Document:

Exhibit 4.1

 

Intrusion Common

 

	
  [FACE OF CERTIFICATE]

  	
   

  	
   

  

NUMBER

C

INCORPORATED UNDER THE LAWS OF THE STATE OF
DELAWARE

THIS CERTIFICATE IS TRANSFERABLE IN
RIDGEFIELD PARK, NJ OR NEW YORK, NY

INTRUSION INC.

SHARES

COMMON STOCK

CUSIP 46121E 20 5

SEE REVERSE FOR CERTAIN DEFINITIONS AND
RESTRICTIONS ON TRANSFER

THIS CERTIFIES THAT

is the OWNER of

FULLY PAID AND NON-ASSESSABLE SHARES OF
COMMON STOCK, $.01 PAR VALUE PER SHARE, OF INTRUSION INC. (herein called the
“Corporation”) transferable on the books of the Corporation by the holder
hereof, in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed or accompanied by a proper assignment. This
Certificate and the shares represented hereby are issued under and shall be
held subject to all of the provisions of the Certificate of Incorporation and
the By-laws of the Corporation, and all amendments thereto, copies of which are
on file at the principal offices of the Corporation and the Transfer Agent, to
all of which the holder of this Certificate, by acceptance hereof, assents.
This Certificate is not valid unless countersigned by the Transfer Agent and
registered by the Registrar of the Corporation.

IN WITNESS WHEREOF, the Corporation has
caused the facsimile signatures of its duly authorized officers and its
facsimile seal to be hereunto affixed.

[SIGNATURE]

PRESIDENT AND CHIEF EXECUTIVE OFFICER

[SIGNATURE]

SECRETARY

[CORPORATE SEAL]

DATED:

COUNTERSIGNED AND REGISTERED:

Mellon Investor Services LLC

TRANSFER AGENT AND REGISTRAR

BY

AUTHORIZED SIGNATURE

 

[REVERSE OF CERTIFICATE]

INTRUSION INC.

The Certificate of Incorporation of the
Corporation on file in the Office of the Secretary of State of Delaware sets
forth a full statement of (i) all of the designations, preferences, limitations
and relative rights of the shares of each class of capital stock authorized to
be issued, (ii) the authority of the Board of Directors to fix and determine
the relative rights and preferences of the shares of preferred stock which the
Corporation is authorized to issue in series and, if and to the extent fixed
and determined, the relative rights and preferences of any such series, (iii)
the denial to stockholders of preemptive rights to acquire unissued or treasury
shares or other securities of the Corporation and (iv) the denial to
stockholders of the right to cumulate votes in any election of directors of the
Corporation. The Corporation will furnish a copy of such statement to the
record holder of this Certificate without charge on written request to the
Corporation at its principal place of business or to the Transfer Agent and
Registrar.

The following abbreviations, when used in the
inscription on the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations:

TEN COM - as tenants in common

TEN ENT - as tenants by the entireties

JT TEN - as joint tenants with right of
survivorship and not as tenants in common

UNIF GIFT MIN ACT - .........................
(Cust) Custodian ......................... (Minor) under Uniform Gifts to
Minors Act ..............................................................
(State)

Additional abbreviations may also be used
though not in the above list.

 

1

 

Intrusion Common

 

For Value Received, hereby sell(s), assign(s)
and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
INCLUDING POSTAL ZIP CODE, OF ASSIGNEE

Shares of the Common Stock represented by the
within Certificate and do(es) hereby irrevocably constitute and appoint

Attorney to transfer the said stock on the
books of the within-named Corporation with full power of substitution in the
premises.

Dated

NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

X (SIGNATURE)

X (SIGNATURE)

THE SIGNATURE(S) MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

SIGNATURE(S) GUARANTEED BY:

 

 

 

2EXHIBIT 10.7

 

 

LEASE

 

CALWEST INDUSTRIAL HOLDINGS TEXAS, L.P.,

 

Landlord,

 

and

 

INTRUSION INC.,

 

Tenant

 

 

TABLE OF CONTENTS

 

	
  1.

  	
   

  	
  USE AND RESTRICTIONS ON USE.

  	
   

  
	
  2.

  	
   

  	
  TERM.

  	
   

  
	
  3.

  	
   

  	
  RENT.

  	
   

  
	
  4.

  	
   

  	
  RENT
  ADJUSTMENTS.

  	
   

  
	
  5.

  	
   

  	
  SECURITY
  DEPOSIT

  	
   

  
	
  6.

  	
   

  	
  ALTERATIONS.

  	
   

  
	
  7.

  	
   

  	
  REPAIR.

  	
   

  
	
  8.

  	
   

  	
  LIENS

  	
   

  
	
  9.

  	
   

  	
  ASSIGNMENT AND SUBLETTING.

  	
   

  
	
  10.

  	
   

  	
  INDEMNIFICATION

  	
   

  
	
  11.

  	
   

  	
  INSURANCE.

  	
   

  
	
  12.

  	
   

  	
  WAIVER
  OF SUBROGATION

  	
   

  
	
  13.

  	
   

  	
  SERVICES
  AND UTILITIES.

  	
   

  
	
  14.

  	
   

  	
  HOLDING OVER

  	
   

  
	
  15.

  	
   

  	
  SUBORDINATION

  	
   

  
	
  16.

  	
   

  	
  RULES
  AND REGULATIONS

  	
   

  
	
  17.

  	
   

  	
  REENTRY
  BY LANDLORD.

  	
   

  
	
  18.

  	
   

  	
  DEFAULT.

  	
   

  
	
  19.

  	
   

  	
  REMEDIES.

  	
   

  
	
  20.

  	
   

  	
  TENANT’S
  BANKRUPTCY OR INSOLVENCY.

  	
   

  
	
  21.

  	
   

  	
  QUIET ENJOYMENT

  	
   

  
	
  22.

  	
   

  	
  CASUALTY

  	
   

  
	
  23.

  	
   

  	
  EMINENT DOMAIN

  	
   

  
	
  24.

  	
   

  	
  SALE BY
  LANDLORD

  	
   

  
	
  25.

  	
   

  	
  ESTOPPEL
  CERTIFICATES

  	
   

  
	
  26.

  	
   

  	
  SURRENDER
  OF PREMISES.

  	
   

  
	
  27.

  	
   

  	
  NOTICES

  	
   

  
	
  28.

  	
   

  	
  TAXES
  PAYABLE BY TENANT

  	
   

  
	
  29.

  	
   

  	
  RELOCATION
  OF TENANT

  	
   

  
	
  30.

  	
   

  	
  DEFINED TERMS AND HEADINGS

  	
   

  
	
  31.

  	
   

  	
  TENANT’S
  AUTHORITY

  	
   

  
	
  32.

  	
   

  	
  FINANCIAL
  STATEMENTS AND CREDIT REPORTS

  	
   

  
	
  33.

  	
   

  	
  COMMISSIONS

  	
   

  
	
  34.

  	
   

  	
  TIME AND
  APPLICABLE LAW

  	
   

  
	
  35.

  	
   

  	
  SUCCESSORS
  AND ASSIGNS

  	
   

  

 

 

	
  36.

  	
   

  	
  ENTIRE
  AGREEMENT

  	
   

  
	
  37.

  	
   

  	
  EXAMINATION
  NOT OPTION

  	
   

  
	
  38.

  	
   

  	
  RECORDATION

  	
   

  
	
  39.

  	
   

  	
  TENANT
  REPRESENATION

  	
   

  
	
  40.

  	
   

  	
  LIMITATION OF
  LANDLORD’S LIABILITY

  	
   

  
	
  EXHIBIT A – FLOOR PLAN
  DEPICTING THE PREMISES

  	
   

  
	
  EXHIBIT A-1 – SITE PLAN

  	
   

  
	
  EXHIBIT B – INITIAL
  ALTERATIONS

  	
   

  
	
  EXHIBIT C – COMMENCEMENT
  DATE MEMORANDUM

  	
   

  
	
  EXHIBIT D – RULES AND
  REGULATIONS

  	
   

  
	
  EXHIBIT E – RENEWAL OPTION

  	
   

  

 

 

GROSS (BY) OFFICE
LEASE

 

REFERENCE PAGES

 

	
  BUILDING:

  	
   

  	
  1101 East Arapaho Road

  Richardson, Texas, 75081

  
	
   

  	
   

  	
   

  
	
  LANDLORD:

  	
   

  	
  CALWEST INDUSTRIAL HOLDINGS TEXAS,

  L.P., a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
  LANDLORD’S ADDRESS:

  	
   

  	
  1406 Halsey Way, Suite 110

  Carrollton, TX 75007

  
	
   

  	
   

  	
   

  
	
  ADDRESS FOR
  RENT PAYMENT:

  	
   

  	
  CalWest
  Industrial Holdings Texas, L.P.

  P.O. Box 847973

  Dallas, Texas 75284

  
	
   

  	
   

  	
   

  
	
  LEASE REFERENCE DATE:

  	
   

  	
  January 12, 2004

  
	
   

  	
   

  	
   

  
	
  TENANT:

  	
   

  	
  INTRUSION INC., a Delaware
  corporation

  (successor-in-interest to Optical Data Systems, Inc.)

  
	
   

  	
   

  	
   

  
	
  TENANT’S NOTICE ADDRESS:

  	
   

  	
  1101 East Arapaho Road

  Richardson, Texas 75081

  
	
   

  	
   

  	
   

  
	
  PREMISES ADDRESS:

  	
   

  	
  1101 East Arapaho Road

  Richardson, Texas 75081
(for outline of Premises see Exhibit A)

  
	
   

  	
   

  	
   

  
	
  PREMISES
  RENTABLE AREA:

  	
   

  	
  Approximately
  32,834 sq. ft. (for outline of Premises see Exhibit A)

  
	
   

  	
   

  	
   

  
	
  USE:

  	
   

  	
  General office use

  
	
   

  	
   

  	
   

  
	
  COMMENCEMENT DATE:

  	
   

  	
  February 1, 2004

  
	
   

  	
   

  	
   

  
	
  TERM OF LEASE:

  	
   

  	
  Approximately six (6) years, one (1) month beginning on the
  Commencement Date and ending on the Termination Date.

  
	
   

  	
   

  	
   

  
	
  TERMINATION DATE:

  	
   

  	
  February 28, 2010

  
	
   

  	
   

  	
   

  
	
  ANNUAL RENT
  and MONTHLY INSTALLMENT OF RENT(Article 3):

  	
   

  	
   

  

 

	
  Period

  	
   

  	
  Rentable
  Square

  Footage

  	
   

  	
  Annual
  Rent

  Per Square Foot

  	
   

  	
  Annual
  Rent

  	
   

  	
  Monthly

  Installment of

  Rent

  	
   

  
	
  from

  	
   

  	
  through

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2/1/04

  	
   

  	
  1/31/06

  	
   

  	
  32,834

  	
   

  	
  $

  	
  11.00

  	
   

  	
  $

  	
  361,174.00

  	
   

  	
  $

  	
  30,097.83

  	
   

  
	
  2/1/06

  	
   

  	
  1/31/08

  	
   

  	
  32,834

  	
   

  	
  $

  	
  11.50

  	
   

  	
  $

  	
  377,591.00

  	
   

  	
  $

  	
  31,465.92

  	
   

  
	
  2/1/08

  	
   

  	
  1/31/09

  	
   

  	
  32,834

  	
   

  	
  $

  	
  12.00

  	
   

  	
  $

  	
  454,008.00

  	
   

  	
  $

  	
  32,834.00

  	
   

  
	
  2/1/09

  	
   

  	
  2/28/10

  	
   

  	
  32,834

  	
   

  	
  $

  	
  12.50

  	
   

  	
  $

  	
  410,425.00

  	
   

  	
  $

  	
  34,202.08

  	
   

  

 

iii

 

 

	
  BASE YEAR (EXPENSES):

  	
   

  	
  January 1, 2003
  to December 31, 2003 ($4.26 per square foot)

  
	
   

  	
   

  	
   

  
	
  BASE YEAR (TAXES):

  	
   

  	
  Taxes for
  January 1, 2003 to December 31, 2003 ($1.03 per square foot)

  
	
   

  	
   

  	
   

  
	
  HVAC EXPENSES:

  	
   

  	
  $1,238.18
  per month

  
	
   

  	
   

  	
   

  
	
  TENANT’S PROPORTIONATE SHARE:

  	
   

  	
  35.75%
  (based on a fraction, the numerator of which is the Premises Rentable Area
  and the denominator of which is the square footage of the Building, which is
  91,851 square feet)

  
	
   

  	
   

  	
   

  
	
  SECURITY DEPOSIT:

  	
   

  	
  $35,250.00
  (currently held by Landlord)

  
	
   

  	
   

  	
   

  
	
  ASSIGNMENT/SUBLETTING FEE:

  	
   

  	
  $1,500.00

  
	
   

  	
   

  	
   

  
	
  REAL ESTATE BROKER DUE COMMISSION:

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  
	
  TENANT’S SIC CODE:

  	
   

  	
  3660

  
	
   

  	
   

  	
   

  
	
  BUILDING BUSINESS HOURS:

  	
   

  	
  8:00 a.m. –
  6:00 p.m., Monday through Friday, excluding holidays

  
	
   

  	
   

  	
   

  
	
  AMORTIZATION RATE:

  	
   

  	
  N/A

  

 

The Reference Pages information is incorporated into
and made a part of the Lease.  In the
event of any conflict between any Reference Pages information and the Lease,
the Lease shall control.  This Lease
includes Exhibits A through E, all of which are made a part of this
Lease. 

 

	
  LANDLORD:

  	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CALWEST INDUSTRIAL HOLDINGS TEXAS, L.P.,

  a Delaware limited partnership 

  	
   

  	
  INTRUSION INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
    CALWEST TEXAS, LLC, a Delaware limited

  liability company

  Its:  General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  RREEF Management Company, a Delaware

  corporation, its Property Manager

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ CYNTHIA A. PRENDERGAST

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ G. WARD PAXTON

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Cynthia A. Prendergast

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  G. Ward Paxton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  District Manager

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
                

  	
  March 23, 2004

  	
   

  	
   

  	
   

  	
  Dated:

  	
   

  	
  March 16, 2004

  
																	

 

iv

 

LEASE

 

This Lease
restates and affirms that certain Lease dated September 12, 1989, as amended by
Supplemental Lease Agreement dated March 7, 1995 by and between Landlord’s
predecessor, G.D.A.F. ASSOCIATES, and Tenant’s predecessor, OPTICAL DATA
SYSTEMS, INC. (hereinafter collectively referred to as the “Original Lease”).  By this Lease Landlord leases to Tenant and
Tenant leases from Landlord the Premises in the Building as set forth and
described on the Reference Pages.  The
Premises are depicted on the floor plan attached hereto as Exhibit A,
and the Building is depicted on the site plan attached hereto as Exhibit A-1.  The Reference Pages, including all terms
defined thereon, are incorporated as part of this Lease.

 

1.             USE AND RESTRICTIONS ON USE.

 

1.1           The Premises are to be used solely
for general office purposes.  Tenant
shall not do or permit anything to be done in or about the Premises which will
in any way obstruct or interfere with the rights of other tenants or occupants
of the Building or injure, annoy, or disturb them, or allow the Premises to be
used for any improper, immoral, unlawful, or objectionable purpose, or commit
any waste.  Tenant shall not do, permit
or suffer in, on, or about the Premises the sale of any alcoholic liquor
without the written consent of Landlord first obtained.  Tenant shall comply with all governmental
laws, ordinances and regulations applicable to the use of the Premises and its
occupancy and shall promptly comply with all governmental orders and directions
for the correction, prevention and abatement of any violations in the Building
or appurtenant land, caused or permitted by, or resulting from the specific use
by, Tenant, or in or upon, or in connection with, the Premises, all at Tenant’s
sole expense.  Tenant shall not do or
permit anything to be done on or about the Premises or bring or keep anything
into the Premises which will in any way increase the rate of, invalidate or
prevent the procuring of any insurance protecting against loss or damage to the
Building or any of its contents by fire or other casualty or against liability
for damage to property or injury to persons in or about the Building or any
part thereof.

 

1.2           Tenant shall not,
and shall not direct, suffer or permit any of its agents, contractors,
employees, licensees or invitees (collectively, the “Tenant Entities”) to at
any time handle, use, manufacture, store or dispose of in or about the Premises
or the Building any (collectively “Hazardous Materials”) flammables,
explosives, radioactive materials, hazardous wastes or materials, toxic wastes
or materials, or other similar substances, petroleum products or derivatives or
any substance subject to regulation by or under any federal, state and local
laws and ordinances relating to the protection of the environment or the
keeping, use or disposition of environmentally hazardous materials, substances,
or wastes, presently in effect or hereafter adopted, all amendments to any of
them, and all rules and regulations issued pursuant to any of such laws or
ordinances (collectively “Environmental Laws”), nor shall Tenant suffer or
permit any Hazardous Materials to be used in any manner not fully in compliance
with all Environmental Laws, in the Premises or the Building and appurtenant
land or allow the environment to become contaminated with any Hazardous
Materials.  Notwithstanding the
foregoing, Tenant may handle, store, use or dispose of products containing small
quantities of Hazardous Materials (such as aerosol cans containing
insecticides, toner for copiers, paints, paint remover and the like) to the
extent customary and necessary for the use of the Premises for general office
purposes; provided that Tenant shall always handle, store, use, and dispose of
any such Hazardous Materials in a safe and lawful manner and never allow such
Hazardous Materials to contaminate the Premises, Building and appurtenant land
or the environment.  TENANT SHALL
PROTECT, DEFEND, INDEMNIFY AND HOLD EACH AND ALL OF THE LANDLORD ENTITIES (AS
DEFINED IN ARTICLE 30) HARMLESS FROM AND AGAINST ANY AND ALL LOSS, CLAIMS,
LIABILITY (INCLUDING, WITHOUT LIMITATION, ANY STRICT LIABILITY) OR COSTS
(INCLUDING COURT COSTS AND ATTORNEY’S FEES) INCURRED BY REASON OF ANY ACTUAL OR
ASSERTED FAILURE OF TENANT TO FULLY COMPLY WITH ALL APPLICABLE ENVIRONMENTAL
LAWS, OR THE PRESENCE, HANDLING, USE OR DISPOSITION IN OR FROM THE PREMISES OF
ANY HAZARDOUS MATERIALS BY TENANT OR ANY TENANT ENTITY (EVEN THOUGH PERMISSIBLE
UNDER ALL APPLICABLE ENVIRONMENTAL LAWS OR THE PROVISIONS OF THIS LEASE), OR BY
REASON OF ANY ACTUAL OR ASSERTED FAILURE OF TENANT TO KEEP, OBSERVE, OR PERFORM
ANY PROVISION OF THIS SECTION 1.2.

 

1.3           Tenant and the
Tenant Entities will be entitled to the non-exclusive use of the common areas
of the Building as they exist from time to time during the Term, including the
parking facilities, subject to Landlord’s rules and regulations regarding such
use.  However, in no event will Tenant
or the Tenant Entities park more vehicles in the parking facilities than
Tenant’s Proportionate Share of the total parking spaces available for common
use.  The foregoing shall not be deemed
to provide Tenant with an exclusive right to any parking spaces or any guaranty
of the availability of any particular parking spaces or any specific number of
parking spaces.

 

1

 

2.             TERM.

 

2.1           The Term of this
Lease shall begin on the Commencement Date as shown on the Reference Pages and
shall terminate on the Termination Date as shown on the Reference Pages, unless
sooner terminated by the provisions of this Lease.

 

2.2           Tenant agrees that
in the event of the inability of Landlord to deliver possession of the Premises
on the Commencement Date for any reason, Landlord shall not be liable for any
damage resulting from such inability. 
No such failure to give possession on the Commencement Date shall affect
the any obligations of Tenant under this Lease, including the payment of any
rent due under this Lease.

 

2.3           In the event
Landlord permits Tenant, or any agent, employee or contractor of Tenant, to
enter, use or occupy the Premises prior to the Commencement Date, such entry,
use or occupancy shall be subject to all the provisions of this Lease other
than the payment of rent, including, without limitation, Tenant’s compliance
with the insurance requirements of Article 11. 
Said early possession shall not advance the Termination Date.

 

3.             RENT.

 

3.1           Tenant agrees to pay
to Landlord the Annual Rent in effect from time to time by paying the Monthly
Installment of Rent then in effect on or before the first day of each full
calendar month during the Term, except that the first full month’s rent shall
be paid upon the execution of this Lease. 
The Monthly Installment of Rent in effect at any time shall be
one-twelfth (1/12) of the Annual Rent in effect at such time.  Rent for any period during the Term which is
less than a full month shall be a prorated portion of the Monthly Installment of
Rent based upon the number of days in such month.  Said rent shall be paid to Landlord, without deduction or offset
and without notice or demand, at the Rent Payment Address, as set forth on the
Reference Pages, or to such other person or at such other place as Landlord may
from time to time designate in writing. 
If an Event of Default occurs, Landlord may require by notice to Tenant
that all subsequent rent payments be made by an automatic payment from Tenant’s
bank account to Landlord’s account, without cost to Landlord.  Tenant must implement such automatic payment
system prior to the next scheduled rent payment or within ten (10) days after
Landlord’s notice, whichever is later. 
Unless specified in this Lease to the contrary, all amounts and sums payable
by Tenant to Landlord pursuant to this Lease shall be deemed additional rent.

 

3.2           Tenant recognizes
that late payment of any rent or other sum due under this Lease will result in
administrative expense to Landlord, the extent of which additional expense is
extremely difficult and economically impractical to ascertain.  Tenant therefore agrees that if rent or any
other sum is not paid within ten (10) days of when due and payable pursuant to
this Lease, a late charge shall be imposed in an amount equal to the greater
of:  (a) Fifty Dollars ($50.00), or (b)
six percent (6%) of the unpaid rent or other payment.  The amount of the late charge to be paid by Tenant shall be
reassessed and added to Tenant’s obligation for each successive month until
paid.  The provisions of this Section
3.2 in no way relieve Tenant of the obligation to pay rent or other payments on
or before the date on which they are due, nor do the terms of this Section 3.2
in any way affect Landlord’s remedies pursuant to Article 19 of this Lease in
the event said rent or other payment is unpaid after date due.

 

4.             RENT ADJUSTMENTS.

 

4.1           For the purpose of
this Article 4, the following terms are defined as follows:

 

4.1.1        Lease Year:  Each fiscal year (as determined by Landlord
from time to time) falling partly or wholly within the Term.

 

4.1.2        Expenses:  All costs of operation, maintenance, repair,
replacement and management of the Building (including the amount of any credits
which Landlord may grant to particular tenants of the Building in lieu of
providing any standard services or paying any standard costs described in this
Section 4.1.2 for similar tenants), as determined in accordance with generally
accepted accounting principles, including the following costs by way of
illustration, but not limitation: water and sewer charges; insurance charges of
or relating to all insurance policies and endorsements deemed by Landlord to be
reasonably necessary or desirable and relating in any manner to the protection,
preservation, or operation of the Building or any part thereof; utility costs,
including, but not limited to, the cost of heat and air conditioning, light,
power, steam, gas; waste disposal; the cost of janitorial services; the cost of
security and alarm services (including any central station signaling system);
costs of cleaning, repairing, replacing and maintaining the common areas,
including parking and landscaping, window cleaning costs; labor costs; costs
and expenses of managing the Building including management fees; air

 

2

 

conditioning maintenance costs; elevator
maintenance fees and supplies; material costs; equipment costs including the
cost of maintenance, repair and service agreements and rental and leasing
costs; purchase costs of equipment; current rental and leasing costs of items
which would be capital items if purchased; tool costs; licenses, permits and
inspection fees; wages and salaries; employee benefits and payroll taxes;
accounting and legal fees; any sales, use or service taxes incurred in
connection therewith.  In addition,
Landlord shall be entitled to recover, as additional rent (which, along with
any other capital expenditures constituting Expenses, Landlord may either
include in Expenses or cause to be billed to Tenant along with Expenses and
Taxes but as a separate item), Tenant’s Proportionate Share of: (i) an
allocable portion of the cost of capital improvement items which are reasonably
calculated to reduce operating expenses; (ii) the cost of fire sprinklers
and suppression systems and other life safety systems; and (iii) other
capital expenses which are required under any governmental laws, regulations or
ordinances which were not applicable to the Building at the time it was
constructed; but the costs described in this sentence shall be amortized over
the reasonable life of such expenditures in accordance with such reasonable
life and amortization schedules as shall be determined by Landlord in
accordance with generally accepted accounting principles, with interest on the
unamortized amount at one percent (1%) in excess of the Wall Street Journal
prime lending rate announced from time to time.  Expenses shall not include depreciation or amortization of the
Building or equipment in the Building except as provided herein, loan principal
payments, costs of alterations of tenants’ premises, leasing commissions,
interest expenses on long-term borrowings or advertising costs.

 

4.1.3        Taxes:  Real estate taxes and any other taxes,
charges and assessments which are levied with respect to the Building or the
land appurtenant to the Building, or with respect to any improvements, fixtures
and equipment or other property of Landlord, real or personal, located in the
Building and used in connection with the operation of the Building and said
land, any payments to any ground lessor in reimbursement of tax payments made
by such lessor; and all fees, expenses and costs incurred by Landlord in
investigating, protesting, contesting or in any way seeking to reduce or avoid
increase in any assessments, levies or the tax rate pertaining to any Taxes to
be paid by Landlord in any Lease Year. 
Taxes shall not include any corporate franchise, or estate, inheritance
or net income tax, or tax imposed upon any transfer by Landlord of its interest
in this Lease or the Building or any taxes to be paid by Tenant pursuant to
Article 28.

 

4.2           If in any Lease
Year, (i) Expenses paid or incurred shall exceed Expenses paid or incurred in
the Base Year (Expenses) and/or (ii) Taxes paid or incurred by Landlord in any
Lease Year shall exceed the amount of such Taxes which became due and payable
in the Base Year (Taxes), Tenant shall pay as additional rent for such Lease
Year Tenant’s Proportionate Share of such excess.  In addition, Tenant shall pay as additional rent the HVAC
Expenses (as defined in Exhibit B attached hereto) in the amount shown on the
Reference Pages.

 

4.3           The annual
determination of Expenses shall be made by Landlord and shall be binding upon
Landlord and Tenant, subject to the provisions of this Section 4.3.  During the Term, Tenant may review, at
Tenant’s sole cost and expense, the books and records supporting such
determination in an office of Landlord, or Landlord’s agent, during normal
business hours, upon giving Landlord five (5) days advance written notice
within sixty (60) days after receipt of such determination, but in no event
more often than once in any one (1) year period, subject to execution of a
confidentiality agreement acceptable to Landlord, and provided that if Tenant utilizes
an independent accountant to perform such review it shall be one of national
standing which is reasonably acceptable to Landlord, is not compensated on a
contingency basis and is also subject to such confidentiality agreement.  If Tenant fails to object to Landlord’s
determination of Expenses within ninety (90) days after receipt, or if any such
objection fails to state with specificity the reason for the objection, Tenant
shall be deemed to have approved such determination and shall have no further right
to object to or contest such determination. In the event that during all or any
portion of any Lease Year or Base Year, the Building is not fully rented and
occupied Landlord shall make an appropriate adjustment in occupancy-related
Expenses for such year for the purpose of avoiding distortion of the amount of
such Expenses to be attributed to Tenant by reason of variation in total
occupancy of the Building, by employing consistent and sound accounting and
management principles to determine Expenses that would have been paid or
incurred by Landlord had the Building been at least ninety-five percent (95%)
rented and occupied, and the amount so determined shall be deemed to have been
Expenses for such Lease Year.

 

4.4           Prior to the actual
determination thereof for a Lease Year, Landlord may from time to time estimate
Tenant’s liability for Expenses and/or Taxes under Section 4.2, Article 6 and
Article 28 for the Lease Year or portion thereof.  Landlord will give Tenant written notification of the amount of
such estimate and Tenant agrees that it will pay, by increase of its Monthly
Installments of Rent due in such Lease Year, additional rent in the amount of
such estimate.  Any such increased rate
of Monthly Installments of Rent pursuant to this Section 4.4 shall remain in
effect until further written notification to Tenant pursuant hereto.

 

4.5           When the above
mentioned actual determination of Tenant’s liability for Expenses and/or Taxes
is made for any Lease Year and when Tenant is so notified in writing, then:

 

3

 

4.5.1        If the total
additional rent Tenant actually paid pursuant to Section 4.3 on account of
Expenses and/or Taxes for the Lease Year is less than Tenant’s liability for
Expenses and/or Taxes, then Tenant shall pay such deficiency to Landlord as
additional rent in one lump sum within thirty (30) days of receipt of
Landlord’s bill therefore; and

 

4.5.2        If the total
additional rent Tenant actually paid pursuant to Section 4.3 on account of
Expenses and/or Taxes for the Lease Year is more than Tenant’s liability for
Expenses and/or Taxes, then Landlord shall credit the difference against the
then next due payments to be made by Tenant under this Article 4, or, if
the Lease has terminated, refund the difference in cash.  Tenant shall not be entitled to a credit by
reason of actual Expenses and/or Taxes in any Lease Year being less than
Expenses and/or Taxes in the Base Year (Expenses and/or Taxes).

 

4.6           If the Commencement
Date is other than January 1 or if the Termination Date is other than December
31, Tenant’s liability for Expenses and Taxes for the Lease Year in which said
Date occurs shall be prorated based upon a three hundred sixty-five (365) day
year.

 

5.             SECURITY DEPOSIT.  Tenant shall deposit the Security Deposit with Landlord upon the
execution of this Lease.  Said sum shall
be held by Landlord as security for the faithful performance by Tenant of all
the terms, covenants and conditions of this Lease to be kept and performed by
Tenant and not as an advance rental deposit or as a measure of Landlord’s
damage in case of Tenant’s default.  If
Tenant defaults with respect to any provision of this Lease, Landlord may use
any part of the Security Deposit for the payment of any rent or any other sum
in default, or for the payment of any amount which Landlord may spend or become
obligated to spend by reason of Tenant’s default, or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of Tenant’s
default.  If any portion is so used,
Tenant shall within five (5) days after written demand therefore, deposit with
Landlord an amount sufficient to restore the Security Deposit to its original
amount and Tenant’s failure to do so shall be a material breach of this Lease.  Except to such extent, if any, as shall be
required by law, Landlord shall not be required to keep the Security Deposit
separate from its general funds, and Tenant shall not be entitled to interest
on such deposit.  If Tenant shall fully
and faithfully perform every provision of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned to Tenant at such
time after termination of this Lease when Landlord shall have determined that
all of Tenant’s obligations under this Lease have been fulfilled.

 

6.             ALTERATIONS.

 

6.1           Except for those, if
any, specifically provided for in Exhibit B to this Lease, Tenant shall
not make or suffer to be made any alterations, additions, or improvements,
including, but not limited to, the attachment of any fixtures or equipment in,
on, or to the Premises or any part thereof or the making of any improvements as
required by Article 7, without the prior written consent of Landlord.  When applying for such consent, Tenant
shall, if requested by Landlord, furnish complete plans and specifications for
such alterations, additions and improvements. Landlord’s consent shall not be
unreasonably withheld with respect to alterations which (i) are not structural
in nature, (ii) are not visible from the exterior of the Building, (iii) do not
affect or require modification of the Building’s electrical, mechanical,
plumbing, HVAC or other systems, and (iv) in aggregate do not cost more than
$5.00 per rentable square foot of that portion of the Premises affected by the alterations
in question.

 

6.2           In the event
Landlord consents to the making of any such alteration, addition or improvement
by Tenant, the same shall be made by using either Landlord’s contractor or a
contractor reasonably approved by Landlord, in either event at Tenant’s sole
cost and expense.  If Tenant shall
employ any contractor other than Landlord’s contractor and such other
contractor or any subcontractor of such other contractor shall employ any
non-union labor or supplier, Tenant shall be responsible for and hold Landlord
harmless from any and all delays, damages and extra costs suffered by Landlord
as a result of any dispute with any labor unions concerning the wage, hours,
terms or conditions of the employment of any such labor.  In any event Landlord may charge Tenant a
construction management fee not to exceed five percent (5%) of the cost of such
work to cover its overhead as it relates to such proposed work, plus
third-party costs actually incurred by Landlord in connection with the proposed
work and the design thereof, with all such amounts being due five (5) days
after Landlord’s demand.

 

6.3           All alterations,
additions or improvements proposed by Tenant shall be constructed in accordance
with all government laws, ordinances, rules and regulations, using Building
standard materials where applicable, and Tenant shall, prior to construction,
provide the additional insurance required under Article 11 in such case, and
also all such assurances to Landlord as Landlord shall reasonably require to
assure payment of the costs thereof, including but not limited to, notices of
non-responsibility, waivers of lien, surety company performance bonds and
funded construction escrows and to protect Landlord and the Building and
appurtenant land against any loss from any mechanic’s, materialmen’s or other
liens.  Tenant shall pay in addition to
any sums due pursuant to Article 4, any increase in real estate taxes
attributable to any such alteration,

 

4

 

addition or improvement for so long, during
the Term, as such increase is ascertainable; at Landlord’s election said sums
shall be paid in the same way as sums due under Article 4.  Landlord may, as a condition to its consent
to any particular alterations or improvements, require Tenant to deposit with
Landlord the amount reasonably estimated by Landlord as sufficient to cover the
cost of removing such alterations or improvements and restoring the Premises,
to the extent required under Section 26.2

 

7.             REPAIR.

 

7.1           Landlord shall have
no obligation to alter, remodel, improve, repair, decorate or paint the
Premises, except as specified in Exhibit B if attached to this Lease and
except that Landlord shall repair and maintain the structural portions of the
Building, including the basic plumbing, air conditioning, heating and
electrical systems installed or furnished by Landlord.  By taking possession of the Premises, Tenant
accepts them as being in good order, condition and repair and in the condition
in which Landlord is obligated to deliver them, except as set forth in the
punch list to be delivered pursuant to Section 2.1.  It is hereby understood and agreed that no representations
respecting the condition of the Premises or the Building have been made by
Landlord to Tenant, except as specifically set forth in this Lease.

 

7.2           Tenant shall, at all
times during the Term, keep the Premises in good condition and repair excepting
damage by fire, or other casualty, and in compliance with all applicable
governmental laws, ordinances and regulations, promptly complying with all
governmental orders and directives for the correction, prevention and abatement
of any violations or nuisances in or upon, or connected with, the Premises, all
at Tenant’s sole expense.

 

7.3           Landlord shall not be
liable for any failure to make any repairs or to perform any maintenance unless
such failure shall persist for an unreasonable time after written notice of the
need of such repairs or maintenance is given to Landlord by Tenant.

 

7.4           Except as provided
in Article 22, there shall be no abatement of rent and no liability of Landlord
by reason of any injury to or interference with Tenant’s business arising from
the making of any repairs, alterations or improvements in or to any portion of
the Building or the Premises or to fixtures, appurtenances and equipment in the
Building.  Except to the extent, if any,
prohibited by law, Tenant waives the right to make repairs at Landlord’s
expense under any law, statute or ordinance now or hereafter in effect.

 

8.             LIENS.  Tenant
shall keep the Premises, the Building and appurtenant land and Tenant’s
leasehold interest in the Premises free from any liens arising out of any
services, work or materials performed, furnished, or contracted for by Tenant,
or obligations incurred by Tenant.  In
the event that Tenant fails, within ten (10) days following the imposition of
any such lien, to either cause the same to be released of record or provide
Landlord with insurance against the same issued by a major title insurance
company or such other protection against the same as Landlord shall accept
(such failure to constitute an Event of Default), Landlord shall have the right
to cause the same to be released by such means as it shall deem proper,
including payment of the claim giving rise to such lien.  All such sums paid by Landlord and all
expenses incurred by it in connection therewith shall be payable to it by
Tenant within five (5) days Landlord’s demand.

 

9.             ASSIGNMENT AND SUBLETTING.

 

9.1           Tenant shall not
have the right to assign or pledge this Lease or to sublet the whole or any
part of the Premises whether voluntarily or by operation of law, or permit the
use or occupancy of the Premises by anyone other than Tenant, and shall not
make, suffer or permit such assignment, subleasing or occupancy without the
prior written consent of Landlord, such consent not to be unreasonably
withheld, and said restrictions shall be binding upon any and all assignees of
the Lease and subtenants of the Premises. 
In the event Tenant desires to sublet, or permit such occupancy of, the
Premises, or any portion thereof, or assign this Lease, Tenant shall give
written notice thereof to Landlord at least sixty (60) days but no more than
one hundred twenty (120) days prior to the proposed commencement date of such
subletting or assignment, which notice shall set forth the name of the proposed
subtenant or assignee, the relevant terms of any sublease or assignment and
copies of financial reports and other relevant financial information of the
proposed subtenant or assignee.

 

9.2           Notwithstanding any
assignment or subletting, permitted or otherwise, Tenant shall at all times
remain directly, primarily and fully responsible and liable for the payment of
the rent specified in this Lease and for compliance with all of its other
obligations under the terms, provisions and covenants of this Lease.  Upon the occurrence of an Event of Default,
if the Premises or any part of them are then assigned or sublet, Landlord, in
addition to any other remedies provided in this Lease or provided by law, may,
at its option, collect directly from such assignee or subtenant all rents due
and becoming due to Tenant under such assignment or sublease and apply such
rent against any sums due to Landlord from

 

5

 

Tenant under this Lease, and no such
collection shall be construed to constitute a novation or release of Tenant
from the further performance of Tenant’s obligations under this Lease.

 

9.3           In addition to
Landlord’s right to approve of any subtenant or assignee, Landlord shall have
the option, in its sole discretion, in the event of any proposed subletting or
assignment, to terminate this Lease, or in the case of a proposed subletting of
less than the entire Premises, to recapture the portion of the Premises to be
sublet, as of the date the subletting or assignment is to be effective.  The option shall be exercised, if at all, by
Landlord giving Tenant written notice given by Landlord to Tenant within thirty
(30) days following Landlord’s receipt of Tenant’s written notice as required
above.  However, if Tenant notifies
Landlord, within five (5) days after receipt of Landlord’s termination notice,
that Tenant is rescinding its proposed assignment or sublease, the termination
notice shall be void and the Lease shall continue in full force and
effect.  If this Lease shall be
terminated with respect to the entire Premises pursuant to this Section, the
Term of this Lease shall end on the date stated in Tenant’s notice as the
effective date of the sublease or assignment as if that date had been
originally fixed in this Lease for the expiration of the Term.  If Landlord recaptures under this Section
only a portion of the Premises, the rent to be paid from time to time during
the unexpired Term shall abate proportionately based on the proportion by which
the approximate square footage of the remaining portion of the Premises shall
be less than that of the Premises as of the date immediately prior to such
recapture.  Tenant shall, at Tenant’s
own cost and expense, discharge in full any outstanding commission obligation
which may be due and owing as a result of any proposed assignment or
subletting, whether or not the Premises are recaptured pursuant to this Section
9.3 and rented by Landlord to the proposed tenant or any other tenant.

 

9.4           In the event that
Tenant sells, sublets, assigns or transfers this Lease, Tenant shall pay to
Landlord as additional rent an amount equal to one hundred percent (100%) of
any Increased Rent (as defined below), less the Costs Component (as defined
below), when and as such Increased Rent is received by Tenant.  As used in this Section, “Increased Rent”
shall mean the excess of (i) all rent and other consideration which Tenant is
entitled to receive by reason of any sale, sublease, assignment or other
transfer of this Lease, over (ii) the rent otherwise payable by Tenant under
this Lease at such time.  For purposes
of the foregoing, any consideration received by Tenant in form other than cash
shall be valued at its fair market value as determined by Landlord in good
faith.  The “Costs Component” is that
amount which, if paid monthly, would fully amortize on a straight-line basis,
over the entire period for which Tenant is to receive Increased Rent, the
reasonable costs incurred by Tenant for leasing commissions and tenant
improvements in connection with such sublease, assignment or other transfer.

 

9.5           Notwithstanding any
other provision hereof, it shall be considered reasonable for Landlord to
withhold its consent to any assignment of this Lease or sublease of any portion
of the Premises if at the time of either Tenant’s notice of the proposed
assignment or sublease or the proposed commencement date thereof, there shall
exist any uncured default of Tenant or matter which will become a default of
Tenant with passage of time unless cured, or if the proposed assignee or
sublessee is an entity:  (a) with which
Landlord is already in negotiation; (b) is already an occupant of the Building
unless Landlord is unable to provide the amount of space required by such
occupant; (c) is a governmental agency; (d) is incompatible with the character
of occupancy of the Building; (e) with which the payment for the sublease or
assignment is determined in whole or in part based upon its net income or
profits; or (f) would subject the Premises to a use which would:  (i) involve increased personnel or wear upon
the Building; (ii)  violate any exclusive right granted to another
tenant of the Building; (iii) require any addition to or modification of the
Premises or the Building in order to comply with building code or other
governmental requirements; or, (iv) involve a violation of Section
1.2.  Tenant expressly agrees that for
the purposes of any statutory or other requirement of reasonableness on the
part of Landlord, Landlord’s refusal to consent to any assignment or sublease
for any of the reasons described in this Section 9.5, shall be conclusively
deemed to be reasonable.

 

9.6           Upon any request to
assign or sublet, Tenant will pay to Landlord the Assignment/Subletting Fee
plus, on demand, a sum equal to all of Landlord’s costs, including reasonable
attorney’s fees, incurred in investigating and considering any proposed or
purported assignment or pledge of this Lease or sublease of any of the Premises,
regardless of whether Landlord shall consent to, refuse consent, or determine
that Landlord’s consent is not required for, such assignment, pledge or
sublease.  Any purported sale,
assignment, mortgage, transfer of this Lease or subletting, which does not
comply, with the provisions of this Article 9 shall be void.

 

9.7           If Tenant is a
corporation, limited liability company, partnership or trust, any transfer or
transfers of or change or changes within any twelve (12) month period in the
number of the outstanding voting shares of the corporation or limited liability
company, the general partnership interests in the partnership or the identity
of the persons or entities controlling the activities of such partnership or
trust resulting in the persons or entities owning or controlling a majority of
such shares, partnership interests or activities of such partnership or trust
at the beginning of such period no longer having such ownership or control
shall be regarded as equivalent to an assignment of this Lease to the persons
or entities acquiring

 

6

 

such ownership or control and shall be
subject to all the provisions of this Article 9 to the same extent and for all
intents and purposes as though such an assignment.

 

10.           INDEMNIFICATION.  NONE OF THE LANDLORD ENTITIES SHALL BE LIABLE AND TENANT HEREBY
WAIVES ALL CLAIMS AGAINST THEM FOR ANY DAMAGE TO ANY PROPERTY OR ANY INJURY TO
ANY PERSON IN OR ABOUT THE PREMISES OR THE BUILDING BY OR FROM ANY CAUSE
WHATSOEVER (INCLUDING WITHOUT LIMITING THE FOREGOING, RAIN OR WATER LEAKAGE OF
ANY CHARACTER FROM THE ROOF, WINDOWS, WALLS, BASEMENT, PIPES, PLUMBING WORKS OR
APPLIANCES, THE BUILDING NOT BEING IN GOOD CONDITION OR REPAIR, GAS, FIRE, OIL,
ELECTRICITY OR THEFT), EXCEPT TO THE EXTENT CAUSED BY OR ARISING FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD OR ITS AGENTS, EMPLOYEES OR
CONTRACTORS.  TENANT SHALL PROTECT,
DEFEND, INDEMNIFY AND HOLD THE LANDLORD ENTITIES HARMLESS FROM AND AGAINST ANY
AND ALL LOSS, CLAIMS, LIABILITY OR COSTS (INCLUDING COURT COSTS AND ATTORNEY’S
FEES) INCURRED BY REASON OF (A) ANY DAMAGE TO ANY PROPERTY (INCLUDING BUT NOT
LIMITED TO PROPERTY OF ANY LANDLORD ENTITY) OR ANY INJURY (INCLUDING BUT NOT
LIMITED TO DEATH) TO ANY PERSON OCCURRING IN, ON OR ABOUT THE PREMISES OR THE
BUILDING TO THE EXTENT THAT SUCH INJURY OR DAMAGE SHALL BE CAUSED BY OR ARISE
FROM ANY ACTUAL OR ALLEGED ACT, NEGLECT, FAULT, OR OMISSION BY OR OF TENANT OR
ANY TENANT ENTITY TO MEET ANY STANDARDS IMPOSED BY ANY DUTY WITH RESPECT TO THE
INJURY OR DAMAGE; (B) THE CONDUCT OR MANAGEMENT OF ANY WORK OR THING WHATSOEVER
DONE BY THE TENANT IN OR ABOUT THE PREMISES OR FROM TRANSACTIONS OF THE TENANT
CONCERNING THE PREMISES; (C) TENANT’S FAILURE TO COMPLY WITH ANY AND ALL
GOVERNMENTAL LAWS, ORDINANCES AND REGULATIONS APPLICABLE TO THE CONDITION OR
USE OF THE PREMISES OR ITS OCCUPANCY; OR (D) ANY BREACH OR DEFAULT ON THE PART
OF TENANT IN THE PERFORMANCE OF ANY COVENANT OR AGREEMENT ON THE PART OF THE
TENANT TO BE PERFORMED PURSUANT TO THIS LEASE, IN EACH CASE EVEN THOUGH CAUSED OR
ALLEGED TO BE CAUSED BY THE NEGLIGENCE OR FAULT OF LANDLORD OR ITS AGENTS, EMPLOYEES OR CONTRACTORS
(OTHER THAN A LOSS ARISING FROM THE GROSS NEGLIGENCE OF LANDLORD OR ITS AGENTS, EMPLOYEES OR CONTRACTORS), AND EVEN
THOUGH ANY SUCH CLAIM, CAUSE OF ACTION, OR SUIT IS BASED UPON OR ALLEGED TO BE
BASED UPON THE STRICT LIABILITY OF LANDLORD OR ITS AGENTS, EMPLOYEES OR CONTRACTORS.  THIS INDEMNITY IS INTENDED TO INDEMNIFY
LANDLORD AND ITS AGENTS, EMPLOYEES OR
CONTRACTORS AGAINST THE CONSEQUENCES OF THEIR OWN NEGLIGENCE OR FAULT AS
PROVIDED ABOVE WHEN LANDLORD OR ITS AGENTS, EMPLOYEES OR CONTRACTORS ARE JOINTLY, COMPARATIVELY,
CONTRIBUTIVELY, OR CONCURRENTLY NEGLIGENT WITH TENANT.  THE PROVISIONS OF THIS ARTICLE SHALL SURVIVE
THE TERMINATION OF THIS LEASE WITH RESPECT TO ANY CLAIMS OR LIABILITY ACCRUING
PRIOR TO SUCH TERMINATION.

 

11.           INSURANCE.

 

11.1         Tenant shall keep in
force throughout the Term: (a) a Commercial General Liability insurance policy
or policies to protect the Landlord Entities against any liability to the
public or to any invitee of Tenant or a Landlord Entity incidental to the use
of or resulting from any accident occurring in or upon the Premises with a
limit of not less than $1,000,000 per occurrence and not less than $2,000,000
in the annual aggregate, or such larger amount as Landlord may prudently
require from time to time, covering bodily injury and property damage liability
and $1,000,000 products/completed operations aggregate; (b) Business Auto
Liability covering owned, non-owned and hired vehicles with a limit of not less
than $1,000,000 per accident; (c) insurance protecting against liability under
Worker’s Compensation Laws with limits at least as required by statute; (d)
Employers Liability with limits of $1,000,000 each accident, $1,000,000 disease
policy limit, $1,000,000 disease—each employee; (e) All Risk or Special Form
coverage protecting Tenant against loss of or damage to Tenant’s alterations,
additions, improvements, carpeting, floor coverings, panelings, decorations,
fixtures, inventory and other business personal property situated in or about
the Premises to the full replacement value of the property so insured,
(f) Business Interruption Insurance for 100% of the 12 months actual loss
sustained, and (g) Excess Liability in the amount of $5,000,000.

 

11.2         The aforesaid
policies shall (a) be provided at Tenant’s expense; (b) name the Landlord
Entities as additional insureds (General Liability) and loss payee
(Property—Special Form); (c) be issued by an insurance company with a minimum
Best’s rating of “A:VII” during the Term; and (d) provide that said insurance
shall not be canceled unless thirty (30) days prior written notice (ten days
for non-payment of premium) shall have been given to Landlord; a certificate of
Liability insurance on ACORD Form 25 and a certificate of Property insurance on
ACORD Form 27 shall be delivered to Landlord by Tenant upon the Commencement
Date and at least thirty (30) days prior to each renewal of said insurance.

 

7

 

11.3         Whenever Tenant shall
undertake any alterations, additions or improvements in, to or about the
Premises (“Work”) the aforesaid insurance protection must extend to and include
injuries to persons and damage to property arising in connection with such
Work, without limitation including liability under any applicable structural
work act, and such other insurance as Landlord shall require; and the policies
of or certificates evidencing such insurance must be delivered to Landlord
prior to the commencement of any such Work.

 

12.           WAIVER OF SUBROGATION.  So long as their respective insurers so
permit, Tenant and Landlord hereby mutually waive their respective rights of
recovery against each other for any loss insured by fire, extended coverage,
All Risks or other insurance now or hereafter existing for the benefit of the
respective party but only to the extent of the net insurance proceeds payable
under such policies.  Each party shall
obtain any special endorsements required by their insurer to evidence
compliance with the aforementioned waiver.

 

13.           SERVICES AND UTILITIES.

 

13.1         Provided Tenant shall
not be in default under this Lease, and subject to the other provisions of this
Lease, Landlord agrees to furnish to the Premises during Building Business
Hours (specified on the Reference Pages) on generally recognized business days
(but exclusive in any event of Sundays and national and local legal holidays),
the following services and utilities subject to the rules and regulations of
the Building prescribed from time to time: 
(a) water suitable for normal office use of the Premises; (b)
electricity and heat and air conditioning required in Landlord’s judgment for
the use and occupation of the Premises during Building Business Hours; (c)
cleaning and janitorial service; (d) elevator service by nonattended automatic
elevators, if applicable; and, (e) equipment to bring to the Premises
electricity for lighting, convenience outlets and other normal office use.  In the absence of Landlord’s gross
negligence or willful misconduct, Landlord shall not be liable for, and Tenant
shall not be entitled to, any abatement or reduction of rental by reason of
Landlord’s failure to furnish any of the foregoing, unless such failure shall
persist for an unreasonable time after written notice of such failure is given
to Landlord by Tenant and provided further that Landlord shall not be liable
when such failure is caused by accident, breakage, repairs, labor disputes of
any character, energy usage restrictions or by any other cause, similar or
dissimilar, beyond the reasonable control of Landlord.  Landlord shall use reasonable efforts to
remedy any interruption in the furnishing of services and utilities.

 

13.2         Should Tenant require
any additional work or service, as described above, including services
furnished outside ordinary business hours specified above, except for
electricity and heat and air conditioning charges, Landlord may, on terms to be
agreed, upon reasonable advance notice by Tenant, furnish such additional
service and Tenant agrees to pay Landlord such charges as may be agreed upon,
including any tax imposed thereon, but in no event at a charge less than
Landlord’s actual cost plus overhead for such additional service and, where
appropriate, a reasonable allowance for depreciation of any systems being used
to provide such service.

 

13.3         Wherever
heat-generating machines or equipment are used by Tenant in the Premises which
affect the temperature otherwise maintained by the air conditioning system or
Tenant allows occupancy of the Premises by more persons than the heating and
air conditioning system is designed to accommodate, in either event whether
with or without Landlord’s approval, Landlord reserves the right to install
supplementary heating and/or air conditioning units in or for the benefit of
the Premises and the cost thereof, including the cost of installation and the
cost of operations and maintenance, shall be paid by Tenant to Landlord within
five (5) days of Landlord’s demand.

 

13.4         Tenant will not,
without the written consent of Landlord, use any apparatus or device in the
Premises, including but not limited to, electronic data processing machines and
machines using current in excess of 2000 watts and/or 20 amps or 120 volts,
which will in any way increase the amount of electricity or water usually
furnished or supplied for use of the Premises for normal office use, nor
connect with electric current, except through existing electrical outlets in
the Premises, or water pipes, any apparatus or device for the purposes of using
electrical current or water.  If Tenant
shall require water or electric current in excess of that usually furnished or
supplied for use of the Premises as normal office use, Tenant shall procure the
prior written consent of Landlord for the use thereof, which Landlord may
refuse, and if Landlord does consent, Landlord may cause a water meter or
electric current meter to be installed so as to measure the amount of such excess
water and electric current.  The cost of
any such meters shall be paid for by Tenant. 
Tenant agrees to pay to Landlord within five (5) days of Landlord’s
demand , the cost of all such excess water and electric current consumed (as
shown by said meters, if any, or, if none, as reasonably estimated by Landlord)
at the rates charged for such services by the local public utility or agency,
as the case may be, furnishing the same, plus any additional expense incurred
in keeping account of the water and electric current so consumed.

 

8

 

13.5         Tenant will not,
without the written consent of Landlord, contract with a utility provider to
service the Premises with any utility, including, but not limited to,
telecommunications, electricity, water, sewer or gas, which is not previously
providing such service to other tenants in the Building.  Subject to Landlord’s reasonable rules and
regulations and the provisions of Articles 6 and 26, Tenant shall be entitled
to the use of wiring (“Communications Wiring”) from the existing
telecommunications nexus in the Building to the Premises, sufficient for normal
general office use of the Premises. 
Tenant shall not install any additional Communications Wiring, nor
remove any Communications Wiring, without in each instance obtaining the prior
written consent of Landlord, which consent may be withheld in Landlord’s sole
and absolute discretion.  Landlord’s
shall in no event be liable for disruption in any service obtained by Tenant pursuant
to this paragraph.

 

14.           HOLDING OVER. 
Tenant shall pay Landlord for each day Tenant retains possession of the
Premises or part of them after termination of this Lease by lapse of time or
otherwise at the rate (“Holdover Rate”) which shall be One Hundred Fifty
Percent (150%) of the greater of (a) the amount of the Annual Rent for the last
period prior to the date of such termination plus all Rent Adjustments under
Article 4; and (b) the then market rental value of the Premises as determined
by Landlord assuming a new lease of the Premises of the then usual duration and
other terms, in either case, prorated on a daily basis, and also pay all
damages sustained by Landlord by reason of such retention.  If Landlord gives notice to Tenant of
Landlord’s election to such effect, such holding over shall constitute renewal
of this Lease for a period from month to month or one (1) year, whichever shall
be specified in such notice, in either case at the Holdover Rate, but if the
Landlord does not so elect, no such renewal shall result notwithstanding
acceptance by Landlord of any sums due hereunder after such termination; and
instead, a tenancy at sufferance at the Holdover Rate shall be deemed to have
been created.  In any event, no
provision of this Article 14 shall be deemed to waive Landlord’s right of
reentry or any other right under this Lease or at law.

 

15.           SUBORDINATION.  Without the necessity of any additional document being executed
by Tenant for the purpose of effecting a subordination, this Lease shall be
subject and subordinate at all times to ground or underlying leases and to the
lien of any mortgages or deeds of trust now or hereafter placed on, against or
affecting the Building, Landlord’s interest or estate in the Building, or any
ground or underlying lease; provided, however, that if the lessor, mortgagee,
trustee, or holder of any such mortgage or deed of trust elects to have
Tenant’s interest in this Lease be superior to any such instrument, then, by
notice to Tenant, this Lease shall be deemed superior, whether this Lease was
executed before or after said instrument. 
Notwithstanding the foregoing, Tenant covenants and agrees to execute
and deliver within ten (10) days of Landlord’s request such further instruments
evidencing such subordination or superiority of this Lease as may be required
by Landlord.

 

16.           RULES AND REGULATIONS.  Tenant shall faithfully observe and comply
with all the rules and regulations as set forth in Exhibit D to this
Lease and all reasonable and non-discriminatory modifications of and additions
to them from time to time put into effect by Landlord.  Landlord shall not be responsible to Tenant
for the non-performance by any other tenant or occupant of the Building of any
such rules and regulations.

 

17.           REENTRY BY LANDLORD.

 

17.1         Landlord reserves and
shall at all times have the right to re-enter the Premises to inspect the same,
to supply janitor service and any other service to be provided by Landlord to
Tenant under this Lease, to show said Premises to prospective purchasers,
mortgagees or tenants, and to alter, improve or repair the Premises and any
portion of the Building, without abatement of rent, and may for that purpose
erect, use and maintain scaffolding, pipes, conduits and other necessary
structures and open any wall, ceiling or floor in and through the Building and
Premises where reasonably required by the character of the work to be
performed, provided entrance to the Premises shall not be blocked thereby, and
further provided that the business of Tenant shall not be interfered with
unreasonably. Landlord shall have the right at any time to change the
arrangement and/or locations of entrances, or passageways, doors and doorways,
and corridors, windows, elevators, stairs, toilets or other public parts of the
Building and to change the name, number or designation by which the Building is
commonly known.  In the event that
Landlord damages any portion of any wall or wall covering, ceiling, or floor or
floor covering within the Premises, Landlord shall repair or replace the
damaged portion to match the original as nearly as commercially reasonable but
shall not be required to repair or replace more than the portion actually
damaged. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant’s business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned by any action
of Landlord authorized by this Article 17.

 

17.2         For each of the
aforesaid purposes, Landlord shall at all times have and retain a key with
which to unlock all of the doors in the Premises, excluding Tenant’s vaults and
safes or special security areas (designated in advance), and Landlord shall
have the right to use any and all means which Landlord may deem proper to open
said doors in an emergency to obtain entry to any portion of the Premises.  As to any portion to which access cannot be
had by means of a key or keys in

 

9

 

Landlord’s possession, Landlord is authorized
to gain access by such means as Landlord shall elect and the cost of repairing
any damage occurring in doing so shall be borne by Tenant and paid to Landlord
within five (5) days of Landlord’s demand.

 

18.           DEFAULT.

 

18.1         Except as otherwise
provided in Article 20, the following events shall be deemed to be Events of
Default under this Lease:

 

18.1.1      Tenant shall fail to
pay when due any sum of money becoming due to be paid to Landlord under this
Lease, whether such sum be any installment of the rent reserved by this Lease,
any other amount treated as additional rent under this Lease, or any other
payment or reimbursement to Landlord required by this Lease, whether or not
treated as additional rent under this Lease, and such failure shall continue
for a period of five (5) days after written notice that such payment was
not made when due, but if any such notice shall be given, for the twelve (12)
month period commencing with the date of such notice, the failure to pay within
five (5) days after due any additional sum of money becoming due to be paid to
Landlord under this Lease during such period shall be an Event of Default,
without notice.

 

18.1.2      Tenant shall fail to
comply with any term, provision or covenant of this Lease which is not provided
for in another Section of this Article and shall not cure such failure within
twenty (20) days (forthwith, if the failure involves a hazardous condition)
after written notice of such failure to Tenant provided, however, that such
failure shall not be an event of default if such failure could not reasonably
be cured during such twenty (20) day period, Tenant has commenced the cure
within such twenty (20) day period and thereafter is diligently pursuing such
cure to completion, but the total aggregate cure period shall not exceed ninety
(90) days.

 

18.1.3      Tenant shall fail to
vacate the Premises immediately upon termination of this Lease, by lapse of
time or otherwise, or upon termination of Tenant’s right to possession only.

 

18.1.4      Tenant shall become
insolvent, admit in writing its inability to pay its debts generally as they
become due, file a petition in bankruptcy or a petition to take advantage of
any insolvency statute, make an assignment for the benefit of creditors, make a
transfer in fraud of creditors, apply for or consent to the appointment of a
receiver of itself or of the whole or any substantial part of its property, or
file a petition or answer seeking reorganization or arrangement under the
federal bankruptcy laws, as now in effect or hereafter amended, or any other
applicable law or statute of the United States or any state thereof.

 

18.1.5      A court of competent
jurisdiction shall enter an order, judgment or decree adjudicating Tenant
bankrupt, or appointing a receiver of Tenant, or of the whole or any
substantial part of its property, without the consent of Tenant, or approving a
petition filed against Tenant seeking reorganization or arrangement of Tenant
under the bankruptcy laws of the United States, as now in effect or hereafter
amended, or any state thereof, and such order, judgment or decree shall not be
vacated or set aside or stayed within sixty (60) days from the date of entry
thereof.

 

19.           REMEDIES.

 

19.1         Except as otherwise
provided in Article 20, upon the occurrence of any of the Events of Default
described or referred to in Article 18, Landlord shall have the option to
pursue any one or more of the following remedies without any notice or demand
whatsoever, concurrently or consecutively and not alternatively:

 

19.1.1      Landlord may, at its
election, terminate this Lease or terminate Tenant’s right to possession only,
without terminating the Lease.

 

19.1.2      Upon any termination
of this Lease, whether by lapse of time or otherwise, or upon any termination
of Tenant’s right to possession without termination of the Lease, Tenant shall
surrender possession and vacate the Premises immediately, and deliver
possession thereof to Landlord, and Tenant hereby grants to Landlord full and
free license to enter into and upon the Premises in such event and to repossess
Landlord of the Premises as of Landlord’s former estate and to expel or remove
Tenant and any others who may be occupying or be within the Premises and to
remove Tenant’s signs and other evidence of tenancy and all other property of
Tenant therefrom without being deemed in any manner guilty of trespass,
eviction or forcible entry or detainer, and without incurring any liability for
any damage resulting therefrom, Tenant waiving any right to claim damages for
such re-entry and expulsion, and without relinquishing Landlord’s right to rent
or any other right given to Landlord under this Lease or by operation of law.

 

10

 

19.1.3      Upon any termination
of this Lease, whether by lapse of time or otherwise, Landlord shall be
entitled to recover as damages, all rent, including any amounts treated as
additional rent under this Lease, and other sums due and payable by Tenant on
the date of termination, plus as liquidated damages and not as a penalty, an
amount equal to the sum of:  (a) an
amount equal to the then present value of the rent reserved in this Lease for
the residue of the stated Term of this Lease including any amounts treated as
additional rent under this Lease and all other sums provided in this Lease to
be paid by Tenant, minus the fair rental value of the Premises for such
residue; (b) the value of the time and expense necessary to obtain a
replacement tenant or tenants, and the estimated expenses described in Section
19.1.4 relating to recovery of the Premises, preparation for reletting and for
reletting itself; and (c) the cost of performing any other covenants which
would have otherwise been performed by Tenant.

 

19.1.4      Upon any termination
of Tenant’s right to possession only without termination of the Lease:

 

19.1.4.1  Neither such
termination of Tenant’s right to possession nor Landlord’s taking and holding
possession thereof as provided in Section 19.1.2 shall terminate the Lease or
release Tenant, in whole or in part, from any obligation, including Tenant’s obligation
to pay the rent, including any amounts treated as additional rent, under this
Lease for the full Term, and if Landlord so elects Tenant shall continue to pay
to Landlord the entire amount of the rent as and when it becomes due, including
any amounts treated as additional rent under this Lease, for the remainder of
the Term plus any other sums provided in this Lease to be paid by Tenant for
the remainder of the Term.

 

19.1.4.2  Landlord shall use
commercially reasonable efforts to relet the Premises or portions thereof to
the extent required by applicable law. 
Landlord and Tenant agree that nevertheless Landlord shall at most be
required to use only the same efforts Landlord then uses to lease premises in the
Building generally and that in any case that Landlord shall not be required to
give any preference or priority to the showing or leasing of the Premises or
portions thereof over any other space that Landlord may be leasing or have
available and may place a suitable prospective tenant in any such other space
regardless of when such other space becomes available and that Landlord shall
have the right to relet the Premises for a greater or lesser term than that
remaining under this Lease, the right to relet only a portion of the Premises,
or a portion of the Premises or the entire Premises as a part of a larger area,
and the right to change the character or use of the Premises.  In connection with or in preparation for any
reletting, Landlord may, but shall not be required to, make repairs, alterations
and additions in or to the Premises and redecorate the same to the extent
Landlord deems necessary or desirable, and Tenant shall pay the cost thereof,
together with Landlord’s expenses of reletting, including, without limitation,
any commission incurred by Landlord, within five (5) days of Landlord’s
demand.  Landlord shall not be required
to observe any instruction given by Tenant about any reletting or accept any
tenant offered by Tenant unless such offered tenant has a credit-worthiness
acceptable to Landlord and leases the entire Premises upon terms and conditions
including a rate of rent (after giving effect to all expenditures by Landlord
for tenant improvements, broker’s commissions and other leasing costs) all no
less favorable to Landlord than as called for in this Lease, nor shall Landlord
be required to make or permit any assignment or sublease for more than the
current term or which Landlord would not be required to permit under the
provisions of Article 9.

 

19.1.4.3  Until such time as
Landlord shall elect to terminate the Lease and shall thereupon be entitled to
recover the amounts specified in such case in Section 19.1.3, Tenant shall pay
to Landlord upon demand the full amount of all rent, including any amounts
treated as additional rent under this Lease and other sums reserved in this
Lease for the remaining Term, together with the costs of repairs, alterations,
additions, redecorating and Landlord’s expenses of reletting and the collection
of the rent accruing therefrom (including reasonable attorney’s fees and
broker’s commissions), as the same shall then be due or become due from time to
time, less only such consideration as Landlord may have received from any
reletting of the Premises; and Tenant agrees that Landlord may file suits from
time to time to recover any sums falling due under this Article 19 as they
become due.  Any proceeds of reletting
by Landlord in excess of the amount then owed by Tenant to Landlord from time
to time shall be credited against Tenant’s future obligations under this Lease
but shall not otherwise be refunded to Tenant or inure to Tenant’s benefit.

 

19.2         Upon the occurrence
of an Event of Default, Landlord may (but shall not be obligated to) cure such
default at Tenant’s sole expense. 
Without limiting the generality of the foregoing, Landlord may, at
Landlord’s option, enter into and upon the Premises if Landlord determines in
its sole discretion that Tenant is not acting within a commercially reasonable
time to maintain, repair or replace anything for which Tenant is responsible
under this Lease or to otherwise effect compliance with its obligations under
this Lease and correct the same, without being deemed in any manner guilty of
trespass, eviction or forcible entry and detainer and without incurring any liability
for any damage or interruption of Tenant’s business resulting therefrom and
Tenant agrees to reimburse Landlord within five (5) days of Landlord’s demand
as additional rent, for any expenses which Landlord may incur in thus effecting
compliance with Tenant’s obligations under this Lease, plus interest from the
date of expenditure by Landlord at the Wall Street Journal prime rate.

 

11

 

19.3         Tenant understands
and agrees that in entering into this Lease, Landlord is relying upon receipt
of all the Annual and Monthly Installments of Rent to become due with respect
to all the Premises originally leased hereunder over the full Initial Term of
this Lease for amortization, including interest at the Amortization Rate.  For purposes hereof, the “Concession Amount”
shall be defined as the aggregate of all amounts forgone or expended by
Landlord as free rent under the lease, under Exhibit B hereof for
construction allowances (excluding therefrom any amounts expended by Landlord
for Landlord’s Work, as defined in Exhibit B), and for brokers’
commissions payable by reason of this Lease. 
Accordingly, Tenant agrees that if this Lease or Tenant’s right to
possession of the Premises leased hereunder shall be terminated as of any date
(“Default Termination Date”) prior to the expiration of the full Initial Term
hereof by reason of a default of Tenant, there shall be due and owing to
Landlord as of the day prior to the Default Termination Date, as rent in
addition to all other amounts owed by Tenant as of such Date, the amount
(“Unamortized Amount”) of the Concession Amount determined as set forth below;
provided, however, that in the event that such amounts are recovered by
Landlord pursuant to any other provision of this Article 19, Landlord agrees
that it shall not attempt to recover such amounts pursuant to this
Paragraph 19.3.  For the purposes
hereof, the Unamortized Amount shall be determined in the same manner as the
remaining principal balance of a mortgage with interest at the Amortization
Rate payable in level payments over the same length of time as from the
effectuation of the Concession concerned to the end of the full Initial Term of
this Lease would be determined.  The foregoing
provisions shall also apply to and upon any reduction of space in the Premises,
as though such reduction were a termination for Tenant’s default, except that
(i) the Unamortized Amount shall be reduced by any amounts paid by Tenant to
Landlord to effectuate such reduction and (ii) the manner of application shall
be that the Unamortized Amount shall first be determined as though for a full
termination as of the Effective Date of the elimination of the portion, but
then the amount so determined shall be multiplied by the fraction of which the
numerator is the rentable square footage of the eliminated portion and the
denominator is the rentable square footage of the Premises originally leased
hereunder; and the amount thus obtained shall be the Unamortized Amount.

 

19.4         If, on account of any
breach or default by Tenant in Tenant’s obligations under the terms and
conditions of this Lease, it shall become necessary or appropriate for Landlord
to employ or consult with an attorney or collection agency concerning or to
enforce or defend any of Landlord’s rights or remedies arising under this Lease
or to collect any sums due from Tenant, Tenant agrees to pay all costs and fees
so incurred by Landlord, including, without limitation, reasonable attorneys’
fees and costs.  TENANT EXPRESSLY WAIVES ANY RIGHT TO:
(A) TRIAL BY JURY; AND (B) SERVICE OF ANY NOTICE REQUIRED BY ANY PRESENT OR
FUTURE LAW OR ORDINANCE APPLICABLE TO LANDLORDS OR TENANTS BUT NOT REQUIRED BY
THE TERMS OF THIS LEASE.

 

19.5         Pursuit of any of the
foregoing remedies shall not preclude pursuit of any of the other remedies
provided in this Lease or any other remedies provided by law (all such remedies
being cumulative), nor shall pursuit of any remedy provided in this Lease
constitute a forfeiture or waiver of any rent due to Landlord under this Lease
or of any damages accruing to Landlord by reason of the violation of any of the
terms, provisions and covenants contained in this Lease.

 

19.6         No act or thing done
by Landlord or its agents during the Term shall be deemed a termination of this
Lease or an acceptance of the surrender of the Premises, and no agreement to
terminate this Lease or accept a surrender of said Premises shall be valid,
unless in writing signed by Landlord. 
No waiver by Landlord of any violation or breach of any of the terms,
provisions and covenants contained in this Lease shall be deemed or construed
to constitute a waiver of any other violation or breach of any of the terms,
provisions and covenants contained in this Lease.  Landlord’s acceptance of the payment of rental or other payments
after the occurrence of an Event of Default shall not be construed as a waiver
of such Default, unless Landlord so notifies Tenant in writing.  Forbearance by Landlord in enforcing one or
more of the remedies provided in this Lease upon an Event of Default shall not
be deemed or construed to constitute a waiver of such Default or of Landlord’s
right to enforce any such remedies with respect to such Default or any
subsequent Default.

 

19.7         To secure the payment
of all rentals and other sums of money becoming due from Tenant under this
Lease, Landlord shall have and Tenant grants to Landlord a first lien upon the
leasehold interest of Tenant under this Lease, which lien may be enforced in
equity, and a continuing security interest upon all goods, wares, equipment,
fixtures, furniture, inventory, accounts, contract rights, chattel paper and
other personal property of Tenant situated on the Premises, and such property
shall not be removed therefrom without the consent of Landlord until all arrearages
in rent as well as any and all other sums of money then due to Landlord under
this Lease shall first have been paid and discharged.  Upon the occurrence of an Event of Default, Landlord shall have,
in addition to any other remedies provided in this Lease or by law, all rights
and remedies under the Uniform Commercial Code, including without limitation
the right to sell the property described in this Section 19.7 at public or
private sale upon five (5) days’ notice to Tenant.

 

19.8         Any and all property
which may be removed from the Premises by Landlord pursuant to the authority of
this Lease or of law, to which Tenant is or may be entitled, may be handled,
removed and/or stored, as the case may be, by or at the direction of Landlord
but at the risk, cost and expense of Tenant, and Landlord shall in no event be
responsible for the

 

12

 

value, preservation or safekeeping
thereof.  Tenant shall pay to Landlord,
upon demand, any and all expenses incurred in such removal and all storage
charges against such property so long as the same shall be in Landlord’s
possession or under Landlord’s control. 
Any such property of Tenant not retaken by Tenant from storage within
thirty (30) days after removal from the Premises shall, at Landlord’s option,
be deemed conveyed by Tenant to Landlord under this Lease as by a bill of sale
without further payment or credit by Landlord to Tenant.

 

19.9         If more than one (1)
Event of Default occurs during the Term or any renewal thereof, Tenant’s
renewal options, expansion options, purchase options and rights of first offer
and/or refusal, if any are provided for in this Lease, shall be null and void.

 

20.           TENANT’S BANKRUPTCY OR
INSOLVENCY.

 

20.1         If at any time and
for so long as Tenant shall be subjected to the provisions of the United States
Bankruptcy Code or other law of the United States or any state thereof for the
protection of debtors as in effect at such time (each a “Debtor’s Law”):

 

20.1.1      Tenant, Tenant as
debtor-in-possession, and any trustee or receiver of Tenant’s assets (each a
“Tenant’s Representative”) shall have no greater right to assume or assign this
Lease or any interest in this Lease, or to sublease any of the Premises than
accorded to Tenant in Article 9, except to the extent Landlord shall be
required to permit such assumption, assignment or sublease by the provisions of
such Debtor’s Law.  Without limitation
of the generality of the foregoing, any right of any Tenant’s Representative to
assume or assign this Lease or to sublease any of the Premises shall be subject
to the conditions that:

 

20.1.1.1  Such Debtor’s Law
shall provide to Tenant’s Representative a right of assumption of this Lease
which Tenant’s Representative shall have timely exercised and Tenant’s
Representative shall have fully cured any default of Tenant under this Lease.

 

20.1.1.2  Tenant’s
Representative or the proposed assignee, as the case shall be, shall have
deposited with Landlord as security for the timely payment of rent an amount equal
to the larger of: (a) three (3) months’ rent and other monetary
charges accruing under this Lease; and (b) any sum specified in Article 5; and
shall have provided Landlord with adequate other assurance of the future
performance of the obligations of the Tenant under this Lease.  Without limitation, such assurances shall
include, at least, in the case of assumption of this Lease, demonstration to
the satisfaction of the Landlord that Tenant’s Representative has and will
continue to have sufficient unencumbered assets after the payment of all
secured obligations and administrative expenses to assure Landlord that
Tenant’s Representative will have sufficient funds to fulfill the obligations
of Tenant under this Lease; and, in the case of assignment, submission of
current financial statements of the proposed assignee, audited by an
independent certified public accountant reasonably acceptable to Landlord and
showing a net worth and working capital in amounts determined by Landlord to be
sufficient to assure the future performance by such assignee of all of the
Tenant’s obligations under this Lease.

 

20.1.1.3  The assumption or any
contemplated assignment of this Lease or subleasing any part of the Premises,
as shall be the case, will not breach any provision in any other lease,
mortgage, financing agreement or other agreement by which Landlord is bound.

 

20.1.1.4  Landlord shall have,
or would have had absent the Debtor’s Law, no right under Article 9 to refuse
consent to the proposed assignment or sublease by reason of the identity or
nature of the proposed assignee or sublessee or the proposed use of the
Premises concerned.

 

21.           QUIET ENJOYMENT.  Landlord represents and warrants that it has full right and
authority to enter into this Lease and that Tenant, while paying the rental and
performing its other covenants and agreements contained in this Lease, shall
peaceably and quietly have, hold and enjoy the Premises for the Term without
hindrance or molestation from Landlord subject to the terms and provisions of
this Lease.  Landlord shall not be
liable for any interference or disturbance by other tenants or third persons,
nor shall Tenant be released from any of the obligations of this Lease because
of such interference or disturbance.

 

22.           CASUALTY

 

22.1         In the event the
Premises or the Building are damaged by fire or other cause and in Landlord’s
reasonable estimation such damage can be materially restored within one hundred
eighty (180) days, Landlord shall forthwith repair the

 

13

 

same and this Lease shall remain in full
force and effect, except that Tenant shall be entitled to a proportionate
abatement in rent from the date of such damage.  Such abatement of rent shall be made pro rata in accordance with
the extent to which the damage and the making of such repairs shall interfere
with the use and occupancy by Tenant of the Premises from time to time.  Within forty-five (45) days from the date of
such damage, Landlord shall notify Tenant, in writing, of Landlord’s reasonable
estimation of the length of time within which material restoration can be made,
and Landlord’s determination shall be binding on Tenant.  For purposes of this Lease, the Building or
Premises shall be deemed “materially restored” if they are in such condition as
would not prevent or materially interfere with Tenant’s use of the Premises for
the purpose for which it was being used immediately before such damage.

 

22.2         If such repairs
cannot, in Landlord’s reasonable estimation, be made within one hundred eighty
(180) days, Landlord and Tenant shall each have the option of giving the other,
at any time within ninety (90) days after such damage, notice terminating this
Lease as of the date of such damage.  In
the event of the giving of such notice, this Lease shall expire and all
interest of the Tenant in the Premises shall terminate as of the date of such
damage as if such date had been originally fixed in this Lease for the
expiration of the Term.  In the event
that neither Landlord nor Tenant exercises its option to terminate this Lease,
then Landlord shall repair or restore such damage, this Lease continuing in
full force and effect, and the rent hereunder shall be proportionately abated
as provided in Section 22.1.

 

22.3         Landlord shall not be
required to repair or replace any damage or loss by or from fire or other cause
to any panelings, decorations, partitions, additions, railings, ceilings, floor
coverings, office fixtures or any other property or improvements installed on
the Premises by, or belonging to, Tenant. 
Any insurance, which may be carried, by Landlord or Tenant against loss
or damage to the Building or Premises shall be for the sole benefit of the
party carrying such insurance and under its sole control.

 

22.4         In the event that Landlord
should fail to complete such repairs and material restoration within sixty (60)
days after the date estimated by Landlord therefore as extended by this Section
22.4, Tenant may at its option and as its sole remedy terminate this Lease by
delivering written notice to Landlord, within fifteen (15) days after the
expiration of said period of time, whereupon the Lease shall end on the date of
such notice or such later date fixed in such notice as if the date of such
notice was the date originally fixed in this Lease for the expiration of the
Term; provided, however, that if construction is delayed because of changes,
deletions or additions in construction requested by Tenant, strikes, lockouts,
casualties, Acts of God, war, material or labor shortages, government
regulation or control or other causes beyond the reasonable control of
Landlord, the period for restoration, repair or rebuilding shall be extended
for the amount of time Landlord is so delayed.

 

22.5         Notwithstanding
anything to the contrary contained in this Article:  (a) Landlord shall not have any obligation whatsoever to repair,
reconstruct, or restore the Premises when the damages resulting from any
casualty covered by the provisions of this Article 22 occur during the last
twelve (12) months of the Term or any extension thereof, but if Landlord
determines not to repair such damages Landlord shall notify Tenant and if such
damages shall render any material portion of the Premises untenantable Tenant
shall have the right to terminate this Lease by notice to Landlord within
fifteen (15) days after receipt of Landlord’s notice; and (b) in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises or Building requires that any insurance proceeds be applied to such
indebtedness, then Landlord shall have the right to terminate this Lease by
delivering written notice of termination to Tenant within fifteen (15) days
after such requirement is made by any such holder, whereupon this Lease shall
end on the date of such damage as if the date of such damage were the date
originally fixed in this Lease for the expiration of the Term.

 

22.6         In the event of any
damage or destruction to the Building or Premises by any peril covered by the
provisions of this Article 22, it shall be Tenant’s responsibility to properly
secure the Premises and upon notice from Landlord to remove forthwith, at its
sole cost and expense, such portion of all of the property belonging to Tenant
or its licensees from such portion or all of the Building or Premises as
Landlord shall request.

 

23.           EMINENT DOMAIN.  If all or any substantial part of the Premises shall be taken or
appropriated by any public or quasi-public authority under the power of eminent
domain, or conveyance in lieu of such appropriation, either party to this Lease
shall have the right, at its option, of giving the other, at any time within
thirty (30) days after such taking, notice terminating this Lease, except that
Tenant may only terminate this Lease by reason of taking or appropriation, if
such taking or appropriation shall be so substantial as to materially interfere
with Tenant’s use and occupancy of the Premises.  If neither party to this Lease shall so elect to terminate this
Lease, the rental thereafter to be paid shall be adjusted on a fair and
equitable basis under the circumstances. 
In addition to the rights of Landlord above, if any substantial part of
the Building shall be taken or appropriated by any public or quasi-public authority
under the power of eminent domain or conveyance in lieu thereof, and regardless
of whether the Premises or any part thereof are so taken or appropriated,
Landlord shall have the right, at its sole option, to terminate this
Lease.  Landlord shall be entitled to
any and all income, rent, award, or any interest

 

14

 

whatsoever in or upon any such sum, which may
be paid or made in connection with any such public or quasi-public use or
purpose, and Tenant hereby assigns to Landlord any interest it may have in or
claim to all or any part of such sums, other than any separate award which may
be made with respect to Tenant’s trade fixtures and moving expenses; Tenant
shall make no claim for the value of any unexpired Term.

 

24.           SALE BY LANDLORD.  In event of a sale or conveyance by Landlord of the Building, the
same shall operate to release Landlord from any future liability upon any of
the covenants or conditions, expressed or implied, contained in this Lease in
favor of Tenant, and in such event Tenant agrees to look solely to the
responsibility of the successor in interest of Landlord in and to this
Lease.  Except as set forth in this
Article 24, this Lease shall not be affected by any such sale and Tenant agrees
to attorn to the purchaser or assignee. 
If any security has been given by Tenant to secure the faithful
performance of any of the covenants of this Lease, Landlord may transfer or
deliver said security, as such, to Landlord’s successor in interest and thereupon
Landlord shall be discharged from any further liability with regard to said
security.

 

25.           ESTOPPEL CERTIFICATES.  Within ten (10) days following any written
request which Landlord may make from time to time, Tenant shall execute and
deliver to Landlord or mortgagee or prospective mortgagee a sworn statement
certifying:  (a) the date of
commencement of this Lease; (b) the fact that this Lease is unmodified and in
full force and effect (or, if there have been modifications to this Lease, that
this Lease is in full force and effect, as modified, and stating the date and
nature of such modifications); (c) the date to which the rent and other sums
payable under this Lease have been paid; (d) the fact that there are no current
defaults under this Lease by either Landlord or Tenant except as specified in
Tenant’s statement; and (e) such other matters as may be requested by
Landlord.  Landlord and Tenant intend
that any statement delivered pursuant to this Article 25 may be relied upon by
any mortgagee, beneficiary or purchaser, and Tenant shall be liable for all
loss, cost or expense resulting from the failure of any sale or funding of any
loan caused by any material misstatement contained in such estoppel
certificate.  Tenant irrevocably agrees
that if Tenant fails to execute and deliver such certificate within such ten
(10) day period Landlord or Landlord’s beneficiary or agent may execute and
deliver such certificate on Tenant’s behalf, and that such certificate shall be
fully binding on Tenant.

 

26.           SURRENDER OF PREMISES.

 

26.1         Tenant shall arrange
to meet Landlord for two (2) joint inspections of the Premises, the first to
occur at least thirty (30) days (but no more than sixty (60) days) before the
last day of the Term, and the second to occur not later than forty-eight (48)
hours after Tenant has vacated the Premises. 
In the event of Tenant’s failure to arrange such joint inspections
and/or participate in either such inspection, Landlord’s inspection at or after
Tenant’s vacating the Premises shall be conclusively deemed correct for
purposes of determining Tenant’s responsibility for repairs and restoration.

 

26.2         All alterations,
additions, and improvements in, on, or to the Premises made or installed by or
for Tenant, including carpeting (collectively, “Alterations”), shall be and
remain the property of Tenant during the Term. 
Upon the expiration or sooner termination of the Term, all Alterations
shall become a part of the realty and shall belong to Landlord without
compensation, and title shall pass to Landlord under this Lease as by a bill of
sale.  At the end of the Term or any
renewal of the Term or other sooner termination of this Lease, Tenant will
peaceably deliver up to Landlord possession of the Premises, together with all
Alterations by whomsoever made, in the same conditions received or first
installed, broom clean and free of all debris, excepting only ordinary wear and
tear and damage by fire or other casualty. 
Notwithstanding the foregoing, if Landlord elects by notice given to
Tenant at least ten (10) days prior to expiration of the Term, Tenant shall, at
Tenant’s sole cost, remove any Alterations, including carpeting, so designated
by Landlord’s notice, and repair any damage caused by such removal.  Tenant must, at Tenant’s sole cost, remove
upon termination of this Lease, any and all of Tenant’s furniture, furnishings,
movable partitions of less than full height from floor to ceiling and other
trade fixtures and personal property (collectively, “Personalty”).  Personalty not so removed shall be deemed
abandoned by the Tenant and title to the same shall thereupon pass to Landlord
under this Lease as by a bill of sale, but Tenant shall remain responsible for
the cost of removal and disposal of such Personalty, as well as any damage
caused by such removal.  In lieu of
requiring Tenant to remove Alterations and Personalty and repair the Premises
as aforesaid, Landlord may, by written notice to Tenant delivered at least
thirty (30) days before the Termination Date, require Tenant to pay to
Landlord, as additional rent hereunder, the cost of such removal and repair in
an amount reasonably estimated by Landlord.

 

26.3         All obligations of
Tenant under this Lease not fully performed as of the expiration or earlier
termination of the Term shall survive the expiration or earlier termination of
the Term Upon the expiration or earlier termination of the Term, Tenant shall
pay to Landlord the amount, as estimated by Landlord, necessary to repair and
restore the Premises as provided in this Lease and/or to discharge Tenant’s
obligation for unpaid amounts due or to become due to Landlord.  All such amounts shall be used and held by
Landlord for payment of such obligations of Tenant, with Tenant being liable
for any additional costs upon demand by Landlord, or with any excess to be
returned to Tenant after all such obligations have been

 

15

 

determined and satisfied.  Any otherwise unused Security Deposit shall
be credited against the amount payable by Tenant under this Lease.

 

27.           NOTICES. 
Any notice or document required or permitted to be delivered under this
Lease shall be addressed to the intended recipient, by fully prepaid registered
or certified United States Mail return receipt requested, or by reputable
independent contract delivery service furnishing a written record of attempted
or actual delivery, and shall be deemed to be delivered when tendered for
delivery to the addressee at its address set forth on the Reference Pages, or
at such other address as it has then last specified by written notice delivered
in accordance with this Article 27, or if to Tenant at either its aforesaid
address or its last known registered office or home of a general partner or
individual owner, whether or not actually accepted or received by the
addressee.  Any such notice or document
may also be personally delivered if a receipt is signed by and received from,
the individual, if any, named in Tenant’s Notice Address.

 

28.           TAXES PAYABLE BY TENANT.  In addition to rent and other charges to be
paid by Tenant under this Lease, Tenant shall reimburse to Landlord, upon
demand, any and all taxes payable by Landlord (other than net income taxes)
whether or not now customary or within the contemplation of the parties to this
Lease:  (a) upon, allocable to, or
measured by or on the gross or net rent payable under this Lease, including
without limitation any gross income tax or excise tax levied by the State, any
political subdivision thereof, or the Federal Government with respect to the
receipt of such rent; (b) upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy of the
Premises or any portion thereof, including any sales, use or service tax
imposed as a result thereof; (c) upon or measured by the Tenant’s gross
receipts or payroll or the value of Tenant’s equipment, furniture, fixtures and
other personal property of Tenant or leasehold improvements, alterations or
additions located in the Premises; or (d) upon this transaction or any document
to which Tenant is a party creating or transferring any interest of Tenant in
this Lease or the Premises.  In addition
to the foregoing, Tenant agrees to pay, before delinquency, any and all taxes
levied or assessed against Tenant and which become payable during the term
hereof upon Tenant’s equipment, furniture, fixtures and other personal property
of Tenant located in the Premises.

 

29.           RELOCATION OF TENANT.  Intentionally deleted.

 

30.           DEFINED TERMS AND HEADINGS.  The Article headings shown in this Lease are
for convenience of reference and shall in no way define, increase, limit or
describe the scope or intent of any provision of this Lease.  Any indemnification or insurance of Landlord
shall apply to and inure to the benefit of all the following “Landlord
Entities”, being Landlord, Landlord’s investment manager, and the trustees,
boards of directors, officers, general partners, beneficiaries, stockholders,
employees and agents of each of them. 
Any option granted to Landlord shall also include or be exercisable by
Landlord’s trustee, beneficiary, agents and employees, as the case may be.  In any case where this Lease is signed by
more than one person, the obligations under this Lease shall be joint and
several.  The terms “Tenant” and
“Landlord” or any pronoun used in place thereof shall indicate and include the
masculine or feminine, the singular or plural number, individuals, firms or
corporations, and their and each of their respective successors, executors,
administrators and permitted assigns, according to the context hereof.  The term “rentable area” shall mean the
rentable area of the Premises or the Building as calculated by the Landlord on
the basis of the plans and specifications of the Building including a
proportionate share of any common areas. 
Tenant hereby accepts and agrees to be bound by the figures for the
rentable square footage of the Premises and Tenant’s Proportionate Share shown
on the Reference Pages; however, Landlord may adjust either or both figures if
there is manifest error, addition or subtraction to the Building or any
business park or complex of which the Building is a part, remeasurement or
other circumstance reasonably justifying adjustment.  The term “Building” refers to the structure in which the Premises
are located and the common areas (parking lots, sidewalks, landscaping, etc.)
appurtenant thereto.  If the Building is
part of a larger complex of structures, the term “Building” may include the
entire complex, where appropriate (such as shared Expenses or Taxes) and
subject to Landlord’s reasonable discretion.

 

31.           TENANT’S AUTHORITY.  If Tenant signs as a corporation, partnership, trust or other
legal entity each of the persons executing this Lease on behalf of Tenant
represents and warrants that Tenant has been and is qualified to do business in
the state in which the Building is located, that the entity has full right and
authority to enter into this Lease, and that all persons signing on behalf of
the entity were authorized to do so by appropriate actions. Tenant agrees to
deliver to Landlord, simultaneously with the delivery of this Lease, a
corporate resolution, proof of due authorization by partners, opinion of
counsel or other appropriate documentation reasonably acceptable to Landlord
evidencing the due authorization of Tenant to enter into this Lease.

 

32.           FINANCIAL STATEMENTS AND CREDIT REPORTS.  At Landlord’s request, Tenant shall deliver
to Landlord a copy, certified by an officer of Tenant as being a true and
correct copy, of Tenant’s most recent audited financial statement, or, if
unaudited, certified by Tenant’s chief financial officer as being true,
complete and correct in all material

 

16

 

respects.  Tenant hereby authorizes Landlord to obtain
one or more credit reports on Tenant at any time, and shall execute such
further authorizations as Landlord may reasonably require in order to obtain a
credit report.

 

33.           COMMISSIONS. 
Each of the parties represents and warrants to the other that it has not
dealt with any broker or finder in connection with this Lease, except as
described on the Reference Pages.

 

34.           TIME AND APPLICABLE LAW.  Time is of the essence of this Lease and all
of its provisions.  This Lease shall in
all respects be governed by the laws of the state in which the Building is
located.

 

35.           SUCCESSORS AND ASSIGNS.  Subject to the provisions of Article 9, the
terms, covenants and conditions contained in this Lease shall be binding upon
and inure to the benefit of the heirs, successors, executors, administrators
and assigns of the parties to this Lease.

 

36.           ENTIRE AGREEMENT.  This Lease, together with its exhibits, contains all agreements
of the parties to this Lease and supersedes any previous negotiations.  There have been no representations made by
the Landlord or any of its representatives or understandings made between the
parties other than those set forth in this Lease and its exhibits.  This Lease may not be modified except by a
written instrument duly executed by the parties to this Lease.

 

37.           EXAMINATION NOT OPTION.  Submission of this Lease shall not be deemed
to be a reservation of the Premises. 
Landlord shall not be bound by this Lease until it has received a copy
of this Lease duly executed by Tenant and has delivered to Tenant a copy of
this Lease duly executed by Landlord, and until such delivery Landlord reserves
the right to exhibit and lease the Premises to other prospective tenants.  Notwithstanding anything contained in this
Lease to the contrary, Landlord may withhold delivery of possession of the
Premises from Tenant until such time as Tenant has paid to Landlord any
security deposit required by Article 5, the first month’s rent as set forth in
Article 3 and any sum owed pursuant to this Lease.

 

38.           RECORDATION. 
Tenant shall not record or register this Lease or a short form
memorandum hereof without the prior written consent of Landlord, and then shall
pay all charges and taxes incident such recording or registration.

 

39.           TENANT REPRESENTATION.  Tenant
hereby represents and warrants that it is successor-in-interest by merger to
Optical Data Systems, Inc., and Optical Data Systems, Inc. is no longer a legal
entity in existence as of the date of this Lease.  Tenant hereby acknowledges that in the event that the foregoing
representation is untrue, this Lease shall become null and void and the
Original Lease shall be reinstated.  If
the Original Lease is reinstated pursuant to this Section 39, the term of the
Original Lease shall be extended to expire on the Termination Date of this
Lease.

 

40.           LIMITATION OF LANDLORD’S LIABILITY.  Redress for any claim against Landlord under
this Lease shall be limited to and enforceable only against and to the extent
of Landlord’s interest in the Building. 
The obligations of Landlord under this Lease are not intended to be and
shall not be personally binding on, nor shall any resort be had to the private
properties of, any of its or its investment manager’s trustees, directors,
officers, partners, beneficiaries, members, stockholders, employees, or agents,
and in no case shall Landlord be liable to Tenant hereunder for any lost
profits, damage to business, or any form of special, indirect or consequential
damages. 

 

 

	
  LANDLORD:

  	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CALWEST INDUSTRIAL HOLDINGS TEXAS, L.P.,

  a Delaware limited partnership

  	
   

  	
  INTRUSION
  INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
     CALWEST TEXAS, LLC, a Delaware limited

  liability company

  	
   

  	
   

  
	
   

  	
  Its:

  	
  General Partner

  	
   

  	
   

  
	
   

  	
  By:

  	
  RREEF Management Company, a Delaware

  corporation, its Property Manager

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ CYNTHIA A. PRENDERGAST

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ G. WARD PAXTON

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Cynthia A. Prendergast

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  G. Ward Paxton

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  District Manager

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
                     
  

  	
  March 23    

  	
  , 2004 

  	
   

  	
   

  	
  Dated:

  	
   

  	
  March 16

  	
  , 2004

  
																		

 

17

 

EXHIBIT A – FLOOR PLAN DEPICTING THE PREMISES

 

attached to and made a part of Lease bearing
the

Lease Reference Date of January 12, 2004
between

CALWEST INDUSTRIAL HOLDINGS TEXAS, L.P., as
Landlord and

INTRUSION INC., as
Tenant

 

Exhibits A is intended only to show the general layout
of the Premises as of the beginning of the Term of this Lease.  It does not in any way supersede any of
Landlord’s rights set forth in Article 17 with respect to arrangements and/or
locations of public parts of the Building and changes in such arrangements
and/or locations.  It is not to be
scaled; any measurements or distances shown should be taken as approximate.

 

 

EXHIBIT
A-1 – SITE PLAN

 

attached to and made a part of Lease bearing
the

Lease Reference Date of January 12, 2004
between

CALWEST INDUSTRIAL HOLDINGS TEXAS, L.P., as
Landlord and

INTRUSION INC., as
Tenant

 

Exhibits A-1 is intended only to show the general
layout of the Premises as of the beginning of the Term of this Lease.  It does not in any way supersede any of
Landlord’s rights set forth in Article 17 with respect to arrangements and/or
locations of public parts of the Building and changes in such arrangements
and/or locations.  It is not to be
scaled; any measurements or distances shown should be taken as approximate.

 

 

EXHIBIT
B – INITIAL
ALTERATIONS

 

attached to and made a part of Lease bearing
the

Lease Reference Date of January 12, 2004
between

CALWEST INDUSTRIAL HOLDINGS TEXAS, L.P., as
Landlord and

INTRUSION INC., as
Tenant

 

Tenant shall take the Premises in its “as-is” condition, except for
certain Leasehold Improvements to be completed by Landlord, at Landlord’s cost
and expenses, as set forth below.

 

Tenant hereby acknowledges and agrees that Tenant is responsible for
the cost of replacement of the HVAC units pursuant to Exhibit C of the Original
Lease.  Landlord is in the process of
replacing the HVAC units.  Landlord and
Tenant hereby acknowledge and agree that (a) Tenant’s share of the total cost
of such replacement is $325,763.22 and (b) after applying a credit to Tenant in
the amount of $102,890.79 (representing overpaid CAM charges for 2001 and
2002), Tenant owes $222,872.43 to Landlord for HVAC replacement.               Landlord hereby agrees to
amortize Tenant’s portion of the cost of such units over fifteen (15) years,
and Tenant will be responsible for making monthly payments only during the term
of the remainder of the current lease or any extension thereof; therefore,
commencing February 1, 2004, and continuing throughout the term of the Lease
and any extension thereof, Tenant hereby agrees to pay to Landlord $1,238.18
per month (“HVAC Expenses”). 
Landlord and Tenant hereby covenant and agree to (a) cooperate with each
other and any contractors performing such HVAC replacement and (b) use their
best efforts to facilitate the completion of such HVAC installation.

 

Landlord
and Tenant further agree that Landlord shall promptly complete the HVAC
installation at the Building and Tenant shall cooperate, including, without
limitation, allowing Landlord reasonable access to Tenant’s telecommunications
room.  Landlord agrees to timely replace
all missing or damaged ceiling tiles in the Premises after completion of the
HVAC installation and further agrees to leave all affected areas of the
Building and the Premises in clean condition with all debris, trash and dirt
removed. Upon completion of Phase I of the HVAC installation and subsequent
clean-up related thereto, Tenant shall have a period of 45 days in which to
move from its existing space to its new Premises and shall complete such
relocation without such 45-day period.

 

 

EXHIBIT
C – COMMENCEMENT
DATE MEMORANDUM

 

attached to and made a part of Lease bearing
the

Lease Reference Date of January 12, 2004
between

CALWEST INDUSTRIAL HOLDINGS TEXAS, L.P., as
Landlord and

INTRUSION INC., as
Tenant

 

COMMENCEMENT DATE
MEMORANDUM

 

INTENTIONALLY DELETED

 

 

EXHIBIT
D – RULES AND
REGULATIONS

 

attached to and made a part of Lease bearing
the

Lease Reference Date of January 12, 2004
between

CALWEST INDUSTRIAL HOLDINGS TEXAS, L.P., as
Landlord and

INTRUSION INC., as
Tenant

 

1.             No sign, placard, picture,
advertisement, name or notice shall be installed or displayed on any part of
the outside or inside of the Building without the prior written consent of the
Landlord, which shall not be unreasonably withheld.  Landlord shall have the right to remove, at Tenant’s expense and
without notice, any sign installed or displayed in violation of this rule.  Notwithstanding the foregoing, Landlord
hereby consents to the sign currently located on the Building; provided,
however, that Landlord may require that Tenant immediately remove such sign in
the event that another tenant enters into a lease with Landlord covering any
portion of the Building.  All approved
signs or lettering on doors and walls shall be printed, painted, affixed or
inscribed at Tenant’s expense by a vendor designated or approved by
Landlord.  In addition, Landlord
reserves the right to change from time to time the format of the signs or
lettering and to require previously approved signs or lettering to be
appropriately altered.

 

2.             If Landlord objects in writing to
any curtains, blinds, shades or screens attached to or hung in or used in
connection with any window or door of the Premises, Tenant shall immediately
discontinue such use.  No awning shall
be permitted on any part of the Premises. 
Tenant shall not place anything or allow anything to be placed against
or near any glass partitions or doors or windows which may appear unsightly, in
the opinion of Landlord, from outside the Premises.

 

3.             Tenant shall not obstruct any
sidewalks, halls, passages, exits, entrances, elevators, or stairways of the
Building. No tenant and no employee or invitee of any tenant shall go upon the
roof of the Building.

 

4.             Any directory of the Building, if
provided, will be exclusively for the display of the name and location of
tenants only and Landlord reserves the right to exclude any other names.
Landlord reserves the right to charge for Tenant’s directory listing.

 

5.             All cleaning and janitorial
services for the Building and the Premises shall be provided exclusively
through Landlord.  Tenant shall not
cause any unnecessary labor by carelessness or indifference to the good order and
cleanliness of the Premises.  Landlord
shall not in any way be responsible to any Tenant for any loss of property on
the Premises, however occurring, or for any damage to any Tenant’s property by
the janitor or any other employee or any other person.

 

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

 

7.             Tenant shall store all its trash
and garbage within its Premises.  Tenant
shall not place in any trash box or receptacle any material, which cannot be
disposed of in the ordinary and customary manner of trash and garbage
disposal.  All garbage and refuse
disposal shall be made in accordance with directions issued from time to time
by Landlord. Tenant will comply with any and all recycling procedures
designated by Landlord.

 

8.             Landlord will furnish Tenant two
(2) keys free of charge to each door in the Premises that has a passageway
lock.  Landlord may charge Tenant a
reasonable amount for any additional keys, and Tenant shall not make or have
made additional keys on its own. Tenant shall not alter any lock or install a
new or additional lock or bolt on any door of its Premises.  Tenant, upon the termination of its tenancy,
shall deliver to Landlord the keys of all doors which have been furnished to
Tenant, and in the event of loss of any keys so furnished, shall pay Landlord
therefore.

 

9.             If Tenant requires telephone, data,
burglar alarm or similar service, the cost of purchasing, installing and
maintaining such service shall be borne solely by Tenant.  No boring or cutting for wires will be
allowed without the prior written consent of Landlord.

 

10.           No equipment, materials, furniture,
packages, bulk supplies, merchandise or other property will be received in the
Building or carried in the elevators except between such hours and in such
elevators as may be designated by Landlord. 
The persons employed to move such equipment or materials in or out of
the Building must be acceptable to Landlord.

 

 

11.           Tenant shall not place a load upon
any floor, which exceeds the load per square foot, which such floor was
designed to carry and which is allowed by law. 
Heavy objects shall stand on such platforms as determined by Landlord to
be necessary to properly distribute the weight.  Business machines and mechanical equipment belonging to Tenant
which cause noise or vibration that may be transmitted to the structure of the
Building or to any space in the Building to such a degree as to be objectionable
to Landlord or to any tenants shall be placed and maintained by Tenant, at
Tenant’s expense, on vibration eliminators or other devices sufficient to
eliminate the noise or vibration. Landlord will not be responsible for loss of
or damage to any such equipment or other property from any cause, and all
damage done to the Building by maintaining or moving such equipment or other
property shall be repaired at the expense of Tenant.

 

12.           Landlord shall in all cases retain
the right to control and prevent access to the Building of all persons whose
presence in the judgment of Landlord would be prejudicial to the safety,
character, reputation or interests of the Building and its tenants, provided
that nothing contained in this rule shall be construed to prevent such access
to persons with whom any tenant normally deals in the ordinary course of its
business, unless such persons are engaged in illegal activities.  Landlord reserves the right to exclude from
the Building between the hours of 6 p.m. and 7 a.m. the following day, or such
other hours as may be established from time to time by Landlord, and on Sundays
and legal holidays, any person unless that person is known to the person or
employee in charge of the Building and has a pass or is properly identified.  Tenant shall be responsible for all persons
for whom it requests passes and shall be liable to Landlord for all acts of
such persons.  Landlord shall not be
liable for damages for any error with regard to the admission to or exclusion
from the Building of any person.

 

13.           Tenant shall not use any method of
heating or air conditioning other than that supplied or approved in writing by
Landlord.

 

14.           Tenant shall not waste electricity,
water or air conditioning.  Tenant shall
keep corridor doors closed. Tenant shall close and lock the doors of its
Premises and entirely shut off all water faucets or other water apparatus
before Tenant and its employees leave the Premises.  Tenant shall be responsible for any damage or injuries sustained
by other tenants or occupants of the Building or by Landlord for noncompliance
with this rule.

 

15.           Tenant shall not install any radio or
television antenna, satellite dish, loudspeaker or other device on the roof or
exterior walls of the Building without Landlord’s prior written consent, which
consent may be withheld in Landlord’s sole discretion, and which consent may in
any event be conditioned upon Tenant’s execution of Landlord’s standard form of
license agreement.  Tenant shall be
responsible for any interference caused by such installation.

 

16.           Tenant shall not mark, drive nails,
screw or drill into the partitions, woodwork, plaster, or drywall (except for
pictures, tackboards and similar office uses) or in any way deface the
Premises.  Tenant shall not cut or bore
holes for wires.  Tenant shall not affix
any floor covering to the floor of the Premises in any manner except as
approved by Landlord.  Tenant shall
repair any damage resulting from noncompliance with this rule.

 

17.           Tenant shall not install, maintain or
operate upon the Premises any vending machine without Landlord’s prior written
consent, except that Tenant may install food and drink vending machines solely
for the convenience of its employees.

 

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

 

19.           Tenant shall not use in any space or
in the public halls of the Building any hand trucks except those equipped with
the rubber tires and side guards or such other material-handling equipment as
Landlord may approve.  Tenant shall not
bring any other vehicles of any kind into the Building.

 

20.           Tenant shall not permit any motor
vehicles to be washed or mechanical work or maintenance of motor vehicles to be
performed in any parking lot.

 

21.           Tenant shall not use the name of the
Building in connection with or in promoting or advertising Tenant’s business,
except that Tenant may include the Building name in Tenant’s address.  Landlord shall have the right, exercisable
without notice and without liability to any tenant, to change the name and
address of the Building.

 

22.           Tenant requests for services must be
submitted to the Building office by an authorized individual.  Employees of Landlord shall not perform any
work or do anything outside of their regular duties unless under special instruction
from

 

 

Landlord, and
no employee of Landlord will admit any person (Tenant or otherwise) to any
office without specific instructions from Landlord.

 

23.           Tenant shall not permit smoking or
carrying of lighted cigarettes or cigars other than in areas designated by
Landlord as smoking areas.

 

24.           Canvassing, soliciting, distribution
of handbills or any other written material in the Building is prohibited and
each tenant shall cooperate to prevent the same.  No tenant shall solicit business from other tenants or permit the
sale of any good or merchandise in the Building without the written consent of
Landlord.

 

25.           Tenant shall not permit any animals
other than service animals, e.g. seeing-eye dogs, to be brought or kept in or
about the Premises or any common area of the Building.

 

26.           These Rules and Regulations are in
addition to, and shall not be construed to in any way modify or amend, in whole
or in part, the terms, covenants, agreements and conditions of any lease of any
premises in the Building. Landlord may waive any one or more of these Rules and
Regulations for the benefit of any particular tenant or tenants, but no such
waiver by Landlord shall be construed as a waiver of such Rules and Regulations
in favor of any other tenant or tenants, nor prevent Landlord from thereafter
enforcing any such Rules and Regulations against any or all of the tenants of
the Building.

 

27.           Landlord reserves the right to make
such other and reasonable rules and regulations as in its judgment may from
time to time be needed for safety and security, for care and cleanliness of the
Building, and for the preservation of good order in and about the
Building.  Tenant agrees to abide by all
such rules and regulations herein stated and any additional rules and
regulations, which are adopted. Tenant shall be responsible for the observance
of all of the foregoing rules by Tenant’s employees, agents, clients,
customers, invitees and guests.

 

 

EXHIBIT
E – RENEWAL
OPTION

 

attached to and made a part of Lease bearing
the

Lease Reference Date of January 12, 2004
between

CALWEST INDUSTRIAL HOLDINGS TEXAS, L.P., as
Landlord and

INTRUSION INC., as Tenant

 

Tenant shall, provided the
Lease is in full force and effect and Tenant is not in default under any of the
other terms and conditions of the Lease at the time of notification or
commencement, have two (2) successive options to renew this Lease for a term of
five (5) years each, for the portion of the Premises being leased by Tenant as
of the date the renewal term is to commence, on the same terms and conditions
set forth in the Lease, except as modified by the terms, covenants and
conditions as set forth below:

 

a.                                       If Tenant elects to exercise said option,
then Tenant shall provide Landlord with written notice no earlier than the date
which is two hundred seventy (240) days prior to the expiration of the then
current term of the Lease but no later than the date which is one hundred
twenty (180) days prior to the expiration of the then current term of this
Lease.  If Tenant fails to provide such
notice, Tenant shall have no further or additional right to extend or renew the
term of the Lease.

 

b.                                      The Annual Rent and Monthly Installment
of Rent in effect at the expiration of the then current term of the Lease shall
be increased to reflect the current fair market rental for comparable space in
the Building and in other similar buildings in the same rental market as of the
date the renewal term is to commence, taking into account the specific
provisions of the Lease which will remain constant.  Landlord shall advise Tenant of the new Annual Rent and Monthly
Installment of Rent for the Premises no later than sixty (60) days after
receipt of Tenant’s written request therefore. 
Said request shall be made no earlier than thirty (30) days prior to the
first date on which Tenant may exercise its option under this Paragraph.  Said notification of the new Annual Rent may
include a provision for its escalation to provide for a change in fair market
rental between the time of notification and the commencement of the renewal
term.  In no event shall the Annual Rent
and Monthly Installment of Rent for the option period be less than the Annual
Rent and Monthly Installment of Rent in the preceding period.  Tenant shall have ten (10) days from said
notification to provide Landlord with written notice that Tenant elects to
exercise its renewal option.  If Tenant
fails to provide such notice, then Tenant will be deemed to have waived its
option to renew the Lease, and Tenant shall have no further or additional right
to extend the term of the Lease.

 

c.                                       This option is not transferable; the
parties hereto acknowledge and agree that they intend that the aforesaid option
to renew this Lease shall be “personal” to Tenant or its permitted assignees as
set forth above and that in no event will any assignee or sublessee have any
rights to exercise the aforesaid option to renew, unless approved by Landlord
in its sole and absolute discretion.

 

d.                                      As each renewal option provided for above
is exercised, the number of renewal options remaining to be exercised is
reduced by one and upon exercise of the last remaining renewal option Tenant
shall have no further right to extend the term of the Lease.

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