tenant desires to assign the Lease or sublease the Property, Tenant
shall have the right to offer, in writing, to terminate the Lease as of a date specified in the offer. If Landlord elects in writing to accept the offer to terminate within twenty (20) days after
notice of the offer, the Lease shall terminate as of the date specified and all the terms and provisions of the Lease governing termination shall apply. If Landlord does not so elect, the Lease shall
continue in effect until otherwise terminated and the provisions of Section 9.05 with respect to any proposed transfer shall continue to apply. 

        Section 9.05.    Landlord's Consent.    

        (a)  Tenant's
request for consent to any transfer described in Section 9.01 shall set forth in writing the details of the proposed transfer, including the name,
business and financial condition of the prospective transferee, financial details of the proposed transfer (e.g., the term of and the rent and security deposit payable under any proposed assignment or
sublease), and any other information Landlord deems relevant. Landlord shall have the right to withhold consent, if reasonable, or to grant consent, based on the following factors: (i) the
business of the proposed assignee or subtenant and the proposed use of the Property; (ii) the net worth and financial reputation of the proposed assignee or subtenant; (iii) Tenant's
compliance with all of its obligations under the Lease; and (iv) such other factors as Landlord may reasonably deem relevant. If Landlord objects to a proposed assignment solely because of the
net worth and or financial reputation of the proposed assignee, Tenant may nonetheless sublease (but not assign), all or a portion of the Property to the proposed transferee, but only on the other
terms of the proposed transfer. 

        (b)  If
Tenant assigns or subleases, the following shall apply: 

          (i)  Tenant
shall pay to Landlord as Additional Rent under the Lease the Landlord's Share (stated in Section 1.13) of the Profit (defined below) on such transaction
as and when 

12

 

received by Tenant, unless Landlord gives written notice to Tenant and the assignee or subtenant that Landlord's Share shall be paid by the assignee or subtenant to Landlord directly. The "Profit"
means (A) all amounts paid to Tenant for such assignment or sublease, including "key" money, monthly rent in excess of the monthly rent payable under the Lease, and all fees and other
consideration paid for the assignment or sublease, including fees under any collateral agreements, less (B) costs and expenses directly incurred by Tenant in connection with the execution and
performance of such assignment or sublease for real estate broker's commissions and costs of renovation or construction of tenant improvements required under such assignment or sublease. Tenant is
entitled to recover such costs and expenses before Tenant is obligated to pay the Landlord's Share to Landlord. The Profit in the case of a sublease of less than all the Property is the rent allocable
to the subleased space as a percentage on a square footage basis. 

        (ii)  Tenant
shall provide Landlord a written statement certifying all amounts to be paid from any assignment or sublease of the Property within thirty (30) days after the
transaction documentation is signed, and Landlord may inspect Tenant's books and records to verify the accuracy of such statement. On written request, Tenant shall promptly furnish to Landlord copies
of all the transaction documentation, all of which shall be certified by Tenant to be complete, true and correct. Landlord's receipt of Landlord's Share shall not be a consent to any further
assignment or subletting. The breach of Tenant's obligation under this Paragraph 9.05(b) shall be a material default of the Lease. 

        Section 9.06.    No Merger.    No merger shall result from Tenant's sublease of the Property under this
Article Nine, Tenant's surrender of this Lease or the termination of this Lease in any other manner. In any such event, Landlord may terminate any or all subtenancies or succeed to the interest
of Tenant as sublandlord under any or all subtenancies. The intent of this paragraph is to allow Landlord the right to treat Tenant's interest under this Lease as a separate and distinct
interest, separate and apart from any sublease that may be permitted. 

ARTICLE TEN:    DEFAULTS; REMEDIES  

        Section 10.01.    Covenants and Conditions.    Tenant's performance of each of Tenant's obligations under this
Lease is a condition as well as a covenant. Tenant's right to continue in possession of the Property is conditioned upon such performance. Time is of the essence in the performance of all covenants
and conditions. 

        Section 10.02.    Defaults.    Tenant shall be in material default under this Lease: 

        (a)  If
Tenant abandons the Property or if Tenant's vacation of the Property results in the cancellation of any insurance described in Section 4.04, however, if Tenant
vacates the premises for any reason but continues to pay all obligations of the property, no default will take place; 

        (b)  If
Tenant fails to pay rent or any other charge when due; 

        (c)  If
Tenant fails to perform any of Tenant's non-monetary obligations under this Lease for a period of thirty (30) days after written notice from Landlord; provided that
if more than thirty (30) days are required to complete such performance, Tenant shall not be in default if Tenant commences such performance within the thirty (30) day period and thereafter diligently
pursues its completion. However, Landlord shall not be required to give such notice if Tenant's failure to perform constitutes a non-curable breach of this Lease. The notice required by this Paragraph
is intended to satisfy any and all notice requirements imposed by law on Landlord and is not in addition to any such requirement. 

        (d)  (i) If
Tenant makes a general assignment or general arrangement for the benefit of creditors; (ii) if a petition for adjudication of bankruptcy or for
reorganization or rearrangement is 

13

 

filed by or against Tenant and is not dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed to take possession of substantially all of Tenant's assets located at the
Property or of Tenant's interest in this Lease and possession is not restored to Tenant within thirty (30) days; or (iv) if substantially all of Tenant's assets located at the Property or of
Tenant's interest in this Lease is subjected to attachment, execution or other judicial seizure which is not discharged within thirty (30) days. If a court of competent jurisdiction determines that
any of the acts described in this subparagraph (d) is not a default under this Lease, and a trustee is appointed to take possession (or if Tenant remains a debtor in possession) and such
trustee or Tenant transfers Tenant's interest hereunder, then Landlord shall receive, as Additional Rent, the excess, if any, of the rent (or any other consideration) paid in connection with such
assignment or sublease over the rent payable by Tenant under this Lease. 

        (e)  If
any guarantor of the Lease revokes or otherwise terminates, or purports to revoke or otherwise terminate, any guaranty of all or any portion of Tenant's obligations
under the Lease. Unless otherwise expressly provided, no guaranty of the Lease is revocable. 

        Section
10.03.    Remedies.    On the occurrence of any material default by Tenant, Landlord may, at any time
thereafter, with notice or demand and without limiting Landlord in the exercise of any right or remedy which Landlord may have: 

        (a)  Terminate
Tenant's right to possession of the Property by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of
the Property to Landlord. In such event, Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default, including (i) the worth at the time of
the award of the unpaid Base Rent, Additional Rent and other charges which Landlord had earned at the time of the termination; (ii) the worth at the time of the award of the amount by which the
unpaid Base Rent, Additional Rent and other charges which Landlord would have earned after termination until the time of the award exceeds the amount of
such rental loss that Tenant proves Landlord could have reasonably avoided; (iii) the worth at the time of the award of the amount by which the unpaid Base Rent, Additional Rent and other
charges which Tenant would have paid for the balance of the Lease term after the time of award exceeds the amount of such rental loss that Tenant proves Landlord could have reasonably avoided; and
(iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under the Lease or which in the ordinary course of
things would be likely to result therefrom, including, but not limited to, any costs or expenses Landlord incurs in maintaining or preserving the Property after such default, the cost of recovering
possession of the Property, expenses of reletting, including necessary renovation or alteration of the Property, Landlord's reasonable attorneys' fees incurred in connection therewith, and any real
estate commission paid or payable. As used in subparts (i) and (ii) above, the worth at the time of the award" is computed by allowing interest on unpaid amounts at the rate of fifteen percent
(15%) per annum, or such lesser amount as may then be the maximum lawful rate. As used in subpart (iii) above, the "worth at the time of the award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%). If Tenant has abandoned the Property, Landlord shall have the option of (i) retaking
possession of the Property and recovering from Tenant the amount specified in this Paragraph 10.03(a), or (ii) proceeding under Paragraph 10.03(b), 

        (b)  Maintain
Tenant's right to possession, in which case this Lease shall continue in effect whether or not Tenant has abandoned the Property. In such event, Landlord shall
be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the rent as it becomes due; 

14

 

        (c)  Pursue
any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state in which the Property is located. 

        Section
10.05.    Automatic Termination.    Notwithstanding any other term or provision hereof to the contrary, the
Lease shall terminate on the occurrence of any act which affirms the Landlord's intention to terminate the Lease as provided in Section 10.03 hereof, including the filing of an unlawful
detainer action against Tenant. On such termination, Prevailing party's damages for default shall include all costs and fees, including reasonable attorneys' fees that Landlord incurs in connection
with the filing, commencement, pursuing and or defending of any action in any bankruptcy court or other court with respect to the Lease; the obtaining of relief from any stay in bankruptcy restraining
any action to evict Tenant; or the pursuing of any action with respect to Landlord's right to possession of the Property. All such damages suffered (apart from Base Rent and other rent payable
hereunder) shall constitute pecuniary damages which must be reimbursed to Landlord prior to assumption of the Lease by Tenant or any successor to Tenant in any bankruptcy or other proceeding. 

        Section
10.06    Cumulative Remedies.    Landlord's exercise of any right or remedy shall not prevent it from
exercising any other right or remedy. 

15

   ARTICLE ELEVEN:    PROTECTION OF LENDERS  

        Section 11.01.    Subordination.    Landlord shall have the right to subordinate this Lease to any ground
lease, deed of trust or mortgage encumbering the Property, any advances made on the security thereof and any renewals, modifications, consolidations, replacements or extensions thereof, whenever made
or recorded. Tenant shall cooperate with Landlord and any lender which is acquiring a security interest in the Property or the Lease. Tenant shall execute such further documents and assurances as such
lender may require, provided that Tenant's obligations under this Lease shall not be increased in any material way (the performance of ministerial acts shall not be deemed material), and Tenant shall
not be deprived of its rights under this Lease. Tenant's right to quiet possession of the Property during the Lease Term shall not be disturbed if Tenant pays the rent and performs all of Tenant's
obligations under this Lease and is not otherwise in default. If any ground lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of its ground lease, deed of trust or mortgage
and gives written notice thereof to Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or mortgage whether this Lease is dated prior or subsequent to the date of said ground
lease, deed of trust or mortgage or the date of recording thereof. 

        Section 11.02.    Attornment.    If Landlord's interest in the Property is acquired by any ground lessor,
beneficiary under a deed of trust, mortgagee, or purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or successor to Landlord's interest in the Property and recognize such
transferee or successor as Landlord under this Lease. 

        Section 11.03.    Signing of Documents.    Tenant shall sign and deliver any instrument or documents necessary
or appropriate to evidence any such attornment or subordination or agreement to do so. If Tenant fails to do so within ten (10) days after written request, Tenant hereby makes, constitutes and
irrevocably appoints Landlord, or any transferee or successor of Landlord, the attorney-in-fact of Tenant to execute and deliver any such instrument or document. 

        Section 11.04.    Estoppel Certificates.    

        (a)  Upon
Landlord's written request, Tenant shall execute, acknowledge and deliver to Landlord a written statement certifying: (i) that none of the terms or
provisions of this Lease have been changed (or if they have been changed, stating how they have been changed), (ii) that this Lease has not been
canceled or terminated; (iii) the last date of payment of the Base Rent and other charges and the time period covered by such payment; (iv) that Landlord is not in default under this
Lease (or, if Landlord is claimed to be in default, stating why); and (v) such other representations or information with respect to Tenant or the Lease as Landlord may reasonably request or
which any prospective purchaser or encumbrancer of the Property may require. Tenant shall deliver such statement to Landlord within thirty (30) days after Landlord's request. Landlord may give any
such statement by Tenant to any prospective purchaser or encumbrancer of the Property. Such purchaser or encumbrancer may rely conclusively upon such statement as true and correct. 

        (b)  If
Tenant does not deliver such statement to Landlord within such fifteen (15)-day period, Landlord, and any prospective purchaser or encumbrancer, may conclusively
presume and rely upon the following facts: (i) that the terms and provisions of this Lease have not been changed except as otherwise represented by Landlord; (ii) that this Lease has not
been canceled or terminated except as otherwise represented by Landlord; (iii) that not more than one month's Base Rent or other charges have been paid in advance; and (iv) that Landlord
is not in default under the Lease. In such event, Tenant shall be estopped from denying the truth of such facts. 

        Section 11.05.    Tenant's Financial Condition.    Within fifteen (15) days after written request from
Landlord, Tenant shall deliver to Landlord such financial statements as Landlord reasonably requires to verify the net worth of Tenant or any assignee, subtenant, or guarantor of Tenant. In addition,
Tenant shall deliver to any lender designated by Landlord any financial statements required by such lender to 

16

 

facilitate the financing or refinancing of the Property. Tenant represents and warrants to Landlord that each such financial statement is a true and accurate statement as of the date of such
statement. All financial statements shall be confidential and shall be used only for the purposes set forth in this Lease. 

ARTICLE TWELVE:    LEGAL COSTS  

        Section 12.01    Legal Proceedings.    If Tenant or Landlord shall be in breach or default under this Lease,
such party (the "Defaulting Party") shall reimburse the other party (the "Nondefaulting Party") upon demand for any costs or expenses that the Nondefaulting Party incurs in connection with any breach
or default of the Defaulting Party under this Lease, whether or not suit is commenced or judgment entered. Such costs shall include legal fees and costs incurred for the negotiation of a settlement,
enforcement of rights or otherwise. Furthermore, if any action for breach of or to enforce the provisions of this Lease is commenced, the court in such action shall award to the party in whose favor a
judgment is entered, a reasonable sum as attorneys' fees and costs. The losing party in such action shall pay such attorneys' fees and costs. Tenant shall also indemnify Landlord against and hold
Landlord harmless from all costs, expenses, demands and liability Landlord may incur if Landlord becomes or is made a party to any claim or action (a) instituted by Tenant against any third
party, or by any third party against Tenant, or by or against any person holding any interest under or using the Property by license of or agreement with Tenant; (b) for foreclosure of any lien for
labor or material
furnished to or for Tenant or such other person; (c) otherwise arising out of or resulting from any act or transaction of Tenant or such other person; or (d) necessary to protect
Landlord's interest under this Lease in a bankruptcy proceeding, or other proceeding under Title 11 of the United States Code, as amended. Tenant shall defend Landlord against any such claim or
action at Tenant's expense with counsel reasonably acceptable to Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any legal fees or costs Landlord incurs in any such claim or
action. Landlord shall hold Tenant harmless from all costs, expenses, demands and liability Tenant may incur if Tenant becomes or is made a party to any claim or action for foreclosure or any lien for
labor or material furnished to or for Landlord. 

        Section 12.02.    Landlord's Consent.    Tenant shall pay Landlord's reasonable attorneys' fees (not to exceed
$1,000) incurred in connection with Tenant's request for Landlord's consent under Article Nine (Assignment and Subletting), or in connection with any other act which Tenant proposes to do and
which requires Landlord's consent. 

ARTICLE THIRTEEN:    MISCELLANEOUS PROVISIONS  

        Section 13.01.    Non-Discrimination.    Tenant promises, and it is a condition to the continuance of this
Lease, that there will be no discrimination against, or segregation of, any person or group of persons on the basis of race, color, sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof. 

        Section 13.02.    Landlord's Liability; Certain Duties.    

        (a)  As
used in this Lease, the term "Landlord" means only the current owner or owners of the fee title to the Property or the leasehold estate under a ground lease of the
Property at the time in question. Each Landlord is obligated to perform the obligations of Landlord under this Lease only during the time such Landlord owns such interest or title. Any Landlord who
transfers its title or interest is relieved of all liability with respect to the obligations of Landlord under this Lease to be performed on or after the date of transfer. However, each Landlord shall
deliver to its transferee all funds that Tenant previously paid if such funds have not yet been applied under the terms of this Lease. 

        (b)  Tenant
shall give written notice of any failure by Landlord to perform any of its obligations under this Lease to Landlord and to any ground lessor, mortgagee or
beneficiary under 

17

 

any deed of trust encumbering the Property whose name and address have been furnished to Tenant in writing. Landlord shall not be in default under this Lease unless Landlord (or such ground lessor,
mortgagee or beneficiary) fails to cure such non-performance within thirty (30) days after receipt of
Tenant's notice. However, if such non-performance reasonably requires more than thirty (30) days to cure, Landlord shall not be in default if such cure is commenced within ten (10) -day period
(for material defaults—thirty days for non-materials default) and thereafter diligently pursued to completion. 

        (c)  Notwithstanding
any term or provision herein to the contrary, the liability of Landlord for the performance of its duties and obligations under this Lease is limited to
Landlord's interest in the Property, and neither the Landlord nor its partners, shareholders, officers or other principals shall have any personal liability under this Lease. 

        Section 13.03.    Severability.    A determination by a court of competent jurisdiction that any provision of
this Lease or any part thereof is illegal or unenforceable shall not cancel or invalidate the remainder of such provision or this Lease, which shall remain in full force and effect. 

        Section 13.04.    Interpretation.    The captions of the Articles or Sections of this Lease are to assist the
parties in reading this Lease and are not a part of the terms or provisions of this Lease. Whenever required by the context of this Lease, the singular shall include the plural and the plural shall
include the singular. The masculine, feminine and neuter genders shall each include the other. In any provision relating to the conduct, acts or omissions of Tenant, the term "Tenant" shall include
Tenant's agents, employees, contractors, invitees, successors or others using the Property with Tenant's expressed or implied permission. 

        Section 13.05.    Incorporation of Prior Agreements; Modifications.    This Lease is the only agreement between
the parties pertaining to the lease of the Property and no other agreements are effective. All amendments to this Lease shall be in writing and signed by all parties. Any other attempted amendment
shall be void. 

        Section 13.06.    Notices.    All notices required or permitted under this Lease shall be in writing and shall
be personally delivered or sent by certified mail, return receipt requested, postage prepaid. Notices to Tenant shall be delivered to the address specified in Section 1.03 above, except that
upon Tenant's taking possession of the Property, the Property shall be Tenant's address for notice purposes. Notices to Landlord shall be delivered to the address specified in Section 1.02
above. All notices shall be effective upon delivery. Either party may change its notice address upon written notice to the other party. In addition to the address for Tenant specified in
Section 1.03, Landlord agrees to deliver notices to the location listed below: 

Gametech
International, Inc., a Delaware Corporation

4070 Silver Sage Drive

Carson City, NV 89701

ATTN: General Counsel and CFO 

        Section 13.07.    Waivers.    All waivers must be in writing and signed by the waiving party. Landlord's
failure to enforce any provision of this Lease or its acceptance of rent shall not be a waiver and shall not prevent Landlord from enforcing that provision or any other provision of this Lease in the
future. No statement on a payment check from Tenant or in a letter accompanying a payment check shall be binding on Landlord. Landlord may, with or without notice to Tenant, negotiate such check
without being bound to the conditions of such statement. 

        Section 13.08.    No Recordation.    Tenant shall not record this Lease without prior written consent from
Landlord. However, either Landlord or Tenant may require that a "Short Form" memorandum of this Lease executed by both parties be recorded. The party requiring such recording shall pay all transfer
taxes and recording fees. 

18

 

        Section 13.09.    Binding Effect; Choice of Law.    This Lease binds any party who legally acquires any rights
or interest in this Lease from Landlord or Tenant. However, Landlord shall have no obligation to Tenant's successor unless the rights or interests of Tenant's successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located shall govern this Lease. 

        Section 13.10.    Corporate Authority; Partnership Authority.    If Tenant is a corporation, each person
signing this Lease on behalf of Tenant represents and warrants that he has full authority to do so and that this Lease binds the corporation. Within thirty (30) days after this Lease is signed, Tenant
shall deliver to Landlord a certified copy of a resolution of Tenant's Board of Directors authorizing the execution of this Lease or other evidence of such authority reasonably acceptable to Landlord.
If Tenant is a partnership, each person or entity signing this Lease for Tenant represents and warrants that he or it is a general partner of the partnership, that he or it has full authority to sign
for the partnership and that this Lease binds the partnership and all general partners of the partnership. Tenant shall give written notice to Landlord of any general partner's withdrawal or addition.
Within thirty (30) days after this Lease is signed, Tenant shall deliver to Landlord a copy of Tenant's recorded statement of partnership or certificate of limited partnership. 

        Section 13.11.    Joint and Several Liability.    All parties signing this Lease as Tenant shall be jointly and
severally liable for all obligations of Tenant. 

        Section 13.12.    Force Majeure.    If Landlord cannot perform any of its obligations due to events beyond
Landlord's control, the time provided for performing such obligations shall be extended by a period of time equal to the duration of such events. Events beyond Landlord's control include, but are not
limited to, Tenant delays, acts of God, war, civil commotion, labor disputes, strikes, fire, flood or other casualty, shortages of labor or material, government regulation or restriction and weather
conditions. 

        Section 13.13.    Execution of Lease.    This Lease may be executed in counterparts and, when all counterpart
documents are executed, the counterparts shall constitute a single binding instrument. Landlord's delivery of this Lease to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties. 

        Section 13.14.    Survival.    All representations and warranties of Landlord and Tenant shall survive the
termination of this Lease. 

ARTICLE FOURTEEN:    BROKERS    Per Separate Agreement 

        Section 14.02.    Protection of Brokers.    If Landlord sells the Property, or assigns Landlord's interest in
this Lease, the buyer or assignee shall, by accepting such conveyance of the Property or assignment of the Lease, be conclusively deemed to have agreed to make all payments to Tenant's Broker
thereafter required of Landlord under this Article Fourteen. Tenant's Broker shall have the right to bring a legal action to enforce or declare rights under this provision. The prevailing party in
such action shall be entitled to reasonable attorneys' fees to be paid by the losing party. Such attorneys' fees shall be fixed by the court in such action. This Paragraph is included in this Lease
for the benefit of Tenant's Broker. 

        Section 14.03.    Broker's Disclosure of Agency.    Tenant's Broker hereby discloses to Landlord and Tenant and
Landlord and Tenant hereby consent to Tenant's Broker acting in this transaction as the agent of (check one): 

/ /    Landlord
exclusively; or 

/x/    Tenant
exclusively. 

19

 

        Section 14.04.    No Other Brokers.    Tenant represents and warrants to Landlord that the brokers named in
Section 1.08 above are the only agents, brokers, finders or other parties with whom Tenant has dealt who are or may be entitled to any commission or fee with respect to this Lease or the
Property. Landlord and Tenant will each indemnify each other for any claims made by any agents, brokers, finders, or other parties arising out of this transaction. 

        ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED HERETO OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED, PLEASE DRAW A
LINE THROUGH THE SPACE BELOW.

20

 

        Landlord
and Tenant have signed this Lease at the place and on-the dates specified adjacent to their signatures below and have initialed all Riders which are attached to or incorporated
by reference in this Lease. 

	 	 	 	 	 	 	"LANDLORD"
	

Signed on	
 	

11/30, 1999	
 	

 	
 	

Cypress Corporate Service, a California corporation, or Assignee
	

at	
 	

Sacramento, CA	
 	

 	
 	

By:	
 	

/s/  LINDA M. STANLEY      
 Linda Stanley
	

 	
 	

 	
 	

 	
 	

Its:	
 	

President
	 	 	 	 	 	 	 	 	

	
 	
 	

 	
 	

 	
 	
"TENANT"
	

Signed on	
 	

11/29, 1999	
 	

 	
 	

Gametech International Inc., A Delaware Corporation
	

at	
 	

Carson City, AZ	
 	

 	
 	

By:	
 	

/s/  ANDREJS K. BUNKSE      
	 	 	 	 	 	 	 	 	

	

 	
 	

 	
 	

 	
 	

Its:	
 	

General Counsel—Corporate Secretary
	 	 	 	 	 	 	 	 	

        IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER
PERSON WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE TANKS.

        THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE
REALTORS, INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS, INC., ITS LEGAL COUNSEL, THE REAL ESTATE
BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL
TO ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL COUNSEL.

21

  

 
 

HAZARDOUS MATERIALS RIDER
  
    Gametech International    
  

        Tenant shall (i) not cause or permit any Hazardous Material to be brought upon, kept or used in or about the Premises by Tenant, its agents, employees,
contractors or invitees, without the prior written consent of Landlord (which consent Landlord shall not unreasonably withhold or delay as long as Tenant demonstrates to Landlord's reasonable
satisfaction that such Hazardous Material is necessary or useful to Tenant's business and will be used, kept and stored in a manner that complies with all laws relating to any such Hazardous Material
so brought upon or used or kept in or about the Premises). If Tenant breaches the obligations stated in the preceding sentence, or if the presence of Hazardous Material on the Premises caused or
permitted by Tenant results in contamination of the Premises by Hazardous Material or otherwise occurs for which Tenant is legally liable to Landlord for damage resulting therefrom, then Tenant shall
indemnify, defend and hold Landlord harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses (including, without limitation, diminution on value of the
Premises, damages for the loss or restrictions on use of rentable or usable space or of any amenity of the Premises, damages arising from any adverse impact on marketing of the Premises, and
reasonable sums paid in settlement of claims, attorneys' fees, consultant fees and expert fees) which arise during or after the lease term as a result of such contamination. The indemnification set
forth herein shall run to the benefit of any bank or other lender to which Landlord or Landlord's successors and assigns may grant a security interest in the Property and or assigns may grant a
security interest in the Property and or the Premises. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions
or any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of Hazardous Material present in the soil or ground
water on or under the Premises caused or permitted by Tenant, its agents, employees, contractors or invitees. Without limiting the foregoing, if the presence of any Hazardous Material on the Premises
caused or permitted by Tenant results in any contamination of the Premises, Tenant shall promptly take all actions at its sole expense as are necessary to return the Premises to the condition existing
prior to the introduction of any such Hazardous Material to the Premises; provided that Landlord's approval of such actions shall first be obtained, which approval shall not be unreasonably withheld
so long as such actions would not potentially have any material adverse long-term or short-term effect on the Premises. 

        As
used herein, the term "Hazardous Material" means any hazardous or toxic substance, material or waste, which is or becomes regulated by any local governmental authority, the State of
Nevada or the United States Government. The term "Hazardous Material" includes, without limitation, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous
waste" or "restricted hazardous waste" under Sections 25115, 25117 or 25122, (ii) designated as a "hazardous substance" pursuant to Section 311 of the Federal Water Pollution
Control Act (33 U.S.C. Section 1317); (iii) defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq. (42 U.S.C. Section 6903); (x) defined as a "hazardous substance"
pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601); or
(iv) or any 

1

 

substance requiring remediation under any federal, state, municipal or other governmental statute, ordinance, rule, regulation or policy. 

	AGREED BY:	 	 
	

 	
 	

("TENANT")
	

TENANT:	
 	

Gametech International Inc., A Delaware  Corporation
 

	BY:	 	/s/ [ILLEGIBLE]	 	Date:	 	11-29-99
	 	 	
	 	 	 	

	

ITS:	
 	

/s/ General Counsel—Secretary	
 	

 	
 	

 
	 	 	
	 	 	 	 

	 	 	("LANDLORD")
	

LANDLORD:	
 	

Cypress Corporate Services, a California corporation, or Assignee
 

	BY:	 	/s/ Linda Stanley	 	Date:	 	11/30/99
	 	 	
	 	 	 	

	 	 	Linda Stanley

President
 	 	 	 	 

2

ADDENDUM TO LEASE  

 By and Between  

 CYPRESS CORPORATE SERVICES, INC., A CALIFORNIA CORPORATION, OR ASSIGNEE,

"LANDLORD"  

 and  

 GAMETECH INTERNATIONAL, INC. A NEVADA CORPORATION, "TENANT"  

1.    Base Rent:

Tenant
shall pay Landlord Base Rent on a NNN basis according to the following schedule: 

	Month	1:	 	Free Rent
	Months	2 - 25:	 	$38,000 per month
	Months	26 - 49:	 	$39,140 per month
	Months	50 - 73:	 	$40,314 per month
	Months	74 - 97:	 	$41,523 per month
	Months	98 - 121:	 	$42,769 per month

Any
escalations in the rent during the term or any additional term shall be at 3% every 24 months. 

The
monthly base rental amount is based on a square footage rate of $.95. The actual monthly rental amount will be determined by multiplying the building's square footage times $.95. Additionally, the
base monthly rental amount is subject to a tenant improvement allowance of $1,225,000. The final monthly base rental amount will be modified if the tenant improvement allowance is either exceeded or
not totally expended. If the tenant improvement allowance is exceeded (up to a total of $1,325,000), the amount over the allowance shall be multiplied by 12% and then divided by 12. The resulting
amount will be added to the base monthly rental amount. If the allowance is not totally spent, the amount under the allowance shall be multiplied by 11% and then divided by 12. The resulting amount
wilt be deducted from the base monthly rental amount, 

2.    Security Deposit

Tenant
shall remit a total of $80,769 (first and last month's rent) upon execution of this agreement. So long as the Tenant has not been in material default of the Lease and has remitted the monthly
rental obligations (and all other periodic payments and covenants as required in the Lease), the last month's rental amount (security deposit) shall be returned upon the expiration of the
36th month of the lease term. 

3.    Landlord Improvements

Landlord
shall construct and deliver, at its sole cost and expense, the improvements set forth in Exhibits B and C. The improvements shall be constructed in accordance with all American with
Disabilities Act requirements (Federal, State and Local) and shall be provided by Landlord at Landlord's sole cost and expense. Tenant shall be responsible for the cost of any improvements beyond
those set forth in Exhibits B and C. The lease shall be contingent upon the attachment of Exhibits B & C and initials of the Landlord and Tenant thereto. Any modifications to the
specifications shall be established and mutually agreed upon prior to the commencement of construction. In accordance with Section 5.02 of this Lease, in the event the City of Reno, the fire
department or any other government agency requires additional improvements to the building (beyond those set forth in Exhibits B or C) due
to a change in Tenant's proposed and specific use of said building, such improvements and all related costs shall be at the sole cost and expense of Tenant. 

 
 

Gametech International
  Reno, Nevada    
  

SUMMARIZED PROJECT SPECIFICATION: (FULL HEIGHT CONCRETE TILT PANELS WITH HYBRED ROOF STRUCTURE AND FOUR-PLY ROOF MEMBRANE)  

	Site:	 	119,355 square feet
	

Building:	
 	

39,306 square feet
	

Building Coverage:	
 	

33%
	

Office:	
 	

35,000 square feet. An allowance of $1,225,000 has been provided.
	

Grade Level:	
 	

One each 12' x 14', chain-driven, insulated sectional, vertical lift.
	

Construction Type:	
 	

20,000 square foot shell, concrete tilt up exterior walls, 24' clear above finish floor; panelized wood roof structure (commonly referred to as a "Hybird" system) with four-ply built up roofing. Roof is single slope @ 1/4" per linear foot
with parapets and external roof drainage. Structure is considered a Type V-N with a mixed B1 & S3 occupancy.
	

Insulation:	
 	

Entire roof structure to receive FSK or equal R-19 batting within the sub-purlins
	

Clear Height:	
 	

24' (minimum)
	

Electrical Service:	
 	

277/480 volt, 3-phase, 4-wire, 800 amp service (exact size to be determined).
	

Fire Protection:	
 	

The warehouse will be protected with a .33/3,000 sprinkler system. The system design will be coordinated through the appropriate governmental jurisdiction.
	

Lighting:	
 	

400 watt metal halide, high bay, enclosed, light fixtures to be installed at a ratio of one per every 500 square feet of warehouse floor area. Fixtures to be Lithonia or equal. Office area lighting per the allowance amount.

	Allowances:	 	 	 
	

Office Space	
 	
$	

1,225,000
	Architectural Feature at Front Entry	 	$	15,000
	Land (2.74 acres at $5.75 per square foot)	 	$	686,250
	Permits and Fees	 	$	77,000

GENERAL DESCRIPTION:  

        Approximate 22,272 square foot shell (with a second floor mezzanine of 17,322 square feet), concrete tilt up exterior walls, 24' minimum clear height above
finished floor; panelized wood roof structure with four-ply built up roofing. Roof is single slope @ 1/4"/LF with parapets and external roof drainage. Structure is considered a Type V-N with a mixed
B1 and S3 occupancy. 

        This
specification is based on the 2.74 acre site along Sandhill Street (currently referred to as Parcel 1-C, PM 3395) in the South Meadows Business Park area. 

DIVISION 1:    GENERAL REQUIREMENTS  

 1.01    LAWS, ORDINANCES, RULES and REGULATIONS  

        All laws, ordinances, rules and regulations pertaining to the State of Nevada shall be complied with. Building design and construction will be in strict
compliance with all local building codes, the 1997 Uniform Building Code, Uniform Fire Code, and all other applicable codes. 

 1.02    FIELD ADMINISTRATION PERSONNEL  

        The field administration personnel shall consist of a project superintendent and a variable sized crew fluctuating with each phase of construction. 

 1.03    TECHNICAL AND ADMINISTRATIVE  

        A technical design team will be assembled to create working drawings, and to consult throughout the construction phase. In general, all structures will be
designed to meet the applicable local building design criteria. 

 1.04    DESIGN and ENGINEERING  

        Budget includes all associated costs for design of the facility, under a design/build contract. Costs for geotechnical investigation, civil, landscape,
architectural, and structural engineering consultants are included. It is anticipated that plumbing, fire protection, heating/ventilating and air conditioning, and electrical will all be Design/Build
Subcontracts. 

 1.05    TESTING and INSPECTION  

        Budget includes costs for UBC 1701 independent inspections. This service shall prepare reports to the owner and contractor and will also be available for review
by the Tenant. 

 1.06    PERMIT and FEES:  

        Budget includes all normal anticipated building permit and fees associated with the construction of the facility. This cost shall be considered as an allowance
based on the base building shell only for plan check and sewerage fees of $17,948. Also included are the imposed Regional Traffic Impact fees based of 35,000 square feet of office use and 5,000 square
feet of warehouse use. Total for impact fees is $55,790. 

 1.07    MOBILIZATION/DEMOBILIZATION  

        As work is commenced, temporary utilities and facilities will be procured as required. The Contractor will coordinate most equipment and materials. Temporary
yards and facilities will be removed and/or relocated as the job progresses. 

 1.08    TEMPORARY CONSTRUCTION FACILITIES  

        Temporary restrooms will be provided at various locations on the site. Also available will be a job site trailer for managing the project. 

 

 1.09    QUALITY/TRAINING/SAFETY/PROGRAMS  

        Quality assurance shall be met through direct supervision, and specialized testing and certification by an independent laboratory on all required phases of
construction. General Contractor will maintain project safety standards in accordance with state, local safety and insurance standards. 

 1.10    DAILY CLEANUP  

        Maintain premises and public properties free from accumulation of waste, debris, and rubbish caused by operations during and after construction. Provide on site
containers for collection of waste materials, debris, and rubbish. 

 1.11    FINAL CLEANUP AND PUNCH LIST  

        Employ experienced workmen or professional cleaners for final cleanup. In preparation of substantial completion or occupancy, conduct final inspection of
sight-exposed interior and exterior surfaces and concealed spaces. Remove grease, dust, dirt, stains, labels, fingerprints and other foreign materials from exposed interior and exterior finishes. At
time of substantial completion, perform "walk -through" with
the owner. Compile a "punch list" as work to be finished, repaired, patched, or touched-up. At the completion of punch list work, perform final walk through with the owner. 

2.    SITEWORK  

 2.01    CLEAR AND GRUB  

        Clear site of trees, stumps, debris, surface vegetation and soil of organic materials, 

 2.02    LAYOUT ENGINEERING  

        Provide licensed surveyor to locate pertinent boundaries, grades, and building corners. Field superintendent or assignee to locate footings. 

 2.03    EARTHWORK  

        It is assumed that import of select fill materials will be required for the site to balance and create a suitable building pad and parking area. All earthwork
shall comply with the recommendations of the soils engineer. Slab on grade will be provided with 6" of Type II base. All structural excavation and backfill will utilize on-site or imported
aggregate materials. 

 2.04    FINE GRADE  

        Fine grade pad to required +/- 1/10th of a foot. Compaction shall be in compliance with geotechnical report. Footing shall receive
overexcavation and recompaction of native soils to achieve proper compaction. 

 2.05    UNDERGROUND UTILITIES  

        All items under this section shall be designed to meet state and local requirements. This includes domestic water, sanitary sewer, fire water, storm drain,
electrical service and telephone. Communications will include a telephone terminal board with ground and quadplex outlet. All underground lines will be backfilled per the soil engineer's
recommendations and site observations. Off-site storm retention basin is not included. All utilities are to be stubbed on to the property by others. Storm Drainage shall flow to the streambed on the
south side of the property. 

2

 

 2.06    ASPHALT PAVING  

        Based further on the recommendations of the civil engineer and soils engineer, automotive paving sections to consist of 3" asphalt paving over 6" aggregate base.
All truck paving and rear storage yard areas shall be considered Asphaltic Concrete with sections to consist of 4" asphalt paving over 6" aggregate base. This specification is subject to soils report
and local or State requirements; any deviations may result in a cost adjustment. 

 2.07    CONCRETE APRONS  

        The concrete loading area is unreinforced concrete 6" nominal thickness slab with a compressive strength of 4000 PSI over 6" base rock. Apron width shall be 12'
wide with a length of 60'. All other site concrete shall be 6" nominal thickness with a compressive strength of 3000 PSI. This specification is subject to the soil report and structural engineer's
findings. 

 2.08    LANDSCAPE AND IRRIGATION  

        Landscaping plans and specifications will be developed in accordance with local practices and requirements for a building of this design. An Allowance of $2.00
per square foot totaling $39,524 is provided for all landscaped areas 

 2.09    SEEDING  

        Included in Landscaping. 

 2.10    EXTERIOR SIGNAGE  

        No exterior signage is provided. 

 2.11    EROSION PROTECTION  

        Winterization and erosion control as required by local governing agencies and the recommendation from civil engineer. 

3.    CONCRETE  

 3.01    BUILDING FOUNDATIONS  

        Building foundation will be reinforced concrete to a specified structural yield as directed by structural drawings. Footings will be square spread footings.
Interior footings will be reinforced concrete to structural engineer's recommendations and will also be square spread footings. Exterior footings shall be square spread footing for direct bearing of
tilt-up panels. Perimeter grade beams or recessed slotting of footing for panel setting bed is not included. 

 3.02    TILT-UP WALLS  

        The exterior of the building shall be constructed of reinforced concrete. Construction and erection of the wall panels to be standard tilt-up method. A structural
engineer will determine the panel thickness. Panels shall be cast on and lifted from the floor slab. Panels to be +/- 29' above finished floor elevation for a parapet design. Interior pick points will
be left exposed (covered by eventual interior wall finishes). Panels shall be prepared to receive paint finish. Exterior panel joints to be caulked on both sides. We have included added architectural
expense for conformance to South Meadows design review criteria. 

3

 

 3.03    FLOOR SLAB  

        The following is subject to structural requirements unknown at the time of authoring these specifications. Floor slab will be 4" in the office areas and 6" in
warehouse, nominal thickness' 4,000 PSI compressive strength concrete placed over 6" type II aggregate base. Floor slab to be reinforced throughout with #3 rebar at 18" O.C. Construction joints
to be no more than 12.5' in width. Construction joints to receive 1/2" diameter smooth dowels at 2' O.C. Slip dowels to be greased on one end. Control joints to be cut perpendicular at a distance not
to exceed 25'. Floor slab to be a hard trowel finish. Control joints will not be caulked. As part of this specification, floor flatness to be an overall average of 35 and floor levelness to be an
overall average of 25. Floor shall be sealed with Lipidolith, Sonneborn, WR Meadows brand or equal. No special foundation for equipment and machinery is provided in the warehouse areas. Housekeeping
pads have been provided for the boiler room, and electrical panels. 

4.    MASONRY  

 4.01    WALLS and STRUCTURES  

        Masonry is included for the trash enclosure only. 8" split faced colored block to 6' high. 

5.    STRUCTURAL STEEL and METALS  

 5.01    STRUCTURAL STEEL  

        Based further on structural engineering drawings, structural steel for this project to consist of tube steel columns, channel chord and connectors for the roof
structure at approximately 50' x 50' bay spacing, embed plates at the tilt up panels and miscellaneous metal fabrications. 

        Based
further on structural engineering drawings, 2nd floor structure will include W 18 x 40 beams for main bays supported by supplemental tube steel columns at an approximate 25' x 25'
bay spacing. Beam to have wood plate for connection of floor system. 

 5.02    ROOF ACCESS  

        Provide roof access via interior ladder(s) w/ roof hatch. Ladder to meet all applicable codes (including OSHA). 

6.    CARPENTRY  

 6.01    ROOF STRUCTURE  

        The main building roof structure consists of a hybrid panelized roofing system Roof sheathing, 2 x 6 sub-purlins and supporting steel joists shall adhere to
standards and specifications per APA, SJI, or other manufacturer's standards. Structure to be panelized wood structure with 1/2"-5/8" OSB sheeting or structural plywood. As required by tenant, the
roof trusses and joists, fire sprinkler piping and heads, mechanical ducting and piping and electrical piping and fixtures shall maintain a minimum clear height of 11 feet above each finish floor.
Joists shall be designed to carry HVAC roof mounted equipment, sprinklers, lighting, and monorail supports as specified. 

 6.02    FLOOR STRUCTURE  

        Based further on structural engineering drawings, the 2nd level floor structure consists of a TJI joists systems with 1-1/8" TandG plywood floor system. TJI's
shall be hung from wood plates bolted to steel beams. Bay spacing shall be approximately 25' x 25'. 

4

 

 6.03    MISCELLANEOUS CARPENTRY  

        All miscellaneous carpentry will be performed, where applicable, to provide the client with a professional finish. 

7.    THERMAL and MOISTURE PROTECTION  

 7.01    INSULATION  

        Shell will be insulated utilizing foil faced FSK R-19 batt wired into place within the sub-purlins per applicable energy code. 

 7.02    BUILT UP ROOFING  

        Furnish and install a 4-layer built-up roofing system. One layer of base sheet over plywood deck. Embed two layers of Ply-IV roofing felts and one layer of
mineral surface cap sheet into two solid moppings of hot Type-III asphalt. This is provided with a 10-year warranty. 

 7.03    SHEET METAL  

        Sheet metal 'fry' reglet will be installed along tilt-up walls. Miscellaneous sheet metal to be utilized at roof curbs and roofing closures. Scuppers and
downspouts are provided along the east and west wall elevations. Roof structure is sloped to drain at every other column line. 

 7.05    CANOPY STRUCTURE  

        An allowance is included for the main entry canopy element of $15,000. 

 7.06    SKYLIGHT/SMOKE VENTS  

        Two (2) skylight/smokevents have been included for the warehouse areas, and four (4) plastic skylights have been provided for the office areas. Smokevents
are 4' x 8', 360 degree fusible link, curb mounted with manual releases. Domes are to be opaque. Skylights shall be clear 6' x 6' pyramid shaped acrylic. 

 7.07    MISCELLANEOUS CAULKING  

        Panel joints to receive caulking on both sides, for the full height of the panels. 

DIVISION 8:    OPENINGS  

 8.01    PERSONNEL EXIT DOORS  

        Exterior doors to be hollow metal doors and frames as required by the UBC code exiting requirements. All hardware to be Schlage series 'S' or equivalent. 

 8.02    GRADE/DOCK LEVEL DOORS  

        Provide one (1) 12' x 14' grade-level door and one (1) 9' x 10' dock-high door, which shall be a manual (chain Operated) vertical rise, steel door.
Manufacturer to be Porvene, Dalton, Overhead Door or equivalent. 

 8.03    ALUMINUM STOREFRONT  

        Provide two single entrances and one double aluminum and glass entrance systems. Main storefront shall be 18' wide with the pair doors. Office window systems
shall be 18' x 6' high strip window system at each level. Glazing to be set in standard aluminum system. Glass to be 1" insulating, 

5

 

medium performance, solar gray, and tempered or as required by local code or mechanical engineering requirements. Aluminum to be extruded anodized sections with brushed mil finish. Office to include
5,100 square feet total of windows/doors at the exterior wall per the above specification. 

 8.04    INTERIOR DOORS  

        Part of tenant improvement allowance 

DIVISION 9:    FINISHES (EXTERIOR)  

 9.01    GYPBOARD SYSTEMS  

        The demising wall separating the warehouse area and the offices is included in the base shell value. This shall be a 6" metal stud wall with 5/8" gypboard both
sides. 

 9.02    EXTERIOR WALL PAINTING  

        The building exterior will receive two (2) coats of latex paint finish system. Exterior man doors, roll-up doors, bollards, and handrails will be painted
with enamel. Standard colors of Sherwin-Williams, Ameritone or equal shall be selected and are to be determined. 

DIVISION 10:    SPECIALTIES  

        No specialty equipment is included in the base shell costs. Fire extinguishers shall be furnished and installed at the discretion of the local authorities and
reimbursed to Contractor. Contractor provides no racking systems. 

DIVISION 11:    EQUIPMENT  

        See TI allowance section. 

DIVISION 12:    FURNISHINGS  

        No Furnishings are included with the base shell budget 

6

   DIVISION 13:    SPECIAL CONSTRUCTION  

Tenant Improvement:  

        An allowance of $1,225,000 has been provided for a total of 35,000 square feet of general office space per the following specifications. The tenant may elect to
use part of the tenant improvement allowance for other real property improvements or pay for all or a portion of the tenant improvements as dictated in the lease addendum. Generally, the tenant
improvements will include the following items: 

	DIV 1	 	Interior architectural design, permits, and general construction management shall have been included for the office improvements.
	

DIV 2	
 	

No addition site work is anticipated.
	

Div 3	
 	

No additional costs for concrete work is anticipated (elevator pit is constructed as part of shell price).
	

DIV 4	
 	

No masonry construction anticipated.
	

DIV 5	
 	

No Miscellaneous metals beyond shell is expected (stairs have been provided for in shell costs).
	

DIV 6	
 	

Cabinetry has been included for counters and cabinets for the lunchroom, copy/fax, and vanity countertops. Upgraded counters and cabinets for the conference room. All Cabinetry work shall be plastic laminate veneer.
	

DIV 7	
 	

Acoustical insulation for the walls and ceiling of the offices, conference rooms, and restrooms. Z-furring with rigid insulation shall be installed along the exterior walls.
	

DIV 8	
 	

Interior doors at office will be 1-3/4" solid core, stained hardwood veneer, with Schlage Series "F" hardware. Door frames will be painted welded steel. Hardware shall be Schlage or equal. Warehouse area doors shall be 18 ga. Steel flush panel
doors.
	

DIV 9	
 	

Typical interior partitions will be 3-5/8", 25 gauge metal studs, 24" on center with 5/8" gypsum board. Fire rated walls, if required, (i.e., one hour, two hour, etc.) shall be determined per code. Walls shall be framed to + 12' in the general office
area to allow for a ceiling height of 9'. Breakroom will have a 9' ceiling height. Office warehouse demising wall shall be full height (in base bid).
	

 	
 	

Provide 2'x4' Donn or equal grid (white) and random fissured lay-in acoustical ceilings in office area. Principal offices and conference room shall have upgraded 2'x2' grid system. Restrooms will have framed ceilings with gypsum board.
	

 	
 	

Standard floor coverings in office area will be level loop glue down carpeting @ $18.00/SY. Restrooms to have ceramic tile floors with 4' wainscot, Showers to be ceramic tile full height. Upgraded lobby flooring and special finishes are not provided.
Breakroom, and warehouse offices shall have vinyl composition tile. All above with 4" rubber base.
	

 	
 	

All interior partitions will receive two coats of flat latex paint. Restrooms to receive latex enamel where applicable. Tenant may elect to paint the interior walls of the warehouse.
	

DIV 10	
 	

Toilet partitions to be painted metal and floor mounted. Quantity as required per restroom. Toilet paper dispensers, waste receptacles, towel dispensers and handicap fixtures will be Bobrick Inc. or equal. No demountable or movable wall partitions,
or office cubical systems and furnishings are to be included.  

7

 

	

DIV 11	
 	

Furnish one Dover, Montgomery, or equal elevator with adjacent equipment sufficiently sized to accommodate building occupancy. Interior finish to be determined based on interior design of tenant improvements.
	

DIV 12	
 	

Window coverings shall be provided with 1" aluminum mini-blinds. Levelor or equal.
	

Div 14	
 	

Standard 2 stop, 150fpm, hydraulic elevator complete with joist beam, rails, pit ladder, standard cab finishes, etc. shall be included.
	

DIV 15	
 	

Restroom fixtures, domestic, waste and vent piping, and accessories shall be included. Anticipated one set of restrooms on each level with 8 toilets, 6 wall counter mounted lavatories, 2 urinals, 1 janitor's mop sink, and drinking fountain. One main
water heater, two bar sinks, one main kitchen sink for the breakroom area to be provided.
	

 	
 	

Fire sprinkler system shall be a typical low hazard office system.
	

 	
 	

HVAC to be provided via VAV terminal units from roof top AHU's. System is to provide a minimum of 1 ton of heating and cooling per 350 square feet of office space and per engineer's final calculations for the office area. Office to be conditioned per
all applicable codes and regulations.
	

DIV 16	
 	

Typical office electrical distribution, power and lighting system for standard level finishes. All offices shall be provided with one voice and one data line (with ring and string only—all cabling and outlets for telecommunications system by
others) and an electrical outlet for every twelve linear feet of wall. Lighting shall be recessed fluorescent parabolic fixtures.
	

 	
 	

No special systems included, including A/V, security, CTV, telecommunications, etc.

        Contractor's
Fee would also be assessed and included within the Tenant Improvement Allowance. 

        No
special construction elements are included with the base shell budget 

DIVISION 14:    CONVEYING SYSTEMS  

        No conveying systems, elevators, conveyors, or pick module systems are included with the base shell budget. 

DIVISION 15:    MECHANICAL  

 15.01    PLUMBING  

        Domestic services for the building shell consists of cold water to hose bibs and stubbed to future office areas, and below floor sewer main line stubbed to
potential office restroom and warehouse needs. Domestic services for general and warehouse offices are provided as optional pricing. This budget specifically excludes costs for process piping,
compressed air, or any other type of Tenant production systems. 

 15.02    FIRE PROTECTION  

        The warehouse will be protected with wet sprinkler systems based on a 33/2000 square feet density standard. No fire pump is provided and is deemed not required.
Hose racks, drops, or in rack sprinkler systems are not included in the building's interior and are deemed not required. 

        Any
tenant improvement areas are included below. 

8

 

 15.03    HVAC  

        Base budget costs include standard style root top split gas fired heaters for the warehouse area to maintain 50 degrees with an outside temperature of zero
degrees Fahrenheit. The warehouse will not be cooled unless Tenant elects to utilize a portion of the tenant improvement allowance. The air conditioning system requirement for the tenant improvements
have been included in the tenant improvement allowance. 

DIVISION 16:    ELECTRICAL  

 16.01    SITE LIGHTING  

        Exterior lighting will be supplied by wall-mounted light fixtures (13 each) commonly referred to as "wall-paks" as well as pole mounted light fixtures (7 each) to
meet design specification. All exterior lights will be controlled via photocells. At a minimum, all parking areas will be lit sufficiently to meet or exceed applicable code. 

 16.02    ELECTRICAL SERVICE and DISTRIBUTION  

        Base building shell budget is provided with a 277/480 volt, 3-phase, 4-wire, 800 amp service which will be installed inside the warehouse area or another area as
determined by Tenant and Owner. Distribution and amperage will be provided for general office use consistent with this type of facility. Warehouse lighting will be one metal halide fixture (400 watt)
per every 500 square feet of warehouse area. Office area lighting will be per code (covered in the tenant improvement allowance). 

 16.03    SITE UTILITIES  

        Provide all typical substructures as required for primary electrical. Telephone conduits are included in the Base building budget. Service from the property line
to the electrical room is included. Upgraded service, and all tenant improvement areas shall be included with optional pricing. 

9

FIRST AMENDMENT  

To Single-Tenant Net Lease

dated November 18, 1999

By and Between  

Cypress Corporate Services "Landlord"

and

Gametech International, Inc. "Tenant"  

        To the extent of any inconsistencies or contradictions between the terms and conditions of the Lease and this Amendment, the terms and conditions contained herein
shall supercede and take precedence over those contained in the Lease. 

        The
parties above acknowledge and hereby agree that the Lease as referenced above, the Lease Riders, the Addendum and the Exhibits attached thereto are hereby amended as follows: 

        1.    Section 1.04. Lease Term:    This amendment confirms that the property's square
footage is 40,746. 

        2.    Paragraph 1 of the Addendum to Lease:    Based on the attached Exhibit "A" to
this amendment, per the guidelines of paragraph 1 of the Lease, the Base Monthly Rent shall be adjusted to the following: 

	Month	 	1:	 	Free Rent
	

Months	
 	

2 - 25:	
 	

$40,571 per month
	

Months	
 	

26 - 49:	
 	

$41,788 per month
	

Months	
 	

50 - 73:	
 	

$43,041 per month
	

Months	
 	

74 - 97:	
 	

$44,332 per month
	

Months	
 	

98 - 121:	
 	

$45,662 per month

        3.    Paragraph 9 of the Addendum to Lease:    The Base Monthly Rent for the option periods
shall be adjusted in accordance with paragraph 9 of the Lease subject to the revised monthly rental amounts per paragraph 2 of this amendment. 

        The
parties have executed this Amendment as of the dates signed below. 

	LANDLORD:	 	TENANT:
	

Cypress Corporate Services	
 	

Gametech International, Inc.
	

By:	

    
	
 	

By:	

/s/  ANDREJS K. BUNKSE      

	

Its:	

President
	
 	

Its:	

General Counsel—Secretary

	

Date:	

    
	
 	

Date:	

4-17-2000

QuickLinks

California Chapters of the Society of Industrial and Office Realtors, Inc.

HAZARDOUS MATERIALS RIDER Gametech International

Gametech International Reno, NevadaPrepared by MERRILL CORPORATION

Exhibit 10.17  

WELLS FARGO BANK  

August 19,
1998 

GameTech
International, Inc.

2209 West 1st Street, Suite 113-114

Tempe, AZ 85281 

Gentlemen: 

        This
letter is to confirm that Wells Fargo Bank, National Association ("Bank"), subject to all terms and conditions contained herein, has agreed to make available to GameTech
International, Inc. ("Borrower") a revolving line of credit under which Bank will make advances to Borrower from time to time up to and including March 31, 2000, not to exceed at any
time the maximum principal amount of Ten Million Dollars ($10,000,000.00) ("Line of Credit"), the proceeds of which shall be used to finance Borrower's working capital requirements. 

I.    CREDIT TERMS:  

        1.    LINE OF CREDIT:    

        (a)    Line of Credit Note.    Borrower's obligation to repay advances under the Line of Credit shall be evidenced by
a promissory note substantially in the form of Exhibit A attached hereto ("Line of Credit Note"), all terms of which are incorporated herein by this reference. 

        (b)    Borrowing and Repayment.    Borrower may from time to time during the term of the Line of Credit borrow,
partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the
total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above. 

        2.    COLLATERAL:    

        As
security for all indebtedness of Borrower to Bank subject hereto, Borrower hereby grants to Bank security interests of first priority in all Borrower's accounts receivables and other
rights to payment, general intangibles, inventory and equipment. Additionally, Borrower hereby covenants and agrees to grant to Bank security interests of first priority in all real and personal
property acquired in any acquisition permitted or approved by Bank under this Agreement. All of the foregoing shall be evidenced by and subject to the terms of such security agreements, financing
statements, deeds of trust and other documents as Bank shall reasonably require, all in form and substance satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand for all costs and
expenses incurred by Bank in connection with any of the foregoing security, including without limitation, filing and recording fees and costs of audits. 

II.    INTEREST/FEES:  

        1.    Interest.    The outstanding principal balance of the Line of Credit shall bear interest at the rate of interest
set forth in the Line of Credit Note 

        2.    Computation and Payment.    Interest shall be computed on the basis of a 360-day year, actual days elapsed.
Interest shall be payable at the times and place set forth in the Line of Credit Note. 

        3.    Unused Commitment Fee.    Borrower shall pay to Bank a fee equal to one quarter percent (.25%) per annum
(computed on the basis of a 360-day year, actual days elapsed) on the average daily unused amount of the Line of Credit, which fee shall be calculated on a calendar quarter basis by Bank and shall be
due and payable by Borrower in arrears on the last day of each calendar quarter. 

 

        4.    Collection of Payments.    Borrower authorizes Bank to collect all principal, interest and fees due as of the
date of this Agreement or otherwise under the Line of Credit by charging Borrower's demand deposit account number 4159-539352 with Bank, or any other demand deposit account maintained by Borrower with
Bank, for the full amount thereof. Should there be insufficient funds in any such demand deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and
payable by Borrower. 

III.    REPRESENTATIONS AND WARRANTIES:  

        Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this letter and shall
continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this letter. 

        1.    Legal Status.    Borrower is a corporation, duly organized and existing and in good standing under the laws of
the state of Delaware, and is qualified or licensed to do business in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower. 

        2.    Authorization and Validity.    This letter, the Line of Credit Note, the Continuing Security Agreement: Rights
to Payment and Inventory, the Security Agreement: Equipment, the Corporate Resolution: Borrowing, all UCC Financing Statements and each other document, contract or instrument deemed necessary by Bank
to evidence any extension of credit to Borrower pursuant to the terms and conditions hereof, or now or at any time hereafter required by or delivered to Bank in connection with this letter
(collectively, the "Loan Documents") have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and
obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms. 

        3.    No Violation.    The execution, delivery and performance by Borrower of each of the Loan Documents do not
violate any provision of any law or regulation, or contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or result in a breach of or constitute a default under any
contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound. 

        4.    Litigation.    There are no pending, or to the best of Borrower's knowledge threatened, actions, claims,
investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or
operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof. 

        5.    Correctness of Financial Statement.    The financial statements of Borrower dated October 31, 1997 and
April 30, 1998, true copies of which have been delivered by Borrower to Bank prior to the date hereof, (a) are complete and correct and present fairly the financial condition of Borrower,
(b) disclose all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or
contingent, and (c) have been prepared in accordance with generally accepted accounting principles consistently applied. Since the date of such financial statements until the date of Borrower's
execution of this letter, there has been no material adverse change in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered
any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing. 

        6.    Income Tax Returns.    Borrower has no knowledge of any pending assessments or adjustments of its income tax
payable with respect to any year. 

2

 

        7.    No Subordination.    There is no agreement, indenture, contract or instrument to which Borrower is a party or by
which Borrower may be bound that requires the subordination in right of payment of any of Borrower's obligations subject to this letter to any other obligation of Borrower. 

        8.    Permits, Franchises.    Borrower possesses, and will hereafter possess, all permits, consents, approvals,
franchises and licenses required and all rights to trademarks, trade names, parents and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law. 

        9.    ERISA.    Borrower is in compliance in all material respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended or recodified from time to time ("ERISA"); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event, as defined in ERISA, has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its
minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under
generally accepted accounting principles. 

        10.    Other Obligations.    Borrower is not in default on any obligation for borrowed money, any purchase money
obligation or any other material lease, commitment, contract, instrument or obligation. 

        11.    Environmental Matters.    Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower
is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which
govern or affect any of Borrower's operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or
supplemented from time to time. None of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is
needed to respond to a release of any toxic or hazardous waste or substance into the environment. Borrower has no material contingent liability in connection with any release of any toxic or hazardous
waste or substance into the environment. 

IV.    CONDITIONS:  

        1.    Conditions of Initial Extension of Credit.    The obligation of Bank to extend any credit contemplated by this
letter is subject to fulfillment to Bank's satisfaction of all of the following conditions: 

        (a)    Documentation.    Bank shall have received each of the Loan Documents, duly executed and in form and substance
satisfactory to Bank. 

        (b)    Financial Condition.    There shall have been no material adverse change, as reasonably determined by Bank, in
the financial condition or business of Borrower, nor any material decline, as reasonably determined by Bank, in the market value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower. 

        (c)    Insurance.    Borrower shall have delivered to Bank evidence of insurance coverage on all Borrower's property,
in form, substance, amounts, covering risks and issued by companies satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank. 

        (d)    Existing Prepayment Fee.    Borrower shall have paid to Bank the amount of $34,533.77 owed pursuant to
Borrower's prepayment of existing indebtedness to Bank. 

3

 

        2.    Conditions of Each Extension of Credit.    The obligation of Bank to make each extension of credit requested by
Borrower hereunder shall be subject to the fulfillment to Bank's satisfaction of each of the following conditions: 

        (a)    Compliance.    The representations and warranties contained herein and in each of the other Loan Documents
shall be true on and as of the date of the signing of this letter and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no default hereunder, and no condition, event or act which with the giving of notice or the passage of time or both would
constitute such a default, shall have occurred and be continuing or shall exist. 

        (b)    Documentation.    Bank shall have received all additional documents which may be required in connection with
such extension of credit. 

V.    COVENANTS:  

        Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities ,(whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank
otherwise consents in writing: 

        1.    Punctual Payment.    Punctually pay all principal, interest, fees or other liabilities due under any of the Loan
Documents at the times and place and in the manner specified therein. 

        2.    Accounting Records.    Maintain adequate books and records in accordance with generally accepted accounting
principles consistently applied, and permit any representative of Bank, at any reasonable
time, and upon reasonable notice unless an Event of Default has occurred and is continuing, to inspect, audit and examine such books and records, to make copies of the same, and inspect the properties
of Borrower. 

        3.    Financial Statements.    Provide to Bank all of the following, in form and detail satisfactory to Bank: 

        (a)  not
later than 120 days after and as of the end of each fiscal year, an audited financial statement of Borrower, prepared by a certified public accountant
acceptable to Bank, to include balance sheet, income statement, statement of cash flows, and source and applicable of funds statement; 

        (b)  not
later than 45 days after and as of the end of each fiscal quarter, a financial statement of Borrower, prepared by Borrower, to include balance sheet, income
statement, statement of cash flows, source and application of funds statement, and an aged listing of accounts receivable and accounts payable; 

        (c)  promptly,
after the same are available, and in any event within five (5) days after filing, copies of all annual, regular, periodic and special reports and
statements which Borrower may file or is required to file with the Securities and Exchange Commission; and 

        (d)  from
time to time such other information as Bank may reasonably request. 

        4.    Compliance.    Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and
franchises necessary for the conduct of its business; and comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower's continued existence and
with the requirements of all laws, rules, regulations and orders of a governmental agency applicable to Borrower and/or its business. 

4

 

        5.    Insurance.    Maintain and keep in force insurance of the types and in amounts customarily carried in lines of
business similar to that of Borrower, including but not limited to fire, extended coverage, public liability, property damage and workers' compensation, with all such insurance carried with companies
and in amounts satisfactory to Bank, and deliver to Bank from time to time at Bank's request schedules setting forth all insurance then in effect. 

        6.    Facilities.    Keep all properties useful or necessary to Borrower's business in good repair and condition, and
from time to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained. 

5

   
        7.    Taxes and Other Liabilities.    Pay and discharge when due any and all indebtedness, obligations, assessments
and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision, to Bank's satisfaction, for eventual payment thereof in the event that Borrower is obligated to
make such payment. 

        8.    Litigation.    Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower
with a claim in excess of $1,000,000.00. 

        9.    Financial Condition.    Maintain Borrower's financial condition as follows using generally accepted accounting
principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein), with compliance determined commencing with Borrower's financial
statements for the period ending July 31, 1998: 

        (a)  Tangible
Net Worth not at any time less than $39,000,000.00, with "Tangible Net Worth" defined as the aggregate of total stockholders' equity less any intangible assets.
For purposes of this subparagraph (a), the term "stockholder's equity" shall exclude the amount of Borrower's common stock purchased and retained or retired by the Borrower pursuant to its
stock repurchase plan announced on or about May 28, 1998, up to a maximum amount of $5,000,000.00. 

        (b)  Quick
Ratio not at any time less than 1.5 to 1.0, with "Quick Ratio" defined as the aggregate of unrestricted cash, unrestricted marketable securities, receivables
convertible into cash and refundable deposits collectible within ninety (90) days divided by total current liabilities. 

        (c)  Net
income after taxes no less than $1.00 on a quarterly basis, determined as of each fiscal quarter end. 

        10.    Other Indebtedness.    Not create, incur, assume or permit to exist any indebtedness or liabilities resulting
from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to Bank,
(b) any other liabilities of Borrower existing as of, and disclosed to Bank prior to, the date hereof, (c) purchase money obligations with respect to purchase money liens permitted in
Section 14 (a), in an amount not
to exceed an aggregate of $1,000,000.00, and (d) unsecured debt with respect to any acquisition permitted or approved by Bank under this Agreement, which is fully subordinated to all
indebtedness of Borrower to Bank pursuant to subordination agreements acceptable to Bank in form and substance. 

        11.    Merger, Consolidation, Transfer of Assets.    Not merge into or consolidate with any other entity; nor make any
substantial change in the nature of Borrower's business as conducted as of the date hereof; nor acquire all or substantially all of the assets of or make an investment in any other entity which shall
require cash consideration in excess of $10,000,000.00, without written consent of Bank which shall not be unreasonably withheld; nor sell, lease, transfer or otherwise dispose of all or a substantial
or material portion of Borrower's assets except in the ordinary course of its business. 

        12.    Guaranties.    Not guarantee or become liable in any way as surety, endorser (other than as endorser of
negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of Borrower as security for, any
liabilities or obligations of any other person or entity, except any of the foregoing in favor of Bank and any of the foregoing which do not equal or exceed 1,000,000.00 in the aggregate at anytime. 

        13.    Loans, Advances, Investments.    Except in the ordinary course of business, not make any loans or advances to
any person or entity, except any of the foregoing existing as of, and disclosed to Bank prior to, the date hereof. 

6

 

        14.    Pledge of Assets.    Not mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all
or any portion of Borrower's assets now owned or hereafter acquired, except any of the foregoing in favor of Bank or which is existing as of, and disclosed to Bank in writing prior to, the date
hereof, and: 

        (a)  purchase
money liens in any property acquired by the Borrower in the ordinary course of business to secure the purchase price of such property or indebtedness incurred
solely for the purpose of financing the acquisition of such property; and, 

        (b)  liens
for taxes and assessments which are not past due, or liens for taxes or assessments for which adequate reserves have been set aside and are being contested in good
faith and not proceeded to judgment. 

        15.  Not,
without Bank's prior written consent which shall not be unreasonably withheld, make any change in ownership during the term of this Agreement of an aggregate of
twenty-five percent (25%)
or more of the common stock of Borrower. Nothing herein shall prevent Borrower from issuing stock pursuant to a secondary offering or issuing stock pursuant to an acquisition. 

        16.    Year 2000 Compliance.    Perform all acts reasonably necessary to ensure that (a) Borrower and any
business in which Borrower holds a substantial interest, and (b) all customers, suppliers and vendors that are material to Borrower's business, become Year 2000 Compliant in a timely manner.
Such acts shall include, without limitation, performing a comprehensive review and assessment of all of Borrower's systems and adopting a detailed plan, with itemized budget, for the remediation,
monitoring and testing of such systems. As used herein, "Year 2000 Compliant" shall mean, in regard to any entity, that all software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity, will properly perform date sensitive functions before, during and after the year 2000. Borrower shall, within thirty (30)
days of Bank's request, provide to Bank such certifications or other evidence of Borrower's compliance with the terms hereof as Bank may from time to time require. 

        17.    Dividends, Distributions.    Not declare of pay any dividend or distribution either in cash, stock or any other
property on Borrower's stock now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of any class of Borrower's stock now or hereafter outstanding, except
(i) stock repurchases pursuant to Borrower's stock repurchase plan announced on or about May 28, 1998, up to a maximum amount of $5,000,000.00 and (ii) dividends or distributions
up to an aggregate of twenty-five percent (25%) of Borrower's net earnings for any fiscal year. 

VI.    DEFAULT, REMEDIES:  

        1.    Default, Remedies.    Upon the violation of any term or condition of any of the Loan Documents, or upon the
occurrence of any default or defined event of default under any of the Loan Documents, or upon the entry of a judgment against or filing of a notice of judgment lien against Borrower in excess of
$1,000,000.00, or the recording of any abstract of judgment in excess of $1,000,000.00 in any county in which Borrower has an interest in real property; or the service of a notice of levy and/or of a
writ of attachment or execution, or other like process, against the assets of Borrower which is not released, vacated or fully bonded within twenty (20) calendar days after its issue, or upon the
occurrence of any material adverse change in the financial condition of Borrower: (a) all indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary
notwithstanding, shall at Bank's option and without notice become immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are expressly waived by Borrower;
(b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and
remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit extended by Bank to Borrower under any
of the 

7

 

Loan Documents and to exercise any or all of the rights of a beneficiary or secured party pursuant to the applicable law. All rights, powers and remedies of Bank may be exercised at any time by Bank
and from time to time after the occurrence of any such breach or default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity. 

        2.    No Waiver.    No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of
the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan
Documents must be in writing and shall be effective only to the extent set forth in such writing. 

VII.    MISCELLANEOUS:  

        1.    Notices.    All notices, requests and demands which any party is required or may desire to give to any other
party under any provision of this letter must be in writing delivered to each party at its address first set forth above, or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the
date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt. 

        2.    Costs, Expenses and Attorneys' Fees.    Borrower shall pay to Bank immediately upon demand the full amount of
all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of Bank's in-house counsel), expended or incurred by
Bank in connection with (a) the negotiation and preparation of this letter and the other Loan Documents, Bank's continued administration hereof and thereof, and the preparation of amendments
and waivers hereto and thereto, (b) the enforcement of Bank's rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, and (c) if Bank is the
prevailing party, the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other person) relating to any Borrower. 

        3.    Successors, Assignment.    This letter shall be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interest hereunder without Bank's prior written consent.
Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank's rights and benefits under each of the Loan Documents. In
connection therewith Bank may disclose all documents and information which Bank now has or hereafter may acquire
relating to any credit extended by Bank to Borrower, Borrower or its business, or any collateral required hereunder. 

        4.    Entire Agreement; Amendment.    This letter and the other Loan Documents constitute the entire agreement between
Borrower and Bank with respect to any extension of credit by Bank subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter
hereof. This letter may be amended or modified only in writing signed by each party hereto. 

8

   
        5.    No Third Party Beneficiaries.    This letter is made and entered into for the sole protection and benefit of
the
parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this letter or any other of the Loan Documents to which it is not a party. 

        6.    Severability of Provisions.    If any provision of this letter shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this
letter. 

        7.    Governing Law.    This letter shall be governed by and construed in accordance with the laws of the State of
Arizona. 

        8.    Arbitration.    

        (a)    Arbitration.    Upon the demand of any party, any Dispute shall be resolved by binding arbitration (except as
set forth in (e) below) in accordance with the terms of this letter. A "Dispute" shall mean any action, dispute, claim or controversy of any kind, whether in contract or tort, statutory or common law,
legal or equitable, now existing or hereafter arising under or in connection with, or in any way pertaining to, any of the Loan Documents, or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or indirectly to any of the Loan Documents, including without limitation, any of the foregoing arising in connection with the
exercise of any self-help, ancillary or other remedies pursuant to any of the Loan Documents. Any party may by summary proceedings bring an action in court to compel arbitration of a Dispute. Any
party who fails or refuses to submit to arbitration following a lawful demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any
Dispute. 

        (b)    Governing Rules.    Arbitration proceedings shall be administered by the American Arbitration Association
("AAA") or such other administrator as the parties shall mutually agree upon in accordance with the AAA Commercial Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the Loan Documents. The arbitration shall be
conducted at a location in Arizona selected by the AAA or other administrator. If there is any inconsistency between the terms hereof and any such rules, the terms and procedures set forth herein
shall control. All statutes of limitation applicable to any Dispute shall apply to any arbitration proceeding. All discovery activities shall be expressly limited to matters directly relevant to the
Dispute being arbitrated.
Judgment upon any award rendered in an arbitration may be entered in any court having jurisdiction; provided however, that nothing contained herein shall be deemed to be a waiver by any party that is
a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law. 

        (c)    No Waiver; Provisional Remedies, Self-Help and Foreclosure.    No provision hereof shall limit the right of any
party to exercise self-help remedies such as setoff, foreclosure against or sale of any real or personal property collateral or security, or to obtain provisional or ancillary remedies, including
without limitation injunctive relief, sequestration, attachment, garnishment or the appointment of a receiver, from a court of competent jurisdiction before, after or during the pendency of any
arbitration or other proceeding. The exercise of any such remedy shall not waive the right of any party to compel arbitration hereunder. 

        (d)    Arbitrator Qualifications and Powers; Awards.    Arbitrators must be active members of the Arizona State Bar or
retired judges of the state or federal judiciary of Arizona with expertise in the substantive law applicable to the subject matter of the Dispute. Arbitrators are empowered to resolve Disputes by
summary rulings in response to motions filed prior to the final arbitration hearing. Arbitrators (i) shall resolve all Disputes in accordance with the substantive law of the 

9

 

state of Arizona, (ii) may grant any remedy or relief that a court of the state of Arizona could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any
award, and (iii) shall have the power to award recovery of all costs and fees, to impose sanctions and to take such other actions as they deem necessary to the same extent a judge could pursuant to
the Federal Rules of Civil Procedure, the Arizona Rules of Civil Procedure or other applicable law. Any Dispute in which the amount in controversy is $5,000,000 or less shall be decided by a single
arbitrator who shall not render an award of greater than $5,000,000 (including damages, costs, fees and expenses). By submission to a single arbitrator, each party expressly waives any right or claim
to recover more than $5,000,000. Any Dispute in which the amount in controversy exceeds $5,000,000 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and deliberations. 

        (e)    Judicial Review.    Notwithstanding anything herein to the contrary, in any arbitration in which the amount in
controversy exceeds $25,000,000, the arbitrators shall be required to make specific, written findings of fact and conclusions of law. In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which is based on legal error, (ii) an award shall not be binding upon the parties unless the findings of fact are
supported by substantial evidence and the conclusions of law are not erroneous under the substantive law of the state of Arizona, and (iii) the parties shall have in addition to the grounds
referred to in the Federal Arbitration Act for vacating, modifying or correcting an award the right to judicial review of (A) whether the findings of fact rendered by the arbitrators are
supported by substantial evidence, and (B) whether the conclusions of law are erroneous under the substantive law of the state of Arizona. Judgment confirming an award in such a proceeding may
be entered only if a court determines the award is supported by substantial evidence and not based on legal error under the substantive law of the state of Arizona. 

        (f)    Miscellaneous.    To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all
action required to conclude any arbitration proceeding within 180 days of the filing of the Dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business, by applicable law or regulation, or to the extent necessary to
exercise any judicial review rights set forth herein. If more than one agreement for arbitration by or between the parties potentially applies to a Dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the Dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any
relationship between the parties. 

        Your
acknowledgment of this letter shall constitute acceptance of the foregoing terms and conditions. Bank's commitment to extend any credit to Borrower pursuant to the terms of this
letter 

10

 

shall terminate on September 18, 1998, unless this letter is acknowledged by Borrower and returned to Bank on or before that date. 

	 	 	 	Sincerely,
	

 	

 	
 	

WELLS FARGO BANK,

    NATIONAL ASSOCIATION
	

 	

 	
 	

By:	

/s/  JOHN HELMS          
 John Helms
 Vice President
	

Acknowledged and accepted as of August 25, 1998:
	

GAMETECH INTERNATIONAL, INC.	
 	

 	

 
	

By:	

/s/  JOHN J. PAULSON      
	
 	

 	

 
	

Title:	

CFO
	
 	

 	

 

11

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