Document:

Exhibit
10.2

OFFICE
LEASE

LANDLORD:  CROWN CARNEGIE ASSOCIATES, LLC, 
a Delaware limited liability company

TENANT:  ITERIS, INC., a Delaware
corporation

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  
	
  Article 1 - Term 1

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 2 – Premises Article 2 – Premises

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Article 3 – Base Rent

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article 4 – Payment of Operating Expenses and Tax
  Expenses

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article 5 – Security Deposit

  	
   

  	
  22

  
	
   

  	
   

  	
   

  
	
  Article 6 – Repairs and Maintenance

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  Article 7 – Utilities; Services

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  Article 8 – Use

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  Article 9 – Insurance; Indemnity

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  Article 10 – Assignment and Subletting

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  Article 11- Alterations; Liens

  	
   

  	
  53

  
	
   

  	
   

  	
   

  
	
  Article 12 – Personal Property Taxes

  	
   

  	
  56

  
	
   

  	
   

  	
   

  
	
  Article 13 – Parking

  	
   

  	
  57

  
	
   

  	
   

  	
   

  
	
  Article 14 – Hazardous Waste

  	
   

  	
  59

  
	
   

  	
   

  	
   

  
	
  Article 15 – Estoppel; Subordination; Attornment

  	
   

  	
  62

  
	
   

  	
   

  	
   

  
	
  Article 16 – Certain Landlord Rights

  	
   

  	
  65

  
	
   

  	
   

  	
   

  
	
  Article 17 – Default

  	
   

  	
  67

  
	
   

  	
   

  	
   

  
	
  Article 18 – Remedies

  	
   

  	
  72

  
	
   

  	
   

  	
   

  
	
  Article 19 – Interest; Late Charge

  	
   

  	
  76

  
	
   

  	
   

  	
   

  
	
  Article 20 – Damage and Destruction

  	
   

  	
  76

  
	
   

  	
   

  	
   

  
	
  Article 21 – Eminent Domain

  	
   

  	
  80

  
	
   

  	
   

  	
   

  
	
  Article 22 – Surrender; Removal of Property

  	
   

  	
  81

  
	
   

  	
   

  	
   

  
	
  Article 23 – Holding Over

  	
   

  	
  82

  
	
   

  	
   

  	
   

  
	
  Article 24 – Intentionally Omitted

  	
   

  	
  84

  
	
   

  	
   

  	
   

  
	
  Article 25 – Force Majeure

  	
   

  	
  84

  
	
   

  	
   

  	
   

  
	
  Article 26 – Signage

  	
   

  	
  84

  
	
   

  	
   

  	
   

  
	
  Article 27 – Waiver

  	
   

  	
  87

  
	
   

  	
   

  	
   

  
	
  Article 28 – Notices

  	
   

  	
  88

  
	
   

  	
   

  	
   

  
	
  Article 29 – Rules and Regulations

  	
   

  	
  88

  
	
   

  	
   

  	
   

  
	
  Article 30 – Relocation: Intentionally Omitted

  	
   

  	
  89

  
	
   

  	
   

  	
   

  
	
  Article 31: Miscellaneous

  	
   

  	
  89

  

 

 i
 

 

	
  Article 32: Satellite Dishes

  	
   

  	
  96

  
	
   

  	
   

  	
   

  
	
  Article 33: Right of First Offer

  	
   

  	
  100

  

 

	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
  EXHIBIT A

  	
  PREMISES

  
	
  EXHIBIT A-1

  	
  FIRST OFFER SPACE

  
	
  EXHIBIT A-2

  	
  PATIO AREA

  
	
  EXHIBIT B

  	
  RULES AND REGULATIONS

  
	
  EXHIBIT C

  	
  NOTICE OF LEASE TERM DATES AND TENANT’S

  
	
   

  	
  PROPORTIONATE SHARE

  
	
  EXHIBIT D

  	
  TENANT WORK LETTER’

  
	
  EXHIBIT E

  	
  INTENTIONALLY OMITTED

  
	
  EXHIBIT F

  	
  TEST LANE & PARKING

  
	
  EXHIBIT G

  	
  JANITORIAL SPECIFICATIONS

  
	
  EXHIBIT H

  	
  ESTOPPEL

  
	
  EXHIBIT I

  	
  SNDA

  

 

 ii

OFFICE LEASE

Basic Lease Provisions

The following
Basic Lease Provisions are incorporated in and made a part of the Lease to
which it is attached.  If there is any
conflict between the Basic Lease Provisions and the Lease, the Basic Lease
Provisions shall control.

	
  Date (for reference

  	
   

  	
   

  
	
  purposes only):

  	
   

  	
  May 24, 2007

  
	
   

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
  CROWN CARNEGIE ASSOCIATES, LLC, a Delaware limited
  liability company.

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  ITERIS, INC., a Delaware corporation.

  
	
   

  	
   

  	
   

  
	
  Premises (Article 2):

  	
   

  	
  The space on the first and second floors of the
  Project, outlined in Exhibit A, containing approximately 52,116 rentable
  square feet in the aggregate, and 47,252 usable square feet in the aggregate (as
  measured using Building Owners and Managers Association (“BOMA”) American
  National Standard Z65.1-1996 as a guideline) (of which approximately 39,482
  rentable square feet and 35,482 usable square feet are located on the first
  floor of the Project and commonly referred to as Suite 100 (“Suite 100”), and
  of which approximately 12,634 rentable square feet and 11,770 usable square
  feet are located on the second floor of the Project and commonly referred to
  as Suite 200 (“Suite 200”)).

  
	
   

  	
   

  	
   

  
	
  Project:

  	
   

  	
  That certain office
  building whose address is
  1700 East Carnegie Avenue, Santa Ana, California 92705, consisting of
  approximately 76,516 rentable square feet.

  
	
   

  	
   

  	
   

  
	
  Development:

  	
   

  	
  The multi-building project commonly known as Freeway
  Corporate Park, with an aggregate of approximately 128,266 rentable
  square feet, as the same may be adjusted by Landlord from time to time.

  
	
   

  	
   

  	
   

  
	
  Lease Term (sometimes referred

  	
   

  	
   

  
	
  to in the Lease as the “Term”)

  	
   

  	
   

  
	
  (Article 1):

  	
   

  	
  Eighty-eight months (see below).

  
	
   

  	
   

  	
   

  
	
  Commencement Date:

  	
   

  	
  Subject to the following provisions of this
  paragraph, the earliest of (i) the date Tenant first commences to
  conduct business in any portion of the Premises, (ii) the date of Substantial
  Completion of the Tenant Improvements (as each such term is defined in the
  Work Letter Agreement attached hereto as Exhibit ”D”), or (iii)
  September 17, 2007 (the “9/17 Date”) (regardless of the degree of
  construction of the Tenant Improvements). It is understood, however, that the
  above Commencement Date assumes a delivery of Suite 200 to Tenant on or
  before July 1, 2007. If Suite 200 is delivered to Tenant after July 1, 2007,
  then (a) there shall be two (2) Commencement Dates under this Lease (which
  could, however, still occur on the same day), as follows: (1) the
  Commencement Date for Suite 100 shall be the earliest of (i) the date Tenant
  first commences to conduct business in any portion of Suite 100, (ii) the
  date of Substantial Completion of the portion of the Tenant Improvements to
  be constructed in Suite 100, or (iii) the 9/17 Date (regardless of the degree
  of construction of the Tenant Improvements); and (2) the Commencement Date
  for Suite 200 shall be the earliest of (i) the date Tenant first
  commences to conduct business in any portion of Suite 200, (ii) the date of
  Substantial Completion of the portion of the Tenant Improvements to be
  constructed in Suite 200 pursuant to Exhibit “D”, or (iii) the Suite 200 Hard
  Date (as defined below) (regardless of the degree of construction of the
  Tenant Improvements); the “Suite 200 Hard Date” is defined as the 9/17 Date,
  plus the number of days during the period (if any) between July 1, 2007 and
  the date of the delivery of Suite 200 to Tenant (or any earlier date delivery
  would have occurred absent delays in delivery caused by Tenant or any of the
  Tenant Parties, as defined in Section 9.5 below); for example, if Suite 200
  was

  

 1
 

 

	
  

  	
   

  	
  delivered to Tenant on July 5, 2007, then the Suite
  200 Hard Date would be September 20, 2007 (i.e., 9/17, plus the 3 days
  attributable to 7/2, 7/3 and 7/4).  In
  the event the two (2) Commencement Dates occur on different dates, then
  during the period in which only one (1) Commencement Date has occurred, Base
  Rent, parking rights and Tenant’s Share shall be equitably adjusted by
  Landlord during such period based on the portion of the Premises for which
  the Commencement Date has occurred, provided that the full amount of the
  Monthly Amortized Additional Allowance and the Monthly Amortized HVAC Costs
  (as each such term is defined in Section 2.1 of Exhibit “D” attached hereto)
  shall be fully payable, without reduction, commencing on the initial
  Commencement Date.

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
  The date immediately
  preceding the eighty-eight (88) month anniversary of the initial Commencement
  Date; provided, however, that if the initial Commencement Date is a date
  other than the first day of a month, the Expiration Date shall be the last
  day of the month which is eighty-eight (88) months after the month in which
  the initial Commencement Date falls, unless extended or earlier terminated
  pursuant to this Lease.

  
	
   

  	
   

  	
   

  

 

Base
Rent

(Article 3) (subject to
increase under Section 2.1 of Exhibit “D” attached hereto):

	
  

  	
   

  	
   

  	
   

  	
  Monthly Base Rent per

  	
   

  
	
  Lease Year

  	
   

  	
  Monthly Base Rent

  	
   

  	
  Rentable Square Foot

  	
   

  
	
  1

  	
   

  	
  $

  	
  101,626.20

  	
   

  	
  $

  	
  1.95

  	
   

  
	
  2

  	
   

  	
  $

  	
  104,232.00

  	
   

  	
  $

  	
  2.00

  	
   

  
	
  3

  	
   

  	
  $

  	
  106,837.80

  	
   

  	
  $

  	
  2.05

  	
   

  
	
  4

  	
   

  	
  $

  	
  109,443.60

  	
   

  	
  $

  	
  2.10

  	
   

  
	
  5

  	
   

  	
  $

  	
  112,049.40

  	
   

  	
  $

  	
  2.15

  	
   

  
	
  6

  	
   

  	
  $

  	
  114,655.20

  	
   

  	
  $

  	
  2.20

  	
   

  
	
  7

  	
   

  	
  $

  	
  117,261.00

  	
   

  	
  $

  	
  2.25

  	
   

  
	
  8

  	
   

  	
  $

  	
  119,866.80

  	
   

  	
  $

  	
  2.30

  	
   

  

 

	
  Tenant’s Share:

  	
   

  	
  68.111% with respect to the Project (and 40.631%
  with respect to the Development)

  
	
   

  	
   

  	
   

  
	
  Base Year:

  	
   

  	
  Calendar Year 2008.

  
	
   

  	
   

  	
   

  
	
  Parking (Article 13):

  	
   

  	
  One hundred seventy (170) unreserved parking spaces,
  in accordance with the provisions set forth in Article 13 below, and other
  uses of the Parking Lot in accordance with the provisions set forth in
  Section 8.3 of this Lease.

  
	
   

  	
   

  	
   

  
	
  Security Deposit (Article 5):

  	
   

  	
  $131,853.48.

  
	
   

  	
   

  	
   

  
	
  Permitted Use:

  	
   

  	
   

  
	
  (Article 8):

  	
   

  	
  Subject to the terms of this Lease (including,
  without limitation, Article 8 of this Lease), and all zoning and other laws,
  rules, regulations, codes and ordinances, and matters of record, general
  business office use, and use for light manufacturing and distribution of
  automotive sensors and roadway sensors/ancillary equipment, all consistent
  with the character of a first-class office building, and no other use. For
  the purposes of this Lease, (i) automotive sensors are electronic devices
  mounted in or on a car or truck that acquire images of the environment in or
  around a vehicle and process the images to acquire information to provide
  driver alerts, operate automotive equipment, or perform similar functions;
  and (ii) roadway sensors/ancillary equipment are electronic devices mounted
  at intersections or along roadways that acquire images of the roadway and process
  the images to acquire information for operating traffic signals or for
  traffic information, management and control purposes.

  
	
   

  	
   

  	
   

  
	
  Rent Payment Address (Article 3):

  	
   

  	
  c/o Crown Realty & Development, Inc.

  
	
   

  	
   

  	
  18201 Von Karman Avenue, Suite 950

  
	
   

  	
   

  	
  Irvine, California 92612

  

 2
 

 

	
  

  	
   

  	
  Attn: Property Management

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address (Article 28):

  	
   

  	
  c/o Crown Realty & Development, Inc.

  
	
   

  	
   

  	
  18201 Von Karman Avenue, Suite 950

  
	
   

  	
   

  	
  Irvine, California 92612

  
	
   

  	
   

  	
  Attn: Property Management

  
	
   

  	
   

  	
   

  
	
  Landlord’s Broker (Section 31.1):

  	
   

  	
  Grubb & Ellis

  
	
   

  	
   

  	
   

  
	
  Tenant’s Broker (Section 31.1):

  	
   

  	
  Cushman & Wakefield

  

 

 3

LEASE

This Lease (together with
the Basic Lease Provisions and Exhibits “A” through “I” which are
incorporated into the Lease by this reference, collectively the “Lease”) is
made as of the date specified in the Basic Lease Provisions, by and between CROWN CARNEGIE ASSOCIATES, LLC, a Delaware
limited liability company (“Landlord”), and ITERIS, INC., a Delaware
corporation (“Tenant”).  Landlord hereby
leases to Tenant and Tenant hereby leases from Landlord the Premises for the
Term, upon the terms and conditions set forth in this Lease.

Article 1 - Term.

1.1                                 The
Term of this Lease shall commence on the initial Commencement Date as set forth
in the Basic Lease Provisions and shall end on the Expiration Date set forth in
the Basic Lease Provisions.  If Landlord does
not deliver possession of the Premises to Tenant on or before any estimated
Commencement Date (or any other date), Landlord shall not be subject to any
liability for its failure to do so, and such failure shall not affect the
validity of this Lease nor the obligations of Tenant hereunder.  For purposes of this Lease, the term “Lease
Year” shall mean each consecutive twelve (12) month period during the Lease
Term, with the first Lease Year commencing on the initial Commencement Date;
however, (a) if the initial Commencement Date falls on a day other than
the first day of a calendar month, the first Lease Year shall end on the last
day of the eleventh (11th) month after the initial Commencement Date and the
second (2nd) and each succeeding Lease Year shall commence on the first day of
the next calendar month, and (b) the last Lease Year shall end on the
Expiration Date.

Notwithstanding the
foregoing, if Suite 200 has not been delivered to Tenant on or prior to August
31, 2007 (the “Deadline Date”) (as such date may be extended, as set forth in
the last sentence of this paragraph), then, as Tenant’s sole and exclusive
remedy, Tenant shall receive one (1) day’s credit of Monthly Base Rent for
Suite 200 only against Monthly Base Rent next due under this Lease for Suite
200 for each day, if any, that occurs during the period, if any, falling after
the Deadline Date and prior to the delivery of Suite 200 to Tenant.  Notwithstanding the foregoing or anything to
the contrary set forth in this Lease, the Deadline Date shall be extended one
(1) day for each day on which there is any delay in the delivery of Suite 200
to Tenant caused by the acts or omission of Tenant or any of the Tenant Parties
or Force Majeure (as defined in Article 25 below).

1.2                                 Landlord
hereby grants the original Tenant named in this Lease (“Original Tenant”) one
(1) option (the “Option”) to extend the Lease Term for a period of five (5)
years (the “Option Term”), which Option shall be exercisable only by written
notice delivered by Tenant to Landlord as set forth below.  The rights contained in this Section 1.2
shall be personal to the Original Tenant and may only be exercised by the
Original Tenant (and not any assignee, sublessee or transferee of the Original
Tenant’s interest in this Lease) if the Original Tenant occupies the entire
Premises as of the date of Tenant’s Acceptance (as defined below).

1.2.1                        The rent
payable by Tenant during the Option Term (“Option Rent”) shall be equal to the “Market
Rent” (defined below).  “Market Rent”
shall mean the applicable Monthly Base Rent, including all escalations, Direct
Expenses, additional rent and other charges at which tenants, as of the
commencement of the Option Term, are leasing non-renewal, non-sublease,
non-equity space comparable in size, location and quality to the Premises for a
term comparable to the Option Term, which comparable space is located in the
Project and in office buildings comparable to the Project in the “Airport Area”
sub-market in the Orange County, California office market taking into
consideration the value of the existing improvements in the Premises to Tenant,
as compared to the value of the existing improvements in such comparable space,
with such value to be based upon the age, quality and layout of the
improvements and the extent to which the same could be utilized by Tenant.

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

to the Option Rent
contained in the Option Rent Notice, in which case the parties shall follow the
procedure and the Option Rent shall be determined, as set forth in Section
1.2.3 below.

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

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

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

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

(d)                                 If
either Landlord or Tenant fails to appoint an arbitrator within ten (10) days
after the applicable Outside Agreement Date, the arbitrator appointed by one of
them shall reach a decision, notify Landlord and Tenant thereof, and such
arbitrator’s decision shall be binding upon Landlord and Tenant.  If the two arbitrators fail to agree upon and
appoint a third arbitrator, or both parties fail to appoint an arbitrator, then
the appointment of the third arbitrator or any arbitrator shall be dismissed
and the matter to be decided shall be forthwith submitted to arbitration under
the provisions of the American Arbitration Association, but subject to the
instructions set forth herein.

1.3                                 Subject
to the timely vacation and surrender of the exiting tenant in Suite 200, and
subject to the acts or omissions of Tenant (or any Tenant Parties) and Force
Majeure (as defined in Article 25), Landlord shall use commercially reasonable
efforts to deliver Suite 200 to Tenant on or before July 1, 2007.

Article 2 –
Premises: Landlord and Tenant hereby stipulate that the
Premises contains the number of square feet specified in the Basic Lease
Provisions.  Upon the request of the
other party, Tenant and Landlord shall deliver to each other a Commencement
Letter in a form substantially similar to that attached hereto as Exhibit “C”,
within ten (10) business days of receipt thereof; provided that failure to
execute and deliver the Commencement Letter shall not in any way affect the
validity of this Lease, or any of the terms of this Lease.  Tenant hereby agrees that, except for latent
defects in the structure of the Premises, and subject to Landlord’s obligations
under Section 6.1 below, the Premises shall be taken “as is”, “with all faults”,
“without any representations or warranties”, and Tenant hereby agrees and
warrants that it has investigated and inspected the condition of the Premises
and the suitability of same for Tenant’s purposes, and Tenant does hereby waive
and disclaim any objection to, cause of action based upon, or claim that its
obligations hereunder should be reduced or limited because of the condition of
the Premises or the Project or the suitability of same for Tenant’s
purposes.  Landlord hereby represents
that, to Landlord’s actual knowledge, as of the date of this Lease, Landlord
has not received written notice from a governmental entity stating that the
Premises are in violation of applicable laws relating to the Premises.  Except as expressly set forth in the
preceding sentence, Tenant acknowledges that neither Landlord nor any agent nor
any employee of Landlord has made any representations or warranty with respect
to the Premises or the Project or with respect to the suitability of either for
the conduct of Tenant’s business and Tenant expressly warrants and represents
that Tenant has relied solely on its own investigation and inspection of the
Premises and the Project in its decision to enter into this Lease and let the
Premises in the above-described condition. 
The Premises shall be initially
improved as provided in, and subject to, the Tenant Work Letter attached hereto
as Exhibit “D” and made a part hereof. 
The existing leasehold improvements in the Premises as of the date of
this Lease, together with the Tenant Improvements (as defined in the Tenant
Work Letter) may be collectively referred to herein as the “Tenant Improvements”.  The taking of possession of the Premises by
Tenant shall conclusively establish that the Premises and the Project were at
such time in satisfactory condition, except for latent defects in the structure
of the Premises, and Landlord’s obligations under Section 6 below.  Tenant hereby waives subsection 1 of Section
1932 and Sections 1941 and 1942 of the Civil Code of California or any
successor provision of law.

 2
 

Article 3 – Base Rent:

3.1                                 Tenant
agrees to pay to Landlord during the Term hereof, at Landlord’s rent payment
address set forth in the Basic Lease Provisions or to such other person or at
such other place as directed from time to time by written notice to Tenant from
Landlord, the monthly sums set forth the Basic Lease Provisions (together with
the Monthly Amortized Additional Allowance, if any, and the Monthly Amortized
HVAC Costs), payable in advance on the first day of each calendar month,
without demand, setoff or deduction, and in the event this Lease commences or
the date of expiration of this Lease occurs other than on the first day or last
day of a calendar month, the rent for such month shall be prorated.  Notwithstanding the foregoing, the first full
month’s Base Rent shall be paid by Tenant to Landlord concurrently with Tenant’s
execution of this Lease.

3.2                                 Provided
that Tenant is not then in material default under this Lease beyond any
applicable notice and cure periods, and has not been in material default under
this Lease beyond any applicable notice and cure periods, Tenant shall be
credited with the payment of monthly Base Rent with respect to the Premises for
the second (2nd) through fifth (5th) full calendar months immediately following
the final Commencement Date (for a total Base Rent credit under this paragraph
of $406,504.80, subject to the terms hereof). 
No such Base Rent credit shall reduce the amount of Additional Rent (or
the Monthly Amortized Additional Allowance, if any, or the Monthly Amortized
HVAC Costs) or other amounts which are otherwise payable by Tenant under this
Lease.  Tenant understands and agrees
that the foregoing Base Rent credit is conditioned upon Tenant’s not being in
material default under this Lease beyond any applicable notice and cure
periods.

Article 4 – Payment of
Operating Expenses and Tax Expenses:

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

4.2                                 As
used herein the term “Direct Expenses”
shall mean the sum of Tax Expenses and Operating Expenses, as each such term is
defined below.

4.2.1                        “Operating Expenses” means all costs
and expenses incurred by Landlord in connection with the maintenance,
operation, replacement, ownership and repair of the Project, the equipment, the
intrabuilding cabling and wiring, adjacent walks, malls and landscaped and
common areas and the parking structure, areas and facilities of the Project,
including, but not limited to, salaries, wages, medical, surgical and general
welfare benefits and pension payments, payroll taxes, fringe benefits,
employment taxes, workers’ compensation, uniforms and dry cleaning thereof for
all persons who perform duties connected with the operation, maintenance and
repair of the Project, its equipment, the intrabuilding cabling and wiring and
the adjacent walks and landscaped areas, including janitorial, gardening,
security, parking, operating engineer, elevator, painting, plumbing, heating,
ventilating, air conditioning, carpentry, window washing, hired services, a
reasonable allowance for depreciation of the cost of acquiring or the rental
expense of personal property used in the maintenance, operation and repair of
the Project, accountant’s fees incurred in the preparation of rent adjustment
statements, legal fees, real estate tax consulting fees, personal property
taxes on property used in the maintenance and operation of the Project, fees,
costs, expenses or dues payable pursuant to the terms of any covenants,
conditions or restrictions or owners’ association pertaining to the Project,
capital expenditures incurred to effect economies of operation of, or stability
of services to, the Project and capital expenditures required by government
regulations, laws, or ordinances including, but not limited to the Americans
with Disabilities Act; the cost of all charges for electricity, gas, water,
heating, ventilation and air conditioning and other utilities furnished to the
Project; the cost of all charges for fire and extended coverage, liability and
all other insurance in connection with the Project carried by Landlord; the
cost of all building and cleaning supplies and materials; the cost of all
charges for cleaning, maintenance and service contracts and other services with
independent contractors and administration fees; a commercially reasonable
property management fee (which fee may be imputed if Landlord has internalized
management or otherwise acts

 3
 

as its own property
manager) and license, permit and inspection fees relating to the Project.  In the event, during any calendar year, the
Project is less than one hundred percent (100%) occupied at all times,
Operating Expenses shall be adjusted to reflect the Operating Expenses of the
Project as though one hundred percent (100%) were occupied at all times, and
the increase or decrease in the sums owed hereunder shall be based upon such
Operating Expenses as so adjusted.

Operating
Expenses shall not include:

(A)                              Any
ground lease rental;

(B)                                Costs
incurred by Landlord for the repair of damage to the Project, to the extent
that Landlord is reimbursed by insurance proceeds;

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

(D)                               Depreciation,
amortization and interest payments, except as provided herein and except on
materials, tools, supplies and vendor-type equipment purchased by Landlord to
enable Landlord to supply services Landlord 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, and
when depreciation or amortization is permitted or required, the item shall be
amortized over its reasonably anticipated useful life;

(E)                                 Marketing
costs, including leasing commissions, attorneys’ fees in connection with the
negotiation and preparation of letters of intent, leases, subleases and/or
assignments and space planning costs;

(F)                                 Reserves
for bad debts;

(G)                                Overhead
and profit increment paid to Landlord or to subsidiaries or affiliates of
Landlord for goods and/or services in or to the Project to the extent the same
unreasonably exceeds a competitive cost given the quality of such goods and/or
services;

(H)                               Interest,
principal, points and fees on debts or amortization on any mortgage or
mortgages or any other debt instrument encumbering the Project (except as
permitted above);

(I)                                    Landlord’s
general corporate overhead expenses;

(J)                                   Advertising
and promotional expenditures;

(K)                               The
cost of any electric power for which any tenant directly contracts with the
local public service company or of which any tenant is separately metered or
submetered and pays Landlord directly; provided, however, that if any tenant in
the Project contracts directly for electric power service or is separately
metered or submetered during any portion of the relevant period, the total
electric power costs for the Project shall be “grossed up” to reflect what
those costs would have been had each tenant in the Project used the
Project-standard amount of electric power;

(L)                                 Management
fees substantially in excess of those management fees which are normally and
customarily charged by landlords of comparable buildings in the vicinity of the
Project;

(M)                            Costs
arising from Landlord’s charitable or political contributions;

(N)                               Costs
for the acquisition of (as contrasted with the maintenance of) sculptures,
paintings or other objects of art;

(O)                               Costs
associated with the operation of the business of the partnership or entity
which constitutes Landlord as the same are distinguished from the costs of
operation of the Project, including partnership accounting and legal matters,
costs of defending any lawsuits with or claims by any mortgagee, costs of
selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s
interest in the Project, costs of any disputes between Landlord and its
employees (if any) not engaged in Project operation, disputes of Landlord with
Project management, or outside fees paid in connection with disputes with other
tenants;

(P)                                 
Capital improvements, except for those (i) acquired in Landlord’s reasonable
judgment to reduce Operating Expenses (amortized at an annual rate which when
added to interest costs is reasonably calculated to equal the amount of
Operating Expenses saved in each calendar

 4
 

year
throughout the Lease Term), together with interest at 9% per annum, compounded,
and/or (ii) incurred after the date of this Lease in order to comply with any
governmental law, rule, code, ordinance or regulation, provided that such
capital costs shall be amortized over their useful lives, as determined by
generally accepted accounting principles, together with interest at 9% per
annum, compounded;

(Q)                               Any
travel expenses;

(R)                                Any
flowers, gifts, balloons, etc. provided to any entity whatsoever, including,
but not limited to, Tenant, other tenants, employees, vendors, contractors,
prospective tenants and agents;

(S)                                 Any
“finders fees”, brokerage commissions, job placement costs or job advertising
cost;

(T)                                Costs
of earthquake insurance (unless earthquake insurance is maintained in the Base
Year or unless Operating Expenses during the Base Year are grossed up to
reflect the amount of Operating Expenses which would have been incurred by
Landlord during the Base Year had Landlord carried earthquake insurance);

(U)                               Costs
of terrorism insurance (unless terrorism insurance is maintained in the Base
Year or unless Operating Expenses during the Base Year are grossed up to
reflect the amount of Operating Expenses which would have been incurred by
Landlord during the Base Year had Landlord carried terrorism insurance);

(V)                                Costs
incurred to (i) comply with laws relating to the removal of any Hazardous
Material, as that term is defined in Article 14 of this Lease, which was
in existence on the Project prior to the initial Commencement Date, and was of
such a nature that a federal, state or municipal governmental authority, if it
had then had knowledge of the presence of such Hazardous Material, in the
state, and under the conditions that it then existed on the Project, would have
then required the removal of such Hazardous Material or other remedial or
containment action with respect thereto, and (ii) to remove, remedy,
contain, or treat any Hazardous Material, which Hazardous Material is brought
onto the Project after the date hereof by Landlord or any other tenant of the
Project, and is of such a nature, at that time, that a federal, state or
municipal governmental authority, if it had then had knowledge of the presence
of such Hazardous Material, in the state, and under the conditions, that it
then exists on the Project, would have then required the removal of such
Hazardous Material or other remedial or containment action with respect
thereto;

(W)                           The cost of repairs or other work occasioned
by fire, windstorm or other casualty reimbursed to Landlord, other than as part
of Operating Expenses;

(Y)                                Costs resulting from the correction of any
latent construction defects in the initial construction of all or any portion
of the Project or Development, or any condition of the Project that is, as of
the date of this Lease, not in compliance with applicable laws, codes, rules or
regulations existing as of the date of this Lease;

(Z)                                Monetary rental concessions or lease buyouts;

(AA)                    The costs of tenant improvements for, or
decorating, painting or redecorating space (exclusive of common areas) for, the
interior of premises of any other tenants or other occupants of the Project or
Development;

(BB)                        Overhead or profit paid to Landlord,
subsidiaries or affiliates of Landlord, for services on or to the Project or
Development if and to the extent the cost therefor materially and unreasonably
exceeds competitive costs for such services in comparable buildings located
within five (5) miles of the Project;

(CC)                        All items, services and/or goods for which
Tenant or any other tenant, occupant, person or other party reimburses Landlord
directly, other than as part of Operating Expenses or similar pass-through
amounts;

(DD)                      Legal fees expended by Landlord in connection
with negotiating and entering into any leases and any related instruments (including,
without limitation, guaranties, surrender agreements, leasing amendments and
consents to assignment or subletting) with any tenant or other occupant of any
portion of the Project or Development, and the enforcement of any such
instruments; or which are expended or incurred by Landlord in connection with
the negotiation and entering of sale, ground lease, financing, partnership or
similar transactions pertaining to the Project or Development;

(EE)                          Wages, salaries and other compensation paid
to executives of Landlord, in their capacities as executives;

 5
 

(FF)                          The cost of defending against claims in
regard to the existence or release of Hazardous Materials by Landlord at the
Project or Development; and

(GG)                        Interest, penalties or damages incurred by
Landlord for late payment of taxes or assessments or under any agreement to
which Landlord is a party by reason of the breach or default of Landlord.

Landlord further
agrees that since one of the purposes of Operating Expenses and the gross-up
provision is to allow Landlord to require Tenant to pay for the cost
attributable to its Premises, Landlord agrees that (i) Landlord will not
collect or be entitled to collect Operating Expenses from all of its tenants in
an amount which is in excess of 100% of the Operating Expenses actually
paid/incurred by Landlord, and (ii) Landlord shall make no profit from Landlord’s
collection of Operating Expenses.  The
foregoing does not limit any management fees that may be charged by Landlord
under this Lease.

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

4.2.3                        If for any
calendar year ending or commencing within the Term, Tenant’s Share of Direct
Expenses for such calendar year exceeds Tenant’s Share of Direct Expenses for
the Base Year, then Tenant shall pay to Landlord, in the manner set forth
below, and as Additional Rent, an amount equal to the excess (the “Excess”).

4.2.4                        Landlord
shall give Tenant a yearly expense estimate statement (the “Estimate Statement”) which shall set forth
Landlord’s reasonable estimate (the “Estimate”) of what the total amount
of Direct Expenses for the then-current calendar year shall be and the
estimated Excess (the “Estimated Excess”)
as calculated by comparing Tenant’s Share of Direct Expenses for such calendar
year, which shall be based upon the Estimate, to Tenant’s Share of Direct
Expenses for the Base Year.  The failure
of Landlord to timely furnish the Estimate Statement for any calendar year
shall not preclude Landlord from subsequently enforcing its rights to collect
any Estimated Excess under this Section 4.2, once such Estimated Excess has
been determined by Landlord.  If pursuant
to the Estimate Statement an Estimated Excess is calculated for the
then-current calendar year, Tenant shall pay, with its next installment of
monthly Base Rent due, a fraction of the Estimated Excess for the then-current
calendar year (reduced by any amounts paid pursuant to the last sentence of
this Section 4.2.4).  Such fraction shall
have as its numerator the number of months which have elapsed in such current
calendar year to the month of such payment, both months inclusive, and shall
have twelve (12) as its denominator. 
Until a new Estimate Statement is furnished, Tenant shall pay monthly,
with the monthly Base Rent installments, an amount equal to one-twelfth (1/12)
of the total Estimated Excess set forth in the previous Estimate Statement
delivered by Landlord to Tenant.

4.2.5                        In
addition, Landlord shall use commercially reasonable efforts to give to Tenant
as soon as reasonably practicable following the end of each calendar year (and
Landlord shall use commercially reasonable efforts to do so by April 1 of each
calendar year), a statement (the “Statement”) which shall state the Direct
Expenses incurred or accrued for such preceding calendar year, and which shall
indicate the amount, if any, of the Excess. 
Upon receipt of the Statement for each calendar year

 6
 

during the Term, if
amounts paid by Tenant as Estimated Excess are less than the actual Excess as
specified on the Statement, Tenant shall pay, with its next installment of
monthly Base Rent due, the full amount of the Excess for such calendar year,
less the amounts, if any, paid during such calendar year as Estimated
Excess.  If, however, the Statement
indicates that amounts paid by Tenant as Estimated Excess are greater than the
actual Excess as specified on the Statement, such overpayment shall be credited
against Tenant’s next installments of Estimated Excess.  Subject to the last sentence of this Section
4.2.5, the failure of Landlord to timely furnish the Statement for any calendar
year shall not prejudice Landlord from enforcing its rights under this Section
4.2, once such Statement has been delivered. 
Even though the Term has expired and Tenant has vacated the Premises,
when the final determination is made of Tenant’s Share of the Direct Expenses
for the calendar year in which this Lease terminates, if an Excess is present,
Tenant shall immediately pay to Landlord an amount as calculated pursuant to
the provisions of this Section 4.2.  The
provisions of this Section 4.2 shall survive the expiration or earlier
termination of the Lease Term.  Notwith­standing
the immediately preceding sentence, (A) Tenant shall not be responsible for
Tenant’s Share of any Direct Expenses attributable to any calendar year which
are first billed to Tenant more than two (2) years after the expiration of the
applicable calendar year, provided that in any event Tenant shall be
responsible for Tenant’s Share of Direct Expenses levied by any governmental
authority or by any public utility companies at any time (provided that
Landlord delivers Tenant a bill for such amounts within two (2) years following
Landlord’s receipt of the bill therefor), and (B) Tenant shall not be
responsible for Tenant’s Share of any Direct Expenses attributable to any
calendar year which are first billed to Tenant more than eighteen (18) months
after the expiration of the Term (as the same may be extended), provided that
in any event Tenant shall be responsible for Tenant’s Share of Direct Expenses
levied by any governmental authority or by any public utility companies at any
time (provided that Landlord delivers Tenant a bill for such amounts within
eighteen (18) months following Landlord’s receipt of the bill therefor).

4.2.6                        Those
Direct Expenses attributable to the Development as a whole (and not
attributable solely to any individual building therein) may, in Landlord’s
discretion, be allocated by Landlord, in good faith, to the Project and to the
other buildings within the Development on an equitable basis.

4.2.7                        Within six
(6) months after receipt of a Statement by Tenant (“Review Period”), if Tenant
disputes the amount set forth in the Statement, a certified public accountant
that is a partner in Tenant or an independent certified public accountant
(which accountant is a member of a nationally, regionally or locally recognized
accounting firm and is hired on a non-contingency fee basis) designated by
Tenant, may, after reasonable notice to Landlord and at reasonable times,
inspect Landlord’s records at Landlord’s offices, provided that Tenant is not
then in default after expiration of all applicable cure periods  of any obligation under this Lease
(including, but not limited to, the payment of the amount in dispute) and
provided further that Tenant and such accountant or representative shall, and
each of them shall use their commercially reasonable efforts to cause their
respective agents and employees to, maintain all information contained in
Landlord’s records in strict confidence. 
Notwithstanding the foregoing, Tenant shall only have the right to
review Landlord’s records one (1) time during any twelve (12) month
period.  Tenant’s failure to dispute the
amounts set forth in any Statement within the Review Period shall be deemed to
be Tenant’s approval of such Statement and Tenant, thereafter, waives the right
or ability to dispute the amounts set forth in such Statement.  If after such inspection, but within thirty
(30) days after the Review Period, Tenant notifies Landlord in writing that
Tenant still disputes such amounts, a certification as to the proper amount
shall be made in accordance with Landlord’s standard accounting practices, at
Tenant’s expense, by an independent certified public accountant selected by
Landlord and who is a member of a nationally or regionally recognized
accounting firm, which certification shall be binding upon Landlord and
Tenant.  Landlord shall cooperate in good
faith with Tenant and the accountant to show Tenant and the accountant the
information upon which the certification is to be based.  However, if such certification by the
accountant proves that the Direct Costs set forth in the Statement were
overstated by more than five percent (5%), then the cost of the accountant and
the cost of such certification shall be paid for by Landlord, up to the amount
of the overstatement in question. 
Promptly following the parties receipt of such certification, the
parties shall make such appropriate payments or reimbursements, as the case may
be, to each other, as are determined to be owing pursuant to such
certification.  Tenant agrees that this
paragraph shall be the sole method to be used by Tenant to dispute the amount
of any Direct Costs payable by Tenant pursuant to the terms of this Lease, and
Tenant hereby waives any other rights at law or in equity relating thereto.

Article 5 – Security
Deposit:  Tenant shall
deposit with Landlord the sum set forth in the Basic Lease Provisions as
security for the full and faithful performance of every provision of this Lease
to be performed by Tenant.  If Tenant
defaults under any provision of this Lease beyond any applicable notice and
cure periods, including but not limited to the payment of rent, Landlord may
use all or any part of this security deposit for the payment of any rent or any
other sums in default, or to compensate Landlord for any other loss or damage
which Landlord may suffer by reason of Tenant’s default.  If any portion of said deposit is so used or
applied, Tenant shall, within ten (10) days after written demand therefor,
deposit cash with Landlord in an amount sufficient to restore the security
deposit to its full amount.  Tenant
agrees that Landlord shall not be required to keep the security deposit in
trust, segregate it or keep it separate from Landlord’s general funds, but
Landlord may commingle the security deposit with its general

 7
 

funds and Tenant shall
not be entitled to interest on such deposit. 
Within thirty (30) days after the expiration or earlier termination of
the Lease Term, and provided there exists no default by Tenant hereunder that
has not been cured within any applicable cure period, the security deposit or
any balance thereof shall be returned to Tenant (or, at Landlord’s option, to
Tenant’s “Transferee”, as such term is defined in Article 10 below).  Tenant hereby waives the provisions of
Section 1950.7 of the California Civil Code and all other provisions of
law, now or hereafter in effect, which provide, among other things, that
Landlord may claim from a security deposit only those sums reasonably necessary
to remedy defaults in the payment of rent, to repair damage caused by Tenant or
to clean the Premises, it being agreed that Landlord may, in addition, claim
those sums specified in this Article 4 above, all of Landlord’s damages
under this Lease and California law including, but not limited to, any damages
accruing upon termination of this Lease under Section 1951.2 of the
California Civil Code and/or those sums reasonably necessary to compensate
Landlord for any other loss or damage, foreseeable or unforeseeable, caused by
the acts or omissions of Tenant or any of the Tenant Parties.

Article 6 – Repairs and
Maintenance:

6.1                                 Subject
to Tenant’s obligations under Section 2.1.3 of Exhibit “D”, Landlord shall maintain,
as part of Operating Expenses, the structural portions of the Project,
including the foundation, floor/ceiling slabs, roof, roof membrane, curtain
wall, exterior glass, columns, beams, shafts, stairs, stairwells, elevator cabs
and common areas (including common area restrooms), and shall also maintain and
repair the base building mechanical, electrical, life safety, plumbing,
sprinkler systems and heating, ventilating and air-conditioning systems, all in
a manner consistent of that at comparable first-class office buildings in
Orange County, California (“Comparable Buildings”).  Except
as may be set forth to the contrary in this Lease (including, without
limitation, in Section 6.2 below), Tenant shall not be required to make any
repair to, modification of, or addition to any such Project structure and/or
systems, except and to the extent required because of Tenant’s Alterations or
improvements, Tenant’s breach of this Lease or Tenant’s occupancy or use of all
or a portion of the Premises for other than normal and customary business
office operations.  The management of the
Building shall be conducted by Landlord, an affiliate of Landlord or a
third-party management company and shall be consistent with that at Comparable
Buildings.

6.2                                 Except
as expressly provided as Landlord’s obligation in Section 6.1 above, Tenant
shall keep the Premises in good condition and repair, normal wear and tear
excepted.  All damage or injury to the
Premises or the Project or Development resulting from the act or negligence of
Tenant, any of the Tenant Parties, or by the use of the Premises, shall be
promptly repaired by Tenant at its sole cost and expense, to the satisfaction
of Landlord; provided, however, that for damage to the Project or Development
as a result of casualty or for any repairs that may impact the mechanical,
electrical, plumbing, heating, ventilation or air-conditioning systems of the
Project, Landlord shall have the right (but not the obligation) to select the
contractor and oversee all such repairs. 
Landlord may make any repairs which are not promptly made by Tenant
after Tenant’s receipt of written notice and the reasonable opportunity of
Tenant to make said repair within thirty (30) days (or such shorter time as may
be reasonably necessary in the event of emergency) from receipt of said written
notice, and charge Tenant for the cost thereof, which cost shall be paid by
Tenant within five (5) business days from invoice from Landlord.  Tenant shall be responsible for the design
and function of all non-standard improvements of the Premises, whether or not
installed by Landlord at Tenant’s request. 
Except as may be set forth to the contrary in this Lease, Tenant waives
all rights to make repairs at the expense of Landlord, or to deduct the cost
thereof from the rent.

Article 7 – Utilities;
Services:

7.1                                 Subject
to Tenant’s obligations under Section 2.1.3 of Exhibit “D”, Landlord agrees to
furnish to the Premises, at a cost to be included in Operating Expenses, from
8:00 a.m. to 6:00 p.m. Mondays through Fridays and 9:00 a.m. to 1:00 p.m. on
Saturdays, excepting holidays (i.e., New Years Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving, the day following Thanksgiving and Christmas
Day), air conditioning and heat all in such reasonable quantities as reasonably
necessary for the comfortable occupancy of the Premises.  In addition, Landlord shall, as part of
Operating Expenses, provide electric current for normal lighting and normal
office machines, elevator service and water on the same floor as the Premises
for lavatory and drinking purposes in such reasonable quantities as reasonably
necessary for general office use and in compliance with applicable codes.  Subject to the last paragraph of this Section
7.1 below, janitorial services shall be furnished as part of Operating Expenses
five (5) days per week, excepting local and national holidays, substantially in
accordance with Exhibit “G” attached hereto (with reasonable modifications from
time to time by Landlord).  Such
janitorial services shall be consistent with those provided at comparable
buildings in the general market area. 
Tenant shall comply with all reasonable, non-discriminatory rules and
regulations which Landlord may establish for the proper functioning and
protection of the common area air conditioning, heating, elevator, electrical,
intrabuilding cabling and wiring and plumbing systems.  Landlord shall not be liable for, and, except
to the extent set forth in Section 7.7 below, there shall be no rent abatement
as a result of, any stoppage, reduction or interruption of any such services
caused by governmental rules, regulations or ordinances, riot, strike,

 8
 

labor disputes,
breakdowns, accidents, necessary repairs or other cause.  Except as specifically provided in this
Article 7, Tenant agrees to pay for all utilities and other services
utilized by Tenant and any additional building services furnished to Tenant
which are not uniformly furnished to all tenants of the Project, at the rate
generally charged by Landlord to tenants of the Project for such utilities or
services.  If Tenant shall require
electric current in excess of that which Landlord is obligated to furnish under
this Section 7.1, Tenant shall first obtain the written consent of Landlord,
which Landlord may refuse in its reasonable discretion.  Additionally, Landlord may cause an electric
current meter or submeter to be installed in or about the Premises to measure
the amount of any such excess electric current consumed by Tenant in the
Premises.  The cost of any such meter and
of installation, maintenance and repair thereof shall be paid for by Tenant and
Tenant agrees to pay to Landlord, promptly upon demand therefor by Landlord,
for all such excess electric current consumed by any such use as shown by said
meter at the rates charged for such service by the city in which the Project is
located or the local public utility, as the case may be, furnishing the same,
plus any additional expense incurred by Landlord in keeping account of the
electric current so consumed.  Without
limiting the foregoing, in connection with any computer server room(s) in the
Premises, and/or any environment chamber room(s) under Section 7.2 below, in
the Premises, Landlord may cause an electric current meter or submeter to be
installed in or about the Premises to measure the amount of any such excess
electric current consumed by Tenant in connection therewith.  The cost of any such meter and of
installation, maintenance and repair thereof shall be paid for by Tenant and Tenant
agrees to pay to Landlord, promptly upon demand therefor by Landlord, for all
such electric current consumed by any such use as shown by said meter at the
rates charged for such service by the city in which the Project is located or
the local public utility, as the case may be, furnishing the same, plus any
additional actual expense (without a Landlord administrative fee) incurred by
Landlord in keeping account of the electric current so consumed.  Additionally, with respect to any metered or
submetered power under this Lease, Landlord may, in its sole and absolute
discretion, require that Tenant contract directly for and timely pay (prior to
delinquency) all such power charges, together with any taxes, penalties,
surcharges or similar charges relating to the same.

If Tenant requires
heating, ventilation and/or air conditioning during times other than the times
provided in this Section 7.1, Tenant shall give Landlord such advance notice as
Landlord shall reasonably require, and Tenant shall pay Landlord’s standard
charge for such after-hours use (currently $50.00 per hour, subject to increase
from time to time, provided that such charge shall not be subject to increase
during the initial Term).

Notwithstanding anything to the contrary set forth
in the Lease, but subject to the terms of this paragraph, during the
Term, Tenant may, upon not less than thirty (30) days’ prior written notice to
Landlord elect  to have janitorial
services not be furnished by Landlord to the Premises, and in such event
(a) Landlord shall have no obligation whatsoever with respect to janitorial
services to the Premises; (b) Tenant shall, at Tenant’s sole cost and expense,
contract directly with a janitorial service provider reasonably approved in
advance by Landlord (“Tenant’s Janitorial Provider”) to provide janitorial
services to the Premises (and Tenant shall, at its sole cost and expense, keep
the Premises in a neat and clean condition at all times), and Landlord shall
have no obligation to provide any janitorial services to the Premises; and (c)
subject to the last two (2) sentences of this paragraph, Operating Expenses
shall not include Tenant’s Janitorial Costs (defined below) and Operating
Expenses for the Base Year  shall not
include Tenant’s Janitorial Costs; the term “Tenant’s Janitorial Costs” shall
mean the amount of cost savings Landlord determines it has achieved as a result
of Landlord’s janitorial service provider not performing janitorial services in
the Premises.

7.2                                 Tenant
will not, without the prior written consent of Landlord, such consent not to be
unreasonably withheld, conditioned or delayed, use any apparatus or device in
the Premises which will in any way increase the amount of electricity or water
usually furnished or supplied for use of the Premises as general office space;
nor connect any apparatus, machine or device with water pipes or electric
current (except through existing electrical outlets in the Premises), for the
purpose of using electric current or water. 
Notwithstanding the foregoing, provided Tenant does not disturb other
tenants of the Project or Development or interfere with Landlord or other
tenants of the Project or Development, subject to the terms of this Lease, all
laws, rules, regulations, codes and ordinances, matters of record, insurance
requirements, and Landlord’s safety requirements (without any representation or
warranty by Landlord as to safety), Tenant may, at Tenant’s sole cost and
expense, use in the Premises a room(s) in the Premises for “environment
chambers” (together with a related drain pipe and source of filtered water
installed by Tenant, at its sole cost and expense), meaning  ovens, that do not use Hazardous Materials,
used to simulate certain physical environments in connection with vehicle
safety and performance testing.

7.3                                 If
any lights, machines or equipment (including but not limited to computers and
computer systems and appurtenances) are used by Tenant in the Premises which
materially affect the temperature otherwise maintained by the air conditioning
system, or generate substantially more heat in the Premises than would be
generated by the building standard lights and usual office equipment, as
reasonably documented by Landlord, Landlord shall have the right to install any
machinery and equipment which Landlord reasonably deems necessary to restore temperature
balance, including but not limited to modifications to the standard air
conditioning equipment, and the cost thereof, including the

 9
 

cost of installation and
any additional cost of operation and maintenance occasioned thereby, shall be
paid by Tenant to Landlord within thirty (30) days after demand by Landlord.

7.4                                 Upon
request from Tenant from time to time, Landlord will provide Tenant with a
listing of telecommunications and media service providers serving the Project,
and Tenant shall have the right to contract directly with the providers of its
choice.  If Tenant wishes to contract
with  or obtain service from any provider
which does not currently serve the Project or wishes to obtain from an existing
carrier services which will require the installation of additional equipment,
such provider must, prior to providing service, enter into a written agreement
with Landlord setting forth the terms and conditions of the access to be
granted to such provider.  In considering
the installation of any new or additional telecommunications cabling or
equipment at the Project, Landlord will consider all relevant factors in a
reasonable and non-discriminatory manner, including, without limitation, the
existing availability of services at the Project, the impact of the proposed
installations upon the Project and its operations and the available space and
capacity for the proposed installations. 
Landlord may also consider whether the proposed service may result in
interference with or interruption of other services at the Project or the
business operations of other tenants or occupants of the Project.  In no event shall Landlord be obligated to
incur any costs or liabilities in connection with the installation or delivery
of telecommunication services or facilities at the Project.  All such installations shall be subject to
Landlord’s prior approval and shall be performed in accordance with the terms
of Article 11 below.  If Landlord
approves the proposed installations in accordance with the foregoing, Landlord
will deliver its standard form agreement upon request and will use commercially
reasonable efforts to promptly enter into an agreement on reasonable and
non-discriminatory terms with a qualified, licensed and reputable carrier
confirming the terms of installation and operation of telecommunications
equipment consistent with the foregoing.

7.5                                 Subject
to Section 7.1 above, Tenant shall not have the right to contract directly with
any provider of electrical power. 
Landlord shall, at no cost to Landlord, reasonably cooperate with Tenant
(including by communicating with Southern California Edison) in connection with
any of Tenant’s additional power or transformer upgrade requirements for the
Premises; provided, however, notwithstanding anything to the contrary in this
Lease (including, without limitation, under Exhibit “D”), all costs and
expenses in connection with the same, including, without limitation, in
connection with any upgrade, improvement or increase in electrical/power
availability, capacity, transformers or systems shall be at Tenant’s sole cost
and expense.

7.6                                 Tenant
acknowledges that Landlord’s election whether or not to provide any type of
mechanical surveillance or security personnel whatsoever in the Project is
solely within Landlord’s discretion; Landlord and the Landlord Parties (defined
in Article 9 below) shall have no liability in connection with the provision,
or lack, of such services.  Landlord and
the Landlord Parties shall not be liable for losses due to theft, vandalism, or
like causes, except to the extent of property damage caused by the gross
negligence or willful misconduct of Landlord.

7.7                                 If
Tenant is prevented from using, and does not use, the Premises or a substantial
portion thereof as a result of any negligent failure by Landlord to provide
services to the Premises that Landlord is required to provide under Section 7.1
above, and such failure did not result from a casualty covered by
Article 16 below and did not arise out of or result from, directly or
indirectly, the breach of this Lease by Tenant or the negligence or willful
misconduct of Tenant or any of the Tenant Parties (a “Prevention Event”), then
Tenant shall give written notice of such Prevention Event to Landlord.  If the Prevention Event continues for three
(3) consecutive business days (the “Prevention Period”) after Landlord’s
receipt of Tenant’s written notice, then Basic Rental shall be abated or
reduced after expiration of the Prevention Period, for such time that Tenant
continues to be so prevented from using, and does not use (as a direct result
of the Prevention Event in question), the Premises or a substantial portion
thereof, in the proportion that the rentable area of the portion of the
Premises that Tenant is prevented from using, and does not use (as a direct
result of the Prevention Event in question), bears to the total rentable area
of the Premises, provided that, subject to the foregoing provisions of this
subsection (i), Basic Rental shall be abated completely (for such time that
Tenant is prevented from using the Premises as a direct result of the
Prevention Event in question) if the portion of the Premises that Tenant is
prevented from using, and does not use, as a direct result of the Prevention
Event in question, is so significant as to make it impractical for Tenant to
conduct its business in the Premises and Tenant does not, in fact, for that
reason, conduct its business in the Premises.

Article 8 – Use:

8.1                                 Tenant
shall use and occupy the Premises only for the use set forth in the Basic Lease
Provisions and shall not use or occupy the Premises or permit the same to be
used or occupied for any other purpose without the prior written consent of
Landlord, which consent may be given or withheld in Landlord’s sole and
absolute discretion, and Tenant agrees that it will use the Premises in such a
manner so as not to unreasonably interfere with or infringe upon the rights of
other tenants or occupants in the Project. 
Tenant shall, at its sole cost and expense, promptly comply with all
laws, statutes, ordinances, governmental regulations or requirements now in
force or which may hereafter be in force relating to or

 10
 

affecting (i) the
condition, use or occupancy of the Premises or the Project (excluding
structural changes to the Project not related to Tenant’s particular use of the
Premises), and (ii) improvements installed or constructed in the Premises by or
for the benefit of Tenant.  Tenant shall
not permit more than eight (8) people per one thousand (1,000) rentable square
feet of the Premises to occupy the Premises on a regular basis.  Tenant shall not do or permit to be done
anything which would invalidate or increase the cost of any fire and extended
coverage insurance policy covering the Project and/or the property located
therein and Tenant shall comply with all rules, orders, regulations and
requirements of any organization which sets out standards, requirements or
recommendations commonly referred to by major fire insurance underwriters, and
Tenant shall promptly upon demand reimburse Landlord for any additional premium
charges for any such insurance policy assessed or increased by reason of Tenant’s
failure to comply with the provisions of this Article 8.  Tenant shall not commit or allow to be
committed or exist: (A) any waste, (B) any public or private nuisance, or (C)
any act or condition which violates any of Landlord’s contracts of which Tenant
has notice affecting any or all of the Project, creates or contributes to any
work stoppage, strike, picketing, labor disruption or dispute, unreasonably interferes
in any way with the business of Landlord or with any contractors,
subcontractors, licensees, agents, concessionaires, subtenants, servants,
employees, customers, guests, invitees or visitors or any other persons
lawfully in and upon the Project, or causes any impairment or reduction of the
good will or reputation of the Project.

8.2                                 Tenant
agrees that it will not, at any time, during the Term of this Lease, carry any
stock of goods or do anything in or about the Premises that will in any way
tend to increase the insurance rates upon the Project.  Tenant agrees to pay Landlord, within thirty
(30) days after demand, the amount of any increase in premiums for insurance
that may be carried during the Term of this Lease, or the amount of insurance
to be carried by Landlord on the Project resulting from the foregoing, or from
Tenant doing any act in or about the Premises that does so increase the
insurance rates, whether or not Landlord shall have consented to such act on
the part of Tenant.  If Tenant installs
upon the Premises any electrical equipment which causes an overload of
electrical lines of the Premises, Tenant shall at its own cost and expense, in
accordance with all other Lease provisions (specifically including, but not
limited to, the provisions of Articles 7 and 11 of this Lease), make whatever
changes are necessary to comply with requirements of the insurance underwriters
and any governmental authority having jurisdiction thereover, but nothing
herein contained shall be deemed to constitute Landlord’s consent to such
overloading.  Tenant shall, at its own
expense, comply with all insurance requirements applicable to the Premises
including without limitation, the installation of fire extinguishers.

8.3                                 Provided
Tenant is not in default under this Lease beyond applicable notice and cure
periods, and provided Tenant does not disturb other tenants of the Project or
Development or interfere with Landlord or other tenants of the Project or
Development, subject to the terms of this Lease, all laws, rules, regulations,
codes and ordinances, matters of record, insurance requirements, and Landlord’s
safety requirements (without any representation or warranty by Landlord as to
safety), during the Lease Term, (1) Tenant shall be permitted to use one (1)
forklift in the Premises for the purpose transporting goods from the loading
area at the Premises into the Premises (provided that Tenant may not use such
forklift in the front of the Premises or in any common areas of the Project or
Development other than the parking lot depicted on Exhibit “F” attached
hereto), and (2) Tenant shall have the right to (a) use up to five (5) of
Tenant’s unreserved parking spaces allocated to Tenant under this Lease, which
spaces shall be as designated by Landlord in good faith (the “Test Target Area”),
on a periodic basis so that Tenant may set up test targets to test and operate
roadway sensor and ancillary equipment from time to time reasonably approved by
Landlord, (b) use up to eighteen (18) of Tenant’s unreserved parking spaces
allocated to Tenant under this Lease, which spaces shall be as designated by
Landlord in good faith, on a periodic basis so that Tenant may install (subject
to reasonable written consent of Landlord with respect to the plans and
specifications therefor), a fenced area for overnight parking of up to eighteen
(18) vehicles, including, but not limited to, a bucket truck, arrow board
trailer and stake bed truck or trailer (the “Fenced Area”), (c) use one (1)
lane in the back of the parking lot serving the Building, in a location
designated by Landlord in good faith within a portion of the general area
depicted on Exhibit “F” attached hereto (the “Lane Test Area”), on a periodic
basis so that Tenant may test and operate certain automotive sensors mounted in
vehicles temporarily parked or standing in the test lane, and (d) install roof
and/or light pole mounted cameras, which locations shall be as designated by
Landlord in good faith to test and operate roadway sensor and ancillary
equipment, all in a manner, and at times, from time to time reasonably approved
by Landlord.  The Test Target Area,
Fenced Area, Lane Test Area and Camera Test Area are referred to collectively
herein as the “Test Area”. 
Notwithstanding anything to the contrary, any parking spaces used or
allocated to Tenant under this Section 8.3 shall reduce the amount of parking
spaces otherwise available to Tenant under this Lease.  Additionally, Tenant shall ensure, at its
sole cost and expenses, that (1) Landlord and its agents and managers have
access to the Fenced Area at all times (and are given keys and all other access
devices relating thereto), and (2) during the hours of 7:00 a.m. through 6:00
p.m., the Fenced Area shall be open such that there is ready and continuously
available free access for vehicles of other tenants (and other parties
designated by Landlord) through the Fenced Area.  Without limiting the foregoing, Tenant
acknowledges and agrees that the general locations depicted on Exhibit “F”
attached hereto are acceptable for the applicable depicted Test Area.  Notwithstanding the foregoing, (i) Tenant may
not use the Test Area for any purpose whatsoever, other than that set forth
above in this Section 8.3; without limiting the foregoing, Tenant may not
store, leave overnight or leave

 11

unattended any equipment
or other property in any of the Test Area, except the Camera Test Area and
except for overnight parking in the Fenced Area; provided, however,
notwithstanding the foregoing or anything to the contrary in this Lease,
Landlord shall not be responsible in any manner to secure or protect any of
Tenant’s equipment or property, and shall not be responsible for theft, damage
or vandalism; (ii) Tenant may not use or store any Hazardous Materials in the
Test Area; (iii) all of Tenant’s obligations, liabilities and duties (but not
rights) under this Lease (including, without limitation, all insurance
obligations and indemnities) shall apply to the Test Area as if it were part of
the Premises, but Landlord shall have no liabilities, obligations, duties or
responsibilities whatsoever in connection with the Test Area or Test
Activities; (iv) Tenant shall reimburse Landlord, within ten (10) business days
after demand (which demand may be made from time to time and at any time) for
all reasonable and verifiable costs and expenses incurred by Landlord in
connection with the Test Area and/or Tenant’s activities relating to the Test
Area (the “Test Activities”); (v) Tenant shall immediately, at its sole cost
and expense, repair and restore any damage relating to the Test Activities;
(vi) Tenant shall ensure that the Test Activities do not cause any noise,
vibration, dust, danger, nuisance, odor or any other disturbance; (vii) Tenant
shall, at its sole cost and expense, ensure that the Test Activities do not
materially and unreasonably interfere with the ingress or egress of other
tenants or users of the Project (or other property designated by Landlord),
including, without limitation, for trucks and trailers; (ix) Tenant shall carry
additional insurance reasonably designated from time to time by Landlord or its
lender with respect to the Test Area and/or Test Activities; (x) the Test Area
shall be used by Tenant on an “as is”, “with all faults”, without any
representations or warranties, and Tenant hereby agrees and warrants that it
has investigated and inspected the condition of the Test Area and the
suitability of same for Tenant’s purposes, and Tenant does hereby waive and
disclaim any objection to, cause of action based upon, or claim that its
obligations hereunder should be reduced or limited because of the condition of
the Test Area or the suitability of same for Tenant’s purposes; Tenant
acknowledges that neither Landlord nor any agent nor any employee of Landlord
has made any representations or warranty with respect to the Test Area or with
respect to the suitability of the same for the conduct of Tenant’s business;
(xi) Tenant’s use of the Test Area shall be subject to coordination and
reasonable scheduling with Landlord; (xii) Landlord may use the Test Area for
any purposes that do not materially and unreasonably interfere with Tenant’s
rights under this Section 8.3; (xiii) all equipment, placement of equipment,
and testing methods and procedures, in the Test Area shall be subject to the
prior written reasonable approval of Landlord; (xiv) Tenant shall, at its sole
cost and expense, at all times maintain all approvals, licenses and permits
required for the Test Activities (and Landlord shall have no obligation in
connection therewith); Tenant’s inability to obtain or maintain any such
license, permit or approval necessary or appropriate for its use, occupation or
operation of the Premises shall not relieve it of its obligations under this
Lease; (xv) the Test Activities shall not adversely affect any building roof,
place material loads on any roof or affect or invalidate any roof
warranty.  and (xv) if Tenant violates
the terms of this Section 8.3 and does not cure the violation within three (3)
days after receipt of written notice from Landlord, or if Tenant violates the
terms of this Section 8.3 more than three (3) times in any twelve (12) month
period, then Landlord may immediately revoke Tenant’s rights under this Section
8.3.  Tenant’s use of the Test Area shall
be in strict accordance and comply with the terms of this Lease, Landlord’s
reasonable rules and regulations and all applicable laws, rules, regulations,
codes, ordinances and statutes, insurance requirements, Landlord’s safety
requirements (without any representation or warrant as to safety), industry
standards and matters of record. 
Landlord may, in its good faith discretion, from time to time relocate
the Test Area or any portion thereof, so long as the same does not materially
and unreasonably interfere with Tenant’s rights under this Section 8.3.

8.4           Outdoor Patio Areas.  Subject to Landlord’s reasonable rules and
regulations promulgated by Landlord and subject to compliance with applicable
governmental requirements (including, without limitation, Tenant’s obtaining
any necessary governmental approvals and permits, at Tenant’s sole cost),
Tenant shall have the right to (a) use the area depicted on Exhibit A-2
attached hereto for installation (subject to the terms of this Lease,
including, without limitation, Article 11) 
and use of a patio area (the “1st Floor Patio Area”), as an incident to
Tenant’s primary permitted use, for the convenience of Tenant’s employees,
subject to the provisions of this Section 8.4, and (b) use the patio area (the “2nd
Floor Patio Area”), in the approximate location depicted on Exhibit A-2
attached hereto, as an incident to Tenant’s primary permitted use, for the
convenience of Tenant’s employees, subject to the provisions of this Section
8.4.  The 1st Floor Patio Area and 2nd
Floor Patio Area are referred to collectively herein as the “Patio Area”.  All of Tenant’s obligations, duties and
liabilities (but not rights) with respect to the Premises shall apply to the
Patio Area (as if the Patio Area were part of the Premises), including, without
limitation, all of Tenant’s indemnity and insurance obligations; provided,
however, Landlord shall have no obligations, liabilities or responsibilities
whatsoever with respect to the Patio Area (including, without limitation, with
respect to lighting, cleaning and services).  Tenant, at its sole cost and expense, shall be
responsible for maintaining and repairing the Patio Area (including all
furniture and any plants located therein) in a neat, clean and orderly
condition at all times.  The location of
tables, chairs, waste receptacles or any other items Tenant desires to locate
in the Patio Area shall be subject to Landlord’s prior written approval, which
approval shall not be unreasonably withheld; provided that items so maintained
in the Patio Area by Tenant shall be at Tenant’s risk and Landlord shall not be
responsible for such items.  The Patio
Area shall be used by Tenant in its existing as-is condition, with all faults.
Without limiting the foregoing, all items in the Patio Area shall be subject to
the prior consent of Landlord.  The Patio
Area use shall not create any objectionable noise, disturbances, crowds or
odors at

 12
 

the Premises,
Project, as determined by Landlord. 
Smoking shall not be permitted on or around the Patio.  Without limiting the foregoing, Tenant shall
(a) be responsible for promptly cleaning any spills or waste in the Patio Area
occasioned by consumption of food items; (b) scrub and wash all tables, chairs,
and furnishings used by it in the Patio Area to prevent build-up from food
spills, dusts, dirt and other substances; and (c) cause the trash containers
located within the Patio Area to be emptied on a regular basis and keep and
maintain all containers and furniture and other property in a clean and
attractive condition and appearance at all times.

Article 9 – Insurance;
Indemnity:

9.1           Tenant, shall at all
times during the Term of this Lease, and at its own cost and expense, procure
and continue in force the following insurance coverage:  (i) Commercial General Liability Insurance,
written on an occurrence basis, with a combined single limit for bodily injury
and property damages of not less than Five Million Dollars ($5,000,000.00) per
occurrence and Five Million Dollars ($5,000,000.00) in the annual aggregate,
including products liability coverage if applicable, owners and contractors
protective coverage, blanket contractual coverage including both oral and
written contracts, and personal injury coverage, covering the insuring
provisions of this Lease and the performance of Tenant of the indemnity and exemption
of Landlord from liability agreements set forth in this Article 9; (ii) a
policy of standard fire, extended coverage and special extended coverage
insurance (all risks), including sprinkler leakage coverage and earthquake
sprinkler leakage where sprinklers are provided in an amount equal to the full
replacement value new without deduction for depreciation of all (A) Tenant
Improvements, Alterations, fixtures and other improvements in the Premises, and
(B) trade fixtures, furniture, equipment and other personal property
installed by or at the expense of Tenant; (iii) Worker’s Compensation coverage
as required by law; (iv) business interruption, loss of income and extra
expense insurance covering any failure or interruption of Tenant’s business
equipment (including, without limitation, telecommunications equipment) and
covering all other perils, failures or interruptions sufficient to cover a
period of interruption of not less than twelve (12) months; and (v) a policy of
comprehensive automobile liability insurance, including loading and unloading,
and covering owned, non-owned and hired vehicles, with limits of no less
than Five Million Dollars ($5,000,000.00) per occurrence.  Tenant shall carry and maintain during the
entire Lease Term (including any option periods, if applicable), at Tenant’s
sole cost and expense, increased amounts of the insurance required to be
carried by Tenant pursuant to this Article 9 and such other reasonable
types of insurance coverage and in such reasonable amounts covering the
Premises and Tenant’s operations therein, as may be reasonably required by
Landlord.  Deductibles under Tenant’s
insurance policies shall not exceed $50,000.00 per occurrence.

Notwithstanding the
foregoing provisions of this Section 9.1, any property insurance required to be
carried by Tenant pursuant to this Section 9.1 may be carried in whole or in
part under a plan of self-insurance maintained by Tenant, which addresses the
risks and liability exposures intended to be covered by the property insurance
required by this Section 9.1, provided that (a) Tenant maintains a net worth
equal to One Hundred Million Dollars ($100,000,000) or more, (b) Tenant
provides to Landlord from time to time, upon Landlord’s request therefor,
evidence reasonably satisfactory to Landlord of such net worth, and (c) the
self-insurance program does not violate any laws, rules, regulations, code or
ordinances.  In addition, whether or not
Tenant self-insures, all references to insurance proceeds in this Lease shall
be deemed to include any and all deductibles and proceeds of self-insurance
which shall be payable to the same extent, in the same amounts and to the party
entitled to the same, as if actual policies of insurance set forth in this
Section 9.1 had been obtained.  Such self-insurance
shall be treated as if Tenant actually carried a policy containing the required
insurance.  For example, the waiver of
subrogation provisions set forth in this Lease shall apply to such
self-insurance.  The provisions of this
paragraph shall be personal to the Original Tenant and shall not apply to any
assignee, sublessee or other transferee of Tenant’s interest in this Lease.

9.2           The aforementioned
minimum limits of policies and Tenant’s procurement and maintenance thereof
shall in no event limit the liability of Tenant hereunder.  The Commercial General Liability Insurance
policy shall name Landlord, Landlord’s property manager, Landlord’s lender(s)
and such other persons or firms as Landlord specifies from time to time, as
additional insureds with an appropriate endorsement to the policy(s).  All such insurance policies carried by Tenant
shall be with companies having a rating of not less than A-VIII in Best’s
Insurance Guide.  Tenant shall furnish to
Landlord, from the insurance companies, or cause the insurance companies to
furnish, certificates of coverage.  No
such policy shall be cancelable or subject to reduction of coverage or other
modification or cancellation except after thirty (30) days prior written notice
to Landlord by the insurer except for the ten (10) days notice for cancellation
due to non-payment of premium.  All such
policies shall be endorsed to agree that Tenant’s policy is primary and that
any insurance carried by Landlord is excess and not contributing with any
Tenant insurance requirement hereunder. 
Tenant shall, prior to the expiration of such policies, furnish Landlord
with renewals or binders.  Tenant agrees
that if Tenant does not take out and maintain such insurance or furnish
Landlord with renewals or binders, Landlord may (but shall not be required to)
procure said insurance on Tenant’s behalf and charge Tenant the cost thereof,
which amount shall be payable by Tenant within thirty (30) days after demand
with interest (at the rate set forth in Article 19 below) from the date such
sums are extended.  Tenant shall have the
right to provide such

 13
 

insurance coverage
pursuant to blanket policies obtained by Tenant, provided such blanket policies
expressly afford coverage to the Premises and to Tenant as required by this
Lease.

9.3           Landlord shall, as a
cost to be included in Operating Expenses, procure and maintain at all times
during the Term of this Lease, a policy or policies of insurance covering loss
or damage to the Project in the amount of at least ninety percent (90%) of the
full replacement costs.  Additionally,
Landlord may  carry:  (i) Bodily Injury and Property Damage
Liability Insurance and/or Excess Liability Coverage Insurance; and (ii)
Earthquake and/or Flood Damage Insurance; and (iii) Rental Income Insurance;
and (iv) any other forms of insurance Landlord may deem appropriate or any
lender may require.  The costs of
all  insurance and deductibles carried or
incurred by Landlord shall be included in Operating Expenses.

9.4           Landlord waives any and
all rights of recovery against Tenant for or arising out of damage to, or
destruction of the Project or the Premises to the extent that Landlord’s
insurance policies then in force insure against such damage or destruction and
permit such waiver and only to the extent of insurance proceeds actually
received by Landlord for such damage or destruction.  Tenant waives any and all rights of recovery
against Landlord for or arising out of damage to or destruction of any property
of Tenant to the extent that Tenant’s insurance policies then in force or the
policies required by this Lease, whichever is broader, insure against such
damage or destruction.

9.5           Tenant shall indemnify,
defend, protect, and hold harmless Landlord and Landlord’s partners, members,
affiliates, agents, managers, directors and employees (the “Landlord Parties”)
from any and all losses, costs, damages, expenses and liabilities (including
without limitation court costs and reasonable attorneys’ fees) (“Claims”)
incurred in connection with or arising from any cause in, on or about the
Premises, any violation by Tenant of any of the requirements, ordinances,
statutes, regulations or other laws, including, without limitation, any
environmental laws, any acts, omissions or negligence of Tenant or of any person
claiming by, through or under Tenant, or its affiliates, subsidiaries,
contractors, agents, servants, employees, invitees, guests or licensees of
Tenant and each of them (collectively, “Tenant Parties”) or any such person, in
on the Premises or Project or any breach of the terms of this Lease by Tenant,
either prior to or during the Lease Term, provided that the terms of the
foregoing indemnity shall not apply to the negligence or willful misconduct of
Landlord or the Landlord Parties. 
Notwithstanding the foregoing, Tenant shall not be required to
indemnify, defend and hold Landlord or the Landlord Parties harmless from any
Claims by any person, company or entity resulting from the negligence or
willful misconduct of Landlord or the Landlord Parties in connection with the
Landlord Parties’ activities in the Project and Landlord hereby so indemnifies,
defends and holds Tenant harmless from any such Claims and from any Claim
resulting from injuries to persons caused by the negligence or willful
misconduct of Landlord and/or Landlord Parties, or breach of this Lease by
Landlord.  The provisions of this Section
9.5 shall survive the expiration or sooner termination of this Lease.

 9.6          Landlord and the Landlord Parties shall not
be liable for injury to Tenant’s business, or loss of income therefrom, however
occurring (including, without limitation, from any failure or interruption of
services or utilities), or, except in connection with damage or injury
resulting from the negligence or willful misconduct of Landlord or the Landlord
Parties or breach of this Lease by Landlord, for damage that may be sustained
by the person, goods, wares, merchandise or property of Tenant or any Tenant
Parties, or any other person in, on or about the Premises caused by or
resulting from any cause whatsoever, including, but not limited to, fire,
steam, electricity, gas, water, or rain which may leak or flow from or into any
part of the Premises, or from the breakage, leakage, obstruction or other
defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, light fixtures, or mechanical or electrical systems, or from
intrabuilding cabling or wiring. 
Landlord and the Landlord Parties shall not be liable to Tenant for any
damages arising from any willful or negligent action or inaction of any other
tenant of the Project.

Article 10 – Assignment
and Subletting:

10.1         If Landlord does not
respond for a consent to an assignment or sublease by Tenant under this Section
10.1, within twenty (20) business days after receipt of written request by
Tenant (together with all information and documentation required hereunder,
including, without limitation, financial statements for the proposed
transferee), then if Landlord does not respond to Tenant’s request within five
(5) business days after receipt of a written reminder notice from Tenant, then
Landlord shall be deemed to have approved the proposed assignment or sublease
in question.  Except as set forth in
Section 10.4 below, Tenant shall have no power to, either voluntarily, involuntarily,
by operation of law or otherwise, sell, assign, transfer or hypothecate this
Lease, or sublet the Premises or any part thereof, or permit the Premises or
any part thereof to be used or occupied by anyone other than Tenant or Tenant’s
employees without the prior written consent of Landlord, which consent shall
not be unreasonably withheld, conditioned or delayed.  Subject to Section 10.4 below, if Tenant is a
corporation, unincorporated association, partnership or limited liability
company, the sale, assignment, transfer or hypothecation of any class of stock
or other ownership interest in such corporation, association, partnership or
limited liability company in excess of seventy-five percent (75%) in the
aggregate (or, 50% in the aggregate if

 14
 

there will be a change in
control or decrease of financial condition as a result of the transactions(s)
in question) of shall be deemed a “Transfer” within the meaning and provisions
of this Article 10.  Notwithstanding
the foregoing, the public trading of Tenant’s stock on a national stock
exchange shall not constitute a Transfer, so long as the day-to-day management
of Tenant does not change as a result thereof. 
Tenant may transfer its interest pursuant to this Lease only upon the
following express conditions, which conditions are agreed by Landlord and
Tenant to be reasonable:

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

(i)            The financial
responsibility of the proposed Transferee is not reasonably satisfactory to
Landlord;

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

(iv)          Either the proposed
Transferee or any person or entity which directly or indirectly controls, is
controlled by or is under common control with the proposed Transferee
(A) occupies space in the Project or Development at the time of the
request for consent, or (B) is negotiating with Landlord or has negotiated
with Landlord during the four (4) month period immediately preceding the date
of the proposed Transfer, to lease space in the Project or Development and
Landlord has, or will have in the next three (3) months, space available to
lease to such party in the Project or Development, comparable to the portion of
the Premises that is the subject of the transaction in question.

(b)           Upon Tenant’s
submission of a request for Landlord’s consent to any such Transfer, Tenant
shall pay to Landlord Landlord’s then standard processing fee and reasonable
attorneys’ fees and costs incurred in connection with the proposed Transfer,
which shall not exceed $3,000.00 per proposed Transfer to a non-Affiliate (as
defined below) and shall not exceed $1,500.00 per proposed Transfer to an
Affiliate;

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

(d)           That an executed
duplicate original of said assignment and assumption agreement or other transfer
on a form reasonably approved by Landlord, shall be delivered to Landlord
within five (5) days after the execution thereof, and that such transfer shall
not be binding upon Landlord until the delivery thereof to Landlord and the
execution and delivery of Landlord’s consent thereto.  It shall be a condition to Landlord’s consent
to any subleasing, assignment or other transfer of part or all of Tenant’s
interest in the Premises (a “Transfer”)
that (i) upon Landlord’s consent to any Transfer, Tenant shall pay and
continue to pay fifty percent (50%) of any “Transfer Payment” (defined below),
received by Tenant from the transferee; (ii) any sublessee of part or all of
Tenant’s interest in the Premises shall agree that in the event Landlord gives
such sublessee notice that Tenant is in default and such default remains
uncured under this Lease, such sublessee shall thereafter make all sublease or
other payments directly to Landlord, which will be received by Landlord without
any liability whether to honor the sublease or otherwise (except to credit such
payments against sums due under this Lease), and any sublessee shall agree to
attorn to Landlord or its successors and assigns at their request should this
Lease be terminated for any reason, except that in no event shall Landlord or
its successors or assigns be obligated to accept such attornment; (iii) any
such Transfer and consent shall be effected on commercially reasonable forms
supplied by Landlord; (iv) Landlord may require that Tenant not then be in default
under this Lease beyond any applicable notice and cure periods; and (v) Tenant
or the proposed subtenant or assignee (collectively, “Transferee”) shall agree to pay Landlord, upon demand, as
Additional Rent, a sum equal to the additional costs, if any, incurred by
Landlord for repair as a result of any change in the nature of occupancy caused
by such subletting or assignment.

10.2         “Transfer Payment” means all rent, Additional Rent or other
consideration payable by a Transferee in connection with a Transfer in excess
of the Base Rent and Direct Expenses payable by Tenant under this Lease during
the term of the Transfer and if such Transfer is for less than all of the
Premises, the Transfer Payment shall be calculated on a rentable square foot
basis after deducting the reasonable, out-of-pocket expenses paid for by Tenant
to unaffiliated third parties for (i) any changes, alterations and improvements
to the Premises reasonably necessary to obtain the assignee or sublessee in
connection with the assignment or sublease, (ii) any monetary concessions
reasonably necessary to obtain the assignee or sublessee and provided by Tenant
to the assignee or sublessee, and (iii) any market brokerage commissions
reasonably necessary to obtain the assignee or sublessee in connection with the
assignment or sublease.  “Transfer
Payment” shall also include, but not be limited to, key money, bonus money or
other cash consideration paid by a Transferee to Tenant in connection with such
Transfer, and

 15
 

any payment in excess of
fair market value for services rendered by Tenant to the Transferee and any
payment in excess of fair market value for assets, fixtures, inventory,
equipment, or furniture transferred by Tenant to the Transferee in connection
with such Transfer.  Any Transfer of this
Lease which is not in compliance with the provisions of this Article 10
shall be voidable by written notice from Landlord.  In no event shall the consent by Landlord to
any Transfer be construed as relieving Tenant or any Transferee from obtaining
the express written consent of Landlord to any further Transfer, or as
releasing Tenant from any liability or obligation hereunder whether or not then
accrued and Tenant shall continue to be fully liable therefor.  No collection or acceptance of rent by Landlord
from any person other than Tenant shall be deemed a waiver of any provision of
this Article 10 or the acceptance of any Transferee hereunder, or a
release of Tenant (or of any Transferee of Tenant).  Notwithstanding anything to the contrary in
this Lease, if Tenant or any proposed Transferee claims that Landlord has
unreasonably withheld or delayed its consent under this Article 10 or
otherwise has breached or acted unreasonably under this Article 10, their
sole remedies shall be a declaratory judgment and an injunction for the relief
sought, and Tenant hereby waives all other remedies, including, without
limitation, any right at law or equity to terminate this Lease, on its own
behalf and, to the extent permitted under all applicable laws, on behalf of the
proposed Transferee; provided, however, in the event Tenant obtains a final,
non-appealable judgment from a court of competent jurisdiction ruling that
Landlord has unreasonably withheld its consent to a proposed Transfer, then
Tenant may, within thirty (30) days after obtaining such judgment, terminate
this Lease, which termination shall be effective as of the date that is fifteen
(15) days after the date of Landlord’s receipt of Tenant’s timely written
notice of termination hereunder.

10.3         Notwithstanding anything
to the contrary contained in this Article 10, in the event Tenant
contemplates a Transfer of all or a portion of the Premises (or in the event of
any other Transfer or Transfers entered into by Tenant as a subterfuge in order
to avoid the terms of this Article 10), Tenant shall give Landlord notice (the “Intention
to Transfer Notice”) of such contemplated Transfer (whether or not the
contemplated Transferee or the terms of such contemplated Transfer have been
determined).  The Intention to Transfer
Notice shall specify the portion of and amount of rentable square feet of the
Premises which Tenant intends to Transfer (the “Contemplated Transfer Space”),
the demising walls to be constructed, to the extent applicable, the
contemplated date of commencement of the contemplated Transfer (the “Contemplated
Effective Date”), and the contemplated length of the term of such contemplated
Transfer, and shall specify that such Intention to Transfer Notice is delivered
to Landlord pursuant to this Article 10 in order to allow Landlord to elect to
recapture the Contemplated Transfer Space for the term set forth in the
Intention to Transfer Notice. 
Thereafter, Landlord shall have the option, by giving written notice to
Tenant within twenty (20) days after receipt of any Intention to Transfer
Notice, to recapture the Contemplated Transfer Space upon the basic terms and
conditions specified in the Intention to Transfer Notice.  In the event such option is exercised by
Landlord, this Lease shall be suspended (or when appropriate, canceled and
terminated if the last day of the term of the Contemplated Transfer is the last
day of the Term) with respect to the Contemplated Transfer Space commencing as
of the date stated in the Intention to Transfer Notice as the Contemplated
Effective Date for a period ending upon the last day of the term of the
Contemplated Transfer, at which time the Lease shall be reinstated and revived
as to the Contemplated Transfer Space. 
In the event of a recapture by Landlord, if this Lease shall be
suspended without liability to Tenant, or, when appropriate, canceled with
respect to less than the entire Premises, the Base Rent and Direct Expenses
reserved herein shall be prorated on the basis of the number of rentable square
feet retained by Tenant in proportion to the number of rentable square feet
contained in the Premises times the rental rate or rates under this Lease
applicable to such Contemplated Transfer Space, and this Lease as so amended
shall continue thereafter in full force and effect, and upon the request of
either party, the parties shall execute written confirmation of the same, (ii)
Landlord shall install, on a commercially reasonable basis, any corridor and/or
demising wall, at Landlord’s sole cost and expense, which is required as a
result of the suspension or cancellation of this Lease with respect to less
than a full floor of the Premises, and (iii) Landlord shall restore the
Contemplated Transfer Space to its condition prior to such recapture upon the
reinstatement of this Lease as to the Contemplated Transfer Space.  If Landlord declines, or fails to elect in a
timely manner to recapture the Contemplated Transfer Space under this Article
10, then, subject to the other terms of this Article 10, for a period of
nine (9) months (the “Nine Month Period”) commencing on the last day of
such twenty (20) day period, Landlord shall not have any right to
recapture the Contemplated Transfer Space with respect to any Transfer made
during the Nine Month Period, provided that any such Transfer is upon terms not
materially inconsistent with the terms set forth in the Intention to Transfer
Notice, and provided further that any such Transfer shall be subject to the
remaining terms of this Article 10. 
If such a Transfer is not so consummated within the Nine Month Period
(or if a Transfer is so consummated, then upon the expiration of the term of
any Transfer of such Contemplated Transfer Space consummated within such Nine
Month Period), Tenant shall again be required to submit a new Intention to
Transfer Notice to Landlord with respect to any contemplated Transfer, as
provided above in this Article 10.

10.4         Notwithstanding the
foregoing, an assignment or subletting of all or a portion of the Premises to
an “Affiliate” of Tenant shall deemed permitted hereunder (and shall not be
subject to a Transfer Premium or Landlord’s right of recapture hereunder),
provided that (a) such Transfer shall not be deemed effective until Tenant
supplies Landlord with a fully executed copy of the document evidencing the
Transfer (i.e., the sublease or assignment and assumption agreement), (b) the
net worth of Tenant’s

 16
 

Affiliate immediately
after the date of Transfer shall be reasonably acceptable to Landlord, taking
into account the remaining obligations then existing under this Lease, and
taking into account that Tenant will remain liable under this Lease, (c) such
assignment or sublease is not a subterfuge by Tenant to avoid its obligations
under this Lease, (d) if the Transfer is an assignment, the assignee assumes,
in full, the obligations of Tenant under this Lease (to the extent accruing
from and after the date of the Transfer), and if the Transfer is a sublease,
the Transferee executes such documentation reasonably required by Landlord in
connection with the subordination of such sublease to this Lease, and (e)
Tenant remains fully liable under this Lease. 
The term “Affiliate” of Tenant shall mean an entity which is (i)
controlled by, controls, or is under common control with Tenant; (ii) any
entity with which Tenant has merged or consolidated, or (iii) any entity which
acquires all or substantially all of the assets and/or shares of stock or
assets of Tenant.  The term “control,” or
“controlled” as used in this Section 10.4 shall mean the ownership, directly or
indirectly, of at least fifty percent (50%) of the voting securities of, or
possession of the right to vote, in the ordinary direction of its affairs, of
at least fifty percent (50%) of the voting interest in, an entity.  Additionally, the public trading of Tenant’s
stock on a national stock exchange shall not require Landlord’s consent under
this Article 10, provided the same does not result in a change in the
day-to-day management of Tenant.

Article 11- Alterations;
Liens:

11.1         Tenant shall make no
alterations, installations, changes or additions in or to the Premises or the
Project (collectively, “Alterations”)
without Landlord’s prior written consent, not to be unreasonably withheld or
delayed, except that Landlord may withhold its approval in its sole and
absolute discretion if the Tenant Alterations will (a) affect, as reasonably
determined by Landlord, the structure or exterior of the Premises or Project,
or (b) adversely affect, as reasonably determined by Landlord, the Project or
Premises systems or equipment, or (c) violate any laws, rules, regulations,
codes, ordinances or matters of record. 
Notwithstanding the foregoing, Tenant may make Alterations to the
Premises, not including any Alterations affecting the Project or Premises
structure, appearance, or systems or equipment 
and not including any substantial modifications to the Premises, without
Landlord’s consent, provided that the aggregate cost of any such Alterations
does not exceed Seventy-Five Thousand Dollars ($75,000.00) in any twelve (12)
month period; Tenant shall give Landlord at least ten (10) business days prior
notice of such Tenant Alterations, which notice shall be accompanied by
reasonably adequate evidence that such changes meet the criteria contained in
this Article 11.  Any Alterations must be
performed in accordance with the terms hereof, using only  contractors or mechanics approved by Landlord
in writing and upon the approval by Landlord in writing of fully detailed and
dimensioned plans and specifications pertaining to the Alterations in question,
to be prepared and submitted by Tenant at its sole cost and expense.  Tenant shall at its sole cost and expense
obtain all necessary approvals and permits pertaining to any Alterations.  Tenant shall cause all Alterations to be
performed in a good and workmanlike manner, in conformance with all applicable
federal, state, county and municipal laws, rules and regulations, pursuant to a
valid building permit, and in conformance with Landlord’s construction rules
and regulations.  Tenant hereby agrees to
indemnify, defend, and  hold Landlord
free and harmless from all liens and claims of lien, and all other liability,
claims and demands arising out of any work done or material supplied to the
Premises by or at the request of Tenant in connection with any Alterations.

11.2         Prior to the commencement
of any Alterations, Tenant shall provide Landlord with evidence that Tenant or
Tenant’s general contractor carries “Builder’s All Risk” insurance in an amount
approved by Landlord covering the construction of such Alterations, and such
other insurance as Landlord may reasonably require, it being understood that
all such Alterations shall be insured by Tenant pursuant to Article 9 of this
Lease immediately upon completion thereof. 
In addition, Landlord may, in its discretion, with respect to any
Alterations costing in excess of Two Hundred Thousand Dollars ($200,000.00),
require Tenant to obtain a lien and completion bond or some alternate form of
security reasonably satisfactory to Landlord in an amount sufficient to ensure
the lien free completion of such Alterations and naming Landlord as a
co-obligee.  If permitted Alterations are
made, they shall be made at Tenant’s sole cost and expense and shall be and
become the property of Landlord, except that Landlord may, by written notice to
Tenant given prior to the end of the Term, require Tenant at Tenant’s expense
to remove all partitions, counters, railings, cabling and other Alterations
installed by Tenant, and to repair any damage to the Premises and the Project
caused by such removal.  Tenant shall
have the right, at the time it requests Landlord’s consent and delivers all
plans and specifications to any Alterations (or, with respect to cosmetic
Alterations described above as not requiring Landlord’s consent, at the time
Tenant gives Landlord notice of the same pursuant to the provisions above) to
make a written request that Landlord notify Tenant whether Tenant shall be
obligated to remove the applicable Alterations at the end of the Lease Term, in
which event, with respect to permitted Alterations under this Article 11,
Tenant shall only be obligated to remove (i) those Alterations that
Landlord notified Tenant it must remove at the end of the Lease Term around the
time of and in connection with Tenant’s requested approval of the Alterations
(or, with respect to cosmetic Alterations described above as not requiring
Landlord’s consent, around the time of and in connection with Tenant’s notice
of the same pursuant to the provisions above), and (ii) those Alterations
that Tenant did not timely seek or did not obtain Landlord’s written consent to
leave in place at the end of the Lease Term, and that Landlord requires Tenant
to remove (and shall repair any damage resulting from such removal and return
the Premises to the same condition existing prior to

 17
 

the undertaking upon the
expiration or earlier termination of this Lease).  Any and all costs attributable to or related
to the applicable building codes of the city in which the Project is located
(or any other authority having jurisdiction over the Project) arising from
Tenant’s plans, specifications, improvements, Alterations or otherwise shall be
paid by Tenant at its sole cost and expense. 
With regard to repairs, Alterations or any other work arising from or
related to this Article 11 (other than cosmetic Alterations costing less
than a total of $25,000.00), Landlord shall be entitled to receive an
administrative/coordination fee (which fee shall vary depending upon whether or
not Tenant orders the work directly from Landlord, but which fee shall not
exceed 5% of all costs and expenses, whether hard costs or soft costs, in
connection with the applicable Alterations) sufficient to compensate Landlord
for all overhead, general conditions, fees and other costs and expenses arising
from Landlord’s involvement with such work. 
The construction of initial
improvements to the Premises shall be governed by the terms of the Tenant Work
Letter and not the terms of this Article 11.

11.3         Tenant shall
keep the Premises and the Project free from any mechanics’ liens, vendors liens
or any other liens arising out of any work performed, materials furnished or
obligations incurred by Tenant, and Tenant agrees to defend, indemnify and hold
Landlord harmless from and against any such lien or claim or action thereon,
together with costs of suit and reasonable attorneys’ fees and costs incurred
by Landlord in connection with any such claim or action.  Before commencing any work of alteration,
addition or improvement to the Premises, Tenant shall give Landlord at least
ten (10) business days’ written notice of the proposed commencement of such
work (to afford Landlord an opportunity to post appropriate notices of
non-responsibility).  In the event that
there shall be recorded against the Premises or the Project or the property of
which the Premises is a part any claim or lien arising out of any such work
performed, materials furnished or obligations incurred by Tenant and such claim
or lien shall not be removed or discharged within ten (10) days of filing,
without limiting any other remedies, Landlord shall have the right but not the
obligation to pay and discharge said lien without regard to whether such lien
shall be lawful or correct, and Tenant shall reimburse to Landlord, within ten
(10) days after demand, the amount of such payment and discharge and all costs
and expenses, including, without limitation, attorneys’ fees and costs incurred
by Landlord.

Article 12 – Personal
Property Taxes:  Tenant
shall pay, prior to delinquency, all taxes assessed against or levied upon
trade fixtures, furnishings, equipment and all other personal property of
Tenant located in the Premises.  In the
event any or all of Tenant’s trade fixtures, furnishings, equipment and other
personal property shall be assessed and taxed with property of Landlord (as
reasonably determined by Landlord), or if the cost or value of any leasehold
improvements in the Premises exceeds the cost or value of a Project-standard
buildout as reasonably determined by Landlord and, as a result, real property
taxes for the Project are increased, Tenant shall pay to Landlord, within
thirty (30) days after delivery to Tenant by Landlord of a written statement
setting forth such amount, the amount of such taxes applicable to Tenant’s
property or above-standard improvements. 
Tenant shall assume and pay to Landlord at the time Base Rent next
becomes due (or if assessed after the expiration of the Lease Term, then within
thirty (30) days), any excise, sales, use, rent, occupancy, garage, parking,
gross receipts or other taxes (other than net income taxes) which may be
imposed on or on account of the letting of the Premises or the payment of Base
Rent or any other sums due or payable hereunder, and which Landlord may be
required to pay or collect under any law now in effect or hereafter
enacted.  Tenant shall pay directly to
the party or entity entitled thereto all business license fees, gross receipts
taxes and similar taxes and impositions which may from time to time be assessed
against or levied upon Tenant, as and when the same become due and before
delinquency.  Notwithstanding anything to
the contrary contained herein, any sums payable by Tenant under this
Article 12 shall not be included in the computation of “Tax Expenses.”

Article 13 – Parking:  Tenant shall have the right, commencing on
the initial Commencement Date and continuing through the expiration or earlier
termination of the Term, to use the number of unreserved parking spaces set
forth in the Basic Lease Provisions (of which five (5) such spaces may be
designated by Tenant as “Iteris Visitor”), which parking spaces shall pertain
to the Project parking facility (subject to adjustment by Landlord in the event
of 2 Commencement Dates under this Lease). 
Tenant shall be responsible for the full amount of any taxes imposed by
any governmental authority in connection with the use of such parking spaces or
the use of the parking facility by Tenant. 
Tenant shall abide by all reasonable, non-discriminatory rules and
regulations which are prescribed from time to time for the orderly operation
and use of the parking facility where the parking spaces are located, including
any sticker or other identification system reasonably established by
Landlord.  Tenant shall cooperate in
seeing that Tenant’s employees and visitors also comply with such reasonable,
non-discriminatory rules and regulations. 
Landlord specifically reserves the right to change the size,
configuration, design, layout and all other aspects of the Project parking
facility at any time and Tenant acknowledges and agrees that Landlord may,
without incurring any liability to Tenant and without any abatement of rent
under this Lease, from time to time, close-off or restrict access to the
Project parking facility for purposes of permitting or facilitating any such
construction, alteration or improvements. 
Landlord may delegate its responsibilities hereunder to a parking
operator or a lessee of the parking facility in which case such parking
operator or lessee shall have all the rights of control attributed hereby to
the Landlord.  The parking spaces rented
by Tenant pursuant to this Article 13 are provided to Tenant solely for
use by Tenant’s own personnel and such spaces may not be transferred, assigned,
subleased or otherwise

 18
 

alienated by Tenant
without Landlord’s prior approval, except to a Transferee in connection with a
permitted Transfer under this Lease. 
Provided Tenant is not in default under this Lease beyond applicable
notice and cure periods, and provided Tenant does not disturb other tenants of
the Project or Development or interfere with Landlord or other tenants of the
Project or Development, subject to the terms of this Lease and the consent of
any other relevant property owner (if required), all laws, rules, regulations,
codes and ordinances, matters of record, insurance requirements, and Landlord’s
safety requirements (without any representation or warranty by Landlord as to
safety), Tenant shall be permitted to install in the area depicted on Exhibit “F”
(subject to Landlord’s reasonable consent as to the plans and specifications
therefor), one (1) small ramp over a curb for the travel of the forklift
permitted under this Lease; such ramp shall belong to Landlord at expiration or
earlier termination of the Term, provided that Landlord may require Tenant to
remove such ramp, and restore the area and repair all damage, at Tenant’s sole
cost and expense, upon expiration or earlier termination of the Term.

Article 14 – Hazardous
Waste:

14.1         Tenant shall not cause or
permit any Hazardous Material (as defined below) to be brought, kept or used in
or about the Project by Tenant or any of the Tenant Parties, other than
ordinary and reasonable quantities of general office supplies (such as ink and
liquid paper), and adhesives and alcohol used in light manufacturing in
connection with the Permitted Use (collectively, the “Permitted Substances”),
provided that (a) the Permitted Substances are stored in packaged and sealed
containers (b) the storage, handling and use of the Permitted Substances must
at all times conform to all laws, rules, regulations, codes and ordinances and
to applicable fire, safety and insurance requirements; (b) the types and
quantities of Permitted Substances must be reasonable and appropriate to the nature
and size of Tenant’s operation in the Premises and reasonable and appropriate
for a first-class office building of the same or similar use and in the
same market area as the Project; (c) no Hazardous Material shall be spilled or
disposed of on, in, under or around the Project or Development or otherwise
discharged from the Premises or any area adjacent to the Project or
Development; and (d) in no event will Tenant be permitted to store, handle or
use on, in, under or around the Premises any Hazardous Material which will
increase the rate of fire or extended coverage insurance on the Premises or
Project or Development.  Tenant
indemnifies Landlord and the Landlord Parties from and against any breach by
Tenant of the obligations stated in this Article 14, and agrees to defend and
hold Landlord and the Landlord Parties harmless from and against any and all
claims, judgments, damages, penalties, fines, costs, liabilities, or losses
which arise during or after the Term of this Lease as a result of such breach.  This indemnification of Landlord and the
Landlord Parties by Tenant includes, without limitation, costs incurred in
connection with any investigation of site conditions or any cleanup, remedial,
removal, or restoration work required by any federal, state, or local
governmental agency or political subdivision because of Hazardous Material
present in the soil or ground water on or under the Project.  Without limiting the foregoing, if the
presence of any Hazardous Material on the Project caused or permitted by Tenant
results in any contamination of the Project, then subject to the provisions of
Articles 7 and 11 of this Lease, Tenant shall promptly take all actions at its
sole expense as are necessary to return the Project to the condition existing
prior to the introduction of any such Hazardous Material and the contractors to
be used by Tenant for such work must be approved by Landlord, which approval
shall not be unreasonably withheld so long as such actions would not
potentially have any material adverse long-term or short-term effect on the
Project and so long as such actions do not materially interfere with the use
and enjoyment of the Project by the other tenants thereof; provided however,
Landlord shall also have the right, by written notice to Tenant, to directly
undertake any such mitigation efforts with regard to Hazardous Materials in or
about the Project due to Tenant’s breach of its obligations pursuant to this
Section 14.1, and to charge Tenant, as Additional Rent, for the costs thereof.

14.2         As used herein, the term “Hazardous Material” means any
hazardous or toxic substance, material, or waste which is or becomes regulated
by any local governmental authority, the State of California or the United
States Government.  The term “Hazardous
Material” includes, without limitation, any material or substance which is (i)
defined as “Hazardous Waste,” “Extremely Hazardous Waste,” or “Restricted
Hazardous Waste” under Sections 25115, 25117 or 25122.7, or listed pursuant to
Section 25140, of the California Health and Safety Code, Division 20, Chapter
6.5 (Hazardous Waste Control Law), (ii) defined as a “Hazardous Substance”
under Section 25316 of the California Health and Safety Code, Division 20,
Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii)
defined as a “Hazardous Material,” “Hazardous Substance,” or “Hazardous Waste”
under Section 25501 of the California Health and Safety Code, Division 20,
Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv)
defined as a “Hazardous Substance” under Section 25281 of the California Health
and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous
Substances), (v) petroleum, (vi) asbestos, (vii) listed under Article 9 or
defined as Hazardous or extremely hazardous pursuant to Article 11 of
Title 22 of the California Administrative Code, Division 4, Chapter 20, (viii)
designated as a “Hazardous Substance” pursuant to Section 311 of the Federal
Water Pollution Control Act (33 U.S.C. § 1317), (ix) defined as a “Hazardous
Waste” pursuant to Section 1004 of the Federal Resource Conservation and
Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903), or (x)
defined as a “Hazardous Substance” pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601
et seq. (42 U.S.C. § 9601).  As used
herein,

 19
 

the term “Laws” means any applicable federal,
state or local law, ordinance, or regulation relating to any Hazardous Material
affecting the Project, including, without limitation, the laws, ordinances, and
regulations referred to in this Section 14.3 above.

Article 15 – Estoppel;
Subordination; Attornment:

15.1         Tenant shall, at any time
and from time to time, upon not less than fifteen (15) days’ prior written notice
from Landlord, execute, acknowledge and deliver to Landlord a statement in
writing certifying the following information, (but not limited to the following
information in the event further information is reasonably requested by
Landlord): (i) that this Lease is unmodified and in full force and effect (or,
if modified, stating the nature of such modification and certifying that this
Lease, as modified, is in full force and effect); (ii) the dates to which the
rental and other charges are paid in advance, if any; (iii) the amount of
Tenant’s security deposit, if any; and (iv) acknowledging that there are not,
to Tenant’s knowledge, any uncured defaults on the part of Landlord hereunder,
and no events or conditions then in existence which, with the passage of time
or notice or both, would constitute a default on the part of Landlord
hereunder, or specifying such defaults, events or conditions, if any are
claimed.  It is expressly understood and
agreed that any such statement may be relied upon by any prospective purchaser
or encumbrancer of all or any portion of the Real Property.  Without limiting the foregoing, Tenant agrees
that the document in Exhibit “H” attached hereto is acceptable and may (without
limitation) be used by Landlord as the statement required under this Section
15.1.

15.2         This Lease is subject and
subordinate to all ground or underlying leases, mortgages and deeds of trust
which affect the property or the Project, including all renewals,
modifications, consolidations, replacements and extensions thereof; provided,
however, if the Landlord under any such lease or the holder or holders of any
such mortgage or deed of trust shall advise Landlord that they desire or
require this Lease to be prior and superior thereto, upon written request of Landlord
to Tenant, Tenant agrees to promptly execute, acknowledge and deliver any and
all documents or instruments which Landlord or such Landlord, holder or holders
deem necessary or desirable for purposes thereof.  Landlord shall have the right to cause this
Lease to be and become and remain subject and subordinate to any and all ground
or underlying leases, mortgages or deeds of trust which may hereafter be
executed covering the Premises, the Project or the property or any renewals,
modifications, consolidations, replacements or extensions thereof, for the full
amount of all advances made or to be made thereunder and without regard to the
time or character of such advances, together with interest thereon and subject
to all the terms and provisions thereof; provided, however, that Landlord
obtains from the lender or other party in question a written undertaking in
favor of Tenant to the effect that such lender or other party will not disturb
Tenant’s right of possession under this Lease if Tenant is not then or
thereafter in breach of any covenant or provision of this Lease beyond any
applicable notice and cure periods. 
Tenant agrees, within fifteen (15) days after Landlord’s written request
therefor, to execute, acknowledge and deliver upon request any and all
documents or instruments requested by Landlord or necessary or proper to assure
the subordination of this Lease to any such mortgages, deed of trust, or
leasehold estates; without limiting the foregoing, Tenant agrees that the
document in Exhibit “I” attached hereto is acceptable and may (without
limitation) be used by Landlord as a document required under this Section
15.2.  Tenant agrees that in the event
any proceedings are brought for the foreclosure of any mortgage or deed of
trust or any deed in lieu thereof, to attorn to the purchaser or any successors
thereto upon any such foreclosure sale or deed in lieu thereof as so requested
to do so by such purchaser and to recognize such purchaser as the Landlord
under this Lease; Tenant shall, within fifteen (15) days after request execute
such further instruments or assurances as such purchaser may reasonably deem
necessary to evidence or confirm such attornment.  Tenant agrees to provide copies of any
notices of Landlord’s default under this Lease to any mortgagee or deed of
trust beneficiary whose address has been provided to Tenant and Tenant shall
provide such mortgagee or deed of trust beneficiary a commercially reasonable
time after receipt of such notice within which to cure any such default.  Tenant waives the provisions of any current
or future statute, rule or law which may give or purport to give Tenant any
right or election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding
or sale.

15.3         In the event of any
transfer or termination of Landlord’s interest in the Premises or the Project
by sale, assignment, transfer, foreclosure, deed-in-lieu of foreclosure or
otherwise whether voluntary or involuntary, Landlord shall be automatically
relieved of any and all obligations and liabilities on the part of Landlord
from and after the date of such transfer or termination, including furthermore
without limitation, the obligation of Landlord under this Lease and California Civil
Code 1950.7 above to return the security deposit, provided said security
deposit is transferred to said transferee and the transferee assumes Landlord’s
obligations accruing thereafter with respect thereto.  Tenant agrees to attorn to the transferee upon
any such transfer and to recognize such transferee as the Landlord under this
Lease and Tenant shall, within fifteen (15) days after request, execute such
further instruments or assurances as such transferee may reasonably deem
necessary to evidence or confirm such attornment.

 20
 

Article 16 – Certain
Landlord Rights:

16.1         Landlord and its agents
shall have the right, to enter the Premises at all reasonable times for the
purpose of cleaning the Premises, and, upon reasonable prior notice (except in
the event of emergency, in which case no notice will be required), for the
purpose of examining or inspecting the same, serving or posting and keeping
posted thereon notices as provided by law, or which Landlord deems necessary
for the protection of Landlord or the Project, showing the same to prospective
tenants (during the last 12 months of the Term or when Tenant is in default
under this Lease beyond any applicable cure period), lenders or purchasers of
the Project, in the case of an emergency, and for making such alterations,
repairs, improvements or additions to the Premises or to the Project as
Landlord may deem necessary or desirable. 
If Tenant shall not be personally present to open and permit an entry
into the Premises at any time when such an entry by Landlord is necessary or
permitted hereunder, Landlord may enter by means of a master key, or may
forcibly enter in the case of an emergency, in each event without liability to
Tenant and without affecting this Lease 
Landlord reserves the right from time to time, but subject to payment by
and/or reimbursement from Tenant as otherwise provided herein: (i) to install,
use, maintain, repair, replace, relocate and control for service to the
Premises and/or other parts of the Project pipes, ducts, conduits, wires,
cabling, appurtenant fixtures, equipment spaces and mechanical systems,
wherever located in the Premises or the Project, (ii) to alter, close or
relocate any facility in the Premises or the common areas or otherwise conduct
any of the above activities for the purpose of complying with a general plan
for fire/life safety for the Project or otherwise, and (iii) to comply with any
federal, state or local law, rule or order. 
Landlord shall attempt to perform any such work with the least
inconvenience to Tenant as is reasonably practicable, but in no event shall
Tenant be permitted to withhold or reduce Base Rent or other charges due
hereunder as a result of same, make any claim for constructive eviction or
otherwise make any claim against Landlord for interruption or interference with
Tenant’s business and/or operations.

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

16.3         Landlord reserves the
right, without incurring any liability to Tenant therefor, to make such changes
in or to the Project and the fixtures and equipment thereof, as well as in or
to the street entrances, halls, passages, elevators, stairways and other
improvements thereof, as it may deem necessary or desirable.  Landlord may adopt any name for the Project
and Landlord reserves the right, from time to time, to change the name and/or
address of the Project.

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

16.5         Except as may be set
forth to the contrary in this Lease, all covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant’s sole cost and expense and without any abatement of rent.

16.6         The inclusion of certain
of Landlord’s rights in this Article 16 shall in no way limit or impair any
rights or remedies of Landlord set forth in this Lease or otherwise available
to Landlord.

Article 17 – Default:

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

(a)           Failure or refusal to
pay Base Rent, Additional Rent or any other amount to be paid by Tenant to
Landlord hereunder within seven (7) business days after written notice that the
same is due or payable hereunder; said seven (7) business day period shall be
in lieu of, and not in addition to, the notice requirements of
Section 1161 of the California Code of Civil Procedure or any similar or
successor law;

(b)           Except where a specific
time period is otherwise set forth for Tenant’s performance in this Lease, in
which event the failure to perform by Tenant within such time period shall be a
default under this Article 17(b), and except as set forth in items (a)
above and (c) through and including (f) below, failure to perform or observe
any other covenant or condition of this Lease to be performed or observed within
thirty (30) days following written notice to Tenant of such failure (the “Default
Notice”);

 21
 

provided, however, that
if the nature of Tenant’s obligation is such that more than thirty (30) days
are required for performance, then Tenant shall not be in default under this
subsection (b) if Tenant commences performance within a reasonable period of
time (but no later than thirty (30) days after receipt of the Default Notice)
and thereafter diligently and in good faith prosecutes the same to completion within
a reasonable period of time after receipt of the Default Notice.  Such thirty (30) day notice shall be in lieu
of, and not in addition to, any required under Section 1161 of the California
Code of Civil Procedure or any similar or successor law;

(c)           Abandonment of the
Premises or any significant portion thereof when accompanied by the non-payment
of rent as specified above;

(d)           The filing by Tenant or
any guarantor hereunder in any court pursuant to any statute of a petition in
bankruptcy or insolvency or for reorganization or arrangement for the
appointment of a receiver of all or a portion of Tenant’s property; the filing
against Tenant or any guarantor hereunder of any such petition, or the
commencement of a proceeding for the appointment of a trustee, receiver or
liquidator for Tenant, or for any guarantor hereunder, or of any of the
property of either, or a proceeding by any governmental authority for the
dissolution or liquidation of Tenant or any guarantor hereunder, if such
proceeding shall not be dismissed or trusteeship discontinued within ninety
(90) days after commencement of such proceeding or the appointment of such
trustee or receiver; or the making by Tenant or any guarantor hereunder of an
assignment for the benefit of creditors;

(f)            Tenant’s failure to
cause to be released any mechanics liens filed against the Premises or the
Project within twenty (20) days after the date the same shall have been filed
or recorded; or

(g)           Tenant’s failure to
observe or perform according to the provisions of Articles 8 or 15 within five
(5) business days after notice from Landlord.

17.2         Landlord shall not be in
default under this Lease unless Landlord fails to perform obligations required
of Landlord within thirty (30) days after written notice is delivered by Tenant
to Landlord and to the holder of any mortgages or deeds of trust (collectively,
“Lender”) covering the Premises whose name and address shall have theretofore
been furnished to Tenant in writing, specifying the obligation which Landlord
has failed to perform; provided, however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for
performance, then Landlord shall not be in default if Landlord or Lender
commences performance within such thirty (30) day period and thereafter
diligently prosecutes the same to completion. 
In the event of any default, breach or violation of Tenant’s rights
under this Lease by Landlord, Tenant’s exclusive remedies shall be an action
for specific performance or action for actual damages.  Tenant hereby waives the benefit of any laws
granting it the right to perform Landlord’s obligation, or the right to
terminate this Lease on account of any Landlord default.

Notwithstanding the
foregoing, if Tenant provides written notice to Landlord of an event or
circumstance which requires the action of Landlord with respect to repair
and/or maintenance which Landlord is required to provide pursuant to the
express terms of Section 6.1 of this Lease, and Landlord fails to provide such
required action within thirty (30) days after receipt of such notice, unless
such repair would normally take longer and Landlord has commenced said repair
work within said thirty (30) day period, then Tenant may deliver to Landlord an
additional ten (10) business days’ written notice to Landlord specifying that
Tenant will take such required action. 
If such action was required under the terms of Section 6.1 of this Lease
to be taken by Landlord and was not taken by Landlord within such additional
ten (10) business day period (or such additional longer period as is reasonably
necessary if such action would normally take longer than 10 business days and
Landlord has commenced said action within said ten (10) business day period),
then Tenant may take the action that was required of Landlord under this Lease
and shall be entitled to prompt reimbursement by Landlord of Tenant’s actual
reasonable out-of-pocket costs paid to unaffiliated third parties in taking
such action. Subject to the last sentence of this paragraph, in the event
Tenant takes such action, and such work may affect the Project systems or the
structural integrity of the Project, Tenant shall use only those contractors
used by Landlord in the Project for work on such Project systems or structure
unless such contractors are unwilling or unable to perform, or timely perform,
such work, in which event Tenant may utilize the services of any other
qualified contractor which normally and regularly performs similar work in
Comparable Buildings (subject to the last sentence of this paragraph) and who
are reasonably approved by Landlord in writing.   Further, if Landlord does not deliver a
written objection to Tenant within thirty (30) days after receipt of a detailed
written invoice by Tenant of its costs of taking action which Tenant claims
should have been taken by Landlord under Section 6.1 above, and if such invoice
from Tenant sets forth a reasonably detailed particularized breakdown of its
costs and expenses in connection with taking such action on behalf of Landlord,
then Tenant may deliver a second written 
invoice of its costs of taking action which Tenant claims should have
been taken by Landlord (with a reasonably detailed particularized breakdown of
its costs and expenses in connection with taking such action on behalf of
Landlord); if Landlord does not deliver a written objection to Tenant within
ten (10) business days after receipt of such second written invoice, then
Tenant shall be entitled to deduct from rent payable by Tenant under this
Lease, the amount

 22

set forth in such invoice.  If,
however, Landlord delivers to Tenant a written objection to the payment of such
invoice, setting Landlord’s reasons for its claim that such action did not have
to be taken by Landlord pursuant to the terms of this Lease or that the charges
are excessive (in which case Landlord shall pay the amount it contends would
not have been excessive), then Tenant shall not be entitled to such deduction
from rent, but as Tenant’s sole and exclusive remedy, Tenant may proceed to
claim a default by Landlord under this Lease (if any), provided that under no
circumstances shall Tenant be allowed to terminate this Lease based upon any
such default by Landlord.  If, in
connection with any such claimed default under the immediately preceding sentence,
Tenant obtains a non-appealable final judgment from a court of competent
jurisdiction, awarding damages to Tenant in connection therewith, then Tenant
may deduct such final judgment against Base Rent next becoming due.
Notwithstanding anything to the contrary set forth in this paragraph, any work
performed by or on behalf of Tenant under this paragraph shall be subject to
Article 11 of this Lease

Article 18 – Remedies:

18.1         Upon the occurrence of an
Event of Default under this Lease as provided in Article 17 above, Landlord may
exercise all of its remedies as may be permitted by law, including but not
limited to the remedy provided by Section 1951.4 of the California Civil Code,
and including without limitation, terminating this Lease, reentering the Premises
and removing all persons and property therefrom, which property may be stored
by Landlord at a warehouse or elsewhere at the risk, expense and for the
account of Tenant.  If Landlord elects to
terminate this Lease, Landlord shall be entitled to recover from Tenant the
aggregate of all amounts permitted by law, including but not limited to (i) the
worth at the time of award of the amount of any unpaid rent which had been
earned at the time of such termination; plus (ii) the worth at the time of award
of the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant’s failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, specifically
including but not limited to, tenant improvement expenses, brokerage commissions
and advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and
any special concessions made to obtain a new tenant; and (v) at Landlord’s
election, such other amounts in addition to or in lieu of the foregoing as may
be permitted from time to time by applicable law.  The term “rent” as used in this
Article 18 shall be deemed to be and to mean all sums of every nature
required to be paid by Tenant pursuant to the terms of this Lease, whether to
Landlord or to others.  As used in items
(i) and (ii), above, the “worth at the time of award” shall be computed by
allowing interest at the rate set forth in item (e), below, but in no case
greater than the maximum amount of such interest permitted by law.  As used in item (iii), above, the “worth at
the time of award” shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).  Nothing in this
Article 18 shall be deemed to affect Landlord’s right to indemnification
for liability or liabilities arising prior to the termination of this Lease for
personal injuries or property damage under the indemnification clause or
clauses contained in this Lease. 
Landlord shall mitigate its damages in accordance with applicable law,
but shall not be required to give preference to the Premises over any other
space.

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

18.3          Whether or not Landlord elects to terminate this Lease on account
of any default by Tenant, as set forth in this Article 18, Landlord shall
have the right to terminate any and all subleases, licenses, concessions or
other consensual arrangements for possession entered into by Tenant and
affecting the Premises or may, in Landlord’s sole discretion, succeed to Tenant’s
interest in such subleases, licenses, concessions or arrangements.  In the event of Landlord’s election to
succeed to Tenant’s interest in any such subleases, licenses, concessions or
arrangements, Tenant shall, as of the date

 23
 

of
notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.

18.4         Notwithstanding anything
in this Lease to the contrary, any remedy of Tenant for the collection of a
judgment (or other judicial process) requiring the payment of money by Landlord
in the event of any default by Landlord hereunder or any claim, cause of action
or obligation, contractual, statutory or otherwise by Tenant against Landlord
or the Landlord Parties concerning, arising out of or relating to any matter
relating to this Lease and all of the covenants and conditions or any
obligations, contractual, statutory, or otherwise set forth herein, shall be
limited solely and exclusively to an amount which is equal to the equity
interest of Landlord in and to the Project. 
No other property or assets of Landlord or any Landlord Party shall be
subject to levy, execution or other enforcement procedure for the satisfaction
of Tenant’s remedies under or with respect to this Lease, Landlord’s
obligations to Tenant, whether contractual, statutory or otherwise, the
relationship of Landlord and Tenant hereunder, or Tenant’s use or occupancy of
the Premises.  Without limiting the
foregoing, no personal liability is assumed by any officer, director, owner,
member, shareholder, employee, agent, and/or representative of Crown Realty
& Development, Inc. and its affiliates, including but not limited to Robert
A. Flaxman and/or Jaime Sohacheski (and their family members) (collectively,
the “Released Parties”) in connection with this Lease.   The parties acknowledge and agree that no
claim, cause of action, liability, demand, damage, debt, expense, and/or lien,
including but not limited to any involving this Lease, shall be asserted
against any of the Released Parties, whether known or unknown at the time of
this Lease or at any time in the future, including after expiration or earlier
termination of this Lease.

Article 19 – Interest;
Late Charge:  Any
amount due from Tenant to Landlord under this Lease which is not paid when due
shall bear interest at the lower of twelve percent (12%) per annum or the
maximum lawful rate of interest from the due date until paid, unless otherwise
specifically provided herein, but the payment of such interest shall not excuse
or cure any default by Tenant under this Lease. 
In addition to such interest: 
(i) if Base Rent is not paid on or before the fifth (5th) day of
the calendar month for which the same is due, a late charge equal to five
percent (5%) of the amount overdue shall be immediately due and owing and shall
accrue for each calendar month or part thereof until such rental, including the
late charge, is paid in full, which late charge Tenant hereby agrees is a
reasonable estimate of the damages Landlord shall suffer as a result of Tenant’s
late payment; provided, however, with respect to the very first late payment in
any 12-month period, such late charge shall not be due unless the applicable
past-due payment is not received by Landlord within five (5) business days
after written demand.  Such damages
include Landlord’s additional administrative and other costs associated with
such late payment and the parties agree that it would be impracticable or
extremely difficult to fix Landlord’s actual damage in such event.  Such charges for interest and late payments
are separate and cumulative and are in addition to and shall not diminish or
represent a substitute for any or all of Landlord’s rights or remedies under
any other provision of this Lease.

Article 20 – Damage and
Destruction:  If the
Project is damaged by fire or other insured casualty and the insurance proceeds
have been made available therefor by the holder or holders of any mortgages or
deeds of trust covering the Premises or the Project, the damage shall be
repaired by Landlord to the extent such insurance proceeds are available
therefor and provided such repairs can, in the opinion of Landlord’s
contractor, be completed within two hundred ten (210) days after the necessity
for repairs as a result of such damage becomes known to Landlord, without the
payment of overtime or other premiums, and until such repairs are completed
rent shall be abated in proportion to the part of the Premises which is
unusable by Tenant in the conduct of its business.  However, if the damage is due to the fault or
neglect of Tenant, or any of the Tenant Parties and the like, there shall be no
abatement of rent, unless and to the extent Landlord receives rental income
insurance proceeds.  If repairs cannot,
in Landlord’s opinion, be completed within two hundred ten (210) days after the
necessity for repairs as a result of such damage becomes known to Landlord
without the payment of overtime or other premiums, Landlord may, at its option,
either (i) make such repairs in a reasonable time and in such event this
Lease shall continue in effect and the rent shall be abated, if at all, in the
manner provided in this Article 20, or (ii) elect not to effect such
repairs and instead terminate this Lease, by notifying Tenant in writing of
such termination within thirty (30) days after Landlord learns of the necessity
for repairs as a result of damage, such notice to include a termination date
giving Tenant thirty (30) days to vacate the Premises.  In addition, Landlord may elect to terminate
this Lease if the Project shall be damaged by fire or other casualty or cause,
whether or not the Premises are affected, if the damage is not fully covered,
except for deductible amounts, by Landlord’s insurance policies.  Finally, if the Premises or the Project is
damaged to any substantial extent by fire or other casualty during the last
nine (9) months of the Term, then notwithstanding anything contained in this
Article 20 to the contrary, Landlord or Tenant shall have the option to
terminate this Lease by giving written notice to the other of the exercise of
such option within thirty (30) days after Landlord learns of the necessity for
repairs as the result of such damage, provided that Landlord reasonably
estimates that the repair will take longer than ninety (90) days.  A total destruction of the Project shall
automatically terminate this Lease. 
Except as provided in this Article 20, there shall be no abatement
of rent and no liability of Landlord by reason of any injury to or interference
with Tenant’s business or property arising from such damage or destruction or
the making of any repairs, alterations or improvements in or to any portion of
the Project or the Premises or in or to fixtures,

 24
 

appurtenances and
equipment therein.  Tenant understands
that Landlord will not carry insurance of any kind on Tenant’s furniture,
furnishings, trade fixtures or equipment, and that Landlord shall not be
obligated to repair any damage thereto or replace the same.  Tenant acknowledges that Tenant shall have no
right to any proceeds of insurance carried by Landlord relating to property
damage.  With respect to any damage which
Landlord is obligated to repair or elects to repair, Landlord and Tenant waive
and release their rights under the provisions of Sections 1932 and 1933 of the
California Civil Code.

This paragraph shall
apply only in the event of casualty damage or destruction to the Premises not
arising out of the negligence or willful misconduct of Tenant or any of the
Tenant Parties, where the Premises are rendered untenantable as a result of the
casualty damage or destruction in question and Landlord does not elect to
terminate this Lease pursuant to the provisions above.  If the estimated completion date of the
repairs to the damage or destruction is greater than two hundred ten (210) days
after the date Landlord learns of the damage, Tenant may elect, no later than
thirty (30) days after Tenant’s receipt of a certificate from Landlord
describing the scope of the restoration and repair obligations and estimating
the date said obligations are expected to be substantially completed so Tenant
can resume normal business operations, to terminate this Lease by written
notice to Landlord effective as of the date specified in Tenant’s notice, which
date shall be not greater than sixty (60) days after the date of delivery of
Tenant’s notice.  Furthermore, if neither
Landlord nor Tenant have terminated this Lease and the repairs are not actually
completed within two hundred ten (210) days after the date Landlord learns of
the damage (which two hundred ten (210) day period shall be extended only by
delays resulting from the negligence or willful misconduct of Tenant and/or any
of the Tenant Parties), Tenant shall have the right to terminate this Lease
within five (5) business days after the end of such period, by written notice
to Landlord (the “Damage Termination Notice”), effective as of the date set
forth in the Damage Termination Notice (the “Damage Termination Date”), which
Damage Termination Date shall not be less than five (5) business days following
the end of such period.  Notwithstanding
the foregoing, if Tenant delivers a Damage Termination Notice to Landlord, then
Landlord shall have the right to suspend the occurrence of the Damage
Termination Date for a period ending thirty (30) days after the Damage
Termination Date set forth in the Damage Termination Notice by delivering to
Tenant, within five (5) business days of Landlord’s receipt of the Damage
Termination Notice, a certificate of Landlord’s contractor responsible for the
repair of the damage certifying that it is such contractor’s good faith
judgment that the repairs shall be substantially completed within thirty (30)
days after the Damage Termination Date. 
If repairs shall be substantially completed prior to the expiration of
such thirty (30) day period, then the Damage Termination Notice shall be of no
force or effect but if the repairs shall not be substantially completed within
such thirty (30) day period, then this Lease shall terminate upon the
expiration of such thirty (30) day period. 
If Landlord undertakes repair and/or restoration pursuant to the
provisions above and thereafter determines that it will not be able to complete
the same within the two hundred ten (210) day period set forth herein, then
Landlord shall promptly notify Tenant thereof and shall provide Tenant with
Landlord’s revised estimate of the date upon which Landlord will complete the
same (“Revised Completion Date”).  Within
fifteen (15) business days after Tenant’s receipt of such notice, Tenant shall
have the right, but not the obligation, to elect to terminate this Lease or to
agree to extend the two hundred ten (210) day period to the Revised Completion
Date.  Tenant’s failure to elect to
terminate or to extend such time period to the Revised Completion Date by
written notice to Landlord within such fifteen (15) business day period shall
be conclusively deemed to be Tenant’s election to extend the time to the
Revised Completion Date.  Upon any such termination
of this Lease pursuant to this paragraph, Tenant shall pay the rent and all
other amounts due under this Lease, properly apportioned up to such date of
termination, and both parties hereto shall thereafter be freed and discharged
of all further obligations accruing after such termination, except as provided
for in provisions of this Lease which by their terms survive the expiration or
earlier termination of the Lease Term.

Article 21 – Eminent
Domain:  If the whole
of the Premises or the Project or so much thereof as to render the balance
unusable by Tenant shall be taken under power of eminent domain, or is sold,
transferred or conveyed in lieu thereof, this Lease shall automatically
terminate as of the date of such condemnation, or as of the date possession is
taken by the condemning authority, at Landlord’s option.  No award for any partial or entire taking
shall be apportioned, and Tenant hereby assigns to Landlord any award which may
be made in such taking or condemnation, together with any and all rights of
Tenant now or hereafter arising in or to the same or any part thereof;
provided, however, that nothing contained herein shall be deemed to give
Landlord any interest in or to require Tenant to assign to Landlord any award
made to Tenant for moving costs, the taking of personal property and trade
fixtures belonging to Tenant and removable by Tenant at the expiration of the
Term hereof as provided hereunder or for the interruption of, or damage to,
Tenant’s business.  In the event of a
partial taking described in this Article 21, or a sale, transfer or
conveyance in lieu thereof, which does not result in a termination of this
Lease, the rent shall be apportioned according to the ratio that the part of
the Premises remaining useable by Tenant bears to the total area of the
Premises.

Article 22 – Surrender;
Removal of Property:

22.1         The voluntary or other
surrender of this Lease by Tenant to Landlord, or a mutual termination hereof,
shall not work a merger, and shall at the option of Landlord, operate as an
assignment

 25
 

to it of any or all
subleases or subtenancies affecting the Premises.  Upon the expiration of the Term of this
Lease, or upon any earlier termination of this Lease, Tenant shall quit and
surrender possession of the Premises to Landlord in good order and condition,
reasonable wear and tear and repairs which are Landlord’s obligation excepted,
and shall, without expense to Landlord, remove or cause to be removed from the
Premises all debris and rubbish, all furniture, equipment, business and trade
fixtures, free-standing cabinet work, moveable partitioning, telephone and data
cabling and other articles of personal property owned by Tenant or installed or
placed by Tenant at its own expense in the Premises, and all similar articles
of any other persons claiming under Tenant (unless Landlord exercises its
option to have any subleases or subtenancies assigned to it), and Tenant shall
repair all damage to the Premises resulting from the  removal of such items from the Premises.

22.2         All fixtures, equipment,
leasehold improvements, Alterations and/or appurtenances attached to or built
into the Premises prior to or during the Term, whether by Landlord or Tenant
and whether at the expense of Landlord or Tenant, or of both, shall be and
remain part of the Premises and shall not be removed by Tenant at the end of
the Term unless otherwise expressly provided for in this Lease or unless such
removal is required by Landlord under Article 11 above.  Such fixtures, equipment, leasehold
improvements, Alterations, additions, improvements and/or appurtenances shall
include but not be limited to:  all floor
coverings, drapes, paneling, built-in cabinetry, molding, doors, vaults
(including vault doors), plumbing systems, security systems, electrical
systems, lighting systems, silencing equipment, communication systems, all
fixtures and outlets for the systems mentioned above and for all telephone,
radio, telegraph and television purposes, and any special flooring or ceiling
installations.  Notwithstanding the foregoing,
with respect to the Improvements under Exhibit “D” attached hereto, Landlord
may only require restoration of any special-purpose improvements (i.e., not
general office improvements) under this Section 22.3 to the extent Landlord
notified Tenant in writing of the same at the time of Landlord’s approval of
the same under such Exhibit “D.”

Article 23 – Holding Over:

23.1         Should Tenant, without
Landlord’s written consent, hold over after termination of this Lease, Tenant
shall become a tenant at sufferance upon each and all of the terms herein
provided as may be applicable to such a tenancy and any such holding over shall
not constitute an extension of this Lease. 
During such holding over, Tenant shall pay in advance, monthly, Base
Rent at a rate equal to one hundred fifty percent (150%) of the rate in effect
for the last month of the Term of this Lease, in addition to, and not in lieu
of, all other payments required to be made by Tenant hereunder including but
not limited to Tenant’s Proportionate Share of any increase in Direct
Expenses.  Subject to Section 23.2 below,
nothing contained in this Article 23 shall be construed as consent by
Landlord to any holding over of the Premises by Tenant, and Landlord expressly
reserves the right to require Tenant to surrender possession of the Premises to
Landlord as provided in this Lease upon the expiration or earlier termination
of the Term.  If Tenant fails to
surrender the Premises upon the expiration or termination of this Lease without
the prior written consent of Landlord, Tenant agrees to indemnify, defend and
hold Landlord harmless from all costs, loss, expense or liability, including
without limitation, claims made by any succeeding tenant of which tenant is
informed and real estate brokers claims and reasonable attorney’s fees and
costs.

23.2         Notwithstanding the
foregoing, Tenant may hold over after the expiration of the term of this Lease,
for a period not to exceed three (3) months, by delivering written notice to
Landlord (“Holdover Notice”) not less than nine (9) months, and not more than
twelve (12) months, prior to the expiration of the Lease Term.  Such Holdover Notice must state the duration
following the expiration of the Lease Term (not to exceed 3 months) for which
Tenant will hold over in the Premises (the “Permitted Holdover Period”).  If Landlord timely receives a Holdover Notice
from Tenant, then the term of this Lease shall be extended through and
including the final day of the Permitted Holdover Period and Tenant shall be
required to pay Base Rent and all other payments required to be made by Tenant
hereunder through and including the final day of the Permitted Holdover Period
(i.e., Tenant shall be obligated to pay such amounts for the entire Permitted
Holdover Period, whether or not Tenant actually occupies all or any portion of
the Premises during the entire Permitted Holdover Period).  Any hold over by Tenant after the expiration
of any Permitted Holdover Period shall be subject to Section 23.1 above.

Article 24 –
Intentionally Omitted.

Article 25 – Force
Majeure:  This Lease
and the obligations of Tenant hereunder shall not be affected or impaired
because Landlord is unable to fulfill any of its obligations hereunder or is
delayed in doing so, if such inability or delay is caused by reason of any
prevention, delay, stoppage due to strikes, lockouts, acts of God, or any other
cause previously, or at such time, beyond the reasonable control or
anticipation of Landlord (collectively, a “Force Majeure”) and Landlord’s obligations under this Lease shall
be forgiven and suspended by any such Force Majeure.

 26
 

Article 26 – Signage:

26.1         Provided
Tenant is not in default under this Lease beyond applicable notice and cure
periods, Tenant, at Landlord’s cost, shall have the right to Project standard suite
entrance signage at the Premises, and five (5) Project standard lines in the
Project lobby directory during the Lease Term.

26.2         Provided
Tenant is not in default under this Lease beyond applicable notice and cure
periods, and subject to any rights of tenants at the Project or Development as
of the date of this Lease (including, without limitation, the tenant commonly
known as OCTFCU (“OCTFCU”),
Tenant, at Tenant’s sole cost and expense, shall have the right to the
following signage at the Project during the Term (collectively, “Tenant’s Rooftop Signage”), provided the
Original Tenant or any permitted Affiliate assignee of this Lease is leasing
from Landlord the entire ground floor of the Project at all times:  subject to the proviso in this sentence, up
to two (2) Project building-top identification signs; provided, however, so
long OCTFCU (or its affiliates, successors, assigns, or subtenants) has the
right to a building-top sign at the Project, Tenant shall only be allowed one
(1) Project building-top identification sign hereunder (it being acknowledged
and agreed by Tenant that Landlord has the right to restrict the aggregate
building-top signs at the Project to a maximum of two (2)).  Notwithstanding the foregoing, if, at any
time on or after the initial Commencement Date, Original Tenant or any
permitted Affiliate assignee of this Lease does not lease the entire ground
floor of the Project, then Tenant shall immediately and automatically lose its
rights to Tenant’s Rooftop Signage and Tenant shall remove Tenant’s Rooftop
Signage, at Tenant’s sole cost and expense, within ten (10) days after Landlord
provides Tenant with written notice that Tenant has lost its rights to the same
hereunder.  Tenant’s Rooftop Signage
shall be used only for the identification of the Original Tenant, and shall be
subject to Landlord’s reasonable approval as to size, design, location (which
may include the area currently utilized for rooftop identification signage by
OCTFCU on the roof of the Project, should such space become available, as
reasonably determined by Landlord), graphics, materials, colors and other
specifications and shall be consistent with the exterior design, materials and
appearance of the Project and the Project’s signage program and shall be
further subject to all applicable governmental laws, rules, regulations, codes,
ordinances and other approvals and matters of record.  Tenant’s Rooftop Signage shall be personal to
the Original Tenant and any permitted Affiliate assignee of this Lease
(provided that the identification of any such Affiliate to be placed on any
signage is not objectionable to Landlord, in its reasonable discretion) and may
not be used, assigned to any assignee or sublessee, or any other person or
entity.  Tenant shall be obligated to
maintain Tenant’s Rooftop Signage in a first-class condition, at Tenant’s sole
cost and expense.   Landlord has the
right, but not the obligation, to oversee the installation of Tenant’s Rooftop
Signage (the cost of which shall be solely borne by Tenant).  The cost to operate, if any, Tenant’s Rooftop
Signage shall be paid for by Tenant, and Tenant shall be responsible to pay all
electricity and other costs and expenses relating to Tenant’s Rooftop Signage
(the cost of separately metering any utility usage shall also be paid for by
Tenant).  Upon the expiration of the
Lease Term, or earlier termination of the Lease, or other termination of Tenant’s
signage rights under this paragraph, Tenant shall be responsible for any and
all costs associated with the removal of Tenant’s Rooftop Signage, including,
but not limited to, the cost to repair and restore the Project to its original
condition, normal wear and tear excepted.

26.3         Provided
Tenant is not in default under this Lease beyond applicable notice and cure
periods, Tenant, at Tenant’s sole cost and expense, shall have the right to the
following signage at the Project during the Term (collectively, “Tenant’s Monument Signage”):  one (1) non-exclusive strip on the monument
sign serving the Project on Carnegie Avenue. 
Tenant’s Monument Signage shall be used only for the identification of
the Original Tenant, and shall be subject to Landlord’s reasonable approval as
to size, design, location, graphics, materials, colors and other specifications
and shall be consistent with the exterior design, materials and appearance of
the Project and the Project’s signage program and shall be further subject to
all applicable governmental laws, rules, regulations, codes, ordinances and
other approvals and matters of record. 
Tenant’s Monument Signage shall be personal to the Original Tenant and
may not be used or assigned to any assignee or sublessee, or any other person
or entity.  Tenant shall be obligated to
maintain Tenant’s Monument Signage in a first-class condition, at Tenant’s sole
cost and expense.   Landlord has the
right, but not the obligation, to oversee the installation of Tenant’s Monument
Signage (the cost of which shall be solely borne by Tenant).  The cost to operate, if any, Tenant’s
Monument Signage shall be paid for by Tenant, and Tenant shall be responsible
to pay all electricity and other costs and expenses relating to Tenant’s
Monument Signage (the cost of separately metering any utility usage shall also
be paid for by Tenant).  Upon the
expiration of the Lease Term, or earlier termination of the Lease, Tenant shall
be responsible for any and all costs associated with the removal of Tenant’s
Monument Signage, including, but not limited to, the cost to repair and restore
the Project to its original condition, normal wear and tear excepted.

Article 27 – Waiver.  No waiver by Landlord or Tenant of any
provision of this Lease shall be deemed to be a waiver of any other provision
hereof or of any subsequent breach by such party of the same or any other
provision.  No provision of this Lease
may be waived by Landlord or Tenant, except by an instrument in writing
executed by the waiving party.  Landlord’s
consent to or approval of any act by Tenant requiring Landlord’s consent or
approval shall not be deemed to render unnecessary the obtaining of Landlord’s
consent to or approval of any subsequent act of Tenant, whether or not similar
to the act so consented to or approved. 
No act or thing done by Landlord or Landlord’s agents during the Term of
this Lease shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept such

 27
 

surrender shall be valid
unless in writing and signed by Landlord. 
The subsequent acceptance of rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any term, covenant
or condition of this Lease, other than the failure of Tenant to pay the
particular rent so accepted, regardless of Landlord’s knowledge of such
preceding breach at the time of acceptance of such rent.  Any payment by Tenant or receipt by Landlord
of an amount less than the total amount then due hereunder shall be deemed to
be in partial payment only thereof and not a waiver of the balance due or an
accord and satisfaction, notwithstanding any statement or endorsement to the
contrary on any check or any other instrument delivered concurrently therewith
or in reference thereto.  Accordingly,
Landlord may accept any such amount and negotiate any such check without
prejudice to Landlord’s right to recover all balances due and owing and to
pursue its other rights against Tenant under this Lease, regardless of whether
Landlord makes any notation on such instrument of payment or otherwise notifies
Tenant that such acceptance or negotiation is without prejudice to Landlord’s
rights.

Article 28 – Notices:  Any notice required or permitted to be given
hereunder shall be in writing and may be given by personal service evidenced by
a signed receipt or sent by registered or certified mail, return receipt
requested, or via overnight courier, and shall be effective upon proof of
delivery, addressed to Tenant at the Premises or to Landlord at the address set
forth in the Basic Lease Provisions. 
Either party may by notice to the other specify a different address for
notice purposes.  A copy of all notices
to be given to Landlord hereunder shall be concurrently transmitted by Tenant
to such party hereafter designated by notice from Landlord to Tenant.

Article 29 – Rules and
Regulations:  Tenant
shall observe faithfully and comply strictly with the Rules and Regulations
attached to this Lease as Exhibit “B” and made a part hereof, and such other
reasonable, non-discriminatory Rules and Regulations as Landlord may from time
to time reasonably adopt for the safety, care and cleanliness of the Project,
the facilities thereof, or the preservation of good order therein.  Landlord shall not be liable to Tenant for
violation of any such Rules and Regulations, or for the breach of any covenant
or condition in any lease by any other tenant in the Project.  A waiver by Landlord of any Rule or
Regulation for any other tenant shall not constitute nor be deemed a waiver of
the Rule or Regulation for this Tenant. 
Landlord agrees not to discriminate against Tenant in Landlord’s
enforcement of the Rules and Regulations against Tenant and other tenants of
the Project or Development.  In the event
of a conflict between the Rules and Regulations and the terms of this Lease,
the terms of this Lease shall control.

Article 30 –
Relocation:  Intentionally Omitted.

Article 31: 
Miscellaneous:

31.1         Brokers.  In connection with this Lease, Landlord warrants and represents
that it has had dealings only with firms set forth in the Basic Lease
Provisions and that it knows of no other person or entity who is or might be
entitled to a commission, finder’s fee or other like payment in connection
herewith and does hereby indemnify and agree to hold Tenant harmless from and against
any and all loss, liability and expenses that Tenant may incur should such
warranty and representation prove incorrect, inaccurate or false.  In connection with this Lease, Tenant
warrants and represents that it has had dealings only with firms set forth in
the Basic Lease Provisions and that it knows of no other person or entity who
is or might be entitled to a commission, finder’s fee or other like payment in
connection herewith and does hereby indemnify and agree to hold Landlord and
Landlord’s agents, employees, affiliates and managers harmless from and against
any and all loss, liability and expenses that Landlord may incur should such
warranty and representation prove incorrect, inaccurate or false.  No Broker shall be a third-party beneficiary
under this Lease.

31.2         Severability; Entire agreement.  Any
provision of this Lease which shall prove to be invalid, void, or illegal shall
in no way affect, impair or invalidate any other provision hereof and such
other provisions shall remain in full force and effect.  This Lease and the exhibits and any addendum
attached hereto constitute the entire agreement between the parties hereto with
regard to Tenant’s occupancy or use of all or any portion of the project, and
no prior agreement or understanding pertaining to any such matter shall be
effective for any purpose.  No provision
of this Lease may be amended or supplemented except by an agreement in writing
signed by the parties hereto or their successor in interest.  The parties agree that any deletion of
language from this Lease prior to its mutual execution by Landlord and Tenant
shall not be construed to have any particular meaning or to raise any
presumption, canon of construction or implication including, without
limitation, any implication that the parties intended thereby to state the
converse, obverse or opposite of the deleted language.

31.3         Attorneys’ Fees.  In any action to enforce the terms of this
Lease, including any suit by Landlord for the recovery of rent or possession of
the Premises, the losing party shall pay the successful party a reasonable sum
for attorneys’ fees and costs in such suit and such attorneys’ fees and costs
shall be deemed to have accrued prior to the commencement of such action and
shall be paid whether or not such action is prosecuted to judgment.  When legal services are rendered by an
attorney at law who is an employee of a party, attorneys’ fees and costs
incurred by that party shall be deemed to include an amount

 28
 

based upon the number of
hours spent by such employee on such matters multiplied by an appropriate
billing rate determined by taking into consideration the same factors,
including but not limited by, the importance of the matter, time applied,
difficulty and results, as are considered when an attorney not in the employ of
a party is engaged to render such service.

31.4         Intentionally Omitted.

31.5         Time of Essence.  Time is of the essence with respect to every
provision of this Lease.

31.6         Joint and Several.  The terms “Landlord” and “Tenant” as used
herein shall include the plural as well as the singular, the neuter shall
include the masculine and feminine genders and the obligations herein imposed
upon Tenant shall be joint and several as to each of the persons, firms or
corporations of which Tenant may be composed.

31.7         No Option.  The submission of this Lease by landlord, its
agent or representative for examination or execution by tenant does not
constitute an option or offer to lease the Premises upon the terms and
conditions contained herein or a reservation of the Premises in favor of
Tenant, it being intended hereby that this Lease shall only become effective
upon the execution hereof by Landlord and Tenant and delivery of a fully
executed Lease to Tenant.

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

31.9         Quiet Possession.  Upon Tenant’s paying the Base Rent,
Additional Rent and other sums provided hereunder and observing and performing
all of the covenants, conditions and provisions on Tenant’s part to be observed
and performed hereunder, Tenant shall have quiet possession of the Premises for
the entire Term hereof, subject to all of the provisions of this Lease.

31.10       Rent.  All payments required to be made under this
Lease to Landlord shall be deemed to be rent, whether or not described as such.

31.11       Successors and Assigns.  Subject to the provisions of Article 10
of this Lease, all of the covenants, conditions and provisions of this Lease
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, personal representatives, successors and assigns.

31.12       Delinquent Payments.  In the event that Tenant shall be delinquent
in the payment of rent on two (2) separate occasions in any twelve (12) month
period, Landlord shall have the right, without limiting any rights or remedies,
to require that Tenant make all payments under this Lease by cashier’s check,
from a bank reasonably acceptable to Landlord.

31.13       Signing Authority.  Tenant represents and warrants that each
individual executing this Lease on behalf of Tenant is duly authorized to
execute and deliver this Lease on behalf of Tenant in accordance with: (i) if
Tenant is a corporation, a duly adopted resolution of the Board of Directors of
said corporation or in accordance with the By-laws of said corporation, (ii) if
Tenant is a partnership, the terms of the partnership agreement, and (iii) if
Tenant is a limited liability company, the terms of its operating agreement,
and that this Lease is binding upon said entity in accordance with its terms.  Concurrently with Tenant’s execution of this
Lease, Tenant shall provide to Landlord a copy of: (i) if Tenant is a
corporation, such resolution of the Board of Directors authorizing the
execution of this Lease on behalf of such corporation, which copy of resolution
shall be duly certified by the secretary or an assistant secretary of the
corporation to be a true copy of a resolution duly adopted by the Board of
Directors of said corporation and shall be in a form reasonably acceptable to
Landlord, (ii) if Tenant is a partnership, a copy of the provisions of the
partnership agreement granting the requisite authority to each individual
executing this Lease on behalf of said partnership, and (iii) if Tenant is a
limited liability company, a copy of the provisions of its operating agreement
granting the requisite authority to each individual executing this Lease on
behalf of said limited liability company.

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

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

 29
 

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

31.17       Headings; Exhibits.  The article headings contained in this Lease
are for convenience only and do not in any way limit or amplify any term or
provision hereof.  The Exhibits attached
hereto are incorporated herein by this reference as if fully set forth herein.

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

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

31.20       Financial Statements.  Tenant shall, when requested by Landlord from
time to time, furnish a true and correct certified financial statement of its
financial condition prepared in conformity with generally accepted accounting
principles and in a form reasonably satisfactory to Landlord.

31.21       Good Faith and Reasonableness.  Except (a) for matters for which there is a standard
of consent or discretion specifically set forth in this Lease; (b) matters
which could have an adverse effect on the Project structure or Project Systems,
or which could affect the exterior appearance of the Project, (iii) matters
covered by Article 4 (Additional Rent), Article 9 (Insurance), or
Articles 17 or 18 (Defaults; Remedies) of this Lease (collectively, the “Excepted
Matters”), any time the consent of Landlord or Tenant is required under this
Lease, such consent shall not be unreasonably withheld, conditioned, or
delayed.

Article 32: 
Satellite Dishes: 
Landlord hereby grants to Tenant the right to occupy a portion of the
roof of the Project, as designated by Landlord in Landlord’s sole and absolute
discretion (hereinafter called the “Roof Premises”) so that Tenant may install,
use, operate and maintain up to two (2) satellite dishes (each, a “Dish”), and
two (2) antennas (each, an “Antenna”) during the Lease Term in accordance with
the specifications reasonably approved in advance by Landlord.  Notwithstanding anything to the contrary set
forth in this Article 32, no Dish or Antenna, nor any work or act in connection
with any Dish or Antenna, by or on behalf of Tenant may invalidate or otherwise
affect the warranty relating to the roof, unless otherwise specified by
Landlord in writing in its sole and absolute discretion.  No Dish or Antenna shall exceed sixteen (16)
inches in height or diameter, and each Dish and Antenna shall have commercially
reasonable specifications commonly found in satellite dishes and antennas of
tenants at comparable buildings in the general vicinity of the Project and
shall be in accordance with the additional following conditions.

Each Dish and
Antenna shall be installed, used, operated and maintained solely on the Rooftop
Premises and solely at the expense of Tenant. 
Tenant shall perform the erection and installation of each Dish and
Antenna in accordance with an installation program reasonably approved and supervised
by Landlord or Landlord’s contractor, and Tenant shall neither bring any Dish
or Antenna nor any associated equipment to the Premises or Rooftop Premises
without first giving Landlord fifteen (15) business days’ prior written notice
of the date and time of the planned installation.  Each Dish and Antenna shall in all cases be
installed, used, operated, maintained and removed in compliance with the
following requirements (all as determined by Landlord in its sole and absolute
discretion): (i) no Dish or Antenna shall interfere in any way with the Project’s
existing engineering, window washing or other maintenance functions or duties;
(ii) each Dish and Antenna must be properly secured and installed so as not to
be affected by high winds or other weather elements; (iii) each Dish and
Antenna must be properly grounded; (iv) the weight of each Dish and Antenna
shall not exceed the load limits of the Project; and (v) in no event shall any
Dish or Antenna or any appurtenant wiring or cable interfere with or otherwise
affect the roof, structure, electrical, mechanical, structural, life safety or
other building systems of the Project. 
Tenant shall bear all costs and expenses in connection with the
installation, use, operation,

 30
 

maintenance and
removal of each Dish and Antenna, including all costs relating to the repair of
any damage to the roof or other parts of the Project caused directly or
indirectly by any such installation, use, operation, maintenance or removal,
including, without limitation, water damage or other damage resulting from
weather elements.

The installation
of the each Dish and Antenna, excluding any necessary penetration of the roof
of the Project, shall be performed by Tenant’s contractor, as approved by
Landlord, and at Tenant’s expense (or, at Landlord’s option, by Landlord’s
contractor, at Tenant’s expense), provided such installation is of a
nonpenetrating surface mount only. 
Tenant may not install any Dish or Antenna in a manner which penetrates
the roof membrane of the Project, without Landlord’s prior written consent,
which consent may be withheld in Landlord’s sole and absolute discretion.  Without limiting Tenant’s other obligations,
Tenant shall reimburse Landlord for all reasonable costs associated with
obtaining confirmation that Landlord’s roof warranty will not be affected by
any penetration.  All work done in
connection with any permitted roof penetration shall be performed by Landlord
or Landlord’s agent at Tenant’s sole cost and expense.  The installation of each Dish and Antenna
shall not damage the Project or existing structures thereon or detract from the
aesthetics or physical attractiveness of Project, as determined by Landlord in
its sole and absolute discretion. 
Landlord may obtain the services of a structural engineer to design any
additional supports required to support any Dish, or Antenna, and to monitor
the installation thereof, and Tenant shall reimburse Landlord, within thirty
(30) days after receipt by Tenant of an invoice, and Tenant’s receipt of
reasonable supporting documentation, for Landlord’s actual and reasonable the
cost of such services and such supports. 
If required by Landlord, Tenant shall install all screening required by
Landlord such that no Dish or Antenna shall be visible from any portion of the
ground constituting the common areas of the Project. Or Development  Each Dish and Antenna shall remain the
personal property of Tenant and shall be removed by Tenant prior to the
expiration or earlier termination of the Lease, and Tenant shall repair any
damage caused by the removal of each Dish and Antenna and its associated
wiring, cables and other components.

Tenant may, at
Tenant’s own cost and expense, upon reasonable prior written notice to
Landlord, and only when accompanied by a representative of Landlord, access the
Rooftop Premises to repair or remove a Dish or Antenna or any portion thereof,
provided that all plans and designs of Tenant relating to the same be subject
to the prior written approval of Landlord, not to be unreasonably withheld.

Tenant hereby
agrees that the Rooftop Premises shall be taken “as is”, “with all faults”,
without any representations and warranties, and Tenant hereby agrees and
warrants that it has investigated and inspected the condition of the Rooftop
Premises and the suitability of same for Tenant’s purposes.  Tenant, at Tenant’s sole cost and expense,
will, at all times in connection with the installation, use, operation and
maintenance of each Dish and Antenna, comply with all governmental laws, rules
and regulations affecting the installation, use, operation and maintenance of
each Dish and Antenna, including, without limitation, applicable building and
fire codes, and will comply with all requirements of the Federal Aviation
Administration and Federal Communications Commission and matters of record in
respect thereof.  Tenant, at Tenant’s
sole cost and expense, shall be obligated to secure and obtain and provide
Landlord with copies of all required permits, approvals and licenses for or
with respect to the installation or operation of each Dish and Antenna prior to
the commencement of any installation activities hereunder, and Tenant shall be
obligated to keep in full force and effect and renew, as applicable, all
required permits, approvals and licenses required hereunder.  The use of each Dish and Antenna by Tenant
will be such as to not cause any interference (as defined by the engineering
standards of the Federal Communications Commission) with communication
receptions presently or hereafter located at or about the Project and belonging
to or operated by any parties to whom Landlord has granted rights, and Tenant
will cooperate with Landlord with respect to any rights that Landlord hereafter
may grant, similar to those granted by this Article 32.

During the entire
period that any Dish or Antenna is situated in the Rooftop Premises, Tenant
agrees to maintain comprehensive general public liability insurance against all
claims for bodily injury, death and property damage occurring in the area
surrounding or in any way related to each Dish and Antenna in the amounts and
in accordance with the terms set forth in this Lease and as otherwise
reasonably designated by Landlord; Tenant shall ensure that all insurance
policies shall name Landlord and any other party designated by Landlord as an
additional insureds.  Tenant shall pay
for the cost of any additional insurance incurred by Landlord or the increase
in any premiums on insurance maintained by Landlord  arising by reason of the erection or
installation and maintenance of any Dish or Antenna.

Tenant expressly
agrees that the terms and conditions of Section 11.3 of this Lease shall also
apply to the Rooftop Premises. 
Additionally, Tenant agrees that, in addition to the terms and
conditions of this Article 32, all of Tenant’s obligations and restrictions
(but not rights) contained in the Lease shall also apply to each Dish and
Antenna and the Rooftop Premises.  The
cost to operate, if any, Tenant’s Signage shall be paid for by Tenant, and
Tenant shall be separately metered for such expense (the cost of separately
metering any utility usage shall also be paid for by Tenant).  All damage to the Project relating to any
Dish or Antenna or Rooftop Premises shall be paid for by Tenant to Landlord
within thirty (30) days after demand.

 31
 

Article 33:  Right of First Offer:  Landlord hereby grants to Tenant a continuing
right of first offer with respect to that space on the second floor of the
Project outlined on Exhibit “A-1” attached hereto and made a part hereof (“First
Offer Space”).  Notwithstanding the
foregoing, (i) such first offer right of Tenant shall commence only following
the expiration or earlier termination of (A) any existing lease pertaining to
the First Offer Space, and (B) as to any First Offer Space which is vacant as
of the date of this Lease, the first lease pertaining to any portion of such
First Offer Space entered into by Landlord after the date of this Lease
(collectively, the “Superior Leases”), including any renewal of such existing
or future lease, whether or not such renewal is pursuant to an express written
provision in such lease, and regardless of whether any such renewal is
consummated pursuant to a lease amendment or a new lease, (ii) such first offer
right shall be subordinate and secondary to all rights of expansion, first
refusal, first offer or similar rights granted to (A) the tenants of the
Superior Leases, and (B) any other tenant of the Project or Development as of
the date hereof (the rights described in items (i) and (ii), above to be known
collectively as “Superior Rights”). 
Tenant’s right of first offer shall be on the terms and conditions set
forth in this Article 33.

33.1         Procedure for Offer.  Landlord shall notify Tenant (“First Offer
Notice”) from time to time when Landlord determines that Landlord shall
commence the marketing of any First Offer Space because such space shall become
available for  lease to third parties,
where no holder of a Superior Right desires to lease such space.  The First Offer Notice shall describe the
space so offered to Tenant and shall set forth Landlord’s proposed material
economic terms and conditions applicable to Tenant’s lease of such space
(collectively, the “Economic Terms”). 
Notwithstanding the foregoing, Landlord’s obligation to deliver the
First Offer Notice shall not apply during the last nine (9) months of the then
Lease Term.

33.2         Procedure for
Acceptance.  If Tenant wishes to
exercise Tenant’s right of first offer with respect to the space described in
the First Offer Notice, then within fifteen (15) business days after delivery
of the First Offer Notice to Tenant, Tenant shall deliver an unconditional
irrevocable written notice to Landlord of Tenant’s exercise of its right of
first offer with respect to the entire space described in the First Offer Notice,
and the Economic Terms shall be as set forth in the First Offer Notice.  If Tenant does not unconditionally exercise
its right of first offer within the fifteen (15) business day period, then
Landlord shall be free to lease the space described in the First Offer Notice
to anyone to whom Landlord desires on any terms Landlord desires and Tenant’s
right of first offer shall terminate as to the First Offer Space described in
the First Offer Notice.  Notwithstanding
anything to the contrary contained herein, Tenant must elect to exercise its
right of first offer, if at all, with respect to all of the space offered by
Landlord to Tenant at any particular time, and Tenant may not elect to lease
only a portion thereof.

33.3         Construction of First
Offer Space.  Except to the extent
otherwise set forth in Landlord’s Economic Terms, Tenant shall take the First
Offer Space in its “as-is” condition, and Tenant shall be entitled to construct
improvements in the First Offer Space in accordance with the provisions of Article
11 of this Lease.

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

33.5         No Defaults.  The rights contained in this Article 33 shall
be personal to the Original Tenant, and may only be exercised by the Original
Tenant (and not any assignee, sublessee or other transferee of the Original
Tenant’s interest in this Lease) if Original Tenant occupies the entire
Premises as of the date of the First Offer Notice.  Tenant shall not have the right to lease
First Offer Space as provided in this Article 33 if, as of the date of the
First Offer Notice, or, at Landlord’s option, as of the scheduled date of
delivery of such First Offer Space to Tenant, Tenant is in default under this
Lease beyond any applicable notice and cure periods.

[SIGNATURE PAGE
FOLLOWS]

 32
 

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

“LANDLORD”

CROWN CARNEGIE ASSOCIATES, LLC,

a Delaware limited liability company

	
  By:

  	
   

  	
  Crown CCA, LLC, a California limited liability
  company

  
	
   

  	
   

  	
  Its: Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Robert A Flaxman

  
	
   

  	
   

  	
   

  	
  Its: Member

  
	
   

  	
   

  	
   

  	
   

  

 

“TENANT”

	
  ITERIS, INC.,

  	
   

  	 

	
  a Delaware
  corporation

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	 

	
  Name:

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Its: CEO

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  By: 

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Name:

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Its: CFO

  	
   

  	
   

  	 

										

 

 33

EXHIBIT
“A”

PREMISES

Suite 100

 1
 

EXHIBIT
“A”

PREMISES

Suite 200

 2

EXHIBIT
“A-1”

FIRST
OFFER SPACE

 1

EXHIBIT
“A-2”

PATIO AREA

 1
 

EXHIBIT
“A-2”

PATIO
AREA

 

 2

EXHIBIT
“B”

RULES AND
REGULATIONS

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

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

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

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

5.             Tenant shall not
overload the floor of the Premises or mark, drive nails, screw or drill into
the partitions, ceilings or floor or in any way deface the Premises with the
exception of commercially reasonable and customary cosmetic actions (such as
hanging pictures) taken by other tenants in the general market area.  Tenant shall not place typed, handwritten or
computer generated signs in the corridors or any other common areas.  Should there be a need for signage additional
to the Project standard tenant placard, a written request shall be made to
Landlord to obtain approval prior to any installation.  All costs for said signage shall be Tenant’s
responsibility.

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

7.             Tenant shall not,
with the exception of small amounts of alcohol and adhesives under Section 14.1
of the Lease, use or keep in the Premises or Project any kerosene, gasoline or
inflammable, explosive or combustible fluid or material, or use any method of
heating or air-conditioning other than that supplied by Landlord.

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

 1
 

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

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

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

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

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

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

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

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

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

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

19.           All doors opening on to
public corridors shall be kept closed, except when being used for ingress and
egress.  Tenant shall cooperate and
comply with any reasonable safety or security programs, including fire drills
and air raid drills, and the appointment of “fire wardens” developed by
Landlord for

 2
 

the Project, or required
by law.  Before leaving the Premises
unattended, Tenant shall close and securely lock all doors or other means of
entry to the Premises and shut off all lights and water faucets in the
Premises.

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

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

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

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

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

25.           Parking.

(a)           Project parking
facility hours shall be as determined from time to time by Landlord.

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

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

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

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

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

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

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

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

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

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

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

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

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

 3

EXHIBIT
“C”

NOTICE OF LEASE TERM DATES

AND TENANT’S PROPORTIONATE SHARE

	
  TO:

  	
  DATE:

  	
   

  
	
   

  	
   

  	
   

  

 

RE:                              Lease
dated              ,
200   , between                                        
(“Landlord”), and                           
(“Tenant”), concerning Suite              ,
located at
                          .

Ladies and Gentlemen:

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

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

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

3.             That in accordance with the Lease, Base Rent commenced
to accrue on              .

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

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

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

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

8.             The Monthly Amortized Additional Allowance, if any, and
the Monthly Amortized HVAC Costs, are as follows:             .

AGREED AND ACCEPTED:

TENANT:

	
               ,

  
	
  a

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
						

 

EXHIBIT
“D”

TENANT
WORK LETTER

ITERIS,
INC.

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

SECTION 1

BASE BUILDING

Landlord has constructed,
at its sole cost and expense, the base, shell and core (i) of the
Premises, and (ii) of the floor of the Project on which the Premises is
located (collectively, the “Base, Shell and
Core”).  Tenant hereby
approves (subject to Landlord’s obligations expressly set forth in the Lease)
the condition of the Base, Shell and Core, and agrees that the Base, Shell and
Core shall be delivered to Tenant in its current “as-is” condition.  The improvements to be initially installed in
the Premises shall be designed and constructed by Tenant pursuant to this
Tenant Work Letter.  Any costs of initial
design and construction of any improvements to the Premises shall be an “Improvement
Allowance Item”, as that term is defined in Section 2.2 of this Tenant
Work Letter.  In connection with Tenant’s
construction of the Tenant Improvements hereunder, Tenant shall not be
obligated to remedy any ADA violations existing as of the date of this Lease in
the common areas of the Base, Shell and Core on the 2nd floor of the Project
under this Tenant Work Letter.

SECTION 2

TENANT
IMPROVEMENTS

2.1           Tenant Improvement
Allowance.

2.1.1        Allowance.  Tenant shall be entitled to a one-time
improvement allowance (the “Tenant
Improvement Allowance”) in the amount of One Million Seven Hundred
Seventy-One Thousand Nine Hundred Fifty Dollars ($1,771,950.00) (based on
$37.50 per usable square foot of the Premises) for the costs relating to the
initial design and construction of Tenant’s improvements which are permanently
affixed to the Premises (the “Tenant
Improvements”).  At Tenant’s
request, and subject to the terms of this Tenant Work Letter (including,
without limitation, Tenant’s obligation to pay to Landlord the Monthly
Amortized Additional Allowance), Tenant shall be entitled to an additional
one-time tenant improvement allowance (“Additional
Allowance”) of up to Two Hundred Thirty-Six Thousand Two Hundred
Sixty Dollars ($236,260.00) (based on $5.00 per usable square foot of the
Premises) over and above the above stated Tenant Improvement Allowance to pay
for that portion of the costs relating to the initial design and construction
of the Tenant Improvements, if any, that exceeds the above-stated initial
Tenant Improvement Allowance.  Subject to
Tenant’s payment obligations herein, the Additional Allowance shall be part of
the Tenant Improvement Allowance under this Exhibit “D”.  In no event shall Landlord be obligated to
make disbursements (or otherwise be obligated) pursuant to this Tenant Work
Letter in a total amount which exceeds the Tenant Improvement Allowance and in
no event shall Tenant be entitled to any credit for any unused portion of the
Tenant Improvement Allowance not used by Tenant by the date that is twelve (12)
months after the date of this Lease.

2.1.2        Additional Allowance.  Notwithstanding anything to the contrary set
forth in this Lease, Tenant agrees to reimburse Landlord for the Additional
Allowance as follows: concurrently with its payments to Landlord of monthly
Base Rent (but without regard to any abatement or credit of Base Rent), and, at
Landlord’s option, as additional Base Rent, Tenant shall pay to Landlord an
amount equal to the Monthly Amortized Additional Allowance (defined
below).  The term “Monthly Amortized
Additional Allowance” shall mean the Additional Allowance, amortized over the
initial Lease Term on a monthly basis (as reasonably determined by Landlord),
with interest accruing on such Additional Allowance at nine percent (9%) per
annum.  If the Lease shall be cancelled
or terminated for any reason prior to the expiration of the initial Lease Term
(other than any permitted termination of the Lease by Tenant as a result of
Landlord default), the unamortized Additional Allowance shall become
immediately due and payable by Tenant to Landlord.

2.1.3        HVAC Work.  Additionally, during the construction of the
Tenant Improvements, using the same Engineer(s) designated by Landlord under
Section 3.1 below, Tenant shall cause the existing HVAC units in and/or
otherwise serving the Premises to be replaced with new comparable HVAC units
(collectively, the “HVAC Units”).  The
definition of HVAC Units shall include purchase, design, engineering and
installation of  package units, heat
pumps and compressors, but shall

 1
 

not include returns, ductwork or looping, which shall
be at Tenant’s sole cost.  The Tenant
Improvement Allowance shall not be used for the HVAC Units or Approved HVAC
Costs (as defined below); provided, however, with respect to any Approved HVAC
Costs, Landlord shall pay for the same (subject to reimbursement by Tenant
hereunder) in the same manner as that for disbursement of the Tenant
Improvement Allowance hereunder.  The
contractor for the HVAC Units (and work under this paragraph), shall be subject
to the prior written approval of Landlord, which approval shall not be
unreasonably withheld.  All plans and
specifications for the HVAC Units (and/or any other matters under this
paragraph), the scope of work relating to the HVAC Units (and/or otherwise
under this paragraph), and all costs and expenses relating to the HVAC Units
(and/or otherwise under this paragraph), shall be subject to the prior written
consent of Landlord.  The term “Approved
HVAC Costs” is defined as the costs of the HVAC Units approved by Landlord in
writing in accordance with the terms hereof. 
Notwithstanding anything to the contrary, the Approved HVAC Costs (or
portion thereof, if applicable) shall be reimbursed by Tenant to Landlord as
follows: during the entire Lease Term (including any extensions/renewals
thereof under the Lease), concurrently with its payments to Landlord of monthly
Base Rent (but without regard to any abatement or credit of Base Rent), and, at
Landlord’s option, as additional Base Rent, Tenant shall pay to Landlord an
amount equal to the Monthly Amortized HVAC Costs (as defined below).  The term “Monthly Amortized HVAC Costs” shall
mean the Approved HVAC Costs, amortized over a twenty (20) year period
(commencing on the Commencement Date), with zero interest accruing on such
Approved HVAC Costs.  If the Lease shall
be cancelled or terminated for any reason (other than any permitted termination
of the Lease by Tenant as a result of Landlord default) prior to the expiration
of the Lease Term, the unamortized HVAC Costs that would have been payable by
Tenant hereunder shall become immediately due and payable by Tenant to
Landlord.  If the then known amount of
Approved HVAC Costs changes after Tenant’s payment of any Monthly Amortized
HVAC Costs hereunder, then Landlord shall make the appropriate equitable
adjustments under this paragraph, and the parties shall make the appropriate
payments to one another as a result thereof within thirty (30) days after any
such adjustment by Landlord.  The degree
of completion of the HVAC Units (and/or work under this paragraph) shall not be
considered in determining whether Substantial Completion has occurred.

2.2           Disbursement of the
Tenant Improvement Allowance

2.2.1        Tenant Improvement
Allowance Items.  Except as otherwise
set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be
disbursed by Landlord (each of which disbursements shall be made pursuant to
Landlord’s disbursement process) for costs related to the construction of the
Tenant Improvements and for the following items and costs (collectively, the “Improvement Allowance Items ”): (i) payment of the fees of
the “Architect” and the “Engineers,” as those terms are defined in
Section 3.1 of this Tenant Work Letter, and payment of the fees incurred
by, and the cost of documents and materials supplied by, Landlord and Landlord’s
consultants in connection with the preparation and review of the “Construction
Drawings,” as that term is defined in Section 3.1 of this Tenant Work
Letter; (ii) the cost of permits; (iii) the cost of any changes in
the Base, Shell and Core required by the Construction Drawings; (iv) the
cost of any changes to the Construction Drawings or Tenant Improvements
required by applicable building codes (the “Code”);
(v) payment to Landlord of a construction coordination fee in an amount
equal to the product of (A) one percent (1%), and (B) an amount equal
to the Tenant Improvement Allowance (including, without limitation, the
Additional Allowance), plus the Over-Allowance Amount (as such Over-Allowance
Amount may increase pursuant to the terms of this Tenant Work Letter), other
than the portion of the Tenant Improvement Allowance, if any, which is used
(not to exceed the caps set forth below) for the Personal Items (as defined in
this paragraph below) pursuant to the provisions below; (vi) space planning,
project management, programming, pricing drawings, construction drawings,
electrical/mechanical/plumbing/engineering drawings, City permits, approval
fees, construction administration, construction; (vii) the cost of purchasing
and installing Tenant’s intrabuilding cabling and wiring; (viii) Tenant’s
furniture fixtures and equipment (subject to Landlord’s receipt of itemized
invoices for the same); and (ix) to the extent not exhausted in connection with
the foregoing items (but subject to the final sentence of this paragraph), as a
one-time credit against monthly Base Rent first due under the Lease after the
final Commencement Date, as applicable. 
However, in no event shall more than Four and 00/100 Dollars ($4.00) per
usable square foot of the Premises be used for the aggregate cost of items
described in (i) and (ii) above; any additional amount incurred as a result of
(i) and (ii) above shall be deemed to constitute an Over-Allowance Amount.  In addition, in no event shall more than Ten
and 00/100 Dollars ($10.00) per usable square foot of the Premises be used for
the aggregate cost of the items (collectively, the “Personal Items”) described in (vii), (viii) and (ix) above.

2.2.2        Disbursement of Tenant
Improvement Allowance.  During the
construction of the Tenant Improvements, Landlord shall make monthly
disbursements of the Tenant Improvement Allowance for Tenant Improvement
Allowance Items for the benefit of Tenant and shall authorize the release of
monies for the benefit of Tenant as follows:

2.2.2.1     Monthly Disbursements.  On or before the twenty-fifth (25th) day of
each calendar month, during the construction of the Tenant Improvements, Tenant
shall deliver to

 2
 

Landlord: (i) a request for payment of the “Contractor,”
as that term is defined below in this Tenant Work Letter, approved by Tenant,
in a form to be provided by Landlord, showing the schedule, by trade, of
percentage of completion of the Tenant Improvements in the Premises, detailing
the portion of the work completed and the portion not completed;
(ii) invoices from all of “Tenant’s Agents,” as that term is defined in Section
4.1.2 of this Tenant Work Letter, for labor rendered and materials
delivered to the Premises; (iii) executed mechanic’s lien releases from
all of Tenant’s Agents which shall comply with the appropriate provisions, as
reasonably determined by  Landlord, of
California Civil Code Section 3262(d); and (iv) all other information
reasonably requested by Landlord.  Tenant’s
request for payment shall be deemed Tenant’s acceptance and approval of the
work furnished and/or the materials supplied as set forth in Tenant’s payment
request.  On or before the last day of
the following month, Landlord shall deliver a check to Tenant made jointly
payable to Contractor and Tenant in payment of the lesser of: (A) the
amounts so requested by Tenant, as set forth in this Section 2.2.2.1,
above, less a ten percent (10%) retention (the aggregate amount of such
retentions to be known as the “Final Retention”) (provided that such 10%
retention shall not apply to the extent of the disbursement of the Improvement
Allowance under this Tenant Work Letter for the Personal Items alone), and
(B) the balance of any remaining available portion of the Tenant
Improvement Allowance (not including the Final Retention), provided that
Landlord does not dispute any request for payment based on a non-compliance of
any work with the “Approved Working Drawings,” as that term is defined in Section
3.4 below, or due to any substandard work. 
Landlord’s payment of such amounts shall not be deemed Landlord’s
approval or acceptance of the work furnished or materials supplied as set forth
in Tenant’s payment request.

2.2.2.2     Final Retention.  Subject to the provisions of this Tenant Work
Letter, a check for the Final Retention payable jointly to Tenant and
Contractor shall be delivered by Landlord to Tenant following the completion of
construction of the Premises, provided that (i) Tenant delivers to
Landlord a waiver and release in accordance with the terms of California Civil
Code Section 3262(d)(2) and a waiver and release in accordance with either
California Civil Code Section 3262(d)(3) or Section 3262(d)(4),
(ii) Landlord has determined that no substandard work exists which
adversely affects the mechanical, electrical, plumbing, heating, ventilating
and air conditioning, life-safety or other systems of the Project, the curtain
wall of the Project, the structure or exterior appearance of the Project, or
any other tenant’s use of such other tenant’s leased premises in the Project
and (iii) Architect delivers to Landlord a certificate, in a form reasonably
acceptable to Landlord, certifying that the construction of the Tenant
Improvements in the Premises has been substantially completed.

2.2.2.3     Other Terms.  Landlord shall only be obligated to make
disbursements from the Tenant Improvement Allowance to the extent costs are
incurred by Tenant for Tenant Improvement Allowance Items.  All Tenant Improvement Allowance Items for
which the Tenant Improvement Allowance has been made available shall be deemed
Landlord’s property under the terms of this Lease (other than Tenant’s
furniture, trade fixtures not attached to the Premises and equipment).

SECTION 3

CONSTRUCTION
DRAWINGS

3.1           Selection of
Architect/Construction Drawings. 
Tenant has retained H. Hendy & Associates as the approved architect
(the “Architect”) to prepare the Construction Drawings.  Tenant shall also retain the engineering
consultants designated by Landlord (the “Engineers”) to prepare all plans and
engineering working drawings relating to the structural, mechanical,
electrical, plumbing, HVAC, life-safety, and sprinkler work in the
Premises.  The plans and drawings to be
prepared by Architect and the Engineers hereunder shall be known collectively
as the “Construction Drawings”.  The
plans attached hereto as Schedule “1” are approved by Landlord and Tenant.  All Construction Drawings shall comply with
the drawing format and specifications reasonably acceptable to and approved by
Landlord.  Tenant and Architect shall
verify, in the field, the dimensions and conditions as shown on the relevant portions
of the base building plans, and Tenant and Architect shall be solely
responsible for the same, and Landlord shall have no responsibility in
connection therewith.  Landlord’s review
of the Construction Drawings as set forth in this Section 3, shall be
for its sole purpose and shall not imply Landlord’s review of the same, or
obligate Landlord to review the same, for quality, design, Code compliance or
other like matters.  Accordingly,
notwithstanding that any Construction Drawings are reviewed by Landlord or its
space planner, architect, engineers and consultants, and notwithstanding any
advice or assistance which may be rendered to Tenant by Landlord or Landlord’s
space planner, architect, engineers, and consultants, Landlord shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Construction Drawings, and Tenant’s
waiver and indemnity set forth in this Lease shall specifically apply to the
Construction Drawings.

3.2           Approved Working
Drawings.  Landlord shall approve (or
disapprove) working drawings prepared by Architect within five (5) business
days after Landlord receives the final Working Drawings (the “Approved Working
Drawings”).  Tenant shall submit the same
to the City in which the Project is located and diligently pursue its receipt
of all applicable building permits. 
Tenant hereby agrees that neither Landlord nor Landlord’s consultants
shall be responsible for obtaining any building permit or

 3
 

certificate of occupancy for the Premises and that
obtaining the same shall be Tenant’s responsibility; provided, however, that
Landlord shall cooperate with Tenant in executing permit applications and
performing other ministerial acts reasonably necessary to enable Tenant to obtain
any such permit or certificate of occupancy. 
No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord, which
consent shall not be unreasonably withheld. 
Tenant shall use its best efforts and all due diligence to cooperate
with the Architect, the Engineers, and the Contractor to complete all phases of
the Tenant Improvements, as soon as possible after the execution of the Lease.

SECTION 4

CONSTRUCTION OF
THE TENANT IMPROVEMENTS

4.1           Tenant’s Selection
of Contractors.

4.1.1        The Contractor.  A general contractor shall be retained by
Tenant to construct the Tenant Improvements and Tenant shall contract directly
with such “Contractor”.  Landlord shall
file a Notice of Non-Responsibility regarding payments under Tenant’s contract
with the Contractor.  Such general
contractor (“Contractor”) shall be selected by Tenant from a list of general
contractors supplied by Tenant and approved by Landlord.  In connection with the performance by Tenant
of the Tenant Improvements pursuant to this Tenant Work Letter, the following
general contractors are deemed acceptable to Tenant and Landlord:  (1) JLC; (2) Casco; and (3) Turelk.

4.1.2        Tenant’s Agents.  All subcontractors, laborers, materialmen, and
suppliers used by Tenant (such subcontractors, laborers, materialmen, and
suppliers, and the Contractor to be known collectively as “Tenant’s Agents”)
must be approved in writing by Landlord, which approval shall not be
unreasonably withheld or delayed.  If
Landlord does not approve any of Tenant’s proposed subcontractors, laborers,
materialmen or suppliers, Tenant shall submit other proposed subcontractors,
laborers, materialmen or suppliers for Landlord’s written reasonable approval.

4.2           Construction of
Tenant Improvements by Tenant’s Agency.

4.2.1        Construction Contract;
Cost Budget.  Prior to Tenant’s
execution of the construction contract and general conditions with Contractor
(the “Contract”), Tenant shall submit the Contract to Landlord for its approval
with regard to proper insurance and licensing requirements and any other areas
which may adversely affect Landlord’s interest in the Project,  and which approval shall not be unreasonably
withheld or delayed by more than five (5) business days after Landlord’s
receipt of the Contract.  Prior to the
commencement of the construction of the Tenant Improvements, and after Tenant
has accepted all bids for the Tenant Improvements, Tenant shall provide
Landlord with a detailed breakdown, by trade, of the final costs to be incurred
or which have been incurred in connection with the design and construction of
the Tenant Improvements to be performed by or at the direction of Tenant or the
Contractor, which costs form a basis for the amount of the Contract (the “Final
Costs”).  Prior to the commencement of
construction of the Tenant Improvements, Tenant shall supply Landlord with cash
in an amount (the “Over-Allowance Amount”) equal to the difference between the
amount of the Final Costs and the amount of the Tenant Improvement Allowance
(less any portion thereof already disbursed by Landlord, or in the process of
being disbursed by Landlord, on or before the commencement of construction of
the Tenant Improvements).  At Landlord’s
option, the Over-Allowance Amount shall be disbursed by Landlord prior to the
disbursement of any of the then remaining portion of the Tenant Improvement
Allowance, and such disbursement shall be pursuant to the same procedure as the
Tenant Improvement Allowance.  In the
event that, after the Final Costs have been delivered by Tenant to Landlord,
the costs relating to the design and construction of the Tenant Improvements
shall change, any additional costs necessary to such design and construction in
excess of the Final Costs, shall be paid by Tenant to Landlord immediately as
an addition to the Over-Allowance Amount or at Landlord’s option, Tenant shall
make payments for such additional costs out of its own funds, but Tenant shall
continue to provide Landlord with the documents described in this Tenant Work
Letter, above, for Landlord’s approval, prior to Tenant paying such costs.

4.2.2        Tenant’s Agents.

4.2.2.1     Landlord’s General
Conditions for Tenant’s Agents and Tenant Improvement Work.  Tenant’s and Tenant’s Agent’s construction of
the Tenant Improvements shall comply with the following: (i) the Tenant
Improvements shall be constructed in strict accordance with the Approved
Working Drawings; (ii) Tenant’s Agents shall submit schedules of all work
relating to the Tenant’s Improvements to Contractor and Contractor shall,
within five (5) business days of receipt thereof, inform Tenant’s Agents of any
changes which are necessary thereto, and Tenant’s Agents shall adhere to such
corrected schedule; and (iii) Tenant shall abide by all rules made by
Landlord’s Project manager with respect to the use of freight, loading dock and
service elevators, storage of materials,

 4
 

coordination of work with the contractors of other
tenants, and any other matter in connection with this Tenant Work Letter,
including, without limitation, the construction of the Tenant Improvements.

4.2.2.2     Indemnity.  Tenant’s indemnity of Landlord as set forth
in this Lease shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to any act or omission of
Tenant or Tenant’s Agents, or anyone directly or indirectly employed by any of
them, or in connection with Tenant’s non-payment of any amount arising out of
the Tenant Improvements and/or Tenant’s disapproval of all or any portion of
any request for payment.  Such indemnity
by Tenant, as set forth in this Lease, shall also apply with respect to any and
all costs, losses, damages, injuries and liabilities related in any way to
Landlord’s performance of any ministerial acts reasonably necessary (i) to
permit Tenant to complete the Tenant Improvements, and (ii) to enable
Tenant to obtain any Project permit or certificate of occupancy for the
Premises.

4.2.2.3     Requirements of Tenant’s
Agents.  Each of Tenant’s Agents
shall guarantee to Tenant and for the benefit of Landlord that the portion of
the Tenant Improvements for which it is responsible shall be free from any
defects in workmanship and materials for a period of not less than one (1) year
from the date of completion thereof.  Each
of Tenant’s Agents shall be responsible for the replacement or repair, without
additional charge, of all work done or furnished in accordance with its
contract that shall become defective within one (1) year after the later to
occur of (i) completion of the work performed by such contractor or
subcontractors and (ii) the applicable Commencement Date.  The correction of such work shall include,
without additional charge, all additional expenses and damages incurred in
connection with such removal or replacement of all or any part of the Tenant
Improvements, and/or the Project and/or common areas that may be damaged or
disturbed thereby.  All such warranties
or guarantees as to materials or workmanship of or with respect to the Tenant
Improvements shall be contained in the Contract or subcontract and shall be
written such that such guarantees or warranties shall inure to the benefit of
both Landlord and Tenant, as their respective interests may appear, and can be
directly enforced by either.  Tenant
covenants to give to Landlord any assignment or other assurances which maybe
necessary to effect such right of direct enforcement.

4.2.2.3.1   Lien-Free
Basis.  Tenant’s Contractor and
agents shall perform all work on a lien-free basis (subject to Landlord’s obligation
to make timely payments under this Exhibit “D”).  If a lien is filed or recorded against the
Project due to, or in any way associated with, the construction of the Tenant
Improvements, Tenant agrees to have such lien released of record (in a manner
and form approved by Landlord) within five (5) days of Landlord’s notice to
Tenant regarding same.  If Tenant fails
to cause the release of such lien within such five (5) day period to Landlord’s
satisfaction, Landlord may cause the removal of such lien, and Tenant agrees to
repay Landlord for all costs and expenses incurred by Landlord to release the
lien (including, but not limited to, the payment of the amount stated in the
lien, any filing, processing, recording and attorneys’ fees) within ten (10)
days of Landlord’s request therefor, and such amount shall be considered
Additional Rent due under the Lease.  If
Tenant fails to pay Landlord as aforesaid, such failure shall be deemed an
uncured noticed material default under the Lease, and Landlord may pursue any
remedy provided for under the Lease, at law or in equity.

4.2.2.4     Insurance Requirements

4.2.2.4.1   General
Coverages.  All of Tenant’s Agents
shall carry worker’s compensation insurance covering all of their respective
employees, and shall also carry public liability insurance, including property
damage, all with limits, in form and with companies as are required to be
carried by Tenant as set forth in this Lease.

4.2.2.4.2   Special
Coverages.  Tenant shall carry “Builder’s
All Risk” insurance in an amount approved by Landlord covering the construction
of the Tenant Improvements, and such other insurance as Landlord may require,
it being understood and agreed that the Tenant Improvements shall be insured by
Tenant pursuant to this Lease immediately upon completion thereof.  Such insurance shall be in amounts and shall
include such  extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that all of Tenant’s Agents shall carry excess liability
and Products and Completed Operating Coverage insurance, each in amounts not
less than $500,000 for each incident, $1,000,000 in aggregate, and in form and
with companies as are required to be carried by Tenant as set forth in this
Lease.

4.2.2.4.3   General
Terms.  Certificates for all
insurance carried pursuant to this Section 4.2.2.4 shall be delivered to
Landlord before the commencement of construction of the Tenant Improvements and
before the Contractor’s equipment is moved onto the site.  All such policies of insurance must contain a
provision that the company writing said policy will give Landlord thirty (30)
days prior written notice of any cancellation or lapse of the effective date or
any reduction in the amounts of such insurance. 
In the event that the Tenant Improvements are damaged by any cause
during the course of the construction thereof, Tenant shall immediately repair
the same at Tenant’s sole cost and expense. 
Tenant’s Agents shall maintain all of the foregoing insurance coverage in
force until

 5
 

the Tenant Improvements are fully completed and
accepted by Landlord, except for any Products and Completed Operation Coverage
insurance required by Landlord, which is to be maintained for ten (10) years
following completion of the work and acceptance by Landlord and Tenant.  All policies carried under this Section
4.2.2.4 shall insure Landlord and Tenant, as their interests may appear, as
well as Contractor and Tenant’s Agents. 
All insurance, except Workers’ Compensation, maintained by Tenant’s
Agents shall preclude subrogation claims by the insurer against anyone insured
thereunder.  Such insurance shall provide
that it is primary insurance as respects the owner and that any other insurance
maintained by owner is excess and noncontributing with the insurance required
hereunder.  The requirements for the
foregoing insurance shall not derogate from the provisions for indemnification
of Landlord by Tenant under Section 4.2.2.2 of this Tenant Work Letter.

4.2.3        Governmental Compliance.  The Tenant Improvements shall comply in all
respects with the following: (i) the Code and other state, federal, city
or quasi-governmental laws, codes, ordinances and regulations, as each may
apply according to the rulings of the controlling public official, agent or
other person; (ii) applicable standards of the American Insurance
Association (formerly, the National Board of Fire Underwriters) and the
National Electrical Code; and (iii) Project material manufacturer’s
specifications.

4.2.4        Inspection by Landlord.
 Landlord shall have the right to inspect
the Tenant Improvements at all times, provided however, that Landlord’s failure
to inspect the Tenant Improvements shall in no event constitute a waiver of any
of Landlord’s rights hereunder nor shall Landlord’s inspection of the Tenant
Improvements constitute Landlord’s approval of the same.  Should Landlord disapprove any portion of the
Tenant Improvements, Landlord shall notify Tenant in writing of such
disapproval and shall specify the items disapproved.  Any defects or deviations in, and/or
disapproval by Landlord of, the Tenant Improvements shall be rectified by
Tenant at no expense to Landlord, provided however, that in the event Landlord
determines that a defect or deviation exists or disapproves of any matter in
connection with any portion of the Tenant Improvements and such defect,
deviation or matter might adversely affect the mechanical, electrical,
plumbing, heating, ventilating and air conditioning or life-safety systems of
the Project, the structure or exterior appearance of the Project or any other
tenant’s use of such other tenant’s leased premises, Landlord may, take such
action as Landlord deems necessary, at Tenant’s expense and without incurring
any liability on Landlord’s part, to correct any such defect, deviation and/or
matter, including, without limitation, causing the cessation of performance of
the construction of the Tenant Improvements until such time as the defect,
deviation and/or matter is corrected to Landlord’s satisfaction.

4.2.5        Meetings.  Commencing upon the execution of this Lease,
Tenant and Landlord shall hold meetings as required at a reasonable time, with
the Architect and the Contractor regarding the progress of the preparation of
Construction Drawings and the construction of the Tenant Improvements, which
meetings shall be held at the Premises or locations reasonably designated by
Landlord, and Landlord and/or its agents shall receive prior notice of, and
shall have the right to attend, all such meetings, and, upon Landlord’s request,
certain of Tenant’s Agents shall attend such meetings.  One such meeting each month shall include the
review of Contractor’s current request for payment.

4.3         Notice of Completion;
Copy of “As Built” Plans.  Within ten
(10) days after completion of construction of the Tenant Improvements, Tenant
shall cause a Notice of Completion to be recorded in the office of the Recorder
of the County in which the Project is located in accordance with Section 3093
of the Civil Code of the State of California or any successor statute, and
shall furnish a copy thereof to Landlord upon such recordation.  If Tenant fails to do so, Landlord may
execute and file the same on behalf of Tenant as Tenant’s agent for such
purpose, at Tenant’s sole cost and expense. 
At the conclusion of construction, (i) Tenant shall cause the
Architect and Contractor (A) to update the Approved Working Drawings as
necessary to reflect all changes made to the Approved Working Drawings during
the course of construction, (B) to certify to the best of their knowledge
that the “record-set” of as-built drawings are true and correct, which
certification shall survive the expiration or termination of this Lease, and
(C) to deliver to Landlord two (2) sets of copies of such as-built
drawings within ninety (90) days following issuance of a certificate of
occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a
copy of all warranties, guaranties, and operating manuals and information
relating to the improvements, equipment, and systems in the Premises.

SECTION 5

MISCELLANEOUS

5.1           Tenant’s
Representative.  Tenant has
designated Dan Gilliam (telephone:  
714-780-7259)  as its sole
representative with respect to the matters set forth in this Tenant Work
Letter, who shall have full authority and responsibility to act on behalf of
the Tenant as required in this Tenant Work Letter.

5.2           Landlord’s
Representative.  Landlord shall
designate an individual as its sole representative with respect to the matters
set forth in this Tenant Work Letter, who, until further notice to

 6
 

Tenant, shall have
full authority and responsibility to act on behalf of the Landlord as required
in this Tenant Work Letter.

5.3           Time of the Essence
in This Tenant Work Letter.  Time is
of the essence with respect to the provisions of this Tenant Work Letter.  Unless otherwise indicated, all references
herein to a “number of days” shall mean and refer to calendar days.  If any item requiring approval is timely
disapproved by Landlord, the procedure for preparation of the document and
approval thereof shall be repeated until the document is approved by Landlord.

5.4           Tenant’s Lease
Default.  Notwithstanding any
provision to the contrary contained in this Lease, if an event of default as
described in the Lease or this Tenant Work Letter has occurred at any time,
then (i) in addition to all other rights and remedies granted to Landlord
pursuant to this Lease, Landlord shall have the right to withhold payment of
all or any portion of the Tenant Improvement Allowance and/or Landlord may cause
Contractor to cease the construction of the Premises (in which case, Tenant
shall be responsible for any delay in the substantial completion of the
Premises caused by such work stoppage), and (ii) all other obligations of
Landlord under the terms of this Tenant Work Letter shall be forgiven until
such time as such default is cured pursuant to the terms of this Lease (in
which case, Tenant shall be responsible for any delay in the substantial
completion of the Premises caused by such inaction by Landlord).

5.5           Additional Services.  If the construction of the Tenant
Improvements shall require that additional services or facilities (including,
but not limited to, hoisting, cleanup or other cleaning services, trash
removal, field supervision, or ordering of materials) be provided by Landlord,
then Tenant shall pay Landlord for such items at Landlord’s cost or at a
reasonable charge if the item involves time of Landlord’s personnel only.

5.6           Construction Defects.  Landlord shall have no responsibility for the
Tenant Improvements and Tenant will remedy, at Tenant’s own expense, and be
responsible for any and all defects in the Tenant Improvements that may appear
during or after the completion thereof whether the same shall affect the Tenant
Improvements in particular or any parts of the Premises in general.  Tenant shall indemnify, hold harmless and
reimburse Landlord for any costs or expenses incurred by Landlord by reason of
any defect in any portion of the Tenant Improvements constructed by Tenant or
Tenant’s contractor or subcontractors, or by reason of inadequate cleanup
following completion of the Tenant Improvements.

5.7           Coordination of
Labor.  All of Tenant’s contractors,
subcontractors, employees, servants and agents must work in harmony with and
shall not interfere with any labor employed by Landlord, or Landlord’s
contractors or by any other tenant or its contractors with respect to any
portion of the Project or Development.

5.8           HVAC Systems.  Tenant agrees to be entirely responsible for
the balancing of any heating, ventilating or air conditioning system installed
by Tenant and/or maintenance of the electrical or plumbing work installed by
Tenant, partitions, doors, hardware or any other installations made by Tenant.

5.9           Approval of Plans.  Landlord will not check Tenant drawings for
building code compliance.  Approval of
the Construction Drawings by Landlord is not a representation that the drawings
are in compliance with the requirements of governing authorities, and it shall
be Tenant’s responsibility to meet and comply with all federal, state, and
local code requirements.  Approval of the
Construction Drawings does not constitute assumption of responsibility by
Landlord or its architect for their accuracy, sufficiency or efficiency, and
Tenant shall be solely responsible for such matters.

5.10         Substantial
Completion.  For purposes of the
Lease and this Tenant Work Letter,  “Substantial
Completion” shall occur upon the substantial completion of construction of the
Tenant Improvements in the applicable portions of the Premises pursuant to the
Approved Working Drawings, with the exception of any punch list work and any
tenant fixtures, work-stations, built-in furniture, or equipment to be
installed by Tenant; provided, however, in the event such substantial completion
is delayed as a result of the acts or omissions of Tenant or any of the Tenant
Parties (as defined in the Lease), or a breach of this Lease by Tenant, then
Substantial Completion shall be deemed to have occurred on the date it would
have otherwise occurred, absent such acts and omissions and breaches.

5.11         Landlord
Delay.

5.11.1      If there are not two (2) different Commencement
Dates (i.e., occurring on 2 different dates) under the Basic Lease Provisions
above, then this Section 5.11.1 (as opposed to Section 5.11.2 below) shall
apply.  If Substantial Completion occurs
after the 9/17 Date, then the 9/17 Date set
forth in the definition of Commencement Date in the Lease shall be extended (up
to a maximum of the number of days, if any, during the period between the 9/17
Date and the date of Substantial Completion)

 7
 

one (1) day for each day (if any) that Substantial
Completion of the Tenant Improvements in the Premises has been delayed as a
result of a “Landlord Delay”.  The term “Landlord
Delay” shall mean only an actual delay in the Substantial Completion of the
Tenant Improvements in the Premises which is caused by the failure of Landlord
to comply with Landlord’s obligations expressly set forth in this Tenant Work
Letter.  Notwithstanding anything to the
contrary contained herein, any delays to the extent caused by or attributable
to the acts, omissions or misconduct of Tenant or any of the Tenant Parties
shall not be deemed to constitute a Landlord Delay.  In addition, no Landlord Delay shall be
deemed to have occurred unless and until (i) Tenant has given Landlord written
notice that an act or omission on the part of Landlord is about to occur or has
occurred which will cause a delay in the Substantial Completion of the Tenant
Improvements in the Premises, and (ii) Landlord has failed to cure such delay
within one (1) business day after Landlord’s receipt of such notice from
Tenant, in which case the number of days of delay after such notice shall, to
the extent such delay is attributable to the circumstances described in the
definition of Landlord Delay, be deemed to be a Landlord Delay.

5.11.2      If there are two
(2) different Commencement Dates (i.e., occurring on 2 different dates) under
the Basic Lease Provisions above, then this Section 5.11.2 (as opposed to
5.11.1 above) shall apply.  With respect
to Suite 100, if Substantial Completion occurs after the 9/17 Date, then the 9/17 Date set forth in the definition of
Commencement Date (for Suite 100) in the Lease shall be extended (up to a
maximum of the number of days, if any, during the period between the 9/17 Date
and the date of Substantial Completion) one (1) day for each day (if any) that
Substantial Completion of the Tenant Improvements in Suite 100 has been delayed
as a result of a “Landlord Delay”. 
Additionally, with respect to Suite 200, if Substantial
Completion occurs after the Suite 200 Hard Date, then the Suite 200 Hard Date set forth in the definition of Commencement Date
(for Suite 200) in the Lease shall be extended (up to a maximum of the number
of days, if any, during the period between the Suite 200 Hard Date and the date
of Substantial Completion) one (1) day for each day (if any) that Substantial
Completion of the Tenant Improvements in Suite 200 has been delayed as a result
of a “Landlord Delay”.  The term “Landlord
Delay” shall mean only an actual delay in the Substantial Completion of the
Tenant Improvements in the applicable portion of the Premises which is caused
by the failure of Landlord to comply with Landlord’s obligations expressly set
forth in this Tenant Work Letter. 
Notwithstanding anything to the contrary contained herein, any delays to
the extent caused by or attributable to the acts, omissions or misconduct of
Tenant or any of the Tenant Parties shall not be deemed to constitute a
Landlord Delay.  In addition, no Landlord
Delay shall be deemed to have occurred unless and until (i) Tenant has given
Landlord written notice that an act or omission on the part of Landlord is
about to occur or has occurred which will cause a delay in the Substantial
Completion of the Tenant Improvements in the applicable portion of the
Premises, and (ii) Landlord has failed to cure such delay within one (1)
business day after Landlord’s receipt of such notice from Tenant, in which case
the number of days of delay after such notice shall, to the extent such delay
is attributable to the circumstances described in the definition of Landlord
Delay, be deemed to be a Landlord Delay.

5.12         Force Majeure.

5.12.1      If there are not
two (2) different Commencement Dates (i.e., occurring on 2 different dates)
under the Basic Lease Provisions above, then this Section 5.12.1 (as opposed to
Section 5.12.2 below) shall apply.  If
Substantial Completion occurs after the 9/17 Date, then the 9/17 Date set forth in the definition of
Commencement Date in the Lease shall be extended (up to a maximum of the number
of days, if any, during the period between the 9/17 Date and the date of
Substantial Completion, and not to exceed an aggregate 60-day extension under
this Section 5.12) one (1) day for each day (if any) that Substantial
Completion of the Tenant Improvements in the Premises has been delayed as a
result of a “Tenant Force Majeure Delay”. 
The term “ Tenant Force Majeure Delay” shall mean only an actual delay
in the Substantial Completion of the Tenant Improvements in the Premises which
is caused by any of the following to the extent they actually occur at the
Premises or Project, and actually prevent Tenant from gaining access to the
Premises or Project for the purpose of performing the Tenant Improvements in
the Premises: (a) failure of
power or utilities, (b) earthquakes, fire or other casualty, or (c) acts of
terrorism, riot, war, insurrection, civil commotion, sabotage and/or national
or local emergency.  Without limitation, financial
inability shall not be considered Tenant Force Majeure Delay. 
Notwithstanding anything to the contrary contained herein, any delays to
the extent caused by or attributable to the acts, omissions or misconduct of
Tenant or any of the Tenant Parties shall not be deemed to constitute a Tenant
Force Majeure Delay.  In addition, no
Tenant Force Majeure Delay  shall be
deemed to have occurred unless and until (i) Tenant has given Landlord written
notice that a circumstance has occurred constituting a Tenant Force Majeure
Delay which will cause a delay in the Substantial Completion of the Tenant
Improvements in the Premises, and (ii) Landlord has failed to cure such delay
within one (1) business day after Landlord’s receipt of such notice from
Tenant, in which case the number of days of delay after such notice shall, to
the extent such delay is attributable to the circumstances described in the
definition of Tenant Force Majeure Delay, be deemed to be a Tenant Force
Majeure Delay.

5.12.2      If there are two
(2) different Commencement Dates (i.e., occurring on 2 different dates) under
the Basic Lease Provisions above, then this Section 5.12.2 (as opposed to
5.12.1 above) shall apply.  With respect
to Suite 100, if Substantial Completion occurs after the 9/17 Date, then the 9/17 Date

 8
 

set forth in the definition of Commencement Date (for
Suite 100) in the Lease shall be extended (up to a maximum of the number of
days, if any, during the period between the 9/17 Date and the date of
Substantial Completion, and not to exceed an aggregate 60-day extension for any
portion of the Premises under this Section 5.12) one (1) day for each day (if
any) that Substantial Completion of the Tenant Improvements in Suite 100 has
been delayed as a result of a “Tenant Force Majeure Delay”.  Additionally, with respect to Suite
200, if Substantial Completion occurs after the Suite 200 Hard Date, then the Suite 200 Hard Date set forth in the
definition of Commencement Date (for Suite 200) in the Lease shall be extended
(up to a maximum of the number of days, if any, during the period between the
Suite 200 Hard Date and the date of Substantial Completion, and not to exceed
an aggregate 60-day extension for any portion of the Premises under this
Section 5.12) one (1) day for each day (if any) that Substantial Completion of
the Tenant Improvements in Suite 200 has been delayed as a result of a “Tenant
Force Majeure Delay”.  The term “ Tenant
Force Majeure Delay” shall mean only an actual delay in the Substantial
Completion of the Tenant Improvements in the applicable portion of the Premises
which is caused by any of the following to the extent they actually occur at
the applicable portion of the Premises or Project, and actually prevent Tenant
from gaining access to the applicable portion of the Premises or Project for
the purpose of performing the Tenant Improvements in the applicable portion of the
Premises: (a) failure of
power or utilities, (b) earthquakes, fire or other casualty, or (c) acts of
terrorism, riot, war, insurrection, civil commotion, sabotage and/or national
or local emergency.  Without limitation, financial
inability shall not be considered Tenant Force Majeure Delay. 
Notwithstanding anything to the contrary contained herein, any delays to
the extent caused by or attributable to the acts, omissions or misconduct of
Tenant or any of the Tenant Parties shall not be deemed to constitute a Tenant
Force Majeure Delay.  In addition, no
Tenant Force Majeure Delay  shall be
deemed to have occurred unless and until (i) Tenant has given Landlord written
notice that a circumstance has occurred constituting a Tenant Force Majeure
Delay which will cause a delay in the Substantial Completion of the Tenant
Improvements in the applicable portion of the Premises, and (ii) Landlord has
failed to cure such delay within one (1) business day after Landlord’s receipt
of such notice from Tenant, in which case the number of days of delay after
such notice shall, to the extent such delay is attributable to the
circumstances described in the definition of Tenant Force Majeure Delay, be
deemed to be a Tenant Force Majeure Delay.

 9
 

SCHEDULE
“1”

APPROVED
PLANS

 10
 

APPROVED
PLANS

 11

EXHIBIT “E”

INTENTIONALLY OMITTED

 1

EXHIBIT
“F”

TEST LANE
& PARKING

 

 1

EXHIBIT “G”

JANITORIAL SPECIFICATIONS

CLEANING SPECIFICATIONS

1.  Daily Services – 5 days per week

A.           Empty all waste baskets
(replace liners if necessary)

B.             Dust furniture and
window ledges

C.             Sweep or dust mop all
hard floors

D.            Spot damp mop coffee
stains and marks on hard floors

E.              Spot clean carpet
where possible if shampooing is not required

F.              Spot clean
fingerprints on doors, walls (and wall switches)

G.             Spot clean partition
glass

H.            Vacuum carpets in all
open areas

I.                 Return all chairs
and wastebaskets to their proper position.

2.     Weekly Services (as
per Detailing Schedule)

A.           Detail vacuum edges,
corners, and under furniture

B.             High dusting,
including picture frames and tops of partitions (not higher than six feet)

C.             Low dusting,
including chair rungs and lower ledges

D.            Thoroughly wet mop all
hard floors

E.              Clean desk tops only
when cleared of papers and files

3.     Monthly Services - (as
per Detailing Schedule)

A.           Scrub and wax hard
floors

B.             Dust window
mini-blinds.

C.             Brush or vacuum
upholstered furniture

4.     Quarterly Services

A.            Dust ceiling and wall
vents

HOURS OF
SERVICE

All work will be
performed during the normal working hours of 6:00 p.m. and 2:30 a.m., Sunday
through Thursday, 5 days a week if not otherwise scheduled by the management.

EXCLUSIONS

Not included in this
contract are hand towels, toilet tissue, seat covers, sanitary products, hand
soap and plastic trash liners will be supplied to all common areas and not to
private restrooms.

HOLIDAYS OBSERVED

The following holidays
are observed and service is not provided on these days.  An extra charge will be calculated for any
services performed on these holidays at a rate of time and one-half.

1.  New Year’s Day

2.     Memorial Day

3.     Fourth of July

4.     Labor Day

5.     Thanksgiving Day

6.     Day After Thanksgiving

7.
    Christmas Day

 1

EXHIBIT “H”

ESTOPPEL

TENANT ESTOPPEL CERTIFICATE

To:                              Bank of America, N. A.

Attention:     Relationship Administration

                     Real
Estate Group

Re:

1.                                        The undersigned, as Tenant of approximately            square
feet of space (the “Premises”) under that certain Lease dated                                               ,                        (the
“Lease”) made with            ,
Landlord, covering space in Landlord’s building (the “Building”) in
            
County,                        ,
known as
            ,
hereby certifies as follows:

(a)                                  That attached hereto as Exhibit “A” is
a true, correct and complete copy of the Lease, together with all amendments
thereto;

(b)                                 That the Lease is in full force and effect
and has not been modified, supplemented or amended in any way except as set
forth in Exhibit “A.” The interest of the undersigned in the Lease has
not been assigned or encumbered;

(c)                                  That the Lease, as amended as indicated in Exhibit
“A,” represents the entire agreement between the parties as to said
leasing, and that there are no other agreements, written or oral, which affect
the occupancy of the Premises by the undersigned;

(d)                                 That all insurance required of the
undersigned under the Lease has been provided by the undersigned and all
premiums have been paid;

(e)                                  That the commencement date of the term of the
Lease was            ,         ;

(f)                                    That the expiration date of the term of the
Lease is            ,            ,
including any presently exercised option or renewal term, and that the
undersigned has no rights to renew, extend or cancel the Lease or to lease
additional space in the Premises or the Building, except as expressly set forth
in the Lease;

(g)                                 That in addition to the Premises, the
undersigned has the right to use or rent
            parking
spaces in or near the Building during the term of the Lease;

 1
 

(h)                                 That the undersigned has no option or
preferential right to purchase all or any part of the Premises (or the land or
Building of which the Premises are a part), and has no right or interest with
respect to the Premises or the Building other than as Tenant under the Lease
(except as specified in            ,
a copy of which is attached hereto);

(i)                                     That all conditions of the Lease to be
performed by Landlord and necessary to the enforceability of the Lease have been
satisfied. On this date there are no existing defenses, offsets, claims or
credits which the undersigned has against the enforcement of the Lease except for
prepaid rent through            (not
to exceed one month);

(j)                                     That all contributions required by the Lease
to be paid by Landlord to date for improvements to the Premises have been paid
in full. All improvements or work required under the Lease to be made by
Landlord to date, if any, have been completed to the satisfaction of the
undersigned. Charges for all labor and materials used or furnished in
connection with improvements and/or alterations made for the account of the
undersigned in the Building have been paid in full. The undersigned has
accepted the Premises, subject to no conditions other than those set forth in
the Lease. The undersigned has entered into occupancy of the Premises;

(k)                                  That the annual minimum rent currently
payable under the Lease is $            and
such rent has been paid through            ;

[(l)                             That the annual percentage rent
currently payable under the Lease is at the rate of            and
such rent has been paid through            ;]

[(m)                        That additional rent is payable
under the Lease for (i) operating, maintenance or repair expenses, (ii)
property taxes, (iii) consumer price index cost of living adjustments, or (iv)
percentage of gross sales adjustments (i.e., adjustments made based on
underpayments of percentage rent).  The
base year amounts for additional rental items are as follows: (I) operating,
maintenance or repair expenses $            ,
(2) property taxes $            ,
and (3) consumer price index            (indicate
base year CPI level);]

(n)                                 That the undersigned has made no agreement
with Landlord or any agent, representative or employee of Landlord concerning
free rent, partial rent, rebate of rental payments or any other similar rent
concession (except as expressly set forth in , a copy of which is attached
hereto). No rents have been prepaid more than one (1) month in advance and full
rental, including basic minimum rent, if any, has commenced to accrue;

(o)                                 That there are no defaults by the undersigned
or Landlord under the Lease, and no event has occurred or situation exists that
would, with the passage of time, constitute a default under the Lease;

(p)                                 That the undersigned has paid to Landlord a
security deposit in the amount of $            ;

 2
 

(q)                                 That the undersigned has all governmental
permits, licenses and consents required for the activities and operations being
conducted or to be conducted by it in or around the Building; and

(r)                                    That as of this date there are no actions,
whether voluntary or otherwise, pending against the undersigned or any
guarantor of the Lease under the bankruptcy or insolvency laws of the United
States or any state thereof.

2.                                        The undersigned represents and warrants that
it has not used, generated, released, discharged, stored or disposed of any
Hazardous Material on, under, in or about the Building or the land on which the
Building is located, other than in the ordinary and commercially reasonable
course of the business of the undersigned in compliance with all applicable
laws. Except for any such legal and commercially reasonable use by the
undersigned, the undersigned has no actual knowledge that any Hazardous
Material is present or has been used, generated, released, discharged, stored
or disposed of by any party, on, under, in or about such Building or land. As
used herein, “Hazardous Material” means any substance, material or waste
(including petroleum and petroleum products) which is designated, classified or
regulated as being “toxic” or “hazardous” or a “pollutant” or which is
similarly designated, classified or regulated under any federal, state or local
law or ordinance.

[If the tenant is signing an SNDA, delete any parts of
Section 3 that are already in the SNDA.]

3.                                        The undersigned hereby agrees:

(a)                               To send a copy of any notice or demand given
or made to Landlord pursuant to the provisions of the Lease to Bank of America,
N.A. (“Lender”), who is or will be the owner and holder of a mortgage or
deed of trust on the demised premises, or its assignee upon being notified in
writing of such assignee’s name and address. Lender’s copy of said notice or
demand shall be sent by certified mail at the same time the notice or demand is
sent to Landlord, to Bank of America, N.A.,            ,
Attention: Relationship Administration, Real Estate Group;

(b)                              To give to the holder of
said mortgage or deed of trust a reasonable period of time, but in no event
less than thirty (30) days, to cure any default complained of in said notice or
demand;

(c)                               That no consent of
Landlord to any modification or assignment of the Lease or any termination of
the Lease (other than in accordance with the express terms of the Lease) shall
be effective without the prior written consent of the holder of said mortgage
or deed of trust; and

(d)                              That in the event that
the holder of said mortgage or deed of trust acquires title to the property
encumbered by the mortgage or deed of trust, such holder will not be liable for
any security deposit that the undersigned may have given to any previous
landlord (including Landlord) which has not, as such, been transferred to such
holder.

 3
 

4.                                       The undersigned acknowledges the right of
Lender to rely upon the certifications and agreements in this Certificate in
making a loan to Landlord. The undersigned hereby agrees to furnish Lender with
such other and further estoppel certificates as Lender may reasonably request.
The undersigned understands that in connection with such loan, Landlord’s
interest in the rentals due under the Lease will be assigned to Lender pursuant
to an assignment of leases by Landlord in favor of Lender. The undersigned
agrees that if Lender shall notify the undersigned that a default has occurred
under the documents evidencing such loan and shall demand that the undersigned
pay rentals and other amounts due under the Lease to Lender, the undersigned
will honor such demand notwithstanding any contrary instructions from Landlord.

EXECUTED
this            day
of            ,            .

	
  

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 4

EXHIBIT
“I”

SNDA

	
  RECORDING REQUESTED BY

  AND WHEN RECORDED MAIL TO:

  	
   

  
	
  Bank of America,
  National Association

  Real Estate Banking Group No.

  Attn.:

  Loan No.:

  	
   

  

 

THIS SPACE ABOVE
FOR RECORDER’S USE

 

SUBORDINATION,
NONDISTURBANCE AND ATTORNMENT AGREEMENT

NOTICE: 
THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT RESULTS IN
YOUR LEASEHOLD ESTATE BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN
OF SOME OTHER OR LATER SECURITY INSTRUMENT.

This
Subordination, Nondisturbance and Attornment Agreement (this “Agreement”)
dated                  ,
          , is made among                                   
(“Tenant”),                                   
(“Landlord”), and Bank of America, N.A., a national banking association
(“Lender”).

WHEREAS, Lender is the owner
of a promissory or deed of trust note (herein, as it may have been or may be
from time to time renewed, extended, amended, supplemented or restated, called
the “Note”) dated                  ,
executed by Landlord payable to the order of Lender, in the face principal
amount of $                 ,
bearing interest and payable as therein provided, secured by, among other
things, a [Construction] Deed of
Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing
(herein, as it may have been or may be from time to time renewed, extended,
amended or supplemented, called the “Deed of Trust”), recorded or to be
recorded in the real property records of                  
County,                  ,
covering, among other property, the land (the “Land”) described in Exhibit
“A” which is attached hereto and incorporated herein by reference, and the
improvements (“Improvements”) thereon (such Land and Improvements being
herein together called the “Property”);

WHEREAS, Tenant is the
tenant under a lease from Landlord dated                  ,
as amended on                                   ,
                 
(herein, as it may from time to time be renewed, extended, amended or
supplemented, called the “Lease”), covering a portion of the Property
(said portion being herein referred to as the “Premises”); and

WHEREAS, the term “Landlord”
as used herein means the present landlord under the Lease or, if the landlord’s
interest is transferred in any manner, the successor(s) or assign(s) occupying
the position of landlord under the Lease at the time in question.

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

1.             Subordination.  Tenant agrees and covenants that the Lease
and the rights of Tenant thereunder, all of Tenant’s right, title and interest
in and to the property covered by the Lease, and any lease thereafter executed
by Tenant covering any part of the Property, are and shall be subject,
subordinate and inferior to (a) the Deed of Trust and the rights of Lender
thereunder, and all right, title and interest of Lender in the Property, and
(b) all other security documents now or hereafter securing payment of any
indebtedness of Landlord (or any prior landlord) to Lender which cover or
affect the Property (the “Security Documents”).  This Agreement is not intended and shall not
be construed to subordinate the Lease to any mortgage, deed of trust or other
security document other than those referred to in the preceding sentence,
securing the indebtedness to Lender.

2.             Nondisturbance.  Lender agrees that so long as the Lease is in
full force and effect and Tenant is not in default in the payment of rent,
additional rent or other payments or in the performance of any of the other
terms, covenants or conditions of the Lease on Tenant’s part to be performed
(beyond the period, if any, specified in the Lease within which Tenant may cure
such default),

 1
 

(a)           Tenant’s
possession of the Premises under the Lease shall not be disturbed or interfered
with by Lender in the exercise of any of its foreclosure rights under the Deed
of Trust or in connection with any conveyance in lieu of foreclosure, and

(b)           Lender
will not join Tenant as a party defendant for the purpose of terminating Tenant’s
interest and estate under the Lease in any proceeding for foreclosure of the
Deed of Trust.

3.             Attornment.

(a)           Tenant
covenants and agrees that in the event of foreclosure of the Deed of Trust,
whether by power of sale or by court action, or upon a transfer of the Property
by conveyance in lieu of foreclosure (the purchaser at foreclosure or the
transferee in lieu of foreclosure, including Lender if it is such purchaser or
transferee, being herein called “New Owner”), Tenant shall attorn to New
Owner as Tenant’s new landlord, and agrees that the Lease shall continue in
full force and effect as a direct lease between Tenant and New Owner upon all
of the terms, covenants, conditions and agreements set forth in the Lease and
this Agreement, except for provisions which are impossible for New Owner to
perform; provided, however, that in no event shall New Owner be:

(i)            liable for any act, omission, default, misrepresentation
or breach of warranty of any previous landlord (including Landlord) or
obligations accruing prior to New Owner’s actual ownership of the Property;

(ii)           subject to any offset, defense, claim or counterclaim
which Tenant might be entitled to assert against any previous landlord
(including Landlord);

(iii)          bound by any payment of rent, additional rent or other
payments made by Tenant to any previous landlord (including Landlord) for more
than one (1) month in advance;

(iv)          bound by any amendment or modification of the Lease
hereafter made, or consent or acquiescence by any previous landlord (including
Landlord) under the Lease to any assignment or sublease hereafter granted,
without the written consent of Lender; or

(v)           liable for any deposit that Tenant may have given to any
previous landlord (including Landlord) which has not, as such, been transferred
to New Owner.

(b)           The
provisions of this Agreement regarding attornment by Tenant shall be
self-operative and effective without the necessity of execution of any new
lease or other document on the part of any party hereto or the respective
heirs, legal representatives, successors or assigns of any such party.  Tenant agrees, however, to execute and
deliver upon the request of New Owner, any instrument or certificate which in
the reasonable judgment of New Owner may be necessary or appropriate to
evidence such attornment, including a new lease of the Premises on the same
terms and conditions as the Lease for the unexpired term of the Lease.

4.             Estoppel
Certificate.  Tenant agrees to
execute and deliver from time to time, upon the request of Landlord or of any
holder(s) of any of the indebtedness or obligations secured by the Deed of
Trust, a certificate regarding the status of the Lease, certifying
(a) that the Lease is in full force and effect, (b) the date through
which rentals have been paid, (c) the date of the commencement of the term
of the Lease, (d) the nature of any amendments or modifications of the
Lease, (e) that to the best of Tenant’s knowledge no default, or state of
facts which with the passage of time or notice (or both) would constitute a
default, exists under the Lease, (f) that to the best of Tenant’s
knowledge, no setoffs, recoupments, estoppels, claims or counterclaims exist
against Landlord, and (g) such other matters as may be reasonably
requested.  If any of the foregoing
statements are untrue, Tenant’s certificate shall state the reasons therefor.

5.             Acknowledgment
and Agreement by Tenant.  Tenant
acknowledges and agrees as follows:

(a)           Tenant
acknowledges that in connection with the financing of the Property, Landlord is
executing and delivering to Lender the Deed of Trust which contains an
assignment of leases and rents.  Tenant
hereby expressly consents to such assignment and agrees that such assignment
shall, in all respects, be superior to any interest Tenant has in the Lease or
the Property, subject to the provisions of this Agreement.  Tenant will not amend, alter or waive any
provision of, or consent to the amendment, alteration or waiver of, any
provision of the Lease without the prior written consent of Lender.  Tenant shall not prepay any rents or other
sums due under the Lease for more than one (1) month in advance of the due
date therefor.  Tenant acknowledges that
Lender will rely upon this instrument in connection with such financing.

 2
 

(b)           Lender,
in making any disbursements to Landlord, is under no obligation or duty to
oversee or direct the application of the proceeds of such disbursements, and
such proceeds may be used by Landlord for purposes other than improvement of
the Property.

(c)           From
and after the date hereof, in the event of any act or omission by Landlord
which would give Tenant the right, either immediately or after the lapse of
time, to terminate the Lease or to claim a partial or total eviction, Tenant
will not exercise any such right (i) until it has given written notice of
such act or omission to Lender, and (ii) until the same period of time as
is given to Landlord under the Lease to cure such act or omission shall have
elapsed following such giving of notice to Lender and following the time when
Lender shall have become entitled under the Deed of Trust to remedy the
same.  In no event will Tenant exercise
any such right less than 30 days after receipt of such notice or prior to
the passage of such longer period of time as may be necessary to cure or remedy
such default, act or omission including such period of time necessary to obtain
possession of the Property and thereafter cure such default, act or omission,
during which period of time Lender shall be permitted to cure or remedy such
default, act or omission. 
Notwithstanding the foregoing, Lender shall have no duty or obligation
to cure or remedy any breach or default. 
It is specifically agreed that Tenant shall not, as to Lender, require
cure of any such default which is personal to Landlord and therefore not
susceptible to cure by Lender.

(d)           In
the event that Lender notifies Tenant of a default under the Deed of Trust,
Note or Security Documents and demands that Tenant pay its rent and all other
sums due under the Lease directly to Lender, Tenant shall honor such demand and
pay the full amount of its rent and all other sums due under the Lease directly
to Lender, without offset, or as otherwise required pursuant to such notice
beginning with the payment next due after such notice of default, without
inquiry as to whether a default actually exists under the Deed of Trust,
Security Documents or otherwise in connection with the Note, and
notwithstanding any contrary instructions of or demands from Landlord.

(e)           Tenant
shall send a copy of any notice or statement under the Lease to Lender at the
same time such notice or statement is sent to Landlord if such notice or
statement has a material impact on the economic terms, operating covenants or
duration of the Lease.

(f)            Tenant
has no right or option of any nature whatsoever, whether pursuant to the Lease
or otherwise, to purchase the Premises or the Property, or any portion thereof
or any interest therein, and to the extent that Tenant has had, or hereafter
acquires, any such right or option, the same is hereby acknowledged to be
subject and subordinate to the Deed of Trust and is hereby waived and released
as against Lender and New Owner.

(g)           This
Agreement satisfies any condition or requirement in the Lease relating to the
granting of a nondisturbance agreement and Tenant waives any requirement to the
contrary in the Lease.

(h)           Lender
and any New Owner shall have no liability to Tenant or any other party for any
conflict between the provisions of the Lease and the provisions of any other
lease affecting the Property, including any provisions relating to exclusive or
non-conforming uses or rights, renewal options and options to expand, and in
the event of such a conflict, Tenant shall have no right to cancel the Lease or
take any other remedial action against Lender, New Owner or any other party.

(i)            Lender
and any New Owner shall have no obligation nor shall they incur any liability
with respect to the erection or completion of the improvements in which the
Premises are located or for completion of the Premises or any improvements for
Tenant’s use and occupancy, either at the commencement of the term of the
Lease, upon any renewal or extension thereof, or upon the addition of
additional space pursuant to any expansion rights contained in the Lease.

(j)            Lender
and any New Owner shall have no obligation nor shall they incur any liability
with respect to any warranties of any nature whatsoever, whether pursuant to the
Lease or otherwise, including any warranties respecting use, compliance with
zoning, Landlord’s title, Landlord’s authority, habitability, fitness for
purpose or possession.

(k)           In
the event that Lender or any New Owner shall acquire title to the Premises or
the Property, Lender or such New Owner shall have no obligation, nor shall it
incur any liability, beyond Lender’s or New Owner’s then-equity interest, if
any, in the Property or the Premises, and Tenant shall look exclusively to such
equity interest of Lender or New Owner, if any, for the payment and discharge
of any obligations imposed upon Lender or New Owner hereunder or under the
Lease or for recovery of any judgment from Lender or New Owner, and in no event
shall Lender, New Owner, or any of their respective officers, directors,
shareholders, agents, representatives, servants, employees or partners ever be
personally liable for such judgment.

(l)            Tenant
has never permitted, and will not permit, the generation, treatment, storage or
disposal of any hazardous substance as defined under federal, state, or local
law, on the Premises or Property except for such substances of a type and only
in a quantity normally used in connection with the occupancy or

 3
 

operation of buildings (such as non-flammable
cleaning fluids and supplies normally used in the day-to-day operation of first
class establishments similar to the Improvements), which substances are being
held, stored, and used in strict compliance with federal, state, and local
laws.  Tenant shall be solely responsible
for and shall reimburse and indemnify Landlord, New Owner or Lender, as
applicable, for any loss, liability, claim or expense, including cleanup and
all other expenses, including legal fees that Landlord, New Owner or Lender, as
applicable, may incur by reason of Tenant’s violation of the requirements of
this Section 5(l).

6.             Acknowledgment
and Agreement by Landlord.  Landlord,
as landlord under the Lease and trustor under the Deed of Trust, acknowledges
and agrees for itself and its heirs, representatives, successors and assigns,
that:  (a) this Agreement does not
constitute a waiver by Lender of any of its rights under the Deed of Trust,
Note or Security Documents, nor does this Agreement in any way release Landlord
from its obligations to comply with the terms, provisions, conditions,
covenants, agreements and clauses of the Deed of Trust, Note and Security
Documents; (b) the provisions of the Deed of Trust, Note and Security
Documents remain in full force and effect and must be complied with by
Landlord; and (c) Tenant is hereby authorized to pay its rent and all
other sums due under the Lease directly to Lender upon receipt of a notice as
set forth in Section 5(d) above from Lender and that Tenant is not
obligated to inquire as to whether a default actually exists under the Deed of
Trust or the Security Documents or otherwise in connection with the Note.  Landlord hereby releases and discharges
Tenant of and from any liability to Landlord resulting from Tenant’s payment to
Lender in accordance with this Agreement. 
Landlord represents and warrants to Lender that a true and complete copy
of the Lease has been delivered by Landlord to Lender.

7.             Lease
Status.  Landlord and Tenant certify
to Lender that neither Landlord nor Tenant has knowledge of any default on the
part of the other under the Lease, that the Lease is bona fide and contains all
of the agreements of the parties thereto with respect to the letting of the
Premises and that all of the agreements and provisions therein contained are in
full force and effect.

8.             Notices.  All notices, requests, consents, demands and
other communications required or which any party desires to give hereunder
shall be in writing and shall be deemed sufficiently given or furnished if
delivered by personal delivery, by telegram, telex, or facsimile, by expedited
delivery service with proof of delivery, or by registered or certified United
States mail, postage prepaid, at the addresses specified at the end of this
Agreement (unless changed by similar notice in writing given by the particular
party whose address is to be changed). 
Any such notice or communication shall be deemed to have been given
either at the time of personal delivery or, in the case of delivery service or
mail, as of the date of first attempted delivery at the address and in the
manner provided herein, or, in the case of telegram, telex or facsimile, upon
receipt.  Notwithstanding the foregoing,
no notice of change of address shall be effective except upon receipt.  This Section 8 shall not be
construed in any way to affect or impair any waiver of notice or demand
provided in this Agreement or in the Lease or in any document evidencing,
securing or pertaining to the loan evidenced by the Note or to require giving
of notice or demand to or upon any person in any situation or for any reason.

9.             Miscellaneous.

(a)           This
Agreement supersedes any inconsistent provision of the Lease.

(b)           Nothing
contained in this Agreement shall be construed to derogate from or in any way
impair or affect the lien, security interest or provisions of the Deed of
Trust, Note or Security Documents.

(c)           This
Agreement shall inure to the benefit of the parties hereto, their respective
successors and permitted assigns, and any New Owner, and its heirs, personal
representatives, successors and assigns; provided, however, that in the event
of the assignment or transfer of the interest of Lender, all obligations and
liabilities of the assigning Lender under this Agreement shall terminate, and
thereupon all such obligations and liabilities shall be the responsibility of
the party to whom Lender’s interest is assigned or transferred; and provided
further that the interest of Tenant under this Agreement may not be assigned or
transferred without the prior written consent of Lender.

(d)           THIS
AGREEMENT AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF CALIFORNIA AND APPLICABLE UNITED STATES FEDERAL LAW
EXCEPT ONLY TO THE EXTENT, IF ANY, THAT THE LAWS OF THE STATE IN WHICH THE
PROPERTY IS LOCATED NECESSARILY CONTROL.

(e)           The
words “herein,” “hereof,” “hereunder” and other similar
compounds of the word “here” as used in this Agreement refer to this
entire Agreement and not to any particular section or provision.  The terms “include” and “including”
shall be interpreted as if followed by the words “without limitation.”

(f)            This
Agreement may not be modified orally or in any manner other than by an
agreement in writing signed by the parties hereto or their respective
successors in interest.

 4
 

(g)           If
any provision of this Agreement shall be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not apply to or affect any other provision hereof, but this Agreement
shall be construed as if such invalidity, illegality or unenforceability did
not exist.

(h)           [This Agreement will be recorded in the real property
records of                   County,                  .]

[Signatures appear on the following page]

 5
 

NOTICE: 
THIS AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON
YOUR LEASE TO OBTAIN A LOAN, A PORTION OF WHICH MAY BE EXPENDED FOR PURPOSES
OTHER THAN IMPROVEMENT OF THE PROPERTY.

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed and sealed as of
the date first above written.

	
  ADDRESS OF LENDER:

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA, N.A., a national

  banking association

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ADDRESS OF TENANT:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ADDRESS OF LANDLORD:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

 6
 

GUARANTOR’S CONSENT

                                  ,
guarantor of the Lease, signs below to express its consent to the foregoing
Agreement and its agreement that its guaranty of the Lease is and shall remain
in full force and effect.

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
							

 

[Add
Appropriate Acknowledgments]

 7
 

EXHIBIT “A”

LEGAL DESCRIPTION OF THE
LAND

 8
 

ACKNOWLEDGMENT

	
  STATE OF CALIFORNIA

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  COUNTY OF 

  	
  )

  	
   

  

 

On                  ,
before me,                  ,
a Notary Public in and for said County and State, personally appeared                  ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) (is/are) subscribed to the within instrument,
and acknowledged to me that (he/she/they) executed the same in (his/her/their)
authorized capacit(-y/-ies), and that by (his/her/their) signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

	
  WITNESS my hand and official seal.

  
	
   

  
	
   

  	
   

  
	
  Signature of Notary Public

  
	
   

  
	
  [SEAL]

  

 

ACKNOWLEDGMENT

	
  STATE OF CALIFORNIA

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  COUNTY OF 

  	
  )

  	
   

  

 

On                  ,
before me,                  ,
a Notary Public in and for said County and State, personally appeared                  ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) (is/are) subscribed to the within instrument,
and acknowledged to me that (he/she/they) executed the same in (his/her/their)
authorized capacit(-y/-ies), and that by (his/her/their) signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

	
  WITNESS my hand and official seal.

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Signature of Notary Public

  
	
   

  
	
  [SEAL]

  

 

 9
 

ACKNOWLEDGMENT

	
  STATE OF CALIFORNIA

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.

  
	
  COUNTY OF 

  	
  )

  	
   

  

 

On                  ,
before me,                  ,
a Notary Public in and for said County and State, personally appeared                  ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) (is/are) subscribed to the within instrument,
and acknowledged to me that (he/she/they) executed the same in (his/her/their)
authorized capacit(-y/-ies), and that by (his/her/their) signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

	
  WITNESS my hand and official seal.

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Signature of Notary Public

  
	
   

  
	
  [SEAL]

  

 

 10Exhibit
10.3

TERMINATION
AGREEMENT

THIS TERMINATION AGREEMENT (the “Agreement”) is made
and entered into this 30  day of May,
2007 by and among Transportation Planning Group, Inc., d.b.a. Crain &
Associates, a California corporation (“Crain”), Abbas Mohaddes, an individual (“Mohaddes”) and
Iteris, Inc, a Delaware corporation (“Iteris”). 
Crain, Mohaddes and Iteris are sometimes referred to herein collectively
as the “Parties”
and individually as a “Party.”

WHEREAS, Mohaddes is
concurrently entering into that certain Agreement for Sale and Purchase of
Stock (“Stock Purchase
Agreement”) with KOA Corporation, d.b.a. Katz, Okitsu &
Associates (the “Buyer”)
to facilitate the sale (the “Sale”) of Mohaddes’ interest in Crain to the Buyer;

WHEREAS, in order to facilitate the Sale, the Parties hereto desire to terminate
that certain Joint Development Agreement dated October 18, 2006 among the
Parties (the “JDA”) conditioned on and effective
immediately prior to the closing of the Sale.

AGREEMENT

NOW, THEREFORE, in consideration
of the covenants, and representations set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

1.             Termination.  The Parties agree that the
JDA shall be terminated effective immediately prior to the closing of the Sale,
and that neither Party shall have any further obligations to the other party
under the JDA except (i) as set forth in Section 4 of the JDA, which shall
survive the termination of the JDA; and (ii) Iteris’ right to the bonus as set
forth in Section 2 below.  Without
limiting the foregoing, the Parties expressly agree that the non-competition
and non-solicitation obligations set forth in JDA shall be terminated effective
immediately prior to the closing of the Sale. 
The Parties further agree that neither party shall have any further
obligations or rights under that certain Confidentiality Agreement dated
October 6, 2005 between Crain and Iteris, which was previously extended
pursuant to the terms of the JDA. 
Mohaddes acknowledges that he has notified the Buyer that the JDA has
been terminated in accordance with this Agreement.

2.             Payment Status; Change in Control Payment.  The Parties agree that no further amounts are
due and payable by Iteris under the JDA. 
At the closing of the Sale, Mohaddes agrees to remit to Iteris $[5,000]
as payment of the bonus set forth in Section 2.4 of the JDA in full
satisfaction of any bonus provisions set forth in the JDA.

3.             Waiver
of Right of First Refusal.  Provided that the Sale is consummated
substantially in accordance with the terms of the last version of the Stock
Purchase Agreement provided to Iteris, Iteris hereby declines its right of
first refusal in connection with the Sale and waives its right to prior notice
of the same so that the Sale may be consummated with the Buyer within 120 days
after the date hereof.

4.             General
Provisions.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. 
This Agreement constitutes the entire agreement among the parties with
regard to the subject matter of this Agreement. 
No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by all parties.  This Agreement shall be binding on, and shall
inure to the benefit of, the parties to it and their respective heirs, legal
representatives, successors, and assigns. 
The terms of this Agreement shall be governed by the laws of the State
of California applicable to agreements entered into, to be wholly performed in
and among residents exclusively of California.

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed by their duly authorized respective
officers as of the date first written above.

	
  

  	
  ITERIS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James Miele

  	
   

  
	
   

  	
   

  	
   

  	
  James Miele,

  
	
   

  	
   

  	
   

  	
  Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRANSPORTATION
  PLANNING GROUP, INC.,

  
	
   

  	
  d.b.a. Crain & Associates, a California
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Abbas
  Mohaddes

  	
   

  
	
   

  	
   

  	
   

  	
  Abbas Mohaddes,

  
	
   

  	
   

  	
   

  	
  Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Abbas Mohaddes

  	
   

  
	
   

  	
  ABBAS MOHADDES

  

 

[SIGNATURE PAGE TO
TERMINATION AGREEMENT]

 2

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