Document:

EXHIBIT 10.13

 

 

STANDARD OFFICE LEASE

 

BY AND BETWEEN

 

ARDEN REALTY LIMITED PARTNERSHIP,

a Maryland limited partnership,

 

AS LANDLORD,

 

AND

 

BROADCAST RESPONSE, INC.,

a California corporation,

 

AS TENANT

 

 

 

SUITE 202

 

HILLSIDE CORPORATE CENTER

555 ST. CHARLES DRIVE, THOUSAND OAKS, CALIFORNIA

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  1

  	
  Basic Lease Provisions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2

  	
  Term/Premises

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3

  	
  Rental

  	
  3

  
	
   

  	
  (a)           Basic
  Rental

  	
  3

  
	
   

  	
  (b)           Increase in Direct Costs

  	
  3

  
	
   

  	
  (c)           Definitions

  	
  3

  
	
   

  	
  (d)           Determination
  of Payment

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4

  	
  Security Deposit

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5

  	
  Holding Over

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6

  	
  Other
  Taxes

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7

  	
  Use

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8

  	
  Condition of Premises

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9

  	
  Repairs and Alterations

  	
  9

  
	
   

  	
  (a)           Landlord’s
  Obligation

  	
  9

  
	
   

  	
  (b)           Tenant’s
  Obligation

  	
  10

  
	
   

  	
  (c)           Alterations

  	
  10

  
	
   

  	
  (d)           Insurance
  Liens

  	
  10

  
	
   

  	
  (e)           Costs
  and Fees; Removal

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  Liens

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11

  	
  Project
  Services

  	
  11

  
	
   

  	
  (a)           Basic
  Services

  	
  11

  
	
   

  	
  (b)           Excess
  Usage

  	
  12

  
	
   

  	
  (c)           Additional
  Electrical Services

  	
  12

  
	
   

  	
  (d)           HVAC
  Balance

  	
  12

  
	
   

  	
  (e)           Telecommunications

  	
  12

  
	
   

  	
  (f)            After-Hours
  Use

  	
  12

  
	
   

  	
  (g)           Reasonable
  Charges

  	
  13

  
	
   

  	
  (h)           Sole
  Electrical Representative

  	
  13

  
	
   

  	
  (i)            Supplemental
  Power

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12

  	
  Rights of Landlord

  	
  13

  
	
   

  	
  (a)           Right of Entry

  	
  13

  
	
   

  	
  (b)           Maintenance
  Work

  	
  13

  
	
   

  	
  (c)           Rooftop

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
  Indemnity; Exemption of Landlord from Liability

  	
  13

  
	
   

  	
  (a)           Indemnity

  	
  13

  
	
   

  	
  (b)           Exemption
  of Landlord from Liability

  	
  14

  
	
   

  	
  (c)           Security

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  14

  	
  Insurance

  	
  14

  
	
   

  	
  (a)           Tenant’s
  Insurance

  	
  14

  
	
   

  	
  (b)           Form of
  Policies

  	
  15

  
	
   

  	
  (c)           Landlord’s
  Insurance

  	
  15

  
	
   

  	
  (d)           Waiver
  of Subrogation

  	
  15

  
	
   

  	
  (e)           Compliance
  with Law

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  15

  	
  Assignment and Subletting

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16

  	
  Damage or Destruction

  	
  18

  

 

i

 

	
  ARTICLE 17

  	
  Subordination

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 18

  	
  Eminent Domain

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19

  	
  Default

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE 20

  	
  Remedies

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE 21

  	
  Transfer
  of Landlord’s Interest

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE 22

  	
  Broker

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE 23

  	
  Parking

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE 24

  	
  Waiver

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 25

  	
  Estoppel Certificate

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 26

  	
  Liability
  Of Landlord

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE 27

  	
  Inability To Perform

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE 28

  	
  Hazardous Waste

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE 29

  	
  Surrender Of Premises; Removal Of Property

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE 30

  	
  Miscellaneous

  	
  27

  
	
   

  	
  (a)           Severability;
  Entire Agreement

  	
  27

  
	
   

  	
  (b)           Attorneys’
  Fees; Waiver of Jury Trial

  	
  27

  
	
   

  	
  (c)           Time of Essence

  	
  28

  
	
   

  	
  (d)           Headings;
  Joint and Several

  	
  28

  
	
   

  	
  (e)           Reserved
  Area

  	
  28

  
	
   

  	
  (f)            No Option

  	
  28

  
	
   

  	
  (g)           Use
  of Project Name; Improvements

  	
  28

  
	
   

  	
  (h)           Rules and
  Regulations

  	
  28

  
	
   

  	
  (i)            Quiet
  Possession

  	
  28

  
	
   

  	
  (j)            Rent

  	
  28

  
	
   

  	
  (k)           Successors
  and Assigns

  	
  28

  
	
   

  	
  (l)            Notices

  	
  29

  
	
   

  	
  (m)          Persistent
  Delinquencies

  	
  29

  
	
   

  	
  (n)           Right
  of Landlord to Perform

  	
  29

  
	
   

  	
  (o)           Access,
  Changes in Project,
  Facilities, Name

  	
  29

  
	
   

  	
  (p)           Signing
  Authority

  	
  29

  
	
   

  	
  (q)           Identification
  of Tenant

  	
  30

  
	
   

  	
  (r)            Substitute
  Premises

  	
  30

  
	
   

  	
  (s)           Survival
  of Obligations

  	
  31

  
	
   

  	
  (t)            Confidentiality

  	
  31

  
	
   

  	
  (u)           Governing
  Law

  	
  31

  
	
   

  	
  (v)           Exhibits

  	
  31

  
	
   

  	
  (w)          Independent
  Covenants

  	
  31

  
	
   

  	
  (x)            Counterparts

  	
  31

  
	
   

  	
  (y)           Financial
  Statements

  	
  31

  
	
   

  	
  (z)            Office
  of Foreign Assets Control

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 31

  	
  Option to Extend

  	
  31

  
	
   

  	
  (a)           Option
  Right

  	
  31

  
	
   

  	
  (b)           Option
  Rent

  	
  32

  
	
   

  	
  (c)           Exercise
  of Options

  	
  32

  
	
   

  	
  (d)           Determination
  of Market Rent

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE 32

  	
  Right
  Of First Offer

  	
  33

  
	
   

  	
  (a)           Expansion
  Rights

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE 33

  	
  Signage/Directory

  	
  34

  

 

ii

 

	
  ARTICLE 34

  	
  Arbitration

  	
  34

  
	
   

  	
  (a)           General
  Submittals to Arbitration

  	
  34

  
	
   

  	
  (b)           JAMS

  	
  35

  

 

 

Exhibit “A”      Premises

Exhibit “B”       Rules and
Regulations

Exhibit “C”       Notice
of Lease Term Dates and Tenant’s Proportionate Share

Exhibit “D”      Tenant
Work Letter

Exhibit “E”       Certified
Copy of Board of Directors Resolutions

Exhibit “F”       Guaranty
of Lease

 

iii

 

INDEX OF DEFINED TERMS

 

	
  DEFINED TERMS

  	
   

  	
  PAGE

  
	
  Additional Rent

  	
   

  	
  3 

  
	
  Alterations

  	
   

  	
  10 

  
	
  Approved Working Drawings

  	
   

  	
  Exhibit D

  
	
  Architect

  	
   

  	
  Exhibit D

  
	
  Base Year

  	
   

  	
  1 

  
	
  Base, Shell and Core

  	
   

  	
  Exhibit D

  
	
  Basic Rental

  	
   

  	
  1 

  
	
  Brokers

  	
   

  	
  1 

  
	
  Code

  	
   

  	
  Exhibit D

  
	
  Commencement Date

  	
   

  	
  1 

  
	
  Construction Drawings

  	
   

  	
  Exhibit D

  
	
  Contractor

  	
   

  	
  Exhibit D

  
	
  Cost Proposal

  	
   

  	
  Exhibit D

  
	
  Cost Proposal Delivery Date

  	
   

  	
  Exhibit D

  
	
  Direct Costs

  	
   

  	
  3 

  
	
  Engineers

  	
   

  	
  Exhibit D

  
	
  Estimate

  	
   

  	
  5 

  
	
  Estimate
  Statement

  	
   

  	
  5 

  
	
  Estimated Excess

  	
   

  	
  5 

  
	
  Event of Default

  	
   

  	
  20 

  
	
  Excess

  	
   

  	
  5 

  
	
  Expiration Date

  	
   

  	
  1 

  
	
  Final Space Plan

  	
   

  	
  Exhibit D

  
	
  Final Working Drawings

  	
   

  	
  Exhibit D

  
	
  First Month’s Rent

  	
   

  	
  2 

  
	
  First
  Offer Space

  	
   

  	
  33 

  
	
  Force
  Majeure

  	
   

  	
  24 

  
	
  Hazardous Material

  	
   

  	
  25 

  
	
  Improvement Allowance

  	
   

  	
  Exhibit D

  
	
  Improvement Allowance Items

  	
   

  	
  Exhibit D

  
	
  Improvements

  	
   

  	
  Exhibit D

  
	
  Landlord

  	
   

  	
  1 

  
	
  Landlord Coordination Fee

  	
   

  	
  Exhibit D

  
	
  Laws

  	
   

  	
  26 

  
	
  Lease

  	
   

  	
  1 

  
	
  Lease Year

  	
   

  	
  2 

  
	
  Operating Costs

  	
   

  	
  4 

  
	
  Options

  	
   

  	
  31 

  
	
  Original
  Tenant

  	
   

  	
  31 

  
	
  Over-Allowance Amount

  	
   

  	
  Exhibit D

  
	
  Parking Passes

  	
   

  	
  1 

  
	
  Partnership Tenant

  	
   

  	
  30 

  
	
  Permits

  	
   

  	
  Exhibit D

  
	
  Permitted Use

  	
   

  	
  1 

  
	
  Premises

  	
   

  	
  1 

  
	
  Project

  	
   

  	
  1 

  
	
  Real Property

  	
   

  	
  3 

  
	
  Review
  Period

  	
   

  	
  5 

  
	
  Security
  Deposit

  	
   

  	
  1 

  
	
  Specifications

  	
   

  	
  Exhibit D

  
	
  Square Footage

  	
   

  	
  1 

  
	
  Standard Improvement Package

  	
   

  	
  Exhibit D

  
	
  Statement

  	
   

  	
  5 

  
	
  Substantial Completion

  	
   

  	
  Exhibit D

  
	
  Tax Costs

  	
   

  	
  3 

  
	
  Tenant

  	
   

  	
  1 

  
	
  Tenant Delays

  	
   

  	
  Exhibit D

  
	
  Tenant Improvements

  	
   

  	
  9 

  
	
  Tenant’s Proportionate Share

  	
   

  	
  1 

  
	
  Term

  	
   

  	
  1 

  
	
  Time
  Deadlines

  	
   

  	
  Exhibit D

  
	
  Transfer

  	
   

  	
  17 

  
	
  Transfer
  Premium

  	
   

  	
  17 

  
	
  Transferee

  	
   

  	
  17 

  

 

iv

 

 

 

STANDARD OFFICE LEASE

 

This
Standard Office Lease (“Lease”) is made
and entered into as of this 30th day Of March, 2006, by and between ARDEN
REALTY LIMITED PARTNERSHIP, a Maryland limited partnership (“Landlord”),
and BROADCAST RESPONSE, INC., a California
corporation (“Tenant”).

 

Tenant
hereby leases from Landlord Suite No. 202, as designated on the plan
attached hereto and incorporated herein as Exhibit “A” (“Premises”), of the project (“Project”)
whose address is 555 St. Charles Drive, Thousand Oaks, California, 91360 for
the Term and upon the terms and conditions hereinafter set forth, and Landlord
and Tenant hereby agree as follows:

 

ARTICLE 1

 

BASIC LEASE
PROVISIONS

 

	
  A.

  	
  Term:

  	
  Sixty
  (60) months.

  
	
   

  	
   

  	
   

  
	
   

  	
  Commencement Date:

  	
  The
  earlier of (i) the date Tenant first commences to conduct business in
  the Premises, or (ii) the date of Substantial Completion of Improvements
  in the Premises, which is anticipated to be June 1, 2006.

  
	
   

  	
   

  	
   

  
	
   

  	
  Expiration Date:

  	
  The
  date immediately preceding the fifth (5th) anniversary of the
  Commencement Date; provided, however,
  that if the Commencement Date is a date
  other than the first day of a month, the Expiration Date shall be the last day of the month which is
  sixty (60) months after the month in which the Commencement Date falls,
  unless extended or earlier terminated pursuant
  to this Lease.

  
	
   

  	
   

  	
   

  
	
  B.

  	
  Square Footage:

  	
  5,316
  rentable (4,537 usable) square feet.

  
	
   

  	
   

  	
   

  
	
  C.

  	
  Basic Rental:

  	
   

  

 

	
   

  	
   

  	
  Annual

  	
   

  	
  Monthly

  	
   

  	
  Monthly Basic Rental

  	
   

  
	
  Lease Year

  	
   

  	
  Basic Rental

  	
   

  	
  Basic Rental

  	
   

  	
  Per Rentable Square Foot

  	
   

  
	
  1

  	
   

  	
  $

  	
  140,342.40

  	
   

  	
  $

  	
  11,695.20

  	
   

  	
  $

  	
  2.20

  	
   

  
	
  2

  	
   

  	
  $

  	
  144,552.67

  	
   

  	
  $

  	
  12,046.06

  	
   

  	
  $

  	
  2.27

  	
   

  
	
  3

  	
   

  	
  $

  	
  148,889.25

  	
   

  	
  $

  	
  12,407.44

  	
   

  	
  $

  	
  2.33

  	
   

  
	
  4

  	
   

  	
  $

  	
  153,355.92

  	
   

  	
  $

  	
  12,779.66

  	
   

  	
  $

  	
  2.40

  	
   

  
	
  5

  	
   

  	
  $

  	
  157,956.59

  	
   

  	
  $

  	
  13,163.05

  	
   

  	
  $

  	
  2.48

  	
   

  

 

	
  D.

  	
  Base Year:

  	
  Calendar
  Year 2006

  
	
   

  	
   

  	
   

  
	
  E.

  	
  Tenant’s Proportionate Share:

  	
  8.78%

  
	
   

  	
   

  	
   

  
	
  F.

  	
  Security Deposit:

  	
  A
  security deposit of $35,085.60 shall be due and payable by Tenant to Landlord upon Tenant’s execution of
  this Lease.

  
	
   

  	
   

  	
   

  
	
  G.

  	
  Permitted Use:

  	
  General
  office use consistent with the character of a first-class office building.

  
	
   

  	
   

  	
   

  
	
  H.

  	
  Brokers:

  	
  West
  Commercial Real Estate Services; CB Richard Ellis

  
	
   

  	
   

  	
   

  
	
  I.

  	
  Parking
  Passes:

  	
  Tenant
  shall rent fourteen (14) unreserved parking passes and four (4) reserved
  parking passes (in locations designated by Landlord) at the rate provided in Article 23 hereof.

  

 

1

 

	
  J.

  	
  Initial Installment of Basic Rental:

  	
  The
  first full month’s Basic Rental of $11,695.20 shall be due and payable by Tenant to
  Landlord upon Tenant’s execution of this Lease.

  

 

ARTICLE 2

 

TERM/PREMISES

 

The
Term of this Lease shall commence on the Commencement Date as set forth in Article 1.A.
of the Basic Lease Provisions and shall
end on the Expiration Date set forth in Article 1.A. of the Basic
Lease Provisions. For purposes
of this Lease, the term “Lease Year” shall mean each
consecutive twelve (12) month period during the Lease Term, with the first
Lease Year commencing on the Commencement Date; however, (a) if the
Commencement Date falls on a day other than the first day of a calendar month, the first Lease
Year shall end on the last
day of the eleventh 11th month after the Commencement Date and the
second 2nd and each succeeding Lease Year shall commence
on the first day of the next calendar month, and (b) the last Lease Year shall end on the Expiration Date.
If Landlord does not deliver possession
of the Premises to Tenant on or before the anticipated Commencement Date
(as set forth in Article 1.A., above), Landlord shall not be subject to
any liability for its failure to do so, and such failure shall not affect the
validity of this Lease nor the obligations of Tenant hereunder. Landlord and
Tenant hereby stipulate that the Premises contains the number of square feet
specified in Article 1.B. of the Basic Lease Provisions, except that the
rentable and usable square feet of the Premises and the Project are subject to
verification from time to time by Landlord’s
architect/space planner. In the
event that Landlord’s
architect/space planner determines that the amounts thereof shall be
different from those set forth in this Lease, all amounts, percentages and
figures appearing or referred to in this Lease based upon such incorrect amount (including, without limitation, the
amount of the Basic Rental, Tenant’s Proportionate
Share, and the Improvement Allowance (as that term is defined in Section 2
of the Tenant Work Letter)) shall be modified in accordance with such
determination. If such determination is made, it will be confirmed in writing
by Landlord to Tenant. Landlord may deliver to Tenant a Commencement Letter in
a form substantially similar to
that attached hereto as Exhibit “C”, which Tenant shall execute and
return to Landlord within five (5) days of receipt thereof. Failure of
Tenant to timely execute and deliver the Commencement Letter shall constitute
an acknowledgment by Tenant that
the statements included in such notice are true and correct, without exception.

 

Notwithstanding
the foregoing, Tenant may enter into the Premises approximately two (2) weeks prior to the anticipated date of
Substantial Completion of the Improvements, upon receipt of Landlord’s consent,
solely for the purpose of installing
furniture, trade fixtures, telephones, computers, photocopy equipment, and
other business equipment. Such early entry will not advance the
Commencement Date so long as Tenant does not commence business operations from
any part of the Premises. All of the provisions of this Lease shall apply to
Tenant during any early entry, including, without limitation, the indemnities
set forth in this Lease, but excluding the obligation to pay Basic Rental only unless and until Tenant has
commenced business operations in the Premises (or the Commencement Date has
otherwise occurred), whereupon Tenant’s Basic Rental payment obligations shall
immediately commence. Landlord may revoke its permission for Tenant’s early
entry if Tenant’s activities or workers interfere with the completion of the
Improvements. If Tenant is granted early entry, Landlord shall not be responsible for any loss, including theft,
damage or destruction to any work or material installed or stored by Tenant at
the Premises or for any injury to Tenant or its agents, employees, contractors,
subcontractors, subtenants, subtenants, assigns, licensees or invitees. Landlord shall have the right to post appropriate notices of non-responsibility and to require
Tenant to provide Landlord with
evidence that Tenant has fulfilled its obligation
to provide insurance
pursuant to the provisions of this Lease.

 

Notwithstanding anything to the contrary contained herein, if the Substantial Completion of the
Improvements to be performed by Landlord pursuant to the Tenant Work Letter
attached hereto as Exhibit “D” has not occurred on or before November 30, 2006 (the “Deadline
Date”), Tenant shall have the right to terminate this Lease
by notifying Landlord in writing of such election by December 15, 2006. In
the event Tenant fails to give such written notice within the period provided herein, then Tenant
shall be conclusively deemed to
have waived its right to
terminate this Lease pursuant to this paragraph,
and Tenant shall have no further right to terminate this Lease except as
otherwise expressly provided elsewhere in this Lease. In the event

 

2

 

of
any termination of this Lease pursuant to this paragraph, neither party shall have any further rights, obligations
or liabilities hereunder from and after the effective date of such
termination. The Deadline Date shall be extended for any delays in the Substantial Completion of the Tenant
Improvements caused by a Tenant Delay (defined in the Tenant Work Letter) or an
event of Force Majeure (as such term is defined in Article 27).

 

ARTICLE 3

 

RENTAL

 

(a)                        Basic Rental.  Tenant agrees to pay to Landlord during the Term hereof at Landlord’s office or to such other
person or at such other place as directed from time to time by written notice
to Tenant from Landlord, the initial monthly and annual sums as set forth in Article 1.C.
of the Basic Lease Provisions, payable in
advance on the first day of each
calendar month, without demand, setoff
or deduction, and in the event
this Lease commences or the date of expiration of this Lease occurs other than
on the first day or last day of a calendar month, the rent for such month shall
be prorated. Notwithstanding the
foregoing, the first full month’s Basic Rental shall be paid to Landlord in
accordance with Article l.J. of the Basic Lease Provisions.

 

(b)                       Increase in
Direct Costs.  The term “Base Year”
means the calendar year set forth in Article 1.D. of the Basic
Lease Provisions. Subject to subparagraph (e) below, if, in
any calendar year during the Term of this Lease, the Direct Costs (as
hereinafter defined) paid or incurred by Landlord shall be higher than the
Direct Costs for the Base Year, Tenant shall pay, an additional sum for each such subsequent calendar year equal to the product of the amount set forth in Article 1.E. of the Basic Lease Provisions multiplied by
such increased amount of Direct Costs. In the event either the Premises
and/or the Project is expanded or reduced, then Tenant’s Proportionate Share shall be appropriately adjusted, and as to the
calendar year in which such change occurs, Tenant’s Proportionate Share for such calendar year shall be determined on
the basis of the number of days during that particular calendar year that such
Tenant’s Proportionate Share was
in effect. In the event this Lease shall terminate on any date other than the
last day of a calendar year, the
additional sum payable hereunder by Tenant during the calendar year in which
this Lease terminates shall be prorated on the basis of the relationship which the number of days which
have elapsed from the commencement of said calendar year to and including Said date
on which this Lease terminates bears to three hundred sixty five (365). Any and all amounts due and payable by Tenant pursuant to this
Lease (other than Basic Rental) shall be deemed “Additional Rent” and Landlord shall be entitled to
exercise the same rights and remedies upon
default in these payments as Landlord is entitled to exercise with
respect to defaults in monthly Basic Rental payments.

 

(c)                        Definitions.  As used herein the term “Direct Costs”
shall mean the sum of the following:

 

(i) “Tax Costs”, which shall mean any and all real estate taxes
and other similar charges on real property or improvements, assessments, water
and sewer charges, and all other charges assessed, reassessed or levied upon
the Project and appurtenances thereto
and the parking or other facilities thereof,
or the real property thereunder (collectively, the “Real Property”) or
attributable thereto or on the rents, issues, profits or income received or
derived therefrom which are assessed, reassessed or levied by the United
States, the State of California or any
local government authority or agency or any political subdivision thereof, and
shall include Landlord’s reasonable legal fees, costs and disbursements
incurred in connection with proceedings for reduction of Tax Costs or any part
thereof; provided, however, if
at any time after the date of this Lease the methods of taxation now prevailing
shall be altered so that in lieu of or as a supplement to or a substitute for
the whole or any part of any Tax
Costs, there shall be assessed, reassessed or levied (a) a tax,
assessment, reassessment, levy, imposition or charge wholly or partially as a
net income, capital or franchise levy or otherwise on the rents, issues,
profits or income derived therefrom, or (b) a tax, assessment, reassessment,
levy (including but not limited to any municipal, state or federal levy),
imposition or charge measured by or based in whole or in part upon the Real Property and imposed upon Landlord, then except to the extent such items are
payable by Tenant under Article 6 below, such taxes, assessments,
reassessments or levies or the part thereof so measured or based, shall be
deemed to be included in the term “Direct Costs.”
In no event shall Tax Costs included in
Direct Costs for any year subsequent to the Base Year be less than the amount of Tax Costs
included in Direct Costs for
the Base Year. In addition, when
calculating Tax Costs for the Base Year, special assessments shall only be

 

3

 

deemed
included in Tax Costs for the Base Year to the extent that such special
assessments are included in Tax
Costs for the applicable subsequent
calendar year during the Term.

 

Tax Costs for the Base Year shall be
initially calculated without including any
Proposition 8 reduction obtained by
Landlord. Notwithstanding anything to the contrary herein, if in any
calendar year subsequent to the Base Year (the “Tax Adjustment Year”), the
amount of Tax Costs decreases as a result of a Proposition 8 reduction, then for purposes of all subsequent
calendar years, including the
calendar year in which such decrease in Tax Costs occurs, the Tax Costs as
initially calculated for the Base Year shall be decreased by an amount equal to
such decrease in Tax Costs in the Tax Adjustment Year. Conversely, if the Tax
Costs thereafter are decreased by a lesser amount during any comparison
year subsequent to the Tax
Adjustment Year (the “Tax Readjustment Year”)
as a result of Landlord’s failure
to secure a Proposition 8
reduction which is greater than or equal to the Proposition 8 reduction secured
during the Tax Adjustment Year,
then for purposes of all subsequent
comparison years, including the
comparison year in which such lesser decrease in Tax Costs occurs, Landlord
shall go back to the Tax Costs as initially calculated for the Base Year, and adjust the Tax Costs as initially calculated for the Base Year and decrease
such amount by an amount equal to the decrease in Tax Costs during such Tax Readjustment Year which resulted from Landlord’s failure to secure a Proposition 8 reduction greater than
or equal to the Proposition 8 reduction secured during the Tax Adjustment Year.
Landlord and Tenant acknowledge that this Article 3(c)(iv) is not
intended to in any way affect the inclusion in Tax Costs of the statutory two
percent (2.0%) annual increase in Tax Costs (as such statutory increase may be
modified by subsequent legislation).

 

(ii)               “Operating Costs”, which shall mean
all costs and expenses incurred by Landlord in connection with the maintenance,
operation, replacement, ownership and repair of the Project, including, but not
limited to, salaries, wages, medical, and other taxes and benefits for all
persons who perform duties connected with the operation, maintenance and repair of the Project; a reasonable allowance for depreciation of the cost of acquiring or the rental expense of
personal property used in the maintenance, operation and repair of the Project;
accountant’s fees, legal fees, real estate tax consulting fees, personal property
taxes on property used in
the maintenance and operation of the Project; fees, costs, expenses or dues payable pursuant to the terms of any covenants, conditions or restrictions
or owners’ association pertaining to
the Project; capital expenditures incurred to effect economies of operation of,
or stability of services to, the Project and capital expenditures required by government regulations, laws, or ordinances including, but not
limited to the American with Disabilities Act; costs incurred (capital or
otherwise) on a regular recurring basis every three (3) or more years for
certain maintenance projects (e.g., parking lot slurry coat or replacement of
lobby and elevator cab carpeting); the cost of all charges for electricity,
gas, water and other utilities furnished to the Project, including any taxes
thereon; charges for insurance for the Project carried by Landlord; the cost of
all building and cleaning supplies and materials; the cost of all charges for
cleaning, maintenance and service contracts and other services with independent
contractors and administration fees;
a property management fee (which fee may be imputed if Landlord has
internalized management or otherwise acts as its own property manager) and
license, permit and inspection fees relating to the Project. In the event,
during any calendar year, the Project is less than ninety-five percent (95%)
occupied at all times, Operating Costs shall be adjusted to reflect the
Operating Costs of the Project as though
ninety-five percent (95%) were occupied at all times, and the increase
or decrease in the sums owed hereunder shall be based upon such Operating Costs
as so adjusted. In no event shall costs for any item of utilities included in
Direct Costs for any year subsequent to the Base Year be less than the amount
included in Direct Costs for the Base Year for such utility item. Notwithstanding anything to the
contrary set forth in this Article 3, when calculating Operating Costs for the Base Year, unless Operating Costs for
the applicable subsequent calendar year include the applicable following items,
Operating Costs shall exclude (a) market-wide labor-rate increases due to extraordinary circumstances including, but not limited to, boycotts and strikes, (b) utility
rate increases due to extraordinary circumstances
including, but not limited to, conservation surcharges, boycotts, embargoes or
other shortages, and (c) amortization
of any capital items
including, but not limited to, capital improvements,
capital repairs and capital replacements (including such amortized costs
where the actual improvement, repair or replacement was made in prior years).

 

4

 

(d)                       Determination of
Payment.

 

(i)                       If for any calendar year ending or commencing
within the Term, Tenant’s Proportionate
Share of Direct Costs for such calendar year exceeds Tenant’s Proportionate Share of Direct Costs
for the Base Year, then Tenant shall pay to Landlord, in the manner set forth
in Sections 3(d)(ii) and (iii), below, and as Additional Rent, an amount
equal to the excess (the “Excess”). Notwithstanding anything herein
to the contrary, Tenant shall not be obligated to pay any  Excess
during the first twelve (12) months of the initial Term.

 

(ii)                    Landlord
shall give Tenant a yearly expense estimate statement (the “Estimate
Statement”) which shall set forth Landlord’s reasonable estimate (the “Estimate”) of what
the total amount of Direct Costs for the then-current calendar year shall be
and the estimated Excess (the “Estimated Excess”) as calculated by comparing
Tenant’s Proportionate Share of Direct Costs for such calendar year,
which shall be based upon the Estimate, to Tenant’s Proportionate Share of Direct Costs for the Base Year. The failure
of Landlord to timely furnish the Estimate Statement for any calendar year shall not preclude Landlord from subsequently enforcing its rights to collect any Estimated Excess
under this Article 3, once such Estimated Excess has been determined by
Landlord. If pursuant to the Estimate Statement an Estimated Excess is calculated
for the then-current calendar year, Tenant shall pay, with its next installment
of monthly Basic Rental due, a fraction of the Estimated Excess for the
then-current calendar year (reduced by any amounts paid pursuant to the last
sentence of this Section 3(d)(ii)). Such fraction shall have as its
numerator the number of months which have elapsed in such current calendar year
to the month of such payment, both months inclusive, and
shall have twelve (12) as its denominator.
Until a new Estimate Statement is furnished, Tenant shall pay monthly,
with the monthly Basic Rental installments, an amount equal to one-twelfth
(1/12) of the total Estimated Excess set forth in the previous Estimate
Statement delivered by Landlord to Tenant.

 

(iii)                 In addition, Landlord shall endeavor
to give to Tenant as soon as reasonably practicable following the
end of each calendar year, a statement (the “Statement”)
which shall state the Direct Costs incurred or accrued for such
preceding calendar year, and which shall indicate the amount, if any, of the
Excess. Upon receipt of the Statement for each calendar year during the Term,
if amounts paid by Tenant as Estimated Excess are less than the actual Excess
as specified on the Statement, Tenant shall pay, with its next installment of
monthly Basic Rental due, the full amount of the Excess for such calendar year,
less the amounts, if any, paid during
such calendar year as Estimated
Excess. If, however, the Statement
indicates that amounts paid by Tenant as Estimated Excess are greater
than the actual Excess as specified on the Statement, such overpayment shall be
credited against Tenant’s next installments of Estimated Excess. The failure of
Landlord to timely furnish the Statement for any calendar year shall not
prejudice Landlord from enforcing its rights under this Article 3, once
such Statement has been delivered. Even
though the Term has expired and
Tenant has vacated the Premises, when the final determination is made of Tenant’s Proportionate Share of the
Direct Costs for the calendar year in which this Lease terminates, if an Excess
is present, Tenant shall immediately pay to Landlord an amount as calculated
pursuant to the provisions of this Article 3(d). The provisions of this Section 3(d)(iii) shall
survive the expiration or earlier termination of the Term.

 

(iv)                Within one hundred twenty
(120) days after receipt of a Statement by Tenant (“Review Period”), if Tenant disputes the amount set forth in the Statement,
Tenant’s employees or an independent certified public accountant (which
accountant is a member of a nationally or
regionally recognized accounting fur
and is hired on a non-contingency fee
basis), designated by Tenant,
may, after reasonable notice to Landlord and at reasonable times, inspect Landlord’s records at Landlord’s offices, provided that Tenant is not then in
default after expiration of all applicable
cure periods of any obligation under
this Lease (including, but not limited to, the payment of the amount in
dispute) and provided further
that Tenant and such accountant or representative shall, and each of them shall
use their commercially reasonable efforts to cause their respective agents and
employees to, maintain all information contained in Landlord’s records in strict confidence. Notwithstanding the foregoing,
Tenant shall only have the tight to review Landlord’s records one (1) time
during any twelve (12) month period. Tenant’s failure to dispute the amounts
set forth in any Statement within the Review Period shall be deemed to be Tenant’s approval of such
Statement and Tenant, thereafter, waives the right or ability to dispute the amounts set forth in such
Statement. If after such inspection, but
within thirty (30) days after the Review Period, Tenant notifies Landlord in
writing that Tenant still disputes such amounts, a certification as to the
proper amount shall be made in accordance with

 

5

 

Landlord’s standard accounting practices, at
Tenant’s expense, by an independent certified public accountant selected by Landlord and who is a member of a nationally or
regionally recognized accounting firm, which certification shall be binding upon Landlord and Tenant. Landlord shall cooperate in good faith with Tenant and the accountant to show Tenant and the accountant
the information upon which the
certification is to be
based. However, if such certification
by the accountant proves that
the Direct Costs set forth in the Statement were overstated by more than ten percent (10%), then the cost of the accountant and the cost of such certification
shall be paid for by Landlord. Promptly following the parties receipt of such
certification, the parties shall make such appropriate payments or
reimbursements, as the case may be, to each other, as are determined to
be owing pursuant to such
certification. Tenant agrees that this section shall be the sole method to be
used by Tenant to dispute the amount of any Direct Costs payable by Tenant
pursuant to the terms of this Lease, and Tenant hereby waives any other rights
at law or in equity relating thereto.

 

(v) If the Project is a part of a multi-building
development (the “Development”), those Direct Costs attributable to such development as a whole (and not attributable solely to any individual building therein) shall be allocated by Landlord to the Project
and to the other buildings within such development on an equitable basis.

 

(e)                                            Additionally, notwithstanding any contrary provision contained in this
Lease in no event shall Tenant’s Proportionate
Share of Direct Controllable
Costs (as defined below) for any calendar year exceed one hundred six percent (106%), calculated on a cumulative and compounded basis, of Tenant’s Proportionate Share of Direct Controllable Costs for the immediately
preceding calendar year. “Direct Controllable Costs” shall mean all
Operating Costs, except for the following: (A) the cost of all charges for
electricity, gas, water and other utilities furnished to the Project, including
any taxes thereon, (B) expenses incurred by Landlord in connection with
the Project for all labor (including union labor), including, but not limited,
to, salaries, wages, medical, surgical and general welfare benefits and pension
payments, payroll taxes, fringe benefits, employment taxes, workers’
compensation, uniforms and dry cleaning thereof for all persons who perform
duties connected with the operation, maintenance and repair of the Project, (C) the
cost of all charges for fire and extended coverage, liability and all other
insurance for the Project carried by Landlord, and (D) costs incurred in
connection with upgrading the
Premises or Project to comply with disability, life, seismic, fire and safety
codes, ordinances, statutes, or other laws.

 

(f)                                    Tenant’s Payment
of Certain Tax Costs. In the event that, after the Commencement Date, the
Contemplated Transaction (as
defined below) is consummated, and solely as a result thereof, and to the
extent that in connection therewith, the Project is reassessed (the “Reassessment”)
for real estate tax purposes by the appropriate governmental authority
pursuant to the terms of Proposition 13,
then the terms of this Section 3(f) shall apply to such Reassessment
of the Project. For purposes hereof,
the term “Contemplated Transaction” means (x) the merger of Landlord with General Electric Capital Corporation, or (y) any transfer of the Project by Landlord to Trizec Properties, Inc. which occurs concurrently, and in
connection, with any such merger.

 

(i)                           The Tax Increase. For purposes
of this Section 3(f), the term “Tax Increase” shall mean that portion of Tax Costs, as calculated immediately
following the Reassessment, which is attributable solely to the Reassessment. Accordingly, the term “Tax
Increase” shall not include any portion of Tax Costs which (A) is
attributable to the initial assessment of the value of the Real Property or the
Project, the base, shell and core of the Project or the tenant improvements
located in the Project, (B) is attributable
to assessments which were pending immediately prior to the Reassessment
which assessments were conducted during, and included in, such Reassessment, or
which assessments were otherwise rendered unnecessary following the
Reassessment, or (C) is attributable to the annual inflationary increase
of real estate taxes (currently two percent (2.0%) per annum).

 

(ii)                        Protection. Only in
connection with a Reassessment pursuant to the terms of Proposition 13 as a
result of the consummation of the Contemplated
Transaction, Tenant shall not be
obligated to pay any portion of the
Tax Increase, and the Tax Increase will not be included in Tax Costs for the
Base Year.

 

(iii)                     Landlord’s Right to Purchase
the Proposition 13
Protection Amount. The amount of Tax Costs which Tenant is not obligated to pay or will not be obligated to pay during

 

6

 

the
Term in connection with a Reassessment pursuant to the terms of this Section 3(f) shall
be sometimes referred to hereafter as a “Proposition
13 Protection Amount”. If the occurrence of a Reassessment is reasonably foreseeable by Landlord and the Proposition 13 Protection Amount attributable
to such Reassessment can be reasonably
quantified or estimated for each calendar year commencing with the year
in which the Reassessment will occur, the terms of this Section 3(f)(iii) shall
apply to each such Reassessment. Upon notice
to Tenant, Landlord shall have the right (but not the obligation) to purchase
the Proposition 13 Protection Amount relating to the Reassessment, at
any time during the Term, by paying to Tenant an amount equal to the “Proposition 13 Purchase Price”, as that term is
defined below. As used herein, “Proposition 13 Purchase Price” shall mean the present value of the Proposition 13 Protection Amount remaining during the Term, as of the date of payment of the Proposition 13
Purchase Price by Landlord. Such present value shall be calculated (i) by
using the portion of the Proposition 13 Protection
Amount attributable to each remaining year of the Term (as though the portion
of such Proposition 13 Protection Amount benefited Tenant at the end of each
Lease Year), as the amounts to
be discounted, and (ii) by
using discount rates for each amount to be discounted equal to (A) the average rates of yield for United
States Treasury Obligations with maturity dates as close as reasonably possible to the end of each
Lease Year during which the portions of
the Proposition 13 Protection Amount would have benefited
Tenant, which rates shall be those in effect as of Landlord’s exercise of its
right to purchase as set forth in this subsection (iii), plus (B) two
percent (2%) per annum. Upon such payment of the Proposition 13 Purchase Price, the provisions of Section 3(f)(ii) of this Lease shall not apply to any Tax Increase attributable to the Applicable
Reassessment and Tenant shall have no further protection whatsoever under this Section 3(f).
Since Landlord will be
estimating the Proposition 13 Purchase Price because a Reassessment
has not yet occurred, then when such Reassessment occurs, if Landlord has
underestimated the Proposition 13
Purchase Price, Tenant’s Basic Rental next due shall be credited with the
amount of such underestimation, and
if Landlord overestimates the Proposition
13 Purchase Price, then Tenant shall pay the amount of the overestimation
to Landlord within thirty (30) days after demand.

 

ARTICLE 4

 

SECURITY DEPOSIT

 

Tenant
shall deposit with Landlord the sum set forth in Article 1.F. of the Basic
Lease Provisions (the “Security
Deposit”) as security for the full and faithful performance of every
provision of this Lease to be performed by Tenant. If Tenant breaches any
provision of this Lease, including but not limited to the payment of rent, Landlord may use all or any part of this security deposit for the payment of any rent or any other sums
in default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of
Tenant’s default. If any portion of
said deposit is so used or applied,
Tenant shall, within five (5) days after written demand
therefor, deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its full
amount. Tenant agrees that Landlord shall not be required to keep the
security deposit in trust, segregate it or keep it separate from Landlord’s
general funds, but Landlord may commingle the security deposit with its general
funds and Tenant shall not be entitled to interest on such deposit. At the
expiration of the Lease Term, and
provided there exists no default by Tenant hereunder, the security
deposit or any balance thereof shall be returned to Tenant (or, at Landlord’s
option, to Tenant’s Transferee (as such term is defined in Article 15
below)), provided that subsequent to
the expiration of this Lease, Landlord may retain from said security deposit (i) an amount reasonably estimated by Landlord to
cover potential Direct Cost reconciliation payments due with respect to the calendar year in which this Lease terminates or expires
(Such amount so retained shall not, in any event, exceed ten percent (10%) of
estimated Direct Cost payments due from Tenant for such calendar year through the date of expiration or
earlier termination of this Lease and any amounts so retained and not applied to such
reconciliation shall be returned to Tenant within thirty (30) days after Landlord’s delivery of the Statement for such calendar year), (ii) any
and all amounts reasonably estimated by
Landlord to cover the anticipated costs to be incurred by Landlord
to remove any signage provided to Tenant under this Lease, to remove
cabling and other items required to be removed by Tenant under Article 29(b) below
and to repair any damage caused
by such removal (in which case any excess amount so retained by Landlord shall
be returned to Tenant within thirty (30) days after such removal and repair),
and (iii) any and all amounts permitted by law or this Article 4.
Tenant hereby waives the provisions of Section 1950.7 of the California
Civil Code and all other provisions of law, now or hereafter in effect, which provide that Landlord may claim from a security
deposit only

 

7

 

those
sums reasonably necessary to
remedy defaults in the payment of
rent, to repair damage caused by
Tenant or to clean the Premises,
it being agreed that Landlord may, in addition, claim those
sums specified in this Article 4 above
and/or those sums reasonably necessary
to compensate Landlord for any
other loss or damage, foreseeable
or unforeseeable, caused by the
acts or omissions of Tenant or
any officer, employee, agent,
contractor or invitee of Tenant.

 

Notwithstanding the above,
provided that Tenant is not in default as of the last day of the twenty-fourth (24th) month and the
last day of the thirty-sixth (36th) month of the
Term, respectively, on each of
the first day of the twenty-fifth (25th) and thirty-seventh
(37th) full months of the Term, Landlord shall apply one-third (1/3) of the Security Deposit (Le., $11,695.20) to
the monthly Basic Rental payable by Tenant for such 25th and 37th months of the
Term, and Tenant shall pay when due any deficiency in the monthly Basic Rentals
due and payable for such 25th and 37th months of the
Term. Landlord shall retain the balance of the Security Deposit (i.e.,
$11,695.20) to be used, if at all, as set forth in the preceding paragraph.

 

ARTICLE 5

 

HOLDING OVER

 

Should Tenant, without Landlord’s written consent,
hold over after termination of this Lease, Tenant shall become a tenant at
sufferance upon each and all of the terms herein provided as may be
applicable to such a tenancy and any such holding over shall not
constitute an extension of this Lease. During such holding over, Tenant shall pay in advance, monthly, Basic Rental
at a rate equal to one hundred fifty
percent (150%) of the rate in effect for the last month of the Term of this
Lease or one hundred fifty percent (150%) of Landlord’s then asking rate for comparable space in the Project,
whichever is greater, in addition to, and not in lieu of, all other payments
required to be made by Tenant hereunder including
but not limited to Tenant’s Proportionate Share of any increase in
Direct Costs. Nothing contained in this Article 5 shall be construed as
consent by Landlord to any holding over of the Premises by Tenant, and Landlord expressly reserves the
right to require Tenant to surrender possession
of the Premises to Landlord as provided in this Lease upon the
expiration or earlier termination of the Term. If Tenant fails to surrender the
Premises upon the expiration or termination of this
Lease, Tenant agrees to indemnify,
defend and hold Landlord harmless from all costs, loss, expense or liability,
including without limitation, claims
made by any succeeding tenant and real estate brokers claims
and attorney’s fees and costs.

 

ARTICLE 6

 

OTHER TAXES

 

Tenant shall pay, prior to delinquency, all taxes assessed against or levied upon trade
fixtures, furnishings, equipment and all other personal property of Tenant
located in the Premises. In the event any or all of Tenant’s trade fixtures,
furnishings, equipment and other personal property shall be assessed and taxed
with property of Landlord, or if the cost or value of any leasehold improvements in the Premises
exceeds the cost or value of a Project-standard
buildout as determined by Landlord and, as a result, real property taxes for
the Project are increased, Tenant shall pay to Landlord, within ten (10) days after delivery to Tenant by
Landlord of a written statement setting forth such amount, the amount of
such taxes applicable to Tenant’s property or above-standard improvements.
Tenant shall assume and pay to Landlord
at the time Basic Rental next becomes due (or if assessed after the
expiration of the Term, then within ten (10) days), any excise, sales,
use, rent, occupancy, garage, parking, gross
receipts or other taxes (other than net income taxes) which may be assessed
against or levied upon Landlord
on account of the letting of the Premises or the payment of Basic Rental or any
other sums due or payable hereunder, and which Landlord may be required to pay
or collect under any law now in effect or hereafter enacted. In addition to Tenant’s obligation pursuant to the immediately
preceding sentence, Tenant shall pay directly to the party or entity entitled
thereto all business license fees, gross receipts taxes and similar taxes and
impositions which may from time to time be assessed against or levied upon
Tenant, as and when the same become due and before delinquency. Notwithstanding anything to the contrary contained herein, any sums payable by Tenant under this Article 6
shall not be included in the computation of “Tax Costs.”

 

8

 

ARTICLE 7

 

USE

 

Tenant
shall use and occupy the Premises only for the use set forth in Article 1.G.
of the Basic Lease Provisions and shall
not use or occupy the Premises or permit
the same to be used or occupied
for any other purpose without the prior written consent of Landlord, which
consent may be given or withheld in Landlord’s sole and absolute discretion,
and Tenant agrees that it will use the Premises in such a manner so as
not to interfere with or infringe upon the rights of other tenants or occupants
in the Project. Tenant shall, at its sole cost and expense, promptly comply
with all laws, statutes, ordinances, governmental
regulations or requirements now in force or which may hereafter be in
force relating to or affecting (i) the condition, use or occupancy of the
Premises or the Project (excluding structural changes to the Project not
related to Tenant’s particular use of the Premises), and (ii) improvements
installed or constructed in the Premises by or for the benefit of Tenant.
Tenant shall not permit more than six (6) people per one thousand (1,000) rentable square feet
of the Premises to occupy the Premises
at any time. Tenant shall not do
or permit to be done anything which would invalidate or increase the cost of any fire
and extended coverage insurance
policy covering the Project and/or the property located therein and Tenant
shall comply with all rules, orders, regulations and requirements of any
organization which sets out standards, requirements or recommendations commonly referred to by major fire insurance
underwriters, and Tenant shall promptly
upon demand reimburse Landlord for any additional premium charges for any such insurance policy assessed or increased by reason
of Tenant’s failure to comply with the provisions of this Article.

 

ARTICLE 8

 

CONDITION OF PREMISES

 

Subject
to Landlord’s repair and maintenance obligations
under this Lease, Tenant hereby agrees that the Premises shall be taken “as
is”, “with all faults”, “without any representations or warranties”, and Tenant hereby agrees and warrants that
it has investigated and
inspected the condition of the
Premises and the suitability of same for Tenant’s purposes, and Tenant does hereby waive and disclaim any objection to, cause of action based
upon, or claim that its obligations hereunder should be reduced or limited because of the
condition of the Premises or the Project or the suitability of same for Tenant’s
purposes. Tenant acknowledges that
neither Landlord nor any agent nor any employee of Landlord has made any
representations or warranty with respect to the Premises or the Project or with
respect to the suitability of either for the conduct of Tenant’s business and Tenant
expressly warrants and represents
that Tenant has relied solely on its own investigation and
inspection of the Premises and the Project in its decision to enter into
this Lease and let the Premises in the above-described
condition. The Premises shall be initially improved as provided in, and subject to, the
Tenant Work Letter attached hereto as Exhibit “D” and made a part hereof.
The existing leasehold improvements in the Premises as of the date of this
Lease, together with the Improvements (as defined in the Tenant Work Letter) may
be collectively referred to herein as the “Tenant Improvements.” The
taking of possession of the Premises by Tenant shall conclusively
establish that the Premises and the Project were at such time in satisfactory condition. Tenant hereby waives subsection 1 of Section 1932
and Sections 1941 and 1942 of the Civil Code of California or any successor
provision of law.

 

Landlord
agrees to cause the electrical, plumbing, heating, ventilation and air
conditioning and other systems serving the Premises to be in good working order as of the
Commencement Date. Notwithstanding the foregoing,
if Tenant fails to notify
Landlord within ninety (90) days after the Substantial Completion of the Improvements that any of the foregoing items are not in
good working order and condition, then such items shall be deemed to be in good working order and condition and Tenant
shall have no further right hereunder to claim otherwise, except for Landlord’s ongoing obligations under this
Lease.

 

ARTICLE 9

 

REPAIRS AND ALTERATIONS

 

(a)                        Landlord’s Obligation.
Landlord shall maintain in good condition and repair the structural portions of
the Project, including the foundation, floor/ceiling slabs, roof, curtain wall, exterior glass, columns,
beams, shafts, stairs, stairwells, elevator cabs and common areas, and

 

9

 

shall
also maintain and repair the base building mechanical, electrical, life safety,
plumbing, sprinkler systems and
heating, ventilating and air-conditioning systems (provided, however, that
Landlord’s obligation with respect to any such systems shall be to repair and
maintain those portions of the systems located in the core of the
Project or in other areas outside of the Premises, but Tenant shall be responsible to repair and maintain any
distribution of such systems throughout the Premises).

 

(b)                       Tenant’s Obligation. Except as
expressly provided as Landlord’s obligation in this Article 9, Tenant shall keep the Premises in good
condition and repair. All damage or
injury to the Premises or the
Project resulting from the act or negligence of Tenant, its employees, agents
or visitors, guests, invitees or licensees, or by the use of the Premises,
shall be promptly repaired by Tenant at its sole cost and expense, to the
satisfaction of Landlord; provided, however, that for damage to the Project as
a result of casualty or for any repairs that may impact the mechanical,
electrical, plumbing, heating, ventilation or air-conditioning systems of the
Project, Landlord shall have the
right (but not the obligation) to select the contractor and oversee all such
repairs. Landlord may make any repairs which are not promptly made by Tenant
after Tenant’s receipt of written notice and the reasonable opportunity of Tenant to make said
repair within five (5) business days from receipt of said written notice,
and charge Tenant for the cost thereof, which cost shall be paid by Tenant within five (5) days from invoice from Landlord.
Tenant shall be responsible for
the design and function of all
non-standard improvements of the Premises, whether or not installed by Landlord at Tenant’s request. Tenant
waives all rights to make repairs at the expense of Landlord, or to deduct the
cost thereof from the rent.

 

(c)                        Alterations. Tenant shall
make no alterations, installations, changes or additions in or to the Premises
or the Project (collectively, “Alterations”) without Landlord’s prior written consent. Any Alterations approved
by Landlord must be performed
in accordance with the terms
hereof, using only contractors or mechanics approved by Landlord in
writing and upon the approval by Landlord in writing of
fully detailed and dimensioned plans and specifications pertaining to the
Alterations in question, to be prepared and submitted by Tenant at its sole
cost and expense. Tenant shall at its sole cost and expense obtain all
necessary approvals and permits pertaining to any Alterations approved by
Landlord. Tenant shall cause all Alterations to be performed in a good and workmanlike
manner, in conformance with all applicable
federal, state, county and municipal laws, rules and regulations,
pursuant to a valid building permit, and in conformance with Landlord’s construction rules and regulations. If Landlord, in approving any Alterations, specifies a
commencement date therefor, Tenant shall not commence any work with respect to
such Alterations prior to such date. Tenant hereby agrees to indemnify, defend,
and hold Landlord free and harmless from all liens and claims of lien, and all
other liability, claims and demands arising out of any work done or material
supplied to the Premises by or at the request of Tenant in connection with any
Alterations.

 

(d)                       Insurance; Liens. Prior to the
commencement of any Alterations, Tenant shall provide Landlord with evidence
that Tenant carries “Builder’s All Risk” insurance in an amount approved by
Landlord covering the construction of such Alterations, and such other
insurance as Landlord may reasonably require, it being understood that all such Alterations
shall be insured by Tenant pursuant to Article 14 of this Lease
immediately upon completion thereof. In addition, Landlord may, in its
discretion, require Tenant to obtain a lien
and completion bond or some
alternate form of security satisfactory to Landlord in an amount sufficient to
ensure the lien free completion of such Alterations and naming Landlord as a
co-obligee.

 

(e)                        Costs and Fees;
Removal. If permitted Alterations are made, they shall be made at Tenant’s sole
cost and expense and shall be
and become the property of Landlord, except that Landlord shall,
by written notice to Tenant given at the time Landlord consents to any
Alterations, inform Tenant whether Tenant shall be required Tenant to remove
all partitions, counters, railings and other Alterations installed by Tenant.
If Tenant shall be required to remove such Alterations, then such removal shall
be performed by Tenant at Tenant’s sole cost and expense and Tenant shall
repair any damage to the Premises and/or Project caused by such removal. Any
and all costs attributable to or
related to the applicable building codes
of the city in which the Project is located (or any other authority having jurisdiction over the
Project) arising from Tenant’s plans, specifications, improvements, Alterations
or otherwise shall be paid by Tenant at its sole cost and expense. With regard
to repairs, Alterations or any other work arising from or related to this Article 9,
Landlord shall be entitled to receive an administrative/coordination fee (which fee shall vary depending upon whether or not Tenant
orders the work directly from Landlord) sufficient to compensate Landlord for
all overhead,

 

10

 

general
conditions, fees and other costs and expenses arising from Landlord’s involvement with such work. The
construction of initial improvements to
the Premises shall be governed by the
terms of the Tenant Work Letter and not the terms of this Article 9.

 

ARTICLE 10

 

LIENS

 

Tenant shall keep the Premises and the Project free
from any mechanics’ liens, vendors liens or any other liens arising out of any work performed, materials
furnished or obligations incurred
by Tenant, and Tenant agrees to defend, indemnify and hold Landlord harmless from and against any such lien or
claim or action thereon, together with costs of suit and reasonable attorneys’ fees and costs
incurred by Landlord in connection with any such claim or action. Before
commencing any work of
alteration, addition or improvement to the Premises, Tenant shall give Landlord
at least ten (10) business days’ written notice of the proposed commencement of such work (to
afford Landlord an opportunity to post appropriate notices of non-responsibility). In the event that
there shall be recorded against the Premises or the Project or the property of which
the Premises is a part any claim or lien arising out of any such work
performed, materials furnished or obligations incurred by Tenant and such claim
or lien shall not be removed or discharged
within ten (10) days of filing, Landlord shall have the right but
not the obligation to pay and discharge said lien without regard to whether
such lien shall be lawful or correct, or to require that Tenant promptly deposit with Landlord in cash, lawful money of the United States, one
hundred fifty percent (150%) of the amount of such claim, which sum may be
retained by Landlord until such claim shall have been removed of record or
until judgment shall have been rendered on such claim and such judgment shall
have become final, at which time Landlord shall have the right to apply such
deposit in discharge of the judgment on said claim and any costs, including attorneys’ fees and costs incurred by
Landlord, and shall remit the balance thereof to Tenant.

 

ARTICLE 11

 

PROJECT SERVICES

 

(a)                    Basic Services. Landlord agrees
to furnish to the Premises, at a cost to be included in Operating Costs, from
6:00 a.m. to 6:00 p.m. Mondays through Fridays, excepting local and national holidays (“Building Hours”), air conditioning and heat
all in such reasonable quantities as in the judgment of Landlord is reasonably necessary for the comfortable occupancy of the Premises. In addition, Landlord shall provide electric current for normal lighting and normal office machines, elevator service and
water on the same floor as the Premises for lavatory and
drinking purposes in such reasonable quantities as in the judgment of Landlord
is reasonably necessary for
general office use and in compliance with applicable codes. Janitorial and maintenance services shall be
furnished five (5) days per week, excepting local and national holidays.
Tenant shall comply with all rules and regulations which Landlord may establish for the proper functioning and protection of
the common area air conditioning,
heating, elevator, electrical, intrabuilding cabling and wiring and plumbing
systems. Landlord shall not be liable for, and there shall be no rent
abatement as a result of, any stoppage, reduction or interruption of any such
services caused by governmental rules,
regulations or ordinances, riot, strike, labor
disputes, breakdowns, accidents,
necessary repairs or other cause. Except as specifically provided in this Article 11,
Tenant agrees to pay for all utilities and other services utilized by Tenant
and any additional building services furnished to Tenant which are not
uniformly furnished to all tenants of the Project, at the rate generally charged by Landlord to tenants of the
Project for such utilities or services.

 

(b)                   Tenant may install a
supplemental HVAC system in the Premises for the purpose of servicing the
Premises during hours other than the Building Hours or to supplement the HVAC provided to the Premises during the Building Hours (the “Tenant HVAC System”) provided that Landlord
approves of the specifications of such unit and the same does not adversely
interfere with the operation systems and equipment of the Project, as
determined by Landlord in its sole discretion. If the Tenant HVAC System shall
interfere with the Project’s systems or equipment, Tenant shall immediately
cease using such unit until such interference is corrected to Landlord’s satisfaction. If Tenant shall elect to install such Tenant HVAC System, such installation shall be performed at
Tenant’s sole expense pursuant to
the applicable terms of Article 9
of this Lease. Tenant shall install a separate meter for such Tenant HVAC
System at

 

11

 

Tenant’s
sole cost and expense. Tenant shall pay to the local utility service provider
the cost of all electricity utilized by the Tenant HVAC System, plus applicable taxes. Landlord, at Landlord’s sole option, may require Tenant to remove the Tenant HVAC System upon the
expiration or earlier
termination of this Lease. If Tenant is so required, Tenant shall, at Tenant’s
sole cost, repair any damages to the Premises or Project caused thereby.

 

(c)                   Excess Usage. Tenant will
not, without the prior written consent of Landlord, use any apparatus or device in the Premises
which will in any way increase the amount of electricity or water usually
furnished or supplied for use of the Premises as general office space; nor
connect any apparatus, machine or
device with water pipes or electric current (except through existing electrical outlets in the Premises), for the
purpose of using electric current or water.

 

(d)                  Additional
Electrical Service. If Tenant shall require electric current in excess
of that which Landlord is obligated to furnish under Article 11(a) above,
Tenant shall first obtain the written consent of Landlord, which Landlord may
refuse in its sole and absolute discretion. Additionally, Landlord may cause an
electric current meter or submeter to be installed in or about the Premises to measure the amount of any
such excess electric current consumed by Tenant in the Premises. The cost of
any such meter and of installation, maintenance and repair thereof shall be paid for by Tenant and
Tenant agrees to pay to Landlord, promptly upon demand therefor by
Landlord, for all such excess electric current consumed by any such use as
shown by said meter at the rates charged for such service by the city in which
the Project is located or the local public utility, as the case may be,
furnishing the same, plus any additional
expense incurred by Landlord in
keeping account of the electric current so consumed.

 

(e)                   HVAC Balance. If any lights, machines
or equipment (including but not limited to computers and computer
systems and appurtenances) are
used by Tenant in the Premises which materially affect the temperature
otherwise maintained by the air conditioning system, or generate substantially
more heat in the Premises than would be generated
by the building standard lights
and usual office equipment, Landlord shall have the right to install any
machinery and equipment which Landlord reasonably deems necessary to restore
temperature balance, including but not limited to modifications to the standard
air conditioning equipment, and the cost thereof, including the cost of installation
and any additional cost of operation
and maintenance occasioned thereby, shall be paid by Tenant to Landlord upon demand by Landlord.

 

(f)                     Telecommunications. Upon request
from Tenant from time to time, Landlord will provide Tenant with a listing of
telecommunications and media service providers serving the Project, and Tenant
shall have the right to contract directly with the providers of its choice. If
Tenant wishes to contract with or obtain
service from any provider which
does not currently serve the Project or wishes to obtain from an existing carrier
services which will require the installation of additional equipment, such provider
must, prior to providing service,
enter into a written agreement with Landlord setting forth the terms and
conditions of the access to be granted to such provider. In considering the installation of any new
or additional telecommunications
cabling or equipment at the Project, Landlord will consider all relevant
factors in a reasonable and non-discriminatory manner, including, without
limitation, the existing availability of services at the Project, the
impact of the proposed installations
upon the Project and its operations and the available space and capacity
for the proposed installations.
Landlord may also consider whether the proposed
service may result in interference with or interruption of other services
at the Project or the business operations of other tenants or occupants of the
Project. In no event shall Landlord be obligated to incur any costs or
liabilities in connection with the installation or delivery of
telecommunication services or facilities at the Project. All such installations
shall be subject to Landlord’s prior approval
and shall be performed in accordance
with the terms of Article 9. If Landlord approves the proposed installations
in accordance with the foregoing, Landlord will deliver its standard form agreement upon request and will use commercially reasonable efforts to promptly enter into an
agreement on reasonable and non-discriminatory terms with a qualified, licensed
and reputable carrier confirming the terms of installation and operation of telecommunications
equipment consistent with the foregoing.

 

(g)                  After-Hours Use. If Tenant
requires heating, ventilation and/or air
conditioning (“HVAC”) during times other than the times provided in Article 11(a) above, Tenant shall give Landlord such advance notice as Landlord
shall reasonably require and shall pay the prevailing rate charged by Landlord’s for after-hours use which is currently Ten Dollars ($10.00) per hour,

 

12

 

per
zone, subject to increase from time to time, and which shall not be applied in
a discriminatory manner.

 

(h)                       Reasonable Charges. Landlord may impose a
reasonable charge for any
utilities or services (other than electric current and heating, ventilation
and/or air conditioning which
shall be governed by Articles 11(c) and (f) above) utilized by Tenant
in excess of the amount or type that Landlord reasonably determines is typical for general office use.

 

(i)                           Sole Electrical
Representative. Tenant agrees that Landlord shall be the sole and exclusive representative with respect to, and shall maintain exclusive
control over, the reception, utilization and distribution of electrical power, regardless
of point or means of origin, use or generation. Tenant shall not have the right
to contract directly with any provider of electrical power or services.

 

(j)                           Supplemental Power. In the event that Tenant
desires, at any time, to install any supplemental
power supply at the
Project (“Supplemental Power Equipment”), Landlord shall have the
right, in its sole and absolute discretion,
(i) to grant or withhold its
consent to the installation of
such Supplemental Power
Equipment, and (ii) to
designate a Landlord-affiliated entity
to perform all work relating to
the design and installation of such
Supplemental Power Equipment.

 

ARTICLE 12

 

RIGHTS OF LANDLORD

 

(a)                        Right of Entry. Landlord and
its agents shall have the right to enter the Premises at all reasonable times for the purpose of cleaning the
Premises, examining or
inspecting the same, serving or posting
and keeping posted thereon
notices as provided by law, or
which Landlord deems necessary for the protection of Landlord or the Project,
showing the same to prospective tenants, lenders or purchasers of the Project,
in the case of an emergency, and for making such alterations, repairs,
improvements or additions to the Premises or to the Project as Landlord may
deem necessary or desirable. If Tenant shall not be personally present to open
and permit an entry into the Premises at any time when such an entry by
Landlord is necessary or permitted hereunder, Landlord may enter by means of a
master key, or may forcibly enter in the case of an emergency, in each event
without liability to Tenant and without affecting this Lease.

 

(b)                       Maintenance Work. Landlord
reserves the right from time to time, but subject to payment by and/or
reimbursement from Tenant as otherwise provided
herein: (i) to install, use, maintain, repair, replace, relocate
and control for service to the Premises
and/or other parts of the Project pipes, ducts, conduits, wires,
cabling, appurtenant fixtures, equipment spaces and mechanical systems,
wherever located in the Premises or the Project, (ii) to alter, close or
relocate any facility in the Premises or the common areas or otherwise conduct
any of the above activities for the purpose of complying with a general plan
for fire/life safety for the Project or otherwise, and (iii) to comply
with any federal, state or local law, rule or order. Landlord shall
attempt to perform any such work with the least inconvenience to Tenant as is reasonably practicable, but in no
event shall Tenant be permitted to withhold or reduce Basic Rental or other
charges due hereunder as a result of same, make any claim for constructive eviction or otherwise make
any claim against Landlord for interruption or interference with Tenant’s
business and/or operations.

 

(c)                        Rooftop.  If Tenant desires to use the rooftop of the Project for any purpose, including the installation of
communication equipment to be used from the Premises, such rights will be
granted in Landlord’s sole discretion and Tenant must negotiate the terms of
any rooftop access with Landlord or the
rooftop management company or lessee holding rights to the rooftop from
time to time. Any rooftop access granted to Tenant will be at prevailing rates
and will be governed by the terms of a separate written agreement or an
amendment to this Lease.

 

ARTICLE 13

 

INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY

 

(a)                        Indemnity. Tenant shall
indemnify, defend and hold Landlord, Arden Realty, Inc., Arden Realty
Limited Partnership, their subsidiaries, partners, affiliates and their
respective

 

13

 

officers,
directors, employees and contractors (collectively, “Landlord Parties”) harmless
from any and all loss, cost,
damage, expense and liability (including, without limitation, court costs and reasonable attorneys’ fees)
incurred in connection with or arising from
any cause in, on or about the Premises
(including, but not limited to, a slip and fall), Tenant’s use of the Premises or the Project or from the
conduct of Tenant’s business or from any breach or default in the performance
of any obligation on Tenant’s
part to be performed under this Lease or arising from any acts, omissions, negligence or willful misconduct of Tenant or any of
its agents, contractors, employees or invitees, patrons, customers or
members in or about the Project.
Tenant hereby assumes all risk of damage
to property or injury to persons in, upon or about the Premises
from any cause (including,
without limitation, any injury resulting from a slip and fall in, upon or about
the Premises), and Tenant hereby
waives all claims in respect thereof against Landlord and the Landlord Parties, excepting where the
damage is caused solely by the gross negligence or willful misconduct of
Landlord or the Landlord Parties.

 

(b)                       Exemption of
Landlord from Liability. Landlord
and the Landlord Parties shall not be liable for injury to Tenant’s
business, or loss of income therefrom, however occurring (including, without limitation, from
any failure or interruption of
services or utilities). Further, Landlord
and the Landlord Parties
shall not be liable for damage or
injury that may be sustained in, upon or about the Premises by Tenant, its
employees, invitees, customers, agents, or contractors, or any other person,
except to the extent such damage or injury results from the gross negligence or
willful misconduct of Landlord or the Landlord Parties. Landlord and the Landlord Parties shall not be liable
to Tenant for any damages arising from any willful or negligent action or
inaction of any other tenant of the Project.

 

(c)                        Security. Tenant acknowledges that Landlord’s election whether or not to
provide any type of mechanical surveillance or security personnel whatsoever in
the Project is solely within Landlord’s discretion; Landlord and the Landlord Parties shall have no liability in
connection with the provision, or
lack, of such services, and Tenant
hereby agrees to hold Landlord
and the Landlord Parties harmless with regard to any such potential claim.
Landlord and the Landlord Parties shall not be liable for losses due to theft,
vandalism, or like causes. Tenant shall
defend, indemnify, and hold Landlord and the Landlord Parties harmless from any
such claims made by any
employee, licensee, invitee, contractor, agent or other person whose
presence in, on or about the Premises or the Project is attendant to the
business of Tenant.

 

ARTICLE 14

 

INSURANCE

 

(a)                      Tenants Insurance. Tenant, shall at all times during the Term of this Lease, and at its own
cost and expense, procure and continue in force the following insurance
coverage: (i) Commercial General Liability Insurance, written on an
occurrence basis, with a combined single limit for bodily injury and property damages of not less than Two Million Dollars
($2,000,000.00) per occurrence and Three Million Dollars ($3,000,000.00) in the
annual aggregate, including products
liability coverage if applicable, owners and contractors protective
coverage, blanket contractual coverage including both oral and written
contracts, and personal injury coverage, covering the insuring provisions of
this Lease and the performance of Tenant of the indemnity and exemption of
Landlord from liability agreements set forth in Article 13 hereof; (ii) a
policy of standard fire, extended coverage and special extended coverage
insurance (all risks), including a
vandalism and malicious mischief endorsement, sprinkler leakage coverage and
earthquake sprinkler leakage where sprinklers are provided in an amount equal
to the full replacement value new without deduction for depreciation
of all (A) Tenant Improvements, Alterations, fixtures and other
improvements in the Premises, including
but not limited to all mechanical, plumbing, heating, ventilating, air conditioning, electrical, telecommunication
and other equipment, systems
and facilities, and (B) trade fixtures,
furniture, equipment and other personal property installed by or at the expense
of Tenant; (iii) Worker’s Compensation coverage as required by law; and (iv) business interruption,
loss of income and extra expense insurance covering any failure or interruption
of Tenant’s business equipment (including, without limitation,
telecommunications equipment) and covering all other perils, failures or
interruptions sufficient to cover a period of interruption of not less than
twelve (12) months. Tenant shall carry and maintain during the entire Lease Term (including any option periods, if applicable), at Tenant’s sole cost and
expense, increased amounts of the insurance required to be carried by Tenant pursuant to this Article 14 and
such other reasonable types of
insurance coverage and in

 

14

 

such
reasonable amounts covering the
Premises and Tenant’s operations therein,
as may be reasonably required by
Landlord.

 

(b)                   Form of
Policies. The aforementioned
minimum limits of policies and Tenant’s procurement and maintenance
thereof shall in no event limit the liability of Tenant hereunder. The
Commercial General Liability Insurance policy shall name the Landlord Parties, Landlord’s lender(s) and
such other persons or firms as Landlord specifies from time to time, as additional insureds with an appropriate endorsement to the
policy(s). All such insurance policies carried by Tenant shall be with
companies having a rating of not less than A-VIII in Best’s Insurance Guide.
Tenant shall furnish to Landlord, from the insurance companies, or cause the
insurance companies to furnish, certificates of coverage. The deductible under
each such policy shall in no event
exceed $5,000,00. No such policy
shall be cancelable or
subject to reduction of coverage or other modification or cancellation except
after thirty (30) days prior written notice to Landlord by the insurer. All
such policies shall be endorsed to agree that Tenant’s policy is primary and
that any insurance carried by Landlord is excess and not contributing with any
Tenant insurance requirement hereunder. Tenant shall, at least twenty (20) days
prior to the expiration of such policies, furnish Landlord with renewals or binders. Tenant agrees that if Tenant does not take out and maintain such insurance or
furnish Landlord with renewals or binders in a timely manner, Landlord may (but shall not be required to) procure said insurance on Tenant’s
behalf and charge Tenant the
cost thereof, which amount shall be payable
by Tenant upon demand with interest
(at the rate set forth in Section 20(e) below) from the date such
sums are extended. Tenant shall have
the right to provide such insurance coverage pursuant to blanket policies
obtained by Tenant, provided
such blanket policies expressly afford coverage to the Premises and to
Tenant as required by this Lease.

 

(c)                    Landlord’s
Insurance. Landlord may, as a cost to be included in Operating
Costs, procure and maintain at all times during the Term of this Lease, a
policy or policies of insurance covering loss or damage to the Project in the
amount of the full replacement costs without deduction for depreciation
thereof, providing protection against all perils included within the
classification of fire and extended coverage, vandalism coverage and malicious
mischief, sprinkler leakage, water damage,
and special extended coverage on the building. Additionally, Landlord may carry: (i) Bodily Injury
and Property Damage Liability Insurance and/or Excess Liability Coverage Insurance; and (ii) Earthquake and/or Flood Damage Insurance; and (iii) Rental
Income Insurance; and (iv) any
other forms of insurance Landlord may deem appropriate or any lender may require. The costs of all insurance carried by Landlord shall be included in Operating Costs.

 

(d)                   Waiver of Subrogation.
Landlord and Tenant each agree to require their respective insurers issuing the
insurance described in Sections 14(a)(ii), 14(a)(iv) and the first sentence
of Section 14(c), waive any rights of subrogation that such companies may have against the other party. Tenant hereby waives any
right that Tenant may have against Landlord and Landlord hereby waives any right that Landlord may have against
Tenant as a result of any loss or damage to the extent such loss or
damage is insurable under such policies.

 

(e)                    Compliance with Law. Tenant agrees
that it will not, at any time, during the Term of this Lease, carry any stock
of goods or do anything in or about the Premises that will in any way tend to
increase the insurance rates upon the Project. Tenant agrees to pay Landlord forthwith upon demand the amount of
any increase in premiums for insurance that may be carried during the
Term of this Lease, or the amount of insurance to be carried by Landlord on the Project resulting from the foregoing, or from Tenant doing any act in or about the
Premises that does so increase the insurance rates, whether or not
Landlord shall have consented to such act on the part of Tenant. If Tenant
installs upon the Premises any electrical equipment which causes an overload of
electrical lines of the Premises, Tenant shall at its own cost and expense, in accordance with all other Lease provisions
(specifically including, but not limited to, the provisions of Article 9,
10 and 11 hereof), make whatever
changes are necessary to comply with requirements of the insurance underwriters and any
governmental authority having
jurisdiction thereover, but nothing herein contained shall be deemed to
constitute Landlord’s consent to
such overloading. Tenant shall,
at its own expense, comply with all insurance requirements applicable to the Premises including without limitation, the installation of fire extinguishers or
an automatic dry chemical extinguishing
system.

 

15

 

ARTICLE 15

 

ASSIGNMENT AND SUBLETTING

 

Tenant
shall have no power to, either voluntarily,
involuntarily, by operation of
law or otherwise, sell, assign, transfer or hypothecate this Lease, or sublet the Premises or any part
thereof, or permit the Premises or any part thereof to be used or occupied by
anyone other than Tenant or Tenant’s employees without the prior written
consent of Landlord, which
consent shall not be unreasonably withheld.
If Tenant is a corporation,
unincorporated association, partnership or limited liability company, the sale, assignment, transfer or hypothecation of any class of stock or
other ownership interest in such corporation,
association, partnership or limited liability company in excess of
twenty-five percent (25%) in the aggregate
shall be deemed a “Transfer” within the meaning and provisions of this Article 15.
Tenant may transfer its interest pursuant to this Lease only upon the following express conditions, which conditions are agreed by Landlord and Tenant
to be reasonable:

 

(a)                      That the proposed Transferee (as hereafter defined) shall be subject to
the prior written consent of Landlord, which consent will not be unreasonably
withheld but, without limiting the generality of the foregoing, it shall be
reasonable for Landlord to deny such consent if:

 

(i)                       The use to be made of the Premises by the proposed Transferee is (a) not generally consistent with the
character and nature of all other tenancies in the Project, or (b) a use
which conflicts with any so-called “exclusive” then in favor of, or for any use
which might reasonably be expected to diminish the rent payable pursuant to any
percentage rent lease with another tenant of the Project or any other buildings
which are in the same complex as the Project, or (c) a use which would be prohibited by any other portion of
this Lease (including but not limited
to any Rules and Regulations then in effect);

 

(ii)                    The financial
responsibility of the proposed Transferee
is not reasonably satisfactory to
Landlord or in any event not at least
equal to those which were
possessed by Tenant as of the date of execution of this Lease;

 

(iii)                 The proposed
Transferee is either a governmental agency or instrumentality thereof

 

(iv)                Either the proposed Transferee or any person or
entity which directly or indirectly controls, is controlled by or is under
common control with the proposed Transferee (A) occupies space in the
Project at the time of the request for consent, or (B) is negotiating with Landlord or has
negotiated with Landlord during the six (6) month period immediately
preceding the date of the proposed Transfer,
to lease space in the Project; or

 

(v)                   The rent charged by Tenant to
such Transferee during the term of such Transfer, calculated using a present value analysis, is less than the rent
being quoted by Landlord at the time of such Transfer
for comparable space in the
Project for a comparable term, calculated using a present value analysis.

 

(b)                     Upon Tenant’s submission of a request for Landlord’s consent to any such Transfer, Tenant
shall pay to Landlord Landlord’s
then standard processing fee and
reasonable attorneys’ fees and costs incurred in connection with the proposed Transfer, which the parties hereby stipulate to be
$1,500.00, unless Landlord provides to Tenant evidence that Landlord has
incurred greater costs in connection with the proposed Transfer;

 

(c)                      That the proposed Transferee shall execute an
agreement pursuant to which it shall agree to perform faithfully and be bound by
all of the terms, covenants, conditions, provisions and agreements
of this Lease applicable to that
portion of the Premises so
transferred; and

 

(d)                     That an executed duplicate
original of said assignment and assumption agreement or other transfer on a
form reasonably approved by
Landlord, shall be delivered to
Landlord within five (5) days after the execution thereof, and that such
transfer shall not be binding upon
Landlord until the delivery thereof to Landlord and the execution and delivery
of Landlord’s consent thereto. It shall be a condition to Landlord’s consent to
any subleasing, assignment or

 

16

 

other
transfer of part or all of Tenant’s interest in the Premises (a “Transfer”)
that (i) upon Landlord’s
consent to any Transfer,
Tenant shall pay and continue to
pay fifty percent (50%) of any Transfer Premium (defined below), received by
Tenant from the transferee; (ii) any sublessee of part or all of Tenant’s
interest in the Premises shall agree that in the event Landlord gives such
sublessee notice that Tenant is in default under this Lease, such sublessee
shall thereafter make all sublease or other payments directly to Landlord,
which will be received by Landlord
without any liability whether to honor the sublease or otherwise (except to
credit such payments against sums
due under this Lease), and any sublessee
shall agree to attorn to Landlord or its successors and assigns
at their request should this Lease be terminated for any reason, except that in
no event shall Landlord or its successors or assigns be obligated to accept
such attornment; (iii) any such Transfer and consent shall be effected on forms supplied by Landlord and/or its legal
counsel; (iv) Landlord may require that Tenant not then be in default
hereunder in any respect; and (v) Tenant
or the proposed subtenant or
assignee (collectively, “Transferee”) shall agree to pay Landlord,
upon demand, as Additional Rent, a sum equal to the additional costs, if
any, incurred by Landlord for
maintenance and repair as a result of any change in the nature of occupancy caused by such subletting or
assignment. “Transfer Premium” shall mean all rent, Additional Rent
or other consideration payable by a Transferee in connection with a Transfer in
excess of the Basic Rental and Direct Costs payable by Tenant under this Lease
during the term of the Transfer and if such Transfer is for less than all of
the Premises, the Transfer Premium shall be calculated on a rentable square foot basis. “Transfer
Premium” shall also include, but not be limited to, key money,
bonus money or other cash consideration
paid by a Transferee to Tenant in
connection with such Transfer, and any payment in excess of fair market value for
services rendered by Tenant to the Transferee and any payment in excess of fair market value for assets,
fixtures, inventory, equipment, or
furniture transferred by Tenant to the Transferee in connection with such
Transfer. Any Transfer of this Lease which is not in compliance with the
provisions of this Article 15 shall be voidable by written notice from
Landlord and shall, at the option of Landlord,
terminate this Lease. In no event shall the consent by Landlord to any
Transfer be construed as relieving Tenant or any Transferee from obtaining the express written consent of Landlord to any further
Transfer, or as releasing Tenant from any
liability or obligation
hereunder whether or not then accrued and Tenant shall continue to be fully liable therefor. No collection
or acceptance of rent by Landlord from any person other than Tenant shall be
deemed a waiver of any provision of this Article 15 or the acceptance of
any Transferee hereunder, or a release of Tenant (or of any Transferee of
Tenant). Notwithstanding anything
to the contrary in this Lease, if Tenant or any proposed Transferee claims that
Landlord has unreasonably withheld
or delayed its consent under this Article 15 or otherwise has breached or
acted unreasonably under this Article 15,
their sole remedies shall be a declaratory
judgment and an injunction for the relief sought without any monetary damages,
and Tenant hereby waives all other remedies, including, without limitation, any
right at law or equity to terminate this Lease, on its own behalf and, to
the extent permitted under all applicable laws, on behalf of the proposed Transferee.

 

Notwithstanding anything to the contrary
contained in this Article 15, Landlord
shall have the option, by giving written notice to Tenant within thirty
(30) days after Landlord’s receipt of a request for consent to a proposed Transfer, to terminate this
Lease as to the portion of the Premises that is the subject of the proposed Transfer. If this Lease is so
terminated with respect to less than the entire Premises, the Basic Rental and
Tenant’s Proportionate Share
shall be prorated based on the
number of rentable square feet retained by Tenant as compared to the total number of rentable square feet previously
contained in the Premises, and this Lease as so amended shall continue
thereafter in full force and effect, and upon the request of either party, the
parties shall execute written confirmation of the same.

 

Notwithstanding the foregoing, an assignment or subletting
of all or a portion of the
Premises to an “Affiliate” of Tenant shall not require Landlord’s consent under
this Article 15 (and shall not require the payment of a Transfer Premium to
Landlord and shall not be subject to
Landlord’s rights of recapture set
forth in the immediately preceding paragraph), provided that (a) Tenant
shall supply Landlord with a fully executed copy of the document evidencing the
assignment or sublease at least ten (10) days prior to the Transfer in question, (b) such assignment or sublease is not a subterfuge by Tenant to avoid its obligations under this Lease, (c) if
the Transfer is an assignment, the assignee assumes, in full, the obligations of Tenant under this
Lease, and if the Transfer is a sublease, the Transferee executes such documentation reasonably
required by Landlord in connection with the subordination of such sublease to
this Lease, and (d) Tenant remains fully liable under this Lease.
The term “Affiliate” of Tenant shall

 

17

 

mean
an entity which is (i) controlled by, controls, or is under common control
with Tenant; (ii) any entity with which Tenant has merged or consolidated, or (iii) any entity
which acquires all or substantially all of the assets and/or shares of stock or
assets of Tenant. The term “control,” or “controlled” as used in this paragraph shall mean the ownership,
directly or indirectly, of at least fifty percent (50%) of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of
at least fifty percent (50%) of the voting interest in, an entity.

 

ARTICLE 16

 

DAMAGE OR DESTRUCTION

 

If
the Project is damaged by fire
or other insured casualty and the insurance proceeds have been made available therefor by the holder or holders of any mortgages or deeds of trust covering the Premises or the
Project, the damage shall be repaired by Landlord to the extent such insurance proceeds are available therefor and
provided such repairs can, in Landlord’s sole opinion, be completed within two
hundred seventy (270) days after the necessity for repairs as a result
of such damage becomes known to Landlord, without the payment of overtime or other premiums,
and until such repairs are completed rent shall be abated in proportion to the part of the Premises
which is unusable by Tenant in the conduct of its business (but there shall be
no abatement of rent by reason of any portion of the Premises being unusable for a period equal to one (1) day or
less). However, if the damage is due to the fault or neglect of Tenant, its
employees, agents, contractors, guests, invitees and the like, there shall be
no abatement of rent, unless and to the extent Landlord receives rental income
insurance proceeds. Upon the occurrence of any damage to the Premises, Tenant
shall assign to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Section 14(a)(ii)(A) above; provided, however, that if the
cost of repair of improvements within the Premises by Landlord
exceeds the amount of insurance proceeds received by Landlord from Tenant’s insurance
carrier, as so assigned by Tenant, such excess costs shall be paid by Tenant to
Landlord prior to Landlord’s repair of such damage. If repairs cannot, in
Landlord’s opinion, be completed within two hundred seventy (270) days after
the necessity for repairs as a result of such damage becomes known to Landlord without the payment of overtime or
other premiums, Landlord may, at its option, either (i) make such
repairs in a reasonable time and in such event this Lease shall continue in
effect and the rent shall be abated, if at all, in the manner provided in this Article 16, or (ii) elect
not to effect such repairs and instead terminate
this Lease, by notifying Tenant
in writing of such termination within sixty (60) days after Landlord learns of
the necessity for repairs as a result of damage, such notice to include a termination date giving Tenant
sixty (60) days to vacate the Premises. In addition, Landlord may elect to
terminate this Lease if the Project shall be damaged by fire or other casualty or cause, whether or not the
Premises are affected, if the damage is not fully covered, except for
deductible amounts, by Landlord’s insurance policies. Finally, if the Premises
or the Project is damaged to any substantial extent during the last twelve (12)
months of the Term (as the same may be extended pursuant to the terms of Article 31, below), then notwithstanding anything contained in
this Article 16 to the contrary, Landlord shall have the option to
terminate this Lease by giving written notice to Tenant of the exercise of such
option within sixty (60) days after Landlord learns of the necessity for
repairs as the result of such damage. A total destruction of the Project shall automatically terminate this Lease.
Except as provided in this Article 16,
there shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant’s business or property arising from such
damage or destruction or the
making of any repairs,
alterations or improvements in or
to any portion of the Project or the Premises or in or to fixtures,
appurtenances and equipment therein. Tenant understands that Landlord will not
carry insurance of any kind on Tenant’s furniture, furnishings, trade fixtures
or equipment, and that Landlord shall not be obligated to repair any damage
thereto or replace the same. Tenant acknowledges
that Tenant shall have no
right to any proceeds of insurance carried by Landlord relating to property damage. With respect to any damage
which Landlord is obligated to repair or elects to repair, Tenant, as a
material inducement to Landlord entering into this Lease, irrevocably waives and releases its
rights under the provisions of Sections 1932 and 1933
of the California Civil Code.

 

18

 

ARTICLE 17

 

SUBORDINATION

 

This Lease is subject and subordinate to all ground
or underlying leases, mortgages and deeds of trust which affect the property or
the Project, including all renewals, modifications, consolidations,
replacements and extensions thereof; provided, however, if the lessor under any
such lease or the holder or holders of any such mortgage or deed of trust shall
advise Landlord that they desire or require this Lease to be prior and superior
thereto, upon written request of Landlord to Tenant, Tenant agrees to promptly
execute, acknowledge and deliver any and I all documents or instruments which
Landlord or such lessor, holder or holders deem necessary or desirable for
purposes thereof. Landlord shall have the right to cause this Lease to be and
become and remain subject and subordinate to any and all ground or underlying
leases, mortgages or deeds of trust which may hereafter be executed covering
the Premises, the Project or the property or any renewals, modifications,
consolidations, replacements or extensions thereof, for the full amount of all advances
made or to be made thereunder and without regard to the time or character of
such advances, together with interest thereon and subject to all the terms and
provisions thereof; provided, however, that Landlord obtains from the lender or
other party in question a written undertaking in favor of Tenant to the effect
that such lender or other party will not disturb Tenant’s right of possession
under this Lease if Tenant is not then or thereafter in breach of any covenant
or provision of this Lease. Tenant agrees, within ten (10) days after
Landlord’s written request therefor, to execute, acknowledge and deliver upon
request any and all documents or instruments requested by Landlord or necessary
or proper to assure the subordination of this Lease to any such mortgages, deed
of trust, or leasehold estates. Tenant agrees that in the event any proceedings
are brought for the foreclosure of any mortgage or deed of trust or any deed in
lieu thereof, to attorn to the purchaser or any successors thereto upon any
such foreclosure sale or deed in lieu thereof as so requested to do so by such
purchaser and to recognize such purchaser as the lessor under this Lease;
Tenant shall, within five (5) days after request execute such further
instruments or assurances as such purchaser may reasonably deem necessary to
evidence or confirm such attornment. Tenant agrees to provide copies of any
notices of Landlord’s default under this Lease to any mortgagee or deed of
trust beneficiary whose address has been provided to Tenant and Tenant shall
provide such mortgagee or deed of trust beneficiary a commercially reasonable
time after receipt of such notice within which to cure any such default. Tenant
waives the provisions of any current or future statute, rule or law which
may give or purport to give Tenant any right or election to terminate or
otherwise adversely affect this Lease and the obligations of the Tenant
hereunder in the event of any foreclosure proceeding or sale.

 

ARTICLE 18

 

EMINENT DOMAIN

 

If
the whole of the Premises or the Project or so much thereof as to render the
balance unusable by Tenant shall be taken under power of eminent domain, or is
sold, transferred or conveyed in lieu thereof, this Lease shall automatically
terminate as of the date of such condemnation,
or as of the date possession is
taken by the condemning authority, at
Landlord’s option. No award for
any partial or entire taking shall be
apportioned, and Tenant hereby
assigns to Landlord any award
which may be made in such taking or condemnation, together with any and
all rights of Tenant now or hereafter arising in or to the same or any part thereof; provided, however, that
nothing contained herein shall be
deemed to give Landlord any interest
in or to require Tenant to assign to
Landlord any award made to Tenant for the taking of
personal property and trade fixtures belonging
to Tenant and removable by
Tenant at the expiration of the Term hereof as provided
hereunder or for the interruption of, or damage to, Tenant’s business;
In the event of a partial taking described in this Article 18, or a sale,
transfer or conveyance in lieu thereof, which does not result in a termination
of this Lease, the rent shall be apportioned
according to the ratio that the part of the Premises remaining useable
by Tenant bears to the total area of the Premises. Tenant hereby waives any and
all rights it might otherwise have pursuant to Section 1265.130 of the
California Code of Civil Procedure.

 

19

 

ARTICLE 19

 

DEFAULT

 

Each
of the following acts or omissions of Tenant or of any guarantor of Tenant’s
performance hereunder, or occurrences, shall constitute an “Event of Default”:

 

(a)                        Failure or
refusal to pay Basic Rental, Additional Rent or any other amount to be paid by
Tenant to Landlord hereunder within three (3) calendar days after notice
that the same is due or payable
hereunder; said three (3) day period shall be in lieu of, and not in
addition to, the notice requirements of Section 1161 of the
California Code of Civil Procedure or
any similar or successor law;

 

(b)                       Except where a
specific time period is otherwise set forth for Tenant’s performance in this
Lease, in which event the failure to perform by Tenant within such time period
shall be a default under this Article 19(b), and except as set forth in items (a) above and (c) through
and including (g) below, failure to perform or observe any other covenant
or condition of this Lease to be performed or observed within ten (10) days
following written notice to Tenant of such failure. Such ten (10) day
notice shall be in lieu of, and not in addition to, any required under Section 1161
of the California Code of Civil Procedure or any similar or successor law;

 

(c)                        Abandonment or
vacating or failure to accept tender of possession of the Premises or any
significant portion thereof;

 

(d)                       The taking in execution or by similar
process or law (other than by eminent domain) of the estate hereby created;

 

(e)                        The filing by
Tenant or any guarantor hereunder in any court pursuant to any statute of a
petition in bankruptcy or
insolvency or for reorganization or
arrangement for the appointment of a receiver of all or a portion of Tenant’s property; the filing against Tenant or any guarantor
hereunder of any such petition, or the commencement of a proceeding for the
appointment of a trustee, receiver or liquidator
for Tenant, or for any guarantor
hereunder, or of any of the property of either, or a proceeding by any
governmental authority for the dissolution or liquidation of Tenant or any guarantor
hereunder, if such proceeding shall not be dismissed or trusteeship
discontinued within thirty (30) days after commencement of such proceeding or
the appointment of such trustee or receiver; or the making by Tenant or any
guarantor hereunder of an assignment for the benefit of creditors. Tenant
hereby stipulates to the lifting of the automatic stay in effect and relief
from such stay for Landlord in the event Tenant files a petition under the
United States Bankruptcy laws,
for the purpose of Landlord pursuing its rights and remedies
against Tenant and/or a guarantor of this Lease;

 

(f)                          Tenant’s failure
to cause to be released any mechanics liens filed against the Premises or the
Project within ten (10) days after the date the same shall have been filed
or recorded; or

 

(g)                       Tenant’s failure
to observe or perform according to the provisions of Articles 7, 14, 17 or 25
within two (2) business days after notice from Landlord.

 

All
defaults by Tenant of any covenant or condition of this Lease shall be deemed
by the parties hereto to be material.

 

ARTICLE 20

 

REMEDIES

 

(a)                      Upon the
occurrence of an Event of Default under this Lease as provided in Article 19
hereof, Landlord may exercise
all of its remedies as may be permitted by law, including but not limited to
the remedy provided by Section 1951.4
of the California Civil Code, and including without limitation, terminating
this Lease, reentering the Premises and removing all persons and property
therefrom, which property may be stored by Landlord at a warehouse or
elsewhere at the risk, expense and for the account of Tenant. If Landlord elects to terminate this
Lease, Landlord shall be entitled to recover from Tenant the aggregate of all amounts permitted by
law, including but not limited to (i) the worth at the time of award of
the amount of any

 

20

 

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 that
Tenant proves could have been reasonably avoided; plus (iii) the
worth at the time of award of the amount
by which the unpaid rent for the balance of the Lease Term after the
time of award exceeds the amount of
such rental loss that Tenant proves could have been reasonably 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, specifically including
but not limited to, tenant improvement expenses, brokerage commissions
and advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and
any special concessions made to obtain a new tenant; and (v) 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 law.
The term “rent” as used in this Article 20(a) shall be deemed to be
and to mean all sums of every nature required to be paid by Tenant pursuant to
the terms of this Lease, whether to Landlord or to others. As used in items (i) and
(ii), above, the “worth at the time of award” shall be computed by allowing
interest at the rate set forth in item (e), below, but in no case greater than
the maximum amount of such interest permitted by law. As used in item (iii), above, the “worth at the time of award”
shall be 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%).

 

(b)                       Nothing in this Article 20
shall be deemed to affect Landlord’s right to indemnification for liability or
liabilities arising prior to the termination of this Lease for personal
injuries or property damage under the indemnification clause or clauses
contained in this Lease.

 

(c)                        Notwithstanding anything to the contrary set forth
herein, Landlord’s re-entry to
perform acts of maintenance or preservation of or in connection with efforts to
relet the Premises or any portion thereof, or the appointment of a receiver
upon Landlord’s initiative to protect Landlord’s interest under this Lease
shall not terminate Tenant’s right to possession of the Premises or any portion thereof and, until Landlord does elect to
terminate this Lease, this Lease shall continue in full force and effect and Landlord may enforce all of Landlord’s rights and remedies hereunder including, without limitation,
the remedy described in California Civil Code Section 1951.4 (lessor may
continue lease in effect after lessee’s breach and abandonment and recover rent
as it becomes due, if Lessee has the right
to sublet or assign, subject only to reasonable limitations). Accordingly,
if Landlord does not
elect to terminate this Lease on account of any default by Tenant, Landlord
may, from time to time, without terminating this Lease, enforce all of its
rights and remedies under this Lease, including the right to recover all rent
as it becomes due.

 

(d)                       All rights,
powers and remedies of Landlord hereunder and under any other agreement now or
hereafter in force between Landlord and
Tenant shall be cumulative and not alternative and shall be in addition to all
rights, powers and remedies given to Landlord by law, and the exercise of one
or more rights or remedies shall not impair
Landlord’s right to exercise any
other right or remedy.

 

(e)                        Any amount due
from Tenant to Landlord hereunder which is not paid when due shall bear
interest at the lower of twelve percent (12%) per annum or the maximum lawful
rate of interest from the due date until paid, unless otherwise specifically
provided herein, but the payment of such interest shall not excuse or cure any
default by Tenant under this Lease. In addition to such interest: (i) if
Basic Rental is not paid on or before the seventh (7th) day of the
calendar month for which the same is due, a late charge equal to seven percent
(7%) of the amount overdue or $100.00, whichever is greater, shall be
immediately due and owing and
shall accrue for each calendar month or part thereof until such rental,
including the late charge, is paid in full, which late charge Tenant hereby agrees
is a reasonable estimate of the damages Landlord shall suffer as a
result of Tenant’s late payment and (ii) an additional charge of $25.00
shall be assessed for any check given to Landlord by or on behalf of Tenant
which is not honored by the
drawee thereof; which damages include
Landlord’s additional administrative
and other costs associated with such late payment and unsatisfied checks
and the parties agree that it
would be impracticable or
extremely difficult to fix Landlord’s
actual damage in such event. Such charges for interest and late payments
and unsatisfied checks are separate and cumulative and are in

 

21

 

addition
to and shall not diminish or represent a substitute for any or all of Landlord’s
rights Or remedies under any other provision of this Lease.

 

(f)                               Whether or not
Landlord elects to terminate this Lease
on account of any default by
Tenant, as set forth in this Article 20, Landlord shall have the right to
terminate any and all subleases, licenses, concessions or other consensual
arrangements for possession entered into by Tenant and affecting the Premises
or may, in Landlord’s sole discretion, succeed to Tenant’s interest in such
subleases, licenses, concessions or arrangements. In the event of Landlord’s
election to succeed to Tenant’s interest in any such subleases, licenses,
concessions or arrangements, Tenant shall, as of the date of notice by Landlord of such election, have no
further right to or interest in the rent or other consideration receivable
thereunder.

 

(g)                            Landlord shall not be in default under this Lease unless Landlord fails
to perform obligations required of Landlord within sixty (60) days after written
notice is delivered by Tenant to Landlord and to the holder of any mortgages or
deeds of trust (collectively, “Lender”) covering
the Premises whose name and address shall have theretofore been furnished to
Tenant in writing, specifying the
obligation which Landlord has
failed to perform; provided, however,
that if the nature of Landlord’s obligation
is such that more than sixty (60) days are required for performance,
then Landlord shall not be in default if Landlord or Lender commences
performance within such sixty (60) day period
and thereafter diligently prosecutes
the same to completion.

 

(h)                            In the event of any default, breach or violation of Tenant’s rights under
this Lease by Landlord, Tenant’s exclusive
remedies shall be an action for specific performance or action for actual
damages. Without limiting any other waiver by Tenant which may be contained in
this Lease, Tenant hereby waives the benefit of any laws granting it the right
to perform Landlord’s obligation, or
the right to terminate this Lease on
account of any Landlord default.

 

ARTICLE 21

 

TRANSFER OF LANDLORD’S INTEREST

 

In
the event of any transfer or termination of Landlord’s interest in the Premises
or the Project by sale, assignment, transfer, foreclosure, deed-in-lieu of
foreclosure or otherwise whether voluntary
or involuntary, Landlord
shall be automatically relieved
of any and all obligations and liabilities on the part of Landlord from and
after the date of such transfer or termination, including furthermore without
limitation, the obligation of
Landlord under Article 4 and California
Civil Code 1950.7 above to
return the security deposit, provided said
security deposit is transferred to said transferee. Tenant agrees to attorn to
the transferee upon any such
transfer and to recognize such transferee as the lessor under this Lease and
Tenant shall, within five (5) days after request, execute such further
instruments or assurances as such transferee may reasonably deem necessary to evidence or confirm such attornment.

 

ARTICLE 22

 

BROKER

 

In
connection with this Lease, Tenant warrants and represents that it has had dealings only with firm(s) set
forth in Article 1.H. of the Basic Lease Provisions and that it knows of
no other person or entity who is or might be entitled to a commission, finder’s
fee or other like payment in connection herewith and does hereby indemnify and
agree to hold Landlord, its
agents, members, partners, representatives, officers, affiliates, shareholders, employees, successors and assigns harmless from and against any and all loss, liability and expenses that Landlord may incur should such
warranty and representation prove incorrect, inaccurate or false.

 

ARTICLE 23

 

PARKING

 

Tenant
shall rent from Landlord, commencing on the Commencement Date, the number of
unreserved and reserved parking passes set forth in Section 1(I) of the
Basic Lease Provisions, which parking passes
shall pertain to the Project parking facility.
Tenant shall pay Landlord for
such automobile parking passes: (i) at the rate of twenty-five dollars
($25.00) per reserved pass

 

22

 

per month during the initial Term; and (ii) at
the prevailing rate charged from time to time at the location of such parking
passes thereafter. In addition, Tenant shall be responsible for the full amount
of any taxes imposed by any governmental authority in connection with the
renting of such parking passes by Tenant or the use of the parking facility by
Tenant. Tenant’s continued right to use the parking passes is conditioned upon
Tenant abiding by all rules and regulations which are prescribed from time
to time for the orderly operation and use of the parking facility where the
parking passes are located, including any sticker or other identification
system established by Landlord, Tenant’s cooperation in seeing that Tenant’s
employees and visitors also comply with such rules and regulations, and
Tenant not being in default under this Lease. Landlord specifically reserves
the right to change the size, configuration, design, layout and all other
aspects of the Project parking facility at any time and Tenant acknowledges and
agrees that Landlord may, without incurring any liability to Tenant and without
any abatement of rent under this Lease, from time to time, close-off or
restrict access to the Project parking facility for purposes of permitting or
facilitating any such construction, alteration or improvements. Landlord may,
from time to time, relocate any reserved parking spaces (if any) rented by
Tenant to another location in the Project parking facility. Landlord may
delegate its responsibilities hereunder to a parking operator or a lessee of
the parking facility in which case such parking operator or lessee shall have
all the rights of control attributed hereby to the Landlord. The parking passes
rented by Tenant pursuant to this Article 23 are provided to Tenant solely
for use by Tenant’s own personnel and such passes may not be transferred,
assigned, subleased or otherwise alienated by Tenant without Landlord’s prior
approval. Tenant may validate visitor parking by such method or methods as
Landlord may establish, at the validation rate from time to time generally
applicable to visitor parking.

 

ARTICLE 24

 

WAIVER

 

No waiver by Landlord of any provision of this Lease
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. No provision of this Lease may be waived by
Landlord, except by an instrument in writing executed by Landlord. 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, whether or not similar to the act so consented to or
approved. 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, and no agreement to accept such surrender shall be
valid unless in writing and signed by Landlord. The subsequent acceptance of
rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any
term, covenant or condition of
this Lease, other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord’s knowledge of such preceding breach at the time
of acceptance of such rent. Any payment by Tenant or receipt by Landlord of an
amount less than the total amount then due hereunder shall be deemed to be in
partial payment only thereof and not a waiver of the balance due or an accord
and satisfaction, notwithstanding any
statement or endorsement to the contrary on any check or any other instrument
delivered concurrently therewith or in reference thereto. Accordingly, Landlord
may accept any such amount and
negotiate any such check without prejudice to Landlord’s right to recover all
balances due and owing and to pursue its other rights against Tenant under this
Lease, regardless of whether Landlord
makes any notation on
such instrument of payment or otherwise
notifies Tenant that such acceptance or negotiation is without prejudice to
Landlord’s rights.

 

ARTICLE 25

 

ESTOPPEL CERTIFICATE

 

Tenant shall, at any time and from time to time, upon
not less than ten (10) days’ prior written notice from Landlord, execute, acknowledge and deliver to Landlord a
statement in writing certifying the following
information, (but not limited to the following information in the event further information is requested
by Landlord): (i) that this
Lease is unmodified and in  full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as modified, is in full force and effect); (ii) the
dates to which the rental and other
charges are paid in advance, if
any; (iii) the amount of
Tenant’s security deposit, if any; and (iv) acknowledging that there are
not, to Tenant’s knowledge, any
uncured defaults on the part of
Landlord hereunder, and no
events or conditions then in existence which, with the passage of

 

23

 

time
or notice or both, would constitute a default on the part of Landlord
hereunder, or specifying such defaults, events or conditions, if any are
claimed. It is expressly understood and
agreed that any such statement may be relied upon by any prospective purchaser or encumbrancer of all or any portion of the Real Property. Tenant’s failure to deliver
such statement within such time shall constitute an admission by Tenant that
all statements contained therein are true and correct. Tenant hereby irrevocably appoints Landlord
as Tenant’s attorney-in-fact and in Tenant’s name, place and stead to execute
any and all documents described
in this Article 25 if Tenant fails to do so within the specified time
period.

 

ARTICLE 26

 

LIABILITY OF LANDLORD

 

Notwithstanding anything in this Lease to the
contrary, any remedy of Tenant for
the collection of a judgment (or other judicial process) requiring the payment
of money by Landlord in the event of any default by Landlord hereunder
or any claim, cause of action,
obligation, contractual statutory
or otherwise by Tenant against
Landlord or the Landlord Parties
concerning, arising out of or relating to any matter relating to this Lease and
all of the covenants and conditions or any obligations, contractual, statutory,
or otherwise set forth herein, shall be limited solely and exclusively to an
amount which is equal to the lesser of (i) the interest of Landlord in and
to the Project (including Landlord’s interest in any proceeds of insurance
policies), and (ii) the interest Landlord would have in the Project if the
Project were encumbered by third party debt in an amount equal to seventy-five
percent (75%) of the then current value of the Property (as such value is
reasonably determined by Landlord). No
other property or assets of
Landlord, or any member, officer, director, shareholder, partner, trustee,
agent, servant or employee of Landlord
(“Representative”) shall be
subject to levy, execution or other enforcement procedure for the satisfaction
of Tenant’s remedies under or with respect to this Lease, Landlord’s
obligations to Tenant, whether contractual, statutory or otherwise, the
relationship of Landlord and Tenant hereunder, or Tenant’s use or occupancy of
the Premises. Tenant further
understands that any liability, duty or obligation of Landlord to Tenant which
accrues from and after the date
of transfer, shall automatically cease and terminate as
of the date that Landlord or any of Landlord’s
Representatives no longer have any right, title or interest in or to the Project. Notwithstanding any contrary
provision herein, neither Landlord nor any Landlord Representative shall be
liable under any circumstances for injury or damage to, or interference with,
Tenant’s business, including but not limited to, loss of profits, loss of rents
or other revenues, loss of business opportunity,
loss of goodwill or loss of use, in each case, however occurring.

 

ARTICLE 27

 

INABILITY TO PERFORM

 

This
Lease and the obligations of
Tenant hereunder shall not be affected or impaired because Landlord is unable
to fulfill any of its obligations hereunder or is delayed in doing so, if such inability or delay is caused by reason of any prevention,
delay, stoppage due to
strikes, lockouts, acts of God, or any other
cause previously, or at such time, beyond the reasonable control or
anticipation of Landlord (collectively,
a “Force Majeure”) and Landlord’s obligations under this
Lease shall be forgiven and suspended by any such Force Majeure.

 

ARTICLE 28

 

HAZARDOUS WASTE

 

(a)                        Tenant shall not
cause or permit any Hazardous Material
(as defined in Article 28(d) below) to enter or be brought, kept or
used in or about the Project by Tenant, its agents, employees, contractors, or
invitees. Tenant indemnifies Landlord and
the Landlord Parties from and against any
breach by Tenant of the obligations
stated in this Article 28, and agrees to defend and hold Landlord and the Landlord Parties harmless from and
against any and all claims, judgments,
damages, penalties, fines, costs, liabilities, or losses (including, without
limitation, diminution in value of the Project, damages for the loss or
restriction or use of rentable or usable space or of any amenity of the Project, damages arising from any adverse impact or marketing of space in
the Project, and sums paid in settlement of claims, attorneys’
fees and costs, consultant fees, and expert fees) which arise during or after
the Term of this

 

24

 

Lease
as a result of such breach. This
indemnification of Landlord and the Landlord Parties by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any
cleanup, remedial, removal, or restoration work required by any federal, state,
or local governmental agency or
political subdivision because of Hazardous
Material present in the soil or ground water on or under the Project.
Without limiting the foregoing, if the presence of any Hazardous Material on the Project caused or permitted by Tenant
results in any contamination of the Project, then subject to the provisions of
Articles 9, 10 and 11 hereof, Tenant shall promptly take all actions at its
sole expense as are necessary to return the Project to the condition existing
prior to the introduction of any such Hazardous
Material and the contractors to be used by Tenant for such work must be approved by Landlord, which approval shall
not be unreasonably withheld so
long as such actions would not potentially have any material adverse long-term
or short-term effect on the Project and so long as such actions do not materially interfere
with the use and enjoyment of the Project by the other tenants thereof;
provided however, Landlord shall also have the right, by written notice to Tenant, to
directly undertake any such mitigation efforts with regard to Hazardous Materials in or about the Project due to Tenant’s breach of its obligations pursuant to this Section 28(a), and to charge
Tenant, as Additional Rent, for the costs thereof.

 

(b)                       Landlord and
Tenant acknowledge that Landlord
may become legally liable for the costs of complying with Laws (as defined in Article 28(e) below)
relating to Hazardous Material which are not the responsibility of Landlord or
the responsibility of Tenant, including the following: (i) Hazardous
Material present in the soil or ground
water on the Project of which Landlord has no knowledge as of the effective date of this Lease; (ii) a change in Laws which relate to Hazardous Material which make that Hazardous Material which is present on
the Real Property as of the effective date of this Lease, whether known or
unknown to Landlord, a violation of such new Laws; (iii) Hazardous
Material that migrates, flows, percolates, diffuses, or in any way moves on to,
or under, the Project after the effective date of this Lease; or Hazardous
Material present on or under the Project as a result of any discharge, dumping or spilling (whether accidental or
otherwise) on the Project by other lessees of the Project or their agents,
employees, contractors, or invitees, or by others. Accordingly, Landlord and
Tenant agree) that the cost of complying with Laws relating to Hazardous Material on the Project for
Which Landlord is legally liable
and which are paid or incurred
by Landlord shall be an Operating Cost (and Tenant shall pay Tenant’s Proportionate Share
thereof in accordance with Article 3)
unless the cost of such
compliance as between Landlord and Tenant, is made the responsibility of Tenant
pursuant to Article 28(a) above.
To the extent any such Operating
Cost relating to Hazardous Material
is subsequently recovered or reimbursed through insurance, or recovery from responsible third
parties or other action, Tenant shall be entitled to a proportionate reimbursement to the extent it has paid its share of
such Operating Cost to which such recovery or reimbursement relates.

 

(c)                        It shall not be unreasonable for Landlord to withhold
its consent to any proposed Transfer if (i) the proposed transferee’s anticipated use of the Premises involves the
generation, storage, use, treatment, or disposal of Hazardous Material; (ii) the proposed Transferee has
been required by any prior landlord,
lender, or governmental
authority to take remedial action in connection with Hazardous Material contaminating a property if the contamination resulted from such Transferee’s actions or use of the property in question;
or (iii) the proposed Transferee
is subject to an enforcement order issued by any governmental authority in connection with the use, disposal, or storage of a Hazardous Material.

 

(d)                       As used herein,
the term “Hazardous Material” means any hazardous, toxic or other
substance, material, or waste
which is or becomes regulated by any local governmental authority, the
State of California or the
United States Government. The term
“Hazardous Material” includes, without limitation, any
material or substance which is (i) defined
as “Hazardous Waste,” “Extremely
Hazardous Waste,” or “Restricted
Hazardous Waste” under Sections
25115, 25117 or 25122.7, or listed pursuant
to Section 25140, of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined
as a “Hazardous Substance” under Section 25316
of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account
Act), (iii) defined as a “Hazardous
Material,” “Hazardous Substance,”
or “Hazardous Waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter
6.95 (Hazardous Materials
Release Response Plans and Inventory),
(iv) defined as a “Hazardous Substance”
under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) regulated by Section 26100 et
seq. of the California Health and

 

25

 

Safety
Code, Division 20, Chapter 18 (Toxic Mold Protection Act of 2001), (vi) petroleum,
(vii) asbestos, (viii) listed under Article 9 or defined as Hazardous or
extremely hazardous pursuant to Article 11
of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix) designated
as a “Hazardous Substance” pursuant to
Section 311 of the Federal Water Pollution Control Act (33 U.S.C. § 1317),
(x) defined as a “Hazardous Waste” pursuant to Section 1004
of the Federal Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.
(42 U.S.C. § 6903), or (xi) defined as a “Hazardous Substance” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. § 9601 et seq. (42 U.S.C. § 9601).

 

(e)                        As used herein,
the term “Laws” means any applicable federal, state or local law, ordinance, or regulation
relating to any Hazardous Material
affecting the Project, including, without
limitation, the laws, ordinances, and regulations referred to in
Article 28(d) above.

 

ARTICLE 29

 

SURRENDER OF PREMISES; REMOVAL OF PROPERTY

 

(a)                        The voluntary or other surrender of this
Lease by Tenant to Landlord, or a mutual termination hereof, shall not work a
merger, and shall at the option of Landlord, operate as an assignment to it of
any or all subleases or subtenancies affecting the Premises.

 

(b)                       Upon the expiration of the Term of this Lease, or upon any earlier
termination of this Lease, Tenant shall quit and surrender possession of the
Premises to Landlord in good order and condition, reasonable wear and tear and
repairs which are Landlord’s obligation excepted, and shall, without expense to
Landlord, remove or cause to be removed from the Premises all debris and
rubbish, all furniture, equipment, business and trade fixtures, free-standing
cabinet work, moveable partitioning, telephone and data cabling and other
articles of personal property owned by Tenant or installed or placed by Tenant
at its own expense in the Premises, and all similar articles of any other persons
claiming under Tenant (unless Landlord exercises its option to have any
subleases or subtenancies assigned to it), and Tenant shall repair all damage
to the Premises resulting from the removal of such items from the Premises.
Landlord agrees to inform Tenant (in writing), at the time Landlord approves
the Final Space Plan, whether Tenant shall be obligated to remove the
Improvements constructed pursuant to Exhibit “D” attached hereto upon the
expiration or earlier termination of this Lease. If Tenant shall be required to
remove such Improvements, then such removal shall be performed by Tenant at
Tenant’s sole cost and expense and Tenant shall repair any damage to the
Premises and/or Project caused by such removal. Notwithstanding any contrary
provision contained in this Lease, Tenant shall not be obligated to remove the
Improvements constructed pursuant to Exhibit “D” attached hereto upon the
expiration or earlier termination of this Lease.

 

(c)                        Whenever
Landlord shall reenter the Premises as provided
in Article 20 hereof, or as otherwise provided in this Lease, any property of Tenant not removed
by Tenant upon the expiration of the Term of this Lease (or within
forty-eight (48) hours after a termination by reason of Tenant’s default), as
provided in this Lease, shall be considered abandoned property (“Abandoned Property”). Landlord may
take any one or more of the following actions with respect to Abandoned Property: (i) remove
any or all of the Abandoned Property
from the Premises, (ii) dispose of any or all of the Abandoned Property in
any manner, (iii) store any or all of the Abandoned Property in any location at the expense and risk of
Tenant, and/or (iv) sell any or all of the Abandoned Property at public or private sale, in
such manner and at such
times and places as Landlord, in
its sole discretion, may deem proper,
without notice to or demand upon Tenant. If Landlord sells the Abandoned
Property, Landlord shall apply the proceeds of such sale as
follows: first, to the cost and expense of such sale, including reasonable
attorneys’ fees and costs for services rendered; second, to the payment of the
cost of or charges for storing any such property; third, to the payment of any
other sums of money which may then or thereafter be due to Landlord from Tenant
under any of the terms of this
Lease; and fourth, the balance, if any, to Tenant. If Landlord takes any such action
with respect to the Abandoned Property
under the terms of this section, Tenant shall release Landlord from any and all
liability arising out of or related to the Abandoned Property and Tenant shall indemnify, defend and hold Landlord harmless from any and all loss, cost, damage, liability
or claims arising out of or
related to the Abandoned Property.

 

26

 

(d)                       All fixtures, equipment, leasehold improvements, Alterations and/or
appurtenances attached to or built into the Premises prior to or during the
Term, whether by Landlord or Tenant and whether at the expense of Landlord or
Tenant, or of both, shall be and remain part of the Premises and shall not be
removed by Tenant at the end of the Term unless otherwise expressly provided
for in this Lease or unless such removal is required by Landlord. Such
fixtures, equipment, leasehold improvements, Alterations, additions,
improvements and/or appurtenances shall include but not be limited to: all
floor coverings, drapes, paneling, built-in cabinetry, molding, doors, vaults
(including vault doors), plumbing systems, security systems, electrical systems,
lighting systems, silencing equipment, communication systems, all fixtures and
outlets for the systems mentioned above and for all telephone, radio, telegraph
and television purposes, and any special flooring or ceiling installations.

 

ARTICLE 30

 

MISCELLANEOUS

 

(a)                         SEVERABILITY;
ENTIRE AGREEMENT. ANY PROVISION OF THIS LEASE
WHICH SHALL PROVE TO BE INVALID, VOID, OR ILLEGAL SHALL IN NO WAY AFFECT,
IMPAIR OR INVALIDATE ANY OTHER PROVISION HEREOF AND SUCH OTHER PROVISIONS SHALL
REMAIN IN FULL FORCE AND EFFECT. THIS LEASE AND THE EXHIBITS AND ANY ADDENDUM
ATTACHED HERETO CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH
REGARD TO TENANT’S OCCUPANCY OR USE OF ALL OR ANY PORTION OF THE PROJECT, AND
NO PRIOR AGREEMENT OR UNDERSTANDING PERTAINING TO ANY SUCH MATTER SHALL BE
EFFECTIVE FOR ANY PURPOSE. NO PROVISION OF THIS LEASE MAY BE AMENDED OR
SUPPLEMENTED EXCEPT BY AN AGREEMENT IN WRITING SIGNED BY THE PARTIES HERETO OR
THEIR SUCCESSOR IN INTEREST. THE PARTIES AGREE THAT ANY DELETION OF LANGUAGE
FROM THIS LEASE PRIOR TO ITS MUTUAL EXECUTION BY LANDLORD AND TENANT SHALL NOT
BE CONSTRUED TO HAVE ANY PARTICULAR MEANING OR TO RAISE ANY PRESUMPTION, CANON
OF CONSTRUCTION OR IMPLICATION INCLUDING, WITHOUT LIMITATION, ANY IMPLICATION
THAT THE PARTIES INTENDED THEREBY TO STATE THE CONVERSE, OBVERSE OR OPPOSITE OF
THE DELETED LANGUAGE.

 

(b)                        Attorneys’ Fees;
Waiver of Jury Trial.

 

(i)                           In any action to
enforce the terms of this Lease, including any suit by Landlord for the recovery of rent or possession of the Premises, the
losing party shall pay the successful party a reasonable sum
for attorneys’ fees and costs in such suit
and such attorneys’ fees and
costs shall be deemed to have accrued prior to the commencement of such action
and shall be paid whether or not such action is prosecuted to judgment. Tenant
shall also reimburse Landlord for all costs incurred by Landlord in connection
with enforcing its rights under this Lease against Tenant following a bankruptcy by Tenant or otherwise,
including without limitation, legal fees, experts’ fees and expenses, court
costs and consulting fees.

 

(ii)                        Should Landlord,
without fault on Landlord’s part, be made a party to any litigation instituted
by Tenant or by any third party against Tenant, or by or against any person holding
under or using the Premises by license of Tenant, or for the foreclosure of any
lien for labor or material furnished to or for Tenant or any such other person
or otherwise arising out of or resulting from any act or transaction of Tenant
or of any such other person, Tenant covenants to save and hold Landlord harmless
from any judgment rendered against
Landlord or the Premises or any
part thereof and from all costs and expenses, including reasonable attorneys’
fees and costs incurred by Landlord in connection with such litigation.

 

(iii)                     When legal services are
rendered by an attorney at law who is an employee of a party, attorneys’ fees
and costs incurred by that party shall be deemed to include an amount based
upon the number of hours spent by such employee on such matters multiplied by
an appropriate billing rate
determined by taking into consideration the same factors,
including but not limited by, the importance of the matter, time applied,
difficulty and results, as are considered
when an attorney not in the employ of a party is engaged to render such service.

 

27

 

(iv)                       EACH
PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION SEEKING SPECIFIC
PERFORMANCE OF ANY PROVISION OF THIS LEASE, FOR DAMAGES FOR ANY BREACH UNDER
THIS LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR REMEDY HEREUNDER.

 

(c)                        Time of Essence. Each of Tenant’s
covenants herein is a condition and time is of the essence
with respect to the performance of every provision of this Lease.

 

(d)                       Headings; Joint
and Several. The article headings contained in this Lease are
for convenience only and do not in any way limit or amplify any term or provision hereof. The terms “Landlord” and “Tenant” as used herein
shall include the plural as well as the singular, the neuter shall include the masculine and feminine genders and the obligations herein imposed upon Tenant shall
be joint and several as to each of
the persons, firms or corporations
of which Tenant may be composed.

 

(e)                        Reserved Area. Tenant hereby
acknowledges and agrees that the exterior walls of the Premises and the area
between the finished ceiling of the Premises and the slab of the floor of the
Project thereabove have not been demised hereby and the use thereof together with
the right to install, maintain, use, repair and replace pipes, ducts, conduits,
wiring and cabling leading through, under or above the Premises or throughout
the Project in locations which will not materially interfere with Tenant’s use
of the Premises and serving other parts of the Project are hereby excepted and
reserved unto Landlord.

 

(f)                          NO
OPTION. THE SUBMISSION OF THIS LEASE BY
LANDLORD, ITS AGENT OR REPRESENTATIVE FOR EXAMINATION OR EXECUTION BY TENANT
DOES NOT CONSTITUTE AN OPTION OR OFFER TO LEASE THE PREMISES UPON THE TERMS AND
CONDITIONS CONTAINED HEREIN OR A RESERVATION OF THE PREMISES IN FAVOR OF
TENANT, IT BEING INTENDED HEREBY THAT THIS LEASE SHALL ONLY BECOME EFFECTIVE
UPON THE EXECUTION HEREOF BY LANDLORD AND TENANT AND DELIVERY OF A FULLY
EXECUTED LEASE TO TENANT.

 

(g)                       Use of Project
Name; Improvements. Tenant shall not be allowed to use the name,
picture or representation of the Project, or words to that effect, in
connection with any business carried on in the Premises or otherwise (except as
Tenant’s address) without the prior written consent of Landlord. In the event
that Landlord undertakes any additional improvements on the Real Property including but not limited to
new construction or renovation or
additions to the existing improvements, Landlord shall not be liable to Tenant
for any noise, dust, vibration or interference with access to the Premises or
disruption in Tenant’s business caused thereby.

 

(h)                       Rules and Regulations. Tenant shall observe faithfully
and comply strictly with the Rules and Regulations attached to this Lease as Exhibit “B” and made a part hereof, and such other Rules and Regulations as Landlord may
from time to time reasonably adopt for
the safety, care and cleanliness of the Project, the facilities thereof, or the
preservation of good order therein. Landlord
shall not be liable to Tenant for violation of any such Rules and Regulations, or for the breach of
any covenant or condition in any lease by any other tenant in the Project.  A waiver by Landlord of any Rule or
Regulation for any other tenant shall not constitute nor be deemed a waiver of
the Rule or Regulation for this Tenant. Landlord agrees to provide Tenant
at least one (1) key for each interior office within the Premises.

 

(i)                           Quiet Possession. Upon Tenant’s paying the Basic Rental,
Additional Rent and other sums
provided 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 of the
provisions of this Lease.

 

(j)                           Rent. All payments
required to be made hereunder to Landlord shall be deemed to be rent, whether
or not described as such.

 

(k)                        Successors and
Assigns. Subject to the provisions of Article 15 hereof, 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.

 

28

 

 

(l)         Notices. Any notice required or permitted to be given
hereunder shall be in writing and may be given by personal service evidenced
by a signed receipt or sent by registered
or certified mail, return receipt requested, or via overnight courier, and shall be
effective upon proof of
delivery, addressed to Tenant at the Premises or to Landlord at the management
office for the Project, with a copy to
Landlord, c/o Arden Realty, Inc., 11601 Wilshire Boulevard, Fourth Floor, Los Angeles, California 90025, Attn: Legal
Department. Either party may by notice
to the other specify a different address
for notice purposes except
that, upon Tenant’s taking
possession of the Premises, the Premises shall constitute Tenant’s address for
notice purposes. A copy of all notices to be given to Landlord hereunder shall be concurrently transmitted by Tenant to
such party hereafter designated by notice from Landlord to Tenant. Any notices
sent by Landlord regarding or
relating to eviction procedures, including
without limitation three day notices, may be sent by regular mail.

 

(m)       Persistent Delinquencies. In the event that Tenant
shall be delinquent by more than fifteen (15) days in the payment of rent on
three (3) separate occasions in
any twelve (12) month period, Landlord
shall have the right to terminate this Lease by thirty (30) days written notice given by Landlord to Tenant within thirty (30) days of the last such delinquency.

 

(n)        Right of Landlord to Perform. All covenants and
agreements to be performed by Tenant under any of the terms of this Lease shall
be performed by Tenant at Tenant’s sole cost and expense and without any abatement of rent. If Tenant shall fail to pay any sum of money, other than rent,
required to be paid by it hereunder or shall fail to perform any other act on
its part to be performed hereunder, and such failure shall continue beyond any
applicable cure period set forth in this Lease, Landlord may, but shall not be obligated to, without
waiving or releasing Tenant from any obligations of Tenant, make any such payment or perform any such
other act on Tenant’s part to be made or performed as is in this Lease
provided. All sums so paid by Landlord and all reasonable incidental costs, together with interest thereon at the
rate of ten percent (10%) per annum from the date of such payment by Landlord, shall be payable to Landlord on
demand and Tenant covenants to pay any such sums, and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and
remedies in the event of the nonpayment thereof by Tenant as in the case of
default by Tenant in the payment of the rent.

 

(o)        Access, Changes in
Project, Facilities, Name.

 

(i)         Every part of the Project except the inside surfaces of all
walls, windows and doors bounding the Premises (including exterior building
walls, the rooftop, core corridor walls and doors and any core corridor
entrance), and any space in or adjacent to the Premises or within the Project
used for shafts, stacks, pipes, conduits, fan rooms, ducts, electric or other
utilities, sinks or other building facilities, and the use thereof, as well as access thereto through the Premises for the purposes of
operation, maintenance, decoration and repair, are reserved to
Landlord.

 

(ii)        Tenant shall permit Landlord to install, use and maintain
pipes, ducts and conduits within the walls, columns and ceilings of the
Premises and throughout the Project.

 

(iii)       Landlord reserves the right, without incurring any liability
to Tenant therefor, to make such changes in or to the Project and the fixtures
and equipment thereof, as well as in or to the street entrances, halls, passages, elevators, stairways and other improvements thereof, as it may deem necessary or desirable.

 

(iv)       Landlord may adopt any name for the Project and
Landlord reserves the right, from time to time, to change the name and/or
address of the Project.

 

(p)        Signing Authority. If Tenant is a corporation, partnership or limited liability company, each individual executing this Lease on
behalf of said entity represents and warrants that he or she is duly authorized
to execute and deliver this Lease on behalf of said entity in accordance with: (i) if
Tenant is a corporation, a duly adopted resolution of the Board of Directors of said corporation or in accordance with the By-laws of said corporation, (ii) if Tenant
is a partnership, the terms of the partnership agreement, and (iii) if
Tenant is a limited liability company, the terms of its operating agreement, and that
this Lease is binding upon said
entity in accordance with its terms. Concurrently with Tenant’s execution of
this Lease, Tenant shall provide to
Landlord a copy of (i) if
Tenant is a corporation, such resolution of the Board of Directors authorizing the execution of this Lease on behalf of such corporation, which copy of

 

 

29

 

 

resolution
shall be duly certified by the secretary or an assistant secretary of the corporation to be a true copy of a resolution duly adopted by
the Board of Directors of said corporation and shall be in the form of Exhibit “E”
attached hereto or otherwise in a form reasonably
acceptable to Landlord, (ii) if Tenant is a partnership, a
copy of the provisions of the partnership agreement granting the
requisite authority to each individual executing this Lease on behalf of said partnership, and (iii) if Tenant
is a limited liability company, a
copy of the provisions of its operating
agreement granting the requisite authority
to each individual executing
this Lease on behalf of said
limited liability company. In
the event Tenant fails to comply with
the requirements set forth in this subsection (p), then each individual executing this Lease,
jointly and severally along with
Tenant, shall be personally liable
for all of Tenant’s obligations in
this Lease.

 

(q)        Identification of
Tenant.

 

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

 

(ii)       If Tenant is a partnership (or is
comprised of two or more persons, individually and as co-partners of a
partnership) or if Tenant’s interest in this Lease shall be assigned to a
partnership (or to two or more persons, individually and as co-partners of a
partnership) pursuant to Article 15 hereof (any such partnership and such
persons hereinafter referred to in this Article 30(q)(ii) as “Partnership Tenant”), the following
provisions of this Lease shall apply to such Partnership Tenant:

 

(A)       The liability of each of the parties comprising Partnership
Tenant shall be joint and several.

 

(B)       Each of the parties comprising
Partnership Tenant hereby consents in advance to, and agrees to be bound by,
any written instrument which may hereafter be executed, changing, modifying or discharging
this Lease, in whole or in part,
or surrendering all or any part of the Premises to the Landlord, and by
notices, demands, requests or other communication which may hereafter be given, by the individual or individuals authorized to execute this Lease on behalf of Partnership Tenant under Subsection (p) above.

 

(C)       Any bills, statements, notices,
demands, requests or other communications given or rendered to Partnership
Tenant or to any of the parties comprising Partnership Tenant shall be deemed
given or rendered to Partnership Tenant and to all such parties and shall be binding upon Partnership Tenant and all
such parties.

 

(D)       If Partnership Tenant admits new partners, all of such new
partners shall, by their admission to Partnership Tenant, be deemed to have
assumed performance of all of the terms, covenants and conditions of this Lease
on Tenant’s part to be observed and performed.

 

(E)        Partnership Tenant shall give prompt notice to Landlord of the admission of any such
new partners, and, upon demand of Landlord, shall cause each such new partner
to execute and deliver to Landlord an agreement in form satisfactory to
Landlord, wherein each such new partner shall assume performance of all of the
terms, covenants and conditions of this Lease on Partnership
Tenant’s part to be observed and performed (but neither Landlord’s failure
to request any such agreement nor the failure of any such new partner to
execute or deliver any such agreement to Landlord shall terminate the
provisions of clause (D) of this Article 30(q)(ii) or relieve
any such new partner of its obligations thereunder).

 

(r)         Intentionally
Omitted.

 

 

30

 

 

(s)       Survival of Obligations. Any obligations of Tenant occurring prior to the expiration or earlier
termination of this Lease shall survive such expiration or earlier termination.

 

(t)       Confidentiality. Tenant
acknowledges that the content of this Lease and any related documents are confidential information. Tenant shall
keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant’s financial, legal
and space planning consultants and any proposed Transferees.

 

(u)      Governing Law.
This Lease shall be governed by
and construed in accordance with the laws of the State of California. No
conflicts of law rules of any state or country (including, without limitation, California conflicts of law rules)
shall be applied to result in the application of any substantive
or procedural laws of any state or country other than California. All
controversies, claims, actions or causes of action arising between the parties
hereto and/or their respective successors and assigns, shall be brought, heard and adjudicated by the courts
of the State of California, with
venue in the county in which the
Project is located. Each of the parties hereto hereby consents to personal
jurisdiction by the courts of the State of California in connection with any
such controversy, claim, action or cause of action, and each of the parties
hereto consents to service of process by any means authorized by California law
and consent to the enforcement of any judgment so obtained in the courts of the
State of California on the same terms and conditions as if such controversy, claim, action or cause of action had been originally heard and adjudicated to a final judgment in such courts. Each of the parties
hereto further acknowledges that the laws and courts of California were freely
and voluntarily chosen to govern
this Lease and to adjudicate any  claims
or disputes hereunder.

 

(v)      Exhibits.
The Exhibits attached hereto are incorporated
herein by this reference as if fully set forth herein.

 

(w)      Independent
Covenants. This Lease shall be construed as though the covenants herein
between Landlord and Tenant are
independent (and not dependent) and Tenant hereby expressly waives the benefit
of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make
any repairs or perform any acts hereunder at Landlord’s expense or to set off
of any of the rent or other amounts owing hereunder against Landlord.

 

(x)       Counterparts.
This Lease may be executed in counterparts, each of which shall be deemed an
original, but such counterparts, when
taken together, shall constitute one agreement.

 

(y)      Financial Statements. Within ten (10) days
after Tenant’s receipt of Landlord’s written request, Tenant shall provide
Landlord with current financial statements of Tenant and financial statements
for the two (2) calendar or fiscal years (if Tenant’s fiscal year is other
than a calendar year) prior to the current financial statement year. Any such
statements shall be prepared in accordance with generally accepted accounting
principles and, if the normal practice of Tenant, shall be audited by an independent certified public accountant.

 

(z)       Office of Foreign Assets Control. Tenant certifies to
Landlord that Tenant is not entering into this Lease, nor acting, for or on
behalf of any person or entity named as a terrorist or other banned or blocked person or entity pursuant to any law, order, rule or regulation of the United States
Treasury Department or the Office of Foreign Assets Control. Tenant hereby agrees to indemnify, defend and hold Landlord
and the Landlord Parties harmless from any and all Claims arising from
or related to any breach of the foregoing
certification.

 

(aa)     Access. Subject to the terms of this Lease, Tenant shall have access to the Premises, Project and parking facilities serving the Project
twenty-four (24) hours per day, seven (7) days per week.

 

ARTICLE 31

 

OPTION TO EXTEND

 

(a)       Option Right.
Landlord hereby grants the Tenant named in this Lease (“Original Tenant”) one
option (“Option”) to extend
the Lease Term for a period of
five (5) years (“Option Term”),
which Option shall be exercisable only by written notice delivered by Tenant to
Landlord as set forth below. The right contained
in this Article 31 shall be personal to the

 

 

31

 

 

Original
Tenant and/or its Affiliate and may only be exercised by the Original Tenant and/or its Affiliate (and not any assignee, sublessee or
other transferee of the Original Tenant’s
interest in this Lease) if the Original Tenant and/or its Affiliate occupies
the entire Premises as of the date of Tenant’s Acceptance (as defined in Section 31(c) below).

 

(b)        Option Rent. The
rent payable by Tenant during the Option Term (“Option Rent”)
shall be equal to the Market
Rent (defined below). “Market Rent” shall mean the applicable
Monthly Basic Rental, including all
escalations, Direct Costs, Utilities Costs, additional rent and other
charges at which tenants, as of
the commencement of the Option Term, are leasing non-renewal, non-sublease, non-equity space comparable in size, location and quality to the Premises
(or Expansion Space, as applicable) for a term comparable to the Option Term (or the
term of Tenant’s lease of the Expansion
Space, as applicable), which
comparable space is located in
office buildings comparable to
the Project in Thousand Oaks, California, taking into consideration the value of the
existing improvements in the
Premises to Tenant, as compared to the value
of the existing improvements in such comparable space, with such value to be based upon the age,
quality and layout of the
improvements and the extent to
which the same could be utilized
by Tenant with consideration given
to the fact that the improvements existing in the Premises are specifically
suitable to Tenant.

 

(c)        Exercise of Options.
The Option shall be exercised by Tenant only in the following manner: (i) Tenant
shall not be in default, and shall not have been in default under this Lease
more than once beyond the expiration of all notice and cure periods provided in this Lease, on the delivery date of the Interest
Notice and Tenant’s Acceptance; (ii) Tenant shall deliver written notice (“Interest Notice”) to Landlord
not more than twelve (12) months nor less than nine (9) months
prior to the expiration of the Lease Term, stating that Tenant is interested in
exercising the Option; (iii) within fifteen (15) business days of Landlord’s receipt of Tenant’s written
notice, Landlord shall deliver notice (“Option Rent Notice”)
to Tenant setting forth the Option Rent; and (iv) if Tenant desires to
exercise such Option, Tenant shall provide
Landlord written notice within five (5) business days after receipt
of the Option Rent Notice (“Tenant’s Acceptance”) and upon, and concurrent with such
exercise, Tenant may, at its option, object
to the Option Rent contained in the Option Rent Notice. Tenant’s failure to
deliver the Interest Notice or Tenant’s Acceptance on or before the dates
specified above shall be deemed
to constitute Tenant’s election not to exercise the Option. If Tenant timely
and properly exercises its
Option, the Lease Term shall be extended for the Option Term upon all of the
terms and conditions set forth in this Lease, except that the rent for the
Option Term shall be as indicated in the Option Rent Notice unless Tenant,
concurrently with Tenant’s acceptance, objects to the Option Rent contained in the Option Rent Notice,
in which case the parties shall follow the procedure and the Option Rent shall
be determined, as set forth in Section 31(d) below.

 

(d)        Determination of
Market Rent. If Tenant timely and appropriately
objects to the Market Rent in Tenant’s Acceptance, Landlord and Tenant shall attempt to
agree upon the Market Rent using
their best good-faith efforts.
If Landlord and Tenant fail to
reach agreement within
twenty-one (21) days following Tenant’s Acceptance (“Outside Agreement Date”), then
each party shall make a separate determination of the Market Rent which shall
be submitted to each other and to arbitration in accordance with the following items (i) through (vii):

 

(i)         Landlord and Tenant shall each appoint, within ten (10) days
of the Outside Agreement Date, one
arbitrator who shall by
profession be a current
real estate broker or appraiser
of commercial office properties in the immediate vicinity of the Project, and who has been active in such field
over the last five (5) years. The determination of the arbitrators shall
be limited solely to the issue of whether Landlord’s or Tenant’s submitted Market Rent is the closest to the
actual Market Rent as determined by the arbitrators,
taking into account the
requirements of item (b), above.

 

(ii)        The
two (2) arbitrators so appointed shall within five (5) business days
of the date of the appointment of the last appointed arbitrator agree upon and
appoint a third arbitrator who shall be qualified under the same criteria set
forth hereinabove for qualification of the initial two (2) arbitrators.

 

(iii)       The
three (3) arbitrators shall within fifteen (15) days of the appointment of
the third arbitrator reach a decision as to whether the parties shall use
Landlord’s or Tenant’s submitted Market Rent, and shall notify Landlord and
Tenant thereof.

 

 

32

 

 

(iv)     The decision of the majority of the three (3) arbitrators
shall be binding upon Landlord and Tenant.

 

(v)      If either Landlord or Tenant fails to
appoint an arbitrator within ten (10) days after the applicable Outside
Agreement Date, the arbitrator appointed by one of them shall reach a decision,
notify Landlord and Tenant thereof, and such arbitrator’s decision shall be
binding upon Landlord and Tenant.

 

(vi)     If the two arbitrators fail to agree upon
and appoint a third arbitrator, or both parties fail to appoint an arbitrator,
then the appointment of the third arbitrator or any arbitrator shall be
dismissed and the matter to be decided shall be forthwith submitted to
arbitration under the provisions of the American Arbitration Association, but
subject to the instruction set forth in this item (d).

 

(vii) The cost of arbitration shall be paid by Landlord and Tenant equally.

 

ARTICLE 32

 

RIGHT OF FIRST OFFER

 

(a)      Right of First Offer. Landlord hereby grants to Tenant a
one-time right of first offer during the initial Term with respect to Suite 204
on the second 2nd floor of the Project as outlined on Exhibit “A-1”
attached hereto and made a part
hereof (“First Offer Space”);
provided, however, such right of first offer shall only be effective if
Tenant has timely delivered its Notice of Exercise (as defined in subparagraph (b)(ii) below) in
accordance with the provisions of this Section 32. Notwithstanding the foregoing,
(i) such first offer right of Tenant shall commence only following
the expiration or earlier termination of (A) any existing lease pertaining
to the First Offer Space, and (B) as to any First Offer  Space which
is vacant as of the date of this Lease, the first lease pertaining to any
portion of such First Offer Space entered into by Landlord after the date of
this Lease (collectively, the “Superior Leases”), including any
renewal of such existing or future lease, whether or not such renewal is pursuant to an express written provision in such lease, and regardless of whether any such renewal is consummated pursuant to a lease
amendment or a new lease, (ii) such
first offer right shall be subordinate
and secondary to all rights of expansion,
first refusal, first offer or similar rights granted to (A) the
tenants of the Superior Leases
and (B) any other tenant of the
Project prior to the date of this Lease (the rights
described in items (i) and (ii), above
to be known collectively
as “Superior
Rights”), and (iii) such
right of first offer shall not be triggered by the lease of space in the
Project by Landlord to an
existing tenant in the Project in connection
with the relocation of such existing
tenant’s premises in the Project. Tenant’s right of first offer shall be on the
terms and conditions set forth in this Section 32.

 

(i)         Procedure for Offer. Landlord shall notify Tenant (“First Offer Notice”) if and when Landlord receives a bona fide proposal from a third
party to lease the First Offer  Space, the terms and conditions of which proposal Landlord deems
reasonably acceptable for consideration, provided that no holder of a Superior
Right desires to lease such space. The First Offer Notice shall describe the space so offered to Tenant and shall set forth Landlord’s proposed material economic
terms and conditions applicable to
Tenant’s lease of such space (collectively, the “Economic Terms”), which
Economic Terms may or may not be the same as those proposed to Landlord by the aforementioned
third party. Notwithstanding anything
herein to the contrary, Landlord’s
obligation to deliver the First Offer Notice shall not apply during the last nine (9) months of the Term, as the same may be
extended pursuant to the terms
of Article 31, above.

 

(ii)        Procedure for Acceptance. If Tenant wishes to exercise
Tenant’s right of first offer with respect to the space described in the First
Offer Notice, then within four (4) business days after delivery of the
First Offer Notice to Tenant, Tenant shall deliver an unconditional irrevocable notice (“Notice of Exercise”) to Landlord of Tenant’s exercise of its right of first offer  with
respect to the entire space described in the First Offer Notice, and the
Economic Terms shall be as set forth in the First Offer Notice. If Tenant does
not unconditionally exercise its
right of first offer within the four (4) business day period, then
Landlord shall be free to lease the space described in the First Offer Notice
to anyone to whom Landlord desires on any terms Landlord desires and Tenant’s
right of first offer  shall terminate as to the First
Offer Space described in the First Offer Notice. Notwithstanding anything to the contrary contained herein, Tenant
must elect to exercise its right of first offer, if at all, with

 

 

33

 

respect
to all of the space offered by Landlord to Tenant at any particular time, and
Tenant may not elect to lease only a portion thereof.

 

(iii)      Construction of First
Offer Space. Except to the extent expressly set forth to the contrary in
the Economic Terms, Tenant shall take the First Offer Space in its “as-is”
condition, and Tenant shall be entitled to
construct improvements in the First
Offer Space i in accordance with the provisions of Article 9
of this Lease.

 

(iv)     Lease of First Offer
Space. If Tenant timely and properly exercises Tenant’s right to lease the
First Offer Space as set forth herein, Landlord and Tenant shall execute an amendment adding such First Offer
Space to this Lease upon the
same non-economic terms and conditions as applicable to the initial Premises,
and upon Landlord’s Economic Terms. Unless otherwise specified in Landlord’s
Economic Terms, Tenant shall commence payment of rent for the First Offer Space
and the Lease Term of the First Offer Space shall commence upon the date of delivery of such
space to Tenant. The Lease Term for the First Offer Space shall expire co-terminously with Tenant’s lease of
the initial Premises, unless otherwise specified in Landlord’s Economic Terms.

 

(v)      No Defaults. The
rights contained in this Section 32 shall be personal to the Original
Tenant and/or its Affiliate, and may only be exercised by the Original Tenant
and/or its Affiliate (and not any assignee, sublessee or other transferee of
the Original Tenant’s interest in this Lease) if Original Tenant and/or its
Affiliate occupies the entire Premises as of the date of the First Offer
Notice. Tenant shall not have the right to lease First Offer Space as provided in this Section 32 if,
as of the date of the First Offer Notice, or, at Landlord’s option, as of the scheduled date of delivery of such
First Offer Space to Tenant, Tenant is in default under this Lease or Tenant
has previously been in default under this Lease more than once beyond the expiration of all applicable notice and
cure periods set forth in this
Lease.

 

ARTICLE 33

 

SIGNAGE/DIRECTORY

 

Provided Tenant is not in default
hereunder, Tenant shall have the right to two (2) lines in the lobby directory during the Lease Term.
The initial directory listing shall be at Landlord’s cost and expense but any additions, deletions or other modifications to such initial
shall listing, if any shall be
at Tenant’s cost and expense.
In addition, Landlord shall provide, at
Landlord’s expense, one (1) Project-standard suite entrance sign.
Upon the expiration of the Lease Term, or other earlier termination of this
Lease, Tenant shall not be responsible for any and all costs associated with
the removal of Tenant’s suite entrance sign.

 

ARTICLE 34

 

ARBITRATION

 

(a)      General Submittals to
Arbitration. The submittal of all matters to arbitration in accordance with
the provisions of this Article 34
is the sole and exclusive method, means and procedure to resolve any and all
claims, disputes or disagreements
arising under this Lease, including, but not limited to any matter
relating to Landlord’s failure to approve an assignment, sublease or other
transfer of Tenant’s interest in the Lease under Article 15 of this Lease,
any other defaults by Landlord, or any Tenant
default, except for (i) all claims by either party which (A) seek
anything other than enforcement of rights under this Lease, or (B) are
primarily founded upon matters of fraud, willful misconduct, bad faith or any
other allegations of tortious action, and seek the award of punitive or
exemplary damages, (ii) all claims by either party arising from the
determination of Market Rent, and (iii) claims relating to Landlord’s exercise of any unlawful
detainer rights pursuant to California law or rights or remedies used by
Landlord to gain possession of the Premises or terminate Tenant’s right of
possession to the Premises, which disputes shall be resolved by suit filed in
the Superior Court of Los Angeles County, California, the decision of which court
shall be subject to appeal pursuant to
applicable laws. The parties hereby
irrevocably waive any and all
rights to the contrary and shall
at all times conduct themselves in strict, full, complete and timely
accordance with the provisions of this Article 34 and all attempts to
circumvent the terms and conditions of
this Article 34 shall be absolutely
null and void and of no force or
effect whatsoever. As to
any matter submitted to arbitration with
respect to the payment of money, to determine whether a matter would, with the
passage of time,

 

 

34

 

constitute
a default, such passage of time shall not commence to run in the event that the
party which is obligated to make the payment does in fact make the
payment to the other party. Such payment
can be made “under protest,” which shall occur when such payment is accompanied by a good faith Notice
stating the reasons that the party has elected to make a payment under protest.
Such protest will be deemed waived unless the subject matter identified in the
protest is submitted to arbitration as
set forth in this Article 34.

 

(b) JAMS.
Any dispute to be arbitrated pursuant to the provisions of this Article 34 shall be determined by binding arbitration
before a retired judge of the Superior Court of the State of California (the “Arbitrator”) under the auspices of Judicial
Arbitration & Mediation Services, Inc. (“JAMS”).
Such arbitration shall be initiated by the parties, or either of them,
within ten (10) days after either party sends notice (the “Arbitration
Notice”) of a
demand to arbitrate to the other party and to JAMS. The Arbitration Notice
shall contain a description of the subject matter of the arbitration, the dispute with respect
thereto, the amount involved, if
any, and the remedy or determination sought. The parties may
agree on a retired judge from
the JAMS panel. If they are unable to
promptly agree, JAMS will provide a
list of three available judges
who, to the extent available, have had extensive
experience in handling real estate commercial lease transactions as
practitioners and each party may strike one. The remaining judge (or if there
are two, the one selected by JAMS) will serve as the Arbitrator. In the event
that JAMS shall no longer exist or if JAMS fails or refuses to accept
submission of such dispute, then the dispute shall be resolved by binding arbitration before the
American Arbitration Association (“AAA”) under the
AAA’s commercial arbitration rules then in effect.

 

(i)        Arbitration Procedure.

 

(A)     Pre-Decision Actions.
The Arbitrator shall schedule a pre-hearing conference to resolve procedural
matters, arrange for the exchange of information, obtain stipulations, and
narrow the issues. The parties will submit proposed discovery schedules to the
Arbitrator at the pre-hearing conference. The scope and duration of discovery
will be within the sole discretion of the Arbitrator. The Arbitrator shall have
the discretion to order a pre-hearing exchange of information by the parties,
including, without limitation, production of requested documents, exchange of
summaries of testimony of proposed witnesses,
and examination by deposition of
parties and third-party witnesses. This discretion shall be exercised in favor
of discovery reasonable under the circumstances.

 

(B)      The Decision. The
arbitration shall be conducted in Los Angeles, California. Any party may be
represented by counsel or other authorized representative. In rendering a
decision(s), the Arbitrator shall determine the rights and obligations of the
parties according to the substantive
and procedural laws of the State of California and the provisions of this
Lease. The Arbitrator’s decision shall
be based on the evidence introduced
at the hearing, including all logical and reasonable inferences
therefrom. The Arbitrator may make any determination,
and/or grant any remedy or relief (an “Arbitration Award”) that is
just and equitable. The decision must
be based on, and accompanied by, a written statement of decision explaining the
factual and legal basis for the decision as to each of the principal controverted issues. The decision
shall be conclusive and binding, and it may thereafter be confirmed as a
judgment by the Superior Court of the State of California, subject only to
challenge on the grounds set
forth in the California Code of Civil Procedure
Section 1286.2. The validity
and enforceability of the Arbitrator’s decision is to be determined
exclusively by the California courts pursuant
to the terms and conditions of this Lease. The Arbitrator shall award
costs, including without limitation attorneys’ fees, and expert and witness costs, to the prevailing party as defined
in California Code of Civil Procedure Section 1032
(“Prevailing
Party”), if any, as determined by the Arbitrator in his or her
discretion. The Arbitrator’s fees and costs shall be paid by the non-prevailing party as determined by
the Arbitrator in his or her discretion. A party shall be determined by the
Arbitrator to be the prevailing party if its proposal for the resolution of dispute is the closer to that adopted by the Arbitrator.

 

[The rest of this page intentionally left blank. Signatures on the next page.]

 

 

35

 

IN WITNESS WHEREOF, the parties have executed this
Lease, consisting of the foregoing provisions and Articles, including all
exhibits and other attachments referenced therein, as of the date first above written.

 

	
  “LANDLORD”:

  	
  ARDEN
  REALTY LIMITED PARTNERSHIP,

  
	
   

  	
  a Maryland limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  ARDEN
  REALTY, INC.,

  
	
   

  	
   

  	
  a Maryland corporation

  
	
   

  	
  Its: 

  	
  Sole General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert C. Peddicord

  
	
   

  	
   

  	
  Its: EVP Operations and Leasing

  

 

	
  “TENANT”:

  	
  BROADCAST
  RESPONSE, INC.,

  
	
   

  	
  a
  California corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Eric Stanton

  
	
   

  	
  Print Name: 

  	
  Eric Stanton

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephanie Turner

  
	
   

  	
  Print Name: 

  	
  Stephanie (Molesworth) Turner

  
	
   

  	
   

  	
  Title: Secretary

  

 

 

36

 

EXHIBIT “A”

 

PREMISES

 

 

1

 

EXHIBIT “A-1”

FIRST OFFER SPACE

 

 

1

 

Exhibit “B”

 

RULES AND REGULATIONS

 

1.        No sign, advertisement or notice shall be displayed, printed or affixed on or to
the Premises or to the outside or inside of the Project or so as to be visible
from outside the Premises or Project without Landlord’s prior written consent.
Landlord shall have the right to remove any non-approved sign, advertisement or notice, without notice to and
at the expense of Tenant, and Landlord shall not be liable in damages for such removal. All approved signs or lettering on doors and walls shall be printed,
painted, affixed or inscribed at the expense of Tenant by Landlord or by a
person selected by Landlord and in a manner and style acceptable to Landlord.

 

2.        Tenant shall not obtain for use on the Premises ice, waxing,
cleaning, interior glass polishing,
rubbish removal, towel or other similar services, or accept barbering or bootblackening, or coffee cart services, milk, soft drinks or
other like services on the Premises, except from persons authorized by Landlord
and at the hours and under regulations fixed by Landlord. Except for
commercially reasonable vending machines for Tenant’s employees, no vending
machines or machines of any description shall be installed, maintained or
operated upon the Premises
without Landlord’s prior written consent.

 

3.        The
sidewalks, halls, passages, exits, entrances, elevators and stairways shall not
be obstructed by Tenant or used for any purpose other than for ingress and
egress from Tenant’s Premises. Under no circumstances is trash to be stored in
the corridors. Notice must be given to Landlord for any large deliveries.
Furniture, freight and other large or heavy articles, and all other deliveries
may be brought into the Project
only at times and in the manner designated
by Landlord, and always at
Tenant’s sole responsibility and
risk. Landlord may impose
reasonable charges for use of freight elevators after or before normal business
hours. All damage done to the Project by
moving or maintaining such
furniture, freight or articles shall be repaired by Landlord at Tenant’s
expense. Tenant shall not take or permit to be taken in or out of entrances or
passenger elevators of the Project, any item normally taken, or which Landlord
otherwise reasonably requires to
be taken, in or out through service
doors or on freight elevators.
Tenant shall move all supplies, furniture and equipment as soon as received
directly to the Premises, and shall move all waste that is at any time being
taken from the Premises directly to the areas designated for disposal.

 

4.        Toilet
rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than for which
they were constructed and no foreign substance of any kind whatsoever shall be
thrown therein.

 

5.        Tenant
shall not overload the floor of
the Premises or mark, drive nails, screw or drill into the partitions, ceilings
or floor or in any way deface the Premises. Tenant shall not place typed,
handwritten or computer generated signs in the corridors or any other common
areas. Should there be a need for signage additional to the Project standard tenant placard, a written
request shall be made to Landlord to obtain approval prior to any installation.
All costs for said signage shall be Tenant’s responsibility.

 

6.        In no event shall Tenant place
a load upon any floor of the Premises or portion of any such flooring exceeding
the floor load per square foot of area for which such floor is designed to
carry and which is allowed by law, or any machinery or equipment which shall
cause excessive vibration to the
Premises or noticeable vibration to
any other part of the Project. Prior to bringing any heavy safes, vaults, large
computers or similarly heavy equipment into. the Project, Tenant shall inform
Landlord in writing of the dimensions and weights thereof and shall obtain
Landlord’s consent thereto. Such consent shall not constitute a representation
or warranty by Landlord that the safe, vault or other equipment complies, with regard
to distribution of weight
and/or vibration, with the provisions of this Rule 6 nor relieve Tenant from responsibility for the
consequences of such noncompliance, and any such safe, vault or other equipment
which Landlord determines to
constitute a danger of damage to
the Project or a nuisance to other tenants, either alone or in combination with other heavy and/or vibrating objects and equipment, shall be promptly removed by Tenant, at
Tenant’s cost, upon Landlord’s
written notice of such determination
and demand for removal thereof.

 

2

 

7.        Tenant shall not use or
keep in the Premises or Project any kerosene, gasoline or inflammable,
explosive or combustible fluid or material, or use any method of heating or
air-conditioning other than that
supplied by Landlord.

 

8.        Tenant shall not lay
linoleum, tile, carpet or other similar floor covering so that the same shall
be affixed to the floor of the Premises in any manner except as approved by Landlord.

 

9.        Tenant shall not
install or use any blinds, shades, awnings or screens
in connection with any window or
door of the Premises and shall not use
any drape or window covering facing any exterior
glass surface other than the standard drapes, blinds or other window covering established by Landlord.

 

10.      Tenant shall cooperate with Landlord in obtaining maximum
effectiveness of the cooling system by closing window coverings when the sun’s
rays fall directly on windows of the Premises. Tenant shall not obstruct,
alter, or in any way impair the efficient operation of Landlord’s heating, ventilating and air-conditioning system. Tenant shall not tamper with or
change the setting of any thermostats or control valves.

 

11.      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, without Landlord’s prior written
consent, occupy or permit any
portion of the Premises to be occupied or used for the manufacture or sale of
liquor or tobacco in any form, or a barber or manicure shop, or as an employment bureau. The Premises shall not be used
for lodging or sleeping or for
any improper, objectionable or
immoral purpose. No auction
shall be conducted on the Premises.

 

12.      Tenant shall not make, or
permit to be made, any unseemly or disturbing noises, or disturb or interfere
with occupants of Project or neighboring buildings or premises or
those having business with it by the use of any musical instrument, radio, phonographs or unusual noise, or in
any other way.

 

13.      No bicycles, vehicles or
animals of any kind shall be brought into or kept in or about the Premises, and
no cooking shall be done or permitted by any tenant in the Premises, except
that the preparation of coffee, tea, hot chocolate and similar items for
tenants, their employees and visitors shall be permitted. No tenant shall cause
or permit any unusual or objectionable
odors to be produced in
or permeate from or throughout the
Premises. The foregoing notwithstanding, Tenant shall have the right to use a
microwave and to heat microwavable items typically heated in an office. No hot
plates, toasters, toaster ovens or similar open element cooking apparatus shall be permitted in the
Premises; provided, however,
Tenant shall have the right to use a microwave oven in the Premises.

 

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

 

15.      No additional locks or
bolts of any kind shall be placed upon any
of the doors or windows by any tenant, nor shall any changes be made in
existing locks or the mechanisms thereof unless Landlord is first notified
thereof, gives written approval, and
is furnished a key therefor. Each tenant must, upon the termination of his
tenancy, give to Landlord all keys and key cards of stores, offices, or toilets
or toilet rooms, either furnished to, or otherwise procured by, such tenant,
and in the event of the loss of any keys so furnished, such tenant shall pay
Landlord the cost of replacing the same or of changing the lock or locks opened
by such lost key if Landlord shall deem it necessary to make such change. If
more than two keys for one lock are desired, Landlord will provide them upon
payment therefor by Tenant. Tenant shall not key or re-key any locks. All locks
shall be keyed by Landlord’s locksmith only.

 

16.      Landlord shall
have the right to prohibit any
advertising by any tenant which, in Landlord’s opinion, tends to impair
the reputation of the Project or its desirability as an office building and upon written notice from Landlord
any tenant shall refrain from
and discontinue such advertising.

 

3

 

17.      Landlord reserves the
right to control access to the Project by all persons after reasonable hours of generally recognized business days and at all
hours on Sundays and legal
holidays and may at all times control access to the equipment areas of the
Project outside the Premises. Each tenant shall be responsible for all persons
for whom it requests after hours access and shall be liable to Landlord for all acts of such persons. Landlord shall have the right from time to time
to establish reasonable rules and charges pertaining to freight elevator
usage, including the allocation and reservation of such usage for
tenants’ initial move-in to their premises, and final departure therefrom.
Landlord may also establish from time to time reasonable rules and charges
for accessing the equipment areas of the Project, including the risers,
rooftops and telephone closets.

 

18.      Any person employed by any
tenant to do janitorial work shall, while in the Project and outside of the
Premises, be subject to and under the control and direction of the Office of
the Project or its designated representative such as security personnel (but
not as an agent or servant of Landlord,
and the Tenant shall be responsible for all acts of such persons).

 

19.      All doors opening on to
public corridors shall be kept closed, except when being used for ingress and
egress. Tenant shall cooperate and comply with any reasonable safety or security programs, including fire drills and air raid drills, and the appointment of “fire wardens” developed by Landlord for the Project, or required by law. Before leaving the Premises
unattended, Tenant shall close and securely lock all doors or other means of
entry to the Premises and shut off all lights and water faucets in the Premises.

 

20.      The requirements of
tenants will be attended to only upon application to the Office of the Project.

 

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

 

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

 

23.      No air-conditioning unit or other similar apparatus shall be
installed or used by any tenant without the prior written consent of Landlord.
Tenant shall pay the cost of all electricity used for air-conditioning in the Premises if such electrical consumption
exceeds normal office requirements, regardless of whether additional apparatus is installed pursuant to the preceding sentence.

 

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

 

25.      All electrical ceiling
fixtures hung in offices or spaces along the perimeter of the Project must be
fluorescent and/or of a quality, type,
design and bulb color approved by Landlord. Tenant shall not
permit the consumption in the Premises of more than 2 1⁄2 watts per net usable
square foot in the Premises in respect of office lighting nor shall Tenant
permit the consumption in the Premises of more than 1 1⁄2 watts per net usable
square foot of space in the Premises in respect of the power outlets therein,
at any one time. In the event that such limits are exceeded, Landlord shall have the right to require Tenant to remove lighting fixtures and equipment and/or to charge
Tenant for the cost of the additional
electricity consumed.

 

26.      Parking.

 

(a)        Project parking facility
hours shall be 7:00 a.m. to 7:00 p.m., Monday through Friday, and closed
on weekends, state and federal holidays excepted, as such hours may be revised
from time to time by Landlord.

(b)        Automobiles must be
parked entirely within the stall lines on the floor.

(c)        All directional signs
and arrows must be observed.

(d)        The speed limit shall be
5 miles per hour.

(e)        Parking
is prohibited in areas
not striped for parking.

(f)         Parking cards or
any other device or form of identification supplied by Landlord (or its operator) shall remain the property of Landlord (or its operator). Such parking identification device must be displayed as requested and may not be mutilated in any
manner.

 

4

 

The
serial number of the parking identification
device may not be obliterated. Devices are not transferable or assignable and
any device in the possession of an unauthorized
holder will be void. There will be a replacement charge to the Tenant or
person designated by Tenant of $25.00
for loss of any parking card. There shall be a security deposit of $25.00 due
at issuance for each card key issued to Tenant.

(g)      The monthly rate for parking is payable one (1) month in advance and must be paid by the third business day of each month.
Failure to do so will automatically cancel parking privileges and a charge at the prevailing daily rate will be due. No deductions or allowances from the monthly rate will be made for
days parker does not use the parking facilities.

(h)      Tenant
may validate visitor parking by such method or methods as the Landlord may
approve, at the validation rate from time to time generally applicable to
visitor parking.

(i)        Landlord (and its operator) may refuse to permit any person who
violates the within rules to park in the Project parking facility, and any violation of the rules shall
subject the automobile to removal from the Project parking facility at the
parker’s expense. In either of said events, Landlord (or its operator) shall refund a prorata portion of the current monthly
parking rate and the sticker or any other form of identification supplied by
Landlord (or its operator) will be returned to Landlord (or its operator).

(j)        Project parking facility
managers or attendants are not authorized to make or allow any exceptions to
these Rules and Regulations.

(k)       All responsibility for any loss or damage to automobiles or any personal
property therein is assumed by the parker.

(l)        Loss or theft of parking
identification devices from automobiles
must be reported to the Project parking facility manager immediately,
and a lost or stolen report must be filed by the parker at that time.

(m)      The parking facilities are for the sole purpose of parking one automobile per space. Washing, waxing, cleaning or servicing of
any vehicles by the parker or his agents is prohibited.

(n)      Landlord (and its
operator) reserves the right to refuse the issuance of monthly stickers or
other parking identification devices
to any Tenant and/or its
employees who refuse to comply with the
above Rules and Regulations
and all City, State or Federal ordinances, laws or agreements.

(o)      Tenant agrees to acquaint
all employees with these Rules and Regulations.

(p)      No vehicle shall be stored
in the Project parking facility for a period of more than one (1) week.

 

27.        The Project is a
non-smoking Project. Smoking or
carrying lighted cigars or cigarettes in the Premises or the Project, including
the elevators in the Project, is prohibited.

28.        Tenant shall not, without Landlord’s prior written consent (which consent may be granted or withheld in Landlord’s absolute discretion), allow
any employee or agent to carry any type of gun or other firearm in or about any
of the Premises, Project or Development.

 

5

 

EXHIBIT “C”

 

NOTICE OF LEASE TERM DATES

AND TENANT’S PROPORTIONATE SHARE

 

TO:                            Broadcast
Response, Inc.                                                   DATE:                                                       

555
St. Charles Drive, Suite 202

Thousand
Oaks, California 91360

 

RE:                Lease
dated                                ,
2006, between Arden Realty Limited Partnership, a Maryland limited partnership (“Landlord”), and Broadcast Response, Inc., a California
corporation (“Tenant”), concerning Suite 202,
located at 555 St. Charles Drive, Thousand Oaks, California.

 

Ladies
and Gentlemen:

 

In
accordance with the Lease, Landlord wishes to advise and/or confirm the
following:

 

1.          That the Premises have
been accepted herewith by the Tenant as being substantially complete in
accordance with the Lease and that there is no deficiency in construction.

 

2.          That the Tenant has
taken possession of the Premises and acknowledges that under the provisions of
the Lease the Term of said Lease shall commence as of
                                        
for a term of five (5) years ending on
                                                              .

 

3.          That in accordance with
the Lease, Basic Rental commenced to accrue on
                                      .

 

4.          If the Commencement
Date of the Lease is other than the first day of the month, the first billing
will contain a prorata adjustment Each billing thereafter shall be for the full
amount of the monthly installment as provided for in said Lease.

 

5.          Rent is due and payable
in advance on the first day of each and every month during the Term of said
Lease. Your rent checks should be made payable to
                                                    
at
                                            
                                                                        .

 

6.          The exact number of
rentable square feet within the Premises is
                              
square feet.

 

7.          Tenant’s Proportionate
Share, as adjusted based upon the exact number of rentable square feet within
the Premises is
                                    %.

 

AGREED AND ACCEPTED:

 

TENANT:

 

Broadcast
Response, Inc.,

a California corporation

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  

 

 

 

 

EXHIBIT “D”

 

TENANT WORK LETTER

 

BROADCAST RESPONSE, INC.

 

This Tenant Work Letter shall set forth the terms and
conditions relating to the renovation of the tenant improvements in the
Premises. This Tenant Work Letter is essentially organized chronologically and addresses the issues of the renovation of the Premises, in
sequence, as such issues will arise.

 

SECTION 1

 

LANDLORD’S INITIAL CONSTRUCTION IN THE PREMISES

 

Landlord has constructed, at its sole cost and
expense, the base, shell and core (i) of the Premises, and (ii) of
the floor of the Project on which the Premises is located (collectively, the “Base,
Shell and Core”). Except to the extent expressly set forth to
the contrary in Article 8 of this Lease, Tenant has inspected and hereby
approves the condition of the Base, Shell and Care, and agrees that the Base,
Shell and Core shall be delivered to Tenant in its current “as-is” condition.
The improvements to be initially installed in the Premises shall be designed
and constructed pursuant to this Tenant Work Letter. Any costs of initial
design and construction of any improvements to the Premises shall be an “Improvement
Allowance Item”, as that teeth is defined in Section 2.2 of this Tenant
Work Letter. Without limiting the foregoing, Landlord agrees to separately
demise the Premises (including any necessary installation, modification or
other work in connection with causing the HVAC system and all other utility and
telecommunications systems to separately service the Premises) (the “Demising Work”). Tenant shall not be responsible for the
costs incurred by Landlord to extend the corridor on the floor on which the Premises
are located.

 

SECTION 2

 

IMPROVEMENTS

 

2.1        Improvement Allowance. Tenant shall be entitled to a
one-time improvement allowance (the “Improvement Allowance”) in the
amount of $90,372.00 ($17.00 per rentable square foot) for the costs relating
to the initial design and construction of Tenant’s improvements which are
permanently affixed to the Premises (the “Improvements”). In
no event shall Landlord be obligated to make disbursements pursuant to this
Tenant Work Letter in a total amount which exceeds the Improvement Allowance
and in no event shall Tenant be entitled to any credit for any unused portion
of the Improvement Allowance not used by Tenant within six (6) months
after execution of the Lease.

 

2.2        Disbursement of the Improvement Allowance. Except as
otherwise set forth in this Tenant Work Letter, the Improvement Allowance shall
be disbursed by Landlord (each of which disbursements shall be made pursuant to
Landlord’s disbursement process) for costs related to the construction of the
Improvements and for the following items and costs (collectively, the “Improvement
Allowance Items”): (i) payment of the fees of the
Architect and the Engineers (as those terms are defined in Section 3.1 of
this Tenant Work Letter), and payment of the fees incurred by, and the cost of documents and materials supplied by, Landlord and Landlord’s consultants in connection with the preparation and review of the Construction Drawings (as that
term is defined in Section 3.1 of this Tenant Work Letter); (ii) the
cost of permits; (iii) the cost of any changes in the Base, Shell and Core required by the Construction
Drawings; (iv) the cost of any changes to the Construction Drawings or
Improvements required by applicable
building codes (the “Code”);
(v) the Landlord Coordination
Fee (as that term is defined in Section 4.3.2 of this Tenant Work
Letter); and (vi) fifty percent (50%) of the costs incurred by Landlord in
connection with the performance of the Demising Work. However, in no event
shall more than Three and 00/100 Dollars ($3.00) per rentable square foot of
the Improvement Allowance be used for the aggregate cost of items described in (i) and
(ii) above; any additional amount incur(r)ed as a
result of (i) and (ii) above shall
be deemed to constitute an Over-Allowance Amount.

 

 

1

 

 

2.3        Standard Improvement
Package. Landlord has established specifications
(the “Specifications”)
for the Project standard components
to be used in the construction of the Improvements in the Premises (collectively, the “Standard
Improvement Package”), which Specifications are available upon request. The quality of Improvements shall be equal
to or of greater quality than
the quality of the Specifications,
provided that Landlord may, at Landlord’s option, require the Improvements to comply with certain Specifications.

 

SECTION 3

 

CONSTRUCTION DRAWINGS

 

3.1        Selection of Architect/Construction Drawings. Landlord shall retain, on half of Tenant, an architect/space planner
designated by Landlord (the “Architect”)
to prepare the Construction Drawings (as that term is defined in this Section 3.1).
Tenant shall retain the engineering consultants designated by Landlord (the “Engineers”) to prepare all plans and engineering
working drawings relating to the structural, mechanical, electrical, plumbing,
HVAC and lifesafety work of the Tenant Improvements. The plans and drawings to
be prepared by Architect and the Engineers hereunder shall be known
collectively as the “Construction Drawings.” All
Construction Drawings shall comply with the drawing format and specifications
as reasonably determined by Landlord,
and shall be subject to Landlord’s
reasonable approval. Tenant and Architect shall verify, in the field,
the dimensions and conditions as shown on the relevant portions of the base
building plans, and Tenant and Architect shall be solely responsible for the
same, and Landlord shall have no
responsibility in connection
therewith. Landlord’s review of
the Construction Drawings as set forth in this Section 3, shall be for its
sole purpose and shall not imply Landlord’s review of the same, or obligate
Landlord to review the same, for quality, design, Code compliance or other like
matters. Accordingly, notwithstanding that any Construction Drawings are
reviewed by Landlord or its space planner, architect, engineers and consultants, and notwithstanding any advice
or assistance which may be rendered to Tenant by Landlord or
Landlord’s space planner, architect, engineers, and consultants,
Landlord shall have no liability whatsoever in connection therewith and shall
not be responsible for any omissions or errors contained in the Construction Drawings.

 

3.2        Final Space Plan.
On or before the date set forth in Schedule 1, attached hereto, the Architect
shall deliver to Landlord for Landlord’s approval the final space
plan for Improvements in the Premises (collectively, the “Final
Space Plan”), which Final Space Plan shall include a layout and designation of all offices, rooms and other partitioning, their
intended use, and equipment to
be contained therein, and shall be approved
by Tenant prior to submission to Landlord.

 

3.3        Final Working
Drawings. On or before the date set forth in Schedule 1, the Architect and
the Engineers shall complete and deliver to Landlord for Landlord’s approval, the architectural and
engineering drawings for the Premises, and the final architectural working
drawings in a form which is complete to allow subcontractors to bid on
the work and to obtain all
applicable permits (collectively, the “Final Working Drawings”). The Final
Working Drawings shall be approved by
Tenant prior to submission to Landlord.

 

3.4        Permits. The
Final Working Drawings shall be approved
by Landlord (the “Approved Working Drawings”) prior to
the commencement of the construction of the Improvements. Tenant shall cause the Architect to immediately
submit the Approved Working Drawings
to the appropriate municipal
authorities for all applicable building
permits necessary to allow Contractor (as that term is defined in Section 4.1,
below), to commence and fully complete the construction of the Improvements
(the “Permits”). No changes, modifications or
alterations in the Approved Working Drawings
may be made without the prior written consent of Landlord, which consent shall not be unreasonably withheld.

 

3.5        Time Deadlines.
Tenant shall use its best efforts and all due diligence to cooperate with the
Architect, the Engineers, and Landlord to complete all phases of the
Construction Drawings and the permitting process and to receive the permits,
and with Contractor for approval of the Cost Proposal (as that term is defined
in Section 4.2 of this Tenant Work Letter), as soon as possible after the
execution of the Lease, and, in that regard, shall meet with Landlord on a
scheduled basis to be determined by Landlord, to discuss Tenant’s progress in
connection with the same. The applicable dates for approval of items, plans and drawings as described in this Section 3,
Section 4 below, and in this Tenant Work Letter are set forth and

 

 

2

 

 

further
elaborated upon in Schedule 1
(the “Time
Deadlines”), attached hereto. Tenant agrees to comply with
the Time Deadlines.

 

SECTION 4

 

CONSTRUCTION OF THE IMPROVEMENTS

 

4.1        Contractor. The contractor which shall construct the Improvements shall be a contractor designated by Landlord. The
contractor selected may be referred to herein as the “Contractor”.

 

4.2        Cost Proposal. After the Approved
Working Drawings are signed by Landlord
and Tenant, Landlord shall provide
Tenant with a cost proposal in
accordance with the Approved Working Drawings, which cost
proposal shall include, as nearly as possible, the cost of all Improvement
Allowance Items to be incurred by Tenant in connection with the construction of
the Improvements (the “Cost Proposal”). Tenant shall approve (by written notice) or disapprove (for reasonable reasons)
the Cost Proposal within three (3) business
days of Tenant’s receipt of the Cost
Proposal. If Tenant approves the
Cost Proposal then,
Tenant shall deliver the same to Landlord and upon landlord’s receipt of the Cost Proposal, Landlord shall be released by Tenant to purchase the
items set forth in the Cost Proposal
and to commence the construction relating to such items. If Tenant disapproves the Cost Proposal, Landlord shall cause the Cost Proposal to be modified to adjust the
scope of the Improvements in a manner acceptable to Landlord and Tenant and/or otherwise take into account the
items reasonably disapproved by
Tenant. Landlord shall then re-submit the modified Cost Proposal to Tenant for Tenant’s approval (in the manner set forth above). This process shall continue
until the Cost Proposal is approved by Tenant. Any delay of the Substantial Completion of the
Improvements caused by the foregoing process shall constitute a Tenant Delay.
The date by which Tenant shall approve
and deliver the Cost Proposal to Landlord
shall be known hereafter as the “Cost Proposal Delivery Date”.

 

             4.3      Construction of Improvements by
Contractor under the Coordination of
Landlord.

 

4.3.1      Over-Allowance Amount.
On the Cost Proposal Delivery
Date, Tenant shall deliver to Landlord an
amount (the “Over-Allowance Amount”) equal to the difference between
(i) the amount of the Cost Proposal
and (ii) the amount of the Improvement Allowance (less any portion
thereof already disbursed by Landlord, or in the process of being disbursed by
Landlord, on or before the Cost Proposal Delivery Date). The Over-Allowance
Amount shall be disbursed by Landlord prior
to the disbursement of any then remaining
portion of the Improvement Allowance, and such disbursement shall be
pursuant to the same procedure as the Improvement Allowance. In the event that,
after the Cost Proposal Delivery
Date, any revisions, changes, or substitutions
shall be made to the Construction Drawings or the Improvements, any
additional costs which arise in connection with such revisions, changes or
substitutions or any other additional costs
shall be paid by Tenant to Landlord immediately upon Landlord’s request as an
addition to the Over-Allowance Amount.

 

4.3.2      Landlord’s Retention
of Contractor. Landlord shall independently retain Contractor, on behalf of Tenant, to construct the
Improvements in accordance with
the Approved Working Drawings
and the Cost Proposal and
Landlord shall coordinate the
construction by Contractor, and Tenant shall pay a construction
coordination fee (the “Landlord Coordination Fee”) to Landlord in an amount equal to the product of (i) three
percent (3%) and (ii) an amount equal
to the Improvement Allowance
plus the Over-Allowance Amount (as such Over-Allowance Amount
may increase pursuant to the terms of this Tenant Work Letter).

 

SECTION 5

 

COMPLETION OF THE IMPROVEMENTS

 

5.1        Substantial
Completion.  For purposes of this Lease, “Substantial
Completion” of the Improvements in the Premises shall occur
upon the completion of construction of the Improvements in the Premises pursuant to the Approved Working Drawings, with the
exception of any punch list items and any tenant fixtures, work-stations,
built-in furniture, or equipment to be installed by Tenant.

 

 

3

 

 

5.2        Delay of the Substantial Completion of the Premises.
Except as provided in this Section 5, the Commencement Date and Tenant’s obligation to pay rent for the Premises shall occur
as set forth in the Lease. However, if there shall be a delay or there are
delays in the Substantial Completion of the Improvements in the Premises as a
result of the following (collectively, “Tenant Delays”):

 

5.2.1        Tenant’s failure to comply with the Time
Deadlines;

 

5.2.2        Tenant’s
failure to timely approve any matter
requiring Tenant’s approval;

 

5.2.3        A
breach by Tenant of the terms of this Tenant Work Letter or the Lease;

 

5.2.4        Changes in any of the Construction
Drawings after disapproval of
the same by Landlord or because
the same do not comply with Code or other applicable laws;

 

5.2.5        Tenant’s request for changes in the Approved Working Drawings;

 

5.2.6        Tenant’s requirement for materials,
components, finishes or improvements which are not available in a commercially reasonable time given the anticipated date of Substantial Completion of the Improvements in
the Premises, or which are different from, or not included in, the Standard
Improvement Package;

 

5.2.7        Changes
to the Base, Shell and Core required by the Approved Working Drawings; or

 

5.2.8        Any other acts or omissions of Tenant,
or its agents, or employees;

 

then,
notwithstanding anything to the
contrary set forth in the Lease or this Tenant Work Letter and regardless of
the actual date of the Substantial Completion of Improvements in the Premises, the date of Substantial Completion thereof
shall be deemed to be the date that Substantial Completion would have occurred if
no Tenant Delay or Delays, as set forth above,
had occurred.

 

SECTION 6

 

MISCELLANEOUS

 

6.1        Tenant’s
Representative. Tenant has designated Eric Stanton as its sole
representative with respect to the matters set forth in this Tenant Work
Letter, who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant Work Letter.

 

6.2        Landlord’s
Representative. Prior to commencement of construction of Improvements,
Landlord shall designate a representative with respect to the matters set forth
in this Tenant Work Letter, who, until further notice to Tenant, shall have
full authority and responsibility to
act on behalf of the Landlord as required in this Tenant Work Letter.

 

6.3        Time of the Essence
in This Tenant Work Letter. Unless otherwise indicated, all references
herein to a “number of days” shall mean and refer to calendar days.

 

 

4

 

 

SCHEDULE 1

 

TIME DEADLINES

 

 

	
   

  	
   

  	
  Dates

  	
   

  	
  Actions to be Performed

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Completed.

  	
   

  	
  Tenant
  to deliver Final Space Plan to Landlord.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  April 10,
  2006

  	
   

  	
  Tenant
  to deliver Final Working Drawings to Landlord.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C. 

  	
   

  	
  Three (3) business days after the receipt of the Cost Proposal 

  	
   

  	
  Tenant to approve Cost Proposal and deliver Cost Proposal to Landlord 

  

 

 

 

1

 

EXHIBIT “E”

 

CERTIFIED COPY OF BOARD OF DIRECTORS
RESOLUTIONS OF

BROADCAST RESPONSE, INC.

 

The
undersigned, being the duly elected
Corporate Secretary of Broadcast Response, Inc., a California corporation (“Corporation”),
hereby certifies that the following
is a true, full and correct copy of the resolutions adopted by the
Corporation by unanimous written consent in lieu of a special meeting of its
Board of Directors, and that
said resolutions have not been amended or revoked as of the date hereof.

 

RESOLVED,
that the Corporation is hereby
authorized to execute, deliver and fully perform that certain document entitled
Standard Office Lease (“Lease”) by and between the Corporation and Arden Realty Limited Partnership, a Maryland limited partnership, for the lease of space at 555 St. Charles Drive, Suite 202,
Thousand Oaks, California,
91360.

 

RESOLVED
FURTHER that the Corporation is hereby authorized and directed to make, execute
and deliver any and all consents, certificates,
documents, instruments, amendments, confirmations, guarantees, papers or
writings as may be required in connection with or in furtherance of the Lease
(collectively with the Lease, the “Documents”) or any transactions described
therein, and to do any and all other acts necessary or desirable to effectuate
the foregoing resolution.

 

RESOLVED
FURTHER that the following officers acting together:                                
as
                                      
and                                                                               
as                                                 
are authorized to execute and deliver the Documents on behalf of the
Corporation, together with any other documents and/or instruments evidencing or
ancillary to the Documents, and in such forms and on such terms as such officer(s) shall
approve, the execution thereof to be conclusive evidence of such approval and to execute and deliver on
behalf of the Corporation all
other documents necessary to effectuate said transaction in conformance with
these resolutions.

 

Dated:                                                    

 

                                                      , Corporate
Secretary

 

 

1

 

ASSIGNMENT AND CONSENT TO
ASSIGNMENT AGREEMENT

 

(HILLSIDE CORPORATE CENTER)

 

This
Assignment and Consent to Assignment Agreement (the “Agreement”)
is made as of January 30, 2007, by and among ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership (“Landlord”),
and BROADCAST RESPONSE, INC., a California corporation (“Assignor”),
and NEXSAN TECHNOLOGIES INCORPORATED, a Delaware corporation (“Assignee”), also known as DELAWARE NEXSAN TECHNOLOGIES
INCORPORATED.

 

R E C I T
A L S

 

A.            Reference is hereby made to that
certain Standard Office Lease dated March 30, 2006, between Landlord and
Assignor (the “Lease”), for space on the second
(2nd) floor and commonly known as Suite 202 (the “Premises”) in that certain office building known as Hillside
Corporate Center and located at 555 St. Charles Drive, Thousand Oaks,
California (the “Building”).

 

B.            Pursuant to the terms of Article 15
of the Lease, Assignor has requested Landlord’s consent with respect to the
assignment (the “Assignment”) by Assignor of its rights,
title, interest and obligations under the Lease to Assignee.  Landlord is willing to consent to the
Assignment on the terms and conditions contained herein.

 

C.            All defined terms not otherwise
expressly defined herein shall have the respective meanings given in the Lease.

 

A G R E E M E N T

 

1.             Assignment
and Assumption.  Effective as of May 1, 2007 (the “Effective Date”), Assignor hereby assigns to Assignee all of
its right, title and interest in, to and under the Lease and to the Premises
(including all of Assignor’s right, title, and interest in and to any prepaid
rents as have been paid by Assignor pursuant to the Lease, and including any
rights under the Lease that specifically state that such rights are for the
benefit only of the Original Tenant as defined in the Lease, specifically
including the Option to Extend provision described in Article 31 thereof),
and Assignee hereby accepts such assignment, assumes all of Assignor’s
obligations under the Lease pursuant to the terms set forth herein, agrees to
be bound by all of the provisions thereof and agrees to perform all of the
obligations of the tenant thereunder from and after the Effective date.  Such assignment and assumption is made upon,
and is subject to, all of the terms, conditions and provisions of this
Agreement.  Assignor hereby agrees to
deliver the Premises to Assignee on or before 5:00 p.m. on April 27,
2007 in a condition as set forth in Section 5 of this Agreement.  Notwithstanding anything herein to the
contrary, if Assignor has not delivered the Premises to Assignee prior to the
Effective Date, assignee’s obligations under the Lease shall not begin until
such delivery is made (and in such circumstance, Assignor shall continue to be
obligated.)

 

2.             Landlord’s Consent.  Landlord hereby consents to the assignment
and assumption set forth in this Agreement, provided, however, such consent is
granted by Landlord only upon 

 

1

 

the terms and conditions
set forth in this Agreement.  This Agreement
shall not be construed to modify, waive or amend any of the terms, covenants
and conditions of the Lease or to waive any breach thereof or any of Landlord’s
rights or remedies thereunder or to enlarge or increase any obligations of
Landlord under the Lease unless specifically so stated herein.  Landlord agrees that the Option to Extend
described in Article 31 of the Lease will apply to the Assignee.

 

3.             Assumption and Release of
Assignor.  Assignee does hereby
assume and agree to be bound by and to perform and comply with, for the benefit
of Landlord, each and every obligation of the tenant under the Lease from the
Effective Date forward.  The Assignment
contemplated herein and Landlord’s consent thereto shall release and discharge
Assignor from any liability, incurred after the Effective Date under the Lease,
but the Assignment shall not alter the primary liability of the Assignor; (i) to
pay the rent and perform and comply with all of the obligations of Tenant under
the Lease prior to the occurrence of the Effective Date; or (ii) to
fulfill any indemnification, defense, repair or other tenant obligations under
the Lease where such obligations arise due to occurrences or circumstances
prior to the Effective Date.

 

4.             Monthly Basic Rental.  Notwithstanding anything to the contrary in
the Lease, assignee shall pay, in accordance with the applicable provisions of
the Lease and this Section 4, monthly installments of Monthly Basic Rental
for the Premises as follows:

 

	
  Period

  	
   

  	
  Monthly Basic Rental

  	
   

  	
  Monthly Basic Rental per

  Rentable Square Foot

  	
   

  
	
  May 1, 2007 -
  April 30, 2008

  	
   

  	
  $

  	
  13,024.20

  	
   

  	
  $

  	
  2.45

  	
   

  
	
  May 1, 2008 -
  April 30, 2009

  	
   

  	
  $

  	
  13,396.32

  	
   

  	
  $

  	
  2.52

  	
   

  
	
  May 1, 2009 -
  April 30, 2010

  	
   

  	
  $

  	
  13,821.60

  	
   

  	
  $

  	
  2.60

  	
   

  
	
  May 1, 2010 -
  June 30, 2011

  	
   

  	
  $

  	
  14,246.88

  	
   

  	
  $

  	
  2.68

  	
   

  

 

5.             Condition of the Premises.  Assignee hereby agrees to accept the Premises
in its “as-is” condition, subject to any Landlord’s obligations to maintain and
repair the Premises pursuant to the Lease. 
Assignee hereby acknowledges that Landlord shall not be obligated to
provide or pay for any improvement work or services related to the improvement
of the Premises.  Assignee also
acknowledges that Landlord has made no representation or warranty regarding the
condition of the Premises or the Building. 
Assignor shall deliver the Premises to Assignee in broom-clean condition
and in a condition that is not in breach of any of the Assignor’s obligations
under the Lease including those with respect to good repair and good upkeep.

 

6.             Defaults.  Assignor hereby represent and warrant to
Landlord that, as of the date of this Agreement, Assignor is in full compliance
with all terms, covenants and conditions of the Lease and there are no breaches
or defaults under the Lease by Landlord or Assignor.  Neither Assignor nor Assignee, to Assignee’s
best knowledge, know of any events or circumstances which, given the passage of
time or notice or both, would constitute a default under the Lease by either
Landlord, on the one hand, or Assignor or Assignee, on the other hand.

 

2

 

7.             Further Transfers.  Neither the assignment and assumption nor
this consent thereto shall be construed as a waiver of Landlord’s right to
consent to any further subletting by the Assignee or any assignment by the Assignee
of it’s rights, title, interest and obligations under the Lease, or as a
consent to any portion of the Premises being used or occupied by any other
party.  Landlord may consent to
subsequent sublettings and assignments of the Lease as set forth in the
Lease.  No such action by Landlord shall
relieve such persons from any liability to Landlord or otherwise with regard to
the Premises.

 

8.             Indemnification.

 

(a)           Assignee hereby defends, indemnifies
and holds harmless Assignor from and against any and all loss, liability,
damage, cost and expense, including without limitation, reasonable attorney’s
fees and disbursements, incurred or sustained by Assignor as a result of
Assignee’s failure to perform any of its obligations under the Lease accruing
prior to the occurrence of the Effective Date.

 

(b)           Assignor hereby defends, indemnifies
and holds harmless Assignee from and against any and all loss, liability,
damage, cost and expense, including without limitation, reasonable attorney’s
fees and disbursements, incurred or sustained by Assignee as a result of
Assignor’s failure to perform any of its obligations under the Lease accruing
prior to the occurrence of the Effective Date.

 

9.             General Provisions.

 

9.1           Brokerage Commission.  Assignor shall be responsible for any
brokerage commission or other brokerage charges or expenses that stem from this
Assignment and which are based upon the acts of Assignor.  Assignor and Assignee covenant and agree that
under no circumstances shall Landlord be liable for any brokerage commission or
other charge or expense in connection with the assignment assumption and
Assignor and Assignee agree to protect, defend, indemnify and hold Landlord
harmless from the same and from any cost or expense (including, but not limited
to, attorney’s fees) incurred by Landlord in resisting any claim for any such
brokerage commission unless it is determined that Landlord retained such
broker.

 

9.2           Controlling Law.  The terms and provisions of this Agreement
shall be construed in accordance with and governed by the laws of the State of
California.

 

9.3           Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their heirs, successors and
assigns.  As used herein, the singular
number includes the plural and the masculine gender includes the feminine and
neuter.

 

9.4           Captions.  The paragraph captions utilized herein are in
no way intended to interpret or limit the terms and conditions hereof; rather,
they are intended for purposes of convenience only.

 

9.5           Partial Invalidity.  If any term, provision or condition contained
in this Agreement shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement, or the application of such term, provision or
condition to persons or circumstances other than those with respect to which it
is invalid or unenforceable, shall not be affected thereby, and each and

 

3

 

every other term,
provision and condition of this Agreement shall be valid and enforceable to the
fullest extent possible permitted by law.

 

9.6           Attorney’s Fees.  If either party commences litigation against
the other for the specific performance of this Agreement, for damages for the
breach hereof or otherwise for enforcement of any remedy hereunder, the parties
hereto agree to and hereby do waive any right to a trial by jury and, in the
event of nay such commencement of litigation, the prevailing party shall be
entitled to recover from the other party such costs and reasonable attorneys’
fees as may have been incurred.

 

9.7           Security Deposit.  Assignor hereby transfers to Assignee
Assignor’s interest in the security deposit given to Landlord under the Lease,
in the amount of Thirty Five Thousand Eight-Five and 60/100 Dollars
($35,085.60).  Assignor hereby waives any
claims against Landlord with respect to said security deposit.  Assignee shall protect, indemnify, defend and
hold Landlord harmless from and against claims Assignor may raise against
Landlord with respect to any such security deposit.  Assignee hereby agrees to, upon execution of
this Agreement by Assignee, (i) reimburse Assignor for said security
deposit in the amount of Thirty Five Thousand Eighty-Five and 60/100 Dollars
($35,085.60); and (ii) deposit with Landlord an additional Seventeen Thousand
Eleven and 20/100 Dollars ($17,011.20) as security deposit, for a total
security deposit under the Lease of Fifty-Two Thousand Ninety-Six and 80/100
Dollars ($52.096.80).  Landlord shall
continue to hold the Security Deposit, as increased herein, in accordance with
the terms and conditions of Article 4 of the Lease.

 

9.8           Entire Agreement.  This Agreement is the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements between the parties hereto with respect
thereto.  This Agreement may not be
altered, amended, changed, terminated or modified in any respect or particular,
unless the same shall be in writing and signed by the party to be charged and
unless such amendment has been approved in writing by Landlord.

 

9.9           Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which when
taken together shall constitute but one and the same agreement.

 

9.10         Landlord’s Costs.  Upon execution of this Agreement, Assignor
shall pay to Landlord One Thousand Five Hundred and No/100 Dollars ($1,500.00)
for costs and reasonable attorney’s fees incurred by Landlord in connection
with Landlord’s review and analysis of the Assignment.  Assignee hereby agrees, upon execution of
this Agreement by Assignee, to reimburse Assignor for said review and analysis
costs in the amount of One Thousand Five Hundred and No/100 Dollars
($1,500.00).

 

9.11         Alterations.  Assignee, at Assignee’s sole cost, may
install (i) a controlled access/security system for the Premises; and (ii) install
Assignee’s telecommunication cabling for Assignee’s business subject to
Landlord’s approval, which approval shall not be unreasonably withheld or
delayed, and pursuant to the terms of the Lease.

 

4

 

9.12         OFAC Certification.  Assignee certifies that it is not acting,
directly or indirectly, for or on behalf of any person, group, entity, or
nation named by any Executive Order of the United States Treasury Department as
a terrorist, “Specially Designated National and Blocked Person,” or other
banned or blocked person, entity, nation, or transaction pursuant to any law,
order, rule, or regulation that is enforced or administered by the Office of
Foreign Assets Control; and it is not engaged in this transaction, directly or
indirectly on behalf of, or instigating or facilitating this transaction,
directly or indirectly on behalf of, any such person, group, entity, or nation.  Assignee hereby agrees to defend, indemnify,
and hold harmless Landlord from and against any and all claims, damages,
losses, risks, liabilities, and expenses (including attorney’s fees and costs)
arising from or related to any breach of the foregoing certification.

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]

 

5

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

	
  “Landlord”

  	
  ARDEN REALTY LIMITED PARTNERSHIP,

  a Maryland limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  ARDEN REALTY, INC. 

  
	
   

  	
   

  	
  a Maryland corporation 

  
	
   

  	
   

  	
  Its: Sole General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert C. Peddicord

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  
	
  “Assignor”

  	
  BROADCAST RESPONSE, INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ILLEGIBLE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephanie Turner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
  “Assignee”

  	
  NEXSAN TECHNOLOGIES INCORPORATED,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Philip Black

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gene Spies

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  CFO

  

 

6

 

FIRST AMENDMENT TO LEASE

(HILLSIDE CORPORATE CENTER, SUITE
205)

 

THIS
FIRST AMENDMENT TO LEASE (“First Amendment”)
is made and entered into as of the 7th day of September, 2007, by and between ARDEN
REALTY LIMITED PARTNERSHIP, a Maryland limited partnership (“Landlord”) and NEXSAN TECHNOLOGIES INCORPORATED, a Delaware
corporation (“Tenant”).

 

R E C I T A L S :

 

A.                                   Landlord and Tenant’s
predecessor-in-interest, Broadcast Response, Inc., a California
corporation (the “Original Tenant”),
entered into that certain Standard Office Lease dated as of March 30, 2006
(the “Original Lease”), as amended by that
certain Assignment and Consent to Assignment Agreement by and between Landlord,
Original Tenant and Tenant and dated as of January 30, 2007 (the “Assignment”), whereby Tenant leases certain office space
located in that certain building commonly known as Hillside Corporate Center
and located and addressed at 555 St. Charles Drive, Thousand Oaks, California
(the “Building”). The Original Lease, as
amended by the Assignment, shall herein be referred to as the “Lease”.

 

B.                                     By this First Amendment, Landlord and
Tenant desire to expand Tenant’s occupancy within the Building, and to
otherwise modify the Lease as provided herein.

 

C.                                     Unless otherwise defined herein, capitalized
terms as used herein shall have the meanings given thereto in the Lease.

 

NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

 

A G R E E M E N T:

 

1.                                       Existing Premises. 
Landlord and Tenant hereby acknowledge that Landlord currently leases to
Tenant that certain office space in the Building containing 5,316 rentable
square feet located on the second (2nd)
floor of the Building and known as Suite 202 (the “Existing
Premises”)

 

2.                                       Expansion Space. 
That certain space located on the second (2nd)
floor of the Building known as Suite 205 outlined on the floor plan
attached hereto as Exhibit “A,” shall be referred to herein as the “Expansion Space.” Landlord and Tenant hereby stipulate that
the Expansion Space contains 1,307 rentable square feet (and 1,118 usable
square feet). Tenant shall commence to pay Monthly Basic Rental pursuant to the
Lease, as hereby amended, effective as of the later of (i) delivery of the
Expansion Space by Landlord to Tenant as defined below, or (ii) September 15,
2007 (“Expansion Commencement Date”). The
addition of the Expansion Space to the Existing Premises shall, effective as of
the Expansion Commencement Date, increase the number of rentable square feet
leased by Tenant in the Building to a total of 6,623 rentable square feet.
Effective as of the Expansion Commencement Date, all references to the “Premises”
shall mean and refer to the Existing Premises as expanded by the Expansion
Space.

 

1

 

3.                                       Term and Monthly Basic Rental for the
Expansion Space.  The Term for Tenant’s lease of the Expansion
Space (“Expansion Space Term”) shall commence
on the Expansion Commencement Date and shall expire co-terminous with Tenant’s
lease of the Existing Premises on June 30, 2011. During the Expansion
Space Term, Tenant shall pay in accordance with the provisions of this Section 3
and the applicable provisions of the Lease, Monthly Basic Rental for the
Expansion Space as follows:

 

	
   

  	
   

  	
   

  	
   

  	
  Monthly Basic Rental Per

  	
   

  
	
  Period

  	
   

  	
  Monthly Basic Rental

  	
   

  	
  Rentable Square Foot

  	
   

  
	
  Expansion Commencement
  Date–October 31, 2007

  	
   

  	
  $

  	
  3,463.55

  	
   

  	
  $

  	
  2.65

  	
   

  
	
  *November 1, 2007–November 30,
  2007

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  December 1, 2007–September 30,
  2008

  	
   

  	
  $

  	
  3,463.55

  	
   

  	
  $

  	
  2.65

  	
   

  
	
  October 1, 2008–
  September 30, 2009

  	
   

  	
  $

  	
  3,607.32

  	
   

  	
  $

  	
  2.76

  	
   

  
	
  October 1, 2009–
  September 30, 2010

  	
   

  	
  $

  	
  3,751.09

  	
   

  	
  $

  	
  2.87

  	
   

  
	
  October 1, 2010–June 30,
  2011

  	
   

  	
  $

  	
  3,894.86

  	
   

  	
  $

  	
  2.98

  	
   

  

*Tenant’s Monthly Basic Rental obligation shall be
abated with regard to the period from November 1, 2007 through November 30,
2007.

 

4.                                       Tenant’s Proportionate Share and Base
Year.  Notwithstanding anything to the contrary in
the Lease, during the Expansion Space Term, (i) Tenant’s Proportionate
Share of any increase in Direct Costs for the Expansion Space only shall be
2.16%; and (ii) the Base Year for the Expansion Space only shall be the
calendar year 2007; provided however, Tenant shall not be obligated to pay its
Proportionate Share of Direct Costs with regard to the Expansion Space for the
period from September 15, 2007 through September 30, 2008.

 

5.                                       Alterations to the Expansion Space. 
Upon full execution and delivery of this First Amendment, Tenant shall
be entitled to a one-time alteration allowance in the amount of $5,590.00 (the “Alterations Allowance”) for the costs relating to
construction of Tenant’s alterations within the Expansion Space (the “Alterations”), which Alterations shall be performed pursuant
to the terms and conditions of Article 9 of the Original Lease. Landlord
shall disburse the Alterations Allowance upon its receipt of paid invoices and
appropriate lien releases from Tenant. In no event shall Landlord be obligated
to make disbursements pursuant to this Section 5 in a total amount which
exceeds the Alterations Allowance and in no event shall Tenant be entitled to
any credit for any unused portion of the Alterations Allowance not used by
Tenant by September 30, 2008. Except as specifically set forth in this Section 5,
Tenant hereby agrees to accept the Expansion Space in its “as-is” condition,
(subject to any obligations by Landlord to repair and maintain under the
Lease), and Tenant hereby acknowledges that Landlord shall not be obligated to
provide or pay for any other work or services related to the improvement of the
Expansion Space. Tenant also acknowledges that Landlord has made no
representation or warranty regarding the condition of the Expansion Space.

 

2

 

6.                                       Security Deposit. 
Tenant has previously deposited with Landlord Fifty-Two Thousand
Ninety-Six and 80/100 Dollars ($52,096.80) as a Security Deposit under the
Lease. Concurrently with Tenant’s execution of this First Amendment, Tenant
shall deposit with Landlord an additional Thee Thousand Eight Hundred
Ninety-Four and 86/100 Dollars ($3,894.86), for a total Security Deposit under
the Lease, as amended herein, of Fifty-Five Thousand Nine Hundred Ninety-One
and 66/100 Dollars ($55,991.66). Landlord shall continue to hold the Security
Deposit, as increased herein, in accordance with the terms and conditions of Article 4
of the Original Lease.

 

7.                                       Parking.  Effective as
of the Expansion Commencement Date and continuing throughout the Expansion
Space Term, Tenant shall rent from Landlord five (5) additional unreserved
parking passes for use in the Building’s parking facility. Tenant’s rental and
use of such additional parking passes shall be in accordance with, and subject
to, all provisions of Article 23 of the Original Lease, at no charge to
Tenant during the Expansion Space Term

 

8.                                       Brokers.  Each party
represents and warrants to the other that no broker, agent or finder, other than
Carlo Brignardello of Cresa Partners on behalf of Tenant (the “Broker”), negotiated or was instrumental in negotiating or
consummating this First Amendment. Each party further agrees to defend,
indemnify and hold harmless the other party from and against any claim for
commission or finder’s fee by any entity, other than the Broker, who claims or
alleges that they were retained or engaged by such party in connection with
this First Amendment. Landlord shall be responsible for paying any commissions
to Broker in connection with this First Amendment pursuant to a separate
agreement between Broker and Landlord.

 

9.                                       WAIVER OF JURY TRIAL. 
EACH PARTY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
SEEKING SPECIFIC PERFORMANCE OF ANY PROVISION OF THE LEASE, FOR DAMAGES FOR ANY
BREACH UNDER THE LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR REMEDY
UNDER THE LEASE.

 

10.                                 No Further Modification. 
Except as set forth in this First Amendment, all of the terms and
provisions of the Lease shall apply with respect to the Expansion Space and
shall remain unmodified and in full force and effect. Effective as of the
Expansion Commencement Date, all references to the “Lease” shall refer to the
Lease as amended by this First Amendment.

 

3

 

IN
WITNESS WHEREOF, this First Amendment has been executed as of the day and year
first above written.

 

	
   

  	
  “Landlord”:

  	 

	
   

  	
   

  	 

	
   

  	
  ARDEN REALTY LIMITED PARTNERSHIP,

  	 

	
   

  	
  a Maryland limited partnership

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  ARDEN REALTY, INC.,

  	 

	
   

  	
   

  	
  a Maryland corporation

  	 

	
   

  	
   

  	
  Its: Sole General Partner

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Robert C. Peddicord

  	 

	
   

  	
   

  	
   

  	
  Its:

  	
  Robert C. Peddicord, COO

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  “Tenant”:

  	 

	
   

  	
   

  	 

	
   

  	
  NEXSAN TECHNOLOGIES INCORPORATED,

  	 

	
   

  	
  a Delaware corporation

  	 

	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Philip Black

  	 

	
   

  	
  Print Name:

  	
  Philip Black

  	 

	
   

  	
   

  	
  Its:

  	
  CEO

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Gene Spies

  	 

	
   

  	
  Print Name:

  	
  Gene Spies

  	 

	
   

  	
   

  	
  Its:

  	
  CFO

  	 

							

 

4

 

 

2ND FLOOR

 

 

 

 

 

EXHIBIT
“A”      09.05.07

 

5EXHIBIT 10.14

 

STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE - GROSS

AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION

 

1.                                      Basic
Provisions (“Basic Provisions”).

 

1.1                                 Parties:  This Lease (“Lease”), dated for reference purposes only October 10,
2003, is made by and between Enterprise Heights Industrial Centre
Associates, a California General Partnership         
                     
                          
                     
                                   
                     
                   
          
                     
                     
          
                     
                     
          
                     
                     
          
                     
                     
          
                   
                     
                (“Lessor”)
and Nexsan Technologies, Inc.             
                     
                                  
                          
                              
                     
                   
            
                     
                     
          
                     
                     
          
                     
                     
       (“Lessee”),
(collectively the “Parties”, or
individually a “Party”).

 

1.2                                 (a)                                  Premises: That certain portion of the Project (as defined
below), including all improvements therein or to be provided by Lessor under
the terms of this Lease, commonly known by the street address of  302 Enterprise St, Ste A      
                     
                     
                     
                 , located in
the City of Escondido              
                     
                     
 , County of San Diego            
           , State of California  
                     ,
with zip code 92029            , as
outlined on Exhibit A       attached hereto (“Premises”) and generally described as (describe briefly the
nature of the Premises): a 13,772 square foot space in a 20,560 square foot
building in the 76,500 square foot multi-tenant project called the Enterprise
Heights Industrial Centre              
                     
                     
                   .  In addition to Lessee’s rights to use and
occupy the Premises as hereinafter specified, Lessee shall have non-exclusive
rights to the Common Areas (as defined in Paragraph 2.7 below) as hereinafter
specified, but shall not have any rights to the roof, exterior walls or utility
raceways of the building containing the Premises (“Building”)
or to any other buildings in the Project. 
The Premises, the Building, the Common Areas, the land upon which they
are located, along with all other buildings and Improvements thereon, are
herein collectively referred to as the “Project.”  (See also Paragraph 2.)

 

(b)                                 Parking:  33  
                     
unreserved vehicle parking spaces (“Unreserved Parking Spaces”):  and 5          
                     
                reserved vehicle
parking spaces (“Reserved Parking Spaces”).  (See also Paragraph 2.6.)

 

1.4                                 Early Possession:  Upon
lease execution                  
(“Early Possession Date”).  (See also Paragraphs 3.2 and 3.3)

 

1.5                                 Base Rent: $9,916.00         
        per month (“Base Rent”),
payable on the first          day of each month
commencing on the Commencement Date           
             .  (See also Paragraph 4.)

 

x  
If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.

 

1.6                                 Lessee’s Share of Common Area Operating Expenses:  eighteen and 00/100 percent (18.00%)
(“Lessee’s Share”).

 

1.7                                 Base Rent and Other Monies Paid Upon Execution:

 

(a)                                  Base Rent: $9,916.00         
for the period first month             
                   .

 

(b)                                 Common Area Operating Expenses:  $954.00         
        for the period first month    
               .

 

(c)                                  Security Deposit:  $9,916.00
                     
    (“Security Deposit”).  (See also Paragraph 5.)

 

(e)                                  Total Due Upon Execution of this Lease: $20,796.00                         .

 

1.8                                 Agreed Use:  General
office, sales, assembly and distribution for a computer hardware manufacturer
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
           . 
(See also Paragraph 6)

 

1.9                                 Insuring Party. 
Lessor is the “Insuring Party”.  (See also Paragraph 8)

 

1.10                           Real Estate Brokers: 
(See also Paragraph 15.)

 

(a)                                  Representation:  The
following real estate brokers (the “Brokers”) and
brokerage relationships exist in this transaction (check applicable boxes):

 

x  Burnham
Real Estate Services               
represents Lessor exclusively (“Lessor’s Broker”);

 

x  Burnham
Real Estate
                             
represents Lessee exclusively (“Lessee’s Broker”); or

 

o                                                                   
represents both Lessor and Lessee (“Dual Agency”).

 

(b)                                 Payment to Brokers: 
Upon execution and delivery of this Lease by both Parties, Lessor shall
pay to the Brokers the brokerage fee agreed to in a separate written agreement.

 

 

1.11                           Guarantor.  The
obligations of the Lessee under this Lease are to be guaranteed by             
                     
                     
                     
                     
                     
                     
                     
                     
       (“Guarantor”).  (See also Paragraph 37.)

 

1.12                           Addenda and Exhibits.  Attached
hereto is an Addendum or Addenda consisting of Paragraph 50     
and 60      and Exhibit A     
through B     , all of which constitute a part
of this Lease.

 

2.                                      Premises.

 

2.1                                 Letting.  Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises,
for the term, at the rental, and upon all of the terms, covenants and
conditions set forth in this Lease. 
Unless otherwise provided herein, any statement of size set forth in
this Lease, or that may have been used in calculating Rent, is an approximation
which the Parties agree is reasonable and any payments based thereon are not
subject to revision whether or not the actual size is more or less.

 

2.2                                 Condition.  Lessor shall
deliver that portion of the Premises contained within the Building (“Unit”) to Lessee broom clean and free of debris on the
Commencement Date or the Early Possession Date, whichever first occurs (“Start Date”), and, so long as the required service contracts
described in Paragraph 7.1(b) below are obtained by Lessee and in effect
within thirty days following the Start Date, warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air
conditioning systems (“HVAC”), loading
doors, if any, and all other such elements in the Unit, other than those
constructed by Lessee, shall be in good operating condition on said date and
that the structural elements of the roof, bearing walls and foundation of the
Unit shall be free of material defects. 
If a non-compliance with such warranty exists as of the Start Date, or
if one of such systems or elements should malfunction or fail within the
appropriate warranty period, Lessor shall, as Lessor’s sole obligation with
respect to such matter, except as otherwise provided in this Lease, promptly
after receipt of written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, malfunction or failure, rectify same
at Lessor’s expense.  The warranty
periods shall be as follows: (i) 6 months as to the HVAC systems, and (ii) 30
days as to the remaining systems and other elements of the Unit.  If Lessee does not give Lessor the required
notice within the appropriate warranty period, correction of any such
non-compliance, malfunction or failure shall be the obligation of Lessee at
Lessee’s sole cost and expense (except for the repairs to the fire sprinkler
systems, roof, foundations, and/or bearing walls - see Paragraph 7).

 

2.3                                 Compliance.  Lessor
warrants that to the best of its knowledge the improvements on the Premises and
the Common Areas comply with the building codes that were in effect at the time
that each such improvement, or portion thereof, was constructed, and also with
all applicable laws, covenants or restrictions of record, regulations, and
ordinances in effect on the Start Date (“Applicable Requirements”).  Said warranty does not apply to the use to
which Lessee will put the Premises or to any ordinances in effect on the Start
Date (“Applicable Requirements”).  Said warranty does not apply to the use to
which Lessee will put the Premises or to any Alterations or Utility
Installations (as defined in Paragraph 7.3(a).) made or to be made by Lessee.  NOTE: Lessee is
responsible for determining whether or not the zoning is appropriate for Leesee’s
intended use, and acknowledges that past uses of the Premises may no longer be
allowed.  If the Premises do
not comply with said warranty, Lessor shall, except as otherwise provided,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify the same at
Lessor’s expense.  If Lessee does not
give Lessor written notice of a non-compliance with this warranty within 6
months following the Start Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee’s sole cost and expense.  If the Applicable Requirements are hereafter
changed so as to require during the term of this Lease the construction of an
addition to or an alteration of the Unit, Premises and/or Building, the
remediation of any Hazardous Substance, or the reinforcement or other physical
modification of the Unit, Premises and/or Building (“Capital
Expenditure”), Lessor and Lessee shall allocate the cost of such
work as follows:

 

(a)                                  Subject
to Paragraph 2.3(c) below, if such Capital Expenditures are required as a
result of the specific and unique use of the Premises by Lessee as compared
with uses by tenants in general, Lessee shall be fully responsible for the cost
thereof, provided, however, that if such Capital Expenditure is required during
the last 2 years of this Lease and the cost thereof exceeds 6 months’ Base
Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt of Lessee’s termination notice that
Lessor has elected to pay the difference between the actual cost thereof and
the amount equal to 6 months’ Base Rent. 
If Lessee elects termination, Lessee shall immediately cease the use of
the Premises which requires such Capital Expenditure and deliver to Lessor
written notice specifying a termination date at least 90 days thereafter.  Such termination date shall, however, in no
event be earlier than the last day that Lessee could legally utilize the
Premises without commencing such Capital Expenditure.

 

(b)                                 If
such Capital Expenditure is not the result of the specific and unique use of
the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
the portion of such costs reasonably attributable to the Premises pursuant to
the formula set out in Paragraph 7.1(d); provided, however, that if such
Capital expenditure is required during the last 2 years of this Lease or if
Lessor reasonably determines that it is not economically feasible to pay it
shares thereof, Lessor shall have the option to terminate this Lease upon 90
days prior written notice to Lessee unless Lessee notifies Lessor, in writing,
within 10 days after receipt of Lessor’s termination notice that Lessee will
pay for such Capital Expenditure.  If
Lessor does not elect to terminate, and fails to tender its share of any such
Capital Expenditure, Lessee may advance such funds and deduct same, with
Interest, from Rent until Lessor’s share of such costs have been fully
paid.  If Lessee is unable to finance
Lessor’s share, or if the balance of the Rent due and payable for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an offset basis,
Lessee shall have the right to terminate this Lease upon 30 days written notice
to Lessor.

 

(c)                                  Notwithstanding
the above, the provisions concerning Capital Expenditures are intended to apply
only to non-voluntary, unexpected, and new Applicable Requirements.  If the Capital Expenditures are instead
triggered by Lessee as a result of an actual or proposed change in use, change
in intensity of use, or 

 

2

 

modification to the
Premises then, and in that event, Lessee shall be fully responsible for the
cost thereof, and Lessee shall not have any right to terminate this Lease

 

2.5                                 Lessee as Prior Owner/Occupant.  The warranties made by Lessor in Paragraph 2
shall be of no force or effect if immediately prior to the Start Date Lessee
was the owner or occupant of the Premises. 
In such event, Lessee shall be responsible for any necessary corrective
work.

 

2.6                                 Vehicle Parking. 
Lessee shall be entitled to use the number of Unreserved Parking Spaces
and Reserved Parking Spaces specified in Paragraph 1.2(b) on those
portions of the Common Areas designated from time to time by Lessor for
parking.  Lessee shall not use more
parking spaces than said number.  Said
parking spaces shall be used for parking by vehicles no larger than full-size
passenger automobiles or pick-up trucks, herein called “Permitted
Size Vehicles.”  Lessor may
regulate the loading and unloading of vehicles by adopting Rules and
Regulations as provided in Paragraph 2.9. 
No vehicles other than Permitted Size Vehicles may be parked in the
Common Area without the prior written permission of Lessor.

 

(a)                                  Lessee
shall not permit or allow any vehicles that belong to or are controlled by
Lessee or Lessee’s employees, suppliers, shippers, customers, contractors or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Lessor for such activities.

 

(b)                                 Lessee
shall not service or store any vehicles in the Common Areas.

 

(c)                                  If
Lessee permits or allows any of the prohibited activities described in this
Paragraph 2.6, then Lessor shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove or tow away the
vehicle involved and charge the cost to Lessee, which cost shall be immediately
payable upon demand by Lessor.

 

2.7                                 Common Areas - Definition. 
The term “Common Areas” is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Project and interior utility raceways and installations within the Unit
that are provided and designated by the Lessor from time to time for the
general non-exclusive use of Lessor, Lessee and other tenants of the Project
and their respective employees, suppliers, shippers, customers, contractors and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, walkways, driveways and landscaped areas.

 

2.8                                 Common Areas - Lessee’s Rights.  Lessor grants to Lessee, for the benefit of
Lessee and its employees, suppliers, shippers, contractors, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or
restrictions governing the use of the Project. 
Under no circumstances shall the right herein granted to use the Common
Areas be deemed to include the right to store any property, temporarily or
permanently, in the Common Areas.  Any
such storage shall be permitted only by the prior written consent of Lessor or
Lessor’s designated agent, which consent may be revoked at any time.  In the event that any unauthorized storage
shall occur, then Lessor shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove the property and
charge the cost to Lessee, which cost shall be immediately payable upon demand
by Lessor.

 

2.9                                 Common Areas - Rules and Regulations.  Lessor or such other person(s) as Lessor
may appoint shall have the exclusive control and management of the Common Areas
and shall have the right, from time to time, to establish, modify, amend and
enforce reasonable rules and regulations (“Rules and
Regulations”) for the management, safety, care, and cleanliness of
the grounds, the parking and unloading of vehicles and the preservation of good
order, as well as for the convenience of other occupants or tenants of the
Building and the Project and their invitees. 
Lessee agrees to abide by and conform to all such Rules and
Regulations, and to cause its employees, suppliers, shippers, customers,
contractors and invitees to so abide and conform. Lessor shall not be
responsible to Lessee for the non-compliance with said Rules and
Regulations by other tenants of the Project.

 

2.10                           Common Areas - Changes. 
Lessor shall have the right, in Lessor’s sole discretion, from time to
time:

 

(a)                                  To
make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces,
parking areas, loading and unloading areas, ingress, egress, direction of
traffic, landscaped areas, walkways and utility raceways;

 

(b)                                 To
close temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available;

 

(c)                                  To
designate other land outside the boundaries of the Project to be a part of the
Common Areas;

 

(d)                                 To
add additional buildings and improvements to the Common Areas;

 

(e)                                  To
use the Common Areas while engaged in making additional improvements, repairs
or alterations to the Project, or any portion thereof; and

 

3

 

(f)                                    To
do and perform such other acts and make such other changes in, to or with
respect to the Common Areas and Project as Lessor may, in the exercise of sound
business judgment, deem to be appropriate.

 

3.                                      Term.

 

3.1                                 Term.  The
Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3.

 

3.2                                 Early Possession.  If
Lessee totally or partially occupies the Premises prior to the Commencement
Date, the obligation to pay Base Rent shall be abated for the period of such
early possession.  All other terms of
this Lease (including but not limited to the obligations to pay Lessee’s Share
of Common Area Operating Expenses, Real Property Taxes and insurance premiums
and to maintain the Premises) shall, however, be in effect during such
period.  Any such early possession shall
not affect the Expiration Date.

 

3.3                                 Delay In Possession. 
Lessor agrees to use its best commercially reasonable efforts to deliver
possession of the Premises to Lessee by the Commencement Date.  If, despite said efforts, Lessor is unable to
deliver possession as agreed, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease.  Lessee shall not, however, be obligated to
pay Rent or perform its other obligations until it receives possession of the
Premises.  If possession is not delivered
within 60 days after the Commencement Date, Lessee may, at its option, by
notice in writing within 10 days after the end of such 60 day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder.  If such written notice is not
received by Lessor within said 10 day period, Lessee’s right to cancel shall
terminate.  Except as otherwise provided,
if possession is not tendered to Lessee by the Start Date and Lessee does not
terminate this Lease, as aforesaid, any period of rent abatement that Lessee
would otherwise have enjoyed shall run from the date of delivery of possession
and continue for a period equal to what Lessee would otherwise have enjoyed
under the terms hereof, but minus any days of delay caused by the acts or
omissions of Lessee.  If possession of
the Premises is not delivered within 4 months after the Commencement Date, this
Lease shall terminate unless other agreements are reached between Lessor and
Lessee, in writing.

 

3.4                                 Lessee Compliance. 
Lessor shall not be required to tender possession of the Premises to
Lessee until Lessee complies with its obligation to provide evidence of
insurance (Paragraph 8.5).  Pending
delivery of such evidence, Lessee shall be required to perform all of its
obligations under this Lease from and after the Start Date, including the
payment of Rent, notwithstanding Lessor’s election to withhold possession
pending receipt of such evidence of insurance. 
Further, if Lessee is required to perform any other conditions prior to
or concurrent with the Start Date, the Start Date shall occur but Lessor may
elect to withhold possession until such conditions are satisfied.

 

4.                                      Rent.

 

4.1                                 Rent Defined.  All
monetary obligations of Lessee to Lessor under the terms of this Lease (except
for the Security Deposit) are deemed to be rent (“Rent”).

 

(a)                                  “Common Area Operating Expenses” are defined, for purposes of
this Lease, as all costs incurred by Lessor relating to the ownership and operation
of the Project, including, but not limited to, the following:

 

(i)                                     The
operation, repair and maintenance, in neat, clean good order and condition, but
not the replacement (see subparagraph(e)), of the following:

 

(aa)                            The Common Areas and Common Area
Improvements, including parking areas, loading and unloading areas, trash
areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers,
irrigation systems, Common Area lighting facilities, fences and gates,
elevators, roofs, and roof drainage systems.

 

(bb)                          Exterior signs and any tenant
directories.

 

(cc)                            Any fire sprinkler systems.

 

(ii)                                  The
cost of water, gas, electricity and telephone to service the Common Area and
any utilities not separately metered.

 

(iii)                               Trash
disposal, pest control services, property management, security services, and
the costs of any environmental inspections.

 

(iv)                              Reserves
set aside for maintenance and repair of Common Areas.

 

(v)                                 Any
increase above the Base Real Property Taxes (as defined in Paragraph 10).

 

(vi)                              Any “insurance
Cost increase” (as defined in Paragraph 8).

 

(vii)                           Any
deductible portion of an insured loss concerning the Building or the Common
Areas.

 

(viii)                        The cost
of any Capital Expenditure to the Building or the Project not covered under the
provisions of Paragraph 2.3 provided; however, that Lessor shall allocate
the cost of any such Capital Expenditure over a 12 year period and Lessee shall
not be required to pay more than Lesseee’s Share of 1/144th of the cost of such
Capital Expenditure in any given month.

 

4

 

(ix)                                Any
other services to be provided by Lessor that are stated elsewhere in this Lease
to be a Common Area Operating Expense.

 

(e)                                  When
a capital component such as the roof, foundations, exterior or a Common Area
capital improvement, such as the parking lot paving, elevators, fences, etc.
requires replacement, rather than repair or maintenance, Lessor shall, at
Lessor’s expense, be responsible for such replacement.  Such expenses and/or costs are not Common
Area Operating Expenses.

 

4.3                                 Payment.  Lessee shall
cause payment of Rent to be received by Lessor in lawful money of the United
States, without offset or deduction (except as specifically permitted in this
Lease), on or before the day on which it is due.  Rent for any period during the term hereof
which is for less than one full calendar month shall be prorated based upon the
actual number of days of said month. 
Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing.  Acceptance of a payment which
isles than the amount then due shall not be a waiver of Lessor’s rights to the
balance of such Rent, regardless of Lessor’s endorsement of any check so
stating, in the event that any check, draft, or other instrument of payment
given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to
Lessor the sum of $25.

 

5.                                      Security
Deposit.  Lessee shall deposit with
Lessor upon execution hereof the Security Deposit as security for Lessee’s
faithful performance of its obligations under this Lease.  If Lessee fails to pay Rent, or otherwise
Defaults under this Lease, Lessor may use, apply or retain all or any portion
of said Security Deposit for the payment of any amount due already due Lessor
or to reimburse or compensate Lessor for any liability, expense, loss or damage
which Lessor may suffer or incur by reason thereof.  If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request therefor
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease.  If
the Base Rent increases during the term of this Lease, Lessee shall, upon written
request from Lessor, deposit additional monies with Lessor so that the total
amount of the Security Deposit shall at all times bear the same proportion to
the increased Base Rent as the initial Security Deposit bore to the Initial
Base Rent.  Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublease or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor’s reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a
result thereof.  If a change in control
of Lessee occurs during this Lease and following such change the financial
condition of Lessee is, in Lessor’s reasonable judgment, significantly reduced,
Lessee shall deposit such additional monies with Lessor as shall be sufficient
to cause the Security Deposit to be at a commercially reasonable level based on
such change in financial condition. 
Lessor shall not be required to keep the Security Deposit separate from
its general accounts.  Within 14 days
after the expiration or termination of this Lease, if Lessor elects to apply
the Security Deposit only to unpaid Rent, and otherwise within 30 days after
the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor
shall return that portion of the Security Deposit not used or applied by
Lessor.  No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.

 

6.                                      Use.

 

6.1                                 Use.  Lessee shall use
and occupy the Premises only for the Agreed Use, or any other legal use which
is reasonably comparable thereto, and for no other purpose.  Lessee shall not use or permit the use of the
Premises in a manner that is unlawful, creates damage, waste or a nuisance, or
that disturbs occupants of or causes damage to neighboring premises or
properties.  Lessor shall not
unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or other mechanical or
electrical systems therein, and/or is not significantly more burdensome to the
Premises.  If Lessor elects to withhold
consent, Lessor shall within 7 days after such request give written
notification of same, which notice shall include an explanation of Lessor’s
objections to the change in the Agreed Use.

 

5

 

6.2                                 Hazardous Substances.

 

(a)                                  Reportable Uses Require Consent.  The term “Hazardous
Substance” as used in this Lease shall mean any product, substance,
or waste whose presence, use, manufacture, disposal, transportation, or
release, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public
health, safety or welfare, the environment or the Premises, (ii) regulated
or monitored by any governmental authority, or (iii) a basis for potential
liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. 
Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof.  Lessee shall not engage in any
activity in or on the Premises which constitutes a Reportable Use of Hazardous
Substances without the express prior written consent of Lessor and timely
compliance (at Lessee’s expense) with all Applicable Requirements.  “Reportable Use”
shall mean (i) the installation or use of any above or below ground
storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and/or (iii) the
presence at the Premises of a Hazardous Substance with respect to which any
Applicable Requirements requires that a notice be given to persons entering or
occupying the Premises or neighboring properties.  Notwithstanding the foregoing, Lessee may use
any ordinary and customary materials reasonably required to be used In the
normal course of the Agreed Use, so long as such use Is In compliance with all
Applicable Requirements, Is not a Reportable Use, and does not expose the
Premises or neighboring property to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor.  In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or Increasing the Security Deposit.

 

(b)                                 Duty to inform Lessor. 
If Lessee knows, or has reasonable cause to believe, that a Hazardous
Substance has come to be located in, on, under or about the Premises, other
than as previously consented to by Lessor, Lessee shall immediately give
written notice of such fact to Lessor, and provide Lessor with a copy of any report,
notice, claim or other documentation which it has concerning the presence of
such Hazardous Substance.

 

(c)                                  Lessee Remediation. 
Lessee than not cause or permit any Hazardous Substance to be spilled or
released in, on, under, or about the Premises (including through the plumbing
or sanitary sewer system) and shall promptly, at Lessee’s expanse, take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or Involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.

 

(d)                                 Lessee Indemnification. 
Lessee shall Indemnify, defend and hold Lessor, its agents, employees,
lenders and ground lessor, if any, harmless from and against any and all loss
of rents and/or damages, liabilities, judgments, claims, expenses, penalties,
and attorneys’ and consultants’ fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee, or any third party
(provided, however, that Lessee shall have no liability under this Lease with
respect to underground migration of any Hazardous Substance under the Promises
from areas outside of the Project). 
Lessee’s obligations shall include, but not be limited to, the effects
of any contamination or injury to person, property or the environment created
or suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination
of this Lease.  No termination, cancellation
or release agreement entered into by Lessor and Lessee shall release Lessee
from its obligations under this Lease with respect to Hazardous Substances,
unless specifically so agreed by Lessor in wilting at the time of such
agreement.

 

(f)                                    Investigations and Remediations.  Lessor shall retain the responsibility and
pay for any Investigations or remediation measures required by governmental
entities having jurisdiction with respect to the existence of Hazardous
Substances on the Promises prior to the Start Date, unless such remediation measure
is required as a result of Lessee’s use (including “Allocations”, as defined in
paragraph 7.3(a) below) of the Promises, in which event Lessee shall be
responsible for such payment Lessee shall cooperate fully in any such
activities at the request of Lessor, including allowing Lessor and Lessor’s
agents to have reasonable access to the Premises at reasonable times in order
to carry out Lessor’s investigative and remedial responsibilities.

 

(g)                                 Lessor Termination Option. 
If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during
the term of this Lease, unless Lessee is legally responsible therefor (in which
case Lessee shall make the investigation and remediation thereof required by
the Applicable Requirements and this Lease shall continue in full force and
effect, but subject to Lessor’s rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessors option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessors expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to
remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within 30 days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition, of Lessors desire to terminate this Lease as of the date
60 days following the date of such notice. 
In the event Lessor elects to give a termination notice, Lessee may,
within 10 days thereafter, give written notice to Lessor of Lessee’s commitment
to pay the amount by which the cost of the remediation of such Hazardous
Substance Condition exceeds an amount equal to 12 times the than monthly Base 

 

6

 

Rent or $100,000,
whichever is greater.  Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within 30 days
following such commitment.  In such
event, this Lease shall continue In full force and effect, and Lessor shall
proceed to make such remediation as soon as reasonably possible after the
required funds are available.  If Lessee
does not give such notice and provide the required funds or assurance thereof
within the time provided, this Lease shall terminate as of the date specified
In Lessor’s notice of termination.

 

6.3                                 Lessee’s Compliance with Applicable Requirements.  Except as otherwise provided in this Lease,
Lessee shall, at Lessee’s sole expanse, fully, diligently and In a timely manner,
materially comply with all Applicable Requirements, the requirements of any
applicable fire insurance underwriter or rating bureau, and the recommendations
of Lessor’s engineers and/or consultants which relate in any manner to the
Premises, without regard to whether said requirements are now in effect or
become effective after the Start Date. 
Lessee shall, within 10 days after receipt of Lessor’s written request
provide Lessor with copies of all permits and other documents, and other
information evidencing Lessee’s compliance with any Applicable Requirements
specified by Lessor, and shall Immediately upon receipt, notify Lessor in
writing (with copies of any documents Involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or
Involving the failure of Lessee or the Premises to comply with any Applicable
Requirements.

 

6.4                                 Inspection; Compliance. 
Lessor and Lessor’s “Lender” (as
defined in Paragraph 30) and consultants shall have the right to enter into
Premises at any time, in the case of an emergency, and otherwise at reasonable
times, for the purpose of inspecting the condition of the Premises and for
verifying compliance by Lessee with this Lease. 
The cost of any such Inspections shall be paid by Lessor, unless a
violation of Applicable Requirements, or a contamination is found to exist or
be imminent, or the inspection is requested or ordered by a governmental
authority.  In such case.  Lessee shall upon request reimburse Lessor
for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination.

 

7.                                      Maintenance;
Repairs; Utility Installations: Trade Fixtures and Alterations.

 

7.1                                 Lessee’s Obligations.

 

(a)                                  In General.  Subject
to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s
Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage
or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense,
keep the Premises.  Utility Installations
(intended for Lessee’s exclusive use, no matter where located), and Alterations
in good order, condition and repair (whether or not the portion of the Promises
requiring repairs, or the moans of repairing the same, are reasonably or madly
accessible to Lessee, and whether or not the need for such repairs occurs as a
result of Lessee’s use, any prior use, the elements or the age of such portion
of the Premises), including, but not limited to, all equipment or facilities,
such as plumbing.  HVAC equipment, electrical,
lighting facilities, boilers, pressure vessels, fixtures, interior walls.  Interior surfaces of exterior walls,
ceilings, floors, windows, doors, plate glass, and skylights but excluding any
items which are the responsibility of Lessor pursuant to Paragraph 7.2.  Lessee, in keeping the Premises in good
order, condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the
service contracts required by Paragraph 7.1(b) below, Lessee’s obligations
shall include restorations, replacements or renewals when necessary to keep the
Promises and all improvements thereon or a pad thereof in good order, condition
and state of repair.

 

(b)                                 Service Contracts. 
Lessee shall, at Lessee’s sole expense, procure and maintain contracts,
with copies to Lessor, in customary form and substance for, and with
contractors specializing and experienced in the maintenance of the following
equipment and improvements, if any, if and when installed on the Premises: (i) HVAC
equipment, (ii) boiler and pressure vassals, (iii) clarifiers, and (iv) any
other equipment, if reasonably required by Lessor, However, Lessor reserves the
right, upon notice to Losses, to procure and maintain any or all of such
service contracts, and if Lessor so elects, Lessee shall reimburse Lessor, upon
demand, for the cost thereof.

 

(c)                                  Failure to Perform. 
If Lessee fails to perform Lessee’s obligations under this Paragraph
7.1, Lessor may enter upon the Premises alter 10 days’ prior written notice to
Lessee (except in the case of an emergency, in which case no notice shall be
required), perform such obligations on Lessee’s behalf, and put the Premises in
goad order, condition and repair, and Lessee shall promptly reimburse Lessor for
the cost thereof.

 

(d)                                 Replacement.  Subject
to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7 below, and
without relieving Lessee of liability resulting from Lessee’s failure to
exercise and perform good maintenance practices, If an Item described in
Paragraph 7,1(b) cannot be repaired other hen at a cost which is in excess
of 50% of the cost of replacing such item, than such item shall be replaced by
Lessor, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this Lease, on the date on which Bass Rent is hue, an amount equal to the
product of multiplying the cost of such replacement bye fraction, the numerator
of which is one, and the denominator of which is 144 (ie. 1/144th of the cost
per month).  Lessee shall pay interest on
the unamortized balance at a rate that is commercially reasonable in the
judgment of Lessor’s accountants.  Lessee
may, however, prepay its obligation at any time.

 

7.2                                 Lessor’s Obligations. 
Subject to the provisions of Paragraphs 2.2 (Condition), 2,3
Compliance), 4.2 (Common Area Operating Expanses), 8 (Use), 7.1 (Lessee’s
Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject
to reimbursement pursuant to Paragraph 1.2, shall keep In good order, condition
and repair the foundations, exterior walls, structural condition of interior
bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm
and/or smoke detection systems, fire hydrants, parking lots, walkways,
parkways, driveways, landscaping, fences, signs and utility systems serving the
Common Areas and all parts thereof, as well as providing the services for which
there is a Common Area Operating Expense pursuant to Paragraph 4.2.  Lessor shall not be obligated to paint the
exterior or interior surfaces of exterior walls nor shall Lessor be obligated
to maintain, repair or replace windows, doors or plate glass of the Premises.  Lessee expressly waives the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease.

 

7

 

7.3                                 Utility Installations; Trade Fixtures; Alterations.

 

(a)                                  Definitions.  The term
“Utility Installations” refers to all
floor and window coverings, air lines, power panels, electrical distribution,
security and fire protection systems, communication systems, lighting fixtures,
HVAC equipment, plumbing, and fencing in or on the Premises.  The term “Trade
Fixtures” shall mean Lessee’s machinery and equipment that can be
removed without doing material damage to the Premises.  The term “Alterations”
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion.  “Lessee Owned Alterations
and/or Utility Installations” are defined as Alterations and/or
Utility Installations made by Lassa that are not yet owned by Lessor pursuant
to Paragraph 7.4(a).

 

(b)                                 Consent.  Lessee shall
not make any Alterations or Utility Installations to the Premises without
Lessor’s prior written consent Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without such
consent but upon notice to Lessor, as long as they are not visible from the
outside, do not Involve puncturing, relocating or removing the roof or any
existing was, and the emulative cost thereof during this Lease as extended does
not exceed a sum equal to 3 month’s Base Rent in the aggregate or a sum equal
to one month’s Base Rent In any one year. 
Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written
approval of Lessor.  Lessor may, as a
precondition to ranting such approval, require Lessee to utilize a contractor
chosen and/or approved by Lessor.  Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans.  Consent shall be
deemed conditioned upon Lessee’s: (i) acquiring all applicable
governmental permits, (ii) furnishing Lesser with copies of both the
permits and the plans and specifications prier to commencement of the work, and
(iii) compliance with all conditions of said permits and other Applicable
Requirements in a prompt and expeditious manner.  Any Alterations or Utility Installations
shall be performed in a workmanlike manner with good and sufficient
materials.  Lessee shall promptly upon
completion furnish Lamer with as-built plans and specifications.  For work which costs an amount in excess of
one month’s Base Rent, Lessor may coed den its consent upon Lessee providing a
lien and completion bond in an amount equal to 150% of the estimated cost of
such Alteration or Utility Installation raid/or upon Lessee’s posting an
additional Security Deposit with Lessor.

 

(c)                                  Indemnification. 
Lessee shall pay, when due, all claims for labor or materials furnished
or alleged to have bean furnished to or for Lessee at or for use on the
Premises, which claims are or may be secured by any mechanic’s or materialmen’s
lien against the Premises or any interest therein.  Lessee shall give Lessor not less than 10
days notice prior to the commencement of any work in, on or about the Premises,
and Lessor shall have the right to post notices of non-responsibility.  If Lessee shall contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof.  If Lessor shall
require, Lessee shall furnish a surety bond in an amount equal to 150% of the
amount of such contested lien, claim or demand, indemnifying Lessor against
liability for the same.  If Lessor elects
to participate in any such action, Lessee shaft pay Lessor’s attorneys’ fees
and costs.

 

7.4                                 Ownership; Removal; Surrender, and Restoration.

 

(a)                                  Ownership.  Subject to
Lessors right to require removal or elect ownership as hereinafter provided,
all Alterations and Utility Installations made by Lessee shall be the property
of Lessee, but considered a part of the Premises.  Lessor may, at any time, elect in writing to
be the owner of all or any specified part of the Lessee Owned Alteration and
Utility Installations.  Unless otherwise
instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and
Utility Installations shall, at the expiration or termination of this Lease,
become the property of Lessor and be surrendered by Lessee with the Premises.

 

(b)                                 Removal.  By delivery
to Lessee of written notice from Lessor not earlier than 90 and not later than
30 days prior to the end of the term of this Lease, Lessor may require that any
or all Lessee Owned Alterations or Utility Installations be removed by the
expiration or termination of this Lease. 
Lessor may require the removal at any time of all or any part of any
Lessee Owned Mentions or Utility Installations made without the required
Consent.

 

(c)                                  Surrender; Restoration. 
Lessee shall surrender the Premises by the Expiration Data or any
earlier termination data, with all of the Improvements, parts and surfaces
thereof broom ocean and free of debris, and in good operating order, condition
and state of repair, ordinary wear and tear excepted.  “Ordinary wear and tear” shall not include
any damage or deterioration that would have been prevented by good maintenance
practice.  Notwithstanding the foregoing,
if this Lease is for 12 months or lass, then Lessee shall surrender the Penises
in the same condition as delivered to Lessee on the Start Date with NO
allowance for ordinary wear and tear. 
Lessee shall repair any damage occasioned by the installation, maintenance
or removal of Trade Fixtures, Lessee owned Alterations and/or Utility
Installations, furnishings, and equipment as well as the removal of any storage
tank installed by or for Lessee.  Lessee
shall also completely remove from the Promises any and all Hazardous Substances
brought onto the Premises by or for Lessee, or any third party (except
Hazardous Substances which were deposited via underground migration from areas
outside of the Project) even if such removal would require Lessee to perform or
pay for work that exceeds statutory requirements.  Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. 
The failure by Lessee to timely vacate the Premises pursuant to this
Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 28 below.

 

8.                                      Insurance;
Indemnity.

 

8.1                                 Payment of Premium Increases.

 

(a)                                  As
used herein, the term “Insurance Cost Increase” is defined as any increase in
the actual cost of the insurance applicable to the Building and/or the Project
and required to be carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and
8.3(b), (‘Required Insurance”), over and above the Base Premium, as hereinafter
defined, calculated on an annual bases. 
Insurance Cost Increase shall include, but not be limited to, 

 

8

 

requirements of the
holder of a mortgage or deed of trust covering the Premises, Building and/or
Project, increased valuation of the Promises, Building and/or Project, and/or a
general premium rate increase.  The term
Insurance Cost Increase shall not, however, include any premium Increases
resulting from the nature of the occupancy of any other tenant of the
Budding.  If the parties insert a dollar
amount in Paragraph 1.9, such amount shall be considered the “Base Premium.”  The
Base Premium shall be the annual premium applicable to the 12 month period
immediately preceding the Start Date. 
If, however, the Project was not insured for the entirety of such 12
month period, then the Base Premium shall be the lowest annual premium
reasonably obtainable for the Required Insurance as of the Start Data, assuming
the most nominal use possible of the Building. 
In no event, however, shall Lessee be responsible for any portion of the
premium cost attributable to liability insurance coverage in excess of
$2,000,000 procured under Paragraph 8.2(b).

 

8.2                                 Liability insurance.

 

(a)                                  Carried by Lessee. 
Lessee shall obtain and keep in force a Commercial General Liability
policy of insurance protecting Lessee and Lessor as an additional insured
against claims for bodily Injury, personal Injury and properly damage based
upon or arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. 
Such insurance shall be on an occurrence basis providing single limit
coverage in an amount not less than $1,000,000 per occurrence with an annual
aggregate of not lass than $2,000,000, an “Additional Insured-Managers or
Lessors of Promises Endorsement” and contain the “Amendment of the Pollution
Exclusion Endorsement” for damage caused by heat, smoke or fumes from a hostile
fire.  The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s indemnity
obligations under this Lease.  The limits
of said insurance shall not, however, limit the liability of Lessee nor relieve
Lessee of any obligation hereunder.  All
Insurance carried by Lessee shall be Ornery to and not contributory with any
similar Insurance carried by Lessor, whose insurance shall be considered excess
Insurance only.

 

(b)                                 Carried by Lessor. 
Lessor shall maintain liability insurance as described in Paragraph
8.2(a), in addition to, and not in lieu of, the insurance required to be
maintained by Lessee.  Lessee shall not
be named as an additional insured therein.

 

8.3                                 Property Insurance - Building, Improvements and Rental Value.

 

(a)                                  Building and improvements. 
Lessor shall obtain and keep in force a policy or policies of insurance
in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to
any Lender insuring loss or damage to the Premises.  The amount of such Insurance shall be equal
to the full replacement cost of the Premises, as the same shall axial from time
to time, or the amount required by any Lender, but in no event more than the
commercially reasonable and available insurable value thereof.  Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee’s personal property shall be insured
by Lessee under Paragraph 8.4.  If the
coverage is available and commercially appropriate, such policy or policies
shall insure against all risks of direct physical lose or damage (except the
perils of flood and/or earthquake unless required by a Lender), including
coverage for debris removal and the enforcement of any Applicable Requirements
requiring the upgrading, demolition, reconstruction or replacement of any
portion of the Premises as the result of a covered loss.  Said policy or policies shall also contain an
agreed valuation provision In lieu of any coinsurance clause, waiver of
subrogation, and Inflation guard protection causing an increase in the annual
property Insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. 
If such insurance coverage has a deductible clause, the deductible
amount shall not exceed $1.000 per occurrence.

 

(c)                                  Adjacent Premises. 
Lessee shall pay for any increase in the premiums for the property
insurance of the Building and for the Common Areas or other buildings In the
Project If said increase is caused by Lessee’s acts, omissions, use or
occupancy of the Premises.

 

(d)                                 Lessee’s Improvements. 
Since Lessor is the Insuring Party, Lessor shall not be required to
insure Lessee Owned Alterations and Utility Installations unless the item in
question has become the property of Lessor under the terms of this Lease.

 

8.4                                 Lessee’s Property.

 

(a)                                  Property Damage Lessee shall obtain and maintain insurance
coverage on all of lessee’s personal property, de Fixtures, and Lessee Owned Alterations
and Utility Installations.  Such
Insurance shall be full replacement cost coverage with a deductible of not t0’exeeed
$1,000 per occurrence.  The proceeds from
any such insurance shall be used by Lessee for the replacement of personal
property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations.  Lessee shall provide
Lessor with written evidence that such insurance is in force.

 

9

 

(c)                                  No Representation of Adequate Coverage.  Lessor makes no representation that the
limits or forms of coverage of insurance specified herein are adequate to cover
Lessee’s property, business operations or obligations under this Lease.

 

8.5                                 Insurance Policies. 
Insurance required herein shall be by companies duly licensed or
admitted to transact business in the state where the Premises are located, and
maintaining during the policy term a “General Policyholders Rating” of at least
B+ .  V, as set forth in the most current
Issue of “Bests Insurance Guide”, or such other rating as may be required by a Lender.  Lessee shall not do or permit to be done
anything which invalidates the required insurance policies.  Lessee shall, prior to the Start Date,
deliver to Lessor certified copies of policies of such Insurance or
certificates evidencing the existence and amounts of the required
insurance.  No such policy shall be
cancelable or subject to modification except after 30 days prior written notice
to Lessor.  Lessee shall, at least 30
days prior to the expiration of such policies, furnish Lessor with evidence of
renewals or “insurance binders” evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand. 
Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less.  If either Party shall fail to procure and
maintain the Insurance required to be carried by it, the other Party may, but
shall not be required to procure and maintain the same.

 

8.6                                 Waiver of Subrogation. 
Without affecting any other rights or remedies, Lessee and Lessor each
hereby release end relieve the other, and waive their entire right to recover
damages against the other, for loss of or damage to its property arising out of
or Incident to the perils required to be insured against herein.  The effect of such releases and waivers is
not limited by the amount of Insurance carried or required, or by any
deductibles applicable hereto.  The
Parties agree to have their respective property damage Insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the Insurance is not invalidated thereby.

 

8.7                                 Indemnity.  Except for
Lessor’s gross negligence or willful misconduct, Lessee shall indemnify,
protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s
master or ground lessor, partners and Lenders, from and against any and all
claims, loss of rents and/or damages, liens. 
Judgments, penalties, attorneys’ and consultants’ fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee.  If
any action or proceeding Is brought against Lessor by reason of any of the
foregoing matters, Lessee shall upon notice defend the same at Lessee’s expanse
by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with
Lessee in such defense.  Lessor need not
have first paid any such claim in order to be defended or indemnified.

 

9.                                      Damage
or Destruction.

 

9.1                                 Definitions.

 

(a)                                  “Premises Partial Damage” shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in 3 months or less
from the date of the damage or destruction, and the cost thereof does not
exceed a sum equal to 8 month’s Base Rent. 
Lessor shall notify Lessee In writing within 30 days from the date of
the damage or destruction as to whether or not the damage is Partial or Total.

 

(b)                                 “Premises Total Destruction” shall mean damage or destruction
to the Improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations and Trade Fixtures, which cannot reasonably be repaired
in 3 months or less from the date of the damage or destruction and/or the cost
thereof exceeds a sum equal to 6 month’s Base Rent.  Lessor shall notify Lessee in writing within
30 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.

 

(c)                                  “Insured Loss” shall moan damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described In Paragraph 8.3(8), irrespective of any
deductible amounts or coverage limits Involved.

 

(d)                                 “Replacement Cost” shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal end upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.

 

(e)                                  “Hazardous Substance Condition” shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

 

9.2                                 Partial Damage - Insured Loss.  If a Premises Partial Damage that is an Insured
Loss occurs, then Lessor shall, at Lessor’s expense, repair such damage (but
not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the

 

10

 

 

total cost to repair of
which is $5,000 or less, and, in such event, Lessor shall make any applicable
insurance proceeds available to Lessee on a reasonable basis for that
mimosa.  Notwithstanding the foregoing,
if the required insurance was not in force or the insurance proceeds are not
sufficient to affect such repair, the insuring Party shall promptly contribute
the shortage in proceeds as and when required to complete said repairs.  In the event, however, such shortage was due
to the fact that, by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within 10 days following receipt of written notice of such shortage and request
therefore.  If Lessor receives said funds
or adequate assurance thereof within said 10 day period, the party responsible
for making the repairs shall complete them as soon as reasonably possible and
this Lease shall remain in full force and effect.  If such funds or assurance are not received.  Lessor may nevertheless elect by written
notice to Lessee within 10 days thereafter to: (i) make such restoration
and repair as is commercially reasonable with Lessor saying any shortage in
proceeds, in which case this Lease shall remain in full force and effect, or (d) have
this Lease terminate 30 days thereafter. 
Lessee shall not be entitled to reimbursement of any funds contributed
by Lessee to repair any such damage or destruction.  Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance hall be
made available for the repairs if made by either Party.

 

9.3           Partial Damage - Uninsured
Loss.  If a Premises Partial
Damage that is not an insured Loss occurs, unless caused by a negligent or
willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s
expense), Lessor may ether: (i) repair such damage as soon as reasonably
possible at Lessor’s expense, in which event this Lease shall continue in full
force and effect, or (ii) terminate this Lease by giving written notice to
Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of
such damage.  Such termination shall be
effective 60 days following the data of such commitment.  In the event Lessor elects to terminate this
Lease.  Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice
to Lessor of Lessee’s commitment to pay for the repair of such damage without
reimbursement from Lessor.  Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within 30 days
after making such commitment In such event this Lease shall continue in full
force and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available.  If Lessee does not make the required
commitment, this Lease shall terminate as of the date specified in the
termination notice.

 

9.4           Total Destruction.  Notwithstanding any other provision hereof, if
a Premises Total Destruction occurs, this Lease shall terminate 80 lays
following such Destruction.  If the
damage or destruction was caused by the gross negligence or willful misconduct
of Lessee, Lessor shall have the right to recover Lessor’s damages from Lessee,
except as provided in Paragraph 8.8.

 

9.5           Damage Near End of Term.  If at any time during the last 6 months of
this Lease there is damage for which the cost to repair exceeds one month’s
Base Rent, whether or not an insured Loss, Lessor may terminate this Lease
affective 60 days following the date of occurrence of such damage by giving a
written termination notice to Lessee within 30 days after the date of
occurrence of such damage. 
Notwithstanding the foregoing, if Lessee at that time has an exercisable
option to extend this Lease or to purchase the Premises, than Lessee may
preserve this Lease by, (a) exercising such option and (b) providing
Lessor with any shortage in insurance proceeds (or adequate assurance thereof)
needed to make the repairs on or before the earlier of (i) the date which is 10
days after Lessee’s receipt of Lessor’s written notice purporting to terminate
this Lease, or (ii) the day prior to the date upon which such option
expires.  If Lessee duly exercises such
option during such period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s
commercially reasonable expense, repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect.  If Lessee fails to exercise such option and
provide such funds or assurance during such period, than this Lease shall
terminate on the date specified in the termination notice and Lessee’s option
shall be extinguished.

 

9.6           Abatement of Rent; Lessee’s
Remedies.

 

(a)           Abatement.  In the event of Promises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee’s use of the Premises is
Impaired, but not to exceed the proceeds received from the Rental Value
insurance.  All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no
liability for any such damage, destruction, remediation, repair or restoration
except as provided herein.

 

(b)           Remedies.  If Lessor shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful
way, such repair or restoration within 90 days after such obligation shall
accrue, Lessee may.  at any time prior to
the commencement of such repair or restoration, give written notice to Lessor
and to any Lenders of which Lessee has actual notice, of Lessee’s election to
terminate this Lease on a date not less ban 60 days following the giving of
such notice.  If Lessee gives such notice
and such repair or restoration is not commenced within 30 days thereafter, this
Lease shall terminate as of the data specified in said notice.  If the repair or restoration is commenced
within such 30 days, this Lease shall continue in full force and effect.  “Commence” shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.

 

9.7           Termination; Advance
Payments.  Upon termination of
this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment
shall be made concerning advance Base Rent and any other advance payments made
by Lessee to Lessor.  Lessor shall, in
addition, return to Lessee so much of Lessee’s Security Deposit as has not
been, or is not then required to be, used by Lessor.

 

9.8           Waive Statutes.  Lessor and Lessee agree that the terms of
this Lease shall govern the effect of any damage to or destruction of the
Premises with respect to the termination of this Lease and hereby waive the
provisions of any present or future statute to the extant inconsistent
herewith.

 

 

11

 

10.          Real Property Taxes.

 

10.1         Definitions.

 

(a)           “Real Property Taxes.”  As used herein, the term “Real Property Taxes”
shall include any form of assessment; real estate, general, special, ordinary
or extraordinary, or rental levy or tax (other than inheritance, personal
income or estate taxes); improvement bond; and/or license fee imposed upon or
levied against any legal or equitable interest of Lessor in the Project.  Lessor’s right to other income therefrom,
and/or Lessor’s business of easing, by any authority having the direct or
Indirect power to tax and where the funds are generated with reference to the
Project address and where the proceeds so generated are to be applied by the
city, county or other local taxing authority of a jurisdiction within which the
Project Is located.  The term “Real
Property Taxes” shall also include any lax, fee, levy, assessment or charge, or
any increase therein, imposed by reason of events occurring during the term of
this Lease, inducting but not limited to, a change in the ownership of the
Project or any portion thereof or a change In the improvements thereon.

 

(b)           “Base Real Property Taxes.”  As used herein, the term “Base Real Property Taxes” shall be the amount of Real
Property Taxes, which are assessed against the Premises, Building, Project or
Common Areas in the calendar year during which the Lease is executed.  In calculating Real Property Taxes for any
calendar year, the Real Property Taxes for any real estate tax year shall be
included in the calculation of Real Property Taxes for such calendar year based
upon the number of days which such calendar year and tax year have In common.

 

10.2         Payment of Taxes.  Lessor shall pay the Real Property Taxes
applicable to the Project.

 

10.3         Additional Improvements.  Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor’s records and work
sheets as being caused by additional improvements placed upon the Project by
other lessees or by Lessor for the exclusive enjoyment of such other lessees.

 

10.5         Personal Property Taxes.  Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained In the Premises. 
When possible  Lessee shall pause
its Lessee Owned Alterations and Utility Installations, Trade Fixtures,
furnishings, equipment and all other personal property to be assessed and
billed separately from the real property of Lessor.  If any of Lessee’s said properly shall be
assessed with Lessors real property, Lessee shall pay Lessor the taxes
attributable to Lessee’s property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee’s property.

 

11.          Utilities.  Lessee shall pay for all water, gas, heat,
light, power, telephone, trash disposal and other utilities and services
supplied to the Premises, together with any taxes thereon.  Notwithstanding the provisions of Paragraph
4.2, if at any time in Lessor’s sole judgment, Lessor determines that Lessee is
using a disproportionate amount of water, electricity or other commonly motored
utilities, or that Lessee is generating such a large volume of trash as to
require an increase in the size of the dumpster and/or an increase in the
number of times per month that the dumpster is emptied, than Lessor may
increase Lessee’s Base Rent by an amount equal to such increased costs.

 

12.          Assignment and Subletting.

 

12.1         Lessor’s Consent Required.

 

(a)           Leases shall not voluntarily or by
operation of law assign, transfer, mortgage or encumber (collectively, “assign or assignment”) or sublet all or any part of Lessee’s
interest in this Lease or In the Premises without Lessor’s prior written
consent.

 

(b)           A change in the control of Lessee
shall constitute an assignment requiring consent.  The transfer, on a cumulative basis, of 25%
or more of the voting control of Lessee shall constitute a change in control
for this purpose.

 

(c)           The involvement of Lessee’ or Its
assets in any transaction, or series of transactions (by way of merger, sale,
acquisition, financing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee’s assets
occurs, which results or will result in a reduction of the Net Worth of Lessee
by an amount greater than 25% of such Net Worth as it was represented at the
time of the execution of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists Immediately prior to
said transaction or transactions constituting such reduction, whichever was or
is greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent.  “Net Worth of Lessee” shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles.

 

 

12

 

(e)           Lessee’s remedy for any breads of
Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or
Injunctive relief.

 

12.2         Terms and Conditions
Applicable to Assignment and Subletting.

 

(a)           Regardless of Lessor’s consent any
assignment or subletting shall not: (i) be effective without the express
written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) after
the primary liability of Lessee for the payment of Rent or for the performance
of any other obligations to be performed by Lessee.

 

(b)           Lessor may accept Rent or performance
of Lessee’s obligations from any person other than Lessee pending approval or
disapproval of an assignment.  Neither a
delay in the approval or disapproval of such assignment nor the acceptance of
Rent or performance shall constitute a waiver or estoppel of Lessor’s right to
exercise its remedies for Lessee’s Default or Breach.

 

(c)           Lessor’s consent to any assignment or
subletting shall not constitute a consent to any subsequent assignment or
subletting.

 

(d)           In the event of any Default or Breath
by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone
else responsible for the performance of Lessee’s obligations under this Lease,
including any assignee or sublessee, without first exhausting Lessor’s remedies
against any other person or entity responsible therefore to Lessor, or any
security held by Lessor,

 

(e)           Each request for consent to an
assignment or subletting shall be in writing, accompanied by information
relevant to Lessor’s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee,
including but not limited to the intended use and/or required modification of
the Premises, if any, together with a fee of $1,000 or 10% of the current
monthly Base Rent applicable to the section of the Premises which the subject
of the proposed assignment or sublease, whichever is greater, as consideration
for Lessor’s considering and accessing said request.  Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested.

 

(f)            Any assignee of, or sublessee under,
this Lease shall, by reason of accepting such assignment or entering into such
sublease, be deemed to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented to in
writing.

 

12.3         Additional Terms and
Conditions Applicable to Subletting. 
The following terms and conditions shall apply to any subletting by
Lessee of all or any part of the Premises and shall be deemed included in all
subleases under this Lease whether or not expressly incorporated therein:

 

(a)           Lessee hereby assigns and transfers
to Lessor all of Lessee’s interest in an Rent payable on any sublease, and
Lessor may collect such Rent and apply same toward Lessee’s obligations under
this Lease; provided, however, that until Breach shall occur in the performance
of Lessee’s obligations, Lessee may collect said Rent.  Lessor shall not, by reason of the foregoing
or any assignment of such sublease, nor by reason of the collection of lent, be
deemed liable to the sublessee for any failure of Lessee to perform and comply
with any of Lessee’s obligations to such sublessee.  Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor
stating that a Breach exists in the performance of Lessee’s obligations under
this Lease, to pay to Lessor all Rent due and to become due under the
sublease.  Sublessee shall rely upon any
such notice from Lessor and shall pay all Rents to Lessor without any
obligation or right to inquire as to whether such Breach exists,
notwithstanding any claim from Lessee to the contrary.

 

(b)           In the event of a Breach by Lessee,
Lessor may, at its option, require sublessee to aft= to Lessor, in which event
Lessor shall undertake the obligations of the sublessor under such sublease
from the time of the exorcise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents
or security deposit paid by such sublessee to such sublessor or for any prior
Defaults or Broaches of such sublessor.

 

(c)           Any matter requiring the consent of
the sublessor under a sublease shall also require the consent of Lessor.

 

(d)           No sublessee shall further assign or
sublet all or any part of the Premises without Lessor’s prior written consent.

 

(e)           Lessor shall deliver a copy of any
notice of Default or Breach by Lessee to the sublessee, who shall have the
right to cure the Default of Lessee within the grace period, if any, specified
in such notice.  The sublessee shall have
a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.

 

13.          Default; Broach; Remedies.

 

13.1         Default; Breach.  A “Default” is
defined as a failure by the Lessee to comply with or perform any of the terms,
covenants, conditions or Rules and Regulations under this Lease.  A “Breach” is
defined as the occurrence of one or more of the following Defaults, and the
failure of Lessee to cure such Default within any applicable grace paled:

 

(a)           The abandonment of the Promises; or
the vacating of the Premises without providing a commercially reasonable level
of security, or where the coverage of the property insurance described in
Paragraph 8.3 is jeopardized as a result thereof, or without providing
reasonable assurances to minimize potential vandalism.

 

 

13

 

(b)           The failure of Lessee to make any
payment of Rent or any Security Deposit required to be made by Lessee
hereunder, whether to Lessor or to a third party when due to provide reasonable
evidence of insurance or surety bond, or to fulfill any obligation under this
Lease which endangers or threatens life or property, where such failure
continues for a period of 3 business days following written notice to Levee.

 

(c)           The failure by Lessee to provide (i) reasonable
written evidence of compliance with Applicable Requirements, (ii) the
service contracts, (iii) the rescission of an unauthorized assignment or
subletting, (iv) an Estoppel Certificate, (v) a requested
subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any
document requested under Paragraph 41 (easements), or (viii) any other
documentation or information which Lessor may reasonably require of Lessee
under the terms of this Lease, where any such failure continues for a period of
10 days following written notice to Lessee.

 

(d)           A Default by Losses as to the terms,
covenants, conditions or provisions of this Lease, or of the rules adopted
under Paragraph 2.9 hereof, other than those described in subparagraphs
13.1(a), (b) or (c), above, where such Default continues for a period of
30 days after written notice; provided, however, that if the nature of Lessee’s
Default is such that more than 30 days are reasonably required for its Cure,
then It shall not be deemed to be a Breach if Lessen commences such cure within
said 30 day palled and thereafter diligently prosecutes such cure to
completion.

 

(f)            The discovery that any financial
statement of Lessee given to Lessor was knowingly materially false.

 

13.2         Remedies.  If Lessee fails to perform any of its
affirmative duties or obligations, within 10 days after written notice (or in
case of an emergency, without notice), Lessor may, at its option, perform such
duty or obligation on Lessee’s behalf, Including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental
licenses, permits or approvals.  The
costs end expenses of any such performance by Lessor shall be due and payable
by Lessee upon receipt of invoice therefor. 
If any check given to Lessor by Lessee shall not be honored by the bank
upon which it is drawn, Lessor, at its option, may require all future payments
to be made by Lessee to be by cashier’s check. 
In the event of a Breach, Lessor may, with or without further notice or
demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Broach:

 

(a)           Terminate Lessee’s right to
possession of the Premises by any lawful means, in which case this Lease shall
terminate and Lessee shall immediately surrender possession to Lessor.  In such event Lessor shall be entitled to
recover from Lessee: (i) the unpaid Rent which had been earned at the time
of termination: (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 that the Lessee proves could
have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate
Lessor for all the detriment proximately caused by the Lessee’s failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including but not limited to the
cost of recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Promises, reasonable attorneys’
fees, and that portion of any leasing commission paid by Lessor in connection
with this Lease applicable to the unexpired term of this Lease.  The worth at the time of award of the amount
referred to in provision (iii) of the immediately preceding sentence shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of the District within which the Premises are located at the time
of award plus one percent Efforts by Lessor to mitigate damages caused by
Lessee’s Breach of this Lease shall not waive Lessor’s right to recover damages
under Paragraph 12.  If termination of
this Lease is obtained through the provisional remedy of unlawful detainer,
Lessor shall have the right to recover in such proceeding any unpaid Rent and
damages as are recoverable therein, or Lessor may reserve the right to recover
all or any part thereof In a separate suit. 
If a notice and grace period required under Paragraph 13.1 was not
previously given, a notice to pay rent or quit, or to perform or quit given to
Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1.  In such
case, the applicable grace period required by Paragraph 13.1 and the unlawful
detainer statute shall run concurrently, and the failure of Lessee to cure the
Default within the greater of the two such grace periods shall constitute both an
unlawful detainer and a Breach of this Lease entitling Lessor to the remedies
provided for in this Lease and/or by said statute.

 

(b)           Continue the Lease and Lessee’s right
to possession and recover the Rent as it becomes due, in which event Lessee may
sublet or assign, subject only to reasonable limitations, Acts of maintenance,
efforts to relet, and/or the appointment of a receiver to protect the Lessor’s
interests, shall not constitute a termination of the lessee’s right to
possession.

 

 

14

 

(c)           Pursue any other remedy now or
hereafter available under the laws or judicial decisions of the state wherein
the Premises are located.  The expiration
or termination of this Lease and/or the termination of Lessee’s right to
possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee’s occupancy of the Premises.

 

13.3         Inducement Recapture.  Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus.  Inducement or
consideration for Lessee’s entering Into this Lease, all of which concessions
are hereinafter referred to as “Inducement Provisions”,
shall be deemed conditioned upon Lessee’s full and faithful performance of all
of the terms, covenants and conditions of this Lease.  Upon Breach of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
notwithstanding any subsequent cure of said Breach by Lessee.  The acceptance by Lessor of rent or the cure
of the Breach which initiated the operation of this paragraph shall not be
deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such acceptance.

 

13.4         Late Charges.  Lessee hereby acknowledges that late payment
by Lessee of Rent will cause Lessor to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain.  Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by any Lender.  Accordingly, if
any Rent shall not be received by Lessor within 5 days after such amount shall
be due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to 10% of each such overdue amount or $100,
whichever is greater.  The parties hereby
agree that such late charge represents a fair and reasonable estimate of the
caste Lessor will incur by reason of such late payment.  Acceptance of such late Charge by Lessor
shall In no event constitute a waiver of Lessee’s Default or Breach with
respect to such overdue amount, nor prevent the exercise of any of the other
rights and remedies granted hereunder. 
In the event that a late charge is payable hereunder, whether or not
collected, for 3 consecutive Installments of Base Rent, then notwithstanding
any provision of this Lease to the contrary, Base Rent shall, at Lessor’s
option, become due and payable quarterly in advance.

 

13.5         Interest.  Any monetary payment due Lessor hereunder,
ether than late charges, not received by Lessor, when due as to scheduled
Payments (such as Base Rent) or within 30 days following the date on which it
was due for non-scheduled payment, shall bear interest from the date when due,
as to scheduled payments, or the 31st day after it was due as to non-scheduled
payments.  The interest (“Interest”) charged shall be equal to the prime rate reported
in the Wall Street Journal as published closest prior to the date when due plus
4%, but shall not exceed the maximum rate allowed by law, interest is payable
in addition to the potential late charge provided far in Paragraph 13.4.

 

13.6         Breach by Lessor.

 

(a)           Notice of Breach.  Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor.  For
purposes of this Paragraph, a reasonable time shall In no event be lass than 30
days altar receipt by Lessor, and any Lender whose name and address shall have
been furnished Lessee in writing for such purpose, of written notice specifying
wherein such obligation of Lessor has not been performed; provided, however,
that if the nature of Lessor’s obligation is such that more than 30 days are
reasonably required for its performance, then Lessor shall not be in breath if
performance is commenced within such 30 day period and thereafter diligently
pursued to completion.

 

(b)           Performance by Lessee
on Behalf of Lessor.  In the event that neither Lessor nor Lender
cures said breach within 30 days after receipt of said notice, or if having
commenced said cure they do not diligently pursue it to completion, then Lessee
may elect to cure said breach at Lessee’s expense and offset from Rent an
amount equal to the greater of one month’s Base Rent or the Security Deposit,
and to pay an excess of such expense under protest, reserving Lessee’s right to
reimbursement from Lessor.  Lessee shall
document the cost of said cure and supply said documentation to Lessor.

 

14.          Condemnation.  If the Premises or any portion thereof are
taken under the power of eminent domain or sold under the threat of the
exercise of said power (collectively “Condemnation”),
this Lease shall terminate as to the part taken as of the date the condemning
authority takes title or possession, whichever first occurs.  If more than 10% of the floor area of the
Unit, or more than 25% of Lessee’s Reserved Parking Spaces, is taken by
Condemnation, Lessee may, at Lessee’s option, to be exercised in writing within
10 days after Lessor shall have given Lessee written notice of such taking (or
in the absence of such notice, within 10 days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession.  If
Lessee does not terminate this Lease hi accordance with the foregoing, this
Lease shall remain in full force and effect as to the portion of the Premises
remaining, except that the Base Rent shall be reduced in proportion to the
reduction in utility of the Premises caused by such Condemnation.  Condemnation awards and/or payments shall be
the property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold, the value of the part taken, or for
severance damages; provided, however, that Lessee shall be entitled to any
compensation for Lessee’s relocation expenses, loss of business goodwill and/or
Trade Fixtures, without regard to whether or not this Lease is terminated
pursuant to the provisions of this Paragraph. 
All Alterations and Utility Installations made to the Premises by
Lessee, for purposes of Condemnation only, shall be considered the property of
the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor.  In the event that this
Lease Is not terminated by reason of the Condemnation, Lessor shall repair any
damage to the Premises Caused by such Condemnation.

 

15.          Brokerage Fees.

 

15.1         Additional Commission.  In addition to the payments owed pursuant to
Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that; (a) if Lessee exercises any Option, (b) if
Lessee acquires from Lessor any rights to the Premises or other premises owned
by Lessor and located within 

 

15

 

the Project, (a) if
Lessee remains in possession of the Premises, with the consent of Lessor, after
the expiration of this Lease, or (d) if Base Rent is increased, whether by
agreement or operation of an escalation clause herein, then.  Lessor shall pay Brokers a fee in accordance
with the schedule of the Brokers in effect at the time of the execution of this
Lease.

 

15.2         Assumption of Obligations.  Any buyer or transferee of Lessor’s interest
in this Lease shall be deemed to have assumed Lessor’s obligation hereunder.  Brokers shall be third party beneficiaries of
the provisions of Paragraphs 1.10, 15, 22 and 31.  If Lessor fails to pay to Brokers any amounts
due as and for brokerage fees pertaining to this Lease when due, than such
amounts shall accrue Interest.  In
addition, if Lessor fails to pay any amounts to Lessee’s Broker when due,
Lessee’s Broker may send written notice to Lessor and Lessee of such failure
and if Lessor fails to pay such amounts within 10 days after said notice,
Lessee shall pay said monies to its Broker and offset such amounts against
Rent.  In addition, Lessee’s Broker shall
be deemed to be a third party beneficiary of any commission agreement entered
into by and/or between Lessor and Lessor’s Broker for the limited purpose of
collecting any brokerage fee owed.

 

15.3         Representations and
indemnities of Broker Relattionships.  Lessee and Lessor each represent and warrant
to the other that it has had no dealings with any person, firm, broker or
finder (other than the Brokers, if any) in connection with this Lease, and that
no one other than said named Brokers is entitled to any commission or finder’s
fee in connection herewith.  Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys’ fees reasonably Incurred with respect thereto.

 

16.          Estoppel Certificates.

 

(a)           Each Party (as “Responding
Party”) shall within 10 days after written notices from the other
Party (the “Requesting Party”) execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the than most Current “Estoppel Certificate”
form published by the American Industrial Real Estate Association, plus such
additional Information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.

 

(b)           If the Responding Party shall fail to
execute or deliver the Estoppel Certificate within such 10 day period, the
Requesting Party may execute an Estoppel Certificate stating that: (i) the
Lease is in full force and effect without modification except as may be
represented by the Requesting Party, (ii) there are no uncured defaults in
the Requesting Party’s performance, and (iii) if Lessor is the Requesting
Party, not more than one month’s rent has been paid in advance.  Prospective purchasers and encumbrancers may
rely upon the Requesting Party’s Estoppel Certificate, and the Responding Party
shall be estoppel from denying the truth of the facts contained in said
Certificate.

 

(c)           If Lessor desires to finance,
refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors
shall deliver to any potential lender or purchaser designated by Lessor such
financial statements as may be reasonably required by such lender or purchaser,
Including but not limited to Lessee’s financial statements for the past 3
years.  All such financial statements shall
be received by Lessor and such lender or purchaser In confidence and shall be
used only for the purposes herein set forth.

 

17.          Definition of Lessor.  The term “Lessor”
as used herein shall mean the owner or owners at the time in question of the
fee title to the Promises, or, if this is a sublease, of the Lessee’s interest
in the prior lease.  In the event of a
transfer of Lessor’s title or interest in the Premises or this Lease.  Lessor shall deliver to the transferee or
assignee (in cash or by credit) any unused Security Deposit held by
Lessor.  Except as provided in Paragraph
15, upon such transfer or assignment and delivery of the Security Deposit, as
aforesaid, the prior Lessor shall be relieved of all liability with respect to
the obligations and/or covenants under this Lease thereafter to be performed by
the Lessor.  Subject to the foregoing,
the obligations and/or covenants In this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.  Notwithstanding the above, and subject to the
provisions of Paragraph 20 below, the original Lessor under this Lease, and all
subsequent holders of the Lessor’s interest in this Lease shall remain liable
and responsible with regard to the potential duties and liabilities of Lessor
pertaining to Hazardous Substances as outlined in Paragraph 6.2 above.

 

18.          Severability.  The Invalidity of any provision of this
Lease, as determined by a court of competent jurisdiction, shall in no way
affect the validity of any other provision hereof.

 

19.          Days. 
Unless otherwise specifically indicated to the contrary, the word “days”
as used in this Lease shall mean and refer to calendar days.

 

20.          Limitation on Liability.  Subject to the provisions of Paragraph 17
above, the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction

 

21.          Time of Essence.  Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.

 

22.          No Prior or Other Agreements; Broker Disclaimer.  This Lease contains all agreements between
the Parties with respect to any matter mentioned herein, and no other prior or
contemporaneous agreement or understanding shall be effective.  Lessor and Lessee each represents and
warrants to the Brokers that it has made, and is relying solely upon, its own
investigation as to the nature, quality, character and financial responsibility
of the other Party to this Lease and as to the use, nature, quality and
character of the Premises.  Brokers have
no responsibility with respect thereto or with respect to any default or breach
hereof by either Party.  The liability
(including court costs and attorneys’ fees), of any Broker with respect to
negotiation, execution, delivery or 

 

 

16

 

performance by either
Lessor or Lessee under this Lease or any amendment or modification hereto shall
be limited to an amount up to the fee received by such Broker pursuant to this
Lease; provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or willful misconduct
of such Broker.

 

23.          Notices.

 

23.1         Notice Requirements.  All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23.  The
addresses noted adjacent to a Party’s signature on this Lease shall be that
Party’s address for delivery or mailing of notices.  Either Party may by written notice to the
other specify a different address for notice, except that upon Lessee’s taking
possession of the Premises, the Premises shall constitute Lessee’s address or
notice.  A copy of all notices to Lessor
shall be concurrently transmitted to such party or parties at such addresses as
Lessor may from time to time hereafter designate in writing.

 

23.2         Date of Notice.  My notice sent by registered or certified
mail, return receipt requested, shall be deemed given on the date of delivery
shown on the receipt card, or if no delivery date is shown, the postmark thereon.  If sent by regular mail the notice shall be
deemed given 48 hours after the same is addressed as required herein and mailed
with postage prepaid.  Notices delivered
by United States Express Mail or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier.  Notices transmitted
by facsimile transmission or similar means shall be deemed delivered upon
telephone confirmation of receipt (confirmation report from fax machine is
sufficient), provided a copy is also delivered via delivery or mail.  If notice is received on a Saturday, Sunday
or legal holiday.  It shall be deemed
received on the next business day.

 

24.          Waivers. 
No waiver by Lessor of the Default or Breach of any term, covariant or
condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof.  Lessor’s consent to or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor’s consent to,
or approval of, any subsequent or similar act by Lessee, or be construed as the
basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent.  The acceptance
of Rent by Lessor shall not be a waiver of any Default or Breach by
Lessee.  Any payment by Lessee may be
accepted by Lessor on account of monies or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.

 

25.          Disclosures Regarding The Nature of a Real Estate Agency
Relationship.

 

(a)           When entering into a discussion with
a real estate agent regarding a real estate transaction, a Lessor or Lessee
should from the outset understand what type of agency relationship or representation
it has with the agent or agents in the transaction.  Lessor and Lessee acknowledge being advised
by the Brokers in this transaction, as follows:

 

(i)            Lessor’s Agent.  A Lessor’s agent under a listing agreement
with the Lessor acts as the agent for the Lessor only.  A Lessor’s agent or subagent has the
following affirmative obligations: To the Lessor: A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings with the Lessor.  To the Lessee and the Lessor;  a. Diligent exercise of reasonable skills and
care in performance of the agent’s duties. 
b. A duty of honest and fair dealing and good faith.  c. A duty to disclose all facts known to the
agent materially affecting the value or desirability of the property that are
not known to, or within the diligent attention and observation of, the
Parties.  An agent is not obligated to
reveal to either Party any confidential information obtained from the other
Party which does not involve the affirmative duties set forth above.

 

(ii)           Lessee’s Agent.  An agent can agree to act as agent for the
Lessee only.  In these situations, the
agent is not the Lessor’s agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part from the
Lessor.  An agent acting only for a
Lessee has the following affirmative obligations.  To the Lessee: A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings with the Lessee.  To the Lessee and the Lessor: a.
Diligent exercise of reasonable skills and care in performance of the agent’s
duties.  b. A duty of honest and fair
dealing and good faith.  c. A duty to disclose
all facts known to the agent materially affecting the value or desirability of
the property that are not known to, or within the diligent attention and
observation of, the Parties.  An agent is
not obligated to reveal to either Party any confidential information obtained
from the other Party which does not involve the affirmative duties set forth
above.

 

(iii)          Agent Representing Both Lessor and
Lessee.  A real estate agent, either
acting directly or through one or more associate licenses, can legally be the
agent of both the Lessor and the Lessee in a transaction, but only with the
knowledge and consent of both the Lessor and the Lessee.  In a dual agency situation, the agent has the
following affirmative obligations to both the Lessor end the Lessee: a. A
fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings
with either Lessor or the Lessee.  b.
Other duties to the Lessor and the Lessee as stated above in subparagraphs (i) or
(ii).  In representing both Lessor and
Lessee, the agent may not without the express permission of the respective
Party, disclose to the other Party that the Lessor will accept rent in an
amount less than that indicated in the Gating or that the Lessee is wiling to
pay a higher rent than that offered.  The
above duties of the agent in a real estate transaction do not relieve a Lessor
or Lessee from the responsibility to protect their own interests.  Lessor and Lessee should carefully read all
agreements to assure that they adequately express their understanding of the
transaction.  A real estate agent is a
person qualified to advise about real estate. 
If legal or tax advice is desired, consult a competent professional.

 

(b)           Brokers have no responsibility with
respect to any default or breach hereof by either Party.  The liability (Including court costs and
attorneys’ fees), of any Broker with respect to any breach of duty, 

 

 

17

 

error or omission
relating to this Lease shall not exceed the fee received by such Broker
pursuant to this Lease; provided, however, that the foregoing limitation on
each Broker’s liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

 

(c)           Buyer and Seller agree to identify to
Brokers as “Confidential” any communication or information given Brokers that
is considered by such Party to be confidential.

 

26.          No Right To Holdover.  Lessee has no right to retain possession of
the Premises or any part thereof beyond the expiration or termination of this
Lease.  In the event that Lessee holds
over, then the Base Rent shall be increased to 150% of the Base Rent applicable
immediately preceding the expiation or termination.  Nothing contained herein shall be construed
as consent by Lessor to any holding over by Lessee.

 

27.          Cumulative Remedies.  No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.

 

28.          Covenants and Conditions; Construction of Agreement.  All provisions of this Lease to be observed
or performed by Lessee are both covenants and conditions.  In construing this Lease, all headings and
titles are for the convenience of the Parties only and shall not be considered
a part of this Lease.  Whenever required
by the context, the singular shall include the plural and vice versa.  This Lease shall not be construed as if
prepared by one of the Parties, but rather according to its fair moaning as a
whole, as if both Parties had prepared it.

 

29.          Binding Effect; Choice of Law.  This Lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located.  Any litigation between the Parties hereto
concerning this Lease shall be initiated in the county in which the Premises
are located.

 

30.          Subordination; Adornment; Non-Disturbance.

 

30.1         Subordination.  This Lease and any Option granted hereby
shall be subject and subordinate to any ground lease, mortgage, deed of trust,
or other hypothecation or security device (collectively, “Security
Device”), now or hereafter placed upon the Premises, to any and all
advances made an the security thereof, and to all renewals, modifications, and
extensions thereof.  Lessee agrees that
the holders of any such Security Devices (in this Lease together referred to as
“Lender”) shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease.  Any Lender may elect to have this Lease
and/or any Option granted hereby superior to the lien of its Security Device by
giving written notice thereof to Lessee, whereupon this Lease and such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof.

 

30.2         Attornment.  Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that In the event of such foreclosure, such new owner shall not: (a) to
liable for any act or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership; (b) be subject to any offsets
or defenses which Lessee might have against any prior lessor.  (c) be bound by prepayment of more than
one month’s rent, or (d) be liable for the return of any security deposit
paid to any prior lessor.

 

30.3         Non-Disturbance.  With respect to Security Devices entered into
by Lessor after the execution of this Lease. 
Lessee’s subordination of his Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a “Non-Disturbance
Agreement”) from the Lender which Non-Disturbance Agreement provides
that Lessee’s possession of the Premises, and this Lease, including any options
to extend the term hereof, will not be disturbed so long as Lessee is not in
Breach hereof and attorns to the record owner of the Premises.  Further, within 60 days after the execution
of this Lease Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device
which s secured by the Promises.  In the
event that Lessor is unable to provide the Non-Disturbance Agreement within
said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and
attempt to negotiate for the execution and delivery of a Non-Disturbance
Agreement.

 

30.4         Self-Executing.  The agreements contained in this Paragraph 30
shall be affective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender In connection with
a sale, financing or refinancing of the Premises, Lessee and Lessor shall
execute such further writings as may be reasonably required to separately
document any subordination, attornment and/or Non-Disturbance Agreement
provided for herein.

 

31.          Attorneys’ Fees.  If any Party or Broker brings an action or
proceeding involving the Premises whether founded in tort, contract or equity,
or to declare rights hereunder, the Prevailing Party (as hereafter defined) in
any such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys’ fees.  Such fees may be
awarded in the same suit or recovered in a separate suit, whether or not such
action or proceeding is pursued to decision or judgment.  The term, “Prevailing
Party” shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be, whether
by compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense.  The
attorneys’ fees award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse at attorneys’ fees reasonably
incurred.  In addition, Lessor shall be
entitled to attorneys’ fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith,
whether or not a legal action is subsequently commenced in connection with such
Default or resulting Breach ($200 is a reasonable minimum per occurrence for
such services and consultation).

 

32.          Lessor’s Access; Showing Premises; Repairs.  Lessor and Lessor’s agents shall have the
right to enter the Premises at any time. 
In the case of an emergency, and otherwise at reasonable times for the
purpose of showing the same to prospective purchasers, lenders, or tenants, and
making such alterations, repairs, improvements or additions to the Premises as
Lessor may deem necessary.  All such
activities shall be without abatement of rent or liability to Lessee.  Lessor may at any time place on the Premises
any ordinary “For Sale” signs and Lessor may
during the last 

 

 

18

 

6 months of the term
hereof place on the Premises any ordinary “For Lease”
signs.  Lessee may at any time place on
the Premises any ordinary “For Sublease”
sign.

 

33.          Auctions. 
Lessee shall not conduct, nor permit to be conducted, any auction upon
the Premises without Lessor’s prior written consent.  Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to permit an auction.

 

35.          Termination; Merger.  Unless specifically stated otherwise in
writing by Lessor, the voluntary or other surrender of this Lease by Lessee,
the mutual termination or cancellation hereof, or a termination hereof by
Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, that Lessor may elect to
continue any one or all existing subtenancies. 
Lessor’s failure within 10 days following any such event to elect to the
contrary by written notice to the holder of any such lesser interest, shall
constitute Lessor’s election to have such event constitute the termination of
such interest.

 

36.          Consents. 
Except as otherwise provided herein, wherever in this Lease the consent
of a Party is required to an act by or for the other Party, such consent shall
not be unreasonably withheld or delayed. 
Lessor’s actual reasonable costs and expenses (including but not limited
to architects’ attorneys’, engineers’ and other consultants’ fees) incurred in
the consideration of, or response to, a request by Lessee for any Lessor
consent, including but not limited to consents to an assignment a subletting or
the presence or use of a Hazardous Substance, shall be paid by Lessee upon
receipt of an invoice and supporting documentation therefor.  Lessor’s consent to any act, assignment or
subletting shall not constitute an acknowledgment that no Default or Breach by
Lessee of this Lease exists, nor shall such consent be deemed a waiver of any
then existing Default or Breach, except as may be otherwise specifically stated
in writing by Lessor at the time of such consent.  The failure to specify herein any particular
condition to Lessor’s consent shall not preclude the imposition by Lessor at
the time of consent of such further or other conditions as are than reasonable
with reference to the particular matter for which consent is being given.  In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests the
reasons for such determination, the determining party shall furnish its reasons
in writing and in reasonable detail within 10 business days following such
request.

 

38.          Quiet Possession.  Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee’s part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.

 

39.          Options. 
If Lessee is granted an option, as defined below, then the following
provisions shall apply.

 

39.1         Definition.  “Option” shall
mean; (a) the right to extend the term of or renew this Lease or to extend
or renew any lease that Lessee has en other property of Lessor: (b) the
right of first refusal or first offer to lease either the Premises or other
property of Lessor (c) the right to purchase or the right of first refusal
to purchase the Premises or other property of Lessor.

 

39.3         Multiple Options.  In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised
unless the prior Options have been validly exercised.

 

39.4         Effect of Default on
Options.

 

(a)           Lessee shall have no right to
exercise an Option: (i) during the period commencing with the giving of
any notice of Default and continuing until said Default is cured, (ii) during
the period of time any Rent is unpaid subject to applicable notice and cure
periods, (iii) during the time Lessee is in Breach of this Lease subject
to applicable notice and cello periods, or (iv) in the event that Lessee
has been given 3 or more notices of separate Default, whether or not the
Defaults are cured, during the 12 month period Immediately preceding the
exercise of the Option.

 

(b)           The period of time within which an
Option may be exercised shall not be extended or enlarged by reason of Lessee’s
inability to exercise an Option because of the provisions of Paragraph 39.4(a).

 

(c)           An Option shall terminate and be of
no further force or effect, notwithstanding Lessee’s duo and timely exercise of
the Option, if, after such exercise and prior to the commencement of the
extended term, (i) Lessee falls to pay Rent for a period of 30 days after
such Rent becomes due subject to applicable notice and cure periods, (ii) Lessor
gives to Lessee 3 or more notices of separate Default during any 12 month
period, whether or not the Defaults are cured, or (iii) if Lessee commits
a Breach of this Lease subject to applicable notice and cure periods.

 

 

19

 

40.          Security Measures.  Lessee hereby acknowledges that the Rent
payable to Lessor hereunder does not include the cost of guard service or other
security measures with respect to rte Premises, and that Lessor shall have no
obligation whatsoever to provide same. 
Lessee assumes all responsibility for the protection of the Premises,
Lessee, Its agents and Invitees and their property from the acts of third
parties.

 

41.          Reservations.  Lessor reserves the right: (i) to grant,
without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor seems necessary, (ii) to cause the recordation of
parcel maps and restrictions, and (iii) to create and/or install new
utility raceways, so long as such easements, rights, dedications, maps, restrictions,
and utility raceways do not unreasonably Interfere with the use of the Premises
by Lessee.  Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate such rights.

 

42.          Performance Under Protest.  If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment “under protest” and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum.  If it shall be adjudged that there was no
legal obligation on the part of said Party to pay such sum or any part thereof,
said Party shall be entitled to recover such sum or so much thereof as It was
not legally required to pay.

 

43.          Authority.  If either Party hereto is a corporation,
trust, limited liability company, partnership, or similar entity, each
Individual executing this Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
its behalf.  Each party shall, within 30 days
after request, deliver to the other party satisfactory evidence of such
authority.

 

44.          Conflict. 
Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.

 

45.          Offer. 
Preparation of this Lease by either party or their agent and submission
of same to the other Party shall not be deemed an offer to lease to the other
Party.  This Lease is not intended to be
binding until executed and delivered by all Parties hereto.

 

46.          Amendments.  This Lease may be modified only in writing,
signed by the Parties in interest at the time of the modification.  As long as they do not materially change
Lessee’s obligations hereunder, Lessee agrees to make such reasonable
non-monetary modifications to this Lease as may be reasonably required by a
Lender in connection with the obtaining of normal financing or refinancing of
the Premises.

 

47.          Multiple Parties.  If more than one person or entity is named
herein as either Lessor or Lessee, such multiple Parties shall have joint and
several responsibility to comply with the terms of this Lease.

 

48.          Waiver of Jury Trial.  The Parties hereby waive their respective
rights to trial by jury in any action or proceeding involving the Property or
arising out or this Agreement

 

49.          Mediation and Arbitration of Disputes.  An Addendum requiring the Mediation and/or
the Arbitration of all disputes between the Parties and/or Brokers arising out
of this Lease o is x
is not attached to this Lease.

 

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW
THEIR INFORMED AND VOLUNTARY CONSENT THERETO. 
THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE
TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND
PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

 

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
TO WHICH IT RELATES.  THE PARTIES ARE
URGED TO:

 

1.             SEEK ADVICE OF
COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

 

2.             RETAIN APPROPRIATE
CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION of THE PREMISES.  SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE
UNITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE
PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING
SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE
SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.

 

WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA,
CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE
LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED.

 

 

20

 

 

The parties hereto have executed this Lease at the place and on the
dates specified above their respective signatures.

 

	
  Executed at:

  	
  San Diego CA

  	
   

  	
  Executed at:

  	
  Woodland Hills CA

  
	
  on:

  	
   

  	
   

  	
  on:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By LESSOR:

  	
   

  	
   

  	
  By LESSEE:

  	
   

  
	
  Enterprise Heights
  Industrial Centre

  	
   

  	
  Nexsan
  Technologies, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Charles R. Swimmer

  	
   

  	
  By:

  	
  /s/ Mohan Vachani

  
	
  Name Printed:

  	
  Charles R. Swimmer

  	
   

  	
  Name Printed:

  	
   

  
	
  Title:

  	
  General Partner

  	
   

  	
  Title:

  	
   

  
	
  Address:

  	
  5414 Oberline
  Dr. Ste 140

  	
   

  	
  Address:

  	
  21700 Oxnard St Ste
  1850

  
	
  San Diego CA 92121

  	
   

  	
  Woodland Hills CA 91367

  
	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (858) 597-6888

  	
   

  	
  Telephone:

  	
  (818) 715-9111

  
	
  Facsimile:

  	
  (858) 597-6880

  	
   

  	
  Facsimile:

  	
  (818) 715-9175

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  

 

21

 

ADDENDUM
ONE TO

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE — GROSS

 

This
ADDENDUM ONE TO STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE — GROSS (“Addendum”)
is made and entered into by and between Enterprise Heights
Industrial Centre Associates, a California General Partnership (“Lessor”)
and Nexsan Technologies, Inc.  (“Lessee”) as of the date set forth on the
first page of that certain STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT
LEASE — GROSS (the “Lease”) between Lessor and Lessee to which this Addendum is
attached and incorporated.  The terms,
covenants, and conditions set forth herein are intended to and shall have the
same force and effect as if set forth at length in the body of the Lease.  To the extent that provisions of this
Addendum are inconsistent with any provisions of the Lease, the provisions of
this Addendum shall supersede and control.

 

50.                                 Base
Rent: The base monthly rent during the lease term shall
be as follows:

 

	
  Months

  	
   

  	
  1 — 12

  	
   

  	
  $

  	
  9,916.00

  
	
  Months

  	
   

  	
  13 — 24

  	
   

  	
  $

  	
  10,329.00

  
	
  Months

  	
   

  	
  25 — 36

  	
   

  	
  $

  	
  10,742.00

  
	
  Months

  	
   

  	
  37 — 48

  	
   

  	
  $

  	
  11,155.00

  
	
  Months.

  	
   

  	
  49 — 60

  	
   

  	
  $

  	
  11,568.00

  

 

51.                                 Half—Rent:  The base monthly rent in months 2, 3 and 4 of
the lease term shall be half-rent in the amount Four Thousand Nine Hundred
Fifty-Eight and 00/100 Dollars ($4,958.00) each month.  The Lessee shall be responsible for the full
amount of operating expenses during the half-rent period.

 

52.                                 Tenant Improvements:  Notwithstanding anything contained in the
Lease, the Lessor shall provide a Tenant Improvement allowance of Twenty-Five
Thousand and 00/100 Dollars ($25,000.00). 
The allowance will be used on Tenant Improvements to the premises which
may be approved in writing by the Lessor. 
The Lessor will be responsible for separately demising the subject
space, including water, electric and HVAC. 
The Lessor will be responsible for separately demising the subject
space, including walls, electric and HVAC. 
The Tenant Improvements and the allowance will be governed by the Work
Letter Agreement attached to the Lease as Exhibit B.

 

53.                                 Operating Expenses:  Notwithstanding any other provision of the
Lease, Lessor will invoice Lessee for Lessee’s Share of Common Area Operating
Expenses for the Project at a fixed rate of Nine Hundred Sixty-four and 00/100
Dollars ($964.00) per mouth, (“Lessee’s Charge”) during the Original, Term and
the Option term.  Lessor represents and
warrants that Lessee’s Charge reflects Lessee’s Share of actual costs incurred
by Lessor for Common Area Operating Expenses at the existing levels of service
currently provided to the Project. 
Lessor agrees that it will not reduce such levels of service, or any
portion thereof, during the Original Term or Option term.  Lessor and Lessee further agree that Lessee’s
Charge will not be adjusted for any future increases or decreases in actual
costs incurred by Lessor for Common Area Operating Expenses.

 

54.                                 Utilities:  Lessee shall pay for all utilities to the
Premises on a separately-metered basis.

 

55.                                 Option to Renew:  The Lessee will have one (1) option to
renew the lease for a three (3) year term. 
The rent for the option term shall be as follows:

 

Year 1                                                               $11,915 per
month

Year 2                                                               $12,272 per
month

Year 3                                                               $12,640 per
month

 

The
Lessee will notify Lessor in writing of their intent to exercise the option on
or before sixty (60) days prior to expiration of the lease.

 

56.                                 Force Majeure:  Notwithstanding anything to the contrary
contained in this Lease, neither party hereto shall be required to perform any
term, condition or covenant of this Lease as long as such performance is
delayed or prevented by force majeure, which shall mean acts of God, strikes,
lockouts, material or labor restrictions by any governmental 

 

 

authority,
civil riot, floods and any other cause not reasonably within the control of
such party and which, by the exercise of due diligence, such party is unable,
wholly or in part, to prevent or overcome. 
The foregoing shall not excuse either party from the payment of any
monies due pursuant to the terms of this Lease, except that the Commencement
Date and Lessee’s obligation to pay Rent shall be extended on a day-for-day
basis for each day of delay attributable to Lessee’s inability to hire
contractors for the construction of Tenant Improvements because such
contractors are unavailable due to the impact of recent wildfires affecting
parts of San Diego County, California.

 

57.                                 Assignment and Subleasing and
Definition Profits: 
Notwithstanding anything to the contrary contained in the Lease:

 

(a)                                  In the event of
an approved assignment or sublease, Lessor shall be entitled to receive fifty
percent (50%) of the Profits (as defined below) actually received by Tenant
pursuant to such approved assignment or sublease.  Whenever Lessor is entitled to share in any
excess income resulting from an assignment of the Lease or sublease of the
Premises, the following shall constitute the definition of “Profits”: the gross
revenue received from the assignee or sublessee during the sublease term or
during the assignment, less: (i) the gross revenue paid to Lessor by
Lessee during the period of the sublease term or during the assignment; (ii) the
gross revenue paid to Lessor by Lessee for all days the portion of the Premises
in question was vacated from the date that Lessee first vacated that portion of
the Premises until the date the assignee or sublessee as to pay rent; (iii) any
improvement allowance or other economic concession (planning allowance, moving
expenses, etc.), paid by Lessee to sublessee or assignee; (iv) brokers’
commissions; (v) attorneys’ fees; (vi) lease takeover payments; (vii) costs
of advertising the space for sublease or assignment; and (viii) unamortized
cost of initial and subsequent improvements to the Premises by Lessee.

 

(b)                                 Lessee may
assign this Lease at any time, or sublease all or part of the Premises, without
receipt of Lessor’s consent, to any entity which acquires all or part of
Lessee, or which is acquired in whole or in part by Lessee, or which is
controlled directly or indirectly by Lessee, or which entity controls, directly
or indirectly, Lessee (“affiliate”), or which owns or is owned by the
affiliate, so long as such transaction was not entered into as a subterfuge to
avoid the obligations and restrictions of this Lease.  Lessee shall not be obligated to share any
Profits resulting from such an assignment or sublease to an affiliate.

 

58.                                 Signs:  Lessee shall have the right to place signage
on the Building with Lessor’s prior written consent, which shall not be
unreasonably withheld (any such approved signage shall be referred to as an “Approved
Sign”).  All Approved Signs must comply
with all laws and local zoning ordinances. 
Lessee may use its own design, graphics, materials, colors and similar
specifications and so long as they are consistent with the exterior design,
materials and appearance of the Building. 
The cost incurred in connection with the initial purchase and
installation of any Approved Signs shall be paid by Lessee.  Lesser shall be responsible for maintaining
any Approved Signs in good condition and repair throughout the Lease Term, at
Lessee’s sole cost.  Upon the expiration
of the Term, or other earlier termination, of the Lease, Lessee shall remove
any Approved Signs ax Lessee’s sole cost and Lessee shall be responsible for
the cost to repair and restore any damage to the Building caused by the
placement or removal of such signs, normal wear and tear excepted.

 

59.                                 Notices:  All notices required under Section 13 of
the Lease are in addition to, and not in lieu of, any notices required by law.

 

60.                                 Modifications to Other Lease
Provisions:  The Lease
is hereby amended as follows:

 

(i)                                     Section 1.3
is deleted in its entirety and replaced with the following new Section 1.3:

 

“1.3
Term:  5 years and 0 months (“Original
Term”) commencing on the date (“Commencement Date”) that is the earlier of (i) the
date Lessee occupies the Premises and commences business operations at the
Premises, and (ii) January 1, 2004, and ending 

 

2

 

on
the date (“Expiration Date”) that is the fifth (5th) anniversary of the
Commencement Date.”

 

(ii)                                  Section 6.2(e) is
deleted in its entirety and replaced with the following new Section 6.2(c):

 

“(e)                            Lessor
Indemnification.  Lessor and its
successor and assigns shall indemnity, defend, reimburse and hold Lessee, its
agents, employees, invitees and lenders, harmless from and against any and all
business interruption losses, environmental damages (including, without
limitation, the cost of investigation, removal, remediation, restoration end/or
abatement), liabilities, judgments, claims, expenses, penalties, and attorneys’
and consultants’ fees arising out of or involving any Hazardous Substance
located in, on, under or about the Project, or any part thereof prior to the
Start Date or which are caused or permitted to be located in, on, under or
about the Project by Lessor, its agents or employees or any third party (other
than third parties acting by or for Lessee) after the Start Date.  Lessor’s obligations under this Section 6.2(e) shall
survive the expiration or termination of this Lease.  No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessor from it s
obligations under this Section 6.2(e) unless specifically so agreed
by Lessee in writing at the time of such agreement”

 

(iii) Section 23.2 is deleted in its entirety and replaced
with the following new Section 23.2:

 

“23.2
Date of Notice.  All notices required or
permitted under this Lease shall be effective upon receipt.  Notices may be delivered by registered or
certified mail, return receipt requested or via facsimile with printed
confirmation of successful transmission, provided an original is also delivered
via delivery or U.S. mail.  If notice is
received on a Saturday, Sunday or legal holiday, it shall be deemed received on
the next business day.”

 

3

 

EXHIBIT A

 

ENTERPRISE HEIGHTS INDUSTRIAL CENTRE

 

TENANT RULES & REGULATIONS

 

1.                                       Use
Of Leased Premises:  The
premises shall be used only for manufacturing, processing, storage, wholesale,
office laboratory, professional and research and development activities or for
such other uses as may be permitted under the M-1 Zone in effect in the City of
Escondido.  There shall not be permitted
any junk or salvage yard or any other use which will be offensive to adjoining
tenants or the neighborhood by reason of odor, fumes, dust smoke, bright
lights, noise, visibility or pollution or will be hazardous by reason of danger
of fire or explosions.

 

2.                                       Use
of Common Area:  The Common
Area shall be used only for vehicular loading, vehicular parking and vehicular
and pedestrian movement within the Property. 
No business is to be conducted by any tenant in any Common Area space
and no storage of any kind will be allowed except with prior written permission
of the owner.  Tenant will be charged for
special cleanups if required as a result of tenant’s activities.

 

3.                                       Parking:  All vehicles must be parked in designated
parking spaces and kept clear of all designated loading areas and fire lanes.

 

4.                                       Restrictions
on Conduct of Business:  The permitted uses described in Paragraph 1
above shall be conducted under the following conditions:

 

a)                                      Noise - No tenant
shall produce noise as such levels as will be offensive to adjoining tenants or
to the neighborhood.

 

b)                                     Vibration - Equipment
creating earthshaking vibrations shall be set back a sufficient distance from
demising walls and shall be so mounted as to eliminate vibration hazard or
nuisance beyond tenant’s demising walls.

 

c)                                      Smoke - No tenant
shall discharge into the atmosphere any air contaminant producing a public
nuisance or hazard.

 

d)                                     Toxic
or Noxious Matter - No tenant shall discharge into the sewer system
or storm drain any toxic or noxious matter in such concentration as to be
detrimental to or endanger the public health, safety, welfare or cause injury
or damage to neighboring property or business.

 

e)                                      Odorous
Matter - No tenant shall emit odorous matter in such quantity as to be
readily detectable beyond its leased premises.

 

f)                                        Fire
and Explosive Hazards - Storage, utilization or manufacture of
active burning materials shall be so accomplished as to be accessible co she
automatic sprinkler system.  Materials
which produce flammable or explosive vapors or gases under ordinary weather
temperatures shall not be permitted except where required for emergency
equipment or incidental to a principal operation such as paint spraying.  In such cases, adequate protection shall be
provided in conformance with the City Building Code.

 

g)                                     Glare
or Heat - Any operation producing intense glare or beat shall be performed so
as not to create a public nuisance or hazard.

 

h)                                     Air
Pollution - No tenant shall discharge into the air pollutants
or contaminants sufficient to create a nuisance, and no processes which by their
nature are likely to cause air pollution shall be undertaken or permitted
unless there is available an adequate, economically feasible method of
controlling the emission of contaminants and such controls arc applied by
tenant.

 

i)                                         Hazardous
Waste - All hazardous waste materials must be properly stored and promptly
disposed of by tenant in accordance with all applicable governmental
regulations.  Tenant is responsible for
obtaining and keeping current required governmental permits.  Tenant may be required to purchase special
insurance covering owner from any liability resulting from storage of hazardous
waste materials.

 

5.                                       Advertising:  No billboards or outdoor advertising of any
sort will be permitted.

 

	
  /s/ Charles R. Swimmer

  	
   

  	
  /s/ Mohan Vachani

  
	
  Lessor

  	
   

  	
  Lessee

  

 

 

EXHIBIT B

 

WORK LETTER AGREEMENT

 

This
Work Letter Agreement (“Agreement”) is being entered into as of November       ,
2003, between Enterprise Heights Industrial Centre Associates, a California
general partnership (“Lessor”), and Nexsan Technologies, Inc., a Delaware
corporation (“Lessee”), in connection with the execution of the Lease between
Lessor and Lessee of even date herewith (“Lease”), who hereby agree as follows:

 

1.                                       General.

 

(a)                                  The purpose of
this Agreement is to set forth how the Tenant Improvements (as defined in Section 5
below) in the Premises are to be constructed, who will undertake the
construction of the Tenant Improvements, who will pay for the construction of
the Tenant Improvements, and the time schedule for completion of the
construction of the Tenant Improvements.

 

(b)                                 Except as defined
in this Agreement to the contrary, all terms utilized in this Agreement shall
have the same meaning ascribed to-them in the Lease.  When work, services, consents or approvals
are to be provided by or on behalf of Lessor, the term “Lessor” shall include
Lessor’s agents, contractors, employees and affiliates.

 

(c)                                  The provisions
of the Lease, except where clearly inconsistent or inapplicable to this
Agreement, are incorporated into this Agreement.

 

(d)                                 The Tenant
Improvements shall be constructed pursuant to this Agreement by Lessee.  Lessor shall provide the Tenant Improvement
Allowance (as defined in Section 6 below) and shall cause the Lessor’s
Work (as defined in Section 16 below) to be constructed pursuant to the
Base Building Plans (as defined in Section 3(b) below).

 

2.                                       Construction
and Move-In Periods.

 

(a)                                  Construction
Period.  Commencing on the Early
Possession Date, Lessee shall have free and unfettered access to the Premises
to perform the Tenant Improvements.

 

(b)                                 Delay of
Commencement Date.  The
Commencement Date shall be delayed by one (1) business day, and in no
event later than February 29, 2004, for each business day of delay in the
Substantial Completion of the Tenant Improvements that is caused by any force
majeure delay (as set forth in Section 56 of the Lease) or Lessor
delay.  No Lessee delay, Lessor delay or
force majeure delay shall be deemed to have occurred unless and until the party
claiming such delay has provided written notice to the other party specifying
the action or inaction that such notifying party contends constitutes a Lessee
delay, Lessor delay, or Force Majeure delay, as applicable.  If such action or inaction is not cured
within one (1) business day after receipt of such notice, then a Lessee
delay, Lessor delay, or force majeure delay, as set forth in such notice, shall
be deemed to have occurred commencing as of the date such notice is received
and continuing for the number of days the Substantial Completion of the
Premises was in fact delayed as a direct result of such action or inaction.

 

(c)                                  Certain
Definitions.

 

(i) The term “Substantially Complete” or “Substantial
Completion” as used in the Lease, this Agreement, or the Addendum shall
mean:  (1) all of the Building’s
heating, ventilating, and air-conditioning (“HVAC”), and plumbing, life-safety,
mechanical and/or electrical systems (collectively, “Building Systems”) are
operational to the extent necessary to service the Premises, provided, however
that during the construction of the Tenant Improvements, such Building Systems
shall also be operational for the three (3) week period prior to the
commencement of the installation of Lessee’s finishes; (2) Lessor has
completed all Lessor work required to be performed by Lessor in accordance with
this Agreement, including punch-list items; (3) Lessor has obtained a
certificate of occupancy for the Building, or a temporary certificate of
occupancy for that 

 

 

portion
of the Building that includes all of the Premises, or its equivalent (except to
the extent delayed by any Lessee delay); (4) Lessee has been provided with
the number of parking privileges and spaces to which it is entitled under the
Lease; (5) Lessee has been tendered continuous and uninterrupted access to
the Premises, including priority use of elevators in accordance with Section 20
below; and (6) Lessee has received the non-disturbance agreement, signed
by Lessor and each lien holder, ground lessor or mortgagee of record, as
required by the Lease.

 

(ii)                                  The term “Lessor delay” as
used in this Agreement means any delay in the completion of the Tenant
Improvements which is due to any act or omission of Lessor (wrongful, negligent
or otherwise), its agents or contractors (including acts or omissions while
acting as agent or contractor for Lessee).

 

3.                                       Preparation of
Plans and Construction Schedule and Procedures.  Lessee shall arrange for the construction of
the Tenant Improvements in accordance with the following schedule:

 

(a)                                  Selection of
Designer and Engineer. 
Lessee shall select an architect or designer (“Designer”) and an
engineer (“Engineer”) familiar with all applicable Laws and Building
Requirements to the extent such Building Requirements have been provided to
Lessee.  The Designer and the Engineer
shall be selected by Lessee subject to Lessor’s consent, which consent shall
not be unreasonably withheld, and which consent (or refusal to consent for
reasonable reasons) shall be granted within two (2) business days after
Lessee has submitted the name of the Designer and the Engineer to Lessor.  This procedure shall be repeated until the
Designer and the Engineer are finally approved by Lessor and written consent
has been delivered to and received by Lessee.

 

(b)                                 Base Building
Plans.  Lessor shall submit
instructions and “as-built” plans and specifications for the Building (“Base
Building Plans”) and all rules, regulations, instructions and procedures
promulgated by Lessor with respect to tenant design and/or construction in the
Building, including, without limitation, Building standard tenant improvements
(collectively, the “Building Requirements”) to the Designer sufficient to allow
the Designer to complete a Space Plan (as defined in Paragraph (c) below).  Lessor shall have submitted to Lessee the
Base Building Plans and the Building Requirements prior to the execution of the
Lease.

 

(c)                                  Preparation and
Approval of Space Plan. 
Lessee shall submit to the Designer all additional information including
occupancy requirements for the Premises (“Information”) necessary to enable the
Designer to prepare (i) a space plan showing all demising walls,
corridors, entrances, exits, doors, interior partitions, laboratory space and
the locations of all offices, conference rooms, computer rooms, mini-service
kitchens, and the reception area (“Space Plan”), and (ii) the Working
Drawings (as defined below).  The
Designer shall incorporate applicable items described in the Building
Requirements into the Working Drawings, which Lessee is required to utilize in
the construction of the Tenant Improvements.

 

Lessee shall cause the Designer to submit to Lessor the Space Plan for
Lessor’s review and approval.  Within two
(2) business days after Lessor receives the Space Plan, Lessor shall
either approve or disapprove the Space Plan for reasonable and material reasons
(which shall be limited to the following: (i) adverse affect on the
structural integrity of the Building; (ii) possible damage to the Building
Systems; (iii) non-compliance with applicable codes; or (iv) adverse
affect on the exterior appearance of the Building (each, a “Design Problem”))
and return the Space Plan to Lessee.  In
such event, Lessor shall require, and Lessee shall make the minimum changes
necessary in order to correct the Design Problems and shall return the Space
Plan to Lessor, which Lessor shall approve or disapprove in his best efforts
within one (1) business day, but no more than three (3) business days
after Lessor receives the revised Space Plan. 
This procedure shall be repeated until the Space Plan is finally
approved by Lessor and written approval has been delivered to and received by
Lessee.

 

(d)                                 Preparation and
Approval of Working Drawings.  After the Space Plan is finally approved by
Lessor, Lessee shall submit to Lessor drawings prepared by the Designer (“Working
Drawings”) which shall be compatible with the design, construction 

 

2

 

and
equipment of the Building, comply with all Laws, be capable of logical
measurement and construction, contain all such information as may be required
for the construction of the Tenant Improvements, and the preparation of the
Engineering Drawings (as defined in Paragraph (e) below), and contain all
partition locations, plumbing locations, air conditioning system and duct work,
special air conditioning requirements, reflected ceiling plans, office
equipment locations, and special security systems.  Such Working Drawings must incorporate the
items required by Lessor for use in the Building, as set forth in the Building
Requirements.  The Working Drawings may
be submitted in one or more stages and at one or more times.

 

Lessor shall approve the Working Drawings, or such portion as has from
time to time been submitted, within three (3) business days after receipt
of same or designate by notice given within such time period to Lessee the
specific changes reasonably required to be made to the Working Drawings in
order to correct any Design Problem and shall return the Working Drawings to
Lessee.  Lessee shall make the minimum
changes necessary in order to correct any such Design Problem and shall return
the Working Drawings to Lessor, which Lessor shall approve or disapprove within
two (2) business days after Lessor receives the revised Working
Drawings.  This procedure shall be
repeated until all of the Working Drawings are finally approved by Lessor and
written approval has been delivered to and received by Lessee.

 

(e)                                  Preparation and
Approval of Engineering Drawings.  After the Working Drawings are finally approved
by Lessor, Lessee shall submit to Lessor for Lessor’s review and approval
engineering drawings prepared by the Engineer, showing complete mechanical,
electrical, plumbing, HVAC, telecommunication, and computer cabling plans (“Engineering
Drawings”).  The Engineering Drawings may
be submitted in one or more stages and at one or more times.

 

Lessor shall approve the Engineering Drawings, or such portion as has
from time to time been submitted, within three (3) business days after
receipt of same or designate by notice given within such time period to Lessee
the specific changes reasonably required to be made to the Engineering Drawings
in order to correct any Design Problem, and shall return the Engineering
Drawings to Lessee.  Lessee shall make
the minimum changes necessary in order to correct any such Design Problem and
shall return the Engineering Drawings to Lessor, which Lessor shall approve or
disapprove within two (2) business days after Lessor receives the revised
Engineering Drawings.  This procedure
shall be repeated until the Engineering Drawings are finally approved by Lessor
and written approval has been delivered to and received by Lessee.”

 

(f)                                    Integration
of Working Drawings and Engineering Drawings into Final Plans.  After Lessor has approved the Engineering
Drawings, Lessee shall cause the Designer to integrate the approved Working
Drawings with the approved Engineering Drawings (collectively “Final Plans”)
and deliver the Final Plans to Lessor.

 

Lessor shall approve the Final Plans within one (1) business day
after receipt of same or designate by notice given within such time period to
Lessee the specific changes reasonably required to be made to the Final Plans
in order to correct any Design Problem, and shall return the Final Plans to
Lessee.  Lessee shall make the minimum
changes necessary in order to correct any such Design Problem and shall return
the Final Plans to Lessor, which Lessor shall approve or disapprove within one (1) business
day after Lessor receives the revised Final Plans.  This procedure shall be repeated until all of
the Final Plans are finally approved by Lessor and written approval has been
delivered to and received by Lessee.

 

4.                                       Contractor and
Review of Plans.

 

(a)                                  Selection of
Contractor.  Lessee
shall select a contractor (“Contractor”) familiar with all Laws and Building
Requirements, subject to the approval of Lessor, which approval will not be
unreasonably withheld and shall be granted (or refused for reasonable reasons)
within three (3) business days after Lessee’s request for such
approval.  Lessee may have Lessor approve
three (3) or more Contractors prior to competitive bidding.  Lessee may enter into a construction contract
with the Contractor at a mutually agreed upon price, or, at Lessee’s election,
in the exercise of its sole 

 

3

 

discretion,
Contractor shall be selected by Lessee pursuant to competitive bidding.  The construction contract shall provide for
progress payments, and Lessee shall pay for the entire cost of the Tenant
Improvements in excess of the Tenant Improvement Allowance (as defined in Section 6(a) below)
after the Tenant Improvement Allowance has first been exhausted.

 

(b)                                 Lessor’s Review
Responsibilities.  Lessee
agrees and understands that the review of all plans pursuant to this Agreement
by Lessor is solely to protect the interests of Lessor in the Building and the
Premises, and, with the exception of the Base Building Plans and the
Engineering Drawings, Lessor shall not be the guarantor of, nor responsible
for, the correctness or accuracy of any such plans or compliance of such plans
with applicable Laws.

 

5.                                       Tenant
Improvements.  The term “Tenant
Improvements” shall mean all improvements shown in the Final Plans as
integrated by the Designer, and, to the extent specified in the Final Plans,
all signage, freestanding workstations, built-ins, related cabinets, reception
desks, conference room tables to the extent specified in the mill work or
comparable contracts, all telecommunication equipment and related wiring, and
all carpets and floor coverings, but, except as provided above, Tenant
Improvements shall not include any personal property of Lessee.  The Tenant Improvement Allowance shall only
be used for permanent fixtures within the building.

 

6.                                       Tenant
Improvement Allowance.

 

(a)                                  Amount.  Lessor will pay on behalf of Lessee an amount
equal to Twenty Five Thousand and No/100 Dollars ($25,000) (“Tenant Improvement
Allowance”).  With respect to the $25,000
Tenant Improvement Allowance, the monies are to be used only for the tenant
improvements within the subject Premises. 
All invoices that represent labor and/or materials as it applies to the
tenant improvements within the building shall be submitted to Madison Square
Properties (5414 Oberlin Drive, Suite 140, San Diego, California, Attn:
Lisa Bostick).  Lessor agrees to pay each
invoice for applicable tenant improvements within one (1) business day
after receiving such invoice from Lessee.

 

(b)                                 Amount Capped.  In no event shall the Lessor’s obligation
exceed the $25,000 Tenant Improvement Allowance.  Moreover, any items related to Tenant
Improvements, including but not limited to, plans, permits, fees, labor and/or
materials, etc.  shall be reimbursed to a
maximum amount not to exceed $25,000.

 

7.                                       Change Orders.  In the event that Lessee requests any changes
to the Final Plans, Lessor shall not unreasonably withhold its consent to any
such changes, and shall grant its consent to such changes within two (2) business
days after Lessor’s receipt of same, provided the changes do not create a
Design Problem.

 

8.                                       No Fee to
Lessor.  Except as otherwise provided
herein, Lessor shall receive no fee for supervision, profit, overhead or
general conditions in connection with the Tenant Improvements.

 

9.                                       No Miscellaneous
Charges.  Neither Lessee nor the
Contractor shall be charged for parking (to the extent parking is available) or
for the use of electricity, water, toilet facilities, HVAC, security, elevators
and/or hoists during the construction of the Tenant Improvements or during the
Move-In Period.

 

10.                                 Bonding.  Notwithstanding anything to the contrary set
forth in the Lease, Lessee shall not be required to obtain or provide any
completion or performance bond in connection with any construction, alteration,
or improvement work performed by or on behalf of Lessee.

 

11.                                 Staging Area.  In addition to Lessee’s rights with respect
to storage space as provided for under the Lease and the Addendum, during the
period prior to the Commencement Date, Lessee shall have the right, without the
obligation to pay rent, to use empty space in the Building designated by Lessor
for the purposes of storing and staging its furniture and equipment only.  With respect to this free storage space,
Lessee shall be responsible for providing all insurance and for providing any
necessary fencing or other 

 

4

 

protective
facilities.  Lessee shall hold Lessor
harmless and shall indemnify Lessor from and against any and all loss,
liability or cost arising out of or in connection with use of such storage
space by Lessee.  Lessee shall be
obligated to remove all of the stored materials and its fencing and other
facilities within ten (10) business days after Lessee’s receipt of written
notice from Lessor stating that such staging area is needed by Lessor for
construction of another tenant’s premises in which event comparable space, to
the extent such space is available, shall be made available to Lessee as a
substitute staging area.

 

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

 

	
  LESSOR:

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
   

  
	
  Enterprise
  Heights Industrial Centre Associates,

  	
   

  	
  Nexsan
  Technologies, Inc.,

  
	
  a
  California general partnership

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/
  Mohan Vachani

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  

 

5

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