Document:

EXHIBIT 10.22

 

	
  EXHIBIT
  A

  
	
  

  	
  CBA Form MT-LS

  Rev’d 6/97

   

   

  	
  LEASE AGREEMENT

  (Single-Tenant Form)

  	
  ©
  Copyright 1997

  Commercial
  Brokers Association

  ALL
  RIGHTS RESERVED

  
	
  This
  Has Been Prepared For Submission To Your Attorney For Review And Approval
  Prior To Signing

  No Representation Is Made By Licensee As To Its Legal Sufficiency Or Tax
  Consequences

  CBA Text Disclaimer:  Text deleted by
  licensee indicated by strike.  New text
  inserted by licensee indicated by small capital letters.

  

 

THIS LEASE AGREEMENT
(the “Lease”) is entered into this 18th day of Aug , 2000, between HARTMANN
LIMITED PARTNERSHIP & WILLIAM LUDWIG HARTMANN MARITAL TRUST (“Landlord”),
and ADVANCED TELCOM, INC.  (“Tenant”). 
Landlord and Tenant agree as follows:

 

1.              LEASE SUMMARY.

 

a.     Leased Premises.  The leased commercial real estate (the “Premises”) consist
of an agreed area of 16,000 rentable
square feet and are outlined on the floor plan attached as Exhibit A,
located on the land legally described on attached Exhibit B, and is
commonly known as THE TRANSNATION BUILDING.  The Premises do not
include, and Landlord reserves, the exterior walls and roof of the Premises,
the land beneath the Premises, the pipes and ducts, conduits, wires, fixtures,
and EQUIPMENT ABOVE THE SUSPENDED CEILING OR STRUCTURAL ELEMENTS
OF THE BUILDING IN WHICH THE PREMISES ARE LOCATED (THE “Building”).  The
Building, the land upon which it is situated, all other improvements located on
such land, and all common areas appurtenant to the Building are referred to
herein as the “Property.”

 

b.     Lease
Commencement Date.  The Lease shall commence on UPON
COMPLETION OF TENANT IMPROVEMENTS OR SEPTEMBER 15 , 2000, WHICHEVER DATE IS EARLIER. 
DURING THE PRE-COMMENCEMENT DATE PERIOD OF TENANT’S WORK, AS DEFINED
BELOW, ALL PROVISIONS OF THE LEASE, EXCEPT FOR 
PAYMENT OF RENT, AS DEFINED HEREIN, SHALL BE APPLICABLE AND BINDING UPON
TENANT.

 

c.     Lease
Termination Date.  The Lease shall terminate at midnight 120 FULL
MONTHS FOLLOWING THE LEASE COMMENCEMENT DATE,          , or
such earlier or later date as provided in Section 3 (the “Termination Date”).

 

d.     Base Rent. 
The base monthly rent shall be (check one): o   $              ,
or ý according to the Rent Rider
attached hereto.  Rent shall be payable
at Landlord’s address shown in Section 1(h) below, or such other
place designated in writing by Landlord.

 

e.     Prepaid Rent.  Upon execution of this Lease, Tenant shall deliver to
Landlord the sum of $6,333.33as
prepaid rent, to be applied to the Rent due for the SECOND month(s) of the Lease.

 

f.      Security
Deposit.  The amount of the security deposit is $NONE.

 

g.     Permitted Use. 
The Premises shall be used only for TELECOMMUNICATIONS SWITCHING OR
COLOCATION FACILITY, OFFICE AND RELATED TELECOMMUNICATIONS ACTIVITIES, and for
no other purpose without the prior written consent of Landlord.

 

h.     Notice and
Payment Addresses:

 

Landlord: COAST
MANAGEMENT COMPANY, INC., ATTN: BRETT CARLTON, 2610 WETMORE AVENUE

 

P.O. BOX
1709, EVERETT, WASHINGTON 98206 Fax No.: (425) 259-5062

 

Tenant: ADVANCED
TELCOM, INC., ATTN: TOM GRINA, SR. VP AND CFO, 110 STONY POINT ROAD, 2ND FLOOR,
SANTA ROSA, CALIFORNIA 95401 Fax No.:  (707) 284-2327

 

 

2.              PREMISES.  Landlord leases
to Tenant, and Tenant leases from Landlord the Premises upon the terms
specified in this Lease.

 

3.              TERM.

 

a.     Commencement
Date.  The Lease shall commence on the date specified in Section 1(b),
or on such earlier or later date as may be specified by written notice
delivered by Landlord to Tenant advising Tenant that the

 

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Premises are ready
for possession and specifying the Commencement Date, which shall not be less
than            (30 if not
completed) days following the date of such notice.  If Tenant occupies the Premises before the Commencement
Date specified in Section 1(b), then the Commencement Date shall be the
date of occupancy.  If Landlord acts
diligently to make the Premises available to Tenant, neither Landlord nor any
agent or employee of Landlord shall be liable for any damage or loss due to
Landlord’s inability or failure to deliver possession of the Premises to Tenant
as provided in this Lease.  The
Termination Date shall be modified upon any change in the Commencement Date so
that the length of the Lease term is not changed.  If Landlord does not deliver possession of the
Premises to Tenant within          days
(60 if not completed) after the date specified in Section 1(b), Tenant may
elect to cancel this Lease by giving written notice to Landlord within 10 days
after such time period ends.  If Tenant
gives such notice, the Lease shall be canceled, all prepaid rent and security
deposits shall be refunded to tenant, and neither Landlord nor Tenant shall
have any further obligations to the other. 
The first “Lease Year” shall commence on the Commencement Date and shall
end on the date which is twelve (12) months from the end of the month in which
the Commencement Date occurs.  Each
successive Lease Year during the initial term and any extension terms shall be
twelve (12) months, commencing on the first day following the end of the
preceding Lease Year, except that the last Lease Year shall end on the
Termination Date.

 

b.     Tenant
Obligations.  To the extent Tenant’s tenant
improvements are not completed in time for the Tenant to occupy or take
possession of the Premises on the Commencement Date due to the failure of
Tenant to fulfill any of its obligations under this Lease, the Lease shall
nevertheless commence on the Commencement Date.

 

Except as
specified elsewhere in this Lease, Landlord makes no representations or
warranties to Tenant regarding the Premises, including the structural condition
of the Premises and the condition of all mechanical, electrical, and other
systems on the Premises.  Except for any
tenant improvements described on attached Exhibit C to be completed by
Landlord (defined therein as “Landlord’s Work”), Tenant shall be responsible
for performing any work necessary to bring the Premises into condition
satisfactory to Tenant.  By signing this
Lease, Tenant acknowledges that it has had adequate opportunity to investigate
the Premises, acknowledges responsibility for making any corrections,
alterations and repairs to the Premises (other than the Landlord’s Work), and
acknowledges that the time needed to complete any such items shall not delay
the Commencement Date.

 

Attached Exhibit C
sets forth all Landlord’s Work, if any, and all tenant improvements to be
completed by Tenant (“Tenant’s Work”), which is to be performed on the Premises.  Responsibilities for design, payment and
performance of all such work shall be as set forth on attached Exhibit C.  If Tenant fails to notify Landlord of any
defects in the Landlord’s Work within 30 days of
delivery of possession to Tenant, Tenant shall be deemed to have accepted the
Premises in their then condition.  If
Tenant discovers any major defects in the Landlord’s Work during this 10-day
period that would prevent Tenant from using the Premises for its intended
purpose, Tenant shall so notify Landlord in writing and the Commencement Date
shall be delayed until after Landlord has corrected the major defects and
Tenant has had five (5) days to inspect and approve the Premises after Landlord’s
correction of such defects, AFTER RECEIPT FROM
LANDLORD OF NOTICE OF CORRECTION.  The Commencement Date shall not be delayed if
Tenant’s inspection reveals minor defects in the Landlord’s Work that will not
prevent Tenant from using the Premises for their intended purpose.  Tenant shall prepare a punch list of all
minor defects and provide the punch list to Landlord.  Landlord shall promptly correct all punch
list items.

 

4.              RENT.  Tenant shall pay
Landlord without demand, deduction or offset, in lawful money of the United
States, the monthly rental stated in Section 1(d) in advance on or
before the first day of each month during the Lease Term beginning on (check
one): o the Commencement Date, or o           (specify,
but if no date specified, then on the Commencement Date), and any other
additional payments due to Landlord, including Operating Costs (collectively the
“Rent”) when required under this Lease.  Payments
for any partial month at the beginning or end of the Lease term shall be
prorated.

 

If any sums
payable by Tenant to Landlord under this Lease are not received by the SEVENTH (7TH) day of each month, Tenant shall pay
Landlord in addition to the amount due, for the cost of collecting and handling
such late payment, an amount equal to the greater of $100 or five percent (5%)
of the delinquent amount.  In addition,
all delinquent sums payable by Tenant to Landlord and not paid within five days
of the due date shall, at Landlord’s option, bear interest at the rate of twelve
percent (12%) per annum, or the highest rate of interest allowable by

 

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law, whichever
is less.  Interest on all delinquent
amounts shall be calculated from the original due date to the date of payment.

 

Landlord’s acceptance of less than the full
amount of any payment due from Tenant shall not be deemed an accord and
satisfaction or compromise of such payment unless Landlord specifically
consents in writing to payment of such lesser sum as an accord and satisfaction
or compromise of the amount which Landlord claims.

 

6.              USES.  The Premises
shall be used only for the use(s) specified in Section 1(g) above
(the “Permitted Use”), and for no other business or purpose without the prior
written consent of Landlord, WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD.  No act shall be done on or around the Premises
that is unlawful or that will MATERIALLY increase the existing rate of
insurance on the Premises or the Building, or cause the cancellation of any
insurance on the Premises or the Building. 
TENANT ACKNOWLEDGES AND UNDERSTANDS THAT THE FIRE
INSURANCE PREMIUM ON THE BUILDING MAY BE INCREASED DUE TO THE PRESENCE OF
TENANT’S DIESEL GENERATOR/FUEL. 
Tenant shall not commit or allow to be committed any waste upon the
Premises, or any public or private nuisance. 
TENANT SHALL OPERATE ITS BUSINESS UNDER THESE
PERMITTED USES IN THE PREMISES CONTINUOUSLY DURING THE LEASE TERM.

 

7.              COMPLIANCE WITH LAWS.  Tenant shall not
cause or permit the Premises to be used in any way which violates any law,
ordinance, or governmental regulation or order. 
Landlord represents to Tenant, to the best of Landlord’s knowledge, that
with the exception of any Tenant’s Work, as of the Commencement Date, the
Premises ARE NOT IN VIOLATION OF ANY applicable
laws, rules, regulations, or orders, including without limitation, the
Americans With Disabilities Act, if applicable, and Landlord shall be
responsible to promptly cure any VIOLATION which
existed on the Commencement Date.  Tenant
shall be responsible for complying with all laws applicable to the Premises as
a result of Tenant’s particular use AND TENANT’S WORK,
such as modifications required by the Americans With Disabilities Act as a
result of Tenant opening the Premises to the public as a place of public
accommodation.  If the enactment or
enforcement of any law, ordinance, regulation or code during the Lease term
requires any changes to the Premises during the Lease term, the Tenant shall
perform all such changes at its expense if the changes are required due to the
nature of Tenant’s activities at the Premises, or to alterations that Tenant
seeks to make to the Premises; otherwise, Landlord shall perform all such
changes at its expense.

 

9.              UTILITIES AND SERVICES.  LANDLORD SHALL NOT BE RESPONSIBLE FOR PROVIDING ANY UTILITIES TO THE
PREMISES, BUT REPRESENTS AND WARRANTS TO TENANT THAT AS OF THE COMMENCEMENT
DATE ELECTRICITY, WATER, SEWER, AND TELEPHONE UTILITIES ARE AVAILABLE AT OR
ADJACENT TO THE PREMISES.  TENANT SHALL
DETERMINE WHETHER THE AVAILABLE CAPACITY OF SUCH UTILITIES WILL MEET TENANT’S
NEEDS.  TENANT SHALL INSTALL AND CONNECT,
IF NECESSARY, AND DIRECTLY PAY FOR ALL WATER, SEWER, GAS, JANITORIAL,
ELECTRICITY, GARBAGE REMOVAL, HEAT, TELEPHONE, AND OTHER UTILITIES AND SERVICES
USED BY TENANT ON THE PREMISES DURING THE TERM, WHETHER OR NOT SUCH SERVICES
ARE BILLED DIRECTLY TO TENANT.  TENANT
WILL ALSO PROCURE, OR CAUSE TO BE PROCURED, WITHOUT COST TO LANDLORD, ALL
NECESSARY PERMITS, LICENSES OR OTHER AUTHORIZATIONS REQUIRED FOR THE LAWFUL AND
PROPER INSTALLATION, MAINTENANCE, REPLACEMENT, AND REMOVAL ON OR FROM THE
PREMISES OR WIRES, PIPES, CONDUITS, TUBES, AND OTHER EQUIPMENT AND APPLIANCES
FOR USE IN SUPPLYING ALL UTILITIES OR SERVICES TO THE PREMISES.  LANDLORD, UPON REQUEST OF TENANT, AND AT THE
SOLE EXPENSE AND LIABILITY OF TENANT, SHALL JOIN WITH TENANT IN ANY APPLICATION
REQUIRED FOR OBTAINING OR CONTINUING SUCH UTILITIES OR SERVICES.

 

10.       TAXES.  TENANT SHALL PAY ALL TAXES (DEFINED BELOW) APPLICABLE TO THE PREMISES
DURING THE LEASE TERM.  ALL PAYMENTS FOR
TAXES SHALL BE MADE AT LEAST TEN (10) DAYS PRIOR TO THEIR DUE DATE.  TENANT SHALL PROMPTLY FURNISH LANDLORD WITH
SATISFACTORY EVIDENCE THAT TAXES HAVE BEEN PAID.  IF ANY TAXES PAID BY TENANT COVER ANY PERIOD
OF TIME BEFORE OR AFTER THE EXPIRATION OF THE TERM, TENANT’S SHARE OF THOSE
TAXES PAID WILL BE PRORATED TO COVER ONLY THE PERIOD OF TIME WITHIN THE TAX
FISCAL YEAR DURING WHICH THIS LEASE WAS IN EFFECT, AND LANDLORD SHALL PROMPTLY
REIMBURSE TENANT TO THE EXTENT REQUIRED. 
IF TENANT FAILS TO TIMELY PAY ANY TAXES, LANDLORD MAY PAY THEM, AND
TENANT SHALL REPAY SUCH AMOUNT TO LANDLORD WITH TENANT’S NEXT RENT INSTALLMENT.

 

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THE TERM “TAXES”
SHALL MEAN: (I) ANY FORM OF REAL ESTATE TAX OR ASSESSMENT IMPOSED ON THE
PREMISES BY ANY AUTHORITY, INCLUDING ANY CITY, STATE OR FEDERAL GOVERNMENT, OR
ANY IMPROVEMENT DISTRICT, AS AGAINST ANY LEGAL OR EQUITABLE INTEREST OF
LANDLORD OR TENANT IN THE PREMISES OR IN THE REAL PROPERTY OF WHICH THE
PREMISES ARE A PART, OR AGAINST RENT PAID FOR LEASING THE PREMISES; AND (II)
ANY FORM OF PERSONAL PROPERTY TAX OR ASSESSMENT IMPOSED ON ANY PERSONAL
PROPERTY, FIXTURES, FURNITURE, TENANT IMPROVEMENTS, EQUIPMENT, INVENTORY, OR
OTHER ITEMS, AND ALL REPLACEMENTS, IMPROVEMENTS, AND ADDITIONS TO THEM, LOCATED
ON THE PREMISES, WHETHER OWNED BY LANDLORD OR TENANT.  “TAXES” SHALL EXCLUDE ANY NET INCOME TAX
IMPOSED ON LANDLORD FOR INCOME THAT LANDLORD RECEIVES UNDER THIS LEASE.

 

TENANT MAY CONTEST
THE AMOUNT OR VALIDITY, IN WHOLE OR IN PART, OF ANY TAXES AT ITS SOLE EXPENSE,
ONLY AFTER PAYING SUCH TAXES OR POSTING SUCH SECURITY AS LANDLORD MAY REASONABLY
REQUIRE IN ORDER TO PROTECT THE PREMISES AGAINST LOSS OR FORFEITURE.  UPON THE TERMINATION OF ANY SUCH PROCEEDINGS,
TENANT SHALL PAY THE AMOUNT OF SUCH TAXES OR PART OF SUCH TAXES AS FINALLY
DETERMINED, TOGETHER WITH ANY COSTS, FEES, INTEREST PENALTIES, OR OTHER RELATED
LIABILITIES.  LANDLORD SHALL COOPERATE
WITH TENANT IN CONTESTING ANY TAXES, PROVIDED LANDLORD INCURS NO EXPENSE OR
LIABILITY IN DOING SO.

 

12.       ALTERATIONS.  Tenant may
make alterations, additions or improvements to the Premises, including any Tenant’s
Work identified on attached Exhibit C (“Alterations”), with the prior
written consent of Landlord, WHICH SHALL NOT BE
UNREASONABLY WITHHELD.  The
term “Alterations” shall not include the installation of shelves, movable
partitions, Tenant’s equipment, and trade fixtures which may be performed
without damaging existing improvements or the structural integrity of the
Premises, and Landlord’s consent shall not be required for Tenant’s
installation of those items.  Tenant
shall complete all Alterations at Tenant’s expense in compliance with all
applicable laws and in accordance with plans and specifications approved by
Landlord, using contractors approved by Landlord.  NON-PERMANENT AND
REMOVABLE ALTERATIONS AND OTHER NON-PERMANENT AND REMOVABLE INTERIOR
IMPROVEMENTS PAID FOR BY TENANT AND TRADE FIXTURES, FURNITURE, EQUIPMENT AND
OTHER PERSONAL PROPERTY USED IN THE OPERATION OF TENANT’S BUSINESS AND
INSTALLED IN THE PREMISES (COLLECTIVELY “TENANT’S PROPERTY”) SHALL AT ALL TIMES
BE AND REMAIN TENANT’S PROPERTY PROVIDED, HOWEVER, THAT TENANT OR TENANT’S
ASSIGNEE MAY AT ANY TIME REMOVE TENANT’S PROPERTY PROVIDED THAT TENANT OR
TENANT’S ASSIGNEE REPAIRS ALL DAMAGE CAUSED BY SUCH REMOVAL AND SUCH REMOVAL
DOES NOT CAUSE MATERIAL DAMAGE TO THE PREMISES. 
ALTERATIONS CONSISTING OF ITEMS OTHER THAN TENANT’S PROPERTY SHALL
BELONG TO THE LANDLORD UPON EXPIRATION OF THE LEASE TERM AND ANY EXTENSION
THEREOF.  LANDLORD SHALL SUBORDINATE ANY
SECURITY INTEREST OR LIEN ON ANY ITEM OR TENANT’S PROPERTY TO ANY SECURITY INTEREST
OR LIEN GRANTED BY TENANT IN OR TO ANY OF ITS PERSONAL PROPERTY, EQUIPMENT OR
TRADE FIXTURES AS SECURITY FOR INDEBTEDNESS INCURRED FOR THE PURPOSE OF
FINANCING THE PURCHASE OR LEASE OF ANY SUCH PROPERTY AND SHALL SUBORDINATE AND
WAIVE ANY RIGHT OF DISTRAINT, DISTRESS FOR RENT OR LANDLORD’S LIEN THAT MAY ARISE
AT LAW TO THE SECURITY INTEREST AND LIEN OF FIRST UNION NATIONAL BANK OR ITS
SUCCESSOR INTEREST.  CONCURRENTLY WITH
THE EXECUTION OF THIS LEASE, LANDLORD SHALL EXECUTE A CERTIFICATE OF LANDLORD
WAIVER ATTACHED THERETO AS EXHIBIT F. 
TENANT SHALL SPECIFICALLY REMOVE AT THE END OF THE LEASE TERM ALL
INSTALLED CABLE/WIRE UNLESS SPECIFICALLY DIRECTED OTHERWISE BY LANDLORD.  TENANT SHALL IMMEDIATELY REPAIR ANY DAMAGE TO
THE PREMISES CAUSED BY REMOVAL OF ALTERATIONS. 
IF TENANT FAILS TO PERFORM THIS REPAIR WORK WITHIN THIRTY (30) DAYS
AFTER TERMINATION OF THE LEASE TERM, LANDLORD MAY PERFORM THIS WORK
WITHOUT NOTICE TO THE TENANT AND CHARGE TENANT ALL EXPENSES ASSOCIATED WITH
SUCH REPAIR WORK.

 

13.       REPAIRS AND MAINTENANCE. 
Tenant shall, at its sole expense, maintain the Premises in good
condition and promptly make all repairs and replacements, whether structural or
non-structural, necessary to keep the Premises safe and in good condition,
including all utilities and other systems serving the Premises.  Landlord shall maintain INCLUDING
ANY NECESSARY REPAIRS the Building structure, foundation, exterior
walls, and roof.  Tenant shall not damage
any demising wall or disturb the structural integrity of the Premises and shall
promptly repair any damage or injury done to any such demising walls or
structural elements caused by Tenant or its employees, agents, contractors, or
invitees.  If Tenant fails to maintain or
repair the Premises, Landlord may enter the Premises and perform such repair or
maintenance on behalf of Tenant.  In such
case, Tenant shall be obligated to pay to Landlord immediately upon receipt of
demand for payment, as additional Rent, all costs incurred by Landlord.  Notwithstanding anything in this Section to
the contrary, Tenant shall not be responsible for any repairs to the Premises
made necessary by the acts of Landlord or its agents, employees, contractors or
invitees therein.

 

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Upon expiration
of the Lease term, whether by lapse of time or otherwise, Tenant shall promptly
and peacefully surrender the Premises, together with all keys, to Landlord in
as good condition as when received by Tenant from Landlord or as thereafter
improved, reasonable wear and tear and insured casualty excepted.

 

14.       ACCESS.  After
reasonable notice from Landlord (except in cases of emergency, where no notice
is required), Tenant shall permit Landlord and its agents and employees to
enter the Premises at all reasonable times for the purposes of repair or
inspection.  This Section shall not
impose any repair or other obligation upon Landlord not expressly stated
elsewhere in this Lease.  After
reasonable notice to Tenant, Landlord shall have the right to enter the Premises
for the purpose of showing the Premises to prospective purchasers or lenders at
any time, and to prospective tenants within 180 days prior to the expiration or
sooner termination of the Lease term.

 

15.       SIGNAGE.  Tenant shall
obtain Landlord’s written consent before installing any signs upon the
Premises; PROVIDED TENANT SHALL BE PERMITTED TO HAVE SIGNAGE
ON THE BUILDING DIRECTORY, THE FASCIA ON BOTH THE COLBY AND WALL EXPOSURES, AND
ON THE DOOR TO THE PREMISES; ALL SUCH SIGNAGE SHALL BE APPROVED BY THE LANDLORD
Tenant shall install any approved signage at Tenant’s sole expense and in
compliance with all applicable laws.  Tenant
shall not damage or deface the Premises in installing or removing signage and
shall repair any injury or damage to the Premises caused by such installation
or removal.  UPON
TERMINATION OF THIS LEASE, TENANT, AT ITS SOLE COST AND EXPENSE, SHALL REMOVE
ALL SIGNS, AND REPAIR ALL DAMAGE CAUSED BY THE INSTALLATION OR REMOVAL OF ANY
OF ITS SIGNS.

 

16.       DESTRUCTION OR CONDEMNATION.

 

a.     Damage and
Repair.  If the Premises or the portion of the
Property necessary for Tenant’s occupancy are partially damaged but not
rendered untenantable, by fire or other insured casualty, then Landlord shall
diligently restore the Premises and the portion of the Property necessary for Tenant’s
occupancy and this Lease shall not terminate; provided, however, Tenant may
terminate the Lease if Landlord is unable to restore the Premises within ONE HUNDRED TWENTY (120) DAYS
of the casualty event.  The Premises or
the portion of the Property necessary for Tenant’s occupancy shall not be
deemed untenantable if less than twenty-five percent (25%) of each of those
areas are damaged.  Notwithstanding the
foregoing, Landlord shall have no obligation to restore the Premises or the
portion of the Property necessary for Tenant’s occupancy if insurance proceeds
are not available to pay the entire cost of such restoration.  If insurance proceeds are available to
Landlord but are not sufficient to pay the entire cost of restoration, then
Landlord may elect to terminate this Lease and keep the insurance proceeds, by
notifying Tenant within THIRTY
(30) days of the date of such casualty.

 

If the
Premises, the portion of the Property necessary for Tenant’s occupancy, or 50%
or more of the rentable area of the Property are entirely destroyed, or
partially damaged and rendered untenantable, by fire or other casualty,
Landlord may, at its option: (a) terminate this Lease as provided herein,
or (b) restore the Premises and the portion of the Property necessary for Tenant’s
occupancy to their previous condition; provided, however, if such casualty
event occurs during the last 6 months of the Lease term (after considering any
option to extend the term timely exercised by Tenant) then either Tenant or
Landlord may elect to terminate the Lease. 
If, within 30 days after receipt by Landlord
from Tenant of written notice that Tenant deems the Premises or the portion of
the Property necessary for Tenant’s occupancy untenantable, Landlord fails to
notify Tenant of its election to restore those areas, or if Landlord is unable
to restore those areas within six (6) months of the date of the casualty
event, then Tenant may elect to terminate the Lease.

 

If Landlord
restores the Premises or the Property under this Section 16(a), Landlord
shall proceed with reasonable diligence to complete the work, and the base Rent
shall be abated in the same proportion as the untenantable portion of the
Premises bears to the whole Premises, provided that there shall be a rent
abatement only if the damage or destruction of the Premises or the Property did
not result from, or was not contributed to directly or indirectly by the act,
fault or neglect of Tenant, or Tenant’s officers, contractors, licensees,
agents, servants, employees, guests, invitees or visitors.  Provided, Landlord complies with its
obligations under this Section, no damages, compensation or claim shall be
payable by Landlord for inconvenience, loss of business or annoyance directly,
incidentally or consequentially arising from any repair or restoration of any
portion of the Premises or the Property. 
Landlord will not carry insurance of any kind for the protection of Tenant
or any improvements paid for by Tenant or as provided in Exhibit C or on Tenant’s
furniture or on any fixtures, equipment, improvements or appurtenances of Tenant
under this Lease, and Landlord shall not be obligated to repair any damage
thereto or replace the same unless the damage is caused by Landlord’s
negligence.

 

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b.     Condemnation. 
If the Premises, the portion of the Property necessary for Tenant’s
occupancy, or 50% or more of the rentable area of the Property are made untenantable
by eminent domain, or conveyed under a threat of condemnation, this Lease shall
terminate at the option of either Landlord or Tenant as of the earlier of the
date title vests in the condemning authority or the condemning authority first
has possession of the Premises or the portion of the Property and all Rents and
other payments shall be paid to that date. 
In case of taking of a part of the Premises or the portion of the
Property necessary for Tenant’s occupancy that does not render those areas untenantable,
then this Lease shall continue in full force and effect and the base Rent shall
be equitably reduced based on the proportion by which the floor area of any
structures is reduced, such reduction in Rent to be effective as of the earlier
of the date the condemning authority first has possession of such portion or
title vests in the condemning authority. 
The Premises or the portion of the Property necessary for Tenant’s
occupancy shall not be deemed untenantable if less than twenty-five percent
(25%) of each of those areas are condemned. 
Landlord shall be entitled to the entire award from the condemning
authority attributable to the value of the Premises or the Property and Tenant
shall make no claim for the value of its leasehold PROVIDED, HOWEVER, THAT LANDLORD SHALL PRO-RATE ANY SUCH AWARD WITH RESPECT
TO TENANT IMPROVEMENTS.  Tenant
shall be permitted to make a separate claim against the condemning authority
for moving expenses or damages resulting from interruption in its business,
provided that in no event shall Tenant’s claim reduce Landlord’s award.

 

17.       INSURANCE.

 

a.     Liability
Insurance.  During the Lease term, Tenant
shall pay for and maintain commercial general liability insurance with broad
form property damage and contractual liability endorsements.  This policy shall name Landlord as an additional
insured, and shall insure Tenant’s activities and those of Tenant’s employees,
officers, contractors, licensees, agents, servants, employees, guests, invitees
or visitors with respect to the Premises against loss, damage or liability for
personal injury or death or loss or damage to property AND AGAINST ANY AND ALL CLAIMS, ARISING FROM OR
RELATED TO, THE USE AND OCCUPANCY OF THE PREMISES, AND ALL AREAS APPURTENANT TO
THESE PREMISES, INCLUDING, WITHOUT LIMITATION, THE ENTRANCES AND EXITS TO THE
PREMISES, THE SIDEWALKS IMMEDIATELY ADJACENT AND CONTIGUOUS TO THE PREMISES,
AND/OR ARISING FROM OR RELATED TO THE OPERATION OF THE TENANT’S BUSINESS WITH A
COMBINED SINGLE LIMIT OF NOT LESS THAN TWO MILLION DOLLARS ($2,000,000.00), AND A DEDUCTIBLE OF NOT MORE THAN TEN THOUSAND
DOLLARS ($10,000.00).  The
insurance will be noncontributory with any liability insurance carried by
Landlord.  NOT MORE FREQUENTLY THAN EVERY TWO (2) YEARS, IF, IN THE
REASONABLE OPINION OF LANDLORD, THE AMOUNT OR TYPE OF COMMERCIAL GENERAL
LIABILITY INSURANCE COVERAGE AT THAT TIME IS NOT ADEQUATE, TENANT SHALL
INCREASE OR CHANGE THE INSURANCE COVERAGE AS REASONABLY REQUIRED BY
LANDLORD.  TENANT SHALL IMMEDIATELY
PROVIDE LANDLORD WRITTEN NOTICE OF ANY INCIDENT OR OCCURRENCE GIVING RISE TO
ANY LOSS, DAMAGE, LIABILITY OR CLAIM UNDER THIS SECTION.

 

b.     CASUALTY
INSURANCE.  DURING THE
LEASE TERM, TENANT SHALL PAY FOR A LANDLORD MAINTAINED ALL-RISK COVERAGE
CASUALTY INSURANCE (WITH COVERAGE FOR EARTHQUAKE AND, IF THE PREMISES ARE IN A
FLOOD PLAIN, FLOOD DAMAGE) FOR THE PREMISES, IN AN AMOUNT SUFFICIENT TO PREVENT
LANDLORD OR TENANT FROM BECOMING A CO-INSURER UNDER THE TERMS OF THE POLICY,
AND IN AN AMOUNT NOT LESS THAN THE REPLACEMENT COST OF THE PREMISES, WITH A
DEDUCTIBLE OF NOT MORE THAN $5,000.  THE
CASUALTY INSURANCE POLICY SHALL NAME TENANT AS THE INSURED AND LANDLORD AND
LANDLORD’S LENDER(S) AS ADDITIONAL INSUREDS, WITH LOSS PAYABLE TO LANDLORD,
LANDLORD’S LENDER(S), AND TENANT AS THEIR INTERESTS MAY APPEAR.  IN THE EVENT OF A CASUALTY LOSS ON THE
PREMISES, LANDLORD MAY APPLY INSURANCE PROCEEDS UNDER THE CASUALTY
INSURANCE POLICY IN THE MANNER DESCRIBED IN SECTION 16(A).

 

c.     Tenant’s
Insurance.  During the Lease term, Tenant shall pay for
and maintain insurance, with vandalism and malicious mischief, sprinkler
leakage and earthquake endorsements, in an amount sufficient to cover not less
than 100% of the full replacement cost, as the same may exist from time to
time, of all of Tenant’s personal property, fixtures, equipment and Tenant improvements.  SPECIAL FORM (ALL
RISK AR) COVERAGE.  TENANT, AT ITS COST,
SHALL FURTHER PROCURE AND MAINTAIN WORKER’S COMPENSATION INSURANCE AND EMPLOYER’S
LIABILITY INSURANCE WITH A LIMIT OF NO LESS THAN THE AMOUNT AND IN FORM REQUIRED
BY LAW.

 

TENANT’S CONTRACTOR’S INSURANCE. 
TENANT SHALL REQUIRE ANY
CONTRACTOR PERFORMING WORK FOR IT ON THE PREMISES TO CARRY AND MAINTAIN AT NO
EXPENSE TO LANDLORD: (A) COMPREHENSIVE GENERAL LIABILITY INSURANCE,
INCLUDING CONTRACTOR’S LIABILITY COVERAGE, CONTRACTUAL LIABILITY COVERAGE,
COMPLETED

 

6

 

OPERATIONS
COVERAGE, BROAD FROM PROPERTY DAMAGE ENDORSEMENT AND CONTRACTOR’S PROTECTIVE
LIABILITY COVERAGE, TO AFFORD PROTECTION, WITH RESPECT TO PERSONAL INJURY,
DEATH OR PROPERTY DAMAGE OF NOT LESS THAN $1,000,000.00 PER OCCURRENCE,
COMBINED SINGLE LIMIT/$2,000,000.00 AGGREGATE; (B) COMPREHENSIVE
AUTOMOBILE LIABILITY INSURANCE WITH LIMITS FOR EACH OCCURRENCE OF NOT LESS THAN
$1,000,000.00 WITH RESPECT TO PERSONAL INJURY OR DEATH AND $500,000.00 WITH
RESPECT TO PROPERTY DAMAGE; AND (C) WORKER’S COMPENSATION OR SIMILAR
INSURANCE IN FORM AND AMOUNTS REQUIRED BY LAW.

 

d.     Miscellaneous. 
Insurance required under this Section shall be with companies rated
A-XV or better in Best’s Insurance Guide, and which are authorized to transact
business in the State of Washington.  No
insurance policy shall be canceled or reduced in coverage and each such policy
shall provide that it is not subject to cancellation or a reduction in coverage
except after thirty (30) days’ prior written notice to Landlord.  Tenant shall deliver to Landlord upon
commencement of the Lease and from time to time thereafter, UPON REASONABLE REQUEST OF LANDLORD,
copies or certificates of the insurance policies required by this Section; WHICH CERTIFICATE SHALL REQUIRE ACTUAL MAILING TO THE
LANDLORD, DELETING ANY “ENDEAVOR TO MAIL” PROVISIONS.  In no event shall the limit of such policies
be considered as limiting the liability of Tenant under this Lease.

 

e.     Waiver of
Subrogation.  Landlord and Tenant hereby release each other
and any other Tenant, their agents or employees, from responsibility for, and
waive their entire claim of recovery for any loss or damage arising from any
cause covered by insurance required to be carried by each of them.  Each party shall provide notice to the
insurance carrier or carriers of this mutual waiver of subrogation, and shall
cause its respective insurance carriers to waive all rights of subrogation
against the other.  This waiver shall not
apply to the extent of the deductible amounts to any such policies or to the
extent of liabilities exceeding the limits of such policies.

 

18.       INDEMNIFICATION.  Tenant shall
defend, indemnify, and hold Landlord harmless against all liabilities, damages,
costs, and expenses, including attorneys’ fees, arising from any negligent or
wrongful act or omission of Tenant or Tenant’s officers, contractors,
licensees, agents, servants, employees, guests, invitees, or visitors on or
around the Premises or arising from any breach of this Lease by Tenant; TENANT SPECIFICALLY ACKNOWLEDGES AND WAIVES ANY IMMUNITY UNDER RCW
TITLE 51.  Tenant shall use
legal counsel REASONABLY acceptable to Landlord
in defense of any action within Tenant’s defense obligation.  Landlord shall defend, indemnify and hold Tenant
harmless against all liabilities, damages, costs, and expenses, including
attorneys’ fees, arising from any negligent or wrongful act or omission of
Landlord or Landlord’s officers, contractors, licensees, agents, servants, employees,
guests, invitees, or visitors on or around the Premises or arising from any
breach of this Lease by Landlord.  Landlord
shall use legal counsel REASONABLY acceptable to Tenant in defense of any
action within Landlord’s defense obligation.

 

19.       ASSIGNMENT AND SUBLETTING. 
EXCEPT AS PROVIDED ON EXHIBIT “E” ATTACHED,
Tenant shall not assign, sublet, mortgage, encumber or otherwise transfer any
interest in this Lease (collectively referred to as a “Transfer”) or any part
of the Premises, without first obtaining Landlord’s written consent, which
shall not be unreasonably withheld or delayed. 
No Transfer shall relieve Tenant of any liability under this Lease
notwithstanding Landlord’s consent to such transfer.  Consent to any Transfer shall not operate as a
waiver of the necessity for Landlord’s consent to any subsequent Transfer.

 

If Tenant is a
partnership, limited liability company, corporation, or other entity, any
transfer of this Lease by merger, consolidation, redemption or liquidation, or
any change(s) in the ownership of, or power to vote, (EXCEPT WITH
RESPECT TO A REGISTERED PUBLIC OFFERING) which singularly or
collectively represents a majority of the beneficial interest in Tenant, shall
constitute a Transfer under this Section; PROVIDED, HOWEVER, THAT
LANDLORD’S WRITTEN CONSENT TO THIS TYPE OF TRANSFER
SHALL NOT BE WITHHELD IF THE NET WORTH DETERMINED IN ACCORDANCE WITH GAAP OF
THE ASSIGNEE UNDER SUCH TRANSFER IS NOT LESS THAN 75% OF THE GAAP  NET WORTH OF THE ASSIGNOR TENANT.  LANDLORD SHALL BE PROVIDED IN ADVANCE ALL
FINANCIAL DOCUMENTATION REASONABLY NECESSARY TO MAKE THIS NET WORTH
DETERMINATION PRIOR TO ANY SUCH TRANSFER.

 

As a condition
to Landlord’s approval, if given, any potential assignee or sublessee otherwise
approved by Landlord shall assume all obligations of Tenant under this Lease
and shall be jointly and severally liable with

 

7

 

Tenant and any
guarantor, if required, for the payment of Rent and performance of all terms of
this Lease.  In connection with any
Transfer, Tenant shall provide Landlord with copies of all assignments,
subleases and assumption instruments.  EQUIPMENT COLLOCATION AGREEMENTS ENTERED INTO WITH OTHER
TELECOMMUNICATION COMPANIES SHALL NOT CONSTITUTE A SUB-LEASE OR ASSIGNMENT.

 

20.       LIENS.  Tenant shall keep
the Premises free from any liens created by or through Tenant.  Tenant shall indemnify and hold Landlord
harmless from liability from any such liens including, without limitation,
liens arising from any Alterations OR TENANT’S WORK.  If a lien is filed against the Premises by
any person claiming by, through or under Tenant, Tenant shall, upon request of
Landlord, at Tenant’s expense, immediately furnish to Landlord a bond in form
and amount and issued by a surety satisfactory to Landlord, indemnifying
Landlord and the Premises against all liabilities, costs and expenses,
including attorneys’ fees, which Landlord could reasonably incur as a result of
such lien(s), AND SHALL, AT LANDLORD’S REQUEST,
IMMEDIATELY OBTAIN AND RECORD AT TENANT’S EXPENSE A BOND IN LIEU OF CLAIM UNDER
RCW 60.04.161.

 

21.       DEFAULT.  The following
occurrences shall each be deemed an Event of Default by Tenant:

 

a.     Failure To Pay. 
Tenant fails to pay any sum, including Rent, due under this Lease following
five (5) days written notice from Landlord of the failure to pay.

 

b.     Vacation/Abandonment.  Tenant vacates the Premises (defined as an absence for at
least 15 consecutive days without prior notice to Landlord), or Tenant abandons
the Premises (defined as an absence of five (5) days or more while Tenant
is in breach of some other term of this Lease). 
Tenant’s vacation or abandonment of the Premises shall not be subject to
any notice or right to cure.

 

c.     Insolvency.  Tenant becomes insolvent, voluntarily or involuntarily
bankrupt, or a receiver, assignee or other liquidating officer is appointed for
Tenant’s business, provided that in the event of any involuntary bankruptcy or
other insolvency proceeding, the existence of such proceeding shall constitute
an Event of Default only if such proceeding is not dismissed or vacated within
60 days after its institution or commencement.

 

d.     Levy or
Execution.  Tenant’s interest in this Lease or the
Premises, or any part thereof, is taken by execution or other process of law
directed against Tenant, or is taken upon or subjected to any attachment by any
creditor of Tenant, if such attachment is not discharged within 15 days after
being levied.

 

e.     Other
Non-Monetary Defaults.  Tenant breaches any agreement, term or
covenant of this Lease other than one requiring the payment of money and not
otherwise enumerated in this Section, and the breach continues for a period of
30 days after notice by Landlord to Tenant of the breach.

 

f.      Failure to Take
Possession.  Tenant fails to take possession
of the Premises on the Commencement 

Date.

 

22.       REMEDIES.

 

Landlord shall
have the following remedies upon an Event of Default.  Landlord’s rights and remedies under this
Lease shall be cumulative, and none shall exclude any other right or remedy
allowed by law.

 

a.     Termination of
Lease.  Landlord may terminate Tenant’s
interest under the Lease, but no act by Landlord other than written notice from
Landlord to Tenant of termination shall terminate this Lease.  The Lease shall terminate on the date
specified in the notice of termination.  Upon
termination of this Lease, Tenant will remain liable to Landlord for damages in
an amount equal to the rent and other sums that would have been owing by Tenant
under this Lease for the balance of the Lease term, less the net proceeds, if
any, of any reletting of the Premises by Landlord subsequent to the
termination, after deducting all Landlord’s Reletting Expenses (as defined
below).  Landlord shall be entitled to
either collect damages from Tenant monthly on the days on which rent or other
amounts would have been payable under the Lease, or alternatively, Landlord may
accelerate Tenant’s obligations under the Lease and recover from Tenant: (i) unpaid
rent which had been earned at the time of termination; (ii) the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of rent loss that Tenant proves could
reasonably have been avoided; (iii) the amount by which the unpaid rent
for the balance of the term of the Lease after the time of award exceeds the
amount of rent loss that Tenant proves could reasonably be avoided (discounting
such amount by the discount rate of the Federal Reserve Bank of San Francisco
at the time of the award, plus 1%); and (iv) any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant’s
failure to perform its

 

8

 

obligations under
the Lease, or which in the ordinary course would be likely to result from the
Event of Default, including without limitation Reletting Expenses described in Section 22b.

 

b.     Re-Entry and
Reletting.  Landlord may continue this Lease
in full force and effect, and without demand or notice, re-enter and take
possession of the Premises or any part thereof, expel the Tenant from the
Premises and anyone claiming through or under the Tenant, and remove the
personal property of either.  Landlord
may relet the Premises, or any part of them, in Landlord’s or Tenant’s name for
the account of Tenant, for such period of time and at such other terms and
conditions, as Landlord, in its discretion, may determine.  Landlord may collect and receive the rents
for the Premises.  Re-entry or taking
possession of the Premises by Landlord under this Section shall not be
construed as an election on Landlord’s part to terminate this Lease, unless a
written notice of termination is given to Tenant.  Landlord reserves the right following any
re-entry or reletting, or both, under this Section to exercise its right
to terminate the Lease.  During the Event
of Default, Tenant will pay Landlord the rent and other sums which would be
payable under this Lease if repossession had not occurred, plus the net
proceeds, if any, after reletting the Premises, after deducting Landlord’s
Reletting Expenses.  “Reletting Expenses”
is defined to include all expenses incurred by Landlord in connection with
reletting the Premises, including without limitation, all repossession costs,
brokerage commissions, attorneys’ fees, remodeling and repair costs, costs for
removing and storing Tenant’s property and equipment, and rent concessions
granted by Landlord to any new Tenant, prorated over the life of the new lease.

 

c.     Waiver of
Redemption Rights.  Tenant, for itself, and on
behalf of any and all persons claiming through or under Tenant, including
creditors of all kinds, hereby waives and surrenders all rights and privileges
which they may have under any present or future law, to redeem the Premises or
to have a continuance of this Lease for the Lease term, as it may have been
extended.

 

d.     Nonpayment of
Additional Rent.  All costs which Tenant agrees to pay to
Landlord pursuant to this Lease shall in the event of nonpayment be treated as
if they were payments of Rent, and Landlord shall have all the rights herein
provided for in case of nonpayment of Rent.

 

e.     Failure to
Remove Property.  If Tenant fails to remove any of its property
from the Premises at Landlord’s request following an uncured Event of Default,
Landlord may, at its option, remove and store the property at Tenant’s expense
and risk.  If Tenant does not pay the
storage cost within five (5) days of Landlord’s request, Landlord may, at
its option, have any or all of such property sold at public or private sale
(and Landlord may become a purchaser at such sale), in such manner as Landlord
deems proper, UPON REASONABLE NOTICE
to Tenant.  Landlord shall apply the
proceeds of such sale: (I) to the expense of such sale, including reasonable attorneys’
fees actually incurred; (ii) to the payment of the costs or charges for
storing such property; (iii) to the payment of any other sums of money
which may then be or thereafter become due Landlord from Tenant under any of
the terms hereof; and (iv) the balance, if any, to Tenant.  Nothing in this Section shall limit
Landlord’s right to sell Tenant’s personal property as permitted by law to
foreclose Landlord’s lien for unpaid rent.

 

23.       MORTGAGE SUBORDINATION AND ATTORNMENT.  This
Lease shall automatically be subordinate to any mortgage or deed of trust
created by Landlord which is now existing or hereafter placed upon the Premises
including any advances, interest, modifications, renewals, replacements or
extensions (“Landlord’s Mortgage”), provided the holder of any Landlord’s
Mortgage or any person(s) acquiring the Premises at any sale or other
proceeding under any such Landlord’s Mortgage shall elect to continue this
Lease in full force and effect.  Tenant
shall attorn to the holder of any Landlord’s Mortgage or any person(s)
acquiring the Premises at any sale or other proceeding under any Landlord’s
Mortgage provided such person(s) assume the obligations of Landlord under this
Lease.  Tenant shall promptly and in no
event later than fifteen (15) days execute, acknowledge and deliver documents
which the holder of any Landlord’s Mortgage may reasonably require as further
evidence of this subordination and attornment. 
Notwithstanding the foregoing, Tenant’s obligations under this Section are
conditioned on the holder of each of Landlord’s Mortgage and each person
acquiring the Premises at any sale or other proceeding under any such Landlord’s
Mortgage not disturbing Tenant’s occupancy and other rights under this Lease,
so long as no uncured Event of Default exists.

 

24.       NON-WAIVER.  Landlord’s
waiver of any breach of any term contained in this Lease shall not be deemed to
be a waiver of the same term for subsequent acts of Tenant.  The acceptance by Landlord of Rent or other
amounts due by Tenant hereunder shall not be deemed to be a waiver of any
breach by Tenant preceding such acceptance.

 

9

 

25.       HOLDOVER.  If Tenant
shall, without the written consent of Landlord, hold over after the expiration
or termination of the Term, such tenancy shall be deemed to be on a
month-to-month basis and may be terminated according to Washington law.  During such tenancy, Tenant agrees to pay to
Landlord 125% the rate of rental last payable under this Lease, unless a different
rate is agreed upon by Landlord.  All
other terms of the Lease shall remain in effect.

 

26.       NOTICES.  All notices
under this Lease shall be in writing and effective (I) when delivered in
person, (ii) three (3) days after being sent by registered or certified
mail to Landlord or Tenant, as the case may be, at the Notice Addresses set
forth in Section 1(h); or (iii) upon confirmed transmission by
facsimile to such persons at the facsimile numbers set forth in Section 1(h) or
such other addresses/facsimile numbers as may from time to time be designated
by such parties in writing.

 

27.       COSTS AND ATTORNEYS’ FEES.  If Tenant
or Landlord engage the services of an attorney to collect monies due or to
bring any action for any relief against the other, declaratory or otherwise,
arising out of this Lease, including any suit by Landlord for the recovery of
Rent or other payments, or possession of the Premises, OR
ANY  PROCEEDINGS  IN  A FEDERAL BANKRUPTCY CASE
BY OR AGAINST TENANT, the losing party shall pay the prevailing
party a reasonable sum for attorneys’ fees AND ALL ACTUAL COSTS
in such suit, at trial and on appeal.

 

28.       ESTOPPEL CERTIFICATES.  Tenant
shall, from time to time, upon written request of Landlord, execute,
acknowledge and deliver to Landlord or its designee a written statement
specifying the following, subject to any modifications necessary to make such
statements true and complete: (i) the date the Lease term commenced and
the date it expires; (ii) the amount of minimum monthly Rent and the date
to which such Rent has been paid; (iii) that this Lease is in full force
and effect and has not been assigned, modified, supplemented or amended in any
way; (iv) that this Lease represents the entire agreement between the
parties; (v) that all conditions under this Lease to be performed by
Landlord have been satisfied; (vi) that there are no existing claims,
defenses or offsets which the Tenant has against the enforcement of this Lease
by Landlord; (vii) that no Rent has been paid more than one month in
advance; and (viii) that no security has been deposited with Landlord (or,
if so, the amount thereof).  Any such
statement delivered pursuant to this Section may be relied upon by a
prospective purchaser of Landlord’s interest or assignee of any mortgage or new
mortgagee of Landlord’s interest in the Premises.  If Tenant shall fail to respond within ten (10) days
of receipt by Tenant of a written request by Landlord as herein provided, Tenant
shall be deemed to have given such certificate as above provided without modification
and shall be deemed to have admitted the accuracy of any information supplied
by Landlord to a prospective purchaser or mortgagee.

 

29.       TRANSFER OF LANDLORD’S INTEREST.  This Lease
shall be assignable by Landlord without the consent of Tenant.  In the event of any transfer or transfers of
Landlord’s interest in the Premises, other than a transfer for security
purposes only, upon the assumption of this Lease by the transferee, Landlord
shall be automatically relieved of obligations and liabilities accruing from
and after the date of such transfer, except for any retained security deposit
or prepaid rent, and Tenant shall attorn to the transferee.

 

30.       RIGHT TO PERFORM.  If Tenant
shall fail to timely pay any sum or perform any other act on its part to be
performed hereunder, Landlord may make any such payment or perform any such
other act on Tenant’s part to be made or performed as provided in this Lease.  Tenant shall, on demand, reimburse Landlord
for its expenses incurred in making such payment or performance.  Landlord shall (in addition to any other
right or remedy of Landlord provided by law) have the same rights and remedies
in the event of the nonpayment of sums due under this Section as in the
case of default by Tenant in the payment of Rent.

 

31.       HAZARDOUS MATERIAL.  LANDLORD MAKES NO REPRESENTATION OR WARRANTIES REGARDING “HAZARDOUS
MATERIAL” (AS DEFINED BELOW) ON, IN, OR UNDER THE PREMISES.  IF THERE IS ANY HAZARDOUS MATERIAL ON, IN, OR
UNDER THE PREMISES AS OF THE STARTING DATE OF TENANT’S WORK OR AS OF THE
COMMENCEMENT DATE, WHICH HAS BEEN OR THEREAFTER BECOMES UNLAWFULLY RELEASED
THROUGH NO FAULT OF TENANT, THEN LANDLORD SHALL INDEMNIFY, DEFEND AND HOLD
TENANT HARMLESS FROM ANY AND ALL CLAIMS, JUDGMENTS, DAMAGES, PENALTIES, FINES,
COSTS, LIABILITIES OR LOSSES INCLUDING, WITHOUT LIMITATION, SUMS PAID IN
SETTLEMENT OF CLAIMS, ATTORNEYS FEES, CONSULTANT FEES AND EXPERT FEES, INCURRED
OR SUFFERED BY TENANT EITHER DURING OR AFTER THE LEASE TERM AS A RESULT OF SUCH
CONTAMINATION.

 

Tenant shall
not cause or permit any Hazardous Material to be brought upon, kept, or used in
or about, or disposed of on the Premises by Tenant, its agents, employees,
contractors or invitees, except in strict compliance with all applicable
federal, state and local laws, regulations, codes and ordinances.  If Tenant breaches the

 

10

 

obligations
stated in the preceding sentence, then Tenant shall indemnify, defend and hold
Landlord harmless from any and all claims, judgments, damages, penalties,
fines, costs, liabilities or losses including, without limitation, diminution
in the value of the Premises, damages for the loss or restriction on use of
rentable or usable space or of any amenity of the Premises, or elsewhere, damages
arising from any adverse impact on marketing of space at the Premises, and sums
paid in settlement of claims, attorneys’ fees, consultant fees and expert fees
incurred or suffered by Landlord either during or after the Lease term.  THESE INDEMNIFICATIONS BY
LANDLORD AND TENANT INCLUDE, without limitation, costs incurred in
connection with any investigation of site conditions or any clean-up, remedial,
removal or restoration work, whether or not required by any federal, state or
local governmental agency or political subdivision, because of Hazardous
Material present in the Premises, or in soil or ground water on or under the
Premises.  Tenant shall immediately
notify Landlord of any inquiry, investigation or notice that Tenant may receive
from any third party regarding the actual or suspected presence of Hazardous
Material on the Premises.

 

Without
limiting the foregoing, if the presence of any Hazardous Material brought upon,
kept or used in or about the Premises by Tenant, its agents, employees, contractors
or invitees, results in any unlawful release of Hazardous Materials on the
Premises or any other property, Tenant shall promptly take all actions, at its
sole expense, as are necessary to return the Premises or any other property, to
the condition existing prior to the release of any such Hazardous Material;
provided that Landlord’s approval of such actions shall first be obtained,
which approval may be withheld at Landlord’s sole discretion.

 

As used
herein, the term “Hazardous Material” means any hazardous, dangerous, toxic or
harmful substance, material or waste including biomedical waste which is or
becomes regulated by any local governmental authority, the State of Washington
or the United States Government, due to its potential harm to the health,
safety or welfare of humans or the environment.

 

32.       QUIET ENJOYMENT.  So long as Tenant
pays the Rent and performs all of its obligations in this Lease, Tenant’s
possession of the Premises will not be disturbed by Landlord or anyone claiming
by, through or under Landlord, or by the holders of any Landlord’s Mortgage or
any successor thereto.

 

33.       RIGHT OF ENTRY.  Landlord
and its agents, employees and contractors shall have the right to enter the
Premises at reasonable times for inspection, to make repairs, alterations, and
improvements, to show the Premises to prospective purchasers and, within six (6) months
prior to the expiration of the Lease term, to show the Premises to prospective Tenants.

 

SURRENDER OF PREMISES.  TENANT SHALL SURRENDER POSSESSION OF THE
PREMISES AND ALL OF TENANT’S ALTERATIONS, AS DEFINED ABOVE, OTHER THAN THOSE
THAT LANDLORD HAS DEMANDED TENANT TO REMOVE IN ACCORDANCE WITH SECTION 12,
TO LANDLORD UPON EXPIRATION OF THIS LEASE, OR UPON ITS EARLIER TERMINATION,
BROOM CLEAN AND IN GOOD CONDITION AND REPAIR (EXCEPT FOR ORDINARY WEAR AND TEAR
OR DESTRUCTION TO THE PREMISES COVERED BY SECTION 16 WHERE LANDLORD ELECTS
TO TERMINATE).  TENANT’S SURRENDER OF THE
PREMISES UPON EXPIRATION OF THE TERM SHALL BE WITHOUT THE NECESSITY OF ANY NOTICE
FROM LANDLORD, AND TENANT HEREBY WAIVES NOTICE TO VACATE THE PREMISES.  IF TENANT FAILS TO SURRENDER THE PREMISES
UPON THE EXPIRATION OF THE TERM, OR UPON TERMINATION OF ANY HOLDOVER PERIOD, IF
APPLICABLE, UNDER SECTION 25 ABOVE, TENANT WILL BE LIABLE TO LANDLORD FOR
ANY AND ALL DAMAGES INCURRED BY LANDLORD AS A RESULT, AND TENANT WILL INDEMNIFY
LANDLORD AGAINST ALL CLAIMS AND DEMANDS MADE BY ANY SUCCEEDING TENANTS AND/OR
BROKERS AGAINST LANDLORD BASED ON DELAY BY LANDLORD IN DELIVERING POSSESSION OF
THE PREMISES TO SUCH SUCCEEDING TENANT OR OWNER.  IN ADDITION, TENANT SHALL PAY TO LANDLORD,
DURING ANY PERIOD THAT IT SHALL REFUSE TO SURRENDER POSSESSION OF THE PREMISES
TO LANDLORD, THE BASE RENT AT THE RATE SPECIFIED IN SECTION 1 TOGETHER
WITH ALL ADDITIONAL RENT DUE HEREUNDER.

 

LIMITATION ON LANDLORD’S LIABILITY.  IF LANDLORD IS IN DEFAULT OF
THIS LEASE, AND AS A CONSEQUENCE TENANT RECOVERS A MONEY JUDGMENT AGAINST
LANDLORD, THE JUDGMENT SHALL BE SATISFIED ONLY OUT OF THE PROCEEDS OF SALE
RECEIVED ON EXECUTION OF THE JUDGMENT AND LEVY AGAINST THE RIGHT, TITLE AND
INTEREST OF LANDLORD IN THE PREMISES, OR OUT OF RENT OR OTHER INCOME FROM THE
BUILDING, RECEIVABLE BY LANDLORD, OR OUT OF THE CONSIDERATION RECEIVED BY
LANDLORD FROM THE SALE OR OTHER DISPOSITION OF ALL OR ANY PART OF LANDLORD’S
RIGHT, TITLE AND INTEREST IN THE PROPERTY; PROVIDED, HOWEVER, THAT THIS
LIMITATION SHALL NOT BE APPLICABLE IF MORE THAN 75% OF THE FAIR MARKET VALUE OF
THE PROPERTY AT THE LEASE COMMENCEMENT DATE IS ENCUMBERED AT THE TIME OF ENTRY
OF ANY SUCH MONETARY JUDGMENT.

 

11

 

NO INTERFERENCE FROM DELETED TEXT.  THIS LEASE WAS FREELY AND
VOLUNTARILY NEGOTIATED BETWEEN THE PARTIES. 
ALTHOUGH THE PRINTED PROVISIONS OF THIS LEASE WERE INITIALLY DRAWN BY
LANDLORD OR LANDLORD’S AGENT, LANDLORD AND TENANT AGREE THAT THIS CIRCUMSTANCE
SHALL NOT CREATE ANY PRESUMPTION, CANON OF CONSTRUCTION, OR IMPLICATION
FAVORING THE POSITION OF EITHER LANDLORD OR TENANT.  THIS LEASE HAS BEEN SUBMITTED TO THE SCRUTINY
OF ALL PARTIES AND THEIR COUNSEL IF DESIRED OR REQUIRED.  LANDLORD AND TENANT AGREE THAT THE
INTERLINEATION, OBLITERATION, OR DELETION OF LANGUAGE FROM THIS LEASE, OR ANY
OF ITS PRELIMINARY DRAFTS, PRIOR TO ITS MUTUAL EXECUTION BY LANDLORD AND TENANT
SHALL NOT BE CONSTRUED TO HAVE ANY PARTICULAR MEANING OR IMPLICATION,
INCLUDING, WITHOUT LIMITATION, ANY IMPLICATION THAT LANDLORD OR TENANT INTENDED
TO STATE THE OPPOSITE OF THE DELETED LANGUAGE. 
THIS LEASE SHALL BE READ AS IF OBLITERATED OR DELETED LANGUAGE HAD NEVER
EXISTED AND INTERLINEATED LANGUAGE HAD ALWAYS EXISTED AND SHALL BE GIVEN A FAIR
AND REASONABLE INTERPRETATION IN ACCORDANCE WITH THE WORDS HEREOF, WITHOUT
CONSIDERATION OF WEIGHT BEING GIVEN TO ITS HAVING BEEN DRAFTED BY ANY PARTY
HERETO OR ITS COUNSEL.

 

FAILURE TO SEND AN INVOICE NOT WAIVER.  LANDLORD’S FAILURE TO PROVIDE
ANY INVOICES, BILL STATEMENTS, ACCOUNTING NOTICES OR DEMANDS REQUIRED HEREUNDER
WITH RESPECT TO AN OBLIGATION OF TENANT, SHALL IN NO WAY EXCUSE OR RELIEVE
TENANT FROM SUCH OBLIGATION OR CONSTITUTE A WAIVER OF LANDLORD’S RIGHT TO  BILL AND COLLECT SUCH OBLIGATION.

 

34.       GENERAL.

 

a.     Heirs and
Assigns.  This Lease shall apply to and be
binding upon Landlord and Tenant and their respective heirs, executors,
administrators, successors and assigns.

 

b.     Brokers’ Fees.  Tenant represents and warrants to Landlord that it has not
engaged any broker, finder or other person who would be entitled to any
commission or fees for the negotiation, execution, or delivery of this Lease
other than as disclosed in Section 1(i) or elsewhere in this Lease.  Tenant shall indemnify and hold Landlord
harmless against any loss, cost, liability or expense incurred by Landlord as a
result of any claim asserted by any such broker, finder or other person on the
basis of any arrangements or agreements made or alleged to have been made by or
on behalf of Tenant.  This subparagraph
shall not apply to brokers with whom Landlord has an express written brokerage
agreement.

 

c.     Entire
Agreement.  This Lease contains all of the
covenants and agreements between Landlord and Tenant relating to the Premises.  No prior or contemporaneous agreements or
understanding pertaining to the Lease shall be valid or of any force or effect
and the covenants and agreements of this Lease shall not be altered, modified
or added to except in writing signed by Landlord and Tenant.

 

d.     Severability.  Any provision of this Lease which shall prove to be invalid,
void or illegal shall in no way affect, impair or invalidate any other provision
of this Lease.

 

e.     Force Majeure.  Time periods for either party’s performance under any
provisions of this Lease (excluding payment of Rent) shall be extended for
periods of time during which the party’s performance is prevented due to
circumstances beyond such party’s control, including without limitation, fires,
floods, earthquakes, lockouts, strikes, embargoes, governmental regulations,
acts of God, public enemy, war or other strife.

 

f.      Governing Law.  This Lease shall be governed by, construed AND ENFORCED in accordance with the laws of the State of Washington.  JURISDICTION
AND VENUE FOR ANY ACTION RELATED TO THIS LEASE SHALL BE IN THE WASHINGTON STATE
SUPERIOR COURT FOR SNOHOMISH COUNTY.

 

g.     Memorandum of
Lease.  Except for the pages containing
the Broker Provisions and Commission Agreement, the parties signatures and
attached Exhibits A and B, this Lease shall not be recorded.  However, Landlord and Tenant shall, at the
other’s request, execute and record a memorandum of Lease in recordable form that
identifies Landlord and Tenant, the commencement and expiration dates of the
Lease, and the legal description of the Premises as set forth on attached Exhibit B.

 

h.     Submission of
Lease Form Not an Offer.  One party’s submission of this
Lease to the other for review shall not constitute an offer to lease the
Premises.  This Lease shall not become
effective and binding upon Landlord and Tenant until it has been fully signed
by both Landlord and Tenant.

 

i.      No Light, Air
or View Easement.  Tenant has not been granted an
easement or other right for light, air or view to or from the Premises.  Any diminution or shutting off of light, air
or view by any structure which may be

 

 

12

 

erected on or
adjacent to the Building shall in no way effect this Lease or the obligations
of Tenant hereunder or impose any liability on Landlord.

 

j.      Authority of
Parties.  Any individual signing this
Lease on behalf of an entity represents and warrants to the other that such
individual has authority to do so and, upon such individual’s execution, that
this Lease shall be binding upon and enforceable against the party on behalf of
whom such individual is signing.

 

35.       Exhibits and Riders.  The following
exhibits and riders are made a part of this Lease:

 

Exhibit A        Floor
Plan Outline of the Premises

 

Exhibit B        Legal
Description

 

Exhibit C        Tenant
Improvement Schedule

 

Exhibit D        Rules and
Regulations

 

EXHIBIT E    ENCUMBRANCE
OF LEASEHOLD ESTATE

 

EXHIBIT F    CERTIFICATE
OF LANDLORD WAIVER

 

CHECK THE BOX
FOR ANY OF THE FOLLOWING THAT WILL APPLY. 
ANY RIDERS CHECKED SHALL BE EFFECTIVE ONLY UPON BEING INITIALED BY THE
PARTIES AND ATTACHED TO THE LEASE.  CAPITALIZED
TERMS USED IN THE RIDERS SHALL HAVE THE MEANING GIVEN TO THEM IN THE LEASE.

 

ý    Rent
Rider

 

o    Retail
Use Rider

 

ý    Arbitration
Rider

 

o    Limitation
on Landlord’s Liability Rider

 

ý    Guaranty
of Tenant’s Lease Obligations Rider

 

o    Parking
Rider

 

ý    Option
to Extend Rider

 

36.       AGENCY DISCLOSURE.  At the
signing of this Agreement,

 

Landlord’s Agent
TOM BOHMAN, MIKE LIVINGSTON OF

 

CUSHMAN & WAKEFIELD OF WASHINGTON, INC.

(insert names of Licensee and the Company name as licensed)

 

represented LANDLORD

(insert Landlord, Tenant, both Landlord and Tenant or neither Landlord
nor Tenant)

 

and Tenant’s Broker
(Licensee) SCOTT ROBERTSON OF

 

KIDDER MATHEWS & SEGNER

(insert names of Licensee and the Company name as licensed)

 

represented TENANT

(insert Landlord, Tenant,
both Landlord and Tenant or neither Landlord nor Tenant)

 

If Tenant’s
Licensee and Landlord’s Agent are different salespersons affiliated with the
same Broker, then both Buyer and Seller confirm their consent to that Broker
acting as a dual agent.  If Tenant’s
Licensee and Landlord’s Agent are the same salesperson representing both
parties, then both Landlord and Tenant confirm their consent to that
salesperson and his/her Broker acting as dual agents.  Landlord and Tenant confirm receipt of the
pamphlet entitled “The Law of Real Estate Agency.”

 

13

 

37.       BROKER PROVISIONS AND COMMISSION AGREEMENT.

 

Landlord shall
pay a commission to            (“Landlord’s
Broker”) in the amount stated BELOW.

 

LANDLORD
SHALL PAY CUSHMAN & WAKEFIELD A REAL ESTATE COMMISSION EQUAL TO FIVE
PERCENT (5%) OF THE AGGREGATE NNN RENT FOR YEARS 1-5 OF THE LEASE AND TWO AND
ONE HALF PERCENT (2 1/2%) OF THE AGGREGATE NNN RENT FOR YEARS 6-10
OF THE LEASE TERM.  CUSHMAN &
WAKEFIELD SHALL SPLIT THE ABOVE COMMISSION ON A 50/50 BASIS WITH KIDDER MATHEWS &
SEGNER.  IN ADDITION TO THE ABOVE
COMMISSION, LANDLORD SHALL PAY CUSHMAN & WAKEFIELD AN ADDITIONAL
COMMISSION EQUAL TO ONE DOLLAR FIFTY CENTS PER SQUARE FOOT ($1.50/SF), ALL OF
WHICH SHALL BE PAID TO KIDDER MATHEWS & SEGNER.  ABOVE COMMISSIONS SHALL BE PAID ONE HALF
(1/2) UPON EXECUTION OF THE LEASE AND THE BALANCE UPON OCCUPANCY.

 

If Landlord’s
Agent is required to employ an attorney to enforce or declare its rights under
this Section, the prevailing party in any such action shall be entitled to
recover its reasonable attorneys’ fees, in an amount determined by the court.  Neither Landlord’s Agent nor Tenant’s
Licensee are receiving compensation from more than one party to this
transaction unless otherwise disclosed on an attached addendum, in which case
Landlord and Tenant consent to such compensation.

 

LANDLORD’S
AGENT AND TENANT’S LICENSEE HAVE MADE NO REPRESENTATIONS OR WARRANTIES
CONCERNING THE PREMISES, THE MEANING OF THE TERMS AND CONDITIONS OF THIS LEASE,
LANDLORD’S OR TENANTS FINANCIAL STANDING, ZONING, COMPLIANCE OF THE PREMISES
WITH APPLICABLE LAWS, SERVICE OR CAPACITY OF UTILITIES, OPERATING EXPENSES, OR
HAZARDOUS MATERIALS.  LANDLORD AND TENANT
ARE EACH ADVISED TO SEEK INDEPENDENT LEGAL ADVICE ON THESE AND OTHER MATTERS
ARISING UNDER THIS LEASE.

 

IN WITNESS
WHEREOF this Lease has been executed the date and year first above written.

 

	
  /s/ Mary
  Stuart Hartman

  	
   

  	
   

  
	
  LANDLORD:

  	
   

  	
  TENANT

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Robert
  T. Warstler

  
	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
  ITS:

  
	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
  ITS:

  

 

14

 

	
  STATE OF
  NORTH CAROLINA

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF
  Avery

  	
  )

  

 

I certify that
I know or have satisfactory evidence that Mary Stuart Hartmann as the person who
appeared before me and said person acknowledged that she signed this
instrument, on oath stated that she was authorized to execute the instrument and
acknowledged it as the Trustee of W. L. Hartmann Marital Trust to be the free and
voluntary act of such party for the uses and purposes mentioned in the
instrument.

 

DATED: 24 of August   ,  
2000

 

	
  (Seal or
  stamp)

  	
   

  	
  /s/ Becky I.
  Alghrary

  
	
   

  	
   

  
	
   

  	
  Printed
  Name:

  	
  Becky I.
  Alghrary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NOTARY
  PUBLIC in and for the State

  
	
   

  	
  of North
  Carolina residing at 140 Robert Cook Lane

  
	
   

  	
  Banner Elk,
  NC 2860

  
	
   

  	
  My
  Commission expires:

  	
  3/15/2005

  
							

 

 

	
  STATE OF
  California

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF Sonoma

  	
  )

  

 

I certify that
I know or have satisfactory evidence that Robert T. Warstler is the person who
appeared before me and said person acknowledged that he signed this instrument,
on oath stated that he was authorized to execute the instrument and
acknowledged it as the President of Advanced TelCom, Inc. to be the
free and voluntary act of such party for the uses and purposes mentioned in the
instrument.

 

DATED:  August 18, 2000

 

	
  (Seal or
  stamp)

  	
  /s/ Leanne
  E. Sperry

  
	
   

  	
   

  
	
   

  	
  Printed
  Name:

  	
  Leanne E.
  Sperry

  
	
   

  	
   

  	
   

  
	
  [Notary
  Seal]

  	
  NOTARY
  PUBLIC in and for the State

  
	
   

  	
  of
  California residing at

  	
  110 Stony
  Point Rd #200 Santa

  
	
   

  	
  Rosa CA
  95401

  
	
   

  	
   

  	
   

  
	
   

  	
  My
  Commission expires:

  	
  12-30-03

  
						

 

15

 

	
  STATE OF
  WASHINGTON

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
  )

  

 

I certify that
I know or have satisfactory evidence that                                              is
the person who appeared before me and said person acknowledged that                                                 signed
this instrument, on oath stated that                                                   was
authorized to execute the instrument and acknowledged it as the                                                        of
                                     to
be the free and voluntary act of such party for the uses and purposes mentioned
in the instrument.

 

DATED:                       ,
             

 

	
  (Seal or
  stamp)

  	
   

  
	
   

  	
   

  
	
   

  	
  Printed
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  NOTARY
  PUBLIC in and for the State

  
	
   

  	
  of
  Washington residing at

  	
   

  
	
   

  	
   

  
	
   

  	
  My
  Commission expires:

  	
   

  
					

 

	
  STATE OF
  WASHINGTON

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
  )

  

 

I certify that
I know or have satisfactory evidence that                                           is
the person who appeared before me and said person acknowledged that                                             signed
this instrument, on oath stated that                                             was
authorized to execute the instrument and acknowledged it as the                                                                 of
Advanced TelCom, Inc. to be the free and voluntary act of such party for
the uses and purposes mentioned in the instrument.

 

DATED:                      ,
           

 

	
  (Seal or
  stamp)

  	
   

  
	
   

  	
   

  
	
   

  	
  Printed
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
  [Notary
  Seal]

  	
  NOTARY
  PUBLIC in and for the State

  
	
   

  	
  of
  California residing at

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  My
  Commission expires:

  	
   

  
						

 

16

 

EXHIBIT A
[Outline of the Premises]

 

 

	
  

  

 

17

 

EXHIBIT B
[Legal Description]

 

 

Lots 15, 16, and 17, re-plat of Block 683,
Plat of Everett, as per plat recorded in volume 4 of Plats on page 49,
records of Snohomish County, State of Washington.

 

18

 

EXHIBIT C
[Tenant Improvement Schedule]

 

LANDLORD’S WORK:

 

1.                                      LANDLORD SHALL REMOVE THE BRICK CHIMNEY FROM
THE ROOF OF THE BUILDING PRIOR TO LEASE COMMENCEMENT.

 

2.                                      LANDLORD SHALL SEAL OR RESEAL THE EXISTING
ROOF MEMBRANE.  LANDLORD SHALL COORDINATE
SAID ROOF WORK WITH TENANT’S IMPROVEMENT SCHEDULE.

 

TENANTS WORK:

 

ARCHITECTURAL:

 

1.                                      DEMOLITION OF EXISTING WALLS, STRUCTURES, AND
FINISHES TO ACCOMMODATE NEW WORK.

 

2.                                      NEW WALLS AND FLOOR COVERINGS FOR NEW SPACES
THAT INCLUDE WAITING/RECEPTION, CUSTOMER SERVICE AREAS, VARIOUS OFFICES,
SUPPORT, AND ADMINISTRATIVE SPACES, TECHNICIAN AND MCC ROOMS, CONFERENCE ROOMS,
AND SWITCH EQUIPMENT ROOMS.  NEW CEILING
IS PROPOSED FOR THE SWITCH EQUIPMENT ROOM. 
IF BUDGET ALLOWS, NEW CEILINGS WILL REPLACE EXISTING CEILINGS IN OTHER
REMODELED AREAS.

 

3.                                      A NEW 4” NORMAL WEIGHT CONCRETE TOPPING SLAB
IS BEING CONSIDERED FOR THE SWITCH ROOM FOR PURPOSES OF ANCHORING THE RACKS TO
THE FLOOR.

 

4.                                      THE AREA ADJACENT TO THE BASEMENT RAMP WILL
BE ENCLOSED TO ACCOMMODATE THE GENERATOR.

 

5.                                      THE AREA WEST OF THE EXISTING BASEMENT TOILET
ROOMS IS ANTICIPATED TO BE ENCLOSED TO PROVIDE SECURED SPACE FOR THE BATTERY
EQUIPMENT ROOM.

 

6.                                      THE INTERMEDIATE WALLS BETWEEN THE THREE
EXISTING BASEMENT STORAGE ROOMS IS SCHEDULED TO BE DEMOLISHED (ALONG WITH THE
CONCRETE CEILING IN THE CENTER STORAGE ROOM) TO COMBINE ALL THREE ROOMS INTO
ONE NEW CO-LOCATION SPACE.

 

7.                                      NEW BACK PORCH/ENTRY TO ACCOMMODATE THE NEW
GENERATOR EXHAUST SHAFT AND PROVIDE IMPROVED EQUIPMENT ACCESS TO THE INTERIOR.

 

STRUCTURAL:

 

1.                                      PROVIDES NEW COLUMNS AND FOOTINGS TO INCREASE
THE FLOOR LOAD CARRYING CAPACITY FOR THE SWITCH EQUIPMENT ROOM.

 

MECHANICAL AND ELECTRICAL:

 

1.                                      UPGRADE ELECTRICAL POWER SERVICE TO THE
BUILDING.

 

2.                                      REPLACE EXISTING ELECTRICAL SERVICE
SWITCHGEAR AND UPGRADE DISTRIBUTION SYSTEM.

 

3.                                      UPGRADE EMERGENCY EGRESS LIGHTING SYSTEM.

 

4.                                      INSTALL EMERGENCY GENERATOR AND AUTOMATIC
TRANSFER EQUIPMENT.

 

5.                                      AUGMENT EXISTING HVAC SYSTEM TO PROVIDE
ADDITIONAL COOLING AS NECESSARY TO SUPPORT EQUIPMENT

 

19

 

6.                                      UPGRADE EXISTING TELEPHONE SERVICE TO
BUILDING TO INCLUDE REDUNDANT, FIBER OPTIC CABLE SERVICE.

 

7.                                      MODIFY PLUMBING TO ACCOMMODATE NEW FIXTURES.

 

8.                                      MODIFY EXISTING LIGHTING TO SUPPORT NEW FLOOR
PLAN CONFIGURATION.

 

9.                                      EXTEND EXISTING FIRE SPRINKLER SYSTEM FOR
APPROPRIATE COVERAGE.

 

10.                               PROVIDE AN ELECTRONIC SECURITY SYSTEM.

 

11.                               TENANT SHALL DELIVER TO LANDLORD A COPY OF
THE CERTIFICATE OF OCCUPANCY OR OTHER GOVERNMENTAL SIGN-OFF PERMITTING TENANT’S
OCCUPANCY OF THE PREMISES ISSUED BY THE APPROPRIATE GOVERNMENTAL AGENCY UPON
COMPLETION OF TENANT’S WORK.

 

TENANT UNDERSTANDS AND ACKNOWLEDGES THAT IT SHALL
DESIGN, PAY FOR, AND ARRANGE FOR PERFORMANCE OF ALL TENANT’S WORK, INCLUDING
ALL NECESSARY PERMITS.  ALL OF TENANT’S
WORK IS AT TENANT’S ELECTION AND IS NOT BEING SPECIFICALLY REQUIRED BY THE
LANDLORD AS A CONDITION OF THE PARTIES’ LEASE. 
TENANT’S PLANS SHALL BE SUBJECT TO LANDLORD’S APPROVAL, WHICH APPROVAL
SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED. 
LANDLORD SHALL BE ENTITLED TO WITHHOLD APPROVAL IF THE PROPOSED PLANS
AND SPECIFICATIONS (I) INTERFERE WITH THE STRUCTURAL INTEGRITY OF THE
BUILDINGS, (II) OVERLOAD THE UTILITY SYSTEMS OF THE BUILDINGS, (III) VIOLATE
ANY APPLICABLE LAWS OR REGULATIONS, (IV) MATERIALLY AFFECT THE ARCHITECTURAL
INTEGRITY OF THE BUILDINGS, OR (V) AFFECT THE FUTURE MARKETABILITY OF THE BUILDING.  THE COST TO LANDLORD OF REVIEW OF THE TENANT’S
PLANS BY DESIGN PROFESSIONALS, INCLUDING ARCHITECTS AND ENGINEERS, AS
APPROPRIATE, SHALL BE PAID FOR AND REIMBURSED TO LANDLORD BY TENANT.  IF LANDLORD DISAPPROVES OF ANY OF TENANT’S
PLANS, LANDLORD SHALL ADVISE TENANT IN REASONABLE DETAIL OF REQUIRED REVISIONS
AND THE REASONS THEREFOR, AFTER BEING SO ADVISED BY LANDLORD, TENANT SHALL
PROMPTLY SUBMIT A REDESIGN, INCORPORATING THE REVISIONS REQUIRED BY LANDLORD,
FOR LANDLORD’S APPROVAL.  IF TENANT HAS
REASON TO DISPUTE ANY LANDLORD DISAPPROVAL, THEN THE PARTIES SHALL MEET WITHIN
FIVE (5) DAYS AND ATTEMPT TO RESOLVE THE DISPUTE.

 

IF THE PARTIES ARE UNABLE TO RESOLVE THEIR
DIFFERENCES AS TO TENANT’S PRELIMINARY PLANS WITHIN FIVE (5) DAYS AFTER
MEETING, THEN EITHER PARTY MAY INITIATE AN ARBITRATION PROCEDURE BY
NOTIFYING THE OTHER PARTY OF THE NEED TO SUBMIT THEIR DISAGREEMENTS TO BINDING
AND FINAL ARBITRATION BY A MUTUALLY ACCEPTABLE ARBITRATOR WITH AT LEAST TEN (10) YEARS
COMMERCIAL OFFICE DESIGN EXPERIENCE.  IF
THE PARTIES ARE UNABLE TO AGREE ON THE ARBITRATOR WITHIN A PERIOD OF TEN (10) DAYS
OF NOTICE, THEN EITHER PARTY MAY REQUEST RESOLUTION BYA SINGLE ARBITRATOR
BEFORE THE AMERICAN ARBITRATION ASSOCIATION AS PROVIDED IN THE ARBITRATION
RIDER.

 

THE COMMENCEMENT DATE, AS DEFINED IN SECTION 1(B),
SHALL NOT BE DELAYED BEYOND SEPTEMBER 15, 2000 AS THE RESULT OF TENANT’S
WORK.  ALL OF TENANT’S WORK AND PERMITTED
IMPROVEMENTS SHALL BE IN ACCORDANCE WITH PLANS APPROVED BY LANDLORD.  TENANT SHALL BE RESPONSIBLE FOR AND PAY THE
COSTS OF UTILITIES TO THE PREMISES DURING THE PERIOD OF TENANT’S WORK PRIOR TO
THE COMMENCEMENT DATE.

 

TENANT SHALL HAVE THE RIGHT TO INSTALL ON THE ROOF
(PROVIDED THAT INSTALLATION IS PERFORMED IN ACCORDANCE WITH BUILDING CODES AND
STANDARDS) EITHER: A SATELLITE DISH MEASURING LESS THAN ONE METER IN DIAMETER,
A GPS IN-CAST ANTENNAE OR A CLUSTER OF FOUR ANTENNAS MEASURING LESS THAN 12-1NCHES
SQUARE; AND, UP TO FOUR WHIP ANTENNAS MEASURING LESS THAN 24-INCHES IN LENGTH.

 

TENANT SHALL
BE ENTITLED TO INSTALL AN EMERGENCY POWER GENERATOR FUELED BY DIESEL ON THE
PREMISES; PROVIDED SUCH USE AND OPERATION IS IN ACCORDANCE WITH ALL APPLICABLE
RULES AND LOCAL ORDINANCES.  THE
GENERATOR SHALL BE INSTALLED AS A SELF-CONTAINED UNIT WITHIN THE PREMISES AND VENTED
TO THE OUT SIDE.

 

20

 

EXHIBIT D

 

[Rules and Regulations]

 

NOTHING IN
THESE RULES AND REGULATIONS SHALL SUPPLANT ANY PROVISION OF THE LEASE.  IN THE EVENT OF A CONFLICT OR INCONSISTENCY
BETWEEN THESE RULES AND REGULATIONS AND THE LEASE, THE LEASE SHALL PREVAIL.

 

1.                                      EXCEPT AS SPECIFICALLY PROVIDED IN THE LEASE
TO WHICH THESE RULES AND REGULATIONS ARE ATTACHED, NO SIGN, PLACARD, PICTURE,
ADVERTISEMENT, NAME OR NOTICE SHALL BE INSTALLED OR DISPLACED ON ANY PART OF
THE OUTSIDE OF THE PREMISES OR THE BUILDING WITHOUT THE PRIOR WRITTEN CONSENT
OF LANDLORD.  LANDLORD SHALL HAVE THE
RIGHT TO REMOVE, AT TENANT’S EXPENSE AND WITHOUT NOTICE, ANY SIGN INSTALLED OR
DISPLAYED IN VIOLATION OF THIS RULE.

 

2.                                      IF LANDLORD OBJECTS IN WRITING TO ANY
CURTAINS, BLINDS, SHADES, SCREENS OR HANGING PLANTS OR OTHER SIMILAR OBJECTS
ATTACHED TO OR USED IN CONNECTION WITH ANY WINDOW OR DOOR OF THE PREMISES, OR
PLACED ON ANY WINDOWSILL, WHICH IS VISIBLE FROM THE EXTERIOR OF THE PREMISES,
AND WHICH IS NOT INCLUDED IN APPROVED TENANT IMPROVEMENT PLANS, TENANT SHALL
REMOVE ANY SUCH OBJECT(S).

 

3.                                      TENANT SHALL NOT OBSTRUCT ANY SIDEWALKS OR
ENTRANCES TO THE BUILDING, OR ANY HALLS, PASSAGES, EXITS, ENTRANCES, OR
STAIRWAYS WITHIN THE PREMISES WHICH ARE REQUIRED TO BE KEPT CLEAR FOR HEALTH
AND SAFETY REASONS.

 

4.                                      NO DELIVERIES SHALL BE MADE WHICH IMPEDE OR
INTERFERE WITH THE OPERATION OF THE BUILDING.

 

5.                                      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. 
FIXTURES AND EQUIPMENT WHICH CAUSE NOISE OR VIBRATION THAT MAY BE
TRANSMITTED TO THE STRUCTURE OF THE BUILDING TO SUCH A DEGREE AS TO BE
REASONABLE OBJECTIONABLE TO ADJACENT BUILDING NEIGHBORS SHALL BE PLACED AND
MAINTAINED BY TENANT, AT TENANTS EXPENSE, ON VIBRATION ELIMINATORS OR OTHER
DEVICES SUFFICIENT TO ELIMINATE SUCH NOISE OR VIBRATION OR REDUCE SUCH NOISE
AND VIBRATION TO ACCEPTABLE LEVELS.

 

6.                                      TENANT SHALL NOT USE ANY METHOD OF HEATING OR
AIR-CONDITIONING OTHER THAN THAT SHOWN IN APPROVED TENANT IMPROVEMENT PLANS.

 

7.                                      TENANT SHALL NOT INSTALL ANY RADIO OR
TELEVISION ANTENNA, LOUDSPEAKER, TELECOMMUNICATIONS/WIRELESS EQUIPMENT, OR
OTHER DEVICES ON THE ROOF OR EXTERIOR WALLS OF THE BUILDING WITHOUT LANDLORD’S
CONSENT.

 

8.                                      CANVASSING, PEDDLING, SOLICITING AND
DISTRIBUTION OF HANDBILLS OR ANY OTHER WRITTEN MATERIAL OUTSIDE OF THE PREMISES
ARE PROHIBITED, AND TENANT SHALL COOPERATE TO PREVENT SUCH ACTIVITIES.

 

9.                                      TENANT SHALL STORE ALL ITS TRASH, GARBAGE AND
HAZARDOUS MATERIAL WITHIN ITS PREMISES OR IN DESIGNATED RECEPTACLES OUTSIDE OF
THE PREMISES.  TENANT SHALL NOT PLACE IN
ANY SUCH RECEPTACLE ANY MATERIAL WHICH CANNOT BE DISPOSED OF IN THE ORDINARY
AND CUSTOMARY MANNER OF TRASH, GARBAGE AND HAZARDOUS MATERIAL DISPOSAL.

 

10.                               THE PREMISES SHALL NOT BE USED FOR ANY
IMPROPER, IMMORAL OR OBJECTIONAL PURPOSE. 
NO COOKING SHALL BE DONE OR PERMITTED ON THE PREMISES, EXCEPT THAT USE
BY TENANT OF UNDERWRITER’S LABORATORY APPROVED EQUIPMENT FOR BREWING COFFEE,
TEA, HOT CHOCOLATE AND SIMILAR BEVERAGES OR USE OF MICROWAVE OVENS FOR
EMPLOYEES USE SHALL BE PERMITTED, OR EQUIPMENT SHOWN ON APPROVED TENANT
IMPROVEMENT PLANS, PROVIDED THAT SUCH EQUIPMENT AND USE IS IN ACCORDANCE WITH
ALL APPLICABLE FEDERAL, STATE, COUNTY AND CITY LAWS, CODES, ORDINANCES, RULES
AND REGULATIONS.

 

11.                               WITHOUT THE WRITTEN CONSENT OF THE LANDLORD,
TENANT SHALL NOT USE THE NAME OF THE BUILDING, IF ANY, IN CONNECTION WITH OR IN
PROMOTING OR ADVERTISING THE BUSINESS OF TENANT EXCEPT AS TENANT’S ADDRESS.

 

12.                               TENANT SHALL COMPLY WITH ALL SAFETY, FIRE
PROTECTION AND EVACUATION PROCEDURES AND REGULATIONS ESTABLISHED BY LANDLORD OR
ANY GOVERNMENTAL AGENCY.

 

21

 

13.                               TENANT ASSUMES ANY AND ALL RESPONSIBILITY FOR
PROTECTING ITS PREMISES FROM THEFT, ROBBERY AND PILFERAGE, WHICH INCLUDES
KEEPING DOORS LOCKED AND OTHER MEANS OF ENTRY TO THE PREMISES CLOSED.

 

14.                               LANDLORD MAY WAIVE ANY ONE OR MORE THESE
RULES AND REGULATIONS FOR THE BENEFIT OF TENANT, BUT NO SUCH WAIVER BY LANDLORD
SHALL BE CONSTRUED AS A WAIVER OF SUCH RULES AND REGULATIONS IN FAVOR OF
TENANT.

 

15.                               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 THE LEASE.

 

16.                               LANDLORD RESERVES THE RIGHT TO MAKE SUCH
OTHER AND REASONABLE RULES AND REGULATIONS AS, IN ITS JUDGEMENT, MAY FROM
TIME TO TIME BE NEEDED FOR SAFETY AND SECURITY, FOR CARE AND CLEANLINESS OF THE
BUILDING, AND FOR THE PRESERVATION OF GOOD ORDER THEREIN, SUBJECT TO PRIOR
NOTICE TO TENANT AND TENANT’S CONSENT, WHICH WILL NOT BE UNREASONABLY WITHHELD,
CONDITIONED OR DELAYED.  TENANT AGREES TO
ABIDE BY ALL SUCH RULES AND REGULATIONS HEREINABOVE STATED AND ANY ADDITIONAL
RULES AND REGULATIONS WHICH ARE ADOPTED.

 

17.                               TENANT SHALL BE RESPONSIBLE FOR THE
OBSERVANCE OF ALL THE FOREGOING RULES BY TENANT’S EMPLOYEES, AGENTS, CLIENTS,
CUSTOMERS, INVITEES AND GUESTS.

 

22

 

EXHIBIT E
ENCUMBRANCE OF LEASEHOLD ESTATE

 

TENANT’S RIGHT TO ENCUMBER

 

SECTION 1.01. TENANT
MAY, AT ANY TIME AND FROM TIME TO TIME DURING THE TERM OF THIS LEASE, ENCUMBER
TO ANY INSTITUTIONAL LENDER REGULATED BY STATE OR FEDERAL AUTHORITY (REFERRED
TO IN THIS LEASE AS “LENDER”), BY DEED OF TRUST OR MORTGAGE OR OTHER SECURITY
INSTRUMENT, ALL OF TENANT’S INTEREST UNDER THIS LEASE AND THE LEASEHOLD ESTATE
HEREBY CREATED IN TENANT (REFERRED TO IN THIS LEASE AS A “LEASEHOLD ENCUMBRANCE”
FOR ANY PURPOSE OR PURPOSES WITHOUT THE CONSENT OF LANDLORD.  HOWEVER, NO LEASEHOLD ENCUMBRANCE INCURRED BY
TENANT IN ACCORDANCE WITH THIS SECTION SHALL, AND TENANT SHALL NOT HAVE
POWER TO INCUR ANY ENCUMBRANCE THAT SHALL, CONSTITUTE IN ANY WAY A LIEN OR
ENCUMBRANCE ON LANDLORD’S FEE INTEREST IN THE PREMISES.  ANY LEASEHOLD ENCUMBRANCE SHALL BE SUBJECT TO
ALL COVENANTS, CONDITIONS, AND RESTRICTIONS SET FORTH IN THIS LEASE AND TO ALL
RIGHTS AND INTERESTS OF LANDLORD, EXCEPT AS IS OTHERWISE PROVIDED IN THIS
LEASE.  TENANT SHALL GIVE LANDLORD PRIOR
WRITTEN NOTICE OF ANY LEASEHOLD ENCUMBRANCE, TOGETHER WITH A COPY OF THE DEED
OF TRUST, MORTGAGE, OR OTHER SECURITY INTEREST EVIDENCING THE LEASEHOLD
ENCUMBRANCE.

 

NOTICE TO AND SERVICE ON LENDER

 

SECTION 1.02. LANDLORD
SHALL MAIL TO ANY LENDER WHO HAS GIVEN LANDLORD WRITTEN NOTICE OF ITS NAME AND
ADDRESS, A DUPLICATE COPY OF ANY AND ALL NOTICES LANDLORD MAY FROM TIME TO
TIME GIVE TO OR SERVE ON TENANT IN ACCORDANCE WITH OR RELATING TO THIS LEASE,
INCLUDING BUT NOT LIMITED TO ANY NOTICE OF DEFAULT, NOTICE OF TERMINATION, OR
NOTICE REGARDING ANY MATTER ON WHICH LANDLORD MAY PREDICATE OR CLAIM A
DEFAULT.  ANY NOTICES OR OTHER
COMMUNICATIONS PERMITTED BY THIS OR ANY OTHER SECTION OF THIS LEASE OR BY
LAW TO BE SERVED ON OR GIVEN TO LENDER BY LANDLORD SHALL BE DEEMED DULY SERVED
ON OR GIVEN TO LENDER WHEN DEPOSITED IN THE UNITED STATES MAIL, FIRST-CLASS POSTAGE
PREPAID, ADDRESSED TO LENDER AT THE LAST MAILING ADDRESS FOR LENDER FURNISHED
IN WRITING BY LENDER TO LANDLORD.

 

NO MODIFICATION WITHOUT LENDER’S CONSENT

 

SECTION 1.03. FOR AS
LONG AS THERE IS ANY LEASEHOLD ENCUMBRANCE IN EFFECT, TENANT AND LANDLORD
HEREBY EXPRESSLY STIPULATE AND AGREE THAT THEY WILL NOT MODIFY THIS LEASE IN
ANY WAY BY MUTUAL AGREEMENT NOR CANCEL THIS LEASE BY MUTUAL AGREEMENT WITHOUT
THE WRITTEN CONSENT OF LENDER HAVING THAT LEASEHOLD ENCUMBRANCE, WHICH CONSENT
SHALL NOT BE UNREASONABLY WITHHELD.

 

RIGHT OF LENDER TO REALIZE ON SECURITY

 

SECTION 1.04. A LENDER
WITH A LEASEHOLD ENCUMBRANCE SHALL HAVE THE RIGHT AT ANY TIME DURING THE TERM
OF THIS LEASE AND THE EXISTENCE OF THE ENCUMBRANCE TO DO BOTH OF THE FOLLOWING:

 

(A.) ANY ACT OR THING REQUIRED OF TENANT UNDER THIS
LEASE, AND ANY SUCH ACT OR THING DONE AND PERFORMED BY LENDER SHALL BE AS
EFFECTIVE TO PREVENT A FORFEITURE OF TENANT’S RIGHTS UNDER THIS LEASE AS IF
DONE BY TENANT; AND

 

(B.) REALIZE ON THE SECURITY AFFORDED BY THE LEASEHOLD
ESTATE BY FORECLOSURE PROCEEDINGS, ACCEPTING AN ASSIGNMENT IN LIEU OF
FORECLOSURE, OR OTHER REMEDY AFFORDED IN LAW OR IN EQUITY OR BY THE SECURITY
INSTRUMENT EVIDENCING THE LEASEHOLD ENCUMBRANCE (REFERRED TO IN THIS LEASE AS “THE
SECURITY INSTRUMENT”), AND

 

(1.) TO TRANSFER, CONVEY, OR ASSIGN THE TITLE OF
TENANT TO THE LEASEHOLD ESTATE CREATED BY THIS LEASE TO ANY PURCHASER AT ANY FORECLOSURE
SALE, WHETHER THE FORECLOSURE SALE IS CONDUCTED UNDER COURT ORDER OR A POWER OF
SALE CONTAINED IN THE SECURITY INSTRUMENT, OR TO AN ASSIGNEE UNDER AN
ASSIGNMENT IN LIEU OF FORECLOSURE; AND

 

23

 

(2.) TO ACQUIRE AND SUCCEED TO THE INTEREST OF TENANT
UNDER THIS LEASE BY VIRTUE OF ANY FORECLOSURE SALE, WHETHER THE FORECLOSURE
SALE IS CONDUCTED UNDER A COURT ORDER OR A POWER OF SALE CONTAINED IN THE
SECURITY INSTRUMENT, OR BY VIRTUE OF AN ASSIGNMENT IN LIEU OF FORECLOSURE.

 

THE LENDER OR ANY PERSON OR
ENTITY ACQUIRING THE LEASEHOLD ESTATE SHALL BE LIABLE TO PERFORM TENANT’S
OBLIGATIONS AND DUTIES, WHETHER DELINQUENT OR OTHERWISE, UNDER THIS LEASE ONLY
DURING THE PERIOD, IF ANY, IN WHICH THAT ENTITY OR PERSON HAS OWNERSHIP OF THE
LEASEHOLD ESTATE OR POSSESSION OF THE PREMISES.

 

RIGHT OF LENDER TO CURE DEFAULTS

 

SECTION 1.05. FOR AS
LONG AS THERE IS IN EFFECT ANY LEASEHOLD ENCUMBRANCE, BEFORE LANDLORD MAY TERMINATE
THIS LEASE BECAUSE OF ANY DEFAULT UNDER OR BREACH OF THIS LEASE BY TENANT,
LANDLORD MUST GIVE A COPY OF ANY NOTICE OF THE DEFAULT OR BREACH TO LENDER AND
AFFORD LENDER THE OPPORTUNITY AFTER SERVICE OF THE NOTICE TO DO ONE OF THE
FOLLOWING:

 

(A.) CURE THE BREACH OR DEFAULT WITHIN THE SAME NUMBER
OF DAYS AFTER EXPIRATION OF THE TIME PERIOD GRANTED TO TENANT UNDER THIS LEASE
FOR CURING A DEFAULT, WHEN THE DEFAULT CAN BE CURED BY THE PAYMENT OF MONEY TO
LANDLORD OR SOME OTHER PERSON;

 

(B.) CURE THE BREACH OR DEFAULT WITHIN THE SAME NUMBER
OF DAYS AFTER EXPIRATION OF THE TIME PERIOD GRANTED TO TENANT UNDER THIS LEASE
FOR CURING A DEFAULT, WHEN THE BREACH OR DEFAULT MUST BE CURED BY SOMETHING
OTHER THAN THE PAYMENT OF MONEY AND CAN BE CURED WITHIN THAT TIME; OR

 

(C.) CURE THE BREACH OR DEFAULT ON ANY REASONABLE TIME
THAT MAY BE REQUIRED WHEN SOMETHING OTHER THAN MONEY IS REQUIRED TO CURE
THE BREACH OR DEFAULT AND CANNOT BE PERFORMED WITHIN THE TIME SPECIFIED IN
SUBPARAGRAPH (B), PROVIDED THAT ACTS TO CURE THE BREACH OR DEFAULT ARE
COMMENCED WITHIN THAT TIME PERIOD AFTER SERVICE OF NOTICE OF DEFAULT ON LENDER
BY LANDLORD AND ARE THEREAFTER DILIGENTLY CONTINUED BY LENDER.

 

ASSIGNMENT WITHOUT CONSENT ON FORECLOSURE

 

SECTION 1.06. A
TRANSFER OF TENANT’S LEASEHOLD INTEREST UNDER THIS LEASE TO ANY OF THE FOLLOWING
SHALL NOT REQUIRE THE PRIOR CONSENT OF LANDLORD SUBJECT TO (D) BELOW.

 

(A.) A PURCHASER AT A FORECLOSURE SALE OF THE
LEASEHOLD ENCUMBRANCE, WHETHER THE FORECLOSURE SALE IS CONDUCTED UNDER COURT
ORDER OR A POWER OF SALE IN THE INSTRUMENT CREATING THE ENCUMBRANCE, PROVIDED
LENDER UNDER THE LEASEHOLD ENCUMBRANCE GIVES LANDLORD WRITTEN NOTICE OF THE
TRANSFER, INCLUDING THE NAME AND ADDRESS OF THE PURCHASER AND THE EFFECTIVE
DATE OF THE TRANSFER;

 

(B.) AN ASSIGNEE OF THE LEASEHOLD ESTATE OF TENANT
UNDER AN ASSIGNMENT IN LIEU OF FORECLOSURE, PROVIDED LENDER UNDER THE LEASEHOLD
ENCUMBRANCE GIVES LANDLORD WRITTEN NOTICE OF THE TRANSFER, INCLUDING THE NAME
AND ADDRESS OF THE ASSIGNEE AND THE EFFECTIVE DATE OF THE ASSIGNMENT; OR

 

(C.) A PURCHASER OR ASSIGNEE OF THE PURCHASER AT A
FORECLOSURE SALE OF THE LEASEHOLD ENCUMBRANCE OR OF THE ASSIGNEE OF THE
LEASEHOLD ESTATE OF TENANT ACQUIRED UNDER AN ASSIGNMENT IN LIEU OF FORECLOSURE,
PROVIDED THE PURCHASER OR ASSIGNEE DELIVERS TO LANDLORD ITS WRITTEN AGREEMENT
TO BE BOUND BY ALL OF THE PROVISIONS OF THIS LEASE.

 

(D.) FOR ANY TRANSFER PURSUANT TO SUBPARAGRAPHS (A),
(B), OR (C) OF THIS SECTION, PRIOR CONSENT OF THE LANDLORD IS NOT REQUIRED
PROVIDED THE NET FINANCIAL WORTH OF THE PURCHASER OR ASSIGNEE, AS THE CASE MAY BE,
DETERMINED IN ACCORDANCE WITH GAAP, IS AT LEAST 75% OF THE IMMEDIATELY PREVIOUS
HOLDER OF THE TENANTS LEASEHOLD INTEREST. 
COMPLETE AND CURRENT FINANCIAL STATEMENTS SHALL BE PROVIDED THE LANDLORD
TO MAKE THIS NET WORTH DETERMINATION BEFORE ANY TRANSFER IN EFFECTUATED.

 

24

 

NEW LEASE TO LENDER

 

SECTION 1.07.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE, SHOULD THIS LEASE TERMINATE
BECAUSE OF ANY DEFAULT UNDER OR BREACH OF THIS LEASE BY TENANT, LANDLORD AGREES
TO ENTER INTO A NEW LEASE FOR THE PREMISES WITH LENDER UNDER A LEASEHOLD
ENCUMBRANCE, AS TENANT, PROVIDED ALL OF THE FOLLOWING CONDITIONS ARE SATISFIED:

 

(A.) A WRITTEN REQUEST FOR THE NEW LEASE IS SERVED ON
LANDLORD BY LENDER WITHIN 10 DAYS AFTER SERVICE ON LENDER OF THE NOTICE
DESCRIBED IN SECTION 1.05 OF THIS LEASE;

 

(B.) THE NEW LEASE:

 

(1.) IS FOR A TERM ENDING ON THE SAME DATE THE TERM OF
THIS LEASE WOULD HAVE ENDED HAD THIS LEASE NOT BEEN TERMINATED;

 

(2.) PROVIDES FOR THE PAYMENT OF RENT AT THE SAME RATE
THAT WOULD HAVE BEEN PAYABLE UNDER THIS LEASE DURING THE REMAINING TERM OF THIS
LEASE HAD THIS LEASE NOT BEEN TERMINATED; AND

 

(3.) CONTAINS THE SAME TERMS, COVENANTS, CONDITIONS,
AND PROVISIONS AS ARE CONTAINED IN THIS LEASE (EXCEPT THOSE THAT HAVE ALREADY
BEEN FULFILLED OR ARE NO LONGER APPLICABLE);

 

(C.) LENDER, ON EXECUTION OF THE NEW LEASE BY
LANDLORD, SHALL PAY ANY AND ALL SUMS THAT WOULD AT THE TIME OF THE EXECUTION OF
THE NEW LEASE BE DUE UNDER THIS LEASE BUT FOR ITS TERMINATION AND SHALL OTHERWISE
FULLY REMEDY, OR AGREE IN WRITING TO REMEDY, ANY OTHER DEFAULTS UNDER OR
BREACHES OF THIS LEASE COMMITTED BY TENANT THAT CAN BE REMEDIED;

 

(D.) LENDER, ON EXECUTION OF THE NEW LEASE, SHALL PAY
ALL REASONABLE COSTS AND EXPENSES, INCLUDING ATTORNEYS’ FEES AND COURT COSTS,
INCURRED IN TERMINATING THIS LEASE, RECOVERING POSSESSION OF THE PREMISES FROM
TENANT OR THE REPRESENTATIVE OF TENANT, AND PREPARING THE NEW LEASE;

 

(E.) THE NEW LEASE SHALL BE SUBJECT TO ALL EXISTING
SUBLEASES BETWEEN TENANT AND SUBTENANTS, PROVIDED THAT FOR ANY SUBLEASE, THE
SUBTENANT AGREES IN WRITING TO ATTORN TO LENDER (OR ITS ASSIGNEE); AND

 

(F.) THE NEW LEASE SHALL BE ASSIGNABLE BY LENDER WITH
THE PRIOR WRITTEN CONSENT OF LANDLORD.

 

NO MERGER OF LEASEHOLD AND FEE ESTATES

 

SECTION 1.08. FOR AS
LONG AS ANY LEASEHOLD ENCUMBRANCE IS IN EXISTENCE, THERE SHALL BE NO MERGER OF
THE LEASEHOLD ESTATE CREATED BY THIS LEASE AND THE FEE ESTATE OF LANDLORD IN
THE PREMISES MERELY BECAUSE BOTH ESTATES HAVE BEEN ACQUIRED OR BECOME VESTED IN
THE SAME PERSON OR ENTITY, UNLESS LENDER OTHERWISE CONSENTS IN WRITING.

 

LENDER AS ASSIGNEE OF LEASE

 

SECTION 1.09. NO LENDER
UNDER ANY LEASEHOLD ENCUMBRANCE SHALL BE LIABLE TO LANDLORD AS AN ASSIGNEE OF
THIS LEASE UNLESS AND UNTIL LENDER ACQUIRES ALL RIGHTS OF TENANT UNDER THIS
LEASE THROUGH FORECLOSURE, AN ASSIGNMENT IN LIEU OF FORECLOSURE, OR AS A RESULT
OF SOME OTHER ACTION OR REMEDY PROVIDED BY LAW OR BY THIS INSTRUMENT CREATING
THE LEASEHOLD ENCUMBRANCE.

 

LENDER AS INCLUDING SUBSEQUENT SECURITY HOLDERS

 

SECTION 1.10. EXCEPT
FOR PURPOSES OF SECTION 1.07, THE TERM “LENDER” AS USED IN THIS LEASE
SHALL MEAN NOT ONLY THE INSTITUTIONAL LENDER THAT LOANED MONEY TO TENANT AND IS
NAMED AS BENEFICIARY, MORTGAGEE, SECURED PARTY, OR SECURITY HOLDER IN THE
SECURITY INSTRUMENT CREATING ANY LEASEHOLD ENCUMBRANCE, BUT ALSO ALL SUBSEQUENT
PURCHASERS OR ASSIGNEES OF THE LENDERS LEASEHOLD ENCUMBRANCE.

 

25

 

TWO OR MORE LENDERS

 

SECTION 1.11. IN THE
EVENT TWO OR MORE LENDERS EACH EXERCISE THEIR RIGHTS UNDER THIS LEASE AND THERE
IS A CONFLICT THAT RENDERS IT IMPOSSIBLE TO COMPLY WITH ALL REQUESTS OF
LENDERS, THE LENDER WHOSE LEASEHOLD ENCUMBRANCE WOULD HAVE SENIOR PRIORITY IN
THE EVENT OF A FORECLOSURE SHALL PREVAIL.

 

26

 

LANDLORD WAIVER AND ESTOPPLE CERTIFICATE

 

First Union National Bank

as Administrative Agent

One First Union Center, TW-10

301 South College Street

Charlotte, NC 28288-0608

 

Ladies and Gentlemen:

 

This letter acknowledges that the undersigned (the “Landlord”)
have been informed that Advanced Telecom Group, Inc. (the “Tenant”), has
entered into an Amended Restated Credit Agreement dated as of July 30,
1999 (as amended, modified, restated or replaced from time to time, the “Credit
Agreement”) among Advanced Telecom Group, Inc.  and certain of its Subsidiaries
(collectively, the “Borrowers”), First Union National Bank, as administrative
agent (the “Administrative Agent”), J.P. Morgan Bank & Trust, as
documentation agent, General Electric Capital Corporation, as syndication
agent, New court Commercial Finance Corporation, as collateral agent and the
lenders party thereto (the “Lenders”).  As
a precedent condition to the Lenders’ obligation to provide loans and other
financial accommodations to the Tenant under the Credit Agreement (the “Loans”),
the Lenders require, among other things, liens on the Tenant’s personal
property, including, without limitation, equipment, trade fixtures and fixtures
(the “Personal Property”).

 

To induce the Lenders to continue to make the Loans
and provide financial accommodations to the Tenant, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Landlord hereby represents and warrants to the Administrative
agent that as of the date hereof:

 

1.             The Landlord is the current
landlord under the lease described in Attachment 1 attached hereto (the “Lease”)
with Tenant;

 

2.             The Lease is in full force and
effect and there have been no amendments, modifications or other agreements
relating to the Lease except as stated herein;

 

3.             The Lease is not in default, nor
is there in existence any facts which with notice or passage of time or both
would constitute a default or a breach of the terms or conditions of the Lease;
and

 

4.             The Tenant is the Tenant under
the Lease, is in lawful and actual possession of the real property described in
the Lease (the “Premises”) and, to the best of the Landlord’s present and
actual knowledge, is in full compliance with the covenants, agreements and
obligations under the Lease.

 

Subject to the specific provisions of Section 12,
“Alterations” of the parties’ Lease, the Landlord agrees that:  (a) the Tenant (or its representatives)
is the owner of the Personal Property located at or on the Premises, whether
attached to the Premises or not; (b) the Administrative Agent’s lien upon
or security interest in the Personal Property is prior and superior to any
interest, lien or claim of any nature the Landlord may now have or hereafter
obtain in the Personal Property whether by operation of law, contract or
otherwise; (c) either the Tenant or the Administrative Agent may remove
the Personal Property from the Premises at any time without hindrance on the
part of the Landlord, and, upon request, the Landlord will grant the
Administrative Agent (or its representatives) access to the Premises so that
the Administrative Agent (or its representatives) may remove the Personal
Property, provided that the Administrative

 

 

Agent, on behalf of the
Lenders, indemnifies and holds Landlord harmless from any losses, liability,
costs or damages caused by the Administrative Agent in connection with the
removal of the Personal Property by the Administrative Agent; and (d) the
Personal Property shall remain personal property (to the extent such Personal
Property is not already a fixture as of the date hereof) and shall not become
fixtures, notwithstanding the manner or mode of the attachment of the Personal
Property to the land.  The Landlord
hereby subordinates to Lenders’ lien or security interest any rights it may now
or hereafter have in the Personal Property, including without limitation, any
lien rights available under applicable law.

 

The Landlord understands that the Administrative
Agent and the Lenders will rely on this Landlord Waiver and Estoppel
Certificate in continuing to make Loans and provide financial accommodations to
the Tenant.  Administrative Agent and
Lenders acknowledge and understand that Landlord’s representations above are as
of the date below only.

 

In the event of a default under the Lease, the
Landlord has agreed to the provisions of Section 1.05 “Right of Lender to
Cure Defaults” under Ex. E Encumbrance of Leasehold Estate to the parties’
Lease.

 

Executed and delivered this        day
of                           ,
2000.

 

[spaces for signature lines]

 

 

	
  

  	
  CBA Form RR

  Rev’d 3/95

   

  	
  ©
  Copyright 1995

  Commercial
  Brokers Association

  ALL
  RIGHTS RESERVED

  
	
  RENT RIDER

  CBA
  Text Disclaimer:  Text deleted by
  licensee indicated by strike.

  New text inserted by licensee indicated by small capital letters.

  

 

 

Landlord and Tenant
should complete only those provisions below which apply.  Any provision below which is not completed
shall not apply to the Lease.

 

1.               BASE MONTHLY RENT SCHEDULE. 
Tenant shall pay Landlord base monthly rent during the Lease Term
according to the following schedule:

 

	
  Lease Year (Stated in Months)

  	
   

  	
  Base Monthly Rent Amount

  	
   

  
	
  0-1

  	
   

  	
  $

  	
  0

  	
   

  
	
  2-12

  	
   

  	
  $

  	
  6,333.33

  	
   

  
	
  13-24

  	
   

  	
  $

  	
  6,520.00

  	
   

  
	
  25-36

  	
   

  	
  $

  	
  6,720.00

  	
   

  
	
  37-48

  	
   

  	
  $

  	
  6,920.00

  	
   

  
	
  49-60

  	
   

  	
  $

  	
  7,120.00

  	
   

  
	
  61-72

  	
   

  	
  $

  	
  7,333.33

  	
   

  
	
  73-84

  	
   

  	
  $

  	
  7,546.66

  	
   

  
	
  85-96

  	
   

  	
  $

  	
  7,773.33

  	
   

  
	
  97-108

  	
   

  	
  $

  	
  8,000.00

  	
   

  
	
  109-120

  	
   

  	
  $

  	
  8,240.00

  	
   

  

 

 

	
  /s/ MSH

  	
   

  	
   

  	
  /s/ RTW

  	
   

  
	
  Landlord’s
  Initials:

  	
   

  	
  Tenant’s
  Initials:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landlord’s
  Initials:

  	
   

  	
  Tenant’s
  Initials:

  

 

1

 

	
  

  	
  CBA Form OR

  Rev’d 3/95

   

  	
  © Copyright 1995

  Commercial Brokers Association

  ALL RIGHTS RESERVED

  
	
  OPTION TO EXTEND RIDER

  CBA Text Disclaimer:  Text
  deleted by licensee indicated by strike.

  New text inserted by licensee indicated by small capital letters.

  

 

 

PROVIDED TENANT IS NOT IN
DEFAULT AT THE TIME OF EXERCISE OR UPON THE COMMENCEMENT OF ANY EXTENSION TERM,
TENANT SHALL HAVE (IF NOT COMPLETED, ZERO) ONE (1) OPTION TO EXTEND
THE TERM OF THIS LEASE FOR TEN (10) YEARS EACH.  TENANT SHALL EXERCISE THE OPTION BY
DELIVERING WRITTEN NOTICE TO LANDLORD NOT LESS THAN ONE HUNDRED EIGHTY (180)
DAYS PRIOR TO THE EXPIRATION OF THE THEN CURRENT LEASE TERM.  IF SUCH NOTICE IS NOT SO GIVEN AND TIMELY
RECEIVED, THIS OPTION SHALL AUTOMATICALLY EXPIRE AND BE OF NO FURTHER FORCE OR
EFFECT.  UPON THE EXERCISE OF THE OPTION,
THE TERM OF THIS LEASE SHALL BE EXTENDED FOR THE PERIOD OF THE SUBJECT OPTION
UPON ALL OF THE SAME TERMS, CONDITIONS AND COVENANTS AS SET FORTH HEREIN,
EXCEPT FOR THE AMOUNT OF THE BASE MONTHLY RENTAL STATED IN THE LEASE, WHICH
SHALL BE $8,466.67/MONTH/TRIPLE NET AND INCREASED ANNUALLY BY 3%.

 

	
  /s/ MSH

  	
   

  	
   

  	
  /s/ RTW

  	
   

  
	
  Landlord’s
  Initials:

  	
   

  	
  Tenant’s
  Initials:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landlord’s
  Initials:

  	
   

  	
  Tenant’s
  Initials:

  
						

 

1

 

	
  

  	
  CBA Form AR

  Rev’d 3/95

   

  	
  © Copyright
  1995

  Commercial
  Brokers Association

  ALL RIGHTS
  RESERVED

  
	
  ARBITRATION RIDER

  CBA Text Disclaimer:  Text
  deleted by licensee indicated by strike.

  New text inserted by licensee indicated by small capital letters.

  

 

 

Any
controversy or claim arising out of or relating to this Lease, or the breach
thereof, other than an action by Landlord against Tenant for nonpayment of
Rent, or for unlawful detainer or ejectment, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof.

 

	
   

  	
   

  	
   

  	
  /s/ RTW

  	
   

  
	
  Landlord’s
  Initials:

  	
   

  	
  Tenant’s
  Initials:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landlord’s
  Initials:

  	
   

  	
  Tenant’s
  Initials:

  
						

 

1EXHIBIT
10.23

 

 

LEASE
AGREEMENT

(Full Service)

 

by
and between

 

 

ADVANCED
TELCOM GROUP, INC.

(“Tenant”)

 

 

and

 

 

200
SOUTH VIRGINIA INVESTMENTS, LLC

(“Landlord”)

 

July 16, 1999

200 South Virginia

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Demise and Premises

  	
   

  
	
   

  	
  1.1

  	
  Demise

  	
   

  
	
   

  	
  1.2

  	
  Premises

  	
   

  
	
   

  	
  1.3

  	
  Commencement
  and Expiration Dates

  	
   

  
	
  2.

  	
  Rent

  	
   

  
	
   

  	
  2.1

  	
  Base Rent

  	
   

  
	
  3.

  	
  Business Taxes

  	
   

  
	
  4.

  	
  Property Taxes

  	
   

  
	
   

  	
  4.1

  	
  Taxes on Tenant’s Personal Property

  	
   

  
	
   

  	
  4.2

  	
  Tenant Improvements

  	
   

  
	
  5.

  	
  Use

  	
   

  
	
   

  	
  5.1

  	
  General

  	
   

  
	
   

  	
  5.2

  	
  Negative Covenants as to Use

  	
   

  
	
   

  	
  5.3

  	
  Hazardous Substances

  	
   

  
	
   

  	
  5.4

  	
  Rules and Regulations

  	
   

  
	
   

  	
  5.5

  	
  Specialized Equipment

  	
   

  
	
  6.

  	
  Condition of Premises, Maintenance and
  Repair

  	
   

  
	
   

  	
  6.1

  	
  Tenant’s Acceptance

  	
   

  
	
   

  	
  6.2

  	
  Tenant’s Maintenance
  Obligations

  	
   

  
	
   

  	
  6.3

  	
  Manner

  	
   

  
	
   

  	
  6.4

  	
  Janitorial Services

  	
   

  
	
   

  	
  6.5

  	
  Landlord’s Maintenance and Repair
  Obligations

  	
   

  
	
   

  	
  6.6

  	
  Waiver

  	
   

  
	
   

  	
  6.7

  	
  End of Term

  	
   

  
	
  7.

  	
  Tenant Alterations

  	
   

  
	
   

  	
  7.1

  	
  Landlord’s Consent

  	
   

  
	
   

  	
  7.2

  	
  Procedure for Approval

  	
   

  
	
   

  	
  7.3

  	
  Standard for Approval

  	
   

  
	
   

  	
  7.4

  	
  Compliance with Laws

  	
   

  
	
   

  	
  7.5

  	
  Title to Improvements

  	
   

  
	
   

  	
  7.6

  	
  Schedule/Manner of Work

  	
   

  
	
   

  	
  7.7

  	
  Debris

  	
   

  
	
   

  	
  7.8

  	
  Right of Entry/Inspection

  	
   

  
	
   

  	
  7.9

  	
  Insurance

  	
   

  
	
   

  	
  7.10

  	
  Non-Responsibility of Landlord

  	
   

  
	
  8.

  	
  Liability and Insurance

  	
   

  
	
   

  	
  8.1

  	
  Action
  by Tenant

  	
   

  
	
   

  	
  8.2

  	
  Landlord’s Insurance

  	
   

  
	
   

  	
  8.3

  	
  Waiver of Subrogation

  	
   

  
	
   

  	
  8.4

  	
  Public Liability Insurance

  	
   

  
	
   

  	
  8.5

  	
  Tenant’s Fire and All Risk Coverage Insurance

  	
   

  
	
   

  	
  8.6

  	
  Insurance Policies

  	
   

  
	
   

  	
  8.7

  	
  Increase Policies

  	
   

  
	
   

  	
  9.1

  	
  Landlord’s Property

  	
   

  
	
   

  	
  9.2

  	
  Tenant’s Property

  	
   

  
								

 

ii

 

	
   

  	
  9.3

  	
  Removal

  	
   

  
	
   

  	
  9.4

  	
  Abandonment

  	
   

  
	
  10.

  	
  Holding Over

  	
   

  
	
   

  	
  11.1

  	
  High Voltage Equipment

  	
   

  
	
   

  	
  11.2

  	
  Cost of Increasing Capacity

  	
   

  
	
   

  	
  11.3

  	
  Light Fixtures

  	
   

  
	
  12.

  	
  Climate Control

  	
   

  
	
  13.

  	
  Signs, Displays, Auctions, and Sales

  	
   

  
	
   

  	
  13.1

  	
  General

  	
   

  
	
   

  	
  13.2

  	
  Tenant’s Interior Signs

  	
   

  
	
   

  	
  13.3

  	
  Displays

  	
   

  
	
   

  	
  13.4

  	
  Auctions

  	
   

  
	
  14.

  	
  Access and Control of Premises

  	
   

  
	
   

  	
  14.1

  	
  Access to Premises

  	
   

  
	
   

  	
  14.2

  	
  Waiver in Connection with Landlord’s Entry

  	
   

  
	
   

  	
  14.3

  	
  Building Changes

  	
   

  
	
  15.

  	
  Damage or Destruction

  	
   

  
	
   

  	
  15.1

  	
  Rights and Obligations

  	
   

  
	
   

  	
  15.2

  	
  Rent Abatement

  	
   

  
	
   

  	
  15.3

  	
  Interference
  with Tenant’s Business

  	
   

  
	
   

  	
  15.4

  	
  Insurance on Tenant’s Property

  	
   

  
	
  16.

  	
  Eminent Domain

  	
   

  
	
   

  	
  16.1

  	
  Total Condemnation

  	
   

  
	
   

  	
  16.2

  	
  Partial Condemnation

  	
   

  
	
   

  	
  16.3

  	
  Effect of Termination or Continuation

  	
   

  
	
   

  	
  16.4

  	
  Award

  	
   

  
	
   

  	
  16.5

  	
  Temporary Taking

  	
   

  
	
  17.

  	
  Landlord’s Self Help Rights; Liability
  and Indemnification

  	
   

  
	
   

  	
  17.1

  	
  Landlord’s Right to Cure

  	
   

  
	
   

  	
  17.2

  	
  Tenant’s Indemnity

  	
   

  
	
   

  	
  17.3

  	
  Limit on Landlord’s Liability

  	
   

  
	
   

  	
  17.4

  	
  Defense of Claims

  	
   

  
	
  18.

  	
  Defaults and Remedies

  	
   

  
	
   

  	
  18.1

  	
  Events of Default

  	
   

  
	
   

  	
  18.2

  	
  Remedies

  	
   

  
	
   

  	
  18.3

  	
  Cumulative Remedies

  	
   

  
	
   

  	
  18.4

  	
  Termination

  	
   

  
	
  19.

  	
  Transfers By Tenant

  	
   

  
	
   

  	
  19.1

  	
  General

  	
   

  
	
   

  	
  19.2

  	
  Listing Premises

  	
   

  
	
   

  	
  19.3

  	
  Corporate Changes

  	
   

  
	
   

  	
  19.4

  	
  Unapproved Transfers

  	
   

  
	
   

  	
  19.5

  	
  Successors and Assigns

  	
   

  
	
  20.

  	
  Subordination; Attornment; Quiet
  Enjoyment

  	
   

  
	
   

  	
  20.1

  	
  Subordination,
  Nondisturbance

  	
   

  
	
   

  	
  20.2

  	
  Attornment

  	
   

  
							

 

iii

 

	
   

  	
  20.3

  	
  Quiet Enjoyment

  	
   

  
	
   

  	
  20.4

  	
  Estoppel Certificates

  	
   

  
	
   

  	
  20.5

  	
  Mortgagee Protection

  	
   

  
	
   

  	
  20.6

  	
  Modification
  for Lender

  	
   

  
	
  21.

  	
  Security

  	
   

  
	
   

  	
  21.1

  	
  Financial Statements

  	
   

  
	
   

  	
  21.2

  	
  Deposit

  	
   

  
	
  22.

  	
  Governing Law

  	
   

  
	
  23.

  	
  No Merger

  	
   

  
	
  24.

  	
  Disputes

  	
   

  
	
   

  	
  24.1

  	
  Attorneys’ and Collection Fees

  	
   

  
	
   

  	
  24.2

  	
  Arbitration of Disputes.  Intentionally Deleted

  	
   

  
	
  25.

  	
  Hazardous Substances

  	
   

  
	
  26.

  	
  Tenant’s Liability and Performance

  	
   

  
	
  27.

  	
  Definition of Landlord; Limitation or
  Liability

  	
   

  
	
  28.

  	
  Waiver

  	
   

  
	
  29.

  	
  Miscellaneous Provisions

  	
   

  
	
   

  	
  29.1

  	
  Successors or Assigns

  	
   

  
	
   

  	
  29.2

  	
  Authority of Parties

  	
   

  
	
   

  	
  29.3

  	
  Interest on Past Due Obligations

  	
   

  
	
   

  	
  29.4

  	
  Broker’s Commission

  	
   

  
	
   

  	
  29.5

  	
  Terms and Headings

  	
   

  
	
   

  	
  29.6

  	
  Examination of Lease

  	
   

  
	
   

  	
  29.7

  	
  Time

  	
   

  
	
   

  	
  29.8

  	
  Amendments

  	
   

  
	
   

  	
  29.9

  	
  Partial Invalidity

  	
   

  
	
   

  	
  29.10

  	
  Recording

  	
   

  
	
   

  	
  29.11

  	
  Notices

  	
   

  
	
   

  	
  29.12

  	
  Entire Agreement

  	
   

  
	
   

  	
  29.13

  	
  Survival of Obligations

  	
   

  
	
   

  	
  29.14

  	
  Representations and Warranties

  	
   

  
	
   

  	
  29.15

  	
  Waiver

  	
   

  

 

iv

 

BASIC LEASE TERMS AND
DESCRIPTION OF EXHIBITS

(Full Service)

 

The following list is a
summary of certain basic terms of this Lease. 
In case of a conflict between any provision of this Lease and the
information contained in this summary, the applicable provision of this Lease shall
control.  Terms set forth in the left-hand
column, below, and used in this Lease shall, unless otherwise defined in the
Lease, have the meaning given opposite each such term in the right-hand column,
below.

 

	
  LESSOR:

  	
   

  	
  200
  South Virginia Investments, LLC, an Oregon limited liability company

  
	
   

  	
   

  	
   

  
	
  ADDRESS
  OF LESSOR:

  	
   

  	
  c/o
  ScanlanKemperBard Companies, Operating Manager

  2650 Pacwest Center

  1211 S.W. Fifth Avenue

  Portland, OR 97204

  Attn: Jeffrey Tallman

  Telecopy: (503) 220-2648

  
	
   

  	
   

  	
   

  
	
  LESSEE:

  	
   

  	
  Advanced
  TelCom Group, Inc., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  ADDRESS
  OF LESSEE:

  	
   

  	
  Advanced
  TelCom Group, Inc.

  100 Stony Point Road, Suite 130

  Santa Rosa, CA 95401

  Attn: Mr. Clifford G. Rudolph

  Telecopy: (707) 535-8909

  
	
   

  	
   

  	
   

  
	
  PROPERTY
  MANAGER:

  	
   

  	
  Trammel
  Crow

  
	
   

  	
   

  	
   

  
	
  ADDRESS
  OF PROPERTY MANAGER:

  	
   

  	
  990
  East Greg Street

  Sparks, NV 89431

  Attn: Cindy Frankenhauser

  Telecopy: 775-356-6181

  
	
   

  	
   

  	
   

  
	
  CITY,
  COUNTY AND STATE:

  	
   

  	
  Reno,
  Washoe County, Nevada, respectively

  
	
   

  	
   

  	
   

  
	
  PREMISES:

  	
   

  	
  5,275
  rentable square feet of space located on the first floor, and 4,554 rentable
  square feet of space located on the second floor, of the building at 200
  South Virginia, as identified on the description and/or floor plan attached
  as Exhibit B.

  
	
   

  	
   

  	
   

  
	
  LEASE
  TERM:

  	
   

  	
  One
  Hundred Twenty (120) months

  
	
   

  	
   

  	
   

  
	
  RENEWAL
  TERM(S):

  	
   

  	
  One
  (1) term of one hundred twenty (120) months

  

 

 

	
   

  	
   

  	
   

  
	
  EFFECTIVE
  DATE:

  	
   

  	
                           ,          

  
	
   

  	
   

  	
   

  
	
  COMMENCEMENT DATE:

  	
   

  	
  August
  1, 1999

  
	
   

  	
   

  	
   

  
	
  EXPIRATION
  DATE:

  	
   

  	
  July
  31, 2009, or as otherwise set forth in Section 1.3.1

  
	
   

  	
   

  	
   

  
	
  BASE
  RENT:

  	
   

  	
  $15,726.40
  per month ($188,716.80 annual rate)

  
	
   

  	
   

  	
   

  
	
  ADJUSTMENT
  DATE FOR BASE RENT:

  	
   

  	
  August
  1, 2000, and on each August 1 thereafter, continuing through the Term and any
  Renewal Term.

  
	
   

  	
   

  	
   

  
	
  PERMITTED
  USE:

  	
   

  	
  General
  offices, including, without limitation, telecommunications management,
  marketing, customer service and, on that portion of the Premises located on
  the second floor only, switch operation.

  
	
   

  	
   

  	
   

  
	
  LANDLORD’S
  BROKER:

  	
   

  	
  CB
  Richard Ellis

  5190 Neil Road, Suite 100

  Reno, NV 89502

  Attn: Tim Ruffin

  
	
   

  	
   

  	
   

  
	
  TENANT’S
  BROKER

  	
   

  	
  Grubb
  & Ellis

  Nevada Commercial Group

  573 Hammil Lane

  Reno, NV 89511

  Attn: Rick LaMay

  

 

EXHIBITS

 

	
  Exhibit
  A

  	
   

  	
  Legal
  Description of Land

  
	
  Exhibit
  B

  	
   

  	
  Premises
  Description and Plan

  
	
  Exhibit
  C

  	
   

  	
  Initial
  Tenant Improvements

  
	
  Exhibit
  D

  	
   

  	
  Rules
  and Regulations

  
	
  Exhibit
  E

  	
   

  	
  Standards
  for Utilities and Services

  
	
  Exhibit
  F

  	
   

  	
  Tenant’s
  Batteries

  
	
  Exhibit
  G

  	
   

  	
  Landlord’s
  Waiver and Estoppel Certificate

  

 

ii

 

LEASE AGREEMENT

(Full Service)

 

THIS LEASE AGREEMENT (this
“Lease” or this “Agreement”) is made and entered into as of the Effective Date
identified in the summary of Basic Lease Terms preceding this Lease by and
between the Tenant and Landlord also identified in such summary.

 

1.                                       Demise
and Premises.

 

1.1                                 Demise.  Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord, upon the terms and subject to the conditions set
forth in this Lease, the Premises described in Section 1.2 within the project
known as 200 South Virginia, in the City, County and State (the “Building”),
SUBJECT, HOWEVER, to any and all existing liens and encumbrances of record (the
“Existing Encumbrances”), and the terms of this Lease.  The Building is located upon the land legally
described in Exhibit A (the “Land”).

 

1.2                                 Premises

 

1.2.1
                     Premises and Associated Rights.  The
premises leased to Tenant consist of space in the Building having the square
footage and location generally identified in the summary of Basic Lease Terms
preceding this Lease, as more particularly identified on the description and/or
floor plans attached as Exhibit B (the “Premises”).  The Premises also include the appurtenant
right to use, in common with others, the public portions of the Building,
including public hallways and lobbies, elevators, parking facilities parking facilities
to the extent allocated to Tenant in the summary of Basic Lease Terms,
restrooms, sidewalks, ramps, landscape areas, and driveways.

 

1.2.2                      Option
to Expand.  If, during the Term
or any Renewal Term, any space on the second floor of the Building and adjacent
to the Premises comes available (the “Expansion Space”), then Landlord shall
offer Tenant the right to lease the Expansion Space by sending to Tenant a
written notice of the specific terms of an offer to lease, including Base Rent
(the “Offered Rent”) and the other terms covered in the summary of Basic Lease
Terms (as set forth in such notice, the “Expansion Space Terms”), prior to
offering to lease the Expansion Space to any other person or entity.

 

(a)                                  Tenant shall have five (5) business days
after its receipt of Landlord’s notice to exercise its right to lease.  If Tenant elects to lease the Expansion
Space, Landlord and Tenant shall execute an amendment to this Lease, adding the
Expansion Space to the Premises and otherwise incorporating the Expansion Space
Terms, within ten (10) business days after acceptance of the proposal by
Tenant, or as soon thereafter as reasonably possible.  If Tenant does not elect to accept such offer
within said five (5) business day period, or fails to enter into a Lease
amendment within said ten (10) business day period, then Landlord may offer to
lease the Expansion Space to a third party, on the same terms and conditions
offered to Tenant.

 

(b)                                 If Landlord receives and desires to accept a
third party offer to lease the Expansion Space for an amount less than
ninety-eight percent (98%) of the Offered Rent, or if such offer is on terms
materially more favorable to the lessee than those terms on

 

1

 

which lease of the Expansion
Space was initially offered to Tenant, then Landlord shall give Tenant notice
of such terms and Tenant shall have an additional five (5) days after the
receipt of said notice to exercise this right of first refusal.  If Tenant accepts such revised proposal, the
parties shall execute an amendment to this Lease, adding the Expansion Space to
the Premises and otherwise incorporating the terms applicable to the Expansion
Space that were contained in the third party officer, within ten (10) business
days after acceptance of the proposal by Tenant or as soon thereafter as
reasonably possible.  If Tenant fails to
accept such offer within the five (5) day period or to execute said Lease
amendment within the ten (10) business day period, Landlord shall be free to
continue negotiating with, and/or to the lease the Expansion Space to, such
third party.

 

1.3                                 Commencement and Expiration
Dates.  The term of this Lease shall be for the
period of months designated in the summary of Basic Lease Terms preceding this
Lease, and shall have the Commencement Date and Expiration Date also designated
in such summary (the “Term”); provided that:

 

1.3.1                      Landlord
shall deliver possession of the Premises upon the Effective Date of this Lease
specified in the Basic Lease Terms.  If
Landlord has not delivered the Premises to Tenant for any reason whatsoever
within ten (10) days after such Effective Date then, as its sole remedy for
such delay in delivery, Tenant may terminate this Lease by written notice to
Landlord, whereupon any monies previously paid by Tenant to Landlord shall be
reimbursed to Tenant.  Within ten (10)
days after Landlord delivers possession of the Premises to Tenant, Tenant shall
inspect the Premises and deliver to Landlord a written notice of any defects or
non-conforming conditions or failures to comply with law in or of the
Premises.  Landlord may elect in writing,
within five (5) business days following receipt of Tenant’s notice, to correct
any such defects or conditions and, if Landlord so elects, Landlord shall
forthwith undertake to correct the same and shall thereafter diligently
prosecute such correction to completion. 
If Landlord does not elect in writing within the period given to correct
any such defects or conditions, then Landlord shall be deemed to have elected
not to correct the same.  Tenant may,
within an additional five (5) business day period following Landlord’s election
or deemed election not to cure any such defects or conditions, terminate this
Lease by written notice to Landlord, whereupon both parties shall be released and
discharged from any further obligations hereunder.  If Tenant does not elect to terminate this
Lease, then, except for latent defects and items that Landlord has undertaken
to correct pursuant to this Section 1.3.1, Tenant shall be deemed to have
accepted the Premises in their then condition, as  is, with all
faults and defects.  If Landlord
undertakes, in accordance with the foregoing procedure, to correct defects or
conditions that Tenant identifies, and if, due to no fault of Tenant, Landlord
fails to complete such work by the Commencement Date, then this Lease shall not
be void or voidable, and Landlord shall not be responsible or liable for any
claims or damages in connection therewith or by reason thereof, and the Term of
this Lease shall not be modified, but the date on which Base Rent first becomes
due under Section 2 shall be extended one day for each day that Landlord’s
completion of such work is delayed.

 

1.3.2                      Subject
to the conditions stated in this Section 1.3.2, Tenant shall have the option to
extend this Lease for up to that number of additional terms specified in the
summary of Basic Lease Terms preceding this Lease (each, a “Renewal Term”),
each consisting of that number of months also specified in the summary of Basic
Lease Terms preceding this Lease.

 

2

 

Each
such Renewal Term shall commence the day following expiration of, as
applicable, the initial Term or the preceding Renewal Term, and shall be for a
Base Rent determined pursuant to Section 2.1.2, and otherwise on and subject to
all of the terms and conditions set forth in this Agreement.  Tenant may exercise the option granted hereby
by written notice to Landlord if, but only if, all of the following conditions
are satisfied:

 

(a)                                  Tenant shall have given such notice not less
than 180 days nor more than 240 days before the last day of the initial Term or
Renewal Term to be extended;

 

(b)                                 During the Term preceding delivery of such
notice, Tenant shall not have defaulted in any of its obligations hereunder
beyond applicable notice and cure periods, or Landlord shall, for purposes of
this Section 1.3.2 only, waived the absence of any such default as a condition
precedent to Tenant’s right to exercise the option.

 

(c)                                  At the time that Tenant gives such notice,
and continuing until the first day of the Renewal Term, there shall not exist
hereunder any default of Tenant nor any event or circumstance that, with
notice, the passage of time, or both, could ripen into a default.

 

Subsequent references to the
“Term” of this Lease shall include the Term and the Renewal Term(s), if any,
for which Tenant effectively exercises the foregoing option.

 

2.                                       Rent.  Tenant shall pay Landlord rent
(“Base Rent”), as set forth in this Section 2. 
Base Rent, along with all other sums that become payable by Tenant under
this Lease, whether to Landlord directly, or to a third party for the benefit
of Landlord and the Premises, are referred to herein as “Rent.” All Base Rent
shall be paid in advance on the first day of each month, commencing on November
1, 1999, unless otherwise provided herein. 
All Rent shall be paid in lawful money of the United States to Landlord,
c/o ScanlanKemperBard Companies, 2650 Pacwest Center, 1211 SW Fifth Avenue,
Portland, OR 97204, or at such other place as Landlord shall designate by
written notice to Tenant.  Tenant shall
pay all Rent promptly when due without notice or demand therefor and without
any abatement, deduction or off set, for any reason whatsoever, except as may
be expressly provided in this Lease.  If
the Tenant’s obligation to pay Base Rent does not commence on the first day of
a calendar month, or does not expire on the last day of the calendar month, the
Base Rent payable by Tenant on the first fractional month, or the last fractional
month, as the case may be, shall be prorated for said month.  Base Rent for the first full calendar month
of the Term shall be paid upon execution of this Lease, and Base Rent for any
partial month at the beginning of the Term shall be due on the Commencement
Date.  Tenant acknowledges that Tenant’s
late payment of Rent due Landlord will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of such cost being extremely
difficult and impractical to ascertain. 
Therefore, if Landlord does not receive any Rent due from Tenant within
five (5) days of when due, Tenant shall pay to Landlord an additional sum equal
to five percent (5 %) of the overdue amount, which late charge shall be due and
payable on demand.  By their execution of
this Lease, Landlord and Tenant confirm that such late charge represents a fair
and reasonable estimate of the costs that Landlord will incur by reason of any
such late payment, that the late charge is in addition to any and all remedies
available to Landlord and that the assessment and/or collection of the late
charge shall not be deemed a waiver by Landlord of such failure or to any other
default under this Lease.  Additionally,
all such delinquent Rent, plus any late charge, shall bear interest at the rate
of

 

3

 

fourteen percent (14%) per
annum, or, if lower, the maximum interest rate permitted by law (as applicable,
the “Default Rate”), from the date due until paid.  If any payment of Rent is returned for
insufficient funds, Landlord may require Tenant to pay all future payments by
cashier’s check.

 

2.1                                 Base Rent.  Subject to adjustment as
provided in Section 2.1.1., the monthly Base Rent shall be the amount specified
in the summary of Basic Lease Terms preceding this Lease (the “Base
Rent”).  As of the first day of each
Adjustment Date specified in the summary of Basic Lease Terms preceding this
Lease, Base Rent shall be increased as provided in Section 2.1.1.

 

2.1.1                      Base
Rent Increases.  The Base Rent shall
be increased annually, during the initial Term and any Renewal Term, effective
as of each Adjustment Date specified in the Basic Lease Terms preceding this
Lease, to equal one hundred three percent (103%) of the Base Rent applicable
during the immediately preceding year.

 

2.1.2                      Base
Rent for the first year of any Renewal Term shall be 95% of the then fair
market rental value of the Premises, which fair market value shall be
established by agreement of the parties or, if they cannot agree by 120 days
prior to the commencement date of the Renewal Term, then fair market value
shall be established pursuant to the terms of this Section 2.1.2.  If the parties are not able to agree upon the
then fair market rental value of the Premises on or before the 120th day prior
to the commencement of the Renewal Term, then not later than the 90th day prior
to the commencement of the Renewal Term, each party shall submit to the other a
written final offer setting forth the then fair market rental value of the
Premises.  The written notice of the fair
market rental value shall also be accompanied by a list of three qualified MAI
appraisers, experienced in determining fair market rental values of similar
commercial properties in the City and County, metropolitan area in which the
Premises is located.  Each party shall
have the right to strike one candidate from the list submitted by the other
parry.  The resulting four names shall
then be placed in a vessel and one MAI appraiser shall be selected at
random.  The MAI appraiser so selected
(the “Appraiser”) need not necessarily conduct an appraisal, but rather shall,
using whatever means (including an appraisal) the Appraiser deems reasonable,
select; as between the two final offers submitted by the parties, that final
offer that sets forth a fair market rental value that is closest to the actual
fair market rental value as the same may be determined by the Appraiser using
whatever means (including an appraisal) the Appraiser deems reasonable.  The decision of the Appraiser shall be final
and binding on the parties and 95% of such determined value shall be the Base
Rent for the first year of the Renewal Term. 
The cost of the Appraiser’s fee shall be paid by the party whose final
offer was not selected as the final offer which was closest to the then fair
market rental value.  Once Base Rent is
established for the first year of a Renewal Term, such Base Rent shall be
adjusted for subsequent years of the Renewal Term in accordance with Section
2.1.1.

 

3.                                       Business
Taxes. 
Tenant shall be directly liable for, and shall pay as and when due
throughout the Term, all license and excise fees and occupation taxes covering
the business conducted on the Premises.

 

4

 

4.                                       Property
Taxes.

 

4.1                                 Taxes on Tenant’s
Personal Property.  Tenant shall be liable for and shall pay at
least ten (10) days before delinquency, taxes levied against any personal
property or trade futures placed by Tenant in or about the Premises.  If any such taxes on Tenant’s personal
property or trade fixtures are levied against the Premises, Landlord or
Landlord’s property, or if the assessed value of the Premises is increased by
the inclusion therein of a value placed upon such personal property or trade
fixtures, then Landlord shall have the right to pay the taxes based upon such
increased assessments, regardless of the validity thereof, but only under
proper protest if requested by Tenant in writing.  If Landlord shall so-pay such taxes, then
Tenant shall, upon demand, repay to Landlord the taxes so-levied and paid by
Landlord, or the proportion of such taxes resulting from such increase in the
assessment.  In any such event, Tenant,
shall have the right, at Tenant’s sole cost and expense, in the name of
Landlord and with Landlord’s full cooperation, to bring suit in any court of
competent jurisdiction to recover the amount of any such taxes so paid under
protest, any amount so recovered to belong to Tenant.

 

4.2                                 Tenant Improvements.  If
the Tenant Improvements, whether installed and/or paid for by Landlord or
Tenant and whether or not affixed to the real property so as to become a part
thereof, are assessed for real property tax purposes at a valuation higher than
the valuation at which improvements conforming to Landlord’s “building
standard” in other space in the Building are assessed, then the real property
taxes and assessments levied against Landlord or the Premises by reason of such
excess assessed valuation shall be deemed to be property taxes and assessments
levied against personal property of Tenant and shall be governed by the
provisions of Section 3.4.2, above.  If
the records of the county assessor are available and sufficiently detailed to
serve as a basis for determining whether said Leasehold Improvements are assessed
at a higher valuation than Landlord’s “building standard”, such records shall
be binding on both Landlord and Tenant. 
If the records of the county assessor are not available or sufficiently
detailed to serve as a basis for making said determination, the actual costs of
construction shall be used.

 

5.                                       Use.

 

5.1                                 General

 

5.1.1                      Permitted
Uses.  Tenant shall use
and occupy the Premises continuously during the term of this Lease for uses
specified in the summary of Basic Lease Terms preceding this Lease.

 

5.1.2                      Licenses
and Permits.  If any governmental
license or permit, other than a Certificate of Occupancy, 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 and requirements of public
authorities relating to Tenant’s particular use and occupancy of the Premises
and shall observe the Rules and Regulations as may be adopted pursuant to
Section 5.4 hereof of which Landlord notifies Tenant from time to time for the
safety and general order of the Premises and the Building.

 

5

 

5.2                                 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 that will cause any substantial
noise, vibration, fumes or electronic interference 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 that: (a) violates
the Certificate of Occupancy for the Premises or for the Building; (b) causes
injury to the Premises, or the Building or any equipment, facilities or systems
therein; (c) constitutes a violation of the laws or requirements of any public
authorities or the requirements of insurance bodies; (d) impairs the character,
reputation or appearance of the Building as a first-class office building; (e)
impairs the proper and economic maintenance, operation and repair of the
Building arid/or its equipment, facilities or systems; or (f) unreasonably
annoys or inconveniences other tenants or occupants of the Building.

 

5.3                                 Hazardous Substances.

 

5.3.1                      Tenant
Shall Not Permit Hazardous Substances Upon the Premises, Building or Land.  Tenant will not itself, and will not suffer
or permit its employees, agents, contractors or invitees in or about the
Premises or Building to use, generate, process, store, transport, handle, or
dispose of, on, under, in, or from the Premises, the Building or the Land, any
Hazardous Substances (as that term is defined in Section 5.3.4, below) in
quantities or concentrations that exceed amounts allowed by, or in a manner
that fails to comply with, applicable law.

 

5.3.2                      Notification.  Tenant shall immediately notify Landlord
should Tenant (a) become aware of the existence of any Hazardous Substance on
the Premises, the Building or the Land, (b) receive any notice of, or become
aware of, any actual or alleged violation with respect to the Premises, the
Building or the Land of any federal, state, or local statute, ordinance, rule,
regulation, or other law pertaining to Hazardous Substances, or (c) become
aware of any lien or action with respect to any of the foregoing.  Tenant shall deliver to Landlord, promptly
upon receipt, (i) copies of any documents received from the United States
Environmental Protection Agency (“EPA”) and/or any state, county, or municipal
environmental or health agency concerning Tenant’s ownership, use, or
operations upon or in connection with the Premises; and (ii) copies of any
documents submitted by Tenant to the EPA and/or any state, county, or municipal
environmental or health agency concerning the Premises.

 

5.3.3                      Inspection
and Remedial Action. 
Landlord is hereby authorized to enter the Premises thereon at
reasonable times, and after reasonable notice, for the purpose of inspecting
the Premises, to ascertain Tenant’s compliance with all covenants made in this
Section.  Upon Landlord’s written request
(a) Tenant, through professional engineers approved by Landlord and at Tenant’s
cost, shall thoroughly investigate suspected Hazardous Substances contamination
of the Premises occurring after the Commencement Date, or of the Building or
Land and caused by a breach of Tenant’s covenant at Section 5.3.1, and (b)
Tenant shall forthwith take such remedial action with respect to any such
contamination as may be necessary to ensure that no such Hazardous Substances
are present on the Premises or in the groundwater of the Premises, Building or
Land in quantities or concentrations that exceed amounts allowed by applicable
law.  Tenant’s obligations under this
Section shall arise upon Landlord’s demand as provided herein, regardless of
whether the EPA or any other federal, state, or local agency or governmental
authority has taken or threatened any action in connection with the presence of
any

 

6

 

Hazardous
Substance on, or release of any Hazardous Substance from, the Premises,
Building or the Land.  If Tenant shall
fail promptly to discharge its obligations under this Section, Landlord may, at
its election, but without the obligation to do so, cause such investigation to
be made or remedial action to be taken and/or take any and all other actions
that Landlord may deem necessary or advisable to protect its interests or to
avoid or minimize its liability for the existence of Hazardous Substances on
the Premises, the Building or the Land, or for a release thereof from the
Premises, the Building or Land.  All
amounts expended by Landlord under this Section shall be payable by Tenant to
Landlord upon demand.

 

5.3.4                      Definition
of Hazardous Substance(s). 
The term “Hazardous Substance” shall mean:

 

(a)                                  “Hazardous substances”, as defined by 40 CFR
Part 302;

 

(b)                                 “Extremely hazardous substance”, as defined
by 40 CFR Part 355;

 

(c)                                  “Toxic chemicals”, as defined by 40 CFR Part
372;

 

(d)                                 “Hazardous chemical” as defined by 29 CFR §
1910.120, to the extent it is included in the employer’s written Hazard
Communication Program or in Material Safety Data Sheets that are located on
site;

 

(e)                                  “Hazardous Waste” as defined by applicable
administrative rules;

 

(f)                                    Petroleum, including crude oil and any
fraction thereof; 

and

 

(g)                                 Any material that contains more than 1% of
asbestos.

 

5.3.5                      Power
Interruption.  If there is any
interruption, failure, stoppage or interference of the utilities, services or
access to be furnished by Lessor to the Premises under this Lease or due to the
presence of any Hazardous Substances on or about the Building (except to the
extent released or emitted by Tenant), and such interruption continues for
seven (7) consecutive calendar days, then Tenant shall be entitled to an
equitable abatement of rent to the extent of the interference with Tenant’s use
of the Premises occasioned thereby.  If
the interference persists for more than thirty (30) consecutive calendar days,
then Tenant shall have the right to terminate the Lease.

 

5.3.6                      Survival.  Tenant’s covenants set forth in this Section
5.3 shall survive the termination of the Lease or any transfer by Tenant, by
assignment or otherwise, of any or all right, title, or interest of Tenant in
the Premises.

 

5.4                                 Rules and Regulations.  Tenant and its employees and agents shall
faithfully observe and comply with, and Tenant shall cause its invitees and
licensees to observe and comply with, the rules and regulations attached as
Exhibit D and with such changes therein as

 

7

 

Landlord may
from time to time make and of which Landlord has notified Tenant (the “Rules
and Regulations”).  Landlord shall not be
liable to Tenant for violation of the Rules and Regulations by any other tenant
or such other tenant’s employees, agents, invitees or licensees.

 

5.5                                 Specialized
Equipment.

 

(a)                                  Subject to the provisions of this Section
5.5, Landlord acknowledges and consents to Tenant’s use and storage on the
Premises of a diesel power generator and specialized batteries for Tenant’s
computers (the “Batteries”), as show in the diagram and structural engineering
report dated June 15, 1999, and attached as Exhibit F (the “Structural
Report”), and to Tenant’s installation and use of the following equipment that
uses electricity in excess of 110 volts: switching, transport and data storage
equipment.  Before installing any such
specialized equipment on the Premises, or any other equipment that does not
constitute standard office equipment normally and routinely used in a typical
business office environment (all of the foregoing are herein referred to as
“Specialized Equipment”), Tenant shall install a separate electric meter and
circuitry to be used for, and to measure the energy consumption of, all such
Specialized Equipment.  Tenant shall take
whatever steps may be necessary (including, without limitation, inspection by a
structural engineer) to confirm that the floor capacity of the Premises is
sufficient to support such and equipment identified in the Structural Report.

 

(b)                                 From and after the date that Tenant installs
a separate meter therefor as part of Tenant’s Initial Tenant Improvements under
Section 7.2.1, Landlord shall provide Tenant nonexclusive access to the 8,000
gallon diesel fuel tank located on the Premises for the purpose making
available to Tenant a back-up supply for the aforementioned diesel power
generator.  Tenant shall pay Landlord,
within ten (10) days following receipt of Landlord’s invoice therefor, the
actual cost (determined in accordance with Landlord’s standard accounting
practices) of any fuel held in such tank that is consumed by Tenant.

 

(c)                                  Tenant may also install, on the roof of the
Building in a location approved by Landlord, cooling systems and an antenna,
used in connection with its business operation. 
Commencing upon installation of the antenna pursuant to this Section
5.5, Tenant shall pay Landlord, together with Tenant’s monthly payment of the
Base Rent, the sum of $300.00, which amount shall be paid on the first day of
each and every successive month for so long as Tenant maintains such antenna on
the roof of the Building.

 

(d)                                 Tenant’s installation of all of the equipment
and items referred to in this Section 5.5 shall be made pursuant to, and in
conformance with, the provisions of this Lease pertaining to the Initial Tenant
Improvements set forth at Section 7.2.1, including, without limitation, the
requirement for obtaining Landlord’s approval of construction drawings.

 

6.                                       Condition
of Premises, Maintenance and Repair.

 

6.1                                 Tenant’s Acceptance.  By taking possession of the Premises on the
Commencement Date, but subject to Section 1.2.1, Tenant shall be deemed to have
accepted the Premises AS IS, and as being in good, sanitary and working order,
condition, and repair.

 

6.2                                 Tenant’s Maintenance Obligations.  Tenant, at its expense, shall be responsible
for maintaining the Premises, the fixtures and improvements in the Premises,
and Tenant’s

 

8

 

Property
(defined at Section 9.2), except for the maintenance of structural elements of
the Building included in the Premises, lighting, plumbing, mechanical, and
electrical systems which shall be maintained by Landlord.  Tenant, at its expense, shall promptly
replace all scratched, damaged or broken doors and, in and about the Premises
and shall be responsible for all repairs, maintenance and replacement of
millwork, cabinets, wall and floor coverings in the Premises.  Tenant shall be responsible for all repairs,
interior and exterior, structural and non-structural, pertaining to Building
glass or the mechanical and/or utility systems, ordinary and extraordinary, in
and to the Premises and the Building and the facilities and systems thereof,
the need for which arises out of the performance or existence of Tenant
Improvements (defined at Section 7,1); 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.  Tenant shall promptly report to Landlord any
damage or injury occurring on or to the Premises or the Building.

 

6.3                                 Manner.  Tenant shall promptly make, at Tenant’s
expense, all repairs in or to the Premises and the Building for which Tenant is
responsible.  Such work shall be
performed only by contractors approved by Landlord.  Any such repairs in or to the Building and
the facilities and systems thereof for which Tenant is responsible may, at
Landlord’s election be performed by Landlord at Tenant’s expense, and 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 reasonably deem necessary to assure the payment
for such work by Tenant.

 

6.4                                 Janitorial Services.  Except as provided below in this Section 6.4,
Landlord shall provide routine janitorial services to the Building and the
Premises of a standard that is substantially equivalent to the services
provided in similar buildings in the Washoe County, Nevada metropolitan area,
and in accordance with the Standards for Utilities and Services attached as
Exhibit E.  Such services shall be
provided at Landlord’s cost and expense. 
Tenant shall provide janitorial service to that portion of the Premises
located on the second floor of the Building, and Landlord shall have no
responsibility for performing or for the cost of such services.

 

6.5                                 Landlord’s Maintenance and Repair Obligations.  Landlord shall cause to be made all
structural repairs to the Building including, without limitation, the roof,
structural walls and foundations of the Building as and when needed in or about
the Premises, except for those repairs for which Tenant is responsible pursuant
to any of the provisions of this Lease. 
In addition, subject to other provisions of this Lease, including
Sections 15 and 16, Landlord shall perform, and/or construct, and Tenant shall
have no responsibility to perform or construct, any repair, maintenance or
improvements (a) necessitated by the acts or omissions of Landlord, or any
other occupant of the Building, or their respective agents, employees or
contractors, (b) occasioned by fire or other casualty, or by the exercise of
the power of eminent domain, (c) required as a consequence of any violation of
any laws not caused by Tenant’s specific use of the Premises, (d) to the
lighting, plumbing, mechanical and electrical systems and the structural
elements of the Building, (e) to the exterior glass of the Premises and the
Building, and (f) to any portion of the Building outside of the demising walls
of the Premises.

 

9

 

6.6                                 Waiver.  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 that Landlord is required or permitted by this Lease or
required by law to make in or to any portion of the Building or the Premises,
or in or to the fixtures, equipment or appurtenances of the Building or the
Premises, but Landlord shall endeavor in good faith to minimize disruption to
Tenant’s business in such event. 
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 act or failure to act of any security personnel or mechanism
used in the Building, or by reason of any lack of security in the Building.

 

6.7                                 End of Term.  Upon termination of this Lease for any reason
whatsoever Tenant will peacefully surrender to Landlord the entire Premises,
together, subject to the provisions of Section 7.5, with all improvements,
changes, alterations and replacements thereto or to the Building or Land, in
good order, condition and repair, but in any event with all windows, walls,
floors, and carpets cleaned, all equipment in good working order, and the
Premises restored to their original condition as of the Commencement Date,
ordinary wear and tear excepted.  Upon such
termination, Tenant shall have the right to remove Tenant’s Property, as
provided at Section 9.2.

 

7.                                       Tenant
Alterations.

 

7.1                                 Landlord’s Consent.  Tenant shall make no alterations, additions,
or improvements in or to the Premises, the Building or the real property
appurtenant thereto (herein, “Tenant Improvements”) without Landlord’s prior
written consent, to be granted or withheld pursuant to Sections 7.2 and 7.3
below, and, if such consent is granted, then only contractors or mechanics that
are approved by Landlord shall effect such Tenant Improvements.

 

7.2                                 Procedure for Approval.  If Tenant
wishes to make any Tenant Improvements to the Premises that either (a) are of a
structural nature, or (b) involve a cost greater than $2,500, (c) involve the
roof, foundation, exterior walls or interior load- bearing walls of the
Building, or (d) are made pursuant to Section 7.2.1 or pursuant to Section
11.2, below, Tenant shall submit to Landlord, for Landlord’s written approval,
a written description of the Major Work that Tenant proposes to perform together
with detailed plans and specifications for such Major Work.   If Tenant wishes to make any alterations,
additions, or improvements to the Premises that do not constitute Major Work,
Tenant shall submit to Landlord, for Landlord’s written approval, a written
description of such work.  Reference
herein to “structural work” or “work of a structural nature” shall have the
meaning that such terms normally connote in the construction industry.  By way of example, alteration of interior
non-load bearing walls and partitions, alteration of ceilings, installation of
wall coverings, painting, installation of rugs, and similar work shall not be
deemed to constitute structural work; alteration to any exterior wall, load
bearing wall, roof, plumbing system, heating, ventilation, and air conditioning
system or similar work shall be deemed to be of a structural nature.

 

7.2.1                      Initial
Tenant Improvements. 
Landlord hereby consents to the Tenant Improvements (some of which will
be made outside of the Premises) described in Exhibit C (the

 

10

 

“Initial
Tenant Improvements”), which include the installation of the Specialized
Equipment and other items described in Section 5.5, and the installation on the
Land, in a location approved by Landlord, of a primary diesel fuel tank to
supply Tenant’s diesel generator described in Section 5.5.  Landlord shall afford Tenant an allowance for
the Initial Tenant Improvements in the amount of $137,606.00, as more
particularly provided in Section 7.2.2 (the “TI Allowance”).  Landlord shall be responsible for, and Tenant
shall not be required to perform or to apply the TI Allowance to, any of the
following:

 

(a)                                  The removal of Hazardous Substances from the
Premises existing thereon or therein on and as of the Effective Date; or

 

(b)                                 Work necessary to bring the Premises into
compliance with applicable laws, regulations and ordinances, including, without
limitation, the Americans with Disability Act, unless such compliance is made
necessary by Tenant’s specific use of the Premises.

 

Tenant shall prepare and
deliver to Landlord, for its review and approval, construction drawings and
specifications for the Initial Tenant Improvements (on the form approved by
Landlord pursuant to this Section 7.2.1, the “Approved Plans”).  Landlord shall not unreasonably withhold or
delay it approval thereof, provided that the same conform to the description of
the Initial Tenant Improvements set forth in Exhibit C, and meet the criteria
specified at clauses (a), (c) and (d), of Section 7.3.

 

7.2.2                      Landlord’s
Obligation and TI Allowance. 
In connection with Tenant’s design and installation of the Initial
Tenant Improvements, Landlord, at its sole cost and expense, shall cause the
Premises to have dedicated electrical power service of 480 volt, 3-phase power
of 800 amps.  Upon completion of the
Initial Tenant Improvements in conformance with the Approved Plans, issuance of
a certificate of occupancy for the Premises, and Tenant’s delivery of its
certification to Landlord that the Initial Tenant Improvements have been
completed in accordance with the Approved Plans, Landlord shall pay the TI
Allowance directly to Tenant’s general contractor performing the Initial Tenant
Improvements construction work.

 

7.3                                 Standard for Approval.  Landlord’s approval of proposed work shall
not be unreasonably withheld or delayed if such work (a) does not adversely
affect, in Landlord’s judgment, the appearance of the Premises and/or Building
or the value of the Premises and/or Building, (b) does not adversely affect, in
Landlord’s judgment, Landlord’s ability to release the Premises, (c) does not
affect the structural integrity of the Building or its systems, (d) conforms to
the requirements of all building codes and any other applicable laws and
regulations, and (e) can be performed and completed without disrupting the
business or operation of the Building or of any other tenant of the
Building.  Tenant’s failure to obtain
Landlord’s prior written consent to any proposed work shall constitute an Event
of Default hereunder.

 

7.4                                 Compliance with Laws.  All work done by Tenant shall be performed in
full compliance with all laws, rules, orders and ordinances.  Without limiting the generality of the
foregoing:  (a) Tenant, at its expense,
shall obtain all necessary governmental permits and certificates for the
commencement and prosecution of Tenant Improvements and for final approval
thereof upon completion, and shall cause the Tenant Improvements work to be

 

11

 

performed in
compliance with all such permits and certificates, applicable laws and
requirements of public authorities and with all applicable requirements of
insurance, and (b) Tenant shall be responsible for assuring that the Premises
complies with any and all requirements of the Americans with Disabilities Act
and any other Federal, state or local governmental agency requirements relating
to Tenant’s specific use of the Premises or Tenant’s business operation.  Landlord’s approval or consent to any
proposed work shall not be deemed a waiver of, or an opinion respecting, the
compliance of the proposed work with the requirements of this Section 7.4.

 

7.5                                 Title to Improvements.  All Tenant
Improvements upon the Premises, including (without limiting the generality of
the foregoing) all wall covering, built-in cabinet work, paneling, and the like
shall, unless Landlord elects otherwise in writing, be the property of
Landlord, and shall remain upon and be surrendered with the Premises as a part thereof
at expiration or earlier termination of this Lease, except that Landlord may,
by written notice to Tenant, require Tenant, at Tenant’s cost, (a) to remove
any or all Tenant Improvements, and (b) to repair all damage resulting from
such removal.  If Tenant fails to perform
the foregoing, Tenant shall pay to Landlord all costs arising from Landlord’s
performance of the same, which shall be due and payable upon Landlord’s demand.

 

7.6                                 Schedule/Manner of Work.  All of
Tenant’s contractors, suppliers, workmen, and mechanics for any Tenant
Improvements shall comply with such rules and conditions as Landlord may
reasonably impose from time to time, which rules and conditions shall be
enforced by Tenant at the discretion of Landlord.  At any time any contractor, supplier,
workman, or mechanic performing construction of any Tenant Improvements
performs any work that may or does impair the quality, integrity, or
performance of any portion of the Building, Tenant shall cause such contractor,
supplier, workman, or mechanic to leave the Building and remove all his tools,
equipment, and materials immediately upon written notice delivered to Tenant
and Tenant shall reimburse Landlord for any repairs or corrections of any
portion of the building caused by or resulting from the work of any contractor,
supplier, workman, or mechanic performing any Tenant Improvements work.  The quality of all Tenant Improvements to or
involving structural, electrical, mechanical, life/safety, energy management,
or plumbing systems in the Premises shall be at least equal to the quality of
such systems as on the Commencement Date.

 

7.7                                 Debris.  Tenant will cause construction of any Tenant
Improvements to be accomplished in a neat, clean, and workmanlike manner.  Tenant shall not permit any trash, rubbish,
or debris to accumulate in the Premises or the Building, and Tenant shall
remove or cause to be removed all such trash, rubbish, and debris from the
Premises and the Building and on a timely basis.  Tenant shall be responsible for any additional
costs incurred by Landlord for cleaning the Building or any portion thereof,
and for removing any trash, rubbish, or debris therefrom to the extent caused
by Tenant’s construction of the Tenant Improvements.

 

7.8                                 Right of Entry/Inspection.  At all times
during the period of construction of any portion of any Tenant Improvements,
Landlord and Landlord’s architects and engineers shall have the right to enter
upon the Premises to inspect the work of construction and the progress thereof.  Tenant shall not close any work affecting any
portion of the life safety, heating, ventilation, and air conditioning,
plumbing, or electrical systems in the Premises or building until the same has
been inspected and approved by Landlord’s engineers.  No inspection or approval

 

12

 

by Landlord’s
engineers of any such work shall constitute an endorsement thereof or any
representation as to the adequacy thereof for any purpose or the conformance
thereof with any governmental ordinances, codes, or regulations, and Tenant
shall be fully responsible and liable therefor.

 

7.9                                 Insurance.  In addition to the insurance requirements set
forth in Section 8, during the period of construction of any Tenant
Improvements, Tenant and Tenant’s general contractor shall maintain worker’s
compensation, builder’s all-risk and public liability insurance, and such other
insurance as Landlord may reasonably require in amounts satisfactory to
Landlord.  All policies shall have such
coverage limits, and be underwritten by such companies, as Landlord shall
approve, and shall name Landlord as an additional insured thereunder.  Before the commencement of construction of
any Tenant Improvements, Tenant and Tenant’s general contractor must deliver
certificates of all such insurance policies and such insurance policies must be
approved by Landlord.

 

7.10                           Non-Responsibility of Landlord.  Tenant hereby acknowledges that Landlord
shall have no responsibility whatsoever for the construction of any Tenant
Improvements or for any defects therein. 
Tenant shall notify Landlord in writing no less than ten (10) days
before the commencement of construction of any Tenant Improvements in order to
afford Landlord an opportunity to post and record appropriate notices of non-responsibility.  Tenant, at its expense, shall procure the
cancellation or discharge of all notices of violation arising from or other
connected with Tenant Improvements work, or any other work, labor, services or
materials done for or supplied to Tenant, or any other person claiming through
or under Tenant, in or about the Premises or Building.  Tenant shall defend, indemnify and save
harmless Landlord and any mortgagee from and against any and all mechanics and
other liens and encumbrances filed in connection with the Tenant Improvements
work, or any other work, labor, services or materials done for or supplied to
Tenant, or any person claiming through or under Tenant, in or about the
Premises or Building.  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; provided, Tenant may contest, in good faith and at its own expense,
any notice of violation, or lien, provided Tenant posts for the protection of
Landlord security in an amount and form acceptable to Landlord.

 

8.                                       Liability
and Insurance.

 

8.1                                 Action by Tenant.  Further to Section 5.2, Tenant shall not do,
or permit anything to be done, or keep or permit anything to be kept in the
Premises that would subject Landlord to any liability or responsibility for
personal injury, death or property damage, or that would increase insurance
rates in respect of the Land, Building or the property therein over the rates
that would otherwise then be in effect or that would result in insurance
companies of good standing refusing to insure the Building or the property
therein in amounts satisfactory to Landlord, or that would result in the
cancellation of or the assertion of any defense by the insurer in whole or in
part to claims under any policy of insurance in respect of the Land, Building
or the property therein.  If, by reason
of any failure of Tenant to comply with the provisions of Section 5 or this
Section 8.1, the premiums on Landlord’s insurance on the Building and/or
property therein shall be higher than they otherwise would be, Tenant shall
reimburse Landlord, on demand, for that part of such premiums attributable to
such failure on the part of Tenant.

 

13

 

8.2                                 Landlord’s Insurance.  Landlord
shall procure and maintain at all times during the Term of this Lease a policy
or policies of insurance covering loss or damage to the Building in the amount
of the full replacement value thereof (exclusive of Tenant’s trade fixtures,
non-standard tenant improvements, equipment and personal property), providing
protection against all perils included within the classification of fire,
extended coverage, all risk of loss as it relates to the standard insuring clause,
loss of rental income, Landlord’s risk liability coverage, and to the extent
any mortgagee of the Building may require or as Landlord may deem prudent,
coverage against such other hazards that are then commonly insured against for
similar properties.  Such insurance shall
provide for payment of loss thereunder to Landlord and/or the holder of any
mortgages or deeds of trust or real estate contracts on the Land and/or
Building.

 

8.3                                 Waiver of
Subrogation.  Landlord and Tenant hereby release each other
and their respective agents, employees, successors and assigns from all
liability for damage to any property that is actually covered by property
insurance in force or that would normally be covered by full replacement “all
risk” property insurance, without regard to the negligence or willful
misconduct of the entity so released. 
Each party shall cause each such insurance policy it obtains to include
a waiver of subrogation regarding the liabilities released hereby.  All of the Landlord and Tenant’s repair and
indemnity obligations under this Lease shall be subject to the waiver contained
in this Section 8.3.  The waiver of
subrogation shall extend to Landlord or Tenant, as applicable, and the agents
and employees of each.

 

8.4                                 Public Liability Insurance.  Tenant,
at its expense, shall procure and maintain at all times during the Term and at
anytime prior to the Term that Tenant is given possession of the Premises,
public liability insurance in respect of the Premises and the conduct or
operation of business therein, with Landlord, Landlord’s Operating Manager and
Landlord’s managing agent, if any, and any mortgagee whose name and address
shall previously have been furnished to Tenant, as additional named insureds,
with limits of not less than $1,000,000 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 $1,000,000 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 Section
17.2.

 

8.5                                 Tenant’s
Fire and All Risk Coverage Insurance.  Tenant shall also at its own
expense maintain, during the Term, and at any time prior to the Term that
Tenant is given possession of the Premises, insurance covering its furniture,
fixtures, equipment, and inventory in an amount equal to not less than one
hundred percent (100%) of the full replacement value thereof and insuring
against fire and all risk perils coverage as provided by a standard all risk
coverage endorsement and the plate glass and all other glass is the
responsibility of the Tenant in the event of breakage from any cause.

 

8.6                                 Insurance
Policies.  All insurance policies required to be carried
by Tenant hereunder shall name Landlord as additional insured and shall be with
companies and with loss-payable clauses satisfactory to Landlord, and certified
copies or originals of policies or certificates evidencing such insurance shall
be delivered to Landlord by Tenant prior to Tenant commencing occupancy and
thereafter within thirty (30) days prior to each renewal thereof.  Such certificate shall be from a company
holding a “Best’s Rating” of at least A: 
Class IX, shall indicate that the insurance policy is in full force and
effect, and that the policy bears an

 

14

 

endorsement that the same not be canceled or amended unless thirty (30)
days prior written notice by U.S. Certified Mail of the proposed cancellation
or amendment has been given to Landlord and any mortgagee of which Landlord has
given Tenant notice prior to the date of such certificate.  Each of said certificates of insurance and
each such policy of insurance required to be maintained by Tenant hereunder
shall expressly evidence insurance coverage as required by the Lease.  All such policies shall be written as primary
policies not contributing with and not in excess of coverage which Landlord may
carry.

 

8.7                                 Increase Policies.  From
and after the fifth (5th) anniversary of the Commencement Date,
Landlord may from time to time require that the amount of public liability
insurance to be maintained by Tenant under Section 7.4 be increased to an
amount determined by Landlord to be necessary to adequately protect Landlord’s
interest.  Upon receipt of Tenant of a
notice from Landlord stating the increased amount of insurance, Tenant shall
thereafter carry the insurance as set forth in such notice.  In no event shall the amount of public liability
insurance to be carried by Tenant be less than the amount specified in Section
7.4, or be greater than the coverage required to be carried from time to time
by new tenants of the Building.

 

9.                                       Landlord’s
Property Tenant’s Property

 

9.1                                 Landlord’s Property.  All
fixtures, equipment, improvements 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 7.5.  Any carpeting or other personal property in
the Premises on the Commencement Date shall be and remain Landlord’s property
and shall not be removed by Tenant; provided, that at Landlord’s written
request, Tenant shall, at its sole expense upon termination of the Lease and in
accordance with, and subject to the provisions of, Section 7.5, remove those
items specified by Landlord, including any or all fixtures, equipment,
improvements, appurtenances and other personal property, that are deemed herein
the property of Landlord.

 

9.2                                 Tenant’s Property.  Notwithstanding
any provision to the contrary in Section 9.1, all business and trade fixtures,
machinery and equipment, communications equipment and office equipment that are
installed in the Premises, the Building or Land by or for the account of Tenant
without expense to Landlord and that 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 (together, the “Tenant’s Property”) shall be and remain the property
of Tenant and may be removed by Tenant at any time during the term 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, the Building
and/or the Land resulting from the installation and/or removal thereof.  Any equipment or other property for which
Landlord shall have granted any allowance or credit to Tenant shall not be
deemed to have been installed by or for the account of Tenant without expense
to Landlord, shall not be considered Tenant’s Property, and shall be deemed to
be the property of Landlord.

 

9.3                                 Removal.  At
or before the Expiration Date of this Lease, or any earlier termination of this
Lease, Tenant, at its expense, shall remove from the Premises all of Tenant’s
Property (except, at Tenant’s option, such items thereof as Landlord shall have
expressly

 

15

 

permitted to remain, which property shall become the property of
Landlord), and Tenant shall repair any damage to the Premises or the Building
resulting from any installation and/or removal of Tenant’s Property.

 

9.4                                 Abandonment.  In
addition to Landlord’s rights at Section 18.2.1, any items of Tenant’s Property
that 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, at
Landlord’s election, 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.

 

10.                                 Holding
Over.  If
Tenant holds over after the Expiration Date or earlier termination of the Term
without the express written consent of Landlord, Tenant shall become a tenant
at sufferance only, at a rental rate equal to two hundred percent (200%) of the
Base Rent in effect upon the date of such expiration or termination (prorated
on the basis of a thirty-day month and actual days elapsed), and otherwise
subject to the terms, covenants, and conditions herein specified, so far as
applicable.  Acceptance by Landlord of
rental after such expiration or earlier termination shall not result in a
renewal or extension of this Lease.  The
foregoing provisions of this Section 10 are in addition to and do not affect
Landlords’ right of re-entry or any rights of Landlord hereunder or as otherwise
provided by law.

 

11.                                 Electric
Energy

 

11.1                           High Voltage Equipment.  Tenant
shall not, without the prior written consent of Landlord, use any equipment,
machine, apparatus or device within the Premises, such as data processing
units, punch card machines or any other specialty equipment, that individually
uses electricity in excess of 110 volts.

 

11.2                           Cost of Increasing Capacity.  The
Initial Tenant Improvements include installation of a separate electric meter
for all Specialized Equipment used in the Premises.  Should Landlord consent to installation of
equipment or a design load for the Premises in excess of that permitted to be
installed as a part of the Initial Tenant Improvements under Section 7.2.1, the
additional equipment required to increase the capacity for Tenant’s excess
equipment or design load shall, subject to obtaining Landlord’s approval
thereof pursuant to Section 7.2, be provided by Tenant.  Tenant shall pay the cost to purchase,
install, service and maintain such additional equipment.  Tenant shall reimburse Landlord, on demand,
for the cost of all electric energy separately metered to the Premises, as
contemplated above and at Section 5.5.

 

11.3                           Light Fixtures.  Landlord shall attend to any
replacement of electric light bulbs, tubes and ballasts in the Premises
throughout the term of this Lease. 
Landlord may adopt a system of relamping and reballasting periodically
on a group basis in accordance with generally accepted management practice.

 

12.                                 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 (except as otherwise provided in the Standards
for Utilities and Services attached as Exhibit E or elsewhere in this Lease)
for occupancy of the Premises during Business Hours of

 

16

 

Business Days.  As used herein,
and unless otherwise stated in the Rules and Regulations “Business Hours” shall
mean generally customary daytime business hours, but not before 8:00 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
subject to such terms and conditions including cost reimbursement, as Landlord
may from time to time prescribe in the Rules and Regulations.

 

13.                                 Signs, Displays,
Auctions, and Sales.

 

13.1                           General.  Tenant
shall not place or suffer to be placed on the exterior walls or windows of the
Premises or upon the roof or any exterior door or wall or on the exterior or
interior of any window thereof any sign, awning, canopy, marquee, advertising
matter, decoration, picture, letter or other thing of any kind without the
prior written consent of Landlord. 
Landlord and Tenant acknowledge that Landlord has, by a separate letter
dated on or about the date of this Lease, consented to Tenant’s placement of
signs in the exterior of the Building, subject however, to the provisions of
such letter.  If Tenant shall install any
sign without Landlord’s consent, Landlord shall have the right and authority
without liability to Tenant to enter upon the Premises, remove and store the
subject sign and repair at Tenant’s cost all damage caused by the removal of
the sign.

 

13.2                           Tenant’s
Interior Signs.  Tenant shall have the right, at its sole cost
and expense, to erect and maintain within the interior of the Premises all
signs and advertising matter customary or appropriate in the conduct of
Tenant’s business; provided, however, that Tenant shall upon demand of Landlord
immediately remove any sign, advertisement, decoration, lettering or notice
which Tenant has placed or permitted to be placed in, upon or about the
Premises and that Landlord reasonably deems objectionable or offensive, and if
Tenant fails or refuses to so do, Landlord may enter upon the Premises and
remove
the same at Tenant’s cost and expense. 
In this connection, Tenant acknowledges that the Premises are a part of
an integrated business environment, and that control of all signs by Landlord
is essential to the maintenance of uniformity, propriety and the aesthetic
values in or pertaining to the Building.

 

13.3                           Displays.  Tenant
may not display or sell merchandise or allow carts or other similar devices
within the control of Tenant to be stored or to remain outside the defined demising
walls and permanent doorways of the Premises. 
Tenant shall not install any exterior lighting, amplifiers, or similar
devices or use in or about the Premises such items as flashing lights,
searchlights, loudspeakers, phonographs or radio broadcasts, nor make, or allow
to be made, any odor or excessive noise in or around the Premises.  No advertisement or sound of advertising
shall be permitted to be heard outside of the Premises.

 

13.4                           Auctions.  Tenant
shall not conduct or permit to be conducted any sale by auction upon or from
the Premises, whether said auction be voluntary, involuntary, pursuant to any
assignment for the payment of creditors or pursuant to any bankruptcy or other
insolvency proceeding.  No auction, fire,
bankruptcy, “going out of business” or other distress sales of any nature may
be conducted on the Premises without prior written consent of Landlord, which
consent may be conditioned as Landlord deems appropriate.

 

17

 

14.                                 Access and
Control of Premises.

 

14.1                           Access to Premises.  Landlord
shall have access to the Premises upon 24-hours prior notice (except in an
emergency, when no notice shall be required) to: (a) inspect the Premises; (b)
exhibit the Premises to prospective purchasers, lenders or tenants (during the
last 180 days of the Term); (c) determine whether Tenant is complying with its
obligations hereunder; (d) supply any service to be provided by Landlord to
Tenant hereunder; (e) post notices of non-responsibility; (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 in a
commercially reasonable and prompt manner, or (g) exercise any of its rights
hereunder including, without limitation, its cure rights under Section
17.1.  Landlord may, in order to carry
out the purposes stated at clauses (a) through (g) above, erect scaffolding and
other necessary structures where reasonably required by the character of the
work to be performed, and during the course of work being performed keep and
store upon the Premises all necessary material, supplies, and equipment,
provided that the business of Tenant shall be interfered with as little as is
reasonably practicable.  For each of the
aforesaid purposes, Landlord shall at all times have and retain a key with
which to unlock all of the doors in, upon and about the Premises (including the
portion thereof on the second floor of the Building), excluding Tenant’s vaults
and safes, if any.  Except for locks
called for by the Initial Tenant Improvements (for which Tenant shall provide
keys and security codes to Landlord as required by the preceding sentence), no
additional locks shall be placed by Tenant upon any doors in the Premises and
if more than two keys for any lock are desired, such additional keys shall be
paid for by Tenant.  Except for locks
called for by the Initial Tenant Improvements, all keys shall be duplicated
only by Landlord, and under no circumstance shall Tenant cause any key to be
duplicated.  Landlord shall have the
right to use any and all means which Landlord may deem proper to open said
doors in an emergency or in re-taking possession in order to obtain entry to
the Premises, and any entry to the Premises obtained by Landlord by any of said
means, or otherwise, shall not under any circumstance be construed or deemed to
be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction
of Tenant from the Premises or any portion thereof, and any damages caused on
account thereof shall be paid by Tenant.

 

14.2                           Waiver in
Connection with Landlord’s Entry.  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 entry on the Premises in accordance with any
provision of this Lease except to the extent caused by the negligence or
intentional misconduct of Landlord.

 

14.3                           Building
Changes.  Landlord reserves the right, at any time,
without incurring any liability by Tenant therefor, and without affecting or
reducing any of Tenant’s covenants and obligations hereunder, to make such
changes, alterations and improvements in or to the Building and the fixtures
and equipment thereof, as well as in or to the doors, halls, passages,
elevators, escalators and stairways thereof, and other public parts and common
areas of the Building and Land, as Landlord shall reasonably deem necessary or
desirable, including the temporary or permanent closure or inoperability.  Landlord reserves the right, and Tenant shall
permit Landlord, to install, erect, use and maintain pipes, ducts and conduits in
and through the

 

18

 

Premises, so long as the installation and maintenance thereof do not
detract from the use or appearance of the Premises.

 

15.                                 Damage or
Destruction.

 

15.1                           Rights and
Obligations.

 

15.1.1                Obligation
to Rebuild.  If rentable area of
the Building, or any portion thereof, is damaged, destroyed, or rendered
untenantable due to fire or other casualty (which is not due to the fault or
negligence of Tenant or its agents, employees, or invitees and is not due
to-any default by Tenant), and if

 

(a)                                  the damage or destruction does not exceed
twenty-five percent (25%) of the insurable value of the Building,

 

(b)                                 the Building is capable of being repaired,
reconstructed or restored within a period of two hundred seventy (270) days
from the date of the damage or destruction, and

 

(c)                                  Landlord will receive insurance proceeds
sufficient to cover the cost of such repairs, reconstruction or restoration,

 

then, subject to Tenant’s
termination right stated in the next succeeding sentence, Landlord shall be
obligated to restore the Building to a condition reasonable comparable to its
condition prior to such casualty; provided, that clause (c), above will not be
a condition to Landlord’s restoration obligation hereunder if the
unavailability of insurance proceeds is attributable to Landlord’s failure to
perform its obligation to carry insurance under Section 8.2, or because a
mortgagee of Landlord has obtained and retained the proceeds thereof due to a
default by Landlord in its obligation to such mortgagee.  If, under the circumstances stated in this
Section 15.1.1, Landlord is obligated to restore the Building, or if under
Section 15.1.2 Landlord elects to restore the Building, but if such restoration
cannot be completed within two hundred seventy (270) days following the
casualty necessitating such restoration, then (provided the casualty is not due
to the fault or negligence of Tenant, or its agents, employees or invitees, or
to a default of Tenant), Tenant shall have the option to terminate this Lease,
which option Tenant must exercise by notice in writing to Landlord given within
thirty (30) days following the date of such casualty.  If Landlord is obligated to restore the
Building as set forth above, and except as stated in the preceding sentence,
this Lease shall remain in full force and effect, Rent shall be adjusted
pursuant to Section 15.2, Landlord will commence restoring that portion of the
Building so damaged as soon as commercially practicable, and will diligently
complete the restoration.

 

15.1.2                Right
to Terminate.  In the case of a
casualty loss not described in Section 15.1.1, then within 60 days after such a
casualty Landlord shall have the right to elect either to terminate this Lease
or to restore the Building.  Landlord
shall make its election by written notice to Tenant within such 60 day period
of time.  If Landlord elects to terminate
this Lease, the termination shall be effective 30 days after receipt of the
notice by Tenant.  If Landlord does not
elect to terminate this Lease, then, subject to Tenant’s right of termination
stated in Section 15.1.1, Rent shall be abated in accordance with Section 15.2
and Landlord shall restore the Building in accordance with the requirements of
Section 15.1.1.

 

19

 

15.1.3                Tenant’s
Property.  If Landlord
undertakes to repair the Building after an event of casualty, such restoration
shall not include replacement of furniture, equipment or other items designated
as Tenant’s Property herein.

 

15.1.4                Late
Term Casualty.  Regardless of
Sections 15.1.1 and 15.1.2, if the casualty, loss occurs within the last two
(2) years of the Term, then, regardless of the extent of the damage, Section
15.1.2 shall establish the rights and obligations of Landlord and Tenant.  In determining whether a casualty loss occurs
during the last two (2) years of the Term, notwithstanding the notice periods
specified in Section 1.3.2, Tenant shall be entitled, within thirty (30) days
following any such casualty, to exercise any renewal option that may exist
under Section 1.3.2, and the applicable Renewal Term shall be included in
making such determination.

 

15.2                           Rent
Abatement.  If
all or part of the Premises shall be damaged or destroyed or rendered
untenantable as a result of fire or other casualty, not caused by Tenant, its
agents, employees or invitees, the Base Rent shall be abated or reduced based
on the number of square feet of space rendered untenantable 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.

 

15.3                           Interference
with Tenant’s Business.  Tenant shall not be entitled to terminate
this Lease and no damages, compensation or claim shall be payable by Landlord
for inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the Premises or of the Building pursuant to this
Section 15.

 

15.4                           Insurance
on Tenant’s Property.  Landlord will not carry insurance of any kind
on Tenant’s Property, and, except as provided by law or by reason of Landlord’s
breach of any of its obligations under this Lease, Landlord shall not be
obligated to repair an damage to or replace any improvements paid for by
Tenant, or any of Tenant’s Property.

 

16.                                 Eminent
Domain.

 

16.1                           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 (herein called “Date of Taking”), and the Base
Rent and Additional Rent shall be prorated and adjusted as Date of Taking.

 

16.2                           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:

 

16.2.1                Landlord’s
Option to Terminate. 
If a material portion of the Building or Land is so taken, Landlord may,
at its option, terminate this Lease by giving Tenant notice to that effect
within ninety (90) days after the Date of Taking, provided Landlord terminates
the leases of all other similarly situated tenants in the Building; and

 

20

 

16.2.2                Tenant’s
Option to Terminate. 
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.

 

16.3                           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.

 

16.4                           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 16.4 shall be deemed to prevent Tenant
from making a claim in any condemnation proceeding for moving expenses, loss of
good will, the unamortized portion of improvements paid for by Tenant and the
value of any fixtures, equipment or furnishings installed by Tenant at its sole
expense and which are included in the taking.

 

16.5                           Temporary
Taking.  A temporary taking (or transfer in lieu
thereof) of any portion of the Premises by any authorized authority shall not
cause a termination of this Lease, but Tenant shall be entitled to a rent
reduction or abatement during the period its possession is interfered with
because of any such taking of the Premises. 
Such rent reduction or abatement shall equal the lesser of the Rent that
would have been payable by Tenant during the period of such temporary taking or
an amount equal to the award paid by the condemning authority for such
taking.  If the taking is for a period of
longer than one hundred eighty (180) days, or for an indefinite period that
extends beyond one year, either Landlord or Tenant may elect to terminate this
Lease by notice to the other given within thirty (30) days after the event
giving rise to the right of termination. 
No temporary taking of the Land or of any portion of the Building not
including the Premises shall give Tenant the right to any rent abatement,
reduction, or lease termination.

 

17.                                 Landlord’s
Self Help Rights; Liability and
Indemnification.

 

17.1                           Landlord’s
Right to Cure.  If Tenant fails to pay or perform any of its
obligations under this Lease, Landlord may, without waiving or releasing Tenant
from its obligations hereunder, but shall not be required to, pay or perform
such oblations on Tenant’s behalf upon ten (10) days notice to Tenant (except
where, in Landlord’s opinion, an emergency exists, in which event no notice
shall be required), and Tenant shall reimburse or pay promptly to Landlord the
reasonable cost thereof as Additional Rent. 
“Reasonable cost,” as used in this Section 17, means Landlord’s actual
out-of-pocket costs to effect such cure plus twenty percent (20%) to cover overhead,
administrative and collection charges. 
There shall be no abatement of Rent and no liability of Landlord by
reason of any injury to or interference with Tenant’s business arising from
Landlord’s exercise of its rights under this Section 17.1.

 

21

 

17.2                           Tenant’s
Indemnity.  As between Landlord and Tenant, and except to
the limited extent otherwise provided in this Section 17.2, Landlord shall not
be liable for injury to any person, or for the loss of or damage to any
property (including property of Tenant) occurring in or about the Premises from
any cause whatsoever.  Tenant hereby
assumes all risk of damage to property or injury to persons in, upon or about
the Premises, from any cause whatsoever except that which is caused by the
gross negligence or willful misconduct of Landlord or its agents, contracts, or
invitees, or the failure of Landlord to observe any of the terms and conditions
of this Lease where such failure has persisted for an unreasonable period of
time after Tenant has given Landlord written notice of such failure.  Tenant hereby indemnifies and holds Landlord
harmless, and shall defend Landlord, from and against any and all claims,
charges, liabilities, obligations, penalties, causes of action, liens, damages,
costs and expenses (including attorneys’ fees) arising, claimed, charged or
incurred against or by Landlord and arising from or in connection with: (a)
Tenant’s use or occupancy of, or any activity, work or other thing done,
permitted or suffered by Tenant on or about, the Premises, whether before,
after or during the Term, (b) any breach or default in the performance of any
obligation on Tenant’s part to be performed under this Lease, or (c) any act or
omission of Tenant, or any officer, contractor, agent, employee, guest, licensee,
or invitee of Tenant.  Such
indemnification obligation shall extend to all costs, attorneys’ fees, and
liabilities incurred in connection with the defense of any such claim
(including appeals and petitions for review) or any action or proceeding brought
thereon.

 

17.3                           Limit on
Landlord’s Liability.  Landlord and its agents shall not be liable
for any loss or damage to persons or property resulting from fire, explosion,
falling plaster or other material, steam, gas, electricity, or from bursting,
overflowing, or leaking of water, water or rain which may leak from or into any
part of the Premises or from pipes, appliances or plumbing works therein or
from the roof, street or subsurface or from any other place, from dampness,
from electrical wiring, circuitry, power surges, overloads, spiking or
interruption of any kind, from air conditioning equipment, or from gas or
odors, sprinkler leakage, or from any other cause whatsoever, unless caused by
or due to the gross negligence of Landlord, its agents, invitees, servants,
employees, or contractors.  Landlord and
its agents shall not be liable for interference with the light, air, or other
incorporeal hereditaments.  Tenant shall give
prompt notice to Landlord in case of casualty or accidents on or about the
Premises.  Landlord or its agents shall
not be liable for any damage to property entrusted to employees of the Building
or its management, nor for the loss of or damage to any property by theft or
otherwise.  Except as otherwise provided
above in this Section 17.3, Landlord shall not be released or indemnified from,
and shall indemnify, defend, protect and hold harmless Tenant from, all losses,
damages, liabilities, judgments, actions, claims, attorneys’ fees, consultants’
fees, payments, costs and expenses arising from the gross negligence or willful
misconduct of Landlord or its agents, contractors, licensees or invitees,
Landlord’s violation of any law, order or regulation, or a breach of Landlord’s
obligations under this Lease.

 

17.4                           Defense of
Claims.  In case any action or proceeding shall be
brought against Landlord by reason of a claim covered by the provisions of
Section 17.2, Tenant, upon notice from Landlord, shall defend the same at
Tenant’s expense, by counsel approved in writing by Landlord.

 

22

 

18.                                 Defaults
and Remedies.

 

18.1                           Events of
Default.  In addition to events described elsewhere in
this Lease as constituting a “default” or an “Event of Default,” the occurrence
of any one or more of the following events shall constitute an Event of Default
hereunder by Tenant:

 

(a)                                  Tenant’s abandonment of the Premises.

 

(b)                                 Tenant’s failure to make any payment of Rent
hereunder as and when due, where such failure shall continue for a period of
three days after Tenant’s receipt of written notice thereof; provided,
that no such notice shall be required more frequently than three (3) times in
any consecutive 12-month period and, where no notice is required, an Event of
Default shall arise automatically upon the due date for the payment of Rent;

 

(c)                                  Tenant’s failure to observe or perform any of
the other covenants or provisions of this Lease to be observed or performed by
Tenant, where such failure shall continue for a period of twenty (20) days
after written notice thereof from Landlord to Tenant (unless this Lease
elsewhere provides that such failure alone constitutes an Event of Default
hereunder upon its occurrence).  If the
nature of Tenant’s default is such that more than 20 days are reasonably
required for its cure, then an Event of Default shall not be deemed to occur if
Tenant shall commence such cure within said 20-day period and shall thereafter
diligently prosecute such cure to completion, but in no event shall such
default extend beyond sixty (60) days. 
Once notice of default has been given, no additional notice shall be
required in order for Landlord to exercise remedies under Section 18.2 by
reason of a recurrence or continuation of such default; or

 

(d)                                 If (i) Tenant shall make any general assignment
for the benefit of creditors; (ii) a petition to have Tenant adjudged a
bankrupt or a petition for reorganization or arrangement under any law relating
to bankruptcy shall be filed by or against Tenant or any such Guarantor (unless
the same is dismissed within 30 days); (iii) a trustee or receiver is appointed
to take possession of substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease, where possession is not
restored to Tenant within 30 days; or (iv) substantially all of Tenant’s assets
located at the Premises, or of Tenant’s interest in this Lease, is attached,
executed upon, or otherwise judicially seized, where such seizure is not
discharged within 30 days.

 

18.2                           Remedies.  Upon
the occurrence of an Event of Default, Landlord may exercise any one or more of
the remedies set forth in this Section 18, or any other remedy available under
applicable law or contained in this Lease.

 

18.2.1                Re-Entry.  Landlord or Landlord’s agents and employees
may immediately or at any time thereafter re-enter the Premises, or any part
thereof, peaceably but using such reasonable force as may be required, and
without judicial process, or by any suitable action or proceeding at law, and
may repossess the Premises, and may remove any persons, fixtures or chattels
therefrom, to the end that Landlord may have, hold and enjoy the Premises.  In the event of any such retaking of
possession of Premises by Landlord, Tenant shall remove all personal property
located thereon and upon failure to do so upon demand of Landlord, Landlord

 

23

 

may
in addition to any other remedies allowed by law, remove and store the same in
any place selected by Landlord, including but not limited to a public warehouse,
at the expense and risk of Tenant.  If
Tenant shall fail to pay all sums due hereunder together with the cost of
storing any such property within thirty (30) days after it has been stored,
Landlord may sell any or all of such property at public or private sale and
shall apply the proceeds of such sale first, to the cost of such sale; second,
to the payment of the charges and expenses for reentry, removal and storage;
third, to the payment of any other sums of money that may be due from Tenant to
Landlord under the terms of this Lease; and the balance, if any, to
Tenant.  Tenant hereby waives all claims
for damages that may be caused by Landlord’s re-entering and taking possession
of Premises or removing and storing or selling the property of Tenant as herein
provided, and will indemnify, defend and save Landlord harmless from loss,
costs or damages to Tenant occasioned hereby, and no such re-entry shall be
considered or construed to be a forcible entry. 
RE-ENTRY OR TAKING POSSESSION OF SAID PREMISES BY LANDLORD SHALL NOT BE
CONSTRUED AS AN ELECTION ON ITS PART TO TERMINATE THIS LEASE UNLESS A WRITTEN
NOTICE OF SUCH INTENTION IS GIVEN TO TENANT.

 

18.2.2                Continue
the Lease.  Landlord may elect
to continue this Lease in effect, whether or not Tenant shall have abandoned or
Landlord shall have re-entered the Premises. 
In such event Landlord shall be entitled to enforce all Landlord’s
rights and remedies under this Lease, including the right to recover the Rent
as the same may become due hereunder and to recover damages from Tenant in
accordance with the provisions of this Section 18.

 

18.2.3                Terminate
Lease.  Terminate Tenant’s
right to possession and use of the Premises by any lawful means, in which case
this Lease shall terminate and Tenant shall immediately surrender possession of
the Premises to Landlord and shall pay Landlord damages as provided at this
Section 18.

 

18.2.4                Monetary
Damages and Recovery. 
Tenant shall have full liability for payment of all damages directly or
indirectly suffered by Landlord which are proximately caused by any default or
breach under this Lease, whether or not such default or breach is declared by
Landlord, and such elements of damage and recovery by Landlord from Tenant
shall specifically include, but not be limited to:

 

(a)                                  the worth at the time of award of any unpaid
Rent which had been earned at the time of such termination of the Lease or
possession; plus

 

(b)                                 the worth at the time of award of the amount
by which the unpaid Rent which would have been earned after termination of the
Lease or possession until the time of award exceeds the amount of such Rent
loss that Tenant proves could have been reasonably avoided; plus

 

(c)                                  the worth at the time of award of the amount
by which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such Rent loss that Tenant proves could be reasonably
avoided; plus

 

(d)                                 any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant’s failure to
perform his obligations under this Lease or

 

24

 

that in the ordinary course
of things would be likely to result therefrom, including but not limited to,
all legal expenses and other related costs incurred by Landlord following
Tenant’s default; that portion of any leasing commission paid by Landlord as a
result of this Lease which is attributable to the unexpired portion of this
Lease; all costs incurred by Landlord in restoring the Premises to good order
and condition, or in remodeling, renovating or otherwise preparing the Premises
for reletting; all other costs incurred by Landlord in reletting the Premises,
including, without limitation, any brokerage commissions, legal fees and the
value of Landlord’s time; and Default Interest, late charges and administrative
fees, as herein provided.  Landlord shall
not be obligated to relet the Premises to a particular tenant, or, in the event
of any such reletting, for refusal or failure to collect any rent due upon such
reletting; and no such refusal or failure shall operate to relieve Tenant of
any liability under this Lease or otherwise affect any such liability.  Landlord at its option may make such physical
changes to the Premises as Landlord, in its sole discretion, considers advisable
or necessary in connection with any such reletting or proposed reletting,
without relieving Tenant of any liability under this Lease or otherwise
affecting Tenant’s liability.  If there
is other unleased space in the Building, Landlord shall have no obligation to
attempt to relet the Premises prior to leasing such other space in the
Building.

 

18.2.5                Form
of Action for Damages. 
To the extent permitted under the law of the State, Landlord may sue
periodically for damages as they accrue without barring a later action for
further damages.  If the Lease or
possession is terminated and the Premises are subsequently re-let, no portion
of the rents from such new Lease that is in excess of the contracted rent
hereunder shall be treated as an offset to monies owed by defaulting
Tenant.  All unpaid Rent after its due
date shall bear interest from the date due at the Default Rate in addition to
any late charges and administration costs related to such delinquency, whether
or not a default is declared.

 

18.2.6                Deposit.  Landlord may apply any deposit held pursuant
to Section 21.2, or pursuant to or in connection with any guarantee of Tenant’s
obligations under this Lease, in payment of any sums due from Tenant hereunder.

 

18.3                           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.  In the event of a breach by Tenant, of any of
its obligations under this Lease, Landlord shall also have the right to obtain
an injunction and any other appropriate equitable relief.

 

18.4                           Termination.  Even
though Tenant has breached this Lease, Tenant’s contractual obligations under
this Lease shall continue in effect for so long as Landlord does not terminate
the same (and even though Landlord may have terminated Tenant’s estate and
right to possession) by written notice to Tenant, and Landlord may enforce all
its rights and remedies under this Lease, including the right to recover the
Rent as it becomes due under this Lease. 
Acts of maintenance or preservation or efforts to relet the Premises or
the appointment of a receiver upon initiative of Landlord to protect Landlord’s
interest under this Lease shall not constitute a termination of Tenant’s rights
to possession unless written notice of termination is given by Landlord to
Tenant.

 

25

 

19.                                 Transfers
By Tenant.

 

19.1                           General.

 

19.1.1                Assignment
and Subletting.  Tenant shall not
assign this Lease or any interest therein, or sublet the Premises or any part
thereof, or permit the use of the Premises by any party other than Tenant, or
hypothecate, 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.  If
Tenant requests consent to a proposed transfer, Tenant shall pay for Landlord’s
reasonable legal and administrative expenses in reviewing the request for
consent to transfer.  Consent to one such
assignment or sublease shall not imply any future consent, and all subsequent
assignments and subleases shall be made only upon obtaining prior written
consent of Landlord.

 

19.1.2                Obligations
of Assignees.  Assignees or
subtenants shall become directly liable to Landlord for all obligations of
Tenant hereunder with respect to the portion of the Premises assigned or
subleased, but Tenant shall remain liable for the performance of all
obligations owed to Landlord under this Lease. 
The instrument by which any assignment or subletting consented to by
Landlord is accomplished shall expressly provide that the assignee or subtenant
will perform and observe all the agreements, covenants, conditions and
provisions to be performed and observed by Tenant under this Lease (with
respect to the portion of the Premises assigned or subleased) and that Landlord
will have the right to enforce such agreements, covenants and conditions
directly against such assignee or subtenant.

 

19.1.3                Procedure
for Consent.  It shall be the
responsibility of Tenant to provide Landlord, in a manner acceptable to
Landlord, with such information as Landlord reasonably determines is necessary
for Landlord to grant or withhold its consent. 
If Tenant desires to request approval to assign, hypothecate or
otherwise transfer this Lease or sublet the Premises, then at least thirty (30)
days prior to the date when Tenant desires the assignment or sublease to be
effective (the “Assignment Date”), Tenant shall give Landlord a notice (the
“Assignment Notice”), which shall set forth the name, address and business of
the proposed assignees or subtenant, current and signed financial statements,
credit information as required by Landlord, the Assignment Date, any ownership
or commercial relationship between Tenant and the proposed assignee or
subtenant, and the consideration and all other material terms and conditions of
the proposed assignment or sublease, all in such detail as Landlord shall
reasonably require.  If Landlord requests
additional detail, the Assignment Notice shall not be deemed to have been
received until Landlord receives such additional detail, and Landlord may
withhold action on the request to any assignment or sublease until such
information is provided.  Landlord shall
not unreasonably withhold or delay its consent to any sublease or
assignment.  In considering an Assignment
Notice, Landlord may, among other things, consider financial capability,
business reputation, business experience, the intended use, the anticipated
demand for services by the assignee or subtenant, and the assignee’s or
subtenant’s anticipated contribution to the prestige of the building.

 

19.1.4                Sublease
Income.  If Tenant shall
sublet all or any portion of the Premises, then any consideration paid by the
sublessee for the portion of the Premises being sublet that exceeds one hundred
percent (100%) of the Base Rent and Additional Rent provided by this

 

26

 

Lease
for such portion of the Premises being sublet (after subtracting reasonable
costs in connection therewith including, without limitation, reasonable broker
and attorneys’ fees and unamortized portion of improvements to the Premises
paid for by Tenant) shall be due, owing and payable from Lessee to Lessor when
paid or owing by the sublessee under the sublease.  For the purpose of this Section 19, the rent
for each square foot of floor space in the Premises shall be deemed equal.

 

19.2                           Listing
Premises.  Tenant shall not list the Premises for lease
through a broker, or advertise or publicize in any way the availability of the
Premises, without prior written notice to and the written approval of Landlord,
which approval Landlord shall not withhold unreasonably, provided, that
Landlord may condition such approval on Tenant’s agreement not to negotiate or
offer to sublease the Premises or assign this Lease to any person or entity
with whom Landlord has, during the preceding twelve-month period, negotiated to
Lease space in the Building, or with whom Landlord is negotiating, or has
negotiated, during the period of the listing.

 

19.3                           Corporate
Changes.  If Tenant is a corporation, partnership or
limited liability company, then any transfer of this Lease by merger,
consolidation, liquidation, change in the ownership or power to vote the
majority of the issued and outstanding stock, or of the partnership or
membership interest, of the company shall not constitute an assignment for the
purposes of this Section 19.

 

19.4                           Unapproved
Transfers.  Any attempted transfer in violation of the
requirements of this Section 19 shall be void and, at the option of Landlord,
shall constitute an Event of Default.

 

19.5                           Successors
and Assigns.  Except as otherwise provided in this Lease,
all of the covenants, conditions, and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors, and assigns.

 

20.                                 Subordination;
Attornment; Quiet Enjoyment.

 

20.1                           Subordination,
Nondisturbance.  This Lease, and all rights of Tenant hereunder,
are and shall be, upon the election of the holder thereof, subject and
subordinate to all mortgages, trust deeds and other financing and security
instruments (“Mortgages”), that may now or hereafter affect the Premises, and
to all renewals, modifications, replacements and extensions of any such
Mortgages, provided, that so long as Tenant pays all rents and other
charges as specified in this Lease and is not otherwise in default (beyond
applicable notice and cure periods) of any of its obligations and covenants
pursuant to this Lease, neither such mortgagee, nor any successors in interest
of such mortgagee, or any purchaser of the Building upon a foreclosure of the
Mortgage, shall disturb Tenant’s possession of the Premises during the Term or
any Renewal Term of this Lease, by reason of a foreclosure (for purposes of
this Lease, a “foreclosure” shall include, but not be limited to, a sheriffs or
trustee’s sale under the power of sale contained in the Mortgage, the
termination of any superior lease of the Building and any other transfer of the
Landlord’s interest in the Building under peril of foreclosure, including,
without limitation to the generality of the foregoing, an assignment or sale in
lieu of foreclosure).  This Section shall
be self operative, and no further instrument of subordination shall be required
to effect a subordination hereunder; provided, however, that in confirmation of
such

 

27

 

subordination Tenant shall promptly execute, acknowledge or deliver any
instrument that Landlord or any such mortgagee may reasonably request to
evidence such subordination so long as such instrument also (i) provides that
the Lease shall not be terminated so long as Lessee is not in default under
this Lease, and (ii) recognizes all of Lessee’s rights hereunder.  Tenant shall execute such document within ten
(10) business days after receipt thereof. 
If Tenant fails to execute, acknowledge or deliver any such instruments
within the five (5) days after notice of such failure to execute within the
required time period, Landlord may declare an Event of Default hereunder.  Tenant hereby irrevocably constitutes and
appoints Landlord as Tenant’s attorney-in-fact, coupled with an interest, to
execute and deliver any such instruments for and on behalf of Tenant, at
Landlord’s sole election.

 

20.2                           Attornment.  If
the interest of Landlord under this Lease is transferred, whether through
possession, foreclosure or delivery of a new lease or deed, then at the request
of such party so succeeding to Landlord’s rights (herein called “Successor
Landlord”), Tenant shall attorn to and recognize such Successor Landlord as
Tenant’s 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 request for
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.

 

20.3                           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, subject to the provisions of this Lease, be binding upon the subsequent
successors in interest of Landlord’s interest in this Lease including those to
whom Tenant is subordinate and/or to whom Tenant agreed to attorn pursuant to
Sections 20.1 and 20.2.

 

20.4                           Estoppel
Certificates.  Within fifteen (15) days following any
written request that Landlord may make from time to time, Tenant shall execute
and deliver to Landlord and/or any prospective mortgagee or purchaser designated
by Landlord, a statement certifying: (a) the date of commencement of this
Lease; (b) the fact that this Lease is unmodified and in full force and effect
(or, if there have been modifications hereto, that this Lease is in full force
and effect, and stating the date and nature of such modifications); (c) the
date to which the rental and other sums payable under this Lease have been
paid; (d) that, to Tenant’s current actual knowledge, there are no current
defaults under this Lease by Landlord except as specified in such statement;
and (e) such other matters as may be reasonably requested.  Landlord and Tenant intend that any statement
delivered by Tenant pursuant to this Section may be relied upon by any
mortgagee, beneficiary, purchaser, or prospective purchaser of the Premises or
any interest therein.  Tenant’s failure
to deliver such statement within five (5) days following Landlord’s written
notice to Tenant stating that such 15-day review period has elapsed (x) shall
be conclusive upon Tenant (i) that this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) that there
are no uncured defaults in the Landlord’s performance, and (iii) that no more
than one month’s rental has been paid in advance, and (y) at Landlord’s
election, shall constitute an Event of Default hereunder.  If Landlord desires to finance or refinance
the Premises, or any part thereof, Tenant shall, within ten (10) days following
Landlord’s request therefor, deliver to any lender designated by Landlord such
financial information of Tenant as

 

28

 

shall be required by such lender. 
All such information shall be received in confidence and shall be used
only for the purpose herein set forth.

 

20.5                           Mortgagee
Protection.  If there occurs any default on the part of
Landlord, Tenant will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgage covering the Premises, and shall
offer such beneficiary or mortgagee a reasonable opportunity to cure the
default, including time to obtain receivership of the Premises and/or
possession of the Premises by power of sale or a judicial foreclosure, if such
should prove necessary to effect a cure.

 

20.6                           Modification
for Lender.  If, in connection with obtaining
construction, interim, or permanent financing related to the Premises, a lender
shall request reasonable modifications in this Lease as a condition to such
financing, Tenant will not unreasonably withhold, delay, or defer its consent
thereto provided that such modifications do not increase Tenant’s obligations,
or decrease Tenant’s rights, hereunder.

 

21.                                 Security.

 

21.1                           Financial
Statements.  Tenant shall furnish to Landlord on or before
ninety (90) days following the end of each fiscal year, Tenant’s unaudited
financial statements for the preceding fiscal year, (consisting of Tenant’s
balance sheet, and profit and loss statement) each prepared by a certified
public accountant in accordance with generally accepted accounting principles
(or other method approved by Landlord) consistently applied.  Tenant shall furnish to Landlord interim
financial statements within thirty (30) days following the end of each of
Tenant’s fiscal quarters.

 

21.2                           Deposit.  On
the Commencement Date, Tenant shall deposit with Landlord the amount specified
in the summary of Basic Lease Terms preceding this Lease, such amount to be
held by Landlord during the Lease Term as security for Tenant’s performance of
its obligations hereunder; provided, that Landlord shall review
annually, in connection with Tenant’s delivery of annual financial statements
pursuant to Section 21.1, the continued necessity of retaining a Security
Deposit hereunder and may elect, in its sole discretion, to refund such
Security Deposit based on such review. 
If Tenant fails to make any payment when due finder this Lease beyond
applicable notice and cure periods, or otherwise defaults with respect to any
provision of this Lease beyond applicable notice and cure periods, Landlord may
use, apply or retain all or any portion of said deposit for the payment of such
obligation or default, or for the payment of any other sum to which Landlord
may be become obligated by reason of Tenant’s default, or to compensate
Landlord for any loss or damage that Landlord may suffer thereby.  If Landlord so uses or applies all or any
portion of said deposit, Tenant shall, within ten (10) days after written
demand therefor from Landlord, deposit cash with Landlord in an amount
sufficient to restore said deposit to the full amount stated in this Section
21.2, and Tenant’s failure to do so shall constitute an Event of Default under
this Lease.  Landlord shall return said
deposit (or so much thereof as has not theretofore been applied by Landlord as
permitted under this Section 21.2) within sixty (60) days following the date of
expiration of the Lease Term or the date on which Tenant has vacated the
Premises.  Landlord shall not be required
to keep said security deposit separate from its general funds, and Tenant shall
not be entitled to interest on said deposit. 
Landlord shall be entitled to deliver the funds constituting the deposit
hereunder to any purchaser

 

29

 

of Landlord’s interest in the Premises, whether by sale, foreclosure,
deed in lieu of foreclosure, or otherwise, and upon such delivery, Landlord
shall be discharged from any further liability with respect to said deposit.

 

22.                                 Governing
Law.  This
Lease shall be governed by and construed pursuant to the laws of the State of
Nevada.

 

23.                                 No
Merger.  The
voluntary or other surrender of this Lease by Tenant, or a mutual cancellation
thereof, shall not constitute a merger of the Landlord’s and Tenant’s estate,
and shall, at the option of Landlord, operate either as an assignment to
Landlord of any or all subleases or subtenancies or as a termination thereof.

 

24.                                 Disputes.

 

24.1                           Attorneys’
and Collection Fees.  If either party should bring an action or
suit because of the breach of any provisions of this Lease, or for any other
relief against the other party hereunder, or in the event of any other
arbitration or litigation between the parties with respect to this Lease, then
all costs and expenses, including collection agency fees and reasonable
attorneys’ fees incurred by the prevailing party in such arbitration or
litigation, including on any arbitration or court proceeding, appeal, petition
for review therefrom or in any proceeding before a U.S. Bankruptcy Court, shall
be paid by the other party, such amount to be set by the court before which the
matter is heard, which obligation on the part of the other party shall be
deemed to have accrued on the date of the commencement of such action and shall
be enforceable whether or not the action is prosecuted to judgment.

 

24.2                           Arbitration of
Disputes.  Intentionally
Deleted.

 

25.                                 Hazardous
Substances.  To the current, actual knowledge of Landlord, (a) no Hazardous Substance is present on
the Land or the soil, surface water or groundwater thereof, (b) except
as disclosed in Section 5.5, no underground storage tanks are present on the
Land, and (c) no action, proceeding or claim is pending or threatened regarding
the Land concerning any Hazardous Substance or pursuant to any environmental
law.  Under no circumstance shall Tenant
be Liable for, and Landlord shall indemnify, defend, protect and hold harmless
Tenant, its agents, contractors, stockholders, directors, successors,
representatives, and assigns from and against, all losses, costs, claims,
liabilities and damages (including attorneys’ and consultants’ fees) of every
type and nature, directly or indirectly arising out of or in connection with
any Hazardous Substance present at any time on or about the Land, or the soil,
air, improvements, groundwater or surface water thereof, or the violation of
any laws, orders or regulations, relating to any such Hazardous Substance,
except to the extent that any of the foregoing actually results from the
release or emission of Hazardous Substance by Tenant or its agents or employees
in violation of applicable environmental laws, or other breach of Tenant’s
obligations set forth at Section 5.3.

 

26.                                 Tenant’s
Liability and Performance.  Except as may be otherwise
specifically provided in this Lease, all covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant’s sole cost and expense and without any abatement of
Rent.  If more than one person or entity
executes this Lease as Tenant (or assumes this Lease as a permitted assignee of
Tenant), (a) each of them is jointly and severally liable for

 

30

 

the keeping, observing and performing of all of the terms, covenants,
conditions, provisions and agreements of this Lease to be kept, observed and
performed by Tenant, and (b) the term “Tenant” as used in this Lease shall mean
and include each of them jointly and severally. 
The act or notice from, or notice or refund to, or the signature of any
one or more of them, with respect to the tenancy of this Lease, including, but
not limited to any renewal, extension, expiration, termination or modification
of this Lease, shall be binding upon each and all of the persons executing this
Lease as Tenant with the same force and effect as if each and all of them had
so acted or so given or received such notice or refund or so signed.

 

27.                                 Definition
of Landlord; Limitation or Liability.  The
term “Landlord,” as used in this Lease, so far as covenants or obligations on
the part of Landlord are concerned, shall be limited to mean and include only
the owner or owners, at the time hi question, of the fee title of the Premises
or the tenants under any ground lease, if any. 
In the event of any transfer, assignment, or other conveyance or
transfers of any such title, Landlord herein named (and in case of any
subsequent transfers or conveyances, the then grantor) shall be automatically
freed and relieved from and after the date of such transfer, assignment, or
conveyance of all liability as respects the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter accruing
to the extent such transferee assumes such liability in writing.  Without further agreement, the transferee of
such title shall be deemed to have assumed and agreed to observe and perform
any and all obligations of Landlord hereunder, accruing during its ownership of
the Premises.  Landlord may transfer its
interest in the Premises without the consent of Tenant and such transfer or
subsequent transfer shall not be deemed a violation on Landlord’s part of any
of the terms and conditions of this Lease. 
Tenant and all successors and assigns acknowledge that, in the event of
any actual or alleged failure, breach or default hereunder by Landlord:

 

(a)                                  The sole and exclusive remedy shall be
against the Landlord’s interest in the Building (including proceeds from the
sale thereof) and the rent reserved by this Lease accruing after any default or
material breach for satisfaction of any liability in respect to this Lease,

 

(b)                                 No member or manager of Landlord shall be
sued, named as a party in any suit or action, served with process or subjected
to any judgment, and any such judgment taken against any member or manager of
Landlord may be vacated and set aside at any time nunc pro tunc;

 

(c)                                  No writ of execution will ever by levied
against the assets of any member or manager of Landlord; and

 

(d)                                 This Lease and the obligations of the Tenant
hereunder shall not be affected or impaired because Landlord is unable to
fulfill any of its obligations hereunder, or is delayed in doing so, if such
liability or delay is caused by reason of strike, labor trouble, inclement
weather, war, riot, acts of God or any other cause beyond the reasonable
control of Landlord.

 

28.                                 Waiver.  The waiver by either party of
any breach of any term, covenant or condition herein contained shall not be
deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition herein contained, nor shall any custom or practice that
may evolve between the parties in the administration of the terms hereof be
deemed a waiver of or in any way affect the right to insist upon the
performance in strict accordance with said terms.  The

 

31

 

subsequent acceptance of Rent hereunder by Landlord shall not be deemed
to be a waiver of any preceding breach by Tenant, of any term, covenant, or
condition of this Lease, other than the failure of Tenant to pay the particular
Rent so accepted, regardless of Landlord’s knowledge of such preceding breach
at the time of such acceptance of such Rent. 
The consent or approval of Landlord to or of any act by Tenant requiring
Landlord’s consent or approval shall not be deemed to waive or render unnecessary
the consent or approval to or of any subsequent similar acts by the acting
party.  Acceptance of one or more rental
or other payments after the dates when the same first became due or after the
applicable grace period shall not prevent Landlord, with respect to subsequent
payments, (a) from insisting upon prompt payment of all amounts due hereunder,
(b) from insisting upon payment of the late fees provided for herein, or (c)
from declaring an Event of Default hereunder. 
Without limiting the generality of the foregoing, no payment by Tenant
or receipt by Landlord of a lesser amount than the full Rent then due shall be
deemed to be other than on account of the earliest stipulated Rent due, nor
shall any endorsement or statement on any check or any letter accompanying any
check, or payment be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord’s right to recover the
balance of such Rent or pursue any other remedy provided for in this Lease or available
at law or in equity.  Acceptance of Rent
from another company or entity does not constitute consent to a purported
sublease or assignment.

 

29.                                 Miscellaneous
Provisions.

 

29.1                           Successors
or Assigns.  Except as otherwise provided herein, all the
terms, conditions, covenants and agreements of this Lease shall extend to and
be binding upon Landlord, Tenant and their respective heirs, administrators,
executors, successors, subtenants, concessionaires, assigns and marital
communities, if any, and upon any person or persons coming into ownership or
possession of any interest in the Premises by operation of law or otherwise.

 

29.2                           Authority
of Parties.  If Tenant is a corporation, Tenant represents
and warrants that each individual executing this Lease on behalf of said
corporation is duly authorized to execute and deliver this Lease on behalf of
said corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the bylaws of said
corporation, and this Lease is binding upon said corporation.  Tenant shall, simultaneously with the
execution of this Lease, deliver to Landlord a certified copy of a resolution
of the Board of Directors of said corporation authorizing or ratifying the
execution of this Lease, and certified copies of other corporation documents as
may reasonably be requested by Landlord or Landlord’s Lender to authenticate
the transaction.

 

29.3                           Interest
on Past Due Obligations.  Any amount due from Tenant to Landlord
hereunder which is not paid when due shall bear interest at the Default Rate
from the date due until paid, but the payment of such interest shall not excuse
or cure any default by Tenant, and interest shall be compensation for the loss
of Tenant’s use of the past due funds, and shall be in addition to late or
delinquent charges which are reimbursements for administrative costs associated
with collecting and processing such past due amounts.  An administrative charge of $25.00 will be assessed
for any check from Tenant which is returned for any reason.

 

32

 

29.4                           Broker’s
Commission.  The brokers who negotiated this Lease, if
any, are identified in the summary of Basic Lease Terms preceding this
Lease.  Landlord shall be solely responsible
for the payment of brokerage commissions to said brokers, and Tenant shall have
no responsibility therefore.  If Tenant
has dealt with any other person or real estate broker with respect to leasing
or renting space in the Building, Tenant shall be solely, responsible for the
payment of any fee due said person or firm and Tenant shall indemnify and hold
Landlord harmless against any liability in respect thereto, including
attorney’s fees and costs.

 

29.5                           Terms and Headings.  The
words “Landlord” and “Tenant” as used herein shall include the plural as well
as the singular.  Words used in any
gender include other genders.  The
Section headings of this Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.

 

29.6                           Examination
of Lease.  Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option for
Lease, and it is not effective as a Lease or otherwise until complete execution
by and delivery to both Landlord and Tenant.

 

29.7                           Time.  Except as otherwise
specifically provided herein, time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.

 

29.8                           Amendments.  No
provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in
interest.

 

29.9                           Partial Invalidity.  If
any term, covenant, or condition of this Lease or the application thereof to
any person or circumstance is, to any extent, invalid or unenforceable, the
remainder of this Lease, or the application of such terms, covenant or
condition to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each term, covenant
or condition of this Lease shall be valid and be enforced to the fullest extent
permitted by law.

 

29.10                     Recording.  Tenant
shall not record or file this Lease, or any assignment or security document pertaining
to this Lease or all or any part of Tenant’s interest therein without the prior
written consent of Landlord, which consent may be subject to such conditions as
Landlord shall deem appropriate, However, upon the request of Landlord, both
parties shall execute a memorandum or “short form” of this Lease for the
purposes of recordation in a form customarily used for such purposes.  Said memorandum or short form of this Lease
shall describe the parties, the Premises and the Lease Term and shall incorporate
this Lease by reference.

 

29.11                     Notices.  All
notices that either party shall be required or may desire to deliver hereunder
shall be given in writing and shall be sent by registered or certified mail,
return receipt requested, by personal delivery, overnight courier, or by
facsimile transmission followed by delivery of a “hard” copy, and shall be
deemed received upon the earlier of the date of receipt or refusal
thereof.  Notices shall be delivered to
Tenant at the address for Tenant set forth in the Summary of Basic Lease Terms
preceding this Lease with a copy to the Premises and a copy of the following
address:  Wilson Sonsini Goodrich &
Rosati, 650 Page Mill Road, Palo Alto,

 

33

 

California, 94304, Attention: 
Norman Cruz, and to Landlord at both the address for Landlord and the
address for Landlord’s property manager, if any, each set forth in the Summary
of Basic Lease Terms preceding this Lease. 
In addition, a copy of any notice to Landlord shall be delivered to the
following address:

 

Parisi
& Parisi, P.C.

Suite
100, The Annand Building

1630
S.W. Morrison

Portland,
OR 97205

Telecopy:
(503) 721-2300

Attn:
Robin B. Parisi, Esq.

 

Either
party may change its address for notice by giving notice to the other in the
manner set forth above, which notice shall only be effective upon receipt or
refusal.  Notice to Tenant hereunder may
be given by landlord’s attorney.

 

29.12                     Entire
Agreement.  This Lease, including the Table of Contents
and summary of Basic Lease Terms that precede this Lease, and the Exhibits
Listed in such summary of Basic Lease Terms and attached hereto, all of which
are incorporated herein by this reference to them, together with any other
document to be furnished pursuant to the provisions hereof embody the entire
agreement and understanding of the parties hereto as to the subject matter
contained herein.  There are no
restrictions, promises, representations, warranties, covenants, or undertakings
other than those expressly set forth or referred to in such documents.  This Lease and such documents supersede all
prior agreements and understandings among the parties with respect to the
subject matter hereof.

 

29.13                     Survival
of Obligations.  The covenants, duties, and obligations of
Tenant contained herein that by their nature do not depend upon Tenant’s
possession of the Premises (including, without limitation, obligations arising
under Section 17.2) shall survive the expiration or earlier termination of this
Lease and such expiration or termination shall not excuse Tenant from the full
performance thereof.

 

29.14                     Representations and Warranties.  Landlord has made no representations or
warranties except as contained herein. 
Tenant hereby represents and warrants that financial statements and other
information famished by Tenant to Landlord are true, accurate and complete, and
such representation and warranty shall survive the execution and termination of
this Lease and is material consideration relied upon by Landlord in executing
this Lease.  Any false, misleading or
inaccurate statement made by Tenant therein shall constitute a material breach
and an Event of Default hereunder.

 

29.15                     Waiver.  For
so long as Tenant, its parent or any of its subsidiaries or affiliates is the
Tenant under this Lease, Landlord hereby waives any statutory landlord’s lien
it may have, as security for the payment of rent, against any and all of the
property of Tenant, its parent, subsidiaries or affiliates, to the fullest
extent allowed by law.  Landlord shall,
within 10 days after Tenant’s request therefor, execute and deliver to Landlord
a Landlord’s Waiver and Estoppel Certificate in the form attached hereto
(including the changes marked) as Exhibit H.

 

34

 

IN WITNESS WHEREOF, the
parties have executed this Lease on the Effective Date.

 

	
   

  	
  200
  SOUTH VIRGINIA INVESTMENTS, an Oregon

  
	
   

  	
  limited
  liability company

  
	
   

  	
   

  
	
   

  	
  By:
  SCANLANKEMPERBARD COMPANIES,

  
	
   

  	
  an
  Oregon corporation, its operating manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
   Jeffrey J. Tarlman

  	
   

  
	
   

  	
  Title:

  	
   VP

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  “Landlord”

  
	
   

  	
   

  
	
   

  	
  ADVANCED
  TELCOM GROUP, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   Charlene S. Curry

  	
   

  
	
   

  	
  Title:

  	
   VP Finance and Treasury

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  “Tenant”

  
								

 

35

 

EXHIBIT A

 

Legal Description of Land

 

Washoe County Nevada Parcel
Number 011-171-05 consisting of 0.56 Acres, also known as 200 South Virginia
Street.

 

 

EXHIBIT B

 

Premises Description and Plan

 

 

 

 

 

 

EXHIBIT C

 

Initial Tenant Improvements

 

 

 

 

 

 

EXHIBIT D

 

Rules and Relations

 

1.                                       No
sign, placard, picture, advertisement, name or notice shall be installed or
displayed on any part of the outside or inside of the Building without the
prior written consent of the Lessor. 
Lessor shall have the right to remove, at Lessee’s expense and without
notice, any sign installed or displayed in violation of this rule.  All approved signs or lettering on doors and
walls shall be printed, painted, affixed or inscribed at the expense of Lessee
by a person chosen by Lessor.

 

2.                                       If
Lessor objects in writing to any curtains, blinds, shades, screens or hanging
plants or other similar objects attached to or used in connection with any
window or door of the Premises, Lessee shall immediately discontinue such
use.  No awning shall be permitted on any
part of the Premises without Lessor’s specific approval in writing.  Lessee shall not place anything against or
near glass partitions or doors or windows which may appear unsightly from
outside the Premises.

 

3.                                       Lessee
shall not obstruct any sidewalk, halls, passages, exits, entrances, elevators,
escalators, or stairways of the Building. 
The halls, passages, exits, entrances, shopping malls, elevators,
escalators and stairways are not open to the general public.  Lessor shall in all cases retain the right to
control and prevent access thereto of all persons whose presence in the
judgment of Lessor would be prejudicial to the safety, character, reputation
and interest of the Building 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 activities. 
No tenant and no employee or invitee of any tenant shall go upon the
roof of the Building.

 

4.                                       The
directory of the Building will be provided exclusively for the display of the
name and location of tenants only, and Lessor reserves the right to exclude any
other names therefrom.

 

5.                                       All
cleaning and janitorial services for the Building and the Premises shall be
provided exclusively through Lessor, and except with the written consent of
Lessor, no person or persons other than those approved by Lessor shall be
employed by Lessee or permitted to enter the Building for the purpose of
cleaning the same.  Lessee shall not
cause any unnecessary labor by carelessness or indifference to the good order
and cleanliness of the Premises.  Lessor
shall not in any way be responsible to any Lessee for any loss of property on
the Premises, however occurring, or for any damage to any of Lessee’s property
by the janitor or any other employee or any other persons.

 

6.                                       Lessor
will furnish Lessee, free of charge, two keys to each door lock in the
Premises.  Lessor may make a reasonable
charge for any additional keys.  Lessee
shall not make or have made additional keys, and Lessee shall not alter any
lock or install a new additional lock or bolt on any door of its Premises.  Lessee, upon the termination of its tenancy,
shall deliver to Lessor the keys of all doors which have been furnished to
Lessee, and in the event of loss of any keys so furnished, shall pay Lessor
therefore.

 

7.                                       If
Lessee requires telegraphic, telephonic, burglar alarm or similar services, it
shall first obtain, and comply with, Lessor’s instructions in their
installation.

 

 

8.                                       Any
freight elevator shall be available for use by all tenants in the Building,
subject to such reasonable scheduling as Lessor in its discretion shall deem
appropriate.  No equipment, materials,
furniture, packages, supplies, merchandise or other property will be received
in the Building or carried in the elevators except between such hours and in
such elevators as may be designated by Lessor.

 

9.                                       Lessee
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.  Lessor shall have the right to
prescribe the weight, size and position of all equipment, materials, furniture
or other property brought in to the Building. 
Heavy objects shall, if considered necessary by Lessor, stand on such
platforms as determined by Lessor to be necessary to properly distribute the
weight.  Business machines and mechanical
equipment belonging to Lessee, which cause noise or vibration that may be transmitted
to the structure of the Building or to any space therein to any tenants in the
Building, shall be placed and maintained by Lessee, at Lessee’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 building must be acceptable to Lessor.  Lessee agrees to place a plywood covering
over any lobby, hallway, elevator and office dooring and carpeting during any time
where it is constructing in the Premises or moving furniture into or out of the
Building.  Pads shall be used in such a
manner to protect walls and ceilings in said lobbies, hallways, elevators and
offices during said construction or moving periods.  Lessor 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 Building including common areas, hallways, elevators and
doors by maintaining or moving such equipment or other property shall be
repaired at the expense of Lessee.

 

10.                                 Except
as and to the extent necessary to power the diesel generator installed in the
Premises as part of the Initial Tenant Improvements, Lessee shall not use or
keep in the Premises any kerosene, gasoline or flammable or combustible fluid
or material other than those limited quantities necessary for the operation or
maintenance of office equipment.  Lessee
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 Lessor or other occupants of the Building by
reason of noise, odors or vibrations, nor shall Lessee bring into or keep in or
about the Premises any birds, dogs, cats or animals of any kind.

 

11.                                 Except
as specifically set forth in the Lease, Lessee shall not use any method of
heating or air-conditioning other than that supplied by Lessor, without
Lessor’s prior written consent.

 

12.                                 Lessee
shall not waste electricity, water or air-conditioning and agrees to cooperate
fully with Lessor to assure the most effective operation of the Building’s
heating and air-conditioning and to comply with any governmental energy-saving
rules, laws or regulations of which Lessee has actual notice, and shall refrain
from attempting to adjust controls. 
Lessee shall keep corridor doors closed, and shall close window
coverings at the end of each business day.

 

13.                                 Lessor
reserves the right, exercisable without notice and without liability to Lessee,
to change the name and street address of the Building.

 

 

14.                                 Lessor
reserves the right to exclude from the Building between the hours of 6 P.M. and
7 A.M. the following day, or such other hours as may be established from time
to time by Lessor, and on Sundays and legal holidays, 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.  Lessee
shall be responsible for all persons for whom it requests passes and shall be
liable to Lessor for all acts of such persons.  Lessor shall not be liable for damages for any
error with regard to the admission to or exclusion from the Building of any
persons.  Lessor reserves the right to
prevent access to the Building in case of invasion, mob, riot, public
excitement or other commotion by closing the doors or by other appropriate
action.  It is understood that Lessee
requires access for clients until 8 p.m. weekdays and occasionally on
weekends.  Lessor shall coordinate with
Lessee a mutually acceptable way for after-hours entry in to the building.

 

15.                                 Lessee
shall close and lock the doors of its Premises and entirely shut off all water
faucets or other water apparatus, and electricity, gas or air outlets before
Lessee and its employees leave the Premises. 
Lessee shall be responsible for any damage or injuries sustained by
other tenants or occupants of the building or by Lessor for noncompliance with
this rule.

 

16.                                 Lessee
shall not obtain for use on the Premises ice, drinking water, food, beverage,
towel or other similar services or accept barbering or bootblacking service
upon the Premises, except at such hours and under such regulations as may be
fixed by Lessor.

 

17.                                 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.

 

18.                                 Lessee
shall not sell, or permit any sales of newspapers, magazines, periodicals,
theater tickets or any other goods or merchandise to the general public in or
on the Premises or the common area. 
Lessee shall not make any room-to-room solicitation of business from
other tenants in the Building nor shall Lessee solicit in any part of the
common areas.  Lessee shall not use the
Premises for any business or activity other than that specifically provided for
in Lessee’s Lease.

 

19.                                 Except
as otherwise provided in the Lease, Lessee shall not install any radio or
television antenna, loudspeaker or other device on the roof or exterior walls
of the Building.  Lessee shall not
interfere with radio or television broadcasting or reception from or in the
Building or elsewhere.

 

20.                                 Lessee
shall not mark, drive nails, screws or drill in to the partitions, woodwork or
plaster or in any way deface the Premises or any part thereof.  Lessor reserves the right to direct
electricians as to where and how telephone and telegraph wires are to be
introduced to the Premises.  Lessee shall
not cut or bore holes for wires.  Lessee
shall not affix any floor covering to the floor of the Premises in any manner
except as approved by Lessor.  Lessee shall
repair any damage resulting from noncompliance with this rule.  Lessee shall pay for any and all damages to
the Building, walls, doors, glass, carpeting or otherwise which may be caused
by Lessee’s use

 

 

of
the Building, moving equipment, supplies or furniture into or out of the
Building whether caused by Lessee or its employees, agents, contractors or
invitees to the Premises.

 

21.                                 Lessee
shall not install, maintain or operate upon the Premises any vending machine
without the written consent of Lessor.

 

22.                                 Canvassing,
soliciting and distribution of handbills or any other written material, and
peddling in the Building or in the common areas and parking lot are prohibited,
and each tenant shall cooperate to prevent same.

 

23.                                 Lessor
reserves the right to exclude or expel from the Building any person who, in
Lessor’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 Building.

 

24.                                 Lessee
shall store all its trash and garbage within its Premises.  Lessee shall not place in any trash box or
receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. 
All garbage and refuse disposal shall be made in accordance with directions
issued from time to time by Lessor.

 

25.                                 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.  No cooking shall be done or permitted by any
tenant on the Premises, except that use by Lessee of Underwriters’ Laboratory
approved equipment for brewing coffee, tea, hot chocolate and similar beverages
shall be permitted, provided that such equipment and use is in accordance with
all applicable federal, state, county and city laws, codes, ordinances, rules
and regulations.

 

26.                                 Lessee
shall not use in any space or in the public halls of the building any hand
truck except those equipped with rubber tires and side guards or such other
material-handling equipment as Lessor may approve.  Lessee shall not bring any other vehicles of
any kind in to the Building.

 

27.                                 Without
the written consent of Lessor, Lessee shall not use the name of the Building in
connection with or in promoting or advertising the business of Lessee except as
Lessee’s address.

 

28.                                 Lessee
shall comply with all safety, fire protection and evacuation procedures and
regulations established by Lessor or any governmental agency.

 

29.                                 Lessee
assumes any and all responsibility for protecting its Premises from theft,
robbery and pilferage, which includes keeping doors locked and other means of
entry to the Premises closed.  Lessee
agrees that the cost to repair any damage to the Building and Premises, as a
result of theft, robbery and pilferage, shall be borne by the Lessee.

 

30.                                 The
requirements of Lessee will be attended to only upon appropriate application to
the office of the Building by an authorized individual.  Employees of Lessor shall not perform any
work or do anything outside of their regulated duties unless under special
instructions from

 

 

Lessor,
and no employee of Lessor will admit any persons (Lessee or otherwise) to any
office without specific instruction from lessor.

 

31.                                 Lessee
shall not park its vehicles in any parking areas designated by Lessor as areas
for parking by visitors to the Building. 
Lessee shall not leave vehicles in the Building parking areas overnight
nor park any vehicles in the Building parking areas other than automobiles,
motorcycles, motor drive or non-motor drive bicycles or four-wheeled
trucks.  Said vehicles improperly parked
shall be subject to a fine of $20.00 per day per violating vehicle or, upon 24
hours notice, shall be subject to towing at the vehicle owner’s expense.

 

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

 

33.                                 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 any lease of premises in the Building.

 

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

 

35.                                 Lessee
shall be responsible for the observance of all of the foregoing rules of
Lessee’s employees, agents, clients, customers, invitees and guests.

 

 

EXHIBIT E

 

Standards for Utilities and Services.

 

The following Standards for
Utilities and Services are in effect. 
Landlord reserves the right to adopt nondiscriminatory modifications and
additions hereto:

 

As long as Tenant is not in
default under any of the terms, covenants, conditions, provisions or agreements
of this Lease, Landlord shall:

 

a.                                       Provide non-attended automatic elevator
facilities Monday through Friday, except holidays, from 8 A.M. to 6 P.M., and
have one elevator available at all other times.

 

b.                                      On Monday through Friday, except holidays,
from 8 A.M. to 6 P.M. (and other times for a reasonable additional charge to be
fixed by Landlord), ventilate the Premises and furnish air conditioning or
heating on such days and hours, when in the reasonable judgment of Landlord it
may be required for the comfortable occupancy of the premises.  The air conditioning system achieves maximum
cooling when the window coverings are closed. 
Landlord shall not be responsible for room temperatures if Tenant does
not keep all window coverings in the Premises closed whenever the system is in
operation.  Tenant agrees to cooperate
fully at all times with Landlord, and to abide by all regulations and
requirements which Landlord may prescribe for the proper function and
protection of said air conditioning system. 
Tenant agrees not to connect any apparatus, device, conduit or pipe to
the Building chilled and hot water air conditioning supply lines.  Tenant further agrees that neither Tenant nor
its servants, employees, agents, visitors, licensees or contractors shall at any
time enter mechanical installations or facilities of the Building or adjust,
tamper with, touch or otherwise in any manner affect said installations or
facilities.

 

c.                                       Landlord shall furnish to the Premises,
during the usual business hours on business days, electric current as required
by the Building standard office lighting and fractional horsepower office
business machines in the amount of approximately two and one-half (2.5) watts
per square foot.  Tenant agrees, should
its electrical installation or electrical consumption be in excess of the
aforesaid quantity or extend beyond normal business hours, to reimburse
Landlord monthly for the measured consumption at the terms, classifications and
rates charged to similar consumers by said public utility serving the
neighborhood in which the Building is located. 
If a separate meter is not installed at Tenant’s cost, such excess cost
will be established by an estimate agreed upon by Landlord and Tenant, and if
the parties fail to agree, as established by an independent licensed
engineer.  Tenant agrees not to use any
apparatus or device in, or upon, or about the premises which may in any way
increase the amount of such services usually furnished or supplied to said
Premises, and Tenant further agrees not to connect any apparatus or device with
wires, conduits or pipes, or other means by which such services are supplied,
for the purpose of using additional or unusual amounts of such services without
written consent of Landlord.  Should
Tenant use the same to excess, the refusal on the part of Tenant to pay upon
demand of Landlord the amount established by Landlord for such excess charge
shall constitute a breach of the obligation to pay rent under this Lease and
shall entitle Landlord to the rights therein granted for such breach.  At all times Tenant’s use of electric current
shall never exceed the capacity of the feeders to the Building or the risers or
wiring installation and Tenant shall not install or use or permit the

 

 

installation
or use of any computer or electronic data processing equipment in the Premises
without the prior written consent of Landlord.

 

d.                                      Water will be available in public areas for
drinking and lavatory purposes only, but if Tenant requires, uses or consumes
water for any purposes in addition to ordinary drinking and lavatory purposes
of which fact Tenant constitutes Landlord to be the sole judge, Landlord may
install a water meter and thereby measure Tenant’s water consumption for all
purposes.  Tenant shall pay Landlord for
the cost of the meter and the cost of the installation thereof and throughout
the duration of Tenant’s occupancy Tenant shall keep said meter and
installation equipment in good working order and repair at Tenant’s own cost
and expenses, in default of which Landlord may cause such meter and equipment to
be replaced or repaired and collect the cost thereof from Tenant.  Tenant agrees to pay for water consumed, as
shown on said meter, as and when bills are rendered, and on default in making
such payment, Landlord may pay such charges and collect the same from
Tenant.  Any such costs or expenses
incurred, or payments made by Landlord for any of the reasons or purposes
hereinabove stated shall be deemed to be additional rent payable by Tenant and
collectible by Landlord as such.

 

e.                                       Provide janitor service to the Premises,
provided the same are used exclusively as offices, and are kept reasonably in
order by Tenant, and if to be kept clean by Tenant, no one other than persons
approved by Landlord shall be permitted to enter the Premises for such
purposes.  If the Premises are not used
exclusively as offices, they shall be kept clean and in order by Tenant, at
Tenant’s expense and to the satisfaction of Landlord, and by persons approved
by Landlord.  Tenant shall pay to Landlord
the cost of removal of any of Tenant’s refuse and rubbish, to the extent that
the same exceeds the refuse and rubbish usually attendant upon the use of the
Premises as offices.

 

Landlord reserves the right
to stop service of the elevator, plumbing, ventilation, air conditioning and
electric systems, when necessary, by reason of accident or emergency or for
repairs, alterations or improvements, in the judgment of Landlord desirable or
necessary to be made, until said repairs, alterations or improvements shall
have been completed, and shall further have no responsibility or liability for
failure to supply elevator facilities, plumbing, ventilating, air conditioning
or electric service, when prevented from so doing by strike or accident or by
any cause beyond Landlord’s reasonable control, or by laws, rules, orders,
ordinances, directions, regulations or requirements of any federal, state,
county or municipal authority or failure of gas, oil, or other suitable fuel
supply or inability by exercise of reasonable diligence to obtain gas, oil or other
suitable fuel.  It is expressly
understood and agreed that any covenants on Landlord’s part to furnish any
service pursuant to any of the terms, covenant, conditions, provisions or
agreements of this Lease, or to perform any act or thing for the benefit of
Tenant shall not be deemed breach if Landlord’s unable to furnish or perform
the same by virtue of a strike or labor trouble or any other cause whatsoever
beyond Landlord’s control.

 

 

EXHIBIT F

 

Tenant’s Batteries

 

 

	
  

  	
  FERRARI SHIELDS & ASSOCIATES

  
	
  Consulting
  Structural and Civil Engineers

  
	
  185, Cadillac Place Reno, Nevada 89509

  
	
  Phone: (775) 829-927 Fax: (775) 829-9359
  [ILLEGIBLE]

  
	
   

  
	
  June 15, 1999

  

 

Mr. Jonathan Biederer

Manager, Site planning and
Power Engineering

Advanced TelCom Group, Inc.

100 Stony Point Road, #130

Santa Rosa, CA 95401

 

Subject: Lucent Technology, 200
South Virginia, Second Floor Suite, structural capabilities.

 

 

Dear Jonathan,

 

I have
reviewed the proposed equipment layout provided to me by Barada Fuetsch
Architects for the proposed Lucent Technology suite in the southwest corner of
the second floor at the 200 South Virginia Street building. The following
report is the result of my engineering investigation into the structural
capacity of the floor system to support the proposed loads.

 

BACKGROUND

 

The equipment
rows are composed of battery storage racks (6500# each) and switching equipment
cabinets (800# each). My structural engineering review of the building floor
system is intended to identify whether the existing structural capacity of the
floor system is adequate to resist the proposed equipment loading. A copy of
the proposed equipment layout is addended to this letter.

 

ANALYSIS

 

My structural
analysis included a review of the W27x84 main floor beam (also a rigid frame element)
spanning east/west between the columns to assess if it is capable of
accommodating the heavy load from the battery storage racks. I also analyzed
the capacity of the composite concrete/steel floor deck spanning north/south
between the typical floor beams. The proposed battery storage racks place a
2,320 pound per linear foot (plf) load on the W27x84; the resultant loading of
the ESS cabinets, dead load of the

 

 

	
  Paul A.
  Ferran, PE

  	
  Joe F.
  Shields, CE/SE

  
	
  President

  	
  Vice President

  

 

 

slab, and a 50 pound per square foot (psf) live load result in a total
load of 3,171 plf. This loading results in a beam section demand of 157
cubic inches; the existing W27x84 has a beam section of 213 cubic inches,
far exceeding the demand generated by the new battery storage loading. I also
reviewed the load carrying capacity of the typical W21x50 floor framing beams
to assess if they could also support a full rack of battery storage cabinets.
The W21x50 has a section of 94.5 cubic inches, but the full rack battery
storage cabinets over the beam produces a demand of 157 cubic inches, far
exceeding the capacity of the typical floor beam.

 

The floor deck of the building appears to be a 6 1/2"
total concrete/metal deck thickness – a 3 1/2" thick reinforced (#3 @ 18TM o.c.
each way) concrete slab over a 3"
20g W3 Formlock deck spanning 10' between the floor beams. The proposed
switching equipment layout results in a 160 psf additional superimposed load on
the floor deck. The 6 1/2" deck is capable of supporting an additional superimposed
load of 201 psf, providing adequate support for the switching cabinets.  However, the floor deck
cannot support any battery storage cabinets between the floor beams.  A copy of the calculations is transmitted with
this letter.

 

CONCLUSIONS

 

The heavy weight of an entire row of the battery storage racks produces
a heavy structural demand, and greatly limits their possible locations. The
only approved location for the 10 ESS battery cabinets is directly over the W27x84
main east/west beam between the columns. The proposed floor plan indicates a
bank of 12 and 13 ESS cabinets that are to be placed to the north of the
switching cabinets. These banks of batteries
would have to be supported by the W21x50 floor beams, which are incapable of
supporting a row of the battery storage racks. No other banks of ESS cabinets
are allowed on the floor plan, other than over the W27x54 beam. If
additional ESS cabinets are desired in the future, the number of the cabinets
in a row must be subordinate to the structural capacity of the supporting
W21x50 floor beam, so that the design parameters of the beam are not violated.
The lateral load capacity of the storage racks is not included in the
structural scope of this report.

 

If you have
any questions regarding this analysis, or require any further assistance,
please do not hesitate to contact me.

 

	
   

  	
  SEAL

  
	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ Paul A. Ferrari

  	
   

  
	
   

  	
  Paul A. Ferrari, P.E.

  

 

	
  Copies to:

  	
  John Barada, Barada Fuetsch Architects

  
	
   

  	
  Tim Ruffin, CB Richard Ellis

  
	
   

  	
  Mike Callahan

  

 

2

 

 

 

	
  BARADA-FUETSCH

  
	
  ARCHITECTS

  
	
   

  	
  ARCHITECTURE

  	
  534
  LANDER STREET

  	
   

  
	
   

  	
  FACILITY
  MANAGEMENT

  	
  RENO,
  NEVADA 89509

  	
   

  
	
   

  	
  MASTER
  PLANNING

  	
  702-329-7624
  FAX 7626

  	
   

  

 

TELEPHONE
CONVERSATION on : 5/26/99

 

	
  WITH:

  	
  Steve
  Wheeler

  	
   

  	
   

  
	
   

  	
  Lucent
  Technology

  	
   

  	
   

  
	
  RE:

  	
  SV101
  – ATG equipment weight specifications

  	
   

  	
   

  

 

	
  Switching
  equipment cabinets:

  
	
  Weight:

  	
  <
  800 #

  	
   

  
	
  Length:

  	
  30"

  	
  [ILLEGIBLE]

  	
   

  
	
  Width:

  	
  24"

  	
   

  	
   

  
	
  Height:

  	
  72"

  	
  [ILLEGIBLE]

  	
   

  
	
  Attachment:

  	
  Bolt
  into floor at each corner (4 bolts) 2" from edge (20" x 26"
  pattern)

  
	
  Layout:

  	
  In
  60" o.c. rows with 30" dimension on axis with the row.

  

 

	
  Battery
  storage racks:

  
	
  Weight:

  	
  6500
  #

  	
  [ILLEGIBLE]

  	
   

  
	
  Length:

  	
  34.4"

  	
   

  	
   

  	 

	
  Width:

  	
  25.5"

  	
  [ILLEGIBLE]

  	
   

  	 

	
  Height:

  	
  84"

  	
   

  	
   

  	 

	
  Attachment:

  	
  Bolt
  into floor, three at each 25.5" end (6 bolts) spaced at 8.1" o.c.

  
	
  Layout:

  	
  Aligned
  over E/W beam running between columns at south building face.

  
	
   

  	
  (In
  lieu of " 10 Future ESS Cabinets" shown).

  
	
   

  	
   

  

 

John
Barada. AIA.

 

CC:
file,

 

 

	
  

  	
  F E R R A
  R I   S H I E L D S   & 
   A S S O C I A T E S

  
	
  C o n s u l t i n g  S t r u c t u r a l  a n d  C i v i l  E n g i n e e r s

  
	
  PROJECT LUCENT TECHNOLOGY
  200 SQ. VIRGINIA

  
	
  2ND FLOOR BEAM ANALYSIS

  
	
  MADE BY PLF

  	
  DATE 6/99

  	
  JOB NO 99010

  
	
  CHKD BY 

  	
  DATE 

  	
  SHEET NO 1

  
	
   

  

 

	
  D.L. DECK
  & FLR

  	
  =

  	
  40psf

  
	
  L.L.

  	
  =

  	
  50psf (SINCE,
  RACKS ARE PERMENANT, L.L. CAN BE USED ONLY FOR A/S LEO)

  
	
  BATTERY
  STORAGE BTWN COLS. F-1 & F-2

  
	
  30' SPAN, BATTERY RACK CENTERED OVER W27x84

  
	
  = STORAGE RACKS @ 6.5K, 34.4R LENGTH

  
	
  =
  (28' - 2')) (12)/34.4         = 10 @ 6.5K
  = 65.0K

  
	
  UNIFORM BM LOAD = 65.0K/28' = 2.32KLF

  
	
   

  
	
  W27x84 LOADING.

  	
   

  
	
  D.L.

  	
  = 17'/2 (40)
  = 340 PLF

  	
   

  
	
  L.L.

  	
  = 50 (3') =
  150 PLF

  	
   

  
	
  ESS CABINETS. (24)(12)/30 = 9@.8K = 720 PLF/2
  = 360 PLF

  
	
  W.T.
  TO

  12 TONES

  
	
  BATTERY
  CABINETS

  	
  = 2.32 KLF

  
	
   

  	
  Sum

  	
  = 3171 PLF

  
	
  M
  = 3171 (282)/8 = 310.8" k, SRQ = 157"3

  
	
   

  	
  Sw27x84= 213"
  3 O.K.

  
	
  BATTERY STORAGE OVER
  W21x50

  
	
  W
  = 3171 PLF

  
	
  M
  = 310.8" k, SRQ = 15.7" 3

  
	
   

  	
  Sw21X50 = 94.5"
  3 N.G.

  
									

 

 

	
  

  	
  F E R R A
  R I   S H I E L D S   & 
   A S S O C I A T E S

  
	
  C o n s u l t i n g  S t r u c t u r a l  a n d  C i v i l  E n g i n e e r s

  
	
  PROJECT

  
	
   

  
	
  MADE BY

  	
  DATE 

  	
  JOB NO 99010

  
	
  CHKD BY

  	
  DATE 

  	
  SHEET NO 2.

  
	
   

  

 

SWITCHING EQUIPMENT

 

800/2 'r 21/2'
= 160 psf

 

20g W3 FORMLOCK DECK w/ 6 1/2 "
TOTAL SLAB

10'-0" SPAN

 

WALLOW = 201 PSF
O.K.

(SUPERIMPOSED)

 

 

EXHIBIT G

 

LANDLORD’S WAIVER AND ESTOPPEL CERTIFICATE

 

 

LANDLORD
WAIVER AND ESTOPPEL CERTIFICATE

 

First
Union National Bank,

   as
Administrative Agent

One
First Union Center, TW-10

301
South College Street

Charlotte,
NC 28288-0608

Ladies and Gentleman:

 

This letter acknowledges
that the undersigned (the “Landlord”) has been informed that                           
(the “Tenant”), has entered into a Credit Agreement dated as of                          ,
1999 (as amended, modified, restated or replaced from time to time, the “Credit
Agreement”) among Advanced Telcom Group, Inc. and certain of its Subsidiaries
(collectively the “Borrowers”), First Union National Bank, as administrative
agent (the “Administrative Agent”), J.P. Morgan Bank & Trust, as syndication
agent, General Electric Capital Corporation, as documentation agent and the
lenders party thereto (the “Lenders”). 
As a precedent condition to the Lenders’ obligation to provide loans and
other financial accommodations to the Tenant under the Credit Agreement (the
“Loans”), the Lenders require, among other things, liens on the Tenant’s
personal property, including, without limitation, equipment, trade fixtures and
fixtures.

 

To induce the Lenders to
continue to make the Loans and provide financial accommodations to the Tenant,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Landlord hereby represents and warrants to
the Administrative Agent that as of the date hereof:

 

1.                                       The
Landlord is the current landlord under the lease described in Exhibit A
attached hereto (the “Lease”) with the Tenant;

 

2.                                       The
Lease is in full force and effect and there have been no amendments,
modifications or other agreements relating to the Lease except as stated
herein;

 

3.                                       The
Lease is not in default, nor, to the Landlord’s knowledge, are there in
existence any facts which with notice or passage of time or both would
constitute a default or a breach of the terms or conditions of the Lease; and

 

4.                                       The
Tenant is the tenant under the Lease, is in lawful and actual possession of the
real property described in the Lease (the “Premises”) and, to the Landlord’s
knowledge, is in full compliance with the covenants, agreements and obligations
under the Lease.

 

The Landlord agrees
that:  (a) the Tenant (or its
representatives) is the owner of equipment, trade fixtures, fixtures and other
personal property of Tenant located at or on the Premises, whether attached to
the Premises or not provided that such equipment, trade fixtures and other
personal property (i) has been or will be installed in the Premises, the
Building or Land (as the terms Building and Land are defined in the Lease) by
or for the account of Tenant without

 

 

expense
to Landlord, and (ii) can be removed without structural damage to the Building
(such personal property owned by Tenant is herein referred to as the “Personal
Property”), (b) the Administrative Agent’s lien upon or security interest in
the Personal Property is prior and superior to any interest, lien or claim of
any nature the Landlord may now have or hereafter obtain in the Personal
Property whether by operation of law, contract or otherwise:  (c) either the Tenant or the Administrative
Agent may remove the Personal Property from the Premises at any time without
hindrance on the part of the Landlord, and, upon request, Landlord will grant
the Administrative Agent (or its representatives) access to the Premises so
that the Administrative Agent (or its representatives) may remove the Personal
Property, provided that (i) Administrative Agent (or its representatives) shall
give Landlord at least 24 hours prior written notice of its desire to enter the
Premises, shall enter the Premises following such notice only in the company of
Landlord or its building manager, shall comply with all Building rules and
regulations in entering the Premises and in removing the Personal Property, and
shall otherwise comply with all provisions of the Lease concerning the removal
of Personal Property (including effecting repairs to the Premises, Building or
Land occasioned thereby); and (ii) the Administrative Agent, on behalf of the
Lenders, shall, and does hereby indemnify, defend and hold Landlord harmless
from any losses, liability, liens, costs or damages, or claims thereof or
therefor, including w/o limitation, reasonable attorneys fees and court costs
caused by the Administrative Agent (or its representatives) in connection with
the removal of the Personal Property by the Administrative Agent:  and (d) the Personal Property shall remain
personal property (to the extent such Personal Property is not already a
fixture as of the date hereof) and shall not become fixtures, notwithstanding
the manner or mode of the attachment of the Personal Property to the land.  The Landlord hereby waives any rights it may
now or hereafter have in the Personal Property, including without limitation,
any lien rights available under applicable law, but excluding any lien filed in
accordance with applicable law to secure a judgment obtained by Landlord
against Tenant for Tenant’s breach of any obligation under the Lease.

 

The Landlord understands
that the Administrative Agent and the Lenders will rely on this Landlord Waiver
and Estoppel Certificate in continuing to make Loans and provide financial
accommodations to the Tenant.

 

In the event of a default
under the Lease, the Landlord agrees to give written notice of such default to
the Administrative Agent at the address set forth above, and allow the
Administrative Agent the same opportunity to cure such default as is accorded
to the Tenant under the Lease, which notice may be given to the Administrative
Agent concurrently with any Notice of Default given to Tenant and, in such
event, which cure period shall run concurrent with any cure period afforded the
tenant under the Lease.  The
administrative Agent may elect to cure such default but shall have no
obligation to do so.

 

 

Executed and delivered this      
day of           , 1999.

 

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

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