STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE ? NET

1.            Basic Provisions ("Basic Provisions").

1.1            Parties: This Lease (" Lease "), dated for reference purposes only February 18, 2009 is made by and between Newark Eureka Industrial Capital LLC, a Delaware limited liability company (" Lessor ") and Smart Modular Technologies, Inc., a California corporation (" Lessee "), (collectively the " Parties ", or individually, a " Party ").

1.2(a)       Premises: That certain portion of the Project (as defined below), including all improvements therein or to be provided by Lessor under the terms of this Lease, commonly known by the street address of 39870 Eureka Drive , located in the City of Newark , the County of Alameda, State of California , with zip code 94560 , as outlined on Exhibit “A” attached hereto (" Premises ") and generally described as (describe briefly the nature of the Premises):

The Premises encompasses approximately 79,480 square feet and is more particularly described as 39870 Eureka Drive contained within an approximate 79,480 square foot building.

In addition to Lessee's right to use and occupy the Premises as hereinafter specified, Lessee shall have right to the use the Common Areas (as defined in Paragraph 2.7 below) in common with all other persons and entities entitled to the use thereof as set forth in the Declaration (as defined in Paragraph 2.4 below), and, subject to the terms and conditions of the Declaration, the exclusive rights to the roof, exterior walls and utility raceways of the building containing the Premises (" Building "). The Premises, the Building, the Common Areas, the land upon which they are located, along with all other buildings and improvements thereon, are herein collectively referred to as the " Project ." (See also Paragraph 2)

1.2(b)       Parking: Subject to the Association Project Documents (as defined in Paragraph 2.4 below), Lessee shall have the right to use all of the vehicle parking spaces on the Project identified as the Project Parking Spaces on Exhibit “B” attached hereto ( "Project Parking Spaces "). (See also Paragraph 2.6)

1.3            Term: Seven (7) years and zero (0) months (" Original Term ") commencing, May 1, 2009  (" Commencement Date ") and ending April 30, 2016 (" Expiration Date "). (See also Paragraph 3)

1.4            Early Possession: Upon delivery of a fully-executed Lease by both parties (" Early Possession Date "). (See also Paragraphs 3.2 and 3.3)

1.5            Base Rent: $ 36,560.80 per month (" Base Rent "), payable in advance on or before the first day of each month commencing  May 1, 2010 . (See also Paragraph 4)

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

1.6            Lessee's Share of Common Area Operating Expenses: Lessee's Share is the percentage obtained by dividing the number of square feet contained in the Premises by the number of square feet of leasable area in the Building or the Project (whichever is applicable). The Lessee's Share as of the Commencement Date is one hundred percent ( 100.00 %) of the Building and one hundred  percent ( 100.00 %) of the Project (" Lessee's Share ").

1.7            Base Rent and Other Monies Paid Upon Execution:

(a)            Base Rent: $ 36,560.80 for the period May 1, 2010 – May 31, 2010 .

(b)            Estimated Monthly Common Area Operating Expenses: $ 17,485.60  for the period May 1, 2009 – May 31, 2009 .

(c)            Security Deposit: $54,046.40(" Security Deposit "). (See Also Paragraph 5)

(d)            Total Due Upon Execution of this Lease : $108,092.80

1.8            Agreed Use: Design, manufacturing, assembly and test, packaging, distribution and warehousing of memory modules, solid-state drives, embedded computing subsystems, TFT-LCD display and similar computer peripheral products and office related uses .   (See also Paragraph 6)

1.9            Insuring Party. Lessor is the " Insuring Party ". (See also Paragraphs 4.2 and 8)

1.10          Real Estate Brokers (see also Paragraph 15):

                (a)           The following real estate brokers (collectively the " Brokers ") and brokerage relationships exist in this transaction (check applicable boxes).

[ P ] Cornish & Carey Commercial represents Lessor exclusively (" Lessor's Broker ");

[ P ] Cresa Partners represents Lessee exclusively (" Lessee's Broker ");

1.11          Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by n/a  (" Guarantor "). (See also Paragraph 37)

1.12          Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of Paragraphs 59 through 63, and Exhibits “A,” “B” and “C,” all of which constitute a part of this Lease.

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

2.2           Condition. EXCEPT AS EXPRESSLY SET FORTH HEREIN, THE PREMISES IS BEING DELIVERED TO LESSEE IN " AS IS, WHERE IS" CONDITION AND LESSOR IS NOT MAKING ANY REPRESENTATIONS OR WARRANTIES AS TO THE HABITABILITY OF THE PREMISES OR THE SUITABILITY OF THE PREMISES GENERALLY OR FOR ANY PARTICULAR PURPOSE. Lessor shall deliver that portion of the Premises contained within the Building (" Unit ") to Lessee broom clean and free of debris on the Commencement Date or the Early Possession Date, whichever first occurs (" Start Date "), and, provided the required service contracts described in Paragraph 7.1(a) below are obtained by Lessee, in effect and delivered to Lessor within thirty (30) days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems (" HVAC "), loading doors, if any, except for elements thereof constructed or altered by Lessee (" Base Unit Systems "), shall be in good operating condition on said Start Date and that the structural elements of the Unit’s roof be in watertight condition and that the structural elements of the bearing walls and foundation of the Unit shall be free of material defects except to the extent caused by the actions or alterations of Lessee or any agent, contractor, or invitee of Lessee (each, a “ Lessee Party ” and collectively, the “ Lessee Parties ”) (" Base Unit Structure "). If a non-compliance with such warranty exists as of the Start Date, or if one of such systems or elements should malfunction or fail within the appropriate warranty period, Lessor shall, as Lessor's sole cost and obligation with respect to such matter, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, malfunction or failure, rectify same at Lessor's sole expense. The warranty periods shall be as follows: (i) 180 days as to the HVAC systems, and (ii) 180 days as to the remaining systems and other elements of the Unit. If Lessee does not give Lessor the required notice within the appropriate warranty period, correction of any such non-compliance, malfunction or failure shall be the obligation of Lessee at Lessee's sole cost and expense (except for the repairs to the fire sprinkler systems, structural elements of the roof, foundations, and/or bearing walls - see Paragraph 7).

2.3            Compliance. Lessor warrants that the Base Unit Systems and the Base Unit Structure and the Common Areas comply with all applicable laws, covenants or restrictions of record, regulations, and ordinances in effect on the date of execution of this Lease (" Applicable Requirements "). Said warranty does not apply to: (i) the use to which Lessee will put the Premises; (ii) any legal obligations triggered or made applicable due to lessee improvements or Alterations made by or for the benefit of Lessee; or (iii) any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee.  If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Unit, Premises and/or Building, the remediation of any Hazardous Substance (except as otherwise the responsibility of a particular Party to remediate as set forth in Paragraph 6.2 below, in which case such responsible party shall be responsible for the cost of such remediation), or the reinforcement or other physical modification of the Unit, Premises and/or Building (" Capital Expenditure "), Lessor and Lessee shall allocate the cost of such work as follows:

(a)           Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result: (i) of the specific and unique use of the Premises by Lessee; or (ii) of improvements made or proposed to be made by Lessee, Lessee shall be fully responsible for the cost thereof, provided, however that if such Capital Expenditure is required during the last 12 months of this Lease and the cost thereof exceeds 6 months' Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt of Lessee's termination notice that Lessor has elected to pay the difference between the actual cost thereof and the amount equal to 6 months' Base Rent. If Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a termination date at least 90 days thereafter. Such termination date shall, however, in no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such Capital Expenditure.

(b)           If such Capital Expenditure is not the result of: (i) the specific and unique use of the Premises by Lessee (such as, governmentally mandated seismic modifications), or (ii) improvements made or proposed to be made by Lessee, then Lessor and Lessee shall allocate the obligation to pay for the portion of such costs reasonably attributable to the Premises pursuant to the formula set out in Paragraph 7.1(c); provided, however, that if such Capital Expenditure is required during the last 12 months of this Lease or if Lessor reasonably determines that it is not economically feasible to pay its share thereof, Lessor shall have the option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in writing, within 10 days after receipt of Lessor's termination notice that Lessee will pay for such Capital Expenditure.

(c)           Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises then, and in that event, Lessee shall be fully responsible for the cost thereof, and Lessee shall not have any right to terminate this Lease.

2.4            Acknowledgements . Lessee acknowledges that: (a) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the condition of the Premises (including but not limited to the information technology infrastructure, electrical, HVAC and other air-handling equipment, and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Lessee's intended use, (b) Lessee has made such investigation as it deems necessary with reference to such matters and, subject to the provisions of Paragraphs 2.2, 2.3, 7.2 and 9 hereof, assumes all responsibility therefor as the same relate to its occupancy of the Premises, and (c) neither Lessor, Lessor's agents, nor Brokers have made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. No later discovery by Lessee that the Premises are unsuitable for Lessee's intended use, or that Lessee is unable to use the Premises for Lessee's intended use because of any Applicable Requirements and the like, shall relieve Lessee from any of Lessee's obligations including payment of Rent when due, under this Lease.   Lessee further acknowledges and agrees that: (i) this Lease, and all rights and obligations hereunder, shall be subject and subordinate, in all respects, to the terms and conditions of that certain Declaration of Covenants, Conditions, and Restrictions for Stevenson Point Techpark, as the same may be amended from time to time (the “ Declaration ”), the Articles of Incorporation and the By-Laws for Stevenson Point Techpark Owners’ Association, as the same may be amended from time to time (the “ Association Documents ”), and any and all rules and regulations established by Stevenson Point Techpark Owners’ Association, or any successor thereto (the “ Association ”), as the same may be amended from time to time (the “ Association Rules ”) (the Declaration, Association Documents and Association Rules are collectively referred to herein as the “ Association Project Documents ”), and (ii) any breach by Lessee of any of the terms or conditions of the Association Project Documents shall, after applicable notice and cure periods, be a default under this Lease.

2.5            Lessee as Prior Owner/Occupant and/or New Leases Under 12 Months in Duration. The warranties, if any, made by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises, or if the initial lease term is less than 12 months in duration. In such event, Lessee shall be responsible for any necessary corrective work including, but not limited to, compliance with Applicable Requirements in effect as of the Commencement Date, unless otherwise expressly set forth in the Addendum, if any.

2.6            Vehicle Parking. Lessee shall be entitled to the use the Project Parking Spaces specified in Paragraph 1.2(b).  Said parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called " Permitted Size Vehicles ." No vehicles other than Permitted Size Vehicles may be parked in the Common Area without the prior written permission of Lessor (which permission may be withheld in Lessor’s sole discretion if such vehicles violates the terms of the Declaration or Association Rules).  Lessee shall comply, and shall cause its employees, suppliers, shippers, customers, contractors and invitees, to comply, with all provisions of the Declaration and all Association Rules relating to vehicles and the use thereof.

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

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

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

2.7            Common Areas - Definition. The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Project and interior utility raceways and installations within the Unit that specifically are provided and designated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, including but limited to fences and gates, common entrances, lobbies, windows, corridors, restrooms, public spaces, elevators, escalators, windows, stairways, airshafts, common area lighting facilities, roof & roof drainage systems, parking areas, loading and unloading areas, utility raceways, trash areas, areas of ingress and egress, roadways, walkways, driveways and landscaped areas.

2.8            Common Areas - Lessee's Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any Rules and Regulations (as defined in Paragraph 2.9) or restrictions governing the use of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property or place any signage, temporarily or permanently, in the Common Areas in violation of the Declaration. Any such signage shall be permitted only by the prior written consent of Lessor or Lessor's designated agent, which consent may be given or withheld in Lessor's sole discretion and revoked at any time. All such signage shall also comply with the provisions of Paragraph 34 hereof. In the event that any unauthorized storage shall occur, or any unauthorized signage be installed, then Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove the property and/or signage and charge the cost to Lessee, which cost shall be immediately payable upon Lessor's demand.

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

2.10          Common Areas - Changes. Provided that Lessee’s rights hereunder are not materially and adversely affected and Lessee’s obligations hereunder and not materially and adversely increased, then Lessor shall have the right, in Lessor's sole discretion, from time to time and at any time:

(a)           To make changes to the Common Areas, including, without limitation, changes in public spaces, driveways, entrances, parking spaces, parking areas, loading and unloading areas, trash areas, ingress, egress, fences, gates, lighting, direction of traffic, landscaped areas, roadways, walkways, driveways, utility locations and landscaped areas;

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

(c)           To designate other land outside the boundaries of the Project to be a part of the Common Areas, including, without limitation, any or all portions of the “Common Area” as defined in the Declaration;

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

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

(f)           To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Lessor may, in Lessor's sole discretion, deem to be appropriate.

Notwithstanding the introductory sentence of this Paragraph 2.10, Lessor shall have the right to undertake the activities in subparagraphs (a), (b), (d), (e) and (f) above at any time and from time to time if required in order for Lessor to comply with its obligations hereunder or pursuant to the Association Project Documents.

3.            Term.

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

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

3.3            Delay In Possession. Lessor agrees to use commercially reasonable efforts to deliver possession of the Premises to Lessee simultaneously with the mutual execution of this Lease.  If Lessor is unable to deliver possession within 7 days from and after the mutual execution of this lease, Lessee may, at its option, by notice in writing within 7 day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder, and neither party shall have any liability to the other for any actual or consequential damages occasioned by the inability of Lessor to deliver possession of the Premises as agreed herein. If such written notice is not received by Lessor within said 7 day period, Lessee's right to cancel shall terminate.

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

4.            Rent.

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

4.2            Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent, Lessee's Share (as specified in Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in accordance with the following provisions:

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

(i)           The operation, repair and maintenance, in neat, clean, good order and condition, and if necessary the replacement, of the following:

(aa)           The Common Areas and Common Area improvements including but not limited to building exterior painting and stucco coating, coverings, and including but not limited to common entrances, lobbies, corridors, windows, stairways, airshafts, restrooms, public spaces, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting facilities, parking areas, loading and unloading areas, including but not limited to slurrying and striping of the preceding, utility raceways, areas of ingress and egress, fences and gates, roofs, and roof drainage systems.

(bb)           Exterior signs and any tenant directory installation, operation and repair.

(cc)           Any fire detection and/or sprinkler systems.

(ii)           The cost of potable water, sewer, gas, steam, processed water, compressed air, electricity, information technology infrastructure, and telephone to service the Common Areas and any other utilities not separately metered including distribution and powerhouse expenses if any) and the costs of any utility surcharges to the Project.

(iii)           Trash disposal (if Tenant does not properly and adequately dispose of trash and Landlord elects to perform such trash disposal), pest control services, property management, security services (if the Premises are vacated due to casualty or otherwise, Tenant does not provide adequate security services for the Property, and Landlord elects to provide such security services), and the reasonable costs of any environmental inspections, and compliance costs.

(iv)           Reserves in amounts as determined by Lessor in its reasonable discretion for maintenance, repair and/or replacement of Common Area Improvements or equipment. Lessor may, in its sole discretion, elect to maintain a reasonable reserve fund (hereinafter the "Reserve Fund") for the replacement of any improvements comprising the Common Area. In such event, and in addition to the Common Area Operating Expenses, Lessee shall pay as additional Rent its proportionate share of the Reserve Fund.

(v)           Real Property Taxes (as defined in Paragraph 10).

(vi)           The cost of insurance maintained by Lessor pursuant to Paragraph 8, including any premium finance charges, broker's fees and charges for risk management services which may be provided by Lessor or an Affiliate of Lessor.

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

(viii)           The cost of any Capital Expenditure to the Building or the Project not covered under the provisions of Paragraph 2.3 provided; however, that Lessor shall allocate the cost of any such Capital Expenditure pursuant to the formula set out in Paragraph 7.1(c).

(ix)           Labor, salaries, and costs, materials, supplies and tools, used in maintaining and/or cleaning the Project and accounting, legal and other professional fees and management fees attributable to the operation of the Project;

(x)           Costs incurred to maintain the quality, integrity, functionality and appearance of the Project;

(xi)           Costs incurred for the purpose of reducing expenses;

(xii)           Costs incurred in complying with laws affecting the Project and the ownership, use, operation thereof and cost under any covenants conditions and restrictions, entitlements, and voluntary energy savings and/or governmental programs;

(xiii)           Costs incurred in providing security to the Project (if the Premises are vacated due to casualty or otherwise, Tenant does not provide adequate security services for the Property, and Landlord elects to provide such security services);

(xiv)           Auditor verification fees, if any;

(xv)           All costs, assessments and fees allocated to the Project and/or payable by Lessor, as owner of the Project, pursuant to the Declaration, including without limitation, all Assessments, including Regular Assessments, Capital Improvement Assessments, Reconstruction Assessments and Special Assessments, all as defined in the Declaration;

(xvi)           All reserve amounts payable by Lessor, as owner of the Project, pursuant to the Declaration; and

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

(b)           Any direct or indirect item of Common Area Operating Expenses and Real Property Taxes, inclusive of any and all occupancy taxes imposed on the use and/or occupancy of the Premises by Lessee or any assignee, subtenant or other occupant claiming by, through, or under Lessee that are specifically attributable to the Premises, the Building or to any other building in the Project or to the operation, repair and maintenance thereof, shall be allocated entirely to such Premises, Building, or other building including, but not limited to costs incurred in contesting taxes, fees, or enactments affecting the Project. However, any Common Area Operating Expenses and Real Property Taxes that are not specifically attributable to the Building or to any other building or to the operation, repair and maintenance thereof, shall equitably be allocated by Lessor to all buildings in the Project.

(c)           The inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or facilities or to provide those services.

(d)           Lessee's Share of Common Area Operating Expenses shall be payable by Lessee within ten (10) days after a reasonably detailed statement of actual expenses is presented to Lessee. At Lessor's option, however, an amount may be estimated by Lessor from time to time of Lessee's Share of annual Common Area Operating Expenses and the same shall be payable monthly or quarterly, as Lessor shall designate, during each 12 month period of the Lease term, on the same day as the Base Rent is due hereunder. Lessor shall deliver to Lessee within one hundred and twenty (120) days after the expiration of each calendar year a reasonably detailed statement showing Lessee's Share of the actual Common Area Operating Expenses incurred during the preceding year provided that the failure of Lessor to timely deliver such statement shall not relieve Lessee of the obligation to pay the actual Common Area Expenses. If Lessee's payments under this Paragraph 4.2(d) during the preceding year exceed Lessee's Share as indicated on such statement, Lessor shall credit the amount of such over-payment against Lessee's Share of Common Area Operating Expenses next becoming due. If Lessee's payments under this Paragraph 4.2(d) during the preceding year were less than Lessee's Share as indicated on such statement, Lessee shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee of the statement.

(e)           Notwithstanding anything to the contrary in the Lease, in no event shall Lessee have any obligation to perform or to pay directly, or to reimburse Lessor for, all or any portion of the following repairs, maintenance, improvements, replacements, premiums, claims, losses, fees, charges, costs and expenses (collec­tively, "Costs"): (i) Costs occa­sioned by the act, omission or violation of Law by Lessor, any other occupant of the Project, or their respective agents, employees or contractors from and after the Commencement Date (the parties hereby agreeing that the foregoing exclusion shall not be construed to exclude costs or expenses relating to the existing condition of the Project); (ii) Costs incurred by Lessor to repair any damage to the improvements on the Premises occasioned by casualties or by the exercise of the power of eminent domain, if and to the extent Lessor is expressly responsible for such Costs as set forth in Paragraphs 9 and 14 below; (iii)  Costs relating to repairs, alterations, improve­ments, equipment and tools which could properly be capitalized under generally accepted account­ing principles, to the extent that such costs are allocated to Lessor pursuant to Paragraph 7.1(c); (iv) Costs for which Lessor has a right of reim­bursement from other parties utilizing the Premises; (v) Taxes, assessments, all other governmental levies, and any increases in the foregoing occasioned by or relating to construction of improvements for other occupants of the Project; (vi) Depreciation, amortization or other expense reserves except as otherwise expressly permitted herein; (vii) Interest, charges and fees incurred on debt, payments on mortgages and rent under ground leases; (viii) Increases in insurance Costs caused by the activities of another occupant of the Project; (ix) Costs incurred by Lessor to comply with Lessor’s obligation to investigate, remediate, remove, restore and/or abate any Hazardous Substance as expressly set forth in Paragraph 6; (x) management fees in excess (as applied on a pro-rata basis) of three percent (3%) of scheduled Rent payable hereunder without reference to any rental abatement, and (xi) Costs and expenses for which Lessee reimburses Lessor directly or which Lessee pays directly to a third person.

(f)            Lessee shall have the right, at Lessee’s sole cost and expense, upon no less than twenty (20) days prior written notice to Lessor given within thirty (30) days after Lessor’s delivery to Lessee of the calendar year statement, to audit Lessor’s books and records with respect to Common Area Operating Expenses for the purpose of verifying the matters set forth in such statement (“ Audit ”).  The Audit shall be conducted by a member of a “Big Four” accounting firm (the “ Accountant ”), which Accountant shall not be working on a contingency fee basis, and shall be conducted at Lessee’s sole cost and expense.  The Audit shall be conducted by the Accountant during normal business hours at offices and hours designated by Lessor and shall be completed within thirty (30) days after the commencement thereof.  Lessee may not conduct an Audit (i) more than once in each Lease year, (ii) while Lessee is delinquent in the payment of Rent, (iii) while Lessee is in Default under this Lease, or (iv) unless Lessee shall have paid all amounts required to be paid under the applicable statement.  The result of any such Audit shall be kept confidential and Lessee shall not supply any information obtained as a result of such Audit to any other tenants of Lessor or representatives and affiliates of any other tenants of Lessor or to any third party except on a confidential basis to Lessee’s legal counsel, accountants or as otherwise required by law.  In the course of any Audit, Lessor may request from Lessee from time to time, and Lessee shall promptly provide to Lessor, (1) copies of all calculations and related workpapers prepared by the Accountant in the course of the applicable Audit and relating to the disputed items of Common Area Operating Expenses, and (2) a copy of the engagement letter or other applicable agreement between Lessee and the Accountant to the extent necessary to confirm that the Accountant is not engaged to conduct the Audit on a contingency basis.  Lessee shall promptly deliver a copy of the result of any such Audit promptly upon the completion thereof, and if the results of the Audit does not result in a reimbursement payable to Lessee for an amount greater than five percent (5%) of the total amount charged to Lessee as previously set forth in Lessor’s calendar year statement of Lessee’s Share of Common Area Operating Expenses, Lessee shall reimburse Lessor for all of Lessor’s reasonable costs and expenses incurred by Lessor in connection with the Audit.  Lessee’s failure to dispute the amount of Common Area Operating Expenses set forth in any calendar year statement within thirty (30) days of Lessor’s delivery to Lessee of such statement shall be deemed to be Lessee’s approval of such statement and Lessee, thereafter, waives the right or ability to dispute the amounts set forth in such statement.

4.3            Payment. Lessee shall cause payment of Rent to be received by Lessor in immediately available, lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein by wire transfer of funds as directed by Lessor in writing or to such other persons or place or different manner as Lessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent, regardless of Lessor's endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $50 in addition to any late charges which may be due and Lessor, at its option, may require all future rent to be paid by cashier’s check.

5.            Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee's faithful performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may, in addition to all other remedies available to Lessor at law or in equity, or otherwise available to Lessor under this Lease, use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, expense, cost, loss or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Lessee agrees that if Lessor requires the removal of any of the Lessee Improvement Work in accordance with the provisions of Paragraphs 7.4(b) or 63 hereof, Lessor shall be entitled to require that the Security Deposit be increased and Lessee shall deposit additional monies with Lessor so that the Security Deposit shall be increased by an amount sufficient to reimburse Lessor for any cost or expense which Lessor may incur by reason of Lessee’s failure to remove the Lessee Improvement Work which Lessor requires to be removed by Lessee at the expiration or earlier termination of this Lease. If a change in control of Lessee occurs during this Lease which does not constitute an assignment requiring consent pursuant to Paragraph 12.1(b) and following such change the financial condition of Lessee is, in Lessor's reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor as Lessor, in the exercise of its sole discretion, deems to be sufficient to cause the Security Deposit to be at a sufficient level based on such change in financial condition. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within 14 days after the expiration or termination of this Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within 30 days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease.  Lessee hereby waives the provisions of Section 1950.7 of the California Civil Code and all other provisions of law, now or hereafter in effect, which provide that Lessor may claim from a security deposit only those sums reasonably necessary to remedy Defaults in the payment of Rent, to repair damage caused by Lessee or to clean the Premises, it being agreed that Lessee may, in addition, claim those sums specified in this Paragraph 5 above and/or those sums reasonably necessary to compensate Lessor for any other loss or damage, foreseeable or unforeseeable, caused by any “Breach,”  as that term is defined in this Lease, of Lessee under this Lease beyond the applicable cure period.

6.            Use.

6.1            Use. Lessee shall use and occupy the Premises only for the Agreed Use, and for no other purpose. Lessee shall not use or permit the Premises to be used for any other purpose without Lessor's prior written consent, which may be granted or withheld in Lessor's sole discretion. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, violates applicable ordinances, regulations or zoning requirements, creates damage, waste or a nuisance, or that disturbs owners and/or occupants of, or causes damage to adjacent premises or neighboring properties or for any improper, immoral, or objectionable purpose. Lessee shall promptly comply with all governmental orders and directions for the correction, prevention and abatement of any violations in or upon, or in connection with, the Premises, at Lessee's sole expense. Lessor shall have no obligation to consider any request by Lessee, or by an assignee or successor-in-interest of Lessee, to allow a use other than the Agreed Use.  Lessee shall comply with all use restrictions and limitations set forth in the Declaration.

6.2            Hazardous Substances.

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

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

(c)            Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including, without limitation, through the plumbing or sanitary sewer system) and/or any part of the Project and shall promptly, at Lessee's expense, take all necessary or reasonably recommended investigatory and/or remedial action, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, or any third party.

(d)            Lessee Indemnification. Lessee shall indemnify, defend (with counsel satisfactory to Lessor) and hold Lessor, its officers, directors, members, managers, partners, employees, agents, contractors, invitees, lenders and master of ground lessor, if any, (each, a “Lessor Party” and collectively, the “Lessor Parties”) harmless from and against any and all loss of rents and/or damages, losses, liabilities, judgments, claims, costs, expenses, penalties, and attorneys' and consultants' fees arising out of or involving either directly or indirectly any Hazardous Substance brought, spilled or released in, on, under or about the Premises and/or any part of the Project by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from adjacent properties except if caused by or contributed to by Lessee and/or any Lessee Party). Lessee's obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or caused by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No expiration, termination or cancellation of this Lease and no release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement.

(e)            Lessor Remediation. Lessor and its successors and assigns shall  be responsible for the investigation, remediation, removal, restoration and/or abatement of  all environmental damages to the Premises which existed as a result of Hazardous Substances on the Premises prior to the Start Date or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees (provided, however, that Lessor shall have no liability under this Lease with respect to underground migration of any Hazardous Substances under the Premises from adjacent properties), unless such remediation measure is required as a result of Lessee's use (including "Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such costs of investigation and remediation, as and when required by the Applicable Requirements.

(f)            Investigations and Remediations. Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to the Start Date (provided, however, that Lessor shall have no liability under this Lease with respect to underground migration of any Hazardous Substances under the Premises from adjacent properties), unless such remediation measure is required as a result of Lessee's use (including "Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor, including, without limitation, allowing Lessor and Lessor's agents to have reasonable access to the Premises at reasonable times in order to carry out Lessor's investigative and remedial responsibilities.

(g)            Lessor Termination Option. If a Hazardous Substance Condition occurs during the term of this Lease, unless Lessee is responsible therefor pursuant to this Paragraph 6 in which case Lessee shall make the investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor's rights under this Paragraph 6 and Paragraph 13, Lessor may, at Lessor's option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such condition exceeds twelve (12) times the then monthly Base Rent or $500,000, whichever is greater, give written notice to Lessee, within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor's desire to terminate this Lease as of the date sixty (60) days following the date of such notice. In the event Lessor elects to give a termination notice, Lessee may, within ten (10) days thereafter, give written notice to Lessor of Lessee's commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount equal to twelve (12) times the then monthly Base Rent or $500,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within thirty (30) days following such commitment. In such event, this Lease shall continue in full force and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time provided, this Lease shall terminate as of the date specified in Lessor's notice of termination.

(h)           Asbestos Notice. Both state and federal applicable law requires disclosure of asbestos-containing construction materials ("ACM") in the Building. This notification is being given to provide the information required under such legislation in order to help Lessee avoid any unintentional contact with the ACMs, and to assist Lessee in making appropriate disclosures to Lessee's employees and others, as required by applicable law.

[ x ]           Lessee acknowledges that Lessor has advised Lessee that Lessor has no actual knowledge that the Building contains ACMs, but that Lessee has satisfied itself as to the presence or absence of ACMs in the Building.

If the box above is not checked, Lessee acknowledges that Lessor has advised Lessee that the Building contains ACMs. Lessor has made available to Lessee, Lessor's asbestos management plan or other relevant data concerning same. However, Lessee has satisfied itself as to the completeness and accuracy of same. If Lessee undertakes any Alterations or repairs to the Premises (to the extent permitted under Article 7), Lessee shall, in addition to complying with the requirements of Article 7, undertake the Alterations or repairs at Lessee’s sole cost and expense and in a manner that avoids disturbing any ACMs present in the Building, if any. If ACMs exist in the Building and are likely to be disturbed in the course of such work, Lessee shall encapsulate or remove the ACMs, if any, at Lessee’s sole cost and expense and in accordance with an approved asbestos-removal plan and otherwise in accordance with all applicable environmental laws, including giving all notices required by the applicable State and Federal Law.

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

6.4            Inspection; Compliance. Lessor and Lessor's " Lender " (as defined in Paragraph 30 below) and consultants shall have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements or a Hazardous Substance Condition (see also Paragraph 9.1e) is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority. In such case, Lessee shall promptly upon request reimburse Lessor for the cost of such inspections, so long as such inspection is reasonably related to the violation or contamination.

6.5           Safety And Health. Lessee, at Lessee’s sole cost and expense, covenants at all times during the term of this Lease to comply with the requirements of the Occupational Safety and Health Act of 1970, 29 U.S.C. Subsection 65, et seq., and any similar legislation in the state wherein the Premises is located (hereinafter, the "Act"), to the extent that the Act applies to the Premises and any activities thereon. Without limiting the generality of the foregoing, Lessee covenants to maintain all working areas, all machinery, structures, electrical facilities, and the like, at the Premises in a condition that fully complies with the requirements of the Act, including such requirements as would be applicable with respect to agents, employees or contractors of Lessor who may, from time to time, be present upon the Premises, and Lessee agrees to indemnify and hold Lessor and the Lessor Parties harmless from and against any liability, claim or damages, arising as a result of Default and/or Breach of the foregoing covenant and from all costs, expenses, and charges arising therefrom, including without limitation, attorneys’ fees, expert and consultant fees, and other costs, incurred by Lessor and/or Lessor Parties in connection therewith, which indemnity shall survive the expiration or termination of this Lease.

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

7.1            Lessee's Obligations.

In General.        It is expressly understood and agreed that Lessor is under no obligation to provide Lessee with any services (including, without limitation, any security services) except as otherwise expressly set forth in this Lease. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises, Utility Installations (intended for Lessee's exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee's use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipment and facilities, including but not limited to plumbing (except for the main underground plumbing connecting to the Premises during the Original Term only, which shall be solely the responsibility of Lessor), HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights but excluding any items which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including, without limitation, the procurement and maintenance of the service contracts required by Paragraph 7.1(a) below, and the procurement of janitorial services through a contractor previously approved by Lessor which services other tenants at the Project. Lessee's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Notwithstanding the preceding sentence, only contractors approved in writing by Lessor may do any work on the roof or roof membrane. Other than contractors approved by Lessor, no person may be on the roof. If Lessee requires rail spur service, Lessee, at its sole cost and expense, must inspect, repair and maintain the physical aspects of the rail spur, and must comply with and renew, when necessary, directly with the applicable rail service provider any rail spur service or switch track agreements for the Premises. Lessee hereby acknowledges that the rail service is provided by Lessor "As-Is," “Where Is," “With All Faults” without any representations or warranties, and that any representations or warranties set forth in Article 2 do not apply to the rail service or the physical condition thereof, and that Lessee hereby agrees and warrants that it has investigated and inspected the condition of the rail services and the rail spur and the suitability of the same for Lessee’s purpose, and Lessee does hereby waive and disclaim any objection or cause of action based upon the condition or availability of the rail service or rail spur. Lessee warrants and represents to Lessor that Lessee, the Lessee Parties and the Lessee’s Broker have no knowledge of and/or are not aware of any defects in the main underground plumbing connecting to the Premises.

(a)            Service Contracts. Lessee shall, at Lessee's sole expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC and other air-handling equipment, (ii) boiler and pressure vessels, (iii) clarifiers, and (iv) any other equipment, if reasonably required by Lessor. However, Lessor reserves the right to procure and maintain any or all of such service contracts if Lessee fails to do so, and Lessee shall reimburse Lessor, promptly upon demand, for the cost thereof. HVAC maintenance contracts obtained by Lessee shall at a minimum require the following on a regular basis: (aa) check performance of all major components, (bb) lubricate moving parts as required, (cc) check refrigerant charges (during cooling season), (dd) inspect for oil, refrigerant, and other leaks, (ee) check operating and safety controls, (ff) check pressures and temperatures, (gg) inspect condensers, (hh) inspect fans, motors and starters, (ii) tighten electrical connections at equipment, (jj) test amperages and voltages, (kk) check belts and drives, (II) change oil and filters, or dryers, as required (at least 4 times annually), (mm) check temperature on control system, and (nn) thoroughly inspect heat exchanger.

(b)            Failure to Perform. If Lessee fails to perform Lessee's obligations under this Paragraph 7.1, Lessor may enter upon the Premises, perform such obligations on Lessee's behalf, and put the Premises in good order, condition and repair, and Lessee shall promptly reimburse Lessor a sum equal to 115% of the cost thereof.

(c)            Replacement. Subject to Lessee's indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulting from Lessee's failure to exercise and perform good maintenance practices, if one or more of the items described in Paragraph 7.1(a) cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such item, then such item shall be replaced by Lessor, and the cost thereof shall be allocated between the Parties as set forth in this Section 7.1(c). Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the product of multiplying the Lessee's portion of the cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is the number of months remaining on the Term. Lessee's portion of the cost of such replacement is determined by multiplying the total cost of such replacement by a fraction, the numerator of which is the number of months remaining in the Term, and the denominator of which is the number of months of the useful life of such replacement as such useful life is commercially reasonably determined by Lessor (including interest on the unamortized balance as is then commercially reasonable in the judgment of Lessor's accountants). Lessee may prepay its obligation at any time. The intent of this paragraph 7.1(c) is that Lessee is solely responsible for that portion of the cost of replacement attributed to the Term.

7.2            Lessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises. Lessor has no obligation to decorate, alter, repair or improve the Premises or the Project. Lessee expressly waives the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease.

7.3            Utility Installations; Trade Fixtures; Alterations.

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

(b)           Consent Of Lessor. Except for Lessee’s initial Lessee Improvement Work (for which Lessee shall obtain the approvals of Lessor as described in Paragraph 60 on the Addendum attached hereto), Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor's prior written consent, which said consent shall not be unreasonably withheld, and, to the extent required under the Declaration, without the prior written consent of the Architectural Committee (as such term is defined in the Declaration).  Lessee shall be responsible, at its cost, for any fees assessed under the Declaration for the review by the Architectural Committee of Lessee’s plans and specifications. Lessee may, however, make non-structural Utility Installations to the interior of the Premises (excluding the roof) without such consent but upon notice to Lessor and in compliance with the provisions of Paragraphs 7.4(b) and 63 hereof, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls, do not affect the structural elements of the Building, and the cost thereof does not exceed $50,000 per event of improvement. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof (including without limitation, antennas, satellite reception devices, telephonic equipment, electronic transmission or reception devises, signs, billboards, advertisements, or any other equipment of any kind) without the prior written approval of: (a) Lessor, which approval may be withheld for any reason or no reason; provided, however, that if such roof penetration and/or roof installation is required for the conduct of Tenant’s Agreed Use, Lessor shall not unreasonably withhold its approval (provided further, that it shall be deemed reasonable for Lessor to withhold its consent if any such roof work proposed by Lessee would be in violation of the Declaration, or would adversely affect the structural elements of the roof and/or Building), and (b) the Architectural Committee to the extent required under the Declaration. Lessor may, as a precondition to granting any approval under this Paragraph, require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor and/or the Architectural Committee shall be presented to Lessor and/or the Architectural Committee in written form with detailed plans as requested by the Lessor and/or the Architectural Committee. Consent shall be deemed conditioned upon Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs an amount in excess of one month's Base Rent, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility Installation and/or upon Lessee's posting an additional Security Deposit with Lessor. Lessee must reimburse Lessor within ten (10) days after Lessee's receipt of Lessor's invoice for Lessor's costs incurred relating to any Utility installations, Trade Fixtures or Alterations, including but not limited to all management, engineering, consulting, construction and legal fees incurred by Lessor for the review and approval of Lessee's plans and specifications or for monitoring Lessee's construction of any Utility Installations, Trade Fixtures or Alterations. On completion of any Alterations by Lessee, Lessee shall promptly supply Lessor with "as built" drawings accurately reflecting all such work.

(c)            Liens; Bonds; and Indemnity. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialman's lien against the Premises or any interest therein. Lessee shall give Lessor not less than twenty (20) days notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor, the Lessor Parties and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor and the Lessor Parties against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessor's and the Lessor Parties’ attorneys' fees and costs.

7.4           Ownership; Removal; Surrender; and Restoration.

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

(b)            Removal. By delivery to Lessee of written notice from Lessor not later than ninety (90) days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease, except those that Lessor has expressly agreed shall be permitted to remain in the Premises in accordance with the terms of this Lease. The cost of said removal shall be solely borne by Lessee. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent. (see Addendum Paragraph 63.

(c)            Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in as good and operating order, condition and state of repair as when received, ordinary wear and tear excepted and subject to the other provisions of this Lease with respect to which Lessee Owned Alterations, Lessee Improvement Work and Utility Installations may remain in the Premises at the end of the Term. Ordinary wear and tear shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for 36 months or less, then Lessee shall surrender the Premises in the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall also completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazardous Substances which were deposited via underground migration from areas outside of the Project) even if such removal would require Lessee to perform or pay for work that exceeds statutory requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. Lessee shall notify Lessor in writing at least 120 days prior to vacating the Premises and shall within 30 days prior to vacating arrange to meet with Lessor for a joint inspection of the Premises prior to vacating. If Lessee fails to give such notice or to arrange for such inspection, then Lessor's inspection of the Premises shall be deemed conclusive for the purpose of determining Lessee's responsibility for repairs and restoration of the Premises. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below. At least fourteen (14) days but no more than thirty (30) days prior to the expiration or earlier termination of the Lease, Lessee shall deliver to Lessor (i) a certificate from an engineer reasonably acceptable to Lessor certifying that the HVAC and other air-handling systems are then in good repair and working order and (ii) in the event Lessee utilizes Hazardous Substances in or on the Premises during the Term, a Phase I environmental assessment of the Premises and if so recommended in the Phase I, a Phase II environmental site assessment prepared by an environmental engineer reasonably acceptable to Lessor indicating that no Hazardous Substance Condition exists on the Premises in violation of applicable law. In the event such Phase I environmental assessment determines that no Hazardous Substance Condition exists on the Premises for which Lessee is responsible pursuant to the terms hereof, Lessor shall reimburse Lessee for the cost of such Phase I environmental assessment.

8.             Insurance; Indemnity.

8.1            Payment of Premiums. The cost of the premiums for the insurance policies required to be carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common Area Operating Expense. Premiums for policy periods commencing prior to, or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date.

8.2            Liability Insurance.

(a)            Carried by Lessee. Lessee shall obtain and keep in force during the term of this Lease a Commercial General Liability policy of insurance protecting Lessee, Lessor and any Lender(s) whose names have been provided to Lessee in writing ( all as additional insureds) against claims for bodily injury, property damage, personal injury and advertising injury based upon, relating to, involving, or arising out of the ownership, use, occupancy, or maintenance of the Premises and all areas appurtenant thereto, and shall cover all owned, non-owned, and hired vehicles used in the conduct of the Lessee's business and operated on or parked upon the Project. Lessee shall promptly provide Lessor with evidence of such insurance in the form of an endorsement to the policy or a copy of the policy.  A Certificate of insurance is not acceptable. Such insurance shall be on an occurrence basis for bodily injury and property damage coverage, providing coverage in an amount not less than $2,000,000 for damages because of all bodily injury and property damage arising out of any one occurrence and coverage in an amount not less than $2,000,000 for all damages because of all personal injury and all advertising injury sustained by any one person or organization. The insurance shall include an "Additional Insured - Managers, Lessors, of Premises" endorsement and contain the "Amendment of the Pollution Exclusion" endorsement for damage or injury caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any inter-insured exclusions as between insured persons or organizations, shall contain endorsements for cross-liability to ensure a severability of interests, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance required by this Lease or as carried by Lessee shall not, however, limit the liability of Lessee, nor relieve Lessee of any obligation hereunder. All insurance to be carried by Lessee shall be primary to and not contributory with any insurance carried by Lessor, whose insurance shall be considered excess insurance only and shall not insure Lessee. The Parties acknowledge and agree that the failure by Lessee to fully and continuously comply with all of the foregoing insurance requirements and covenants, whether through Lessee's neglect, inability to obtain such coverage, or otherwise, Shall constitute a material breach of this Lease.

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

8.3            Property Insurance - Building, Improvements and Rental Value.

(a)            Building and Improvements. Lessor shall obtain and keep in force a policy or policies in the name of Lessor, with loss payable to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lenders, but in no event shall Lessor be required to carry more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's personal property shall be insured by Lessee under Paragraph 8.4 and not under any Lessor's policies of insurance. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of terrorism, flood and/or earthquake unless required by Lessor or a Lender), including, without limitation, coverage for debris removal' and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Without limiting the generality of the foregoing, said policy or policies shall also contain if available and commercially appropriate an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $100,000 per occurrence, and Lessee shall be liable for such deductible amount in the event of an Insured Loss.  In addition to the policies of property insurance required to be carried by Lessor under the provisions of this Lease, Lessor shall have the right (but not the obligation), if required by Lessor’s Lender, to maintain terrorism, earthquake and/or flood insurance with respect to the Building and the Project, in which event the costs of such insurance shall be included in the Common Area Operation Expenses. Lessee acknowledges that the current Lessor’s Lender requires the maintenance of terrorism, earthquake and flood insurance with respect to the Building and the Project.

(b)            Rental Value. Lessor may obtain and keep in force if available and commercially appropriate a policy or policies in the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for a minimum of one (1) year (" Rental Value Insurance "). Said insurance, if obtained, shall provide that in the event the Lease is terminated by reason of an insured loss, the period of indemnity for such coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for a minimum of on