Document:

Exhibit 10.7

 

OFFICE SPACE LEASE

 

BETWEEN

 

THE IRVINE COMPANY

 

AND

 

GARDENBURGER, INC.

 

 

OFFICE SPACE LEASE

 

THIS
LEASE is made as of the 21st day of August, 2003, by and between THE IRVINE COMPANY, hereafter called
“Landlord,” and GARDENBURGER, INC.,
an Oregon corporation, hereafter called “Tenant.”

 

ARTICLE I.  BASIC LEASE PROVISIONS

 

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

 

1.                    Tenant’s Trade Name:  N/A

 

2.                    Premises:  Suite No. 350 (the Premises are more
particularly described in Section 2.1). 

 

Address of Building: 
15615 Alton Parkway, Irvine, CA 92618

 

Project Description:  Palm
Court

 

3.                    Use of Premises:  General office and for no other use.

 

4.                    Estimated Delivery Date :  October 1, 2003

 

5.                     Lease Term:  Thirty-six (36) months, plus such additional
days as may be required to cause this Lease to terminate on the final day of the
calendar month.

 

6.                    Basic
Rent:  Ten Thousand Three Hundred
Twenty-Two Dollars ($10,322.00) per month.

 

Rental Adjustments:

 

Commencing
twelve (12) months following the Commencement Date, the Basic Rent shall be Ten
Thousand Eight Hundred Thirty-Eight Dollars ($10,838.00) per month.

 

Commencing
twenty-four (24) months following the Commencement Date, the Basic Rent shall
be Eleven Thousand Three Hundred Fifty-Four Dollars ($11,354.00) per month.

 

7.                     Property Tax Base :  The Property Taxes per rentable square foot
incurred by Landlord and attributable to the twelve month period ending June
30, 2004 (the “Base Year”).

 

Building Cost Base : 
The Building Costs per rentable square foot incurred by Landlord and
attributable to the Base Year.

 

Expense Recovery Period:  Every twelve month period during the Term
(or portion thereof during the first and last Lease years) ending June 30.

 

8.                    Floor Area of Premises:  approximately 5,161 rentable square feet

 

9.                    Security
Deposit:  $12,489.00

 

10.              Broker(s):  Lee & Associates 

 

11.              Plan
Approval Date :  N/A

 

12.              Parking:  Eighteen (18) unreserved vehicle parking
spaces.

 

13.              Address
for Payments and Notices:

 

	
  LANDLORD

  	
   

  	
  TENANT

  
	
   

  	
   

  	
   

  
	
  The Irvine Company

  8001 Irvine Center Drive, Suite 840

  Irvine, CA  92618

  Attn:  Property Manager

  	
   

  	
  Gardenburger, Inc.

  15615 Alton Parkway, Suite 350

  Irvine, CA  92618

  
	
   

  	
   

  	
   

  
	
  with a copy of notices to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE IRVINE COMPANY

  P.O. Box 6370

  Newport Beach, CA 92658-6370

  Attn:  Vice President, Operations –
  Office Properties

  	
   

  	
   

  

 

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ARTICLE II. 
PREMISES

 

SECTION 2.1.                                     LEASED
PREMISES.  Landlord leases to Tenant and
Tenant rents from Landlord the premises shown in Exhibit A (the “Premises”),
containing approximately the floor area set forth in Item 8 of the Basic Lease
Provisions and known by the suite number identified in Item 2 of the Basic
Lease Provisions.  The Premises are
located in the building identified in Item 2 of the Basic Lease Provisions (the
“Building”), which is a portion of the project described in Item 2 (the
“Project”).  If, upon completion of the
space plans for the Premises, Landlord’s architect or space planner determines
that the rentable square footage of the Premises differs from that set forth in
the Basic Lease Provisions, then Landlord shall so notify Tenant and the Basic
Rent (as shown in Item 6 of the Basic Lease Provisions) shall be promptly
adjusted in proportion to the change in square footage.  Within five (5) days following Landlord’s
request, the parties shall memorialize the adjustments by executing an
amendment to this Lease prepared by Landlord.

 

SECTION 2.2.                                     ACCEPTANCE
OF PREMISES.  Tenant acknowledges that
neither Landlord nor any representative of Landlord has made any representation
or warranty with respect to the Premises or the Building or the suitability or
fitness of either for any purpose, except as set forth in this Lease.  The taking of possession or use of the
Premises by Tenant for any purpose other than construction shall conclusively
establish that the Premises and the Building were in satisfactory condition and
in conformity with the provisions of this Lease in all respects, except for
those matters which Tenant shall have brought to Landlord’s attention on a
written punch list.  The list shall be
limited to any items required to be accomplished by Landlord under the Work
Letter (if any) attached as Exhibit X, and shall be delivered to Landlord
within thirty (30) days after the term (“Term”) of this Lease commences as
provided in Article III below.  If there
is no Work Letter, or if no items are required of Landlord under the Work
Letter, by taking possession of the Premises Tenant accepts the improvements in
their existing condition, and waives any right or claim against Landlord
arising out of the condition of the Premises. 
Nothing contained in this Section shall affect the commencement of the
Term or the obligation of Tenant to pay rent. 
Landlord shall diligently complete all punch list items of which it is
notified as provided above.

 

SECTION 2.3.                                     BUILDING
NAME, ADDRESS AND DEPICTION.  Tenant
shall not utilize any name selected by Landlord from time to time for the
Building and/or the Project as any part of Tenant’s corporate or trade
name.  Landlord shall have the right to
change the name, number or designation of the Building or Project without
liability to Tenant.  Tenant shall not
use any picture of the Building in its advertising, stationery or in any other
manner.

 

ARTICLE III.  TERM

 

SECTION 3.1.                                     GENERAL.  The Term shall be for the period shown in Item
5 of the Basic Lease Provisions.  The
Term shall commence (“Commencement Date”) one (1) month following the date the
Premises are “ready for occupancy” as described in Section 3.2 (the “Delivery
Date”).  Promptly following request by
Landlord, the parties shall memorialize on a form provided by Landlord the
actual Commencement Date and the expiration date (“Expiration Date”) of this
Lease.

 

SECTION 3.2.                                     EARLY
OCCUPANCY.  It is understood that Landlord
is currently constructing the Premises as a “spec suite” pursuant to a mutually
agreeable space plan.  The Premises
shall be deemed “ready for occupancy” upon the tendered date, but only if and
when Landlord, to the extent applicable, (a) has put into operation all building
services essential for the use of the Premises by Tenant, (b) has provided
reasonable access to the Premises for Tenant so that it may be used without
unnecessary interference, (c) has substantially completed all the work required
to be done by Landlord in this Lease, and (d) has obtained requisite
governmental approvals to Tenant’s occupancy. 
Notwithstanding the foregoing, however, if the prosecution of Landlord’s
improvement work in the Premises is delayed due to any action or inaction by
Tenant, then the Premises shall be deemed ready for occupancy for purposes
hereof as of the date Landlord would have been able to deliver the Premises to
Tenant but for Tenant’s delay(s). 
Following the full execution of this Lease, payment of all deposits due
hereunder and delivery of proper evidence of insurance pursuant to Exhibit D
hereof, Tenant shall be permitted to occupy the Premises during the one (1)
month period following the Delivery Date in order that it may install its
furniture, telephone systems and data cabling equipment and commence its normal
business operations therein.  Tenant’s
access to the Premises prior to the Commencement Date shall be subject to all
of the terms and obligations of this Lease, including the indemnity provisions
herein, except that Tenant shall not be required to pay Basic Rent during that
period.

 

SECTION 3.3.                                     RIGHT
TO EXTEND THIS LEASE.  Provided
that Tenant is not in default under any provision of this Lease at the time of
exercise of the extension right granted herein, and provided further that
Tenant is occupying the entire Premises and has not assigned or sublet any of
its interest in this Lease (except in connection with an assignment of this
Lease to a Tenant Affiliate as described in Section 9.1(f) hereof), Tenant may
extend the Term of this Lease for one (1) period of twenty-four (24)
months.  Tenant shall exercise its right
to extend the Term by and only by delivering to Landlord, not less than nine
(9) months or more than twelve (12) months prior to the expiration date of the
Term,

 

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Tenant’s written notice of its irrevocable
commitment to extend (the “Commitment Notice”).  Should Tenant fail timely to deliver the Commitment Notice, then
this extension right shall thereupon lapse and be of no further force or
effect.  The Basic Rent payable under
the Lease during the extension of the Term shall be at the prevailing market
rental rate (including periodic adjustments) for comparable and similarly
improved space within the Building as of the commencement of the extension
period, as determined by Landlord based on a reasonable extrapolation of its
then-current leasing rates.  In no event
shall the monthly Basic Rent payable for the extension period be less than the
Basic Rent payable during the month immediately preceding the commencement of
such extension period.  Promptly
following receipt of the Commitment Notice, Landlord shall prepare an
appropriate amendment to the Lease memorializing the extension of the Term in
accordance with the foregoing, and Tenant shall duly execute and return same to
Landlord within fifteen (15) days. 
Should Tenant fail timely to execute and deliver the amendment, then
Landlord may, at its sole written election, either specifically enforce the
Commitment Notice or extinguish Tenant’s right to extend the Term.  Should Landlord elect the latter, then this
Lease shall terminate upon the scheduled date of expiration and Tenant’s rights
under this paragraph shall be of no further force or effect.  Any attempt to assign or transfer any right
or interest created by this paragraph to other than a Tenant Affiliate shall be
void from its inception.  Tenant shall
have no other right to extend the Term beyond the single twenty-four (24) month
extension created by this paragraph. 
Unless agreed to in a writing signed by Landlord and Tenant, any
extension of the Term, whether created by an amendment to this Lease or by a
holdover of the Premises by Tenant, or otherwise, shall be deemed a part of,
and not in addition to, any duly exercised extension period permitted by this
paragraph.  Time is specifically made of
the essence of this paragraph.

 

ARTICLE IV. 
RENT AND OPERATING EXPENSES

 

SECTION 4.1.                                     BASIC
RENT.  From and after the
Commencement Date, Tenant shall pay to Landlord without deduction or offset a
Basic Rent for the Premises in the total amount shown (including subsequent
adjustments, if any) in Item 6 of the Basic Lease Provisions.  Any rental adjustment shown in Item 6 shall
be deemed to occur on the specified monthly anniversary of the Commencement
Date, whether or not that date occurs at the end of a calendar month.  The rent shall be due and payable in advance
commencing on the Commencement Date and continuing thereafter on the first day
of each successive calendar month of the Term, as prorated for any partial
month.  No demand, notice or invoice
shall be required.  An installment of
rent in the amount of one (1) full month’s Basic Rent at the initial rate specified
in Item 6 of the Basic Lease Provisions shall be delivered to Landlord concurrently
with Tenant’s execution of this Lease and shall be applied against the Basic
Rent first due hereunder; the next installment of Basic Rent shall be due on
the first day of the second calendar month of the Term, which installment
shall, if applicable, be appropriately prorated to reflect the amount prepaid
for that calendar month.

 

SECTION 4.2.                                     OPERATING
EXPENSE INCREASE.

 

(a)                                  Commencing twelve
(12) months following the Commencement Date, Tenant shall compensate Landlord,
as additional rent, for Tenant’s proportionate shares of “Building Costs” and
“Property Taxes,” as those terms are defined below, incurred by Landlord in the
operation of the Building and Project. 
Property Taxes and Building Costs are mutually exclusive and may be
billed separately or in combination as determined by Landlord.  Tenant’s proportionate share of Property
Taxes shall equal the product of the rentable floor area of the Premises
multiplied by the difference of (i) Property Taxes per rentable square foot
less (ii) the Property Tax Base set forth in Item 7 of the Basic Lease
Provisions.  Tenant’s proportionate
share of Building Costs shall equal the product of the rentable floor area of
the Premises multiplied by the difference of (i) Building Costs per rentable
square foot less (ii) the Building Cost Base set forth in Item 7 of the Basic
Lease Provisions.  Tenant acknowledges
Landlord’s rights to make changes or additions to the Building and/or Project
from time to time pursuant to Section 6.5 below, in which event the total
rentable square footage within the Building and/or Project may be
adjusted.  For convenience of reference,
Property Taxes and Building Costs may sometimes be collectively referred to as
“Operating Expenses.”

 

(b)                                 Commencing prior
to the start of the first full “Expense Recovery Period” of the Lease (as
defined in Item 7 of the Basic Lease Provisions), and prior to the start of
each full or partial Expense Recovery Period thereafter, Landlord shall give
Tenant a written estimate of the amount of Tenant’s proportionate shares of
Building Costs and Property Taxes for the Expense Recovery Period or portion
thereof.  Commencing twelve (12) months
following the Commencement Date, Tenant shall pay the estimated amounts to Landlord
in equal monthly installments, in advance, with Basic Rent.  If Landlord has not furnished its written
estimate for any Expense Recovery Period by the time set forth above, Tenant
shall continue to pay cost reimbursements at the rates established for the
prior Expense Recovery Period, if any; provided that when the new estimate is
delivered to Tenant, Tenant shall, at the next monthly payment date, pay any
accrued cost reimbursements based upon the new estimate.  Landlord may from time to time change the
Expense Recovery Period to reflect a calendar year or a new fiscal year of
Landlord, as applicable, in which event Tenant’s share of Operating Expenses
shall be equitably prorated for any partial year.

 

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(c)                                  Within one hundred
twenty (120) days after the end of each Expense Recovery Period, Landlord shall
furnish to Tenant a statement setting forth the actual or prorated Property
Taxes and Building Costs attributable to that period, and the parties shall
within thirty (30) days thereafter make any payment or allowance necessary to
adjust Tenant’s estimated payments, if any, to Tenant’s actual proportionate
shares as shown by the annual statement. 
If Tenant has not made estimated payments during the Expense Recovery
Period, any amount owing by Tenant pursuant to subsection (a) above shall be
paid to Landlord in accordance with Article XVI.  If actual Property Taxes or Building Costs allocable to Tenant
during any Expense Recovery Period are less than the Property Tax Base or the
Building Cost Base, respectively, Landlord shall not be required to pay that
differential to Tenant, although Landlord shall refund any applicable estimated
payments collected from Tenant.  Should
Tenant fail to object in writing to Landlord’s determination of actual Operating
Expenses within sixty (60) days following delivery of Landlord’s expense
statement, Landlord’s determination of actual Operating Expenses for the
applicable Expense Recovery Period shall be conclusive and binding on Tenant.

 

(d)                                 Even though the Lease
has terminated and the Tenant has vacated the Premises, when the final
determination is made of Tenant’s share of Property Taxes and Building Costs
for the Expense Recovery Period in which the Lease terminates, Tenant shall
upon notice pay the entire increase due over the estimated expenses paid;
conversely, any overpayment made in the event expenses decrease shall be
rebated by Landlord to Tenant.  However,
in lieu thereof, Landlord may deliver a reasonable estimate of the anticipated
reconciliation amount to Tenant prior to the expiration of the Term, in which
event the appropriate party shall fund that amount by the termination date.

 

(e)                                  If, at any time
during any Expense Recovery Period, any one or more of the Operating Expenses
are increased to a rate(s) or amount(s) in excess of the rate(s) or amount(s)
used in calculating the estimated expenses for the year, then Tenant’s
estimated share of Property Taxes or Building Costs, as applicable, shall be
increased for the month in which the increase becomes effective and for all
succeeding months by an amount equal to Tenant’s proportionate share of the
increase.  Landlord shall give Tenant
written notice of the amount or estimated amount of the increase, the month in
which the increase will become effective, Tenant’s monthly share thereof and
the months for which the payments are due. 
Tenant shall pay the increase to Landlord as a part of Tenant’s monthly
payments of estimated expenses as provided in paragraph (b) above, commencing
with the month in which effective.

 

(f)                                    The term “Building
Costs” shall include all expenses of operation and maintenance of the Building
and the Project, together with all appurtenant Common Areas (as defined in
Section 6.2), and shall include the following charges by way of illustration
but not limitation:  water and sewer
charges; insurance premiums or reasonable premium equivalents should Landlord
elect to self-insure any risk or deductible that Landlord is authorized to
insure hereunder; license, permit, and inspection fees; heat; light; power;
janitorial services; access control/security costs, inclusive of the reasonable
cost of improvements made to enhance access control systems and procedures;
repairs; air conditioning; supplies; materials; equipment; tools; tenant services;
programs instituted to comply with transportation management requirements;
amortization of capital investments reasonably intended to produce a reduction
in operating charges or energy conservation; amortization of capital
investments necessary to bring the Building into compliance with applicable
laws and building codes; labor; reasonably allocated wages and salaries, fringe
benefits, and payroll taxes for administrative and other personnel directly
applicable to the Building and/or Project, including both Landlord’s personnel
and outside personnel; any expense incurred pursuant to Sections 6.1, 6.2, 6.4,
7.2, and 10.2 and Exhibits B and C below; and a reasonable overhead/management
fee.  It is understood that Building
Costs shall include competitive charges for direct services provided by any
subsidiary or division of Landlord.  In
no event shall access control/security costs, insurance costs, or utility
charges allocable to Tenant on a per square foot basis during any Expense
Recovery Period be less than the corresponding amount for such component in the
Building Cost Base.  The term “Property
Taxes” as used herein shall include the following:  (i) all real estate taxes or personal property taxes, as such
property taxes may be reassessed from time to time; and (ii) other taxes,
charges and assessments which are levied with respect to this Lease or to the
Building and/or the Project, and any improvements, fixtures and equipment and
other property of Landlord located in the Building and/or the Project, except
that general net income and franchise taxes imposed against Landlord shall be
excluded; and (iii) any tax, surcharge or assessment which shall be levied in
addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (iv) costs and expenses incurred in
contesting the amount or validity of any Property Tax by appropriate
proceedings.  A copy of Landlord’s
unaudited statement of expenses shall be made available to Tenant upon
request.  The Building Costs, inclusive
of those for the Base Year, shall be extrapolated by Landlord to reflect at
least ninety-five percent (95%) occupancy of the rentable area of the Building.

 

SECTION 4.3.                                     SECURITY
DEPOSIT.  Concurrently with Tenant’s
delivery of this Lease, Tenant shall deposit with Landlord the sum, if any,
stated in Item 9 of the Basic Lease Provisions (the “Security Deposit”), to be
held by Landlord as security for the full and faithful performance of Tenant’s
obligations under this Lease to pay any rent as and when due, including without
limitation such additional rent as may be owing under any provision hereof, and
to maintain the Premises as required by Sections 7.1 and 15.3 or any other
provision of this Lease.  Upon any
breach of those obligations by Tenant, Landlord may apply all or part of the
Security Deposit as full or partial compensation.  If any portion of the Security Deposit is so applied, Tenant
shall within five (5) days after written demand by

 

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Landlord deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount.  Landlord shall not be required to keep this
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. 
In no event may Tenant utilize all or any portion of the Security
Deposit as a payment toward any rental sum due under this Lease.  If Tenant fully performs its obligations
under this Lease, the Security Deposit or any balance thereof shall be returned
to Tenant or, at Landlord’s option, to the last assignee of Tenant’s interest
in this Lease.

 

ARTICLE V. 
USES

 

SECTION 5.1.                                     USE.  Tenant shall use the Premises only for the
purposes stated in Item 3 of the Basic Lease Provisions.  The parties agree that any contrary use
shall be deemed to cause material and irreparable harm to Landlord and shall
entitle Landlord to injunctive relief in addition to any other available
remedy.  The uses prohibited under this
Lease shall include, without limitation, use of the Premises or a portion
thereof for (i) offices of any agency or bureau of the United States or any
state or political subdivision thereof; (ii) offices or agencies of any foreign
governmental or political subdivision thereof; (iii) offices of any health care
professionals or service organization; (iv) schools, temporary employment
agencies or other training facilities which are not ancillary to corporate,
executive or professional office use; (v) retail or restaurant uses; or (vi) communications
firms such as radio and/or television stations.  Tenant shall not do or permit anything to be done in or about the
Premises which will in any way interfere with the rights or quiet enjoyment of
other occupants of the Building or the Project, or use or allow the Premises to
be used for any unlawful purpose, nor shall Tenant permit any nuisance or
commit any waste in the Premises or the Project.  Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any insurance policy(ies) covering the
Building, the Project and/or their contents, and shall comply with all
applicable insurance underwriters rules. 
Tenant shall comply at its expense with all present and future laws,
ordinances and requirements of all governmental authorities that pertain to
Tenant or its use of the Premises, including without limitation all federal and
state occupational health and safety and handicap access requirements, whether
or not Tenant’s compliance will necessitate expenditures or interfere with its
use and enjoyment of the Premises. 
Tenant shall not generate, handle, store or dispose of hazardous or
toxic materials (as such materials may be identified in any federal, state or
local law or regulation) in the Premises or Project without the prior written
consent of Landlord; provided that the foregoing shall not be deemed to
proscribe the use by Tenant of customary office supplies in normal quantities
so long as such use comports with all applicable laws.  Tenant agrees that it shall promptly
complete and deliver to Landlord any disclosure form regarding hazardous or
toxic materials that may be required by any governmental agency.  Tenant shall also, from time to time upon
request by Landlord, execute such affidavits concerning Tenant’s best knowledge
and belief regarding the presence of hazardous or toxic materials in the
Premises.  Landlord shall have the right
at any time to perform an assessment of the environmental condition of the
Premises and of Tenant’s compliance with this Section.  As part of any such assessment, Landlord
shall have the right, upon reasonable prior notice to Tenant, to enter and
inspect the Premises and to perform tests, provided those tests are performed
in a manner that minimizes disruption to Tenant.  Tenant will cooperate with Landlord in connection with any
assessment by, among other things, promptly responding to inquiries and
providing relevant documentation and records. 
The reasonable cost of the assessment/testing shall be reimbursed by
Tenant to Landlord if such assessment/testing determines that Tenant failed to
comply with the requirements of this Section. 
In all events Tenant shall indemnify Landlord in the manner elsewhere
provided in this Lease from any release of hazardous or toxic materials caused
by Tenant, its agents, employees, contractors, subtenants or licensees.  The foregoing covenants shall survive the
expiration or earlier termination of this Lease.

 

SECTION 5.2.                                     SIGNS.  Landlord shall affix and maintain a sign
(restricted solely to Tenant’s name as set forth herein or such other name as
Landlord may consent to in writing) adjacent to the entry door of the Premises,
together with a directory strip listing Tenant’s name as set forth herein in
the lobby directory of the Building. 
Any subsequent changes to that initial signage shall be at Tenant’s sole
expense.  All signage shall conform to
the criteria for signs established by Landlord and shall be ordered through
Landlord.  Tenant shall not place or
allow to be placed any other sign, decoration or advertising matter of any kind
that is visible from the exterior of the Premises.  Any violating sign or decoration may be immediately removed by
Landlord at Tenant’s expense without notice and without the removal
constituting a breach of this Lease or entitling Tenant to claim damages.

 

ARTICLE VI. LANDLORD SERVICES

 

SECTION 6.1.                                     UTILITIES
AND SERVICES.  Landlord shall furnish to the
Premises the utilities and services described in Exhibit B, subject to the
conditions and payment obligations and standards set forth in this Lease.  Landlord shall not be liable for any failure
to furnish any services or utilities when the failure is the result of any
accident or other cause beyond Landlord’s reasonable control, nor shall
Landlord be liable for damages resulting from power surges or any breakdown in
telecommunications facilities or services. 
Landlord’s temporary inability to furnish any services or utilities
shall not entitle Tenant to any damages, relieve Tenant of the obligation to
pay rent or

 

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constitute a constructive or other eviction
of Tenant, except that Landlord shall diligently attempt to restore the service
or utility promptly.  Tenant shall
comply with all rules and regulations which Landlord may reasonably establish
for the provision of services and utilities, and shall cooperate with all
reasonable conservation practices established by Landlord.  Landlord shall at all reasonable times have
free access to all electrical and mechanical installations of Landlord.

 

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

 

SECTION 6.3.                                     USE
OF COMMON AREAS.  The occupancy by Tenant of the
Premises shall include the use of the Common Areas in common with Landlord and
with all others for whose convenience and use the Common Areas may be provided
by Landlord, subject, however, to compliance with all rules and regulations as
are prescribed from time to time by Landlord. 
Landlord shall at all times during the Term have exclusive control of
the Common Areas, and may restrain or permit any use or occupancy, except as
otherwise provided in this Lease or in Landlord’s rules and regulations.  Tenant shall keep the Common Areas clear of
any obstruction or unauthorized use related to Tenant’s operations.  Landlord may temporarily close any portion
of the Common Areas for repairs, remodeling and/or alterations, to prevent a
public dedication or the accrual of prescriptive rights, or for any other
reasonable purpose.

 

SECTION 6.4.                                     PARKING.  Parking shall be provided in accordance with
the provisions set forth in Exhibit C to this Lease.

 

SECTION 6.5.                                     CHANGES
AND ADDITIONS BY LANDLORD.  Landlord
reserves the right to make alterations or additions to the Building or the
Project, or to the attendant fixtures, equipment and Common Areas.  No change shall entitle Tenant to any
abatement of rent or other claim against Landlord, provided that the change
does not deprive Tenant of reasonable access to or use of the Premises.

 

ARTICLE VII. 
MAINTAINING THE PREMISES

 

SECTION 7.1.                                     TENANT’S
MAINTENANCE AND REPAIR.  Subject
to Article XI, Tenant at its sole expense shall make all repairs necessary to
keep the Premises and all improvements and fixtures therein in the condition as
existed on the Commencement Date (or on any later date that the applicable
improvements may have been installed), excepting ordinary wear and tear.  Notwithstanding Section 7.2 below, Tenant’s
maintenance obligation shall include without limitation all appliances,
non-building standard lighting/electrical systems, and plumbing fixtures and
installations located within or servicing only the Premises.  All repairs shall be at least equal in
quality to the original work, shall be made only by a licensed, bonded
contractor approved in writing in advance by Landlord and shall be made only at
the time or times approved by Landlord. 
Any contractor utilized by Tenant shall be subject to Landlord’s
standard requirements for contractors, as modified from time to time.  Landlord may impose reasonable restrictions
and requirements with respect to repairs, as provided in Section 7.3, and the
provisions of Section 7.4 shall apply to all repairs.  Alternatively, should Landlord or its management agent agree to
make a repair on behalf of Tenant and at Tenant’s request, Tenant shall
promptly reimburse Landlord as additional rent for all costs incurred
(including the standard coordination fee of Landlord’s management agent) upon
submission of an invoice.

 

SECTION 7.2.                                     LANDLORD’S
MAINTENANCE AND REPAIR.  Subject
to Article XI, Landlord shall provide service, maintenance and repair with
respect to the heating, ventilating and air conditioning (“HVAC”) equipment of
the Building (exclusive of any supplemental HVAC equipment servicing only the
Premises) and shall maintain in good repair the Common Areas, roof, foundations,
footings, the exterior surfaces of the exterior walls of the Building, and the
structural, electrical, mechanical and plumbing systems of the Building except
as provided in Section 7.1 above. 
Landlord shall have the right to employ or designate any reputable
person or firm, including any employee or agent of Landlord or any of
Landlord’s affiliates or divisions, to perform any service, repair or
maintenance function.  Landlord need not
make any other improvements or repairs except as specifically required under
this Lease, and nothing contained in this Section shall limit Landlord’s right
to reimbursement from Tenant for maintenance, repair costs and replacement
costs as provided elsewhere in this Lease. 
Tenant understands that it shall not make repairs at Landlord’s expense
or by rental offset.  Except as provided
in Sections 11.1 and 12.1 below, 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 the making of any repairs, alterations or improvements to
any portion of the Building, including repairs to the Premises, nor shall any
related activity by Landlord constitute an actual or constructive

 

6

 

eviction; provided, however, that in making
repairs, alterations or improvements, Landlord shall interfere as little as
reasonably practicable with the conduct of Tenant’s business in the Premises.

 

SECTION 7.3.                                     ALTERATIONS
.  Tenant shall make no alterations, additions
or improvements to the Premises without the prior written consent of
Landlord.  Landlord’s consent shall not
be unreasonably withheld as long as the proposed changes do not affect the
structural, electrical or mechanical components or systems of the Building, are
not visible from the exterior of the Premises, and utilize only building
standard materials.  Landlord may
impose, as a condition to its consent, any requirements that Landlord in its
discretion may deem reasonable or desirable, 
including but not limited to a requirement that all work be covered by a
lien and completion bond satisfactory to Landlord and requirements as to the
manner, time, and contractor for performance of the work.  Without limiting the generality of the
foregoing, Tenant shall use Landlord’s designated mechanical and electrical
contractors for all work affecting the mechanical or electrical systems of the
Building.  Should Tenant perform any
work that would necessitate any ancillary Building modification or other
expenditure by Landlord, then Tenant shall promptly fund the cost thereof to
Landlord.  Tenant shall obtain all
required permits for the work and shall perform the work in compliance with all
applicable laws, regulations and ordinances, and Landlord shall be entitled to
a supervision fee in the amount of five percent (5%) of the cost of the
work.  Under no circumstances shall
Tenant make any improvement which incorporates asbestos-containing construction
materials into the Premises.  Any
request for Landlord’s consent shall be made in writing and shall contain
architectural plans describing the work in detail reasonably satisfactory to
Landlord.  Landlord may elect to cause
its architect to review Tenant’s architectural plans, and the reasonable cost
of that review shall be reimbursed by Tenant. 
Should the work proposed by Tenant modify the internal configuration of
the Premises, then Tenant shall, at its expense, furnish Landlord with as-built
drawings and CAD disks compatible with Landlord’s systems.  Unless Landlord otherwise agrees in writing,
all alterations, additions or improvements affixed to the Premises (excluding
moveable trade fixtures and furniture) shall become the property of Landlord
and shall be surrendered with the Premises at the end of the Term, except that Landlord
may, by notice to Tenant given at the time of Landlord’s consent to the
alteration or improvement, require Tenant to remove by the Expiration Date, or
sooner termination date of this Lease, all or any alterations, decorations,
fixtures, additions, improvements and the like installed either by Tenant or by
Landlord at Tenant’s request.  Tenant
shall repair any damage to the Premises arising from that removal and restore
the affected area to its pre-existing condition, reasonable wear and tear
excepted.  Landlord may require Tenant
to remove an improvement provided as part of the initial build-out pursuant to
Exhibit X, if any, if and only if the improvement is a non-building standard
item and Tenant is notified of the requirement prior to the build-out.  Except as otherwise provided in this Lease
or in any Exhibit to this Lease, should Landlord make any alteration or
improvement to the Premises at the request of Tenant, Landlord shall be
entitled to prompt payment from Tenant of the cost thereof, inclusive of the
standard coordination fee of Landlord’s management agent.

 

SECTION 7.4.                                     MECHANIC’S
LIENS.  Tenant shall keep the Premises
free from any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant. 
Upon request by Landlord, Tenant shall promptly cause any such lien to
be released by posting a bond in accordance with California Civil Code Section
3143 or any successor statute.  In the
event that Tenant shall not, within thirty (30) days following the imposition
of any lien, cause the lien to be released of record by payment or posting of a
proper bond, Landlord shall have, in addition to all other available remedies,
the right to cause the lien to be released by any means it deems proper,
including payment of or defense against the claim giving rise to the lien.  All expenses so incurred by Landlord,
including Landlord’s attorneys’ fees, shall be reimbursed by Tenant promptly
following Landlord’s demand, together with interest from the date of payment by
Landlord at the maximum rate permitted by law until paid.  Tenant shall give Landlord no less than
twenty (20) days’ prior notice in writing before commencing construction of any
kind on the Premises so that Landlord may post and maintain notices of nonresponsibility
on the Premises.

 

SECTION 7.5.                                     ENTRY
AND INSPECTION.  Landlord shall at all
reasonable times have the right to enter the Premises to inspect them, to
supply services in accordance with this Lease, to protect the interests of
Landlord in the Premises, to make repairs and renovations as reasonably deemed
necessary by Landlord, and to submit the Premises to prospective or actual
purchasers or encumbrance holders (or, during the final twelve months of the
Term or when an uncured Tenant default exists, to prospective tenants), all
without being deemed to have caused an eviction of Tenant and without abatement
of rent except as provided elsewhere in this Lease.  Landlord shall at all times have and retain a key which unlocks
all of the doors in the Premises, excluding Tenant’s vaults and safes, and
Landlord shall have the right to use any and all means which Landlord may deem
proper to open the doors in an emergency in order to obtain entry to the
Premises, and any entry to the Premises obtained by Landlord shall not under
any circumstances be deemed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or any eviction of Tenant from the Premises.

 

SECTION 7.6.                                     SPACE
PLANNING AND SUBSTITUTION.  Landlord
shall have the right, upon providing not less than forty-five (45) days written
notice, to move Tenant to other space of comparable size in the Building or in
the Project.  The new space shall be
provided with improvements of comparable quality to those within the
Premises.  Landlord shall pay the
reasonable out-of-pocket costs to relocate and reconnect Tenant’s personal
property and equipment within the new space; provided that Landlord may elect
to cause such work to be done by its contractors.  Landlord shall also reimburse Tenant for such other reasonable
out-of-pocket costs that Tenant may incur in connection

 

7

 

with the relocation, including without
limitation necessary stationery revisions, provided that a reasonable estimate
thereof is given to Landlord within twenty (20) days following Landlord’s
notice.  In no event, however, shall
Landlord be obligated to incur or fund total relocation costs, exclusive of
tenant improvement expenditures, in an amount in excess of two (2) months of Basic
Rent at the rate then payable hereunder. 
Within ten (10) days following request by Landlord, Tenant shall execute
an amendment to this Lease prepared by Landlord to memorialize the relocation.  Should Tenant fail timely to execute and
deliver the amendment to Landlord, or should Tenant thereafter fail to comply
with the terms thereof, then Landlord may at its option elect to terminate this
Lease upon not less than sixty (60) days prior written notice to Tenant.  Upon the effective date of any termination
of this Lease, Tenant shall vacate the Premises in accordance with Section
15.3.

 

ARTICLE VIII.  TAXES AND ASSESSMENTS ON TENANT’S PROPERTY

 

Tenant
shall be liable for and shall pay before delinquency, all taxes and assessments
levied against all personal property of Tenant located in the Premises.  When possible Tenant shall cause its
personal property to be assessed and billed separately from the real property
of which the Premises form a part.  If
any taxes on Tenant’s personal property are levied against Landlord or
Landlord’s property and if Landlord pay s the same, or if the assessed value of
Landlord’s property is increased by the inclusion of a value placed upon the
personal property of Tenant and if Landlord pays the taxes based upon the increased
assessment, Tenant shall pay to Landlord the taxes so levied against Landlord
or the proportion of the taxes resulting from the increase in the assessment.

 

ARTICLE IX. 
ASSIGNMENT AND SUBLETTING

 

SECTION 9.1.                                     RIGHTS
OF PARTIES.

 

(a)                                  Tenant may not,
either voluntarily or by operation of law, assign, sublet , encumber, or
otherwise transfer all or any part of Tenant’s interest in this Lease, or
permit the Premises to be occupied by anyone other than Tenant, without
Landlord’s prior written consent, which consent shall not unreasonably be
withheld in accordance with the provisions of Section 9.1.(c).  For purposes of this Lease, references to
any subletting, sublease or variation thereof shall be deemed to apply not only
to a sublease effected directly by Tenant, but also to a sub-subletting or an
assignment of subtenancy by a subtenant at any level.  No assignment (whether voluntary, involuntary or by operation of
law) and no subletting shall be valid or effective without Landlord’s prior
written consent and, at Landlord’s election, shall constitute a material
default of this Lease.  Landlord shall
not be deemed to have given its consent to any assignment or subletting by any
other course of action, including its acceptance of any name for listing in the
Building directory.  To the extent not
prohibited by provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq.
(the “Bankruptcy Code”), including Section 365(f)(1), Tenant on behalf of
itself and its creditors, administrators and assigns waives the applicability
of Section 365(e) of the Bankruptcy Code unless the proposed assignee of the
Trustee for the estate of the bankrupt meets Landlord’s standard for consent as
set forth in Section 9.1(c) of this Lease. 
If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, any and all monies or other considerations
to be delivered in connection with the assignment shall be delivered to
Landlord, shall be and remain the exclusive property of Landlord and shall not
constitute property of Tenant or of the estate of Tenant within the meaning of
the Bankruptcy Code.  Any person or
entity to which this Lease is assigned pursuant to the provisions of the
Bankruptcy Code shall be deemed to have assumed all of the obligations arising
under this Lease on and after the date of the assignment, and shall upon demand
execute and deliver to Landlord an instrument confirming that assumption.

 

(b)                                 If Tenant is a
corporation, limited liability company, unincorporated association or partnership,
the transfer of any stock or interest in the entity which results in a change
in voting control shall be deemed an assignment within the meaning and
provisions of this Article.  In
addition, any change in the status of the entity, such as, but not limited to,
the withdrawal of a general partner, shall be deemed an assignment within the
meaning of this Article.

 

(c)                                  If Tenant or any
subtenant hereunder desires to transfer an interest in this Lease, Tenant shall
first notify Landlord and request in writing Landlord’s consent to the
transfer.  Tenant shall also submit in
writing to Landlord:  (i) the name and
address of the proposed transferee; (ii) the nature of any proposed subtenant’s
or assignee’s business to be carried on in the Premises; (iii) the terms and
provisions of any proposed sublease or assignment (including without limitation
the rent and other economic provisions, term, improvement obligations and
commencement date); (iv) evidence that the proposed assignee or subtenant will
comply with the requirements of Exhibit D to this Lease; and (v) any other
information requested by Landlord and reasonably related to the transfer.  Except as provided in Subsection (d) of this
Section, Landlord shall not unreasonably withhold its consent, provided:  (1) the use of the Premises will be
consistent with the provisions of this Lease and with Landlord’s commitment to
other tenants of the Building and Project; (2) any proposed subtenant or
assignee demonstrates that it is financially responsible by submission to
Landlord of all reasonable information as Landlord may request concerning the
proposed subtenant or assignee, including, but

 

8

 

not limited to, a balance sheet of the
proposed subtenant or assignee as of a date within ninety (90) days of the
request for Landlord’s consent and statements of income or profit and loss of
the proposed subtenant or assignee for the two-year period preceding the
request for Landlord’s consent; (3) the proposed subtenant or assignee is, in
Landlord’s good faith determination, appropriate for tenancy in a first class
office project; (4) the proposed assignee or subtenant is neither an existing
tenant or occupant of the Building or Project nor a prospective tenant with
whom Landlord is then actively negotiating; and (5) the proposed transfer will
not impose additional burdens or security risks on Landlord.  If Landlord consents to the proposed
transfer, then the transfer may be effected within ninety (90) days after the
date of the consent upon the terms described in the information furnished to
Landlord; provided that any material change in the terms shall be subject to
Landlord’s consent as set forth in this Section.  Landlord shall approve or disapprove any requested transfer within
thirty (30) days following receipt of Tenant’s written notice and the
information set forth above.  Tenant
shall pay to Landlord a transfer fee of Five Hundred Dollars ($500.00) if and
when any transfer request submitted by Tenant is approved.

 

(d)                                 Notwithstanding
the provisions of Subsection (c) above, in lieu of consenting to a proposed
assignment or subletting, Landlord may elect to (i) sublease the Premises (or
the portion proposed to be subleased), or take an assignment of Tenant’s
interest in this Lease, upon the same terms as offered to the proposed
subtenant or assignee (excluding terms relating to the purchase of personal
property, the use of Tenant’s name or the continuation of Tenant’s business),
or (ii) terminate this Lease as to the portion of the Premises proposed to be
subleased or assigned with a proportionate abatement in the rent payable under
this Lease, effective on the date that the proposed sublease or assignment
would have commenced.  Landlord may
thereafter, at its option, assign or relet any space so recaptured to any third
party, including without limitation the proposed transferee identified by
Tenant.

 

(e)                                  Should any
assignment or subletting occur, Tenant shall promptly pay or cause to be paid
to Landlord, as additional rent, fifty percent (50%) of any amounts paid by the
assignee or subtenant, however described and whether funded during or after the
Lease Term, to the extent such amounts are in excess of the sum of (i) the
scheduled rental sums payable by Tenant hereunder (or, in the event of a
subletting of only a portion of the Premises, the rent allocable to such
portion as reasonably determined by Landlord) and (ii) the direct out-of-pocket
costs, as evidenced by third party invoices provided to Landlord, incurred by
Tenant to effect the transfer, which costs shall be amortized over the
remaining Term of this Lease or, if shorter, over the term of the
sublease.  Upon request by Landlord,
Tenant and all other parties to the transfer shall memorialize in writing the
amounts to be paid pursuant to this paragraph.

 

(f)                                    Notwithstanding
the foregoing, provided Tenant is not then in default hereunder, Tenant may,
without Landlord’s prior consent but with prior written notice to Landlord and
subject to the provisions of Section 9.2, assign or transfer its right, title
and interest in this Lease or sublease the Premises to any of the following:
(i) any entity resulting from a merger or consolidation with Tenant; (ii) any
entity succeeding to the business and assets of Tenant; or (iii) any entity
controlling, controlled by, or under common control with, Tenant (collectively,
“Tenant Affiliate”).

 

SECTION 9.2.                                     EFFECT
OF TRANSFER.  No subletting or assignment,
even with the consent of Landlord, shall relieve Tenant, or any
successor-in-interest to Tenant hereunder, of its obligation to pay rent and to
perform all its other obligations under this Lease.  Moreover, Tenant shall indemnify and hold Landlord harmless, as
provided in Section 10.3, for any act or omission by an assignee or subtenant.  Each assignee, other than Landlord, shall be
deemed to assume all obligations of Tenant under this Lease and shall be liable
jointly and severally with Tenant for the payment of all rent, and for the due
performance of all of Tenant’s obligations, under this Lease.  Such joint and several liability shall not
be discharged or impaired by any subsequent modification or extension of this
Lease.  No transfer shall be binding on
Landlord unless any document memorializing the transfer is delivered to Landlord,
both the assignee/subtenant and Tenant deliver to Landlord an executed consent
to transfer instrument prepared by Landlord and consistent with the
requirements of this Article, and the assignee/subtenant independently complies
with all of the insurance requirements of Tenant as set forth in Exhibit D and
evidence thereof is delivered to Landlord. 
The acceptance by Landlord of any payment due under this Lease from any
other person shall not be deemed to be a waiver by Landlord of any provision of
this Lease or to be a consent to any transfer. 
Consent by Landlord to one or more transfers shall not operate as a
waiver or estoppel to the future enforcement by Landlord of its rights under
this Lease.  In addition to the
foregoing, no change in the status of Tenant or any party jointly and severally
liable with Tenant as aforesaid (e.g., by conversion to a limited liability
company or partnership) shall serve to abrogate the liability of any person or
entity for the obligations of Tenant, including any obligations that may be
incurred by Tenant after the status change by exercise of a preexisting right
in this Lease.

 

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

 

(a)                                  Tenant hereby
irrevocably assigns to Landlord all of Tenant’s interest in all rentals and
income arising from any sublease of the Premises, and Landlord may collect such
rent and income and apply same toward Tenant’s obligations under this Lease;
provided, however, that until a default occurs in the performance of Tenant’s
obligations under this Lease, Tenant shall have the right to

 

9

 

receive and collect the sublease
rentals.  Landlord shall not, by reason
of this assignment or the collection of sublease rentals, be deemed liable to
the subtenant for the performance of any of Tenant’s obligations under the
sublease.  Tenant hereby irrevocably
authorizes and directs any subtenant, upon receipt of a written notice from
Landlord stating that an uncured default exists in the performance of Tenant’s
obligations under this Lease, to pay to Landlord all sums then and thereafter
due under the sublease.  Tenant agrees
that the subtenant may rely on that notice without any duty of further inquiry
and notwithstanding any notice or claim by Tenant to the contrary.  Tenant shall have no right or claim against
the subtenant or Landlord for any rentals so paid to Landlord.  In the event Landlord collects amounts from
subtenants that exceed the total amount then due from Tenant hereunder,
Landlord shall promptly remit the excess to Tenant.

 

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

 

(c)                                  Tenant agrees that
Landlord may, at its sole option, authorize a subtenant of the Premises to cure
a default by Tenant under this Lease. 
Should Landlord accept such cure, the subtenant shall have a right of
reimbursement and offset from and against Tenant under the applicable sublease.

 

ARTICLE X. 
INSURANCE AND INDEMNITY

 

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

 

SECTION 10.2.                              LANDLORD’S
INSURANCE.  Landlord may, at its election,
provide any or all of the following types of insurance, with or without
deductible and in amounts and coverages as may be determined by Landlord in its
discretion:  property insurance, subject
to standard exclusions, covering the Building or Project, and such other risks
as Landlord or its mortgagees may from time to time deem appropriate, and
commercial general liability coverage. 
Landlord shall not be required to carry insurance of any kind on any
tenant improvements or alterations in the Premises installed by Tenant or its
contractors or otherwise removable by Tenant (collectively, “Tenant
Installations”), as well as any trade fixtures, furnishings, equipment,
interior plate glass, signs and all items of personal property in the Premises,
and Landlord shall not be obligated to repair or replace any of the foregoing
items should damage occur.  All proceeds
of insurance maintained by Landlord upon the Building and Project shall be the
property of Landlord, whether or not Landlord is obligated to or elects to make
any repairs.

 

SECTION 10.3.                              TENANT’S
INDEMNITY.  To the fullest extent
permitted by law, but subject to Section 10.5 below, Tenant shall defend,
indemnify and hold harmless Landlord, its agents, lenders, and any and all
affiliates of Landlord, from and against any and all claims, liabilities, costs
or expenses arising either before or after the Commencement Date from Tenant’s
use or occupancy of the Premises, the Building or the Common Areas, or from the
conduct of its business, or from any activity, work, or thing done, permitted
or suffered by Tenant or its agents, employees, subtenants, vendors,
contractors, invitees or licensees in or about the Premises, the Building or
the Common Areas, or from any default in the performance of any obligation on
Tenant’s part to be performed under this Lease, or from any act or negligence
of Tenant or its agents, employees, subtenants, vendors, contractors, invitees
or licensees.  Landlord may, at its
option, require Tenant to assume Landlord’s defense in any action covered by
this Section through counsel reasonably satisfactory to Landlord.

 

SECTION 10.4.                              LANDLORD’S
NONLIABILITY.  Landlord shall not be liable
to Tenant, its employees, agents and invitees, and Tenant hereby waives all
claims against Landlord, its employees and agents for loss of or damage to any
property, or any injury to any person, or loss or interruption of business or
income, resulting from any condition including, but not limited to, fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak or flow from or into any part of the Premises or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building, whether the damage or injury results from conditions arising in
the Premises or in other portions of the Building.  It is understood that any such condition may require the
temporary evacuation or closure of all or a portion of the Building.  Should Tenant elect to receive any service
from a concessionaire, licensee or third party tenant of Landlord, Tenant shall
not seek recourse against Landlord for any breach or liability of that service
provider.  Neither Landlord nor its
agents shall be liable for interference with light or other similar intangible
interests.  Tenant shall immediately
notify Landlord in case of fire or accident in the Premises, the Building or
the Project and of defects in any improvements or equipment.

 

10

 

SECTION 10.5.                              WAIVER
OF SUBROGATION.                      Landlord and
Tenant each hereby waives all rights of recovery against the other on account
of loss and damage occasioned to the property of such waiving party to the
extent that the waiving party is entitled to proceeds for such loss and damage
under any property insurance policies carried or otherwise required to be
carried by this Lease.  By this waiver
it is the intent of the parties that neither Landlord nor Tenant shall be
liable to any insurance company (by way of subrogation or otherwise) insuring
the other party for any loss or damage insured against under any property
insurance policies, even though such loss or damage might be occasioned by the
negligence of such party, its agents, employees, contractors or invitees.  The foregoing waiver by Tenant shall also
inure to the benefit of Landlord’s management agent for the Building.

 

ARTICLE XI. DAMAGE OR DESTRUCTION

 

SECTION 11.1.                              RESTORATION.

 

(a)                                  If the Building of
which the Premises are a part is damaged as the result of an event of casualty,
then subject to the provisions below, Landlord shall repair that damage as soon
as reasonably possible unless:  (i)
Landlord reasonably determines that the cost of repair would exceed ten percent
(10%) of the full replacement cost of the Building (“Replacement Cost”) and the
damage is not covered by Landlord’s fire and extended coverage insurance (or by
a normal extended coverage policy should Landlord fail to carry that
insurance); or (ii) Landlord reasonably determines that the cost of repair
would exceed twenty-five percent (25%) of the Replacement Cost; or (iii)
Landlord reasonably determines that the cost of repair would exceed ten percent
(10%) of the Replacement Cost and the damage occurs during the final twelve
(12) months of the Term.  Should
Landlord elect not to repair the damage for one of the preceding reasons,
Landlord shall so notify Tenant in the “Casualty Notice” (as defined below),
and this Lease shall terminate as of the date of delivery of that notice.

 

(b)                                 As soon as
reasonably practicable following the casualty event but not later than sixty
(60) days thereafter, Landlord shall notify Tenant in writing (“Casualty
Notice”) of Landlord’s election, if applicable, to terminate this Lease.  If this Lease is not so terminated, the
Casualty Notice shall set forth the anticipated period for repairing the
casualty damage.  If the anticipated
repair period exceeds two hundred seventy (270) days and if the damage is so
extensive as to reasonably prevent Tenant’s substantial use and enjoyment of
the Premises, then Tenant may elect to terminate this Lease by written notice
to Landlord within ten (10) days following delivery of the Casualty Notice.

 

(c)                                  To the extent and
for the period that Landlord is entitled to reimbursement from the proceeds of
rental interruption insurance carried by Landlord as part of Operating
Expenses, the rental to be paid under this Lease shall be abated in the same
proportion that the floor area of the Premises that is rendered unusable by the
damage from time to time bears to the tot al floor area of the Premises.

 

(d)                                 Notwithstanding
the provisions of subsections (a), (b) and (c) of this Section, but subject to
Section 10.5, the cost of any repairs shall be borne by Tenant, and Tenant
shall not be entitled to rental abatement or termination rights, if the damage
is due to the fault or neglect of Tenant or its employees, subtenants,
contractors, invitees or representatives. 
In addition, the provisions of this Section shall not be deemed to
require Landlord to repair any Tenant Installations, fixtures and other items
that Tenant is obligated to insure pursuant to Exhibit D or any other provision
of this Lease.

 

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

 

ARTICLE XII. EMINENT DOMAIN

 

SECTION 12.1.                              TOTAL
OR PARTIAL TAKING.  If all or a material portion
of the Premises is taken by any lawful authority by exercise of the right of
eminent domain, or sold to prevent a taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to the authority.  In the
event title to a portion of the Building or Project, other than the Premises,
is taken or sold in lieu of taking, and if Landlord elects to restore the
Building in such a way as to alter the Premises materially, either party may
terminate this Lease, by written notice to the other party, effective on the
date of vesting of title.  In the event neither
party has elected to terminate this Lease as provided above, then Landlord
shall promptly, after receipt of a sufficient condemnation award, proceed to
restore the Premises to substantially their condition prior to the taking, and
a proportionate allowance shall be made to Tenant for the rent corresponding to
the time during which, and to the part of the Premises of which, Tenant is
deprived on account of the taking and restoration.  In the event of a taking, Landlord shall be entitled to the
entire amount of the condemnation award without deduction for any estate or
interest of Tenant; provided that nothing in this Section shall be deemed to
give Landlord any interest in, or prevent Tenant from seeking any award against
the taking

 

11

 

authority for, the taking of personal
property and fixtures belonging to Tenant or for relocation or business
interruption expenses recoverable from the taking authority.

 

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

 

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

 

ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE

 

SECTION 13.1.                              SUBORDINATION.  At the option of Landlord or any of its
mortgagees/deed of trust beneficiaries, this Lease shall be either superior or
subordinate to all ground or underlying leases, mortgages and deeds of trust,
if any, which may hereafter affect the Building, and to all renewals,
modifications, consolidations, replacements and extensions thereof; provided,
that so long as Tenant is not in default under this Lease, this Lease shall not
be terminated or Tenant’s quiet enjoyment of the Premises disturbed in the
event of termination of any such ground or underlying lease, or the foreclosure
of any such mortgage or deed of trust, to which this Lease has been
subordinated pursuant to this Section. 
In the event of a termination or foreclosure, Tenant shall become a
tenant of and attorn to the successor-in-interest to Landlord upon the same
terms and conditions as are contained in this Lease, and shall promptly execute
any instrument reasonably required by Landlord’s successor for that purpose.  Tenant shall also, within ten (10) days
following written request of Landlord (or the beneficiary under any deed of
trust encumbering the Building), execute and deliver all instruments as may be
required from time to time by Landlord or such beneficiary (including without
limitation any subordination, nondisturbance and attornment agreement in the
form customarily required by such beneficiary) to subordinate this Lease and
the rights of Tenant under this Lease to any ground or underlying lease or to
the lien of any mortgage or deed of trust; provided, however, that any such
beneficiary may, by written notice to Tenant given at any time, subordinate the
lien of its deed of trust to this Lease. 
Tenant shall agree that any purchaser at a foreclosure sale or lender
taking title under a deed in lieu of foreclosure shall not be responsible for
any act or omission of a prior landlord, shall not be subject to any offsets or
defenses Tenant may have against a prior landlord, and shall not be liable for
the return of any security deposit not actually recovered by such purchaser or
bound by any rent paid in advance of the calendar month in which the transfer
of title occurred; provided that the foregoing shall not release the applicable
prior landlord from any liability for those obligations.  Tenant acknowledges that Landlord’s
mortgagees and successors-in-interest and all beneficiaries under deeds of
trust encumbering the Building are intended third party beneficiaries of this
Section.

 

SECTION 13.2.                              ESTOPPEL
CERTIFICATE.  Tenant shall, within ten (10)
days following written notice from Landlord, execute, acknowledge and deliver
to Landlord, in any form that Landlord may reasonably require, a statement in
writing in favor of Landlord and/or any prospective purchaser or encumbrancer
of the Building (i) certifying that this Lease is unmodified and in full force
and effect (or, if modified, stating the nature of the modification and
certifying that this Lease, as modified, is in full force and effect) and the
dates to which the rental, additional rent and other charges have been paid in
advance, if any, and (ii) acknowledging that, to Tenant’s knowledge, there are
no uncured defaults on the part of Landlord, or specifying each default if any
are claimed, and (iii) setting forth all further information that Landlord may
reasonably require.  Tenant’s statement
may be relied upon by any prospective purchaser or encumbrancer of all or any
portion of the Building or Project.  In
addition to Landlord’s other rights and remedies, Tenant’s failure to deliver
any estoppel statement within the provided time shall be conclusive upon Tenant
that (i) this Lease is in full force and effect, without modification except as
may be represented by Landlord, (ii) there are no uncured defaults in
Landlord’s performance, and (iii) not more than one month’s rental has been
paid in advance.

 

ARTICLE XIV. DEFAULTS AND REMEDIES

 

SECTION 14.1.                              TENANT’S
DEFAULTS.  In addition to any other event
of default set forth in this Lease, the occurrence of any one or more of the
following events shall constitute a default by Tenant:

 

(a)                                  The failure by
Tenant to make any payment of rent required to be made by Tenant, as and when
due, where the failure continues for a period of three (3) days after written
notice from Landlord to Tenant; provided, however, that any such notice shall
be in lieu of, and not in addition to, any notice required under California
Code of Civil Procedure Section 1161 and 1161(a) as amended.

 

12

 

For purposes of these default and remedies
provisions, the term “additional rent” shall be deemed to include all amounts
of any type whatsoever other than Basic Rent to be paid by Tenant pursuant to
the terms of this Lease.

 

(b)                                 The assignment,
sublease, encumbrance or other transfer of the Lease by Tenant, either
voluntarily or by operation of law, whether by judgment, execution, transfer by
intestacy or testacy, or other means, without the prior written consent of
Landlord unless otherwise authorized herein.

 

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

 

(d)                                 The failure or
inability by Tenant to observe or perform any of the covenants or provisions of
this Lease to be observed or performed by Tenant, other than as specified in
any other subsection of this Section, where the failure continues for a period
of thirty (30) days after written notice from Landlord to Tenant; provided,
however, that any such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Section 1161 and
1161(a) as amended.  However, if the
nature of the failure is such that more than thirty (30) days are reasonably required
for its cure, then Tenant shall not be deemed to be in default if Tenant
commences the cure within thirty (30) days, and thereafter diligently pursues
the cure to completion.

 

(e)                                  (i)  The making by Tenant of any general
assignment for the benefit of creditors; (ii) the filing by or against Tenant
of a petition to have Tenant adjudged a Chapter 7 debtor under the Bankruptcy
Code or to have debts discharged or a petition for reorganization or
arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenant, the same is dismissed within sixty (60) days);
(iii) the appointment of a trustee or receiver to take possession of
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease, if possession is not restored to Tenant within thirty
(30) days; (iv) the attachment, execution or other judicial seizure of
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease, where the seizure is not discharged within thirty (30)
days; or (v) Tenant’s convening of a meeting of its creditors for the purpose
of effecting a moratorium upon or composition of its debts.  Landlord shall not be deemed to have
knowledge of any event described in this subsection unless notification in
writing is received by Landlord, nor shall there be any presumption
attributable to Landlord of Tenant’s insolvency.  In the event that any provision of this subsection is contrary to
applicable law, the provision shall be of no force or effect.

 

SECTION 14.2.                              LANDLORD’S
REMEDIES.

 

(a)                                  In the event of
any default by Tenant, then in addition to any other remedies available to
Landlord, Landlord may exercise the following remedies:

 

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

 

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

 

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

 

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

 

(4)  Any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or which
in the ordinary course of things would be likely to result from Tenant’s
default, including, but not limited to, the cost of recovering possession of
the Premises, commissions and other expenses of reletting, including necessary
repair, renovation, improvement and alteration of the Premises for a new
tenant, reasonable attorneys’ fees, and any other reasonable costs; and

 

(5)  At
Landlord’s election, all other amounts in addition to or in lieu of the
foregoing as may be permitted by law. 
The term “rent” as used in this Lease shall be deemed to mean the Basic
Rent and all other sums required to be paid by Tenant to Landlord pursuant to
the terms of this Lease, including without limitation any sums that may be
owing from Tenant pursuant to Section 4.3 of this Lease.  Any sum, other than Basic Rent, shall be
computed on the basis of the average monthly amount accruing during the
twenty-four (24) month period immediately prior to default, except that if it
becomes necessary to compute such rental before the twenty-four (24) month
period has occurred, then the computation shall be on the basis of the average
monthly amount during the shorter

 

13

 

period. 
As used in subparagraphs (1) and (2) above, the “worth at the time of
award” shall be computed by allowing interest at the rate of ten percent (10%)
per annum.  As used in subparagraph (3)
above, the “worth at the time of award” shall be computed by discounting the
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).

 

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

 

(b)                                 The various rights
and remedies reserved to Landlord in this Lease or otherwise shall be
cumulative and, except as otherwise provided by California law, Landlord may
pursue any or all of its rights and remedies at the same time.  No delay or omission of Landlord to exercise
any right or remedy shall be construed as a waiver of the right or remedy or of
any breach or default by Tenant.  The
acceptance by Landlord of rent shall not be a (i) waiver of any preceding
breach or default by Tenant of any provision of this Lease, other than the
failure of Tenant to pay the particular rent accepted, regardless of Landlord’s
knowledge of the preceding breach or default at the time of acceptance of rent,
or (ii) a waiver of Landlord’s right to exercise any remedy available to
Landlord by virtue of the breach or default. 
The acceptance of any payment from a debtor in possession, a trustee, a
receiver or any other person acting on behalf of Tenant or Tenant’s estate
shall not waive or cure a default under Section 14.1.  No payment by Tenant or receipt by Landlord of a lesser amount
than the rent required by this Lease shall be deemed to be other than a partial
payment on account of the earliest due stipulated rent, nor shall any
endorsement or statement on any check or letter be deemed an accord and
satisfaction and Landlord shall accept the check or payment without prejudice
to Landlord’s right to recover the balance of the rent or pursue any other
remedy available to it.  Tenant hereby
waives any right of redemption or relief from forfeiture under California Code
of Civil Procedure Section 1174 or 1179, or under any other present or future
law, in the event this Lease is terminated by reason of any default by
Tenant.  No act or thing done by
Landlord or Landlord’s agents during the Term shall be deemed an acceptance of
a surrender of the Premises, and no agreement to accept a surrender shall be
valid unless in writing and signed by Landlord.  No employee of Landlord or of Landlord’s agents shall have any
power to accept the keys to the Premises prior to the termination of this
Lease, and the delivery of the keys to any employee shall not operate as a
termination of the Lease or a surrender of the Premises.

 

SECTION 14.3.                              LATE
PAYMENTS.

 

(a)                                  Any rent due under
this Lease that is not paid to Landlord within five (5) days of the date when
due shall bear interest at the maximum rate permitted by law from the date due
until fully paid.  The payment of
interest shall not cure any default by Tenant under this Lease.  In addition, Tenant acknowledges that the
late payment by Tenant to Landlord of rent will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult and impracticable to ascertain. 
Those costs may include, but are not limited to, administrative,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any ground lease, mortgage or trust deed covering the
Premises.  Accordingly, if any rent due
from Tenant shall not be received by Landlord or Landlord’s designee within
five (5) days after the date due, then Tenant shall pay to Landlord, in
addition to the interest provided above, a late charge for each delinquent
payment equal to the greater of (i) four percent (4%) of that delinquent
payment or (ii) two hundred and fifty dollars ($250.00).  Acceptance of a late charge by Landlord
shall not constitute a waiver of Tenant’s default with respect to the overdue
amount, nor shall it prevent Landlord from exercising any of its other rights
and remedies.

 

(b)                                 Following each
second consecutive installment of rent that is not paid within five (5) days
following notice of nonpayment from Landlord, Landlord shall have the option
(i) to require that beginning with the first payment of rent next due, rent
shall no longer be paid in monthly installments but shall be payable quarterly
three (3) months in advance and/or (ii) to require that Tenant increase the
amount, if any, of the Security Deposit by one hundred percent (100%).  Should Tenant deliver to Landlord, at any
time during the Term, two (2) or more insufficient checks, the Landlord may
require that all monies then and thereafter due from Tenant be paid to Landlord
by cashier’s check.

 

SECTION 14.4.                              RIGHT
OF LANDLORD TO PERFORM.  All covenants
and agreements to be performed by Tenant under this Lease shall be performed at
Tenant’s sole cost and expense and without any abatement of rent or right of
set -off.  If Tenant fails to pay any
sum of money, or fails to perform any other act on its part to be performed
under this Lease, and the failure continues beyond any applicable grace period
set forth in Section 14.1, then in addition to any other available remedies,
Landlord may, at its election, make the payment or perform the other act on Tenant’s
part.  Landlord’s election to make the
payment or perform the act on Tenant’s part shall not give rise to any
responsibility of Landlord to continue making the same or similar payments or
performing the same or similar acts. 
Tenant shall, promptly upon demand by Landlord, reimburse Landlord for
all sums paid

 

14

 

by Landlord and all necessary incidental
costs, together with interest at the maximum rate permitted by law from the
date of the payment by Landlord.

 

SECTION 14.5.                              DEFAULT
BY LANDLORD.  Landlord shall not be deemed
to be in default in the performance of any obligation under this Lease unless
and until it has failed to perform the obligation within thirty (30) days after
written notice by Tenant to Landlord specifying in reasonable detail the nature
and extent of the failure; provided, however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion.

 

SECTION 14.6.                              EXPENSES
AND LEGAL FEES.  Should either Landlord or
Tenant bring any action in connection with this Lease, the prevailing party
shall be entitled to recover as a part of the action its reasonable attorneys’
fees, and all other costs.  The
prevailing party for the purpose of this paragraph shall be determined by the
trier of the facts.

 

SECTION 14.7.                              WAIVER
OF JURY TRIAL/RIGHT TO ARBITRATE.

 

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

 

(b)                                  SHOULD
A DISPUTE ARISE BETWEEN THE PARTIES REGARDING ANY MATTER DESCRIBED ABOVE, THEN
EXCEPT WITH RESPECT TO ACTIONS FOR UNLAWFUL OR FORCIBLE DETAINER EITHER PARTY
MAY CAUSE THE DISPUTE TO BE SUBMITTED TO EITHER JAMS/ENDISPUTE (“JAMS”) OR THE
AMERICAN ARBITRATION ASSOCIATION (“AAA”), OR THEIR SUCCESSORS, IN THE COUNTY IN
WHICH THE BUILDING IS SITUATED FOR BINDING ARBITRATION BEFORE A SINGLE
ARBITRATOR.  HOWEVER, EACH PARTY
RESERVES THE RIGHT TO SEEK A PROVISIONAL REMEDY BY JUDICIAL ACTION.  NO ARBITRATION ELECTION BY EITHER PARTY
PURSUANT TO THIS SUBSECTION SHALL BE EFFECTIVE IF MADE LATER THAN THIRTY (30)
DAYS FOLLOWING SERVICE OF A JUDICIAL SUMMONS AND COMPLAINT BY OR UPON SUCH
PARTY CONCERNING THE DISPUTE.  THE
ARBITRATION ELECTION SHALL DESIGNATE WHETHER THE ARBITRATION WILL BE CONDUCTED
WITH JAMS OR AAA.  THE ARBITRATION SHALL
BE CONDUCTED IN ACCORDANCE WITH THE RULES OF PRACTICE AND PROCEDURE OF JAMS OR
THE COMMERCIAL ARBITRATION RULES OF THE AAA, AS APPLICABLE, AND OTHERWISE
PURSUANT TO THE CALIFORNIA ARBITRATION ACT (CODE OF CIVIL PROCEDURE SECTIONS
1280 ET SEQ.).  NOTWITHSTANDING THE
FOREGOING, THE ARBITRATOR IS SPECIFICALLY DIRECTED TO LIMIT DISCOVERY TO THAT
WHICH IS ESSENTIAL TO THE EFFECTIVE PROSECUTION OR DEFENSE OF THE ACTION, AND
IN NO EVENT SHALL SUCH DISCOVERY BY EITHER PARTY INCLUDE MORE THAN ONE
NON-EXPERT WITNESS DEPOSITION UNLESS BOTH PARTIES OTHERWISE AGREE.  THE ARBITRATOR SHALL, TO THE EXTENT
APPLICABLE, FOLLOW THE SUBSTANTIVE LAW OF CALIFORNIA AND SHALL RENDER A
REASONED WRITTEN DECISION WITHIN TWENTY DAYS FOLLOWING THE HEARING.  THE ARBITRATOR SHALL APPORTION THE COSTS OF
THE ARBITRATION, TOGETHER WITH THE ATTORNEYS’ FEES OF THE PARTIES, IN THE
MANNER DEEMED EQUITABLE BY THE ARBITRATOR, IT BEING THE INTENTION OF THE
PARTIES THAT THE PREVAILING PARTY ORDINARILY BE ENTITLED TO RECOVER ITS
REASONABLE COSTS AND FEES.  JUDGMENT
UPON ANY AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED BY ANY COURT HAVING
JURISDICTION.

 

ARTICLE XV. END OF TERM

 

SECTION 15.1.                              HOLDING
OVER.  This Lease shall terminate
without further notice upon the expiration of the Term, and any holding over by
Tenant after the expiration shall not constitute a renewal or extension of this
Lease, or give Tenant any rights under this Lease, except when in writing
signed by both parties.  If Tenant holds
over for any period after the expiration (or earlier termination) of the Term,
Landlord may, at its option, treat Tenant as a tenant at sufferance only,
commencing on the first (1st) day following the termination of this
Lease.  However, should Landlord accept
the payment of monthly hold-over rent by Tenant, then a month-to-month tenancy
shall be deemed effected and neither party shall terminate this Lease without
thirty (30) days prior written notice to the other party.  Any hold-over by Tenant shall be subject to
all of the terms of this Lease, except that the monthly rental shall be two
hundred percent (200%) of the total monthly rental for the month immediately
preceding the date of termination, subject to Landlord’s right to modify same
upon thirty (30) days notice to Tenant. 
The acceptance by Landlord of monthly hold-over rental in a lesser

 

15

 

amount shall not constitute a waiver of
Landlord’s right to recover the full amount due unless otherwise agreed in
writing by Landlord.  If Tenant fails to
surrender the Premises upon the expiration of this Lease despite demand to do
so by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss
or liability, including without limitation, any claims made by any succeeding
tenant relating to such failure to surrender. 
The foregoing provisions of this Section are in addition to and do not
affect Landlord’s right of re-entry or any other rights of Landlord under this
Lease or at law.

 

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

 

SECTION 15.3.                              SURRENDER
OF PREMISES;  REMOVAL OF PROPERTY.  Upon the Expiration Date or upon any earlier
termination of this Lease, Tenant shall quit and surrender possession of the
Premises to Landlord in as good order, condition and repair as when received or
as hereafter may be improved by Landlord or Tenant, reasonable wear and tear
and repairs which are Landlord’s obligation excepted, and shall remove or fund
to Landlord the cost of removing all wallpapering and voice and/or data
transmission cabling installed by or for Tenant, together with all personal
property and debris, except for any items that Landlord may by written
authorization allow to remain.  Tenant
shall repair all damage to the Premises resulting from the removal and restore
the affected area to its pre-existing condition, reasonable wear and tear
excepted, provided that Landlord may instead elect to repair any structural
damage at Tenant’s expense.  If Tenant
shall fail to comply with the provisions of this Section, Landlord may effect
the removal and/or make any repairs, and the cost to Landlord shall be
additional rent payable by Tenant upon demand. 
If requested by Landlord,  Tenant
shall execute, acknowledge and deliver to Landlord an instrument in writing
releasing and quitclaiming to Landlord all right, title and interest of Tenant
in the Premises.

 

ARTICLE XVI. 
PAYMENTS AND NOTICES

 

All
sums payable by Tenant to Landlord shall be paid, without deduction or offset,
in lawful money of the United States to Landlord at its address set forth in
Item 13 of the Basic Lease Provisions, or at any other place as Landlord may
designate in writing.  Unless this Lease
expressly provides otherwise, as for example in the payment of rent pursuant to
Section 4.1, all payments shall be due and payable within five (5) days after
demand.  All payments requiring
proration shall be prorated on the basis of the number of days in the pertinent
calendar month or year, as applicable. 
Any notice, election, demand, consent, approval or other communication
to be given or other document to be delivered by either party to the other may
be delivered to the other party, at the address set forth in Item 13 of the
Basic Lease Provisions, by personal service or electronic facsimile
transmission, or by any courier or “overnight” express mailing service, or may
be deposited in the United States mail, postage prepaid.  Either party may, by written notice to the
other, served in the manner provided in this Article, designate a different
address.  If any notice or other
document is sent by mail, it shall be deemed served or delivered three (3)
business days after mailing or, if sooner, upon actual receipt.  The refusal to accept delivery of a notice,
or the inability to deliver the notice (whether due to a change of address for
which notice was not duly given or other good reason), shall be deemed delivery
and receipt of the notice as of the date of attempted delivery.  If more than one person or entity is named
as Tenant under this Lease, service of any notice upon any one of them shall be
deemed as service upon all of them.

 

ARTICLE XVII.  RULES AND REGULATIONS

 

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

 

ARTICLE XVIII.  BROKER’S COMMISSION

 

The
parties recognize as the broker(s) who negotiated this Lease the firm(s), if
any, whose name(s) is (are) stated in Item 10 of the Basic Lease Provisions, and
agree that Landlord shall be responsible for the payment of brokerage
commissions to those broker(s) unless otherwise provided in this Lease.  Each party warrants that it has had no
dealings with any other real estate broker or agent

 

16

 

in connection with the negotiation of this
Lease, and agrees to indemnify and hold the other party harmless from any cost,
expense or liability (including reasonable attorneys’ fees) for any
compensation, commissions or charges claimed by any other real estate broker or
agent employed or claiming to represent or to have been employed by the
indemnifying party in connection with the negotiation of this Lease.  The foregoing agreement shall survive the
termination of this Lease.

 

ARTICLE XIX. 
TRANSFER OF LANDLORD’S INTEREST

 

In
the event of any transfer of Landlord’s interest in the Premises, the
transferor shall be automatically relieved of all obligations on the part of
Landlord accruing under this Lease from and after the date of the transfer,
provided that Tenant is duly notified of the transfer.  Any funds held by the transferor in which
Tenant has an interest shall be turned over, subject to that interest, to the
transferee.  No holder of a mortgage
and/or deed of trust to which this Lease is or may be subordinate shall be
responsible in connection with the Security Deposit unless the mortgagee or
holder of the deed of trust actually receives the Security Deposit.  It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall, subject to
the foregoing, be binding on Landlord, its successors and assigns, only during
and in respect to their respective successive periods of ownership.

 

ARTICLE XX. 
INTERPRETATION

 

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

 

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

 

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

 

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

 

SECTION 20.5.                              TIME
OF ESSENCE.  Time is of the essence with
respect to the performance of every provision of this Lease in which time of
performance is a factor.

 

SECTION 20.6.                              CONTROLLING
LAW/VENUE.  This Lease shall be governed by
and interpreted in accordance with the laws of the State of California.  Should any litigation be commenced between
the parties in connection with this Lease, such action shall be prosecuted in
the applicable State Court of California in the county in which the Building is
located.

 

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

 

SECTION 20.8.                              WAIVER.  One or more waivers by Landlord or Tenant of
any breach of any term, covenant or condition contained in this Lease shall not
be a waiver of any subsequent breach of the same or any other term, covenant or
condition.  Consent to any act by one of
the parties shall not be deemed to render unnecessary the obtaining of that
party’s consent to any subsequent act. 
No breach of this Lease shall be deemed to have been waived unless the
waiver is in a writing signed by the waiving party.

 

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

 

17

 

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

 

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

 

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

 

ARTICLE XXI. 
EXECUTION AND RECORDING

 

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

 

SECTION 21.2.                              CORPORATE
AND PARTNERSHIP AUTHORITY.  If Tenant
is a corporation, limited liability company or partnership, each individual
executing this Lease on behalf of the entity represents and warrants that he is
duly authorized to execute and deliver this Lease and that this Lease is
binding upon the corporation, limited liability company or partnership in
accordance with its terms.  Tenant
shall, at Landlord’s request, deliver a certified copy of its organizational
documents or an appropriate certificate authorizing or evidencing the execution
of this Lease.

 

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

 

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

 

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

 

ARTICLE XXII.  MISCELLANEOUS

 

SECTION 22.1.                              NONDISCLOSURE
OF LEASE TERMS.  Tenant acknowledges and agrees
that the terms of this Lease are confidential and constitute proprietary
information of Landlord.  Disclosure of
the terms could adversely affect the ability of Landlord to negotiate other
leases and impair Landlord’s relationship with other tenants.  Accordingly, Tenant agrees that it, and its
partners, officers, directors, employees and attorneys, shall not intentionally
and voluntarily disclose the terms and conditions of this Lease to any other
tenant or apparent prospective tenant of the Building or Project, either
directly or indirectly, without the prior written consent of Landlord,
provided, however, that Tenant may disclose the terms to prospective subtenants
or assignees under this Lease or pursuant to any legal requirement.

 

SECTION 22.2.                              REPRESENTATIONS
BY TENANT.  The application, financial
statements and tax returns, if any, submitted and certified to by Tenant as an
accurate representation of its financial condition have been prepared,
certified and submitted to Landlord as an inducement and consideration to
Landlord to enter into this Lease.  The
application and statements are represented and warranted by Tenant to be
correct and to accurately and fully reflect Tenant’s true financial condition
as of the date of execution of this Lease by Tenant.  Tenant shall during the Term promptly furnish Landlord with
current annual financial statements accurately reflecting Tenant’s financial
condition upon written request from Landlord.

 

18

 

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

 

SECTION 22.4.                              MORTGAGEE
PROTECTION.  No act or failure to act on
the part of Landlord which would otherwise entitle Tenant to be relieved of its
obligations hereunder or to terminate this Lease shall result in such a release
or termination unless (a) Tenant has given notice by registered or certified
mail to any beneficiary of a deed of trust or mortgage covering the Building
whose address has been furnished to Tenant and (b) such beneficiary is afforded
a reasonable opportunity to cure the default by Landlord, including, if
necessary to effect the cure, time to obtain possession of the Building by
power of sale or judicial foreclosure provided that such foreclosure remedy is
diligently pursued.

 

SECTION 22.5.                              DISCLOSURE
STATEMENT.  Tenant acknowledges that it
has read, understands and, if applicable, shall comply with the provisions of
Exhibit F to this Lease, if that Exhibit is attached.

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  THE IRVINE COMPANY

  	
  GARDENBURGER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Donald S. McNutt

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Senior Vice President, Leasing,

  	
  Printed Name

  	
   

  	
   

  
	
   

  	
  Office Properties

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Michael T. Bennett

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Vice President, Operations,

  	
   

  	
  Printed Name

  	
   

  	
   

  
	
   

  	
  Office Properties

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
								

 

19

 

EXHIBIT B

 

UTILITIES AND SERVICES

 

The
following standards for utilities and services shall be in effect at the
Building.  Landlord reserves the right
to adopt nondiscriminatory modifications and additions to these standards.  In the case of any conflict between these
standards and the Lease, the Lease shall be controlling.  Subject to all of the provisions of the
Lease, including but not limited to the restrictions contained in Section 6.1,
the following shall apply:

 

1.          Landlord shall make available to the
Premises during the hours of 8:00 a.m. to 6:00 p.m., Monday through Friday, and
if requested by Tenant on a week -by-week basis, from 8:00 a.m. to 1:00 p.m. on
Saturday (“Building Hours”), generally recognized national holidays excepted,
reasonable HVAC services.  Subject to
the provisions set forth below, Landlord shall also furnish the Building with
elevator service (if applicable), reasonable amounts of electric current for
normal lighting by Landlord’s standard overhead fluorescent and incandescent
fixtures and for the operation of office equipment consistent in type and
quantity with that utilized by typical office tenants of the Building and
Project, and water for lavatory purposes. 
Tenant will not, without the prior written consent of Landlord, connect
any apparatus, machine or device with water pipes or electric current (except
through existing electrical outlets in the Premises) for the purpose of using
electric current or water.  Because the
Building systems have been designed for normal occupancy of approximately four
persons per one thousand usable square feet, Tenant understands that excess
occupancy of the Premises may result in excessive use of power and other
services and may inhibit the efficient cooling of the Premises.  This paragraph shall at all times be subject
to applicable governmental regulations.

 

2.          Upon written
request from Tenant delivered to Landlord at least 24 hours prior to the period
for which service is requested, but during normal business hours, Landlord will
provide any of the foregoing building services to Tenant at such times when
such services are not otherwise available. 
Tenant agrees to pay Landlord for those after-hour services at rates
that Landlord may establish from time to time. 
If Tenant requires electric current in excess of that which Landlord is
obligated to furnish under this Exhibit B, Tenant shall first obtain the
consent of Landlord, and Landlord may cause an electric current meter to be
installed in the Premises to measure the amount of electric current
consumed.  The cost of installation, maintenance
and repair of the meter shall be paid for by Tenant, and Tenant shall reimburse
Landlord promptly upon demand for all electric current consumed for any special
power use as shown by the meter.  The
reimbursement shall be at the rates charged for electrical power by the local
public utility furnishing the current, plus any additional expense incurred in
keeping account of the electric current consumed.

 

3.          Landlord shall furnish water for drinking,
personal hygiene and lavatory purposes only. 
If Tenant requires or uses water for any purposes in addition to
ordinary drinking, cleaning and lavatory purposes, Landlord may,  in its discretion, install a water meter to
measure Tenant’s water consumption. 
Tenant shall pay Landlord for the cost of the meter and the cost of its
installation, and for consumption throughout the duration of Tenant’s
occupancy.  Tenant shall keep the meter
and installed equipment in good working order and repair at Tenant’s own cost
and expense, in default of which Landlord may cause the meter to be replaced or
repaired at Tenant’s expense.  Tenant
agrees to pay for water consumed, as shown on the meter and when bills are
rendered, and on Tenant’s default in making that payment Landlord may pay the
charges on behalf of Tenant.  Any costs
or expenses or payments made by Landlord for any of the reasons or purposes
stated above shall be deemed to be additional rent payable by Tenant to
Landlord upon demand.

 

4.          In the event that any utility service to the
Premises is separately metered or billed to Tenant, Tenant shall pay all
charges for that utility service to the Premises and the cost of furnishing the
utility to tenant suites shall be excluded from the Operating Expenses as to
which reimbursement from Tenant is required in the Lease.  If any utility charges are not paid when due
Landlord may pay them, and any amounts paid by Landlord shall immediately
become due to Landlord from Tenant as additional rent.  If Landlord elects to furnish any utility
service to the Premises, Tenant shall purchase its requirements of that utility
from Landlord as long as the rates charged by Landlord do not exceed those
which Tenant would be required to pay if the utility service were furnished it
directly by a public utility.

 

5.          Landlord shall
provide janitorial services five days per week, equivalent to that furnished in
comparable buildings, and window washing as reasonably required; provided,
however, that Tenant shall pay for any additional or unusual janitorial
services required by reason of any nonstandard improvements in the Premises,
including without limitation wall coverings and floor coverings installed by or
for Tenant, or by reason of any use of Premises other than exclusively as
offices.  The cleaning services provided
by Landlord shall also exclude refrigerators, eating utensils (plates, drinking
containers and silverware), and interior glass partitions.  Tenant shall pay to Landlord the cost of
removal of any of Tenant’s refuse and rubbish, to the extent that they exceed
the refuse and rubbish usually attendant with general office usage.

 

1

 

6.          Tenant shall have
access to the Building 24 hours per day, 7 days per week, 52 weeks per year;
provided that Landlord may install access control systems as it deems advisable
for the Building.  Such systems may, but
need not, include full or part-time lobby supervision, the use of a sign-in
sign-out log, a card identification access system, building parking and access
pass system, closing hours procedures, access control stations, fire stairwell
exit door alarm system, electronic guard system, mobile paging system, elevator
control system or any other access controls. 
In the event that Landlord elects to provide any or all of those
services, Landlord may discontinue providing them at any time with or without
notice.  Landlord may impose a
reasonable charge for access control cards and/or keys issued to Tenant.  Landlord shall have no liability to Tenant
for the provision by Landlord of improper access control services, for any
breakdown in service, or for the failure by Landlord to provide access control
services.  Tenant further acknowledges
that Landlord’s access systems may be temporarily inoperative during building
emergency and system repair periods. 
Tenant agrees to assume responsibility for compliance by its employees
with any regulations established by Landlord with respect to any card key
access or any other system of building access as Landlord may establish.  Tenant shall be liable to Landlord for any
loss or damage resulting from its or its employees use of any access system.

 

2

 

EXHIBIT C

 

PARKING

 

The
following parking regulations shall be in effect at the Building.  Landlord reserves the right to adopt
reasonable, nondiscriminatory modifications and additions to the regulations by
written notice to Tenant.  In the case
of any conflict between these regulations and the Lease, the Lease shall be
controlling.

 

1.          Landlord agrees to maintain, or cause to be
maintained, an automobile parking area (“Parking Area”) in reasonable proximity
to the Building for the benefit and use of the visitors and patrons and, except
as otherwise provided, employees of Tenant, and other tenants and occupants of
the Building.  The Parking Area shall include,
whether in a surface parking area or a parking structure, the automobile
parking stalls, driveways, entrances, exits, sidewalks and attendant pedestrian
passageways and other areas designated for parking.  Landlord shall have the right and privilege of determining the
nature and extent of the automobile Parking Area, whether it shall be surface,
underground or other structure, and of making such changes to the Parking Area
from time to time which in its opinion are desirable and for the best interests
of all persons using the Parking Area. 
Landlord shall keep the Parking Area in a neat, clean and orderly
condition, and shall repair any damage to its facilities.  Landlord shall not be liable for any damage
to motor vehicles of visitors or employees, for any loss of property from
within those motor vehicles, or for any injury to Tenant, its visitors or
employees, unless ultimately determined to be caused by the sole active
negligence or willful misconduct of Landlord. 
Unless otherwise instructed by Landlord, every parker shall park and
lock his or her own motor vehicle. 
Landlord shall also have the right to establish, and from time to time
amend, and to enforce against all users of the Parking Area all reasonable
rules and regulations (including the designation of areas for employee parking)
as Landlord may deem necessary and advisable for the proper and efficient
operation and maintenance of the Parking Area. 
Garage managers or attendants are not authorized to make or allow any
exceptions to these regulations.

 

2.          Landlord may, if
it deems advisable in its sole discretion, charge for parking and may establish
for the Parking Area a system or systems of permit parking for Tenant, its
employees and its visitors, which may include, but not be limited to, a system
of charges against nonvalidated parking, verification of users, a set of
regulations governing different parking locations, and an allotment of reserved
or nonreserved parking spaces based upon the charges paid and the identity of
users.  In no event shall Tenant or its
employees park in reserved stalls leased to other tenants or in stalls within
designated visitor parking zones, nor shall Tenant or its employees utilize
more than the number of parking stalls allotted in this Lease to Tenant.  It is understood that Landlord shall not
have any obligation to cite improperly parked vehicles or otherwise attempt to
enforce reserved parking rules during hours when parking attendants are not
present at the Parking Area.  Tenant
shall comply with such system in its use (and in the use of its visitors,
patrons and employees) of the Parking Area, provided, however, that the system
and rules and regulations shall apply to all persons entitled to the use of the
Parking Area, and all charges to Tenant for use of the Parking Area shall be no
greater than Landlord’s then current scheduled charge for parking.

 

3.          Tenant shall, upon
request of Landlord from time to time, furnish Landlord with a list of its
employees’ names and of Tenant’s and its employees’ vehicle license
numbers.  Tenant agrees to acquaint its
employees with these regulations and assumes responsibility for compliance by
its employees with these parking provisions, and shall be liable to Landlord
for all unpaid parking charges incurred by its employees.  Any amount due from Tenant shall be deemed
additional rent.  Tenant authorizes
Landlord to tow away from the Building any vehicle belonging to Tenant or
Tenant’s employees parked in violation of these provisions, and/or to attach
violation stickers or notices to those vehicles.  In the event Landlord elects or is required to limit or control
parking by tenants, employees, visitors or invitees of the Building, whether by
validation of parking tickets, parking meters or any other method of
assessment, Tenant agrees to participate in the validation or assessment
program under reasonable rules and regulations as are established by Landlord
and/or any applicable governmental agency.

 

4.          Landlord may
establish an identification system for vehicles of Tenant and its employees
which may consist of stickers, magnetic parking cards or other identification
devices supplied by Landlord.  All
identification devices shall remain the property of Landlord, shall be
displayed as required by Landlord or upon request and may not be mutilated or
obliterated in any manner.  Those
devices shall not be transferable and any such device in the possession of an
unauthorized holder shall be void and may be confiscated.  Landlord may impose a reasonable fee for
identification devices and a replacement charge for devices which are lost or
stolen.  Each identification device
shall be returned to Landlord promptly following the Expiration Date or sooner
termination of this Lease.  Loss or
theft of parking identification devices shall be reported to Landlord or its
Parking Area operator immediately and a written report of the loss filed if
requested by Landlord or its Parking Area operator.

 

5.          Persons using the
Parking Area shall observe all directional signs and arrows and any posted speed
limits.  Unless otherwise posted, in no
event shall the speed limit of 5 miles per hour be exceeded.  All vehicles shall be parked entirely within
painted stalls, and no vehicles shall be

 

1

 

parked in areas which are posted or marked
as “no parking” or on or in ramps, driveways and aisles.  Only one vehicle may be parked in a parking
space.  In no event shall Tenant interfere
with the use and enjoyment of the Parking Area by other tenants of the Building
or their employees or invitees.

 

6.          Parking Areas
shall be used only for parking vehicles. 
Washing, waxing, cleaning or servicing of vehicles, or the parking of
any vehicle on an overnight basis, in the Parking Area (other than emergency
services) by any parker or his or her agents or employees is prohibited unless
otherwise authorized by Landlord. 
Tenant shall have no right to install any fixtures, equipment or
personal property (other than vehicles) in the Parking Area, nor shall Tenant
make any alteration to the Parking Area.

 

7.          It is understood that the employees of
Tenant and the other tenants of Landlord within the Building and Project shall
not be permitted to park their automobiles in the portions of the Parking Area
which may from time to time be designated for patrons of the Building and/or
Project and that Landlord shall at all times have the right to establish rules
and regulations for employee parking. 
Landlord shall lease to Tenant, and Tenant shall be obligated to lease
from Landlord for the Term of this Lease, the total number of vehicle parking
spaces set forth in Item 12 of the Basic Lease Provisions (the “Allotted
Stalls”).  Tenant shall pay to Landlord
for the lease of the Allotted Stalls the amounts as Landlord shall from time to
time determine.  Should any monthly
parking charge installment not be paid within five (5) days following the date
due, then a late charge shall be payable by Tenant equal to the greater of (i)
four percent (4%) of the delinquent installment or (ii) two hundred and fifty
dollars ($250.00), which late charge shall be separate and in addition to any
late charge that may be assessed pursuant to Section 14.3 of the Lease for
other than delinquent monthly parking charges. 
Landlord may authorize persons other than those described above,
including occupants of other buildings, to utilize the Parking Area.  In the event of the use of the Parking Area
by other persons, those persons shall pay for that use in accordance with the
terms established above; provided, however, Landlord may allow those persons to
use the Parking Area on weekends, holidays, and at other non-office hours
without payment.  Notwithstanding the
foregoing, provided Tenant is not in default under the Lease, the monthly stall
charge for the Allotted Stalls shall be waived through the end of the initial
Lease Term.

 

8.          Notwithstanding
the foregoing paragraphs 1 through 7, Landlord shall be entitled to pass on to
Tenant its proportionate share of any charges or parking surcharge or
transportation management costs levied by any governmental agency.  The foregoing parking provisions are further
subject to any governmental regulations which limit parking or otherwise seek
to encourage the use of carpools, public transit or other alternative
transportation forms or traffic reduction programs.  Tenant agrees that it will use its best efforts to cooperate,
including registration and attendance, in programs which may be undertaken to
reduce traffic.  Tenant acknowledges
that as a part of those programs, it may be required to distribute employee
transportation information, participate in employee transportation surveys,
allow employees to participate in commuter activities, designate a liaison for
commuter transportation activities, distribute commuter information to all
employees, and otherwise participate in other programs or services initiated
under a transportation management program.

 

9.          Should any parking
spaces be allotted by Landlord to Tenant, either on a reserved or nonreserved
basis, Tenant shall not assign or sublet any of those spaces, either
voluntarily or by operation of law, without the prior written consent of
Landlord, except in connection with an authorized assignment of this Lease or
subletting of the Premises.

 

2

 

EXHIBIT D

 

TENANT’S INSURANCE

 

The
following standards for Tenant’s insurance shall be in effect at the Building,
and Tenant shall also cause any of its subtenants to comply with the
requirements below.  Landlord reserves
the right to adopt reasonable nondiscriminatory modifications and additions to
those standards.  Tenant agrees to
obtain and present evidence to Landlord that it has fully complied with the
insurance requirements.

 

1.          Tenant shall, at
its sole cost and expense, commencing on the date Tenant is given access to the
Premises for any purpose and during the entire Term, procure, pay for and keep
in full force and effect:  (i)
commercial general liability insurance with respect to the Premises and the
operations of or on behalf of Tenant in, on or about the Premises, including
but not limited to coverage for personal injury, independent contractors, broad
form property damage, fire legal liability, products liability (if a product is
sold from the Premises), and liquor law liability (if alcoholic beverages are
sold, served or consumed within the Premises), which policy(ies) shall be
written on an “occurrence” basis and for not less than $2,000,000 combined
single limit (with a $50,000 minimum limit on fire legal liability) per occurrence
for bodily injury, death, and property damage liability, or the current limit
of liability carried by Tenant, whichever is greater, and subject to such
increases in amounts as Landlord may determine from time to time; (ii) workers’
compensation insurance coverage as required by law, together with employers’
liability insurance coverage of at least $1,000,000; (iii) with respect to
improvements, alterations, and the like required or permitted to be made by
Tenant under this Lease, builder’s risk insurance, in amounts satisfactory to
Landlord; (iv) insurance against fire, vandalism, malicious mischief and such
other additional perils as may be included in a standard “special form” policy,
insuring all Tenant Installations, trade fixtures, furnishings, equipment and
items of personal property in the Premises, in an amount equal to not less than
ninety percent (90%) of their actual replacement cost (with replacement cost
endorsement), which policy shall also include loss of income/business
interruption/extra expense coverage in an amount not less than nine months loss
of income from Tenant’s business in the Premises.  In no event shall the limits of any policy be considered as
limiting the liability of Tenant under this Lease.

 

2.          All policies of
insurance required to be carried by Tenant pursuant to this Exhibit shall be
written by responsible insurance companies authorized to do business in the
State of California and with a general policyholder rating of not less than
“A-” and financial rating of not less than “VIII” in the most current Best’s
Insurance Report.  Any insurance
required of Tenant may be furnished by Tenant under any blanket policy carried
by it or under a separate policy.  A
certificate of insurance, certifying that the policy has been issued, provides
the coverage required by this Exhibit and contains the required provisions,
together with endorsements acceptable to Landlord evidencing the waiver of
subrogation and additional insured provisions required under Paragraph 3 below,
shall be delivered to Landlord prior to the date Tenant is given the right of
possession of the Premises.  Proper
evidence of the renewal of any insurance coverage shall also be delivered to
Landlord not less than thirty (30) days prior to the expiration of the coverage.  Landlord may at any time, and from time to
time, inspect and/or copy any and all insurance policies required by this
Lease.

 

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

 

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

 

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

 

1

 

EXHIBIT E

 

RULES AND REGULATIONS

 

The
following Rules and Regulations shall be in effect at the Building.  Landlord reserves the right to adopt
reasonable nondiscriminatory modifications and additions at any time.  In the case of any conflict between these
regulations and the Lease, the Lease shall be controlling.

 

1.          Except with the
prior written consent of Landlord, or unless otherwise specifically authorized
in this Lease, Tenant shall not sell or permit the retail sale of goods or
services in or from the Premises, nor shall Tenant allow the Premises to be
utilized for any manufacturing or medical practice.

 

2.          The sidewalks,
halls, passages, elevators, stairways, and other common areas shall not be
obstructed by Tenant or used by it for storage, for depositing items, or for
any purpose other than for ingress to and egress from the Premises.  The halls, passages, entrances, elevators,
stairways, balconies and roof are not for the use of the general public, and
Landlord shall in all cases retain the right to control and prevent access to
those areas of all persons whose presence, in the judgment of Landlord, shall
be prejudicial to the safety, character, reputation and interests of the
Building and its tenants.  Should Tenant
have access to any balcony or patio area, Tenant shall not place any furniture
or other personal property in such area without the prior written approval of
Landlord.  Nothing contained in this
Lease shall be construed to prevent access to persons with whom Tenant normally
deals only for the purpose of conducting its business on the Premises (such as
clients, customers, office suppliers and equipment vendors and the like) unless
those persons are engaged in illegal activities.  Neither Tenant nor any employee or contractor of Tenant shall go
upon the roof of the Building without the prior written consent of Landlord.

 

3.          The sashes, sash
doors, windows, glass lights, solar film and/or screen, and any lights or
skylights that reflect or admit light into the halls or other places of the
Building shall not be covered or obstructed. 
The toilet rooms, water and wash closets and other water apparatus shall
not be used for any purpose other than that for which they were constructed,
and no foreign substance of any kind shall be thrown in those facilities, and
the expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by Tenant.

 

4.          No sign,
advertisement or notice visible from the exterior of the Premises shall be
inscribed, painted or affixed by Tenant on any part of the Building or the
Premises without the prior written consent of Landlord.  If Landlord shall have given its consent at
any time, whether before or after the execution of this Lease, that consent
shall in no way operate as a waiver or release of any of the provisions of this
Lease, and shall be deemed to relate only to the particular sign, advertisement
or notice so consented to by Landlord and shall not be construed as dispensing
with the necessity of obtaining the specific written consent of Landlord with
respect to any subsequent sign, advertisement or notice.  If Landlord, by a notice in writing to
Tenant, shall object to any curtain, blind, tinting, shade or screen attached
to, or hung in, or used in connection with, any window or door of the Premises,
the use of that curtain, blind, tinting, shade or screen shall be immediately
discontinued and removed by Tenant.  No
awnings shall be permitted on any part of the Premises.  No antenna or satellite dish shall be
installed by Tenant that is either located or visible from outside the Premises
without the prior written agreement of Landlord.

 

5.          Tenant shall not
do or permit anything to be done in the Premises, or bring or keep anything in
the Premises, which shall in any way increase the rate of fire insurance on the
Building, or on the property kept in the Building, or obstruct or interfere
with the rights of other tenants, or in any way injure or annoy them, or
conflict with the regulations of the Fire Department or the fire laws, or with
any insurance policy upon the Building, or any portion of the Building or its
contents, or with any rules and ordinances established by the Board of Health
or other governmental authority.

 

6.          The installation
and location of any unusually heavy equipment in the Premises, including
without limitation file storage units, safes and electronic data processing
equipment, shall require the prior written approval of Landlord.  Landlord may restrict the weight and position
of any equipment that may exceed the weight load limits for the structure of
the Building, and may further require, at Tenant’s expense, the reinforcement
of any flooring on which such equipment may be placed and/or an engineering
study to be performed to determine whether the equipment may safely be
installed in the Building and the necessity of any reinforcement.  The moving of large or heavy objects shall
occur only between those hours as may be designated by, and only upon previous
written notice to, Landlord, and the persons employed to move those objects in
or out of the Building must be reasonably acceptable to Landlord.  Without limiting the generality of the
foregoing, no freight, furniture or bulky matter of any description shall be
received into or moved out of the lobby of the Building or carried in any
elevator other than the freight elevator designated by Landlord unless approved
in writing by Landlord.

 

7.          Landlord shall
clean the Premises as provided in the Lease, and except with the written
consent of Landlord, no person or persons other than those approved by Landlord
will be permitted to enter the Building for that purpose.  Tenant shall not cause unnecessary labor by
reason of

 

1

 

Tenant’s carelessness and indifference in the
preservation of good order and cleanliness. 
Landlord shall not be responsible to Tenant or its employees for loss or
damage to property in connection with the provision of janitorial services by
third party contractors.

 

8.          Tenant shall not
sweep or throw, or permit to be swept or thrown, from the Premises any dirt or
other substance into any of the corridors or halls or elevators, or out of the
doors or windows or stairways of the Building, and Tenant shall not use, keep
or permit to be used or kept any foul or noxious gas or substance in the
Premises, or permit or suffer the Premises to be occupied or used in a manner
offensive or objectionable to Landlord or other occupants of the Building by
reason of noise, odors and/or vibrations, or interfere in any way with other
tenants or those having business with other tenants, nor shall any animals or
birds be kept by Tenant in or about the Building.  Smoking or carrying of lighted cigars, cigarettes, pipes or
similar products anywhere within the Premises or Building is strictly
prohibited, and Landlord may enforce such prohibition pursuant to Landlord’s
leasehold remedies.  Smoking is
permitted outside the Building and within the project only in areas designated
by Landlord.

 

9.          No cooking shall
be done or permitted by Tenant on the Premises, except pursuant to the normal
use of a U.L. approved microwave oven and coffee maker for the benefit of
Tenant’s employees and invitees, nor shall the Premises be used for the storage
of merchandise or for lodging.

 

10.              Tenant shall not
use or keep in the Building any kerosene, gasoline, or inflammable fluid or any
other illuminating material, or use any method of heating other than that
supplied by Landlord.

 

11.              If Tenant desires
telephone, telegraph, burglar alarm or similar connections, Landlord will
direct electricians as to where and how the wires are to be introduced.  No boring or cutting for wires or otherwise
shall be made without directions from Landlord.

 

12.              Upon the
termination of its tenancy, Tenant shall deliver to Landlord all the keys to
offices, rooms and toilet rooms and all access cards which shall have been
furnished to Tenant or which Tenant shall have had made.

 

13.              Tenant shall not
mark, drive nails, screw or drill into the partitions, woodwork or plaster or
in any way deface the Premises, except to install normal wall hangings.  Tenant shall not affix any floor covering to
the floor of the Premises in any manner except by a paste, or other material
which may easily be removed with water, the use of cement or other similar
adhesive materials being expressly prohibited. 
The method of affixing any floor covering shall be subject to approval
by Landlord.  The expense of repairing
any damage resulting from a violation of this rule shall be borne by Tenant.

 

14.              On Saturdays,
Sundays and legal holidays, and on other days between the hours of 6:00 p.m.
and 8:00 a.m., access to the Building, or to the halls, corridors, elevators or
stairways in the Building, or to the Premises, may be refused unless the person
seeking access complies with any access control system that Landlord may
establish.  Landlord shall in no case be
liable for damages for the admission to or exclusion from the Building of any
person whom Landlord has the right to exclude under Rules 2 or 18 of this
Exhibit.  In case of invasion, mob,
riot, public excitement, or other commotion, or in the event of any other
situation reasonably requiring the evacuation of the Building, Landlord
reserves the right at its election and without liability to Tenant to prevent
access to the Building by closing the doors or otherwise, for the safety of the
tenants and protection of property in the Building.

 

15.              Tenant shall be
responsible for protecting the Premises from theft, which includes keeping
doors and other means of entry closed and securely locked.  Tenant shall cause all water faucets or
water apparatus to be shut off before Tenant or Tenant’s employees leave the
Building, and that all electricity, gas or air shall likewise be shut off, so
as to prevent waste or damage, and for any default or carelessness Tenant shall
make good all injuries sustained by other tenants or occupants of the Building
or Landlord.

 

16.              Tenant shall not
alter any lock or install a new or additional lock or any bolt on any door of
the Premises without the prior written consent of Landlord.  If Landlord gives its consent, Tenant shall
in each case promptly furnish Landlord with a key for any new or altered lock.

 

17.              Tenant shall not
install equipment, such as but not limited to electronic tabulating or computer
equipment, requiring electrical or air conditioning service in excess of that
to be provided by Landlord under the Lease except in accordance with Exhibit B.

 

18.              Landlord shall
have full and absolute authority to regulate or prohibit the entrance to the
Premises of any vendor, supplier, purveyor, petitioner, proselytizer or other
similar person if, in the good faith judgment of Landlord, such person will be
involved in general solicitation activities, or the proselytizing, petitioning,
or disturbance of other tenants or their customers or invitees, or engaged or
likely to engage in conduct which may in Landlord’s opinion distract from the
use of the Premises for its intended purpose. 
Notwithstanding the foregoing, Landlord reserves the absolute right and
discretion to limit or prevent access to the Buildings by any food or beverage
vendor, whether or not

 

2

 

invited by Tenant, and Landlord may
condition such access upon the vendor’s execution of an entry permit agreement
which may contain provisions for insurance coverage and/or the payment of a fee
to Landlord.

 

19.              Tenant shall, at
its expense, be required to utilize the third party contractor designated by
Landlord for the Building to provide any telephone wiring services from the
minimum point of entry of the telephone cable in the Building to the Premises.

 

20.              Tenant shall, upon
request by Landlord, supply Landlord with the names and telephone numbers of
personnel designated by Tenant to be contacted on an after-hours basis should
circumstances warrant.

 

21.              Tenant shall cause
its employees and agents, and shall endeavor to instruct its invitees, to wear
attire suitable for a first class office project while such persons are in the
Building or Project.

 

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

 

3EXHIBIT
10.48

 

AGREEMENT
AND RELEASE OF ALL CLAIMS

 

THIS Agreement and Release of All claims (the
“Agreement”) is made and entered into this 1st day of October, 2003 by and
between GARDENBURGER, INC., an Oregon corporation (“Gardenburger”), formerly
known as Wholesome and Hearty Foods, Inc., and Lorraine Crawford (“Employee”)
in order to provide for an orderly transition of the Employee’s
responsibilities in connection with her termination of employment with
Gardenburger and completely resolve any and all issues that employee might have
in connection with her employment with Gardenburger or the termination thereof.

 

NOW, THEREFORE, in consideration of the mutual
promises and conditions contained herein, the parties agree as follows:

 

1. Termination.

 

1.1 Termination.  Employee
is currently employed at Gardenburger. 
Employee’s position is being eliminated and, as a result of the
elimination of her position, Employee understands her employment will terminate
on December 31, 2003 (the “Termination Date”).

 

2.  Pay.

 

2.1  Wages. 
From the date of this Agreement through the Termination Date,
Gardenburger will continue to pay Employee, on Gardenburger’s normal bi-weekly
pay dates, all wages and other benefits associated with her employment.

 

2.2 Severance and Additional Severance Pay.  Gardenburger agrees to pay severance
outlined in the Memo received from Lyle Hubbard dated May 4, 2000 (the
“Memo”)(Attachment A), plus one month’s additional severance pay for each full
month worked from the date of this Agreement to the Termination Date, provided
that under no circumstances shall Employee be entitled to more than twelve (12)
month’s total severance pay calculated by adding severance due under the Memo
plus Additional Severance as here outlined. This Severance and Additional
Severance pay shall be paid on a pro-rated basis ($5500.00 per pay period) on
Gardenburger’s normal bi-weekly pay dates (beginning 2 weeks after termination)
until the full amount is paid. No additional severance pay payment will be made
to Employee until Employee executes and delivers this Agreement to
Gardenburger, the revocation period described in Section 9 of this Agreement
has expired, and Employee executes and delivers to Gardenburger a Release of
all Claims upon her separation from employment. As outlined in the Memo, the
last three (3) months of severance will only be paid if employee has not
obtained full time, permanent employment

 

 

elsewhere.  Therefore, Employee
will be required to notify the Gardenburger Human Resources department on a
monthly basis of her employment status following the completion of nine (9)
months severance. Employee agrees that these Additional Severance payments
represent amounts to which she is not otherwise entitled but for this
Agreement.

 

2.3 Withholdings.  All compensation paid to Employee under this Section 2 shall
be subject to the customary withholding of federal and state income tax and
other deductions required by law, or otherwise authorized, with respect to
compensation paid by a corporation to an employee.

 

3.  Other Agreements.  Employee and Gardenburger are parties to other agreements
including the Memo, which remain in full force and effect except as expressly
modified herein.

 

4.  Benefits. In addition to any benefits included in the Letter,  Gardenburger agrees to provide Company-paid
COBRA medical benefits for the period that Severance and/or Additional
Severance is paid.

 

5.
Outplacement Assistance.  Upon
Employee’s request, Employee will be afforded outplacement assistance through a
career transition services provider of Gardenburger’s selection at a cost not
to exceed $5,500.  Employee must begin
using this service within 90 days after the Termination Date in order to be
eligible for this benefit.

 

6.
Release of Claims

 

6.1 In return for the benefits conferred by
this Agreement, which Employee acknowledges that Gardenburger had no legal
obligation to provide, Employee, hereby releases and forever discharges
Gardenburger, its predecessors, successors and assigns, and its past, present,
and future insurers, representatives, officers, trustees, shareholders,
directors, agents, attorneys, and employees, and their respective successors,
assigns, executors, and administrators (collectively, the “Releasees”), of and
from any and all claims, charges, complaints, actions, causes of action,
liability, damages, costs, attorney fees, expenses of whatever nature, and
demands of any kind (including without limitation those based in tort,
contract, or statue, including without limitation, applicable state civil rights
laws, Title VII of the Civil Rights Act of 1964, the Post-Civil War Rights Act,
the Age Discrimination in Employment Act, 29, USC 621 et seq, the Americans
with Disabilities Act, the Rehabilitation Act of 1973, the Equal Pay Act of
1963, and any regulations under such laws) up to and including the date set
forth below, whether known or unknown, foreseen or unforeseen, asserted or
unasserted.

 

6.2 Without limitation on the foregoing,
Employee hereby accepts the payments set forth herein in full settlement and
satisfaction of all claims, charges, complaints, actions, causes of action, and
demands against Gardenburger or any of the Releasees of every nature and kind
whatsoever, known or unknown, suspected or unsuspected, past, present, or
future on account of or in any way related to or arising from

 

2

 

the employment relationship existing between them or the termination of
that relationship.  Employee agrees that
she is lawfully entitled to no payments, wages, compensation, or benefits from
Gardenburger except as set forth in this Agreement and the Memo, and except for
any amounts to which she is entitled under the terms of Gardenburger’s 401(k)
plan and under the stock option agreements entered into between Gardenburger
and Employee.

 

6.3 Employee represents that she has no
claims against or relating to Gardenburger pending or filed with any local,
state, or federal agency as of the date this Agreement is signed; and that if
any such claims are pending or filed, they will be immediately withdrawn or
dismissed.  Employee agrees that she
will not assert any court action, lawsuit, or any to her claims against
Gardenburger or any other Releases arising out of or in connection with any of
the foregoing released claims, including without limitation any action,
lawsuit, or claim arising out of or in connection with the employment
relationship existing between Gardenburger and Employee or the termination of
that relationship other than one based upon an alleged violation of this
Agreement.

 

6.4 Gardenburger hereby releases and forever discharges Employee and
her heirs, successors, beneficiaries, agents, and attorneys, and their
respective successors, assigns, executors, and administrators, of and from any
and all charges, complaints, actions, causes of action, liability, damages,
costs, attorney fees, expenses of whatever nature, and demands of any kind
(including without limitation those based in tort, contract, or statute)
arising from or based on claims of which any current member of Gardenburger’s
Board of Directors has actual knowledge as of the date of this Agreement.

 

6.5  Indemnification. The Company hereby agrees to hold
harmless and indemnify Employee and the estate or personal representative of
Employee from and against all liability and expenses actually and necessarily
incurred by Employee in any threatened, pending, or completed actions, suits,
or proceedings, whether civil, criminal, administrative, or investigative,
involving Employee by reason of the fact that he or she is or was an officer or
agent of the Company in the broadest and maximum extent permitted by Oregon
law.

 

7.  No Admission of
Liability.  Nothing in
this Agreement shall operate or be interpreted as an admission of liability as
to any of the claims, charges, actions, or lawsuits released hereby.

 

8. Employee Given 21 days to Consider Agreement.  Gardenburger hereby advises Employee in
writing to consult with an attorney before signing this Agreement and that she
has a period of at least 21 days to consider whether to execute this
Agreement.  For purposes of this 21-day
waiting period, Employee acknowledges that a form of this Agreement was
delivered to her on September 24, 2003. Employee understands that she may
accept this agreement at any time during the 21-day waiting period by signing
and delivering it to Gardenburger.

 

3

 

9. Revocation.  After signing the Agreement and delivering it to Peggy Noteboom,
Employee may revoke this Agreement by written notice, delivered to Mrs.
Noteboom, within seven days following her date of signature as set forth on
page 5 of this Agreement.  This
Agreement becomes effective and enforceable after the seven-day period has expired,
without revocation.

 

10.
Confidentiality. 
Employee agrees that she will not disclose, disseminate, or publicize,
or cause or permit to be disclosed, disseminated, or publicized any of the
terms of this Agreement, subject only to the following exceptions only.  Employee may disclose the terms of this
Agreement (i) to the extent necessary to represent Gardenburger’s interests in
claims or litigation where Gardenburger authorizes disclosure; (ii) to tax
advisers and taxing authorities to the extent necessary to report income to
appropriate taxing authorities, provided any non-government person to whom the
information is disclosed shall also be bound by this confidentiality provision;
(iii) in response to an order or subpoena of a court or governmental agency of
competent jurisdiction, provided, however, that notice of receipt of such order
or subpoena shall be immediately communicated to Gardenburger telephonically
and in writing, so that Gardenburger shall have an opportunity to intervene and
assert what rights it has to nondisclosure prior to Employee’s response to such
order or subpoena; (iv) to the extent necessary to enforce this Agreement
according to its terms; (v) to the extent necessary to comply with legal
obligations; and (vi) to her spouse, if any, (vii) to any attorney of record; and/or
(viii) to a confidential, personal Human Resource consultant for purposes of
reviewing the draft Agreement.

 

11. 
Non-Disparagement. 
Employee agrees to not make any derogatory remarks of any nature
whatsoever at any time about Gardenburger, its past or present employees or its
products either, publicly or privately, unless required by law, during or after
her employment with Gardenburger. 
Gardenburger agrees to not make any derogatory remarks of any nature whatsoever
at any time about Employee either publicly or privately, unless required by law
during or after Employee’s employment with Gardenburger.

 

12.  Employee
Proprietary Rights and Confidentiality Agreement; Employee Non-Competition
Agreement.  Employee
acknowledges and reaffirms her obligations under the Employee Proprietary
Rights and Confidentiality Agreement and the Employee Non-Competition Agreement
executed by her in conjunction with her employment at Gardenburger.  The terms of
such Employee Proprietary Rights and Confidentiality Agreement and
Non-Competition Agreement are hereby incorporated herein and made a part of
this Agreement.  Employee agrees to
strictly comply with the terms of such Agreements.

 

13.  Return of
Property.  Employee
agrees to and hereby represents that she has returned to Gardenburger all of
Gardenburger’s property in her possession or under her control except to the
extent that property is required for the ongoing performance of her job duties,
and agrees that upon termination she will immediately return all Gardenburger 

 

4

 

property with the exception of one laptop computer which she will be
entitled to keep as her personal property.

 

14.  Non-disclosure to
Public or Media.  Employee
agrees that for the duration of her employment and the twelve (12) months
following the Termination Date she will not discuss Gardenburger, its business
plans or operations, or its personnel with any members of the Public or
representatives of the print or broadcast or electronic media.

 

15.  Right to
Rescind.  If employee
should violate any of provisions of this Agreement governing confidentiality,
disparagement, return of property, or non-disclosure to media, Employee
acknowledges that Gardenburger shall not have received the benefit of the
bargain and that it may at its sole option elect to rescind and declare this
Agreement void.  Should Gardenburger
make such an election and declare this Agreement void, Employee shall not be
entitled to any further severance payments under this Agreement and shall
immediately upon demand repay to Gardenburger the sum of all monies paid to her
and the value of benefits paid on her behalf under to this agreement.

 

16.  Waiver.  No waiver of any provision of this Agreement
shall be deemed, or shall constitute, a waiver of any other provisions, whether
or not similar, nor shall any waiver constitute a continuing waiver.  No waiver shall be binding unless executed
in writing by the party making the waiver.

 

17. 
Amendment.  No supplement, modification or amendment of
this Agreement shall be valid, unless the same is in writing and signed by all
parties hereto.

 

18. 
Severability.  In the event any provision or portion of
this Agreement is held to be unenforceable or invalid by any court of competent
jurisdiction, the remainder of this Agreement shall remain in full force and
effect and shall in no way be affected or invalidated thereby.

 

19. 
Arbitration.  Any dispute between the parties, including,
without limitations, any dispute concerning or arising under this Agreement,
shall be settled by binding arbitration using the Arbitration Service of
Portland, Inc., and the rules and procedures thereof.  The arbitration shall be conducted in Portland, Oregon, before a
single arbitrator.  A party
substantially prevailing in the arbitration shall also be entitled to recover
such amount for its costs and reasonable attorneys fees incurred in connection
with the arbitration as shall be determined by the arbitrator.  Judgement upon the arbitration award may be
entered in any court having jurisdiction. 
Nothing herein, however, shall prevent either party from resorting to a
court of competent jurisdiction in those instances where injunctive relief may
be appropriate.  In the event of such
litigation in the courts, the prevailing party shall be entitled to recover its
reasonable attorney fees and other costs incurred in connection with that
action or proceeding, including such costs and attorney fees incurred in
connection with any appeal or petition for review.

 

5

 

20.  Knowing and Voluntary Agreement; No Pressure or Coercion.  Employee acknowledges and agrees that the
only consideration for this Agreement is the consideration expressly described
herein, that she has carefully read the entire Agreement, that she has had the
opportunity to review this Agreement and to have it reviewed and explained to
her by an attorney and financial counsel of her choosing, that she fully
understands it’s final and binding effect, and that she is signing this
Agreement voluntarily, with the full intent of releasing Gardenburger from all
claims, without any undue pressure or coercion from Gardenburger.

 

 

	
   

  	
  GARDENBURGER, INC.

  
	
   

  	
   

  
	
  Signed:

  	
  /s/LORRAINE CRAWFORD

  	
   

  	
  By:

  	
  /s/SCOTT C. WALLACE

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chairman, President and CEO

  
	
   

  	
   

  
	
  Date:   October 2, 2003

  	
  Date:   October 2, 2003

  
						

 

6

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