LEASE

Office Lease Agreement

You are currently viewing:

This Office Lease Agreement involves

NORTH BAY BANCORP/CA

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: LEASE
Date: 3/30/2004

[Graphic Omitted]

STANDARD MULTI-TENANT OFFICE LEASE - GROSS

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1. Basic Provisions ("Basic Provisions").

1.1 Parties: This Lease ("Lease"), dated for reference purposes only

May 9, 2003, is made by and between Fairfield West Partners, LLC ("Lessor") and

Solano Bank ("Lessee"), (collectively the "Parties", or individually a "Party").

1.2(a) Premises: That certain portion of the Project (as defined

below), known as Suite Numbers(s). First, floor(s), consisting of approximately

3,078 rentable square feet and approximately _______ useable square

feet("Premises"). The Premises are located at: 1411 Oliver Road, in the City of

Fairfield, County of Solano, State of California, with zip code 94534. In

addition to Lessee's rights to use and occupy the Premises as hereinafter

specified, Lessee shall have non-exclusive rights to the Common Areas (as

defined in Paragraph 2.7 below) as hereinafter specified, but shall not have any

rights to the roof, the exterior walls, the area above the dropped ceilings, or

the utility raceways of the building containing the Premises ("Building") or to

any other buildings in the Project. The Premises, the Building, the Common

Areas, the land upon which they are located, along with all other buildings and

improvements thereon, are herein collectively referred to as the "Project." The

Project consists of approximately 38,606 rentable square feet. (See also

Paragraph 2)

1.2(b) Parking: _____________ unreserved and _____________ reserved

vehicle parking spaces at a monthly cost of $_____________ per unreserved space

and $________ per reserved space. (See Paragraph 2.6)

1.3 Term: Ten (10) years and Zero months ("Original Term") commencing

July, 1, 2003 ("Commencement Date") and ending June 30, 2013 ("Expiration

Date"). (See also Paragraph 3)

1.4 Early Possession: __________________________ ("Early Possession

Date"). (See also Paragraphs 3.2 and 3.3)

1.5 Base Rent: $7,695.00 per month ("Base Rent)", payable on the First

day of each month commencing July 1, 2003. (See also Paragraph 4)

[X] If this box is checked, there are provisions in this Lease for the Base Rent

to be adjusted.

1.6 Lessee's Share of Operating Expense Increase: seven point nine

percent (7.9%) ("Lessee's Share"). Lessee's Share has been calculated by

dividing the approximate rentable square footage of the Premises by the total

approximate square footage of the rentable space contained in the Project and

shall not be subject to revision except in connection with an actual change in

the size of the Premises or a change in the space available for lease in the

Project.

1.7 Base Rent and Other Monies Paid Upon Execution:

(a) Base Rent: $7,695.00 for the period July 1, 2003 to

July 31, 2003.

(b) Security Deposit: $7,695.00 ("Security Deposit").

(See also Paragraph 5)

(d) Other: $_____________ for _____________.

(e) Total Due Upon Execution of this Lease: $15,390.00.

1.8 Agreed Use: Financial Services. (See also Paragraph 6)

1.9 Base Year; Insuring Party. The Base Year is 2003. Lessor is the

"Insuring Party". (See also Paragraphs 4.2 and 8)

1.10 Real Estate Brokers: (See also Paragraph 15)

(a) Representation: The following real estate brokers (the

"Brokers") and brokerage relationships exist in this

transaction (check applicable boxes):

[X] Premier Commercial, Inc. represents Lessor exclusively ("Lessor's Broker");

[_] ____________________________________________________ represents Lessee

exclusively ("Lessee's Broker"); or

/s/ ??????? /s/ ???????

----------- -----------

/s/ ???????

----------- -----------

Initials Initials

EXHIBIT 10.4

Page 1 of 15

<PAGE>

[_] ____________________________________________________ represents both Lessor

and Lessee ("Dual Agency").

(b) Payment to Brokers: Upon execution and delivery of this Lease by

both Parties, Lessor shall pay to the Brokers the brokerage fee agreed to in a

separate written agreement (or if there is no such agreement, the sum of

_____________ or _____________ % of the total Base Rent for the brokerage

services rendered by the Brokers).

1.11 Guarantor. The obligations of the Lessee under this Lease shall be

guaranteed by _______________________________________ ("Guarantor"). (See also

Paragraph 37)

1.12 Business Hours for the Building:: 7:00 a.m. to 6:00 p.m., Mondays

through Fridays (except Building Holidays) and 9:00 a.m. to 1:00 p.m. on

Saturdays (except Building Holidays). "Building Holidays" shall mean the dates

of observation of New Year's Day, President's Day, Memorial Day, Independence

Day, Labor Day, Thanksgiving Day, Christmas Day, and None.

1.13 Lessor Supplied Services. Notwithstanding the provisions of

Paragraph 11.1, Lessor is NOT obligated to provide the following:

[_] Janitorial services

[_] Electricity

[_] Other (specify): ____________________________________________________

1.14 Attachments. Attached hereto are the following, all of which

constitute a part of this Lease:

[X] an Addendum consisting of Paragraphs 51 through 52;

[X] a plot plan depicting the Premises;

[X] a current set of the Rules and Regulations;

[_] a Work Letter;

[_] a janitorial schedule;

[_] other (specifiy): __________________________________________________________

2. Premises.

2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases

from Lessor, the Premises, for the term, at the rental, and upon all of the

terms, covenants and conditions set forth in this Lease. Unless otherwise

provided herein, any statement of size set forth in this Lease, or that may have

been used in calculating Rent, is an approximation which the Parties agree is

reasonable and any payments based thereon are not subject to revision whether or

not the actual size is more or less. Note: Lessee is advised to verify the

actual size prior to executing this Lease.

2.2 Condition. Lessor shall deliver the Premises to Lessee in a clean

condition on the Commencement Date or the Early Possession Date, whichever first

occurs ("Start Date"), and warrants that the existing electrical, plumbing, fire

sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"),

and all other items which the Lessor is obligated to construct pursuant to the

Work Letter attached hereto, if any, other than those constructed by Lessee,

shall be in good operating condition on said date.

2.3 Compliance. Lessor warrants that the improvements comprising the

Premises and the Common Areas comply with the building codes that were in effect

at the time that each such improvement, or portion thereof, was constructed, and

also with all applicable laws, covenants or restrictions of record, regulations,

and ordinances ("Applicable Requirements") in effect on the Start Date. Said

warranty does not apply to the use to which Lessee will put the Premises,

modifications which may be required by the Americans with Disabilities Act or

any similar laws as a result of Lessee's use (see Paragraph 50), or to any

Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to

be made by Lessee. NOTE: Lessee is responsible for determining whether or not

the zoning and other Applicable Requirements are appropriate for Lessee's

intended use, and acknowledges that past uses of the Premises may no longer be

allowed. If the Premises do not comply with said warranty, Lessor shall, except

as otherwise provided, promptly after receipt of written notice from Lessee

setting forth with specificity the nature and extent of such non-compliance,

rectify the same. If the Applicable Requirements are hereafter changed so as to

require during the term of this Lease the construction of an addition to or an

alteration of the Premises, the remediation of any Hazardous Substance, or the

reinforcement or other physical modification of the Premises ("Capital

Expenditure"), Lessor and Lessee shall allocate the cost of such work as

follows:

(a) Subject to Paragraph 2.3(c) below, if such Capital

Expenditures are required as a result of the specific and unique use of the

Premises by Lessee as compared with uses by tenants in general, Lessee shall be

fully responsible for the cost thereof, provided, however that if such Capital

Expenditure is required during the last 2 years of this Lease and the cost

thereof exceeds 6 months' Base Rent, Lessee may instead terminate this Lease

unless Lessor notifies Lessee, in writing, within 10 days after receipt of

Lessee's termination notice that Lessor has elected to pay the difference

between the actual cost thereof and the amount equal to 6 months' Base Rent. If

Lessee elects termination, Lessee shall immediately cease the use of the

Premises which requires such Capital Expenditure and deliver to Lessor written

notice specifying a termination date at least 90 days thereafter. Such

termination date shall, however, in no event be earlier than the last day that

Lessee could legally utilize the Premises without commencing such Capital

Expenditure.

(b) If such Capital Expenditure is not the result of the

specific and unique use of the Premises by Lessee (such as, governmentally

mandated seismic modifications), then Lessor and Lessee shall allocate the cost

of such Capital Expenditure as follows: Lessor shall advance the funds necessary

for such Capital Expenditure but Lessee shall 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 Lessee's share of the cost

of such Capital Expenditure (the percentage specified in Paragraph 1.6 by a

fraction, the numerator of which is one, and the denominator of which is 144

(ie. 1/144th of the cost per month). Lessee shall pay interest on the

unamortized balance of Lessee's share at a rate that is commercially reasonable

in the judgment of Lessor's accountants. Lessee may, however, prepay its

obligation at any time. Provided, however, that if such Capital Expenditure is

required during the last 2 years of this Lease or if Lessor reasonably

determines that it is not economically feasible to pay 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. If Lessor does not elect to terminate, and fails to tender its

share of any such Capital Expenditure, Lessee may advance such funds and deduct

same, with Interest, from Rent until Lessor's share of such costs have been

fully paid. If Lessee is unable to finance Lessor's share, or if the balance of

the Rent due and payable for the remainder of this Lease is not sufficient to

fully reimburse Lessee on an offset basis, Lessee shall have the right to

terminate this Lease upon 30 days written notice to Lessor.

Capital Expenditures are intended to apply only to nonvoluntary, unexpected, and

new Applicable Requirements. If the Capital Expenditures are instead triggered

by Lessee as a result of an actual or proposed change in use, change in

intensity of use, or modification to the Premises then, and in that event,

Lessee shall 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) Lessee has been

advised by Lessor and/or Brokers to satisfy itself with respect to the condition

of the Premises (including but not limited to the electrical, HVAC and fire

sprinkler systems, security, environmental aspects, and compliance with

Applicable Requirements), and their suitability for Lessee's intended use, (b)

Lessee has made such investigation as it deems necessary with reference to such

/s/ ??????? /s/ ???????

----------- -----------

/s/ ???????

----------- -----------

Initials Initials

Page 2 of 15

<PAGE>

matters and assumes all responsibility therefor as the same relate to its

occupancy of the Premises, and (c) neither Lessor, Lessor's agents, nor Brokers

have made any oral or written representations or warranties with respect to said

matters other than as set forth in this Lease. In addition, Lessor acknowledges

that: (i) Brokers have made no representations, promises or warranties

concerning Lessee's ability to honor the Lease or suitability to occupy the

Premises, and (ii) it is Lessor's sole responsibility to investigate the

financial capability and/or suitability of all proposed tenants.

2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in

Paragraph 2 shall be of no force or effect if immediately prior to the Start

Date, Lessee was the owner or occupant of the Premises. In such event, Lessee

shall be responsible for any necessary corrective work.

2.6 Vehicle Parking. So long as Lessee is not in default, and subject

to the Rules and Regulations attached hereto, and as established by Lessor from

time to time, Lessee shall be entitled to rent and use the number of parking

spaces specified in Paragraph 1.2(b) at the rental rate applicable from time to

time for monthly parking as set by Lessor and/or its licensee.

(a) If Lessee commits, permits or allows any of the prohibited

activities described in the Lease or the rules then in effect, then Lessor shall

have the right, without notice, in addition to such other rights and remedies

that it may have, to remove or tow away the vehicle involved and charge the cost

to Lessee, which cost shall be immediately payable upon demand by Lessor.

(b) The monthly rent per parking space specified in Paragraph

1.2(b) is subject to change upon 30 days prior written notice to Lessee. The

rent for the parking is payable one month in advance prior to the first day of

each calendar month.

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

Premises that are provided and designated by the Lessor from time to time for

the general nonexclusive use of Lessor, Lessee and other tenants of the Project

and their respective employees, suppliers, shippers, customers, contractors and

invitees, including, but not limited to, common entrances, lobbies, corridors,

stairwells, public restrooms, elevators, parking areas, loading and unloading

areas, trash areas, roadways, walkways, driveways and landscaped areas.

2.8 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 nonexclusive right to use, in

common with others entitled to such use, the Common Areas as they exist from

time to time, subject to any rights, powers, and privileges reserved by Lessor

under the terms hereof or under the terms of any rules and regulations or

restrictions governing the use of the Project. Under no circumstances shall the

right herein granted to use the Common Areas be deemed to include the right to

store any property, temporarily or permanently, in the Common Areas. Any such

storage shall be permitted only by the prior written consent of Lessor or

Lessor's designated agent, which consent may be revoked at any time. In the

event that any unauthorized storage shall occur then Lessor shall have the

right, without notice, in addition to such other rights and remedies that it may

have, to remove the property and charge the cost to Lessee, which cost shall be

immediately payable upon demand by Lessor.

2.9 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 adopt,

modify, amend and enforce reasonable rules and regulations ("Rules and

Regulations") for the management, safety, care, and cleanliness of the grounds,

the parking and unloading of vehicles and the preservation of good order, as

well as for the convenience of other occupants or tenants of the Building and

the Project and their invitees. The Lessee agrees to abide by and conform to all

such Rules and Regulations, and to cause its employees, suppliers, shippers,

customers, contractors and invitees to so abide and conform. Lessor shall not be

responsible to Lessee for the noncompliance with said Rules and Regulations by

other tenants of the Project.

2.10 Common Areas - Changes. Lessor shall have the right, in Lessor's

sole discretion, from time to time:

(a) To make changes to the Common Areas, including, without

limitation, changes in the location, size, shape and number of the lobbies,

windows, stairways, air shafts, elevators, escalators, restrooms, driveways,

entrances, parking spaces, parking areas, loading and unloading areas, ingress,

egress, direction of traffic, landscaped areas, walkways and utility raceways;

(b) To close temporarily any of the Common Areas for

maintenance purposes so long as reasonable access to the Premises remains

available;

Project to be a part of the Common Areas;

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

Areas;

(e) To use the Common Areas while engaged in making additional

improvements, repairs or alterations to the Project, or any portion thereof; and

(f) To do and perform such other acts and make such other

changes in, to or with respect to the Common Areas and Project as Lessor may, in

the exercise of sound business judgment, deem to be appropriate.

3. Term.

3.1 Term. The Commencement Date, Expiration Date and Original Term of

this Lease are as specified in Paragraph 1.3.

3.2 Early Possession. If Lessee totally or partially occupies the

Premises prior to the Commencement Date, the obligation to pay Base Rent shall

be abated for the period of such early possession. All other terms of this Lease

(including but not limited to the obligations to pay Lessee's Share of the

Operating Expense Increase) shall, however, be in effect during such period. Any

such early possession shall not affect the Expiration Date.

3.3 Delay In Possession. Lessor agrees to use its best commercially

reasonable efforts to deliver possession of the Premises to Lessee by the

Commencement Date. If, despite said efforts, Lessor is unable to deliver

possession by such date, Lessor shall not be subject to any liability therefor,

nor shall such failure affect the validity of this Lease. Lessee shall not,

however, be obligated to pay Rent or perform its other obligations until Lessor

delivers possession of the Premises and any period of rent abatement that Lessee

would otherwise have enjoyed shall run from the date of delivery of possession

and continue for a period equal to what Lessee would otherwise have enjoyed

under the terms hereof, but minus any days of delay caused by the acts or

omissions of Lessee. If possession is not delivered within 60 days after the

Commencement Date, as the same may be extended under the terms of any Work

Letter executed by Parties, Lessee may, at its option, by notice in writing

within 10 days after the end of such 60 day period, cancel this Lease, in which

event the Parties shall be discharged from all obligations hereunder. If such

written notice is not received by Lessor within said 10 day period, Lessee's

right to cancel shall terminate. If possession of the Premises is not delivered

within 120 days after the Commencement Date, this Lease shall terminate unless

other agreements are reached between Lessor and Lessee, in writing.

3.4 Lessee Compliance. Lessor shall not be required to deliver

possession of the Premises to Lessee until Lessee complies with its obligation

to provide evidence of insurance (Paragraph 8.5). Pending delivery of such

evidence, Lessee shall be required to perform all of its obligations under this

Lease from and after the Start Date, including the payment of Rent,

notwithstanding Lessor's election to withhold possession pending receipt of such

evidence of insurance. Further, if Lessee is required to perform any other

conditions prior to or concurrent with the Start Date, the Start Date shall

occur but Lessor may elect to withhold possession until such conditions are

satisfied.

4. Rent.

4.1. Rent Defined. All monetary obligations of Lessee to Lessor under

the terms of this Lease (except for the Security Deposit) are deemed to be rent

("Rent").

4.2 Operating Expense Increase. Lessee shall pay to Lessor during the

term hereof, in addition to the Base Rent, Lessee's Share of the amount by which

all Operating Expenses for each Comparison Year exceeds the amount of all

Operating Expenses for the Base Year, such excess being hereinafter referred to

as the "Operating Expense Increase", in accordance with the following

provisions:

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

(b) "Comparison Year" is defined as each calendar year during

the term of this Lease subsequent to the Base Year; provided, however, Lessee

shall have no obligation to pay a share of the Operating Expense Increase

applicable to the first 12 months of the Lease Term (other than such as are

mandated by a governmental authority, as to which government mandated expenses

Lessee shall pay Lessee's Share, notwithstanding they occur during the first

/s/ ??????? /s/ ???????

----------- -----------

/s/ ???????

----------- -----------

Initials Initials

Page 3 of 15

<PAGE>

twelve (12) months). Lessee's Share of the Operating Expense Increase for the

first and last Comparison Years of the Lease Term shall be prorated according to

that portion of such Comparison Year as to which Lessee is responsible for a

share of such increase.

relating to the ownership and operation of the Project, calculated as if the

Project was at least 95% occupied, including, but not limited to, the following:

(i) The operation, repair, and maintenance in neat,

clean, safe, good order and condition, but not the replacement (see subparagraph

(g)), of the following:

(aa) The Common Areas, including their

surfaces, coverings, decorative items, carpets, drapes and window coverings, and

including parking areas, loading and unloading areas, trash areas, roadways,

sidewalks, walkways, stairways, parkways, driveways, landscaped areas, striping,

bumpers, irrigation systems, Common Area lighting facilities, building exteriors

and roofs, fences and gates;

(bb) All heating, air conditioning,

plumbing, electrical systems, life safety equipment, communication systems and

other equipment used in common by, or for the benefit of, lessees or occupants

of the Project, including elevators and escalators, tenant directories, fire

detection systems including sprinkler system maintenance and repair.

(ii) Trash disposal, janitorial and security

services, pest control services, and the costs of any environmental inspections;

(iii) Any other service to be provided by Lessor that

is elsewhere in this Lease stated to be an "Operating Expense";

(iv) The cost of the premiums for the insurance

policies maintained by Lessor pursuant to paragraph 8 and any deductible portion

of an insured loss concerning the Building or the Common Areas;

(v) The amount of the Real Property Taxes payable by

Lessor pursuant to paragraph 10;

(vi) The cost of water, sewer, gas, electricity, and

other publicly mandated services not separately metered;

(vii) Labor, salaries, and applicable fringe benefits

and costs, materials, supplies and tools, used in maintaining and/or cleaning

the Project and accounting and management fees attributable to the operation of

the Project;

(viii) The cost of any Capital Expenditure to the

Building or the Project not covered under the provisions of Paragraph 2.3

provided; however, that Lessor shall allocate the cost of any such Capital

Expenditure over a 12 year period and Lessee shall not be required to pay more

than Lessee's Share of 1/144th of the cost of such Capital Expenditure in any

given month;

(ix) Replacement of equipment or improvements that

have a useful life for accounting purposes of 5 years or less.

(d) Any item of Operating Expense that is specifically

attributable to the Premises, the Building or to any other building in the

Project or to the operation, repair and maintenance thereof, shall be allocated

entirely to such Premises, Building, or other building. However, any such item

that is not specifically attributable to the Building or to any other building

or to the operation, repair and maintenance thereof, shall be equitably

allocated by Lessor to all buildings in the Project.

(e) The inclusion of the improvements, facilities and services

set forth in Subparagraph 4.2(c) shall not be deemed to impose an obligation

upon Lessor to either have said improvements or facilities or to provide those

services unless the Project already has the same, Lessor already provides the

services, or Lessor has agreed elsewhere in this Lease to provide the same or

some of them.

(f) Lessee's Share of Operating Expense Increase shall be

payable by Lessee within 10 days after a reasonably detailed statement of actual

expenses is presented to Lessee by Lessor. At Lessor's option, however, an

amount may be estimated by Lessor from time to time in advance of Lessee's Share

of the Operating Expense Increase for any Comparison Year, and the same shall be

payable monthly during each Comparison Year of the Lease term, on the same day

as the Base Rent is due hereunder. In the event that Lessee pays Lessor's

estimate of Lessee's Share of Operating Expense Increase as aforesaid, Lessor

shall deliver to Lessee within 60 days after the expiration of each Comparison

Year a reasonably detailed statement showing Lessee's Share of the actual

Operating Expense Increase incurred during such year. If Lessee's payments under

this paragraph (f) during said Comparison Year exceed Lessee's Share as

indicated on said statement, Lessee shall be entitled to credit the amount of

such overpayment against Lessee's Share of Operating Expense Increase next

falling due. If Lessee's payments under this paragraph during said Comparison

Year were less than Lessee's Share as indicated on said statement, Lessee shall

pay to Lessor the amount of the deficiency within 10 days after delivery by

Lessor to Lessee of said statement. Lessor and Lessee shall forthwith adjust

between them by cash payment any balance determined to exist with respect to

that portion of the last Comparison Year for which Lessee is responsible as to

Operating Expense Increases, notwithstanding that the Lease term may have

terminated before the end of such Comparison Year.

(g) Operating Expenses shall not include the costs of

replacement for equipment or capital components such as the roof, foundations,

exterior walls or a Common Area capital improvement, such as the parking lot

paving, elevators, fences that have a useful life for accounting purposes of 5

years or more unless it is of the type described in paragraph 4.2(c) (viii), in

which case their cost shall be included as above provided.

(h) Operating Expenses shall not include any expenses paid by

any tenant directly to third parties, or as to which Lessor is otherwise

reimbursed by any third party, other tenant, or by insurance proceeds.

4.3 Payment. Lessee shall cause payment of Rent to be received by

Lessor in lawful money of the United States on or before the day on which it is

due, without offset or deduction (except as specifically permitted in this

Lease). Rent for any period during the term hereof which is for less than one

full calendar month shall be prorated based upon the actual number of days of

said month. Payment of Rent shall be made to Lessor at its address stated herein

or to such other persons or place as Lessor may from time to time designate in

writing. Acceptance of a payment which is less than the amount then due shall

not be a waiver of Lessor's rights to the balance of such Rent, regardless of

Lessor's endorsement of any check so stating. In the event that any check,

draft, or other instrument of payment given by Lessee to Lessor is dishonored

for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any

Late Charge. Payments will be applied first to accrued late charges and

attorney's fees, second to accrued interest, then to Base Rent and Operating

Expense Increase, and any remaining amount to any other outstanding charges or

costs.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the

Security Deposit as security for Lessee's faithful performance of its

obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults

under this Lease, Lessor may use, apply or retain all or any portion of said

Security Deposit for the payment of any amount due Lessor or to reimburse or

compensate Lessor for any liability, expense, loss or damage which Lessor may

suffer or incur by reason thereof. If Lessor uses or applies all or any portion

of the Security Deposit, Lessee shall within 10 days after written request

therefor, deposit monies with Lessor sufficient to restore said Security Deposit

to the full amount required by this Lease. If the Base Rent increases during the

term of this Lease, Lessee shall, upon written request from Lessor, deposit

additional moneys with Lessor so that the total amount of the Security Deposit

shall at all times bear the same proportion to the increased Base Rent as the

initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be

amended to accommodate a material change in the business of Lessee or to

accommodate a sublessee or assignee, Lessor shall have the right to increase the

Security Deposit to the extent necessary, in Lessor's reasonable judgment, to

account for any increased wear and tear that the Premises may suffer as a result

thereof. If a change in control of Lessee occurs during this Lease and following

such change the financial condition of Lessee is, in Lessor's reasonable

judgment, significantly reduced, Lessee shall deposit such additional monies

with Lessor as shall be sufficient to cause the Security Deposit to be at a

commercially reasonable level based on such change in financial condition.

Lessor shall not be required to keep the Security Deposit separate from its

general accounts. Within 14 days after the expiration or termination of this

Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and

otherwise within 30 days after the Premises have been vacated pursuant to

Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit

not used or applied by Lessor. No part of the Security Deposit shall be

considered to be held in trust, to bear interest or to be prepayment for any

monies to be paid by Lessee under this Lease.

6. Use.

6.1 Use. Lessee shall use and occupy the Premises only for the Agreed

Use, or any other legal use which is reasonably comparable thereto, and for no

other purpose. Lessee shall not use or permit the use of the Premises in a

manner that is unlawful, creates damage, waste or a nuisance, or that disturbs

occupants of or causes damage to neighboring premises or properties. Lessor

shall not unreasonably withhold or delay its consent to any written request for

/s/ ??????? /s/ ???????

----------- -----------

/s/ ???????

----------- -----------

Initials Initials

Page 4 of 15

<PAGE>

modification of the Agreed Use, so long as the same will not impair the

structural integrity of the improvements of the Building, will not adversely

affect the mechanical, electrical, HVAC, and other systems of the Building,

and/or will not affect the exterior appearance of the Building. If Lessor elects

to withhold consent, Lessor shall within 7 days after such request give written

notification of same, which notice shall include an explanation of Lessor's

objections to the change in the Agreed Use.

6.2 Hazardous Substances.

(a) Reportable Uses Require Consent. The term "Hazardous

Substance" as used in this Lease shall mean any product, substance, or waste

whose presence, use, manufacture, disposal, transportation, or release, either

by itself or in combination with other materials expected to be on the Premises,

is either: (i) potentially injurious to the public health, safety or welfare,

the environment or the Premises, (ii) regulated or monitored by any governmental

authority, or (iii) a basis for potential liability of Lessor to any

governmental agency or third party under any applicable statute or common law

theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,

petroleum, gasoline, and/or crude oil or any products, byproducts or fractions

thereof. Lessee shall not engage in any activity in or on the Premises which

constitutes a Reportable Use of Hazardous Substances without the express prior

written consent of Lessor and timely compliance (at Lessee's expense) with all

Applicable Requirements. "Reportable Use" shall mean (i) the installation or use

of any above or below ground storage tank, (ii) the generation, possession,

storage, use, transportation, or disposal of a Hazardous Substance that requires

a permit from, or with respect to which a report, notice, registration or

business plan is required to be filed with, any governmental authority, and/or

(iii) the presence at the Premises of a Hazardous Substance with respect to

which any Applicable Requirements requires that a notice be given to persons

entering or occupying the Premises or neighboring properties. Notwithstanding

the foregoing, Lessee may use any ordinary and customary materials reasonably

required to be used in the normal course of the Agreed Use such as ordinary

office supplies (copier toner, liquid paper, glue, etc.) and common household

cleaning materials, so long as such use is in compliance with all Applicable

Requirements, is not a Reportable Use, and does not expose the Premises or

neighboring property to any meaningful risk of contamination or damage or expose

Lessor to any liability therefor. In addition, Lessor may condition its consent

to any Reportable Use upon receiving such additional assurances as Lessor

reasonably deems necessary to protect itself, the public, the Premises and/or

the environment against damage, contamination, injury and/or liability,

including, but not limited to, the installation (and removal on or before Lease

expiration or termination) of protective modifications (such as concrete

encasements) and/or increasing the Security Deposit.

(b) Duty to Inform Lessor. If Lessee knows, or has reasonable

cause to believe, that a Hazardous Substance has come to be located in, on,

under or about the Premises, other than as previously consented to by Lessor,

Lessee shall immediately give written notice of such fact to Lessor, and provide

Lessor with a copy of any report, notice, claim or other documentation which it

has concerning the presence of such Hazardous Substance.

Hazardous Substance to be spilled or released in, on, under, or about the

Premises (including through the plumbing or sanitary sewer system) and shall

promptly, at Lessee's expense, comply with all Applicable Requirements and take

all investigatory and/or remedial action reasonably recommended, whether or not

formally ordered or required, for the cleanup of any contamination of, and for

the maintenance, security and/or monitoring of the Premises or neighboring

properties, that was caused or materially contributed to by Lessee, or

pertaining to or involving any Hazardous Substance brought onto the Premises

during the term of this Lease, by or for Lessee, or any third party.

(d) Lessee Indemnification. Lessee shall indemnify, defend and

hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless

from and against any and all loss of rents and/or damages, liabilities,

judgments, claims, expenses, penalties, and attorneys' and consultants' fees

arising out of or involving any Hazardous Substance brought onto the Premises by

or for Lessee, or any third party (provided, however, that Lessee shall have no

liability under this Lease with respect to underground migration of any

Hazardous Substance under the Premises from areas outside of the Project not

caused or contributed to by Lessee). Lessee's obligations shall include, but not

be limited to, the effects of any contamination or injury to person, property or

the environment created or suffered by Lessee, and the cost of investigation,

removal, remediation, restoration and/or abatement, and shall survive the

expiration or termination of this Lease. No termination, cancellation or release

agreement entered into by Lessor and Lessee shall release Lessee from its

obligations under this Lease with respect to Hazardous Substances, unless

specifically so agreed by Lessor in writing at the time of such agreement.

(e) Lessor Indemnification. Lessor and its successors and

assigns shall indemnify, defend, reimburse and hold Lessee, its employees and

lenders, harmless from and against any and all environmental damages, including

the cost of remediation, which result from Hazardous Substances which existed on

the Premises prior to Lessee's occupancy or which are caused by the gross

negligence or willful misconduct of Lessor, its agents or employees. Lessor's

obligations, as and when required by the Applicable Requirements, shall include,

but not be limited to, the cost of investigation, removal, remediation,

restoration and/or abatement, and shall survive the expiration or termination of

this Lease.

(f) Investigations and Remediations. Lessor shall retain the

responsibility and pay for any investigations or remediation measures required

by governmental entities having jurisdiction with respect to the existence of

Hazardous Substances on the Premises prior to Lessee's occupancy, unless such

remediation measure is required as a result of Lessee's use (including

"Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which

event Lessee shall be responsible for such payment. Lessee shall cooperate fully

in any such activities at the request of Lessor, including allowing Lessor and

Lessor's agents to have reasonable access to the Premises at reasonable times in

order to carry out Lessor's investigative and remedial responsibilities.

(g) Lessor Termination Option. If a Hazardous Substance

Condition (see Paragraph 9.1(e)) occurs during the term of this Lease, unless

Lessee is legally responsible therefor (in which case Lessee shall make the

investigation and remediation thereof required by the Applicable Requirements

and this Lease shall continue in full force and effect, but subject to Lessor's

rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option,

either (i) investigate and remediate such Hazardous Substance Condition, if

required, as soon as reasonably possible at Lessor's expense, in which event

this Lease shall continue in full force and effect, or (ii) if the estimated

cost to remediate such condition exceeds 12 times the then monthly Base Rent or

$100,000, whichever is greater, give written notice to Lessee, within 30 days

after receipt by Lessor of knowledge of the occurrence of such Hazardous

Substance Condition, of Lessor's desire to terminate this Lease as of the date

60 days following the date of such notice. In the event Lessor elects to give a

termination notice, Lessee may, within 10 days thereafter, give written notice

to Lessor of Lessee's commitment to pay the amount by which the cost of the

remediation of such Hazardous Substance Condition exceeds an amount equal to 12

times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall

provide Lessor with said funds or satisfactory assurance thereof within 30 days

following such commitment. In such event, this Lease shall continue in full

force and effect, and Lessor shall proceed to make such remediation as soon as

reasonably possible after the required funds are available. If Lessee does not

give such notice and provide the required funds or assurance thereof within the

time provided, this Lease shall terminate as of the date specified in Lessor's

notice of termination.

6.3 Lessee's Compliance with Applicable Requirements. Except as

otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully,

diligently and in a timely manner, materially comply with all Applicable

Requirements, the requirements of any applicable fire insurance underwriter or

rating bureau, and the recommendations of Lessor's engineers and/or consultants

which relate in any manner to the Premises, without regard to whether said

requirements are now in effect or become effective after the Start Date. Lessee

shall, within 10 days after receipt of Lessor's written request, provide Lessor

with copies of all permits and other documents, and other information evidencing

Lessee's compliance with any Applicable Requirements specified by Lessor, and

shall immediately upon receipt, notify Lessor in writing (with copies of any

documents involved) of any threatened or actual claim, notice, citation,

warning, complaint or report pertaining to or involving the failure of Lessee or

the Premises to comply with any Applicable Requirements.

6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in

Paragraph 30) and consultants shall have the right to enter into Premises at any

time, in the case of an emergency, and otherwise at reasonable times, for the

purpose of inspecting the condition of the Premises and for verifying compliance

by Lessee with this Lease. The cost of any such inspections shall be paid by

Lessor, unless a violation of Applicable Requirements, or a Hazardous Substance

Condition (see paragraph 9.1e) is found to exist or be imminent, or the

inspection is requested or ordered by a governmental authority. In such case,

Lessee shall upon request reimburse Lessor for the cost of such inspection, so

long as such inspection is reasonably related to the violation or contamination.

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

7.1 Lessee's Obligations. Notwithstanding Lessor's obligation to keep

the Premises in good condition and repair, Lessee shall be responsible for

/s/ ??????? /s/ ???????

----------- -----------

/s/ ???????

----------- -----------

Initials Initials

Page 5 of 15

<PAGE>

payment of the cost thereof to Lessor as additional rent for that portion of the

cost of any maintenance and repair of the Premises, or any equipment (wherever

located) that serves only Lessee or the Premises, to the extent such cost is

attributable to causes beyond normal wear and tear. Lessee shall be responsible

for the cost of painting, repairing or replacing wall coverings, and to repair

or replace any improvements with the Premises. Lessor may, at its option, upon

reasonable notice, elect to have Lessee perform any particular such maintenance

or repairs the cost of which is otherwise Lessee's responsibility hereunder.

7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2

(Condition), 2.3 (Compliance), 4.2 (Operating Expenses), 6 (Use), 7.1 (Lessee's

Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject

to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition

and repair the foundations, exterior walls, structural condition of interior

bearing walls, exterior roof, fire sprinkler system, fire alarm and/or smoke

detection systems, fire hydrants, and the Common Areas. Lessee expressly waives

the benefit of any statute now or hereafter in effect to the extent it is

inconsistent with the terms of this Lease.

7.3 Utility Installations; Trade Fixtures; Alterations.

(a) Definitions. The term "Utility Installations" refers to

all floor and window coverings, air lines, vacuum lines, power panels,

electrical distribution, security and fire protection systems, communication

cabling, lighting fixtures, HVAC equipment, and plumbing in or on the Premises.

The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can

be removed without doing material damage to the Premises. The term "Alterations"

shall mean any modification of the improvements, other than Utility

Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned

Alterations and/or Utility Installations" are defined as Alterations and/or

Utility Installations made by Lessee that are not yet owned by Lessor pursuant

to Paragraph 7.4(a).

(b) Consent. Lessee shall not make any Alterations or Utility

Installations to the Premises without Lessor's prior written consent. Lessee

may, however, make non-structural Utility Installations to the interior of the

Premises (excluding the roof) without such consent but upon notice to Lessor, as

long as they are not visible from the outside, do not involve puncturing,

relocating or removing the roof, ceilings, floors or any existing walls, will

not affect the electrical, plumbing, HVAC, and/or life safety systems, and the

cumulative cost thereof during this Lease as extended does not exceed $2000.

Notwithstanding the foregoing, Lessee shall not make or permit any roof

penetrations and/or install anything on the roof without the prior written

approval of Lessor. Lessor may, as a precondition to granting such approval,

require Lessee to utilize a contractor chosen and/or approved by Lessor. Any

Alterations or Utility Installations that Lessee shall desire to make and which

require the consent of the Lessor shall be presented to Lessor in written form

with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i)

acquiring all applicable governmental permits, (ii) furnishing Lessor with

copies of both the permits and the plans and specifications prior to

commencement of the work, and (iii) compliance with all conditions of said

permits and other Applicable Requirements in a prompt and expeditious manner.

Any Alterations or Utility Installations shall be performed in a workmanlike

manner with good and sufficient materials. 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.

labor or materials furnished or alleged to have been furnished to or for Lessee

at or for use on the Premises, which claims are or may be secured by any

mechanic's or materialmen's lien against the Premises or any interest therein.

Lessee shall give Lessor not less than 10 days notice prior to the commencement

of any work in, on or about the Premises, and Lessor shall have the right to

post notices of non-responsibility. If Lessee shall contest the validity of any

such lien, claim or demand, then Lessee shall, at its sole expense defend and

protect itself, Lessor and the Premises against the same and shall pay and

satisfy any such adverse judgment that may be rendered thereon before the

enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond

in an amount equal to 150% of the amount of such contested lien, claim or

demand, indemnifying Lessor against liability for the same. If Lessor elects to

participate in any such action, Lessee shall pay Lessor's attorneys' fees and

costs.

7.4 Ownership; Removal; Surrender; and Restoration.

(a) Ownership. Subject to Lessor's right to require removal 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 earlier than 90 and not later than 30 days prior to the end of the

term of this Lease, Lessor may require that any or all Lessee Owned Alterations

or Utility Installations be removed by the expiration or termination of this

Lease. Lessor may require the removal at any time of all or any part of any

Lessee Owned Alterations or Utility Installations made without the required

consent.

Premises by the Expiration Date or any earlier termination date, with all of the

improvements, parts and surfaces thereof clean and free of debris, and in good

operating order, condition and state of repair, ordinary wear and tear excepted.

"Ordinary wear and tear" shall not include any damage or deterioration that

would have been prevented by good maintenance practice. Notwithstanding the

foregoing, if this Lease is for 12 months or less, then Lessee shall surrender

the Premises in the same condition as delivered to Lessee on the Start Date with

NO allowance for ordinary wear and tear. Lessee shall repair any damage

occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee

owned Alterations and/or Utility Installations, furnishings, and equipment as

well as the removal of any storage tank installed by or for Lessee. Lessee shall

also completely remove from the Premises any and all Hazardous Substances

brought onto the Premises by or for Lessee, or any third party (except Hazardous

Substances which were deposited via underground migration from areas outside of

the Project) even if such removal would require Lessee to perform or pay for

work that exceeds statutory requirements. Trade Fixtures shall remain the

property of Lessee and shall be removed by Lessee. The failure by Lessee to

timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express

written consent of Lessor shall constitute a holdover under the provisions of

Paragraph 26 below.

8. Insurance; Indemnity.

8.1 Insurance Premiums. The cost of the premiums for the insurance

policies maintained by Lessor pursuant to paragraph 8 are included as Operating

Expenses (see paragraph 4.2 (c)(iv)). Said costs shall include increases in the

premiums resulting from additional coverage related to requirements of the

holder of a mortgage or deed of trust covering the Premises, Building and/or

Project, increased valuation of the Premises, Building and/or Project, and/or a

general premium rate increase. Said costs shall not, however, include any

premium increases resulting from the nature of the occupancy of any other tenant

of the Building. If the Project was not insured for the entirety of the Base

Year, then the base premium shall be the lowest annual premium reasonably

obtainable for the required insurance as of the Start Date, assuming the most

nominal use possible of the Building and/or Project. In no event, however, shall

Lessee be responsible for any portion of the premium cost attributable to

liability insurance coverage in excess of $2,000,000 procured under Paragraph

8.2(b).

8.2 Liability Insurance.

(a) Carried by Lessee. Lessee shall obtain and keep in force a

Commercial General Liability policy of insurance protecting Lessee and Lessor as

an additional insured against claims for bodily injury, personal injury and

property damage based upon or arising out of the ownership, use, occupancy or

maintenance of the Premises and all areas appurtenant thereto. Such insurance

shall be on an occurrence basis providing single limit coverage in an amount not

less than $1,000,000 per occurrence with an annual aggregate of not less than

$2,000,000, an "Additional Insured-Managers or Lessors of Premises Endorsement"

and contain the "Amendment of the Pollution Exclusion Endorsement" for damage

caused by heat, smoke or fumes from a hostile fire. The policy shall not contain

any intra-insured exclusions as between insured persons or organizations, but

shall include coverage for liability assumed under this Lease as an "insured

contract" for the performance of Lessee's indemnity obligations under this

Lease. The limits of said insurance shall not, however, limit the liability of

Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by

Lessee shall be primary to and not contributory with any similar insurance

carried by Lessor, whose insurance shall be considered excess insurance only.

(b) Carried by Lessor . Lessor shall maintain liability

insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of,

the insurance required to be maintained by Lessee. Lessee shall not be named as

an additional insured therein.

8.3 Property Insurance - Building, Improvements and Rental Value.

/s/ ??????? /s/ ???????

----------- -----------

/s/ ???????

----------- -----------

Initials Initials

Page 6 of 15

<PAGE>

(a) Building and Improvements. Lessor shall obtain and keep in

force a policy or policies of insurance in the name of Lessor, with loss payable

to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the

Building and/or Project. The amount of such insurance shall be equal to the full

replacement cost of the Building and/or Project, as the same shall exist from

time to time, or the amount required by any Lender, but in no event more than

the commercially reasonable and available insurable value thereof. Lessee Owned

Alterations and Utility Installations, Trade Fixtures, and Lessee's personal

property shall be insured by Lessee under Paragraph 8.4. If the coverage is

available and commercially appropriate, such policy or policies shall insure

against all risks of direct physical loss or damage (except the perils of flood

and/or earthquake unless required by a Lender), including coverage for debris

removal and the enforcement of any Applicable Requirements requiring the

upgrading, demolition, reconstruction or replacement of any portion of the

Premises as the result of a covered loss. Said policy or policies shall also

contain an agreed valuation provision in lieu of any coinsurance clause, waiver

of subrogation, and inflation guard protection causing an increase in the annual

property insurance coverage amount by a factor of not less than the adjusted

U.S. Department of Labor Consumer Price Index for All Urban Consumers for the

city nearest to where the Premises are located. If such insurance coverage has a

deductible clause, the deductible amount shall not exceed $1,000 per occurrence.

(b) Rental Value. Lessor shall also obtain and keep in force a

policy or policies in the name of Lessor with loss payable to Lessor and any

Lender, insuring the loss of the full Rent for one year with an extended period

of indemnity for an additional 180 days ("Rental Value insurance"). Said

insurance shall contain an agreed valuation provision in lieu of any coinsurance

clause, and the amount of coverage shall be adjusted annually to reflect the

projected Rent otherwise payable by Lessee, for the next 12 month period.

the premiums for the property insurance of the Building and for the Common Areas

or other buildings in the Project if said increase is caused by Lessee's acts,

omissions, use or occupancy of the Premises.

(d) Lessee's Improvements. Since Lessor is the Insuring Party,

Lessor shall not be required to insure Lessee Owned Alterations and Utility

Installations unless the item in question has become the property of Lessor

under the terms of this Lease.

8.4 Lessee's Property; Business Interruption Insurance.

(a) Property Damage. Lessee shall obtain and maintain

insurance coverage on all of Lessee's personal property, Trade Fixtures, and

Lessee Owned Alterations and Utility Installations. Such insurance shall be full

replacement cost coverage with a deductible of not to exceed $1,000 per

occurrence. The proceeds from any such insurance shall be used by Lessee for the

replacement of personal property, Trade Fixtures and Lessee Owned Alterations

and Utility Installations. Lessee shall provide Lessor with written evidence

that such insurance is in force.

(b) Business Interruption. Lessee shall obtain and maintain

loss of income and extra expense insurance in amounts as will reimburse Lessee

for direct or indirect loss of earnings attributable to all perils commonly

insured against by prudent lessees in the business of Lessee or attributable to

prevention of access to the Premises as a result of such perils.

representation that the limits or forms of coverage of insurance specified

herein are adequate to cover Lessee's property, business operations or

obligations under this Lease.

8.5 Insurance Policies. Insurance required herein shall be by companies

duly licensed or admitted to transact business in the state where the Premises

are located, and maintaining during the policy term a "General Policyholders

Rating" of at least B+, V, as set forth in the most current issue of "Best's

Insurance Guide", or such other rating as may be required by a Lender. Lessee

shall not do or permit to be done anything which invalidates the required

insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor

certified copies of policies of such insurance or certificates evidencing the

existence and amounts of the required insurance. No such policy shall be

cancelable or subject to modification except after 30 days prior written notice

to Lessor. Lessee shall, at least 30 days prior to the expiration of such

policies, furnish Lessor with evidence of renewals or "insurance binders"

evidencing renewal thereof, or Lessor may order such insurance and charge the

cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon

demand. Such policies shall be for a term of at least one year, or the length of

the remaining term of this Lease, whichever is less. If either Party shall fail

to procure and maintain the insurance required to be carried by it, the other

Party may, but shall not be required to, procure and maintain the same.

8.6 Waiver of Subrogation. Without affecting any other rights or

remedies, Lessee and Lessor each hereby release and relieve the other, and waive

their entire right to recover damages against the other, for loss of or damage

to its property arising out of or incident to the perils required to be insured

against herein. The effect of such releases and waivers is not limited by the

amount of insurance carried or required, or by any deductibles applicable

hereto. The Parties agree to have their respective property damage insurance

carriers waive any right to subrogation that such companies may have against

Lessor or Lessee, as the case may be, so long as the insurance is not

invalidated thereby.

8.7 Indemnity. Except for Lessor's gross negligence or willful

misconduct, Lessee shall indemnify, protect, defend and hold harmless the

Premises, Lessor and its agents, Lessor's master or ground lessor, partners and

Lenders, from and against any and all claims, loss of rents and/or damages,

liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or

liabilities arising out of, involving, or in connection with, the use and/or

occupancy of the Premises by Lessee. If any action or proceeding is brought

against Lessor by reason of any of the foregoing matters, Lessee shall upon

notice defend the same at Lessee's expense by counsel reasonably satisfactory to

Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not

have first paid any such claim in order to be defended or indemnified.

8.8 Exemption of Lessor from Liability. Lessor shall not be liable for

injury or damage to the person or goods, wares, merchandise or other property of

Lessee, Lessee's employees, contractors, invitees, customers, or any other

person in or about the Premises, whether such damage or injury is caused by or

results from fire, steam, electricity, gas, water or rain, or from the breakage,

leakage, obstruction or other defects of pipes, fire sprinklers, wires,

appliances, plumbing, HVAC or lighting fixtures, or from any other cause,

whether the said injury or damage results from conditions arising upon the

Premises or upon other portions of the Building, or from other sources or

places. Lessor shall not be liable for any damages arising from any act or

neglect of any other tenant of Lessor nor from the failure of Lessor to enforce

the provisions of any other lease in the Project. Notwithstanding Lessor's

negligence or breach of this Lease, Lessor shall under no circumstances be

liable for injury to Lessee's business or for any loss of income or profit

therefrom.

9. Damage or Destruction.

9.1 Definitions.

(a) "Premises Partial Damage" shall mean damage or destruction

to the improvements on the Premises, other than Lessee Owned Alterations and

Utility Installations, which can reasonably be repaired in 3 months or less from

the date of the damage or destruction, and the cost thereof does not exceed a

sum equal to 6 month's Base Rent. Lessor shall notify Lessee in writing within

30 days from the date of the damage or destruction as to whether or not the

damage is Partial or Total.

(b) "Premises Total Destruction" shall mean damage or

destruction to the improvements on the Premises, other than Lessee Owned

Alterations and Utility Installations and Trade Fixtures, which cannot

reasonably be repaired in 3 months or less from the date of the damage or

destruction and/or the cost thereof exceeds a sum equal to 6 month's Base Rent.

Lessor shall notify Lessee in writing within 30 days from the date of the damage

or destruction as to whether or not the damage is Partial or Total.

improvements on the Premises, other than Lessee Owned Alterations and Utility

Installations and Trade Fixtures, which was caused by an event required to be

covered by the insurance described in Paragraph 8.3(a), irrespective of any

deductible amounts or coverage limits involved.

(d) "Replacement Cost" shall mean the cost to repair or

rebuild the improvements owned by Lessor at the time of the occurrence to their

condition existing immediately prior thereto, including demolition, debris

removal and upgrading required by the operation of Applicable Requirements, and

without deduction for depreciation.

(e) "Hazardous Substance Condition" shall mean the occurrence

or discovery of a condition involving the presence of, or a contamination by, a

Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the

Premises which requires repair, remediation, or restoration.

/s/ ??????? /s/ ???????

----------- -----------

/s/ ???????

----------- -----------

Initials Initials

Page 7 of 15

<PAGE>

9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is

an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such

damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility

Installations) as soon as reasonably possible and this Lease shall continue in

full force and effect; provided, however, that Lessee shall, at Lessor's

election, make the repair of any damage or destruction the total cost to repair

of which is $5,000 or less, and, in such event, Lessor shall make any applicable

insurance proceeds available to Lessee on a reasonable basis for that purpose.

Notwithstanding the foregoing, if the required insurance was not in force or the

insurance proceeds are not sufficient to effect such repair, the Insuring Party

shall promptly contribute the shortage in proceeds as and when required to

complete said repairs. In the event, however, such shortage was due to the fact

that, by reason of the unique nature of the improvements, full replacement cost

insurance coverage was not commercially reasonable and available, Lessor shall

have no obligation to pay for the shortage in insurance proceeds or to fully

restore the unique aspects of the Premises unless Lessee provides Lessor with

the funds to cover same, or adequate assurance thereof, within 10 days following

receipt of written notice of such shortage and request therefor. If Lessor

receives said funds or adequate assurance thereof within said 10 day period, the

party responsible for making the repairs shall complete them as soon as

reasonably possible and this Lease shall remain in full force and effect. If

such funds or assurance are not received, Lessor may nevertheless elect by

written notice to Lessee within 10 days thereafter to: (i) make such restoration

and repair as is commercially reasonable with Lessor paying any shortage in

proceeds, in which case this Lease shall remain in full force and effect, or

(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled

to reimbursement of any funds contributed by Lessee to repair any such damage or

destruction. Premises Partial Damage due to flood or earthquake shall be subject

to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but

the net proceeds of any such insurance shall be made available for the repairs

if made by either Party.

9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that

is not an Insured Loss occurs, unless caused by a negligent or willful act of

Lessee (in which event Lessee shall make the repairs at Lessee's expense),

Lessor may either: (i) repair such damage as soon as reasonably possible at

Lessor's expense, in which event this Lease shall continue in full force and

effect, or (ii) terminate this Lease by giving written notice to Lessee within

30 days after receipt by Lessor of knowledge of the occurrence of such damage.

Such termination shall be effective 60 days following the date of such notice.

In the event Lessor elects to terminate this Lease, Lessee shall have the right

within 10 days after receipt of the termination notice to give written notice to

Lessor of Lessee's commitment to pay for the repair of such damage without

reimbursement from Lessor. Lessee shall provide Lessor with said funds or

satisfactory assurance thereof within 30 days after making such commitment. In

such event this Lease shall continue in full force and effect, and Lessor shall

proceed to make such repairs as soon as reasonably possible after the required

funds are available. If Lessee does not make the required commitment, this Lease

shall terminate as of the date specified in the termination notice.

9.4 Total Destruction. Notwithstanding any other provision hereof, if a

Premises Total Destruction occurs, this Lease shall terminate 60 days following

such Destruction. If the damage or destruction was caused by the gross

negligence or willful misconduct of Lessee, Lessor shall have the right to

recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.

9.5 Damage Near End of Term. If at any time during the last 6 months of

this Lease there is damage for which the cost to repair exceeds one month's Base

Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective

60 days following the date of occurrence of such damage by giving a written

termination notice to Lessee within 30 days after the date of occurrence of such

damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable

option to extend this Lease or to purchase the Premises, then Lessee may

preserve this Lease by, (a) exercising such option and (b) providing Lessor with

any shortage in insurance proceeds (or adequate assurance thereof) needed to

make the repairs on or before the earlier of (i) the date which is 10 days after

Lessee's receipt of Lessor's written notice purporting to terminate this Lease,

or (ii) the day prior to the date upon which such option expires. If Lessee duly

exercises such option during such period and provides Lessor with funds (or

adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor

shall, at Lessor's commercially reasonable expense, repair such damage as soon

as reasonably possible and this Lease shall continue in full force and effect.

If Lessee fails to exercise such option and provide such funds or assurance

during such period, then this Lease shall terminate on the date specified in the

termination notice and Lessee's option shall be extinguished.

9.6 Abatement of Rent; Lessee's Remedies.

(a) Abatement. In the event of Premises Partial Damage or

Premises Total Destruction or a Hazardous Substance Condition for which Lessee

is not responsible under this Lease, the Rent payable by Lessee for the period

required for the repair, remediation or restoration of such damage shall be

abated in proportion to the degree to which Lessee's use of the Premises is

impaired, but not to exceed the proceeds received from the Rental Value

insurance. All other obligations of Lessee hereunder shall be performed by

Lessee, and Lessor shall have no liability for any such damage, destruction,

remediation, repair or restoration except as provided herein.

(b) Remedies. If Lessor shall be obligated to repair or

restore the Premises and does not commence, in a substantial and meaningful way,

such repair or restoration within 90 days after such obligation shall accrue,

Lessee may, at any time prior to the commencement of such repair or restoration,

give written notice to Lessor and to any Lenders of which Lessee has actual

notice, of Lessee's election to terminate this Lease on a date not less than 60

days following the giving of such notice. If Lessee gives such notice and such

repair or restoration is not commenced within 30 days thereafter, this Lease

shall terminate as of the date specified in said notice. If the repair or

restoration is commenced within such 30 days, this Lease shall continue in full

force and effect. "Commence" shall mean either the unconditional authorization

of the preparation of the required plans, or the beginning of the actual work on

the Premises, whichever first occurs.

9.7 Termination; Advance Payments. Upon termination of this Lease

pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be

made concerning advance Base Rent and any other advance payments made by Lessee

to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's

Security Deposit as has not been, or is not then required to be, used by Lessor.

9.8 Waive Statutes. Lessor and Lessee agree that the terms of this

Lease shall govern the effect of any damage to or destruction of the Premises

with respect to the termination of this Lease and hereby waive the provisions of

any present or future statute to the extent inconsistent herewith.

10. Real Property Taxes.

10.1 Definitions. As used herein, the term "Real Property Taxes" shall

include any form of assessment; real estate, general, special, ordinary or

extraordinary, or rental levy or tax (other than inheritance, personal income or

estate taxes); improvement bond; and/or license fee imposed upon or levied

against any legal or equitable interest of Lessor in the Project, Lessor's right

to other income therefrom, and/or Lessor's business of leasing, by any authority

having the direct or indirect power to tax and where the funds are generated

with reference to the Project address and where the proceeds so generated are to

be applied by the city, county or other local taxing authority of a jurisdiction

within which the Project is located. "Real Property Taxes" shall also include

any tax, fee, levy, assessment or charge, or any increase therein, imposed by

reason of events occurring during the term of this Lease, including but not

limited to, a change in the ownership of the Project or any portion thereof or a

change in the improvements thereon.

10.2 Payment of Taxes. Except as otherwise provided in Paragraph 10.3,

Lessor shall pay the Real Property Taxes applicable to the Project, and said

payments shall be included in the calculation of Operating Expenses in

accordance with the provisions of Paragraph 4.2.

10.3 Additional Improvements. Operating Expenses shall not include Real

Property Taxes specified in the tax assessor's records and work sheets as being

caused by additional improvements placed upon the Project by other lessees or by

Lessor for the exclusive enjoyment of such other lessees. Notwithstanding

Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the time

Operating Expenses are payable under Paragraph 4.2, the entirety of any increase

in Real Property Taxes if assessed solely by reason of Alterations, Trade

Fixtures or Utility Installations placed upon the Premises by Lessee or at

Lessee's request.

10.4 Joint Assessment. If the Building is not separately assessed, Real

Property Taxes allocated to the Building shall be an equitable proportion of the

Real Property Taxes for all of the land and improvements included within the tax

parcel assessed, such proportion to be determined by Lessor from the respective

valuations assigned in the assessor's work sheets or such other information as

may be reasonably available. Lessor's reasonable determination thereof, in good

faith, shall be conclusive.

10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all

taxes assessed against and levied upon Lessee Owned Alterations and

/s/ ??????? /s/ ???????

----------- -----------

/s/ ???????

----------- -----------

Initials Initials

Page 8 of 15

<PAGE>

Utility Installations, Trade Fixtures, furnishings, equipment and all personal

property of Lessee contained in the Premises. When possible, Lessee shall cause

its Lessee Owned Alterations and Utility Installations, Trade Fixtures,

furnishings, equipment and all other personal property to be assessed and billed

separately from the real property of Lessor. If any of Lessee's said property

shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes

attributable to Lessee's property within 10 days after receipt of a written

statement setting forth the taxes applicable to Lessee's property.

11. Utilities and Services.

11.1 Services Provided by Lessor. Lessor shall provide heating,

ventilation, air conditioning, reasonable amounts of electricity for normal

lighting and office machines, water for reasonable and normal drinking and

lavatory use in connection with an office, and replacement light bulbs and/or

fluorescent tubes and ballasts for standard overhead fixtures. Lessor shall also

provide janitorial services to the Premises and Common Areas 5 times per week,

excluding Building Holidays, or pursuant to the attached janitorial schedule, if

any. Lessor shall not, however, be required to provide janitorial services to

kitchens or storage areas included within the Premises.

11.2 Services Exclusive to Lessee. Lessee shall pay for all water, gas,

heat, light, power, telephone and other utilities and services specially or

exclusively supplied and/or metered exclusively to the Premises or to Lessee,

together with any taxes thereon. If a service is deleted by Paragraph 1.13 and

such service is not separately metered to the Premises, Lessee shall pay at

Lessor's option, either Lessee's Share or a reasonable proportion to be

determined by Lessor of all charges for such jointly metered service.

11.3 Hours of Service. Said services and utilities shall be provided

during times set forth in Paragraph 1.12. Utilities and services required at

other times shall be subject to advance request and reimbursement by Lessee to

Lessor of the cost thereof.

11.4 Excess Usage by Lessee. Lessee shall not make connection to the

utilities except by or through existing outlets and shall not install or use

machinery or equipment in or about the Premises that uses excess water, lighting

or power, or suffer or permit any act that causes extra burden upon the

utilities or services, including but not limited to security and trash services,

over standard office usage for the Project. Lessor shall require Lessee to

reimburse Lessor for any excess expenses or costs that may arise out of a breach

of this subparagraph by Lessee. Lessor may, in its sole discretion, install at

Lessee's expense supplemental equipment and/or separate metering applicable to

Lessee's excess usage or loading.

11.5 Interruptions. There shall be no abatement of rent and Lessor

shall not be liable in any respect whatsoever for the inadequacy, stoppage,

interrupt

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates