Document:

Exhibit 10.1

 

SALLY BEAUTY HOLDINGS,
INC.

 

ANNUAL INCENTIVE PLAN

 

2007

 

SECTION 1

PURPOSE

 

The purpose of the Sally Beauty Holdings Annual Incentive Plan is to
permit Sally Beauty Holdings, Inc. (the “Company”), through awards of
annual incentive compensation that satisfy the requirements for
performance-based compensation under Section 162(m) of the Internal
Revenue Code, to attract and retain executives and to motivate these executives
to promote the profitability and growth of the Company.

 

SECTION 2

DEFINITIONS

 

“Award” shall mean the amount granted to a Participant by the
Committee for a Performance Period.

 

“Board” shall mean the Board of Directors of the Company, or the
successor thereto.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Committee” shall mean the Compensation Committee of the Board
or any subcommittee thereof which meets the requirements of Section 162(m)(4)(C) of
the Code.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934,
as amended.

 

“Executive” shall mean any “covered employee” (as defined in Section 162(m) of
the Code) and, in the discretion of the Committee, any other executive officer
of the Company or its Subsidiaries.

 

“Operating Income” shall mean, for each Performance Period, the
operating income of the Company as reported in the Company’s audited
consolidated financial statements for the Performance Period, with such
adjustments for such Performance Period as the Committee may provide for prior
to the commencement thereof, or at such later time as may be permitted by
applicable provisions of the Code (which adjustments may include effects of
charges for restructurings, discontinued operations, extraordinary items, other
unusual or non-recurring items, and the cumulative effect of tax or accounting
changes, each as determined in accordance with generally accepted accounting
principles and identified in the financial statements, notes to the financial
statements or management’s discussion and analysis).

 

“Participant” shall mean, for each Performance Period, each
Executive who has been selected by the Committee to participate in the Plan.

 

“Performance Period” shall mean the Company’s fiscal year or any
other period designated by the Committee with respect to which an Award may be
granted.

 

“Plan” shall mean this Sally Beauty Holdings Annual Incentive
Plan, as amended from time to time.

 

“Stock Plans” shall mean the Sally Beauty Holdings 2007 Omnibus
Incentive Plan and any future equity compensation plans approved by the
shareholders of the Company.

 

1

 

SECTION 3

ADMINISTRATION

 

The Committee shall administer the Plan and shall have full authority
to interpret the Plan, to establish rules and regulations relating to the
operation of the Plan, to select Participants, to determine the amounts of any
Awards and to make all determinations and take all other actions necessary or
appropriate for the proper administration of the Plan.  The Committee’s interpretation of the Plan,
and all actions taken within the scope of its authority, shall be final and
binding on the Company, its stockholders and Participants, Executives, former
Executives and their respective successors and assigns.  No member of the Committee shall be eligible
to participate in the Plan.

 

SECTION 4

DETERMINATION OF AWARDS

 

(a)   Prior to the beginning
of each Performance Period, or at such later time as may be permitted by
applicable provisions of the Code, the Committee shall establish the Executives
or class of Executives who will be Participants in the Plan.  For each Performance Period the Award payable
to the Chief Executive Officer of the Company is 1% of Operating Income with
respect to such Performance Period, and the Award payable to each other Participant
is 0.5% of Operating Income with respect to such Performance Period.

 

(b)  Following the end of each Performance Period, and before any
payments are made under the Plan, the Committee shall certify in writing (i) that
the Company has positive Operating Income for such Performance Period and (ii) the
amount of the maximum Awards provided for in paragraph (a) of this
section.

 

(c)  Following the certification required by paragraph (b) of
this section, the Committee may determine to grant to any Participant an Award,
which may not exceed the amount determined in accordance with paragraph (a) of
this section for such Participant.  The
Committee may reduce or eliminate the Award granted to any Participant based on
factors determined by the Committee, including but not limited to, performance
against financial goals and the Participant’s personal performance.

 

SECTION 5

PAYMENT OF AWARDS

 

Each Participant shall be eligible to receive, as soon as practicable
after the amount of such Participant’s Award for a Performance Period has been
determined, payment of the Award in cash, stock, restricted stock, options,
other stock-based or stock-denominated units or any combination thereof
determined by the Committee.  Equity or
equity-based awards shall be granted under the terms and conditions of one or more
of the Company’s Stock Plans.  Payment of
the award may be deferred in accordance with a written election by the
Participant pursuant to procedures established by the Committee.

 

SECTION 6

AMENDMENTS

 

The Committee may amend the Plan at any time and from time to time,
provided that no such amendment that would require the consent of the
stockholders of the Company pursuant to Section 162(m) of the Code,
New York Stock Exchange listing rules or the Exchange Act, or any other
applicable law, rule or regulation, shall be effective without such
consent.  No amendment which adversely
affects a Participant’s rights to, or interest in, an Award granted prior to
the date of the amendment shall be effective unless the Participant shall have
agreed thereto in writing.

 

2

 

SECTION 7

TERMINATION

 

The Committee may terminate this Plan at any time but in no event shall
the termination of the Plan adversely affect the rights of any Participant to a
previously granted Award without such Participant’s written consent.

 

SECTION 8

OTHER PROVISIONS

 

(a)  No Executive or other person shall have any claim or right to
be granted an Award under this Plan until such Award is actually granted.  Neither the establishment of this Plan, nor
any action taken hereunder, shall be construed as giving any Executive any
right to be retained in the employ of the Company.  Nothing contained in this Plan shall limit
the ability of the Company to make payments or awards to Executives under any
other plan, agreement or arrangement.

 

(b)  The rights and benefits of a Participant hereunder are
personal to the Participant and, except for payments made following a
Participant’s death, shall not be subject to any voluntary or involuntary
alienation, assignment, pledge, transfer, encumbrance, attachment, garnishment
or other disposition.

 

(c)  Awards under this Plan shall not constitute compensation for
the purpose of determining participation or benefits under any other plan of
the Company unless specifically included as compensation in such plan.

 

(d)  The Company shall have the right to deduct from Awards any
taxes or other amounts required to be withheld by law.

 

(e)  Nothing contained in the Plan shall be construed to prevent
the Company or any of its subsidiaries from taking any corporate action which
is deemed by it to be appropriate or in its best interest, whether or not such
action would have an adverse effect on any awards made under the Plan and
nothing in the Plan shall be deemed to limit or restrict the ability of the
Company or any of its subsidiaries from establishing any compensation plan or
arrangement, or making any payment, or granting any award to any Executive or
other person.  No employee, beneficiary
or other person shall have any claim against the Company or any of its
subsidiaries as a result of any such action.

 

(f)  All questions pertaining to the construction, regulation,
validity and effect of the provisions of the Plan shall be determined in
accordance with the laws of the State of New York without regard to principles
of conflict of laws.

 

(g)  No member of the Committee or the Board, and no officer,
employee or agent of the Company shall be liable for any act or action
hereunder, whether of commission or omission, taken by any other member, or by
any officer, agent, or employee, or, except in circumstances involving bad
faith, for anything done or omitted to be done in the administration of the
Plan.

 

SECTION 9

EFFECTIVE DATE

 

The Plan shall be effective as of April 26,
2007, subject to approval by the stockholders of the Company in accordance with
Section 162(m) of the Code.

 

3Exhibit 10.1

 

STANDARD MULTI-TENANT OFFICE LEASE - GROSS

AIR COMMERCIAL REAL ESTATE ASSOCIATION

 

1.                                      Basic Provisions (“Basic Provisions”).

 

1.1                               Parties: 
This Lease (“Lease”), dated for reference
purposes only April 14, 2008 is made by and between Allen Joseph
Blackmore, Trustee of the Blackmore Family Trust, Restated 1995 (“Lessor”) and Genoptix, Inc., a
Delaware Corporation (“Lessee”),
(collectively the “Parties”, or individually a “Party”).

 

1.2                               (a)                                  Premises:  That certain
portion of the Project (as defined below), known as Suite Numbers(s) 100,
106 & 200, consisting of approximately 42,948 rentable square feet and
approximately 36,397 useable square feet (“Premises”).  The Premises are located at:  1811 Aston Avenue in the City of Carlsbad,
County of San Diego, State of California, with zip code 92008.  In addition to Lessee’s rights to use and
occupy the Premises as hereinafter specified, Lessee shall have non-exclusive
rights to the Common Areas (as defined in Paragraph 2.7 below) as hereinafter
specified, but shall not have any rights to the roof, the exterior walls, the
area above the dropped ceilings, or the utility raceways of the building
containing the Premises (“Building”)
or to any other buildings in the Project. 
The Premises, the Building, the Common Areas, the land upon which they
are located, along with all other buildings and improvements thereon, are
herein collectively referred to as the “Project.”  The Project consists of approximately 56,721
rentable square feet.  (See also
Paragraph 2)

 

(b)                                  Parking:  one hundred
seventy three (173) unreserved and zero (0) reserved vehicle parking spaces at
a monthly cost of $zero (0) per unreserved space and $zero (0) per reserved
space.  (See Paragraph 2.6)

 

1.3                               Term:  Six (6) years
and zero (0) months (“Original Term”)
commencing January 1, 2009 (“Commencement Date”)
and ending December 31, 2014 (“Expiration Date”).  (See also Paragraph 3)

 

1.4                               Early Possession: 
Upon substantial completion of tenant improvements to Suite 200 (“Early Possession Date”).  (See also Paragraphs 3.2 and 3.3)

 

1.5                               Base Rent:  $111,665.00
per month (“Base Rent”), payable on the
first day of each month commencing January 1, 2009.  (See also Paragraph 4)

 

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

 

1.6                               Lessee’s Share of Operating Expense Increase:  seventy-six percent (76%) (“Lessee’s Share”).  Lessee’s Share has been calculated by
dividing the approximate rentable square footage of the Premises by the total
approximate square footage of the rentable space contained in the Project and
shall not be subject to revision except in connection with an actual change in
the size of the Premises or a change in the space available for lease in the
Project.

 

1.7                               Base Rent and Other Monies Paid Upon Execution:

 

(a)                                  Base Rent: 
$111,665.00 for the period January 1-31, 2009.

 

(b)                                  Security Deposit: 
$111.665.00 (“Security Deposit”).  (See also Paragraph 5)

 

(c)                                  Parking: 
$0.00 for the period
                        .

 

(d)                                  Other: 
$0.00 for                                       .

 

(e)                                  Total Due Upon Execution of this Lease:  $223,330.00.

 

1.8                               Agreed Use:  General
office uses and any other legal related uses permitted under all applicable
laws and zoning.  (See also Paragraph 6)

 

1.9                               Base
Year; Insuring Party. The Base Year is 2009. Lessor is the “Insuring Party”. (See also
Paragraphs 4.2

and 8)

 

1.10                        Real Estate Brokers:  (See also
Paragraph 15)

 

1.11                        Guarantor.  The
obligations of the Lessee under this Lease shall be guaranteed by N/A (“Guarantor”).  (See also Paragraph 37)

 

1.12                        Business Hours for the Building: 
8:00 a.m. to 6:00 p.m., Mondays through Fridays
(except Building Holidays) and 8:00 a.m. to 12:00 p.m. on Saturdays
(except Building Holidays).  

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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“Building Holidays” shall mean the dates of observation of
New Year’s Day, President’s Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day, and
                                .

 

1.13                        Lessor Supplied Services.  Notwithstanding
the provisions of Paragraph 11.1, Lessor is NOT obligated to provide the
following:

 

o    Janitorial services

 

x   Electricity to individual suites

 

x   Other (specify):  telephone to individual suites

 

1.14                        Attachments.  Attached
hereto are the following, all of which constitute a part of this Lease:

 

x   an Addendum consisting of Paragraphs 50
through 73;

 

o    a plot plan depicting the Premises;

 

o    a current set of the Rules and
Regulations;

 

x   Tenant Improvement Agreement ;

 

o    a janitorial schedule;

 

o    other (specify):

.

 

2.                                      Premises.

 

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

 

2.2                               Condition.  Lessor shall
deliver the Premises to Lessee in a clean condition on the Commencement Date or
the Early Possession Date, whichever first occurs (“Start
Date”), and warrants that the existing electrical, plumbing,
fire sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”), and all other items which
the Lessor is obligated to construct pursuant to the Work Letter attached
hereto, if any, other than those constructed by Lessee, shall be in good
operating condition on said date, that the structural elements of the roof,
bearing walls and foundation of the Unit shall be free of material defects, and
that the Premises do not contain hazardous levels of any mold or fungi defined
as toxic under applicable state or federal law.

 

2.3                               Compliance.  Lessor
warrants to the best of its knowledge that the improvements comprising the
Premises and the Common Areas comply with the building codes that were in
effect at the time that each such improvement, or portion thereof, was
constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances (“Applicable Requirements”)
in effect on the Start Date.  Said
warranty does not apply to the use to which Lessee will put the Premises,
modifications which may be required by the Americans with Disabilities Act or
any similar laws as a result of Lessee’s use (see Paragraph 49), or to any
Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or
to be made by Lessee.  NOTE:  Lessee is responsible for
determining whether or not the zoning and other Applicable Requirements are
appropriate for Lessee’s intended use, and acknowledges that past uses of the
Premises may no longer be allowed.  If
the Premises do not comply with said warranty, Lessor shall, except as
otherwise provided, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
rectify the same.  If the Applicable
Requirements are hereafter changed so as to require during the term of this
Lease the construction of an addition to or an alteration of the Premises, the
remediation of any Hazardous Substance, or the reinforcement or other physical
modification of the Premises (“Capital Expenditure”),
Lessor and Lessee shall allocate the cost of such work as follows:

 

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

 

(b)                                 If such
Capital Expenditure is not the result of the specific and unique use of the
Premises by Lessee (such as, governmentally mandated seismic modifications),
then Lessor shall pay for such Capital Expenditure and Lessee shall only be
obligated to pay, each month during the remainder of 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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the
term of this Lease and any exercised Option Period , on the date that on which
the Base Rent is due, an amount equal to 144th of the portion of such costs
reasonably attributable to the Premises. 
Lessee shall pay Interest on the balance but may prepay its obligation
at any time.  If, however, such Capital
Expenditure is required during the last 2 years of this Lease or if Lessor
reasonably determines that it is not economically feasible to pay its share thereof,
Lessor shall have the option to terminate this Lease upon 90 days prior written
notice to Lessee unless Lessee notifies Lessor, in writing, within 10 days
after receipt of Lessor’s termination notice that Lessee will pay for such
Capital Expenditure.

 

(c)                                  Notwithstanding
the above, the provisions concerning Capital Expenditures are intended to apply
only to nonvoluntary, unexpected, and new Applicable Requirements.  If the Capital Expenditures are instead
triggered by Lessee as a result of an actual or proposed change in use, change
in intensity of use, or modification to the Premises then, and in that event,
Lessee shall either:  (i) immediately
cease such changed use or intensity of use and/or take such other steps as may
be necessary to eliminate the requirement for such Capital Expenditure, or (ii) complete
such Capital Expenditure at its own expense. 
Lessee shall not have any right to terminate this Lease.

 

2.4                               Acknowledgements.  Lessee
acknowledges that:  (a) Lessee has
been advised by Lessor and/or Brokers to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical, HVAC
and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements), and their suitability for Lessee’s intended use,
(b) Lessee has made such investigation as it deems necessary with
reference to such matters and assumes all responsibility therefor as the same
relate to its occupancy of the Premises, and (c) neither Lessor, Lessor’s
agents, nor Brokers have made any oral or written representations or warranties
with respect to said matters other than as set forth in this Lease.  In addition, Lessor acknowledges that:  (i) Brokers have made no
representations, promises or warranties concerning Lessee’s ability to honor
the Lease or suitability to occupy the Premises, and (ii) it is Lessor’s
sole responsibility to investigate the financial capability and/or suitability
of all proposed tenants.

 

2.5                               Vehicle Parking.  So long as
Lessee is not in default, and subject to the Rules and Regulations
attached hereto, and as established by Lessor from time to time, Lessee shall
be entitled to rent and use the number of parking spaces specified in Paragraph
1.2(b) at the rental rate applicable from time to time for monthly parking
as set by Lessor and/or its licensee.

 

(a)                                  If Lessee
commits, permits or allows any of the prohibited activities described in the
Lease or the rules then in effect, then Lessor shall have the right, upon
notice to Lessee, in addition to such other rights and remedies that it may
have, to remove or tow away the vehicle involved and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.

 

2.6                               Common Areas - Definition.  The term “Common Areas” is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Project and interior utility raceways and installations within the
Premises that are provided and designated by the Lessor from time to time for
the general nonexclusive use of Lessor, Lessee and other tenants of the Project
and their respective employees, suppliers, shippers, customers, contractors and
invitees, including, but not limited to, common entrances, lobbies, corridors,
stairwells, public restrooms, elevators, parking areas, loading and unloading
areas, trash areas, roadways, walkways, driveways and landscaped areas.

 

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

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3.                                      Term.

 

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

Paragraph 1.3.

 

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

 

3.3                               Delay In Possession.  Lessor
agrees to use its best commercially reasonable efforts to deliver possession of
the Premises to Lessee by the Commencement Date.  If, despite said efforts, Lessor is unable to
deliver possession by such date, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease.  Lessee shall not, however, be obligated to
pay Rent or perform its other obligations until Lessor delivers possession of
the Premises and any period of rent abatement that Lessee would otherwise have
enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Lessee would otherwise have enjoyed under the terms hereof,
but minus any days of delay caused by the acts or omissions of Lessee.  If possession is not delivered within 60 days
after the Commencement Date, as the same may be extended under the terms of any
Work Letter executed by Parties, Lessee may, at its option, by notice in
writing within 10 days after the end of such 60 day period, cancel this Lease,
in which event the Parties shall be discharged from all obligations
hereunder.  If such written notice is not
received by Lessor within said 10 day period, Lessee’s right to cancel shall
terminate.  If possession of the Premises
is not delivered within 120 days after the Commencement Date, this Lease shall
terminate unless other agreements are reached between Lessor and Lessee, in
writing.

 

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

 

4.                                      Rent.

 

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

 

4.2                               Operating Expense Increase.  Lessee shall
pay to Lessor during the term hereof, in addition to the Base Rent, Lessee’s
Share of the amount by which all Operating Expenses for each Comparison Year
exceeds the amount of all Operating Expenses for the Base Year, such excess
being hereinafter referred to as the “Operating Expense
Increase”, in accordance with the following provisions:

 

(a)                                  “Base
Year” is as specified in Paragraph 1.9.

 

(b)                                  “Comparison
Year” is defined as each calendar year during the term of this
Lease subsequent to the Base Year; provided, however, Lessee shall have no
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of
the Operating Expense Increase applicable to the first 12 months of the Lease
Term (other than such as are mandated by a governmental authority, as to which
government mandated expenses Lessee shall pay Lessee’s Share, notwithstanding
they occur during the first twelve (12) months).  Lessee’s Share of the Operating Expense
Increase for the first and last Comparison Years of the Lease Term shall be
prorated according to that portion of such Comparison Year as to which Lessee
is responsible for a share of such increase.

 

(c)                                  The
following costs relating to the ownership and operation of the Project,
calculated as if the Project was at least 100% occupied, are defined as “Operating Expenses”:

 

(i)                                    Costs
relating to the operation, repair, and maintenance in neat, clean, safe, good
order and condition, but not the replacement (see subparagraph (g)), of the
following:

 

(1)                                 The Common
Areas, including their surfaces, coverings, decorative items, carpets, drapes
and window coverings, and including parking areas, loading and unloading areas,
trash areas, roadways, sidewalks, walkways, stairways, parkways, driveways,
landscaped areas, striping, bumpers, irrigation systems, Common Area lighting
facilities, building exteriors and roofs, fences and gates;

 

(2)                                 All heating,
air conditioning, plumbing, electrical systems, life safety equipment,
communication systems and other equipment used in common by, or for the benefit
of, tenants or occupants of the Project, including elevators and escalators,
tenant directories, fire detection systems including sprinkler system
maintenance and repair.

 

(ii)                                The cost of
trash disposal, janitorial and security services, pest control services, and
the costs of any environmental inspections;

 

(iii)                            The cost of
any other service to be provided by Lessor that is elsewhere in this Lease
stated to be an “Operating Expense”;

 

(iv)                             The cost of
the premiums for the insurance policies maintained by Lessor pursuant to
paragraph 8 and any deductible portion of an insured loss concerning the Building
or the Common Areas;

 

(v)                                 The amount
of the Real Property Taxes payable by Lessor pursuant to paragraph 10;

 

(vi)                             The cost of
water, sewer, gas, electricity, and other publicly mandated services not
separately metered;

 

(vii)                         Labor,
salaries, and applicable fringe benefits and costs, materials, supplies and
tools, used in maintaining and/or cleaning the Project and accounting and
management fees attributable to the operation of the Project;

 

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

 

(ix)                            The cost to
replace equipment or improvements that have a useful life for accounting
purposes of 5 years or less.

 

(x)                                Reserves set
aside for maintenance, repair and/or replacement of Common Area improvements
and equipment.

 

(d)                                  Any item of
Operating Expense that is specifically attributable to the Premises, the
Building or to any other building in the Project or to the operation, repair
and maintenance thereof, shall be allocated entirely to such Premises,
Building, or other building.  However,
any such item that is not specifically attributable to the Building or to any
other building or to the operation, repair and maintenance thereof, shall be
equitably allocated by Lessor to all buildings in the Project.

 

(e)                                  The
inclusion of the improvements, facilities and services set forth in
Subparagraph 4.2(c) shall not be deemed to impose an obligation upon
Lessor to either have said improvements or facilities or to provide those
services unless the Project already has the same, Lessor already provides the
services, or Lessor has agreed elsewhere in this Lease to provide the same or
some of them.

 

(f)                                    Lessee’s
Share of Operating Expense Increase is payable monthly on the same day as the
Base Rent is due hereunder.  The amount
of such payments shall be based on Lessor’s estimate of the Operating Expense
Expenses.  Within 60 days after the
expiration of each calendar year, written request (but not more than once each
year) Lessor shall deliver to Lessee a reasonably detailed statement showing
Lessee’s Share of the actual Common Area Operating Expenses incurred during the
preceding year.  If Lessee’s payments
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amount
of such over-payment against Lessee’s future payments.  If Lessee’s payments during such Year were
less than Lessee’s Share, Lessee shall pay to Lessor the amount of the
deficiency within 10 30 days after delivery by Lessor to Lessee of said
statement.  Lessor and Lessee shall
forthwith adjust between them by cash payment any balance determined to exist
with respect to that portion of the last Comparison Year for which Lessee is
responsible as to Operating Expense Increases, notwithstanding that the Lease
term may have terminated before the end of such Comparison Year.

 

(g)                                 Operating
Expenses shall not include the costs of replacement for equipment or capital
components such as the roof, foundations, exterior walls or a Common Area
capital improvement, such as the parking lot paving, elevators, fences that
have a useful life for accounting purposes of 5 years or more.

 

(h)                                 Operating
Expenses shall not include any expenses paid by any tenant directly to third parties,
or as to which Lessor is otherwise reimbursed by any third party, other tenant,
or by insurance proceeds.

 

4.3                               Payment.  Lessee shall
cause payment of Rent to be received by Lessor in lawful money of the United
States on or before the day on which it is due, without offset or
deduction.  All monetary amounts shall be
rounded to the nearest whole dollar.  In
the event that any invoice prepared by Lessor is inaccurate such inaccuracy
shall not constitute a waiver and Lessee shall be obligated to pay the amount
set forth in this Lease.  Rent for any
period during the term hereof which is for less than one full calendar month
shall be prorated based upon the actual number of days of said month.  Payment of Rent shall be made to Lessor at
its address stated herein or to such other persons or place as Lessor may from
time to time designate in writing. 
Acceptance of a payment which is less than the amount then due shall not
be a waiver of Lessor’s rights to the balance of such Rent, regardless of
Lessor’s endorsement of any check so stating. 
In the event that any four (4) checks, drafts, or other instrument
of payment given by Lessee to Lessor is dishonored for any reason during the
term of this lease, Lessor, at its option, may require all future Rent be paid
by cashier’s check.  Payments will be
applied first to accrued late charges and attorney’s fees, second to accrued
interest, then to Base Rent and Common Area Operating Expenses, and any
remaining amount to any other outstanding charges or costs.

 

5.                                      Security Deposit.  Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee’s faithful performance of its
obligations under this Lease.  If Lessee
fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use,
apply or retain all or any portion of said Security Deposit for the payment of
any amount due already due Lessor, for Rents which will be due in the future,
and/ or to reimburse or compensate Lessor for any liability, expense, loss or
damage which Lessor may suffer or incur by reason thereof.  If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. 
If the Base Rent increases during the term of this Lease, Lessee shall,
upon written request from Lessor, deposit additional monies with Lessor so that
the total amount of the Security Deposit shall at all times bear the same
proportion to the increased Base Rent as the initial Security Deposit bore to
the initial Base Rent.  Should the Agreed
Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase
the Security Deposit to the extent necessary, in Lessor’s reasonable judgment,
to account for any increased wear and tear that the Premises may suffer as a
result thereof.  If a change in control
of Lessee occurs during this Lease and following such change the financial
condition of Lessee is, in Lessor’s reasonable judgment, significantly reduced,
Lessee shall deposit such additional monies with Lessor as shall be sufficient
to cause the Security Deposit to be at a commercially reasonable level based on
such change in financial condition. 
Lessor shall not be required to keep the Security Deposit separate from
its general accounts.  Within 90 sixty
days after the expiration or termination of this Lease, Lessor shall return
that portion of the Security Deposit not used or applied by Lessor.  No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be prepayment for any
monies to be paid by Lessee under this Lease.

 

6.                                      Use.

 

6.1                               Use.  Lessee shall
use and occupy the Premises only for the Agreed Use, or any other legal use
which is reasonably comparable thereto, and for no other purpose.  Lessee shall not use or permit the use of the
Premises in a manner that is unlawful, creates damage, waste or a nuisance, or
that unreasonably disturbs occupants of or causes damage to neighboring
premises or properties.  Other than
guide, signal and seeing eye dogs, Lessee shall not keep or allow in the
Premises any pets, animals, birds, fish, or reptiles.  Lessor shall not unreasonably withhold or
delay its consent to any written request for a modification of the Agreed Use,
so long as the same will not impair the structural integrity of the
improvements of the Building, will not adversely affect the mechanical, electrical,
HVAC, and other systems of the Building, and/or will not affect the exterior
appearance of the Building.  If Lessor
elects to withhold consent, Lessor shall within 7 days after such request give
written notification of same, which notice shall include an explanation of
Lessor’s objections to the change in the Agreed Use.

 

6.2                               Hazardous Substances.

 

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

 

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

 

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

 

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

 

(e)                                  Lessor Indemnification.  Lessor and
its successors and assigns shall indemnify, defend, reimburse and hold Lessee,
its employees and lenders, harmless from and against any and all environmental
damages, including the cost of remediation, which result from Hazardous
Substances which existed on the Premises prior to Lessee’s occupancy or which
are caused by the gross negligence or willful misconduct of Lessor, its agents
or employees.  Lessor’s obligations, as
and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.

 

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

 

(g)                                 Lessor Termination Option.  If a
Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term of
this Lease, unless Lessee is legally responsible therefor (in 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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which
case Lessee shall make the investigation and remediation thereof required by
the Applicable Requirements and this Lease shall continue in full force and
effect, but subject to Lessor’s rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to remediate
such condition exceeds 12 times the then monthly Base Rent or $100,000,
whichever is greater, give written notice to Lessee, within 30 days after
receipt by Lessor of knowledge of the occurrence of such Hazardous Substance
Condition, of Lessor’s desire to terminate this Lease as of the date 60 days
following the date of such notice.  In
the event Lessor elects to give a termination notice, Lessee may, within 10
days thereafter, give written notice to Lessor of Lessee’s commitment to pay
the amount by which the cost of the remediation of such Hazardous Substance
Condition exceeds an amount equal to 12 times the then monthly Base Rent or
$100,000, whichever is greater.  Lessee
shall provide Lessor with said funds or satisfactory assurance thereof within
30 days following such commitment.  In
such event, this Lease shall continue in full force and effect, and Lessor
shall proceed to make such remediation as soon as reasonably possible after the
required funds are available.  If Lessee
does not give such notice and provide the required funds or assurance thereof
within the time provided, this Lease shall terminate as of the date specified
in Lessor’s notice of termination.

 

6.3                               Lessee’s Compliance with Applicable Requirements.  Except as otherwise provided in this
Lease, Lessee shall, at Lessee’s sole expense, fully, diligently and in a
timely manner, materially comply with all Applicable Requirements, the
requirements of any applicable fire insurance underwriter or rating bureau, and
the recommendations of Lessor’s engineers and/or consultants which relate in
any manner to the Premises, without regard to whether said requirements are now
in effect or become effective after the Start Date.  Lessee shall, within 10 days after receipt of
Lessor’s written request, provide Lessor with copies of all permits and other
documents, and other information evidencing Lessee’s compliance with any
Applicable Requirements specified by Lessor, and shall immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of
any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with
any Applicable Requirements.  Likewise,
Lessee shall immediately promptly give written notice to Lessor of:  (i) any water damage to the Premises and
any suspected seepage, pooling, dampness or other condition conducive to the
production of mold; or (ii) any mustiness or other odors that might
indicate the presence of mold in the Premises.

 

6.4                               Inspection; Compliance.  Lessor and
Lessor’s “Lender” (as defined in
Paragraph 30) and consultants shall have the right to enter into
Premises at any time, in the case of an emergency, and otherwise at reasonable
times, after reasonable notice, for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease.  The cost of any such inspections shall be
paid by Lessor, unless a violation of Applicable Requirements, or a Hazardous
Substance Condition (see paragraph 9.1e) is found to exist or be imminent, or
the inspection is requested or ordered by a governmental authority.  In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspection, so long as such inspection is
reasonably related to the violation or contamination.  In addition, Lessee shall provide copies of
all relevant material safety data sheets (MSDS) to Lessor within 10 days of the
receipt of written request therefor.

 

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

 

7.1                               Lessee’s Obligations.  Notwithstanding
Lessor’s obligation to keep the Premises in good condition and repair, Lessee
shall be responsible for payment of the cost thereof to Lessor as additional
rent for that portion of the cost of any maintenance and repair of the
Premises, or any equipment (wherever located) that
serves only Lessee or the Premises, to the extent such cost is attributable to
abuse or misuse.  Lessee shall be
responsible for the cost of painting, repairing or replacing wall coverings,
and to repair or replace any improvements with the Premises.  Lessor may, at its option, upon reasonable
notice, elect to have Lessee perform any particular such maintenance or repairs
the cost of which is otherwise Lessee’s responsibility hereunder.

 

7.2                               Lessor’s Obligations.  Subject to
the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Operating
Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9 (Damage or Destruction) and
14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall
keep in good order, condition and repair the foundations, exterior walls,
structural condition of interior bearing walls, exterior roof, fire sprinkler
system, fire alarm and/or smoke detection systems, fire hydrants, and the
Common Areas.  Lessee expressly waives
the benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease.

 

7.3                               Utility Installations; Trade Fixtures; Alterations.

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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(b)                                  Consent.  Lessee shall
not make any Alterations or Utility Installations to the Premises without
Lessor’s prior written consent.  Lessee
may, however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor,
as long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof, ceilings, floors or any existing walls, will
not adversely affect the electrical, plumbing, HVAC, and/or life safety
systems, and the cumulative cost thereof during this Lease as extended does not
exceed $2000.  Notwithstanding the
foregoing, Lessee shall not make or permit any roof penetrations and/or install
anything on the roof without the prior written approval of Lessor.  Lessor may, as a precondition to granting
such approval, require Lessee to utilize a contractor chosen and/or approved by
Lessor.  Any Alterations or Utility Installations
that Lessee shall desire to make and which require the consent of the Lessor
shall be presented to Lessor in written form with detailed plans.  Consent shall be deemed conditioned upon
Lessee’s:  (i) acquiring all
applicable governmental permits, (ii) furnishing Lessor with copies of
both the permits and the plans and specifications prior to commencement of the
work, and (iii) compliance with all conditions of said permits and other
Applicable Requirements in a prompt and expeditious manner.  Any Alterations or Utility Installations
shall be performed in a workmanlike manner with good and sufficient materials
and in accordance with Building Standard construction and finishes.  Lessee shall promptly upon completion furnish
Lessor with asbuilt plans and specifications. 
Concurrently with its consent, Lessor shall indicate in writing whether
any proposed Alterations or Utility Installations will be required to be
removed upon the expiration of the Term.

 

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

 

7.4                               Ownership; Removal; Surrender; and Restoration.

 

(a)                                  Ownership.  Subject to
Lessor’s right to require removal pursuant to Section 7.3 (b) or
elect ownership as hereinafter provided, all
Alterations and Utility Installations made by Lessee shall be the property of
Lessee, but considered a part of the Premises. 
Lessor may, at any time, elect in writing to be the owner of all or any
specified part of the Lessee Owned Alterations and Utility Installations.  Unless otherwise instructed per paragraph 7.4(b) hereof,
all Lessee Owned Alterations and Utility Installations shall, at the expiration
or termination of this Lease, become the property of Lessor and be surrendered
by Lessee with the Premises.

 

(b)                                  Removal.  Subject to
the provisions of Section 7.3 (b), by By delivery to Lessee of written
notice from Lessor not earlier than 90 and
not later than 30 days prior to the end of the term of this Lease, Lessor may
require that any or all Lessee Owned Alterations or Utility Installations be
removed by the expiration or termination of this Lease.  Lessor may require the removal at any time of
all or any part of any Lessee Owned Alterations or Utility Installations made
without the required consent.

 

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

 

8.                                      Insurance; Indemnity.

 

8.1                               Insurance Premiums.  The cost of
the premiums for the insurance policies maintained by Lessor pursuant to
paragraph 8 are included as Operating Expenses (see paragraph 4.2
(c)(iv)).  Said costs shall include
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of the holder of a mortgage or deed of trust
covering the Premises, Building and/or Project, increased valuation of the
Premises, Building and/or Project, and/or a general premium rate increase.  Said costs shall not, however, include any
premium increases resulting from the nature of the occupancy of any other
tenant of the Building.  If the Project
was not insured for the entirety of the Base Year, then the base premium shall
be the lowest annual premium reasonably obtainable for the required insurance
as of the Start Date, assuming the most nominal use possible of the Building
and/or Project.  In no event, however,
shall Lessee be responsible for any portion of the premium cost attributable to
liability insurance coverage in excess of $2,000,000 procured under Paragraph
8.2(b).

 

8.2                               Liability Insurance.

 

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

 

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

 

8.3                               Property Insurance - Building, Improvements and Rental Value.

 

(a)                                  Building and Improvements. 
Lessor shall obtain and keep in force a policy or policies of insurance
in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to
any Lender insuring loss or damage to the Building and/or Project.  The amount of such insurance
shall be equal to the full insurable replacement cost of the Building and/or
Project, as the same shall exist from time to time, or the amount required by
any Lender, but in no event more than the commercially reasonable and available
insurable value thereof.  Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee’s personal
property shall be insured by Lessee under Paragraph 8.4.  If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and the
enforcement of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss.  Said policy or policies
shall also contain an agreed valuation provision in lieu of any coinsurance
clause, waiver of subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage amount by a factor of not
less than the adjusted U.S. Department of Labor Consumer Price Index for All
Urban Consumers for the city nearest to where the Premises are located.  If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $1,000 per occurrence.

 

(b)                                  Rental Value.  Lessor shall
also obtain and keep in force a policy or policies in the name of Lessor with
loss payable to Lessor and any Lender,
insuring the loss of the full Rent for one year with an extended period of
indemnity for an additional 180 days (“Rental Value insurance”).  Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by Lessee, for the next 12 month period.

 

(c)                                  Adjacent Premises.  Lessee shall
pay for any increase in the premiums for the property insurance of the Building
and for the Common Areas or other buildings in the Project if said increase is
caused by Lessee’s acts, omissions, use or occupancy of the Premises.  Lessee’s Improvements.  Since Lessor is the Insuring Party, Lessor shall
not be required to insure Lessee Owned Alterations and
Utility Installations unless the item in question has become the property of
Lessor under the terms of this Lease.

 

8.4                               Lessee’s
Property; Business Interruption Insurance.

 

(a)                                  Property Damage.  Lessee shall
obtain and maintain insurance coverage on all of Lessee’s personal property,
Trade Fixtures, and Lessee Owned Alterations and Utility Installations.  Such insurance shall be full replacement cost
coverage with a deductible of not to exceed $1,000
$25,000 per occurrence.  The proceeds
from any such insurance shall be used by Lessee for the replacement of personal
property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations.  Lessee shall provide
Lessor with written evidence that such insurance is in force.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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(b)                                Business Interruption.  Lessee shall
obtain and maintain loss of income and extra expense insurance in amounts as
will reimburse Lessee for direct or indirect loss of earnings attributable to
all perils commonly insured against by prudent lessees in the business of
Lessee or attributable to prevention of access
to the Premises as a result of such perils.

 

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

 

8.5                               Insurance Policies.  Insurance
required herein shall be by companies duly licensed or admitted to transact
business in the state where the
Premises are located, and maintaining during the policy term a “General Policyholders Rating” of at
least A-, VI, as set forth in the most current issue of “Best’s
Insurance Guide”, or such other rating as may be required by a
Lender.  Lessee shall not do or permit to
be done anything which invalidates the required insurance policies.  Lessee shall, prior to the Start Date,
deliver to Lessor certified copies of policies of such insurance or
certificates evidencing the existence and amounts of the required
insurance.  Lessee shall provide Lessor
written notice no later then three business days following Lessee’s receipt of
any cancellation or modification notification of any insurance policy and shall
include in the notice to Lessor copies of any written communication from the
insurance company or its agents in connection with such cancellation or
modification.  Lessee shall, at least 30
days following the expiration of such policies, furnish Lessor with evidence of
renewals or “insurance binders” evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand. 
Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less.  If either Party shall fail to procure and
maintain the insurance required to be carried by it, the other Party may, but
shall not be required to, procure and maintain the same.

 

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

 

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

 

8.8                               Exemption of Lessor and its Agents from Liability.  Notwithstanding the negligence or breach
of this Lease by Lessor or its agents, neither Lessor nor its agents shall be
liable under any circumstances for:  (i) injury
or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee’s employees, contractors, invitees, customers, or
any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, indoor
air quality, the presence of mold or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or
lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises or upon other portions of the
Building, or from other sources or places, (ii) any damages arising from
any act or neglect of any other tenant of Lessor or from the failure of Lessor
or its agents to enforce the provisions of any other lease in the Project, or (iii) injury
to Lessee’s business or for any loss of income or profit therefrom.  Instead, it is intended that Lessee’s sole
recourse in the event of such damages or injury be to file a claim on the
insurance policy(ies) that Lessee is required to maintain pursuant to the
provisions of paragraph 8.

 

8.9                               Failure to Provide Insurance.  Lessee
acknowledges that any failure on its part to obtain or maintain the insurance
required herein will expose Lessor to risks and potentially cause Lessor to
incur costs not contemplated by this Lease, the extent of which will be
extremely difficult to ascertain.  Accordingly, for any month or portion thereof
that Lessee does not maintain the required insurance and/or does not provide
Lessor with the required binders or certificates evidencing the existence of
the required insurance, the Base Rent shall be automatically increased, without
any requirement for notice to Lessee, by an amount equal to 10% 5% of the then
existing Base Rent or $100, whichever is greater.  The parties agree that such increase in Base
Rent represents fair and reasonable compensation for the additional risk/costs
that Lessor will incur by reason of Lessee’s failure to maintain the required
insurance.  Such increase in Base Rent
shall in no event constitute a waiver of Lessee’s Default or Breach with
respect to the failure to maintain such insurance, prevent the exercise of any
of the other rights and remedies granted hereunder, nor relieve Lessee of its
obligation to maintain the insurance specified in this Lease.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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9.                                      Damage or Destruction.

 

9.1                               Definitions.

 

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

 

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

 

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

 

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

 

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

 

9.2                               Partial Damage - Insured Loss.  If a
Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at
Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee
Owned Alterations and Utility Installations) as soon as reasonably possible and
this Lease shall continue in full force and effect.  Notwithstanding the foregoing, if the
required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly contribute
the shortage in proceeds as and when required to complete said repairs.  In the event, however, such shortage was due
to the fact that, by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within 10 days following receipt of written notice of such shortage and request
therefor.  If Lessor receives said funds
or adequate assurance thereof within said 10 day period, the party responsible
for making the repairs shall complete them as soon as reasonably possible and
this Lease shall remain in full force and effect.  If such funds or assurance are not received,
Lessor may nevertheless elect by written notice to Lessee within 10 days
thereafter to:  (i) make such
restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or (ii) have this Lease terminate 30 days thereafter.  Lessee shall not be entitled to reimbursement
of any funds contributed by Lessee to repair any such damage or
destruction.  Premises Partial Damage due
to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such insurance
shall be made available for the repairs if made by either Party.

 

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

 

9.4                               Total Destruction.  Notwithstanding
any other provision hereof, if a Premises Total Destruction occurs, this Lease
shall terminate 60 days
following such Destruction.  If the damage
or destruction was caused by the gross negligence or willful misconduct of
Lessee, Lessor shall have the right to recover Lessor’s damages from Lessee,
except as provided in Paragraph 8.6.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

 

9.6                               Abatement of Rent; Lessee’s Remedies.

 

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

 

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

 

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

 

10.                               Real Property Taxes.

 

10.1                        Definitions.  As used
herein, the term “Real Property Taxes” shall
include any form of assessment; real estate, general, special, ordinary
or extraordinary, or rental levy or tax (other than inheritance, personal
income or estate taxes); improvement bond; and/or license fee imposed upon or
levied against any legal or equitable interest of Lessor in the Project, Lessor’s
right to other income therefrom, and/or Lessor’s business of leasing, by any
authority having the direct or indirect power to tax and where the funds are generated
with reference to the Project address and where the proceeds so generated are
to be applied by the city, county or other local taxing authority of a
jurisdiction within which the Project is located.  “Real Property Taxes”
shall also include any tax, fee, levy, assessment or charge, or any increase
therein:  (i) imposed by reason of
events occurring during the term of this Lease, including but not limited to, a
change in the ownership of the Project, (ii) a change in the improvements
thereon, and/or (iii) levied or assessed on machinery or equipment
provided by Lessor to Lessee pursuant to this Lease.

 

10.2                        Payment of Taxes.  Except as
otherwise provided in Paragraph 10.3, Lessor shall pay the Real Property Taxes
applicable to the Project, and said payments shall be included in the
calculation of Operating Expenses in accordance with the provisions of
Paragraph 4.2.

 

10.3                        Additional Improvements. 
Operating Expenses shall not include Real Property Taxes specified in
the tax assessor’s records and work sheets as
being caused by additional improvements placed upon the Project by other
lessees or by Lessor for the exclusive enjoyment of such other lessees.  Notwithstanding Paragraph 10.2 hereof, Lessee
shall, however, pay to Lessor at the time Operating Expenses are payable under
Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed
solely by reason of Alterations, Trade Fixtures or Utility Installations placed
upon the Premises by Lessee or at Lessee’s request or by reason of any
alterations or improvements to the Premises made by Lessor subsequent to the
execution of this Lease by the Parties.

 

10.4                        Joint Assessment.  If the
Building is not separately assessed, Real Property Taxes allocated to the
Building shall be an equitable proportion of
the Real Property Taxes for all of the land and improvements included within
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the respective valuations assigned in the
assessor’s work sheets or such other information as may be reasonably
available.  Lessor’s reasonable
determination thereof, in good faith, shall be conclusive.

 

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

 

11.                               Utilities and Services.

 

11.1                        Services Provided by Lessor.  Lessor shall
provide heating, ventilation, air conditioning, reasonable amounts of
electricity for normal lighting
and office machines, water for reasonable and normal drinking and lavatory use
in connection with an office, and replacement light bulbs and/or fluorescent
tubes and ballasts for standard overhead fixtures.  Lessor shall also provide janitorial services
to the Premises and Common Areas 5 times per week, excluding Building Holidays,
or pursuant to the attached janitorial schedule, if any.  Lessor shall not, however, be required to
provide janitorial services to kitchens or storage areas included within the
Premises.

 

11.2                        Services Exclusive to Lessee.  Lessee shall pay for all electricity, water,
gas, light, power, telephone and other utilities and services specially
or exclusively supplied and/or metered exclusively to the Premises or to
Lessee, together with any taxes thereon. 
If a service is deleted by Paragraph 1.13 and such service is not
separately metered to the Premises, Lessee shall pay at Lessor’s option, either
Lessee’s Share or a reasonable proportion to be determined by Lessor of all
charges for such jointly metered service.

 

11.3                        Hours of Service.  Said
services and utilities shall be provided during times set forth in Paragraph
1.12.  Utilities and services required at
other times shall be subject to advance request and reimbursement by Lessee to
Lessor of the cost thereof.

 

11.4                        Excess Usage by Lessee.  Lessee shall
not make connection to the utilities except by or through existing outlets and
shall not install or use machinery
or equipment in or about the Premises that uses excess water, lighting or
power, or suffer or permit any act that causes extra burden upon the utilities
or services, including but not limited to security and trash services, over
standard office usage for the Project. 
Lessor shall require Lessee to reimburse Lessor for any excess expenses
or costs that may arise out of a breach of this subparagraph by Lessee.  Lessor may, in its sole discretion, install
at Lessee’s expense supplemental equipment and/or separate metering applicable
to Lessee’s excess usage or loading.

 

11.5                        Interruptions.  There shall
be no abatement of rent and Lessor shall not be liable in any respect
whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessor’s
reasonable control or in cooperation with governmental request or directions.

 

12.                               Assignment and Subletting.

 

12.1                        Lessor’s Consent Required.

 

(a)                                  Lessee
shall not voluntarily or by operation of law assign, transfer, mortgage or
encumber (collectively, “assign or assignment”)
or sublet all of Lessee’s interest in this Lease or in the Premises without
Lessor’s prior written consent or to a tenant whose use is more intensive than original tenant.

 

(b)                                  Unless
Lessee is a corporation and its stock is publicly traded on a national stock
exchange, a change in the control of Lessee shall constitute an assignment requiring consent.  The transfer, on a cumulative basis, of 25%
or more of the voting control of Lessee shall constitute a change in control
for this purpose.

 

(c)                                  An
assignment or subletting without consent shall, at Lessor’s option, be a
Default curable after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any notice and grace
period.  If Lessor elects to treat such
unapproved assignment or subletting as a noncurable Breach, Lessor may
either:  (i) terminate this Lease,
or (ii) upon 30 days written notice, increase the monthly Base Rent to
110% of the Base Rent then in effect. 
Further, in the event of such Breach and rental adjustment, (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to 110% of the price previously in effect, and (ii) all
fixed and non-fixed rental adjustments scheduled during the remainder of the
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(d)                                  Lessee’s
remedy for any breach of Paragraph 12.1 by Lessor shall be limited to
compensatory damages and/or injunctive relief. 
Lessor may reasonably withhold consent to a proposed assignment or
subletting if Lessee is in Default at the time consent is requested.

 

(e)                                  Notwithstanding
the foregoing, allowing a de minimis portion of the Premises, i e. 20 square
feet or less, to be used by a third party
vendor in connection with the installation of a vending machine or payphone
shall not constitute a subletting.

 

12.2                        Terms and Conditions Applicable to Assignment and Subletting.

 

(a)                                  Regardless
of Lessor’s consent, no assignment or subletting shall:  (i) be effective without the express
written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter
the primary liability of Lessee for the
payment of Rent or for the performance of any other obligations to be performed
by Lessee.

 

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

 

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

 

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

 

(e)                                  Each
request for consent to an assignment or subletting shall be in writing,
accompanied by information relevant to Lessor’s determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any,
together with a fee of 10% of the current monthly base rent or $500 whichever
is greater as consideration for Lessor’s considering and processing said
request.  Lessee agrees to provide Lessor
with such other or additional information and/or documentation as may be
reasonably requested.  (See also
Paragraph 36)

 

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

 

(g)                                 Lessor’s
consent to any assignment or subletting shall not transfer to the assignee or
sublessee any Option granted to the original Lessee by this Lease unless such transfer
is specifically consented to by Lessor in writing.  (See Paragraph 39.2)

 

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

 

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

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

 

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

 

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

 

(f)                                    Notwithstanding
anything contained in Paragraph 7.3 and 12 of this lease, if a sublessee
desires to modify the Premises, Lessee will deposit with Lessor adequate funds to restore the Premises to its original
condition upon lease termination prior to Lessor’s approval of said Sublease.

 

13.                               Default; Breach; Remedies.

 

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

 

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

 

(b)                                  The
failure of Lessee to make any payment of Rent or any Security Deposit required
to be made by Lessee hereunder, whether to Lessor or, when due, to provide
reasonable evidence of insurance or surety bond, or to fulfill any obligation
under this Lease which endangers or
threatens life or property, where such failure continues for a period of 3 5
business days following written notice to Lessee.  THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT
OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR’S
RIGHTS, INCLUDING LESSOR’S RIGHT TO RECOVER POSSESSION OF THE PREMISES.

 

(c)                                  The
failure of Lessee to allow Lessor and/or its agents access to the Premises or
the commission of waste, act or acts constituting public or private nuisance,
and/or an illegal activity on the Premises by Lessee, where such actions
continue for a period of 3 business days following
written notice to Lessee.

 

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

 

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

 

(f)                                    The
occurrence of any of the following events: 
(i) the making of any general arrangement or assignment for the
benefit of creditors; (ii) becoming a “debtor” as
defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in
the case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Lessee’s assets
located at the Premises or of Lessee’s interest in this Lease, where possession
is not restored to Lessee within 60 days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee’s assets
located at the Premises or of Lessee’s interest in this Lease, where such
seizure is not discharged within 30 60 days; provided, however, in the event
that any provision of this subparagraph is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.

 

(g)                                 The
discovery that any financial statement of Lessee or of any Guarantor given to
Lessor was materially false.

 

(h)                                 If
the performance of Lessee’s obligations under this Lease is guaranteed:  (i) the death of a Guarantor, (ii) the
termination of a Guarantor’s liability
with respect to this Lease other than in accordance with the terms of such
guaranty, (iii) a Guarantor’s becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a
Guarantor’s breach of its guaranty obligation on an anticipatory basis, and
Lessee’s failure, within 60 days following written notice 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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of any such event, to provide
written alternative assurance or security, which, when coupled with the then
existing resources of Lessee, equals or exceeds the combined financial
resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.

 

13.2                        Remedies. 
If Lessee fails to perform any of its affirmative duties or obligations,
within 10 days after written notice (or in case of an emergency,
without notice), Lessor may, at its option, perform such duty or obligation on
Lessee’s behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals.  Lessee shall pay to Lessor an
amount equal to 115% of the costs and expenses incurred by Lessor in such
performance upon receipt of an invoice therefor.  In the event of a Breach, Lessor may, with or
without further notice or demand, and without limiting Lessor in the exercise
of any right or remedy which Lessor may have by reason of such Breach:

 

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

 

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

 

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

 

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

 

13.4                        Interest.  Any monetary
payment due Lessor hereunder, other than late charges, not received by Lessor,
when due as to scheduled payments (such as Base Rent) or within 30 days
following the date on which it was due for nonscheduled payment, shall bear
interest from the date when
due, as to scheduled payments, or the 31st day after it was due as to
nonscheduled payments.  The interest (“Interest”) charged shall be
computed at the rate of 10% per annum but shall not exceed the maximum rate
allowed by law.  Interest is payable in
addition to the potential late charge provided for in Paragraph 13.4.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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13.5                        Breach by Lessor.

 

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

 

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

 

15.                               Brokerage Fees.

 

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

 

16.                               Estoppel Certificates.

 

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

 

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

 

(c)                                  If
Lessor desires to finance, refinance, or sell the Premises, or any part
thereof, Lessee and all Guarantors shall within 10 days after written notice from Lessor deliver to any potential lender or
purchaser designated by Lessor such financial statements as may be reasonably
required by such lender or purchaser, including but not limited to Lessee’s
financial statements for the past 3 years. 
All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes
herein set forth.

 

17.                               Definition of Lessor. 
The term “Lessor” as used herein shall
mean the owner or owners at the time in question of the fee title to the Premises,
or, if this is a sublease, of the Lessee’s interest in the prior lease.  In the event of a transfer of Lessor’s title
or interest in the Premises or this Lease, Lessor shall deliver to the
transferee or assignee (in cash or by credit) any unused Security Deposit held
by Lessor.  Upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor.  Subject to the foregoing, the obligations
and/or covenants in this Lease to be performed by the Lessor shall be binding
only upon the Lessor as hereinabove defined.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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18

 

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

 

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

 

20.                               Limitation on Liability.  The obligations of Lessor under this Lease shall not
constitute personal obligations of Lessor or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Project, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease, and shall not seek recourse against Lessor’s
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction.

 

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

 

22.                               No Prior or Other Agreements;
Broker Disclaimer.  This Lease contains all
agreements between the Parties with respect to any matter mentioned
herein, and no other prior or contemporaneous agreement or understanding shall
be effective.

 

23.                               Notices.

 

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

 

23.2                        Date of Notice.  Any notice
sent by registered or certified mail, return receipt requested, shall be deemed
given on the date of delivery shown on the
receipt card, or if no delivery date is shown, the postmark thereon.  If sent by regular mail the notice shall be
deemed given 72 hours after the same is addressed as required herein and mailed
with postage prepaid.  Notices delivered
by United States Express Mail or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the
Postal Service or courier.  Notices
transmitted by facsimile transmission or similar means shall be deemed
delivered upon telephone confirmation of receipt (confirmation report from fax
machine is sufficient), provided a copy is also delivered via delivery or
mail.  If notice is received on a
Saturday, Sunday or legal holiday, it shall be deemed received on the next
business day.

 

24.                               Waivers.

 

(a)                                  No
waiver by Lessor of the Default or Breach of any term, covenant or condition
hereof by Lessee, shall be deemed a waiver of any other term, covenant or
condition hereof, or of any subsequent Default or Breach by Lessee of the same
or of any other term, covenant or condition
hereof.  Lessor’s consent to, or approval
of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s
consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of
this Lease requiring such consent.

 

(b)                                  The
acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by
Lessee.  Any payment by Lessee may be
accepted by Lessor on account of moneys or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith, which such statements
and/or conditions shall be of no force or effect whatsoever unless specifically
agreed to in writing by Lessor at or before the time of deposit of such
payment.

 

(c)                                  THE
PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL
MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR
FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE
IS INCONSISTENT WITH THIS LEASE.

 

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

 

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

 

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

 

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

 

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

 

26.                               No Right To Holdover.  Lessee has no right to retain possession of the Premises or
any part thereof beyond the expiration or termination of this
Lease.  In the event that Lessee or
Lessee’s sublessee as approved by Lessor in accordance with Paragraph 12 hereof
holds over, then the Base Rent shall be increased to 150% of the Base Rent
applicable immediately preceding the expiration or termination.  Nothing contained herein shall be construed
as consent by Lessor to any holding over by Lessee.

 

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

 

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

 

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

 

30.                               Subordination; Attornment;
Non-Disturbance.

 

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

 

30.2                        Attornment.  In the event
that Lessor transfers title to the Premises, or the Premises are acquired by
another upon the foreclosure or termination
of a Security Devise to which this Lease is subordinated (i) Lessee shall,
subject to the non-disturbance provisions of Paragraph 30.3, attorn to such new
owner, and upon request, enter into a new lease, containing all of the terms
and provisions of this Lease, with such new owner for the remainder of the term
hereof, or, at the election of the new owner, this Lease will automatically
become a new lease between Lessee and such new owner, and (ii) Lessor
shall thereafter be relieved of any further obligations hereunder and such new
owner shall assume all of Lessor’s obligations, except that such new owner
shall not:  (a) be liable for any
act or omission of any prior lessor or with respect to events occurring prior
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offsets or defenses which Lessee might have
against any prior lessor, (c) be bound by prepayment of more than one
month’s rent, or (d) be liable for the return of any security deposit paid
to any prior lessor which was not paid or credited to such new owner.

 

30.3                        Non-Disturbance.  With respect
to Security Devices entered into by Lessor after the execution of this Lease,
Lessee’s subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a “Non-Disturbance
Agreement”) from the Lender
which Non-Disturbance Agreement provides that Lessee’s possession of the
Premises, and this Lease, including any options to extend the term hereof, will
not be disturbed so long as Lessee is not in Breach hereof and attorns to the
record owner of the Premises.

 

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

 

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

 

32.                               Lessor’s Access; Showing
Premises; Repairs.  Lessor and Lessor’s agents shall
have the right to enter the Premises at any time, in the case
of an emergency, and otherwise at reasonable times after reasonable prior
notice for the purpose of showing the same to prospective purchasers, lenders,
or tenants, and making such alterations, repairs, improvements or additions to
the Premises as Lessor may deem necessary or desirable and the erecting, using
and maintaining of utilities, services, pipes and conduits through the Premises
and/or other premises as long as there is no material adverse effect on Lessee’s
use of the Premises.  All such activities
shall be without abatement of rent or liability to Lessee.

 

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

 

34.                               Signs.  Lessor may place on the Premises ordinary “For Sale” signs
at any time and ordinary “For Lease” signs during the last 6 months of the
term hereof.

 

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

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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21

 

37.                               Guarantor.

 

37.1                        Execution.  The
Guarantors, if any, shall each execute a guaranty in the form most recently
published by the AIR Commercial Real Estate
Association.

 

37.2                        Default.  It shall
constitute a Default of the Lessee if any Guarantor fails or refuses, upon
request to provide:  (a) evidence of
the execution of the guaranty, including the
authority of the party signing on Guarantor’s behalf to obligate Guarantor, and
in the case of a corporate Guarantor, a certified copy of a resolution of its board
of directors authorizing the making of such guaranty, (b) current
financial statements, (c) an Estoppel Certificate, or (d) written
confirmation that the guaranty is still in effect.

 

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

 

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

 

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

 

39.2                        Options Personal To Original Lessee. 
Any Option granted to Lessee in this Lease is personal to
the original Lessee, and cannot be assigned or exercised by anyone other than
said original Lessee and only while the original Lessee is in full possession
of the Premises and, if requested by
Lessor, with Lessee certifying that Lessee has no intention of thereafter
assigning or subletting.  Notwithstanding
the foregoing, any Option shall be assignable to any Permitted Transferee.

 

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

 

39.4                        Effect of Default on Options.

 

(a)                                  Lessee shall
have no right to exercise an Option:  (i) during
the period commencing with the giving of any notice of Default and continuing
until said Default is cured, (ii) during the period of time any Rent is
unpaid (without regard to whether notice thereof is given Lessee), (iii) during
the time Lessee is in Breach of this Lease, or (iv) in the event that
Lessee has been given 3 or more notices of separate Default, whether or not the
Defaults are cured, during the 12 month period immediately preceding the
exercise of the Option or (v) if Lessee has been delinquent in paying Base
Rent more than six (6) times during the lease term.

 

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

 

(c)                                  An Option
shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option, if, after
such exercise and prior to the commencement of the extended term or completion
of the purchase if Lessee commits a Breach of this Lease.

 

40.                               Security Measures.  Lessee hereby acknowledges that the Rent payable to Lessor
hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever to
provide same.  Lessee assumes all
responsibility for the protection of the Premises, Lessee, its agents and
invitees and their property from the acts of third parties.  In the event, however, that Lessor should
elect to provide security services, then the cost thereof shall be an Operating
Expense.

 

41.                               Reservations.

 

(a)                                  Lessor
reserves the right:  (i) to grant,
without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, (ii) to cause the recordation of
parcel maps and restrictions, (iii) to create and/or install new utility
raceways, so long as such easements,
rights, dedications, maps, restrictions, and utility raceways do not
unreasonably interfere with the use of the Premises by Lessee.  Lessor may also:  change the name, address or title of the
Building or Project upon at least 90 days prior written notice; provide and
install, at Lessee’s expense, Building standard graphics on the door of the
Premises and such portions of the Common Areas as Lessor shall reasonably deem
appropriate; grant to any lessee the exclusive right to conduct any business as
long as such exclusive right does not conflict with any rights expressly given
herein; and to place such signs, notices or displays as Lessor reasonably deems
necessary or advisable upon the roof, exterior of the Building or the Project
or on signs in the Common Areas.  Lessee
agrees to sign any documents reasonably requested by Lessor to effectuate such
rights.  The obstruction of Lessee’s
view, air, or light by any structure 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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22

 

erected in the vicinity of the Building, whether
by Lessor or third parties, shall in no way affect this Lease or impose any
liability upon Lessor.

 

(b)                                  Lessor also
reserves the right to move Lessee to other space of comparable size in the
Building or Project.  Lessor must provide
at least 45 days prior written notice of such move, and the new space must
contain improvements of comparable quality to those contained within
the Premises.  Lessor shall pay the
reasonable out of pocket costs that Lessee incurs with regard to such
relocation, including the expenses of moving and necessary stationary revision
costs.  In no event, however, shall
Lessor be required to pay an amount in excess of two months Base Rent.  Lessee may not be relocated more than once
during the term of this Lease.

 

(c)                                  Lessee shall
not:  (i) use a representation
(photographic or otherwise) of the Building or Project or their name(s) in
connection with Lessee’s business; or (ii) suffer
or permit anyone, except in emergency, to go upon the roof of the Building.

 

42.                               Performance Under Protest.  If at any time a dispute shall arise as to any amount or sum
of money to be paid by one Party to the other under the provisions hereof, the
Party against whom the obligation to pay the money is asserted shall have the
right to make payment “under protest”
and such payment shall not be regarded as a voluntary payment and there shall
survive the right on the part of said Party to institute suit for recovery of
such sum.  If it shall be adjudged that
there was no legal obligation on the part of said Party to pay such sum or any
part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay. 
A Party who does not initiate suit for the recovery of sums paid “under
protest” within 6 months shall be deemed to have waived its right to protest
such payment.

 

43.                               Authority; Multiple Parties;
Execution

 

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

 

(b)                                  If this
Lease is executed by more than one person or entity as “Lessee”, each such
person or entity shall be jointly and severally liable hereunder.  It is agreed that any one of the named
Lessees shall be empowered to execute any amendment to this Lease, or other document
ancillary thereto and bind all of the named Lessees, and Lessor may rely on the
same as if all of the named Lessees had executed such document.

 

(c)                                  This Lease
may be executed by the Parties in counterparts, each of which shall be deemed
an original and all of which together shall
constitute one and the same instrument.

 

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

 

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

 

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

 

47.                               Waiver of Jury Trial.  THE PARTIES HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY
OR ARISING OUT OF THIS AGREEMENT.

 

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

 

49.                               Americans with Disabilities
Act.  Since compliance with the Americans with Disabilities Act
(ADA) is dependent upon Lessee’s specific use of the Premises, Lessor makes no
warranty or representation as to whether or not the Premises comply with ADA or
any similar legislation.  In the event
that Lessee’s use of the Premises requires modifications or additions to the
Premises in order to be in ADA compliance, Lessee agrees to make any such
necessary modifications and/or additions at Lessee’s expense.

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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23

 

REASONABLE AND EFFECTUATE
THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

 

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

 

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

 

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

 

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

 

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

 

	
  Executed
  at: 1811 Aston Carlsbad

  	
   

  	
  Executed
  at: 2110 Rutherford Rd, Carlsbad, CA

  92008

  
	
   

  	
   

  	
   

  
	
  On:
  4/15/08

  	
   

  	
  On:
  4/15/08

  
	
   

  	
   

  	
   

  
	
  By
  LESSOR:

  	
   

  	
  By
  LESSEE:

  
	
   

  	
   

  	
   

  
	
  Allen
  Joseph Blackmore, Trustee of the

  Blackmore Family Trust, Restated 1995

  	
   

  	
  Genoptix, Inc.,
  a Delaware Corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Allen J. Blackmore

  	
   

  	
  By:

  	
  /s/
  Tina Nova Bennett

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name
   Printed: Allen Joseph Blackmore

  	
   

  	
  Name
  Printed:   Tina Nova Bennett, Ph.D.

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:
  President & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/
  C. V. Kuhlen MD

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name
  Printed:

  	
   

  	
   

  	
  Name
  Printed:  Christian V. Kuhlen

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:
   VP, General Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:   Mail: 
   P.O. Box 1810, Rancho
  Santa

  Fe, CA 92067, Physical: 1811 Aston Ave, Ste

  102 Carlsbad, CA 92008

  	
   

  	
  Address:
   2110 Rutherford Rd.

  Carlsbad, CA 92008

  
	
   

  	
   

  	
   

  
	
  Telephone:   (760) 804-9600

  	
   

  	
  Telephone:   (760) 268-6200

  
	
   

  	
   

  	
   

  
	
  Facsimile:   (760) 804-9607

  	
   

  	
  Facsimile:   (760) 268-6201

  
	
   

  	
   

  	
   

  
	
  Federal
  ID No.

  	
   

  	
   

  	
  Federal
  ID No.

  	
   

  
											

 

NOTICE:  These forms are often modified to meet
changing requirements of law and industry needs. Always write or call to make
sure you are utilizing the most current form: AIR Commercial Real Estate
Association, 800 W 6th Street, Suite 800, Los Angeles, CA 90017. Telephone
No. (213) 687-8777. Fax No.: (213) 687-8616.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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24

 

ADDENDUM TO STANDARD MULTI-TENANT OFFICE LEASE GROSS

BY AND BETWEEN

ALLEN JOSEPH BLACKMORE, TRUSTEE OF THE BLACKMORE FAMILY TRUST,

RESTATED 1995, LESSOR

AND

GENOPTIX, INC., A DELAWARE CORPORATION, LESSEE

DATED APRIL 14, 2008

 

This
Addendum to Standard Multi-Tenant Office Lease – Gross dated as of April 14,
2008, is attached to and made a part of that certain Standard Multi-Lessee
Office Lease – Gross dated as of April 14, 2008 (the “Lease”) by and between
Allen Joseph Blackmore, Trustee of the Blackmore Family Trust, Restated 1995 (“Lessor”),
and Genoptix, Inc., a Delaware Corporation (“Lessee”).  In the event of any express or implied
inconsistency between the provisions of this Addendum and the Lease, the
provisions of this Addendum shall control. 
Initially capitalized terms used but not otherwise defined herein shall
have the meanings given to them in the Lease.

 

50.                                 SUBSTANTIAL COMPLETION:  The term “Substantially Completed” or “Substantial Completion” shall
mean: (a) the shell and core of the Building are complete and in
compliance with all Applicable Requirements and all of the Building’s plumbing,
heating, life safety ventilating, air conditioning, or electrical systems (“Building
Systems”) are operational to the extent necessary to service the Premises such
that Tenant can conduct normal business operations from the Premises, (b) Lessor
has completed all the work required to be performed by Lessor in accordance
with the Tenant Improvement Agreement, except minor “punch-list” items which
can be, and shall thereafter be, promptly completed, (c) Lessor has
obtained a certificate of occupancy for the Premises, or a final sign off of
the Permit by the City Inspector or its equivalent, (d) Lessee has been
provided with the number of parking spaces to which it is entitled under the
Lease, (e) Lessee has been tendered continuous and uninterrupted access to
the Premises, and (f) Lessee has received a Non-Disturbance Agreement
signed by Landlord and each current lien holder, ground lessor or mortgage
holder of record.

 

51.                                 EARLY ACCESS: 
Lessee, along with its contractors, subcontractors, agents, etc., shall
be permitted to enter the Premises at any time prior to the anticipated
Commencement Date provided said access has been coordinated in advance with
Reno Contracting with no obligation to pay rent, for the purpose of installing
furniture, fixtures, equipment, and leasehold improvements.  Such entry shall not interfere with or delay
completion of the tenant improvements, or result in additional construction
costs to Lessor.  Lessee shall be
obligated to comply with all terms of the Lease except for the payment of Base
Rent and Lessee’s Share of Operating Expenses during such early access period.

 

52.                                 BASE RENT INCREASES:

 

On
January 1, 2010, the monthly Base Rent shall be increased to $115,015.00;

On
January 1, 2011, the monthly Base Rent shall be increased to $118,465.00;

On
January 1, 2012, the monthly Base Rent shall be increased to $122,019.00;

On
January 1, 2013, the monthly Base Rent shall be increased to $125,680.00;

On
January 1, 2014, the monthly Base Rent shall be increased to $129,450.00.

 

53.                                 MONUMENT SIGNAGE: 
Lessee shall be granted signage rights on the monument sign located at
the entrance to the Premises.  Said
signage shall be designed by Lessor’s signage contractor using Tenant’s
corporate logo and name, in accordance with the Building Signage Program, the
CC&R’s and all City ordinances.  The
cost of the sign, permit, design, fabrication and installation shall be charged
to Lessee’s Tenant Improvement Allowance in an amount not to exceed $ 2,500
unless mutually agreed upon by Lessor and Lessee.  All costs associated with sign removal shall
be at Lessee’s sole cost and expense.

 

54.                                 TENANT DIRECTORY AND SUITE
IDENTIFICATION:  Lessee shall be granted Tenant Directory and Suite Identification
signage in accordance with the Building Signage Program, which shall include a
sign adjacent to Tenant’s suites and a directory listing.  All costs associated with the fabrication,
installation and removal of said signage shall be at Lessee’s sole cost and
expense in an amount not to exceed $ 300 unless mutually agreed upon by Lessor
and Lessee.

 

55.                                 BUILDING SIGNAGE: 
Lessee shall have the right to one exterior building top signage. Said
signage shall be designed by Lessor’s signage contractor using Tenant’s
corporate logo and name, in accordance with the Building Signage Program, the
CC&R’s and all City ordinances.  The
cost of the sign, permit, design, fabrication and installation shall be charged
to Lessee’s Tenant Improvement Allowance in an amount not to exceed $5,000
unless mutually agreed upon by Lessor and Lessee. All costs associated with
sign removal shall be at Lessee’s sole cost and expense.

 

56.                                 HEATING, VENTILATING, &
AIR CONDITIONING:  Lessor, at Lessor’s expense, which expense
shall be included in the Operating Expenses for the Base Year, shall furnish
heating, ventilating and air-conditioning (HVAC) to the Premises, during the
hours set forth in Paragraph 1.12 hereof. 
After Hours HVAC usage shall be reimbursed to Lessor based upon Lessor’s
actual cost for such usage.  If
reimbursed, such actual costs shall be billed to Lessee monthly in addition to
Base Rent.  Any dispute regarding the
calculation of Landlord’s actual costs shall be determined by the Building’s
HVAC maintenance contractor based upon data provided to Lessee.

 

	
   

  	
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57.                                 REFUSE:  The
trash bins are provided for the disposal of ordinary office refuse.  The use of the bins for the disposal of large
items which do not constitute customary office refuse, i.e., packing crates,
furniture, storage pallets, etc., is expressly prohibited, and shall be
disposed of promptly in some other manner by Lessee at Lessee’s expense.

 

58.                                 ELECTRICAL AND PHONE SERVICES:  It is
understood by the parties hereto that Lessee shall contract directly with the
appropriate vendors for electricity and phone services to its suite and said
costs shall be paid directly by Lessee to such vendors. These costs shall not
be included in the Operating Expenses. 
The costs of installing any separate meters for the Premises shall be
borne solely by Lessor, and shall not be charged to Lessee as an Operating
Expense.

 

59.                                 BUILDING MAINTENANCE: 
Lessor has warranted the Building condition and compliance in Paragraphs
2.2 and 2.3.  To the extent that any
system replacement or repair of any key component to the Building’s system is
required to be made within nine (9) months of the Commencement Date, or
Lessor receives notice within such nine (9) month period that any such
replacements or repairs are required, such repair or replacement shall be paid
for solely by Lessor and shall not be charged to Lessee as Building Operating
Expenses provided such repair or replacement is not occasioned by Lessee’s
negligence or abuse.

 

60.                                 RIGHT OF FIRST OFFER ON FIRST
FLOOR SUITES 103 AND 104:  During the Term of the Lease, provided that
Lessee is not in Breach of the Lease, Lessee shall have a continuing right to
lease (a) Suite 103, located on the first floor of the Building
(approximately 4,649 rentable square feet), a depiction of which space is
attached as Exhibit F-1 hereto (“Suite 103 Space”), and (b) Suite 104,
located on the first floor of the Building (approximately 6,886 rentable square
feet), a depiction of which space is attached as Exhibit F-2 hereto (“Suite 104
Space”) should Lessor receive a bona fide, third party offer to lease either Suite 103
Space or Suite 104 Space (together the “First Floor Suites”).  If Lessor receives an offer from a bona fide
third party to lease either of the First Floor Suites, then Lessor will notify
Lessee in writing of the terms and conditions of such offer along with the
terms and conditions that Lessor would be willing to accept. Such written
notice shall be accompanied with a copy of the third party offer for
verification purposes. Lessee shall keep such notices confidential.  Lessee shall have five (5) business days
following receipt of Lessor’s notice to either (i) accept or reject the
terms and conditions upon which Lessor would be willing to lease the applicable
First Floor Suite, or (ii) enter into further negotiations with Lessor for
the subject space for a period not to exceed ten (10) business days
following the expiration of the five (5) business day period following
receipt of Lessor’s notice, and if such negotiations do not result in a lease
for such space, then Lessee shall be deemed to have rejected Lessor’s
offer.  If Lessee elects to enter into
negotiations, then before the termination of such negotiation, Lessee shall
present Lessor with an offer (“Best and Final Offer”) containing the provision
upon which Lessee would be willing to lease the proposed space.

 

If
Lessee elects to accept the terms and conditions in Lessor’s notice or if
Lessor and Lessee agree to terms during the negotiations or Lessor elects to
accept the terms of the Best and Final Offer, then the accepting party shall
notify the other party in writing and Lessee and Lessor shall then execute a
amendment for one or both of the First Floor Suites upon which the parties have
agreed to lease to be upon the same terms and conditions as the existing Lease,
with the only changes (e.g. rent, commencement date, term tenant improvements,
etc.) being those contained in the notice that Lessor delivered to Lessee.
Lessee’s failure to notify Lessor in writing within five (5) business days
following receipt of Lessor’s notice of Lessee’s intention to exercise its
rights to lease either of the First Floor Suites as described herein shall be
deemed a rejection of Lessee’s right to lease such space.  If Lessee should not accept Lessor’s offer
(whether by notice, inaction or failure of negotiations) and does not present
Lessor with a Best and Final Offer, then Lessor shall have four (4) months
to consummate a lease with said third party at such terms and conditions as
Lessor deems appropriate.  If Lessee
presents a Best and Final Offer to Lessor, then Lessor shall have four (4) months
to consummate a lease with said third party at such terms and conditions no
more favorable to the third party than those contained in the Best and Final
Offer.  If during negotiations with the
proposed tenant, the proposed lease terms and conditions change to be more
favorable to the third party than those contained in the Best and Final Offer,
or if the four (4) month negotiation period lapses, then all rights of
First Offer shall be reinstated and Lessee shall be granted a new Right of
First Offer on the applicable space pursuant to the procedures described above.

 

This
right of first offer to lease additional space shall be personal to Lessee,
and, notwithstanding any provision to the contrary contained elsewhere in the
Lease, may not be assigned to any person or entity (except to a Permitted Transferee
(defined below)).

 

61.                                 LIEN WAIVER: 
Lessor acknowledges Lessee’s right to finance and to secure under the
Uniform Commercial Code, inventory, furnishings, furniture, equipment,
machinery, leasehold improvements and other personal property located in or at
the Premises, and Lessor agrees, upon Lessee’s request, to execute the waiver
forms attached hereto as Exhibit C releasing liens in favor of any
purchase money seller, Lessor or lender who has financed or may finance in the
future such items.  Without limiting the
effectiveness of the foregoing, provided that no default shall have occurred
and be continuing, Lessor shall, upon the request of Lessee, and at the Lessee’s
sole cost and expense (including Lessor’s reasonable attorney fees incurred in
relation thereto), execute and deliver any commercially reasonable instruments
necessary or appropriate to confirm any such grant, release, dedication,
transfer, annexation 

 

	
   

  	
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or
amendment to any person or entity permitted under this paragraph including
Lessor waivers with respect to any of the foregoing.

 

62.                                 OPTION TO EXTEND: 
Provided that Lessee is not then in default under any of the terms,
covenants and conditions of the Lease beyond any applicable notice and cure
period, Lessor hereby grants to Lessee, subject to the conditions hereinafter
set forth, one (1), five (5) year option to extend the Term of this Lease
(the “Option Term.”).  This option shall
be on all of the same terms and conditions as this Lease, except for Base Rent,
which shall be adjusted as set forth in Paragraph 63 below.  This option shall remain personal to Lessee
and shall not be transferable to other entities except to a Permitted
Transferee.  Lessee shall give Lessor
written notification of Lessee’s intent to exercise the option no later than June 1,
2014.  All references to “Term” in the
Lease shall include the Option Term as exercised in accordance with the Lease.

 

63.                                 BASE RENT INCREASES DURING OPTION
PERIODS:

 

On
January 1, 2015, the monthly Base Rent shall be increased to $133,334.00

On
January 1, 2016, the monthly Base Rent shall be increased to $137,334.00;

On
January 1, 2017, the monthly Base Rent shall be increased to $141,454.00;

On
January 1, 2018, the monthly Base Rent shall be increased to $145,698.00;

On
January 1, 2019, the monthly Base Rent shall be increased to $150,069.00.

 

64.                                 PERMITTED TRANSFERS: 
Notwithstanding anything to the contrary contained in the Lease
(including Section 12 thereof), Lessee may assign the Lease or sublease
all of the Premises without Lessor’s consent, but with ten (10) days
advance written notice to (each, a “Permitted Transferee”): (i) any
corporation, partnership or other business entity that controls, is controlled
by, or is under common control with Lessee, (ii) any corporation,
partnership or other business entity resulting from a merger or consolidation
with Lessee, or (iii) to any entity which acquires substantially all of
Lessee’s assets or capital stock.  In no
event shall any public offering of stock of Lessee on a national stock exchange
constitute a transfer requiring Lessor’s consent pursuant to Article 12 of
the Lease.   The provisions of Section 12.1(c) are
hereby deleted from the Lease.

 

65.                                 RULES AND REGULATIONS AND USE:  Lessor agrees that the Rules and
Regulations attached as Exhibit D to the Lease shall not be changed,
revised or enforced in any unreasonable or non-discriminatory way by Lessor,
nor modified or added to by Lessor in such a way as to interfere with Lessee’s
permitted use of the Premises set forth in the Lease.  Lessor shall not enforce the Rules and
Regulations in an unreasonable manner or in a manner which shall unreasonably
interfere with the normal and customary use of the Premises by Lessee for the
Agreed Use, and Lessor shall not unreasonably interfere with Lessee’s occupancy
of the Premises in connection with any Lessor activity in the Building or
Project, including, without limitation, repairs or alterations to the Common
Areas.

 

66.                                 EXCLUSIONS FROM OPERATING
EXPENSES:

 

(a)                                  Notwithstanding anything to the contrary in
the definition of Operating Expenses and Real Property Taxes set out in the
Lease, Operating Expenses and Real Property Taxes shall not include the
following, except to the extent specifically permitted by a specific exception
to the following:

 

(i)                                     Any ground lease rental;

 

(ii)                                  Rentals for items (except when needed in
connection with normal repairs and maintenance of permanent systems) which if
purchased, rather than rented, would constitute a Capital Expenditure which is
specifically excluded in Paragraph 2.3 of the Lease (excluding, however,
equipment not affixed to the Building which is used in providing janitorial or
similar services);

 

(iii)                               Costs incurred by Lessor for the repair of
damage to the Building, to the extent that Lessor is reimbursed by insurance
proceeds;

 

(iv)                              Costs, including permit, license and
inspection costs, incurred with respect to the installation of tenants’ or
other occupants’ improvements in the Building or incurred in renovating or
otherwise improving, decorating, painting or redecorating vacant space for
tenants or other occupants of the Building;

 

(v)                                 Depreciation, amortization and interest
payments, except as provided herein and except on materials, tools, supplies
and vendor-type equipment purchased by Lessor to enable Lessor to supply
services Lessor might otherwise contract for with a third party where such
depreciation, amortization and interest payments would otherwise have been
included in the charge for such third party’s services.

 

(vi)                              Marketing costs including, without
limitation, leasing commissions, attorneys’ fees in connection with the
negotiation and preparation of letters, deal memos, letters of intent, leases,
subleases and/or assignments, space planning costs, and other costs and
expenses incurred in connection with lease, sublease and/or assignment
negotiations and transactions with present or prospective tenants or other
occupants of the Building;

 

(vii)                           Expenses in connection with services or other
benefits which are not offered to Lessee or for which Lessee is charged for
directly but which are provided to another tenant or occupant of the Building;

 

(viii)                        Costs incurred by Lessor due to the violation
by Lessor or any tenant of the terms and conditions of any lease of space in
the Building; Exclusions from Operating Expenses, continued.

 

	
   

  	
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3

 

(ix)                                Overhead and profit increment paid to Lessor
or to subsidiaries or affiliates of Lessor for goods and/or services in or to
the Building to the extent the same exceeds the costs of such goods and/or
services rendered by unaffiliated third parties on a competitive basis;

 

(x)                                   Interest, principal, points and fees on debts
or amortization on any mortgage or mortgages or any other debt instrument
encumbering the Building or the Project;

 

(xi)                                Lessor’s general corporate overhead and
general and administrative expenses;

 

(xii)                             Advertising and promotional expenditures, and
costs of signs in or on the Building identifying the owner of the Building or
other tenants’ signs;

 

(xiii)                          Costs incurred in connection with upgrading
the Building to comply with disability, life, fire and safety codes,
ordinances, statutes, or other laws in effect prior to the Commencement Date,
including, without limitation, the Americans with Disabilities Act, including
penalties or damages incurred to such non-compliance;

 

(xiv)                         Tax penalties incurred as a result of Lessor’s
negligence, inability or unwillingness to make payments and/or file any tax or
information returns when due:

 

(xv)                            Costs for which Lessor has been compensated
by a management fee, and any management fees in excess of those management fees
which are normally and customarily charged by comparable landlords of
Comparable Buildings;

 

(xvi)                         Costs arising from the negligence or fault of
other tenants or Lessor or its agents, or any vendors, contractors, or
providers or materials or services selected, hired or engaged by Lessor or its
agents;

 

(xvii)                      Notwithstanding any contrary provisions of
the Lease, including, without limitation, any provision relating to capital
expenditures, any and all costs arising from the presence of hazardous
materials or substances in or about the Premises, the Building or the Project
including, without limitation, hazardous substances in the ground water or
soil, not placed in the Premises, the Building or the Project by Lessee;

 

(xviii)                   Costs arising from Lessor’s charitable or
political contributions;

 

(xix)                           Costs arising from latent defects in the
base, shell or core of the Building or improvements installed by Lessor or
repair thereof;

 

(xx)                              Costs for sculpture, paintings or other
objects of art;

 

(xxi)                           Costs (including in connection therewith all
attorneys’ fees and costs of settlement judgments and payments in lieu thereof)
arising from claims, disputes or potential disputes in connection with
potential or actual claims litigation or arbitrations pertaining to Lessor
and/or the Building and/or the Project;

 

(xxii)                        Costs associated with the operation of the
business of the partnership or entity which constitutes Lessor as the same are
distinguished from the costs of operation of the Building, including
partnership accounting and legal matters, costs of defending any lawsuits with
any mortgagee (except as the action of Lessee may be in issue), costs of
selling, syndicating, financing, mortgaging or hypothecating any of Lessor’s
interest in the Building, costs of any disputes between Lessor and its
employees (if any) not engaged in Building operation, disputes of Lessor with
Building management, or outside fees paid in connection with disputes with
other tenants;

 

(xxiii)                     Any “finders fees”, brokerage commissions,
job placement costs or job advertising cost, other than with respect to a
receptionist or secretary in the Building office, once per year;

 

(xxiv)                    Any “above-standard” cleaning, including, but
not limited to construction cleanup or special cleanings associated with
parties/events and specific tenant requirements in excess of service provided
to Lessee, including related trash collection, removal, hauling and dumping;

 

(xxv)                       The cost of any magazine, newspaper, trade or
other subscriptions;

 

(xxvi)                    The cost of any training or incentive
programs, other than for tenant life safety information services;

 

(xxvii)                 The cost of any “tenant relations” parties,
events or promotion not consented to by an authorized representative of Lessee
in writing;

 

(xxviii)              “In-house” legal and/or accounting fees in
excess of the management fees.

 

(b)                                 In the event any facilities, services or
utilities used in connection with the Building are provided from another
building owned or operating by Lessor or vice versa, the costs incurred by
Lessor in connection therewith shall be allocated to Operating Expenses by
Lessor on a reasonably equitable basis.

 

67.                                 AUDIT RIGHTS RELATING TO
OPERATING EXPENSES:  Within sixty (60) days following the end of
each Comparison Year, Lessor shall furnish Lessee a statement of the actual
expenses incurred by Lessor during the previous Comparison Year compared to the
actual expenses incurred by Lessor during the Base Year. If the actual expenses
incurred by Lessor during the Comparison Year exceed those expenses incurred by
Lessor during the Base Year, Lessee shall pay Lessor its prorata portion of the
deficiency within thirty (30) days after delivery of Lessor’s Statement.  At Lessor’s option, the amount of this
reimbursement may be estimated annually in advance with estimated payments
being due monthly in addition to Base Rent.

 

For
up to sixty (60) days following delivery of Lessor’s Statement, Lessee shall
have the right (on not less than ten (10) days prior written notice to
Lessor) to audit financial records of Lessor related to Operating Expenses
incurred during the previous Comparison 

Year
as covered by the most recent Lessor’s Statement.  Any audit shall be conducted during normal
business hours at Lessor’s office, or any other 

 

	
   

  	
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4

 

location
reasonably designated by Lessor and shall be conducted by a certified public
accounting firm reasonably approved by Lessor, provided it is not retained on a
contingency or percentage of recovery basis. 
Lessee must make any claim to Lessor for an adjustment to the Lessor’s
Statement within thirty (30) days of any audit of Lessor’s Statement performed
by Lessee.

 

68.                                 PARKING: 
Except for maintenance and emergency, Lessee’s parking privileges shall
be available to Lessee twenty-four (24) hours per day, seven (7) days per
week, every day of the year, in any location where Lessee shall maintain its
parking privileges.  In no event shall
Lessee be charged any fee for parking during the Original Term or any Option
Term.

 

69.                                 ALTERATIONS: 
Notwithstanding any provision in the Lease to the contrary, including Section 1.2
(a) of the Lease, Lessee shall have the right to, at Lessee’s sole cost
and expense (subject to the requirements of Section 7.3 of the Lease
applicable to Alterations), install and maintain (i) a “key card” security
system in the Building for purposes of protecting the Premises against
unauthorized access, and (ii) telephone, data and IT cabling in the
Premises.

 

70.                                 TERMINATION OF FARADAY LEASE: 
Effective upon the occurrence of the Commencement Date under the Lease,
Lessor shall cause that certain Standard Multi-Tenant Office Lease – Gross
(with Addendum attached thereto), dated as of January 30, 2008 (the “Faraday
Lease”) by and between Blackmore Signal Hill, a California limited partnership
(“Faraday Lessor”) and Lessee for certain premises located at 1555 Faraday
Avenue, Carlsbad, California (the “Faraday Premises”) to be terminated on
behalf of the Faraday Lessor.  Lessee
agrees to accept such termination concurrently therewith and thereafter neither
Lessee nor the Faraday Lessor shall have any further obligation under the
Faraday Lease except with respect to such matters as are intended to survive
the expiration or earlier termination of the Faraday Lease pursuant to its
terms.  Lessee shall perform all
obligations of the Faraday Lease through the date of termination (including,
without limitation, restoring the premises before vacating) and at Faraday
Lessor’s request, Lessee and Faraday Lessor shall execute a termination
agreement for the Faraday Lease in a commercially reasonable form (but such
termination agreement shall not include any termination fee). Faraday Lessor
shall have the right to enter into a lease for the Faraday Premises with a
third party tenant prior to the scheduled Commencement Date under the Lease, in
which event the Faraday Lease termination shall occur on the date that Lessee
has effected its computer, data, telephony and furniture, fixture and equipment
installations in, and physical move into, already improved space on the first
floor of the Building (the “Relocation Space”), such that Lessee can commence
business operations therein as the same are then conducted in the Faraday
Premises.  Notwithstanding the foregoing,
following vacation of the Faraday Premises, Lessee shall pay rent and other
charges under the Faraday Lease through the Commencement Date (and shall be
entitled to occupy the Relocation Space at no additional charges beyond the
amounts to be paid under the Faraday Lease, but shall perform all other obligations
under this Lease with respect to its occupancy of the Relocation Space during
such period), at which time the terms of the Lease shall govern the Premises as
a whole including the Relocation Space. 
In no event shall Lessor’s construction activities in the balance of the
Premises during such period of relocation from the Faraday Premises adversely
affect Lessee’s use or occupancy of the Relocation Space for the conduct of
Lessee’s business.  Lessor represents and
warrants that the Faraday Lessor is an affiliate of Lessor and Lessor has the
authority to cause the termination of the Faraday Lease as contemplated
hereinabove.

 

71.                                 COOPERATION REGARDING RUTHERFORD
LEASE:  Lessee currently subleases certain space at
2110 Rutherford Road, Carlsbad, California (“Rutherford Premises”) from a
sublandlord that is a tenant of an affiliate of Lessor. The sublease rental
rate that Lessee pays at the Rutherford Premises is less than the amount that
the landlord of the Rutherford Premises receives from the sublandlord. Lessor
and Lessee shall cooperate in good faith to attempt to extend Lessee’s current
tenancy at the Rutherford Premises through December 31, 2014, but
recognize that the sublandlord must cooperate for such extension to occur.  Such cooperation shall require neither Lessor
(or its affiliate) nor Lessee to incur any additional liability or to modify
the rents currently being paid or received under the existing lease and
sublease arrangements affecting the Rutherford Premises.   If the sublandlord at the Rutherford
Premises does not exercise its option to extend its lease, then Lessor shall
cause Lessor’s affiliate to enter into a direct lease with Lessee for the
Rutherford Premises for the period of July 1, 2012, through December 31,
2014, at a base monthly rent schedule of $123,114.44 for the period of July 1,
2012 through June 30, 2013; $126,807.87 for the period of July 1,
2013 through June 30, 2014; and $130,612.11 for the period of July 1,
2014 through December 31, 2014.

 

72.                                 ENTIRE AGREEMENT; COUNTERPARTS:  There
are no oral agreements between the parties hereto affecting this Addendum and
the Lease (collectively herein, the “Lease”), and this Lease supersedes and
cancels any and al previous negotiations, arrangements, brochures, agreements
and understandings, if any, between the parties hereto or displayed by Lessor
to Lessee with respect to the subject matter thereof, and none thereof shall be
used to interpret or construe this Lease. 
This Addendum may be executed in counterparts, which, when taken together,
shall constitute a single document.

 

73.                                 EXHIBITS:  The
following exhibits are attached hereto and made a part hereof:

 

Exhibit A-1–
Floor Plan-Suite 100;

Exhibit A-2–
Floor Plan-Suite 106;

Exhibit A-3–
Floor Plan-Suite 200;

Exhibit B
– Site Plan;

 

	
   

  	
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5

 

Exhibit C
- Landlord Waiver and Consent Form;

Exhibit D
– Building Rules and Regulations;

Exhibit E-1-
Condition of Building Upon Possession-Suite 100;

Exhibit E-2-
Condition of Building Upon Possession-Suite 106;

Exhibit E-3-
Condition of Building Upon Possession-Suite 200;

Exhibit F-1
– Suite 103 Floor Plan;

Exhibit F-2
– Suite 104 Floor Plan.

 

IN
WITNESS WHEREOF, Lessor and Lessee have entered into this Addendum as of the
date first written above.

 

	
  LESSOR:

  	
   

  	
  LESSEE:

  
	
   

  	
   

  	
   

  
	
  ALLEN
  JOSEPH BLACKMORE, TRUSTEE OF

  THE BLACKMORE FAMILY TRUST, RESTATED

  1995

  	
   

  	
  GENOPTIX,
  INC., A DELAWARE CORPORATION

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Allen J. Blackmore, TTE

  	
   

  	
  By:
  

  	
  /s/
  Tina Nova Bennett

  
	
   

  	
  Allen Joseph Blackmore, Trustee

  	
   

  	
   

  
	
   

  	
  of
  the Blackmore Family Trust

  	
   

  	
   

  
	
   

  	
  Restated
  1995, General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  4/15/08

  	
   

  	
  It’s:

  	
  President &
  CEO

  
	
   

  	
   

  	
   

  	
   

  	
  (title of officer)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  4/15/08

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  C.V. Kuhlen

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  VP,
  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  4/15/08

  
														

 

6

 

EXHIBIT B

 

TENANT IMPROVEMENT
AGREEMENT

 

This Tenant Improvement Agreement (“Agreement”) is
entered into as of April 14, 2008, between Allen Joseph Blackmore, Trustee
of the Blackmore Family Trust Restated 1995 (“Lessor”) and Genoptix, Inc.,
a Delaware corporation (“Lessee”), in connection with the execution of the
Lease (with Addendum attached thereto) between Lessor and Lessee executed
simultaneously with this Agreement (“Lease”). 
This Agreement is the “Work Letter” referred to in said Lease.  Lessor and Lessee hereby agree as follows:

 

1.                                       General.

 

a.                                       The
purpose of this Agreement is to set forth how the interior improvements on the
second floor of the Premises, including, without limitation, offices, employee
services facilities, demising walls, window coverings and floor covering (“Tenant
Improvements”) are to be constructed, who will perform the construction of the
Tenant Improvements, and who will pay for the construction of the Tenant
Improvements. The Premises are located on the 2nd floor of the multi-tenant
building located at 1811 Aston Avenue, Carlsbad, California (“Building”).  The first floor of the Premises has already
been improved and is not part of this Agreement (although it is included in the
definition of “Premises” in the Lease).

 

b.                                      Except
as defined in this Agreement to the contrary, all terms utilized in this
Agreement shall have the same meaning as the defined terms in the Lease.

 

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

 

2.                                       Designer/Architect.  The plans for the Tenant Improvements shall
be prepared by Richard Yen & Associates, or such other designer
approved by Lessor and Lessee (“Designer”) who is familiar with the design of
the Building and with all Applicable Requirements applicable to construction
and completion of the Tenant Improvements and the customary tenant improvements
for Class A office buildings in Carlsbad, California.  The cost of the space planning, architectural
and engineering services (including “value engineering” services) relating to
the preparation of the plans for the Tenant Improvements shall be included in
the cost of the Tenant Improvements in an amount not to exceed $2.00 per usable
square foot of the Premises.  Lessor
shall contract with the Designer.

 

3.                                       Preparation
of Plans and Construction Schedule for Tenant Improvements.  Lessor has provided instructions and Building
background drawings to the Designer specifically identified above prior to the
execution of the Lease (or, if such identified Designer is yet to be selected
by the parties, promptly after such selection) to complete the plans and
specifications, and Lessor shall contract on behalf of Lessee for the
construction of the Tenant Improvements and supervise the Contractor in
accordance with the following schedule:

 

a.                                       Upon
the execution of the Lease, Lessee shall provide Designer with sufficient
information to allow Designer to prepare preliminary Schematic Drawings (“Schematic
Drawings”) for the Tenant Improvements, which Schematic Drawings shall be
delivered to Lessor and Lessee upon completion. 
Upon receipt of the Schematic Drawings, if such Tenant Improvements are
of a nature that are inconsistent with either customary improvements for Class A
office space in Carlsbad, California or Building Standard Tenant Improvement
Items (as defined below), then Lessor shall notify Lessee of such proposed
improvements, if any, that Lessee will need to remove and restore the Premises
to the existing condition at the termination or expiration of the Lease so that
Lessee can modify its proposed improvement plans accordingly.  Except with respect to such non-standard
tenant improvements that Lessor has disapproved as provided hereinabove and
which Lessee nonetheless elects to have Lessor construct, Lessee shall have no
obligation to remove any of the Tenant Improvements.

 

b.                                      Lessee
shall approve such Schematic Drawings not later than five (5) business
days of receipt or designate by written notice to Lessor the specific changes
required to be made to the Schematic Drawings, which Lessor shall make as soon
as reasonably possible.  Lessee’s failure
to give notice within such five (5) business day period of receipt shall
be deemed an approval of the Schematic Drawings.

 

c.                                       After
Lessee has approved the Schematic Drawings, Lessor shall cause the Designer to
prepare and deliver to Lessee final Construction Documents (“Plans”) which
shall be defined as, and shall consist of, complete architectural 

 

B-1

 

plans (inclusive of Schematic Drawings) and
construction detail and specifications necessary to allow the Contractor to
build the Tenant Improvements in accordance with the final Plans. The term “Tenant
Improvements” shall mean all improvements shown on the final Plans as approved
by Lessee and Lessor under this Agreement.

 

d.                                      Lessee
shall approve such Plans within three (3) business days of receipt or
designate by written notice to Lessor the specific changes required to be made
to such Plans, which Lessor shall cause Designer to make as soon as reasonably
possible following Lessor’s approval. 
Lessee’s failure to give notice within such three (3) business day
period shall be deemed an approval of the Plans.

 

e.                                       The
Tenant Improvements shall not affect the Building’s structure, systems
(excluding HVAC and utilities hook-ups to service the Premises), equipment or
appearance (including, without limitation, any modification of the existing
lobby, core or other improvements in the Building) except as expressly agreed
to by Lessor or as required under Applicable Requirements, shall incorporate
the “Building Standard Tenant Improvement Items” as described on Schedule “1”
attached hereto and otherwise shall be consistent with tenant improvements in Class A
office space in Carlsbad, all as determined in Lessor’s sole and absolute
discretion.  Prior to final approval of
the Plans, Lessor shall have the right to disapprove any Tenant Improvements
requested by Lessee that Lessor determines do not at least meet the minimum of
the above standards (“Landlord’s Minimum Standard”).

 

4.             Construction
of Tenant Improvements.

 

a.                                       Lessor,
as soon as this Agreement is executed, shall make arrangements for Reno
Contracting, Inc. (“Contractor”) to construct the Tenant Improvements as
indicated on the Plans as soon as commercially possible and consistent with
industry custom and practice. Although Lessor will enforce the contract with
Contractor to have the Tenant Improvements completed as soon as reasonably
possible, Lessor shall not be liable for delay in the construction of the
Tenant Improvements that cause the date of Substantial Completion to occur
after December 31, 2008 (as extended by delays due to Lessee’s breach of
its obligations hereunder or due to a delay arising from a Change Order
requested by Lessee) except to the extent that such delay is caused by (i) Lessor’s
failure to respond to Schematic Drawings or Plans within three (3) business
days of their submission to Lessor, (ii) any willful misconduct by
Contractor which actually delays completion of the Tenant Improvements, and (iii) Lessor’s
gross negligence or intentional misconduct. 
Lessor shall direct Contractor to secure independent bids from three (3) subcontractors
mutually acceptable to Lessor and Lessee (to the extent that such bids are
reasonably available) for each trade (except for HVAC, fire safety, plumbing
and electrical, for which the same subcontractors that completed lobby and core
work and first floor tenant improvements at the Building will perform the work
for such items in the Premises).  Unless
mutually agreed by Lessor and Lessee, the lowest bidding subcontractor shall be
retained by Contractor to perform the work. 
Lessee shall be provided with the bid packages submitted for bid and,
based on the winning bids, a budget of Total Costs (defined below) shall be
prepared by Contractor and submitted to Lessor and Lessee for final approval
(the “Approved Budget”). In connection with its approval of the Approved
Budget, subject to Landlord’s Minimum Standard, Lessee shall have the right to
eliminate or modify any elements of the Tenant Improvements and cause the Total
Cost estimate to be revised accordingly, however Lessee shall be solely liable
for any additional cost or delay in completion of the Tenant Improvements
resulting therefrom.  Lessee shall have
the benefit of the lowest pricing Contractor provides to Lessor for comparable
construction on other properties owned by Lessor or its affiliated companies.

 

b.                                      Lessor
shall not be paid a separate fee in connection with Lessor’s obligations set
forth in this Agreement with respect to reviewing the design and construction
of the Tenant Improvements for the Premises and supervising Contractor in the
construction of the Tenant Improvements.

 

5.                                       Lessee
Representative.  Lessee will
designate a representative with decision making authority to attend the Tenant
Improvement Construction Meetings that shall occur on a weekly basis or as
needed in order to ensure that the construction process progresses smoothly and
on schedule.

 

6.                                       Tenant
Improvement Allowance.  The cost of
the planning, design and construction of the Tenant Improvements (“Total Cost”)
shall be at Lessee’s sole and entire cost except for the Allowance (defined
below). The Total Cost shall include all direct and indirect costs and expenses
incurred by Lessor relating to the Tenant Improvements as indicated by 

 

B-2

 

the Plans, as modified, including, without limitation,
all direct and indirect costs related to the architectural, engineering and
inspection fees, construction management fees, the costs of the Schematic
Drawings and the Plans, payments made under all construction contracts,
premiums for all bonds and insurance, all sales, use or similar taxes relating
to the construction of the Tenant Improvements, permit fees and other
governmental fees, losses and expenses not compensated by insurance or
otherwise sustained by Lessor, blueprinting expenses and all other ordinary and
reasonable expenses incurred by Lessor applicable to the construction of the
Tenant Improvements all as shown on the Approved Budget, excluding costs
required to bring the Building or Project into compliance with Applicable
Requirements.  Lessor represents and
warrants that the existing construction in the Project and the Building
complies with Applicable Requirements (including, without limitation, the
Americans with Disabilities Act requirements applicable to the Project and
Building for normal office use). Except with respect to modifications to the
Project or the Building (outside of the Premises) that are necessary to comply
with Applicable Requirements, Lessor shall have no obligation to make any
modifications to the Premises or the Building following the execution of this
Agreement and any such changes to the Premises or the Building related to
Lessee’s occupancy of the Premises shall be included in the Total Cost. Lessor
will provide a Tenant Improvement allowance of $60.00 per useable square foot
of the second floor of the Premises (which the parties agree consists of 24,494
useable square feet) (“Allowance”); provided, however, for
avoidance of doubt, the cost of compliance with American with Disabilities Act
requirements for portions of the Building and Project outside of the Premises
as a result of the initial Tenant Improvements shall be at Lessor’s sole cost
and expense. If the estimated Total Cost of the Tenant Improvements under the
Approved Budget exceeds the Allowance, then Lessee shall pay such overage to
Lessor (within five business days after Lessor’s written request) at the time
that at least 75% of the Allowance has been expended for the costs of
construction of the Tenant Improvements. 
If Lessee requests a Change Order in the Tenant Improvements from that
shown on the Plans and the additional cost of the Change Order causes the Total
Cost under the Approved Budget to exceed the Allowance, then, the Approved
Budget shall be modified to include the cost of such Change Order and Lessee shall
pay such additional cost of the Change Order to Lessor before the Change Order
is approved. Lessor shall perform the services of fund control with respect to
the construction costs and shall disburse funds on a percentage of completion
basis as construction progresses thereon. 
When all the Tenant Improvements are Substantially Complete, if the
Total Cost of the Tenant Improvements is less than the sum of the Allowance
plus any amounts Lessee paid to Lessor, then Lessor shall apply the entirety of
such overage to the Base Rent due under the Lease commencing on the date that
Base Rent is first due until fully expended.

 

7.                                       Substantially
Complete.  Lessor shall use diligent
efforts to cause Substantial Completion of the Tenant Improvements (as defined
in Section 50 of the Lease) to occur on or before January 1, 2009,
and Lessee shall cooperate therewith in the timely performance of its
obligations hereunder.  The actual date
of Substantial Completion shall not impact the Commencement Date of the Term of
the Lease, but no rent shall be payable under the Lease by Lessee until
Substantial Completion has occurred except to the extent of Lessee’s breach of
its obligations hereunder or due to a delay arising from a Change Order
requested by Lessee as provided below.

 

a.                                       If
Lessee delays the date of Substantial Completion due to Change Orders or the
non-timely response to clarification or direction requested by the Designer,
Contractor or Lessor, such delays shall not cause any delay in the Commencement
Date of the Lease nor shall it delay Lessee’s obligation to pay rent for the
Premises.

 

b.                                      Whenever
possible and practical, Lessor will utilize, for the construction of the Tenant
Improvements, the items and materials designated in the Plans.  However, whenever Lessor determines in its
judgment that it is not practical or efficient to use such materials, Lessor
shall have the right to substitute comparable items and materials.  However, if such substitute materials
increase the cost of construction or operate to delay Substantial Completion,
then Lessor shall not make such substitution without the consent of Lessee.

 

c.                                       If
the date of Substantial Completion occurs before the scheduled Commencement
Date, then Lessee shall be entitled to occupy the Premises during the period
commencing on the date of Substantial Completion and ending on the Commencement
Date without payment of monthly Base Rent or Operating Expenses during such
period, but all other obligations of Lessee under the Lease shall apply.  The foregoing shall be without prejudice to
Lessee’s early occupancy rights under the Lease.

 

8.                                       Change
Orders.  If Lessee requests any
changes to the Plans other than those that are necessary due to acts or
omissions of Lessor or the Designer (“Change Order”), Lessor shall not
unreasonably withhold its consent to any such Change Order, provided the 

 

B-3

 

Change Order does not materially affect the Building’s
structure, systems, equipment or appearance (including, without limitation, any
modification of the existing lobby, core or other improvements in the Building)
unless such Change Order is required to comply with Applicable Requirements,
and does not result in the use of materials in the construction of the Tenant
Improvements of a lesser quality than the Building Standard Tenant Improvement
Items. Lessee shall request Change Orders in writing consistent with the
provisions of Paragraph 3 of this Agreement and if the Change Order increases
the cost of the Tenant Improvements, then Lessee shall pay such increased costs
to Lessor before the request is approved if the additional cost of the Change
Order exceeds the Allowance.

 

9.                                       No
Lessor Liability.  Lessor shall not
be liable for any loss, cost, damage, or expense incurred or claimed by Lessee
or any other person or party on account of the construction or installation of
the Tenant Improvements or any other improvements to the Premises made by
Lessee, except to the extent caused by Lessor’s negligence, recklessness or
intentional acts. Lessee agrees and understands that Lessor shall not be the
guarantor of, nor responsible for, the correctness or accuracy of any Plans,
the compliance of such Plans with applicable laws or the operation of the
Tenant Improvements in the Premises. Lessor assumes no liability or
responsibility resulting from the failure of the Lessee to comply with
applicable governmental laws, codes and regulations or for any defect in any of
the Tenant Improvements or other alteration to the Premises made by Lessee.  Notwithstanding the foregoing, Lessor shall
enforce for the benefit of Lessee all contracts, warranties, indemnities and
guaranties applicable to the design and construction of the Tenant
Improvements.  Lessee shall indemnify,
defend and hold Lessor harmless from and against claims for personal injury or
property damage to the extent caused by Lessee’s gross negligence and
intentional misconduct in connection with its entry onto and activities on the
Premises during the construction of the Tenant Improvements.

 

10.                                 Future
Improvements by Lessee to the Premises. 
In the event that Lessee shall desire to perform future improvements to
the Premises during the term of the Lease or any extension thereof, Lessee
shall construct such improvements in accordance with the terms and conditions
of the Lease.

 

11.                                 Default.  Any default by Lessee or Lessor under the
terms of this Agreement, subject to applicable notice and cure periods, shall
constitute a default under the Lease and shall entitle the other to exercise
all remedies set forth in the Lease.  The
defaulting party shall have all rights to remedy such default pursuant to the
provisions of the Lease.

 

12.                                 Reasonable
Diligence and Cooperation.  Both
Lessor and Lessee agree to use reasonable diligence and cooperation in
performing all of their respective obligations and duties under this Agreement
and in proceeding with the construction and completion of all Tenant
Improvements in the Premises.

 

	
   

  	
  LESSOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Allen J. Blackmore,
  TTE

  
	
   

  	
  Allen Joseph Blackmore,
  Trustee of

  
	
   

  	
  the Blackmore Family
  Trust Restated 1995

  
	
   

  	
   

  
	
   

  	
  LESSEE:

  
	
   

  	
   

  
	
   

  	
  GENOPTIX, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tina Nova Bennett

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President &
  CEO

  
	
   

  	
   

  	
   

  	
  (title of officer)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ C.V. Kuhlen

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  VP, General Counsel

  
	
   

  	
   

  	
  (title of officer)

  
					

 

B-4

 

SCHEDULE “1”

 

Building Standard Tenant
Improvement Items

 

1.             DEMISING WALLS

 

a.                       Demising
walls:  (For stud heights =< 14’-9”)
3-5/8” x 25 ga. Metal studs at 24”o.c. with 5/8” Type ‘x’ Gyp Bd.  Attach with 1” Type ‘S’ screws at 8” o.c.
vert. And 12” o.c. at bottom and top track and at intermediate studs.  Complete and full height from floor to
structure above.  Set bottom tack in two (2) beads
of silicon sealant.  Provide slip track
at top of demising wall where attaching to building structure.

 

b.                      Wall
Insulation:  3” unfaced fiberglass batt
insulation.

 

c.                       Finish:  Level 4 finish in accordance with ASTM C 840
Gypsum Association standard GA-214-96.

 

d.                      Sound
Rating:  Minimum STC 49.

 

2.             INTERIOR PARTITIONS

 

a.                       Interior
Partitions:  (For stud heights =< 14’-9”)
3-5/8” x 25 ga. Metal studs at 24”o.c. with 5/8” Type ‘x’ Gyp Bd.  Attach with 1” Type ‘S’ screws at 8” o.c.
vert. And 12” o.c. at bottom and top track and at intermediate studs.

 

b.                      Wall
Insulation:  3” unfaced fiberglass batt
insulation, where required for sound attenuation.

 

c.                       Finish:  Level 4 finish in accordance with ASTM C 840
Gypsum Association standard GA-214-96.

 

3.             INTERIOR DOORS, FRAMES, AND SIDELIGHTS

 

a.                       Interior
Doors:  3’-0” x 8’-10” x 1-3/4” thick
solid core, plain sliced, Grade ‘A’ per WDMA I.S. 1-A (1993), book matched, Am.
Cherry veneer, stained per Architect’s sample.

 

b.                      Frames:  Pre-finished metal door frame; fire-rated
assembly (20-min.) where required.

 

c.                       Sidelights:  Integral sidelights with 1/4” clear tempered
float glass.

 

4.             DOOR HARDWARE

 

a.                       Hardware:  Standard hardware sets as required for each
door.

 

b.                      Mortise
Locksets:  Schlage, L Series Mortise
Lockset at tenant entry door, or as required, Athens lever, 626

 

c.                       Cylinder
Locksets:  Schlage, D Series, Athens
lever, 626.

 

5.             ACOUSTICAL CEILINGS

 

a.                       Metal
Suspension System, Standard:  Armstrong
World Industries, Inc., Superfine XL 9/16” Exposed Tee System, white.

 

b.                      Metal
Suspension System (Optional Upgrade): 
Armstrong World Industries, Inc., Interlude XL 9/16” Dimensional
Tee System, white.

 

c.                       Acoustical
Panels:  Armstrong World Industries, Inc.,
Dune, fine textured, white, 15/16” angled tegular, 24” x 24”.

 

d.                      Ceiling
heights shall be maintained at a minimum of 9’-0” above finish floor, except at
certain feature areas or soffits.

 

6.             WALL BASE

 

a.                       Carpet
Base:  4” carpet base at carpeted floors,
to match adjacent carpet.

 

b.                      Resilient
Wall Base (at VCT or linoleum flooring): 
4” rubber top-set carpet base, smooth. 
Color:  to be selected from
manufacturer’s standard colors.

 

B-5

 

7.             FLOOR COVERING

 

a.                       Carpet:

 

1.               Cut
pile carpet: Equal to Prince Street; Entendre [Tip Sheared]; 409806 Biomass.

 

2.               Level
loop carpet: Equal to Shaw- 5A036 Kendari.

 

b.                      Vinyl
composition Tile:  Armstrong, Excelon, 12”
x 12”, 1/8 gage. Color to be selected from manufacturer’s standard colors.

 

c.                       Linoleum
Floor Covering:  Armstrong World
Industries, Inc., Marmoette sheet linoleum floor covering.  Color and pattern to be selected from
manufacturer’s standard colors.

 

8.             PAINT

 

a.                       Interior
Paint:  ICI, Frazee, or Dunn-Edwards,
Flat latex interior wall paint.  Colors
to be selected from manufacturer’s standard colors.

 

9.             ARCHITECTURAL WOODWORK

 

a.                       Plastic
Laminate Cabinets:  WIC Premium grade,
frameless, flush overlay, high-pressure decorative laminate by Nevamar.  Color and pattern to be selected from
manufacturer’s standard selection.

 

10.           WINDOW TREATMENT

 

a.                       Vertical
Blinds:  3 1/2” flat vinyl vanes,
perforated, white.

 

11.           HVAC SYSTEMS

 

a.                       Water
source heat pumps for the primary air systems, condenser water piping, main
supply air ducts, main

 

12.           LIGHTING CONTROL

 

a.                       A/B
switching  as required, “Decora” swiches,
white.

 

13.           LIGHTING

 

a.                       Recessed
Fluorescent Fixtures:  Columbia Lighting,
Stratus, STR24-3, 2’x4’ 3 lamp, linear indirect recessed luminaire, white.

 

b.                      Recessed
Downlight:  Prescolite, Virtual Source,
Compact Fluorescent Downlight, 8” aperature.

 

B-6

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