Document:

Exhibit 10.2

 

	
  

  

 

MANAGEMENT
AGREEMENT

 

This MANAGEMENT AGREEMENT  (this Agreement”) is made and entered into as of
this                    day
of
                                             ,
2000, by and between CIRCLE LINE SIGHTSEEING YACHTS, INC., c/o New York Cruise
Lines, Inc., Pier 83 West 42nd Street & The Hudson River, New
York, New York 10036, hereinafter referred to as “Owner,” and APCOA/STANDARD
PARKING, INC., Two Copley Place, Suite 300, Boston, MA 02116, hereinafter
referred to as “Operator.”

 

W I T N E S S E T H:

 

THAT, WHEREAS, Owner presently controls a parking facility at The
Hudson River and Piers 81 and 83 and has the authority to contract for the
management of said facility;

 

WHEREAS, Operator is an experienced operator and manager of parking
facilities; and

 

WHEREAS, Owner and Operator desire to enter into an agreement whereby
Operator will manage parking of motor vehicles at such facility upon the terms,
covenants and conditions herein set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:

 

1.                                      PREMISES.  Owner hereby grants to Operator and Operator
hereby accepts the right and obligation of administering, managing and
operating the parking operations with respect to the parking facility known as
the Circle Line Lot, servicing Pier 81 and Pier 83 and located at West 42nd
Street and the Hudson River in the City of New York, State of New York,
hereinafter referred to as the “Premises.”

 

2.                                      TERM.  The term of this Agreement shall be for
three (3) years commencing on
                             ,
2000 and expiring on
                                    ,
2003 (the “Term”).

 

3.                                      OPERATOR’S
OBLIGATIONS AND SERVICES. 
Operator hereby covenants and agrees that it will:

 

(a)                                  Operate and direct
the operation of the Premises as a parking facility, and render the usual and
customary services incidental thereto, in a 

 

1

 

professional, businesslike and efficient manner, subject only to the
limitations contained in this Agreement, and provide supervision and inspection
adequate to properly manage the Premises. 
Owner reserves the right to establish the hours of operation and parking
rates for the Premises.

 

(b)                                 Routinely maintain the
parking equipment provided by Operator (if any) in good operating condition and
repair, and also purchase, on behalf of Owner, with Owner’s prior written
approval, equipment and supplies necessary for the operation of the Premises.

 

(c)                                  Hire, pay and
supervise sufficient experienced and qualified personnel who will render the
services required by this Agreement for the professional, businesslike and
efficient operation of the Premises. 
Such employees will be neatly uniformed and courteous to the public.  All persons so employed shall be employees
of Operator and not of Owner, and shall have no authority to act as the agent
of Owner.

 

(d)                                 Promote, advertise and
endeavor to increase the volume, efficiency and quality of the services
rendered.

 

(e)                                  Collect from
transient users of and monthly parkers at the Premises parking fees and other
charges as directed by Owner.

 

(f)                                    Maintain courteous,
businesslike relations with users of the Premises, whose requests shall be
received, considered and promptly acted upon.

 

(g)                                 Cause the Premises to
be maintained in a clean and orderly manner according to reasonable standards
acceptable to Owner, including routine cleaning, sweeping, power washing,
painting, light bulb and ballast replacement, but Operator shall not be
required to make (and shall not be authorized to make, without Owner’s prior
written approval) any structural, mechanical, electrical or other installations
or alterations to the Premises required by statutes, regulations or other
governmental requirements pertaining to air quality, environmental protection
or persons with disabilities, which matters shall be the sole responsibility of
Owner.

 

(h)                                 Promptly notify Owner
of any damage, accident, injury, or in the event of any other matter which, in
Operator’s reasonable judgment, requires Owner’s attention.

 

(i)                                     Advise
and cooperate with Owner in the development and implementation of rules and
regulations applicable to the Premises, and enforce such applicable rules and
regulations as Owner shall adopt.  Advise
and consult with Owner with respect to matters of potential changes to traffic
control systems, signage and/or any other matter that may substantially alter
the use and operation of the Premises, the implementation of any of which shall
require Owner’s written consent.

 

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(j)                                     Obtain and
maintain the policies of insurance specified in Section 8 hereof.

 

(k)                                  Maintain the
premises, systems and improvements in good condition and repair including (as
applicable) all directional signs and paint where necessary including affixing
striping to pavement.

 

(l)                                     Prepare and file
all necessary returns, reports and forms required by law in connection with
unemployment insurance, social security taxes, worker’s compensation insurance,
disability benefits, Federal and state income tax withholding and other similar
taxes and all other returns and reports required by any Federal, state or
municipal authority (other than income and property tax returns of the Owner)
including but not limited to all New York State and City Sales, Use and Parking
Taxes, collect, remit and   pay or make
all deposits required for such taxes.

 

(m)                               Annually during the
term, Operator shall prepare and deliver to Owner a budget, for Owner’s
reasonable approval, reflecting the Gross Receipts and Operating Expenses
(defined in Section 4 hereof) which Operator expects to receive and incur,
respectively, during Owners forthcoming fiscal year (the Budget), it being agreed that
if Owner for any reason does not respond to any proposed Budget within sixty
(60) days after Owners receipt thereof, said Budget shall be deemed
approved.  If at any time during the
period covered by an approved Budget it appears to Operator that the actual
total of all Operating Expenses likely to be incurred during said period will
exceed the Budget’s projected total by more than ten percent (10%), Operator
shall promptly so advise Owner, and Owner and Operator shall jointly discuss
what actions, if any, could be taken to minimize the Operating Expenses without
substantially impairing the operation of the Premises.

 

All expenses incurred in connection with performing the above
obligations and services shall be deemed Operating Expenses (defined in Section
4 hereof).

 

In addition to the above services, Operator shall provide certain
“amenities” programs as mutually agreed upon with the prior approval of
Owner.  Said approval shall be at the
sole discretion of Owner and the cost of such programs shall not be an
Operating Expense hereunder.

 

4.                                      GROSS
RECEIPTS, OPERATING EXPENSES, REIMBURSABLE COSTS AND NET PROFIT.  Operator shall account for all Gross
Receipts collected by Operator under this Agreement and deposit such receipts
in a federally insured bank account maintained by Operator.

 

“Gross
Receipts” shall mean all sums collected by Operator for the parking
and storage of motor  vehicles, or for
any other services or amenities offered by Operator on the Premises  whether on an hourly, daily, weekly, or
monthly basis, less all refunds, discounts and allowances made by Operator to
its customers.  “Net Receipts” are defined as
Gross Receipts less any sales,

 

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use, excise, occupancy, gross
receipts, parking tax, or any other tax or charge collected by Operator on
behalf of and payable to the tax collector.

 

Owner reserves the right, in its sole discretion, to allow parking at
the Premises without charge or at a reduced rate for special events or employee
parking, or at other times Owner determines. 
Accordingly, Gross Receipts shall not include the value any such free or
discounted parking privileges granted by Owner to its employees, agents,
representatives, and invitees.

 

“Operating
Expenses” shall mean all expenses related to the operation of the
Premises, including, without limitation, the aggregate of salaries and wages,
payroll taxes, fringe benefits, workers’ compensation insurance, license and
permit fees, uniforms, supplies, pagers, tools, radios, cleaning, costs of
maintenance and repair required of Operator hereunder, telephone charges,
employee recruitment/training, cost of annual audit, banking charges, credit
card system charges, postage and freight, tickets, stationery including report
forms, garagekeeper’s legal and public liability insurance premiums established
by Operator , the first $1,000 of any loss or damage claim (plus attorney’s
fees and court costs to defend Owner and/or Operator in actions brought to
recover damages for such losses) and losses due to theft or robbery.  Such expenses shall be paid from Net Receipts
if sufficient.

 

Operating
Expenses shall not include utility charges, costs of maintenance and Owner’s
carrying costs for the Premises, such as depreciation, building insurance, real
estate taxes and assessments, taxes on Owner’s personal property, debt
retirement including mortgage interest, rent and any other expenses (including
compliance with the Americans With Disabilities Act of 1990).  Payment of such expenses and costs are the
sole obligation of Owner.

 

“Reimbursable
Costs” are any expenses which are not deemed Operating Expenses and
are approved in writing by Owner prior to expenditure.

 

If Owner
disputes any Operating Expense or Reimbursable Cost, Owner shall give Operator
written notice specifying the item disputed and the reason therefor.  In such event, owner shall have the right to
withhold any money that represents a disputed item.  Payment for any Operating Expense or Reimbursable Cost which is
not disputed shall not be withheld.  The
parties shall, in good faith, diligently pursue resolution of any disputed item
within thirty (30) days of said notice. 
In the event  that after the
thirty (30) day period, the dispute is not resolved, the Owner and Operator
agree to submit this disputed matter for a non-binding mediation to JAMS, 45
Broadway, New York, New York 10006.  The
Owner and Operator understand that the role of the mediator is not to render a
decision but to assist the parties in reaching a mutually acceptable
resolution.

 

The mediator
will provide an evaluation of the Owner and Operator’s cases and of the likely
resolution if the dispute is not settled. 
The Owner and Operator agree that the mediator is not acting as an
attorney or providing legal advice on behalf of either of them.  The fees charged by JAMS will be shared and
paid equally by the Owner and Operator.

 

“Net Profit”
is the balance remaining after deducting all Operating Expenses and
Reimbursable Costs from Net Receipts. 
Net Profit, less deductions for any Net Profit Advance (defined below),
and Operator’s Management Fee, shall be paid to Owner concurrently with the
statement required in Section 9 of this Agreement.

 

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An advance of Net Profit shall be paid to Owner as follows:

 

(a)                                  On or before
December 31, 2000 or any future December 31st during the
term of the Agreement, and again on or before April 1, 2000, or any future
April 1st during the term of this Agreement, Operator shall
remit, upon Owner’s written request, to Owner an advance of Net Profit equal to
$100,000.00 for each month.  Thus, the
annual advance of Net Profit shall be equal to $200,000 (“Net Profit
Advance”).  Owner shall be responsible
for paying back the Net Profit Advance, plus interest equal to the prime rate of
interest published in The Wall Street Journal plus two (2) points,
according to Subsection (b) below.

 

(b)                                 The annual Net Profit
Advance, plus interest as aforesaid, shall be deducted by Operator from the
Premises’ Net Receipts during the months of April through December of
each year.  If, as of January 1 of
any year (after the first year), the Net Profit Advance for such year still
shall not have been fully reimbursed because Net Receipts for the months of
April through December were insufficient, then Owner must reimburse
the balance due Operator in accordance with Section 7 herein.

 

5.                                      MANAGEMENT
FEE.  As compensation for
Operator’s services hereunder, Owner shall pay Operator, each month, a
management fee based on a tiered percentage of annual Net Receipts, as follows:

 

5% of the first $700,000 of annual Net Receipts; plus

 

6% of annual Net Receipts in excess of $700,000, but less than
$1,000,000; plus

 

7% of annual Net Receipts in excess of $1,000,000.

 

In computing the Management Fee, Net Receipts (as defined in Section 4
hereof) shall not include all (i) sums due and payable and (ii) outstanding
accounts receivable, if any, for the parking of motor vehicles.  The Management Fee may be deducted by
Operator from Net Receipts to the extent such receipts are sufficient.

 

The term “year” shall mean the twelve (12) consecutive calendar months
beginning with the commencement date of the Initial Term of this Agreement and
each twelve-month period thereafter.

 

6.                                      CONDITION
AND USE OF THE PREMISES.  Owner
warrants and represents that, at the commencement of and throughout the term
herein, the Premises (including but not limited to the roof, structural
portions, and interior and exterior of any building which is part of the
Premises) are and shall, at Owner’s expense, be kept in good condition and
repair for use as a parking facility and be constructed and fixtured to comply
with all laws, regulations, ordinances and codes now in effect or which become
effective during the term hereof, including the Americans With Disabilities Act
of 1990.

 

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7.                                      REIMBURSEMENT
OF DEFICIT.  In the event the
Net Receipts actually collected by Operator during any year are exceeded by the
total of Operating Expenses, Reimbursable Costs, the Management Fee, and any
reimbursement of Net Profit Advance due Operator pursuant to Section 4 herein,
resulting in a deficit for said year, Owner agrees to pay Operator the amount
of said deficit within thirty (30) days after receipt of Operator’s annual
statement. If payment is not made by Owner to Operator within said thirty-day
period, Operator shall have the right to: 
(i) charge interest equal to prime rate of interest published in The
Wall Street Journal plus two (2) points from the date such payment became
due and payable; (ii) offset the amount of the deficit (plus accrued interest)
by deduction thereof from any Net Profit due or to become due to Owner; and
(iii) at its option, terminate this Agreement upon written notice, without
waiving or limiting any of its legal remedies which Operator may pursue to
collect the amount owed.

 

8.                                      OPERATOR’S
INSURANCE COVERAGES.

 

(a)                                  Operator
shall carry and maintain, as an Operating Expense, the following insurance
coverages:

 

(1)                                  Worker’s Compensation
insurance in compliance with the Worker’s Compensation Act of the State of New
York.

 

(2)                                  Employer’s
liability insurance on all employees for the Premises not covered by the
Worker’s Compensation Act, for occupational accidents or disease, for limits of
not less than $100,000 for any one occurrence, or whatever is necessary to
satisfy the requirements of the umbrella liability insurance specified in
Subsection (a)(6) below.

 

(3)                                  Garage liability
insurance on an occurrence form basis with limits of not less than $1,000,000
per occurrence with an annual aggregate limit of $2,000,000 per location.

 

(4)                                  Garage keeper’s legal
liability insurance (if applicable) insuring any and all automobiles that are
parked at the Premises by Operator’s attendants or for which a bailment
otherwise is created, with such limits of liability not less than $1,000,000
per occurrence.

 

(5)                                  Comprehensive crime
insurance including employee theft, premise, transit and depositor’s forgery
coverage, with limits of liability as to any given occurrence of $50,000 for
monies and securities inside and outside the Premises, and $1,000,000 on
account of any employee dishonesty.

 

(6)                                  Umbrella liability
insurance, in excess following form, with an annual aggregate limit of not less
than (i) $15,000,000, with respect to garage liability insurance, and (ii)
$15,000,000, with respect to garagekeeper’s legal liability insurance (if
applicable).

 

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(b)                                 The liability policies
affording the coverages described in Subsections (a)(3), (a)(4) and (a)(6)
above shall be endorsed to cover Owner and its employees, agents, directors and
officers as additional insureds.

 

(c)                                  All such insurance
shall be with companies as shall be reasonably satisfactory to Owner, and all
such policies shall provide that they may not be cancelled or adversely altered
without at least thirty-(30) days’ prior written notice to Owner.  Operator shall deliver satisfactory
certificates of insurance to Owner and renewal policies shall be obtained, and
certificates delivered to Owner, at least thirty (30) days prior to expiration.

 

(d)                                 Owner hereby waives
all claims for recovery from Operator and its employees, agents, directors and
officers for personal injury and/or loss or damage to Owner’s property of the
type covered by insurance actually carried by Owner or which is commonly
covered under an “all-risk” of direct physical loss insurance policy of the
type customarily available in New York, New York, in either case irrespective
of applicable deductibles.

 

9.                                      ACCOUNTING.  Within twenty (20) days after the end of
each calendar month, Operator shall mail to Owner a statement showing all Gross
Receipts, Net Receipts, Operating Expenses, Reimbursable Costs, the Management
Fee and Net Profit for the preceding calendar month.  Within forty-five (45) days following the last month of the term
of this Agreement, Operator shall mail a like final statement.  An annual statement setting forth such
information for Owner’s fiscal year shall be mailed to Owner within 45 days
after the end of each fiscal year. 
Owner’s fiscal year shall be January 1 to December 31..

 

Operator shall keep complete and accurate accounting reports and
records of Gross Receipts, Net Receipts, Operating Expenses, Reimbursable Costs
and Net Profit relating to the Premises. 
Such reports and records shall be kept in accordance with good
accounting practices.  Operator shall
permit Owner to inspect Operator’s accounting reports and records at Operator’s
offices during reasonable business hours and at Owner’s expense.

 

10.                               EQUIPMENT
AND IMPROVEMENTS.  Operator may,
with Owner’s written approval, purchase and install equipment or improvements
which the parties agree should be installed as part of the revenue and traffic
control system and operational requirements for the Premises.

 

Title to equipment and improvements so purchased and installed by
Operator shall vest in Owner upon installation.  The total cost thereof (including delivery and installation costs
and

 

7

 

taxes) shall be reimbursed to
Operator by Owner within thirty (30) days after receipt of Operator’s statement
showing the description and cost of each item, or, at the option of Operator,
may be deducted by Operator from the Net Profit otherwise due and payable to
Owner.

 

Operator agrees that it will not make or construct any improvements,
additions or alterations to the Premises without the prior written consent of
Owner.

 

11.                               OWNER’S
OBLIGATIONS.  Owner shall, at
its expense, be responsible only for following:

 

(a)                                  Repair and
maintenance of the Premises, systems and improvements in good condition and
repair, including (as applicable): 
heating, air conditioning, ventilating, exhaust, fire protection, alarm,
utility, plumbing (including lavatory facilities), sewage, drainage, security
and lighting systems; paving; fencing; parking booths; landscaping; windows and
doors; plate glass; driveways, sidewalks and curbs (including curb cuts);
sealing and waterproofing; electrical or mechanical equipment, including
traffic control devices used at or in the Premises; and all structural repairs.

 

(b)                                 Alterations,
improvements and additions Owner deems necessary and/or as may be required by
the Americans With Disabilities Act of 1990, and payment of architectural,
engineering or consulting fees with respect thereto.

 

Owner agrees that any contract between Owner and a contractor for work
on behalf of Owner at the Premises shall require (i) the contractor to
indemnify, save and hold Owner and Operator harmless from and against and free
and clear of all claims, suits, actions, and damages which may arise, occur or
result from work performed by said contractor, and (ii) the contractor to name
Owner and Operator as additional insureds on contractor’s policy of insurance
and furnish Owner and Operator with a certificate of insurance evidencing such
coverages.

 

12.                               INDEMNIFICATION.  Operator shall indemnify and hold harmless
Owner from all loss or liability whatsoever, on account of any damage or
injury, claims and demands arising out of acts or omissions of the Operator,
its agents or employees, or by failure to keep said parking facility or
equipment in good order and repair, or for such other damage or injury caused
by any acts or events whatsoever including, but not limited to, acts or
omissions of third parties in or about said parking facility.  However, Operator shall not be liable for
damages or injury occasioned by failure of the Owner to comply with its
obligations hereunder or by reason of the negligence of the Owner, its agents
or employees or third parties.  Owner
shall indemnify and hold harmless Operator from all loss or liability
whatsoever, on account of any damage or injury, claims and demands arising out
of acts or omissions of the Owner, its agents or

 

8

 

employees;  or by failure to keep said parking facility
or equipment in good order and repair; 
or for such other damage or injury caused by any acts or events
whatsoever including, but not limited to, acts or omissions of third parties in
or about said parking facility. 
However, Owner shall not be liable for damages or injury occasioned by
failure of the Operator to comply with its obligations hereunder or by reason
of the negligence of the Operator, its agents or employees or third
parties.  Operator guarantees to and
indemnifies Owner for payment of any liability imposed upon Owner as a result
of Operator’s failure to pay any tax due or to become due to any municipal
taxing including but not limited to any tax, penalty or interest thereon.

 

13.                               OWNER’S
INSURANCE.  Owner shall, at its
expense, provide and maintain fire and extended coverage, vandalism and
malicious mischief, and all-risk insurance coverages for buildings,
improvements and any other real or personal property of Owner located on the
Premises in an amount equal to the full replacement cost thereof.

 

14.                               RELEASE
AND WAIVER OF SUBROGATION.  In
the event all or any part of the Premises (including any buildings,
improvements or other real or personal property thereon) are damaged or
destroyed by fire or other casualty, the rights or claims of either party or
its employees, agents, successors or assigns against the other with respect to
liability for such loss, destruction or damage resulting therefrom, including
loss, destruction or damage suffered as a result of negligence of either party
or their employees or agents, are hereby released and discharged, and any and
all subrogation rights or claims are hereby waived to the extent of the insurance
coverage carried by the parties hereto.

 

All such insurance policies shall contain a clause or endorsement
providing that the insurance shall not be prejudiced if the insured has waived
its rights of recovery (including subrogation rights) against any person or
company prior to the date of loss, destruction or damage.

 

15.                               LICENSES
AND PERMITS.  Operator shall
obtain and maintain all licenses and permits required by an operator of parking
facilities by any governmental body or agency having jurisdiction over
Operator’s operations at the Premises and will abide by the terms of such
licenses and permits.  Any license or
permit fees incurred by Operator shall be deemed an Operating Expense.

 

16.                               LAWS
AND ORDINANCES.  Operator shall
not use all or any part of the Premises for any use or purpose which is (i)
forbidden by or in violation of any law of the United States, any state law or
any city ordinance, or (ii) may be dangerous to life, limb or property.

 

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17.                               LOSS
OR DAMAGE TO PREMISES.  In case
of any substantial loss of or damage to the Premises as the result of a taking
under the power of eminent domain, or by fire, storm or other casualty, Owner
may (i) repair or restore the Premises at Owner’s expense, or (ii) abandon the
operation and terminate this Agreement by giving at least ten (10) days’ prior
written notice to Operator.  If Owner so
terminates, Owner shall not be liable to Operator for Management Fees arising
after the date of taking or casualty; provided, however, if any portion of the
Premises remains suitable for parking and Operator, with Owner’s prior written
approval, continues its operations, Operator shall be entitled to receive its
Management Fees for the period during which such operations are continued. If
Owner repairs and restores the Premises, no Management Fees shall be due for
the period the Premises are unsuitable for the ordinary conduct of parking
business, and Operator shall not be required to provide services hereunder, but
this Agreement shall continue in effect and the term shall be extended for a
period equal to the period needed for repair and restoration.

 

18.                               RELATIONSHIP
OF THE PARTIES.  No partnership
or joint venture between the parties is created by this Agreement, it being
agreed that Operator is an independent contractor.

 

19.                               FORCE
MAJEURE.  Neither party shall be
in violation of this Agreement for failure to perform any of its obligations by
reason of strikes, boycotts, labor disputes, embargoes, shortages of materials,
acts of God, acts of the public enemy, acts of public authority, weather
conditions, riots, rebellion, accidents, sabotage or any other circumstances
for which it is not responsible and which are not within its control.  No Management Fee shall be due to Operator
if it suspends operations for any such cause or event.

 

20.                               GOVERNING
LAW.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.

 

21.                               APPROVALS.  Whenever the approval of either party is required
herein, such approval shall not be unreasonably withheld or delayed except
where it is provided herein to be in the sole discretion of the Owner.

 

22.                               WAIVERS.  No waiver of default by either party of any
term, covenant or condition hereof to be performed or observed by the other
party shall be construed as, or operate as, a waiver of any subsequent default
of the same or any other term, covenant or condition hereof.

 

10

 

23.                               SEVERABILITY.  If any provision hereof is held to be
invalid by a court of competent jurisdiction, such invalidity shall not affect
any other provision hereof, provided such invalidity does not materially
prejudice either party in its rights and obligations contained in the valid provisions
of this Agreement.

 

24.                               TERMINATION.  The Owner may terminate this Agreement
provided the Owner gives thirty (30) days prior written notice to the
Operator.  The Operator may terminate
this Agreement provided the Operator gives ninety (90) days prior written
notice to the Owner.

 

25.                               ASSIGNMENT.   Operator shall not assign or transfer this
Agreement or its right, title or interest herein without the prior written
consent of Owner.  The giving of such
consent shall be in the sole discretion of the Owner.  Operator is hereby given the right to assign this Agreement to an
affiliate of Operator or to a corporation substantially all of the stock of
which is owned by Operator and/or to collaterally assign its right, title and
interest herein to a financial institution as security for any present or
future loans to Operator.

 

26.                               NOTICES.  Any notice or communication required to be
given to or served upon either party hereto shall be given or served by
personal service or by express delivery or by mailing the same, postage
prepaid, by United States registered or certified mail, return receipt
requested, to the following addresses:

 

	
  TO OWNER:

  	
   

  	
  Circle Line Sightseeing Yachts, Inc.

  
	
   

  	
   

  	
  c/o New York CruiseLines, Inc.

  Attn:  Mark Davidoff, Vice President

  Pier 83, West 42nd Street & The Hudson River

  New York, NY 10036

  
	
   

  	
   

  	
   

  
	
  with copy to:

  	
   

  	
  Graubard Mollen
  & Miller

  
	
  (by regular mail)

  	
   

  	
  Attn: Kevin B. McGrath, Esq.

  
	
  600 Third Avenue

  	
   

  	
   

  
	
  New York, New York 10016

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TO OPERATOR:

  	
   

  	
  APCOA/Standard
  Parking, Inc.

  
	
   

  	
   

  	
  Attn: Legal Department

  900 N. Michigan Avenue, Suite 1600

  Chicago, IL  60611

  
	
   

  	
   

  	
   

  
	
  with copy to:

  	
   

  	
  APCOA/Standard Parking, Inc.

  
	
  (by regular mail)

  	
   

  	
  Attn:  Richard P. DiPietro,
  Senior Vice President

  Two Copley Place, Suite 300

  Boston, MA  02116

  

 

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Either party may designate a substitute address at any time hereafter
by written notice thereof to the other party.

 

27.                               ENTIRE
AGREEMENT.  This Agreement,
together with all exhibits hereto, constitutes the entire agreement between the
parties, and all other representations or statements heretofore made, verbal or
written, are merged herein.  This
Agreement may be amended only by written agreement of the parties.

 

28.                               PARTIES
BOUND.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their heirs,
successors, executors, administrators, legal representatives and permitted
assigns.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

 

	
  OWNER:

  	
   

  	
  OPERATOR:

  
	
   

  	
   

  	
   

  
	
  Circle Line
  Sightseeing Yachts, Inc.

  	
   

  	
  APCOA/Standard
  Parking, Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
  August J. Ceradini

  	
   

  	
  Steven A. Warshauer

  
	
  President

  	
   

  	
  Executive Vice President

  
						

 

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FIRST
AMENDMENT OF MANAGEMENT AGREEMENT

 

This FIRST AMENDMENT OF MANAGEMENT AGREEMENT  (this
“Amendment”)
is made and entered into as of this
             day of
                        
2003, by and between Circle Line Sightseeing Yachts, Inc., hereinafter referred
to as “Owner,”
and Standard Parking Corporation, a Delaware corporation formerly known as
APCOA/Standard Parking, Inc., hereinafter referred to as “Operator.”

 

W I T N E S S E T H:

 

THAT, WHEREAS, Owner and Operator are parties
to a Management Agreement dated September 19, 2000 (“Management
Agreement”) pursuant to which Operator operates and manages Owner’s parking
facility at the Hudson River and Piers 81 and 83 in New York, New York
(“Premises”); and

 

WHEREAS, Owner and Operator desire to amend
the Management Agreement upon the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the
mutual covenants and agreements herein contained, the parties hereto agree as
follows:

 

1.                                      RECITALS
AND DEFINITIONS.  The above
recitals are incorporated herein.  The
terms defined in the Management Agreement shall have the same meanings ascribed
to such terms in the Management Agreement when used herein, unless expressly
defined otherwise herein.

 

2.                                      NET
PROFIT ADVANCE.  Operator shall
continue to advance Net Profit to Owner in accordance with Section 4 (a) and
(b) of the Management Agreement, except that for the balance of the term of the
Management Agreement:

 

(a)          The first installment
($100,000) of the total annual Net Profit Advance of $200,000 shall be due and payable
to Owner on the 1st day of April each year during the remainder
of

 

13

 

the term, or
if such date shall fall on a day other than a business day, the first business
day thereafter; and

 

(b)         The second installment
($100,000) of the total annual Net Profit Advance shall be due and payable to
Owner on the 31st day of December each year during the
remainder of the term, or if such date shall fall on a day other  than a business day, the first business day thereafter.

 

3.                                      LOAN
TO OWNER.  On or before
June         , 2003, Operator
shall loan (“Loan”) to Owner the sum of $300,000 (“Loan Amount”).  Owner shall pay back the Loan Amount, plus
interest thereon at a rate of nine percent (9 %) per annum, to Operator in full
by November 1, 2003 (“Due Date”). 
Owner may prepay the Loan Amount at any time without penalty.  As consideration for the Loan, the
Management Fee shall be adjusted in accordance with Section 4 of this Amendment
and Owner shall execute and deliver to Operator, upon execution of this
Amendment, a promissory note in the form attached hereto and made a part hereof
as Exhibit “A”.

 

If the Loan Amount, plus interest as
aforesaid, is not paid to Operator by the Due Date, then: (a) Operator may
charge interest at the default rate (“Default Rate”) of twelve percent (12%);
(b) Owner shall be in default of the Management Agreement; (c) the Management
Fee set forth in Section 4 of this Amendment shall remain in effect until such
time as the Loan is paid back in full; and (d) Operator may continue to operate
the Premises, notwithstanding any expiration of the Management Agreement or
attempt by Owner to terminate the Agreement, free of any obligation to remit
any Net Profit or Net Profit Advance to Owner, and retaining all Gross Receipts
and deducting the balance of the Loan Amount (plus interest as aforesaid) from
Net Receipts until such time as Operator is paid in full.  The foregoing remedies shall be in addition
to all remedies available at law or in equity to recover the sum due.

 

If the Loan Amount, plus interest as
aforesaid, is not paid to Operator by the Due Date and Operator retains a
collection agency and/or an attorney to pursue collection of the delinquent
amount plus interest at the Default Rate, then all collection costs, including
without limitation, attorney’s fees and court costs, shall be payable by Owner
to Operator.

 

4.                                      MANAGEMENT
FEE.  Commencing retroactive to
January 1, 2003 and continuing until such time as the Loan Amount (plus
interest as aforesaid) in paid in full to Operator, the Management Fee payable
to Operator each month shall be based on the following.

 

5% of the
first $163,000 of annual Net Receipts; plus

 

12% of all Net
Receipts in excess of $163,000.

 

14

 

In the first full month following the date on
which the Loan Amount (plus interest as aforesaid) is paid in full, the
Management Fee as originally set forth in Section 5 of the Management Agreement
shall be reinstated and this Section 4 shall be deemed terminated.  Thus, for example, if the Loan is paid in
full on October 31, 2003, the Management Fee for November 2003 and
subsequent months shall conform to Management Fee originally set forth in
Section 5 of the Management Agreement

 

5.                                      TERMINATION
RIGHTS.  All rights to terminate
the Management Agreement shall remain as originally set forth in the Management
Agreement except that, for so long as the Loan remains outstanding, repayment
of the Loan Amount (plus interest as aforesaid) to Operator shall be a
condition precedent to the exercise by Owner of any right of termination of the
Agreement.  In addition, if the
Management Agreement should terminate for any other reason while the Loan is
still pending (for example, but without limitation, because of a condemnation
action, or loss or damage to the Premises), then the Loan Amount (plus interest
as aforesaid) shall become due and payable as of the date of such
termination.  If not paid upon termination,
then Operator may pursue any or all of the remedies available under Section 3
of this Amendment, at law or in equity, and shall be entitled to recovery of
its collection costs and legal fees, all as set forth in said Section 3.

 

6.                                      NO
OTHER CHANGES.  Except as
expressly modified herein, the Management Agreement remains in full force and
effect upon its original terms and conditions.

 

 

IN WITNESS WHEREOF, the parties hereto have
executed this Amendment as of the date first above written.

 

	
  OWNER:

  	
   

  	
  OPERATOR:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Circle Line Sightseeing Yachts, Inc.

  	
   

  	
  Standard Parking Corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
  Michael K.
  Wolf

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
  Executive
  Vice President

  
									

 

15

 

Exhibit “A”

 

FORM OF PROMISSORY NOTE

 

	
  $300,000

  	
   

  	
  Executed at
                                       

  

 

June         , 2003

 

FOR VALUE RECEIVED, CIRCLE LINE SIGHTSEEING YACHTS, INC. (the “Maker”),
promises to pay to the order of STANDARD PARKING CORPORATION, a Delaware
corporation (“Lender”) the principal sum of Three Hundred Thousand Dollars
($300,000.00).  Said principal sum, plus
interest thereon at a rate of nine percent (9%) per annum, shall be paid to
Lender on or before November 1, 2003 (“Due Date”).

 

Failure to pay said sum when due shall entitle the holder(s) of this Promissory
Note to declare the amount immediately due and payable without notice to the
Maker.  Past due payments shall bear
interest at the default rate of twelve 
percent (12%) per annum (“Default Rate”).

 

This Note is given to evidence the making of a loan by Standard Parking
Corporation to Maker in connection with a Management Agreement by and between
Standard Parking Corporation and Maker dated September 19, 2000, as
amended by First Amendment of Management Agreement dated
                           ,
2003 (as so amended, the “Management Agreement”).

 

The Maker waives notice of protest, dishonor, or any other notice
otherwise required to be given to a maker of a Promissory Note, and Maker
acknowledges that this Note is given in connection with a business transaction
and not in connection with any household, consumer, or agricultural
transaction.

 

Maker shall have the right to prepay this Note in part or in full at
any time, or to make partial payments from time to time, but no prepayment
shall relieve the Maker from the obligation to make the payment in full of the
loan amount, plus interest as aforesaid, as the same becomes due.

 

No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of
any other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.

 

The Maker and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any

 

16

 

extension or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of collateral and to the
additional or release of any other party or persons primarily or secondarily liable.

 

THIS NOTE AND THE OBLIGATIONS OF THE MAKER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF ILLINOIS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW).  THE MAKER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE STATE OF
ILLINOIS OR ANY FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE MAKER BY MAIL AT THE ADDRESS SPECIFIED IN THE
“NOTICES” SECTION OF THE MANAGEMENT AGREEMENT. 
THE MAKER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT.

 

The person signing this Promissory Note on behalf of Maker hereby
acknowledges that he is a duly qualified officer of Maker and that all
requisite proceedings, if required by the by-laws and/or other corporate
documents of Maker, have been taken, and said officer has all requisite
corporate authority to execute and deliver this Promissory Note.

 

 

CIRCLE LINE
SIGHTSEEING YACHTS, INC.

 

 

	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
						

 

17Exhibit
10.24

 

LEASE

 

 

BY AND BETWEEN

 

 

SHORELINE
PARK, LLC,

a Delaware limited liability company

as Landlord

 

 

and

 

 

OMNICELL Inc.,

as Tenant

 

 

For Premises located at

 

1201 Charleston Road,

Mountain View, California

 

 

 

TABLE OF
CONTENTS

 

 

	
  SUMMARY OF BASIC LEASE
  TERMS

  
	
   

  
	
  ARTICLE 1 DEFINITIONS

  
	
   

  
	
  ARTICLE 2 DEMISE, CONSTRUCTION, AND
  ACCEPTANCE

  
	
   

  
	
  ARTICLE 3 RENT

  
	
   

  
	
  ARTICLE 4 USE OF PREMISES

  
	
   

  
	
  ARTICLE 5
  TRADE FIXTURES AND ALTERATIONS

  
	
   

  
	
  ARTICLE 6 REPAIR AND
  MAINTENANCE

  
	
   

  
	
  ARTICLE 7 WASTE
  DISPOSAL AND UTILITIES

  
	
   

  
	
  ARTICLE 8 COMMON
  OPERATING EXPENSES

  
	
   

  
	
  ARTICLE 9 INSURANCE

  
	
   

  
	
  ARTICLE
  10 LIMITATION ON LANDLORD’S LIABILITY AND INDEMNITY

  
	
   

  
	
  ARTICLE 11 DAMAGE TO
  PREMISES

  
	
   

  
	
  ARTICLE 12 CONDEMNATION

  
	
   

  
	
  ARTICLE 13 DEFAULT AND
  REMEDIES

  
	
   

  
	
  ARTICLE 14
  ASSIGNMENT AND SUBLETTING

  
	
   

  
	
  ARTICLE 15 GENERAL
  PROVISIONS

  

 

 

LEASE

 

This Lease is dated as of the lease reference date
specified in Section A of the Summary of Basic Lease Terms and is made
by and between the party identified as Landlord in Section B of the Summary
and the party identified as Tenant in Section C of the Summary.

 

 

SUMMARY OF BASIC LEASE TERMS

 

	
  SECTION

  (LEASE REFERENCE)

  	
   

  	
  TERMS

  
	
   

  	
   

  	
   

  
	
  A.

  (Introduction)

  	
   

  	
  Lease Reference Date:

  	
   

  	
  June 11, 2003

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  (Introduction)

  	
   

  	
  Landlord:

  	
   

  	
  SHORELINE PARK, LLC

  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  (Introduction)

  	
   

  	
  Tenant:

  	
   

  	
  OMNICELL, INC.

  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  (§ 1.20)

  	
   

  	
  Premises:

  	
   

  	
  That area consisting of
  approximately 86,995 square feet of gross leasable area the address of which
  is 1201 Charleston Road, Mountain View, California, and which is located
  within the Building as shown on Exhibit A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  (§1.21)

  	
   

  	
  Project:

  	
   

  	
  The parcel(s) of land
  containing the Building and Common Area and the other improvements located on
  said land, all as outlined in Exhibit A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  (§ 1.7)

  	
   

  	
  Building:

  	
   

  	
  The building in which
  the Premises are located having an address of 1201 Charleston Road, Mountain
  View, California, and containing approximately 86,995 square feet of gross
  leasable area.  The rentable square
  footage (“RSF”) of the Premises will be determined by measurement based on
  the final Space Plans in accordance with Paragraph 8 of Exhibit B.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
   

  	
  Tenant’s Share:

  	
   

  	
  Not applicable.  Tenant shall not be required to pay for
  operating expenses.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  Tenant’s Allocated
  Parking Stalls:

  	
   

  	
  Tenant is entitled to
  use the 290 parking stalls at the Project located adjacent to the Premises
  and outlined on Exhibit A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  (§ 1.24)

  	
   

  	
  Scheduled Commencement
  Date:  October 1,
  2003.

  
	
   

  	
   

  	
   

  
	
  J.

  (§ 1.17)

  	
   

  	
  Lease Term:

  	
   

  	
  60 calendar months
  (plus the partial month following the Commencement Date if such date is not
  the first day of a month).  If the
  Commencement Date is other than the first day

  

 

1

 

	
   

  	
   

  	
   

  	
   

  	
  of a calendar month,
  the first month shall include the remainder of the calendar month in which
  the Commencement Date occurs plus the first full calendar month thereafter,
  and Base Monthly Rent for such first month shall include the full Base
  Monthly Rent for the first full calendar month plus Base Monthly Rent for the
  partial month in which the Commencement Date occurs prorated on a daily basis

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  See Addendum No. 1 for
  Tenant’s option to extend.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  K.

  (§ 3.1)

  	
   

  	
  Base Monthly Rent:

  	
   

  	
  Months

  	
   

  	
  Monthly Amount

  	
   

  	
  Amount/RSF

  	
   

  	
   

  
	
   

  	
  1 – 12

  	
   

  	
  -0-

  	
   

  	
  -0-

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  13 – 24

  	
   

  	
  $

  	
  113,093.50

  	
   

  	
  $

  	
  1.30

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  25 – 36

  	
   

  	
  $

  	
  117,443.25

  	
   

  	
  $

  	
  1.35

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  37 – 48

  	
   

  	
  $

  	
  121,793.00

  	
   

  	
  $

  	
  1.40

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  49 – 60

  	
   

  	
  $

  	
  130,492.50

  	
   

  	
  $

  	
  1.50

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  In the event the actual
  rentable square footage of the Premises is more or less than 86,995, as
  determined in accordance with Paragraph 8 of Exhibit B,  the amount of the Base Monthly Rent will
  be adjusted accordingly.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  L.

  (§ 3.3)

  	
   

  	
  Prepaid Rent:  $-0-

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M.

  (§ 3.5)

  	
   

  	
  Security Deposit:  $-0-

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N.

  (§ 4.1)

  	
   

  	
  Permitted Use:

  	
   

  	
  General office,
  research and development, light manufacturing, assembly and other uses
  incidental thereto.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  O.

  (§ 5.2)

  	
   

  	
  Permitted Tenant’s
  Alterations limit: 
  $25,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P.

  (§9.1)

  	
   

  	
  Tenant’s Liability
  Insurance Minimum: 
  $3,000,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q.

  (§ 1.3)

  	
   

  	
  Landlord’s Address:

  	
   

  	
  Divco West Group, LLC

  100 Park Center Plaza, Suite 425

  San Jose, California 95113

  Attn:  Property Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  	
   

  	
   

  	
  Divco West Group, LLC

  150 Almaden Blvd., Suite 700

  San Jose, CA 95113

  Attn.: Asset Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  R.

  (§ 1.3)

  	
   

  	
  Tenant’s Address:

  	
   

  	
  1101 East Meadow Drive

  Palo Alto, CA 94303

  Attn:  Vice President of Finance

  
														

 

2

 

	
   

  	
   

  	
  With a copy to:

  	
   

  	
   

  	
  Attn:  Corporate Counsel

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S.

  (§15.13)

  	
   

  	
  Retained Real Estate
  Brokers:  Colliers
  International representing Landlord and Cornish & Carey Commercial
  representing Tenant

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  T.

  (§ 1.16)

  	
   

  	
  Lease:

  	
   

  	
  This Lease includes the
  summary of the Basic Lease

  Terms, the Lease, and
  the following exhibits and addenda:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit A - Project
  Site Plan and Outline of the Premises

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit B - Work Letter
  for Tenant Improvements

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit C - Acceptance
  Agreement

  
	
   

  	
   

  	
   

  	
   

  	
  Exhibit D - Hazardous
  Material Certificate

  
	
   

  	
   

  	
   

  	
   

  	
  Addendum No. 1

  

 

The foregoing
Summary is hereby incorporated into and made a part of this Lease.  Each reference in this Lease to any term of
the Summary shall mean the respective information set forth above and shall be
construed to incorporate all of the terms provided under the particular paragraph
pertaining to such information.  In the
event of any conflict between the Summary and the Lease, the Summary shall
control.

 

ARTICLE 1 DEFINITIONS

 

1.1                                 General:  Any initially capitalized term that is given
a special meaning by this Article 1, the Summary, or by any other provision of
this Lease (including the exhibits attached hereto) shall have such meaning
when used in this Lease or any addendum or amendment hereto unless otherwise
clearly indicated by the context.

 

1.2                                 Additional
Rent:  The term “Additional Rent” is defined in Section 3.2.

 

1.3                                 Address
for Notices:  The term “Address for Notices” means the addresses
set forth in Sections Q and R of the Summary; provided, however, that
after the Commencement Date, Tenant’s Address for Notices shall be the address
of the Premises.

 

1.4                                 Agents:  The term “Agents”
means the following: (i) with respect to Landlord, the employees, contractors
and agents of Landlord; and (ii) with respect to Tenant, the employees,
contractors, agents and invitees of Tenant, and Tenant’s subtenants.

 

1.5                                 Agreed
Interest Rate:  The term “Agreed Interest Rate” means that interest
rate determined as of the time it is to be applied that is equal to the lesser
of (i) 5% in excess of the discount rate established by the Federal Reserve
Bank of San Francisco as it may be adjusted from time to time, or (ii) the
maximum interest rate permitted by Law.

 

1.6                                 Base
Monthly Rent:  The term “Base Monthly Rent” means the fixed monthly
rent payable by Tenant pursuant to Section 3.1 which is specified in Section
K of the Summary.

 

1.7                                 Building:  The term “Building”
means the building in which the Premises are located which Building is
identified in Section F of the Summary.

 

1.8                                 Commencement
Date:  The term “Commencement Date” is the date the Lease
Term commences, which term is defined in Section 2.2.

 

3

 

1.9                                 Common
Area:  The term “Common Area” means all areas and facilities
within the Project that are not designated by Landlord for the exclusive use of
Tenant or any other lessee or other occupant of the Project, including the
parking areas, access and perimeter roads, pedestrian sidewalks, landscaped
areas, trash enclosures, recreation areas and the like.

 

1.10                           [intentionally
omitted].

 

1.11                           Effective
Date:  The term “Effective Date” means the date the last
signatory to this Lease whose execution is required to make it binding on the
parties hereto shall have executed this Lease.

 

1.12                           Event
of Tenant’s Default:  The term “Event of Tenant’s Default” is defined in
Section 13.1.

 

1.13                           Hazardous
Materials:  The terms “Hazardous Materials” and “Hazardous Materials Laws” are defined in
Section 7.2F.

 

1.14                           Insured
and Uninsured Peril:  The terms “Insured Peril” and “Uninsured Peril” are defined in ¶11.2E.

 

1.15                           Law:  The term “Law”
means any judicial decision, statute, constitution, ordinance, resolution,
regulation, rule, administrative order, or other requirement of any municipal,
county, state, federal or other government agency or authority having
jurisdiction over the parties to this Lease or the Premises, or both, in effect
either at the Effective Date or any time during the Lease Term, including,
without limitation, any Hazardous Material Law (as defined in Section 7.2F) and
the Americans with Disabilities Act, 42 U.S.C. §§ 12101 et.  seq.
and any rules, regulations, restrictions, guidelines, requirements or
publications promulgated or published pursuant thereto.

 

1.16                           Lease:  The term “Lease”
means the Summary and all elements of this Lease identified in Section T
of the Summary, all of which are attached hereto and incorporated herein by
this reference.

 

1.17                           Lease
Term:  The term “Lease Term” or “Term” means the term of this Lease which shall commence on the
Commencement Date and continue for the period specified in Section J of
the Summary.

 

1.18                           Lender:  The term “Lender”
means any beneficiary, mortgagee, secured party, lessor, or other holder of any
Security Instrument.

 

1.19                           Permitted
Use:  The term “Permitted Use” means the use specified in Section
N of the Summary.

 

1.20                           Premises:  The term “Premises”
means that building area described in Section D of the Summary that is
within the Building.

 

1.21                           Project:  The term “Project”
means that real property and the improvements thereon which are specified in Section E
of the Summary.

 

1.22                           Private
Restrictions:  The term “Private Restrictions” means all recorded
covenants, conditions and restrictions, private agreements, reciprocal easement
agreements, and any other recorded instruments affecting the use of the
Premises which (i) exist as of the Effective Date, or (ii) are recorded after
the Effective Date and are approved by Tenant.

 

1.23                           [intentionally
omitted]

 

4

 

1.24                           Scheduled
Commencement Date:  The term “Scheduled Commencement Date” means the date
specified in Section I of the Summary.

 

1.25                           Security
Instrument:  The term “Security Instrument” means any underlying
lease, mortgage or deed of trust which now or hereafter affects the Project,
and any renewal, modification, consolidation, replacement or extension thereof.

 

1.26                           Summary:  The term “Summary”
means the Summary of Basic Lease Terms executed by Landlord and Tenant that is
part of this Lease.

 

1.27                           Tenant’s
Alterations:  The term “Tenant’s Alterations” or “Tenant’s Alteration” or “Tenant Alteration” means all improvements,
additions, alterations, and fixtures installed in the Premises by Tenant.

 

1.28                           [intentionally
omitted]

 

1.29                           Trade
Fixtures:  The term “Trade Fixtures” means anything affixed to
the Premises by Tenant at its expense for purposes of trade, manufacture,
ornament or domestic use (except replacement of similar work or material
originally installed by Landlord) which can be removed without material injury
to the Premises unless such thing has, by the manner in which it is affixed,
become an integral part of the Premises.

 

ARTICLE 2 DEMISE,
CONSTRUCTION, AND ACCEPTANCE

 

2.1                                 Demise
of Premises:  Landlord hereby leases
to Tenant, and Tenant leases from Landlord, for the Lease Term upon the terms
and conditions of this Lease, the Premises, together with (i) the non-exclusive
right to use Tenant’s Allocated Parking Stalls within the Common Area (subject
to the limitations set forth in Section 4.5), and (ii) the non-exclusive right to
use the Common Area for ingress to and egress from the Premises and for the
purposes for which such areas have been designated.  Landlord reserves the use of the exterior walls, the roof and the
area beneath and above the Premises, together with the right to install,
maintain, use, and replace ducts, wires, conduits and pipes leading through the
Premises in locations which will not interfere with Tenant’s use of the
Premises.

 

2.2                                 Commencement
Date:  The “Commencement Date” shall mean the later of
(a) the date the “Tenant Improvements” and the “Exterior Work” have been
“Substantially Completed” (as such terms are defined in Exhibit B attached
hereto), and (b) October 1, 2003. 
The Scheduled Commencement Date is an estimate of the actual
Commencement Date.

 

2.3                                 Construction
of Improvements:  Landlord shall
construct the Tenant Improvements in accordance with the terms of Exhibit B.

 

2.4                                 Delivery
and Acceptance of Possession:  If
Landlord is unable to deliver possession of the Premises to Tenant on or before
the Scheduled Commencement Date for any reason whatsoever, then this Lease
shall not be void or voidable except as provided in this paragraph, and
Landlord shall not be liable to Tenant for any loss or damage resulting
therefrom.  If the delay in delivery is
due to any Tenant Delay (as defined in Exhibit B) , then Substantial
Completion of the Tenant Improvements shall be deemed (for the purposes of
calculating the Commencement Date) to be the date the Tenant Improvements would
have been Substantially Completed but for such Tenant Delays. Notwithstanding
the foregoing, if the Commencement Date does not occur within 90 days after the
Scheduled Commencement Date, which date is not subject to extension due to
Force Majeure Delays (as that term is defined in Exhibit B), then
Tenant (if the delay was not due to a Tenant Delay), as its sole and exclusive
remedy, shall have the right to terminate this Lease upon written notice to

 

5

 

Landlord within ten (10) days after the earlier of (i)
notice from Landlord that there will be a delay beyond said 90-day time period,
or (ii) end of said time period.

 

Upon Substantial Completion of the Tenant
Improvements, Landlord and Tenant shall together execute an acceptance agreement
in the form attached as Exhibit C, appropriately completed.  The failure of Landlord or Tenant to execute
such acceptance agreement shall not delay the Commencement Date.

 

2.5                                 Early
Occupancy:  Tenant shall have access
to the Premises prior to the Commencement Date to make arrangements for
Tenant’s move into the Premises and to install fixtures, supplies, inventory
and other property. Tenant agrees that it shall not interfere with the progress
of Landlord’s work by such entry. During the course of any pre-term possession,
all terms and conditions of this Lease shall apply, except for the payment of
Rent and the start of the Commencement Date. 
If such access is interfering with the construction of the Tenant Improvements
as determined by Landlord’s general contractor, then Tenant agrees to
discontinue the activities that is causing the interference or vacate the
Premises.

 

ARTICLE 3 RENT

 

3.1                                 Base
Monthly Rent:  Commencing on the
Commencement Date and continuing throughout the Lease Term, Tenant shall pay to
Landlord the Base Monthly Rent set forth in Section K of the Summary.

 

3.2                                 Additional
Rent:  Commencing on the
Commencement Date and continuing throughout the Lease Term, Tenant shall pay
the following as additional rent (the “Additional
Rent”): (i) any late charges or interest due Landlord pursuant to
Section 3.4; (ii) Landlord’s share of any Subrent received by Tenant upon
certain assignments and sublettings as required by Section 14.1; (iii) any
legal fees and costs due Landlord pursuant to Section 15.9; and (iv) any other
charges due Landlord pursuant to this Lease. 
This Lease is intended to be a “gross lease,” and all charges for common
area costs, maintenance costs, insurance costs and real estate taxes are included
in Base Monthly Rent, except as otherwise explicitly provided herein.

 

3.3                                 Payment
of Rent:  Prior to the first day of
the thirteenth full month of the Lease Term, Tenant shall pay to Landlord the
amount set forth in Section L of the Summary as prepayment of rent, for
credit against the Base Monthly Rent due for the thirteenth month of the Lease
Term.  The term “Rent” or “rent”
shall mean Base Monthly Rent and Additional Rent.  All rent required to be paid in monthly installments shall be
paid in advance on the first day of each calendar month during the Lease
Term.  All rent shall be paid in lawful
money of the United States, without any abatement, deduction or offset
whatsoever (except as specifically provided in Sections 10.1, 11.4 or
12.3), and without any prior demand therefor. 
Rent shall be paid to Landlord at its address set forth in Section Q
of the Summary, or at such other place as Landlord may designate from time to
time in writing.  Tenant’s obligation to
pay Base Monthly shall be prorated at the commencement and expiration of the
Lease Term.

 

3.4                                 Late
Charge, Interest and Quarterly Payments:

 

(a)                                  Late
Charge.  Tenant acknowledges that
the late payment by Tenant of any installment of rent, or any other sum of
money required to be paid by Tenant under this Lease, will cause Landlord to
incur certain costs and expenses not contemplated under this Lease, the exact
amount of such costs being extremely difficult and impractical to fix.  Such costs and expenses will include,
without limitation, attorneys’ fees, administrative and collection costs, and
processing and accounting expenses and other costs and expenses necessary and
incidental thereto.  If any Base Monthly
Rent or Additional Rent is not received by Landlord from Tenant when due such payment
is due, then upon three (3) day’s advance notice to Tenant, Tenant shall
immediately pay to Landlord a late charge equal to 10% of such delinquent rent
as liquidated damages for 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 rent or prevent Landlord from exercising

 

6

 

any right or remedy available to Landlord upon
Tenant’s failure to pay any rent due under this Lease in a timely fashion,
including any right to terminate this Lease pursuant to Section 13.2B.

 

(b)                                 Interest.  If any rent remains delinquent for a period
in excess of five (5) days following written notice to Tenant, then, in
addition to such late charge, Tenant shall pay to Landlord interest on any rent
that is not paid when due at the Agreed Interest Rate following the date such
amount became due until paid.

 

(c)                                  [intentionally
omitted]

 

3.5                                 Security
Deposit:  [intentionally omitted]

 

3.6                                 Electronic
Payment. [intentionally omitted]

 

ARTICLE 4 USE OF PREMISES

 

4.1                                 Limitation
on Use:  Tenant shall use the
Premises solely for the Permitted Use specified in Section N of the
Summary.  There shall not be any change
in use without the prior written consent of Landlord which will not be
unreasonably withheld.  Tenant shall not
do anything in or about the Premises which will (i) cause structural injury to
the Building, or (ii) cause damage to any part of the Building except to the
extent reasonably necessary for the installation of Tenant’s Trade Fixtures and
Tenant’s Alterations, and then only in compliance with the applicable
provisions of this Lease.  Tenant shall
not operate any equipment within the Premises which will (i) materially damage
the Building or the Common Area, (ii) overload existing electrical systems or
other mechanical equipment servicing the Building, (iii) impair the efficient
operation of the sprinkler system or the heating, ventilating or air
conditioning (“HVAC”) equipment
within or servicing the Building, or (iv) damage, overload or corrode the
sanitary sewer system.  Tenant shall not
set any load on the floor in excess of the load limits for which such items are
designed.  Any dust, fumes, or waste
products generated by Tenant’s use of the Premises shall be contained and  disposed so that they do not (i) create an
unreasonable fire or health hazard, (ii) damage the Premises, or (iii) result
in the violation of any Law.  Except as
approved by Landlord, Tenant shall not change the exterior of the Building or
install any equipment or antennas on or make any penetrations of the exterior
or roof of the Building.  Tenant shall
not commit any waste in or about the Premises, and Tenant shall keep the Premises
in a neat, clean, attractive and orderly condition, free of any nuisances.  If Landlord designates a standard window
covering for use throughout the Building, Tenant shall use this standard window
covering to cover all windows in the Premises. 
Tenant shall not conduct on any portion of the Premises or the Project
any public or private auction, fire sale, going-out-of-business sale, distress
sale or other liquidation sale.

 

4.2                                 Compliance
with Regulations:  Tenant shall not
use the Premises in any manner which violates any Laws or Private Restrictions
which affect the Premises.  Tenant shall
abide by and promptly observe and comply with all Laws and Private
Restrictions.  Tenant shall not use the
Premises in any manner which will cause a cancellation of any insurance policy
covering Tenant’s Alterations or any improvements installed by Landlord at its
expense or which poses an unreasonable risk of damage or injury to the
Premises.  Tenant shall not sell, or
permit to be kept, used, or sold in or about the Premises any article which is
prohibited by the standard form of fire insurance policy.  Tenant shall comply with all reasonable
requirements of any insurance company, insurance underwriter, or Board of Fire
Underwriters which are necessary to maintain the insurance coverage carried by
either Landlord or Tenant pursuant to this Lease.  Notwithstanding the foregoing or anything to the contrary
contained in this Lease, Tenant shall not be responsible for compliance with
any Laws where such compliance is not related specifically to Tenant’s use and occupancy
of the Premises, including without limitation the construction of any Tenant
Alteration.  For example, if any
governmental authority should require any portion of the Project or the
Premises to be structurally strengthened against earthquake, or should require
the removal of Hazardous Materials from the Premises and such measures are
imposed as a

 

7

 

general requirement applicable to all tenants rather
than as a condition to Tenant’s specific use or occupancy of the Premises, such
work shall be performed by and at the sole cost of Landlord.

 

4.3                                 Outside
Areas:  No materials, supplies,
tanks or containers, equipment, finished products or semi-finished products,
raw materials, inoperable vehicles or articles of any nature shall be stored
upon or permitted to remain outside of the Premises except in outside the
Building which have been designed for such purpose by Landlord for such use by
Tenant.

 

4.4                                 Signs:  Tenant shall be entitled to have one sign
identifying Tenant’s name on the Building and on its name listed on the
monument sign for the Building, provided each such sign is permitted and in
conformity with all Laws and Private Restrictions then in effect and the
design, size and quality of such signs are approved by Landlord, which approval
will not be unreasonably withheld.  Such
signage shall be installed at the expense of Landlord as a Tenant Improvement
pursuant to Exhibit B.  At its
expense, Tenant shall maintain such signs in good condition and repair and
shall be obligated to remove the sign on the Building at the expiration or
sooner termination of the Lease Term. 
Except as provided above, Tenant shall not be entitled to any other
signage at the Building or Project.

 

4.5                                 Parking:  Tenant is allocated and shall have the
non-exclusive right to use not more than the number of Tenant’s Allocated
Parking Stalls contained within the Project described in Section H of
the Summary for its use and the use of Tenant’s Agents.  Tenant shall not at any time use more
parking spaces than the number so allocated to Tenant or park its vehicles or
the vehicles of others in any portion of the Project not designated by Landlord
as a non-exclusive parking area.  If
Landlord grants to any other tenant the exclusive right to use any particular
parking space(s), Tenant shall not use such spaces.  Landlord reserves the right, after having given Tenant reasonable
notice, to have any vehicles owned by Tenant or Tenant’s Agents utilizing
parking spaces in excess of the parking spaces allowed for Tenant’s use to be
towed away at Tenant’s cost.  All trucks
and delivery vehicles shall be (i) parked at the rear of the Building, (ii)
loaded and unloaded in a manner which does not interfere with the businesses of
other occupants of the Project, and (iii) permitted to remain on the Project
only so long as is reasonably necessary to complete loading and unloading.  In the event Landlord elects or is required
by any Law to limit or control parking in the Project, whether by validation of
parking tickets or any other method of assessment, Tenant agrees to participate
in such validation or assessment program under such reasonable rules and
regulations as are from time to time established by Landlord.

 

4.6                                 Rules
and Regulations:  Landlord may from
time to time promulgate reasonable and nondiscriminatory rules and regulations
applicable to all occupants of the Project for the care and orderly management
of the Project and the safety of its tenants and invitees.  Such rules and regulations shall be binding
upon Tenant upon delivery of a copy thereof to Tenant, and Tenant agrees to
abide by such rules and regulations.  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 for the
violation by any other tenant of the Project of any such rules and regulations;
provided, however, that Landlord shall use its commercially reasonable efforts
to require compliance by other tenants with such rules and regulations, but
such efforts shall not require Landlord to terminate any lease or commence any
litigation or arbitration proceeding.

 

ARTICLE 5 TRADE FIXTURES
AND ALTERATIONS

 

5.1                                 Trade
Fixtures:  Throughout the Lease
Term, Tenant may provide and install, and shall maintain in good condition, any
Trade Fixtures required in the conduct of its business in the Premises, except
to the extent (a) any Trade Fixture will use, generate, store or dispose of any
Hazardous Material in which case the installation of such Trade Fixtures shall
be in compliance with the provisions of Article 7, or (b) any Trade Fixture
will constitute a Tenant Alteration, in which case it shall be subject to the
requirements set forth below for the construction of a Tenant Alteration,
including, without limitation, the prior written consent of Landlord, if
required.  All Trade Fixtures shall
remain Tenant’s property.

 

8

 

5.2                                 Tenant’s
Alterations:  Construction by Tenant
of a Tenant Alteration shall be governed by the following:

 

A.                                   Consent
Required.  Tenant shall not
construct any Tenant’s Alterations or otherwise alter the Premises without
Landlord’s prior written approval, which will not be unreasonably withheld
unless such Tenant Alteration affects areas outside of the Premises or the
exterior of the Building or the structural parts of the Building, in which case
Landlord may withhold its consent in its sole and absolute discretion.  Notwithstanding the foregoing, Landlord’s
consent shall not be required for any Tenant Alteration to the interior of the
Premises that complies with the following requirements: (a) is cosmetic in
nature such as painting; or (b)(i) does not affect the roof or any area outside
of the Premises; (ii) does not adversely affect the structural parts of the
Building or electrical, plumbing, HVAC or mechanical systems in the Building or
servicing the Premises, or the sprinkler or other life safety system; and (iii)
costs less than the Permitted Tenant Alterations Limit specified in Section O
of the Summary per work of improvement and in the aggregate for all of such
Alterations during a calendar year (herein referred to as “Minor Alteration”). Tenant shall provide
Landlord with prior written notice of any Minor Alteration that requires a
building permit.  In the event
Landlord’s approval for any Tenant’s Alterations is required, Tenant shall not
construct the Tenant Alteration until Landlord has approved in writing the
plans and specifications therefor, and such Tenant’s Alterations shall be
constructed substantially in compliance with such approved plans and
specifications.  All Tenant’s
Alterations constructed by Tenant shall be constructed by a licensed contractor
reasonably approved by Landlord in accordance with all Laws using new materials
of good quality.

 

B.                                     Other
Requirements.  Tenant shall not
commence construction of any Tenant’s Alterations until (i) all required
governmental approvals and permits have been obtained, (ii) all requirements
regarding insurance imposed by this Lease have been satisfied, (iii) Tenant has
given Landlord at least five days’ prior notice of its intention to commence
such construction, and (iv) if reasonably requested by Landlord, Tenant has
obtained contingent liability and broad form builders’ risk insurance in an
amount reasonably satisfactory to Landlord if there are any perils relating to
the proposed construction not covered by insurance carried pursuant to Article
9.

 

C.                                     Restoration.  All Tenant’s Alterations shall remain the
property of Tenant during the Lease Term. 
At the expiration or sooner termination of the Lease Term, all Tenant’s
Alterations shall be surrendered to Landlord as part of the realty and shall
then become Landlord’s property, and Landlord shall have no obligation to
reimburse Tenant for all or any portion of the value or cost thereof; provided,
however, that if Landlord requires Tenant to remove any Tenant’s Alterations in
accordance with the provisions of this Section, Tenant shall so remove such
Tenant’s Alterations prior to the expiration or sooner termination of the Lease
Term.  Notwithstanding the foregoing,
Tenant shall not be obligated to remove any Tenant’s Alterations with respect
to which the following is true: (i) Tenant was required, or elected, to obtain
the approval of Landlord to the installation of the Leasehold Improvement in
question; (ii) at the time Tenant requested Landlord’s approval, Tenant
requested of Landlord in writing that Landlord inform Tenant of whether or not
Landlord would require Tenant to remove such Tenant Alteration at the
expiration of the Lease Term; and (iii) at the time Landlord granted its
approval, it did not inform Tenant in writing that it would require Tenant to
remove such Leasehold Improvement at the expiration of the Lease Term.

 

5.3                                 Alterations
Required by Law:  Tenant shall make
any alteration, addition or change of any sort to the Premises that is required
by any Law because of (i) Tenant’s particular use or change of use of the
Premises; (ii) Tenant’s application for any permit or governmental approval; or
(iii) Tenant’s construction or installation of any Tenant’s Alterations or
Trade Fixtures.  Any other alteration,
addition, or change required by Law which is not the responsibility of Tenant
pursuant to the foregoing shall be made by 
Landlord.

 

5.4                                 [intentionally
omitted]

 

9

 

5.5                                 Mechanic’s
Liens:  Tenant shall keep the
Project free from any mechanics’ liens caused by Tenant or its Agents and shall
pay when due all bills arising out of any work performed, materials furnished,
or obligations incurred by Tenant or Tenant’s Agents relating to the
Project.  If any such claim of lien is
recorded, Tenant shall bond against or discharge the same within 10 business
days after notice from Landlord, but in any event prior to the time Landlord’s
interest may be adversely effected. 
Should any lien be filed against the Project or any action be commenced
affecting title to the Project, the party receiving notice of such lien or
action shall immediately give the other party written notice thereof.

 

5.6                                 Taxes
on Tenant’s Property:  Tenant shall
pay before delinquency any and all taxes, assessments, license fees and public
charges levied, assessed or imposed against Tenant’s estate in this Lease or
the property of Tenant situated within the Premises which become due during the
Lease Term.  If any tax or other charge
is assessed by any governmental agency because of the execution of this Lease,
such tax shall be paid by Landlord.  On
demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of
these payments.

 

ARTICLE 6 REPAIR AND MAINTENANCE

 

6.1                                 Tenant’s
Obligation to Maintain:  Except as
otherwise provided in Section 6.2, Section 11.1, and Section 12.3, Tenant shall
be responsible for the following during the Lease Term:

 

A.                                   General.  Except for those items required to be
maintained by Landlord, Tenant shall clean and maintain in good order,
condition, and repair and replace when necessary the Premises and every part
thereof, through regular inspections and servicing, including, but not limited
to: (i) all plumbing and sewage facilities within the Premises (including all
sinks, toilets, faucets and drains), and all ducts, pipes, vents or other parts
of the HVAC or plumbing system within the Premises; (ii) all fixtures, interior
walls, floors, carpets and ceilings; (iii) all windows, doors, entrances, plate
glass, showcases and skylights, if any, (including cleaning both interior and
exterior surfaces); (iv) all electrical facilities and all equipment (including
all lighting fixtures, lamps, bulbs, tubes, fans, vents, exhaust equipment and
systems) within the Premises; and (v) any automatic fire extinguisher equipment
in the Premises.

 

B.                                     Utilities
and Glass.  With respect to utility
facilities serving the Premises (including electrical wiring and conduits, gas
lines, water pipes, and plumbing and sewage fixtures and pipes), Tenant shall
be responsible for the maintenance and repair of any such facilities which
serve only the Premises, including all such facilities that are within the
walls or floor, or on the roof of the Premises, and any part of such facility
that is not within the Premises, but only up to the point where such facilities
enter the Premises.

 

C.                                     Windows.  Tenant shall replace any damaged or broken
glass in the Premises (including all interior and exterior doors and windows)
with glass of the same kind, size and quality. 
Tenant shall repair any damage to the Premises (including exterior doors
and windows) caused by vandalism or any unauthorized entry. Tenant shall
maintain continuously throughout the Lease Term a service contract for the
washing of all windows (both interior and exterior surfaces) in the Premises,
which contract provides for the periodic washing of all such windows as
necessary to maintain the appearance of the Premises in good condition and as
is customary for comparable properties in the area during the Lease Term.  Tenant shall furnish Landlord with copies of
all such service contracts.

 

D.                                    HVAC.  At its expense, Tenant shall (i) maintain
and repair (including replacement of filters, fans and other minor equipment
that requires replacement as part of the normal repair and maintenance) all
HVAC equipment which services only the Premises, and shall keep the same in
good condition through regular inspection and servicing, and (ii) maintain
continuously throughout the Lease Term a service contract for the maintenance
of all such HVAC equipment with a licensed HVAC repair and maintenance
contractor

 

10

 

approved by Landlord, which contract provides for the periodic
inspection and servicing of the HVAC equipment at least once every 3 months
during the Lease Term.  Should any heat
pump, condensor or other major component of the HVAC unit(s) serving the
Premises require replacement during the Term of this Lease, such replacement
shall be done by Landlord, and Tenant shall pay only its pro rata share of the
cost, based on the anticipated life of the replacement equipment and the
remaining time remaining on the Lease Term. 
Tenant’s payments shall be amortized over the remaining Lease Term.  Notwithstanding the foregoing, Landlord may
elect at any time to assume responsibility for the maintenance, repair and
replacement of such HVAC equipment which serves only the Premises, and the cost
thereof shall be paid by Tenant to Landlord within 30 days after request.  Tenant shall furnish Landlord with copies of
all such service contracts..

 

E.                                      Standards.  All repairs and replacements required of
Tenant shall be promptly made with new materials of like kind and quality.  If the work affects the structural parts of
the Building or if the estimated cost of any item of repair or replacement is
in excess of the Permitted Tenant’s Alterations Limit, then Tenant shall first
obtain Landlord’s written approval of the scope of the work, plans therefor,
materials to be used, and the contractor.

 

F.                                      Structural.  Notwithstanding the foregoing, Tenant shall
not be responsible for repairs and maintenance to the structural (which for
purposes hereof shall mean the foundation, roof structure and load bearing
walls) or the roof membrane.

 

G.                                     Damage
by Tenant.  Notwithstanding anything
to the contrary in this Lease, Tenant shall pay for any work and materials
required to be done by Landlord under this Lease due to damage caused by the
negligence, willful misconduct or misuse by Tenant or its Agents which is not
otherwise covered by insurance proceeds. 
If Tenant or any of its Agents causes a casualty causing damage to any
part of the Building, Common Area or Project, then Tenant shall pay to Landlord
the amount of the applicable deductible under Landlord’s property damage
insurance, not to exceed $10,000.00 in any one case regardless of the amount of
the deductible.

 

6.2                                 Landlord’s
Obligations

 

A.                                   Landlord’s
Warranties:  Notwithstanding
anything to the contrary in this Lease, Landlord warrants that on the
Commencement Date, (a) the Premises and Building shall comply with all Laws and
Private Restrictions then applicable to the Premises, Common Area and the
Building, and (b) the Premises, including the improvements and equipment
therein, shall be in good working order, condition, and repair.  In the event of any breach of any of the
foregoing warranties, Landlord shall promptly rectify the same at its sole cost
and expense.

 

Landlord represents and
warrants to its actual knowledge, without independent investigation other than
a review of its property files for the Building, that as of the date of this
Lease no Hazardous Materials are present at the Building in violation of any
applicable Hazardous Materials Laws.

 

B.                                     Landlord’s
Obligation to Maintain:  Landlord
shall repair, maintain, replace (when necessary) and operate the Common Area
and repair, maintain and replace (when necessary) the roof, exterior and
structural parts of the Building and the Common Area so that the same are kept
in good order and repair, and shall also be responsible for any latent defects
in the HVAC, plumbing and electrical systems serving the Premises.  If there is central HVAC or other building
service equipment and/or utility facilities serving portions of the Common Area
and/or both the Premises and other parts of the Building, Landlord shall maintain
and operate (and replace when necessary) such equipment.  Landlord shall not be responsible for
repairs required by an accident, fire or other peril or for damage caused to
any part of the Project by any act or omission of Tenant or Tenant’s Agents
except as otherwise required by Article 11. 
Landlord may engage contractors of its choice

 

11

 

to perform the obligations required of it by this
Article, and the necessity of any expenditure to perform such obligations shall
be at the sole discretion of Landlord.

 

6.3                                 Control
of Common Area:  Landlord shall at
all times have exclusive control of the Common Area.  Landlord shall have the right, without the same constituting an
actual or constructive eviction and without entitling Tenant to any abatement
of rent, to: (i) close any part of the Common Area 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 the Common
Area to perform maintenance or for any other reason deemed sufficient by
Landlord; (iii) change the shape, size, location and extent of the Common Area;
(iv) eliminate from or add to the Project any land or improvement, including multi-deck
parking structures; (v) make changes to the Common Area including, without
limitation, changes in the location of driveways, entrances, passageways, doors
and doorways, elevators, stairs, restrooms, exits, parking spaces, parking
areas, sidewalks or the direction of the flow of traffic and the site of the
Common Area; (vi) remove unauthorized persons from the Project; and/or (vii)
change the name or address of the Building or Project.  Tenant shall keep the Common Area clear of
all obstructions created or permitted by Tenant.  In exercising any such rights regarding the Common Area, (i)
Landlord shall make a reasonable effort to minimize any disruption to Tenant’s
business, and (ii) Landlord shall not exercise its rights to control the Common
Area in a manner that would unreasonably interfere with Tenant’s use of the
Premises.  Landlord shall have no
obligation to provide guard services or other security measures for the benefit
of the Project.  Tenant assumes all
responsibility for the protection of Tenant and Tenant’s Agents from acts of
third parties; provided, however, that nothing contained herein shall prevent
Landlord, at its sole option, from providing security measures for the Project.

 

ARTICLE 7 WASTE DISPOSAL
AND UTILITIES

 

7.1                                 Waste
Disposal:  Tenant shall store its
waste either inside the Premises or within outside trash enclosures provided by
the garbage collection company or Tenant. 
All  entrances to such outside
trash enclosures shall be kept closed, and waste shall be stored in such manner
as not to be visible from the exterior of such outside enclosures.  Tenant shall cause all of its waste to be
regularly removed from the Premises at Tenant’s sole cost.  Tenant shall keep all fire corridors and
mechanical equipment rooms in the Premises free and clear of all obstructions
at all times.

 

7.2                                 Hazardous
Materials:  Landlord and Tenant
agree as follows with respect to the existence or use of Hazardous Materials on
the Project:

 

A.                                   Hazardous
Materials Disclosure Certificate. 
Prior to executing this Lease, Tenant has delivered to Landlord Tenant’s
executed initial Hazardous Materials Disclosure Certificate, in the form
attached hereto as Exhibit D (the “Initial
Hazardous Materials Certificate”). 
Tenant covenants, represents and warrants to Landlord that the
information in the Initial Hazardous Materials Certificate is true and correct
and accurately describes the use(s) of Hazardous Materials which will be made
and/or used on the Premises by Tenant.  Tenant
shall, commencing with the date which is one year from the Commencement Date
and continuing every year thereafter for the Term of this Lease, deliver to
Landlord, an executed and updated Hazardous Materials Disclosure Certificate,
substantially in the form attached hereto as Exhibit D (the “Annual Hazardous Materials Certificate”)
describing Tenant’s then present use of Hazardous Materials on the Premises.

 

B.                                     Hazardous Material Usage.  Tenant
shall not be entitled to use, store, generate, transport or dispose of any
Hazardous Materials (herein referred to as “Hazardous
Materials Usage”) on, in, or about any portion of the Premises and
the Project other than the materials listed in the Hazardous Materials
Certificate, without, in each instance, obtaining Landlord’s prior written
consent thereto in its reasonable discretion. 
If Landlord, in its reasonable discretion, consents in writing to any
such Hazardous Material Usage, then Tenant shall be permitted to use those
Hazardous Materials as expressly approved by Landlord in writing.

 

12

 

Any such Hazardous Materials Usage may only be to the
extent of the quantities of Hazardous Materials as specified in the then
applicable Hazardous Material Disclosure Certificate or as expressly approved
by Landlord.  Any Hazardous Material
Usage of Hazardous Materials by Tenant and Tenant’s Agents after the Effective
Date in or about the Project shall strictly comply with all applicable laws,
including all Hazardous Materials Laws now or hereinafter enacted.  Tenant agrees that any changes to the type
and/or quantities of Hazardous Materials specified in the most recent approved
Hazardous Material Disclosure Certificate may be implemented only with the
prior written consent of Landlord, which consent may be given or withheld in
Landlord’s reasonable discretion. 
Tenant shall not be entitled nor permitted to install any tanks under,
on or about the Premises or Project for the storage of Hazardous Materials
without the express written consent of Landlord, which may be given or withheld
in Landlord’s sole and absolute discretion.

 

C.                                     Tests
and Inspections.  Subject to Section
15.1, Landlord shall have the right at all times during the Term of this Lease
to (i) inspect the Premises, (ii) conduct tests and investigations to determine
whether Tenant is in compliance with the provisions of this Section 7.2 or to
determine if Hazardous Materials are present in, on or about the Premises,
Building and Common Area, and (iii) request lists of all Hazardous Materials
used, stored or otherwise located on, under or about any portion of the
Premises and/or the Common Areas by Tenant. 
All such tests shall be conducted in a commercially reasonable manner,
except in an emergency, so as to minimize any unreasonable disruption of Tenant’s
use and occupancy of the Premises.  The
cost of all such inspections, tests and investigations shall be borne by
Landlord, but shall be subject to indemnification by Tenant pursuant to Section
7.2E below, if applicable.  The
aforementioned rights granted herein to Landlord and its representatives shall
not create (a) a duty on Landlord’s part to inspect, test, investigate, monitor
or otherwise observe the Premises or the activities of Tenant and Tenant’s
Representatives with respect to Hazardous Materials, including without
limitation, Tenant’s operation, use and any remediation related thereto, or (b)
liability on the part of Landlord and its representatives for Tenant’s use,
storage, disposal or remediation of Hazardous Materials, it being understood that
Tenant shall be solely responsible for all liability in connection therewith.

 

D.                                    Notice.  Tenant shall give to Landlord immediate
verbal and follow-up written notice of any spills, releases, discharges,
disposals, emissions, migrations, removals or transportation of Hazardous
Materials on, under or about any portion of the Premises, Common Areas or
Project by Tenant; provided that Tenant has actual knowledge of such
event(s).  Tenant, at its sole cost and
expense, covenants and warrants to promptly investigate, clean up, remove,
restore and otherwise remediate (including, without limitation, preparation of
any feasibility studies or reports and the performance of any and all closures)
any spill, release, discharge, disposal, emission, migration or transportation
or other Hazardous Material Usage of Hazardous Materials arising from or
related to the acts or omissions of Tenant or Tenant’s Agents such that the
affected portions of the Project and any adjacent property are returned to the
condition existing prior to the appearance of such Hazardous Materials, if
commercially feasible, but in any event in compliance with all applicable
Laws.  Any such work shall be subject to
the prior written approval of Landlord in its good faith discretion.  Tenant, at its sole cost and expense, shall
conduct and perform, or cause to be conducted and performed, all closures as
required by any Hazardous Materials Laws or any agencies or other governmental
authorities having jurisdiction thereof relating to Tenant’s or its Agent’s use
of the Premises prior to the expiration of the Lease Term.  If Tenant fails to so promptly investigate,
clean up, remove, restore, provide closure or otherwise so remediate, Landlord
may, but without obligation to do so, take any and all steps necessary to
rectify the same and Tenant shall promptly reimburse Landlord, upon demand, for
all costs and expenses to Landlord of performing investigation, clean up,
removal, restoration, closure and remediation work.  All such work undertaken by Tenant, as required herein, shall be
performed in such a manner so as to enable Landlord to make full economic use
of the Premises and the other portions of the Project after the satisfactory
completion of such work.

 

 

 

13

 

E.                                      Indemnity.

 

(1)                                  Tenant
shall indemnify, hold harmless and defend Landlord and Landlord’s Agents and
mortgagees and other lien holders (“Landlord’s Parties”), from and against any
and all “Losses” (hereinafter defined) arising from or related to: (a) any
violation by Tenant or any of Tenant’s Agents of any of Hazardous Materials
Laws; (b) any breach of the provisions of this Section 7.2 or any subsection
thereof by Tenant or any of Tenant’s Agents; or (c) any Hazardous Materials
Usage by Tenant or its Agents on, about or from the Premises of any Hazardous
Material approved by Landlord under this Lease. The term “Losses” shall mean all claims, demands,
expenses, actions, judgments, damages (whether consequential, direct or
indirect), penalties, fines, liabilities, losses of every kind and nature
(including, without limitation, property damage, diminution in value of
Landlord’s interest in the Premises or the Project, damages for the loss or
restriction on use of any space or amenity within the Building or the Project,
damages arising from any adverse impact on marketing space in the Project, sums
paid in settlement of claims and any costs and expenses associated with injury,
illness or death to or of any person), suits, administrative proceedings, costs
and fees, including, but not limited to, attorneys’ and consultants’ fees and
expenses, and the costs of cleanup, remediation, removal and restoration, that
are in any way related to any matter covered by the foregoing indemnity.  Tenant’s indemnity under this Section 7.2
will not be applicable for any Losses due to (i) any Hazardous Materials Usage
by Landlord or Landlord Parties, or (ii) any Hazardous Materials Usage by any
other party other than Tenant or its Agents, or (iii) any Hazardous Materials existing
as of the Commencement Date.

 

(2)                                 Landlord
agrees that it shall not release any Hazardous Materials in the Building or
Common Area in violation of the applicable Hazardous Materials Laws.  If any Hazardous Materials are released in
the Building or Common Area in violation of the Hazardous Materials Laws, other
than by Tenant or any of its Agents, and such Hazardous Materials are required
to be remediated under the applicable Hazardous Materials Law by a governmental
authority having jurisdiction over the subject matter at the Building, then
Landlord agrees to remediate such Hazardous Materials, at its sole cost and
expense, to the extent required under the Hazardous Materials Laws and
otherwise in a manner determined by Landlord in its reasonable good faith
discretion and in a manner that minimizes, to the extent reasonably possible,
interference with Tenant’s use of the Premises.  Landlord shall indemnify, defend and hold harmless Tenant and
Tenant’s Agents (other than invitees of Tenant) from and against any and all
Losses (other than lost profits) arising out of (a) any violation by Landlord
or its Agents of any Hazardous Materials Laws at the Building or Common Area,
or (b) any Hazardous Materials on, under or about the Premises or the Building
existing on the Commencement Date; or (c) any Hazardous Materials Usage by
Landlord or any Hazardous Materials Usage in violation of applicable Hazardous
Materials Law by any other party other than Tenant or its Agents, on, about or
from the Premises of any Hazardous Material. 
Landlord’s indemnity under this Section 7.2E(2) will not be applicable
for any Losses due to any Hazardous Materials Usage by Tenant or its
Agents.  The provisions of this Section
7.2E(2) that require the Landlord to remediate and indemnify will not be
applicable to any to any Lender under any Security Instrument now or hereafter
encumbering any portion of the Building or Complex, even if such beneficiary or
mortgage acquires title to the Building or Complex through a trustee sale,
foreclosure or deed in lieu of foreclosure.

 

F.                                      Hazardous
Material.  As used herein, the term
“Hazardous Material,” means any
hazardous or toxic substance, material or waste which is or becomes regulated
by any local governmental authority, the State of California or the United
States Government or under any Hazardous Material Law.  The term “Hazardous Material,” includes,
without limitation, petroleum products, asbestos, PCB’s, and any material or
substance which is (i) listed under Article 9 or defined as hazardous or
extremely hazardous pursuant to Article 11 of Title 22 of the California
Administrative Code, Division 4, Chapter 20, (ii) defined as a “hazardous
waste” pursuant to Section 1004 of the Federal Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903), or (iii) defined as a
“hazardous substance” pursuant to Section 101 of the Comprehensive
Environmental Response; Compensation and Liability Act, 42 U.S.C. 9601 et seq.
(42 U.S.C. 9601).  As used herein, the
term “Hazardous Material Law”
shall mean any statute, law, ordinance, or regulation of any governmental body
or agency (including the U.S. Environmental Protection Agency, the

 

14

 

California Regional Water Quality Control Board, and
the California Department of Health Services) which regulates the use, storage,
release or disposal of any Hazardous Material.

 

G.                                     Survival.  The obligations of Landlord and Tenant under
this Section 7.2 shall survive the expiration or earlier termination of the
Lease Term.  The rights and obligations
of Landlord and Tenant with respect to issues relating to Hazardous Materials
are exclusively established by this Section 7.2.  In the event of any inconsistency between any other part of this
Lease and this Section 7.2, the terms of this Section 7.2 shall control.

 

7.3                                 Utilities:  Tenant shall promptly pay, as the same
become due, all charges for water, gas, electricity, telephone, sewer service,
waste pick-up and any other utilities, materials or services furnished directly
to or used by Tenant on or about the Premises during the Lease Term, including,
without limitation, (i) meter, use and/or connection fees, hook-up fees, or
standby fee (excluding any connection fees or hook-up fees which relate to making
the existing electrical, gas, and water service available to the Premises as of
the Commencement Date), and (ii) penalties for discontinued or interrupted
service.

 

7.4                                 Compliance
with Governmental Regulations: 
Landlord and Tenant shall comply with all rules, regulations and
requirements promulgated by national, state or local governmental agencies or
utility suppliers concerning the use of utility services, including any
rationing, limitation or other control. 
Tenant shall not be entitled to terminate this Lease nor to any
abatement in rent by reason of such compliance.

 

ARTICLE 8 COMMON
OPERATING EXPENSES

 

8.1                                 Tenant’s
Supplement Taxes.  Notwithstanding
anything to the contrary, from and after the Commencement Date, Tenant shall
pay for increases in real estate taxes (including, without limitation, all
assessments, levies and other charges included in real estate taxes by any
governmental authority) due to the construction or installation of any Trade
Fixtures or Tenant Alteration by Tenant or its assignee, sublessee,
concessionaire, or transferee under a Transfer (“Tenant’s Activities”), but in any event not including due to
the construction of the initial Tenant Improvements.  Under applicable law in California, the construction of
alterations may result in a supplemental tax assessment and an increase in real
estate taxes.  If there is such an
increase in real estate taxes due to any of Tenant’s Activities, then Tenant
shall pay as additional rent, the cost of such increase as determined by the
taxing authority.  Landlord will not be
able to advise Tenant if any alteration will trigger a supplemental tax
assessment since that determination will be made by the local assessor’s
office.  Accordingly, Tenant shall still
be responsible for such increase in real estate taxes as a result of any of
Tenant’s Activities even though Landlord may have provided its consent or
approval for the construction of such alteration.   Such payment shall be made by Tenant to Landlord within thirty
(30) days prior to the date such amounts are due to the taxing authority,
upon  request by Landlord.

 

ARTICLE 9 INSURANCE

 

9.1                                 Tenant’s
Insurance:  Tenant shall maintain
insurance complying with all of the following:

 

A.                                   Types.  Tenant shall procure, pay for and keep in
full force and effect the following:

 

(1)  Commercial
general liability insurance, including property damage, against liability for
personal injury, bodily injury, death and damage to property occurring in or
about, or resulting from an occurrence in or about, the Premises with combined
single limit coverage of not less than the amount of Tenant’s Liability
Insurance Minimum specified in Section P of the Summary, which insurance
shall contain a “contractual liability” endorsement insuring Tenant’s
performance of Tenant’s obligation to indemnify Landlord contained in Section
10.3;

 

15

 

(2)  Fire and
property damage insurance in so-called “all risk” form insuring Tenant’s Trade
Fixtures and Tenant’s Alterations for the full actual replacement cost thereof;

 

(3)  Business
interruption insurance with limits of liability representing at least
approximately six months of income, business auto liability covering owned,
non-owned and hired vehicles with a limit of not less than $1,000,000 per
accident, insurance protecting against liability under workers’ compensation
laws with limits at least as required by statute, insurance for all plate glass
in the Premises, and such other insurance that is either (i) required by any
Lender, or (ii) reasonably required by Landlord and customarily carried by
tenants of similar property in similar businesses.

 

B.                                     Requirements.  Where applicable and required by Landlord,
each policy of insurance required to be carried by Tenant pursuant to this Section
9.1: (i) shall name Landlord and such other parties in interest as Landlord
reasonably designates as additional insured; (ii) shall be primary insurance
which provides 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 declarations
without the right of contribution from any other insurance coverage of
Landlord; (iii) issued by a carrier in each case having a rating in “Best’s
Insurance Reports” as issued from time to time of not less than A-, VII; (iv)
shall provide that such policy shall not be subject to cancellation except
after at least 30 days prior written notice to Landlord so long as such
provision of 30 days notice is reasonably obtainable, but in any event not less
than 10 days prior written notice; (v) shall not have a “deductible” in excess
of a deductible that Tenant has at other comparable leased properties or
otherwise consistent with its normal risk management practice; (vi) shall
contain a cross liability endorsement; and (vii) shall contain a “severability”
clause.  If Tenant has in full force and
effect a blanket policy of liability insurance with the same coverage for the
Premises as described above, as well as other coverage of other premises and
properties of Tenant, or in which Tenant has some interest, such blanket
insurance shall satisfy the requirements of this Section 9.1.

 

C.                                     Evidence.  A copy of each paid-up policy evidencing the
insurance required to be carried by Tenant pursuant to this Section 9.1
(appropriately authenticated by the insurer) or a certificate of the insurer,
certifying that such policy has been issued, providing the coverage required by
this Section 9.1, and containing the provisions specified herein, shall be
delivered to Landlord prior to the time Tenant or any of its Agents enters the
Premises and upon renewal of such policies, but not less than 5 days prior to
the expiration of the term of such coverage. 
Landlord may, at any time, and from time to time, inspect and/or copy
any and all insurance policies required to be procured by Tenant pursuant to
this Section 9.1. If any Lender or insurance advisor reasonably determines at
any time that the amount of coverage required for any policy of insurance
Tenant is to obtain pursuant to this Section 9.1 is not adequate, then Tenant
shall increase such coverage for such insurance to such amount as such Lender
or insurance advisor reasonably deems adequate, not to exceed the level of
coverage for such insurance commonly carried by comparable businesses similarly
situated.

 

9.2                                 Landlord’s
Insurance:  Landlord shall have the
following obligations and options regarding insurance:

 

A.                                   Property
Damage.  Landlord shall maintain a
policy or policies of fire and property damage insurance in so-called “all
risk” form insuring Landlord (and such others as Landlord may designate)
against loss of rents for a period of not less than 12 months and from physical
damage to the Project with coverage of not less than the full replacement cost
thereof.  Landlord may so insure the
Project separately, or may insure the Project with other property owned by
Landlord which Landlord elects to insure together under the same policy or
policies. Landlord shall have the right, but not the obligation, in its sole
and absolute discretion, to obtain insurance for such additional perils as
Landlord deems appropriate, including, without limitation, coverage for damage
by earthquake and/or flood.  All such
coverage shall contain “deductibles” which Landlord deems appropriate, which in
the case of earthquake and flood insurance, may be up to 10% of the replacement
value of the property insured or such higher amount as is then commercially
reasonable.

 

16

 

Landlord shall not be required to cause such insurance
to cover any Trade Fixtures or Tenant’s Alterations of Tenant.

 

B.                                     Other.  Landlord shall maintain a policy or policies
of commercial 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 or resulting from an occurrence
in, on or about the Project, with combined single limit coverage in the amount
of $3,000,000.

 

C.                                     Tenant’s
Obligation to Reimburse:  If
Landlord’s insurance rates for the Building are increased at any time during
the Lease Term as a result of the nature of Tenant’s use of the Premises,
Tenant shall reimburse Landlord for the full amount of such increase
immediately upon receipt of a bill from Landlord therefor.

 

9.3                                 Mutual
Waiver of Subrogation:  Landlord and
Tenant hereby mutually waive their respective rights for recovery against each
other for any loss of or damage to the property of either party, where such
loss or damage is insured by any insurance policy required to be maintained by
this Lease or otherwise in force at the time of such loss or damage.  Each party shall obtain any special
endorsements, if required by the insurer, whereby the insurer waives its right
of subrogation against the other party hereto. 
The portions of this Section shall not apply in those instances in which
a waiver of subrogation would cause either party’s insurance coverage to be
voided or otherwise made uncollectible.

 

ARTICLE 10 LIMITATION ON
LANDLORD’S LIABILITY AND INDEMNITY

 

10.1                           Limitation
on Landlord’s Liability:  Landlord
shall not be liable to Tenant, nor shall Tenant be entitled to terminate this
Lease or to any abatement of rent (except as expressly provided otherwise
herein), for any injury to Tenant or Tenant’s Agents, damage to the property of
Tenant or Tenant’s Agents, or loss to Tenant’s business resulting from any
cause, including without limitation any: (i) failure, interruption or
installation of any HVAC or other utility system or service; (ii) failure to
furnish or delay in furnishing any utilities or services when such failure or
delay is caused by fire or other peril, the elements, labor disturbances of any
character, or any other accidents or other conditions beyond the reasonable control
of Landlord; (iii) limitation, curtailment, rationing or restriction on the use
of water or electricity, gas or any other form of energy or any services or
utility serving the Project; (iv) vandalism or forcible entry by unauthorized
persons or the criminal act of any person. 
Notwithstanding the foregoing but subject to Section 9.3, Landlord shall
be liable for any such injury, damage or loss for matters occurring under
clauses (i) or (ii) above which is proximately caused by Landlord’s willful misconduct
or  negligence or breach by Landlord of
its obligations under this Lease. 
Notwithstanding the foregoing, if Tenant’s use or occupancy of the
Premises is substantially impaired by the failure, interruption or installation
of any HVAC or other utility system or service or maintenance obligation of
Landlord for a period of more than 30 days, Base Monthly Rent payable by Tenant
hereunder shall abate until such substantial impairment ceases.

 

10.2                           Limitation
on Tenant’s Recourse:  If Landlord
is a corporation, limited liability company, trust, partnership, joint venture,
unincorporated association or other form of business entity: (i) the
obligations of Landlord shall not constitute personal obligations of the
officers, directors, trustees, partners, joint venturers, members, owners,
stockholders, or other principals or representatives of such business entity;
and (ii) Tenant shall not have recourse to the assets of such officers,
directors, trustees, partners, joint venturers, members, owners, stockholders,
principals or representatives except to the extent of their interest in the
Project.  Tenant shall have recourse
only to the interest of Landlord in the Project for the satisfaction of the
obligations of Landlord and shall not have recourse to any other assets of
Landlord for the satisfaction of such obligations.

 

10.3                           Indemnification
of Landlord:  Tenant shall hold
harmless, indemnify and defend Landlord, and its employees, agents and
contractors, with competent counsel reasonably satisfactory to Landlord (and

 

17

 

Landlord agrees to accept counsel that any insurer
requires be used), from all liability, penalties, losses, damages, costs,
expenses, causes of action, claims and/or judgments arising by reason of any
death, bodily injury, personal injury or property damage resulting from (i) any
cause or causes whatsoever (other than the willful misconduct or negligence of
Landlord or the breach by Landlord of any of its obligations under this Lease)
occurring in or about or resulting from an occurrence in or about the Premises
during the Lease Term, or (ii) an Event of Tenant’s Default.  The provisions of this Section 10.3 shall
survive the expiration or sooner termination of this Lease.

 

ARTICLE 11 DAMAGE TO PREMISES

 

11.1                           Landlord’s
Duty to Restore:  If the Premises
are damaged by any peril after the Effective Date, Landlord shall restore the
Premises unless the Lease is terminated by Landlord pursuant to Section 11.2 or
by Tenant pursuant to Section 11.3.  All
insurance proceeds available from the fire and property damage insurance
carried by Landlord pursuant to Section 9.2 shall be paid to and become the
property of Landlord.  If this Lease is
terminated pursuant to either Section 11.2 or Section 11.3, then all insurance
proceeds available from insurance carried by Tenant which covers 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.  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 Premises, to the
extent then allowed by Law, to substantially the same condition in which the
Premises were immediately prior to such damage.  If Landlord is not able to commence restoration of the Premises
by 120 days following the date of destruction, either because of a failure to
receive insurance proceeds or necessary permits, Tenant shall have the right to
terminate this Lease in accordance with the provisions of 11.3.  Landlord’s obligation to restore shall be
limited to the Premises and interior improvements constructed by Landlord as
they existed as of the Commencement Date, excluding any Tenant’s Alterations,
Trade Fixtures and/or personal property constructed or installed by Tenant in
the Premises.  Tenant shall be
responsible for any necessary repair of Tenant’s Alterations and/or Trade
Fixtures installed by Tenant.

 

11.2                           Landlord’s
Right to Terminate:  Landlord shall
have the right to terminate this Lease in the event any of the following
occurs, which right may be exercised only by delivery to Tenant of a written
notice of election to terminate within 30 days after the date of such damage:

 

A.                                   Damage
From Insured Peril.  Either the
Premises or the Building is damaged by an Insured Peril to such an extent that
the estimated cost to restore exceeds 66% of the then actual replacement cost
thereof;

 

B.                                     Damage
From Uninsured Peril.  Either the
Premises or the Building is damaged by an Uninsured Peril to such an extent
that the estimated cost to restore exceeds 10% of the then actual replacement
cost thereof and Landlord does not commence restoration of the Building within
120 days from the date of the casualty; provided, however, that Landlord may
not terminate this Lease pursuant to this Section 11.2B if one or more tenants
of the Project agree in writing to pay the amount by which the cost to restore
the damage exceeds such amount and subsequently deposit such amount with
Landlord within 30 days after Landlord has notified Tenant of its election to
terminate this Lease;

 

C.                                     Damage
Near End of Term.  The Premises are
damaged by any peril within 12 months of the last day of the Lease Term to such
an extent that the estimated cost to restore equals or exceeds an amount equal
to six times the Base Monthly Rent then due; provided, however, that Landlord
may not terminate this Lease pursuant to this Section 11.2C if Tenant, at the
time of such damage, has a then valid express written option to extend the
Lease Term and Tenant exercises such option to extend the Lease Term, after
notice from Landlord, within 15 days following the date of such damage; or

 

18

 

D.                                    Restrictions
on Restoration.  Either the Premises
or the Building is damaged by any peril and, because of the Laws then in force,
(i) cannot be restored at reasonable cost to substantially the same condition
in which it was prior to such damage, or (ii) cannot be used for the same use
being made thereof before such damage if restored as required by this Article.

 

E.                                      Defined
Terms.  As used herein, the
following terms shall have the following meanings: (i) the term “Insured Peril” shall mean a peril required
to be insured against pursuant to the terms of this Lease or actually insured
against by Landlord, pursuant to which the insurance proceeds are sufficient to
restore, except for the deductible in the under the applicable property damage
policy and except for the deductible of not more than 10% of the replacement
cost of the Building in a policy for damage by earthquake; and (ii) the term “Uninsured Peril” shall mean any peril which
is not an Insured Peril. 
Notwithstanding the foregoing, if the “deductible” for earthquake or
flood insurance exceeds 10% of the replacement cost of the improvements
insured, such peril shall be deemed an “Uninsured Peril” affording Landlord the
right to terminate under Section 11.2B, unless Landlord proceeds with
restoration of the Building within 120 days after the date of the damage by
earthquake.

 

11.3                           Tenant’s
Right to Terminate:  If the 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 Section 11.2, 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 completed.  Tenant shall have the right to terminate
this Lease in the event any of the following occurs, which right may be
exercised only by delivery to Landlord of a written notice of election to
terminate within 10 days after Tenant receives from Landlord the estimate of
the time needed to complete such restoration.

 

A.                                   Major
Damage.  The Premises are damaged by
any peril and, in the reasonable opinion of Landlord’s architect or
construction consultant, the restoration of the Premises cannot be
substantially completed within 120 days after the date of such damage; or

 

B.                                     Damage
Near End of Term.  The Premises are
damaged by any peril within 12 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 Premises cannot be substantially completed within 60 days
after the date of such damage.

 

11.4                           Abatement
of Rent:  In the event of damage to
the Premises which does not result in the termination of this Lease, the Base
Monthly Rent and the Additional Rent shall be temporarily abated from the date
of damage until restoration in proportion to the degree to which Tenant’s use
of the Premises is impaired by such damage. 
Tenant shall not be entitled to any compensation or damages from
Landlord for loss of Tenant’s business or property or for any inconvenience or
annoyance caused by such damage or restoration except as otherwise provided in
this Lease.  Tenant hereby waives the
provisions of California Civil Code Sections 1932(2) and 1933(4) and the
provisions of any similar law hereinafter enacted.

 

ARTICLE 12 CONDEMNATION

 

12.1                           Landlord’s
Termination Right:  Landlord shall
have the right to terminate this Lease if, as a result of a taking by means of
the exercise of the power of eminent domain (including a voluntary sale or
transfer by Landlord to a condemnor under threat of condemnation), (i) all or
any part of the Premises is so taken, (ii) more than 10% of the Building
Leasable Area is so taken, or (iii) more than 50% of the Common Area is so
taken.  Any such right to terminate by
Landlord must be exercised within a reasonable period of time, to be effective
as of the date possession is taken by the condemnor.

 

19

 

12.2                           Tenant’s
Termination Right:  Tenant shall
have the right to terminate this Lease if, as a result of any taking by means
of the exercise of the power of eminent domain (including any voluntary sale or
transfer by Landlord to any condemnor under threat of condemnation), (i) 10% or
more of the Premises is so taken and that part of the Premises that remains
cannot be restored within a reasonable period of time and thereby made
reasonably suitable for the continued operation of the Tenant’s business, or
(ii) there is a taking affecting the Common Area and, as a result of such
taking, Landlord cannot provide parking spaces within reasonable walking
distance of the Premises equal in number to at least 80% of the number of
spaces allocated to Tenant by Section 2.1, whether by rearrangement of the
remaining parking areas in the Common Area (including construction of
multi-deck parking structures or re-striping for compact cars where permitted
by Law) or by alternative parking facilities on other land.  Tenant must exercise such right within a
reasonable period of time, to be effective on the date that possession of that
portion of the Premises or Common Area that is condemned is taken by the
condemnor.

 

12.3                           Restoration
and Abatement of Rent:  If any part
of the Premises or the Common Area is taken by condemnation and this Lease is
not terminated, then Landlord shall restore the remaining portion of the
Premises and Common Area and interior improvements constructed by Landlord as
they existed as of the Commencement Date, excluding any Tenant’s Alterations,
Trade Fixtures and/or personal property constructed or installed by
Tenant.  Thereafter, except in the case
of a temporary taking, as of the date possession is taken the Base Monthly Rent
shall be reduced in the same proportion that the floor area of that part of the
Premises so taken (less any addition thereto by reason of any reconstruction)
bears to the original floor area of the Premises or by an amount reasonably calculated
to compensate Tenant for the decrement in use of the Common Area.

 

12.4                           Temporary
Taking:  If any portion of the
Premises is temporarily taken for one year or less, this Lease shall remain in
effect, but only if such taking does not materially adversely affect Tenant’s
ability to use the Premises.  If any
portion of the Premises is temporarily taken by condemnation for a period which
exceeds one year or which extends beyond the natural expiration of the Lease
Term, and such taking materially and adversely affects Tenant’s ability to use
the Premises for the Permitted Use, then Tenant shall have the right to
terminate this Lease, effective on the date possession is taken by the
condemnor.

 

12.5                           Division
of Condemnation Award:  Any award
made as a result of any condemnation of the Premises or the Common Area 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 for the following so long as the award made to Landlord is not thereby
reduced: (i) for the taking of personal property 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 California Code of Civil Procedure
Section 1265.130 and the provisions of any similar law hereinafter enacted
allowing either party to petition the Superior Court to terminate this Lease in
the event of a partial taking of the Premises.

 

ARTICLE 13 DEFAULT AND REMEDIES

 

13.1                           Events
of Tenant’s Default:  Tenant shall
be in default of its obligations under this Lease if any of the following
events occurs (an “Event of Tenant’s Default”):

 

A.                                   Payment.  Tenant shall have failed to pay Base Monthly
Rent or Additional Rent when due, and such failure is not cured within 5
business days after delivery of written notice from Landlord specifying such
failure to pay; or

 

20

 

B.                                     General
Covenant.  Tenant shall have failed
to perform any term, covenant, or condition of this Lease other than those
referred to in any other subsection of this Section 13.1, and Tenant shall have
failed to cure such breach within 30 days after written notice from Landlord
specifying the nature of such breach where such breach could reasonably be
cured within said 30 day period, or if such breach could not be reasonably
cured within said 30 day period, Tenant shall have failed to commence such cure
within said 30 day period and thereafter continue with due diligence to
prosecute such cure to completion within such time period as is reasonably
needed; or

 

C.                                     Transfer.  Tenant shall have sublet the Premises or
assigned its interest in the Lease in violation of the provisions contained in
Article 14; or

 

D.                                    Abandonment.  Tenant shall have abandoned the Premises; or

 

E.                                      Insolvency.  The occurrence of the following: (i) the
making by Tenant of any general arrangements or assignments for the benefit of
creditors; (ii) Tenant becomes a “debtor” as defined in 11 USC §101 or any
successor statute thereto (unless, in the case of a petition filed against
Tenant, the same is dismissed within 90 days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant’s assets
located at the Premises or of Tenant’s interest in this Lease, where possession
is not restored to Tenant within 60 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease, where such seizure is not
discharged within 60 days; provided, however, in the event that any provision
of this Section 13.1E is contrary to any applicable Law, such provision shall
be of no force or effect; or

 

F.                                      Required
Documents.  Tenant shall have failed
to deliver documents required of it pursuant to ¶15.4 or ¶15.6 within the time
periods specified therein.

 

Any written notice of default sent by Landlord to
Tenant shall be in lieu of, and not in addition to, any termination notice
required under applicable statutory or regulatory provisions (and no further
notice shall be required should Landlord elect to terminate this Lease as set
forth below).

 

13.2                           Landlord’s
Remedies:  If an Event of Tenant’s
Default occurs, Landlord shall have the following remedies, in addition to all
other rights and remedies provided by any Law or otherwise provided in this
Lease, to which Landlord may resort cumulatively or in the alternative:

 

A.                                   Continue.  Landlord may 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 (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 Agreed Interest Rate 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 compel Tenant to
perform its obligations under this Lease, if available under California
law.  Notwithstanding anything contained
in this Lease, in the event of a breach of an obligation by Tenant which
results in a condition which poses an imminent danger to safety of persons or
damage to property, then if Tenant does not cure such breach within 3 days
after delivery to it of written notice from Landlord identifying the breach,
Landlord may cure the breach of Tenant and be reimbursed by Tenant for the cost
thereof with interest at the Agreed Interest Rate from the date the sum is paid
by Landlord until Landlord is reimbursed by Tenant. Should Landlord not
terminate this Lease by giving Tenant written notice, Landlord may enforce all
its rights and remedies under this Lease, including the right to recover the
rent as it becomes due under the Lease as provided in California Civil Code
Section 1951.4.

 

B.                                     [intentionally
omitted]

 

21

 

C.                                     Terminate.  Landlord may 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 Section 13.2C shall not relieve Tenant
from its obligation to pay sums then due Landlord or from any claim against
Tenant for damages or rent previously accrued or then 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: (i) appointment of a receiver or keeper in order to
protect Landlord’s interest hereunder; (ii) consent to any subletting of the
Premises or assignment of this Lease by Tenant, whether pursuant to the
provisions hereof or otherwise; or (iii) any other action by Landlord or
Landlord’s Agents intended to mitigate the adverse effects of any breach of
this Lease by Tenant to relet the Premises or any portions thereof to the
extent such actions do not affect a termination of Tenant’s right to possession
of the Premises.

 

D.                                    No
Deemed Termination.  In the event
Tenant breaches this Lease and abandons the Premises, this Lease shall not
terminate unless Landlord gives Tenant written notice of its election to so
terminate this Lease.  The actions by or
on behalf of Landlord intended to mitigate the adverse effect of such breach
described in Section 13.C, shall not constitute a termination of Tenant’s right
to possession unless Landlord gives Tenant written notice of termination.

 

E.                                      Damages.  In the event Landlord terminates this Lease,
Landlord shall be entitled to damages in an amount as set forth in California
Civil Code Section 1951.2 as in effect on the Effective Date.  For purposes of computing damages pursuant
to California Civil Code Section 1951.2, (i) an interest rate equal to the
Agreed Interest Rate shall be used where permitted, and (ii) the term “rent”
includes Base Monthly Rent and Additional Rent.  Such damages shall include:

 

(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 rental
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 (1%); 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 the following: (i) expenses for cleaning, repairing or restoring the
Premises; (ii) expenses for altering, remodeling or otherwise improving the
Premises for the purpose of reletting, including installation of leasehold
improvements (whether such installation be funded by a reduction of rent,
direct payment or allowance to a new tenant, or otherwise); (iii) broker’s fees,
advertising costs and other expenses of reletting the Premises; (iv) costs of
carrying the Premises, such as taxes, insurance premiums, utilities and
security precautions; (v) expenses in retaking possession of the Premises; and
(vi) attorneys’ fees and court costs incurred by Landlord in retaking
possession of the Premises and in releasing the Premises or otherwise incurred
as a result of Tenant’s default.

 

F.                                      Non
Exclusive Remedies.  Nothing in this
Section 13.2 shall limit Landlord’s right to indemnification from Tenant as
provided in Section 7.2 and Section 10.3. 
Any notice given by Landlord in order to satisfy the requirements of
Section 13.1A or Section 13.1B above shall also satisfy the notice requirements
of California Code of Civil Procedure Section 1161 regarding unlawful detainer
proceedings.

 

13.3                           Waiver:  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.  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 unless such waiver is in
writing and signed by Landlord.  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

 

22

 

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 of
any other provisions herein contained.

 

13.4                           [intentionally
omitted]

 

13.5                           Waiver
by Tenant of Certain Remedies: 
Tenant waives the provisions of Sections 1932(1), 1941 and 1942 of the
California Civil Code and any similar or successor law regarding Tenant’s right
to terminate this Lease or to make repairs and deduct the expenses of such
repairs from the rent due under this Lease. 
Tenant hereby waives any right of redemption or relief from forfeiture
under the law of the State of California or under any other present or future
law, including the provisions of Sections 1174 and 1179 of the California Code
of Civil Procedure.

 

ARTICLE 14 ASSIGNMENT AND
SUBLETTING

 

14.1                           Transfer
By Tenant:  The following provisions
shall apply to any assignment, subletting or other transfer by Tenant or any
subtenant or assignee or other successor in interest of the original Tenant
(collectively referred to in this Section 14.1 as “Tenant”):

 

A.                                   Transfer.  Tenant shall not do any of the following
(collectively referred to herein as a “Transfer”),
whether voluntarily, involuntarily or by operation of law, without the prior
written consent of Landlord, which consent shall not be unreasonably withheld:
(i) sublet all or any part of the Premises or allow it to be sublet, occupied
or used by any person or entity other than Tenant; (ii) assign its interest in
this Lease; (iii) mortgage or encumber the Lease (or otherwise use the Lease as
a security device) in any manner; or (iv) materially amend or modify an
assignment, sublease or other transfer that has been previously approved by
Landlord.  Tenant shall reimburse
Landlord for all reasonable costs and attorneys’ fees incurred by Landlord in
connection with the evaluation, processing, and/or documentation of any
requested Transfer, whether or not Landlord’s consent is granted, but not to
exceed $1,000.00 without Tenant’s prior consent.  Landlord’s reasonable costs shall include the cost of any review
or investigation performed by Landlord or consultant acting on Landlord’s
behalf of (i) Hazardous Materials used, stored, released, or disposed of by the
potential Subtenant or Assignee, and/or (ii) violations of Hazardous Materials
Law by the Tenant or the proposed Subtenant or Assignee.  Any Transfer so approved by Landlord shall
not be effective until Tenant has delivered to Landlord an executed counterpart
of the document evidencing the Transfer which (i) contains the same terms and
conditions as stated in Tenant’s notice given to Landlord pursuant to Section
14.1B, and (ii) in the case of an assignment of the Lease, contains the
agreement of the proposed transferee to assume all obligations of Tenant under
this Lease arising after the effective date of such Transfer and to remain
jointly and severally liable therefor with Tenant.  Any attempted Transfer without Landlord’s consent shall
constitute an Event of Tenant’s Default and shall be voidable at Landlord’s
option.  Landlord’s consent to any one
Transfer shall not constitute a waiver of the provisions of this Section 14.1
as to any subsequent Transfer or a consent to any subsequent Transfer.  No Transfer, even with the consent of
Landlord, shall relieve Tenant of its personal and primary obligation to pay
the rent and to perform all of the other obligations to be performed by Tenant
hereunder.  The acceptance of rent by
Landlord from any person shall not be deemed to be a waiver by Landlord of any
provision of this Lease nor to be a consent to any Transfer.

 

B.                                     Procedure.  At least 20 days before a proposed Transfer
is to become effective, Tenant shall give Landlord written notice of the
proposed terms of such Transfer and request Landlord’s approval, which notice
shall include the following: (i) the name and legal composition of the proposed
transferee; (ii) a current financial statement of the transferee, financial
statements of the transferee covering the preceding three years if the same
exist, and (if available) an audited financial statement of the transferee for
a period ending not more than one year prior to the proposed effective date of
the Transfer; (iii) the nature of the proposed transferee’s business to be
carried on in the Premises; (iv) all consideration to be given on account of
the

 

23

 

Transfer; and (v) an accurately filled out response to Landlord’s
standard hazardous materials questionnaire. 
Tenant shall provide to Landlord such other information as may be
reasonably requested by Landlord within five days after Landlord’s receipt of
such notice from Tenant.  Landlord shall
respond in writing to Tenant’s request for Landlord’s consent to a Transfer
within the later of (i) 20 days of receipt of such request together with the
required accompanying documentation, or (ii) 5 days after Landlord’s receipt of
all information which Landlord reasonably requests within five days after it
receives Tenant’s first notice regarding the Transfer in question.  If Landlord fails to respond in writing
within said period, Tenant may provide a second written notice to Landlord
requesting such consent and if Landlord fails to respond within 7 days after
receipt of such second notice, then Landlord will be deemed to have consented
to such Transfer.  Tenant shall
immediately notify Landlord of any modification to the proposed terms of such
Transfer, which shall also be subject Landlord’s consent in accordance with the
same process for obtaining Landlord’s initial consent to such Transfer.

 

C.                                     Intentionally
Deleted.

 

D.                                    Other
Requirements.  If Landlord consents
to a Transfer proposed by Tenant, Tenant may enter into such Transfer, and if
Tenant does so, the following shall apply:

 

(1)                                  Tenant
shall not be released of its liability for the performance of all of its
obligations under the Lease.

 

(2)                                  If
Tenant assigns its interest in this Lease, then Tenant shall pay to Landlord
50% of all Subrent (as defined in ¶14.1D(5)) received by Tenant over and above
(i) the assignee’s agreement to assume the obligations of Tenant under this
Lease, and (ii) all Permitted Transfer Costs related to such assignment.  In the case of assignment, the amount of
Subrent owed to Landlord shall be paid to Landlord on the same basis, whether
periodic or in lump sum, that such Subrent is paid to Tenant by the
assignee.  All Permitted Transfer Costs
shall be amortized on a straight line basis over the term of such sublease
(including any extension options) for purposes of calculating the amount due
Landlord hereunder.

 

(3)                                  If
Tenant sublets any part of the Premises, then with respect to the space so
subleased, Tenant shall pay to Landlord 50% of the positive difference, if any,
between (i) all Subrent paid by the subtenant to Tenant, less (ii) the sum of
all Base Monthly Rent and Additional Rent allocable to the space sublet and all
Permitted Transfer Costs related to such sublease.  Such amount shall be paid to Landlord on the same basis, whether
periodic or in lump sum, that such Subrent is paid to Tenant by its
subtenant.  All Permitted Transfer Costs
shall be amortized on a straight line basis over the term of such sublease
(including any extension options) for purposes of calculating the amount due
Landlord hereunder.

 

(4)                                  Tenant’s
obligations under this Section 14.1D shall survive any Transfer, and Tenant’s
failure to perform its obligations hereunder shall be an Event of Tenant’s
Default.  At the time Tenant makes any
payment to Landlord required by this Section 14.1D, Tenant shall deliver an
itemized statement of the method by which the amount to which Landlord is
entitled was calculated, certified by Tenant as true and correct.  Upon request therefor, Tenant shall deliver
to Landlord copies of all bills, invoices or other documents upon which its
calculations are based.  Landlord may
condition its approval of any Transfer upon obtaining a certification from both
Tenant and the proposed transferee of all Subrent and other amounts that are to
be paid to Tenant in connection with such Transfer.

 

(5)                                  As
used in this Section 14.1D, the term “Subrent”
shall mean any consideration of any kind received, or to be received, by Tenant
as a result of the Transfer, if such sums are related to Tenant’s interest in
this Lease or in the Premises, including payments from or on behalf of the
transferee (in excess of the fair market value thereof) for Tenant’s assets,
fixtures, leasehold improvements, inventory, accounts, goodwill, equipment,
furniture, and general intangibles.  As
used in this ¶14.1D, the term “Permitted
Transfer Costs” shall mean (i) all leasing commissions paid to third
parties not affiliated with

 

24

 

Tenant in order to obtain the Transfer in question,
and (ii) all reasonable attorneys’ fees incurred by Tenant with respect to the
Transfer in question, and (iii) the cost of all improvements made to the
Premises in connection with the assignment or sublease.

 

E.                                      Deemed
Transfers.  If Tenant is a
corporation, the following shall be not be deemed a voluntary assignment of
Tenant’s interest in this Lease: (i) any dissolution, merger, consolidation, or
other reorganization of or affecting Tenant, whether or not Tenant is the
surviving corporation; and (ii) if the capital stock of Tenant is not publicly
traded, the sale or transfer to one person or entity (or to any group of
related persons or entities) stock possessing more than 50% of the total
combined voting power of all classes of Tenant’s capital stock issued,
outstanding and entitled to vote for the election of directors.  If Tenant is a partnership, limited
liability company or other entity any withdrawal or substitution (whether
voluntary, involuntary or by operation of law, and whether occurring at one
time or over a period of time) of any partner, member or other party owning 25%
or more (cumulatively) of any interest in the capital or profits of the
partnership, limited liability company or other entity or the dissolution of
the partnership, limited liability company or other entity, shall be deemed a
voluntary assignment of Tenant’s interest in this Lease.

 

F.                                      Permitted
Transfers.  Notwithstanding anything
contained in Section 14.1, Tenant may enter into any of the following transfers
(a “Permitted Transfer”) without
Landlord’s prior written consent  and
the same shall not be deemed to be a “Transfer” hereunder, but after not less
than five (5) days prior written notice to Landlord together with reasonable
supporting documentation that the Transfer is a Permitted Transfer, and
Landlord shall not be entitled to receive any part of any Subrent resulting
therefrom that would otherwise be due it pursuant to ¶14.1D:

 

(1)                                  Tenant
may sublease all or part of the Premises or assign its interest in this Lease
to any entity which controls, is controlled by, or is under common control with
the original Tenant to this Lease;

 

(2)                                  Tenant
may assign its interest in the Lease to an entity which results from a merger,
consolidation or other reorganization of Tenant, whether or not Tenant is the
surviving entity, provided that the surviving entity has sufficient financing
strength to meet the remaining obligations under this Lease; and

 

(3)                                  Tenant
may assign this Lease to an entity which purchases or otherwise acquires all or
substantially all of the assets of Tenant, provided that the acquiring entity
has sufficient financing strength to meet the remaining obligations under this
Lease.

 

G.                                     Reasonable
Standards.  The consent of Landlord
to a Transfer may not be unreasonably withheld, provided that it is agreed to
be reasonable for Landlord to consider any of the following reasons, which list
is not exclusive, in electing to deny consent:

 

(1)                                  The
financial strength, credit, character and business or professional standing of
the proposed transferee at the time of the proposed Transfer is up to
Landlord’s reasonable standards for the Premises or the Project;

 

(2)                                  A
proposed transferee whose occupation of the Premises would cause a diminution
in the value of the Building or Project;

 

(3)                                  A
proposed transferee whose impact or affect on the common facilities or the
utility, efficiency or effectiveness of any utility or telecommunication system
serving the Building or the Project or the other occupants of the Project would
be adverse or require material improvements or changes in any utility or
telecommunication capacity currently serving the Building or the Project;

 

25

 

(4)                                  A
proposed transferee whose occupancy will require a variation in the terms of
this Lease (including, without limitation, a variation in the use clause) or
which otherwise adversely affects any interest of Landlord;

 

(5)                                  A
proposed transferee who is or is likely to be, or whose occupancy of the
Premises is or is likely to, subject the Premises or the Project to compliance
with additional laws or other governmental requirements beyond those to which
Tenant’s occupancy is subject;

 

(6)                                  Either
the proposed transferee is negotiating with Landlord to lease space in the
Building or in the Project at such time;

 

(7)                                  the
proposed Transferee will use, store or handle Hazardous Materials (defined
above) in or about the Premises of a type, nature or quantity not then acceptable
to Landlord;

 

(8)                                  The
existence of any default in the payment of Base Monthly Rent or any other sum
required of Tenant under this Lease;

 

(9)                                  Landlord
otherwise determines that the proposed Transfer would have the effect of
materially increasing the expenses associated with operating, maintaining and
repairing the Building, Common Area or Project.

 

H.                                    [intentionally
omitted]

 

14.2                           Transfer
By Landlord:  Landlord and its
successors in interest shall have the right to transfer their interest in this
Lease and the Project 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, 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, provided only that the transferor agrees in writing
to assume the obligations of Landlord hereunder accruing from and after the
effective date of such transfer.  After
the date of any such transfer, the term “Landlord” as used herein shall mean
the transferee of such interest in the Premises.

 

ARTICLE 15 GENERAL PROVISIONS

 

15.1                           Landlord’s
Right to Enter:  Subject to Tenant’s
reasonable security requirements, Landlord and its agents may enter the
Premises at any reasonable time after giving at least 24 hours’ prior notice to
Tenant (and immediately in the case of emergency) for the purpose of: (i)
inspecting the same; (ii) posting notices of non-responsibility; (iii)
supplying any service to be provided by Landlord to Tenant; (iv) showing the
Premises to prospective purchasers, mortgagees or (within 180 days of the
expiration date of this Lease) tenants; (v) making necessary alterations,
additions or repairs required by this Lease; (vi) performing Tenant’s
obligations when Tenant has failed to do so after written notice from Landlord;
(vii) placing upon the Premises ordinary “for lease” signs (within 180 days of
the expiration date of this Lease) or “for sale” signs; and (viii) responding
to an emergency.  Landlord shall have
the right to use any and all means necessary and proper to enter the Premises
in an emergency.  Any entry into the
Premises obtained by Landlord in accordance with this ¶15.1 shall not be a
forcible or unlawful entry into, or a detainer of, the Premises, or an
eviction, actual or constructive, of Tenant from the Premises.

 

15.2                           Surrender
of the Premises:  Upon the
expiration or sooner termination of this Lease, Tenant shall vacate and
surrender the Premises to Landlord in the same condition as existed at the
Commencement Date, except for (i) reasonable wear and tear, (ii) damage caused
by any peril or condemnation, (iii) contamination by Hazardous Materials for
which Tenant is not responsible pursuant to Section 7.2 and (iv) 

 

26

 

repair, maintenance or replacement tasks to be performed by Landlord
hereunder.  In this regard, normal wear
and tear shall be construed to mean wear and tear caused to the Premises by the
natural aging process which occurs in spite of prudent application of
commercially reasonable standards for maintenance, repair and janitorial practices,
and does not include items of neglected or deferred maintenance.  If Landlord so requests, Tenant shall, prior
to the expiration or sooner termination of this Lease, (i) remove any Tenant’s
Alterations which Tenant is required to remove pursuant to Section 5.2 and
repair all damage caused by such removal, and (ii) return the Premises or any
part thereof to its original configuration existing as of the time the Premises
were delivered to Tenant if Tenant is required to do so pursuant to Section
5.2.  If the Premises are not so
surrendered at the termination of this Lease, Tenant shall continue to be
responsible for the payment of Rent until the Premises are so surrendered in
accordance with said provisions and Tenant shall be liable to Landlord for all
costs incurred by Landlord in returning the Premises to the required condition,
plus interest on all costs incurred at the Agreed Interest Rate.  Tenant shall indemnify Landlord against loss
or liability resulting from delay by Tenant in so surrendering the Premises,
including, without limitation, any claims paid to any succeeding tenant or
losses and damages suffered by Landlord due to lost opportunities to lease any
portion of the Premises to any such succeeding tenant or prospective tenant,
together with, in each case, actual attorneys’ fees and costs.

 

15.3                           Holding
Over:  This Lease shall terminate
without further notice at the expiration of the Lease Term.  Any holding over by Tenant after expiration
of the Lease Term shall not constitute a renewal or extension of the Lease or
give Tenant any rights in or to the Premises except as expressly provided in
this Lease.  Any holding over after such
expiration without the written consent of Landlord shall be construed to be a
tenancy from month to month on the same terms and conditions herein specified
insofar as applicable except that Base Monthly Rent shall be increased to an
amount equal to 150% of the Base Monthly Rent payable during the last full
calendar month of the Lease Term.

 

15.4                           Subordination:  The following provisions shall govern the
relationship of this Lease to any Security Instrument:

 

A.                                   Existing
Security Instruments.  The Lease is
subject and subordinate to all Security Instruments existing as of the
Effective Date.  However, if any Lender
so requires, this Lease shall become prior and superior to any such Security
Instrument.

 

B.                                     New
Security Instruments.  At Landlord’s
election, this Lease shall become subject and subordinate to any Security
Instrument created after the Effective Date. 
Notwithstanding such subordination, Tenant’s right to quiet possession
of the Premises shall not be disturbed so long as Tenant is not in default and
performs all of its obligations under this Lease, unless this Lease is
otherwise terminated pursuant to its terms.

 

C.                                     Documents.  Tenant shall upon request execute any
document or instrument reasonably required by any Lender to make this Lease
either prior or subordinate to a Security Instrument, which may include such
other matters as the Lender customarily and reasonably requires in connection
with such agreements, including provisions that the Lender not be liable for
(i) the return of any security deposit unless the Lender receives it from
Landlord, and (ii) any defaults on the part of Landlord occurring prior to the
time the Lender takes possession of the Project in connection with the
enforcement of its Security Instrument. 
Tenant’s failure to execute any such document or instrument within 10
days after written demand therefor shall constitute an Event of Tenant’s
Default.

 

15.5                           Mortgagee
Protection and Attornment:  In the
event of any default on the part of the Landlord, Tenant will use reasonable
efforts to give notice by registered mail to any Lender whose name has been
provided to Tenant and shall offer such Lender a reasonable opportunity to cure
the default.  Tenant shall attorn to any
purchaser of the Premises at any foreclosure sale or private sale conducted
pursuant to any Security

 

27

 

Instrument encumbering the Premises, or to any grantee or transferee
designated in any deed given in lieu of foreclosure.

 

15.6                           Estoppel
Certificates and Financial Statements: 
At all times during the Lease Term, each party agrees, following any
request by the other party, promptly to execute and deliver to the requesting
party within 15 days following delivery of such request 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 the certifying party’s knowledge, any
uncured defaults on the part of any party hereunder or, if there are uncured
defaults, specifying the nature of such defaults, and (iv) certifying such
other information about the Lease as may be reasonably required by the
requesting party.  A failure to deliver
an estoppel certificate within 15 days after delivery of a request therefor
shall be a conclusive admission that, as of the date of the request for such
statement: (i) this Lease is unmodified except as may be represented by the
requesting party in said request and is in full force and effect, (ii) there
are no uncured defaults in the requesting party’s performance, and (iii) no
rent has been paid more than 30 days in advance.  At any time during the Lease Term Tenant shall, upon 15 days’
prior written notice from Landlord, provide Tenant’s most recent public filing
containing its financial statements (or if Tenant is not a public company at
the time, such entity’s most recent financial statements) to any existing
Lender or to any potential Lender or buyer of the Premises.

 

15.7                           Consent:  Whenever Landlord’s approval or consent is
required by this Lease, such approval or consent shall not be unreasonably
withheld, delayed or conditioned, unless a different standard has been
expressly provided in this Lease for the particular matter requiring Landlord’s
consent or approval.

 

15.8                           Notices:  Any notice required or desired to be given
regarding this Lease shall be in writing and may be given by personal delivery,
by facsimile, by courier service, or by mail. 
A notice shall be deemed to have been given (i) on the third business
day after mailing if such notice was deposited in the United States mail,
certified or registered, postage prepaid, addressed to the party to be served
at its Address for Notices specified in Section Q or Section R of
the Summary (as applicable), (ii) when delivered if given by personal delivery,
and (iii) in all other cases when actually received at the party’s Address for
Notices.  Either party may change its
address by giving notice of the same in accordance with this Section 15.8.

 

15.9                           Attorneys’
Fees:  In the event either Landlord
or Tenant shall bring any action or legal proceeding for an alleged breach of
any provision of this Lease, to recover rent, to terminate this Lease or
otherwise to enforce, protect or establish any term or covenant of this Lease,
the prevailing party shall be entitled to recover as a part of such action or
proceeding, or in a separate action brought for that purpose, reasonable
attorneys’ fees, court costs, and experts’ fees as may be fixed by the court.

 

15.10                     Corporate Authority:  If Tenant is a corporation, partnership or
other entity, Tenant represents and warrants that each individual executing
this Lease on behalf of Tenant is duly authorized to execute and deliver this
Lease on behalf of such corporation in accordance with the by-laws of such
corporation (or partnership in accordance with the partnership agreement of
such partnership) and that this Lease is binding upon such corporation (or
partnership) in accordance with its terms. 
Tenant is a duly authorized and existing corporation, is qualified to do
business in California, and has full right and authority to enter into this
Lease.

 

15.11                     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.  The captions used in this Lease are for
convenience only and shall not be considered in the construction or
interpretation of any provision hereof. 
Any fully executed copy of this Lease shall be deemed an original for
all purposes.  This

 

28

 

Lease shall, subject to the provisions regarding assignment, apply to
and bind the respective heirs, successors, executors, administrators and
assigns of Landlord and Tenant.  “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.  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 “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 a provision of this Lease
expressly requires reimbursement.  Where
a party hereto is obligated not to perform any act, such party is also
obligated to restrain any others within its control from performing said act,
including the agents of such party. 
Landlord shall not become or be deemed a partner or a joint venturer
with Tenant by reason of the provisions of this Lease.

 

15.12                     Termination by Exercise of
Right:  If this Lease is terminated
pursuant to its terms by the proper exercise of a right to terminate
specifically granted to Landlord or Tenant by this Lease, then this Lease shall
terminate 30 days after the date the right to terminate is properly exercised
(unless another date is specified in that part of the Lease creating the right,
in which event the date so specified for termination shall prevail), the rent
and all other charges due hereunder shall be prorated as of the date of
termination, and neither Landlord nor Tenant shall have any further rights or
obligations under this Lease except for those that have accrued prior to the
date of termination or those obligations which this Lease specifically provides
are to survive termination.  This ¶15.12
does not apply to a termination of this Lease by Landlord as a result of an
Event of Tenant’s Default.

 

15.13                     Brokerage Commissions:  Each party hereto (i) represents and
warrants to the other that it has not had any dealings with any real estate
brokers, leasing agents or salesmen, or incurred any obligations for the
payment of real estate brokerage commissions or finder’s fees which would be
earned or due and payable by reason of the execution of this Lease, other than
to the Retained Real Estate Brokers described in Section S of the
Summary, and (ii) agrees to indemnify, defend, and hold harmless the other
party from any claim for any such commission or fees which result from the
actions of the indemnifying party. 
Landlord shall be responsible for, and shall indemnify, defend and hold
Tenant harmless from, the payment of any commission owed to the Retained Real
Estate Brokers.

 

15.14                     Force Majeure:  Any prevention, delay or stoppage due to
strikes, lock-outs, inclement weather, labor disputes, inability to obtain
labor, materials, fuels or reasonable substitutes therefor, governmental
restrictions, regulations, controls, action or inaction, civil commotion, fire
or other acts of God, and other causes beyond the reasonable control of
Landlord (except financial inability) shall excuse the performance by a party,
for a period equal to the period of any said prevention, delay or stoppage, of
any obligation hereunder.

 

15.15                     Entire Agreement:  This Lease constitutes the entire agreement
between the parties, and there are no binding agreements or representations
between the parties except as expressed herein.  Tenant acknowledges that neither Landlord nor Landlord’s Agents has
made any legally binding representation or warranty as to any matter except
those expressly set forth herein, including any warranty as to (i) whether the
Premises may be used for Tenant’s intended use under existing Law, (ii) the
suitability of the Premises or the Project for the conduct of Tenant’s
business, or (iii) the condition of any improvements.  There are no oral agreements between Landlord and Tenant
affecting this Lease, and this Lease supersedes and cancels any and all
previous negotiations, arrangements, brochures, agreements and understandings,
if any, between Landlord and Tenant or displayed by Landlord to Tenant with
respect to the subject matter of this Lease. 
This instrument shall not be legally binding until it is executed by
both Landlord and Tenant.  No subsequent
change or addition to this Lease shall be binding unless in writing and signed
by Landlord and Tenant.

 

29

 

IN WITNESS WHEREOF, Landlord and Tenant have executed
this Lease with the intent to be legally bound thereby, to be effective as of
the Effective Date.

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  SHORELINE PARK, LLC

  	
  OMNICELL, Inc.

  
	
  a Delaware limited
  liability company

  	
  a Delaware corporation

  
	
   

  	
   

  
	
  By:

  	
  Divco West Group, LLC,

  	
  By:

  	
  /s/ DENNIS P. WOLF

  	
   

  
	
   

  	
  a Delaware limited
  liability company

  	
  Name:

  	
  Dennis P. Wolf

  	
   

  
	
   

  	
  Its Agent

  	
  Title:

  	
  Executive Vice
  President

  of Operations, Finance

  and Administration, and

  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SCOTT L. SMITHERS

  	
   

  	
  Dated:

  	
  6/30/2003

  	
   

  
	
   

  	
  Name:

  	
  Scott L. Smithers

  	
   

  	
   

  
	
   

  	
  Its:

  	
  DOD

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
  6/30/2003

  	
   

  	
   

  

 

30

 

Exhibit
A

 

Project
Site Plan and Outline of the Premises

 

 

Exhibit
B

 

Work Letter
For Construction Obligations

 

This Exhibit B forms
a part of that certain Lease (the “Lease”)
by and between Shoreline Park, LLC, a Delaware limited liability company, as
Landlord, and Omnicell Inc., a Delaware corporation, as Tenant, to which this
Exhibit is attached.  If there is any
conflict between this Exhibit and the Lease, this Exhibit shall govern.

 

1.                                       Defined Terms.  All
defined terms referred to in this Exhibit shall have the same meaning as
defined in the Lease to which this Exhibit is a part, except where expressly
defined to the contrary.

 

2.                                       Additional Definitions. 
Each of the following terms shall have the following meaning:

 

“Construction Plans” -The complete plans
and specifications for the construction of the Tenant Improvements consisting
of all architectural, engineering, mechanical and electrical drawings and
specifications which are required to obtain all building permits, licenses and
certificates from the applicable governmental authority(ies) for the
construction of the Tenant Improvements. 
The Construction Plans shall be prepared by duly licensed and/or
registered architectural and/or engineering professionals selected by Landlord
in its sole and absolute discretion, and in all respects shall be in
substantial compliance with all applicable laws, rules, regulations, building
codes for the city and county where the Building is located.  The Construction Plans will be prepared so
as to accurately and fully reflect the improvements and other matters described
in the Space Plans.

 

“Force Majeure Delays” - Any delay,
other than a Tenant Delay, by Landlord in completing the Tenant Improvements by
the Estimated Commencement Date set forth in the Lease by reason of (i) any
strike, lockout or other labor trouble or industrial disturbance (whether or
not on the part of the employees of either party hereto), (ii) governmental
preemption of priorities or other controls in connection with a national or
other public emergency, civil disturbance, riot, war, sabotage, blockade,
embargo, inability to secure customary materials, supplies or labor through
ordinary sources by reason of regulation or order of any government or
regulatory body, or (iii) shortages of fuel, materials, supplies or labor, (iv)
lightning, earthquake, fire, storm, tornado, flood, washout explosion,
inclement weather or any other similar industry-wide or Building-wide cause
beyond the reasonable control of Landlord, or (v) any other cause, whether
similar or dissimilar to the above, beyond Landlord’s reasonable control.  The time for performance of any obligation
of Landlord to construct Landlord’s Work under this Work Letter or the Lease
shall be extended at Landlord’s election by the period of any delay caused by
any of the foregoing events.

 

“Space Plan” - That certain Space Plan
attached hereto as Exhibit B-1, which reflect the Tenant Improvements to
be constructed by Landlord.  Landlord
and Tenant hereby approve of the Space Plan. 
The type and quality of materials to be used by Landlord to construct
the Tenant Improvements will be in accordance with the specifications described
in Exhibit B-2 attached hereto (the “Specifications”).

 

“Substantial Completion,” “Substantially Complete,” “Substantially Completed” - The terms
Substantial Completion, Substantially Completed and Substantially Complete
shall mean when the following have occurred or would have occurred but for
Tenant Delays:

 

1

 

(a)                                  The Tenant Improvements have been
Substantially Completed substantially in accordance with the Construction
Plans, except “punch list” items which may be completed without materially
impairing Tenant’s use of the Premises or a material portion thereof; and

 

(b)                                 Landlord has obtained from the appropriate
governmental authority a temporary, conditional or final certificate of
occupancy (or equivalent), if one is required, for the Tenant Improvements
permitting occupancy of the Premises by Tenant.

 

“Tenant Delay” - Any delay incurred by
Landlord in completing the Tenant Improvements due to (i) a delay by Tenant, or
by any person employed or engaged by Tenant, in approving or delivering to
Landlord any plans, schedules or information, including, without limitation,
the Construction Plans beyond the applicable time period set forth in this
Exhibit, if any; (ii) any changes requested by Tenant in or to previously
approved work or in the Space Plan or Construction Plans; (iii) requests for
materials and finishes which are not readily available, and/or delays in
delivery of any materials specified by Tenant through change orders; or (v)
interference with the construction of the Tenant Improvements.

 

“Tenant Improvements” - The improvements
to be installed by Landlord in the Premises substantially in accordance with
the Construction Plans and the type and quality of the Tenant Improvements
shall be in accordance with the Specifications.

 

2.                                       Construction of the Tenant Improvements.

 

2.1                                 Construction Plans. 
Landlord shall cause to be prepared the Construction Plans for the
Tenant Improvements that are consistent with and are logical evolutions of the
Space Plan and the building standards. 
Tenant’s approval of the Construction Plans shall not be required.  However, if requested by Landlord, Tenant
shall notify Landlord in writing within five (5) days after receipt of
Construction Plans or any preliminary plans that (i) Tenant approves of such
plans; or (ii) Tenant disapproves the plans because they vary in design from
the Space Plan approved by Landlord and Tenant in the particular instances
specified by Tenant in such notice (including, without limitation, the specific
changes requested by Tenant), but such disapproval shall constitute a Tenant
Delay unless the plans deviate from the Space Plan or changes in such Space
Plan that have been approved in writing by Landlord.

 

2.2                                 Construction. 
Landlord shall construct the Tenant Improvements substantially in
accordance with the Construction Plans. 
The construction contract for constructing the Tenant Improvements and
the contractor(s) to perform the work shall be approved and/or selected, as the
case may be, by Landlord at its sole and absolute discretion without the
consent of Tenant. The parties anticipate that the Tenant Improvements will be
Substantially Completed by the estimated Commencement Date, subject to Tenant
Delays and Force Majeure Delays.

 

2.3                                 Tenant’s Responsibility. 
Tenant shall be solely responsible for the suitability for the Tenant’s
needs and business of the design and function of the Tenant Improvements.
Tenant shall also be responsible for procuring or installing in the Premises
any trade fixtures, equipment, furniture, furnishings, telephone equipment or
other personal property (“Personal Property”)
to be used in the Premises by Tenant other than the FF&E described in
Paragraph 7 below), and the cost of such Personal Property shall be paid by
Tenant.  Tenant shall conform to the
Building’s wiring standards in installing any telephone equipment and shall be
subject to any and all rules of the site during construction.

 

2

 

3.                                       Payment of Construction Costs. 
Landlord shall pay for the costs to construct the Tenant Improvements
based on the Space Plan in existence as of the date hereof.  Any additional costs due to changes in the
Tenant Improvements reflected in the Space Plan or in the Construction Plans
requested by Tenant or as a result of any Tenant Delay shall be paid by Tenant
as provided in section 4 below.

 

4.                                       Changes in Work. 
Tenant shall be permitted to make changes in the Space Plan,
Construction Plans, Tenant Improvements or Specifications, but only if Tenant
agrees to pay for any additional cost attributable to such changes and provided
such changes are approved by Landlord, which approval will not be unreasonably
withheld.  Any change that results in a
delay in constructing the Tenant Improvements shall be deemed a Tenant Delay,
and shall extend the time period by which Landlord must Substantially Complete
the Tenant Improvements, but shall not extend or postpone the date for payment
of rent or for commencement of the term under this Lease.  The cost of such changes, including the cost
to revise the Construction Plans, obtain any additional permits and construct
any additional improvements required as a result thereof, shall be paid by
Tenant to Landlord within ten (10) days after request by Landlord, together
with reasonable supporting documentation. If Landlord does not receive such
payment within said ten (10) day period, Landlord shall have the right, in
addition to any other rights or remedies available under the Lease, at law or
in equity, to (i) discontinue all or any portion of the work until it receives
said payment; (ii) proceed with the other work not affected by such change
until such payment is received; (iii) proceed with the work contemplated with
such change; or (iv) proceed with the work without making such change; in which
case the commencement or completion of such work shall not be deemed a waiver
of Tenant’s obligation to pay for same or any additional costs or expenses
incurred as a result thereof.

 

5.                                       ADA.  By the Commencement Date,
Landlord agrees that the Tenant Improvements and the Premises will comply with
the accessibility requirements of the Americans with Disabilities Act, 42
U.S.C. §§ 12101 et.  seq. and any rules, regulations,
restrictions, guidelines, requirements or publications promulgated or published
pursuant thereto (“ADA”),
exclusive of any changes that may be required due to Tenant’s particular use or
change in use of the Premises or the manner in which it conducts its business
therein, or the construction of any improvements or alterations in the Premises
by Tenant.

 

6.                                       Landlord’s Exterior Work.  At
its expense, Landlord agrees to make the exterior remodeling improvements
depicted in Exhibit B-3 attached hereto (“Exterior Work”). 
Landlord shall have the right, but not the obligation to make changes to
the Exterior Work without the consent of Tenant so long as the changes that may
reduce the scope of the Exterior Work do not have an adverse effect on the
cosmetic appearance of the exterior of the Building.  Landlord agrees to complete the Exterior Work prior to, and as a
condition to, the Commencement Date, subject to Tenant Delays.

 

7.                                       FFE.  At its expense, Landlord
agrees to provide the furniture, fixtures and equipment as noted in the Space
Plan attached hereto (the “FF&E”)
on or before the Commencement Date.  The
quality and type of materials shall be subject to the reasonable approval of
Landlord and Tenant and consistent with Class A office use.  Tenant shall provide its approval or
disapproval within three days after request by Landlord and any disapproval
must include the changes requested by Tenant for approval.

 

8.                                       Warranty.  The Tenant Improvements, the
Exterior Work and the FF&E shall be constructed or obtained in accordance
with the Construction Plans and Specifications (in the case of the Tenant
Improvements), Exhibit B-3 (in the case of the Exterior Work) or the
Space Plan (in the case of the FF&E), in full compliance with all
Laws.  Landlord shall warrant that the
Tenant Improvements and the Exterior Work are free from material defects in
workmanship and materials for a period of one year following completion (“Warranty Period”), and Landlord will assign
to Tenant any warranty Landlord

 

3

 

may receive in connection with the FF&E.  Tenant must notify Landlord of a defect promptly after Tenant
discovers such defect, but not later than the end of the Warranty Period.

 

9.                                       Remeasurement of Square Footage.  The
Premises shall contain a rentable area of approximately the rentable square
feet (“RSF”) set forth in Section
D of the Lease Summary, which is the Landlord’s best estimate of the rentable
area that will be in the Premises upon completion of construction of the Tenant
Improvements.  Upon the completion of
the Tenant Improvements in the Premises, Landlord shall cause the Premises to
be remeasured in accordance with the Standard (as defined below) and shall,
within (10) days of the completion of the Tenant Improvements, advise Tenant,
by notice, of the RSF in the Premises and the basis for such calculation (“Landlord’s Determination”).  If Tenant shall dispute Landlord’s
Determination, it may contest Landlord’s Determination by sending Landlord a
notice (“Contest Notice”) within
thirty (30) days following receipt of Landlord’s Determination.  If Tenant does not send the Contest Notice
within such time period, Landlord’s Determination shall be final and binding on
Tenant and all dollar amounts set forth in Section K of the Lease Summary which
are predicated on RSF shall be amended to reflect Landlord’s Determination.  If Tenant sends the Contest Notice within the
time period, then within ten (10) days of Landlord’s receipt of the Contest
Notice from Tenant, Landlord and Tenant shall jointly appoint a designer or
architect (“Neutral”) to field measure the Premises in accordance with the
Standard, and all figures, percentages and dollar amounts in the Lease which
are predicated on the RSF set forth in Section K of the Lease Summary shall be
amended accordingly, based on the field measurements by the Neutral in
accordance with the Standard.  The
Neutral must be a designer or architect with ten (10) years of experience and
familiar with BOMA definitions in the Standard.  If Landlord and Tenant are unable to agree upon a Neutral, such
appointment shall be made as quickly as possible by any court of competent
jurisdiction after request by either Landlord or Tenant.  The calculation of the rentable area shall
include the rentable area of the floor according to the Standard Method for
Measuring Floor Area in Office Buildings, ANSI Z65.1-1996 (“Standard”).  If the determination by the Neutral is within plus or minus 5% of
the Landlord’s Determination, the cost of the Neutral shall be paid by
Tenant.  If the determination by the
Neutral shall be paid by Tenant.  If the
determination by the Neutral is not within plus or minus five percent (5%) of
the Landlord’s Determination the cost of the Neutral shall be paid by Landlord

 

4

 

Exhibit B-1

 

Space Plan

 

5

 

Exhibit B-2

 

Specifications

 

6

 

Exhibit B-3

 

Exterior
Work

 

7

 

Exhibit C

 

ACCEPTANCE AGREEMENT

 

This Acceptance Agreement is
made as of                            ,
2003, by and between the parties hereto with regard to that Lease dated June
30, 2003, by and between Shoreline Park, LLC, a Delaware limited liability
company, as Landlord (“Landlord”), and Omnicell, Inc., a Delaware corporation, as
Tenant (“Tenant”), affecting those premises commonly known as 1201 Charleston
Road, Mountain View, California.  The
parties hereto agree as follows:

 

1.                                       Landlord delivered possession of the Premises
to Tenant on
                     ,
2003 with all improvements and work, if any, required completed in the
condition required under the Lease, subject to those items listed on Schedule
1, and Tenant accepted possession of the Premises.

 

2.                                       The Commencement Date of the Lease Term for
the Premises is                            ,
2003     , and the Lease Term for the Premises shall
expire on                                     ,
       , unless sooner terminated according
to the terms of the Lease.

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  SHORELINE PARK, LLC

  a Delaware limited liability company

  	
  OMNICELL, Inc. 

  a Delaware corporation

  
	
   

  	
   

  
	
  By:

  	
  Divco West Group, LLC,

  a Delaware limited liability company

  Its Agent

  	
   

  	
  By:

  	
  /s/ DENNIS P. WOLF

  	
   

  	
   

  
	
  Name:

  	
  Dennis P. Wolf

  
	
  Title:

  	
  Executive Vice
  President

  of Operations, Finance

  and Administration, and

  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SCOTT L. SMITHERS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Scott L. Smithers

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  DOD

  	
   

  	
   

  	
   

  	
   

  

 

 

Exhibit D

Hazardous Materials Disclosure
Certificate

 

Your cooperation
in this matter is appreciated. 
Initially, the information provided by you in this Hazardous Materials
Disclosure Certificate is necessary for the Landlord (identified below) to
evaluate and finalize a lease agreement with you as Tenant.  After a lease agreement is signed by you and
the Landlord (the “Lease Agreement”), on an annual basis in accordance with the
Lease Agreement, you are to provide an update to the information initially
provided by you in this certificate. 
The information contained in the initial Hazardous Materials Disclosure
Certificate and each annual certificate provided by you thereafter will be
maintained in confidentiality by Landlord subject to release and disclosure as
required by (i) any lenders and owners and their respective environmental
consultants, (ii) any prospective purchaser(s) of all or any portion of the
property on which the Premises are located, (iii) Landlord to defend itself or
its lenders, partners or representatives against any claim or demand, and (iv)
any laws, rules, regulations, orders, decrees, or ordinances, including,
without limitation, court orders or subpoenas. 
Any and all capitalized terms used herein, which are not otherwise
defined herein, shall have the same meaning ascribed to such term in the Lease
Agreement.  Any questions regarding this
certificate should be directed to, and when completed, the certificate should
be delivered to:

 

Landlord:                               c/o Divco West Group,
LLC,

150 Almaden Blvd., Suite 700

San Jose, CA 94549

Attn.:                                         

 

Name of
(Prospective)
Tenant:                                                      

 

Mailing Address:

 

 

Contact Person,
Title and Telephone Number(s):

 

 

Contact Person for
Hazardous Waste Materials Management and Manifests and Telephone Number(s):

 

 

 

Address of
(Prospective) Premises:

 

 

Length of (Prospective)
Initial Term:

 

 

1.                                      General Information:

 

Describe the initial proposed operations to take place
in, on, or about the Premises, including, without limitation, principal
products processed, manufactured or assembled

 

1

 

services and activities to be provided or otherwise
conducted.  Existing Tenants should
describe any proposed changes to on-going operations.

 

 

2.                                      Use, Storage and Disposal of Hazardous Materials

 

2.1                                 Will
any Hazardous Materials be used, generated, stored or disposed of in, on or
about the Premises?  Existing Tenants
should describe any Hazardous Materials which continue to be used, generated,
stored or disposed of in, on or about the Premises.

 

	
  Wastes

  	
   

  	
  Yes

  	
  o

  	
   

  	
   

  	
  No

  	
  o

  	
   

  
	
  Chemical Products

  	
   

  	
  Yes

  	
  o

  	
   

  	
   

  	
  No

  	
  o

  	
   

  
	
  Other

  	
   

  	
  Yes

  	
  o

  	
   

  	
   

  	
  No

  	
  o

  	
   

  

 

If Yes is marked, please explain:

 

 

 

2.2                                 If
Yes is marked in Section 2.1, attach a list of any Hazardous Materials to be
used, generated, stored or disposed of in, on or about the Premises, including
the applicable hazard class and an estimate of the quantities of such Hazardous
Materials at any given time; estimated annual throughput; the proposed
location(s) and method of storage (excluding nominal amounts of ordinary
household cleaners and janitorial supplies which are not regulated by any
Environmental Laws); and the proposed location(s) and method of disposal for
each Hazardous Material, including, the estimated frequency, and the proposed
contractors or subcontractors.  Existing
Tenants should attach a list setting forth the information requested above and
such list should include actual data from on-going operations and the
identification of any variations in such information from the prior year’s
certificate.

 

3.                                      Storage Tanks and Sumps

 

3.1                                 Is
any above or below ground storage of gasoline, diesel, petroleum, or other
Hazardous Materials in tanks or sumps proposed in, on or about the
Premises?  Existing Tenants should
describe any such actual or proposed activities.

 

	
  Yes o

  	
  No o

  	
   

  

 

If yes, please explain:

 

 

4.                                      Waste Management

 

4.1                                 Has
your company been issued an EPA Hazardous Waste Generator I.D. Number?  Existing Tenants should describe any
additional identification numbers issued since the previous certificate.

 

2

 

	
  Yes o

  	
  No o

  	
   

  

 

4.2                                 Has
your company filed a biennial or quarterly reports as a hazardous waste
generator? Existing Tenants should describe any new reports filed.

 

	
  Yes o

  	
  No o

  	
   

  

 

If yes, attach a copy of the most recent report filed.

 

5.                                      Wastewater Treatment and Discharge

 

5.1                                 Will
your company discharge wastewater or other wastes to:

 

	
         
  storm drain?

  	
   

  	
         
  sewer?

  
	
         
  surface water?

  	
   

  	
         
  no wastewater or other wastes discharged.

  

 

Existing Tenants should indicate any actual discharges.  If so, describe the nature of any proposed
or actual discharge(s).

 

 

5.2                                 Will
any such wastewater or waste be treated before discharge?

 

	
  Yes o

  	
  No o

  	
   

  

 

If yes, describe the type of treatment proposed to be
conducted.  Existing Tenants should
describe the actual treatment conducted.

 

 

6.                                      Air Discharges

 

6.1                                 Do
you plan for any air filtration systems or stacks to be used in your company’s
operations in, on or about the Premises that will discharge into the air; and
will such air emissions be monitored? 
Existing Tenants should indicate whether or not there are any such air
filtration systems or stacks in use in, on or about the Premises which
discharge into the air and whether such air emissions are being monitored.

 

	
  Yes o

  	
  No o

  	
   

  

 

If yes, please describe:

 

 

 

6.2                                 Do
you propose to operate any of the following types of equipment, or any other
equipment requiring an air emissions permit? 
Existing Tenants should specify any such equipment being operated in, on
or about the Premises.

 

	
         
  Spray booth(s)

  	
   

  	
         
  Incinerator(s)

  
	
         
  Dip tank(s)

  	
   

  	
         
  Other (Please describe)

  
	
         
  Drying oven(s)

  	
   

  	
         
  No Equipment Requiring Air Permits

  

 

3

 

If yes, please describe:

 

 

7.                                      Hazardous Materials Disclosures

 

7.1                                 Has
your company prepared or will it be required to prepare a Hazardous Materials
management plan (“Management Plan”) pursuant to Fire Department or other
governmental or regulatory agencies’ requirements?  Existing Tenants should indicate whether or not a Management Plan
is required and has been prepared.

 

	
  Yes o

  	
  No o

  	
   

  

 

If yes, attach a copy of the Management Plan.  Existing Tenants should attach a copy of any
required updates to the Management Plan.

 

7.2                                 Are
any of the Hazardous Materials, and in particular chemicals, proposed to be
used in your operations in, on or about the Premises regulated under
Proposition 65?  Existing Tenants should
indicate whether or not there are any new Hazardous Materials being so used
which are regulated under Proposition 65.

 

	
  Yes o

  	
  No o

  	
   

  

 

If yes, please explain:

 

 

8.                                      Enforcement Actions and Complaints

 

8.1                                 With
respect to Hazardous Materials or Environmental Laws, has your company ever
been subject to any agency enforcement actions, administrative orders, or
consent decrees or has your company received requests for information, notice
or demand letters, or any other inquiries regarding its operations?  Existing Tenants should indicate whether or
not any such actions, orders or decrees have been, or are in the process of
being, undertaken or if any such requests have been received.

 

	
  Yes o

  	
  No o

  	
   

  

 

If yes, describe the actions, orders or decrees and
any continuing compliance obligations imposed as a result of these actions,
orders or decrees and also describe any requests, notices or demands, and
attach a copy of all such documents. 
Existing Tenants should describe and attach a copy of any new actions,
orders, decrees, requests, notices or demands not already delivered to Landlord
pursuant to the Lease Agreement.

 

 

 

4

 

8.2                                 Have
there ever been, or are there now pending, any lawsuits against your company
regarding any environmental or health and safety concerns?

 

	
  Yes o

  	
  No o

  	
   

  

 

If yes, describe any such lawsuits and attach copies
of the complaint(s), cross-complaint(s), pleadings and all other documents
related thereto as requested by Landlord. 
Existing Tenants should describe and attach a copy of any new
complaint(s), cross-complaint(s), pleadings and other related documents not
already delivered to Landlord pursuant to the Lease Agreement.

 

 

 

8.3                                 Have
there been any problems or complaints from adjacent Tenants, owners or other
neighbors at your company’s current facility with regard to environmental or
health and safety concerns?  Existing
Tenants should indicate whether or not there have been any such problems or
complaints from adjacent Tenants, owners or other neighbors at, about or near
the Premises.

 

	
  Yes o

  	
  No o

  	
   

  

 

If yes, please describe.  Existing Tenants should describe any such problems or complaints
not already disclosed to Landlord under the provisions of the Lease Agreement.

 

 

 

9.                                      Permits and Licenses

 

9.1                                 Attach
copies of all Hazardous Materials permits and licenses including a Transporter
Permit number issued to your company with respect to its proposed operations
in, on or about the Premises, including, without limitation, any wastewater
discharge permits, air emissions permits, and use permits or approvals.  Existing Tenants should attach copies of any
new permits and licenses as well as any renewals of permits or licenses
previously issued.

 

The undersigned
hereby acknowledges and agrees that (A) this Hazardous Materials Disclosure
Certificate is being delivered in connection with, and as required by, Landlord
in connection with the evaluation and finalization of a Lease Agreement and
will be attached thereto as an exhibit; (B) that this Hazardous Materials
Disclosure Certificate is being delivered in accordance with, and as required
by, the provisions of the Lease Agreement; and (C) that Tenant shall have and
retain full and complete responsibility and liability with respect to any of
the Hazardous Materials disclosed in the Hazardous Material Certificate
notwithstanding Landlord’s/Tenant’s receipt and/or approval of such
certificate.  Tenant further agrees that
none of the following described acts or events shall be construed or otherwise
interpreted as either (a) excusing, diminishing or otherwise limiting Tenant
from the requirement to fully and faithfully perform its obligations under the
Lease with respect to Hazardous Materials, including, without limitation,
Tenant’s indemnification of the Indemnitees and compliance with all
Environmental Laws, or (b) imposing upon Landlord, directly or indirectly, any
duty or liability with respect to any such Hazardous Materials, including,
without limitation, any duty on Landlord to investigate or otherwise verify the
accuracy of the representations and statements made therein or to ensure that
Tenant is in compliance with all Environmental Laws; 

 

5

 

(i) the delivery
of such certificate to Landlord and/or Landlord’s acceptance of such
certificate, (ii) Landlord’s review and approval of such certificate, (iii)
Landlord’s failure to obtain such certificate from Tenant at any time, or (iv)
Landlord’s actual or constructive knowledge of the types and quantities of
Hazardous Materials being used, stored, generated, disposed of or transported
on or about the Premises by Tenant or Tenant’s Representatives.  Notwithstanding the foregoing or anything to
the contrary contained herein, the undersigned acknowledges and agrees that
Landlord and its partners, lenders and representatives may, and will, rely upon
the statements, representations, warranties, and certifications made herein and
the truthfulness thereof in entering into the Lease Agreement and the
continuance thereof throughout the term, and any renewals thereof, of the Lease
Agreement.

 

I (print name)
                                       ,
acting with full authority to bind the (proposed) Tenant and on behalf of the
(proposed) Tenant, certify, represent and warrant that the information
contained in this certificate is true and correct.

 

 

(Prospective)
Tenant:

 

	
  By:

  	
  /s/ DENNIS P.
  WOLF

  	
   

  	
   

  
	
  Title:

  	
  Executive Vice
  President

  of Operations, Finance

  and Administration, and

  Chief Financial Officer

  	
   

  	
   

  
	
  Date:

  	
  6/30/2003

  	
   

  	
   

  

 

6

 

ADDENDUM NO. 1

 

This ADDENDUM NO. 1 (this
“Addendum”) is made in connection
with and is a part of that certain Lease, dated as of June 12, 2003, by and
between Shoreline Park, LLC, a Delaware limited liability company, as Landlord,
and Omnicell, Inc., a Delaware corporation (the “Lease”).

 

1.                                       Definitions
and Conflict.  All capitalized terms
referred to in this Addendum shall have the same meaning as provided in the
Lease, except as expressly provided to the contrary in this Addendum.  In case of any conflict between any term or
provision of the Lease and any exhibits attached thereto and this Addendum,
this Addendum shall control.

 

2.                                       Option
to Extend and Rent During the Extended Period.  Tenant shall have one (1) option to extend the initial Lease Term
for a period of five (5) years (the period shall be referred to as the “Extension Period”) by giving written notice
of exercise of such option (“Extension Option
Notice”) at least one hundred eight (180) days, but not more than
three hundred sixty-five (365) days, prior to the expiration of the initial
Lease Term.  If an Event of Tenant’s
Default (as defined in Section 13.1 of the Lease) exists on the date of giving
an Extension Option Notice, or if an Event of Tenant’s Default exists on the
date of the applicable Extension Period is to commence, the Extension Period at
the option of Landlord shall not commence and the Lease shall expire at the end
of initial Lease Term.  The Extension
Period shall commence, if at all, immediately following the expiration of the
initial Lease Term.  If Tenant is in
default (after notice and the expiration of the applicable cure period) under
any term or provision of the Lease on the date of the applicable Extension
Period is to commence, the Extension Period at the option of Landlord shall not
commence and the Lease shall expire at the end of initial term.  The Extension Period shall be upon all of
the terms and provisions of the Lease, except that the Base Monthly Rent during
such Extension Period shall be five-five percent (95%) of then Fair Market
Rent, (ii) Tenant shall not have any right or option to extend the Lease Term
beyond the one and only Extension Period, (iv) any work, allowances or
concession provided, granted or available to Tenant at or in connection with
the commencement of the initial Lease Term will not apply, except that Landlord
shall agree, at not cost to Tenant, to recarpet and repaint the Premises.

 

2.1                                 Fair
Market Rent. The term “Fair Market Rent”
for purposes of determining Base Monthly Rent during the Extension Period shall
mean the base monthly rent generally applicable to similar leases in like
buildings for space of comparable size, age, quality of the Premises in the Mountain View, Sunnyvale and Santa Clara, California
area projected as of the first day of the Extension Period by giving due
consideration for the quality of the Building and improvements therein
(including the quality of the then existing improvements in the Premises), for
a term comparable to the Extension Period at the time the commencement of the
Extension Period is scheduled to commence, and otherwise subject to the terms
and conditions of this Lease that will be applicable during the Extension
Period.

 

2.2                                 Procedure
to Determine Fair Market Rent. 
Landlord shall notify Tenant in writing of Landlord’s determination of
the Fair Market Rent (“Landlord’s FMR”)
after receipt of the Extension Option Notice. 
Within thirty (30) days after receipt of such written notice of
Landlord’s FMR, Tenant shall have the right either to: (i) accept Landlord’s
FMR, or (ii) elect to have the Fair Market Rent determined in accordance with
the appraisal procedure set forth below. 
If Tenant fails to provide written notice of such election within said
time period, Landlord may send a second written notice to Landlord requesting
such election and if Tenant fails to provide written notice of such election to
Landlord within five (5) days after receipt of such second written notice, then
it shall be deemed an acceptance of Landlord’s FMR.  The election (or deemed election) by Tenant under this section
shall be non-revocable and binding on the parties.

 

1

 

 

2.3                                 Appraisers.  If Tenant has elected to have the Fair
Market Rent determined by an appraisal, then within ten (10) days after receipt
of Tenant’s written notice of such an election, each party, by giving written
notice to the other party, shall appoint an appraiser to render a written
opinion of the Fair Market Rent for the Extension Period.  Each appraiser must be a member of the
Appraisal Institute of America (MAI) for at least five years and with at least
five years experience in the appraisal of rental rates of office buildings in
the area in which the Building is located and otherwise unaffiliated with
either Landlord or Tenant.  The two appraisers
shall render their written opinion of the Fair Market Rent for the Extension
Period to Landlord and Tenant within twenty (20) days after the appointment of
the second appraiser.  If the Fair
Market Rent of each appraiser is within five percent (5%) of each other, then
the average of the two appraisals of Fair Market Rent shall be the Base Monthly
Rent for the Extension Period.  If one
party does not appoint its appraiser as provided above, then the one appointed
shall determine the Fair Market Rent. 
The Fair Market Rent so determined under this section shall be binding
on Landlord and Tenant.

 

2.4                                 Third
Appraiser.  If the Fair Market Rent
determined by the appraisers is more than five percent (5%) apart, then the two
appraisers shall pick a third appraiser within ten (10) days after the two
appraisers have rendered their opinions of Fair Market Rent as provided
above.  If the two appraisers are unable
to agree on the third appraiser within said ten (10) day period, Landlord and
Tenant shall mutually agree on the third appraiser within ten (10) days
thereafter and if the parties fail to agree within said time period, then at
the request of either Landlord or Tenant, such third appraiser shall be
promptly appointed by the then Presiding Judge of the Superior Court of the
State of California for the County where the Premises are located..  The third appraiser shall be a person who
has not previously acted in any capacity for either party and must meet the
qualifications stated above.

 

2.5                                 Impartial
Appraisal.  Within twenty (20) days
after its appointment, the third appraiser shall render its written opinion of
the Fair Market Rent for the applicable Extension Period (“Third Opinion”).  If the fair market rent set forth in the Third Opinion is
equidistant from the fair market rent determination of Landlord’s and Tenant’s
appraiser, then the fair market rent contained in the Third Opinion shall be
the Base Monthly Rent during the Extension Period.  If the fair market rent of the Third Opinion is not equidistant
from the fair market rent made by Landlord’s and Tenant’s appraiser, then the
two closest fair market determinations made by Landlord’s appraiser, Tenant’s
appraiser and the Third Opinion shall be average and such average shall be the
Base Monthly Rent during the applicable Extension Period.  The fair market rent determined in accordance
with the foregoing procedure shall be binding on the parties

 

2.6                                 Appraisal
Costs.  Each party shall bear the
cost of its own appraiser and one-half (1/2) the cost of the third appraiser.

 

2.7                                 Acknowledgment
of Rent.  After the Fair Market Rent
for the Extension Period has been established in accordance with the foregoing
procedure, Landlord and Tenant shall promptly execute an amendment to the Lease
to reflect the Base Monthly Rent for the Extension Period.

 

2.8                                 Personal
to Assignees.  The foregoing option
to extend is personal to the original Tenant signing the Lease and any
transferee under a Permitted Transfer (as defined in Section 14.1F of the
Lease) and any other assignee approved in writing by Landlord, but may not be
assigned or transferred to or exercised by any other assignee, sublessee or
transferee under a Transfer.

 

2

 

3.                                       First
Offer Expansion Right.  As of the
date of the Lease, Landlord owns the following buildings in the Shoreline
Business Park (in addition to the Building): 1395-1397 Charleston Road, 1380
Shorebird Way, 1390 Shorebird Way, 1383 Shorebird Way, 1393 Shorebird Way and
1371-1375 Shorebird Way, Mountain View, CA (the “Other Buildings”). 
Tenant shall have the right during the initial Term (the “First Offer Period”), not the Extension
Period or any other period after the initial Term, to expand into space in one
of the Other Buildings that at the time is still owned by Landlord (the “Expansion Space”) solely in accordance with
the terms of this Section 3 and its subsections, provided that Tenant is not in
default of any term or provision of the Lease. 
Such right shall not be applicable to (i) a renewal, expansion,
assignment or sublease of any lease with any existing tenant for space in any
portion of the Expansion Space, (ii) any expansion options or similar rights
granted to any other tenant now existing in the Other Buildings, or (iii) any
building included in the definition of Other Buildings that has been sold by
Landlord,.  Notwithstanding anything to
the contrary in this Addendum or the Lease, if Landlord sells any or all of the
buildings in definition of Other Buildings, then such buildings affected
thereby shall no longer be included in the Other Buildings where there may be
Expansion Space.  For purposes hereof of
this Section 3, a sale shall include a sale by Landlord to another party or a
taking in condemnation (or an agreement in lieu thereof), or a foreclosure or
trustee sale (or deed in lieu thereof).

 

3.1                                 Process.  During the First Offer Period, if Tenant
wants to lease additional space in the Expansion Space, Tenant shall notify
Landlord of the size of the additional Expansion Space Tenant wants to lease (“Tenant’s Expansion Request”).  Tenant’s Expansion Request shall remain in
effect for a period of six (6) months, until Tenant accepts a Landlord’s
Expansion Proposal or until Tenant revokes an Expansion Request, whichever
comes first.  If Landlord determines
that a portion of the Expansion Space matching Tenant’s Expansion Request is
available for lease or will be available for lease within the following six
months after Landlord’s receipt of Tenant’s Expansion Request, Landlord will
propose such space to Tenant for lease at a rental rate and other terms and
conditions acceptable to Landlord in its sole and absolute discretion (“Landlord’s Expansion Proposal”).  No court, arbitrator, mediator, appraiser or
other third party shall have the right to determine the terms and conditions
for any lease terms in Landlord’s Expansion Proposal.  Tenant shall have ten (10) days within which to agree to lease
such Expansion Space on the terms set forth in Landlord’s Expansion Proposal or
to reject such proposal.  If Tenant
fails to provide written notice of acceptance of Landlord’s Expansion Proposal
within said time period, Landlord may send a second written notice to Landlord
requesting Tenant’s response and if Tenant fails to provide written notice of
acceptance to Landlord within two (2) business days after receipt of such
second written notice, then it shall be deemed a rejection by Tenant.  If Tenant provides written notice of
acceptance of Landlord’s Expansion Proposal but makes any change in the terms
for the lease of the Expansion Space contained in the Landlord’s Expansion
Proposal, then it shall be deemed a rejection of Landlord’s Expansion Proposal.

 

3.2                                 Effect
of Rejection.  If Tenant rejects (or
is deemed to have rejected) the offer to lease the portion of the Expansion
Space contained in the Landlord’s Expansion Proposal (the “Rejected Space”), Landlord shall be free to
lease all or any portion of the Rejected Space offered to Tenant to any other
party on the terms proposed in Landlord’s Expansion Proposal, or on any other
terms which may be different than the terms in Landlord’s Expansion Proposal,
subject to the limitation in Section 3.3 below, in which case Tenant’s right to
lease the Rejected Space shall automatically lapse and the Rejected Space will
no longer be subject to Tenant’s rights to expand under Section 3 of this
Addendum.

 

3.3                                 Changes
in the Offer.  If the difference in
the stated minimum monthly rent for the term contained in Landlord’s Expansion
Proposal that was not accepted by Tenant is greater than ten percent (10%) of
the stated minimum monthly rent payable over the term in any amended offer to
lease

 

3

 

from a third party, Landlord shall be obligated to offer the revised
terms to Tenant and Tenant shall have five (5) days after receipt of such
amended offer to accept or reject the revised terms.  If Tenant rejects or does not accept the revised or new terms
within the foregoing time period, Landlord shall have the right to enter a
lease for all or any portion of such Expansion Space on the revised or new
terms.

 

3.4                                 Election
to Expand.  If Tenant accepts
Landlord Expansion Proposal as provided above, then the parties shall enter
into an amendment of the Lease to include such Expansion Space on the terms set
forth in Landlord’s Proposal Notice.

 

3.5                                 Personal
to Assignees.  The foregoing right
of first offer to lease the Expansion Space is personal to the original Tenant
signing the Lease and any transferee under a Permitted Transfer and any other
assignee approved in writing by Landlord, but may not be assigned or
transferred to or exercised by any other assignee, sublessee or transferee
under a Transfer.

 

4.                                       First
Offer to Purchase.  If Landlord
elects in its sole and absolute discretion to market the Building for sale, as
a single asset and not in a pool or combination of other properties owned by
Landlord or its affiliates, to an unaffiliated third party, at any time during
the initial Lease Term or any extended term, and if Tenant is not then in
default of the Lease beyond any applicable notice and cure periods, Landlord
will first notify Tenant in writing of the price and on terms and conditions
under which Landlord would sell the Building to Tenant (the “Sale Notice”).  Landlord may market for sale the Building at any time, including
while Tenant is considering to purchase based on the Sale Notice.  Tenant may elect to purchase at the price
and terms set forth in the Sale Notice by delivering to Landlord unconditional
and irrevocable written notice of acceptance within 10 days after receipt of
the Sale Notice.  If Tenant does not
provide such notice of acceptance within said time period or if Tenant makes
any change in the purchase price or other terms in the Sale Notice, it shall be
deemed an election not to purchase, and Landlord shall be free to sell the
Building to any other party on the terms proposed in Landlord’s Sale Notice, or
on any other terms which may be different than the terms in Landlord’s Sale
Notice, so long as the purchase price is not 10% less than the purchase price
proposed in the applicable Sale Notice, for a period of 12 months, in which
case Tenant’s right to purchase the Building shall lapse and be of no further
force or effect.  If Landlord fails to
consummate such a sale or enter into a binding purchase agreement for such a
sale during such period, the rights of Tenant pursuant to this Paragraph 4
shall once again be effective.  No
court, arbitrator, mediator, appraiser or other third party shall have the
right to determine the purchase price or other terms and conditions for
purchase of the Building.  Upon exercise
of the option to purchase, the parties shall enter into a binding purchase
agreement containing the terms set forth in the Sale Notice, which terms may
include a deposit by Tenant of five percent of the purchase price in escrow
with an escrow company selected by Tenant, which deposit may be non-refundable
but applicable to the purchase price at closing.

 

The foregoing right of first offer to purchase the
Building is personal to the original Tenant signing the Lease and any
transferee under a Permitted Transfer and any other assignee approved in
writing by Landlord, but may not be assigned or transferred to or exercised by
any other assignee, sublessee or transferee under a Transfer.

 

Notwithstanding anything to the contrary, Tenant
acknowledges and agrees that this option to purchase is subject and subordinate
to any deed of trust now or hereafter placed on the Building and that any
lender will not be obligated to agree to recognize such right in the event of a
foreclosure, trustee’s sale or deed in lieu thereof or in connection with
providing any subordination, attornment and non-disturbance agreement.

 

4

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