OFFICE LEASE

 

 

                                                                   Exhibit 10.34

 

      THIS OFFICE LEASE   ("Lease") is made and entered into   effective as of the

1st day of   February,   2005,   by and between   1400   GLENARM   PLACE   VENTURE (the

"Landlord"), and RICOCHET NETWORKS, INC., a Delaware corporation (the "Tenant").

 

                           ARTICLE 1: BASIC PROVISIONS

 

      This Article   contains   the basic lease   provisions   between   Landlord and

Tenant.

 

A. Building:             1400 Glenarm Place, Denver, Colorado (the "Property", as

                        further described in Article 30).

 

B. Premises:             Suite 100   located on the 1st floor of the   Building   as

                        cross   hatched   on Exhibit A hereto,   together   with the

                        existing walled office fixtures.

 

C. Commencement

   Date:                 February 1, 2005, subject to Articles 2 and 4.

 

D. Expiration Date:      January 31, 2008, subject to Articles 2 and 4.

 

E. Rentable Area:        The rentable area of the Premises   shall be deemed to be

                        4,723 square feet, and the rentable area of the Property

                        shall be deemed to be 38,500   square feet,   for purposes

                        of this Lease, subject to Article 30.

 

F. Tenant's Share:       Twelve and 27/100 percent (12.27%),   subject to Articles

                        3 and 30.

 

G. Base Rent:            Tenant   shall   pay   monthly   Base Rent   pursuant   to the

                        following schedule and as described in Article 3:

 

                        Period                             Monthly Base Rent

 

                        2/1/05 - 1/31/06:                  $5,805.35

                        2/1/06 - 1/31/07:                  $6,002.15

                         2/1/07 - 1/31/08:                  $6,198.94

 

H. Additional Rent:      Tenant shall pay Tenant's Share of Taxes and Expenses in

                        excess   of the   amount   for the   Base   Tax Year and Base

                        Expense Year of 2005, as further described in Article 3.

 

I. Permitted Use:        General offices, subject to Article 7.

 

J. Security Deposit:     $6,002.15, subject to Article 16.

 

K. Broker (if any):      Frederick   Ross   Company and Cresa   Partners   subject to

                         Article 26.

 

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L. Guarantor(s):         YDI Wireless, Inc.

 

M. Landlord's Notice Address (subject to Article 25):

 

                        c/o Shames-Makovsky   Realty Company, 1400 Glenarm Place,

                        Suite 201, Denver, Colorado 80202.

 

N. Tenant's Notice Address (subject to Article 25):

 

                        Ricochet Networks,   Inc., 1400 Glenarm Place, Suite 100,

                        Denver, Colorado 80202.

 

0. Rent Payments:        Rent   shall   be paid to   Landlord,   c/o   Shames-Makovsky

                        Realty Company,   1400 Glenarm Place,   Suite 201, Denver,

                        Colorado   80202,   or such other parties and addresses as

                        to which Landlord shall provide advance notice.

 

P. Exhibits:             This Lease includes, and incorporates by this reference:

 

                        Exhibit A:      Premises

                        Exhibit B:      Rules

                        Exhibit C:      Guaranty

 

      The foregoing   provisions   shall be interpreted   and applied in accordance

with the other   provisions   of this Lease.   The terms of this   Article,   and the

terms   defined   in   Article   30 and   other   Articles,   shall   have the   meanings

specified   therefor when used as capitalized   terms in other   provisions of this

Lease or related   documentation   (except as   expressly   provided to the contrary

therein).

 

                        ARTICLE 2: TERM AND COMMENCEMENT

 

      A. Term.   Landlord   hereby   leases to Tenant and Tenant hereby leases from

Landlord   the   Premises for the Term,   subject to the other   provisions   of this

Lease. The term ("Term") of this Lease shall commence on the   Commencement   Date

and end on the Expiration Date set forth in Article 1, unless sooner   terminated

as provided in this Lease, subject to adjustment as provided below and the other

provisions of this Lease.

 

      B. Early   Commencement.   The   Commencement   Date,   Rent and Tenant's other

obligations   shall be advanced to such earlier date as Tenant,   with   Landlord's

written permission,   commences occupying the Premises for business purposes.   If

such event occurs with respect to a portion of the   Premises,   the   Commencement

Date, Rent and Tenant's other   obligations   shall be so advanced with respect to

such   portion   (and   fairly   prorated   based   on   the   rentable   square   footage

involved).   During   any   period   that   Tenant   shall be   permitted   to enter the

Premises   prior to the   Commencement   Date   other   than to   occupy   the same for

business purposes (e.g., to perform   alterations or improvements),

 

 

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Tenant shall comply with all terms and   provisions   of this Lease,   except those

provisions   requiring the payment of Rent. Landlord shall permit early entry, so

long as the Premises are legally   available,   Landlord   has   completed   any work

required   to be   performed   by   Landlord   under   this   Lease (or can   reasonably

accommodate   the   scheduling   of minor work Tenant   desires to perform,   such as

cabling,   without   delaying any such Landlord work), and Tenant is in compliance

with the other provisions of the Lease, including the insurance requirements.

 

      C.   Commencement   Delays.   Subject to Article 4.C, the Commencement   Date,

Rent and Tenant's other   obligations   shall be postponed to the extent Tenant is

not   reasonably   able to occupy the   Premises   because   Landlord   fails,   by the

Commencement   Date set forth in   Article 1, to: (i)   deliver   possession   of the

Premises,   and (ii)   substantially   complete   any   improvements   to the Premises

required to be performed by Landlord under this Lease, except to the extent that

Tenant, its space planners, architects,   contractors, agents or employees in any

way contribute to such failure. If such failure occurs with respect to a portion

of the Premises,   the   Commencement   Date,   Rent and Tenant's other   obligations

shall be so postponed with respect to such portion (and fairly prorated based on

the rentable square footage   involved).   If the   Commencement   Date is postponed

pursuant to the foregoing provisions for a ninety (90) day initial grace period,

Tenant shall have the right to terminate   this Lease by notice to Landlord given

within ten (10) days thereafter, subject to Landlord's right to cure as provided

in   Article   21.   Any such   delay in the   Commencement   Date   shall not   subject

Landlord to liability for loss or damage resulting therefrom,   and Tenant's sole

recourse   with   respect   thereto   shall be the   postponement   of Rent and   other

obligations and right to terminate this Lease described herein.

 

      D. Adjustments and   Confirmation.   If the Commencement Date is advanced to

an earlier date as provided above, the Expiration Date shall not be changed.   If

the Commencement   Date is postponed as provided above, the Expiration Date shall

be   extended   by the same   length   of time if   Landlord   so   elects by notice to

Tenant.   If the   Commencement   Date   occurs   other   than on the   first   day of a

calendar   month,   Landlord   may further   elect by such notice to: (i) extend the

Term so that the Expiration   Date is the last day of the calendar month in which

it would otherwise   occur,   and/or (ii) adjust the dates for any fixed increases

in the Base Rent so that   they   occur on the   first   day of the   calendar   month

following the month in which they would otherwise occur.   Tenant shall execute a

confirmation   of any   dates as   adjusted   herein in such   form as   Landlord   may

reasonably   request;   any   failure   to   respond   within   thirty   (30) days after

requested   shall be deemed an   acceptance of the matters set forth in Landlord's

confirmation.   If Tenant   disagrees   with   Landlord's   adjustment of such dates,

Tenant shall pay Rent and perform all other obligations commencing and ending on

the dates determined by Landlord, subject to refund or credit when the matter is

resolved.

 

                    ARTICLE 3: BASE RENT AND ADDITIONAL RENT

 

      A. Base Rent. Tenant shall pay Landlord the monthly Base Rent set forth in

Article 1 in advance on or before the first day of each   calendar   month   during

the Term; provided, Tenant shall pay Base Rent for the first full calendar month

for which Base Rent

 

 

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shall be due (and any initial partial month) when Tenant executes this Lease.

 

      B. Taxes and Expenses.   Tenant shall pay Landlord   Tenant's Share of Taxes

and Expenses in excess of the amounts of Taxes and Expenses respectively for the

Base Tax Year and Base Expense Year in the manner described below. The foregoing

capitalized terms shall have the meanings   specified   therefor in Articles 1 and

30.

 

      C. Payments.

 

      (i) Landlord may   reasonably   estimate in advance the amounts Tenant shall

owe for Taxes and Expenses for any full or partial calendar year of the Term. In

such event,   Tenant shall pay such estimated amounts,   on a monthly basis, on or

before the first day of each calendar month,   together with Tenant's   payment of

Base   Rent.   Such   estimate   may be   reasonably   adjusted   from   time to time by

Landlord.

 

      (ii)   Within   120 days   after the end of each   calendar   year,   or as soon

thereafter as practicable,   Landlord shall provide a statement (the "Statement")

to Tenant showing: (a) the amount of actual Taxes and Expenses for such calendar

year, with a listing of amounts for major categories of Expenses, (b) any amount

paid by Tenant   towards   Taxes and   Expenses   during   such   calendar   year on an

estimated basis,   and (c) any further revised   estimate of Tenant's   obligations

for Taxes and Expenses for the current calendar year.

 

      (iii) If the Statement   shows that Tenant's   estimated   payments were less

than Tenant's actual   obligations   for Taxes and Expenses for such year,   Tenant

shall pay the   difference   within   fifteen   (15) days after   Landlord   sends the

Statement.   If the Statement   shows that Tenant's   estimated   payments   exceeded

Tenant's actual   obligations   for Taxes and Expenses,   Landlord shall credit the

difference   against the payment of Rent next due. If the Term shall have expired

and no   further   Rent   shall be due,   Landlord   shall   provide   a refund of such

difference at the time Landlord sends the Statement.

 

      (iv) If the   Statement   shows a further   increase   in   Tenant's   estimated

payments for the current calendar year, Tenant shall: (a) thereafter pay the new

estimated amount until Landlord further revises such estimated   amount,   and (b)

pay the   difference   between   the new and former   estimates   for the period from

January 1 of the current   calendar year through the month in which the Statement

is sent within fifteen (15) days after Landlord sends the Statement.

 

      (v) In lieu of providing one Statement   covering all such items,   Landlord

may provide   separate   statements,   at the same or different   times.   So long as

Tenant's   obligations   hereunder are not materially   adversely affected thereby,

Landlord reserves the right to reasonably change,   from time to time, the manner

or timing of Tenant's payments for Taxes and Expenses.

 

      D. Tax   Refunds,   Protest   Costs,   Fiscal   Years and Special   Assessments.

Landlord shall each year: (i) credit against Taxes any refunds   received   during

such year, whether or not for a prior year, (ii) include in Taxes any additional

amount paid during such

 

 

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year   involving   an   adjustment   to Taxes   for a prior   year due to error by the

taxing   authority,   supplemental   assessment,   or other reason,   (iii) for Taxes

payable   in   installments   over   more than one year,   include   only the   minimum

amounts payable each year and any interest thereon,   and (iv) include, in either

Taxes or Expenses,   any fees for attorneys,   consultants and experts,   and other

costs paid during such year in attempting to protest,   appeal or otherwise   seek

to reduce or minimize Taxes, whether or not successful. Notwithstanding anything

to the contrary   contained in this Lease, if any taxing authority,   at any time,

uses a fiscal year other than a current   calendar   year,   Landlord   may elect to

require   payments by Tenant   based on: (a) amounts   paid or payable   during each

calendar   year   without   regard to such fiscal   years,   or (b)   amounts   paid or

payable for or during each fiscal tax year.

 

      E.   Grossing   Up and   Tenant's   Share   Adjustments.   In order to   allocate

variable Expenses (i.e. those items that vary based on occupancy levels, such as

cleaning   and   utilities)   among   those   parties   who are   leasing   space at the

Property when it is not fully   occupied   during all or a portion of any calendar

year,   Landlord may   reasonably   determine the amount of such variable   Expenses

that would have been paid had the Property been 95% occupied,   in which case the

amount so   determined   shall be deemed to have been the amount of   Expenses   for

such year (rather than adjusting Tenant's Share by subtracting vacant space from

the   denominator).   Similarly,   if Landlord   is not   furnishing   any   particular

utility   or   service   to a tenant   during   any   period   (the cost of   which,   if

performed by   Landlord,   would be included in   Expenses),   Landlord may for such

period:   (i) adjust   such   items to reflect   the   additional   amount   that would

reasonably   have been incurred   during such period had Landlord   furnished   such

utility or service to such tenant,   or (ii)   exclude the   rentable   area of such

tenant from the rentable   area of the Property in   computing   Tenant's   Share of

such items.   "Tenant's Share" shall be subject to such other   adjustments as are

provided in the definition thereof in Article 30 below.

 

      F.   Prorations;   Payments   After Term Ends. If the Term commences on a day

other   than the first day of a   calendar   month or ends on a day other   than the

last day of a calendar   month,   the Base Rent and any other amounts payable on a

monthly   basis shall be prorated on a per diem basis for such   partial   calendar

months.   If the Base Rent is scheduled to increase under Article 1 other than on

the first day of a calendar   month,   the amount for such month shall be prorated

on a per diem   basis to   reflect   the   number of days of such   month at the then

current and increased rates,   respectively.   If the Term commences other than on

January   1, or ends other   than on   December   31,   Tenant's   obligations   to pay

amounts   towards Taxes and Expenses for such first or final calendar years shall

be prorated on a per diem basis to reflect the portion of such years included in

the Term. Tenant's   obligations to pay Taxes and Expenses (or any other amounts)

accruing   during,   or relating   to, the period   prior to   expiration   or earlier

termination of this Lease, shall survive such expiration or termination.

 

      G. Landlord's   Accounting   Practices and Records.   Landlord shall maintain

records   respecting Taxes and Expenses and determine the same in accordance with

sound   accounting and management   practices   consistently   applied in accordance

with this Lease.   Although this Lease   contemplates   the general   computation of

Taxes   and   Expenses

 

 

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on a   cash   basis,   Landlord   shall   make   reasonable   and   appropriate   accrual

adjustments   to ensure that each calendar year includes   substantially   the same

recurring items.   Landlord   reserves the right to apply a full accrual system of

accounting so long as the same is consistently   applied and Tenant's obligations

are not materially adversely affected. Tenant or its representative (acting on a

non-contingent fee basis) shall have the right to review such records by sending

notice to Landlord no later than thirty (30) days   following   the   furnishing of

the Statement   specifying such records as Tenant   reasonably   desires to review.

Such review shall be subject to the   continuing   condition that Tenant not be in

Default, and subject to reasonable scheduling by Landlord during normal business

hours at the place or places where such records are normally kept. No later than

thirty (30) days after Landlord makes such records available for review,   Tenant

shall send   Landlord   notice   specifying   any   exceptions   that Tenant   takes to

matters included in such Statement, Tenant's detailed reasons for each exception

which support a conclusion that such exception   properly   identifies an error in

such Statement,   and a complete copy of the review report.   Such Statement shall

be   considered   final and   binding   on   Tenant,   except as to   matters   to which

exception is taken after review of Landlord's   records in the   foregoing   manner

and within the foregoing times. The foregoing times for sending Tenant's notices

hereunder are critical to Landlord's budgeting process, and are therefore of the

essence of this Paragraph.   If Tenant takes timely exception as provided herein,

Landlord may seek certification from an independent   certified public accountant

or financial   consultant (who shall be subject to Tenant's reasonable   approval)

as to the proper   amount of Taxes and   Expenses or the items as to which   Tenant

has taken exception.   In such case: (i) such   certification   shall be considered

final and   binding on both   parties   (except as to   additional   amounts not then

known or omitted by error),   and (ii) Tenant   shall pay Landlord for the cost of

such certification, unless it shows that Taxes and Expenses were overstated by a

net amount of five   percent   (5%) or more.   Pending   review of such   records and

resolution   of any   exceptions,   Tenant   shall pay   Tenant's   Share of Taxes and

Expenses in the amounts shown on such   Statement,   subject to credit,   refund or

additional payment after any such exceptions are resolved

 

      H.   General   Payment   Matters.   Base Rent,   Taxes,   Expenses and any other

amounts which Tenant is or becomes obligated to pay Landlord under this Lease or

other agreement entered in connection   herewith are sometimes herein referred to

collectively   as "Rent," and all remedies   applicable to the non-payment of rent

shall be   applicable   thereto.   Tenant   shall   pay Rent in good   funds and legal

tender of the United States of America,   together with any applicable   sales tax

or other taxes on Rent as further described in Article 14. Tenant shall pay Rent

without any deduction,   recoupment,   set-off or counterclaim, and without relief

from any valuation or appraisement   laws, except as may be expressly provided in

this   Lease.   No delay by Landlord   in   providing   the   Statement   (or   separate

statements)   shall be deemed a default   by   Landlord   or a waiver of   Landlord's

right to require   payment of Tenant's   obligations for actual or estimated Taxes

or Expenses. In no event shall a decrease in Taxes or Expenses serve to decrease

Base Rent.   Landlord may apply payments   received from Tenant to any obligations

of Tenant then accrued,   without regard to such obligations as may be designated

by Tenant.

 

 

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                        ARTICLE 4: CONDITION OF PREMISES

 

      A.   General   Condition   of   Premises.   Tenant   has   inspected,   or   had an

opportunity to inspect, the Premises (and portions of the Property,   Systems and

Equipment providing access to or serving the Premises), and agrees to accept the

same   "as   is"   without   any   agreements,   representations,    understandings   or

obligations   on the part of   Landlord   to perform   any   alterations,   repairs or

improvements,   except as may be expressly   provided under this Lease (which term

includes any Exhibit   hereto).   To the extent that Landlord has expressly agreed

to perform any   improvements   to the Premises   under this Lease,   the   following

provisions shall apply.

 

      B. Tenant Not Occupying   Premises   During   Improvements.   If Tenant is not

currently   occupying the Premises,   then to the extent that Landlord is required

to perform any improvements to the Premises under this Lease: (i) Landlord shall

use diligent, good faith efforts to substantially complete any such improvements

to an extent that Tenant can reasonably   occupy the Premises by the Commencement

Date set forth in Article 1,   subject to Article 2 and the other   provisions   of

this Lease, (ii) Tenant shall use diligent, good faith efforts to cooperate, and

to cause its space planners,   architects,   contractors,   agents and employees to

cooperate,   diligently   and in good faith with Landlord and any space   planners,

architects,   contractors or other parties designated by Landlord,   such that any

such improvements to the Premises can be planned,   permits can be obtained,   and

the work can be substantially   completed by the   Commencement   Date set forth in

Article 1, and (iii) the Commencement   Date, Rent and Tenant's other obligations

shall be subject to postponement as further described in Article 2. In the event

of any   dispute   as to whether   any such   improvements   have been   substantially

completed,   Landlord may refer the matter to Landlord's   independent   architect,

whose good faith decision shall be final and binding on the parties.

 

      C. Tenant Occupying Premises During   Improvements.   If Tenant is currently

occupying the   Premises,   whether   pursuant to a prior lease or   otherwise,   and

Landlord   is required to perform any   improvements   to the   Premises   under this

Lease, then   notwithstanding   any other provision of this Lease to the contrary:

(i)   Landlord   shall   use   commercially    reasonable   efforts   to   minimize   any

disruption to Tenant's occupancy of the Premises in connection   therewith,   (ii)

Landlord shall seek to substantially   complete the same by the Commencement Date

set forth in Article 1, or within a reasonable time thereafter, but shall not be

required to incur   overtime or pay premiums to perform such work before or after

the Building   Hours,   and may require that Tenant   cooperate in   scheduling   and

staging the work within the Premises (including cooperation in moving personnel,

furniture and equipment or permitting   Landlord to do so), and (iii) there shall

be no postponement of the Commencement   Date or abatement of Rent as a result of

any such improvements, or delays in substantially completing the same, under any

circumstances   (Tenant hereby acknowledging that it could have arranged for such

improvements through an independent contractor,   subject to Landlord's approval,

the other provisions of this Lease and such other   documentation as Landlord may

have required).

 

 

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                           ARTICLE 5: QUIET ENJOYMENT

 

      Landlord   agrees   that,   if Tenant   timely pays the Rent and   performs the

terms and provisions   hereunder,   Tenant shall hold the Premises during the Term

free of lawful claims by any party acting by or through Landlord, subject to all

other terms and provisions of this Lease.

 

                        ARTICLE 6: UTILITIES AND SERVICES

 

      A. Standard   Landlord   Utilities and Services.   Landlord shall provide the

following   utilities   and   services   (the   cost of which   shall be   included   in

Expenses):

 

      (i) Heat and   air-conditioning   to   provide   a   temperature   required,   in

Landlord's   reasonable   opinion   and in   accordance   with   applicable   Law,   for

occupancy   of the   Premises   as offices   during   Building   Hours (as   defined in

Article 30).

 

      (ii) Water   from city mains for   drinking,   lavatory   and toilet   purposes

only, at those points of supply provided for nonexclusive general use of tenants

at the   Property,   or   points of supply   in the   Premises   installed   by or with

Landlord's written consent for such purposes.

 

      (iii)   Cleaning and trash removal in and about the Premises   comparable to

that provided as a standard   service by landlords for office space in comparable

office buildings in the vicinity.

 

      (iv)   Passenger   elevator   service at all times (if the   Property has such

equipment   serving   the   Premises,   and   subject   to   changes   in the   number of

elevators   in service   after   Building   Hours or at other   times),   and   freight

elevator service (if the Property has such equipment   serving the Premises,   and

subject to scheduling by Landlord), in common with Landlord and other parties.

 

      (v) Electricity for   building-standard   overhead office lighting fixtures,

and equipment and accessories   customary for offices,   where: (a) Tenant uses an

amount of electricity   that is generally   consistent   with average office use at

the   Property,   as   reasonably   determined   by   Landlord,   (b) the   Systems   and

Equipment   are   suitable,   and the   safe   and   lawful   capacity   thereof   is not

exceeded,   and (c) sufficient   capacity   remains at all times for other existing

and future tenants,   as reasonably   determined by Landlord (who shall be subject

to similar restriction).

 

      B. Additional Utilities and Services.   Landlord shall seek to provide such

extra utilities or services as Tenant may from time to time request, if the same

are   reasonable   and   feasible   for   Landlord   to   provide   and do   not   involve

modifications   or additions to the Property or existing   Systems and   Equipment,

and if Landlord shall receive Tenant's request within a reasonable   period prior

to the time such extra   utilities or services are required.   Landlord may comply

with   written or oral   requests by any   officer or   employee   of Tenant,   unless

Tenant   shall   notify   Landlord   of, or   Landlord   shall   request,   the names of

authorized   individuals   (up to 3 for   each   floor   on which   the   Premises   are

located) and

 

 

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procedures for written   requests.   Tenant shall pay, for any extra   utilities or

services,   such standard   charges as Landlord shall from time to time establish,

Landlord's out-of-pocket costs for architects,   engineers, consultants and other

parties relating to such extra utilities or services, and a fee equal to fifteen

percent (15%) of such costs (provided, Landlord's standard overtime HVAC charges

shall not require an additional such percentage thereon).   All payments for such

extra   utilities or services shall be due at the same time as the installment of

Base Rent with which the same are billed, or if billed separately,   shall be due

within   fifteen (15) days after such billing.   Landlord shall not be responsible

for inadequate   air-conditioning or ventilation whenever the use or occupancy of

the   Premises   exceeds   the normal   capacity   or design   loads of,   affects   the

temperature or humidity otherwise   maintained by, or otherwise adversely affects

the operation   of, the Systems and   Equipment   for the Property,   whether due to

items of equipment or machinery generating heat, above-normal   concentrations of

personnel or equipment, or alterations to the Premises made by or through Tenant

without balancing the air or installing supplemental HVAC equipment. In any such

case,   with at least fifteen (15) days advance   notice to Tenant,   Landlord may:

(i) elect to balance the air and/or install,   operate, maintain and replace such

supplemental HVAC equipment during the Term, at Tenant's   reasonable expense, as

an extra utility or service, or (ii) require that Tenant arrange for the same as

Work under Article 9. Notwithstanding the foregoing to the contrary,   in lieu of

charging   separately   for   additional   utilities   and   services,    Landlord   may

reasonably   elect   from time to time to   expand   the   amounts   of   utilities   or

services   available   without   separate   charge,   in which case the costs thereof

shall be included respectively in Utility Costs or Expenses.

 

      C. Monitoring.   Landlord may install and operate meters,   submeters or any

other   reasonable   system for monitoring or estimating any services or utilities

used by Tenant in excess of those required to be provided by Landlord under this

Article (including a system for Landlord's   engineer to reasonably   estimate any

such excess usage).   If such system indicates such excess services or utilities,

Tenant shall pay   Landlord's   charges and fees as described in Paragraph B above

for installing and operating such system and any supplementary air-conditioning,

ventilation,   heat,   electrical or other systems or equipment (or adjustments or

modifications   to the existing   Systems and Equipment)   which Landlord may make,

and Landlord's   charges for such amount of excess   services or utilities used by

Tenant.

 

      D.   Interruptions   and   Changes.   Landlord   shall   have no   liability   for

interruptions,   variations,   shortages,   failures, changes in quality, quantity,

character   or   availability   of any   utilities   or   services   caused by repairs,

maintenance,   replacements,   alterations   (including any freon   retrofit   work),

labor   controversies,   accidents,   inability   to obtain   services,   utilities or

supplies,   governmental   or utility   company   acts or   omissions,   requirements,

guidelines or requests, or other causes beyond Landlord's reasonable control (or

under any circumstances with respect to utilities or services not required to be

provided by Landlord hereunder).   Under no circumstances whatsoever shall any of

the   foregoing   be   deemed   an   eviction   or   disturbance   of   Tenant's   use and

possession of the Premises or any part thereof,   serve to abate Rent, or relieve

Tenant from performance of Tenant's   obligations under this Lease.   However,   in

any   such   event   after   receiving   notice,    Landlord   shall   use   commercially

reasonable efforts to restore such utilities or services required to be provided

hereunder to

 

 

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reasonable levels.

 

                  ARTICLE 7: USE, COMPLIANCE WITH LAWS, AND RULES

 

      A. Use of Premises.   Tenant shall use the Premises   only for the permitted

use   identified   in Article 1, and no other purpose   whatsoever,   subject to the

other provisions of this Article and this Lease.   Unless expressly   permitted in

Article   1,   Tenant   shall not use or permit the   Premises   to be used as a: (i)

medical, dental,   psychology,   psychiatry or science office or laboratory,   (ii)

telemarketing   "boiler-room" sales operation,   (iii) "executive suite" or "legal

suite" multi-party   shared offices operation,   (iv) travel agency or reservation

center, (v) retail real estate brokerage, retail stock brokerage, or retail bank

or financial   institution,   (vi)   computerized   vehicle sales,   loan or "finder"

service, (vii) social-welfare office or governmental,   quasi-governmental, trade

association   or   union   office   or   activities,    (ix)   employment,    placement,

recruiting   or   clerical   support   agency,   (x)   radio or   television   studio or

broadcasting   or recording   facility,   or (xi) school,   educational   facility or

training   center   (except for   training   that is minor and   ancillary to general

office   use and does not   require   parking   in excess of code   requirements   for

general office use).

 

      B. Compliance With Laws. Tenant shall comply with all Laws relating to the

Premises   and Tenant's use of the   Premises   and   Property,   and shall   promptly

reimburse   Landlord for any expenses   Landlord   incurs for work or other matters

relating   to areas   outside of the   Premises   in order to comply   with Laws as a

result of   Tenant's   particular   use of the   Premises   (as opposed to a Law that

applies to office tenants in general); provided, Tenant shall not be required by

this   provision to perform   structural   improvements   to the Premises   that will

result   in a   benefit   to   Landlord   extending   beyond   the   Term,   as it may be

extended, unless required by a Law pertaining to: (i) Tenant's particular use of

the Premises   (as opposed to a Law that   applies to office   tenants in general),

(ii) Work   performed   by or for Tenant or any   Transferee   (i.e.   excluding   any

improvements or work that Landlord is required to perform under this Lease),   or

(iii) other acts or omissions of Tenant or any Transferee.

 

      C.   Rules.   Tenant   shall   comply   with the Rules   set forth in   Exhibit B

attached   hereto   (the   "Rules").   Landlord   shall have the right,   by notice to

Tenant,   to   reasonably   amend   such   Rules and   supplement   the same with other

reasonable   Rules   relating to the Property,   or the promotion of safety,   care,

efficiency,   cleanliness   or good order   therein.   Although   Landlord   shall not

discriminate   against   Tenant in the   enforcement   of the Rules,   nothing herein

shall be construed to give Tenant or any other Person any claim, demand or cause

of action against   Landlord arising out of the violation of Laws or the Rules by

any   other   tenant   or   visitor   of the   Property,   or   out of the   enforcement,

modification or waiver of the Rules by Landlord in any particular instance.

 

      D. Other Requirements.   So long as Tenant receives written notification of

the   applicable   requirements,   Tenant   shall not use or permit the   Premises or

Property   to be used   in a way   that   will:   (i)   violate   the   requirements   of

Landlord's   insurers,   the   American   Insurance   Association,   or any   board   of

underwriters,   (ii) cause a   cancellation   of   Landlord's   policies,   impair the

insurability of the Property, or increase Landlord's premiums (any such

 

 

                                       10

<PAGE>

 

increase shall be paid by Tenant without such payment being deemed permission to

continue such activity or a waiver of any other remedies of Landlord),   or (iii)

violate the   requirements of any Lenders,   the   certificates of occupancy issued

for   the   Premises   or the   Property,   or   any   other   requirements,   covenants,

conditions or restrictions   affecting the Property at any time (provided none of

the   foregoing   shall   prohibit   normal office use of the Premises in compliance

with the other provisions of this Lease).

 

                       ARTICLE 8: MAINTENANCE AND REPAIRS

 

      Except for customary cleaning and trash removal provided by Landlord under

Article 6, or   casualty   damage to be repaired   by   Landlord   under   Article 11,

Tenant shall keep and maintain (or cause to be kept and maintained) the Premises

in good and sanitary condition, working order and repair, in compliance with all

applicable   Laws   as   described   in   Article   7,   and as   required   under   other

provisions of this Lease,   including the Rules   (including   any carpet and other

flooring material, paint and wall-coverings,   doors, windows, ceilings, interior

surfaces   of   walls,   lighting,    plumbing   and   other   fixtures,    alterations,

improvements,   and systems and equipment in or exclusively   serving the Premises

whether   installed   by   Landlord   or   Tenant).   In the event   that any   repairs,

maintenance or replacements are required,   Tenant shall promptly notify Landlord

and   arrange   for the same   either:   (i) through   Landlord   for such   reasonable

charges as Landlord may establish from time to time, payable within fifteen (15)

days after billing,   or (ii) at Landlord's   option, by engaging such contractors

as Landlord   shall first   designate   or approve in writing to perform such work,

all in a first   class,   workmanlike   manner   approved   by Landlord in advance in

writing and otherwise in   compliance   with Article 9 respecting   "Work".   Tenant

shall promptly notify Landlord concerning the necessity for any repairs or other

work hereunder and upon   completion   thereof.   Tenant shall pay Landlord for any

repairs,   maintenance   and   replacements   to areas of the   Property   outside the

Premises   caused,   in whole or in part,   as a result   of moving   any   furniture,

fixtures,   or other property to or from the Premises,   or otherwise by Tenant or

its employees, agents, contractors, or visitors (notwithstanding anything to the

contrary contained in this Lease). Except as provided in the preceding sentence,

or for damage covered under Article 11,   Landlord shall keep the exterior walls,

roof, structure, Systems and Equipment, and common areas of the Property in good

and   sanitary   condition,   working   order and repair (the cost of which shall be

included   in   Expenses   to the extent   permitted   in the   definition   thereof in

Article 30) and in compliance with all applicable Laws.

 

                        ARTICLE 9: ALTERATIONS AND LIENS

 

      A.   Alterations   and   Approval.   Tenant   shall not   attach   any   fixtures,

equipment or other items to the Premises,   or paint or make any other additions,

changes,   alterations   or   improvements   to   the   Premises   or the   Systems   and

Equipment serving the Premises (all such work is referred to collectively herein

as the "Work"),   without the prior written   consent of Landlord.   Landlord shall

not unreasonably   withhold   consent,   except that Landlord reserves the right to

withhold consent in Landlord's sole discretion for Work affecting the structure,

safety,   efficiency   or security of the   Property or   Premises,   the Systems and

Equipment,   or the   appearance   of the Premises from any common or public areas.

 

 

                                       11

<PAGE>

 

Landlord may only require removal of Work installed by or for Tenant as provided

under Article 23.

 

      B. Approval   Conditions.   Landlord reserves the right to impose reasonable

requirements   as a condition of such consent or otherwise in connection with the

Work,   including    requirements   that   Tenant:   (i)   use   parties   contained   on

Landlord's approved list (if reputable and available on commercially   reasonable

terms) or submit for Landlord's prior written approval the names,   addresses and

background   information   concerning   all   architects,    engineers,   contractors,

subcontractors   and suppliers Tenant proposes to use, (ii) submit for Landlord's

written   approval   detailed   plans and   specifications   prepared by licensed and

competent architects and engineers,   (iii) obtain and post permits, (iv) provide

additional    insurance,    bonds   and/or    other    reasonable    security    and/or

documentation   protecting   against   damages,   liability and liens, (v) use union

labor   (if    Landlord    uses   union    labor),    (vi)   permit    Landlord   or   its

representatives   to inspect the Work at reasonable   times, and (vii) comply with

such other reasonable   requirements as Landlord may impose concerning the manner

and times in which such Work shall be done.   Landlord   may require that all Work

be performed   under   Landlord's   supervision.   If Landlord   consents,   inspects,

supervises,   recommends or designates any   architects,   engineers,   contractors,

subcontractors   or suppliers,   the same shall not be deemed a warranty as to the

adequacy of the design,   workmanship   or quality of materials,   or compliance of

the Work with the plans and specifications or any Laws.

 

      C.   Performance of Work. All Work shall be performed:   (i) in a thoroughly

first class,   professional and workmanlike manner, (ii) only with materials that

are new, high quality, and free of material defects,   (iii) only by parties, and

strictly in accordance with plans,   specifications,   and other matters, approved

or   designated   by Landlord in advance in writing,   (iv) so as not to   adversely

affect   the   Systems   and   Equipment   or   the   structure   of the   Property,   (v)

diligently   to   completion   and so as to avoid any   disturbance,   disruption   or

inconvenience   to other tenants and the   operation of the Property,   and (vi) in

compliance with all Laws, the Rules and other provisions of this Lease, and such

other reasonable   requirements as Landlord may impose   concerning the manner and

times in which such Work shall be done.   Any floor,   wall or ceiling coring work

or   penetrations or use of noisy or heavy equipment which may interfere with the

conduct of   business   by other   tenants at the   Property   shall,   at   Landlord's

option, be performed at times other than Building Hours (at Tenant's sole cost).

If Tenant fails to perform the Work as required herein or the materials supplied

fail to comply   herewith or with the   specifications   approved by Landlord,   and

Tenant fails to cure such failure   within 48 hours after   written or oral notice

by Landlord (except notice shall not be required in emergencies), Landlord shall

have the right to stop the Work until such   failure   is cured   (which   shall not

limit   Landlord's   other   remedies   and   shall   not   serve to abate   the Rent or

Tenant's   other   obligations   under this   Lease).   Upon   completion   of any Work

hereunder,   Tenant shall provide   Landlord with "as built" plans,   copies of all

construction contracts, and proof of payment for all labor and materials.

 

      D. Liens.   Tenant shall pay all costs for the Work when due.   Tenant shall

keep   the   Property,    Premises   and   this   Lease   free   from   any    mechanic's,

materialman's, architect's, engineer's or similar liens or encumbrances, and any

claims therefor,   or stop or

 

 

                                        12

<PAGE>

 

violation notices, in connection with any Work. If contemplated under applicable

statutory   procedures,   Tenant   shall   post and   record   appropriate   notices of

non-responsibility   on behalf of   Landlord,   and shall give   Landlord   notice at

least ten (10) days prior to the   commencement   of any Work (or such   additional

time   as may be   necessary   under   applicable   Laws),   to   afford   Landlord   the

opportunity   of posting and recording   any other notices of   non-responsibility.

Tenant shall remove any such claim,   lien or   encumbrance,   or stop or violation

notices of record,   by bond or otherwise within thirty (30) days after notice by

Landlord.   If Tenant fails to do so, Landlord may pay the amount (or any portion

thereof) or take such other   action as Landlord   deems   necessary to remove such

claim,   lien or   encumbrance,   or   stop   or   violation   notices,   without   being

responsible for investigating the validity thereof. The amount so paid and costs

incurred by Landlord   shall be deemed   additional   Rent under this Lease payable

upon demand,   without   limitation   as to other   remedies   available to Landlord.

Nothing contained in this Lease shall authorize Tenant to do any act which shall

subject   Landlord's   title to, or any   Lender's   interest   in, the   Property   or

Premises   to any   such   claims,   liens   or   encumbrances,   or stop or   violation

notices,   whether claimed pursuant to statute or other Law or express or implied

contract.

 

      E.   Landlord's   Fees   and   Costs.   Tenant   shall   pay   Landlord   a fee for

reviewing, scheduling,   monitoring,   supervising, and providing access for or in

connection   with the Work,   if Tenant   elects to contract   Landlord for any Work

performed,   in an amount   equal to three   percent   (3%) of the total cost of the

Work   (including    costs   of   plans   and   permits    therefor),    and   Landlord's

out-of-pocket costs, including any costs for security, utilities, trash removal,

temporary   barricades,   janitorial,   engineering,   architectural   or   consulting

services,   and other matters in connection with the Work, payable within fifteen

(15) days after billing.

 

            ARTICLE 10: INSURANCE, SUBROGATION, AND WAIVER OF CLAIMS

 

      A.   Required   Insurance.   Tenant   shall   maintain   during   the   Term:   (i)

commercial   general   liability ("CGL")   insurance,   with limits of not less than

$1,000,000 for personal   injury,   bodily injury or death, and property damage or

destruction   (including loss of use thereon,   combined single limit, for any one

occurrence,   and $2,000,000 in the aggregate per policy year, with endorsements:

(a) for contractual liability covering Tenant's indemnity obligations under this

Lease, and (b) adding   Landlord,   the management   company for the Property,   and

other parties reasonably   designated by Landlord,   as additional   insureds,   and

(ii) primary,   noncontributory,   extended coverage or "all-risk" property damage

insurance   (including   installation   floater insurance during any alterations or

improvements   that Tenant makes to the   Premises)   covering any   alterations   or

improvements beyond any work or allowance provided by Landlord under this Lease,

and Tenant's personal property,   business records,   fixtures and equipment,   for

damage or other loss caused by fire or other   casualty or cause   including,   but

not limited to,   vandalism and malicious   mischief,   theft,   water damage of any

type,   including   sprinkler leakage,   bursting or stoppage of pipes,   explosion,

business   interruption (for at least nine (9) months), and other insurable risks

in amounts not less than the full insurable   replacement   value of such property

and   full   insurable   value   of such   other   interests   of   Tenant   (subject   to

reasonable deductible amounts).

 

 

                                        13

<PAGE>

 

      B.   Certificates   and Other   Matters.   Tenant shall provide   Landlord with

certificates    evidencing   the   coverage    required    hereunder    prior   to   the

Commencement   Date, or Tenant's   entry to the Premises for delivery of materials

or construction of improvements or any other purpose   (whichever   first occurs).

Such certificates   shall state that such insurance   coverage may not be reduced,

canceled or allowed to expire   without at least thirty (30) days' prior   written

notice   to   Landlord,   and   shall   include,   as   attachments,   originals   of the

additional   insured   endorsements to Tenant's CGL policy required above.   Tenant

shall provide   renewal   certificates to Landlord at least thirty (30) days prior

to expiration of such policies.   Except as provided to the contrary herein,   any

insurance   carried by   Landlord or Tenant   shall be for the sole   benefit of the

party carrying such insurance.   Tenant's   insurance policies shall be primary to

all policies of Landlord and any other additional insureds (whose policies shall

be deemed excess and noncontributory). All insurance required hereunder shall be

provided by responsible   insurers licensed in the State in which the Property is

located,   and shall have a general policy   holder's   rating of at least A- and a

financial   rating of at least X in the then current edition of Best's   Insurance

Reports.   Landlord   disclaims   any   representation   as to whether the   foregoing

overages will be adequate to protect Tenant.

 

      C. Mutual Waiver of Claims and   Subrogation.   The parties hereby   mutually

waive all claims   against   each other for all losses   covered or   required to be

covered hereunder by their respective   insurance policies,   and waive all rights

of subrogation of their respective insurers; for purposes hereof, any deductible

amount shall be treated as though it were recoverable under such policies.   SUCH

MUTUAL   WAIVER OF CLAIMS   SHALL   APPLY   REGARDLESS   OF THE   NEGLIGENCE   OR GROSS

NEGLIGENCE   OF THE   OTHER   PARTY OR ITS   AFFILIATES,   AGENTS OR   EMPLOYEES.   The

parties   agree that their   respective   insurance   policies are now, or shall be,

endorsed such that said waiver of subrogation   shall not affect the right of the

insured to recover thereunder.

 

                            ARTICLE 11: CASUALTY DAMAGE

 

      A. Restoration. Tenant shall promptly notify Landlord of any damage to the

Premises by fire or other   casualty.   If the Premises or any common areas of the

Property   providing   access thereto shall be damaged by fire or other   casualty,

Landlord   shall use   available   insurance   proceeds   to restore   the same.   Such

restoration   shall   be to   substantially   the   same   condition   as   prior to the

casualty,   except for   modifications   required by zoning and building   codes and

other Laws or by any Lender, any other   modifications to the common areas deemed

desirable   by   Landlord   (provided   access   to the   Premises   is not   materially

impaired),   and except that Landlord   shall not be required to repair or replace

any of Tenant's furniture,   furnishings,   fixtures, systems or equipment, or any

alterations   or   improvements   in excess of any work or   allowance   provided   by

Landlord under this Lease.   Tenant shall   reasonably   cooperate in approving any

plans for repairs to the Premises hereunder, and in vacating the Premises to the

extent   reasonably   required to avoid any   interference   or delay in   Landlord's

repair work.   Promptly   following   completion of Landlord's   work,   Tenant shall

repair   and   replace   Tenant's   furniture,   furnishings,   fixtures,   systems   or

equipment, and any alterations or improvements made by Tenant in excess of those

provided by Landlord,   subject to and in compliance with the other provisions of

this Lease.

 

 

                                        14

<PAGE>

 

      B. Abatement of Rent.   Landlord shall not be liable for any   inconvenience

or annoyance to Tenant or its visitors, or injury to Tenant's business resulting

in any way from such damage or the repair thereof.   However,   Landlord shall use

available rent loss proceeds to allow Tenant a   proportionate   abatement of Rent

from the date of the   casualty   through   the date   that   Landlord   substantially

completes   Landlord's   repair   obligations   hereunder (or the date that Landlord

would have substantially completed such repairs, but for delays by Tenant or any

other   occupant of the Premises,   or any of their agents,   employees,   invitees,

Transferees and contractors),   provided such abatement:   (i) shall apply only to

the extent the Premises are untenantable   for the purposes   permitted under this

Lease and not used by Tenant as a result thereof,   based   proportionately on the

square   footage of the   Premises   so affected   and not used,   and (ii) shall not

apply if Tenant or any other   occupant of the Premises,   or any of their agents,

employees, invitees, Transferees or contractors caused the damage.

 

      C. Termination of Lease. Notwithstanding the foregoing to the contrary, in

lieu of performing the   restoration   work,   Landlord may elect to terminate this

Lease by notifying Tenant in writing of such termination within ninety (90) days

after the date of damage (such termination   notice to include a termination date

providing at least thirty (30) days for Tenant to vacate the   Premises),   if the

Property   shall be   materially   damaged by Tenant or any other   occupant   of the

Premises,   or   any   of   their   agents,   employees,    invitees,    Transferees   or

contractors,   or if the Property   shall be damaged by fire or other   casualty or

cause   such   that:   (i)   repairs   to the   Premises   and   access   thereto   cannot

reasonably be completed   within 120 days after the casualty   without the payment

of overtime or other premiums,   (ii) more than twenty-five   percent (25%) of the

Premises is affected by the damage and fewer than twenty-four (24) months remain

in the Term,   or any   material   damage   occurs to the   Premises   during the last

twelve   (12)   months   of the Term,   (iii)   any   Lender   shall   require   that the

insurance   proceeds   or any   material   portion   thereof   be used to   retire   the

Mortgage debt (or shall   terminate the ground lease, as the case may be), or the

damage is not fully   covered,   except   for   reasonable   deductible   amounts,   by

Landlord's   insurance   policies,   or (iv) the cost of the repairs,   alterations,

restoration or improvement   work would exceed   thirty-five   percent (35%) of the

replacement   value of the Building   (whether or not the Premises are affected by

the damage).   Tenant agrees that the abatement of Rent provided   herein shall be

Tenant's sole recourse in the event of such damage,   and waives any other rights

Tenant may have under any   applicable   Law to perform   repairs or terminate   the

Lease by reason of damage to the Premises or Property.

 

                             ARTICLE 12: CONDEMNATION

 

      If at least fifty percent (50%) of the rentable area of the Premises shall

be taken by power of eminent domain or condemned by a competent   authority or by

conveyance   in lieu   thereof for public or   quasi-public   use   ("Condemnation"),

including   any temporary   taking for a period of one year or longer,   this Lease

shall   terminate on the date   possession for such use is so taken.   If: (i) less

than fifty   percent (50%) of the Premises is taken,   but the taking   includes or

affects a material   portion   of the   Building   or   Property,   or the   economical

operation   thereof,   or (ii) the taking is   temporary   and will be in effect for

less than one year

 

 

                                       15

<PAGE>

 

but more than thirty (30) days, then in either such event, Landlord may elect to

terminate this Lease upon at least thirty (30) days' prior notice to Tenant. The

parties   further agree that: (a) if this Lease is terminated,   all Rent shall be

apportioned   as of the   date of such   termination   or the   date of such   taking,

whichever shall first occur,   (b) if the taking is temporary,   Rent shall not be

abated for the period of the taking,   but Tenant may seek a   condemnation   award

therefor (and the Term shall not be extended thereby),   and (c) if this Lease is

not terminated but any part of the Premises is permanently taken, the Rent shall

be proportionately   abated based on the square footage of the Premises so taken.

Landlord   shall be entitled to receive the entire award or payment in connection

with such   Condemnation   and Tenant   hereby   assigns to   Landlord   any   interest

therein for the value of Tenant's unexpired   leasehold estate or any other claim

and waives any right to participate   therein,   except that Tenant shall have the

right to file any separate claim   available to Tenant for a temporary   taking of

the   leasehold as   described   above,   and for moving   expenses and any taking of

Tenant's personal property,   provided such award is separately payable to Tenant

and does not diminish the award available to Landlord or any Lender.

 

                      ARTICLE 13: ASSIGNMENT AND SUBLETTING

 

      A.   Transfers.   Tenant   shall not,   without the prior   written   consent of

Landlord,   which consent shall not be unreasonably withheld as further described

below: (i) assign, mortgage, pledge,   hypothecate,   encumber, or permit any lien

to attach to, or otherwise transfer,   this Lease or any interest   hereunder,   by

operation of Law or   otherwise,   (ii) sublet the   Premises or any part   thereof,

(iii)   permit the use of the   Premises by any Persons   other than Tenant and its

employees   (all   of   the   foregoing   are   hereinafter    sometimes    referred   to

collectively   as   "Transfers"   and any   Person to whom any   Transfer   is made or

sought to be made is hereinafter   sometimes   referred to as a "Transferee").   If

Tenant   shall desire   Landlord's   consent to any   Transfer,   Tenant shall notify

Landlord in writing, which notice shall include: (a) the proposed effective date

(which shall not be less than thirty (30) nor more than 180 days after   Tenant's

notice),   (b) the portion of the Premises to be   Transferred   (herein called the

"Subject   Space"),   (c) the terms of the proposed Transfer and the consideration

therefor,   the name, address and background   information concerning the proposed

Transferee, and a true and complete copy of all proposed Transfer documentation,

(d) financial   statements (balance sheets and income/expense   statements for the

current   and   prior   year)   of the   proposed   Transferee,   in   form   and   detail

reasonably satisfactory to Landlord,   certified by an officer,   partner or owner

of the Transferee,   (e) at least one favorable financial and business reference,

and (f) any other   reasonable   information   to enable   Landlord to determine the

financial responsibility,   character, and reputation of the proposed Transferee,

nature of such Transferee's business and proposed use of the Subject Space or as

Landlord may reasonably   request.   Any Transfer made without complying with this

Article shall, at Landlord's   option,   be null, void and of no effect,   or shall

constitute   a Default   under this   Lease.   Whether or not   Landlord   shall grant

consent,   Tenant   shall   pay   $500   towards   Landlord's   review   and   processing

expenses,   as well as any   reasonable   legal fees   incurred by Landlord,   within

fifteen (15) days after Landlord's written request.

 

 

                                       16

<PAGE>

 

      B. Approval.   Landlord will not   unreasonably   withhold its consent to any

proposed   Transfer of the Subject Space to the Transferee on the terms specified

in Tenant's   notice.   The parties hereby agree that it shall be reasonable under

this Lease and under any applicable Law for Landlord to withhold   consent to any

proposed Transfer where one or more of the following applies (without limitation

as to other reasonable grounds for withholding   consent):   (i) the Transferee is

of a character or   reputation or engaged in a business   which is not   consistent

with the   quality or nature of the   Property or other   tenants of the   Property,

(ii) the Transferee   intends to use the Subject Space for purposes which are not

permitted under this Lease, (iii) the Subject Space is not regular in shape with

appropriate   means of ingress and egress   suitable for normal renting   purposes,

would result in more than a reasonable   number of   occupants,   or would   require

increased   services by Landlord,   (iv) the Transferee is a government (or agency

or   instrumentality   thereof),   (v) the   proposed   Transferee   or any   affiliate

thereof is an occupant of the   Property (or of any complex in which the Property

is   located)   or has   negotiated   to   lease   space in the   Property   (or in such

complex)   from   Landlord   during   the prior six (6)   months,   (vi) the   proposed

Transferee does not have, in Landlord's good faith   determination,   satisfactory

references or a reasonable financial condition in relation to the obligations to

be   assumed in   connection   with the   Transfer,   (vii) the   Transfer   involves a

partial or   collateral   assignment,   a mortgage,   or other   encumbrance   on this

Lease, (viii) the proposed Transfer involves conversion, merger or consolidation

of Tenant   into a limited   liability   company or limited   liability   partnership

which would have the legal effect of releasing Tenant from any obligations under

this Lease,   (ix) the proposed   Transfer would cause Landlord to be in violation

of any Laws or any other lease,   Mortgage or   agreement   to which   Landlord is a

party,   or would give a tenant of the   Property a right to cancel its lease,   or

(x) Tenant has committed and failed to cure a Default.   If Tenant disagrees with

Landlord's   decision to deny   approval,   Tenant's   sole remedy   shall be to seek

immediate   declaratory and injunctive relief, and to recover attorneys' fees and

costs as a prevailing party under Article 17.

 

      C.   Transfer   Premiums.   If   Landlord   consents   to a   Transfer,   and as a

condition   thereto which the parties   hereby agree is   reasonable,   Tenant shall

retain fifty percent (50%) of any Transfer Premium, and shall pay Landlord fifty

percent   (50%) of any Transfer   Premium,   derived by Tenant from such   Transfer.

"Transfer   Premium" shall mean: (i) for a lease   assignment,   all   consideration

paid or payable therefor,   and (ii) for a sublease, all rent, additional rent or

other   consideration   paid by such   Transferee   in excess of the Rent payable by

Tenant   under   this   Lease (on a monthly   basis   during   the Term,   and on a per

rentable square foot basis, if less than all of the Premises is transferred). In

any   such    computation,    Tenant:    (a)   may   subtract   any   reasonable   direct

out-of-pocket   costs   incurred   in   connection   with   such   Transfer,    such   as

advertising   costs,   brokerage    commissions,    attorneys'   fees   and   leasehold

improvements   for the   Subject   Space,   and (b) shall   include in the   "Transfer

Premium" any   so-called   "key money" or other bonus amount paid by Transferee to

Tenant, and any payments in excess of fair market value for services rendered by

Tenant to   Transferee   or in excess of fair market   value for assets,   fixtures,

inventory,   equipment or furniture transferred by Tenant to Transferee.   If part

of the   consideration   for such   Transfer   shall be payable   other than in cash,

Landlord's   share of such   non-cash   consideration   shall be in such   form as is

reasonably   satisfactory   to Landlord.   Tenant shall pay the   percentage   of the

Transfer Premium due Landlord

 

 

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hereunder   within fifteen (15) days after Tenant   receives any Transfer   Premium

from the Transferee.

 

      D. Recapture.   Notwithstanding   anything to the contrary contained in this

Article,   Landlord   shall have the   option,   by giving   notice to Tenant   within

thirty (30) days after receipt of Tenant's notice of any proposed   Transfer,   to

recapture the Premises or Subject Space.   Such recapture notice shall cancel and

terminate this Lease with respect to the Premises or Subject Space,   as the case

may be, as of the date stated in Tenant's   notice as the   effective   date of the

proposed Transfer (or at Landlord's option, such notice shall cause the Transfer

to be made to Landlord or its agent or nominee,   in which case the parties shall

execute reasonable Transfer   documentation   promptly thereafter).   If this Lease

shall be canceled with respect to less than the entire Premises, the Rent herein

shall be prorated on the basis of the number of rentable square feet retained by

Tenant in   proportion   to the number of rentable   square feet   contained   in the

Premises,   this Lease as so amended shall continue   thereafter in full force and

effect,   and upon   request of either   party the parties   shall   execute   written

confirmation   of the same.   Tenant   shall   surrender   and vacate the Premises or

Subject Space,   as the case may be, when required   hereunder in accordance   with

Article 23, and any failure to do so shall be subject to Article 24.

 

      E. Terms of Consent. If Landlord consents to a Transfer: (i) the terms and

conditions of this Lease,   including   Tenant's   liability for the Subject Space,

shall in no way be deemed to have been   waived or   modified,   (ii) such   consent

shall   not be deemed   consent   to any   further   Transfer   by either   Tenant or a

Transferee,   (iii) no Transferee   shall   succeed to any rights   provided in this

Lease or any   amendment   hereto to extend   the Term of this   Lease,   expand   the

Premises,   or lease other space,   any such rights   being deemed   personal to the

initial Tenant, (iv) Tenant shall deliver to Landlord, promptly after execution,

an original   executed   copy of all   documentation   pertaining to the Transfer in

form reasonably acceptable to Landlord,   and (v) Tenant shall furnish a complete

statement,   certified by an independent   certified public accountant or Tenant's

financial   officer,   setting   forth in detail the   computation   of any   Transfer

Premium that Tenant has derived and shall derive from such Transfer. Landlord or

its authorized   representatives   shall have the right at all reasonable times to

audit the books, records and papers of Tenant and any Transferee relating to any

Transfer,   and shall   have the right to make   copies   thereof.   If the   Transfer

Premium respecting any Transfer shall be found to have been understated,   Tenant

shall   pay   the   deficiency   within   fifteen   (15)   days   after   demand   (and if

understated   by more than five   percent   (5%),   Tenant   shall   include with such

payment   Landlord's   costs   of such   audit).   Any   sublease   hereunder   shall be

subordinate and subject to the provisions of this Lease, and if this Lease shall

be   terminated   during   the term of any   sublease,   whether   based on Default or

mutual   agreement,   Landlord   shall have the right to: (a) deem such sublease as

merged and canceled and repossess the Subject Space by any lawful means,   or (b)

require that such   subtenant   attorn to and   recognize   Landlord as its landlord

under such sublease with respect to obligations arising   thereafter,   subject to

the terms of Landlord's   standard form of   attornment   documentation.   If Tenant

shall   commit a   Default   under   this   Lease,   Landlord   is   hereby   irrevocably

authorized to direct any   Transferee to make all payments under or in connection

with the   Transfer   directly   to Landlord   (which   Landlord   shall apply   toward

Tenant's obligations under this Lease).

 

 

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      F.   Certain   Transfers.   For purposes of this Lease,   the term   "Transfer"

shall also include,   and all of the foregoing provisions shall apply to: (i) the

conversion,   merger or consolidation of Tenant into a limited   liability company

or limited   liability   partnership,   (ii) if Tenant is a partnership   or limited

liability   company,   the   withdrawal   or change,   voluntary,   involuntary   or by

operation of law, of a majority of the   partners or members,   or a transfer of a

majority of partnership or membership   interests,   within a twelve month period,

or the   dissolution   of the   partnership   or   company,   and (iii) if Tenant is a

closely held corporation   (i.e., whose stock is not publicly held and not traded

through an exchange or over the counter), the dissolution, merger, consolidation

or other reorganization of Tenant, or within a twelve month period: (a) the sale

or other   transfer   of more than an   aggregate   of 50% of the   voting   shares of

Tenant (other than to immediate   family members by reason of gift or death),   or

(b) the sale, mortgage, hypothecation or pledge of more than an aggregate of 50%

of Tenant's net assets. Notwithstanding the foregoing provisions of this Article

13(F),   the   term   "Transfer"   shall   not   include,   and   none of the   foregoing

provisions   shall   apply to,   any   transfer   or   assignment   of this   Lease,   by

operation of law or otherwise,   to a successor in interest to Tenant by means of

merger,   sale,   acquisition,   change of control, or sale of all or substantially

all of the assets of Tenant;   provided,   however,   that the   provisions   of this

sentence   are   personal   to   Ricochet   Networks,   Inc.   and its parent   company,

subsidiaries, and affiliates.

 

               ARTICLE 14: PERSONAL PROPERTY, RENT AND OTHER TAXES

 

      Tenant   shall   pay,   prior to   delinquency,   all   taxes,   charges or other

governmental    impositions    assessed   against   or   levied   upon   all   fixtures,

furnishings,   personal property, built-in and modular furniture, and systems and

equipment located in or exclusively serving the Premises,   notwithstanding   that

certain   such   items   may   become   Landlord's   property   under   Article   23 upon

termination of the Lease.   Whenever possible,   Tenant shall cause all such items

to be assessed and billed separately from the other property of Landlord. In the

event any such items   shall be assessed   and billed   with the other   property of

Landlord,   Tenant shall pay Landlord   Tenant's   share of such taxes,   charges or

other governmental   impositions within fifteen (15) days after Landlord delivers

a statement   and a copy of the   assessment   or other   documentation   showing the

amount of impositions applicable to Tenant's property. Tenant shall pay any rent

tax,   sales tax,   service   tax,   transfer   tax,   value   added tax,   or any other

applicable   tax on the Rent,   utilities   or services   herein,   the   privilege of

renting,   using or   occupying   the Premises or   collecting   Rent   therefrom,   or

otherwise   respecting   this Lease or any other   document   entered in   connection

herewith.   Notwithstanding the foregoing, Tenant shall have no obligation to pay

any excess   profits taxes,   franchise   taxes,   gift taxes,   capital stock taxes,

inheritance and succession taxes, estate taxes,   federal and state income taxes,

or other taxes to the extent applicable to Landlord's general or net income.

 

 

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<PAGE>

 

                         ARTICLE 15: LANDLORD'S REMEDIES

 

      A. Default.   The   occurrence   of any one or more of the   following   events

shall   constitute   a   "Default"   by   Tenant   and shall   give rise to   Landlord's

remedies   set   forth in   Paragraph   B below:   (i)   failure   to make when due any

payment of Rent,   unless such   failure is cured   within five (5)   business   days

after notice (for the first   default in a twelve month   period,   and   thereafter

three (3) days for any   subsequent   failure to make when due any payment of Rent

in the same twelve month period); (ii) failure to observe or perform any term or

condition   of this Lease   other than the   payment of Rent (or the other   matters

expressly   described herein),   unless such failure is cured within any period of

time following notice expressly   provided with respect thereto in other Articles

hereof,   or otherwise   within a reasonable   time (but not less than fifteen (15)

days), but in no event more than thirty (30) days following notice (provided, if

the nature of Tenant's failure is such that more time is reasonably   required in

order to cure,   Tenant   shall   not be in   Default   if Tenant   commences   to cure

promptly   within such period,   diligently   seeks and keeps   Landlord   reasonably

advised of efforts to cure such failure to   completion,   and completes such cure

within   sixty (60) days   following   Landlord's   notice);   (iii)   failure to cure

immediately   upon notice   thereof any condition   which is hazardous,   interferes

with another   tenant or the operation or leasing of the   Property,   or may cause

the   imposition of a fine,   penalty or other remedy on Landlord or its agents or

affiliates,   (iv) violating Article 13 respecting   Transfers,   or abandoning the

Premises   ("abandonment"   under this Lease   shall   mean   vacating   or failing to

occupy the Premises for more than thirty (30) days while Tenant is delinquent in

paying   Rent),   or (v) (a)   making   by   Tenant or any   guarantor   of this   Lease

("Guarantor") of any general assignment for the benefit of creditors, (b) filing

by or for   reorganization or arrangement under any Law relating to bankruptcy or

insolvency   (unless,   in the case of a   petition   filed   against   Tenant or such

Guarantor,   the same is dismissed within thirty (30) days), (c) appointment of a

trustee or receiver to take possession of   substantially   all of Tenant's assets

located in the Premises or of Tenant's interest in this Lease,   where possession

is not restored to Tenant within thirty (30) days, (d) attachment,   execution or

other judicial   seizure of   substantially   all of Tenant's assets located in the

Premises or of Tenant's   interest in this Lease, (e) Tenant's or any Guarantor's

convening of a meeting of its   creditors or any class thereof for the purpose of

effecting a moratorium   upon or   composition   of its debts,   (f) Tenant's or any

Guarantor's insolvency or failure, or admission of an inability, to pay debts as

they mature,   or (g) a violation by Tenant or any   affiliate of Tenant under any

other lease or agreement   with   Landlord or any   affiliate   thereof which is not

cured within the time permitted for cure thereunder. The notice and cure periods

herein are   intended   to satisfy and run   concurrently   with any notice and cure

periods provided by Law, and shall not be in addition thereto.

 

      B.   Remedies.   If a Default   occurs,   Landlord   shall   have the rights and

remedies   hereinafter   set forth to the extent   permitted by Law, which shall be

distinct,   separate   and   cumulative   with and in addition to any other right or

remedy allowed under any Law or other provision of this Lease:

 

      (1) Landlord   may   terminate   Tenant's   right of   possession,   reenter and

repossess the Premises by detainer   suit,   summary   proceedings   or other lawful

means,   with or without

 

 

                                       20

<PAGE>

 

terminating this Lease (except as required by Law), and recover from Tenant: (i)

any unpaid Rent as of the termination   date,   (ii) the amount by which:   (a) any

unpaid   Rent which   would have   accrued   after the   termination   date during the

balance of the Term   exceeds (b) the   reasonable   rental   value of the   Premises

under a lease substantially   similar to this Lease,   taking into account,   among

other things, the condition of the Premises,   market   conditions,   the period of

time the   Premises   may   reasonably   remain   vacant   before   Landlord is able to

re-lease the same to a suitable   replacement   tenant, and Costs of Reletting (as

defined in   Paragraph   H below) that   Landlord   may incur in order to enter such

replacement lease, and (iii) any other amounts necessary to compensate   Landlord

for   all   damages    proximately   caused   by   Tenant's   failure   to   perform   its

obligations   under this   Lease.   For   purposes of   computing   the amount of Rent

herein that would have accrued after the termination date, Tenant's   obligations

for Taxes   and   Expenses   shall be   projected   based   upon the   average   rate of

increase in such items from the   Commencement   Date through the termination date

(or if such   period   shall be less than three   years,   then based on   Landlord's

reasonable   estimates).   The amounts   computed in accordance   with the foregoing

subclauses   (a) and (b) shall both be   discounted   in   accordance   with accepted

financial   practice   at the   rate of five   percent   (5%)   per   annum to the then

present value.

 

      (2) Landlord   may   terminate   Tenant's   right of   possession,   reenter and

repossess the Premises by detainer   suit,   summary   proceedings   or other lawful

means,   with or without   terminating this Lease (except as required by Law), and

recover   from   Tenant:   (i)   any   unpaid   Rent   as of   the   date   possession   is

terminated,   (ii) any unpaid Rent which thereafter   accrues during the Term from

the date   possession   is   terminated   through the time of judgment (or which may

have accrued from the time of any earlier judgment   obtained by Landlord),   less

any   consideration   received from replacement   tenants as further   described and

applied pursuant to Paragraph H, below