Document:

Exhibit 10.12

 

 

SUNSET CENTER AT TANASBOURNE

 

OFFICE LEASE AGREEMENT

 

 

Between

 

MARK TANASBOURNE LLC,

an Oregon limited liability company

 

(“Landlord”)

 

 

And

 

 

MATHSTAR,

a Minnesota corporation

 

(“Tenant”)

 

 

Dated:  June 1, 2005

 

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  SECTION 1 DEMISE AND PREMISES

  	
   

  
	
   

  	
  1.1

  	
  Demise

  	
   

  
	
   

  	
  1.2

  	
  Premises

  	
   

  
	
   

  	
  1.3

  	
  Commencement and Expiration Dates

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  SECTION 2 RENT

  	
   

  
	
   

  	
  2.1

  	
  Rents

  	
   

  
	
   

  	
  2.2

  	
  Base Rent

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  SECTION 3 ADDITIONAL RENT

  	
   

  
	
   

  	
  3.1

  	
  Operating
  Expenses

  	
   

  
	
   

  	
  3.2

  	
  Operating Expense Exclusions

  	
   

  
	
   

  	
  3.3

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  SECTION 4 PAYMENT OF
  ADDITIONAL RENT

  	
   

  
	
   

  	
  4.1

  	
  Written Statement of Estimate

  	
   

  
	
   

  	
  4.2

  	
  Final Written Statement

  	
   

  
	
   

  	
  4.3

  	
  Adjustment for Reduced Occupancy

  	
   

  
	
   

  	
  4.4

  	
  Tenant
  Examination

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  SECTION 5 SECURITY DEPOSIT

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  SECTION 6 USE

  	
   

  
	
   

  	
  6.1

  	
  General

  	
   

  
	
   

  	
  6.2

  	
  Negative Covenants as to Use

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  SECTION 7 SUBORDINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  SECTION 8 TRANSFERS BY TENANT

  	
   

  
	
   

  	
  8.1

  	
  General

  	
   

  
	
   

  	
  8.2

  	
  Landlord’s Option to Recapture Premises

  	
   

  
	
   

  	
  8.3

  	
  Landlord’s Option to Increase Rent

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  SECTION 9 LIABILITY AND
  INSURANCE

  	
   

  
	
   

  	
  9.1

  	
  Waiver
  of Subrogation

  	
   

  
	
   

  	
  9.2

  	
  Tenant’s
  Insurance

  	
   

  
	
   

  	
  9.3

  	
  Delivery of Policies; Cancellation

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  SECTION 10 ALTERATIONS

  	
   

  
	
   

  	
  10.1

  	
  General

  	
   

  
	
   

  	
  10.2

  	
  Bonds

  	
   

  
	
   

  	
  10.3

  	
  Permits

  	
   

  
	
   

  	
  10.4

  	
  Manner

  	
   

  
	
   

  	
  10.5

  	
  Indemnification of Landlord

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  SECTION 11 LANDLORD’S
  AND TENANT’S PROPERTY

  	
   

  
	
   

  	
  11.1

  	
  Landlord’s
  Property

  	
   

  
	
   

  	
  11.2

  	
  Tenant’s
  Property

  	
   

  
	
   

  	
  11.3

  	
  Abandonment

  	
   

  

 

i

 

	
  12.

  	
  SECTION 12 REPAIRS AND
  MAINTENANCE

  	
   

  
	
   

  	
  12.1

  	
  Landlord’s Obligations

  	
   

  
	
   

  	
  12.2

  	
  General

  	
   

  
	
   

  	
  12.3

  	
  Manner

  	
   

  
	
   

  	
  12.4

  	
  Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  SECTION13 ELECTRIC ENERGY

  	
   

  
	
   

  	
  13.1

  	
  High Voltage Equipment

  	
   

  
	
   

  	
  13.2

  	
  Cost of Increasing Capacity

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  SECTION 14 CLIMATE CONTROL

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  SECTION 15 OTHER SERVICES

  	
   

  
	
   

  	
  15.1

  	
  Elevators

  	
   

  
	
   

  	
  15.2

  	
  Cleaning

  	
   

  
	
   

  	
  15.3

  	
  Removal of Excess Refuse

  	
   

  
	
   

  	
  15.4

  	
  Building
  Directory

  	
   

  
	
   

  	
  15.5

  	
  Signs

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  SECTION 16 ACCESS

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  SECTION 17 INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  SECTION 18 DAMAGE OR
  DESTRUCTION

  	
   

  
	
   

  	
  18.1

  	
  General

  	
   

  
	
   

  	
  18.2

  	
  Rent
  Abatement

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  SECTION 19 EMINENT DOMAIN

  	
   

  
	
   

  	
  19.1

  	
  Total
  Condemnation

  	
   

  
	
   

  	
  19.2

  	
  Partial
  Condemnation

  	
   

  
	
   

  	
  19.3

  	
  Effect of Termination or Continuation

  	
   

  
	
   

  	
  19.4

  	
  Award

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  SECTION 20 SURRENDER

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  SECTION 21 EVENTS OF DEFAULT

  	
   

  
	
   

  	
  21.1

  	
  Events
  of Default

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  SECTION 22 REMEDIES UPON
  DEFAULT

  	
   

  
	
   

  	
  22.1

  	
  Remedies

  	
   

  
	
   

  	
  22.2

  	
  Cumulative
  Remedies

  	
   

  
	
   

  	
  22.3

  	
  Interest
  on Damages

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  SECTION 23 CURING TENANT’S
  DEFAULTS

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  SECTION 24 BROKER

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  SECTION 24 NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  SECTION 26 ESTOPPEL
  CERTIFICATES

  	
   

  
	
   

  	
   

  	
   

  
	
  27.

  	
  SECTION 27 RELOCATION OF
  PREMISES

  	
   

  
	
   

  	
   

  	
   

  
	
  28.

  	
  SECTION 28 PARKING

  	
   

  

 

ii

 

	
  29.

  	
  SECTION 29 MISCELLANEOUS

  	
   

  
	
   

  	
  29.1

  	
  Entire
  Agreement

  	
   

  
	
   

  	
  29.2

  	
  Successors and Assigns

  	
   

  
	
   

  	
  29.3

  	
  Nonrecourse
  Lease

  	
   

  
	
   

  	
  29.4

  	
  Force
  Majeure

  	
   

  
	
   

  	
  29.5

  	
  Effect of Failure to Consent

  	
   

  
	
   

  	
  29.6

  	
  Rules and
  Regulations

  	
   

  
	
   

  	
  29.7

  	
  Tenant
  Holdover

  	
   

  
	
   

  	
  29.8

  	
  Tenant Representations

  	
   

  
	
   

  	
  29.9

  	
  Non-Waiver

  	
   

  
	
   

  	
  29.10

  	
  Square Footage Calculations Approximate

  	
   

  
	
   

  	
  29.11

  	
  Time

  	
   

  
	
   

  	
  29.12

  	
  Late
  Fees

  	
   

  
	
   

  	
  29.13

  	
  Attorneys’
  Fees

  	
   

  
	
   

  	
  29.14

  	
  Quiet
  Enjoyment

  	
   

  
	
   

  	
  29.15

  	
  Severability

  	
   

  
	
   

  	
  29.16

  	
  Incorporation of Exhibits

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A – Outline of Premises

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A-1 – Outline of Expansion Space

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit B – Legal
  Description of Land

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C – TV&
  Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C-1 – Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C-2 –
  General Specifications for Tenant Improvements

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C-3 – Construction Budget Sheet

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit D – Estoppel
  Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit E – Rules and
  Regulations

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit F1 – Monument View 1

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit F-2 – Monument View 2

  	
   

  
	
   

  	
   

  	
   

  
	
  Addendum
  to Lease

  	
   

  
						

 

iii

 

SUMMARY OF FUNDAMENTAL PROVISIONS

 

	
  DATED:

  	
   

  	
  June 1,
  2005

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BETWEEN:

  	
   

  	
  MARK
  TANASBOURNE LLC, an Oregon limited liability company

  	
   

  	
  (“Landlord”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  MATHSTAR,
  a Minnesota corporation

  	
   

  	
  (“Tenant”)

  

 

1.                                       TERM:

 

A.                                   Estimated
Commencement Date:  July 1, 2005 (see Section 1.3).

 

B.                                     Estimated
Expiration Date:  December 31, 2010 (see Section 1.3).

 

C.                                     Length
of Term:  Sixty-six (66) months

 

2.                                       BUILDING: 
19075 NW Tanasbourne Drive,
Hillsboro, Oregon 97124.

 

3.                                       PROJECT: 
Sunset Center at Tanasbourne.

 

4.                                       PREMISES: 
6,473 rentable square feet
on the second (2nd) floor(s) of
the Building (see Exhibit ”A”).

 

5.                                       BASE RENT:

 

	
  Months 

  	
   

  	
  Annual Rate Per

  Rentable Square Foot

  	
   

  	
  Monthly Base Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commencement Date through 6th month

  	
   

  	
  $21.00

  	
   

  	
  Abated

  	
   

  
	
  7th month – 18th month

  	
   

  	
  $21.00

  	
   

  	
  $11,327.75

  	
   

  
	
  19th month – 30th month

  	
   

  	
  $21.63

  	
   

  	
  $11,667.58

  	
   

  
	
  31st month – 42nd month

  	
   

  	
  $22.28

  	
   

  	
  $12,018.20

  	
   

  
	
  43rd month – 54th month

  	
   

  	
  $22.95

  	
   

  	
  $12,379.61

  	
   

  
	
  55th month – 66th month

  	
   

  	
  $23.64

  	
   

  	
  $12,751.81

  	
   

  

 

6.                                       SECURITY DEPOSIT: 
$12,751.81 (see Section 5).

 

7.                                       TENANT’S PROPORTIONATE SHARE OF OPERATING EXPENSES AND
OF TAXES:  9.3 percent (see Section 3 and Section 4).

 

8.                                       BASE YEAR: 
2005

 

9.                                       USE OF PREMISES:  Office Use.

 

10.                                 PARKING SPACES:  1 space for
every 250 rentable square feet of leased Premises.

 

11.                                 NOTICE ADDRESSES:

 

	
   

  	
  Landlord:

  	
  Mark Tanasbourne
  LLC

  
	
   

  	
   

  	
  c/o Melvin Mark
  Brokerage Company

  
	
   

  	
   

  	
  111 SW Columbia
  Street, Suite 1380

  
	
   

  	
   

  	
  Portland, OR
  97201

  

 

 

	
   

  	
  Tenant:

  	
  MathStar,
  a Minnesota corporation

  
	
   

  	
   

  	
  19075
  NW Tanasbourne Drive, Suite 200

  
	
   

  	
   

  	
  Hillsboro,
  OR  97124

  

 

12.                                 LANDLORD’S BROKER:                                                 M.
James Mark, Melvin Mark Brokerage Company

 

13.                                 TENANT’S BROKER:                                                                      Gordon
King, Colliers International

 

 

OFFICE LEASE AGREEMENT

 

	
  DATED:

  	
   

  	
  May 18,
  2005

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BETWEEN:

  	
   

  	
  MARK
  TANASBOURNE LLC, an Oregon limited liability company

  	
   

  	
  (“Landlord”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  MathStar,
  a Minnesota corporation

  	
   

  	
  (“Tenant”)

  

 

SECTION 1          DEMISE AND PREMISES

 

1.1                                 Demise

 

Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, upon the terms and conditions set forth in this Lease, the Premises
described in Section 1.2 in the Building described in the Summary of
Fundamental Provisions (the “Building”). 
The Building is located upon the land described on the attached Exhibit B
(the “Land”).  The Land, the Building,
and all other improvements on the Land whether now in existence or constructed
during the term of this Lease are part of Sunset Center at Tanasbourne (the “Project”).

 

1.2                                 Premises

 

The Premises (the “Premises”) leased to Tenant are identified by the
outlining on the floor plan(s) attached as Exhibit A and are described in
the Summary of Fundamental Provisions.

 

1.3                                 Commencement and Expiration Dates

 

The term of this Lease shall commence on the earlier of (a) the
date on which Tenant takes possession of the Premises or (b) the date on
which Landlord’s work, if any, in the Premises as described in the Work
Agreement attached as Exhibit C to the Lease (“Landlord’s Work”) is
substantially completed.  If Landlord is
unable to give possession of the Premises on the estimated commencement date
set forth in the Summary of Fundamental Provisions, Landlord shall not be
subject to any liability, and the validity of this Lease shall not be impaired
under such circumstances, but Base Rent and Additional Rent shall be abated
(provided Tenant is not responsible for the delay) until Landlord has given
notice to Tenant that the Premises are ready for Tenant’s possession.  If Landlord has given Tenant permission to
take possession of the Premises prior to the date on which Landlord’s Work is
substantially completed, such possession shall be deemed to be upon all the
terms, covenants, conditions and provisions of this Lease, including, without
limitation, the payment of Base Rent and the Additional Rent.  The term of this Lease shall expire, unless
sooner terminated pursuant to the provisions of this Lease, sixty-six (66) months after the
Commencement Date (the “Expiration Date”).

 

SECTION 2          RENT

 

2.1                                 Rents

 

Tenant agrees to pay to Landlord rent consisting of Base Rent and
Additional Rent described in Section 3 of this Lease (which may, along
with all other sums which become payable to Landlord by Tenant, be referred to
in this Lease as “Rents”).  All Rents
shall be paid in advance on the first day of each month unless otherwise
expressly provided in this Lease.  All
Rents shall be paid in lawful money of the United States to Landlord at its
office set forth in the Summary of Fundamental Provisions, or such other place
as Landlord shall designate by written notice to Tenant.  Tenant shall pay all Rents promptly when due
without notice or demand therefor and without any abatement, deduction or
setoff, for any reason whatsoever, except as may be expressly provided in this
Lease.  If the Commencement Date occurs
on a day other than the first day of a calendar month, the Rents for that
partial calendar month shall be prorated based on the number of days in such
month.

 

1

 

2.2                                 Base Rent

 

The Base Rent shall be as set forth in the Summary of Fundamental
Provisions.

 

SECTION 3          ADDITIONAL RENT

 

3.1                                 Operating Expenses

 

Tenant agrees to pay its Proportionate Share of all increases in Operating
Expenses in excess of those incurred by Landlord during the Base Year.  Tenant’s Proportionate Share of Operating
Expenses is set forth in the Summary of Fundamental Provisions and is
determined by dividing the number of rentable square feet in the Premises by
the number of rentable square feet in the Building.  The term “Operating Expenses” shall mean all
costs, fees, and expenses paid or incurred by Landlord or on Landlord’s behalf
as determined by Landlord to be necessary or appropriate for the efficient
operation, maintenance, repair, replacement, management, administration and
insurance of the Project and the curbs, sidewalks, common areas, parking
garage, and plazas adjoining the Project, except for Taxes which shall be paid
in accordance with Sections 3.3 and 4 below.  Operating Expenses include, without
limitation, the following:

 

3.1.1                        Salaries,
wages, medical, insurance, union and general welfare benefits, pension
payments, payroll taxes, worker’s compensation insurance, uniforms and related
expenses and benefits of persons engaged in the repair, operation, maintenance,
management, administration, engineering and security of the Project;

 

3.1.2                        All
expenses incurred for gas, electricity, heat, ventilation, air-conditioning,
water, sewer, garbage and waste disposal, recycling, elevator service and other
services or utilities furnished to the Project, together with any taxes
thereon;

 

3.1.3                        All
maintenance, repair, and replacement costs relating to the Project including,
but not limited to, the public and service areas of the Project including, but
not limited to, sidewalks, landscaping, parking, service areas, mechanical
rooms and improvement exteriors;

 

3.1.4                        The cost
of all insurance charges, including but not limited to rent loss insurance, casualty,
liability, fire with extended coverage endorsement, and other insurance
covering the Project;

 

3.1.5                        The cost
or rental of all supplies, including without limitation, cleaning supplies,
light bulbs, tubes and ballasts, materials and equipment, and all taxes
thereon;

 

3.1.6                        The cost
of hand tools and other moveable equipment used in the repair, maintenance or
operation of the Project;

 

3.1.7                        The cost
of all charges for window and other cleaning, janitorial and security services;

 

3.1.8                        Charges of
independent contractors performing repairs or services to the Project not
otherwise charged to a specific tenant;

 

3.1.9                        Repairs,
replacements and general maintenance made by Landlord or on Landlord’s behalf;

 

3.1.10                  Alterations and
improvements to the Project made by reason of the laws and requirements of any
public authorities or the requirements of insurance bodies;

 

3.1.11                  Management fees
paid to a third party, or, if no managing agent is employed by Landlord,
Landlord shall be entitled to charge a management fee which is not in excess of
the then-prevailing rates for management fees of other first-class office
projects in the Portland, Oregon metropolitan area;

 

2

 

3.1.12                  The costs of any
capital improvements or repairs to the Project and/or of any machinery or
equipment installed in the Project amortized over the useful life of the
improvements, machinery and/or equipment as estimated by Landlord, which is
made or becomes operational, as the case may be, after the completion of the
initial construction of the Building;

 

3.1.13                  The rental costs
or rental value of the management offices serving the Project;

 

3.1.14                  Legal,
accounting and other professional fees incurred in connection with operation,
maintenance and management of the Project; and

 

3.1.15                  All other
charges properly allocable to the operation of the Project in accordance with
standard real estate accounting practices in the Portland, Oregon metropolitan
area.

 

3.2                                 Operating Expense Exclusions

 

The
following expenses shall be excluded from Operating Expenses:  (a) depreciation or amortization on the
initial construction of the Project; (b) debt service (including without
limitation, interest, principal and any impound payments) required to be made
on any mortgage or deed of trust recorded with respect to the Project; (c) rent
on any ground lease; (d) the cost of leasehold improvements made for
Tenant or any tenants of the Project; (e) leasing commissions, attorneys’
fees, costs and disbursements and other expenses (including advertising)
incurred in connection with leasing, renovating, or improving space for tenants
or other occupants of the Project; (f) repairs, replacements, alterations
and general maintenance paid for by insurance proceeds or by Tenant or third
parties; and (g) specific costs incurred for the account of, or separately
billed to and paid by, specific tenants of the Project.

 

3.3                                 Taxes

 

Tenant
agrees to pay its Proportionate Share of all increases in Taxes (as defined
below) in excess of the Taxes payable by Landlord during the Base Year.  Tenant’s Proportionate Share of Taxes shall
be the same as Tenant’s Proportionate Share of Operating Expenses, as provided
in Section 3.1 of this Lease.  “Taxes”
shall mean all taxes and assessments of all public, quasi-public, and
governmental authorities and owner associations against the Project or the
ownership, management, or operation of the Project, all rent taxes, local
improvement districts, special and general assessments, gross receipts taxes, taxes
on Landlord’s interest under this Lease, all taxes in lieu of or in addition to
the foregoing, whether or not such taxes are now in effect (excluding, however,
any tax based upon Landlord’s net income and any inheritance taxes), and the
cost of contesting any such taxes or assessments.

 

SECTION 4          PAYMENT OF ADDITIONAL RENT

 

4.1                                 Written Statement of Estimate

 

Prior
to the beginning of each calendar year during the term of this Lease after the
Base Year, or as soon thereafter as practical, Landlord shall furnish Tenant
with a written statement setting forth Tenant’s Proportionate Share of the increase in the estimated Operating
Expenses and Taxes for the next calendar year. 
Failure of Landlord to deliver the statement of estimated Operating
Expenses and Taxes shall not relieve Tenant of its obligation to pay Tenant’s
Proportionate Share of Operating Expenses and Taxes.  Tenant shall each month pay to Landlord as
Additional Rent an amount equal to Tenant’s Proportionate Share as shown in
Landlord’s written statement.

 

4.2                                 Final Written Statement

 

Within
ninety (90) days after the close of each calendar year after the Base Year
during the term of this Lease, or as soon thereafter as practical, Landlord
shall deliver to Tenant a written statement (the “Operating Statement”) setting
forth Tenant’s actual Proportionate Share of the increases, if any, in
Operating Expenses and of the Taxes for the preceding calendar year over the
Base Year.  In the event Tenant’s share
of the actual Operating Expenses is in excess of the amount actually paid by
Tenant for Operating Expenses on an estimated basis for the

 

3

 

year in question, Tenant
shall pay the amount of such deficiency to Landlord within thirty (30) days
following the date of such statement.  In
the event Tenant’s share of actual Operating Expenses is less than the amount
actually paid by Tenant for Operating Expenses on an estimated basis for the
year in question, then Landlord shall either apply the overpayment to Tenant’s
next Rent payment, or promptly reimburse the excess to Tenant.  In the event Tenant’s share of the actual
Taxes is in excess of the amount actually paid by Tenant for Taxes on an
estimated basis for the year in question, Tenant shall pay the amount of such
deficiency to Landlord within thirty (30) days following the date of such
statement.  In the event Tenant’s share
of actual Taxes is less than the amount actually paid by Tenant for Taxes on an
estimated basis for the year in question, then Landlord shall either apply the
overpayment to Tenant’s next Rent payment, or promptly reimburse the excess to
Tenant.  In no event shall Base Rent
decrease pursuant to the provisions of Section 3 or Section 4 of this
Lease.

 

4.3                                 Adjustment for Reduced Occupancy

 

If
during any calendar year, less than 95 percent of the rentable area of the
Building is occupied, Landlord’s estimation and determination of Operating
Expenses shall be based on Landlord’s estimate of Operating Expenses as if the
Building were at least 95 percent occupied. 
Landlord shall use sound accounting and management principles to make
appropriate adjustments in occupancy-related Operating Expenses for the year in
question for the purpose of avoiding distortion in the amount of Operating
Expenses by reason of variation in the total occupancy of the Building.  The amount so determined by Landlord shall be
deemed to be the Operating Expenses for the Building for the year in question.

 

4.4                                 Tenant Examination

 

Any
objections by Tenant to the Operating Statement shall be made in writing given
to Landlord within 60 days after the Operating Statement is submitted to
Tenant.  If no objections are made within
such time period, the Operating Statement shall be conclusive and binding on
Tenant.  If Tenant makes any such
objection within the time period required by this Section 4.4, Tenant
shall have the right to inspect, at Tenant’s sole cost and expense, Landlord’s
records pertaining to the computation of Operating Expenses and Taxes, so long
as the following provisions are complied with: 
(a) Tenant shall perform such inspection within 75 days following
the receipt of the Operating Statement pertaining to the year in question, (b) Tenant
shall provide to Landlord a copy of the inspection report, (c) Tenant
shall keep the report confidential and shall not share the contents, results,
or the fact that Tenant is investigating the Operating Expenses or the Taxes,
or adjustments with any other person, except for its advisors on a need-to-know
basis, and (d) Tenant shall pay to Landlord within ten (10) days
following its inspection any amount determined to be owing by Tenant.  Tenant’s inspection may only be conducted by
Tenant’s employees, advisors or by
Tenant’s certified public accountant paid on an hourly basis (and not a
contingent fee basis).  Landlord agrees
to pay Tenant any amount determined to be owing to Tenant within ten (10) days
following Landlord’s receipt of the inspection report or, if Landlord does not
agree with Tenant’s inspection report, as determined by an independent
certified public accountant within ten (10) days following the date on
which a report by such independent certified public accountant is given to
Landlord and Tenant.  Such independent
certified public accountant shall be selected by Landlord and approved in
advance by Tenant, which approval shall not be unreasonably withheld.

 

SECTION 5          SECURITY DEPOSIT

 

Tenant
has deposited with Landlord the sum shown on the Summary of Fundamental
Provisions as security for the full and faithful performance by Tenant of
Tenant’s obligations under this Lease. 
The security deposit shall not earn interest, and shall not be
considered an advance payment of rent or a measure of Landlord’s damages in the
event of a default by Tenant.  If Tenant
defaults in the performance of any of Tenant’s obligations under this Lease,
including the payment of Rents, Landlord may, but shall not be obligated to,
use, apply or retain all or any part of the security deposit to the extent
required for the payment of any sum in default. 
If Landlord shall so use, apply or retain all or any part of the
security deposit, Tenant shall upon demand immediately deposit with Landlord a
sum equal to the amount so used, applied or retained.  If Tenant shall fully and faithfully comply
with all of Tenant’s obligations under this Lease, the security deposit or any
balance thereof shall be paid to Tenant within thirty (30) days after the date
on which this Lease shall expire or sooner terminate, and after delivery to
Landlord of possession of the Premises and after all payments required to be
made by Tenant in this Lease, have been paid.

 

4

 

SECTION 6          USE

 

6.1                                 General

 

Tenant
shall use and occupy the Premises continuously during the term of this Lease
for general office use and for no other purpose without the prior written
consent of Landlord.  If any governmental
license or permit shall be required for the proper and lawful conduct of Tenant’s
business in the Premises, Tenant, at its expense, shall procure, maintain and
comply with the terms and conditions of each such license or permit.  Tenant shall, at Tenant’s expense, comply
with all laws, codes, rules, statutes, regulations, orders and other
requirements of public authorities (“Laws”) relating to Tenant’s use and
occupancy of the Premises.

 

6.2                                 Negative Covenants as to Use

 

Tenant
shall not, without the prior written consent of Landlord, use any apparatus,
machinery or device in or about the Premises which will cause any noise,
vibration, fumes or electronic interference or which will overload the floors
or structure of the Premises.  Tenant
shall not at any time use or occupy, or suffer or permit anyone to use or
occupy the Premises, or permit anything to be done in the Premises, in any
manner which:  (a) violates the
Certificate of Occupancy for the Premises or for the Building; or (b) causes
or is liable to cause injury to the Premises or the Building or any equipment,
facilities or systems therein; or (c) constitutes a violation of Laws or
the requirements of insurance bodies; or (d) impairs or tends to impair
the character, reputation or appearance of the Building as a first-class office
building; or (e) impairs or tends to impair the proper and economic
maintenance, operation and repair of the Building and/or its equipment,
facilities or systems; or (f) annoys or inconveniences or tends to annoy
or inconvenience other tenants or occupants of the Project; or (g) generates,
releases, stores, or deposits on or about the Premises any environmentally
hazardous or toxic substances, materials, wastes, pollutants, oils, or
contaminants, as defined by any Law.

 

SECTION 7          SUBORDINATION

 

This
Lease, and all rights of Tenants hereunder, are and shall be subject and
subordinate to any ground leases or master leases (“Master Leases”) covering
the Land and/or the Building now or hereafter existing, and to all mortgages,
trust deeds and other financing and security instruments (“Mortgages”), which
may now or hereafter affect the Land and/or the Building, and to all renewals,
modifications, replacements and extensions of such Master Leases and
Mortgages.  This Section shall be
self-operative, and no further instrument of subordination shall be
required.  In confirmation of such
subordination, Tenant shall execute, acknowledge and deliver to Landlord any
instrument that Landlord may reasonably request to evidence such subordination
within ten days after a request therefor. 
If the interest of Landlord under this Lease is transferred, whether
through possession, foreclosure or delivery of a new lease or deed, then Tenant
shall recognize the party succeeding to Landlord’s rights and obligations (the “Successor
Landlord”) as the Landlord under this Lease and shall promptly execute and
deliver any instrument that such Successor Landlord may reasonably request to
evidence such attornment.  Upon such
attornment, Tenant’s rights hereunder shall continue in full force and effect
as a direct Lease between the Successor Landlord and Tenant upon all of the
terms, conditions and covenants as set forth in this Lease so long as Tenant is
not in default.  Landlord shall use commercially reasonable effort to
obtain customary nondisturbance agreements from holders of encumbrances in the
building.

 

SECTION 8          TRANSFERS BY TENANT

 

8.1                                 General

 

Tenant
shall not assign this Lease or any interest therein, or sublet the Premises or
any part thereof, or mortgage, encumber or otherwise transfer or dispose of
Tenant’s interest in the Premises, either voluntarily or involuntarily, without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed.  If Tenant requests consent to a proposed
transfer, Tenant shall pay for Landlord’s reasonable legal and administrative
expenses incurred in reviewing the request for consent to transfer.  Consent to one such transfer shall not imply
any future consent, and all subsequent transfers shall be made only upon
obtaining prior written consent of Landlord. 
Assignees shall become directly liable to Landlord for all obligations
of Tenant

 

5

 

hereunder, but Tenant
shall remain liable for all obligations under this Lease.  Tenant agrees that the instrument by which
any transfer consented to by Landlord is accomplished shall expressly provide
that the transferee will perform and observe all the agreements, covenants,
conditions and provisions to be performed and observed by Tenant under this
Lease and that Landlord will have the right to enforce such agreements,
covenants and conditions directly against such transferee.  It shall be the responsibility of Tenant to
provide Landlord, in a manner reasonably acceptable to Landlord, with such
information as Landlord determines is necessary for Landlord to grant or
withhold its consent.  Landlord may
withhold its consent if the proposed transferee fails to satisfy the criteria
then generally (but not necessarily uniformly) used by Landlord in selecting
new tenants, which criteria may include, without limitation, financial capability,
business reputation, business experience, existing and future space
requirements of other tenants, existing and future space requirements of the
proposed transferee, the intended use, and the
anticipated demand for services by the transferee., and the transferee’s
anticipated contribution to the prestige of the Project.  Landlord shall not be obligated to approve a
transfer to an existing Project tenant or another party with whom Landlord has
been negotiating to lease space in the Project. 
If Tenant is a corporation or other entity, then any merger,
consolidation, liquidation, change in the ownership or power to vote the
majority of voting stock or equity interests of tenant shall constitute a
transfer for the purposes of this Section 8.

 

8.2                                 Landlord’s Option to Recapture Premises

 

Tenant
shall, together with any request for Landlord’s consent to assign this Lease or
to sublet the Premises, or any part thereof, offer to Landlord the right to
recapture all or any part of the Premises which Tenant desires to assign or
sublet.  Landlord shall have fifteen (15) thirty (30) days following
receipt of Tenant’s notice to make an election to recapture under this Section 8.2.  Landlord may require Tenant to assign or
sublease to Landlord all or any portion of the Premises Tenant desires to
assign or sublease.  In the event
Landlord shall elect to recapture all or any portion of the Premises, Base Rent
shall be reduced by a fraction the numerator of which is the Net Rentable area
of that portion of the Premises being recaptured by Landlord and the
denominator of which is the total Net Rentable area of the Premises.

 

8.3                                 Landlord’s Option to Increase Rent

 

In the
event Landlord consents to Tenant’s proposed transfer, Landlord, at its option,
may require Tenant to pay, when paid by the transferee to Tenant, the following
sums which shall be added to and included in Base Rent:  all of any rents, additional charges or other
consideration payable pursuant to the transfer to Tenant (including all sums
payable for the sale or rental of Tenant’s leasehold improvements or fixtures
but reduced by any marketing expenses paid to third parties incurred in
connection with reletting the Premises or any portion thereof) by the
transferee which are in excess of the Base Rent and Additional Rent payable by
Tenant with respect to the space in question pursuant to the terms of this
Lease.  The sums payable under Section 8.3
shall be paid to Landlord as and when paid by the transferee to Tenant.

 

SECTION 9          LIABILITY AND INSURANCE

 

9.1                                 Waiver of Subrogation

 

Tenant
and Landlord shall each secure appropriate clauses in, or endorsements upon,
each insurance policy obtained by them which cover or are applicable to the
Premises or the personal property, fixtures and equipment located therein, pursuant
to which the insurance companies waive subrogation or permit the insureds,
prior to any loss, to agree with a third party to waive any claim they might
have against said third party without invalidating the coverage under the
insurance policies.  Tenant’s waiver of
subrogation or permission for waiver of any claim shall extend to Landlord and
its agents and employees.  Landlord’s
waiver of subrogation or permission of waiver of any claim shall extend to
Tenant and its agents and employees. 
Tenant and Landlord hereby release each other and their respective
agents and employees in respect of any claim which they might otherwise have
against each other or their respective agents or employees for loss, damage or
other casualty occurring during the term of this Lease and covered under a fire
insurance policy with extended coverage endorsement in the form normally used
in respect of similar property in the Portland, Oregon, metropolitan area.

 

6

 

9.2                                 Tenant’s Insurance

 

Tenant,
at its expense, shall procure and maintain at all times during the term of this
Lease, commercial general liability insurance in respect of the Premises and
the conduct or operation of business therein, with Landlord and its managing
agent, if any, and any party to a Master Lease or any Mortgagee whose name and
address shall previously have been furnished to Tenant, as additional named
insureds, with limits of not less than $2,000,000 for bodily injury or death to
any one person and $3,000,000 for bodily injury or death to any number of
persons in any one occurrence, and $2,000,000 for property damage.  All such insurance shall insure the
performance by Tenant of the indemnity agreement as to liability for injury to,
illness of, or death of persons and damage to property set forth in this
Lease.  Tenant shall maintain at Tenant’s
expense, insurance with extended coverage endorsement covering Tenant’s
Property as defined in Section 11.2 of this Lease.

 

9.3                                 Delivery of Policies; Cancellation

 

Tenant
shall deliver to Landlord and any additional named insureds evidence of the
policies or certificates of insurance required by Section 9.2 in a form
reasonably satisfactory to Landlord issued by an insurance company authorized
to issue insurance in the State of Oregon, at least ten (10) days before
the Commencement Date.  Tenant shall
procure and pay for renewals of such insurance prior to the time for the
expiration of such policies, and Tenant shall deliver to Landlord and any
additional named insureds evidence of such renewal policies at least thirty
(30) days before the expiration of any existing policy.  All such policies shall contain a provision
whereby the policies cannot be canceled or modified unless Landlord and any
additional named insureds are given at least thirty (30) days prior written
notice of such cancellation or modification.

 

SECTION 10        ALTERATIONS

 

10.1                           General

 

Except
for any initial improvements which Landlord has expressly agreed to provide
pursuant to the attached Exhibit C, Tenant is leasing the Premises “AS IS”
on the date of this Lease.  Tenant shall
make no changes, additions, alterations or improvements to the Premises, or
attach any fixtures or equipment (the “Alterations”) without the prior written
consent of Landlord.  Before proceeding
with any Alterations, Tenant shall submit to Landlord for Landlord’s approval,
plans and specifications for the proposed work to be done.  Tenant shall not proceed with such work until
Tenant obtains Landlord’s approval. 
Tenant shall pay to Landlord upon demand the cost and expense incurred
by Landlord in reviewing or having reviewed, said plans and specifications, and
inspecting the Alterations to determine whether the same are being performed in
accordance with the approved plans and specifications and all Laws including,
without limitation, the reasonable fees of any architect or engineer employed
by Landlord for such purpose.

 

10.2                           Bonds

 

Before
proceeding with any approved Alterations, at Landlord’s request, Tenant shall
obtain and deliver to Landlord a performance bond and labor and materials
payment bond (issued by a corporate surety licensed to do business in the State
of Oregon), each in an amount equal to the estimated cost of the Alterations
and in form satisfactory to Landlord.

 

10.3                           Permits

 

Tenant,
at its expense, shall obtain all necessary governmental permits and
certificates for the commencement and prosecution of the Alterations and for
final approval thereof upon completion, and shall cause the Alterations to be
performed in compliance with all such permits and certificates, applicable Laws
and all applicable requirements of insurance.

 

7

 

10.4                           Manner

 

The
Alterations shall, at Landlord’s option, be performed by Landlord or by contractors
designated or first approved by Landlord, which approval shall not be
unreasonably withheld.  Tenant shall pay
any construction supervision fees charged by Landlord or its construction
supervision to supervise any such work. 
The Alterations shall be performed in such manner as not to interfere
with or delay, and as not to impose any additional expense upon, Landlord in
the construction, maintenance, repair or operation of the Project; and if any
such additional expense shall be incurred by Landlord as a result of Tenant’s
performance of the Alterations, Tenant shall pay such additional expense upon
demand.  In performing the Alterations,
Tenant shall fully and promptly comply with and observe the Rules and
Regulations of Landlord then in force with respect to the making of the
Alterations.

 

10.5                           Indemnification of Landlord

 

Tenant,
at its expense, shall procure the cancellation or discharge of all notices of
violation and/or liens arising from or otherwise connected with the
Alterations, or any other work, labor, services or materials done for or
supplied to Tenant, or any other person claiming through or under Tenant.  Tenant shall defend, indemnify and save
harmless Landlord and any Master Lessor and Mortgagee from and against any and
all mechanics and other liens and encumbrances filed in connection with the
Alterations, or any other work, labor, services or materials done for or
supplied to Tenant, or any person claiming through or under Tenant.  Tenant, at its expense, shall procure the
satisfaction or discharge of record of all such liens and encumbrances of
record within fifteen (15) days after the filing thereof.

 

SECTION 11        LANDLORD’S AND TENANT’S PROPERTY

 

11.1                           Landlord’s Property

 

All
fixtures, equipment, improvements, wires, cables, conduits and appurtenances
attached to or built into the Premises, whether or not by or at the expense of
Tenant, shall be and remain a part of the Premises, shall be deemed the
property of Landlord and shall not be removed by Tenant, except as provided in Section 11.2;
and except that, at Landlord’s written request, Tenant shall, at its sole
expense upon termination of the Lease, remove those items specified by
Landlord, which are deemed herein the property of Landlord, except for Building
Standard office improvements which are installed as part of Landlord’s Work
which Tenant shall not be required to remove.

 

11.2                           Tenant’s Property

 

All
unattached business and trade fixtures, machinery and equipment, communications
equipment and office equipment which are installed in the Premises by or for
the account of Tenant without expense to Landlord and which can be removed
without structural damage to the Building and all furniture, furnishings
(excluding window coverings) and other articles of movable personal property
owned by Tenant and located in the Premises (“Tenant’s Property”) shall be and
remain the property of Tenant, may be removed by Tenant at any time during the
term of this Lease, and shall be removed prior to the Expiration Date, or
earlier termination date, of this Lease; provided, that if any of Tenant’s
Property is removed, Tenant shall repair or pay the cost of repairing any
damage to the Premises or to the Project resulting from the installation and/or
removal thereof.

 

11.3                           Abandonment

 

Any
items of Tenant’s Property which shall remain in the Premises after the
Expiration Date of this Lease, or any earlier termination of this Lease, at the
option of Landlord, may be deemed to have been abandoned, and in such case such
items may be retained by Landlord, and Landlord may deal with Tenant’s Property
in such manner as Landlord shall determine, at Tenant’s expense.

 

8

 

SECTION 12        REPAIRS AND MAINTENANCE

 

12.1                           Landlord’s Obligations

 

Landlord
shall cause to be made all structural repairs to the roof, walls, subflooring,
and foundations of the Building as and when needed in or about the Premises and
the cost thereof shall be an item of Operating Expenses, except for those
repairs for which Tenant is responsible pursuant to any of the provisions of
this Lease.

 

12.2                           General

 

Tenant
shall, at its expense, throughout the term of this Lease, take good care of the
Premises, the fixtures and appurtenances therein and Tenant’s Property.  Tenant, at its expense, shall promptly
replace all scratched, damaged or broken doors and glass (except for exterior window glass) in and
about the Premises and shall be responsible for all repairs, maintenance and
replacement of wall and floor coverings in the Premises and for the repair and
maintenance of all sanitary and electrical fixtures and equipment therein reasonable wear and tear excepted.  Tenant shall be responsible for all repairs,
interior and exterior, structural and non-structural, ordinary and
extraordinary, in and to the Premises and the Building and the facilities
systems thereof, the need for which arises out of the performance or existence
of Tenant’s Alterations; the installation, use or operation of Tenant’s
Property in the Premises; the moving of Tenant’s Property in or out of the
Building; or the act, omission, misuse or neglect of Tenant or any of its
subtenants or its or their employees, agents, contractors or invitees.

 

12.3                           Manner

 

Tenant
shall promptly make, at Tenant’s expense, all repairs in or to the Premises for
which Tenant is responsible, and any such repairs required to be made by Tenant
to the mechanical, electrical, sanitary, heating, ventilating, air-conditioning
or other systems of the Building.  Such
work shall be performed only by contractor(s) designated or approved in writing
by Landlord.  Any other repairs in or to
the Building and the facilities and systems thereof for which Tenant is
responsible may be performed by Landlord at Tenant’s expense; but Landlord may,
at its option, before commencing any such work or at any time thereafter,
require Tenant to furnish to Landlord such security, bond or surety in a form
and amount as Landlord shall deem necessary to assure the payment for such work
by Tenant.

 

12.4                           Waiver

 

In each case, time being of the essence, Landlord
shall have no liability to Tenant, nor shall Tenant’s covenants and obligations
under this Lease be reduced or abated in any manner whatsoever, by reason of
any inconvenience, annoyance, interruption of or injury to Tenant’s business
arising from Landlord’s making any repairs or changes which Landlord is
required or permitted by this Lease or required by law to make in or to any
portion of the Project, or in or to the fixtures, equipment or appurtenances of
the Project.

 

SECTION 13        ELECTRIC ENERGY

 

13.1                           High Voltage Equipment

 

Tenant
shall not, without the prior written consent of Landlord, which consent will
not be unreasonably withheld, use any equipment, machine, apparatus or device
within the Premises which individually uses electric current in excess of 110
volts.

 

13.2                           Cost of Increasing Capacity

 

Should
Landlord consent to installation of equipment or a design load for the Premises
in excess of that existing upon the Commencement Date, the additional equipment
required to increase the capacity for Tenant’s excess equipment or design load
shall be provided by Landlord.  Tenant
shall, upon installation, pay to Landlord the cost to purchase, install,
service and maintain such additional equipment. 
The cost of the electric

 

9

 

energy used in excess of
the original design load for the Premises as determined by Landlord and its
engineers and consultants shall not be an Operating Expense of the Building but
shall be paid for by Tenant on a monthly basis with the Base Rent commencing on
the date the additional electric energy is made available to Tenant.

 

SECTION 14        CLIMATE CONTROL

 

Landlord
shall maintain and operate the heating, ventilating and air-conditioning
systems serving the Premises and shall furnish heat, ventilating and
air-conditioning in the Premises, the expense of which shall be included in
Operating Expenses, (except as otherwise provided in this Lease and except for
any special requirements of Tenant for its particular use of the Premises) for
occupancy of the Premises during Business Hours of Business Days.  As used herein, “Business Hours” shall mean
generally customary daytime business hours, but not before 7:00 a.m. or
after 6:00 p.m. on weekdays and not before 8:00 a.m. or after 1:00 p.m.
on Saturdays, and “Business Days” shall mean all days except Sundays and days
observed by the Federal or the State government as legal holidays.  If Tenant shall require heat or
air-conditioning service at any other time, Landlord shall furnish such service
upon not less than forty-eight (48) hours’ advance notice from Tenant, and
Tenant shall pay to Landlord upon demand Landlord’s then-established charges
therefor.

 

SECTION 15        OTHER SERVICES

 

15.1                           Elevators

 

Landlord
shall provide elevator service to the Premises during Business Hours of
Business Days and Landlord shall have at least one elevator subject to call at
all other times.  The expense of
providing elevator service shall be included in Operating Expenses.

 

15.2                           Cleaning

 

The
expenses for the cleaning of the Premises, including the exterior and interior
of the windows of the Building, shall be included in the Operating
Expenses.  Landlord shall not be required
to clean any portions of the Premises used for the preparation, serving or
consumption of food or beverages, training rooms, data processing or
reproduction operations or private lavatory or toilets.  Tenant shall pay Landlord on demand the costs
incurred by Landlord for extra cleaning work in the Premises required because
of:  (a) misuse or neglect on the
part of Tenant or the Tenant Related Parties; or (b) interior glass
partitions or surfaces; or (c) non-building standard materials or finishes
installed by Tenant or at Tenant’s request; or (d) the use of the Premises
by Tenant or the Tenant Related Parties other than during Business Hours on
Business Days.

 

15.3                           Removal of Excess Refuse

 

Tenant
shall pay to Landlord on demand for the costs of removal from the Premises and
the Building of any refuse and rubbish of Tenant in excess of that ordinarily
accumulated in business office occupancy or at times other than Landlord’s
standard cleaning times.

 

15.4                           Building Directory

 

Landlord,
at Tenant’s request and expense, shall provide listings on the Building
directory of the names of Tenant, and the names of any of Tenant’s officers and
employees, provided that the names so listed shall not use more than Tenant’s
proportionate share of the space on the Building directory, as reasonably
determined by Landlord.

 

15.5                           Signs

 

Tenant
shall not inscribe, post, place or in any manner display any sign, notice,
picture, placard or any advertising matter whatsoever, anywhere in, on or about
the Premises or the Project without first obtaining Landlord’s prior written
consent.  All such approved signs shall
be removed by Tenant upon the expiration or earlier termination of this Lease
and any damage caused by such removal shall be repaired at Tenant’s
expense.  Landlord

 

10

 

shall provide a sign for
Tenant’s entrance door and at the first floor directory at Landlord’s sole cost
and expense.  Tenant, at Tenant’s sole
cost and expense, shall have the right to place its name on an exterior
Building sign (not attached to the building, but a common monument sign with up
to six other Tenants in the Building, if (a) Landlord first approves the
sign, which approval shall not be unreasonably withheld or delayed, (b) the
sign complies with all applicable Laws, and (c) the sign complies with all
recorded covenants, conditions, and restrictions related to the Project
including without limitation the Tanasbourne Corporate Center Protective
Covenants and the Tanasbourne Corporate Center Design and Development
Guidelines (“CC&Rs”).  Tenant shall
maintain the sign in good condition and repair throughout the Term, pay all
costs associated with the sign, and remove the sign on or before the expiration
of the Lease or its earlier termination.  Tenant shall be allowed exterior monument
signage including MathStar’s name prominently displayed on an entry monument as
shown on Exhibit ”F”.  The final
design is subject to review by the City of Hillsboro, OR and to comply with all
recorded covenants, conditions, and restrictions related to the Project
including without limitation the Tanasbourne Corporate Center Protective
Covenants and the Tanasbourne Corporate Center Design and Development
Guidelines (“CC&Rs”).  Tenant shall
have the use of the top position on the monument.

 

SECTION 16        ACCESS

 

Landlord
shall have access to the Premises at all reasonable times to:  (a) inspect the Premises; or (b) exhibit
the Premises to prospective purchasers, lenders or tenants; or (c) determine
whether Tenant is complying with all its obligations hereunder; or (d) supply
janitor service and any other service to be provided by Landlord to Tenant
hereunder; or (e) post notices of non-responsibility; or (f) make
repairs required of Landlord hereunder or repairs to any adjoining space or
utility services or make repairs, alterations or improvements to any other
portion of the Building, provided, however, that all such work shall be done as
promptly as possible and so as to cause as little interference with the Tenant’s
use of the Premises as reasonably possible. 
Tenant hereby waives any claim against Landlord for damages for any
injury or inconvenience to or interference with Tenant’s business, any loss of
occupancy or quiet enjoyment of the Premises or any other loss occasioned by
such entry except to the extent caused by the gross negligence or intentional
misconduct of Landlord.

 

SECTION 17        INDEMNIFICATION

 

Tenant
shall indemnify, defend, and hold harmless Landlord and all parties to any
Master Lease and/or Mortgagees and their respective partners, directors,
officers, agents and employees (the “Landlord Related Parties”) from and
against any and all claims arising from or in connection with (a) the
conduct or management of the Premises or any business therein, or any condition
created (other than by Landlord or the Landlord Related Parties) in or about
the Premises; or (b) any act, omission or negligence of Tenant or any of
its subtenants, licensees, or partners, directors, officers, agents, employees,
invitees or contractors (collectively, the “Tenant Related Parties”); or (c) any
accident, injury or damage whatever (unless caused by Landlord’s or the
Landlord Related Parties’ negligence) occurring in, at or upon the Premises; or
(d) any breach or default by Tenant in the full and prompt payment and
performance of Tenant’s obligations under this Lease; together with all costs,
expenses and liabilities incurred or in connection with each such claim or
action or proceeding brought thereon, including, without limitation, all
attorneys’ fees and expenses; provided,
however that Tenant shall not be required to indemnify, defend or hold harmless
Landlord to the extent any such claim is caused by Landlord’s negligence or
willful conduct.  Further, Tenant’s
obligations under Section 17 shall not extend to the acts of Tenant’s
invitees outside the Premises. 
Landlord shall not be liable for any loss or damage to any person or
property, which may be caused by theft, or by any act or neglect of any tenant
or occupant of the Project.  Neither
Landlord nor any of the Landlord Related Parties shall be liable for any loss,
injury or damage to Tenant or to any other person, or to its or their property,
irrespective of the cause of such injury, damage or loss, except to the extent
caused by or resulting from the negligence of Landlord or the Landlord Related
Parties, in the operation or maintenance of the Premises or the Project.  Further, neither Landlord nor of the Landlord
Related Parties shall be liable for any such damage caused by other tenants or
persons in, upon or about the Project, even if negligent, for consequential damages,
including lost profits, of Tenant or any person claiming through or under
Tenant.

 

11

 

SECTION 18        DAMAGE OR DESTRUCTION

 

18.1                           General

 

In the
event the Premises shall be destroyed or rendered untenantable either wholly or
in part, by fire or other unavoidable casualty, Landlord may, at its option,
apply any insurance proceeds to the restoration of the Premises to their
previous condition.  This Lease shall
remain in full force and effect unless Landlord, within sixty (60) days
after the happening of any such casualty, shall notify Tenant of its election
not to restore said Premises, in which event this Lease shall terminate as of
the date of the casualty.  Any restoration
by Landlord shall not include replacement of furniture, equipment or other
items designated as Tenant’s Property. 
Tenant shall be responsible for restoration of Tenant’s Property.  If the Building shall be destroyed or damaged
by fire or other casualty insured against under Landlord’s fire and extended
coverage insurance policy to the extent that more than twenty percent (20%)
thereof, as determined by Landlord’s architect, is rendered untenantable, or in
the case the Building shall be materially destroyed or damaged by any other
casualty, Landlord may, at its election, terminate this Lease by notice to
Tenant within sixty (60) days after such destruction or damage.  Such notice shall be effective thirty (30)
days after receipt thereof by Tenant.

 

18.2                           Rent Abatement

 

If all
or part ads Premises shall be damaged or destroyed or rendered untenantable as
a result of fire or other casualty, the Base Rent and Additional Rent provided
herein shall be abated or reduced, as the case may be, in the proportion that
the untenantable area of the Premises bears to the total area of the Premises,
for the period from the date of the damage or destruction to the date the
damage to the Premises shall be substantially repaired, or the date on which
Tenant again uses the untenantable portion, whichever first occurs.

 

SECTION 19        EMINENT DOMAIN

 

19.1                           Total Condemnation

 

If the
whole of the Building or the Premises shall be taken by condemnation or in any
other manner for any public or quasi-public use or purpose, (including a sale
under threat of condemnation) this Lease shall terminate as of the date of
vesting of title on such taking (the “Date of Taking”), and the Base Rent and
Additional Rent shall be prorated and adjusted as of Date of Taking.

 

19.2                           Partial Condemnation

 

If a
part of the Building or the Land shall be so taken, this Lease shall be
unaffected by such taking, except that:

 

19.2.1                  Landlord may, at
its option, terminate this Lease by giving Tenant notice to that effect within
ninety (90) days after the Date of Taking; and

 

19.2.2                  If twenty
percent (20%) or more of the Premises shall be so taken and the remaining area
of the Premises shall not be reasonably sufficient for Tenant to continue
feasible operation of its business, Tenant may terminate this Lease by giving
Landlord notice to that effect within ninety (90) days after the Date of
Taking.

 

19.3                           Effect of Termination or Continuation

 

This
Lease shall terminate on the date that such notice from the Landlord or Tenant
to the other shall be given, and the Base Rent and Additional Rent shall be prorated
and adjusted as of such termination date. 
Upon a partial taking this Lease shall continue in force as to the
remaining part of the Premises, and the Base Rent and Additional Rent shall be
adjusted according to the rentable area remaining.

 

12

 

19.4                           Award

 

Landlord
shall be entitled to receive the entire award or payment in connection with any
taking without deduction therefrom for any estate vested in Tenant by this
Lease and Tenant shall receive no part of such award.  Tenant shall have no claim against Landlord
or the condemning authority for the unexpired portion of the Lease term.  Nothing contained in this Section 20.4
shall be deemed to prevent Tenant from making a separate claim proceeding for
the value of any of Tenant’s Property which is included in the taking.

 

SECTION 20        SURRENDER

 

On the
last day of the term of this Lease, or upon any earlier termination of this
Lease, or upon re-entry by Landlord upon the Premises, Tenant shall quit and
surrender the Premises to Landlord “broom-clean” and in good order, condition
and repair, except for ordinary wear and tear and in accordance with the
provisions of Section 11 of this Lease.

 

SECTION 21        EVENTS OF DEFAULT

 

21.1                           Events of Default

 

The
occurrence of any one or more of the following events of default shall
constitute a breach of this Lease by Tenant:

 

21.1.1                  Failure of
Tenant to make any Base Rent or Additional Rent payment, or any other payment
under this Lease when it is due within five (5) days
written notice from Landlord that payment is past due.

 

21.1.2                  Tenant makes any
transfer without Landlord’s prior written consent as required under Section 10.

 

21.1.3                  Tenant vacates
or abandons the Premises during the Term, unless such failure is excused under
other provisions of this Lease.

 

21.1.4                  Failure of
Tenant to deliver the instruments described in Section 7 or Section 26
as and when required in such Sections, as applicable, or failure of Tenant to
comply with any applicable Law when and as required by the applicable
governmental authority.

 

21.1.5                  Failure of
Tenant to comply with any other term or condition of this Lease or to fulfill
any other obligation of this Lease within 15 days after written notice by
Landlord specifying the nature of the failure with reasonable
particularity.  No notice and no
opportunity to cure shall be required if Landlord has previously given Tenant
notice of failure to comply with such term or condition or fulfill such other
obligation of this Lease more than twice
in any twelve-month period during the Term.

 

21.1.6                  Dissolution,
termination of existence, insolvency on a balance sheet basis or business
failure of Tenant; the commencement by Tenant of a voluntary case under the
federal bankruptcy laws or under any other federal or state law relating to
insolvency or debtor’s relief; the entry of a decree or order for relief
against Tenant in an involuntary case under the federal bankruptcy laws or
under any other applicable federal or state law relating to insolvency or debtor’s
relief; the appointment of or the consent by Tenant to the appointment of a
receiver, trustee or custodian of Tenant or of any of Tenant’s property; an
assignment for the benefit of creditors by Tenant; Tenant’s failure generally
to pay its debts as such debts become due; the making or suffering by Tenant of
a fraudulent transfer under applicable federal or state law; concealment by
Tenant of any of its property in fraud of creditors; or the imposition of a
lien through legal proceedings or distraint upon any of the property of Tenant
which is not discharged or bonded. 
During any period in which there is a Guarantor(s) of this Lease, each
reference to “Tenant” in this paragraph shall be deemed to refer to “Guarantor
or Tenant” separately.

 

13

 

SECTION 22        REMEDIES UPON DEFAULT

 

22.1                           Remedies

 

Upon
the occurrence of an event of default, Landlord may exercise any one or more of
the remedies set forth in this Section, or any other remedy available under
applicable law, at equity, or contained in this Lease.

 

22.1.1                  To the extent
permitted by law, Landlord may re-enter and retake possession of the Premises,
without notice, either through self-help, by summary proceedings, any other
applicable action or proceeding, or other means.  Landlord may use the Premises for Landlord’s
own purposes or relet it upon any reasonable terms without prejudice to any
other remedies that Landlord may have by reason of Tenant’s default.  None of these actions will be deemed an acceptance
of surrender by Tenant.  To the extent
permitted by law, and except as expressly provided in this Lease, Tenant waives
the service of any notice of intention to terminate this Lease or to retake the
Premises, and waives service of any demand for payment of rent or for
possession, and of any and every other notice or demand required or permitted
under applicable law.

 

22.1.2                  Landlord at its
option may relet the whole or any part of the Premises, from time to time
either in the name of Landlord or otherwise, to such tenants, for such terms
ending before, on, or after the expiration date of the Term, at such rentals
and upon such other conditions (including concessions and free rent periods) as
Landlord, in its sole discretion, may determine to be appropriate.  Landlord shall have no obligation to relet
the Premises or any part and shall not be liable for refusal or failure to
relet the Premises, or in the event of any such reletting, for refusal or
failure to collect any rent due upon such reletting.  No such refusal or failure shall operate to
relieve Tenant of any liability under this Lease or otherwise affect Tenant’s
liability.  If there is other comparable
unleased space in the Project, Landlord shall have no obligation to attempt to
relet the Premises prior to leasing other space in the Project.

 

22.1.3                  Whether or not
Landlord retakes possession of or relets the Premises, Landlord may recover all
damages caused by the default (including but not limited to unpaid rent,
attorneys’ fees reasonably incurred, and costs of reletting).  Landlord may sue periodically to recover
damages as they accrue during the remainder of the Term without barring a later
action for further damages.  Landlord may
at any time bring an action for accrued damages plus damages for the remaining
Term as allowed by law.

 

22.2                           Cumulative Remedies

 

The
remedies provided for in this Lease are cumulative and in addition to any other
remedy available to Landlord at law or in equity.

 

22.3                           Interest on Damages

 

In
addition to any other remedies Landlord may have under this Lease, if any
Rents, damages or other sums payable hereunder by Tenant to Landlord are not
paid within five (5) days after their due date the same shall bear
interest at a rate equal to the prime rate established by Wells Fargo Bank (or
its successor) on the due date plus two percent (2%), accruing from the due
date to the date of payment.

 

SECTION 23        CURING TENANT’S DEFAULTS

 

If
Tenant shall default in the performance of any of Tenant’s obligations under
this Lease, Landlord, without waiving such default, may (but shall not be
obligated to) perform the same for the account and expense of Tenant, without
notice in a case of emergency, and in any other case only if such default
continues after the expiration of five (5) days from the date
Landlord gives Tenant notice of the default. 
Tenant agrees to reimburse Landlord upon demand for any expenses which
Landlord may incur in complying with the terms of this Lease on behalf of
Tenant.

 

14

 

SECTION 24        BROKER

 

Tenant
covenants, warrants and represents that it has not engaged any broker, agent or
finder who would be entitled to any commission or fee in connection with the
negotiation and execution of this Lease except as set forth in the Summary of
Fundamental Provisions attached hereto. 
Tenant agrees to indemnify and hold harmless Landlord against and from
any claims for any brokerage commissions and all costs, expenses and
liabilities in connection therewith, including attorneys’ fees and expenses,
arising out of any charge or claim for a commission or fee by any broker, agent
or finder on the basis of any agreements made or alleged to have been made by
or on behalf of Tenant.  The provisions
of this Section 24 shall not apply to any brokers named on the Summary of
Fundamental Provisions.

 

SECTION 25        NOTICES5

 

Any
notice or other communication required or permitted to be given by either party
to the other pursuant to this Lease shall be in writing and delivered in person
to the Landlord or Tenant or sent postage prepaid by registered or certified
mail, addressed to the other party at the address set forth in the Summary of
Fundamental Provisions or such other address which may be designated by a party
in writing.  Notice shall be considered
given and effective on the date of delivery or, if mailed, on the date of such
mailing.

 

SECTION 26        ESTOPPEL CERTIFICATES

 

Each
party agrees that at any time requested by the other party, with not less than
ten business (10) days’ prior
notice, to execute and deliver to the other a statement certifying that this
Lease is unmodified and in full force and effect (or if there have been
modifications, that the Lease is in full force and effect as modified and
stating the modifications), certifying the dates to which the Base Rent and
Additional Rent have been paid, stating whether or not, to the best knowledge
of the signer, the other party is in default in performance of any of its
obligations under this Lease, and, if so, specifying each such default of which
the signer shall have knowledge, and stating whether or not, to the best
knowledge of the signer, any event has occurred which with the giving of notice
or passage of time, or both, would constitute such a default, and, if so,
specifying each such event; it being intended that any such statement delivered
pursuant hereto shall be deemed a representation and warranty to be relied upon
by the party requesting the certificate and by others with whom such party may
be dealing, regardless of independent investigation.  Tenant shall also include in any such
statement such other information concerning this Lease as Landlord may
reasonably request.  Within ten days
after the Commencement Date, Tenant shall execute and deliver to Landlord a
completed estoppel certificate in the form attached as Exhibit D.

 

SECTION 27        RELOCATION OF PREMISES

 

If the
Premises contain less than 3,000 rentable square feet, Landlord may elect by
notice to Tenant to substitute for the Premises other office space in the
Project (herein called “Substitute Premises”) designated by Landlord; provided
that the Substitute Premises contain at least the same useable square foot area
as the Premises and have a configuration substantially similar to that of the
Premises.  Tenant shall vacate and
surrender the Premises and shall occupy the Substitute Premises promptly (and,
in any event, not later than fifteen (15) days after Landlord has
substantially completed the work to be performed by Landlord in the Substitute
Premises pursuant to this Section).  Base
Rent for the remainder of the Lease term shall be adjusted such that the Base
Rent payable by Tenant per net leasable square foot of the Substitute Premises
shall be the same as that for the Premises. 
Additional Rent payable for the Substitute Premises shall be calculated
in accordance with Section 4. 
Landlord shall, at Landlord’s expense: 
furnish and install in the Substitute Premises fixtures, equipment,
improvements and appurtenances at least equal in kind and quality to those
contained in the Premises at the time such notice of substitution is given by
Landlord; and promptly reimburse Tenant for any other actual and reasonable
out-of-pocket costs incurred by Tenant in connection with Tenant’s move from
the Premises to the Substitute Premises provided such costs are approved by
Landlord in advance, which approval shall not be unreasonably withheld.

 

15

 

SECTION 28        PARKING

 

Tenant
shall have the nonexclusive right, in common with others, to use up to the
number of parking spaces listed in the Summary of Fundamental Provisions for
automobile parking.  Landlord reserves
the right to grant parking rights to other tenants, to make rules and
regulations relating to the use of parking areas, including reasonable
restrictions on parking by tenants and employees, to designate specific spaces
for the use by any tenant, and to change the parking layout from time to
time.  Tenant shall not park nor allow
the Tenant Related Parties collectively to park in excess of the number of
parking spaces listed in the Summary of Fundamental Provisions in the Project
at any point in time.

 

SECTION 29        MISCELLANEOUS

 

29.1                           Entire Agreement

 

All
understandings and agreements between the parties are merged in this Lease and
neither party is relying upon any statement or representation not embodied in
this Lease.  No agreement shall be
effective to change or modify this Lease, unless such agreement is in writing,
refers expressly to this Lease and is signed by the party against whom
enforcement is sought.

 

29.2                           Successors and Assigns

 

Except
as otherwise expressly provided in this Lease, the obligations of this Lease
bind and benefit the successors and assigns of the parties.

 

29.3                           Nonrecourse Lease

 

Tenant
shall look only to Landlord’s estate and property in the Land and the Building
(or the proceeds thereof) for the satisfaction of Tenant’s remedies for the
collection of a judgment (or other judicial process) requiring the payment of
money by Landlord in the event of any default by Landlord hereunder, and no
other property or assets of Landlord or its partners or principals, disclosed
or undisclosed, shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant’s remedies under or with respect to
this Lease.

 

29.4                           Force Majeure

 

The
obligations of Tenant hereunder shall in no way be affected, impaired or
excused, nor shall Landlord have any liability whatsoever to Tenant,
because:  Landlord is unable to fulfill,
or is delayed in fulfilling, any of its obligations under this Lease by reason
of strike, other labor trouble, governmental preemption of priorities or other
controls in connection with a national or other public emergency or shortages
of fuel, supplies or labor resulting therefrom, or any other cause, whether
similar or dissimilar, beyond Landlord’s reasonable control; or of any failure
or defect in the supply, quantity or character of electricity, water or other
utilities furnished to the Premises, by reason of any requirement, act or
omission of the public utility or others serving the Building with electric
energy, oil, gas or water, or for any other reason whether similar or
dissimilar, beyond Landlord’s reasonable control.

 

29.5                           Effect of Failure to Consent

 

If
Tenant shall request Landlord’s consent and Landlord shall fail or refuse to
give such consent, Tenant shall not be entitled to any damages for any
withholding by Landlord of its consent, it being intended that Tenant’s sole
remedy shall be an action for specific performance or injunction, and that such
remedy shall be available only in those cases where Landlord has expressly
agreed in writing not unreasonably to withhold its consent or where as a matter
of law Landlord may not unreasonably withhold its consent.

 

16

 

29.6                           Rules and Regulations

 

Tenant
and its employees and agents shall faithfully observe and comply with the rules and
regulations attached to this Lease as Exhibit E and such changes therein
as Landlord may from time to time hereafter make and give notice of to Tenant
(the “Rules and Regulations”). 
Landlord shall not be liable to Tenant for violation of the Rules and
Regulations by any other tenant or its employees, agents, invitees or
licensees.

 

29.7                           Tenant Holdover

 

If,
without objection by Landlord, Tenant fails to vacate the Premises after the
Expiration Date of this Lease, or any earlier termination hereof, Tenant shall
at the election of Landlord become a tenant from month to month upon the terms
of this Lease; provided, however that Base Rent shall be adjusted beginning on
the first day after the Expiration Date to be the equal to 110% of the Base Rent in effect at the
expiration of the Lease for the first two (2) months
and 200% of the Base Rent in effect at the expiration of the Lease thereafter.  Notwithstanding anything contained herein to
the contrary, Tenant shall be liable to Landlord for any and all damages caused
by such failure to vacate the Premises after the Expiration Date of this Lease
or any earlier termination hereof, including but not limited to incidental and
consequential damages to Landlord.

 

29.8                           Tenant Representations

 

If
Tenant is a corporation or other entity, each person executing this Lease on
behalf of Tenant hereby covenants and warrants that Tenant is duly formed and
validly existing under the laws of its state of formation; Tenant has full
right and authority to enter into this Lease and to perform all Tenant’s
obligations hereunder; and each person (and both of the persons if more than
one signs) signing this Lease on behalf of Tenant is duly and validly
authorized to do so.

 

29.9                           Non-Waiver

 

No
provision of this Lease shall be deemed to have been waived by Landlord unless
such waiver is in writing signed by Landlord. 
Landlord’s waiver of a breach of any term or condition of this Lease
shall not be deemed a waiver of any subsequent breach.  Acceptance of any Rents or other payments
shall not be deemed a waiver of such breach.

 

29.10                     Square Footage Calculations Approximate

 

The
parties acknowledge and agree that any calculations of square footage in the
Premises and in the Project are approximations. 
No recalculation of square footage shall affect the obligation of Tenant
under this Lease including, without limitation, the amount of Base Rent payable
by Tenant or the amount of Tenant’s Proportionate Share of Operating Expenses
or the amount of Tenant’s Proportionate Share of Taxes.

 

29.11                     Time

 

Time
is of the essence of this Lease.

 

29.12                     Late Fees

 

Tenant
acknowledges that late payment by Tenant to Landlord of any Rent due hereunder
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain.  Such costs may include, without limitation,
processing and accounting charges and late charges which may be imposed on
Landlord under the terms of any Mortgage. 
Accordingly, if any Rent payment is not received by Landlord within five
days after it is due, Tenant shall pay to Landlord a late charge equal to ten
percent (10%) of the overdue amount.  The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs incurred by Landlord by reason of the late payment by
Tenant.  Acceptance of any late charge by
Landlord shall in no event constitute a waiver of Tenant’s default with respect
to the overdue amount in question, nor prevent Landlord from exercising any of
the other rights and remedies granted hereunder.

 

17

 

29.13                     Attorneys’ Fees

 

In the
event a suit, action, arbitration, or other proceeding of any nature
whatsoever, including without limitation any proceeding under the U.S.
Bankruptcy Code, is instituted, or the services of an attorney are retained, to
interpret or enforce any provision of this Lease or with respect to any dispute
relating to this Lease, the prevailing or non defaulting party shall be
entitled to recover from the losing or defaulting party its attorneys’,
paralegals’, accountants’, and other experts’ fees and all other fees, costs,
and expenses actually incurred and reasonably necessary in connection
therewith.  In the event of suit, action,
arbitration, or other proceeding, the amount thereof shall be determined by the
judge or arbitrator, shall include fees and expenses incurred on any appeal or
review, and shall be in addition to all other amounts provided by law.

 

29.14                     Quiet Enjoyment

 

So
long as Tenant pays all Rents and complies with all of the terms and conditions
of this Lease, Tenant shall peaceably and quietly have, hold and enjoy the
Premises.  This covenant shall be binding
upon the subsequent successors in interest of Landlord’s interest in this
Lease.

 

29.15                     Severability

 

If any
portion of this Lease is held to be illegal, invalid or unenforceable under
present or future law effective during the term of this Lease, the remainder of
this Lease shall not be affected thereby.

 

29.16                     Incorporation of Exhibits

 

Exhibit A
(Floor Plans), Exhibit B (Legal Description of Project), Exhibit C
(Work Agreement), Exhibit D (Estoppel Certificate) and Exhibit E (Rules and
Regulations) are attached to this Lease and by this reference made a part
hereof.

 

IN
WITNESS WHEREOF, Landlord and Tenant have duly executed this lease as of the
day and year first above written.

 

	
   

  	
  LANDLORD:

  	
  MARK TANASBOURNE
  LLC,

  
	
   

  	
  an Oregon
  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Mark Properties
  Limited Partnership,

  
	
   

  	
   

  	
  an Oregon
  limited partnership, Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Mark Management,
  LLC,

  
	
   

  	
   

  	
   

  	
  an Oregon
  limited liability company, General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
  /s/ M. James
  Mark

  	
   

  
	
   

  	
   

  	
       M. James Mark,
  Co-Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  	
  MATHSTAR,
  a Minnesota corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Daniel
  Sweeney

  	
   

  
	
   

  	
  Its 

  	
  Chief Operating
  Officer

  	
   

  
									

 

18

 

Exhibits

 

A:  Outline of Premises

A-1:  Outline of Expansion Space

B:  Legal Description of Land

C:  Work Agreement

C-1:  Plan

C-2:  General Specifications for Tenant
Improvements

C-3:  Construction Budget Sheet

D:  Estoppel Certificate

E:  Rules and Regulations

F-1:  Monument View 1

F-2:  Monument View 2

Addendum

 

19

 

 

A

 

 

A-1

 

EXHIBIT B

 

LEGAL DESCRIPTION

 

Situated in the East
one-half of Section 25, Township 2 North, Range 1 West, of the Willamette
Meridian, in the City of Hillsboro, County of Washington and State of Oregon
and being a portion of Lots 15 and 16, Plat of TANASBOURNE CORPORATE CENTER,
recorded in Book 49, pages 47-49, Plat Records of said county and
being described as follows:

 

Beginning at the
Southwest corner of said Lot 15, said point also being on the North
right-of-way line of N.W. Tanasbourne Drive and running thence North 29o55’47”
East, on the West line of said Lot l5 at a distance of 569.73 feet to a point
on the South right-of-way line of the Sunset Highway (US Highway 26); thence
South 49o04’l7” East, on said South right-of way line a distance of 265.21 feet
to a point on a non-tangent 2035.98 foot radius curve right; thence on said
curve through a central angle of 06o18’39” (the long chord of which bears South
53o35’21” East, a distance of 224.13 feet) an arc distance of 224.25 feet to a
point on a non-tangent 829.93 foot radius curve right; thence on said curve
through a central angle of 02o15’27” (the long chord of which bears South 47o34’25”
East, a distance of 32.70 feet) an arc distance of 32.70 feet to a point;
thence leaving said South right-of-way line and running South 49o31’34” West, a
distance of 275.00 feet; thence South 89o16’17” West, a distance of 32.02 feet
to a point on a non-tangent 65.00 foot radius curve left, said point also being
on the North right-of-way line of N.W. Stucki Place; thence on the North and
West right-of-way lines of said N.W. Stucki Place the following courses:  on said curve through a central angle of
150o43’58” (the long chord of which bears South 78o52’34” West, a distance of
125.78 feet) an arc distance of 171.00 feet to the end thereof and the
beginning of a tangent 25.00 foot radius curve right; thence on said curve through
a central angle of 43o45’40”(the long chord of which bears South 25o23’26”
West, a distance of 18.63 feet) an arc distance of 19.09 feet to the end
thereof; thence South 47o16’17” West, a distance of 122.75 feet to the
beginning of a tangent 25.00 foot radius curve right; thence on said curve
through a central angle of 90o00’00”(the long chord of which bears North 87o43’43”
West, a distance of 35.36 feet) an arc distance of 39.27 feet to a point on the
North right-of-way line of N.W. Tanasbourne Drive; thence on said North
right-of-way line the following courses: 
North 42o43’43” West, a distance of 4.25 feet to the beginning of a
tangent 430.00 foot radius curve left; thence on said curve through a central
angle of 16o04’39” (the long chord of which bears North 50o46’03” West, a
distance of 120.26 feet) an arc distance of 120.66 feet to the end thereof;
thence North 58o48’22” West, a distance of 110.44 feet to the point of
beginning.

 

TOGETHER WITH:

 

A parcel of land located
in the northeast one-quarter of section 25, township 1 north, range 2
west, Willamette meridian, Washington County, Oregon, and being portions of
lots 13 and 14 of “Tanasbourne Corporate Center”, described as follows:

 

Beginning at the
southeast corner of said lot 14; thence along the east line of said lot north
29o 55’ 47” east 569.72 feet to a point on the south right-of-way line of
sunset highway (highway 26) as established in deed document no. 92017391;
thence leaving said lot line along said right-of-way line north 49o 04’ 17” west
55.11 feet to a point on the north line of said lot 14 and the south
right-of-way line of sunset highway (highway 26) as shown on the plat of “Tanasbourne
Corporate Center”, thence along said right-of-way line and the north lines of
lot 14 and lot 13 north 60o 04’ 13” west 501.90 feet; thence leaving said line
south 29o 55’ 47” west 605.84 feet to a point on the south line of said lot 13
and the north right-of-way line of N.W. Tanasbourne Drive; thence along said
lot line and right-of-way line on a non-tangent curve concave to the north, the
radius point of which bears north 23o 29’ 50” east, having a radius of 3,970.00
feet, through a central angle of 00o 59’ 50”, an arc length of 69.10 feet
(chord bears south 67o 00’ 05” east 69.10 feet) to a point of reverse
curvature; thence on a curve concave to the south, having a radius of 2,430.00
feet, through a central angle of 08o 41’ 38”, an arc length of 368.72 feet
(chord bears south 63o 09’ 11” east 368.37 feet) to the point of beginning.

 

B-1

 

EXCEPTING THEREFROM the
following described property:

 

A parcel of land located
in the northeast one-quarter of section 25, township 1 north, range 2
West, Willamette meridian, Washington County, Oregon and being a portion of lot
13, “Tanasbourne Corporate Center”, described as follows:

 

Beginning at the
southeast corner of said lot 13; thence along the east line north 29o 55’ 47”
east 586.25 feet to the northeast corner; thence along the north line north 60o
04’ 13” west 171.00 feet; thence leaving said line south 29o 55’ 47”
west 605.74 feet to a point on the south line of said lot 13 and a point on the
north right-of-way line on N.W. Tanasbourne Drive; thence along said lot line
and right-of-way line on a non-tangent curve concave to the north the radius
point of which bears north 23o 29’ 50” having a radius of 3,970.00 feet,
through a central angle of 00o 59’ 50”, an arc length of 69.10 feet (chord
bears south 67o 00’ 05” east 69.10 feet) to a point of reverse curvature;
thence on a curve concave to the south, having a radius of 2,430.00 feet,
through a central angel of 02o 25’ 44”, an arc length of 103.02 feet (chord
bears south 66o 17’ 08” east 103.01 feet) to the point of beginning.

 

B-2

 

EXHIBIT C

 

WORK AGREEMENT

 

SECTION 1.                            GENERAL

 

Landlord
agrees to provide certain improvements in the Premises in accordance with this
Work Agreement.  Landlord shall pay  all costs 
towards the cost of designing and construction the improvements in the Premises

as provided in the attached Exhibit C-1
Plans and further described by the Exhibit C-2 General Outline
Specification for Tenant Improvements and Exhibit C-3 Construction
Budget Sheet.    Throughout the process of design and
construction of the Tenant improvements, Dan
Sweeney (“Tenant’s Construction Representative”) shall be available
for onsite and telephone consultations and decisions as necessary.  Tenant’s Construction Representative’s
address is 5900 Green Oak Drive, Minneapolis
MN 55343 and his telephone number is 503-310-2254. 
Tenant’s Construction Representative shall have the authority to bind
Tenant as to all matters relating to the tenant improvements. 

 

SECTION 2.                            DESIGN
OF TENANT IMPROVEMENTS

 

 

2.2                                 

 

 

2.4                                 Tenant
shall be responsible for delays and additional costs in completion of the
design and construction of Tenant’s improvements caused by changes made by Tenant to the attached plans.  

 

SECTION 3.                            CONSTRUCTION
OF TENANT IMPROVEMENTS

 

3.1                                 

 

C-1

 

 

3.2                                 

 

3.3                                 If
Tenant desires any change to its improvements, Tenant shall submit a written
request for such change to Landlord, together with all plans and specifications
necessary to show and explain changes from the approved Working Plans.  Any such change shall be subject to Landlord’s
approval.  If Landlord’s contractor is
constructing Tenant’s improvements, Landlord or such contractor shall notify
Tenant in writing of the amount, if any, which will be charged or credited to
Tenant to reflect the cost of such change.

 

SECTION 4.                            COMPLETION
AND INSPECTION

 

4.1                                 Substantial Completion Date.  Landlord shall be deemed to have met its
obligation to substantially complete Landlord’s Work in conformity with the
working drawings for construction upon (a) the issuance by the City of
Hillsboro of a certificate of occupancy or a temporary certificate of occupancy
for the Building (or any comparable approval of Landlord’s work) which does not
contain any condition preventing occupancy and the use of the Building (herein
the “Certificate of Occupancy’), and (b) the issuance by the Architect of
a certificate stating that, except for any then remaining Punchlist Items,
construction of Landlord’s work has been substantially completed according to
the Final Plans and Specifications (herein the “Architect’s Certificate”).  The date upon which substantial completion
occurs is herein referred to as the “Substantial Completion Date.”

 

4.2                                 Inspection and Creation of Punchlist.  Approximately thirty (30) days prior to the
date which Landlord anticipates to be the Substantial Completion Date, Landlord
shall deliver to Tenant written notice of the expected Substantial Completion
Date.  Approximately five (5) days
prior to the anticipated Substantial Completion Date, representatives of
Landlord and Tenant shall make a joint inspection of the Building to create an
agreed upon list of items of Landlord’s Work yet to be substantially
completed.  The items included in such
list are herein referred to as the “Punchlist Items.” If the parties are unable
to agree whether any particular item is to be included as a Punchlist Item,
then the decision of the Architect as to such item shall be binding.

 

4.3                                 Performance of Punchlist Work; Final Completion.  Landlord shall complete Punchlist Items after
the Substantial Completion Date.  The
existence of Punchlist Items shall not delay delivery of possession nor the
Lease Commencement Date.  Tenant shall be
given possession of the Premises upon the Substantial Completion Date, but
Landlord shall continue to have complete access to the Premises for the purpose
of taking any and all steps related to then remaining Punchlist Items, and
Tenant shall cooperate to facilitate such steps.  The obligation of Landlord to perform
punchlist work shall be to perform the same to an industry standard level, not
to perfection; any disagreement as to whether an item of punchlist work has
been performed to industry standard shall be resolved by the Architect.  If Landlord fails to complete any particular
Punchlist Item within ninety (90) days after written notice from Tenant that the
same remains

 

C-2

 

uncompleted,
and if such failure is not due to a cause beyond the reasonable control of
Landlord, then Tenant may perform the necessary correction, in which event
Landlord shall reimburse Tenant for all actual out-of-pocket expenses incurred
in such correction upon deliver by Tenant of substantiation of amount of such
expenses.  Landlord shall be deemed to
have fully and finally completed its construction obligations hereunder upon
the date (herein the “Final Completion Date”) that Landlord shall have
completed its punchlist obligations.

 

C-3

 

 

C-1

 

EXHIBIT C-2

 

SUNSET CENTER AT TANASBOURNE

 

General Outline Specifications for Tenant Improvements

 

Project
Description:                                       Work
shall include demising walls to underside of structure; interior walls to
underside of suspended ceiling; general office finishes including floors, walls
doors frames and hardware, suspended acoustic ceilings; HVAC in offices; wet
fire sprinkler system; restroom and plumbing; electrical and lighting systems.

 

General
Requirements:

 

•                                          All
construction permits are included as part of the Improvement Cost.

•                                          Fire and
extended coverage insurance (Builder’s Risk) shall be provided by Landlord as
part of the Improvement Cost.

•                                          All work
shall be in accordance with the Uniform Building Code and local jurisdictions.

 

Cabinetry:

 

•                                          Cabinets
shall be particle-board construction with melamine faced interiors and plastic
laminate at all exposed surfaces. 
Countertops and splashes shall be plastic laminate.

•                                          Tenant
reception counter is 0 allowance.

 

Insulation:

 

•                                          3 1/2”
unfaced batt insulation in demising walls and ceilings.

 

Door, Frames &
Hardware:

 

•                                          Interior
doors shall be 3’0” x 8’ 10” x 1-3/4” flush, solid core (AWI grade
Premium) with maple quarter sawn veneer face (AWI Type II) and pre-finished
with clear lacquer.

•                                          Interior door
frames shall be knock-down metal drywall type (Timely) 18 ga; primed.  Color: 
Match wall color.

•                                          Interior door
hardware shall be 1-1/2” pr. 4-1/2” butt hinges; Schlage 625
latchsets and locksets in lever handles, Option 03 chrome finish; wall
stops.

 

Partitions:

 

•                                          Interior
walls shall be 3-1/2” metal studs @ 24” o.c. to underside of suspended
ceiling (9’ typical); one layer of 5/8” drywall on each side with smooth
finish; two coats; of latex enamel paint; 4” rubber base.

 

Suspended Ceiling:

 

•                                          Suspension
system shall be 2’ x 4’ exposed T-bar grid supported from roof structure.  Ceiling tile shall be non-directional,
fissured mineral fiberboard with standard white finish at all offices
(Armstrong #733 “Second Look”) at 9’0” above finished floor.  Suspension system is included.

 

Floor Coverings:

 

Office Carpet:

 

	
  Style:

  	
   

  	
  Shaw Design
  Services V (5A032) or equivalent

  
	
  Gauge:

  	
   

  	
  1/10

  
	
  Stitches Per
  Inch:

  	
   

  	
  9.5

  

 

C-2-1

 

	
  Production Yarn
  Weight:

  	
  30 oz./SY

  
	
  Finished Pile
  Thickness:

  	
  201 inches

  
	
  Average Density:

  	
  5,373 oz./CY

  
	
  Warranty:

  	
  10 year
  Commercial Ltd.

  

 

Sheet Vinyl:

 

	
  Type:

  	
  Classic Corlon
  Sheet Vinyl Flooring

  	
   

  
	
  Width:

  	
  6 Feet

  	
   

  
	
  Style:

  	
  Seagate

  	
   

  
	
  Reference
  Specification:

  	
  Grade 1, Class A
  backing

  	
   

  
	
  Gauge:

  	
  2.16 mm
  overall/1.27 mm wear/layer

  	
   

  
	
  Load Limit:

  	
  500 psi

  	
   

  
	
  Manufacturer:

  	
  Armstrong
  “Seagate”

  	
   

  

 

•                                          Sheet vinyl
(Armstrong “Seagate’) in Janitors closet.

•                                          Vinyl cove
base; 4” in carpeted areas; 4” in sheet vinyl and VCT areas.

 

Painting Finishing:

 

•                                          Interior
drywall paint shall be a two coat, one color application; wood doors to be
pre-finished maple quarter sawn veneer with clear lacquer.  Miscellaneous metals receive an enamel
finish.

 

Window Coverings:

 

•                                          Hunter
Douglas color 724 Crème de la crème (pearl) Blinds on any interior relites are
not included.

 

Plumbing:

 

•                                          Complete and
code approved domestic water and sanitary sewer systems shall be provided.

•                                          Plumbing
fixtures shall be Kohler (or equal); including toilet, lavs (in countertops);
faucets.  Water heater; capacity as
required.  Drinking fountain as required
by code.  All fixtures to meet all
applicable ADA requirements.

 

Fire Protection:

 

•                                          Office
areas shall have semi-recessed heads with chrome escutcheons complete per code.

 

Electrical/Exterior,
Exit and Emergency Lighting:

 

•                                          Exit and
emergency lighting shall be provided to meet UBC and ADA requirements.

 

Electrical/Interior
Lighting:

 

•                                          Office areas
shall have 2’ x 4’ florescent “lay-in” Lithonia 18 cell parabolic
fixtures.  Cost of these fixtures is
included in the overall shell cost.

•                                          Light control
switching minimum requirements shall be: 
offices – one switch on wall near door; conference rooms - two switches
on wall near door; restrooms and lunch rooms – one switch on wall near door;
corridors – two switches.

 

Electrical/Power:

 

•                                          Receptacles
shall be provided as required by code in all areas.

•                                          Service panel
will be a 100 amp, 42 circuit for the floor.

 

C-2-2

 

Electrical/Telephone &
Data:

 

•                                          Telephone
and/or data outlets shall be wall mounted mud rings with pull cords only to
above the ceiling line.  Telephone
equipment, signaling and intercom are not included.

•                                          Data and/or
computer wiring by Tenant.

 

C-2-3

 

 

C-3

 

EXHIBIT D

 

ESTOPPEL CERTIFICATE

 

	
  Landlord:

  	
   

  	
  Mark Tanasbourne
  LLC, an Oregon limited liability company

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Premises:

  	
   

  	
                                                                ,
  Sunset Center at Tanasbourne

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Area:

  	
   

  	
                                               
  Rentable Sq. Ft.

  	
  Lease Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender:

  	
   

  	
   

  	
   

  	
   

  
						

 

The
undersigned Landlord and Tenant of the above-referenced Lease (the “Lease”)
hereby ratify the Lease and certify to Lender as mortgagee of the real property
of which the premises demised under the Lease (the “Premises”) is a part, as
follows:

 

1.                                       That
the term of the Lease commenced on                                   ,
19      , Tenant is in full and complete
possession of the Premises demised under the Lease, and Tenant has commenced
full occupancy and use of the Premises, such possession having been delivered
by Landlord and having been accepted by the Tenant.

 

2.                                       That
the Lease presently calls for monthly Base Rent installments of $                             
and that Tenant is paying monthly installments of Base Rent of $                          
which commenced (or will commence) to accrue on the                       
day of                           ,
19       .

 

3.                                       That
no advance rental or other payment has been made in connection with the Lease,
except rental for the current month, and that: 
(initial one)

 

( )                                     there
is no “free rent” or other concession under the remaining term of the Lease and
the rent has been paid to and including                               ,
19      .

 

( )                                     there
is “free rent” which extends through                               ,
19      , that the first month following the free
rent period has been paid in advance, and no further free rent or prepaid rent
exists throughout the remaining term of the Lease.

 

4.                                       That
a security deposit in the amount of $                              
is being held by Landlord, which amount is not subject to any set-off or
reduction or to any increase for interest or other credit due to Tenant.

 

5.                                       That
all obligations and conditions under said Lease to be performed to date by
Landlord or Tenant have been satisfied, free of defenses and set-offs including
construction work in the Premises.

 

6.                                       That
the Lease is a valid lease and in full force and effect and represents the
entire agreement between the parties; that there is no existing default on the
part of Landlord or Tenant in any of the terms and conditions thereof and no
event has occurred which, with the passing of time or giving of notice or both,
would constitute an event of default; and that said Lease has:  (initial one)

 

( )                                     not
been amended, modified, supplemented, extended, renewed or assigned.

 

D-1

 

( )                                     been
amended, modified, supplemented, extended, renewed or assigned as follows by
the following described agreements:

 

 

7.                                       That
the Lease provides for a primary term of                           
months; the term of the Lease expires on the               
day of                           ,
19       ; and that (initial one)

 

( )                                     neither
the Lease nor any of the documents listed above in Paragraph 6 (if any),
contain an option for any additional term or terms.

 

( )                                     the
Lease and/or the documents listed above in Paragraph 6 contain an option for                               
additional term(s) of                               
year(s) and                               
month(s) (each) at a rent to be determined as follows:

	
   

  
	
   

  
	
                                                                                                                                               .

  

 

8.                                       That
Landlord has not rebated, reduced or waived any amounts due from Tenant under
the Lease, either orally or in writing, nor has a Landlord provided financing
for, made loans or advances to, or invested in the business of Tenant.

 

9.                                       That,
to the best of Tenant’s knowledge, there is no apparent or likely contamination
of the Premises by Hazardous Materials, and Tenant does not use, nor has Tenant
disposed of, Hazardous Materials in violation of Environmental Laws on the real
property or the Premises.

 

10.                                 That
there are no actions, voluntary or involuntary, pending against Tenant under
the bankruptcy laws of the United States or any state thereof.

 

11.                                 That
this certification is made knowing that Lender is relying upon the
representations herein made.

 

LANDLORD:                                                                         MARK
TANASBOURNE LLC,

an
Oregon limited liability company

 

By:                              Mark
Properties Limited Partnership,

an
Oregon limited partnership, Managing Member

 

By:                              Mark
Management, LLC,

an
Oregon limited liability company, General Partner

 

	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
                       M.
  James Mark, Co-Manager

  
	
   

  	
   

  

 

	
  TENANT:

  	
  MATHSTAR,
  a Minnesota corporation

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  

 

D-2

 

EXHIBIT E

 

RULES AND REGULATIONS

 

1.                                       The
entrances, halls, corridors, stairways, exits, and elevators shall not be
obstructed by any of the tenants or used for any purpose other than for ingress
and egress from their respective premises. 
The entrances, halls, corridors, stairways, exits, and elevators are not
intended for use by the general public but for the tenant and its employees,
licensees and invitees.  Landlord
reserves the right to control and operate the public portions of the Project
and the public facilities as well as facilities furnished for the common use of
the tenants, in such manner as it in its reasonable judgment deems best for the
benefit of the tenants generally.  No
tenant shall invite to the tenant’s premises, or permit the visit of, persons
in such numbers or under such conditions as to interfere with the use and
enjoyment of any of the plazas, entrances, corridors, elevators and other
facilities of the Project by any other tenants. 
Fire exits and stairways are for emergency use only, and they shall not
be used for any other purpose.

 

2.                                       Landlord
may refuse admission to the Building outside of Business Hours on Business Days
(as such terms are defined in the Lease) to any person not producing
identification satisfactory to Landlord. 
If Landlord issues identification passes, Tenant shall be responsible
for all persons for whom it issues any such pass and shall be liable to
Landlord for all acts or omissions of such persons.

 

3.                                       No
awnings or other projections shall be attached to the outside walls of the
Building.  No curtains, blinds, shades or
screens, if any, which are different from the standards adopted by Landlord for
the Building shall be attached to or hang in any exterior window or door of the
premises of any tenant without the prior written consent of Landlord.

 

4.                                       No
sign, placard, picture, name lettering, advertisement, notice or object visible
from the exterior of any tenant’s premises shall be displayed in or on the
exterior windows or doors, or on the outside of any tenant’s premises, or at
any point inside any tenant’s premises where the same might be visible outside
of such premises, without the prior written consent of Landlord.  Landlord shall adopt and furnish to tenants
general guidelines relating to signs inside the Building.  Tenant shall conform to such guidelines.  All approved signs or lettering shall be
prepared, printed, affixed, or inscribed at the expense of the tenant and shall
be of a size, color and style acceptable to Landlord.

 

5.                                       The
windows that reflect or admit light and air into the halls, passageways or
other public places in the Building shall not be covered or obstructed by any
tenant, nor shall any bottles, parcels or other articles be placed on the
window sills.

 

6.                                       No
showcases or other articles shall be put in front of or affixed to any part of
the exterior of the Building, nor placed in the halls, corridors or vestibules.

 

7.                                       No
bicycles, vehicles, animals, fish or birds of any kind shall be brought into or
kept in or about the premises of any tenant or the Building.

 

8.                                       No
noise, including, but not limited to, music or the playing of musical
instruments, recordings, radio or television, which, in the judgment of
Landlord, might disturb other tenants in the Project, shall be made or
permitted by any tenant.

 

9.                                       No
tenant, nor any tenant’s contractors, employees, agents, visitors, invitees or
licensees, shall at any time bring into or keep upon the premises or the
Building any inflammable, combustible, explosive, environmentally hazardous or
otherwise dangerous fluid, chemical or substance.

 

10.                                 All
movement of freight, furniture, packages, boxes, crates or any other object or
matter of any description must take place during such hours and in such
elevators, and in such manner as Landlord or its

 

E-1

 

agent may determine from
time to time.  Any labor and engineering
costs incurred by Landlord in connection with any moving herein specified,
shall be paid by Tenant to Landlord, on demand.

 

11.                                 No
tenant shall occupy or permit any portion of its premises to be occupied as an
office for a public stenographer, public word processor, printer or
photocopier.  No tenant shall use its
premises, or permit any part thereof to be used, for manufacturing or the sale
at retail or auction of merchandise, goods or property of any kind.

 

12.                                 Landlord
shall have the right to prescribe the weight and position of safes and other
objects of excessive weight, and no safe or other object whose weight exceeds
the lawful load for the area upon which it would stand shall be brought into or
kept upon any tenant’s premises.  If, in
the judgment of Landlord, it is necessary to distribute the concentrated weight
of any heavy object, the work involved in such distribution shall be done at
the expense of the tenant and in such manner as Landlord shall determine.

 

13.                                 Landlord,
its contractors, and their respective employees, shall have the right to use,
without charge therefor, all light, power and water in the premises of any
tenant while cleaning or making repairs or alterations in the premises of such
tenant.

 

14.                                 No
premises of any tenant shall be used for lodging or sleeping or for any immoral
or illegal purpose.

 

15.                                 The
requirements of tenants for any services by Landlord will be attended to only
upon prior application to the Landlord. 
Employees of Landlord shall not perform any work or do anything outside
of their regular duties, unless under special instructions from Landlord.

 

16.                                 Canvassing,
soliciting and peddling in the Project are prohibited and each tenant shall
cooperate to prevent the same.

 

17.                                 Each
tenant shall store its trash and garbage within its premises.  No material shall be placed in the trash
boxes or receptacles if such material is of such nature that it may not be
disposed of in the ordinary and customary manner of removing and disposing of
office building trash and garbage in the City of Hillsboro without being in
violation of any law or ordinance governing such disposal.  All garbage and refuse disposal shall be made
only through entryways and elevators provided for such purposes and at such
times as Landlord shall designate.  No
tenant shall cause or permit any unusual or objectionable odors to emanate from
its premises which would annoy other tenants or create a public or private
nuisance.

 

18.                                 No
coin vending machine, video game, coin or token operated amusement device or
similar machine shall be used or installed in any tenant’s premises without
Landlord’s prior written consent

 

19.                                 No
bankruptcy, going out of business, liquidation or other form of distress sale
shall be held on any of tenant’s premises. 
No advertisement shall be done by loudspeaker, barkers, flashing lights
or displays or other methods not consistent with the character of a
high-quality office building.

 

20.                                 Nothing
shall be done or permitted in any tenant’s premises, and nothing shall be
brought into or kept in any tenant’s premises, which would impair or interfere
with the economic heating, cleaning or other servicing of the Building or the
premises, or the use or enjoyment by any other tenant of any other premises,
nor shall there be installed by any tenant any ventilating, air conditioning,
electrical or other equipment of any kind which, in the reasonable judgment of
Landlord, might cause any such impairment or interference.

 

21.                                 No
acids, vapors or other similar caustic materials shall be discharged or
permitted to be discharged into the waste lines, vents or flues of the Building
other than the vent for hard soldering as
provided in the initial improvements.  The water and wash closets and other plumbing
fixtures in or serving any tenant’s premises shall not be used for any purpose
other than the purposes for which they were designed or constructed, and no
sweepings, rubbish, rags, acids or other foreign substances shall be deposited therein.  All damages resulting

 

E-2

 

from any misuse of the
fixtures shall be borne by the tenant who, or whose servants, employees,
agents, invitees, visitors or licensees shall have caused the same.

 

22.                                 All
entrance doors in each tenant’s premises shall be left locked and all windows
shall be left closed by the tenant when the tenant’s premises are not in
use.  Entrance doors to the tenant’s
premises shall not be left open at any time. 
Each tenant, before closing and leaving its premises at any time, shall
turn out all lights.

 

23.                                 Hand
trucks not equipped with rubber tires and side guards shall not be used within
the Building.

 

24.                                 Window
coverings for all windows in each tenant’s premises above the ground floor
shall be lowered as reasonably required because of the position of the sun,
during the operation of the Building air-conditioning system to cool or
ventilate the tenant’s premises.

 

25.                                 Landlord
reserves the right to rescind, modify, alter or waive any rule or
regulation at any time prescribed for the Project when, in its reasonable
judgment, it deems it necessary, desirable or proper for its best interest and
for the best interests of the tenants generally, and no alteration or waiver of
any rule or regulation in favor of one tenant shall operate as an
alteration or waiver in favor of any other tenant.  Landlord shall not be responsible to any
tenant for the non-observance or violation by any other tenant of any of the rules and
regulations at any time prescribed for the Project.

 

26.                                 Landlord
reserves the right to add to, modify or otherwise change these Rules and
Regulations.  Such changes shall become
effective when written notice thereof is provided to tenants of the Project.

 

E-3

 

 

F-1

 

 

F-2

 

ADDENDUM TO THE LEASE
DATED JUNE 1, 2005 BY AND BETWEEN

SUNSET CENTER, LLC, AN OREGON LIMITED LIABILITY COMPANY, LANDLORD

AND MATHSTAR, A MINNESOTA CORPORATION, TENANT

 

29.17                 OPTION TO
EXPAND.

 

So long as Tenant is not
then in default of the Lease beyond any applicable cure periods, Tenant shall
have a one-time option to expand the Premises (the “Second Floor Expansion
Option”) by adding approximately 2,072 rentable square feet located on the
second floor of the Building as outlined on the attached Exhibit A-1
((the “Second Floor Expansion Option”), in accordance with the terms of this Section 29.17.  If Tenant wishes to exercise the Second Floor
Expansion Option, Tenant shall do so by giving Landlord written notice of its
exercise of the Second Floor Expansion Option (the “Second Floor Expansion
Notice”) no later than on June 30, 2006. 
If Tenant does not give Landlord a written notice exercising Tenant’s
Second Floor Expansion Option, then the Option shall terminate and shall be of
no further force or effect.

 

If Tenant gives Landlord
written notice of is exercise of the Second Floor Expansion Option on or before
June 30, 2006, then, effective on the earlier of (a) the date on
which tenant improvements in the Second Floor Expansion Space are substantially
completed or (b) September 1, 2006 (the “Second Floor Expansion Space
Commencement Date”), the Second Floor Expansion Space shall be added to the
Premises.  The annual Base Rent for the
Second Floor Expansion Space (the “Second Floor Expansion Space Base Rent”)
shall equal the rate per square foot at the time of the Second Floor Expansion
Space Commencement Date, as set forth in the Summary of Fundamental Provisions,
Item #5 of this Lease, multiplied by 2,072, and the Second Floor Expansion
Space Base Rent shall increase as set forth in the Summary of Fundamental
Provisions, Item #5 of the Lease.  The
tenant improvement allowance to be provided by Landlord for the Second Floor
Expansion Space shall equal $23.86 per rentable square foot.

 

Effective on the Second
Floor Expansion Space Commencement Date, the following shall occur:  (a) the Second Floor Expansion Space
shall be added to the Premises for the remainder of the Term of the Lease, (b) Base
Rent for the Premises shall be increased by an amount equal to the Second Floor
Base Rent determined as provided in this Section 29.17, and (c) Tenant’s
Proportionate Share of Operating Expenses shall increase proportionately based
on the increase the square footage in the Premises.  Subject to the tenant improvement allowance
to be provided by Landlord and Landlord’s obligations regarding common areas
described above in this Section 29.17, Tenant shall lease the Second Floor
Expansion Space in its “as-is” condition as of the Second Floor Expansion Space
Commencement Date.  The terms of the work
agreement attached as Exhibit C to this Amendment shall apply to the
improvements to the Second Floor Expansion Space and the use of such tenant
improvement allowance as if the Second Floor Expansion Space were the original
Premises leased under this Lease.

 

29.18                 RIGHT OF FIRST
REFUSAL.

 

During the first eighteen
(18) months of the Lease, in the event a third party is interested in space on
the second floor, Landlord agrees to give Tenant prior written notice.  Tenant shall have seventy-two (72) hours to
respond to the notice and to negotiate a lease satisfactory to Landlord, or
Landlord may lease the area to the third party and Tenant shall have no further
rights to this space.  The same terms and
conditions shall apply to said expansion space including, but not limited to,
the base rental rate and an improvement allowance equal to $.46 per foot for
each month remaining in the lease term effective with the addition of the
additional space to the leased Premises. 
This Right of First Refusal shall expire on December 31, 2006.

 

29.19                 OPTION TO TERMINATION.

 

Provided Tenant is not in
default, Tenant shall have the option to terminate the Lease effective December 31,
2008 by giving Landlord one hundred eighty (180) days prior written
notice.  Upon said termination, Tenant
shall be required to pay Landlord the unamortized balance of the cost of tenant
improvements and a leasing commissions.

 

The balance shall be
computed on the basis of an even payment amortization over the lease term at 6%
annual interest and shall be due and payable on the date that the termination
notice is given to Landlord.

 

F-3Exhibit 10.13

 

EXECUTIVE SUITE RENTAL AGREEMENT

 

JET CENTER PROPERTY SERVICES, LLC

1250 Aviation Avenue

San Jose, CA 95110

 

1.             PARTIES. 
This Executive Suite Rental Agreement (“Rental Agreement”), by and
between JET CENTER PROPERTY SERVICES, LLC,
a limited liability corporation (“Landlord”) and MathStar, Inc., (“Tenant”).  This Rental Agreement is dated for reference
purposes only, June 16, 2005.

 

2.             PREMISES. 
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord
those certain office space consisting of approximately 172 usable square feet
and approximately 193 rentable square feet and designated as Executive Suite # 200R (the “Premises”)
and shown on attached Exhibit ”A”. 
The Premises is situated on the second floor of Building B (the “Building”),
of the San Jose Jet Center located at 1250 Aviation Avenue, San Jose, CA 95110
(the “Jet Center”).  In addition to the
services and facilities listed on attached Exhibit ”B”, Tenant will have
the non-exclusive right in common with Landlord, other tenants of the Jet
Center and invitees of both, to use the Building lobbies, common hallways,
stairways, restrooms, elevator, parking areas, and other commonly understood to
be public or common areas, subject to Landlord’s Rules and Regulations.

 

3.             TERM. 
The term of this Agreement shall be for one year, commencing on July 16, 2005 (“Commencement Date”)
and terminating on June 30, 2006. 
Thereafter, the lease will continue on a month-to-month basis unless and
until terminated as provided herein. 
Once the month-to-month lease term is initiated, either party may
terminate this Agreement at any time by giving written notice of termination as
follows (the “Term”):

 

(a)           Except as
provided in paragraph 3 above, upon thirty (30) days prior written notice delivered
to the other party, either party may terminate this Agreement with or without
cause (the “Termination Notice”).  The
termination of this Agreement following service of the Termination Notice shall
be effective as of 5:00 p.m., on the thirtieth (30th) day following the
date of delivery to the other party (the “Expiration Date”) unless sooner
terminated pursuant to any other provision herein.

 

4.             POSSESSION. 
If Landlord, for any reason whatsoever, cannot deliver possession of the
Premises at the commencement of the Term hereof, this Rental Agreement shall
not be void or void able, not shall Landlord be liable to Tenant for any loss
or damage resulting there from, excepting that Tenant shall not be called upon
to pay rent for the period between the commencement of said Term and the time
when Landlord delivers possession of the Premises.

 

5.             RENT. 
Tenant shall pay to Landlord monthly rent for the Premises, without
notice, demand, deduction or set-off, in the amount of five hundred and thirty-one dollars and no
cents ($531.00) on or before the
first day of each and every calendar month of the Term.  Tenant shall pay to Landlord upon occupancy
of the premises the first and last installment of monthly rent in 

 

 

the total amount of one thousand and
sixty-two dollars, ($1,062.00).  If the Commencement Date is not the first day
of a month or the termination date is not the last day of a month, the rent
payable hereunder shall be prorated on a daily basis at the then current rate
for the fractional month during which the Term commences and/or terminates and
the rent payable for such partial month or months shall be payable on the first
day of the first full calendar month of the Term or the first day of the last
full calendar month immediately preceding the last partial calendar month of
the Term, as the case may be.  Said rent
and other payments due hereunder shall be paid to Landlord in lawful money of
the United States of America at the administrative offices of the San Jose Jet
Center, or to such other person or at such other place as Landlord may from
time to time designate in writing.  All
monies (other than monthly rent) required to be paid by Tenant under this
Rental Agreement shall be deemed “Additional Rent” and rights and remedies
arising in connection with the collection of monthly rent shall apply to
Additional Rent.  The term “rent(s)”
whenever used in this Rental Agreement refers to monthly rent and Additional
Rent.

 

6.             SECURITY DEPOSIT.  In addition to first and last’s month rent,
Tenant has deposited with Landlord the sum of five
hundred and thirty-one dollars and no cents ($531.00) to secure the faithful
performance by Tenant of all of the terms, covenants and conditions of this
Rental Agreement by Tenant to be kept and performed during the Term hereof.  If Tenant fails to pay rent or any other sums
to be paid by Tenant to Landlord, or if Tenant shall default in or breach any
of the other terms, covenants or conditions of this Rental Agreement, Landlord
may, at its option, apply all or any portion of said deposit to any rent or
other sum due and unpaid by Tenant to Landlord, to cure any default or breach
of Tenant under the terms of this Rental Agreement, to reimburse Landlord for
any costs incurred in connection with any such default or breach, or compensate
Landlord for any damage, liability, or expenses, suffered by Landlord as a
result of such default or breach including, but not limited to, any attorney’s
fees and other costs incurred by Landlord in connection with such default or
breach.  If Landlord so applies any of
the said deposit, then Tenant shall, upon written demand of Landlord,
immediately remit to Landlord a sufficient amount in cash to restore said
security deposit to its full amount, and Tenant’s failure to do so shall
constitute a material breach of this Rental Agreement.  Should Tenant comply with all of the terms,
covenants and conditions of this Lease and promptly pay all rent provided for
as it falls due and all other sums payable by Tenant to Landlord hereunder, any
unused portion of said security deposit shall be returned to Tenant following
the expiration of the Term of this Rental Agreement.

 

7.             USE. 
The Premises shall be used and occupied by Tenant for general office
purposes and for no other purpose without the prior written consent of
Landlord.  Tenant shall not do or permit
to be done in or about the Premises that may cause any increase in insurance
premiums or cause the cancellation of any insurance policy.  Tenant shall not use the Premises for any
purposes that will in any way violate or conflict with any law, statute,
ordinance or governmental rule or regulation.  Tenant shall not in any way obstruct or
interfere with the rights of or quiet enjoyment by other tenants or occupants
of the Building or any appurtenant areas.  Tenant shall not use, store, dispose of,
transport, or handle any hazardous materials, or toxic substances in, on or
about the Premises, the Building or the San Jose Jet Center.

 

8.             ALTERATIONS.  Tenant shall not make or cause to be made any
alterations, modifications, or changes to the Premises or construct any
improvements to or within the Premises, including without limitation,
carpeting, shelving, painting, fixed partitions, telephone, 

 

2

 

data, modem, or facsimile lines (collectively, “Alterations”), without
Landlord’s prior written approval, and then not until Landlord shall have fist
approved, in writing, the plans and specifications therefore, which approval
shall not be unreasonably withheld.  All
Alterations shall be installed by licensed contractors approved in advance by
Landlord in compliance with all laws, rules, regulations, permits and approvals
pertaining to such Alteration.

 

9.             LANDLORD’S OBLIGATION.  In addition to the services and facilities
listed on Exhibit ”B”, Landlord agrees to furnish to the Premises during
normal working hours heating and air conditioning as well as provide clean
restrooms for Tenant’s use.  All such
services and facilities are provided without warranty of any sort whatsoever
and Landlord shall not be liable for failure to supply any services or
facilities for any cause beyond Landlord’s control, or which in Landlord’s
reasonable judgment require suspension. 
For purposes of this Rental Agreement, “normal working hours” shall mean
Monday through Friday 8:00 AM to 5:00 PM.

 

10.           INSURANCE. 
Tenant assumes the risk, shall be responsible for, and hereby relieves
Landlord from all liability for damage to any of Tenant’s fixtures, goods,
inventory, furniture, and equipment, or any injury, death, damage, or loss to
any person or property which occurs in, on, or about the Premises or in any
other part of the Building, and which is caused by Tenant or Tenant’s Agents or
invitees.  Tenant further releases
Landlord from all liability arising in connection with damage to or loss of any
property of Tenant or any third party, which may result from water leakage into
the Premises, or from any other cause even if resulting from the negligence of
Landlord or its Agents.  Landlord shall
not be liable for injury to Tenant’s business or any loss of income there from
relative to any such damage or injury or arising in connection with any
renovations or modifications to the Building or the Jet Center and all areas
appurtenant thereto.  Tenant shall, at
its own expense, procure and continue to force at all times during the term of
this Rental Agreement, comprehensive public liability insurance, insuring
Landlord, Tenant and the City of San Jose against any liability arising out of
the ownership, use, occupancy, maintenance, or operation of the Premises and
all areas appurtenant thereto.  A minimum of $2,000,000.00 general liability coverage
and $300,000.00 automobile coverage with thirty (30) days written notice of
cancellation or modification shall be required.  The policies of liability insurance required
to be carried by Tenant pursuant to this Section or actually carried by
Tenant with respect to the Premises: (i) shall name Landlord and the City
and their respective principals, officers, servants, agents, contractors,
directors and employees, and such others as may be designated by Landlord from
time to time, as additional insureds; (2) shall be primary insurance
providing that the insurer shall be liable for the full amount of the loss, up to
and including the total amount of liability set forth in the declaration of
coverage, without the right of contribution from or prior payment by any other
insurance coverage of Landlord; (iii) shall be in a form satisfactory to
Landlord; (iv) shall be carried with companies reasonably acceptable to
Landlord; (v) shall provide that any and each such policy shall not be
subject to cancellation, lapse or change except after at least thirty (30)
days prior written notice to Landlord, and (vi) shall contain a so-called “severability”
or “cross liability” endorsement.  Prior
to occupancy of the Premises, Tenant shall deliver to Landlord a copy of such
policy or a Evidence of Insurance of the insurer certifying in a form
satisfactory to Landlord that a policy has been issued, premium paid, providing
the coverages and/or limits of liability required by this Section and
containing the provisions specified herein. 
With respect to each renewal or replacement of any such insurance,
policy or policies, the requirements of this Section must be complied with
not less than thirty (30) days prior to the expiration or cancellation of each
policy 

 

3

 

being renewed or replaced.  If
Landlord reasonably determines at any time that the amount of coverage and/or
limits of liability set forth in this Section is not adequate, then Tenant
shall increase the amount of such coverages and/or limits of liability for such
insurance to such greater amount, as Landlord deems adequate.

 

11.           MAINTENANCE, REPAIRS AND SURRENDER OF PREMISES.  By taking possession of the Premises, Tenant
shall be deemed to have accepted the Premises as being in good, sanitary order,
condition, and repair and upon expiration or earlier termination of this Rental
Agreement, Tenant shall surrender the Premises in the same condition received,
ordinary wear and tear alone excepted. 
Tenant shall maintain in a first class condition and repair as necessary
the interior of the Premises.  Tenant
shall not damage or deface the interior surfaces of the Premises, including
without limitation, the ceilings, walls, floors, doors or windows or window
coverings.  Tenant shall provide, at its
expense, and use during the entire Term of this Rental Agreement, hard plastic
carpet protectors under each chair having castors or wheels at all desks,
workstations and tables.  Any wear to the
carpeting as a result of the failure to use such carpet protectors shall be
considered excessive wear and tear, Landlord may, at its option, require Tenant
to repair such damage or arrange to have such damage repaired, in which event
Tenant shall immediately reimburse Landlord for the cost of such repairs.  Landlord shall maintain in good order and
condition the Premises and the Building, unless such maintenance and repairs
are necessary as the results of the acts or omissions of Tenant, or Tenant’s
Agents or guests or invitees, in which case Tenant shall pay to Landlord the
reasonable cost of such maintenance or repairs. 
Normal wear and tear, for the purposes of this Rental Agreement, shall
be construed to mean wear and tear caused to the Premises by a natural aging
process, which occurs in spite of prudent application of the best standards of
maintenance and repair practices.  It is
not intended, not shall it be construed, to include items of neglected or
deferred maintenance which would have or should have been attended to during
the Term of this Rental Agreement if the best standards had been applied to
properly maintain and keep the Premises at all times in good condition and
repair.

 

12.           INDEMNIFICATION.  Tenant shall indemnify, defend and hold
harmless Landlord and its employees, agents, contractors, and representatives
(collectively “Landlord’s Agents”) from and against any and all claims,
demands, damages judgments, costs, expenses and fees including attorneys’ fees
and costs of court, alleged or otherwise, arising in connection with or
resulting, either directly or indirectly, from any actual or alleged use of the
Premises by Tenant or its employees, agents, contractors and representatives
(collectively “Tenant’s Agents”) or Tenant’s guests and invitees, or from the
conduct of Tenant’s business or from any activity, work or thing done,
permitted or suffered by Tenant or Tenant’s Agents in, on, or about the
Premises or elsewhere and shall further indemnify, defend, and hold harmless
Landlord and Landlord’s Agents from and against any and all claims, demands,
damages, judgments, costs, expenses and fees, including attorneys’ fees and
court and other defense costs, alleged or otherwise, arising in connection with
or resulting, whether directly or indirectly, from any actual or alleged breach
or default in the performance of any obligation on Tenant’s part to be
performed under the terms of this Rental Agreement, or the negligent acts or
omissions or willful misconduct of Tenant, or any of Tenant’s Agents.  Tenant shall defend Landlord with counsel of
Landlord’s choice in connection with any of the foregoing.

 

4

 

13.           ASSIGNMENTS AND SUBLETTING.  Tenant shall not assign, transfer, mortgage,
pledge, hypothecate or encumber this Rental Agreement or any interest therein,
and shall not sublet the Premises or any part thereof without prior written
consent of Landlord.

 

14.           ENTRY BY LANDLORD.  Landlord shall at any and all times have the
right to enter the premises to inspect the same, to supply janitorial services,
to make repairs or provide any other services required by Landlord to be
performed hereunder, or to show the premises to other prospective tenants,
lenders, or purchasers.

 

15.           TELEPHONE SERVICE.  Tenant shall make arrangements with Pacific
Bell Telephone or the current telephone service provider, for installation of
any telephone, facsimile or Internet connections.  Tenant shall utilize Landlord’s existing
internal telephone system.  The telephone
company shall bill all monthly telephone, facsimile or Internet charges
directly to Tenant.  Any and all
additional phone services, including programming, installations, and purchasing
shall be provided by a Landlord approved vendor and at the sole cost of the
Tenant.  Tenant shall pay all initial
phone installation costs directly to Landlord approved vendor.  Should
Tenant utilize Landlord’s PBX, a one-time set-up fee of Two Hundred Fifty
Dollars ($250) for connection of one telephone line and $0.35 per rentable
square foot will be added to the monthly rent for the use off the San Jose Jet
Center PBX equipment and Receptionist Phone Answering Service during the Term.  Set-up fee shall be paid by Tenant prior to
occupancy.  The cost for any
additional telephone, facsimile, ISDN, or other equipment and/or connections
shall be billed by Landlord to Tenant and due within thirty (30) days following
receipt thereof.  Landlord shall make
arrangements for connection to its PBX equipment.

 

16.           ADVERTISING/SIGNAGE.  Tenant shall not use the name “San Jose Jet
Center” in any of its advertising or on its letterhead, business cards or other
stationary without the express written approval of Landlord.  Tenant shall not place any sign or object on
the exterior surfaces of the Premises or in a position allowing such sign or
object to be seen from the exterior of the Premises.  Should Tenant so choose, Signage identifying
the Premises in the Executive Suite directories and at Premises (suite
door) shall be installed as soon as reasonably practical following the
Commencement Date by Landlord.  A signage fee of One Hundred Fifty Dollars ($150.00)
shall be paid by Tenant to Landlord prior to such installation.  An additional One Hundred Fifty Dollars ($150.00) shall be charged for each and every
change of name requiring a change in the signage.

 

17.           NOTICES. 
Any notice required or permitted to be given hereunder must be in
writing and may be given by personal delivery, or United States mail, or
private courier service, and if given by mail or private courier service shall
be deemed sufficiently given when sent by registered or certified mail, first
class postage prepaid, addressed to Tenant at the Premises, or to Landlord at
1250 Aviation Avenue, San Jose, CA 95110 Attn: Real Estate Manager or such
other address as Landlord may designate from time to time.  Notice given by U.S. mail or courier service
shall be deemed received upon the earlier of: (i) actual date of receipt: (ii) the
date shown upon the return receipt; or (iii) forty-eight hours after
deposit in the U.S. mail when mailed in the manner set forth in this
Section.  The parties agree that the
Premises address shall be deemed to be Tenant’s primary residence under, and
any notice required pursuant to, California Civil Code Section 1946 or
California Code of Civil Procedure Section 1161 and 1161(a) may be
served in 

 

5

 

the foregoing manner, and if so served, shall constitute proper service
of process under said statutory provision.

 

18.           DEFAULT
AND REMEDIES

 

18.1         EVENTS OF TENANT’S DEFAULT:  Tenant shall be in default of its
obligations under this Rental Agreement upon the occurrence of any of the
following events:

 

A.            Tenant
shall have failed to pay monthly rent or any Additional Rent when due including
required late fees as defined in Section 19.8 within ten (10) days
following the date of written notice from Landlord; or

 

B.            Tenant
shall have failed to fully perform one or more of its obligations under or
breached any of the terms, covenants or conditions of this Rental Agreement
(except the payment of monthly rent or Additional Rent) within ten (10) days
following the date of written notice from Landlord to Tenant specifying the
nature of such failure and requesting Tenant to perform the same; or

 

C.            Tenant
shall have sublet all or any portion of the premises or assigned or encumbered
all or any portion of its interest in this Rental Agreement in violation of the
provisions contained in Section 13, whether voluntary, involuntary, or by
operation of Law; or

 

D.            Tenant
shall violate or breach any of the terms, covenants or conditions of this
Rental Agreement and has abandoned the Premises as defined by California Civil
Code 1951.2; or

 

E.             Tenant
shall have availed itself of the protection of any debtor’s relief law,
bankruptcy law, moratorium law or other similar laws.

 

18.2         LANDLORD’S REMEDIES: 
In the event of any default by Tenant, and without limiting
Landlord’s right to indemnification as provided in this Rental Agreement,
Landlord, at its election, shall have the following remedies, in addition to
all other rights and remedies provided in this Rental Agreement, by law, or in
equity, to which Landlord may resort cumulatively, or in the alternative:

 

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

 

6

 

B.            Terminate
this Rental Agreement by giving Tenant written notice of termination, in which
event this Rental Agreement shall terminate on the date set forth for
termination in such notice.  If Landlord
has given any written notice pursuant to Section 19.2 above, then Landlord
shall not be required to give Tenant any additional notice terminating the
Rental Agreement.  Any termination under
this subparagraph shall not relieve Tenant from its obligation to pay to
Landlord all monthly rent and Additional Rent then or thereafter due, or any
other sums due or thereafter accruing to Landlord, or from any claim against Tenant
for damages previously accrued or the or thereafter accruing.  In no event shall (i) any action of
whatever nature or kind, by Landlord or on its behalf, or (ii) an
abandonment of the Premises by Tenant, in the absence of a specific written
election by Landlord to terminate this Rental Agreement, constitute a
termination of this Rental Agreement.  If
Landlord does not terminate this Rental Agreement by giving written notice of
termination, Landlord may enforce all of its rights and remedies under this
Rental Agreement, including the right to recover rent as it becomes due under
this Rental Agreement as provided in California Civil Code, Section 1951.4,
as in effect on the Rental Agreement Commencement Date.

 

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

 

(1)           The worth
at the time of award of the unpaid rents, which has been earned at the time of
termination;

 

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

 

(3)           The worth
at the time of award (computed by discounting at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent) of
the amount by which the rents for the balance of the Term after the time of
award exceed the amount of such rental loss that Tenant proves could have been
reasonably avoided; and

 

(4)           Any other
amount necessary to compensate Landlord for all detriment proximately caused by
Tenant’s failure to perform Tenant’s obligations under this Rental Agreement,
or which in the ordinary course of things would be likely to result there from.

 

The “worth at the time of award” of the amounts
referred to in subparagraphs (1) and (2) of this Section is
computed by allowing interest at an annual rate equal to the greater of twelve 

 

7

 

percent (12%) or five percent (5%) plus the rate established by the
Federal Reserve Bank of San Francisco, as of the twenty-fifth (25th) day of the
month immediately preceding the default by Tenant, on advances to member banks
under Section 13 and 13(a) of the Federal Reserve Act, as now in
effect or hereafter from time to time amended, not to exceed the maximum rate
allowable by law.

 

18.3         RIGHT TO SURE DEFAULTS.  If Tenant fails to cure a default described
under this Section, Landlord may, in addition to all other rights and remedies
under this Rental Agreement, at law or in equity, cure such default and demand
reimbursement by Tenant of the cost actually incurred by Landlord in curing
such default, with interest thereon from the date such cost is incurred until
the date of payment.

 

18.4         TENANT’S WAIVER.  Landlord and Tenant agree that the provisions
set forth in this Rental Agreement are intended to supersede and replace the
provisions of California Civil Code, Sections 1932(1), 1933(4), 1941 and 1942,
and accordingly, Tenant hereby waives the provisions of Sections 1932(1), 1941
and 1942 of the California Civil Code and/or any similar or successor law
regarding Tenant’s right to terminate this Rental Agreement or to make repairs
and deduct the expenses of such repairs from the rent due under this Rental
Agreement.  Tenant hereby waives any
right of redemption or relief from forfeiture under the laws of the State of
California, or under any other present or future law of a similar nature,
including without limitation, California Code of Civil Procedure Section 1179,
in the event Tenant is evicted or Landlord takes possession of the Premises by
reason of any default by Tenant.

 

19.           GENERAL
PROVISIONS.

 

19.1         ESTOPPEL CERTIFICATES.  Tenant will, following any request by
Landlord, promptly execute and deliver to Landlord an estoppel certificate (i) certifying
that this Rental Agreement is unmodified and in full force and effect, or, if
modified, stating the nature of such modification and certifying that this
Rental Agreement, as so modified, is in full force and effect, (ii) stating
the date to which the rent and other charges are paid in advance, if any, (iii) acknowledging
that there are not, to Tenant’s knowledge, any uncured defaults on the part of
Landlord hereunder, or specifying such defaults if any are claimed, and (iv) certifying
such other information about this Rental Agreement as may be reasonably
requested by Landlord.  Tenant’s failure
to execute and deliver such estoppel certificate within ten (10) days
after Landlord’s request therefore shall be a material default by Tenant under
this Rental Agreement.  If Tenant fails
to deliver an estoppel certificate within the prescribed time, it shall be
deemed that this Rental Agreement is in full force and effect, that no rent
other sums have been paid in advance, and that there are no uncured defaults on
the part of Landlord under this Rental Agreement.

 

19.2         RELOCATION OF TENANT.  Landlord, following thirty (30) days notice,
may require Tenant to move from the Premises to another location of comparable
size in the Building in order to permit Landlord to consolidate the Premises
with other space leased or proposed to be leased by another existing or
prospective tenant in the Building.  In
the event of such relocation notice, if there is less than six (6) months
remaining in the Rental Agreement Term as of the effective date of the
relocation then Tenant shall have the right to terminate the Rental Agreement
effective on the date of the proposed relocation by providing notice to
landlord within fifteen (15) days following the date of Landlord’s notice.  The failure of Tenant 

 

8

 

to deliver its notice of termination within the time and manner set
forth herein shall be deemed a waiver by Tenant of its right to terminate this
Rental Agreement.  In the event of such
relocation: (a) Tenant shall pack its personal property in moving boxes
and Landlord, at its cost, shall move Tenant’s empty furniture and equipment
and the boxed personal property and, if necessary, shall pay to have Landlord’s
internal phone system reprogrammed, and (b) Landlord and Tenant shall execute
and amendment to this Rental Agreement identifying the relocated premises as
the Premises under the terms of this Rental Agreement.

 

19.3         AUTHORITY. 
The undersigned parties hereby represent and warrant that they have the
proper authority and power to execute this Rental Agreement on behalf of
Landlord and Tenant, respectively.  Each
individual executing this Rental Agreement on behalf of Tenant represents and
warrants that Tenant is validly formed and duly authorized and existing, and
that Tenant is qualified to do business in the State of California.

 

19.4         LANGUAGE CONSTRUCTION.  The term “party” shall mean Landlord or
Tenant as the context implies.  If Tenant
consists of more than one person or entity, then all members of Tenant shall be
jointly and severally liable hereunder. 
This Rental Agreement shall be construed and enforced in accordance with
the Laws of the State of California.  The
language in all parts of this Rental Agreement shall in all cases be construed
as a whole according to its fair meaning, and not strictly for or against
either Landlord or Tenant, regardless of the drafting party.  The captions used in this Rental Agreement
are for convenience only and shall no be considered in the construction or
interpretation of any provision hereof. 
When the context of this Rental Agreement requires, the neuter gender
includes the masculine, the feminine, a partnership or corporation or joint
venture, and the singular includes the plural. 
The terms “must”, “shall”, “will” and “agree” are mandatory.  The term “may” is permissive.  When a party is required to do something by
this Rental Agreement, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless specific provision is made
therefore.  Where Tenant is obligated not
to perform any act or is not permitted to perform any act, Tenant is also
obligated to restrain any others reasonably within its control, including
employees, agents, invitees, contractors, subcontractors, and the like, from
performing said act.  Landlord shall not
become or be deemed a partner or a joint venturer with Tenant by reason of any
of the provision of this Rental Agreement. 
Time is of the essence with respect to the performance of each and every
provision of this Rental Agreement in which time of performance is a
factor.  Any copy of this Rental
Agreement, which is executed by the parties herein referenced, shall be deemed
an original for all purposes.  This
Rental Agreement shall, subject to the provisions regarding assignment, apply
to and bind the respective heirs, successors, executors, administrators and
assigns of Landlord and Tenant.  This
Rental Agreement is and shall be considered to be the only agreement between
the parties hereto.  All negotiations and
oral agreements are included herein.  No
amendment or other modification of this Rental Agreement shall be effective
unless it is in writing and signed by both Landlord and Tenant.  If any term, covenant or condition of this
Rental Agreement shall be held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, covenants or
conditions shall remain in full force and effect.

 

19.5         GOVERNMENTAL COMPLIANCE.  Tenant shall comply with all laws, rules and
regulations of any governmental agency having jurisdiction over the
Premises.  Landlord shall have the right
to voluntarily cooperate with the efforts of governmental agencies and/or 

 

9

 

utility suppliers in reducing energy or other resource consumption
within the Project.  Tenant shall not be
entitled to terminate this Rental Agreement or to any reduction in or abatement
of rent by reason of such compliance or cooperation.  Tenant agrees at all times to cooperate fully
with Landlord and to abide by all rules, regulations, restrictions, and/or
recommendation established by Landlord arising in connection therewith.

 

19.6         DAMAGE AND DESTRUCTION.  In the event the Premises or the Building is
damaged as a result of the negligent acts or omission of Tenant or Tenant’s
Agents or invitees Tenant shall reimburse Landlord for all repair costs.  The foregoing notwithstanding, if the
Premises or the Building is substantially damaged, Landlord shall have the
right to terminate this Rental Agreement by delivering to Tenant a written
notice of election to terminate within thirty (30) days after the date of
such damage or destruction:

 

19.7         RULES AND REGULATIONS.  Tenant agrees to abide by any and all rules,
policies and regulations established by Landlord, and all modifications or
amendments thereto including without limitation, those set forth in the
attached Exhibit D and E and incorporated herein by this reference in
order to properly regulate services, use, occupancy, operation, safety and the
general image of the San Jose Jet Center. 
A violation by Agreement Landlord shall not be responsible or liable to
Tenant for the violation of such rules and regulations by any other tenant
of the Building.

 

19.8         LATE CHARGE.  If Tenant does not pay any sum payable by
Tenant to Landlord within ten (10) days after such sum becomes due and
payable, Tenant shall pay to Landlord included with such late payment a late
charge equal to ten (10%) percent of the amount due.  Any installment of rent or any other sums due
from annual rate of twelve percent (12%) but in no event greater than the
amount permitted by law.  The accrual
and/or acceptance of any late charge or interest shall not constitute a waiver
of Tenant’s default with respect to any overdue amount, not prevent Landlord
from exercising any of Landlord’s other rights or remedies.

 

19.9         LANDLORD’S LIABILITY.  Tenant, for itself and its successors and
assigns (to the extent this Rental Agreement is assignable), hereby agrees that
in the event of any actual, or alleged, breach or default by Landlord under
this Rental Agreement that: (A) Tenant’s sole and exclusive remedy against
Landlord shall be against Landlord’s interest in the Building; (B) no
officer, director, or shareholder of Landlord shall be sued or named as a party
in a suit or action (except as necessary to secure jurisdiction of the
corporation); (C) no service of process shall be made against any officer,
director or shareholder (except as may be necessary to secure jurisdiction of
the corporation); (D) no officer, director, or shareholder of Landlord
shall be required to answer or otherwise plead to any service of process; (E) no
judgment will be taken against any officer, director, or shareholder of
Landlord; (F) any judgment taken against any officer, director, or
shareholder of Landlord may be vacated and set aside at any time nunc pro tunc;
(G) no writ of execution will ever be levied against the assets of any
officer, director or shareholder of Landlord; and (H) the covenants and
agreements of Tenant as set forth in this Section shall be enforceable by
Landlord and any officer, director and shareholder of Landlord.

 

19.10       ATTORNEYS’ FEES.  In the event any party shall bring any
action, arbitration proceeding or legal proceeding alleging a breach of any
provision of the Rental Agreement, to recover rent, to terminate this Rental
Agreement, or to enforce, protect, determine or establish 

 

10

 

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

 

19.11       GROUND LEASE.  Tenant acknowledges that its occupancy of the
Premises is subject to, in addition to this Rental Agreement, the provisions of
a ground lease between the City of San Jose, as landlord, and SJJC Aviation
Services, LLC, as tenant, under which Landlord leases the property upon which
the Premises are situated.  This Rental
Agreement is subordinate to said ground lease and Tenant hereby agrees to
strictly comply with all the terms, covenants and conditions thereunder.  In addition, the parties agree that this
Rental Agreement in its entirety is subject to approval of its form by the City
of San Jose Airport Director.

 

19.12       SECURITY ACCESS AGREEMENT.  Tenant shall execute and deliver to Landlord
prior to the Commencement Date the Security Access Agreement attached to this
Rental Agreement as Exhibit C.

 

IN WITNESS WHEREOF, the parties hereto have executed
this Rental Agreement as of the date set forth below their signatures.

 

	
  LANDLORD:

  	
  TENANT:

  	
   

  
	
   

  	
   

  	
   

  
	
  JET CENTER PROPERTY SERVICES, LLC

  	
  MathStar, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/ Daniel P. Ryan

  	
   

  	
  BY:

  	
  /s/ Bryon K Bequette

  	
   

  
	
   

  	
  Mr. Daniel P. Ryan

  	
   

  	
  General Counsel and Secretary

  	
   

  
	
   

  	
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DATED:

  	
  July 7

  	
  , 2005

  	
  DATED:

  	
  July 6

  	
  , 2005

  
										

 

11

 

EXHIBIT ”A”

 

 

 

A-1

 

EXHIBIT ”B”

 

EXECUTIVE SUITES SERVICES

 

	
  SERVICES*

  	
   

  	
  AVAILABILITY**

  	
   

  	
  CHARGES***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Receptionist Service

  	
   

  	
  8:00am-5:00pm M-F

  	
   

  	
  No Charge

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone Answering

  	
   

  	
  8:00am-5:00pm M-F

  	
   

  	
  One-Time Set-up charge $250.00

  
	
  (If connected to PBX System)

  	
   

  	
   

  	
   

  	
  (monthly fee, add $0.35/sq ft)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Conference Rooms

  	
   

  	
  24 Hours

  	
   

  	
  No Charge

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Coffee Service (Prepared)

  	
   

  	
  8:00am-5:00pm M-F

  	
   

  	
  No Charge

  
	
  (Self Service)

  	
   

  	
  24 Hours

  	
   

  	
  “

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Copies (In House)

  	
   

  	
  8:00am-5:00pm, M-Fri.

  	
   

  	
  $0.10/COPY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile (Incoming/Outgoing)

  	
   

  	
  24 Hours

  	
   

  	
  $1.00/Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mail (Delivery)

  	
   

  	
  USPS Box (Pick up @ 2pm)

  	
   

  	
  N/A

  
	
  (Postage Meter
  Accounts)

  	
   

  	
  24 Hours

  	
   

  	
  Actual Postage Usage

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Janitorial Service

  	
   

  	
  Sunday - Thursday

  	
   

  	
  No Charge

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Parking

  	
   

  	
  24 Hours

  	
   

  	
  No Charge

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bottle Water Service

  	
   

  	
  24 Hours

  	
   

  	
  No Charge

  

 

*All services are subject to cancellation.

** All times are subject to change following notice from Landlord.

*** All costs are subject to change following notice from Landlord.

 

B-1

 

EXHIBIT ”C”

 

SAN JOSE JET CENTER SECURITY ACCESS
AGREEMENT

 

Tenant:   MathStar Inc.

Suite Number:   200R

Contact Name:   Steve Williams

Off-site mailing Address:   5900
Green Oak Dr., Minnetonka, MN 55343

Phone Number:   (408) 398-4475

Alternate Phone:

The following names are those persons who have authorized access to the
above referenced suite.

 

	
  1.

  	
   

  	
   

  	
  2.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
   

  	
  4.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
   

  	
  6.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
   

  	
  8.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
   

  	
  10.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
   

  	
  12.

  	
   

  
							

 

This list shall only be updated by: (Print Name or Names):

 

 

 

The undersigned represents and warrants that they have the power and
authority to authorize access to the above referenced suite on behalf of the
above referenced Tenant as set forth in this Security Access Agreement.  Tenant acknowledges that access by person
with keys to the suite or who may enter a suite that has not been locked
otherwise properly secured will not be restricted by Landlord.  The undersigned further releases Landlord
from any and all actual or alleged liability, damage, or injury which may arise
in connection with any access which may be given to any one or more of above
listed persons or any other person (s) with keys or who gain access as a result
of unlocked doors or unsecured offices. 
Tenant further agrees that in the event any one or more of the above
listed persons should no longer be given access to the suite, Tenant shall
immediately notify Landlord of such change by providing Landlord with an
updated Security Access List.

 

	
  Tenant:.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (print name and title)

  	
   

  
	
   

  	
   

  
	
  Signature Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  IN CASE OF EMERGENCY CALL:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AT:

  	
  (     )

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (     )

  	
   

  
								

 

C-1

 

EXHIBIT ”D”

 

RULES AND REGULATIONS

 

1.             No curtains,
draperies, blinds, shutters, shades, screens or other coverings, hangings or
decorations shall be attached to, hung or placed in, or used in connection with
any window or glass door on the Premises without the prior written consent of
Landlord.  In any event, with the prior
written consent of Landlord, said above items shall be installed inboard of
Landlord’s standard window covering and shall in no way be visible from the
exterior of the Building.  No articles
shall be placed or kept on the windowsills so as to be visible from the
exterior of the Building.

 

2.             Tenant
shall not obstruct any sidewalks, halls, passages, exits, entrances, elevators,
escalators, or stairways of the Project. 
Landlord shall in all cases retain the right to control and prevent
access thereto of all persons whose presence in the judgment of Landlord would
be prejudicial to the safety, character, reputation and/or interest of the
Project and its tenants; provided that nothing herein contained shall be
construed to prevent such access to persons with whom any tenant normally deals
in the ordinary course of its business, unless such persons are engaged in
illegal or unlawful activities or threaten the safety of the Project or its
tenants.  No tenant and no employee or
invitee of any tenant shall go up on the roof of any portion of the Project.

 

3.             Tenant
shall not cause any unnecessary labor by carelessness or indifference to the
good order and cleanliness of the Premises. 
Landlord shall in no event be responsible to Tenant for any loss of
property on the Premises, however occurring, or for any damage done to the
effects of Tenant by the janitor or other employee or any other person.  Janitor service may not be furnished on
nights when rooms are occupied after 9:00 p.m.  Window cleaning shall be done only at regular
and customary times determined by Landlord for such services.

 

4.             Landlord
will furnish Tenant, free of charge, with two keys to each door lock in the
Premises.  Landlord may make a reasonable
charge for any additional keys.  Landlord
shall also furnish Tenant with one U.S. Postal Service mailbox key.  Tenant shall not make or have made additional
keys, and Tenant shall not alter any lock or install new additional locks or
bolts on any door of its Premises. 
Tennant, upon the termination of its tenancy, shall deliver to Landlord
the keys of all doors, which have been furnished to Tenant, and the mailbox
key.  In the event of loss of any door
keys, Tenant shall pay Landlord for the costs of replacement and for the cost
of re-keying the door or doors affected. 
In the event of loss of the mailbox key, a charge of no less than Twenty
Dollars ($20.00) shall be assessed to Tenant for the cost of replacing the
mailbox lock and new keys.

 

5.             No
boring or cutting for telephone, data, modem, facsimile, telegraph lines and
equipment, burglar alarms, electric wires or similar services and equipment
shall be allowed without the prior consent of Landlord and any such wires
permitted shall be introduced at the place and in the manner described by
Landlord.  The location of telephones,
speakers, fire extinguishers and all other office equipment affixed to premises
occupied by tenant shall be subject to the written approval of Landlord.

 

D-1

 

6.             The
Building elevator shall be available for use by all tenants in the Project,
subject to such reasonable scheduling, as Landlord, in its discretion, shall
deem appropriate.  No equipment,
materials, furniture, packages, supplies, merchandise or other property will be
received in the Project or carried in the elevators except between such hours
as may be designated by Landlord.  Tenant’s
initial move in and subsequent deliveries of bulky items, such as furniture,
safes and similar items shall, unless otherwise agreed in writing by Landlord,
be made during the hours of 6:00 p.m. to 6:00 a.m. or on Saturday or
Sunday.  Deliveries during normal office
hours shall be limited to normal office supplies and other small items.  No deliveries shall be made which impede or
interfere with other tenants or the operation of the Project.  Landlord reserves the right to refuse the
transporting of any materials in the elevator, which may be of a hazardous or
bulky nature, or be beyond the loading capacity or operational capacity of the
elevator.  Tenant shall be liable for any
and all repairs to the elevator due to the improper use or misuse of the
elevator by Tenant, its agents, employees or invitees.

 

7.             Tenant
shall not place a load upon any floor of the Premises, which exceeds the load
per square foot, which such floor was designed to carry and which is allowed by
law.  Landlord shall have the right to
prescribe the weight, size and position of all equipment, materials, furniture
or other property brought into the Project. 
Heavy objects shall, if considered necessary by Landlord, stand on such
platforms as determined by Landlord to be necessary to properly distribute the
weight, which platforms shall be provided at Tenant’s expense.  Business machines and mechanical equipment
belonging to Tenant, which cause noise or vibration that may be transmitted to
the structure of the Building or to any space therein to such a degree as to be
objectionable to Landlord or to any tenants in the Project, shall be placed and
maintained by Tenant, at Tenant’s expense, on vibration eliminators or other
devices sufficient to eliminate noise or vibration.  The persons employed to move such equipment
in or out of the Project must be acceptable to Landlord.  Landlord will not be responsible for loss of,
or damage to, any such equipment or other property from any cause, and all
damage done to the Project by maintaining or moving such equipment or other
property shall be repaired at the expense of Tenant.

 

8.             Tenant
shall not use or keep in the Premises any kerosene, gasoline or inflammable or
combustible fluid or material other than those limited quantities necessary for
the operation or maintenance of office equipment.  Tenant shall not use or permit to be used in
the Premises any foul or noxious gas or substance, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Building by reason of noise, odors or
vibrations, nor shall Tenant bring into or keep in or about the Premises any
birds or animals.

 

9.             Tenant
shall not use any method of heating or air conditioning other than that
supplied by Landlord, including without limitation, any space heater.

 

10.           Tenant
shall not waste electricity, water or air-conditioning and agrees to cooperate
fully with Landlord to assure the most effective operation of the Project’s
heating and air conditioning systems and to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice, and
shall not adjust thermostatic controls. 
Tenant shall keep corridor doors closed, and shall close window
coverings during the heat of day and at the end of each business day.

 

D-2

 

11.           Landlord
reserves the right to exclude from the Project any person unless that person is
known to the person or employee in charge of the Building and has a pass or is
properly identified and escorted.  Tenant
shall be responsible for all persons for whom it requests passes or agrees to
escort and shall be liable to Landlord for all acts of such persons.  Landlord shall not be liable for damages for
any error with regard to the admission to or exclusion from the Project of any
person.  Landlord reserves the right to
prevent access to the Project in case of invasion, mob, riot, public excitement
or other commotion by closing the doors, locking the gates, or by other
appropriate action.

 

12.           Tenant
shall entirely shut off all electricity and close and lock the doors of its
Premises before Tenant and its employees leave the Premises.  Tenant shall be responsible for any damage or
injuries sustained by other tenants or occupants of the Project or by Landlord
for noncompliance wit this rule.

 

13.           No cooking
shall be done or permitted on the Premises, except that use by Tenant of
Underwriters’ Laboratory approved equipment for brewing coffee, tea, hot
chocolate and similar beverages or use of microwave ovens for employee use
shall be permitted, provided that such equipment complies with and is used in
accordance with all applicable federal, state, county and city laws, codes,
ordinances, rules and regulations and provided further that Tenant or an
employee of Tenant is present at all times that such equipment and/or microwave
is in use.  Tenant shall be fully liable
for any and all damage or liability arising in connection with or resulting
from violation of the rules.

 

14.           The toilet
rooms, toilets, urinals, wash bowls and other apparatus shall not be used for
any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown therein.  The expense of any breakage, stoppage, or
damage resulting from the violation of this rule shall be borne by the
tenant who, or whose employees or invitees, shall have caused it.

 

15.           Tenant
shall not sell, or permit the sale at retail of newspapers magazines,
periodicals, theater tickets or any other goods or merchandise to the general
public in or on the Premises.  Tenant
shall not make any room-to-room solicitation of business from other tenants in
the Project.  Tenant shall no use the
Premises for any business or activity other than that specifically provided for
in Tenant’s Lease.

 

16.           Tenant
shall not install any radio or television antenna, satellite dish, loudspeaker
or other devices of whatever nature or kind on the roof or exterior walls of
the buildings within the Project.  Tenant
shall not interfere with radar, radio or television broadcasting or reception
from or in the buildings within the Project or the radio tower adjacent to the
Property or elsewhere.  Tenant shall not
install any burglar alarm, security system, or other similar protection device
without the prior written approval of Landlord.

 

17.           Tenant
shall not mark, drive nails, screw or drill into the partitions, woodwork or
plaster or in any way deface the Premises or any part thereof, except in
accordance with the provisions of the Lease pertaining to alterations.  Landlord reserves the right to direct
electricians as to where and how telephone, modem, data, and/or telegraph wires
are to be introduced to the Premises. 
Tenant shall not cut wires or bore holes.  Tenant shall not affix any floor covering to 

 

D-3

 

the floor of the Premises in any manner except as approved by
Landlord.  Tenant shall repair any damage
resulting from noncompliance with this rule.

 

18.           Tenant
shall not install, maintain or operate upon the Premises any vending machines
without the written consent of Landlord.

 

19.           Canvassing,
soliciting and distribution of handbills or any other written material, and
peddling within the Project are prohibited, and Tenant shall cooperate to
prevent such activities.

 

20.           Landlord
reserves the right to exclude or expel from the Project any person who, in
Landlord’s judgment, is intoxicated or under the influence of liquor or drugs
or who is in violation of any of the Rules and Regulations of the Project.

 

21.           Tenant
shall store all its trash and garbage within its Premises or in other facilities
provided by Landlord.  Tenant shall not
place in any trash box or receptacle any material that cannot be disposed of in
the ordinary and customary manner of trash and garbage disposal.  Tenant shall be charged accordingly for any
costs incurred in the removal of rubbish or debris not commonly incurred in
normal business activity.  All garbage
and refuse disposal shall be made in accordance with directions issued from
time to time by Landlord.  Excessive use
of the trash containers by Tenant shall be subject to additional charge.

 

22.           The
Premises shall not be used for the storage of merchandise held for sale to the
general public, or for lodging or for manufacturing of any kind, nor shall the
Premises be used for any improper, immoral or objectionable purpose.

 

23.           Tenant
shall not use in the buildings within the Project any hand truck except those
equipped with rubber tires and side guards or such other material-handling
equipment as Landlord may approve. 
Tenant shall not bring any other vehicles of any kind into the buildings
within the Project.

 

24.           Without
the written consent of Landlord, Tenant shall not use Landlord’s name or the
name of the Project in connection with or in promoting or advertising the
business of Tenant except as Tenant’s address.

 

25.           Tenant
shall comply with all safety, fire protection and evacuation procedures, rules and
regulations established by Landlord or any governmental agency.

 

26.           Tenant
assumes any and all responsibility for protecting its Premises and/or its vehicles
from theft, robbery and pilferage, which includes keeping doors locked and
other means of entry to the Premises and vehicles closed.

 

27.           Tenant’s
requirements will be attended to only upon appropriate application to the
Project management office by an authorized individual.  Employees of Landlord shall not perform any
work or do anything outside of their regular duties unless under special
instructions from Landlord.  Any request
for work to be performed by employees of Landlord without first receiving
Landlord’s consent shall be a violation of this rule and a default under
the terms of the Lease.

 

D-4

 

28.           Landlord
may waive any one or more of these Rules and Regulations for the benefit
of Tenant or any other tenant, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations in favor of Tenant or
any other tenant, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against any or all of the tenants of the Building.

 

29.           These Rules and
Regulations are in addition to, and shall not be construed to in any way modify
or amend, in whole or in part, the terms, covenants, agreements and conditions
of Tenant’s Lease of its Premises.

 

30.           Landlord
reserves the right to make such other Rules and Regulations as, in its
judgment, may from time to time be needed for safety and security, for care and
cleanliness of the Project and for the preservation of good order therein.  Tenant agrees to abide by all such Rules and
Regulations hereinabove stated and any additional rules and regulations,
which are adopted.

 

31.           Tenant
shall be responsible for the observance of all of the foregoing rules and
regulations by Tenant’s employees, agents, contractors, clients, customers,
invitees and guests.

 

32.           Tenant
shall cooperate with Landlord in complying with all resolutions and
requirements established by governmental agencies relative to the use,
occupancy, ownership, or management of the Project, including without limitation,
transportation and transit conditions established for the Project and shall
designate a responsible employee to represent Tenant in all matters pertaining
to any and all such matters.

 

D-5

 

EXHIBIT ”E”

 

SAN JOSE JET CENTER

PARKING RULES AND REGULATIONS

 

The following rules and regulations shall govern use of parking
areas and facilities (“Parking Areas”) for the San Jose Jet Center located at
1250 Aviation Avenue, San Jose, California (the Project”) and from time to time
may change:

 

1.             Tenant
shall not park any vehicles in the Parking Area other than automobiles,
motorcycles, or four-wheeled trucks.

 

2.             No
extended term storage of vehicles shall be permitted without Landlord’s prior
written consent.

 

3.             Designated
2 hour visitor parking is permitted. 
Violations may result in owner being towed at their own expense.

 

4.             Any
vehicles parked in non-visitor parking areas may require a parking permit
issued by Landlord.

 

5.             Violation
of Tenant’s allocated parking may result in Additional Rents

 

6.             Vehicles
must be parked entirely within the painted lines of a single parking stall.

 

7.             All
directional signs and arrows must be observed.

 

8.             The
speed limit within all Parking Areas shall be 5 miles per hour

 

9.             All
parking limitation signage shall be observed, including without limitation, the
two hour parking zones in front of the buildings.

 

10.           Vehicles
parked in a non-visitor parking spot must display Landlord’s issued parking
permits.

 

11.           Parking
is prohibited (Any person parking in a non-visitor spot is subject to immediate
towing at owner’s expense.  Additional
parking permits are available.  Without a
parking permit, car can be towed at owner’s expense).

 

a.             In
areas not striped for parking;

 

b.             In
aisles;

 

c.             Where
“no parking” signs are posted;

 

d.             In
cross hatched areas;

 

e.             In
such other areas as may be designated by Landlord from time to time

 

E-1

 

12.           Washing,
waxing, cleaning, or servicing of any vehicle in any area not specifically
reserved for such purpose is prohibited.

 

13.           Landlord
shall have the right to remove, at the owner’s expense, any vehicle parked in
the Parking Area in violation of any one or more of these Rules and
Regulations and shall further have the right to refuse parking of any vehicle
by a tenant or person and/or his agents or representatives who willfully refuse
to comply with these Rules and Regulations and all Project, City, State
ad/or Federal rules, regulations, ordinances, laws or agreements.

 

14.           Landlord
reserves the right to install parking control devices.

 

15.           Landlord
reserves the right to issue parking stickers or other forms of identification
as a condition to using the Parking Areas. 
Such parking stickers or any other device or form of identification
shall remain the property of Landlord. 
Such parking identification device must be displayed as requested and
may not be mutilated in any matter.  The
serial number of the parking identification device may not be obliterated.  Devices will not be transferable and any
device in the procession of an authorized holder will be void.

 

16.           Tenant
assumes any and all responsibility for protecting its vehicles from theft,
robbery, damage, and pilferage, which includes keeping doors and windows locked
and other means of entry to such vehicles secured.

 

17.           Landlord
may waive any one to more of these Rules and Regulations for the benefit
of Tenant, but no such waiver by Landlord shall be construed as a waiver of any
other Rule or Regulations against Tenant or any or all of the tenants of
the Building.

 

18.           These
Rules and Regulations are in addition to and shall not be construed to in
any way modify or amend, in whole or in part, the terms, covenants, agreements
and conditions of Tenant’s Lease of its Premises.

 

19.           Landlord
reserves the right to modify and/or adopt such other Rules and Regulations
as, in its judgment, may from time to time be needed for safety and security,
for care and cleanliness of the Project; and for the preservation of good order
herein, tenant agrees to abide by all such Rules and Regulations
hereinabove stated and any additional rules and regulations, which are
adopted.  Landlord may refuse to permit
any person or any tenant who permits any of its employees and/or invitees who
violate these rules in the Parking Area, and any violation of the rules shall
subject car to removal at the owner’s sole cost and expense.

 

20.           Unless
otherwise agreed to in writing by Landlord, parking in the Parking Areas shall
be on a non-exclusive “first come first serve” basis.

 

21.           Tenant
shall be responsible for the observance of the foregoing rules and
regulations by Tenant’s employees, agents, contractors, clients, customers,
invitees, and guests.

 

E-2

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