Document:

EXHIBIT 10.1

 

LEASE

(Single Tenant; Net)

 

 

BETWEEN

 

 

THE IRVINE COMPANY

 

 

AND

 

 

RAINING DATA CORPORATION

 

 

INDEX TO LEASE

 

	
  ARTICLE I. BASIC
  LEASE PROVISIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE II. PREMISES

  	
   

  
	
  SECTION 2.1.

  	
  LEASED
  PREMISES

  	
   

  
	
  SECTION 2.2.

  	
  ACCEPTANCE
  OF PREMISES

  	
   

  
	
  SECTION 2.3.

  	
  BUILDING
  NAME AND ADDRESS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III. TERM  

  	
   

  
	
  SECTION 3.1.

  	
  GENERAL

  	
   

  
	
  SECTION 3.2.

  	
  DELAY
  IN POSSESSION

  	
   

  
	
  SECTION 3.3.

  	
  RIGHT TO EXTEND THIS
  LEASE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV. RENT AND OPERATING EXPENSES

  	
   

  
	
  SECTION 4.1.

  	
  BASIC
  RENT

  	
   

  
	
  SECTION 4.2.

  	
  OPERATING
  EXPENSES

  	
   

  
	
  SECTION 4.3.

  	
  SECURITY
  DEPOSIT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V. USES  

  	
   

  
	
  SECTION 5.1.

  	
  USE

  	
   

  
	
  SECTION 5.2.

  	
  SIGNS

  	
   

  
	
  SECTION 5.3.

  	
  HAZARDOUS
  MATERIALS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI. COMMON AREAS; SERVICES

  	
   

  
	
  SECTION 6.1.

  	
  UTILITIES
  AND SERVICES

  	
   

  
	
  SECTION 6.2.

  	
  OPERATION
  AND MAINTENANCE OF COMMON AREAS

  	
   

  
	
  SECTION 6.3.

  	
  USE
  OF COMMON AREAS

  	
   

  
	
  SECTION 6.4.

  	
  PARKING

  	
   

  
	
  SECTION 6.5.

  	
  CHANGES
  AND ADDITIONS BY LANDLORD

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII. MAINTAINING THE PREMISES

  	
   

  
	
  SECTION 7.1.

  	
  TENANT’S
  MAINTENANCE AND REPAIR

  	
   

  
	
  SECTION 7.2.

  	
  LANDLORD’S
  MAINTENANCE AND REPAIR

  	
   

  
	
  SECTION 7.3.

  	
  ALTERATIONS

  	
   

  
	
  SECTION 7.4.

  	
  MECHANIC’S
  LIENS

  	
   

  
	
  SECTION 7.5.

  	
  ENTRY
  AND INSPECTION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII. TAXES AND ASSESSMENTS ON
  TENANT’S PROPERTY

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX. ASSIGNMENT AND SUBLETTING

  	
   

  
	
  SECTION 9.1.

  	
  RIGHTS
  OF PARTIES

  	
   

  
	
  SECTION 9.2.

  	
  EFFECT
  OF TRANSFER

  	
   

  
	
  SECTION 9.3.

  	
  SUBLEASE
  REQUIREMENTS

  	
   

  
	
  SECTION 9.4.

  	
  CERTAIN
  TRANSFERS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X. INSURANCE AND INDEMNITY

  	
   

  
	
  SECTION 10.1.

  	
  TENANT’S
  INSURANCE

  	
   

  
	
  SECTION 10.2.

  	
  LANDLORD’S
  INSURANCE

  	
   

  
	
  SECTION 10.4.

  	
  LANDLORD’S
  NONLIABILITY

  	
   

  
	
  SECTION 10.5.

  	
  WAIVER
  OF SUBROGATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI. DAMAGE OR DESTRUCTION

  	
   

  
	
  SECTION
  11.1.

  	
  RESTORATION

  	
   

  
	
  SECTION
  11.2.

  	
  LEASE GOVERNS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII. EMINENT DOMAIN

  	
   

  
	
  SECTION
  12.1.

  	
  TOTAL OR PARTIAL TAKING

  	
   

  
	
  SECTION
  12.2.

  	
  TEMPORARY TAKING

  	
   

  
	
  SECTION
  12.3.

  	
  TAKING OF PARKING AREA

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII. SUBORDINATION; ESTOPPEL
  CERTIFICATE; FINANCIALS

  	
   

  
	
  SECTION
  13.1.

  	
  SUBORDINATION

  	
   

  
	
  SECTION 13.2.

  	
  ESTOPPEL
  CERTIFICATE

  	
   

  
	
  SECTION
  13.3.

  	
  FINANCIALS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES

  	
   

  
	
  SECTION
  14.1.

  	
  TENANT’S DEFAULTS

  	
   

  
	
  SECTION
  14.2.

  	
  LANDLORD’S REMEDIES

  	
   

  
	
  SECTION
  14.3.

  	
  LATE PAYMENTS

  	
   

  
	
  SECTION
  14.4.

  	
  RIGHT OF LANDLORD TO PERFORM

  	
   

  
	
  SECTION
  14.5.

  	
  DEFAULT BY LANDLORD

  	
   

  

 

i

 

	
  SECTION
  14.6.

  	
  EXPENSES AND LEGAL FEES

  	
   

  
	
  SECTION
  14.7.

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
  SECTION
  14.8.

  	
  SATISFACTION OF JUDGMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV. END OF TERM

  	
   

  
	
  SECTION
  15.1.

  	
  HOLDING OVER

  	
   

  
	
  SECTION
  15.2.

  	
  MERGER ON TERMINATION

  	
   

  
	
  SECTION
  15.3.

  	
  SURRENDER OF PREMISES; REMOVAL OF PROPERTY

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI. PAYMENTS AND NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVII. RULES AND REGULATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVIII. BROKER’S COMMISSION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIX. TRANSFER OF LANDLORD’S
  INTEREST

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XX. INTERPRETATION

  	
   

  
	
  SECTION
  20.1.

  	
  GENDER AND NUMBER

  	
   

  
	
  SECTION
  20.2.

  	
  HEADINGS

  	
   

  
	
  SECTION
  20.3.

  	
  JOINT AND SEVERAL LIABILITY

  	
   

  
	
  SECTION
  20.4.

  	
  SUCCESSORS

  	
   

  
	
  SECTION
  20.5.

  	
  TIME OF ESSENCE

  	
   

  
	
  SECTION
  20.6.

  	
  CONTROLLING LAW/VENUE

  	
   

  
	
  SECTION
  20.7.

  	
  SEVERABILITY

  	
   

  
	
  SECTION
  20.8.

  	
  WAIVER AND CUMULATIVE REMEDIES

  	
   

  
	
  SECTION
  20.9.

  	
  INABILITY TO PERFORM

  	
   

  
	
  SECTION
  20.10.

  	
  ENTIRE AGREEMENT

  	
   

  
	
  SECTION
  20.11.

  	
  QUIET ENJOYMENT

  	
   

  
	
  SECTION
  20.12.

  	
  SURVIVAL

  	
   

  
	
  SECTION
  20.13.

  	
  INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXI. EXECUTION AND RECORDING

  	
   

  
	
  SECTION
  21.1.

  	
  COUNTERPARTS

  	
   

  
	
  SECTION
  21.2.

  	
  CORPORATE, LIMITED LIABILITY COMPANY AND
  PARTNERSHIP AUTHORITY

  	
   

  
	
  SECTION
  21.3.

  	
  EXECUTION OF LEASE; NO OPTION OR OFFER

  	
   

  
	
  SECTION
  21.4.

  	
  RECORDING

  	
   

  
	
  SECTION
  21.5.

  	
  AMENDMENTS

  	
   

  
	
  SECTION
  21.6.

  	
  EXECUTED COPY

  	
   

  
	
  SECTION
  21.7.

  	
  ATTACHMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXII. MISCELLANEOUS

  	
   

  
	
  SECTION
  22.1.

  	
  NONDISCLOSURE OF LEASE TERMS

  	
   

  
	
  SECTION
  22.2.

  	
  GUARANTY

  	
   

  
	
  SECTION
  22.3.

  	
  CHANGES REQUESTED BY LENDER

  	
   

  
	
  SECTION
  22.4.

  	
  MORTGAGEE PROTECTION

  	
   

  
	
  SECTION
  22.5.

  	
  COVENANTS AND CONDITIONS

  	
   

  
	
  SECTION
  22.6.

  	
  SECURITY MEASURES

  	
   

  
	
  SECTION
  22.7.

  	
  JAMS

  	
   

  
	
  SECTION
  22.8.

  	
  APPROVALS

  	
   

  
	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
  Exhibit A

  	
  Description of Premises

  	
   

  
	
  Exhibit B

  	
  Environmental
  Questionnaire

  	
   

  
	
  Exhibit C

  	
  Landlord’s
  Disclosures

  	
   

  
	
  Exhibit
  D

  	
  Insurance Requirements

  	
   

  
	
  Exhibit
  E

  	
  Rules and Regulations

  	
   

  
	
  Exhibit
  X

  	
  Work Letter

  	
   

  
	
  Exhibit Y

  	
  Project Site Plan

  	
   

  
				

 

ii

 

LEASE

(Single
Tenant; Net)

 

THIS
LEASE is made as of the 9th day of November, 2004, by and between
THE IRVINE COMPANY, a Delaware corporation hereafter called “Landlord,” and RAINING DATA CORPORATION, a Delaware
corporation, hereinafter called “Tenant.”

 

ARTICLE I.  BASIC LEASE PROVISIONS

 

Each
reference in this Lease to the “Basic Lease Provisions”
shall mean and refer to the following collective terms, the application of
which shall be governed by the provisions in the remaining Articles of this
Lease.

 

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

 

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

 

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

 

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

 

4.                                       Estimated
Commencement Date:  November 1, 2005

 

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

 

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

 

Basic Rent is subject to adjustment as follows:

 

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

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

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

 

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

 

7.                                       Guarantor(s):  None.

 

8.                                       Floor
Area:  Approximately 29,112 rentable
square feet

 

9.                                       Security
Deposit:  $ 49,957.00

 

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

 

11.                                 Additional
Insureds:  None

 

1

 

12.                                 Address
for Payments and Notices:

 

	
  LANDLORD

  	
   

  	
  TENANT

  
	
   

  	
   

  	
   

  
	
  THE IRVINE COMPANY

  dba Office Properties

  111 Innovation Drive

  Irvine, CA 92617

  Attn: Vice President, Operations, Technology Portfolio

  	
   

  	
  Prior to Commencement Date:

  
RAINING DATA CORPORATION

  17500 Cartwright Road

  Irvine, CA 92614

  Attn: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
  with a copy of notices to:

  	
   

  	
  After the Commencement Date:

  
	
   

  	
   

  	
   

  
	
  THE IRVINE COMPANY

  dba Office Properties

  111 Innovation Drive

  Irvine, CA 92617

  Attn: Senior Vice President, Operations

  Office Properties

  	
   

  	
  RAINING DATA CORPORATION

  25A Technology Drive

  Irvine, CA 92618

  Attn: Chief Financial Officer

  

 

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

 

14.                                 Vehicle
Parking Spaces: One Hundred Five (105)

 

2

 

ARTICLE II.  PREMISES

 

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

 

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

 

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

 

SECTION 2.4.      LANDLORD’S
RESPONSIBILITIES.

 

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

 

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

 

3

 

(c)           Landlord shall correct, repair and/or
replace any non-compliance of the Building, the Tenant Improvements, and/or the
Common Areas with all applicable building permits and codes in effect as of the
date of the issuance of building permit(s) therefor, including without
limitation, the provisions of Title III of the Americans With Disabilities Act
(“ADA”). Said costs of compliance shall
be Landlord’s sole cost and shall not be part of Project Costs; including any
costs of bringing to code compliance any portions of the Building, the Tenant
Improvements and/or the Common Areas which were in compliance when they were
built but are nonetheless required by the applicable governmental entity to be
upgraded to current codes, such upgrading requirement, however, not to
be triggered as the result of either Alterations by Tenant or by any further
revisions or amendments to the codes themselves.  Landlord shall correct, repair or replace any
non-compliance of the Building, the Tenant Improvements and/or the Common Areas
with any further revisions or amendments to applicable building codes
(including, without limitation, the ADA) becoming effective after the date of
issuance of the applicable building permit(s) therefor, provided that, subject
to the first sentence of this Section 2.4(c), the amortized cost of such
repairs or replacements (amortized over the useful life thereof in accordance
with generally accepted accounting principles, consistently applied, and using
a market cost of funds reasonably determined by Landlord) shall be included as
Project Costs payable by Tenant, and provided that any compliance work “triggered”
by Landlord’s performance of the Tenant Improvements Work shall be Landlord’s
sole cost.  All other ADA compliance
issues which pertain to the Premises, including without limitation, in
connection with Tenant’s construction of any Alterations or other improvements
in the Premises (and any resulting ADA compliance requirements in the Common
Areas if Landlord shall consent to same as more particularly provided in
Section 7.3 of this Lease) and the operation of Tenant’s business and
employment practices in the Premises, shall be the responsibility of Tenant at
its sole cost and expense.  The repairs,
corrections or replacements required of Landlord or of Tenant under the
foregoing provisions of this Section 2.4(c) shall be made promptly
following notice of non-compliance from any applicable governmental agency.

 

ARTICLE III.  TERM

 

SECTION 3.1.      GENERAL.  The term of this Lease (“Term”)
shall be for the period shown in Item 5 of the Basic Lease Provisions.  Subject to the provisions of Section 3.2
below, the Term shall commence (“Commencement Date”)
on the earlier of (a) the date Tenant commences use of the Premises for its
regular business operations therein, or (b) the later of the Estimated
Commencement Date set forth in Item 4 of the Basic Lease Provisions or
the date upon which all of the following have occurred: the Premises are
tendered to Tenant with the tenant improvements to be constructed by Landlord
pursuant to the Work Letter (“Tenant Improvements”)
substantially completed but for minor “punch list” matters that do not
materially interfere with the use of the Premises for Tenant’s regular business
operations therein (provided Landlord has then obtained all governmental
approvals required for the legal of occupancy for the Premises for the
permitted use) (the “substantial completion”
of the Tenant Improvements, or the Tenant Improvements “substantially
completed” herein). The date on which this Lease is scheduled to
terminate is referred to as the “Expiration Date.”  Prior to Tenant’s taking of possession of the
Premises, the parties shall memorialize on a form provided by Landlord the
actual Commencement Date and the Expiration Date of this Lease.  Tenant’s failure to execute that form shall
not affect the validity of Landlord’s determination of those dates or Tenant’s
obligation to pay rent hereunder.

 

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

 

If the
Commencement Date has not occurred for any reason whatsoever by that date which
is thirty (30) days from and after the Estimated Commencement Date (which
thirty (30) day period shall be extended by one (1) day for each day the
Commencement Date is actually delayed due to “Tenant Delay”), Landlord shall
not be liable to Tenant for any resulting loss or damage, but Tenant shall be
entitled to: (i) one-half (1⁄2) day of credit against Basic Rent first coming due
under this Lease for each such day that the Commencement Date is so delayed for
the initial thirty (30) days of such delay, and (ii) one (1) day of credit
against Basic Rent first coming due under this Lease for each such day that the
Commencement Date is so delayed for the next succeeding sixty (60) days of such
delay; provided, however, that the foregoing period of delay for which Tenant shall
be entitled to rent credits as provided in the foregoing Subsections (i) and
(ii) shall not exceed ninety (90) days of delay in the aggregate.  In addition, if the Commencement Date has not
occurred for any reason whatsoever by that date which is ninety (90) days from
and after the Estimated Commencement Date (which ninety (90) day period shall
be extended by one (1) day for each day the Commencement Date is actually
delayed due to “Tenant Delay” or due to matters beyond Landlord’s reasonable
control (such extension of the 90-day period due to matters beyond Landlord’s
reasonable control, however, not to exceed thirty (30) days in the aggregate),
Landlord shall not be liable to Tenant for any resulting loss or damage, but
Tenant may terminate this Lease by written notice to Landlord given at any time
thereafter (but prior to the actual occurrence of the Commencement Date),
whereupon any monies previously paid by Tenant to Landlord shall be reimbursed
to Tenant.  Landlord agrees to use
commercially reasonable efforts to cause the Tenant Improvements to be
substantially completed on or before the Estimated Commencement Date, but
Tenant’s sole recourse and remedy for Landlord’s failure to so complete the
Tenant Improvements shall be the rent credit and termination rights described
in the foregoing sentences.  Any disputes
concerning the foregoing provisions of this Section 3.2 shall be submitted
to and resolved by JAMS arbitration pursuant to Section 22.7 of this
Lease.

 

4

 

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

 

If Landlord and Tenant have not by then been able to agree upon the
Basic Rent for the extension of the Term, then within one hundred twenty (120)
and ninety (90) days prior to the expiration date of the Term, Landlord shall
notify Tenant in writing of the Basic Rent that would reflect the prevailing
market rental rate for a 36-month renewal of comparable space in “freeway
fronting” projects owned by Landlord in the Irvine Spectrum (“Comparable Projects”) (together with any increases thereof
during the extension period) as of the commencement of the extension period (“Landlord’s Determination”). 
Should Tenant disagree with the Landlord’s Determination, then Tenant
shall, not later than twenty (20) days thereafter, notify Landlord in writing
of Tenant’s determination of those rental terms (“Tenant’s
Determination”).  Within ten
(10) days following delivery of the Tenant’s Determination, the parties shall
attempt to agree on an appraiser to determine the fair market rental.  If the parties are unable to agree in that
time, then each party shall designate an appraiser within ten (10) days
thereafter.  Should either party fail to
so designate an appraiser within that time, then the appraiser designated by
the other party shall determine the fair market rental.  Should each of the parties timely designate
an appraiser, then the two appraisers so designated shall appoint a third
appraiser who shall, acting alone, determine the fair market rental for the
Premises.  Any appraiser designated
hereunder shall have an MAI certification with not less than five (5) years
experience in the valuation of commercial industrial buildings in the vicinity
of the Comparable Projects.

 

Within thirty (30) days following the selection of the appraiser and
such appraiser’s receipt of the Landlord’s Determination and the Tenant’s
Determination, the appraiser shall determine whether the rental rate determined
by Landlord or by Tenant more accurately reflects the fair market rental rate
for the 36-month renewal of the Lease for the Premises, as reasonably
extrapolated to the commencement of the extension period.  Accordingly, either the Landlord’s
Determination or the Tenant’s Determination shall be selected by the appraiser
as the fair market rental rate for the extension period.   In making such determination, the appraiser
shall consider rental comparables for the Comparable Projects (provided that if
there are an insufficient number of comparables within the Comparable Projects,
the appraiser shall consider rental comparables for similarly improved space
within the vicinity of the Comparable Projects with appropriate adjustment for
location and quality of project), including, without limitation, factors for
tenant improvement allowances or “free rent” provisions then being granted by
landlords for renewals of leases, but the appraiser shall not attribute any
factor for brokerage commissions or any improvements paid for by Tenant in
making its determination of the fair market rental rate.  At any time before the decision of the
appraiser is rendered, either party may, by written notice to the other party,
accept the rental terms submitted by the other party, in which event such terms
shall be deemed adopted as the agreed fair market rental.  The fees of the appraiser(s) shall be borne
entirely by the party whose determination of the fair market rental rate was
not accepted by the appraiser.

 

Within twenty (20) days after the determination of the fair market
rental, Landlord shall prepare an appropriate amendment to this Lease in
commercially reasonable form for the extension period, and Tenant shall execute
and return same to Landlord within twenty (20) days after Tenant’s receipt of
same.  Should the fair market rental not
be established by the commencement of the extension period, then Tenant shall
continue paying rent at the rate in effect during the last month of the initial
Term, and a lump sum adjustment shall be made promptly upon the determination
of such new rental.

 

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

 

ARTICLE IV.  RENT AND
OPERATING EXPENSES

 

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

 

5

 

SECTION
4.2.      OPERATING EXPENSES.

 

(a)           From and after the Commencement Date,
Tenant shall pay to Landlord, as additional rent, Tenant’s Share of all
Operating Expenses, as defined in Section 4.2(f), incurred by Landlord in the
operation of the Building and the Project. 
The term “Tenant’s Share” means one hundred
percent (100%) of Operating Expenses reasonably determined by Landlord to
benefit or relate substantially to the Building rather than the entire Project,
plus that portion of any Operating Expenses reasonably determined by
multiplying the cost of such item by a fraction, the numerator of which is the
Floor Area and the denominator of which is the total rentable square footage,
as reasonably determined from time to time by Landlord, of (i) all of the
buildings in the Project, as reasonably determined by Landlord, for expenses
reasonably determined by Landlord to benefit or relate substantially to the
entire Project rather than any specific building or (ii) all or some of the
buildings within the Project as well as all or a portion of other property
owned by Landlord and/or its affiliates, for expenses reasonably determined by
Landlord which benefit or relate to such buildings within the Project and such
other real property.  In the event that
Landlord reasonably determines that these Premises have incurred a
non-proportional benefit from any expense, or is the non-proportional cause of
any such expense, Landlord may allocate a greater percentage of such Operating
Expense to these Premises.  The full
amount of any management fee payable by Landlord for the management of Tenant’s
Premises that is calculated as a percentage of the rent payable by Tenant shall
be paid in full by Tenant as additional rent.

 

(b)           Prior to the start of each full
Expense Recovery Period (as defined in this Section 4.2), Landlord shall give
Tenant a written estimate of the amount of Tenant’s Share of Operating Expenses
for the applicable Expense Recovery Period. 
Failure to provide such estimate shall not relieve Tenant from its
obligation to pay Tenant’s Share of Operating Expenses or estimated amounts
thereof, if and when Landlord provides such estimate or final payment
amount.  Tenant shall pay the estimated
amounts to Landlord in equal monthly installments, in advance concurrently with
payments of Basic Rent.  If Landlord has
not furnished its written estimate for any Expense Recovery Period by the time
set forth above, Tenant shall continue to pay monthly the estimated Tenant’s
Share of Operating Expenses in effect during the prior Expense Recovery Period;
provided that when the new estimate is delivered to Tenant, Tenant shall, at
the next monthly payment date, pay any accrued estimated Tenant’s Share of
Operating Expenses based upon the new estimate. 
For purposes hereof, “Expense Recovery Period”
shall mean every twelve month period during the Term (or portion thereof for
the first and last lease years) commencing July 1 and ending June 30,
provided that Landlord shall have the right to change the date on which an
Expense Recovery Period commences in which event appropriate reasonable
adjustments shall be made to Tenant’s Share of Operating Expenses so that the
amount payable by Tenant shall not materially vary as a result of such change.

 

(c)           Within one hundred twenty (120) days
after the end of each Expense Recovery Period, Landlord shall furnish to Tenant
a statement showing in reasonable detail the actual or prorated Tenant’s Share
of Operating Expenses incurred by Landlord during the period, and the parties
shall within thirty (30) days thereafter make any payment or allowance
necessary to adjust Tenant’s estimated payments of Tenant’s Share of Operating
Expenses, if any, to the actual Tenant’s Share of Operating Expenses as shown
by the annual statement.  Any delay or
failure by Landlord in delivering any statement hereunder shall not constitute
a waiver of Landlord’s right to require Tenant to pay Tenant’s Share of
Operating Expenses pursuant hereto.  Any
amount due Tenant shall be credited against installments of Basic Rent and
Operating Expenses next coming due, and any deficiency shall be paid by Tenant
together with the next installment of Basic Rent.  Should Tenant fail to object in writing to
Landlord’s determination of Tenant’s Share of Operating Expenses, or fail to
give written notice of its intent to audit Landlord’s Operating Expenses
pursuant to the provisions of the next succeeding paragraph, within one hundred
eighty (180) days following delivery of Landlord’s expense statement, Landlord’s
determination of Tenant’s Share of Operating Expenses for the applicable
Expense Recovery Period shall be conclusive and binding on the parties for all
purposes and any future claims to the contrary shall be barred.

 

Provided no Event of Default has occurred and is continuing, Tenant
shall have the right to cause a certified public accountant, engaged on a
non-contingency fee basis, to audit Operating Expenses by inspecting Landlord’s
general ledger of expenses not more than once during any Expense Recovery
Period.  However, to the extent that
insurance premiums or any other component of Operating Expenses is determined
by Landlord on the basis of an internal allocation of costs utilizing information
Landlord in good faith deems proprietary, such expense component shall not be
subject to audit so long as it does not exceed the amount per square foot
typically imposed by landlords of other first class business parks in Orange
County, California.  Tenant shall give
notice to Landlord of Tenant’s intent to audit within one hundred eighty (180)
days after Tenant’s receipt of Landlord’s expense statement which sets forth
Tenant’s Share of Landlord’s actual Operating Expenses.  Such audit shall be conducted at a mutually
agreeable time during normal business hours at the office of Landlord or its
management agent where such accounts are maintained.  If Tenant’s audit determines that actual
Operating Expenses have been overstated by more than five percent (5%), then
subject to Landlord’s right to review and/or contest the audit results,
Landlord shall reimburse Tenant for the reasonable out-of-pocket costs of such
audit.  Tenant’s rent shall be
appropriately adjusted to reflect any overstatement in Operating Expenses.  In the event of a dispute between Landlord
and Tenant regarding such audit, such dispute shall be submitted and resolved
by binding arbitration pursuant to Section 22.7 below.  All of the information obtained by Tenant
and/or its auditor in connection with such audit, as well as any compromise,
settlement, or adjustment reached between Landlord and Tenant as a result
thereof, shall be held in strict confidence and, except as may be required
pursuant to litigation, shall not be disclosed to any third party, directly or
indirectly, by Tenant or its auditor or any of their officers, agents or
employees.  Landlord may require Tenant’s
auditor to execute a separate confidentiality agreement affirming the foregoing
as a condition precedent to any audit. In the 

 

6

 

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

 

(d)           Even though this Lease has terminated
and the Tenant has vacated the Premises, when the final determination is made
of Tenant’s Share of Operating Expenses for the Expense Recovery Period in
which this Lease terminates, Tenant shall within thirty (30) days of written
notice pay the entire increase over the estimated Tenant’s Share of Operating
Expenses already paid.  Conversely, any
overpayment by Tenant shall be rebated by Landlord to Tenant not later than
thirty (30) days after such final determination.

 

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

 

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

 

(g)           The term “Project
Costs” shall include all expenses of operation, repair and
maintenance of the Building and the Project, including without limitation all
appurtenant Common Areas (as defined in Section 6.2), and shall include the
following charges by way of illustration but not limitation:  water and sewer charges; insurance premiums
and deductibles and/or reasonable premium and deductible equivalents should
Landlord elect to self-insure all or any portion of any risk that Landlord is
authorized to insure hereunder (provided, however, that Tenant’s Share of any
such deductible or deductible equivalent shall not exceed the amount of Fifty
Thousand Dollars ($50,000.00) per occurrence for any casualty); license,
permit, and inspection fees (but excluding business management and/or broker
licenses); light; power; window washing; trash pickup; heating, ventilating and
air conditioning; supplies; materials; equipment; tools; the cost of any
insurance, tax or other consultant utilized by Landlord in connection with the
Building and/or Project; establishment of reasonable reserves for replacements
and/or repairs (provided, however, that Landlord shall first exhaust such
reserves in performing such replacement or repair work and Landlord shall only
be entitled to include, as a Project Cost, only the amount by which the cost to
perform such work exceeds the existing reserve as amortized pursuant to the
applicable provisions hereof); costs incurred in connection with compliance
with any laws, or changes in laws becoming effective after the Commencement
Date applicable to the Building or the Project (provided that, except for laws
or changes in laws that pertain particularly to Tenant or to Tenant’s
particular use of the Premises (which shall be the sole responsibility of
Tenant at its cost), to the extent such laws or change in laws require
expenditures of a “capital” nature (as determined by generally accepted
accounting principles, consistently applied), then such “capital” expenditure
shall be amortized (using a market cost of funds as reasonably determined by
Landlord) over the useful life of such asset and only the amortized cost
thereof shall be includable in Project Costs during the remaining Term of the
Lease); the cost of any capital expenditures or replacements in accordance with
generally accepted accounting principles, consistently applied (other than
tenant improvements for specific tenants), to the extent of the amortized
amount thereof over the useful life of such capital expenditures or replacements
in accordance with generally accepted accounting principles, consistently
applied, calculated at a market cost of funds, as reasonably determined by
Landlord, for each such year of useful life during the Term; costs associated
with the maintenance of an air conditioning, heating and ventilation service
agreement; labor; reasonably allocated wages and salaries, fringe benefits, and
payroll taxes for administrative and other personnel directly applicable to the
Building and/or Project, including both Landlord’s personnel and outside
personnel; any expense incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and
10.2; and a market competitive overhead/management fee for the professional
operation of the Project.  It is understood
and agreed that Project Costs may include competitive charges for direct
services (including without limitation, management and/or operations services)
provided by any subsidiary, division or affiliate of Landlord.  Notwithstanding anything to the contrary
herein, “Project Costs” shall not include and Tenant shall in no event have any
obligation to perform or to pay directly, or to reimburse Landlord for, all or
any portion of the following repairs, maintenance, improvements, replacements,
premiums, claims, losses, fees, charges, costs and expenses (collectively, “Costs”): 
(i) Costs occasioned by the breach by Landlord of any of its
obligations under this Lease; (ii) Costs of any renovation, improvements,
painting or redecorating of any leasable space within Project not made
available for Tenant’s use; (iii) Costs incurred in connection with
negotiations or disputes with any other occupant of the Project;
(iv) Costs incurred in connection with the presence of any Hazardous
Material, except to the extent Tenant is responsible therefor pursuant to
Section 5.3 of this Lease; (v) interest, charges and fees incurred on
debt incurred by

 

7

 

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

 

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

 

SECTION 4.3.      SECURITY DEPOSIT.  Concurrently with Tenant’s delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions, to be held by Landlord as security for the full and
faithful performance of all of Tenant’s obligations under this Lease (the “Security Deposit”). Landlord shall not be required to keep
this Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. 
Subject to the last sentence of this Section, the Security Deposit shall
be understood and agreed to be the property of Landlord upon Landlord’s receipt
thereof, and may be utilized by Landlord in its sole and absolute discretion
towards the payment of all expenses by Landlord for which Tenant would be
required to reimburse Landlord under this Lease, including without limitation
brokerage commissions and Tenant Improvement costs.  Upon any Event of Default by Tenant (as
defined in Section 14.1), Landlord may, in its sole and absolute discretion,
retain, use or apply the whole or any part of the Security Deposit to pay any
sum which Tenant is obligated to pay under this Lease, sums that Landlord may
expend or be required to expend by reason of the Event of Default by Tenant or
any loss or damage that Landlord may suffer by reason of the Event of Default
or costs incurred by Landlord in connection with the repair or restoration of
the Premises pursuant to Section 15.3 of this Lease upon expiration or earlier
termination of this Lease.  In no event
shall Landlord be obligated to apply the Security Deposit upon an Event of
Default and Landlord’s rights and remedies resulting from an Event of Default,
including without limitation, Tenant’s failure to pay Basic Rent, Tenant’s
Share of Operating Expenses or any other amount due to Landlord pursuant to
this Lease, shall not be diminished or altered in any respect due to the fact
that Landlord is holding the Security Deposit. 
If any portion of the Security Deposit is applied by Landlord as
permitted by this Section, Tenant shall within five (5) days after written
demand by Landlord deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to its original amount. If Tenant fully performs
its obligations under this Lease, the Security Deposit shall be returned to
Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interest in
this Lease) within thirty (30) days after the expiration of the Term.

 

ARTICLE V.  USES

 

SECTION 5.1.      USE.  Tenant shall use the Premises only for the
purposes stated in Item 3 of the Basic Lease Provisions, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
Tenant from all relevant and required governmental agencies and
authorities.  The parties agree that any
contrary use shall be deemed to cause material and irreparable harm to Landlord
and shall entitle Landlord to injunctive relief in addition to any other
available remedy.  Tenant, at its
expense, shall procure, maintain and make available for Landlord’s inspection
throughout the Term, all governmental approvals, licenses and permits required
for the proper and lawful conduct of Tenant’s permitted use of the
Premises.  Tenant shall not do or permit
anything to be done in or about the Premises which will in any way interfere
with the rights of other occupants of the Building or the Project, or use or
allow the Premises to be used for any unlawful purpose, nor shall Tenant permit
any nuisance or commit any waste in the Premises or the Project.  Tenant shall not perform any work or conduct
any business whatsoever in the Project other than inside the Premises.  Tenant shall not do or permit to be done
anything which will invalidate or increase the cost of any insurance
policy(ies) covering the Building, the Project and/or their contents unless
Tenant pays for such increase, and shall comply with all applicable insurance
underwriters rules.  Tenant shall comply
at its expense with all present and future laws, ordinances, restrictions,
regulations, orders, rules and requirements of all governmental authorities
that pertain to Tenant or its use of the Premises, including without limitation
all federal and state occupational health and safety requirements, whether or not
Tenant’s compliance will necessitate expenditures or interfere with its use and
enjoyment of the Premises.  Tenant shall
comply at its expense with all existing covenants, conditions, easements or
restrictions now affecting or encumbering the Building and/or Project,
including without limitation the payment by Tenant of any periodic or special
dues or assessments charged against the Premises or Tenant which may be
allocated to the Premises or Tenant in accordance with the provisions

 

8

 

thereof.  Tenant shall also
comply at its expense with any future amendments or modifications to such
existing covenants, conditions, easements or reservations, and with any future
covenants, conditions, easements or restrictions hereafter affecting or
encumbering the Building and/or the Project, provided same do not materially
impair Tenant’s use and enjoyment of the Premises.  Tenant shall promptly upon demand reimburse
Landlord for any additional insurance premium charged by reason of Tenant’s
failure to comply with the provisions of this Section, and shall indemnify
Landlord from any liability and/or expense resulting from Tenant’s
noncompliance.  Notwithstanding anything
to the contrary contained in this Section 5.1, in the event Tenant’s
obligation for compliance with all future and present laws, ordinances,
restrictions, regulations, orders, rules and requirements of all governmental
authorities, and with all present and future covenants, conditions, easements
or restrictions now or hereafter affecting or encumbering the Building and/or
the Project, results in a “capital” expenditure (as determined by generally
accepted accounting principles, consistently applied) on Tenant’s part (or
Tenant’s being obligated to reimburse Landlord for a “capital” expenditure),
Tenant shall only be responsible for the amortized cost of such “capital”
expenditure (amortized at a market cost of funds as reasonably determined by
Landlord) over the useful life of said improvement during the Term, except in
the event each obligation for capital expenditure is required due to Tenant’s
particular use of the Premises (in which case Tenant shall be fully responsible
for the entire cost of such “capital” expenditure).

 

SECTION 5.2.      SIGNS.  Provided Tenant or any Permitted Transferee
continues to lease the entire Building: (i) Tenant shall have the exclusive
right to one (1) exterior building top sign, one (1) exterior “eyebrow” sign on
the Building (at least one of which foregoing signs may face the I-5 Freeway)
and signage on the glass entry to the Premises, for Tenant’s name and/or
graphics and in locations designated by Landlord, subject to Landlord’s right
of prior approval that such exterior signage is in compliance with the Signage
Criteria (defined below), and (ii) Landlord will not place or authorize to be
placed any other signs on or about the Building.  Except as provided in the foregoing, and for
signage within the lobby of the Premises which shall be subject to Landlord’s
prior right of approval of the specifications therefor, Tenant shall have no
right to maintain signs in any location in, on or about the Premises, the
Building or the Project that are visible from the exterior of the
Building.  The size, design, graphics,
material, style, color and other physical aspects of any permitted sign shall
be subject to Landlord’s written determination, as determined solely by
Landlord, prior to installation, that signage is in compliance with any
covenants, conditions or restrictions encumbering the Premises and Landlord’s
signage program for the Project, as in effect from time to time and approved by
the City in which the Premises are located (“Signage
Criteria”).  Prior to placing
or erecting any such signs, Tenant shall obtain and deliver to Landlord a copy
of any applicable municipal or other governmental permits and approvals and
comply with any applicable insurance requirements for such signage.  Tenant shall be responsible for the cost of
any permitted sign, including the fabrication, installation, maintenance and
removal thereof and the cost of any permits therefor.  If Tenant fails to maintain its sign in good
condition, or if Tenant fails to remove same upon termination of this Lease and
repair and restore any damage caused by the sign or its removal, Landlord may
do so at Tenant’s expense.  Landlord
shall have the right to temporarily remove any signs in connection with any
repairs or maintenance in or upon the Building. 
The term “sign” as used in this Section shall include all signs,
designs, monuments, displays, advertising materials, logos, banners, projected
images, pennants, decals, pictures, notices, lettering, numerals or graphics.

 

SECTION
5.3.      HAZARDOUS MATERIALS.

 

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

 

(b)           Tenant shall not cause or knowingly
permit its agents, employees, contractors, licensees or invitees to bring upon,
store, use, generate, release or dispose of any Hazardous Materials on, under,
from or about the Premises (including without limitation the soil and
groundwater thereunder) without the prior written consent of Landlord, which
consent may be given or withheld in Landlord’s sole and absolute
discretion.  Notwithstanding the
foregoing, Tenant shall have the right, without obtaining prior written consent
of Landlord, to utilize within the Premises a reasonable quantity of standard
office products that may contain Hazardous Materials (such as photocopy toner, “White
Out”, and the like), provided  however, that (i) Tenant shall
maintain such products in their original retail packaging, shall follow all
instructions on such packaging with respect to the storage, use and disposal of
such products, and shall otherwise comply with all applicable laws with respect
to such products, and (ii) all of the other terms and provisions of this
Section 5.3 shall apply with respect to Tenant’s storage, use and disposal
of all such products.  Landlord may, in
its sole and absolute discretion, place such conditions as Landlord deems
appropriate with respect to Tenant’s use of any such Hazardous Materials, and
may further require that Tenant demonstrate that any such Hazardous Materials
are necessary or useful to Tenant’s business and will be generated, stored,
used and disposed of in a manner that complies with all applicable laws and
regulations pertaining thereto and with good business practices.  Tenant understands that Landlord may utilize
an environmental consultant to assist in determining conditions of approval in
connection with the storage, generation, release, disposal or use of Hazardous
Materials by Tenant on or about the Premises, and/or to conduct periodic
inspections of the storage, generation, use, release and/or disposal of such
Hazardous Materials by Tenant on and from the Premises, and in the event any
violations of this Section 5.3 are found, then Tenant agrees that any costs
incurred by Landlord in connection therewith shall be reimbursed by Tenant to
Landlord as additional rent hereunder upon demand.

 

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

 

9

 

Exhibit B attached hereto.  The completed Environmental Questionnaire
shall be deemed incorporated into this Lease for all purposes, and Landlord
shall be entitled to rely fully on the information contained therein.  On each anniversary of the Commencement Date
until the expiration or sooner termination of this Lease, Tenant shall disclose
to Landlord in writing the names and amounts of all Hazardous Materials which
were stored, generated, used, released and/or disposed of on, under or about
the Premises by Tenant or its agents, employees, contractors, licensees or
invitees for the twelve-month period prior thereto, and which Tenant desires to
store, generate, use, release and/or dispose of on, under or about the Premises
for the succeeding twelve-month period. 
In addition, to the extent Tenant is permitted to utilize Hazardous
Materials upon the Premises, Tenant shall promptly provide Landlord with
complete and legible copies of all the following environmental documents
relating thereto:  reports filed pursuant
to any self-reporting requirements; permit applications, permits, monitoring
reports, emergency response or action plans, workplace exposure and community
exposure warnings or notices and all other reports, disclosures, plans or
documents (even those which may be characterized as confidential) relating to
water discharges, air pollution, waste generation or disposal, and underground
storage tanks for Hazardous Materials; orders, reports, notices, listings and
correspondence (even those which may be considered confidential) of or
concerning the release, investigation of, compliance, cleanup, remedial and
corrective actions, and abatement of Hazardous Materials; and all complaints,
pleadings and other legal documents filed by or against Tenant related to Tenant’s
use, handling, storage, release and/or disposal of Hazardous Materials.

 

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

 

(e)           If the storage, use, generation,
release or disposal of any Hazardous Materials on, under, from or about the
Premises or the Project caused or knowingly permitted by Tenant or its agents,
employees, contractors, licensees or invitees results in (i) injury to any
person, (ii) injury to or any contamination of the Premises or the
Project, or (iii) injury to or contamination of any real or personal
property wherever situated, Tenant, at its expense, shall promptly take all
actions necessary to return the Premises and the Project and any other affected
real or personal property owned by Landlord to the condition existing prior to
the introduction of such Hazardous Materials and to remedy or repair any such
injury or contamination, including without limitation, any cleanup,
remediation, removal, disposal, neutralization or other treatment of any such
Hazardous Materials as required by law. 
Notwithstanding the foregoing, Tenant shall not, without Landlord’s
prior written consent, which consent may be given or withheld in Landlord’s
sole and absolute discretion, take any remedial action in response to the
presence of any Hazardous Materials on, from, under or about the Premises or
the Project or any other affected real or personal property owned by Landlord
or enter into any similar agreement, consent, decree or other compromise with
any governmental agency with respect to any Hazardous Materials claims;
provided however, Landlord’s prior written consent shall not be necessary in
the event that the presence of Hazardous Materials on, under or about the
Premises or the Project or any other affected real or personal property owned
by Landlord (i) imposes an immediate threat to the health, safety or
welfare of any individual and (ii) is of such a nature that an immediate
remedial response is necessary and it is not possible to obtain Landlord’s
consent before taking such action.  To
the fullest extent permitted by law, Tenant shall indemnify, hold harmless,
protect and defend (with attorneys reasonably acceptable to Landlord) Landlord
and any successors to all or any portion of Landlord’s interest in the Premises
and the Project and any other real or personal property owned by Landlord from
and against any and all liabilities, losses, damages, diminution in value,
judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses
(including without limitation reasonable attorneys’ fees, court costs and other
professional expenses), whether foreseeable or unforeseeable, arising directly
or indirectly out of the use, generation, storage, treatment, release, on- or
off-site disposal or transportation of Hazardous Materials on, into, from,
under or about the Premises, the Building or the Project and any other real or
personal property owned by Landlord caused or knowingly permitted by Tenant,
its agents, employees, contractors, licensees or invitees.  Such indemnity obligation shall specifically
include, without limitation, the cost of any required or necessary repair,
restoration, cleanup or detoxification of the Premises, the Building and the
Project and any other real or personal property owned by Landlord, the
preparation of any closure or other required plans, whether or not such action
is required or necessary during the Term or after the expiration of this Lease
and any loss of rental due to the inability to lease the Premises or any
portion of the Building or Project as a result of such Hazardous Material or
remediation thereof.  If it is at any
time discovered that Tenant may have knowingly permitted its agents, employees,
contractors, licensees or invitees to release a Hazardous Material on, under,
from or about the Premises, the Building or the Project or any other real or
personal property owned by Landlord, or caused such release, Tenant shall, at
Landlord’s request, immediately prepare and submit to Landlord a comprehensive
plan, subject to Landlord’s approval, specifying the actions to be taken by
Tenant to return the Premises, the Building or the Project or any other real or
personal property owned by Landlord to the condition existing prior to the
introduction of such Hazardous Materials. 
Upon Landlord’s approval of such cleanup plan, Tenant shall, at its
expense, and without limitation of any rights and remedies of Landlord under
this Lease or at law or in equity, immediately implement such plan and proceed
to cleanup such Hazardous Materials in accordance with

 

10

 

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

 

(f)            Landlord hereby discloses to Tenant,
and Tenant hereby acknowledges, certain facts relating to Hazardous Materials
at the Project known by Landlord to exist as of the date of this Lease, as more
particularly described in Exhibit C attached hereto.  Tenant shall have no liability or
responsibility with respect to the Hazardous Materials facts described in Exhibit C,
nor with respect to any Hazardous Materials which Tenant proves were neither
released on the Premises during the Term nor caused by Tenant, its agents,
employees, contractors, licensees or invitees. 
Tenant hereby acknowledges that this disclosure satisfies any obligation
of Landlord to Tenant pursuant to California Health & Safety Code Section
25359.7, or any amendment or substitute thereto or any other disclosure
obligations of Landlord.  Landlord shall
take responsibility, at its sole cost and expense and not as a Project Cost,
for any governmentally-ordered clean-up, remediation, removal, disposal,
neutralization or other treatment of Hazardous Materials conditions described
in this Section 5.3(f).  The
foregoing obligation on the part of Landlord shall include the reasonable costs
(including, without limitation, reasonable attorney’s fees) of defending Tenant
(with attorneys reasonably acceptable to Tenant) from and against any legal
action or proceeding instituted by any governmental agency in connection with
such clean-up, remediation, removal, disposal, neutralization or other
treatment of such conditions, provided that Tenant promptly tenders such
defense to Landlord.  Tenant agrees to
notify its agent employees, contractors, licensees, and invitees of any
exposure or potential exposure to Hazardous Materials at the Premises that
Landlord brings to Tenant’s attention.

 

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

 

(h)           Except as disclosed in
Section 5.3(f) above (and/or as may otherwise be disclosed to Tenant in
writing), Landlord represents that to “Landlord’s knowledge” (as hereinafter
defined), there are no Hazardous Materials in or about the Project which are in
violation of any applicable federal, state or local law, ordinance or
regulation.  As used herein, “Landlord’s
knowledge” shall mean the actual knowledge, without duty of inquiry or
investigation, of the current employees or authorized agents of Landlord
responsible for Hazardous Materials compliance matters.

 

ARTICLE VI.  COMMON
AREAS; SERVICES

 

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

 

Notwithstanding the foregoing, if as a result of the direct actions of
Landlord, its employees, contractors or authorized agents, for more than three
(3) consecutive business days following written notice to Landlord there is no
HVAC or electricity services to all or a portion of the Premises, or such an
interruption of other essential utilities and building services, such as fire
protection or water, so that all or a portion of the Premises cannot be used by
Tenant, then Tenant’s Basic Rent (or an equitable portion of such Basic Rent to
the extent that less than all of the Premises are affected) shall thereafter be
abated until the Premises are again usable by Tenant; provided, however, that
if Landlord is diligently pursuing the repair of such utilities or services and
Landlord provides substitute services reasonably suitable for Tenant’s
purposes, as for example, bringing in portable air-conditioning equipment, then
there shall not be an abatement of Basic Rent. 
The foregoing provisions shall be Tenant’s sole recourse and remedy in
the event of such an interruption of services, and shall not apply in case of
the actions of parties other than Landlord, its employees, contractors or
authorized agents, or in the case of damage to, or destruction of, the Premises
(which shall be governed by the provisions of Article XI of the
Lease).  Any disputes concerning the
foregoing provisions shall be submitted to and resolved by JAMS arbitration
pursuant to Section 22.7 of this Lease.

 

11

 

SECTION 6.2.      OPERATION AND MAINTENANCE
OF COMMON AREAS.  During the
Term, Landlord shall operate all Common Areas within the Project and the
Building in a first class manner as Landlord shall determine to be
appropriate.  The term “Common Areas” shall mean all areas which are not held for
exclusive use by persons entitled to occupy space, and all other appurtenant
areas and improvements within the Project provided by Landlord for the common
use of Landlord and tenants and their respective employees and invitees,
including without limitation parking areas and structures, driveways,
sidewalks, landscaped and planted areas, hallways and interior stairwells not
located within the premises of any tenant, common electrical rooms and roof
access entries, common entrances and lobbies, elevators, and restrooms not
located within the premises of any tenant.

 

SECTION 6.3.      USE OF COMMON AREAS.  The occupancy by Tenant of the Premises shall
include the use of the Common Areas in common with Landlord and with all others
for whose convenience and use the Common Areas may be provided by Landlord,
subject, however, to compliance with all rules and regulations as are
prescribed from time to time by Landlord. 
All costs incurred by Landlord for the maintenance and operation of the
Common Areas shall be included in Project Costs (to the extent properly
included therein) except to the extent any particular cost incurred is related
to or associated with a specific tenant and can be charged to such tenant of
the Project.  Landlord shall at all times
during the Term have exclusive control of the Common Areas, and may restrain or
permit any use or occupancy, except as authorized by Landlord’s rules and
regulations.  Tenant shall keep the
Common Areas clear of any obstruction or unauthorized use related to Tenant’s
operations or use of Premises, including without limitation, planters and
furniture.  Nothing in this Lease shall
be deemed to impose liability upon Landlord for any damage to or loss of the
property of, or for any injury to, Tenant, its invitees or employees.  Landlord may temporarily close any portion of
the Common Areas for repairs, remodeling and/or alterations, to prevent a
public dedication or the accrual of prescriptive rights, or for any other
reason deemed sufficient by Landlord, without liability to Landlord.

 

SECTION 6.4.      PARKING.  Tenant shall be entitled to the number of
vehicle parking spaces set forth in Item 14 of the Basic Lease Provisions,
which spaces shall be unreserved and unassigned, on those portions of the
Common Areas designated by Landlord for parking.  Tenant shall not use more parking spaces than
such number.  All parking spaces shall be
used only for parking of vehicles no larger than full size passenger
automobiles, sports utility vehicles or pickup trucks.  Tenant shall not permit or allow any vehicles
that belong to or are controlled by Tenant or Tenant’s employees, suppliers,
shippers, customers or invitees to be loaded, unloaded or parked in areas other
than those designated by Landlord for such activities.  If Tenant permits or allows any of the
prohibited activities described above, then Landlord shall have the right,
without notice, in addition to such other rights and remedies that Landlord may
have, to remove or tow away the vehicle involved and charge the costs to
Tenant.  Parking within the Common Areas
shall be limited to striped parking stalls, and no parking shall be permitted
in any driveways, access ways or in any area which would prohibit or impede the
free flow of traffic within the Common Areas. 
There shall be no parking of any vehicles for longer than a forty-eight
(48) hour period unless otherwise authorized by Landlord, and vehicles which
have been abandoned or parked in violation of the terms hereof may be towed
away at the owner’s expense.  Landlord
shall have the right to establish, and from time to time amend, and to enforce
against all users all reasonable rules and regulations (including the
designation of areas for employee parking) that Landlord may deem necessary and
advisable for the proper and efficient operation and maintenance of parking
within the Common Areas.  Landlord shall
have the right to construct, maintain and operate lighting facilities within
the parking areas; to change the area, level, location and arrangement of the
parking areas and improvements therein; to restrict parking by tenants, their
officers, agents and employees to employee parking areas; after the expiration
of the initial 60-month Term of this Lease, to enforce parking charges (by
operation of meters or otherwise, provided Landlord is then generally enforcing
parking changes throughout its technology building portfolio); and to do and
perform such other acts in and to the parking areas and improvements therein
as, in the use of good business judgment, Landlord shall determine to be
advisable.  Any person using the parking
area shall observe all directional signs and arrows and any posted speed limits.  In no event shall Tenant interfere with the
use and enjoyment of the parking area by other tenants of the Project or their
employees or invitees.  Parking areas
shall be used only for parking vehicles. 
Washing, waxing, cleaning or servicing of vehicles, or the storage of
vehicles for longer than 48-hours, is prohibited unless otherwise authorized by
Landlord.  Tenant shall be liable for any
damage to the parking areas caused by Tenant or Tenant’s employees, suppliers,
shippers, customers or invitees, including without limitation damage from
excess oil leakage.  Tenant shall have no
right to install any fixtures, equipment or personal property in the parking
areas.

 

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

 

ARTICLE
VII.  MAINTAINING THE PREMISES

 

SECTION 7.1.      TENANT’S MAINTENANCE AND
REPAIR.  Except as set forth
in Section 7.2 below and subject to Landlord’s obligations expressly contained
in Section 2.4 of this Lease, Tenant at its sole expense shall maintain and
make all repairs and replacements necessary to keep the Premises and the
Building in the condition as existed on the Commencement Date (or on any later
date that the improvements may have been installed), excepting ordinary wear
and tear, casualty and condemnation, including without limitation all interior
glass, doors, door closures, hardware, fixtures, fire extinguisher equipment
and other equipment installed in the Premises and all Alterations constructed
by Tenant pursuant to Section 7.3 below. 
Any damage or deterioration of

 

12

 

the Premises shall not be deemed ordinary wear and tear if the same
could have been prevented by good maintenance practices by Tenant.  As part of its maintenance obligations
hereunder, Tenant shall, at Landlord’s request, provide Landlord with copies of
all maintenance schedules, reports and notices prepared by, for or on behalf of
Tenant.  All repairs and replacements
shall be at least equal in quality to the original work, shall be made only by
a licensed contractor reasonably approved in writing in advance by
Landlord.  Any contractor utilized by
Tenant shall be subject to Landlord’s standard requirements for contractors, as
modified from time to time.  Landlord may
impose reasonable restrictions and requirements with respect to repairs, as
provided in Section 7.3, and the provisions of Section 7.4 shall apply to all
repairs.  If Tenant fails to properly
maintain and/or repair the Premises as herein provided following Landlord’s
notice and the expiration of the applicable cure period (or earlier if Landlord
determines that such work must be performed prior to such time in order to
avoid damage to the Premises or Building or other detriment), then Landlord may
elect, but shall have no obligation, to perform any repair or maintenance
required hereunder on behalf of Tenant and at Tenant’s expense, and Tenant
shall reimburse Landlord upon demand for all reasonable costs incurred upon
submission of an invoice.  Notwithstanding
anything to the contrary in this Section 7.1, Landlord shall perform and
construct, and Tenant shall have no responsibility to perform or construct, any
repair, maintenance or improvements which could be treated as a “capital”
expenditure under generally accepted accounting principles, consistently
applied; provided, however, that Tenant shall pay for its share of such “capital
expenditures” to the extent such costs are properly included in Operating
Expenses.

 

SECTION 7.2.      LANDLORD’S MAINTENANCE AND
REPAIR.  Subject to Section
7.1 and Article XI, Landlord shall provide service, maintenance and repair with
respect to any air conditioning, ventilating or heating equipment which serves
the Premises (exclusive, however, of any HVAC units installed as part of the
Tenant Improvements or by Tenant after the Commencement Date, which shall be
serviced, maintained and repaired by Tenant), and shall maintain in good repair
the roof (including the roof membrane), foundations, footings, the exterior
surfaces of the exterior walls of the Building (including exterior glass), and
the structural, electrical, plumbing, life safety and mechanical systems,
except that Tenant at its expense shall make all repairs resulting from the act
or negligence of Tenant, its agents, employees, invitees, subtenants or
contractors.  Landlord shall have the
right to employ or designate any reputable person or firm, including any
employee or agent of Landlord or any of Landlord’s affiliates or divisions, to
perform any service, repair or maintenance function. Landlord need not make any
other improvements or repairs except as specifically required under this Lease,
and nothing contained in this Section shall limit Landlord’s right to
reimbursement from Tenant for maintenance, repair costs and replacement costs
as provided elsewhere in this Lease. 
Tenant understands that it shall not make repairs at Landlord’s expense
or by rental offset.  Except for normal
preventive maintenance, which Landlord shall perform regardless of any notice
from Tenant, Tenant further understands that Landlord shall not be required to
make any repairs to the roof, foundations, footings, the exterior surfaces of
the exterior walls of the Building (excluding exterior glass), or structural,
electrical or mechanical systems unless and until Tenant has notified Landlord
in writing of the need for such repair and Landlord shall have a reasonable
period of time thereafter to commence and complete said repair, if
warranted.  Subject to the express
provisions of Section 2.4 above and to the limitations set forth in Section
4.2, all costs of any maintenance, repairs and replacement on the part of
Landlord provided hereunder shall be considered part of Project Costs.  Tenant further agrees that if Tenant fails to
report any such need for repair in writing within sixty (60) days of its
discovery by Tenant, Tenant shall be responsible for any costs and expenses and
other damages related to such repair which are in excess of those which would
have resulted had such need for repair been reported to Landlord within such
sixty (60) day period.

 

SECTION 7.3.      ALTERATIONS.  Except as otherwise provided in this Section,
Tenant shall make no alterations, additions, fixtures or improvements (“Alterations”)  to the
Premises or the Building without the prior written consent of Landlord, which
consent shall not be unreasonably withheld. 
Notwithstanding the foregoing, Tenant may make Alterations to the
Premises costing less than One Dollars ($1.00) per square foot of the improved
portion of the Premises during each calendar year of the Term without Landlord’s
consent, provided, however, that any Alterations which change the structural,
electrical or mechanical systems of the Premises, or which require a
governmental permit as a prerequisite to the construction thereof, shall
require Landlord’s prior written consent, which shall not be unreasonably
withheld.  Notwithstanding anything to
the contrary contained in either of the foregoing sentences, however, no
Alterations shall:  (i) affect the
exterior of the Building or outside areas (or be visible from adjoining sites),
or (ii) adversely affect or penetrate any of the structural portions of
the Building, including but not limited to the roof, or (iii) require any
change to the basic floor plan of the Premises (including, without limitation,
the adding of any additional “office” square footage) or any change to any
structural or mechanical systems of the Premises, or (iv) fail to comply with
any applicable governmental, or (v) result in the Premises requiring building
services beyond the level normally provided to other tenants, or
(vi) interfere in any manner with the proper functioning of, or Landlord’s
access to, any mechanical, electrical, plumbing or HVAC systems, facilities or
equipment located in or serving the Building, or (vii) diminish the value
of the Premises including, without limitation, using lesser quality materials
than those existing in the Premises, or (viii) alter or replace Standard
Improvements.  Further, in the event that
any Alteration would result in a change from Landlord’s building standard
materials and specifications for the Project (“Standard
Improvements”), then subject to Landlord’s election contained in the
last paragraph of this Section 7.3, Tenant shall be responsible for the cost of
replacing such non-standard improvement (“Non-Standard Improvement”)
with the applicable Standard Improvement (“Replacements”)
which Replacements shall be completed prior to the Expiration Date or earlier
termination of this Lease.  Landlord may
impose any reasonable condition to its consent, including but not limited to a
requirement that the installation and/or removal of all Alterations and
Replacements in excess of One Hundred Thousand Dollars ($100,000.00) be covered
by a lien and completion bond satisfactory to Landlord in its reasonable
discretion.  Landlord shall in all
events, whether or not Landlord’s consent is required, have the right to
reasonably approve the contractor performing the installation and removal of
Alterations and Replacements and Tenant shall not permit any contractor not
approved by Landlord to perform any work on the Premises or on the
Building.  Tenant shall obtain all
required permits for the installation and removal of Alterations and
Replacements and shall

 

13

 

perform the installation and removal of Alterations and Replacements in
compliance with all applicable laws, regulations and ordinances, including
without limitation the Americans with Disabilities Act, all covenants,
conditions and restrictions affecting the Project, and the Rules and
Regulations as described in Article XVII. 
Tenant understands and agrees that Landlord shall be entitled to a
supervision fee in the amount of five percent (5%) of the cost of such
Alterations either requiring a permit from the City of Irvine or affecting any
mechanical, electrical, plumbing or HVAC systems, facilities or equipment
located in or serving the Building. 
Under no circumstances shall Tenant make any Alterations or Replacements
which incorporate any Hazardous Materials, including without limitation
asbestos-containing construction materials into the Premises, the Building or
the Common Area.  If any governmental
entity requires, as a condition to any proposed Alterations by Tenant, that
improvements be made to the Common Areas, and if Landlord consents to such
improvements to the Common Areas (which consent may be withheld in the sole and
absolute discretion of Landlord), then Tenant shall, at Tenant’s sole expense,
make such improvements to the Common Areas required by law and in such manner,
utilizing such materials, and with such contractors, architects and engineers
as Landlord may require in its sole and absolute discretion.  Any request for Landlord’s consent to any
proposed Alterations shall be made in writing and shall contain architectural
plans or other written materials describing the work in detail reasonably
satisfactory to Landlord.  Landlord may
elect to cause its architect to review Tenant’s architectural plans and the
reasonable cost of that review shall be reimbursed by Tenant.  Should the work proposed by Tenant and
consented to by Landlord modify the basic floor plan of the Premises, then
Tenant shall, at its expense, furnish Landlord with as-built drawings and CAD
disks compatible with Landlord’s systems and standards.  Unless Landlord otherwise agrees in writing,
all Alterations made or affixed to the Premises, the Building or to the Common
Area (excluding moveable trade fixtures, equipment, personal property and
furniture), [including without limitation all
Tenant Improvements constructed pursuant to the Work Letter (except as
otherwise provided in the Work Letter)], shall become
the property of Landlord and shall be surrendered with the Premises at the end
of the Term; except that Landlord may, as provided in the next succeeding
paragraph of this Section 7.3, require Tenant to remove by the Expiration
Date, or sooner termination date of this Lease, all or any of the Alterations
installed either by Tenant or by Landlord at Tenant’s request and to repair any
damage to the Premises, the Building or the Common Area arising from that
removal and restore the Premises to their condition prior to making such
Alterations.  The foregoing provisions for
removal of Alterations, however, shall not be applicable to the Tenant
Improvements constructed pursuant to the Work Letter, which Work Letter itself
shall govern any removal of the Tenant Improvements upon the expiration of the
Term.

 

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

 

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

 

SECTION 7.5.      ENTRY AND INSPECTION.  Landlord shall at all reasonable times, upon
written or oral notice (except in emergencies, when no notice shall be
required) have the right to enter the Premises to inspect them, to supply
services in accordance with this Lease, to have access to install, repair,
maintain, replace or remove all electrical and mechanical installations of
Landlord and to protect the interests of Landlord in the Premises, and to
submit the Premises to prospective or actual purchasers or encumbrance holders
(or, during the last one hundred and eighty (180) days of the Term or when an
uncured Tenant Event of Default exists, to prospective tenants), all without
being deemed to have caused an eviction of Tenant and without abatement of rent
except as provided elsewhere in this Lease. 
Landlord shall have the right, if desired, to retain a key which unlocks
all of the doors in the Premises, excluding Tenant’s vaults and safes, and
Landlord shall have the right to use any and all means which Landlord may deem
proper to open the doors in an emergency in order to obtain entry to the
Premises, and any entry to the Premises obtained by Landlord shall not under
any circumstances be deemed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or any eviction of Tenant from the Premises.  In exercising any of Landlord’s rights of
entry, inspection, repair, maintenance and construction under this Lease,
including, without limitation, under Sections 5.3(d), 6.1, 6.5 and 7.5,
Landlord shall comply with Tenant’s reasonable security measures and operating
procedures and shall use commercially reasonable efforts to minimize any disruption
to Tenant.  Further, Landlord shall not
exercise any such rights in any such manner as would unreasonably interfere
with Tenant’ use of, access to, or parking at the Premises.

 

14

 

ARTICLE VIII.  TAXES AND ASSESSMENTS ON TENANT’S PROPERTY

 

Tenant
shall be liable for and shall pay before delinquency, all taxes and assessments
levied against all personal property of Tenant located in the Premises, and, if
required by Landlord, against all Non Standard Improvements to the Premises (as
defined in Section 7.3) made by Landlord or Tenant, and against any Alterations
(as defined in Section 7.3) made to the Premises or the Building by or on
behalf of Tenant.  If requested by
Landlord, Tenant shall cause its personal property, Non-Standard Improvements  and Alterations to be assessed and billed separately from
the real property of which the Premises form a part.  If any taxes required to be paid by Tenant on
Tenant’s personal property, Non-Standard Improvements and/or Alterations are
levied against Landlord or Landlord’s property and if Landlord pays the same,
or if the assessed value of Landlord’s property is increased by the inclusion
of a value placed upon the personal property, Non-Standard Improvements and/or
Alterations and if Landlord pays the taxes based upon the increased assessment,
Landlord shall have the right to require that Tenant pay to Landlord the taxes
so levied against Landlord or the proportion of the taxes resulting from the
increase in the assessment.  In
calculating what portion of any tax bill which is assessed against Landlord
separately, or Landlord and Tenant jointly, is attributable to Tenant’s
Non-Standard Improvements, Alterations and personal property, Landlord’s
reasonable determination shall be conclusive.

 

ARTICLE IX.  ASSIGNMENT
AND SUBLETTING

 

SECTION
9.1.      RIGHTS OF PARTIES.

 

(a)           Notwithstanding any provision of this
Lease to the contrary, and except as to transfers expressly permitted without
Landlord’s consent pursuant to Section 9.4, Tenant will not, either voluntarily
or by operation of law, assign, sublet, encumber, or otherwise transfer all or
any part of Tenant’s interest in this Lease or the Premises, or permit the
Premises to be occupied by anyone other than Tenant, without Landlord’s prior
written consent, which consent shall not unreasonably be withheld in accordance
with the provisions of Section 9.1(b). 
Except as to transfers expressly permitted without Landlord’s consent
pursuant to Section 9.4, no assignment (whether voluntary, involuntary or by
operation of law) and no subletting shall be valid or effective without
Landlord’s prior written consent and, at Landlord’s election, any such
assignment or subletting shall be void and of no force and effect.  Landlord shall not be deemed to have given
its consent to any assignment or subletting by any course of action other than
written consent.  To the extent not
prohibited by provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., (the “Bankruptcy
Code”), including Section 365(f)(1), Tenant on behalf of itself and
its creditors, administrators and assigns waives the applicability of Section
365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee for
the estate of the bankrupt meets Landlord’s standard for consent as set forth
in Section 9.1(b) of this Lease.  If this
Lease is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, any and all monies or other considerations to be delivered in
connection with the assignment shall be delivered to Landlord, shall be and
remain the exclusive property of Landlord and shall not constitute property of
Tenant or of the estate of Tenant within the meaning of the Bankruptcy
Code.  Any person or entity to which this
Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be
deemed to have assumed all of the obligations arising under this Lease on and
after the date of the assignment,  and
shall upon demand execute and deliver to Landlord an instrument confirming that
assumption.

 

(b)           If Tenant desires to transfer an
interest in this Lease or the Premises, it shall first notify Landlord of its
desire and shall submit in writing to Landlord: 
(i) the name and address of the proposed transferee; (ii) the nature of
any proposed transferee’s business to be carried on in the Premises; (iii) the
terms and provisions of any proposed sublease, assignment or other transfer,
including a copy of the proposed assignment, sublease or transfer form;
(iv) evidence that the proposed assignee, subtenant or transferee will
comply with the requirements of Exhibit D hereto; (v) a
completed Environmental Questionnaire from the proposed assignee, subtenant or
transferee; (vi) any other information requested by Landlord and reasonably
related to the transfer and (vii) the fee described in Section 9.1(e).  Except as provided in Section 9.1 (c),
Landlord shall not unreasonably withhold its consent, provided that the parties
agree that it shall be reasonable for Landlord to withhold its consent if:  (1) the use of the Premises will not be
consistent with the provisions of this Lease or with Landlord’s commitment to
other tenants of the Building and Project; (2) insurance requirements of the
proposed assignee or subtenant may not be brought into conformity with Landlord’s
then current leasing practice; (3) a proposed subtenant or assignee has failed
to submit to Landlord all reasonable information as requested by Landlord
concerning the proposed subtenant or assignee, including, but not limited to,
current financial statements; (4) the proposed assignee or subtenant is an
existing tenant of the Building or Project or a prospect with whom Landlord is “actively
negotiating” (as herein with defined) to become a tenant at the Building or
Project (provided Landlord has available space in the Project for such existing
tenant or prospect); or (7) the proposed transfer will impose additional
burdens or adverse tax effects on Landlord. 
As used herein, “actively negotiating” shall mean that the prospect
shall have countered a written proposal from Landlord in writing within four
(4) months prior to Tenant’s proposed transfer for the lease of space in the
Building or the Project.  Tenant’s
exterior sign rights under this Lease are personal to Tenant and any Permitted
Transferee, and may not be assigned or transferred to any assignee of this
Lease or subtenant of the Premises other than a Permitted Transferee without
Landlord’s prior written consent, which may be withheld in Landlord’s sole and
absolute discretion.  Notwithstanding the
foregoing, Landlord shall not unreasonably withhold its consent to a transfer
of such signage rights in connection with Tenant’s assignment of this Lease or
sublease of the entire Premises, provided that Landlord shall have the right of
prior approval that such signage continues to comply with the Sign Criteria and
the other requirements of Section 5.2 of this Lease, and provided further
that any name and/or graphics on such signage do not materially devalue the
Project as determined by Landlord in its sole and absolute discretion.

 

15

 

If
Landlord consents to the proposed transfer, Tenant may within ninety (90) days
after the date of the consent effect the transfer upon the terms described in
the information furnished to Landlord; provided that any material change in the
terms shall be subject to Landlord’s consent as set forth in this Section
9.1.  Landlord shall approve or
disapprove any requested transfer within fifteen (15) business days following
receipt of Tenant’s written request, the information set forth above, and the
fee set forth below.

 

(c)           Except with respect to an assignment
or subletting to a Permitted Transferee, in the event of an assignment of this
Lease or a subletting or more than twenty-five percent (25%) of the Floor Area
of the Premises (in the aggregate) in lieu of consenting to a proposed
assignment or subletting, Landlord may elect, within the fifteen (15) business
day period permitted for Landlord to approve or disapprove a requested
transfer, to terminate this Lease as to the portion of the Premises proposed to
be subleased or assigned with a proportionate abatement in the Basic Rent and
Operating Expenses payable under this Lease, effective thirty (30) days’
following written notice by Landlord of its election to so sublease or
terminate.  Landlord may thereafter, at
its option, assign, sublet or re-let any space so sublet, obtained by
assignment or obtained by termination to any third party, including without
limitation the proposed transferee of Tenant.

 

(d)           Except with respect to an assignment
or subletting to a Permitted Transferee, in the event that Landlord approves
the requested assignment or subletting, Tenant agrees that fifty percent (50%)
of any amounts paid by the assignee or subtenant, however described, in excess
of (i) the Basic Rent and Operating Expenses payable by Tenant hereunder,
or in the case of a sublease of a portion of the Premises, in excess of the
Basic Rent and Operating Expenses reasonably allocable to such portion as
determined by Landlord, plus (ii) Tenant’s direct out-of-pocket costs
which Tenant certifies to Landlord have been paid to provide occupancy related
services to such assignee or subtenant of a nature commonly provided by landlords
of similar space (including, without limitation, brokerage commissions, legal
fees and tenant improvements costs paid by Tenant in connection with such
subletting or assignment), shall be the property of Landlord and such amounts
shall be payable directly to Landlord by the assignee or subtenant or, at
Landlord’s option, by Tenant within ten (10) days of Tenant’s receipt
thereof.  Landlord shall have the right
to review or audit the books and records of Tenant, or have such books and
records reviewed or audited by an outside accountant, to confirm any such
direct out-of-pocket costs.  In the event
that such direct out-of-pocket costs claimed by Tenant are overstated by more
than five percent (5%), Tenant shall reimburse Landlord for any of Landlord’s
costs related to such review or audit. 
At Landlord’s request, a written agreement shall be entered into by and
among Tenant, Landlord and the proposed assignee or subtenant confirming the
requirements of this Section 9.1(d).

 

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

 

SECTION 9.2.      EFFECT OF TRANSFER.  No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant of its obligation to pay rent and to
perform all its other obligations under this Lease.  Moreover, Tenant shall indemnify and hold
Landlord harmless, as provided in Section 10.3, for any act or omission by an
assignee or subtenant.  Each assignee,
other than Landlord, shall assume all obligations of Tenant under this Lease
and shall be liable jointly and severally with Tenant for the payment of all
rent, and for the due performance of all of Tenant’s obligations, under this
Lease.  No assignment or subletting shall
be effective or binding on Landlord unless documentation in form and substance
satisfactory to Landlord in its reasonable discretion evidencing the transfer,
and in the case of an assignment, the assignee’s assumption of the obligations
of Tenant under this Lease, is delivered to Landlord and both the assignee/subtenant
and Tenant deliver to Landlord an executed consent to transfer instrument
prepared by Landlord in a commercially reasonable form and consistent with the
requirements of this Article.  The
acceptance by Landlord of any payment due under this Lease from any other
person shall not be deemed to be a waiver by Landlord of any provision of this
Lease or to be a consent to any transfer. 
Consent by Landlord to one or more transfers shall not operate as a
waiver or estoppel to the future enforcement by Landlord of its rights under
this Lease or as a consent to any subsequent transfer.

 

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

 

(a)           Such subletting and any subtenant of
the Premises shall be subject to each and every provision contained in this
Lease.

 

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

 

16

 

claim by Tenant to the contrary. 
Tenant shall have no right or claim against the subtenant or Landlord
for any rentals so paid to Landlord; provided, however, that any such amounts
received by Landlord shall be credited towards any amount Tenant owes under
this Lease.

 

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

 

SECTION 9.4.      CERTAIN TRANSFERS.  Notwithstanding anything to the contrary
contained in this Article IX, Landlord’s consent shall not be required and
Tenant may, without Landlord’s prior written consent and without constituting
an assignment or sublease hereunder, sublet the Premises or assign the Lease to
(A) an entity controlling, under common control with or controlled by Tenant (“Affiliate”), (B) a successor entity related
to Tenant by purchase, merger, consolidation, nonbankruptcy reorganization, or
government action, or (C) a purchaser of substantially all of Tenant’s assets
located in the Premises ((A), (B) and (C) are collectively referred to herein
as a “Permitted Transferees” and
individually as a “Permitted Transferee”
and transfers to such Permitted Transferees shall be collectively referred to
herein as “Permitted Transfers”),
so long as (i) the net worth of the Permitted Transferee is at least equal
to the net worth of Tenant immediately prior to the date of such Permitted
Transfer, or, in Landlord’s reasonable determination, such Permitted Transferee
has sufficient net worth to perform Tenant’s obligations under this Lease,
evidence of which, satisfactory to Landlord, shall be presented to Landlord
prior to such Permitted Transfer, (ii) Tenant shall provide to Landlord,
prior to such Permitted Transfer, written notice of such Permitted Transfer and
such assignment documentation and other information as Landlord may reasonably
require in connection therewith, and (iii) all of the other terms and requirements
Section 9.2 and 9.3 (but not of Section 9.1) shall apply with
respect to such Permitted Transfer.  A
sale or transfer of Tenant’s capital stock shall not be deemed an assignment,
subletting or any other transfer of this Lease or the Premises.

 

ARTICLE X.  INSURANCE
AND INDEMNITY

 

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

 

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

 

SECTION
10.3.    JOINT INDEMNITY.

 

(a)           To
the fullest extent permitted by law, Tenant shall defend, indemnify, protect,
save and hold harmless Landlord, its agents, and any and all affiliates of
Landlord, including, without limitation, any corporations or other entities
controlling, controlled by or under common control with Landlord, from and
against any and all claims, liabilities, costs or expenses arising either
before or after the Commencement Date from Tenant’s use or occupancy of the
Premises, the Building or the Common Areas, including without limitation, the
use by Tenant, its agents, employees, invitees or licensees of any recreational
facilities within the Common Areas, or from the conduct of its business, or
from any activity, work, or thing done, permitted or suffered by Tenant or its
agents, employees, invitees or licensees in or about the Premises, the Building
of the Common Areas, or from any default in the performance of any obligation
on Tenant’s part to be performed under this Lease, or from any act or
negligence or willful misconduct of Tenant or its agents, employees, visitors,
patrons, guests, invites or licensees. 
In cases of alleged negligence asserted by third parties against
Landlord which arise out of, are occasioned by, or in any way attributable to
Tenant, its agents, employees, contractors, licensees or invitees use and
occupancy of the Premises, the Building or the Common Areas, or from the
conduct of its business or from any activity, work or thing done, permitted or
suffered by Tenant or its agents, employees, invitees or licensees on Tenant’s
part to be performed under this Lease, or from any negligence or willful
misconduct of Tenant, its agents, employees, licensees or

 

17

 

invitees, Tenant shall accept any tender of defense for Landlord and
shall, notwithstanding any allegation of negligence or willful misconduct on
the part of the Landlord, defend Landlord with counsel reasonably satisfactory
to Landlord and protect and hold Landlord harmless and pay all costs, expenses
and attorneys’ fees incurred in connection with such litigation, provided that
Tenant shall not be liable for any such injury or damage, and Landlord shall
reimburse Tenant for the reasonable attorneys’ fees and costs for the attorney
representing both parties, all to the extent and in the proportion that such
injury or damage is ultimately determined by a court of competent jurisdiction
(or in connection with any negotiated settlement agreed to by Landlord) to be
attributable to the active negligence or willful misconduct of Landlord.  Upon Landlord’s request, Tenant shall at
Tenant’s sole cost and expense, retain a separate attorney reasonably selected
by Landlord to represent Landlord in any such suit if Landlord reasonably
determines that the representation of both Tenant and Landlord by the same
attorney would cause a conflict of interest; provided, however, that to the
extent and in the proportion that the injury or damage which is the subject of
the suit is ultimately determined by a court of competent jurisdiction (or in
connection with any negotiated settlement agreed to by Landlord) to be
attributable to the active negligence or willful misconduct of Landlord,
Landlord shall reimburse Tenant for the reasonable legal fees and costs of the
separate attorney retained by Tenant. 
The provisions of this Section 10.3(a) shall expressly survive the
expiration or sooner termination of this Lease.

 

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

 

SECTION 10.4.    LANDLORD’S NONLIABILITY.  Subject only to the express indemnity
obligations contained in Section 10.3(b) of this Lease but notwithstanding
any other provision of this Lease to the contrary, Landlord shall not be liable
to Tenant, its employees, agents and invitees, and Tenant hereby waives all
claims against Landlord, for injuries to or deaths of persons whatsoever
resulting from fire, explosion, falling plaster, steam, gas, electricity, water
or rain which may leak or flow from or into any part of the Premises or from
the breakage, leakage, obstruction or other defects of the pipes, sprinklers,
wires, appliances, plumbing, air conditioning, electrical works or other
fixtures in the Building, whether such injury or death results from conditions
arising in the Premises or in other portions of the Building.  Notwithstanding any provision of this Lease
to the contrary, including, without limitation, the provisions of Section
10.3(b) of this Lease, Landlord shall not be liable to Tenant, its employees,
agents and invitees, and Tenant hereby waives all claims against Landlord, for
loss of or damage to any property, or any other loss, cost, damage, injury or
liability to property whatsoever resulting from fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak or flow from or
into any part of the Premises or from the breakage, leakage, obstruction or
other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, electrical works or other fixtures in the Building, whether the
damage or injury results from conditions arising in the Premises or in other
portions of the Building.  It is
understood that any such condition may require the temporary evacuation or
closure of all or a portion of the Building. 
Notwithstanding any provision of this Lease to the contrary, including,
without limitation, the provisions of Section 10.3(b) of this Lease,
Landlord shall in no event be liable to Tenant, its employees, agents, and
invitees, and Tenant hereby waives all claims against Landlord, for loss or
interruption of Tenant’s business or income (including, without limitation, any
consequential damages and lost profit or opportunity costs), or any other loss,
cost, damage, injury or liability resulting from Acts of God (except with
respect to restoration obligations pursuant to Article XI below), acts of
civil disobedience or insurrection, acts or omissions (criminal or otherwise)
of any third parties (other than Landlord’s employees or authorized agents),
including without limitation, any other tenants within the Project or their
agents, employees, contractors, guests or invitees.  Landlord shall have no liability (including
without limitation consequential damages and lost profit or opportunity costs)
and, except as provided in Sections 11.1 and 12.1 below, there shall be no
abatement of rent, by reason of any injury to or interference with Tenant’s
business arising from the making of any repairs, alterations or improvements to
any portion of the Building, including repairs to the Premises, nor shall any
related activity by Landlord constitute an actual or constructive eviction;
provided, however, that in making repairs, alterations or improvements,
Landlord shall interfere as little as reasonably practicable with the conduct
of Tenant’s business in the Premises. 
Should Tenant elect to receive any service or products from a
concessionaire, licensee or third party tenant of Landlord, Landlord shall have
no liability for any services or products so provided or for any breach of
contract by such third party provider. 
Neither Landlord nor its agents shall be liable for interference with
light or other similar intangible interests. 
Tenant shall immediately notify Landlord in case of fire or accident in
the Premises, the Building or the Project and of defects in any improvements or
equipment.

 

SECTION 10.5.    WAIVER OF SUBROGATION.  Notwithstanding anything to the contrary
contained in this Lease, Landlord and Tenant each hereby waives all rights of
recovery against the other and the other’s agents on account of loss and damage
occasioned to the property of such waiving party to the extent that the waiving
party is entitled to proceeds for such loss or damage under any property
insurance policies carried or required to be carried by the provisions of this
Lease (including, without limitation, the Property Policy required of Landlord
in the first sentence of Section 10.2 of this Lease); provided however, that
the foregoing waiver shall not apply to the extent of Tenant’s obligations to
pay deductibles under any such policies and this Lease.  By this waiver it is the intent of the
parties that neither Landlord nor Tenant shall be liable to any insurance
company (by way of subrogation or otherwise) insuring the other party for any
loss or damage insured against under any property insurance policies
contemplated by this Lease, even though such loss or damage might be occasioned
by the negligence of such party, its agents, employees, contractors, guests or
invitees.  All of Landlord’s and Tenant’s
repair and indemnity obligations under this Lease shall be subject to the
waiver contained in this Section 10.5.

 

18

 

ARTICLE XI.  DAMAGE OR DESTRUCTION

 

SECTION
11.1.           RESTORATION.

 

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

 

(b)                                 If
Landlord has the right to terminate this Lease pursuant to Section 11.1(a) and
does not elect to so terminate this Lease, and provided that at the time of
Landlord’s Notice neither an uncured Event of Default exists nor has Landlord
delivered Tenant a notice of any failure by Tenant to fulfill an obligation
under this Lease which, unless cured by Tenant within the applicable grace
period, would constitute an Event of Default, then within ten (10) business
days following delivery of Landlord’s Notice pursuant to Section 11.1(a),
Tenant may elect to terminate this Lease by written notice to Landlord, but
only if (i) Landlord’s Notice specifies that Landlord has determined that the
Premises cannot be repaired, with reasonable diligence, within two hundred
seventy (270) days after the date of damage or (ii) the casualty has occurred
within the final twelve (12) months of the Term and such material damage has a
materially adverse impact on Tenant’s continued use of the Premises.  If Tenant fails to provide such termination
notice within such ten (10) business day period, Tenant shall be deemed to have
waived any termination right under this Section 1l.1(b) or any other applicable
law.

 

(c)                                  In
the event that neither Landlord nor Tenant terminates this Lease pursuant to
this Section 11.1 as a result of material damage to the Building or Premises
resulting from a casualty, Landlord shall repair all material damage to the
Premises or the Building as soon as reasonably possible and this Lease shall
continue in effect for the remainder of the Term.  Subject to any provision to the contrary in
the Work Letter, such repair by Landlord shall include repair of material
damage to the Tenant Improvements constructed pursuant to the Work Letter.  Landlord shall have the right, but not the
obligation, to repair or replace any other leasehold improvements made by
Tenant or any Alterations (as defined in Section 7.3) constructed by
Tenant.  If Landlord elects to repair or
replace such leasehold improvements and/or Alterations, all insurance proceeds
available for such repair or replacement shall be made available to
Landlord.  Landlord shall have no
liability to Tenant in the event that the Premises or the Building has not been
fully repaired within the time period specified by Landlord in Landlord’s
Notice to Tenant as described in Section 11.1(a).  Notwithstanding the foregoing, the repair of
damage to the Premises to the extent such damage is not material shall be
governed by Sections 7.1 and 7.2.

 

Notwithstanding
anything to the contrary contained in this Section 11.1(c), if for any reasons
other than delays caused by Tenant, or other matters beyond Landlord’s
reasonable control (not to exceed thirty (30) days in the aggregate), the
Premises and/or the Building have not been substantially repaired within the
time period specified in Landlord’s Notice to Tenant as described in Section
11.1(a), then Tenant may, by written notice to Landlord given at any time
thereafter but prior to the actual date of the substantial completion of the
repair of the Premises or the Building, elect to terminate this Lease.  Notwithstanding the foregoing, if at any time
during the construction period, Landlord reasonably determines that the
substantial completion of said repairs will be delayed beyond the time period
specified in Landlord’s Notice (for reasons other than Tenant-caused delays
and/or force majeure delays not exceeding 30 days in the aggregate), then
Landlord may notify Tenant in writing of such determination and of a new
outside date for completion of such repairs, and Tenant must elect within ten
(10) days of receipt of such notice to either terminate this Lease or waive its
right to terminate this Lease provided such repairs are substantially completed
prior to the new outside date established by Landlord in such notice to Tenant.  Tenant’s failure to elect to terminate this
Lease within such ten (10) day period shall be deemed Tenant’s waiver of its
right to terminate this Lease as provided in this paragraph as to the previous
outside date, but not as to the new outside date established by said notice.

 

(d)                                 Commencing
on the date of such material damage to the Building, and ending on the sooner
of the date the damage is repaired or the date this Lease is terminated, the
rental to be paid under this Lease shall be abated in the same proportion that
the Floor Area of the Premises that is rendered unusable by the damage from
time to time bears to the total Floor Area of the Premises, as reasonably
determined by Landlord.

 

19

 

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

 

SECTION 11.2.           LEASE
GOVERNS.  Tenant agrees that the
provisions of this Lease, including without limitation Section 11.1, shall
govern any damage or destruction and shall accordingly supersede any contrary
statute or rule of law.

 

ARTICLE XII.  EMINENT DOMAIN

 

SECTION
12.1.           TOTAL
OR PARTIAL TAKING.  If all or a
material portion of the Premises is taken by any lawful authority by exercise
of the right of eminent domain, or sold to prevent a taking, either Tenant or
Landlord may terminate this Lease effective as of the date possession is
required to be surrendered to the authority. 
In the event title to a portion of the Building or Project, whether or
not including a portion of the Premises, is taken or sold in lieu of taking,
and if Landlord elects to restore the Building in such a way as to alter the
Premises materially, either party may terminate this Lease, by written notice
to the other party, effective on the date of vesting of title.  In the event neither party has elected to
terminate this Lease as provided above, then Landlord shall promptly, after
receipt of a sufficient condemnation award, proceed to restore the Premises to
substantially their condition prior to the taking, and a proportionate
allowance shall be made to Tenant for the rent corresponding to the time during
which, and to the part of the Premises of which, Tenant is deprived on account
of the taking and restoration.  In the
event of a taking, Landlord shall be entitled to the entire amount of the
condemnation award without deduction for any estate or interest of Tenant;
provided that nothing in this Section shall be deemed to give Landlord any
interest in, or prevent Tenant from seeking any award against the taking
authority for, the taking of personal property and fixtures belonging to Tenant
or for relocation or business interruption expenses recoverable from the taking
authority.

 

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

 

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

 

ARTICLE XIII.  SUBORDINATION; ESTOPPEL CERTIFICATE;
FINANCIALS

 

SECTION 13.1.           SUBORDINATION.  At the option of Landlord or any lender of
Landlord’s that obtains a security interest in the Building, this Lease shall
be either superior or subordinate to all ground or underlying leases, mortgages
and deeds of trust, if any, which may hereafter affect the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as no uncured Event of Default exists under this Lease,
Tenant’s possession and quiet enjoyment of the Premises shall not be disturbed
and this Lease shall not terminate in the event of termination of any such
ground or underlying lease, or the foreclosure of any such mortgage or deed of
trust, to which this Lease has been subordinated pursuant to this Section.  Tenant shall, at any time upon not less than
twenty (20) days prior written notice from Landlord, execute and deliver any documents
or agreements that are in commercially reasonable form and are requested by
Landlord or such lessor or lender which provide Tenant with the non-disturbance
protections set forth in this Section. 
In the event of a termination or foreclosure, Tenant shall become a
tenant of and attorn to the successor-in-interest to Landlord upon the same
terms and conditions as are contained in this Lease, and shall execute any
instrument reasonably required by Landlord’s successor for that purpose.  Tenant shall also, upon written request of
Landlord, execute and deliver all instruments as may be required from time to
time to subordinate the rights of Tenant under this Lease to any ground or
underlying lease or to the lien of any mortgage or deed of trust (provided that
such instruments include the nondisturbance and attornment provisions set forth
above and are in commercially reasonable form), or, if requested by Landlord,
to subordinate, in whole or in part, any ground or underlying lease or the lien
of any mortgage or deed of trust to this Lease. 
Tenant agrees that any purchaser at a foreclosure sale or lender taking
title under a deed-in-lieu of foreclosure shall not be responsible for any act
or omission of a prior landlord, shall not be subject to any offsets or
defenses Tenant may have against a prior landlord, and shall not be liable for
the return of the security deposit to the extent it is not actually received by
such purchaser or bound by any rent paid for more than the current month in
which the foreclosure occurred.

 

20

 

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

 

SECTION 13.2.           ESTOPPEL CERTIFICATE.

 

(a)                                  Tenant
shall, at any time upon not less than twenty (20) days prior written notice
from Landlord, execute, acknowledge and deliver to Landlord, in any
commercially reasonable form that Landlord may reasonably require, a statement
in writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of the modification and certifying
that this Lease, as modified, is in full force and effect) and the dates to
which the rental, additional rent and other charges have been paid in advance,
if any, and (ii) acknowledging that, to Tenant’s knowledge, there are no
uncured defaults on the part of Landlord, or specifying each default if any are
claimed, and (iii) setting forth all further information that Landlord or any
purchaser or encumbrancer may reasonably require.  Tenant’s statement may be relied upon by any
prospective purchaser or encumbrancer of all or any portion of the Building or
Project.

 

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

 

SECTION
13.3.           FINANCIALS.

 

(a)                                  Tenant
shall deliver to Landlord, prior to the execution of this Lease and thereafter
at any time within twenty (20) days upon Landlord’s request (but not more
frequently than once during any calendar year during the Term), Tenant’s
current tax returns and financial statements, certified true, accurate and
complete by the chief financial officer of Tenant, including a balance sheet
and profit and loss statement for the most recent prior year, or, in the event
Tenant is a publicly traded corporation on a nationally recognized stock
exchange, Tenant’s current financial reports filed with the Securities and
Exchange Commission (collectively, the “Statements”),
which Statements shall accurately and completely reflect the financial
condition of Tenant.  Landlord agrees
that it will keep the Statements confidential, except that Landlord shall have
the right to deliver the same to any proposed purchaser of the Building or
Project, and to any encumbrancer of all or any portion of the Building or
Project.

 

(b)                                 Tenant
acknowledges that Landlord is relying on the Statements in its determination to
enter into this Lease, and Tenant represents to Landlord, which representation
shall be deemed made on the date of this Lease, that no material change in the
financial condition of Tenant, as reflected in the Statements, has occurred
since the date Tenant delivered the Statements to Landlord.  The Statements are represented and warranted
by Tenant to be correct and to accurately and fully reflect Tenant’s true
financial condition as of the date of submission by any Statements to Landlord.

 

ARTICLE XIV.  EVENTS OF
DEFAULT AND REMEDIES

 

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

 

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

 

(b)                                 Except
as provided in Article IX of this Lease, the assignment, sublease,
encumbrance or other transfer of this Lease by Tenant, either voluntarily or by
operation of law, whether by judgment, execution, transfer by intestacy or
testacy, or other means, where such assignment, sublease, encumbrance or other
transfer remains in effect for a period of fifteen (15) days after written
notice from Landlord to Tenant.

 

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

 

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

 

21

 

(e)                                  The
abandonment of the Premises by Tenant.

 

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

 

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

 

SECTION
14.2.           LANDLORD’S REMEDIES.

 

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

 

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

 

(1)                                  The
worth at the time of award of the unpaid Basic Rent and additional rent which
had been earned at the time of termination;

 

(2)                                  The
worth at the time of award of the amount by which the unpaid Basic Rent and
additional rent which would have been earned after termination until the time
of award exceeds the amount of such loss that Tenant proves could have been
reasonably avoided;

 

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

 

(4)                                  Any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or which
in the ordinary course of things would be likely to result from Tenant’s Event
of Default, including, but not limited to, the cost of recovering possession of
the Premises, refurbishment of the Premises, marketing costs, commissions and
other expenses of reletting, including necessary repair, the unamortized
portion of any tenant improvements and brokerage commissions funded by Landlord
in connection with this Lease, reasonable attorneys’ fees, and any other
reasonable costs; and

 

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

 

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

 

22

 

collect all rent as it becomes due.  Efforts by the Landlord to maintain, preserve
or relet the Premises, or the appointment of a receiver to protect the Landlord’s
interests under this Lease, shall not constitute a termination of the Tenant’s
right to possession of the Premises.  In
the event that Landlord elects to avail itself of the remedy provided by this
Section 14.2(a)(ii), Landlord shall not unreasonably withhold its consent to an
assignment or subletting of the Premises subject to the reasonable standards
for Landlord’s consent as are contained in this Lease.

 

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

 

(c)                                  No
delay or omission of Landlord to exercise any right or remedy shall be
construed as a waiver of the right or remedy or of any breach or Event of
Default by Tenant.  The acceptance by
Landlord of rent shall not be a (i) waiver of any preceding breach or Event of
Default by Tenant of any provision of this Lease, other than the failure of
Tenant to pay the particular rent accepted, regardless of Landlord’s knowledge
of the preceding breach or Event of Default at the time of acceptance of rent,
or (ii) a waiver of Landlord’s right to exercise any remedy available to
Landlord by virtue of the breach or Event of Default.  No payment by Tenant or receipt by Landlord
of a lesser amount than the rent required by this Lease shall be deemed to be
other than a partial payment on account of the earliest due stipulated rent,
nor shall any endorsement or statement on any check or letter be deemed an
accord and satisfaction and Landlord shall accept the check or payment without
prejudice to Landlord’s right to recover the balance of the rent or pursue any
other remedy available to it.  No act or
thing done by Landlord or Landlord’s agents during the Term shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender shall be valid unless in writing and signed by Landlord.  No employee of Landlord or of Landlord’s
agents shall have any power to accept the keys to the Premises prior to the
termination of this Lease, and the delivery of the keys to any employee shall
not operate as a termination of this Lease or a surrender of the Premises.

 

SECTION
14.3.           LATE PAYMENTS.

 

(a)                                  Any
payment due to Landlord under this Lease, including without limitation Basic
Rent, Tenant’s Share of Operating Expenses or any other payment due to Landlord
under this Lease, that is not received by Landlord within five (5) days
following the date due shall bear interest at the maximum rate permitted by law
from the date due until fully paid.  The
payment of interest shall not cure any breach or Event of Default by Tenant
under this Lease.  In addition, Tenant
acknowledges that the late payment by Tenant to Landlord of Basic Rent and
Tenant’s Share of Operating Expenses will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult and impracticable to ascertain. 
Those costs may include, but are not limited to, administrative,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any ground lease, mortgage or trust deed covering the
Premises.  Accordingly, if any Basic Rent
or Tenant’s Share of Operating Expenses due from Tenant shall not be received
by Landlord or Landlord’s designee within five (5) days following the date due,
then Tenant shall pay to Landlord, in addition to the interest provided above,
a late charge, which the Tenant agrees is reasonable, in a sum equal to the
greater of five percent (5%) of the amount overdue or Two Hundred Fifty Dollars
($250.00) for each delinquent payment. 
Notwithstanding the foregoing, the late fee for the initial late payment
of Basic Rent and/or Operating Expenses during each calendar year of the Term
shall be waived.  Acceptance of a late
charge by Landlord shall not constitute a waiver of Tenant’s breach or Event of
Default with respect to the overdue amount, nor shall it prevent Landlord from
exercising any of its other rights and remedies.

 

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

 

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

 

23

 

SECTION 14.5.           DEFAULT
BY LANDLORD.  Landlord shall not be
deemed to be in default in the performance of any obligation under this Lease,
and Tenant shall have no rights to take any action against Landlord, unless and
until Landlord has failed to perform the obligation within thirty (30) days
after written notice by Tenant to Landlord specifying in reasonable detail the
nature and extent of the failure; provided, however, that if the nature of
Landlord’s obligation is such that more than thirty (30) days are required for
its performance, then Landlord shall not be deemed to be in default if it
commences performance within the thirty (30) day period and thereafter
diligently pursues the cure to completion. 
In the event of Landlord’s default under this Lease, Tenant’s sole
remedies shall be to seek damages or specific performance from Landlord,
provided that any damages shall be limited to Tenant’s actual out-of-pocket
expenses and shall in no event include any consequential damages, lost profits
or opportunity costs.

 

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

 

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

 

SECTION 14.8.           SATISFACTION
OF JUDGMENT.  The obligations of
Landlord do not constitute the personal obligations of the individual partners,
trustees, directors, officers or shareholders of Landlord or its constituent
partners.  Should Tenant recover a money
judgment against Landlord, such judgment shall be satisfied only from the
interest of Landlord in the Project and out of the rent or other income from
such property receivable by Landlord or out of consideration received by
Landlord from the sale or other disposition of all or any part of Landlord’s
right, title or interest in the Project and no action for any deficiency may be
sought or obtained by Tenant.

 

ARTICLE XV.  END OF TERM

 

SECTION 15.1.           HOLDING
OVER.  This Lease shall terminate
without further notice upon the expiration of the Term, and any holding over by
Tenant after the expiration shall not constitute a renewal or extension of this
Lease, or give Tenant any rights under this Lease, except when in writing
signed by both parties.  Any period of
time following the Expiration Date or earlier termination of this Lease
required for Tenant to remove its property or to place the Premises in the
condition required pursuant to Section 15.3 (or for Landlord to do so if
Tenant fails to do so) shall be deemed a holding over by Tenant.  If Tenant holds over for any period after the
Expiration Date (or earlier termination) of the Term without the prior written
consent of Landlord, such possession shall constitute a tenancy at sufferance
only and an Event of Default under this Lease; such holding over with the prior
written consent of Landlord shall constitute a month-to-month tenancy
commencing on the first (1st) day following the termination of this Lease and
terminating thirty (30) days following delivery of written notice of
termination by either Landlord or Tenant to the other.  In either of such events, possession shall be
subject to all of the terms of this Lease, except that the monthly Basic Rent
shall be the greater of (a) one hundred fifty percent (150%) of the Basic
Rent for the month immediately preceding the date of termination or (b) the
then currently scheduled Basic Rent for comparable space in the Project.  The acceptance by Landlord of monthly
holdover rental in a lesser amount shall not constitute a waiver of Landlord’s
right to recover the full amount due for any holdover by Tenant, unless
otherwise agreed in writing by Landlord. 
If Tenant fails to surrender the Premises upon the expiration of this
Lease despite demand to do so by Landlord, Tenant shall indemnify and hold
Landlord harmless from all loss or liability, including without limitation, any
claims made by any succeeding tenant relating to such failure to
surrender.  The foregoing provisions of
this Section are in addition to and do not affect Landlord’s right of re-entry
or any other rights of Landlord under this Lease or at law.

 

SECTION 15.2.           MERGER ON
TERMINATION.  The voluntary or other
surrender of this Lease by Tenant, or a mutual termination of this Lease, shall
terminate any or all existing subleases unless Landlord, at its option, elects
in writing to treat the surrender or termination as an assignment to it of any
or all subleases affecting the Premises.

 

24

 

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

 

ARTICLE XVI.  PAYMENTS AND NOTICES

 

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

 

ARTICLE XVII. 
RULES AND REGULATIONS

 

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

 

ARTICLE XVIII.  BROKER’S COMMISSION

 

The
parties recognize as the broker(s) who negotiated this Lease the firm(s), if
any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease.  Each party warrants that it has
had no dealings with any other real estate broker or agent in connection with
the negotiation of this Lease, and each party agrees to indemnify and hold the
other party harmless from any cost, expense or liability (including reasonable
attorneys’ fees) for any compensation, commissions or charges claimed by any
other real estate broker or agent employed or claiming to represent or to have
been employed by the indemnifying party in connection with the negotiation of
this Lease.  The foregoing agreement shall
survive the termination of this Lease. 
If Tenant fails to take possession of the Premises or if this Lease
otherwise terminates prior to the Expiration Date as the result of failure of
performance by Tenant, Landlord shall be entitled to recover from Tenant the
unamortized portion of any brokerage commission funded by Landlord in addition
to any other damages to which Landlord may be entitled.

 

ARTICLE XIX.  TRANSFER OF LANDLORD’S
INTEREST

 

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

 

25

 

ARTICLE XX.  INTERPRETATION

 

SECTION 20.1.           GENDER
AND NUMBER.  Whenever the context of
this Lease requires, the words “Landlord” and “Tenant” shall include the plural as well as the singular,
and words used in neuter, masculine or feminine genders shall include the
others.

 

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

 

SECTION 20.3.           JOINT AND
SEVERAL LIABILITY.  If more than one
person or entity is named as Tenant, the obligations imposed upon each shall be
joint and several and the act of or notice from, or notice or refund to, or the
signature of, any one or more of them shall be binding on all of them with
respect to the tenancy of this Lease, including, but not limited to, any
renewal, extension, termination or modification of this Lease.

 

SECTION 20.4.           SUCCESSORS.  Subject to Articles IX and XIX, all rights
and liabilities given to or imposed upon Landlord and Tenant shall extend to
and bind their respective heirs, executors, administrators, successors and
assigns.  Nothing contained in this
Section is intended, or shall be construed, to grant to any person other than
Landlord and Tenant and their successors and assigns any rights or remedies
under this Lease.

 

SECTION 20.5.           TIME OF
ESSENCE.  Time is of the essence with
respect to the performance of every provision of this Lease.

 

SECTION 20.6.           CONTROLLING
LAW/VENUE.  This Lease shall be
governed by and interpreted in accordance with the laws of the State of
California.  Any litigation commenced
concerning any matters whatsoever arising out of or in any way connected to
this Lease shall be initiated in the Superior Court of the county in which the
Project is located.

 

SECTION 20.7.           SEVERABILITY.  If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material
benefit by either party or the deletion of which is consented to by the party
adversely affected, shall be held invalid or unenforceable to any extent, the
remainder of this Lease shall not be affected and each term and provision of
this Lease shall be valid and enforceable to the fullest extent permitted by
law.

 

SECTION 20.8.           WAIVER
AND CUMULATIVE REMEDIES.  One or more
waivers by Landlord or Tenant of any breach of any term, covenant or condition
contained in this Lease shall not be a waiver of any subsequent breach of the
same or any other term, covenant or condition. 
Consent to any act by one of the parties shall not be deemed to render
unnecessary the obtaining of that party’s consent to any subsequent act.  No breach by Tenant of this Lease shall be
deemed to have been waived by Landlord unless the waiver is in a writing signed
by Landlord.  The rights and remedies of
Landlord under this Lease shall be cumulative and in addition to any and all
other rights and remedies which Landlord may have.

 

SECTION 20.9.           INABILITY
TO PERFORM.  In the event that either
party shall be delayed or hindered in or prevented from the performance of any
work or in performing any act required under this Lease by reason of any cause beyond
the reasonable control of that party, other than financial inability, then the
performance of the work or the doing of the act shall be excused for the period
of the delay and the time for performance shall be extended for a period
equivalent to the period of the delay. 
The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent or from the timely performance of any other
obligation under this Lease within Tenant’s reasonable control.

 

SECTION 20.10.    ENTIRE AGREEMENT.  This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further
effect.  Tenant waives its rights to rely
on any representations or promises made by Landlord or others which are not
contained in this Lease.  No verbal
agreement or implied covenant shall be held to modify the provisions of this
Lease, any statute, law, or custom to the contrary notwithstanding.

 

SECTION 20.11.    QUIET ENJOYMENT.  Upon the observance and performance of all
the covenants, terms and conditions on Tenant’s part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall have
the right of quiet enjoyment and use of the Premises for the Term without
hindrance or interruption by Landlord or any other person claiming by or through
Landlord.

 

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

 

SECTION 20.13.    INTERPRETATION.  This Lease shall not be construed in
favor of or against either party, but shall be construed as if both parties
prepared this Lease.

 

26

 

ARTICLE XXI.  EXECUTION
AND RECORDING

 

SECTION 21.1.           COUNTERPARTS.  This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.

 

SECTION 21.2.           CORPORATE,
LIMITED LIABILITY COMPANY AND PARTNERSHIP AUTHORITY.  If Tenant is a corporation, limited liability
company or partnership, Tenant represents and warrants that each individual
executing this Lease on behalf of the corporation, limited liability company or
partnership is duly authorized to execute and deliver this Lease on behalf of
the corporation, limited liability company or partnership, and that this Lease
is binding upon the corporation, limited liability company or partnership in
accordance with its terms.

 

SECTION 21.3.           EXECUTION
OF LEASE; NO OPTION OR OFFER.  The
submission of this Lease to Tenant shall be for examination purposes only, and
shall not constitute an offer to or option for Tenant to lease the
Premises.  Execution of this Lease by
Tenant and its return to Landlord shall not be binding upon Landlord,
notwithstanding any time interval, until Landlord has in fact executed and
delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.

 

SECTION 21.4.           RECORDING.  Tenant shall not record this Lease without
the prior written consent of Landlord. 
Tenant, upon the request of Landlord, shall execute and acknowledge a “short form” memorandum of this Lease for recording purposes.

 

SECTION 21.5.           AMENDMENTS.  No amendment or termination of this Lease
shall be effective unless in writing signed by authorized signatories of Tenant
and Landlord, or by their respective successors in interest.  No actions, policies, oral or informal
arrangements, business dealings or other course of conduct by or between the
parties shall be deemed to modify this Lease in any respect.

 

SECTION 21.6.           EXECUTED
COPY.  Any fully executed photocopy
or similar reproduction of this Lease shall be deemed an original for all
purposes.

 

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

 

ARTICLE XXII. 
MISCELLANEOUS

 

SECTION 22.1.           NONDISCLOSURE
OF LEASE TERMS.  Tenant acknowledges
and agrees that the terms of this Lease are confidential and constitute
proprietary information of Landlord. 
Disclosure of the terms could adversely affect the ability of Landlord
to negotiate other leases and impair Landlord’s relationship with other
tenants.  Accordingly, Tenant agrees that
it, and its partners, officers, directors, employees and attorneys, shall not
intentionally and voluntarily disclose, by public filings or otherwise, the
terms and conditions of this Lease (“Confidential
Information”) to any third party, either directly or indirectly,
without the prior written consent of Landlord, which consent may be given or
withheld in Landlord’s sole and absolute discretion.  The foregoing restriction shall not apply if
either: (i) Tenant is required to disclose the Confidential Information in
response to a subpoena or other regulatory, administrative or court order, (ii)
Tenant is required to disclose the Confidential Information to, or file a copy
of this Lease with, any governmental agency or any stock exchange; provided
however, that if disclosure of the Confidential Information is required by
subpoena or other regulatory, administrative or court order, Tenant shall
provide Landlord with as much advance notice of the possibility of such
disclosure as practical so that Landlord may attempt to stop such disclosure or
obtain an order concerning such disclosure. 
In addition, Tenant may disclose the terms of this Lease to (i)
prospective assignees of this Lease and prospective subtenants under this Lease
with whom Tenant is actively negotiating such an assignment or sublease, (ii)
to Tenant’s attorneys, accountants and financial advisors, and (iii) in
connection with any acquisition of Tenant by merger, consolidation,
nonbankruptcy reorganization, or government action, a sale of substantially all
of Tenant’s assets, any sale or transfer of Tenant’s capital stock or any financing
by Tenant.

 

SECTION 22.2.           GUARANTY.  [Intentionally Deleted]

 

SECTION 22.3.           CHANGES
REQUESTED BY LENDER.  If, in
connection with obtaining financing for the Project, the lender shall request
reasonable modifications in this Lease as a condition to the financing, Tenant
will not unreasonably withhold or delay its consent, provided that the
modifications do not materially increase the obligations of Tenant or
materially and adversely affect the leasehold interest created by this Lease.

 

SECTION 22.4.           MORTGAGEE
PROTECTION.  No act or failure to act
on the part of Landlord which would otherwise entitle Tenant to be relieved of
its obligations hereunder shall result in such a release or termination unless
(a) Tenant has given notice by registered or certified mail to any beneficiary
of a deed of trust or mortgage covering the Building whose address has been
furnished to Tenant and (b) such beneficiary is afforded a reasonable
opportunity to cure the default by Landlord (which in no event shall be less than
sixty (60) days), including, if necessary to effect the cure, time to obtain
possession of the Building by power of sale or judicial foreclosure provided
that such foreclosure remedy is diligently pursued.  Tenant agrees that each beneficiary of a deed
of trust or mortgage covering the Building is an express third party
beneficiary hereof, Tenant shall have no right or claim for the collection of
any deposit from such beneficiary or from any purchaser at a foreclosure sale
unless such beneficiary or purchaser shall have actually received and not
refunded the deposit, and Tenant shall comply with any

 

27

 

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

 

SECTION 22.5.           COVENANTS
AND CONDITIONS.  All of the
provisions of this Lease shall be construed to be conditions as well as
covenants as though the words specifically expressing or imparting covenants
and conditions were used in each separate provision.

 

SECTION 22.6.           SECURITY
MEASURES.  Tenant hereby acknowledges
that Landlord shall have no obligation whatsoever to provide guard service or
other security measures for the benefit of the Premises or the Project.  Tenant assumes all responsibility for the
protection of Tenant, its employees, agents, invitees and property from acts of
third parties.  Nothing herein contained
shall prevent Landlord, at its sole option, from providing security protection
for the Project or any part thereof, in which event the cost thereof shall be
included within the definition of Project Costs.

 

SECTION
22.7.           JAMS.

 

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

 

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

 

(c)                                  The
agreement herein among the parties to the Lease and any other written agreement
to arbitrate referred to herein shall be specifically enforceable under
prevailing law.

 

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

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  
	
  THE IRVINE COMPANY

  	
  RAINING DATA CORPORATION,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Steven Case

  	
   

  	
  By:

  	
  /s/ Brian C. Bezdek

  	
   

  
	
   

  	
  Steven Case

  	
   

  	
  Name:

  	
  Brian C. Bezdek

  
	
   

  	
  Senior Vice President, Office Properties

  	
   

  	
  Title:

  	
  Vice President, Chief Financial Officer

  and Corporate Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Danielle M. Sim

  	
   

  	
   

  	
   

  
	
   

  	
  Danielle M. Sim, Senior Vice President,

  	
   

  	
   

  
	
   

  	
  Operations, Office Properties

  	
   

  	
   

  
							

 

28

 

EXHIBIT B

 

THE IRVINE COMPANY – INVESTMENT PROPERTIES
GROUP

 

HAZARDOUS MATERIAL SURVEY FORM

 

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

 

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

 

THE IRVINE COMPANY MANAGEMENT OFFICE

8105 Irvine Center Drive, Suite 350

Irvine, CA 92618

 

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

 

1.                                       GENERAL
INFORMATION.

 

	
  Name of Responding Company:

  	
   

  
	
  Check all that apply:

  	
   

  	
  Tenant           o

  	
   

  	
   

  	
   

  	
  Contractor           o

  	
   

  
	
   

  	
   

  	
  Prospective    o

  	
   

  	
   

  	
   

  	
  Existing  o

  	
   

  

 

Mailing Address:

Contact person & Title:

Telephone Number:  (  )

 

Current TIC Tenant(s):

 

Address of Lease Premises:

 

Length of Lease or Contract Term:

 

Prospective TIC Tenant(s):

 

Address of Leased Premises:

 

Address of Current Operations:

 

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

 

 

 

 

2.                                       HAZARDOUS
MATERIALS.  For the purposes of this
Survey Form, the term “hazardous material” means any raw material, product or
agent considered hazardous under any state or federal law.  The term does not include wastes which are
intended to be discarded.

 

2.1                                 Will any hazardous
materials be used or stored on site?

 

	
  Chemical Products

  	
   

  	
  Yes

  	
  o

  	
   

  	
  No

  	
  o

  
	
  Biological Hazards/

  Infectious Wastes

  	
   

  	
  Yes

  	
  o

  	
   

  	
  No

  	
  o

  
	
  Radioactive Materials

  	
   

  	
  Yes

  	
  o

  	
   

  	
  No

  	
  o

  
	
  Petroleum Products

  	
   

  	
  Yes

  	
  o

  	
   

  	
  No

  	
  o

  

 

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

 

1

 

	
  Hazardous
  Materials

  	
   

  	
  Location and Method

  of Storage

  	
   

  	
  Quantity

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

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

 

 

 

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

 

3.1                                 List any hazardous
waste generated or to be generated on the premises, and indicate the quantity
generated on a monthly basis.

 

	
  Hazardous
  Materials

  	
   

  	
  Location and Method

  of Storage

  	
   

  	
  Quantity

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

	
  Hazardous
  Materials

  	
   

  	
  Location and Method

  of Storage

  	
   

  	
  Disposal Method

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

Yes o   No  o

 

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

 

 

 

 

3.4                                 Attach
copies of any hazardous waste permits or licenses issued to your company with
respect to its operations on the premises.

 

4.                                                                                       SPILLS

 

4.1                                 During the past year,
have any spills or releases of hazardous materials occurred on the premises?           Yes
o                                                No
o

 

2

 

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

 

 

 

4.2                                 Were any agencies
notified in connection with such spills?                      Yes  o              No
o

 

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

 

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

Yes  o                                                         No  o

 

If so, briefly describe the actions
taken.  Attach copies of any clearance
letters obtained from any regulatory agencies involved and the results of any
final soil or groundwater sampling done upon completion of the clean-up
work.  

 

 

5.                                                                                       WASTEWATER
TREATMENT/DISCHARGE

 

 

 

5.1                                 Do you discharge
industrial wastewater to:

 

	
       storm drain?

  	
   

  	
       sewer?

  
	
   

  	
   

  	
   

  
	
       surface water?

  	
   

  	
       no industrial discharge

  

 

5.2                                 Is your industrial
wastewater treated before discharge?                                            Yes  o   No  o

 

If yes, describe the type of treatment conducted. 

 

 

 

5.3                                 Attach
copies of any wastewater discharge permits issued to your company with respect
to its operations on the premises.

 

6.                                       AIR
DISCHARGES.

 

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

Yes  o                                                          No  o

 

6.2                                 Do you operate any
equipment that require air emissions permits?

Yes  o                                                          No  o

 

6.3                                 Attach
copies of any air discharge permits pertaining to these operations.

 

7.                                       HAZARDOUS
MATERIALS DISCLOSURES.

 

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

 

7.2                                 Has your company
prepared a Hazardous Materials Disclosure – Chemical Inventory and Business
Emergency Plan or similar disclosure document pursuant to state or county
requirements?                     Yes  o         No  o

 

If so, attach a copy.

 

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

 

If so, describe the procedures followed to comply with these
requirements. 

 

 

 

7.4                                 Is
your company subject to OSHA Hazard Communication Standard Requirements?

Yes  o                                                          No  o

 

3

 

If so, describe the procedures followed to
comply with these requirements.  

 

 

 

8.                                                                                       ANIMAL
TESTING.

 

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

 

If so, describe the activity. 

 

 

 

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

 

If so, describe the activity. 

 

 

 

9.                                                                                       ENFORCEMENT
ACTIONS, COMPLAINTS.

 

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

 

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

 

 

 

9.2                                 Has
your company ever received any request for information, notice of violation or
demand letter, complaint, or inquiry regarding environmental compliance or
health and safety?

Yes   o             No   o

 

9.3                                 Has
an environmental audit ever been conducted which concerned operations or
activities on premises occupied by you?           Yes  o           No  o

 

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

 

 

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Date:

  	
   

  

 

4

 

EXHIBIT
C

 

LANDLORD’S
DISCLOSURES

 

SPECTRUM

 

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

 

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

 

1

 

EXHIBIT
D

 

TENANT’S
INSURANCE

 

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

 

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

 

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

 

3.                                       All
policies of insurance required to be carried by Tenant pursuant to this Exhibit D
containing a deductible exceeding Twenty Thousand Dollars ($20,000.00) per
occurrence must be approved in writing by Landlord prior to the issuance of
such policy.  Tenant shall be solely
responsible for the payment of all deductibles.

 

4.                                       All
policies of insurance required to be carried by Tenant pursuant to this Exhibit
D shall be written by responsible insurance companies authorized to do
business in the State of California and with a general policyholder rating of
not less than “A-” and financial rating of not less than “VIII” in the most
current Best’s Insurance Report.  Any
insurance required of Tenant may be furnished by Tenant under any blanket
policy carried by it or under a separate policy.  A true and exact copy of each paid up policy
evidencing the insurance (appropriately authenticated by the insurer) or a
certificate of insurance, certifying that the policy has been issued, provides
the coverage required by this Exhibit D and contains the required
provisions, together with endorsements acceptable to Landlord evidencing the
waiver of subrogation and additional insured provisions required below, shall
be delivered to Landlord prior to the date Tenant is given the right of
possession of the Premises.  Proper
evidence of the renewal of any insurance coverage shall also be delivered to
Landlord not less than thirty (30) days prior to the expiration of the
coverage.  Landlord may at any time, and
from time to time, inspect and/or copy any and all insurance policies required
by this Lease.

 

5.                                       Each
policy evidencing insurance required to be carried by Tenant pursuant to this Exhibit D
shall contain the following provisions and/or clauses satisfactory to
Landlord:  (i) with respect to Tenant’s
commercial general liability insurance, a provision that the policy and the
coverage provided shall be primary and that any coverage carried by Landlord
shall be noncontributory with respect to any policies carried by Tenant,
together with a provision including Landlord, the Additional Insureds
identified in Item 11 of the Basic Lease Provisions, and any other parties in
interest designated by Landlord, as additional insureds; (ii) except with
respect to Tenant’s commercial general liability insurance, a waiver by the
insurer of any right to subrogation against Landlord, its agents, employees,
contractors and representatives which arises or might arise by reason of any
payment under the policy or by reason of any act or omission of Landlord, its
agents, employees, contractors or representatives; and (iii) a provision that
the insurer will not cancel or reduce the coverage provided by the policy
without first giving Landlord thirty (30) days prior written notice.

 

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

 

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

 

1

 

EXHIBIT E

 

RULES AND
REGULATIONS

 

This Exhibit sets forth the rules and regulations governing Tenant’s
use of the Premises leased to Tenant pursuant to the terms, covenants and
conditions of the Lease to which this Exhibit is attached and therein made part
thereof.  In the event of any conflict or
inconsistency between this Exhibit and the Lease, the Lease shall control.

 

1.                                       Tenant
shall not place anything or allow anything to be placed near the glass of any
window, door, partition or wall, which may appear unsightly from outside the
Premises.

 

2.                                       The
walls, walkways, sidewalks, entrance passages, elevators, stairwells, courts
and vestibules shall not be obstructed or used for any purpose other than
ingress and egress of pedestrian travel to and from the Premises, and shall not
be used for smoking, loitering or gathering, or to display, store or place any
merchandise, equipment or devices, or for any other purpose.  The walkways, sidewalks, entrance
passageways, courts, vestibules and roof are not for the use of the general
public and Landlord shall in all cases retain the right to control and prevent
access thereto by all persons whose presence in the judgment of the Landlord
shall be prejudicial to the safety, character, reputation and interests of the
Building and its tenants, provided that nothing herein contained shall be
construed to prevent such access to persons with whom Tenant normally deals in
the ordinary course of Tenant’s business unless such persons are engaged in
illegal activities.  Smoking is permitted
outside the building and within the project only in areas designated by Landlord.  No tenant or employee or invitee or agent of
any tenant shall be permitted upon the roof of the Building without prior
written approval from Landlord.

 

3.                                       No
awnings or other projection shall be attached to the outside walls of the
Building.  No security bars or gates,
curtains, blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of the Premises without the prior written
consent of Landlord.  Neither the interior
nor exterior of any windows shall be coated or otherwise sunscreened without
the express written consent of Landlord.

 

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

 

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

 

6.                                       Landlord
shall direct electricians as to the manner and location of any future telephone
wiring.  No boring or cutting for wires
will be allowed without the prior consent of Landlord.  The locations of the telephones, call boxes
and other office equipment affixed to the Premises shall be subject to the
prior written approval of Landlord.

 

7.                                       The
Premises shall not be used for manufacturing or for the storage of merchandise
except as permitted in the Lease.  No
exterior storage shall be allowed at any time without the prior written
approval of Landlord.  The Premises shall
not be used for cooking or washing clothes without the prior written consent of
Landlord, or for lodging or sleeping or for any immoral or illegal
purposes.  Notwithstanding anything to
the contrary herein or in the Lease, Tenant shall be permitted, without
Landlord’s consent, to use such standard kitchen appliances as are typically
found in an office kitchenette, including microwave ovens, refrigerators,
dishwashers and beverage dispensers.

 

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

 

9.                                       No
animals, except for seeing eye dogs, shall be permitted at any time within the
Premises.

 

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

 

1

 

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

 

12.                                 No equipment of any
type shall be placed on the Premises which in Landlord’s opinion exceeds the
load limits of the floor or otherwise threatens the soundness of the structure
or improvements of the Building.

 

13.                                 Except
as permitted under the Lease or in connection with the Tenant Improvements, no
air conditioning unit or other similar apparatus shall be installed or used by
any Tenant without the prior written consent of Landlord.

 

14.                                 The
entire Premises, including vestibules, entrances, parking areas, doors,
fixtures, windows and plate glass, shall at all times be maintained in a safe,
neat and clean condition by Tenant.  All
trash, refuse and waste materials shall be regularly removed from the Premises
by Tenant and placed in the containers at the locations designated by Landlord
for refuse collection.  All cardboard
boxes must be “broken down” prior to being placed in the trash container.  All styrofoam chips must be bagged or
otherwise contained prior to placement in the trash container, so as not to
constitute a nuisance.  Pallets must be
immediately disposed of by tenant and may not be disposed of in the Landlord
provided trash container or enclosures. 
Pallets may be neatly stacked in an exterior location on a temporary
basis (no longer than 5 days) so long as Landlord has provided prior written
approval.  The burning of trash, refuse
or waste materials is prohibited.

 

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

 

16.                                 All
keys for the Premises shall be provided to Tenant by Landlord and Tenant shall
return to Landlord any of such keys so provided upon the termination of the
Lease.  Tenant shall not change locks or
install other locks on doors of the Premises, without the prior written consent
of Landlord.  In the event of loss of any
keys furnished by Landlord for Tenant, Tenant shall pay to Landlord the costs
thereof.  Upon the termination of its
tenancy, Tenant shall deliver to Landlord all the keys to lobby(s), suite(s)
and telephone & electrical room(s) which have been furnished to Tenant or
which Tenant shall have had made.

 

17.                                 No
person shall enter or remain within the Project while intoxicated or under the
influence of liquor or drugs.  Landlord
shall have the right to exclude or expel from the Project any person who, in
the absolute discretion of Landlord, is under the influence of liquor or drugs.

 

18.                                 The
moving of large or heavy objects shall occur only between those hours as may be
designated by, and only upon previous written notice to, Landlord, and the
persons employed to move those objects in or out of the Building must be
reasonably acceptable to Landlord. 
Without limiting the generality of the foregoing, no freight, furniture
or bulky matter of any description shall be received into or moved out of the
lobby of the Building or carried in the elevator.

 

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

 

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

 

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

 

2

 

EXHIBIT X

 

INDUSTRIAL WORK LETTER

 

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

 

I.                                         ARCHITECTURAL
AND CONSTRUCTION PROCEDURES.

 

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

 

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

 

C.                                     Not later than
April 1, 2005, Landlord’s architect and engineers shall prepare and deliver to
Tenant working drawings and specifications for the Tenant Improvements Work
based on the approved Preliminary Plan (“Working Drawings and
Specifications”). Tenant shall have five (5) business days from the
receipt thereof to approve or disapprove the Working Drawings and
Specifications.  Tenant shall not
unreasonably withhold or delay its approval, and any disapproval or requested
modification shall be limited to items not consistent with the approved
Preliminary Plan or Preliminary Cost Estimate, subject to Tenant’s right to
request a Change pursuant to Section I.D below. 
Should Tenant disapprove the Working Drawings and Specifications, such
disapproval shall be accompanied by specific reasons for disapproval and a
detailed list of requested revisions. 
The parties shall confer and negotiate in good faith to reach agreement
on revisions to the Working Drawings and Specifications, and the Preliminary
Cost Estimate as a consequence of such revisions.  Any revision so requested by Tenant and
accepted by Landlord shall be incorporated into a revised set of Working
Drawings and Specifications, and Tenant shall approve same in writing within
five (5) business days of receipt without further revision.  Subject to the provisions of Section I.G
below, Tenant’s failure to comply in a timely manner with any of the
requirements of this paragraph shall constitute a Tenant Delay as defined
below.

 

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

 

1

 

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

 

E.                                      Landlord may
consent in writing, in its reasonable discretion, to Tenant’s request for a
Change, including any modification of a Standard
Improvement shown in the Preliminary Plan to other than a Standard
Improvement (a “Non-Standard Improvement”)
or any other modification of the Working Drawings and Specifications, if
requested in writing by Tenant. 
Notwithstanding the foregoing, Landlord shall in no event be required to
approve any Non-Standard Improvement if Landlord determines that such
Improvement:  (i) is of a lesser
quality than the corresponding Standard Improvements, (ii) fails to
conform to applicable governmental requirements, (iii) requires building
services beyond the level normally provided to other tenants, (iv) would delay
construction of the Tenant Improvements beyond the Estimated Commencement Date
and Tenant declines to accept such delay in writing as a Tenant Delay, (v)
interferes in any manner with the proper functioning of, or Landlord’s access
to, any mechanical, electrical, plumbing or HVAC systems, facilities or
equipment in or serving the Building,  or
(vi) would have an adverse aesthetic impact to the Premises or cause additional
expenses to Landlord in reletting the Premises. 
All Standard Improvements and Non-Standard Improvements shall become the
property of Landlord and shall be surrendered with the Premises at the end of
the Term; except that Landlord may, by notice to Tenant given at the time of
Landlord’s approval of any Non-Standard Improvements incorporated into the
Tenant Improvements as a “Change”, require Tenant either to remove all or any
of such Non-Standard Improvements, to repair any damage to the Premises or the
Common Area arising from such removal, and to replace such Non-Standard Improvements
with the applicable Building Standard, or to reimburse Landlord for the
reasonable cost of such removal, repair and replacement upon demand.  Any such removals, repairs and replacements
by Tenant shall be completed by the Expiration Date, or sooner termination of
this Lease.

 

F.                                      Promptly
following the approval of the Working Drawings and Specifications by the
parties pursuant to Section I.C. above, Landlord shall submit the Working
Drawings and Specifications to a competitive bidding process involving at least
three (3) licensed and reputable general contractors.  If requested by Tenant, Landlord shall
provide copies of the bid responses to Tenant. 
After adjustments for any inconsistent assumptions to reflect an “apples
to apples” comparison, Landlord shall select the lowest qualified bidder. In
the event Landlord selects other than the lowest bidder, it shall do so based
on commercially reasonable factors which it shall demonstrate to Tenant.  Upon selection of the bidder, Landlord shall
enter into a “lump sum” or “fixed price” construction contract with the chosen
contractor (the “TI Contractor”)
in the amount of the bid so selected for the construction of the Tenant
Improvements in accordance with the approved and final Working Drawings and Specifications
(the “TI Contract”).  The TI Contractor is the contractor only of
Landlord and Tenant shall have no liability to the Contractor of the TI
Contract.

 

G.                                     Notwithstanding
any provision in the Lease to the contrary, and not by way of limitation of any
other rights or remedies of Landlord, if Tenant fails to comply with any of the
time periods specified in this Work Letter, fails otherwise to approve or
reasonably disapprove any submittal within the time period specified herein for
such response (or if no time period is so specified, within five (5) days
following Tenant’s receipt thereof), fails to provide all of the Programming
Information requested by Landlord within the time period specified therefor,
fails to approve in writing the Working Drawings and Specifications within the
time specified therefor, fails to timely deliver payment of any net increased
costs specified in a Change Order in accordance with Section I.D above,
requests any Changes and thereafter accepts a Change Order containing Landlord’s
good faith estimate of resulting Tenant Delay, or otherwise actually delays in
any manner for more than one (1) business day following written or oral
notification thereof the completion of the Tenant Improvements (including
without limitation by specifying materials that are not readily available) or
the issuance of an occupancy certificate beyond the Estimated Commencement Date
(any of the foregoing being referred to in this Lease as a “Tenant Delay”), then, subject to and as provided in Section
3.2 of the Lease, the date Tenant otherwise would commence the payment of rent
under the Lease shall be advanced by the number of days that Landlord
reasonably determines that it was actually delayed in delivering the Premises
to Tenant following the Estimated Commencement Date due to such Tenant
Delay.  Any Change Order delivered by
Landlord shall include a good faith estimate of the amount of any Tenant Delay
and a binding estimate of the net cost increase above the Preliminary Cost
Estimate (taking into account any cost savings attributable to such Change
Order together with previous Change Orders). 
Promptly upon Landlord’s realization that the actual amount of Tenant
Delay due to Change Order will exceed the amount of delay in Landlord’s good
faith estimate, Landlord shall advise Tenant orally or in writing of the
additional amount of delay Landlord estimates in its good faith will result
therefrom.  Should Landlord determine
that the rent

 

2

 

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

 

H.                                    Landlord shall
permit Tenant and its agents to enter the Premises for at least the fourteen
(14) days prior to the Commencement Date of the Lease in order that Tenant may
install fixtures, furniture, cabling and other personal property through Tenant’s
own contractors prior to the Commencement Date. 
Any such work shall be subject to Landlord’s prior written approval, and
shall be performed in a manner and upon terms and conditions and at times satisfactory
to Landlord’s representative.  The
foregoing license to enter the Premises prior to the Commencement Date is,
however, conditioned upon Tenant’s contractors and their subcontractors and
employees working in harmony and not interfering with the work being performed
by Landlord as determined by Landlord in Landlord’s sole and absolute
discretion.  If at any time that entry
shall cause disharmony or interfere with the work being performed by Landlord
as defined by Landlord in Landlord’s sole and absolute discretion, this license
may be withdrawn by Landlord upon twenty-four (24) hours written notice to
Tenant.  This license is further
conditioned upon the compliance by Tenant’s contractors with all requirements
imposed by Landlord on third party contractors, including without limitation
the maintenance by Tenant and its contractors and subcontractors of workers’
compensation and public liability and property damage insurance in amounts and
with companies and on forms satisfactory to Landlord, with certificates of such
insurance being furnished to Landlord prior to proceeding with any such
entry.  The entry shall be deemed to be
under all of the provisions of the Lease except as to the covenants to pay
Basic Rent and Operating Expenses. 
Landlord shall not be liable in any way for any injury, loss or damage
which may occur to any such work being performed by Tenant, the same being
solely at Tenant’s risk.

 

I.                                         Tenant hereby
designates Brian Bezdek (“Tenant’s Construction
Representative”), Telephone No. (949) 260-5149, as its agent for all
matters related to the Tenant Improvement Work, including but not by way of
limitation, for purposes of receiving notices, approving submittals and issuing
requests for Changes, and Landlord shall be entitled to rely upon authorizations
and directives of such person(s) as if given directly by Tenant.  The foregoing authorization is intended to
provide assurance to Landlord that it may rely upon the directives and decision
making of the Tenant’s Construction Representative with respect to the Tenant
Improvement Work and is not intended to limit or reduce Landlord’s right
to reasonably rely upon any decisions or directives given by other officers or
representatives of Tenant.   Tenant may
amend the designation of its Tenant’s Construction Representative(s) at any
time upon delivery of written notice to Landlord.

 

II.                                     COST
OF TENANT IMPROVEMENTS

 

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

 

B.                                          In
the event that the cost of completing the Tenant Improvement Work (including
both “hard” and “soft” costs) shall actually be reduced due solely to
Change(s) requested by Tenant (and approved by Landlord pursuant to the
applicable provisions of this Work Letter), which Change(s) have either
eliminated portions of the Tenant Improvement Work as shown in the approved
Plan and Cost Estimate or substituted materials or specifications for portions
of the Tenant Improvement Work, then Tenant may apply such savings, in an
aggregate amount of up to, but not exceeding, $2.00 per usable square foot of
the Premises, towards Tenant’s out-of-pocket moving costs incurred in moving to
the Premises.

 

III.                                 DISPUTE
RESOLUTION

 

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

 

3Exhibit 10.2

 

CREDIT AGREEMENT

 

CREDIT AGREEMENT, dated as of
the 30th day of June, 2004, by and among (a) TESSCO TECHNOLOGIES INCORPORATED,
a Delaware corporation (“TESSCO”), CARTWRIGHT COMMUNICATIONS COMPANY a
Delaware corporation, TESSCO SERVICE SOLUTIONS, INC., a Delaware corporation,
TESSCO COMMUNICATIONS INCORPORATED, a Delaware corporation, WIRELESS SOLUTIONS
INCORPORATED, a Maryland corporation, and TESSCO BUSINESS SERVICES, LLC, a
Delaware limited liability company, (all of the aforementioned entities,
including TESSCO, being hereinafter called
collectively the “Borrowers”); (b) the Lenders who are or may become a party to
this Agreement;  (c) WACHOVIA BANK,
NATIONAL ASSOCIATION, as Administrative Agent and Collateral Agent for the
Lenders, (d) SUNTRUST BANK, as Arrangement Agent.

 

STATEMENT OF PURPOSE

 

The Borrowers have requested,
and the Lenders have agreed to extend, a term loan to the Borrowers on the
terms and conditions of this Agreement.

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, such parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1                          Definitions. The following terms
when used in this Agreement shall have the meanings assigned to them below:

 

“Affiliate” means, with
respect to any Person, any other Person which directly or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, such first Person or any of its Subsidiaries.

 

“Agent” means Wachovia in
its capacity as Administrative Agent and Collateral Agent hereunder, and any
successor thereto appointed pursuant to Section 12.9.

 

“Agent’s Office” means
the office of the Agent specified in or determined in accordance with the provisions
of Section 13.1(c).

 

“Agreement” means this Credit Agreement, as
amended, restated or otherwise modified in accordance with the provisions of
Section 13.11 hereof.

 

“Applicable Law” means
all applicable provisions of constitutions, laws, statutes, ordinances, rules,
treaties, regulations, permits, licenses, approvals, interpretations and orders
of courts or Governmental Authorities and all orders and decrees of all courts
and arbitrators.

 

 

 

“Arrangement Agent” means
SunTrust Bank, in its capacity as Arrangement Agent.

 

“Assignment and Acceptance”
has the meaning assigned thereto in Section 13.10.

 

“Benefitted
Lender” has the meaning set forth in Section 4.5.

 

“Borrowing Date” means
the date upon which the Loan is to be made.

 

“Borrowers” has the meaning
given to such term in the Preamble hereto.

 

“Business Day” means (a)
for all purposes other than as set forth in clause (b) below, any day other
than a Saturday, Sunday or legal holiday on which banks in Charlotte, North
Carolina, Baltimore, Maryland and New York, New York are open for the conduct
of their commercial banking business, and (b) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
the Loan bearing interest at a rate based upon the LIBOR Rate, any day that is
a Business Day described in clause (a) and that is also a day for trading by
and between banks in Dollar deposits in the London interbank market.

 

“Change in Control” has
the meaning assigned thereto in Section 11.1(g).

 

“Closing Date” means the
date of this Agreement or such later Business Day upon which each condition
described in Section 5.2 shall be satisfied or waived in all respects in a
manner acceptable to the Agent and the Lenders, in their reasonable discretion.

 

“Code” means the Internal
Revenue Code of 1986, and the rules and regulations thereunder, each as
amended, supplemented or otherwise modified.

 

“Collateral” means the
Property covered by the Deed of Trust and any other Loan Document that may now
or hereafter be or become subject to a security interest or lien in favor of
Agent on behalf of the Lenders to secure the Obligations.

 

“Consolidated”
means, when used with reference to financial statements or financial statement
items of the Borrowers and their Subsidiaries, such statements or items on a
consolidated basis in accordance with applicable principles of consolidation
under GAAP.

 

“Debt” means, with
respect to the Borrowers and their Subsidiaries at any date and without
duplication, the sum of the following calculated in accordance with GAAP:  (a) all liabilities, obligations and
indebtedness for borrowed money including but not limited to obligations
evidenced by bonds, debentures, notes or other similar instruments of any such
Person, (b) all obligations to pay the deferred purchase price of property or
services of any such Person, (c) all obligations of any such Person as lessee
under Capital Leases, (d) all Debt of any other Person secured by a Lien on any
asset of any such Person, (e) all Guaranty Obligations of any such Person, (f)
all obligations, contingent or otherwise, of any such Person relative to the
face amount of letters of credit, whether or not drawn, and banker’s
acceptances issued for the account of any such Person, (g) all obligations of
any such Person to redeem, repurchase, exchange, defease or otherwise make
payments in

 

2

 

respect of capital stock or other securities of
such Person  and (h) all obligations
incurred by any such Person pursuant to Hedging Agreements.

 

“Deed of Trust” means
that certain Indemnity Deed of Trust of even date herewith from the Guarantor
to certain trustees for the benefit of the Agent on behalf of the Lenders,
which Deed of Trust creates a first priority Lien upon the Property.

 

“Default” means any of
the events specified in Section 11.1 which, with the passage of time, the
giving of notice or any other condition, would constitute an Event of Default.

 

“Default Rate” shall have
the meaning given to such term in Section 4.1(b) hereof.

 

“Dollars” or “$” means,
unless otherwise qualified, dollars in lawful currency of the United States.

 

 “Employee Benefit Plan” means any
employee benefit plan within the meaning of Section 3(3) of ERISA which (a) is
maintained for the employees of the Borrowers or any ERISA Affiliate or (b) has
at any time within the preceding six years been maintained for the employees of
the Borrowers or any current or former ERISA Affiliate.

 

“Environmental Laws”
means any and all federal, state and local laws, statutes, ordinances, rules,
regulations, permits, licenses, approvals, interpretations and orders of courts
or Governmental Authorities, relating to the protection of human health or the
environment, including, but not limited to, requirements pertaining to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of Hazardous Materials.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, and the rules and regulations
thereunder, each as amended, supplemented or otherwise modified.

 

“ERISA Affiliate” means
any Person who together with the Borrowers is treated as a single employer
within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section
4001(b) of ERISA.

 

“Eurodollar Reserve
Percentage” means, for any day, the percentage, if any, (expressed as a
decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%)
which is in effect for such day as prescribed by the Federal Reserve Board (or
any successor) for determining the maximum reserve requirement (including
without limitation any basic, supplemental or emergency reserves) in respect of
eurocurrency liabilities or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.

 

“Event of Default” means
any of the events specified in Section 11.1, provided that any requirement for
passage of time, giving of notice, or any other condition, has been satisfied.

 

“Existing Facility” means
the loan initially established by certain of the Borrowers, and others,
and  NationsBank, N.A. (predecessor in
interest to Bank of America, N.A.), pursuant to a

 

3

 

Loan Agreement dated July 16, 1996, as the same
may from time to time have been amended, restated, supplemented, or otherwise
modified.

 

“Extension of Credit”
means, as to any Lender at any time, an amount equal to the principal amount of
the portion of the Loan advanced by such Lender and then outstanding.

 

“FDIC” means the Federal
Deposit Insurance Corporation, or any successor thereto.

 

“Fiscal Year” means the
fiscal year of the Borrowers and their Subsidiaries of 52 or 53 weeks ending on
the Sunday following, on, or between March 26 and April 1 of each calendar
year.

 

“GAAP” means generally
accepted accounting principles, as recognized by the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board,
consistently applied and maintained on a consistent basis for the Borrowers and
their Subsidiaries throughout the period indicated and consistent with the
prior financial practice of the Borrowers and their Subsidiaries.

 

“Governmental Approvals”
means all authorizations, consents, approvals, licenses and exemptions of,
registrations and filings with, and reports to, all Governmental Authorities.

 

“Governmental Authority”
means any nation, province, state or political subdivision thereof, and any
government or any Person exercising executive, legislative, regulatory or
administrative functions of or pertaining to government, and any corporation or
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.

 

“Guarantor” means TESSCO
Incorporated, a Delaware corporation.

 

“Guaranty” means the
Guaranty Agreement of even date herewith from the Guarantor to the Lenders.

 

“Guaranty Obligation”
means, with respect to the Borrowers and their Subsidiaries, without
duplication, any obligation, contingent or otherwise, of any such Person
pursuant to which such Person has directly or indirectly guaranteed any Debt or
other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
any such Person (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, or by agreement to keep well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement condition or otherwise) or (b) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); provided, that the term Guaranty Obligation shall
not include endorsements for collection or deposit in the ordinary course of
business.

 

“Hazardous Materials”
means any substances or materials (a) which are or become defined as hazardous
wastes, hazardous substances, pollutants, contaminants, chemical substances or
mixtures or toxic substances under any Applicable Law, (b) which are
toxic, explosive, corrosive,

 

4

 

flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise harmful to human health or the environment and are or
become regulated by any Governmental Authority, (c) the presence of which
require investigation or remediation under any Applicable Law, (d) the
discharge or emission or release of which requires a permit or license under
any Applicable Law or other Governmental Approval, (e) which are deemed to
constitute a nuisance or a trespass or to pose a health or safety hazard to
persons or neighboring properties, (f) which consist of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance, or (g) which contain, without limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.

 

“Hedging Agreement” means
any agreement with respect to an interest rate swap, collar, cap, floor or a
forward rate agreement or other agreement regarding the hedging of interest
rate risk exposure executed in connection with hedging the interest rate
exposure of the Borrowers, and any confirming letter executed pursuant to such
hedging agreement, all as amended, restated or otherwise modified.

 

“Lender” means each
Person executing this Agreement as a Lender set forth on the signature pages
hereto and each Person that hereafter becomes a party to this Agreement as a
Lender pursuant to Section 13.10.

 

“Lending Office” means,
with respect to any Lender, the office of such Lender maintaining such Lender’s
portion of the Loan.

 

“LIBOR” means, at any
time, the rate of interest per annum determined on the basis of the rate for
deposits in Dollars for a one-month period which appears on the Telerate Page
3750 (rounded upward, if necessary, to the nearest one-sixteenth of one percent
(1/16%)).

 

“LIBOR Rate” means a rate
per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%)
determined by the Agent pursuant to the following formula:

 

	
  LIBOR Rate =

  	
  LIBOR

  	
   

  
	
   

  	
  1.00-Eurodollar Reserve
  Percentage

  

 

“Lien” means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.  For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement relating to such asset.

 

“Loan Documents” means,
collectively, this Agreement, the Note, any Hedging Agreement with any Lender
which is now or hereafter permitted or required hereunder, and each other
document, instrument, certificate and agreement executed and delivered by any
Borrower, any Subsidiary or their counsel in connection with this Agreement or
otherwise referred to herein or contemplated hereby, all as may be amended,
restated or otherwise modified.

 

5

 

“Loan” means the Loan in
the principal amount of $4,500,000 made available by the Lenders to the
Borrower pursuant to this Agreement.

 

“Material Adverse Effect”
means, with respect to the Borrowers, a material adverse effect on the
properties, business, prospects, operations or condition (financial or
otherwise) of the Borrowers, on a Consolidated basis, or on the ability of the
Borrowers, taken as a whole, to perform their obligations under the Loan
Documents.

 

“Multiemployer Plan”
means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which
any Borrower or any ERISA Affiliate is making, or is accruing an obligation to
make, contributions within the preceding six years.

 

“Note” means the Term
Note made by the Borrowers payable to the order of the Lenders in care of the
Agent, substantially in the form of Exhibit A hereto, evidencing the
Loan, and any amendments and modifications thereto, any substitutes therefor,
and any replacements, restatements, renewals or extension thereof, in whole or
in part.

 

“Notice of Borrowing” has
the meaning assigned thereto in Section 2.3(a).

 

“Obligations” means, in
each case, whether now in existence or hereafter arising: (a) the principal of
and interest on (including interest accruing after the filing of any bankruptcy
or similar petition) the Loan, (b) all payment and other obligations owing by
the Borrowers to any Lender or the Agent under any Hedging Agreement with any
Lender which is permitted or required hereunder, and (c) all other fees and
commissions (including reasonable attorney’s fees), charges, indebtedness,
loans, liabilities, financial accommodations, obligations, covenants and duties
owing by the Borrowers to the Lenders or the Agent, of every kind, nature and
description, direct or indirect, absolute or contingent, due or to become due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note, in each case under or in respect of this Agreement, the
Note, or any of the other Loan Documents.

 

“Officer’s Compliance Certificate”
has the meaning assigned thereto in Section 7.2.

 

“Other Taxes” has the meaning assigned thereto
in Section 4.9(b).

 

“PBGC” means the Pension
Benefit Guaranty Corporation or any successor agency.

 

“Pension Plan” means any
Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the
provisions of Title IV of ERISA or Section 412 of the Code and which (a) is
maintained for employees of the Borrowers or any ERISA Affiliates or (b) has at
any time within the preceding six years been maintained for the employees of
the Borrowers or any of their current or former ERISA Affiliates.

 

“Permitted Lien” means a
lien permitted by the provisions of Section 10.3.

 

“Person” means an
individual, corporation, limited liability company, partnership, association,
trust, business trust, joint venture, joint stock company, pool, syndicate,
sole

 

6

 

proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.

 

“Prime Rate” means, at
any time, the rate of interest per annum publicly announced from time to time
by Wachovia as its prime rate.  Each
change in the Prime Rate shall be effective as of the opening of business on
the day such change in the Prime Rate occurs. 
The parties hereto acknowledge that the rate announced publicly by
Wachovia as its Prime Rate is an index or base rate and shall not necessarily
be its lowest or best rate charged to its customers or other banks.

 

“Property” shall mean
that certain parcel of real property known as 11126 McCormick Road, Hunt
Valley, Maryland and  more particularly
described in the Deed of Trust, together with all improvements now or hereafter
located thereon.

 

“Register” has the
meaning assigned thereto in Section 13.10(d).

 

“Required Lenders” means,
at any date, any combination of holders of at least fifty-one percent (51%) of
the then-outstanding principal amount of the Loan.

 

“Responsible Officer”
means any of the following: the chief executive officer or chief financial
officer of any Borrower or any other officer of a Borrower reasonably
acceptable to the Agent.

 

“Revolving Credit Agreement”  means that certain Credit Agreement dated as
of  the 25th day of September,
2003 by and among (a) the Borrowers and the Guarantor as borrowers, (b) the
Lenders party thereto, (c) the Agent, and (d) the Arrangement Agent, as the
same may from time to time be amended, restated, supplemented, or otherwise
modified.

 

“Scheduled Maturity Date”
has the meaning given to such term in Section 2.6.

 

“Solvent” means, as to
the Borrowers and their Subsidiaries on a particular date, that any such Person
(a) has capital sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage and is able to pay its
debts as they mature, (b) owns property having a value, both at fair valuation
and at present fair saleable value, greater than the amount required to pay its
probable liabilities (including contingencies), and (c) does not believe that
it will incur debts or liabilities beyond its ability to pay such debts or
liabilities as they mature.

 

“Subsidiary” means as to any Person, any
corporation, partnership, limited liability company or other entity of which
more than fifty percent (50%) of the outstanding capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other managers of such corporation, partnership, limited
liability company or other entity is at the time, directly or indirectly, owned
by or the management is otherwise controlled by such Person (irrespective of
whether, at the time, capital stock or other ownership interests of any other
class or classes of such corporation, partnership, limited liability company or
other entity shall have or might have voting power by reason of the happening
of any contingency).  Unless otherwise
qualified references to “Subsidiary” or “Subsidiaries” herein shall refer to
those of the Borrowers.

 

7

 

“SunTrust” means SunTrust Bank and its
successors.

 

“Taxes” has the meaning
assigned thereto in Section 4.9(a).

 

“Termination Event”
means:  (a) a “Reportable Event”
described in Section 4043 of ERISA, or (b) the withdrawal of the Borrowers or
any ERISA Affiliate from a Pension Plan during a plan year in which it was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA, or (c) the termination of
a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041
of ERISA, or (d) the institution of proceedings to terminate, or the
appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e)
any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan, or (f) the partial or complete withdrawal of the
Borrowers or any ERISA Affiliate from a Multiemployer Plan, or (g) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA, or (h) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i)
any event or condition which results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.

 

“UCC” means the Uniform
Commercial Code as in effect in the State of Maryland, as amended, restated or
otherwise modified.

 

“United States” means the
United States of America.

 

“Wachovia” means Wachovia
Bank, National Association, a national banking association, and its successors.

 

SECTION 1.2                          General .  Unless otherwise specified, a reference in
this Agreement to a particular section, subsection, Schedule or Exhibit is a
reference to that section, subsection, Schedule or Exhibit of this
Agreement.  Wherever from the context it
appears appropriate, each term stated in either the singular or the plural
shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, the feminine
and the neuter.

 

SECTION 1.3                          Other
Definitions and Provisions.

 

(a)                                  Use of Capitalized Terms.  Unless
otherwise defined therein, all capitalized terms defined in this Agreement
shall have the defined meanings when used in this Agreement, the Note and the
other Loan Documents or any certificate, report or other document made or
delivered pursuant to this Agreement. 
Any capitalized term used herein without definition shall have the
meaning given to such term in the Revolving Credit Agreement.

 

8

 

(b)                                 Miscellaneous.  The words “hereof”, “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.

 

ARTICLE II

 

ADVANCE AND REPAYMENT OF LOAN

 

SECTION 2.1                          The Loan.   Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make to the Borrowers on the Closing
Date its portion of the Loan in the aggregate principal amount of $4,500,000,
as such portions are more particularly described in Schedule 1
hereto.  Amounts repaid hereunder may
not  be reborrowed.

 

SECTION 2.2                          Borrowing Procedure.

 

(a)                                  The
Borrowers may request the Lenders to advance the proceeds of the Loan by
delivering to the Lenders a duly completed writing
(a “Notice of Borrowing”) in the form attached hereto as Exhibit B,
which shall be irrevocable and shall be received not later than 10:00 a.m.
E.S.T. on the proposed Borrowing Date. 
The Lenders’ obligation to make the Loan available hereunder shall
expire on June 30, 2004; provided, however, that such obligation
shall terminate automatically upon the occurrence of a Default or an Event of
Default.  The Borrowers unconditionally
and irrevocably authorize the Lenders to make the payments specified in the
Notice of Borrowing.

 

SECTION
2.3                          Funding Procedure.

 

(a)                                  Each
Lender will make its portion of the Loan (in accordance with Schedule 1 hereto)
available to Agent, for the account of the Borrowers, at the office of Agent
located at 7 St. Paul Street, Baltimore, Maryland 21202 at 11:00 a.m.,
Baltimore time, on the Borrowing Date requested by the Borrowers in funds
immediately available to Agent; provided, however, that each Lender’s portion
of the Loan shall be due no earlier than 1.30
p.m., Baltimore time, on the Business Day of the giving of the Notice of
Borrowing to such Lender.

 

SECTION 2.4                          Repayment of the Loan.

 

(a)                                  Repayment of Loan.  The
Borrowers shall repay the outstanding principal amount of the Loan, together
with interest thereon, in accordance with the provisions of the Note.

 

(b)                                 Optional Repayments. The Borrowers
may, at their option, prepay, in whole or in part, the Loan at any time without
penalty or premium. Any such
prepayment shall be applied first to the payment of accrued and unpaid
interest, fees and other charges payable in connection with the Loan and then
to the payment of the principal balance of the Loan due at maturity, then to
the principal portion of the monthly installments, in the inverse order of
their maturity.

 

9

 

SECTION 2.5                          Use of Proceeds.   The Borrowers shall use the proceeds of the
Loan solely to refinance the Existing Facility, including the payment of fees
and expenses incurred in connection with such transaction.

 

ARTICLE III

 

[Intentionally Deleted]

 

ARTICLE IV

 

GENERAL 
PROVISIONS

 

SECTION 4.1                          Interest; Late Charges, Etc.

 

(a)                                  Subject to the terms and conditions
hereinafter set forth, so long as no Event of Default has occurred and is
then  continuing, the Loan shall bear
interest at a floating and fluctuating per
annum rate of interest equal to the applicable LIBOR Rate plus 1.75%.

 

(b)                                 Subject
to Section 11.3, upon the occurrence and during the continuance of an Event of
Default, the Loan shall bear interest at a rate per annum three percent (3%) in
excess of the rate then applicable to the Loan (the “Default Rate”).  Interest shall continue to accrue on the Note
after the filing by or against any or all of the Borrowers of any petition
seeking any relief in bankruptcy or under any act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign.

 

(c)                                  Interest Payment and Computation.  All
interest rates, fees and commissions provided hereunder shall be computed on
the basis of a 360-day year and assessed for the actual number of days
elapsed.  The interest rate payable
hereunder shall be adjusted daily upon any change in the LIBOR Rate or the
Prime Rate, as applicable.

 

(d)                                 Maximum Rate.  In no contingency or event
whatsoever shall the aggregate of all amounts deemed interest hereunder or
under the Note charged or collected pursuant to the terms of this Agreement or
pursuant to the Note exceed the highest rate permissible under any Applicable
Law which a court of competent jurisdiction shall, in a final determination,
deems applicable hereto.  In the event
that such a court determines that the Lenders have charged or received interest
hereunder in excess of the highest applicable rate, the rate in effect
hereunder shall automatically be reduced to the maximum rate permitted by
Applicable Law and the Lenders shall at the Agent’s option (i) promptly refund
to the Borrowers any interest received by the Lenders in excess of the maximum
lawful rate or (ii) shall apply such excess to the principal balance of the
Obligations.  It is the intent hereof
that the Borrowers not pay or contract to pay, and that neither the Agent nor
any Lender receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by the Borrowers under
Applicable Law.

 

10

 

SECTION 4.2                          Fees and Late Charges.

 

(a)                                  Origination
Fee.  On the Closing Date, the
Borrowers shall pay to the Agent for the benefit of the Lenders an origination
fee of $18,000.

 

(b)                                 Late Charge.  The
Borrowers shall pay a late charge equal to five percent (5%) of any payment of
principal and/or interest that is more than fifteen (15) days late.

 

SECTION 4.3                          Manner of Payment.   Each payment by the Borrowers on account of
the principal of or interest on the Loan or of any fee, commission or other
amounts payable to the Agent or the Lenders under this Agreement or the Note
shall be made not later than 1:00 p.m. (Baltimore, Maryland time) on the date
specified for payment under this Agreement to the Agent at the Agent’s Office
for the account of the Lenders (other than as set forth below) pro  rata
in accordance with their respective outstanding balances in Dollars, in
immediately available funds and without any set-off, counterclaim or deduction
whatsoever.  Any payment received after
such time but before 2:00 p.m. (Baltimore time) on such day shall be deemed a
payment on such date for the purposes of Section 11.1, but for all other
purposes shall be deemed to have been made on the next succeeding Business
Day.  Any payment received after 2:00
p.m. (Baltimore, Maryland time) shall be deemed to have been made on the next
succeeding Business Day for all purposes. 
Upon receipt by the Agent of each such payment, the Agent shall
distribute to each Lender at its address for notices set forth herein its pro
rata share of such payment and shall wire advice of the amount of such
credit to each Lender.  Each payment to
the Agent of Agent’s fees or expenses shall be made for the account of the
Agent and any amount payable to any Lender under any Section of this Agreement
relating to payments due to the Lenders shall be paid to the Agent for the
account of the applicable Lender.  If any
payment under this Agreement or the Note shall be specified to be made upon a
day which is not a Business Day, it shall be made on the next succeeding day
which is a Business Day and such extension of time shall in such case be
included in computing any interest if payable along with such payment.

 

SECTION 4.4                          Crediting of Payments and  Proceeds.   In the event that the Borrowers shall fail to
pay any of the Obligations when due and the Obligations shall have been
accelerated pursuant to Section 11.2, all payments received by the Lenders upon
the Note and the other Obligations and all net proceeds from the enforcement of
the Obligations shall be applied first to all expenses then due and payable by
the Borrowers hereunder, then to all indemnity obligations then due and payable
by the Borrowers hereunder, then to all 
fees then due and payable, then to all commitment and other fees and
commissions then due and payable,  then
to accrued and unpaid interest on the Loan, then to the principal amount of the
Loan (pro  rata in accordance with all such amounts due to the
respective Lenders).

 

SECTION 4.5                          Adjustments.  
If any Lender (a “Benefitted Lender”) shall at any time
receive any payment of all or part of the Obligations owing to it, or interest
thereon, or if any Lender shall at any time receive any collateral in respect
to the Obligations owing to it (whether voluntarily or involuntarily, by
set-off or otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender, if any, in respect of the Obligations
owing to such other Lender, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders such portion of each such other Lender’s
Extension of Credit, or shall

 

11

 

provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders; provided,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and
the purchase price and benefits returned to the extent of such recovery, but
without interest.  The Borrowers agree
that each Lender so purchasing a portion of another Lender’s Extension of
Credit may exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if such Lender were
the direct holder of such portion.

 

SECTION 4.6                          Changed
Circumstances.

 

(a)                                  Circumstances Affecting LIBOR Rate Availability.  If
at any time the Agent determines that the LIBOR Rate cannot be adequately
and reasonably determined, which determination shall be conclusive and binding
upon the Borrowers, the Agent shall immediately give notice thereof to the
Borrowers.  Thereafter, the interest rate
applicable to the Loan shall be converted to a rate equal to the Prime Rate.
The interest rate applicable to the Loan shall remain at such converted rate
until the Agent shall notify the Borrowers that the circumstances giving rise
to such condition no longer exist.

 

(b)                                 Laws Affecting LIBOR Rate Availability.  If,
after the date hereof, the introduction of, or any change in, any Applicable
Law or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any of their
respective Lending Offices) with any request or directive (whether or not
having the force of law) of any such Authority, central bank or comparable
agency, shall make it unlawful or impossible for any of the Lenders (or any of
their respective Lending Offices) to honor its obligations hereunder to
maintain the Loan at a rate based upon the LIBOR Rate, such Lender shall
promptly give written notice thereof to the Agent and the Agent shall promptly
give notice to the Borrowers and the other Lenders.  Thereafter, until the Agent notifies the
Borrowers that such circumstances no longer exist, the interest rate
applicable to the Loan shall be converted to the sum of the Prime Rate plus
1.75%.

 

(c)                                  Increased Costs.  If, after the date hereof, the
introduction of, or any change in, any Applicable Law, or in the interpretation
or administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any of the Lenders (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
of such Authority, central bank or comparable agency:

 

(i)                                     shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with respect to
the Note or shall change the basis of taxation of payments to any of the Lenders (or any of
their respective Lending Offices) of the principal of or interest on the Note
or any other amounts due under this Agreement in respect thereof (except for
changes in the rate of tax on the overall net income of any of the Lenders or
any

 

12

 

of
their respective Lending Offices imposed by the jurisdiction in which such
Lender is organized or is or should be qualified to do business or such Lending
Office is located); or

 

(ii)                                  shall impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit, insurance or capital or
similar requirement against assets of, deposits with or for the account of, or
credit extended by any of the Lenders (or any of their respective Lending
Offices) or shall impose on any of the Lenders (or any of their respective
Lending Offices) or the foreign exchange and interbank markets any other
condition affecting the Note;

 

and
the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining the Loan at a rate of interest based upon the LIBOR Rate
or to reduce the yield or amount of any sum received or receivable by any of
the Lenders under this Agreement or under the Note, then such Lender shall
promptly notify the Agent, and the Agent shall promptly notify the Borrowers in
writing of such fact and demand compensation therefor and, within fifteen (15)
days after such notice by the Agent, the Borrowers shall pay to such Lender
such additional amount or amounts as will compensate such Lender or Lenders for
such increased cost or reduction.  The
Agent will promptly notify the Borrowers of any event of which it has knowledge
which will entitle such Lender to compensation pursuant to this Section 4.6(c);
provided, that the Agent shall incur no liability whatsoever to the
Lenders or the Borrowers in the event it fails to do so.  The amount of such compensation shall be
determined, in the applicable Lender’s reasonable discretion, based upon the
assumption that such Lender funded its portion of the Loan in the London
interbank market and using any reasonable attribution or averaging methods that
such Lender deems appropriate and practical. 
A certificate of such Lender setting forth the basis for determining
such amount or amounts necessary to compensate such Lender shall be forwarded
to the Borrowers by the Agent ten (10) Business Days prior to the date upon
which the Borrowers are required to make any payment set forth in the
certificate and shall be conclusively presumed to be correct save for manifest
error.

 

SECTION 4.7                          Capital Requirements. 
 If either (a) the
introduction of, or any change in, or in the interpretation of, any Applicable
Law or (b) compliance with any guideline or request from any central bank or
comparable agency or other Governmental Authority (whether or not having the
force of law), has or would have the effect of reducing the rate of return on
the capital of, or has affected or would affect the amount of capital required
to be maintained by, any Lender or any corporation controlling such Lender as a
consequence of, or with reference to the Loan or other loans of this type, below
the rate which the Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within ten (10) Business Days
after written demand by any such Lender, the Borrowers shall pay to such Lender
from time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction.  A certificate as to such amounts submitted to
the Borrowers and the Agent by such Lender shall, in the absence of manifest
error, be presumed to be correct and binding for all purposes.

 

13

 

SECTION 4.8                          Taxes.

 

(a)                                  Payments Free and Clear.  Any and
all payments by the Borrowers hereunder or under the Note shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholding, and all liabilities with
respect thereto excluding, (i) in the case of each Lender and the Agent, income
and franchise taxes imposed by the jurisdiction under the laws of which such
Lender or the Agent (as the case may be) is organized or is or should be
qualified to do business or any political subdivision thereof and (ii) in the
case of each Lender, income and franchise taxes imposed by the jurisdiction of
such Lender’s Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as “Taxes”).  If the Borrowers shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under the
Note to any Lender or the Agent, (A) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 4.9) such Lender or
the Agent (as the case may be) receives an amount equal to the amount such
party would have received had no such deductions been made, (B) the
Borrowers shall make such deductions, (C) the Borrowers shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with applicable law, and (D) the Borrowers shall deliver to the
Agent evidence of such payment to the relevant taxing authority or other authority
in the manner provided in Section 4.6.

 

(b)                                 Stamp and Other Taxes.  The
Borrowers shall pay any present or future stamp, registration, recordation or
documentary taxes or any other similar fees or charges or excise or property
taxes, levies of the United States or any state or political subdivision
thereof or any applicable foreign jurisdiction which arise from any payment
made hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement, the Note, the other Loan Documents, or the
perfection of any rights or security interest in respect thereto (hereinafter
referred to as “Other Taxes”).

 

(c)                                  Indemnity.  The Borrowers shall indemnify
each Lender and the Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.7) paid by such Lender or the Agent (as
the case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. 
Such indemnification shall be made within thirty (30) days from the date
such Lender or the Agent (as the case may be) makes written demand therefor.

 

(d)                                 Evidence of Payment.  Within
thirty (30) days after the date of any payment of Taxes or Other Taxes, the
Borrowers shall furnish to the Agent, at its address referred to in Section
13.1, the original or a certified copy of a receipt evidencing payment thereof
or other evidence of payment satisfactory to the Agent.

 

(e)                                  Delivery of Tax Forms.  Each
Lender organized under the laws of a jurisdiction other than the United States
or any state thereof shall deliver to the Borrowers, with a copy to the Agent,
on the Closing Date or concurrently with the delivery of the relevant
Assignment and Acceptance, as applicable, (i) two United States Internal
Revenue Service Forms 4224 or Forms

 

14

 

1001, as applicable (or successor forms) properly
completed and certifying in each case that such Lender is entitled to a
complete exemption from withholding or deduction for or on account of any
United States federal income taxes, and (ii) an Internal Revenue Service Form W-8
or W-9 or successor applicable form, as the case may be, to establish an
exemption from United States backup withholding taxes.  Each such Lender further agrees to deliver to
the Borrowers, with a copy to the Agent, a Form 1001 or 4224 and Form W-8 or W-9,
or successor applicable forms or manner of certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers, certifying in the case of a Form
1001 or 4224 that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes (unless in any such case an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders such forms
inapplicable or the exemption to which such forms relate unavailable and such
Lender notifies the Borrowers and the Agent that it is not entitled to receive
payments without deduction or withholding of United States federal income
taxes) and, in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax.

 

(f)                                    Survival.  Without prejudice to the
survival of any other agreement of the Borrowers hereunder, the agreements and
obligations of the Borrowers contained in this Section 4.8 shall survive the
payment in full of the Obligations.

 

SECTION 4.9                          Security. The obligations of
the Guarantor shall be secured as provided in the Deed of Trust.

 

SECTION 4.10                    The Borrowers’ Representatives.   Each of the Borrowers hereby represents and
warrants to the Agent and the Lenders that each of them will derive benefits,
directly and indirectly, from the proceeds of the Loan, both in its separate
capacity and as a member of the integrated group to which each of the Borrowers
belong, since the successful operation of the integrated group is dependent
upon the continued successful performance of the functions of the integrated
group as a whole.  For administrative
convenience, TESSCO is hereby irrevocably appointed by each of the Borrowers as
agent for each of the Borrowers for the purpose of requesting the Loan,
receiving the proceeds of the Loan and disbursing the proceeds of the Loan
among the Borrowers.  In its capacity as
such agent, TESSCO shall have the power and authority through its authorized
officer or officers to (i) endorse any check for the proceeds of the Loan for
and on behalf of each of the Borrowers and in the name of each of the
Borrowers, and (ii) instruct the Agent or the Lenders to credit the proceeds of
the Loan as indicated in the Notice of Borrowing.  By reason of the foregoing, the Agent and
each Lender is hereby irrevocably authorized by each of the Borrowers to make
the Loan to the Borrowers for the account of the Borrowers pursuant to this
Agreement upon the request of any one of the persons who is authorized to do so
under the provisions of any applicable corporate resolutions of TESSCO.  Neither the Agent nor any Lender assumes any
responsibility or liability for any errors, mistakes and/or discrepancies in
any oral, telephonic, written or other transmissions of any instructions,
orders, requests and confirmations between the Agent or any Lender and any one
or more of the Borrowers in connection with the Loan or any other transaction
pursuant to the provisions of this Agreement, except for acts of gross
negligence and/or willful misconduct.

 

15

 

ARTICLE V

 

CLOSING; CONDITIONS OF CLOSING AND BORROWING

 

SECTION 5.1                          Closing.  
 The closing shall
take place at the offices of Ober, Kaler, Grimes & Shriver, a Professional
Corporation, at a date and time upon which the parties hereto shall mutually
agree.

 

SECTION 5.2                          Conditions to Closing and Funding of
Loan.   The obligation of the Lenders
to close this Agreement and to make the Loan is subject to the satisfaction or
waiver of each of the following conditions:

 

(a)                                  Executed Loan Documents.  This
Agreement, the Note, the Guaranty, the Deed of Trust, and the other Loan
Documents shall have been duly authorized, executed and delivered to the Agent
by the parties thereto, shall be in full force and effect and no default shall
exist thereunder, and the Borrowers shall have delivered original counterparts
of the Loan Documents (except the Note) to the Lenders.

 

(b)                                 Closing Certificates; etc.

 

(i)            Officer’s Certificate of the Borrowers and
Guarantor.  The Lenders shall have received a certificate
from a Responsible Officer of each of the Borrowers and the Guarantor, in form
and substance reasonably satisfactory to the Lenders, to the effect that all
representations and warranties of such Borrower or Guarantor contained in this
Agreement and the other Loan Documents are true, correct and complete in all
material respects; that such Borrower or Guarantor is not in violation of any
of the covenants contained in this Agreement and the other Loan Documents;
that, after giving effect to the transactions contemplated by this Agreement,
no Default or Event of Default has occurred and is continuing; and that such
Borrower or Guarantor has satisfied each of the closing conditions.

 

(ii)                                  Certificate of Secretary of the Borrowers and
Guarantor.  The Lenders shall have received a certificate
of the secretary or assistant secretary of each of the Borrowers and the
Guarantor certifying as to the incumbency and genuineness of the signature of
each officer of such Borrower or Guarantor executing Loan Documents to which it
is a party and certifying that attached thereto is a true, correct and complete
copy of (A) the articles of incorporation (or articles of organization in the
case of a limited liability company Borrower) of such Borrower or Guarantor and
all amendments thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of incorporation or organization,
(B) the bylaws (or operating agreement, as applicable) of such Borrower or
Guarantor as in effect on the date of such certifications, (C) resolutions duly
adopted by the Board of Directors (or Board of Managers, as applicable) of such
Borrower or Guarantor authorizing the borrowings contemplated hereunder and the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party, and (D) each certificate required to be
delivered pursuant to Section 5.2(b)(iii).

 

16

 

(iii)                               Certificates
of Good Standing.  To the extent
requested by the Lenders, the Lenders shall have received long-form
certificates as of a recent date of the good standing of each of the Borrowers
and the Guarantor under the laws of its jurisdiction of organization and each
other jurisdiction where any of the Borrowers or the Guarantor is qualified to
do business and a certificate of the relevant taxing authorities of such
jurisdictions certifying that such Person has filed required tax returns and
owes no delinquent taxes.

 

(iv)                              Opinions of Counsel.  The
Lenders shall have received favorable opinions of counsel to the Borrowers
addressed to the Lenders with respect to the Borrowers, the Guarantor, the Loan
Documents and such other matters as the Lenders shall reasonably request.

 

(v)                                 Tax Forms.  The Lenders shall have
received copies of the United States Internal Revenue Service forms required by
Section 4.9(e) hereof.

 

(c)                                  Lien Searches; Insurance, Etc.

 

(i)                                     Lien Search. The Lenders shall have received the results of an updated  Lien search (including a search as to
judgments, pending litigation and tax matters) made against the Guarantor under
the UCC (or applicable judicial docket) as in effect in the state of its
incorporation and in the jurisdiction in which the Property is located, indicating
among other things that the Property is free and clear of any Lien except for
Permitted Liens.

 

(ii)           Hazard and
Liability Insurance.  The Lenders
shall have received certificates of insurance, evidence of payment of all
insurance premiums for the current policy year of each, and, if requested by
the Lenders, copies (certified by a Responsible Officer) of all insurance
policies in the form required by this Agreement and otherwise in form and
substance reasonably satisfactory to the Lenders in all respects.

 

(d)                                 Consents; Defaults.

 

(i)                                     Governmental and Third Party Approvals.  The
Borrowers shall have obtained all necessary approvals, authorizations and
consents of any Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this Agreement
and the other Loan Documents.

 

(ii)           No Injunction, Etc.  No
action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any Governmental Authority to enjoin,
restrain, or prohibit, or to obtain substantial damages in respect of, or which
is related to or arises out of this Agreement or the other Loan Documents or
the consummation of the transactions contemplated hereby or thereby, or which,
in the Lenders’ sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement and such other Loan Documents.

 

(iii)                               No Event of
Default.  No Default or Event of
Default shall have occurred and be continuing.

 

17

 

(e)                                  Financial Matters.

 

(i)                                     Financial Statements.  The
Lenders shall have received the audited Consolidated and consolidating
financial statements of the Borrowers and their Subsidiaries for the fiscal
year ending March 28, 2004, in form and substance reasonably satisfactory to
the Lenders.

 

(ii)           Payment at
Closing.  The Borrowers shall have
paid the fees set forth or referenced in Section 4.2 and any other accrued and
unpaid fees or commissions due hereunder (including, without limitation,
reasonable legal fees and expenses) to the Agent and the Lenders, and to any
other Person such amount as may be due thereto in connection with the
transactions contemplated hereby, including all taxes, fees and other charges
in connection with the execution, delivery, recording, filing and registration
of any of the Loan Documents.

 

(f)                                    Title
Insurance.  An ALTA standard loan
form mortgagee’s title insurance policy or commitment to issue such mortgagee’s
title insurance policy in the amount of not less than $4,500,000 issued by
Chicago Title Insurance Company (the “Title Company”), insuring that (i) the
Guarantor holds title in fee simple to the Property, (ii) the lien of the Deed
of Trust is a valid first lien thereon subject only to such exceptions as have
been approved by the Agent and the Lenders, and (iii) the Property is free and
clear of all liens, claims and encumbrances other than those approved by the
Agent and the Lenders in their discretion. 
Such policy or commitment shall (i) contain such endorsements and
affirmative coverage as the Lenders may reasonably  request, in form and substance reasonably
satisfactory to the Agent and the Lenders, and (ii) be accompanied by copies of
all documents related to all proposed exceptions.

 

(g)                                 Appraisals.  An appraisal of the Property by an appraiser
and in form and content satisfactory to the Agent and the Lenders in their
discretion.  The appraisal shall be
performed at the sole cost and expense of the Borrowers.  In no event shall the amount advanced under
the Loan exceed 75% of the appraised unencumbered value of the Property.

 

(h)                                 Survey.   A survey of the Property certified by an
independent registered land surveyor, confirming the legal description of the
Property, showing the location of all roads, easements or rights of way
affecting the Property, and containing such certifications as the Title Company
shall require.

 

(i)                                     Environmental
Assessment.  A current Phase I
environmental assessment report for the Property, prepared by an independent
environmental engineer engages by the Borrower and approved by the Lenders, in
form and content satisfactory to the Lenders and the Agent, confirming the
absence of any Hazardous Materials on the Property, the presence of which is
prohibited under any applicable state or federal laws.

 

(j)                                     Miscellaneous.

 

(i)                                     Notice of Borrowing.  The
Agent shall have received a Notice of Borrowing from the Borrowers in
accordance with Section 2.3(a).

 

18

 

(ii)                                  Proceedings and Documents.  All
opinions, certificates and other instruments and all proceedings in connection
with the transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Lenders.  The Lenders shall have received copies of all
other instruments and other evidence as the Lenders may reasonably request, in
form and substance reasonably satisfactory to the Lenders, with respect to the
transactions contemplated by this Agreement and the taking of all actions in connection
therewith.

 

(iiiii)                         Existing Facility.  The
Existing Facility shall be repaid in full and terminated and all collateral
security therefor shall be released, and the Agent shall have received a
pay-off letter in form and substance reasonably satisfactory to it evidencing
such repayment, termination, reconveyance and release.

 

(iv)          Due Diligence and Other Documents.  The
Borrowers shall have delivered to the Agent such other documents, certificates
and opinions as the Lenders may reasonably request.

 

(k)                                  Continuation of Representations and Warranties.  The
representations and warranties contained in Article VI shall be true and
correct on and as of such borrowing or issuance date with the same effect as if
made on and as of such date; except for any representation and warranty made as
of an earlier date, which representation and warranty shall remain true and
correct as of such earlier date.

 

(l)                                     No Existing Default.  No
Default or Event of Default shall have occurred and be continuing hereunder on
the Borrowing Date with respect to the Loan or after giving effect to the Loan.

 

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF THE BORROWERS

 

SECTION 6.1                          Representations and Warranties.   To induce the Agent and the Lenders to enter
into this Agreement and to induce the Lenders to make the Loan, the Borrowers
hereby represent and warrant to the Agent and the Lenders both before and after
giving effect to the transactions contemplated hereunder that:

 

(a)                                  Organization; Power; Qualification.  Each of
the Borrowers is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation, has the power
and authority to own its properties and to carry on its business as now being
and hereafter proposed to be conducted and is duly qualified and authorized to
do business in each jurisdiction in which the character of its properties or
the nature of its business requires such qualification and authorization and
where failure to be so qualified would have a material adverse effect on such
Borrower.

 

(b)                                 Authorization of Agreement, Loan Documents and
Borrowing. Each of the Borrowers
and their Subsidiaries has the right, power and authority and has taken all
necessary

 

19

 

corporate and other action to authorize the
execution, delivery and performance of this Agreement and each of the other
Loan Documents to which it is a party in accordance with their respective
terms.  This Agreement and each of the
other Loan Documents have been duly executed and delivered by the duly
authorized officers of the Borrowers and each of their Subsidiaries party
thereto, and each such document constitutes the legal, valid and binding
obligation of the Borrowers or their Subsidiary party thereto, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar state or federal
debtor relief laws from time to time in effect which affect the enforcement of
creditors’ rights in general and the availability of equitable remedies.

 

(c)                                  Compliance of Agreement, Loan Documents and Borrowing
with Laws, Etc.  The execution, delivery and performance by
the Borrowers and their Subsidiaries of the Loan Documents to which each such
Person is a party, in accordance with their respective terms, the borrowings
hereunder and the transactions contemplated hereby do not and will not, by the
passage of time, the giving of notice or otherwise, (i) require any
Governmental Approval which has not been obtained or violate any Applicable Law
relating to the Borrowers, (ii) conflict with, result in a breach of or
constitute a default under the articles of incorporation, bylaws or other
organizational documents of any of the Borrowers or a material default under
any indenture, agreement or other instrument to which such Person is a party or
by which any of its properties may be bound or any Governmental Approval
relating to such Person which would have a material adverse effect on any
Borrower, or (iii) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or hereafter acquired by such
Person (other than Liens, if any) arising under the Loan Documents.

 

(d)                                 Compliance with Law; Governmental Approvals.  Each of
the Borrowers (i) has all Governmental Approvals required by any Applicable Law
for it to conduct its business, each of which is in full force and effect, is
final and not subject to review on appeal and is not the subject of any pending
or, to the best of its knowledge, threatened attack by direct or collateral
proceeding, and (ii) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable Laws relating to
it or any of its respective properties, the noncompliance with which would have
a material adverse effect on such Borrower.

 

(e)                                  Tax Returns and Payments.  Each of
the Borrowers and its Subsidiaries has duly filed or caused to be filed all
federal, state, local and other tax returns required by Applicable Law to be
filed, and has paid, or made adequate provision for the payment of, all
federal, state, local and other taxes, assessments and governmental charges or
levies upon it and its property, income, profits and assets which are due and
payable pursuant to and as provided for under such returns (unless such taxes,
assessments, and governmental charges or levies are currently being contested
by the Borrowers in good faith and by appropriate proceedings, and adequate
reserves have been set aside therefor). 
No Governmental Authority has asserted any Lien (other than Permitted
Liens) or other claim against any of the Borrowers or any Subsidiary thereof
with respect to unpaid taxes which has not been discharged or resolved.  The charges, accruals and reserves on the
books of the Borrowers and any of their Subsidiaries in respect of federal,
state, local and other taxes for all Fiscal Years and portions thereof since
the organization of the Borrowers and any of their Subsidiaries are in the judgment
of the Borrowers adequate, and the Borrowers do not anticipate any additional
taxes or assessments for any of such years.

 

20

 

(f)                                    Intellectual Property Matters.  Each of
the Borrowers and their Subsidiaries owns or possesses rights to use all
franchises, licenses, copyrights, copyright applications, patents, patent
rights or licenses, patent applications, trademarks, trademark rights, trade
names, trade name rights, copyrights and rights with respect to the foregoing,
in all cases in which the failure to own or possess such rights would have a
Material Adverse Effect.  No event has
occurred which permits, or after notice or lapse of time or both would permit,
the revocation or termination of any such rights, and neither the Borrowers nor
any Subsidiary thereof is liable to any Person for infringement under
Applicable Law with respect to any such rights as a result of its business
operations.

 

(g)                                 ERISA.

 

(i)                                     As of the Closing Date, neither any Borrower nor
any ERISA Affiliate maintains or contributes to, or has any obligation under,
any Employee Benefit Plans other than those previously identified in writing to
the Lenders;

 

(ii)                                  each Borrower and each ERISA Affiliates is in
material compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder with respect to all Employee Benefit
Plans except for any required amendments for which the remedial amendment
period as defined in Section 401(b) of the Code has not yet expired.  Each Employee Benefit Plan that is intended
to be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified as to form, and each trust related to
such plan has been determined to be exempt under Section 501(a) of the
Code.  No liability has been incurred by
any Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer Plan;

 

(iii)                               No Pension Plan has
been terminated, nor has any accumulated funding deficiency (as defined in
Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code), nor has
any funding waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has any Borrower or any ERISA Affiliate
failed to make any contributions or to pay any amounts due and owing as
required by Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under Section 412 of
the Code or Section 302 of ERISA, nor has there been any event requiring any
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Pension Plan;

 

(iv)                              Neither any Borrower nor any ERISA Affiliate
has:  (A) engaged in a nonexempt
prohibited transaction described in Section 406 of the ERISA or Section 4975 of
the Code, (B) incurred any liability to the PBGC which remains outstanding
other than the payment of premiums and there are no premium payments which are
due and unpaid, (C) failed to make a required contribution or payment to a
Multiemployer Plan, or (D) failed to make a required installment or other
required payment under Section 412 of the Code, in each case, if such
transaction, liability, non-payment or failure would result in a material
adverse effect upon any of the Borrowers;

 

21

 

(v)                                 No Termination Event has occurred or is
reasonably expected to occur; and

 

(vi)                              No proceeding, claim, lawsuit and/or
investigation is existing or, to the best knowledge of the Borrowers after due
inquiry, threatened concerning or involving any (A) employee welfare benefit
plan (as defined in Section 3(1) of ERISA) currently maintained or contributed
to by any Borrower or any ERISA Affiliate, (B) Pension Plan or (C)
Multiemployer Plan.

 

(h)                                 Margin Stock.  Neither any Borrower nor any
Subsidiary thereof is engaged principally or as one of its activities in the
business of extending credit for the purpose of “purchasing” or “carrying” any “margin
stock” (as each such term is defined or used in Regulation U of the Board of
Governors of the Federal Reserve System). 
No part of the proceeds of the Loan will be used for purchasing or carrying
margin stock or for any purpose which violates, or which would be inconsistent
with, the provisions of Regulation T, U or X of such Board of Governors.

 

(i)                                     Government Regulation.  Neither
any Borrower nor any Subsidiary thereof is an “investment company” or a company
“controlled” by an “investment company” (as each such term is defined or used
in the Investment Company Act of 1940, as amended) and neither any Borrower nor
any Subsidiary thereof is, or after giving effect to the Loan will be, subject
to regulation under the Public Utility Holding Company Act of 1935 or the
Interstate Commerce Act, each as amended, or any other Applicable Law which
limits its ability to incur or consummate the transactions contemplated hereby.

 

(j)                                     Employee Relations. Each of the Borrowers and its Subsidiaries has
a stable work force in place and is not, as of the Closing Date, party to any
collective bargaining agreement nor has any labor union been recognized as the
representative of its employees except as set forth on Schedule 6.1(m)
to the Revolving Credit Agreement.  The
Borrowers know of no pending, threatened or contemplated strikes, work stoppage
or other collective labor disputes involving their employees or those of their
Subsidiaries.

 

(k)                                  Financial Statements.  The (i)
Consolidated and consolidating balance sheets of the Borrowers and their
Subsidiaries as of March 28, 2004 and the related statements of income and
retained earnings and cash flows for the Fiscal Year then ended, copies of
which have been furnished to the Lenders, are complete and correct and fairly
present the assets, liabilities and financial position of the Borrowers and
their Subsidiaries as at such dates, and the results of the operations and
changes of financial position for the periods then ended.  All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with
GAAP.  The Borrowers and their
Subsidiaries have no Debt, obligation or other unusual forward or long-term
commitment which is not fairly reflected in the foregoing financial statements
or in the notes thereto.

 

(l)                                     No Material Adverse Change.  Since
the date of the most recent audited financial statements delivered to the
Lenders, there has been no material adverse change in the properties, business,
operations, prospects, or condition (financial or otherwise) of the Borrowers

 

22

 

and their Subsidiaries and no event has occurred
or condition arisen that could reasonably be expected to have a Material
Adverse Effect.

 

(m)                               Solvency.  As of the Closing Date and
after giving effect to the Loan made hereunder, the Borrowers, on a
consolidated basis, will be Solvent.

 

(n)                                 Titles to Properties.  Each of
the Borrowers and their Subsidiaries has such title to the real property owned
by it as is necessary or desirable to the conduct of its business and valid and
legal title to all of its personal property and assets, including, but not
limited to, those reflected on the balance sheets of the Borrowers and their
Subsidiaries delivered pursuant hereto, except those which have been disposed
of by the Borrowers or their Subsidiaries subsequent to such date, which
dispositions have been in the ordinary course of business or as otherwise
expressly permitted hereunder, and except for minor imperfections in title
which do not significantly detract from the use thereof.

 

(o)                                 Liens.  None of the properties and assets of any
Borrower or any Subsidiary thereof is subject to any Lien, except Permitted
Liens.  No financing statement under the
Uniform Commercial Code of any state which names any Borrower or any Subsidiary
thereof or any of their respective trade names or divisions as debtor and which
has not been terminated, has been filed in any state or other jurisdiction upon
the authority of any Borrower or in respect of any security interest granted by
any Borrower, and neither any Borrower nor any Subsidiary thereof has signed
any such financing statement or any security agreement authorizing any secured party
thereunder to file any such financing statement, except to perfect Permitted
Liens.

 

(p)                                 Litigation.  Except for matters previously
disclosed in writing to the Lenders, there are no actions, suits or proceedings
pending nor, to the knowledge of any Borrower, threatened against or in any
other way relating adversely to or affecting any Borrower or any Subsidiary
thereof or any of their respective properties in any court or before any
arbitrator of any kind or before or by any Governmental Authority which would
have a Material Adverse Effect.

 

(q)                                 Absence of Defaults.  No event
has occurred or is continuing which constitutes a Default or an Event of
Default, or which constitutes, or which with the passage of time or giving of
notice or both would constitute, a default or event of default by any Borrower
or any Subsidiary thereof under any contract or judgment, decree or order to
which any Borrower or any Subsidiary is a party or by which any Borrower or any
Subsidiary or any of their respective properties may be bound or which would
require any Borrower or any Subsidiary to make any payment thereunder prior to
the scheduled maturity date therefor which would have a Material Adverse
Effect.

 

(r)                                    Accuracy and Completeness of Information.  All
written information, reports and other papers and data produced by or on behalf
of any Borrower or any Subsidiary thereof and furnished to the Lenders were, at
the time the same were so furnished, complete and correct in all material
respects to the extent necessary to give the recipient a true and accurate
knowledge of the subject matter.  To the
knowledge of the Borrowers, no document furnished or written statement made to
the Agent or any Lender by any Borrower or any Subsidiary thereof in connection
with the negotiation, preparation or execution of this Agreement or any of the
Loan Documents contains or

 

23

 

will contain any untrue statement of a fact
material to the creditworthiness of the Borrowers or their Subsidiaries or
omits or will omit to state a fact necessary in order to make the statements
contained therein not misleading.  No
Borrower is aware of any facts which it has not disclosed in writing to the
Agent having a Material Adverse Effect, or insofar as any Borrower can now
foresee, could reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.2                          Survival of Representations and
Warranties, Etc.
  All representations and
warranties set forth in this Article VI and all representations and warranties
contained in any certificate, or any of the Loan Documents (including but not
limited to any such representation or warranty made in or in connection with
any amendment thereto) shall constitute representations and warranties made
under this Agreement.  All representations
and warranties made under this Agreement shall be made or deemed to be made at
and as of the Closing Date, shall survive the Closing Date and shall not be
waived by the execution and delivery of this Agreement, any investigation made
by or on behalf of the Lenders or any borrowing hereunder.

 

ARTICLE VII

 

FINANCIAL INFORMATION AND NOTICES

 

Until all the Obligations have
been paid and satisfied in full, unless consent has been obtained in the manner
set forth in Section 13.11 hereof, the Borrowers will furnish or cause to be
furnished to the Lenders (a) within the time frames described in Article VII of
the Revolving Credit Agreement, each of the statements, reports, certificates
and other items described in Article VII of the Revolving Credit Agreement, and
(b) as soon as reasonably available, such other information regarding the
operations, business affairs and financial condition of the Borrowers or any of
their Subsidiaries as any Lender may reasonably request and which the Borrowers
can legally provide.

 

In the event that the Revolving
Credit Agreement is terminated or ceases to be in effect for any reason,
Borrowers agree to continue and provide to the Lenders, within the time frames
set forth in the Revolving Credit Agreement, as in effect immediately prior to
its termination, such reports, certificates and other items as are required by
the Revolving Credit Agreement, as in effect immediately prior to its
termination.

 

All written information, reports, statements and other
papers and data furnished by or on behalf of any Borrower to the Agent or any
Lender (other than financial forecasts) whether pursuant to this Article VII or
any other provision of this Agreement, or any of the other Loan Documents,
shall be, at the time the same is so furnished, complete and correct in all
material respects to the extent necessary to give the Agent or any Lender
complete, true and accurate knowledge of the subject matter based on the
Borrowers’ knowledge thereof.

 

24

 

ARTICLE VIII

 

AFFIRMATIVE COVENANTS

 

Until all of the Obligations
have been paid and satisfied in full, unless consent has been obtained in the
manner set forth in Section 13.11 hereof, the Borrowers and their Subsidiaries
on a Consolidated basis will comply with each of the covenants set forth in
Article VIII of the Revolving Credit Agreement. 
In the event that the Revolving Credit Agreement is terminated or ceases
to be effective, the Borrowers and their Subsidiaries shall continue to comply with
the provisions of Article VIII of the Revolving Credit Agreement, as in effect
immediately prior to its termination.  In
addition, the Borrower and their Subsidiaries shall:

 

SECTION 8.1                          Payment and Performance of
Obligations.
Pay and perform all Obligations under this Agreement and the
other Loan Documents in accordance with the terms hereof and thereof.

 

SECTION 8.2.                       Further Assurances.

  Make, execute and deliver all
such additional and further acts, things, deeds and instruments as the Agent or
any Lender may reasonably require to document and consummate the transactions
contemplated hereby and to vest completely in and insure the Agent and the
Lenders their respective rights under this Agreement, the Note, and the other
Loan Documents.

 

ARTICLE IX

 

FINANCIAL COVENANTS

 

Until all of the Obligations
have been paid and satisfied in full, unless consent has been obtained in the
manner set forth in Section 13.11 hereof, the Borrowers and their Subsidiaries
on a Consolidated basis will comply with each of the financial covenants set
forth in Article IX of the Revolving Credit Agreement.  In the event that the Revolving Credit
Agreement is terminated or ceases to be effective, the Borrowers and their
Subsidiaries shall continue to comply with the provisions of Article IX of the
Revolving Credit Agreement, as in effect immediately prior to its termination.

 

ARTICLE X

 

NEGATIVE COVENANTS

 

Until all of the Obligations
have been paid and satisfied in full, each Borrower agrees that it shall not,
and shall not permit any of its Subsidiaries to, fail to comply with the
provisions of Article X of the Revolving Credit Agreement.  In the event that the Revolving Credit
Agreement is terminated or shall cease to be effective, the Borrowers and their
Subsidiaries shall comply in all respect with the provisions of Article X of
the Revolving Credit Agreement as in effect immediately prior to its
termination.

 

25

 

ARTICLE XI

 

DEFAULT AND REMEDIES

 

SECTION 11.1       Events
of Default.  Each of the following
shall constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment or order of any court or any order, rule or
regulation of any Governmental Authority or otherwise:

 

(a)           Default
in Payment of Principal and Interest on Loan.  The Borrowers shall default in any payment of
principal of or interest on, the Loan or the Note when and as due (whether at
maturity, by reason of acceleration or otherwise); provided, however, that the
Borrowers shall not be deemed to be in default hereunder if a failure to make
an interest payment results from the failure of the Lenders to automatically
debit the Borrowers account as provided in Section 10(b) of the Note, if, at
the time such payment was due, such account contained sufficient funds to make
such payment in full.

 

(b)           Other
Payment Default.  The Borrowers shall
default in the payment when and as due (whether at maturity, by reason of
acceleration or otherwise) of (a) any fee payable hereunder or under any
Hedging Agreement, as and when the same becomes due and payable, or (b) the
payment of any other Obligation within ten (10) days after demand therefor.

 

(c)           Misrepresentation.  Any representation or warranty made or deemed
to be made by any of the Borrowers or any of their Subsidiaries under this
Agreement, the Loan Document or any amendment hereto or thereto, shall at any
time prove to have been incorrect or misleading in any material respect when
made or deemed made; provided, however, that in the event the Agent or the
Lenders determine that a Borrower has made a misrepresentation constituting an
Event of Default, the Agent shall notify the Borrowers, and the Borrowers shall
be permitted two (2) Business Days after the receipt of such notice to
demonstrate to the Agent and the Lenders in writing that the representation was
not a misrepresentation. Thereafter, if the Agent and the Lenders are satisfied
that such representation was not a misrepresentation, then such representation
shall no longer be the basis for an Event of Default hereunder.

 

(d)           Default
in Performance of Certain Covenants. 
The Borrowers shall default in the performance or observance of any
covenant or agreement contained in Sections 7.1, 7.2 or 7.4(a) of the Revolving
Credit Agreement, as incorporated by reference in Article VII hereof, or
Articles IX or X of this Agreement, and, in the case of any covenant contained
in Sections 7.1, 7.2, or 7.4(a) of the Revolving Credit Agreement, such default
shall remain uncured for a period of five (5) Business Days after written
notice thereof to the Borrower.

 

(e)           Default
in Performance of Other Covenants and Conditions.  The Borrowers or any Subsidiary thereof shall
default in the performance or observance of any term, covenant, condition or
agreement contained in this Agreement (other than as specifically provided for
otherwise in this Section 11.1) or any other Loan Document and such default
shall continue for a period of thirty (30) days after written notice thereof
has been given to the Borrowers by the Agent.

 

26

 

(f)            Debt
Cross-Default.  The Borrowers shall
be in default (after giving effect to any applicable grace or cure period)
under the Revolving Credit Agreement, or any Borrower or any of its
Subsidiaries shall (i) default in the payment of any Debt (other than the Note)
the aggregate outstanding amount of which Debt is in excess of $2,000,000,
beyond the period of grace, if any, provided in the instrument or agreement
under which such Debt was created, or (ii) default in the observance or
performance of any other agreement or condition relating to any Debt (other
than the  Note) the aggregate outstanding
amount of which Debt is in excess of $2,000,000 or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause, with the giving
of notice if required, any such Debt to become due prior to its stated maturity
(any applicable grace period having expired).

 

(g)           Other
Cross Defaults.  Any Borrower shall
default in the payment when due, or in the performance or observance of any
obligation or condition of any contract or judgment, decree or order to which
any Borrower or any Subsidiary is a party or by which any Borrower or any
Subsidiary or any of their respective properties may be bound or which would
require any Borrower or any Subsidiary to make any payment thereunder prior to
the scheduled maturity date therefor, which would have a Material Adverse
Effect.

 

(h)           Change in Control.  (i) Any
person or group of persons (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended) other than TESSCO shall obtain
ownership or control in one or more series of transactions of more than
forty-nine percent (49%) of the common stock of any of the other Borrowers or
more than forty-nine percent (49%) of the voting power entitled to vote in the
election of members of the board of directors of any other Borrower, or (ii)
any person or group of persons (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended), not including Robert B. Barnhill,
Jr., or interests controlled by him, shall obtain ownership or control in one
or more series of transactions of more than forty-nine percent (49%) of the
voting power entitled to vote in the election of members of the board of
directors of TESSCO (any such event described in subparts (i) and (ii) of this
Section 9.1(h) being hereinafter called a “Change in Control”).

 

(i)            Voluntary
Bankruptcy Proceeding.  The
Guarantor, any Borrower or any Subsidiary thereof shall (i) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (ii) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or composition for adjustment of debts, (iii) consent to or fail to
contest in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv) apply for or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
or liquidator of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they become
due, (vi) make a general assignment for the benefit of creditors, or (vii) take
any corporate action for the purpose of authorizing any of the foregoing.

 

(j)            Involuntary
Bankruptcy Proceeding.  A case or
other proceeding shall be commenced against the Guarantor, any Borrower or any
Subsidiary thereof in any court of

 

27

 

competent
jurisdiction seeking (i) relief under the federal bankruptcy laws (as now or
hereafter in effect) or under any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts, or (ii)
the appointment of a trustee, receiver, custodian, liquidator or the like for
the Guarantor, any Borrower or any Subsidiary thereof or for all or any
substantial part of their respective assets, domestic or foreign, and such case
or proceeding shall continue without dismissal or stay for a period of sixty
(60) consecutive days, or an order granting the relief requested in such case
or proceeding (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.

 

(k)           Failure
of Agreements.  Any material
provision of this Agreement or of any other Loan Document shall for any reason
cease to be valid and binding on any Borrower or other party thereto or any
such Person shall so state in writing.

 

(l)            Termination
Event.  Any of the following events
occurs, and a Material Adverse Effect results therefrom:  (i) any Borrower or any ERISA Affiliate fails
to make full payment when due of all amounts which, under the provisions of any
Pension Plan or Section 412 of the Code, any Borrower or any ERISA Affiliate is
required to pay as contributions thereto, (ii) an accumulated funding
deficiency occurs or exists, whether or not waived, with respect to any Pension
Plan, (iii) a Termination Event or (iv) any Borrower or any ERISA Affiliate as
employers under one or more Multiemployer Plans makes a complete or partial
withdrawal from any such Multiemployer Plan and the plan sponsor of such
Multiemployer Plans notifies such withdrawing employer that such employer has
incurred a withdrawal liability requiring payments.

 

(m)          Judgment.  A judgment or order for the payment of money
which causes the aggregate amount of all such judgments to exceed $1,000,000 in
any Fiscal Year shall be entered against the Guarantor, any Borrower or any of
its Subsidiaries by any court and such judgment or order shall continue without
discharge or stay for a period of thirty (30) days.

 

SECTION 11.2       Remedies.  Upon the occurrence of an Event of Default,
with the consent of the Required Lenders, the Agent may, or upon the request of
the Required Lenders, the Agent shall, by written notice to the Borrowers:

 

(a)           Acceleration;
Termination of Facilities.  Declare
the principal of and interest on the Loan and the Note at the time outstanding,
and all other amounts owed to the Lenders and to the Agent under this Agreement
or any of the other Loan Documents (other than any Hedging Agreement) and all
other Obligations (other than obligations owing under any Hedging Agreement),
to be forthwith due and payable, whereupon the same shall immediately become
due and payable without presentment, demand, protest or other notice of any
kind, all of which are expressly waived, anything in this Agreement or the
other Loan Documents to the contrary notwithstanding; provided, that upon
the occurrence of an Event of Default specified in Section 11.1(i) or (j), all
Obligations (other than obligations owing under any Hedging Agreement) shall
automatically become due and payable.

 

(b)           Rights
of Collection.  Exercise on behalf of
the Lenders all of the Lenders’ or the Agent’s other rights and remedies under
this Agreement, the other Loan Documents and Applicable Law, in order to
satisfy all of the Borrowers’ Obligations.

 

28

 

SECTION 11.3       Rights
and Remedies Cumulative; Non-Waiver; etc. The enumeration of the rights and
remedies of the Agent and the Lenders set forth in this Agreement is not
intended to be exhaustive and the exercise by the Agent and the Lenders of any
right or remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative, and shall be in addition to any
other right or remedy given hereunder or under the Loan Documents or that may
now or hereafter exist in law or in equity or by suit or otherwise.  No delay or failure to take action on the
part of the Agent or any Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege or shall be
construed to be a waiver of any Event of Default.  No course of dealing between the Borrowers,
the Agent and the Lenders or their respective agents or employees shall be
effective to change, modify or discharge any provision of this Agreement or any
of the other Loan Documents or to constitute a waiver of any Event of Default.

 

ARTICLE XII

 

THE AGENT

 

SECTION 12.1       Appointment.  Each of the Lenders hereby irrevocably
designates and appoints Wachovia as Administrative Agent and Collateral Agent
of such Lender under this Agreement and the other Loan Documents for the term
hereof and each such Lender irrevocably authorizes Wachovia as Agent for such
Lender to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of this Agreement
and such other Loan Documents, together with such other powers as are
reasonably incidental thereto. 
Notwithstanding any provision to the contrary elsewhere in this
Agreement or such other Loan Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the Agent.  Any reference to the Agent in this Article
XII shall be deemed to refer to the Agent solely in its capacity as Agent and
not in its capacity as a Lender.

 

SECTION 12.2       Delegation
of Duties.  The Agent may execute any
of its respective duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.  The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by the
Agent with reasonable care.

 

SECTION 12.3       Exculpatory
Provisions.  Neither the Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or the other Loan Documents (except for actions occasioned solely by
its or such Person’s own gross negligence or willful misconduct), or (b) responsible
in any manner to any of

 

29

 

the Lenders for any recitals,
statements, representations or warranties made by the Borrowers or any of their
Subsidiaries or any officer thereof contained in this Agreement or the other
Loan Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents or for any failure of the Borrowers or any of their
Subsidiaries to perform their obligations hereunder or thereunder.  The Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement, or to
inspect the properties, books or records of the Borrowers or any of their
Subsidiaries.

 

SECTION 12.4       Reliance
by the Agent.  The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrowers), independent accountants and other experts selected by the
Agent.  The Agent may deem and treat the
payee of the Note as the owner thereof for all purposes unless such Note shall
have been transferred in accordance with Section 13.10 hereof.  The Agent shall be fully justified in failing
or refusing to take any action under this Agreement and the other Loan
Documents unless it shall first receive such advice or concurrence of the
Required Lenders (or, when expressly required hereby or by any other Loan
Document, all the Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action except for its own gross negligence or willful
misconduct.  The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement and the Note in accordance with a request of the Required Lenders
(or, when expressly required hereby, all the Lenders), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Note.

 

SECTION 12.5       Notice
of Default.  The Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless it has received notice from a Lender or the Borrowers
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”.  In the event that the Agent receives such a
notice, it shall promptly give notice thereof to the Lenders.  The Agent shall take such action with respect
to such Default or Event of Default as shall be reasonably directed by the
Required Lenders; provided that unless and until the Agent shall have
received such direction, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable in the best interests of the
Lenders, except to the extent that other provisions of this Agreement
expressly require that any such action be taken or not be taken only with the
consent and authorization or the request of the Lenders or Required Lenders, as
applicable.

 

SECTION 12.6       Non-Reliance
on the Agent and Other Lenders.  Each
Lender expressly acknowledges that neither the Agent nor any of its respective
officers, directors, employees,

 

30

 

agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties to it and
that no act by the Agent hereinafter taken, including any review of the affairs
of the Borrowers or any of their Subsidiaries, shall be deemed to constitute
any representation or warranty by the Agent to any Lender.  Each Lender represents to the Agent that it
has, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrowers and their
Subsidiaries and made its own decision to make its portion of the Loan
hereunder and enter into this Agreement. 
Each Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrowers and their
Subsidiaries.  Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Agent hereunder or by the other Loan Documents, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Borrowers or any of their Subsidiaries
which may come into the possession of the Agent or any of its respective
officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or
Affiliates.

 

SECTION 12.7       Indemnification.  The Lenders agree to indemnify the Agent in
its capacity as such and (to the extent not reimbursed by the Borrowers and without
limiting the obligation of the Borrowers to do so) on a pro rata basis
according to the respective portions of the Loan, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of
the  Note) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or the other Loan Documents, or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent’s bad faith, gross negligence or willful
misconduct.  The agreements in this
Section 12.7 shall survive the payment of the Note and all other amounts
payable hereunder and the termination of this Agreement.

 

SECTION 12.8       The
Agent in Its Individual Capacity. 
The Agent and its respective Subsidiaries and Affiliates may make loans
to, accept deposits from and generally engage in any kind of business with the
Borrowers as though the Agent were not an Agent hereunder.  With respect to the Loan made by it, the
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise the same as though it were
not an Agent, and the terms “Lender” and “Lenders” shall include the Agent in
its individual capacity.

 

31

 

SECTION 12.9       Resignation
of the Agent; Successor Agent. 
Subject to the appointment and acceptance of a successor as provided
below, the Agent may resign at any time by giving notice thereof to the Lenders
and the Borrowers.  Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent, reasonably acceptable to the Borrowers, which successor shall have
minimum capital and surplus of $500,000,000. 
If no successor Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the Agent’s giving of notice of resignation, then the Agent may, on behalf of
the Lenders, appoint a successor Agent, reasonably acceptable to the Borrowers,
which successor shall have minimum capital and surplus of $500,000,000.  Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder.  After any
retiring Agent’s resignation hereunder as Agent, the provisions of this Section
12.9 shall continue in effect for its benefit in respect of any actions taken
or omitted to be taken by it while it was acting as Agent.

 

ARTICLE XIII

 

MISCELLANEOUS

 

SECTION 13.1       Notices.

 

(a)           Method
of Communication.  Except as
otherwise provided in this Agreement, all notices and communications hereunder
shall be in writing, or by telephone subsequently confirmed in writing.  Any notice shall be effective if delivered by
hand delivery or sent via telecopy, recognized overnight courier service or
certified mail, return receipt requested, and shall be presumed to be received
by a party hereto (i) on the date of delivery if delivered by hand or sent by
telecopy, (ii) on the next Business Day if sent by recognized overnight courier
service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. 
A telephonic notice to the Agent as understood by the Agent will be
deemed to be the controlling and proper notice in the event of a discrepancy
with or failure to receive a confirming written notice.

 

(b)           Addresses
for Notices.  Notices to any party
shall be sent to it at the following addresses, or any other address as to
which all the other parties are notified in writing.

 

	
  If to the Borrowers:

  	
  c/o TESSCO Technologies Incorporated

  
	
   

  	
  11126 McCormick Road

  
	
   

  	
  Hunt Valley, Maryland 21031-4302

  
	
   

  	
  Attention: Robert C. Singer, Senior Vice
  President and

  
	
   

  	
  Chief Financial Officer

  
	
   

  	
  Telephone No.: 410-229-1000

  
	
   

  	
  Telecopy No.: 410-229-1656

  

 

32

 

	
  With copies to:

  	
  Ballard Spahr Andrews & Ingersoll, LLP

  
	
   

  	
  300 East Lombard Street

  
	
   

  	
  Baltimore, Maryland 21202

  
	
   

  	
  Attention: Douglas M. Fox, Esquire

  
	
   

  	
  Telephone No.: 410-528-5600

  
	
   

  	
  Telecopy No.: 410-528-5650

  
	
   

  	
   

  
	
  If to Wachovia as Agent:

  	
  Wachovia Bank, National Association

  
	
   

  	
  7 St. Paul
  Street, 2nd Floor

  
	
   

  	
  Baltimore,
  MD 21202

  
	
   

  	
  Attention:
  Lucy C. Campbell, Vice President

  
	
   

  	
  Telephone No.: 410-332-5243

  
	
   

  	
  Telecopy No.: 410-539-0136

  
	
   

  	
   

  
	
  With copies to:

  	
  Ober, Kaler Grimes & Shriver,

  
	
   

  	
  A Professional Corporation

  
	
   

  	
  120 East Baltimore Street

  
	
   

  	
  Baltimore, Maryland 21202

  
	
   

  	
  Attention: David S. Musgrave, Esquire

  
	
   

  	
  Telephone No.: 410-347-1391

  
	
   

  	
  Telecopy No.: 410-547-0699

  
	
   

  	
   

  
	
  If to SunTrust as

  	
   

  
	
  Arrangement Agent:

  	
  SunTrust Bank

  
	
   

  	
  120 East
  Baltimore Street

  
	
   

  	
  Baltimore,
  MD 21202

  
	
   

  	
  Attention:
  Gregory Farno, Senior Vice President

  
	
   

  	
  Telephone No.: 410-986-1673

  
	
   

  	
  Telecopy No.: 410-986-1927

  
	
  With copies to:

  	
  Ober, Kaler Grimes & Shriver,

  
	
   

  	
  A Professional Corporation

  
	
   

  	
  120 East Baltimore Street

  
	
   

  	
  Baltimore, Maryland 21202

  
	
   

  	
  Attention: David S. Musgrave, Esquire

  
	
   

  	
  Telephone No.: 410-347-1391

  
	
   

  	
  Telecopy No.: 410-547-0699

  
	
   

  	
   

  
	
  If to any Lender:

  	
  To the Address set forth on Schedule 1
  hereto

  

 

(c)           Agent’s
Office.  The Agent hereby designates
its office located at the address set forth above, or any subsequent office
which shall have been specified for such purpose by written notice to the
Borrowers and Lenders, as the Agent’s Office referred to herein, to which
payments due are to be made and at which the Loan will be disbursed.

 

SECTION 13.2       Expenses;
Indemnity.  The Borrowers will (a)
pay reasonably incurred all out-of-pocket expenses of the Agent and the Lenders
in connection with (i) the preparation,

 

33

 

execution and delivery of this
Agreement and each other Loan Document, whenever the same shall be executed and
delivered, including without limitation all out-of-pocket syndication and due
diligence expenses and reasonable fees and disbursements of counsel for the
Agent and (ii) the preparation, execution and delivery of any waiver, amendment
or consent by the Agent or the Lenders relating to this Agreement or any other
Loan Document, including without limitation reasonable fees and disbursements
of counsel for the Agent, (b) pay all reasonable out-of-pocket expenses of the
Agent and each Lender actually incurred in connection with the administration
and enforcement of any rights and remedies of the Agent and the Lenders under
the Loan, including consulting with appraisers, accountants, engineers,
attorneys and other Persons concerning the nature, scope or value of any right
or remedy of the Agent or any Lender hereunder or under any other Loan Document
or any factual matters in connection therewith, which expenses shall include
without limitation the reasonable fees and disbursements of such Persons, and
(c) defend, indemnify and hold harmless the Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any losses, penalties, fines, liabilities,
settlements, damages, costs and expenses, suffered by any such Person in
connection with any claim, investigation, litigation or other proceeding
(whether or not the Agent or any Lender is a party thereto) and the prosecution
and defense thereof, arising out of or in any way connected with this
Agreement, any other Loan Document or the Loan, including without limitation
reasonable attorney’s and consultant’s fees, except to the extent that any of
the foregoing directly result from the gross negligence or willful misconduct
of the party seeking indemnification therefor.

 

SECTION 13.3       Set-off.  In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the continuance
thereof, the Lenders and any assignee or participant of a Lender in accordance
with Section 13.10 are hereby authorized by the Borrowers at any time or from
time to time, without notice to the Borrowers or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, time or demand, including, but
not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness at any time held or owing by
the Lenders, or any such assignee or participant to or for the credit or the
account of the Borrowers against and on account of the Obligations irrespective
of whether (a) the Lenders shall have made any demand under this Agreement or
any of the other Loan Documents or (b) the Agent shall have declared any or all
of the Obligations to be due and payable as permitted by Section 11.2 and
although such Obligations shall be contingent or unmatured.

 

SECTION 13.4       Governing
Law.  This Agreement, the Note and
the other Loan Documents, unless otherwise expressly set forth therein, shall
be governed by, construed and enforced in 
accordance with the laws of the State of Maryland, without reference to
the conflicts or choice of law principles thereof.

 

SECTION 13.5       Consent
to Jurisdiction.  The Borrowers
hereby irrevocably consent to the personal jurisdiction of the state and
federal courts located in the State of Maryland, in any action, claim or other
proceeding arising out of any dispute in connection with this Agreement,
the  Note and the other Loan Documents,
any rights or obligations hereunder or thereunder,

 

34

 

or the performance of such
rights and obligations.  Each Borrower
hereby irrevocably consents to the service of a summons and complaint and other
process in any action, claim or proceeding brought by the Agent or any Lender
in connection with this Agreement, the Note or the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such
rights and obligations, on behalf of itself or its property, in the manner
specified in Section 13.1.  Nothing in
this Section 13.5 shall affect the right of the Agent or any Lender to serve
legal process in any other manner permitted by Applicable Law or affect the
right of the Agent or any Lender to bring any action or proceeding against any
Borrower or its properties in the courts of any other jurisdictions.

 

SECTION 13.6       Binding Arbitration; Waiver of Jury
Trial.

 

(a)           Binding
Arbitration.  Upon demand of any
party, whether made before or after institution of any judicial proceeding, any
dispute, claim or controversy arising out of, connected with or relating to the
Note or any other Loan Document (“Disputes”), between or among parties to the
Note or any other Loan Document shall be resolved by binding arbitration as
provided herein.  Institution of a
judicial proceeding by a party does not waive the right of that party to demand
arbitration hereunder.  Disputes may
include, without limitation, tort claims, counterclaims, claims brought as
class actions, claims arising from Loan Documents executed in the future,
disputes as to whether a matter is subject to arbitration, or claims concerning any aspect of the past,
present or future relationships arising out of or connected with the Loan
Documents.  Arbitration shall be
conducted under and governed by the Commercial Financial Disputes Arbitration
Rules (the “Arbitration Rules”) of the American Arbitration Association and
Title 9 of the U.S. Code.  All
arbitration hearings shall be conducted in Baltimore, Maryland.  The expedited procedures set forth in Rule
51, et  seq. of the Arbitration Rules shall be applicable to
claims of less than $1,000,000.  All applicable
statutes of limitation shall apply to any Dispute.  A judgment upon the award may be entered in
any court having jurisdiction. 
Notwithstanding anything foregoing to the contrary, any arbitration
proceeding demanded hereunder shall begin within ninety (90) days after such
demand thereof and shall be concluded within one-hundred and twenty (120) days
after such demand.  These time
limitations may not be extended unless a party hereto shows cause for extension
and then such extension shall not exceed a total of sixty (60) days.  The panel from which all arbitrators are
selected shall be comprised of licensed attorneys.  The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted.  The parties hereto do not
waive any applicable Federal or state substantive law except as provided
herein.  Notwithstanding the foregoing,
this paragraph shall not apply to any Hedging Agreement that is a Loan
Document.

 

(b)           Jury
Trial. THE AGENT, EACH LENDER AND THE BORROWERS
HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE
IRREVOCABLY WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

 

35

 

(c)           Preservation
of Certain Remedies.  Notwithstanding
the preceding binding arbitration provisions, the parties hereto and the other
Loan Documents preserve, without diminution, certain remedies that such Persons
may employ or exercise freely, either alone, in conjunction with or during a
Dispute.  Each such Person shall have and
hereby reserves the right to proceed in any court of proper jurisdiction or by
self help to exercise or prosecute the following remedies:  (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted in
the Loan Documents or under applicable law or by judicial foreclosure and sale,
(ii) all rights of self help including peaceful occupation of property and collection
of rents, set off, and peaceful possession of property, (iii) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment, appointment of receiver and filing an involuntary
bankruptcy proceeding, and (iv) when applicable, a judgment by confession of
judgment.  Preservation of these remedies
does not limit the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.

 

SECTION 13.7       Reversal
of Payments.  To the extent that any
Borrower makes a payment or payments to the Agent for the ratable benefit of
the Lenders which payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of
such payment repaid, the Obligations or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been received by the Agent.

 

SECTION 13.8       Injunctive Relief; Punitive Damages.

 

(a)           Each  Borrower recognizes that, if any Borrower
fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement, any remedy of law may prove to be inadequate relief to
the Lenders. Therefore, each Borrower agrees that the Lenders, at the Lenders’
option, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.

 

(b)           The
Agent, each Lender and each Borrower (on behalf of itself and its Subsidiaries)
hereby agree that no such Person shall have a remedy of punitive or exemplary
damages against any other party to a Loan Document and each such Person hereby
waives any right or claim to punitive or exemplary damages that they may now
have or may arise in the future in connection with any Dispute, whether such
Dispute is resolved through arbitration or judicially.

 

(c)           The
parties agree that they shall not have a remedy of punitive or exemplary
damages against any other party in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.

 

SECTION 13.9       Accounting
Matters.  All financial and
accounting calculations, measurements and computations made for any purpose
relating to this Agreement, including, without limitation, all computations
utilized by the Borrowers or any Subsidiary thereof to determine compliance
with any covenant contained herein, shall, except as otherwise expressly
contemplated hereby or unless there is an express written direction by the
Agent to the contrary

 

36

 

agreed to by the Borrowers, be
performed in accordance with GAAP as in effect on the Closing Date.  In the event that changes in GAAP shall be
mandated by the Financial Accounting Standards Board, or any similar accounting
body of comparable standing, or shall be recommended by the Borrowers’
certified public accountants, to the extent that such changes would modify such
accounting terms or the interpretation or computation thereof, such changes
shall be followed in defining such accounting terms only from and after the
date the Borrowers and the Lenders shall have amended this Agreement to the
extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Agreement.

 

SECTION 13.10     Successors and Assigns; Participations.

 

(a)           Benefit
of Agreement.  This Agreement shall
be binding upon and inure to the benefit of the Borrowers, the Agent and the
Lenders, all future holders of the Note, and their respective successors and
assigns, except that the Borrowers shall not assign or transfer any of their
rights or obligations under this Agreement without the prior written consent of
each Lender.

 

(b)           Assignment
by Lenders.  Each Lender may, with
the consent of the Borrowers (so long as no Default or Event of Default has
occurred and is continuing), which consent shall not be unreasonably withheld,
and with the consent of the Agent and each of the other Lenders, assign to one
or more assignees all or a portion of its interests, rights and obligations
under this Agreement; provided that:

 

(i)            each
such assignment shall be of a constant, and not a varying, percentage of all of
the assigning Lender’s rights and obligations under this Agreement;

 

(ii)           if
less than all of the assigning Lender’s portion of the Loan is to be assigned,
the portion so assigned shall not be less than $1,000,000;

 

(iii)          the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance in the
form of Exhibit C attached hereto (an “Assignment and Acceptance”);

 

(iv)          such
assignment shall not, without the consent of the Borrowers, require the
Borrowers to file a registration statement with the Securities and Exchange
Commission or apply to or qualify the Loan under the blue sky laws of any
state; and

 

(v)           the
assigning Lender shall pay to the Agent an assignment fee of $3,000 upon the
execution by such Lender of the Assignment and Acceptance; provided that
no such fee shall be payable upon any assignment by a Lender to an Affiliate
thereof.

 

Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five (5) Business
Days after the execution thereof, (A) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereby and (B) the Lender thereunder shall,
to the extent provided in such assignment, be released from its obligations
under this Agreement.

 

37

 

(c)           Rights
and Duties Upon Assignment.  By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the assignee thereunder confirm to and agree with each other and
the other parties hereto as set forth in such Assignment and Acceptance.

 

(d)           Register.  The Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the amount of the Extensions of
Credit with respect to each Lender from time to time (the “Register”).  The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Agent and
the Lenders may treat each person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection
by any Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

 

(e)           Procedure.  Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee together with the
written consent to such assignment, the Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of Exhibit C:

 

(i)            accept
such Assignment and Acceptance;

 

(ii)           record
the information contained therein in the Register;

 

(iii)          give
prompt written notice thereof to the Lenders and the Borrowers; and

 

(iv)          promptly
deliver a copy of such Assignment and Acceptance to the Borrowers.

 

(f)            Participations.  Each Lender may sell participations to one or
more banks or other entities in all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Extensions of Credit); provided that:

 

(i)            each
such participation shall be in an amount not less than $1,000,000;

 

(ii)           such
Lender’s obligations under this Agreement 
shall remain unchanged;

 

(iii)          such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations;

 

(iv)          such
Lender shall remain the “Lender” for all purposes of this Agreement;

 

38

 

(v)           the
Borrowers, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement;

 

(vi)          such
Lender shall not give such participant the right to approve any waivers,
amendments or other modifications to this Agreement or any other Loan Document
other than waivers, amendments or modifications which would reduce the
principal of or the interest rate on the Loan, extend the term or increase the
amount of the Loan, reduce the amount of any fees to which such participant is
entitled, or extend any scheduled payment date for principal of the Loan; and

 

(vii)         any
such disposition shall not, without the consent of the Borrowers, require the
Borrowers to file a registration statement with the Securities and Exchange
Commission or apply to or qualify the Loan under the blue sky laws of any
state.

 

(g)           Disclosure of Information; Confidentiality.  The
Agent and the Lenders shall hold all non-public information with respect to the
Borrowers obtained pursuant to the Loan Documents in accordance with their
customary procedures for handling confidential information; provided,
that the Agent may disclose information relating to this Agreement (and not the
Borrowers’ business generally) to Gold Sheets and other similar bank
trade publications, such information to consist of deal terms and other
information customarily found in such publications and provided  further,
that the Agent and the Lenders may disclose any such information to the extent
such disclosure is required by law or requested by any regulatory
authority.  Any Lender may, in connection
with any assignment, proposed assignment, participation or proposed participation
pursuant to this Section 13.10, disclose to the assignee, participant, proposed
assignee or proposed participant, any information relating to the Borrowers
furnished to such Lender by or on behalf of the Borrowers; provided,
that prior to any such disclosure, each such assignee, proposed assignee,
participant or proposed participant shall agree with the Borrowers or such
Lender for the express benefit of the Borrowers to preserve the confidentiality
of any confidential information relating to the Borrowers received from such
Lender.

 

(h)           Certain
Pledges or Assignments.  Nothing
herein shall prohibit any Lender from pledging or assigning the Note to any
Federal Reserve Bank in accordance with Applicable Law.

 

SECTION 13.11     Amendments,
Waivers and Consents.  Except as set
forth below, any term, covenant, agreement or condition of this Agreement or
any of the other Loan Documents may be amended or waived by the Lenders, and
any consent given by the Lenders, if, but only if, such amendment, waiver or
consent is in writing signed by the Required Lenders (or by the Agent with the
consent of the Required Lenders) and delivered to the Agent and, in the case of
an amendment, signed by the Borrowers; provided, that no amendment,
waiver or consent shall (a) increase the amount or extend the time of the
obligation of the Lenders to make the Loan, (b) extend the originally scheduled
time or times of payment of the principal of the Loan or the time or times of
payment of interest on the Loan, (c) reduce the rate of interest or fees
payable on the Loan, (d) reduce the principal amount of the Loan, (e) permit
any subordination of the principal or interest on the Loan, (f) permit any
assignment (other than as specifically permitted or

 

39

 

contemplated in this Agreement)
of any of the Borrowers’ rights and obligations hereunder, (g) release any material portion of the
collateral for the Obligations or release any security document, or (h)
amend the provisions of this Section 13.11 or the definition of Required Lenders,
without the prior written consent of each Lender.  In addition, no amendment, waiver or consent
of or to the provisions of Article XII shall be made without the written
consent of the Agent.

 

SECTION 13.12     Cerformance
of Duties.  The Borrowers’ obligations
under this Agreement and each of the Loan Documents shall be performed by the
Borrowers at their sole cost and expense.

 

SECTION 13.13     All
Powers Coupled with Interest.  All
powers of attorney and other authorizations granted to the Lenders, the Agent
and any Persons designated by the Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied.

 

SECTION 13.14     Survival
of Indemnities.  Notwithstanding any
termination of this Agreement, the indemnities to which the Agent and the
Lenders are entitled under the provisions of this Article XIII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Agent and the Lenders against events arising
after such termination as well as before.

 

SECTION 13.15     Titles
and Captions.  Titles and captions of
Articles, Sections and subsections in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.

 

SECTION 13.16     Severability
of Provisions.  Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions hereof or thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

 

SECTION 13.17     Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which when
taken together shall constitute one and the same agreement.

 

SECTION 13.18     Term
of Agreement.  This Agreement shall
remain in effect from the Closing Date through and including the date upon
which all Obligations shall have been indefeasibly and irrevocably paid and
satisfied in full.  No termination of
this Agreement shall affect the rights and obligations of the parties hereto
arising prior to such termination.

 

40

 

SECTION 13.19     Inconsistencies with Other Documents; Independent
Effect of Covenants.

 

(a)           In the event there is a conflict or inconsistency between
this Agreement and any other Loan Document, the terms of this Agreement shall
control.

 

(b)           Each Borrower expressly acknowledges and agrees that each
covenant contained in Articles VIII, IX, or X hereof shall be given independent
effect.  Accordingly, the Borrowers shall
not engage in any transaction or other act otherwise permitted under any
covenant contained in Articles VIII, IX, or X if, before or after giving effect
to such transaction or act, the Borrowers shall or would be in breach of any
other covenant contained in Articles VIII, IX, or X.

 

SECTION 13.20     Joint and Several Liability, Etc.  The Borrowers shall be jointly and severally
liable for the payment and performance of the Obligations.  The Agent and the Lenders may, without notice
to or consent of any of the Borrowers and with or without consideration,
release, discharge, compromise or settle with, waive, grant indulgences to,
proceed against or otherwise deal with, any of the Borrowers or any collateral
for any of the Obligations without in any way affecting, limiting, modifying,
discharging or releasing any of the obligations and liabilities under this
Agreement or any other Loan Documents of the other Borrowers.  Each of the Borrowers consents and agrees
that (a) the Agent shall be under no obligation to marshall any assets in favor
of such Borrower or against or in payment of any or all of the obligations and
liabilities of such Borrower under this Agreement or any of the other Loan
Documents, (b) any rights such Borrower may have against the other Borrowers
for contribution, exoneration from payment or otherwise, in respect of any
amounts paid by such Borrower pursuant to any of the Loan Documents or which
continue to be owing pursuant to any of the Loan Documents, shall be postponed
until the Obligations have been indefeasibly paid in full and no commitments
therefor are outstanding and (c) the Agent or the Lenders, as applicable, may
enforce and collect the obligations and liabilities of such Borrower hereunder
or under the other Loan Documents irrespective of any attempt, pursuit, enforcement
or exhaustion of any rights and remedies the Agent or the Lenders may at any
time have to collect the obligations and liabilities hereunder or under the
other Loan Documents of the other Borrowers.

 

ARTICLE XIV

 

GUARANTY

 

SECTION 14.1       Borrowers’ Guaranty of the Obligations.  Each Borrower acknowledges that it is jointly
and severally liable for all of the Obligations and, as a result hereby,
unconditionally guarantees the full and prompt payment when due, whether at
maturity or earlier, by reason of acceleration or otherwise, and at all times
thereafter, of all Obligations of every kind and nature of the other Borrowers
to the Lenders or the Agent under the Loan Documents, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, joint
or several, now or hereafter existing, or due or to become due, and howsoever
owned, held or acquired.  Each Borrower
agrees that if this guaranty, or any liens securing this guaranty, would, but
for the application of this sentence, be unenforceable under applicable law,

 

41

 

this guaranty and each such
lien shall be valid and enforceable to the maximum extent that would not cause
this guaranty or such lien to be unenforceable under applicable law, and this
guaranty and such lien shall automatically be deemed to have been amended
accordingly at all relevant times.

 

Each Borrower
hereby agrees that its obligations under this guaranty shall be unconditional,
irrespective of (a) the validity or enforceability of the Obligations or
any part thereof, or of any promissory note or other document evidencing all or
any part of the Obligations, (b) the absence of any attempt to collect the
Obligations from any Borrower or other action to enforce the same, (c) the
waiver or consent by the Agent or any Lender with respect to any provision of
any agreement, instrument or document evidencing or securing all or any part of
the Obligations, or any other agreement, instrument or document now or hereafter
executed by any Borrower and delivered to the Agent or the Lenders,
(d) the failure by the Agent or the Lenders to take any steps to perfect
and maintain a security interest in, or to preserve its rights to, any
collateral now or hereafter given for the Obligations, (e) the Lenders’
election, in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (f) any
borrowing or grant of a security interest by any Borrower as debtor-in-possession
under Section 364 of the Bankruptcy Code, (g) the disallowance, under
Section 502 of the Bankruptcy Code, of all or any portion of the Agent’s
or the Lenders’ claim(s) for repayment of the Obligations, or (h) any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of any Borrower.

 

Each Borrower
hereby waives, to the fullest extent permitted by applicable law, diligence,
presentment, demand of payment, filing of claims with a court in the event of
receivership or bankruptcy of any Borrower, protest or notice with respect to
the Obligations (other than notices required to be given pursuant to the terms
of this Agreement or any of the other Loan Documents), and all demands
whatsoever, and covenants that this guaranty will not be discharged, except by
complete and irrevocable payment and performance of the Obligations (other than
contingent and unasserted indemnification obligations).  No notice to any Borrower or any other party
(other than notices required to be given pursuant to the terms of this
Agreement or any of the other Loan Documents) shall be required for the Agent
or the Lenders to make demand hereunder. 
Such demand shall constitute a mature and liquidated claim against any Borrower.  Upon the occurrence and continuance of any
Event of Default, the Agent and the Lenders may, in their sole discretion,
proceed directly and at once, without notice, against any one or more of the
Borrowers to collect and recover the full amount of any portion of the
Obligations, without first proceeding against the other Borrowers, any other
person, firm, corporation, or any security or collateral for the
Obligations.  To the extent not expressly
provided for herein, the Agent and the Lenders shall have the exclusive right
to determine the application of all payments made and credits, if any, given by
or from any Borrower, any other person, firm or corporation, or any security or
collateral for the Obligations, on account of the Obligations.

 

At any time
after and during the continuance of an Event of Default, the Agent and the
Lenders may, in their sole discretion, without notice to any Borrower and
regardless of the acceptance of any collateral for the payment hereof,
appropriate and apply toward payment of the Obligations (i) any indebtedness
due or to become due from such Borrower and (ii) any

 

42

 

moneys, credits or other
property belonging to such Borrower at any time held by or coming into the
possession of the Agent, any Lender or any of their Affiliates, whether for
deposit or otherwise.  The Agent and the
Lenders agree promptly to notify the Borrowers in writing after any such
set-off and application made by such Person.

 

[SIGNATURES ON NEXT PAGE]

 

43

 

IN WITNESS
WHEREOF, the parties hereto have caused this Credit Agreement to be executed
under seal by their duly authorized officers, all as of the day and year first
written above.

 

	
  WITNESS:

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  TESSCO
  TECHNOLOGIES INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CARTWRIGHT
  COMMUNICATIONS

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  TESSCO
  SERVICE SOLUTIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TESSCO
  COMMUNICATIONS

  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  WIRELESS
  SOLUTIONS INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

	
   

  	
  TESSCO
  BUSINESS SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Sean Sands

  	
   

  
	
   

  	
   

  	
   

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Gregory Farno

  	
   

  
	
   

  	
   

  	
   

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE AGENT:

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Sean Sands

  	
   

  
	
   

  	
   

  	
   

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARRANGEMENT AGENT:

  
	
   

  	
   

  
	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Gregory Farno

  	
   

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  	
   

  

 

 

Schedule 1

 

	
  LENDER

  	
   

  	
  PERCENTAGE

  	
   

  	
  PORTION OF TERM LOAN

  	
   

  
	
  Wachovia Bank, National Association
7 St. Paul Street, 2nd Floor

  Baltimore, MD 21202

  Attn: Lucy C. Campbell, Vice President

  Telephone No.: 410-332-5242

  Telecopy No.: 410-539-0136

  	
   

  	
  50

  	
  % 

  	
  $

  	
  2,250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SunTrust Bank
120 East Baltimore Street

  Baltimore, MD 21202

  Attn: Gregory Farno, Sr. Vice President

  Telephone No.: 410-986-1673

  Telecopy No.: 410-986-1927

  	
   

  	
  50

  	
  % 

  	
  $

  	
  2,250,000

  	
   

  

 

 

 

CREDIT AGREEMENT

 

dated as of June 30, 2004,

 

by and among

 

TESSCO TECHNOLOGIES INCORPORATED,

CARTWRIGHT COMMUNICATIONS COMPANY,

TESSCO SERVICE SOLUTIONS, INC.,

TESSCO COMMUNICATIONS INCORPORATED,

WIRELESS SOLUTIONS INCORPORATED,

TESSCO BUSINESS SERVICES, LLC,

as Borrowers,

 

the Lenders referred to herein,

 

and

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

 

and

 

SUNTRUST BANK,

as Arrangement Agent

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1

  	
  Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.2

  	
  General

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.3

  	
  Other Definitions and Provisions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II ADVANCE AND REPAYMENT OF LOAN

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
  The Loan

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.2

  	
  Borrowing Procedure

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.3

  	
  Funding Procedure

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.4

  	
  Repayment of the Loan

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.5

  	
  Use of Proceeds

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Intentionally Deleted]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV GENERAL PROVISIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1

  	
  Interest; Late Charges, Etc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.2 

  	
  Fees and Late Charges 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.3

  	
  Manner of Payment

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.4

  	
  Crediting of Payments and Proceeds

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.5

  	
  Adjustments

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.6

  	
  Changed Circumstances

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.7

  	
  Capital Requirements

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.8

  	
  Taxes

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.9 Security

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.10 The Borrowers’ Representatives

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V CLOSING; CONDITIONS OF CLOSING
  AND BORROWING

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1

  	
  Closing

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.2

  	
  Conditions to Closing and Funding of Loan

  	
   

  	
   

  

 

 

	
  ARTICLE VI REPRESENTATIONS AND WARRANTIES
  OF THE BORROWERS 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
  Representations and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.2

  	
  Survival of Representations and Warranties,
  Etc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII FINANCIAL INFORMATION AND
  NOTICES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII AFFIRMATIVE COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1 Payment and Performance of
  Obligations

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.2. Further Assurances

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX FINANCIAL COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X NEGATIVE COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI DEFAULT AND REMEDIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.1 Events of Default

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.2 Remedies

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.3 Rights and Remedies
  Cumulative; Non-Waiver; etc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII THE AGENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.1 Appointment

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.2 Delegation of Duties

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.3 Exculpatory Provisions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.4 Reliance by the Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.5 Notice of Default

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.6 Non-Reliance on the Agent and
  Other Lenders

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.7 Indemnification

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.8 The Agent in Its Individual
  Capacity

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.9 Resignation of the Agent;
  Successor Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 13.1 Notices

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 13.2 Expenses; Indemnity

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 13.3 Set-off

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 13.4 Governing Law

  	
   

  	
   

  

 

 

	
  SECTION
  13.5 Consent to Jurisdiction

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.6 Binding Arbitration; Waiver of Jury Trial

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.7 Reversal of Payments

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.8 Injunctive Relief; Punitive Damages

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.9 Accounting Matters

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.10 Successors and Assigns; Participations

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.11 Amendments, Waivers and Consents

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.12 Performance of Duties

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.13 All Powers Coupled with Interest

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.14 Survival of Indemnities

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.15 Titles and Captions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.16 Severability of Provisions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.17 Counterparts

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.18 Term of Agreement

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.19 Inconsistencies with Other Documents; Independent Effect of Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.20 Joint and Several Liability, Etc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIVGUARANTY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  14.1 Borrowers’ Guaranty of the Obligations

  	
   

  	
   

  

 

EXHIBITS

 

	
  Exhibit A

  	
   

  	
  -

  	
   

  	
  Form of Term Note

  
	
  Exhibit B

  	
   

  	
  -

  	
   

  	
  Form of Notice of Borrowing

  
	
  Exhibit C

  	
   

  	
  -

  	
   

  	
  Form of Assignment and Acceptance

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  1

  	
   

  	
  -

  	
   

  	
  Lenders
  and Portions of Term Loan

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}]]