Document:

Form Lease for Non-Incubator

Tenants on North Property

LEASE AGREEMENT

BY AND BETWEEN

THE UNIVERSITY OF MISSISSIPPI RESEARCH FOUNDATION, INC.,

A MISSISSIPPI NON-PROFIT CORPORATION,

AS LANDLORD

AND

NEMUS,

AS TENANT

Dated:  September 1, 2014

 

 

 

 

BASIC LEASE PROVISIONS

The following is a summary of some of the Basic Provisions of the Lease.  In the event of any conflict between the terms of these Basic Lease Provisions and the relevant Sections of the Lease, the Lease shall control.

		
1.

	
Building

	
 

	
The Innovation Hub

Insight Park

850 Insight Park Avenue

University, Mississippi 38677

 

		
 

	
 

	
 

	
 

		
2.

	
Premises

	
 

	
 

		
 

	
 

	
 

	
 

		
 

	
Suite:

	
 

	
Scale-up Lab

		
 

	
 

	
 

	
 

		
 

	
Floor:

	
 

	
2

		
 

	
 

	
 

	
 

		
 

	
Rentable Square Feet:

	
 

	
3415

		
 

	
 

	
 

	
 

		
3.

	
Term:

	
 

	
36 months

		
 

	
 

	
 

	
 

		
4.

	
Base Rent

	
 

	
 

		
 

	
 

	
 

	
 

		
 

	
Lease Year

	
Rate Per Rentable Square Foot of Premises per Annum

		
 

	
 

	
 

	
 

		
 

	
1

	
 

	
$31.62

		
 

	
 

	
 

	
 

		
 

	
2

	
 

	
$32.55

		
 

	
 

	
 

	
 

		
 

	
3

	
 

	
$33.52

		
 

	
 

	
 

	
 

		
 

	
4

	
 

	
_______________

		
 

	
 

	
 

	
 

		
 

	
5

	
 

	
_______________

		
 

	
 

	
 

	
 

		
6.

	
Security Deposit:

	
 

	
$9,000

		
 

	
 

	
 

	
 

		
7.

	
Tenant's Broker:

	
 

	
N/A

LEASE AGREEMENT

THIS LEASE AGREEMENT (hereinafter called the "Lease") is made and entered into this 1st day of September, 2014, by and between UNIVERSITY OF MISSISSIPPI RESEARCH FOUNDATION, INC., a Mississippi non-profit corporation (hereinafter called "Landlord"); and Nemus (hereinafter called "Tenant").

RECITALS:

WHEREAS, The University of Mississippi, a body corporate under the laws of the State of Mississippi (the "Owner"), is the fee simple owner of certain real property located in Lafayette County, Mississippi as further described on Exhibit "A" attached hereto and made a part hereof (the "Property").

WHEREAS, pursuant to that certain Lease Agreement dated as of April 15, 2011 and such Memorandum of Lease recorded at Book 2011, Page 07001, in the office of the Chancery Clerk of Lafayette County Mississippi (the "Recorder's Office"), Owner has leased to Landlord a certain [4.98]-acre parcel of the Property as further described on Exhibit "B" attached hereto and made a part hereof (the "North Property") and the Landlord has constructed one or more buildings and an office park, together with any and all improvements now or hereafter located thereon and together with any additional land and/or buildings which Landlord hereinafter acquires and makes a part thereof to be known as "Insight Park" (the "Project").  The Project is subject to that certain Development Agreement  by and between the Landlord and the Owner dated as of September 14, 2011 and that certain Declaration of Covenants, Conditions, Restrictions, Reservations, and Easements recorded at Book 2011, Page 07001, in the Recorder's Office (the "Declaration"), which Declaration provides the rules, regulations, covenants, conditions, restrictions, reservations and easements governing the operation of the Project, this Lease, Landlord's lease of the Property to Tenant and Tenant's lease of the Property from Landlord.

WHEREAS, the Landlord desires to lease to Tenant and Tenant desires to lease from Landlord certain space in the Project pursuant to the terms and conditions provided herein.

NOW THEREFORE, the parties hereby agree as follows:

	1.	Definitions:

As used in this Agreement, the following terms have the following meanings:

a.            "Base Rent" shall mean as defined in Section 4.

b.            "Building" shall mean as defined in Section 2.

c.            "Bridge" means that certain proposed bridge for access between (a) the South Property and (b) the North Property and the main campus of the University and to be constructed over and across Mississippi Highway 6.

d.            "City" means the City of Oxford, Mississippi.

e.            "Commencement Date" shall mean as defined in Section 3.

f.            "Common Area"  "Common Area" shall include, but not be limited to, the following:

i.            any portion of the Property (including, without limitation, the improvements thereon) from time to time leased by the Owner to the Landlord and designated as common area by the Landlord, for the common use and enjoyment of any lessees, and their respective sublessees, subtenants, successors, assigns, guests and invitees;

ii.            any other portion of the Property not used or intended for the use as a site or area for improvements to accommodate research, commercial or other business enterprises, owned, created, established, acquired, reserved and/or otherwise designated for the common use and enjoyment of the lessees and their respective sublessees, subtenants, successors, assigns, guests and invitees of the Landlord, including, without limitation, areas to accommodate detention basins and piping, sanitary lift stations, buffer areas and buffer improvements, landscape entry features and other or similar areas and improvements located therein;

 

iii.            all street lights, pedestrian lights and landscape lighting located along the primary access roads or elsewhere on the Property;

iv.            all signage common to the development of the Property and associated landscaping, gateway architectural features and utilities;

v.            all water irrigation systems installed to maintain any portion of the Common Area described in the preceding clauses of this subsection;

vi.            all pathways, sidewalks, trails, bridges, and concourses connecting the parcels or Common Areas, including, but not limited to the Bridge;

vii.            all drainage and detention facilities within the Property; and

viii.            all telecommunications, power or other utility lines owned by the Owner or Landlord.

g.            "Expiration Date" shall mean as defined in Section 3.

h.            "Governmental Requirements" means all laws, ordinances, orders, rules or regulations of all Governmental Authorities, including, without limitation, laws, ordinances, orders, rules and regulations relating to public disclosures, zoning, certificates of need, licenses, permits, subdivision, building, safety, health, fire protection or environmental matters.

i.            "Innovation Center" shall mean the incubator portion of the building which is dedicated to start-up companies requiring more administrative and training services than non-incubator tenants.

j.            "Operating Expenses" shall mean as defined in Section 9.

k.            "Person" means any individual, corporation, partnership, joint venture, association, trust, limited liability company, unincorporated organization or any other form of entity.

l.            "Premises" shall mean as defined in Section 2.

m.            "Project" shall have the definition as set forth in the recitals of this Agreement.

n.            "Property" shall have the definition as set forth in the recitals of this Agreement.

o.            "Rent Commencement Date" shall mean, for Premises that require Work pursuant to Section 9 herein, the earlier of (i) the date all of the Work is completed pursuant to Section 9 herein or (ii) the date the Tenant is open and operating in the Premises.  For Premises that do not require Work, "Rent Commencement Date" shall mean the "Commencement Date."

p.            "State" means the State of Mississippi.

q.            "Term" shall mean as defined in Section 3.

 

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	2.	Premises:

Landlord does hereby rent and lease to Tenant and Tenant does hereby rent and lease from Landlord the following described space (hereinafter called the "Premises"):

3415 rentable square feet of space located on the 2nd floor of a two-story building (the "Building") located on the North Property, said Premises to be located as shown by diagonal lines on the drawing attached hereto as Exhibit B-1 and made a part hereof by reference.  The Premises shall be prepared for Tenant's occupancy in the manner and subject to the provisions of Exhibit C attached hereto and made a part of hereof.  Useable Area shall be determined by application of the most recent version of American National Standard's Institute (ANSI) standard Z65.1.  The factor used to increase Useable Square Feet to Rentable Square Feet represents the Common Area of the Building and the use of other Park assets exclusive of rentable assets such as conference rooms, audio-visual equipment, and display units.  Because of these extra amenities, the factor used is not necessarily the same one that would be derived by use of ANSI standard Z65.1 and therefore Rentable Square Feet is not equal to the ANSI definition of Rentable Square Feet.

	3.	Lease Term:

Tenant shall have and hold the Premises for a term ("Term") commencing on the date (the "Commencement Date"), which is October 1, 2014, and shall terminate at midnight on the last day (the "Expiration Date") of the December 31, 2017. Promptly following the Rent Commencement Date, Landlord and Tenant shall enter into a letter agreement in the form attached hereto as Exhibit D, specifying the Commencement Date, the Rent Commencement Date, the Expiration Date, the exact number of rentable square feet contained within the Premises and the exact amount of Base Rent payable hereunder for the first Lease Year (as defined in Section 0 below).

	4.	Base Rent:

Tenant shall pay to Landlord, at Insight Park, $9,000/mo., University, MS 38677, Attention:  Insight Park Director or IC Manager or Director, or at such other place as Landlord shall designate in writing to Tenant, annual base rent ("Base Rent") in the amounts set forth in the Basic Lease Provisions.  The term "Lease Year," as used in the Basic Lease Provisions and throughout this Lease, shall mean each and every consecutive twelve (12) month period during the Term of this Lease, with the first such twelve (12) month period commencing on the Rent Commencement Date; provided, however, if the Rent Commencement Date occurs other than on the first day of a calendar month the first Lease Year shall be that partial month plus the first full twelve (12) months thereafter.

	5.	Rent Payment:

The Base Rent for each Lease Year shall be payable in equal monthly installments, due on the first day of each calendar month, in advance, in legal tender of the United States of America, without abatement, demand, deduction or offset whatsoever, except as may be expressly provided in this Lease.  One full monthly installment of Base Rent shall be due and payable on the date of execution of this Lease by Tenant for the first month's Base Rent.  If the Rent Commencement Date should be a date other than the first day of a calendar month, the monthly Base Rent installment paid on the date of execution of this Lease by Tenant shall be prorated to that partial calendar month and Tenant shall receive a credit against the following month's rent for such prorated amount due Tenant.  A like monthly installment of Base Rent shall be due and payable on or before the first day of each calendar month following the Rent Commencement Date during the Term hereof.  Tenant shall pay, as additional rent, all other sums due from Tenant under this Lease ("Additional Rent") (the term "Rent," as used herein, means all Base Rent, Additional Rent and all other amounts payable hereunder from Tenant to Landlord).

 

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	6.	Late Payment.

Notwithstanding the other remedies provided herein for the late payment of rent, if any monthly installment of Rent is not received by Landlord on or before the date due, or if any payment due Landlord by Tenant which does not have a scheduled due date:

a.            is not received by Landlord on or before the fifth (5th) business day following the date Tenant was invoiced, or if any checks for Rent are returned unpaid for any reason, a late charge of four percent (4%) percent of such past due amount shall be immediately due and payable as Additional Rent;

b.            and is not received by Landlord on or before the fifteenth (15th) business day following the date Tenant was invoiced, or if any checks for Rent are returned unpaid for any reason, a late charge of ten percent (10%) percent of such past due amount shall be immediately due and payable as Additional Rent and interest shall accrue at the highest rate allowed by applicable law from the date past due until paid.

	7.	Partial Payment.

No payment by Tenant or acceptance by Landlord of an amount less than the Rent herein stipulated shall be deemed a waiver of any other Rent due.  No partial payment or endorsement on any check or any letter accompanying such payment of Rent shall be deemed an accord and satisfaction, but Landlord may accept such payment without prejudice to Landlord's right to collect the balance of any Rent due under the terms of this Lease or any late charge assessed against Tenant hereunder.

	8.	Security Deposit:

Not later than two weeks prior to the Rent Commencement Date, Tenant shall pay Landlord the sum of Nine Thousand Dollars and No/100 Dollars ($9,000) (hereinafter referred to as "Security Deposit") as evidence of good faith on the part of Tenant in the fulfillment of the terms of this Lease, which shall be held by the Landlord during the Term of this Lease, or any renewal thereof.  Under no circumstances will Tenant be entitled to any interest on the Security Deposit.  The Security Deposit may be used by Landlord, at its discretion, to apply to any amount owing to Landlord hereunder, to pay the expenses of repairing any damage to the Premises or any other expense or liability caused by Tenant.  Following any such application of the Security Deposit, Tenant shall pay to Landlord on demand, in immediately available funds, the amount so applied in order to restore the Security Deposit to its original amount.  In addition to any other rights available to Landlord hereunder, the Security Deposit shall be forfeited in any event if Tenant fails to occupy the Premises as Tenant for the full original term of this Lease, or if this Lease should for any reason whatsoever be terminated prior to the normal Expiration Date of the original term, or of any renewal thereof.  If there are no payments to be made from the Security Deposit as set out in this paragraph, or if there is any balance of the Security Deposit remaining after all payments have been made, the Security Deposit, or such balance thereof remaining, will be refunded to the Tenant within thirty (30) days after fulfillment by Tenant of all obligations hereunder.  In no event shall Tenant be entitled to apply the Security Deposit to any Rent due hereunder.  In the event of an act of bankruptcy by or insolvency of Tenant, or the appointment of a receiver for Tenant or a general assignment for the benefit of Tenant's creditors, then the Security Deposit shall be deemed immediately assigned to Landlord.  The right to retain the Security Deposit shall be in addition and not alternative to Landlord's other remedies under this Lease or as may be provided by law and shall not be affected by summary proceedings or other proceedings to recover possession of the Premises.  In the event Landlord should have good cause to doubt the full and faithful performance of every provision of this Lease by Tenant, Landlord shall have the right to demand that Tenant post an additional Security Deposit in the same amount as the original Security Deposit.  Upon sale or conveyance of the Building, Landlord may transfer or assign the Security Deposit to any new owner of the Premises, and upon such transfer all liability of Landlord for the Security Deposit shall terminate.  Landlord shall be entitled to commingle the Security Deposit with its other funds.

	9.	Operating Expenses. 

a.            Tenant agrees to reimburse Landlord throughout the Term, as Additional Rent hereunder for Tenant's Share (as defined below) of the annual Operating Expenses (as defined below) in excess of the Operating Expenses for calendar year _____ (hereinafter called the "Base Year Amount").  The term "Tenant's Share" shall mean the percentage determined by dividing the rentable square footage of the Premises by the rentable square footage of the [Building] or [Project].  If Tenant does not lease the Premises during the entire full calendar year in which the Term of this Lease commences or ends, Tenant's Share of excess Operating Expenses for the applicable calendar year shall be appropriately prorated for the partial year, based on the number of days Tenant has leased the Premises during that year.

 

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b.            "Operating Expenses" shall be all those expenses of operating, servicing, managing, maintaining and repairing the Property, Building, Common Area, and all parking areas (as well as an allocation of certain Project expenses, as reasonably allocated by Landlord to the Building and the other buildings and improvements in the Project) in a manner deemed by Landlord reasonable and appropriate and in the best interest of the tenants of the Building and in a manner consistent with first-class office buildings in and around Oxford, Mississippi.  Operating Expenses shall include, without limitation, the following:

i.            All taxes and assessments, whether general or special, applicable to the Property and the Building, which shall include real and personal property ad valorem taxes, and any and all reasonable costs and expenses incurred by Landlord in seeking a reduction of any such taxes and assessments.  However, Tenant shall not be obligated for taxes on the net income from the operation of the Building, unless there is imposed in the future a tax on rental income on the Building in lieu of the real Property ad valorem taxes, in which event such tax shall be deemed an Operating Expense of the Building.

ii.            Insurance premiums and deductible amounts, including, without limitation, for commercial general liability, ISO Causes of Loss Special Form (or equivalent) property, rent loss and other coverages carried by Landlord on the Building and Property.

iii.            All utilities, including, without limitation, water, power, heating, lighting, ventilation, sanitary sewer and air conditioning of the Building, but not including those utility charges actually paid by Tenant or other tenants of the Building.  Tenant agrees that such services may be provided by and expenses paid to the Owner pursuant to Section 9.01 of the Declaration.

iv.            Janitorial and maintenance expenses, including: (a) janitorial services and janitorial supplies and other materials used in the operation and maintenance of the Building and (ii) the cost of maintenance and service agreements on equipment, window cleaning, grounds maintenance, pest control, security, trash and snow removal, and other similar services or agreements;

v.            Management fees (or a charge equal to fair market management fees if Landlord provides its own management services) and the market rental value of a management office;

vi.            The costs, including interest, amortized over its useful life, of any capital improvement made to the Building by or on behalf of Landlord after the date of this Lease which is required under any governmental law or regulation (or any judicial interpretation thereof) that was not applicable to the Building as of the date of this Lease, and of the acquisition and installation of any device or equipment designed to improve the operating efficiency of any system within the Building or which is acquired to improve the safety of the Building or Project;

vii.            All services, supplies, repairs, replacements or other expenses directly and reasonably associated with servicing, maintaining, managing and operating the Building, including, but not limited to the lobby, vehicular and pedestrian traffic areas and other common use areas;

viii.            Wages and salaries of Landlord's employees (not above the level of Building manager) engaged in the maintenance, operation, repair and services of the Building, including taxes, insurance and customary fringe benefits;

ix.            Legal and accounting costs;

 

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x.            Costs to maintain and repair the Building and Property;

xi.            Landscaping and security costs unless Landlord hires a third party to provide such services pursuant to a service contract and the cost of that service contract is already included in Operating Expenses as described above;

xii.            The Building's allocated share (as reasonably be determined by Landlord) of certain expenses which are incurred on a Project-wide basis including, without limitation, costs in connection with (i) landscaping, (ii) utility and road repairs, (iii) security, (iv) signage installation, replacement and repair and (v) taxes or assessments which are not assessed against a particular building or the parcel on which it is located.  If the Property is covered by a declaration and/or an owners association and costs of the type described above are allocated to the Building by way of dues or costs charged or assessed under that declaration or by that association, those charges or dues shall be included in the Operating Expenses.

c.            Landlord shall, on or before the Commencement Date and on or before December 20 of each calendar year, provide Tenant a statement of the estimated monthly installments of Tenant's Share of excess Operating Expenses increases which will be due for the remainder of the calendar year in which the Rent Commencement Date occurs or for the upcoming calendar year, as the case may be.  In the event Landlord has not provided Tenant with such statement prior to January 1 of any calendar year, Tenant shall continue to pay Tenant's share of excess Operating Expenses in the same amount as the previous calendar year, unless and until Landlord provides a statement of estimated monthly installments for the current calendar year.  As soon as practicable after December 31 of each calendar year during the Term of this Lease, Landlord shall furnish to Tenant an itemized statement of the Operating Expenses within the Building for the calendar year then ended.  Upon reasonable prior written request given not later than thirty (30) days following the date Landlord's statement is delivered to Tenant, Landlord will provide Tenant detailed documentation to support the itemized statement.  If Tenant does not notify Landlord of any objection to Landlord's itemized statement within thirty (30) days of Landlord's delivery thereof, Tenant shall be deemed to have accepted such statement as true and correct and shall be deemed to have waived any right to dispute the excess Operating Expenses due pursuant to that statement.

Tenant shall pay to Landlord, together with its monthly payment of Base Rent as provided in Section 0 and 5 hereinabove, as Additional Rent hereunder, the estimated monthly installment of Tenant's Share of the excess Operating Expenses for the calendar year in question.  At the end of any calendar year if Tenant has paid to Landlord an amount in excess of Tenant's Share of excess Operating Expenses for such calendar year, Landlord shall reimburse to Tenant any such excess amount (or shall apply any such excess amount to any amount then owing to Landlord hereunder, and if none, to the next due installment or installments of Additional Rent due hereunder, at the option of Landlord).  At the end of any calendar year if Tenant has paid to Landlord less than Tenant's Share of excess Operating Expenses for such calendar year, Tenant shall pay to Landlord any such deficiency within thirty (30) days after Tenant receives the annual statement.

For the calendar year in which this Lease terminates, and is not extended or renewed, the provisions of this Section shall apply, but Tenant's Share for such calendar year shall be subject to a pro rata adjustment based upon the number of days prior to the expiration of the Term of this Lease.  Tenant shall make monthly estimated payments of the prorata portion of Tenant's Share for such calendar year (in the manner provided above) and when the actual prorated Tenant's Share for such calendar year is determined Landlord shall send a statement to Tenant and if such statement reveals that Tenant's estimated payments for the prorated Tenant's Share for such calendar year exceeded the actual prorated Tenant's Share for such calendar year, Landlord shall include a check for that amount along with the statement.  If the statement reveals that Tenant's estimated payments for the prorated Tenant's Share for such calendar year were less than the actual prorated Tenant's Share for such calendar year, Tenant shall pay the shortfall to Landlord within thirty (30) days of the date Tenant receives Landlord's statement.

If the Building is less than one hundred percent (100%) occupied during any calendar year of the Term, then the actual Operating Expenses for the calendar year in question shall be increased to the amount of Operating Expenses which Landlord reasonably determines would have been incurred during that calendar year if the Building had been fully occupied throughout such calendar year.  If the provisions of this subsection are applied in any calendar year the Base Year Amount shall likewise be adjusted for the calendar year on which it is based.

 

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	10.	[Building Allowance and Tenant Finishes:  (There is no TA since the space is complete)

a.            Landlord will provide to non-incubator tenants only in newly constructed and previously unoccupied spaces an allowance ("Allowance") of $________ per rentable square foot contained within the Premises to be applied to the cost of the Work described in Exhibit C.  Landlord shall perform such work within the Premises.  Tenant and Landlord agree that all costs of the Work in excess of such Allowance shall be paid by Tenant in accordance with the Work Letter.  Should Tenant fail to pay for such excess costs when due as herein provided, such amount due shall accrue interest at the rate of one and one-half (1.5%) percent per month or fraction thereof from the date such payment is due until paid (Annual Percentage Rate - 18%) and the failure to pay such amount when due shall be a default, subject to the provisions of Section 14.

b.            The Work Letter attached hereto as Exhibit C is hereby made a part of this Lease, and its provisions shall control in the event of a conflict with the provisions contained in this Lease.]

	11.	Use of Premises.

Tenant shall use and occupy the Premises for general office purposes of a type customary for first-class office buildings or for laboratory purposes for designated wet or dry laboratories for laboratory purposes of a type customary for first-class scientific laboratory buildings and for no other purpose.  The Premises shall not be used for any illegal purpose, nor in violation of any valid regulation of any governmental body, nor in any manner to create any nuisance or trespass, nor in any manner to vitiate the insurance or increase the rate of insurance on the Premises or the Building, nor in any manner inconsistent with the first-class nature of the Building.  If, by reason of acts of Tenant, there is any increase in rate of such insurance on the Building or contents created by Tenant's acts or conduct of business, then Tenant hereby agrees to pay such increase.

	12.	Rules and Regulations.

The Building rules and regulations, annexed hereto, and all reasonable rules and regulations which Landlord may hereafter, from time to time, adopt and promulgate for the government and management of said Building, are hereby made a part of this Lease and shall, during the said term, be observed and performed by Tenant, his agents, employees and invitees.

	13.	Default.

If Tenant shall default in the payment of Rent herein reserved when due and fails to cure such default within five (5) business days after written notice of such default is given to Tenant by Landlord (such notice shall only be required twice per year); or if Tenant shall be in default in performing any of the terms or provisions of this Lease other than the provisions requiring the payment of Rent, and fails to cure such default within thirty (30) days after written notice of such default is given to Tenant by Landlord or, if such default cannot be cured within thirty (30) days, Tenant shall not be in default if Tenant promptly commences and diligently proceeds the cure to completion as soon as possible and in all events within ninety (90) days; or if Tenant is adjudicated a bankrupt; or if a permanent receiver is appointed for Tenant's Property and such receiver is not removed within sixty (60) days after written notice from Landlord to Tenant to obtain such removal; or if, whether voluntarily or involuntarily, Tenant takes advantage of any debtor relief proceedings under any present or future law, whereby the Rent or any part thereof, is, or is proposed to be, reduced or payment thereof deferred; or if Tenant's effects should be levied  upon or attached and such levy or attachment is not satisfied or dissolved within thirty (30) days after written notice from Landlord to Tenant to obtain satisfaction thereof; or, if Tenant is an individual, in the event of the death of the individual and the failure of the executor, administrator or personal representative of the estate of the deceased individual to have assigned the Lease within three (3) months after the death to an assignee approved by Landlord; then, and in any of said events, Landlord, at its option, may exercise any or all of the remedies set forth in Section 14 below.

 

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	14.	Remedies.

Upon the occurrence of any default set forth in Section 13 above which is not cured by Tenant within the applicable cure period provided therein, if any, Landlord may exercise all or any of the following remedies:

a.            terminate this Lease by giving Tenant written notice of termination, in which event this Lease shall terminate on the date specified in such notice and all rights of Tenant under this Lease shall expire and terminate as of such date, Tenant shall remain liable for all obligations under this Lease up to the date of such termination and Tenant shall surrender the Premises to Landlord on the date specified in such notice, and if Tenant fails to so surrender, Landlord shall have the right, without notice, to enter upon and take possession of the Premises and to expel and remove Tenant and its effects without being liable for prosecution or any claim of damages therefor;

b.            terminate this Lease as provided in the immediately preceding subsection and recover from Tenant all damages Landlord may incur by reason of Tenant's default, including without limitation, the then present value of (i) the total Rent which would have been payable hereunder by Tenant for the period beginning with the day following the date of such termination and ending with the Expiration Date of the term as originally scheduled hereunder, minus (ii) the aggregate reasonable rental value of the Premises for the same period (as determined by a real estate broker licensed in Mississippi, who has at least ten (10) years experience, immediately prior to the date in question evaluating commercial office space, taking into account all relevant factors including, without limitation, the length of the remaining Term, the then current market conditions in the general area, the likelihood of reletting for a period equal to the remainder of the Term, net effective rates then being obtained by landlords for similar type space in similar buildings in the general area, vacancy levels in the general area, current levels of new construction in the general area and how that would affect vacancy and rental rates during the period equal to the remainder of the Term and inflation), plus (iii) the costs of recovering the Premises, and all other expenses incurred by Landlord due to Tenant's default, including, without limitation, reasonable attorneys' fees, plus (iv) the unpaid Rent earned as of the date of termination, plus interest, all of which sum shall be immediately due and payable by Tenant to Landlord;

c.            without terminating this Lease, and without notice to Tenant, Landlord may in its own name, but as agent for Tenant enter into and take possession of the Premises and re-let the Premises, or a portion thereof, as agent of Tenant, upon any terms and conditions as Landlord may deem necessary or desirable (Landlord shall have no obligation to attempt to re-let the Premises or any part thereof.  Upon any such re-letting, all rentals received by Landlord from such re-letting shall be applied first to the costs incurred by Landlord in accomplishing any such re-letting, and thereafter shall be applied to the Rent owed by Tenant to Landlord during the remainder of the term of this Lease and Tenant shall pay any deficiency between the remaining Rent due hereunder and the amount received by such re-letting as and when due hereunder;

d.            allow the Premises to remain unoccupied and collect Rent from Tenant as it becomes due; or

e.            pursue such other remedies as are available at law or in equity.

	15.	Services.

Building services will generally be available at all times, but Landlord shall provide maintenance of Building utilities and systems during the normal business hours except as noted:

a.            Elevator service for passenger and delivery needs;

b.            Air conditioning sufficient to cool the Premises and heat sufficient to warm the Premises to maintain, in Landlord's reasonable judgment, comfortable temperatures in the Premises, subject to governmental regulations and then existing Building capacities;

c.            Hot and cold running water for all restrooms and lavatories;

 

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d.            Janitorial service at times established by the Landlord for the Building in keeping with the standards generally maintained in similar office buildings in the Oxford, Mississippi area; and to include soap, paper towels, and toilet tissue for public restrooms;

e.            Electrical and mechanical maintenance services are provided Monday through Friday;

f.            Electric power for lighting and outlets not in excess of a total of 3 watts per useable square foot of the Premises at 100% connected load, subject to governmental regulations and then existing Building capacities;

g.            Replacement of Building standard lamps and ballasts as needed;

h.            Repairs and maintenance as described in Section 1 of the Supplemental Conditions of this Lease; and;

i.            General management, including supervision, inspections, recordkeeping, accounting, leasing and related management functions.

Tenant shall have no right to any services in excess of those provided herein.  If Tenant uses services in an amount or for a period in excess of that provided for herein, then Landlord reserves the right to: (i) charge Tenant as Additional Rent hereunder a reasonable sum as reimbursement for the direct cost of such added services (plus a reasonable administrative charge with respect thereto); (ii) charge Tenant for the cost of any additional equipment or facilities or modifications thereto necessary to provide the additional services; and/or (iii) to discontinue providing such excess services to Tenant;

Landlord shall not be liable for any damages directly or indirectly resulting from the interruption in any of the services described above, nor shall any such interruption entitle Tenant to any abatement of Rent or any right to terminate this Lease.  Landlord shall use all reasonable efforts to furnish uninterrupted services as required above;

	16.	Parking.

No rights to specific parking spaces are granted under this Lease.  Landlord reserves the right to build improvements upon, reduce the size of, relocate, reconfigure, eliminate, and/or make alterations or additions to such parking facilities at any time.  Landlord may designate visitor parking spaces.  The parking lot and vehicle use are subject to the most recently issued University of Mississippi Parking and Traffic Rules and Regulations.  All issues pertaining to vehicle registration and fees must be directed to the University Police and Campus Safety Department Parking Services Office ("Parking Services").  Parking Services may impose fines for Tenant or Tenant's employees parking in visitor parking spaces.  Landlord can impose fines for parking fees not paid by Tenant to Parking Services.  Tenant must obtain prior written approval from the Landlord and agree to pay any assigned and reasonable fees to consume electric power from the parking lot plug-in power poles.

	17.	Entire Agreement; Special Stipulations and Supplemental Conditions.

This Lease, including the recitals, the Special Stipulations and the Supplemental Conditions, attached hereto as Exhibit D and E respectively, which sections are hereby incorporated herein and made a part hereof by this reference, contains the entire agreement of the parties and no representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied herein shall be of any force or effect.  The Special Stipulations are modifications to the terms of this Lease and such Special Stipulations shall control in the event of any conflict with the other provisions of this Lease or any exhibits hereto.

 

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	18.	Notices.

Any notice which is required or permitted to be given by either party under this Lease shall be in writing and must be given only by certified mail, return receipt requested, by hand delivery or by nationally recognized overnight courier service at the addresses set forth below.  Any such notice shall be deemed given on the date sent or deposited for delivery in accordance with one of the permitted methods described above.  The time period for responding to any such notice shall begin on the date the notice is actually received, but refusal to accept delivery or inability to accomplish delivery because the party can no longer be found at the then current notice address, shall be deemed receipt.  Either party may change its notice address by notice to the other party in accordance with the terms of this Section.  The following are the initial notice addresses for each party:

	
Landlord's Notice Address:

 

Insight Park

850 Insight Park Avenue

University, MS 38677

Attention:  Director

Telephone Number: (662) 915-2526

Facsimile Number: (662) 915-2339

	
Tenant's Notice Address:

 

Nemus

16440 Bake Parkway

Suite 150

Irvine, CA 92618

Attention:  Mr. Reg Lapham

19.     Use of Communications Resources

Tenants who connect to Insight Park data or other telecommunications resources are responsible for the transmissions they generate on those networks. Insight Park may monitor transmissions on these networks and, at Insight Park's discretion, deny clients access to the networks if Tenants are found to be generating illegal, harmful or nuisance transmissions. If Insight Park denies a Tenant access to a network, it shall be the responsibility of the Tenant to locate the source of the offending transmission and demonstrate that reasonable steps have been undertaken to ensure cessation of the offending transmissions. After the source of the offending transmissions has been located and the transmissions cease, Insight Park may, at their discretion, grant Tenants access to the appropriate networks.

(SIGNATURE PAGE FOLLOWS)

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IN WITNESS WHEREOF, the parties herein have entered into this Lease the day and year first above written.

	
 

 

 

 

 

 

 

	
LANDLORD:

 

UNIVERSITY OF MISSISSIPPI RESEARCH FOUNDATION, INC., an Mississippi non-profit corporation

 By:___________________________

 

Name:Insight Park

 

Its:Assistant Director

 

 

	
 

 

 

 

 

	
TENANT:

 

NEMUS

 

By:___________________________

 

Name:Nemus

 

Its:_President___________________________

 

 

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EXHIBIT A

Legal Description of Property

Legal Description of South Property

Description: A tract of land being a fraction of the South Half (S 1/2) of Section 30, the Southwest Quarter (SW 1/4) of Section 29, and the Northeast Quarter (NE 1/4) of Section 31, Township 8 South, Range 3 West, Lafayette County, Mississippi; and being described in more detail as follows:

Commencing from a 1" square iron tube found marking the Northeast Corner of the Southeast Quarter (SE 1/4) of Section 30, Township 8 South, Range 3 West, Lafayette County, Mississippi; run thence South 00°20'54" East along the east line of said section for a distance of 1,548.89 feet to a concrete monument found at a fence corner marking the Southeast Corner of Hathorn's University Hills Subdivision, said monument being the point of beginning of this description; run thence South 00°20'54" East continuing along said Section line and a wire fence for a distance of 39.49 feet to a concrete monument found; run thence South 51°38'58" East leaving said Section line and end of fence for a distance of 100.00 feet to a 1/2" rebar set at the beginning of a circular curve to the left; run thence along said curve having an arc length of 1,270.77, a chord bearing of South 34°15'34" West, a chord length of 1,269.69 feet, and a radius of 8,898.25 feet to a 1/ 2" rebar set; run thence Due West  for a distance of 1,742.47 feet to a 1/2" rebar set; run thence Due North for a distance of 610.00 feet to a 1/2" rebar set; run thence North 46°35'59" West for a distance of 1,278.97 feet to a 1/2" rebar set; run thence Due North for a distance of 960.02 feet to a 1/2" rebar set on the South right-of-way line of Mississippi State Highway Number 6, said rebar being 125.00 feet right of and perpendicular to centerline median station number 166+08.41; run thence South 89°59'24" East along said South right-of-way line and partially near a wire fence for a distance of 1,800.00 feet to a concrete monument found at the Northwest corner of aforementioned Hathorn's University Hills Subdivision, said monument being 125.00 right of and perpendicular to centerline median station number 184+08.41, passing through a right-of-way marker found on line 1,408.41 back; said marker being 125.00 feet right of and perpendicular to centerline median station number 170+00.00; run thence South 00°27'38" East leaving said right-of way line and along the West line of said Subdivision, partially near a wire fence  for a distance of 1,298.18 feet to a concrete monument found at a fence corner marking the Southwest Corner of said Subdivision; run thence North 89°58'38" East along the South line of said Subdivision and along and near said wire fence for a distance of 1,497.39 feet  the point of beginning of the herein described tract of land. Said tract contains 111.68 acres, more or less.

Legal Description of North Property

Description: A tract of land being a fraction of the Northeast Quarter ( NE 1/4 ) of Section 30, Township 8 South, Range 3 West, Lafayette County, Mississippi, and being described in more detail as follows:

Commencing from a 1" square iron tube found marking the Southeast Corner of the Northeast Quarter ( NE 1/4 ) of Section 30, Township 8 South, Range 3 West, run thence South 89°54'37" West for a distance of 898.13 feet to a 1/2" rebar set on the North right of way line of Mississippi State Highway No. 6, said rebar being 125.00 feet left of and perpendicular to the centerline median plan station number 190+10.44, said rebar also being the Point of Beginning of this description; Run thence North 89°59'32" West along said North right of way line and near a fence line for a distance of 1,764.21 feet to a 1/2" rebar set, said rebar being 125.00 feet left of and perpendicular to centerline median plan station number 172+46.24; run thence North 00°23'38" East leaving said right of way line for a distance of 355.70 feet to a 1/2" rebar set, passing through a concrete monument found on line 355.03 feet back; run thence to and along a chain link fence line as follows: South 71°13'14" East for a distance of 253.12 feet to a 2 1/2" metal fence corner post found, passing through the beginning of said fence line 235.48 feet back; run thence North 77°25'06" East for a distance of 357.52 feet to a 3" angle iron fence corner post found; run thence North 00°33'34" East for a distance of 54.77 to a 1/2" rebar set; run thence North 28°08'45" East leaving said fence line for a distance of 45.67 feet to a 3" metal fence corner post found on another chain link fence line; run thence North 00°03'26" East along said fence line for a distance of 103.05 feet to a 1/2" rebar set; run thence South 82°48'18" East leaving said fence line for a distance of 457.38 to a 1/2" rebar set; run thence Due East for a distance of 179.22 feet to a 1/2" rebar set; run thence North 61°01'12" East for a distance of 199.57 feet to a 1/2" rebar set; run thence North 02°35'34" East for a distance of 249.82 feet to a 1/2" rebar set; run thence South 83°23'23" East for a distance of 92.02 feet to a 1/2" rebar set on the west side of Hathorn Road; run thence along the westerly and southerly side of Hathorn Road as follows: South 25°13'49" East for a distance of 79.55 feet to a 1/2" rebar set, said rebar being at the beginning of a circular curve to the left; run thence along said circular curve having a radius of 313.00 feet, an arc length of 281.15 feet, a chord bearing of South 48°07'39" East, and a Chord Length of 271.79 feet to a 1/2" rebar set; run thence South 75°22'51" East for a distance of 74.80 feet to a 1/2" rebar set; run thence South 12°56'24" West for a distance of 303.34 feet to a 1/2" rebar set; run thence South 00°00'28" West for a distance of 260.89 feet to the point of beginning of this description. Said tract contains 19.92 acres, more or less.

 

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      Less and Except

Tract 1 Description: A tract of land being a fraction of the Northeast Quarter ( NE 1/4 ) of Section 30, Township 8 South, Range 3 West, Lafayette County, Mississippi, and being described in more detail as follows:

Commencing from a 1" square iron tube found marking the Southeast Corner of the Northeast Quarter ( NE 1/4 ) of Section 30, Township 8 South, Range 3 West, run thence North 84°37'49" West for a distance of 1,868.15 feet to a 1/2" rebar set; said rebar being the point of beginning of this description; run thence North 02°09'29" West for a distance of 145.83 feet to a 1/2" rebar set; run thence North 87°50'31" East for a distance of 116.67 feet to a 1/2" rebar found; run thence South 02°09'29" East for a distance of 145.83 feet to a 1/2" rebar set;  run thence South 87°50'31" West for a distance of 116.67 feet to the point of beginning of this Description. Said tract contains 0.39 acre, more or less.

also Less and Except

Tract 2 Description: A tract of land being a fraction of the Northeast Quarter ( NE 1/4 ) of Section 30, Township 8 South, Range 3 West, Lafayette County, Mississippi, and being described in more detail as follows:

Commencing from a 1" square iron tube found marking the Southeast Corner of the Northeast Quarter ( NE 1/4 ) of Section 30, Township 8 South, Range 3 West, run thence North 84°37'49" West for a distance of 1,868.15 feet to a 1/2" rebar set; said rebar being the point of beginning of this description; run thence South 87°50'31" West for a distance of 113.33 feet to a 1/2" rebar found; run thence North 02°09'29" West for a distance of 150.00 feet to a 1/2" rebar set; run thence North 87°50'31" East for a distance of 230.00 feet to a PK nail set in a paved road; run thence South 02°09'29" East for a distance of 4.17 feet to a 1/2" rebar found; run thence South 87°50'31" West for a distance of 116.67 feet to a 1/2" rebar set; run thence South 02°09'29" East for a distance of 145.83 feet to the point of beginning of this Description. Said tract contains 0.40 acre, more or less.

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EXHIBIT B

Legal Description of Parcel 1 on the North Property

 

 

 

  

14

EXHIBIT B-1

PREMISES

[ATTACH FLOOR PLAN SHOWING PREMISES BY DIAGONAL LINES]

First Floor Plan

 

15

Second Floor Plan

16

EXHIBIT C

(WORK LETTER)

[CONFIRM ANY CONSTRUCTION MANAGEMENT FEE TO BE PAID FROM ALLOWANCE, IF APPLICABLE]

 

 

 

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EXHIBIT D

ACKNOWLEDGMENT, ACCEPTANCE AND AMENDMENT

Insight Park, The Innovation Hub

NEMUS

Tenant hereby acknowledges that the Premises demised pursuant to the Lease to which this Exhibit is attached (the "Lease"), and all tenant finish items to be completed by the Landlord, or Landlord's contractors, have been satisfactorily completed in every respect, except for the punch list items set forth below, and Tenant hereby accepts said Premises as substantially complete and ready for the uses intended as set forth in the Lease.  Landlord shall complete the punch list items, if any, as soon as is reasonably possible.  Possession of the Premises is hereby delivered to Tenant, and any damages to walls, ceilings, floors or existing work, except for any damages caused by Landlord or Landlord's contractors in completing any punch list items, shall be the sole responsibility of Tenant.

If any improvements or tenant finishes are to be constructed or installed by Tenant or Tenant's contractors, as previously approved by Landlord, Tenant hereby agrees to indemnify and hold harmless Landlord from and against any claims, demands, loss or damage Landlord may suffer or sustain as a result of such work by Tenant or Tenant's contractors, including, without limitation, any claim of lien which may be filed against the Premises or Landlord's Property as a result of such work by Tenant's contractors or representatives.  In the event any such claim of lien is filed against Landlord's Property by any contractor, laborer or materialman performing work on the Premises at Tenant's direction, Tenant agrees to cause such lien to be discharged, by payment of the claim or bond, within ten (10) days of receipt of demand by Landlord.

Tenant and Landlord hereby further acknowledge and agree as follows:

1.            The Lease Commencement Date (as defined in the Lease) is September 1, 2014, Rent Commencement Date (as defined in the Lease) is October 1, 2014, and the Lease Expiration Date (as defined in the Lease) is December 31, 2017

2.            The exact rentable square feet contained within the Premises is 3415 square feet.

3.            Tenant's Share is 3415.

		a.	The initial Base Rent payable under the Lease is $9,000/mo. and will commence on October 1, 2014.

4.            Tenant intends to occupy the Premises on October 1, 2014.

5.            Keycards and/or keys to the Premises will be arranged for Tenant.

		a.	The following punch list items are all that remain to be completed by Landlord or Landlord's contractor.  We agree to pay 50% of the cost associated with the modifications to the suite.

Security cameras installed

Alarm system installed

Deadbolt locks installed and new locks with unique master key

[unless something is inserted above, the parties agree that no punch list items remain to be completed]

 

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6.            This Acknowledgment, Acceptance and Amendment, when executed by Landlord and Tenant, shall be attached to and shall become a part of the Lease.  If any provision contained herein conflicts with any provision of the Lease, the provisions hereof shall supersede and control, and the Lease shall be deemed modified and amended to conform with the provisions hereof.

7.            Other agreements or modifications:

Tenant to procure and handle installation of freezer and the required safe for lockup.

 [unless something is inserted above, the parties agree that there are no other agreements or modifications]

IN WITNESS WHEREOF, Landlord and Tenant have hereunto set their hands and seals, this 1st day of September, 2014.

	
TENANT:

 

 

NEMUS

 

 

By: _______________________________________                                                             

 

Name:Nemus

 

Its:  President                                                                                               

 

	
LANDLORD:

 

 

UNIVERSITY OF MISSISSIPPI RESEARCH FOUNDATION, INC., a Mississippi non-profit corporation

 

By: _______________________   

                                                             

Name: Insight Park

 

Its: Assistant Director

 

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EXHIBIT E

SPECIAL STIPULATIONS

Insight Park, Building ___

 

 

 

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EXHIBIT F

SUPPLEMENTAL LEASE CONDITIONS

1.            Repairs By Landlord.  Tenant, by taking possession of the Premises, shall accept and shall be held to have accepted the Premises as suitable for the use intended by this Lease.  Landlord shall not be required, after possession of the Premises has been delivered to Tenant, to make any repairs or improvements to the Premises, except as set forth in this Lease.  Except for damage caused by casualty and condemnation (which shall be governed by Sections 12 and 16 of these Supplemental Conditions), and subject to normal wear and tear, Landlord shall maintain in good repair the exterior walls, roof, common areas, foundation, structural portions and the Building's mechanical, electrical, plumbing and HVAC systems (but not any special or supplemental systems installed by or on behalf of Tenant), provided such repairs are not occasioned by Tenant, Tenant's invitees or anyone in the employ or control of Tenant.

2.            Repairs By Tenant.  Except as described in Section 1 above, Tenant shall, at its own cost and expense, maintain the Premises in good repair and in a neat and clean, first-class condition, including making all necessary repairs and replacements.  Tenant shall further, at its own cost and expense, repair or restore any damage or injury to all or any part of the Building caused by Tenant or Tenant's agents, employees, invitees, licensees, visitors or contractors, including but not limited to any repairs or replacements necessitated by (i) the construction or installation of improvements to the Premises by or on behalf of Tenant, or (ii) the moving of any Property into or out of the Premises.  If Tenant fails to make such repairs or replacements promptly, Landlord may, at its option, make the repairs and replacements and the costs of such repair or replacements shall be charged to Tenant as Additional Rent and shall become due and payable by Tenant with the monthly installment of Base Rent next due hereunder. Further, Tenant agrees:

a.            that it will not commit or allow any waste or damage to be committed on any portion of the Premises, and shall, at the termination of this Lease by lapse of time or otherwise, return the Premises to Landlord in as good condition as such Premises were in on the Rent Commencement Date, ordinary wear and tear excepted, and upon termination of this Lease, Landlord shall have the right to re-enter and resume possession of the Premises;

b.            that any special wiring installed for or by Tenant, including, but not limited to, cable and conduits, shall be removed at Tenant's expense within seven (7) days of the expiration of this Lease, but only if such removal is requested by Landlord;

c.            that any improvements, including, but not limited to wall coverings, floor coverings or carpet, paneling, doors and hardware or cabinetry are made to the Premises at Tenant's expense or under any agreement with Tenant whereby Tenant is given an allowance or rent reduction in exchange for Landlord's agreement to install or allow to be installed lease improvements shall become the property of Landlord.  Landlord shall determine whether any or all improvements shall be removed at the expense of the Tenant and part or all of the space is restored to its original pre-improvement condition;

d.            that Tenant shall not lay linoleum, tile, carpet or any other floor covering without Landlord's prior written approval. The expense of repairing any damage resulting from a violation of this rule or the removal of any floor covering shall be borne by Tenant;

e.            that all wallpaper or vinyl fabric materials which Tenant may install on painted walls shall be applied with a strippable adhesive.  The use of non-strippable adhesives will cause damage to the walls when materials are removed, and repairs made necessary thereby shall be made by Landlord at Tenant's expense;

f.            that if Tenant requires telegraphic, telephonic, burglar alarm or similar services, it shall first obtain, and comply with, Landlord's instruction with respect to their installation; and

g.            that Tenant will be responsible for any damage to the Premises, including carpeting and flooring, as a result of:  rust or corrosion of file cabinets, roller chairs, metal objects, or spills of any type of liquid.

 

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3.            Alterations and Improvements.  Except for minor, decorative alterations which do not affect the Building structure or systems, are not visible from outside the Premises and do not cost in excess of $10,000.00 in the aggregate, Tenant shall not make or allow to be made any alterations, physical additions or improvements in or to the Premises without first obtaining in writing Landlord's written consent for such alterations or additions, which consent may be granted or withheld in the sole, unfettered discretion of Landlord (if the alterations will affect the Building structure or systems or will be visible from outside the Premises), but which consent shall not be unreasonably withheld (if the alterations will not affect the Building structure or systems and will not be visible from outside the Premises).  Upon Landlord's request, Tenant will furnish Landlord plans and specifications for any proposed alterations, additions or improvements and shall reimburse Landlord for its reasonable cost to review such plans.  Any alterations, physical additions or improvements shall at once become the property of Landlord; provided, however, Landlord, at its option, may require Tenant to remove any alterations, additions or improvements (and/or any cabling installed by or on behalf of Tenant) in order to restore the Premises to the condition existing on the Commencement Date.  All costs of any such alterations, additions or improvements shall be borne by Tenant.  All alterations, additions or improvements must be made in a good, first-class, workmanlike manner and in a manner that does not disturb other tenants (i.e., any loud work must be performed during non-business hours) and Tenant must maintain appropriate liability and builder's risk insurance throughout the construction.  Tenant does hereby indemnify and hold Landlord harmless from and against all claims for damages or death of persons or damage or destruction of property arising out of the performance of any such alterations, additions or improvements made by or on behalf of Tenant.  Under no circumstances shall Landlord be required to pay, during the Term of this Lease and any extensions or renewals thereof, any ad valorem or Property tax on such alterations, additions or improvements, Tenant hereby covenanting to pay all such taxes when they become due.  In the event any alterations, additions, improvements or repairs are to be performed by contractors or workmen other than Landlord's contractors or workmen, any such contractors or workmen must first be approved, in writing, by Landlord.  Landlord agrees to assign to Tenant any rights it may have against the contractor of the Premises with respect to any work performed by said contractor in connection with improvements made by Landlord at the request of Tenant.

4.            Landlord's Failure to Give Possession.  Landlord shall not be liable for damages to Tenant for failure to deliver possession of the Premises to Tenant if such failure is due to no fault of Landlord, to the failure of any construction or remodeling of the Premises by Tenant to be completed or to the failure of any previous tenant to vacate the Premises.  Landlord will use commercially reasonable efforts to give possession to Tenant by the scheduled Commencement Date of the Term.  If Landlord's failure to do so is caused by the act of any previous tenant holding over, Landlord agrees to transfer to Tenant the right to prosecute in its own name any cause of action which Landlord may have against such tenant holding over, Tenant to hold for itself any recovery in such action, except for any amounts due Landlord as Rent hereunder.

5.            Acceptance and Waiver.  Landlord shall not be liable to Tenant, its agents, employees, guests or invitees (and, if Tenant is an entity, its officers, members, partners, managers, agents, employees, guests or invitees) for any damage caused to any of them due to the Building or any part or appurtenances thereof being improperly constructed or being or becoming out of repair, or arising from the leaking of gas, water, sewer or steam pipes, or from electricity, but Tenant, by moving into the Premises and taking possession thereof, shall accept, and shall be held to have accepted the Premises as suitable for the purposes for which the same are leased, and shall accept and shall be held to have accepted the Building and every appurtenances thereof, and Tenant by said act waives any and all defects therein; provided, however, that this Section shall not apply to any damages or injury directly caused by or resulting from the gross negligence or willful misconduct of Landlord.

6.            Signs.  A Building standard suite entry shall be installed on the door to the Premises or adjacent to the entry to the Premises as part of the Work and the cost thereof shall be paid out of the Allowance.  Otherwise, Tenant shall not paint or place signs, placards, or other advertisement of any character upon the windows or inside walls of the Premises except with the consent of Landlord which consent may be withheld by Landlord in its absolute discretion, and Tenant shall place no signs upon the outside walls, common areas or the roof of the Building.  Landlord shall have the right to remove any such sign, placard, picture, name, advertisement, or notice without notice to and at the expense of Tenant.  If Landlord shall have given such consent to Tenant at any time, whether before or after the execution of this Lease, such consent shall in no way operate as a waiver or release of any of the provisions hereof or of this Lease, and shall be deemed to relate only to the particular sign, placard, picture, name, 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 other sign, placard, picture, name, advertisement or notice.  All approved signs shall be printed, painted, affixed and inscribed at the expense of Tenant by a person approved by Landlord.  All approved signs must be removed by Tenant upon vacating the Premises.

 

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7.            Advertising.  Landlord may advertise the Premises as being "For Rent" at any time following a default by Tenant which remains uncured and at any time within one hundred eighty (180) days prior to the expiration, cancellation or termination of this Lease for any reason and during any such periods may exhibit the Premises to prospective tenants.

8.            Address.  Tenant shall use the address stated in this Lease only during its tenancy.  At such time that this Lease expires or is terminated, Tenant agrees to discontinue usage of the address on any printed materials.

9.            Removal of Fixtures.  If Tenant is not in default hereunder, Tenant may, prior to the expiration of the Term of this Lease, or any extension thereof, remove any trade fixtures and equipment which it has placed in the Premises which can be removed without significant damage to the Premises, provided Tenant repairs all damages to the Premises caused by such removal.

10.            Entering Premises.  Landlord may enter the Premises at reasonable hours provided that Landlord's entry shall not unreasonably interrupt Tenant's business operations and that prior oral or written notice is given when reasonably possible (and, if in the opinion of Landlord any emergency exists, at any time and without notice): (a) to make repairs, perform maintenance and provide other services described herein (no prior notice is required to provide routine services) which Landlord is obligated to make to the Premises or the Building pursuant to the terms of this Lease or to the other premises within the Building pursuant to the leases of other tenants; (b) to inspect the Premises to see that Tenant is complying with all of the terms and conditions of this Lease and with the rules and regulations hereof; (c) to remove from the Premises any articles or signs kept or exhibited therein in violation of the terms hereof; (d) to run pipes, conduits, ducts, wiring, cabling or any other mechanical, electrical, plumbing or HVAC equipment through the areas behind the walls, below the floors or above the drop ceilings; (e) to show the space to prospective tenants, and (f) to exercise any other right or perform any other obligation that Landlord has under this Lease.  Landlord shall be allowed to take all material into and upon the Premises that may be required to make any repairs, improvements and additions, or any alterations, without in any way being deemed or held guilty of trespass and without constituting a constructive eviction of Tenant.  The Rent reserved herein shall not abate while said repairs, alterations or additions are being made and Tenant shall not be entitled to maintain a set-off or counterclaim for damages against Landlord by reason of loss from interruption to the business of Tenant because of the prosecution of any such work.  All such repairs, decorations, additions and improvements shall be done during ordinary business hours, or, if any such work is at the request of Tenant to be done during any other hours, the Tenant shall pay all overtime and other extra costs.

11.            Indemnities.  Tenant does hereby indemnify and save harmless Landlord against all claims for damages to persons or property which are caused anywhere in the Building or on the Property by the negligence or willful misconduct of Tenant, its agents or employees or which occur in the Premises (or arise out of actions taking place in the Premises) unless such damage is caused by the negligence or willful misconduct of Landlord, its agents, or employees.  The indemnities contained herein do not override the waivers contained in Section 12 below.

12.            Tenant's Insurance; Waivers.

a.            Tenant further covenants and agrees that from and after the date of delivery of the Premises from Landlord to Tenant, Tenant will carry and maintain, at its sole cost and expense, the following types of insurance, in the amounts specified and in the form hereinafter provided for:

i.            Liability Insurance in the Commercial General Liability form (or reasonable equivalent thereto) covering the Premises and Tenant's use thereof against claims for personal injury or death, property damage and product liability occurring upon, in or about the Premises, such insurance to be written on an occurrence basis (not a claims made basis), to be in combined single limits amounts not less than $2,000,000 and to have general aggregate limits of not less than $4,000,000 for each policy year.  The insurance coverage required under this Section 12 (a)(i) shall, in addition, extend to any liability of Tenant arising out of the indemnities provided for in Section 11 of these Supplemental Conditions and, if necessary, the policy shall contain a contractual endorsement to that effect.  The general aggregate limits under the Commercial General Liability insurance policy or policies must apply separately to the Premises and to Tenant's use thereof (and not to any other location or use of Tenant) and, if necessary, such policy shall contain an endorsement to that effect.  Commercial General Liability insurance shall be written on ISO occurrence form CG00010196 (or a substitute form providing equal or better coverage).  The certificate of insurance evidencing the Commercial General Liability form of policy shall specify all endorsements required herein and shall specify on the face thereof that the limits of such policy apply separately to the Premises.

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ii.            Boiler and machinery insurance in adequate amounts on all fired objects and other fired pressure vessels and systems serving the Premises (if any); and if the said objects and the damage that may be caused by them or result from them are not covered by Tenant's extended coverage insurance, then such insurance shall be in an amount not less than $250,000 and be issued on a replacement cost basis.

iii.            Commercial property insurance covering all of the items included in Tenant's leasehold improvements, heating, ventilating and air conditioning equipment maintained by Tenant, trade fixtures, merchandise and personal property from time to time in, on or upon the Premises, and alterations, additions or changes made by Tenant pursuant to Section 10 of the Lease, in an amount not less than one hundred percent (100%) of their full replacement value from time to time during the Term, providing protection against perils included within the ISO Special Causes of Loss Form insurance policy (or substitute form providing equal or better coverage), together with insurance against sprinkler damage, vandalism and malicious mischief.  Any policy proceeds from such insurance shall be held in trust by Tenant's insurance company for the repair, construction and restoration or replacement of the property damaged or destroyed unless this Lease shall cease and terminate under Section 22 of these Supplemental Conditions.

iv.            Workers' Compensation and Employer's Liability insurance affording statutory coverage and containing statutory limits with the Employer's Liability portion thereof to have minimum limits of $500,000.00.

v.            Business Interruption Insurance equal to not less than fifty percent (50%) of the estimated annual gross earnings (as defined in the standard form of business interruption insurance policy) of Tenant generated from or through the Premises for its most recent fiscal year which insurance shall be issued on an "all risks" basis (or its equivalent).

vi.            Pollution liability coverage, if requested in writing by Landlord, with a limit of not less than $1,000,000 depending on Tenant's Permitted Use.

b.            All policies of the insurance provided for in this Section 12 shall be issued in form acceptable to Landlord by insurance companies with a rating and financial size of not less than A-X in the most current available "Best's Insurance Reports," and licensed to do business in Mississippi.  Each and every such policy:

i.            shall name Landlord as an additional insured (as well as any mortgagee of Landlord and any other party reasonably designated by Landlord) and the coverage in (ii) shall also name Landlord as loss payee with respect to all leasehold improvements and fixtures (other than Tenant's trade fixtures);

ii.            shall (and a certificate thereof shall be delivered to Landlord at or prior to the execution of the Lease) be delivered to each of Landlord and any such other parties in interest within thirty (30) days after delivery of possession of the Premises to Tenant and thereafter within thirty (30) days prior to the expiration of each such policy, and, as often as any such policy shall expire or terminate.  Renewal or additional policies shall be procured and maintained by Tenant in like manner and to like extent;

iii.            shall contain a provision that the insurer will give to Landlord and such other parties in interest at least thirty (30) days notice in writing in advance of any material change, cancellation, termination or lapse, or the effective date of any reduction in the amounts of insurance; and;

 

24

iv.            shall be written as a primary policy which does not contribute to and is not in excess of coverage which Landlord may carry.

c.            the insurance provided for in this Section may be maintained by means of a policy or policies of blanket insurance, covering additional items or locations or insureds, provided, however, that:

i.            Landlord and any other parties in interest from time to time designated by Landlord to Tenant shall be named as an additional insured thereunder as its interest may appear;

ii.            the coverage afforded Landlord and any such other parties in interest will not be reduced or diminished by reason of the use of such blanket policy of insurance;

iii.            any such policy or policies (except any covering the risks referred to in Section 12 (a)) shall specify therein (or Tenant shall furnish Landlord with a written statement from the insurers under such policy specifying) the amount of the total insurance allocated to the Tenant's improvements and property more specifically detailed in Section 12 (a)(iii); and;

iv.            the requirements set forth in Section 12 (b) are otherwise satisfied.

d.            Notwithstanding anything to the contrary set forth hereinabove, Landlord and Tenant do hereby waive any and all claims against one another for damage to or destruction of real or personal property to the extent such damage or destruction can be covered by ISO Causes of Loss - Special Form property insurance of the type described herein.  Each party shall also be responsible for the payment of any deductible amounts required to be paid under the applicable ISO Causes of Loss - Special Form fire and casualty insurance carried by the party whose property is damaged.  These waivers shall apply if the damage would have been covered by a customary ISO Causes of Loss - Special Form insurance policy, even if the party fails to obtain such coverage.  The intent of this provision is that each party shall look solely to its insurance with respect to property damage or destruction which can be covered by ISO Causes of Loss - Special Form insurance of the type described in Section 12 (a)(iii).  To further effectuate the provisions of this Section 12, Landlord and Tenant both agree to provide copies of this Lease (and in particular, these waivers) to their respective insurance carriers and to require such insurance carriers to waive all rights of subrogation against the other party with respect to property damage covered by the applicable ISO Causes of Loss - Special Form fire and casualty insurance policy.

13.            Governmental Requirements.  Tenant shall, at its own expense, promptly comply with all requirements of any legally constituted governmental or public authority made necessary by reason of Tenant's occupancy of the Premises, including, without limitation, the Americans with Disabilities Act.

14.            Abandonment of Premises.  Tenant agrees not to abandon or vacate the Premises during the Term of this Lease.  If Tenant does abandon or vacate the Premises for more than sixty (60) days, Landlord may terminate this Lease, by written notice to Tenant at any time prior to Tenant reoccupying the Premises, but such termination shall not entitle Landlord to pursue any other remedies unless an uncured Event of Default then exists, in which case Landlord may pursue any and all remedies provided by this Lease, at law or in equity.

15.            Assignment and Subletting.  Tenant may not, without the prior written consent of Landlord, which consent may be withheld by Landlord in its sole, unfettered discretion, assign this Lease or any interest hereunder, or sublet the Premises or any part thereof, or permit the use of the Premises by any party other than Tenant.  In the event that Tenant is a corporation or entity other than an individual, any transfer of a majority or controlling interest in Tenant (whether by stock transfer, merger, operation of law or otherwise) shall be considered an assignment for purposes of this paragraph and shall require Landlord's prior written consent.  Consent to one assignment or sublease shall not destroy or waive this provision, and all later assignments and subleases shall likewise be made only upon the prior written consent of Landlord.  Tenant shall reimburse Landlord for its legal and administrative costs in reviewing any such proposed assignment or sublease.  Subtenants or assignees shall become liable to Landlord for all obligations of Tenant hereunder, without relieving Tenant's liability hereunder and, in the event of any default by Tenant under this Lease, Landlord may, at its option, but without any obligation to do so, elect to treat such sublease or assignment as a direct Lease with Landlord and collect rent directly from the subtenant.  In addition, upon any request by Tenant for Landlord's consent to an assignment or sublease, Landlord may elect to terminate this Lease and recapture all of the Premises (in the event of an assignment request) or the applicable portion of the Premises (in the event of a subleasing request); provided, however, if Landlord notifies Tenant that Landlord elects to exercise this recapture right, Tenant may, within five (5) business days of its receipt of Landlord's notice, notify Landlord that Tenant withdraws its request to sublease or assign, in which case Tenant shall continue to lease all of the Premises, subject to the terms of this Lease and Landlord's recapture notice shall be null and void.  If Tenant desires to assign or sublease, Tenant must provide written notice to Landlord describing the proposed transaction in detail and providing all documentation (including detailed financial information for the proposed assignee or subtenant) reasonably necessary to let Landlord evaluate the proposed transaction.  Landlord shall notify Tenant within twenty (20) days of its receipt of such notice whether Landlord elects to exercise its recapture right and, if not, whether Landlord consents to the requested assignment or sublease.  If Landlord fails to respond within such twenty (20) day period, Landlord will be deemed not to have elected to recapture and not to have consented to the assignment or sublease.  If Landlord does consent to any assignment or sublease request and the assignee or subtenant pays to Tenant an amount in excess of the Rent due under this Lease (after deducting Tenant's reasonable, actual expenses in obtaining such assignment or sublease, amortized in equal monthly installments over the then remainder of the Term), Tenant shall pay 75% of such excess to Landlord as and when the monthly payments are received by Tenant.

25

16.            Destruction or Damage.

a.            If the Building or the Premises are totally destroyed by storm, fire, earthquake, or other casualty, or damaged to the extent that, in Landlord's reasonable opinion the damage cannot be restored within one hundred eighty (180) days of the date Landlord provides Tenant written notice of Landlord's reasonable estimate of the time necessary to restore the damage, or if the damage is not covered by standard ISO Causes of Loss - Special Form property insurance, or if the Landlord's lender requires that the insurance proceeds be applied to its loan, Landlord shall have the right to terminate this Lease effective as of the date of such destruction or damage by written notice to Tenant on or before thirty (30) days following Landlord's notice described in the next sentence and Rent shall be accounted for as between Landlord and Tenant as of that date.  Landlord shall provide Tenant with notice within sixty (60) days following the date of the damage of the estimated time needed to restore, whether the loss is covered by Landlord's insurance coverage and whether or not Landlord's lender requires the insurance proceeds be applied to its loan.

b.            If the Premises are damaged by any such casualty or casualties but Landlord is not entitled to or does not terminate this Lease as provided in subparagraph (a) above, this Lease shall remain in full force and effect, Landlord shall notify Tenant in writing within sixty (60) days of the date of the damage that the damage will be restored (and will include Landlord's good faith estimate of the date the restoration will be complete), in which case Rent shall abate as to any portion of the Premises which is not usable, and Landlord shall restore the Premises to substantially the same condition as before the damage occurred as soon as practicable, whereupon full Rent shall recommence.

c.            Notwithstanding anything to the contrary contained herein, Landlord shall have no obligation to restore any item that is Tenant's responsibility to insure under Section 12 of this Supplement (other than any leasehold improvements, which Landlord will restore in accordance with the foregoing, to the extent Landlord actually receives insurance proceeds from Tenant or Tenant's insurer to pay for such restoration), regardless of whether Tenant insures same, undertakes self insurance with respect to same or fails to maintain insurance with respect to same; Tenant shall bear the responsibility for prompt restoration of all such items.

17.            Storage.  If Landlord makes available to Tenant any storage space outside the Premises, anything stored therein shall be wholly at the risk of Tenant, and Landlord shall have no responsibility or liability for the items stored therein.

18.            Waste Disposal.  All normal trash and waste (i.e., waste that does not require special handling) shall be disposed of through the janitorial service.

19.            Surrender of Premises.  Whenever under the terms hereof Landlord is entitled to possession of the Premises, Tenant at once shall surrender the Premises and the keys or electronic card keys thereto to Landlord in the same condition as on the Rent Commencement Date hereof, natural wear and tear only excepted, and Tenant shall remove all of its personalty therefrom and shall, if directed to do so by Landlord, remove all improvements (and/or any cabling installed by or on behalf of Tenant) and restore the Premises to its original condition prior to the construction of any improvements which have been made therein by or on behalf of Tenant, including any improvements made prior to the Rent Commencement Date.  Landlord may forthwith re-enter the Premises and repossess itself thereof and remove all persons and effects therefrom, using such force as may be necessary without being guilty of forcible entry, detainer, trespass or other tort.  Tenant's obligation to observe or perform these covenants shall survive the expiration or other termination of the Term of this Lease.  If the last day of the Term of this Lease or any renewal falls on Saturday, Sunday or a legal holiday, this Lease shall expire on the business day immediately preceding.

 

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20.            Environmental Provisions.

a.            The University of Mississippi has established policies, regulations and procedures for the purchase, receiving, use, storage, handling, shipping and disposal of hazardous materials. All activities that occur on the campus of the University of Mississippi using or involving biological, chemical, radiological materials or ionizing radiation producing devices, must adhere to all current and future university regulations, policies and procedures.

b.            Hazardous materials include any and all chemicals for which the manufacturer is required to produce and provide a material safety data sheet, any compound, product or mixture regulated by local, state, or federal laws or regulations, any and all materials that have the potential to cause harm to human health or to the environment, including novel compounds, any and all radioactive materials, isotopes, radiation generating devices, biological agent, infectious microorganism, animals, vertebrate or invertebrate, live or preserved, and any other, potentially hazardous agent or nonindigenous species of plant or animal that may or may not be currently regulated.

c.            The provisions set forth in this Article shall survive the termination of this Lease. If Tenant's transportation, storage, use or disposal of Hazardous or Toxic Materials on the Premises or the Property results in (i) contamination of the soil or surface or ground water; or  (ii) loss, damage or inconvenience to person(s) and/or property, then Tenant agrees to (i) notify Landlord and the University of Mississippi Health and Safety Officer immediately of any contamination, claim of contamination, loss or damage or inconvenience; (ii) after consultation and approval by Landlord and the University of Mississippi Health and Safety Officer, to clean up the contamination in full compliance with all applicable statutes, regulations and standards; and (iii) to indemnify, defend and hold harmless Landlord from and against any Claim arising from or connected with any such contamination, claim of contamination, loss, damage. Further, upon written notice from Landlord, Tenant shall immediately cease any activity that may cause any inconvenience to either Landlord or other tenants, or their agents, employees or invitees. In the event of a conflict of the provisions of this Section 20 with any other provision in this Lease, the provision in this Section 20 shall prevail.

21.            Cleaning Premises.  Upon vacating the Premises, Tenant agrees to return the Premises to Landlord broom clean and in the same condition when Tenant's possession commenced, natural wear and tear excepted, regardless of whether any Security Deposit (as defined in Section 8 of the Lease) has been forfeited.

22.            No Estate In Land.  This contract shall create the relationship of landlord and tenant between Landlord and Tenant; no estate shall pass out of Landlord; Tenant has only a usufruct, not subject to levy or sale, and not assignable by Tenant except with Landlord's consent.

23.            Cumulative Rights.  All rights, powers and privileges conferred hereunder upon the parties hereto shall be cumulative but not restrictive to those given by law.

24.            Damage or Theft of Personal Property.  All personal property brought into the Premises shall be at the risk of the Tenant only and Landlord shall not be liable for theft thereof or any damage thereto occasioned by any acts of co-tenants, or other occupants of the Building, or any other person, except, with respect to damage to the Premises, as may be occasioned by the negligent or willful act of the Landlord, its employees and agents.

 

27

25.            Holding Over.  In the event Tenant remains in possession of the Premises after the expiration of the Term hereof, or of any renewal term, with Landlord's written consent, Tenant shall be a tenant at will and such tenancy shall be subject to all the provisions hereof, except that the monthly rental shall be at the higher of double the monthly Base Rent payable hereunder upon such expiration of the Term hereof, or of any renewal term, or up to double the then current fair market rental value of the Premises.   In the event Tenant remains in possession of the Premises after the expiration of the Term hereof, or any renewal term, without Landlord's written consent, Tenant shall be a tenant at sufferance and may be evicted by Landlord without any notice, but Tenant shall be obligated to pay rent for such period that Tenant holds over without written consent at the same rate provided in the previous sentence and shall also be liable for any and all other damages Landlord suffers as a result of such holdover including, without limitation, the loss of a prospective tenant for such space.  There shall be no renewal of this Lease by operation of law or otherwise.  Nothing in this Section shall be construed as a consent by Landlord for any holding over by Tenant after the expiration of the Term hereof, or any renewal term.

26.            Quiet Enjoyment.  Tenant, upon payment in full of the required Rent and full performance of the terms, conditions, covenants and agreements contained in this Lease, shall peaceably and quietly have, hold and enjoy the Premises during the term hereof.  Landlord shall not be responsible for the acts or omissions of any other tenant, Tenant or third party that may interfere with Tenant's use and enjoyment of the Premises.

27.            Limitation of Liability.  Landlord's obligations and liability with respect to this Lease shall be limited solely to Landlord's interest in the Building, as such interest is constituted from time to time, and neither Landlord nor any partner of Landlord, or any officer, director, shareholder, or partner of any partner of Landlord, shall have any personal liability whatsoever with respect to this Lease.  No owner of the Property, whether or not named herein, shall have liability hereunder after it ceases to hold title to the Property.

28.            Submission of Agreement.  Submission of this Lease to Tenant for signature does not constitute a reservation of space or an option to acquire a right of entry.  This Lease is not binding or effective until execution by and delivery to both Landlord and Tenant.

29.            Authority.  If Tenant executes this Lease as a corporation, limited partnership, limited liability company or any other type of entity, each of the persons executing this Lease on behalf of Tenant does hereby personally represent and warrant that Tenant is a duly organized and validly existing corporation, limited partnership, limited liability company or other type of entity, that Tenant is qualified to do business in the State of Mississippi, that Tenant has full right, power and authority to enter into this Lease, and that each person signing on behalf of Tenant is authorized to do so.  In the event any such representation and warranty is false, all persons who execute this Lease shall be individually, jointly and severally, liable as Tenant. Upon Landlord's request, Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord confirming the foregoing representations and warranties.

30.            Relocation.  At any time or from time to time during the Term or any renewal thereof, Landlord shall have the unrestricted right to relocate Tenant from the Premises to any other office space in the Project.  Landlord shall provide Tenant at least ninety (90) days prior written notice of any such relocation and Landlord shall reimburse Tenant for all reasonable expenses incurred by Tenant in connection with such relocation including moving expenses, telecommunications and data cabling and hookup and the cost of a reasonable supply of replacement stationery.  Landlord shall, at its sole expense, renovate or construct improvements in the relocation space that are substantially similar to those in the Premises.  Following any such relocation, Landlord and Tenant shall enter into an amendment to this Lease to reflect that the Premises consists of the relocation space.  All other terms and conditions of the Lease shall remain unchanged following such relocation.

31.            Broker Disclosure (if applicable).  ________________, a real estate broker licensed in the State of Mississippi, has acted as agent for Tenant in this transaction and is to be paid a commission by ______________ pursuant to a separate agreement.  Landlord represents that it has dealt with no other broker other than the broker(s) identified herein.  Landlord agrees that, if any other broker makes a claim for a commission based upon the actions of Landlord, Landlord shall indemnify, defend and hold Tenant harmless from any such claim.  Tenant represents that it has dealt with no broker other than the broker(s) identified herein.  Tenant agrees that, if any other broker makes a claim for a commission based upon the actions of Tenant, Tenant shall indemnify, defend and hold Landlord and Landlord's broker harmless from any such claim.  Tenant will cause its broker to execute a customary lien waiver, adequate under Mississippi law, to extinguish any lien claims such broker may have in connection with this Lease.

 

28

32.            Mortgagee's Rights.

a.            Tenant agrees that this Lease shall be subject and subordinate (i) to any mortgage, deed to secure debt or other security interest now encumbering the Property and to all advances which may be hereafter made, to the full extent of all debts and charges secured thereby and to all renewals or extensions of any part thereof, and to any mortgage, deed to secure debt or other security interest which any owner of the Property may hereafter, at any time, elect to place on the Property; (ii) to any assignment of Landlord's interest in the leases and rents from the Building or Property which includes the Lease which now exists or which any owner of the Property may hereafter, at any time, elect to place on the Property; and (iii) to any Uniform Commercial Code Financing Statement covering the personal property rights of Landlord or any owner of the Property which now exists or any owner of the Property may hereafter, at any time, elect to place on the foregoing personal property (all of the foregoing instruments set forth in (i), (ii) and (iii) above being hereafter collectively referred to as "Security Documents").  Tenant agrees upon request of the holder of any Security Documents ("Holder") to hereafter execute any documents which the counsel for Landlord or Holder may deem necessary to evidence the subordination of the Lease to the Security Documents.  If Tenant fails to execute any such requested documents, Landlord or Holder is hereby empowered to execute such documents in the name of Tenant evidencing such subordination, as the act and deed of Tenant, and this authority is hereby declared to be coupled with an interest and not revocable.

b.            In the event of a foreclosure pursuant to any Security Documents, Tenant shall at the election of the Holder, thereafter remain bound pursuant to the terms of this Lease as if a new and identical Lease between the purchaser at such foreclosure ("Purchaser"), as landlord, and Tenant, as tenant, had been entered into for the remainder of the Term hereof and Tenant shall attorn to the Purchaser upon such foreclosure sale and shall recognize such Purchaser as the Landlord under the Lease.  Such attornment shall be effective and self-operative without the execution of any further instrument on the part of any of the parties hereto.  Tenant agrees, however, to execute and deliver at any time and from time to time, upon the request of Landlord or of Holder, any instrument or certificate that may be necessary or appropriate in any such foreclosure proceeding or otherwise to evidence such attornment.

c.            If the Holder of any Security Document or the Purchaser upon the foreclosure of any of the Security Documents shall succeed to the interest of Landlord under the Lease, such Holder or Purchaser shall have the same remedies, by entry, action or otherwise for the non-performance of any agreement contained in the Lease, for the recovery of Rent or for any other default or event of default hereunder that Landlord had or would have had if any such Holder or Purchaser had not succeeded to the interest of Landlord.  Any such Holder or Purchaser which succeeds to the interest of Landlord hereunder, shall not be (a) liable for any act or omission of any prior Landlord (including Landlord); or (b) subject to any offsets or defenses which Tenant might have against any prior Landlord (including Landlord); or (c) bound by any Rent which Tenant might have paid for more than the current month to any prior Landlord (including Landlord); or (d) bound by any amendment or modification of the Lease made without its consent.

d.            Tenant hereby acknowledges that if the interest of Landlord hereunder is covered by an assignment of Landlord's interest in Lease, Tenant shall pay all Rent due and payable under the Lease directly to the Holder of the assignment of Landlord's interest in Lease upon notification of the exercise of the rights thereunder by the Holder thereof.

e.            Notwithstanding anything to the contrary set forth in this Section 32, the Holder of any Security Documents shall have the right, at any time, to elect to make this Lease superior and prior to its Security Document.  No documentation, other than written notice to Tenant, shall be required to evidence that the Lease has been made superior and prior to such Security Documents, but Tenant hereby agrees to execute any documents reasonably requested by Landlord or Holder to acknowledge that the Lease has been made superior and prior to the Security Documents.

33.            Tenant's Estoppel.  Tenant shall, from time to time, upon not less than ten (10) days prior written request by Landlord, execute, acknowledge and deliver to Landlord a written statement certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), the dates to which the Rent has been paid, that Tenant is not in default hereunder and has no offsets or defenses against Landlord under this Lease, whether or not to the best of Tenant's knowledge Landlord is in default hereunder (and if so, specifying the nature of the default), and other factual matters reasonably requested by Landlord, it being intended that any such statement delivered pursuant to this paragraph may be relied upon by a prospective purchaser of Landlord's interest or by a mortgagee of Landlord's interest or assignee of any security deed upon Landlord's interest in the Premises.

 

29

34.            Employees.  Tenant agrees not to discriminate against any applicant or trainee or employee on the grounds of race, creed, color, political affiliation or belief, sex, national origin, sexual orientation, age or handicap (except where any of these is a bona fide occupational qualification), as required by Title VI and VII of eh Federal Civil Rights Act of 1964 Section 504 of the Rehabilitation Act of 1964.

35.            Attorney's Fees.  If Tenant fails to pay any Rent or other sum due and owing under this Lease, and such sum is thereafter collected by or through an attorney at law, then, in addition to such sums, Tenant shall also pay Landlord's reasonable attorneys' fees incurred in such collection.   Further, if Landlord exercises any of the remedies provided to Landlord under this Lease as a result of Tenant's failure to comply with its obligations, or if Landlord brings any action to enforce its rights under this Lease, Tenant shall be obligated to reimburse Landlord, on demand, for all costs and expenses, including reasonable attorneys' fees and court costs, incurred in connection therewith; provided, however that a recovery of attorneys' fees by Landlord against Tenant under this sentence shall include, but shall not duplicate, the recovery by Landlord against Tenant of its reasonable attorneys' fees and other reasonable costs of collection permitted under the first sentence of this Section.

36.            Force Majeure.  In the event of a strike, lockout, labor trouble, civil commotion, an act of God, or any other event beyond Landlord's control (a "force majeure event") which results in the Landlord being unable to timely perform its obligations hereunder to repair the Premises, provide services, or complete Work, if any (as may be provided in Exhibit C), so long as Landlord diligently proceeds to perform such obligations after the end of the force majeure event, Landlord shall not be in breach hereunder, this Lease shall not terminate, and Tenant's obligation to pay any Base Rent, additional rent, or any other charges and sums due and payable shall not be excused.

37.            Paragraph Titles; Severability.  The paragraph titles used herein are not to be considered a substantive part of this Lease, but merely descriptive aids to identify the paragraph to which they refer.  Use of the masculine gender includes the feminine and neuter, and vice versa, where necessary to impart contextual continuity.  If any paragraph or provision herein is held invalid by a court of competent jurisdiction, all other paragraphs or severable provisions of this Lease shall not be affected thereby, but shall remain in full force and effect.

38.            Negotiation.  This Lease has been negotiated "at arm's length" by Landlord and Tenant, each having the opportunity to be represented by legal counsel.  Therefore, this Lease shall not be more strictly construed against either party by reason of the fact that one party may have drafted this Lease.

39.            Construction of Agreement.  No failure of Landlord to exercise any power given Landlord hereunder, or to insist upon strict compliance by Tenant of his obligations hereunder, and no custom or practice of the parties at variance with the terms hereof shall constitute a waiver of Landlord's right to demand exact compliance with the terms hereof.  Time is of the essence of this Lease.

40.            Anti-Terrorism Representation.  Tenant is not, and shall not during the Term of the Lease become, a person or entity with whom Landlord is restricted from doing business with under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, H. r. 3162, Public Law 107-56 (commonly known as the "USA Patriot Act") and Executive Order Number 13224 on Terrorism Financing, effective September 24, 2001 and regulations promulgated pursuant thereto (collectively, "Anti-Terrorism Laws"), including without limitation persons and entities named on the Office of Foreign Asset Control Specially Designated Nationals and Blocked Persons List (collectively, "Prohibited Persons").

 

30

To the best of its knowledge, Tenant is not currently engaged in any transactions or dealings, or otherwise associated with, any Prohibited Persons in connection with the use or occupancy of the Premises, the Building or the Property.  Tenant will not in the future during the Term of this Lease engage in any transactions or dealings, or be otherwise associated with, any Prohibited Persons in connection with the use or occupancy of the Premises, the Building or the Property.

Tenant's breach of any representation or covenant set forth in this Section 40 shall constitute a breach of this Lease on behalf of Tenant, entitling Landlord to any and all remedies hereunder, or at law or in equity.

 

  

 

Jackson 6212626v3

 

 

 

31CENTER TOWER

LEASE

Between

CENTER TOWER ASSOCIATES, LLC,

A limited liability company

And

NEMUS,

A California corporation

 

 

 

 

LEASE

THIS LEASE (the "Lease") is made this 13th day of October, 2014, between CENTER TOWER ASSOCIATES, LLC, a California limited liability company, (hereinafter called "Landlord"), and NEMUS, a California corporation (hereinafter called "Tenant").

LEASE OF PREMISES

Landlord hereby leases to Tenant and Tenant hereby hires from Landlord, subject to all of the terms and conditions hereinafter set forth, those certain premises (hereinafter called the "Premises") shown in the floor plan(s) attached hereto as Exhibit "A-1" and located or to be located on the floor(s) and in the suite(s) of that certain office structure to be known as "Center Tower," as constructed or to be constructed on certain land situated in the City of Costa Mesa, County of Orange, State of California, and as more particularly identified in Item 1 of the Basic Lease Provisions.  Such land is or will be improved with the Center Tower and certain "common facilities" described in Paragraph 32.  The Center Tower space and common facilities are referred to collectively herein as "the Building" and are depicted on Exhibit "A-2."  The following Basic Lease provisions are an integral part of this Lease.  In the event of any conflict between any Basic Lease Provision and any provision of this Lease, the Lease provision shall control.

BASIC LEASE PROVISIONS

	
1.

	
Building Name:

	
Center Tower

	
Floor: 6th

		
Address:

	
650 Town Center Drive

Costa Mesa, CA  92626

 

	
Suite: 620

	
2.

	
Rentable Area:

	
3,684 square feet (See Exhibit "A-3")

 

	
	
3.

	
Expense Percentage

	
0.8390 %

 

	
	
4.

	
Initial Basic Annual Rent:

	
$64,470.00

 

	
	
5.

	
Initial Monthly Basic Rent Installments:

	
$5,372.50

 

	
	
6.

	
Basic Annual Rent Increases:

	
None.

 

	
	
7.

	
Term:

	
Two (2) years.

 

	
	
8.

	
Commencement Date:

	
November 1, 2014

 

	
	
9.

	
Security Deposit:

	
$9,593.75.

 

	
	
10.

	
Broker(s):

	
Cushman & Wakefield of California, Inc., for both Landlord and Tenant.

 

	
11.

	
Permitted Use:

	
General office, sales, training and administrative uses consistent with the operation of a first class office building together with such other legally permitted uses as may be approved by Landlord in its sole and absolute discretion. Sales, as described above, shall not include on-site retail activities.

 

	
12.

	
Space Plan Approval Date:

	
Not Applicable.

 

	
 

	
13.

	
Addresses for Notices:

	
 

	
 

 

If to Landlord:

CENTER TOWER ASSOCIATES, LLC

3315 Fairview Road

Costa Mesa, California 92626

Attn:  Center Tower Controller

And

CENTER TOWER ASSOCIATES, LLC

Suite 930

650 Town Center Drive

Costa Mesa, California 92626

Attn:  Property Manager

1

If to Tenant:

Nemus Bioscience, Inc.

650 Town Center Drive

Suite 620

Costa Mesa, CA. 92626

14.            All payments payable under this Lease shall be sent to Landlord via first class mail File #57270, Los Angeles, CA  90074-7270 or via overnight delivery to Lockbox 57270, 1000 West Temple Street, Los Angeles, CA  90012 or such other address as Landlord may designate.

IN WITNESS WHEREOF, the parties hereto have executed this Lease, consisting of the foregoing provisions and Paragraphs 1 through 48 which follow, together with Exhibits"A-1" through "A-3" and "B" through "E" incorporated herein by this reference, as of the date first above written.

 

	
LANDLORD:

	
 

	
TENANT:

 

	
 

	
CENTER TOWER ASSOCIATES, LLC, a California limited liability company

	
NEMUS,

a California corporation

 

	
By:

	
Henry Segerstrom Management LLC, a California limited liability company, Manager

	
By:

	
 

	
 

	
 

	
 

	
 

	
 

	
By

	
 

	
 

	
Its:

	
CFO

	
 

	
Manager

	
 

	
 

	
 

	
OR

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
       By:

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
       Its:

	
CEO

	
 

	
Alternate Manager

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
AND

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Chase J. McLaughlin

	
 

	
 

	
 

	
 

	
        Chase J. McLaughlin, Manager

	
 

	
 

	
 

 

2

TABLE OF CONTENTS

Page

	
1.

	
TERM

	
1

 

	
2.

	
BASIC ANNUAL RENT

	
1

 

	
3.

	
ADDITIONAL RENT

	
1

 

	
4.

	
SECURITY DEPOSIT

	
2

 

	
5.

	
REPAIRS

	
2

 

	
6.

	
IMPROVEMENTS AND ALTERATIONS

	
3

 

	
7.

	
LIENS

	
4

 

	
8.

	
USE OF PREMISES

	
4

 

	
9.

	
HAZARDOUS MATERIALS

	
5

 

	
10.

	
UTILITIES AND SERVICES

	
7

 

	
11.

	
RULES AND REGULATIONS

	
9

 

	
12.

	
TAXES ON TENANT'S PROPERTY

	
9

 

	
13.

	
BUILDING SPACE MANAGEMENT

	
9

 

	
14.

	
FIRE OR CASUALTY

	
10

 

	
15.

	
EMINENT DOMAIN

	
10

 

	
16.

	
ASSIGNMENT AND  SUBLETTING

	
10

 

	
17.

	
ACCESS

	
13

 

	
18.

	
SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATES; FINANCIAL  STATEMENTS

	
13

 

	
19.

	
SALE BY LANDLORD

	
14

 

	
20.

	
NONLIABILITY AND INDEMNIFICATION OF LANDLORD; INSURANCE

	
14

 

	
21.

	
WAIVER OF SUBROGATION

	
16

 

	
22.

	
ATTORNEYS' FEES

	
17

 

	
23.

	
WAIVER

	
17

 

	
24.

	
NOTICES

	
17

 

	
25.

	
INSOLVENCY OR BANKRUPTCY

	
17

 

	
26.

	
DEFAULTS AND REMEDIES

	
17

 

	
27.

	
HOLDOVER

	
19

 

	
28.

	
CONDITION OF PREMISES

	
20

 

	
29.

	
QUIET POSSESSION

	
20

 

	
30.

	
TENANT'S SIGNS

	
20

 

	
31.

	
CONFLICT OF LAWS

	
20

 

	
32.

	
COMMON FACILITIES

	
20

 

	
33.

	
SUCCESSORS AND ASSIGNS

	
21

 

	
34.

	
BROKERS

	
21

 

-i-

	
35.

	
NAME

	
21

 

	
36.

	
EXAMINATION  OF LEASE

	
21

 

	
37.

	
INTEREST ON TENANT'S OBLIGATIONS; LATE CHARGE

	
21

 

	
38.

	
TIME

	
22

 

	
39.

	
DEFINED TERMS AND MARGINAL  HEADINGS

	
22

 

	
40.

	
PRIOR AGREEMENTS;  SEPARABILITY

	
22

 

	
41.

	
TRAFFIC AND ENERGY MANAGEMENT

	
22

 

	
42.

	
CORPORATE/PARTNERSHIP/TRUST AUTHORITY

	
22

 

	
43.

	
NO LIGHT, AIR OR VIEW EASEMENT

	
23

 

	
44.

	
NON-DISCLOSURE OF LEASE TERMS

	
23

 

	
45.

	
FORCE MAJEURE

	
23

 

	
46.

	
MISCELLANEOUS

	
23

 

	
47.

	
GUARANTY – Intentionally Omitted

	
24

 

	
48.

	
ADDENDA

	
24

 

 

Exhibit "A 1"                     Floor Plan(s) of Premises

Exhibit "A 2"                     Plot Plan of Building

Exhibit "A 3"                     Rentable Area

Exhibit "B"                          Intentionally Omitted

Exhibit "C"                          Rules and Regulations

Exhibit "D"                          Tenant's Certificate

Exhibit "E"                          Janitorial Specifications

 

 

 

 

 

 

 

  

-ii-

  

	1.	TERM

(a)            The term of this Lease shall be as shown in Item 7 of the Basic Lease Provisions and shall commence on the date shown in Item 8 of the Basic Lease Provisions (the "Commencement Date"). Notwithstanding the Commencement Date, Tenant shall have access to the Premises seven (7) days prior to the Commencement Date. Early access shall be for the purpose of installing Tenant's equipment, wiring, furniture and related items and, if completed, Tenant's actual use of the Premises for its normal business activities. All provisions of this Lease shall be applicable immediately upon such mutual execution and delivery by the parties other than Tenant's obligation for the payment of rent which shall not commence until the Commencement Date. Within thirty (30) days following the date of commencement of the term of this Lease, Landlord and Tenant shall execute a supplemental agreement, in letter form, setting forth the Commencement Date and the Rentable Area of the Premises. Notwithstanding the foregoing, failure of Tenant to execute such supplemental agreement shall not affect Landlord's determination of the Commencement Date and Rentable Area of the Premises in accordance with the provisions of this Lease.  From and after the Commencement Date, Tenant shall observe all obligations of the tenant pursuant to this Lease, including those requiring the payment of Basic Annual Rent and Additional Rent.

(b)            The Commencement Date shown in Item 8 of the Basic Lease Provisions is an estimated date by which Landlord will deliver the Premises to Tenant. If Landlord is unable to tender possession of the Premises on that date, this Lease shall not be void or voidable, nor shall Landlord be liable for any loss or damage resulting therefrom, except to the extent caused by Landlord's gross negligence or willful misconduct.

	2.	BASIC ANNUAL RENT

Tenant shall pay as Basic Annual Rent for the Premises the initial sum shown in Item 4 of the Basic Lease Provisions, subject to adjustment as set forth in Item 6 of the Basic Lease Provisions. Basic Annual Rent shall be payable in advance in equal monthly installments as shown in Item 5 of the Basic Lease Provisions without deduction or offset, commencing on the Commencement Date and continuing on the first day of each calendar month thereafter.  In the event the term of this Lease commences or ends on a day other than the first or last day of a calendar month, then the Basic Annual Rent for such partial month shall be prorated in the proportion that the number of days this Lease is in effect during such partial month bears to the number of days in that calendar month, and such Basic Annual Rent shall be paid at the commencement of such partial month.  The first monthly installment of Basic Annual Rent and Additional Rent payable by Tenant pursuant to this Lease shall be paid to Landlord concurrently with Tenant's execution and delivery of this Lease to Landlord.

	3.	ADDITIONAL RENT

(a)            Tenant agrees to pay as Additional Rent for the Premises Tenant's proportionate share of all "Operating Expenses" (as hereinafter defined) incurred by Landlord in the operation of the Building.  Tenant's proportionate share thereof (hereinafter "Expense Percentage") shall be the percentage obtained by dividing the average Rentable Area of the Premises for such year or portion thereof by ninety-five percent (95%) of the total Rentable Area of the Building, for the same period, and, subject to Exhibit "A-3," shall initially be as set forth in Item 3.A. of the Basic Lease Provisions.

(b)            Prior to commencement of the Lease term and of each calendar year thereafter, Landlord shall give Tenant a written estimate of Operating Expenses and Tenant's proportionate share thereof for the ensuing year or portion thereof.  Tenant shall pay such estimated amount to Landlord in equal monthly installments, in advance.  Within ninety (90) days after the end of each calendar year, Landlord shall furnish to Tenant a statement showing in reasonable detail the actual Operating Expenses for such period in accordance with subparagraph (d) below, and the parties shall make any payment or allowance necessary to adjust Tenant's estimated payment to Tenant's proportionate share as shown by such annual statement.  Any amount due from Tenant shall be paid within ten (10) days after receipt of such statement.  Any amount due to Tenant shall be credited against installments of Additional Rent next coming due under this Paragraph 3.

(c)            If at any time during any calendar year of the Lease term the amount(s) and/or the rates for any item(s) of 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 Operating Expenses for such calendar year, Tenant's estimated share of such Operating Expenses shall be increased for the month in which such increase becomes effective and for succeeding months by Tenant's Expense Percentage of such increase, as applicable.  In the event of such an increase in rate or amount, Landlord shall give Tenant written notice (the "Adjustment Notice") of the amount or estimated amount of increase, the month in which effective, and Tenant's monthly share thereof.  Commencing with the first monthly payment of estimated Operating Expenses required to be made by Tenant after receipt of the Adjustment Notice (the "First Adjustment Payment"), Tenant shall pay such increase to Landlord as part of Tenant's monthly payments of estimated Operating Expenses as provided in subparagraph (b) above.  If the effective date of the increase is prior in time to the date of the Adjustment Notice, the First Adjustment Payment shall be increased to include the amount of the monthly payments, if any, which would have been made had the Adjustment Notice been received prior to the effective date of the increase.

(d)            The term "Operating Expenses" as used herein shall include all costs of operation and maintenance of the Building, as determined by generally accepted accounting practices consistently applied and determined as if the Building were ninety-five percent occupied for an entire calendar year, and shall include the following costs by way of illustration but not limitation:  real and personal property taxes and vehicle taxes and fees; general and special assessments; costs and expenses incurred in contesting the amount of validity of any property tax by appropriate proceedings; water and sewer charges; insurance premiums, including the cost of rental insurance; the amount of any deductible payable by Landlord with respect to damage or destruction to all or any portion of the Building; license, permit and inspection fees; heat; light; power; intrabuilding network cable including, without limitation, service contract fees; janitorial and courtesy officer services (if any); fire protection; labor; salaries; air conditioning; gardening and landscaping; maintenance and repair (including repairs pursuant to Paragraph 5); painting; trash removal; depreciation of operational equipment for the Building; supplies; materials; equipment; tools; property management costs and fees; all fees, assessments and other amounts paid by Landlord of the type described in Paragraph 41; the cost of any capital improvements made to the Building by Landlord which are reasonably calculated to reduce Operating Expenses and/or are required under any governmental law or regulation not applicable to the Building or not in effect at the time it was constructed, such cost to be amortized over such reasonable period as Landlord shall determine and to include a return on capital at the rate of ten percent (10%) per annum on the unamortized balance or at such higher rate as may have been paid by Landlord on funds borrowed for the purpose of constructing such capital improvements; the cost of providing a management office at the Building; the cost of providing a manager and support staff to operate such office and the Building; and an amount equal to fifteen percent of all such costs and expenses to cover Landlord's indirect administrative and overhead expense.  The term "property taxes" as used herein shall include (i) all real estate taxes and personal property taxes and other taxes, charges and assessments, unforeseen as well as foreseen, which are levied with respect to the Building, and any improvements, fixtures and equipment and other property of Landlord, real or personal, located in the Building and used in connection with the operation of the Building and the land upon which situated, (ii) 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 Paragraph 12, and (iii) any service or other fees collected by governmental agencies in addition to or in lieu of property taxes for services provided by such agencies.  The term "property taxes" as used herein shall also include any rental, excise, sales, transaction privilege, or other tax or levy, however denominated, imposed upon or measured by the rental reserved hereunder or on Landlord's business of leasing the Premises, excepting only net income taxes.

 

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(e)            Notwithstanding anything to the contrary contained in subparagraph (d) immediately above, as to each specific category of expense which one or more tenants of the Building either pays directly to third parties or actually reimburses to Landlord (for example, separately metered utilities, property taxes directly reimbursed to Landlord, etc.) then each such expense which is actually paid or reimbursed shall not be included in "Operating Expenses" for purposes of this Paragraph 3.  Tenant's Operating Expense Percentages, as appropriate, for each such category of expense shall be adjusted by excluding from the denominator thereof the Rentable Area of all such tenants paying such category of expense directly to third parties or actually reimbursing same directly to Landlord.  Moreover, if Tenant directly pays a third party or actually reimburses Landlord for any such category of expense, each such category of expenses which is paid or actually reimbursed by Tenant shall be excluded from the determination of "Operating Expenses" for Tenant to the extent such expense (after deduction of that portion paid or directly reimbursed by Tenant) was incurred with respect to space in the Building actually leased to other tenants.

(f)            The annual determination of Operating Expenses shall be made by Landlord and the fact that such Operating Expenses have in fact been incurred by Landlord shall be certified by a nationally recognized firm of certified public accountants designated by Landlord.  A copy of Landlord's determination and such certification shall be made available to Tenant upon request.  Landlord's determination and such certification shall be final and binding upon Landlord and Tenant.

(g)            The Basic Annual Rent, as adjusted pursuant to Paragraph 2, the Additional Rent and all other amounts required to be paid by Tenant hereunder, are sometimes herein collectively referred to as, and shall constitute, "rent" within the meaning of California Civil Code Section 1951(a).

	4.	SECURITY DEPOSIT

Tenant has paid or will pay Landlord such sum(s) at such time(s) as are set forth in Item 9 of the Basic Lease Provisions as security for the full and faithful performance of the terms hereof by Tenant.  Landlord shall not be required to keep this security deposit separate from its general funds and Tenant shall not be entitled to interest thereon.  If Tenant defaults with respect to any provision of this Lease, including but not limited to the provisions relating to the payment of rent, Landlord may, but shall not be required to, use, apply or retain all or any part of this security deposit for the payment of any rent of any other sum in default, or for the payment of any other amount which Landlord may spend or become obligated to spend by reason of Tenant's default or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's default, including without limitation, costs and attorneys' fees incurred by Landlord to recover possession of the Premises upon a default by Tenant hereunder.  If any portion of said deposit is so used or applied, Tenant shall, within five (5) days after receipt of written demand therefor, deposit cash with Landlord in an amount sufficient to restore the security deposit to its original amount and Tenant's failure to do so shall constitute a default hereunder by Tenant.  If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the security deposit shall be applied against any amounts owed by Tenant to Landlord at the expiration or termination of this Lease and any balance thereof shall be returned to Tenant (or, at Landlord's option, to the last assignee of Tenant's interest hereunder) within the time specified in Civil Code Section 1950.7.

	5.	REPAIRS

(a)            Subject to Paragraph 5(b), Landlord shall make all necessary repairs to the exterior walls, exterior doors, windows, corridors and other common areas of the Building and Landlord shall keep the Building in a safe, clean and neat condition, and use reasonable efforts to keep all equipment used in common with other tenants, such as elevators, plumbing, heating, air conditioning, intrabuilding network cabling and similar equipment, in good condition and repair.  Except as provided in Paragraphs 14 and 15 hereof, there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with or interruption of Tenant's business arising from the failure of any such equipment or the making of any repairs, alterations or improvements in or to any portion of the Building or in or to fixtures, appurtenances and equipment therein.  Tenant waives the right to make repairs at Landlord's expense under Section 1942 of the California Civil Code, or under any law, statute or ordinance now or hereafter in effect.  Landlord shall have no obligation to repair until a reasonable time after receipt of notice or knowledge of the need for repair.  The cost of all such work by Landlord shall be included in Operating Expenses pursuant to Paragraph 3.

 

2

(b)            Tenant agrees that it will make all repairs to the Premises and fixtures therein not required above to be made by Landlord and shall do all decorating, remodeling, alteration and painting required by Tenant during the term of this Lease.  Tenant will pay for any repairs to the Premises or the Building made necessary by any negligence or carelessness of Tenant or its assignees, subtenants, employees of their respective agents or other persons permitted in the Building by Tenant, or any of them, and will maintain the Premises, and will leave the Premises upon termination of this Lease in a safe, clean, neat and sanitary condition.

	6.	IMPROVEMENTS AND ALTERATIONS

(a)            Landlord shall have no construction obligation under this Lease and Tenant shall and does hereby accept the Premises in its current "AS-IS" condition without any improvements or modifications.

(b)            Landlord shall have the right, at any time, and without any liability to Tenant, to change the arrangement and/or location of entrances or passageways, doors and doorways, and corridors, elevators, stairs, toilets, and other public parts of the Building and upon giving Tenant reasonable notice thereof, to change the name, number or designation by which the Building is commonly known.

(c)            Tenant shall not make any alterations, additions or improvements without the prior written consent of Landlord.  Subject to Landlord approval of specific plans and specifications, Landlord acknowledges Tenant's intent to install, at Tenant's sole cost, a dedicated server room of approximately 100 square feet in size with dedicated twenty-four (24) hour HVAC in a mutually agreed location within the Premises. All such alterations, additions and improvements shall be made in conformity with plans therefor approved by Landlord in writing prior to the commencement of such work and shall be performed by a tenant improvements contractor designated by Landlord.  All such alterations, additions and improvements (except movable furniture, furnishings and trade fixtures) shall become the property of Landlord and shall be surrendered with the Premises, as a part thereof, at the expiration or earlier termination of the term hereof.  All such alterations, additions or improvements shall, however, be made by Tenant at Tenant's sole expense.  Upon termination of the Lease, or, at Landlord's option, within thirty (30) days prior to the expiration of the Lease term, Tenant shall, upon demand by Landlord, at Tenant's sole cost and expense, forthwith remove any alterations, additions or improvements (except those made initially at the commencement of Tenant's possession of the Premises) made by Tenant and designated by Landlord to be removed, and repair and restore the Premises to their original condition, reasonable wear and tear excepted.  Notwithstanding the foregoing, Tenant shall not be required to restore the dedicated server room. Any personal property left on or in the Premises at the expiration or earlier termination of this Lease shall be disposed of by Landlord in the manner provided by law, including, without limitation, California Civil Code Section 1980 et seq.  Tenant releases Landlord of and from any and all claims and liability for damage to or destruction or loss of property left by Tenant upon the Premises at the expiration or other termination of this Lease and Tenant hereby indemnifies Landlord against any and all claims and liability with respect thereto.  Tenant further waives all claims to all property (and the proceeds thereof) abandoned by Tenant and retained or disposed of by Landlord.

(d)            Tenant shall not commence work on any alteration, addition or improvement until and unless Landlord has received at least ten (10) days notice that such work is to commence.  Tenant shall immediately reimburse Landlord for any expense incurred by Landlord in reviewing and approving the plans and specifications for such work or by reason of any faulty work done by Tenant or Tenant's contractors, or by reason of delays caused by such work, or by reason of inadequate cleanup, or which is otherwise incurred by Landlord to review the plans and specifications, and monitor and inspect the progress of such work.  Tenant or its contractors will in no event be allowed to make any improvements to the Premises which could possibly affect any of the Building systems or to make any structural modification to the Building without first obtaining Landlord's consent, which Landlord can withhold in its sole and absolute discretion.  All work by Tenant shall be scheduled through Landlord and shall be diligently and continuously pursued from the date of its commencement through its completion.  In addition to the foregoing, and at Landlord's option, Tenant shall obtain a completion and/or performance bond in a form and by a surety acceptable to Landlord and in an amount not less than one and one-half (11⁄2) times the estimated cost of such alterations, additions or improvements.

(e)            All alterations, additions and improvements to the Premises made by Tenant shall comply with both ADA as defined in Paragraph 8 of this Lease and the plans therefor approved in advance by Landlord; provided, however, Landlord's approval or consent to any such work shall not impose any liability upon Landlord nor shall such approval infer that Landlord has expressed any opinion or made any warranty regarding the adequacy, sufficiency or legality of any such improvements.  Such plans and any specifications associated therewith shall be prepared by an architect or interior designer approved in advance by Landlord.  No such work shall proceed without Landlord's prior approval of (i) Tenant's contractor(s); (ii) certificates of insurance from a company or companies approved by Landlord, furnished to Landlord by Tenant's contractor, for combined single limit bodily injury and property damage insurance covering comprehensive general liability and automobile liability, in an amount not less than One Million Dollars ($1,000,000) per occurrence and endorsed to show Landlord as an additional named insured, and for workers' compensation as required by law (provided, however, nothing in this subparagraph shall release Tenant of its other insurance obligations hereunder); and (iii) detailed plans and specifications for such work.  All such work by Tenant shall be done in a first-class workmanlike manner and in conformity with all applicable governmental requirements, with valid building permit(s) and/or all other permits or licenses when and where required, copies of which shall be furnished to Landlord before the work is commenced, and any work not acceptable to any governmental authority or agency having or exercising jurisdiction over such work, or not reasonably satisfactory to Landlord, shall be promptly replaced and corrected at Tenant's expense.  All such work shall comply with all rules and regulations established by Landlord to ensure the safety, cleanliness and good order of the Building and its occupants, including but not limited to those relating to usage of elevators and loading docks, establishment of off-Premises staging areas, disposal of refuse and the hours of performing operations which result in the creation of noise, dust and odors.  No such alterations, additions or improvements by Tenant shall incorporate therein any hazardous materials, as defined in Paragraph 9.

 

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(f)            No antenna, satellite dish, microwave receiver or other receiving or transmission equipment shall be installed by Tenant in or on the roof of or about the Building or elsewhere in the common areas except with the prior written consent of Landlord.  Any such installation by Tenant shall be only the particular equipment specifically approved by Landlord and any such installation shall be limited to the manner and location approved by Landlord.  Any such installation shall be subject to such terms and conditions as are provided by Landlord to Tenant at the time Landlord approves such installation.

	7.	LIENS

Tenant shall keep the Premises and the Building free from any liens arising out of any work performed, materials furnished, or obligations incurred by or for Tenant.  In the event that Tenant shall not, within ten (10) days following the imposition of any such lien, cause the same to be released of record by payment or posting of a proper lien release bond, Landlord shall have, in addition to all other remedies provided herein and by law, the right, but not the obligation, to cause the same to be released by such means as it shall deem proper, including payment of or defense against the claim giving rise to such lien.  All sums paid by Landlord and all expenses incurred by it in connection therewith shall create automatically an obligation of Tenant to pay an equivalent amount as additional rent, which additional rent shall be payable by Tenant within five (5) days after Tenant's receipt of Landlord's demand therefor with interest at the rate per annum determined pursuant to Paragraph 37 from date of payment by Landlord until paid by Tenant.  Tenant agrees to indemnify and hold Landlord harmless from and against any and all claims for mechanics', materialmen's or other liens in connection with any alterations, repairs or any work performed, materials furnished or obligations incurred by or for Tenant.  Nothing herein shall imply any consent by Landlord to subject Landlord's estate to liability under any mechanics' or other lien law.  Tenant shall give Landlord adequate opportunity and Landlord shall have the right to post in or on the Premises such notices of nonresponsibility as are provided for in the mechanics lien laws of the state of California.

	8.	USE OF PREMISES

Tenant and any of its permitted assignees, sublessees or other occupants (collectively "Tenant Parties") shall use the Premises only for the purpose(s) set forth in Item 11 of the Basic Lease Provisions and shall not use or permit the Premises to be used for any other purpose without the prior written consent of Landlord.  Without limiting the foregoing, Tenant and the Tenant Parties shall not use the Premises, nor permit the Premises to be used, for retail purposes nor shall Tenant or the Tenant Parties permit the Premises to be used by a governmental or quasi-governmental entity or agency (it being understood, however, that Landlord may lease to such an entity or agency if Landlord recaptures all or any portion of the Premises pursuant to Paragraph 16 below).  Tenant shall not use or occupy the Premises in violation of law or of the certificate of occupancy issued for the Building, and shall, upon five (5) days written notice from Landlord, discontinue any use of the Premises which is declared by any governmental authority having jurisdiction to be a violation of law or of such certificate of occupancy.  Tenant shall comply promptly with any direction of any governmental authority having jurisdiction which shall, by reason of the nature of Tenant's use or occupancy of the Premises, impose any duty upon Tenant or Landlord with respect to the Premises or with respect to the use or occupancy thereof.  Tenant shall not do or permit to be done anything which will invalidate or increase the cost of any fire, extended coverage or any other insurance policy covering the Building and/or property located therein and shall comply with all rules, orders, regulations and requirements of the Pacific Fire Rating Bureau or any other organization performing a similar function.  Notwithstanding Paragraph 3, Tenant shall promptly upon demand reimburse Landlord, as additional rent, for the full amount of any additional premium charged for such policy by reason of Tenant's failure to comply with the provisions of this Paragraph, together with interest thereon from date of payment by Landlord to date of reimbursement by Tenant at the rate per annum determined pursuant to Paragraph 37.  Such demand for reimbursement shall not be Landlord's exclusive remedy.  Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of the Building, or injure or annoy them, or use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance in, or about the Premises.  Tenant shall not commit or suffer to be committed any waste in or upon the Premises.  Landlord shall not be liable to Tenant for any other occupant's or tenant's failure to conduct itself in accordance with the provisions of this Paragraph 8, and Tenant shall not be released or excused from the performance of any of its obligations under the Lease in the event of any such failure.

Without limiting any of its other obligations pursuant to this Paragraph 8 or Paragraph 9, Tenant covenants and agrees to comply with all laws, rules, regulations and guidelines now or hereafter applicable to the Premises ("Applicable Laws"), including by way of example and not limitation Applicable Laws concerning physical disabilities, with respect to:  (a) the disposal of water, trash, garbage and other matter (liquid or solid) generated by Tenant, the disposal of which is not otherwise the express obligation of Landlord under this Lease, including, but not limited to, laws, rules, regulations and guidelines with respect to recycling and other forms of reclamation (all of which are herein collectively referred to as "Waste Management Requirements") and (b) on and after the date that Tenant takes possession of the Premises, Tenant will comply and cause the Premises to comply (other than for Landlord's initial construction obligation under the Exhibit "B" Work Letter) with the provisions, regulations and amendments under the Americans with Disabilities Act of 1990, 42 U.S.C. Sec. 12101-12213 (hereinafter referred to as "ADA") including but not limited to all employer-employee obligations.  Tenant shall comply with all rules and regulations established by Landlord from time to time to comply with Waste Management Requirements applicable to Landlord (i) as owner of the Premises and (ii) in performing Landlord's obligations under this Lease, if any.  Tenant's obligations under this Paragraph 8 shall survive the expiration or termination of this Lease.

 

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Tenant shall indemnify, defend, protect and hold Landlord harmless from and against all liability (including costs, expenses and attorneys' fees) that Landlord may sustain by reason of Tenant's breach of its obligations under this Paragraph 8.

	9.	HAZARDOUS MATERIALS

(a)            As used in this Lease, the following words or phrases shall have the following meanings:

(i)            "Agents" means Tenant's partners, officers, directors, shareholders, employees, agents, contractors and any other third parties entering the Building at the request or invitation of Tenant.

(ii)            "Building" for purposes of this Paragraph 9 only, shall mean the Building, the air about the Building and the soil, surface water and ground water under the surface of the Building.

(iii)            "Claims" means claims, liabilities, losses, actions, environmental suits, causes of action, legal or administrative proceedings, damages, fines, penalties, loss of rents, liens, judgments, costs and expenses (including, without limitation, attorneys' fees and costs of defense, and consultants', engineers' and other professionals' fees and costs).

(iv)            "Hazardous" means:  (A) hazardous; (B) toxic; (C) reactive; (D) corrosive; (E) ignitible; (F) carcinogenic; (G) reproductive toxic; (H) any other attribute of a Substance now or in the future referred to in, or regulated by, any Hazardous Materials Laws; and (I) potentially injurious to health, safety or welfare, the environment, the Premises or the Building.

(v)            "Hazardous Materials" means any:  (A) Substance which is Hazardous, regardless of whether that Substance is Hazardous by itself or in combination with any other Substance; (B) Substance which is regulated by any Hazardous Materials Laws; (C) asbestos and asbestos-containing materials; (D) urea formaldehyde; (E) radioactive substance; (F) flammable explosives; (G) petroleum, including crude oil or any fraction thereof; (H) polychlorinated biphenyls; and (I) "hazardous substances," "hazardous materials" or "hazardous wastes" under any Hazardous Materials Laws.

(vi)            "Hazardous Materials Laws" means:  (A) any existing or future federal, state or local law, ordinance, regulation or code which protects health, safety or welfare, or the environment; (B) any existing or future administrative or legal decision interpreting any such law, ordinance, regulation or code; and (C) any common law theory which may result in Claims against Landlord, the Premises or the Building.

(vii)            "Permits" means any permit, authorization, license or approval required by any applicable governmental agency.

(viii)            "Substance" means any substance, material, product, chemical, waste, contaminant or pollutant.

(ix)            "Use" means use, generate, manufacture, produce, store, release and discharge.

(b)

(i)            Without limiting the generality of Paragraph 8 of this Lease, and except as provided in Paragraphs 9(b)(ii) and 9(b)(iii), Tenant covenants and agrees that Tenant and its Agents shall not bring into, maintain upon, engage in any activity involving the Use of, or Use in or about the Building, or transport to or from the Building, any Hazardous Materials.  Notwithstanding the provisions of Paragraphs 9(b)(ii) or 9(b)(iii), in no event shall Tenant or its Agents release or dispose of any Hazardous Materials in, on, under or about the Building.

(ii)            Notwithstanding the provisions of Paragraph 9(b)(i), if Tenant or its Agents proposes to Use any Hazardous Materials, or to install or operate any equipment which will or may Use Hazardous Materials ("Equipment"), then Tenant shall first obtain Landlord's prior written consent, which consent may be given or withheld by Landlord in its subjective, good faith judgment, within thirty (30) days of Landlord's receipt of the last of documents or information requested by Landlord as set forth in this Paragraph.  Tenant's failure to receive Landlord's consent within such thirty (30) day period shall be conclusively deemed Landlord's withholding of consent.  Tenant's request for Landlord's consent shall include the following documents or information:  (A) a Hazardous Materials list pursuant to Paragraph 9(c) regarding the Hazardous Materials Tenant proposes to Use and/or Equipment Tenant proposes to install and operate; (B) reasonably satisfactory evidence that Tenant has obtained all necessary Permits to Use those Hazardous Materials and/or to install and operate the proposed Equipment; (C) reasonably satisfactory evidence that Tenant's Use of the Hazardous Materials and/or installation and operation of the Equipment shall comply with all applicable Hazardous Materials Laws, Tenant's permitted use under this Lease and all restrictive covenants encumbering the Building; (D) reasonably satisfactory evidence of Tenant's financial capability and responsibility for potential Claims associated with the Use of the Hazardous Materials and/or installation and operation of the Equipment; and (E) such other documents or information as Landlord may reasonably request.  Landlord may, at its option, condition its consent upon any terms that Landlord, in its subjective, good faith judgment, deems necessary to protect itself, the public and the Building against potential problems, Claims arising out of Tenant's Use of Hazardous Materials and/or installation and operation of Equipment including, without limitation, (i) changes in the insurance provisions of the Lease, (ii) installation of equipment, fixtures and/or personal property and/or alteration of the Premises (all at Tenant's sole cost) to minimize the likelihood of a violation of Hazardous Materials Laws as a result of Tenant's Use of the Hazardous Materials and/or installation and operation of Equipment, and/or (iii) increasing the amount of the security deposit.  Neither Landlord's consent nor Tenant's obtaining any Permits shall relieve Tenant of any of its obligations pursuant to this Paragraph 9.  Landlord's granting of consent to one request to Use Hazardous Materials and/or install and operate Equipment shall not be deemed Landlord's consent to any other such request.  If Landlord grants its consent to Tenant's request, no subtenant, assignee or successor of Tenant shall have the right to Use those Hazardous Materials or install or operate that Equipment without again complying with the provisions of this Paragraph 9(b)(ii).

 

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(iii)            Notwithstanding the provisions of Paragraphs 9(b)(i) and 9(b)(ii), Tenant may Use any Substance typically found or used in applications of the type permitted by this Lease so long as:  (A) any such Substance is typically found only in such quantity as is reasonably necessary for Tenant's permitted use under Paragraph 8 of this Lease; (B) any such Substance and all equipment necessary in connection with the Substance are Used strictly in accordance with the manufacturers' instructions therefor; (C) no such Substance is released or disposed of in or about the Building; (D) any such Substance and all equipment necessary in connection with the Substance are removed from the Building and transported for Use or disposal by Tenant in compliance with any applicable Hazardous Materials Laws upon the expiration or earlier termination of this Lease; and (E) Tenant and its Agents comply with all applicable Hazardous Materials Laws.

(iv)            Tenant shall not use or install in or about the Premises any asbestos or asbestos-containing materials.

(c)            Tenant shall deliver to Landlord, within thirty (30) days after Tenant's receipt of Landlord's written request, a written list identifying any Hazardous Materials that Tenant or its Agents then Uses or has Used within the last twelve (12) month period in the Building.  Each such list shall state:  (i) the use or purpose of each such Hazardous Material; (ii) the approximate quantity of each such Hazardous Material Used by Tenant; (iii) such other information as Landlord may reasonably require; and (iv) Tenant's written certification that neither Tenant nor its Agents have released, discharged or disposed of any Hazardous Materials in or about the Building, or transported any Hazardous Materials to or from the Building, in violation of any applicable Hazardous Materials Laws.  Landlord shall not request Tenant to deliver a Hazardous Materials list more often than once during each twelve (12) month period, unless Landlord reasonably believes that Tenant or its Agents have violated the provisions of this Paragraph 9 (in which case (A) Landlord may request such lists as often as Landlord determines is necessary until such violation is cured, and (B) Tenant shall provide such lists within ten (10) days of each of Landlord's requests, or if an emergency exists, such lists shall be immediately provided).

(d)            Tenant shall furnish to Landlord copies of all notices, claims, reports, complaints, warnings, asserted violations, documents or other communications received or delivered by Tenant, as soon as possible and in any event within five (5) days of such receipt or delivery, with respect to any actual or alleged Use, disposal or transportation of Hazardous Materials in or about the Premises or the Building.  Whether or not Tenant receives any such notice, claim, report, complaint, warning, asserted violation, document or communication, Tenant shall immediately notify Landlord, orally and in writing, if Tenant or any of its Agents knows or has reasonable cause to believe that any Hazardous Materials, or a condition involving or resulting from the same, is present, in Use, has been disposed of, or transported to or from the Premises or the Building other than as previously consented to by Landlord in strict accordance with Paragraph 9(b).

(e)            Tenant acknowledges that it, and not Landlord, is in possession and control of the Premises for purposes of all reporting requirements under any Hazardous Materials Laws.  If Tenant or its Agents violate any provision of this Paragraph 9, then Tenant shall immediately notify Landlord in writing and shall be obligated, at Tenant's sole cost, to abate, remediate, clean-up and/or remove from the Building, and dispose of, all in compliance with all applicable Hazardous Materials Laws, all Hazardous Materials Used by Tenant or its Agents.  Such work shall include, but not be limited to, all testing and investigation required by Landlord, Landlord's lender and/or ground lessor, if any, and any governmental authorities having jurisdiction, and preparation and implementation of any remedial action plan required by any governmental authorities having jurisdiction.  All such work shall, in each instance, be conducted to the satisfaction of Landlord and all governmental authorities having jurisdiction.  If at any time Landlord determines that Tenant is not complying with the provisions of this Paragraph 9(e), then Landlord may, without prejudicing, limiting, releasing or waiving Landlord's rights under this Paragraph 9, separately undertake such work, and Tenant shall reimburse all costs incurred by Landlord upon demand.

(f)            Landlord's right of entry pursuant to Paragraph 17 shall include the right to enter and inspect the Premises, and the right to inspect Tenant's books and records, to verify Tenant's compliance with, or violations of, the provisions of this Paragraph 9.  Furthermore, Landlord may conduct such investigations and tests as Landlord or Landlord's lender or ground lessor may require.  If Landlord determines that Tenant has violated the provisions of this Paragraph 9, or if any applicable governmental agency requires any such inspection, investigation or testing, then Tenant, in addition to its other obligations set forth in this Paragraph 9, shall immediately reimburse Landlord for all costs incurred therewith.

(g)

(i)            Tenant shall indemnify, protect, defend (with legal counsel acceptable to Landlord in its subjective, good faith judgment) and hold harmless Landlord, its partners and its and their respective successors, assigns, partners, directors, officers, shareholders, employees, agents, lenders, ground lessors and attorneys, and the Building, from and against any and all Claims incurred by such indemnified persons, or any of them, in connection with, or as the result of:  (A) the presence, Use or disposal of any Hazardous Materials into or about the Building, or the transportation of any Hazardous Materials to or from the Building, by Tenant or its Agents; (B) any injury to or death of persons or damage to or destruction of property resulting from the presence, Use or disposal of any Hazardous Materials into or about the Building, or the transportation of any Hazardous Materials to or from the Building, by Tenant or its Agents; (C) any violation of any Hazardous Materials Laws; and (D) any failure of Tenant or its Agents to observe the provisions of this Paragraph 9.  Payment shall not be a condition precedent to enforcement of the foregoing indemnification provision.  Tenant's obligations hereunder shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary testing, investigation, studies, reports, repair, clean-up, detoxification or decontamination of the Building, and the preparation and implementation of any closure, removal, remedial action or other required plans in connection therewith, and shall survive the expiration or earlier termination of the term of this Lease.  For purposes of these indemnity provisions, any acts or omissions of Tenant, its assignees, sublessees, Agents or others acting for or on behalf of Tenant (regardless of whether they are negligent, intentional, willful, or unlawful) shall be strictly attributable to Tenant.

 

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(ii)            If at any time after the initiation of any suit, action, investigation or other proceeding which could create a right of indemnification under Paragraph 9(g)(i) Landlord determines that Tenant is not complying with the provisions of Paragraph 9(g)(i), then Landlord may, without prejudicing, limiting, releasing or waiving the right of indemnification provided herein, separately defend or retain separate counsel to represent and control the defense as to Landlord's interest in such suit, action, investigation or other proceeding.  Tenant shall pay all costs of Landlord's separate defense or counsel upon demand.

(iii)            Tenant waives, releases and discharges Landlord, its partners and its and their respective officers, directors, shareholders, partners, employees, agents, representatives, attorneys, lenders, ground lessors, attorneys, successors and assigns from any and all Claims of whatever kind, known or unknown, including any action under the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), as amended ("CERCLA") and the provisions of California Health & Safety Code Section 25100 et seq., as amended, which Tenant has or may have, based upon the Use, migration, disposal of or transportation to or from the Premises or the Building of any Hazardous Materials (unless caused by Landlord's gross negligence or willful misconduct) or the environmental condition of the Premises or the Building (including without limitation all facilities, improvements, structures and equipment thereon and soil and groundwater thereunder).  Tenant agrees, represents and warrants that the matters released herein are not limited to matters which are known, disclosed or foreseeable, and Tenant waives any and all rights and benefits which it now has, or may have, conferred upon Tenant by virtue of the provisions of Section 1542 of the California Civil Code, which provides:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

Tenant agrees, represents and warrants that it is familiar with, has read, understands, and has consulted legal counsel of its choosing with respect to California Civil Code Section 1542 and Tenant realizes and acknowledges that factual matters now unknown to it may have given, or may hereinafter give, rise to Claims which are presently unknown, unanticipated and unsuspected.

(h)            Upon any violation of the provisions of this Paragraph 9, Landlord shall be entitled to exercise any or all remedies available to a landlord against a defaulting tenant including, but not limited to, those set forth in Paragraph 26.

(i)            By its signature to this Lease, Tenant confirms that:  (i)  Landlord has not made any representation or warranty regarding the environmental condition of the Premises or the Building; and (ii) Tenant has conducted its own examination of the Premises and the Building with respect to Hazardous Materials and accepts the same "AS IS" and with no Hazardous Materials present thereon.

(j)            No termination, cancellation or release agreement entered into by Landlord and Tenant shall release Tenant from its obligations under this Paragraph 9 unless specifically agreed to by Landlord in writing at the time of such agreement.

(k)            Tenant's covenants and obligations under this Paragraph 9 shall also apply to any assignee or sublessee of Tenant, and to any such assignee's or sublessee's partners, officers, directors, shareholders, employees, agents, contractors and any other third parties entering upon the Building at the request or invitation of such assignee or sublessee.

	10.	UTILITIES AND SERVICES

(a)            Provided that Tenant is not in default hereunder, Landlord agrees to furnish or cause to be furnished to the Premises, the utilities and services described, subject to the conditions and in accordance with the standards set forth below:

(i)            Landlord shall provide automatic elevator facilities Monday through Friday, excepting therefrom all holidays recognized by Landlord, hereinafter collectively referred to as "generally accepted business days," from 8:00 a.m. to 6:00 p.m., and on Saturdays from 8:00 a.m. to 12:00 noon, and have at least one elevator available for use at all other times.

 

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(ii)            On generally accepted business days from 8:00 a.m. to 6:00 p.m. and on Saturdays from 8:00 a.m. to 12:00 noon (and at other times for a reasonable additional charge to be fixed by Landlord), Landlord shall ventilate the Premises and furnish air conditioning when in the judgment of Landlord it is required for the comfortable occupancy of the Premises during such days and hours, subject to any requirements or standards relating to, among other things, energy conservation, imposed or established by governmental agencies or cooperative organizations.  Landlord shall make available at Tenant's expense after-hours power, including light, and air conditioning to each floor of the Building which shall be controlled by a key and metering system, digital control system or other central control system selected by Landlord.  Minimum use of after-hours power, heat and air conditioning, the costs thereof and the prior notice required for such services shall be determined from time to time by Landlord and confirmed in writing to Tenant, as the same may change from time to time.

(iii)            Landlord shall furnish to the Premises at all times, subject to interruptions beyond Landlord's control, electric current as required by the building standard office lighting (approximately two (2) watts per square foot) and receptacles (approximately one (1) watt per square foot).  At all times Tenant's use of electric current shall never exceed the capacity of the feeders to the Building or the risers or wiring installation.  Tenant shall not install or use or permit the installation or use of any computer or electronic data processing equipment in the Premises without the prior written consent of Landlord.

(iv)            Landlord shall furnish water for drinking, cleaning and lavatory purposes only.

(v)            Landlord shall provide janitorial services to the Premises, each evening, five (5) days per week (except for the Building holidays), in accordance with the specifications attached hereto as Exhibit "E", provided the Premises are used exclusively as offices and customary ancillary uses and are kept reasonably in order by Tenant.  Landlord shall not be responsible or liable for any act or omission or commission on the part of the persons employed to perform said janitorial services, which shall be performed at Landlord's direction without interference by Tenant or Tenant's employees, agents, contractors, licensees, directors, officers, partners, trustees, visitors or invitees (collectively, "Tenant Parties").  If the Premises are not used exclusively as offices, Tenant or persons approved by Landlord shall keep the Premises clean and in order to the satisfaction of Landlord, but at Tenant's sole expense.  No persons other than Tenant and those persons approved by Landlord shall be permitted to enter the Building for the purpose of keeping the Premises clean and in order.  Tenant shall pay to Landlord the cost of removal of any of Tenant's refuse and rubbish, to the extent that the same exceeds the refuse and rubbish usually attendant upon the use of the Premises as offices.

(vi)            Landlord shall replace, as necessary, the fluorescent tubes in the Building standard lighting fixtures installed by Landlord.  Tenant shall replace, as necessary, all bulbs and fluorescent tubes in non-building standard lighting fixtures, if any, installed in the Premises.  If Tenant shall fail to make any such replacement within five (5) days after written notice from Landlord, Landlord may make such replacement and charge the cost of labor and materials involved therein to Tenant, as additional rent.

(vii)            Landlord shall provide at all times, subject to interruptions due to equipment failure, maintenance and/or repairs, intrabuilding network cabling to permit connection of telephone service from the Minimum Point of Entry as designated by Pacific Bell or other provider to the telephone closet located on the floor of the Building on which the Premises is located.

(b)            Landlord may impose a reasonable charge for any utilities and services, including without limitation, air conditioning, electric current and water, required to be provided by Landlord by reason of any use of the Premises at any time other than the hours from 8:00 a.m. to 6:00 p.m. on generally accepted business days or the hours from 8:00 a.m. to 12:00 noon on Saturdays or any use beyond what Landlord agrees to furnish as described above, or special electrical, cooling and ventilating needs created in certain areas by hybrid telephone equipment, computers and other similar equipment or uses.  At Landlord's option, separate meters for such utilities and services may be installed for the Premises and Tenant, upon demand therefor, shall immediately pay Landlord for the installation, maintenance and repair of such meters.

(c)            Tenant agrees to cooperate fully at all times with Landlord and to abide by all regulations and requirements which Landlord may prescribe for the use of the above utilities and services.  Any failure to pay any excess costs as described above shall constitute a breach of the obligation to pay rent under this Lease and shall entitle Landlord to the rights herein granted for such breach.

(d)            Landlord reserves the right in its sole and absolute discretion to reduce, interrupt or cease service of the heating, air conditioning, ventilation, elevator, plumbing, electrical systems, telephone systems and/or utilities services of the Premises or the Building, for (i) the making of any repairs, additions, alterations or improvements to the Premises or Building until said repairs, additions, alterations or improvements shall have been completed or (ii) any accident, breakage, strikes, lockouts or other labor disturbance or labor dispute of any character, governmental regulation, moratorium or other governmental action, inability by exercise of reasonable diligence to obtain electricity, water or fuel, or by any other cause beyond Landlord's reasonable control.  In such event, Landlord shall not be liable for, and Tenant shall not be entitled to, any abatement or reduction of rent by reason of Landlord's failure to furnish any of the foregoing.  Landlord shall not be in breach of this Lease and shall not be liable in damages (including but not limited to any damages, compensation or claims arising from any interruption or cessation of Tenant's business) or otherwise for failure, stoppage or interruption of any such service, nor shall the same be construed either as an eviction of Tenant, or work an abatement of rent, or relieve Tenant from the operation of any covenant or agreement.  In the event of any failure, stoppage or interruption thereof, however, Landlord shall use reasonable diligence to resume service promptly where it is within Landlord's reasonable control to do so.

 

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(e)            Landlord, in its sole and absolute discretion, may elect to contract for the services of individuals that will monitor the systems and operations of the Building.  In this connection, Landlord may also elect to station some of these individuals in the lobby of the Building.  Such individuals are not security personnel and will not provide protective services to any of the tenants of the Building, including Tenant.

(f)            Notwithstanding anything hereinabove to the contrary, Landlord reserves the right from time to time to make reasonable and nondiscriminatory modifications to the above standards for utilities and services.

(g)            Tenant shall pay for all telephone service to the Premises and shall contract directly with the providing company for such service, and Landlord shall have no responsibilities thereto.

	11.	RULES AND REGULATIONS

Tenant agrees to abide by all rules and regulations of the Building imposed by Landlord as set forth in Exhibit "C" attached hereto, as the same may be changed from time to time upon reasonable notice to Tenant.  Any such change shall be effective upon delivery of a copy thereof to Tenant.  These rules and regulations are imposed for the cleanliness, good appearance, proper maintenance, good order and reasonable use of the Premises and the Building, and as may be necessary for the enjoyment of the Building by all tenants and their clients, customers and employees.  A breach of the rules and regulations shall not be grounds for termination of this Lease unless Tenant continues to breach the same after ten (10) days written notice by Landlord; provided, however, that any such notice shall be in lieu of, and not in addition to, any notice required under Paragraph 26, below, or Section 1161, et seq., of the California Code of Civil Procedure, as amended.  Landlord shall not be liable to Tenant for the failure of any other tenant, its agents or employees, to conform to the rules and regulations.

	12.	TAXES ON TENANT'S PROPERTY

(a)            Tenant shall be liable for and pay ten (10) days before delinquency, all taxes, levies and assessments levied against any personal property or trade fixtures placed by Tenant in or about the Premises, and, when possible, Tenant shall cause such personal property and trade fixtures to be assessed and billed separately from the Building and the Premises.  If any such taxes, levies and assessments on Tenant's personal property or trade fixtures are levied against Landlord or Landlord's property or if the assessed value of the Building is increased by the inclusion therein of a value placed upon such personal property or trade fixtures of Tenant and if Landlord pays the taxes, levies and assessments based upon such increased assessment, which Landlord shall have the right to do regardless of the validity thereof, but only under proper protest if requested by Tenant, Tenant shall upon demand repay to Landlord, as additional rent, the taxes, levies and assessments so levied against Landlord, or the proportion of such taxes, levies and assessments resulting from such increase in the assessment, together with interest thereon from the date of payment by Landlord to the date of reimbursement by Tenant at the rate determined pursuant to Paragraph 37.  It is provided, however, that in any such event Tenant shall have the right, in the name of Landlord and with Landlord's full cooperation but without any cost to Landlord, to bring suit in any court of competent jurisdiction to recover the amount of any such taxes, levies and assessments so paid under protest, any amount so recovered to belong to Tenant.

(b)            If the tenant improvements in the Premises, whether installed and/or paid for by Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof, are assessed for real property tax purposes at a valuation higher than the valuation at which tenant improvements conforming to Landlord's "building standard" in other space in the Building are assessed, then the real property taxes and assessments levied against Landlord or the Building by reason of such excess assessed valuation shall be deemed to be taxes levied against personal property of Tenant and shall be governed by the provisions of subparagraph (a) above.  If the records of the County Assessor are available and sufficiently detailed to serve as a basis for determining whether said tenant improvements are assessed at a higher valuation than Landlord's "building standard," such records shall be binding on both Landlord and Tenant; otherwise the actual cost of construction shall be the basis for such determination.

	13.	BUILDING SPACE MANAGEMENT

Landlord reserves the right without Tenant's consent, on thirty (30) days written notice to Tenant, to substitute other premises anywhere within the Building for the Premises, at the same rental rate, provided that the substituted premises:  (a) contain at least ninety-five percent (95%) of the same Rentable Area as the Premises, and (b) contain a comparable number of offices and staff support areas.  Subject to the limitation specified below, Landlord shall pay all reasonable moving expenses of Tenant incidental to such substitution of premises, but only limited to (i) physical movement of Tenant's furniture, furnishings, equipment, books and files from the Premises to the substituted premises, (ii) installation and hook-up charges for Tenant's telephone and PBX equipment, (iii) relocation and installation of photocopy and word processing equipment located in the Premises and (iv) a reasonable supply of new stationery and business cards then held in stock by Tenant, not in excess of a 60 day supply, if Tenant's stationery and business cards in use at the date of Landlord's notice identify Tenant's suite number(s).  Tenant shall provide a detailed estimate of its costs to Landlord within twenty (20) days of Tenant's receipt of Landlord's notice.  Landlord may elect to use its own contractors in connection with Tenant's relocation.  In no event shall Landlord be obligated to incur or fund moving expenses, exclusive to Tenant improvement costs, in an amount in excess of two (2) months of Basic Annual Rent at the rate then payable hereunder.  In the event there is a substitution of premises, the parties shall immediately execute an amendment to this Lease describing the location of new premises and setting forth all adjustments to the Basic Annual Rent and/or the Additional Rent, if any.  In the event that Tenant shall fail to execute and deliver such amendment to Landlord within ten (10) days of its receipt of same, for any reason (including without limitation, the inability of the parties to reach an agreement on the proposed relocation), or if Tenant shall 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.  In the event of such termination, and provided Tenant timely vacates the Premises in the condition required by this Lease, Tenant shall be entitled to a refund of the Basic Annual Rent paid by Tenant for the final one (1) month of the Term.  Upon the effective date of such termination of this Lease, Tenant shall vacate the Premises in accordance with the terms of this Lease and the provisions of Paragraph 27 hereof as well as all other default and remedy provisions of this Lease shall be applicable in the event of Tenant's failure to so vacate the Premises.

 

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	14.	FIRE OR CASUALTY

(a)            In the event the Premises, or access to them, are wholly or partially destroyed by fire or other casualty covered by the form of fire and extended coverage insurance maintained by Landlord, Landlord shall rebuild, repair or restore the Premises and access thereto to substantially the same condition as when the same were furnished to Tenant, excluding any improvements installed by Tenant and any of Tenant's personal property, and this Lease shall continue in full force and effect.  In the event, however, that the Building is so damaged or destroyed to the extent of more than one-third (1/3) of its replacement cost, or to any substantial extent by a casualty not so covered, Landlord may elect by written notice to Tenant given within twenty (20) days after the occurrence of the casualty to terminate this Lease in lieu of so restoring the Premises, in which event this Lease shall terminate as of the date of the occurrence of the casualty.  Landlord shall in no event be obligated to make any repairs or replacement of any items other than those items installed by or at the expense of Landlord.  If the Premises are rendered totally or partially untenantable, rent shall abate during the period of reconstruction in the same proportion to the total rent as the portion of the Premises rendered untenantable bears to the entire Premises.  Any such rental abatement shall not defeat or diminish Landlord's rights to recover upon any rental interruption insurance maintained by Landlord pursuant to Paragraph 20.  In no event shall Tenant be entitled to any compensation or damages for loss of use of the whole or any part of the Premises or for any inconvenience occasioned by any such destruction, rebuilding or restoration of the Premises, the Building or access thereto.  Tenant waives the provisions of California Civil Code Sections 1932(2) and 1933(4) and any present and future laws and case decisions to the same effect.

(b)            Notwithstanding anything to the contrary contained in Paragraph 14(a) above, if the Premises or the Building is wholly or partially damaged or destroyed within the final twelve (12) months of the Term of this Lease, Landlord may, at its option, by giving Tenant notice within sixty (60) days after notice to Landlord of the occurrence of such damage or destruction, elect to terminate the Lease.  Furthermore, upon termination of this Lease pursuant to this Paragraph 14(b), Tenant and Landlord hereby agree (except as expressly provided for otherwise in this Lease) to release each other from any and all obligations and liabilities with respect to the Lease except such obligations and liabilities which arise or accrue prior to such termination.

	15.	EMINENT DOMAIN

(a)            In case the whole of the Premises, or such part thereof as shall substantially interfere with Tenant's use and occupancy thereof, shall be taken by any lawful power or authority by exercise of the right of eminent domain, or sold to prevent such taking or threat of such taking, either Tenant or Landlord may terminate this Lease effective as of the date possession is required to be surrendered to said authority.  Except as provided herein, Tenant shall not because of such taking assert any claim against Landlord or the taking authority for any compensation because of such taking, and Landlord shall be entitled to receive the entire amount of any award without deduction for any estate or interest of Tenant.  In the event the amount of property or the type of estate taken shall not substantially interfere with Tenant's use of the Premises, Landlord shall be entitled to the entire amount of the award without deduction for any estate or interest of Tenant.  In such event, Landlord shall promptly proceed to restore the Premises to substantially their condition prior to such partial 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 shall be so deprived on account of such taking and restoration.  Any such rental abatement shall not defeat or diminish Landlord's rights to recover upon any rental interruption insurance maintained by Landlord pursuant to Paragraph 20.  Nothing contained in this Paragraph 15(a) shall be deemed to give Landlord any interest in, or prevent Tenant from seeking any award against the taking authority for, the taking of personal property and fixtures belonging to Tenant or for relocation or business interruption expenses recoverable from the taking authority.  Landlord may, without any obligation to Tenant, agree to sell and/or convey to any taking authority the Premises, the Building or any portion thereof sought by such taking authority, free from this Lease and the rights of Tenant hereunder, without first requiring that any action or proceeding be instituted or pursued to judgment.

(b)            In the event of a temporary taking of the Premises or any part of the Premises and/or of Tenant's rights to the Premises or under this Lease, this Lease shall not terminate, nor shall Tenant have the right to any abatement of rent or of any other payments owed to Landlord pursuant to this Lease.  Any award made to Tenant by reason of such temporary taking shall belong entirely to Tenant.

(c)            This Paragraph 15 shall be Tenant's sole and exclusive remedy in the event of a taking or condemnation.  Tenant hereby waives the benefit of California Code of Civil Procedure Section 1265.130.  Upon termination of the Lease pursuant to this Paragraph 15, Tenant and Landlord hereby agree (except as expressly provided for otherwise in this Lease) to release each other from any and all obligations and liabilities with respect to the Lease except such obligations and liabilities which arise or accrue prior to such termination.

	16.	ASSIGNMENT AND  SUBLETTING

(a)            Except as provided below, Tenant shall not, either voluntarily or involuntarily or by operation of law, assign, sublet, mortgage or otherwise encumber all or any portion of its interest in this Lease or in the Premises or permit the Premises to be occupied by anyone other than Tenant or Tenant's employees without obtaining the prior written consent of Landlord, which consent shall be subject to the provisions of subsections (b) through (i) below.  Any such attempted assignment, subletting, mortgage or other encumbrance without such consent shall be null and void and of no effect.  In connection with any transaction of the type described in this Paragraph 16(a):

 

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(i)            Any approved sublease shall be subject to all of the terms and provisions of this Lease and shall be terminable by Landlord upon the expiration or any earlier termination of this Lease, including a termination by mutual agreement of Landlord and Tenant.

(ii)            In connection with any such approved assignment, the assignee shall, within ten (10) days after receipt of written request from Landlord, execute and deliver to Landlord a written assumption of the obligations of Tenant pursuant to this Lease accruing from and after the effective date of the assignment and in form and substance reasonably satisfactory to Landlord.

(iii)            No such approved assignment or subletting shall release Tenant from any of the obligations of the tenant hereunder, whether accruing prior to or subsequent to the effective date of such transaction.

(iv)            No such approved transaction shall be accompanied by a change in use from that permitted pursuant to Paragraph 11 of the Basic Lease Provisions nor shall any such transaction violate any exclusive use granted by Landlord prior to the proposed transaction.

(b)            No assignment, subletting, mortgage or other encumbrance of Tenant's interest in this Lease shall relieve Tenant of its obligation to pay the rent and to perform all of the other obligations to be performed by Tenant hereunder.  Except as provided below, any subletting by Tenant of any portion of the Premises shall be at not less than 100% of the then current market rental rate for direct (non-sublease) space in the Building (the "100% Rental Rate") and upon market terms and, if Landlord so requests, shall require that the assignee or sublessee remit directly to Landlord, on a monthly basis, all rent due to Tenant by said assignee or sublessee.  The acceptance of rent by Landlord 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 subletting, assignment, mortgage or other encumbrance.  Consent to one sublease, assignment, mortgage or other encumbrance shall not be deemed to constitute consent to any subsequent attempted subletting, assignment, mortgage or other encumbrance.  If Tenant desires to sublet all or any portion of the Premises at terms other than the 100% Rental Rate, then Tenant may do so provided Tenant engages Landlord's leasing agent as Tenant's exclusive agent to market such space.  Landlord shall act in good faith in such capacity and make all prospective tenants of the Building who inquire about available space aware of Tenant's space.  The listing agreement between Landlord and Tenant shall be for a duration of one hundred eighty (180) days on generally available, arms length, market terms and conditions including, without limitation, a commission schedule and commission entitlement for transactions with registered parties occurring within one hundred eighty (180) days after expiration of the listing.  Tenant acknowledges that Tenant's agreement to use Landlord as the listing broker is essential consideration for Landlord allowing subleasing at below the 100% Rental Rate which is otherwise prohibited.  After expiration of the one hundred eighty (180) day period, Tenant shall be free to utilize services of any qualified broker and may offer the space at below the 100% Rental Rate provided Tenant does not advertise or publish such rates.

(c)            If Tenant desires at any time to assign this Lease or to sublet the Premises or any portion thereof, it shall first notify Landlord of its desire to do so and shall submit in writing to Landlord (i) the name of the proposed subtenant or assignee; (ii) the nature of the proposed subtenant's or assignee's business to be carried on in the Premises, (iii) the terms and provisions of the proposed sublease or assignment and the proposed effective date thereof; and (iv) such financial information as Landlord may reasonably request concerning the proposed subtenant or assignee.  The submission pursuant to clause (iii) shall include a copy of any agreement, escrow instructions or other document which contains or memorializes the terms and provisions of the transaction for which Landlord's consent is required.  Similarly, if Tenant desires to mortgage or encumber its interest in this Lease, Tenant shall first supply to Landlord in writing such information as to such transaction as may be reasonably requested by Landlord.

(d)            As a condition to Landlord's consent to such assignment or subletting, Landlord shall be entitled to receive (at the same time as paid to Tenant), in the case of a subletting, one hundred percent (100%) of all rent (however denominated and paid) payable by the subtenant to Tenant in excess of that payable by Tenant to Landlord pursuant to the other provisions of this Lease and, in the case of an assignment, one hundred percent (100%) of all consideration given, directly or indirectly, by the assignee to Tenant in connection with such assignment for the value of the leasehold estate, less normal and usual costs incurred by Tenant in connection with such subletting or assignment.  For the purposes of this subparagraph, the term "rent" shall mean all consideration paid or given, directly or indirectly, for the use of the Premises or any portion thereof.  The term "consideration" shall mean and include money, services, property or any other thing of value such as payment of costs, cancellation of indebtedness, discounts, rebates and the like.  "Normal and usual costs" shall only mean the following:  broker's commission paid by Tenant to a broker independent of Tenant in connection with such assignment or subletting; legal fees incurred by Tenant in processing such assignment or subletting; and out-of-pocket costs incurred by Tenant in advertising for an assignee or subtenant.  "Sublet" and "sublease" shall include a sublease as to which Tenant is sublessor and any sub-sublease or other sub-subtenancy, irrespective of the number of tenancies and tenancy levels between the ultimate occupant and Landlord, as to which Tenant receives any consideration, as defined in this subparagraph, and Tenant shall require on any sublease which it executes that Tenant receive the profit from all sub-subtenancies, irrespective of the number of levels thereof.  Any rent or other consideration which is to be passed through to Landlord by Tenant pursuant to this subparagraph shall be paid to Landlord promptly upon receipt by Tenant and shall be paid in cash, irrespective of the form in which received by Tenant from any subtenant or assignee.  In the event that any rent or other consideration received by Tenant from a subtenant or assignee is in a form other than cash, Tenant shall pay to Landlord in cash the fair value of such consideration.

 

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(e)            At any time within thirty (30) days after Landlord's receipt of the last of the information specified in subparagraph (c) above, Landlord may by written notice to Tenant elect (i) to approve or disapprove of such assignment or sublease, (ii) to sublease the Premises or the portion thereof so proposed to be subleased by Tenant, or to take an assignment of Tenant's leasehold estate hereunder, or such part thereof as shall be specified in said notice, on the same terms as those stated in this Lease and in turn sublease or assign to the proposed subtenant or assignee on the same terms as those offered by Tenant to the proposed subtenant or assignee, as the case may be; or (iii) to terminate this Lease as to the portion (including all) of the Premises so proposed to be subleased or assigned, with a proportionate abatement in the rent payable hereunder.  Tenant shall, at Tenant's own cost and expense, discharge in full any commissions which may be due and owing as the result of any proposed assignment or subletting, whether or not the Premises are recaptured pursuant hereto and rented by Landlord to the proposed subtenant or assignee or any other tenant.  If Landlord does not disapprove the proposed subletting or assignment in writing and does not exercise any option set forth in this subparagraph (e) within said thirty (30) day period, Tenant may within one hundred eighty (180) days after the expiration of said thirty (30) day period enter into a valid assignment or sublease of the Premises or portion thereof, upon the terms and conditions set forth in the information furnished by Tenant to Landlord pursuant to subparagraph (c) above.  It is provided, however, that any material change in such terms shall be subject to Landlord's consent and rights of termination and recapture as provided in this Paragraph and, provided further, that any amount to be paid by Tenant in connection with such subletting or assignment pursuant to subparagraph (d) above shall be paid to Landlord upon consummation of such transaction.

(f)            Landlord shall have the right to approve or disapprove any proposed assignee or subtenant.  In exercising such right of approval or disapproval, Landlord shall be entitled to take into account any fact or factor which Landlord reasonably deems relevant to such decision, including but not necessarily limited to the following, all of which are agreed by Tenant to be reasonable factors for Landlord's consideration:

(i)            The financial strength of the proposed assignee or subtenant, including, but not limited to, the adequacy of its working capital to pay all expenses anticipated in connection with any proposed remodeling of the Premises.  Landlord may also consider the business experience of the proposed subtenant or assignee and the longevity of the current enterprise, it being understood and agreed that "start-up" ventures and enterprises found by Landlord to lack sufficient maturity may be disapproved by Landlord.

(ii)            The proposed use of the Premises by such proposed assignee or subtenant and the compatibility of such proposed use within the quality and nature of the other uses in the Building.

(iii)            Any violation which the proposed use by such proposed assignee or subtenant would cause of any other rights granted by Landlord to Landlord's other tenants.

(iv)            Whether there then exists any default by Tenant pursuant to this Lease or any non-payment or non-performance by Tenant under this Lease which, with the passage of time and/or the giving of notice, would constitute a default under this Lease.

(v)            The business reputation, character, history and nature of the business of the proposed assignee or subtenant.

(vi)            Whether the proposed assignee or subtenant is an existing tenant of Landlord or its affiliates, it being understood and agreed that Landlord will disapprove a subletting or assignment to such an existing tenant if (A) Landlord or its affiliates can reasonably meet such tenant's additional space requirements or (B) if Tenant proposes to charge less than the 100% Rental Rate.

(vii)            Whether the proposed assignee or subtenant is a person or entity with whom Landlord or any of its affiliates have negotiated (within the past ninety days) or are actively negotiating for space, it being understood and agreed that Landlord will disapprove a subletting or assignment to such potential direct tenant. For the purposes hereof, negotiation shall mean that Landlord has submitted a written proposal to the prospective tenant.

(viii)            Whether the proposed assignee or subtenant is a governmental entity or agency it being understood and agreed that Landlord will disapprove the proposed subletting or assignment as being inconsistent with the character of Landlord's tenancies.

Moreover, Landlord shall be entitled to be reasonably satisfied that each and every covenant, condition or obligation imposed upon Tenant by this Lease and each and every right, remedy or benefit afforded Landlord by this Lease is not impaired or diminished by such assignment or subletting.  Landlord and Tenant acknowledge that the express standards and provisions set forth in this Lease dealing with assignment and subletting, including those set forth in this subparagraph (f) have been freely negotiated and are reasonable at the date hereof taking into account Tenant's proposed use of the Premises and the nature and quality of Landlord's real property.  No withholding of consent by Landlord for any reason deemed sufficient by Landlord shall give rise to any claim by Tenant or any proposed assignee or subtenant or entitle Tenant to terminate this Lease or to any abatement of rent.  In this connection, Tenant hereby expressly waives its rights under California Civil Code Section 1995.310.  Moreover, approval of any assignment of Tenant's interest shall, whether or not expressly so stated, be conditioned upon such assignee assuming in writing all obligations of Tenant hereunder.

(g)            All options to extend, renew or expand, all exterior sign rights and all reserved, reduced cost or free parking rights, in each case if any, contained in this Lease are personal to Tenant or its affiliates.  Consent by Landlord to any assignment or subletting shall not include consent to the assignment or transfer of any such rights or options with respect to the Premises or any other special privileges or extra services granted to Tenant by this Lease, any addendum or amendment hereto or any letter agreement.  All such options, rights, privileges and extra services shall terminate upon such subletting or assignment unless Landlord specifically grants the same in writing to such assignee or subtenant.

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(h)            The voluntary or other surrender of this Lease by Tenant or a mutual cancellation hereof shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subleases or subtenancies or shall operate as an assignment to Landlord of such subleases or subtenancies.  Tenant agrees to reimburse Landlord for Landlord's reasonable costs and attorneys' fees incurred in connection with the processing and documentation of any such requested assignment, subletting, transfer, change of ownership or hypothecation of this Lease or Tenant's interest in and to the Premises.

(i)            Landlord shall be permitted to hire outside contractors to review all assignment and subletting documents and information and Tenant shall reimburse Landlord for the actual and reasonable out-of-pocket cost thereof, including reasonable attorneys' fees, on demand.

	17.	ACCESS

Landlord reserves and shall at any time and all times have the right to enter the Premises to inspect the same, to supply janitorial service and any other service to be provided by Landlord to Tenant hereunder, to submit said Premises to prospective purchasers, tenants or actual or prospective lenders, to post notices of non-responsibility, to use and maintain pipes and conduits in and through the Premises, and to alter, improve or repair the Premises or any other portion of the Building, all without being deemed guilty of an eviction of Tenant and without abatement of rent, and may for that purpose erect scaffolding and other necessary structures where reasonably required by the character of the work to be performed, provided that the business of Tenant shall be interfered with as little as is reasonably practicable.  Landlord may enter by means of a master key without liability to Tenant for any damage caused by Landlord entering the Premises, except for damage to Tenant's personal property caused by any failure of Landlord to exercise due care.  Tenant shall not disturb any notices or other items placed by Landlord in the Premises.  Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby.  For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, 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 said doors in an emergency in order to obtain entry to the Premises.  Any lock installed by Tenant shall be of a type and style designated by Landlord concurrently with such installation.  Any entry to the Premises obtained by Landlord by any of said means shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or any eviction of Tenant from the Premises or any portion thereof.  No provision of this Lease shall be construed as obligating Landlord to perform any repairs, alterations or decorations except as otherwise expressly agreed to be performed by Landlord.

	18.	SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATES; FINANCIAL  STATEMENTS

(a)            This Lease and the rights of Tenant hereunder, at Landlord's election, shall be junior, subject, and subordinate to the lien of any ground or underlying lease, mortgage, deed of trust, and other security instrument of any kind now or hereafter covering the Premises or the Building, or any portion of any thereof, and to any and all advances made thereunder, interest thereon or costs incurred pursuant thereto (with respect to mortgages or deeds of trust) and any amendments, modifications, renewals, supplements, consolidations, replacements or extensions thereto.  Such priority shall be established without the necessity of the execution and delivery of any further instruments on the part of Tenant to effect such subordination.  Landlord or any ground lessor, mortgagee or beneficiary under a deed of trust may at any time cause such subordination by giving notice thereof to Tenant at least sixty (60) days before the subordination is to become effective.  Notwithstanding the foregoing, Tenant covenants and agrees to (a) execute and deliver upon demand such further instruments evidencing such subordination of this Lease or subordination of such mortgage, deed of trust or ground lease as may be requested by Landlord and (b) supply such financial information concerning Tenant as may be requested by any ground lessor or lender, prospective purchaser or Landlord, in connection with such subordination, within ten (10) business days after demand.  If Tenant fails to execute such further instruments within ten (10) business days after demand, Landlord may execute such documents on behalf of Tenant as Tenant's attorney-in-fact.  Tenant does hereby make, constitute and irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name, place and stead, to execute such instruments in accordance with this subparagraph.  In addition, Tenant's failure to execute such further instruments within ten (10) business days after demand shall constitute a material breach of this Lease.  Notwithstanding subordination by Tenant to any existing or future lienholder, Tenant's right to quiet possession of the Premises shall not be disturbed so long as Tenant shall pay the rent and observe and perform all of the provisions of this Lease to be observed and performed by Tenant, unless this Lease is terminated pursuant to specific provisions relating thereto contained herein.  In the event of the foreclosure of any such lien or encumbrance, Tenant shall attorn to the then owner who owns or acquires title to the Building and will recognize such owner as Landlord under this Lease.  Tenant hereby waives any right to terminate this Lease because of any such foreclosure.

(b)            Notwithstanding the foregoing, and without the consent of Tenant, the holder of any mortgage or deed of trust or the beneficiary thereunder shall have the right to elect to be subject and subordinate to this Lease, with such subordination to be effective upon such terms and conditions as such holder or beneficiary may direct and which are not inconsistent with the provisions of this Paragraph 18.

(c)            Tenant shall at any time and from time to time upon not less than twenty (20) days prior notice by Landlord, execute, acknowledge and deliver to Landlord a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), and the dates to which the Basic Annual Rent, Additional Rent and other charges have been paid in advance, if any, (ii) stating whether or not to the best knowledge of Tenant, Landlord is in default in the performance of any covenant, agreement or condition contained in this Lease and, if so, specifying each such default of which Tenant may have knowledge and (iii) acknowledging (if true) the accuracy of such other facts as are included in such statement by Landlord.  Any such statement delivered pursuant to this subparagraph may be relied upon by any prospective purchaser of the fee of the Building or any mortgagee, ground lessor or other like encumbrancer thereof or any assignee of any such encumbrancer upon the Building.  If Tenant fails to deliver such statement within such time, such failure shall, at Landlord's option, be deemed to be Tenant's irrevocable appointment of Landlord as Tenant's special attorney-in-fact in connection with the preparation and execution of any such statement and such execution by Landlord as Tenant's attorney-in-fact shall be conclusive upon Tenant that (A) this Lease is in full force and effect, without modification except as may be represented by Landlord, (B) that there are no uncured defaults in Landlord's performance, (C) that not more than one month's Basic Annual Rent has been paid in advance and (D) that any other statements of fact included by Landlord in the statement are correct.  Tenant shall be liable for all loss, cost or expense resulting from the failure of any ground lease, sale or funding of any loan caused by any material misstatement contained in any estoppel certificate supplied by Tenant or resulting from failure of Tenant to deliver any such statement.

 

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(d)            In addition, and not in lieu of the foregoing, within ten (10) days after the Commencement Date, Tenant shall execute and deliver to Landlord a certificate substantially in the form of Exhibit "D" attached hereto, indicating thereon any exceptions thereto which Tenant claims to exist at that time.  Failure of Tenant to execute and deliver such certificate within such time period shall constitute an acceptance of the Premises and the acknowledgment and agreement by Tenant that the statements included in Exhibit "D" are true and correct without exception.

	19.	SALE BY LANDLORD

(a)            In the event of a sale, transfer or conveyance by Landlord of the Building, the same shall operate to release Landlord from any and all liability under this Lease.  Tenant's right to quiet possession of the Premises shall not be disturbed so long as Tenant shall pay the rent and observe and perform all of the provisions of this Lease to be observed and performed by Tenant, unless this Lease is terminated pursuant to specific provisions relating thereto contained herein.  If any security deposit has been made by Tenant, Landlord may transfer the balance of such security deposit (after lawful deductions and in accordance with California Civil Code Section 1950.7), after notice to Tenant, to the purchaser, and thereupon Landlord shall be discharged from any further liability with respect thereto.

	20.	NONLIABILITY AND INDEMNIFICATION OF LANDLORD; INSURANCE

(a)            Landlord's Nonliability.  Subject to Paragraphs 20(j) and 21 below, Landlord and its partners, and their respective partners, officers, agents and employees shall not be liable for Tenant's loss of income or extra expense or for any damage to Tenant's property, nor for loss of damage to property by theft or otherwise, nor for any injury or damage which may be sustained by the person, goods, wares, merchandise or property of Tenant, its employees, invitees or customers or any other person in or about the Premises caused by or resulting from any peril which may affect the Premises, including without limitation fire, explosion, falling plaster, steam, electricity, gas, 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 or lighting fixtures of the same, whether such damage or injury results from conditions arising upon the Premises or upon other portions of the Building, or from other sources.  Landlord shall not be liable for any damages arising from any act or neglect of any other tenant or occupant of the Building or any of their officers, employees, agents, representatives, customers and invitees and Tenant hereby waives any such right it may have against Landlord.  Tenant shall give prompt notice to Landlord in case of fire or accidents in the Premises or of defects therein or in the fixtures or equipment.  Any claim, defense, or other right of Tenant arising in connection with this Lease or with negotiations before this Lease was signed shall be barred unless Tenant files an action or interposes a defense based thereon within one hundred eighty (180) days after the date of the alleged event on which Tenant is basing its claim, defense or right.

(b)            Indemnification.  Subject to Paragraphs 20(j) and 21 below, and to the fullest extent permitted by law, Tenant shall indemnify, hold Landlord harmless from and defend Landlord, its agents and employees against any and all claims, losses, costs, damages, expenses or liabilities, including without limitation reasonable attorney's fees and costs of defense, for death of or any injury or damage to any person or property whatsoever, when such death, injury or damage has been caused in part or in whole by the act, neglect, fault, or omission of Tenant, its assignees, sublessees, agents, servants, employees or invitees or which arises from Tenant's use of the Premises or the conduct of Tenant's business.  Tenant shall further indemnify, hold Landlord harmless from and defend Landlord, it's agents and employees against and from any and all claims arising from any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease.  This indemnification provision shall not require payment as a condition precedent to recovery, and Tenant's defense obligation hereunder shall include the obligation, upon demand, to defend Landlord against any claim or action of the type herein specified by counsel reasonably satisfactory to Landlord.  In addition, if any person not a party to this Lease shall institute any other type of action against Tenant in which Landlord, involuntarily and without cause, shall be made a party defendant and which is related to this Lease, Tenant shall indemnify, hold Landlord harmless from and defend Landlord from all liabilities by reason thereof.

 

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(c)            Tenant's Insurance.  Tenant hereby agrees to maintain in full force and effect at all times during the term of this Lease, at its own expense, for the protection of Tenant and Landlord, as their interests may appear, policies of insurance which afford the following coverages:

(i)            Workers' Compensation coverage as required by law, including United States Longshoremen and Harborworkers Act (if applicable), together with Employer's Liability coverage with a limit of not less than $1,000,000 per occurrence.

(ii)            Comprehensive General Liability or Commercial General Liability Insurance with respect to the Premises and the operations on or on behalf of Tenant in, on or about the Premises, including but not limited to Blanket Contractual Liability, Owners Protective, Broad Form Property Damage Liability Coverage, Personal Injury, Completed Operations, Products Liability (if applicable), Fire Legal Liability, Host Liquor Liability (or Liquor Liability, if applicable), protection and indemnity (if applicable) and Owned and Non-Owned Automobile Coverage in an amount not less than $1,000,000 per occurrence.  The policy for such insurance shall contain the following provisions:  (A) severability of interest; (B) cross liability; (C) an endorsement naming Landlord and any other parties in interest designated by Landlord as an additional insured; (D) an endorsement stating, in substance, "such insurance as is afforded by this policy for the benefit of the Landlord and any other additional insured shall be primary as respects to any liability or claims arising out of the occupancy of the Premises by the Tenant, or Tenant's operations and any insurance carried by Landlord, or any other additional insured shall be non-contributory;" (E) with respect to improvements or alterations permitted under this Lease, contingent liability and builder's risk insurance; (F) an endorsement allocating to the Premises the full amount of liability limits required by this Lease; (G) coverage must be on an "occurrence basis;" "Claims Made" forms are not acceptable; and (H) an aggregate limit of no less than $3,000,000 per annum available for occurrences at the Premises, if such policy has an aggregate limit.

(iii)            Insurance providing protection against "All Risks" of physical loss, including without limitation insurance against fire, theft, burglary, structural collapse, sprinkler leakage, earthquake and flood (if required by a lender holding a security interest in the Building), vandalism and malicious mischief, in an amount sufficient to cover the full cost of replacement (with no deductible for depreciation and with the understanding that such amount shall be adjusted not more frequently than on an annual basis) of all improvements and betterments to the Premises, all of Tenant's fixtures, furnishings, equipment, furniture, trade fixtures and other personal property located or used in the Premises and loss of income or extra expense including losses resulting from an interruption in or failure of the Intrabuilding Network Cabling.  All policies of such insurance shall contain no coinsurance or contribution provisions and shall name Landlord and the lending institution(s), if any, as additional insureds and/or loss payable in accordance with such lender's or lenders' requirements.  For the purposes of this subparagraph (iii), the Premises shall consist of the Rentable Area shown in the floor plan attached hereto as Exhibit "A-1," and consist of the cubic space spanning from the floor slab to the bottom surface of the floor slab of the floor immediately above the Premises (the "upper slab"), without any offsets or deductions for columns and other structural portions of the Building or vertical penetrations that are included for the special use of Tenant.  Such cubic space shall include the plenum space which is bounded by the lower surface of the upper slab and the suspended ceiling of the Premises.  The proceeds of such insurance, so long as this Lease remains in effect, shall be used to repair or replace the improvements, trade fixtures and personal property in the Premises so insured.  Upon any termination of this Lease pursuant to Paragraph 14(a) above, the proceeds of such insurance relating to improvements to the Premises shall be the property of Landlord.

(iv)            Loss of income or business interruption insurance providing protection against any peril included within the classification "All Risk," including but not limited to insurance against sprinkler leakage.

The minimum limit of the coverage provided in division (ii) above shall be adjusted upward only at the expiration of each third (3rd) full calendar year as follows:  Not less that sixty (60) days prior to the relevant adjustment date, Landlord shall request such insurance brokerage firm as is then placing insurance for Landlord (the "Reviewing Broker") to review Tenant's then existing liability insurance coverage, to review the then use of the Premises and the claims history with respect thereto and to recommend, in writing, the amount of coverage to be carried by Tenant pursuant to division (ii).  Such recommendation shall be based upon the then use of the Premises and the liability claims history with respect to the Premises and shall be certified by the Reviewing Broker to be consistent with amounts of coverage generally recommended by such Reviewing Broker for similar types of tenants or users of property with uses similar to that of the Premises in the geographical area which includes the Premises.  If the Reviewing Broker shall recommend an increase(s) in the amount of coverage then provided by Tenant under division (ii), Tenant shall promptly increase its coverage to the recommended amount(s).  In no event shall there by any reduction in the amount of coverage provided by Tenant under division (ii) below the initial amounts set forth herein, notwithstanding any recommendation by the Reviewing Broker.  The failure of the Reviewing Broker to require any additional insurance coverage shall not be deemed to relieve Tenant from any obligations under this Lease.

(d)            Deductibles.  Tenant may, with the written consent of Landlord, elect to have reasonable deductibles in connection with the policies of insurance required to be maintained by Tenant under subparagraph (c)(iii).

(e)            Certificates of Insurance.  Tenant shall deliver to Landlord at least thirty (30) days prior to the time such insurance is first required to be carried by Tenant, and thereafter at least thirty (30) days prior to the renewal date or expiration of each such policy, Certificates of Insurance evidencing the above coverage with limits not less than those specified above.  Such Certificates, with the exception of Workers' Compensation, shall add Landlord and each of its partners, and its and their subsidiaries, affiliates, partners, officers, directors, agents, employees, lenders and other persons or entities designated by Landlord and having an insurable interest in the Premises as additional insureds and shall expressly provide that the interest of same therein shall not be affected by any breach by Tenant of any policy provision for which such Certificates evidence coverage.  Neither Landlord nor any other person or entity named as an additional insured pursuant to this subparagraph shall have any obligation under such policies, such as payment of premiums, giving of notices and the like.  Further, all Certificates shall expressly provide that not less than thirty (30) days prior unqualified written notice shall be given to Landlord or Landlord's lender in the event of material alteration to, non-renewal of, or cancellation of the coverages evidenced by such Certificates.  Notwithstanding the foregoing, Landlord may, at any time, from time to time, inspect and/or copy and approve any and all insurance policies required hereunder.

 

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(f)            Landlord's Insurance.  Landlord shall at all times during the term of this Lease maintain in effect a policy or policies of (i) "All Risk" insurance, together with sprinkler leakage and vandalism and malicious mischief coverage, covering the Building, including Landlord's interest in all tenant improvements in the Premises, and (ii) Lessor's "Risk Only" Liability Insurance.  Landlord may also, but shall not be required to, maintain flood and earthquake insurance with respect to the Building, rental interruption insurance assuring that the rent under this Lease will be paid to Landlord for a period of not less than twelve (12) months if the Premises are destroyed or rendered inaccessible by a risk insured against under the foregoing coverage, and any other types of insurance that Landlord, in its business judgment, may determine is necessary or desirable to obtain.  The cost of all such insurance shall be included in the Operating Expenses to be reimbursed by Tenant to Landlord pursuant to Paragraph 3.

(g)            Increase in Coverage.  Upon demand, Tenant shall provide Landlord, at Tenant's expense, with such increased amount of existing insurance, and such other insurance in such limits, as Landlord may require and such other hazard insurance as the nature and condition of the Premises may require in the sole judgment of Landlord to afford Landlord adequate protection for risks of Tenant to be insured hereunder.

(h)            No Co-Insurance.  If on account of the failure of Tenant to comply with the provisions of this Paragraph, Landlord or any additional insured is adjudged a coinsurer by its insurance carrier, then any loss or damage Landlord or such additional insured shall sustain by reason thereof shall be borne by Tenant and shall be immediately paid by Tenant upon receipt of a bill therefor and evidence of such loss.

(i)            Insurance Limits.  Landlord makes no representation that the limits of liability specified to be carried by Tenant under the terms of this Lease are adequate to protect Tenant against Tenant's undertakings under this Lease.  In the event Tenant believes that any such insurance coverage called for under this Lease is insufficient, Tenant shall provide, at its own expense, such additional insurance as Tenant deems adequate.  In no event shall the limits of any coverage maintained by Tenant pursuant to this Paragraph 20 be considered as limiting Tenant's liability under this Lease.

(j)            Landlord's Negligence.  Nothing contained herein shall operate to relieve Landlord from any loss, damage, injury, liability, claim, cost or expense which it is determined by a court of competent jurisdiction was proximately caused by its willful misconduct or its own sole negligence or the sole negligence of its agents or employees.

(k)            General Requirements.  All insurance required to be carried by Tenant hereunder shall be with companies rated A:XI, or better, in the then most recent edition of Best's Insurance Guide and licensed to provide the relevant insurance in the State of California.  Such insurance shall be primary insurance (and not "excess over") as respects Landlord and any other additional insured(s) designated by Landlord and not contributory with any other available insurance.  All policies of such insurance shall each contain an unqualified provision that the insurer will not cancel, deny renewal or materially amend the coverage provided by such policy without first giving Landlord and any additional insured(s) thirty (30) days prior written notice.  All policies and certificates delivered by Tenant pursuant to this Paragraph shall contain liability limits not less than those set forth herein, shall list the additional insured(s) and shall specify all endorsements and special coverages required by this Paragraph.  Any insurance required to be maintained by Tenant may be maintained by Tenant pursuant to so-called "blanket" policies of insurance so long as (i) the Premises is specifically identified therein (by rider, endorsement or otherwise) as included in the coverage provided, (ii) the limits of the policy are applicable on a "per location" basis to the Premises and (iii) such policies otherwise comply with the provision of this Lease.  The term "term of this Lease" shall mean, for the purposes of this Paragraph, the period commencing on the date Tenant is given access to the Premises for any purpose through the later of the expiration or termination of the Lease term or the date Tenant surrenders physical possession of the Premises to Landlord.  With respect to the Comprehensive General Liability insurance required to be obtained by Tenant under this Lease, the foregoing general requirements are subject to the specific requirements set forth in subparagraph (c)(ii), above.

(l)            Landlord's Self Help Right.  In the event that Tenant fails to procure, maintain and/or pay for at the times and for the durations specified in this Lease, any insurance required by this Paragraph, or fails to carry insurance required by any governmental requirement, Landlord may (but without obligation to do so) at any time or from time to time, and without notice, procure such insurance and Tenant agrees to pay the sums so paid by Landlord together with interest thereon at the interest rate set forth in Paragraph 37(a) below, and any costs or expenses incurred by Landlord in connection therewith, within ten (10) days following Landlord's written demand to Tenant for such payment.

	21.	WAIVER OF SUBROGATION

Landlord and Tenant each hereby waives on behalf of themselves and their respective insurance carriers any and all rights of recovery against the other, and against any other tenant or occupant of the Building and against the officers, employees, agents, representatives, customers and invitees of such other party and of such other tenant or occupant of the Building for loss of or damage to such waiving party or its property or the property of others under its control, to the extent that such loss or damage is insured against under any policy of insurance required to be carried by such waiving party pursuant to the provisions of this Lease (or any other policy of insurance carried by such waiving party in lieu thereof) at the time of such loss or damage.  The foregoing waiver shall be effective whether or not a waiving party shall actually obtain and maintain the insurance which such waiving party is required to obtain and maintain pursuant to this Lease (or any substitute therefor). The policies of insurance which Landlord and Tenant are required to maintain under this Lease shall provide that the insurance company shall waive all right of recovery by way of subrogation against either Landlord or Tenant in connection with any damage covered by the subject policy.

 

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	22.	ATTORNEYS' FEES

In the event of any legal action or proceeding brought by either party against the other arising out of this Lease or in which this Lease is asserted as a defense, the prevailing party shall be entitled to recover from the other party reasonable attorneys' fees incurred in such action in an amount determined by the court, in addition to its costs incurred in such action, and such amounts shall be included in any judgment rendered in such action or proceeding.  For purposes of this provision, in any unlawful detainer or other action or proceeding instituted by Landlord based upon any default or alleged default of Tenant hereunder, Landlord shall be deemed the prevailing party if (a) judgment is entered in favor of Landlord or (b) prior to trial or judgment Tenant shall pay all or any portion of the rent claimed by Landlord, eliminate the condition(s), cease the act(s) or otherwise cure the omission(s) claimed by Landlord to constitute a default by Tenant hereunder.  If Landlord engages an attorney due to any failure by Tenant to comply with this Lease but no legal action or proceeding is commenced, Tenant agrees to pay Landlord's reasonable attorney fees and costs related to such matter.  If Landlord becomes involved in any litigation or dispute, threatened or actual, by or against anyone not a party to the Lease, but arising by reason of or related to any act of omission of Tenant or any of the Tenant Parties, Tenant agrees to pay Landlord's reasonable attorneys' fees and other costs incurred in connection with the litigation or dispute regardless of whether a lawsuit is actually filed.

	23.	WAIVER

No waiver by Landlord of any provision of this Lease or of any breach by Tenant hereunder shall be deemed to be a waiver of any other provision hereof, or of any subsequent breach by Tenant of the same or any other provision.  Landlord's consent to or approval of any act by Tenant requiring Landlord's consent or approval shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act of Tenant.  Furthermore, any custom or practice which may develop between the parties in the administration of this Lease shall not be construed to waive or lessen the right of Landlord to insist upon the performance by Tenant in strict accordance with all of the terms, covenants, agreements, conditions, and provisions of this Lease.  No act or thing done by Landlord or Landlord's agents during the term of this Lease shall be deemed an acceptance of a surrender of the Premises, unless done in a writing signed by Landlord.  Tenant's delivery of keys to any employee or agent of Landlord shall not operate as a termination of this Lease or a surrender of the Premises unless done pursuant to a written agreement to such effect executed by Landlord.  The acceptance of any rent by Landlord following a breach of this Lease by Tenant shall not constitute a waiver by Landlord of such breach (other than the failure to pay the particular rent so accepted) or any other breach unless such waiver is expressly stated in a writing signed by Landlord.  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 Paragraph 26(A)(vi) or waive the provisions of Paragraphs 16 or 25.

	24.	NOTICES

All notices, requests, payments, consents or approvals ("notices") which Landlord or Tenant may be required, or may desire, to serve on the other shall be in writing and may be served, by personal service or as an alternative to personal service, by mailing the same by registered or certified mail, postage prepaid and return receipt requested, addressed as set forth in Item 13 of the Basic Lease Provisions, or addressed to such other address or addresses as either Landlord or Tenant may from time to time designate to the other in the manner provided for herein.  All notices shall be deemed effective upon receipt.  If personally delivered, notices shall be deemed received at the time of delivery.  If any notice is sent by mail, the same shall be deemed delivered and received on the date of receipt or refusal indicated on the return receipt.  Any notice provided for herein may also be sent by facsimile transmission or by any reputable overnight courier so long as written confirmation of delivery of such notice is obtained by the sender.  In either of these cases, a confirmation copy of such notice shall be sent by registered or certified mail, return receipt requested, and such notice shall be deemed to be received one day after it is sent.

	25.	INSOLVENCY OR BANKRUPTCY

In no event shall this Lease be assigned or assignable by operation of law and in no event shall this Lease be an asset of Tenant in any receivership, bankruptcy, insolvency, or reorganization proceeding.

	26.	DEFAULTS AND REMEDIES

(a)            The occurrence of any of the following shall constitute a material default and breach of this Lease by Tenant:

(i)            Any failure by Tenant to pay the rent or to make any other payment required to be made by Tenant hereunder at the time specified for payment.  Landlord shall give Tenant three (3) days written notice of any such default, which notice shall be in lieu of, and not in addition to, any notice required under Section 1161, et seq., of the California Code of Civil Procedure, as amended;

 

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(ii)            The abandonment or vacation of the Premises by Tenant.  Abandonment is herein defined to include, but is not limited to, any absence by Tenant from the Premises for five (5) days or longer, without notice from Landlord being required and regardless of whether Tenant is otherwise in default under this Lease;

(iii)            Any failure by Tenant to observe and perform any other provision of this Lease to be observed or performed by Tenant, where such failure continues for ten (10) days (except where a different period of time is specified in this Lease) after written notice by Landlord to Tenant; provided, however, that any such notice shall be in lieu of, and not in addition to, any notice required under Section 1161, et seq., of the California Code of Civil Procedure, as amended.  If the nature of such default is such that the same cannot reasonably be cured within such ten (10) day period, Tenant shall not be deemed to be in default if Tenant shall within such period commence such cure and thereafter diligently prosecute the same to completion;

(iv)            Tenant makes or has made or furnishes or has furnished any warranty, representation or statement to Landlord in connection with this Lease, or any other agreement to which Tenant and Landlord are parties, which is or was false or misleading in any material respect when made or furnished;

(v)            Subject to the provisions of Paragraph 16(h) above, any substantial portion of the assets of Tenant is transferred, or any material obligation is incurred by Tenant, unless such transfer or obligation is incurred in the ordinary course of Tenant's business, or in good faith for fair equivalent consideration, or with Landlord's consent; and/or

(vi)            The making by Tenant of any general assignment for the benefit of creditors; the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or of 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); the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within sixty (60) days; the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within sixty (60) days; or Tenant's convening of a meeting of its creditors or any class thereof for the purpose of effecting a moratorium upon or composition of its debts.

(b)            In the event of any such default by Tenant, then in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder by giving written notice of such intention to terminate.  In the event that Landlord shall elect to so terminate this Lease then Landlord may recover from Tenant:

(i)            the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus

(ii)            the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss which Tenant proves reasonably could have been avoided; plus

(iii)            the worth at the time of award of the amount by which the unpaid rent for the balance of the term of this Lease after the time of award exceeds the amount of such rental loss that Tenant proves reasonably could have been avoided; plus

(iv)            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 therefrom including any amount expended by Landlord to mitigate damages; plus

(v)            the unamortized value of the Building Standard Work (as described in Exhibit "B") made to the Premises, calculated by reference to the length of the term of the Lease that would have remained had the Lease not been terminated; plus

(vi)            the amount of rent, if any, that is postponed or abated, as well as the amount of any other rent or operating concession, any lease take over obligation assumed by Landlord, any lease subsidy paid by Landlord or any other bonus, lease cancellation payment, inducement or concession for Tenant's entering into this Lease; and

(vii)            at Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law.

(c)            As used in subparagraphs (b)(i) and (b)(ii) above, the "worth at the time of award" is computed by allowing interest at the rate determined pursuant to Paragraph 37 below.  As used in subparagraph (b)(iii) above, the "worth at the time of award" is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

(d)            In the event of any default by Tenant, Landlord shall also have the right, with or without terminating this Lease, to re-enter the Premises and remove all persons and property from the Premises.  Such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant, all in accordance with applicable California law.

 

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(e)            In the event of the vacation or abandonment of the Premises by Tenant or in the event that Landlord shall elect to re-enter as provided above or shall take possession of the Premises pursuant to legal proceedings or pursuant to any notice provided by law, then if Landlord does not elect to terminate this Lease as provided in this Paragraph 26, Landlord may from time to time, without terminating this Lease, either recover all rental as it becomes due or relet the Premises or any part thereof for such term or terms and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable, with the right to make alterations and repairs to the Premises.  Election by Landlord to proceed pursuant to this subparagraph shall be made upon written notice to Tenant and shall be deemed an election of the remedy described in California Civil Code Section 1951.4 and, unless Landlord relets the Premises, Tenant shall have the right to sublet or assign subject to the prior written consent of Landlord.  Such consent shall not be unreasonably withheld and shall be subject to all of the terms and provisions of Paragraph 16.

(f)            In the event that Landlord shall elect to so relet, then rentals received by Landlord from such reletting shall be applied:  first, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any cost of such reletting; third, to the payment of the cost of any alterations and repairs to the Premises; fourth, to the payment of rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and applied in payment of future amounts as the same may become due and payable hereunder.  Should the rent for such reletting, during any month for which the payment of rent is required hereunder, be less than the rent payable during that month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord immediately upon demand therefor by Landlord.  Such deficiency shall be calculated and paid monthly.  Tenant shall also pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such reletting or in making such alterations and repairs not covered by the rentals received from such reletting.

(g)            No re-entry, removal of property or taking possession of the Premises by Landlord pursuant to this Paragraph 26 shall be construed as an election to terminate this Lease unless a written notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction.  Furthermore, neither Landlord's acts of maintenance or preservation nor its efforts to relet nor the appointment of a receiver to collect rents shall constitute a termination of Tenant's right to possession unless a written notice of such intention is provided by Landlord to Tenant.  Notwithstanding any reletting without termination by Landlord because of any default by Tenant, Landlord may at any time after such reletting elect to terminate this Lease for any such default.

(h)            In any action for unlawful detainer commenced by Landlord against Tenant by reason of any default hereunder, the reasonable rental value of the Premises for the period of the unlawful detainer shall be the amount of rent reserved in this Lease for such period, unless Landlord or Tenant shall prove to the contrary by competent evidence.  The rights and remedies reserved to Landlord herein, including those not specifically described, shall be cumulative and, except as otherwise provided by California statutory law in effect at the time, Landlord may pursue any or all of such rights and remedies, or any other right available at law or equity, at the same time or otherwise.  Without limitation, Tenant acknowledges that Tenant's failure to timely comply with the requirements of Paragraph 18(a) may result in a lender refusing to loan Landlord funds or a buyer refusing to purchase the Building on favorable terms (or at all), causing Landlord substantial monetary damages.

(i)            All covenants and agreements to be performed by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost and expense and without any abatement of rent.  If Tenant fails to pay any sum of money, other than rent, required to be paid by it or fails to perform any other act on its part to be performed, and such failure continues beyond any applicable grace period set forth in the Paragraph providing for such obligation (or if no grace period is set forth in such Paragraph, then the applicable grace period pursuant to this Paragraph 26), then in addition to any other remedies provided herein Landlord may, but shall not be obligated so to do, without curing such default or waiving or releasing Tenant from any of its obligations, make any such payment or perform any such other act on Tenant's part, including the removal of any offending signs.  Landlord's election to make any such payment or perform any such 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, within ten (10) days after written demand therefor by Landlord, reimburse Landlord for all sums so paid by Landlord and all necessary incidental costs, together with interest thereon at the rate determined under Paragraph 37, accruing from the date of such payment by Landlord; and Landlord shall have the same rights and remedies in the event of failure by Tenant to pay such amounts as Landlord would have in the event of a default by Tenant in payment of rent.

(j)            Tenant hereby waives, for itself and all persons claiming by and under Tenant, all rights and privileges which it might have had under any present or future law, to redeem the Premises or to continue the Lease after being dispossessed or ejected from the Premises.

	27.	HOLDOVER

Tenant shall surrender possession of the Premises immediately after the expiration of the Lease term or termination of the Lease.  If Tenant or anyone claiming under Tenant holds over after the expiration or earlier termination of the term hereof without the express written consent of Landlord, Tenant shall (a) become a tenant at sufferance only at the greater of (i) two hundred percent (200%) of the Basic Annual Rent and Additional Rent then in effect, or (ii) two hundred percent (200%) of the then current market rent in the Building (Basic Annual Rent and Additional Rent) by reference to recent comparable transactions entered into by Landlord and otherwise upon the terms, covenants and conditions herein specified, so far as applicable, (b) pay all damages sustained by Landlord by reason of such holding over and (c) indemnify, defend and hold Landlord harmless from and against any loss or liability resulting from such holding over, including, but not limited to, any amounts required to be paid to any tenant or prospective tenant who was to have occupied the Premises after said termination or expiration and any related attorneys' fees and brokerage commissions.  Acceptance by Landlord of rent after such expiration or earlier termination shall not constitute a consent to a holdover hereunder, but shall create only a month-to-month tenancy terminable at the end of any calendar month by not less than ten (10) days written notice given by either party to the other party.  Further, no payment of money by Tenant to Landlord after the termination of this Lease by Landlord, or after the giving of any notice of termination to Tenant by Landlord which Landlord is entitled to give Tenant under this Lease, shall reinstate, continue or extend the term of this Lease or shall affect any such notice given to Tenant prior to the payment of such money, it being agreed that after the service of such notice or the commencement of any suit by Landlord to obtain possession of the Premises, Landlord may receive and collect when due any and all payments owed by Tenant under the Lease, and otherwise exercise its rights and remedies.  The making of any such payments by Tenant shall not waive such notice, or in any manner affect any pending suit or judgment obtained.  The foregoing provisions of this Paragraph are in addition to and do not affect Landlord's right of re-entry or any other rights of Landlord hereunder or as otherwise provided by law.

 

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	28.	CONDITION OF PREMISES

Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Premises or the Building or with respect to the suitability of any part of the Building for the conduct of Tenant's business.  The taking of possession of the Premises by Tenant shall conclusively establish that the Premises and the Building were at such time in good and sanitary order, condition and repair.  Landlord and its agents shall not be liable for any latent defect in the Premises or in the Building.  Tenant shall give prompt notice to Landlord in case of fire or accidents in the Premises or in the Building, or of defects therein or in the fixtures and equipment.

	29.	QUIET POSSESSION

Upon Tenant's paying the rent hereunder and observing and performing all of the covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire term hereof, subject to all the provisions of this Lease.

	30.	TENANT'S SIGNS

(a)            Tenant may, at its sole cost and expense, place its signs displaying its logo and graphics on the entrance doors to the Premises and in hallways or elevator lobbies on floors wholly leased by Tenant. On partial floors leased by Tenant, Tenant, at Landlord's initial cost and thereafter at Tenant's sole cost and expense, may place Landlord's standard sign on entrance doors to the Premises which will conform to Landlord's graphics program for the Building.

(b)            Landlord at its own cost and expense shall place a directory board in the Building lobby.  Landlord shall cause Tenant's name to be affixed thereto, at Landlord's initial cost and thereafter at Tenant's cost. Tenant may utilize one line per one thousand square feet of Rentable Area of the Premises.

(c)            Unless specifically set forth to the contrary in an addendum to this Lease, Tenant shall not place any sign on the exterior of the Building, or within the Building if such sign may be seen from outside of the Building or on any Building sign monument or other device constructed for the placement of tenant signs.

(d)            All Tenant signs installed by Landlord or Tenant shall comply with all applicable requirements of all governmental authorities having jurisdiction and shall be installed in a good and workmanlike manner.  Such signs shall be maintained and kept in good repair at Tenant's sole cost and expense.

	31.	CONFLICT OF LAWS

This Lease shall be governed by and construed pursuant to the laws of the State of California, and the venue of any action or proceeding under this Lease shall be Orange County, California.

	32.	COMMON FACILITIES

Tenant shall have the non-exclusive right, in common with Landlord and other tenants and occupants of the Building and their employees, agents and business visitors, to the use of all common facilities which constitute a part of the Building, subject to such reasonable rules and regulations relating to such use as Landlord may from time to time establish.  Common facilities located within the Building include any building lobby, elevators, rest rooms, stairways and stairwells, elevator lobbies and all common entrances, corridors, passageways and serviceways which are not located within the Premises of Tenant or the premises of another tenant of the Building.  Common facilities located outside of the Building include landscaping, hardscaping and any fountains adjacent to the Building, a parking structure (the "Building Parking Structure"), all sidewalks, driveways, vehicle and pedestrian entrances and accessways, loading docks, truck tunnels, truck parking and truck turn-around areas, vehicle and pedestrian ramps serving the Building and any pedestrian walkway connecting the Building and the Building Parking Structure.  Landlord may make changes at any time and from time to time to the common facilities, without any liability to Tenant, and no such change shall entitle Tenant to any abatement of rent.  Landlord shall at all times have the sole and exclusive control of the common facilities.  To the extent that any common facilities located outside of the Building are maintained jointly or for the common benefit of Landlord and the owners of adjacent structures, (i) Tenant's non-exclusive right of use of such common facilities shall be in common with Landlord, other tenants and occupants of and visitors to the Building and the owners, tenants, occupants of and visitors to such other structures and (ii) Operating Expenses for purposes of Paragraph 3 shall include only that portion of the operating expenses of such common facilities as are allocated to the Building from time to time by agreement among Landlord and the owners of such other structures. During the term and subject to availability, Tenant's principals and employees shall be entitled to purchase contracts for reserved and random select parking at the prevailing price offered by the operator of the Building Parking Structure which such prices are currently $175/month for a reserved space contract and $90/month for a random select parking contract. Parking privileges shall be subject to compliance with all rules and regulations applicable thereto as designated by Landlord or the operator of the Parking Structure.

 

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Tenant shall keep all common facilities free and clear of any obstructions created or permitted by Tenant or resulting from Tenant's operations and shall not conduct an assembly on the common facilities without Landlord's prior consent.  Nothing herein shall affect the right of Landlord at any time to remove any persons not authorized to use the common facilities or to prevent the use of such facilities by unauthorized persons.  Landlord reserves the right, from time to time, to (A) make alterations in or additions to the common facilities, including without limitation, constructing new structures or changing the location, size, shape and/or number of the driveways, entrances, parking spaces, parking areas, loading and unloading areas, landscape areas and walkways, (B) close temporarily any of the common facilities of the Building for maintenance purposes as long as reasonable access to the Premises remains available, (C) designate property to be included in or eliminate property from the common facilities of the Building, and (D) use the common facilities of the Building while engaged in making alterations in or additions or repairs to the Building.

	33.	SUCCESSORS AND ASSIGNS

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

	34.	BROKERS

Tenant warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, excepting only the broker(s) named in Item 10 of the Basic Lease Provisions, if any, and that it knows of no other real estate broker or agent who is or might be entitled to a commission in connection with this Lease.  Landlord covenants and agrees to pay all real estate commissions due in connection with this Lease to such named broker(s), but only at such time(s) and in such amount(s) as are agreed in writing between Landlord and such broker.  Tenant agrees to pay and hold Landlord harmless from and defend Landlord against any cost, expense or liability for any compensation claimed by any broker, finder or agent employed or claiming to have been employed by Tenant in connection with this Lease or with the negotiation of this Lease.  Landlord and Tenant acknowledge that payment shall not be a condition precedent to recovery upon the foregoing indemnification provision.

	35.	NAME

Tenant shall not, without the written consent of Landlord, use the name, insignia or logotype of the Building for any purpose other than as the address of the business to be conducted by Tenant in the Premises, and in no event shall Tenant acquire any rights in or to such name, insignia and/or logotype.  Furthermore, Tenant shall not use any picture of the Building in its advertising, stationery or in any other manner.  Tenant shall, when referring to the Building, refer to the Building by the name or address assigned thereto, from time to time, by Landlord.  References to the Building and its location shall not be made by Tenant in any other manner.  Landlord expressly reserves the right, in its sole and absolute discretion, at any time to change the name, insignia, logotype or street address of the Building without in any manner being liable to Tenant.

	36.	EXAMINATION  OF LEASE

Submission of this instrument for examination, negotiation or signature by Tenant does not constitute an offer to lease or a reservation of the Premises for Tenant or an option for Tenant to lease the Premises, and it is not effective as a Lease or otherwise until at least one counterpart, duly executed by authorized persons of Landlord and Tenant, has been delivered to each party thereto.  Without limiting the generality of the foregoing, Tenant acknowledges that this Lease and any material amendments hereto are subject to the approval of Landlord's lender with respect to the Building.  Promptly upon execution of this Lease by Tenant, Landlord shall submit the same to its lender for approval.  Delivery by Landlord to Tenant of a copy of this Lease or of any amendment hereto fully executed by Landlord and Tenant shall constitute notice to Tenant that Landlord has obtained the approval of its lender with respect to this Lease or such amendment.

	37.	INTEREST ON TENANT'S OBLIGATIONS; LATE CHARGE

(a)            Any amount due from Tenant to Landlord which is not paid when due shall bear interest at the maximum rate per annum which Landlord is permitted by law to charge, from the date such payment is due until paid, but the payment of such interest shall not excuse or cure any default by Tenant under this Lease.  Such rate shall remain in effect after the occurrence of any breach or default hereunder by Tenant to and until payment of the entire amount due.

(b)            In the event Tenant is more than ten (10) days late in paying any installment of rent due under this Lease, Tenant shall pay Landlord a late charge equal to five percent (5%) of the delinquent installment of rent, provided that in no event shall the amount of such late charge be less than One Hundred Dollars ($100.00).  The parties agree that it would be impractical or extremely difficult to fix Landlord's actual damages due to a late payment by Tenant and that the amount of such late charge represents a reasonable estimate of the cost and expense that would be incurred by Landlord in processing each delinquent payment of rent by Tenant and that such late charge shall be paid to Landlord as liquidated damages for each delinquent payment pursuant to California Civil Code Section 1671.  The parties further agree that the payment of late charges and the payment of interest provided for in subparagraph (a) above are distinct and separate from one another in that the payment of interest is to compensate Landlord for the use of Landlord's money by Tenant, while the payment of a late charge is to compensate Landlord for the additional administrative expense incurred by Landlord in handling and processing delinquent payments.  It is understood that the payment of any late charge by Tenant and the acceptance thereof by Landlord shall not be deemed a waiver by Landlord of its rights regarding any default by Tenant under this Lease.

 

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(c)            After the second late payment in any calendar year, in addition to all of its other remedies, Landlord shall have the option to require that (i) 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 the payment of a security deposit equal to three (3) months rent (Basic Annual Rent and Additional Rent).

(d)            Should Tenant deliver to Landlord, at any time during the term, two (2) or more insufficient checks, Landlord may require that all monies then and thereafter due from Tenant be paid to Landlord by cashier's check.

	38.	TIME

Time is of the essence of this Lease with respect to the performance of every provision of this Lease in which time of performance is a factor.

	39.	DEFINED TERMS AND MARGINAL  HEADINGS

The words "Landlord" and "Tenant" as used herein shall each include the plural as well as the singular and, when applicable, shall refer to actions taken by their respective representatives.  If more than one person is named as Tenant the obligations of such persons are joint and several.  The headings to the Paragraphs of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretations of any part hereof.

	40.	PRIOR AGREEMENTS;  SEPARABILITY

This Lease and the exhibits and any addenda hereto contain all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease, and no prior agreement, understanding or representation pertaining to any such matter shall be effective for any purpose.  No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest, and consented to in writing by any lender designated by Landlord holding a secured interest in the Building.  No verbal agreement or implied covenant shall be held to vary the terms hereof, any statute, law or custom to the contrary notwithstanding.  No employee or agent of Landlord shall have authority, by letter, memorandum or other written communication, to amend, vary or delete any provision of this Lease or any exhibit hereto, unless such written instrument bears the signature of Landlord.  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 hereunder shall be held invalid, illegal or unenforceable to any extent, the remainder of this Lease shall not be affected thereby and each term and provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.

	41.	TRAFFIC AND ENERGY MANAGEMENT

(a)            Tenant and its employees shall comply with South Coast Air Quality Management District Rule 2202 (formerly known as Regulation 15) and any other environmental regulation and/or program now or hereafter applicable to the Building.  Landlord and Tenant agree to cooperate and use their best efforts to participate in governmentally mandated and voluntary traffic management programs generally applicable to businesses located in Costa Mesa, California or to the Building and, initially, shall encourage and support van and car pooling by office workers and service employees and shall encourage and support staggered and flexible working hours for employees to the fullest extent permitted by the requirements of Tenant's business.  Neither this Paragraph nor any other provision in this Lease, however, is intended to or shall create any rights or benefits in any other person, firm, company, governmental entity or the public.

(b)            Landlord and Tenant agree to cooperate and use their best efforts to comply with any and all guidelines or controls imposed upon either Landlord or Tenant by federal or state governmental organizations or by any energy conservation association to which Landlord is a party concerning energy management.

(c)            All costs, fees and assessments and other charges paid by Landlord to any governmental authority or voluntary association in connection with any program of the types described in this Paragraph, and all costs and fees paid by Landlord to any governmental authority, voluntary association or third party pursuant to or to implement any such program, shall be included in Operating Expenses for the purpose of Paragraph 3, whether or not specifically listed in such Paragraph.  Any breach by Tenant of any of its covenants in this Paragraph 41 may result in penalties or fees being assessed against Landlord or the Building.  These penalties or fees shall not be part of Operating Expenses but instead shall be payable by Tenant on demand of Landlord.

	42.	CORPORATE/PARTNERSHIP/TRUST AUTHORITY

Each individual executing this Lease on behalf of Landlord and Tenant represents and warrants that the execution and delivery of this Lease on behalf of the party for whom such person is executing is duly authorized, that he or she is authorized to execute and deliver this Lease and that this Lease is binding upon such party in accordance with its terms.  If Tenant is a corporation, Tenant shall, within ten (10) days after execution of this Lease, deliver to Landlord a certified copy of a resolution of the Board of Directors of Tenant or any executive committee thereof authorizing or ratifying the execution of this Lease.  Failure of Tenant to provide such resolution shall not, however, relieve Tenant of its obligations pursuant to this Lease.  If Tenant is a partnership or trust, Tenant shall deliver those certificates or written assurances from the partnership or trust as Landlord may reasonably request.

 

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	43.	NO LIGHT, AIR OR VIEW EASEMENT

Any diminution or shutting off of light, air or view by any structure which may be erected on lands adjacent to the Building shall in no way affect this Lease, abate any payment owed by Tenant under the Lease, or otherwise impose any liability on Landlord.

	44.	NON-DISCLOSURE OF LEASE TERMS

Landlord and Tenant agree that the terms of this Lease are confidential and constitute proprietary information of the parties hereto.  Disclosure of the terms hereof could adversely affect the ability of Landlord to negotiate with other tenants.  Each of the parties hereto agrees that such party, and its respective partners, officers, directors, employees, agents, real estate brokers and sales persons and attorneys, shall not disclose the terms and conditions of this Lease to any other person without the prior written consent of the other party hereto except pursuant to an order of a court of competent jurisdiction.  The foregoing notwithstanding, Landlord may disclose the terms hereof to any lender now or hereafter having a lien on Landlord's interest in the Building or any portion thereof, and either party may disclose the terms hereof to its respective independent accountants who review its respective financial statements or prepare its respective tax returns, to any prospective transferee of all or any portions of their respective interests hereunder (including a prospective sublessee or assignee of Tenant), to any lender or prospective lender to such party, to any governmental entity, agency or person to whom disclosure is required by applicable law, regulation or duty of diligent inquiry and in connection with any action brought to enforce the terms of this Lease, on account of the breach or alleged breach hereof or to seek a judicial determination of the rights or obligations of the parties hereunder.

	45.	FORCE MAJEURE

Any covenants, conditions, provisions or agreements on the part of Landlord to perform any act or thing for the benefit of Tenant shall not be deemed breached if Landlord is unable to furnish or perform the same by virtue of a strike, lockout, laws, rules, orders, ordinances, directions, regulations or requirements of any federal, state, county or municipal authority, labor trouble or any other cause whatsoever beyond Landlord's control, nor shall Tenant's rent be abated by reason of such inability on the part of Landlord.  Whenever under the provisions of this Lease, Landlord is required or agrees to take certain actions, Landlord's obligation shall be deemed fulfilled if Landlord causes such action to be taken by any other person.

	46.	MISCELLANEOUS

(a)            At the expiration or earlier termination of this Lease, Tenant shall execute, acknowledge and deliver to Landlord, within five (5) days after written demand from Landlord to Tenant, any quitclaim deed or other document which may be reasonably requested by any reputable title insurance company to remove this Lease as a matter affecting title to the Premises on a preliminary title report or title policy issued with respect to the Building.

(b)            Tenant acknowledges that the exterior demising walls of the Premises and the area between the finished ceiling of the Premises and the slab of the Building floor thereabove have not been leased to Tenant and the use thereof together with the right to install, maintain, use, repair and replace pipes, ducts, conduits and wires leading through, under or above the Premises in locations which will not materially interfere with Tenant's use of the Premises are hereby reserved by Landlord.

(c)            All amounts payable hereunder shall be paid in lawful money of the United States which shall be legal tender at the time of payment.  When no other time is stated herein for payment, payment of any amount due from Tenant to Landlord hereunder shall be made within ten (10) days after Tenant's receipt of Landlord's invoice or statement therefor.

(d)            Tenant shall, upon written request by Landlord, amend this Lease in any manner reasonably requested by any actual or prospective ground lessor of or lender to Landlord, provided that any such amendment shall not materially impair any rights or remedies of Tenant hereunder.

(e)            LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTIONS OF THE UNITED STATES AND THE STATE OF CALIFORNIA.  EACH PARTY EXPRESSLY AND KNOWINGLY WAIVES AND RELEASES ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY MATTERS ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE.

______________                                                                                                  _____________

Landlord's Initials                                                                                    Tenant's Initials

(f)            This Lease may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

(g)            This Lease shall be strictly construed neither against Landlord nor Tenant.

 

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(h)            Neither this Lease nor any memorandum hereof shall be recorded by either Landlord or Tenant.

(i)            The obligations of the indemnifying party under each and every indemnification and hold harmless provision in this Lease shall survive the expiration or earlier termination of this Lease to and until the last to occur of (i) the last date permitted by law for the bringing of any claim or action with respect to which indemnification may be claimed by the indemnified party against the indemnifying party under such provisions or (ii) the date on which any claim or action for which indemnification may be claimed under such provision is fully and finally resolved and, if applicable, any compromise thereof or judgment or award thereon is paid in full by the indemnifying party and the indemnified party is reimbursed by the indemnifying party for any amounts paid by the indemnified party in compromise thereof or upon a judgment or award thereon and in defense of such action or claim, including reasonable attorneys' fees incurred.

(j)            In no event shall the review, approval, inspection or examination by Landlord of any item to be reviewed, approved, inspected or examined by Landlord under the terms of this Lease be deemed to be an approval of, or representation or warranty as to, the adequacy, accuracy, sufficiency or soundness of any such item or the quality or suitability of such item for its intended use.  Any such review, approval, inspection or examination by Landlord shall be for the sole purpose of protecting Landlord's interests in the Building under this Lease, and no third parties shall have any rights pursuant thereto.

(k)            The obligations of Landlord herein are intended to be binding only on the property of the entity acting as Landlord and shall not be personally binding, nor shall any resort be had to the private properties of the general partners thereof or any employee or agent of Landlord.  Subject to the provisions of Paragraph 18 to the contrary, any lien obtained to enforce any judgment obtained by Tenant against Landlord and any levy of execution thereon shall be subject and subordinate to any lien, mortgage or deed of trust to which Paragraph 18 applies or may apply.

	47.	GUARANTY – Intentionally Omitted

	48.	ADDENDA

The provisions in this Paragraph 48 shall supersede and override any other provision in this Lease to the extent the same are inconsistent.

48.1 - Access

Tenant shall have controlled access to the Building pursuant to the terms of this Lease, twenty-four (24) hours per day, seven (7) days per week, every day of the year.  The foregoing shall not extend to temporary interruptions of such access as required for maintenance or repair, as the result of reconstruction or restoration following a casualty or condemnation or resulting from force majeure causes.

48.2            Civil Code Section 1938 Disclosure

Pursuant to Section 1938 of the Civil Code of California, Landlord hereby discloses to Tenant that the Building has not been inspected by a Certified Access Specialist.

 

 

 

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EXHIBIT "A 1"

FLOOR PLAN(S) OF PREMISES

 

 

 

 

 

 

 

 

 

 

 

Exhibit A-1

 

EXHIBIT "A 2"

PLOT PLAN OF BUILDING

 

 

 

 

Exhibit A-2

  

EXHIBIT "A 3"

RENTABLE AREA

The term "Rentable Area" as used in the lease to which this exhibit is attached (the "Lease") shall mean:

(a)            As to each floor of the Building on which the entire space rentable to tenants is or will be leased to one tenant (hereinafter referred to as a "Single Tenant Floor"), Rentable Area attributable to such lease shall be the total of (i) the entire area bounded by the inside surface of the four exterior glass walls (or the inside surface of the permanent external wall(s) where there is no glass) on such floor, including, all areas used for elevator lobbies, corridors, special stairways, or elevators, rest rooms, mechanical rooms, electrical rooms and telephone closets, without deduction for columns and other structural portions of the Building or vertical penetrations that are included for the special use of the tenant of such floor, (ii) a pro rata portion of any Building lobby and (iii) any covered or enclosed common facilities which constitute a part of the Building and which are maintained by Landlord for the common benefit of all tenants of the Building and the area occupied by any mechanical, heating, ventilating and air conditioning equipment which serves the Building but which is located outside thereof which bears the same proportion to the total area of such common facilities as the Rentable Area of such Single Tenant Floor bears to the Rentable Area of the Building (excluding such common facilities), but excluding one half of the area contained within the exterior walls of the Building stairs, and excluding fire towers, vertical ducts, elevator shafts, flues, vents, stacks and pipe shafts.

(b)            As to each floor of the Building on which space is or will be leased to more than one tenant, Rentable Area attributable to each such lease shall be the total of (i) the entire area included within the premises covered by such lease, being the area bounded by the inside surface of any exterior glass walls (or the inside surface of the permanent exterior wall(s) where there is no glass) of the Building bounding such premises, the exterior of all walls separating such premises from any public corridors or other public areas on such floor, and the centerline of all walls separating such premises from other areas leased or to be leased to other tenants on such floor, (ii) a pro rata portion of the area covered by the elevator lobbies, corridors, rest rooms, mechanical rooms, electrical rooms and telephone closets situated on such floor, (iii) a pro rata portion of the Building lobby, and (iv) that portion of the covered or enclosed common facilities which constitute a part of the Building and which are maintained by Landlord for the common benefit of all tenants of the Building and the area occupied by any mechanical, heating, ventilating and air conditioning equipment which serves the Building but which is located outside thereof which bears the same proportion to the total area of such common facilities as the Rentable Area of such premises bears to the Rentable Area of the Building (excluding such common facilities), but excluding one half of the area contained within the exterior walls of the Building stairs, and excluding fire towers, vertical ducts, elevator shafts, flues, vents, stacks and pipe shafts.

(c)            For the purposes of paragraphs (a) and (b) above, there shall be included in the covered or enclosed common facilities which constitute a part of the Building the central heating, ventilating and air conditioning plant which services the Building and any areas which would have been included in the Rentable Area of any floor of the Building if any architectural recesses on such floor had not been designed and, in lieu thereof, the exterior walls of the Building had been extended to the exterior walls of adjacent floors which have no recesses.

(d)            The Rentable Area of the Building shall be deemed to be 462,191 square feet for purposes of the Lease.  The Rentable Area contained within the Premises let pursuant to the Lease initially shall be the number of square feet set forth in Item 2 of the Basic Lease Provisions.

Exhibit A-3

 

EXHIBIT "B"

Intentionally Omitted

 

 

 

 

  

Exhibit B-1

EXHIBIT "C"

RULES AND REGULATIONS

1.            The sidewalks, entrances, lobby, passages, courts, elevators, vestibules, stairways, corridors and halls of the Building shall not be obstructed or used for any purpose other than ingress and egress.  The halls, passages, entrances, lobby, 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 thereto by 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, provided that nothing herein contained shall be construed to prevent such 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 such persons are engaged in illegal activities in the Building.  Neither Tenant nor any employee of Tenant shall go upon the roof of the Building without the prior written consent of Landlord.

2.            No awnings or other projections shall be attached to the outside walls of the Building.  No curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with, any window or door of the Premises other than Landlord's standard blinds.  All electric ceiling fixtures hung in offices or spaces along the perimeter of the Building must be fluorescent, of a quality, type, design and bulb color approved by Landlord.  Neither the interior nor the exterior of any windows shall be coated or otherwise sunscreened without the written consent of Landlord.  No hanging planters, television sets or other objects shall be attached to or suspended from the ceiling by any tenant without the prior written consent of Landlord.

3.            Except as provided in Paragraph 30 of the Lease, no sign, advertisement, notice or handbill shall be exhibited, distributed, painted or affixed by Tenant on, about or from any part of the Premises or the Building without the prior written consent of Landlord.  If Landlord shall have given such consent at the time, whether before or after the execution of the Lease, such consent shall in no way operate as a waiver or release of any of the provisions hereof or of the 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 each and every such sign, advertisement or notice other than the particular sign, advertisement or notice, as the case may be, so consented to Landlord.  In the event of the violation of the foregoing by Tenant, Landlord may remove or stop same without any liability, and may charge the expense incurred in such removal or stoppage to Tenant.  Interior signs on doors and directory tablets shall be inscribed, painted or affixed for Tenant by Landlord at Tenant's expense, and shall be of a size, color, material and style acceptable to Landlord.  The directory tablet will be provided exclusively for the display of the names and locations of tenants only and Landlord reserves the right to exclude any other names therefrom.  Nothing may be placed on the exterior of corridor walls or corridor doors other than Landlord's standard lettering.

4.            The windows and doors that reflect or admit light and air into halls, passageways or other public places in the Building shall not be covered or obstructed by Tenant, nor shall any bottles, parcels or other articles be placed on the windowsills.  Tenant shall see that the windows, transoms and doors of the Premises are closed and securely locked before leaving the Building and must observe strict care not to leave windows open when it rains.  Tenant shall exercise extraordinary care and caution that all water faucets or water apparatus are entirely shut off before Tenant or Tenant's employees leave the Building, and that all electricity, gas or air shall likewise be carefully shut off, so as to prevent waste or damage.  Tenant shall cooperate with Landlord in obtaining maximum effectiveness of the cooling system by closing blinds when the sun's rays fall directly on the windows of the Premises.  Tenant shall not tamper with or change the setting of any thermostats or temperature control valves installed by Landlord.  All lights in Tenant's premises shall be turned off at night and on weekends and holidays when such premises are not in use.

5.            The toilet rooms, water and wash closets and other plumbing fixtures shall not be used for any purpose other than those for which they were constructed, and no sweepings, rubbish, rags, or other substances shall be thrown therein.  All damages resulting from any misuse of the fixtures shall be borne by the tenant who, or whose subtenants, assignees or any of whose servants, employees, agents, visitors or licensees shall have caused the same.

6.            Tenant shall not mark, paint, drill into, or in any way deface any part of the Premises or the Building.  No boring, cutting or stringing of wires or laying of linoleum or other similar floor coverings or painting or wood staining of fixtures or equipment shall be permitted, except with the prior written consent of Landlord and only as Landlord may direct.  The location of telephone boxes, call boxes and other equipment affixed to any premises shall be subject to Landlord's approval.

7.            No bicycles, vehicles, birds or animals of any kind, other than those assisting handicapped persons, shall be brought into or kept in or about the Premises, and no cooking shall be done or permitted by Tenant in the Premises, except that the preparation of coffee, tea, hot chocolate and similar items for Tenant and its employees shall be permitted provided power shall not exceed that amount which can be provided by a 30 amp circuit.  Tenant shall not cause or permit any unusual or objectionable odors to be produced or permeate from its Premises.

8.            The Premises shall not be used for manufacturing or for the storage of merchandise except as such storage may be incidental to the permitted use of the Premises.  Tenant shall not occupy or permit any portion of the Premises to be occupied as an office for a public stenographer or typist, or for the manufacture or sale of liquor, narcotics, or tobacco (including a cigarette vending machine for use by Tenant's employees) in any form, or as a medical office, or as a barber or manicure shop, or as an employment bureau without the express prior written consent of Landlord.  Tenant shall not engage or pay any employees on the Premises except those actually working for Tenant on the Premises nor advertise for laborers giving an address at the Premises.  The Premises shall not be used for lodging or sleeping or for any immoral or illegal purposes.

 

Exhibit C-1

9.            Tenant shall not make, or permit to be made any unseemly or disturbing noises or disturb or interfere with occupants of this or neighboring buildings or premises or those having business with them, whether by the use of any musical instrument, radio, phonograph, unusual noise, or in any other way.  Tenant shall not throw anything out of doors, windows or skylights or down the passageways.

10.            No Tenant, or subtenant or assignee of Tenant, if any, nor any of their servants, employees, agents, visitors or licensees shall at any time bring or keep upon any premises any inflammable, combustible or explosive fluid, chemical or substance.

11.            No additional locks or bolts of any kind shall be placed upon any of the doors or windows by Tenant, nor shall any changes be made in existing locks or the mechanisms thereof.  Tenant must, upon the termination of its tenancy, restore to Landlord all keys to stores, offices, and toilet rooms, either furnished to or otherwise procured by Tenant, and in the event of the loss of keys so furnished, Tenant shall pay to Landlord the cost of replacing the same or of changing the lock or locks opened by any lost key if Landlord shall deem it necessary to make such changes.

12.            All removals, and the carrying in or out of any safes, freight, furniture, and bulky matter of any description must take place during the hours which Landlord shall determine from time to time, and shall not be done without the express written consent of Landlord.  The moving of safes and other fixtures and bulky matter of any kind must be done upon previous notice to the manager of the Building and under such person's supervision, and the persons employed by Tenant for such work must be acceptable to Landlord.  Landlord reserves the right to inspect all safes, freight and other bulky articles to be brought into the Building and to exclude from the Building all safes, freight and other bulky articles which violated any of these Rules and Regulations or the Lease.  Landlord reserves the right to prescribe the weight and position of all safes, which must be placed upon supports approved by Landlord to distribute the weight.  No tenant shall place a load upon any floor which exceeds the load per square foot which such floor was designed to carry and which is allowed by law.  Tenant shall be responsible for all damages occasioned by its movement into or out of the Building of any item described in this paragraph.  All safes, freight and other bulky articles shall be taken into and removed from the Premises solely on the freight elevator of the Building and the freight loading and unloading areas adjacent thereto.

13.            Tenant shall not purchase spring water, ice, towels, janitorial or maintenance or other like services from any person or persons not approved by Landlord and only at hours and under regulations fixed by Landlord.

14.            Landlord shall have the right to prohibit any advertising by Tenant which, in Landlord's opinion, tends to impair the reputation of the Building or the desirability of the Building as an office location.  Upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising.

15.            Landlord reserves the right to exclude from the Building from 6:00 p.m. to 8:00 a.m. on weekdays, after 12:00 noon on Saturdays and at all hours on Sunday and legal holidays all persons who are not known to the Building personnel and who do not present a pass to the Building approved by Landlord.  Landlord will furnish passes to persons for whom Tenant requests the same in writing.  Tenant shall be responsible for all persons for whom it requests passes and shall be liable to Landlord for all acts of such persons.  Landlord shall in no case be liable for damages for any error with regard to the admission to or exclusion from the Building of any person.  In case of an invasion, mob riot, public excitement or other circumstances rendering such action advisable in Landlord's opinion, Landlord reserves the right without any abatement of rent to require all persons to vacate the Building and to prevent access to the Building during the continuance of the same for the safety of Tenant and the protection of the Building and the property in the Building, and no such action by Landlord shall entitle Tenant to any abatement of rent.  Tenant shall observe all security regulations issued by Landlord and shall comply with all instructions and/or directions of Building personnel.

16.            Any persons employed by any tenant to do janitorial work shall, while in the Building and outside of the Premises, be subject to and under the control and direction of the manager of the Building (but not as an agent or servant of such manager or of Landlord), and such tenant shall be responsible for all acts of such persons.

17.            All doors opening onto public corridors shall be kept closed, except when in use for ingress and egress.  Tenant shall not prop open or block open entrance doors to the Building, service doors to the Building or elevator doors.

18.            The requirements of tenants will be attended to only upon application to the Office of the Building.  Employees of Landlord shall not perform any work outside of their regular duties except under special instructions from Landlord.

19.            Canvassing, soliciting, peddling and vending in the Building are prohibited and Tenant shall report any such activity to Landlord and otherwise cooperate to prevent the same.  It is understood and agreed that Landlord may prohibit access to the Building by any solicitors, peddlers or vendors, including without limitation, food vendors at Landlord's discretion.  Landlord reserves the right unto itself to license Building access to any such solicitors, peddlers and vendors.

20.            All office equipment of any electrical or mechanical nature shall be placed by Tenant in the Premises in settings approved by Landlord to absorb or prevent any vibration, noise and annoyance.

 

Exhibit C-2

21.            No air conditioning unit or other similar apparatus shall be installed or used by Tenant without the written consent of Landlord.

22.            There shall not be used in any space, or in the elevators and public halls of the Building, either by Tenant or others, any hand trucks except those equipped with rubber tires and rubber side guards.

23.            No vending machine or machines of any description shall be installed, maintained or operated upon the Premises without the prior written consent of Landlord.

24.            The scheduling of any tenant move-ins shall be subject to the reasonable discretion of Landlord.

25.            If Tenant desires telephone or telegraph 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.

26.            The term "personal goods or services vendors" as used herein means persons who periodically enter the Building for the purpose of selling goods or services to Tenant, other than goods or services which are used by Tenant only for the purpose of conducting its business on the Premises.  "Personal goods or services" include, but are not limited to, drinking water and other beverages, food, barbering services and shoeshining services.  Landlord reserves the right to prohibit personal goods and services vendors from access to the Building except upon such reasonable terms and conditions, including but not limited to the payment of a reasonable fee and provision for insurance coverage, as are related to the safety, care and cleanliness of the Building, the preservation of good order therein, and the relief of any financial or other burden on Landlord occasioned by the presence of such vendors or the sale by them of personal goods or services to Tenant or its employees.  If necessary for the accomplishment of these purposes, Landlord may exclude a particular vendor entirely or limit the number of vendors who may be present at any one time in the Building.

27.            It shall be the responsibility of each tenant to provide its employees with keys to its premises.  Landlord will under no circumstances open any premises for any tenant or its employees.

28.            Smoking or carrying a lighted cigar, cigarette or pipe anywhere in the interior of the Building is prohibited.  Smoking is also prohibited in the common areas of the Building, except for those specific areas designated in writing by Landlord.  The location of such areas shall be determined by Landlord in its sole discretion.  Landlord hereby reserves the right from time to time to designate substitute smoking areas within the common areas in its sole discretion.

29.            No waiver of any rule or regulation by Landlord shall be effective unless expressed in writing and signed by Landlord.  Landlord may waive any one or more of these rules for the benefit of a particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such rules in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such rules against any or all tenants of the Building.

 

  

Exhibit C-3

EXHIBIT "D"

TENANT'S CERTIFICATE

Center Tower Associates, LLC

650 Town Center Drive

Suite 930

Costa Mesa, CA 92626

Attn:  Property Management

Gentlemen:

The undersigned does hereby state, declare, represent and warrant as follows:

1.            The undersigned tenant ("Tenant") has entered into a certain lease dated ___________________, 20__ (the "Lease") with Center Tower Associates, LLC, a California limited liability company ("Landlord").  The Lease covers certain premises commonly known as Suite ___, 650 Town Center Drive, Costa Mesa, CA 92626 (the "Building") and more particularly described in the Lease (the "Premises").

2.            The Lease is in full force and effect and has not been modified, amended, supplemented or changed, except as set forth, if at all, on Exhibit "A" attached hereto and all provisions of the Lease and the modifications, amendments, supplements or changes set forth on Exhibit "A" attached hereto, if any, are hereby ratified by Tenant.  If no amendments are described on Exhibit "A," then Tenant certifies that there are no amendments, modifications, supplements or changes to the Lease.  Such Lease and any amendments described on Exhibit "A" constitute the entire agreement between Landlord and Tenant as to the leasing of the Premises.

3.            The commencement date of the Lease was ________________, 20__ (the "Commencement Date").  Basic Annual Rent and Additional Rent in the full amounts required by the Lease are payable from the Commencement Date except as set forth, if at all, on Exhibit "A."  Basic Annual Rent and Additional Rent have been paid through _______________.

4.            Tenant has accepted possession of the Premises and is now in occupancy thereof.

5.            The terms of the Lease to be performed by Landlord through the date hereof have been fully satisfied, including without limitation, all improvement work to be performed by Landlord with respect to the Premises.  Tenant acknowledges that such work has been completed in all respects.  Landlord has fulfilled all of its duties of an inducement nature, and all required contributions by Landlord to Tenant on account of improvements by Tenant to the Premises have been paid and received.

6.            As of this date there are no defaults by Landlord pursuant to the Lease.  Tenant has no defenses with respect to its obligations under the Lease and claims no setoff or counterclaim against Landlord.

7.            Basic Annual Rent and Additional Rent have not been paid in advance of the due dates therefor except as set forth, if at all, on Exhibit "A."  A security deposit in the amount of $____________ is required by the Lease and has been deposited with Landlord.  Basic Annual Rent and Additional Rent due through the date hereof have been paid in full except as set forth, if at all, on Exhibit "A."

8.            Tenant has not assigned its interest in the Lease or sublet the Premises or any portion thereof except as set forth, if at all, on Exhibit "A."

9.            Tenant is not in violation of any of its obligations nor in breach of any of its covenants concerning the use of hazardous substances as provided for in the Lease.

10.            Tenant acknowledges that the Lease is subject to an assignment of Landlord's interest therein to Landlord's lender with respect to the Building,                                                                       ("Lender").  In connection with such assignment, Tenant acknowledges and agrees that:

(a)            Lender may rely upon the statements contained in this Certificate to the same extent as if this Certificate were addressed to Lender.

(b)            No amendments, modifications, supplements or changes to the Lease shall be effective without the written consent of Lender.

(c)            Upon receipt of written notice from the Lender, Tenant agrees to make all payments of Basic Annual Rent and Additional Rent thereafter coming due to Lender.

Exhibit D-1

 

(d)            Tenant shall, in writing, notify Lender of any defaults by Landlord pursuant to the Lease which would entitle Tenant to cancel the Lease or to abate the rent payable thereunder.  Such notice to Lender shall be given at the same time as notice is given to Landlord.

Dated:  _________________________, 20__

TENANT:

By:            ______________________________

Title:            ______________________________

By:            ______________________________

Title:            ______________________________

Exhibit D-2

 

EXHIBIT "A"

1.            Amendments, modifications, supplements to Lease:

(If None, so state)

2.            Rent Abatement:

(If None, so state)

3.            Prepaid Rent:

(If None, so state)

4.            Rent in Default:

(If None, so state)

5.            Assignments and sublettings:

(If None, so state)

Exhibit D-3

                  

EXHIBIT "E"

JANITORIAL SPECIFICATION

General Specifications

These specifications are included to describe the level of services, which this contract is intended to include.  The evaluation of the contractor's performance will be based upon results, not upon the frequency or method of performance.  All cleaning products are to be Green Seal Certified or meet the California Code of Regulations.  Micro fiber clothes are to be used when possible.  Contractor is responsible for training all employees with green building cleaning and proper chemical storage.

Office and Common Areas

Daily Service – Office/Common Areas

Empty all wastebaskets and recycle bins, change all plastic liners as necessary.  Wash out receptacles as needed.

Take all trash to designated areas for removal from building.  Be careful not to spot any floor areas or elevator carpets in the process.

Take all recycling to designated recycle compactor.

Using a damp micro fiber cloth, dust all horizontal surfaces (low dusting), baseboards, furniture, and equipment.  Do not dust desks that are cluttered with work papers.  Replace all desk ornaments in their original position.

Dust furniture – sweep off any dust, paper bits, erasures as needed.  Remove staples.

Any spots or spills resulting due to the contractor's negligence shall be removed at contractor's expense.

Clean conference tables, chairs, whiteboards and blackboards (upon request).

Remove fingerprints, marks and stains from all partitions, desks, cabinets and doors.

Wipe clean all hand plates, kick plates, light switches and doorknobs.

Vacuum and spot carpets in high traffic areas, remove staples and other debris.

Using a micro fiber mop, spot damp mop all tile and cement floors. Remove all black scuffmarks.

Clean, polish, sanitize and wipe off all stains and splash marks from drinking fountains.

Clean and sanitize all lavatories and rest rooms

Spot clean fingerprints, smudges and other marks from all glass doors, partitions, and mirrors.

When exiting any suite, shut off lights and lock suite door unless directed otherwise by Property Manager's office.

Perform additional work as requested by lessee and bill directly to lessee.

Wash all lunchroom tabletops, counters, cabinets and exterior refrigerator surfaces.

Report all burned out fluorescent tubes to security nightly.

            Weekly Service – Office/Common Area

		1.	Damp wipe with a micro fiber cloth all interior doors as needed.

		2.	Vacuum offices and common area fabric furniture.

		3.	Damp wipe all vinyl and leather furniture

		4.	Dust all ledges, files, baseboards, and sills under 7'.

		5.	Dust low and high surfaces of all furniture.

		6.	Sweep and damp mop full tile or cement floor areas.

		7.	Thoroughly detail vacuum entire carpet areas.  Remove staples and other debris.

Monthly Service – Office/Common Area

		1.	Wipe down with a damp microfiber cloth all desktops upon request.

		2.	Completely clean all furniture systems partitions as needed.

		3.	Dust all ledges, walls, moldings, pictures, shelves, etc. over 7'.

		4.	Completely vacuum all drapes (3420 Bristol only)

		5.	Completely clean air conditioning grills.

		6.	Scrub and wax all tile floors.

		7.	Mop and clean buff all hardwood, parquet and composition floors.

		8.	Clean all vinyl baseboards.

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