Document:

exhibit1016.htm

    
      
         

      

      
         

        
          

        

      

       

    

    EXHIBIT
10.16

    INDUSTRIAL
SPACE LEASE

    (GROSS)

     

    THIS LEASE, dated January 1,
2010, for reference purposes only, is made by and between ROBERT D. DUCOTE and GAIL H. DUCOTE (“Landlord”),
and MERIX CORPORATION
(“Tenant”), to be effective and binding upon the parties as of the date of the
last designated signatories to this Lease shall have executed this Lease (the
“Effective Date of this Lease”).

     

    ARTICLE
1

     

    REFERENCES

     

    
      	
              1.1

            	
              REFERENCES:
      All references in this Lease (subject to any further clarification
      contained in this Lease) to the following terms shall have the following
      meaning or refer to the respective address, person, date, time period,
      amount, percentage, calendar year or fiscal year as below set
      forth:

            

    

    
      	 	 	 
      	 	 	 
	 	A.	 	
              Tenant’s
      Address for Notice:

            	 	
              355
      Turtle Creek Court

              San
      Jose, CA. 95125

            	 
	 	 	 	 
      	 	 	 
	 	B.	 	
              Tenant’s
      Representative:

              Phone
      number:

            	 	
              John
      R. Johnston

              503-992-4280,
      503-805-7972FAX

            	 
	 	 	 	 
      	 	 	 
	 	C.	 	
              Landlord’s
      Address for Notice:

            	 	
              18781
      Westview Drive

              Saratoga,
      CA. 95070

            	 
	 	 	 	 
      	 	 	 
	 	D.	 	
              Landlord’s
      Representative:

              Phone
      Number:

            	 	
              Robert
      Ducote

              873-2300,
      257-7144FAX

            	 
	 	 	 	 
      	 	 	 
	 	E.	 	
              Intended
      Commencement Date:

            	 	
              January
      1, 2010

            	 
	 	 	 	 
      	 	 	 
	 	F.	 	
              Intended
      Term:

            	 	
              30
      Months

            	 
	 	 	 	 
      	 	 	 
	 	G.	 	
              Lease
      Expiration Date:

            	 	
              June
      30, 2012

            	 
	 	 	 	 
      	 	 	 
	 	H.	 	
              Tenant’s
      Punch List Period:

            	 	
              Fifteen
      (15) days

            	 
	 	 	 	 
      	 	 	 
	 	I.	 	
              First
      Month’s Prepaid Rent:

            	 	$	13,500.00	 
	 	 	 	 
      	 	 	 	 
	 	J.	 	
              Last
      Month’s Prepaid Rent:

            	 	$	807.61	 
	 	 	 	 
      	 	 	 	 
	 	K.	 	
              Tenant’s
      Security Deposit:

            	 	
              Not
      applicable

            	 
	 	 	 	 
      	 	 	 	 
	 	L.	 	
              Late
      Charge Amount:

            	 	$	100.00	 
	 	 	 	 
      	 	 	 	 
	 	M.	 	
              Real
      Property Tax Base Year:

            	 	 	2010-2011	 
	 	 	 	 
      	 	 	 	 
	 	N.	 	
              Insurance
      Base Year:

            	 	 	2010-2011	 
	 	 	 	 
      	 	 	 	 
	 	O.	 	
              Tenant’s
      Required Liability Coverage:

            	 	$	500,000.00	 
	 	 	 	 
      	 	 	 	 
	 	P.	 	
              Tenant’s
      Number of Parking Spaces:

            	 	
              Entire
      lot for 355 Turtle Creek Court

            	 

    

    

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	
              Q.

            	
              Project
      and Building: That certain real property situated in the City of San Jose,
      County of Santa Clara, State of California, as presently improved with one
      (1) building, which real property is shown on the Site Plan attached
      hereto as Exhibit “A” and is commonly known as or otherwise described as
      follows:

            

    

     

    “A one
story concrete tilt-up building consisting of approximately 13,990 square feet
located at 355 Turtle Creek Court, San Jose, CA 95125”

     

    
      	
              R.

            	
              Leased
      Premises: That certain interior space within the Building, which space is
      shown outlined in red on the Floor Plan attached hereto as Exhibit “B”
      consisting of approximately 13,990 square feet and, for purposes of this
      Lease, agreed to contain said number of square feet. The Leased Premises
      are commonly known as or otherwise described as
  follows:

            

    

     

    “Approximately
13,990 square feet of office and warehouse space consisting of that one story
concrete tilt-up building located at 355 Turtle Creek Court, San Jose, CA 95125,
in its entirety”

     

    
      	
              S.

            	
              Base
      Monthly Rent: The term “Base Monthly Rent” shall mean the following:
      Without prior demand, Tenant shall pay monthly rent on or before the tenth
      day of each month as follows:

            

    

     

    MONTHS
1-30: THIRTEEN THOUSAND FIVE HUNDRED and NO/100 DOLLARS
($13,500.00)

     

    
      	
              T.

            	
              Permitted
      Use: The term “Permitted Use” shall mean the following: Office use and
      machining and fabrication of electronic components. Such use shall not
      include the manufacture, use, or storage of industrial solvents, excepting
      ordinary janitorial cleaning solutions and then only in quantities
      necessary for routine janitorial cleaning of the demised premises.
      Notwithstanding the foregoing sentence, such solvents may be used or
      stored on the premises if and only if Tenant obtains written authorization
      executed by Landlord specifying the solvent or solvents permitted to be
      used or stored and the permissible quantities of each
    solvent.

            

    

     

    
      	
              U.

            	
              Exhibits:
      The term “Exhibits” shall mean the Exhibits to this Lease, which is
      described as follows:

            

    

     

    Exhibit
“A” - Site Plan showing the Project and delineating the building in which the
Leased Premises are located.

     

    
      	
              V.

            	
              Addenda:
      The term “Addenda” shall mean the Addendum or (Addenda) to this
      Lease.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              ARTICLE
      2

            

    

     

    
      	
               
      

            	
              LEASED
      PREMISES TERM AND POSSESSION

            

    

     

    
      	
              2.1

            	
              DEMISE
      OF LEASED PREMISES: Landlord hereby leases to Tenant and tenant hereby
      leases from Landlord for Tenant’s own use in the conduct of Tenant’s
      business and not for purposes of speculating in real estate, for the Lease
      Term and upon the terms and subject to the conditions of this Lease, that
      certain interior space described in Article 1 as the Leased Premises,
      reserving and excepting to Landlord the exclusive right to all profits to
      be derived from any assignments or sub-lettings by Tenant during the Lease
      Term by reason of the appreciation in the fair market rental value of the
      Leased Premises. Landlord further reserves the right to install,
      maintains, use and replace ducts, wires, conduits and pipes leading
      through the Leased Premises in locations which will not materially
      interfere with Tenant’s use of the Lease Premises. Tenant’s Lease of the
      Leased Premises, together with the appurtenant right to use the Common
      Areas as described in Paragraph 2.2 below, shall be conditioned upon and
      be subject to the continuing compliance by Tenant with (i) ail the terms
      and conditions of this Lease, (ii) all Laws governing the use of the
      Leased Premises and the Project, (iii) all Private Restrictions, easements
      and other matters now of public record respecting the use of the Leased
      Premises and the Project, and (iv) all reasonable rules and regulations
      from time to time established by
Landlord.

            

    

     

    
      	
              2.2

            	
              RIGHT
      TO USE COMMON AREAS: As an appurtenant right to Tenant’s right to the use
      of the Leased Premises, Tenant shall have the non-exclusive right to use
      the Common Areas in conjunction with other tenants of the Project and
      their invitees, subject to the limitations on such use as set forth in
      Article 4, and solely for the purposes for which they were designed and
      intended. Tenant’s right to use the Common Areas shall terminate
      concurrently with any termination of this
Lease.

            

    

     

    
      	
              2.3

            	
              LEASE
      COMMENCEMENT DATE AND LEASE TERM: The term of this Lease shall begin, and
      the Lease Commencement Date shall be deemed to have occurred, on the
      Intended Commencement Date (as set forth in Article 1) unless either (i)
      Landlord is unable to deliver possession of the Leased Premises to Tenant
      on the Intended Commencement Date, in which case the Lease Commencement
      Date shall be as determined pursuant to Paragraph 2.7 below (the “Lease
      Commencement Date”). The term of this Lease shall end on the Lease
      Expiration Date (as set forth in Article 1), irrespective of whatever date
      the Lease Commencement Date is determined to be pursuant to the foregoing
      sentence. The Lease Term shall be that period of time commencing on the
      Lease Commencement Date and ending on the Lease Expiration Date (the
      “Lease Term”).

            

    

     

    
      	
              2.4

            	
              DELIVERY
      OF POSSESSION: Landlord shall deliver to Tenant possession of the Leased
      Premises on or before the Intended Commencement Date (as set forth in
      Article 1) in their presently existing condition, broom clean, unless
      Landlord shall have agreed, as a condition to Tenant’s obligation, to
      accept possession of the Leased Premises, pursuant to an Addenda attached
      to and made a part of this Lease to modify existing interior improvements
      or to make, construct and/or install additional specified improvements
      within the Leased Premises, in which case Landlord shall deliver to Tenant
      possession of the Leased Premises on or before the Intended Commencement
      Date as so modified and/or improved. If Landlord is unable to so deliver
      possession of the Leased Premises to Tenant on or before the Intended
      Commencement Date, for whatever reason, Landlord shall not be in default
      under this Lease, nor shall this Lease be void, voidable or cancelable by
      Tenant until the lapse of one hundred twenty days after the Intended
      Commencement Date (the “delivery grace period”); however, the Lease
      Commencement Date shall not be deemed to have occurred until such date as
      Landlord notifies Tenant that the Leased Premises are Ready for Occupancy.
      Additionally, the delivery grace period above set forth shall be extended
      for such number of days as Landlord may be delayed in delivering
      possession of the Leased Premises to Tenant by reason of Force Majeure or
      the actions of Tenant. If Landlord is unable to deliver possession of the
      Leased Premises to Tenant within the described delivery grace period
      (including any extensions thereof by reason of Force Majeure of the
      actions of Tenant), then Tenant’s sole remedy shall be to cancel and
      terminate this Lease, and in no event shall Landlord be liable to Tenant
      for such delay. Tenant may not cancel this Lease at any time after the
      date Landlord notifies Tenant the Lease Premises are Ready for
      Occupancy.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              2.5

            	
              ACCEPTANCE
      OF POSSESSION: Tenant acknowledges that it has inspected the Leased
      Premises and is willing to accept them in their existing condition, broom
      clean, unless Landlord shall have agreed, as a condition to Tenant’s
      obligation to accept possession of the Leased Premises, pursuant to an
      Addenda attached to and made a part of this Lease to modify existing
      interior improvements or to make, construct and/or install additional
      specified improvements within the Leased Premises, in which case Tenant
      agrees to accept possession of the Lease Premises when Landlord has
      substantially completed such modifications or improvements and the Lease
      Premises are Ready for Occupancy. If Landlord shall have so modified
      existing improvements or constructed additional improvements within the
      Leased Premises for Tenant, Tenant shall, with Tenant’s punch list Period
      (as set forth in Article 1) which shall commence on the date that Landlord
      notifies Tenant that the Leased Premises are Ready for Occupancy, submit
      to Landlord a punch list of all incomplete and/or improper worked
      performed by Landlord. Upon the expiration of Tenant’s punch list Period,
      Tenant shall be conclusively deemed to have accepted the Leased Premises
      in their then-existing condition as so delivered by landlord to Tenant,
      except as to those items reasonably set forth in Tenant’s punch list,
      provided that such punch list was submitted to Landlord with Tenant’s
      Punch list Period. Additionally, Landlord agrees to place in good working
      order all existing plumbing, lighting, heating, ventilating and air
      conditioning systems within the Leased Premises and all man doors and
      roll-up truck doors serving the Leased Premises to the extent that such
      systems and/or items are not in good operating condition as of the date
      Tenant accepts possession of the Leased Premises; provided that, an only
      if, Tenant notifies Landlord in writing of such failures or deficiencies
      within five business days from the date Tenant so accepts possession of
      the Lease Premises.

            

    

     

    
      	
              2.6

            	
              SURRENDER
      OF POSSESSION: Immediately prior to the expiration or upon the sooner
      termination of this Lease, tenant shall remove all of Tenant’s signs from
      the exterior of the Building and shall remove all of Tenant’s equipment,
      trade fixtures, furniture, supplies, wall decorations and other personal
      property from the Leased Premises, and shall vacate and surrender the
      Leased Premises to Landlord in the same condition, broom clean, as existed
      at the Lease Commencement Date, reasonable wear and tear expected. Tenant
      shall repair all damage to the Leased Premises caused by Tenant’s removal
      of tenant’s property and all damage to the exterior of the Building caused
      by Tenant’s removal of Tenant’s signs. Tenant shall patch and refinish, to
      Landlord’s reasonable satisfaction, all penetrations made by Tenant or its
      employees to the floor, walls or ceiling of the Lease Premises, whether
      such penetrations were made with Landlord’s approval or not. Tenant shall
      repair or replace all stained or damaged ceiling tiles, wall coverings and
      floor coverings to the reasonable satisfaction of Landlord. Tenant shall
      repair all damage caused by Tenant to the exterior surface of the Building
      and the paved surfaces of the outside areas adjoining the Leased Premises
      and, where necessary, replace or resurface same. Additionally, Tenant
      shall, prior to the expiration or sooner termination of this Lease, remove
      any improvements constructed or installed by Tenant which Landlord
      requests be so removed by Tenant and repair all damage caused by such
      removal. If the Leased Premises are not surrendered to Landlord in the
      condition required by this Paragraph at the expiration or sooner
      termination of this Lease, Landlord may, at Tenant’s expense, so remove
      Tenant’s signs, property and/or improvements not so removed and make such
      repairs and replacements not so made or hire, at Tenant’s expense,
      independent contractors to perform such work. Tenant shall be liable to
      Landlord for all costs incurred by Landlord in returning the Leased
      Premises to the required condition, plus interest on all costs incurred
      from the date paid by Landlord at the then maximum rate of interest not
      prohibited by Law until paid, payable by Tenant to Landlord within tent
      days after receipt of a statement therefore from Landlord. Tenant shall
      indemnify Landlord against loss or liability resulting from delay by
      Tenant in so surrendering the Leased Premises, including, without
      limitation, any claims made by any succeeding tenant or any losses to
      Landlord due to the lost opportunities to lease succeeding
      tenants.

            

    

     

    
      	
              2.7

            	
              EARLY
      OCCUPANCY: If Tenant enters into possession of the Lease Premises prior to
      the Intended Commencement Date (or permits its contractors to enter the
      Leased Premises prior to the Intended Commencement Date), unless otherwise
      agreed in writing by Landlord, the Lease Commencement Date shall be deemed
      to have occurred on such sooner date, and Tenant shall be obligated to
      perform all its obligations under this Lease, including the obligation to
      pay rent, from that sooner date.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
3

    RENT,
LATE CHARGES AND SECURITY DEPOSITS

     

    
      	
              3.1

            	
              BASE
      MONTHLY RENT: Commencing on the Lease Commencement Date (as determined
      pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term,
      Tenant shall pay to Landlord, without prior demand therefore, in advance
      on the first day of each calendar month, as base monthly rent, the amount
      set forth as “Base Monthly Rent” in Article 1 (the “Base Monthly
      Rent”).

            

    

     

    
      	
              3.2

            	
              ADDITIONAL
      RENT: Commencing on the Lease Commencement Date (as determined pursuant to
      Paragraph 2.3 above) and continuing throughout the Lease Term, Tenant
      shall pay to Landlord as additional rent (the “Additional Rent”) the
      following amounts:

            

    

     

    
      	
               
      

            	
              A.

            	
              Tenant’s
      Proportionate Share of all increases in Landlord’s Insurance Costs and
      Real Property Taxes over those paid during the period set forth in Article
      1 as the “Insurance Base Year” and the “Real Property Tax Base Year”,
      respectively, plus an accounting fee equal to five percent of such
      increase. Payment shall be made by whichever of the following methods is
      from time to time designated by
Landlord:

            

    

     

    
      	
               
      

            	
              (1)

            	
              Landlord
      may bill to Tenant, on a periodic basis not more frequent than monthly,
      Tenant’s Proportionate Share of any increases in Landlord’s Insurance
      Costs or Real Property Taxes, as paid or incurred by Landlord during the
      current period over those paid or incurred in the same period during the
      applicable Base Year, and Tenant shall pay such share of such increases,
      together with an accounting fee equal to five percent of the amount
      billed, within ten days after receipt of a written bill therefore from
      Landlord; or

            

    

     

    
      	
               
      

            	
              (2)

            	
              Landlord
      may deliver to Tenant Landlord’s reasonable estimate of the increase in
      Landlord’s Insurance Costs and/or Real Property Taxes it anticipates will
      be paid or incurred for the ensuing calendar or fiscal year, as the case
      requires, over those paid or incurred during the applicable Base Year, and
      Tenant shall pay its Proportionate Share of the estimated increases for
      such year, together with an accounting fee equal to five percent of the
      amount billed, in equal monthly installments during such year with the
      installments of Base Monthly Rent. Landlord reserves the right to change
      from time to time the method of billing Tenant its Proportionate Share of
      such increases or the periodic basis on which such increases are
      billed.

            

    

     

    
      	
               
      

            	
              B.

            	
              Landlord’s
      share of the consideration received by Tenant upon certain assignments and
      subletting as required by Article
7;

            

    

     

    
      	
               
      

            	
              C.

            	
              Any
      legal fees and costs that Tenant is obligated to pay or reimburse to
      Landlord pursuant to Article 13;
and

            

    

     

    
      	
               
      

            	
              D.

            	
              Any
      other charges or reimbursements due Landlord from Tenant pursuant to the
      terms of this Lease.

            

    

     

    
      	
               
      

            	
              E.

            	
              For
      the purposes of this Lease, the term “Additional Rent” shall not include
      an accounting fee equal to five percent (5%) of the increase in the
      Tenant’s Proportionate Share in any increases in Landlord’s Insurance
      Costs or Real Property Taxes. No such charge shall be imposed on the
      Tenant during the term of the
Lease.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              3.3.

            	
              YEAR-END
      ADJUSTMENTS: If Landlord shall have elected to charge Tenant its
      Proportionate Share of the increases in Landlord’s Insurance Costs and/or
      Real Property Taxes on an estimated basis in accordance with the
      provisions of Paragraph 3.2A(2) above, Landlord shall furnish to Tenant
      within three months following the end of the applicable calendar or fiscal
      year, as the case may be, a statement setting forth (i) the amount of
      Landlord’s Insurance Costs and/or Real Property Taxes paid or incurred
      during the just ended calendar or fiscal year, as appropriate, (ii) the
      amount of Landlord’s Insurance Costs and/or Real Property Taxes paid or
      incurred during the applicable Base Year, and (iii) Tenant’s Proportionate
      Share of the increases, if any, in Landlord’s Insurance Costs and/or Real
      Property Taxes for the just ended fiscal or calendar year, as appropriate.
      If Tenant shall have paid more than its Proportionate Share of such
      increases for the previous year, Landlord shall, at its election, either
      (i) credit the amount of such overpayment toward the next ensuing payment
      or payments of Additional Rent that would otherwise be due or (ii) refund
      in cash to Tenant the amount of such overpayment. If such year-end
      statement shall show that Tenant did not pay its Proportionate Share of
      any such increases in full, then Tenant shall pay to Landlord the amount
      of such underpayment, together with the accounting fee applicable thereto,
      within ten days from Landlord’s billing of same to Tenant. The provisions
      of this Paragraph shall survive the expiration or sooner termination of
      this Lease.

            

    

     

    
      	
              3.4

            	
              LATE
      CHARGE AND INTEREST ON RENT IN DEFAULT: Tenant acknowledges that the late
      payment by Tenant of any monthly installment of Base Monthly Rent or any
      Additional Rent will cause Landlord to incur certain costs and expenses
      not contemplated under this Lease, the exact amounts of which are
      extremely difficult or impractical to fix. Such costs and expenses will
      include, without limitation, administration and collection costs and
      processing and accounting expenses. Therefore, if any installment of Base
      Monthly Rent is not received by Landlord from Tenant with six calendar
      days after the same becomes due, Tenant shall immediately pay to Landlord
      a late charge in an amount equal to the amount set forth in Article 1 as
      the “Late Charge Amount”, and if any Additional Rent is not received by
      Landlord within six calendar days after same becomes due, Tenant shall
      immediately pay to Landlord a late charge in an amount equal to ten
      percent of the Additional Rent not so paid. Landlord and Tenant agree that
      this late charge represents a reasonable estimate of such costs and
      expenses and is fair compensation to Landlord for its loss suffered by
      reason of Tenant’s failure to make timely payment. In no event shall this
      provision for a late charge be deemed to grant to Tenant a grace period or
      extension of time within which to pay any rental installment or prevent
      Landlord from exercising any right or remedy available to Landlord upon
      Tenant’s failure to pay each rental installment due under this Lease when
      due, including the right to terminate this Lease. If any rent remains
      delinquent for a period in excess of six calendar days, then, in addition
      to such late charge, Tenant shall pay to Landlord interest on any rent
      that is not so paid from said sixth day at the then maximum interest rate
      not prohibited by Law until paid.

            

    

     

    
      	
              3.5

            	
              PAYMENT
      OF RENT: All rent shall be paid in lawful money of the United States,
      without any abatement, deduction or offset for any reason whatsoever, to
      Landlord at such address as Landlord may designate from time to time.
      Tenant’s obligation to pay Base Monthly Rent and all Additional Rent shall
      be prorated at the commencement and expiration of the Lease Term. The
      failure of Tenant to pay any of the Additional Rent as required pursuant
      to this Lease when due shall be treated the same as a failure by Tenant to
      pay Base Monthly Rent when due, and Landlord shall have the same rights
      and remedies against Tenant as Landlord would have if Tenant failed to pay
      the Base Monthly Rent when due.

            

    

     

    
      	
              3.6

            	
              PREPAID
      RENT: Tenant has paid to Landlord the amount set forth in Article 1 as
      “First Month’s Prepaid Rent” as prepayment of rent for credit against the
      first installment(s) of Base Monthly Rent due hereunder. Additionally,
      Tenant has paid to Landlord the Monthly Rent due hereunder, subject,
      however, to the provisions of Paragraph 3.7
  below.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              3.7

            	
              SECURITY
      DEPOSIT: Tenant has deposited with Landlord the amount set forth in
      Article 1 as the “Security Deposit” as security for the performance by
      Tenant of the terms of this Lease to be performed by Tenant, and not as
      prepayment of rent. Landlord may apply such portion or portions of the
      Security Deposit as are reasonably necessary for the following purposes:
      (i) to remedy any default by Tenant in the payment of Base Monthly Rent or
      Additional Rent or a late charge or interest on default rent; (ii) to
      repair damage to the Lease Premises caused by Tenant; (iii) to clean and
      repair the Lease Premises following their surrender to Landlord if not
      surrendered in the condition required pursuant to the provisions of
      Article 2; and (iv) to remedy any other default of Tenant to the extent
      permitted by Law including, without limitation, paying in full on Tenant’s
      behalf any sums claimed by material-men or contractors of Tenant to be
      owing to them by Tenant for work done or improvements made at Tenant’s
      request to the Lease Premises. In this regard, Tenant hereby waives any
      restriction on the uses to which the Security Deposit may be applied as
      contained in Section 1950.7(c) of the California Civil Code and/or any
      successor statute. In the event the Security Deposit or any portion
      thereof is so used, Tenant shall pay to Landlord, promptly upon demand, an
      amount in cash sufficient to restore the Security Deposit to the full
      original sum if Tenant fails to promptly restore the Security Deposit and
      if Tenant shall have paid to promptly restore the Security Deposit and if
      Tenant shall have paid to Landlord any sums as “Last Month’s Prepaid Rent”
      Landlord may, in addition to any other remedy Landlord may have under this
      Lease reduce the amount of Tenant’s Last Month’s Prepaid Rent by
      transferring all or portions of such Last Month’s Prepaid Rent to Tenant’s
      Security Deposit until such Security Deposit is restored to the amount set
      forth in Article 1. Landlord shall not be deemed a trustee of the Security
      Deposit. Landlord may use the Security Deposit in Landlord’s ordinary
      business and shall not be required to segregate it from its general
      accounts. Tenant shall not be entitled to any interest on the Security
      Deposit. If Landlord transfers the Building during the Lease Term,
      Landlord may pay the Security Deposit to any subsequent owner in
      conformity with the provisions of Section 1905.7 of the California Civil
      Code and/or any successor statute. In which event the transferring
      landlord shall be released from all liability for the return of the
      Security Deposit. Tenant specifically grants to Landlord (and hereby
      waives the provisions of California Civil Code Section to the contrary) a
      period of sixty days following a surrender of the Leased Premises by
      Tenant to Landlord within which to restore the Security Deposit (less
      permitted deductions) to Tenant, if being agreed between Landlord and
      Tenant that sixty days is a reasonable period of time within which to
      inspect the Lease Premises, make required repairs, receive and verify
      workmen’s billings therefore, and prepare a final accounting with respect
      to such deposit. In no event shall the Security Deposit, or any portion
      thereof, be considered prepaid
rent.

            

    

    For the
purposes of this Lease, paragraph 3.7 “Security Deposit” above, shall not be applicable
during this Lease Term.

     

    ARTICLE
4

     

    USE
OF LEASED PREMISES AND COMMON AREAS

     

    
      	
              4.1

            	
              PERMITTED
      USE: Tenant shall be entitled to use the Leased Premises solely for the
      “Permitted use” as set forth in Article 1 and for no other purpose
      whatsoever. Tenant shall continuously and without interruption use the
      Lease Premises for such purpose for the entire Lease Term. Any
      discontinuance of such use for a period of thirty consecutive calendar
      days shall be, at Landlord’s election, a default by Tenant under the terms
      of this Lease. Subject to the limitations contained in this Article 4,
      Tenant shall have the right to use the Common Areas, in conjunction with
      other tenants and during normal business hours, solely for the purposes
      for which they were intended and for no other purposes whatsoever. Tenant
      shall not have the right to use the exterior surfaces of exterior walls,
      the area beneath the floor or the area above the ceiling of the Leased
      Premises.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              4.2

            	
              GENERAL
      LIMITATIONS ON USE: Tenant shall not do or permit anything to be done in
      or about the Leased Premises, the Building, the Common Areas or the
      Project which does or could (i) interfere with the rights of other tenants
      or occupants of the Building or the Project, (ii) jeopardize the
      structural integrity of the Building or (iii) cause damage to any part of
      the Building or the Project. Tenant shall not operate any equipment within
      the Leased Premises which does or could (i) injure, vibrate or shake the
      Leased Premises or the building, (ii) damage, overload or impair the
      efficient operation of any electrical, plumbing, heating, ventilating or
      air conditioning systems within or servicing the Lease Premises or the
      Building or (iii) damage or impair the efficient operation of the
      sprinkler system (if any) within or servicing the Leased Premises or the
      Building. Tenant shall not install any equipment or antennas on or make
      any penetrations of the exterior walls or roof of the Building. Tenant
      shall not affix any equipment to or make any penetrations or cuts in the
      floor, ceiling or walls of the Leased Premises. Tenant shall not place any
      loads upon the floors, walls ceilings or roof systems, which could
      endanger the structural integrity of the Building or damage its floors,
      foundations or supporting structural components. Tenant shall not place
      any explosive, flammable or harmful fluids or other waste materials in the
      drainage systems of the Building or the Project. Tenant shall not drain or
      discharge any fluids in the landscaped areas or across the paved areas o
      the Project. Tenant shall not use any area located outside the Leased
      Premises for the storage of its materials, supplies, inventory or
      equipment, and all such materials, supplies, inventory and equipment shall
      at all times be stored within the Leased Premises. Tenant shall not commit
      nor permit to be committed any waste in or about the Leased Premises, the
      Common Areas or the Project.

            

    

     

    
      	
              4.3

            	
              NOISE
      AND EMISSIONS: All noise generated by Tenant in its use of the Leased
      Premises shall be confined or muffled so that it does not interfered with
      the businesses or annoy other tenants of the Building or the Project. All
      dust, fumes odors and other emissions generated by Tenant’s use of the
      Leased Premises shall be sufficiently dissipated in accordance with sound
      environmental practices and exhausted from the Leased Premises in such a
      manner so as not to interfere with the businesses of or annoy other
      tenants of the Building or the Project, or cause any damage to the Leased
      Premises or the Building or any component part thereof or the property of
      other tenants of the Building of the
Project.

            

    

     

    
      	
              4.4

            	
              TRASH
      DISPOSAL: Tenant shall provide trash and garbage disposal facilities
      inside the Leased Premises for all of its trash, garbage and waste
      requirements (other than general office waste which may be disposed of in
      the trash bins provided by Landlord), and shall cause such trash, garbage
      and waste to be regularly removed from the Leased Premises at Tenant’s
      sole cost. Tenant shall keep all areas outside the Leased Premises and all
      fire corridors and mechanical equipment rooms in or about the Leased
      Premises free and clear of all trash, garbage, waste and boxes containing
      same at all times.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              4.5

            	
              PARKING:
      Tenant is allocated, and Tenant and its employees and invitees shall have
      the non-exclusive right to use, not more than the number of parking spaces
      set forth in Article 1 as “Tenant’s Number of Parking Spaces”. Tenant
      shall not, at any time, use or permit its employees or invitees to use
      more parking spaces than the number so allocated to Tenant. Tenant shall
      not have the exclusive right to use any specific parking space, and
      Landlord reserves the right to designate from time to time the location of
      the parking spaces allocated for Tenant’s use. In the event Landlord
      elects or is required by any Law to limit or control parking within the
      Project, whether by validation of parking tickets or any other method,
      Tenant agrees to participate in such validation or other program as
      reasonably established by Landlord. Tenant shall not, at any time, park or
      permit to be parked any trucks or vehicles adjacent to entryways or
      loading areas within the Project so as to interfere in any way with the
      use of such areas, nor shall Tenant, at any time, park or permit the
      parking of Tenant’s trucks or other vehicles, or the trucks and vehicles
      of Tenant’s suppliers or others, in any portion of the Common Areas not
      designated by Landlord for such use by Tenant. Tenant shall not, at any
      time, park or permit to be parked any recreational vehicles, inoperative
      vehicles or equipment on any portion of the common parking area or other
      Common Areas of the Project. Tenant agrees to assume responsibility for
      compliance by its employees and invitees with the parking provisions
      contained herein. If Tenant or its employees park any vehicle within the
      Project in violation of these provisions, then Landlord may charge Tenant,
      as Additional Rent, and Tenant agrees to pay, as Additional Rent, Ten
      Dollars per day for each day or partial day that each such vehicle is
      parked in any area other than that designated. Tenant hereby authorizes
      Landlord, at Tenant’s sole expense, to tow away from the Project and store
      until redeemed by its owner any vehicle belonging to Tenant or Tenant’s
      employees parked in violation of these
  provisions.

            

    

     

    
      	
              4.6

            	
              SIGNS:
      Tenant shall not place or install on or within any portion of the Leased
      Premises, the Building, the Common Areas or the Project any sign (other
      than a business identification sign first approved by Landlord in
      accordance with this Paragraph), advertisements, banners, placards or
      pictures which are visible from the exterior of the Leased Premises.
      Tenant shall not place or install on or within any portion of the Leased
      Premises, the Building, the Common Areas or the Project any business
      identification sign which is visible from the exterior of the Leased
      Premises until Landlord shall have first approved in writing the location,
      sized, content, design, method of attachment and material to be used in
      the making of such sign. Any signs, once approved by Landlord, shall be
      installed only in strict compliance with Landlord’s approval, at Tenant’s
      expense, using a person first approved by Landlord to install same.
      Landlord may remove any signs (not first approved in writing by Landlord),
      advertisements, banners, placards or pictures so placed by Tenant on or
      with the Leased Premises, the Building, the Common Areas or the Project
      and charge to tenant the cost of such removal, together with any costs
      incurred by landlord to repair any damage caused thereby, including any
      cost incurred to restore the surface upon which such sign was so affixed
      to its original condition. Tenant shall remove any such signs, repair any
      damage caused thereby, and restore the surface upon which the sign was
      affixed to its original condition, all to Landlord’s reasonable
      satisfaction, upon the termination of this
  Lease.

            

    

     

    
      	
              4.7

            	
              COMPLIANCE
      WITH LAWS AND PRIVATE RESTRICTIONS: Tenant shall not use or permit any
      person to use the Leased Premises in any manner, which violates any Laws
      or Private Restrictions. Tenant shall abide by and shall promptly observe
      and comply with, at its sole cost and expense, all Laws and Private
      Restrictions respecting the use and occupancy of the Lease Premises, the
      Building, the Common Areas or the Project and shall defend with competent
      counsel, indemnify and hold Landlord harmless from any claims, damages or
      liability resulting from Tenant’s failure to do
  so.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              4.8

            	
              COMPLIANCE
      WITH INSURANCE REQUIREMENTS: With respect to any insurance policies
      carried by Landlord in accordance with the provisions of this Lease,
      Tenant shall not conduct (nor permit any other person to conduct) any
      activities with the Leased Premises, or store, keep or use anything with
      the Leased Premises with (i) is prohibited under the terms of any of such
      policies, (ii) could result in the termination of the coverage afforded
      under any of such policies, (iii) could give to the insurance carriers the
      right to cancel any of such policies, or (iv) could cause an increase in
      the rates (over standard rates) charged for the coverage afforded under
      any such policies. Tenant shall comply with all requirements of any
      insurance company, insurance underwriter, or Board of Fire Underwriters
      which are necessary to maintain, at standard rates, the insurance
      coverage’s carried by either Landlord or Tenant pursuant to this
      Lease.

            

    

     

    
      	
              4.9

            	
              LANDLORD’S
      RIGHT TO ENTER: Landlord and its agents shall have the right to enter the
      Leased Premises during normal business hours and subject to Tenant’s
      reasonable security measures for the purpose of (i) inspecting the same;
      (ii) supplying any services to be provided by Landlord to Tenant; (iii)
      showing the Leased Premises to prospective purchasers, mortgagees or
      tenants; (iv) making necessary alternations, additions or repairs; (v)
      performing any of Tenant’s obligations when Tenant has failed to do so
      after giving Tenant reasonable written notice of its intent to do so; and
      (vi) posting notices of non-responsibility. Additionally, Landlord shall
      have the right to enter the Leased Premises at times of emergency. Any
      entry into the Leased Premises or portions thereof obtained by Landlord in
      accordance with this Paragraph shall not under any circumstances be
      construed or deemed to be a forcible or unlawful entry into, or a detainer
      of, the Leased Premises, or an eviction, actual or constructive, of Tenant
      from the Leased Premises or any portion
thereof.

            

    

     

    
      	
              4.10

            	
              CONTROL
      OF COMMON AREAS: Landlord shall at all times have exclusive control of the
      Common Areas. Landlord shall have the right, without the same constituting
      an actual or constructive eviction and without entitling Tenant to any
      reduction in or abatement of rent, to: (i) temporarily closed any part of
      the Common Areas to whatever extent required in the opinion of Landlord’s
      counsel to prevent a dedication thereof or the accrual of any prescriptive
      rights therein: (ii) temporarily close all or any part of the Common Areas
      to perform maintenance or for any other reason deemed sufficient by
      Landlord; (iii) change the shape, size, location, number and extent of
      improvements within the Common Areas including, without limitation,
      changing the location of driveways, entrances, exits, parking spaces,
      parking areas, sidewalks, directional or locator signs, or the direction
      of the flow of traffic; and (iv) to make additions to the Common Areas
      including, without limitation, the construction of parking structures.
      Landlord shall have the right to change the name or address of the
      Building. Tenant in its use of the Common Areas, shall keep the Common
      Areas free and clear of all obstructions created or permitted by Tenant.
      If, in the opinion of Landlord, unauthorized persons are using any of the
      Common Areas by reason of, or under claim of, the express or implied
      authority or consent of Tenant, then Tenant, upon demand of Landlord,
      shall restrain, to the fullest extent then allowed by Law, such
      unauthorized use, and shall initiate such appropriate proceedings as may
      be required to so restrain such use. Nothing contained herein shall affect
      the right of Landlord at any time to remove any unauthorized person from
      the Common Areas or to prohibit the use of the Common Areas by
      unauthorized persons, including without limitation, the right to prohibit
      mobile food and beverage vendors. In exercising any such right regarding
      the Common Areas, Landlord shall make a reasonable effort to minimize any
      disruption to Tenant’s business.

            

    

     

    
      	
              4.11

            	
              RULES
      AND REGULATIONS: Landlord shall have the right from time to time to
      establish reasonable rules and regulations and/or amendments or additions
      thereto respecting the use within the Project and the use of the Common
      Areas for the care and orderly management of the Project and the safety of
      its tenants, occupants and invitees. Upon delivery to Tenant of a copy of
      such rules and regulations or any amendments or additions thereto, Tenant
      shall comply with such rules and regulations. A violation by Tenant of any
      of such rules and regulations shall constitute a default by Tenant under
      this Lease. If there is a conflict between the rules and regulations and
      any of the provisions of this Lease, the provisions of this Lease shall
      prevail. Landlord shall not be responsible or liable to Tenant for the
      violation of such rules and regulations by any other tenant of the
      Project.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              4.12

            	
              ENVIRONMENTAL
      PROTECTION: Landlord may voluntarily cooperate in a reasonable manner with
      the efforts of all governmental agencies in reducing actual or potential
      environmental damage. Tenant shall not be entitled to terminate this Lease
      or to any reduction or abatement of rent by reason of such compliance or
      cooperation. Tenant agrees at all times to cooperate fully with Landlord
      and to abide by all rules and regulations and requirements which Landlord
      may reasonably prescribe in order to comply with the requirements and
      recommendations of governmental agencies regulating, or otherwise involved
      in, the protection of the
environment.

            

    

     

    ARTICLE
5

     

    REPAIRS,
MAINTENANCE, SERVICES AND UTILITIES

     

    
      	
              5.1

            	
              REPAIRS
      AND MAINTENANCE: Except in the case of damage to or destruction of the
      Leased Premises, the Building or the Project caused by an Act of God or
      other peril, in which case the provisions of Article 10 shall control, the
      parties shall have the following obligations and responsibilities with
      respect to the repair and maintenance of the Leased Premises, the Building
      and the Common Areas.

            

    

     

    
      	
               
      

            	
              A.

            	
              Tenant’s
      Obligation: Tenant shall, at all times during the Leased Term and at its
      sole cost and expense, regularly clean and continuously keep and maintain
      in good order, condition and repair the Leased Premises and every part
      thereof and all appurtenances thereto, including, without limiting the
      generality of the foregoing, (i) all interior walls, floors and ceilings,
      (ii) all windows, doors and skylights, (iii) all electrical wiring,
      conduits, connectors and fixtures, (iv) all plumbing, pipes, sinks,
      toilets, faucets and drains, (v) all lighting fixtures, bulbs and lamps,
      (vi) all heating, ventilating and air conditioning equipment located
      within the Leased Premises or located outside the Leased Premises (e.g.
      rooftop compressors) and serving the Leased Premises (other tan Common
      HVAC as defined in Subparagraph B below), and all entranceways to the
      Leased Premises. Tenant, if requested to do so by Landlord, shall have at
      Tenant’s sole cost and expense, a licensed heating, ventilating and air
      conditioning contractor to regularly and periodically inspect (not less
      frequently than every three months) and perform required maintenance on
      the heating, ventilating and air conditioning equipment and systems
      serving the Leased Premises, or alternately, Landlord may so contract in
      its own name for such regular and periodic inspections of and maintenance
      on such heating, ventilating and air conditioning equipment and systems
      and charge to Tenant, as Additional Rent, the cost thereof. Tenant shall,
      at its sole cost and expense, repair all damage to the Building, the
      Common Areas or the Project caused by the activities of Tenant, its
      employees, invitees or contractors promptly following written notice from
      Landlord to so repair such damage. If Tenant shall fail to perform the
      required maintenance or fail to make repairs required of it pursuant to
      Paragraph within a reasonable period of time following notice from
      Landlord to do so, then Landlord may, at its election and without waiving
      any other remedy it may otherwise have under this Lease or at Law, perform
      such maintenance or make such repairs and charge to Tenant, as Additional
      Rent, the costs so incurred by Landlord for same. All glass within or a
      part of the Leased Premises, both interior and exterior, is at the sole
      risk of Tenant and any broken glass shall promptly be replaced by Tenant
      at Tenant’s expense with glass of the same kind, size and
      quality.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              B.

            	
              Landlord’s
      Obligation: Landlord shall, at all times during the Lease Term, maintain
      in good condition and repair; (i) the exterior and structural parts of the
      Building (including the foundation, sub-flooring, load- bearing and
      exterior walls, and roof); (ii) the Common Areas; and (iii) the electrical
      and plumbing systems located outside the Leased Premises which service the
      Building. Additionally, to the extent that the Building contains central
      heating, ventilating and or air conditioning systems located outside the
      Leased Premises and designed to service, and then servicing, more than a
      single tenant within the Building, (“Common HVAC”), Landlord shall
      maintain in good operating condition and repair such Common HVAC equipment
      and systems.

            

    

     

    
      	
              5.2

            	
              SERVICES
      AND UTILITIES: The parties shall have the following responsibilities and
      obligations with respect to obtaining and paying the cost of providing the
      following utilities and other services to the Leased
    Premises.

            

    

     

    
      	
               
      

            	
              A.

            	
              Gas
      and Electric: Tenant shall arrange, at its sole expense and in its own
      name, for the supply of gas and electricity to the Leased Premises. In the
      event that such services are not separately metered, Tenant shall, at its
      sole expense, cause such meters to be installed. Tenant shall be
      responsible for determining if the local supplier of gas and/or
      electricity can supply the needs of Tenant and whether or not the existing
      gas and/or electrical distribution systems within the Building and the
      Leased Premises are adequate for Tenant’s needs. Tenant shall pay all
      charges for gas and electricity as so supplied to the Leased
      Premises.

            

    

     

    
      	
               
      

            	
              B.

            	
              Water:
      Landlord shall provide the Leased Premises with water and Tenant shall
      pay, as Additional Rent, the cost to Landlord of providing water to the
      Leased Premises; provided, however, to the
      extent that Landlord shall be providing water to the Leased Premises for
      the use of more than a single tenant, Tenant shall be responsible to pay
      as Additional Rent only so much of the cost to Landlord of providing water
      to the Leased Premises as is related to Tenant’s water usage. The costs of
      Tenant’s water usage shall include any costs to Landlord in keeping
      account of such usage and all governmental fees, public charges or the
      like (such as sewer usage fees) attributable to or based upon
      usage.

            

    

     

    
      	
               
      

            	
              C.

            	
              Security
      Services: Tenant acknowledges that Landlord is not responsible for the
      security of the Leased Premises or the protection of Tenant’s property or
      Tenant’s employees, invitees or contractors, and that to the extent Tenant
      determines that such security or protection services are advisable or
      necessary, Tenant shall arrange for an pay the costs of providing
      same.

            

    

     

    
      	
               
      

            	
              D.

            	
              Trash
      Disposal: Landlord will provide one trash bin or each building within the
      Project for use by the tenants of such building for disposal of general
      office waste only and for no other purpose. In no event shall Tenant use
      the trash bins provided by Landlord for disposal of any of its industrial
      waste, garbage or trash, and in no event shall Landlord be required to
      provide extra bins for such purpose to because other tenants of the
      Building or the Project are using such bins for such
    purpose.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              5.3

            	
              ENERGY
      AND RESOURCE CONSUMPTION: Landlord may voluntarily cooperate in a
      reasonable manner with the efforts to governmental agencies and/or utility
      suppliers in reducing energy or other resource consumption within the
      Project. Tenant shall not be entitled to terminate this Lease or to any
      reduction in or abatement of rent by reason of such compliance or
      cooperation. Tenant agrees at all times to cooperate fully with Landlord
      and to abide by all reasonable rules established by Landlord (i) in order
      to maximize the efficient operation of the electrical, heating,
      ventilating and air conditioning systems and all other energy or other
      resource consumption systems within the Project and/or (ii) in order to
      comply with the requirements and recommendations of utility suppliers and
      governmental agencies regulating the consumption of energy and/or other
      resources.

            

    

     

    
      	
              5.4

            	
              LIMITATION
      OF LANDLORD’S LIABILITY: Landlord shall not be liable to Tenant for injury
      to Tenant, its employees, agents, invitees or contractors, damage to
      Tenant’s property or loss of Tenant’s business or profits, nor shall
      Tenant be entitled to terminate this Lease or to any reduction in or
      abatement of rent by reason of (i) Landlord’s failure to perform any
      maintenance or repairs to the Project until Tenant shall have first
      notified Landlord, in writing, of the need for such maintenance or
      repairs, and then only after Landlord shall have had a reasonable period
      of time following its receipt of such notice within which to perform such
      maintenance or repairs, or (ii) any failure, interruption, rationing or
      other curtailment in the supply of water, electric current, gas or other
      utility service to the Leased Premises, the Building or the Project from
      whatever cause (other than Landlord’s gross negligence or willful
      misconduct), or (iii) the unauthorized intrusion or entry into the Leased
      Premises by third parties (other than
Landlord).

            

    

     

    ARTICLE
6

     

    ALTERATIONS
AND IMPROVEMENTS

     

    
      	
              6.1

            	
              BY
      TENANT: Tenant shall not make any alterations to or modifications of the
      Leased Premises or construct any improvements to or within the Leased
      Premises without Landlord’s prior written approval, and then not until
      Landlord shall have first approved, in writing, the plans and
      specifications therefore, which approval shall not be unreasonably
      withheld. All such modifications, alterations or improvements, once so
      approved, shall be made, constructed or installed by Tenant at Tenant’s
      expense, using a licensed contractor first approved by Landlord, in
      substantial compliance with the Landlord-approved plans and specifications
      therefore. All work undertaken by Tenant shall be done in accordance with
      all Laws and in good and workmanlike manner using new materials of good
      quality. Tenant shall not commence the making of any such modifications or
      alterations or the construction of any such improvements until (i) all
      required governmental approvals and permits shall have been obtained, (ii)
      all requirements regarding insurance imposed by this Lease have been
      satisfied, (iii) Tenant shall have given Landlord at least five business
      days prior to written notice of its intention to commence such work so
      that Landlord may post and file notices of non-responsibility, and (iv) if
      requested by Landlord, Tenant shall have obtained contingent liability and
      broad form builder’s risk insurance in an amount satisfactory to Landlord
      to cover any perils relating the proposed work not covered by insurance
      carried by Tenant pursuant to Article 9. In no event shall Tenant make any
      modifications, alterations or improvements to the Common Areas or any
      areas outside the Leased Premises. As used in the Article, the term
      “modifications”, alterations and/or improvements” shall include, without
      limitation, the installation of additional electrical outlets, overhead
      lighting fixtures, drains, sinks, partitions, doorways, or the
      like.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              6.2

            	
              OWNERSHIP
      OF IMPROVEMENTS: All modifications, alternations and improvements made or
      added to the Leased Premises by Tenant (other than Tenant’s inventory,
      equipment, movable furniture, wall decorations and trade fixtures) shall
      be deemed real property and a part of the Leased Premises, but shall
      remain the property of Tenant during the Lease Term. Any such
      modifications, alterations or improvements, once completed, shall not be
      altered or removed from the Leased Premises during the Lease Term without
      Landlord’s written approval first obtained in accordance with the
      provisions of Paragraph 6.1 above. At the expiration or sooner termination
      of this Lease, all such modifications, alterations and improvements (other
      than Tenant’s inventory, equipment, movable furniture, wall decorations
      and trade fixtures) shall automatically become the property of the
      Landlord and shall be surrendered to Landlord as part of the Leased
      Premises as required pursuant to Article unless Landlord shall require
      Tenant to remove any of such modifications, alterations or improvements in
      accordance with the Provision of Article 2, in which case Tenant shall so
      remove same. Landlord shall have no obligation to reimburse to Tenant all
      or any portion of the cost or value of any such modifications, alterations
      or improvements so surrendered to Landlord. All modifications, alterations
      or improvements which are installed or constructed on or attached to the
      Leased Premises by Landlord at Landlord’s expense shall be deemed real
      property and a part of the Leased Premises and shall be the property of
      Landlord. All lighting, plumbing, electrical, heating, ventilating and air
      conditioning fixtures, partitioning, window coverings, wall coverings and
      floor coverings installed by Tenant shall be deemed improvements to the
      Leased Premises and not trade fixtures of
  Tenant.

            

    

     

    
      	
              6.3

            	
              ALTERATIONS
      REQUIRED BY LAW: Tenant shall make all modifications, alterations, and
      improvements to the Leased Premises, at its sole cost, that are required
      by Law because of (i) Tenant’s use or occupancy of the Leased Premises,
      (ii) Tenant’s application for any permit or governmental approval, or
      (iii) Tenant’s making of any modifications, alterations, or improvements
      to or within the Leased Premises.

            

    

     

    
      	
              6.4

            	
              LIENS:
      Tenant shall keep the Leased Premises, the Building and the Project free
      from any liens and shall pay value due all bills arising out of any work
      performed, materials furnished, or obligations incurred by Tenant, its
      agents, employees or contractors related to the Leased Premises, if any
      such claim of lien is recorded against Tenant’s interest in this Lease,
      the Leased Premises, the Building or the Project, Tenant shall bond
      against, discharge or otherwise cause such lien to be entirely released
      within ten days after the same has been so
  recorded.

            

    

     

    ARTICLE
7

     

    ASSIGNMENT
AND SUBLETTING BY TENANT

     

    
      	
              7.1

            	
              BY
      TENANT: Tenant shall neither assign this Lease nor sublet the Lease
      Premises without obtaining the written consent of the Landlord to do so,
      however, that Landlord shall not arbitrarily or unreasonably refuse to
      grant consent to such assignment or subletting, and provided further that
      a consent to one assignment or subletting by Landlord shall not be deemed
      a consent to any subsequent assignment or subletting. Any assignment or
      subletting without the consent of the Landlord shall be void and shall, at
      the option of the Landlord, terminate this Lease. The acceptance of rent
      by Landlord from any person or entity other than the Tenant, or the
      acceptance of rent by Landlord from Tenant with knowledge of a violation
      of the provisions of this paragraph, shall not be deemed a waiver by
      Landlord of any provision of this Article or this Lease or to be a consent
      to any assignment or subletting by
Tenant.

            

    

     

    
      	
              7.2

            	
              MERGER
      OR REORGANIZATION: If Tenant is a corporation, any dissolution, merger,
      consolidation or other reorganization of Tenant, or the sale or other
      transfer in the aggregate over the Lease Term of a controlling percentage
      of the capital stock of Tenant shall not be deemed a voluntary assignment
      of Tenant’s interest in this Lease. However, should Tenant dissolve,
      merge, consolidate, or otherwise reorganize, Tenant shall notify Landlord
      in writing of the proposed change in its status fifteen (15) days prior to
      the effective date of such dissolution or
  reorganization.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              7.3

            	
              LANDLORD’S
      CONSENT: If Tenant shall desire to assign its interest under this Lease or
      to sublet the Leased Premises, Tenant must first notify Landlord, in
      writing, of its intent to so assign or sublet, specifying in detail the
      terms of such assignment or subletting, including, by way of illustration
      but not of limitation, the name of the proposed assignee or sublessee, the
      proposed assignee’s sublessee’s intended use of the leased premises, a
      current financial statement of such proposed assignee or sublessee, and
      the form of documents to be used in effectuating such assignment or
      subletting. Land lord shall have a period of fifteen (15) days following
      receipt of such notice to either (i) consent to such assignment or
      subletting, or (ii) refuse to consent to such requested assignment or
      subletting, provided that such consent shall not be unreasonably or
      arbitrarily refused. During said fifteen (15) day period, Tenant covenants
      and agrees to supply Landlord, upon request, all necessary or relevant
      information which Landlord may reasonably request respecting such proposed
      assignment or subletting and/or the proposed assignee or
      sublessee.

            

    

     

    
      	
              7.4

            	
              CONDITIONS
      TO LANDLORD’S CONSENT: If Landlord elects to consent to such requested
      assignment or subletting, such consent shall be expressly conditioned upon
      the occurrence of each of the conditions set forth below. Any purported
      assignment or subletting made prior to the full and complete satisfaction
      of each of the following conditions shall be void and shall, at the option
      of Landlord, constitute a material default of this Lease permitting
      Landlord to terminate this Lease unless such default is cured by Tenant
      satisfying each condition within five (5) days of receipt of written
      notice of the default. The conditions are as
  follows:

            

    

     

    
      	
               
      

            	
              A.

            	
              Landlord
      having approved in form and substance the assignment or sublease
      agreement, which approval shall not be unreasonably
    withheld.

            

    

     

    
      	
               
      

            	
              B.

            	
              Each
      such sublessee or assignee having agreed in writing satisfactory to
      Landlord to assume, to be bound by, and to perform the obligations of this
      Lease to be performed by Tenant.

            

    

     

    
      	
               
      

            	
              C.

            	
              Tenant
      having delivered to Landlord a complete and fully executed duplicate
      original of each sublease agreement or assignment
    agreement.

            

    

     

    
      	
               
      

            	
              D.

            	
              Tenant
      and Tenant’s sublessee shall have entered into a written agreement with
      and for the benefit of Landlord satisfactory to Landlord whereby Tenant
      and Tenant’s sublessee jointly agree to pay to Landlord one hundred
      percent of all excess rentals to be paid by such sublessee as and when
      such excess rentals are so paid.

            

    

     

    
      	
              7.5

            	
              EXCESS
      RENTALS DEFINED: The term “excess rentals” shall mean all consideration to
      be paid by the sublessee to Tenant or to any other on Tenant’s behalf or
      for Tenant’s benefit for the sublease of the Leased Premises in excess of
      the rent due Landlord under the terms of this Lease for the same period,
      less any commissions paid by Tenant to a licensed real estate broker for
      arranging such sublease. Tenant agrees that the portion of any excess
      rentals arising from any subletting by Tenant, which is to be paid to
      Landlord pursuant to this Article, now is and shall then be the property
      of Landlord and not the property of
Tenant.

            

    

     

    
      	
              7.6

            	
              EFFECT
      OF LANDLORD’S CONSENT: No assignment or subletting, even with the consent
      of Landlord, shall relieve Tenant of it’s primary obligation to pay rent
      and to perform all of the other obligations to be performed by Tenant
      hereunder. Consent by Landlord to one or more assignments or sublettings
      by Tenant shall not be deemed to be a consent to any subsequent assignment
      or subletting.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              7.7

            	
              GOOD
      FAITH: The rights granted to Tenant by this Article are granted in
      consideration of Tenant’s express covenant that all pertinent allocations
      which are made by Tenant between the value of this Lease and the value of
      any of Tenant’s personal property which may be conveyed or leased
      generally concurrently with and which may reasonably be considered a part
      of the same transaction as the permitted assignment or subletting shall be
      made fairly, honestly and in good faith. If Tenant shall breach this
      Covenant of Good Faith, Landlord may immediately declare Tenant to be in
      default under the terms of this Lease and terminate this Lease and/or
      exercise any other rights and remedies Landlord would have under the terms
      of this Lease in the case of a material default by Tenant under this
      Lease.

            

    

     

    
      	
              7.8

            	
              EFFECT
      OF LANDLORD’S CONSENT: No subletting, assignment or encumbrance, even with
      the consent of Landlord shall relieve Tenant of its personal and primary
      obligation to pay rent and to perform all of the other obligations to be
      performed by Tenant hereunder. Consent by Landlord to one or more
      assignments or encumbrances of Tenant’s interest in this Lease or to one
      or more subletting of the Leased Premises shall not be deemed to be a
      consent to any subsequent assignment, encumbrance or subletting. If
      Landlord shall have been ordered by a court of competent jurisdiction to
      consent to a requested assignment or subletting, or such an assignment or
      subletting shall have been ordered over the objection of Landlord, such
      assignment or subletting shall not be binding between the assignee (or
      sub-lessee) and Landlord until such a time as all conditions set forth in
      Paragraph 7.4 above have been fully satisfied (to the extent not then
      satisfied) by the assignee or sub-lessee, including, without limitation,
      the payment to Landlord of all agreed assignment considerations and/or
      excess rentals then due Landlord.

            

    

     

    ARTICLE
8

     

    LIMITATION
ON LANDLORD’S LIABILITY AND INDEMNITY

     

    
      	
              8.1

            	
              LIMITATION
      ON LANDLORD’S LIABILITY AND RELEASE: Landlord shall not be liable to
      Tenant for, and Tenant hereby releases Landlord and its partners and
      officers from, any and all liability, whether in contract, tort or any
      other basis, for any injury to or any damage sustained by Tenant, its
      agents, employees, contractors or invitees; any damage to Tenant’s
      property; or any loss to Tenant’s business, loss of Tenant’s profits or
      other financial loss of Tenant resulting from or attributable to the
      condition of, the management of, the maintenance of, or the protection of
      the Leased Premises, the Building, the Project or the Common Areas,
      including, without limitation, any such injury, damage or loss resulting
      from (i) the failure, interruption, rationing or other curtailment or
      cessation in the supply of electricity, water, gas or other utility
      service to the Project, the Building or the Leased Premises; (ii) the
      vandalism or forcible entry into the Building or the Leased Premises;
      (iii) the penetration of water into or onto any portion of the Leased
      Premises through roof leaks or otherwise; (iv) the failure to provide
      security and/or adequate lighting in or about the Project, the Building or
      the Leased Premises; (v) the existence of any design or construction
      defects within the Project, the Building or the Leased Premises; (vi) the
      failure of any mechanical systems to function properly (such as the HVAC
      systems); or (vii) the blockage of access to any portion of the Project,
      the Building or the Leased Premises, except to the extent such damage was
      proximately caused by Landlord’s active negligence, willful misconduct, or
      Landlord’s failure to perform an obligation expressly undertaken pursuant
      to this Lease but only if Tenant shall have given Landlord prior written
      notice to perform such obligation and Landlord shall have failed to
      perform such obligation within a reasonable period of time following
      receipt of written notice from Tenant to so perform such obligation. In
      this regard, Tenant acknowledges that it is fully apprised of the
      provisions of Law relating to releases, and particularly to those
      provisions contained in Section 1542 of the California Civil Code, which
      read as follows:

            

    

     

    “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the
debtor.”

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Notwithstanding
such statutory provision, and for the purpose of implementing a full and
complete release and discharge, Tenant hereby (i) waives the benefit of such
statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
Paragraph is a full and complete settlement and release and discharge of all
claims and is intended to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of our suspect to exist in
its favor.

     

    
      	
              8.2

            	
              TENANT’S
      INDEMNIFICATION OF LANDLORD: Tenant shall defend, with counsel
      satisfactory to Landlord, any claims made or legal actions filed or
      threatened by third parties against Landlord with respect to the death,
      bodily injury, personal injury, damage to property or interference with
      contractual or property rights suffered by any third party (including
      other tenants within the Project) which (i) occurred within the Leased
      Premises or (ii) resulted from Tenant’s use or occupancy of the Leased
      Premises or the Common Areas or (iii) resulted from Tenant’s activities in
      or about the Leased Premises, the Building or the Project, and Tenant
      shall indemnify and hold Landlord, Landlord’s principals, employees and
      agents harmless from any loss, including loss of rents by reason of vacant
      space which otherwise would have been leased but for such activities,
      liability, penalties, or expense whatsoever (including any legal fees
      incurred by Landlord with respect to defending such claims) resulting
      therefrom, except to the extent proximately caused by the active
      negligence or willful misconduct of Landlord. This indemnity agreement
      shall survive until the latter to occur of (i) the date of the expiration,
      or sooner termination, of this Lease, or (ii) the date Tenant actually
      vacates the Leased Premises. Notwithstanding the foregoing, Tenant shall
      be under no duty to indemnify and hold Landlord harmless, nor defend
      Landlord, against any liability, claims, or damages arising because of
      Landlord’s failure to make any repairs required by this Lease or to take
      any action required by this Lease or to take any action required of
      Landlord by this Lease, provided that the Landlord has been properly
      notified by Tenant of the required repair or action. The term “properly
      notified” shall mean notice as prescribed in Paragraph 13.10 of this
      Lease.

            

    

     

    ARTICLE
9

     

    INSURANCE

     

    
      	
              9.1

            	
              TENANT’S
      INSURANCE: Tenant shall maintain insurance complying with all of the
      following:

            

    

     

    
      	
               
      

            	
              A.

            	
              Tenant
      shall procure pay for and keep in full force and effect, at all times
      during the Lease Term, the
following:

            

    

     

    
      	
               
      

            	
              (1)

            	
              Comprehensive
      general liability insurance insuring Tenant against liability for personal
      injury, bodily injury, death and damage to property occurring within the
      Leased Premises, or resulting from Tenant’s use or occupancy of the Leased
      Premises or the Common Areas, or resulting from Tenant’s activities in or
      about the Leased Premises, with combined single limit coverage of not less
      than the amount of Tenant’s Required Liability Coverage (as set forth in
      Article 1), which insurance shall contain a “broad form liability”
      endorsement insuring Tenant’s performance of Tenant’s obligation to
      indemnify Landlord as contained in Article
8.2.

            

    

     

    
      	
               
      

            	
              (2)

            	
              Fire
      and property damage insurance in so-called “fire and extended coverage”
      form insuring Tenant against loss from physical damage to Tenant’s
      personal property, inventory, trade fixtures and improvements within the
      Leased Premises with coverage for the full actual replacement cost
      thereof:

            

    

     

    
      	
               
      

            	
              (3)

            	
              Pressure
      vessel insurance, if applicable;

            

    

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (4)

            	
              Product
      liability insurance (including, without limitation, if food and/or
      beverages are distributed, sold and/or consumed within the Leased
      Premises, to the extent obtainable, coverage for liability arising out of
      the distribution, sale or consumption of food and/or beverages (including
      alcoholic beverages, if applicable) at the Leased Premises) for not less
      than Tenant’s Required Liability Coverage (as set forth in Article
      1);

            

    

     

    
      	
               
      

            	
              (5)

            	
              Workers’
      compensation insurance and any other employee benefit insurance sufficient
      to comply with all Laws; and

            

    

     

    
      	
               
      

            	
              (6)

            	
              With
      respect to making of alterations or the construction of improvements or
      the like undertaken by Tenant, contingent liability and builder’s risk
      insurance, in an amount and with coverage satisfactory to
      Landlord.

            

    

     

    
      	
               
      

            	
              B.

            	
              Each
      policy of liability insurance required to be carried by Tenant pursuant to
      this Paragraph or actually carried by Tenant with respect to the Leased
      Premises (i) shall, except with respect to insurance required by
      Subparagraph A (6) above, name Landlord, and such others as are designated
      by Landlord, as additional insured; (ii) shall be primary insurance
      providing that the insurer shall be liable for the full amount of the
      loss, up to and including the total amount of liability set forth in the
      declaration of coverage, without the right of contribution from or prior
      payment by any other insurance coverage of Landlord; (iii) shall be in a
      form satisfactory to Landlord; (iv) shall be carried with companies
      reasonably acceptable to Landlord; (v) shall provide that such policy
      shall not be subject to cancellation, lapse or change except after at
      least thirty days prior written notice to Landlord; and (vi) shall contain
      a so-called “severability” or “cross liability” endorsement. Each policy
      of property insurance maintained by tenant with respect to the Leased
      Premises or any property therein (i) shall provide that such policy shall
      not be subject to cancellation, lapse or change except after at least
      thirty days prior written notice to Landlord and (ii) shall contain a
      waiver and/or a permission to waive by the insurer of any right of
      subrogation against Landlord, its principals, employees, agents and
      contractors, which might arise by reason of any payment under such policy
      or by reason of any act or omission of Landlord, its principals,
      employees, agents or contractors.

            

    

     

    
      	
               
      

            	
              C.

            	
              Prior
      to the time Tenant or any of its contractors enters the Leased Premises,
      Tenant shall deliver to the Landlord, with respect to each policy of
      insurance required to be carried by Tenant pursuant to this Article, a
      copy of such policy (appropriately authenticated by the insurer as having
      been issued, premium paid, providing the coverage required by this
      Paragraph and containing the provisions specified herein. With respect to
      each renewal or replacement of any such insurance, the requirements of
      this Paragraph must be complied with not less than thirty days prior to
      the expiration or cancellation of the policy being renewed or replaced.
      Landlord may, at any time and from time to time, inspect and/or copy any
      and all insurance policies required to be carried by Tenant pursuant to
      this Article. If Landlord’s Lender, insurance broker or advisor or counsel
      reasonably determines at any time that the amount of coverage set forth in
      Paragraph 9.1A for any policy of insurance Tenant is required to carry
      pursuant to this Article is not adequate, then Tenant shall increase the
      amount of coverage for such insurance to such greater amount as Landlord’s
      Lender, insurance broker or advisor or counsel reasonably deems adequate;
      provided, however, such increased level of coverage may not exceed the
      level of coverage for such insurance commonly carried by comparable
      businesses similarly situated and operating under similar
      circumstances.

            

    

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              9.2

            	
              LANDLORD’S
      INSURANCE: With respect to insurance maintained by
    Landlord:

            

    

     

    
      	
               
      

            	
              A.

            	
              Landlord
      shall maintain, as the minimum coverage required of it by this Lease, fire
      and property damage insurance in so-called “fire and extended coverage”
      form insuring Landlord (and such others as Landlord may designate) against
      loss from physical damage to the Building with coverage of not less than
      ninety percent of the full actual replacement cost thereof and against
      loss of rents for a period of not less than six months. Such fire and
      property damage insurance, at Landlord’s election but without any
      requirement on Landlord’s behalf to do so, (i) may be written in so-called
      “all risk” form, excluding only those perils commonly excluded from such
      coverage by Landlord’s then property damage insurer; (ii) may provide
      coverage for physical damage to the improvements so insured for up to the
      entire full actual replacement cost thereof; (iii) may be endorsed to
      cover loss or damage caused by any additional perils against which
      Landlord may elect to insure, including earthquake and/or flood; (iv) may
      provide coverage for loss of rents for a period of up to twelve months;
      and (v) may contain “deductibles” not exceeding One Thousand Dollars per
      occurrence (or up to five percent of the Building’s replacement value in
      the case of earthquake and/or flood insurance). Landlord shall not be
      required to cause such insurance to cover any of Tenant’s personal
      property, inventory and trade fixtures, or any modifications, alterations
      or improvements made or constructed by Tenant to or within the Leased
      Premises.

            

    

     

    
      	
               
      

            	
              B.

            	
              Landlord
      shall maintain comprehensive general liability insurance insuring Landlord
      (and such others as are designated by Landlord) against liability for
      personal injury, bodily injury, death, and damage to property occurring
      in, on or about, or resulting from the use or occupancy of the Project, or
      any portion thereof, with combined single limit coverage of at least Two
      Million Dollars. Landlord may carry such greater coverage as Landlord or
      Landlord’s Lender, insurance broker or advisor or counsel may from time to
      time determine is reasonably necessary for the adequate protection of
      Landlord and the Project.

            

    

     

    
      	
               
      

            	
              C.

            	
              Landlord
      may maintain any other insurance, which in the opinion of its insurance
      broker or advisor or legal counsel is prudent to carry under the given
      circumstances.

            

    

     

    
      	
              9.3

            	
              MUTUAL
      WAIVER OF SUBROGATION: Landlord hereby releases Tenant, and Tenant hereby
      releases Landlord and its respective partners and officers, agents,
      employees and servants, from any and all liability for loss, damage or
      injury to the property of the other in or about the Leased Premises which
      is caused by or results from a peril or event or happening which would be
      covered by insurance required to be carried under the terms of this Lease,
      or is covered by insurance actually carried and in force at the time of
      the loss, by the party sustaining such loss; however, that such waiver
      shall be effective only to the extent permitted by the insurance covering
      such loss and to the extent such insurance is not prejudiced
      thereby.

            

    

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
10

    DAMAGE
TO LEASED PREMISES

     

    
      	
              10.1

            	
              LANDLORD’S
      DUTY TO RESTORE: If the Leased Premises are damaged by any peril after the
      Effective Date of this Lease, Landlord shall restore the Leased Premises,
      as and when required by this Paragraph, unless this Lease is terminated by
      Landlord pursuant to Paragraph 10.2 or by Tenant pursuant to Paragraph
      10.3. All insurance proceeds available from the fire and property damage
      insurance carried by Landlord shall be paid to and become the property of
      Landlord. If this Lease is terminated pursuant to either Paragraph 10.2 or
      10.3, all insurance proceeds available from insurance carried by Tenant
      which cover loss to property that is Landlord’s property or would become
      Landlord’s property on termination of this Lease shall be paid to and
      become the property of Landlord, and the remainder of such proceeds shall
      be paid to and become the property of Tenant. If this Lease is not
      terminated pursuant to either Paragraph 10.2 or 10.3, all insurance
      proceeds available from insurance carried by Tenant which cover loss to
      property that is Landlord’s property shall be paid to and become property
      of Landlord, and all proceeds available which cover loss to property which
      would become the property of Landlord upon the termination of this Lease
      shall be paid to and remain the property of Tenant. If this Lease is not
      so terminated, then upon receipt of the insurance proceeds (if the loss is
      covered by insurance) and the issuance of all necessary governmental
      permits, Landlord shall commence and diligently prosecute to completion
      the restoration of the Leased Premises, to the extent then allowed by Law,
      to substantially the same condition in which the Leased Premises existed
      as of the Lease Commencement Date. Landlord’s obligation to restore shall
      be limited to the Leased Premises and interior improvements constructed by
      Landlord. Landlord shall have no obligation to restore any other
      improvements to the Leased Premises or any of Tenant’s personal property,
      inventory, trade fixtures, and other improvements constructed by Tenant to
      like or similar condition as existed at the time of such damage or
      destruction.

            

    

     

    
      	
              10.2

            	
              LANDLORD’S
      RIGHT TO TERMINATE: Landlord shall have the option to terminate this Lease
      in the event any of the following occurs, which option may be exercised
      only by delivery to Tenant of a written notice of election to terminate
      within thirty days after the date of such damage or
      destruction:

            

    

     

    
      	
               
      

            	
              A.

            	
              The
      Building is damaged by any peril covered by valid collectible insurance
      actually carried by Landlord and in force at the time of such damage or
      destruction (an “insured peril”) to such an extent that the estimated cost
      to restore the Building exceeds the lesser of (i) the insurance proceeds
      available from insurance actually carried by Landlord, or (ii)
      seventy-five percent of the then actual replacement cost
      thereof:

            

    

     

    
      	
               
      

            	
              B.

            	
              The
      Building is damaged by an uninsured peril, which peril Landlord was
      required to insure against pursuant to the provisions of Article 9 of this
      Lease, to such an extent that the estimated cost to restore the Building
      exceeds the lesser of (i) the insurance proceeds which would have been
      available had Landlord carried such required insurance, or (ii)
      seventy-five percent of the then actual replacement cost
      thereof;

            

    

     

    
      	
               
      

            	
              C.

            	
              The
      Building is damaged by an uninsured peril, which peril Landlord was not
      required to insure against pursuant to the provisions of Article 9 of this
      Lease, to any extent.

            

    

     

    
      	
               
      

            	
              D.

            	
              The
      Building is damaged by any peril and, because of the Laws then in force,
      (i) may not be restored at reasonable cost as required by Paragraph 10.1
      above, or (ii) may not be used for the same use being made thereof before
      such damage, whether or not restored as required by this
      Article.

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              10.3

            	
              TENANT’S
      RIGHT TO TERMINATE: If the Leased Premises are damaged by any peril and
      Landlord does not elect to terminate this Lease or is not entitled to
      terminate this Lease pursuant to this Article, then as soon as reasonably
      practicable, Landlord shall furnish Tenant with the written opinion of
      Landlord’s architect or construction consultant as to when the restoration
      work required of Landlord may be complete. Tenant shall have the option to
      terminate this Lease in the event any of the following occurs, which
      option may be exercised in the case of A or B below only by delivery to
      Landlord of a written notice of election to terminate within seven days
      after Tenant receives from Landlord the estimate of the time needed to
      complete such restoration:

            

    

     

    
      	
               
      

            	
              A.

            	
              The
      Leased Premises are damaged by any peril and, in the reasonable opinion of
      Landlord’s architect or construction consultant, the restoration of the
      Leases Premises cannot be substantially completed within nine months after
      the date of such damage; or

            

    

     

    
      	
               
      

            	
              B.

            	
              The
      Leased Premises are damaged by any peril within nine months of the last
      day of the Lease Term and, in the reasonable opinion of Landlord’s
      architect or construction consultant, the restoration of the Leased
      Premises cannot be substantially completed within ninety days after the
      date such restoration is commenced;
or

            

    

     

    
      	
               
      

            	
              C.

            	
              Landlord
      does not complete the restoration of the Leased Premises within nine
      months from the date of the damage, provided that such nine-month period
      of time shall be extended for such number of days as Landlord may be
      delayed by reason of Force Majeure.

            

    

     

    
      	
              10.4

            	
              TENANT’S
      WAIVER: Landlord and Tenant agree that the provisions of Paragraph 10.3
      above, captioned “Tenant’s Right to Terminate”, are intended to supersede
      and replace the provisions contained in California Civil Code, Section
      1932, Subdivision 2, and California Civil Code Section 1934, and
      accordingly, Tenant hereby waives the provisions of said Civil Code
      Sections and the provisions of any successor Code Sections or similar Laws
      hereinafter enacted.

            

    

     

    
      	
              10.5

            	
              ABATEMENT
      OF RENT: In the event of damage to the Leased Premises, which does not
      result in the termination of this Lease, the Base Monthly Rent (and any
      Additional Rent) shall be temporarily abated during the period of
      restoration in proportion to the degree to which Tenant’s use of the
      Leased Premises is impaired by such
damage.

            

    

     

    ARTICLE
11

     

    CONDEMNATION

     

    
      	
              11.1

            	
              LANDLORD’S
      RIGHT TO TERMINATE: Subject to Paragraph 11.3, Landlord shall have the
      option to terminate this Lease if, as a result of a taking by means of the
      exercise of the power of eminent domain (including inverse condemnation
      and/or voluntary sale or transfer by Landlord to an entity having the
      power of eminent domain under threat of condemnation), (i) all or any part
      of the Leased Premises is so taken, (ii) more than thirty-three and
      one-third percent of the Building’s leasable area is so taken, (iii) more
      than thirty-three and one-third percent of the Common Area is so taken, or
      (iv) because of the Laws then in force, the Leased Premises may not be
      used for the same use being made thereof before such taking, whether or
      not restored as required by Paragraph 11.4 below. Any such option to
      terminate by Landlord must be exercisable within a reasonable period of
      time, to be effective as of the date of possession is taken by the
      condemner.

            

    

     

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              11.2

            	
              TENANT’S
      RIGHT TO TERMINATE: Subject to Paragraph 11.3, Tenant shall have the
      option to terminate this Lease, if, as a result of any taking by means of
      the exercise of the power of eminent domain (including inverse
      condemnation and/or a voluntary sale or transfer by Landlord to an entity
      having the power of eminent domain under threat of condemnation), (i) all
      of the Leased Premises is so taken, (ii) thirty-three and one-third
      percent or more of the Leased Premises is so taken and the part of the
      Leased Premises that remains cannot, within a reasonable period of time,
      be made reasonably suitable for the continued operation of the Tenant’s
      business, or (iii) there is a taking of a portion of the Common Area and,
      as a result of such taking, Landlord cannot provide parking spaces within
      the Project (or within a reasonable distance therefrom) equal in number to
      at least sixty-six and two-thirds percent of Tenant’s Number of Parking
      Spaces (as set forth in Article 1), whether by rearrangement of the
      remaining parking areas in the Common Area (including, if Landlord elects,
      construction of multi-deck parking structures or re-striping for compact
      cars where permitted by Law), or by providing alternative parking
      facilities on other land within reasonable walking distance of the Leased
      Premises. Tenant must exercise such option within a reasonable period of
      time, to be effective on the later to occur of (i) the date that
      possession of that portion of the Common Area or the Leased Premises that
      is condemned is taken by condemner or (ii) the date Tenant vacates the
      Leased Premises.

            

    

     

    
      	
              11.3

            	
              TEMPORARY
      TAKING: If any portion of the Leased Premises is temporarily taken for one
      year or less, this Lease shall remain in effect. If any portion of the
      Leased Premises is temporarily taken for a period which either exceeds one
      year or which extends beyond the natural expiration of the Lease Term,
      then Landlord and Tenant shall each independently have the option to
      terminate this Lease, effective on the date possession is taken by the
      condemner.

            

    

     

    
      	
              11.4

            	
              RESTORATION
      AND ABATEMENT OF RENT: If any part of the Leased Premises is taken by
      condemnation and this Lease is not terminated, then Landlord shall repair
      any damage occasioned thereby to the remainder of the Leased Premises to a
      condition reasonably suitable for Tenant’s continued operations and
      otherwise, to the extent practicable, in the manner and to the extent
      provided in Paragraph 10.1. As of the date possession is taken by the
      condemning authority, (i) the Base Monthly Rent shall be reduced in the
      same proportion that the area of that part of the Leased Premises so taken
      (less any addition to the area of the Leased Premises by reason of any
      reconstruction) bears to the area of the Leased Premises immediately prior
      to such taking, and (ii) Tenant’s Proportionate Share shall be
      appropriately adjusted.

            

    

     

    
      	
              11.5

            	
              DIVISION
      OF CONDEMNATION AWARD: Any award made for any condemnation of the Project,
      the Building, the Common Areas or the Leased Premises, or any portion
      thereof, shall belong to and be paid to Landlord, and Tenant hereby
      assigns to Landlord all of its right, title and interest in any such
      award; provided, however, that Tenant shall be entitled to receive any
      condemnation award that is made directly to Tenant (i) for the taking of
      personal property, inventory or trade fixtures belonging to Tenant (ii)
      for the interruption of Tenant’s business or its moving costs, (iii) for
      loss of Tenant’s goodwill, or (iv) for any temporary taking where this
      Lease is not terminated as a result of such taking. The rights of Landlord
      and Tenant regarding any condemnation shall be determined as provided in
      this Article, and each party hereby waives the provisions of Section
      1265.130 of the California Code of Civil Procedure, and the provisions of
      any similar law hereinafter enacted, allowing either party to petition the
      Superior Court to terminate this Lease and/or allocating condemnation
      awards between Landlord and Tenant in the event of a taking of the Leased
      Premises.

            

    

     

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    ARTICLE
12

     

    DEFAULTS
AND REMEDIES

     

    
      	
              12.1

            	
              EVENTS
      OF TENANTS DEFAULTS: Tenant shall be in default of its obligations under
      this Lease if any of the following events
occur:

            

    

     

    
      	
               
      

            	
              A.

            	
              Tenant
      has failed to pay Base Monthly Rent or any Additional Rent within five (5)
      days after written notice from Landlord that it is due (provided, however,
      that Landlord shall not be required to give more than two (2) such notices
      in any twelve (12) consecutive month period, after which Tenant shall be
      in default if it fails to pay any rent or other charge when due);
      or

            

    

     

    
      	
               
      

            	
              B.

            	
              Tenant
      shall have done or permitted to have been done any act, use or thing in
      its use, occupancy or possession of the Leased Premises or in its use of
      the Common Areas which is prohibited by the terms of this Lease and,
      within thirty (30) days after written notice from Landlord specifying the
      nature of the default with reasonable particularity has failed to cure
      such default (provided, however, that if the default is of such a nature
      that it cannot be completely remedied within such thirty (30) day period,
      this provision shall be complied with if Tenant begins to cure the default
      within the thirty (30) day period and thereafter proceeds with due
      diligence and in good faith to effect the cure as soon as practicable);
      or

            

    

     

    
      	
               
      

            	
              C.

            	
              Tenant
      has failed to perform any other term or provision of this Lease within
      thirty (30) days after written notice from Landlord specifying the nature
      of the default with reasonable particularity (provided, however, that if
      the default is of such a nature that it cannot be completely remedied
      within such thirty (30) day period, this provision shall be complied with
      if Tenant begins to cure the default within the thirty (30) day period and
      thereafter proceeds with due diligence and in good faith to effect the
      cure as soon as practicable); or

            

    

     

    
      	
               
      

            	
              D.

            	
              Tenant
      shall have sublet the Leased Premises or assigned or encumbered its
      interest in this Lease in violation of the provisions contained in Article
      7, whether voluntarily or by operation of Law;
  or

            

    

     

    
      	
               
      

            	
              E.

            	
              Tenant
      shall have abandoned the Leased Premises;
or

            

    

     

    
      	
               
      

            	
              F.

            	
              Tenant
      or any Guarantor of this Lease shall have permitted or suffered the
      sequestration or attachment of, or execution on, or the appointment of a
      custodian or receiver with respect to, all or any substantial part of the
      property or assets of Tenant (or such Guarantor) or any property or asset
      essential to the conduct of Tenant’s (or such Guarantor’s) business, and
      Tenant (or such Guarantor) shall have failed to obtain return or release
      of the same within thirty days thereafter, or prior to sale pursuant to
      such sequestration, attachment or levy, whichever is earlier;
      or

            

    

     

    
      	
               
      

            	
              G.

            	
              Tenant
      or any Guarantor of this Lease shall have made a general assignment of all
      or a substantial part of its assets for the benefit of creditors;
      or

            

    

     

    
      	
               
      

            	
              H.

            	
              Tenant
      or any Guarantor of this Lease shall have allowed (or sought) to have
      entered against it a decree or order which: (i) grants or constitutes an
      order for relief, appointment of a trustee, or confirmation of a
      reorganization plan under the bankruptcy laws of the United States; (ii)
      approves as properly filed a petition seeking liquidation or
      reorganization under said bankruptcy laws or any other debtor’s relief law
      or similar statute of the United States or any state thereof; or (iii)
      otherwise directs the winding up or liquidation of Tenant; provided,
      however, if any decree or order was entered without Tenant’s consent or
      over Tenant’s objection, Landlord may not terminate this Lease pursuant to
      this Subparagraph if such decree or order is rescinded or reversed within
      thirty days after its original
entry.

            

    

     

    
      	
               
      

            	
              I.

            	
              Tenant
      or any Guarantor of this Lease shall have availed itself of the protection
      of any debtor’s relief law, moratorium law or other similar Law which does
      not require the prior entry of a decree or
  order.

            

    

     

    
      	
               
      

            	
              Initial
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              12.2

            	
              LANDLORD’S
      REMEDIES: In the event of any default by Tenant, and without limiting
      Landlord’s right to indemnification as provided in Article 8.2, Landlord
      shall have the following remedies, in addition to all other rights and
      remedies provided by Law or otherwise provided in this Lease, to which
      Landlord may resort cumulatively, or in the
  alternative:

            

    

     

    
      	
               
      

            	
              A.

            	
              Landlord
      may, at Landlord’s election, keep this Lease in effect and enforce, by an
      action at law or in equity, all of its rights and remedies under this
      Lease including, without limitation, (i) the right to recover the rent and
      other sums as they become due by appropriate legal action, (ii) the right
      to make payments required of Tenant, or perform Tenant’s obligations and
      be reimbursed by Tenant for the cost thereof with interest at the then
      maximum rate of interest not prohibited by Law from the date the sum is
      paid by Landlord until Landlord is reimbursed by Tenant, and (iii) the
      remedies of injunctive relief and specific performance to prevent Tenant
      from violating the terms of this Lease and/or to compel Tenant to perform
      its obligations under this Lease, as the case may
  be.

            

    

     

    
      	
               
      

            	
              B.

            	
              Landlord
      may, at Landlord’s election, terminate this Lease by giving Tenant written
      notice of termination in which event this Lease shall terminate on the
      date set forth for termination in such notice. Any termination under this
      Subparagraph shall not relieve Tenant from its obligation to pay Landlord
      all Base Monthly Rent or Additional Rent then or thereafter due, or any
      other sums due or thereafter accruing to Landlord, or from any claim
      against Tenant for damages previously accrued or then or thereafter
      accruing. In no event shall any one or more of the following actions by
      Landlord, in the absence of a written election by Landlord to terminate
      this Lease, constitute a termination of this
  Lease:

            

    

     

    
      	
               
      

            	
              (1)

            	
              Appointment
      of a receiver of keeper in order to protect Landlord’s interest
      hereunder;

            

    

     

    
      	
               
      

            	
              (2)

            	
              Consent
      to any subletting of the Leased Premises or assignment of this Lease by
      Tenant, whether pursuant to the provisions hereof or otherwise;
      or

            

    

     

    
      	
               
      

            	
              (3)

            	
              Any
      other action by Landlord or Landlord’s agents intended to mitigate the
      adverse effects of any breach of this Lease by Tenant, including, without
      limitation, any action taken to maintain and preserve the Leased Premises
      or any action taken to re-let the Leased Premises, or any portion thereof,
      for the account of Tenant and in the name of
  Tenant.

            

    

     

    
      	
               
      

            	
              C.

            	
              In
      the event Tenant breaches this Lease and abandons the Leased Premises,
      Landlord may terminate this Lease, but his Lease shall not terminate
      unless Landlord gives Tenant written notice of termination. No act by or
      on behalf of Landlord intended to mitigate the adverse effect of such
      breach, including those described by Subparagraph B (1), (2) and (3)
      immediately preceding, shall constitute a termination of Tenant’s right to
      possession unless Landlord gives Tenant written notice of termination. If
      Landlord does not terminate this Lease by giving written notice of
      termination, Landlord may enforce all its rights and remedies under this
      Lease, including the right to recover rent as it becomes due under this
      Lease as provided in California Civil Code Section 1951.4, as in effect on
      the Effective Date of this Lease.

            

    

     

    
      	
               
      

            	
              D.

            	
              In
      the event Landlord terminates this Lease, Landlord shall be entitled, at
      Landlord’s election, to damages in an amount as set forth in California
      Civil Code Section 1951.2, as in effect on the Effective Date of this
      Lease. For purposes of computing damages pursuant to said Section 1951.2,
      an interest rate equal to the maximum rate of interest then not prohibited
      by Law shall be used where permitted. Such damages shall include, without
      limitation:

            

    

     

    
      	
               
      

            	
              Initial
      _____ _____ _____

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (1)

            	
              The
      worth at the time of award of the amount by which the unpaid rent for the
      balance of the term after the time of award exceeds the amount of such
      loss that Tenant proves could be reasonably avoided, computed by
      discounting such amount at the discount rate of the Federal Reserve Bank
      of San Francisco at the time of award plus one percent:
  and

            

    

     

    
      	
               
      

            	
              (2)

            	
              Any
      other amount necessary to compensate Landlord for all detriment
      proximately caused by Tenant’s failure to perform Tenant’s obligations
      under this Lease, or which in the ordinary course of things would be
      likely to result therefrom, including, without limitation, the following:
      (i) expenses for cleaning, repairing or restoring the Leased Premises;
      (ii) expenses for altering, remodeling or otherwise improving the Leased
      Premises for the purpose of re-letting, including removal of existing
      leasehold improvements and/or installation of additional leasehold
      improvements (regardless of how the same is funded, including reduction of
      rent, a direct payment or allowance to a new tenant, or otherwise); (iii)
      broker’s fees, advertising costs and other expenses of re-letting the
      Leased Premises; (iv) costs of carrying the Leased Premises, such as
      taxes, insurance premiums, utility charges and security precautions; (v)
      expenses incurred in removing, disposing of and/or storing any of Tenant’s
      personal property, inventory or trade fixtures remaining therein; (vi)
      attorney’s fees, expert witness fees, court costs and other reasonable
      expenses incurred by Landlord (nut not limited to taxable costs) in
      retaking possession of the Leased Premises, establishing damages
      hereunder, and re-leasing the Leased Premises; and (vii) any other
      expenses, costs or damages otherwise incurred or suffered as a result of
      Tenant’s default.

            

    

     

    
      	
              12.3

            	
              LANDLORD’S
      DEFAULT AND TENANT’S REMEDIES: In the event Landlord fails to perform any
      of its obligations under this Lease, Landlord shall nevertheless not be in
      default under the terms of this Lease until such time as Tenant shall have
      first given Landlord written notice specifying the nature of such failure
      to perform its obligations, and then only after Landlord shall have had a
      reasonable period of time following its receipt of such notice within
      which to perform such obligations. In the event of Landlord’s default as
      above set forth, then, and only then, Tenant shall have the following
      remedies only:

            

    

     

    
      	
               
      

            	
              A.

            	
              Tenant
      may then proceed in equity or at law to compel Landlord to perform its
      obligations and/or recover damages proximately caused by such failure to
      perform (except as and to the extent Tenant has waived its right to
      damages as provided in this Lease).

            

    

     

    
      	
               
      

            	
              B.

            	
              Tenant,
      at its option, may then cure any default of Landlord at Landlord’s cost.
      If, pursuant to this Subparagraph, Tenant reasonably pays any sum to any
      third party or does any act that requires the payment of any sum to any
      third party at any time by reason of Landlord’s default, the sum paid by
      Tenant shall be immediately due from Landlord to Tenant at the time Tenant
      supplies Landlord with an invoice therefore (provided such invoice sets
      forth and is accompanied by a written statement of Tenant setting forth in
      reasonable detail the amount paid, the party to whom it was paid, the date
      it was paid, and the reasons giving rise to such payment), together with
      interest at twelve percent per annum from the date of such invoice until
      Tenant is reimbursed by Landlord.

            

    

     

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              12.4

            	
              LIMITATION
      ON TENANT’S RECOURSE: If Landlord is a corporation, trust, partnership,
      joint venture, unincorporated association, or other form of business
      entity, Tenant agrees that (i) the obligations of Landlord under this
      Lease shall not constitute personal obligations of the officers,
      directors, trustees, partners, joint venturers, members, owners,
      stockholders, or other principals of such business entity and (ii) Tenant
      shall have recourse only to the assets of such business entity for the
      satisfaction of such obligations and not against the assets of such
      officers, directors, trustees, partners, joint venturers, members, owners,
      stockholders or principals (other than to the extent of their interest in
      the assets owned by such business entity). Additionally, if Landlord is a
      partnership, then Tenant covenants and
agrees:

            

    

     

    
      	
               
      

            	
              A.

            	
              No
      partner of Landlord shall be sued or named as a part in any suit or action
      brought by Tenant with respect to any alleged breach of this Lease (except
      to the extent necessary to secure jurisdiction over the partnership and
      then only of that sole purpose);

            

    

     

    
      	
               
      

            	
              B.

            	
              No
      service of process shall be made against any partner of Landlord except
      for the sole purpose of securing jurisdiction over the partnership;
      and

            

    

     

    
      	
               
      

            	
              C.

            	
              No
      writ of execution will ever be levied against the assets of any partner of
      Landlord other than to the extent of his interest in the assets of the
      partnership. Tenant further agrees that each of the foregoing covenants
      and agreements shall be enforceable by Landlord and by any partner of
      Landlord and shall be applicable to any actual or alleged
      misrepresentation or nondisclosure made respecting this Lease or the
      Leased Premises or any actual or alleged failure, default or breach of any
      covenant or agreement either expressly or implicitly contained in this
      Lease or imposed by statute or at common
law.

            

    

     

    
      	
              12.5

            	
              TENANT’S
      WAIVER: Landlord and Tenant agree that the provisions of Paragraph 12.3
      above are intended to supercede and replace the provisions of California
      Civil Code 1932. (1), 1941 and 1942, and accordingly, Tenant hereby waives
      the provisions of Section 1932(1), 1941 and 1942 of the California Civil
      Code and/or any similar or successor Law regarding Tenant’s right to
      terminate this Lease or to make repairs and deduct the expenses of such
      repair from the rent due under this Lease. Tenant hereby waives any right
      of redemption or relief from forfeiture under the Laws of the State of
      California, or under any other present or future Law, in the event Tenant
      is evicted or Landlord takes possession of the Leased Premises by reason
      of any default by Tenant.

            

    

     

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    ARTICLE
13

    GENERAL
PROVISIONS

     

    
      	
              13.1

            	
              TAXES
      ON TENANT’S PROPERTY: Tenant shall pay before delinquency any and all
      taxes, assessments, license fees, use fees and public charges of whatever
      nature or description levied, assessed or imposed against Tenant or
      Tenant’s estate in this Lease or Tenant’s property or improvements made by
      Tenant to the Leased Premises. Tenant shall pay before delinquency and all
      taxes, assessments, license fees, use fees and public charges of whatever
      nature or description levied, assessed or imposed by a governmental agency
      against Landlord by reason of or based upon Tenant’s use of public
      facilities or services, or Tenant’s consumption of public utilities,
      energy, water or other resources which become due during the Lease Term.
      On demand by Landlord, Tenant shall furnish Landlord with satisfactory
      evidence of these payments. If any such taxes, assessments, fees or public
      charges are levied against Landlord, Landlord’s property, the Building or
      the Project, or if the assessed value of the Building or the Project is
      increased by the inclusion therein of a value placed upon same, then
      Landlord, after giving written notice to Tenant, shall have the right,
      regardless of the validity thereof, to pay such taxes, assessment, fee or
      public charge and bill Tenant, as Additionally Rent, the amount of such
      taxes, assessment, fee or public charge so paid on Tenant’s behalf. Tenant
      shall, within ten days from the date it receives an invoice from Landlord
      setting forth the amount of such taxes, assessment, fee or public charge
      so levied, pay to Landlord, as Additional Rent, the amount set forth in
      said invoice. Failure by Tenant to pay the amount so invoiced within said
      ten-day period shall be conclusively deemed a default by Tenant under this
      Lease. Tenant shall have the right, and with Landlord’s full cooperation
      if Tenant is not then in default under the terms of this Lease, to bring
      suit in any court of competent jurisdiction to recover from the taxing
      authority the amount of any such taxes, assessment, fee or public charge
      so paid.

            

    

     

    
      	
              13.2

            	
              HOLDING
      OVER: This Lease shall terminate without further notice on the Leased
      Expiration Date (as set forth in Article 1). Any holding over by Tenant
      after expiration of the Lease Term shall neither constitute a renewal or
      extension of this Lease nor give Tenant any rights in or to the Leased
      Premises except as expressly provided in this Paragraph. Any such holding
      over shall be deemed an unlawful detainer or the Leased Premises unless
      Landlord has consented to same. Any such holding over to which Landlord
      has consented shall be construed to be a tenancy from month to month, on
      the same terms and conditions herein specified insofar as applicable,
      except that the Base Monthly Rent shall be increased to an amount equal to
      one hundred ten percent of the Base Monthly Rent payable during the last
      full month immediately preceding such holding
  over.

            

    

     

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              13.3

            	
              SUBORDINATION
      TO MORTGAGES: This Lease is subject and subordinate to all underlying
      ground leases and to all mortgages and deeds of trust which affect the
      Building and are of public record as of the Effective Date of this Lease,
      and to all renewals, modifications, consolidation, replacements and
      extensions thereof. However, if the lessor under any such ground lease or
      any Lender holding any such mortgage or deed of trust shall advise
      landlord that it desires or requires this Lease to be made prior and
      superior thereto, then, upon written request of Landlord to Tenant, Tenant
      shall promptly execute, acknowledge and deliver any and all documents or
      instruments which Landlord and such lessor or Lender deem necessary or
      desirable to make this Lease prior thereto. Tenant hereby consents to
      Landlord’s ground leasing the land underlying the Building and/or
      encumbering the Building as security for future loans on such terms as
      Landlord shall desire, all of which future ground leases, mortgages or
      deeds of trust shall be subject and subordinate to this Lease. However, if
      any lessor under any such future ground lease or any Lender holding such
      future mortgage or deed of trust shall desire or require that this Lease
      be made subject and subordinate to such future ground lease, mortgage or
      deed of trust, then Tenant agrees, within ten days after Landlord’s
      written request therefore, to execute, acknowledge and deliver to Landlord
      any and all documents or instruments requested by Landlord or such lessor
      or Lender as may be necessary or proper to assure the subordination of
      this Lease to such future ground lease, mortgage or deed of trust; but
      only if such lessor or Lender agrees to recognize Tenant’s rights under
      this Lease and not to disturb Tenant’s quiet possession of the Leased
      Premises so long as Tenant is not in default under this
    Lease.

            

    

     

    
      	
              13.4

            	
              TENANT’S
      ATTORNMENT UPON FORECLOSURE: Tenant shall, upon request, attorn (i) to any
      purchaser of the Building, (ii) to any grantee or transferee designated in
      any deed given in lieu of foreclosure of any security interest encumbering
      the Building, or (iii) to the lessor under any underlying ground lease of
      the land underlying the Building, should such ground lease be terminated;
      provided that such purchaser, grantee or lessor recognizes Tenant’s rights
      under this Lease.

            

    

     

    
      	
              13.5

            	
              MORTGAGEE
      PROTECTION: In the event of any default on the part of Landlord, Tenant
      will give notice by certified mail to any Lender or lessor under any
      underlying ground lease who shall have requested, in writing, to Tenant
      that it be provided with such notice, and Tenant shall offer such Lender
      or lessor a reasonable opportunity to cure the default, including time to
      maintain possession of the Lease Premises by power of sale or judicial
      foreclosure or other appropriate legal proceedings as reasonably necessary
      to effect a cure.

            

    

     

    
      	
              13.6

            	
              ESTOPPEL
      CERTIFICATES: Tenant will, following any request by Landlord, promptly
      execute and deliver to Landlord an estoppel certificate (i) certifying
      that this Lease is unmodified and in full force and effect, or, if
      modified, stating the nature of such modification and certifying that this
      Lease, as so modified, is in full force and effect, (ii) stating the date
      to which the rent and other charges are paid in advance, if any, (iii)
      acknowledging that there are not, to Tenant’s knowledge, any uncured
      defaults on the part of the Landlord hereunder, or specifying such
      defaults if any are claimed, and (iv) certifying such other information
      about this Lease as may be reasonably requested by Landlord. Tenant’s
      failure to execute and deliver such estoppel certificate within ten days
      after Landlord’s request therefore shall be material default by Tenant
      under this Lease, and Landlord shall have all of the rights and remedies
      available to Landlord as Landlord would otherwise have in the case of any
      other material default by Tenant, including the right to terminate this
      Lease and sue for damages proximately caused thereby it being agreed and
      understood by Tenant that Tenant’s failure to so deliver such estoppel
      certificate in a timely manner could result in Landlord being unable to
      perform committed obligations to other third parties which were made by
      landlord in reliance upon this covenant of Tenant. Landlord and Tenant
      intend that any statement delivered pursuant to this Paragraph may be
      relied upon by any Lender or purchaser or prospective Lender or purchaser
      of the Building, the Project, or any interest
  therein.

            

    

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              13.7

            	
              TRANSFER
      BY LANDLORD: Landlord and its successor in interest shall have the right
      to transfer their interest in the Building, Project, or any portion
      thereof at any time and to any person or entity. In the event of any such
      transfer, the Landlord originally named herein (and in the case of any
      subsequent transfer, the transferor), from the date of such transfer, (i)
      shall be automatically relieved without any further act by any person or
      entity, of all liability for the performance of the obligations of the
      Landlord hereunder which may accrue after the date of such transfer and
      (ii) shall be relieved of all liability for the performance of the
      obligations of the Landlord hereunder which have accrued before the date
      of transfer if its transferee agrees to assume and perform all such prior
      obligations of the Landlord hereunder. Tenant shall attorn to any such
      transferee. After the date of any such transfer, the term “Landlord” as
      used herein shall mean the transferee of such interest in the Building or
      the Project.

            

    

     

    
      	
              13.8

            	
              FORCE
      MAJEURE: The obligations of each of the parties under this Lease (other
      than the obligation to pay money) shall be temporarily excused if such
      party is prevented or delayed in performing such obligation by reason of
      any strikes, lockouts or labor disputes; inability to obtain labor,
      materials, fuels or reasonable substitutes therefore; governmental
      restrictions, regulations, controls, action or inaction; civil commotion;
      inclement weather, fire or other acts of God; or other causes (except
      financial inability) beyond the reasonable control of the party obligated
      to perform (including acts or omissions of the other party) for a period
      equal to the period of any such prevention, delay or
    stoppage.

            

    

     

    
      	
              13.9

            	
              NOTICES:
      Any notice required or desired to be given by a party regarding this Lease
      shall be in writing and shall be personally served, or in lieu of personal
      service may be given by depositing such notice in the United States mail,
      certified, postage prepaid, addressed to the other party as
      follows:

            

    

     

    
      	
               
      

            	
              A.

            	
              If
      addressed to Landlord, to Landlord at its Address for Notices (as set
      forth in Article 1)

            

    

     

    
      	
               
      

            	
              B.

            	
              If
      addressed to Tenant, to Tenant at its Address for Notices (as set forth in
      Article 1). Any notice given by certified mail shall be deemed given on
      the date receipt was acknowledged to the postal authorities. Any notice
      given by mail other than certified mail shall be deemed given only if
      received by the other party, and then on the date of receipt. Each party
      may, by written notice to the other in the manner aforesaid, change the
      address to which notices addressed to it shall thereafter be
      mailed.

            

    

     

    
      	
              13.10

            	
              ATTORNEYS’
      FEES: In the event any party shall bring any action, arbitration
      proceeding or legal proceeding alleging a breach of any provision of this
      Lease, to recover rent, to terminate this Lease, or to enforce, protect,
      determine or establish any term or covenant of this Lease or rights or
      duties hereunder of either party, the prevailing party shall be entitled
      to recover from the non-prevailing party as a part of such action or
      proceeding, or in a separate action for that purpose brought within one
      year from the determination of such proceeding, reasonable attorney’s
      fees, expert witness fees, court costs and other reasonable expenses
      incurred by the prevailing party. In the event that Landlord shall be
      required to retain counsel to enforce any provision of this Lease, and if
      Tenant shall thereafter cure (or desire to cure) such default, Landlord
      shall be conclusively deemed the prevailing party and Tenant shall pay to
      Landlord all attorneys’ fees, expert witness fees, court costs and other
      reasonable expenses so incurred by Landlord promptly upon demand. Landlord
      may enforce this provision by either (i) requiring Tenant to pay such fees
      and costs as a condition to curing its default or (ii) bringing a separate
      action to enforce such payment, it being agreed by and between Landlord
      and Tenant that Tenant’s failure to pay such fees and costs upon demand
      shall constitute a breach of this Lease in the same manner as a failure by
      Tenant to pay the Base Monthly Rent, giving Landlord the same rights and
      remedies as if Tenant failed to pay the Base Monthly
  Rent.

            

    

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              13.11

            	
              DEFINITIONS:
      Any term that is given a special meaning by any provisions in this Lease
      shall, unless otherwise specifically stated, have such meaning whenever
      used in this Lease in any addendum or amendment hereto. In addition to the
      terms defined in Article 1, the following terms shall have the following
      meanings:

            

    

     

    
      	
               
      

            	
              A.

            	
              REAL
      PROPERTY TAXES: The terms “real Property Tax” and “Real Property Taxes”
      shall each mean (i) all taxes, assessments, levies and other charges of
      any kind or nature whatsoever, general and special, foreseen and
      unforeseen (including all installments of principal and interest required
      to pay any general or special assessments for public improvements and any
      increases resulting from reassessments caused by any change in ownership
      or new construction), now or hereafter imposed by any governmental or
      quasi-governmental authority or special district having the direct or
      indirect power to tax or levy assessments, which are levied or assessed
      for whatever reason against the Project or any portion thereof, or
      Landlord’s interest therein, or the fixtures, equipment and other property
      of Landlord that is an integral part of the Project and located thereon,
      or Landlord’s business of owing, leasing or managing the Project or the
      gross receipts, income or rentals from the Project; (ii) all charges,
      levies or fees imposed by any governmental authority against Landlord by
      reason of or based upon the use of or number of parking spaces within the
      Project, the amount of public services or public utilities used or
      consumed (e.g. water, gas, electricity, sewage or surface water disposal)
      at the Project, the number of persons employed by tenants of the Project,
      the size (whether measured in area, volume, number of tenants or whatever)
      or the value of the Project, or the type of use or uses conducted within
      the Project; and (iii) all costs and fees (including attorneys’ fees)
      incurred by Landlord in contesting any Real Property Tax and in
      negotiating with public authorities as to any Real Property Tax. If, at
      any time during the Lease Term, the taxation or assessment of the Project
      prevailing as of the Effective Date of this Lease shall be altered so that
      in lieu of or in addition to any Real Property Tax described above there
      shall be levied, assessed or imposed (whether by reason of a change in the
      method of taxation or assessment, creation of a new tax or charge, or any
      other cause) and alternate, substitute, or additional tax or charge (i) on
      the value, size, use or occupancy of the Project or Landlord’s interest
      therein or (ii) on or measured by the gross receipts, income or rentals
      from the Project, or on Landlord’s business of owning, leasing or managing
      the Project or (iii) computed in any manner with respect to the operation
      of the Project, then any such tax or charge, however designated, shall be
      included within the meaning of the terms “Real Property Tax” or “Real
      Property Taxes” for purposes of this Lease. If any Real Property Tax is
      partly based upon property or rents unrelated to the Project, then only
      that part of such Real Property Tax that is fairly allocable to the
      Project shall be included within the meaning of the terms “Real Property
      Tax” or “Real Property Taxes”. Notwithstanding the foregoing, the terms
      “Real Property Tax” or “Real Property Taxes” shall not include estate,
      inheritance, transfer, gift or franchise taxes of Landlord or the federal
      or state income tax imposed on Landlord’s income from all
      sources.

            

    

     

    
      	
               
      

            	
              B.

            	
              LANDLORD’S
      INSURANCE COSTS: The term “Landlord’s Insurance Costs” shall mean the
      costs to Landlord to carry and maintain the policies of fire and property
      damage insurance for the Project and general liability insurance required,
      or permitted, to be carried by Landlord pursuant to Article 9, together
      with any deductible amounts paid by Landlord upon the occurrence of any
      insured casualty or loss.

            

    

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              C.

            	
              READY
      FOR OCCUPANCY: The term “Ready for Occupancy” shall mean the date upon
      which (i) the Leased Premises are suitable for Tenants occupancy in a
      broom clean condition and (ii) the improvements, if any, to be made to the
      Leased Premises by Landlord as a condition to Tenant’s obligation to
      accept possession of the Leased Premises have been substantially completed
      and the appropriate governmental building department (i.e. the City
      building department, if the Project is located within a City, or otherwise
      the County building department) shall have approved the construction of
      the improvements as complete or is willing to so approve the construction
      of the improvements as complete subject only to compliance with specified
      conditions which are the responsibility of Tenant to
    satisfy.

            

    

     

    
      	
               
      

            	
              D.

            	
              TENANT’S
      PROPORTIONATE SHARE: The terms “Tenant’s Proportionate Share” and Tenant’s
      Share” as used with respect to an item pertaining to the Building, shall
      each mean that percentage obtained by dividing the leasable square footage
      contained within the Leased Premises (as set forth in Article 1) by the
      total leasable square footage contained within the Building as the same
      from time to time exists or, as used with respect to an item pertaining to
      the Project, shall each mean that percentage obtained by dividing the
      leasable square footage contained within the Leased Premises (as set forth
      in Article 1) by the total leasable square footage contained within the
      Project as the same from time to time exists, unless, as to any given
      item, such a percentage allocation unfairly burdens or benefits a given
      tenant(s), in which case Landlord shall have the exclusive right to
      equitably allocate such item so as to not unfairly burden or benefit a
      given tenant(s). Landlord’s determination of any such special allocation
      shall be final and binding upon Tenant unless made in bad
      faith.

            

    

     

    
      	
               
      

            	
              E.

            	
              BUILDINGS
      PROPORTIONATE SHARE: The terms “Building’s Proportionate Share” and
      “Building’s Share” shall each mean that percentage which is obtained by
      dividing the leasable square footage contained within the Building by the
      leasable square footage contained with all buildings located within the
      Project, unless, as to any given item, such a percentage allocation
      unfairly burdens or benefits a given building(s), in which case Landlord
      shall have the exclusive right to equitably allocate such item so as to
      not unfairly burden or benefit any given building(s). Landlord’s
      determination of any such special allocation shall be final and binding
      upon Tenant unless made in bad
faith.

            

    

     

    
      	
               
      

            	
              F.

            	
              LAW:
      The term “Law” shall mean any judicial decision and any statute,
      constitution, ordinance, resolution, regulation, rule, administrative
      order, or other requirement of any municipal, county, state, federal, or
      other governmental agency or authority having jurisdiction over the
      parties to this Lease, the Leased Premises, the Building or the Project,
      or any of them in effect either at the Effective Date of this Lease or at
      any time during the Lease Term, including, without limitation, any
      regulation, order, or policy of any quasi-official entity or body (e.g. a
      board of fire examiners or a public utility or special
      district).

            

    

     

    
      	
               
      

            	
              G.

            	
              LENDER:
      The term “Lender” shall mean any beneficiary, mortgagee, secured party, or
      other holder of any deed of trust, mortgage or other written security
      device or agreement affecting the Project, and the note or other
      obligations secured by it.

            

    

     

    
      	
               
      

            	
              H.

            	
              PRIVATE
      RESTRICTIONS: The term “Private Restrictions” shall mean all recorded
      covenants, conditions and restrictions, private agreements, easements, and
      any other recorded instruments affecting the use of the Project, as they
      may exist from time to time.

            

    

     

    
      	
               
      

            	
              I.

            	
              RENT:
      The term “rent” shall mean collectively Base Monthly Rent and all
      Additional Rent.

            

    

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              13.12

            	
              GENERAL
      WAIVERS: One party’s consent to or approval of any act by the other party
      requiring the first party’s consent or approval shall not be deemed to
      waive or render unnecessary the first party’s consent to or approval of
      any subsequent similar act by the other party. No waiver of any provision
      hereof or any breach of any provision hereof shall be effective unless in
      writing and signed by the waiving party. The receipt by Landlord of any
      rent or payment with or without knowledge of the breach of any other
      provision hereof shall not be deemed a waiver of any such breach. No
      waiver of any provision of this Lease shall be deemed a continuing waiver
      unless such a waiver specifically states so in writing and is signed by
      both Landlord and Tenant. No delay or omission in the exercise of any
      right or remedy accruing to either party upon any breach by the other
      party under this Lease shall impair such right or remedy or be construed
      as a waiver of any such breach theretofore or thereafter occurring. The
      waiver by either party of any breach of any provision of this Lease shall
      not be deemed to be a waiver of any subsequent breach of the same or any
      other provisions herein contained.

            

    

     

    
      	
              13.13

            	
              MISCELLANEOUS:
      Should any provision of this Lease prove to be invalid or illegal, such
      invalidity or illegality shall in no way affect, impair or invalidate any
      other provision hereof, and such remaining provisions shall remain in full
      force and effect. Time is of the essence with respect to the performance
      of every provision of this Lease in which time of performance is a factor.
      Any copy of this Lease, which is executed by the parties, shall be deemed
      an original for all purposes. This Lease shall, subject to the provisions
      regarding assignment, apply to and bind the respective heirs, successors,
      executors, administrators and assigns of Landlord and Tenant. The term
      “party” shall mean Landlord or Tenant as the context implies. If Tenant
      consists of more than one person or entity, then all members of Tenant
      shall be jointly and severally liable hereunder. This Lease shall be
      construed and enforced in accordance with the Laws of the State of
      California. The language in all parts of this Lease shall in all cases be
      construed as a whole according to its fair meaning, and not strictly for
      or against either Landlord or Tenant. The captions used in this Lease are
      for convenience only and shall not be considered in the construction or
      interpretation of any provision hereof. When the context of this Lease
      requires, the neuter gender includes the masculine, the feminine, a
      partnership or corporation or joint venture, and the singular includes the
      plural. The terms “must”, “shall”, “will” and “agree” are mandatory. The
      term “may” is permissive. When a party is required to do something by this
      Lease, it shall do so at its sole cost and expense without right of
      reimbursement from the other party unless specific provision is made
      therefore. Where Tenant is obligated not to perform any act or is not
      permitted to perform any act, Tenant is also obligated to restrain any
      others reasonably within its control, including agents, invitees,
      contractors, subcontractors and employees, from performing said act.
      Landlord shall not become or be deemed a partner or a joint venturer with
      Tenant by reason of any of the provisions of this
  Lease.

            

    

     

    ARTICLE
14

     

    CORPORATE
AUTHORITY, BROKERS AND ENTIRE AGREEMENT

     

    
      	
              14.1

            	
              CORPORATE
      AUTHORITY: If Tenant is a corporation, each individual executing this
      Lease on behalf of said corporation represents and warrants that Tenant is
      validly formed and duly authorized and existing, that Tenant is qualified
      to do business in the State of California, that Tenant has the full right
      and legal authority to enter into this Lease, that he is duly authorized
      to execute and deliver this Lease on behalf of the Tenant in accordance
      with the bylaws and/or a board of directors’ resolution of Tenant, and
      that this Lease is binding upon Tenant in accordance with its terms.
      Tenant shall, within thirty days after execution of this Lease, deliver to
      Landlord a certified copy of the resolution of its board of directors
      authorizing or ratifying the execution of this Lease, and if Tenant fails
      to do so, Landlord at its sole election may elect to (i) extend the
      Intended Commencement Date by such number of days that Tenant shall have
      delayed in so delivering such corporate resolution to Landlord or (ii)
      terminate this Lease.

            

    

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              14.2

            	
              BROKERAGE
      COMMISSIONS: Tenant warrants that it has not had any dealings with any
      real estate broker(s), leasing agent(s) or salesmen, other than those
      persons or entities named in Article 1 as the “Brokers” with respect to
      the lease by it of the Leased Premises pursuant to this Lease, and that it
      will indemnify, defend with competent counsel, and hold Landlord harmless
      from any liability for the payment of any real estate brokerage
      commissions, leasing commissions or finder’s fees claimed by any other
      real estate broker(s), leasing agent(s) or salesmen to be earned or due
      and payable by reason of Tenant’s agreement or promise (implied or
      otherwise) to pay (or have Landlord pay) such a commission or finder’s fee
      by reason of its leasing the Leased Premises pursuant to this
      Lease.

            

    

     

    
      	
              14.3

            	
              ENTIRE
      AGREEMENT: This Lease, the Exhibits (as described in Article 1) and the
      Addenda (as described in Article 1), which Exhibits and Addenda are by
      this reference incorporate herein, constitute the entire agreement between
      the parties, and there are no other agreements, understandings or
      representations between the parties relating to the lease by Landlord of
      the Leased Premises to Tenant, except as expressed herein. No subsequent
      changes, modifications or additions to this Lease shall be binding upon
      the parties unless in writing and signed by both Landlord and
      Tenant.

            

    

     

    
      	
              14.4

            	
              LANDLORD’S
      REPRESENTATIONS: Tenant acknowledges that neither Landlord nor any of its
      agents made any representations or warranties respecting the Project, the
      Building or the Leased Premises, upon which Tenant relied in entering into
      this Lease, which are not expressly set forth in this Lease. Tenant
      further acknowledges that neither Landlord nor any of its agents made any
      representations as to (i) whether the Lease Premises may be used for
      Tenant’s intended use under existing Law or (ii) the suitability of the
      Leased Premises for the conduct of Tenant’s business or (iii) the exact
      square footage of the Leased Premises, and that Tenant relied solely upon
      its own investigations respecting said matters. Tenant expressly waives
      any and all claims for damage by reason of any statement, representation,
      warranty, promise or other agreement of Landlord or Landlord’s agent(s),
      if any, not contained in this Lease or in any Addenda
    hereto.

            

    

     

    ARTICLE
15

     

    OPTION
TO RENEW LEASE

     

    
      	
              15.1

            	
              OPTION
      TO RENEW LEASE: Provided that Tenant is not in default under this Lease
      beyond the applicable notice and cure period at the time of exercise of
      any such option or at the time of commencement of any renewal term, Tenant
      is hereby granted two (2) options to renew the term of the Lease. Each
      option shall be for a period of thirty (36) months and each such period
      being a “Renewal Term”.

            

    

     

    
      	
               
      

            	
              A.

            	
              Tenant
      shall occupy the Premises during the Renewal Term under the same terms and
      conditions specified in the Lease, except the Tenant shall lease the
      Premises in its then “as-is” condition, with Tenant being entitled to no
      additional tenant improvement allowance or other right to require the
      improvements to be made to the Premises. The Base Monthly Rent for the
      first Renewal Term shall be as set forth in Article 1 of this Lease.
      During the second Renewal Term, the Base Monthly Rent shall be the then
      Market Rate, but not less than the Base Monthly Rate for the Premises in
      effect immediately prior to the commencement of such Renewal
      Term.

            

    

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              B.

            	
              As
      used herein, the term “Market Rate” shall be initially determined by
      Landlord as the amount as the base annual rent per square foot then being
      charged in comparable industrial buildings located in the metropolitan
      area of San Jose, California (the “Comparable Buildings”) for space
      comparable to the Premises and taking into consideration all other
      relevant factors establishing similarity or dissimilarity between the
      comparable lease and the leasing of the Premises to Tenant for the Renewal
      Term, including without limitation, escalations (including type, base year
      and stop), concessions, length of lease term, size and location of the
      Premises, tenant improvement allowances quality and quantity of any
      existing tenant improvements, quality and creditworthiness of Tenant,
      amenities offered, location of building, and other generally applicable
      concessions, allowances, terms and conditions of tenancy. The reference to
      the foregoing factors is illustrative only and the presence or absence of
      such factors shall be taken into account in determining Market
      Rate.

            

    

     

    
      	
               
      

            	
              C.

            	
              Within
      thirty (30) days after Landlord receives the notice of Tenant’s exercise
      of the second renewal option, Landlord shall notify Tenant of the proposed
      Market Rate, as well as any escalation rate applicable to the second
      Renewal Term, In the event that landlord and Tenant are not able to agree
      as to the market Rate and any applicable escalation rate within thirty
      (30) days of good faith negotiation, then the Base Monthly Rate for the
      second Renewal Term shall be determined by the arbitration provision set
      forth below.

            

    

     

    
      	
               
      

            	
              D.

            	
              If
      Landlord and Tenant cannot agree on the Base Monthly rent to be paid
      during the second Renewal Term as provided above, then each party shall
      immediately select an arbitrator to determine the base Monthly Rent to be
      paid by Tenant during the applicable period, if the two arbitrators agree
      on the Base Monthly Rent to be paid by the Tenant, then their decision
      shall be binding on the parties. If the arbitrators cannot agree within
      fifteen (15) days following their appointment on the Base Monthly Rent to
      be paid, then the two shall, within five (5) days thereafter, select a
      third arbitrator who will consider the proposal of each party’s
      arbitrator, and shall, within five (5) days from the third arbitrator’s
      appointment, adopt the findings of either the Landlord’s or Tenant’s
      arbitrator with respect to Base Monthly Rent to be paid during the
      applicable period, which finding shall be final and binding upon the
      parties. If one of the parties appoints an arbitrator and the other party
      does not do so within the period provided herein, the decision of the
      single arbitrator appointed by the one party shall be binding upon the
      parties.

            

    

     

    
      	
               
      

            	
              E.

            	
              Tenant
      may exercise its right to renew the Lease by giving to Landlord written
      notice of its election to renew the Lease not later than 90 days prior to
      the expiration of the then current Term or Renewal Term, as
      applicable.

            

    

     

    
      	
               
      

            	
              F.

            	
              Tenant
      shall not be entitled to more than two (2) renewal options. In the event
      Tenant fails to timely notify Landlord in the manner herein specified,
      Tenant shall be conclusively deemed to have waived its right to enter into
      the applicable Renewal Term or any subsequent Renewal
  Term.

            

    

     

    
      	
               
      

            	
              G.

            	
              The
      options to renew provided hereunder shall be automatically transferred to
      any assignee of Tenant’s interest under this
  Lease.

            

    

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
16

     

    INTENT
TO SELL PROPERTY

     

    
      	
              16.1

            	
              LANDLORD’S
      NOTICE OF INTENT TO SELL PROPERTY: Should Landlord actively pursue sale of
      355 Turtle Creek Court, or receive an unsolicited offer on the property
      during the Lease
      term, then Landlord shall notify Tenant or Tenant’s management by
      registered mail 30 days in advance of offering to others or within 30 days
      of an unsolicited offer. Tenant shall reply with its interest or decline
      within 15 days after Landlord’s
notice.

            

    

     

    IN WITNESS WHEREOF, Landlord
and Tenant have executed this Lease as of the respective dates below set forth
with the intent to be legally bound thereby as of the Effective Date of this
Lease first above set forth.

    
      	 
      	 
      	 
      	 
      
	 
      	
              AS
      LANDLORD:

            
	 
      	 
      
	
              Dated:
      Jan 5th, 2010

            	 
      
	 
      	 
      
	 
      	
              By:

            	
              /s/ Gail H. Ducote

            	 
      
	 
      	 
      	
              Gail
      H. Ducote

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Robert D. Ducote

            	 
      
	 
      	 
      	
              Robert
      D. Ducote

            
	 
      	 
      	 
      	 
      	 
      
	 
      	
              AS
      TENANT:

            	 
      
	 
      	 
      	 
      
	
              Dated:
      JAN 4,
      2010

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              MERIX
      CORPORATION

            	 
      
	 
      	
              By:

            	
              /s/ John R. Johnston

            	 
      	 
      
	 
      	 
      	
              John
      R. Johnston

            	 
      
	 
      	 
      	
              V.P.
      Global EH&S and Facilities

            	 
      

    

     

    If Tenant
is a corporation, the authorized officers must sign on behalf of the corporation
and indicate the capacity in which they are signing. This Lease must be executed
by the chairman of the board, president, or vice-president, and the secretary,
assistant secretary, the chief financial officer or assistant treasurer, unless
the bylaws or a resolution of the board of directors shall otherwise provide, in
which event a certified copy of the bylaws or a certified copy of the
resolution, as the case may be, must be attached to this Lease.

     

    Initial
_____ _____ _____

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

     

    EXHIBIT
A

    
      	 
      	 
      
	 
      	
              Initial
      ______  ______  ______

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
B

    
      	 
      	 
      
	 
      	
              Initial
      ______  ______  ______exhibit1017.htm

    EXHIBIT
10.17

    PROPOSED

    Viasystems
Group, Inc.

    2010
Equity Incentive Plan

    NONQUALIFIED
STOCK OPTION AWARD AGREEMENT

     

    THIS
AGREEMENT (the “Award Agreement”) is made effective as of [_____________] (the
“Date of Grant”) between [Viasystems Group, Inc.,] a Delaware corporation (with
any successor, the “Company”), and [___________] (the
“Participant”):

     

    R E C I T A L
S:

     

    WHEREAS,
the Company has adopted the Viasystems Group, Inc.

     

    2010
Equity Incentive Plan (the “Plan”), which Plan is incorporated herein by
reference and made a part of this Award Agreement.  Capitalized terms
not otherwise defined herein shall have the same meanings as in the Plan;
and

     

    WHEREAS,
the Committee has determined that it would be in the best interests of the
Company and its stockholders to grant the option provided for herein to the
Participant pursuant to the Plan and the terms set forth herein.

     

    NOW
THEREFORE, in consideration of the mutual covenants hereinafter set forth, the
parties agree as follows:

     

    1. Grant of the
Option.  The Company hereby grants to the Participant the right
and option (the “Option”) to purchase, on the terms and conditions hereinafter
set forth, all or any part of an aggregate of [________] Shares, subject to
adjustment as set forth 

    in the Plan.   The
Option is intended to be a nonqualified stock option, and is not intended to be
treated as an option that complies with Section 422 of the Internal Revenue Code
of 1986, as amended.

     

    2. Option
Price.  The purchase price of the Shares subject to the Option
shall be $[____] per Share (the “Option Price”), subject to adjustment as set
forth in the Plan.

     

    3. Vesting.  Subject
to the Participant’s continuing to receive compensation from the Company or its
subsidiaries, each vesting date, one-third of the Option (i.e., ___ Options)
shall vest on the first anniversary of the Date of Grant, and thereafter, the
remaining 

    two-thirds
of the Option shall vest in equal installments at the end of each of the next
eight (8) ensuing calendar quarters.

     

            At any time, the portion
of the Option which has become vested as described in this Section 3 is
hereinafter referred to as the “Vested Portion.”  The Vested Portion
of the Option shall remain exercisable for the period set forth in Section
6.

     

    4. Accelerated Vesting.
Notwithstanding any provision herein to the contrary:

     

    (a) In the
event the Participant’s Service terminates due to death or Disability prior to
the first anniversary of the Date of Grant, the unvested portion of the Option
shall vest on a pro rata basis based on the ratio of (i) the number of complete
months beginning on 

    the Date
of Grant and ending on the date of the Participant’s termination of Service to
(ii) thirty-six (36).

     

    (b) Immediately
prior to a Change in Control,  the unvested portion of the Option
shall become fully vested and exercisable as of such date of the Change of
Control and shall remain exercisable for, and shall otherwise terminate and
thereafter be forfeited at the end 

    of, a
period of 90 days following the Change of Control.

     

    5. Forfeiture.   Except
as otherwise provided herein, if the Participant’s Service is terminated for any
reason, the Option shall, to the extent not then vested as of the Termination
Date, be cancelled by the Company without consideration and the Vested Portion
of the 

    Option
shall remain exercisable for the period set forth in Section 6.

     

    6. Exercise of
Option.

     

    (a) Period of
Exercise.  Subject to (i) the affirmative approval of the Plan
by the Shareholders on June 23, 2010, (ii) the filing of the registration
statement on Form S-8 registering all of the securities of the Company available
for issuance under the Plan, and (iii) the 

    provisions
of the Plan and this Award Agreement, the Participant may exercise all or any
part of the Vested Portion of the Option at any time prior to the earliest to occur
of:

     

    (i) the 7th
anniversary of the Date of Grant;

     

    (ii) the date
that is one (1) year following termination of the Participant’s
Service;

     

    (b) Method of
Exercise.

     

    (i) Subject
to Section 4, the Vested Portion of the Option may be exercised by delivering to
the Company at its principal office written notice of intent to so exercise;
provided that
the Option may be exercised with respect to whole Shares only.  Such
notice 

    shall
specify the number of Shares for which the Option is being exercised and shall
be accompanied by payment in full of the Option Price.  In the event
the Option is being exercised by the Participant’s representative, the notice
shall be accompanied by 

    proof
(satisfactory to the Committee) of the representative’s right to exercise the
Option.  The payment of the Option Price may be made at the election
of the Participant (A) in cash or its equivalent (e.g., by cashier’s check), (B)
to the extent permitted by the 

    Committee,
in Shares having a Fair Market Value equal to the aggregate Option Price for the
Shares being purchased and satisfying such other requirements as may be imposed
by the Committee, (C) partly in cash and, to the extent permitted by the
Committee, 

    partly in
such Shares, (D) to the extent permitted by the Committee, by reducing the
number of Shares otherwise deliverable upon the exercise of the Option by the
number of Shares having a Fair Market Value equal to the Option Price, or (E) if
there is a public 

    market
for the Shares at such time, subject to such requirements as may be imposed by
the Committee, through the delivery of irrevocable instructions to a broker to
sell Shares obtained upon the exercise of the Option and to deliver promptly to
the Company 

    an amount
out of the proceeds of such sale equal to the aggregate Option Price for the
Shares being purchased.  The Committee may prescribe any other method
of payment that it determines to be consistent with applicable
law.  Neither the Participant nor the 

    Participant’s
representative shall have any rights to dividends or other rights of a
stockholder with respect to Shares subject to an Option until the Participant
has given written notice of exercise of the Option, paid in full for such Shares
and, if applicable, has 

    satisfied
any other conditions imposed by the Committee pursuant to the Plan.

     

    (ii) Notwithstanding
any other provision of the Plan or this Award Agreement to the contrary, the
Option may not be exercised prior to the completion of any registration or
qualification of the Option or the Shares under applicable securities or other
laws, or 

    under any
ruling or regulation of any governmental body or national securities exchange
that the Committee shall in its sole discretion determine to be necessary or
advisable.

     

    (iii) Upon the
Company’s determination that the Option has been validly exercised as to any of
the Shares, the Company shall issue certificates in the Participant’s name for
such Shares.  However, the Company shall not be liable to the
Participant for damages 

    relating
to any delays in issuing the certificates to him, any loss of the certificates,
or any mistakes or errors in the issuance of the certificates or in the
certificates themselves.

     

    (iv) In the
event of the Participant’s death, the Vested Portion of the Option shall remain
exercisable during the period set forth in Section 6 by the Participant’s
executor or administrator, or the person or persons to whom the Participant’s
rights under this 

    Award
Agreement shall pass by will or by the laws of descent and distribution as the
case may be.  Any heir or legatee of the Participant shall take rights
herein granted subject to the terms and conditions hereof.

     

    7. No Right to Continued
Service.  The granting of the Option evidenced hereby and this
Award Agreement shall impose no obligation on the Company or any Affiliate to
continue the Service of the Participant and shall not lessen or affect any right
that the Company 

    or any
Affiliate may have to terminate the Service of such Participant.

     

    8. Securities Laws/Legend on
Certificates.  The issuance and delivery of Shares shall comply
with all applicable requirements of law, including (without limitation) the
Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, state securities 

    laws and
regulations, and the regulations of any stock exchange or other securities
market on which the Company’s securities may then be traded.  If the
Company deems it necessary to ensure that the issuance of securities under the
Plan is not required to be 

    registered
under any applicable securities laws, each Participant to whom such security
would be issued shall deliver to the Company an agreement or certificate
containing such representations, warranties and covenants as the Company may
deem necessary which 

    satisfies
such requirements. The certificates representing the Shares shall be subject to
such stop transfer orders and other restrictions as the Committee may deem
reasonably advisable, and the Committee may cause a legend or legends to be put
on any such 

    certificates
to make appropriate reference to such restrictions.

     

    9. Transferability.  The
Option may not be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by the Participant other than by will or by the laws
of descent and distribution, and any such purported assignment, alienation,
pledge, 

    attachment,
sale, transfer or encumbrance shall be void and unenforceable against the
Company or any Affiliate; provided that the
designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.  No such

    permitted
transfer of the Option to heirs or legatees of the Participant shall be
effective to bind the Company unless the Committee shall have been furnished
with written notice thereof and a copy of such evidence as the Committee may
deem necessary to establish the 

    validity
of the transfer and the acceptance by the transferee or transferees of the terms
and conditions hereof.  During the Participant’s lifetime, the Option
is exercisable only by the Participant.

     

    10. Adjustment of
Option.  Adjustments to the Option (or any of the Shares
underlying the Option) shall be made in accordance with the terms of the
Plan.

     

    11. Definitions.  For
purposes of this Award Agreement:

     

     “Disability” shall have
the meaning set forth in the Participant’s employment agreement with the Company
or its Affiliates, if any, or if the Participant is not a party to an employment
agreement with a definition of “Disability,” then “Disability” means a
disability that 

    would
entitle a Participant to payment of monthly disability payments under any
Company long-term disability plan.

     

    12. Withholding.  The
Participant may be required to pay to the Company or any Affiliate and the
Company shall have the right and is hereby authorized to withhold, the minimum
statutory withholding taxes in respect of the Option, its exercise or any
payment or 

    transfer
under or with respect to the Option and to take such other action as may be
necessary in the opinion of the Committee to satisfy all obligations for the
payment of such withholding taxes.

     

    13. Notices.  Any
notification required by the terms of this Agreement shall be given in writing
and shall be deemed effective upon personal delivery or within three (3) days of
deposit with the United States Postal Service (or in the case of non-U.S.
Participant, the 

    foreign
postal service of the country in which the Participant resides), by registered
or certified mail, with postage and fees prepaid.  A notice shall be
addressed to the Company, Attention: Human Resources, at its principal executive
office and to the Participant at the 

    address
that he or she most recently provided to the Company.

     

    14. Entire
Agreement.  This Award Agreement and the Plan constitute the
entire contract between the parties hereto with regard to the subject matter
hereof.  They supersede any other agreements, representations or
understandings (whether oral or written and 

    whether
express or implied) which relate to the subject matter hereof.

     

    15. Waiver.  No
waiver of any breach or condition of this Award Agreement shall be deemed to be
a waiver of any other or subsequent breach or condition whether of like or
different nature.

     

    16. Successors and
Assigns.  The provisions of this Award Agreement shall inure to
the benefit of, and be binding upon, the Company and its successors and assigns
and upon the Participant, the Participant’s assigns and the legal
representatives, heirs and legatees

     of
the Participant’s estate, whether or not any such person shall have become a
party to this Award Agreement and agreed in writing to be joined herein and be
bound by the terms hereof.

     

    17. Choice of Law; Jurisdiction;
Waiver of Jury Trial.  THIS AWARD AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF DELAWARE WITHOUT REGARD TO
CONFLICTS OF LAWS.

     

    SUBJECT TO THE TERMS OF THIS AWARD
AGREEMENT, THE PARTIES AGREE THAT ANY AND ALL ACTIONS ARISING UNDER OR IN
RESPECT OF THIS AWARD AGREEMENT SHALL BE LITIGATED IN THE FEDERAL OR STATE
COURTS IN [DELAWARE].  BY EXECUTING AND DELIVERING THIS AWARD
AGREEMENT, EACH PARTY IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF SUCH
COURTS FOR ITSELF, HIMSELF OR HERSELF AND IN RESPECT OF ITS, HIS OR HER PROPERTY
WITH RESPECT TO SUCH ACTION.  EACH PARTY AGREES THAT VENUE WOULD BE
PROPER IN ANY OF SUCH COURTS, AND HEREBY WAIVES ANY OBJECTION THAT ANY SUCH
COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF ANY SUCH
ACTION.

     

    EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AWARD
AGREEMENT.

     

    18. Option Subject to
Plan.  By entering into this Award Agreement the Participant
agrees and acknowledges that the Participant has received and read a copy of the
Plan.  The Option is subject to the Plan.  The terms and
provisions of the Plan as it may be amended

     from
time to time are hereby incorporated herein by reference (subject to the
limitation set forth in Section 19).  In the event of a conflict
between any term or provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan 

    will
govern and prevail.  The Participant has had
the opportunity to retain counsel, and has read carefully, and understands, the
provisions of the Plan and the Award Agreement.

     

    19. Amendment.  The
Committee may amend or alter this Award Agreement and the Option granted
hereunder at any time; provided that,
subject to Articles 11, 12 and 13 of the Plan, no such amendment or alteration
shall be made without the consent of the Participant

     if
such action would materially diminish any of the rights of the Participant under
this Award Agreement or with respect to the Option.

     

    20. Severability. The
provisions of this Award Agreement are severable and if any one or more
provisions are determined to be illegal or otherwise unenforceable, in whole or
in part, the remaining provisions shall nevertheless be binding and
enforceable.

     

    21. Signature in
Counterparts.  This Award Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

     

    [SIGNATURE PAGE FOLLOWS]

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Award
Agreement.

     

    VIASYSEMS GROUP, INC.

     

    

     

    By:                                                             

     

          Name:

     

          Title:

     

    

     

    Agreed
and acknowledged as

     

    of the
date first above written:

     

    

     

    

                          PARTICIPANT

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